Document:

Document

Exhibit 10.69    

1-26-15  

CANADIAN PACIFIC PENSION PLAN  
FOR  
U.S. MANAGEMENT EMPLOYEES  

(Incorporating All Amendments Adopted
Through December 31, 2014)   

          CANADIAN PACIFIC PENSION PLAN   
               FOR  
          U.S. MANAGEMENT EMPLOYEES  
                       (Incorporating All Amendments Adopted through December 31, 2014)  

Table of Contents  
                                                                                                                                     
									
			Page
	ARTICLE I	Purpose........................................................................................................	1
	Sec. 1.1	Name of Plan...............................................................................................	1
	Sec. 1.2	Purpose........................................................................................................	1
	Sec. 1.3	Effective Date..............................................................................................	1
	Sec. 1.4	Company.....................................................................................................	1
	Sec. 1.5	Administrator...............................................................................................	1
	Sec. 1.6	Construction and Applicable Law...............................................................	1
	Sec. 1.7	Benefit Determinations and Applicability of Amendments........................	2
			
	ARTICLE II 	MISCELLANEOUS DEFINITIONS..........................................................	5
	Sec. 2.1	Active Participant........................................................................................	5
	Sec. 2.2 	Actuary........................................................................................................	5
	Sec. 2.3	Affiliate.......................................................................................................	5
	Sec. 2.4	Board...........................................................................................................	5
	Sec. 2.5	Common Control.........................................................................................	5
	Sec. 2.6	Fund.............................................................................................................	5
	Sec. 2.7	Funding Agency..........................................................................................	5
	Sec. 2.8	Leased Employee........................................................................................	5
	Sec. 2.9 	Named Fiduciary.........................................................................................	5
	Sec. 2.10 	Participating Employer................................................................................	6
	Sec. 2.11 	Plan Year.....................................................................................................	6
	Sec. 2.12  	Predecessor Employer.................................................................................	6
	Sec. 2.13	Qualified Employee.....................................................................................	7
	Sec. 2.14	Successor Employer....................................................................................	8
			
	ARTICLE III 	SERVICE DEFINITIONS AND RULES...................................................	9
	Sec. 3.1	Employment Commencement Date.............................................................	9
	Sec. 3.2	Termination of Employment.......................................................................	9
	Sec. 3.3	Hour of Service...........................................................................................	9
	Sec. 3.4	Eligibility Computation Period...................................................................	11
	Sec. 3.5	Year of Eligibility Service...........................................................................	11
	Sec. 3.6	Year of Vesting Service..............................................................................	11
	Sec. 3.7	Year of Credited Service.............................................................................	12
			
	ARTICLE IV	BENEFIT DEFINITIONS...........................................................................	15

									
	Sec. 4.1	Normal Pension...........................................................................................	15
	Sec. 4.2	Normal Retirement......................................................................................	15
	Sec. 4.3	Late Retirement...........................................................................................	15
	Sec. 4.4	Early Retirement..........................................................................................	15
	Sec. 4.5	Vested Termination.....................................................................................	15
	Sec. 4.6	Accrued Monthly Pension...........................................................................	15
	Sec. 4.7	Certified Earnings........................................................................................	17
	Sec. 4.8	Final Average Monthly Earnings................................................................	19
	Sec. 4.9	Normal Retirement Age..............................................................................	20
	Sec. 4.10	Early Retirement Reduction Factor.............................................................	20
	Sec. 4.11	Vested Termination Reduction Factor........................................................	20
	Sec. 4.12	Actuarial Equivalent....................................................................................	20
			
	ARTICLE V	PLAN PARTICIPATION...........................................................................	22
	Sec. 5.1	Entry Date....................................................................................................	22
	Sec. 5.2	Eligibility for Participation..........................................................................	22
	Sec. 5.3	Duration of Participation.............................................................................	23
	Sec. 5.4	No Guarantee of Employment.....................................................................	23
			
	ARTICLE VI  	PENSION BENEFITS................................................................................	24
	Sec. 6.1	Pension on Normal Retirement...................................................................	24
	Sec. 6.2	Pension on Late Retirement........................................................................	24
	Sec. 6.3	Pension on Early Retirement.......................................................................	24
	Sec. 6.4	Pension on Vested Termination..................................................................	24
	Sec. 6.5	Deduction for Other Pension Payments......................................................	25
	Sec. 6.6	Amendments Affecting Pension Rights......................................................	25
	Sec. 6.7	Suspension of Benefits and Effect of Reemployment.................................	25
	Sec. 6.8	Nonforfeitable Benefits...............................................................................	27
			
