<PAGE>   1
                                                                    EXHIBIT 10.1

                             THE COASTAL CORPORATION
                                   THRIFT PLAN
                                Includes Plan as
                 AMENDED AND RESTATED AS OF JANUARY 1, 1999 and
                      First Amendment dated June 26, 1999,
                     Second Amendment dated May 2, 2000, and
                     Third Amendment dated November 6, 2000.




<PAGE>   2


                    THE COASTAL CORPORATION
                          THRIFT PLAN
                       TABLE OF CONTENTS

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                                                             Page
<S>                                                          <C>
INTRODUCTION                                                   1

 I. DEFINITIONS                                                2

    1.1    "Active Participation"                              2
    1.2    "Actual Contribution Percentage"                    3
    1.3    "Actual Deferral Percentage"                        3
    1.4    "After Tax Contribution"                            3
    1.5    "Adjusted Balance"                                  3
    1.6    "Annual Additions"                                  3
    1.7    "Basic Compensation"                                3
    1.8    "Beneficiary                                        4
    1.9    "Board"                                             4
    1.10   "Break in Service"                                  4
    1.11   "Coastal"                                           5
    1.12   "Code"                                              5
    1.13   "Committee"                                         5
    1.14   "Common Stock"                                      5
    1.15   "Company"                                           5
    1.16   "Compensation"                                      6
    1.17   "Earnings"                                          6
    1.18   "Eligible Employee"                                 6
    1.19   "Employee"                                          6
    1.20   "Employment Year"                                   8
    1.21   "Entry Date"                                        8
    1.22   "ERISA"                                             8
    1.23   "ESOP"                                              8
    1.24   "ESOP Participant"                                  8
    1.25   "Highly Compensated Eligible Employee"              8
    1.26   "Hour of Service"                                   8
    1.27   "Investment Fund"                                  10
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    1.28   "Limitation Year"                                   10
    1.29   "Matching Contributions"                            10
    1.30   "Matching Contributions Account"                    10
    1.31   "Maximum Permissible Amount"                        10
    1.32   "Non-ESOP Participant"                              10
    1.33   "Normal Retirement Date"                            10
    1.34   "Participant"                                       10
    1.35   "Participation"                                     11
    1.36   "Plan"                                              11
    1.37   "Plan Year"                                         11
    1.38   "Related Employer"                                  11
    1.39   "Related Plan"                                      11
    1.40   "Regulations"                                       11
    1.41   "Salary Reduction Agreement"                        11
    1.42   "Salary Reduction Contributions"                    11
    1.43   "Salary Reduction Contribution Account"             11
    1.44   "Service"                                           11
    1.45   "Severance Period of One Year"                      12
    1.46   "Subsidiary"                                        12
    1.47   "Trust" or "Trust Fund"                             12
    1.48   "Trust Agreement"                                   12
    1.49   "Trustee"                                           12
    1.50   "Uniformed Services"                                12
    1.51   "Valuation Date"                                    12
    1.52   "Veterans' Rights Act"                              13

II. PARTICIPATION                                              13

    2.1    Eligibility                                         13
    2.2    Participation                                       13
    2.3    Reemployment of a Participant                       13
    2.4    Discontinuance of Contributions                     13

III. CONTRIBUTIONS                                             13

    3.1    After Tax Contributions                             13
    3.2    Salary Reductions                                   14
    3.3    Salary Reduction Contributions                      14
    3.4    Maximum Contribution                                15
    3.5    Matching Contributions                              15
    3.6    Limitations on Contributions                        16
    3.7    Rollover Contributions                              16
    3.8    Withdrawal of Rollover Contribution                 17
    3.9    Rules Governing Matching Contributions              17
    3.10   Exclusive Benefit of Employees                      21
    3.11   Forfeitures of Matching Contributions               22
    3.12   Return of Contributions                             22
    3.13   Veterans' Rights Act                                22

IV. SPECIAL RULES GOVERNING SALARY REDUCTION CONTRIBUTIONS
    AND SALARY REDUCTION CONTRIBUTION ACCOUNTS                 23

    4.1    Administrative Rules Governing Salary Reduction
           Agreements                                          23
    4.2    Limitations on Salary Reduction Contributions       23
    4.3    Return of Certain Salary Reduction Contributions    27
    4.4    Distributions from Salary Reduction Contribution
           Accounts                                            27
    4.5    Accounting                                          28
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 V. ALLOCATIONS TO PARTICIPANTS' ACCOUNTS                     28

    5.1    Separate Accounts                                  28
    5.2    Allocation of After Tax Contribution Accounts      28
    5.3    Allocation to Salary Reduction Accounts            28
    5.4    Allocation of Matching Contributions               28
    5.5    Maximum Allocation                                 29
    5.6    Vesting                                            31
    5.7    Allocations and Adjustment to Accounts             32
    5.8    Special Allocation Provisions                      32

VI. PAYMENT OF BENEFITS                                       33

    6.1    General Requirements                               33
    6.2    Payments on Death                                  33
    6.3    Payments on Disability                             35
    6.4    Payments on Termination                            35
    6.5    Pretermination Distributions                       36
    6.6    Property Distributed                               38
    6.7    Methods of Payment                                 39
    6.8    Distribution of Unallocated Employee
           Contributions                                      45
    6.9    Administrative Powers Relating to Payments         45
    6.10   Withdrawals from Participant Contribution
           Account                                            46
    6.11   Ten-Year Withdrawal                                46
    6.12   Participant to Elect Source of Funds for
           Distribution                                       46

VII.       PLAN ADMINISTRATION                                47

    7.1    Company Responsibility                             47
    7.2    Powers and Duties of Administrator                 47
    7.3    Organization and Operation of Committee            48
    7.4    Records and Reports of Committee                   49
    7.5    Claims Procedure                                   49
    7.6    Compensation and Expenses of Committee             49
    7.7    Indemnity of Committee Members                     50

VIII.      TRUST AND TRUSTEE                                  50

    8.1    Trust Agreement                                    50
    8.2    Exclusive Benefit of Employees                     50
    8.3    Appointment of Trustee and Investment Managers     50
    8.4    Assignment of Assets to Trustees                   51
    8.5    Assignment of Assets to Investment Managers        51
    8.6    Voting Company Stock - Annual or Special Meeting   51
    8.7    Voting Company Stock - Tender or Exchange Offer    52
    8.8    Common Trust Fund Authorization                    52

IX. LOANS TO PARTICIPANTS                                     53

    9.1    Loans                                              53
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 X. INVESTMENT OF ACCOUNT BALANCES                            53

    10.1   Investment Funds                                   53
    10.2   Initial Investment                                 53
    10.3   Investment Options                                 53
    10.4   Diversification of Investments - Salary
           Reduction Contribution Accounts (ESOP)             56
    10.5   Rules Governing Investments of Non-ESOP
           Participants                                       57
    10.6   Description of Funds                               58

XI. AMENDMENT AND TERMINATION                                 60

    11.1   Amendment of Plan                                  60
    11.2   Voluntary Termination of/or Permanent
           Discontinuance of Contributions to the Plan        61
    11.3   Involuntary Termination of Plan                    61
    11.4   Payments on Termination of/or Permanent
           Discontinuance of Contributions to the Plan        62
    11.5   Assets Available for All Controlled Group
           Participants                                       62

XII.       MISCELLANEOUS                                      63

    12.1   Duty to Furnish Information and Documents          63
    12.2   Annual Statements and Available Information        63
    12.3   No Enlargement of Employment Rights                63
    12.4   Applicable Law                                     63
    12.5   No Guarantee except for Colorado Plan              63
    12.6   Unclaimed Funds                                    64
    12.7   Merger or Consolidation of Plan                    64
    12.8   Interest Nontransferable                           64
    12.9   Prudent Man Rule                                   65
    12.10  Limitations on Liability                           65
    12.11  Headings                                           66
    12.12  Gender and Number                                  66
    12.13  ERISA and Approval Under Internal Revenue Code     66
    12.14  Extension of Plan to Related Employers             66
    12.15  Rules of Interpretation                            67
    12.16  Electronic Procedures                              67

XIII.      TOP-HEAVY PROVISIONS                               67

    13.1   Top-Heavy Status                                   67
    13.2   Definitions                                        67
    13.3   Determination of Top-Heavy Status                  68
    13.4   Vesting                                            70
    13.5   Minimum Contribution                               70
    13.6   Compensation                                       70
    13.7   Collective Bargaining Agreements                   70
    13.8   Limit on Annual Additions:  Combined Plan-Limit    70
    13.9   Safe-Harbor Rule                                   71

    SUPPLEMENTS

    ANR Supplement                                            71
    Coastal Mart, Inc. Supplement                             74
    Coal Supplement                                           74
    Coastal Canada Supplement                                 75
    Maverick Supplement                                       75
    St. Helen's Facility Supplement                           75
    Derby Supplement                                          76
    Conoco Supplement                                         80
    Bluebell Supplement                                       80
    Rensselaer Supplement                                     81
    TransCanada - U.S.                                        81
    TransCanada - Caribou                                     82
</TABLE>

<PAGE>   6
                             THE COASTAL CORPORATION
                                   THRIFT PLAN

                                Includes Plan as
                 AMENDED AND RESTATED AS OF JANUARY 1, 1999 AND
                      First Amendment Dated June 26, 1999,
                     Second Amendment Dated May 2, 2000, and
                     Third Amendment Dated November 6, 2000.

                                  Introduction

                             Name and Effective Date

    The name of this plan is "The Coastal Corporation Thrift Plan" (hereinafter
referred to as the "Plan" or "Coastal Plan"). The Plan was also known by its
former names, which are "The Coastal Corporation Thrift Plan and Trust" and
prior to 1980, the "Coastal States Gas Corporation Thrift Plan and Trust." The
Plan became effective on January 1, 1963.

    The Plan was amended and restated as of January 1, 1999 to convert certain
of the Section 401(k) provisions of the Plan to ESOP provisions.

    The Plan is an ESOP with respect to contributions made pursuant to a Salary
Reduction Agreement (Code Section 401(k) contribution) by a Participant during
the period the Participant is an Employee of a corporation with respect to which
Common Stock of the Company is an employer security as defined in Section 409(l)
of the Code, specifically, (i) a corporation which is a Related Employer; (ii) a
Subsidiary which is a corporation in which the Company owns, directly, at least
fifty percent of the total combined voting power of all classes of stock
entitled to vote or at least fifty percent of the total value of shares of all
classes of stock in such corporation and all other corporations below it in the
organizational structure would be considered Related Employers assuming such
Subsidiary were the Company.

    As of January 1, 1986, the American Natural Resources System Companies
Employees' Savings Plan (hereinafter referred to as the "ANR Plan") was merged
into the Coastal Plan.


                                       1
<PAGE>   7

    The purpose of the Plan is to enable participating Employees to share in the
growth and prosperity of the Company, to provide Employees with an opportunity
to accumulate capital for their future economic needs and to enable Employees to
acquire stock ownership interest in the Company.

    This Plan is designed to be a profit sharing plan as defined in Code Section
401(a) and this statement is intended to satisfy the requirements of Section
401(a)(27) of the Code, except that the ESOP provisions of the Plan are designed
to invest primarily in qualifying employer securities (as defined in Sections
409(l) and 4975(e)(8) of the Code) and are intended to be a stock bonus plan as
defined in Section 401(a)(23) of the Code.

    Plan provisions apply on a prospective basis from their effective date and
do not alter Plan provisions with respect to periods of time prior to the
effective date.

                                    ARTICLE I
                                   DEFINITIONS

    Whenever used herein the following words and phrases shall have the meanings
stated below unless a different meaning is plainly required by the context:

    1.1 "Active Participation" means a calendar month (a) with respect to which
a contribution is made to the Plan for a Participant pursuant to a Salary
Reduction Agreement and/or an After Tax Contribution election, (b) during which
a Participant would have been eligible to contribute to the Plan but was
prohibited from contributing due to a withdrawal of funds from the Plan, (c)
during which the Participant would have been eligible to contribute to the Plan
but was prohibited from doing so due to a decision by the Administrator to stop
contributions for such period of time for such Participant in order to meet the
requirements for continued qualification of the Plan, (d) during which the
Participant would have been eligible to contribute to the Plan except that (i)
such Participant was employed by a Related Employer or Subsidiary which had not
adopted the Plan with respect to such period of time and (ii) such Participant,
if eligible, contributed to a defined contribution plan which met the
qualification requirements of Code Section 401(a) adopted by such Related
Employer or Subsidiary, (e) during which, due to disability, a Participant
qualified for benefits under a long- term disability plan of the Company and was
therefore ineligible to participate in the Plan as an Employee, or (f) during
which a Participant was not an Employee but was a "leased employee" as defined
in Section 1.19(d) provided that, if eligible, such Participant contributed to a
defined contribution plan adopted by the employer of such "leased employee" if
such plan met the qualification requirements of Section 401(a) of the Code. A
Participant shall receive full credit for any calendar month during which the
Participant makes a contribution. Any full calendar month during which a
Participant is eligible to contribute and declines to do so shall be excluded
from Active Participation.


                                       2
<PAGE>   8


    Active Participation includes any period of participation in the Coastal
Plan, the ANR Plan and the Original and Amended Colorado Plans (which were
merged into this Plan in 1974).

    1.2 "Actual Contribution Percentage" for the purpose of testing compliance
with Code Section 401(m) for a specified group for a given Plan Year, is the
average of the ratios, calculated separately for each Eligible Employee in such
group of (i) the After Tax Contribution, if any, contributed by the Participant
for such Plan Year and the Matching Contributions, if any contributed by the
Company on behalf of such Participant for such Plan year to (ii) the
Participant's Earnings for such Plan Year.

    1.3 "Actual Deferral Percentage" shall mean, for a specified group for a
given Plan Year, the average of the ratios calculated separately for each
Eligible Employee in such group: (i) the Salary Reduction contributions, if any,
contributed by the Company on behalf of each such Eligible Employee for such
Plan Year to (ii) the Participant's Earnings for such Plan Year.

    1.4 "After Tax Contribution" is a contribution by a Participant that is
subject to federal income tax prior to contribution to the Plan.

    1.5 "Adjusted Balance" means the balance in a Participant's account or
accounts, as adjusted in accordance with Plan provisions including Sections 5.2,
5.3, 5.4, 5.5 and 5.7 of the Plan as of the applicable Valuation Date.

    1.6 "Annual Additions" means the total of: (a) Company contributions
allocated to a Participant's accounts under this Plan and any Related Plan
during any Limitation Year; (b) the amount of employee contributions made by the
Participant under this Plan and any Related Plan; and (c) forfeitures allocated
to a Participant's accounts under this Plan and any Related Plan.

    Clauses (a) and (b) above include excess contributions under Sections 3.9
and 4.3.

    1.7 "Basic Compensation" means the fixed salaries or wages per hour based on
an eight-hour per day schedule paid by the Company to the Participant for the
Plan Year including pay on the basis of sales commissions, truck mileage and
loading but excluding compensation for bonuses, overtime and other incentive
compensation. Basic Compensation includes payment for current year earned
vacation, but not for accrued vacation. Basic Compensation includes any amount
paid by an Employer pursuant to the direction of an Employee (where the
direction is delivered in writing or by using the electronic procedure provided
by the Administrator) under a Salary Reduction Agreement and under any salary
reduction program maintained by the Employer which meets the qualification
requirements of Code Section 125 for exclusion from the gross income of the
Participant. Except as provided in this definition, only payments included in
the definition of Compensation are included in Basic Compensation.


                                       3
<PAGE>   9

         In no event shall Basic Compensation of a Participant taken into
account under the Plan for any Plan Year exceed $160,000 (or such greater amount
provided pursuant to Section 401(a)(17) of the Code).

    1.8 "Beneficiary" means the person, persons, or entity designated or
determined pursuant to the provisions of Section 6.2(b) of the Plan.

    1.9 "Board" means the Board of Directors of the Company.

    1.10 "Break in Service" means the termination of employment of an Employee
followed by (i) for purposes of subsection (a), a Severance Period of One Year
during which the Employee accumulates no Hours of Service, or (ii) for purposes
of subsections (b), (c), (d) and (e), the expiration of an Employment Year in
which the Employee accumulates fewer than 501 Hours of Service.

        (a) A Break in Service shall not be deemed to have occurred if (i) the
    employment of a terminated Employee is resumed prior to the expiration of a
    Severance Period of One Year in which he accumulates any Hours of Service;
    (ii) the Employee is absent from the active employment with the Company and
    Related Employers for periods of employment with the Company or Related
    Companies during which the individual is disabled due to illness or injury;
    or (iii) the Employee is absent from employment with the Company by reason
    of service in the "uniformed services" (as that term is defined in the
    Veterans' Rights Act) for a period during which the Employee's reemployment
    rights are guaranteed by the Veterans' Rights Act, and the Employee is
    reemployed by the Company under the terms of Section 4312 of the Veterans'
    Rights Act; or (iv) the Employee is absent on an approved leave of absence
    granted to the Employee on or after August 5, 1993 pursuant to the Family
    and Medical Leave Act, if the Employee returns to work for an Employer at
    the end of such leave of absence.

        (b) An Employee who is absent from work with the Company because of: (i)
    Employee's pregnancy, (ii) the birth of the Employee's child, (iii) the
    placement of a child with the Employee in connection with the Employee's
    adoption of the child, or (iv) caring for such child immediately following
    such birth or placement shall receive credit, solely for purposes of
    determining whether a Break in Service has occurred under this Section, for
    the Hours of Service described in subsection (c) of this Section; provided
    that the total number of hours credited as Hours of Service under this
    subsection shall not exceed 501 Hours of Service.

        (c) In the event of an Employee's absence from work for any of the
    reasons set forth in subsection (b) of this Section, the Hours of Service
    that the Employee will be credited with under subsection (b) are (i) the
    Hours of


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<PAGE>   10


    Service that otherwise would normally have been credited to the Employee but
    for such absence, or (ii) eight Hours of Service per day of such absence if
    the Administrator is unable to determine the Hours of Service described in
    clause (i).

        (d) An Employee who is absent from work for any of the reasons set forth
    in subsection (b) of this Section shall be credited with Hours of Service
    under subsection (b), (i) only in the Employment Year in which the absence
    begins, if the Employee would be prevented from incurring a Break in Service
    in that Year solely because the period of absence is treated as credited
    Hours of Service, as provided in subsections (b) and (c), or (ii) in any
    other case, in the immediately following Employment Year.

        (e) No credit for Hours of Service will be given pursuant to subsections
    (b), (c) and (d) of this Section unless such timely information that the
    Administrator may reasonably require to establish: (i) that the absence from
    work is for one of the reasons specified in subsection (b); and (ii) the
    number of days for which there was such an absence. No credit for Hours of
    Service will be given pursuant to subsections (b), (c), and (d) for any
    purpose of the Plan other than the determination of whether an Employee has
    incurred a Break in Service pursuant to this Section.

    1.11 "Coastal" means The Coastal Corporation, a Delaware corporation.

    1.12 "Code" means the Internal Revenue Code of 1986, as amended from time to
time. Reference to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes said section.

    1.13 "Committee" means the Administrative Committee described in Section 7.1
of the Plan.

    1.14 "Common Stock" means the shares of common stock of Coastal, $.33a par
value, which are publicly traded.

    1.15 "Company" means Coastal, or any successor corporation resulting from a
merger or consolidation with the Company or transfer of substantially all of the
assets of the Company, if such successor or transferee shall adopt and continue
the Plan by appropriate corporate action, pursuant to Section 11.3 of the Plan.
All employees of a Related Employer shall be treated as employed by the Company
only for purposes of determining Hours of Service under Section 1.26, Service
under Section 1.44, eligibility to participate under Section 2.1, vesting under
Section 5.6 and the commencement of benefits under Section 6.7(b).
Notwithstanding anything to the contrary contained in this Section, no provision
of this Section shall be construed or interpreted to require the Company to make
a Company contribution under the Plan for any individual who is not an Employee.

                                       5
<PAGE>   11


    1.16 "Compensation" means all amounts received (without regard to whether or
not an amount is paid in cash) by a Participant for personal services actually
rendered in the course of employment with the Company to the extent such amounts
are includible in gross income, but shall not include payments or reimbursements
for moving expenses to the extent that the Company determines that such moving
expenses meet the requirements of Section 217 of the Code to be allowed as a
deduction by the Participant, income arising from the exercise of a nonqualified
stock option and income arising from premature disposition of stock acquired
pursuant to exercise of a qualified stock option. In no event shall Compensation
of a Participant taken into account under the Plan for any Plan Year exceed
$160,000 (or such greater amount provided pursuant to Section 401(a)(17) of
Code.)

    Effective for Plan Years commencing after December 31, 1997, for purposes of
applying the contribution and benefit limitations of Section 415 of the Code,
Compensation shall include an Employer contribution pursuant to a salary
reduction agreement to a plan which meets the qualification requirements of
Section 401(k) of the Code and any amount which is excluded from gross income
pursuant to Section 125 of the Code.

    1.17 "Earnings" means a Participant's Compensation paid during a Plan Year,
increased by the amount subject to any Salary Reduction Agreement entered into
by the Participant for such Year.

         In no event shall Earnings of a Participant taken into account under
the Plan for any Plan Year exceed $160,000 (or such greater amount provided
pursuant to Section 401(a)(17) of the Code).

    1.18 "Eligible Employee" means, for purposes of Sections 3.9 and 4.2, any
Employee who has met the requirements of Section 2.1 of the Plan and who is
directly or indirectly eligible to make an election under the Plan for all or a
portion of a Plan Year and includes an Employee who would be a Participant but
for the failure to make required contributions; an Employee whose eligibility to
make After Tax Contributions or Salary Reduction Contributions has been
suspended because of a distribution, a loan or an election (other than certain
one-time elections) not to participate in the Plan; an Employee who may not
receive additional Annual Additions because of Code Section 415 limits; or an
Employee who may not contribute due to the limitations of Code Section
401(a)(17).

    1.19 "Employee" means an individual employed by the Company provided,
however, that "Employee" does not include any individual covered by a collective
bargaining agreement or other agreement between employee representatives and the
Company if retirement, thrift, profit sharing or similar benefits were the
subject of good faith bargaining between such employee representatives and the
Company and such agreement does not provide for eligibility for this benefit.

        (a) Any person who is, with respect to the United States, a nonresident
    alien and who does not receive earned


                                       6
<PAGE>   12


    income from sources within the United States from a Related Employer or
    Subsidiary which has adopted this Plan is not an "Employee" unless such
    person is employed at a work location in Canada of a Related Employer or
    Subsidiary which has adopted this Plan.

        (b) Any United States citizen who is employed by a foreign subsidiary of
    a Related Employer or Subsidiary which has adopted this Plan shall be
    considered an "Employee" of such Employer provided there is in effect an
    agreement between the Internal Revenue Service and such Employer to pay,
    with respect to foreign service, an amount equivalent to the tax under the
    Federal Insurance Contributions Act, and provided further that contributions
    under a funded plan of deferred compensation are not provided by any other
    person with respect to the remuneration paid to such United States citizen
    by the foreign subsidiary.

        (c) A person who, due to disability, qualifies for benefits under a long
    term disability plan of the Company is not eligible to participate in the
    Plan and shall not be considered an "Employee" for purposes of the Plan
    during the period of time such person qualifies for such long term
    disability benefits. This provision applies to periods after 1989.

        (d) A person who is not an employee of the Company, a Subsidiary or a
    Related Employer and who performs services for the Company, Subsidiary or
    Related Employer pursuant to an agreement between the Company, a Subsidiary
    or a Related Employer and a leasing organization shall be considered a
    "leased employee" after such person performs such services for a
    twelve-month period and the services are performed under the primary
    direction or control of the Company, Subsidiary or a Related Employer. A
    person who is considered a leased employee of the Company, a Subsidiary or a
    Related Employer shall not be considered an Employee for purposes of the
    Plan. If a leased employee subsequently becomes an Employee and thereafter
    participates in the Plan, he shall be given credit for Hours of Service and
    Service for his period of employment as a leased Employee, except to the
    extent that the requirements of Section 414(n)(5) of the Code were satisfied
    with respect to such Employee while he was a leased Employee.

