-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QyKV4bvZV3pTDvtV/CFgDYR0Ct5qJU6CC8dDF2hF3yUOB8k4hROYxCn/AJEnfoqV Tzi8UMqdAXhSnbBPQBjfPg== 0000856465-03-000008.txt : 20030814 0000856465-03-000008.hdr.sgml : 20030814 20030814121851 ACCESSION NUMBER: 0000856465-03-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GIANT INDUSTRIES INC CENTRAL INDEX KEY: 0000856465 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 860642718 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10398 FILM NUMBER: 03844886 BUSINESS ADDRESS: STREET 1: 23733 N SCOTTSDALE RD CITY: SCOTTSDALE STATE: AZ ZIP: 85255 BUSINESS PHONE: 4805858888 MAIL ADDRESS: STREET 1: 23733 N SCOTTSDALE RD CITY: SCOTTSDALE STATE: AZ ZIP: 85255 10-Q 1 secondqtr-edgar.txt GIANT INDUSTRIES, INC.'S 2003 2 QTR. 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from _______ to _______. Commission File Number: 1-10398 GIANT INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 86-0642718 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 23733 North Scottsdale Road, Scottsdale, Arizona 85255 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (480) 585-8888 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] Number of Common Shares outstanding at July 31, 2003: 8,785,555 shares. GIANT INDUSTRIES, INC. AND SUBSIDIARIES INDEX PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheets June 30, 2003 (Unaudited) and December 31, 2002 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2003 and 2002 (Unaudited) Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002 (Unaudited) Notes to Consolidated Financial Statements (Unaudited) Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3 - Quantitative and Qualitative Disclosures About Market Risk Item 4 - Controls and Procedures PART II - OTHER INFORMATION Item 1 - Legal Proceedings Item 4 - Submission of Matters to a Vote of Security Holders Item 6 - Exhibits and Reports on Form 8-K SIGNATURE PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. GIANT INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
June 30, 2003 December 31, 2002 ------------- ----------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents......................... $ 10,772 $ 10,168 Receivables, net.................................. 75,655 76,088 Inventories (Note 9).............................. 120,876 107,980 Prepaid expenses and other........................ 5,073 7,877 Deferred income taxes............................. 9,769 9,769 ---------- ---------- Total current assets............................ 222,145 211,882 ---------- ---------- Property, plant and equipment (Notes 3 and 4)....... 645,385 630,950 Less accumulated depreciation and amortization.... (230,030) (212,801) ---------- ---------- 415,355 418,149 ---------- ---------- Goodwill (Note 5)................................... 19,403 19,465 Other assets (Notes 5 and 6)........................ 41,111 52,790 ---------- ---------- $ 698,014 $ 702,286 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt (Note 11)....... $ 8,473 $ 10,251 Accounts payable.................................. 75,055 67,282 Accrued expenses.................................. 44,472 42,818 ---------- ---------- Total current liabilities....................... 128,000 120,351 ---------- ---------- Long-term debt, net of current portion (Note 11).... 378,748 398,069 Deferred income taxes............................... 39,185 37,612 Other liabilities (Note 3).......................... 21,790 18,937 Commitments and contingencies (Notes 11 and 12) Stockholders' equity: Preferred stock, par value $.01 per share, 10,000,000 shares authorized, none issued Common stock, par value $.01 per share, 50,000,000 shares authorized, 12,537,535 and 12,323,759 shares issued.................... 126 123 Additional paid-in capital........................ 74,660 73,763 Retained earnings................................. 91,959 89,885 ---------- ---------- 166,745 163,771 Less common stock in treasury - at cost, 3,751,980 shares................................ (36,454) (36,454) ---------- ---------- Total stockholders' equity...................... 130,291 127,317 ---------- ---------- $ 698,014 $ 702,286 ========== ========== See accompanying notes to consolidated financial statements.
GIANT INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data)
Three Months Six Months Ended June 30, Ended June 30, --------------------- --------------------- 2003 2002 2003 2002 --------- --------- --------- --------- Net revenues...................................... $ 409,708 $ 289,578 $ 891,015 $ 468,886 Cost of products sold............................. 339,380 239,911 749,747 375,633 --------- --------- --------- --------- Gross margin...................................... 70,328 49,667 141,268 93,253 Operating expenses................................ 41,486 30,094 80,513 53,282 Depreciation and amortization..................... 9,433 8,748 18,562 16,800 Selling, general and administrative expenses...... 7,272 6,130 14,296 11,555 Net (gain) loss on disposal/write-down of assets.. (177) 504 234 508 --------- --------- --------- --------- Operating income.................................. 12,314 4,191 27,663 11,108 Interest expense.................................. (9,865) (9,527) (20,024) (15,530) Amortization/write-off of financing costs......... (1,197) (909) (2,388) (1,117) Interest and investment income.................... 59 261 83 325 --------- --------- --------- --------- Earnings (loss) from continuing operations before income taxes............................. 1,311 (5,984) 5,334 (5,214) Provision (benefit) for income taxes.............. 542 (2,159) 2,207 (1,848) --------- --------- --------- --------- Earnings (loss) from continuing operations before cumulative effect of change in accounting principle....................... 769 (3,825) 3,127 (3,366) Discontinued operations, net of income tax benefit of $214, $306, $233 and $531 (Note 6)... (322) (459) (349) (795) Cumulative effect of change in accounting principle, net of income tax benefit of $468 (Note 3)................................. - - (704) - --------- --------- --------- --------- Net earnings (loss)............................... $ 447 $ (4,284) $ 2,074 $ (4,161) ========= ========= ========= ========= Net earnings (loss) per common share: Basic Continuing operations......................... $ 0.09 $ (0.45) $ 0.36 $ (0.40) Discontinued operations....................... (0.04) (0.05) (0.04) (0.09) Cumulative effect of change in accounting principle..................... - - (0.08) - --------- --------- --------- --------- $ 0.05 $ (0.50) $ 0.24 $ (0.49) ========= ========= ========= ========= Assuming dilution Continuing operations......................... $ 0.09 $ (0.45) $ 0.36 $ (0.40) Discontinued operations....................... (0.04) (0.05) (0.04) (0.09) Cumulative effect of change in accounting principle..................... - - (0.08) - --------- --------- --------- --------- $ 0.05 $ (0.50) $ 0.24 $ (0.49) ========= ========= ========= ========= See accompanying notes to consolidated financial statements.
GIANT INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Six Months Ended June 30, ------------------------- 2003 2002 --------- --------- Cash flows from operating activities: Net earnings (loss)....................................... $ 2,074 $ (4,161) Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization, including discontinued operations............................. 18,971 17,807 Amortization/write-off of financing costs............. 2,388 1,117 Deferred income taxes................................. 2,042 (2,377) Cumulative effect of change in accounting principle, net........................... 704 - Net loss on the disposal/write-down of assets included in continuing operations................... 234 508 Net loss on disposal of discontinued operations....... 113 132 Loss on write-down/write-off of assets included in discontinued operations.......................... 76 423 Tax refund received................................... 4,090 - Other................................................. 765 312 Changes in operating assets and liabilities (excluding in 2002 the effects of the Yorktown acquisition): Increase in receivables............................. (3,657) (21,426) (Increase) decrease in inventories.................. (12,702) 6,302 Decrease (increase) in prepaid expenses and other... 2,796 (2,349) Increase in accounts payable........................ 7,773 8,111 Increase in accrued expenses........................ 2,541 673 --------- --------- Net cash provided by operating activities................... 28,208 5,072 --------- --------- Cash flows from investing activities: Yorktown refinery acquisition............................. - (193,992) Capital expenditures...................................... (10,150) (7,552) Contingent payment on Yorktown refinery acquisition....... (5,475) - Proceeds from sale of property, plant and equipment and other assets........................................ 9,347 2,296 --------- --------- Net cash used by investing activities....................... (6,278) (199,248) --------- --------- Cash flows from financing activities: Proceeds from long-term debt.............................. - 234,144 Payments of long-term debt................................ (6,276) (101,134) Proceeds from line of credit.............................. 50,000 60,000 Payments on line of credit................................ (65,000) - Deferred financing costs.................................. (50) (13,704) Proceeds from exercise of stock options................... - 94 --------- --------- Net cash (used) provided by financing activities............ (21,326) 179,400 --------- --------- Net increase (decrease) in cash and cash equivalents........ 604 (14,776) Cash and cash equivalents: Beginning of period..................................... 10,168 26,326 --------- --------- End of period........................................... $ 10,772 $ 11,550 ========= ========= Significant Noncash Investing and Financing Activities. On January 1, 2003, in accordance with Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations," the Company recorded an asset retirement obligation of $2,198,000, asset retirement costs of $1,580,000 and related accumulated depreciation of $674,000. The Company also reversed a previously recorded asset retirement obligation for $120,000, and recorded a cumulative effect adjustment of $1,172,000 ($704,000 net of taxes). See Note 3. On April 3, 2003, the Company contributed 213,776 newly issued shares of its common stock, valued at $900,000, to its 401(k) plan as a discretionary contribution for the year 2002. In the second quarter of 2002, the Company issued $200,000,000 of 11% Senior Subordinated Notes at a discount of $5,856,000. See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION: Giant Industries, Inc., a Delaware corporation (together with its subsidiaries, "Giant" or the "Company"), through its wholly-owned subsidiary Giant Industries Arizona, Inc. and its subsidiaries ("Giant Arizona"), is engaged in the refining and marketing of petroleum products. These operations are conducted on both the East Coast (primarily in Virginia, Maryland, North Carolina, the New England states and the New York Harbor) and in the Southwest (primarily in New Mexico, Arizona, and Colorado, with a concentration in the Four Corners area where these states adjoin). In addition, Phoenix Fuel Co., Inc. ("Phoenix Fuel"), a wholly- owned subsidiary of Giant Arizona, operates an industrial/commercial wholesale petroleum products distribution operation primarily in Arizona. See Note 2 for a further discussion of Company operations. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, hereafter referred to as generally accepted accounting principles, for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary for a fair and comparable presentation have been included. These adjustments and reclassifications are of a normal recurring nature, with the exception of the cumulative effect of a change in accounting for asset retirement obligations (see Note 3) and discontinued operations (see Note 6). Operating results for the six months ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002. On January 1, 2003, the Company adopted Financial Accounting Standards Board ("FASB") SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143"). SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. See Note 3 for disclosures relating to SFAS No. 143. In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock- Based Compensation - Transition and Disclosure" ("SFAS No. 148"). SFAS No. 148 amends SFAS No. 123 to permit alternative methods of transition for adopting a fair value based method of accounting for stock-based employee compensation. The Company uses the intrinsic value method to account for stock-based employee compensation. The Company is evaluating whether or not it will adopt the transition provisions of SFAS No. 148 in 2003. See Note 8 for disclosures relating to stock-based employee compensation. On January 1, 2003, the Company adopted the provisions of FASB Interpretation No. 45 "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("Interpretation No. 45"). Interpretation No. 45 elaborates on existing disclosure requirements for guarantees and clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of Interpretation No. 45 apply on a prospective basis to guarantees issued or modified after December 31, 2002. The adoption of Interpretation No. 45 had no effect on the Company's financial statements. In January 2003, the FASB issued FASB Interpretation No. 46 "Consolidation of Variable Interest Entities" ("Interpretation No. 46"). Interpretation No. 46 clarifies the application of existing consolidation requirements to entities where a controlling financial interest is achieved through arrangements that do not involve voting interests. Under Interpretation No. 46, a variable interest entity is consolidated if a company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns. Interpretation No. 46 applies to variable interest entities created or acquired after January 31, 2003. For variable interest entities existing at January 31, 2003, Interpretation No. 46 is effective for accounting periods beginning after June 15, 2003. The application of Interpretation No. 46 had no effect on the Company's financial statements. In 2001, the American Institute of Certified Public Accountants ("AICPA") issued an exposure draft of a proposed Statement of Position ("SOP"), "Accounting for Certain Costs Related to Property, Plant, and Equipment." This proposed SOP would create a project timeline framework for capitalizing costs related to property, plant and equipment ("PP&E") construction. The costs of planned major maintenance activities such as maintenance turnarounds at the Company's refineries would be capitalized or expensed in accordance with the SOP instead of being deferred and amortized over the period until the next turnaround. The AICPA is in the process of redrafting the SOP. The final SOP is expected to be issued by the end of 2003 and will be effective for fiscal years beginning after December 15, 2004, with early application encouraged. The Company is in the process of evaluating the effect the SOP will have on its financial position and results of operations. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. This statement is effective immediately for financial instruments entered into or modified after May 31, 2003 and is effective for all other financial instruments beginning July 1, 2003. The Company is currently evaluating the standard and does not expect any of its existing financial instruments to be within the scope of this statement. In May 2003, the FASB ratified Emerging Issues Task Force Issue 03-4 ("EITF 03-4"), "Determining the Classification and Benefit Attribution Method for a 'Cash Balance' Pension Plan." EITF 03-4 requires a cash balance pension plan to be considered a defined benefit plan for purposes of applying SFAS No. 87, "Employers' Accounting for Pensions." It requires the traditional unit credit attribution method to be used for accounting purposes. The effective date of the consensus is the next measurement date after May 28, 2003. The Company is currently evaluating the impact of EITF 03-4 on its financial statements. Certain reclassifications have been made to the 2002 financial statements and notes to conform to the financial statement classifications used in the current year. These reclassifications relate primarily to the discontinued operation requirements of SFAS No. 144. These reclassifications had no effect on reported earnings or stockholders' equity. NOTE 2 - BUSINESS SEGMENTS: The Company is organized into three operating segments based on manufacturing and marketing criteria. These segments are the Refining Group, the Retail Group and Phoenix Fuel. A description of each segment and its principal products follows: - Refining Group: The Refining Group operates the Company's Ciniza and Bloomfield refineries in the Four Corners area of New Mexico and the Yorktown refinery in Virginia. In addition to these three refineries, the refining group operates a crude oil gathering pipeline system in New Mexico that services the Four Corners refineries, two finished products distribution terminals, and a fleet of crude oil and finished product truck transports. The Company's three refineries manufacture various grades of gasoline, diesel fuel, and other products from crude oil, other feedstocks, and blending components. In addition, finished products are acquired through exchange agreements, from third party suppliers and from Phoenix Fuel. These products are sold through Company- operated retail facilities, independent wholesalers and retailers, industrial/commercial accounts, and sales and exchanges with major oil companies. Crude oil, other feedstocks and blending components are purchased from third party suppliers. - Retail Group: The Retail Group operates the Company's service stations with convenience stores or kiosks. Until June 19, 2003, when it was sold, the Retail Group also operated a travel center located on I-40 adjacent to the Ciniza refinery near Gallup, New Mexico. These service stations sell various grades of gasoline, diesel fuel, general merchandise, including tobacco and alcoholic and nonalcoholic beverages, and food products to the general public through retail locations. The Refining Group or Phoenix Fuel supplies the petroleum fuels sold by the Retail Group. General merchandise and food products are obtained from third party suppliers. At June 30, 2003, the Company operated 129 service stations. - Phoenix Fuel: The Company's Phoenix Fuel operation is an industrial/commercial wholesale petroleum products distribution operation, which includes several lubricant and bulk petroleum distribution plants, an unmanned fleet fueling ("cardlock") operation, a bulk lubricant terminal facility, and a fleet of finished product and lubricant delivery trucks. The petroleum fuels and lubricants sold are primarily obtained from third party suppliers and to a lesser extent from the Refining Group. Other Company operations that are not included in any of the three segments are included in the category "Other." These operations consist primarily of corporate staff operations, including selling, general and administrative ("SG&A") expenses. Operating income for each segment consists of net revenues less cost of products sold, operating expenses, depreciation and amortization, and the segment's SG&A expenses. The sales between segments are made at market prices. Cost of products sold reflects current costs adjusted, where appropriate, for the last in, first out ("LIFO") method of valuing certain inventories and lower of cost or market inventory adjustments. The total assets of each segment consist primarily of net property, plant and equipment, inventories, accounts receivable and other assets directly associated with the segment's operations. Included in the total assets of the corporate staff operations are a majority of the Company's cash and cash equivalents, various accounts receivable, net property, plant and equipment, and other long-term assets. Disclosures regarding the Company's reportable segments with a reconciliation to consolidated totals for the three months ended June 30, 2003 and 2002, are presented below.
For the Three Months Ended June 30, 2003 (In thousands) ---------------------------------------------------------------- Refining Retail Phoenix Reconciling Group Group Fuel Other Items Consolidated ---------------------------------------------------------------- Customer net revenues: Finished products: Four Corners operations.............. $ 68,091 Yorktown operations.................. 154,880 -------- Total................................ $222,971 $ 52,436 $ 91,588 $ - $ - $ 366,995 Merchandise and lubricants............. - 34,570 6,707 - - 41,277 Other.................................. 5,126 3,893 378 145 - 9,542 -------- -------- -------- -------- --------- ---------- Total................................ 228,097 90,899 98,673 145 - 417,814 -------- -------- -------- -------- --------- ---------- Intersegment net revenues: Finished products...................... 40,891 - 11,419 - (52,310) - Other.................................. 4,186 - - - (4,186) - -------- -------- -------- -------- --------- ---------- Total................................ 45,077 - 11,419 - (56,496) - -------- -------- -------- -------- --------- ---------- Total net revenues....................... 273,174 90,899 110,092 145 (56,496) 417,814 Net revenues of discontinued operations.. - 8,106 - - - 8,106 -------- -------- -------- -------- --------- ---------- Net revenues of continuing operations.... $273,174 $ 82,793 $110,092 $ 145 $ (56,496) $ 409,708 ======== ======== ======== ======== ========= ========== Operating income (loss): Four Corners operations................ $ 12,715 Yorktown operations.................... (2,847) -------- Total operating income (loss)............ $ 9,868 $ 4,809 $ 2,284 $ (5,033) $ (150) $ 11,778 Discontinued operations loss............. - (209) - - (327) (536) -------- -------- -------- -------- --------- ---------- Operating income (loss) from continuing operations............. $ 9,868 $ 5,018 $ 2,284 $ (5,033) $ 177 $ 12,314 -------- -------- -------- -------- --------- Interest expense......................... (9,865) Amortization of financing costs.......... (1,197) Interest income.......................... 59 ---------- Earnings from continuing operations before income taxes.................... $ 1,311 ========== Depreciation and amortization: Four Corners operations................ $ 3,978 Yorktown operations.................... 2,080 -------- Total................................ $ 6,058 $ 2,781 $ 446 $ 313 $ - $ 9,598 Discontinued operations.............. - 165 - - - 165 -------- -------- -------- -------- --------- ---------- Continuing operations................ $ 6,058 $ 2,616 $ 446 $ 313 $ - $ 9,433 -------- -------- -------- -------- --------- ---------- Capital expenditures..................... $ 4,574 $ 120 $ 129 $ 55 $ - $ 4,878 Yorktown refinery acquisition contingent payment..................... $ 1,489 $ - $ - 4 - $ - $ 1,489
For the Three Months Ended June 30, 2002 (In thousands) ---------------------------------------------------------------- Refining Retail Phoenix Reconciling Group Group Fuel Other Items Consolidated ---------------------------------------------------------------- Customer net revenues: Finished products: Four Corners operations.............. $ 68,437 Yorktown operations(1)............... 72,834 -------- Total................................ $141,271 $ 49,669 $ 64,378 $ - $ - $255,318 Merchandise and lubricants............. - 37,984 5,453 - - 43,437 Other.................................. 2,061 3,809 724 40 - 6,634 -------- -------- -------- ------- -------- -------- Total................................ 143,332 91,462 70,555 40 - 305,389 -------- -------- -------- ------- -------- -------- Intersegment net revenues: Finished products...................... 39,168 - 14,067 - (53,235) - Other.................................. 4,351 - - - (4,351) - -------- -------- -------- ------- -------- -------- Total................................ 43,519 - 14,067 - (57,586) - -------- -------- -------- ------- -------- -------- Total net revenues....................... 186,851 91,462 84,622 40 (57,586) 305,389 Net revenues of discontinued operations.. - 15,811 - - - 15,811 -------- -------- -------- ------- -------- -------- Net revenues of continuing operations.... $186,851 $ 75,651 $ 84,622 $ 40 $(57,586) $289,578 ======== ======== ======== ======= ======== ======== Operating income (loss): Four Corners operations................ $ 8,356 Yorktown operations(1)................. (3,090) -------- Total operating income (loss)............ $ 5,266 $ 1,886 $ 1,566 $(4,233) $ (1,059) $ 3,426 Discontinued operations loss............. - (210) - - (555) (765) -------- -------- -------- ------- -------- -------- Operating income (loss) from continuing operations............. $ 5,266 $ 2,096 $ 1,566 $(4,233) $ (504) $ 4,191 -------- -------- -------- ------- -------- Interest expense......................... (9,527) Amortization/write-off of financing costs..................... (909) Interest income.......................... 261 -------- Loss from continuing operations before income taxes.................... $ (5,984) ======== Depreciation and amortization: Four Corners operations................ $ 4,083 Yorktown operations(1)................. 1,080 -------- Total................................ $ 5,163 $ 3,258 $ 530 $ 293 $ - $ 9,244 Discontinued operations.............. - 496 - - - 496 -------- -------- -------- ------- -------- -------- Continuing operations................ $ 5,163 $ 2,762 $ 530 $ 293 $ - $ 8,748 -------- -------- -------- ------- -------- -------- Capital expenditures..................... $ 4,474 $ 136 $ 57 $ 553 $ - $ 5,220 Yorktown refinery acquisition............ $193,992 $ - $ - $ - $ - $193,992 (1) Since acquisition on May 14, 2002.
Disclosures regarding the Company's reportable segments with reconciliation to consolidated totals for the six months ended June 30, 2003 and 2002, are presented below.
As of and for the Six Months Ended June 30, 2003 (In thousands) ---------------------------------------------------------------- Refining Retail Phoenix Reconciling Group Group Fuel Other Items Consolidated ---------------------------------------------------------------- Customer net revenues: Finished products: Four Corners operations.............. $146,642 Yorktown operations.................. 362,947 -------- Total................................ $509,589 $104,178 $194,223 $ - $ - $ 807,990 Merchandise and lubricants............. - 65,504 12,717 - - 78,221 Other.................................. 15,088 7,928 988 210 - 24,214 -------- -------- -------- -------- --------- ---------- Total................................ 524,677 177,610 207,928 210 - 910,425 -------- -------- -------- -------- --------- ---------- Intersegment net revenues: Finished products...................... 86,903 - 24,052 - (110,955) - Other.................................. 8,207 - - - (8,207) - -------- -------- -------- -------- --------- ---------- Total................................ 95,110 - 24,052 - (119,162) - -------- -------- -------- -------- --------- ---------- Total net revenues....................... 619,787 177,610 231,980 210 (119,162) 910,425 Net revenues of discontinued operations.. - 19,410 - - - 19,410 -------- -------- -------- -------- --------- ---------- Net revenues of continuing operations.... $619,787 $158,200 $231,980 $ 210 $(119,162) $ 891,015 ======== ======== ======== ======== ========= ========== Operating income (loss): Four Corners operations................ $ 22,218 Yorktown operations.................... 5,511 -------- Total operating income (loss)............ $ 27,729 $ 5,842 $ 3,890 $ (9,957) $ (423) $ 27,081 Discontinued operations loss............. - (393) - - (189) (582) -------- -------- -------- -------- --------- ---------- Operating income (loss) from continuing operations............. $ 27,729 $ 6,235 $ 3,890 $ (9,957) $ (234) $ 27,663 -------- -------- -------- -------- --------- Interest expense......................... (20,024) Amortization of financing costs.......... (2,388) Interest income.......................... 83 ---------- Earnings from continuing operations before income taxes.................... $ 5,334 ========== Depreciation and amortization: Four Corners operations................ $ 7,958 Yorktown operations.................... 3,814 -------- Total................................ $ 11,772 $ 5,610 $ 900 $ 689 $ - $ 18,971 Discontinued operations.............. - 409 - - - 409 -------- -------- -------- -------- --------- ---------- Continuing operations................ $ 11,772 $ 5,201 $ 900 $ 689 $ - $ 18,562 -------- -------- -------- -------- --------- ---------- Total assets............................. $452,207 $117,914 $ 65,076 $ 62,817 $ - $ 698,014 Capital expenditures..................... $ 9,362 $ 374 $ 333 $ 81 $ - $ 10,150 Yorktown refinery acquisition contingent payment..................... $ 5,475 $ - $ - $ - $ - $ 5,475
As of and for the Six Months Ended June 30, 2002 (In thousands) ---------------------------------------------------------------- Refining Retail Phoenix Reconciling Group Group Fuel Other Items Consolidated ---------------------------------------------------------------- Customer net revenues: Finished products: Four Corners operations.............. $120,747 Yorktown operations(1)............... 72,834 -------- Total................................ $193,581 $ 89,088 $121,159 $ - $ - $403,828 Merchandise and lubricants............. - 70,821 11,421 - - 82,242 Other.................................. 3,904 7,769 1,301 90 - 13,064 -------- -------- -------- -------- --------- -------- Total................................ 197,485 167,678 133,881 90 - 499,134 -------- -------- -------- -------- --------- -------- Intersegment net revenues: Finished products...................... 68,761 - 26,373 - (95,134) - Other.................................. 8,823 - - - (8,823) - -------- -------- -------- -------- --------- -------- Total................................ 77,584 - 26,373 - (103,957) - -------- -------- -------- -------- --------- -------- Total net revenues....................... 275,069 167,678 160,254 90 (103,957) 499,134 Net revenues of discontinued operations.. - 30,248 - - - 30,248 -------- -------- -------- -------- --------- -------- Net revenues of continuing operations.... $275,069 $137,430 $160,254 $ 90 $(103,957) $468,886 ======== ======== ======== ======== ========= ======== Operating income (loss): Four Corners operations................ $ 17,406 Yorktown operations(1)................. (3,090) -------- Total operating income (loss)............ $ 14,316 $ 1,197 $ 3,039 $ (7,707) $ (1,063) $ 9,782 Discontinued operations loss............. - (771) - - (555) (1,326) -------- -------- -------- -------- --------- -------- Operating income (loss) from continuing operations............. $ 14,316 $ 1,968 $ 3,039 $ (7,707) $ (508) $ 11,108 -------- -------- -------- -------- --------- Interest expense......................... (15,530) Amortization/write-off of financing costs..................... (1,117) Interest income.......................... 325 -------- Loss before income taxes................. $ (5,214) ======== Depreciation and amortization: Four Corners operations................ $ 8,632 Yorktown operations(1)................. 1,080 -------- Total................................ $ 9,712 $ 6,459 $ 1,067 $ 569 $ - $ 17,807 Discontinued operations.............. - 1,007 - - - 1,007 -------- -------- -------- -------- --------- -------- Continuing operations................ $ 9,712 $ 5,452 $ 1,067 $ 569 $ - $ 16,800 -------- -------- -------- -------- --------- -------- Total assets............................. $446,612 $148,860 $ 64,313 $ 60,543 $ - $720,328 Capital expenditures..................... $ 5,364 $ 444 $ 273 $ 1,471 $ - $ 7,552 Yorktown refinery acquisition............ $193,992 $ - $ - $ - $ - $193,992 (1)Since acquisition on May 14, 2002.
NOTE 3 - ASSET RETIREMENT OBLIGATIONS: On January 1, 2003, the Company adopted SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 addresses financial accounting and reporting obligations associated with the retirement of tangible long- lived assets and the associated asset retirement costs. This Statement applies to all entities. It addresses legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset, except for certain obligations of lessees. As used in this Statement, a legal obligation is an obligation that a party is required to settle as a result of an existing or enacted law, statue, ordinance, or written or oral contract or by legal construction of a contract under the doctrine of promissory estoppel. This Statement requires that the fair value of a liability for an Asset Retirement Obligation ("ARO") be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated Asset Retirement Cost ("ARC") is capitalized as part of the carrying amount of the long-lived asset. To initially recognize the Company's ARO liability, the Company capitalized the fair value of all ARO's identified by the Company, calculated as of the date the liability would have been recognized were SFAS No. 143 in effect at that time. In accordance with SFAS No. 143, the Company also recognized the cumulative accretion and accumulated depreciation from the date the liability would have been recognized had the provisions of SFAS No. 143 been in effect, to January 1, 2003, the date of adoption by the Company. As a result, on January 1, 2003, the Company recorded an ARO liability of $2,198,000, ARC assets of $1,580,000 and related accumulated depreciation of $674,000. The Company also reversed a previously recorded asset retirement obligation for $120,000, and recorded a cumulative effect adjustment of $1,172,000 ($704,000 net of taxes). The following ARO's were identified by the Company: 1. Landfills - pursuant to Virginia law, the two solid waste management facilities at the Yorktown refinery must satisfy closure and post-closure care and financial responsibility requirements. 2. Crude Pipelines - the Company's right-of-way agreements generally require that pipeline properties be returned to their original condition when the agreements are no longer in effect. This means that the pipeline surface facilities must be dismantled and removed and certain site reclamation performed. The Company does not believe these right-of-way agreements will require the Company to remove the underground pipe upon taking the pipeline permanently out of service. Regulatory requirements, however, may mandate that such out-of-service underground pipe be purged. 3. Storage Tanks - the Company has a legal obligation under applicable law to remove all underground and aboveground storage tanks, both on owned property and leased property, once they are taken out of service. Under some lease arrangements, the Company also has committed to restore the leased property to its original condition. The following table reconciles the beginning and ending aggregate carrying amount of the Company's ARO's for the six and twelve month periods ended June 30, 2003 and December 31, 2002, respectively.
December 31, June 30, 2002 2003 (Pro Forma) --------- ------------ (In thousands) Liability beginning of year........... $2,198 $1,719 Liabilities incurred.................. - 340 Liabilities settled................... (58) - Accretion expense..................... 88 139 Revision to estimated cash flows...... - - ------ ------ Liability end of period............... $2,228 $2,198 ====== ======
The effect of the change for the three and six months ended June 30, 2003 was to reduce earnings before the cumulative effect of change in accounting principle by approximately $45,000 and $0.005 per share and $91,000 or a $0.01 per share, respectively. The pro forma information below for the three and six months ended June 30, 2002 reflects the effects of additional depreciation and accretion expense net of related income taxes as if the requirements of SFAS No. 143 were in effect as of the beginning of the period.
Three Months Ended Six Months Ended June 30, 2002 June 30, 2002 ------------------ ---------------- (In thousands) Loss from continuing operations....... $(3,863) $(3,442) Loss from discontinued operations..... (459) (795) ------- ------- $(4,322) $(4,237) ======= ======= Net loss per common share: Basic and assuming dilution: Continuing operations............. $ (0.45) $ (0.40) Discontinued operations........... (0.05) (0.09) ------- ------- $ (0.50) $ (0.49) ======= =======
NOTE 4 - YORKTOWN ACQUISITION: On May 14, 2002, the Company acquired the 61,900 bpd Yorktown refinery from BP Corporation North America Inc. and BP Products North America Inc. (collectively, "BP"). As part of the Yorktown acquisition, the Company agreed to pay earn- out payments, up to a maximum of $25,000,000, to BP beginning in 2003 and concluding at the end of 2005, when the average monthly spreads for regular reformulated gasoline or No. 2 distillate over West Texas Intermediate equivalent light crude oil on the New York Mercantile Exchange exceed $5.50 or $4.00 per barrel, respectively. In the first and second quarters of 2003, the Company incurred $3,986,000 and $1,489,000, respectively, under this provision of the purchase agreement. These earn- out payments are considered additional purchase price and are allocated to the assets acquired in the same proportions as the original purchase price allocation, not to exceed the estimated current replacement cost, and amortized over the estimated remaining life of the assets. No material adjustments have been made to the Company's initial allocation of the purchase price of the Yorktown refinery except as noted above. The following unaudited pro forma financial information for the three and six months ended June 30, 2002 gives effect to the: (i) Yorktown acquisition; (ii) financing transactions entered into in connection with the Yorktown acquisition; and (iii) redemption of the Company's $100,000,000 of 9 3/4% Senior Subordinated Notes due 2003 (the "9 3/4% Notes"), which occurred on June 28, 2002, as if each had occurred at the beginning of the period presented. The pro forma results were determined using estimates and assumptions, which management believes to be reasonable, based upon limited available information from BP. This pro forma information is not necessarily indicative of the results of future operations.
Three Months Six Months Ended June 30, 2002 Ended June 30, 2002 ------------------- ------------------- (In thousands, except per share data) Revenues from continuing operations.......... $355,286 $669,294 Net loss from continuing operations.......... (6,046) (14,763) Net loss..................................... (6,505) (15,558) Net loss from continuing operation per share: Basic...................................... $ (0.71) $ (1.73) Diluted.................................... $ (0.71) $ (1.73) Net loss per share: Basic...................................... $ (0.76) $ (1.82) Diluted.................................... $ (0.76) $ (1.82)
NOTE 5 - Goodwill and Other Intangible Assets: At June 30, 2003 and December 31, 2002, the Company had goodwill of $19,403,000 and $19,465,000, respectively. The changes in the carrying amount of goodwill for the six months ended June 30, 2003 are as follows:
Refining Retail Phoenix Group Group Fuel Total -------- ------- ------- ------- (In thousands) Balance as of January 1, 2003......... $ 125 $ 4,618 $14,722 $19,465 Goodwill written off related to the sale of three retail units... - (62) - (62) ------- ------- ------- ------- Balance as of June 30, 2003........... $ 125 $ 4,556 $14,722 $19,403 ======= ======= ======= =======
A summary of intangible assets that are included in "Other Assets" in the Consolidated Balance Sheet at June 30, 2003 is presented below:
Gross Net Carrying Accumulated Carrying Value Amortization Value -------- ------------ -------- (In thousands) Amortized intangible assets: Rights-of-way.......................... $ 3,564 $ 2,461 $ 1,103 Contracts.............................. 3,971 3,535 436 Licenses and permits................... 786 103 683 ------- ------- ------- 8,321 6,099 2,222 ------- ------- ------- Unamortized intangible assets: Liquor licenses........................ 7,316 - 7,316 ------- ------- ------- Total intangible assets.................. $15,637 $ 6,099 $ 9,538 ======= ======= =======
NOTE 6 - DISCONTINUED OPERATIONS, ASSETS HELD FOR SALE, AND DISPOSITIONS: Losses from discontinued operations before income taxes of $536,000 for the three months ended June 30, 2003 include a net loss on the disposal of two retail units and the Company's travel center of $251,000, which includes $12,000 of associated goodwill, an impairment write-down on one closed retail unit of $76,000, and net operating losses of $209,000. Losses from discontinued operations before income taxes of $582,000 for the six months ended June 30, 2003 include a net loss on the disposal of four retail units and the Company's travel center of $113,000, which includes $62,000 of associated goodwill, an impairment write-down on one closed retail unit of $76,000, and net operating losses of $393,000. Losses from discontinued operations before income taxes of $765,000 and $1,326,000 for the three and six months ended June 30, 2002, respectively, include a loss on the disposal of two retail units of $132,000, impairment write-downs of $415,000 on five retail units, and asset write-offs of $8,000. In addition, net operating losses of $210,000 and $771,000 were incurred for the three and six months ended June 30, 2002, respectively. Revenues included in discontinued operations for the three months ended June 30, 2003 and 2002, were $8,106,000 and $15,811,000, respectively, and for the six months ended June 30, 2003 and 2002, were $19,410,000 and $30,248,000, respectively. On June 19, 2003, the Company completed the sale of its Giant Travel Center to Pilot Travel Centers LLC ("Pilot") and received net proceeds of approximately $5,820,000, plus an additional $491,000 for inventories. As a result of this transaction, the Company recorded a pretax loss of approximately $44,600 which included charges that were a direct result of the decision to sell the Travel Center. In connection with the sale, the Company entered into a long-term product supply agreement with Pilot. The Company will receive a supply agreement performance payment at the end of five years if there has been no material breach under the supply agreement and all requirements have been met for such payment. Included in "Other Assets" as assets held for sale in the accompanying Consolidated Balance Sheets are the following categories of assets. All of these assets are being marketed for sale. In the first six months of 2003, two closed retail units were sold and impairment write- downs of $400,000 were recorded relating to various other assets.
June 30, December 31, 2003 2002 ------------- ----------------- (In thousands) Operating retail units included in discontinued operations: Property, plant and equipment..................... $ 637 $ 9,170 Inventories....................................... 166 361 ------- ------- 803 9,531 Vacant land - residential/commercial property......... 6,278 6,351 Closed retail units................................... 1,735 2,376 Vacant land - industrial site......................... 1,596 1,596 Vacant land - adjacent to retail units................ 1,189 1,201 ------- ------- $11,601 $21,055 ======= =======
NOTE 7 - EARNINGS PER SHARE: The following table sets forth the computation of basic and diluted earnings (loss) per share:
Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2003 2002 2003 2002 -------- --------- -------- --------- Numerator (In thousands) Earnings (loss) from continuing operations.............. $ 769 $ (3,825) $ 3,127 $ (3,366) Loss from discontinued operations.... (322) (459) (349) (795) Cumulative effect of change in accounting principle............... - - (704) - -------- --------- -------- --------- Net earnings (loss).................. $ 447 $ (4,284) $ 2,074 $ (4,161) ======== ========= ======== =========
Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2003 2002 2003 2002 --------- --------- --------- --------- Denominator Basic - weighted average shares outstanding................. 8,780,857 8,566,271 8,676,895 8,560,109 Effect of dilutive stock options..... 80,966 -* 61,851 -* --------- --------- --------- --------- Diluted - weighted average shares outstanding................. 8,861,823 8,566,271 8,738,746 8,560,109 ========= ========= ========= ========= *The additional shares would be antidilutive due to the net loss.
Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2003 2002 2003 2002 -------- --------- -------- --------- Basic Earnings (Loss) Per Share Earnings (loss) from continuing operations......................... $ 0.09 $ (0.45) $ 0.36 $ (0.40) Loss from discontinued operations.... (0.04) (0.05) (0.04) (0.09) Cumulative effect of change in accounting principle............... - - (0.08) - -------- --------- -------- --------- Net earnings (loss).................. $ 0.05 $ (0.50) $ 0.24 $ (0.49) ======== ========= ======== =========
Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2003 2002 2003 2002 -------- --------- -------- --------- Diluted Earnings (Loss) Per Share Earnings (loss) from continuing operations......................... $ 0.09 $ (0.45) $ 0.36 $ (0.40) Loss from discontinued operations.... (0.04) (0.05) (0.04) (0.09) Cumulative effect of change in accounting principle............... - - (0.08) - -------- --------- -------- --------- Net earnings (loss).................. $ 0.05 $ (0.50) $ 0.24 $ (0.49) ======== ========= ======== =========
On April 3, 2003, the Company contributed 213,776 newly issued shares of its common stock to its 401(k) plan as a discretionary contribution for the year 2002. On May 9, 2003, the Company granted 140,500 stock options under its 1998 Stock Incentive Plan. At June 30, 2003, there were 8,785,555 shares of the Company's common stock outstanding. There were no transactions subsequent to June 30, 2003, that if the transactions had occurred before June 30, 2003, would materially change the number of common shares or potential common shares outstanding as of June 30, 2003. NOTE 8 - STOCK-BASED EMPLOYEE COMPENSATION: The Company has a stock-based employee compensation plan that is more fully described in Note 16 to the Company's Annual Report on Form 10-K for the year ended December 31, 2002. The Company accounts for this plan under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related Interpretations. The Company uses the intrinsic value method to account for stock-based employee compensation. No stock- based employee compensation cost is reflected in net income, as all options granted under this plan had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net earnings (loss) and net earnings (loss) per share as if the Company had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation", to stock-based employee compensation.
Three Months Ended Six Months Ended June 30, June 30, ------------------ ----------------- 2003 2002 2003 2002 ------- ------- ------- ------- (In thousands, except per share data) Net earnings (loss), as reported......... $ 447 $(4,284) $ 2,074 $(4,161) Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects............................ 55 52 94 127 ------- ------- ------- ------- Pro forma net earnings (loss)............ $ 392 $(4,336) $ 1,980 $(4,288) ======= ======= ======= ======= Net earnings (loss) per share: Basic - as reported.................... $ 0.05 $ (0.50) $ 0.24 $ (0.49) ======= ======= ======= ======= Basic - pro forma...................... $ 0.04 $ (0.51) $ 0.23 $ (0.50) ======= ======= ======= ======= Diluted - as reported.................. $ 0.05 $ (0.50) $ 0.24 $ (0.49) ======= ======= ======= ======= Diluted - pro forma.................... $ 0.04 $ (0.51) $ 0.23 $ (0.50) ======= ======= ======= =======
NOTE 9 - INVENTORIES:
June 30, 2003 December 31, 2002 ------------- ----------------- (In thousands) First-in, first-out ("FIFO") method: Crude oil............................ $ 53,116 $ 34,192 Refined products..................... 55,357 59,896 Refinery and shop supplies........... 11,737 11,362 Merchandise.......................... 3,269 3,374 Retail method: Merchandise.......................... 10,018 8,797 -------- -------- Subtotal........................... 133,497 117,621 Adjustment for last-in, first-out ("LIFO") method............ (12,621) (9,641) -------- -------- Total.............................. $120,876 $107,980 ======== ========
The portion of inventories valued on a LIFO basis totaled $81,894,000 and $70,329,000 at June 30, 2003 and December 31, 2002, respectively. The following data will facilitate comparison with the operating results of companies using the FIFO method of inventory valuation. If inventories had been determined using the FIFO method at June 30, 2003 and 2002, net earnings (loss) and diluted earnings (loss) per share amounts for the three months ended June 30, 2003 and 2002, would have been (lower) higher by $(8,644,000) and $(0.98), and $1,003,000 and $0.12, respectively, and net earnings (loss) and diluted earnings (loss) per share amounts for the six months ended June 30, 2003 and 2002, would have been higher by $1,788,000 and $0.20, and $914,000 and $0.11, respectively. For interim reporting purposes, inventory increments expected to be liquidated by year-end are valued at the most recent acquisition costs, and inventory liquidations that are expected to be reinstated by year end are ignored for LIFO inventory valuation calculations. The LIFO effects of inventory increments not expected to be liquidated by year-end, and the LIFO effects of inventory liquidations not expected to be reinstated by year-end, are recorded in the period such increments and liquidations occur. NOTE 10 - DERIVATIVE INSTRUMENTS: The Company is exposed to various market risks, including changes in certain commodity prices and interest rates. To manage the volatility relating to these normal business exposures, the Company, from time to time, uses commodity futures and options contracts to reduce price volatility, to fix margins in its refining and marketing operations and to protect against price declines associated with its crude oil and finished products inventories. In the first half of 2003, the Company entered into various crude oil and gasoline futures contracts in order to economically hedge crude oil and other inventories and purchases for the Yorktown refinery operations. For the three and six months ended June 30, 2003, the Company recognized losses on these contracts of approximately $161,000 and $1,594,000, respectively, in cost of products sold. These transactions did not qualify for hedge accounting in accordance with SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities," as amended, and accordingly were marked to market each month. There were no open crude oil futures contracts or other commodity derivative contracts at June 30, 2003. NOTE 11 - LONG-TERM DEBT: Long-term debt consists of the following:
June 30, 2003 December 31, 2002 ------------- ----------------- (In thousands) 11% senior subordinated notes, due 2012, net of unamortized discount of $5,474 and $5,651, interest payable semi-annually...................... $194,526 $194,349 9% senior subordinated notes, due 2007, interest payable semi-annually...................... 150,000 150,000 Senior secured revolving credit facility, due 2005, floating interest rate, interest payable monthly.... 10,000 25,000 Senior secured mortgage loan facility, due 2005, floating interest rate, principal and interest payable monthly..................................... 26,000 32,222 Capital lease obligations, 11.3%, due through 2007, interest payable monthly.............. 6,664 6,703 Other................................................. 31 46 -------- -------- Subtotal............................................ 387,221 408,320 Less current portion.................................. (8,473) (10,251) -------- -------- Total............................................... $378,748 $398,069 ======== ========
Repayment of both the 11% and 9% senior subordinated notes (collectively, the "Notes") is jointly and severally guaranteed on an unconditional basis by the Company's direct and indirect wholly-owned subsidiaries, subject to a limitation designed to ensure that such guarantees do not constitute a fraudulent conveyance. Except as otherwise specified in the indentures pursuant to which the Notes were issued, there are no restrictions on the ability of such subsidiaries to transfer funds to the Company in the form of cash dividends, loans or advances. General provisions of applicable state law, however, may limit the ability of any subsidiary to pay dividends or make distributions to the Company in certain circumstances. Separate financial statements of the Company's subsidiaries are not included herein because the aggregate assets, liabilities, earnings, and equity of the subsidiaries are substantially equivalent to the assets, liabilities, earnings, and equity of the Company on a consolidated basis; the subsidiaries are jointly and severally liable for the repayment of the Notes; and the separate financial statements and other disclosures concerning the subsidiaries are not deemed by the Company to be material to investors. The Company has a $100,000,000 three-year senior secured revolving credit facility (the "Credit Facility") with a group of banks. The Company also has a $40,000,000 three-year senior secured mortgage loan facility (the "Loan Facility") with a group of financial institutions. The Credit Facility is primarily a working capital and letter of credit facility. The availability of funds under this facility is the lesser of (i) $100,000,000, or (ii) the amount determined under a borrowing base calculation tied to the eligible accounts receivable and inventories. At June 30, 2003, the availability of funds under the Credit Facility was $100,000,000. There were $10,000,000 in direct borrowings outstanding under this facility at June 30, 2003, and there were approximately $35,103,000 of irrevocable letters of credit outstanding, primarily to crude oil suppliers, insurance companies and regulatory agencies. On July 31, 2003, there were no direct borrowings outstanding under this facility and there were approximately $36,410,000 of irrevocable letters of credit outstanding. The interest rate applicable to the Credit Facility is tied to various short-term indices. At June 30, 2003, this rate was approximately 4.9% per annum. The Company is required to pay a quarterly commitment fee of 0.50% per annum of the unused amount of the facility. The obligations under the Credit Facility are guaranteed by each of the Company's principal subsidiaries and secured by a security interest in the personal property of the Company and the personal property of the Company's subsidiaries, including accounts receivable, inventory, contracts, chattel paper, trademarks, copyrights, patents, license rights, deposit and investment accounts and general intangibles. The obligations under the Credit Facility also are secured by first priority liens on the Bloomfield and Ciniza refineries, including the land, improvements, equipment and fixtures related to the refineries; certain identified New Mexico service station/convenience stores; the stock of the Company's various direct and indirect subsidiaries; and all proceeds and products of this additional collateral. The lenders under the Loan Facility are entitled to participate with the lenders under the Credit Facility in this additional collateral pro rata based on the obligations owed by the Company under the Credit Facility and the Loan Facility. The Credit Facility contains negative covenants limiting, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness; create liens; dispose of assets; make capital expenditures through 2003; consolidate or merge; make loans and investments; enter into transactions with affiliates; use loan proceeds for certain purposes; guarantee obligations and incur contingent obligations; enter into agreements restricting the ability of subsidiaries to pay dividends to the Company; make distributions or stock repurchases; make significant changes in accounting practices or change the Company's fiscal year; and except on terms acceptable to the senior secured lenders, to prepay or modify subordinated indebtedness. The Credit Facility also requires the Company to meet certain financial covenants, including maintaining a minimum consolidated tangible net worth, a minimum fixed charge coverage ratio, a total leverage ratio, and a senior leverage ratio of consolidated senior indebtedness to consolidated Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"); and achieve a minimum quarterly consolidated EBITDA. The Company also was required to, and did, prepay $15,000,000 of the outstanding principal amount of the Credit Facility from the proceeds of asset sales occurring between October 1, 2002 and June 30, 2003. Pursuant to the Loan Facility, the Company issued notes to the lenders, which bear interest at a rate that is tied to various short-term indices. At June 30, 2003, this rate was approximately 6.7% per annum. The remainder of the notes fully amortize during the three-year term as follows: remainder of 2003 - $4,000,000, 2004 - $11,111,000, and 2005 - $10,889,000. The Loan Facility is secured by the Yorktown refinery property, fixtures and equipment, excluding inventory, accounts receivable and other Yorktown refinery assets securing the Credit Facility. The Company and its principal subsidiaries also guarantee the loan and have granted the lenders the same additional collateral as described above in connection with the Credit Facility. The Loan Facility contains the same negative covenants as in the Credit Facility and requires the Company to meet the same financial covenants as in the Credit Facility. The Company's failure to satisfy any of the covenants in the Credit Facility and the Loan Facility is an event of default under both facilities. Both facilities also include other customary events of default, including, among other things, a cross-default to the Company's other material indebtedness and certain changes of control. NOTE 12 - COMMITMENTS AND CONTINGENCIES: Various legal actions, claims, assessments and other contingencies arising in the normal course of the Company's business, including those matters described below, are pending against the Company and certain of its subsidiaries. Certain of these matters involve or may involve significant claims for compensatory, punitive or other damages. These matters are subject to many uncertainties, and it is possible that some of these matters could be ultimately decided, resolved or settled adversely. The Company has recorded accruals for losses related to those matters that it considers to be probable and that can be reasonably estimated. Although the ultimate amount of liability at June 30, 2003, that may result from those matters for which the Company has recorded accruals is not ascertainable, the Company believes that any amounts exceeding the Company's recorded accruals should not materially affect the Company's financial condition. It is possible, however, that the ultimate resolution of these matters could result in a material adverse effect on the Company's results of operations for a particular reporting period. Federal, state and local laws and regulations relating to the environment, health, and safety affect nearly all of the operations of the Company. As is the case with all companies engaged in similar industries, the Company faces significant exposure from actual or potential claims and lawsuits brought by either governmental authorities or private parties, alleging non-compliance with environmental, health, and safety laws and regulations, or property damage or personal injury caused by the environmental, health, or safety impacts of current or historic operations. These matters include soil and water contamination, air pollution and personal injuries or property damage allegedly caused by substances manufactured, handled, used, released or disposed of by the Company or by its predecessors. Future expenditures related to compliance with environmental, health, and safety laws and regulations, the investigation and remediation of contamination, and the defense or settlement of governmental or private property claims and lawsuits cannot be reasonably quantified in many circumstances for various reasons. These reasons include the speculative nature of remediation and clean-up cost estimates and methods, imprecise and conflicting data regarding the hazardous nature of various types of substances, the number of other potentially responsible parties involved, various defenses that may be available to the Company and changing environmental, health, and safety laws, regulations, and their respective interpretations. ENVIRONMENTAL ACCRUALS As of June 30, 2003 and December 31, 2002, the Company had environmental liability accruals of approximately $8,040,000 and $8,367,000, respectively, which are summarized below. Environmental accruals are recorded in the current and long-term sections of the Company's Consolidated Balance Sheets.
Summary of Environmental Contingencies (In thousands) December 31, Increase June 30, 2002 (Decrease) Payments 2003 ------------ ---------- -------- -------- Farmington Refinery....................... $ 570 $ - $ - $ 570 Ciniza - Land Treatment Facility.......... 189 - - 189 Bloomfield Tank Farm (Old Terminal)....... 89 - (20) 69 Ciniza - Solid Waste Management Units..... 275 - - 275 Bloomfield Refinery....................... 310 - (30) 280 Ciniza Well Closures...................... 100 - - 100 Retail Service Stations - Various......... 119 125 (7) 237 Yorktown Refinery......................... 6,715 - (395) 6,320 ------- ------- ------- ------- Totals................................. $ 8,367 $ 125 $ (452) $ 8,040 ======= ======= ======= =======
At June 30, 2003, approximately $7,239,000 of these accruals were for the following projects: (i) the remediation of the hydrocarbon plume that appears to extend no more than 1,800 feet south of the Company's inactive Farmington refinery; (ii) environmental obligations assumed in connection with the acquisitions of the Yorktown refinery and the Bloomfield refinery; and (iii) hydrocarbon contamination on and adjacent to the 5.5 acres that the Company owns in Bloomfield, New Mexico. The remaining amount of the accrual relates to the closure of certain solid waste management units at the Ciniza refinery, which is being conducted in accordance with the refinery's Resource Conservation and Recovery Act permit; closure of the Ciniza refinery land treatment facility including post-closure expenses; estimated monitoring well closure costs at the Ciniza refinery; and amounts for smaller remediation projects. NOTICES OF VIOLATION AT FOUR CORNERS REFINERIES In June 2002, the Company received a draft compliance order from the New Mexico Environment Department ("NMED") in connection with alleged violations of air quality regulations at the Ciniza refinery. These alleged violations relate to an inspection completed in April 2001. In August 2002, the Company received a compliance order from NMED in connection with alleged violations of air quality regulations at the Bloomfield refinery. These alleged violations relate to an inspection completed in September 2001. In the second quarter of 2003 the United States Environmental Protection Agency ("EPA") informally advised the Company that it also intended to allege air quality violations in connection with the 2001 inspections at both refineries. The Company has since participated in joint meetings with NMED and EPA. At a meeting in July 2003, NMED stated its intention to increase the number of violations at both refineries, from nine to 19, and that potential penalties could increase from approximately $684,000 to approximately $1,500,000. At the same meeting, EPA stated that potential penalties it would assert could range as high as $1,000,000. Subsequently, EPA informally advised the Company that it would not proceed with one of its alleged violations, which the Company expects will reduce EPA's potential penalty to $500,000. The Company is continuing discussions with NMED and EPA with respect to both of the above matters. These discussions may result in the modification or dismissal of some of the alleged violations and reductions in the amount of potential penalties. In lieu of monetary penalties and as part of an administrative settlement, EPA may require the Company to undertake an enhanced leak detection and repair program, permanent reductions in overall flaring, and environmentally beneficial projects, known as Supplemental Environmental Projects ("SEPs"). The Company has not yet determined the nature or scope of any SEPs to be proposed. FARMINGTON REFINERY MATTERS In 1973, the Company constructed the Farmington refinery that was operated until 1982. The Company became aware of soil and shallow groundwater contamination at this facility in 1985. The Company hired environmental consulting firms to investigate the contamination and undertake remedial action. The consultants identified several areas of contamination in the soils and shallow groundwater underlying the Farmington property. A consultant to the Company has indicated that contamination attributable to past operations at the Farmington property has migrated off the refinery property, including a hydrocarbon plume that appears to extend no more than 1,800 feet south of the refinery property. Remediation activities are ongoing by the Company under the supervision of the New Mexico Oil Conservation Division ("OCD"), although no cleanup order has been received. The Company's environmental reserve for this matter is approximately $570,000. LEE ACRES LANDFILL The Farmington refinery property is located adjacent to the Lee Acres Landfill (the "Landfill"), a closed landfill formerly operated by San Juan County, which is situated on lands owned by the United States Bureau of Land Management (the "BLM"). Industrial and municipal wastes were disposed of in the Landfill by numerous sources. While the Landfill was operational, the Company used it to dispose of office trash, maintenance shop trash, used tires and water from the Farmington refinery's evaporation pond. The Landfill was added to the National Priorities List as a Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") Superfund site in 1990. In connection with this listing, EPA defined the site as the Landfill and the Landfill's associated groundwater plume. EPA excluded any releases from the Farmington refinery itself from the definition of the site. In May 1991, EPA notified the Company that it may be a potentially responsible party under CERCLA for the release or threatened release of hazardous substances, pollutants or contaminants at the Landfill. BLM made a proposed plan of action for the Landfill available to the public in 1996. Remediation alternatives examined by BLM in connection with the development of its proposed plan ranged in projected cost from no cost to approximately $14,500,000. BLM proposed the adoption of a remedial action alternative that it believes would cost approximately $3,900,000 to implement. BLM's $3,900,000 cost estimate is based on certain assumptions that may or may not prove to be correct and is contingent on confirmation that the remedial actions, once implemented, are adequately addressing Landfill contamination. For example, if assumptions regarding groundwater mobility and contamination levels are incorrect, BLM is proposing to take additional remedial actions with an estimated cost of approximately $1,800,000. BLM has received public comment on its proposed plan. The final remedy for the site, however, has not yet been selected. Although the Company was given reason to believe that a final remedy would be selected in 2002, that selection did not occur. The Company has been advised that the site remedy may be announced in 2003. In 1989, a consultant to the Company estimated, based on various assumptions, that the Company's share of potential liability could be approximately $1,200,000. This amount was based upon estimated Landfill remediation costs significantly higher than those being proposed by BLM. The amount also was based on the consultant's evaluation of such factors as available clean-up technology, BLM's involvement at the site and the number of other entities that may have had involvement at the site, but did not include an analysis of all of the Company's potential legal defenses and arguments, including possible setoff rights. Potentially responsible party liability is joint and several, such that a responsible party may be liable for all of the clean-up costs at a site even though the party was responsible for only a small part of such costs. Although it is possible that the Company may ultimately incur liability for clean-up costs associated with the Landfill, a reasonable estimate of the amount of this liability, if any, cannot be made at this time because, among other reasons, the final site remedy has not been selected, a number of entities had involvement at the site, allocation of responsibility among potentially responsible parties has not yet been made, and potentially applicable factual and legal issues have not been resolved. The Company has not recorded a liability in relation to BLM's proposed plan because the amount of any potential liability is currently not determinable. BLM may assert claims against the Company and others for reimbursement of investigative, cleanup and other costs incurred by BLM in connection with the Landfill and surrounding areas. It is also possible that the Company will assert claims against BLM in connection with contamination that may be originating from the Landfill. Private parties and other governmental entities also may assert claims against BLM, the Company and others for property damage, personal injury and other damages allegedly arising out of any contamination originating from the Landfill and the Farmington property. Parties also may request judicial determination of their rights and responsibilities, and the rights and responsibilities of others, in connection with the Landfill and the Farmington property. Currently, however, there is no outstanding litigation against the Company by BLM or any other party. BLOOMFIELD REFINERY ENVIRONMENTAL OBLIGATIONS In connection with the acquisition of the Bloomfield refinery, the Company assumed certain environmental obligations including Bloomfield Refining Company's ("BRC") obligations under an administrative order issued by EPA in 1992 pursuant to the Resource Conservation and Recovery Act (the "Order"). The Order required BRC to investigate and propose measures for correcting any releases of hazardous waste or hazardous constituents at or from the Bloomfield refinery. EPA has delegated its oversight authority over the Order to NMED's Hazardous Waste Bureau ("HWB"). In 2000, the OCD approved the groundwater discharge permit for the refinery, which included an abatement plan that addressed the Company's environmental obligations under the Order. Discussions between OCD, HWB and the Company have resulted in revisions to the abatement plan. As of June 30, 2003, the Company had an accrual of $280,000 for remediation expenses associated with the abatement plan, and anticipates that these expenses will be incurred through approximately 2018. BLOOMFIELD TANK FARM (OLD TERMINAL) The Company has discovered hydrocarbon contamination adjacent to a 55,000 barrel crude oil storage tank (the "Tank") that was located in Bloomfield, New Mexico. The Company believes that all or a portion of the Tank and the 5.5 acres owned by the Company on which the Tank was located may have been a part of a refinery, owned by various other parties, that, to the Company's knowledge, ceased operations in the early 1960s. The Company received approval to conduct a pilot bioventing project to address remaining contamination at the site, which was completed in June 2001. Based on the results of the pilot project, the Company submitted a remediation plan to OCD proposing the use of bioventing to address the remaining contamination. This remediation plan was approved by OCD in June 2002, work on the bioventing project began in January 2003 and active remediation is currently in process. The Company anticipates that it will incur soil remediation expenses through approximately 2004 in connection with the bioventing plan followed by continued groundwater monitoring and testing until natural attenuation has completed the process of groundwater remediation. At June 30, 2003, the Company had an environmental accrual of $69,000 for this matter. YORKTOWN ENVIRONMENTAL LIABILITIES The Company assumed certain liabilities and obligations in connection with its purchase of the Yorktown refinery from BP, but was provided with specified levels of indemnification for certain matters. In view of the indemnification from BP, the Company established an environmental accrual for the liabilities and obligations assumed. This accrual currently has a balance of approximately $6,320,000. These liabilities and obligations include, subject to certain exceptions and indemnifications, all obligations, responsibilities, liabilities, costs and expenses under environmental, health, and safety laws that are caused by, arise from, or are incurred in connection with or relate in any way to the ownership or operation of the refinery. The Company has agreed to indemnify BP from and against losses of any kind incurred in connection with or related to liabilities and obligations assumed by the Company. The Company only has limited indemnification rights against BP. Environmental obligations assumed by the Company include BP's responsibilities under a consent decree among various parties covering many locations. Parties to the consent decree include the United States, BP Exploration and Oil Co., Amoco Oil Company, and Atlantic Richfield Company. The Company assumed BP's responsibilities as of January 18, 2001, the date the consent decree was lodged with the court. As applicable to the Yorktown refinery, the consent decree requires, among other things, reduction of NOx, SO2 and particulate matter emissions and adoption of enhancements to the refinery's leak detection and repair program. The Company estimates that it will incur capital expenditures in the approximate amount of $20,000,000 to $27,000,000 to comply with the Consent Decree and that these costs will be incurred over a period of approximately five years, although the Company believes most of the expenditures will be incurred in 2006. In addition, the Company estimates that it will incur operating expenses associated with the requirements of the Consent Decree of approximately $1,600,000 to $2,600,000 per year. The environmental obligations assumed in connection with the Yorktown acquisition also include BP's obligations under an administrative order (the "Yorktown Order") issued by EPA in 1991 pursuant to the Resource Conservation and Recovery Act ("RCRA"). The Yorktown Order requires an investigation of certain areas of the refinery and the development of measures to correct any releases of contaminants or hazardous constituents found in these areas. A RCRA Facility Investigation and a Corrective Measures Study ("RFI/CMS") already has been prepared. It was revised by BP, in draft form, to incorporate comments from EPA and the Virginia Department of Environmental Quality ("VDEQ"), although a final RFI/CMS has not yet been approved. The draft RFI/CMS proposes certain investigation, sampling, monitoring, and cleanup measures, including the construction of an on-site corrective action management unit that would be used to consolidate hazardous materials associated with these measures. These proposed actions relate to soil, sludge, and remediation wastes relating to certain solid waste management units, groundwater in the aquifers underlying the refinery, and surface water and sediment in a small pond and tidal salt marsh on the refinery property. The Company anticipates that EPA may issue a proposed course of action for public comment in the second half of 2003. Following the public comment period, EPA will issue an approved RFI/CMS in coordination with VDEQ and will make a final remedy decision. The Company estimates that expenses associated with the actions described in the proposed RFI/CMS will cost approximately $19,000,000 to $21,000,000, and will be incurred over a period of approximately 30 years, with approximately $5,000,000 of this amount being incurred over an initial 3-year period, and additional expenditures in the approximate amount of $5,000,000 being incurred over the following 3-year period. The Company, however, may not be responsible for all of these expenditures as a result of the environmental indemnification provisions included in its purchase agreement with BP, as more fully discussed below. BP has agreed to indemnify, defend, save and hold the Company harmless from and against all losses that are caused by, arising from, incurred in connection with or relate in any way to property damage caused by, or any environmental remediation required due to, a violation of health, safety and environmental laws during the operation of the refinery by BP. In order to have a claim against BP, however, the aggregate of all such losses must exceed $5,000,000, in which event a claim only relates to the amount exceeding $5,000,000. After $5,000,000 is reached, a claim is limited to 50% of the amount by which the losses exceed $5,000,000 until the aggregate of all such losses exceeds $10,000,000. After $10,000,000 is reached, a claim would be for 100% of the amount by which the losses exceed $10,000,000. In applying these provisions, losses amounting to less than $250,000 in the aggregate arising out of the same occurrence or matter are not aggregated with any other losses for purposes of determining whether and when the $5,000,000 or $10,000,000 has been reached. After the $5,000,000 or $10,000,000 has been reached, BP has no obligation to indemnify the Company with respect to such matters for any losses amounting to less than $250,000 in the aggregate arising out of the same occurrence or matter. Except as specified in the Yorktown purchase agreement, in order to seek indemnification from BP, the Company must notify BP of a claim within two years following the closing date. Further, BP's aggregate liability for indemnification under the refinery purchase agreement, including liability for environmental indemnification, is limited to $35,000,000. On October 21, 2002, the Company received a notice from EPA assessing the Company a penalty under the consent decree in connection with a hydrocarbon flaring incident at the Yorktown refinery. The flaring occurred during a five-day period in April 2002 following a power outage at the refinery. BP owned the refinery at the time of the incident. On April 14, 2003, the Company settled this penalty in full by making a payment of $50,000 to EPA. The Company has since received reimbursement for the entire amount of the settlement from BP. DEFENSE ENERGY SUPPORT CENTER CLAIM On February 11, 2003, the Company filed a complaint against the United States in the United States Court of Federal Claims in connection with military jet fuel that the Company sold to the Defense Energy Support Center ("DESC") from 1983 through 1994. The Company asserted that the United States, acting through DESC, underpaid for the jet fuel in the approximate amount of $17,000,000. The Company believes that its claims are supported by recent federal court decisions, including decisions from the Court of Federal Claims, dealing with contract provisions similar to those contained in the contracts that are the subject of the Company's claims. The DESC has indicated that it may counterclaim and assert, based on its interpretation of the contract provisions, that the Company owes additional amounts ranging from approximately $2,100,000 to $4,900,000. DESC denied all liability in a motion for partial summary judgment filed in the second quarter of 2003. On July 23, 2003, the Company responded to DESC's motion and filed its own cross-motion for partial summary judgment. Due to the preliminary nature of this matter, there can be no assurance that the Company will ultimately prevail on its claims or DESC's counterclaims, nor is it possible to predict when any payment will be received if the Company is successful. Accordingly, the Company has not recorded a receivable for these claims or a liability for any potential counterclaim. FORMER CEO MATTERS James E. Acridge was terminated as the Company's President and Chief Executive Officer, and was replaced as the Company's Chairman, on March 29, 2002. He remains on the Board of Directors. The Company paid Mr. Acridge the equivalent of his pre-termination base salary until July 26, 2002. In addition, the Company extended the exercise period of Mr. Acridge's stock options until June 29, 2003. These options expired unexercised. On July 22, 2002, Mr. Acridge filed a lawsuit in the Superior Court of Arizona for Maricopa County against current Company officers Messrs. Holliger, Gust, Cox, and Bullerdick, current Company directors Messrs. Bernitsky, Kalen, and Rapport, and as yet unidentified accountants, auditors, appraisers, attorneys, bankers and professional advisors (the "Lawsuit"). Mr. Acridge alleged that the defendants wrongfully interfered with his employment agreement and caused the Company to fire him. The complaint sought unspecified general compensatory damages, punitive damages, and costs and attorneys' fees. The complaint also stated that Mr. Acridge intended to initiate a separate arbitration proceeding against the Company, alleging that the Company breached his employment agreement and violated an implied covenant of good faith and fair dealing. The court subsequently ruled that the claims raised in the Lawsuit were subject to arbitration and the Lawsuit was dismissed. Arbitration proceedings in connection with the claims described above have not yet been initiated. If proceedings are initiated, the claims will be defended vigorously. The Company believes that the named officers and directors of the Company are entitled to indemnification from the Company in connection with the defense of, and any liabilities arising out of, the claims asserted by Mr. Acridge. The Company has an outstanding loan to Mr. Acridge in the principal amount of $5,000,000. In the fourth quarter of 2001, the Company established a reserve for the entire amount of the loan plus interest accrued through December 31, 2001. In view of developments in bankruptcy proceedings relating to Mr. Acridge, the Company has continued to maintain the reserve. In 1998, Giant Arizona executed a lease for approximately 8,176 square feet of additional space from a limited liability company (the "Landlord") in which the bankruptcy estate of Prime Pinnacle (the "Prime Estate") owned a 51% interest. Giant Arizona also executed a sublease with a separate limited liability company controlled by Mr. Acridge for use of the space as an inn. The term for each of the lease and the sublease was for five years, terminating on June 30, 2003. Except in connection with the settlement negotiations discussed below, Giant Arizona never made rental payments to the Landlord, and believes that, in the past, the Landlord received payments directly from the sublessee. In August 2001, the owner of the 49% interest in the Landlord (the "Minority Owner") notified Giant Arizona that the sublessee was delinquent on the payment of the rent due, and on or about December 28, 2001, the Minority Owner filed a derivative lawsuit for and on behalf of the Landlord against Giant Arizona to collect all amounts owing under the lease. Subsequently, the matter was referred to arbitration by court order. Pursuant to a letter dated January 16, 2002, the Company made a formal demand on the sublessee for the sublessee to pay all of the past due amounts and, on May 23, 2002, made a separate demand for arbitration of this matter. In September 2002, the Company negotiated a settlement agreement with the Minority Owner, in which the Company agreed to pay the Landlord approximately $375,000 for rent and other monetary obligations allegedly due under the lease from May 2001 through October 2002, and agreed to be responsible for rental payments from November 2002 through June 2003. All settlement amounts have been paid by the Company and both the lease and sublease have terminated. Notwithstanding the settlement with the Landlord (now owned 100% by the Minority Owner), the Company's arbitration action against the sublessee is still in process. Mr. Acridge personally, and three entities controlled by Mr. Acridge, have commenced Chapter 11 Bankruptcy proceedings. The entities controlled by Mr. Acridge are Pinnacle Rodeo LLC ("Pinnacle Rodeo"), Pinnacle Rawhide LLC ("Pinnacle Rawhide"), and Prime Pinnacle Peak Properties, Inc. ("Prime Pinnacle"). The four bankruptcy cases are jointly administered. The Company has filed proofs of claim in the bankruptcy proceeding seeking to recover certain amounts it alleges are owed to the Company by Mr. Acridge, including amounts relating to the outstanding $5,000,000 loan and the above-described lease. Further, the Company has filed a complaint in the bankruptcy proceeding in which it seeks a determination that certain of the amounts it asserts are owed by Mr. Acridge are not dischargeable in bankruptcy. It is unknown whether and to what extent creditors, including the Company, will receive any recovery on their respective debts from any of the four bankruptcy estates or whether the Company will be successful in pursuing its non-dischargeability complaint. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CRITICAL ACCOUNTING POLICIES Inherent in the preparation of the Company's financial statements are the selection and application of certain accounting principles, policies, and procedures that affect the amounts that are reported. In order to apply these principles, policies, and procedures, the Company must make judgments, assumptions, and estimates based on the best available information at the time. Actual results may differ based on the accuracy of the information utilized and subsequent events, some of which the Company may have little or no control over. In addition, the methods used in applying the above may result in amounts that differ considerably from those that would result from the application of other acceptable methods. The Company's significant accounting policies are described in Note 1 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002. Certain critical accounting policies that materially affect the amounts recorded in the consolidated financial statements are the use of the LIFO method of valuing certain inventories, the accounting for certain environmental remediation liabilities, the accounting for certain related party transactions, and assessing the possible impairment of certain long-lived assets. There have been no changes to these policies in 2003, except as relates to the adoption of SFAS No. 143 "Accounting for Asset Retirement Obligations". See Note 3 to the Company's Consolidated Financial Statements included in Part I, Item 1. RESULTS OF OPERATIONS Included below are certain operating results and operating data for the Company and its operating segments.
