Exhibit 10.8

QWEST SAVINGS AND INVESTMENT PLAN

Amended and Restated

Effective January 1, 2008

(unless otherwise indicated)

 

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QWEST SAVINGS & INVESTMENT PLAN

(amended and restated, effective January 1, 2008)

PREAMBLE

QWEST COMMUNICATIONS INTERNATIONAL INC., a Delaware corporation (“QCI”),
established a profit sharing plan that includes a cash or deferred arrangement
(the “Classic Qwest Plan”), effective January 1, 1999.

U S WEST, Inc. sponsored a profit sharing plan that included both a cash or
deferred arrangement and a match that was an ESOP (the “Classic U S WEST Plan”)
until U S WEST, Inc. was merged with QCI on June 30, 2000. QCI was the surviving
corporation and therefore became the sponsor of the Classic U S WEST Plan,
although its employees did not participate in such plan. The Classic U S WEST
Plan was later renamed the Qwest Savings & Investment Plan.

The Classic Qwest Plan was merged into the Qwest Savings & Investment Plan
effective December 31, 2001. On that date, the trust(s) for the Classic Qwest
Plan became trust(s) for the merged plan. The merged plan retained the name
Qwest Savings & Investment Plan, and is referred to in this document as the
“Plan.”

The merged plan is hereby amended and restated and is effective as of January 1,
2008 unless otherwise provided herein. The Plan and its assets held in the
trust(s) are intended to comply with the provisions of the Code (as defined
herein) and ERISA (as defined herein), to qualify as a profit sharing plan for
all purposes of the Code, except for the match which was intended to qualify as
an employee stock ownership plan under Code section 4975(e)(7) prior to the
employee stock ownership provisions of the Plan being frozen in 2004. The Plan
is also intended to provide a cash or deferred arrangement that satisfies the
requirements of Code section 401(k).

Effective May 14, 2004, the employee stock ownership plan (“ESOP”) portion of
the Plan was frozen. No contributions have been made to the ESOP portion of the
Plan on and after May 14, 2004. Certain provisions of the ESOP portion of the
Plan have been retained in this restated plan document in connection with the
allocation of ESOP shares to certain participant accounts.

 

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ARTICLE I

Definitions

The following words and phrases shall have the meaning set forth below:

1.1 “Account” means the aggregate of all the sub-accounts identified in
section 4.1 of a particular Account Owner.

1.2 “Account Owner” means a Participant who has an Account balance, an Alternate
Payee who has an Account balance, or a beneficiary who has obtained a present
interest in the Account of the previous Account Owner because of the previous
Account Owner’s death.

1.3 “Acquisition Loan” means a loan or other extension of credit used by the
Trustee to finance the acquisition of Stock or to repay and finance, to the
extent permitted by law, a prior Acquisition Loan.

1.4 “Affiliate” means any member of the Controlled Group except QCI. For
purposes of determining the limit on Annual Additions under section 3.8, the
term “Affiliate” shall also include those legal entities that would be members
of the Controlled Group if the Controlled Group were determined by using the
modification discussed in Code section 415(h).

1.5 “After-Tax Contribution” means the contributions provided for in section 3.1
that are not Before-Tax Contributions and are not designated by a Participant as
Roth Contributions as set forth in section 3.1.

1.6 “Alternate Payee” means any Participant’s Spouse, former spouse, child, or
other dependent who is recognized by a Qualified Domestic Relations Order as
having a right to receive all, or a portion of, the benefits payable under this
Plan with respect to such Participant.

1.7 “Annual Addition” means the allocations to a Participant’s account(s) for
any Plan Year, as described in detail below.

(a) Annual Additions shall include: (i) Company Contributions to this Plan (and
any other defined contribution plan maintained by any Affiliate); (ii) after-tax
contributions, including any Roth Contributions, to this Plan and any other
defined contribution plan maintained by any Affiliate; (iii) salary deferral
contributions to this Plan and before-tax contributions to any other defined
contribution plan maintained by any Affiliate; (iv) forfeitures allocated to a
Participant’s account(s) in this Plan and any other defined contribution plan
maintained by any Affiliate (except as provided in paragraph (b)(iii) below);
(v) all amounts paid or accrued to a welfare benefit fund as defined in Code
section 419(e) and allocated to the separate account (under such welfare benefit
fund) of a Key Employee to provide post-retirement medical benefits; and
(vi) contributions allocated on the Participant’s behalf to any individual
medical account as defined in Code section 415(l)(2).

(b) Annual Additions shall not include: (i) Rollover Contributions or Roth
Rollover Contributions to this Plan or rollover contributions, made pursuant to
Code section 402(c), 403(a)(4), 403(b)(8), 405(d)(3), 408(d)(3), or 409(b)(3)(C)
to any other defined contribution plan maintained by any Affiliate;
(ii) repayments of loans made to a Participant from a qualified plan maintained
by the Company or any Affiliate; (iii) repayments of forfeitures for rehired
Participants, as described in Code sections 411(a)(7)(B) and 411(a)(3)(D);
(iv) direct transfer of employee contributions from one qualified plan to this
Plan or any other qualified defined contribution plan maintained by any
Affiliate;

 

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(v) deductible employee contributions within the meaning of Code
section 72(o)(5); (vi) employee contributions to a simplified employee pension,
if such contributions are deductible under Code section 219(a); (vii) catch up
contributions made pursuant to section 3.1(c) or similar contributions to other
qualified plans maintained by any Affiliate, or (viii) any restorative payments
allocated to a Participant’s Account as provided in Treas. Reg. § 1.415(c)-1(b).

1.8 “Before-Tax Contribution” means the contributions provided for in
section 3.1 that are intended to be excluded from the Employee’s income for
federal income tax purposes pursuant to Code sections 401(k) and 402(e)(3).

1.9 “Break in Service” means a period that begins on the Severance From Service
Date. A one-year Break in Service begins on the Severance From Service Date and
ends on the first anniversary of such date provided that the Employee does not
perform at least one Hour of Service during such twelve-month period. A leave of
absence in a non-paid status that is approved in writing by the Company shall
not constitute a Break in Service.

1.10 “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations and rulings in effect thereunder from time to time.

1.11 “Committee” or “Employee Benefits Committee” means the administrative
Committee described in section 8.4.

1.12 “Company” means Qwest Communications International Inc., a Delaware
corporation, any successor thereto. If the context so warrants, the term
“Company” shall also include any Participating Company.

1.13 “Company Contributions” means all contributions to the Plan made by the
Company pursuant to Article III for the Plan Year.

1.14 “Company Discretionary Contribution Account” means the Account that is
credited with Company Discretionary Contributions to the Plan in accordance with
section 3.4, together with investment earnings (or losses) thereon.

1.15 “Company Discretionary Contributions” means an amount contributed to the
Plan by a Participating Company in accordance with section 3.4.

1.16 “Company Matching Contributions” means contributions to the Plan made by
the Company pursuant to subsection 3.2(a) for the Plan Year.

1.17 “Compensation” means:

(a) Code Section 415, Highly Compensated Employee Determination and Company
Discretionary Contributions. “Compensation” for purposes of Section 3.8
(relating to limitations under Code Section 415), Section 3.4 (relating to
Company Discretionary Contributions) and Section 1.27 (relating to Highly
Compensated Employee) shall mean the wages, within the meaning of Code
section 3401(a), which are paid by the Company or an Affiliate to or for an
Employee (including amounts paid to the Employee under the Management Separation
Plan), all other compensatory payments to an Employee by the Company or an
Affiliate (in the course of its trade or business) for which the Company or an
Affiliate is required to furnish the Employee a written statement under Code
sections 6041(d), 6051(a)(3) and 6052, and any amounts excluded from the
Employee’s income under Code sections 125, 402(e)(3) or 132(f)(4).

 

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(b) Before-Tax, After-Tax and Matching Contributions for Occupational Employees.
For purposes of determining and allocating Company Matching Contributions under
section 3.2(a) and for purposes of determining the amount of Participant
Contributions under subsection 3.1(a) for Occupational Employees, Compensation
shall include the amounts specified in subsection (b)(i) below and exclude the
amounts specified in subsection (b)(ii) below.

(i) Included Items. Compensation shall include the following specific amounts
and, to the extent that an element of compensation is not specifically excluded
from Compensation in subsection (ii) below, it shall be included as Compensation
for purposes of the Plan:

(A) base pay for Occupational Employees (including any elective salary deferrals
that are excluded from federal taxable income pursuant to Code
sections 402(e)(3) or 125 or pre-tax payments pursuant to Code
section 132(f)(4));

(B) annual lump sum merit awards;

(C) merit awards for performance on specific job projects;

(D) annual lump sum team incentives and gain share awards;

(E) retroactive wage increases;

(F) incentive compensation including marketing and team incentive compensation,
as determined from payroll records;

(G) short-term disability benefits paid to a Covered Employee under the Qwest
Disability Plan or under the terms of a Participating Company’s predecessor
Sickness and Accident Disability Benefit Plan received by a Participant who is
absent on account of disability;

(H) effective January 1, 1997, all amounts received by a Participant who is on a
leave of absence, including a military or political leave of absence, approved
by the Participating Company with which the Participant is employed and,
effective January 1, 2003 with respect to military leave, which the
Participating Company treats as subject to federal income tax withholding;

(I) commissions;

(J) imputed base pay for non-paid union time solely related to the Participating
Company’s business, and any other payments similar in nature bargained for by
the Employee’s collective bargaining representative;

(K) lump sum or biweekly payments under the Reassignment Pay Protection
Allowance; and

(L) amounts received pursuant to the Qwest Bonus Plan.

(ii) Excluded Items. Compensation shall not include the following amounts:

(A) overtime;

(B) shift differentials;

(C) personal vehicle reimbursements;

 

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(D) compensation received from a non-qualified deferred compensation plan;

(E) other premium pay including awards associated with any type of Employee
suggestion plan or special community service project;

(F) payments received from redeployment plans;

(G) differentials based on geographic location;

(H) pay in lieu of unused vacation;

(I) workers’ compensation payments;

(J) foreign service premiums, differentials, or housing allowances;

(K) moving and relocation expenses, including, but not limited to relocation pay
and bonuses;

(L) amounts realized from the exercise of non-qualified stock options and
amounts realized from the sale, exchange or other disposition of stock acquired
under incentive stock options;

(M) severance payments under any severance plan or severance bonus payment
(other than amounts under the Qwest Bonus Plan) and amounts paid in connection
with the settlement of a claim or release;

(N) amounts paid in connection with health and welfare benefits, including, but
not limited to life insurance allowances;

(O) amounts received from any tax qualified plan or a plan intended by the
Company to constitute a qualified plan;

(P) amounts earned while the Occupational Employee is not a Covered Employee or
an Occupational Employee;

(Q) effective January 1, 2003, subject to section 3.13, amounts received by a
Participant who is on military leave of absence, approved by the Participating
Company with which the Participant is employed, and which the Participating
Company does not treat as subject to federal income tax withholding; and

(R) amounts paid in connection with a contract ratification bonus.

(c) Before-Tax, After-Tax, Roth and Matching Contributions for Management
Employees. For purposes of determining and allocating Company Matching
Contributions under section 3.2(a) and for purposes of determining the amount of
Participant Contributions under Section 3.1(a) for Management Employees,
Compensation shall mean amounts specified in subsection (c)(i) below and
excluding amounts specified in (c)(ii) below.

(i) Compensation shall include the following amounts:

(A) The Management Employee’s salary, wages, fees for professional services and
other amounts received (without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course of employment with
the Company or an Affiliate to the extent the amounts are includable in gross
income, including overtime, commissions, compensation based on profits, tips,
bonuses, all foreign earned income as defined in Code section 911(b) (whether or
not excludable from gross income under Code section 911), and any amounts that
are excluded from income under Code sections 931 or 933; and

 

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(B) Elective deferrals (as defined in Code section 402(g)(3)) and amounts that
are contributed or deferred by the Company or an Affiliate at the election of
the Management Employee and that are not includable in gross income of the
Management Employee by reason of Code sections 125 or 132(f).

(C) effective January 1, 2003, amounts received by a Participant who is on
military leave of absence, approved by the Participating Company with which the
Participant is employed, and which the Participating Company treats as subject
to federal income tax withholding.

(D) Pay in lieu of unused vacation, but only for Employees terminating under the
Management Separation Plan.

(ii) Compensation shall not include the following amounts:

(A) Contributions made by the Company or an Affiliate to a plan of deferred
compensation, to the extent that, before the application of the limitations of
Code section 415 to such plan, such contributions are not includable in the
gross income of the Management Employee for the taxable year in which such
contributions were contributed;

(B) Contributions made by the Company or an Affiliate on behalf of a Management
Employee to a simplified employee pension plan described in Code section 408(k),
to the extent such contributions are not excludable in the Management Employee’s
gross income;

(C) Any distributions from a plan of deferred compensation, regardless of
whether such amounts are includable in the gross income of the Management
Employee;

(D) Amounts realized from the exercise of a non-qualified stock option;

(E) Amounts realized when restricted stock or property held by the Management
Employee becomes freely transferable or is no longer subject to a substantial
risk of forfeiture, as described in Code section 83;

(F) Amounts realized from the sale, exchange, or other disposition of stock
acquired under an incentive stock option;

(G) Other amounts that receive special tax benefits, including premiums for
group term life insurance, to the extent that the premiums are not includable in
the Management Employee’s gross income;

(H) Contributions made by the Company or an Affiliate (whether or not pursuant
to a salary reduction agreement) towards the purchase of an annuity described in
Code section 403(b) (whether or not such contributions are excludable from the
gross income of the Management Employee);

 

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(I) Reimbursements or other expense allowances, fringe benefits (cash and
noncash), moving expenses, deferred compensation and welfare benefits;

(J) Amounts earned while the Management Employee is not a Covered Employee or a
Management Employee; and

(K) effective January 1, 2003, subject to section 3.13, amounts received by a
Participant who is on military leave of absence, approved by the Participating
Company with which the Participant is employed, and which the Participating
Company does not treat as subject to federal income tax withholding.

(d) Time Period for Measuring Compensation. For purposes of subsections (b) and
(c) above, the following applies for purposes of determining Compensation.

(A) General. Compensation shall only include amounts paid to a Covered Employee,
except as provided in paragraph (B) below. Compensation shall only include
amounts paid after the Employee has satisfied the participation requirements
described in Article II, and for purposes of calculating the match, shall only
include amounts paid after the Employee has become eligible to receive a match.

(B) Trailing Pay. Compensation shall also include amounts that are paid in the
month in which the Covered Employee terminates employment with the Company and
Controlled Group members or in any of the following three months.

(e) 414(s) Compensation. For purposes of ADP, ACP and multiple use tests and for
purposes of QNECs under sections 3.9, 3.10, 3.11, and 3.12, “Compensation” means
wages within the meaning of Code section 3401(a) which are paid by the Company
or an Affiliate to or for an Employee and all other compensatory payments to the
Employee by the Company or Affiliate (in the course of its trade or business)
for which the Company or Affiliate is required to furnish the Employee a written
statement under Code sections 6041(d), 6051(a)(3) and 6052, 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 services
performed. For purposes of this subsection, Compensation shall include Company
contributions which are not includable in the gross income of the Employee under
Code sections 125, 132(0(4), or 402(e)(3).

(f) Limitation on Compensation. The annual Compensation of each employee taken
into account under the Plan shall not exceed the OBRA ‘93 annual compensation
limit. The OBRA ‘93 annual compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance with Code
section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA ‘93 annual
compensation limit will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the denominator of which
is 12.

If Compensation for any prior determination period is taken into account in
determining an employee’s benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA ‘93
annual compensation limit in effect for that prior determination period.

 

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For this purpose, for determination periods beginning before the first day of
the first Plan Year beginning on or after January 1, 1994, the OBRA ‘93 annual
compensation limit is $150,000.

(g) Limit on Compensation Effective January 1, 2008. The annual Compensation of
each Participant taken into account in determining allocations for any Plan Year
beginning on or after January 1, 2008, shall not exceed $230,000, as adjusted
for cost of living increases in accordance with section 401(a)(17)(B) of the
Code. 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.

1.18 “Controlled Group” means QCI and all the entities that are treated as a
single employer with QCI pursuant to Code sections 414(b), 414(c), 414(m), or
414(o).

1.19 “Covered Employee” means:

(a) General. A Covered Employee shall mean an Employee of a Participating
Company who is: (i) a regular or regular-term Employee in active service (on a
full-time or part-time basis); (ii) a regular flexible Employee; or (iii) a
person classified as a temporary Employee, incidental Employee, seasonal
Employee, or an intern.

(b) Exclusions. A Covered Employee shall not include any Employee of a
non-Participating Company. Anyone classified as an “occasional employee” shall
not be a Covered Employee. A Covered Employee shall not include any Leased
Employees or any individuals who would be Leased Employees but for their length
of service with the Company and Affiliates. A Covered Employee, who is a
Management Employee, shall not include any individual who enters into an
agreement with the Participating Company stating that he is not to participate
in the Plan.

(c) Collectively Bargained Employees. A Covered Employee does not include an
Employee included in a unit of Employees covered by a collective bargaining
agreement that does not provide for such Employee’s participation in the Plan,
provided that retirement benefits were the subject of good faith bargaining
during the negotiation of such collective bargaining agreement.

(d) Independent Contractors. A Covered Employee does not include an individual
(i) who provides services to the Controlled Group under an agreement, contract,
or any other arrangement pursuant to which the individual is initially
classified as an independent contractor or (ii) whose remuneration for services
has not been treated initially as subject to the withholding of federal income
tax pursuant to Code section 3401 and (iii) has been subsequently reclassified
as a common law employee by the Company or as a result of a final decree of a
court of competent jurisdiction or the settlement of an administrative or
judicial proceeding.

(e) Non-resident Aliens. Any non-resident alien who either (i) receives from the
Company or an Affiliate no earned income (within the meaning of Code section
911(d)(2)) that constitutes income from sources within the United States (within
the meaning of Code section 861(a)(3)) or (ii) receives from the Company or an
Affiliate earned income that constitutes income from sources within the United
States, but such income is exempt from United States income tax by an income tax
treaty or convention, shall not be a Covered Employee.

1.20 “Domestic Relations Order” means any judgment, decree or order (including
approval of a property settlement agreement) that relates to the provision of
child support, alimony payments, or marital property rights to a spouse, former
spouse, child, or other dependent of the Participant and is made pursuant to a
state domestic relations law (including a community property law).

 

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1.21 “Employee” means:

(a) Any individual employed as a common law employee by any Participating
Company on a full-time or part-time basis who receives compensation other than a
pension, retainer, or fee under contract.

(b) An individual shall not be an “Employee” if he meets any of the following:
(i) the individual was performing services for any Participating Company under
an agreement, contract, or any other arrangement pursuant to which the
individual is characterized or classified by the Participating Company as an
independent contractor (or an employee of an independent contractor), (ii) the
individual’s payments for services for any Participating Company have not been
initially treated by any Participating Company as subject to wage withholding
under the Code and applicable state law, (iii) any individual who was not
initially classified by a Participating Company as a common law employee of a
Participating Company, (iv) any individual who was initially classified as a
Leased Employee or (v) any other individual who was leased by a Participating
Company from an entity that is the individual’s employer of record.
Notwithstanding paragraph (a) above, if the Company determines or agrees that
the classification or treatment was incorrect and that the individual was or is
in fact a common law employee, such an individual shall not be an Employee (or
Covered Employee or Participant) either retroactively or prospectively; however,
if the Company informs the individual in writing that he is an Employee for
purposes of the Plan, he shall be an Employee with respect to service after the
date specified in such writing. Notwithstanding the foregoing, if an individual
files a claim with the Committee in accordance with section 13.2 within 60 days
of such initial classification, and the Committee determines that such
classification is incorrect, the determination by the Committee shall be given
retroactive effect.

(c) Solely for purposes of the requirements of Code Section 414(n)(3) (but only
to the extent they relate to this Plan), including counting service for
eligibility to participate and vesting, “Employee” shall also mean (i) any
individual described in the preceding paragraph (b) who is in fact a common law
employee and (ii) Leased Employees. Notwithstanding the foregoing, if such
Leased Employees constitute less than 20% of the Participating Companies’
non-highly compensated work force within the meaning of Code
section 414(n)(5)(C)(ii), “Employee shall not include Leased Employees covered
by a plan described in Code section 414(n)(5) unless otherwise provided in the
Plan.

(d) By way of example, assume a technician is leased from an entity (or hired as
an independent contractor) on May 1, 2002. The Company later determines or
agrees that the individual has in fact always been a common law employee and
reclassifies him as such (including subjecting him to wage withholding) on
June 1, 2004; however, he continues as a technician. Solely for the purposes of
the requirements of Code section 414(n)(3) (but only to the extent they relate
to this Plan), including counting service for eligibility to participate and
vesting, this individual will be treated as an Employee on and after May 1,
2002. However, the individual shall not be an Employee (or Covered Employee or
Participant) for any other purpose with respect to employment either prior or
subsequent to June 1, 2004, even though other technicians of the Company are
treated as Employees. The individual shall not become an Employee (or Covered
Employee or Participant) unless and until the Company informs the individual in
writing that he is an Employee for purposes of the Plan.

1.22 “Employment Commencement Date” means the date on which an Employee first
performs an Hour of Service.

 

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1.23 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and rulings in effect thereunder from time to time.

1.24 “ESOP Account” means the account that is credited with payments to the ESOP
made by a Participating Company prior to May 14, 2004 in accordance with
sections 3.2 and 3.4, together with the investment earnings (or losses) thereon.
The ESOP Account shall be comprised of various subaccounts, including the ESOP
Matching Contribution Account and any other subaccounts established by the
Committee.

1.25 “Financed Shares” means stock acquired by the Plan with the proceeds of an
Acquisition Loan.

1.26 “Five-Percent Owner” means:

(a) With respect to a corporation, any person who owns (either directly or
indirectly according to the rules of Code section 318) more than 5% of the value
of the outstanding stock of the corporation or stock possessing more than 5% of
the total combined voting power of all stock of the corporation.

(b) With respect to a non-corporate entity, any person who owns (either directly
or indirectly according to rules similar to those of Code section 318) more than
5% of the capital or profits interest in the entity.

A person shall be a Five-Percent Owner for a particular year if such person is a
Five-Percent Owner at any time during such year.

1.27 “Highly Compensated Employee” means:

(a) Any Employee who, at any time during the Plan Year or the Look-Back Year,
was a Five-Percent Owner, or

(b) Any Employee who earned at least $100,000 (as adjusted by the Secretary of
the Treasury) during the Look-Back Year and was a member of the Top-Paid Group.

(c) For Plan Years other than Plan Years running concurrent with the calendar
year, the calendar year beginning within the Look-Back Year will be treated as
the Look-Back Year for purposes of determining whether an Employee is a Highly
Compensated Employee on account of the Employee’s Compensation for the Look-Back
Year under Section 414(q)(1)(B).

1.28 “Hour of Service” means each hour for which an Employee is paid or entitled
to payment by the Controlled Group for the performance of duties for the
Controlled Group. Hours of Service shall be credited to the Employee when the
duties are performed, regardless of when the Employee is paid for such duties.

1.29 “Key Employee” means an individual described in Code section 416(i) and the
regulations promulgated thereunder.

1.30 “Leased Employee” means any person (other than an employee of the
recipient) who pursuant to an agreement between the recipient and any other
person (“Leasing Organization”) has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code
section 414(n)(6)) on a substantially full-time basis for a period of at least
one year, and such services are performed under the recipient’s primary
direction or control.

 

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1.31 “Limitation Year” means the Plan Year.

1.32 “Look-Back Year” means, except as provided in Section 1.27, the twelve
months immediately preceding the Plan Year.

1.33 “Management Employee” means an Employee who is not an Occupational
Employee.

1.34 “Matching Contribution Account” means, prior to May 14, 2004, the
subaccount of the ESOP Account that is credited with payments to the ESOP by a
Participating Company prior to May 14, 2004 in accordance with section 3.2,
together with the investment earnings (or losses) thereon. Effective May 14,
2004, the subaccount referenced in the preceding sentence shall be identified as
the “ESOP Matching Contribution Account” and “Matching Contribution Account”
shall mean the Account which is credited with Company Matching Contributions
made by a Participating Company on or after May 14, 2004 in accordance with
Section 3.2, together with the investment earnings (or losses) thereon.

1.35 “Non-Highly Compensated Employee” means an Employee who is not a Highly
Compensated Employee.

1.36 “Non-Key Employee” means any Employee who is not a Key Employee.

1.37 “Normal Retirement Age” means age 65.

1.38 “Occupational Employee” means an Employee who is represented for collective
bargaining purposes by a labor organization within the meaning of the Labor
Management Relations Act. Notwithstanding the foregoing or any other provision
of this Plan, the term “Occupational Employee” shall exclude an Employee who is
represented by a labor organization for collective bargaining purposes and for
whom the labor organization and the Company have agreed that the benefits
available to Management Employees under the Plan shall be made available rather
than the benefits available to Occupational Employees, but only for such period
of time as specified in the agreement between the labor organization and the
Company.