        A person who is not considered to be a "leased employee" as defined
    above and who is engaged as an independent contractor pursuant to a contract
    or agreement between such person and the Company, a Subsidiary or a Related
    Employer which designates him as an independent contractor or otherwise
    contemplates or implies that he will function as an independent contractor
    is not considered an Employee for purposes of the Plan. Only individuals who
    are paid as employees from the payroll of the Company, a Subsidiary or a
    Related Employer and treated by the Company, Subsidiary or Related Employer
    at all times as Employees shall be deemed Employees for purposes of the
    Plan, and no independent

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<PAGE>   13


    contractor shall be treated as an Employee under the Plan during the period
    he renders services to the Company as an independent contractor. Any person
    retroactively or in any other way held or found to be a "common law
    employee" shall not be eligible to participate in the Plan for any period
    during which he was not treated as an Employee by the Company and considered
    to be an "Employee" under this definition. If an independent contractor
    subsequently becomes an Employee and thereafter participates in the Plan, he
    shall be given credit for Hours of Service and Service for his period of
    employment as a leased Employee, except to the extent that the requirements
    of Section 414(n)(5) of the Code were satisfied with respect to such
    Employee while he was an independent contractor.

    1.20 "Employment Year" means a twelve consecutive month period commencing
with an individual's initial date of hire (or last date of rehire if he has
incurred a Break in Service) or with any anniversary thereof. For purposes
hereof, an individual's date of hire shall be the first day on which he
completes an Hour of Service and his date of rehire shall be the first day on
which he completes an Hour of Service following a Break in Service.

    1.21 "Entry Date" means the first day of the first full pay period for an
Employee that occurs after completion of a year of Service.

    1.22 "ERISA" means Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.

    1.23 "ESOP" means employee stock ownership plan as defined in Section
4975(e)(7) of the Code.

    1.24 "ESOP Participant" means a Participant subject to a Salary Reduction
Agreement and to which the ESOP provisions of the Plan apply.

    1.25 "Highly Compensated Participant" means a Participant who, (a) during
the current Plan Year or the preceding Plan Year, was at any time a five-percent
owner (as defined in Section 416 of the Code) of the Company, or (b) during the
preceding Plan Year (I) received Compensation from the Company in excess of
$80,000 (or such greater amount provided by the Secretary of the Treasury
pursuant to Section 414(q) of the Code) and, if elected by the Company, was in
the top-paid group of Employees (as defined in Section 414(q) of the Code) for
such Year. A Participant is in the top paid group for such Plan Year if he is in
the group consisting of the top 20 percent of the Employees when ranked on the
basis of compensation (as defined in Section 414(q)(4)) paid during such Plan
Year.

    1.26 "Hour of Service" means a period of time consisting of an individual's
period of employment with the Company, a Subsidiary or a Related Employer and
for all purposes except vesting means (i) each hour for which an individual is
paid, or entitled to payment, for the performance of duties during a period of


                                       8
<PAGE>   14

employment with the Company, a Subsidiary or Related Employer, and (ii) each
hour for which an individual is directly or indirectly paid by the Company, a
Subsidiary or Related Employer or is entitled to payment from the Company, a
Subsidiary or Related Employer during which no duties are performed by reason of
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence (but not in excess of 501 hours in any
continuous period during which no duties are performed). Each Hour of Service
for which back pay, irrespective of mitigation of damages, is either awarded or
agreed to by the Company, a Subsidiary or a Related Employer shall be included
under either (i) or (ii) as may be appropriate. Hours of Service shall be
credited:

        (a) in the case of hours referred to in clause (i) of the first sentence
    of this section, for the computation period in which the duties are
    performed;

        (b) in the case of hours referred to in clause (ii) of the first
    sentence of this section, for the computation period or periods in which the
    period during which no duties are performed occurs; and

        (c) in the case of hours for which back pay is awarded or agreed to by
    the Company, a Subsidiary or a Related Employer for the computation period
    or periods to which the award or agreement pertains, rather than to the
    computation period in which the award, agreement or payment is made.

        In determining Hours of Service, an individual who is employed by the
    Company, a Subsidiary or a Related Employer on other than an hourly-rated
    basis shall be credited with ten (10) Hours of Service per day for each day
    the individual would, if hourly-rated, be credited with service pursuant to
    clause (i) of the first sentence of this Section. If an individual is paid
    for reasons other than the performance of duties pursuant to clause (ii) of
    the first sentence of this Section: (i) in the case of a payment made or due
    that is calculated on the basis of units of time, an individual shall be
    credited with the number of regularly scheduled working hours included in
    the units of time on the basis of which the payment is calculated; and (ii)
    an individual without a regular work schedule shall be credited with eight
    (8) Hours of Service per day (to a maximum of forty (40) Hours of Service
    per week) for each day that the individual is so paid. Hours of Service
    shall be calculated in accordance with Department of Labor Regulations
    Section 2530.200b-2 or any future legislation or regulation that amends,
    supplements or supersedes said section.

        (d) Hours of Service shall not be credited for the performance of duties
    for any entity prior to the time of acquisition of fifty percent of the
    voting or other ownership interest of such entity by Coastal. Provided,
    however, that Hours of Service under this Plan shall include Hours of
    Service credited under the Plan prior to the January 1, 1989 restatement of
    the Plan.

                                       9
<PAGE>   15


        (e) Solely for purposes of determining an individual's

                           (i) eligibility to participate in the Plan under
                  Section 2.1, and

                           (ii) vesting under Section 5.6, Hours of Service
                  shall include hours during an approved leave of absence
                  granted by the Company to an individual on or after August 5,
                  1993 pursuant to the Family and Medical Leave Act, if the
                  individual returns to employment with the Company, a
                  Subsidiary or Related Employer at the end of such leave of
                  absence.

        Such Hours of Service shall be calculated pursuant to the provisions of
    Subsection (c) of this Section.

    1.27 "Investment Fund" or "Fund" means any fund as described in the Plan.

    1.28 "Limitation Year" means the twelve (12) consecutive month period to be
used in determining the Plan's compliance with Code Section 415 and the
Regulations thereunder. The Company shall take all actions necessary to ensure
that the Limitation Year is the same twelve (12) month period as the Plan Year.

    1.29 "Matching Contributions" means amounts contributed by the Company
pursuant to Section 3.5 of the Plan.

    1.30 "Matching Contributions Account" means the record of money and assets
held by the Trustee for an individual Participant or Beneficiary pursuant to the
provisions of the Plan derived from Matching Contributions.

    1.31 "Maximum Permissible Amount" means the lesser of: (a) $30,000 (or, if
greater, one-quarter of the dollar limitation in effect pursuant to Section
415(b)(1)(A) of the Code); or (b) 25% of a Participant's Compensation.

    1.32 "Non-ESOP Participant" means a Participant under a Salary Reduction
Agreement and to which the ESOP provisions of the Plan do not apply.

    1.33 "Normal Retirement Date" means the date a Participant attains age 65.

    1.34 "Participant" means an Employee who becomes a Participant under the
provisions of Section 2.2 of the Plan.

        (a) For purposes of Sections 3.9 and 4.2 of the Plan, "Participant"
    means an Eligible Employee, and;

        (b) An Employee who makes a Rollover Contribution prior to the Entry
    Date of such Employee shall be a Participant only with respect to such
    Rollover Contributions until the Entry Date of such Employee.


                                       10
<PAGE>   16


        (c) A former Employee or Beneficiary who has no vested Adjusted Balance
    in any account under the Plan is not a Participant.

    1.35 "Participation" means the months of participation calculated under the
provisions of Active Participation excluding the provisions of subsection
1.1(d)(ii) and including any full calendar month during which a Participant is
eligible to contribute and declines to do so.

    1.36 "Plan" means The Coastal Corporation Thrift Plan. For purposes of
Section 401(a) of the Code, the Plan shall constitute a profit-sharing plan,
except for the ESOP provisions that shall constitute a stock bonus plan.

    1.37 "Plan Year" means the fiscal year of Coastal, which is currently
designated as the twelve-month period from January through December of each
year. Any other twelve consecutive month period that may hereafter be designated
as the fiscal year of Coastal shall be the Plan Year.

    1.38 "Related Employer" means (i) any corporation that is a member of a
controlled group of corporations (as defined in Section 414(b) of the Code) that
includes the Company; (ii) any trade or business (whether incorporated or
unincorporated) that is under common control (as defined in Section 414(c) of
the Code) with the Company; and (iii) any member of an affiliated service group
(as defined in Section 414(m) of the Code) that includes the Company.

    1.39 "Related Plan" means any other defined contribution plan (as defined in
Section 415 of the Code) maintained by the Company or by any Related Employer.

    1.40 "Regulations" means regulations issued pursuant to provisions of the
Code.

    1.41 "Salary Reduction Agreement" means a written agreement, entered into by
a Participant, pursuant to the provisions of Section 3.2 of the Plan.

    1.42 "Salary Reduction Contributions" means amounts contributed by the
Company pursuant to the provisions of Section 3.3 of the Plan.

    1.43 "Salary Reduction Contribution Account" means the record of money and
assets held by the Trustee for an individual Participant or Beneficiary pursuant
to the provisions of the Plan, derived from Salary Reduction Contributions.

    1.44 "Service" means the number of Employment Years, commencing with the
Employment Year in which an individual is initially employed and ending with the
Employment Year in which a Break in Service occurs during which the individual
accrues at least 1,000 Hours of Service. Service will include an approved leave
of absence granted to an individual on or after August 5, 1993 pursuant to the
Family and Medical Leave Act, if such


                                       11

<PAGE>   17

individual returns to employment with the Company, a Subsidiary or Related
Employer at the end of such approved leave of absence. Without regard to the
preceding provisions of this Section, a Participant's years of Service after a
period of five consecutive one-year Breaks in Service shall be disregarded for
purposes of determining his nonforfeitable interest in his Company Matching
Contribution Account as of the Valuation Date coincident with or next preceding
the date he incurs such five consecutive one-year Breaks in Service. For
purposes of determining eligibility to participate in the Plan only, Service
during the initial Employment Year shall be based on the initial date of hire or
date of rehire, as is appropriate, and, for subsequent Employment Years
(including the Plan Year which includes the first anniversary of the
individual's date of hire or rehire, as appropriate), Service shall be
determined based upon the Plan Year in lieu of the Employment Year.

    1.45 "Severance Period of One Year" means a twelve consecutive month period
during which an Employee performs no Hours of Service and which begins on the
earlier of the date, on which (i) the Participant terminates employment with the
Company or (ii) the first date of a period in which the Participant remains
absent from service of the Company for any reason other than termination of
employment. For this purpose a Participant shall not be considered to have
terminated employment while such Participant, due to disability, qualified for
benefits under a long-term disability plan of the Company.

    1.46 "Subsidiary" means any corporation or unincorporated trade, business or
partnership in which Coastal owns, directly or indirectly, fifty percent of the
outstanding voting securities in such corporation or 50% of the ownership
interest in such unincorporated entity.

    1.47 "Trust" or "Trust Fund" means all money, securities and other property
held under the Trust Agreement for the purposes of the Plan.

    1.48 "Trust Agreement" means The Coastal Corporation Thrift Trust document,
as it may be amended from time to time.

    1.49 "Trustee" with respect to the Trust Agreement is defined in such Trust
Agreement.

    1.50 "Uniformed Services" means, with respect to the United States of
America, the Armed Forces, the Army National Guard and the Air National Guard
when engaged in active duty for training, or full-time National Guard duty, the
commissioned corps of the Public Health Service, and other category of persons
designated by the President of the United States of America in time of war or
emergency.

    1.51 "Valuation Date" means the last business day of each calendar month and
such other date, if any, as shall be selected by the Administrator.


                                       12
<PAGE>   18


    1.52 "Veterans' Rights Act" means the Uniformed Services Employment and
Reemployment Rights Act of 1994 (P.L. 103-353), as amended.

                                   ARTICLE II
                                  PARTICIPATION

    2.1 Eligibility. Each employee is eligible to participate in the Plan as of
the Entry Date of such Employee or the first day of any pay period of such
Employee that is subsequent to such Entry Date.

    2.2 Participation. To participate, an Employee who has met the eligibility
requirements of Section 2.1 must enroll by submitting a written election to
participate to the Administrator on a form provided by or acceptable to the
Administrator or by using the electronic enrollment procedure provided by the
Administrator.

    2.3 Reemployment of a Participant. If an Employee who has satisfied the
eligibility requirements of Section 2.1 shall incur a Break in Service and shall
thereafter be reemployed by the Company, he shall again become eligible to
participate under the Plan on the date of his resumption of employment.

    2.4 Discontinuance of Contributions. To discontinue contributions to the
Plan, a Participant must submit a written election to discontinue contribution
to the Administrator on a form provided by or acceptable to the Administrator or
by using the electronic procedure provided by the Administrator. Such
discontinuance may be effective the first day of any pay period of such
Participant subsequent to its receipt by the Administrator. Such discontinuance
must be effective for at least twelve weeks.

                                   ARTICLE III
                                  CONTRIBUTIONS

    3.1 After Tax Contributions.

        (a) Each Participant may elect to contribute from one percent (1%) to
    eight percent (8%) in increments of one percent (1%) of the Basic
    Compensation of such Participant to the Plan.

        (b) The minimum of one percent (1%) stated in the preceding subsection
    shall be two percent (2%) unless the Participant has also elected at least a
    one percent (1%) reduction in Basic Compensation pursuant to a Salary
    Reduction Agreement. The total of After Tax Contributions and Salary
    Reduction amount may not exceed the maximum percentage for such Participant
    established pursuant to Section 3.4.


                                       13
<PAGE>   19

    3.2 Salary Reductions.

        (a) By entering into a Salary Reduction Agreement with the Company, a
    Participant elects to reduce his Basic Compensation from the Company by a
    percentage between one percent (1%) and eight percent (8%) (in increments of
    one percent (1%)). Reductions to a Participant's Basic Compensation pursuant
    to his Salary Reduction Agreement shall be effected through payroll
    deductions. Salary Reduction Agreements shall be subject to the special
    rules set forth in ARTICLE IV below.

        (b) The minimum of one percent (1%) stated in preceding subsection (a)
    shall be two percent (2%) unless the Participant is also contributing at
    least one percent (1%) as an After Tax Contribution. The total of After Tax
    Contributions and Salary Reduction amount may not exceed the maximum
    percentage for the Participant as established pursuant to Section 3.4.

        (c) Notwithstanding any provision of the Plan to the contrary, the
    elective deferrals (as defined in Section 402(g)(3) of the Code, including
    Salary Reduction Contributions) of any Participant for any taxable year of
    the Participant shall not exceed the amount set forth in Section 402(g) of
    the Code, as adjusted by the Secretary of the Treasury pursuant to Sections
    402(g)(5) and 415(d) of the Code. Notwithstanding subsection 3.2(a),
    fractional reductions shall be permitted where necessary to comply with the
    limit imposed by Section 402(g)(1) of the Code. Any amount contributed to
    the Plan by the Company on behalf of a Participant during any Plan Year,
    pursuant to the Participant's Salary Reduction Agreement, in excess of the
    limitations set forth in this subsection, adjusted for earnings, gains, and
    losses allocable thereto, shall be paid directly to the Participant within
    the time period set forth in Section 402(g)(2) of the Code.

        (d) Salary Reduction Contributions for ESOP Participants shall
    constitute and shall be treated as an ESOP. Except as otherwise provided in
    Sections 10.3 and 10.4, all Salary Reduction Contributions for ESOP
    Participants shall be invested in Common Stock.

    3.3 Salary Reduction Contributions. The Company shall contribute to the
Trust for each Plan Year a Salary Reduction Contribution in an amount equal to
the total amount subject to Salary Reduction Agreements for such Year and
deducted from payroll during such Year and not reduced pursuant to Section
3.2(c). The Company shall pay to the Trustee its Salary Reduction Contribution
as of the earliest date on which such Contributions can reasonably be segregated
from the Company's general assets, which date shall not be later than the
fifteenth business day of the month following the date on which such amounts
would otherwise have been payable to the Participants in cash.

                                       14
<PAGE>   20


    3.4 Maximum Contribution.

        (a) The total percentage of Basic Compensation contributed to the Plan
    for a Participant pursuant to both a Salary Reduction Agreement and an After
    Tax Contribution election and eligible for Company Matching Contribution
    shall not exceed two percent during the first twenty-four months of Active
    Participation, four percent during the twenty-fifth through the forty-eighth
    month of Active Participation, six percent during the forty-ninth through
    the seventy-second month of Active Participation and eight percent for
    months of Active Participation thereafter.

        (b) In addition to the amount eligible for Company Matching
    Contribution, a Participant who has less than seventy-two months of Active
    Participation may contribute an additional amount to the Plan. Such
    additional amount is not eligible for the Company Matching Contribution.
    Such additional amount shall be in whole percentages of the Basic
    Compensation of the Participant and may not exceed the percentage by which
    eight percent exceeds the total percentage of Basic Compensation of such
    Participant that is eligible for the Company Matching Contribution. Such
    additional percentage may be contributed pursuant to a Salary Reduction
    Agreement and/or After Tax Contribution election provided that the total
    contributed under both such options shall not exceed such additional
    percentage. This provision is effective on, and applies to periods of time
    after, January 1, 1990.

    3.5 Matching Contributions.

        (a) For each Plan Year the Company shall contribute to the Trust for
    each Participant a Matching Contribution in an amount equal to one hundred
    percent of the amount eligible for Company Matching Contribution pursuant to
    Section 3.4 of the Plan and designated by such Participant pursuant to a
    Salary Reduction Agreement and After Tax Contribution election and deducted
    from his Earnings through payroll deductions during such Plan Year. Matching
    Contributions shall be held in trust uninvested by the Company and shall not
    accrue earnings until remitted to the Trustee, which shall be as soon as
    practicable following the end of each payroll period. Matching Contributions
    shall be subject to the special rules set forth in Section 3.9 below.

        (b) Matching Contributions made with respect to a Plan Year or any part
    thereof pursuant to this Section shall in no event be made later than the
    time prescribed by law for filing the income tax return of the Company for
    the fiscal year of the Company (including extensions thereto) which
    corresponds to such Plan Year.

        (c) Matching Contributions to the Trust under the Plan shall be made in
    cash or other property as the Company, in its discretion, shall determine.

        (d) Matching Contributions shall be considered to be made with respect
    to After Tax Contributions for the period of time with respect to which the
    Matching Contribution is

                                       15
<PAGE>   21


    made to the extent that there are After Tax Contributions eligible for
    Matching Contributions and any remaining Matching Contributions shall be
    considered to be made with respect to a Salary Reduction Agreement.

    3.6 Limitations on Contributions. Notwithstanding anything to the contrary
in Section 3.3 or 3.5, in no event shall: (i) the aggregate amount contributed
by the Company pursuant to this Plan exceed the maximum deduction allowable by
Section 404 of the Code, or (ii) the Company contribute an amount for any
Limitation Year which would cause: (a) the Annual Additions to the accounts of
any Participant to exceed the Maximum Permissible Amount for such Participant
for that Year (except as provided in Section 5.5(b)); or (b) the sum of the
defined benefit plan fraction and the defined contribution plan fraction (as
such terms are defined in Section 5.5) to exceed one (1) for any Participant for
that Year. All contributions made by the Company under the Plan are conditioned
upon the qualification of the Plan under Section 401 of the Code and
deductibility of the contribution under Section 404 of the Code.

    3.7 Rollover Contributions.

        (a) An Employee may make a Rollover Contribution to the Plan. A Rollover
    Contribution shall be invested in the Coastal Common Stock Fund. If the
    Rollover Contribution consists of assets other than cash, such other assets
    shall be liquidated and the proceeds invested in the Coastal Common Stock
    Fund. Rollover Contributions are not eligible for Company Matching
    Contributions.

        (b) "Rollover Contribution" is a contribution to the Plan for the
    account of an Employee of an amount which is not subject to federal income
    tax if it is transferred to a qualified plan and which originated from (i)
    another qualified plan or (ii) an individual retirement account, the entire
    value of which is attributable to a rollover contribution from a qualified
    plan. Specifically, Rollover Contributions must meet the requirements of
    Sections 401(a)(31) or 408(d)(3) of the Code if such life annuity form of
    payment must be preserved in the Plan.

        A contribution shall not be accepted as a Rollover Contribution if the
    Administrator determines that such acceptance would render this Plan a
    direct or indirect transferee of a defined benefit plan, money purchase
    pension plan (including a target benefit plan), stock bonus or profit
    sharing plan that provides for a life annuity form of payment to the
    Employee.

        (c) The Employee shall furnish any information requested by the
    Administrator with respect to a contribution which the Employee wishes to
    make to the Plan as a Rollover Contribution.

        (d) The Administrator shall determine if assets qualify as a Rollover
    Contribution before accepting such assets for

                                       16
<PAGE>   22


    the Plan. Assets that the Administrator determines do not qualify shall not
    be accepted. The Administrator shall not accept assets as a Rollover
    Contribution if, in its judgment, such acceptance would cause the Plan to
    violate any provision of the Code.

        (e) The Administrator shall establish accounting records that separately
    identify any Rollover Contributions, including earnings and appreciation or
    depreciation thereon, of a Participant.

        (f) Rollover Contribution shall remain invested in the Coastal Common
    Stock Fund.

    3.8 Withdrawal of Rollover Contribution. A Participant may withdraw all or
any portion of the Rollover Account of such Participant as of any Valuation Date
by submitting a written request to the Administrator. Such request must be
received by the Administrator at least five days prior to the effective
Valuation Date and must be in written form acceptable to the Administrator. The
Participant may make one such withdrawal in a Plan Year. A withdrawal from the
Rollover Account of a Participant shall not result in the suspension of
contributions to the Plan for a Participant.

    3.9 Rules Governing Matching Contributions.

        (a) For each Plan Year, the Actual Contribution Percentage for Highly
    Compensated Eligible Employees for such Plan Year shall bear to the Actual
    Contribution Percentage for all other Eligible Employees for such Plan Year
    a relationship that satisfies either of the following tests:

            (i) The Actual Contribution Percentage for Highly Compensated
        Eligible Employees is not more than the Actual Contribution Percentage
        for all other Eligible Employees multiplied by 1.25; or

            (ii)The Actual Contribution Percentage for Highly Compensated
        Eligible Employees is not more than the Actual Contribution Percentage
        for all other Eligible Employees multiplied by two and the excess of the
        Actual Contribution Percentage for the group of Highly Compensated
        Eligible Employees over that of all other Eligible Employees is not more
        than two percentage points.

        The Administrator may apply the test of this subsection (a) by using the
    Actual Contribution Percentage for all other Eligible Employees for the
    preceding Plan Year in lieu of the Plan Year if the Administrator so elects;
    provided, however, that such election conforms to applicable Code
    requirements.

        (b) Aggregation Rules. The following aggregation rules shall apply in
    determining the Actual Contribution Percentage for purposes of determining
    the tests in Section 3.9(a):

                                       17
<PAGE>   23


            (i) If the Plan is aggregated with any other plan for purposes of
        Sections 401(a)(4) and 410(b) of the Code (except the average benefit
        percentage test of Section 410(b)(2)(A)(ii) of the Code), then all
        employee contributions and matching contributions made under such
        aggregated plans shall be treated as a single plan for purposes of
        Sections 401(a)(4), 401(m) and 410(b).

            (ii) If a Highly Compensated Eligible Employee is eligible to
        participate in more than one plan of the Employer to which employee or
        matching contributions are made, the Actual Contribution Percentage is
        calculated by treating all plans in which the Highly Compensated
        Eligible Employee is eligible to participate (except those plans that
        may not be permissively aggregated under Regulations Section
        1.401(m)-1(b)(3)(i)) as a single plan.

        (c) If, at the end of any Plan Year, neither of the tests set forth in
    subsection (a) is satisfied for such Year, then the Matching Contributions
    made for such Year on behalf of Highly Compensated Eligible Employees and
    the After Tax Contributions made for such Year by Highly Compensated
    Eligible Employees shall be reduced in a manner set forth in this subsection
    (c) to the extent necessary to comply with one of the tests set forth in
    subsection (a). Reductions pursuant to the preceding sentence shall be
    effected with respect to Highly Compensated Eligible Employees pursuant to
    the following procedure:

            (i) The Actual Contribution Percentage of the Highly Compensated
        Eligible Employee with the highest Actual Contribution Percentage for
        the Plan year shall be reduced to the extent necessary to cause such
        Highly Compensated Eligible Employee's Actual Contribution Percentage to
        equal the Actual Contribution Percentage of the Highly Compensated
        Eligible Employee with the next highest Actual Contribution Percentage
        for such Plan Year. This process shall be repeated until the Plan
        satisfies one of the tests set forth in subsection (a) of this Section
        for such Plan Year.