Three Months Six Months Ended June 30, Ended June 30, --------------------- --------------------- 2003 2002 2003 2002 --------- --------- --------- --------- (In thousands, except per share data) Net revenues...................................... $ 409,708 $ 289,578 $ 891,015 $ 468,886 Cost of products sold............................. 339,380 239,911 749,747 375,633 --------- --------- --------- --------- Gross margin...................................... 70,328 49,667 141,268 93,253 Operating expenses................................ 41,486 30,094 80,513 53,282 Depreciation and amortization..................... 9,433 8,748 18,562 16,800 Selling, general and administrative expenses...... 7,272 6,130 14,296 11,555 Net (gain) loss on disposal/write-down of assets.. (177) 504 234 508 --------- --------- --------- --------- Operating income.................................. 12,314 4,191 27,663 11,108 Interest expense.................................. (9,865) (9,527) (20,024) (15,530) Amortization/write-off of financing costs......... (1,197) (909) (2,388) (1,117) Interest and investment income.................... 59 261 83 325 --------- --------- --------- --------- Earnings (loss) from continuing operations before income taxes............................. 1,311 (5,984) 5,334 (5,214) Provision (benefit) for income taxes.............. 542 (2,159) 2,207 (1,848) --------- --------- --------- --------- Earnings (loss) from continuing operations before cumulative effect of change in accounting principle....................... 769 (3,825) 3,127 (3,366) Discontinued operations, net of income tax benefit of $214, $306, $233 and $531............ (322) (459) (349) (795) Cumulative effect of change in accounting principle, net of income tax benefit of $468.... - - (704) - --------- --------- --------- --------- Net earnings (loss)............................... $ 447 $ (4,284) $ 2,074 $ (4,161) ========= ========= ========= ========= Net earnings (loss) per common share: Basic Continuing operations......................... $ 0.09 $ (0.45) $ 0.36 $ (0.40) Discontinued operations....................... (0.04) (0.05) (0.04) (0.09) Cumulative effect of change in accounting principle..................... - - (0.08) - --------- --------- --------- --------- $ 0.05 $ (0.50) $ 0.24 $ (0.49) ========= ========= ========= ========= Assuming dilution Continuing operations......................... $ 0.09 $ (0.45) $ 0.36 $ (0.40) Discontinued operations....................... (0.04) (0.05) (0.04) (0.09) Cumulative effect of change in accounting principle..................... - - (0.08) - --------- --------- --------- --------- $ 0.05 $ (0.50) $ 0.24 $ (0.49) ========= ========= ========= =========
Three Months Six Months Ended June 30, Ended June 30, --------------------- --------------------- 2003 2002 2003 2002 --------- --------- --------- --------- (In thousands) Net revenues:(1) Refining Group: Four Corners operations...................... $ 115,464 $ 113,951 $ 246,013 $ 202,169 Yorktown operations(2)....................... 157,710 72,900 373,774 72,900 Retail Group................................... 82,793 75,651 158,200 137,430 Phoenix Fuel................................... 110,092 84,622 231,980 160,254 Other.......................................... 145 40 210 90 Intersegment................................... (56,496) (57,586) (119,162) (103,957) --------- --------- --------- --------- Net revenues of continuing operations.......... 409,708 289,578 891,015 468,886 Net revenues of discontinued operations........ 8,106 15,811 19,410 30,248 --------- --------- --------- --------- Total net revenues............................. $ 417,814 $ 305,389 $ 910,425 $ 499,134 ========= ========= ========= ========= Income (loss) from operations:(1) Refining Group: Four Corners operations...................... $ 12,715 $ 8,356 $ 22,218 $ 17,406 Yorktown operations(2)....................... (2,847) (3,090) 5,511 (3,090) Retail Group................................... 5,018 2,096 6,235 1,968 Phoenix fuel................................... 2,284 1,566 3,890 3,039 Other.......................................... (5,033) (4,233) (9,957) (7,707) Net gain (loss) on disposal/write-down of assets.................................... 177 (504) (234) (508) --------- --------- --------- --------- Operating income from continuing operations.... 12,314 4,191 27,663 11,108 Operating loss from discontinued operations.... (536) (765) (582) (1,326) --------- --------- --------- --------- Total income from operations................... $ 11,778 $ 3,426 $ 27,081 $ 9,782 ========= ========= ========= ========= (1) The Refining Group operates the Company's three refineries, its crude oil gathering pipeline system, two finished products distribution terminals, and a fleet of crude oil and finished product truck transports. The Retail Group operates the Company's service stations with convenience stores or kiosks. Until June 19, 2003, when it was sold, the Retail Group also operated a travel center located on I-40 adjacent to the Ciniza refinery near Gallup, New Mexico. Phoenix Fuel is an industrial/commercial wholesale petroleum products distribution operation, which includes several lubricant and bulk petroleum distribution plants, an unmanned fleet fueling ("cardlock") operation, a bulk lubricant terminal facility, and a fleet of finished product and lubricant delivery trucks. The Other category is primarily corporate staff operations. (2) Acquired May 14, 2002.
Three Months Six Months Ended June 30, Ended June 30, --------------------- --------------------- 2003 2002 2003 2002 --------- --------- --------- --------- Refining Group Operating Data: Four Corners Operations: Crude Oil/NGL Throughput (BPD)................ 31,854 33,144 31,502 33,463 Refinery Sourced Sales Barrels (BPD).......... 30,472 34,060 31,000 32,618 Average Crude Oil Costs ($/Bbl)............... $ 27.90 $ 23.48 $ 29.55 $ 21.17 Refining Margins ($/Bbl)...................... $ 9.41 $ 6.41 $ 8.86 $ 6.86 Yorktown Operations:(1) Crude Oil/NGL Throughput (BPD)................ 52,316 53,563 54,275 53,563 Refinery Sourced Sales Barrels (BPD).......... 54,046 54,610 56,703 54,610 Average Crude Oil Costs ($/Bbl)............... $ 28.06 $ 26.77 $ 30.74 $ 26.77 Refining Margins ($/Bbl)...................... $ 2.82 $ 1.68 $ 3.57 $ 1.68 Retail Group Operating Data: (Continuing operations only) Fuel Gallons Sold (000's)....................... 37,980 38,335 73,180 74,245 Fuel Margins ($/gal)............................ $ 0.233 $ 0.168 $ 0.195 $ 0.155 Merchandise Sales ($ in 000's).................. $ 32,844 $ 33,225 $ 61,520 $ 61,508 Merchandise Margins............................. 29.5% 27.4% 29.8% 27.2% Operating Retail Outlets at Period End: Continuing Operations......................... 126 127 126 127 Discontinued Operations....................... 3 19 3 19 Phoenix Fuel Operating Data: Fuel Gallons Sold (000's)....................... 105,148 90,524 208,185 182,995 Fuel Margins ($/gal)............................ $ 0.055 $ 0.053 $ 0.051 $ 0.053 Lubricant Sales ($ in 000's).................... $ 6,212 $ 5,002 $ 11,827 $ 10,389 Lubricant Margins............................... 15.2% 17.5% 15.7% 17.0% (1) Acquired May 14, 2002.
Certain factors affecting the comparison of the Company's continuing results of operations for the three and six months ended June 30, 2003 with the same periods in 2002, include, among other things, the following: - The acquisition of the Yorktown refinery on May 14, 2002. - The Yorktown refinery began a crude unit and coker unit turnaround at the end of March 2003. The refinery was back in operation April 16, 2003. On April 28, 2003, a transformer failure disrupted operations at the electric generation plant that supplies the Company's Yorktown refinery with power. As a result of the failure, the refinery suffered a complete loss of power and shut down all processing units. The refinery was operating at full capacity by the middle of May. The Company incurred costs of approximately $1,254,000 as a result of the loss of power, all of which were expensed during the three months ended June 30, 2003, and estimates that reduced production resulted in lost earnings of approximately $3,750,000. - Stronger refining margins at the Company's refineries due to, among other things, lower domestic crude oil and finished product inventories and strong domestic finished product demand, reduced in part by losses on various crude oil futures contracts. - Lower than anticipated crude oil receipts for the Four Corners refineries due to supplier production problems and reduced supply availability resulted in reduced refinery production. - Stronger finished product sales volumes with relatively stable margins for the Company's Phoenix Fuel operations. - Improved retail fuel and merchandise margins in several of the Company's market areas. In addition, the Company is experiencing increased competition in certain of its markets. Earnings (Loss) From Continuing Operations Before Income Taxes - ------------------------------------------------------- For the three months ended June 30, 2003, earnings from continuing operations before income taxes were $1,311,000, compared to a loss of $5,984,000 for the three months ended June 30, 2002, an increase of $7,295,000. This amount includes the following items related to the operation and acquisition of the Yorktown refinery: (i) an operating loss decrease of $243,000; (ii) an increase in the amortization of financing costs of $288,000, and (iii) additional interest expense of $338,000. The remainder of the increase, relating to the Company's other operations, was primarily due to a 47% increase in Four Corners refinery margins. Also contributing to the increase was a 25% increase in wholesale fuel volumes sold by Phoenix Fuel to third-party customers, a 39% increase in retail fuel margins, and an 8% increase in retail merchandise margins. In addition, in the second quarter of 2002 impairment write-downs were recorded for certain retail assets. These increases were offset in part by higher operating expenses and selling, general, and administrative ("SG&A") expenses for other Company operations, and a 9% decrease in Four Corners refinery third party fuel volumes sold. For the six months ended June 30, 2003, earnings from continuing operations before income taxes were $5,334,000, compared to a loss of $5,214,000 for the six months ended June 30, 2002, an increase of $10,548,000. This amount includes the following items related to the operation and acquisition of the Yorktown refinery: (i) an increase in operating earnings of $8,601,000; (ii) an increase in the amortization of financing costs of $1,271,000, and (iii) additional interest expense of $4,493,000. The remainder of the increase, relating to the Company's other operations, was primarily due to a 29% increase in Four Corners refinery margins. Also contributing to the increase was a 22% increase in wholesale fuel volumes sold by Phoenix Fuel to third-party customers, a 26% increase in retail fuel margins, and a 10% increase in retail merchandise margins. These increases were offset in part by higher operating expenses and selling, general, and administrative ("SG&A") expenses for other Company operations, and a 3% decrease in Four Corners refinery third party fuel volumes sold. Revenues From Continuing Operations - ----------------------------------- Revenues for the three months ended June 30, 2003, increased approximately $120,130,000 or 41% to $409,708,000 from $289,578,000 in the comparable 2002 period. The increase includes revenue increases of $84,810,000 for the Yorktown refinery. Revenue increases relating to the Company's other operations were primarily due to a 17% increase in Four Corners refining weighted average selling prices, a 10% increase in Phoenix Fuel's weighted average selling prices, a 25% increase in wholesale fuel volumes sold by Phoenix Fuel to third-party customers, and a 14% increase in retail refined product selling prices. These increases were offset in part by a 9% decline in Four Corners refinery fuel volumes sold to third parties. Same store retail fuel volumes sold were relatively flat, while same store merchandise sales were down slightly. Revenues for the six months ended June 30, 2003, increased approximately $422,129,000 or 90% to $891,015,000 from $468,886,000 in the comparable 2002 period. The increase includes revenue increases of $300,874,000 for the Yorktown refinery. Revenue increases relating to the Company's other operations were primarily due to a 36% increase in Four Corners refining weighted average selling prices, a 22% increase in Phoenix Fuel's weighted average selling prices, a 22% increase in wholesale fuel volumes sold by Phoenix Fuel to third-party customers, and a 22% increase in retail refined product selling prices. These increases were offset in part by a 3% decline in Four Corners refinery fuel volumes sold to third parties. Same store retail fuel volumes sold were down slightly, while same store merchandise sales were relatively flat. Cost of Products Sold From Continuing Operations - ------------------------------------------------ For the three months ended June 30, 2003, cost of products sold increased approximately $99,469,000 or 41% to $339,380,000 from $239,911,000 in the comparable 2002 period. The increase includes cost of products sold increases of $74,954,000 for the Yorktown refinery. Cost of products sold increases relating to the Company's other operations were primarily due to a 19% increase in Four Corners refining weighted average crude oil costs, a 25% increase in wholesale fuel volumes sold by Phoenix Fuel to third-party customers, and a 10% increase in the cost of finished products purchased by Phoenix Fuel. In addition, cost of products sold for 2002 included a gain of approximately $1,970,000 from various crude oil futures contracts used to economically hedge crude oil inventories and purchases for the Yorktown refinery. In 2003, losses of $161,000 were incurred on similar crude oil and gasoline contracts. These increases were offset in part by a 9% decline in Four Corners refinery fuel volumes sold to third parties. For the six months ended June 30, 2003, cost of products sold increased approximately $374,114,000 or 100% to $749,747,000 from $375,633,000 in the comparable 2002 period. The increase includes cost of products sold increases of $267,909,000 for the Yorktown refinery. Cost of products sold increases relating to the Company's other operations were primarily due to a 40% increase in Four Corners refining weighted average crude oil costs, a 22% increase in wholesale fuel volumes sold by Phoenix Fuel to third-party customers, and a 23% increase in the cost of finished products purchased by Phoenix Fuel. In addition, cost of products sold for 2003 included a loss of approximately $1,594,000 from various crude oil and gasoline futures contracts used to economically hedge crude oil and other inventories and purchases for the Yorktown refinery. In 2002, a gain of $1,970,000 was recorded on similar crude oil contracts. These increases were offset in part by a 3% decline in Four Corners refinery fuel volumes sold to third parties. Operating Expenses From Continuing Operations - --------------------------------------------- For the three months ended June 30, 2003, operating expenses increased approximately $11,392,000 or 38% to $41,486,000 from $30,094,000 in the comparable 2002 period. For the six months ended June 30, 2003, operating expenses increased approximately $27,231,000 or 51% to $80,513,000 from $53,282,000 in the comparable 2002 period. The increases include operating expense increases of $8,115,000 and $20,574,000 for the Yorktown refinery for the three and six month periods, respectively. Operating expense increases relating to the Company's other operations in both comparable periods were due to, among other things, higher payroll and related costs, increased purchased fuel costs for the Four Corners refineries, due to higher prices, and higher general insurance premiums for all operations. Depreciation and Amortization From Continuing Operations - -------------------------------------------------------- For the three months ended June 30, 2003, depreciation and amortization increased approximately $685,000 or 8% to $9,433,000 from $8,748,000 in the comparable 2002 period. For the six months ended June 30, 2003, depreciation and amortization increased approximately $1,762,000 or 10% to $18,562,000 from $16,800,000 in the comparable 2002 period. The increases include depreciation and amortization increases of $1,000,000 and $2,734,000 for the Yorktown refinery for the three and six month periods, respectively. Depreciation and amortization decreases relating to the Company's other operations in each comparable period were due to, among other things, lower refinery turnaround amortization costs in 2003, reduced depreciation expense relating to certain retail assets becoming fully depreciated, and the sale of certain pipeline assets in 2002. These decreases were offset in part by higher costs relating to construction, remodeling and upgrades in retail and refining operations during 2003 and 2002. Selling, General and Administrative Expenses From Continuing Operations - ----------------------------------------------------------------------- For the three months ended June 30, 2003, SG&A expenses increased approximately $1,142,000 or 19% to $7,272,000 from $6,130,000 in the comparable 2002 period. For the six months ended June 30, 2003, SG&A expenses increased approximately $2,741,000 or 24% to $14,296,000 from $11,555,000 in the comparable 2002 period. The increases include SG&A expense increases of $376,000 and $846,000 for the Yorktown refinery for the three and six month periods, respectively. SG&A expense increases relating to the Company's other operations in each comparable period were due to, among other things, increased costs for the Company's self-insured health plan due to higher claims experience, higher workers compensation costs, increased letter of credit fees, and higher general insurance premiums. In addition, the first quarter of 2002 included a credit of $471,000 for the revision of estimated accruals for 2001 management incentive bonuses, following the determination of bonuses to be paid to employees. Interest Expense and Interest Income From Continuing Operations - --------------------------------------------------------------- For the three months ended June 30, 2003, interest expense increased approximately $338,000 or 4% to $9,865,000 from $9,527,000 in the comparable 2002 period. For the six months ended June 30, 2003, interest expense increased approximately $4,494,000 or 29% to $20,024,000 from $15,530,000 in the comparable 2002 period. Interest expense increased for the three and six month comparable periods by $1,491,000 and $8,084,000, respectively, related to the issuance of new senior subordinated notes, borrowings under the Company's new loan facilities, and other transactions related to the May 2002 acquisition of the Yorktown refinery. This increase was offset in part by a decrease in interest expense of approximately $1,153,000 and $3,591,000 for the three and six month comparable periods, respectively, relating to the repayment in 2002 of the Company's $100,000,000 of 9 3/4% Senior Subordinated Notes due 2003 (the "9 3/4% Notes") with a portion of the proceeds of the Company's issuance of new senior subordinated notes. For the three and six month comparable periods ended June 30, 2003, interest income decreased approximately $202,000 and $242,000, respectively. The decreases were primarily due to interest received in 2002 on funds held in an escrow account in connection with the acquisition of the Yorktown refinery and a reduction in funds available for investment in short-term instruments since the acquisition of the Yorktown refinery. Amortization/Write-Off of Financing Costs From Continuing Operations - -------------------------------------------------------------------- For the three and six month comparable periods ended June 30, 2003, amortization of financing costs increased $288,000 and $1,271,000, respectively. The increase is due to the amortization of $17,436,000 of deferred financing costs, relating to new senior subordinated debt and new senior secured loan facilities, incurred in connection with the acquisition of the Yorktown refinery and the refinancing of the Company's 9 3/4% Notes. These costs are being amortized over the term of the related debt. In addition, each 2002 period includes the write-off of $364,000 in deferred financing costs relating to the refinancing of the 9 3/4% Notes. Income Taxes From Continuing Operations - --------------------------------------- The effective tax rate for the three and six months ended June 30, 2003 was approximately 41% and effective tax benefit rate for the three and six months ended June 30, 2002 was approximately 36%. The difference in the rates is due to, among other things, permanent tax differences, certain general business tax credits available, and higher tax rates associated with the Company's operations in Virginia. Discontinued Operations - ----------------------- Losses from discontinued operations before income taxes of $536,000 for the three months ended June 30, 2003 include a net loss on the disposal of two retail units and the Company's travel center of $251,000, which includes $12,000 of associated goodwill, an impairment write-down on one closed retail unit of $76,000 and net operating losses of $209,000. Losses from discontinued operations before income taxes of $582,000 for the six months ended June 30, 2003 include a net loss on the disposal of four retail units and the Company's travel center of $113,000, which includes $62,000 of associated goodwill, an impairment write-down on one closed retail unit of $76,000 and net operating losses of $393,000. Losses from discontinued operations before income taxes of $765,000 and $1,326,000 for the three and six months ended June 30, 2002, respectively, include a loss on the disposal of two retail units of $132,000, impairment write-downs of $415,000 on five retail units, and asset write-offs of $8,000. In addition, net operating losses of $210,000 and $771,000 were incurred for the three and six months ended June 30, 2002, respectively. OUTLOOK The Company believes that its refining fundamentals continue to indicate and support an expected improved financial performance over the next several months. Furthermore, the Company continues to actively search for more cost-effective raw material sources for the Yorktown refinery, such as a long-term supply agreement for lower quality or higher acidity crude oils which the Yorktown refinery has the ability to process. The Company hopes to develop some of these arrangements by year-end. In the Company's retail area, fuel and merchandise margins remain strong with same store fuel and merchandise volumes remaining stable. Phoenix Fuel continues to see good growth in both wholesale and cardlock volumes with relatively stable margins. LIQUIDITY AND CAPITAL RESOURCES Cash Flow From Operations - ------------------------- Operating cash flows increased by $23,136,000 for the six months ended June 30, 2003 compared to the six months ended June 30, 2002, primarily as a result of an increase in net earnings before depreciation and amortization, amortization of financing costs, deferred income taxes, and net (gain) loss on disposal/write-down of assets in 2003 and an increase in cash flows related to changes in operating assets and liabilities in each period. Net cash provided by operating activities totaled $28,208,000 and $5,072,000 for the six months ended June 30, 2003 and 2002, respectively. Working Capital - --------------- Working capital at June 30, 2003 consisted of current assets of $222,145,000 and current liabilities of $128,000,000, or a current ratio of 1.74:1. At December 31, 2002, the current ratio was 1.76:1 with current assets of $211,882,000 and current liabilities of $120,351,000. Current assets have increased since December 31, 2002, primarily due to increases in cash and cash equivalents and inventories. These increases were offset in part by decreases in accounts receivable and prepaid expenses and other. Inventories have increased primarily due to increases in refinery onsite crude oil volumes, primarily at Yorktown, and increases in crude oil and refined product prices. These increases were offset, in part, by decreases in refined product volumes at the refineries, terminals, Phoenix Fuel and retail operations. Accounts receivable have decreased primarily due to the receipt of income tax refunds, offset in part by an increases in trade receivables resulting from higher finished product selling prices. Prepaids and other have decreased primarily due to the expensing of prepaid insurance premiums. Current liabilities have increased since December 31, 2002, primarily due to increases in accounts payable and accrued expenses, offset in part by a reduction in the current portion of long-term debt. Accounts payable have increased primarily as a result of higher raw material and finished product costs and volumes. Accrued expenses have increased primarily as a result of higher petroleum product taxes payable, higher workers compensation cost accruals, increased accruals for the Company's self- insured health plan, and accruals for 2003 401(k) Company matching and discretionary contributions. These increases were offset in part by the payment of 2002 401(k) Company matching and discretionary contributions. The current portion of long-term debt declined due to a reduction in the current amount due under the Company's Loan Facility. Capital Expenditures and Resources - ---------------------------------- Net cash used in investing activities for capital expenditures totaled approximately $10,150,000 for the six months ended June 30, 2003. Of this amount, expenditures of approximately $7,696,000 were made for the crude unit and coker unit turnaround at the Yorktown refinery that began at the end of March 2003. The refinery was back in operation on April 16, 2003. Other expenditures were for operational and environmental projects for the refineries and retail operations. On April 28, 2003, a transformer failure disrupted operations at the electric generation plant that supplies the Company's Yorktown refinery with power. As a result of the failure, the refinery suffered a complete loss of power and shut down all processing units. By the middle of May 2003, the refinery was operating at full capacity. The Company incurred costs of approximately $1,254,000 as a result of the loss of power, all of which were expensed in the three months ended June 30, 2003, and estimates that reduced production resulted in lost earnings of approximately $3,750,000. The Company is pursuing reimbursement from the power station owner. There is no guarantee, however, that the Company will be able to recover anything or what the amount of any recovery might be. The Credit Facility and the Loan Facility limit the Company's capital expenditures on a quarterly basis through the fourth quarter of 2003. The limitations permit all capital expenditures currently anticipated for 2003. Prior approval from the Company's lenders would be required to exceed the agreed upon levels, and the Company cannot provide assurance that it could obtain such approval. As part of the Yorktown acquisition, the Company agreed to pay earn- out payments, up to a maximum of $25,000,000 to BP beginning in 2003 and concluding at the end of 2005 when the average monthly spreads for regular reformulated gasoline or No. 2 distillate over West Texas Intermediate equivalent light crude oil on the New York Mercantile Exchange exceed $5.50 or $4.00 per barrel, respectively. For the first half of 2003, the Company incurred $5,475,000 under this provision of the purchase agreement. These earn-out payments are considered additional purchase price and are allocated to the assets acquired in the same proportions as the original purchase price was allocated, not to exceed the estimated current replacement cost, and amortized over the estimated remaining life of the assets. On June 19, 2003, the Company completed the sale of its Giant Travel Center to Pilot Travel Centers LLC ("Pilot") and received net proceeds of approximately $5,820,000, plus an additional $491,000 for inventories. As a result of this transaction, the Company recorded a pretax loss of approximately $44,600 which included charges that were a direct result of the decision to sell the Travel Center. In connection with the sale, the Company entered into a long-term product supply agreement with Pilot. The Company will receive a supply agreement performance payment at the end of five years if there has been no material breach under the supply agreement and all requirements have been met for such payment. The debt reduction strategy implemented by the Company in 2002 is being carried forward into 2003. In the first half of 2003, the Company reduced the outstanding balance of its Credit Facility by $15,000,000 and reduced the outstanding balance of its Loan Facility by $6,222,000. These reductions were paid from operating cash flows and proceeds of approximately $9,347,000 from the sale of assets, primarily five of the Company's retail units and the travel center. On July 22, 2003, the Company entered into a purchase and sale agreement for the sale of an approximate 8-acre tract of land in north Scottsdale that includes its corporate headquarters building, and anticipates receiving proceeds of approximately $10,400,000. The sale is contingent on, among other things, the parties entering into a mutually acceptable leaseback agreement. The Company is marketing a number of its retail service station/convenience stores, including its remaining units in Phoenix, and certain vacant land. The Company also is evaluating the possible sale of other non-strategic or under performing assets in addition to the assets described above. The Company can provide no assurance, however, that it will be able to complete the sales of the assets described above or any other asset sales. The Company currently intends to use the proceeds from the potential sales of assets, and savings or proceeds generated from other parts of the Company's debt reduction initiative, to further reduce long-term debt. The Company's loan facilities required the Company to reduce the outstanding principal balance of its Credit Facility by $15,000,000 from the proceeds of asset sales occurring between October 1, 2002 and June 30, 2003. With the sale of the Company's travel center, this requirement was met prior to June 30, 2003. No further reductions of the Credit Facility's outstanding principal balance from the proceeds of asset sales is required by the Company's loan facilities. The Company has two capital projects relating to its Four Corners refinery operations, in which approximately $3,000,000 of spending has occurred. The projects are currently dormant, although they remain viable. Before the end of 2003, the Company plans to evaluate the future status of these projects and will make a determination as to whether some or all of the costs should be written off. The Company anticipates that working capital, including that necessary for capital expenditures and debt service, will be funded through existing cash balances, cash generated from operating activities, and, if necessary, future borrowings. Future liquidity, both short and long-term, will continue to be primarily dependent on producing or purchasing, and selling, sufficient quantities of refined products at margins sufficient to cover fixed and variable expenses. The Company believes that it will have sufficient working capital to meet its needs over the next 12-month period. Capital Structure - ----------------- At June 30, 2003 and December 31, 2002, the Company's long-term debt was 74.4% and 75.8% of total capital, respectively, and the Company's net debt (long-term debt less cash and cash equivalents) to total capitalization percentages were 73.9% and 75.3%, respectively. At June 30, 2003 the Company had long-term debt of $378,748,000, net of current portion of $8,473,000, including $150,000,000 of 9% Senior Subordinated Notes due 2007 (the "9% Notes") and $200,000,000 of 11% Senior Subordinated Notes due 2012 (the "11% Notes"), collectively, (the "Notes"). See Note 11 to the Company's Consolidated Financial Statements included in Part I, Item 1 for a description of these obligations. Repayment of the Notes is jointly and severally guaranteed on an unconditional basis by the Company's direct and indirect wholly-owned subsidiaries, subject to a limitation designed to ensure that such guarantees do not constitute a fraudulent conveyance. Except as otherwise specified in the indentures pursuant to which the Notes were issued, there are no restrictions on the ability of such subsidiaries to transfer funds to the Company in the form of cash dividends, loans or advances. General provisions of applicable state law, however, may limit the ability of any subsidiary to pay dividends or make distributions to the Company in certain circumstances. Separate financial statements of the Company's subsidiaries are not included herein because the aggregate assets, liabilities, earnings, and equity of the subsidiaries are substantially equivalent to the assets, liabilities, earnings, and equity of the Company on a consolidated basis; the subsidiaries are jointly and severally liable for the repayment of the Notes; and the separate financial statements and other disclosures concerning the subsidiaries are not deemed by the Company to be material to investors. The indentures supporting the Notes and the Company's Credit Facility and Loan Facility contain certain restrictive covenants, and other terms and conditions that if not maintained, if violated, or if certain conditions are met, could result in default, early redemption of the Notes, and affect the Company's ability to borrow funds, make certain payments, or engage in certain activities. A default under any of the Notes, the Credit Facility or the Loan Facility, if not waived, could cause such debt, and by reason of cross-default provisions, the Company's other debt to become immediately due and payable. There is no assurance that any requested waivers would be granted. If the Company is unable to repay amounts owed under the Credit Facility and the Loan Facility, the lenders under the Credit Facility and Loan Facility could proceed against the collateral granted to them to secure that debt. If those lenders accelerate the payment of the Credit Facility and Loan Facility, the Company cannot provide assurance that its assets would be sufficient to pay that debt and other debt or that it would be able to refinance such debt or borrow more money on terms acceptable to it, if at all. The Company's ability to comply with the covenants, and other terms and conditions, of the indentures for the Notes, the Credit Facility and the Loan Facility may be affected by many events beyond the Company's control, and the Company cannot provide assurance that its operating results will be sufficient to comply with the covenants, terms and conditions. The Board suspended the payment of cash dividends on common stock in the fourth quarter of 1998. At the present time, the Company is unable to pay dividends under the terms of the indentures for the Notes and has no plans to reinstate such dividends even if it could. The payment of future dividends is subject to the results of the Company's operations, declaration by the Company's Board of Directors, and compliance with certain debt covenants. Risk Management - --------------- The Company is exposed to various market risks, including changes in certain commodity prices and interest rates. To manage the volatility relating to these normal business exposures, the Company, from time to time, uses commodity futures and options contracts to reduce price volatility, to fix margins in its refining and marketing operations and to protect against price declines associated with its crude oil and finished products inventories. In the first half of 2003, the Company entered into various crude oil and gasoline futures contracts in order to economically hedge crude oil and other inventories and purchases for the Yorktown refinery operations. For the three and six months ended June 30, 2003, the Company recognized losses on these contracts of approximately $161,000 and $1,594,000, respectively, in cost of products sold. These transactions did not qualify for hedge accounting in accordance with SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities," as amended, and accordingly were marked to market each month. There were no open crude oil futures contracts or other commodity derivative contracts at June 30, 2003. The Company's Credit Facility is floating-rate debt tied to various short-term indices. As a result, the Company's annual interest costs associated with this debt may fluctuate. At June 30, 2003, there were $10,000,000 of direct borrowings outstanding under this facility. The potential increase in annual interest expense from a hypothetical 10% adverse change in interest rates on these borrowings at June 30, 2003, would be approximately $11,000. The Company's Loan Facility is floating-rate debt tied to various short-term indices. As a result, the Company's annual interest costs associated with this debt may fluctuate. At June 30, 2003, there was $26,000,000 outstanding under this facility. The potential increase in annual interest expense from a hypothetical 10% adverse change in interest rates on these borrowings at June 30, 2003, would be approximately $29,000. The Company's operations are subject to normal hazards of operations, including fire, explosion and weather-related perils. The Company maintains various insurance coverages, including business interruption insurance, subject to certain deductibles. The Company is not, however, fully insured against certain risks because such risks are not fully insurable, coverage is unavailable or premium costs, in the Company's judgment, do not justify the expenditures. Any such event that causes a loss for which the Company is not fully insured could have a material and adverse effect on the Company's business, financial condition and operating results. Credit risk with respect to customer receivables is concentrated in the geographic areas in which the Company operates and relates primarily to customers in the oil and gas industry. To minimize this risk, the Company performs ongoing credit evaluations of its customers' financial position and requires collateral, such as letters of credit, in certain circumstances. ENVIRONMENTAL, HEALTH AND SAFETY - -------------------------------- Federal, state and local laws and regulations relating to health, safety and the environment affect nearly all of the operations of the Company. As is the case with other companies engaged in similar industries, the Company faces significant exposure from actual or potential claims and lawsuits, brought by either governmental authorities or private parties, alleging non-compliance with environmental, health, and safety laws and regulations, or property damage or personal injury caused by the environmental, health, or safety impacts of current or historic operations. These matters include soil and water contamination, air pollution, and personal injuries or property damage allegedly caused by substances manufactured, handled, used, released, or disposed of by the Company or by its predecessors. Applicable laws and regulations govern the investigation and remediation of contamination at the Company's current and former properties, as well as at third-party sites to which the Company sent wastes for disposal. The Company may be held liable for contamination existing at current or former properties, notwithstanding that a prior operator of the site, or other third party, caused the contamination. The Company may also be held responsible for costs associated with contamination clean-up at third-party disposal sites, notwithstanding that the original disposal activities were in accordance with all applicable regulatory requirements at such time. The Company is currently engaged in a number of such remediation projects. Future expenditures related to compliance with environmental, health and safety laws and regulations, the investigation and remediation of contamination, and the defense or settlement of governmental or private property claims and lawsuits cannot be reasonably quantified in many circumstances for various reasons. These reasons include the speculative nature of remediation and cleanup cost estimates and methods, imprecise and conflicting data regarding the hazardous nature of various types of substances, the number of other potentially responsible parties involved, various defenses that may be available to the Company, and changing environmental, health and safety laws, regulations, and their respective interpretations. The Company cannot provide assurance that compliance with such laws or regulations, such investigations or cleanups, or such enforcement proceedings or private-party claims will not have a material adverse effect on the Company's business, financial condition or results of operations. Rules and regulations implementing federal, state and local laws relating to the environment, health, and safety will continue to affect the operations of the Company. The Company cannot predict what new environmental, health, or safety legislation or regulations will be enacted or become effective in the future or how existing or future laws or regulations will be administered or enforced with respect to products or activities to which they have not been previously applied. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of regulatory agencies, could have an adverse effect on the financial position and the results of operations of the Company and could require substantial expenditures by the Company for, among other things: (i) the installation and operation of refinery equipment, pollution control systems and other equipment not currently possessed by the Company; (ii) the acquisition or modification of permits applicable to Company activities; and (iii) the initiation or modification of cleanup activities. Significant developments have occurred in connection with the following environmental, health or safety matters that were previously discussed: (i) in the Company's Annual Report on Form 10-K for the year ended December 31, 2002, under the heading "Regulatory, Environmental and Other Matters", the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations", or Note 18 to the Company's Consolidated Financial Statements; or (ii) the Company's Quarterly Report on Form 10-Q for the first quarter of 2003 under the heading "Environmental, Health and Safety", the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" or Note 11 to the Company's Consolidated Financial Statements. The Company received a draft compliance order from the New Mexico Environment Department ("NMED") in June 2002 in connection with alleged violations of air quality regulations at the Ciniza refinery. In August 2002, the Company received a compliance order from NMED in connection with alleged violations of air quality regulations at the Bloomfield refinery. In July 2003, NMED stated its intention to increase the number of alleged violations at both refineries and the amount of potential penalties. In July 2003, the United States Environmental Protection Agency ("EPA") also represented that it would assert violations and impose monetary penalties. The Company has engaged in conversations with NMED and EPA in connection with both of these matters, which may result in the modification or dismissal of some of the alleged violations and reductions in the amount of potential penalties. A further discussion of these alleged violations is found in Note 12 to the Company's Consolidated Financial Statements included in Part I, Item 1. The Company was assessed a penalty by the EPA in 2002 in connection with a hydrocarbon flaring incident at the Yorktown refinery. On April 14, 2003, the Company settled this penalty in full by making a payment of $50,000 to the EPA. Since the Company did not own the Yorktown refinery at the time of the flaring incident, the Company requested and received reimbursement from BP for the entire amount. A further discussion of this penalty is found in Note 12 to the Company's Consolidated Financial Statements included in Part I, Item 1. As of June 30, 2003, the Company had environmental liability accruals of approximately $8,040,000. A further discussion of these accruals is found in Note 12 to the Company's Consolidated Financial Statements included in Part I, Item 1. OTHER - ----- The Company's Ciniza and Bloomfield refineries continue to be affected by reduced crude oil production in the Four Corners area. The Four Corners basin is a mature production area and accordingly is subject to natural decline in production over time. This natural decline is being offset to some extent by new drilling, field workovers, and secondary recovery projects, which have resulted in additional production from existing reserves. As a result of the declining production of crude oil in the Four Corners area, the Company has not been able to cost-effectively obtain sufficient amounts of crude oil to operate the Company's Four Corners refineries at full capacity. The Company's refinery crude oil utilization rate for its Four Corners refineries was approximately 72% for 2002 and was approximately 70% for the first half of 2003. The Company's current projections of Four Corners crude oil production indicate that the Company's crude oil demand will exceed the crude oil supply that is available from local sources for the foreseeable future. The Company expects to operate the Ciniza and Bloomfield refineries at lower levels than would otherwise be scheduled as a result of shortfalls in Four Corners crude oil production. The Company is assessing other long-term options to address the continuing decline in Four Corners crude oil production. None of these options, however, may prove to be economically viable. The Company cannot provide assurance that the Four Corners crude oil supply for the Ciniza and Bloomfield refineries will continue to be available at all or on acceptable terms. Any significant, long-term interruption or decline in the supply of crude oil or other feedstocks for the Company's Four Corners refineries, either by reduced production or significant long-term interruption of transportation systems, would have an adverse effect on the Company's Four Corners refinery operations and on the Company's overall operations. In addition, the Company's future results of operations are primarily dependent on producing or purchasing, and selling, sufficient quantities of refined products at margins sufficient to cover fixed and variable expenses. Because large portions of the refineries' costs are fixed, a decline in refinery utilization due to a decrease in feedstock availability or any other reason could significantly affect the Company's profitability. The Company may increase its production runs in the future if additional crude oil or refinery feedstocks become available depending on demand for finished products and refinery margins attainable. FORWARD-LOOKING STATEMENTS - -------------------------- This report includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements are included throughout this report, including in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements relate to projections of capital expenditures and other financial statements. These statements also relate to the Company's business strategy, goals and expectations concerning the Company's market position, future operations, acquisitions, dispositions, margins, profitability, liquidity and capital resources. The Company has used the words "believe," "expect," "anticipate," "estimate," "could," "plan," "intend," "may," "project," "predict," "will" and similar terms and phrases to identify forward- looking statements in this report. Although the Company believes the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate, and the forward-looking statements based on these assumptions could be incorrect. While the Company has made these forward-looking statements in good faith and they reflect the Company's current judgment regarding such matters, actual results could vary materially from the forward-looking statements. Actual results and trends in the future may differ materially depending on a variety of important factors. These important factors include the following: - the availability of Four Corners sweet crude oil and the adequacy and costs of raw material supplies generally; - the Company's ability to negotiate new crude oil supply contracts; - the risk that the Company will not be able to find more cost- effective sources of raw materials for the Yorktown refinery; - the Company's ability to manage the liabilities, including environmental liabilities, that the Company assumed in the Yorktown acquisition; - the Company's ability to obtain anticipated levels of indemnification from BP in connection with the Yorktown refinery acquisition; - the Company's ability to recover damages from the electric generation plant that supplies the Yorktown refinery in connection with the April 2003 loss of power; - volatility in the difference, or spread, between market prices for refined products and crude oil and other feedstocks; - the risk that the Company will not be able to sell non-strategic and under-performing assets on terms favorable to the Company; - state or federal legislation or regulation, or findings by a regulator with respect to existing operations; - the risk that the Company will not remain in compliance with covenants, and other terms and conditions, contained in its Notes, Credit Facility and Loan Facility; - the risk that the Company will not be able to post satisfactory letters of credit; - general economic factors affecting the Company's operations, markets, products, services and prices; - unexpected environmental remediation costs; - the risk that the Company will not be able to resolve the alleged air quality violations and associated penalties for its Ciniza and Bloomfield refineries on satisfactory terms; - other risk described elsewhere in this report or described from time to time in the Company's filings with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entity by the previous statements. Forward-looking statements the Company makes represent its judgment on the dates such statements are made. The Company assumes no obligation to update any information contained in this report or to publicly release the results of any revisions to any forward-looking statements to reflect events or circumstances that occur, or that the Company becomes aware of, after the date of this report. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The information required by this item is incorporated herein by reference to the section entitled "Risk Management" in the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2. ITEM 4. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures as of the end of the period covered by this report were effective as of the date of that evaluation. (b) Change in Internal Control Over Financial Reporting No change in the Company's internal control over financial reporting occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is a party to ordinary routine litigation incidental to its business. There is also hereby incorporated by reference the information regarding contingencies in Note 12 to the Consolidated Financial Statements set forth in Part I, Item 1, and the discussion of certain contingencies contained in Part I, Item 2, under the heading "Liquidity and Capital Resources - Environmental, Health and Safety." ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of stockholders was held on May 8, 2003. Proxies for the meeting were solicited under Regulation 14A. There were no matters submitted to a vote of security holders other than the election of two directors and approval of auditors as specified in the Company's Proxy Statement. There was no solicitation in opposition to management's nominees to the Board of Directors. Fred L. Holliger was elected as a director of the Company. The vote was as follows: Shares Voted "For" Shares Voted "Withholding" - ------------------ -------------------------- 5,841,924 516,986 Brooks J. Klimley was elected as a director of the Company. The vote was as follows: Shares Voted "For" Shares Voted "Withholding" - ------------------ -------------------------- 5,845,416 513,494 Deloitte & Touche LLP was ratified as independent auditors for the Company for the year ending December 31, 2003. The vote was as follows: Shares Voted "For" Shares Voted "Against" Shares Voted "Abstaining" - ------------------ ---------------------- ------------------------- 5,742,485 577,903 38,522 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 4.1* Giant Industries, Inc. & Affiliated Companies 401(k) Plan Adoption Agreement, effective June 24, 2003. 4.2* First Amendment to Giant Industries, Inc. & Affiliated Companies 401(k) Plan Adoption Agreement, effective June 24, 2003. 4.3* Second Amendment to Giant Industries, Inc. & Affiliated Companies 401(k) Plan Adoption Agreement, effective July 1, 2003. 4.4* Amendment to Giant Industries, Inc. & Affiliated Companies 401(k) Plan Service Agreement, effective June 24, 2003. 4.5* Giant Industries, Inc. & Affiliated Companies 401(k) Basic Plan Document, effective June 24, 2003. 31.1* Chief Executive Officer's Rule 13a-14(a)/15d-14(a) Certification. 31.2* Chief Financial Officer's Rule 13a-14(a)/15d-14(a) Certification. 32.1* Chief Executive Officer's Section 1350 Certification. 32.2* Chief Financial Officer's Section 1350 Certification. *Filed herewith. (b) Reports on Form 8-K: The Company filed the following reports on Form 8-K during the quarter for which this report is being filed and subsequently: (i) On May 6, 2003, the Company filed a Form 8-K dated May 6, 2003, containing a press release detailing the Company's earnings for the first quarter of 2003. (ii) On August 12, 2003, the Company filed a Form 8-K dated August 12, 2003, containing a press release detailing the Company's earnings for the second quarter of 2003. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q for the quarter ended June 30, 2003 to be signed on its behalf by the undersigned thereunto duly authorized. GIANT INDUSTRIES, INC. /s/ MARK B. COX --------------------------------------------- Mark B. Cox, Vice President, Treasurer, Chief Financial Officer and Assistant Secretary, on behalf of the Registrant and as the Registrant's Principal Financial Officer Date: August 13, 2003 10 EX-4 3 exhibit04-1.txt GIANT INDUSTRIES, INC.'S 2003 2 QTR. 10-Q - EXHIBIT 4.1 EXHIBIT 4.1 THE CORPORATEPLAN FOR RETIREMENTsm (Profit Sharing/401(k) Plan) A Fidelity Prototype Plan Non-Standardized Adoption Agreement No. 001 For use With Fidelity Basic Plan Document No. 02 Plan Number: 40292 The CORPORATEplan for Retirementsm Non-Std PS Plan 12/05/2001 2001 FMR Corp. All rights reserved. ADOPTION AGREEMENT ARTICLE 1 NON-STANDARDIZED PROFIT SHARING/401(K) PLAN 1.01 PLAN INFORMATION (a) Name of Plan: This is the Giant Industries, Inc. & Affiliated Companies 401(k) Plan (the "Plan") (b) Type of Plan: (1) [ ] 401(k) Only (2) [X] 401(k) and Profit Sharing (3) [ ] Profit Sharing Only (c) Administrator Name (if not the Employer): 401(k) Administrative Committee Giant Industries, Inc. Address: 23733 North Scottsdale Road Scottsdale, AZ 85255 Telephone Number: (480) 585-8729 The Administrator is the agent for service of legal process for the Plan. (d) Plan Year End (month/day): 12/31 (e) Three Digit Plan Number: 002 (f) Limitation Year (check one): (1) [ ] Calendar Year (2) [x] Plan Year (3) [ ] Other: ______________________ (g) Plan Status (check appropriate box(es)): (1) [ ] New Plan Effective Date:_____________ (2) [x] Amendment Effective Date: 6/24/2003 This is (check one): (A) [x] an amendment and restatement of a Basic Plan Document No. 02 Adoption Agreement previously executed by the Employer; or (B) [ ] a conversion to a Basic Plan Document No. 02 Adoption Agreement. The original effective date of the Plan: 7/1/1993 (3) x] This is an amendment and restatement of the Plan and the Plan was not amended prior to the effective date specified in Subsection 1.01(g)(2) above to comply with the requirements of the Acts specified in the Snap Off Addendum to the Adoption Agreement. The provisions specified in the Snap Off Addendum are effective as of the dates specified in the Snap Off Addendum, which dates may be prior to the Amendment Effective Date. Please read and complete, if necessary, the Snap Off Addendum to the Adoption Agreement. (4) [x] Special Effective Dates - Certain provisions of the Plan shall be effective as of a date other than the date specified above. Please complete the Special Effective Dates Addendum to the Adoption Agreement indicating the affected provisions and their effective dates. (5) [ ] Plan Merger Effective Dates. Certain plan(s) were merged into the Plan and certain provisions of the Plan are effective with respect to the merged plan(s) as of a date other than the date specified above. Please complete the Special Effective Dates Addendum to the Adoption Agreement indicating the plan(s) that have merged into the Plan and the effective date(s) of such merger(s). 1.02 EMPLOYER (a) Employer Name: Giant Industries, Inc. Address: 23733 North Scottsdale Road Scottsdale, AZ 85255 Contact's Name: Mr. Delbert Tingey Telephone Number: (480) 585-8729 (1) Employer's Tax Identification Number: 86-0642718 (2) Employer's fiscal year end: 12/31 (3) Date business commenced: 12/11/1968 (b) The term "Employer" includes the following Related Employer(s) (as defined in Subsection 2.01(rr)) (list each participating Related Employer and its Employer Tax Identification Number): Employer: Tax ID: Designation: Giant Industries Arizona, Inc., an Arizona Company 86-0218157 Related (controlled group) Ciniza Production Company, a New Mexico Corporation 74-2468207 Related (controlled group) Giant Stop-N-Go of New Mexico, Inc., a New Mexico Corporation 85-0389396 Related (controlled group) Giant Four Corners, Inc., an Arizona Corporation 86-0739055 Related (controlled group) Giant Mid-Continent, Inc., an Arizona Corporation 86-0784398 Related (controlled group) San Juan Refining Company, a New Mexico Corporation 74-2759385 Related (controlled group) Phoenix Fuel Co., Inc., an Arizona Corporation 86-0109486 Related (controlled group) Giant Pipeline Company, a New Mexico Corporation 85-0467397 Related (controlled group) 1.03 TRUSTEE (a) Trustee Name: Fidelity Management Trust Company Address: 82 Devonshire Street Boston, MA 02109 1.04 COVERAGE All Employees who meet the conditions specified below shall be eligible to participate in the Plan: (a) Age Requirement (check one): (1) [x] no age requirement. (2) [ ] must have attained age:_____(not to exceed 21). (b) Eligibility Service Requirement (1) Eligibility to Participate in Plan (check one): (A) [ ] no Eligibility Service requirement. (B) [ ] ___(not to exceed 11) months of Eligibility Service requirement (no minimum number Hours of Service can be required). (C) [x] one year of Eligibility Service requirement (at least 1,000 Hours of Service are required during the Eligibility Computation Period). SEE AMENDMENT (D) [ ] two years of Eligibility Service requirement (at least 1,000 Hours of Service are required during each Eligibility Computation Period). (Do not select if Option 1.01(b)(1), 401(k) Only, is checked, unless a different Eligibility Service requirement applies to Deferral Contributions under Option 1.04(b)(2).) Note: If the Employer selects the two year Eligibility Service requirement, then contributions subject to such Eligibility Service requirement must be 100% vested when made. (2) [ ] Special Eligibility Service requirement for Deferral Contributions and/or Matching Employer Contributions: (A) The special Eligibility Service requirement applies to (check the appropriate box(es)): (i) [ ] Deferral Contributions. (ii) [ ] Matching Employer Contributions. (B) The special Eligibility Service requirement is: (Fill in (A), (B), or (C) from Subsection 1.04(b)(1) above). (c) Eligible Class of Employees (check one): Note: The Plan may not cover employees who are residents of Puerto Rico. These employees are automatically excluded from the eligible class, regardless of the Employer's selection under this Subsection 1.04(c). (1) [ ] includes all Employees of the Employer. (2) [x] includes all Employees of the Employer except for (check the appropriate box(es)): (A) [x] employees covered by a collective bargaining agreement. (B) [ ] Highly Compensated Employees as defined in Code Section 414(q). (C) [x] Leased Employees as defined in Subsection 2.01(cc). (D) [x] nonresident aliens who do not receive any earned income from the Employer which constitutes United States source income. (E) [x] other: An employee who is classified by the Employer as an employee of Giant Yorktown, Inc. Note: The Employer should exercise caution when excluding employees from participation in the Plan. Exclusion of employees may adversely affect the Plan's satisfaction of the minimum coverage requirements, as provided in Code Section 410(b). (d) The Entry Dates shall be (check one): (1) [ ] immediate upon meeting the eligibility requirements specified in Subsections 1.04(a), (b), and (c). (2) [x] the first day of each Plan Year and the first day of the seventh month of each Plan Year. (3) [ ] the first day of each Plan Year and the first day of the fourth, seventh, and tenth months of each Plan Year. (4) [ ] the first day of each month. (5) [ ] the first day of each Plan Year. (Do not select if there is an Eligibility Service requirement of more than six months in Subsection 1.04(b) or if there is an age requirement of more than 20 1/2 in Subsection 1.04(a).) (e) [ ] Special Entry Date(s) - In addition to the Entry Dates specified in Subsection 1.04(d) above, the following special Entry Date(s) apply for Deferral and/or Matching Employer Contributions. (Special Entry Dates may only be selected if Option 1.04(b)(2), special Eligibility Service requirement, is checked. The same Entry Dates must be selected for contributions that are subject to the same Eligibility Service requirements.) (1) The special Entry Date(s) shall apply to (check the appropriate box(es)): (A) [ ] Deferral Contributions. (B) [ ] Matching Employer Contributions. (2) The special Entry Date(s) shall be:_____ (Fill in (1), (2), (3), (4), or (5) from Subsection 1.04(d) above). (f) Date of Initial Participation - An Employee shall become a Participant unless excluded by Subsection 1.04(c) above on the Entry Date immediately following the date the Employee completes the service and age requirement(s) in Subsections 1.04(a) and (b), if any, except (check one): (1) [x] no exceptions. (2) [ ] Employees employed on the Effective Date in Subsection 1.01(g)(1) or (2) shall become Participants on that date. (3) [ ] Employees who meet the age and service requirement(s) of Subsections 1.04(a) and (b) on the Effective Date in Subsection 1.01(g)(1) or (2) shall become Participants on that date. 1.05 COMPENSATION Compensation for purposes of determining contributions shall be as defined in Section 5.02, modified as provided below. (a) Compensation Exclusions: Compensation shall exclude the item(s) listed below for purposes of determining Deferral Contributions, Employee Contributions, if any, and Qualified Nonelective Employer Contributions, or, if Subsection 1.01(b)(3), Profit Sharing Only, is selected, Nonelective Employer Contributions. Unless otherwise indicated in Subsection 1.05(b), these exclusions shall also apply in determining all other Employer-provided contributions. (Check the appropriate box(es); Options (2), (3), (4), (5), and (6) may not be elected with respect to Deferral Contributions if Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, is checked): (1) [ ] No exclusions. (2) [ ] Overtime Pay. (3) [ ] Bonuses. (4) [ ] Commissions. (5) [x] The value of a qualified or a non-qualified stock option granted to an Employee by the Employer to the extent such value is includable in the Employee's taxable income. (6) [x] Severance Pay. (b) Special Compensation Exclusions for Determining Employer-Provided Contributions in Article 5 (either (1) or (2) may be selected, but not both): (1) [ ] Compensation for purposes of determining Matching, Qualified Matching, and Nonelective Employer Contributions shall exclude: ____________ (Fill in number(s) for item(s) from Subsection 1.05(a) above that apply.) (2) [ ] Compensation for purposes of determining Nonelective Employer Contributions only shall exclude: _________(Fill in number(s) for item(s) from Subsection 1.05(a) above that apply.) Note: If the Employer selects Option (2), (3), (4), (5), or (6) with respect to Nonelective Employer Contributions, Compensation must be tested to show that it meets the requirements of Code Section 414(s) or 401(a)(4). These exclusions shall not apply for purposes of the "Top Heavy" requirements in Section 15.03, for allocating safe harbor Matching Employer Contributions if Subsection 1.10(a)(3) is selected, for allocating safe harbor Nonelective Employer Contributions if Subsection 1.11(a)(3) is selected, or for allocating non-safe harbor Nonelective Employer Contributions if the Integrated Formula is elected in Subsection 1.11(b)(2). (c) Compensation for the First Year of Participation - Contributions for the Plan Year in which an Employee first becomes a Participant shall be determined based on the Employee's Compensation (check one): (1) [ ] for the entire Plan Year. (2) [x] for the portion of the Plan Year in which the Employee is eligible to participate in the Plan. Note: If the initial Plan Year of a new Plan consists of fewer than 12 months from the Effective Date in Subsection 1.01(g)(1) through the end of the initial Plan Year, Compensation for purposes of determining the amount of contributions, other than non-safe harbor Nonelective Employer Contributions, under the Plan shall be the period from such Effective Date through the end of the initial year. However, for purposes of determining the amount of non-safe harbor Nonelective Employer Contributions and for other Plan purposes, where appropriate, the full 12-consecutive-month period ending on the last day of the initial Plan Year shall be used. 1.06 TESTING RULES (a) ADP/ACP Present Testing Method - The testing method for purposes of applying the "ADP" and "ACP" tests described in Sections 6.03 and 6.06 of the Plan shall be the (check one): (1) [ ] Current Year Testing Method - The "ADP" or "ACP" of Highly Compensated Employees for the Plan Year shall be compared to the "ADP" or "ACP" of Non-Highly Compensated Employees for the same Plan Year. (Must choose if Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, or Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked.) (2) [x] Prior Year Testing Method - The "ADP" or "ACP" of Highly Compensated Employees for the Plan Year shall be compared to the "ADP" or "ACP" of Non-Highly Compensated Employees for the immediately preceding Plan Year. (Do not choose if Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, or Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked.) (3) [ ] Not applicable. (Only if Option 1.01(b)(3), Profit Sharing Only, is checked or Option 1.04(c)(2)(B), excluding all Highly Compensated Employees from the eligible class of Employees, is checked.) Note: Restrictions apply on elections to change testing methods that are made after the end of the GUST remedial amendment period. (b) First Year Testing Method - If the first Plan Year that the Plan, other than a successor plan, permits Deferral Contributions or provides for either Employee or Matching Employer Contributions, occurs on or after the Effective Date specified in Subsection 1.01(g), the "ADP" and/or "ACP" test for such first Plan Year shall be applied using the actual "ADP" and/or "ACP" of Non-Highly Compensated Employees for such first Plan Year, unless otherwise provided below. (1) [ ] The "ADP" and/or "ACP" test for the first Plan Year that the Plan permits Deferral Contributions or provides for either Employee or Matching Employer Contributions shall be applied assuming a 3% "ADP" and/or "ACP" for Non-Highly Compensated Employees. (Do not choose unless Plan uses prior year testing method described in Subsection 1.06(a)(2).) (c) HCE Determinations: Look Back Year - The look back year for purposes of determining which Employees are Highly Compensated Employees shall be the 12-consecutive-month period preceding the Plan Year, unless otherwise provided below. (1) [ ] Calendar Year Determination - The look back year shall be the calendar year beginning within the preceding Plan Year. (Do not choose if the Plan Year is the calendar year.) (d) HCE Determinations: Top Paid Group Election - All Employees with Compensation exceeding $80,000 (as indexed) shall be considered Highly Compensated Employees, unless Top Paid Group Election below is checked. (1) [ ] Top Paid Group Election - Employees with Compensation exceeding $80,000 (as indexed) shall be considered Highly Compensated Employees only if they are in the top paid group (the top 20% of Employees ranked by Compensation). Note: Effective for determination years beginning on or after January 1, 1998, if the Employer elects Option 1.06(c)(1) and/or 1.06(d)(1), such election(s) must apply consistently to all retirement plans of the Employer for determination years that begin with or within the same calendar year (except that Option 1.06(c)(1), Calendar Year Determination, shall not apply to calendar year plans). 1.07 DEFERRAL CONTRIBUTIONS (a) [x] Deferral Contributions - Participants may elect to have a portion of their Compensation contributed to the Plan on a before-tax basis pursuant to Code Section 401(k). (1) Regular Contributions - The Employer shall make a Deferral Contribution in accordance with Section 5.03 on behalf of each Participant who has an executed salary reduction agreement in effect with the Employer for the payroll period in question, not to exceed 60% of Compensation for that period. Note: For Limitation Years beginning prior to 2002, the percentage elected above must be less than 25% in order to satisfy the limitation on annual additions under Code Section 415 if other types of contributions are provided under the Plan. (A) [ ] Instead of specifying a percentage of Compensation, a Participant's salary reduction agreement may specify a dollar amount to be contributed each payroll period, provided such dollar amount does not exceed the maximum percentage of Compensation specified in Subsection 1.07(a)(1) above. (B) A Participant may increase or decrease, on a prospective basis, his salary reduction agreement percentage (check one): (i) [x] as of the beginning of each payroll period. (ii) [ ] as of the first day of each month. (iii) [ ] as of the next Entry Date. (Do not select if immediate entry is elected with respect to Deferral Contributions in Subsection 1.04(d) or 1.04(e).) (iv) [ ] other. (Specify, but must be at least once per Plan Year) ________________________ ________________________ Note: Notwithstanding the Employer's election hereunder, if Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, or 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked, the Plan provides that an Active Participant may change his salary reduction agreement percentage for the Plan Year within a reasonable period (not fewer than 30 days) of receiving the notice described in Section 6.10. (C) A Participant may revoke, on a prospective basis, a salary reduction agreement at any time upon proper notice to the Administrator but in such case may not file a new salary reduction agreement until (check one): (i) [ ] the first day of the next Plan Year. (ii) [ ] any subsequent Entry Date. (Do not select if immediate entry is elected with respect to Deferral Contributions in Subsection 1.04(d) or 1.04(e).) (iii) [x] other. (Specify, but must be at least once per Plan Year) the beginning of each payroll period (2) [ ] Additional Deferral Contributions - The Employer may allow Participants upon proper notice and approval to enter into a special salary reduction agreement to make additional Deferral Contributions in an amount up to 100% of their Compensation for the payroll period(s) designated by the Employer. (3) [ ] Bonus Contributions - The Employer may allow Participants upon proper notice and approval to enter into a special salary reduction agreement to make Deferral Contributions in an amount up to 100% of any Employer paid cash bonuses designated by the Employer on a uniform and non- discriminatory basis that are made for such Participants during the Plan Year. The Compensation definition elected by the Employer in Subsection 1.05(a) must include bonuses if bonus contributions are permitted. Note: A Participant's contributions under Subsection 1.07(a)(2) and/or (3) may not cause the Participant to exceed the percentage limit specified by the Employer in Subsection 1.07(a)(1) for the full Plan Year. If the Administrator anticipates that the Plan will not satisfy the "ADP" and/or "ACP" test for the year, the Administrator may reduce the rate of Deferral Contributions of Participants who are Highly Compensated Employees to an amount objectively determined by the Administrator to be necessary to satisfy the "ADP" and/or "ACP" test. 1.08 EMPLOYEE CONTRIBUTIONS (AFTER-TAX CONTRIBUTIONS) (a) [x] Employee Contributions - Either (1) Participants will be permitted to contribute amounts to the Plan on an after-tax basis or (2) the Employer maintains frozen Employee Contributions Accounts (check one): (1) [x] Future Employee Contributions - Participants may make voluntary, non-deductible, after-tax Employee Contributions pursuant to Section 5.04 of the Plan. (Only if Option 1.07(a), Deferral Contributions, is checked.) (2) [ ] Frozen Employee Contributions - Participants may not currently make after-tax Employee Contributions to the Plan, but the Employer does maintain frozen Employee Contributions Accounts. 1.09 QUALIFIED NONELECTIVE CONTRIBUTIONS (a) Qualified Nonelective Employer Contributions - If Option 1.07(a), Deferral Contributions, is checked, the Employer may contribute an amount which it designates as a Qualified Nonelective Employer Contribution to be included in the "ADP" or "ACP" test. Unless otherwise provided below, Qualified Nonelective Employer Contributions shall be allocated to Participants who were eligible to participate in the Plan at any time during the Plan Year and are Non-Highly Compensated Employees either (A) in the ratio which each Participant's "testing compensation", as defined in Subsection 6.01(t), for the Plan Year bears to the total of all Participants' "testing compensation" for the Plan Year or (B) as a flat dollar amount. (1) [ ] Qualified Nonelective Employer Contributions shall be allocated to Participants as a percentage of the lowest paid Participant's "testing compensation", as defined in Subsection 6.01(t), for the Plan Year up to the lower of (A) the maximum amount contributable under the Plan or (B) the amount necessary to satisfy the "ADP" or "ACP" test. If any Qualified Nonelective Employer Contribution remains, allocation shall continue in the same manner to the next lowest paid Participants until the Qualified Nonelective Employer Contribution is exhausted. 