1.39 “Participant” means an individual who has an Account under the Plan because
the individual is or was an Employee. The term “Participant” shall also include
any Employee who has satisfied the eligibility requirements of section 2.1, but
who does not yet have an Account balance.

1.40 “Participant Contributions” means Before-Tax, After-Tax Contributions and
Roth Contributions.

1.41 “Participating Company” means QCI, Qwest Services Corporation (“QSC”) and
all wholly owned subsidiaries of QCI and QSC that, with the consent of the Plan
Design Committee, participate in the Plan.

1.42 “Period of Service” means the duration of employment, in general. A Period
of Service prior to December 31, 2001 shall be measured according to the Plan
provisions then in effect. Beginning December 31, 2001, an Employee’s Period of
Service commences on the Employee’s Employment Commencement Date or Reemployment
Commencement Date and ends on the Severance From Service Date. An Employee’s
Period of Service shall include any Period of Severance of less than 12
consecutive months. The Period of Service shall include all service performed
for the Controlled Group, except for

 

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those periods that may be disregarded under the rules of Code section 410(a)(5)
or 411(a)(4). In order to determine the service to be credited to the Employee
for purposes of Articles 2 and 5, nonsuccessive Periods of Service must be
aggregated. Less than whole year Periods of Service (whether or not consecutive)
shall be aggregated on the basis of days, with 365 day of service equaling a
one-year Period of Service. A Period of Service shall also include service with
AT&T and certain other companies spun off from AT&T effective on or about
January 1, 1985, and certain other related companies, but only to the extent
required by law or by mutual agreement of such companies.

1.43 “Period of Severance” means the period commencing on the Severance From
Service Date and ending on the date the Employee again performs an Hour of
Service for the Controlled Group.

1.44 “Plan” means the Qwest Savings and Investment Plan set forth herein, now in
effect or hereafter amended.

1.45 “Plan Design Committee” means the committee described in section 8.5.

1.46 “Plan Year” means the period on which the records of the Plan are kept.
Effective January 1, 2003, the Plan Year shall be the period commencing on
January 1 and ending on the following December 31. Effective prior to
December 31, 2002, the Plan Year shall be the period commencing on December 31
and ending on the following December 30. December 31, 2002 shall constitute a
short Plan Year.

1.47 “QAM” means Qwest Asset Management Company.

1.48 “QCI” means Qwest Communications International Inc., a Delaware
corporation, and any successor thereto.

1.49 “Qualified Domestic Relations Order” or “QDRO” means a Domestic Relations
Order that creates or recognizes the existence of an Alternate Payee’s right to,
or assigns to an Alternate Payee the right to, receive all or a portion of the
benefits payable with respect to a Participant under the Plan and with respect
to which the requirements of subsection 13.9(c) are met.

1.50 “Qualified Non-Elective Contributions” or “QNEC” means any contribution to
the Plan made by the Company pursuant to subsection 3.3(c) for the Plan Year.
Qualified Non-Elective Contributions shall be fully vested when made and shall
be subject to the distribution restrictions of Code section 401(k)(2)(B).

1.51 “Qwest Shares” means the common shares of the Company.

1.52 “Qwest Shares Fund” means a fund to be invested by an appointed investment
manager or independent fiduciary, as set forth in section 3A.4, primarily in
Qwest Shares. The Trustee shall purchase any Qwest Shares required for the Plan,
or cause such shares to be purchased, in accordance with the Trust Agreement.
Subject to section 3A.7, dividends and other distributions received in cash with
respect to common stock of the Company held in the Qwest Shares Fund shall be
reinvested in the Qwest Shares Fund. Dividends and other distributions received
in the form of Qwest Shares, with respect to common stock of the Company held in
the Qwest Shares Fund, shall be held in the Qwest Shares Fund.

1.53 “Reemployment Commencement Date” means the date on which an Employee first
performs an Hour of Service for the Controlled Group after incurring a one-year
Break in Service.

 

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1.54 “Required Beginning Date” means April 1 of the calendar year following the
later of the calendar year in which the Participant attains age 70 1/2 or the
calendar year in which the Participant terminates employment with the Controlled
Group; provided however, that the Required Beginning Date for a Participant who
is a Five Percent Owner is April 1 of the calendar year following the calendar
year in which the Participant attains 70 1/2.

1.55 “Rollover Contribution” means a contribution to the Plan by an Employee
pursuant to section 3.6(a).

1.56 “Roth Contribution” means a contribution made by a Participant who is a
Management Employee pursuant to section 3.1(d) that is includible in the
Participant’s gross income at the time of deferral and which has been
irrevocably designated by the Participant as a Roth Contribution.

1.57 “Roth Rollover Contribution” means a contribution to the Plan by an
Employee that is from a designated Roth 401(k) account in another plan described
in Section 401(a) or Section 403(b) of the Code.

1.58 “Self-Directed Brokerage Account” or “SDBA” means a Participant directed
brokerage account as described in section 9.4 and 9.5.

1.59 “Severance From Service Date” means the earlier of the date determined
under subsection (a) or (b):

(a) the last day an Employee performs service for the Controlled Group if the
Employee resigns, is discharged, retires, or dies, or

(b) the first anniversary of the day a former Employee is absent from the
Controlled Group for any reason other than resignation, discharge, retirement,
or death (such as vacation, holiday, sickness, disability, leave of absence, or
temporary layoff), with the following exceptions:

(i) If the former Employee is absent from the Controlled Group because of
parental leave on the first anniversary of the day the former Employee was first
absent, the Severance From Service Date shall be the second anniversary of the
day the Employee was first absent. Parental leave shall include only the
pregnancy of the former Employee, the birth of the former Employee’s child, the
placement of a child with the former Employee in connection with the adoption of
the child by the former Employee, or the caring for such child immediately
following the birth or placement.

(ii) If the former Employee is absent from the Controlled Group for more than
one year because of an approved leave of absence (with or without pay) for any
reason (including but not limited to jury duty and military leave), and the
former Employee returns to work at or prior to the leave of absence, no
Severance From Service Date shall occur.

1.60 “Spouse” means the individual to whom a Participant is legally married
pursuant to the laws of the state in which the Employee is domiciled at the time
the determination of an individual’s status as a spouse is made. Spouse shall
also include a former spouse to the extent that a qualified domestic relations
order, as defined in Code section 414(p), requires such former spouse to be
treated as a spouse or a surviving spouse.

1.61 “Stock” means the $0.01 par value common stock of QCI.

1.62 “Taxable Year” means the accounting period of QCI for federal income tax
purposes.

 

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1.63 “Top-Paid Group” means the top 20% of Employees ranked on the basis of
Compensation received during the applicable year. For purposes of this
section only, a Leased Employee (as defined in Code section 414(n)(2)) shall be
treated as an Employee unless he is either covered by a safe-harbor plan
(described in Code section 414(n)(5)) maintained by the leasing organization or
covered by a qualified plan maintained by the Employer or an Affiliate. For
purposes of determining the number of Employees in the Top-Paid Group, the
following Employees may be excluded:

(a) any Employee who has not completed six months of service before the end of
the applicable year;

(b) any Employee who normally works less than 17 1/2 hours per week, as defined
in the regulations under Code section 414(q);

(c) any Employee who normally works less than six months during the applicable
year, as defined in the regulations under Code section 414(q);

(d) any Employee who has not had his 21st birthday by the end of the applicable
year; and

(e) any Employee who is a non-resident alien and who receives no earned income
(within the meaning of Code section 911(d)(2)) from the Controlled Group that
constitutes income from sources within the United States (within the meaning of
Code section 861(a)(3)) during the applicable year.

Notwithstanding the foregoing, the Committee may elect, on a consistent and
uniform basis, to modify the permissible exclusions set forth above by
substituting any shorter period of service or lower age. The Committee may elect
not to exclude any Employees in determining the size of the Top-Paid Group.

1.64 “Trust Agreement” means the agreement or agreements entered into between
QAM and one or more Trustees to provide for the custody and investment of the
assets of the Plan.

1.65 “Trustee” means the individual or entity that has been appointed by QAM to
maintain the custody of the assets of the Plan and to provide for the investment
of the assets of the Plan and that has entered into a Trust Agreement with QAM
pursuant to which such individual or entity has agreed to provide for the
custody and the investment of the assets of the Plan. QAM may appoint more than
one Trustee. QAM may enter into one or more Trust Agreements with one or more
Trustees. In this Plan document, the term Trustee shall refer to all Trustees
appointed by QAM unless the context requires otherwise.

1.66 “Trust Fund” means the assets of the Plan that are held by one or more
Trustees pursuant to one or more Trust Agreements.

1.67 “Valuation Date” means each day the New York Stock Exchange is open for
business, the last day of each Plan Year and any other dates as specified in
section 4.2 as of which the assets of the Trust Fund are valued at fair market
value and as of which the increase or decrease in the net worth of the Trust
Fund is allocated among the Participants’ accounts. For purposes of Article XII
only, the term “Valuation Date” means the date as of which the account balances
are valued, which is the last trading day of the prior Plan Year.

 

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ARTICLE II

Participation

2.1 Eligibility - Participant Contributions, Matching and Company Discretionary
Contributions.

(a) Occupational. This subsection applies only to Occupational Employees. Each
Covered Employee is eligible to make Before-Tax and After-Tax Contributions to
the Plan as soon as administratively practicable following the later of: (i) the
completion by the Covered Employee of three consecutive months of service or, if
earlier, the date he completes a one-year Period of Service, or (ii) the date he
becomes a Covered Employee. Each Covered Employee may receive an allocation of
Company Discretionary Contributions based on his Compensation paid while he is
eligible to make Before-Tax and After-Tax Contributions. Each Covered Employee
becomes eligible to receive an allocation of Company Matching Contributions as
soon as administratively practicable after the later of the date he completes a
one-year Period of Service or the date he became a Covered Employee.

(b) Management. This subsection applies only to Management Employees. Each
Covered Employee is eligible to make Participant Contributions as soon as
administratively practicable after the Participant’s Employment Commencement
Date. Each Covered Employee may receive an allocation of Company Discretionary
Contributions based on his Compensation paid while he is eligible to make
Before-Tax, Roth and After-Tax Contributions. Each Covered Employee is eligible
to receive an allocation of Company Matching Contributions as soon as
administratively practicable after the Participant’s Employment Commencement
Date.

(c) Retroactive Participation. If the Covered Employee is not provided with
enrollment materials before he became eligible to make contributions to the
Plan, then once the enrollment materials are provided to the Covered Employee,
he has 30 days to “enroll retroactively.” By enrolling retroactively, the
Covered Employee shall be given the opportunity to make the Before-Tax and
After-Tax Contributions he could have made if he had enrolled as early as he
could have, and those contributions shall be matched according to the matching
formula in effect when the make-up contributions are made (or, if greater,
according to the matching formula in effect when the original contributions
could have been made). The make-up contributions shall be subject to the limits
described in Article III for the Plan Year in which they were made (rather than
the Plan Year in which they could have been made).

(d) Misclassification. If a Covered Employee is wrongly classified as a
Management Employee instead of an Occupational Employee, and is retroactively
classified as an Occupational Employee, the Covered Employee shall continue to
be eligible to make Participant Contributions (even if he has less than three
months of Service). If a Covered Employee is wrongly classified as an
Occupational Employee instead of a Management Employee, the Covered Employee
shall be given the opportunity make the Before-Tax and After-Tax Contributions
he could have made if he had enrolled as early as he could have, and those
contributions shall be matched according to the matching formula in effect for
Management Employees when the make-up contributions are made (or, if greater,
according to the matching formula in effect when the original contributions
could have been made). The make-up contributions shall be subject to the limits
described in Article III for the Plan Year in which they were made (rather than
the Plan Year in which they could have been made).

(e) Rehires. This subsection applies only to rehires who are Occupational
Employees. A rehired Employee who has not previously met the eligibility
requirements of Section 2.1(a) shall become eligible to make Participant
Contributions from his first paycheck in the calendar

 

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month following the later of: (i) the completion by the Covered Employee of
three consecutive months of service or, if earlier, the date he completes a
one-year Period of Service, or (ii) the date he becomes a Covered Employee,
provided that he is then a Covered Employee. An Employee who is rehired after
previously having met the eligibility requirements of Section 2.1(a) shall
become eligible to make Participant Contributions from his first paycheck
following his date of rehire.

2.2 Eligibility - Rollover.

A Covered Employee is able to make a rollover to this Plan pursuant to
section 3.6 on any date on which he is a Covered Employee, including any date
prior to his satisfaction of section 2.1. A former Employee who is a vested
Account Owner may make a rollover contribution in accordance with procedures
approved by the Committee and in accordance with section 3.6.

2.3 Enrollment - Procedure.

A Covered Employee who is eligible to participate in the Plan may enroll by
completing the procedures established by the Committee and communicated to the
Employees from time to time. Effective December 31, 2001, a Management Employee
who is a Covered Employee will be automatically enrolled in the Plan, pursuant
to subsection 3.1(g) unless the Management Employee affirmatively elects not to
be enrolled in the Plan.

 

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ARTICLE III

Contributions

3.1 Participant Contributions.

(a) General Rules. A Participant may elect to defer the receipt of a portion of
his Compensation during a Plan Year and contribute such amount to the Plan as
Participant Contributions. Participant Contributions, if any, shall be made in
whole percentages of Compensation received in a payroll period. Before-Tax
Contributions shall be allocated to Before-Tax accounts; After-Tax Contributions
shall be allocated to After-Tax accounts, and contributions designated by
eligible Participants as Roth Contributions shall be allocated to Roth
Contribution accounts.

(b) Plan Design Limits. A Participant’s Participant Contributions in a Plan Year
shall be at least 1% and shall not exceed 50 % of Compensation for each pay
period with respect to Management Employees and Occupational Employees. A
Participant may only elect to make Participant Contributions from his
Compensation, subject to Code section 401(a)(17) limitations, for the Plan Year
that he receives while eligible to make Participant Contributions.

(c) Catch-up Contributions. Effective January 1, 2002, and implemented as soon
as administratively available thereafter, all Participants who are eligible to
make Before Tax Contributions under this Plan and who have attained age 50
before the close of the Plan Year shall be eligible to make catch-up
contributions in accordance with, and subject to the limitations of,
section 414(v) of the Code. Such catch-up contributions shall not be taken into
account for purposes of the provisions of the Plan implementing the required
limitations of sections 402(g) and 415 of the Code or the limitations set forth
in section 3.1(b) of the Plan. The Plan shall not be treated as failing to
satisfy the provisions of the Plan implementing the requirements of
section 401(k)(3), 410(b) or 416 of the Code, as applicable, by reason of the
making of such catch-up contributions. Participants who are eligible to make
catch-up contributions shall make an election to that effect in accordance with
Section 3.1(f) of the Plan.

Notwithstanding any provision contained in the Plan to the contrary, a
Participant eligible to make catch-up contributions may defer an amount for any
payroll period in addition to the amount described in Section 3.1(b). Such
additional amount may be equal to a pro-rata share of the applicable dollar
catch-up limit or such other amount as is otherwise necessary to permit the
eligible Participant to elect to defer the applicable maximum catch-up amount.
The Committee may establish such rules, policies and procedures as it deems
necessary for purposes of the administration of this subsection.

(d) Roth Contributions. Beginning with pay periods having pay dates on or after
January 1, 2008, Participants who are Management Employees shall be eligible to
elect to make Roth Contributions in accordance with, and subject to the
limitations of, section 402A of the Code. A Participant’s Roth Contributions
shall be irrevocably designated as Roth Contributions, shall be deducted from
the Participant’s after-tax Compensation, shall be deposited in the
Participant’s Roth Contribution Account, and applicable earnings, gains and
losses shall be credited to such account on a reasonable and consistent basis.

(e) Legal Limits. The sum of the Participant’s Before-Tax Contributions and, if
applicable, Roth Contributions, to this Plan in a calendar year and similar
contributions to any other plan containing a qualified cash or deferred
arrangement that is maintained by the Controlled Group shall not exceed the
limit for that calendar year specified in Code section 402(g)(1) except to the
extent permitted under section 3.1(c). The Company shall inform the Committee if
such limit has been exceeded; the excess amount (less any amount already
returned pursuant to other corrective actions described in this

 

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Article) shall be returned as soon as administratively possible, and in no event
later than April 15 of the succeeding calendar year. If the sum of the
Participant’s Before-Tax Contributions, Roth Contributions, similar
contributions to any qualified plan maintained by the Controlled Group, and any
similar contributions to a qualified plan maintained by an unrelated entity
exceeded the Code section 402(g)(1) limit in a calendar year, and the
Participant informs the Committee of the amount of the excess allocated to this
Plan, then such excess (less any amount already returned pursuant to other
corrective actions described in this Article) shall be returned to the
Participant as soon as administratively practicable, and in no event later than
April 15 of the succeeding calendar year. The amount returned shall be adjusted
to reflect the net increase or decrease in the net worth of the Trust Fund
attributable to such amount for the Plan Year. The Committee may use any
reasonable method to allocate this adjustment. Company Matching Contributions
attributable to such returned amounts shall be forfeited. Unmatched Before-Tax
Participant Contributions shall be returned first. The Committee reserves the
right, but is not required, to suspend Before-Tax Contributions, Roth
Contributions or After-Tax Contributions for any Participant if it believes any
limit set forth in this Article III may be violated if such suspension is not
made.

(f) Suspension of Before-Tax Contributions. If a Participant’s Before-Tax
Contributions or Roth Contributions are halted during a Plan Year because of a
limit prescribed by the Plan or the law (as opposed to the Participant’s
voluntarily suspending his or her contributions), the Committee shall establish
procedures regarding the reactivation of the Participant’s election for the next
Plan Year. Until changed by the Committee, the procedure will be to discontinue
the Before-Tax Contributions and/or Roth Contributions for the Participant. The
Participant may elect to contribute After-Tax Contributions to the extent
possible. If the Participant does not thereafter change his or her contribution
rate or make an election with respect to After-Tax Contributions, the Committee
will reactivate the Participant’s Before-Tax Contribution and/or Roth
Contribution election at the beginning of the next Plan Year.

(g) Participant Elections. Participant Contributions shall be made according to
rules prescribed by the Committee, and may only be made after the Participant
has authorized the deduction of such contributions from his Compensation. Such
authorization shall remain in effect until revoked or changed by the
Participant. The Participant may change such authorization as of the first day
of any payroll period; however, a Participant may make only one change per day.
If an Employee makes a hardship withdrawal from his Before-Tax account under
section 6.6, his contribution rate shall be immediately reduced to 0%, and shall
remain at 0% for the length of time set forth in section 6.6(d)(ii). To be
effective, any authorization, change of authorization, or notice of revocation
must be made according to such restrictions and requirements as the Committee
prescribes.

(h) Default Compensation Reduction Authorization. This subsection applies to
Management Employees only. Each individual who is both a Covered Employee and
Management Employee on his Employment Commencement Date or Reemployment
Commencement Date and who satisfies the requirements of Section 2.1 will be
deemed to have authorized a 3% Before-Tax Contribution, effective as soon as
administratively feasible for the first full pay period after such Covered
Employee satisfies the requirements of Section 2.1. However, no Compensation
reduction authorization shall be deemed to have been made if, within a
reasonable time prior to the pay date, the Covered Employee affirmatively
elects, in a form approved by the Committee (including, if applicable, by means
of telephone, computer or other paperless media) to authorize no Compensation
reduction under the Plan.

(i) Revocation or Change of Compensation Reductions; Required Notices. A
Participant may elect to increase, decrease, or revoke his Compensation
reduction authorization, or provide a new Compensation reduction authorization,
effective for Compensation not yet paid to the Participant. Any such change,
revocation or new authorization shall be made in a form prescribed or approved
by the Committee (including, if applicable, by means of telephone, computer, or
other paperless

 

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media). The Committee may require that any new or changed Compensation reduction
authorization be made a minimum period of time before it is effective. In
addition, within 30 days after the date an individual becomes a Covered
Employee, each individual described in subsection (h) above shall be given a
notice by the Committee explaining the deemed Compensation reduction
authorization provided for in subsection (h) above and his right to have no such
Compensation reduction occur, or to alter the amount of Compensation reduction,
including the manner in which that election may be made and the time by which it
must be made. If a Participant who is an Occupational Employee terminates
employment with a Participating Company and is reemployed within 30 days by
another Participating Company, any previous elections to make Before-Tax
Contributions or After-Tax Contributions, as the case may be, shall remain in
effect. If a Participant who is a Management Employee terminates employment with
a Participating Company and is reemployed after 90 days by another Participating
Company, any previous elections to make Before-Tax Contributions, Roth
Contributions or After-Tax Contributions, as the case may be, shall not remain
in effect. With respect to such Management Employee the provisions of subsection
(h) above shall apply upon his reemployment with a Participating Company. In the
event a Management Employee terminates employment with a Participating Company
and is rehired as an Occupational Employee, any previous elections shall not
remain in effect and such employee may enroll in the Plan pursuant to the rules
pertaining to Occupational Employees. In the event an Occupational Employee
terminates employment with a Participating Company and is rehired as a
Management Employee, any previous election shall not remain in effect and such
employee shall be subject to the rule set forth in subsection (h) above.

3.2 Company Matching Contributions.

(a) Amount of Company Matching Contribution. The Participating Companies shall
make sufficient Company Matching Contributions to the Plan so that the Matching
Contribution Account of each Participant will be allocated with an amount
required by (and limited to) the matching formula set forth in subsections (b)
and (c) below. Company Matching Contributions may include forfeitures to the
extent authorized under Section 5.5.

(b) Matching Formula. Subject to the limitations set forth later in this
Article III, and except as provided in subsection (c) below, a Participant shall
receive an allocation only with respect to Participant Contributions from each
paycheck that is received by a Covered Employee after having satisfied the
eligibility requirements of Article II. If a Participant makes Before-Tax, Roth
(if applicable) and After-Tax Contributions for a pay period, the Before-Tax
Contributions will be matched first, After Tax Contributions will be matched
next, and Roth Contributions (if applicable) will be matched last. Catch-up
contributions made pursuant to section 3.1(c) shall not be matched. Subject to
the foregoing, the matching formula is as follows:

(i) Occupational. This paragraph applies only to Occupational Employees. Each
Participant shall receive an allocation equal to 81% of the first 6% of the
Participant’s Before-Tax Contributions and After-Tax Contributions made during
such pay period by such Participant; provided, however, that the allocation for
any such Participant for any pay period shall not exceed 4.86% of such
Participant’s Compensation for that pay period. The maximum allocation for the
Plan Year for a Participant is equal to 4.86% of the dollar limit under Code
section 401(a)(17) for the Plan Year.

(ii) Management. This paragraph applies only to Management Employees. Each
Participant shall receive an allocation equal to 100% of the Before-Tax
Contributions, Roth Contributions and After-Tax Contributions made during such
pay period by such Participant; provided, however, that the allocation for any
such Participant for any pay period shall not exceed 3% of such Participant’s
Compensation for that pay period. The maximum allocation for the Plan Year for
such a Participant is equal to 3% of the dollar limit under Code
section 401(a)(17) for the Plan Year.

 

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(c) Special Matching Provisions.

(i) Suspension After In-Service Withdrawal. The match shall be suspended in
certain situations, as described in Article VI, following a distribution or
withdrawal.

(ii) Retroactive Application. The matching formula may be applied retroactively
in certain situations as described in section 2.1(d).

3.3 Miscellaneous Company Contributions.

(a) The Participating Companies may make additional contributions to the Plan to
satisfy the minimum contribution required by section 12.4. The Company may elect
to use any portion of forfeitures occurring during the Plan Year for this
purpose, pursuant to section 5.5. For all Employees, this contribution shall be
allocated to Before-Tax accounts.

(b) The Participating Companies may make additional contributions to the Plan to
restore the forfeited benefits, pursuant to section 5.3. This additional
contribution shall be required only when the forfeitures occurring during the
Plan Year are insufficient to restore such forfeited amounts, as described in
section 5.4.

(c) The Participating Companies may make QNECs to the Plan to enable the Plan to
satisfy the ADP, ACP, and multiple use tests of Article III. QNECs shall be
allocated to Before-Tax accounts.

3.4 Company Discretionary Contributions.

Each Participating Company may make a Company Discretionary Contribution to the
Trust Fund for any Plan Year in such amounts as the board of directors of the
Participating Company shall determine in its sole discretion. Notwithstanding
the foregoing, Company Discretionary Contributions shall be subject to the
limitations of section 3.5 and section 3.8.

3.5 Contributions Contingent on Deductibility.

The Company Contributions and Before-Tax Contributions for a Plan Year shall not
exceed the amount allowable as a deduction for the Taxable Year ending with or
within a Plan Year pursuant to Code section 404, including carry forwards of
unused deductions for prior Taxable Years. Company Contributions and Before-Tax
Contributions are conditioned expressly on their deductibility pursuant to Code
section 404. Company Contributions and Before-Tax Contributions shall be paid to
the Trustee not later than the due date (including any extensions) for filing
QCI’s Company’s federal income tax return for such year, except that QNECs may
be paid to the Trustee within 12 months after the end of the Plan Year to which
they relate. Company Contributions and Before-Tax Contributions for a Plan Year
may be made without regard to current or accumulated earnings and profits.