            (ii)The dollar amount of each reduction made pursuant to (i) next
        above shall be determined for each Highly Compensated Eligible Employee
        and all such dollar amounts for such Plan Year shall be aggregated.

            (iii) The Matching Contributions and After Tax Contributions of the
        Highly Compensated Eligible Employee with the highest dollar amount of
        Matching Contributions and After Tax Contributions for the Plan Year
        shall be reduced to the extent necessary to cause the amount of such
        Highly Compensated Eligible Employee's Matching Contributions and After
        Tax Contributions to equal the amount of Matching Contributions and
        After Tax Contributions of the Highly Compensated Eligible Employee with
        the next highest

                                       18
<PAGE>   24


        dollar amount of Matching Contributions and After Tax Contributions so
        reduced equals the aggregate dollar amount in (ii) next above. In
        connection with the aforementioned procedure, (i) Matching Contributions
        made with respect to the amount of reduction in Salary Reduction
        Contributions for such year pursuant to provisions of Article III
        including Section 3.2(c) and Article IV including Section 4.2(c) shall
        be reduced first, and then (ii) After Tax Contributions and Matching
        Contributions with respect to After Tax Contributions shall be reduced
        equally to the extent necessary.

        (d) After Tax Contributions made by Eligible Employees who are not
    Highly Compensated Eligible Employees and Matching Contributions made on
    account of Eligible Employees who are not Highly Compensated Eligible
    Employees shall be valid and shall not be affected by this Section. After
    Tax Contributions and Matching Contributions that are reduced pursuant to
    the preceding provisions of this Section for a Plan Year, adjusted for
    earnings, gains, and losses allocable thereto pursuant to Section 401(m) of
    the Code for such Plan Year, shall be paid as soon as feasible to the
    applicable Eligible Employee. If the vested portion of the Matching
    Contributions Account of the Eligible Employee is not sufficient to satisfy
    the necessary reduction, the nonvested portion of the Matching Contributions
    Account shall be forfeited to the extent necessary to satisfy such
    reduction. The calculations, reductions, and payments required by this
    Section shall be made by the Administrator with respect to a Plan Year at
    any time prior to the close of the following Plan Year.

        (e) If, at any time during a Plan Year, the Administrator, in its sole
    discretion, determines that both of the tests set forth in subsection (a) of
    this Section 3.9 may not be met for such Plan Year, then:

            (i) The Administrator shall have the unilateral right during the
        Plan Year to require the prospective reduction, for the balance of the
        Year, or any part thereof, of the percentage of Earnings of Highly
        Compensated Eligible Employees that may be contributed as After Tax
        Contributions. Such reductions shall be made to the extent necessary, in
        the discretion of the Administrator, to assure that one of the tests set
        forth in subsection (a) of this Section 3.9 shall be met for the Plan
        Year and shall be based upon estimates made from data available to the
        Administrator at any time during the Plan Year.

            (ii)Reductions pursuant to subsection (i) next above shall be
        effected with respect to Highly Compensated Eligible Employees pursuant
        to one of the following procedures selected by the Administrator in its
        discretion.


                                       19
<PAGE>   25

                           (A) The Administrator may establish a maximum
                  percentage of Basic Compensation which may be contributed by a
                  Highly Compensated Eligible Employee for all or any portion of
                  the Plan Year. Such maximum percentage shall apply
                  prospectively to all Highly Compensated Eligible Employees and
                  may range from zero to eight percent, or

                           (B) The Actual Contribution Percentage of Highly
                  Compensated Eligible Employees shall be reduced on the basis
                  of the amount of contributions by, or on behalf of, each such
                  Highly Compensated Eligible Employee to the extent necessary
                  to assume that one of the tests set forth in subsection (a)
                  shall not be exceeded for such Plan Year.

        (f) If a "Multiple Use of the Alternative Limitation" occurs in a Plan
    Year, then, notwithstanding any other provision of Section 4.2 or of this
    Section 3.9, the test in paragraph (a)(ii) of this Section shall not be used
    to satisfy the requirements of this Section for After Tax Contributions and
    Matching Contributions in the same Plan Year that the test contained in
    Section 4.2(b)(ii) is used to satisfy the requirements of Section 4.2 with
    respect to Salary Reduction Contributions. If the preceding sentence shall
    be applicable for a Plan Year, then the Administrator shall determine
    whether to use the test in paragraph (a)(ii) of this Section to satisfy the
    requirements of this Section 3.9, or to use with the test in paragraph
    (b)(ii) of Section 4.2 to satisfy the requirements of Section 4.2 for such
    Plan Year.

        A Multiple Use of the Alternative Limitation shall occur in any Plan
    Year if both of the following conditions are satisfied in the Plan Year:

        (1) At least one Highly Compensated Eligible Employee is eligible to
    authorize Salary Reduction Contributions to be made on his behalf, and to
    make After Tax Contributions or have Matching Contributions allocated to his
    Matching Contributions Account, pursuant to the Plan during such Plan Year,
    and

        (2) The sum of the Actual Deferral Percentage of the entire group of
    Highly Compensated Eligible Employees and of the Actual Contribution
    Percentage of the entire group of Highly Compensated Eligible Employees for
    such Plan Year exceeds the greater of A and B below:

                      A. The sum of:

                           (i) 125% of the greater of (I) the Actual Deferral
                  Percentage of the group of Eligible Employees for such Plan
                  Year who are not Highly Compensated Eligible Employees, or
                  (II) the Actual Contribution Percentage of the group of
                  Eligible Employees who are not Highly Compensated Eligible
                  Employees for such Plan Year, and


                                       20

<PAGE>   26

                           (ii) Two plus the lesser of (I) or (II) above. In no
                  event, however, shall this amount exceed 200% of the lesser of
                  (I) or (II) above;

                      B. The sum of:

                           (i) 125% of the lesser of (I) the Actual Deferral
                  Percentage of the group of Eligible Employees who are not
                  Highly Compensated Eligible Employees for such Plan Year, or
                  (II) the Actual Contribution Percentage of the group of
                  Eligible Employees who are not Highly Compensated Eligible
                  Employees for such Plan Year, and

                           (ii) Two plus the greater of (I) or (II) above. In no
                  event, however, shall this amount exceed 200% of the greater
                  of (I) or (II) above.

        (3) The Actual Deferral Percentage of the entire group of Highly
    Compensated Eligible Employees exceeds the amount described in Section
    4.2(b)(i); and

        (4) The Actual Contribution Percentage of the entire group of Highly
    Compensated Eligible Employees exceeds the amount described in Section
    3.9(a)(i).

    3.10 Exclusive Benefit of Employees. All contributions made pursuant to the
Plan shall be held by the Trustee in accordance with the terms of the Trust
Agreement for the exclusive benefit of those Employees who are Participants
under the Plan, including former Employees and their Beneficiaries, and shall be
applied to provide benefits under the Plan and to pay expenses of administration
of the Plan and the Trust, to the extent that such expenses are not otherwise
paid. At no time prior to the satisfaction of all liabilities with respect to
such Employees and their Beneficiaries shall any part of the Trust Fund (other
than such part as may be required to pay administration expenses and taxes), be
used for, or diverted to, purposes other than for the exclusive benefit of such
Employees and their Beneficiaries. However, without regard to the provisions of
this Section 3.10:

        (a) If a contribution under the Plan is conditioned on initial
    qualification of the Plan under Section 401(a) of the Code, and the Plan
    receives an adverse determination with respect to its initial qualification,
    the Trustee shall, upon written request of the Company, return to the
    Company the amount of such contribution (increased by earnings attributable
    thereto and reduced by losses attributable thereto) within one calendar year
    after the date that qualification of the Plan is denied, provided that the
    application for the determination is made by the time prescribed by law for
    filing the Company's return for the taxable year in which the Plan is
    adopted, or such later date as the Secretary of the Treasury may prescribe;


                                       21

<PAGE>   27


        (b) If a contribution is conditioned upon the deductibility of the
    contribution under Section 404 of the Code; then, to the extent the
    deduction is disallowed, the Trustee shall upon written request of the
    Company return the contribution (to the extent disallowed) to the Company
    within one year after the date the deduction is disallowed;

        (c) If a contribution or any portion thereof is made by the Company by a
    mistake of fact, the Trustee shall, upon written request of the Company,
    return the contribution or such portion to the Company within one year after
    the date of payment to the Trustee; and

        (d) Earnings attributable to amounts to be returned to the Company
    pursuant to subsection (b) or (c) above shall not be returned, and losses
    attributable to amounts to be returned pursuant to subsection (b) or (c)
    shall reduce the amount to be so returned.

    3.11 Forfeitures of Matching Contributions.

         Matching Contributions with respect to Salary Reduction Contributions
shall be forfeited to the extent that (i) such Matching Contributions were
contributed with respect to Salary Reduction Contributions which must be
distributed pursuant to the provisions of Section 4.3 and (ii) such Matching
Contributions exceed contributions which must be distributed pursuant to Section
3.9(d).

    3.12 Return of Contributions.

         If a Participant has After Tax Contributions and/or Salary Reduction
Contributions some of which were eligible for Company Matching Contributions and
some of which were not so eligible, then in determining the amount of After Tax
Contributions or Salary Reduction Contributions to be returned to a Participant
pursuant to Sections 3.9 or 4.3, such distribution shall be considered to be
made first from contributions of the respective type which were not eligible for
a Company Matching Contribution.

    3.13 Veterans' Rights Act.

            a) The provisions of this Section apply only to the extent required
        by the Veterans' Rights Act.

            b) The Veterans' Rights Act provides for coverage under the Plan for
        persons who were covered Employees at the time of their departure to
        render service in the Uniformed Services and who otherwise qualify for
        coverage under such Act.

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


                                       22

<PAGE>   28


                                   ARTICLE IV
                    SPECIAL RULES GOVERNING SALARY REDUCTION
                       CONTRIBUTIONS AND SALARY REDUCTION
                              CONTRIBUTION ACCOUNTS

    4.1 Administrative Rules Governing Salary Reduction Agreements.

        (a) A Salary Reduction Agreement entered into by a Participant pursuant
    to Section 3.2 and any amendment or revocation thereof, shall become
    effective on the Entry Date of a Participant or at the beginning of the
    first full payroll period following such Entry Date if such Participant
    executes and delivers a new or amended Salary Reduction Agreement, and other
    forms required by the Administrator prior to such effective date.

        (b) A Participant may unilaterally revoke a Salary Reduction Agreement
    at any time after it becomes effective by written instrument delivered to
    the Company or by using the electronic procedure provided by the
    Administrator.

        (c) The Company may amend or revoke a Salary Reduction Agreement with a
    Participant at any time if the Company determines that such amendment or
    revocation is necessary to ensure that the Annual Additions to the accounts
    of a Participant do not exceed the Maximum Permissible Amount for such
    Participant for that Year or to ensure that the requirements of Sections
    3.2(c) and 4.2 are met for such Year.

    4.2 Limitations on Salary Reduction Contributions.

        (a) Notwithstanding anything to the contrary contained elsewhere in the
    Plan or contained in any Salary Reduction Agreement, all Salary Reduction
    Agreements entered into with respect to any Plan Year shall be valid only if
    one of the tests set forth in paragraph (b) next below is satisfied for such
    Plan Year. In determining whether such tests are satisfied, all Salary
    Reduction Contributions, if any, made with respect to such Plan Year shall
    be considered.

        (b) For each Plan Year, the Actual Deferral Percentage for Highly
    Compensated Eligible Employees for such Plan Year shall bear to the Actual
    Deferral Percentage for all other Eligible Employees for such Plan Year a
    relationship that satisfies either of the following tests:

                  (i)The Actual Deferral Percentage for Highly Compensated
        Eligible Employees is not more than the Actual Deferral Percentage of
        all other Eligible Employees multiplied by 1.25; or


                                       23


<PAGE>   29


                  (ii) The Actual Deferral Percentage for Highly Compensated
         Eligible Employees is not more than the Actual Deferral Percentage for
         all other Eligible Employees multiplied by two and the excess of the
         Actual Deferral Percentage for the group of Highly Compensated Eligible
         Employees over that of all other Eligible Employees is not more than
         two percentage points.

         The following rules shall apply in determining the Actual Deferral
Percentage:

                  (iii) A Salary Reduction Contribution will be taken into
         account under the Actual Deferral Percentage Test for a Plan Year only
         if it relates to Compensation that either (a) would have been received
         by the Employee in the Plan Year (but for the Eligible Employee's
         Salary Reduction Agreement), or (b) is attributable to services
         performed by the Eligible Employee in the Plan Year and, but for the
         Eligible Employee's Salary Reduction Agreement, would have been
         received by the Eligible Employee within two and one-half months after
         the close of the Plan Year.

                  (iv) A Salary Reduction Contribution will be taken into
         account under the Actual Deferral Percentage Test for a Plan Year only
         if it is allocated to Eligible Employees as of a date within that Plan
         Year. For purposes of this subsection, a Salary Reduction Contribution
         is considered allocated as of a date within a Plan Year if the
         allocation is not contingent on the Eligible Employee's participation
         in the Plan or the performance of Service on any date subsequent to
         that date and the Salary Reduction Contribution is actually paid to the
         trust no later than twelve months after the Plan Year to which the
         Salary Reduction Contribution relates.

                  (v)If the Plan is aggregated with any other plan for purposes
         of Sections 401(a)(4) and 410(b) of the Code (except the average
         benefit percentage test of Section 410(b)(2)(A)(ii) of the Code), then
         all employee contributions and matching contributions made under such
         aggregated plans shall be treated as a single plan for purposes of
         Sections 401(a)(4) and 410(b).

                  (vi) If a Highly Compensated Eligible Employee is eligible to
         participate in more than one plan of the Employer to which employee or
         matching contributions are made, the Actual Deferral Percentage is
         calculated by treating all plans in which the Highly Compensated
         Eligible Employee is eligible to participate (except those plans that
         may not be permissively aggregated under Regulations Section 1.401(k)-
         1(g)(1)(ii)) as a single plan.

         The Administrator may apply the test of subsection (b) by using the
Actual Deferral Percentage for all other Eligible Employees for the preceding
Plan

                                       24
<PAGE>   30
    Year if the Administrator so elects; provided, however, that such election
    conforms to applicable Code requirements.

    (c) If at the end of any Plan Year neither of the tests set forth in
subsection (b) next above is satisfied for such Year, then:

        (i) Salary Reduction Agreements entered into for such Year by Highly
    Compensated Eligible Employees shall be valid only to the extent permitted
    by one of the tests set forth in subsection (b) next above, and Salary
    Reduction Contributions made by the Company for such year for Highly
    Compensated Eligible Employees shall be reduced in the manner set forth in
    subsection (c)(ii) to the extent necessary to comply with one of the tests
    set forth in subsection (b) next above. All Salary Reduction contributions
    so reduced, adjusted for earnings, gain and losses allocable thereto, shall
    be allocated and distributed in the manner provided in Section 4.3.

        The Administrator may apply the test of subsection (b) by using the
    Actual Deferral Percentage for all other Eligible Employees for the
    preceding Plan Year in lieu of the Plan Year if the Administrator so elects;
    provided, however, that such election, if made after 1999, requires
    governmental approval to change.

        (ii) Reductions pursuant to subsection (i) next above shall be effected
    with respect to Highly Compensated Eligible Employees pursuant to the
    following procedure:

            (A) The Actual Deferral Percentage of the Highly Compensated
        Eligible Employee with the highest deferral percentage for the Plan Year
        shall be reduced to the extent necessary to cause such Highly
        Compensated Eligible Employee's Actual Deferral Percentage to equal the
        Actual Deferral Percentage of the Highly Compensated Eligible Employee
        with the next highest Actual Deferral Percentage. This process shall be
        repeated until the Plan satisfies one of the tests set forth in
        subsection (b) of this Section for such Plan Year.

            (B) The dollar amount of each reduction made pursuant to (A) next
        above shall be determined for each Highly Compensated Eligible Employee
        and all such dollar amounts for such Plan Year shall be aggregated.

            (C) The Salary Reduction Contributions of the Highly Compensated
        Eligible Employee with the highest dollar amount of Salary Reduction
        Contributions for the Plan Year shall be reduced by the amount necessary
        to cause the amount of such Highly Compensated Eligible Employee's
        Salary Reduction Contributions to equal the amount of Salary


                                       25
<PAGE>   31

        Reduction Contributions of the Highly Compensated Eligible Employee with
        the next highest dollar amount of Salary Reduction Contributions for
        such Plan Year. This process shall be repeated until the total amount of
        Salary Reduction Contributions so reduced equals the aggregate dollar
        amount determined in (B) next above.

            (iii) Salary Reduction Agreements entered into by all Eligible
        Employees who are not Highly Compensated Eligible Employees shall be
        valid and Salary Deferral Contributions made by the Company for such
        Eligible Employee shall not be changed.

            The amount of excess Salary Reduction Contributions to be
        distributed shall be reduced by any excess Salary Reduction
        Contributions previously distributed to the Eligible Employee for the
        taxable year ending with or within the same Plan Year and excess Salary
        Reduction Contributions to be distributed for a taxable year will be
        reduced by excess Salary Reduction Contributions previously distributed
        for the Plan beginning with or within such taxable year.

            The calculations, reductions and allocations required by this
        Section 4.2(c) and Section 4.3 shall be made by the Company with respect
        to a Plan Year at any time prior to the close of the following Plan
        Year.

        (d) If at any time during a Plan Year the Company, in its sole
    discretion, determines that both of the tests set forth in subsection (b) of
    this Section 4.2 may not be met for such Plan Year, then:

            (i) The Administrator shall have the unilateral right during the
        Plan Year to require the prospective reduction, for the balance of such
        Year or any part thereof of the percentage of the Earnings of Highly
        Compensated Eligible Employees that may be subject to Salary Reduction
        Agreements. Such reductions shall be made to the extent necessary, in
        the discretion of the Administrator, to assure that one of the tests set
        forth in subsection (b) of this Section 4.2 shall be met for the Plan
        Year and shall be based upon estimates made from data available to the
        Administrator at any time during the Plan Year.

            (ii) Reductions pursuant to subsection (i) next above shall be
        effected with respect to Highly Compensated Eligible Employees pursuant
        to one of the following procedures selected by the Administrator in its
        discretion:

                (A) The Administrator may establish a maximum percentage of
            Basic Compensation which may be contributed with respect to a Highly
            Compensated Eligible Employee pursuant to a Salary Reduction

                                       26
<PAGE>   32

            Agreement for all or any portion of the Plan Year. Such maximum
            percentage shall apply prospectively to all Highly Compensated
            Eligible Employees and may range from zero to eight percent, or

                (B) The Actual Deferral Percentage of Highly Compensated
            Eligible Employees shall be reduced on the basis of the amount of
            contributions by, or on behalf of, each such Highly Compensated
            Eligible Employee to the extent necessary to assume that one of the
            tests set forth in subsection (b) shall not be exceeded for such
            Plan Year.

    4.3 Return of Certain Salary Reduction Contributions. If a Salary Reduction
Contribution made by the Company for a Highly Compensated Participant is reduced
for Plan Year pursuant to Section 4.2(c), the amount so reduced, adjusted for
earnings, gains and losses allocable thereto, shall be allocated and distributed
to such Participant, at any time prior to the close of the following Plan Year.

    4.4 Distributions From Salary Reduction Contribution Accounts.
Notwithstanding anything to the contrary contained elsewhere in the Plan, a
Participant's Salary Reduction Contribution Account shall not be distributable
other than upon:

        (a) The Participant's separation from service, death, or total and
    permanent disability;

        (b) Termination of the Plan without establishment of a successor plan;

        (c) The date of the sale or other disposition by the Company to an
    unrelated entity of substantially all of the assets (within the meaning of
    Section 409(d)(2) of the Code) used by the Company in a trade or business of
    the Company, where (i) the Participant is employed by such trade or business
    and continues employment with the entity acquiring such assets, and (ii) the
    Company continues to maintain the Plan after the sale or other disposition.
    The sale of 85% of the assets used in the trade or business shall be deemed
    a sale of "substantially all" of the assets used in such trade or business;

        (d) The date of the sale or other disposition by the Company of the
    Company's interest in a subsidiary (within the meaning of Section 409(d)(3)
    of the Code) to an unrelated entity, where (i) the Participant is employed
    by such subsidiary and continues employment with such subsidiary following
    such sale or other disposition, and (ii) the Company continues to maintain
    the Plan after the sale or other disposition;

        (e) The Participant's attainment of age 59; or

        (f) The Participant's hardship (as defined in Section 6.5(a)).

                                       27
<PAGE>   33

        Notwithstanding anything to the contrary contained herein, an event
    shall not be treated as described in clause (b), (c) or (d) above with
    respect to any Participant unless the Participant receives a single sum
    distribution (as defined in Section 401(k)(10)(B)(ii) of the Code) by reason
    of the event.

    4.5 Accounting. Each Participant's Salary Reduction Contribution Account
shall be accounted for separately from the Participant's other accounts under
the Plan.

                                    ARTICLE V
                      ALLOCATIONS TO PARTICIPANTS' ACCOUNTS

    5.1 Separate Accounts. The Administrator shall create and maintain such
separate accounts for each Participant as shall be needed, including an After
Tax Contribution Account, a Salary Reduction Contribution Account, and Matching
Contributions Accounts. The Administrator shall also create and maintain a
Suspense Account in the event that such an Account is required pursuant to
Section 5.5. Such accounts are primarily for accounting purposes and do not
require a segregation of the Trust Fund. The Administrator may delegate the
responsibility for the maintenance of the accounts to the Trustee or to Company.
Notwithstanding any provisions of this Article, in no event shall an allocation
be made to any Account of any Participant, for any Limitation Year which would
cause: (a) Annual Additions to the accounts of such Participant to exceed the
Maximum Permissible Amount for that Year (except as permitted in Section 5.5(b);
or (b) the sum of the defined benefit plan fraction (as defined in Section 5.5)
and the defined contribution plan fraction (as defined in Section 5.5) to exceed
one for such Participant for that Year.

    5.2 Allocation of After Tax Contribution Accounts. After Tax Contributions
made pursuant to an election of a Participant pursuant to Section 3.1 and not
reduced pursuant to Section 3.9, shall be allocated to his After Tax
Contribution Account as of the Valuation Date coincident with or next following
the pay date with respect to which such contributions are made (even though
receipt of such contributions by the Trustee may take place after such date).

    5.3 Allocation to Salary Reduction Accounts.

        (a) Salary Reduction Contributions made on behalf of a Participant shall
    be allocated to his Salary Reduction Contribution Account as of the
    Valuation Date coincident with or next following the pay date with respect
    to which such contributions are made.

    5.4 Allocation of Matching Contributions.

        (a) Matching Contributions made on behalf of a Participant pursuant to
    Section 3.5 and not reduced pursuant to

                                       28
<PAGE>   34

Sections 3.6, 3.9 and 3.11, shall be allocated to his Matching Contributions
Accounts as of each Valuation Date (even though receipt of the Matching
Contributions by the Trustee may take place after such date).

    5.5 Maximum Allocation.

        (a) Except as provided in subsection (b) of this Section, the
    allocations to the accounts of any Participant in any Limitation Year shall
    be limited so that the Participant's Annual Additions for such Year do not
    exceed the Maximum Permissible Amount.

        (b) If the foregoing limitation on allocations would be exceeded in any
    Limitation Year for any Participant as a result of (i) the allocation of
    forfeitures, (ii) reasonable error in estimating a Participant's
    Compensation, (iii) reasonable error in determining the amount of elective
    deferrals (within the meaning of Section 402(g)(3) of the Code) that may be
    made with respect to a Participant, or (iv) under such other limited facts
    and circumstances that the Commissioner of Internal Revenue, pursuant to
    Regulations Section 1.415-6(b)(6), finds justify the availability of this
    Section 5.5, the After Tax Contributions and Salary Reduction Contributions
    made by or with respect to such Participant shall be distributed to him to
    the extent that any such distribution would reduce the amount in excess of
    the limits of this Section 5.5 and any amount in excess of the limits of
    this Section 5.5 remaining after such distribution shall be placed,
    unallocated to any Participant, in a Suspense Account. If a Suspense Account
    is in existence at any time during a particular Limitation Year, other than
    the Limitation Year described in the preceding sentence, all amounts in the
    Suspense Account must be allocated to Participants' accounts (subject to the
    limits of this Section 5.5) before any contributions which would constitute
    Annual Additions may be made to the Plan for that Limitation Year. The
    excess amount allocated pursuant to this Section 5.5(b) shall be used to
    reduce Matching Contributions for the next Limitation Year (and succeeding
    Limitation Years, as necessary) for that Participant. However, if that
    Participant is not covered by the Plan as of the end of the applicable
    Limitation Year, then the excess amounts must be held unallocated in the
    Suspense Account for the Limitation Year and allocated and reallocated in
    the next Limitation Year to all of the remaining Participants in the Plan.
    The Suspense Account will not share in the valuation of Participants'
    accounts and the allocation of earnings set forth in Section 5.7 of the
    Plan, and the change in fair market value and allocation of earnings
    attributable to the Suspense Account shall be allocated to the remaining
    accounts hereunder as set forth in Section 5.7.