1.10 MATCHING EMPLOYER CONTRIBUTIONS (Only if Option 1.07(a), Deferral Contributions, is checked) (a) [x] Basic Matching Employer Contributions (check one): (1) [ ] Non-Discretionary Matching Employer Contributions - The Employer shall make a basic Matching Employer Contribution on behalf of each Participant in an amount equal to the following percentage of a Participant's Deferral Contributions during the Contribution Period (check (A) or (B) and, if applicable, (C)): Note: Effective for Plan Years beginning on or after January 1, 1999, if the Employer elected Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions and meets the requirements for deemed satisfaction of the "ADP" test in Section 6.10 for a Plan Year, the Plan will also be deemed to satisfy the "ACP" test for such Plan Year with respect to Matching Employer Contributions if Matching Employer Contributions hereunder meet the requirements in Section 6.11. (A) [ ] Single Percentage Match:_______% (B) [ ] Tiered Match: ____% of the first ____% of the Active Participant's Compensation contributed to the Plan, ____% of the next _____% of the Active Participant's Compensation contributed to the Plan, ____% of the next _____% of the Active Participant's Compensation contributed to the Plan. Note: The percentages specified above for basic Matching Employer Contributions may not increase as the percentage of Compensation contributed increases. (C) [ ] Limit on Non-Discretionary Matching Employer Contributions (check the appropriate box(es)): (i) [ ] Deferral Contributions in excess of ____% of the Participant's Compensation for the period in question shall not be considered for non- discretionary Matching Employer Contributions. Note: If the Employer elected a percentage limit in (i) above and requested the Trustee to account separately for matched and unmatched Deferral Contributions made to the Plan, the non-discretionary Matching Employer Contributions allocated to each Participant must be computed, and the percentage limit applied, based upon each payroll period. (ii) [ ] Matching Employer Contributions for each Participant for each Plan Year shall be limited to $_________. (2) [x] Discretionary Matching Employer Contributions - The Employer may make a basic Matching Employer Contribution on behalf of each Participant in an amount equal to the percentage declared for the Contribution Period, if any, by a Board of Directors' Resolution (or by a Letter of Intent for a sole proprietor or partnership) of the Deferral Contributions made by each Participant during the Contribution Period. The Board of Directors' Resolution (or Letter of Intent, if applicable) may limit the Deferral Contributions matched to a specified percentage of Compensation or limit the amount of the match to a specified dollar amount. (A) [ ] 4% Limitation on Discretionary Matching Employer Contributions for Deemed Satisfaction of "ACP" Test - In no event may the dollar amount of the discretionary Matching Employer Contribution made on a Participant's behalf for the Plan Year exceed 4% of the Participant's Compensation for the Plan Year. (Only if Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked.) (3) [ ] Safe Harbor Matching Employer Contributions - Effective only for Plan Years beginning on or after January 1, 1999, if the Employer elects one of the safe harbor formula Options provided in the Safe Harbor Matching Employer Contribution Addendum to the Adoption Agreement and provides written notice each Plan Year to all Active Participants of their rights and obligations under the Plan, the Plan shall be deemed to satisfy the "ADP" test and, under certain circumstances, the "ACP" test. (b) [ ] Additional Matching Employer Contributions - The Employer may at Plan Year end make an additional Matching Employer Contribution equal to a percentage declared by the Employer, through a Board of Directors' Resolution (or by a Letter of Intent for a sole proprietor or partnership), of the Deferral Contributions made by each Participant during the Plan Year. (Only if Option 1.10(a)(1) or (3) is checked.) The Board of Directors' Resolution (or Letter of Intent, if applicable) may limit the Deferral Contributions matched to a specified percentage of Compensation or limit the amount of the match to a specified dollar amount. (1) [ ] 4% Limitation on Additional Matching Employer Contributions for Deemed Satisfaction of "ACP" Test - In no event may the dollar amount of the additional Matching Employer Contribution made on a Participant's behalf for the Plan Year exceed 4% of the Participant's Compensation for the Plan Year. (Only if Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, or Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked.) Note: If the Employer elected Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, above and wants to be deemed to have satisfied the "ADP" test for Plan Years beginning on or after January 1, 1999, the additional Matching Employer Contribution must meet the requirements of Section 6.10. In addition to the foregoing requirements, if the Employer elected either Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, or Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions, and wants to be deemed to have satisfied the "ACP" test with respect to Matching Employer Contributions for the Plan Year, the Deferral Contributions matched may not exceed the limitations in Section 6.11. (c) Contribution Period for Matching Employer Contributions - The Contribution Period for purposes of calculating the amount of basic Matching Employer Contributions described in Subsection 1.10(a) is: (1) [ ] each calendar month. (2) [ ] each Plan Year quarter. (3) [x] each Plan Year. (4) [ ] each payroll period. The Contribution Period for additional Matching Employer Contributions described in Subsection 1.10(b) is the Plan Year. (d) Continuing Eligibility Requirement(s) - A Participant who makes Deferral Contributions during a Contribution Period shall only be entitled to receive Matching Employer Contributions under Section 1.10 for that Contribution Period if the Participant satisfies the following requirement(s) (Check the appropriate box(es). Options (3) and (4) may not be elected together; Option (5) may not be elected with Option (2), (3), or (4); Options (2), (3), (4), (5), and (7) may not be elected with respect to basic Matching Employer Contributions if Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, is checked): (1) [ ] No requirements. (2) [x] Is employed by the Employer or a Related Employer on the last day of the Contribution Period. (3) [ ] Earns at least 501 Hours of Service during the Plan Year. (Only if the Contribution Period is the Plan Year.) (4) [ ] Earns at least 1,000 Hours of Service during the Plan Year. (Only if the Contribution Period is the Plan Year.) (5) [ ] Either earns at least 501 Hours of Service during the Plan Year or is employed by the Employer or a Related Employer on the last day of the Plan Year. (Only if the Contribution Period is the Plan Year.) (6) [ ] Is not a Highly Compensated Employee for the Plan Year. (7) [ ] Is not a partner or a member of the Employer, if the Employer is a partnership or an entity taxed as a partnership. (8) [ ] Special continuing eligibility requirement(s) for additional Matching Employer Contributions. (Only if Option 1.10(b), Additional Matching Employer Contributions, is checked.) (A) The continuing eligibility requirement(s) for additional Matching Employer Contributions is/are: (Fill in number of applicable eligibility requirement(s) from above.) Note: If Option (2), (3), (4), or (5) above is selected, then Matching Employer Contributions can only be funded by the Employer after the Contribution Period or Plan Year ends. Matching Employer Contributions funded during the Contribution Period or Plan Year shall not be subject to the eligibility requirements of Option (2), (3), (4), or (5). If Option (2), (3), (4), or (5) is adopted during a Contribution Period or Plan Year, as applicable, such Option shall not become effective until the first day of the next Contribution Period or Plan Year. (e) [x] Qualified Matching Employer Contributions - Prior to making any Matching Employer Contribution hereunder (other than a safe harbor Matching Employer Contribution), the Employer may designate all or a portion of such Matching Employer Contribution as a Qualified Matching Employer Contribution that may be used to satisfy the "ADP" test on Deferral Contributions and excluded in applying the "ACP" test on Employee and Matching Employer Contributions. Unless the additional eligibility requirement is selected below, Qualified Matching Employer Contributions shall be allocated to all Participants who meet the continuing eligibility requirement(s) described in Subsection 1.10(d) above for the type of Matching Employer Contribution being characterized as a Qualified Matching Employer Contribution. (1) [ ] To receive an allocation of Qualified Matching Employer Contributions a Participant must also be a Non-Highly Compensated Employee for the Plan Year. Note: Qualified Matching Employer Contributions may not be excluded in applying the "ACP" test for a Plan Year if the Employer elected Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, or Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions, and the "ADP" test is deemed satisfied under Section 6.10 for such Plan Year. 1.11 NONELECTIVE EMPLOYER CONTRIBUTIONS Note: An Employer may elect both a fixed formula and a discretionary formula. If both are selected, the discretionary formula shall be treated as an additional Nonelective Employer Contribution and allocated separately in accordance with the allocation formula selected by the Employer. (a) [ ] Fixed Formula (An Employer may elect both the Safe Harbor Formula and one of the other fixed formulas. Otherwise, the Employer may only select one of the following.) (1) [ ] Fixed Percentage Employer Contribution - For each Plan Year, the Employer shall contribute for each eligible Active Participant an amount equal to ____% (not to exceed 15% for Plan Years beginning prior to 2002 and 25% for Plan Years beginning on or after January 1, 2002) of such Active Participant's Compensation. (2) [ ] Fixed Flat Dollar Employer Contribution - The Employer shall contribute for each eligible Active Participant an amount equal to $_______. The contribution amount is based on an Active Participant's service for the following period: (A) [ ] Each paid hour. (B) [ ] Each payroll period. (C) [ ] Each Plan Year. (D) [ ] Other: _______________________ (3) [ ] Safe Harbor Formula - Effective only with respect to Plan Years that begin on or after January 1, 1999, the Nonelective Employer Contribution specified in the Safe Harbor Nonelective Employer Contribution Addendum is intended to satisfy the safe harbor contribution requirements under the Code such that the "ADP" test (and, under certain circumstances, the "ACP" test) is deemed satisfied. Please complete the Safe Harbor Nonelective Employer Contribution Addendum to the Adoption Agreement. (Choose only if Option 1.07(a), Deferral Contributions, is checked.) (b) [x] Discretionary Formula - The Employer may decide each Plan Year whether to make a discretionary Nonelective Employer Contribution on behalf of eligible Active Participants in accordance with Section 5.10. Such contributions shall be allocated to eligible Active Participants based upon the following (check (1) or (2)): (1) [x] Non-Integrated Allocation Formula - In the ratio that each eligible Active Participant's Compensation bears to the total Compensation paid to all eligible Active Participants for the Plan Year. (2) [ ] Integrated Allocation Formula - As (A) a percentage of each eligible Active Participant's Compensation plus (B) a percentage of each eligible Active Participant's Compensation in excess of the "integration level" as defined below. The percentage of Compensation in excess of the "integration level" shall be equal to the lesser of the percentage of the Active Participant's Compensation allocated under (A) above or the "permitted disparity limit" as defined below. Note: An Employer that has elected the Safe Harbor formula in Subsection 1.11(a)(3) above may not take Nonelective Employer Contributions made to satisfy the safe harbor into account in applying the integrated allocation formula described above. "Integration level" means the Social Security taxable wage base for the Plan Year, unless the Employer elects a lesser amount in (A) or (B) below. (A) _____% (not to exceed 100%) of the Social Security taxable wage base for the Plan Year, or (B) $____ (not to exceed the Social Security taxable wage base). "Permitted disparity limit" means the percentage provided by the following table: If the "Integration Level" is at But Less Than The "Permitted least ___% of the Taxable ___% of the Disparity Wage Base Taxable Wage Base Limit" is 0% 20% 5.7% 20% 80% 4.3% 80% 100% 5.4% 100% N/A 5.7% Note: An Employer who maintains any other plan that provides for Social Security Integration (permitted disparity) may not elect Option 1.11(b)(2). (c) Continuing Eligibility Requirement(s) - A Participant shall only be entitled to receive Nonelective Employer Contributions for a Plan Year under this Section 1.11 if the Participant satisfies the following requirement(s) (Check the appropriate box(es) - Options (3) and (4) may not be elected together; Option (5) may not be elected with Option (2), (3), or (4); Options (2), (3), (4), (5), and (7) may not be elected with respect to Nonelective Employer Contributions under the fixed formula if Option 1.11(a)(3), Safe Harbor Formula, is checked): (1) [ ] No requirements. (2) [x] Is employed by the Employer or a Related Employer on the last day of the Plan Year. (3) [ ] Earns at least 501 Hours of Service during the Plan Year. (4) [ ] Earns at least 1,000 Hours of Service during the Plan Year. (5) [ ] Either earns at least 501 Hours of Service during the Plan Year or is employed by the Employer or a Related Employer on the last day of the Plan Year. (6) [ ] Is not a Highly Compensated Employee for the Plan Year. (7) [ ] Is not a partner or a member of the Employer, if the Employer is a partnership or an entity taxed as a partnership. (8) [ ] Special continuing eligibility requirement(s) for discretionary Nonelective Employer Contributions. (Only if both Options 1.11(a) and (b) are checked.) (A) The continuing eligibility requirement(s) for discretionary Nonelective Employer Contributions is/are: ____ (Fill in number of applicable eligibility requirement(s) from above.) Note: If Option (2), (3), (4), or (5) above is selected then Nonelective Employer Contributions can only be funded by the Employer after the Plan Year ends. Nonelective Employer Contributions funded during the Plan Year shall not be subject to the eligibility requirements of Option (2), (3), (4), or (5). If Option (2), (3), (4), or (5) is adopted during a Plan Year, such Option shall not become effective until the first day of the next Plan Year. 1.12 EXCEPTIONS TO CONTINUING ELIGIBILITY REQUIREMENTS [ ] Death, Disability, and Retirement Exception to Eligibility Requirements - Active Participants who do not meet any last day or Hours of Service requirement under Subsection 1.10(d) or 1.11(c) because they become disabled, as defined in Section 1.14, retire, as provided in Subsection 1.13(a), (b), or (c), or die shall nevertheless receive an allocation of Nonelective Employer and/or Matching Employer Contributions. No Compensation shall be imputed to Active Participants who become disabled for the period following their disability. 1.13 RETIREMENT (a) The Normal Retirement Age under the Plan is (check one): (1) [x] age 65. (2) [ ] age ______(specify between 55 and 64). (3) [ ] later of age _____ (not to exceed 65) or the fifth anniversary of the Participant's Employment Commencement Date. (b) [ ] The Early Retirement Age is the first day of the month after the Participant attains age _____ (specify 55 or greater) and Completes ____ years of Vesting Service. Note: If this Option is elected, Participants who are employed by the Employer or a Related Employer on the date they reach Early Retirement Age shall be 100% vested in their Accounts under the Plan. (c) [x] A Participant who becomes disabled, as defined in Section 1.14, is eligible for disability retirement. Note: If this Option is elected, Participants who are employed by the Employer or a Related Employer on the date they become disabled shall be 100% vested in their Accounts under the Plan. 1.14 DEFINITION OF DISABLED A Participant is disabled if he/she (check the appropriate box(es)): (a) [ ] satisfies the requirements for benefits under the Employer's long-term disability plan. (b) [x] satisfies the requirements for Social Security disability benefits. (c) [ ] is determined to be disabled by a physician approved by the Employer. 1.15 VESTING A Participant's vested interest in Matching Employer Contributions and/or Nonelective Employer Contributions, other than Safe Harbor Matching Employer and/or Nonelective Employer Contributions elected in Subsection 1.10(a)(3) or 1.11(a)(3), shall be based upon his years of Vesting Service and the schedule(s) selected below, except as provided in Subsection 1.21(d) or in the Vesting Schedule Addendum to the Adoption Agreement. (a) [ ] Years of Vesting Service shall exclude: (1) [ ] for new plans, service prior to the Effective Date as defined in Subsection 1.01(g)(1). (2) [ ] for existing plans converting from another plan document, service prior to the original Effective Date as defined in Subsection 1.01(g)(2). (b) Vesting Schedule(s) Note: The vesting schedule selected below applies only to Nonelective Employer Contributions and Matching Employer Contributions other than safe harbor contributions under Option 1.11(a)(3) or Option 1.10(a)(3). Safe harbor contributions under Options 1.11(a)(3) and 1.10(a)(3) are always 100% vested immediately. (1) Nonelective Employer (2) Matching Employer Contributions Contributions (check one): (check one): (A) [ ] N/A - No Nonelective (A) [ ] N/A - No Matching Employer Contributions Employer Contributions (B) [x] 100% Vesting immediately (B) [x] 100%Vesting immediately (C) [ ] 3 year cliff (see C below) (C) [ ] 3 year cliff (see C below) (D) [ ] 5 year cliff (see D below) (D) [ ] 5 year cliff (see D below) (E) [ ] 6 year graduated (E) [ ] 6 year graduated (see E below) (see E below) (F) [ ] 7 year graduated (F) [ ] 7 year graduated (see F below) (see F below) (G) [ ] Other vesting (G) [ ] Other vesting (complete G1 below) (complete G2 below) Years of Vesting Service Applicable Vesting Schedule(s) C D E F G1 G2 0 0% 0% 0% 0% ____% ____% 1 0% 0% 0% 0% ____% ____% 2 0% 0% 20% 0% ____% ____% 3 100% 0% 40% 20% ____% ____% 4 100% 0% 60% 40% ____% ____% 5 100% 100% 80% 60% ____% ____% 6 100% 100% 100% 80% ____% ____% 7 or more 100% 100% 100% 100% 100% 100% Note: A schedule elected under G1 or G2 above must be at least as favorable as one of the schedules in C, D, E or F above. Note: If the Plan is being amended to provide a more restrictive vesting schedule, the more favorable vesting schedule shall continue to apply to Participants who are Active Participants immediately prior to the later of (1) the effective date of the amendment or (2) the date the amendment is adopted. (c) [ ] A vesting schedule more favorable than the vesting schedule(s) selected above applies to certain Participants. Please complete the Vesting Schedule Addendum to the Adoption Agreement. (d) Application of Forfeitures - If a Participant forfeits any portion of his non-vested Account balance as provided in Section 6.02, 6.04, 6.07, or 11.08, such forfeitures shall be (check one): (1) [ ] N/A - Either (A) no Matching Employer Contributions are made with respect to Deferral Contributions under the Plan and all other Employer Contributions are 100% vested when made or (B) there are no Employer Contributions under the Plan. (2) [x] applied to reduce Employer contributions. (3) [ ] allocated among the Accounts of eligible Participants in the manner provided in Section 1.11. (Only if Option 1.11(a) or (b) is checked.) 1.16 PREDECESSOR EMPLOYER SERVICE [x] Service for purposes of eligibility in Subsection 1.04(b) and vesting in Subsection 1.15(b) of this Plan shall include service with the following predecessor employer(s): See Attachment 1.17 PARTICIPANT LOANS Participant loans (check one): (a) [x] are allowed in accordance with Article 9 and loan procedures outlined in the Service Agreement. (b) [ ] are not allowed. 1.18 IN-SERVICE WITHDRAWALS Participants may make withdrawals prior to termination of employment under the following circumstances (check the appropriate box(es)): (a) [x] Hardship Withdrawals - Hardship withdrawals from a Participant's Deferral Contributions Account shall be allowed in accordance with Section 10.05, subject to a $500 minimum amount. (b) [x] Age 59 1/2 - Participants shall be entitled to receive a distribution of all or any portion of the following Accounts upon attainment of age 59 1/2 (check one): (1) [ ] Deferral Contributions Account. (2) [x] All vested account balances. (c) Withdrawal of Employee Contributions and Rollover Contributions - (1) Unless otherwise provided below, Employee Contributions may be withdrawn in accordance with Section 10.02 at any time. (A) [x] Employees may not make withdrawals of Employee Contributions more frequently than: Once per year. (2) Rollover Contributions may be withdrawn in accordance with Section 10.03 at any time. (d) [x] Protected In-Service Withdrawal Provisions - Check if the Plan was converted by plan amendment or received transfer contributions from another defined contribution plan, and benefits under the other defined contribution plan were payable as (check the appropriate box(es)): (1) [ ] an in-service withdrawal of vested employer contributions maintained in a Participant's Account (check (A) and/or (B)): (A) [ ] for at least _____(24 or more) months. (i) [ ] Special restrictions applied to such in-service withdrawals under the prior plan that the Employer wishes to continue under the Plan as restated hereunder. Please complete the Protected In- Service Withdrawals Addendum to the Adoption Agreement identifying the restrictions. (B) [ ] after the Participant has at least 60 months of participation. (i) [ ] Special restrictions applied to such in-service withdrawals under the prior plan that the Employer wishes to continue under the Plan as restated hereunder. Please complete the Protected In-Service Withdrawals Addendum to the Adoption Agreement identifying the restrictions. (2) [x] another in-service withdrawal option that is a "protected benefit" under Code Section 411(d)(6) or an in-service hardship withdrawal option not otherwise described in Section 1.18(a). Please complete the Protected In-Service Withdrawals Addendum to the Adoption Agreement identifying the in-service withdrawal option(s). 1.19 FORM OF DISTRIBUTIONS Subject to Section 13.01, 13.02 and Article 14, distributions under the Plan shall be paid as provided below. (Check the appropriate box(es) and, if any forms of payment selected in (b), (c) and/or (d) apply only to a specific class of Participants, complete Subsection (b) of the Forms of Payment Addendum.) (a) Lump Sum Payments - Lump sum payments are always available under the Plan. (b) [ ] Installment Payments - Participants may elect distribution under a systematic withdrawal plan (installments). (c) [ ] Annuities (Check if the Plan is retaining any annuity form(s) of payment.) (1) An annuity form of payment is available under the Plan for the following reason(s) (check (A) and/or (B), as applicable): (A) [ ] As a result of the Plan's receipt of a transfer of assets from another defined contribution plan or pursuant to the Plan terms prior to the Amendment Effective Date specified in Section 1.01(g)(2), benefits were previously payable in the form of an annuity that the Employer elects to continue to be offered as a form of payment under the Plan. (B) [ ] The Plan received a transfer of assets from a defined benefit plan or another defined contribution plan that was subject to the minimum funding requirements of Code Section 412 and therefore an annuity form of payment is a protected benefit under the Plan in accordance with Code Section 411(d)(6). (2) The normal form of payment under the Plan is (check (A) or (B)): (A) [ ] A lump sum payment. (i) Optional annuity forms of payment (check (I) and/or (II), as applicable). (Must check and complete (I) if a life annuity is one of the optional annuity forms of payment under the Plan.) (I) [ ] A married Participant who elects an annuity form of payment shall receive a qualified joint and ____% (at least 50%) survivor annuity. An unmarried Participant shall receive a single life annuity, unless a different form of payment is specified below: ____________________________ (II)[ ] Other annuity form(s) of payment. Please complete Subsection (a) of the Forms of Payment Addendum describing the other annuity form(s) of payment available under the Plan. (B) [ ] A life annuity (complete (i) and (ii) and check (iii) if applicable). (i) The normal form for married Participants is a qualified joint and ____% (at least 50%) survivor annuity. The normal form for unmarried Participants is a single life annuity, unless a different annuity form is specified below: _________________________________ (ii) The qualified preretirement survivor annuity provided to a Participant's spouse is purchased with _______% (at least 50%) of the Participant's Account. (iii) [ ] Other annuity form(s) of payment. Please complete Subsection (a) of the Forms of Payment Addendum describing the other annuity form(s) of payment available under the Plan. (d) [x] Other Non-Annuity Form(s) of Payment - As a result of the Plan's receipt of a transfer of assets from another plan or pursuant to the Plan terms prior to the Amendment Effective Date specified in 1.01(g)(2), benefits were previously payable in the following form(s) of payment not described in (a), (b) or (c) above and the Plan will continue to offer these form(s) of payment: Company stock may be taken in-kind. Distribution of Account in whole shares of Employer stock, or in cash, or in cash and Employer stock. (e) [ ] Eliminated Forms of Payment Not Protected Under Code Section 411(d)(6). Check if either (1) under the Plan terms prior to the Amendment Effective Date or (2) under the terms of another plan from which assets were transferred, benefits were payable in a form of payment that will cease to be offered after a specified date. Please complete Subsection (c) of the Forms of Payment Addendum describing the forms of payment previously available and the effective date of the elimination of the form(s) of payment. 1.20 TIMING OF DISTRIBUTIONS Except as provided in Subsection 1.20(a) or (b) and the Postponed Distribution Addendum to the Adoption Agreement, distribution shall be made to an eligible Participant from his vested interest in his Account as soon as reasonably practicable following the date the Participant's application for distribution is received by the Administrator. (a) Required Commencement of Distribution - If a Participant does not elect to receive benefits as of an earlier date, as permitted under the Plan, distribution of a Participant's Account shall begin as of the Participant's Required Beginning Date. (b) [ ] Postponed Distributions - Check if the Plan was converted by plan amendment from another defined contribution plan that provided for the postponement of certain distributions from the Plan to eligible Participants and the Employer wants to continue to administer the Plan using the postponed distribution provisions. Please complete the Postponed Distribution Addendum to the Adoption Agreement indicating the types of distributions that are subject to postponement and the period of postponement. Note: An Employer may not provide for postponement of distribution to a Participant beyond the 60th day following the close of the Plan Year in which (1) the Participant attains Normal Retirement Age under the Plan, (2) the Participant's 10th anniversary of participation in the Plan occurs, or (3) the Participant's employment terminates, whichever is latest. 1.21 TOP HEAVY STATUS (a) The Plan shall be subject to the Top-Heavy Plan requirements of Article 15 (check one): (1) [ ] for each Plan Year, whether or not the Plan is a "top-heavy plan" as defined in Subsection 15.01(f). (2) [x] for each Plan Year, if any, for which the Plan is a "top-heavy plan" as defined in Subsection 15.01(f). (3) [ ] Not applicable. (Choose only if Plan covers only employees subject to a collective bargaining agreement.) (b) In determining whether the Plan is a "top-heavy plan" for an Employer with at least one defined benefit plan, the following assumptions shall apply: (1) [x] Interest rate: 7% per annum. (2) [x] Mortality table: 1994 Uninsured Pensioner (UP-94), sex distinct. (3) [ ] Not applicable. (Choose only if either (A) Plan covers only employees subject to a collective bargaining agreement or (B) Employer does not maintain and has not maintained any defined benefit plan during the five-year period ending on the applicable "determination date", as defined in Subsection 15.01(a).) (c) If the Plan is or is treated as a "top-heavy plan" for a Plan Year, each non-key Employee shall receive an Employer Contribution of at least 3.0 (3, 4, 5, or 7 1/2)% of Compensation for the Plan Year in accordance with Section 15.03. The minimum Employer Contribution provided in this Subsection 1.21(c) shall be made under this Plan only if the Participant is not entitled to such contribution under another qualified plan of the Employer, unless the Employer elects otherwise below: (1) [ ] The minimum Employer Contribution shall be paid under this Plan in any event. (2) [ ] Another method of satisfying the requirements of Code Section 416. Please complete the 416 Contribution Addendum to the Adoption Agreement describing the way in which the minimum contribution requirements will be satisfied in the event the Plan is or is treated as a "top-heavy plan". (3) [ ] Not applicable. (Choose only if Plan covers only employees subject to a collective bargaining agreement.) Note: The minimum Employer contribution may be less than the percentage indicated in Subsection 1.21(c) above to the extent provided in Section 15.03. (d) If the Plan is or is treated as a "top-heavy plan" for a Plan Year, the following vesting schedule shall apply instead of the schedule(s) elected in Subsection 1.15(b) for such Plan Year and each Plan Year thereafter (check one): (1) [ ] Not applicable. (Choose only if either (A) Plan provides for Nonelective Employer Contributions and the schedule elected in Subsection 1.15(b)(1) is at least as favorable in all cases as the schedules available below or (B) Plan covers only employees subject to a collective bargaining agreement.) (2) [X] 100% vested after 0 (not in excess of 3) years of Vesting Service. (3) [ ] Graded vesting: Years of Vesting Service Vesting Percentage Must be at Least 0 0% 1 0% 2 20% 3 40% 4 60% 5 80% 6 or more 100% Note: If the Plan provides for Nonelective Employer Contributions and the schedule elected in Subsection 1.15(b)(1) is more favorable in all cases than the schedule elected in Subsection 1.21(d) above, then the schedule in Subsection 1.15(b)(1) shall continue to apply even in Plan Years in which the Plan is a "top-heavy plan". 1.22 CORRECTION TO MEET 415 REQUIREMENTS UNDER MULTIPLE DEFINED CONTRIBUTION PLANS If the Employer maintains other defined contribution plans, annual additions to a Participant's Account shall be limited as provided in Section 6.12 of the Plan to meet the requirements of Code Section 415, unless the Employer elects otherwise below and completes the 415 Correction Addendum describing the order in which annual additions shall be limited among the plans. (a) [ ] Other Order for Limiting Annual Additions 1.23 INVESTMENT DIRECTION Investment Directions - Participant Accounts shall be invested (check one): (a) [ ] in accordance with the investment directions provided to the Trustee by the Employer for allocating all Participant Accounts among the Options listed in the Service Agreement. (b) [ ] in accordance with the investment directions provided to the Trustee by each Participant for allocating his entire Account among the Options listed in the Service Agreement. (c) [x] in accordance with the investment directions provided to the Trustee by each Participant for all contribution sources in his Account, except that the following sources shall be invested in accordance with the investment directions provided by the Employer (check (1) and/or (2)): (1) [x] Nonelective Employer Contributions (2) [ ] Matching Employer Contributions The Employer must direct the applicable sources among the same investment options made available for Participant directed sources listed in the Service Agreement. 1.24 RELIANCE ON OPINION LETTER An adopting Employer may rely on the opinion letter issued by the Internal Revenue Service as evidence that this Plan is qualified under Code Section 401 only to the extent provided in Announcement 2001-77, 2001-30 I.R.B. The Employer may not rely on the opinion letter in certain other circumstances or with respect to certain qualification requirements, which are specified in the opinion letter issued with respect to this Plan and in Announcement 2001-77. In order to have reliance in such circumstances or with respect to such qualification requirements, application for a determination letter must be made to Employee Plans Determinations of the Internal Revenue Service. Failure to fill out the Adoption Agreement properly may result in disqualification of the Plan. This Adoption Agreement may be used only in conjunction with Fidelity Basic Plan Document No. 02. The Prototype Sponsor shall inform the adopting Employer of any amendments made to the Plan or of the discontinuance or abandonment of the prototype plan document. 1.25 PROTOTYPE INFORMATION: Name of Prototype Sponsor: Fidelity Management & Research Company Address of Prototype Sponsor: 82 Devonshire Street Boston, MA 02109 Questions regarding this prototype document may be directed to the following telephone number: 1-800-343-9184. EXECUTION PAGE (Fidelity's Copy) IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this _____ day of _________________, ______. Employer:_____________________________ By:___________________________________ Title:________________________________ Employer:_____________________________ By:___________________________________ Title:________________________________ Accepted by: Fidelity Management Trust Company, as Trustee By:___________________________________ Date:________________ Title:________________________________ EXECUTION PAGE (Employer's Copy) IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this _____ day of _________________, ______. Employer:_____________________________ By:___________________________________ Title:________________________________ Employer:_____________________________ By:___________________________________ Title:________________________________ Accepted by: Fidelity Management Trust Company, as Trustee By:___________________________________ Date:________________ Title:________________________________ AMENDMENT EXECUTION PAGE This page is to be completed in the event the Employer modifies any prior election(s) or makes a new election(s) in this Adoption Agreement. Attach the amended page(s) of the Adoption Agreement to this execution page. The following section(s) of the Plan are hereby amended effective as of the date(s) set forth below: Section Amended Page Effective Date ___________________________ _________ ______________ ___________________________ _________ ______________ ___________________________ _________ ______________ ___________________________ _________ ______________ IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed this _____ day of _____________, ________. Employer:____________________________ Employer:_________________________ By:__________________________________ By:_______________________________ Title:_______________________________ Title:____________________________ Accepted by: Fidelity Management Trust Company, as Trustee By:___________________________________ Date:________________ Title:________________________________ ADDENDUM Re: SPECIAL EFFECTIVE DATES for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan (a) [x] Special Effective Dates for Other Provisions - The following provisions (e.g., new eligibility requirements, new contribution formula, etc.) shall be effective as of the dates specified herein: Section 1.07(a)(1) is effective on 06/24/2003. Prior to this date, the Deferral Contribution was limited to 25% of Compensation. - Effective: 06/24/2003 ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ (b) [ ] Plan Merger Effective Dates - The following plan(s) were merged into the Plan after the Effective Date indicated in Subsection 1.01(g)(1) or (2), as applicable. The provisions of the Plan are effective with respect to the merged plan(s) as of the date(s) indicated below: 1. Name of merged plan:________________________________________ ________________________________________________________________ ________________________________________________________________ Effective date:_________________________________________________ 2. Name of merged plan:________________________________________ ________________________________________________________________ ________________________________________________________________ Effective date:_________________________________________________ 3. Name of merged plan:________________________________________ ________________________________________________________________ ________________________________________________________________ Effective date:_________________________________________________ 4. Name of merged plan:________________________________________ ________________________________________________________________ ________________________________________________________________ Effective date:_________________________________________________ 5. Name of merged plan:________________________________________ ________________________________________________________________ ________________________________________________________________ Effective date:_________________________________________________ ADDENDUM Re: SAFE HARBOR MATCHING EMPLOYER CONTRIBUTION for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan (a) Safe Harbor Matching Employer Contribution Formula Note: Matching Employer Contributions made under this Option must be 100% vested when made and may only be distributed because of death, disability, separation from service, age 59 1/2, or termination of the Plan without the establishment of a successor plan. In addition, each Plan Year, the Employer must provide written notice to all Active Participants of their rights and obligations under the Plan. (1) [ ] 100% of the first 3% of the Active Participant's Compensation contributed to the Plan and 50% of the next 2% of the Active Participant's Compensation contributed to the Plan. (A) [ ] Safe harbor Matching Employer Contributions shall not be made on behalf of Highly Compensated Employees. Note: If the Employer selects this formula and does not elect Option 1.10(b), Additional Matching Employer Contributions, Matching Employer Contributions will automatically meet the safe harbor contribution requirements for deemed satisfaction of the "ACP" test. (Employee Contributions must still be tested.) (2) [ ] Other Enhanced Match: ____% of the first ____% of the Active Participant's Compensation contributed to the plan, ____% of the next ____% of the Active Participant's Compensation contributed to the plan, ____% of the next ____% of the Active Participant's Compensation contributed to the plan. Note: To satisfy the safe harbor contribution requirement for the "ADP" test, the percentages specified above for Matching Employer Contributions may not increase as the percentage of Compensation contributed increases, and the aggregate amount of Matching Employer Contributions at such rates must at least equal the aggregate amount of Matching Employer Contributions which would be made under the percentages described in (a)(1) of this Addendum. (A) [ ] Safe harbor Matching Employer Contributions shall not be made on behalf of Highly Compensated Employees. (B) [ ] The formula specified above is also intended to satisfy the safe harbor contribution requirement for deemed satisfaction of the "ACP" test with respect to Matching Employer Contributions. (Employee Contributions must still be tested.) Note: To satisfy the safe harbor contribution requirement for the "ACP" test, the Deferral Contributions and/or Employee Contributions matched cannot exceed 6% of a Participant's Compensation. ADDENDUM Re: SAFE HARBOR NONELECTIVE EMPLOYER CONTRIBUTION for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan (a) Safe Harbor Nonelective Employer Contribution Election (1) [ ] For each Plan Year, the Employer shall contribute for each eligible Active Participant an amount equal to _____% (not less than 3% nor more than 15%) of such Active Participant's Compensation. (2) [ ] The Employer may decide each Plan Year whether to amend the Plan by electing and completing (A) below to provide for a contribution on behalf of each eligible Active Participant in an amount equal to at least 3% of such Active Participant's Compensation. Note: An Employer that has selected Subsection (a)(2) above must amend the Plan by electing (A) below and completing the Amendment Execution Page no later than 30 days prior to the end of each Plan Year for which safe harbor Nonelective Employer Contributions are being made. (A) [ ] For the Plan Year beginning __________, the Employer shall contribute for each eligible Active Participant an amount equal to % (not less than 3% nor more than 15%) of such Active Participant's Compensation. Note: Safe harbor Nonelective Employer Contributions must be 100% vested when made and may only be distributed because of death, disability, separation from service, age 59 1/2, or termination of the Plan without the establishment of a successor plan. In addition, each Plan Year, the Employer must provide written notice to all Active Participants of their rights and obligations under the Plan. (b) [ ] Safe harbor Nonelective Employer Contributions shall not be made on behalf of Highly Compensated Employees. (c) [ ] In conjunction with its election of the safe harbor described above, the Employer has elected to make Matching Employer Contributions under Subsection 1.10 that are intended to meet the requirements for deemed satisfaction of the "ACP" test with respect to Matching Employer Contributions. ADDENDUM Re: PROTECTED IN-SERVICE WITHDRAWALS for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan (a) Restrictions on In-Service Withdrawals of Amounts Held for Specified Period - The following restrictions apply to in-service withdrawals made in accordance with Subsection 1.18(d)(1)(A) (cannot include any mandatory suspension of contributions restriction): __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ (b) Restrictions on In-Service Withdrawals Because of Participation in Plan for 60 or More Months - The following restrictions apply to in-service withdrawals made in accordance with Subsection 1.18(d)(1)(B) (cannot include any mandatory suspension of contributions restriction): __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ (c) [ ] Other In-Service Hardship Withdrawal Provisions - In-service hardship withdrawals are permitted from a Participant's Deferral Contributions Account and the other sub-accounts specified below, subject to the conditions otherwise applicable to hardship withdrawals from a Participant's Deferral Contributions Account: __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ (d) [X] Other In-Service Withdrawal Provisions - In-service withdrawals from a Participant's Accounts specified below shall be available to Participants who satisfy the requirements also specified below: In-service withdrawal available at age 55 with 10 or more years of active participation in the 401(k) plan after 1/1/2001 (including the active participation in the ESOP prior to 1/1/2001). In-service withdrawal includes assets transferred from the ESOP (Fidelity source 07- Transfer Assets Cash and Fidelity source 08 - Transfer Assets Stock) and Discretionary Profit Sharing Contributions ( Fidelity source 05 - Employer Contribution Cash and Fidelity source 06 - Employer Contribution Stock). __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ (1) [ ] The following restrictions apply to a Participant's Account following an in-service withdrawal made pursuant to (d) above (cannot include any mandatory suspension of contributions restriction): __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ ADDENDUM Re: FORMS OF PAYMENT for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan (a) The following optional forms of annuity will continue to be offered under the Plan: ___________________________________________________ (b) The forms of payment described in Section 1.19(b), (c) and/or (d) apply to the following class(es) of Participants: ___________________________________________________ Note: Please indicate if different classes of Participants are subject to different forms of payment. (c) The following forms of payment were previously available under the Plan but will be eliminated as of the date specified in subsection (4) below (check the applicable (box(es) and complete (4)): (1) [ ] Installment Payments. (2) [ ] Annuities. (A) [ ] The normal form of payment under the Plan was a lump sum and all optional annuity forms of payment not listed under Section 1.19(c)(2)(A)(i) are eliminated. The eliminated forms of payment include the following: (B) [ ] The normal form of payment under the Plan was a life annuity and all annuity forms of payment not listed under Section 1.19(c)(2)(B) are eliminated. (Complete (i) and (ii) and, if applicable, (iii).) (i) The normal form for married Participants was a qualified joint and _____% (at least 50%) survivor annuity. The normal form for unmarried Participants was a single life annuity, unless a different form is specified below: ________________________________________ (ii) The qualified preretirement survivor annuity provided to a Participant's spouse was purchased with ____% (at least 50%) of the Participant's Account. (iii) The other annuity form(s) of payment previously available under the Plan included the following: ________________________________________ (3) [ ] Other Non-Annuity Forms of Payment. All other non-annuity forms of payment that are not listed in Section 1.19(d) but that were previously available under the Plan are eliminated. The eliminated non-annuity forms of payment include the following: ________________________________________ (4) The form(s) of payment described in this Subsection (c) will not be offered to Participants who have an Annuity Starting Date which occurs on or after _________(cannot be earlier than September 6, 2000). Notwithstanding the date entered above, the forms of payment described in this Subsection (c) will continue to be offered to Participants who have an Annuity Starting Date that occurs (1) within 90 days following the date the Employer provides affected Participants with a summary that satisfies the requirements of 29 CFR 2520.104b-3 and that notifies them of the elimination of the applicable form(s) of payment, but (2) no later than the first day of the second Plan Year following the Plan Year in which the amendment eliminating the applicable form(s) of payment is adopted. ADDENDUM Re: VESTING SCHEDULE for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan (a) More Favorable Vesting Schedule (1) The following vesting schedule applies to the class of Participants described in (a)(2) below: ___________________________________________________ ___________________________________________________ ___________________________________________________ ___________________________________________________ ___________________________________________________ (2) The vesting schedule specified in (a)(1) above applies to the following class of Participants: ___________________________________________________ (b) [ ] Additional Vesting Schedule (1) The following vesting schedule applies to the class of Participants described in (b)(2) below: ___________________________________________________ ___________________________________________________ ___________________________________________________ (2) The vesting schedule specified in (b)(1) above applies to the following class of Participants: ___________________________________________________ ADDENDUM Re: POSTPONED DISTRIBUTIONS for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan Postponement of Certain Distributions to Eligible Participants - The types of distributions specified below to eligible Participants of their vested interests in their Accounts shall be postponed for the period also specified below: __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ Notwithstanding the foregoing, if the Employer selected an Early Retirement Age in Subsection 1.14(b) that is the later of an attained age or completion of a specified number of years of Vesting Service, any Participant who terminates employment on or after completing the required number of years of Vesting Service, but before attaining the required age shall be eligible to commence distribution of his vested interest in his Account upon attaining the required age. ADDENDUM Re: 415 CORRECTION for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan (a) Other Formula for Limiting Annual Additions to Meet 415 - If the Employer, or any employer required to be aggregated with the Employer under Code Section 415, maintains any other qualified defined contribution plans or any "welfare benefit fund", "individual medical account", or "simplified medical account", annual additions to such plans shall be limited as follows to meet the requirements of Code Section 415: _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ADDENDUM Re: 416 CONTRIBUTION for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan (a) Other Method of Satisfying the Requirements of 416 - If the Employer, or any employer required to be aggregated with the Employer under Code Section 416, maintains any other qualified defined contribution or defined benefit plans, the minimum benefit requirements of Code Section 416 shall be satisfied as follows: _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ SNAP OFF ADDENDUM Re: EFFECTIVE DATES FOR GUST COMPLIANCE for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan Notwithstanding any other provision of the Plan to the contrary, to comply with changes required by the Retirement Protection Act of 1994 ("GATT"), the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"), the Small Business Job Protection Act of 1996 ("SBJPA"), the Taxpayer Relief Act of 1997 ("TRA '97") and the Internal Revenue Service Restructuring and Reform Act of 1998 (collectively, "GUST"), the following provisions shall apply effective as of the dates set forth below: (a) The following elections were in effect for Plan Years beginning on or after January 1, 1997 and ending before the date specified in Subsection 1.01(g)(2): (1) HCE Determinations History - The Plan was operated in accordance with the provisions of Subsections 1.06(a) and 1.06(b), unless otherwise provided below. (A) [ ] HCE Determinations: Look Back Year Elections - For the following Plan Year(s), the Plan was operated in accordance with a different look back year election as provided below: (B) [ ] HCE Determinations: Top Paid Group Elections - For the following Plan Year(s), the Plan was operated in accordance with a different top paid group election as provided below: (2) ADP/ACP Testing Methods History - The Plan was operated using the testing method shown in Subsection 1.06(a), unless otherwise provided below. (A) [ ] For the following Plan Years, the Plan was operated in accordance with a different method as provided below: _________________________________________________ _________________________________________________ (3) First Year Testing Method - If the first Plan Year that the Plan, other than a successor plan, permitted Deferral Contributions or provided for either Employee or Matching Employer Contributions, occurred on or after January 1, 1997 but prior to the Effective Date specified in Subsection 1.01(g)(2), the "ADP" and/or "ACP" test for such first Plan Year was applied using the actual "ADP" and/or "ACP" of Non-Highly Compensated Employees for such first Plan Year, unless otherwise provided below. (A) [ ] The "ADP" and/or "ACP" test for the first Plan Year that the Plan permitted Deferral Contributions or provided for either Employee or Matching Employer Contributions was applied assuming a 3% "ADP" and/or "ACP" for Non-Highly Compensated Employees. (b) The following provisions are effective as of the following dates, except as otherwise provided in the applicable Subsection(s) (A): (1) The definition of "Required Beginning Date" in Subsection 2.01(ss) is effective January 1, 1997. (A) [ ] Later effective date applicable to the definition of Required Beginning Date in Subsection 2.01(ss): ____________ (Cannot be later than the January 1 following the date specified in Subsection 1.01(g)(2)). (2) The elimination of all family aggregation rules is effective for Plan Years beginning on or after January 1, 1997. (A) [ ] Later effective date applicable to elimination of family aggregation rules: ___________ (Cannot be later than the first day of the Plan Year in which the date specified in Subsection 1.01(g)(2) occurs). (3) The inclusion in Compensation for purposes of Code Section 415 of amounts excluded from gross income under a salary reduction agreement by reason of the application of Code Sections 125, 402(e)(3), 402(h), or 403(b), as provided in Subsection 6.12(d), is effective for Limitation Years beginning on or after January 1, 1998. (A) [ ] Later effective date applies to modification of definition of Compensation for Code Section 415 purposes:______ (Cannot be later than the first day of the Limitation Year in which the date specified in Subsection 1.01(g)(2) occurs). (4) The increase in the cash out limitation from $3,500 to $5,000 is effective the first day of the first Plan Year beginning after August 5, 1997. (A) [ ] Later effective date applies to increase in cash out limitation: __________ (Cannot be later than the date specified in Subsection 1.01(g)(2)). (5) The elimination of the "look back" requirement for mandatory cashouts with respect to Participants whose Accounts are not subject to the requirements of Section 14.04 shall be effective with respect to distributions made on or after March 22, 1999. (A) [ ] Later effective date applies to elimination of look back requirement for mandatory cashouts: ________ (Cannot be later than the date specified in Subsection 1.01(g)(2)). (6) The exclusion from the definition of "eligible rollover distribution" in Subsection 13.04(c) of hardship withdrawals of Deferral Contributions made in accordance with the provisions of Section 10.05 or the Protected In-Service Withdrawal Addendum to the Adoption Agreement is effective for distributions made on or after January 1, 1999. (A) [ ] Later effective date applies to rollover treatment of hardship withdrawals of Deferral Contributions: _______ (Cannot be later than the earlier of January 1, 2000 or the date specified in Subsection 1.01(g)(2)). (c) The following provisions are effective as of the following dates: (1) The inclusion in Compensation of amounts excluded from gross income under a salary reduction agreement by reason of the application of Code Sections 132(f)(4) (the "132(f) Amendment"), as provided in Subsections 2.01(s) and 2.01(z) and Sections 5.02 and 15.03 is effective for Plan Years beginning on or after January 1, 2001, or, if earlier, the first day of the Plan Year in which the Plan has been operated in accordance with the 132(f) Amendment, but, in no case earlier than the first Plan Year beginning on or after January 1, 1998. The 132(f) Amendment, as provided in Subsection 6.12(d) is effective for Limitation Years beginning on or after January 1, 2001, or, if earlier, the first day of the Limitation Year in which the Plan has been operated in accordance with the 132(f) Amendment, but, in no case earlier than the first Limitation Year beginning on or after January 1, 1998. (2) The definition of "Highly Compensated Employee" in Subsection 2.01(z) is effective for Plan Years beginning on or after January 1, 1997. (3) The definition of "Leased Employee" in Subsection 2.01(cc) is effective for Plan Years beginning on or after January 1, 1997. (4) The change in the "maximum permissible amount", as defined in Subsection 6.01(r), to $30,000 adjusted for cost of living increases, is effective for Limitation Years beginning on or after January 1, 1995. (5) The rules for applying the "ADP" test, described in Section 6.03, and the "ACP" test, described in Section 6.06 are effective for Plan Years beginning on or after January 1, 1997. (6) The rules for allocating and distributing "excess contributions", as provided in Section 6.04, and the rules for allocation, distribution and forfeiture of "excess aggregate contributions", as provided in Section 6.07 are effective for Plan Years beginning on or after January 1, 1997. (7) The 4% limitation on discretionary matching employer contributions in the event the Plan is intended to satisfy the safe harbor contribution requirements under the Code such that the "ADP" test (and, if applicable, the "ACP" test) is deemed satisfied is effective only for Plan Years beginning on or after January 1, 2000. (8) The provisions of Section 18.03, regarding the Code Section 401(a)(13)(C) and (D) exceptions to the nonalienability of benefits rules, apply to judgments, orders, and decrees issued and settlement agreements entered into on or after August 5, 1997. (9) The provisions of Section 18.07, regarding veterans reemployment rights, are effective December 12, 1994. (d) For Plan Years ending before the date specified in Subsection 1.01(g)(2), the provisions of this amendment and restatement that are related to GUST shall apply in accordance with the provisions of this amendment and restatement, except as otherwise provided below: _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ (e) For Plan Years ending before the date specified in Subsection 1.01(g)(2), the provisions of this amendment and restatement that are related to GUST shall apply to all plans merged into the Plan during the period covered by this Addendum except to the extent any such merged plan is amended to provide otherwise or as provided below: _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ THE CORPORATEPLAN FOR RETIREMENTSM (PROFIT SHARING/401(K) PLAN) ADDENDUM TO ADOPTION AGREEMENT FIDELITY BASIC PLAN DOCUMENT No. 02 RE: ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 ("EGTRRA") AMENDMENTS for Plan Name: Giant Industries, Inc. & Affiliated Companies 401(k) Plan PREAMBLE Adoption and Effective Date of Amendment. This amendment of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This amendment is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided below, this amendment shall be effective as of the first day of the first plan year beginning after December 31, 2001. Supersession of Inconsistent Provisions. This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment. (a) Catch-up Contributions. The Employer must select either (1) or (2) below to indicate whether eligible Participants age 50 or older by the end of a calendar year will be permitted to make catch-up contributions to the Plan, as described in Section 5.03(b)(1): (1) [X] Catch-up contributions shall apply effective January 1, 2002, unless a later effective date is specified herein, _________. (2) [ ] Catch-up contributions shall not apply. Note: The Employer must not select (a)(1) above unless all plans of all employers treated, with the Employer, as a single employer under subsections (b), (c), (m), or (o) of Code Section 414 also permit catch up contributions (except a plan maintained by the Employer that is qualified under Puerto Rico law), as provided in Code Section 414(v)(4) and IRS guidance issued thereunder. The effective date applicable to catch-up contributions must likewise be consistent among all plans described immediately above, to the extent required in Code Section 414(v)(4) and IRS guidance issued thereunder. (b) Plan Limit on Elective Deferral for Plans Permitting Catch-up Contributions. This Section (b) is inapplicable if the Plan converted to this Fidelity document from any other document effective after April 1, 2002. For Plans that permit catch-up contributions beginning on or before April 1, 2002, pursuant to (a)(1) above, the 60% Plan Limit described in Section 5.03(b)(2) shall apply beginning April 1, 2002, unless (b)(1) or (b)(2) is selected below. For Plans that permit catch up contributions beginning after April 1, 2002, pursuant to (a)(1) above, the Plan Limit set out in Section 1.07(a)(1) shall continue to apply unless and until the Employer's election in (b)(2) below, if any, provides for a change in the Plan Limit. (1) [ ] The Plan Limit set out in Section 1.07(a)(1) shall continue to apply on and after April 1, 2002. (2) [ ] The Plan Limit set out in Section 1.07(a)(1) shall continue to apply until ________________ (cannot be before April 1, 2002), and the Plan Limit after that date shall be ____% of Compensation each payroll period. (c) Matching Employer Contributions on Catch-up Contributions. The Employer must select the box below only if the Employer selected (a)(1) above, and the Employer wants to provide Matching Employer Contributions on catch-up contributions. In that event, the same rules that apply to Matching Employer Contributions on Deferral Contributions other than catch-up contributions will apply to Matching Employer Contributions on catch-up contributions. [X] Notwithstanding anything in 2.01(l) to the contrary, Matching Employer Contributions under Section 1.10 shall apply to catch-up contributions described in Section 5.03(b)(1). (d) Vesting of Matching Employer Contributions. Complete this section (d) only if the vesting schedule for Matching Employer Contributions under the Plan must be amended to comply with EGTRRA. This is the case if, in the absence of an amendment, the vesting schedule for Matching Employer Contributions would not be at least as rapid as Three-Year Cliff or Six-Year Graded Vesting, effective for Participants with at least one Hour of Service on or after the first Plan Year beginning after December 31, 2001, subject to the rule described in (2) below. Complete (d)(1) to specify the new vesting schedule; any vesting schedule changes must conform to the requirements of Section 16.04 of the Plan. Only complete (d)(2) if your Plan is maintained pursuant to a collective bargaining agreement ratified by June 7, 2001. Complete (d)(3) if the Employer wants to apply the vesting schedule selected in (d)(1) to only the portion of a Participant's accrued benefits derived from Matching Employer Contributions for Plan Years beginning after December 31, 2001. (1) Vesting Schedule for Matching Employer Contributions. Unless the Employer checks the box in (d)(3) of this EGTRRA Amendments Addendum, the Vesting Schedule set forth below shall apply to all accrued benefits derived from Matching Employer Contributions for Participants who complete an Hour of Service under the Plan in a Plan Year beginning after December 31, 2001, regardless of the Plan Year for which such contributions are made, subject to the Employer's election of a later effective date as indicated in (d)(2) below: [ ] 100% Vesting immediately [ ] 3-Year Cliff (see C below) [ ] 6-Year Graded (see E below) [ ] Other Vesting Schedule (complete G3 below, but must be at least as favorable as either C or E) Applicable Vesting Schedule Years of Vesting Service C E G3 0 0% 0% __% 1 0% 0% __% 2 0% 20% __% 3 100% 40% __% 4 100% 60% __% 5 100% 80% __% 6 or more 100% 100% 100% (2) Delayed Effective Date for Plans Subject to Collective Bargaining. If the plan is maintained pursuant to one or more collective bargaining agreements ratified by June 7, 2001, the effective date for faster vesting of Matching Employer Contributions for Participants covered by such a collective bargaining agreement can be delayed by checking the box below and inserting the effective date, which is the first day of the first Plan Year beginning on or after the earlier of (i) January 1, 2006, or (ii) the later of the date on which the last of the collective bargaining agreements described above terminates (without regard to any extension on or after June 7, 2001), or January 1, 2002. [ ] The vesting schedule elected by the Employer in (d)(1) above shall apply to those Participants covered by a collective bargaining agreement(s) ratified by June 7, 2001, who have at least one Hour of Service on or after ___________. Unless the Employer selects the box in (d)(3) below, the vesting schedule selected in (d)(1) above shall apply to the entire accrued benefit derived from Matching Employer Contributions of such Participants with an Hour of Service in a Plan Year beginning on or after the date specified herein. For all other Participants, the vesting schedule shall apply as of the date and in the manner described in (d)(1) and, where applicable, (d)(3). (3) Grandfathered Application of Prior Vesting Schedule. The Employer must check the box below only if the Employer wants to grandfather an existing vesting schedule and apply the vesting schedule that the Employer selected in (d)(1) above to only that portion of a Participant's accrued benefit derived from Matching Employer Contributions for Plan Years beginning after December 31, 2001, (and/or for Plan Years beginning on or after the date specified in (d)(2), for any Participants subject to (d)(2), if selected by the Employer). [ ] The Vesting Schedule in (d)(1) above shall apply only to the portion of a Participant's accrued benefits derived from Matching Employer Contributions under the Plan in a Plan Year beginning after December 31, 2001, or such later date applicable to the Participant if specified in (d)(2) above. (e) Rollovers of After-Tax Employee Contributions to the Plan. The Employer must mark the box below only if the Employer does not want the Plan to accept Participant Rollover Contributions of qualified plan after-tax employee contributions, as described in Section 5.06, which would otherwise be effective for distributions after December 31, 2001: [ ] Participant Rollover Contributions or direct rollovers of qualified plan after-tax employee contributions shall not be accepted by the Plan at any time. (f) Application of the Same Desk Rule. The Employer must mark the box below only if the Employer wants to discontinue the application of the same desk rule set forth in Section 12.01(a). [x] Effective for distributions from the Plan after December 31, 2001, or such later date as specified herein 01/01/2002, a Participant's elective deferrals, qualified nonelective contributions and qualified matching contributions, if applicable, and earnings attributable to such amounts shall be distributable, upon a severance from employment as described in Section 12.01(b), effective only for severances occurring after ______ (or, if no date is entered, regardless of when the severance occurred). Amendment Execution (Fidelity's Copy) IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed this _____ day of ________________, ______. Employer:____________________________ Employer:_________________________ By:__________________________________ By:_______________________________ Title:_______________________________ Title:____________________________ Accepted by: Fidelity Management Trust Company, as Trustee By:___________________________________ Date:________________ Title:________________________________ Amendment Execution (Employer's Copy) IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed this 19th day of June, 2003. Employer: Giant Industries, Inc. Employer: ---------------------------- ------------------------- By: /s/ NATALIE R. DOPP By: ---------------------------------- ------------------------------- Title: VP, Human Resources Title: ------------------------------- ---------------------------- Accepted by: Fidelity Management Trust Company, as Trustee By: /s/ ROBERT Q. BUCKLES Date: June 23, 2003 ---------------------------------- ----------------------------- Title: Authorized Signatory ------------------------------- EX-4 4 exhibit04-2.txt GIANT INDUSTRIES, INC.'S 2003 2 QTR. 10-Q - EXHIBIT 4.2 EXHIBIT 4.2 FIRST AMENDMENT TO THE Giant Industries, Inc. & Affiliated Companies 401(k) Plan WHEREAS, Giant Industries, Inc. (the "Corporation") has adopted and subsequently amended and restated the Giant Industries, Inc. & Affiliated Companies 401(k) Plan (the "Plan"), in the form of The CORPORATEplan for RetirementSM Profit Sharing/401(k) Plan Fidelity Basic Plan Document No. 02 (a prototype plan sponsored by Fidelity Management and Research Corporation), by executing an Adoption Agreement, effective June 24, 2003; and WHEREAS, Section 16.02 of The CORPORATEplan for RetirementSM Profit Sharing/401(k) Plan Fidelity Basic Plan Document No. 02 provides for the amendment of the Plan by the Employer, and NOW THEREFORE, Section 1.04(b)(2) of the Adoption Agreement is amended by adding the following at its conclusion: "Full-Time Employees shall become eligible to make Deferral Contributions beginning on the first Entry Date on or after they complete sixty days or more of service. For this purpose, "Full- Time Employee" means an Employee who is regularly schedule to work thirty (30) or more hours per week. Sections 1.05(a) and (b) of the Adoption Agreement are amended by adding the following at the conclusion of 1.05(b)(2). "In addition to the marked exclusions, Compensation shall exclude any amount realized from the exercise of a qualified or nonqualified stock option, and any Compensation for the portion of the Plan Year during which the employee is classified by the Employer as an employee of Giant Yorktown, Inc." With respect to Section 1.16, Service for purposes of eligibility in Subsection 1.04(b) shall include Service with the following predecessor employers: (a) Bloomfield Refining Company ("Bloomfield"), The Gary-Williams Company ("Gary-Williams"), and any affiliate or predecessor employer of either, but only to the extent service was credited under The Gary Tax Advantaged Savings Program and Profit-Sharing Plan on October 4, 1995 with respect to such employer, and only for employees who were employed by Bloomfield or Gary-Williams on October 3, 1995, and became Employees of the Employer on October 4, 1995, in connection with the sale of assets of Bloomfield Refining Company to the Employer. (b) Meridian Oil Inc., Meridian Oil Gathering Inc., and Meridian Oil Trading Inc. (collectively "Meridian"), and any affiliate or predecessor employer of Meridian, but only to the extent service was credited under the Burlington Resources Retirement Savings Plan on August 18, 1995 with respect to such employer, and only for employees who were employed by Meridian on August 17, 1995, and became Employees of the Employer on August 18, 1995, in connection with the sale of assets of Meridian to the Employer. (c) Texaco Refining and Marketing Inc. ("Texaco"), and any affiliate or predecessor employer of Texaco, but only to the extent service was credited under any plan sponsored by Texaco that qualified under Section 401(a)(4) of the Code, and only for an employee who was employed by Texaco on July 24, 1993, and became an Employee of the Employer on July 25, 1995 in connection with the sale of assets of Texaco to the Employer. (d) Thriftway Marketing Corporation ("Thriftway") for service before May 28, 1997 but only for Pat Curtis, a human resource generalist, and for employees employed by Thriftway on May 27, 1997 who were employed or hired into the transportation division on or about May 28, 1997 and who became Employees of the Employer on May 28, 1997 in connection with the sale of assets of Thriftway and certain related entities to the Employer. (e) Kaibab Industries, Inc. ("Kaibab") and any affiliate or predecessor employer of Kaibab, but only to the extent Service was granted under the Kaibab 401(k) Plan and only for an employee who was employed by Kaibab immediately before becoming an Employee of the Employer and became an Employee of the Employer on or after May 21, 1998 and on or before December 31, 1998, in connection with the sale of certain assets of Kaibab to the Employer." (f) BP Amoco Corporation, BP Heritage BP, Heritage Amoco, Amoco, or any affiliate or predecessor (collectively, "BP Amoco"), but only with respect to service before 2003, only to the extent service was credited under the BP Employee Savings Plan, and only with respect to an employee who was employed by BP Amoco at the Yorktown Refinery at any time beginning on or after January 1, 2000 and ending on or before the Closing Date, and who becomes an employee of Giant Yorktown, Inc., on or after the Closing Date and on or before December 31, 2002, in connection with the Purchase Agreement. For this purpose, "Closing Date" means the closing date under the Purchase Agreement, and "Purchase Agreement" means the purchase agreement dated as of February 8, 2002 under which Giant Industries, Inc. is purchasing a refinery located in Yorktown, Virginia and related assets (collectively, the "Yorktown Refinery") from BP Corporation North America Inc. and BP Products North America Inc." Section 1.23(c)(1) of the Adoption Agreement is amended by adding the following at its conclusion: The Employer may direct the Trustee to invest any or all of any Nonelective Employer Contributions in the Employer stock fund. With respect to the remainder of the Nonelective Employer Contribution, if any, the Participant shall direct the Trustee regarding its investment. The Employer may direct the Trustee to invest in the Employer stock fund a portion of amounts transferred from the ESOP, and the Participant shall direct the Trustee regarding the investment of the remainder of his Transfer Account. A Participant who has either (1) attained age 59 1/2 or (2) attained age 55 and been credited with 10 years of active participation in the 401(k) plan after 1/1/01 (including the active participation in the ESOP prior to 1/1/01) may direct the Trustee regarding the investment of all or a portion of the Nonelective Employer Contribution and Transfer Account otherwise invested at the Employer's direction in the Employer Stock Fund (source line 06, Employer Contribution Stock and source line 08 Transfer Assets Stock). IN WITNESS WHEREOF the Employer has caused this amendment to be executed this 19th day of June, 2003, by its duly authorized officer, effective June 24, 2003. GIANT INDUSTRIES, INC. By: /s/ NATALIE R. DOPP ------------------------------ Title: VP, Human Resources --------------------------- EX-4 5 exhibit04-3.txt GIANT INDUSTRIES, INC.'S 2003 2 QTR. 10-Q - EXHIBIT 4.3 EXHIBIT 4.3 SECOND AMENDMENT TO THE Giant Industries, Inc. & Affiliated Companies 401(k) Plan WHEREAS, Giant Industries, Inc. (the "Corporation") has adopted and subsequently amended and restated the Giant Industries, Inc. & Affiliated Companies 401(k) Plan (the "Plan"), in the form of The CORPORATEplan for RetirementSM Profit Sharing/401(k) Plan Fidelity Basic Plan Document No. 02 (a prototype plan sponsored by Fidelity Management and Research Corporation), by executing an Adoption Agreement, effective June 24, 2003; and WHEREAS, Section 16.02 of The CORPORATEplan for RetirementSM Profit Sharing/401(k) Plan Fidelity Basic Plan Document No. 02 provides for the amendment of the Plan by the Employer, and NOW THEREFORE, 1. Effective July 1, 2003 Section 1.04(b)(2) of the Adoption Agreement is amended, by deleting the following at its conclusion: "Full-Time Employees shall become eligible to make Deferral Contributions beginning on the first Entry Date on or after they complete sixty days or more of service. For this purpose, "Full- Time Employee" means an Employee who is regularly schedule to work thirty (30) or more hours per week. 2. Effective July 1, 2003 Sections 1.04(b)(2)(A) and (B) are amended as shown on page 2 of the attachment. 