3.6 Rollover Contributions, Roth Rollover Contributions, Direct Transfers, and
Other Contributions by Participants.

(a) Rollovers. The Plan shall accept the following types of Rollover
Contributions from Covered Employees and former Employees in accordance with
section 2.2.

(i) Direct Rollovers. The Plan will accept a direct rollover of an eligible
rollover distribution from a qualified plan described in section 401(a) or
403(a) of the Code, including

 

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after-tax employee contributions; an annuity contract described in
section 403(b) of the Code; or an eligible plan under section 457(b) of the Code
which is maintained by a state, political subdivision of a state or any agency
or instrumentality of a state or political subdivision of a state. The Committee
may authorize the Trustee to accept as part of an eligible rollover distribution
the direct rollover of a promissory note evidencing a Covered Employee’s loan
from a qualified plan described in section 401(a) or 403(a) of the Code.

(ii) Rollover Contributions From Other Plans. The Plan will accept a Covered
Employee’s or former Employee’s contribution of an eligible rollover
distribution from: a qualified plan described in section 401(a) or 403(a) of the
Code; an annuity contract described in section 403(b) of the Code; an eligible
plan under section 457(b) of the Code which is maintained by a state, political
subdivision of a state or any agency or instrumentality of a state or political
subdivision of state.

(iii) Rollover Contributions From IRAs. The Plan will accept a Covered
Employee’s or former Employee’s rollover contribution of the portion of a
distribution from an individual retirement account or annuity described in
section 408(a) or 408(b) of the Code that is eligible to be rolled over and
would otherwise be includible in gross income.

(iv) Rollover Accounts. Rollover Contributions may be made by any Covered
Employee or former Employee; however, such Covered Employee shall not be
entitled to receive an allocation of any Company Contributions until he has
satisfied the applicable eligibility and participation requirements of
section 2.1. Rollover Contributions shall be allocated to Rollover Contributions
accounts. Any rollover amounts representing after-tax contributions (and
earnings) shall be accounted for separately in a subaccount of the Covered
Employee’s After-Tax account. If the Plan accepts a Rollover Contribution and
subsequently determines that it was not a valid Rollover Contribution, the Plan
shall distribute the invalid contribution (adjusted to reflect investment
experience) to the Covered Employee or former Employee, as soon as
administratively practicable, without the Covered Employee’s or former
Employee’s consent. A Covered Employee who has not met the requirements of
section 2.1 who maintains a Rollover Account shall be entitled to direct the
investment of his Rollover Account pursuant to Article IX, but shall not be
permitted to take a loan from the Rollover Account until he has satisfied the
requirements of section 2.1.

(v) Roth Rollover Contributions. The Plan will accept a Covered Employee’s or
former Employee’s contribution of an eligible Roth Rollover distribution from a
qualified plan described in section 401(a) or 403(a) of the Code or an annuity
contract described in section 403(b) of the Code.

(b) Direct Transfers. The Committee may authorize the Trustee to accept the
direct transfer of assets from the trustee or funding agent of another qualified
retirement plan (the “Transferor Plan”) attributable to the participation under
the Transferor Plan of a Covered Employee. Nevertheless, no amount may be
transferred to this Plan, directly or indirectly, from a plan required to
provide automatic survivor benefits pursuant to Code section 401(a)(11). Direct
transfers may be made on behalf of any Covered Employee; however, such Covered
Employee shall not be entitled to receive an allocation of Company Contributions
or to make Participant Contributions until he has satisfied the applicable
eligibility and participation requirements of section 2.1. The Committee shall
authorize such a direct transfer only if the Transferor Plan is a plan qualified
under Code section 401(a); the Committee may require such proof of qualified
status from the Covered Employee as it considers necessary. Unless a transfer of
assets in kind is specifically authorized by the Committee, all direct transfers
shall be made in cash pursuant to such procedures, rules, and regulations as the
Committee may adopt from time to time. No amounts representing “qualified
voluntary employee contributions” within the meaning of Code

 

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section 219(e) may be directly transferred to this Plan. All amounts transferred
to this Plan pursuant to this section shall be fully vested at all times. The
Covered Employee shall provide adequate documentation establishing the
appropriate designation(s) of the amounts directly transferred to this Plan.
Amounts subject to the distribution rules of Code section 401(k)(2)(B)(i) shall
be allocated to the Covered Employee’s Before-Tax account. Amounts attributable
to rollover contributions or employer contributions (other than amounts subject
to the distribution rules of Code section 401(k)(2)(B)(i)) shall be allocated to
the Covered Employee’s Rollover account. Such amounts shall thereafter share in
the increase or decrease in the net worth of the Trust Fund, and shall be
subject to the individual’s investment directions in accordance with the Trust
Agreement. Notwithstanding anything in this paragraph to the contrary, the
Committee shall authorize the Trustee to accept the direct transfer of assets
from the trustee or funding agent of a Transferor Plan if such direct transfer
is required by Treas. Reg. section 1.411(a)-11(e)(1) or another applicable
provision of the Code or Treasury regulations.

(c) Direct Rollovers. The Committee may authorize the Trustee to accept “direct
rollovers” from Covered Employees. A “direct rollover” is a voluntary, direct
transfer of assets to this Plan from another qualified retirement plan that is
nontaxable under Code sections 402(c) and 401(a)(31). Direct rollovers may be
made by any Covered Employee who is eligible to make Salary Deferral
Contributions; however, such Covered Employee shall not be entitled to receive
an allocation of any Company Contributions until he has satisfied the applicable
eligibility and participation requirements of section 2.1. Direct rollovers
shall be allocated to Rollover Contributions accounts.

3.7 Return of Contributions.

Upon request of the Company, the Trustee shall return:

(a) To the Company, any Company Contribution or Participant Contribution made
under a mistake of fact. The amount that shall be returned shall not exceed the
excess of the amount contributed (reduced to reflect any decrease in the net
worth of the Trust Fund attributable thereto) over the amount that would have
been contributed without the mistake of fact. Appropriate reductions shall be
made in the accounts of Participants to reflect the return of any contributions
previously credited to such accounts. However, no contribution shall be returned
to the extent that such reduction would reduce the account of a Participant to
an amount less than the balance that would have been credited to his account had
the contribution not been made. Any contribution made under a mistake of fact
shall be returned within one year after the date of payment.

(b) To the Company, any Company Contribution or Before-Tax Contribution that is
not deductible under Code section 404. The Company shall pay any returned
Before-Tax Contribution to the appropriate Participant as soon as
administratively practicable, subject to any required withholding. All
contributions under the Plan (except After-Tax Contributions and contributions
discussed in section 3.1) are expressly conditioned upon their deductibility for
federal income tax purposes. The amount that shall be returned shall be the
excess of the amount contributed (reduced to reflect any decrease in the net
worth of the Trust Fund attributable thereto) over the amount that would have
been contributed if there had not been a mistake in determining the deduction.
Appropriate reductions shall be made in the accounts of Participants to reflect
the return of any contributions previously credited to such accounts. However,
no contribution shall be returned to the extent that such reduction would reduce
the account(s) of a Participant to an amount less than the balance that would
have been credited to his account(s) had the contribution not been made. Any
contribution conditioned on its deductibility shall be returned within one year
after it is disallowed as a deduction.

 

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3.8 Limitation on Annual Additions.

(a) Code section 415 Limit.

(i) For 2001 Limitation Year. This paragraph applies only for the Limitation
Year beginning on December 31, 2001. Except to the extend permitted under
section 3.1(c) of the Plan and section 414(v) of the Code, if applicable, the
Annual Additions to a Participant’s account(s) in this Plan and any other
defined contribution plan maintained by the Controlled Group for the Limitation
Year shall not exceed in the aggregate the lesser of (i) 25% of such Employee’s
Compensation or (ii) $35,000.

(ii) Limitation Years After 2001. This paragraph applies for Limitation Years
beginning on and after December 31, 2002. Except to the extent permitted under
section 3.1(c) of the Plan and section 414(v) of the Code, if applicable, the
annual addition that may be contributed or allocated to a Participant’s account
under the Plan for any Limitation Year shall not exceed the lesser of:

(A) $40,000, as adjusted for increases in the cost of living under
section 415(d) of the Code, or

(B) 100% of the Participant’s Compensation, within the meaning of
section 415(c)(3) of the Code, for the Limitation Year.

The compensation limit referred to in (B) shall not apply to any contribution
for medical benefits after separation from service (within the meaning of
section 401(h) or section 419A(f)(2) of the Code) which is otherwise treated as
an annual addition.

(b) Correction. If, as a result of a reasonable error in estimating
Compensation, or as a result of the allocation of forfeitures, or as a result of
other facts and circumstances as provided in the regulations under Code
section 415, the Annual Additions to a Participant’s Account(s) in this Plan
would, but for this subsection, exceed the foregoing limits, the Annual
Additions shall be reduced, to the extent necessary, in the following order:
(i) unmatched After-Tax Contributions, (ii) unmatched Roth Contributions
(iii) unmatched Before-Tax Contributions, (iv) matched After-Tax Contributions
(and the corresponding match), (v) matched Roth Contributions, and (vi) matched
Before-Tax Contributions (and the corresponding match). The Plan shall pay any
reduction in the Participant Contributions to the Participant as soon as
administratively practicable, subject to any required withholding. The amount of
Participant Contributions returned to the Participant shall be adjusted to
reflect any increase or decrease in the net value of the Trust Fund attributable
to such contributions for the Plan Year. The amount of any reduction of Company
Contributions shall be placed in a suspense account in the Trust Fund and used
to reduce Company Contributions to the Plan. The following rules shall apply to
such suspense account: (i) no further Company Contributions may be made if the
allocation thereof would be precluded by Code section 415; (ii) any increase or
decrease in the net value of the Trust Fund attributable to the suspense account
shall not be allocated to the suspense account, but shall be allocated to the
remainder of the Trust Fund; and (iii) all amounts held in the suspense account
shall be allocated as of each succeeding allocation date on which forfeitures
may be allocated pursuant to section 5.5 (and may be allocated more frequently
if the Committee so directs), until the suspense account is exhausted.

(c) Other Plans. The Controlled Group may also maintain other defined
contribution plans. If any refunds or reductions are required to satisfy the
limit of subsection (a), the Participant’s Annual Additions under the other
defined contribution plan shall be reduced to the extent necessary. If further
reduction is necessary, the Participant’s Annual Additions under this Plan shall
be reduced, in the order specified in subsection (b), to the extent necessary.

 

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(d) Special ESOP Rules. Any dividend paid with respect to Stock is not treated
as an annual addition.

3.9 Contribution Limits for Highly Compensated Employees (ADP Test).

(a) Limits on Contributions. Notwithstanding any provision in this Plan to the
contrary, the actual deferral percentage (“ADP”) test of Code section 401(k)(3)
shall be satisfied. Code section 401(k), the regulations issued thereunder, and
Internal Revenue Service guidance issued thereunder are hereby incorporated by
reference. The ADP test shall be performed using the current year testing
method.

(b) Permissible Variations of the ADP Test. To the extent permitted by the
regulations under Code sections 401(m) and 401(k), Before-Tax Contributions and
QNECs may be used to satisfy an ACP test of section 3.10 if they are not used to
satisfy the ADP test. The Committee may elect to exclude from the ADP test those
Non-Highly Compensated Employees who, at the end of the Plan Year, had not
attained age 21 and/or whose Period of Service was for less than one year.

(c) Advance Limitation of Before-Tax Contributions or Company Matching
Contributions. The Committee may limit the Before-Tax Contributions of any
Highly Compensated Employee (or any Employee expected to be a Highly Compensated
Employee) at any time during the Plan Year (with the result that his share of
Company Matching Contributions may be limited). This limitation may be made, if
practicable, whenever the Committee believes that any of the limits of this
Article will not be satisfied.

(d) Corrections to Satisfy Test. If the ADP test is not satisfied, the Committee
shall decide which one or more of the following methods shall be employed to
satisfy the ADP test:

(i) The Company may make QNECs to the Plan within 2 1/2 months after the close
of the Plan Year if possible, and in no event later than 12 months after the
close of the Plan Year.

(ii) Before-Tax Contributions and Roth Contributions of Highly Compensated
Employees may be returned to Highly Compensated Employees, without the consent
of either a Highly Compensated Employee or his Spouse, subject to the rules of
subsection (e). Any such return shall be made within 2 1/2 months after the
close of the Plan Year if possible, and in no event later than 12 months after
the close of the Plan Year. Any match attributable to such returned amounts
shall be forfeited. Unmatched Before-Tax Contributions shall be returned first.

(e) Determining Amounts Returned. If the ADP test is not satisfied and the
Committee elects to return or recharacterize contributions pursuant to paragraph
(d)(ii) above, the following procedure shall be applied to determine the amounts
returned or recharacterized. First, the aggregate excess contribution for all
Highly Compensated Employees as a group shall be determined by calculating the
amount by which the Before Tax Contributions of the Highly Compensated
Employee(s) with the highest actual deferral ratio (as defined in Code section
401(k)) must be reduced until the actual deferral ratio for such Highly
Compensated Employee(s) is reduced to the greater of (i) the actual deferral
ratio that causes the ADP test to be satisfied or (ii) the actual deferral ratio
of the Highly Compensated Employee(s) with the next highest actual deferral
ratio. The calculation described in the preceding sentence shall be continued
until the ADP test is satisfied. The aggregate excess contribution shall be
equal to the sum of the amounts by which the Highly Compensated Employees’
Before Tax Contributions must be reduced to cause the ADP test to be satisfied.
Next, the Highly Compensated Employee(s) with the highest numerator for purposes
of calculating the actual deferral ratio (the “ADP Numerator”) shall have an
amount returned equal to the lesser of (i) the amount that will cause the ADP
Numerator of such

 

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Highly Compensated Employee(s) to equal the ADP Numerator of the Highly
Compensated Employee(s) with the next highest ADP Numerator or (ii) the amount
of the aggregate excess contribution. Highly Compensated Employees who have the
same ADP Numerator shall have an equal dollar amount of Before Tax Contributions
reduced. This procedure shall be repeated until the aggregate excess
contribution is exhausted. The amounts returned shall be reduced by any amounts
previously returned. The amounts returned shall be adjusted to reflect any
increase or decrease in the net worth of the Trust Fund attributable to such
contributions through the date of the distribution of such contributions. The
Company may use any reasonable method to calculate the adjustment.

3.10 Contribution Limits for Highly Compensated Employees (ACP Test).

(a) Limits on Contributions. Notwithstanding any provision in this Plan to the
contrary, the actual contribution percentage (“ACP”) test of Code
section 401(m)(2) shall be satisfied. Code section 401(m), the regulations
issued thereunder, and Internal Revenue Service guidance issued thereunder are
hereby incorporated by reference. The ACP test shall be performed using the
current year testing method. To the extent Company Matching Contributions are
made to the ESOP portion of the Plan, the Plan will perform one ACP test for the
After-Tax Contributions and a separate ACP test for the Company Matching
Contributions. To the extent Company Matching Contributions are made, but not
under the ESOP portion of the Plan, the ACP test will include both After-Tax
Contributions and Company Matching Contributions in the same ACP test.

(b) Permissible Variations of the ACP Test. To the extent permitted by the
regulations under Code sections 401(m) and 401(k), Before-Tax Contributions and
QNECs may be used to satisfy one ACP test if not used to satisfy the ADP test or
the other ACP test. The Committee may elect to exclude from either or both ACP
tests those Non-Highly Compensated Employees who, at the end of the Plan Year,
had not attained age 21 and/or whose Period of Service was for less than one
year.

(c) Corrections to Satisfy Test. If an ACP test is not satisfied, the Committee
shall decide which one or more of the following methods shall be employed to
satisfy the ACP test. The corrections shall be made with 2-1/2 months after the
close of the Plan Year if possible, and in no event later than 12 months after
the close of the Plan Year.

(i) The Company may make QNECs to the Plan, pursuant to section 3.12.

(ii) The vested match allocated to any Highly Compensated Employee for the Plan
Year may be paid to such Highly Compensated Employee, without the consent of
either the Highly Compensated Employee or his Spouse, subject to the rules of
subsection (d).

(iii) Those Before-Tax, Roth and After-Tax Contributions that are taken into
account for this ACP test for any Highly Compensated Employee may be returned to
such Highly Compensated Employee, without the consent of either the Highly
Compensated Employee or his Spouse, subject to the rules of subsection (d).
Unmatched After-Tax Contributions shall be returned first. If any matched
contribution is returned, then the associated match shall be forfeited (unless
it has already been paid to the Highly Compensated Employee pursuant to
paragraph (ii)).

(d) Determining Amount Returned. If the ACP test is not satisfied and the
Committee elects to return the match or Participant Contributions pursuant to
paragraph (c) above, the following procedure shall be applied to determine the
amounts returned. First, the total excess aggregate contribution for all Highly
Compensated Employees as a group shall be determined by calculating the amount
by which the amounts subject to this test for the Highly Compensated Employee(s)
with the highest actual contribution ratio (as defined in Code section 401(m))
must be reduced until the actual

 

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contribution ratio for such Highly Compensated Employee(s) is reduced to the
greater of (i) the actual contribution ratio that causes the ACP test to be
satisfied or (ii) the actual contribution ratio of the Highly Compensated
Employee(s) with the next highest actual contribution ratio. The calculation
described in the preceding sentence shall be continued until the ACP test is
satisfied. The total excess aggregate contribution shall be equal to the sum of
the amounts by which the Highly Compensated Employees’ match (and other
contributions subject to this test) must be reduced to cause the ACP test to be
satisfied. Next, the Highly Compensated Employee(s) with the highest numerator
for purposes of calculating the actual contribution ratio (the “ACP Numerator”)
shall have an amount returned equal to the lesser of (i) the amount that will
cause the ACP Numerator of such Highly Compensated Employee(s) to equal the ACP
Numerator of the Highly Compensated Employee(s) with the next highest ACP
Numerator or (ii) the amount of the total excess aggregate contribution. Highly
Compensated Employees who have the same ACP Numerator shall have an equal dollar
amount returned. This procedure shall be repeated until the total excess
aggregate contribution is exhausted. The amounts returned shall be adjusted to
reflect any increase or decrease in the net worth of the Trust Fund attributable
to such contributions through the date of the distribution of such
contributions. The Company may use any reasonable method to calculate the
adjustment.

3.11 Contribution Limits for Highly Compensated Employees (Multiple Use).

(a) Limits on Contributions. Notwithstanding any provision in this Plan to the
contrary, the multiple use test described in the regulations under Code
section 401(m) shall be satisfied. Code section 401(m) and the regulations
thereunder are hereby incorporated by reference.

(b) Corrections to Satisfy Multiple Use Test. If the multiple use test is not
satisfied, the Company shall cause the contributions to the accounts of the
Highly Compensated Employees to be adjusted using one or more of the methods
described in subsections 3.9(d) and 3.10(c). The Company shall apply such
methods to all Highly Compensated Employees. The Company may also use any other
correction method permitted in the regulations under Code section 401(m).

(c) Repeal of Multiple Use Test. The multiple use test described in Treasury
Regulation section 1.401(m)-2 and this section 3.11 shall not apply for Plan
Years beginning on and after December 31, 2002.

3.12 QNECs.

QNECs shall satisfy all of the following requirements:

(a) QNECs shall be made within 2 1/2 months after the close of the Plan Year to
which they apply, if possible, and in no event later than 12 months after the
close of such Plan Year. QNECs shall be nonforfeitable and subject to the
restrictions of Code section 401(k)(2)(B) and (C) when made.

(b) As of the last day of each Plan Year, the Committee shall allocate the QNECs
for such Plan Year. These amounts shall be allocated to the Before-Tax accounts
of those Non-Highly Compensated Employees who made Participant Contributions as
follows:

(i) QNECs shall be allocated to the Before-Tax accounts of such Non-Highly
Compensated Employee(s) with the least Compensation, until either the QNECs are
exhausted or the limit of section 3.8 is reached for such Non-Highly Compensated
Employee(s).

 

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(ii) Any remaining QNECs shall be allocated to the Before-Tax accounts of such
Non-Highly Compensated Employee(s) with the next lowest Compensation, until
either the QNECs are exhausted or the limit of section 3.8 is reached for such
Non-Highly Compensated Employee(s).

(iii) The procedure in paragraph (ii) shall be repeated until all QNECs have
been allocated.

(c) For purposes of the ADP Test and the ACP Test set forth in Sections 3.9 and
3.10, respectively, no QNEC shall be taken into consideration for any Non-Highly
Compensated Employee to the extent that such QNEC exceeds the product of
(i) that Non-Highly Compensation Employee’s Compensation and (ii) the greater of
(A) five percent (5%) or (B) two times the Plan’s Representative Contribution
Rate (as defined in paragraph (i) below). Any QNEC taken into account for
purposes of the ACP Test set forth in Section 3.10 shall not be taken into
account for purposes of the ADP Test set forth in Section 3.9, including the
determination of the Representative Contribution Rate (as defined in paragraph
(ii) below) for purposes of the ADP Test. Any QNEC taken into account for
purposes of the ADP Test set forth in Section 3.9 shall not be taken into
account for purposes of the ACP Test set forth in Section 3.10, including the
determination of the Representative Contribution Rate for purposes of the ACP
Test.

(i) The “Representative Contribution Rate” is the greater of:

(A) the lowest Applicable Contribution Rate of any Non-Highly Compensated
Employee among a group of eligible Non-Highly Compensation Employees that
consists of one-half of all eligible Non-Highly Compensated Employee for the
Plan Year; or

(B) the lowest Applicable Contribution Rate of any eligible Non-Highly
Compensated Employee in the group of all eligible Non-Highly Compensated
Employees for the Plan Year and who is employed by the Company on the last day
of the Plan Year.

(ii) The “Applicable Contribution Rate” for a Non-Highly Compensated Employee is
the quotient of the QNEC made for such Non-Highly Compensated Employee for a
Plan Year divided by the Compensation of the Non-Highly Compensated Employee for
the same Plan Year.

(iii) Notwithstanding the foregoing, QNECs that are made in connection with the
Company’s obligation to pay prevailing wages under the Davis Bacon Act (46 Stat.
1949), Public Law 71-98, Service Contract Act of 1965 (79 Stat. 1965), or
similar legislation can be taken into account for a Plan Year for a Non-Highly
Compensated Employee to the extent that the QNEC for such Non-Highly Compensated
Employee does not exceed ten percent (10%) of that Non-Highly Compensated
Employee’s Compensation.

(iv) QNECs taken into account for purposes of satisfying the ACP Test pursuant
to Section 3.10(c)(i), satisfying any other ADP or ACP test, or the requirements
of U.S. Treasury Regulations §1.401(k)-3 (pertaining to safe harbor plans),
§1.401(m)-3 (pertaining to safe harbor plans) or §1.401(k)-4 (pertaining to
SIMPLE 401(k) plans) cannot be taken into account for purposes of satisfying the
ADP Test pursuant to Section 3.9(d)(i).

(v) QNECs taken into account for purposes of satisfying the ADP Test pursuant to
Section 3.9(d)(i), satisfying any other ACP or ADP test, or the requirements of
U.S. Treasury Regulations §1.401(k)-3 (pertaining to safe harbor plans),
§1.401(m)-3 (pertaining to safe harbor plans) or §1.401(k)-4 (pertaining to
SIMPLE 401(k) plans) cannot be taken into account for purposes of satisfying the
ACP Test pursuant to Section 3.10(c)(i).

 

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3.13 Military Service.

Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Code.

 

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ARTICLE IIIA

ESOP Provisions

3A.1 ESOP Portion of the Plan.

Notwithstanding anything in this Article IIIA to the contrary, the employee
stock ownership plan (“ESOP”) portion of the Plan is frozen effective May 14,
2004. No contributions shall be made to the ESOP portion of the Plan on or after
May 14, 2004 and no new Acquisition Loans may be incurred by the Plan on or
after May 14, 2004.

This Article IIIA sets forth special provisions applicable only to the ESOP
portion of the Plan. The ESOP is an employee stock ownership plan within the
meaning of Code section 4975(e)(7). The ESOP is maintained as a portion of the
Plan as authorized by Treasury Regulations section 54.4975-11(a)(5). Except as
provided in section 3A.4, the ESOP shall be comprised of the ESOP Accounts
established under the Plan. Except as provided in section 3A.4, any reference in
this Article to the ESOP portion of the Plan shall mean the ESOP Accounts
established under the Plan. Unless otherwise specifically stated therein or
unless the context otherwise requires, all other Articles of this Plan apply to
the Plan as a whole.

3A.2 Participating Company Contributions.

Each Participating Company shall contribute to the ESOP such amounts as are
required under Article III. Such contributions may be made in cash or Stock or a
combination thereof.

3A.3 Investment of Participating Company Contributions.

All contributions to the ESOP shall be invested primarily in Stock or used to
repay Acquisition Loans.

3A.4 Investment of ESOP Accounts.

The ESOP is designed to invest primarily in qualifying employer securities, as
defined in Code section 409(l). Moreover, notwithstanding any provision of the
Plan to the contrary, all amounts transferred to the ESOP or held in the ESOP
shall be invested in Stock except for the following amounts:

(a) Dividends awaiting distribution in accordance with section 3A.7;

(b) Amounts needed to discharge Acquisition Loan installments due in the short
term; and

(c) Cash balances as set forth in the Trust Agreement.