        (c) Any reduction in the contributions and allocations under this Plan
    made with respect to a Participant's accounts required pursuant to this
    Section 5.5 and Section 415 of the Code shall be effected, to the minimum
    extent necessary, in

                                       29
<PAGE>   35

    the following manner: (i) first, After Tax Contributions made by such
    Participant, adjusted for earnings, gains, and losses allocable thereto,
    shall be reduced; (ii) next, the Salary Reduction Contributions that would
    have been made by the Company for the applicable Limitation Year with
    respect to the Participant shall be reduced; and (iii) finally, the Matching
    Contributions that would have been made by the Company for the applicable
    Plan Year with respect to such Participant shall be reduced. The amount of
    any reductions in After Tax Contributions and Salary Reduction Contributions
    pursuant to clauses (i) and (ii), adjusted for earnings, gains and losses
    allocable to After Tax Contributions, shall be paid by the Trustee directly
    to the affected Participant pursuant to subsection (b) of this Section, and
    the amount of earnings, gains and losses allocable to Salary Reduction
    Contributions, and any reductions in Matching Contributions, pursuant to
    clause (iii), adjusted for gains earnings, and losses allocable thereto,
    shall be treated pursuant to subsection (b) of this Section.

        (d) Upon termination of the Plan, any amounts in a Suspense Account at
    the time of such termination shall revert to the Company.

        (e) In the event that any Participant under this Plan is also a
    Participant in a defined benefit plan (as defined in Section 415(k) of the
    Code) maintained by the Company, the sum of the defined benefit plan
    fraction and the defined contribution plan fraction (as such terms are
    defined in Section 415(e) of the Code) for any Limitation Year with respect
    to such Participant shall not exceed one. If that sum exceeds one, then no
    reduction in contributions or allocations to obtain compliance with Section
    415(e) of the Code shall occur under this Plan until the Participant's
    benefits under such defined benefit plan have been reduced pursuant to the
    terms thereof. Any reduction under this Plan shall be made only to the
    extent necessary so that the sum of such fractions shall equal one. For
    purposes of this Section 5.5, a plan is deemed to be maintained by the
    Company if the plan is maintained by any Related Employer.

        Effective for Plan Years commencing after December 31, 1999, 5.5(e) is
    deleted in its entirety and replaced with "Reserved."

        (f) If a Participant is entitled to receive an allocation under this
    Plan and any Related Plan and, in the absence of the limitations contained
    in this Section 5.5, the Company would contribute or allocate to the
    accounts of that Participant an amount for a Limitation Year that would
    cause the Annual Additions to the accounts of the Participant to exceed the
    Maximum Permissible Amount for such Year, then the contributions or
    allocations made with respect to the Participant under this Plan shall not
    be reduced until the contributions or allocations under the Related Plan
    have been reduced to the extent necessary so that the allocation of such
    Annual Additions does not exceed the Maximum Permissible Amount.


                                       30
<PAGE>   36

        (g) The provisions of this Section shall be interpreted by the
    Administrator in the administration of the Plan, to reduce contributions and
    allocations (as required by this Section) only to the minimum extent
    necessary to reflect the requirements of Section 415 of the Code, as amended
    and in force from time to time, and Regulations promulgated pursuant to that
    Section, which are incorporated by reference herein.

    5.6 Vesting.

        (a) Each Participant shall have a vested interest in the Adjusted
    Balance of his Matching Contributions Account in accordance with the
    following formula:

<TABLE>
<CAPTION>
          Calendar Months of         Vested      Forfeitable
         Active Participation      Percentage     Percentage
<S>                                <C>           <C>
           Less than Twelve Months      0%            100%
           Twelve Months               20%             80%
           Twenty-four Months          40%             60%
           Thirty-six Months           60%             40%
           Forty-eight Months          80%             20%
           Sixty Months               100%              0%
</TABLE>

        (b) On reaching his Normal Retirement Date, a Participant who is then
    employed on such Normal Retirement Date by the Company, a Related Employer,
    or a Subsidiary shall be one hundred percent (100%) vested in the Adjusted
    Balance of his Matching Contributions Account.

        (c) In the event a Participant dies or becomes disabled within the
    meaning of Sections 6.2 or 6.3 while an Employee, he shall be one hundred
    percent (100%) vested in the Adjusted Balance of his Matching Contributions
    Account as of the date of his death or disability.

        (d) In the event the Plan is terminated, or upon the complete
    discontinuance of Company contributions to the Plan, each Participant shall
    become one hundred percent (100%) vested in the Adjusted Balance of his
    Matching Contribution Account.

        (e) Each Participant shall at all times be fully vested in the Adjusted
    Balances of his Salary Reduction Contribution Account and After Tax
    Contribution Account.

        (f) Upon reemployment, a Participant shall be credited with his prior
    months of Active Participation for purposes of vesting with respect to
    Matching Contributions for Service after such reemployment date. This
    reinstatement does not apply to any amount forfeited under provisions of the
    Plan. In accordance with the provisions of the definition of Service, after
    five consecutive one-year Breaks in Service, any prior months Active
    Participation are disregarded and any


                                       31
<PAGE>   37

    interest in the Participant's Company Matching Contribution Account which
    was not vested prior to such five consecutive one-year Breaks in Service is
    forfeited.

    5.7 Allocations and Adjustments to Accounts. As of each Valuation Date, and
subject to any applicable provisions of Article IX Loans, to Participants, the
Administrator shall determine, on an accrual basis of accounting, the Adjusted
Balance of the Account of each Participant in the following manner:

        (a) As soon as feasible after each Valuation Date, the Administrator
    shall determine the earning and the amount of any realized or unrealized
    appreciation or depreciation in the fair market value of each of the
    Investment Funds, determined as of the Valuation Date. In determining such
    value, the Administrator shall use such generally accepted methods and bases
    as the Administrator, in its discretion, shall deem advisable. The judgment
    of the Administrator as to the fair market value of any asset shall be
    presumptively conclusive and binding on all persons.

        (b) The Account Balances shall be adjusted to reflect the changes in the
    number of shares, amount of cash and short- term investments, units or
    dollar value as is appropriate for each Investment Fund.

        The Coastal Common Stock Fund, Coastal Class A Common Stock Fund,
    Coastal Preferred Stock Fund, Valero Stock Fund, Intelect Stock Fund and
    PG&E Stock Fund are maintained in shares of stock and cash and short-term
    investments.

        The Diversified Fund and the Index Fund shall be accounted for on a unit
    basis and the number of units shall not be adjusted to reflect changes in
    the market value of assets held by such Fund.

        The Interest Income Fund shall be accounted for on a cash basis. Each
    Account Balance shall be adjusted by an amount equal to the pro rata
    increase or decrease in fair market value of the assets of each such Fund.

        (c) Each Account shall then be further adjusted by adding to it the
    amount of contributions allocable thereto, for each Participant's Account
    pursuant to Sections 5.2, 5.3, and 5.4 for the appropriate period ending on
    that Valuation Date.

        (d) Following the above adjustments to each Account there shall be
    deducted from each Account the distributions and withdrawals made therefrom
    as of such Valuation Date and as of a date since the prior Valuation Date.

    5.8 Special Allocation Provisions. Whenever an account balance is
distributable in installments, the undistributed balance of such account shall
participate in the valuation provided in Section 5.7 until fully distributed.

                                       32
<PAGE>   38

                                   ARTICLE VI
                               PAYMENT OF BENEFITS

    6.1 General Requirements.

        (a) Withdrawals are effective on a Valuation Date, provided the
    Administrator receives a written withdrawal request at least five days prior
    to the Valuation Date.

        (b) Only one withdrawal may be made per calendar year except that, in
    the year the Participant terminates employment, both a withdrawal during
    employment and a withdrawal due to termination may be made.

        (c) The Company shall not make any contribution to the Trust for the
    account of a Participant with respect to any period the Participant is not
    permitted to contribute to the Trust.

    6.2 Payments on Death.

        (a) Upon the death of a Participant, distribution shall be made pursuant
    to written direction from the Beneficiary of such Participant in accordance
    with the withdrawal provisions of the Plan.

        (b) Each unmarried Participant or each married Participant whose
    surviving Spouse has consented to an alternate Beneficiary designation or
    alternate method of payment as provided in subsection (c), shall have the
    right to designate, by giving a written designation to the Administrator,
    (i) a person or persons or entity as Beneficiary to receive the death
    benefit provided under this Section 6.2 and (ii) the method of payment of
    such death benefit to his Beneficiary pursuant to Section 6.7. Successive
    designations may be made, and the last designation received by the
    Administrator prior to the death of the Participant shall be effective and
    shall revoke all prior designations. If a designated Beneficiary shall die
    before the Participant, the Beneficiary's interest shall terminate, and,
    unless otherwise provided in the Participant's designation, if the
    designation included more than one Beneficiary, such interest shall be paid
    in equal shares to those Beneficiaries, if any, who survive the Participant.
    A Participant to whom this subsection applies shall have the right to
    designate different Beneficiaries to receive the Adjusted Balance in his
    various accounts under the Plan and shall have the right to revoke the
    designation of any Beneficiary without the consent of the Beneficiary.

        (c) The Beneficiary of each married Participant shall be the surviving
    Spouse, if any, of the Participant and the death benefits of any Participant
    who is married at the date of his death shall be paid in full to his
    surviving Spouse, if any, in a single sum or such other form of distribution
    as

                                       33
<PAGE>   39

    is permitted by the Plan. Notwithstanding the preceding sentence, the death
    benefits provided pursuant to subsection (a) shall be distributed to any
    other Beneficiary designated by a married Participant as provided in
    subsection (b) of this Section and pursuant to the method, if any,
    designated by the Participant as provided in subsection (b) if the
    Participant's surviving Spouse consented to such designation by the
    Participant, prior to the date of the Participant's death, in writing. Such
    consent must acknowledge the effect of the election and the identity of any
    nonsurviving Spouse Beneficiary, including any class of Beneficiaries or
    contingent Beneficiaries, and must be witnessed by a representative of the
    Plan or a notary public. The consent of the Participant's surviving Spouse
    shall not be required if the Participant establishes to the satisfaction of
    the Administrator that consent may not be obtained because there is no
    surviving Spouse or the surviving Spouse cannot be located, or because of
    such other circumstances as the Secretary of the Treasury may prescribe by
    regulations. The Participant may not subsequently change the method of
    distribution elected by the Participant or the designation of his
    Beneficiary unless his surviving Spouse consents to the new election or
    designation in accordance with the requirements set forth in the preceding
    sentence, or unless the surviving Spouse's consent permits the Participant
    to change the election of method of payment or the designation of his
    Beneficiary without the Spouse's further consent. Any consent by a surviving
    Spouse, or establishment that the consent of the surviving Spouse may not be
    obtained, shall be effective only with respect to that surviving Spouse.

        (d) If a Participant fails to designate a Beneficiary, if such
    designation is for any reason illegal or ineffective, or if no Beneficiary
    survives the Participant, his death benefits otherwise payable pursuant to
    subsections (b) or (c) shall be paid:

                (i) to his surviving Spouse; or

                (ii) if there is no surviving Spouse, or if the surviving Spouse
            has rejected the death benefits under the Plan pursuant to
            provisions of the Plan, then to the estate of the Participant.

        (e) The Administrator may determine the identity of the distributees of
    any death benefit payable under the Plan and in so doing may act and rely
    upon any information it may deem reliable upon reasonable inquiry, and upon
    any affidavit, certificate, or other paper believed by it to be genuine, and
    upon any evidence believed by it to be sufficient.

        (f) A Participant's surviving Spouse, for purposes of distributions
    pursuant to this Section 6.2 of the Plan, is the person who is legally
    married to the Participant throughout the twelve month period immediately
    prior to the death of the Participant.

                                       34
<PAGE>   40

    6.3 Payments on Disability. A Participant who is totally and permanently
disabled may request a withdrawal of the Adjusted Balance of the Participant's
accounts in a method provided in the Plan. For purposes of this section "total
and permanent disability" means a physical or mental condition which is expected
to render the Participant permanently unable to perform duties of any gainful
employment based on the education, training and background of the Participant.
The determination of the existence of such disability shall be made by the
Administrator and shall be final and binding upon the Participant and all other
parties. The Administrator may require the submission of such medical evidence
as it may deem necessary in order to arrive at its determination. The
Administrator's determination of the existence of a disability will be made with
reference to the nature of the injury without regard to the period the
Participant is absent from work.

    6.4 Payments on Termination. Upon the termination of a Participant's
employment with the Company for any reason other than death, the Participant may
request a withdrawal of the Adjusted Balance of his Salary Reduction
Contribution Account and After Tax Contribution Account, if any, and the vested
portion of the Adjusted Balance of his Matching Contributions Account, if any,
in a method provided in the Plan. The vested portion of a Participant's Matching
Contributions Account shall be determined in accordance with Plan provisions
including Section 5.6.

    If the Participant was at least fifty percent vested at the time of such
termination of employment or if the Participant does not withdraw any amount
attributable to the benefit derived from contributions made by such Participant,
the nonvested portion, if any, of the Adjusted Balance of his Matching
Contributions Account shall be retained in his Matching Contributions Account
until a period has elapsed sufficient to determine whether he will be reemployed
or will incur five consecutive one-year Breaks in Service. If he is reemployed
before he incurs five consecutive one-year Breaks in Service, his Matching
Contributions Account will continue to vest. If he incurs five consecutive
one-year Breaks in Service the amount in such accounts shall be deemed a
forfeiture and shall be applied to reduce future Company Matching Contributions
to the Plan. If a Participant who is rehired before he incurs five consecutive
one- year Breaks in Service again incurs a termination of employment under
circumstances in which he is not fully vested in his Matching Contributions
Account, the portion of his Matching Contributions Account distributable on the
date of his later termination of employment shall be calculated as follows:

        (i) the amount distributed to the Participant from his Matching
    Contributions Account upon his earlier termination of employment shall be
    added to the Adjusted Balance of his Matching Contributions Account;

        (ii) the amount determined under subsection (i) shall be multiplied by
    the vested percentage as of the date of his later termination of employment
    determined under; Section 5.6 and

                                       35
<PAGE>   41

        (iii) the amount distributed to the Participant upon his earlier
    termination of employment shall be deducted from the product calculated
    under subsection (ii) to determine the amount distributable upon his later
    termination of employment.

    If the Participant was less than fifty percent vested at the time of
termination of employment with the Company for any reason other than death and
withdraws any amount attributable to the benefit derived from contributions made
by such Participant, the nonvested portion, if any, of the Adjusted Balance of
his Matching Contributions Account shall be forfeited. However, such forfeited
amount shall remain subject to reinstatement and further vesting under
provisions of the Plan if the Participant is reemployed before he incurs five
consecutive one-year Breaks in Service. If such Participant is reemployed before
he incurs five consecutive one-year Breaks in Service, any amount forfeited due
to a withdrawal described in the preceding sentence shall be restored upon
repayment by such Participant of the full amount of such withdrawal. Any such
repayment must be made before the earlier of five years after the first day the
employee is subsequently reemployed or the close of the first period of five
consecutive one-year Breaks in Service commencing after the withdrawal. Upon
reemployment prior to incurring five consecutive one-year Breaks in Service, the
dollar value of the forfeited amount shall be restored without adjustment for
gains or losses and shall be subject to further vesting on a prospective basis
pursuant to Plan provisions. In computing future vesting with respect to such
reinstated amount, such reinstated amount shall be multiplied by a factor
described in the following sentence prior to being multiplied by the percentage
of increased vesting so as to adjust the reinstated amount to reflect the amount
which would have vested if the full Adjusted Balance of his Matching
Contributions Account were being multiplied by the vesting percentage. The
factor described in the preceding sentence is a fraction, the numerator of which
is one, and the denominator of which is the fractional portion of such Adjusted
Balance of his Matching Contributions Account prior to the distribution
represented by the reinstated amount. The preceding applies to a Participant who
terminated employment after 1984.

    Amounts forfeited shall be applied to reduce future Matching Contributions
to the Plan.

    6.5 Pretermination Distributions - Salary Reduction Contribution Accounts.

        (a) The Administrator may upon the request of a Participant who has not
    attained the age of fifty-nine and one-half and who makes such request prior
    to his termination of employment, direct the Trustee to make distribution to
    the Participant from his Salary Reduction Contribution Account for the
    purposes set forth below, subject to the following rules:

                                       36
<PAGE>   42

        (i) Each request for a distribution must be made by written application
    to the Administrator supported by such evidence as the Administrator may
    require;

        (ii) In no event shall the amount distributed to a Participant in
    accordance with this Section 6.5 exceed 100% of his Salary Reduction
    Contribution Account as of December 31, 1988, plus amounts attributable to
    contributions only after 1988 but excluding earnings after 1988;

        (iii) Each distribution made pursuant to this Section 6.5 shall be on
    account of a hardship suffered by the Participant. For purposes of this
    Section 6.5, a hardship shall be limited to:

            (1) Medical expenses described in Section 213(d) of the Code
        previously incurred by the Participant, the Participant's spouse, or any
        dependents of the Participant (as defined in Section 152 of the Code);
        or necessary for these persons to obtain medical care described in
        Section 213(d) of the Code;

            (2) Purchase (excluding mortgage payments) of a principal residence
        for the Participant;

            (3) Payment of tuition and related educational fees for the next
        twelve months of post- secondary education for Participant, his spouse,
        children or dependent;

            (4) The need to prevent eviction of the Participant from his
        principal residence or foreclosure on the mortgage of the Participant's
        principal residence; and

            (5) Funeral expenses of a family member of the Participant;

        (iv) The amount distributed shall not be in excess of the immediate and
    heavy financial need of the Participant which need shall be deemed to
    include any amounts reasonably anticipated by the Participant to be
    necessary to pay federal, state or local income taxes and penalties incurred
    as a result of the distribution;

        (v) The Participant shall first obtain all distributions, other than
    hardship distributions, and all nontaxable loans currently available under
    the Plan and all other Plans maintained by the Company;

        (vi) The Participant's elective contributions and employee contributions
    (as defined in Regulations Section 1.401(k)) shall be suspended under the
    Plan and all other deferred compensation plans maintained by the

                                       37
<PAGE>   43

        Company for 12 months after his receipt of the hardship distribution
        (except for mandatory employee contributions to a defined benefit plan);

            (vii) The Participant may not make elective contributions (as
        defined in Regulations Section 1.401(k)) under the Plan or any other
        Plan maintained by the Company for the Participant's taxable year
        immediately following the taxable year of the hardship distribution in
        excess of the applicable limit under Section 402(g) of the Code for such
        next taxable year less the amount of such Participant's elective
        contributions for the taxable year of the hardship distribution;

            (viii) The amount distributed to a Participant in accordance with
        this Section 6.5 shall not exceed (A) the Adjusted Balance of a
        Participant's Salary Reduction Contribution Account as of December 31,
        1988, plus (B) Salary Reduction Contributions allocated to such Salary
        Reduction Contribution Account after December 31, 1988; and

            (ix) If a Participant's termination of employment occurs after a
        request is approved in accordance with this Section 6.5 but prior to
        distribution of the full amount approved, the approval of his request
        shall be automatically void and the benefits which he or his Beneficiary
        are entitled to receive under the Plan shall be distributed in
        accordance with the preceding provisions of this Article.

        (b) A Participant who has attained the age of 59 may elect, by written
    instrument given to the Administrator, to withdraw from his Salary Reduction
    Contribution Account an amount not in excess of the Adjusted Balance
    thereof, pursuant to withdrawal provisions of the Plan.

        (c) A request for a distribution pursuant to subsection (a) of this
    Section 6.5 shall be approved or denied by written instrument given by the
    Administrator to the Participant within a reasonable time after the date the
    written request is given to the Administrator by the Participant.

    6.6 Property Distributed - Salary Reduction Contribution Accounts (ESOP).

            (a) (i) An ESOP Participant, or his Beneficiary, shall have the
        right to demand that all or any part of the distribution from his
        account be made in the form of Common Stock; provided, however, the
        Participant, or his Beneficiary, shall not have the right to demand a
        distribution in the form of Common Stock with respect to that portion of
        the Participant's account invested in other than Common Stock, at the
        Participant's election, including an election pursuant to Section
        401(a)(28)(B)

                                       38
<PAGE>   44

        of the Code. Only whole shares of stock shall be distributed. Cash will
        be distributed in lieu of fractional shares in all cases. Subject to the
        foregoing right of a Participant, or his Beneficiary, to elect to
        receive a distribution in whole shares, distributions from the Plan may
        be made in cash, in whole shares of stock, or partially in whole shares
        and partially in cash, at the option of the Administrator.

            (ii) Prior to a distribution from the Plan initiated by the
        Administrator, the Administrator shall notify the Participant of the
        right to demand to receive stock from the Plan. Such notice shall also
        state that distributions involving less than fifty shares of stock of
        the Company and/or stock of companies other than the Company will be
        made in cash unless the Participant elects to receive stock within
        thirty days of such notice. The Participant shall have thirty days from
        the receipt of such notice in which to exercise his right to receive
        stock.

    6.7 Methods of Payment. (a) Whenever the Administrator shall direct the
    Trustee to make payment to a Participant or his Beneficiary upon termination
    of the Participant's employment (whether by reason of death or for other
    reasons), the Administrator shall direct the Trustee to pay the Adjusted
    Balance of his Salary Reduction Contribution Account, After Tax Contribution
    Account, the vested portion of the Adjusted Balance of his Matching
    Contributions Account, and any Rollover Contribution Account to or for the
    benefit of the Participant or his Beneficiary, in cash or wholly or partly
    in kind, in any of the following ways as the Participant shall determine
    (or, if a deceased former Participant shall have failed to select a method
    of payment, as his Beneficiary shall determine):

            (i) In a single sum, provided that distributions in kind shall be
        valued at the fair market value of the assets distributed on the
        Valuation Date as of which such distribution is made;

            (ii) Subject to Section 6.2, in annual installments computed
        pursuant to the method specified in this subsection (a) commencing,
        prospectively, at any time after termination of the Participant's
        employment and continuing over a period that complies with subsection
        (c); and

            (iii) With respect to the Interest Income Fund account balances, an
        annuity, if any, offered by the insurance company with whom the funds
        are deposited which meets the criteria established by ERISA and the Code
        for distribution from a qualified plan.

        Annual installments distributed pursuant to subsection (ii) shall be in
    an amount equal to the value of the account balances of the Participant in
    the Plan divided by the number

                                       39
<PAGE>   45

        of annual installments remaining to be made. An election for annual
        installments may be cancelled prospectively up to five days before the
        Valuation Date for any annual installment.

            The annual installment method of distribution described in
        subsection (a)(ii) of this Section may be elected by a Participant only
        if the Participant's vested interest in his accounts at the time for any
        distribution exceeds $5,000.

        If a Participant is married at the time an annuity is distributed
    pursuant to subsection (iii), such annuity shall provide that the Spouse to
    whom the Participant is married at the time of such distribution shall
    receive, upon the death of the Participant, a periodic benefit for the life
    of such Spouse which is at least fifty percent of the periodic benefit which
    was payable to the Participant. This requirement with respect to periodic
    payments for the surviving Spouse shall not apply if such Spouse rejects it
    in a manner which satisfies the requirements of Section 6.2 with respect to
    consent to an alternate Beneficiary by a surviving Spouse. For purposes of
    this Section 6.7, the term "Spouse" means the person married to the
    Participant at the time of distribution of the annuity with no twelve month
    of marriage requirement.

        (b) Payment shall be made or commence as follows:

            (i) In the case of a Participant whose employment terminated due to
        retirement, death, or disability, payment shall be made or commence not
        more than 60 days after the close of the Plan Year in which the
        employment of the Participant terminates.