	ARTICLE VII 	DEATH BENEFITS AND OPTIONAL SETTLEMENTS........................	28
	Sec. 7.1	Qualified Preretirement Survivor Annuity..................................................	28
	Sec. 7.2	Qualified Joint and Survivor Annuity.........................................................	29
	Sec. 7.3	Optional Settlements...................................................................................	31
	Sec. 7.4	Lump Sum Death Benefit............................................................................	32
	Sec. 7.5	Definition of Spouse and Marriage.............................................................	33
			
	ARTICLE VIII  	MISCELLANEOUS BENEFIT PROVISIONS..........................................	34
	Sec. 8.1 	Commencement Date for Pension Payments.............................................. 	34
	Sec. 8.2	Automatic Cash –Outs and Default Rollovers............................................	35
	Sec. 8.3	No Other Benefits........................................................................................	36
	Sec. 8.4	Source of Benefits....................................................................................... 	36
	Sec. 8.5	Incompetent Payee......................................................................................	36
	Sec. 8.6	Assignment or Alienation of Benefits.........................................................	37

									
	Sec. 8.7	Payment of Taxes........................................................................................ 	37
	Sec. 8.8	Conditions Precedent................................................................................... 	37
	Sec. 8.9	Company Directions to Funding Agency....................................................	37
	Sec. 8.10	Effect on Unemployment Compensation.................................................... 	38
	Sec. 8.11	Benefits Not Increased by Actuarial Gains................................................. 	38
	Sec. 8.12	Maximum Limitations on Benefits.............................................................. 	38
	Sec. 8.13	Special Benefit Limitation on Distributions to Highly Compensated Employees	39
	Sec. 8.14	Distributions Made in Accordance With Code Section 401(a)(9).............. 	40
	Sec. 8.15	Rollovers and Transfers to Other Eligible Plans......................................... 	40
	Sec. 8.16	Deemed Cash-Out Upon Termination of Employment............................... 	41
	Sec. 8.17	Retroactive Annuity Starting Dates............................................................. 	41
	Sec. 8.18	Benefits of Reemployed Veterans............................................................... 	42
	Sec. 8.19	Limitations Under Code §436..................................................................... 	43
			
	ARTICLE IX  FUND	FUND..........................................................................................................	45
	Sec. 9.1 	Composition................................................................................................	45
	Sec. 9.2	Funding Agency.......................................................................................... 	45
	Sec. 9.3	Compensation and Expenses of Funding Agency....................................... 	45
	Sec. 9.4	Funding Policy............................................................................................ 	45
	Sec. 9.5	Securities and Property of Participating Employers....................................	45
	Sec. 9.6	No Diversion............................................................................................... 	46
	Sec. 9.7	Employer Contributions.............................................................................. 	46
			
	ARTICLE X 	ACTUARY..................................................................................................	47
	Sec. 10.1 	Appointment................................................................................................	47
	Sec. 10.2	Responsibilities...........................................................................................	47
	Sec. 10.3	Compensation..............................................................................................	47
	Sec. 10.4	Resignation, Removal and Successor.......................................................... 	47
			
	ARTICLE XI 	ADMINISTRATION OF PLAN................................................................. 	48
	Sec. 11.1 	Administration by Company....................................................................... 	48
	Sec. 11.2	Certain Fiduciary Provisions....................................................................... 	48
	Sec. 11.3	Discrimination Prohibited........................................................................... 	49
	Sec. 11.4	Evidence......................................................................................................	49
	Sec. 11.5	Correction of Errors..................................................................................... 	49
	Sec. 11.6	Records........................................................................................................	49
	Sec. 11.7	General Fiduciary Standard......................................................................... 	49
	Sec. 11.8	Prohibited Transactions............................................................................... 	50
	Sec. 11.9	Claims Procedure........................................................................................	50
	Sec. 11.10	Bonding.......................................................................................................	50
	Sec. 11.11	Waiver of Notice......................................................................................... 	50
	Sec. 11.12	Agent For Legal Process............................................................................. 	50

									
	Sec. 11.13	Indemnification...........................................................................................	50
			