Amounts in ESOP Accounts which are invested in investment vehicles other than
the Qwest Shares Fund or qualifying employer securities pursuant to section 3A.9
shall not be considered as amounts held under the ESOP portion of the Plan. In
the event amounts held in the ESOP Account are invested in vehicles other than
the Qwest Shares Fund and are subsequently invested in the Qwest Shares Fund,
such amounts shall be held in the ESOP portion of the Plan to the extent they
are invested in the Qwest Shares Fund.

 

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3A.5 Acquisition Loans.

The Plan may incur Acquisition Loans from time to time to finance the
acquisition of Financed Shares or to repay a prior Acquisition Loan. An
installment obligation incurred in connection with the purchase of Stock shall
constitute an Acquisition Loan.

(a) An Acquisition Loan shall be for a specific term, shall bear a reasonable
rate of interest and shall not be payable on demand except in the event of
default. An Acquisition Loan shall provide for full payment immediately upon a
Change in Control (as defined in section 3A.8).

(b) An Acquisition Loan may be secured by a collateral pledge of the Financed
Shares so acquired, provided that such pledge does not violate regulations
promulgated by the Federal Reserve Board or any other applicable law or
regulation. No other Trust Fund assets may be pledged as collateral for an
Acquisition Loan, and no lender shall have recourse against Trust Fund assets
other than any Financed Shares remaining subject to pledge. Any pledge of
Financed Shares must provide for the release of shares so pledged under either
the General Rule or the Special Rule (as defined in paragraphs (f) and
(g) below).

(c) Within a reasonable time after receipt by the Trustee of the proceeds of an
Acquisition Loan, the Trustee shall, as directed by the Committee, apply the
loan proceeds to acquire Stock from either Qwest or by open market purchases, or
to repay an Acquisition Loan.

(d) Payments of principal and interest on any Acquisition Loan during a Plan
Year shall not exceed an amount equal to the sum of Company Matching
Contributions and Trust Fund earnings in or attributable to the ESOP during or
prior to such Plan Year, less payments with respect to the Acquisition Loan in
prior Plan Years. For this purpose, Trust Fund earnings in or attributable to
the ESOP shall include dividends on Financed Shares held in a loan suspense
account, as such term is defined in subsection (e), earnings on such dividends,
earnings on the proceeds of Acquisition Loans awaiting investment in Stock,
earnings on Company Matching Contributions, and such other amounts as may be
permitted by law.

(e) Any Financed Shares acquired by the Trustee shall initially be credited to a
“loan suspense account” and shall be allocated to the ESOP Accounts with respect
to a Plan Year on the basis of payments on the Acquisition Loan made by the
Trustee during the Plan Year. The number of Financed Shares to be released from
a loan suspense account for allocation to ESOP Accounts for each Plan Year shall
be determined in accordance with the General Rule or the Special Rule as defined
in subsections (f) and (g) below. With respect to each Acquisition Loan, the
Committee shall determine whether the General Rule or the Special Rule is to
apply.

(f) General Rule: The General Rule is based upon the payment of principal and
interest on the Acquisition Loan. For each Plan Year during the duration of the
Acquisition Loan, the Committee shall release from the loan suspense account a
number of shares equal to the total number of shares held in the loan suspense
account immediately prior to the release, multiplied by a fraction in which:

(i) the numerator is the amount of principal and interest paid for the Plan
Year; and

(ii) the denominator is the sum of the numerator plus the principal and interest
to be paid for all future Plan Years.

 

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(g) Special Rule: The Special Rule is based solely on principal payments. For
each Plan Year during the duration of the Acquisition Loan, the Committee shall
release from the loan suspense account a number of shares equal to the total
number of such shares held in the loan suspense account immediately prior to the
release, multiplied by a fraction in which:

(i) the numerator is the amount of principal paid for the Plan Year; and

(ii) the denominator is the sum of the numerator plus the principal to be paid
for all future Plan Years.

(h) The Committee may apply the Special Rule only if the Acquisition Loan
provides for annual payments of principal and interest at a cumulative rate
which is not less rapid at any time than level annual payments of such amounts
for ten years, and only if the interest included in any payment is disregarded
to the extent that it would be determined to be interest under standard loan
amortization tables. The Special Rule shall not be applicable from the time
that, by reason of a renewal, extension or refinancing, the sum of the expired
duration of the Acquisition Loan, the renewal period, the extension period and
the duration of a new Acquisition Loan exceeds ten years.

(i) In determining the number of shares to be released for any Plan Year under
either the General Rule or the Special Rule:

(i) the number of future years under the Acquisition Loan must be definitely
ascertainable and must be determined without taking into account any possible
extensions or renewal periods; and

(ii) if the Acquisition Loan provides for a variable interest rate, the interest
to be paid for all future Plan Years must be computed by using the interest rate
applicable as of the end of the Plan Year for which the determination is being
made.

3A.6 Allocations to ESOP Accounts.

(a) The ESOP Account maintained for each Participant shall be allocated with an
amount set forth in section 3.2.

(b) Financed Shares shall be released from a loan suspense account and allocated
to ESOP Accounts pursuant to section 3.2. The shares will be released under the
General Rule or the Special Rule (whichever is applicable), the number released
based on the sum of (i) loan payments already made during such Plan Year, and
(ii) Trust Fund assets (subject to the limitation in section 3A5(d)) that have
been designated by the Committee to be used for loan payments during such Plan
Year.

3A.7 Distribution of Dividends.

Dividends on the Stock held in each ESOP Account shall be deposited in an
interest bearing account and distributed in cash to such individuals as
determined by the Committee. Such dividends may be distributed in cash and will
be distributed no later than 90 days after the last day of the Plan Year in
which such dividends were paid. Interest earned on the dividends will be
allocated to the ESOP Account as reinvested earnings on Company Matching
Contributions. Dividends on the Stock held in the loan suspense account
described in section 3A.5 shall be used to repay any outstanding Acquisition
Loans. See section 13.11 for missing Account Owners and subsection 5.2(f)
regarding uncashed checks.

 

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Effective January 1, 2002, Participants may elect to receive a cash distribution
attributable to dividends paid with respect to Stock held in their ESOP Accounts
or to have such dividends reinvested in Stock. In the absence of an election,
dividends shall be reinvested in Stock. The Committee may establish
non-discriminatory rules and procedures pertaining to the payment and
reinvestment of dividends including, but not limited to, the establishment of a
de minimis amount eligible to be distributed in cash without Participant
consent.

3A.8 Provision for Allocation of ESOP Shares in Connection with Change in
Control.

(a) Application. Notwithstanding any other provisions of this Plan, the
provisions of this section 3A.8 shall apply.

(b) Change in Control Provisions. Upon the occurrence of a Change in Control (as
defined in subsection (f)), the following provisions shall be applicable for the
period commencing on the date on which a Change in Control occurs and ending
with the earlier of the fifth anniversary of such date or the date on which all
unallocated Stock have been fully allocated to the ESOP Accounts of Participants
(the “Change in Control Period”):

(i) upon a Change in Control, QCI shall immediately make a contribution to the
Plan in an amount sufficient to permit the Trustee to pay off all outstanding
Acquisition Loans;

(ii) the Trustee shall immediately use such contribution to repay all
outstanding Acquisition Loans;

(iii) Financed Shares released from a loan suspense account as a result of such
prepayment of an Acquisition Loan shall be allocated to the ESOP Accounts of
Participants, without regard to the matching formula in section 3.2, in
proportion to their Compensation for the Plan Year;

(iv) to the extent that such allocations of released shares, together with other
annual additions, would exceed the limitations in Article III, such shares shall
be reallocated among other Participants to the maximum extent permitted;

(v) any released shares which may not be allocated to Participants’ ESOP
Accounts in the Plan Year in which the Change in Control occurs shall be held in
a section 415 suspense account, pursuant to Treasury Regulations
section 1.415-6(b)(6), and shall be allocated to Participants’ ESOP Accounts, in
proportion to their Compensation, in each subsequent year to the maximum extent
permitted by section 415 of the Code.

(c) Restrictions on Trustees. The assets of the Plan shall not be transferred to
any successor Trustee (whether by spin-off, merger, consolidation, transfer of
assets, or otherwise) or to any other funding vehicle unless it is trusteed by a
corporate Trustee which has trust assets in excess of one hundred billion
dollars and such successor Trustee specifically agrees in writing to comply with
the provisions of this section.

(d) Amendment. The provisions of this section may not be amended during a Change
in Control Period without the written consent of a majority of both (i) all
Participants who were actively employed by a Participating Company immediately
prior to the Change in Control, and (ii) all Participants who are actively
employed by a Participating Company at the date of such amendment. A Participant
shall not be deemed to have consented in a form approved by Qwest to any
amendments affecting this section unless actual written consent is received by
QCI.

 

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(e) Restriction on Plan Termination or Merger. The Plan may not be terminated,
nor may the Plan be merged or consolidated with, nor may the assets of the Plan
be transferred to, any other Plan (other than pursuant to an interchange
agreement) during any period in which any shares are unallocated.

(f) Change in Control. For purposes of this section 3A.8, a “Change in Control”
shall be deemed to have occurred if a change in the beneficial ownership of
QCI’s voting stock or a change in the composition of its board of directors is
the result of any of the following:

(i) any “person” (as such term is used in sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) is or becomes a beneficial owner of (or
otherwise has the authority to vote), directly or indirectly, stock representing
20% or more of the total voting power of its then outstanding stock, unless
through a transaction arranged by, or consummated with the prior approval of its
board of directors;

(ii) if a tender offer (for which a filing has been made with the Securities and
Exchange Commission which purports to comply with the requirements of
section 14(d) of the Securities Exchange Act of 1934 and the corresponding
Securities and Exchange Commission rules) is made for Stock, which has not been
arranged by or consummated with the prior approval of QCI’s board of directors,
then upon the first to occur: either (i) any time during the offer when the
person (using the definition in (i) above) making the offer owns or has accepted
for payment Stock with 20% or more of the total voting power of voting stock, or
(ii) three business days before the offer is to terminate unless the offer is
withdrawn first if the person making the offer could own, by the terms of the
offer plus any shares owned by this person, stock with 50% or more of the total
voting power of QCI shares when the offer terminates; or

(iii) any period of two consecutive calendar years during which there shall
cease to be a majority of QCI’s board of directors comprised as follows:
individuals who at the beginning of such period constitute the board of
directors and any new director(s) whose election by the board of directors or
nomination for election by QCI’s stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved.

(g) Notice. QCI shall give written notice to the Trustee of any of the events
described in paragraphs (b)(i), (b)(ii), or (b)(iii) of this section upon the
occurrence of such event.

3A.9 ESOP Diversification.

(a) ESOP Account Diversification Prior to April 8, 2002. The following applies
with respect to Participant diversification of ESOP Accounts prior to April 8,
2002:

(i) Special One-Time Election. An Employee who has attained age 55 may direct
that all or any portion of the amounts credited to his ESOP Account be
transferred among the funds specified in paragraphs (b), (c), (d), (e), (f) and
(i) of section 9.4 in accordance with section 9.3. The direction described in
this section 3A.9(a)(i) may be exercised only one time by any Employee and
applies to amounts in the ESOP Account at the time of the direction.

(ii) Qualified Participant. Each Participant who has attained age 55 and has
completed at least 10 years of participation in the ESOP may elect, in
accordance with section 9.3, that any whole percentage of his ESOP Account be
transferred among the funds specified in paragraphs (b), (c), (d), (e), (f) and
(i) of section 9.4; provided, however, that he shall have no right to make a
transfer

 

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election if the value of his ESOP Account, at the time of the transfer, is $500
or less. The election under this section 3A.9(a)(ii) may be made once each Plan
Year during the six consecutive Plan Years beginning with the Plan Year in which
the Participant first elects a transfer under this subsection.

(iii) Non-Employee Account Owners. A former Employee, Alternate Payee or
beneficiary may direct that all or any portion of the amounts credited to his
ESOP Account be transferred among the funds specified in paragraphs (b), (c),
(d), (e), (f) and (i) of section 9.4 in accordance with section 9.3. There is no
limitation on the number of such transfers.

(iv) Pre-85 Match. The Pre-85 Matching Contribution Account may be invested in
any of the funds specified in paragraphs (b), (c), (d), (e), (f) and (i) of
section 9.4 in accordance with section 9.3.

(v) Management Employee Diversification Election. A Management Employee may
direct that all or a portion of the contributions (and earnings thereon)
credited to his ESOP Account on or after January 1, 2001 be transferred among
the funds specified in paragraphs (b), (c), (d), (e), (f) and (i) of section 9.4
in accordance with sections 9.3 and 9.4.

(vi) Crediting of Diversified Amounts. All diversified amounts shall remain
credited to a Management Employee’s ESOP Account after diversification.

(b) Diversification of ESOP Account Effective April 8, 2002. Notwithstanding any
other provision of the Plan, effective as of April 8, 2002, each Management
Employee, Occupational Employee and non-Employee Account Owner may direct that
all or a portion of the contributions (and earnings thereon) credited to his
ESOP Account, irrespective of when contributed or credited, be transferred among
the funds available for Participant investments as specified in section 9.4, to
the extent such funds are available to receive contributions or transfers.
Effective October 1, 2002, such direction may include an automatic transfer of
funds from the Qwest Shares Fund to other investment funds selected by the
Account Owner.

 

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ARTICLE IV

Interests in the Trust Fund

4.1 Participants’ Accounts.

The Committee shall establish and maintain separate accounts in the name of each
Participant, but the maintenance of such accounts shall not require any
segregation of assets of the Trust Fund. Each account shall contain the
contributions specified below and the increase or decrease in the net worth of
the Trust Fund attributable to such contributions.

(a) Before-Tax Account. A Before-Tax account shall be established for each
Participant who makes Before-Tax Contributions, receives an allocation of QNECs,
or makes a direct transfer of amounts subject to the distribution rules of Code
section 401(k)(2)(B)(i). The Committee may elect to establish subaccounts for
the different types of contributions allocated to this account.

(b) After-Tax Account. An After-Tax account shall be established for each
Participant who makes After-Tax Contributions or who has after-tax contributions
rolled over from another qualified plan or transferred to this Plan, and the
earnings thereon. The Committee may elect to establish subaccounts for the
different types of contributions allocated to this account or for rollovers.

(c) Roth Contribution Account. A Roth Contribution account shall be established
for each eligible Participant who elects to make Roth Contributions in
accordance with Section 402A of the Code and section 3.1(d) of the Plan. Amounts
irrevocably designated by the Participant as Roth Contributions shall be
credited to the Roth Contribution account and cannot be reclassified or
transferred to any other Participant account.

(d) Matching Contribution Account. A Matching Contribution Account shall be
established for each participant who receives an allocation of Company Matching
Contributions on or after May 14, 2004.

(e) ESOP Account. An ESOP Account shall be established for each Participant who
receives an allocation of Company Matching Contributions prior to May 14, 2004.
The ESOP Account shall be comprised of various subaccounts, including the ESOP
Matching Contribution Account and any other subaccounts established by the
Committee.

(f) Rollover Account. A Rollover account shall be established for each
Participant who makes a Rollover Contribution, a direct rollover, or a direct
transfer of employer contributions other than amounts subject to the
distribution rules of Code section 401(k)(2)(B)(i), and the earnings thereon.

(g) Other Accounts. The Committee may establish other accounts, including but
not limited to Roth Rollover accounts, for Participants who have an account or
accounts directly transferred into this Plan from another qualified plan or for
any other purpose as the Committee deems advisable.

4.2 Valuation of Trust Fund.

(a) General. The Trustee shall value the assets of the Trust Fund as of the
close of business for each day the New York Stock Exchange is open for business,
and as of any other dates determined by the Committee, at their current fair
market value and determine the net worth of the Trust Fund. In addition, the
Committee may direct the Trustee to have a special valuation of the assets of
the Trust Fund when the Committee determines, in its sole discretion, that such
valuation is necessary or

 

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appropriate. The Trustee shall allocate the expenses of the Trust Fund occurring
since the preceding Valuation Date, pursuant to section 9.2, and then determine
the increase or decrease in the net worth of the Trust Fund that has occurred
since the preceding Valuation Date. The Trustee shall determine the share of the
increase or decrease that is attributable to the non-separately accounted for
portion of the Trust Fund and to any amount separately accounted for, as
described in subsections (b) and (c).

(b) Mandatory Separate Accounting. The Trustee shall separately account for
(i) loans and loan repayments, pursuant to section 7.3, (ii) any individually
directed investments permitted under section 9.3, and (iii) amounts subject to a
Domestic Relations Order, to provide a more equitable allocation of any increase
or decrease in the net worth of the Trust Fund.

(c) Permissible Separate Accounting. The Trustee may separately account for the
following amounts to provide a more equitable allocation of any increase or
decrease in the net worth of the Trust Fund:

(i) Company Matching Contributions made since the preceding Valuation Date;

(ii) Participant Contributions, Rollover Contributions, and direct transfers
that were received by the Trustee since the preceding Valuation Date;

(iii) Company Matching Contributions and Before-Tax Contributions of Highly
Compensated Employees that may need to be distributed or forfeited to satisfy
the ADP and ACP tests of Article III;

(iv) Any other amounts for which separate accounting will provide a more
equitable allocation of the increase or decrease in the net worth of the Trust
Fund.

4.3 Allocation of Increase or Decrease in Net Worth.

(a) The Trustee shall, as of each Valuation Date, allocate the increase or
decrease in the net worth of the Trust Fund that has occurred since the
preceding Valuation Date between the non-separately accounted for portion of the
Trust Fund and the amounts separately accounted for that are identified in
subsections 4.2(b) and 4.2(c).

(b) The increase or decrease attributable to the non-separately accounted for
portion of the Trust Fund shall be allocated among the appropriate accounts in
the ratio that the dollar value of each such account bore to the aggregate
dollar value of all such accounts on the preceding Valuation Date after all
allocations and credits made as of such date had been completed.

(c) After the allocation in subsection (b) is completed, the Trustee shall
allocate any amounts separately accounted for (including the increase or
decrease in the net worth of the Trust Fund attributable to such amounts) to the
appropriate account(s) if such separate accounting is no longer necessary.

(d) Notwithstanding any other provision in this Article IV, and in accordance
with the Trust Agreement, if Participants’ instructions to liquidate investments
in any fund cannot be effected by the settlement date for purchases in the fund
in which the proceeds of such liquidation are to be invested, the Trustee shall
make such purchases as and when cash becomes available. On any day that the
Trustee determines that it will be unable to purchase units of investment in any
fund for such day because of market conditions, such purchase shall be effective
as soon as practicable. In addition, QAM may

 

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establish special procedures to value the purchases and redemptions during any
period of market upheaval, when transactions are suspended, when there are large
redemption requests from Account Owners, or to handle any other extraordinary or
abnormal situation. In the event that shares of a fund are sold over a period
extending beyond one day in accordance with this section, the value ascribed to
such shares shall be the average price of the shares for the extended period.
The average price shall apply only to those shares that are sold and not to the
fund as a whole.

4.4 Fees.

In accordance with section 8.8, the Committee or, as the case may be, QAM, has
full discretionary authority to allocate to Accounts, in any manner the
Committee or QAM determines to be equitable, those Plan taxes and administrative
and investment-related expenses that are properly chargeable to the Plan and
that are not paid by use of forfeitures or by the Company.

 

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ARTICLE V

Amount of Benefits

5.1 Vesting Schedule - Forfeitures.

(a) Management. A Management Employee shall have a fully vested and
nonforfeitable interest in all his Account(s) at all times.

(b) Occupational. This subsection applies only to Participants who are
Occupational Employees. All the Participants’ Accounts in this Plan, except for
the Matching Contribution Account and the ESOP Account (if any) (together, the
“Company Contributions Accounts”), are fully vested. Unless one of the
exceptions below provides for faster vesting, a Participant’s Company
Contributions Accounts will be 0% vested until his Period of Service is three
years, at which time the Company Contributions Accounts will be fully vested.

(i) A Participant’s Company Contributions Accounts will be 100% vested if the
Participant is entitled to retire on an immediate service pension under the
Qwest Pension Plan.

(ii) A Participant’s Company Contributions Accounts will be 100% vested if the
Participant separates from service at the expiration of Company-provided
disability benefits.

(iii) A Participant’s Company Contributions Accounts will be 100% vested if the
Participant dies or attains Normal Retirement Age while an Employee.

(iv) A Participant’s Company Contributions Accounts will be 100% vested if the
Participant separates from service pursuant to the terms of the applicable
bargaining agreement that is similar in nature to the provisions of the
Management Separation Plan or, in accordance with a Participating Company’s
practices with respect to technological displacement or layoff.

(v) A Participant’s Company Contributions Accounts will be 100% vested if the
Participant ceases to participate in the Plan as a result of a sale or other
disposition by a Participating Company of (A) substantially all the assets used
by such Participating Company in a trade or business in which the Participant is
employed to an unrelated corporation, or (B) its interest in a subsidiary in
which the Participant is employed to an unrelated entity or individual.

(c) Change in Employment Classification.

(i) In the event an Occupational Employee becomes a Management Employee, all
amounts credited to such Employee shall be 100% vested including amounts
attributable to contributions made on behalf of such Employee while he was an
Occupational Employee regardless of his Period of Service.

(ii) In the event a Management Employee becomes an Occupational Employee, all
amounts credited to such Employee shall be 100% vested including amounts
attributable to contributions made on behalf of such Employee while he is an
Occupational Employee regardless of his Period of Service.

(d) Vesting for Rehires. If a rehired Participant has an Matching Contribution
Account balance and/or an ESOP Account balance when he is rehired (or if his
previously forfeited balance(s) are restored pursuant to section 5.3), all
service from both episodes of employment shall be

 

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taken into account when determining the vested percentage of his Matching
Contribution Account and ESOP Account (if any). If a rehired Participant has
forfeited his Matching Contribution Account and/or ESOP Account, the forfeiture
may be restored under section 5.3; whether or not such forfeiture is restored,
all service from both episodes of employment shall be taken into account when
determining the vested percentage of the Matching Contribution Account and/or
ESOP Account (if any) if the Participant notifies the Committee of his past
service.

5.2 Forfeitures.

(a) Notwithstanding the vesting rules of section 5.1, the Company Contributions
may be reduced, pursuant to section 3.7, if a contribution is made under a
mistake of fact or if the contribution is not deductible. Any such reduction
shall be allocated as specified in section 3.7.

(b) Notwithstanding the vesting rules of section 5.1, Annual Additions to a
Participant’s accounts and any increase or decrease in the net worth of the
Trust Fund attributable to such Annual Additions may be reduced to satisfy the
limits described in section 3.8. Any such reduction shall be allocated as
specified in section 3.8.

(c) Notwithstanding the vesting rules of section 5.1, Company Matching
Contributions and any increase or decrease in the net worth of the Trust Fund
attributable to such contributions may be forfeited as of the last day of the
Plan Year if the Participant Contribution that they matched was returned under
section 3.1, 3.9, 3.10 or 3.11. Any such forfeiture shall be allocated as
specified in section 5.5.

(d) Notwithstanding the vesting rules of section 5.1, a missing individual’s
vested accounts shall be forfeited as provided in section 13.11. Any such
forfeiture shall be allocated as specified in section 5.5.

(e) A Participant’s non-vested interest in his Matching Contribution Account and
ESOP Account (if any) shall be forfeited on the day he incurs a five-year Period
of Severance, unless an earlier forfeiture is permitted by one of the following
rules. If a Participant has a vested Company Contribution account balance of $0
when he terminates employment with the Controlled Group, his non-vested interest
in his Matching Contribution Account and ESOP Account (if any) shall be
forfeited as of his last day of employment. If a Participant receives a
distribution of his entire vested interest in his Accounts, his non-vested
interest in his Matching Contribution Account and ESOP Account (if any) shall be
forfeited as of the day he received such distribution. Forfeitures pursuant to
this subsection shall be allocated as specified in section 5.5.

(f) The following rules will apply with respect to uncashed checks:

(i) with respect to active Participants, any uncashed check outstanding for one
year or more, whose value is less than $25, will be cancelled, and the amount
will be applied to Plan expenses;

(ii) with respect to Participants who have terminated employment with the
Company, any uncashed check outstanding for one year or more, whose value is
less than $25, will be cancelled, and the amount will be applied to Plan
expenses; and

(iii) any check not described in (i) or (ii) of this subsection shall be treated
in accordance with section 13.11.

 

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5.3 Restoration of Forfeitures.

(a) The forfeiture of a missing individual’s account(s), as described in
section 13.11, shall be restored to such individual if he makes a claim for such
amount.