            (ii) In the case of a Participant whose employment terminates for
        any reason other than retirement, death, or disability, payment shall be
        made or commence not more than 60 days after the close of the Plan Year
        in which the Participant incurs a Break in Service.

            (iii) Notwithstanding the provisions of subsections (i) and (ii), if
        the Participant's vested interest in his accounts at the time for any
        distribution exceeds $5,000, then neither such distribution nor any
        subsequent distribution shall be made to the Participant at any time
        before his 65th birthday without his written consent.

        (c) ESOP Participants. Notwithstanding the provisions of subsection
    (b),:

            (i) Unless an ESOP Participant otherwise elects, the distribution of
        the Adjusted Balance of his Salary Reduction Contribution Account will
        commence not later than twelve months after the close of the Plan Year
        (A) in which the ESOP Participant's employment with the

                                       40
<PAGE>   46

        Company terminates because of retirement on or after his Normal
        Retirement Date, permanent disability, or death, or (B) that is the
        fifth Plan Year following the Plan Year in which the ESOP Participant's
        employment with the Company terminates for any other reason, except that
        this clause (B) shall not apply if the ESOP Participant is reemployed by
        the Company before the first day of such fifth Plan Year.

            (ii) Unless the ESOP Participant otherwise elects, the distribution
        of the Adjusted Balance of his Salary Reduction Contribution Account
        will be in substantially equal annual payments over a period not longer
        than the greater of (A) five years, or (B) where the aggregate Adjusted
        Balance of an ESOP Participant's Salary Reduction Contribution Account
        exceeds $735,000, five years plus one additional year (but not more than
        five additional years) for each $145,000 or fraction thereof by which
        such aggregate Adjusted Balance exceeds $735,000. The dollar amounts
        contained in this subsection (ii) shall be adjusted by the Secretary of
        the Treasury pursuant to Section 409(o)(2) of the Code.

        (d) Notwithstanding anything to the contrary contained elsewhere in the
    Plan:

            (i) A Participant's benefits under the Plan will:

                (1) be distributed to him not later than the Required
            Distribution Date (as defined in subsection (iii)), or

                (2) be distributed commencing not later than the Required
            Distribution Date in accordance with regulations prescribed by the
            Secretary of the Treasury over a period not extending beyond the
            life expectancy of the Participant or the life expectancy of the
            Participant and his Beneficiary.

            (ii) (1) If the Participant dies after distribution has commenced
        pursuant to subsection (i)(2) but before his entire interest in the Plan
        has been distributed to him, then the remaining portion or that interest
        will be distributed at least as rapidly as under the method of
        distribution being used under subsection (i)(2) at the date of his
        death.

                (2) If the Participant dies before distribution has commenced
            pursuant to subsection (i)(2), then, except as provided in
            subsections (ii)(3) and (ii)(4), his entire interest in the Plan
            will be distributed within five years after his death.

                (3) Notwithstanding the provisions of subsection (ii)(2), if the
            Participant dies before

                                       41
<PAGE>   47

            distribution has commenced pursuant to subsection (i)(2) and if any
            portion of his interest in the Plan is payable (A) to or for the
            benefit of a Beneficiary, (B) in accordance with regulations
            prescribed by the Secretary of the Treasury over a period not
            extending beyond the life expectancy of the Beneficiary, and (C)
            beginning not later than one year after the date of the
            Participant's death or such later date as the Secretary of Treasury
            may prescribe by regulations, then the portion referred to in this
            subsection (ii)(3) shall be treated as distributed on the date on
            which such distribution begins.

                (4) Notwithstanding the provisions of subsections (ii)(2) and
            (ii)(3), if the Beneficiary referred to in subsection (ii)(3) is the
            surviving spouse of the Participant, then:

                    (A) the date on which the distributions are required to
                begin under subsection (ii)(3)(C) of this Section shall not be
                earlier than the date on which the Participant would have
                attained age 702, and

                    (B) if the surviving spouse dies before the distributions to
                that spouse begin, then this subsection (ii)(4) shall be applied
                as if the surviving spouse were the Participant.

            (iii) For purposes of this subsection (c), the Required Distribution
        Date means April 1 of the calendar year following the later of (A) the
        calendar year in which the Participant attains age 702, or (B) the
        calendar year in which the Participant terminates service with the
        Company, unless he is a 5% owner (as defined in Section 416 of the Code)
        of the Company with respect to the Plan Year ending in the calendar year
        in which he attains age 702, in which case clause (B) shall not apply.

            However, if the Participant attains age 702 in calendar year 1988,
        the Required Distribution Date means April 1, 1990, and if the
        Participant attains age 702 prior to January 1, 1988, the Required
        Distribution Date means the April 1 following the later of the calendar
        year in which the Participant: (A) attains age 702, or (B) terminates
        service with the Company, unless he is a 5% owner (as defined in Section
        416 of the Code) of the Company with respect to the Plan Year ending in
        the calendar year in which he attains age 702, in which case clause (B)
        shall not apply.

            If a Participant (other than a 5% owner) attained age 702 prior to
        1997 and elected not to retire, the Participant shall continue to
        receive the distribution of Retirement Income until the Participant

                                       42
<PAGE>   48

        affirmatively elects to discontinue such distributions until the
        Participant retires, subject to the terms of an applicable qualified
        domestic relations order, as defined in Section 414(p) of the Code.

            If a Participant (other than a 5% owner) attains age 702 in 1996 and
        elects not to retire during 1996, the Participant may elect to defer the
        commencement of the distribution of Retirement Income, which election
        must be made by December 31, 1997. If such Participant elects not to
        defer the distribution of Retirement Income, the Participant must be
        paid a "make- up" distribution which is the Actuarial Equivalent of
        Retirement Income calculated as though the Participant had retired at
        age 70 2 during 1996 and distributions of Retirement Income had
        commenced on April 1, 1997 and were paid through December 31, 1997. The
        make-up distribution calculated under this provision must be paid to the
        Participant by December 31, 1997.

            If a Participant (other than a 5% owner) attains age 702 in 1997 or
        1998 and elects not to retire, such Participant may affirmatively elect
        to have his Retirement Income commence April 1 of the year following the
        calendar year in which the Participant attains age 702.

            A Participant (other than a 5% owner) who attains age 702 after
        December 31, 1998 shall no longer have the option of electing to
        commence the distribution of Retirement Income prior to termination of
        employment.

            (iv) For purposes of this subsection (c), the life expectancy of a
        Participant and his surviving spouse shall be redetermined but only if
        the Participant (or spouse, if the Participant is deceased) requests
        such redetermination. Such redetermination may be made no more
        frequently than annually.

            (v) A Participant may not elect a form of distribution pursuant to
        subsection (i) providing payments to a Beneficiary who is other than his
        surviving spouse unless the actuarial value of the payments expected to
        be paid to the Participant is more than 50% of the actuarial value of
        the total payments expected to be paid under such form of distribution.

        (e) (i) This subsection applies to distributions made on or after
    January 1, 1993. Notwithstanding any provision of the Plan to the contrary
    that would otherwise limit a Distributee's election under this subsection, a
    Distributee may elect, at the time and in the manner prescribed by the Plan
    Administrator, to have any portion of an Eligible Rollover Distribution paid
    directly to an Eligible Retirement Plan specified by the Distributee in a
    Direct Rollover.

                                       43
<PAGE>   49
            (ii) Definitions.

                (A) "Eligible Rollover Distribution" is any distribution of all
            or any portion of the balance to the credit of the Distributee,
            except that an Eligible Rollover Distribution does not include: Any
            distribution that is one of a series of substantially equal periodic
            payments (not less frequently than annually) made for the life (or
            life expectancy) of the Distributee or the joint lives (or joint
            life expectancies) of the Distributee and the Distributee's
            designated Beneficiary, or for a specified period of ten years or
            more; any distribution to the extent such distribution is required
            under Section 401(a)(9) of the Code; any hardship distribution
            described in Section 401(k)(2)(B)(i)(IV); and the portion of any
            distribution that is not includible in gross income (determined
            without regard to the exclusion for net unrealized appreciation with
            respect to employer securities).

                (B) "Eligible Retirement Plan" is an individual retirement
            account described in Section 408(a) of the Code, an individual
            retirement annuity described in Section 408(b) of the Code, an
            annuity plan described in Section 403(a) of the Code, or a qualified
            trust described in Section 401(a) of the Code, that accepts the
            Distributee's Eligible Rollover Distribution. However, in the case
            of an Eligible Rollover Distribution to the surviving Spouse, an
            Eligible Retirement Plan is an individual retirement account
            described in Section 408(a) of the Code or individual retirement
            annuity described in Section 408(b) of the Code.

                (C) "Distributee" includes an Employee or former Employee. In
            addition, the Employee's or former Employee's surviving Spouse and
            the Employee's or former Employee's spouse or former spouse who is
            the alternate payee under a qualified domestic relations order, as
            defined in Section 414(p) of the Code, are Distributees with regard
            to the interest of the spouse or former spouse.

                (D) "Direct Rollover" is a payment by the Plan to the Eligible
            Retirement Plan specified by the Distributee.

            (iii) If a distribution is one to which Sections 401(a)(11) and 417
        of the Code do not apply, such distribution may commence less than
        thirty days after

                                       44
<PAGE>   50

        the notice required under Regulations Section 1.411(a)- 11(c) is given,
        provided that:

                (1) the Plan Administrator clearly informs the Participant that
            the Participant has a right to a period of at least thirty days
            after receiving such notice to consider the decision of whether or
            not to elect a distribution (and, if applicable, a particular
            distribution option), and

                (2) the Participant, after receiving such notice, affirmatively
            elects a distribution.

            Prior to January 1, 1998, $3,500 should be used in lieu of $5,000.

    6.8 Distribution of Unallocated Employee Contributions.

        (a) If on the date of termination of a Participant's employment, the
    Company shall be holding After Tax Contributions made by the Participant,
    but not yet allocated to his After Tax Contribution Account, the
    Administrator shall direct the Company to pay such amounts either directly
    to the Participant (or his Beneficiary, as the case may be) or to the
    Trustee, to be distributed by the Trustee in accordance with the method of
    distribution determined under Section 6.7.

        (b) If on the date of termination of a Participant's employment, a
    Participant's Earnings have been reduced by any amount pursuant to a Salary
    Reduction Agreement, and such amount has not yet been allocated to his
    Salary Reduction Contribution Account, the Administrator shall direct the
    Company to pay such amounts to the Trustee to be credited to the
    Participant's Salary Reduction Contribution Account, to be distributed by
    the Trustee in accordance with the method of distribution determined under
    Section 6.7.

    6.9 Administrative Powers Relating to Payments. If a Participant or
Beneficiary is under a legal disability or, by reasons of illness or mental or
physical disability, is in the opinion of the Administrator unable properly to
attend to his personal financial matters, the Trustee may make such payments in
such of the following ways as the Administrator shall direct:

            (i) directly to such Participant or Beneficiary;

            (ii) to the legal representative of such Participant or Beneficiary;
        or

            (iii) to some relative by blood or marriage, or friend, for the
        benefit of such Participant or Beneficiary.

    Any payment made pursuant to this section shall be in complete discharge of
the obligation therefor under the Plan.

                                       45
<PAGE>   51

    6.10 Withdrawals from Participant Contribution Account.

        (a) As of any Valuation Date, a Participant may withdraw from his After
    Tax Contribution Account an amount not in excess of the Adjusted Balance
    thereof.

        (b) For a Participant with ten or more years of Active Participation,
    the preceding subsection (a) shall apply to his Matching Contribution
    Account.

        (c) If a withdrawal is made by a Participant from his After Tax
    Contribution Account or Salary Reduction Account, such Participant may not
    make an additional withdrawal from the Plan for the remainder of such Plan
    Year. In addition, the Participant may not make After Tax Contributions or
    contributions pursuant to a Salary Reduction Agreement until a period of
    twenty-six weeks has elapsed since the prior withdrawal. A fifty-two week
    suspension period shall apply if a withdrawal requiring such suspension is
    made pursuant to Section 6.5.

    6.11 Ten-Year Withdrawal.

        (a) After ten years of Active Participation in the Plan, each
    Participant may elect once during each such subsequent ten years of Active
    Participation to withdraw any portion of such Participant's Account
    Balances.

        (b) To receive a distribution as of a Valuation Date, the Administrator
    must receive a written withdrawal request at least five days prior to such
    Valuation Date. A Participant may continue to contribute to the Plan after a
    ten year withdrawal.

        (c) The withdrawals permitted by this Section shall not apply to the
    portion of the Account Balances attributable to the Salary Reduction
    Contribution Account of the Participant unless the Participant has attained
    the age of fifty nine and one half years, the Participant is totally and
    permanently disabled (as determined by the Administrator) or the withdrawal
    is approved by the Administrator pursuant to the criteria and procedure
    contained in Section 6.5.

        (d) Unless the Participant specifies otherwise, withdrawals shall be
    made first from the portion of the Account Balances attributable to After
    Tax Contributions of the Participant, next from the portion attributable to
    the Company Matching Contributions which are eligible for withdrawal and
    finally from the portion contributed pursuant to a Salary Reduction
    Agreement of the Participant.

    6.12 Participant to Elect Source of Funds for Distribution. A Participant or
where appropriate, a Beneficiary may designate the accounting fund from which a
distribution of assets from the Trust are to be made.

                                       46
<PAGE>   52

                                   ARTICLE VII
                               PLAN ADMINISTRATION

    7.1 Company Responsibility.

        (a) Coastal shall be responsible for and shall control and manage the
    operation and administration of the Plan. It shall be the "Plan
    Administrator" and "Named Fiduciary" for purposes of ERISA and shall be
    subject to service of process on behalf of the Plan. The Board may, in its
    discretion, appoint a Committee of one or more persons, to be known as the
    "Plan Administrative Committee" to act as the agent of Coastal in performing
    these duties. In the event that the Board chooses not to appoint such a
    Committee, all references in the Plan to the "Committee" (except for such
    references in this Section 7.1) shall mean Coastal. The members of the
    Committee shall serve at the pleasure of the Board; they may be officers,
    directors, or employees of the Company or any other individuals. Any member
    may resign by delivering his written resignation to the Board and to the
    Committee. Vacancies in the Committee arising by resignation, death, removal
    or otherwise, shall be filled by the Board. The Company shall advise the
    Trustee in writing of the names of the members of the Committee and of
    changes in membership from time to time.

        (b) Except as specified otherwise in the Plan, any action permitted or
    required with respect to the Plan shall be performed by an officer of the
    Company.

    7.2 Powers and Duties of Administrator.

        (a) The Administrator shall administer the Plan in accordance with its
    terms and shall have all the powers necessary to carry out the provisions of
    the Plan. The Administrator shall direct the Trustee concerning all payments
    which shall be made out of the Trust pursuant to the Plan. The Administrator
    shall interpret the Plan and shall determine all questions arising in the
    administration, interpretation, and application of the Plan, including but
    not limited to, questions of eligibility and the status of rights to
    Participants, Beneficiaries and other persons. Any such determination by the
    Administrator shall presumptively be conclusive and binding on all persons.
    The regularly kept records of the Company shall be conclusive and binding
    upon all persons with respect to an Employee's Hours of Service, date and
    length of employment, time and amount of Compensation and the manner of
    payment thereof, type and length of any absence from work and all other
    matters contained therein relating to Employees. All rules and
    determinations of the Administrator shall be uniformly and consistently
    applied to all persons in similar circumstances. The Committee shall have
    the powers and duties of the Administrator to the extent the Board
    designates a Committee and directs it to exercise such powers and perform
    such duties.

                                       47
<PAGE>   53

        (b) The Administrator has full and absolute discretion in the exercise
    of each and every aspect of its authority under the Plan, including without
    limitation, the authority to determine any person's right to benefits under
    the Plan, the correct amount and form of any such benefits, the authority to
    decide any appeal, the authority to review and correct any prior actions,
    and all of the rights, powers, and authorities specified in the Plan.
    Notwithstanding any provision of law or any explicit or implicit provision
    of this document, any action taken, or ruling or decision made, by the
    Administrator in the exercise of any of its powers and authorities under the
    Plan shall be final and conclusive as to all parties, including without
    limitation, all Participants and Beneficiaries, regardless of whether the
    Administrator may have an actual or potential conflict of interest with
    respect to the subject matter of such action, ruling, or decision. No such
    final action, ruling, or decision of the Administrator shall be subject to
    de novo review in any judicial proceeding; and no such final action, ruling,
    or decision of the Administrator may be set aside unless it is held to have
    been an abuse of discretion or arbitrary and capricious by a final judgment
    of a court having jurisdiction with respect to the issue.

        (c) When a misstatement or mistake of fact becomes known, the
    Administrator shall make such adjustments as it determines to be practical
    and equitable.

    7.3 Organization and Operation of Committee.

        (a) The Committee shall act by majority vote of its members at the time
    in office, and such action may be taken either by vote at a meeting or in
    writing without a meeting. The signatures of a majority of the members will
    be sufficient to authorize Committee action. A Committee member shall not
    participate in discussions of or vote upon matters pertaining to his own
    participation in the Plan.

        (b) The Committee may authorize any of its members or any other person
    to execute any document or documents on behalf of the Committee, in which
    event the Committee shall notify the Trustee in writing of such action and
    the name or names of such member or person. The Trustee thereafter shall
    accept and rely upon any document executed by such members or persons as
    representing action by the Committee, until the Committee shall file with
    the Trustee a written revocation of such designation.

        (c) The Committee may adopt such bylaws and regulations as it deems
    desirable for the conduct of its affairs and with the consent of the
    Administrator, may appoint such accountants, counsel, specialists, and other
    persons as it deems necessary or desirable in connection with the
    administration of this Plan. The Committee shall be entitled to rely
    conclusively upon, and shall be fully protected in any action taken by it in
    good faith in relying upon, any opinions or reports which shall be furnished
    to it

                                       48
<PAGE>   54

    by any such accountant, counsel, specialist or other person.

    7.4 Records and Reports of Committee. The Committee shall keep a record of
all its proceedings and acts and shall keep all such books of account, records,
and other data as may be necessary for proper administration of the Plan. The
Committee shall, when appropriate, notify the Trustee and the Company of any
action taken by the Committee and, when required, shall notify any other
interested person or persons.

    7.5 Claims Procedure. Claims for benefits under the Plan shall be made in
writing to the Committee. In the event a claim for benefits is wholly or
partially denied by the Committee, the Committee shall, within a reasonable
period of time, but not later than ninety (90) days after receipt of the claim,
notify the claimant in writing of the denial of the claim. If the claimant shall
not be notified in writing of the denial of the claim within ninety (90) days
after it is received by the Committee, the claim shall be deemed denied. A
notice of denial shall be written in a manner calculated to be understood by the
claimant, and shall contain (i) the specific reason or reasons for denial of the
claim, (ii) a specific reference to the pertinent Plan provisions upon which the
denial is based, (iii) a description of any additional material or information
necessary for the claimant to perfect the claim, together with an explanation of
why such material or information is necessary, and (iv) an explanation of the
Plan's review procedure. Within sixty (60) days of the receipt by the claimant
of the written notice of denial of the claim, or within sixty (60) days after
the claim is deemed denied as set forth above, if applicable, the claimant may
file a written request with the Committee that it conduct a full and fair review
of the denial of the claimant's claim for benefits including the conducting of a
hearing, if necessary by the Committee. In connection with the claimant's appeal
of the denial of his benefit, the claimant may review pertinent documents and
may submit issues and comments in writing. The Committee shall render a decision
on the claim appeal promptly, but not later than sixty (60) days after the
receipt of the claimant's request for review, unless special circumstances (such
as the need to hold a hearing, if necessary), required an extension of time for
processing, in which case the sixty (60) day period may be extended to one
hundred and twenty (120) days. The Committee shall notify the claimant in
writing of any such extension. The decision upon review shall (i) include
specific reasons for the decision, (ii) be written in a manner calculated to be
understood by the claimant and (iii) contain specific references to the
pertinent Plan provisions upon which the decision is based.

    7.6 Compensation and Expenses of Committee. The members of the Committee
shall serve without compensation for services as such, but all proper expenses
incurred by the Committee incident to the functioning of the Plan shall be paid
by the Company; provided, however, that reasonable compensation or expenses of
administering the Plan shall be borne by, and paid out of the Plan assets,
except to the extent that the Administrator elects to have such expenses paid
directly by the Company.

                                       49
<PAGE>   55

    7.7 Indemnity of Committee Members. The Company shall indemnify and defend
each member of the Committee and each of its other employees against any and all
claims, loss, damages, expenses (including reasonable attorney fees), and
liability arising in connection with the administration of the Plan, except when
the same is judicially determined to be due to the gross negligence or willful
misconduct of such member or other employee.

                                  ARTICLE VIII
                                TRUST AND TRUSTEE

    8.1 Trust Agreement. A Trust has been created and will be maintained for the
purposes of the Plan. All contributions under the Plan will be paid into the
Trust. The Trust Fund will be held, invested and disposed of by the Trustee from
time to time acting in accordance with the Trust Agreement. All benefits payable
under the Plan will be paid from the Trust Fund.

    8.2 Exclusive Benefit of Employees.

        (a) All contributions made pursuant to the Plan shall be held by the
    Trustee in accordance with the terms of the Trust Agreement and the Plan for
    the exclusive benefit of those Employees who are Participants under the
    Plan, including former Employees and their Beneficiaries.

        The Company, Related Employers and Subsidiaries may pay all expenses
    incurred in the establishment and administration of the Plan, including
    expenses and fees of the Trustee, but they shall not be obligated to do so.
    Any such expenses not so paid may be paid from the Trust Fund to the extent
    permitted by applicable laws, including ERISA.

        (b) Compensation of the Trustee shall be paid by the Company. All taxes
    of any and all kinds whatsoever that may be levied or assessed under
    existing or future laws upon, or in respect of, the Trust Fund or the income
    thereof shall be paid from the Trust Fund.

    8.3 Appointment of Trustee and Investment Managers. The Administrator, by
action of its Board of Directors, may appoint one or more Trustees and
Investment Managers. Each Trustee and Investment Manager shall, upon acceptance
of the Plan, be bound by its terms. The provisions of the Plan applicable to
Trustee or Investment Manager shall apply to each Trustee or Investment Manager
with respect to the assets assigned to it pursuant to the provisions of the
Plan.

    Each Trustee and each Investment Manager shall be responsible for assets
during the time that such assets are assigned to it and shall not be responsible
for assets during a time when such assets are assigned to another Trustee or
Investment Manager. Each Trustee or Investment Manager shall be liable with
respect to its own acts, but not with respect to the

                                       50
<PAGE>   56
act of any other Trustee or Investment Manager.

    Each Investment Manager shall be (a) registered as an investment advisor
under the Investment Advisers Act of 1940, (b) a bank, as defined in the
Investment Advisers Act of 1940, or (c) an insurance company qualified to
manage, acquire or dispose of any assets of a plan under the laws of more than
one state. Upon appointment, each Investment Manager shall certify and
acknowledge, in writing, to the Administrator and the Trustee that he has a copy
of the Plan, that he is a fiduciary with respect to such Plan, and that he has
assumed the duties and responsibilities conferred upon him by the Administrator.
The duties, responsibilities and authority of any Investment Manager may be
revoked or modified by the Administrator at any time by written notice to such
Investment Manager and to the Trustee. Any Investment Manager duly appointed and
authorized by the Administrator shall, during the period of his appointment,
possess fully and absolutely those powers, rights and duties of the Trustee (to
the extent delegated by the Administrator and to the extent permissible under
the terms of the Plan) with respect to the investment or reinvestment of that
portion of the Plan assets over which such Investment Manager has investment
management authority.

    8.4 Assignment of Assets to Trustees. The Administrator shall have the power
to assign all or a portion of the assets of the Trust to any Trustee. The
Administrator shall provide written notice at least thirty days in advance to a
Trustee of the Administrator's decision to transfer any assets from such Trustee
to another Trustee. Any transfer of assets among Trustees shall occur as of a
Valuation Date, unless all of the Trustees involved in the asset transfer
consent to another date.

    8.5 Assignment of Assets to Investment Managers. With respect to assets
assigned to it by the Administrator, each Trustee may assign all or a portion of
such assets to an Investment Manager, provided such assignment is consistent
with the duties, responsibilities and authorities granted to such Investment
Manager by the Administrator. The Trustees may retain custody of the indicia of
ownership of such assets.