	ARTICLE XII  	AMENDMENT, TERMINATION, MERGER........................................... 	51
	Sec. 12.1 	Amendment................................................................................................. 	51
	Sec. 12.2	Discontinuance of Joint Participation in Plan by a Participating Employer	51
	Sec. 12.3	Reorganization of Participating Employers................................................. 	51
	Sec. 12.4	Termination.................................................................................................	52
	Sec. 12.5	Partial Termination...................................................................................... 	54
	Sec. 12.6	Merger, Consolidation, or Transfer of Plan Assets.....................................	55
	Sec. 12.7	Deferral of Distributions............................................................................. 	55
			
	ARTICLE XIII  	MISCELLANEOUS PROVISIONS........................................................... 	56
	Sec. 13.1 	Insurance Company Not Responsible for Validity of Plan......................... 	56
	Sec. 13.2	Headings......................................................................................................	56
	Sec. 13.3	Capitalized Definitions................................................................................ 	56
	Sec. 13.4	Gender.........................................................................................................	56
	Sec. 13.5	Use of Compounds of Word Here............................................................... 	56
	Sec. 13.6	Construed as a Whole.................................................................................. 	56
			
	ARTICLE XIV  	TOP-HEAVY PLAN PROVISIONS.......................................................... 	57
	Sec. 14.1 	Effective Date.............................................................................................. 	57
	Sec. 14.2	Key Employee Defined............................................................................... 	57
	Sec. 14.3	Determination of Top_Heavy Status........................................................... 	57
	Sec. 14.4	Minimum Accrued Benefit.......................................................................... 	59
	Sec. 14.5	Vesting Schedule......................................................................................... 	60
	Sec. 14.6	Definition of Employer............................................................................... 	61
	Sec. 14.7	Exception For Collective Bargaining Unit..................................................	61
	Sec. 14.8	Special Rule for Automatic Cash Outs of Partially Vested Benefits.......... 	61
			
	APPENDIX A	.....................................................................................................................	62
	APPENDIX B	.....................................................................................................................	64
	APPENDIX C	.....................................................................................................................	66
	APPENDIX D	.....................................................................................................................	69

CANADIAN PACIFIC PENSION PLAN  
FOR  
U.S. MANAGEMENT EMPLOYEES  

(Incorporating All Amendments Adopted through December 31, 2014)  

ARTICLE I  

GENERAL   

     Sec. 1.1     Name of Plan.  The name of the pension plan set forth herein is the Canadian Pacific Pension Plan for U.S. Management Employees. It was previously named the Canadian Pacific Railway Pension Plan for U.S. Management Employees. Prior to that the Plan was known as the “CP Rail System Funded Pension Plan for U.S. Management Employees.” Prior to that it was known as the “Soo Line Railroad Funded Pension Plan,” and before that as the “Pension Plan for Eligible Officers and Employees of Minneapolis, St. Paul & Sault Ste. Marie Railroad Company.” It is sometimes herein referred to as the “Plan.”  

     Sec. 1.2     Purpose.  The Plan has been established so that eligible employees will have a source of retirement income in addition to the other sources of retirement income available to them.  

     Sec. 1.3     Effective Date.  The “Effective Date” of the Plan is December 31, 1956, the date as of which the Plan was established. This restatement of the Plan incorporates all amendments made effective through December 31, 2014.  

     Sec. 1.4     Company.  The “Company” is Soo Line Railroad Company, a Minnesota  corporation, and any Successor Employer thereof. The Company was Minneapolis, St. Paul &  Sault Ste. Marie Railroad Company for the period commencing December 31, 1956 and ending  December 31, 1960.  

     Sec. 1.5     Administrator.  The Company is the “Administrator” of the Plan for purposes  of ERISA.  

     Sec. 1.6     Construction  and  Applicable  Law.    The Plan is intended to meet the  requirements for qualification under Code section 401(a). The Plan is also intended to be in full  compliance with applicable requirements of ERISA. The Plan shall be administered and construed consistent with said intent. It shall also be construed and administered according to the  laws of the State of Minnesota to the extent that such laws are not preempted by the laws of the  United States of America. All controversies, disputes, and claims arising hereunder shall be  submitted to the United States District Court for the District of Minnesota, except as otherwise  provided in any trust agreement entered into with a Funding Agency. All references herein to the “Internal Revenue Code” or “Code” are to the Internal Revenue Code of 1986 as from time  to time amended. All references herein to the “Employee Retirement Income Security Act” or    

“ERISA” are to the Employee Retirement Income Security Act of 1974 as from time to time  amended.  