(b) If a former Participant who has suffered a forfeiture becomes an Employee
before the fifth anniversary of his Severance from Service Date, he may repay to
the Plan the entire amount previously distributed to him within 60 months after
such reemployment; if he does so, any amounts previously forfeited (unadjusted
for any increase or decrease in the value of Trust assets subsequent to the date
on which the forfeiture occurred) shall be reinstated to the Participant’s
Accounts within a reasonable time after such repayment. Such reinstatement shall
be made from forfeitures of Participants occurring during the Plan Year in which
such reinstatement occurs to the extent such forfeitures are attributable to
contributions by the same Participating Company and earnings on such
contributions; provided, however, if such forfeitures are not sufficient to
provide such reinstatement, the reinstatement shall be made from the current
year’s contribution by that Participating Company to the Plan.

(c) If a Participant is rehired after having incurred a five-year Break in
Service from his Severance from Service Date, then no amount forfeited from his
Matching Contribution Account and/or ESOP Account shall be restored to that
account.

(d) All the rights, benefits, and features available to a missing individual
when the forfeiture occurred shall be available with respect to the restored
forfeiture.

5.4 Method of Forfeiture Restoration.

Forfeitures that are restored pursuant to section 5.3 shall be accomplished by
an allocation of the forfeitures occurring during the Plan Year, pursuant to
section 5.5, or if such forfeitures are insufficient, by a special Company
Contribution, pursuant to subsection 3.3(b).

5.5 Allocation of Forfeitures.

As of the last day of each quarter during the Plan Year, the forfeitures that
occurred during the quarter shall be allocated as follows. Forfeitures arising
in accounts of Employees of each Participating Employer shall be aggregated and
then allocated as follows. The forfeitures shall first be used to restore
forfeitures pursuant to section 5.4. Any remaining forfeitures may be used, to
the extent permitted by ERISA, to pay reasonable expenses of Plan administration
and to reduce Company Contributions to the Plan. QCI shall decide on behalf of
each employer, each quarter, the amount of reasonable administrative expenses
that shall be paid out of forfeitures and the amount and type(s) of Company
Contributions the forfeitures shall reduce.

5.6 Transfers - Portability.

If any other employer adopts this or a similar profit sharing plan and enters
into a reciprocal agreement with the Company that provides that (a) the transfer
of a Participant from such employer to the Company (or vice versa) shall not be
deemed a termination of employment for purposes of the plans, and (b) service
with either or both employers shall be credited for purposes of vesting under
both plans, then the transferred Participant’s account shall be unaffected by
the transfer if deemed advisable by the Committee.

 

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ARTICLE VI

Distribution of Benefits

6.1 Beneficiaries.

(a) Designating Beneficiaries. A Participant may designate a beneficiary or
beneficiaries to receive any benefits that may become payable under the Plan on
account of his death and which under the Plan may be paid to a beneficiary other
than his Spouse, and may change or revoke any prior designation of beneficiary
or beneficiaries by filing with the Committee a written designation of
beneficiary signed by him. No such designation shall be effective unless filed
with the Committee prior to the death of the Participant. The last such
designation shall govern the designation of beneficiary. Each such designation
shall be made upon a form furnished by or otherwise acceptable to the Committee.
If no beneficiary has been properly designated, or if no designated beneficiary
survives the Participant, the death benefits, if any, payable to the beneficiary
of the deceased Participant shall be paid to the Participant’s surviving spouse.
If there is no surviving spouse, the estate (which shall include the
Participant’s probate estate or living trust) shall be the beneficiary, provided
that in any case where there is no such personal representative of the
Participant’s estate duly appointed and acting in that capacity within 90 days
after the Participant’s death (or such extended period as the Committee
determines is reasonably necessary to allow such personal representative to be
appointed, but not to exceed 180 days after the Participant’s death), such
benefits shall be payable in the following order:

(i) the Participant’s issue;

(ii) the Participant’s parents;

(iii) the issue of the Participant’s parents; or

(iv) such person as may be chosen in the discretion of the Committee. A category
of beneficiary described in one of the four clauses set forth above shall only
be eligible to receive a benefit if no person described in a preceding clause is
alive at the time of death. If the issue described in clauses (i) and (ii) are
of different degrees of kinship to the Participant, the rules of intestate
succession then in existence under the Colorado Probate Code shall determine the
amount to be taken by each beneficiary. As a condition to such payment, the
Committee may require such receipts, releases, indemnity agreements, proofs and
other documents which it may deem necessary or desirable. To the extent these
provisions for designating beneficiaries are determined by the Committee or its
delegate to conflict with state or local slayers’ laws or ordinances, these
provisions of the Plan shall preempt such laws and shall control any decision by
the Committee or its delegate.

(b) Special Rule for Married Participants. If the Participant is a married
Participant, his or her Spouse shall be the sole beneficiary unless the Spouse
has consented to the designation of a different beneficiary. A Spouse may waive
the right to consent to the designation of a subsequent beneficiary or may
retain such right. To be effective, the Spouse’s consent must be in writing,
witnessed by a notary public, and filed with the Committee. Any spousal consent
shall be effective only as to the Spouse who signed the consent.

(c) Disclaimers. Any individual or legal entity who is a beneficiary may
disclaim all or any portion of his interest in the Plan, provided that the
disclaimer satisfies the requirements of Code section 2518(b) and applicable
state law. The legal guardian of a minor or legally incompetent person may
disclaim for such person. The personal representative (or the individual or
legal entity acting in the capacity of the personal representative according to
applicable state law) may disclaim on behalf of a beneficiary who has died. The
amount disclaimed shall be distributed as if the disclaimant had predeceased the
individual whose death caused the disclaimant to become a beneficiary.

 

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(d) Simultaneous Death. In the event of the occurrence of the death of the
Participant and his beneficiary (and/or contingent beneficiary, if applicable)
at the same time (as recorded on the death certificates), the Participant shall
be deemed to have survived his beneficiary.

6.2 Consent.

(a) General. Except for distributions identified in subsection (b),
distributions may be made only after the appropriate consent has been obtained
under this subsection. Distributions to a Participant or to a beneficiary (other
than a beneficiary of a deceased Alternate Payee) shall be made only with the
Participant’s or beneficiary’s consent to the time of distribution.
Distributions to an Alternate Payee or his or her beneficiary shall be made as
specified in the QDRO and in accordance with section 13.9. To be effective, the
consent must be filed with the Committee according to the procedures adopted by
the Committee, within 90 days before the distribution is to commence. A consent
once given shall be irrevocable after distribution has been processed.

(b) Exceptions to General Rule. Consent is not required for the following
distributions:

(i) Corrective distributions under Article III that are returned to the
Participant because the contribution is not deductible by the Company or because
the contribution would exceed the limits of Code sections 401(a)(17), 415(c)(1),
402(g), 401(k)(3), 401(m)(2), 401(m)(9), or any other limitation of the Code;

(ii) Distributions that are required to comply with Code section 401(a)(9);

(iii) Distributions pursuant to Code section 401(a)(14);

(iv) Distributions of dividends pursuant to section 3A.7;

(v) Distributions of invalid rollovers pursuant to subsection 3.6(a); and

(vi) Distributions that must occur by a deadline specified in the Plan.

6.3 Distributable Amount.

The distributable amount of the Participant’s Account(s) is the value of his
Account(s) as of the Valuation Date coincident with or next preceding the date
distribution is made to the Participant or beneficiary, reduced by any amount
that is payable to an Alternate Payee pursuant to section 13.9, and reduced by
the outstanding balance of any Plan loan for which the Participant has pledged
his account(s). Furthermore, the Committee shall temporarily suspend or limit
distributions (by reducing the distributable amount), as explained in section
13.9, when the Committee is informed that a Domestic Relations Order affecting
the Participant’s Accounts is or may be in the process of becoming QDRO. The
distributable amount shall also be zero (except to the extent necessary to
comply with Code section 401(a)(9)) while the Committee has suspended
withdrawals because it believes that the Plan may have a cause of action against
the Participant, as explained in subsection 13.9(h).

 

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6.4 Manner of Distribution.

(a) General. The distributable amount shall be paid in a single payment,
installments, or partial withdrawal, except as otherwise provided in the
remainder of this section.

(b) Partial Withdrawals and Installments. Except as provided in paragraph (d) of
this Section 6.4 (relating to distributions of $5,000 or less), withdrawals of
less than the distributable amount are available to Employees as specified in
Section 6.6, to those Employees over 70 1/2 who are Five-Percent Owners as
described in paragraph 6.5(c)(ii) and to any former Employees or beneficiaries
eligible to receive a distribution under Section 6.5. A partial withdrawal shall
be taken from the following Accounts in the following order: After-Tax Account
(unmatched After-Tax Contributions and corresponding earnings distributed before
Matched After-Tax Contributions and corresponding earnings); Roth Contribution
Account (unmatched Roth Contributions and corresponding earnings distributed
before Matched Roth Contributions and corresponding earnings); Rollover Account;
Roth Rollover Account; ESOP Account; Matching Contribution Account; and
Before-Tax Account (unmatched Before-Tax Contributions and corresponding
earnings distributed before Matched Before-Tax Contributions and corresponding
earnings). Installment payments made pursuant to section 6.9 shall be made
annually if such installment payments are elected or requested to be made.

(c) Cash or In-Kind. Hardship distributions under section 6.6(d) shall be paid
in cash. All other withdrawals and distributions shall be paid in cash except
(i) to the extent that the withdrawn amount was invested in the Qwest Shares
Fund and the Account Owner elects to receive that portion of his withdrawal in
whole shares of common stock of the Company, as applicable (with fractional
shares paid in cash); or (ii) to the extent that the Committee permits in-kind
distributions. Effective October 1, 2002, in-kind distributions from the SDBAs
are permitted subject to any rules or procedures adopted by the Committee.

(d) Distributions Not Exceeding $1,000. Notwithstanding any provision of this
Plan to the contrary, the Plan shall make a distribution in a single lump sum to
a Participant who has terminated employment and whose vested Account equals
$1,000 or less at the time of the distribution. For purposes of this paragraph,
amounts held in a Participant’s Rollover Contribution Account and Roth Rollover
Account, as described in section 3.6, shall be disregarded for purposes of
determining the value of the Participant’s Account.

(e) Distributions of Accounts More Than $1,000 But Not More Than $5,000.
Notwithstanding any provision of the Plan to the contrary, effective January 1,
2006, the vested Account of a Participant who has terminated employment and
whose vested Account is more than $1,000 but not more than $5,000 at the time of
the distribution shall be paid in a direct rollover to an individual retirement
plan designated by the Committee, unless the Participant elects to have his
vested Account distributed in a single lump sum or in an eligible rollover
distribution pursuant to Section 6.7. For purposes of this Section, amounts held
in a Participant’s Rollover Contribution Account, as described in Section 3.6,
shall be disregarded for purposes of determining the value of the Participant’s
Account.

6.5 Time of Distribution.

All distributions except in-service withdrawals under section 6.6 shall be
subject to the following rules.

(a) Earliest Date of Distribution. Unless an earlier distribution is permitted
by subsection (b) or required by subsection (c), the earliest date that a
Participant may elect to receive a distribution is as follows.

 

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(i) Termination of Employment. A Participant may elect to receive a distribution
as soon as practicable after he terminates employment. Effective January 1,
2002, a Participant’s deferrals, qualified nonelective contributions, qualified
matching contributions and earnings attributable to these contributions shall be
distributed on account of the Participant’s severance from employment. However,
such a distribution shall be subject to the other provisions of the Plan
regarding distributions, other than provisions that require a separation from
service before such amounts may be distributed.

(ii) During Employment. A Participant may not obtain a distribution while
employed by the Controlled Group, except as provided in section 6.6 (relating to
in-service withdrawals) and except as provided in paragraph 6.5(c)(ii) and
(iii) (relating to the minimum distributions required on and after a
Five-Percent Owner’s Required Beginning Date).

(iii) After Death. After the death of the Participant, the Participant’s
beneficiary shall elect to receive a distribution in a lump sum, partial
withdrawal or installments with the Participant’s total Account balance being
distributed to such beneficiary (or the beneficiary’s beneficiary if the
beneficiary dies) over a period not exceeding five years after the date of the
Participant’s death or, if the beneficiary is a designated beneficiary, the
designated beneficiary’s life expectancy. The Plan Administrator may not direct
payment of the deceased Participant’s Account over the life expectancy of the
beneficiary unless payment will commence no later than the December 31 following
the close of the calendar year in which the Participant’s death occurred or, if
the designated beneficiary is the Participant’s surviving Spouse, December 31 of
the calendar year in which the Participant would have attained age 70 1/2. A
beneficiary may accelerate payment of all or some of the deceased Participant’s
Account at any time. In the event the beneficiary, other than a beneficiary who
is the spouse of the Participant, does not elect to receive a full distribution
within five years of the date of the Participant’s death, or the beneficiary has
not elected to begin receiving distributions over his life expectancy as
described above, the Committee shall pay the Participant’s entire account
balance to the beneficiary by the end of the fifth calendar year following the
Participant’s death.

(b) Compliance With Code section 401(a)(14). Notwithstanding subsection (a),
unless a Participant elects otherwise, his distribution shall commence no later
than 60 days after the close of the latest of: (i) the Plan Year in which the
Participant attains Normal Retirement Age; (ii) the Plan Year in which occurs
the tenth anniversary of the year in which the Participant commenced
participation in the Plan; and (iii) the Plan Year in which the Participant
terminates employment with the Controlled Group. If a Participant does not
affirmatively elect a distribution, he shall be deemed to have elected to defer
the distribution to a date later than that specified in the preceding sentence.

(c) Latest Date of Distribution.

(i) Former Employees. Except as provided in section 6.5(c)(iii) or section 6.12,
a Participant who is not an Employee shall receive a single payment of his
distributable amount by his Required Beginning Date. If a Five-Percent Owner
terminates employment after his Required Beginning Date, the Plan shall
distribute the entire distributable amount to him as soon as administratively
practicable after the termination of employment.

(ii) Current Employees. Except as provided in section 6.5(c)(iii) or section
6.12, an Employee who is not a Five-Percent Owner is not required to receive any
distributions until he ceases to be an Employee. An Employee who is a
Five-Percent Owner shall receive annual distributions of at least the minimum
amount required to be distributed pursuant to Code section 401(a)(9). A
Five-Percent Owner may request that his first minimum required distribution be
distributed in the calendar year preceding his Required Beginning Date; the
Committee shall comply with this request to the extent it is administratively
practicable to do so.

 

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(iii) Required Distributions Effective January 1, 2002. With respect to
distributions under the Plan in calendar years beginning on and 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 in January 2001,
notwithstanding any provision of the Plan to the contrary except
section 6.5(a)(iii) above. This paragraph shall continue in effect until the end
of the last calendar year beginning with the effective date of final regulations
under section 401(a)(9) or such other date specified in guidance published by
the Internal Revenue Service. This subsection 6.5(c)(iii) shall be effective
December 31, 2001 with respect to individuals who participated in the Classic
Qwest Plan. The Committee may apply reasonable and nondiscriminatory policies as
it deems appropriate with respect to payment of distributions under this
section.

(d) Alternate Payee. Distributions to an Alternate Payee shall be made in
accordance with the provisions of the QDRO and pursuant to subsection 13.9.

(e) Timing of Small Account Distributions. In the case of a distribution
described in section 6.4(e), distributions shall be made as soon as reasonably
practicable after the Participant becomes eligible to receive a distribution in
accordance with uniformly applied and non-discriminatory procedures.

6.6 In-Service Withdrawals.

A Participant may withdraw amounts from his account(s) while he is employed by
the Company or an Affiliate only as provided in this section and
subsection 6.5(c). To request a withdrawal, a Participant must follow the
procedures established by the Committee. The amount withdrawn shall not exceed
the distributable amount.

(a) Rollover Contribution Account. A Participant may withdraw all or any portion
of his Rollover Contributions Account at any time, subject to the limits of
subsection (c).

(b) After Age 59 1/2 . A Participant who has attained age 59 1/2 may withdraw
all or any portion of his Before-Tax Account, Roth Contribution Account, ESOP
Account, Matching Contribution Account, Rollover Account. Roth Rollover Account
or other accounts at any time, subject to the limits of subsection (c).

(c) Regular In-Service Withdrawals. Withdrawals under this subsection may be
made at any time subject to the limitations contained herein.

(i) Partial Withdrawal.

(A) Amount of Withdrawal. A Participant may withdraw any specified dollar amount
(with respect to distributions made prior to October 1, 2002, in $25 increments,
with a $100 minimum) from his After-Tax Account, Rollover Account, vested
Matching Contribution Account, and vested ESOP Account (if any), except for
(1) any After-Tax Contribution that was matched during the Plan Year of the
withdrawal or the two preceding Plan Years, and (2) any Matching Contribution
Account or ESOP Account contribution for the Plan Year of the withdrawal or for
the preceding two Plan Years, or (3) investment earnings on the amounts in
(1) or (2). . No withdrawals shall be made from Roth Contribution Accounts or
Roth Rollover Accounts.

 

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(B) Source of Withdrawal. A withdrawal under this subsection (i) shall be taken
in the following order: (1) unmatched After-Tax Contributions and corresponding
earnings, (2) matched After-Tax Contributions and corresponding earnings,
(3) Rollover Account, and (4) Matching Contribution Account and ESOP Account (to
the extent those amounts may be withdrawn). Matching Contribution Account and
ESOP Account contributions and investment earnings thereon contributed within
the Plan Year of withdrawal or preceding two Plan Years may not be withdrawn. No
withdrawals shall be made from Roth Contribution Accounts or Roth Rollover
Accounts.

(C) Limits. Only two withdrawals are permitted under this subsection (i) in any
one Plan Year. As soon as administratively practicable after the second
withdrawal, the matching formula for the Employee shall be zero for the next
three months.

(ii) Full Withdrawal.

(A) Amount of Withdrawal. A Participant may withdraw the entire amount from his
After-Tax Account, Rollover Account, vested Matching Contribution Account, and
vested ESOP Account (if any), except for any Company contribution for the Plan
Year of the withdrawal or for the preceding two Plan Years (or investment
earnings thereon). Participants who have not attained age 59  1/2 may not
withdraw amounts from Roth Contribution Accounts and Roth Rollover Accounts.
Participants over age 59 1/2 may elect to withdraw, in addition to those amounts
identified in the preceding sentence, the entire amount from their Before-Tax
Account, Roth Contribution Account and Roth Rollover Account, as the case may
be.

(B) Limits. Only one full withdrawal is permitted under this subsection (ii) in
any one Plan Year, except that a second full withdrawal is permitted if it is
made in conjunction with a hardship withdrawal under subsection (d). As soon as
administratively practicable after the full withdrawal, the matching formula for
the Employee shall be zero for the next six months beginning on the date of
withdrawal. The six-month suspension period shall begin as of the date the full
withdrawal occurs and will run concurrent with a suspension pursuant to
6.6(c)(i)(C) if applicable.

(iii) Committee Procedures. The Committee may establish reasonable procedures,
including but not limited to a prescribed hierarchy of Accounts from which
distributions under this section may be made in accordance with legal
requirements and administrative feasibility.

(d) Hardship. A Participant may withdraw all or any portion of his Before-Tax
Contributions account (but not any earnings attributable to such account after
December 31, 1988) subject to the limits of this subsection, if the Participant
has an immediate and heavy financial need, as defined in subparagraph (i), and
the withdrawal is needed to satisfy the financial need, as explained in
subparagraph (ii), and the withdrawal is not greater than the maximum
permissible withdrawal described in subparagraph (iii).

(i) Financial Need. A distribution will be deemed to be made on account of an
immediate and heavy financial need of a Participant if the distribution is on
account of:

(A) medical expenses described in Code section 213(d) incurred by the
Participant, the Participant’s spouse or any of the Participant’s dependents (as
defined in Code section 152 and, for Plan Years beginning on and after
January 1, 2006, without regard to subsections (b)(1), (b)(2) and (d)(1)(B)
thereof);

(B) purchase (excluding mortgage payments) of a principal residence for the
Participant;

 

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(C) payment of tuition, related educational fees, and room and board expenses
for the next 12 months post secondary education for the Participant or his
spouse, children or dependents (as defined in Code section 152 and, for Plan
Years beginning on and after January 1, 2006, without regard to subsections
(b)(1), (b)(2) and (d)(1)(B) thereof);

(D) the need to prevent the eviction of the Participant from his principal
residence or foreclosure on the mortgage of the Participant’s principal
residence;

(E) for Plan Years beginning on and after January 1, 2006, payment for burial or
funeral expenses for the Participant’s deceased parent, spouse, children or
dependents (as defined in Code section 152 and, for Plan Years beginning on and
after January 1, 2006, without regard to subsection (d)(1)(B) thereof); or

(F) for Plan Years beginning on and after January 1, 2006, expenses for the
repair of damage to the Participant’s principal residence that would qualify for
the casualty deduction under Code section 165 (as determined without regard to
whether the loss exceeds 10% of the Participant’s adjusted gross income).

(ii) Deemed Satisfaction of Need. The withdrawal is deemed to satisfy an
immediate and heavy financial need of the Participant if all of the following
requirements are satisfied: (A) the distribution is not in excess of the
immediate and heavy financial need of the Participant (including amounts
necessary to pay any federal, state, or local income taxes or penalties
reasonably anticipated to result from the hardship withdrawal); (B) the
Participant has requested and obtained all distributions, other than hardship
distributions, and requested and obtained all non-taxable loans currently
available under all Plans maintained by the Company; (C) prior to January 1,
2002 the Participant’s deferrals and additional Participant Contributions under
this Plan and all other plans maintained by the Company will be suspended for at
least 12 months after receipt of the hardship distribution, effective for
distributions on and after January 1, 2002, such contributions will be suspended
for six months after receipt of the distribution; and (D) with respect to
hardship distributions made prior to January 1, 2002 the Participant may not
make, under this Plan and all other plans maintained by the Company, Participant
deferral contributions for the Participant’s taxable year immediately following
the taxable year of the hardship distribution in excess of the applicable limit
under Code section 402(g) for such next taxable year less the amount of such
Participant’s Before Tax Contributions for the taxable year of the hardship
distribution.

(iii) Maximum Withdrawal. An Employee may not withdraw more than the sum of the
amount needed to satisfy his financial need and any taxes and penalties
resulting from the withdrawal. An Employee may not withdraw any increase in the
net worth of the Trust Fund that has occurred and been allocated to his
Before-Tax account after December 31, 1988.

(e) Frequency and Procedures. The Committee shall issue such rules as to the
frequency of withdrawals, and withdrawal procedures, as it deems appropriate,
including requirements as to the proof of immediate and heavy financial need.
The Committee may postpone the withdrawal until after the next Valuation Date.
The Committee may have a special valuation of the Trust Fund performed before a
withdrawal is permitted. The Committee may charge a fee for the withdrawal as
well as a fee for having a special valuation performed.

6.7 Direct Rollover Election.

(a) General Rule. A Participant, an Alternate Payee who is the Spouse or former
Spouse of the Participant, or a surviving Spouse of a deceased Participant
(collectively, the “distributee”)

 

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may direct the Trustee to pay all or any portion of his “eligible rollover
distribution” to an “eligible retirement plan” in a “direct rollover.” Except as
set forth in subsection (b) below, this direct rollover option is not available
to other Account Owners (i.e., non-Spouse beneficiaries and Alternate Payees who
are not the Spouse or former Spouse of the Participant). Within a reasonable
period of time before an eligible rollover distribution, the Committee shall
inform the distributee of this direct rollover option, the appropriate
withholding rules, other rollover options, the options regarding income
taxation, and any other information required by Code section 402(f).

(b) Effective for distributions made due to deaths occurring after March 31,
2007, any individual who is a Beneficiary and who is not otherwise described in
subsection (a) above (a “non-Spouse beneficiary”) may direct the Trustee to pay
all or a portion of his “eligible rollover distribution” to an individual
retirement account described in Code section 408(a) in a “direct rollover” to
such individual retirement account. Within a reasonable period of time before an
eligible rollover distribution to a non-Spouse beneficiary, the Committee shall
inform the non-Spouse beneficiary of this direct rollover option, the
appropriate withholding rules, any other rollover options, the options regarding
income taxation, and any other information required by Code section 402(f).

(c) Definition of Eligible Rollover Distribution. For purposes of this section
only, an “eligible rollover distribution” is any distribution or in-service
withdrawal other than (i) distributions required under Code section 401(a)(9),
(ii) distributions of amounts that have already been subject to federal income
tax (such as defaulted loans or after-tax voluntary contributions),
(iii) installment payments in a series of substantially equal payments made at
least annually and (A) made over a specified period of ten or more years,
(B) made for the life or life expectancy of the distributee, or (C) made for the
joint life or joint life expectancy of the distributee and his designated
beneficiary, (iv) a distribution to satisfy the limits of Code section 415 or
402(g), (v) a distribution to satisfy the ADP, ACP, or multiple use tests,
(vi) any other actual or deemed distribution specified in the regulations issued
under Code section 402(c), or (vii) any hardship withdrawal by an Employee under
age 59 1/2 pursuant to subsection 6.6(d).

(d) Definition of Eligible Retirement Plan. For purposes of this section only,
(i) for a Participant or an Alternate Payee who is the Spouse or former Spouse
of the Participant, an “eligible retirement plan” is an individual retirement
account or annuity described in Code section 408(a) or 408(b), an annuity plan
described in Code section 403(a), or the qualified trust of a defined
contribution plan that accepts eligible rollover distributions, and (ii) for a
surviving Spouse of a deceased Participant, an “eligible retirement plan” is an
individual retirement account or annuity.