    8.6 Voting Company Stock - Annual or Special Meeting. Before each annual or
special meeting of the stockholders of The Coastal Corporation, Valero Energy
Corporation, Intelect Communications, Inc. or Pacific Gas and Electric Company,
the Trustee shall utilize its best efforts to timely distribute or cause to be
distributed to each Participant (or, in the event of his death, his Beneficiary)
a copy of the proxy solicitation material for such meeting, and request written
instructions from the Participants as to the voting of the stock credited to
their accounts. Such instructions shall be on a confidential basis. The Trustee
shall exercise the voting rights on stock credited to accounts of a Participant
in accordance with the timely instructions of such Participant (or his
Beneficiary, if applicable). If the Trustee does not timely receive voting
instructions from a Participant (or Beneficiary), the stock credited to such
Participant's accounts shall be voted by the

                                       51
<PAGE>   57

Trustee. The Trustee shall exercise the voting rights on stock that has not been
credited to the accounts of Participants as of the applicable record date for
determination of holders of stock entitled to vote.

    8.7 Voting Company Stock - Tender or Exchange Offer. Each Participant (or,
in the event of his death, his Beneficiary) shall have the right, to the extent
of shares of stock allocated to the account of the Participant under the Plan,
to direct the Trustee in writing on a confidential basis as to the manner in
which to respond to a tender or exchange offer with respect to such stock. The
Trustee shall utilize its best efforts to timely distribute or cause to be
distributed to each Participant (or Beneficiary) such information as will be
distributed to shareholders of such stock in connection with any such tender or
exchange offer. If the Trustee shall not receive timely direction from a
Participant (or Beneficiary) as to the manner in which to respond to such a
tender or exchange offer, the Trustee shall not tender or exchange any shares of
such stock with respect to which such Participant (or Beneficiary) has the right
of direction. Shares of stock which have not been allocated to the account of a
Participant shall be tendered or exchanged by the Trustee in the same proportion
as shares with respect to which Participants (or Beneficiaries) have the right
of direction are tendered or exchanged.

    8.8 Common Trust Fund Authorization. Notwithstanding anything contained in
this ARTICLE VIII to the contrary, the Trustee may engage in any transaction
with:

        (a) a common or collective trust fund or pooled investment fund which is
    authorized and permitted to receive investments from the Trust and which is
    maintained by any "party-in-interest," within the meaning of Section 3(14)
    of ERISA, which is a bank or trust company supervised by a state or federal
    agency including, where otherwise permissible under the applicable laws and
    regulations, any such fund as maintained by the Trustee, its affiliates, any
    Investment Manager appointed hereunder or another fiduciary hereunder
    (provided such other fiduciary qualified as an Investment Manager under
    Section 3(38) of ERISA), the provisions of which as they may now or
    hereafter exist are hereby incorporated by reference, or

        (b) a pooled investment fund or an insurance company qualified to do
    business in a state, provided such fund is authorized and permitted to
    receive investments from the Trust, if (i) the transaction is a sale or
    purchase of an interest in such fund, and (ii) the bank, trust company or
    insurance company receives not more than reasonable compensation. This
    provision constitutes the express permission required by Section 408(b)(8)
    of ERISA.

                                       52
<PAGE>   58


                                   ARTICLE IX
                              LOANS TO PARTICIPANTS

    9.1 Loans. Loans to Participants are not available under the Plan.

                                    ARTICLE X
                         INVESTMENT OF ACCOUNT BALANCES

    10.1 Investment Funds. The Adjusted Balance of each Participant's Salary
Reduction Contribution Account, After Tax Contribution Account and Matching
Contributions Account will be invested in the various Investment Funds as
described in this article.

    10.2 Initial Investment. Salary Reduction Contributions, After Tax
Contributions and Matching Contributions received by the Trustee may be
initially invested in such short-term investment obligations as selected by the
Trustee from time to time pending investment pursuant to Section 10.3. These
deposits and earnings will be allocated between the Investment Funds as of the
Valuation Date next following receipt by the Trustee of such deposits and
earnings in accordance with Participants' selection of Investment Funds pursuant
to Section 10.3.

    10.3 Investment Options.

         (a) Salary Reduction Contributions shall be invested in the Coastal
    Common Stock Fund.

         (b) Matching Contributions shall be invested in the Coastal Common
    Stock Fund.

         (c) (i) After Tax Contributions which, pursuant to Plan Section 3.4(a),
    are eligible for Company Matching Contributions shall be allocated, pursuant
    to Participant's election (either in writing or by using the electronic
    procedure provided by the Administrator), to the Coastal Common Stock Fund,
    the Diversified Fund, the Index Fund and the Interest Income Fund. A minimum
    of twenty-five percent of After Tax Contributions must be allocated to the
    Coastal Common Stock Fund. Allocations to the various funds must be in
    multiples of one percent of After Tax Contributions.

             (ii) In default of any Participant's direction, such contributions
    will be invested in the Coastal Common Stock Fund until a form designating a
    different Investment Fund is submitted to the Administrator.

             (iii) After Tax Contributions which, pursuant to Plan Section
    3.4(b), are not eligible for Company Matching Contributions shall be
    invested in the Coastal Common Stock Fund.

         (d) Each Participant shall have the right to file a maximum of four
    written forms per Plan Year with the Administrator modifying the direction
    made in subsection (c) with respect to subsequent After Tax Contributions
    under the Plan. Such investment elections shall be effective as of the

                                       53
<PAGE>   59


    first day of either a calendar month or pay period as is determined by the
    Administrator on a uniform basis. Such investment elections must be received
    by the Administrator (either in writing or made using the electronic
    procedure provided by the Administrator) prior to the first day of the
    period for which such election is effective.

         (e) Each Participant shall have the right once each Plan Year to file a
    written form with the Administrator directing that the portion of (i) his
    After Tax Contribution Account attributable to contributions which were
    eligible for Company Matching Contributions and/or (ii) (A) after he is both
    eligible for Company Matching Contributions at a level of eight percent and
    has attained the age of fifty-nine and one half years, or (B) after he has
    both attained the age of 55 years and completed ten years of Participation,
    his Salary Reduction Contribution Account held in the Coastal Common Stock
    Fund, the Diversified Fund, the Index Fund and/or the Interest Income Fund
    be transferred, in whole or in part, to any other such Funds. This direction
    shall be made by designating the percentage of the Adjusted Balance of such
    Accounts that is to be transferred to such other Funds. Such a reinvestment
    election may be effective as of any Valuation Date provided that such
    election is received by the Administrator (either in writing or made using
    the electronic procedure provided by the Administrator) at least five days
    before such Valuation Date.

         A Participant is limited to one transfer among funds per calendar year
    under the Plan and a transfer among funds pursuant to Section 10.4 or 10.5
    shall be in lieu of, and not in addition to, a transfer among funds pursuant
    to this Section 10.3.

         (f) In general, the process for purchase and sale of stock and other
    investments is as described herein. When a Participant requests a transfer
    among funds, the Account Balance of the Participant will indicate the
    transfer out of one fund and into the other fund as of the Valuation Date
    selected by the Participant.

           The amount transferred from a stock fund is determined as described
    herein in subsection (g) of this Section.

           Any amount transferred to the Coastal Common Stock Fund is entered as
    short-term investment and stock is allocated as of the next Valuation Date.
    See subsection (i) of this Section.

           Any amount transferred to or from the Interest Income Fund, the
    Diversified Fund or the Index Fund is entered or removed, respectively, as
    of the Valuation Date selected by the Participant for such transfer. This
    differs from transactions involving Coastal common stock since the Interest
    Income Fund, Diversified Fund and the Index Fund do not have a short-term
    investment account.

                                       54
<PAGE>   60


         (g) Sale of Stock.

           Sale of Coastal common stock from an account is considered to have
    occurred as of the Valuation Date and the Participant directing the sale
    will generally receive the closing price on that day. The closing price is
    the "Close" price for New York Stock Exchange Composite Transactions as
    reported in "The Wall Street Journal" or, if not so reported, the closing
    price as determined by the Administrator from independent reporting sources.
    The shares being sold by the Participant are purchased by the Trust from the
    Participant at the closing price. The shares are then available as part of
    the "purchase pool," discussed below, for allocation to the accounts of
    Participants who purchase shares through contribution or transfer of funds.
    In the event that the volume of sales by Participants exceeds the
    anticipated need of the Trust for Coastal common stock, the Trustee may sell
    the stock which exceeds the anticipated need of the Trust. Such sales will
    be in the open market and the price received by the Trustee may vary
    substantially from the closing price on the Valuation Date. When such market
    sales occur, the price received by a Participant for sale of stock in his
    account will be the average sale price of shares retained by the Trust at
    closing market price on the Valuation Date and the actual sale price of
    shares sold on the market. This means that a Participant making a withdrawal
    of cash or a transfer among funds may receive a price per share which is
    less than or greater than the closing market price on the Valuation Date.

           Coastal Preferred Stock Fund, Valero Stock Fund, Intelect Stock Fund
    and PG&E Stock Fund are similar to the Coastal Common Stock Fund, except
    that all shares from these funds must be sold in the market. Thus, the
    proceeds of market sales are the amount the Participant receives upon
    transfer or withdrawal of cash from these funds. These market sales are made
    on or as close to the Valuation Date as practical. The average price
    received for all shares sold for a particular Valuation Date is the amount
    realized by each Participant. There are no purchases by the Trust because
    contributions and transfers to these funds are not permitted.

         (h) Purchase of Stock.

           The purchase price of shares allocated to the account of a
    Participant is an average purchase price of shares that are, for
    convenience, called a "purchase pool." The purchase pool consists of shares
    retained by the Trust from the accounts of Participants who sell shares due
    to transfer among funds or withdrawal of cash from the Trust plus shares
    purchased by the Trustee in the open market. The purchase pool price for any
    end of month allocation is the average price of all shares in the purchase
    pool. Because the Trustee purchases shares in the market as needed for
    allocation, the Participant cannot determine in advance the purchase pool
    price. The Trustee does not purchase stock from Coastal and Coastal does not
    donate stock to the Thrift Plan. All purchases and sales involve parties
    other than Coastal.

                                       55
<PAGE>   61


         (i) Short-Term Cash Investment.

           The stock funds, including the Coastal Common Stock Fund, are to be
    invested in stock.

           Any funds which have not been invested in stock are described in the
    account of a Participant as "short-term cash." Any transfer to a stock fund
    as of a Valuation Date will be shown as short-term cash. This amount will be
    used as the basis for allocation of stock as of the following Valuation
    Date. This allocation is made using the purchase pool price for the
    Valuation Date the allocation is made. For example, if a Participant
    requests that $1,000 be transferred from the Interest Income Fund to the
    Coastal Common Stock Fund as of the February Valuation Date, the account of
    the Participant will reflect (1) a removal of $1,000 from Interest Income
    Fund as of the February Valuation Date, (2) short-term investment of $1,000
    in the Coastal Common Stock Fund as of the February Valuation Date, (3)
    short-term investment of $0 as of the March Valuation Date, and (4) number
    of shares of stock which $1,000 purchased at the purchase pool price as of
    the March Valuation Date.

           Short-term investment is invested on a short-term basis pending
    purchase of stock. Earnings from such investments are allocated to accounts
    of Participants.

         (j) Allocation of Earnings.

           The Interest Income Fund may include contracts with insurance
    companies that pay different rates of interest and short term investments
    income which results from temporary investment of funds pending their
    transmission to the insurance companies. The earnings are commingled and
    allocated to each account based on the Account Balance as of the prior
    Valuation Date. For example, March earnings are allocated based on the
    Participant Account Balance as of the end of February. Then current
    contributions are added to give the total value as of the March Valuation
    Date.

           Processing of withdrawals can take 30 to 90 days. Funds being
    withdrawn do not receive an allocation of interest during that period of
    processing.

           Earnings for the Diversified Fund and the Index Fund are handled in
    the same general way as the Interest Income Fund. However, in the
    Diversified Fund and the Index Fund, the value of the unit reflects the
    change in value due to both earnings and market price changes.

         (k) The Administrator will maintain individual accounts representing
    the interests of Participants in the several investment funds.

    10.4 Diversification of Investments - Salary Reduction Contribution Accounts
(ESOP).

                                       56
<PAGE>   62


         (a) Each Qualified Participant (as defined below) may elect once each
    Plan Year in the Qualified Election Period (as defined below), by written
    instrument delivered to the Administrator [or by using the electronic
    procedure provided by the Administrator], to direct the investment of the
    Participant's Adjusted Balance of his Salary Reduction Contribution Account.
    The Administrator shall direct the Trustee to invest the Adjusted Balance of
    such Qualified Participant's Salary Reduction Contribution Account pursuant
    to the procedure described in Section 10.3(e) of the Plan.

         (b) A Qualified Participant's election pursuant to this Section shall
    direct the investment of the amount subject to that election among the
    Interest Income Fund, the Diversified Fund and the Index Fund.

         (c) Definitions.

               (1) "Qualified Election Period" means once each Plan Year
         beginning with the first Plan Year in which a Participant first becomes
         a Qualified Participant.

               (2) "Qualified Participant" means any Participant who has both
         attained the age of fifty-five years and completed ten years of
         Participation.

    10.5 Rules Governing Investments of Non-ESOP Participants. The provisions of
this Section apply to Participant contributions pursuant to a Salary Reduction
Agreement by a Participant during the time the Participant is an Employee of an
adopting employer that (i) is not a corporation or (ii) is a corporation to
which the ESOP provisions do not apply. (See the Introduction Section of the
Plan for a description of corporations to which the ESOP provisions apply.)

         (a) The Participant may have his Salary Reduction Contribution Account
    invested in the Coastal Common Stock Fund, the Diversified Fund, the Index
    Fund and/ or the Interest Income Fund. The Participant must elect the
    investment allocation in writing or by using the electronic procedure
    provided by the Administrator. Allocations to the various funds must be in
    multiples of one percent of Salary Reduction Contributions. A minimum of one
    percent of the Basic Compensation of a Participant who elects the Salary
    Reduction Contribution must be allocated to the Coastal Common Stock Fund,
    provided, that such minimum of one percent of Basic Compensation shall be
    reduced to the extent necessary to make such minimum equal to a whole
    percentage of the Salary Reduction Contribution of the Participant.

         (b) Once each Plan Year, the Participant may direct that funds in his
    Salary Reduction Contribution Account be transferred among the Coastal
    Common Stock Fund, the Interest Income Fund, the Diversified Fund and the
    Index Fund using the procedure described in Section 10.3(e) of the Plan.

                                       57
<PAGE>   63


    10.6 Description of Funds

         (a) The Coastal Common Stock Fund. This Fund shall be invested in
    Common Stock. Cash dividends on Common Stock shall be reinvested in Common
    Stock.

         (b) Interest Income Fund. The Interest Income Fund is an unsegregated
    fund invested in interest bearing investments such as bonds, notes,
    debentures, savings accounts, savings certificates, commercial paper,
    obligations of the United States of America, deposit accounts maintained by
    one or more legal reserve life insurance companies which provide for the
    payment of fixed or variable rates of interest for specified periods of
    time, and other similar types of investments, although such investments may
    not be legal investments for trustees under the applicable statutes. A
    portion of the fund may be retained in cash.

         (c) Diversified Fund. The Diversified Fund is an unsegregated fund
    invested in capital stocks of issuers (other than Coastal or any Subsidiary
    thereof), notes, bonds, debentures, and other similar types of investments,
    although such investments may not be legal investments for trustees under
    the applicable statutes. A portion of the fund may be retained in cash or
    invested temporarily in obligations of the United States of America, or in
    commercial paper.

         (d) Index Fund. The Index Fund is an unsegregated fund invested in
    capital stocks or similar securities of issuers (other than Coastal or any
    Subsidiary thereof), although such investments may not be legal investments
    for trustees under the applicable statutes. The Index Fund seeks investment
    results that parallel the performance of an unmanaged stock index fund such
    as the Standard & Poor's 500 Composite Stock Price Index. A portion of the
    fund may be retained in cash or invested temporarily in obligations of the
    United States of America, or in commercial paper.

         (e) Coastal Class A Common Stock Fund. This fund is to hold Coastal
    Class A common stock that was issued as a dividend to holders of Common
    Stock.

           Cash realized from Coastal Class A common stock will be invested in
    the Coastal Common Stock Fund.

           A Participant may direct the Administrator in writing to have Coastal
    Class A common stock converted into Common Stock. When stock attributable to
    Employer contributions and earnings thereon is converted, the Common Stock
    received shall become part of the Coastal Common Stock Fund. When stock
    attributable to Participant contributions and earnings thereon is converted,
    the Common Stock received shall become part of the Coastal Common Stock Fund
    unless the Participant has directed in writing that the Common Stock is to
    be sold and the proceeds invested in the Diversified Fund, the Index Fund or
    the Interest Income Fund.

                                       58
<PAGE>   64


         (f) Coastal Preferred Stock Fund. The Coastal Preferred Stock Fund
    shall be invested in Coastal Series B $1.83 convertible preferred stock.
    Dividends shall be reinvested in the Coastal Common Stock Fund.

             Each Participant may elect to have the Coastal Series B $1.83
    preferred stock in the Participant's account converted to Common Stock and
    Coastal Class A common stock. The Participant shall notify the Administrator
    of the election to convert such preferred stock and the number of shares to
    be converted. The Administrator shall instruct the Trustee to convert such
    preferred stock.

         (g) Valero Stock Fund. This fund is to hold common stock of Valero
    Energy Corporation (hereinafter, Valero) which was issued to holders of
    Common Stock as of the result of a corporate spinoff.

             A Participant may direct the Administrator to have cash realized
    from Valero stock invested in the Coastal Common Stock Fund. Such election
    shall be in writing and will become effective the first day of any month,
    provided the election is received by the Administrator prior to the first of
    such month. The election may be revoked by writing to the Administrator.
    Such revocation shall be effective the first day of any month, provided the
    election is received by the Administrator prior to the first of such month.
    All cash realized from Valero stock shall be invested in the Diversified
    Fund to the extent it is not invested in the Coastal Common Stock Fund
    pursuant to a Participant election.

             A Participant may direct the Administrator in writing to sell the
    Valero stock in the Participant's account and invest the proceeds in the
    Coastal Common Stock Fund or the Diversified Fund. In addition, a
    Participant may direct the Administrator, in writing, to sell the Valero
    stock in the Participant's account that is attributable to his contributions
    and earnings thereon, and invest the proceeds in the Interest Income Fund. A
    Participant may direct the Administrator to sell any Diversified Fund units
    purchased with proceeds of Valero stock attributable to Employer
    contributions and reinvest the proceeds in the Coastal Common Stock Fund.

             For purposes of the Withdrawal provisions of the Plan, the Valero
    stock shall be considered to have the same contribution date as the Coastal
    stock with respect to which the Valero stock was issued.

         (h) PG&E Stock Fund. This fund is to hold common stock of Pacific Gas
    and Electric Company (hereinafter PG&E) which was issued to holders of
    Valero common stock as a dividend.

             A Participant may direct the Administrator to have cash realized
    from PG&E stock invested in the Coastal Common Stock Fund. Such election
    shall be in writing and will become

                                       59
<PAGE>   65


    effective the first day of any month, provided the election is received by
    the Administrator prior to the first of such month. The election may be
    revoked by writing to the Administrator. Such revocation shall be effective
    the first day of any month, provided the election is received by the
    Administrator prior to the first of such month. All cash realized from PG&E
    stock shall be invested in the Diversified Fund to the extent it is not
    invested in Common Stock pursuant to a Participant election.

             A Participant may direct the Administrator in writing to sell the
    PG&E stock in the Participant's account and invest the proceeds in the
    Coastal Common Stock Fund or the Diversified Fund. In addition, a
    Participant may direct the Administrator, in writing, to sell the PG&E stock
    in the Participant's account that is attributable to his contributions and
    earnings thereon, and invest the proceeds in the Interest Income Fund. A
    Participant may direct the Administrator to sell any Diversified Fund units
    purchased with proceeds of PG&E stock attributable to Employer contributions
    and reinvest the proceeds in the Coastal Common Stock Fund.

             For purposes of the Withdrawal provisions of the Plan the PG&E
    stock shall be considered to have the same contribution date as the Valero
    stock with respect to which the PG&E stock was issued.

         (i) Intelect Stock Fund. This fund is to hold common stock of Intelect
    Communications, Inc. formerly Coastal International, Ltd. (hereinafter
    "Intelect") issued to holders of Common Stock, as the result of a corporate
    spinoff.

             Cash realized from Intelect stock will be reinvested in the Coastal
    Common Stock Fund.

             A Participant may direct the Administrator in writing to sell
    Intelect stock in the Participant's account and invest the proceeds in the
    Coastal Common Stock Fund or the Diversified Fund. In addition, a
    Participant may direct the Administrator in writing to sell the Intelect
    stock in the Participant's account which is attributable to his
    contributions and earnings thereon and to invest the proceeds in the
    Interest Income Fund.

             For purposes of the withdrawal provisions of the Plan, the date of
    contribution for the Intelect common stock is considered to be October 31,
    1980.

                                   ARTICLE XI
                            AMENDMENT AND TERMINATION

    11.1 Amendment of Plan. The Company reserves the right at any time and from
time to time to modify or amend, in whole or in part, any or all of the
provisions of the Plan, by resolution of

                                       60
<PAGE>   66


the board, as evidenced by a written instrument executed by an authorized
officer of the Company, and all Employees and persons claiming any interest
hereunder shall be bound thereby; provided however, that no amendment shall have
the effect of:

                  (i) directly or indirectly divesting the interest of any
         Participant in any amount that he would have received had he terminated
         his employment with the Company immediately prior to the effective date
         of such amendment, or the interest of any Beneficiary as such interest
         existed immediately prior to the effective date of such amendment;

                  (ii) directly or indirectly affecting the vesting schedule set
         forth in Section 5.6 used to determine the vested interest of a
         Participant on the effective date of the amendment unless (a) the
         conditions of Section 203(c) of ERISA are satisfied and (b) each
         Participant whose nonforfeitable percentage of his accrued benefit
         derived from Matching Contributions is determined under such schedule
         and who has completed three years of Service with the Employer, may
         elect, during the election period, to have the nonforfeitable
         percentage determined under the old vesting schedule;

                  (iii) vesting in the Company any right, title, or interest in
         or to any Plan assets except as provided in Section 11.4 of the Plan;

                  (iv) causing or effecting discrimination in favor of officers,
         shareholders, or highly compensated Employees; or

                  (v) causing any part of the Plan assets to be used for any
         purpose other than for the exclusive benefit of the Participants and
         their Beneficiaries.

    11.2 Voluntary Termination of/or Permanent Discontinuance of Contributions
to the Plan. The Company expects the Plan to be permanent, but since future
conditions affecting the Company cannot be anticipated, the Company shall have
the right to terminate the Plan in whole or in part, or to permanently
discontinue contributions to the Plan, at any time by resolution of its Board of
Directors and by giving written notice of such termination or permanent
discontinuance to the Trustee. Such resolution shall specify the effective date
of termination or permanent discontinuance, which shall not be earlier than the
first day of the Plan Year which includes the date of the resolution.

    11.3 Involuntary Termination of Plan. The Plan shall automatically terminate
if the Company is legally adjudicated as bankrupt, makes a general assignment
for the benefit of creditors, or is dissolved. In the event of the merger or
consolidation of the Company with or into any other corporation, or in the event
substantially all of the assets of the Company

                                       61
<PAGE>   67


shall be transferred to another corporation, the successor corporation resulting
from the consolidation or merger, or transfer of such assets, as the case may
be, shall have the right to adopt and continue the Plan and succeed to the
position of the Company hereunder. If, however, the Plan is not so adopted as of
a date within ninety (90) days after the effective date of such consolidation,
merger or sale, the Plan shall automatically be deemed terminated as of the
effective date of such transaction. Nothing in this Plan shall prevent the
dissolution, liquidation, consolidation or merger of the Company, or the sale or
transfer of all or substantially all of its assets.

    11.4 Payments on Termination of/or Permanent Discontinuance of Contributions
to the Plan. If the Plan is terminated as herein provided, or if it should be
partially terminated, or upon the complete discontinuance of Company
contributions to the Plan, the following procedure shall be followed, except
that, in the event of a partial termination, it shall be followed only in cases
of those Participants and Beneficiaries directly affected:

                  (i) The Administrator may continue to administer the Plan, but
         if it fails to do so, its records, books of account and other necessary
         data shall be turned over to the Trustee and the Trustee shall act on
         its own motion as hereinafter provided.