3. Effective July 1, 2003 Sections 1.04(e)(1) and (2) are amended as shown on page 3 of the attachment. IN WITNESS WHEREOF the Employer has caused this amendment to be executed this 27th day of June, 2003, by its duly authorized officer, effective July 1, 2003. GIANT INDUSTRIES, INC. By: /s/ NATALIE R. DOPP ------------------------------ Title: VP, Human Resources --------------------------- Attachment to Second Amendment THE CORPORATEPLAN FOR RETIREMENTSM (Profit Sharing/401(k) Plan) A Fidelity Prototype Plan Non-Standardized Adoption Agreement No. 001 For use With Fidelity Basic Plan Document No. 02 Plan Number: 40292 Non-Std PS Plan The CORPORATEplan for RetirementSM 12/05/2001 2001 FMR Corp. All rights reserved. ADOPTION AGREEMENT ARTICLE 1 NON-STANDARDIZED PROFIT SHARING/401(K) PLAN 1.01 PLAN INFORMATION (a) Name of Plan: This is the Giant Industries, Inc. & Affiliated Companies 401(k) Plan (the "Plan") 1.04 COVERAGE All Employees who meet the conditions specified below shall be eligible to participate in the Plan: (a) Age Requirement (check one): (1) [x] no age requirement. (2) [ ] must have attained age:_____ (not to exceed 21). (b) Eligibility Service Requirement (1) Eligibility to Participate in Plan (check one): (A) [ ] no Eligibility Service requirement. (B) [ ] _____(not to exceed 11) months of Eligibility Service requirement (no minimum number Hours of Service can be required). (C) [X] one year of Eligibility Service requirement (at least 1,000 Hours of Service are required during the Eligibility Computation Period). (D) [ ] two years of Eligibility Service requirement (at least 1,000 Hours of Service are required during each Eligibility Computation Period). (Do not select if Option 1.01(b)(1), 401(k) Only, is checked, unless a different Eligibility Service requirement applies to Deferral Contributions under Option 1.04(b)(2).) Note: If the Employer selects the two year Eligibility Service requirement, then contributions subject to such Eligibility Service requirement must be 100% vested when made. (2) [x] Special Eligibility Service requirement for Deferral Contributions and/or Matching Employer Contributions: (A) The special Eligibility Service requirement applies to (check the appropriate box(es)): (i) [x] Deferral Contributions. (ii) [ ] Matching Employer Contributions. (B) The special Eligibility Service requirement is: (A) (Fill in (A), (B), or (C) from Subsection 1.04(b)(1) above). (c) Eligible Class of Employees (check one): Note: The Plan may not cover employees who are residents of Puerto Rico. These employees are automatically excluded from the eligible class, regardless of the Employer's selection under this Subsection 1.04(c). (1) [ ] includes all Employees of the Employer. (2) [x] includes all Employees of the Employer except for (check the appropriate box(es)): (A) [x] employees covered by a collective bargaining agreement. (B) [ ] Highly Compensated Employees as defined in Code Section 414(q). (C) [x] Leased Employees as defined in Subsection 2.01(cc). (D) [x] nonresident aliens who do not receive any earned income from the Employer which constitutes United States source income. (E) [x] other: An employee who is classified by the Employer as an employee of Giant Yorktown, Inc. Note: The Employer should exercise caution when excluding employees from participation in the Plan. Exclusion of employees may adversely affect the Plan's satisfaction of the minimum coverage requirements, as provided in Code Section 410(b). (d) The Entry Dates shall be (check one): (1) [ ] immediate upon meeting the eligibility requirements specified in Subsections 1.04(a), (b), and (c). (2) [x] the first day of each Plan Year and the first day of the seventh month of each Plan Year. (3) [ ] the first day of each Plan Year and the first day of the fourth, seventh, and tenth months of each Plan Year. (4) [ ] the first day of each month. (5) [ ] the first day of each Plan Year. (Do not select if there is an Eligibility Service requirement of more than six months in Subsection 1.04(b) or if there is an age requirement of more than 20 1/2 in Subsection 1.04(a).) (e) [x] Special Entry Date(s) - In addition to the Entry Dates specified in Subsection 1.04(d) above, the following special Entry Date(s) apply for Deferral and/or Matching Employer Contributions. (Special Entry Dates may only be selected if Option 1.04(b)(2), special Eligibility Service requirement, is checked. The same Entry Dates must be selected for contributions that are subject to the same Eligibility Service requirements.) (1) The special Entry Date(s) shall apply to (check the appropriate box(es)): (A) [x] Deferral Contributions. (B) [ ] Matching Employer Contributions. (2) The special Entry Date(s) shall be: (1) (Fill in (1), (2), (3), (4), or (5) from Subsection 1.04(d) above). (f) Date of Initial Participation - An Employee shall become a Participant unless excluded by Subsection 1.04(c) above on the Entry Date immediately following the date the Employee completes the service and age requirement(s) in Subsections 1.04(a) and (b), if any, except (check one): (1) [x] no exceptions. (2) [ ] Employees employed on the Effective Date in Subsection 1.01(g)(1) or (2) shall become Participants on that date. (3) [ ] Employees who meet the age and service requirement(s) of Subsections 1.04(a) and (b) on the Effective Date in Subsection 1.01(g)(1) or (2) shall become Participants on that date. AMENDMENT EXECUTION PAGE This page is to be completed in the event the Employer modifies any prior election(s) or makes a new election(s) in this Adoption Agreement. Attach the amended page(s) of the Adoption Agreement to this execution page. The following section(s) of the Plan are hereby amended effective as of the date(s) set forth below: Section Amended Page Effective Date 1.04(b)(2)(A) 4 7/1/03 1.04(b)(2)(B) 4 7/1/03 1.04(e)(1) and 1.04(e)(2) 5 7/1/03 1.04(b)(2) 4 (see attached amendment) 7/1/03 IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed this 27th day of June, 2003. Employer: Giant Industries, Inc. Employer: ---------------------------- ------------------------- By: /s/ NATALIE R. DOPP By: ---------------------------------- ------------------------------- Title: VP, Human Resources Title: ------------------------------- ---------------------------- Accepted by: Fidelity Management Trust Company, as Trustee By: /s/ JOAN M. BERNING Date: 7/1/03 ---------------------------------- ----------------------------- Title: Authorized Signatory ------------------------------- EXECUTION PAGE (FIDELITY'S COPY) This Agreement shall be effective upon execution by both parties. By executing this Agreement, the parties agree to terms and conditions contained in the Agreement and the following attached Appendices: Original Service Agreement Effective Date Revision Date(s) Articles I and II 01/01/1996 Appendix A - Investment Schedule and Services Appendix B - Enrollment and Education Services Appendix C - Contribution Processing Services Appendix D - Loan and Withdrawal Services Appendix E - Compliance Services Appendix F - Miscellaneous Additional Services 07/01/2003 In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officers. Employer: Employer: /s/ NATALIE R. DOPP - ------------------------------- ------------------------------- (Signature) (Signature) Natalie R. Dopp - ------------------------------- ------------------------------- (Print Name) (Print Name) VP, Human Resources - ------------------------------- ------------------------------- (Title) (Title) 6/27/03 - ------------------------------- ------------------------------- (Date) (Date) Note: Only one authorized signature is required to execute this Agreement unless the Employer's corporate policy mandates two authorized signatures. Fidelity Management Trust Company: /s/ JOAN M. BERNING - ------------------------------- (Signature) Joan M. Berning - ------------------------------- (Print Name) Authorized Signatory - ------------------------------- (Title) 7/1/03 - ------------------------------- (Date) EXECUTION PAGE (EMPLOYER'S COPY) This Agreement shall be effective upon execution by both parties. By executing this Agreement, the parties agree to terms and conditions contained in the Agreement and the following attached Appendices: Original Service Agreement Effective Date Revision Date(s) Articles I and II 01/01/1996 Appendix A - Investment Schedule and Services Appendix B - Enrollment and Education Services Appendix C - Contribution Processing Services Appendix D - Loan and Withdrawal Services Appendix E - Compliance Services Appendix F - Miscellaneous Additional Services 07/01/2003 In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officers. Employer: Employer: /s/ NATALIE R. DOPP - ------------------------------- ------------------------------- (Signature) (Signature) Natalie R. Dopp - ------------------------------- ------------------------------- (Print Name) (Print Name) VP, Human Resources - ------------------------------- ------------------------------- (Title) (Title) 6/27/03 - ------------------------------- ------------------------------- (Date) (Date) Note: Only one authorized signature is required to execute this Agreement unless the Employer's corporate policy mandates two authorized signatures. Fidelity Management Trust Company: /s/ JOAN M. BERNING - ------------------------------- (Signature) Joan M. Berning - ------------------------------- (Print Name) Authorized Signatory - ------------------------------- (Title) 7/1/03 - ------------------------------- (Date) APPENDIX F - MISCELLANEOUS The provision(s) as identified in this Appendix F shall supercede the referenced provision(s) of this Agreement, subject to the terms and conditions contained herein. For provision(s) below identified as exceptions to the Plan (requiring an amendment to the CORPORATEplan for RetirementSM), the Employer hereby agrees to obtain a favorable determination letter on the Plan from the Internal Revenue Service. Title: Amendment to Compensation Description: The Employer will provide an amendment that excludes any amount realized from the exercise of qualified or nonqualified stock options and any Compensation for the portion of the Plan Year during which the employee is classified by the Employer as an employee of Giant Yorktown, Inc. from the definition of Compensation. Exception Fee: Fee Waived Fidelity hereby agrees to allow an amendment to the CORPORATEplan for RetirementSM to incorporate a Plan provision to accomplish the above stated purpose. Amending the Plan to add such a provision will make the Plan individually designed and the Employer hereby agrees to accept all consequences of such a designation (see attached). Title: Change to Loan Policy in Appendix D Description: Participant will be permitted to initiate up to two loans in a given plan year. While Fidelity will produce Participant communication materials and forms for use by the Employer, the Employer must provide any necessary language summarizing this provision as well as identify which materials and forms would use this language. Exception Fee: Fee Waived Title: Change to Loan Policy in Appendix D Description: Loan availability is to be computed based on the entire account balance except for the Non-Elective Employer Contribution Stock (EMPLOYER CONTRIB STOCK SOURCE) and the ESOP Transfer Stock (TRANSFER ASSETS STOCK SOURCE) accounts and is to be withdrawn from those same accounts. While Fidelity will produce Participant communication materials and forms for use by the Employer, the Employer must provide any necessary language summarizing this provision as well as identify which materials and forms would use this language. Exception Fee: Fee Waived Title: Amendment to Investment Direction Description: The Employer will provide an amendment that allows for Employer investment direction for one of the Non-Elective Employer Contribution account and Employee Investment direction from the other Non-Elective Employer Contribution account. Exception Fee: Fee Waived Fidelity hereby agrees to allow an amendment to the CORPORATEplan for RetirementSM to incorporate a Plan provision to accomplish the above stated purpose. Amending the Plan to add such a provision will make the Plan individually designed and the Employer hereby agrees to accept all consequences of such a designation (see attached). Title: Amendment to Non-Elective Employer Contribution Description: The Employer will provide an amendment that allows it to decide upon funding of each contribution if the Employer or Employee will direct investment. Exception Fee: Fee Waived Fidelity hereby agrees to allow an amendment to the CORPORATEplan for RetirementSM to incorporate a Plan provision to accomplish the above stated purpose. Amending the Plan to add such a provision will make the Plan individually designed and the Employer hereby agrees to accept all consequences of such a designation (see attached). Title: Amendment to Investment Direction Description: The Employer will provide an amendment that allows for employee investment direction in all restricted accounts upon attaining either age 55 and 10 years of service, or age 59.5. Exception Fee: Fee Waived Fidelity hereby agrees to allow an amendment to the CORPORATEplan for RetirementSM to incorporate a Plan provision to accomplish the above stated purpose. Amending the Plan to add such a provision will make the Plan individually designed and the Employer hereby agrees to accept all consequences of such a designation (see attached). Attachment to Appendix F of the CORPORATEplan for RetirementSM Service Agreement Article II, Section 2 of the CORPORATEplan for RetirementSM Service Agreement provides that the Employer may not add, delete, or modify the CORPORATEplan for RetirementSM prototype documents in any way without the written consent of Fidelity. In Appendix F of the CORPORATEplan for RetirementSM Service Agreement, Fidelity gave its written consent that this provision be waived solely for the purpose of allowing the company to make a certain amendment to the prototype plan. The Employer will be responsible for drafting the amendment to which reference is made in Appendix F. As a result of this amendment, the Employer's Plan will not be able to rely on the opinion letter Fidelity received from the IRS for the CORPORATEplan for RetirementSM with respect to the Employer's Plan. The Employer's Plan will be individually designed, and the Employer will incur the 'user' fee for an individually designed plan instead of the fee for a prototype plan in filing for an IRS determination letter. The Employer will be responsible for the continuing qualification of the plan, including amending it to comply with the required Internal Revenue Service guidelines. Fidelity will provide the Employer with a copy of any model amendments or updates to the Fidelity Prototype plan. The Employer shall be responsible for retaining the provision allowed by Appendix F (if so desired) in any restated version of the Fidelity Prototype Plan adopted by the Employer. While Fidelity will generate a Summary Plan Description for the Employer's Plan, the Employer must provide any necessary language summarizing the amendment. Finally, the Employer must give Fidelity the opportunity to review any other amendment that the Employer proposes to the Plan, allowing Fidelity to approve or reject the amendment based upon its impact on the operation of the Plan. EX-4 6 exhibit04-4.txt GIANT INDUSTRIES, INC.'S 2003 2 QTR. 10-Q - EXHIBIT 4.4 EXHIBIT 4.4 Amendment to The CORPORATEplan for RetirementSM Service Agreement to Conform to Re-executed Documents WHEREAS, the undersigned employer ("Employer") and Fidelity Management Trust Company ("Trustee") have executed the CORPORATEplan for RetirementSM Service Agreement ("CPR Service Agreement") under which the Trustee and its affiliates (collectively, Fidelity) have agreed to provide specified services for the Giant Industries, Inc. & Affiliated Companies 401(k) Plan (the "Plan"); WHEREAS, Article VII, Section 12, of the CPR Service Agreement provides that it may be amended by a written agreement signed by the Employer and Fidelity; and WHEREAS, the Employer and Trustee now desire to amend the CPR Service Agreement. NOW THEREFORE, the Employer and Trustee through this written agreement ("Amendment") hereby adopt the following amendments to the CPR Service Agreement: Article II is renumbered to be Subarticle B of Article I and is further amended by deleting the words "mailed directly to Participants' homes". Article III is renumbered to be Subarticle C of Article I. Article IV is renumbered to be Subarticle D of Article I. Articles V, VI and VII are deleted. AND FURTHER AGREE, that this Amendment shall be effective upon the date listed under the "Original Effective Date" column on the attached Execution Pages and that the attached Article II and Appendices listed on the Execution Pages are incorporated into the CPR Service Agreement and control over conflicting provisions of the previously executed CPR Service Agreement, or any amendments thereto. V4.8 (06/2002) CPR Service Agreement 8/8/2003 2002 Fidelity Management & Research Company ARTICLE II. TERMS AND CONDITIONS This Agreement is subject to the following terms and conditions: 1. Services: Fidelity shall have the responsibility to perform only those services set forth in this Agreement, including any Appendices to this Agreement. All other regulatory and administrative matters relating to the Plan shall be the responsibility of the Employer and the Plan Administrator. The Employer acknowledges that Fidelity does not provide legal or tax advice, and that the Employer must obtain its own legal and tax counsel for advice on the plan design appropriate for its specific situation and on legal and tax issues pertaining to the administration of the Plan. 2. Documents: The Employer must use the Fidelity CORPORATEplan for RetirementSM ('CPR') Prototype Basic Plan Document, corresponding Adoption Agreement, and Service Agreement. The Service Agreement includes any Appendices or Amendments, which are expressly made part of the Service Agreement. The Employer may not add, delete, or modify the documents in any way without the written consent of Fidelity. The Employer shall be responsible for completing and executing the Adoption Agreement, Standardized or Non-Standardized. Fidelity as the Prototype Plan Sponsor is responsible for updating and amending the Prototype plan document and may not provide legal advice to the Employer on the completion and execution of the documents. The Employer may only rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this Plan is qualified under section 401 of the Internal Revenue Code to the extent provided for by the Internal Revenue Service (IRS). The Employer is responsible for filing a request with the appropriate IRS office to obtain an individual determination letter for the Plan and for paying associated IRS user fees. 3. Related Employers: The Employer is responsible for determining if the Employer is a member of a controlled group of businesses or an affiliated service group, as those terms are defined by the Internal Revenue Code, and for notifying Fidelity in writing of its determination. Fidelity is under no obligation to verify the Employer's determination. Only members of the Employer's controlled group or affiliated service group may participate in the Plan. If the Standardized Adoption Agreement is adopted by the Employer, all members of its controlled group or affiliated service group must be included in the plan. Failure to do so may result in disqualification of the Plan by the Internal Revenue Service. If the Non-standardized Adoption Agreement is adopted by the Employer, group members that participate in the Plan must be listed as Related Employers in the Adoption Agreement. All employees of group members must be considered for the coverage and contribution requirements of the Plan and of any plan of a group member. If the Employer's controlled group or affiliated service group status changes after initial retention of Fidelity, the Employer must provide timely written notification to Fidelity and take other appropriate action to include, exclude, or remove group members or former group members from the Plan. 4. Conversion Method/Transition Period: An existing Employer plan converting to Fidelity shall be subject to a transition period to facilitate the movement of Participant records and Plan assets from the prior recordkeeper and/or trustee to Fidelity. The responsibilities of the parties, the procedures for the conversion, and the duration of the transition period are dependent upon the conversion method(s) selected by the Employer in the separate Conversion Strategy Agreement and are subject to the conditions and limitations contained therein. 5. Investments: Fidelity shall have no discretion or authority with respect to the investment of the Plan assets but shall act solely as a directed trustee of the contributed funds. All Plan assets must be invested in the Permissible Investments elected by the Employer and identified in Appendix A and are subject to the terms and conditions contained therein. The Employer may add, delete, or replace a Permissible Investment with another by providing Fidelity with proper written direction at least thirty days prior to the effective date of the change. Forfeitures held by the Plan prior to application and contributions received by Fidelity as to which investment instructions have not been provided shall be invested in the Permissible Investment selected by the Employer for such purposes or, absent Employer selection, in the most conservative Permissible Investment designated in Appendix A, until investment instructions have been received by Fidelity. Delivery of prospectuses, amended prospectuses, and annual and semi-annual reports for Permissible Investments may only be made to the Named Fiduciary designated in Article II unless the Employer directs Fidelity in writing to deliver said information to Participants or a Participant requests said information in accordance with procedures communicated to Participants by Fidelity. 6. Employer Investment Direction: If Employer investment direction is elected by the Employer, then all Participant accounts must be invested in Permissible Investments. A Participant shall not be allowed to make any exchanges of his/her account balance. Fidelity shall provide the Employer with procedures for exchanging Participant account balances between/among mutual Fund(s) offered under the Plan. Exchanges requested by an authorized Plan representative shall be executed within the time period specified in the procedures. Fidelity reserves the right to modify the procedures upon notice to the Employer. 7. Investment Directions by Participants: If Participant investment direction is elected by the Employer, each Participant in the Plan shall be permitted to direct the investment of his/her individual account balance and future contributions among Permissible Investments through Fidelity's telephone exchange system or internet exchange system, except as otherwise provided in the Plan and this Agreement, including any Appendices. The frequency of changes in investments shall be determined under the rules applicable to the Permissible Investments unless the Employer has adopted additional rules limiting the frequency of investment changes in accordance with Plan. Except as otherwise provided in this Agreement, including any Appendices, a proper exchange request received by Fidelity prior to the closing of the New York Stock Exchange shall be effective on that day. The Employer hereby directs Fidelity to act upon such directions without questioning the authenticity of the direction other than as provided in this section. A Participant shall be required to provide his/her Social Security Number and personal identification number. For security purposes, the Employer may direct that a Participant using the telephone exchange system be required to respond to additional questions (e.g., date of birth, date of hire) before being able to access his/her accounts. Only authorized Plan contacts and the Participant shall have access to a Participant's account. 8. Reliance and Indemnification: Fidelity may rely upon and act upon any writing from any person authorized by the Employer to give instructions concerning the Plan and may conclusively rely upon and be protected in acting upon any written order from the Employer or upon any other notice, request, consent, certificate, or other instructions or paper reasonably believed by it to have been executed by a duly authorized person, so long as it acts in good faith in taking or omitting to take any such action. Fidelity need not inquire as to the basis in fact of any statement in writing received from the Employer. Fidelity shall be entitled to reasonably rely upon the information provided by the Employer in performance of its duties hereunder. Unless resulting from Fidelity's negligence or willful misconduct, the Employer shall indemnify and save harmless Fidelity from any and all liabilities and expenses, including without limitation, reasonable attorney's fees incurred or required to be paid by Fidelity in connection with the Plan. Notwithstanding anything in this Agreement to the contrary and subject to the provisions of the attached Appendices to this Agreement, (i) any direction, notice or other communication provided to the Employer or Fidelity by another party required to be in writing by the Plan or this Service Agreement, (ii) any service provided under this Agreement requiring or utilizing written information, or (iii) any written communication or disclosure to Participants required by the Plan or this Service Agreement may be provided through any medium that is permitted under applicable law or regulation and, to the extent so allowed, will no longer require any writing to which reference is made in this Agreement. 9. Fees: As consideration for its services under this Agreement, Fidelity shall be entitled to the fees in accordance with Article I, this Article II, and any Appendices or amendments to this Agreement. Fees shall be billed to the Employer or charged to Participant accounts as indicated. The Employer is responsible for determining whether any fees paid from Plan assets are reasonable expenses of administering the Plan as required by the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Fees charged to Participant accounts shall be charged as a flat dollar amount to all Participants unless otherwise indicated or directed by the Employer. A reasonable additional fee shall be charged if Fidelity has to reprocess or correct any contribution data transmission due to excessive errors of the Employer or its payroll vendor, not to exceed $100.00 per hour. The Employer will be notified by Fidelity prior to incurring these charges. Fidelity shall be entitled to reasonable compensation for its extraordinary costs and expenses incurred in the event of termination of this Agreement. The Employer will be notified by Fidelity prior to incurring these charges. In addition, Fidelity reserves the right to charge a termination fee in an amount equal to a full year of Administrative and Trustee fees under this Agreement in the event the Employer terminates its relationship with Fidelity within one year after the Implementation Date, unless resulting from Fidelity's willful misconduct. Unless otherwise indicated, all Fidelity fees under this Agreement, including any Appendices, shall be billed in arrears to the Employer or Participants, as applicable, on a quarterly basis during the twelve-month annual billing cycle. An Employee is treated as a Participant for purposes of the annual per-participant Administrative Services fee if he/she has an account balance on any day in the twelve-month annual billing cycle. If payment of the aforementioned fees is not received by Fidelity within sixty days of receipt of Fidelity's invoice, the fees shall be paid from available Plan forfeitures or shall be charged against the respective accounts of all Participants on a per capita basis. Fidelity may charge a separate Implementation Services Conversion Fee under Article I if the Employer acquires another Company and merges the acquired Company's plan with its Plan or receives additional assets for its Plan. The Conversion Fee shall be determined after the relevant information has been received by Fidelity, and it shall be communicated to the Employer prior to the conversion, due to merger, acquisition, takeover, or divestiture. 10. Duration and Amendment: This Agreement shall remain in effect for the remainder of the current calendar year and shall thereafter be automatically extended for successive one-year terms. Either party, however, by sixty days prior written notice to the other, may terminate this Agreement. The receiving party may agree to a shorter notice period. This Agreement may be amended or modified at any time and from time to time by an instrument executed by the parties. Notwithstanding the foregoing, Fidelity reserves the right to amend unilaterally this Service Agreement upon sixty days prior written notice to the Employer to update services and procedures or to revise the fee schedule in accordance with the terms thereof. 11. Service Providers: Fidelity Management Trust Company is the non- discretionary Trustee of the Employer's Plan under the CORPORATEplan for RetirementSM. Fidelity may use its affiliates in providing the services described in this Agreement. 12. Construction and Interpretation: This agreement shall be construed in accordance with the laws of the Commonwealth of Massachusetts except to the extent such laws are superseded by Section 514 of ERISA. Unless defined herein or a different meaning is clearly required by the context, capitalized terms shall have the meanings set forth in the Plan. SPECIMEN SIGNATURES At least one person is required to be authorized to provide instructions to Fidelity Management Trust Company regarding the CORPORATEplan for RetirementSM account. Only the following person(s) designated below is/are authorized to advise Fidelity on all plan administrative matters: NAME & TITLE SPECIMEN SIGNATURE Natalie R. Dopp /s/ NATALIE R. DOPP - ------------------------------ ----------------------------------------- VP, Human Resources - ------------------------------ ----------------------------------------- - ------------------------------ ----------------------------------------- Delbert L. Tingey /s/ DELBERT L. TINGEY - ------------------------------ ----------------------------------------- Benefits Manager - ------------------------------ ----------------------------------------- - ------------------------------ ----------------------------------------- - ------------------------------ ----------------------------------------- - ------------------------------ ----------------------------------------- PROCEDURE FOR CHANGING SPECIMEN SIGNATURES: The specimen signatures can be changed by the Employer at any time. To add a new authorized signer, the Employer must send a letter of instruction signed by an authorized individual to the designated Fidelity representative, with an original specimen signature of the new authorized signer. To delete a signer, the Employer should send a similar letter identifying the individual who is no longer an authorized signer. The Employer must provide any change at least ten business days prior to the date the change shall become effective. INVESTMENT LITERATURE CONTACT The Administrator designated in the Plan is the Named Fiduciary of the Plan. The individual designated below shall receive on behalf of the Named Fiduciary prospectuses and annual and semi-annual reports pertaining to the Permissible Investment options of the Plan. Mr. Delbert L Tingey - --------------------------------------- (Name) Benefits Manager - --------------------------------------- (Title) 23733 North Scottsdale Road - --------------------------------------- (Address Line 1) - --------------------------------------- (Address Line 2) Scottsdale AZ 85255 - --------------------------------------- (City) (State) (Zip) EXECUTION PAGE (FIDELITY'S COPY) This Agreement shall be effective upon execution by both parties. By executing this Agreement, the parties agree to terms and conditions contained in the Agreement and the following attached Appendices: Original Revision Service Agreement Effective Date Date(s) Articles I and II Appendix A - Investment Schedule and Services 01/01/1996 06/24/2003 Appendix B - Enrollment and Education Services 06/24/2003 Appendix C - Contribution Processing Services 06/24/2003 Appendix D - Loan and Withdrawal Services 06/24/2003 Appendix E - Compliance Services 06/24/2003 Appendix F - Miscellaneous Additional Services 06/24/2003 In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officers. Employer: Employer: /s/ NATALIE R. DOPP - ------------------------------- ------------------------------- (Signature) (Signature) Natalie R. Dopp - ------------------------------- ------------------------------- (Print Name) (Print Name) VP, Human Resources - ------------------------------- ------------------------------- (Title) (Title) 6/19/03 - ------------------------------- ------------------------------- (Date) (Date) Note: Only one authorized signature is required to execute this Agreement unless the Employer's corporate policy mandates two authorized signatures. Fidelity Management Trust Company: /s/ ROBERT Q. BUCKLES - ------------------------------- (Signature) Robert Q. Buckles - ------------------------------- (Print Name) Authorized Signatory - ------------------------------- (Title) June 23, 2003 - ------------------------------- (Date) EXECUTION PAGE (EMPLOYER'S COPY) This Agreement shall be effective upon execution by both parties. By executing this Agreement, the parties agree to terms and conditions contained in the Agreement and the following attached Appendices: Original Revision Service Agreement Effective Date Date(s) Articles I and II Appendix A - Investment Schedule and Services 01/01/1996 06/24/2003 Appendix B - Enrollment and Education Services 06/24/2003 Appendix C - Contribution Processing Services 06/24/2003 Appendix D - Loan and Withdrawal Services 06/24/2003 Appendix E - Compliance Services 06/24/2003 Appendix F - Miscellaneous Additional Services 06/24/2003 In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officers. Employer: Employer: /s/ NATALIE R. DOPP - ------------------------------- ------------------------------- (Signature) (Signature) Natalie R. Dopp - ------------------------------- ------------------------------- (Print Name) (Print Name) VP, Human Resources - ------------------------------- ------------------------------- (Title) (Title) 6/19/03 - ------------------------------- ------------------------------- (Date) (Date) Note: Only one authorized signature is required to execute this Agreement unless the Employer's corporate policy mandates two authorized signatures. Fidelity Management Trust Company: /s/ ROBERT Q. BUCKLES - ------------------------------- (Signature) Robert Q. Buckles - ------------------------------- (Print Name) Authorized Signatory - ------------------------------- (Title) June 23, 2003 - ------------------------------- (Date) APPENDIX A: INVESTMENT SCHEDULE AND SERVICES Participant Accounts under the Trust shall be invested among the Permissible Investment options listed below pursuant to Participant and/or Employer directions and pursuant to the conditions and limitations contained in this Appendix A. Unless specifically indicated otherwise in this Appendix A, Appendix F, or an amendment to this Agreement, purchases, sales, and exchanges of each Permissible Investment option are controlled by that Permissible Investment's prospectus or other governing document(s). 1. Fidelity Funds (Core Options) Fund # Fidelity Fund Name 0631 Fidelity Retirement Government Money Market Portfolio 0054 Fidelity Government Income Fund 0319 Fidelity Equity-Income II Fund 0022 Fidelity Contrafund 0330 Fidelity Dividend Growth Fund 0650 Spartan U.S. Equity Index Fund 0316 Fidelity Low-Priced Stock Fund 0337 Fidelity Mid-Cap Stock Fund 0325 Fidelity Diversified International Fund 0369 Fidelity Freedom Income Fund 0370 Fidelity Freedom 2000 Fund 0371 Fidelity Freedom 2010 Fund 0372 Fidelity Freedom 2020 Fund 0373 Fidelity Freedom 2030 Fund 0718 Fidelity Freedom 2040 Fund 0314 Fidelity Asset Manager(SM) 0321 Fidelity Asset Manager: Growth The Employer agrees that the Fidelity Freedom funds listed above (all those starting with 'Fidelity Freedom') are being selected as a group of all the Fidelity Freedom funds currently available for the Plan. The Employer understands that a choice can be made at any time to remove all Fidelity Freedom funds as Permissible Investments for the Plan. The Employer agrees that any change to the Permissible Investments for the Plan to remove Fidelity Freedom funds will be effective as soon as administratively feasible for Fidelity (after the Employer and Fidelity have amended this agreement to reflect such change) and that the Employer will communicate to participants the date and consequences of such change. The Employer hereby directs Fidelity to add or remove as Permissible Investments for the Plan any Fidelity Freedom fund being added to or removed from the group of all Fidelity Freedom funds. Fidelity shall always give the Employer at least 90 days notice of the date that funds available through the Freedom Fund group will change and the Employer has until 20 days before such date to direct Fidelity to remove all Fidelity Freedom funds as Permissible Investments for the Plan. To the extent that the Employer selects as a Permissible Investment option the Managed Income Portfolio of the Fidelity Group Trust for Employee Benefit Plans ('Group Trust'), the Employer hereby (A) agrees to the terms of the Group Trust and adopts said terms as a part of this Agreement and (B) acknowledges that it has received from the Trustee copies of the Fidelity Group Trust for Employee Benefit Plans, the Declaration of Separate Fund for the Managed Income Portfolio, the Participation Agreement for the Managed Income Portfolio, and the IRS Determination Letter for the Group Trust. The Employer also acknowledges that plan-level redemptions from the Managed Income Portfolio directed by the Employer require twelve months advance written notice. 2. Non-Fidelity Funds (Core Options) Annual Fee per plan: Fee Waived Fee Paid By: Fund # Non-Fidelity Fund Name BPS* OMOD Lord Abbett Mid-Cap Value Fund - Class A 0 OF5K Janus Adviser Capital Appreciation Fund - Class I 0 OFBK Baron Growth Fund 0 *Basis-point-per-annum fee charged by Fidelity on amounts invested in the Non-Fidelity Fund is waived. Fidelity shall provide recordkeeping services for Non-Fidelity Funds subject to and in accordance with the terms and conditions of this Section: a. For purposes of this Agreement, 'Non-Fidelity Fund' shall mean an investment company registered under the Investment Company Act of 1940, as amended, other than one advised by Fidelity Management & Research Company, and specified in an agreement between Fidelity and the transfer agent for such investment company ('Fund Vendor'). b. The Basis-point-per-annum fee charged by Fidelity shall be computed and billed or charged in arrears quarterly based on the market value of Non- Fidelity Funds held in Participant Accounts on the last business day of the quarter. In addition to the fees specified above, Fidelity shall be entitled to fees from the Fund Vendor as set forth in a separate agency agreement with the Fund Vendor. Fidelity will make available appropriate information concerning the current provisions of such agreements electronically (currently through Plan Sponsor Webstation) for the Employer's review. c. The Fund Vendor shall prepare and provide descriptive information on the funds for use by Fidelity in its written participant communication materials. Fidelity shall utilize historical performance data obtained from third-party vendors in communications with plan participants. The Employer hereby consents to Fidelity's use of such materials and acknowledges that Fidelity is not responsible for the accuracy of such third-party information. 3. Employer Stock Employer Stock Information* Stock Name: Giant Industries, Inc. Stock Symbol: GI Dividend Payments: Yes Employer Contributions by: Cash Annual Fee: $23,000.00 Fee Paid By: Employer *The Employer is required to notify Fidelity of any changes in this information and Fidelity reserves the right to adjust the annual fee for Employer Stock immediately in the event of a change. Unitized Share Accounting Fidelity shall recordkeep and trustee 'Employer stock' subject to terms and conditions of the Plan and this Section a. The 'Employer stock' and the Plan must meet the following requirements: i. The 'Employer stock' must be publicly traded and Depository Trust Company eligible. ii. If the Plan allows Participant investment direction, the Plan must comply with Section 404(c) of the Employee Retirement Income Security Act of 1974, as amended ('ERISA'). The 'Employer stock' may not be one of the 'core investment options' under Section 404(c). iii. The 'Employer stock' must be 'qualifying employer securities' within the meaning of Section 407(d)(5) of ERISA. Fidelity shall not trustee or recordkeep stock of a company that is not a Related Employer of the Employer. b. Investments in 'Employer stock' shall be made via the 'Employer stock' investment fund (the 'stock fund'), which shall consist of shares of 'Employer stock' and short-term liquid investments consisting of mutual fund shares or commingled money market pool units, as agreed to by the Employer and Fidelity, necessary to satisfy the 'stock fund's' cash needs for transfers and payments. A target range for the short-term, liquid investments shall be maintained for the 'stock fund'. The Named Fiduciary shall, after consultation with Fidelity, establish and communicate to Fidelity in writing such target range and a drift allowance for such short-term, liquid investments. Such target range and drift allowance may be changed by the Named Fiduciary, after consultation with Fidelity, provided any such change is communicated to Fidelity in writing. Fidelity is responsible for ensuring that the actual short-term, liquid investments held in the 'stock fund' fall within the agreed-upon target range over time, subject to Fidelity's ability to execute open-market trades in 'Employer stock' or to otherwise trade with the Employer. Purchases and sales on the open market of 'Employer stock' shall be made in accordance with the Fidelity's standard trading guidelines, as they may be amended from time to time, as necessary to honor exchange and withdrawal activity and to maintain the target range and drift allowance for the 'stock fund'. Fidelity may temporarily exceed the drift allowance for the target range when necessary to reach sufficient Available Liquidity (pursuant to paragraph d below) to allow transactions to be processed. c. Each Participant's interest in the 'stock fund' shall be measured in units of participation. Such units shall represent a proportionate interest in all assets of the 'stock fund,' which includes shares of 'Employer stock,' short-term investments, and at times, receivables for dividends and/or 'Employer stock' sold and payables for 'Employer stock' purchased. A net asset value (NAV) per unit shall be determined daily for each cash unit outstanding of the 'stock fund.' Valuation of the 'stock fund' shall be based upon: (i) the New York Stock Exchange closing price of the stock; or (ii) if unavailable, the latest available price as reported by the principal national securities exchange on which the 'Employer stock' is traded; or (iii) if neither is available, the price determined in good faith by the Trustee. The NAV shall be adjusted for gains or losses realized on sales of 'Employer stock,' appreciation or depreciation in the value of those shares owned, dividends paid on 'Employer stock' (to the extent not used to purchase additional units of the 'stock fund' for affected participants), interest on the short-term investments held by the 'stock fund,' payables and receivables for pending stock trades, receivables for dividends not yet distributed, and payables for other expenses of the 'stock fund,' including principal obligations, if any, and expenses that, pursuant to Employer direction, the Trustee accrues or pays from the 'stock fund.' The NAV will also be adjusted for commissions on purchases and sales of 'Employer stock.' d. Unless otherwise directed in writing pursuant to directions that Fidelity can administratively implement, purchases and sales of units shall be made as follows: i. Subject to subparagraphs (I) and (II) below, purchases and sales of units in the 'stock fund' (other than for exchanges) shall be made on the date on which Fidelity receives from the Administrator in good order all information, documentation, and wire transfers of funds (if applicable), necessary to accurately effect such transactions. Exchanges of units in the 'stock fund' shall be made in accordance with the Exchange Guidelines provided in paragraph ii. hereof. (I) Aggregate sales of units in the 'stock fund' on any day shall be limited to the Available Liquidity of the 'stock fund' for that day. For these purposes, Available Liquidity shall mean the amount of short-term investments held in the fund decreased by any outgoing cash for expenses then due, payables for loan principal, and obligations for pending stock purchases, and increased by incoming cash (such as contributions, exchanges in, loan repayments) and to the extent credit is available and allocable to the 'stock fund', receivables for pending stock sales. In the event that the requested sales exceed the Available Liquidity, then transactions shall be processed giving precedence to distributions, loans and withdrawals, and otherwise on a first-in first-out (FIFO) basis, as provided in the Specified Hierarchy stated in paragraph iii. hereof. So long as the 'stock fund' is open for such transactions, sales of units that are requested but not processed on a given day due to insufficient Available Liquidity shall be suspended until Available Liquidity is sufficient to honor such transactions in accordance with the Specified Hierarchy. (II) Fidelity shall close the 'stock fund' to sales or purchases of units, as applicable, on any date on which trading in the 'Employer stock' has been suspended or substantial purchase or sale orders are outstanding and cannot be executed. ii. Exchange Guidelines. Provided that the 'stock fund' is open for purchases and sales of units, the following rules will govern exchanges: (I) Participants may contact Fidelity on any day to exchange from mutual funds, or any GIC fund or managed income portfolio into the 'stock fund.' If the request is confirmed before the close of the market (generally, 4:00 p.m. ET) on a business day, it will receive that day's trade date. Requests confirmed after the close of the market on a business day (or on any day other than a business day) will be processed on a next business day basis. (II) Participants may contact Fidelity on any day to exchange the 'stock fund' to a mutual fund or any GIC fund or managed income portfolio. If Fidelity accepts the request conditionally before the close of the market (generally 4:00 p.m. ET) on any business day and Available Liquidity is sufficient to honor the trade after Specified Hierarchy rules are applied, it will receive that day's trade date. Requests accepted conditionally after the close of the market on any business day (or on any day other than a business day) will be processed on a next business day basis, subject to Available Liquidity for such day after application of Specified Hierarchy rules. If Available Liquidity on any day is insufficient to honor the trade after application of Specified Hierarchy rules, it will be suspended until Available Liquidity is sufficient, after application of Specified Hierarchy rules, to honor such trade, and it will receive the trade date and Closing Price of the date on which it was processed. iii. Specified Hierarchy. The following procedures shall govern sales of the 'stock fund' requested for a day on which Available Liquidity is insufficient: (I) Loans, withdrawals and distributions will be aggregated and placed first in the hierarchy. If Available Liquidity is sufficient for the aggregate of such transactions, all such loans, withdrawals and distributions will be honored. If Available Liquidity is insufficient for the aggregate of such transactions, then no such loans, withdrawals or distributions will be honored. (II) If Available Liquidity has not been exhausted by the aggregate of loans, withdrawals and distributions, then all remaining transactions involving a sale of units in the Stock Fund shall be grouped on the basis of when such requests were received, in accordance with standard procedures maintained by the Trustee for such grouping as they may be amended from time to time. To the extent of Available Liquidity, all transactions in a group will be honored, on a FIFO basis. If Available Liquidity is insufficient to honor all transactions within a group, then none of such transactions in the group will be honored. Transactions not honored on a particular day due to insufficient Available Liquidity shall be honored, using the hierarchy specified above, on the next business day on which there is Available Liquidity. 4. Annual Fee for Excess Core Permissible Investment Options The fees stated in this Service Agreement, including any Appendices and amendments hereto, take into consideration the Core Permissible Investment options selected by the Employer in this Appendix A and include up to 15 Core Permissible Investment options with no additional annual fee. The annual fee for each Core Permissible Investment option in excess of 15 is $500.00 per option and such fee is in addition to any fees specified elsewhere in this Service Agreement, including any Appendices and amendments hereto. The annual fee for excess Core Permissible Investment options shall be billed or charged quarterly in arrears and paid by Employer. The Fidelity Freedom funds, Fidelity Select Foundation, and Mutual Fund Window collectively count as one Permissible Investment option each. Any change to the Core Permissible Investment options selected by the Employer after the effective date of this Service Agreement shall require an amendment to this Service Agreement and may result in amended or additional fees. 5. Mutual Fund Window Participants may participate in a Mutual Fund Window arrangement under the Plan, hereinafter referred to as 'MFW'. Fidelity shall provide recordkeeping services for MFW in accordance with the terms and conditions of this Section. Additional Fees: Setup Fee per Plan: Fee Waived Fee Paid By:___________ Annual Fee per Plan: Fee Waived Fee Paid By:___________ Quarterly Fee per Participant: Fee Waived Fee Paid By:___________ Terms: a. MFW allows a participant to invest in any of the Fidelity Funds listed below. b. The quarterly per participant fee will be assessed for every participant having a balance at the end of the billing period in any fund available only through this MFW. Participants may invest in any of the other permissible investments (hereinafter 'Core Funds') described in other sections of Appendix A without being subject to these MFW fees. The annual fee for excess permissible investment options listed in Appendix A shall only apply to those selected Core Funds. c. The following is a list of all other funds in which a Plan Participant may invest through MFW: Fund # Fidelity Fund Name 0003 Fidelity Fund 0004 Fidelity Puritan Fund 0005 Fidelity Trend Fund 0015 Fidelity Ginnie Mae Fund 0023 Fidelity Equity-Income Fund 0025 Fidelity Growth Company Fund 0026 Fidelity Investment Grade Bond Fund 0032 Fidelity Intermediate Bond Fund 0038 Fidelity Capital & Income Fund 0039 Fidelity Value Fund 0040 Fidelity Mortgage Securities Fund 0073 Fidelity Independence Fund 0093 Fidelity OTC Portfolio 0094 Fidelity Overseas Fund 0301 Fidelity Europe Fund 0302 Fidelity Pacific Basin Fund 0303 Fidelity Real Estate Investment Portfolio 0304 Fidelity Balanced Fund 0305 Fidelity International Growth & Income Fund 0307 Fidelity Capital Appreciation Fund 0308 Fidelity Convertible Securities Fund 0309 Fidelity Canada Fund 0311 Fidelity Utilities Fund 0312 Fidelity Blue Chip Growth Fund 0315 Fidelity Disciplined Equity Fund 0318 Fidelity Worldwide Fund 0320 Fidelity Stock Selector 0322 Fidelity Emerging Markets Fund 0324 Fidelity Aggressive Growth Fund 0328 Fidelity Asset Manager: Income 0331 Fidelity New Markets Income Fund 0332 Fidelity Export and Multinational Fund 0334 Fidelity Global Balanced Fund 0335 Fidelity Aggressive International Fund 0336 Fidelity Small Cap Independence Fund 0338 Fidelity Large Cap Stock Fund 0341 Fidelity Europe Capital Appreciation Fund 0347 Fidelity Asset Manager: Aggressive 0349 Fidelity Latin America Fund 0350 Fidelity Japan Fund 0351 Fidelity Southeast Asia Fund 0384 Fidelity Small Cap Retirement Fund 0397 Spartan Total Market Index Fund 0450 Fidelity Short-Term Bond Fund 0500 Fidelity Fifty 0630 Fidelity Retirement Money Market Portfolio 0632 Fidelity Managed Income Portfolio 0651 Fidelity U.S. Bond Index Fund 0662 Fidelity Institutional Short-Intermediate Government Fund 0708 Fidelity Structured Large Cap Value Fund 0762 Fidelity Structured Mid Cap Value Fund 0763 Fidelity Structured Large Cap Growth Fund 0793 Fidelity Structured Mid Cap Growth Fund 0794 Fidelity Inflation-Protected Bond Fund 0812 Fidelity Ultra-Short Bond Fund 0818 Fidelity International Small Cap Fund 0820 Fidelity Total Bond Fund The Employer may not add, delete, or replace any investment option identified in this Appendix A within 90 days of the Plan's adding the MFW. The Employer understands that this MFW service is an investment selection of a certain group of funds currently available for the Plan and that the funds present in this MFW service change over time. The Employer understands that a choice can be made at any time to change from the MFW service to another investment platform (another window or a platform without a window investment) offered by Fidelity and available to the Plan. The Employer will always have the option to move to an investment platform of 15 Fidelity Funds (not Select Funds) chosen from among those available to the Plan. The Employer agrees that any change of investment platform will be effective as soon as administratively feasible for Fidelity (after the Employer and Fidelity have amended this agreement to reflect such change) and that the Employer will communicate to participants the date and consequences of such change. The Employer hereby directs Fidelity to add new funds to the Permissible Investments for the Plan as those funds are added to MFW service. Fidelity shall always give the Employer at least 90 days notice of the date that new fund(s) will become available through the MFW service and the Employer has until 20 days before such date to direct Fidelity not to make any such new fund or funds available for the Plan. The Employer understands that, since this service is a package service and Fidelity is unable to customize this package, the Employer's decision not to add certain fund(s) may mean that the Plan is unable to remain on its current MFW service. If the Employer's decisions make the Plan unable to remain on its current MFW service, the Employer agrees to choose an entirely different investment platform (another MFW service or a platform without a MFW service) for the Plan at least 10 business days before such new funds are to be added to the current MFW service. The Employer hereby directs Fidelity to remove from the Permissible Investments for the Plan any funds being removed as a fund available under the MFW service ('Non-MFW Funds'). Fidelity shall always give the Employer at least 90 days notice of the date that a fund or funds will become Non-MFW Funds. If the Employer decides to change any of the Core Permissible Investments for the Plan, the Employer agrees that Fidelity may reassess the Plan's fee structure and charge additional fees based upon the Core Permissible Investments for the Plan resulting from the Employer's decision. The Employer hereby directs Fidelity to exchange all balances present in the any such Non-MFW funds, on the date such a Non-MFW Fund ceases to be a Permissible Investment for the Plan, into the default investment for the Plan. The Employer agrees that any closure of a fund that is part of the MFW service will be treated as a fund being removed from the MFW service pursuant to the paragraph immediately preceding, except that Fidelity may adjust notice timeframes as circumstances dictate. The Employer further agrees that anytime a fund within the MFW service merges completely (thus ceasing to exist) into a fund that is not currently a Permissible Investment under the Plan, that such fund will be treated as if it was closing pursuant to the previous sentence. Fidelity agrees that anytime two funds that are Permissible Investments under the Plan merge, Fidelity will assist the Employer with communicating in advance the consequences of the merger to its Plan participants. The Employer agrees that when two Permissible Investments merge Plan participants who do not act before the date of the merger will have their account balances in each such fund combined in the resulting fund. If a merger of two Permissible Investments will result in the Plan having one less Core Permissible Investment, Fidelity agrees to give the Employer the opportunity to remove the resulting fund from the MFW service and assign it as a Core Permissible Investment. The Employer understands that the timing of the merger of funds is outside of the control of the Trustee and that all assistance to be provided the Employer will always be on a best efforts basis. The Plan is intended to constitute a plan described in ERISA Section 404(c) and regulations issued thereunder. The Employer shall not be relieved of fiduciary responsibility for the selection and monitoring of all Permissible Investments under the Plan, including any constituting part of the MFW. APPENDIX B: ENROLLMENT AND EDUCATION SERVICES Fidelity shall provide Enrollment and Education Services as outlined in this Appendix B. Consultation with a Fidelity Education Consultant is available to identify additional needs in the future. 1. {Reserved} 2. Ongoing Enrollment and Educational Services provided at no additional charge - Enrollment Kits for newly eligible Participants - Ongoing Education Curriculum (one per year) - Retirement Benefits Line - Stages Magazines - Stages Program for Retirees, Pre-retirees and Job Changers - NetBenefits Internet Service - Unless the Employer specifically directs Fidelity otherwise in writing, Plan Participants will be provided educational and informational materials about integrated Fidelity investment opportunities through the Fidelity Employee Investment Services program. - Participant Statements: Fidelity will mail Participant statements directly to Participants' homes except for individual Participants who have indicated through Automated Channels (Fidelity Automated Retirement Benefits Line, NetBenefitsSM World Wide Web Internet service, or any other service subsequently employed by Fidelity to facilitate electronic plan administration) that they desire to receive statements only through Automated channels. Notwithstanding any of the above, a Participant will always have the ability to request a written statement at least as frequently as legally required. - In the event that Fidelity, or any of its affiliates, provides tools or services that estimate the initial eligible entry date for Employees based on Plan design and assumed achievement of some Plan eligibility variables, Fidelity does not represent, warrant, guarantee or certify that such estimates are accurate. The Employer agrees that Fidelity has no responsibility for any such estimates. - Fidelity may from time to time produce communication materials and forms that the Employer may use regarding the Plan. The Employer acknowledges that it is solely responsible for any such communication materials and/or forms, or modification thereof, ultimately distributed or otherwise used in connection with the Plan. 3. Enrollment and Educational Services available for additional charge - Additional Employee Education Meetings - Additional Enrollment Kits for existing Participants - Savings Plan Enrollment Video Kit 4. Fees for Enrollment and Education Services Except as otherwise provided in this Appendix B, fees for Enrollment and Education Services shall be billed or charged in full as of the invoice date following the date the services are provided. APPENDIX C: CONTRIBUTION PROCESSING Fidelity shall provide contribution processing services as outlined in this Appendix C and subject to the terms and conditions contained herein. 1. The Employer shall be responsible for calculating and effecting Participant and Employer contributions to the Plan and transmitting such contributions and associated contribution data to Fidelity. 2. The Employer must consolidate all contribution data and loan repayment information for multiple payroll cycles and/or multiple sites into one transmission. Contribution data shall be received by Fidelity via Plan Sponsor Webstation (PSW), or other electronic medium permitted by Fidelity, in the manner specified. The Employer's computer system must meet certain minimum specifications to enable this service. 3. Following the receipt of contribution and/or loan repayment data in good order (as determined by Fidelity), the Employer shall either initiate a wire transfer or allow Fidelity, through any of its affiliates, to request an electronic funds transfer through Automated Clearing House ("ACH") to fund the contribution amount. Contributions received in good order will be credited to Participants' accounts on the business day they are received, if received prior to the close of the New York Stock Exchange's business day. Before the Employer may fund through ACH, the Employer must have completed and signed a valid Service Setup Form. 4. Notwithstanding section 3 contained herein, Fidelity reserves the right to require the Employer to wire transfer any contribution. Unsolicited or improperly formatted wire transfers may not be invested until properly identified and reconciled. Regardless of the method of contribution remittance, the Employer is always responsible for funding contributions to the Trust within legal time limits. 5. In the event that Fidelity, or any of its affiliates, provides tools or services to assist the Employer with the calculation of the Employer's Matching Employer Contribution and/or Nonelective Employer Contribution, Fidelity does not represent, warrant, guarantee or certify that such calculations are accurate. The Employer agrees that Fidelity has no responsibility for any such calculations. APPENDIX D: LOAN AND WITHDRAWAL SERVICES Loans and withdrawals from the Plan shall be processed in accordance with the provisions of the Plan and this Appendix D. Fidelity shall provide loan and withdrawal processing services subject to the terms and conditions of this Appendix D. 1. Participant Loans Loan setup fee per loan: $75.00 Fee Paid By: Participants Annual loan maintenance fee per loan: $25.00 Fee Paid By: Participants Pre-Approved Loans This Section includes the Loan Policy adopted in accordance with the Plan. All other provisions governing Participant loans are included in the Plan. This Section is effective for loans made on or after the Effective Date of the CORPORATEplan for RetirementSM. Subject to paragraph f. below, other loans made under the Plan shall continue under their existing terms until they are repaid. a. Administration - The Employer shall collect and remit all principal and interest payments to Fidelity and keep the proceeds of such loan repayments separate from the other assets of the Employer, clearly identifying such assets as Plan assets. The Employer hereby directs Fidelity that all Participant loans shall be considered pre-approved by the Employer and there shall not be any advance notification to the Employer of any Participant loan. The Employer must provide Fidelity with all applicable loan repayment frequencies for Participants by location, division, or region. Plans converting to The CORPORATEplan for RetirementSM must provide the highest outstanding loan balance(s) in the twelve months prior to the conversion date. If the Employer fails to provide this information, the Employer shall review and approve all loan requests via Plan Sponsor Webstation (or any other service subsequently employed by Fidelity to facilitate electronic plan sponsor administration, hereinafter PSW) for the first twelve months of the Plan's administration under The CORPORATEplan for RetirementSM. Currently, the following types of loans require Plan Administrator review and approval prior to such distributions being processed: - Loans subject to spousal consent - Loans only permitted when hardship circumstances are present If, subsequent to the execution of this Agreement, the Employer directs Fidelity in writing that Participant loans shall no longer be considered pre-approved, then the Employer shall review and approve all loan requests via PSW. b. Application Procedure - The Participant shall use Automated Channels (Fidelity Automated Retirement Benefits Line, NetBenefitsSM World Wide Web Internet service, or any other service subsequently employed by Fidelity to facilitate electronic plan administration) to apply for a loan. Participant loan requests that cannot be serviced via Automated Channels shall be referred to the Employer for assistance. To originate a Participant loan, the Participant shall direct Fidelity as to the term and amount of the loan to be made from his/her account. Such directions shall be made by use of the Automated Channels maintained for such purpose by Fidelity or its agent. The Automated Channels shall determine, based on the current value of the Participant's account on the date of the request and any guidelines provided by the Employer, the amount available for the loan. The vested percentage on Fidelity's Participant Recordkeeping System (FPRS) shall be used to process the loan. The Employer is responsible for ensuring that the proper vested percentage for each Participant is always maintained on FPRS. Based on the interest rate supplied by the Employer in accordance with the terms of the Plan, the Automated Channels shall advise the Participant of such interest rate, as well as the installment payment amounts. Fidelity shall distribute the loan note with the proceeds check directly to the Participant. Fidelity shall also distribute the required Truth-In-Lending disclosures, if applicable, to the Participant. To facilitate recordkeeping, Fidelity may destroy the original of any promissory note made in connection with a loan to a Participant under the Plan, provided that Fidelity first creates a duplicate by a photographic optical scanning or other process. The duplicate shall yield a reasonable facsimile of the promissory note and the Participant's signature thereon. The duplicate may be reduced or enlarged in size from the actual size of the original promissory note. c. Conditions and Limitations - i. Minimum Principal Amount. The minimum principal amount of any loan is $1,000.00. ii. Duration. The repayment period of any loan shall be no more than five years unless such loan is for the purchase of a Participant's primary residence, in which case the repayment period may not extend beyond 10 years from the date of the loan. A loan becomes immediately due and payable upon a Participant's termination of employment, death or disability. iii. Sources. The Administrator may provide that loans only be made from certain contribution sources within Participant Account(s) by notifying the Trustee in writing of the restricted source. iv. Purpose: A loan will be granted for any purpose. v. Repayment Method. A loan to an Employee shall be repaid at least quarterly by payroll. If repayment is not made by payroll deduction, a loan shall be repaid by the Employee to the Employer. Loan repayments are forwarded to Fidelity, by the Employer, in the same manner and frequency as contributions. vi. Outstanding Loans. A Participant may have one loan outstanding at a time. A Participant with an existing loan may not apply for another loan until the existing loan is paid in full. Also, a Participant may not (1) refinance an existing loan, (2) apply for an additional loan for the purpose of paying off an existing loan, or (3) apply for more than one loan during each Plan Year. d. Interest Rate - The Employer shall determine and communicate to Fidelity a reasonable rate of interest based on the prevailing interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances. The interest rate shall remain fixed throughout the duration of the loan. e. Prepayment - A Participant may prepay the entire outstanding loan balance prior to maturity without penalty. f. Repayment Suspension / Re-amortization - Loan repayments may not be suspended or re-amortized except as provided in this subsection. Loan repayments may only be suspended if the participant is on a leave of absence (LOA) from the Employer and never for more than 12 months unless the LOA is pursuant to Internal Revenue Code (IRC) Section 414(u). Loan payments suspended due to an LOA must resume following the conclusion of the LOA (or the 12 month period described in the previous sentence). The Employer is required to inform Fidelity of the dates for all loan repayment suspensions and resumptions, but this information may be transmitted electronically. In the case of payments resuming following suspension due to an LOA, the loan may be re-amortized to allow for level payments, but the amount of each payment must not be less than the amount required under the terms of the original loan. When loan repayments are to resume following a participant's LOA, the Employer must direct Fidelity as to whether or not to re-amortize the remaining balance of the loan. The repayment period for the remaining balance of a loan may never be extended beyond 5 years from the date of the original loan unless there is an LOA pursuant to IRC Section 414(u) or the loan is a personal residence loan. The Employer may also direct Fidelity to re-amortize loans for participants whose payroll frequency has changed during the period of the loan or whose established loan repayment frequency was incorrect, but that re-amortization cannot extend payments beyond the original term of the loan. g. Default - A Participant's loan shall be considered in default at the end of the calendar quarter following a calendar quarter (end of the 'cure period') for which there is outstanding any part of any payment due (principal or interest). The Employer agrees to provide to Fidelity information regarding the status of participants relating to loan repayments. Fidelity agrees to provide the Employer with information regarding the repayment status of outstanding loans and thereafter to provide notices to Participants regarding late, missing or insufficient payments relating to loans they have outstanding. The Employer hereby directs Fidelity to default loans of Participants , in accordance with the Plan, after Participants have defaulted by the terms of their loans, but in no event later than the date legally required. Notwithstanding the above, based upon the information Fidelity has provided regarding the repayment status of outstanding loans, the Employer may direct Fidelity not to provide notices of delinquency for specific Plan Participants, however, an Employer cannot direct Fidelity to delay the loan default. h. Pre-existing Loans - Loans existing prior to the Effective Date of the CORPORATEplan for RetirementSM shall continue under their existing terms until repaid. A Participant may not apply for a new loan until that Participant has less loans outstanding than the number of loans allowed pursuant to paragraph c., vi. Outstanding Loans, above. Fidelity shall not accept any pre-existing loans that require Fidelity to hold as security for the loan property other than the Participant's vested account. i. Fees - Loan Set-Up fees shall be billed or charged in full on the first invoice date following origination of the loan. Annual loan maintenance fees shall be accrued and billed or charged quarterly in arrears. Notwithstanding any provision or designation herein to the contrary, the Employer shall be responsible for the payment of annual loan maintenance fees on pre-existing loans unless the loan terms allow payment by Participants. 2. Participant Withdrawals Pre-Approved Withdrawals Participant withdrawals and distributions shall be processed in accordance with the provisions of the Plan and subject to the following terms and conditions: a. The Employer hereby directs Fidelity that all Participant withdrawals shall be considered pre-approved by the Employer and there shall not be any advance notification to Fidelity of any Participant withdrawal. b. Participants shall use Automated Channels (Fidelity Automated Retirement Benefits Line, NetBenefitsSM World Wide Web Internet service, or any other service subsequently employed by Fidelity to facilitate electronic plan administration) to request withdrawals. Participant withdrawals that cannot be serviced via the Automated Channels shall be referred to the Employer for assistance. The Employer understands that currently the following types of withdrawals cannot be completed through Automated Channels: i. distributions as a result of the Plan's failure of any required Internal Revenue Code test ii. minimum required distributions iii. distributions to an alternate payee under a qualified domestic relations order prior to establishment of an Account for the alternate payee iv. distributions to a beneficiary prior to establishment of an Account for the beneficiary v. installment payments The Employer agrees that Fidelity may expand the Automated Channels service to include other types of withdrawals by giving notice (which may be an electronic transmission) to the Employer in advance. The Employer is responsible for updating the status codes, applicable dates, and other appropriate information for participants via Plan Sponsor Webstation (PSW), or other agreed upon transmission. c. Participant withdrawals shall be processed any business day during any month except that no withdrawals shall be processed from December 15 through January 1. The Automated Channels shall determine the amount available for withdrawal based on the current value of the Participant's Account on the date of the request and any guidelines provided by the Employer. The vested percentage on Fidelity's Participant Recordkeeping System (FPRS) shall be used to process the distribution. The Employer is responsible for ensuring that the proper vested percentage for each Participant is always maintained on FPRS. Fidelity shall distribute withdrawals directly to Participants based upon the addresses of record. d. Currently, the following distributions require Plan Administrator review and approval prior to such distributions being processed: i. withdrawals subject to spousal consent ii. hardship withdrawals iii. protected benefit forms only available to a specified class of participants If, subsequent to the execution of this Agreement, the Employer directs Fidelity in writing that some or all types of distribution shall no longer be considered pre-approved, then the Employer shall review and approve each such distribution request through PSW. APPENDIX E: COMPLIANCE SERVICES 1. Nondiscrimination Testing Fidelity shall not perform nondiscrimination testing services for the Plan. The Employer shall be responsible for performing all nondiscrimination tests required by the Internal Revenue Code. 2. Form 5500 Services Fidelity shall not provide Form 5500 Services for the Plan. The Employer shall be responsible for the completion and filing of the Form 5500. APPENDIX F: MISCELLANEOUS The provision(s) as identified in this Appendix F shall supercede the referenced provision(s) of this Agreement, subject to the terms and conditions contained herein. For provision(s) below identified as exceptions to the Plan (requiring an amendment to the CORPORATEplan for RetirementSM), the Employer hereby agrees to obtain a favorable determination letter on the Plan from the Internal Revenue Service. Title: Amendment to Eligibility Service Requirement Description: The Employer will provide an amendment that allows for different Eligibility Service Requirements for different groups of Employees. Exception Fee: Fee Waived Fidelity hereby agrees to allow an amendment to the CORPORATEplan for RetirementSM to incorporate a Plan provision to accomplish the above stated purpose. Amending the Plan to add such a provision will make the Plan individually designed and the Employer hereby agrees to accept all consequences of such a designation (see attached). Title: Amendment to Compensation Description: The Employer will provide an amendment that excludes any amount realized from the exercise of qualified or nonqualified stock options and any Compensation for the portion of the Plan Year during which the employee is classified by the Employer as an employee of Giant Yorktown, Inc. from the definition of Compensation. Exception Fee: Fee Waived Fidelity hereby agrees to allow an amendment to the CORPORATEplan for RetirementSM to incorporate a Plan provision to accomplish the above stated purpose. Amending the Plan to add such a provision will make the Plan individually designed and the Employer hereby agrees to accept all consequences of such a designation (see attached). Title: Change to Loan Policy in Appendix D Description: Participant will be permitted to initiate up to two loans in a given plan year. While Fidelity will produce Participant communication materials and forms for use by the Employer, the Employer must provide any necessary language summarizing this provision as well as identify which materials and forms would use this language. Exception Fee: Fee Waived Title: Change to Loan Policy in Appendix D Description: Loan availability is to be computed based on the entire account balance except for the Non-Elective Employer Contribution Stock (EMPLOYER CONTRIB STOCK SOURCE) and the ESOP Transfer Stock (TRANSFER ASSETS STOCK SOURCE) accounts and is to be withdrawn from those same accounts. While Fidelity will produce Participant communication materials and forms for use by the Employer, the Employer must provide any necessary language summarizing this provision as well as identify which materials and forms would use this language. Exception Fee: Fee Waived Title: Amendment to Investment Direction Description: The Employer will provide an amendment that allows for Employer investment direction for one of the Non-Elective Employer Contribution account and Employee Investment direction from the other Non-Elective Employer Contribution account. Exception Fee: Fee Waived Fidelity hereby agrees to allow an amendment to the CORPORATEplan for RetirementSM to incorporate a Plan provision to accomplish the above stated purpose. Amending the Plan to add such a provision will make the Plan individually designed and the Employer hereby agrees to accept all consequences of such a designation (see attached). Title: Amendment to Non-Elective Employer Contribution Description: The Employer will provide an amendment that allows it to decide upon funding of each contribution if the Employer or Employee will direct investment. Exception Fee: Fee Waived Fidelity hereby agrees to allow an amendment to the CORPORATEplan for RetirementSM to incorporate a Plan provision to accomplish the above stated purpose. Amending the Plan to add such a provision will make the Plan individually designed and the Employer hereby agrees to accept all consequences of such a designation (see attached). Title: Amendment to Investment Direction Description: The Employer will provide an amendment that allows for employee investment direction in all restricted accounts upon attaining either age 55 and 10 years of service, or age 59.5. Exception Fee: Fee Waived Fidelity hereby agrees to allow an amendment to the CORPORATEplan for RetirementSM to incorporate a Plan provision to accomplish the above stated purpose. Amending the Plan to add such a provision will make the Plan individually designed and the Employer hereby agrees to accept all consequences of such a designation (see attached). Attachment to Appendix F of the CORPORATEplan for RetirementSM Service Agreement Article II, Section 2 of the CORPORATEplan for RetirementSM Service Agreement provides that the Employer may not add, delete, or modify the CORPORATEplan for RetirementSM prototype documents in any way without the written consent of Fidelity. In Appendix F of the CORPORATEplan for RetirementSM Service Agreement, Fidelity gave its written consent that this provision be waived solely for the purpose of allowing the company to make a certain amendment to the prototype plan. The Employer will be responsible for drafting the amendment to which reference is made in Appendix F. As a result of this amendment, the Employer's Plan will not be able to rely on the opinion letter Fidelity received from the IRS for the CORPORATEplan for RetirementSM with respect to the Employer's Plan. The Employer's Plan will be individually designed, and the Employer will incur the 'user' fee for an individually designed plan instead of the fee for a prototype plan in filing for an IRS determination letter. The Employer will be responsible for the continuing qualification of the plan, including amending it to comply with the required Internal Revenue Service guidelines. Fidelity will provide the Employer with a copy of any model amendments or updates to the Fidelity Prototype plan. The Employer shall be responsible for retaining the provision allowed by Appendix F (if so desired) in any restated version of the Fidelity Prototype Plan adopted by the Employer. While Fidelity will generate a Summary Plan Description for the Employer's Plan, the Employer must provide any necessary language summarizing the amendment. Finally, the Employer must give Fidelity the opportunity to review any other amendment that the Employer proposes to the Plan, allowing Fidelity to approve or reject the amendment based upon its impact on the operation of the Plan. EX-4 7 exhibit04-5.txt GIANT INDUSTRIES, INC.'S 2003 2 QTR. 10-Q - EXHIBIT 4.5 EXHIBIT 4.5 The CORPORATEplan for RetirementSM Fidelity Basic Plan Document No. 02 The CORPORATEplan for RetirementSM Basic Plan Document 02 12/5/2001 2001 FMR Corp. All rights reserved. THE CORPORATEPLAN FOR RETIREMENTSM Preamble. Article 1. Adoption Agreement. Article 2. Definitions. 