(e) Definition of Direct Rollover. For purposes of this section only, a “direct
rollover” is a payment by the Trustee to the eligible retirement plan specified
by the distributee.

(f) If a distributee will receive an eligible rollover distribution of at least
$200, the distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover; provided, however, that a distributee may not elect to have an
eligible rollover distribution of less than $500 paid directly to an eligible
retirement plan unless the distributee elects to have the entire eligible
rollover distribution paid directly to the eligible retirement plan.

6.8 Direct Rollovers of Plan Distributions.

(a) Modification of Definition of Eligible Retirement Plan. For purposes of the
direct rollover provisions in section 6.7 of the Plan, an eligible retirement
plan shall also mean an annuity contract described in section 403(b) of the Code
and an eligible plan under section 457(b) of the Code

 

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which 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 relation order, as defined in
section 414(p) of the Code. For distributions to non-Spouse beneficiaries (as
defined in Section 6.7(b) of the Plan) made due to deaths occurring after
March 31, 2007, an eligible retirement plan shall mean only an individual
retirement account described in Section 408(a) of the Code.

(b) Modification of Definition of Eligible Rollover Distribution To Exclude
Hardship Distributions. For purposes of the direct rollover provisions in
section 6.7 of the Plan, 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.

(c) Modification of Definition of Eligible Rollover Distribution To Include
After-tax Employee Contributions. For purposes of the direct rollover provisions
in section 6.7 of the Plan, 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 section 408(a) or (b) of the Code, or to a qualified defined
contribution plan described in section 401(a) or 403(a) of the Code 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.

6.9 Installments.

(a) General. A Participant may elect in accordance with section 9.6 that all of
the amount distributable be distributed in the form of approximately equal
annual installments to be paid over a period not to exceed the Participant’s
life expectancy (calculated at the time distributions begin, according to IRS
tables, and rounded down to a whole year). Each installment shall consist of an
approximately equal payment amount. Installments are paid annually, at
approximately the same time each year. A Participant who elects installments may
elect a lump sum payment of the remaining balance at any time.

(b) Rehire. If a Participant who is receiving installments becomes an Employee
again, the installments will continue as originally scheduled. A separate
Account will be established for the Participant’s benefits for the later episode
of employment. The Participant’s Account from the earlier episode of employment
is not available for distribution under section 6.6 and is ignored when
determining the amount the Participant can borrow under Article VII. If the
Participant’s later episode of employment terminates before all installments are
paid, then installment payments will continue to be made on the same schedule,
but the amount of each remaining payment will be increased so that the entire
vested balance in all the Participant’s Accounts (from both episodes of
employment) are paid out in the remaining installments.

(c) Installments Unavailable for Participants With SDBA Investments. Effective
May 1, 2000, a Participant may not elect installments if any portion of his
Account is invested in the SDBA. A Participant who elected installments before
May 1, 2000 shall not be permitted to invest any additional amounts in the SDBA,
and shall be required to sell all amounts in the SDBA no later than April 30,
2001.

 

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(d) Accounts and Investments From Which Installments are Taken. An installment
shall be taken pro-rata from each of the Participant’s Accounts, in proportion
to be vested balance of each Account and pro rata from each investment fund in
the Accounts.

6.10 Deferred Withdrawals.

A Participant who has not elected installment payments may elect to receive
deferred withdrawals in any Plan Year. Deferred withdrawals shall either be
(i) not be less than $100 and shall be in increments of $25, or (ii) shall be
the entire vested Account balance (ignoring any dividends that are awaiting
distribution under section 3A.7). A deferred withdrawal shall be taken from the
following Accounts, in the following order: After-Tax Account (unmatched
After-Tax Contributions and corresponding earnings distributed before matched
After-Tax Contributions and corresponding earnings); Roth Contribution Account
(unmatched Roth Contributions and corresponding earnings distributed before
matched Roth Contributions and corresponding earnings); Rollover Account; Roth
Rollover Account ESOP Account; Matching Contribution Account; Before-Tax Account
(unmatched Before-Tax Contributions and corresponding earnings distributed
before matched Before-Tax Contributions and corresponding earnings).

6.11 Return of Basis.

For purposes of Code section 72, the Plan contains two separate contracts, one
for After-Tax Contributions made before 1987 and the investment earnings
thereon, and the other for all other contributions and their investment
earnings.

6.12 Minimum Distribution Requirements.

(a) General Rules.

(i) Effective Date. The provisions of this section will apply for purposes of
determining required minimum distributions for calendar years beginning with the
2002 calendar year.

(ii) Coordination with Minimum Distribution Requirements Previously in Effect.
Required minimum distributions for 2002 under this section will be determined as
follows. If the total amount of 2002 required minimum distributions under the
Plan made to the distributee prior to the effective date of this section equals
or exceeds the required minimum distributions determined under this section,
then no additional distributions will be required to be made for 2002 on or
after such date to the distributee. If the total amount of 2002 required minimum
distributions under the Plan made to the distributee prior to the effective date
of this section is less than the amount determined under this section, then
required minimum distributions for 2002 on and after such date will be
determined so that the total amount of required minimum distributions for 2002
made to the distributee will be the amount determined under this section.

(iii) Precedence. The requirements of this section will take precedence over any
inconsistent provisions of the Plan.

(iv) Requirements of Treasury Regulations Incorporated. All distributions
required under this section will be determined and made in accordance with the
Treasury Regulations under Section 401(a)(9) of the Code.

(v) TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of
this section, distributions may be made under a designation made before
January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and
Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that relate to
section 242(b)(2) of TEFRA.

 

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(b) Time and Manner of Distribution.

(i) Required Beginning Date. The Participant’s entire interest will be
distributed, or begin to be distributed, to the Participant no later than the
Participant’s Required Beginning Date.

(ii) Death of Participant Before Distributions Begin. If the Participant dies
before distributions begin, the Participant’s entire interest will be
distributed, or begin to be distributed, no later than as follows:

(A) If the Participant’s surviving Spouse is the Participant’s sole designated
beneficiary, then distributions to the surviving Spouse will begin by
December 31 of the calendar year immediately following he calendar year in which
the Participant died, or by December 31 of the calendar year in which the
Participant would have attained age 70-1/2, if later.

(B) If the Participant’s surviving Spouse is not the Participant’s sole
designated beneficiary, then distributions to the designated beneficiary will
begin in accordance with the beneficiary’s election by December 31 of the
calendar year immediately following the calendar year in which the Participant
died and payments shall be made in accordance with section 6.12(d). Such
election must be made within a reasonable time prior to the December 31 of the
year containing the anniversary of the Participant’s death. Alternatively the
designated beneficiary may elect to receive his interest in the Plan by
December 31 of the calendar year containing the fifth anniversary of the
Participant’s death. Such election must be made by September 30 of the year
following the year of the Participant’s death and must provide that the
beneficiary’s entire interest shall be distributed by December 31 of the
calendar year containing the fifth anniversary of the Participant’s death. In
the event the beneficiary does not make an election under this subsection, such
beneficiary’s interest shall be paid in a lump sum as soon as practicable after
any election periods expire but in no event no later than December 31 of the
calendar year containing the fifth anniversary of the Participant’s death.

(C) If there is no designated beneficiary as of September 30 of the year
following the year of the Participant’s death, the Participant’s entire interest
will be distributed as soon as practicable, but in no event later than
December 31 of the calendar year containing the fifth anniversary of the
Participant’s death.

(D) If the Participant’ surviving Spouse is the Participant’s sole designated
beneficiary and the surviving Spouse dies after the Participant but before
distributions to the surviving Spouse begin, this section (b)(ii), other than
section (b)(ii)(A), will apply as if the surviving Spouse were the Participant.

For purposes of this section (b)(ii) and section (d), unless section (b)(ii)(D)
applies, distributions are considered to begin on the Participant’s Required
Beginning Date. If section (b)(ii)(D) applies, distributions are considered to
begin on the date distributions are required to begin to the surviving Spouse
under section (b)(ii)(A).

(iii) Forms of Distribution. Unless the Participant’s interest is distributed in
the form of a single sum on or before the Required Beginning Date, as of the
first distribution calendar year distributions will be made in accordance with
sections (c) and (d).

 

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(c) Required Minimum Distributions During Participant’s Lifetime.

(i) Amount of Required Minimum Distribution For Each Distribution Calendar Year.
During the Participant’s lifetime, the minimum amount that will be distributed
for each distribution calendar year is the lesser of:

(A) the quotient obtained by dividing the Participant’s Account balance by the
distribution period in the Uniform Lifetime Table set forth in section
1.401(a)(9)-9 of the Treasury Regulations, using the Participant’s age as of the
Participant’s birthday in the distribution calendar year; or

(B) if the Participant’s sole designated beneficiary for the distribution
calendar year is the Participant’s Spouse, the quotient obtained by dividing the
Participant’s Account balance by the number in the Joint and Last Survivor Table
set forth in section 1.401(a)(9)-9 of the Treasury Regulations, using the
Participant’s and Spouse’s attained ages as of the Participant’s and Spouse’s
birthdays in the distribution calendar year.

(ii) Lifetime Required Minimum Distributions Continue Through Year of
Participant’s Death. Required minimum distributions will be determined under
this section (c) beginning with the first distribution calendar year and up to
and including the distribution calendar year that includes the Participant’s
date of death.

(d) Required Minimum Distributions After Participant’s Death.

(i) Death On or After Date Distributions Begin.

(A) Participant Survived by Designated Beneficiary. If the Participant dies on
or after the date distributions begin and there is a designated beneficiary, the
minimum amount that will be distributed for each distribution calendar year
after the year of the Participant’s death is the quotient obtained by dividing
the Participant’s Account balance by the longer of the remaining life expectancy
of the Participant or the remaining life expectancy of the Participant’s
designated beneficiary, determined as follows:

(1) The Participant’s remaining life expectancy is calculated using the age of
the Participant in the year of death, reduced by one for each subsequent year.

(2) If the Participant’s surviving Spouse is the Participant’s sole beneficiary,
the remaining life expectancy of the surviving Spouse is calculated for each
distribution calendar year after the year of the Participant’s death using the
surviving Spouse’s age as of the Spouse’s birthday in that year. For
distribution calendar years after the year of the surviving Spouse’s death, the
remaining life expectancy of the surviving Spouse is calculated using the age of
the surviving Spouse as of the Spouse’s birthday in the calendar year of the
Spouse’s death, reduced by one for each subsequent year.

(3) If the Participant’s surviving Spouse is not the Participant’s sole
designated beneficiary, the designated beneficiary’s remaining life expectancy
is calculated using the age of the beneficiary in the year following the year of
the Participant’s death, reduced by one for each subsequent year.

(B) No Designated Beneficiary. If the Participant dies on or after the date
distributions begin and there is no designated beneficiary as of September 30 of
the year after the

 

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year of the Participant’s death, the minimum amount that will be distributed for
each distribution calendar year after the year of the Participant’s death is the
quotient obtained by dividing the Participant’s Account balance by the
Participant’s remaining life expectancy calculated using the age of the
Participant in the year of death, reduced by one for each subsequent year.

(ii) Death Before Date Distributions Begin.

(A) Participant Survived by Designated Beneficiary. If the Participant dies
before the date distributions begin and there is a designated beneficiary, the
minimum amount that will be distributed for each distribution calendar year
after the year of the Participant’s death is the quotient obtained by dividing
the Participant’s Account balance by the remaining life expectancy of the
Participant’s designated beneficiary, determined as provided in section (d)(i).

(B) No Designated Beneficiary. If the Participant dies before the date
distributions begin and there is no designated beneficiary as of September 30 of
the year after the year of the Participant’s death, distribution of the
Participant’s entire interest will be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant’s death.

(C) Death of Surviving Spouse Before Distributions to Surviving Spouse Are
Required to Begin. If the Participant dies before the date distributions begin,
the Participant’s surviving Spouse is the Participant’s sole designated
beneficiary, and the surviving Spouse dies before distributions are required to
begin to the surviving Spouse under section (b)(2)(A) this section (d)(ii) will
apply as if the surviving Spouse were the Participant.

(e) Definitions.

(i) Designated Beneficiary. The individual who is designated as the beneficiary
under section 6.1 of the Plan and is the designated beneficiary under section
401(a)(9) of the Internal Revenue Code and section 1.401(a)(9)4, Q&A- 1 of the
Treasury Regulations.

(ii) Distribution calendar year. A calendar year for which a minimum
distribution is required. For distributions beginning before the Participant’s
death, the first distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant’s Required Beginning
Date. For distributions beginning after the Participant’s death, the first
distribution calendar year is the calendar year in which distributions are
required to begin under section (b)(ii). The required minimum distribution for
the Participant’s first distribution calendar year will be made on or before the
Participant’s Required Beginning Date. The required minimum distribution for
other distribution calendar years, including the required minimum distribution
for the distribution calendar year in which the Participant’s Required Beginning
Date occurs, will be made on or before December 31 of that distribution calendar
year.

(iii) Life expectancy. Life expectancy as computed by use of the Single Life
Table in section 1.401(a)(9)-9 of the Treasury Regulations.

(iv) Participant’s Account balance. For purposes of this section, Participant’s
Account balance means the Account balance as of the last valuation date in the
calendar year immediately preceding the distribution calendar year (valuation
calendar year) increased by the amount of any contributions made and allocated
or forfeitures allocated to the Account balance as of dates in the valuation
calendar year after the valuation date and decreased by distributions made in
the valuation calendar year after the valuation date. The Account balance for
the valuation calendar year includes any amounts rolled over or transferred to
the Plan either in the valuation calendar year or in the distribution calendar
year if distributed or transferred in the valuation calendar year.

 

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(v) Required Beginning Date. Required Beginning Date as defined in section 1.54.

 

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ARTICLE VII

Loans

The Committee is authorized, as one of the Plan fiduciaries, to establish a
Participant loan program at the time determined by the Committee and
communicated to the Employees. The Committee shall administer the Plan’s loan
program in accordance with the following rules. To the extent it is not
inconsistent with the Plan, such loan program is hereby incorporated in the Plan
by this reference. The Committee may establish such other rules and procedures
as it determines, in its sole discretion, to be necessary or desirable to
administer the loan program.

7.1 Availability.

Loans shall be available only to active Employees and Employees on an authorized
or legally protected leave of absence (collectively referred to in this
section as “Borrowers”), provided however, that with respect to loans made prior
to January 1, 2002, no loan shall be made to any individual while the individual
falls into any of the following categories, nor shall any loan be made of
amounts accrued while such individual fell into any of the following categories:

(a) owner-employee within the meaning of Code section 401(c)(3); or

(b) Employee or officer who owns (or is considered as owning within the meaning
of Code section 318(a)(1) on any day during the taxable year of the Company or
Affiliate) 5% or more of the stock of the Company or any Affiliate that is an S
corporation; or

(c) sibling (of the whole- or half-blood), spouse, ancestor or lineal descendant
of any individual described in subsection (a) or (b),

unless such individual has furnished to the Committee a written exemption from
the prohibited transaction provisions of ERISA and the Code, granted by the
Department of Labor and covering the loan. Furthermore, no loan shall be made to
a Borrower while the Committee has suspended withdrawals because it believes
that the Plan may have a cause of action against the Borrower, as explained in
subsection 13.9(h). Loans shall be made on a reasonably equivalent basis to
eligible Borrowers who have demonstrated to the satisfaction of the Committee
that they intend to repay their loans.

7.2 Loan Amount.

The Committee may establish a minimum loan amount of no more than $1,000. A
Borrower may have no more than two loans outstanding at any time and a Borrower
may not take a loan within six months after the effective date of a previous
loan. The maximum outstanding indebtedness under the Plan shall not exceed
one-half the vested portion of the Borrower’s account(s) under the Plan, less
any portion allocated to an Alternate Payee. The maximum total outstanding
indebtedness of the Borrower under the Plan and all other plans maintained by
the Controlled Group is the lesser of:

(a) $50,000, reduced by the excess (if any) of (i) the highest outstanding
balance of loans to the Borrower from the Plan and all other plans maintained by
the Controlled Group during the twelve month period ending on the day before
such loan is made, over the outstanding loan balance on the date such loan is
made; or

(b) one-half of the vested percentage of the Borrower’s account(s) under the
Plan and all other qualified plans maintained by the Controlled Group.

 

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Notwithstanding the foregoing, the Committee may, in its sole discretion,
establish lesser limits on the amounts that may be borrowed, which limits shall
be applied in a non discriminatory manner. No loan shall be made of amounts that
are required to be distributed, pursuant to Section 6.5, prior to the end of the
term of the loan. Amounts allocated and credited to Roth Contribution Accounts
may be taken into account for purposes of calculating the maximum permissible
loan amount, but no funds from Roth Contribution Accounts shall be made part of
the loan proceeds.

7.3 Repayment.

All loans shall be repaid, with interest, in substantially level amortized
payments made not less frequently than quarterly. The Committee shall select the
method for determining the interest rate, which must be a reasonable rate of
interest. In the absence of Committee action, the Trustee shall establish the
interest rate which shall be equal to the prime rate as published in The Wall
Street Journal on the last day of the calendar month preceding the date of the
loan plus one percentage point. The minimum term for a loan is one year. The
maximum term for a loan is five years (60 consecutive calendar months)
commencing on the date of the loan, unless the proceeds of such loan are used to
acquire the principal residence of the Borrower, in which case the maximum term
for the loan is fifteen years (180 consecutive calendar months) commencing on
the date of the loan. Effective prior to October 1, 2002, loans shall be
amortized on a yearly basis unless otherwise permitted in a uniform and
nondiscriminatory manner by the Committee. Effective October 1, 2002, loans
shall be amortized on a semi-monthly basis unless otherwise permitted in a
uniform and nondiscriminatory manner by the Committee. A loan may be prepaid in
full by a bank check or by a cashier’s check at any time following the effective
date of the loan. Loan repayments shall be accelerated, and all loans shall be
payable in full 90 days after the Borrower separates from service. If the
Borrower is an active Employee or on a paid leave of absence, loans shall be
repaid through payroll withholding unless the Employee is prepaying his loan, in
which case the prepayment need not be through payroll withholding.

7.4 Administration.

A Borrower shall apply for a loan by following the procedures specified by the
Committee. The Committee may impose a loan application fee, a loan origination
fee, and loan maintenance fees. All loans shall be evidenced by one or more
promissory notes and shall be fully secured. Such evidence may be embodied in
the endorsement of the check constituting loan proceeds or other manner
authorized by the Internal Revenue Service and Department of Labor. No Borrower
whose account(s) are so pledged may obtain distribution of any portion of his
account(s) that have been pledged. The rights of the Trustee under such pledge
shall have priority over all claims of the Borrower, his beneficiaries, and
creditors. Loans shall be treated as a directed investment of the Borrower under
section 9.3.

 

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ARTICLE VIII

Allocation of Responsibilities - Named Fiduciaries

8.1 No Joint Fiduciary Responsibilities.

The Participating Companies, named fiduciaries and other persons designated in
the Plan or Trust Agreement shall have only the responsibilities specifically
allocated to them herein or in the Trust Agreement or in their appointment.

All allocations of responsibilities under this Article VIII or otherwise to
Participating Companies, named fiduciaries or other persons are intended to be
mutually exclusive, and there shall be no sharing of fiduciary or non-fiduciary
responsibilities.

Whenever one named fiduciary is required by the Plan, Trust Agreement or
appointment to follow the directions of another named fiduciary, the two named
fiduciaries shall not be deemed to have been assigned a shared responsibility,
but the giving of directions shall be the only responsibility of the named
fiduciary, and the responsibility of the named fiduciary receiving those
directions shall be to follow them insofar as such instructions are on their
face proper under applicable law.

In addition, the Company may allocate responsibility for the operation and
administration of the Plan in accordance with its terms.

8.2 The Participating Companies.

Each Participating Company shall be responsible for (a) making its respective
contributions hereunder and (b) keeping accurate records with respect to its
Employees and their Compensation and furnishing such data to the Committee.

8.3 The Company.

(a) Acting in its capacity as Plan sponsor and not as a fiduciary, the Company
or its delegate shall be responsible for:

(i) Amendment or termination of the Plan pursuant to the terms of Article X
herein;

(ii) Subject to section 8.8(c), appointment of any third party service providers
and vendors to the Plan other than fiduciaries; and

(iii) Appointment and removal of the members of the Committee and the Plan
Design Committee.

(b) The Company shall also be responsible for exercise of the Plan
Administrator’s duties in the absence of the Committee.

8.4 The Committee.

The Company or its delegate shall appoint the Committee consisting of not less
than one nor more than seven persons. The Committee shall be a named fiduciary
of the Plan. The members of the Committee shall hold office at the pleasure of
the Company or its delegate and shall serve without compensation. The Committee
shall comply with the provisions of ERISA pertaining to the powers and
responsibilities of administrators and named fiduciaries.

 

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8.5 Plan Design Committee.

The Company or its delegate shall appoint the Plan Design Committee. The Plan
Design Committee shall not be a fiduciary of the Plan. The Plan Design Committee
may make determinations with respect to Plan design matters, including
authorization to amend the Plan pursuant to section 10.4. The members of the
Plan Design Committee shall hold office at the pleasure of the Company or its
delegate and shall serve without compensation.

8.6 Delegation.

The Committee and QAM (as defined in 8.8(b)) and the other named fiduciaries may
delegate any of their responsibilities to other persons to carry out specified
responsibilities, except as may be limited or prohibited by the Code or ERISA.
Such delegates may be employees of the Company or any Participating Company or
non-Participating Companies or outside parties.

8.7 The Trustee.

The Trustee shall be responsible for: (a) the investment of the Trust Fund to
the extent and in the manner provided in the Trust Agreement; (b) the custody
and preservation of Trust assets delivered to it; and (c) making such payments
from the Trust Fund as the Committee and QAM shall direct.

8.8 Allocation of Fiduciary Responsibilities.

(a) The Committee shall be the Plan Administrator and shall have all power and
authority necessary for that purpose, including, but not by way of limitation,
the full discretion and power to interpret and construe the Plan, to make
factual determinations, to determine the eligibility, status and rights of all
persons under the Plan and in general to decide any dispute. The Committee shall
direct the Trustee concerning all non-investment-related distributions from the
Trust Fund, in accordance with the provisions of the Plan and the Trust
Agreement, and shall have such other powers in the administration of the Trust
Fund as may be conferred upon it by the Trust Agreement. The Committee shall
maintain all Plan records except to the extent responsibility is delegated to
others to maintain records of the Trust Fund. The Committee shall have the
discretion and authority to determine conclusively for all parties all questions
arising in the administration of the Plan, and any decision of the Committee
shall not be subject to further review. The Committee shall also be responsible
for approving reimbursement of expenses of the Company and its subsidiaries,
other than QAM.

(b) QAM shall be the named fiduciary for all purposes of the management and
investment of Plan assets except as provided in Subsection (d) below. Such
powers of QAM shall include, without limitation, appointing and removing
trustees, investment managers and other service providers providing investment
advice or investment education; authority to enter into trust agreements and
amendments thereto, investment manager agreements and other agreements related
to providing investment management or investment education; responsibility for
monitoring performance of all service providers that provide investment advice
or investment education; approving processes and policies for payment of Plan
expenses related to investment management, investment advice or investment
education; and the authority to determine asset allocation ranges and general
investment strategies for Plan assets subject to section 4.39d) below. QAM shall
have all power and authority necessary for these purposes.

 

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(c) With regard to their respective functions, the Committee’s and QAM’s
authority shall include the following:

(i) the selection of agents and fiduciaries to operate and administer the Plan
and Trust;

(ii) the selection of agents and other providers of services to the Plan;

(iii) the periodic review of the performance of such agents, service providers,
managers and fiduciaries;

(iv) certifying to the Trustee the names and specimen signatures of the members
of the Committee or QAM (or their delegates) acting from time to time;

(v) approving administrative (in the case of the Committee) and
investment-related (in the case of QAM) expenses;

(vi) establishing compensation arrangements for other fiduciaries, agents and
service providers; and

(vii) to the extent necessary or advisable QAM may establish policies and
procedures or take such actions as authorized by section 4.3(d) of the Plan.

(d) (i) Notwithstanding the preceding provisions of this section or any other
provision of this Plan, neither the Committee, QAM, the Board of Directors, a
Participating Company, the Trustee nor any investment manager shall be a
fiduciary with respect to the designation or direction by an Account Owner of
investment funds with respect to that Account Owner’s Account. Each Account
Owner shall be the named fiduciary (except as otherwise provided by
section 404(c) of ERISA) with respect to any designation, direction or other
exercise of control of investment funds with respect to his Account. As a
result, with respect to designations and directions described in this Plan and
any other exercise of control by an Account Owner over assets in his Account,
such Account Owner shall be solely responsible for such actions and neither the
Committee, QAM, the Trustee, a Participating Company, the Board of Directors nor
any other person or entity which is otherwise a fiduciary shall be liable for
any loss or liability which results from such Account Owner’s exercise of
control.