                  (ii) Notwithstanding any other provisions of the Plan, all
         interests of Participant shall become fully vested and nonforfeitable.

                  (iii) The value of the Trust and the shares of all
         Participants and Beneficiaries shall be determined as of the date of
         termination or discontinuance.

                  (iv) Distribution to Participants and Beneficiaries shall be
         made at such time after termination of or discontinuance of
         contributions to the Plan as shall be determined by the Administrator
         (or the Trustee if no Administrator is then acting) not later than the
         time specified in Section 6.6.

                  (v) Any assets remaining after allocation to the accounts of
         Participants of all amounts due such Participants shall be distributed
         to the Company.

    11.5 Assets Available for All Controlled Group Participants. All assets held
in the Trust allocated to a particular member of a Controlled Group shall be
available to pay benefits with respect to all Participants of such Controlled
Group. A "Controlled Group" is a controlled group of corporations and/or trades
or businesses as defined in Sections 414(b) and (c) of the Code.

                                       62
<PAGE>   68


                                   ARTICLE XII
                                  MISCELLANEOUS

    12.1 Duty to Furnish Information and Documents. Participants and their
Beneficiaries must furnish to the Administrator and the Trustee such evidence,
data or information as the Administrator considers necessary or desirable for
the purpose of administering the Plan, and the provisions of the Plan for each
person are upon the condition that he will furnish promptly full, true, and
complete evidence, data and information requested by the Administrator. All
parties to, or claiming any interest under, the Plan hereby agree to perform any
and all acts, and to execute any and all documents and papers, necessary or
desirable for carrying out the Plan and the Trust.

    12.2 Annual Statements and Available Information. The Administrator shall
advise Employees of the eligibility requirements and benefits under the Plan. As
soon as practicable after making the annual valuation and allocations provided
for in the Plan, and at such other times as the Administrator may determine, the
Administrator shall provide each Participant, and each former Participant
(except former Participants who have no vested Adjusted Balance) and Beneficiary
(except former Beneficiaries who have no vested Adjusted Balance) with respect
to whom an account is maintained, with a statement reflecting the current status
of his accounts, including the Adjusted Balance thereof. No Participant, except
as necessary to administer the Plan, shall have the right to inspect the records
reflecting the account of any other Participant. The Administrator shall make
available for inspection at reasonable times by Participants and Beneficiaries
copies of the Plan, any amendments thereto, the Plan summary, and all reports of
Plan and Trust operations required by law.

    12.3 No Enlargement of Employment Rights. Nothing contained in the Plan
shall be construed as a contract of employment between the Company and any
person, nor shall the Plan be deemed to give any person the right to be retained
in the employ of the Company or limit the right of the Company to employ or
discharge any person with or without cause, or to discipline any Employee.

    12.4 Applicable Law. All questions pertaining to the validity, construction
and administration of the Plan shall be determined in conformity with the laws
of Texas to the extent that such laws are not preempted by federal laws
including the Code and ERISA and valid regulations published thereunder.

    12.5 No Guarantee except for Colorado Plan.

         (a) Neither Trustee, the Administrator, the Committee, nor the Company
    in any way guarantees the Trust Fund from loss or depreciation or the
    payment of any benefits which may be or become due to any person from the
    Trust Fund. No Participant or other person shall have any recourse against
    the Trustee, the Administrator, the Company or the Committee if the Trust
    Fund is insufficient to provide Plan benefits in full. Nothing herein
    contained shall be deemed to give any Participant, former Participant, or
    Beneficiary an interest in any specific part of the Trust Fund or any other
    interest

                                       63
<PAGE>   69


    except the right to receive benefits out of the Trust Fund in accordance
    with the provisions of the Plan and Trust.

         (b) Notwithstanding the preceding provisions of this Section, the
    adopting employers of the Original and Amended Colorado Plans guarantee to
    the former Participants in the Original and Amended Colorado Plans that, in
    the event of any withdrawal or settlement of their account, they will
    receive, with respect to the credit balance in their account as of April 30,
    1974, an amount which is not less than equal to the contributions which were
    deducted from the compensation of the Participants and paid into the Trust
    Fund, after considering all prior withdrawals. The Company makes no such
    guarantee with respect to contributions to the Plan by said Participants
    after April 30, 1974.

    12.6 Unclaimed Funds. Each Participant shall keep the Administrator,
informed of his current address and current address of his Beneficiary or
Beneficiaries. Neither the Company, the Committee nor the Trustee shall be
obligated to search for the whereabouts of any person. If the location of a
Participant is not made known to the Administrator within three (3) years after
the date on which distribution of the Participant's account may be first made,
distribution may be made as though the Participant had died at the end of the
three-year period. If, within one additional year after such three-year period
has elapsed, or within three years after the actual death of a Participant, the
Administrator is unable to locate any individual who would receive distribution
under the Plan upon the death of the Participant pursuant to Section 6.2 of the
Plan, the Adjusted Balance in the Participant's accounts shall be disposed of in
accordance with applicable laws.

    12.7 Merger or Consolidation of Plan. Any merger or consolidation of the
Plan with another Plan, or transfer of Plan assets or liabilities to another
plan, shall be effected in accordance with such regulations, if any, as may be
issued pursuant to Section 208 of ERISA, in such manner that each Participant in
the Plan would receive, if the merged, consolidated or transferee plan were
terminated immediately following such event, a benefit which is equal to or
greater than the benefit he would have been entitled to receive if the Plan had
terminated immediately before such event.

    12.8 Interest Nontransferable. Except as provided in Article IX, the Code,
ERISA, and this Section, no interest of any person or entity in, or right to
receive distributions from, the Trust Fund shall be subject in any manner to
sale, transfer, assignment, pledge, attachment, garnishment, or other alienation
or encumbrance of any kind; nor may such interest or right to receive
distributions be taken, either voluntarily or involuntarily, for the
satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims in bankruptcy proceedings. The account of any
Participant, however, shall be subject to and payable in accordance with the
applicable requirements of any qualified domestic relations order, as that term
is defined in Section 414(p) of the Code, and

                                       64
<PAGE>   70


the Administrator shall direct the Trustee to provide for payment from a
Participant's account in accordance with such order and with the provisions of
Section 414(p) of the Code and any regulations promulgated thereunder. A payment
from a Participant's account may be made to an alternate payee (as defined in
Section 414(p)(8) of the Code) prior to the date the Participant reaches his
earliest retirement age (as defined in Section 414(p)(4)(B) of the Code) if such
payments are made pursuant to a qualified domestic relations order. All such
payments pursuant to a qualified domestic relations order shall be subject to
reasonable rules and regulations promulgated by the Administrator respecting the
time of payment pursuant to such order and the valuation of the Participant's
account or accounts from which payment is made; provided, that all such payments
are made in accordance with such order and Section 414(p). The balance of an
account that is subject to any qualified domestic relations order shall be
reduced by the amount of any payment made pursuant to such order.

         Notwithstanding the preceding paragraph, if any Participant borrows
money pursuant to Article IX, the Trustee and the Administrator shall have all
rights to collect upon such indebtedness as are granted pursuant to Article IX
and any agreements or documents executed in connection with such loan.

         The account of any Participant, may also be offset by an amount set
forth in a court order or requirement to pay that arises from (1) a judgment of
conviction for a crime involving the Plan, (2) a civil judgment (or consent to
order or decree) that is entered by a court in an action brought in connection
with a breach (or alleged breach) of a fiduciary duty under ERISA, or (3) a
settlement agreement entered into by the Participant with either the Secretary
of Labor or the Pension Benefit Guaranty Corporation in connection with a breach
of fiduciary duty under ERISA by a fiduciary or any other person.

    12.9 Prudent Man Rule. Notwithstanding any other provision of this Plan and
Trust Agreement, the Trustee, the Committee and the Company shall exercise their
powers and discharge their duties under this Plan and Trust Agreement for the
exclusive purpose of providing benefits to Employees and their Beneficiaries,
and shall act with the care, skill, prudence and diligence under the
circumstances that a prudent man acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character and
with like aims. Subject to the terms of the Plan, the Code, ERISA and the
preceding sentence, the Trustee shall diversify investments of the Trust Fund so
as to minimize the risk of large losses, unless under the circumstances it is
clearly prudent not to do so.

    12.10 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, none of the Trustee, the Company, the Administrator, the
Committee and each individual acting as an employee or agent of any of them
shall be liable to any Participant, former Participant or Beneficiary for any
claim, loss, liability or expense incurred in connection with the Plan, except
when the same shall have been judicially determined to be

                                       65
<PAGE>   71


due to the gross negligence or willful misconduct of such person. The Company
shall indemnify and hold harmless each individual acting as an employee or agent
of the Company (including Committee members) from any and all claims,
liabilities, costs and expense (including attorney's fees) arising out of any
actual or alleged act or failure to act with respect to the administration of
the Plan, except that no indemnification or defense shall be provided to any
person with respect to conduct which has been judicially determined, or agreed
by the parties, to have constituted bad faith or willful misconduct on the part
of such person, or to have resulted in his receipt of personal profit or
advantage to which he is not entitled.

    12.11 Headings. The headings in this Plan are inserted for convenience of
reference only and are not to be considered in construction of the provisions
thereof.

    12.12 Gender and Number. Except when otherwise required by the context, any
masculine terminology in this document shall include the feminine, and any
singular terminology shall include the plural.

    12.13 ERISA and Approval Under Internal Revenue Code. This Plan is intended
to qualify as a Plan and Trust meeting the requirements of Sections 401 and
501(a) of the Code, as now in effect or hereafter amended, so that the income of
the Trust Fund may be exempt from taxation under Section 501(a) of the Code,
contributions of the Company under the Plan may be deductible for federal income
tax purposes under Section 404 of the Code and amounts subject to Salary
Reduction Agreements are not treated as distributed to Participants for federal
income tax purposes under Section 402(e)(3) of the Code. Any modification or
amendment of the Plan and/or Trust may be made retroactively, as necessary or
appropriate, to establish and maintain such qualification and to meet any
requirement of the Code or ERISA.

    12.14 Extension of Plan to Related Employers.

         (a) With the approval of the Company, any Related Employer or
    Subsidiary may adopt the Plan and qualify its Employees to become
    Participants thereunder by taking proper corporate action to adopt the Plan
    and making such contributions to the Trust Fund as the board of directors of
    the Related Employer or Subsidiary may require.

         (b) The Plan will terminate with respect to any Related Employer or
    Subsidiary that has adopted the Plan pursuant to this Section if the Related
    Employer or Subsidiary ceases to be a Related Employer or Subsidiary,
    revokes its adoption of the Plan by appropriate corporate action,
    permanently discontinues its contributions for its Employees, is judicially
    declared bankrupt, or makes a general assignment for the benefit of
    creditors. If the Plan is terminated or contributions are discontinued with
    respect to any Related Employer or Subsidiary, the provisions of Section
    11.4 shall apply to the interest in the Plan of persons who are, at the time
    of such event, the Employees of such Related Employer or Subsidiary.

                                       66
<PAGE>   72


         (c) The terms "Company" and "Employee" in the Plan shall include any
    Related Employer or Subsidiary that has adopted the Plan pursuant to this
    Section 12.14 and the Employees of such Related Employer or Subsidiary;
    provided, however, that the term "Company" shall not include any such
    Related Employer or Subsidiary where used in Articles VII or VIII of the
    Plan. The Administrator shall act as the agent for each Related Employer and
    Subsidiary that adopts the Plan for all purposes of administration thereof.

         (d) Amendments and supplements to the Plan by Coastal shall be binding
    on each Related Employer and Subsidiary which has adopted the Plan to the
    extent that each Related Employer or Subsidiary does not reject such
    amendment or supplement within ninety days of adoption by Coastal.

         (e) Each Related Employer or Subsidiary may, by action of its Board of
    Directors, adopt a supplement to the Plan which modifies provisions of the
    Plan, but such modification shall apply only to Employees of such Related
    Employer or Subsidiary. Any such supplement shall be effective only if
    approved by the Board of Directors of Coastal.

    12.15 Rules of Interpretation. The provisions of the Plan apply to all
Participants generally, unless a provision states otherwise. The provisions of
the Plan with respect to Salary Reduction Agreements, Salary Reduction
Contributions and Salary Reduction Contribution Accounts apply generally to both
ESOP Participants and Non-ESOP Participants unless the provision states
otherwise.

    12.16 Electronic Procedures. The Administrator has established an electronic
procedure that may be used for certain transactions under the Plan, including
certain Participant elections. Where an electronic procedure has been
established, a Participant may use the electronic procedure in lieu of
submitting a written form to the Administrator.

                                  ARTICLE XIII
                              TOP-HEAVY PROVISIONS

    13.1 Top-Heavy Status. Except as provided in Sections 13.4(b) and (c), the
provisions of this Article shall not apply to the Plan with respect to any Plan
Year for which the Plan is not Top-Heavy. If the Plan is or becomes Top-Heavy
in any Plan Year, the provisions of this Article XIII will supersede any
conflicting provisions elsewhere in the Plan.

    13.2 Definitions. For purposes of this Article XIII, the following words and
phrases shall have the meanings stated below unless a different meaning is
required by the context:

         (a) "Determination Date" means, with respect to any Plan Year: (i) the
    last day of the preceding Plan Year, or

                                       67
<PAGE>   73


    (ii) in the case of the first Plan Year of the Plan, the last day of such
    Plan Year.

         (b) "Key Employee" means an Employee meeting the definition of "key
    employee" contained in Section 416(i)(1) of the Code and the Regulations
    interpreting that Section. For purposes of determining whether an Employee
    is a Key Employee, the definition of compensation set forth in Section 13.6
    shall apply.

         (c) "Non-Key Employee" means any Employee who is not a Key Employee.

         (d) "Valuation Date" means with respect to a particular Determination
    Date, the most recent Valuation Date (as defined in Section 1.51) occurring
    within a twelve month period ending on the applicable Determination Date.

    13.3 Determination of Top-Heavy Status.

         (a) The Plan will be "Top-Heavy" with respect to any Plan Year if, as
    of the Determination Date applicable to such Year, the ratio of the Adjusted
    Balances in the accounts of Key Employees (determined as of the Valuation
    Date applicable to such Determination Date) to the Adjusted Balances in the
    accounts of all Employees (determined as of such Valuation Date) exceeds
    60%. For purposes of computing such ratio, and for all other purposes of
    applying and interpreting this paragraph (a): (i) the amount of the accounts
    of any Employee shall be increased by the aggregate distributions made with
    respect to such Employee under the Plan during the five-year period ending
    on any Determination Date; (ii) benefits provided under all plans which are
    aggregated pursuant to (b) of this Section must be considered; and (iii) the
    provisions of Section 416 of the Code and all Regulations interpreting that
    Section shall be applied. If any Employee has not performed services for the
    Company or any Related Employer at any time during the five-year period
    ending on any Determination Date, the balances of the accounts of such
    Employee shall not be taken into consideration for purposes of determining
    whether the Plan is Top-Heavy with respect to the Plan Year to which such
    Determination Date applies.

         (b) For purposes of determining whether the Plan is Top-Heavy, all
    qualified retirement plans maintained by the Company and each Related
    Employer shall be aggregated to the extent that such aggregation is required
    under the applicable provisions of Section 416 of the Code and the
    Regulations interpreting that Section. All other qualified retirement plans
    maintained by the Company and each Related Employer shall be aggregated only
    to the extent permitted by Section 416 of the Code and such Regulations and
    elected by the Company.

         (c) For purposes of determining whether the Plan is Top-Heavy, the
    Adjusted Balance of a Participant's account shall not include (i) the amount
    of a rollover contribution

                                       68
<PAGE>   74


    (or similar transfer) and earnings thereon attributable to a rollover
    contribution (or similar transfer) accepted after December 31, 1983,
    initiated by the Participant and derived from a plan not maintained by the
    Company or any Related Employer, or (ii) a distribution made with respect to
    an Employee which is a tax-free rollover contribution (or similar transfer)
    that is either not initiated by the Employee or that is made to a plan
    maintained by the Company or any Related Employer.

         (d) Solely for purposes of determining whether the Plan is Top-Heavy,
    the accrued benefit of any Non-Key Employee shall be determined (i) under
    the method, if any, that uniformly applies for accrual purposes under all
    plans of the Company or any Related Employer, or (ii) if there is no such
    method, as if such benefit accrued not more rapidly than the slowest accrual
    rate permitted under the fractional accrual rule of Section 411(b)(1)(C) of
    the Code. 13.4 Vesting.

         (a) If the Plan becomes Top-Heavy, the vested interest of a Participant
    in the portion of his Matching Contributions Account referred to in
    paragraph (b) below shall be determined in accordance with the following
    formula in lieu of the formula set forth in Section 5.6; provided, however,
    that the following formula for vesting of Top-Heavy Participants shall be at
    least as favorable at all points in time as the formula set forth in Section
    5.6:

<TABLE>
<CAPTION>
                               Vested        Forfeitable
           Years of Service  Percentage       Percentage
<S>                          <C>             <C>
           Less than 2             0%             100%
           2 but less than 3      20%              80%
           3 but less than 4      40%              60%
           4 but less than 5      60%              40%
           5 but less than 6      80%              20%
           6 or more             100%               0%
</TABLE>

           For purposes of the above schedule, years of Service shall include
    all years of Service required to be counted under Section 411(a) of the
    Code, disregarding all years of Service permitted to be disregarded under
    Section 411(a)(4) of the Code.

         (b) The vesting schedule set forth in paragraph (a) next above shall
    apply to all amounts allocated to a Participant's Matching Contributions
    Account while the Plan is Top-Heavy and during the period of time before the
    Plan becomes Top-Heavy. This vesting schedule shall not apply to the
    Matching Contributions Account of any Employee who does not have an Hour of
    Service after the Plan becomes Top-Heavy.

         (c) If the Plan becomes Top-Heavy and subsequently ceases to be
    Top-Heavy, the vesting schedule set forth in subsection (a) shall
    automatically cease to apply, and the

                                       69
<PAGE>   75


    vesting schedule set forth in Section 5.6 above shall automatically apply,
    with respect to all amounts allocated to a Participant's Matching
    Contributions Account for all Plan Years after the Plan Year with respect to
    which the Plan was last Top-Heavy. For purposes of this subsection (c), this
    change in vesting schedules shall only be valid to the extent that the
    conditions of Section 11.1 of the Plan and Section 411(a)(10) of the Code
    are satisfied.

    13.5 Minimum Contribution. For each Plan Year that the Plan is Top-Heavy,
the Company will contribute and allocate to the Salary Reduction Contribution
Account and Matching Contributions Account of each Participant who is a Non-Key
Employee and is employed by the Company on the last day of such Plan Year an
amount consisting of contributions and forfeitures equal to the lesser of (i) 3%
of such Employee's compensation (as defined in Section 13.6) for such Plan Year
and (ii) the largest percentage of Salary Reduction Contributions, Matching
Contributions and forfeitures, as a percentage of the Key Employee's
compensation (as defined in Section 13.6), allocated to the Salary Reduction
Contribution Account and Matching Contributions Account of any Key Employee for
such Year. The minimum contribution allocable pursuant to this Section 13.5 will
be determined without regard to any contributions by the Company for any
Employee under the Federal Social Security Act. A Non-Key Employee will not be
excluded from an allocation pursuant to this Section merely because his
compensation is less than a stated amount. A Non-Key Employee who has become a
Participant but who fails to complete at least 1,000 Hours of Service in a Plan
Year in which the Plan is Top-Heavy shall not be excluded from an allocation
pursuant to this Section. A Non-Key Employee who is a Participant in the Plan
and who declined to elect to have Salary Reduction Contribution made to his
Account for the Plan Year shall receive an allocation for that Plan pursuant to
this Section.

    13.6 Compensation. For any Plan Year in which the Plan is Top- Heavy, annual
compensation for purposes of this Article XIII shall have the meaning set forth
in Section 414(q)(7) of the Code. In no event shall compensation of a
Participant taken into account for purposes of this Article XIII for any Plan
Year exceed $160,000 (or such greater amount provided pursuant to Section
401(a)(17) of the Code).

    13.7 Collective Bargaining Agreements. The requirements of Section 13.4 and
13.5 shall not apply with respect to any employee included in a unit of
employees covered by a collective bargaining agreement between employee
representatives and the Company or a Related Employer if retirement benefits
were the subject of good faith bargaining between such employee representatives
and the Company or Related Employer.

    13.8 Limit on Annual Additions: Combined Plan-Limit.

         (a) If the Plan is determined to be Top-Heavy under Section 13.3,
    Section 5.5(d) shall be applied by substituting "1.0" for "1.25" in applying
    Section 415(e) of the Code to the Plan.

                                       70
<PAGE>   76


         (b) Subsection (a) above shall not apply if:

                     (1) Section 13.5 is applied by substituting "4%" for "3%,"
               and

                     (2) The Plan would not be Top-Heavy if "90%" were
               substituted for "60%" in Section 13.3.

         (c) If, but for this subsection (c), subsection (a) would begin to
    apply with respect to the Plan, the operation of subsection (a) shall be
    suspended with respect to an Employee so long as there are:

                     (1) No Company contributions, forfeitures or voluntary
               nondeductible contributions allocated with respect to such
               Employee, and

                     (2) No accruals under a qualified defined benefit plan for
               such Employee.

    13.9 Safe-Harbor Rule. Each Non-Key Employee covered under both a Top-Heavy
defined benefit plan and a Top-Heavy defined contribution plan maintained by the
Company or any Related Employer must receive the defined benefit minimum (as
defined in Section 416(c)(1) of the Code) under the provisions of the defined
benefit plan.

                                 ANR SUPPLEMENT
                                  Introduction

    The provisions of this Supplement are in addition to other provisions of the
Plan. This Supplement applies only to "ANR Employee" as defined herein. The
purpose of this Supplement is to set forth specific provisions associated with
the merger of the Coastal Plan and the "ANR Plan" as defined herein. The
effective date of the merger is January 1, 1986.

                                   Definitions

         1. "ANR Plan" means the American Natural Resources System Companies
    Employees' Savings Plan and the American Natural Resources System Companies
    Employees' Savings Plan Trust Agreement.

         2. "ANR Employee" means an employee of American Natural Resources
    Company and subsidiaries that are at least 50% owned directly or indirectly
    by American Natural Resources Company.

         3. "Coastal Plan" means The Coastal Corporation Thrift Plan and Trust.

         4. "Eligible ANR Employee" means a person who was either (a) a
    participant in the ANR Plan before 1986, or (b) an ANR Employee before 1986
    who would have been eligible to participate in the ANR Plan after 1985 if
    the ANR Plan had continued after 1985 without change as to plan provisions
    or

                                       71
<PAGE>   77


    adopting employers and, where applicable, an Employee who became an employee
    of a Related Employer or Subsidiary which adopted the Coastal Plan had
    instead remained as an ANR Employee.

                                     Merger

    As of January 1, 1986 the ANR Plan and the Coastal Plan merged. The terms of
the merged plans are contained in the Coastal Plan as amended to include this
Supplement.

                          Continued ANR Plan Provisions

         1. Vesting. Employer contributions to the ANR Plan for periods before
    1986 shall vest in accordance with the vesting schedule contained in the ANR
    Plan as of the end of 1985.

         2. Service. In applying the terms of the Coastal Plan, an ANR Employee
    shall receive credit for "Hours of Employment" and "Years of Service" (both
    terms as defined in the ANR Plan at the end of 1985) for periods before 1986
    on the same basis as such ANR Employee would have received credit under the
    ANR Plan. Service under the ANR Plan shall be counted for purposes of
    eligibility, vesting, contribution percentage and withdrawal under the
    merged plan.

         However, in determining the contribution level for periods after 1985
    and the vesting as of the end of 1985 pursuant to the five years of
    participation rule under the ANR Plan, the following periods are excluded:
    (i) periods of time during which the Participant was not eligible to
    contribute to the ANR Plan, and (ii) periods of time during which the
    Participant was eligible to contribute to the ANR Plan and declined to do
    so.

         3. Transition Contribution and Vesting. An Eligible ANR Employee who
    would have been eligible to contribute to the ANR Plan at a four percent
    rate during 1986, 1987 and/or 1988 was eligible to contribute at such rate
    for such period. The ANR Plan vesting schedule as in effect at the end of
    1985 shall apply to Employer matching contributions made pursuant to this
    provision to the extent such contributions exceed the amount such
    Participant would be eligible to contribute to the Coastal Plan in the
    absence of this transition rule.