2.01. Definitions 2.02. Pronouns 2.03. Special Effective Dates Article 3. Service. 3.01. Crediting of Eligibility Service 3.02. Re-Crediting of Eligibility Service Following Termination of Employment 3.03. Crediting of Vesting Service 3.04. Application of Vesting Service to a Participant's Account Following a Break in Vesting Service 3.05. Service with Predecessor Employer 3.06. Change in Service Crediting 4.01. Article 4. Participation. 4.01. Date of Participation 4.02. Transfers Out of Covered Employment 4.03. Transfers Into Covered Employment 4.04. Resumption of Participation Following Reemployment 5.01. Article 5. Contributions. 5.01. Contributions Subject to Limitations 5.02. Compensation Taken into Account in Determining Contributions 5.03. Deferral Contributions 5.04. Employee Contributions 5.05. No Deductible Employee Contributions 5.06. Rollover Contributions 5.07. Qualified Nonelective Employer Contributions 5.08. Matching Employer Contributions 5.09. Qualified Matching Employer Contributions 5.10. Nonelective Employer Contributions 5.11. Vested Interest in Contributions 5.12. Time for Making Contributions 5.13. Return of Employer Contributions Article 6. Limitations on Contributions. 6.01. Special Definitions 6.02. Code Section 402(g) Limit on Deferral Contributions 6.03. Additional Limit on Deferral Contributions 6.04. Allocation and Distribution of "Excess Contributions" 6.05. Reductions in Deferral Contributions to Meet Code Requirements 6.06. Limit on Matching Employer Contributions and Employee Contributions 6.07. Allocation, Distribution, and Forfeiture of "Excess Aggregate Contributions" 6.08. Aggregate Limit on "Contribution Percentage Amounts" and "Includable Contributions" 6.09. Income or Loss on Distributable Contributions 6.10. Deemed Satisfaction of "ADP" Test 6.11. Deemed Satisfaction of "ACP" Test With Respect to Matching Employer Contributions 6.12. Code Section 415 Limitations Article 7. Participants' Accounts. 7.01. Individual Accounts 7.02. Valuation of Accounts Article 8. Investment of Contributions. 8.01. Manner of Investment 8.02. Investment Decisions 8.03. Participant Directions to Trustee Article 9. Participant Loans. 9.01. Special Definitions 9.02. Participant Loans 9.03. Separate Loan Procedures 9.04. Availability of Loans 9.05. Limitation on Loan Amount 9.06. Interest Rate 9.07. Level Amortization 9.08. Security 9.09. Transfer and Distribution of Loan Amounts from Permissible Investments 9.10. Default 9.11. Effect of Termination Where Participant has Outstanding Loan Balance 9.12. Deemed Distributions Under Code Section 72(p) 9.13. Determination of Account Value Upon Distribution Where Plan Loan is Outstanding Article 10. In-Service Withdrawals. 10.01. Availability of In-Service Withdrawals 10.02. Withdrawal of Employee Contributions 10.03. Withdrawal of Rollover Contributions 10.04. Age 59 1/2 Withdrawals 10.05. Hardship Withdrawals 10.06. Preservation of Prior Plan In-Service Withdrawal Rules 10.07. Restrictions on In-Service Withdrawals 10.08. Distribution of Withdrawal Amounts Article 11. Right to Benefits. 11.01. Normal or Early Retirement 11.02. Late Retirement 11.03. Disability Retirement 11.04. Death 11.05. Other Termination of Employment 11.06. Application for Distribution 11.07. Application of Vesting Schedule Following Partial Distribution 11.08. Forfeitures 11.09. Application of Forfeitures 11.10. Reinstatement of Forfeitures 11.11. Adjustment for Investment Experience Article 12. Distributions. 12.01. Restrictions on Distributions 12.02. Timing of Distribution Following Retirement or Termination of Employment 12.03. Participant Consent to Distribution 12.04. Required Commencement of Distribution to Participants 12.05. Required Commencement of Distribution to Beneficiaries 12.06. Whereabouts of Participants and Beneficiaries Article 13. Form of Distribution. 13.01. Normal Form of Distribution Under Profit Sharing Plan 13.02. Cash Out Of Small Accounts 13.03. Minimum Distributions 13.04. Direct Rollovers 13.05. Notice Regarding Timing and Form of Distribution 13.06. Determination of Method of Distribution 13.07. Notice to Trustee Article 14. Superseding Annuity Distribution Provisions. 14.01. Special Definitions 14.02. Applicability 14.03. Annuity Form of Payment 14.04. "Qualified Joint and Survivor Annuity" and "Qualified Preretirement Survivor Annuity Requirements" 14.05. Waiver of the "Qualified Joint and Survivor Annuity" and/or "Qualified Preretirenient Survivor Annuity Rights" 14.06. Spouse's Consent to Waiver 14.07. Notice Regarding "Qualified Joint and Survivor Annuity" 14.08. Notice Regarding "Qualified Preretirement Survivor Annuity" 14.09. Former Spouse Article 15. Top-Heavy Provisions. 15.01. Definitions 15.02. Application 15.03. Minimum Contribution 15.04. Modification of Allocation Provisions to Meet Minimum Contribution Requirements 15.05. Adjustment to the Limitation on Contributions and Benefits 15.06. Accelerated Vesting 15.07. Exclusion of Collectively-Bargained Employees Article 16. Amendment and Termination. 16.01. Amendments by the Employer that do Not Affect Prototype Status 16.02. Amendments by the Employer that Affect Prototype Status 16.03. Amendment by the Mass Submitter Sponsor and the Prototype Sponsor 16.04. Amendments Affecting Vested and/or Accrued Benefits 16.05. Retroactive Amendments 16.06. Termination 16.07. Distribution upon Termination of the Plan 16.08. Merger or Consolidation of Plan; Transfer of Plan Assets Article 17. Amendment and Continuation of Prior Plan; Transfer of Funds to Or from Other Qualified Plans. 17.01. Amendment and Continuation of Prior Plan 17.02. Transfer of Funds from an Existing Plan 17.03. Acceptance of Assets by Trustee 17.04. Transfer of Assets from Trust Article 18. Miscellaneous. 18.01. Communication to Participants 18.02. Limitation of Rights 18.03. Nonalienability of Benefits 18.04. Qualified Domestic Relations Orders Procedures 18.05. Additional Rules for Paired Plans 18.06. Application of Plan Provisions in Multiple Employer Plans 18.07. Veterans Reemployment Rights 18.08. Facility of Payment 18.09. Information between Employer and Trustee 18.10. Effect of Failure to Qualify Under Code 18.11. Directions, Notices and Disclosure 18.12. Governing Law Article 19. Plan Administration. 19.01. Powers and Responsibilities of the Administrator 19.02. Nondiscriminatory Exercise of Authority 19.03. Claims and Review Procedures 19.04. Named Fiduciary 19.05. Costs of Administration Article 20. Trust Agreement. 20.01. Acceptance of Trust Responsibilities 20.02. Establishment of Trust Fund 20.03. Exclusive Benefit 20.04. Powers of Trustee 20.05. Accounts 20.06. Approval of Accounts 20.07. Distribution from Trust Fund 20.08. Transfer of Amounts from Qualified Plan 20.09. Transfer of Assets from Trust 20.10. Separate Trust or Fund for Existing Plan Assets 20.11. Self-Directed Brokerage Option 20.12. Employer Stock Investment Option 20.13. Voting; Delivery of Information 20.14. Compensation and Expenses of Trustee 20.15. Reliance by Trustee on Other Persons 20.16. Indemnification by Employer 20.17. Consultation by Trustee with Counsel 20.18. Persons Dealing with the Trustee 20.19. Resignation or Removal of Trustee 20.20. Fiscal Year of the Trust 20.21. Discharge of Duties by Fiduciaries 20.22. Amendment 20.23. Plan Termination 20.24. Permitted Reversion of Funds to Employer 20.25. Governing Law Preamble. This prototype plan consists of three parts: (1) an Adoption Agreement that is a separate document incorporated by reference into this Basic Plan Document; (2) this Basic Plan Document; and (3) a Trust Agreement that is a part of this Basic Plan Document and is found in Article 20. Each part of the prototype plan contains substantive provisions that are integral to the operation of the plan. The Adoption Agreement is the means by which an adopting Employer elects the optional provisions that shall apply under its plan. The Basic Plan Document describes the standard provisions elected in the Adoption Agreement. The Trust Agreement describes the powers and duties of the Trustee with respect to plan assets. The prototype plan is intended to qualify under Code Section 401(a). Depending upon the Adoption Agreement completed by an adopting Employer, the prototype plan may be used to implement a money purchase pension plan, a profit sharing plan, or a profit sharing plan with a cash or deferred arrangement intended to qualify under Code Section 401(k). Article 1. Adoption Agreement. Article 2. Definitions. 2.01. Definitions. Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context: (a) "Account" means an account established for the purpose of recording any contributions made on behalf of a Participant and any income, expenses, gains, or losses incurred thereon. The Administrator shall establish and maintain sub-accounts within a Participant's Account as necessary to depict accurately a Participant's interest under the Plan. (b) "Active Participant" means any Eligible Employee who has met the requirements of Article 4 to participate in the Plan and who may be entitled to receive allocations under the Plan. (c) "Administrator" means the Employer adopting this Plan, as listed in Subsection 1.02(a) of the Adoption Agreement, or any other person designated by the Employer in Subsection 1.01(c) of the Adoption Agreement. (d) "Adoption Agreement" means Article 1, under which the Employer establishes and adopts, or amends the Plan and Trust and designates the optional provisions selected by the Employer, and the Trustee accepts its responsibilities under Article 20. The provisions of the Adoption Agreement shall be an integral part of the Plan. (e) "Annuity Starting Date" means the first day of the first period for which an amount is payable as an annuity or in any other form permitted under the Plan. (f) "Basic Plan Document" means this Fidelity prototype plan document, qualified with the National Office of the Internal Revenue Service as Basic Plan Document No. 02. (g) "Beneficiary" means the person or persons (including a trust) entitled under Section 11.04 or 14.04 to receive benefits under the Plan upon the death of a Participant; provided, however, that for purposes of Section 13.03 such term shall be applied in accordance with Code Section 401(a)(9) and the regulations thereunder. (h) "Break in Vesting Service" means a 12-consecutive-month period beginning on an Employee's Severance Date or any anniversary thereof in which the Employee is not credited with an Hour of Service. Notwithstanding the foregoing, the following special rules apply in determining whether an Employee who is on leave has incurred a Break in Vesting Service: (1) If an individual is absent from work because of "maternity/ paternity leave" beyond the first anniversary of his Severance Date, the 12-consecutive-month period beginning on the individual's Severance Date shall not constitute a Break in Vesting Service. For purposes of this paragraph, "maternity/paternity leave" means a leave of absence (A) by reason of the pregnancy of the individual, (B) by reason of the birth of a child of the individual, (C) by reason of the placement of a child with the individual in connection with the adoption of such child by the individual, or (D) for purposes of caring for a child for the period beginning immediately following such birth or placement. (2) If an individual is absent from work because of "FMLA leave" and returns to employment with the Employer or a Related Employer following such "FMLA leave", he shall not incur a Break in Vesting Service during any 12-consecutive-month period beginning on his Severance Date or anniversaries thereof in which he is absent because of such "FMLA leave". For purposes of this paragraph, "FMLA leave" means an approved leave of absence pursuant to the Family and Medical Leave Act of 1993. (i) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (j) "Compensation" means wages as defined in Code Section 3401(a) and all other payments of compensation to an Eligible Employee by the Employer (in the course of the Employer's trade or business) for services to the Employer while employed as an Eligible Employee for which the Employer is required to furnish the Eligible Employee a written statement under Code Sections 6041(d) and 6051(a)(3). Compensation must be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). For any Self-Employed Individual, Compensation means Earned Income; provided, however, that if the Employer elects to exclude specified items from Compensation, such Earned Income shall be adjusted in a similar manner so that it is equivalent under regulations issued under Code Section 414(s) to Compensation for Participants who are not Self-Employed Individuals. Compensation shall generally be based on the amount actually paid to the Eligible Employee during the Plan Year or, for purposes of Articles 5 and Article 15 if so elected by the Employer in Subsection 1.05(c) of the Adoption Agreement, during that portion of the Plan Year during which the Eligible Employee is an Active Participant. Notwithstanding the preceding sentence, Compensation for purposes of Section 6.12 (Code Section 415 Limitations) shall be based on the amount actually paid or made available to the Participant during the Limitation Year. If the initial Plan Year of a new plan consists of fewer than 12 months, calculated from the Effective Date listed in Subsection 1.01(g)(1) of the Adoption Agreement through the end of such initial Plan Year, Compensation for such initial Plan Year shall be determined as follows: (1) If the Plan is a profit sharing plan, for purposes of allocating Nonelective Employer Contributions under Section 1.11 of the Adoption Agreement (other than Nonelective Employer Contributions made in accordance with the Safe Harbor Nonelective Employer Contributions Addendum to the Adoption Agreement) and determining Highly Compensated Employees under Subsection 2.01(z), the initial Plan Year shall be the 12-month period ending on the last day of the Plan Year. (2) For purposes of Section 6.12 (Code Section 415 Limitations) where the Limitation Year is based on the Plan Year, the Limitation Year shall be the 12-month period ending on the last day of the Plan Year. (3) For all other purposes, the initial Plan Year shall be the period from the Effective Date listed in Subsection 1.01(g)(1) of the Adoption Agreement through the end of the initial Plan Year. The annual Compensation of each Active Participant taken into account for determining benefits provided under the Plan for any determination period shall not exceed the annual Compensation limit under Code Section 401(a)(17) as in effect on the first day of the determination period. This limit shall be adjusted by the Secretary to reflect increases in the cost of living, as provided in Code Section 401(a)(17)(B); provided, however, that the dollar increase in effect on January 1 of any calendar year is effective for determination periods beginning in such calendar year. If a Plan determines Compensation over a determination period that contains fewer than 12 calendar months (a "short determination period"), then the Compensation limit for such "short determination period" is equal to the Compensation limit for the calendar year in which the "short determination period" begins multiplied by the ratio obtained by dividing the number of full months in the "short determination period" by 12; provided, however, that such proration shall not apply if there is a "short determination period" because (i) the Employer elected in Subsection 1.05(c) of the Adoption Agreement to determine contributions based only on Compensation paid during the portion of the Plan Year during which an individual was an Active Participant, (ii) an Employee is covered under the Plan less than a full Plan Year, or (iii) Deferral Contributions and/or Matching Employer Contributions are contributed for each pay period during the Plan Year and are based on Compensation for that pay period. (k) "Contribution Period" means the period for which Matching Employer and Nonelective Employer Contributions are made and calculated. The Contribution Period for additional Matching Employer Contributions, as described in Subsection 1.10(b) of the Adoption Agreement and Nonelective Employer Contributions is the Plan Year. The Contribution Period for basic Matching Employer Contributions, as described in Subsection 1.10(a)of the Adoption Agreement, is the period specified by the Employer in Subsection 1.10(c) of the Adoption Agreement. (l) "Deferral Contribution" means any contribution made to the Plan by the Employer in accordance with the provisions of Section 5.03. (m) "Early Retirement Age" means the early retirement age specified in Subsection 1.13(b) of the Adoption Agreement, if any. (n) "Earned Income" means the net earnings of a Self-Employed Individual derived from the trade or business with respect to which the Plan is established and for which the personal services of such individual are a material income-providing factor, excluding any items not included in gross income and the deductions allocated to such items, except that net earnings shall be determined with regard to the deduction allowed under Code Section 164(f), to the extent applicable to the Employer. Net earnings shall be reduced by contributions of the Employer to any qualified plan, to the extent a deduction is allowed to the Employer for such contributions under Code Section 404. (o) "Effective Date" means the effective date specified by the Employer in Subsection 1.01(g)(1) or (2) of the Adoption Agreement with respect to the Plan, if this is a new plan, or with respect to the amendment and restatement, if this is an amendment and restatement of the Plan. The Employer may select special Effective Dates with respect to specified Plan provisions, as set forth in Section (a) of the Special Effective Dates Addendum to the Adoption Agreement. In the event that another plan is merged into and made a part of the Plan, the effective date of the merger shall be reflected in Section (b) of the Special Effective Dates Addendum to the Adoption Agreement. If this is an amendment and restatement of the Plan, and the Plan was not amended prior to the effective date specified by the Employer in Subsection 1.01(g)(2) of the Adoption Agreement to comply with the requirements of the Acts specified in the Snap Off Addendum to the Adoption Agreement, the effective dates specified in such Snap Off Addendum shall apply with respect to those provisions specified therein. Such effective dates may be earlier than the date specified in Subsection 1.01(g)(2) of the Adoption Agreement. (p) "Eligibility Computation Period" means each 12-consecutive-month period beginning with an Employee's Employment Commencement Date and each anniversary thereof. (q) "Eligibility Service" means an Employee's service that is taken into account in determining his eligibility to participate in the Plan as may be required under Subsection 1.04(b) of the Adoption Agreement. Eligibility Service shall be credited in accordance with Article 3. (r) "Eligible Employee" means any Employee of the Employer who is in the class of Employees eligible to participate in the Plan. The Employer must specify in Subsection 1.04(c) of the Adoption Agreement any Employee or class of Employees not eligible to participate in the Plan. If Article 1 of the Employer's Plan is a Non-Standardized Adoption Agreement, regardless of the Employer's selection in Subsection 1.04(c) of the Adoption Agreement, the following Employees are automatically excluded from eligibility to participate in the Plan: (1) any individual who is a signatory to a contract, letter of agreement, or other document that acknowledges his status as an independent contractor not entitled to benefits under the Plan or who is not otherwise classified by the Employer as a common law employee and with respect to whom the Employer does not withhold income taxes and file Form W-2 (or any replacement Form), with the Internal Revenue Service and does not remit Social Security payments to the Federal government, even if such individual is later adjudicated to be a common law employee; and (2) any Employee who is a resident of Puerto Rico. If the Employer elects to exclude collective bargaining employees from the eligible class, the exclusion applies to any Employee of the Employer included in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, unless the collective bargaining agreement requires the Employee to be covered under the Plan. The term "employee representatives" does not include any organization more than half the members of which are owners, officers, or executives of the Employer. If the Employer does not elect to exclude Leased Employees from the eligible class, contributions or benefits provided by the leasing organization which are attributable to services performed for the Employer shall be treated as provided by the Employer and there shall be no duplication of benefits under this Plan. (s) "Employee" means any common law employee of the Employer or a Related Employer, any Self-Employed Individual, and any Leased Employee. Notwithstanding the foregoing, a Leased Employee shall not be considered an Employee if Leased Employees do not constitute more than 20 percent of the Employer's non-highly compensated work-force (taking into account all Related Employers) and the Leased Employee is covered by a money purchase pension plan maintained by the leasing organization and providing (1) a nonintegrated employer contribution rate of at least 10 percent of compensation, as defined for purposes of Code Section 415(c)(3), but including amounts contributed pursuant to a salary reduction agreement which are excludable from gross income under Code Section 125, 132(f)(4), 402(e)(3), 402(h) or 403(b), (2) full and immediate vesting, and (3) immediate participation by each employee of the leasing organization. (t) "Employee Contribution" means any after-tax contribution made by an Active Participant to the Plan. (u) "Employer" means the employer named in Subsection 1.02(a) of the Adoption Agreement and any Related Employer included as an Employer under this Subsection 2.01(u). If Article 1 of the Employer's Plan is a Standardized Adoption Agreement, the term "Employer" includes all Related Employers; provided, however, that if an employer becomes a Related Employer as a result of an asset or stock acquisition, merger or other similar transaction, the term "Employer" shall not include such employer for periods prior to the earlier of (1) the date as of which Subsection 1.02(b) of the Adoption Agreement is amended to name such employer or (2) the first day of the second Plan Year beginning after the date of such transaction. If Article 1 of the Employer's Plan is a Non-Standardized Adoption Agreement, the term "Employer" includes only those Related Employers designated in Subsection 1.02(b) of the Adoption Agreement. If the organization or other entity named in the Adoption Agreement is a sole proprietor or a professional corporation and the sole proprietor of such proprietorship or the sole shareholder of the professional corporation dies, then the legal representative of such sole proprietor or shareholder shall be deemed to be the Employer until such time as, through the disposition of such sole proprietor's or sole shareholder's estate or otherwise, any organization or other entity succeeds to the interests of the sole proprietor in the proprietorship or the sole shareholder in the professional corporation. The legal representative of a sole proprietor or shareholder shall be (1) the person appointed as such by the sole proprietor or shareholder prior to his death under a legally enforceable power of attorney, or, if none, (2) the executor or administrator of the sole proprietor's or shareholder's estate. If one of the Employers designated in Subsection 1.02(b) of the Adoption Agreement is not a Related Employer, the term "Employer" includes such un-Related Employer and the provisions of Section 18.06 shall apply. (v) "Employment Commencement Date" means the date on which an Employee first performs an Hour of Service. (w) "Entry Date" means the date specified by the Employer in Subsection 1.04(d) or (e) of the Adoption Agreement as of which an Eligible Employee who has met the applicable eligibility requirements begins to participate in the Plan. The Employer may specify different Entry Dates for purposes of eligibility to participate in the Plan by (1) making Deferral Contributions and (2) receiving allocations of Matching and/or Nonelective Employer Contributions. (x) "ERISA" means the Employee Retirement Income Security Act of 1974, as from time to time amended. (y) "Fund Share" means the share, unit, or other evidence of ownership in a Permissible Investment. (z) "Highly Compensated Employee" means both highly compensated active Employees and highly compensated former Employees. A highly compensated active Employee includes any Employee who performs service for the Employer during the "determination year" and who (1) at any time during the "determination year" or the "look-back year" was a five percent owner or (2) received Compensation from the Employer during the "look-back year" in excess of $80,000 (as adjusted pursuant to Code Section 415(d)) and, if elected by the Employer in Section 1.06 of the Adoption Agreement, was a member of the top-paid group for such year. For this purpose, the "determination year" shall be the Plan Year. The "look-back year" shall be the twelve-month period immediately preceding the "determination year", unless the Employer has elected in Section 1.06 of the Adoption Agreement to make the "look-back year" the calendar year beginning within the preceding Plan Year. A highly compensated former Employee includes any Employee who separated from service (or was deemed to have separated) prior to the "determination year", performs no service for the Employer during the "determination year", and was a highly compensated active Employee for either the separation year or any "determination year" ending on or after the Employee's 55th birthday, as determined under the rules in effect for determining Highly Compensated Employees for such separation year or "determination year". The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, shall be made in accordance with Code Section 414(q) and the Treasury Regulations issued thereunder. For purposes of this Subsection 2.01(z), Compensation shall include amounts that are not includable in the gross income of an Employee under a salary reduction agreement by reason of the application of Code Section 125, 132(f)(4), 402(e)(3), 402(h), or 403(b). (aa) "Hour of Service", with respect to any individual, means: (1) Each hour for which the individual is directly or indirectly paid, or entitled to payment, for the performance of duties for the Employer or a Related Employer, each such hour to be credited to the individual for the Eligibility Computation Period in which the duties were performed; (2) Each hour for which the individual is directly or indirectly paid, or entitled to payment, by the Employer or a Related Employer (including payments made or due from a trust fund or insurer to which the Employer contributes or pays premiums) on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity, disability, layoff, jury duty, military duty, or leave of absence, each such hour to be credited to the individual for the Eligibility Computation Period in which such period of time occurs, subject to the following rules: (A) No more than 501 Hours of Service shall be credited under this paragraph (2) on account of any single continuous period during which the individual performs no duties, unless the individual performs no duties because of military duty, the individual's employment rights are protected by law, and the individual returns to employment with the Employer or a Related Employer during the period that his employment rights are protected under Federal law; (B) Hours of Service shall not be credited under this paragraph (2) for a payment which solely reimburses the individual for medically-related expenses, or which is made or due under a plan maintained solely for the purpose of complying with applicable worker's compensation, unemployment compensation or disability insurance laws; and (C) If the period during which the individual performs no duties falls within two or more Eligibility Computation Periods and if the payment made on account of such period is not calculated on the basis of units of time, the Hours of Service credited with respect to such period shall be allocated between not more than the first two such Eligibility Computation Periods on any reasonable basis consistently applied with respect to similarly situated individuals; (3) Each hour not counted under paragraph (1) or (2) for which he would have been scheduled to work for the Employer or a Related Employer during the period that he is absent from work because of military duty, provided the individual's employment rights are protected under Federal law and the individual returns to work with the Employer or a Related Company during the period that his employment rights are protected, each such hour to be credited to the individual for the Eligibility Computation Period for which he would have been scheduled to work; and (4) Each hour not counted under paragraph (1), (2), or (3) for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to be paid by the Employer or a Related Employer, shall be credited to the individual for the Eligibility Computation Period to which the award or agreement pertains rather than the Eligibility Computation Period in which the award, agreement, or payment is made. For purposes of paragraphs (2) and (4) above, Hours of Service shall be calculated in accordance with the provisions of Section 2530.200b- 2(b) of the Department of Labor regulations, which are incorporated herein by reference. Notwithstanding any other provision of this Subsection to the contrary, the Employer may elect to credit Hours of Service in accordance with any of the equivalencies set forth in paragraphs (d), (e), or (f) of Department of Labor Regulations Section 2530.200b-3. (bb) "Inactive Participant" means any individual who was an Active Participant, but is no longer an Eligible Employee and who has an Account under the Plan. (cc) "Leased Employee" means any individual who provides services to the Employer or a Related Employer (the "recipient") but is not otherwise an employee of the recipient if (1) such services are provided pursuant to an agreement between the recipient and any other person (the "leasing organization"), (2) such individual has performed services for the recipient (or for the recipient and any related persons within the meaning of Code Section 414(n)(6)) on a substantially full-time basis for at least one year, and (3) such services are performed under primary direction of or control by the recipient. The determination of who is a Leased Employee shall be made in accordance with any rules and regulations issued by the Secretary of the Treasury or his delegate. (dd) "Limitation Year" means the 12-consecutive-month period designated by the Employer in Subsection 1.01(f) of the Adoption Agreement. If no other Limitation Year is designated by the Employer, the Limitation Year shall be the calendar year. All qualified plans of the Employer and any Related Employer must use the same Limitation Year. If the Limitation Year is amended to a different 12-consecutive-month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. (ee) "Matching Employer Contribution" means any contribution made by the Employer to the Plan in accordance with Section 5.08 or 5.09 on account of an Active Participant's Deferral Contributions. (ff) "Mass Submitter Sponsor" means Fidelity Management & Research Company or its successor. (gg) "Nonelective Employer Contribution" means any contribution made by the Employer to the Plan in accordance with Section 5.10. (hh) "Non-Highly Compensated Employee" means any Employee who is not a Highly Compensated Employee. (ii) "Normal Retirement Age" means the normal retirement age specified in Subsection 1.13(a) of the Adoption Agreement. If the Employer enforces a mandatory retirement age in accordance with Federal law, the Normal Retirement Age is the lesser of that mandatory age or the age specified in Subsection 1.13(a) of the Adoption Agreement. (jj) "Participant" means any individual who is either an Active Participant or an Inactive Participant. (kk) "Permissible Investment" means the investments specified by the Employer as available for investment of assets of the Trust and agreed to by the Trustee and the Prototype Sponsor. The Permissible Investments under the Plan shall be listed in the Service Agreement. (ll) "Plan" means the plan established by the Employer in the form of the prototype plan, as set forth herein as a new plan or as an amendment to an existing plan, by executing the Adoption Agreement, together with any and all amendments hereto. (mm) "Plan Year" means the 12-consecutive-month period ending on the date designated by the Employer in Subsection 1.01(d) of the Adoption Agreement, except that the initial Plan Year of a new Plan may consist of fewer than 12 months, calculated from the Effective Date listed in Subsection 1.01(g)(1) of the Adoption Agreement through the end of such initial Plan Year, in which event Compensation for such initial Plan Year shall be treated as provided in Subsection 2.01(j). (nn) "Prototype Sponsor" means Fidelity Management & Research Company or its successor. (oo) "Qualified Matching Employer Contribution" means any contribution made by the Employer to the Plan on account of Deferral Contributions or Employee Contributions made by or on behalf of Active Participants in accordance with Section 5.09, that may be included in determining whether the Plan meets the "ADP" test described in Section 6.03. (pp) "Qualified Nonelective Employer Contribution" means any contribution made by the Employer to the Plan on behalf of Non-Highly Compensated Employees in accordance with Section 5.07, that may be included in determining whether the Plan meets the "ADP" test described in Section 6.03 or the "ACP" test described in Section 6.06. (qq) "Reemployment Commencement Date" means the date on which an Employee who terminates employment with the Employer and all Related Employers first performs an Hour of Service following such termination of employment. (rr) "Related Employer" means any employer other than the Employer named in Subsection 1.02(a) of the Adoption Agreement if the Employer and such other employer are members of a controlled group of corporations (as defined in Code Section 414(b)) or an affiliated service group (as defined in Code Section 414(m)), or are trades or businesses (whether or not incorporated) which are under common control (as defined in Code Section 414(c)), or such other employer is required to be aggregated with the Employer pursuant to regulations issued under Code Section 414(o); provided, however, that if Article 1 of the Employer's Plan is a Standardized Adoption Agreement, for purposes of Subsection 1.02(b) of the Adoption Agreement, the term "Related Employer" shall not include any employer that becomes a Related Employer as a result of an asset or stock acquisition, merger or other similar transaction with respect to any period prior to the earlier of (1) the date as of which Subsection 1.02(b) of the Adoption Agreement is amended to name such employer or (2) the first day of the second Plan Year beginning after the date of such transaction. (ss) "Required Beginning Date" means: (1) for a Participant who is not a five percent owner, April 1 of the calendar year following the calendar year in which occurs the later of (i) the Participant's retirement or (ii) the Participant's attainment of age 70 1/2; provided, however, that a Participant may elect to have his Required Beginning Date determined without regard to the provisions of clause (i). (2) for a Participant who is a five percent owner, April 1 of the calendar year following the calendar year in which the Participant attains age 70 1/2. Once the Required Beginning Date of a five percent owner or a Participant who has elected to have his Required Beginning Date determined in accordance with the provisions of Section 2.01(ss)(1)(ii) has occurred, such Required Beginning Date shall not be re-determined, even if the Participant ceases to be a five percent owner in a subsequent year or continues in employment with the Employer or a Related Employer. For purposes of this Subsection 2.01(ss), a Participant is treated as a five percent owner if such Participant is a five percent owner as defined in Code Section 416(i) (determined in accordance with Code Section 416 but without regard to whether the Plan is top-heavy) at any time during the Plan Year ending with or within the calendar year in which such owner attains age 70 1/2. (tt) "Rollover Contribution" means any distribution from a qualified plan (or an individual retirement account holding only assets allocable to a distribution from a qualified plan) that an Employee elects to contribute to the Plan in accordance with the provisions of Section 5.06. (uu) "Self-Employed Individual" means an individual who has Earned Income for the taxable year from the Employer or who would have had Earned Income but for the fact that the trade or business had no net profits for the taxable year, including, but not limited to, a partner in a partnership, a sole proprietor, a member in a limited liability company or a shareholder in a subchapter S corporation. (vv) "Service Agreement" means the agreement between the Employer and the Prototype Sponsor (or an agent or affiliate of the Prototype Sponsor) relating to the provision of investment and other services to the Plan and shall include any addendum to the agreement and any other separate written agreement between the Employer and the Prototype Sponsor (or an agent or affiliate of the Prototype Sponsor) relating to the provision of services to the Plan. (ww) "Severance Date" means the earlier of (i) the date an Employee retires, dies, quits, or is discharged from employment with the Employer and all Related Employers or (ii) the 12-month anniversary of the date on which the Employee was otherwise first absent from employment; provided, however, that if an individual terminates or is absent from employment with the Employer and all Related Employers because of military duty, such individual shall not incur a Severance Date if his employment rights are protected under Federal law and he returns to employment with the Employer or a Related Employer within the period during which he retains such employment rights, but, if he does not return to such employment within such period, his Severance Date shall be the earlier of (1) the anniversary of the date his absence commenced or (2) the last day of the period during which he retains such employment rights. (xx) "Trust" means the trust created by the Employer in accordance with the provisions of Section 20.01. (yy) "Trust Agreement" means the agreement between the Employer and the Trustee, as set forth in Article 20, under which the assets of the Plan are held, administered, and managed. (zz) "Trustee" means Fidelity Management Trust Company or its successor. The term Trustee shall include any delegate of the Trustee as may be provided in the Trust Agreement. (aaa) "Trust Fund" means the property held in Trust by the Trustee for the Accounts of Participants and their Beneficiaries. (bbb) "Vesting Service" means an Employee's service that is taken into account in determining his vested interest in his Matching Employer and Nonelective Employer Contributions Accounts as may be required under Section 1.15 of the Adoption Agreement. Vesting Service shall be credited in accordance with Article 3. 2.02. Pronouns. Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise. 2.03. Special Effective Dates. Some provisions of the Plan are only effective beginning as of a specified date or until a specified date. Any such special effective dates are specified within Plan text where applicable and are exceptions to the general Plan Effective Date as defined in Section 2.01(o). Article 3. Service. 3.01. Crediting of Eligibility Service. If the Employer has selected an Eligibility Service requirement in Subsection 1.04(b) of the Adoption Agreement for an Eligible Employee to become an Active Participant, Eligibility Service shall be credited to an Employee as follows: (a) If the Employer has selected the one or two year(s) of Eligibility Service requirement described in Subsection 1.04(b)(1)(C) or (D) of the Adoption Agreement, an Employee shall be credited with a year of Eligibility Service for each Eligibility Computation Period during which the Employee has been credited with at least 1,000 Hours of Service. (b) If the Employer has selected the months of Eligibility Service requirement described in Subsection 1.04(b)(1)(B) of the Adoption Agreement, an Employee shall be credited with Eligibility Service for the aggregate of the periods beginning with the Employee's Employment Commencement Date (or Reemployment Commencement Date) and ending on his subsequent Severance Date; provided, however, that an Employee who has a Reemployment Date within the 12-consecutive-month period following the earlier of the first date of his absence or his Severance Date shall be credited with Eligibility Service for the period between his Severance Date and his Reemployment Date. Months of Eligibility Service shall be measured from the Employee's Employment Commencement Date or Reemployment Commencement Date to the coinciding date in the applicable following month. 3.02. Re-Crediting of Eligibility Service Following Termination of Employment. An Employee whose employment with the Employer and all Related Employers terminates and who is subsequently reemployed by the Employer or a Related Employer shall be re-credited upon reemployment with his Eligibility Service earned prior to his termination of employment. 3.03. Crediting of Vesting Service. If the Plan provides for Matching Employer and/or Nonelective Employer Contributions that are not 100 percent vested when made, Vesting Service shall be credited to an Employee for the aggregate of the periods beginning with the Employee's Employment Commencement Date (or Reemployment Commencement Date) and ending on his subsequent Severance Date; provided, however, that an Employee who has a Reemployment Date within the 12-consecutive-month period following the earlier of the first date of his absence or his Severance Date shall be credited with Vesting Service for the period between his Severance Date and his Reemployment Date. Fractional periods of a year shall be expressed in terms of days. 3.04. Application of Vesting Service to a Participant's Account Following a Break in Vesting Service. The following rules describe how Vesting Service earned before and after a Break in Vesting Service shall be applied for purposes of determining a Participant's vested interest in his Matching Employer and Nonelective Employer Contributions Accounts. (a) If a Participant incurs five-consecutive Breaks in Vesting Service, all years of Vesting Service earned by the Employee after such Breaks in Service shall be disregarded in determining the Participant's vested interest in his Matching Employer and Nonelective Employer Contributions Account balances attributable to employment before such Breaks in Vesting Service. However, Vesting Service earned both before and after such Breaks in Vesting Service shall be included in determining the Participant's vested interest in his Matching Employer and Nonelective Employer Contributions Account balances attributable to employment after such Breaks in Vesting Service. (b) If a Participant incurs fewer than five-consecutive Breaks in Vesting Service, Vesting Service earned both before and after such Breaks in Vesting Service shall be included in determining the Participant's vested interest in his Matching Employer and Nonelective Employer Contributions Account balances attributable to employment both before and after such Breaks in Vesting Service. 3.05. Service with Predecessor Employer. If the Plan is the plan of a predecessor employer, an Employee's Eligibility and Vesting Service shall include years of service with such predecessor employer. In any case in which the Plan is not the plan maintained by a predecessor employer, service for such predecessor employer shall be treated as Eligibility and Vesting Service if so specified in Section 1.16 of the Adoption Agreement. 3.06. Change in Service Crediting. If an amendment to the Plan or a transfer from employment as an Employee covered under another qualified plan maintained by the Employer or a Related Employer results in a change in the method of crediting Eligibility and/or Vesting Service with respect to a Participant between the Hours of Service crediting method set forth in Section 2530.200b-2 of the Department of Labor Regulations and the elapsed- time crediting method set forth in Section 1.410(a)-7 of the Treasury Regulations, each Participant with respect to whom the method of crediting Eligibility and/or Vesting Service is changed shall be treated in the manner set forth in Section 1.410(a)-7(f)(1) of the Treasury Regulations which are incorporated herein by reference. Article 4. Participation. 4.01. Date of Participation. If the Plan is an amendment and restatement of a prior plan, all Eligible Employees who were active participants in the Plan immediately prior to the Effective Date shall continue as Active Participants on the Effective Date. All Eligible Employees who are in the service of the Employer on the Effective Date (and, if this is an amendment and restatement of a prior plan, were not active participants in the prior plan immediately prior to the Effective Date) shall become Active Participants on the date elected by the Employer in Subsection 1.04(f) of the Adoption Agreement. Any other Eligible Employee shall become an Active Participant in the Plan on the Entry Date coinciding with or immediately following the date on which he first satisfies the eligibility requirements set forth in Subsections 1.04(a) and 1.04(b) of the Adoption Agreement. The Employer may elect different Eligibility Service requirements for purposes of eligibility (a) to make Deferral Contributions and (b) to receive Nonelective and/or Matching Employer Contributions. Any Eligibility Service requirement that the Employer elects to apply in determining an Eligible Employee's eligibility to make Deferral Contributions shall also apply in determining an Eligible Employee's eligibility to make Employee Contributions, if Employee Contributions are permitted under the Plan, and to receive Qualified Nonelective Employer Contributions. If an Employer elects to have different Eligibility Service requirements apply, an Eligible Employee who has met the eligibility requirements with respect to certain contributions, but who has not met the eligibility requirements with respect to other contributions, shall become an Active Participant in accordance with the provisions of the preceding paragraph, but only with respect to the contributions for which he has met the eligibility requirements. 4.02. Transfers Out of Covered Employment. If any Active Participant ceases to be an Eligible Employee, but continues in the employ of the Employer or a Related Employer, such Employee shall cease to be an Active Participant, but shall continue as an Inactive Participant until his entire Account balance is forfeited or distributed. An Inactive Participant shall not be entitled to receive an allocation of contributions or forfeitures under the Plan for the period that he is not an Eligible Employee and wages and other payments made to him by the Employer or a Related Employer for services other than as an Eligible Employee shall not be included in Compensation for purposes of determining the amount and allocation of any contributions to the Account of such Inactive Participant. Such Inactive Participant shall continue to receive credit for Vesting Service completed during the period that he continues in the employ of the Employer or a Related Employer. 4.03. Transfers Into Covered Employment. If an Employee who is not an Eligible Employee becomes an Eligible Employee, such Eligible Employee shall become an Active Participant immediately as of his transfer date if such Eligible Employee has already satisfied the eligibility requirements and would have otherwise previously become an Active Participant in accordance with Section 4.01. Otherwise, such Eligible Employee shall become an Active Participant in accordance with Section 4.01. Wages and other payments made to an Employee prior to his becoming an Eligible Employee by the Employer or a Related Employer for services other than as an Eligible Employee shall not be included in Compensation for purposes of determining the amount and allocation of any contributions to the Account of such Eligible Employee. 4.04. Resumption of Participation Following Reemployment. If a Participant who terminates employment with the Employer and all Related Employers is reemployed as an Eligible Employee, he shall again become an Active Participant on his Reemployment Date. Any other Employee who terminates employment with the Employer and all Related Employers and is reemployed by the Employer or a Related Employer shall become an Active Participant as provided in Section 4.01 or 4.03. Any distribution which a Participant is receiving under the Plan at the time he is reemployed by the Employer or a Related Employer shall cease except as otherwise required under Section 12.04. Article 5. Contributions. 5.01. Contributions Subject to Limitations. All contributions made to the Plan under this Article 5 shall be subject to the limitations contained in Article 6. 5.02. Compensation Taken into Account in Determining Contributions. In determining the amount or allocation of any contribution that is based on a percentage of Compensation, only Compensation paid to a Participant for services rendered to the Employer while employed as an Eligible Employee shall be taken into account. Except as otherwise specifically provided in this Article 5, for purposes of determining the amount and allocation of contributions under this Article 5, Compensation shall not include reimbursements or other expense allowances, fringe benefits (cash and non- cash), moving expenses, deferred compensation, welfare benefits, and any items elected by the Employer with respect to such contributions in Subsection 1.05(a) or (b), as applicable, of the Adoption Agreement, but shall include amounts that are not includable in the gross income of the Participant under a salary reduction agreement by reason of the application of Code Section 125, 132(f)(4), 402(e)(3), 402(h), or 403(b). If the initial Plan Year of a new plan consists of fewer than 12 months, calculated from the Effective Date listed in Subsection 1.01(g)(1) of the Adoption Agreement through the end of such initial Plan Year, except as otherwise provided in this paragraph, Compensation for purposes of determining the amount and allocation of contributions under this Article 5 for such initial Plan Year shall include only Compensation for services during the period beginning on the Effective Date listed in Subsection 1.01(g)(1) of the Adoption Agreement and ending on the last day of the initial Plan Year. Notwithstanding the foregoing, if the Plan is a profit sharing plan, Compensation for purposes of determining the amount and allocation of non-safe harbor Nonelective Employer Contributions under this Article 5 for such initial Plan Year shall include Compensation for the full 12-consecutive-month period ending on the last day of the initial Plan Year. 5.03. Deferral Contributions. If so provided by the Employer in Subsection 1.07(a) of the Adoption Agreement, each Active Participant may elect to execute a salary reduction agreement with the Employer to reduce his Compensation by a specified percentage or dollar amount, not exceeding the percentage specified by the Employer in Subsection 1.07(a)(1) of the Adoption Agreement, per payroll period, subject to any exceptions elected by the Employer in Subsections 1.07(a)(2) and (3) of the Adoption Agreement, and equal to a whole number multiple of one percent. If elected by the Employer in Subsection 1.07(a)(1)(A) of the Adoption Agreement, in lieu of specifying a percentage of Compensation reduction, an Active Participant may elect to reduce his Compensation by a specified dollar amount per payroll period, provided that such dollar amount may not exceed the percentage of Compensation specified by the Employer in Subsection 1.07(a)(1) of the Adoption Agreement, subject to any exceptions elected by the Employer in Subsections 1.07(a)(2) and (3) of the Adoption Agreement. An Active Participant's salary reduction agreement shall become effective on the first day of the first payroll period for which the Employer can reasonably process the request, but not earlier than the later of (a) the effective date of the provisions permitting Deferral Contributions or (b) the date the Employer adopts such provisions. The Employer shall make a Deferral Contribution on behalf of the Participant corresponding to the amount of said reduction. Under no circumstances may a salary reduction agreement be adopted retroactively. An Active Participant may elect to change or discontinue the percentage or dollar amount by which his Compensation is reduced by notice to the Employer as provided in Subsection 1.07(a)(1)(B) or (C) of the Adoption Agreement. Notwithstanding the Employer's election in Subsection 1.07(a)(1)(B) or (C) of the Adoption Agreement, if the Employer has elected one of the safe harbor contributions in Subsection 1.10(a)(3) or 1.11(a)(3) of the Adoption Agreement, an Active Participant may elect to change or discontinue the percentage or dollar amount by which his Compensation is reduced by notice to the Employer within a reasonable period, as specified by the Employer (but not less than 30 days), of receiving the notice described in Section 6.10. 5.04. Employee Contributions. If the Employer elected to permit Deferral Contributions in Subsection 1.07(a) of the Adoption Agreement and if so provided by the Employer in Subsection 1.08(a)(1) of the Adoption Agreement, each Active Participant may elect to make non-deductible Employee Contributions to the Plan in accordance with the rules and procedures established by the Employer and in an amount not less than one percent of such Participant's Compensation for the Plan Year. 5.05. No Deductible Employee Contributions. No deductible Employee Contributions may be made to the Plan. Deductible Employee Contributions made prior to January 1, 1987 shall be maintained in a separate Account. No part of the deductible Employee Contributions Account shall be used to purchase life insurance. 5.06. Rollover Contributions. An Eligible Employee who is or was entitled to receive an eligible rollover distribution, as defined in Code Section 402(c)(4) and Treasury Regulations issued thereunder, from a qualified plan (or an individual retirement account holding only assets attributable to a distribution from a qualified plan) may elect to contribute all or any portion of such distribution to the Trust directly from such qualified plan or individual retirement account or within 60 days of receipt of such distribution to the Eligible Employee. Rollover Contributions shall only be made in the form of cash, allowable Fund Shares, or, if and to the extent permitted by the Employer with the consent of the Trustee, promissory notes evidencing a plan loan to the Eligible Employee; provided, however, that Rollover Contributions shall only be permitted in the form of promissory notes if the Plan otherwise provides for loans. An Eligible Employee who has not yet become an Active Participant in the Plan in accordance with the provisions of Article 4 may make a Rollover Contribution to the Plan. Such Eligible Employee shall be treated as a Participant under the Plan for all purposes of the Plan, except eligibility to have Deferral Contributions made on his behalf and to receive an allocation of Matching Employer or Nonelective Employer Contributions. The Administrator shall develop such procedures and require such information from Eligible Employees as it deems necessary to ensure that amounts contributed under this Section 5.06 meet the requirements for tax- deferred rollovers established by this Section 5.06 and by Code Section 402(c). No Rollover Contributions may be made to the Plan until approved by the Administrator. If a Rollover Contribution made under this Section 5.06 is later determined by the Administrator not to have met the requirements of this Section 5.06 or of the Code or Treasury regulations, the Trustee shall, within a reasonable time after such determination is made, and on instructions from the Administrator, distribute to the Employee the amounts then held in the Trust attributable to such Rollover Contribution. A Participant's Rollover Contributions Account shall be subject to the terms of the Plan, including Article 14, except as otherwise provided in this Section 5.06. Notwithstanding any other provision of this Section 5.06, the Employer may direct the Trustee not to accept Rollover Contributions. 5.07. Qualified Nonelective Employer Contributions. The Employer may, in its discretion, make a Qualified Nonelective Employer Contribution for the Plan Year in any amount necessary to satisfy or help to satisfy the "ADP" test, described in Section 6.03, and/or the "ACP" test, described in Section 6.06. Qualified Nonelective Employer Contributions shall be made and allocated based on Participants' "testing compensation", as defined in Subsection 6.01(t), rather than Compensation, as defined in Subsection 2.01(j). Any Qualified Nonelective Employer Contribution shall be allocated among the Accounts of Non-Highly Compensated Employees who are Active Participants at any time during the Plan Year as follows: (a) Unless the Employer elects the allocation formula in Subsection 1.09(a)(1) of the Adoption Agreement, the Qualified Nonelective Employer Contribution shall be allocated at the election of the Employer either (1) in the ratio that each eligible Active Participant's "testing compensation", as defined in Subsection 6.01(t), for the Plan Year bears to the total "testing compensation" paid to all eligible Active Participants for the Plan Year; or (2) as a uniform flat dollar amount for each eligible Active Participant for the Plan Year. (b) If the Employer elects the allocation formula in Subsection 1.09(a)(1) of the Adoption Agreement, the Qualified Nonelective Employer Contribution shall be allocated as follows: (1) The eligible Active Participant with the least "testing compensation", as defined in Subsection 6.01(t), for the Plan Year shall receive an allocation equal to the lowest of: (A) the maximum amount that may be contributed on the eligible Active Participant's behalf under Code Section 415, taking into account all other contributions made by or on behalf of the eligible Active Participant to plans maintained by the Employer or a Related Employer that are includable as "annual additions", as defined in Subsection 6.01(b); or (B) the full amount of the Qualified Nonelective Employer Contribution. (2) The eligible Active Participant with the next lowest "testing compensation", as defined in Subsection 6.01(t), for the Plan Year shall receive an allocation equal to the lowest of: (A) the maximum amount that may be contributed on the eligible Active Participant's behalf under Code Section 415, taking into account all other contributions made by or on behalf of the eligible Active Participant to plans maintained by the Employer or a Related Employer that are includable as "annual additions", as defined in Subsection 6.01(b); or (B) the balance of any Qualified Nonelective Employer Contribution remaining after allocation is made as provided in Subsection 5.07(b)(1) above. (3) The allocation in Subsection 5.07(b)(2) shall be applied individually to each remaining eligible Active Participant, in ascending order of "testing compensation", until the Qualified Nonelective Employer Contribution is fully allocated. Once the Qualified Nonelective Employer Contribution is fully allocated, no further allocation shall be made to the remaining eligible Active Participants. Active Participants shall not be required to satisfy any Hours of Service or employment requirement for the Plan Year in order to receive an allocation of Qualified Nonelective Employer Contributions. Qualified Nonelective Employer Contributions shall be distributable only in accordance with the distribution provisions that are applicable to Deferral Contributions; provided, however, that a Participant shall not be permitted to take a hardship withdrawal of amounts credited to his Qualified Nonelective Employer Contributions Account after the later of December 31, 1988 or the last day of the Plan Year ending before July 1, 1989. 5.08. Matching Employer Contributions. If so provided by the Employer in Section 1.10 of the Adoption Agreement, the Employer shall make a Matching Employer Contribution on behalf of each eligible Active Participant, as determined in accordance with Subsection 1.10(d) and Section 1.12 of the Adoption Agreement, who had Deferral Contributions made on his behalf during the Contribution Period. The amount of the Matching Employer Contribution shall be determined in accordance with Subsection 1.10(a) and/or (b) and/or the Safe Harbor Matching Employer Contribution Addendum to the Adoption Agreement, as applicable. 5.09. Qualified Matching Employer Contributions. If so provided by the Employer in Subsection 1.10(e) of the Adoption Agreement, prior to making its Matching Employer Contribution (other than any safe harbor Matching Employer Contribution) to the Plan, the Employer may designate all or a portion of such Matching Employer Contribution as a Qualified Matching Employer Contribution. The Employer shall notify the Trustee of such designation at the time it makes its Matching Employer Contribution. Qualified Matching Employer Contributions shall be distributable only in accordance with the distribution provisions that are applicable to Deferral Contributions; provided, however, that a Participant shall not be permitted to take a hardship withdrawal of amounts credited to his Qualified Matching Employer Contributions Account after the later of December 31, 1988 or the last day of the Plan Year ending before July 1, 1989. If the amount of an Employer's Qualified Matching Employer Contribution is determined based on a Participant's Compensation, and the Qualified Matching Employer Contribution is necessary to satisfy the "ADP" test described in Section 6.03, the compensation used in determining the amount of the Qualified Matching Employer Contribution shall be "testing compensation", as defined in Subsection 6.01(t). If the Qualified Matching Employer Contribution is not necessary to satisfy the "ADP" test described in Section 6.03, the compensation used to determine the amount of the Qualified Matching Employer Contribution shall be Compensation as defined in Subsection 2.01(j), modified as provided in Section 5.02. 5.10. Nonelective Employer Contributions. If so provided by the Employer in Section 1.11 of the Adoption Agreement, the Employer shall make Nonelective Employer Contributions to the Trust in accordance with Subsection 1.11(a)and/or (b) of the Adoption Agreement to be allocated as follows: (a) If the Plan is a money purchase pension plan or the Employer has elected a fixed contribution formula, Nonelective Employer Contributions shall be allocated among eligible Active Participants, as determined in accordance with Subsection 1.11(c) and Section 1.12 of the Adoption Agreement, in the manner specified in Subsection 1.11(a) or the Safe Harbor Nonelective Employer Contribution Addendum to the Adoption Agreement, as applicable. (b) If the Employer has elected a discretionary contribution amount, Nonelective Employer Contributions shall be allocated among eligible Active Participants, as determined in accordance with Subsection 1.11(c) and Section 1.12 of the Adoption Agreement, as follows: (1) If the non-integrated formula is elected in Subsection 1.11(b)(1) of the Adoption Agreement, Nonelective Employer Contributions shall be allocated to eligible Active Participants in the ratio that each eligible Active Participant's Compensation bears to the total Compensation paid to all eligible Active Participants for the Plan Year; provided, however, that if the Plan is or is deemed to be a "top-heavy plan", as defined in Subsection 15.01(f), for any Plan Year, these allocation provisions shall be modified as provided in Section 15.04; or (2) If the integrated formula is elected in Subsection 1.11(b)(2) of the Adoption Agreement, Nonelective Employer Contributions shall be allocated in the following steps: (A) First, to each eligible Active Participant in the same ratio that the sum of the eligible Active Participant's Compensation and "excess Compensation" for the Plan Year bears to the sum of the Compensation and "excess Compensation" of all eligible Active Participants for the Plan Year. This allocation as a percentage of the sum of each eligible Active Participant's Compensation and "excess Compensation" shall not exceed the "permitted disparity limit", as defined in Section 1.11 of the Adoption Agreement. Notwithstanding the foregoing, if in any Plan Year an eligible Active Participant has reached the "cumulative permitted disparity limit", such eligible Active Participant shall receive an allocation under this Subsection 5.10(b)(2)(A) based on two times his Compensation for the Plan Year, rather than the sum of his Compensation and "excess Compensation" for the Plan Year. If an Active Participant did not benefit under a qualified defined benefit plan or target benefit plan for any Plan Year beginning on or after January 1, 1994, the Active Participant shall have no "cumulative disparity limit". (B) Second, if any Nonelective Employer Contributions remain after the allocation in Subsection 5.10(b)(2)(A), the remaining Nonelective Employer Contributions shall be allocated to each eligible Active Participant in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all eligible Active Participants for the Plan Year. Notwithstanding the provisions of Subsections 5.10(b)(2)(A) and (B) above, if in any Plan Year an eligible Active Participant benefits under another qualified plan or simplified employee pension, as defined in Code Section 408(k), that provides for or imputes permitted disparity, the Nonelective Employer Contributions for the Plan Year allocated to such eligible Active Participant shall be in the ratio that his Compensation for the Plan Year bears to the total Compensation paid to all eligible Active Participants. If the Plan is or is deemed to be a "top-heavy plan", as defined in Subsection 15.01(f), for any Plan Year, the allocation steps in Subsections 5.10(b)(2)(A) and (B) shall be modified as provided in Section 15.04. For purposes of this Subsection 5.10(b)(2), the following definitions shall apply: (C) "Cumulative permitted disparity limit" means 35 multiplied by the sum of an Active Participant's annual permitted disparity fractions, as defined in Sections 1.401(l)-5(b)(3) through (b)(7) of the Treasury Regulations, attributable to the Active Participant's total years of service under the Plan and any other qualified plan or simplified employee pension, as defined in Code Section 408(k), maintained by the Employer or a Related Employer. For each Plan Year commencing prior to January 1, 1989, the annual permitted disparity fraction shall be deemed to be one, unless the Participant never accrued a benefit under any qualified plan or simplified employee pension maintained by the Employer or a Related Employer during any such Plan Year. In determining the annual permitted disparity fraction for any Plan Year, the Employer may elect to assume that the full disparity limit has been used for such Plan Year. (D) "Excess Compensation" means Compensation in excess of the "integration level" specified by the Employer in Subsection 1.11(b)(2) of the Adoption Agreement. 5.11. Vested Interest in Contributions. A Participant's vested interest in the following sub-accounts shall be 100 percent: (a) his Deferral Contributions Account; (b) his Qualified Nonelective Contributions Account; (c) his Qualified Matching Employer Contributions Account; (d) his Nonelective Employer Contributions Account attributable to Nonelective Employer Contributions made in accordance with the Safe Harbor Nonelective Employer Contribution Addendum to the Adoption Agreement that are intended to satisfy the safe harbor contribution requirement for deemed satisfaction of the "ADP" test described in Section 6.03; (e) his Matching Employer Contributions Account attributable to Matching Employer Contributions made in accordance with the Safe Harbor Matching Employer Contribution Addendum to the Adoption Agreement that are intended to satisfy the safe harbor contribution requirement for deemed satisfaction of the "ADP" test described in Section 6.03; (f) his Rollover Contributions Account; (g) his Employee Contributions Account; and (h) his deductible Employee Contributions Account. A Participant's vested interest in his Nonelective Employer Contributions Account attributable to Nonelective Employer Contributions other than those described in Subsection 5.11(d) above, shall be determined in accordance with the vesting schedule elected by the Employer in Subsection 1.15(b)(1) of the Adoption Agreement. A Participant's vested interest in his Matching Employer Contributions Account attributable to Matching Employer Contributions other than those described in Subsection 5.11(e) above, shall be determined in accordance with the vesting schedule elected by the Employer in Subsection 1.15(b)(2) of the Adoption Agreement. 5.12. Time for Making Contributions. The Employer shall pay its contribution for each Plan Year not later than the time prescribed by law for filing the Employer's Federal income tax return for the fiscal (or taxable) year with or within which such Plan Year ends (including extensions thereof). The Employer shall remit any safe harbor Matching Employer Contributions made during a Plan Year quarter to the Trustee no later than the last day of the immediately following Plan Year quarter. The Employer should remit Employee Contributions and Deferral Contributions to the Trustee as of the earliest date on which such contributions can reasonably be segregated from the Employer's general assets, but not later than the 15th business day of the calendar month following the month in which such amount otherwise would have been paid to the Participant, or within such other time frame as may be determined by applicable regulation or legislation. The Trustee shall have no authority to inquire into the correctness of the amounts contributed and paid over to the Trustee, to determine whether any contribution is payable under this Article 5, or to enforce, by suit or otherwise, the Employer's obligation, if any, to make a contribution to the Trustee. 5.13. Return of Employer Contributions. The Trustee shall, upon request by the Employer, return to the Employer the amount (if any) determined under Section 20.24. Such amount shall be reduced by amounts attributable thereto which have been credited to the Accounts of Participants who have since received distributions from the Trust, except to the extent such amounts continue to be credited to such Participants' Accounts at the time the amount is returned to the Employer. Such amount shall also be reduced by the losses of the Trust attributable thereto, if and to the extent such losses exceed the gains and income attributable thereto, but shall not be increased by the gains and income of the Trust attributable thereto, if and to the extent such gains and income exceed the losses attributable thereto. To the extent such gains exceed losses, the gains shall be forfeited and applied as provided in Section 11.09. In no event shall the return of a contribution hereunder cause the balance of the individual Account of any Participant to be reduced to less than the balance which would have been credited to the Account had the mistaken amount not been contributed. Article 6. Limitations on Contributions. 