(ii) Notwithstanding any other provision of the Plan to the contrary, QAM shall
have the authority to appoint an investment manager/independent fiduciary to be
solely responsible for the management and investment of Plan assets in the Qwest
Shares Fund (including the responsibility for evaluating the propriety of
allowing additional Participant investments in such fund), and to remove any
investment manager/independent fiduciary so appointed. No other person or entity
which is otherwise a fiduciary under the Plan shall have any fiduciary
responsibility or authority with respect to the investment of Plan assets in the
Qwest Shares Fund.

8.9 Organization of the Committee.

(a) The Committee shall elect a Chairman and appoint a Secretary. The Committee
may appoint a non-member to serve as Secretary. The Committee may adopt such
bylaws and rules of procedures as it deems desirable for the conduct of its
affairs and for the administration of the Plan.

(b) The Plan Design Committee may adopt bylaws and rules of procedure as it
deems desirable.

 

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(c) The Committee may appoint agents (who need not be members of the Committee)
to whom it may delegate such powers as it deems appropriate. No writing is
necessary to effect such appointment.

(d) Each committee may make its determinations with or without meetings. Each
committee may authorize one or more of its members or agents to sign
instructions, notices and determinations on its behalf. The action of a majority
of either committee shall constitute the action of that committee.

8.10 Agent for Process.

The General Counsel of the Company shall be the agent of the Plan for service of
all legal process.

8.11 Plan Expenses.

The expenses of the Committee shall be borne by the Company. Notwithstanding the
preceding sentence, all expenses of any party lawfully payable from the assets
of the Plan shall be paid from such assets except to the extent the Company or
its delegate determines otherwise or such expenses are paid from forfeitures.

 

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ARTICLE IX

Trust Agreement - Investments

9.1 Trust Agreement.

QAM has entered into a Trust Agreement to provide for the holding, investment
and administration of the funds of the Plan. The Trust Agreement shall be part
of the Plan, and the rights and duties of any person under the Plan shall be
subject to all terms and provisions of the Trust Agreement.

9.2 Expenses of Trust.

(a) Except as provided in subsection (b) below, all taxes upon or in respect of
the Trust shall be paid by the Trustee out of the Trust assets. All reasonable
expenses of administering the Trust shall be paid by the Trustee, pursuant to
the written direction of the Committee or QAM, as the case may be, out of the
Trust assets to the extent they are not paid by the Company; provided however,
that the reasonable expenses of administering the Trust shall be paid from
certain Trust assets as provided in section 4.4. No fiduciary shall receive any
compensation for services rendered to the Plan if the fiduciary is being
compensated on a full time basis by the Company.

(b) All expenses of individually directed transactions in Trust assets,
including without limitation the Trustee’s transaction fee, brokerage
commissions, transfer taxes, and any taxes and penalties that may be imposed as
a result of a Participant’s investment direction, shall be assessed against the
Account(s) of the Account Owner directing such transactions. Any income or
excise tax imposed as a result of an individually directed transaction shall be
assessed against the Account of the Account Owner directing such transaction.

9.3 Investments.

(a) Section 404(c) Plan. This Plan is intended to constitute a plan described in
section 404(c) of ERISA and the regulations thereunder. Accordingly, the
Committee intends to provide to Account Owner the information described in
section 2550.404c-1(b)(2)(i)(B)(1) of the Department of Labor Regulations. In
addition, upon request by an Account Owner, the Committee shall provide the
information described in sections 2550.404c-1(b)(2)(i)(B)(2) of the Department
of Labor Regulations.

The Committee may take such other actions or implement such other procedures as
it deems necessary or desirable in order that the Plan comply with
section 404(c) of ERISA.

(b) Directed Investments.

(i) General. An Account Owner’s Account shall be invested, upon the direction of
each Account Owner, in any one or more of a series of investment options
established upon the direction of QAM and in accordance with section 9.4. One
investment option may be a brokerage account with restricted investment
alternatives. One investment option shall be the Qwest Shares Fund. Up to 100%
of the Plan’s assets may be comprised of Stock. The options available for
investment and, to the extent the options include investment funds, the
principal features of such investment funds, including a general description of
the investment objectives, the risk and return characteristics, and the type and
diversification of the investment portfolio of each fund, shall be communicated
to the Account Owners from time to time. Any restrictions on the investment
options or on the purchase or sale of any investment options shall be
established by QAM and communicated to Account Owners from time to time. Any
changes in the available investment options shall be communicated to all Account
Owners.

 

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(ii) Special Rule for Management Employees. If a Management Employee is
automatically enrolled under Subsection 3.1(g), his Before-Tax Contributions
shall be invested in the Plan’s designated qualified default investment
alternative (“QDIA”) subject to the Participant’s right to change the investment
election.

(iii) Special Rules Regarding International Stock Funds and Stable Value Funds.
The Committee shall impose a 2% redemption fee on the proceeds of units of any
international stock or equity fund that are redeemed by an Account Owner within
30 days of their purchase. The proceeds of any such redemption fees shall be
credited back to such fund. If the Committee determines, in its sole discretion,
that an Account Owner has engaged in a repeated practice of excessive trading in
such a fund, the Committee shall have the right to prohibit the Account Owner
from making further investments in the international stock or equity offered for
participant investments. This subsection shall be construed as consistent with,
and not as a limitation on, the right of the Committee under Section 9.4 to
establish rules and regulations regarding the investment funds, including
establishing any blackout periods or limitations on investing. Transfers may not
be made directly from any stable value fund offered for participant investments
to a Participant’s SDBA.

(c) Change in Investment Directions. Account Owners may change their investment
directions in writing, by telephone, computer, or other paperless media, or by
any other means made available by the recordkeeper with respect to the
investment of new contributions and with respect to the investment of existing
amounts allocated to Accounts at any time, subject to such restrictions and
procedures as are established by the recordkeeper or the Committee. Such changes
shall be effective prospectively, as of the time established by the Committee.
The Committee shall establish procedures for giving investment directions, which
shall be communicated to Account Owners.

(d) Loans. Loans under Article VII shall be treated as an investment of the
Account Owner, with the result that all loan repayments, including interest,
shall be allocated solely to the borrower’s Account.

(e) Special Rules for Stock. The Committee and/or QAM, as the case may be, shall
take such actions and establish such procedures as it deems necessary to ensure
the confidentiality of information relating to the purchase, sale, and holding
of Stock, and the exercise of voting, tender and similar rights with respect to
such shares by an Account Owner. Notwithstanding the foregoing, such information
may be disclosed to the extent necessary to comply with applicable state and
federal laws. In the event of a tender or exchange offer with respect to QCI, or
in the event of a contested election with respect to its board of directors, QCI
shall, at its own expense, appoint an independent fiduciary to carry out the
Committee’s administrative functions with respect to Stock. Such independent
fiduciary shall not be an “affiliate” of any Participating Company as such term
is defined in section 2550.404c-1(e)(3) of the Department of Labor Regulations.

9.4 Investment Funds.

QAM shall select the specific investments for the investment funds (other than
the SDBA) either by selecting a mutual fund, common, group or collective trust
fund, or similar vehicle, or by designating itself, an investment manager, as
defined in ERISA, or the Trustee who will be responsible for investment of all
or a portion of a particular fund.

The Account Owner may designate in accordance with section 9.3 that amounts
contributed to his Account initially will be invested in any one or more of the
investment funds, provided that such designation shall be in increments of 1% of
the aggregate contributions. Any direction for investment of an Account shall be
deemed to be a continuing direction until changed. Roth Contributions may not be
directed by a Participant into the Participant’s SDBA for investment.

 

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An Account Owner may direct that the investment of his Account be redirected
into any or all other investment funds in 1% increments of the aggregate balance
in accordance with section 9.3; provided, however, that transfers may not be
made (a) from any stable value fund to the SDBA, or (b) to the SDBA using Roth
Contributions. When the Account Owner provides an investment direction for his
After-Tax Contributions, Before-Tax Contributions and Roth Contributions, the
same investment direction will apply to the corresponding match. The Committee
and/or QAM may establish any other rules and regulations regarding the
investment funds (including establishing any blackout periods or limitations on
investing) as deemed appropriate in their sole discretion; any such rules shall
be deemed adopted upon the earlier of adoption of a rule or written (or
electronic) notice to affected Participants.

9.5 Special Rules Regarding SDBA.

A Participant may not elect installment payments if any portion of his Account
is invested in the SDBA. A Participant who elected installment payments before
May 1, 2000 shall not be permitted to invest any additional amounts in the SDBA.

The vendor selected to administer the SDBA has the exclusive right to terminate
any Participant’s SDBA account, at any time, for any reason. If the vendor
exercises this right, the Participant will no longer be permitted to invest
through SDBA and the Participant may direct where the funds will be invested in
the core funds. If after 10 business days the Participant has not given
direction as to which of the core funds the returning SDBA funds should be
invested in, the funds will be liquidated and transferred back to the core
account and then invested in the QDIA subject to the Participant’s right to
change the investment election.

9.6 Requirements for Participant Elections.

(a) This section 9.6 sets forth the requirements for Participants (and other
Account Owners to the extent applicable) to make (i) initial and subsequent
elections with respect to investment of contributions into investment funds as
set forth in section 9.4, (ii) initial elections, suspensions or changes in
Participant Contributions pursuant to section 3.1, (iii) elections with respect
to redirection of Account balances into investment funds, pursuant to
sections 9.3 and 9.4, and (iv) requests for distributions pursuant to
sections 6.5, 6.6, 6.9 and 6.10 and loans pursuant to Article VII.

(b) (i) The elections described in subsection (a) shall be made according to
such rules and procedures that the Committee establishes.

(ii) Elections described in section 9.6(a)(i) and (ii) will generally be
effective as soon as administratively practicable, except that the initial
election is not effective before the date the Participant is eligible to
participate in the Plan.

(iii) Elections described in section 9.6(a)(iii) will generally be effective as
soon as administratively practicable.

(iv) Requests described in Section 9.6(a)(iv) will be processed as soon as
administratively practicable which, generally, will be on the first day in which
the Plan’s records reflect the individual’s eligibility to receive a
distribution and a request for a distribution is properly made by the
Participant and received by the Plan. Proceeds from transactions described in
section 9.6(a)(iv) will be delivered as soon as practicable thereafter.

 

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(v) Elections under sections 9.6(a)(i) and (ii) and (iii) shall be made through
the Qwest Service Center, unless the Committee determines otherwise. The
Committee (or its delegate) shall send the Participant a written confirmation
containing the particulars of such election. If the Participant fails to object,
in writing, within 120 days after the election was effective that the written
confirmation is incorrect, the particulars set forth in such written
confirmation shall be deemed conclusive evidence of the election made by the
Participant.

(c) If an Account Owner properly requested the Committee or Participating
Company or recordkeeper to take some action with respect to his Account or his
participation in the Plan, and such action was not taken, the Committee shall
correct the mistaken action or the omission to act only if the Account Owner
notifies the Committee in writing of the mistake or omission within 120 days of
the mistake or omission.

(d) Notwithstanding the foregoing, Participant elections and directions may be
executed pursuant to policies and procedures adopted by QAM pursuant to and in
accordance with section 4.3(d).

 

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ARTICLE X

Termination and Amendment

10.1 Termination of Plan or Discontinuance of Contributions.

(a) The Board of Directors of the Company may terminate the Plan. In addition,
the Plan Design Committee, with the consent of the Chairman of the Board (or, at
any time when there is no Chairman of the Board, the President) and subject to
the approval of the Board of Directors (or without such approval in the case of
changes that, in the opinion of the Plan Design Committee, are required by
federal or state statutes applicable to the Company or any other Participating
Company or authorized or made desirable by such statutes) may terminate the
Plan. Upon termination or partial termination, the Accounts of all affected
Participants shall become fully vested and shall be distributed among them and
their beneficiaries.

(b) The Participating Companies expect to continue the Plan indefinitely, but
the continuance of the Plan and the payment of contributions are not assumed as
contractual obligations. Any Participating Company may withdraw from the Plan as
to its Employees at any time by resolution of the Participating Company’s Board
of Directors. Upon withdrawal by any Participating Company, Sections 11.3 and
11.4 shall apply.

10.2 Allocations Upon Termination of Plan or Discontinuance of Company
Contributions.

Upon the termination or partial termination of the Plan or upon the complete
discontinuance of contributions, the Committee shall promptly notify the Trustee
of such termination or discontinuance. The Trustee shall then determine, in the
manner prescribed in section 4.2, the net worth of the Trust Fund as of the
close of the last business day of the calendar month in which such notice was
received by the Trustee. The Trustee shall advise the Committee of any increase
or decrease in such net worth that has occurred since the preceding Valuation
Date. After crediting to the Before-Tax Contributions Account, the Roth
Contribution Account, and the After-Tax Contributions account of each
Participant the amount contributed by him since the preceding Valuation Date,
the Committee shall thereupon allocate, in the manner described in section 4.3,
among the accounts of the Participants then remaining in the Plan, any such
increase or decrease in the net worth of the Trust Fund. Immediately after the
allocation of such increase or decrease in net worth, the Committee shall
allocate among the accounts of the Participants then remaining in the Plan, in
the manner described in sections 3.2, 3.12, 4.1, and 5.5, any Company
Contributions, Qualified Non-Elective Contributions or forfeitures occurring
since the preceding Valuation Date.

10.3 Procedure Upon Termination of Plan or Discontinuance of Contributions.

If the Plan has been terminated or partially terminated, or if a complete
discontinuance of contributions to the Plan has occurred, then after the
allocations required under section 10.2 have been completed, the Trustee shall
distribute or transfer the account(s) of affected Participants as follows.

(a) If the Company or Affiliate maintains or establishes another defined
contribution plan (other than an employee stock ownership plan defined in Code
section 4975(e)(7)), then no amount in his accounts may be distributed to any
Participant. Account balances shall be directly transferred to the other defined
contribution plan.

(b) If the Company or Affiliate does not maintain another defined contribution
plan (other than an employee stock ownership plan, defined in Code
section 4975(e)(7)), then the Trustee shall distribute the Participant’s
account(s) to the Participant in a lump sum (other than an annuity) without the
consent of Participant.

 

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Any distribution or transfer made pursuant to this section may be in cash, in
kind, or partly in cash and partly in kind. After all such distributions or
transfers have been made, the Trustee shall be discharged from all obligation
under the Trust; no Account Owner who has received any such distribution, or for
whom any such transfer has been made, shall have any further right or claim
under the Plan or Trust.

10.4 Amendment by QCI.

The Company expects this Plan to be permanent, but as future conditions cannot
be foreseen, it reserves the right to amend the Plan at any time, without prior
notice to anyone, subject to collective bargaining agreements and applicable
laws. The Plan may be amended by a writing approved by the Company’s Board of
Directors and signed on behalf of the Company by an officer of the Company duly
authorized by the Board of Directors. The Plan may also be amended in writing by
the Plan Design Committee or other person(s) to the extent authority to amend
the Plan has been delegated to the Plan Design Committee or such person(s) by
the Board of Directors. Each amendment shall be effective on such date as the
Company or its delegee may determine. No amendment or modification that affects
the rights, powers, privileges, immunities or obligations of the Trustee may be
made without the consent of the Trustee. Amendments may modify the rights and
interests of Employees who are Participants in the Plan at the time thereof as
well as future Participants, but amendments may not diminish the accrued benefit
(as defined in Section 411(d)(6) of the Code) of any Participant as of the
effective date of such amendment.

10.5 Amendment to Vesting Schedule.

If the vesting schedule is amended, each Participant with at least three Years
of Service may elect, within the period specified in the following sentence
after the adoption of the amendment, to have his nonforfeitable percentage
computed under the Plan without regard to such amendment. The period during
which the election may be made shall commence with the date the amendment is
adopted and shall end on the latest of:

(a) 60 days after the amendment is adopted;

(b) 60 days after the amendment becomes effective; or

(c) 60 days after the Participant is issued written notice of the amendment by
the Company or Committee.

 

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ARTICLE XI

Plan Adoption by Affiliates

11.1 Any corporation, whether or not presently existing, which is or shall
become a subsidiary of a Participating Company after the date this Plan is
adopted may, with the consent of the Plan Design Committee, become a party to
the Plan and Trust by adopting the Plan and Trust for its Employees or by being
designated by the Company or Plan Design Committee to participate in this Plan.

11.2 Agent of Affiliate.

By becoming a party to the Plan, each Affiliate appoints QCI as its agent with
authority to act for it in all transactions in which it believes such agency
will facilitate the administration of the Plan. QCI, or the Plan Design
Committee in the case of Plan amendment, shall have the sole authority to amend
and terminate the Plan.

11.3 Disaffiliation and Withdrawal from Plan.

(a) Disaffiliation. Unless QCI or its delegate (in its sole discretion)
determines otherwise, any Affiliate that has adopted the Plan and thereafter
ceases for any reason to be an Affiliate shall forthwith cease to be a party to
the Plan.

(b) Withdrawal. Any Affiliate may, by appropriate action and written notice
thereof to QCI, provide for the discontinuance of its participation in the Plan.
Such withdrawal from the Plan shall not be effective until the end of the Plan
Year in which the Affiliate gives written notice of its discontinuance of
participation in the Plan, unless QCI approves an earlier withdrawal.

11.4 Effect of Disaffiliation or Withdrawal.

If at the time of disaffiliation or withdrawal, the disaffiliating or
withdrawing entity, by appropriate action, adopts a substantially identical plan
that provides for direct transfers from this Plan, then, as to employees of such
entity, no plan termination shall have occurred; the new plan shall be deemed a
continuation of this Plan for such employees. In such case, the Trustee shall
transfer to the trustee of the new plan all of the assets held for the benefit
of Employees of the disaffiliating or withdrawing entity, and no forfeitures or
acceleration of vesting shall occur solely by reason of such action. Such
payment shall operate as a complete discharge of the Trustee, and of all
organizations except the disaffiliating or withdrawing entity, of all
obligations under this Plan to employees of the disaffiliating or withdrawing
entity and to their beneficiaries. A new plan shall not be deemed substantially
identical to this Plan if it provides slower vesting than this Plan. Nothing in
this section authorizes the divesting of any vested percentage of a
Participant’s Account.

11.5 Distribution Upon Disaffiliation or Withdrawal.

(a) Disaffiliation. If an entity disaffiliates from QCI and the provisions of
section 11.4 are not followed, then the following rules apply to the account(s)
of Participants of the disaffiliating entity.

(i) If the disaffiliating entity maintains a defined contribution plan (other
than an employee stock ownership plan within the meaning of Code
section 4975(e)(7)), then the Trustee shall transfer the Participant’s
account(s) to the other plan unless the Participant consents to an immediate

 

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distribution in a lump sum (other than an annuity) of the vested portion of his
account(s). Notwithstanding the preceding sentence, a Participant may not
receive an immediate distribution to the extent that such a distribution would
violate the Code or ERISA.

(ii) If the disaffiliating entity does not maintain a defined contribution plan
(other than an employee stock ownership plan within the meaning of Code
section 4975(e)(7)), then the Trustee shall distribute the vested portion of
Participant’s account(s) to the Participant in a lump sum (other than an
annuity), upon the consent of the Participant. If the Participant does not
consent to an immediate distribution, then distribution may only be made
according to Article VI.

(b) Withdrawal. If an Affiliate withdraws from the Plan and the provisions of
section 12.4 are not followed, then the following rules apply to the account(s)
of Participants who are employees of the withdrawing entity.

(i) If the withdrawing entity maintains a defined contribution plan that accepts
transfers from this Plan, then the Participant may transfer his account(s) from
this Plan to such plan. No forfeitures or acceleration of vesting shall occur
solely by reason of such transfer.

(ii) If the withdrawing entity does not maintain a defined contribution plan
that accepts transfers from this Plan, then the Participant’s account(s) shall
remain in this Plan and shall be distributed according to Article VI.

(c) Distribution or Transfer. Any distribution or transfer made pursuant to this
section may be in cash, in kind, or partly in cash and partly in kind. After
such distribution or transfer has been made, no Participant or beneficiary who
has received any such distribution, or for whom any such transfer has been made,
shall have any further right or claim under the Plan or Trust.

 

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ARTICLE XII

Top-Heavy Provisions

12.1 Application of Top-Heavy Provisions.

The provisions of this Article XII shall be applicable only if the Plan becomes
“top-heavy” as defined below. If the Plan becomes “top-heavy” for a Plan Year,
the provisions of this Article XII shall apply to the Plan effective as of the
first day of such Plan Year and shall continue to apply to the Plan (whether or
not the Plan ceases to be “top-heavy”) until the Plan is terminated or otherwise
amended.

12.2 Determination of Top-Heavy Status.

The Plan shall be considered “top-heavy” for a Plan Year if, as of the last day
of the prior Plan Year (hereinafter, the “determination date”), the aggregate of
the account balances of key employees under the Plan (and under all other plans
required or permitted to be aggregated with this Plan) exceeds 60% of the
aggregate of the account balances of all Employees under the Plan (and under all
other plans required or permitted to be aggregated with this Plan). For purposes
of determining the account balance or the present value of the accrued benefit
of any Employee, distributions made with respect to such Employee within a
five-year period ending on the determination date must be included. This shall
also apply to distributions under a terminated plan which, if it had not been
terminated, would have been required to be included in an aggregation group.
However, if any individual has not performed any services for any employer
maintaining the Plan (other than benefits under the Plan) at any time during the
five-year period ending on the determination date, any accrued benefit for such
individual (and the account of such individual) shall not be taken into account.
Each plan of the Company in which a key employee participates and each other
plan of the Company which enables this Plan to meet the requirements of Code
section 401(a) or Code section 410 is required to be aggregated to test for
top-heaviness. Plans of the Company, which, when considered with the Plan and
other plans of the Company that are required to be aggregated with this Plan,
would continue to satisfy the requirements of Code sections 401(a) and 410, may
be aggregated to test for top-heaviness. If one or more of the plans required or
permitted to be aggregated with this Plan is a defined benefit plan, the Plan
will be top-heavy if the sum of the aggregate account balances of the key
employees under the Plan (and under all other plans required or permitted to be
aggregated with this Plan) and the aggregate present values of the accrued
benefits of the key employees under the defined benefit plan or plans required
or permitted to be aggregated with this Plan exceeds 60% of the sum of the
aggregate account balances of all Employees under the Plan (and under all other
plans required or permitted to be aggregated with this Plan) and the aggregate
present values of the accrued benefits of all Employees under the defined
benefit plan or plans required or permitted to be aggregated with this Plan. For
purposes of computing the present values of the accrued benefits under a defined
benefit plan, if the aggregation group includes more than one defined benefit
plan, the same actuarial assumptions shall be used with respect to each such
defined benefit plan. The foregoing top-heavy ratio shall be computed in
accordance with the provisions of Code section 416(g), together with the
regulations and rulings thereunder.

12.3 Special Vesting Rule.

The amount credited to the Participant’s Company Contributions account shall
vest in accordance with the following schedule if such schedule is more rapid
than the vesting schedule in section 5.1:

 

Years of Service

   Vested Percentage

fewer than 3

   0

3 or more

   100

 

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12.4 Special Minimum Contribution.

Notwithstanding the provisions of the Plan to the contrary, each active
Participant in the Plan who is not a Key Employee and who is employed by the
Company on the last day of the Plan Year, regardless of whether the Participant
received credit for 1,000 or more Hours of Service, made any required Employee
contributions for such year or satisfied any other requirement for eligibility
to share in Company Contributions, shall be entitled to a minimum Company
Contribution, together with forfeitures, for each Plan Year of an amount not
less than the lesser of (i) 3% of such Participant’s Compensation for such year
or (ii) the largest percentage of Compensation provided for any Key Employee as
a Company Contribution (including forfeitures) or Salary Deferral Contribution
for that Plan Year; provided however, that Social Security contributions may not
be used to reduce this contribution. If the Company Contributions and the
allocation of the Company Contributions do not satisfy the requirements of the
preceding sentence for any Plan Year when this Plan is a top-heavy plan, the
Company shall contribute an additional amount to the Plan such that each Non-Key
Employee shall receive an allocation of at least the minimum contribution
required by this section for such Plan Year. For purposes of this section,
Qualified Non-Elective Contributions shall be considered to be Company
Contributions.

12.5 Change in Top-Heavy Status.

If the Plan shall cease to be a “top-heavy” plan as defined in this Article XII,
and if any change in the benefit structure, vesting schedule or other component
of a Participant’s accrued benefit, shall occur as a result of such change in
top-heavy status, the nonforfeitable portion of each Participant’s benefit
attributable to Company Contributions and forfeitures shall not be decreased as
a result of such change. In addition, each Participant with at least three Years
of Service with the Company on the date of such change, may elect to have his
nonforfeitable percentage computed under the Plan without regard to such change
in status. The period during which the election may be made shall commence on
the date the Plan ceases to be a top-heavy plan and shall end on the later of
(a) 60 days after the change in status occurs, (b) 60 days after the change in
status becomes effective, or (c) 60 days after the Participant is issued written
notice of the change by the Company or the Committee.

12.6 Top-Heavy Rules Effective December 31, 2002.

This section shall apply for purposes of determining whether the Plan is a
top-heavy plan under section 416(g) of the Code for Plan Years beginning
December 31, 2002 and whether the Plan satisfies the minimum benefits
requirements of section 416(c) of the Code for such years.