         4. The following vesting and distribution provisions shall apply only
    to contributions and earnings before 1986:

              (a) Termination of Participation. Any Participant may, upon 20
         days written notice to the Administrator, terminate his participation
         in the Plan as of any Valuation Date. Upon such termination the
         Administrator shall direct the Trustee to distribute to the Participant
         an amount equal to the greater of (i) the total of his contributions
         under the Plan and (ii) an amount which bears the same ratio to the
         value of his Plan account as of such Valuation Date as the total of his
         contributions

                                       72
<PAGE>   78


         under the Plan bears to the total of such contributions and all
         Employer contributions to the Plan on his behalf. The amount
         distributable shall in no event exceed the value of the Participant's
         Plan account. Such a Participant shall continue to be considered a
         Participant for all purposes of the Plan except that he shall be
         ineligible to again elect to make contributions under the Plan for a
         period of twelve full accounting periods from the date of termination
         of his Participation.

              This provision shall be administered in accordance with
         administrative procedures in effect at the end of 1985.

              (b) Suspension of Participation. If a Participant shall, prior to
         termination of his employment, cease to meet the eligibility
         requirements of the Plan, his contributions and Employer contributions
         on his behalf shall be suspended during the period of his
         ineligibility. Distribution of such Participant's Plan account shall be
         deferred until termination of his employment with the Employer,
         whereupon the Administrator shall direct the Trustee to distribute the
         value of the Participant's Plan account whether or not such Participant
         would have otherwise been fully vested upon termination of employment.

              (c) Distribution Upon Termination of Employment Under
         Circumstances Resulting in Forfeiture of Employer Contributions. Upon
         termination of a Participant's employment under circumstances in which
         the Participant is not fully vested, the Administrator shall direct the
         Trustee to distribute to the Participant an amount equal to the greater
         of (i) the total of his contributions remaining in the Plan and (ii) an
         amount which bears the same ratio to the value of his Plan account as
         of the Valuation Date coincident with or next following his termination
         of employment as the total of his contributions remaining in the Plan
         bears to the total of such contributions remaining in the Plan and all
         employer contributions on his behalf remaining in the Plan. The amount
         distributable shall in no event exceed the value of the Participant's
         Plan account. The remaining portion of the Participant's Plan account
         shall be forfeited.

              (d) Transfer of Employment.

                       (i) A transfer of employment from one Related Employer or
                  Subsidiary to another shall not be considered as a termination
                  of employment.

                       (ii) If a Participant shall be transferred to the employ
                  of a Related Company or Subsidiary which has not elected to
                  participate in the Plan, distribution of such Participant's
                  Plan account shall be deferred until the date on which he is
                  no longer in the employ of any Related Company or Subsidiary,
                  whereupon the Administrator shall direct the Trustee to
                  distribute the value of the Participant's Plan account whether
                  or not such Participant would have otherwise been fully vested
                  upon termination of employment.

                                       73
<PAGE>   79


                          COASTAL MART, INC. SUPPLEMENT

    With respect to an individual employed by Coastal Mart, Inc. for a position
in a retail outlet, the term "Employee" includes an individual only if such
individual is classified as a Manager, Retail Outlet. This provision is
effective January 1, 1990.

                                 COAL SUPPLEMENT
                                  Introduction

    The purpose of this Supplement is to provide for participation in the Plan
on a modified basis for Employees of Coastal Coal Company, LLC (formerly ANR
Coal Company, LLC) and Related Employers and Subsidiaries which have adopted
this Supplement. The provisions of the Plan apply to such Employees except to
the extent this Supplement modifies any such Plan provisions.

    This Supplement became effective January 1, 1990, and was amended as of
January 1, 1999.

                                  Contributions

    Contributions for a Participant are eligible for Company Matching
Contributions to a maximum of two percent of Basic Compensation.

                                   Investment

    2.1 The Participant may have his Salary Reduction Contribution invested in
the Coastal Common Stock Fund, the Diversified Fund, the Index Fund and/or the
Interest Income Fund. The Participant must elect the investment allocation in
writing or by using the electronic enrollment procedure provided by the
Administrator. Allocations to the various funds must be in multiples of one
percent of the Salary Reduction Contributions. A minimum of one percent of the
Basic Compensation of a Participant who elects a Salary Reduction Contribution
must be allocated to the Coastal Common Stock Fund, provided, that such minimum
of one percent of Basic Compensation shall be reduced to the extent necessary to
make such minimum equal to a whole percentage of the Salary Reduction
Contribution of the Participant.

    2.2 Once each Plan Year, the Participant may direct that funds in the Salary
Reduction Contribution accounts be transferred among the Coastal Common Stock
Fund, the Interest Income Fund, the Diversified Fund and the Index Fund using
the procedure described in Plan Section 10.3(e).

                                       74
<PAGE>   80


                            COASTAL CANADA SUPPLEMENT

    The provisions of this Supplement apply only to Employees of Coastal Canada
Petroleum, Inc. ("Coastal Canada"). The provisions of this Supplement are in
addition to other provisions of the Plan and the provisions of the Plan apply to
such Employees, except to the extent this Supplement modifies Plan provisions.

    The purpose of this Supplement is to allow Employees of Coastal Canada to
participate in the Plan on a basis consistent with the laws of Canada and its
provinces.

                                  Contributions

    Salary Reduction Contributions are not permitted. Coastal Canada
Participants may only make After Tax Contributions to the Plan. Investment
Option

    The Coastal Common Stock Fund is the only investment option available to
Coastal Canada Participants.

                               MAVERICK SUPPLEMENT

    The provisions of this Supplement apply to persons who were employed by
Maverick Markets, Inc. ("Maverick") during April 1995 and who became Employees
of Related Employers on or about May 1, 1995 as a result of the acquisition by
Coastal Markets, Ltd. ("Coastal Markets") of certain assets of Maverick on May
1, 1995. The provisions of the Plan apply to such Employees, except to the
extent this Supplement modifies Plan provisions.

    The purpose of this Supplement is to provide credit for prior service for
determining eligibility of certain Employees of Coastal Markets and Coastal
Mart, Inc.

    Section 1.17 of the Plan with respect to Employees who were former employees
of Maverick is modified to read as follows:

    "Entry Date" shall be the earlier of (a) the date determined pursuant to
provisions of the Plan, excluding this Supplement; or (b) the date which is both
(i) 90 or more days after May 1, 1995 and (ii) for purposes of determining
eligibility to participate in the Plan only, determined by crediting Hours of
Service with respect to periods of employment with Maverick prior to May 1,
1995.

                         ST. HELENS FACILITY SUPPLEMENT

                                    ARTICLE I

                                  INTRODUCTION

    This Supplement is referred to as the "St. Helens Facility Supplement." The
purpose of this Supplement is to provide for prior service credit under the Plan
for Participants who were

                                       75
<PAGE>   81


formerly employees of Chevron Chemical Company at the St. Helens Facility
located in St. Helens, Oregon and who became employees of Coastal Refining &
Marketing, Inc. or a Related Employer on or about January 24, 1996.

    The provisions of the St. Helens Facility Supplement apply in lieu of
inconsistent or contrary provisions contained in the Plan (excluding this
Supplement) with respect to persons to whom this Supplement applies.

    Terms used in this Supplement which are defined in the Plan have the same
meaning in this Supplement unless such terms are defined differently for
purposes of this Supplement. The definition of terms defined in this Supplement
apply only to this Supplement and not to other parts of the Plan.

                                   ARTICLE II

                              PRIOR SERVICE CREDIT

    2.1 In applying the terms of the Plan, an Employee who was formerly an
employee of Chevron Chemical Company, a Delaware corporation, and who became an
employee of the Company or a Related Employer on or about January 24, 1996 in
conjunction with the acquisition of the St. Helens plant located in St. Helens,
Oregon, shall receive credit for periods of immediate and continuous service
prior to January 24, 1996 up to a maximum of seven years for purposes of
determining eligibility to participate, vesting and calculating Company matching
contributions. However, Employees shall not receive credit for prior service for
purposes of calculating benefit accruals.

                                DERBY SUPPLEMENT

                                  Introduction

    This Supplement is referred to as the "Derby Supplement." The provisions of
this Supplement apply only to Participants in the Derby Refining Company Thrift
Plan, as in effect on December 31, 1997 (the "Derby Refining Plan") with
Adjusted Balances as of December 31, 1997. Additional contributions by such
Participants are not permitted. The provisions of the Plan apply to such
Participants except to the extent this Supplement modifies Plan provisions.

    In addition to Participants with Adjusted Balances on December 31, 1997,
Article III of this Supplement shall apply to any former Participant with an
Adjusted Balance that is subject to reinstatement pursuant to the provisions of
Article III of this Supplement.

    Upon the merger of the Derby Refining Plan into the Plan, each Participant
in the Plan, as merged, shall have account balances in the Plan equal to the sum
of the account balances the Participant had in the Plan and the Derby Refining
Plan immediately prior to the merger.

                                       76
<PAGE>   82


                                    ARTICLE I
                                  Participation

    Individuals with Adjusted Balances are eligible to participate.

                                   ARTICLE II
                                  Contributions

    No contributions are permitted under this Supplement.

                                   ARTICLE III
                             Payments on Termination

    Upon the termination of a Participant's employment with the Company for any
reason other than death, the Participant may request a withdrawal of the
Adjusted Balance of his After Tax Contribution Account, if any, and the vested
portion of the Adjusted Balance of his Matching Contributions Account, if any,
in a method provided in the Plan. The vested portion of a Participant's Matching
Contributions Account shall be determined in accordance with Plan provisions.

    The portion of a Participant's Adjusted Balance of his Matching
Contributions Account which is not vested when the Participant terminates
employment with the Company, Subsidiaries and Related Employers shall be
forfeited but shall remain subject to reinstatement and further vesting under
provisions of the Plan if the Participant is reemployed by the Company, a
Subsidiary or a Related Employer prior to the time the Participant incurs five
consecutive one-year Breaks in Service.

    Upon reemployment prior to incurring five consecutive one-year Breaks in
Service, the dollar value of the forfeited amount shall be restored without
adjustment for gains or losses and shall be subject to further vesting on a
prospective basis pursuant to Plan provisions. In computing future vesting with
respect to such reinstated amount, such reinstated amount shall be multiplied by
a factor described in the following sentence prior to being multiplied by the
percentage of increased vesting so as to adjust the reinstated amount to reflect
the amount which would have vested if the full Adjusted Balance in his Matching
Contributions Account were being multiplied by the vesting percentage. The
factor described in the preceding sentence is a fraction, the numerator of which
is one and the denominator of which is the fractional portion of such Adjusted
Balance in his matching Contribution Account prior to the distribution
represented by the reinstated amount. The preceding applies to a Participant who
terminated employment after March 31, 1987.

    Any amount forfeited shall be applied to reduce future Matching
Contributions to the Plan.

                                       77
<PAGE>   83


                                   ARTICLE IV
                                   Withdrawals

    4.1 Withdrawals from Participant Contribution Account. Subject to the
approval of the Administrator based on the financial necessity for the
withdrawal, a Participant shall have the right to withdraw, in whole or in part,
the value of his contributions into the Trust to the date of withdrawal under
the Plan, exclusive of any earnings thereon, provided that such withdrawals are
effective as of a Valuation Date and the Participant gives written notice
thereof to the Administrator at least ten (10) days prior to the effective date
of the withdrawal. An Employee who has participated in the Plan for at least
five (5) years, may withdraw not more than the value of his contributions into
the Trust on the date of withdrawal, except for the value of those contributions
during the preceding twelve (12) months, without suffering any penalties. In the
event such Participant should withdraw any portion of the value of his
contributions into the Trust during the period of twelve (12) months preceding
the date of withdrawal, he shall not be permitted to contribute to the Trust for
a period of twenty-six (26) weeks from the date of withdrawal. An Employee, who
has participated in the Plan for less than five (5) years, may withdraw the
value of his contributions into the Trust to the date of withdrawal, provided he
suffers certain penalties. In the event such Participant withdraws not more than
fifty percent (50%) of the value of his contributions into the Trust to the date
of withdrawal, he shall not be permitted to contribute to the Trust for a period
of thirteen (13) weeks from the date of withdrawal. In the event such
Participant should withdraw more than fifty percent (50%) of the value of his
contributions into the Trust to the date of withdrawal, he shall not be
permitted to contribute to the Trust for a period of twenty-six (26) weeks from
the date of withdrawal. During the period the Participant is not permitted to
contribute to the Trust, the Company shall make no contributions to the Trust
for his account. The Administrator shall not approve more than one withdrawal
for a Participant during any Plan Year. In no event will a Participant suffer
any forfeitures of amounts in his account as a result of withdrawals permitted
under this Section.

    4.2 Ten-Year Withdrawal. (a) Upon completion of each ten (10) years of
Active Participation, a Participant may withdraw any portion of his Adjusted
Balance, provided he files an irrevocable written election with the
Administrator at least ninety (90) days prior to the completion of such ten (10)
year period. A Participant may continue to contribute to the Trust after a ten
(10) year withdrawal.

       (b) At any time after completion of ten (10) years of Active
   Participation in the Plan, a Participant may withdraw any portion of such
   Participant's entire Adjusted Balance, provided that such Participant may not
   contribute to the Trust for a period of six (6) months following the
   Valuation Date applicable to such withdrawal.

       (c) The following requirements apply to withdrawals pursuant to this
   section.

                                       78
<PAGE>   84


                  (i) Withdrawals are effective on a Valuation Date, provided
         that the Administrator receives a written withdrawal request at least
         ten (10) days prior to the Valuation Date and, for a withdrawal
         pursuant to subsection (a), at least ninety (90) days prior to
         completion of the ten (10) year period.

                  (ii) Only one withdrawal may be made per calendar year, and

                  (iii) The Company shall not make any contributions to the
         Trust for the account of the Participant with respect to any period
         that the Participant is not permitted to contribute to the Trust.

       (d) Unless the Participant specifies otherwise, withdrawals shall be made
   first from the portion of the Account Balances attributable to After Tax
   Contributions of the Participant, and next from the portion attributable to
   the Company Matching Contributions which are eligible for withdrawal.

                                    ARTICLE V
                              Description of Funds

    5.1 The Coastal Common Stock Fund. This Fund shall be invested in Common
Stock. Cash dividends on Common Stock shall be reinvested in the Coastal Common
Stock Fund.

    5.2 Government Bond Fund. This Fund is an unsegregated fund which is
invested, at the discretion of the Trustee, in obligations issued or guaranteed
by the United States of America or by any agency or instrumentality thereof, and
in savings deposits in any bank (including the Trustee bank) to the extent they
are fully guaranteed by the Federal Deposit Insurance Corporation.

    5.3 Diversified Fund. This Fund is an unsegregated fund invested, at the
discretion of the Trustee, in common or capital stock of issuers (other than
Coastal or any subsidiary of Coastal), notes, bonds or debentures or preferred
stocks whether or not convertible into eligible common or capital stocks, and
other similar types of investments, although the same may not be legal
investments for trustees under the laws applicable thereto, and which may be
temporarily invested in obligations of the United States of America or in
commercial paper (including participation in pooled commercial paper accounts).

    5.4 Index Fund. The Index Fund is as described in the Plan.

    5.5 The Coastal Preferred Stock Fund. This Fund is as described in the Plan.

    5.6 The Valero Energy Corporation Stock Fund. This fund is as described in
the Plan.

    5.7 PG&E Stock Fund. This fund is as described in the Plan.

                                       79
<PAGE>   85


    5.8 Intelect Stock Fund. This fund is as described in the Plan.

    5.9 Coastal Class A Common Stock Fund. This fund is as described in the
Plan.

                                   ARTICLE VI
                                Company Guarantee

    The Company guarantees to each Participant that through withdrawals and
final settlement, he will receive an amount from the Trust which is at least
equal to the amount he has contributed to the Trust. This guarantee does not
apply to Company contributions or any earnings on either Participant or Company
contributions.

                                CONOCO SUPPLEMENT

    The provisions of this Supplement apply to persons who became Employees of
Related Employers, including Coastal Oil & Gas Corporation and Coastal Field
Services Company on November 2, 1998 in conjunction with a transaction which
included the acquisition of certain oil and gas assets from Conoco, Inc. and who
had been employed at certain facilities which were part of the acquisition
immediately prior to the effective date of the transaction ("Conoco Employees").
The provisions of the Plan apply to the Conoco Employees, except to the extent
this Supplement modifies Plan provisions.

    The purpose of this Supplement is to provide credit for prior service only
for purposes of determining eligibility to participate in the Plan for the
Conoco Employees. Section 1.21 of the Plan with respect to Employees is modified
to read as follows only for purposes of determining eligibility to participate
in the Plan:

    "Entry Date" shall be the earlier of (a) the date determined pursuant to
provisions of the Plan, excluding this Supplement; or (b) the date determined by
crediting Hours of Service with respect to periods of employment with Conoco,
Inc. and its affiliates prior to November 2, 1998."

    The effective date of this Supplement is November 2, 1998.

                               BLUEBELL SUPPLEMENT

    The provisions of this Supplement apply to persons who became Employees of a
Related Employer, including Coastal Field Services Company on March 26, 1999 in
conjunction with a transaction which included the acquisition of gas processing
facilities from Gary- Williams Energy Corporation and who had been employed at
facilities which were part of the acquisition immediately prior to the effective
date of the transaction ("Bluebell Employees"). The provisions of the Plan apply
to the Bluebell Employees except to the extent this Supplement modifies Plan
provisions.

                                       80
<PAGE>   86


    The purpose of this Supplement is to provide credit for prior service only
for purposes of determining eligibility to participate in the Plan for Bluebell
Employees.

    Section 1.21 of the Plan with respect to Bluebell Employees is modified to
read as follows only for purposes of eligibility to participate in the Plan.

        "Entry  Date"  shall  be  the earlier  of  (a)  the  date
determined  pursuant  to provisions of the Plan,  excluding  this
Supplement;  or  (b)  the date determined by crediting  Hours  of
Service  with respect to periods of employment with Gary-Williams
Energy Corporation immediately prior to March 26, 1999.

    The effective date of this Supplement is March 26, 1999.

                              RENSSELAER SUPPLEMENT

    The provisions of this Supplement apply to persons who became Employees of a
Related Employer, including Coastal Power Company on March 15, 1999 in
conjunction with a transaction which included the acquisition of electrical
power generating facilities from LG&E-Westmoreland Rensselaer, a California
general partnership, and who had been employed at facilities which were part of
the acquisition immediately prior to the effective date of the transaction
("Rensselaer Employees"). The provisions of the Plan apply to the Rensselaer
Employees except to the extent this Supplement modifies Plan provisions.

    The purpose of this Supplement is to provide credit for prior service only
for purposes of determining eligibility to participate in the Plan for
Rensselaer Employees.

    Section 1.21 of the Plan with respect to Rensselaer Employees is modified to
read as follows only for purposes of eligibility to participate in the Plan.

        "Entry  Date"  shall  be  the earlier  of  (a)  the  date
determined  pursuant  to provisions of the Plan,  excluding  this
Supplement;  or  (b)  the date determined by crediting  Hours  of
Service  with  respect  to  periods  of  employment  with   LG&E-
Westmoreland Rensselaer immediately prior to March 15, 1999.

    The effective date of this Supplement is March 15, 1999.

                          TRANSCANADA - U.S. SUPPLEMENT

    The provisions of this Supplement apply to persons who became Employees of a
Related Employer, including Coastal Field Services Company, on or after December
30, 1999 in conjunction with a transaction that included the acquisition of gas
processing facilities from TransCanada Gas Processing USA, Inc. and who had been
employed at facilities which were part of the acquisition

                                       81
<PAGE>   87


immediately prior to the effective date of the transaction ("TransCanada - U.S.
Employees"). The provisions of the Plan apply to the TransCanada - U.S.
Employees except to the extent this Supplement modifies Plan provisions.

    The purpose of this Supplement is to provide credit for prior service only
for purposes of determining eligibility to participate and the level of Matching
Contributions in the Plan for TransCanada - U.S. Employees.

    1. Eligibility. Section 1.21 of the Plan with respect to TransCanada - U.S.
Employees is modified to read as follows only for purposes of determining
eligibility to participate in the Plan.

    2. "Entry Date" shall be the earlier of (a) the date determined pursuant to
provisions of the Plan, excluding this Supplement; or (b) the date determined by
crediting Hours of Service with respect to periods of employment with
TransCanada Gas Processing USA, Inc. immediately prior to December 30, 1999, or
such date the Participant commences employment with a Related Employer, if the
Participant commences such employment after December 30, 1999.

    3. Maximum Contribution. Section 3.4(a) of the Plan with respect to
TransCanada - U.S. Employees is modified to read as follows only for purposes of
determining the level of the Participant's contributions:

                  (a) The total percentage of Basic Compensation contributed to
         the Plan for a Participant pursuant to both a Salary Reduction
         Agreement and an After Tax Contribution election and eligible for
         Matching Contributions shall not exceed two percent during the first
         twenty-four months of Active Participation, four percent during the
         twenty-fifth through the forty-eighth month of Active Participation,
         six percent during the forty-ninth through the seventy-second month of
         Active Participation and eight percent for months of Active
         Participation thereafter; provided, however, that Hours of Service with
         respect to periods of employment with TransCanada Gas Processing USA,
         Inc. immediately prior to December 30, 1999, or such date the
         Participant commences employment with a Related Employer if the
         Participant commences such employment after December 30, 1999, shall be
         included in the calculation of the number of months of Active
         Participation only for the purpose of determining Matching
         Contributions.

    The effective date of this Supplement is December 30 1999.

                        TRANSCANADA - CARIBOU SUPPLEMENT

    The provisions of this Supplement apply to persons who became Employees of a
Related Employer, including Coastal Canada Field Services Inc., on or after June
1, 2000 in conjunction with a

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transaction that included the acquisition of the TransCanada Caribou Gas Plant
(the "Plant") from NovaGas Canada Limited Partnership and who had been employed
at the Plant immediately prior to the effective date of the transaction
("TransCanada - Caribou Employees"). The provisions of the Plan apply to the
TransCanada B Caribou Employees except to the extent this Supplement modifies
Plan provisions.

    The purpose of this Supplement is to provide credit for prior service only
for purposes of determining eligibility to participate and the level of Matching
Contributions in the Plan for TransCanada - Caribou Employees and to allow
TransCanada B Caribou Employees to participate in the Plan on a basis consistent
with the laws of Canada and its provinces.

       1. Eligibility. Section 1.21 of the Plan with respect to TransCanada -
   Caribou Employees is modified to read as follows only for purposes of
   determining eligibility to participate in the Plan.

       2. "Entry Date" shall be the earlier of (a) the date determined pursuant
   to provisions of the Plan, excluding this Supplement; or (b) the date
   determined by crediting Hours of Service with respect to periods of
   employment with NovaGas Canada Limited Partnership immediately prior to June
   1, 2000, or such date the Participant commences employment with a Related
   Employer if the Participant commences such employment after June 1, 2000.

       3. Contributions.

       (a) Salary Reduction Contributions are not permitted. TransCanada -
   Caribou Employees may only make After Tax Contributions to the Plan.

       (b) Section 3.4(a) of the Plan with respect to TransCanada - Caribou
   Employees is modified to read as follows only for purposes of determining the
   level of the Participant's contributions:

                  (a) The total percentage of Basic Compensation contributed to
         the Plan for a Participant pursuant to an After Tax Contribution
         election and eligible for Matching Contribution shall not exceed two
         percent during the first twenty-four months of Active Participation,
         four percent during the twenty-fifth through the forty-eighth month of
         Active Participation, six percent during the forty-ninth through the
         seventy-second month of Active Participation and eight percent for
         months of Active Participation thereafter; provided, however, that
         Hours of Service with respect to periods of employment with NovaGas
         Canada Limited Partnership immediately prior to June 1, 2000, or such
         date the Participant commences employment with a Related Employer if
         the Participant commences such employment after June 1, 2000, shall be
         included in the calculation of the number of months of Active
         Participation only for the purpose of determining Matching
         Contributions.

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       4. Investment Option.

       The Coastal Common Stock Fund is the only investment option available to
   TransCanada - Caribou Employees.

   The effective date of this Supplement is June 1, 2000.

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