6.01. Special Definitions. For purposes of this Article, the following definitions shall apply: (a) "Aggregate limit" means the greater of (1) or (2) where (1) is the sum of (A) 125 percent of the greater of the average "deferral ratio" of the Active Participants who are Non-Highly Compensated Employees for the "testing year" or the average "contribution percentage" of Active Participants who are Non-Highly Compensated Employees for the "testing year" beginning with or within the "testing year" of the cash or deferred arrangement and (B) the lesser of 200 percent or two plus the lesser of such average "deferral ratio" or average "contribution percentage" and where (2) is the sum of (A) 125 percent of the lesser of the average "deferral ratio" of the Active Participants who are Non-Highly Compensated Employees for the "testing year" or the average "contribution percentage" of the Active Participants who are Non-Highly Compensated Employees for the "testing year" beginning with or within the "testing year" of the cash or deferred arrangement and (B) the lesser of 200 percent or two plus the greater of such average "deferral ratio" or average "contribution percentage". (b) "Annual additions" mean the sum of the following amounts allocated to an Active Participant for a Limitation Year: (1) all employer contributions allocated to an Active Participant's account under qualified defined contribution plans maintained by the "415 employer", including amounts applied to reduce employer contributions as provided under Section 11.09; (2) all employee contributions allocated to an Active Participant's account under a qualified defined contribution plan or a qualified defined benefit plan maintained by the "415 employer" if separate accounts are maintained with respect to such Active Participant under the defined benefit plan; (3) all forfeitures allocated to an Active Participant's account under a qualified defined contribution plan maintained by the "415 employer"; (4) all amounts allocated, after March 31, 1984, to an "individual medical benefit account" which is part of a pension or annuity plan maintained by the "415 employer"; (5) all amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits allocated to the separate account of a key employee, as defined in Code Section 419A(d)(3), under a "welfare benefit fund" maintained by the "415 employer"; and (6) all allocations to an Active Participant under a "simplified employee pension". (c) "Contribution percentage" means the ratio (expressed as a percentage) of (1) the "contribution percentage amounts" allocated to an "eligible participant's" accounts for the Plan Year to (2) the "eligible participant's" "testing compensation" for the Plan Year. (d) "Contribution percentage amounts" mean: (1) any Employee Contributions made by an "eligible participant" to the Plan; (2) any Matching Employer Contributions, but excluding (A) Qualified Matching Employer Contributions that are taken into account in satisfying the "ADP" test described in Section 6.03 (except that such exclusion shall not apply for any Plan Year in which the "ADP" test described in Section 6.03 is deemed satisfied pursuant to Section 6.10) and (B) Matching Employer Contributions that are forfeited either to correct "excess aggregate contributions" or because the contributions to which they relate are "excess deferrals", "excess contributions", or "excess aggregate contributions"; (3) at the election of the Employer, Qualified Nonelective Employer Contributions, excluding Qualified Nonelective Employer Contributions that are taken into account in satisfying the "ADP" test described in Section 6.03; and (4) at the election of the Employer, Deferral Contributions, excluding Deferral Contributions that are taken into account in satisfying the "ADP" test described in Section 6.03. Notwithstanding the foregoing, for any Plan Year in which the "ADP" test described in Section 6.03 is deemed satisfied pursuant to Section 6.10, "contribution percentage amounts" shall not include the following: (5) any Deferral Contributions; and (6) if the requirements described in Section 6.11 for deemed satisfaction of the "ACP" test with respect to Matching Employer Contributions are met, any Matching Employer Contributions; or if the requirements described in Section 6.11 for deemed satisfaction of the "ACP" test with respect to Matching Employer Contributions are not met, any Matching Employer Contributions made on behalf of an "eligible participant" for the Plan Year that do not exceed four percent of the "eligible participant's" Compensation for the Plan Year. To be included in determining an "eligible participant's" "contribution percentage" for a Plan Year, Employee Contributions must be made to the Plan before the end of such Plan Year and other "contribution percentage amounts" must be allocated to the "eligible participant's" Account as of a date within such Plan Year and made before the last day of the 12-month period immediately following the Plan Year to which the "contribution percentage amounts" relate. If an Employer has elected the prior year testing method described in Subsection 1.06(a)(2) of the Adoption Agreement, "contribution percentage amounts" that are taken into account for purposes of determining the "contribution percentages" of Non- Highly Compensated Employees for the prior year relate to such prior year. Therefore, such "contribution percentage amounts" must be made before the last day of the Plan Year being tested. Effective for Plan Years beginning on or after January 1, 1999, if an Employer elects to change from the current year testing method described in Subsection 1.06(a)(1) of the Adoption Agreement to the prior year testing method described in Subsection 1.06(a)(2) of the Adoption Agreement, the following shall not be considered "contribution percentage amounts" for purposes of determining the "contribution percentages" of Non- Highly Compensated Employees for the prior year immediately preceding the Plan Year in which the change is effective: (7) Qualified Matching Employer Contributions that were taken into account in satisfying the "ADP" test described in Section 6.03 for such prior year; (8) Qualified Nonelective Employer Contributions that were taken into account in satisfying the "ADP" test described in Section 6.03 or the "ACP" test described in Section 6.06 for such prior year; and (9) all Deferral Contributions. (e) "Deferral ratio" means the ratio (expressed as a percentage) of (1) the amount of "includable contributions" made on behalf of an Active Participant for the Plan Year to (2) the Active Participant's "testing compensation" for such Plan Year. An Active Participant who does not receive "includable contributions" for a Plan Year shall have a "deferral ratio" of zero. (f) "Defined benefit fraction" means a fraction, the numerator of which is the sum of the Active Participant's annual benefits (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or qualified joint and survivor annuity) under all the defined benefit plans (whether or not terminated) maintained by the "415 employer", each such annual benefit computed on the assumptions that the Active Participant shall remain in employment until the normal retirement age under each such plan (or the Active Participant's current age, if later) and that all other factors used to determine benefits under such plan shall remain constant for all future Limitation Years, and the denominator of which is the lesser of 125 percent of the dollar limitation determined for the Limitation Year under Code Sections 415(b)(1)(A) and 415(d) or 140 percent of the Active Participant's highest average Compensation for three consecutive calendar years of service during which the Active Participant was active in each such plan, including any adjustments under Code Section 415(b). However, if the Active Participant was a participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by the "415 employer" which were in existence on May 6, 1986 then the denominator of the "defined benefit fraction" shall not be less than 125 percent of the Active Participant's total accrued benefit as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any changes in the terms and conditions of such plans made after May 5, 1986, under all such defined benefit plans that met, individually and in the aggregate, the requirements of Code Section 415 for all Limitation Years beginning before January 1, 1987. (g) "Defined contribution fraction" means a fraction, the numerator of which is the sum of all "annual additions" credited to an Active Participant for the current Limitation Year and all prior Limitation Years and the denominator of which is the sum of the "maximum permissible amounts" for the current Limitation Year and all prior Limitation Years during which the Participant was an Employee (regardless of whether the "415 employer" maintained a defined contribution plan in any such Limitation Year). If the Active Participant was a participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined contribution plans maintained by the "415 employer" which were in existence on May 6, 1986, then the numerator of the "defined contribution fraction" shall be adjusted if the sum of this fraction and the "defined benefit fraction" would otherwise exceed 1.0 under the terms of the Plan. Under the adjustment an amount equal to the product of (1) the excess of the sum of the fractions over 1.0 and (2) the denominator of this fraction shall be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the plans made after May 6, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. For purposes of determining the "defined contribution fraction", the "annual additions" for Limitation Years beginning before January 1, 1987 shall not be recomputed to treat all employee contributions as "annual additions". (h) "Determination year" means (1) for purposes of determining income or loss with respect to "excess deferrals", the calendar year in which the "excess deferrals" were made and (2) for purposes of determining income or loss with respect to "excess contributions", and "excess aggregate contributions", the Plan Year in which such "excess contributions" or "excess aggregate contributions" were made. (i) "Elective deferrals" mean all employer contributions, other than Deferral Contributions, made on behalf of a Participant pursuant to an election to defer under any qualified CODA as described in Code Section 401(k), any simplified employee pension cash or deferred arrangement as described in Code Section 402(h)(1)(B), any eligible deferred compensation plan under Code Section 457, any plan as described under Code Section 501(c)(18), and any employer contributions made on behalf of a Participant pursuant to a salary reduction agreement for the purchase of an annuity contract under Code Section 403(b). "Elective deferrals" shall not include any deferrals properly distributed as excess "annual additions". (j) "Eligible participant" means any Active Participant who is eligible to make Employee Contributions, or Deferral Contributions (if the Employer takes such contributions into account in calculating "contribution percentages"), or to receive a Matching Employer Contribution. Notwithstanding the foregoing, the term "eligible participant" shall not include any Active Participant who is included in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers. (k) "Excess aggregate contributions" with respect to any Plan Year mean the excess of (1) The aggregate "contribution percentage amounts" actually taken into account in computing the average "contribution percentages" of "eligible participants" who are Highly Compensated Employees for such Plan Year, over (2) The maximum amount of "contribution percentage amounts" permitted to be made on behalf of Highly Compensated Employees under Section 6.06 (determined by reducing "contribution percentage amounts" made for the Plan Year on behalf of "eligible participants" who are Highly Compensated Employees in order of their "contribution percentages" beginning with the highest of such "contribution percentages"). "Excess aggregate contributions" shall be determined after first determining "excess deferrals" and then determining "excess contributions". (l) "Excess contributions" with respect to any Plan Year mean the excess of (1) The aggregate amount of "includable contributions" actually taken into account in computing the average "deferral percentage" of Active Participants who are Highly Compensated Employees for such Plan Year, over (2) The maximum amount of "includable contributions" permitted to be made on behalf of Highly Compensated Employees under Section 6.03 (determined by reducing "includable contributions" made for the Plan Year on behalf of Active Participants who are Highly Compensated Employees in order of their "deferral ratios", beginning with the highest of such "deferral ratios"). (m) "Excess deferrals" mean those Deferral Contributions and/or "elective deferrals" that are includable in a Participant's gross income under Code Section 402(g) to the extent such Participant's Deferral Contributions and/or "elective deferrals" for a calendar year exceed the dollar limitation under such Code Section for such calendar year. (n) "Excess 415 amount" means the excess of an Active Participant's "annual additions" for the Limitation Year over the "maximum permissible amount". (o) "415 employer" means the Employer and any other employers which constitute a controlled group of corporations (as defined in Code Section 414(b) as modified by Code Section 415(h)) or which constitute trades or businesses (whether or not incorporated) which are under common control (as defined in Code Section 414(c) as modified by Code Section 415(h)) or which constitute an affiliated service group (as defined in Code Section 414(m)) and any other entity required to be aggregated with the Employer pursuant to regulations issued under Code Section 414(o). (p) "Includable contributions" mean: (1) any Deferral Contributions made on behalf of an Active Participant, including "excess deferrals" of Highly Compensated Employees, but excluding (a) "excess deferrals" of Non-Highly Compensated Employees that arise solely from Deferral Contributions made under the Plan or plans maintained by the Employer or a Related Employer and (b) Deferral Contributions that are taken into account in satisfying the "ACP" test described in Section 6.06; (2) at the election of the Employer, Qualified Nonelective Employer Contributions, excluding Qualified Nonelective Employer Contributions that are taken into account in satisfying the "ACP" test described in Section 6.06; and (3) at the election of the Employer, Qualified Matching Employer Contributions; provided, however, that the Employer may not elect to treat Qualified Matching Employer Contributions as "includable contributions" for any Plan Year in which the "ADP" test described in Section 6.03 is deemed satisfied pursuant to Section 6.10. To be included in determining an Active Participant's "deferral ratio" for a Plan Year, "includable contributions" must be allocated to the Participant's Account as of a date within such Plan Year and made before the last day of the 12-month period immediately following the Plan Year to which the "includable contributions" relate. If an Employer has elected the prior year testing method described in Subsection 1.06(a)(2) of the Adoption Agreement, "includable contributions" that are taken into account for purposes of determining the "deferral ratios" of Non-Highly Compensated Employees for the prior year relate to such prior year. Therefore, such "includable contributions" must be made before the last day of the Plan Year being tested. Effective for Plan Years beginning on or after January 1, 1999, if an Employer elects to change from the current year testing method described in Subsection 1.06(a)(1) of the Adoption Agreement to the prior year testing method described in Subsection 1.06(a)(2) of the Adoption Agreement, the following shall not be considered "includable contributions" for purposes of determining the "deferral ratios" of Non-Highly Compensated Employees for the prior year immediately preceding the Plan Year in which the change is effective: (4) Deferral Contributions that were taken into account in satisfying the "ACP" test described in Section 6.06 for such prior year; (5) Qualified Nonelective Employer Contributions that were taken into account in satisfying the "ADP" test described in Section 6.03 or the "ACP" test described in Section 6.06 for such prior year; and (6) all Qualified Matching Employer Contributions. (q) "Individual medical benefit account" means an individual medical benefit account as defined in Code Section 415(l)(2). (r) "Maximum permissible amount" means for a Limitation Year with respect to any Active Participant the lesser of (1) $30,000 (adjusted as provided in Code Section 415(d)) or (2) 25 percent of the Active Participant's Compensation for the Limitation Year. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different 12-consecutive-month period, the dollar limitation specified in clause (1) above shall be adjusted by multiplying it by a fraction the numerator of which is the number of months in the short Limitation Year and the denominator of which is 12. The Compensation limitation specified in clause (2) above shall not apply to any contribution for medical benefits within the meaning of Code Section 401(h) or 419A(f)(2) after separation from service which is otherwise treated as an "annual addition" under Code Section 419A(d)(2) or 415(l)(1). (s) "Simplified employee pension" means a simplified employee pension as defined in Code Section 408(k). (t) "Testing compensation" means compensation as defined in Code Section 414(s). "Testing compensation" shall be based on the amount actually paid to a Participant during the "testing year" or, at the option of the Employer, during that portion of the "testing year" during which the Participant is an Active Participant; provided, however, that if the Employer elected different Eligibility Service requirements for purposes of eligibility to make Deferral Contributions and to receive Matching Employer Contributions, then "testing compensation" must be based on the amount paid to a Participant during the full "testing year". The annual "testing compensation" of each Active Participant taken into account in applying the "ADP" test described in Section 6.03 and the "ACP" test described in Section 6.06 for any "testing year" shall not exceed the annual compensation limit under Code Section 401(a)(17) as in effect on the first day of the "testing year". This limit shall be adjusted by the Secretary to reflect increases in the cost of living, as provided in Code Section 401(a)(17)(B); provided, however, that the dollar increase in effect on January 1 of any calendar year is effective for "testing years" beginning in such calendar year. If a Plan determines "testing compensation" over a period that contains fewer than 12 calendar months (a "short determination period"), then the Compensation limit for such "short determination period" is equal to the Compensation limit for the calendar year in which the "short determination period" begins multiplied by the ratio obtained by dividing the number of full months in the "short determination period" by 12; provided, however, that such proration shall not apply if there is a "short determination period" because (1) the Employer elected in accordance with any rules and regulations issued by the Secretary of the Treasury or his delegate to apply the "ADP" test described in Section 6.03 and/or the "ACP" test described in Section 6.06 based only on Compensation paid during the portion of the "testing year" during which an individual was an Active Participant or (2) an Employee is covered under the Plan for fewer than 12 calendar months. (u) "Testing year" means (1) if the Employer has elected the current year testing method in Subsection 1.06(a)(1) of the Adoption Agreement, the Plan Year being tested. (2) if the Employer has elected the prior year testing method in Subsection 1.06(a)(2) of the Adoption Agreement, the Plan Year immediately preceding the Plan Year being tested. (v) "Welfare benefit fund" means a welfare benefit fund as defined in Code Section 419(e). 6.02. Code Section 402(g) Limit on Deferral Contributions. In no event shall the amount of Deferral Contributions made under the Plan for a calendar year, when aggregated with the "elective deferrals" made under any other plan maintained by the Employer or a Related Employer, exceed the dollar limitation contained in Code Section 402(g) in effect at the beginning of such calendar year. A Participant may assign to the Plan any "excess deferrals" made during a calendar year by notifying the Administrator on or before March 15 following the calendar year in which the "excess deferrals" were made of the amount of the "excess deferrals" to be assigned to the Plan. A Participant is deemed to notify the Administrator of any "excess deferrals" that arise by taking into account only those Deferral Contributions made to the Plan and those "elective deferrals" made to any other plan maintained by the Employer or a Related Employer. Notwithstanding any other provision of the Plan, "excess deferrals", plus any income and minus any loss allocable thereto, as determined under Section 6.09, shall be distributed no later than April 15 to any Participant to whose Account "excess deferrals" were so assigned for the preceding calendar year and who claims "excess deferrals" for such calendar year. Any Matching Employer Contributions attributable to "excess deferrals", plus any income and minus any loss allocable thereto, as determined under Section 6.09, shall be forfeited and applied as provided in Section 11.09. "Excess deferrals" shall be treated as "annual additions" under the Plan, unless such amounts are distributed no later than the first April 15 following the close of the calendar year in which the "excess deferrals" were made. 6.03. Additional Limit on Deferral Contributions ("ADP" Test). Notwithstanding any other provision of the Plan to the contrary, the Deferral Contributions made with respect to a Plan Year on behalf of Active Participants who are Highly Compensated Employees for such Plan Year may not result in an average "deferral ratio" for such Active Participants that exceeds the greater of: (a) the average "deferral ratio" for the "testing year" of Active Participants who are Non-Highly Compensated Employees for the "testing year" multiplied by 1.25; or (b) the average "deferral ratio" for the "testing year" of Active Participants who are Non-Highly Compensated Employees for the "testing year" multiplied by two, provided that the average "deferral ratio" for Active Participants who are Highly Compensated Employees for the Plan Year being tested does not exceed the average "deferral ratio" for Participants who are Non-Highly Compensated Employees for the "testing year" by more than two percentage points. For the first Plan Year in which the Plan provides a cash or deferred arrangement, the average "deferral ratio" for Active Participants who are Non-Highly Compensated Employees used in determining the limits applicable under Subsections 6.03(a) and (b) shall be either three percent or the actual average "deferral ratio" for such Active Participants for such first Plan Year, as elected by the Employer in Section 1.06(b) of the Adoption Agreement. The deferral ratios of Active Participants who are included in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement shall be disaggregated from the "deferral ratios" of other Active Participants and the provisions of this Section 6.03 shall be applied separately with respect to each group. The "deferral ratio" for any Active Participant who is a Highly Compensated Employee for the Plan Year being tested and who is eligible to have "includable contributions" allocated to his accounts under two or more cash or deferred arrangements described in Code Section 401(k) that are maintained by the Employer or a Related Employer, shall be determined as if such "includable contributions" were made under a single arrangement. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Code Section 401(k). If this Plan satisfies the requirements of Code Section 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code Sections only if aggregated with this Plan, then this Section 6.03 shall be applied by determining the "deferral ratios" of Employees as if all such plans were a single plan. Plans may be aggregated in order to satisfy Code Section 401(k) only if they have the same plan year. The Employer shall maintain records sufficient to demonstrate satisfaction of the "ADP" test and the amount of Qualified Nonelective and/or Qualified Matching Employer Contributions used in such test. 6.04. Allocation and Distribution of "Excess Contributions". Notwithstanding any other provision of this Plan, the "excess contributions" allocable to the Account of a Participant, plus any income and minus any loss allocable thereto, as determined under Section 6.09, shall be distributed to the Participant no later than the last day of the Plan Year immediately following the Plan Year in which the "excess contributions" were made. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which the "excess contributions" were made, a ten percent excise tax shall be imposed on the Employer maintaining the Plan with respect to such amounts. The "excess contributions" allocable to a Participant's Account shall be determined by reducing the "includable contributions" made for the Plan Year on behalf of Active Participants who are Highly Compensated Employees in order of the dollar amount of such "includable contributions", beginning with the highest such dollar amount. "Excess contributions" shall be treated as "annual additions". Any Matching Employer Contributions attributable to "excess contributions", plus any income and minus any loss allocable thereto, as determined under Section 6.09, shall be forfeited and applied as provided in Section 11.09. 6.05. Reductions in Deferral Contributions to Meet Code Requirements. If the Administrator anticipates that the Plan will not satisfy the "ADP" and/or "ACP" test for the year, the Administrator may objectively reduce the rate of Deferral Contributions of Participants who are Highly Compensated Employees to an amount determined by the Administrator to be necessary to satisfy the "ADP" and/or "ACP" test. 6.06. Limit on Matching Employer Contributions and Employee Contributions ("ACP" Test). The provisions of this Section 6.06 shall not apply to Active Participants who are included in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers. Notwithstanding any other provision of the Plan to the contrary, Matching Employer Contributions and Employee Contributions made with respect to a Plan Year by or on behalf of "eligible participants" who are Highly Compensated Employees for such Plan Year may not result in an average "contribution percentage" for such "eligible participants" that exceeds the greater of: (a) the average "contribution percentage" for the "testing year" of "eligible participants" who are Non-Highly Compensated Employees for the "testing year" multiplied by 1.25; or (b) the average "contribution percentage" for the "testing year" of "eligible participants" who are Non-Highly Compensated Employees for the "testing year" multiplied by two, provided that the average "contribution percentage" for the Plan Year being tested of "eligible participants" who are Highly Compensated Employees does not exceed the average "contribution percentage" for the "testing year" of "eligible participants" who are Non- Highly Compensated Employees for the "testing year" by more than two percentage points. For the first Plan Year in which the Plan provides for "contribution percentage amounts" to be made, the "ACP" for "eligible participants" who are Non-Highly Compensated Employees used in determining the limits applicable under paragraphs (a) and (b) of this Section 6.06 shall be either three percent or the actual "ACP" of such eligible participants for such first Plan Year, as elected by the Employer in Section 1.06(b). The "contribution percentage" for any "eligible participant" who is a Highly Compensated Employee for the Plan Year and who is eligible to have "contribution percentage amounts" allocated to his accounts under two or more plans described in Code Section 401(a) that are maintained by the Employer or a Related Employer, shall be determined as if such "contribution percentage amounts" were contributed under a single plan. If a Highly Compensated Employee participates in two or more such plans that have different plan years, all plans ending with or within the same calendar year shall be treated as a single plan. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under Treasury Regulations issued under Code Section 401(m). If this Plan satisfies the requirements of Code Section 401(m), 401(a)(4) or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code Sections only if aggregated with this Plan, then this Section 6.06 shall be applied by determining the "contribution percentages" of Employees as if all such plans were a single plan. Plans may be aggregated in order to satisfy Code Section 401(m) only if they have the same plan year. The Employer shall maintain records sufficient to demonstrate satisfaction of the "ACP" test and the amount of Deferral Contributions, Qualified Nonelective Employer Contributions, and/or Qualified Matching Employer Contributions used in such test. 6.07. Allocation, Distribution, and Forfeiture of "Excess Aggregate Contributions". Notwithstanding any other provision of the Plan, the "excess aggregate contributions" allocable to the Account of a Participant, plus any income and minus any loss allocable thereto, as determined under Section 6.09, shall be forfeited, if forfeitable, or if not forfeitable, distributed to the Participant no later than the last day of the Plan Year immediately following the Plan Year in which the "excess aggregate contributions" were made. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which such "excess aggregate contributions" were made, a ten percent excise tax shall be imposed on the Employer maintaining the Plan with respect to such amounts. The "excess aggregate contributions" allocable to a Participant's Account shall be determined by reducing the "contribution percentage amounts" made for the Plan Year on behalf of "eligible participants" who are Highly Compensated Employees in order of the dollar amount of such "contribution percentage amounts", beginning with the highest such dollar amount. "Excess aggregate contributions" shall be treated as "annual additions". "Excess aggregate contributions" shall be forfeited or distributed from a Participant's Employee Contributions Account, Matching Employer Contributions Account and if applicable, the Participant's Deferral Contributions Account and/or Qualified Nonelective Employer Contributions Account in the order prescribed by the Employer, who shall direct the Trustee, and which order shall be uniform with respect to all Participants and non-discriminatory. Forfeitures of "excess aggregate contributions" shall be applied as provided in Section 11.09. 6.08. Aggregate Limit on "Contribution Percentage Amounts" and "Includable Contributions". The sum of the average "deferral ratio" and the average "contribution percentage" of those Active Participants who are Highly Compensated Employees during the Plan Year shall not exceed the "aggregate limit". The average "deferral ratio" and average "contribution percentage" of such Active Participants shall be determined after any corrections required to meet the "ADP" test, described in Section 6.03, and the "ACP" test, described in Section 6.06, have been made. Notwithstanding the foregoing, the "aggregate limit" shall not be exceeded if either the average "deferral ratio" or the average "contribution percentage" of such Active Participants for the Plan Year does not exceed 1.25 multiplied by the average "deferral ratio" or the average "contribution percentage", as applicable, for the "testing year" of the Active Participants who are Non- Highly Compensated Employees for the "testing year". If the "aggregate limit" would be exceeded for any Plan Year, then the limit shall be met by reducing the "contribution percentage amounts" contributed for the Plan Year on behalf of the Active Participants who are Highly Compensated Employees for such Plan Year (in order of their "contribution percentages", beginning with the highest such "contribution percentage"). "Contribution percentage amounts" that are reduced as provided herein shall be treated as "excess aggregate contributions". If for any Plan Year in which the "ADP" test described in Section 6.03 is deemed satisfied pursuant to Section 6.10, the average "deferral ratio" of those Active Participants who are Highly Compensated Employees during the Plan Year does not meet the "aggregate limit" after reducing the "contribution percentage amounts" contributed on behalf of such Active Participants to zero, no further reduction shall be required under this Section 6.08. 6.09. Income or Loss on Distributable Contributions. The income or loss allocable to "excess deferrals", "excess contributions", and "excess aggregate contributions" shall be determined under one of the following methods: (a) the income or loss for the "determination year" allocable to the Participant's Account to which such contributions were made multiplied by a fraction, the numerator of which is the amount of the distributable contributions and the denominator of which is the balance of the Participant's Account to which such contributions were made, determined without regard to any income or loss occurring during the "determination year"; or (b) the income or loss for the "determination year" determined under any other reasonable method, provided that such method is used consistently for all Participants in determining the income or loss allocable to distributable contributions hereunder for the Plan Year, and is used by the Plan in allocating income or loss to Participants' Accounts. Income or loss allocable to the period between the end of the "determination year" and the date of distribution shall be disregarded in determining income or loss. 6.10. Deemed Satisfaction of "ADP" Test. Notwithstanding any other provision of this Article 6 to the contrary, for any Plan Year beginning on or after January 1, 1999, if the Employer has elected one of the safe harbor contributions in Subsection 1.10(a)(3) or 1.11(a)(3) of the Adoption Agreement and complies with the notice requirements described herein for such Plan Year, the Plan shall be deemed to have satisfied the "ADP" test described in Section 6.03. The Employer shall provide a notice to each Active Participant during the Plan Year describing the following: (a) the formula used for determining the amount of the safe harbor contribution to be made on behalf of Active Participants for the Plan Year or a statement that the Plan may be amended during the Plan Year to provide for a safe harbor Nonelective Employer Contribution for the Plan Year equal to at least three percent of each Active Participant's Compensation for the Plan Year; (b) any other employer contributions provided under the Plan and any requirements that Active Participants must satisfy to be entitled to receive such employer contributions; (c) the type and amount of Compensation that may be deferred under the Plan as Deferral Contributions; (d) the procedures for making a cash or deferred election under the Plan and the periods during which such elections may be made or changed; and (e) the withdrawal and vesting provisions applicable to contributions under the Plan. The descriptions required in (b) through (e) may be provided by cross references to the relevant sections of an up to date summary plan description. Such notice shall be written in a manner calculated to be understood by the average Active Participant. The Employer shall provide the notice to each Active Participant within one of the following periods, whichever is applicable: (f) if the employee is an Active Participant 90 days before the beginning of the Plan Year, within the period beginning 90 days and ending 30 days before the first day of the Plan Year; or (g) if the employee becomes an Active Participant after the date described in paragraph (f) above, within the period beginning 90 days before and ending on the date he becomes an Active Participant; provided, however, that such notice shall not be required to be provided to an Active Participant earlier than is required under any guidance published by the Internal Revenue Service. If an Employer that provides notice that the Plan may be amended to provide a safe harbor Nonelective Employer Contribution for the Plan Year does amend the Plan to provide such contribution, the Employer shall provide a supplemental notice to all Active Participants stating that a safe harbor Nonelective Employer Contribution in the specified amount shall be made for the Plan Year. Such supplemental notice shall be provided to Active Participants at least 30 days before the last day of the Plan Year. 6.11. Deemed Satisfaction of "ACP" Test With Respect to Matching Employer Contributions. A Plan that satisfies the requirements of Section 6.10 shall also be deemed to have satisfied the "ACP" test described in Section 6.06 with respect to Matching Employer Contributions, if Matching Employer Contributions to the Plan for the Plan Year meet all of the following requirements: (a) the percentage of Deferral Contributions matched does not increase as the percentage of Compensation contributed increases; (b) Highly Compensated Employees are not provided a greater percentage match than Non-Highly Compensated Employees; (c) Deferral Contributions matched do not exceed six percent of a Participant's Compensation; and (d) if the Employer elected in Subsection 1.10(a)(2) or 1.10(b) of the Adoption Agreement to provide discretionary Matching Employer Contributions, the Employer also elected in Subsection 1.10(a)(2)(A) or 1.11(b)(1) of the Adoption Agreement, as applicable, to limit the dollar amount of such discretionary Matching Employer Contributions allocated to a Participant for the Plan Year to no more than four percent of such Participant's Compensation for the Plan Year. If such Plan provides for Employee Contributions, the "ACP" test described in Section 6.06 must be applied with respect to such Employee Contributions. For purposes of applying the "ACP" test with respect to Employee Contributions, Matching Employer Contributions and Nonelective Employer Contributions that satisfy the vesting and distribution requirements applicable to safe harbor contributions, but which are not required to comply with the safe harbor contribution requirements may be taken into account. 6.12. Code Section 415 Limitations. Notwithstanding any other provisions of the Plan, the following limitations shall apply: (a) Employer Maintains Single Plan: If the "415 employer" does not maintain any other qualified defined contribution plan or any "welfare benefit fund", "individual medical benefit account", or "simplified employee pension" in addition to the Plan, the provisions of this Subsection 6.12(a) shall apply. (1) If a Participant does not participate in, and has never participated in any other qualified defined contribution plan, "welfare benefit fund", "individual medical benefit account", or "simplified employee pension" maintained by the "415 employer", which provides an "annual addition", the amount of "annual additions" to the Participant's Account for a Limitation Year shall not exceed the lesser of the "maximum permissible amount" or any other limitation contained in the Plan. If a contribution that would otherwise be contributed or allocated to the Participant's Account would cause the "annual additions" for the Limitation Year to exceed the "maximum permissible amount", the amount contributed or allocated shall be reduced so that the "annual additions" for the Limitation Year shall equal the "maximum permissible amount". (2) Prior to the determination of a Participant's actual Compensation for a Limitation Year, the "maximum permissible amount" may be determined on the basis of a reasonable estimation of the Participant's Compensation for such Limitation Year, uniformly determined for all Participants similarly situated. Any Employer contributions based on estimated annual Compensation shall be reduced by any "excess 415 amounts" carried over from prior Limitation Years. (3) As soon as is administratively feasible after the end of the Limitation Year, the "maximum permissible amount" for such Limitation Year shall be determined on the basis of the Participant's actual Compensation for such Limitation Year. (4) If there is an "excess 415 amount" with respect to a Participant for a Limitation Year as a result of the estimation of the Participant's Compensation for the Limitation Year, the allocation of forfeitures to the Participant's Account, or a reasonable error in determining the amount of Deferral Contributions that may be made on behalf of the Participant under the limits of this Section 6.12, such "excess 415 amount" shall be disposed of as follows: (A) Any Employee Contributions shall be reduced to the extent necessary to reduce the "excess 415 amount". (B) If after application of Subsection 6.12(a)(4)(A) an "excess 415 amount" still exists, any Deferral Contributions that have not been matched shall be reduced to the extent necessary to reduce the "excess 415 amount". (C) If after application of Subsection 6.12(a)(4)(B) an "excess 415 amount" still exists, any Deferral Contributions that have been matched and the Matching Employer Contributions attributable thereto shall be reduced to the extent necessary to reduce the "excess 415 amount". (D) If after the application of Subsection 6.12(a)(4)(C) an "excess 415 amount" still exists, any Nonelective Employer Contributions shall be reduced to the extent necessary to reduce the "excess 415 amount". (E) If after the application of Subsection 6.12(a)(4)(D) an "excess 415 amount" still exists, any Qualified Nonelective Employer Contributions shall be reduced to the extent necessary to reduce the "excess 415 amount". Employee Contributions and Deferral Contributions that are reduced as provided above shall be returned to the Participant. Any income allocable to returned Employee Contributions or Deferral Contributions shall also be returned or shall be treated as additional "annual additions" for the Limitation Year in which the excess contributions to which they are allocable were made. If Matching Employer, Nonelective Employer, or Qualified Nonelective Employer Contributions to a Participant's Account are reduced as an "excess 415 amount", as provided above, and the individual is still an Active Participant at the end of the Limitation Year, then such "excess 415 amount" shall be reapplied to reduce future Employer contributions under the Plan for the next Limitation Year (and for each succeeding Limitation Year, as necessary) for such Participant, so that in each such Limitation Year the sum of the actual Employer contributions made on behalf of such Participant plus the reapplied amount shall equal the amount of Employer contributions which would otherwise be made to such Participant's Account. If the individual is not an Active Participant at the end of a Limitation Year, then such "excess 415 amount" shall be held unallocated in a suspense account. The suspense account shall be applied to reduce future Employer contributions for all remaining Active Participants in the next Limitation Year and each succeeding Limitation Year if necessary. If a suspense account is in existence at any time during the Limitation Year pursuant to this Subsection 6.12(a)(4), it shall participate in the allocation of the Trust Fund's investment gains and losses. All amounts in the suspense account must be allocated to the Accounts of Active Participants before any Employer contribution may be made for the Limitation Year. Except as otherwise specifically provided in this Subsection 6.12, "excess 415 amounts" may not be distributed to Participants. (b) Employer Maintains Multiple Defined Contribution Type Plans: Unless the Employer specifies another method for limiting "annual additions" in the 415 Correction Addendum to the Adoption Agreement, if the "415 employer" maintains any other qualified defined contribution plan or any "welfare benefit fund", "individual medical benefit account", or "simplified employee pension" in addition to the Plan, the provisions of this Subsection 6.12(b) shall apply. (1) If a Participant is covered under any other qualified defined contribution plan or any "welfare benefit fund", "individual medical benefit account", or "simplified employee pension" maintained by the "415 employer", that provides an "annual addition", the amount of "annual additions" to the Participant's Account for a Limitation Year shall not exceed the lesser of (A) the "maximum permissible amount", reduced by the sum of any "annual additions" to the Participant's accounts for the same Limitation Year under such other qualified defined contribution plans and "welfare benefit funds", "individual medical benefit accounts", and "simplified employee pensions", or (B) any other limitation contained in the Plan. If the "annual additions" with respect to a Participant under other qualified defined contribution plans, "welfare benefit funds", "individual medical benefit accounts", and "simplified employee pensions" maintained by the "415 employer" are less than the "maximum permissible amount" and a contribution that would otherwise be contributed or allocated to the Participant's Account under the Plan would cause the "annual additions" for the Limitation Year to exceed the "maximum permissible amount", the amount to be contributed or allocated shall be reduced so that the "annual additions" for the Limitation Year shall equal the "maximum permissible amount". If the "annual additions" with respect to the Participant under such other qualified defined contribution plans, "welfare benefit funds", "individual medical benefit accounts", and "simplified employee pensions" in the aggregate are equal to or greater than the "maximum permissible amount", no amount shall be contributed or allocated to the Participant's Account under the Plan for the Limitation Year. (2) Prior to the determination of a Participant's actual Compensation for the Limitation Year, the amounts referred to in Subsection 6.12(b)(1)(A) above may be determined on the basis of a reasonable estimation of the Participant's Compensation for such Limitation Year, uniformly determined for all Participants similarly situated. Any Employer contribution based on estimated annual Compensation shall be reduced by any "excess 415 amounts" carried over from prior Limitation Years. (3) As soon as is administratively feasible after the end of the Limitation Year, the amounts referred to in Subsection 6.12(b)(1)(A) shall be determined on the basis of the Participant's actual Compensation for such Limitation Year. (4) Notwithstanding the provisions of any other plan maintained by a "415 employer", if there is an "excess 415 amount" with respect to a Participant for a Limitation Year as a result of estimation of the Participant's Compensation for the Limitation Year, the allocation of forfeitures to the Participant's account under any qualified defined contribution plan maintained by the "415 employer", or a reasonable error in determining the amount of Deferral Contributions that may be made on behalf of the Participant to the Plan or any other qualified defined contribution plan maintained by the "415 employer" under the limits of this Subsection 6.12(b), such "excess 415 amount" shall be deemed to consist first of the "annual additions" allocated to this Plan and shall be reduced as provided in Subsection 6.12(a)(4); provided, however, that if the "415 employer" maintains both a profit sharing plan and a money purchase pension plan under this Basic Plan Document, "annual additions" to the money purchase pension plan shall be reduced only after all "annual additions" to the profit sharing plan have been reduced. (c) Employer Maintains or Maintained Defined Benefit Plan: For Limitation Years beginning prior to January 1, 2000, if the "415 employer" maintains, or at any time maintained, a qualified defined benefit plan, the sum of any Participant's "defined benefit plan fraction and "defined contribution plan fraction" shall not exceed the combined plan limitation of 1.00 in any such Limitation Year. The combined plan limitation shall be met by reducing "annual additions" under the Plan, unless otherwise provided in the qualified defined benefit plan. (d) Adjustment to Compensation: Compensation for purposes of this Section 6.12 shall include amounts that are not includable in the gross income of the Participant under a salary reduction agreement by reason of the application of Code Section 125, 132(f)(4), 402(e)(3), 402(h), or 403(b). Article 7. Participants' Accounts. 7.01. Individual Accounts. The Administrator shall establish and maintain an Account for each Participant that shall reflect Employer and Employee contributions made on behalf of the Participant and earnings, expenses, gains and losses attributable thereto, and investments made with amounts in the Participant's Account. The Administrator shall establish and maintain such other accounts and records as it decides in its discretion to be reasonably required or appropriate in order to discharge its duties under the Plan. The Administrator shall notify the Trustee of all Accounts established and maintained under the Plan. 7.02. Valuation of Accounts. Participant Accounts shall be valued at their fair market value at least annually as of a date specified by the Administrator in accordance with a method consistently followed and uniformly applied, and on such date earnings, expenses, gains and losses on investments made with amounts in each Participant's Account shall be allocated to such Account. Participants shall be furnished statements of their Account values at least once each Plan Year. Article 8. Investment of Contributions. 8.01. Manner of Investment. All contributions made to the Accounts of Participants shall be held for investment by the Trustee. Except as otherwise specifically provided in Section 20.10, the Accounts of Participants shall be invested and reinvested only in Permissible Investments selected by the Employer and designated in the Service Agreement. 8.02. Investment Decisions. Investments shall be directed by the Employer or by each Participant or both, in accordance with the Employer's election in Subsection 1.23 of the Adoption Agreement. Pursuant to Section 20.04, the Trustee shall have no discretion or authority with respect to the investment of the Trust Fund; however, an affiliate of the Trustee may exercise investment management authority in accordance with Subsection (e) below. (a) With respect to those Participant Accounts for which Employer investment direction is elected, the Employer (in its capacity as a named fiduciary under ERISA) has the right to direct the Trustee in writing with respect to the investment and reinvestment of assets comprising the Trust Fund in the Permissible Investments designated in the Service Agreement. (b) With respect to those Participant Accounts for which Participant investment direction is elected, each Participant shall direct the investment of his Account among the Permissible Investments designated in the Service Agreement. The Participant shall file initial investment instructions with the Administrator, on such form as the Administrator may provide, selecting the Permissible Investments in which amounts credited to his Account shall be invested. (1) Except as provided in this Section 8.02, only authorized Plan contacts and the Participant shall have access to a Participant's Account. While any balance remains in the Account of a Participant after his death, the Beneficiary of the Participant shall make decisions as to the investment of the Account as though the Beneficiary were the Participant. To the extent required by a qualified domestic relations order as defined in Code Section 414(p), an alternate payee shall make investment decisions with respect to any segregated account established in the name of the alternate payee as provided in Section 18.04. (2) If the Trustee receives any contribution under the Plan as to which investment instructions have not been provided, the Trustee shall promptly notify the Administrator and the Administrator shall take steps to elicit instructions from the Participant. The Trustee shall credit any such contribution to the Participant's Account and such amount shall be invested in the Permissible Investment selected by the Employer for such purposes or, absent Employer selection, in the most conservative Permissible Investment designated in the Service Agreement, until investment instructions have been received by the Trustee. If the Employer elects to allow Participants to direct the investment of their Account in Subsection 1.23(b) or (c) of the Adoption Agreement, the Plan is intended to constitute a plan described in ERISA Section 404(c) and regulations issued thereunder. The fiduciaries of the Plan shall be relieved of liability for any losses that are the direct and necessary result of investment instructions given by the Participant, his Beneficiary, or an alternate payee under a qualified domestic relations order. The Employer shall not be relieved of fiduciary responsibility for the selection and monitoring of the Permissible Investments under the Plan. (c) All dividends, interest, gains and distributions of any nature received in respect of Fund Shares shall be reinvested in additional shares of that Permissible Investment. (d) Expenses attributable to the acquisition of investments shall be charged to the Account of the Participant for which such investment is made. (e) The Employer may appoint an investment manager (which may be the Trustee or an affiliate) to determine the allocation of amounts held in Participants' Accounts among various investment options (the "Managed Account" option) for Participants who direct the Trustee to invest any portion of their accounts in the Managed Account option. The investment options utilized under the Managed Account option may be those generally available under the Plan or may be as selected by the investment manager for use under the Managed Account option. Participation in the Managed Account option shall be subject to such conditions and limitations (including account minimums) as may be imposed by the investment manager. 8.03. Participant Directions to Trustee. The method and frequency for change of investments shall be determined under (a) the rules applicable to the Permissible Investments selected by the Employer and designated in the Service Agreement and (b) any additional rules of the Employer limiting the frequency of investment changes, which are included in a separate written administrative procedure adopted by the Employer and accepted by the Trustee. The Trustee shall have no duty to inquire into the investment decisions of a Participant or to advise him regarding the purchase, retention, or sale of assets credited to his Account. Article 9. Participant Loans. 9.01. Special Definitions. For purposes of this Article, the following special definitions shall apply: (a) A "participant" is any Participant or Beneficiary, including an alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), who is a party-in-interest (as determined under ERISA Section 3(14)) with respect to the Plan. (b) An "owner-employee" is, if the Employer is a sole proprietorship for Federal income tax purposes (regardless of its characterization under state law), the individual who is the sole proprietor or sole member, as applicable; if the Employer is a partnership for Federal income tax purposes (regardless of its characterization under state law), a partner or member, as applicable, who owns more than 10 percent of either the capital interest or the profits interest of the partnership. (c) A "shareholder-employee" is an employee or officer of an electing small business (Subchapter S) corporation who owns (or is considered as owning within the meaning of Code Section 318(a)(1)), on any day during the taxable year of such corporation, more than five percent of the outstanding stock of the corporation. 9.02. Participant Loans. If so provided by the Employer in Section 1.17 of the Adoption Agreement, the Administrator shall allow "participants" to apply for a loan from their Accounts under the Plan, subject to the provisions of this Article 9. 9.03. Separate Loan Procedures. All Plan loans shall be made and administered in accordance with separate loan procedures that are hereby incorporated into the Plan by reference. 9.04. Availability of Loans. Loans shall be made available to all "participants" on a reasonably equivalent basis. Notwithstanding the preceding sentence, no loans shall be made to (a) an Eligible Employee who makes a Rollover Contribution in accordance with Section 5.06, but who has not satisfied the requirements of Section 4.01 to become an Active Participant or (b) a "shareholder-employee" or "owner-employee". Loans shall not be made available to "participants" who are Highly Compensated Employees in an amount greater than the amount made available to other "participants". 9.05. Limitation on Loan Amount. No loan to any "participant" shall be made to the extent that such loan when added to the outstanding balance of all other loans to the "participant" would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of plan loans during the one-year period ending on the day before the loan is made over the outstanding balance of plan loans on the date the loan is made, or (b) one-half the present value of the "participant's" vested interest in his Account. For purposes of the above limitation, plan loans include all loans from all plans maintained by the Employer and any Related Employer. 9.06. Interest Rate. All loans shall bear a reasonable rate of interest as determined by the Administrator based on the prevailing interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances. The determination of a reasonable rate of interest must be based on appropriate regional factors unless the Plan is administered on a national basis in which case the Administrator may establish a uniform reasonable rate of interest applicable to all regions. 9.07. Level Amortization. All loans shall by their terms require that repayment (principal and interest) be amortized in level payments, not less than quarterly, over a period not extending beyond five years from the date of the loan unless such loan is for the purchase of a "participant's" primary residence. Notwithstanding the foregoing, the amortization requirement may be waived for a period not exceeding one year during which a "participant" is on a leave of absence from employment with the Employer and any Related Employer either without pay or at a rate of pay which, after withholding for employment and income taxes, is less than the amount of the installment payments required under the terms of the loan. Installment payments must resume after such leave of absence ends or, if earlier, after the first year of such leave of absence, in an amount that is not less than the amount of the installment payments required under the terms of the original loan. No waiver of the amortization requirements shall extend the period of the loan beyond five years from the date of the loan, unless the loan is for purchase of the "participant's" primary residence. 9.08. Security. Loans must be secured by the "participant's" vested interest in his Account not to exceed 50 percent of such vested interest. If the provisions of Section 14.04 apply to a Participant, a Participant must obtain the consent of his or her spouse, if any, to use his vested interest in his Account as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a Plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting spouse or any subsequent spouse with respect to that loan. 9.09. Transfer and Distribution of Loan Amounts from Permissible Investments. The Employer shall confirm the order in which the Permissible Investments shall be liquidated in order that the loan amount can be transferred and distributed. 9.10. Default. The Administrator shall treat a loan in default if (a) any scheduled repayment remains unpaid at the end of the period specified in the separate loan procedures (unless payment is not made due to a waiver of the amortization schedule for a "participant" who is on a leave of absence, as described in Section 9.07), or (b) there is an outstanding principal balance existing on a loan after the last scheduled repayment date. Upon default, the entire outstanding principal and accrued interest shall be immediately due and payable. If a distributable event (as defined by the Code) has occurred, the Administrator shall direct the Trustee to foreclose on the promissory note and offset the "participant's" vested interest in his Account by the outstanding balance of the loan. If a distributable event has not occurred, the Administrator shall direct the Trustee to foreclose on the promissory note and offset the "participant's" vested interest in his Account as soon as a distributable event occurs. The Trustee shall have no obligation to foreclose on the promissory note and offset the outstanding balance of the loan except as directed by the Administrator. 9.11. Effect of Termination Where Participant has Outstanding Loan Balance. If a Participant has an outstanding loan balance at the time his employment terminates, the entire outstanding principal and accrued interest shall be immediately due and payable. Any outstanding loan amounts that are immediately due and payable hereunder shall be treated in accordance with the provisions of Sections 9.10 and 9.12 as if the Participant had defaulted on the outstanding loan. 9.12. Deemed Distributions Under Code Section 72(p). Notwithstanding the provisions of Section 9.10, if a "participant's" loan is in default, the "participant" shall be treated as having received a taxable "deemed distribution" for purposes of Code Section 72(p), whether or not a distributable event has occurred. The amount of a loan that is a deemed distribution ceases to be an outstanding loan for purposes of Code Section 72, except as otherwise specifically provided herein, and a Participant shall not be treated as having received a taxable distribution when the Participant's Account is offset by the outstanding balance of the loan amount as provided in Section 9.10. In addition, interest that accrues on a loan after it is deemed distributed shall not be treated as an additional loan to the Participant and shall not be included in the income of the Participant as a deemed distribution. Notwithstanding the foregoing, unless a Participant repays a loan that has been deemed distributed, with interest thereon, the amount of such loan, with interest, shall be considered an outstanding loan under Code Section 72(p) for purposes of determining the applicable limitation on subsequent loans under Section 9.05. If a Participant makes payments on a loan that has been deemed distributed, payments made on the loan after the date it was deemed distributed shall be treated as Employee Contributions to the Plan for purposes of increasing the Participant's tax basis in his Account, but shall not be treated as Employee Contributions for any other purpose under the Plan, including application of the "ACP" test described in Section 6.06 and application of the Code Section 415 limitations described in Section 6.12. The provisions of this Section 9.12 regarding treatment of loans that are deemed distributed shall be effective as of (a) the Effective Date, if the Plan is a new plan or is an amendment and restatement of a plan that administered loans in accordance with the provisions of Q & A 19 and 20 of Section 1.72(p)-1 of the Proposed Treasury Regulations immediately prior to the Effective Date or (b) as of the January 1 coinciding with or immediately following the Effective Date, in any other case. Any loan that was deemed distributed prior to the date the provisions of this Section 9.12 are effective shall be administered in accordance with the provisions of this Section 9.12 to the extent such administration is consistent with the transition rules in Q & A 21(c)(2) of Section 1.72(p)-1 of the Proposed Treasury Regulations. 9.13. Determination of Account Value Upon Distribution Where Plan Loan is Outstanding. Notwithstanding any other provision of the Plan, the portion of a "participant's" vested interest in his Account that is held by the Plan as security for a loan outstanding to the "participant" in accordance with the provisions of this Article shall reduce the amount of the Account payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. If less than 100 percent of a "participant's" vested interest in his Account (determined without regard to the preceding sentence) is payable to the "participant's" surviving spouse or other Beneficiary, then the Account shall be adjusted by first reducing the "participant's" vested interest in his Account by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse or other Beneficiary. Article 10. In-Service Withdrawals. 10.01. Availability of In-Service Withdrawals. Except as otherwise permitted under Section 11.02 with respect to Participants who continue in employment past Normal Retirement Age, or as required under Section 12.04 with respect to Participants who continue in employment past their Required Beginning Date, a Participant shall not be permitted to make a withdrawal from his Account under the Plan prior to retirement or termination of employment with the Employer and all Related Employers, if any, except as provided in this Article. 10.02. Withdrawal of Employee Contributions. A Participant may elect to withdraw, in cash, up to 100 percent of the amount then credited to his Employee Contributions Account. Such withdrawals may be made at any time, unless the Employer elects in Subsection 1.18(c)(1)(A) of the Adoption Agreement to limit the frequency of such withdrawals. 10.03. Withdrawal of Rollover Contributions. A Participant may elect to withdraw, in cash, up to 100 percent of the amount then credited to his Rollover Contributions Account. Such withdrawals may be made at any time. 10.04. Age 59 1/2 Withdrawals. If so provided by the Employer in Subsection 1.18(b) or the Protected In-Service Withdrawals Addendum to the Adoption Agreement, a Participant who continues in employment as an Employee and who has attained the age of 59 1/2 is permitted to withdraw upon request all or any portion of the Accounts specified by the Employer in Subsection 1.18(b) or the Protected In-Service Withdrawals Addendum to the Adoption Agreement, as applicable. 10.05. Hardship Withdrawals. If so provided by the Employer in Subsection 1.18(a) of the Adoption Agreement, a Participant who continues in employment as an Employee may apply to the Administrator for a hardship withdrawal of all or any portion of his Deferral Contributions Account (excluding any earnings thereon accrued after the later of December 31, 1988 or the last day of the last Plan Year ending before July 1, 1989) and, if so provided by the Employer in Subsection 1.18(d)(2), such other Accounts as may be specified in Subsection (c) of the Protected In-Service Withdrawals Addendum to the Adoption Agreement. The minimum amount that a Participant may withdraw because of hardship is $500. For purposes of this Section 10.05, a withdrawal is made on account of hardship if made on account of an immediate and heavy financial need of the Participant where such Participant lacks other available resources. Determinations with respect to hardship shall be made by the Administrator and shall be conclusive for purposes of the Plan, and shall be based on the following special rules: (a) The following are the only financial needs considered immediate and heavy: (1) expenses incurred or necessary for medical care (within the meaning of Code Section 213(d)) of the Participant, the Participant's spouse, children, or dependents; (2) the purchase (excluding mortgage payments) of a principal residence for the Participant; (3) payment of tuition, related educational fees, and room and board for the next 12 months of post-secondary education for the Participant, the Participant's spouse, children or dependents; (4) the need to prevent the eviction of the Participant from, or a foreclosure on the mortgage of, the Participant's principal residence; or (5) any other financial need determined to be immediate and heavy under rules and regulations issued by the Secretary of the Treasury or his delegate. (b) A distribution shall be considered as necessary to satisfy an immediate and heavy financial need of the Participant only if: (1) The Participant has obtained all distributions, other than the hardship withdrawal, and all nontaxable (at the time of the loan) loans currently available under all plans maintained by the Employer or any Related Employer; (2) The Participant suspends Deferral Contributions and Employee Contributions to the Plan for the 12-month period following the date of his hardship withdrawal. The suspension must also apply to all elective contributions and employee contributions to all other qualified plans and non-qualified plans maintained by the Employer or any Related Employer, other than any mandatory employee contribution portion of a defined benefit plan, including stock option, stock purchase, and other similar plans, but not including health and welfare benefit plans (other than the cash or deferred arrangement portion of a cafeteria plan); (3) The withdrawal amount is not in excess of the amount of an immediate and heavy financial need (including amounts necessary to pay any Federal, state or local income taxes or penalties reasonably anticipated to result from the distribution); and (4) The Participant agrees to limit Deferral Contributions (and "elective deferrals", as defined in Subsection 6.01(i)) to the Plan and any other qualified plan maintained by the Employer or a Related Employer for the calendar year immediately following the calendar year in which the Participant received the hardship withdrawal to the applicable limit under Code Section 402(g) for such calendar year less the amount of the Participant's Deferral Contributions (and "elective deferrals") for the calendar year in which the Participant received the hardship withdrawal. 10.06. Preservation of Prior Plan In-Service Withdrawal Rules. As indicated by the Employer in Subsection 1.18(d) of the Adoption Agreement, to the extent required under Code Section 411(d)(6), in-service withdrawals that were available under a prior plan shall be available under the Plan. (a) If the Plan is a profit sharing plan, the following provisions shall apply to preserve prior in-service withdrawal provisions. (1) If the Plan is an amendment and restatement of a prior plan or is a transferee plan of a prior plan that provided for in-service withdrawals from a Participant's Matching Employer and/or Nonelective Employer Contributions Accounts of amounts that have been held in such Accounts for a specified period of time, a Participant shall be entitled to withdraw at any time prior to his termination of employment, subject to any restrictions applicable under the prior plan that the Employer elects in Subsection 1.18(d)(1)(A)(i) of the Adoption Agreement to continue under the Plan as amended and restated hereunder (other than any mandatory suspension of contributions restriction), any vested amounts held in such Accounts for the period of time specified by the Employer in Subsection 1.18(d)(1)(A) of the Adoption Agreement. (2) If the Plan is an amendment and restatement of a prior plan or is a transferee plan of a prior plan that provided for in-service withdrawals from a Participant's Matching Employer and/or Nonelective Employer Contributions Accounts by Participants with at least 60 months of participation, a Participant with at least 60 months of participation shall be entitled to withdraw at any time prior to his termination of employment, subject to any restrictions applicable under the prior plan that the Employer elects in Subsection 1.18(d)(1)(B)(i) of the Adoption Agreement to continue under the Plan as amended and restated hereunder (other than any mandatory suspension of contributions restriction), any vested amounts held in such Accounts. (3) If the Plan is an amendment and restatement of a prior plan or is a transferee plan of a prior plan that provided for in-service withdrawals from a Participant's Matching Employer and/or Nonelective Employer Contributions Accounts under any other circumstances, a Participant who has met any applicable requirements, as set forth in the Protected In-Service Withdrawals Addendum to the Adoption Agreement, shall be entitled to withdraw at any time prior to his termination of employment any vested amounts held in such Accounts, subject to any restrictions applicable under the prior plan that the Employer elects to continue under the Plan as amended and restated hereunder, as set forth in the Protected In-Service Withdrawal Addendum to the Adoption Agreement. (b) If the Plan is a money purchase pension plan that is an amendment and restatement of a prior profit sharing plan or is a transferee plan of a prior profit sharing plan that provided for in-service withdrawals from any portion of a Participant's Account other than his Employee Contributions and/or Rollover Contributions Accounts, a Participant who has met any applicable requirements, as set forth in the Protected in-Service Withdrawals Addendum to the Adoption Agreement, shall be entitled to withdraw at any time prior to his termination of employment his vested interest in amounts attributable to such prior profit sharing accounts, subject to any restrictions applicable under the prior plan that the Employer elects to continue under the Plan as amended and restated hereunder (other than any mandatory suspension of contributions restriction), as set forth in the Protected In-Service Withdrawal Addendum to the Adoption Agreement. 10.07. Restrictions on In-Service Withdrawals. The following restrictions apply to any in-service withdrawal made from a Participant's Account under this Article: (a) If the provisions of Section 14.04 apply to a Participant's Account, the Participant must obtain the consent of his spouse, if any, to obtain an in-service withdrawal. (b) In-service withdrawals shall be made in a lump sum payment, except that if the provisions of Section 14.04 apply to a Participant's Account, the Participant may receive the in-service withdrawal in the form of a "qualified joint and survivor annuity", as defined in Subsection 14.01(a). (c) Notwithstanding any other provision of the Plan to the contrary other than the provisions of Section 11.02, a Participant shall not be permitted to make an in-service withdrawal from his Account of amounts attributable to contributions made to a money purchase pension plan, except employee and/or rollover contributions that were held in a separate account(s) under such plan. 10.08. Distribution of Withdrawal Amounts. The Employer shall confirm the order in which the Permissible Investments shall be liquidated in order that the withdrawal amount can be distributed. Article 11. Right to Benefits. 11.01. Normal or Early Retirement. Each Participant who continues in employment as an Employee until his Normal Retirement Age or, if so provided by the Employer in Subsection 1.13(b) of the Adoption Agreement, Early Retirement Age, shall have a vested interest in his Account of 100 percent regardless of any vesting schedule elected in Section 1.15 of the Adoption Agreement. If a Participant retires upon the attainment of Normal or Early Retirement Age, such retirement is referred to as a normal retirement. 11.02. Late Retirement. If a Participant continues in employment as an Employee after his Normal Retirement Age, he shall continue to have a 100 percent vested interest in his Account and shall continue to participate in the Plan until the date he establishes with the Employer for his late retirement. Until he retires, he has a continuing election to receive all or any portion of his Account. 11.03. Disability Retirement. If so provided by the Employer in Subsection 1.13(c) of the Adoption Agreement, a Participant who becomes disabled while employed as an Employee shall have a 100 percent vested interest in his Account regardless of any vesting schedule elected in Section 1.15 of the Adoption Agreement. An Employee is considered disabled if he satisfies any of the requirements for disability retirement selected by the Employer in Section 1.14 of the Adoption Agreement and terminates his employment with the Employer. Such termination of employment is referred to as a disability retirement. Determinations with respect to disability shall be made by the Administrator. 11.04. Death. If a Participant who is employed as an Employee dies, his Account shall become 100 percent vested and his designated Beneficiary shall be entitled to receive the balance of his Account, plus any amounts thereafter credited to his Account. If a Participant whose employment as an Employee has terminated dies, his designated Beneficiary shall be entitled to receive the Participant's vested interest in his Account. A copy of the death notice or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the Participant's Account, such amount shall be paid to his surviving spouse or, if none, to his estate (such spouse or estate shall be deemed to be the Beneficiary for purposes of the Plan). If a Beneficiary dies after benefits to such Beneficiary have commenced, but before they have been completed, and, in the opinion of the Administrator, no person has been designated to receive such remaining benefits, then such benefits shall be paid in a lump sum to the deceased Beneficiary's estate. Subject to the requirements of Section 14.04, a Participant may designate a Beneficiary, or change any prior designation of Beneficiary by giving notice to the Administrator on a form designated by the Administrator. If more than one person is designated as the Beneficiary, their respective interests shall be as indicated on the designation form. In the case of a married Participant, the Participant's spouse shall be deemed to be the designated Beneficiary unless the Participant's spouse has consented to another designation in the manner described in Section 14.06. 11.05. Other Termination of Employment. If a Participant terminates his employment with the Employer and all Related Employers, if any, for any reason other than death or normal, late, or disability retirement, he shall be entitled to a termination benefit equal to the sum of (a) his vested interest in the balance of his Matching Employer and/or Nonelective Employer Contributions Account(s), other than the balance attributable to safe harbor Matching Employer and/or safe harbor Nonelective Employer Contributions elected by the Employer in Subsection 1.10(a)(3) or 1.11(a)(3) of the Adoption Agreement, such vested interest to be determined in accordance with the vesting schedule(s) selected by the Employer in Section 1.15 of the Adoption Agreement, and (b) the balance of his Deferral, Employee, Qualified Nonelective Employer, Qualified Matching Employer, and Rollover Contributions Accounts, and the balance of his Matching Employer or Nonelective Employer Contributions Account that is attributable to safe harbor Matching Employer and/or safe harbor Nonelective Employer Contributions. 11.06. Application for Distribution. Unless a Participant's Account is cashed out as provided in Section 13.02, a Participant (or his Beneficiary, if the Participant has died) who is entitled to a distribution hereunder must make application, in a form acceptable to the Administrator, for a distribution from his Account. No distribution shall be made hereunder without proper application therefor, except as otherwise provided in Section 13.02. 