(a) Determination of Top-Heavy Status.

(i) 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 section 416(i)(1) of the Code for Plan
Years beginning after December 31, 2002), a 5% owner of the employer or a 1%
owner of the employer having annual Compensation within the meaning of
section 415(c)(3) of the Code. The determination of who is a Key Employee will
be made in accordance with section 416(i)(1) of the Code and the applicable
regulations and other guidance of general applicability issued thereunder.

 

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(ii) Determination of Present Values and Amounts. This section 12.6 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.

(iii) 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 section 416(g)(2) of the Code during the one-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 section 416(g)(2)(A)(i) of the Code. 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 “five-year period”
for “one-year period.”

(iv) 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 one-year period ending on the determination
date shall not be taken into account.

(b) Minimum Benefits.

(i) Matching Contributions. Company Matching Contributions shall be taken into
account for purposes of satisfying the minimum contribution requirements of
section 416(c)(2) of the Code and the Plan. The preceding sentence shall apply
with respect to matching contributions under the Plan. Company Matching
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 section 401(m) of the
Code.

(ii) Contributions Under Other Plans. Any minimum benefits required pursuant to
this Article XII shall be provided through this Plan.

 

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ARTICLE XIII

Miscellaneous

13.1 Right to Dismiss Employees - No Employment Contract.

The Company may terminate the employment of any Employee as freely and with the
same effect as if this Plan were not in existence. Participation in this Plan by
an Employee shall not constitute an express or implied contract of employment
between the Company and the Employee.

13.2 Claims Procedure.

(a) Claims Procedures Effective January 1, 2002. The following procedure will
apply with respect to any and all claims filed on and after January 1, 2002:

(i) Definitions. For purposes of this section, the following terms shall have
the meanings set forth below:

(A) Adverse Benefit Determination. Adverse Benefit Determination means the
denial of a claim. It does not encompass the amendment or termination of the
Plan. However, it also includes any denial, reduction or termination of benefits
or a failure to provide or make payment (in whole or in part) for a benefit and
any denial, reduction, termination or failure to provide or make a payment that
is based upon on a determination of a Participant’s or beneficiary’s eligibility
to participate in a Plan.

(B) Claimant. Claimant means either a Plan Participant or a beneficiary of a
Plan Participant with respect to whom a benefits determination is being or has
been made.

(C) Notice, Notify or Notification. Notice, Notify or Notification means the
delivery or furnishing of information to an individual in a manner that
satisfies the standards of ERISA’s regulations on disclosure (29 C.F.R.
§ 2520.104b-1(b)).

(D) Relevant Document. A document, record or other information is considered
“relevant” to a Participant’s benefit claim if such document, record or other
information was relied upon in making the benefit determination; was submitted,
considered or generated in the course of making the benefit determination,
without regard to whether such document, record or other information was relied
upon in making the benefit determination; or demonstrates compliance with the
administrative processes and safe-guards required to assure consistent
application of Plan provisions with respect to similarly-situated Claimants.

(ii) Filing of Claim. A Claimant or his duly authorized representative may file
a claim for a Plan benefit to which the Claimant believes that he is entitled.
Such claim (a) must be in writing and delivered to the Committee or its delegate
within 24 months after the earlier of (i) the date on which the Plan benefit
commenced to be paid or (ii) the date on which the Claimant or his duly
authorized representative knew or, with the exercise of reasonable diligence
should have known, the Plan benefit should have commenced to be paid and
(b) must comply with such other procedures as the Committee shall require.
Delivery of the claim must be made by first class mail, postage prepaid, or
electronically or by facsimile.

 

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(iii) Initial Determination of Claim.

(A) Within a reasonable period of time, but not later than 90 days after receipt
of such claim, the Committee or its delegate shall Notify the Claimant, of the
determination on the claim, whether granting or denying, in whole or in part,
unless special circumstances require an extension of time for processing the
claim. In no event may the extension period exceed 90 days from the end of the
initial period. If an extension is necessary, the Claimant will be given a
written notice to this effect prior to the expiration of the initial 90-day
period. The Notice will explain the special circumstances requiring the
extension and date by which the Committee or its delegate expects to render a
determination on the claim.

(B) The Committee or its delegate has full discretion to deny or grant a claim
in whole or in part. Such decisions shall be made in accordance with the
governing Plan documents and, where appropriate, Plan provisions will be applied
consistently with respect to similarly situated Claimants. The Committee shall
have the discretion to determine which Claimants are similarly situated. If
Notice regarding a claim is not furnished in accordance with this paragraph
(iii), the claim will be deemed denied and the Claimant will be permitted to
exercise his right of review pursuant to paragraph (v) of this section.

(iv) Duty of Committee Upon an Adverse Benefit Determination. The Committee or
its delegate will provide to every Claimant who has received an Adverse Benefit
Determination, written Notice setting forth in a manner calculated to be
understood by the Claimant:

(A) the specific reason or reasons for the denial;

(B) reference to the specific Plan provisions on which the Adverse Benefit
Determination is based;

(C) a description of any additional material or information necessary for the
Claimant to perfect the claim and an explanation of why the material or
information is necessary; and

(D) an explanation of the Plan’s claim review procedures and the time limits
applicable to such procedures, including a statement of the Claimant’s right to
bring a civil action under Section 502(a) of ERISA following an Adverse Benefit
Determination.

(v) Request for Review Of An Adverse Benefit Determination. Within 60 days after
receipt by the Claimant of written Notification of the Adverse Benefit
Determination, the Claimant or his duly authorized representative, upon written
application to the Committee, may request the Committee to review the Adverse
Benefit Determination, to review Relevant Documents and to submit issues and
comments in writing. Delivery of the request for review of the Adverse Benefit
Determination must be made by first class mail, postage prepaid, or
electronically or by facsimile.

On review of an Adverse Benefit Determination, upon request and free of charge,
Claimants will have reasonable access to, and copies of, all documents, records
and other information relevant to a Claimant’s claim for benefits.

(vi) Decision on Review.

(A) The Committee or its delegate shall make a prompt decision on review and
shall have full discretion to deny or grant an appeal in whole or in part. The
decision on review shall be written in a manner calculated to be understood by
the Claimant, and shall include specific reasons for the decision and references
to the specific Plan provisions on which the decision is

 

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based. The decision on review shall be made not later than 60 days after the
Committee’s receipt of a request for a review, unless special circumstances
require an extension of time for processing. In no event may the extension
period exceed 60 days from the end of the initial period. If an extension is
necessary, the Claimant will be given a written Notice to this effect prior to
the expiration of the initial 60-day period. The Notice will explain the special
circumstances requiring the extension and date by which the Committee or its
delegate expect to render a determination on the claim. If Notice of the
decision on the review is not furnished in accordance with this
section 13.2(b)(vi), the claim shall be deemed to have been denied and the
Claimant shall be permitted to exercise his right to legal remedy pursuant to
section 13.2(b)(vii).

(B) The Committee’s or its delegate’s review will take into account all
comments, documents, records and other information submitted regardless of
whether the information was previously considered on initial review. Such
decisions shall be made in accordance with the governing Plan documents and,
where appropriate, Plan provisions will be applied consistently with respect to
similarly situated Claimants. The Committee shall have the discretion to
determine which Claimants are similarly situated.

(C) On review of an Adverse Benefit Determination, upon request and free of
charge, Claimants will have reasonable access to, and copies of, all documents,
records and other information relevant to a Claimant’s claim for benefits.

(D) Notice of Adverse Benefit Determination on appeal must contain the
following: the specific reason or reasons for the Adverse Benefit Determination;
reference to the specific Plan provisions on which the Adverse Benefit
Determination is based; and a statement of the Claimant’s right to bring a civil
action under Section 502(a) of ERISA following an Adverse Benefit Determination.

(vii) Legal Remedy. After exhausting the claims procedure as provided in this
Section above, nothing shall prevent any person from pursuing any other legal
remedy; provided, however, that no person shall have the right to file a civil
action, proceeding or lawsuit against the Plan or any person acting with respect
to the Plan, including, but not limited to, the Company, any Participating
Company, the Plan Administrator or any other Plan fiduciary, or any third party
service provider, after the last day of the twelfth month following the later of
(a) the deadline set forth in Subsection (v) or (b) the date on which the
Adverse Benefit Determination on appeal was issued with respect to such Plan
benefit claim.

13.3 Source of Benefits.

All benefits payable under the Plan shall be paid solely from the Trust Fund,
and the Company assumes no liability or responsibility therefor.

13.4 Exclusive Benefit of Employees.

It is the intention of the Company that no part of the Trust, other than as
provided in sections 3.7, 4.4, 9.2, and 13.9, or as permitted by the Code or
ERISA, ever to be used for or diverted to purposes other than for the exclusive
benefit of the Employees and their beneficiaries.

 

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13.5 Forms of Notices.

Wherever provision is made in the Plan for the filing of any notice, election or
designation by a Participant, the action of such Participant shall be evidenced
by the execution of such form or by taking such other action as the Committee
may prescribe for the purpose.

13.6 Failure of Any Other Corporation to Qualify.

If any entity adopts this Plan but fails to obtain or retain the qualification
of the Plan under the applicable provisions of the Code, such entity shall
withdraw from this Plan upon a determination by the Internal Revenue Service
that it has failed to obtain or retain such qualification. Within 30 days after
the date of such determination, the assets of the Trust Fund held for the
benefit of the Employees of such entity shall be segregated and disposed of in
accordance with the Plan and Trust.

13.7 Notice of Adoption of the Plan.

The Company shall provide each of its Employees with notice of the adoption of
this Plan and of any amendments and of the salient provisions thereof prior to
the end of the first Plan Year. A complete copy of the Plan shall also be made
available for inspection by Employees.

13.8 Plan Merger.

If this Plan merges or consolidates with, or transfers its assets or liabilities
to, any other qualified plan of deferred compensation, provisions shall be made
so that each Account Owner would (if the Plan then terminated) be entitled to
receive a benefit immediately after the merger, consolidation, or transfer that
is equal to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer if this Plan had then
been terminated. Any such merger or consolidation with, or transfer of any
assets or liabilities to, any other plan shall be to a plan qualified under Code
section 401(a) and shall be subject to the approval of the Plan Design Committee
or its designee. In the event of a transfer of Plan assets pursuant to this
section, any corresponding benefit liabilities shall also be transferred.

At the discretion of the Company or Plan Design Committee, the Plan shall accept
assets transferred directly from a plan qualified under Code section 401(a).

13.9 Inalienability of Benefits - Domestic Relations Orders.

(a) No Assignment of Benefits. Except as provided in Article VII (relating to
Plan loans) compliance with a tax levy under Code section 6331, the collection
by the United States on a judgment resulting from an unpaid tax assessment, and
subsections (b) and (g) below, no Account Owner shall have any right to assign,
alienate, transfer, hypothecate, encumber, or anticipate his interest in any
benefits under this Plan, nor shall such benefits be subject to any legal
process to levy upon or attach the same for payment of any claim against any
such Account Owner.

(b) Exception: QDROs. Subsection (a) shall apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a Participant
pursuant to a Domestic Relations Order unless such Domestic Relations Order is a
Qualified Domestic Relations Order in which case the Plan shall make payment of
benefits in accordance with the applicable requirements of any such Qualified
Domestic Relations Order.

 

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(c) Requirements for QDROs. In order to be a Qualified Domestic Relations Order,
the Domestic Relations Order (i) must clearly specify the name and the last
known mailing address (if any) of the Participant; (ii) must specify the name
and mailing address of each Alternate Payee covered by the order; (iii) must
specify either the amount or percentage of the Participant’s benefits to be paid
by the Plan to each such Alternate Payee, or the manner in which such amount or
percentage is to be determined; (iv) must specify the number of payments or
period to which such order applies; (v) must specify each plan to which such
order applies; (vi) may not require the Plan to provide any type or form of
benefit, or any option, not otherwise provided under the Plan, (vii) may not
require the Plan to provide increased benefits (determined on the basis of
actuarial value); and (viii) may not require the payment of benefits to an
Alternate Payee if such benefits have already been designated to be paid to
another Alternate Payee under another order previously determined to be a
Qualified Domestic Relations Order.

(d) Payments Prior to Participant’s Separation From Service. In the case of any
payment before a Participant has separated from service, the account balance as
of the date specified in the Qualified Domestic Relations Order shall be the
vested portion of the Participant’s account(s) on such date.

(e) Procedures.

(i) General. The Committee shall establish reasonable procedures to determine
the qualified status of Domestic Relations Orders and to administer
distributions under QDROs. Such procedures shall be in writing and shall permit
the Participant and an Alternate Payee to designate a representative to receive
copies of notices.

(ii) Notice to Participant and Alternate Payee; Review. When the Committee
receives a Domestic Relations Order, it shall promptly notify the Participant
and each Alternate Payee of the receipt of such order and provide them with
copies of the Plan’s procedures for determining the qualified status of the
Order. Within a reasonable period after receipt of the order, the Committee
shall determine whether such order is a Qualified Domestic Relations Order and
notify the Participant and each Alternate Payee of such determination.

(iii) Separate Accounting. During any period in which the issue of whether a
Domestic Relations Order is a Qualified Domestic Relations Order is being
determined (by the Committee, by a court of competent jurisdiction, or
otherwise), the Committee shall separately account for the amounts (hereinafter
referred to as the “segregated amounts”) that would have been payable to the
Alternate Payee during such period if the order had been determined to be a
Qualified Domestic Relations Order. If the order (or modification thereof) is
determined to be a Qualified Domestic Relations Order within 18 months after the
date the first payment would have been required by such order, the Committee
shall pay the segregated amounts (plus any interest thereon) to the person or
persons entitled thereto. However, if it is determined that the order is not a
Qualified Domestic Relations Order, or if the issue as to whether such order is
a Qualified Domestic Relations Order is not resolved within 18 months after the
date the first payment would have been required by such order, then the
Committee shall pay the segregated amounts (plus any interest thereon) to the
person or persons who would have been entitled to such amounts if there had been
no order. Any determination that an order is a Qualified Domestic Relations
Order that is made after the close of the 18-month period shall be applied
prospectively only. If the Plan’s fiduciaries act in accordance with fiduciary
provisions of ERISA in treating a Domestic Relations Order as being (or not
being) a Qualified Domestic Relations Order or in taking action in accordance
with this subsection (e), then the Plan’s obligation to the Participant and each
Alternate Payee shall be discharged to the extent of any payment made pursuant
to the acts of such fiduciaries.

 

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(iv) Plan Loans, Withdrawals, and Distributions. Upon receiving a Domestic
Relations Order (whether in draft form or entered by a court) or upon receiving
information that causes the Committee to reasonably believe that a Domestic
Relations Order will be submitted, the Committee shall place a hold on the
Participant’s accounts that prohibits the Participant from receiving the
proceeds of a Plan loan, receiving an in-service withdrawal, or receiving a
distribution upon termination of employment. However, the Participant may
receive the proceeds of a Plan loan, receive an in-service withdrawal, or
receive a distribution upon termination of employment if all prospective
Alternate Payees consent in writing to the loan, in-service withdrawal or
distribution. If the Committee places the hold on the account as the result of
receiving information that causes the Committee to believe that a Domestic
Relations Order will be submitted and if the Committee does not receive a
Domestic Relations Order (either in draft form or entered by a court) within 90
days after the Committee placed the hold on the Participant’s accounts, the hold
will be removed from the Participant’s accounts. If the Committee places the
hold on the Participant’s accounts as a result of receiving a Domestic Relations
Order (either in draft form or entered by a court), the hold shall remain on the
Participant’s accounts until the first to occur of (A) the 90th day after the
date the Committee responds to the parties with its comments on the Domestic
Relations Order, or (B) the date the Committee determines that the Domestic
Relations Order is a QDRO and the Participant’s accounts are divided between the
Participant and the Alternate Payee on the records of the Plan. However, if the
Participant’s accounts are affected by the separate accounting requirement of
section 13.9(e)(iii) above, the hold shall continue to the extent necessary for
the Plan and the Committee to comply with the separate accounting requirement.
Nothing in this subsection 13.9(e)(iv) shall prevent the Participant from
exercising investment control over the assets in his accounts during the
pendency of a hold on the accounts.

(f) Rights of Alternate Payee. The Alternate Payee shall have the following
rights under the Plan:

(i) Single Payment. The only form of payment available to an Alternate Payee is
a single payment of the distributable amount (measured at the time the payment
is processed). If the Alternate Payee is awarded more than the distributable
amount, the Alternate Payee shall initially receive a distribution of the
distributable amount, with additional payments made as soon as administratively
convenient after more of the amount awarded to the Alternate Payee becomes
distributable.

(ii) Timing of Distribution. Subject to the limits imposed by this paragraph,
the Alternate Payee may choose (or the QDRO may specify) the date of the
distribution. If the value of the nonforfeitable portion of an Alternate Payee’s
Account is $5,000 or less, with respect to distributions on or after March 28,
2005, the Alternate Payee shall receive a distribution as soon as practicable,
provided that the value is $5,000 or less when the distribution is processed.
Otherwise, the distribution to the Alternate Payee may occur at any time after
the Committee determines that the Domestic Relations Order is a QDRO and before
the Participant’s Required Beginning Date (unless the order is determined to be
a QDRO after the Participant’s Required Beginning Date, in which case the
distribution to the Alternate Payee shall be made as soon as administratively
practicable after the order is determined to be a QDRO).

(iii) Death of Alternate Payee. The Alternate Payee may designate one or more
beneficiaries, as specified in section 6.1. When the Alternate Payee dies, the
Alternate Payee’s beneficiary shall receive a complete distribution of the
distributable amount in a single payment as soon as administratively convenient.

(iv) Investing. An Alternate Payee may direct the investment of his Account
pursuant to section 9.3.

 

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(v) Claims. The Alternate Payee may bring claims against the Plan pursuant to
section 13.2.

(g) Exception: Recoup Plan Losses. Subsection (a) shall not apply to any offset
of a Participant’s benefits against an amount that the Participant is ordered or
required to pay to the Plan if the following conditions are met.

(i) The order or requirement to pay must arise (A) under a judgment of
conviction for a crime involving the Plan, (B) under a civil judgment (including
a consent order or decree) entered by a court in an action brought in connection
with a violation (or alleged violation) of part 4 of subtitle B of title I of
ERISA, or (iii) pursuant to a settlement agreement between the Secretary of
Labor and the Participant, or a settlement agreement between the Pension Benefit
Guaranty Corporation and the Participant, in connection with a violation (or
alleged violation) of part 4 of subtitle B of title I of ERISA by a fiduciary or
any other person.

(ii) The judgment, order, decree, or settlement agreement must expressly provide
for the offset of all or part of the amount ordered or required to be paid to
the Plan against the Participant’s benefits provided under the Plan.

(iii) To the extent that the survivor annuity requirements of Code section
401(a)(11) apply with respect to distributions from the Plan to the Participant,
if the Participant is married at the time at which the offset is to be made,
(A) either the Participant’s Spouse must have already waived his right to a
qualified preretirement survivor annuity and a qualified joint and survivor
annuity or the Participant’s Spouse must consent in writing to such offset with
such consent witnessed by a notary public or representative of the Plan (or it
is established to the satisfaction of a Plan representative that such consent
may not be obtained by reason of circumstances described in Code section
417(a)(2)(B)), or (B) the Participant’s Spouse is ordered or required in such
judgment, order, decree, or settlement to pay an amount to the Plan in
connection with a violation of part 4 of subtitle B of title I of ERISA, or
(C) in such judgment, order, decree, or settlement, the Participant’s Spouse
retains the right to receive a survivor annuity under a qualified joint and
survivor annuity pursuant to Code section 401(a)(11)(A)(i) and under a qualified
preretirement survivor annuity provided pursuant to Code section
401(a)(11)(A)(ii). The value of the Spouse’s survivor annuity in subparagraph
(C) shall be determined as if the Participant terminated employment on the date
of the offset, there was no offset, the Plan permitted commencement of benefits
only on or after Normal Retirement Age, the Plan provided only the
“minimum-required qualified joint and survivor annuity,” and the amount of the
qualified preretirement survivor annuity under the Plan is equal to the amount
of the survivor annuity payable under the “minimum-required qualified joint and
survivor annuity.” For purposes of this paragraph only, the “minimum-required
qualified joint and survivor annuity” is the qualified joint and survivor
annuity which is the actuarial equivalent of the Participant’s accrued benefit
(within the meaning of Code section 411(a)(7)) and under which the survivor
annuity is 50% of the amount of the annuity which is payable during the joint
lives of the Participant and his or her Spouse.

(h) Suspensions. The Committee shall temporarily prevent the Account Owner from
borrowing from his or her Accounts and shall temporarily suspend distributions
and withdrawals from his or her Accounts, except to the extent necessary to make
the required minimum distributions under Code section 401(a)(9), when the
Committee has reason to believe that the Plan may be entitled to an offset of
the Participant’s benefits described in subsection (g). The Committee shall
promulgate reasonable and non-discriminatory rules regarding such suspensions,
including but not limited to how long such suspensions remain in effect.

 

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(i) Overpayments. Notwithstanding any provision of subsection (a) to the
contrary, if a mistake is made in determining the eligibility for, or
calculation of the proper amount of, any Benefit under this Plan, whether such
error is attributable to the Participant, a Beneficiary, the Committee or its
delegates or third party vendors, and such mistake results in an overpayment of
a Benefit to a Participant or Beneficiary, the Committee or its delegates are
authorized to recover such overpayment(s) using all lawful process, including,
in the Committee’s sole discretion, the filing of legal action to recover such
overpayments.

(j) Clerical Error If a clerical error or other mistake is made by the
Committee, QAM, their delegates, members of the Employee Benefits Group of the
Company’s Human Resources Organization, vendors, a Participant or Beneficiary,
such clerical error or mistake does not and shall not create a right to benefits
under the Plan. Clerical errors include, but are not limited to, providing
misinformation on eligibility or benefits or entitlements, relating to
information transmittal and/or communications, perfunctory or ministerial in
nature, involving claims processing, recordkeeping or underwriting function, or
made by any of the parties listed above. Although every effort is and will be
made to administer the Plan in a fully accurate manner, any inadvertent error,
misstatement or omission will be disregarded and the actual Plan provisions will
be controlling. When an error is found, it will be corrected or adjusted
appropriately as soon as practicable. Interest shall not be payable with respect
to a benefit corrected or adjusted. It is the Participant’s responsibility to
confirm the accuracy of statements made by the Plan or its delegates

13.10 Payments Due Minors or Incapacitated Persons.

If any person entitled to a payment under the Plan is a minor, or if the
Committee determines that any such person is incapacitated by reason of physical
or mental disability, whether or not legally adjudicated as such, the Committee
shall have the power to cause the payments becoming due to such person to be
made to the legal guardian or conservator of such person, or if none, to a
parent of a minor or the responsible adult with whom a minor maintains his
residence or to a custodian for a minor under the Uniform Gifts to Minors Act
(or Gift to Minors Act), if permitted by the laws of the State in which the
minor resides. Payments made pursuant to such power shall operate as a complete
discharge of the Trust Fund, the Trustee, and the Committee.

13.11 Disposition of Unclaimed Payments.

Each Participant must file with the Committee from time to time in writing his
post office address and the post office address of each of his beneficiaries and
each change of post office address. Any communication, statement, or notice
addressed to an Account Owner at his last post office address filed with the
Committee, or if no address is filed with the Committee then at his last post
office address as shown on the Company’s records, will be binding on the Account
Owner and beneficiaries for all purposes of the Plan. Neither the Committee nor
the Trustee shall be required to search for or locate an Account Owner. If the
Committee notifies an Account Owner that he is entitled to a distribution and
also notifies him of the provisions of this section, and the Participant or
beneficiary fails to claim his benefits under the Plan or make his address known
to the Committee, within one year after the notification, the benefits under the
Plan of the Account Owner will, after the Committee takes reasonable measures to
locate the Participant, either be forfeited and used to pay Plan expenses as of
the end of any Plan Year following the one-year waiting period, or continue to
be held in the Trust Fund for the benefit of the Account Owner. If an Account
Owner’s Account is forfeited pursuant to this section and if the Account Owner
should later make a claim for his benefit, the Company shall contribute to the
Trust Fund, for distribution, shares of Stock and cash equal in value to the
amount forfeited.

 

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13.12 Pronouns: Gender and Number.

Unless the context clearly indicates otherwise, words in either gender shall
include the other gender and the singular shall include the plural and vice
versa.

13.13 Applicable Law.

This Plan shall be construed and regulated by ERISA, the Code, and, to the
extent applicable, the laws of the State of Colorado without regard to the
conflicts of law provisions.

Executed this 17th day of December, 2007.

 

QWEST COMMUNICATIONS INTERNATIONAL INC. PLAN DESIGN COMMITTEE By  

 

  Teresa A. Taylor   Executive Vice President and Chief Administrative and Human
Resources Officer By  

 

  Felicity O’Herron   Vice President, Human Resources By  

 

  Erik P. Ammidown   Director, Human Resources, Health & Life Benefits

Original Document – 1 of 3

 

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