11.07. Application of Vesting Schedule Following Partial Distribution. If a distribution from a Participant's Matching Employer and/or Nonelective Employer Contributions Account has been made to him at a time when he is less than 100 percent vested in such Account balance, the vesting schedule(s) in Section 1.15 of the Adoption Agreement shall thereafter apply only to the balance of his Account attributable to Matching Employer and/or Nonelective Employer Contributions allocated after such distribution. The balance of the Account from which such distribution was made shall be transferred to a separate account immediately following such distribution. At any relevant time prior to a forfeiture of any portion thereof under Section 11.08, a Participant's vested interest in such separate account shall be equal to P(AB + (RxD))-(RxD), where P is the Participant's vested interest at the relevant time determined under Section 11.05; AB is the account balance of the separate account at the relevant time; D is the amount of the distribution; and R is the ratio of the account balance at the relevant time to the account balance after distribution. Following a forfeiture of any portion of such separate account under Section 11.08 below, any balance in the Participant's separate account shall remain 100 percent vested. 11.08. Forfeitures. If a Participant terminates his employment with the Employer and all Related Employers before he is 100 percent vested in his Matching Employer and/or Nonelective Employer Contributions Accounts, the non-vested portion of his Account (including any amounts credited after his termination of employment) shall be forfeited by him as follows: (a) If the Inactive Participant elects to receive distribution of his entire vested interest in his Account, the non-vested portion of his Account shall be forfeited upon the complete distribution of such vested interest, subject to the possibility of reinstatement as provided in Section 11.10. For purposes of this Subsection, if the value of an Employee's vested interest in his Account balance is zero, the Employee shall be deemed to have received a distribution of his vested interest immediately following termination of employment. (b) If the Inactive Participant elects not to receive distribution of his vested interest in his Account following his termination of employment, the non-vested portion of his Account shall be forfeited after the Participant has incurred five consecutive Breaks in Vesting Service. No forfeitures shall occur solely as a result of a Participant's withdrawal of Employee Contributions. 11.09. Application of Forfeitures. Any forfeitures occurring during a Plan Year shall be applied to reduce the contributions of the Employer, unless the Employer has elected in Subsection 1.15(d)(3) of the Adoption Agreement that such remaining forfeitures shall be allocated among the Accounts of Active Participants who are eligible to receive allocations of Nonelective Employer Contributions for the Plan Year in which the forfeiture occurs. Forfeitures that are allocated among the Accounts of eligible Active Participants shall be allocated in the same manner as Nonelective Employer Contributions. If the plan is a money purchase pension plan or the Employer has elected a fixed Nonelective Employer Contribution rate rather than a discretionary rate, forfeitures shall incrementally increase the amount allocated to the Accounts of eligible Active Participants. Notwithstanding any other provision of the Plan to the contrary, forfeitures may first be used to pay administrative expenses under the Plan, as directed by the Employer. To the extent that forfeitures are not used to reduce administrative expenses under the Plan, as directed by the Employer, forfeitures will be applied in accordance with this Section 11.09. Pending application, forfeitures shall be held in the Permissible Investment selected by the Employer for such purpose or, absent Employer selection, in the most conservative Permissible Investment designated by the Employer in the Service Agreement. Notwithstanding any other provision of the Plan to the contrary, in no event may forfeitures be used to reduce the Employer's obligation to remit to the Trust (or other appropriate Plan funding vehicle) loan repayments made pursuant to Article 9, Deferral Contributions or Employee Contributions. 11.10. Reinstatement of Forfeitures. If a Participant forfeits any portion of his Account under Subsection 11.08(a) because of distribution of his complete vested interest in his Account, but again becomes an Employee, then the amount so forfeited, without any adjustment for the earnings, expenses, losses, or gains of the assets credited to his Account since the date forfeited, shall be recredited to his Account (or to a separate account as described in Section 11.07, if applicable) if he meets all of the following requirements: (a) he again becomes an Employee before the date he incurs five- consecutive Breaks in Vesting Service following the date complete distribution of his vested interest was made to him; and (b) he repays to the Plan the amount previously distributed to him, without interest, within five years of his Reemployment Date. If an Employee is deemed to have received distribution of his complete vested interest as provided in Section 11.08, the Employee shall be deemed to have repaid such distribution on his Reemployment Date. Upon such an actual or deemed repayment, the provisions of the Plan (including Section 11.07) shall thereafter apply as if no forfeiture had occurred. The amount to be recredited pursuant to this paragraph shall be derived first from the forfeitures, if any, which as of the date of recrediting have yet to be applied as provided in Section 11.09 and, to the extent such forfeitures are insufficient, from a special contribution to be made by the Employer. 11.11. Adjustment for Investment Experience. If any distribution under this Article 11 is not made in a single payment, the amount retained by the Trustee after the distribution shall be subject to adjustment until distributed to reflect the income and gain or loss on the investments in which such amount is invested and any expenses properly charged under the Plan and Trust to such amounts. Article 12. Distributions. 12.01. Restrictions on Distributions. A Participant, or his Beneficiary, may not receive a distribution from his Deferral Contributions, Qualified Nonelective Employer Contributions, Qualified Matching Employer Contributions, safe harbor Matching Employer Contributions or safe harbor Nonelective Employer Contributions Accounts earlier than upon the Participant's separation from service with the Employer and all Related Employers, death, or disability, except as otherwise provided in Article 10, Section 11.02 or Section 12.04. Notwithstanding the foregoing, amounts may also be distributed from such Accounts, in the form of a lump sum only, upon (a) Termination of the Plan without establishment of another defined contribution plan, other than an employee stock ownership plan (as defined in Code Section 4975(e) or 409) or a simplified employee pension plan as defined in Code Section 408(k). (b) The disposition by a corporation to an unrelated corporation of substantially all of the assets (within the meaning of Code Section 409(d)(2)) used in a trade or business of such corporation if such corporation continues to maintain the Plan after the disposition, but only with respect to former Employees who continue employment with the corporation acquiring such assets. (c) The disposition by a corporation to an unrelated entity of such corporation's interest in a subsidiary (within the meaning of Code Section 409(d)(3)) if such corporation continues to maintain this Plan, but only with respect to former Employees who continue employment with such subsidiary. 12.02. Timing of Distribution Following Retirement or Termination of Employment. Except as otherwise elected by the Employer in Subsection 1.20(b) and provided in the Postponed Distribution Addendum to the Adoption Agreement, the balance of a Participant's vested interest in his Account shall be distributable upon his termination of employment with the Employer and all Related Employers, if any, because of death, normal, early, or disability retirement (as permitted under the Plan), or other termination of employment. Notwithstanding the foregoing, a Participant whose vested interest in his Account exceeds $5,000 as determined under Section 13.02 (or such larger amount as may be specified in Code Section 417(e)(1)) may elect to postpone distribution of his Account until his Required Beginning Date. A Participant who elects to postpone distribution has a continuing election to receive such distribution prior to the date as of which distribution is required, unless such Participant is reemployed as an Employee. 12.03. Participant Consent to Distribution. If a Participant's vested interest in his Account exceeds $5,000 as determined under Section 13.02 (or such larger amount as may be specified in Code Section 417(e)(1)), no distribution shall be made to the Participant before he reaches his Normal Retirement Age (or age 62, if later), unless the consent of the Participant has been obtained. Such consent shall be made within the 90-day period ending on the Participant's Annuity Starting Date. The consent of the Participant's spouse must also be obtained if the Participant's Account is subject to the provisions of Section 14.04, unless the distribution shall be made in the form of a "qualified joint and survivor annuity" as defined in Section 14.01. A spouse's consent to early distribution, if required, must satisfy the requirements of Section 14.06. Neither the consent of the Participant nor the Participant's spouse shall be required to the extent that a distribution is required to satisfy Code Section 401(a)(9) or Code Section 415. In addition, upon termination of the Plan if it does not offer an annuity option (purchased from a commercial provider) and if the Employer or any Related Employer does not maintain another defined contribution plan (other than an employee stock ownership plan as defined in Code Section 4975(e)(7)) the Participant's Account shall, without the Participant's consent, be distributed to the Participant. However, if any Related Employer maintains another defined contribution plan (other than an employee stock ownership plan as defined in Code Section 4975(e)(7)) then the Participant's Account shall be transferred, without the Participant's consent, to the other plan if the Participant does not consent to an immediate distribution. 12.04. Required Commencement of Distribution to Participants. In no event shall distribution to a Participant commence later than the earlier of the dates described in (a) and (b) below: (a) unless the Participant (and his spouse, if appropriate) elects otherwise, the 60th day after the close of the Plan Year in which occurs the latest of (i) the date on which the Participant attains Normal Retirement Age, or age 65, if earlier, (ii) the date on which the Participant's employment with the Employer and all Related Employers ceases, or (iii) the 10th anniversary of the year in which the Participant commenced participation in the Plan; and (b) the Participant's Required Beginning Date. Notwithstanding the provisions of Subsection 12.04(a) above, the failure of a Participant (and the Participant's spouse, if applicable) to consent to a distribution as required under Section 12.03, shall be deemed to be an election to defer commencement of payment as provided in Subsection 12.04(a) above. 12.05. Required Commencement of Distribution to Beneficiaries. If a Participant dies before his Annuity Starting Date, the Participant's Beneficiary shall receive distribution of the Participant's vested interest in his Account in the form provided under Article 13 or 14, as applicable, beginning as soon as reasonably practicable following the date the Beneficiary's application for distribution is filed with the Administrator. Unless distribution is to be made over the life or over a period certain not greater than the life expectancy of the Beneficiary, distribution of the Participant's entire vested interest shall be made to the Beneficiary no later than the end of the fifth calendar year beginning after the Participant's death. If distribution is to be made over the life or over a period certain no greater than the life expectancy of the Beneficiary, distribution shall commence no later than: (a) If the Beneficiary is not the Participant's spouse, the end of the first calendar year beginning after the Participant's death; or (b) If the Beneficiary is the Participant's spouse, the later of (i) the end of the first calendar year beginning after the Participant's death or (ii) the end of the calendar year in which the Participant would have attained age 70 1/2. If distribution is to be made to a Participant's spouse, it shall be made available within a reasonable period of time after the Participant's death that is no less favorable than the period of time applicable to other distributions. In the event such spouse dies prior to the date distribution commences, he shall be treated for purposes of this Section 12.05 (other than Subsection 12.05(b) above) as if he were the Participant. Any amount paid to a child of the Participant shall be treated as if it had been paid to the surviving spouse if the amount becomes payable to the surviving spouse when the child reaches the age of majority. If the Participant has not designated a Beneficiary, or the Participant or Beneficiary has not effectively selected a method of distribution, distribution of the Participant's benefit shall be completed by the close of the calendar year in which the fifth anniversary of the death of the Participant occurs. If a Participant dies on or after his Annuity Starting Date, but before his entire vested interest in his Account is distributed, his Beneficiary shall receive distribution of the remainder of the Participant's vested interest in his Account beginning as soon as reasonably practicable following the Participant's date of death in a form that provides for distribution at least as rapidly as under the form in which the Participant was receiving distribution. 12.06. Whereabouts of Participants and Beneficiaries. The Administrator shall at all times be responsible for determining the whereabouts of each Participant or Beneficiary who may be entitled to benefits under the Plan and shall at all times be responsible for instructing the Trustee in writing as to the current address of each such Participant or Beneficiary. The Trustee shall be entitled to rely on the latest written statement received from the Administrator as to such addresses. The Trustee shall be under no duty to make any distributions under the Plan unless and until it has received written instructions from the Administrator satisfactory to the Trustee containing the name and address of the distributee, the time when the distribution is to occur, and the form which the distribution shall take. Notwithstanding the foregoing, if the Trustee attempts to make a distribution in accordance with the Administrator's instructions but is unable to make such distribution because the whereabouts of the distributee is unknown, the Trustee shall notify the Administrator of such situation and thereafter the Trustee shall be under no duty to make any further distributions to such distributee until it receives further written instructions from the Administrator. If the Administrator is unable after diligent attempts to locate a Participant or Beneficiary who is entitled to a benefit under the Plan, the benefit otherwise payable to such Participant or Beneficiary shall be forfeited and applied as provided in Section 11.09. If a benefit is forfeited because the Administrator determines that the Participant or Beneficiary cannot be found, such benefit shall be reinstated by the Employer if a claim is filed by the Participant or Beneficiary with the Administrator and the Administrator confirms the claim to the Employer. Notwithstanding the above, forfeiture of a Participant's or Beneficiary's benefit may occur only if a distribution could be made to the Participant or Beneficiary without obtaining the Participant's or Beneficiary's consent in accordance with the requirements of Section 1.411(a)-11 of the Treasury Regulations. Article 13. Form of Distribution. 13.01. Normal Form of Distribution Under Profit Sharing Plan. Unless the Plan is a money purchase pension plan subject to the requirements of Article 14, or a Participant's Account is otherwise subject to the requirements of Section 14.03 or 14.04, distributions to a Participant or to the Beneficiary of the Participant shall be made in a lump sum in cash or, if elected by the Participant (or the Participant's Beneficiary, if applicable) and provided by the Employer in Section 1.19 of the Adoption Agreement, under a systematic withdrawal plan (installments). A Participant (or the Participant's Beneficiary, if applicable) who is receiving distribution under a systematic withdrawal plan may elect to accelerate installment payments or to receive a lump sum distribution of the remainder of his Account balance. Distribution may also be made hereunder in any non- annuity form that is a protected benefit and is provided by the Employer in Section 1.19(d) of the Adoption Agreement. Even if the Plan does not otherwise provide for distributions under a systematic withdrawal plan, if a Participant elects to have his Required Beginning Date determined under the provisions of Subsection 2.01(ss)(1)(ii) or his Required Beginning Date occurs under the provisions of Subsection 2.01(ss)(2) while he is still employed by the Employer or a Related Employer on or after his Required Beginning Date, the Participant may elect to receive distributions during the period that he continues employment with the Employer or a Related Employer made under a systematic withdrawal plan that provides the minimum distributions required under Code Section 401(a)(9), as determined under Section 13.03 of the Plan. Minimum required distributions to a Participant described in the preceding sentence shall only continue to such Participant through the calendar year in which the Participant retires or otherwise terminates employment. Distributions for calendar years following the calendar year in which the Participant retires shall be made in one of the forms of payment otherwise available under the Plan, as provided in Section 1.19 and the Forms of Payment Addendum to the Adoption Agreement. Distributions shall be made in cash, except that distributions may be made in Fund Shares of marketable securities (as defined in Code Section 731(c)(2)), other than Fund Shares of Employer Stock, at the election of the Participant, pursuant to the qualifying rollover of such distribution to a Fidelity Investments? individual retirement account. A distribution may be made in the form of Fund Shares of Employer Stock or an in-kind distribution of Plan investments that are not marketable securities only if and to the extent provided in Section 1.19(d) of the Adoption Agreement; provided, however, that notwithstanding any other provision of the Plan to the contrary, the right of a Participant to receive a distribution in the form of Fund Shares of Employer Stock or an in-kind distribution of Plan investments that are not marketable securities applies only to that portion of the Participant's Account invested in such form at the time of distribution. 13.02. Cash Out Of Small Accounts. Notwithstanding any other provision of the Plan to the contrary, if a Participant's vested interest in his Account is $5,000 (or such larger amount as may be specified in Code Section 417(e)(1)) or less, the Participant's vested interest in his Account shall be distributed in a lump sum as soon as practicable following the Participant's termination of employment because of retirement, disability, death or other termination of employment. For purposes of this Section, until final Treasury Regulations are issued to the contrary, if either (a) a Participant has commenced distribution of his Account under a systematic withdrawal plan or (b) his Account is subject to the provisions of Section 14.04 and the Participant's Annuity Starting Date has occurred with respect to amounts currently held in his Account, the Participant's vested interest in his Account shall be deemed to exceed $5,000 (or such larger amount as may be specified in Code Section 417(e)(1)) if the Participant's vested interest in such amounts exceeded such dollar amount on the Participant's Annuity Starting Date. Notwithstanding the provisions of this Section 13.02, the Employer may determine not to cash out Participant Accounts in accordance with the foregoing provisions, provided that such determination is uniform with respect to all Participants and non-discriminatory. 13.03. Minimum Distributions. This Section applies to distributions under a systematic withdrawal plan that are made on or after a Participant's Required Beginning Date or his date of death, if earlier. This Section shall be interpreted and applied in accordance with the regulations under Code Section 401(a)(9), including the minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2 of the Proposed Treasury Regulations, or any successor regulations of similar import. Distribution must be made in substantially equal annual, or more frequent, installments, in cash, over a period certain which does not extend beyond the life expectancy or joint life expectancies of the Participant and his Beneficiary or, if the Participant dies prior to the commencement of distributions from his Account, the life expectancy of the Participant's Beneficiary. The amount to be distributed for each calendar year for which a minimum distribution is required shall be at least an amount equal to the quotient obtained by dividing the Participant's interest in his Account by the life expectancy of the Participant or Beneficiary or the joint life and last survivor expectancy of the Participant and his Beneficiary, whichever is applicable. The amount to be distributed for each calendar year shall not be less than an amount equal to the quotient obtained by dividing the Participant's interest in his Account by the lesser of (a) the applicable life expectancy, or (b) if a Participant's Beneficiary is not his spouse, the applicable divisor determined under Section 1.401(a)(9)-2, Q&A 4 of the Proposed Treasury Regulations, or any successor regulations of similar import. Distributions after the death of the Participant shall be made using the applicable life expectancy under (a) above, without regard to Section 1.401(a)(9)-2 of such regulations. For purposes of this Section 13.03, life expectancy and joint life and last survivor expectancy shall be computed by use of the expected return multiples in Table V and VI of Section 1.72-9 of the Treasury Regulations. For purposes of this Section 13.03, the life expectancy of a Participant or a Beneficiary who is the Participant's surviving spouse shall be recalculated annually unless the Participant or the Participant's spouse irrevocably elects otherwise prior to the time distributions are required to begin. If not recalculated in accordance with the foregoing, life expectancy shall be calculated using the attained age of the Participant or Beneficiary, whichever is applicable, as of such individual's birth date in the first year for which a minimum distribution is required reduced by one for each elapsed calendar year since the date life expectancy was first calculated. If the Participant dies after distribution of his benefits has begun, distributions to the Participant's Beneficiary shall be made at least as rapidly as under the method of distribution being used as of the date of the Participant's death. A Participant's interest in his Account for purposes of this Section 13.03 shall be determined as of the last valuation date in the calendar year immediately preceding the calendar year for which a minimum distribution is required, increased by the amount of any contributions allocated to, and decreased by any distributions from, such Account after the valuation date. Any distribution for the first year for which a minimum distribution is required made after the close of such year shall be treated as if made prior to the close of such year. The Administrator shall notify the Trustee in writing whenever a distribution is necessary in order to comply with the minimum distribution rules set forth in this Section 13.03. 13.04. Direct Rollovers. Notwithstanding any other provision of the Plan to the contrary, a "distributee" may elect, at the time and in the manner prescribed by the Administrator, to have any portion or all of an "eligible rollover distribution" paid directly to an "eligible retirement plan" specified by the "distributee" in a direct rollover; provided, however, that this provision shall not apply if the total "eligible rollover distribution" that the "distributee" is reasonably expected to receive for the calendar year is less than $200 and that a "distributee" may not elect a direct rollover with respect to a portion of an "eligible rollover distribution" if such portion totals less than $500. For purposes of this Section 13.04, the following definitions shall apply: (a) "Distributee" means a Participant , the Participant's surviving spouse, and the Participant's spouse or former spouse who is the alternate payee under a qualified domestic relations order, who is entitled to receive a distribution from the Participant's vested interest in his Account. (b) "Eligible retirement plan" means an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 401(a), that accepts "eligible rollover distributions". However, in the case of an "eligible rollover distribution" to a surviving spouse, an "eligible retirement plan" means an individual retirement account or individual retirement annuity. (c) "Eligible rollover distribution" means 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 the following: (1) 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; (2) any distribution to the extent such distribution is required under Code Section 401(a)(9); (3) the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); (4) any hardship withdrawal of Deferral Contributions made in accordance with the provisions of Section 10.05 or the Protected In-Service Withdrawals Addendum to the Adoption Agreement. 13.05. Notice Regarding Timing and Form of Distribution. Within the period beginning 90 days before a Participant's Annuity Starting Date and ending 30 days before such date, the Administrator shall provide such Participant with written notice containing a general description of the material features and an explanation of the relative values of the forms of benefit available under the Plan and informing the Participant of his right to defer receipt of the distribution until his Required Beginning Date and his right to make a direct rollover. Distribution may commence fewer than 30 days after such notice is given, provided that: (a) the Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option); (b) the Participant, after receiving the notice, affirmatively elects a distribution, with his spouse's written consent, if necessary; (c) if the Participant's Account is subject to the requirements of Section 14.04, the following additional requirements apply: (1) the Participant is permitted to revoke his affirmative distribution election at any time prior to the later of (A) his Annuity Starting Date or (B) the expiration of the seven-day period beginning the day after such notice is provided to him; and (2) distribution does not begin to such Participant until such revocation period ends. 13.06. Determination of Method of Distribution. Subject to Section 13.02, the Participant shall determine the method of distribution of benefits to himself and may determine the method of distribution to his Beneficiary. Such determination shall be made prior to the time benefits become payable under the Plan. If the Participant does not determine the method of distribution to his Beneficiary or if the Participant permits his Beneficiary to override his determination, the Beneficiary, in the event of the Participant's death, shall determine the method of distribution of benefits to himself as if he were the Participant. A determination by the Beneficiary must be made no later than the close of the calendar year in which distribution would be required to begin under Section 12.05 or, if earlier, the close of the calendar year in which the fifth anniversary of the death of the Participant occurs. 13.07. Notice to Trustee. The Administrator shall notify the Trustee in any medium acceptable to the Trustee, which may be specified in the Service Agreement, whenever any Participant or Beneficiary is entitled to receive benefits under the Plan. The Administrator's notice shall indicate the form of payment of benefits that such Participant or Beneficiary shall receive, (in the case of distributions to a Participant) the name of any designated Beneficiary or Beneficiaries, and such other information as the Trustee shall require. Article 14. Superseding Annuity Distribution Provisions. 14.01. Special Definitions. For purposes of this Article, the following special definitions shall apply: (a) "Qualified joint and survivor annuity" means (1) if the Participant is not married on his Annuity Starting Date, an immediate annuity payable for the life of the Participant or (2) if the Participant is married on his Annuity Starting Date, an immediate annuity for the life of the Participant with a survivor annuity for the life of the Participant's spouse (to whom the Participant was married on the Annuity Starting Date) which is equal to at least 50 percent of the amount of the annuity which is payable during the joint lives of the Participant and such spouse, provided that the survivor annuity shall not be payable to a Participant's spouse if such spouse is not the same spouse to whom the Participant was married on his Annuity Starting Date. (b) "Qualified preretirement survivor annuity" means an annuity purchased with at least 50 percent of a Participant's vested interest in his Account that is payable for the life of a Participant's surviving spouse. The Employer shall specify that portion of a Participant's vested interest in his Account that is to be used to purchase the "qualified preretirement survivor annuity" in Section 1.19 of the Adoption Agreement. 14.02. Applicability. The provisions of this Article shall apply to a Participant's Account if: (a) the Plan is a money purchase pension plan; (b) the Plan is an amendment and restatement of a plan that provided an annuity form of payment and such form of payment has not been eliminated pursuant to Subsection 1.19(e) and the Forms of Payment Addendum to the Adoption Agreement; (c) the Participant's Account contains assets attributable to amounts directly or indirectly transferred from a plan that provided an annuity form of payment and such form of payment has not been eliminated pursuant to Subsection 1.19(e) and the Forms of Payment Addendum to the Adoption Agreement. 14.03. Annuity Form of Payment. To the extent provided in Section 1.19 of the Adoption Agreement, a Participant may elect distributions made in whole or in part in the form of an annuity contract. Any annuity contract distributed under the Plan shall be subject to the provisions of this Section 14.03 and, to the extent provided therein, Sections 14.04 through 14.09. (a) At the direction of the Administrator, the Trustee shall purchase the annuity contract on behalf of a Participant or Beneficiary from an insurance company. Such annuity contract shall be nontransferable. (b) The terms of the annuity contract shall comply with the requirements of the Plan and distributions under such contract shall be made in accordance with Code Section 401(a)(9) and the regulations thereunder. (c) The annuity contract may provide for payment over the life of the Participant and, upon the death of the Participant, may provide a survivor annuity continuing for the life of the Participant's designated Beneficiary. Such an annuity may provide for an annuity certain feature for a period not exceeding the life expectancy of the Participant or, if the annuity is payable to the Participant and a designated Beneficiary, the joint life and last survivor expectancy of the Participant and such Beneficiary. If the Participant dies prior to his Annuity Starting Date, the annuity contract distributed to the Participant's Beneficiary may provide for payment over the life of the Beneficiary, and may provide for an annuity certain feature for a period not exceeding the life expectancy of the Beneficiary. The types of annuity contracts provided under the Plan shall be limited to the types of annuities described in Section 1.19 and the Forms of Payment Addendum to the Adoption Agreement. (d) The annuity contract must provide for nonincreasing payments. 14.04. "Qualified Joint and Survivor Annuity" and "Qualified Preretirement Survivor Annuity" Requirements. The requirements of this Section 14.04 apply to a Participant's Account if: (a) the Plan is a money purchase pension plan; (b) the Plan is a profit sharing plan and the Employer has selected distribution in the form of a life annuity as the normal form of distribution with respect to such Participant's Account in Subsection 1.19(c)(2)(B) of the Adoption Agreement; or (c) the Plan is a profit sharing plan and the Employer has specified distribution in the form of a life annuity as the normal form of distribution in Subsection (c)(2)(B) of the Forms of Payment Addendum to the Adoption Agreement and the Participant's Annuity Starting Date occurs prior to the date specified in Subsection (c)(4) of the Forms of Payment Addendum to the Adoption Agreement; (d) the Participant is permitted to elect and has elected distribution in the form of an annuity contract payable over the life of the Participant. If a Participant's Account is subject to the requirements of this Section 14.04, distribution shall be made to the Participant in the form of a "qualified joint and survivor annuity" (with a survivor annuity in the percentage amount specified by the Employer in Subsection 1.19 of the Adoption Agreement), unless the Participant waives the "qualified joint and survivor annuity" as provided in Section 14.05. If the Participant dies prior to his Annuity Starting Date, distribution shall be made to the Participant's surviving spouse, if any, in the form of a "qualified preretirement survivor annuity", unless the Participant waives the "qualified preretirement survivor annuity" as provided in Section 14.05, or the Participant's surviving spouse elects in writing to receive distribution in one of the other forms of payment provided under the Plan. If the Employer has specified in Section 1.19 of the Adoption Agreement that less than 100 percent of a Participant's Account shall be used to purchase the "qualified preretirement survivor annuity", distribution of the balance of the Participant's vested interest in his Account that is not used to purchase the "qualified preretirement survivor annuity" shall be distributed to the Participant's designated Beneficiary in accordance with the provisions of Sections 11.04 and 12.05. 14.05. Waiver of the "Qualified Joint and Survivor Annuity" and/or "Qualified Preretirement Survivor Annuity" Rights. A Participant may waive the "qualified joint and survivor annuity" described in Section 14.04 and elect another form of distribution permitted under the Plan at any time during the 90-day period ending on his Annuity Starting Date; provided, however, that if the Participant is married, his spouse must consent in writing to such election as provided in Section 14.06. Spousal consent is not required if the Participant elects distribution in the form of a different "qualified joint and survivor annuity". A Participant may waive the "qualified preretirement survivor annuity" and designate a non-spouse Beneficiary at any time during the "applicable election period"; provided, however, that the Participant's spouse must consent in writing to such election as provided in Section 14.06. The "applicable election period" begins on the later of (1) the date the Participant's Account becomes subject to the requirements of Section 14.04 or (2) the first day of the Plan Year in which the Participant attains age 35 or, if he terminates employment prior to such date, the date he terminates employment with the Employer and all Related Employers. The "applicable election period" ends on the earlier of the Participant's Annuity Starting Date or the date of the Participant's death. A Participant whose employment has not terminated may elect to waive the "qualified preretirement survivor annuity" prior to the Plan Year in which he attains age 35, provided that any such waiver shall cease to be effective as of the first day of the Plan Year in which the Participant attains age 35. If the Employer has specified in Section 1.19 of the Adoption Agreement that less than 100 percent of a Participant's Account shall be used to purchase the "qualified preretirement survivor annuity", the Participant may designate a non-spouse Beneficiary for the balance of the Participant's vested interest in his Account that is not used to purchase the "qualified preretirement survivor annuity". Such designation shall not be subject to the spousal consent requirements of Section 14.06. 14.06. Spouse's Consent to Waiver. A spouse's written consent to a Participant's waiver of the "qualified joint and survivor annuity" or "qualified preretirement survivor annuity" forms of distribution must acknowledge the effect of the Participant's election and must be witnessed by a Plan representative or a notary public. In addition, the spouse's written consent must either (a) specify the form of distribution elected instead of the "qualified joint and survivor annuity", if applicable, and that such form may not be changed (except to a "qualified joint and survivor annuity") without written spousal consent and specify any non- spouse Beneficiary designated by the Participant, if applicable, and that such designation may not be changed without written spousal consent or (b) acknowledge that the spouse has the right to limit consent as provided in clause (a) above, but permit the Participant to change the form of distribution elected or the designated Beneficiary without the spouse's further consent. A Participant's spouse shall be deemed to have given written consent to a Participant's waiver if the Participant establishes to the satisfaction of a Plan representative that spousal consent cannot be obtained because the spouse cannot be located or because of other circumstances set forth in Code Section 401(a)(11) and Treasury Regulations issued thereunder. Any written consent given or deemed to have been given by a Participant's spouse hereunder shall be irrevocable and shall be effective only with respect to such spouse and not with respect to any subsequent spouse. A spouse's consent to a Participant's waiver shall be valid only if the applicable notice described in Section 14.07 or 14.08 has been provided to the Participant. 14.07. Notice Regarding "Qualified Joint and Survivor Annuity". The notice provided to a Participant under Section 14.05 shall include a written explanation of (a) the terms and conditions of the "qualified joint and survivor annuity" provided herein, (b) the Participant's right to make, and the effect of, an election to waive the "qualified joint and survivor annuity", (c) the rights of the Participant's spouse under Section 14.06, and (d) the Participant's right to revoke an election to waive the "qualified joint and survivor annuity" prior to his Annuity Starting Date. 14.08. Notice Regarding "Qualified Preretirement Survivor Annuity". If a Participant's Account is subject to the requirements of Section 14.04, the Administrator shall provide the Participant with a written explanation of the "qualified preretirement survivor annuity" comparable to the written explanation provided with respect to the "qualified joint and survivor annuity", as described in Section 14.07. Such explanation shall be furnished within whichever of the following periods ends last: (a) the period beginning with the first day of the Plan Year in which the Participant reaches age 32 and ending with the end of the Plan Year preceding the Plan Year in which he reaches age 35; (b) a reasonable period ending after the Employee becomes an Active Participant; (c) a reasonable period ending after Section 14.04 first becomes applicable to the Participant's Account; or (d) in the case of a Participant who separates from service before age 35, a reasonable period ending after such separation from service. For purposes of the preceding sentence, the two-year period beginning one year prior to the date of the event described in Subsection 14.08(b), (c) or (d) above, whichever is applicable, and ending one year after such date shall be considered reasonable, provided, that in the case of a Participant who separates from service under Subsection 14.08(d) above and subsequently recommences employment with the Employer, the applicable period for such Participant shall be redetermined in accordance with this Section 14.08. 14.09. Former Spouse. For purposes of this Article, a former spouse of a Participant shall be treated as the spouse or surviving spouse of the Participant, and a current spouse shall not be so treated, to the extent required under a qualified domestic relations order, as defined in Code Section 414(p). Article 15. Top-Heavy Provisions. 15.01. Definitions. For purposes of this Article, the following special definitions shall apply: (a) "Determination date" means, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, "determination date" means the last day of that Plan Year. (b) "Determination period" means the Plan Year containing the "determination date" and the four preceding Plan Years. (c) "Key employee" means any Employee or former Employee (and the Beneficiary of any such Employee) who at any time during the "determination period" was (1) an officer of the Employer or a Related Employer whose annual Compensation exceeds 50 percent of the dollar limitation under Code Section 415(b)(1)(A), (2) one of the ten Employees whose annual Compensation from the Employer or a Related Employer exceeds the dollar limitation under Code Section 415(c)(1)(A) and who owns (or is considered as owning under Code Section 318) one of the largest interests in the Employer and all Related Employers, (3) a five percent owner of the Employer and all Related Employers, or (4) a one percent owner of the Employer and all Related Employers whose annual Compensation exceeds $150,000. The determination of who is a "key employee" shall be made in accordance with Code Section 416(i)(1) and regulations issued thereunder. (d) "Permissive aggregation group" means the "required aggregation group" plus any other qualified plans of the Employer or a Related Employer which, when considered as a group with the "required aggregation group", would continue to satisfy the requirements of Code Sections 401(a)(4) and 410. (e) "Required aggregation group" means: (1) Each qualified plan of the Employer or Related Employer in which at least one "key employee" participates, or has participated at any time during the "determination period" (regardless of whether the plan has terminated), and (2) any other qualified plan of the Employer or Related Employer which enables a plan described in Subsection 15.01(e)(1) above to meet the requirements of Code Section 401(a)(4) or 410. (f) "Top-heavy plan" means a plan in which any of the following conditions exists: (1) the "top-heavy ratio" for the plan exceeds 60 percent and the Plan is not part of any "required aggregation group" or "permissive aggregation group"; (2) the plan is a part of a "required aggregation group" but not part of a "permissive aggregation group" and the "top-heavy ratio" for the "required aggregation group" exceeds 60 percent; or (3) the plan is a part of a "required aggregation group" and a "permissive aggregation group" and the "top-heavy ratio" for both groups exceeds 60 percent. (g) "Top-heavy ratio" means: (1) With respect to the Plan, or with respect to any "required aggregation group" or "permissive aggregation group" that consists solely of defined contribution plans (including any simplified employee pension, as defined in Code Section 408(k)), a fraction, the numerator of which is the sum of the account balances of all "key employees" under the plans as of the "determination date" (including any part of any account balance distributed during the five-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 during the five-year period ending on the "determination date") of all participants under the plans as of the "determination date". Both the numerator and denominator of the "top-heavy ratio" shall be increased, to the extent required by Code Section 416, to reflect any contribution which is due but unpaid as of the "determination date". (2) With respect to any "required aggregation group" or "permissive aggregation group" that includes one or more defined benefit plans which, during the five-year period ending on the "determination date", has covered or could cover an Active Participant in the Plan, a fraction, the numerator of which is the sum of the account balances under the defined contribution plans for all "key employees" and the present value of accrued benefits under the defined benefit plans for all "key employees", and the denominator of which is the sum of the account balances under the defined contribution plans for all participants and the present value of accrued benefits under the defined benefit plans for all participants. Both the numerator and denominator of the "top-heavy ratio" shall be increased for any distribution of an account balance or an accrued benefit made during the five-year period ending on the "determination date" and any contribution due but unpaid as of the "determination date". For purposes of Subsections 15.01(g)(1) and (2) above, the value of accounts and the present value of accrued benefits shall be determined as of the most recent "determination date", except as provided in Code Section 416 and the regulations issued thereunder for the first and second plan years of a defined benefit plan. When aggregating plans, the value of accounts and accrued benefits shall be calculated with reference to the "determination dates" that fall within the same calendar year. The present value of accrued benefits shall be determined using the interest rate and mortality table specified in Subsection 1.21(b) of the Adoption Agreement. The accounts and accrued benefits of a Participant who is not a "key employee" but who was a "key employee" in a prior year, or who has not performed services for the Employer or any Related Employer at any time during the five-year period ending on the "determination date", shall be disregarded. The calculation of the "top-heavy ratio", and the extent to which distributions, rollovers, and transfers are taken into account, shall be made in accordance with Code Section 416 and the regulations issued thereunder. Deductible employee contributions shall not be taken into account for purposes of computing the "top-heavy ratio". For purposes of determining if the Plan, or any other plan included in a "required aggregation group" of which the Plan is a part, is a "top-heavy plan", the accrued benefit in a defined benefit plan of an Employee other than a "key employee" shall be determined under the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Employer or a Related Employer, or, if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate of Code Section 411(b)(1)(C). 15.02. Application. If the Plan is or becomes a "top-heavy plan" in any Plan Year or is automatically deemed to be a "top-heavy plan" in accordance with the Employer's selection in Subsection 1.21(a)(1) of the Adoption Agreement, the provisions of this Article shall apply and shall supersede any conflicting provision in the Plan. 15.03. Minimum Contribution. Except as otherwise specifically provided in this Section 15.03, the Nonelective Employer Contributions made for the Plan Year on behalf of any Active Participant who is not a "key employee" shall not be less than the lesser of three percent (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement) of such Participant's Compensation for the Plan Year or, in the case where neither the Employer nor any Related Employer maintains a defined benefit plan which uses the Plan to satisfy Code Section 401(a)(4) or 410, the largest percentage of Employer contributions made on behalf of any "key employee" for the Plan Year, expressed as a percentage of the "key employee's" Compensation for the Plan Year, unless the Employer has provided in Subsection 1.21(c) of the Adoption Agreement that the minimum contribution requirement shall be met under the other plan or plans of the Employer. The minimum contribution required under this Section 15.03 shall be made to the Account of an Active Participant even though, under other Plan provisions, the Active Participant would not otherwise be entitled to receive a contribution, or would have received a lesser contribution for the Plan Year, because (a) the Active Participant failed to complete the Hours of Service requirement selected by the Employer in Subsection 1.10(d) or 1.11(c) of the Adoption Agreement, or (b) the Participant's Compensation was less than a stated amount; provided, however, that no minimum contribution shall be made for a Plan Year to the Account of an Active Participant who is not employed by the Employer or a Related Employer on the last day of the Plan Year. The minimum contribution for the Plan Year made on behalf of each Active Participant who is not a "key employee" and who is a participant in a defined benefit plan maintained by the Employer or a Related Employer shall not be less than five percent of such Participant's Compensation for the Plan Year, unless the Employer has provided in Subsection 1.21(c) of the Adoption Agreement that the minimum contribution requirement shall be met under the other plan or plans of the Employer. That portion of a Participant's Account that is attributable to minimum contributions required under this Section 15.03, to the extent required to be nonforfeitable under Code Section 416(b), may not be forfeited under Code Section 411(a)(3)(B). Notwithstanding any other provision of the Plan to the contrary, for purposes of this Article, Compensation shall include amounts that are not includable in the gross income of the Participant under a salary reduction agreement by reason of the application of Code Section 125, 132(f)(4), 402(e)(3), 402(h), or 403(b). Compensation shall generally be based on the amount actually paid to the Eligible Employee during the Plan Year or during that portion of the Plan Year during which the Eligible Employee is an Active Participant, as elected by the Employer in Subsection 1.05(c) of the Adoption Agreement. 15.04. Modification of Allocation Provisions to Meet Minimum Contribution Requirements. If the Employer elected a discretionary Nonelective Employer Contribution in Subsection 1.11(b) of the Adoption Agreement, the provisions for allocating Nonelective Employer Contributions described in Subsection 5.10(b) shall be modified as provided herein to meet the minimum contribution requirements of Section 15.03. (a) If the Employer selected the non-integrated formula in Subsection 1.11(b)(1) of the Adoption Agreement, Nonelective Employer Contributions shall be allocated as follows: (1) Nonelective Employer Contributions shall be allocated to each eligible Active Participant, as determined under this Section 15.04, who is not a "key employee" in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all such eligible Active Participants for the Plan Year; provided, however that such ratio shall not exceed three percent of a Participant's Compensation for the Plan Year (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement). (2) If any Nonelective Employer Contributions remain after the allocation in Subsection 15.04(a)(1) above, the remaining Nonelective Employer Contributions shall be allocated to each eligible Active Participant, as determined under this Section 15.04, who is a "key employee" in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all such eligible Active Participants for the Plan Year; provided, however that such ratio shall not exceed three percent of a Participant's Compensation for the Plan Year (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement). (3) If any Nonelective Employer Contributions remain after the allocation in Subsection 15.04(a)(2) above, the remaining Nonelective Employer Contributions shall be allocated to each eligible Active Participant, as determined under this Section 15.04, in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all such eligible Active Participants for the Plan Year. (b) If the Employer selected the integrated formula in Subsection 1.11(b)(2) of the Adoption Agreement, the "permitted disparity limit", as defined in Subsection 1.11(b)(2) of the Adoption Agreement, shall be reduced by the percentage allocated under Subsection 15.04(b)(1) or (2) below, and the allocation steps in Subsection 5.10(b)(2) shall be preceded by the following steps: (1) Nonelective Employer Contributions shall be allocated to each eligible Active Participant, as determined under this Section 15.04, who is not a "key employee" in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all such eligible Active Participants for the Plan Year; provided, however that such ratio shall not exceed three percent of a Participant's Compensation for the Plan Year (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement). (2) If any Nonelective Employer Contributions remain after the allocation in Subsection 15.04(b)(1) above, the remaining Nonelective Employer Contributions shall be allocated to each eligible Active Participant, as determined under this Section 15.04, who is a "key employee" in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all such eligible Active Participants for the Plan Year; provided, however that such ratio shall not exceed three percent of a Participant's Compensation for the Plan Year (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement). (3) If any Nonelective Employer Contributions remain after the allocation in Subsection 15.04(b)(2) above, the remaining Nonelective Employer Contributions shall be allocated to each eligible Active Participant in the same ratio that the eligible Active Participant's Excess Compensation for the Plan Year bears to the total Excess Compensation of all eligible Participants for the Plan Year; provided, however, that such ratio shall not exceed three percent (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement). 15.05. Adjustment to the Limitation on Contributions and Benefits. For Limitation Years beginning prior to January 1, 2000, if the Plan is a "top- heavy plan", the number 100 shall be substituted for the number 125 in determining the "defined benefit fraction", as defined in Subsection 6.01(f) and the "defined contribution fraction", as defined in Subsection 6.01(g). However, this substitution shall not take effect with respect to the Plan in any Plan Year in which the following requirements are satisfied: (a) The Employer contributions for such Plan Year made on behalf of each eligible Active Participant, as determined under Section 15.03, who is not a "key employee" and who is a participant in a defined benefit plan maintained by the Employer or a Related Employer is not less than 7 1/2 percent of such eligible Active Participant's Compensation. (b) The "top-heavy ratio" for the Plan (or the "required aggregation group" or "permissible aggregation group", as applicable) does not exceed 90 percent. The substitutions of the number 100 for 125 shall not take effect in any Limitation Year with respect to any Participant for whom no benefits are accrued or contributions made for the Limitation Year. 15.06. Accelerated Vesting. For any Plan Year in which the Plan is or is deemed to be a "top-heavy plan" and all Plan Years thereafter, the top- heavy vesting schedule selected by the Employer in Subsection 1.21(d) of the Adoption Agreement shall automatically apply to the Plan. The top-heavy vesting schedule applies to all benefits within the meaning of Code Section 411(a)(7) except those already subject to a vesting schedule which vests at least as rapidly in all cases as the schedule elected in Subsection 1.21(d) of the Adoption Agreement, including benefits accrued before the Plan becomes a "top-heavy plan". Notwithstanding the foregoing provisions of this Section 15.06, the top-heavy vesting schedule does not apply to the Account of any Participant who does not have an Hour of Service after the Plan initially becomes or is deemed to have become a "top-heavy plan" and such Employee's Account attributable to Employer Contributions shall be determined without regard to this Section 15.06. 15.07. Exclusion of Collectively-Bargained Employees. Notwithstanding any other provision of this Article 15, Employees who are included in a unit covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers shall not be included in determining whether or not the Plan is a "top-heavy plan". In addition, such Employees shall not be entitled to a minimum contribution under Section 15.03 or accelerated vesting under Section 15.06, unless otherwise provided in the collective bargaining agreement. Article 16. Amendment and Termination. 16.01. Amendments by the Employer that do Not Affect Prototype Status. The Employer reserves the authority through a board of directors' resolution or similar action, subject to the provisions of Article 1 and Section 16.04, to amend the Plan as provided herein, and such amendment shall not affect the status of the Plan as a prototype plan. (a) The Employer may amend the Adoption Agreement to make a change or changes in the provisions previously elected by it. Such amendment may be made either by (1) completing an amended Adoption Agreement on which the Employer has indicated the change or changes, or (2) adopting an amendment, executed by the Employer only, in the form provided by the Prototype Sponsor, that provides replacement pages to be inserted into the Adoption Agreement, which pages include the change or changes. Any such amendment must be filed with the Trustee. (b) The Employer may make a separate amendment to the Plan as necessary to satisfy Code Section 415 or 416 because of the required aggregation of multiple plans by completely overriding the Basic Plan Document provisions. (c) The Employer may adopt certain model amendments published by the Internal Revenue Service which specifically provide that their adoption shall not cause the Plan to be treated as an individually designed plan. 16.02. Amendments by the Employer that Affect Prototype Status. The Employer reserves the authority through a board of directors' resolution or similar action, subject to the provisions of Section 16.04, to amend the Plan in a manner other than that provided in Section 16.01. However, upon making such amendment, including, if the Plan is a money purchase pension plan, a waiver of the minimum funding requirement under Code Section 412(d), the Employer may no longer participate in this prototype plan arrangement and shall be deemed to have an individually designed plan. Following such amendment, the Trustee may transfer the assets of the Trust to the trust forming part of such newly adopted plan upon receipt of sufficient evidence (such as a determination letter or opinion letter from the Internal Revenue Service or an opinion of counsel satisfactory to the Trustee) that such trust shall be a qualified trust under the Code. 16.03. Amendment by the Mass Submitter Sponsor and the Prototype Sponsor. The Mass Submitter Sponsor may in its discretion amend the mass submitter prototype plan at any time, subject to the provisions of Article 1 and Section 16.04, and provided that the Mass Submitter Sponsor mails a copy of such amendment to each Prototype Sponsor that maintains the prototype plan or a minor modifier of the prototype plan. Each Prototype Sponsor shall provide a copy of such amendment to each Employer adopting its prototype plan at the Employer's last known address as shown on the books maintained by the Prototype Sponsor or its affiliates. The Prototype Sponsor may, in its discretion, amend the Plan or the Adoption Agreement, subject to the provisions of Article 1 and Section 16.04, and provided that such amendment does not change the Plan's status as a word for word adoption of the mass submitter prototype plan or a minor modifier of the mass submitter prototype plan, unless such Prototype Sponsor elects no longer to be a sponsoring organization with respect to the mass submitter prototype plan. The Prototype Sponsor shall provide a copy of such amendment to each Employer adopting its prototype plan at the Employer's last known address as shown on the books maintained by the Prototype Sponsor or its affiliates. 16.04. Amendments Affecting Vested and/or Accrued Benefits. Except as permitted by Section 16.05, Section 1.19(e) and the Forms of Payment Addendum to the Adoption Agreement, and/or Code Section 411(d)(6) and regulations issued thereunder, no amendment to the Plan shall be effective to the extent that it has the effect of decreasing a Participant's Account or eliminating an optional form of benefit with respect to benefits attributable to service before the amendment. Furthermore, if the vesting schedule of the Plan is amended, the nonforfeitable interest of a Participant in his Account, determined as of the later of the date the amendment is adopted or the date it becomes effective, shall not be less than the Participant's nonforfeitable interest in his Account determined without regard to such amendment. If the Plan is a money purchase pension plan, no amendment to the Plan that provides for a significant reduction in contributions to the Plan shall be made unless notice has been furnished to Participants and alternate payees under a qualified domestic relations order as provided in ERISA Section 204(h). If the Plan's vesting schedule is amended because of a change to "top- heavy plan" status, as described in Subsection 15.01(f), the accelerated vesting provisions of Section 15.06 shall continue to apply for all Plan Years thereafter, regardless of whether the Plan is a "top-heavy plan" for such Plan Year. If the Plan's vesting schedule is amended and an Employee's vested interest, as calculated by using the amended vesting schedule, is less in any year than the Employee's vested interest calculated under the Plan's vesting schedule immediately prior to the amendment, the amended vesting schedule shall apply only to Employees hired on or after the effective date of the change in vesting schedule. 16.05. Retroactive Amendments made by Mass Submitter or Prototype Sponsor. An amendment made by the Mass Submitter Sponsor or Prototype Sponsor in accordance with Section 16.03 may be made effective on a date prior to the first day of the Plan Year in which it is adopted if, in published guidance, the Internal Revenue Service either permits or requires such an amendment to be made to enable the Plan and Trust to satisfy the applicable requirements of the Code and all requirements for the retroactive amendment are satisfied. 16.06. Termination. The Employer has adopted the Plan with the intention and expectation that contributions shall be continued indefinitely. However, said Employer has no obligation or liability whatsoever to maintain the Plan for any length of time and may amend the Plan to discontinue contributions under the Plan or terminate the Plan at any time without any liability hereunder for any such discontinuance or termination. The Employer may terminate the Plan by written notice delivered to the Trustee. 16.07. Distribution upon Termination of the Plan. Upon termination or partial termination of the Plan or complete discontinuance of contributions thereunder, each Participant (including a terminated Participant with respect to amounts not previously forfeited by him) who is affected by such termination or partial termination or discontinuance shall have a vested interest in his Account of 100 percent. Subject to Section 12.01 and Article 14, upon receipt of written instructions from the Administrator, the Trustee shall distribute to each Participant or other person entitled to distribution the balance of the Participant's Account in a single lump sum payment. In the absence of such instructions, the Trustee shall notify the Administrator of such situation and the Trustee shall be under no duty to make any distributions under the Plan until it receives written instructions from the Administrator. Upon the completion of such distributions, the Trust shall terminate, the Trustee shall be relieved from all liability under the Trust, and no Participant or other person shall have any claims thereunder, except as required by applicable law. If distribution is to be made to a Participant or Beneficiary who cannot be located, the Administrator shall give written instructions to the Trustee to (a) escheat the distributable amount to the State or Commonwealth of the distributee's last known address or (b) draw a check in the distributable amount and mail it to the distributee's last known address. In the absence of such instructions, the Trustee shall make distribution to the distributee by drawing a check in the distributable amount and mailing it to the distributee's last known address. 16.08. Merger or Consolidation of Plan; Transfer of Plan Assets. In case of any merger or consolidation of the Plan with, or transfer of assets and liabilities of the Plan to, any other plan, provision must be made so that each Participant would, if the Plan then terminated, receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer if the Plan had then terminated. Article 17. Amendment and Continuation of Prior Plan; Transfer of Funds to or from Other Qualified Plans. 17.01. Amendment and Continuation of Prior Plan. In the event the Employer has previously established a plan (the "prior plan") which is a defined contribution plan under the Code and which on the date of adoption of the Plan meets the applicable requirements of Code Section 401(a), the Employer may, in accordance with the provisions of the prior plan, amend and restate the prior plan in the form of the Plan and become the Employer hereunder, subject to the following: (a) Subject to the provisions of the Plan, each individual who was a Participant in the prior plan immediately prior to the effective date of such amendment and restatement shall become a Participant in the Plan. (b) Except as provided in Section 16.04, no election may be made under the vesting provisions of the Adoption Agreement if such election would reduce the benefits of a Participant under the Plan to less than the benefits to which he would have been entitled if he voluntarily separated from the service of the Employer immediately prior to such amendment and restatement. (c) No amendment to the Plan shall decrease a Participant's accrued benefit or eliminate an optional form of benefit, except as permitted under Section 1.19(e) and the Forms of Payment Addendum to the Adoption Agreement. (d) The amounts standing to the credit of a Participant's account immediately prior to such amendment and restatement which represent the amounts properly attributable to (1) contributions by the Participant and (2) contributions by the Employer and forfeitures shall constitute the opening balance of his Account or Accounts under the Plan. (e) Amounts being paid to an Inactive Participant or to a Beneficiary in accordance with the provisions of the prior plan shall continue to be paid in accordance with such provisions. (f) Any election and waiver of the "qualified preretirement survivor annuity", as defined in Section 14.01, in effect after August 23, 1984, under the prior plan immediately before such amendment and restatement shall be deemed a valid election and waiver of Beneficiary under Section 14.04 if such designation satisfies the requirements of Sections 14.05 and 14.06, unless and until the Participant revokes such election and waiver under the Plan. (g) Unless the Employer and the Trustee agree otherwise, all assets of the predecessor trust shall be deemed to be assets of the Trust as of the effective date of such amendment. Such assets shall be invested by the Trustee as soon as reasonably practicable pursuant to Article 8. The Employer agrees to assist the Trustee in any way requested by the Trustee in order to facilitate the transfer of assets from the predecessor trust to the Trust Fund. 17.02. Transfer of Funds from an Existing Plan. The Employer may from time to time direct the Trustee, in accordance with such rules as the Trustee may establish, to accept cash, allowable Fund Shares or participant loan promissory notes transferred for the benefit of Participants from a trust forming part of another qualified plan under the Code, provided such plan is a defined contribution plan. Such transferred assets shall become assets of the Trust as of the date they are received by the Trustee. Such transferred assets shall be credited to Participants' Accounts in accordance with their respective interests immediately upon receipt by the Trustee. A Participant's interest under the Plan in transferred assets which were fully vested and nonforfeitable under the transferring plan or which were transferred to the Plan in a manner intended to satisfy the requirements of subsection (b) of this Section 17.02 shall be fully vested and nonforfeitable at all times. A Participant's interest under the Plan in transferred assets which were transferred to the Plan in a manner intended to satisfy the requirements of subsection (a) of this Section 17.02 shall be determined in accordance with the terms of the Plan unless the transferor plan's vesting schedule is more favorable. Such transferred assets shall be invested by the Trustee in accordance with the provisions of Subsection 17.01(g) as if such assets were transferred from a prior plan. Except as otherwise provided below, no transfer of assets in accordance with this Section 17.02 may cause a loss of an accrued or optional form of benefit protected by Code Section 411(d)(6). Effective for transfers made on or after January 1, 2002, the terms of the Plan as in effect at the time of the transfer shall apply to the amounts transferred regardless of whether such application would have the effect of eliminating or reducing an optional form of benefit protected by Code Section 411(d)(6) which was previously available with respect to any amount transferred to the Plan pursuant to this Section 17.02, provided that such transfer satisfies the requirements set forth in either (a) or (b): (a) (1) The transfer is conditioned upon a voluntary, fully informed election by the Participant to transfer his entire account balance to the Plan. As an alternative to the transfer, the Participant is offered the opportunity to retain the form of benefit previously available to him (or, if the transferor plan is terminated, to receive any optional form of benefit for which the participant is eligible under the transferor plan as required by Code Section 411(d)(6)); (2) If the defined contribution plan from which the transfer is made is a money purchase pension plan, the Plan is a money purchase plan or, if the defined contribution plan from which the transfer is made includes a qualified cash or deferred arrangement, the Plan includes a cash or deferred arrangement; and (3) The transfer is made either in connection with an asset or stock acquisition, merger or other similar transaction involving a change in employer of the employees of a trade or business (i.e., an acquisition or disposition within the meaning of Section 1.410(b)-2(f)) or in connection with the participant's change in employment status such that the participant is not entitled to additional allocations under the transferor plan. (b)(1) The transfer satisfies the requirements of subsection (a)(1) of this Section 17.02; (2) The transfer occurs at a time when the Participant is eligible, under the terms of the transferor plan, to receive an immediate distribution of his account; (3) If the transfer occurs on or after January 1, 2002, the transfer occurs at a time when the participant is not eligible to receive an immediate distribution of his entire nonforfeitable account balance in a single sum distribution that would consist entirely of an eligible rollover distribution within the meaning of Code Section 401(a)(31)(C); and (4) The amount transferred, together with the amount of any contemporaneous Code Section 401(a)(31) direct rollover to the Plan, equals the entire nonforfeitable account of the participant whose account is being transferred. It is the Employer's obligation to ensure that all assets of the Plan, other than those maintained in a separate trust or fund pursuant to the provisions of Section 20.10, are transferred to the Trustee. The Trustee shall have no liability for and no duty to inquire into the administration of such transferred assets for periods prior to the transfer. 17.03. Acceptance of Assets by Trustee. The Trustee shall not accept assets which are not either in a medium proper for investment under the Plan, as set forth in the Plan and the Service Agreement, or in cash. Such assets shall be accompanied by instructions in writing (or such other medium as may be acceptable to the Trustee) showing separately the respective contributions by the prior employer and by the Participant, and identifying the assets attributable to such contributions. The Trustee shall establish such accounts as may be necessary or appropriate to reflect such contributions under the Plan. The Trustee shall hold such assets for investment in accordance with the provisions of Article 8, and shall in accordance with the written instructions of the Employer make appropriate credits to the Accounts of the Participants for whose benefit assets have been transferred. 17.04. Transfer of Assets from Trust. Effective on or after January 1, 2002, the Employer may direct the Trustee to transfer all or a specified portion of the Trust assets to any other plan or plans maintained by the Employer or the employer or employers of an Inactive Participant or Participants, provided that the Trustee has received evidence satisfactory to it that such other plan meets all applicable requirements of the Code, subject to the following: (a) The assets so transferred shall be accompanied by instructions in writing (or such other medium as may be acceptable to the Trustee) from the Employer naming the persons for whose benefit such assets have been transferred, showing separately the respective contributions by the Employer and by each Inactive Participant, if any, and identifying the assets attributable to the various contributions. The Trustee shall not transfer assets hereunder until all applicable filing requirements are met. The Trustee shall have no further liabilities with respect to assets so transferred. (b) A transfer of assets made pursuant to this Section 17.04 may result in the elimination or reduction of an optional form of benefit protected by Code Section 411(d)(6), provided that the transfer satisfies the requirements set forth in either (1) or (2): (1)(i) The transfer is conditioned upon a voluntary, fully informed election by the Participant to transfer his entire Account to the other defined contribution plan. As an alternative to the transfer, the Participant is offered the opportunity to retain the form of benefit previously available to him (or, if the Plan is terminated, to receive any optional form of benefit for which the Participant is eligible under the Plan as required by Code Section 411(d)(6)); (ii) If the Plan is a money purchase pension plan, the defined contribution plan to which the transfer is made must be a money purchase pension plan and if the Plan includes a qualified cash or deferred arrangement under Code Section 401(k), the defined contribution plan to which the transfer is made must include a qualified cash or deferred arrangement; and (iii) The transfer is made either in connection with an asset or stock acquisition, merger or other similar transaction involving a change in employer of the employees of a trade or business (i.e., an acquisition or disposition within the meaning of Section 1.410(b)-2(f)) or in connection with the Participant's change in employment status such that the Participant becomes an Inactive Participant. (2)(i) The transfer satisfies the requirements of subsection (1)(i) of this Section 17.04; (ii) The transfer occurs at a time when the Participant is eligible, under the terms of the Plan, to receive an immediate distribution of his benefit; (iii) If the transfer occurs on or after January 1, 2002, the transfer occurs at a time when the Participant is not eligible to receive an immediate distribution of his entire nonforfeitable Account in a single sum distribution that would consist entirely of an eligible rollover distribution within the meaning of Code Section 401(a)(31)(C); (iv) The Participant is fully vested in the transferred amount in the transferee plan; and (v) The amount transferred, together with the amount of any contemporaneous Code Section 401(a)(31) direct rollover to the transferee plan, equals the entire nonforfeitable Account of the Participant whose Account is being transferred. Article 18. Miscellaneous. 18.01. Communication to Participants. The Plan shall be communicated to all Eligible Employees by the Employer promptly after the Plan is adopted. 18.02. Limitation of Rights. Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, shall be construed as giving to any Participant or other person any legal or equitable right against the Employer, Administrator or Trustee, except as provided herein; and in no event shall the terms of employment or service of any Participant be modified or in any way affected hereby. It is a condition of the Plan, and each Participant expressly agrees by his participation herein, that each Participant shall look solely to the assets held in the Trust for the payment of any benefit to which he is entitled under the Plan. 18.03. Nonalienability of Benefits. Except as provided in Code Sections 401(a)(13)(C) and (D) (relating to offsets ordered or required under a criminal conviction involving the Plan, a civil judgment in connection with a violation or alleged violation of fiduciary responsibilities under ERISA, or a settlement agreement between the Participant and the Department of Labor in connection with a violation or alleged violation of fiduciary responsibilities under ERISA), Section 1.401(a)-13(b)(2) of the Treasury Regulations (relating to Federal tax levies), or as otherwise required by law, the benefits provided hereunder shall not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, either voluntarily or involuntarily, and any attempt to cause such benefits to be so subjected shall not be recognized. The preceding sentence shall also apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless such order is determined by the Administrator to be a qualified domestic relations order, as defined in Code Section 414(p), or any domestic relations order entered before January 1, 1985. 18.04. Qualified Domestic Relations Orders Procedures. The Administrator must establish reasonable procedures to determine the qualified status of a domestic relations order. Upon receiving a domestic relations order, the Administrator shall promptly notify the Participant and any alternate payee named in the order, in writing, of the receipt of the order and the Plan's procedures for determining the qualified status of the order. Within a reasonable period of time after receiving the domestic relations order, the Administrator must determine the qualified status of the order and must notify the Participant and each alternate payee, in writing, of its determination. The Administrator shall provide such notice by mailing to the individual's address specified in the domestic relations order, or in a manner consistent with the Department of Labor regulations. If any portion of the Participant's Account is payable during the period the Administrator is making its determination of the qualified status of the domestic relations order, the Administrator must make a separate accounting of the amounts payable. If the Administrator determines the order is a qualified domestic relations order within 18 months of the date amounts first are payable following receipt of the order, the Administrator shall direct the Trustee to distribute the payable amounts in accordance with the order. If the Administrator does not make his determination of the qualified status of the order within the 18-month determination period, the Administrator shall direct the Trustee to distribute the payable amounts in the manner the Plan would distribute if the order did not exist and shall apply the order prospectively if the Administrator later determines the order is a qualified domestic relations order. The Trustee shall set up segregated accounts for each alternate payee when properly notified by the Administrator. A domestic relations order shall not fail to be deemed a qualified domestic relations order merely because it requires the distribution or segregation of all or part of a Participant's Account with respect to an alternate payee prior to the Participant's earliest retirement age (as defined in Code Section 414(p)) under the Plan. A distribution to an alternate payee prior to the Participant's attainment of the earliest retirement age is available only if (a) the order specifies distribution at that time and (b) if the present value of the alternate payee's benefits under the Plan exceeds $5,000 as determined under Section 13.02 (or such larger amount as may be specified in Code Section 417(e)(1)), and the order requires, and the alternate payee consents to, a distribution occurring prior to the Participant's attainment of earliest retirement age. 18.05. Additional Rules for Paired Plans. If the Employer has adopted both a money purchase pension plan and a profit sharing plan under this Basic Plan Document which are to be considered paired plans, the elections in Section 1.04 of the Adoption Agreement must be identical with respect to both plans. When the paired plans are "top-heavy plans", as defined in Subsection 15.01(f), or are deemed to be "top-heavy plans", the money purchase pension plan shall provide the minimum contribution required under Section 15.03, unless contributions under the money purchase pension plan are frozen. 18.06. Application of Plan Provisions in Multiple Employer Plans. Notwithstanding any other provision of the Plan to the contrary, if one of the Employers designated in Subsection 1.02(b) of the Adoption Agreement is not a Related Employer, the Prototype Sponsor reserves the right to take any or all of the following actions: (a) treat the Plan as a multiple employer plan; (b) permit the Employer to amend the Plan to exclude the un-Related Employer from participation in the Plan; or (c) treat the Employer as having amended the Plan in the manner described in Section 16.02 such that the Employer may no longer participate in this prototype plan arrangement. For the period, if any, that the Prototype Sponsor elects to treat the Plan as a multiple employer plan, each un-Related Employer shall be treated as a separate Employer for purposes of contributions, application of the "ADP" and "ACP" tests described in Sections 6.03 and 6.06, application of the Code Section 415 limitations described in Section 6.12, top-heavy determinations and application of the top-heavy requirements under Article 15, and application of such other Plan provisions as the Employers determine to be appropriate. For any such period, the Prototype Sponsor shall continue to treat the Employer as participating in this prototype plan arrangement for purposes of Plan administration, notices or other communications in connection with the Plan, and other Plan-related services; provided, however, that if the Employer applies to the Internal Revenue Service for a determination letter, the multiple employer plan shall be filed on the form appropriate for multiple employer plans. The Administrator shall be responsible for administering the Plan as a multiple employer plan. 18.07. Veterans Reemployment Rights. Notwithstanding any other provision of the Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service shall be provided in accordance with Code Section 414(u). The Administrator shall notify the Trustee of any Participant with respect to whom additional contributions are made because of qualified military service. 18.08. Facility of Payment. In the event the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may direct the Trustee to disburse such payments to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under state law for the care and control of such recipient. The receipt by such person or institution of any such payments shall be complete acquittance therefore, and any such payment to the extent thereof, shall discharge the liability of the Trust for the payment of benefits hereunder to such recipient. 18.09. Information between Employer and Trustee. The Employer agrees to furnish the Trustee, and the Trustee agrees to furnish the Employer, with such information relating to the Plan and Trust as may be required by the other in order to carry out their respective duties hereunder, including without limitation information required under the Code and any regulations issued or forms adopted by the Treasury Department thereunder or under the provisions of ERISA and any regulations issued or forms adopted by the Department of Labor thereunder. 18.10. Effect of Failure to Qualify Under Code. Notwithstanding any other provision contained herein, if the Employer fails to obtain or retain approval of the Plan by the Internal Revenue Service as a qualified Plan under the Code, the Employer may no longer participate in this prototype Plan arrangement and shall be deemed to have an individually designed plan. 18.11. Directions, Notices and Disclosure. Any notice or other communication in connection with this Plan shall be deemed delivered in writing if addressed as provided below and if either actually delivered at said address or, in the case of a letter, three business days shall have elapsed after the same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified: (a) If to the Employer or Administrator, to it at the address set forth in the Adoption Agreement, and, if to the Employer, to the attention of the contact specified in Subsection 1.02(a) of the Adoption Agreement; (b) If to the Trustee, to it at the address set forth in Subsection 1.03(a) the Adoption Agreement; or, in each case at such other address as the addressee shall have specified by written notice delivered in accordance with the foregoing to the addressor's then effective notice address. Any direction, notice or other communication provided to the Employer, the Administrator or the Trustee by another party which is stipulated to be in written form under the provisions of this Plan may also be provided in any medium which is permitted under applicable law or regulation. Any written communication or disclosure to Participants required under the provisions of this Plan may be provided in any other medium (electronic, telephone or otherwise) that is permitted under applicable law or regulation. 18.12. Governing Law. The Plan and the accompanying Adoption Agreement shall be construed, administered and enforced according to ERISA, and to the extent not preempted thereby, the laws of the Commonwealth of Massachusetts. Nothing contained in Sections 8.02, 19.01 or 19.05 or this Section 18.13 shall be construed in a manner which subjects a governmental plan (as defined in Code Section 414(d)) or a non-electing church plan (as described in Code Section 410(d)) to the fiduciary provisions of Title I of ERISA. Article 19. Plan Administration. 19.01. Powers and Responsibilities of the Administrator. The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the requirements of ERISA. In addition to the powers and authorities expressly conferred upon it in the Plan, the Administrator shall have all such powers and authorities as may be necessary to carry out the provisions of the Plan, including the discretionary power and authority to interpret and construe the provisions of the Plan, such interpretation to be final and conclusive on all persons claiming benefits under the Plan; to make benefit determinations; to utilize the correction programs or systems established by the Internal Revenue Service (such as the Employee Plans Compliance and Resolution System) or the Department of Labor; and to resolve any disputes arising under the Plan. The Administrator may, by written instrument, allocate and delegate its fiduciary responsibilities in accordance with ERISA Section 405, including allocation of such responsibilities to an administrative committee formed to administer the Plan. 19.02. Nondiscriminatory Exercise of Authority. Whenever, in the administration of the Plan, any discretionary action by the Administrator is required, the Administrator shall exercise its authority in a nondiscriminatory manner so that all persons similarly situated shall receive substantially the same treatment. 19.03. Claims and Review Procedures. Except to the extent that the provisions of any collective-bargaining agreement provide another method of resolving claims for benefits under the Plan, the provisions of this Section 19.03 shall control with respect to the resolution of such claims; provided, however, that the Employer may institute alternative claims procedures that are more restrictive on the Employer and more generous with respect to persons claiming a benefit under the Plan. (a) Claims Procedure. Whenever a request for benefits under the Plan is wholly or partially denied, the Administrator shall notify the person claiming such benefits of its decision in writing. Such notification shall contain (1) specific reasons for the denial of the claim, (2) specific reference to pertinent Plan provisions, (3) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (4) information as to the steps to be taken if the person wishes to submit a request for review. Such notification shall be given within 90 days after the claim is received by the Administrator (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period). If such notification is not given within such period, the claim shall be considered denied as of the last day of such period and such person may request a review of his claim. (b) Review Procedure. Within 60 days after the date on which a person receives a written notice of a denied claim (or, if applicable, within 60 days after the date on which such denial is considered to have occurred), such person (or his duly authorized representative) may (1) file a written request with the Administrator for a review of his denied claim and of pertinent documents and (2) submit written issues and comments to the Administrator. The Administrator shall notify such person of its decision in writing. Such notification shall be written in a manner calculated to be understood by such person and shall contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The decision on review shall be made within 60 days after the request for review is received by the Administrator (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period). If the decision on review is not made within such period, the claim shall be considered denied. 19.04. Named Fiduciary. The Administrator is a "named fiduciary" for purposes of ERISA Section 402(a)(1) and has the powers and responsibilities with respect to the management and operation of the Plan described herein. 19.05. Costs of Administration. Unless some or all are paid by the Employer, all reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator and the Trustee in administering the Plan and Trust may be paid from the forfeitures (if any) resulting under Section 11.08, or from the remaining Trust Fund. All such costs and expenses paid from the Trust Fund shall, unless allocable to the Accounts of particular Participants, be charged against the Accounts of all Participants on a pro rata basis or in such other reasonable manner as may be directed by the Employer and accepted by the Trustee. Article 20. Trust Agreement. 20.01. Acceptance of Trust Responsibilities. By executing the Adoption Agreement, the Employer establishes a trust to hold the assets of the Plan that are invested in Permissible Investments. By executing the Adoption Agreement, the Trustee agrees to accept the rights, duties and responsibilities set forth in this Article. If the Plan is an amendment and restatement of a prior plan, the Trustee shall have no liability for and no duty to inquire into the administration of the assets of the Plan for periods prior to the date such assets are transferred to the Trust. 20.02. Establishment of Trust Fund. A trust is hereby established under the Plan. The Trustee shall open and maintain a trust account for the Plan and, as part thereof, Accounts for such individuals as the Employer shall from time to time notify the Trustee are Participants in the Plan. The Trustee shall accept and hold in the Trust Fund such contributions on behalf of Participants as it may receive from time to time from the Employer. The Trust Fund shall be fully invested and reinvested in accordance with the applicable provisions of the Plan in Fund Shares or as otherwise provided in Section 20.10. The Trust is intended to qualify as a domestic trust in accordance with Code Section 7701(a)(30)(E) and any regulations issued thereunder. Accordingly, only United States persons (as defined in Code Section 7701(a)(30) may have the authority to control all substantial decisions regarding the Trust (including decisions to appoint, retain or replace the Trustee), unless the Plan filed a domestic trust election pursuant to Treasury Regulation Section 301.7701-7(f) or any subsequent guidance issued by the Internal Revenue Service, or except as otherwise provided in applicable regulation or legislation. 20.03. Exclusive Benefit. The Trustee shall hold the assets of the Trust Fund for the exclusive purpose of providing benefits to Participants and Beneficiaries and defraying the reasonable expenses of administering the Plan. No assets of the Plan shall revert to the Employer except as specifically permitted by the terms of the Plan. 20.04. Powers of Trustee. The Trustee shall have no discretion or authority with respect to the investment of the Trust Fund but shall act solely as a directed trustee of the funds contributed to it. In addition to and not in limitation of such powers as the Trustee has by law or under any other provisions of the Plan, the Trustee shall have the following powers, each of which the Trustee exercises solely as directed Trustee in accordance with the written direction of the Employer except to the extent a Plan asset is subject to Participant direction of investment and provided that no such power shall be exercised in any manner inconsistent with the provisions of ERISA: (a) to deal with all or any part of the Trust Fund and to invest all or a part of the Trust Fund in Permissible Investments, without regard to the law of any state regarding proper investment; (b) to transfer to and invest all or any part of the Trust in any collective investment trust which is then maintained by a bank or trust company (or any affiliate) and which is tax-exempt pursuant to Code Section 501(a) and Rev. Rul. 81-100; provided that such collective investment trust is a Permissible Investment; and provided, further, that the instrument establishing such collective investment trust, as amended from time to time, shall govern any investment therein, and is hereby made a part of the Plan and this Trust Agreement to the extent of such investment therein; (c) to retain uninvested such cash as it may deem necessary or advisable, without liability for interest thereon, for the administration of the Trust; (d) to sell, lease, convert, redeem, exchange, or otherwise dispose of all or any part of the assets constituting the Trust Fund; (e) to borrow funds from a bank or other financial institution not affiliated with the Trustee in order to provide sufficient liquidity to process Plan transactions in a timely fashion, provided that the cost of borrowing shall be allocated in a reasonable fashion to the Permissible Investment(s) in need of liquidity; (f) to enforce by suit or otherwise, or to waive, its rights on behalf of the Trust, and to defend claims asserted against it or the Trust, provided that the Trustee is indemnified to its satisfaction against liability and expenses; (g) to employ such agents and counsel as may be reasonably necessary in collecting, managing, administering, investing, distributing and protecting the Trust Fund or the assets thereof and to pay them reasonable compensation; (h) to compromise, adjust and settle any and all claims against or in favor of it or the Trust; (i) to oppose, or participate in and consent to the reorganization, merger, consolidation, or readjustment of the finances of any enterprise, to pay assessments and expenses in connection therewith, and to deposit securities under deposit agreements; (j) to apply for or purchase annuity contracts in accordance with Article 14; (k) to hold securities unregistered, or to register them in its own name or in the name of nominees; (l) to appoint custodians to hold investments within the jurisdiction of the district courts of the United States and to deposit securities with stock clearing corporations or depositories or similar organizations; (m) to make, execute, acknowledge and deliver any and all instruments that it deems necessary or appropriate to carry out the powers herein granted; (n) generally to exercise any of the powers of an owner with respect to all or any part of the Trust Fund; and (o) to take all such actions as may be necessary under the Trust Agreement, to the extent consistent with applicable law. The Employer specifically acknowledges and authorizes that affiliates of the Trustee may act as its agent in the performance of ministerial, nonfiduciary duties under the Trust. The expenses and compensation of such agent shall be paid by the Trustee. The Trustee shall provide the Employer with reasonable notice of any claim filed against the Plan or Trust or with regard to any related matter, or of any claim filed by the Trustee on behalf of the Plan or Trust or with regard to any related matter. 20.05. Accounts. The Trustee shall keep full accounts of all receipts and disbursements and other transactions hereunder. Within 120 days after the close of each Plan Year, within 90 days after termination of the Trust, and at such other times as may be appropriate, the Trustee shall determine the then net fair market value of the Trust Fund as of the close of the Plan Year, as of the termination of the Trust, or as of such other time, whichever is applicable, and shall render to the Employer and Administrator an account of its administration of the Trust during the period since the last such accounting, including all allocations made by it during such period. 20.06. Approval of Accounts. To the extent permitted by law, the written approval of any account by the Employer or Administrator shall be final and binding, as to all matters and transactions stated or shown therein, upon the Employer, Administrator, Participants and all persons who then are or thereafter become interested in the Trust. The failure of the Employer or Administrator to notify the Trustee within six months after the receipt of any account of its objection to the account shall, to the extent permitted by law, be the equivalent of written approval. If the Employer or Administrator files any objections within such six month period with respect to any matters or transactions stated or shown in the account, and the Employer or Administrator and the Trustee cannot amicably settle the question raised by such objections, the Trustee shall have the right to have such questions settled by judicial proceedings. Nothing herein contained shall be construed so as to deprive the Trustee of the right to have judicial settlement of its accounts. In any proceeding for a judicial settlement of any account or for instructions, the only necessary parties shall be the Trustee, the Employer and the Administrator. 20.07. Distribution from Trust Fund. The Trustee shall make such distributions from the Trust Fund as the Employer or Administrator may direct (in writing or such other medium as may be acceptable to the Trustee), consistent with the terms of the Plan and either for the exclusive benefit of Participants or their Beneficiaries, or for the payment of expenses of administering the Plan. 20.08. Transfer of Amounts from Qualified Plan. If amounts are to be transferred to the Plan from another qualified plan or trust under Code Section 401(a), such transfer shall be made in accordance with the provisions of the Plan and with such rules as may be established by the Trustee. The Trustee shall only accept assets which are in a medium proper for investment under this Trust Agreement or in cash, and that are accompanied in a timely manner, as agreed to by the Administrator and the Trustee, by instructions in writing (or such other medium as may be acceptable to the Trustee) showing separately the respective contributions by the prior employer and the transferring Employee, the records relating to such contributions, and identifying the assets attributable to such contributions. The Trustee shall hold such assets for investment in accordance with the provisions of this Trust Agreement. 20.09. Transfer of Assets from Trust. Subject to the provisions of the Plan, the Employer may direct the Trustee to transfer all or a specified portion of the Trust assets to any other plan or plans maintained by the Employer or the employer or employers of an Inactive Participant or Participants, provided that the Trustee has received evidence satisfactory to it that such other plan meets all applicable requirements of the Code. The assets so transferred shall be accompanied by written instructions from the Employer naming the persons for whose benefit such assets have been transferred, showing separately the respective contributions by the Employer and by each Participant, if any, and identifying the assets attributable to the various contributions. The Trustee shall have no further liabilities with respect to assets so transferred. 20.10. Separate Trust or Fund for Existing Plan Assets. With the consent of the Trustee, the Employer may maintain a trust or fund (including a group annuity contract) under this prototype plan document separate from the Trust Fund for Plan assets purchased prior to the adoption of this prototype plan document which are not Permissible Investments listed in the Service Agreement. The Trustee shall have no authority and no responsibility for the Plan assets held in such separate trust or fund. The Employer shall be responsible for assuring that such separate trust or fund is maintained pursuant to a separate trust agreement signed by the Employer and the trustee. The duties and responsibilities of the trustee of a separate trust shall be provided by the separate trust agreement, between the Employer and the trustee. Notwithstanding the preceding paragraph, the Trustee or an affiliate of the Trustee may agree in writing to provide ministerial recordkeeping services for guaranteed investment contracts held in the separate trust or fund. The guaranteed investment contract(s) shall be valued as directed by the Employer or the trustee of the separate trust. The trustee of the separate trust (hereafter referred to as "trustee") shall be the owner of any insurance contract purchased prior to the adoption of this prototype plan document. The insurance contract(s) must provide that proceeds shall be payable to the trustee; provided, however, that the trustee shall be required to pay over all proceeds of the contract(s) to the Participant's designated Beneficiary in accordance with the distribution provisions of this Plan. A Participant's spouse shall be the designated Beneficiary of the proceeds in all circumstances unless a qualified election has been made in accordance with Article 14. Under no circumstances shall the trust retain any part of the proceeds. In the event of any conflict between the terms of the Plan and the terms of any insurance contract purchased hereunder, the Plan provisions shall control. Any life insurance contracts held in the Trust Fund or in the separate trust are subject to the following limits: (a) Ordinary life - For purposes of these incidental insurance provisions, ordinary life insurance contracts are contracts with both nondecreasing death benefits and nonincreasing premiums. If such contracts are held, less than 1/2 of the aggregate employer contributions allocated to any Participant shall be used to pay the premiums attributable to them. (b) Term and universal life - No more than 1/4 of the aggregate employer contributions allocated to any participant shall be used to pay the premiums on term life insurance contracts, universal life insurance contracts, and all other life insurance contracts which are not ordinary life. (c) Combination - The sum of 1/2 of the ordinary life insurance premiums and all other life insurance premiums shall not exceed 1/4 of the aggregate employer contributions allocated to any Participant. 20.11. Self-Directed Brokerage Option. If one of the Permissible Investments under the Plan is the self-directed brokerage option, the Employer hereby directs the Trustee to use Fidelity Brokerage Services LLC, Member NYSE, SIPC or any of the Trustee's affiliates or subsidiaries (collectively, "FBS"), an affiliate of the Trustee, to purchase or sell individual securities for Participant Accounts in accordance with investment directions provided by such Participants. The provision of brokerage services by FBS shall be subject to the following: (a) The Trustee shall provide the Employer with an annual report which summarizes brokerage transactions and transaction-related charges incurred by the Plan. (b) Any successor organization of FBS, through reorganization, consolidation, merger, or otherwise, shall, upon consummation of such transaction, become the successor broker in accordance with the terms of this direction provision. (c) The Trustee and FBS shall continue to rely on this direction provision until notified to the contrary. The Employer reserves the right to terminate this direction upon sixty (60) days written notice to FBS (or its successor) and the Trustee, and such termination shall also have the effect of terminating the self-directed brokerage option for the Plan. (d) The Trustee shall provide the Employer with a list of the types of securities that may not be purchased or held under this self-directed brokerage option. The Trustee shall provide the Employer with administrative procedures and fees governing investment in and withdrawals or exchanges from the self-directed brokerage option. The Trustee shall have no liability in the event a Participant purchases a restricted security. (e) Participants may authorize the use of an agent to have limited trading authority over assets in their Accounts invested under the self- directed brokerage option provided that the Participant completes and files with FBS a limited trading authorization and indemnification form in the form prescribed by FBS. (f) FBS shall provide all proxies and other shareholder materials to each Participant with such securities allocated to his or her Account under the self-directed brokerage option. The Participant shall have the authority to direct the exercise of all shareholder rights attributable to the securities allocated to his or her Account and it is intended that all such Participant directions shall be subject to ERISA Section 404(c). The Trustee shall not exercise any such shareholder rights in the absence of a direction from the Participant. (g) Self-directed brokerage accounts held under the Plan are subject to fees as more fully described in the related self-directed brokerage documents provided to the Employer. If there are insufficient funds to cover the self-directed brokerage account trades and expenses, a liquidation may be made to cover the debit balance and, in doing so, the Trustee shall not be deemed to have exercised any discretion. 20.12. Employer Stock Investment Option. If one of the Permissible Investments is equity securities issued by the Employer or a Related Employer ("Employer Stock"), such Employer Stock must be publicly traded and "qualifying employer securities" within the meaning of Section 401(d)(5) of ERISA. Plan investments in Employer Stock shall be made via the Employer Stock Investment Fund (the "Stock Fund") which shall consist of either (i) the shares of Employer Stock held for each Participant who participates in the Stock Fund (a "Share Accounting Stock Fund"), or (ii) a combination of shares of Employer Stock and short-term liquid investments, consisting of mutual fund shares or commingled money market pool units as agreed to by the Employer and the Trustee, which are necessary to satisfy the Stock Fund's cash needs for transfers and payments (a "Unitized Stock Fund"). Dividends received by the Stock Fund are reinvested in additional shares of Employer Stock or, in the case of a Unitized Stock Fund, in short-term liquid investments. The determination of whether each Participant's interest in the Stock Fund is administered on a share- accounting or a unitized basis shall be determined by the Employer's election in the Service Agreement. In the case of a Unitized Stock Fund, such units shall represent a proportionate interest in all assets of the Unitized Stock Fund, which includes shares of Employer Stock, short-term investments, and at times, receivables for dividends and/or Employer Stock sold and payables for Employer Stock purchased. A net asset value per unit shall be determined daily for each cash unit outstanding of the Unitized Stock Fund. The return earned by the Unitized Stock Fund shall represent a combination of the dividends paid on the shares of Employer Stock held by the Unitized Stock Fund, gains or losses realized on sales of Employer Stock, appreciation or depreciation in the market price of those shares owned, and interest on the short-term investments held by the Unitized Stock Fund. A target range for the short-term liquid investments shall be maintained for the Unitized Stock Fund. The Named Fiduciary shall, after consultation with the Trustee, establish and communicate to the Trustee in writing such target range and a drift allowance for such short-term liquid investments. Such target range and drift allowance may be changed by the Named Fiduciary, after consultation with the Trustee, provided any such change is communicated to the Trustee in writing. The Trustee is responsible for ensuring that the actual short-term liquid investments held in the Unitized Stock Fund fall within the agreed upon target range over time, subject to the Trustee's ability to execute open-market trades in Employer Stock or to otherwise trade with the Employer. Investments in Employer Stock shall be subject to the following limitations: (a) Acquisition Limit. Pursuant to the Plan, the Trust may be invested in Employer Stock to the extent necessary to comply with investment directions under Section 8.02 of the Plan. Notwithstanding the foregoing, effective for Deferral Contributions made for Plan Years beginning on or after January 1, 1999, the portion of a Participant's Deferral Contributions that the Employer may require to be invested in Employer Stock for a Plan Year cannot exceed one percent of such Participant's Compensation for the Plan Year. (b) Fiduciary Duty of Named Fiduciary. The Administrator or any person designated by the Administrator as a named fiduciary under Section 19.01 (the "named fiduciary") shall continuously monitor the suitability under the fiduciary duty rules of ERISA Section 404(a)(1) (as modified by ERISA Section 404(a)(2)) of acquiring and holding Employer Stock. The Trustee shall not be liable for any loss, or by reason of any breach, which arises from the directions of the named fiduciary with respect to the acquisition and holding of Employer Stock, unless it is clear on their face that the actions to be taken under those directions would be prohibited by the foregoing fiduciary duty rules or would be contrary to the terms of the Plan or this Trust Agreement. (c) Execution of Purchases and Sales. Purchases and sales of Employer Stock shall be made on the open market on the date on which the Trustee receives in good order all information and documentation necessary to accurately effect such purchases and sales or (i) if later, in the case of purchases, the date on which the Trustee has received a transfer of the funds necessary to make such purchases, (ii) as otherwise provided in the Service Agreement, or (iii) as provided in Subsection (d) below. Such general rules shall not apply in the following circumstances: (1) If the Trustee is unable to determine the number of shares required to be purchased or sold on such day; (2) If the Trustee is unable to purchase or sell the total number of shares required to be purchased or sold on such day as a result of market conditions; or (3) If the Trustee is prohibited by the Securities and Exchange Commission, the New York Stock Exchange, or any other regulatory body from purchasing or selling any or all of the shares required to be purchased or sold on such day. In the event of the occurrence of the circumstances described in (1), (2), or (3) above, the Trustee shall purchase or sell such shares as soon as possible thereafter and, in the case of a Share Accounting Stock Fund, shall determine the price of such purchases or sales to be the average purchase or sales price of all such shares purchased or sold, respectively. (d) Purchases and Sales from or to Employer. If directed by the Employer in writing prior to the trading date, the Trustee may purchase or sell Employer Stock from or to the Employer if the purchase or sale is for adequate consideration (within the meaning of ERISA Section 3(18)) and no commission is charged. If Employer contributions or contributions made by the Employer on behalf of the Participants under the Plan are to be invested in Employer Stock, the Employer may transfer Employer Stock in lieu of cash to the Trust. In such case, the shares of Employer Stock to be transferred to the Trust will be valued at a price that constitutes adequate consideration (within the meaning of ERISA Section 3(18)). (e) Use of Broker to Purchase Employer Stock. The Employer hereby directs the Trustee to use Fidelity Capital Markets, Inc., an affiliate of the Trustee, or any other affiliate or subsidiary of the Trustee (collectively, "Capital Markets"), to provide brokerage services in connection with all market purchases and sales of Employer Stock for the Stock Fund, except in circumstances where the Trustee has determined, in accordance with its standard trading guidelines or pursuant to Employer direction, to seek expedited settlement of trades. The Trustee shall provide the Employer with the commission schedule for such transactions, a copy of Capital Markets' brokerage placement practices, and an annual report which summarizes all securities transaction-related charges incurred by the Plan. The following shall apply as well: (1) Any successor organization of Capital Markets through reorganization, consolidation, merger, or similar transactions, shall, upon consummation of such transaction, become the successor broker in accordance with the terms of this provision. (2) The Trustee shall continue to rely on this Employer direction until notified to the contrary. The Employer reserves the right to terminate this authorization upon sixty (60) days written notice to Capital Markets (or its successor) and the Trustee and the Employer and the Trustee shall decide on a mutually-agreeable alternative procedure for handling brokerage transactions on behalf of the Stock Fund. (f) Securities Law Reports. The named fiduciary shall be responsible for filing all reports required under Federal or state securities laws with respect to the Trust's ownership of Employer Stock; including, without limitation, any reports required under Section 13 or 16 of the Securities Exchange Act of 1934 and shall immediately notify the Trustee in writing of any requirement to stop purchases or sales of Employer Stock pending the filing of any report. The Trustee shall provide to the named fiduciary such information on the Trust's ownership of Employer Stock as the named fiduciary may reasonably request in order to comply with Federal or state securities laws. (g) Voting and Tender Offers. Notwithstanding any other provision of the Trust Agreement the provisions of this Subsection shall govern the voting and tendering of Employer Stock. For purposes of this Subsection, each Participant shall be designated as a named fiduciary under ERISA with respect to shares of Employer Stock that reflect that portion, if any, of the Participant's interest in the Stock Fund not acquired at the direction of the Participant in accordance with ERISA Section 404(c). The Employer, after consultation with the Trustee, shall provide and pay for all printing, mailing, tabulation and other costs associated with the voting and tendering of Employer Stock, except as required by law. The Trustee, after consultation with the Employer, shall prepare the necessary documents associated with the voting and tendering of Employer Stock, unless the Employer directs the Trustee not to do so. (1) Voting. (A) When the issuer of the Employer Stock prepares for any annual or special meeting, the Employer shall notify the Trustee thirty (30) days in advance of the intended record date and shall cause a copy of all proxy solicitation materials to be sent to the Trustee. If requested by the Trustee, the Employer shall certify to the Trustee that the aforementioned materials represent the same information that is distributed to shareholders of Employer Stock. Based on these materials the Trustee shall prepare a voting instruction form. At the time of mailing of notice of each annual or special stockholders' meeting of the issuer of the Employer Stock, the Employer shall cause a copy of the notice and all proxy solicitation materials to be sent to each Participant with an interest in Employer Stock held in the Trust, together with the foregoing voting instruction form to be returned to the Trustee or its designee. The form shall show the proportional interest in the number of full and fractional shares of Employer Stock credited to the Participant's Sub-Accounts held in the Stock Fund. The Employer shall provide the Trustee with a copy of any materials provided to the Participants and shall (if the mailing is not handled by the Trustee) notify the Trustee that the materials have been mailed or otherwise sent to Participants. (B) Each Participant with an interest in the Stock Fund shall have the right to direct the Trustee as to the manner in which the Trustee is to vote (including not to vote) that number of shares of Employer Stock that is credited to his Account, if the Plan uses share accounting, or, if accounting is by units of participation, that reflects such Participant's proportional interest in the Stock Fund (both vested and unvested). Directions from a Participant to the Trustee concerning the voting of Employer Stock shall be communicated in writing, or by such other means mutually acceptable to the Trustee and the Employer. These directions shall be held in confidence by the Trustee and shall not be divulged to the Employer, or any officer or employee thereof, or any other person, except to the extent that the consequences of such directions are reflected in reports regularly communicated to any such persons in the ordinary course of the performance of the Trustee's services hereunder. Upon its receipt of the directions, the Trustee shall vote the shares of Employer Stock that reflect the Participant's interest in the Stock Fund as directed by the Participant. The Trustee shall not vote shares of Employer Stock that reflect a Participant's interest in the Stock Fund for which the Trustee has received no direction from the Participant, except as required by law. (2) Tender Offers. (A) Upon commencement of a tender offer for any securities held in the Trust that are Employer Stock, the Employer shall timely notify the Trustee in advance of the intended tender date and shall cause a copy of all materials to be sent to the Trustee. The Employer shall certify to the Trustee that the aforementioned materials represent the same information distributed to shareholders of Employer Stock. Based on these materials, and after consultation with the Employer, the Trustee shall prepare a tender instruction form and shall provide a copy of all tender materials to be sent to each Participant with an interest in the Stock Fund, together with the foregoing tender instruction form, to be returned to the Trustee or its designee. The tender instruction form shall show the number of full and fractional shares of Employer Stock credited to the Participant's Account, if the Plan uses share accounting, or, if accounting is by units of participation, that reflect the Participant's proportional interest in the Stock Fund (both vested and unvested). The Employer shall notify each Participant with an interest in such Employer Stock of the tender offer and utilize its best efforts to timely distribute or cause to be distributed to the Participant the tender materials and the tender instruction form described herein. The Employer shall provide the Trustee with a copy of any materials provided to the Participants and shall (if the mailing is not handled by the Trustee) notify the Trustee that the materials have been mailed or otherwise sent to Participants. (B) Each Participant with an interest in the Stock Fund shall have the right to direct the Trustee to tender or not to tender some or all of the shares of Employer Stock that are credited to his Account, if the Plan uses share accounting, or, if accounting is by units of participation, that reflect such Participant's proportional interest in the Stock Fund (both vested and unvested). Directions from a Participant to the Trustee concerning the tender of Employer Stock shall be communicated in writing, or by such other means as is agreed upon by the Trustee and the Employer under the preceding paragraph. These directions shall be held in confidence by the Trustee and shall not be divulged to the Employer, or any officer or employee thereof, or any other person, except to the extent that the consequences of such directions are reflected in reports regularly communicated to any such persons in the ordinary course of the performance of the Trustee's services hereunder. The Trustee shall tender or not tender shares of Employer Stock as directed by the Participant. Except as otherwise required by law, the Trustee shall not tender shares of Employer Stock that are credited to a Participant's Account, if the Plan uses share accounting, or, if accounting is by units of participation, that reflect a Participant's proportional interest in the Stock Fund for which the Trustee has received no direction from the Participant. (C) A Participant who has directed the Trustee to tender some or all of the shares of Employer Stock that reflect the Participant's proportional interest in the Stock Fund may, at any time prior to the tender offer withdrawal date, direct the Trustee to withdraw some or all of such tendered shares, and the Trustee shall withdraw the directed number of shares from the tender offer prior to the tender offer withdrawal deadline. A Participant shall not be limited as to the number of directions to tender or withdraw that the Participant may give to the Trustee. (D) A direction by a Participant to the Trustee to tender shares of Employer Stock that reflect the Participant's proportional interest in the Stock Fund shall not be considered a written election under the Plan by the Participant to withdraw, or have distributed, any or all of his withdrawable shares. If the Plan uses share accounting, the Trustee shall credit to the Participant's Account the proceeds received by the Trustee in exchange for the shares of Employer Stock tendered from the Participant's Account. If accounting is by units of participation, the Trustee shall credit to each proportional interest of the Participant from which the tendered shares were taken the proceeds received by the Trustee in exchange for the shares of Employer Stock tendered from that interest. Pending receipt of direction (through the Administrator) from the Participant or the named fiduciary, as provided in the Plan, as to which of the remaining Permissible Investments the proceeds should be invested in, the Trustee shall invest the proceeds in the Permissible Investment specified for such purposes in the Service Agreement or, if no such Permissible Investment has been specified, the most conservative Permissible Investment designated by the Employer in the Service Agreement. (h) Shares Credited. If accounting with respect to the Stock Fund is by units of participation, then for all purposes of this Section 20.12, the number of shares of Employer Stock deemed "reflected" in a Participant's proportional interest shall be determined as of the last preceding valuation date. The trade date is the date the transaction is valued. (i) General. With respect to all rights other than the right to vote, the right to tender, and the right to withdraw shares previously tendered, in the case of Employer Stock credited to a Participant's Account or proportional interest in the Stock Fund, the Trustee shall follow the directions of the Participant and if no such directions are received, the directions of the named fiduciary. The Trustee shall have no duty to solicit directions from Participants. (j) Conversion. All provisions in this Section 20.12 shall also apply to any securities received as a result of a conversion to Employer Stock. 20.13. Voting; Delivery of Information. The Trustee shall deliver, or cause to be executed and delivered, to the Employer or Administrator all notices, prospectuses, financial statements, proxies and proxy soliciting materials received by the Trustee relating to securities held by the Trust or, if applicable, deliver these materials to the appropriate Participant or the Beneficiary of a deceased Participant. The Trustee shall not vote any securities held by the Trust except in accordance with the instructions of the Employer, Participant, or the Beneficiary of the Participant if the Participant is deceased; provided, however, that the Trustee may, in the absence of instructions, vote "present" for the sole purpose of allowing such shares to be counted for establishment of a quorum at a shareholders' meeting. The Trustee shall have no duty to solicit instructions from Participants, Beneficiaries, or the Employer. 20.14. Compensation and Expenses of Trustee. The Trustee's fee for performing its duties hereunder shall be such reasonable amounts as the Trustee may from time to time specify in the Service Agreement or any other written agreement with the Employer. Such fee, any taxes of any kind which may be levied or assessed upon or with respect to the Trust Fund, and any and all expenses, including without limitation legal fees and expenses of administrative and judicial proceedings, reasonably incurred by the Trustee in connection with its duties and responsibilities hereunder shall, unless some or all have been paid by said Employer, be paid either from forfeitures resulting under Section 11.08, or from the remaining Trust Fund and shall, unless allocable to the Accounts of particular Participants, be charged against the respective Accounts of all Participants, in such reasonable manner as the Trustee may determine. 20.15. Reliance by Trustee on Other Persons. The Trustee may rely upon and act upon any writing from any person authorized by the Employer or the Administrator pursuant to the Service Agreement or any other written direction to give instructions concerning the Plan and may conclusively rely upon and be protected in acting upon any written order from the Employer or the Administrator or upon any other notice, request, consent, certificate, or other instructions or paper reasonably believed by it to have been executed by a duly authorized person, so long as it acts in good faith in taking or omitting to take any such action. The Trustee need not inquire as to the basis in fact of any statement in writing received from the Employer or the Administrator. The Trustee shall be entitled to rely on the latest certificate it has received from the Employer or the Administrator as to any person or persons authorized to act for the Employer or the Administrator hereunder and to sign on behalf of the Employer or the Administrator any directions or instructions, until it receives from the Employer or the Administrator written notice that such authority has been revoked. Notwithstanding any provision contained herein, the Trustee shall be under no duty to take any action with respect to any Participant's Account (other than as specified herein) unless and until the Employer or the Administrator furnishes the Trustee with written instructions on a form acceptable to the Trustee, and the Trustee agrees thereto in writing. The Trustee shall not be liable for any action taken pursuant to the Employer's or the Administrator's written instructions (nor for the collection of contributions under the Plan, nor the purpose or propriety of any distribution made thereunder). 20.16. Indemnification by Employer. The Employer shall indemnify and save harmless the Trustee, and all affiliates, employees, agents and sub- contractors of the Trustee, from and against any and all liability or expense (including reasonable attorneys' fees) to which the Trustee, or such other individuals or entities, may be subjected by reason of any act or conduct being taken in the performance of any Plan-related duties, including those described in this Trust Agreement and the Service Agreement, unless such liability or expense results from the Trustee's, or such other individuals' or entities', negligence or willful misconduct. 20.17. Consultation by Trustee with Counsel. The Trustee may consult with legal counsel (who may be but need not be counsel for the Employer or the Administrator) concerning any question which may arise with respect to its rights and duties under the Plan and Trust, and the opinion of such counsel shall, to the extent permitted by law, be full and complete protection in respect of any action taken or omitted by the Trustee hereunder in good faith and in accordance with the opinion of such counsel. 20.18. Persons Dealing with the Trustee. No person dealing with the Trustee shall be bound to see to the application of any money or property paid or delivered to the Trustee or to inquire into the validity or propriety of any transactions. 20.19. Resignation or Removal of Trustee. The Trustee may resign at any time by written notice to the Employer, which resignation shall be effective 60 days after delivery to the Employer. The Trustee may be removed by the Employer by written notice to the Trustee, which removal shall be effective 60 days after delivery to the Trustee or such shorter period as may be mutually agreed upon by the Employer and the Trustee. Except in the case of Plan termination, upon resignation or removal of the Trustee, the Employer shall appoint a successor trustee. Any such successor trustee shall, upon written acceptance of his appointment, become vested with the estate, rights, powers, discretion, duties and obligations of the Trustee hereunder as if he had been originally named as Trustee in this Agreement. Upon resignation or removal of the Trustee, the Employer shall no longer participate in this prototype plan and shall be deemed to have adopted an individually designed plan. In such event, the Employer shall appoint a successor trustee within said 60-day period and the Trustee shall transfer the assets of the Trust to the successor trustee upon receipt of sufficient evidence (such as a determination letter or opinion letter from the Internal Revenue Service or an opinion of counsel satisfactory to the Trustee) that such trust shall be a qualified trust under the Code. The appointment of a successor trustee shall be accomplished by delivery to the Trustee of written notice that the Employer has appointed such successor trustee, and written acceptance of such appointment by the successor trustee. The Trustee may, upon transfer and delivery of the Trust Fund to a successor trustee, reserve such reasonable amount as it shall deem necessary to provide for its fees, compensation, costs and expenses, or for the payment of any other liabilities chargeable against the Trust Fund for which it may be liable. The Trustee shall not be liable for the acts or omissions of any successor trustee. 20.20. Fiscal Year of the Trust. The fiscal year of the Trust shall coincide with the Plan Year. 20.21. Discharge of Duties by Fiduciaries. The Trustee and the Employer and any other fiduciary shall discharge their duties under the Plan and this Trust Agreement solely in the interests of Participants and their Beneficiaries in accordance with the requirements of ERISA. 20.22. Amendment. In accordance with provisions of the Plan, and subject to the limitations set forth therein, this Trust Agreement may be amended by an instrument in writing signed by the Employer and the Trustee. No amendment to this Trust Agreement shall divert any part of the Trust Fund to any purpose other than as provided in Section 20.03. 20.23. Plan Termination. Upon termination or partial termination of the Plan or complete discontinuance of contributions thereunder, the Trustee shall make distributions to the Participants or other persons entitled to distributions as the Employer or Administrator directs in accordance with the provisions of the Plan. In the absence of such instructions and unless the Plan otherwise provides, the Trustee shall notify the Employer or Administrator of such situation and the Trustee shall be under no duty to make any distributions under the Plan until it receives written instructions from the Employer or Administrator. Upon the completion of such distributions, the Trust shall terminate, the Trustee shall be relieved from all liability under the Trust, and no Participant or other person shall have any claims thereunder, except as required by applicable law. 20.24. Permitted Reversion of Funds to Employer. If it is determined by the Internal Revenue Service that the Plan does not initially qualify under Code Section 401, all assets then held under the Plan shall be returned by the Trustee, as directed by the Administrator, to the Employer, but only if the application for determination is made by the time prescribed by law for filing the Employer's return for the taxable year in which the Plan was adopted or such later date as may be prescribed by regulations. Such distribution shall be made within one year after the date the initial qualification is denied. Upon such distribution the Plan shall be considered to be rescinded and to be of no force or effect. Contributions under the Plan are conditioned upon their deductibility under Code Section 404. In the event the deduction of a contribution made by the Employer is disallowed under Code Section 404, such contribution (to the extent disallowed) must be returned to the Employer within one year of the disallowance of the deduction. Any contribution made by the Employer because of a mistake of fact must be returned to the Employer within one year of the contribution. 20.25. Governing Law. This Trust Agreement shall be construed, administered and enforced according to ERISA and, to the extent not preempted thereby, the laws of the Commonwealth of Massachusetts. Nothing contained in Sections 20.04, 20.13 or 20.21 or this Section 20.25 shall be construed in a manner which subjects a governmental plan (as defined in Code Section 414(d)) or a non-electing church plan (as described in Code Section 410(d)) to the fiduciary provisions of Title I of ERISA. ADDENDUM IRS Model Amendment for Proposed Regulations Under Section 401(a)(9) of the Internal Revenue Code Distributions for Calendar Years Beginning on or After 2002. With respect to distributions under the Plan for calendar years beginning on or after January 1, 2002, the Plan will apply the minimum distribution requirements of section 401(a)(9) of the Internal Revenue Code in accordance with the regulations under section 401(a)(9) that were proposed on January 17, 2001, notwithstanding any provision of the Plan to the contrary. This amendment shall continue in effect until the end of the last calendar year beginning before the effective date of final regulations under section 401(a)(9) or such other date as may be specified in guidance published by the Internal Revenue Service. The CORPORATEplan for RetirementSM ADDENDUM Re: Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") Amendments for Fidelity Basic Plan Document No. 02 PREAMBLE Adoption and Effective Date of Amendment. This amendment of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This amendment is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided below, this amendment shall be effective as of the first day of the first plan year beginning after December 31, 2001. Supersession of Inconsistent Provisions. This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment. 1. Section 2.01(j), "Compensation," is hereby amended by adding the following paragraph to the end thereof: Notwithstanding anything herein to the contrary, the annual Compensation of each Participant taken into account in determining allocations for any Plan Year beginning after December 31, 2001, shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B). Annual Compensation means Compensation during the Plan Year or such other consecutive 12-month period over which Compensation is otherwise determined under the Plan (the determination period). The cost- of-living adjustment in effect for a calendar year applies to annual Compensation for the determination period that begins with or within such calendar year. 2. Section 2.01(l), "Deferral Contribution," is hereby amended by replacing the period with a semicolon and adding the following to the end thereof: provided, however, that the term 'Deferral Contribution' shall exclude all catch-up contributions as described in Section 5.03(b)(1) for purposes of Matching Employer Contributions as described in Section 1.10 of the Adoption Agreement, unless otherwise elected by the Employer in Section (c) of the EGTRRA Amendments Addendum to the Adoption Agreement. 3. Section 2.01(tt) "Rollover Contribution" is hereby amended as follows: 'Rollover Contribution' means any distribution from an eligible retirement plan as defined in Section 5.06 that an Employee elects to contribute to the Plan in accordance with the terms of such Section 5.06. 4. The existing text of Section 5.03 is hereby redesignated as Section 5.03(a), and a new Section 5.03(b) is hereby added to read as follows (b) Catch-up Contributions. (1) If elected by the Employer in Section (a) of the EGTRRA Amendments Addendum to the Adoption Agreement, all Participants who are eligible to make Deferral Contributions under the Plan and who are projected to attain age 50 before the close of the calendar year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Code Section 414(v). Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code Sections 402(g) and 415. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code Section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of such catch-up contributions. (2) Unless otherwise elected by the Employer in Section (b) of the EGTRRA Amendments Addendum to the Adoption Agreement, if the Plan permits catch-up contributions, as described in paragraph (1) above on April 1, 2002, then, notwithstanding anything herein to the contrary, effective April 1, 2002, the limit on Deferral Contributions, as otherwise provided in Section 1.07(a)(1) (the "Plan Limit") shall be 60% of Compensation for the payroll period in question, provided, however, that this Section 5.03(b)(2) shall be inapplicable if the Plan's Section 1.01(g)(2)(B) Amendment Effective Date is after April 1, 2002. (3) In the event that the Plan Limit is changed during the Plan Year, for purposes of determining catch-up contributions for the Plan Year, as described in paragraph (1) above, the Plan Limit shall be determined pursuant to the time-weighted average method described in Proposed Income Tax Regulation Section 1.414(v)-1(b)(2)(i). 5. Section 5.06 is hereby amended to add the following paragraph to the end thereof: Unless otherwise elected by the Employer in Section (e) of the EGTRRA Amendments Addendum to the Adoption Agreement, the Plan will accept Participant Rollover Contributions and/or direct rollovers of distributions made after December 31, 2001 (including Rollover Contributions received by the Participant as a surviving spouse, or a spouse or former spouse who is an alternate payee under a qualified domestic relations order), from the following types of plans: (a) a qualified plan described in Code Section 401(a) or 403(a), including after-tax employee contributions (provided, however, that any such after-tax employee contributions must be contributed in a direct rollover); (b) an annuity contract described in Code Section 403(b), excluding after-tax employee contributions; (c) an eligible plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state; and (d) Participant Rollover Contributions of the portion of a distribution from an individual retirement account or annuity described in Code Section 408(a) or 408(b) that is eligible to be rolled over and would otherwise be includible in gross income, provided, however, that the Plan will in no event accept a rollover contribution consisting of nondeductible individual retirement account or annuity contributions. 6. The first paragraph of Section 6.02 is hereby amended by replacing the first sentence thereof with the following: In no event shall the amount of Deferral Contributions made under the Plan for a calendar year, when aggregated with the 'elective deferrals' made under any other plan maintained by the Employer or a Related Employer, exceed the dollar limitation contained in Code Section 402(g) in effect at the beginning of such calendar year, except to the extent permitted under Section 5.03(b)(1) and Code Section 414(v), if applicable. 7. Section 6.08 is hereby amended by adding the following sentence to the end thereof: Notwithstanding anything herein to the contrary, the multiple use test described in Treasury Regulation Section 1.401(m)-2 and this Section 6.08 shall not apply for Plan Years beginning after December 31, 2001. 8. Section 6.12 is hereby amended by adding a new subsection 6.12(e) thereto as follows: (e) Maximum Annual Additions for Limitation Years Beginning After December 31, 2001. Notwithstanding anything herein to the contrary, this subsection (e) shall be effective for Limitation Years beginning after December 31, 2001. Except to the extent permitted under Section 5.03(b)(1) and Code Section 414(v), if applicable, the 'annual additions' that may be contributed or allocated to a Participant's Account under the Plan for any Limitation Year shall not exceed the lesser of: (1) $40,000, as adjusted for increases in the cost-of-living under Code Section 415(d), or (2) 100 percent of the Participant's compensation, within the meaning of Code Section 415(c)(3), for the Limitation Year. The compensation limit referred to in (2) shall not apply to any contribution for medical benefits after separation from service (within the meaning of Code Section 401(h) or 419A(f)(2)) that is otherwise treated as an 'annual addition'. 9. Section 9.04 is hereby amended by replacing the final period in the first paragraph with a semi-colon and adding the following to the end thereof: provided, however, that notwithstanding anything herein to the contrary, effective for Plan loans made after December 31, 2001, Plan provisions prohibiting loans to any 'owner-employee' or 'shareholder-employee' shall cease to apply. 10. Section 10.05(b)(2) is hereby amended by replacing the semicolon with a period and adding the following to the end thereof: Notwithstanding anything herein to the contrary, the rule in this Section 10.05(b)(2) shall be applied to a Participant who receives a distribution after December 31, 2001, on account of hardship, by substituting the phrase 'the 6-month period' for the phrase 'the 12-month period'. 11. Section 10.05(b)(4) is hereby amended by adding the following phrase to the beginning thereof: Effective for calendar years beginning before January 1, 2002, for a Participant who received a hardship distribution before January 1, 2001, 12. The existing text of Section 11.05 is hereby redesignated as Section 11.05(a), and a new Section 11.05(b) is hereby added to read as follows: (b) Vesting of Matching Employer Contributions. Notwithstanding anything herein to the contrary, the vesting schedule elected by the Employer in Section (d)(1) of the EGTRRA Amendments Addendum to the Adoption Agreement shall apply to all accrued benefits derived from Matching Employer Contributions for Participants who complete an Hour of Service in a Plan Year beginning after December 31, 2001, except as otherwise elected by the Employer in Section (d)(2) or Section (d)(3) of the EGTRRA Amendments Addendum to the Adoption Agreement. With respect to Participants covered by a collective bargaining agreement, the vesting schedule elected in Section (d)(1) of the EGTRRA Amendments Addendum to the Adoption Agreement shall take effect on a later date if so elected in Section (d)(2). If so elected in Section (d)(3) of the EGTRRA Amendments Addendum to the Adoption Agreement, the vesting schedule elected in Section (d)(1) shall apply only to the accrued benefits derived from Matching Employer Contributions made with respect to Plan Years beginning after December 31, 2001 (or such later date as may be provided in Section (d)(2) for Participants covered by a collective bargaining agreement). 13. The existing text of Section 12.01 is hereby redesignated as Section 12.01(a), current subsections (a), (b), and (c) thereof are redesignated as paragraphs (1), (2), and (3), respectively, and the first sentence thereof is replaced with the following: Subject to the application of Section 12.01(b), a Participant or his Beneficiary may not receive a distribution from his Deferral Contributions, Qualified Nonelective Employer Contributions, Qualified Matching Employer Contributions, safe harbor Matching Employer Contributions or safe harbor Nonelective Employer Contributions Accounts earlier than upon the Participant's separation from service with the Employer and all Related Employers, death, or disability, except as otherwise provided in Article 10 or Section 12.04. 14. Section 12.01 is hereby amended by adding a new subsection (b) to the end thereof: (b) If elected by the Employer in Section (f) of the EGTRRA Amendments Addendum to the Adoption Agreement, notwithstanding subsection (a) of this Section 12.01, a Participant, or his Beneficiary, may receive a distribution after December 31, 2001 (or such later date as specified therein), from his Deferral Contributions, Qualified Nonelective Employer Contributions, Qualified Matching Employer Contributions, safe harbor Matching Employer Contributions or safe harbor Nonelective Employer Contributions Accounts on account of the Participant's severance from employment occurring after the dates specified in Section (f) of the EGTRRA Amendments Addendum to the Adoption Agreement. 15. Section 13.04 is hereby amended by adding the following paragraph to the end thereof: Notwithstanding anything herein to the contrary, the following provisions shall apply to distributions made after December 31, 2001: (i) Modification of definition of eligible retirement plan. For purposes of this Section 13.04, an 'eligible retirement plan' shall also mean an annuity contract described in Code Section 403(b) and an eligible deferred compensation plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. The definition of 'eligible retirement plan' shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p). (ii) Modification of definition of eligible rollover distribution to exclude hardship distributions. For purposes of this Section 13.04, any amount that is distributed on account of hardship shall not be an 'eligible rollover distribution' and the 'distributee' may not elect to have any portion of such a distribution paid directly to an 'eligible retirement plan.' (iii) Modification of definition of eligible rollover distribution to include after-tax Employee Contributions. For purposes of this Section 13.04, a portion of a distribution shall not fail to be an "eligible rollover distribution" merely because the portion consists of after-tax Employee Contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Code Section 408(a) or (b), or to a qualified defined contribution plan described in Code Section 401(a) or 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible. 16. Article 15 is hereby amended by adding a new Section 15.08 at the end thereof as follows: 15.08. Modification of Top-Heavy Provisions. Notwithstanding anything herein to the contrary, this Section 15.08 shall apply for purposes of determining whether the Plan is a top-heavy plan under Code Section 416(g) for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of Code Section 416(c) for such years. This Section modifies the rules in this Article 15 of the Plan for Plan Years beginning after December 31, 2001. (a) Determination of top-heavy status. (1) Key employee. Key employee means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the determination date was an officer of the Employer having annual compensation greater than $130,000 (as adjusted under Code Section 416(i)(1) for Plan Years beginning after December 31, 2002), a 5- percent owner of the Employer, or a 1-percent owner of the Employer having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of Code Section 415(c)(3). The determination of who is a key employee will be made in accordance with Code Section 416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder. (2) Determination of present values and amounts. This Section 15.08(a)(2) shall apply for purposes of determining the present values of accrued benefits and the amounts of account balances of Employees as of the determination date. (A) Distributions during year ending on the determination date. The present values of accrued benefits and the amounts of account balances of an Employee as of the determination date shall be increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under Code Section 416(g)(2) during the 1- year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i). In the case of a distribution made for a reason other than separation from service, death, or disability, this provision shall be applied by substituting the phrase "5-year period" for the phrase "1-year period." (B) Employees not performing services during year ending on the determination date. The accrued benefits and accounts of any individual who has not performed services for the Employer during the 1- year period ending on the determination date shall not be taken into account. (b) Minimum benefits. (1) Matching contributions. Matching Employer Contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Code Section 416(c)(2) and the Plan. The preceding sentence shall apply with respect to Matching Employer Contributions under the Plan or, if the Plan provides that the minimum contribution requirement shall be met in another plan, such other plan. Matching Employer Contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of Code Section 401(m). (2) Contributions under other plans. The Employer may provide in the Adoption Agreement that the minimum benefit requirement shall be met in another plan (including another plan that consists solely of a cash or deferred arrangement which meets the requirements of Code Section 401(k)(12) and matching contributions with respect to which the requirements of Code Section 401(m)(11) are met). (c) Other Modifications. The top-heavy requirements of Code Section 416 and this Article 15 shall not apply in any year beginning after December 31, 2001, in which the Plan consists solely of a cash or deferred arrangement which meets the requirements of Code Section 401(k)(12) and Matching Employer Contributions with respect to which the requirements of Code Section 401(m)(11) are met. EX-31 8 exhibit31-1.txt GIANT INDUSTRIES, INC.'S 2003 2 QTR. 10-Q - EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Fred Holliger, certify that: 1. I have reviewed this report on Form 10-Q of Giant Industries, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably like to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 13, 2003. By: /s/ FRED HOLLIGER - ------------------------------ Name: Fred Holliger Title: Chief Executive Officer EX-31 9 exhibit31-2.txt GIANT INDUSTRIES, INC.'S 2003 2 QTR. 10-Q - EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Mark B. Cox, certify that: 1. I have reviewed this report on Form 10-Q of Giant Industries, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably like to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 13, 2003. By: /s/ MARK B. COX - ------------------------------ Name: Mark B. Cox Title: Chief Financial Officer EX-32 10 exhibit32-1.txt GIANT INDUSTRIES, INC.'S 2003 2 QTR. 10-Q - EXHIBIT 32.1 EXHIBIT 32.1 CHIEF EXECUTIVE OFFICER'S SECTION 1350 CERTIFICATION I, Fred L. Holliger, Chief Executive Officer of Giant Industries, Inc. ("Giant"), do hereby certify that: (a) the Quarterly Report on Form 10-Q of Giant for the quarterly period ended June 30, 2003 (the "Form 10-Q") to which this certification is being furnished as an exhibit fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (b) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Giant. Giant Industries, Inc. By: /s/ FRED L. HOLLIGER - -------------------------------- Name: Fred L. Holliger Title: Chief Executive Officer Date: August 13, 2003. EX-32 11 exhibit32-2.txt GIANT INDUSTRIES, INC.'S 2003 2 QTR. 10-Q - EXHIBIT 32.2 EXHIBIT 32.2 CHIEF FINANCIAL OFFICER'S SECTION 1350 CERTIFICATION I, Mark B. Cox, Chief Financial Officer of Giant Industries, Inc. ("Giant"), do hereby certify that: (a) the Quarterly Report on Form 10-Q of Giant for the quarterly period ended June 30, 2003 (the "Form 10-Q") to which this certification is being furnished as an exhibit fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (b) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Giant. Giant Industries, Inc. By: /s/ MARK B. COX - ----------------------------- Name: Mark B. Cox Title: Chief Financial Officer Date: August 13, 2003. -----END PRIVACY-ENHANCED MESSAGE-----