     Sec. 1.7     Benefit Determinations and Applicability of Amendments.  Except as may be specifically provided herein to the contrary, benefits under the Plan attributable to service prior to a Participant's Termination of Employment shall be determined and paid in accordance with  the provisions of the Plan as in effect as of the date the Termination of Employment occurred. Also, and except as may be specifically provided herein to the contrary, any amendment to the Plan shall apply only to benefits accrued by individuals who are employees of a Participating Employer or Affiliate on or after the effective date of such amendment. Notwithstanding the foregoing:  

(a)     Certain provisions of the Plan have specific effective dates, which are noted in the particular provisions.  

(b)     Certain provisions of the 1994 amendment and restatement of the Plan were  required as a result of federal statutes and regulations. In cases where these new legal requirements were applicable prior to January 1, 1994, the Plan has been and will be applied and interpreted in a manner that is consistent with a good faith interpretation of the applicable legal requirements.  

(c)     Certain provisions of the 1999 and 2002 amendment and restatements of the Plan  are intended to reflect and comply with certain provisions of (and legal changes  made by) the General Agreement on Trades and Tariffs contained in the Uruguay Round  Agreements Act, P.L. 103-465 (“GATT”), the Small Business Job Protection Act of 1996, P.L. 104-88 (“SBJA”) and the Taxpayer Relief Act of 1997, P.L.105-34 (“TRA 97”) and the Community Renewal Tax Relief Act of  2000 (“CRA”). In the absence of explicit regulatory guidance, the Plan has been, and will be applied and interpreted in a manner that is consistent with a good faith interpretation of the legal requirements of the  above-referenced Acts. The January 1, 2002 restatement of the Plan (dated “11-14-02”) was the subject of a  favorable determination letter dated November 26, 2002 which confirmed that the provisions of the Plan meet the qualification requirements of GATT, SBJA, USERRA, TRA 97 and CRA.    

(d)     Notwithstanding any provision of the Plan to the contrary, contributions, benefits  and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Code and the Uniformed Services Employment and Reemployment Rights Act of 1994, P.L. 103-353 (“USERRA”), as amended from time to time. In the absence of explicit regulatory guidance, the Plan will be applied and interpreted in a manner that is consistent with a good faith interpretation of USERRA. The provisions of USERRA became effective with respect to the Plan as of December 12, 1994.  

(e)     This working copy of  the Plan, dated “1-26-10”, incorporates good faith  amendments made under the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). These amendments were incorporated in the January 1, 2002 restatement of the Plan (dated “11-14-02”) and were adopted on January 31, 2003.  Unless stated otherwise, or required by law, the effective date of the  EGTRRA amendments was January 1, 2002. The Plan has been applied and interpreted in a manner that is consistent with a good faith interpretation of the requirements of EGTRRA.  

(f)     The working copy of the Plan, dated “1-26-10”, also incorporated good faith  amendments intended to reflect and comply with the provisions of the Pension  Protection Act of 2006 (“PPA”), and the Worker, Retiree and Employer Recovery Act of 2008 (“WRERA”), the Heroes Earnings Assistance and Relief Act of 2008 (the “HEART  Act”) and the final Code §415 regulations issued by the Department of Treasury on April 5, 2007. Unless stated otherwise or required by law, the effective date of the PPA and WRERA amendments is January 1, 2008. Unless otherwise stated or required by law, the effective date of the HEART amendments was January 1, 2007. The Plan has been, and shall be, applied and  interpreted in a manner that is consistent with a good faith interpretation of the requirements of the PPA.  

(g)     The working copy of the Plan document, dated “1-26-10”, included all  amendments adopted through December 31, 2009. These amendments included the following:  

(1)     Amendments dated “8-25-05”, which were adopted September 7, 2005,  and included the default rollover provisions effective March 28, 2005.  

(2)     Amendments dated “1-20-06”, which were adopted on January 24, 2006,  and which modified the actuarial equivalent factors for purposes of  determining the amount of optional forms of benefit and applying the Code §415 limits.  

(3)     Amendments dated “12-22-08”, which were adopted on December 22,  2008, and set forth the provisions of the Pension Protection Act, the HEART Act and the final Code §415 regulations.  

(4)     Amendments dated “12-11-09”, which were adopted on December 29,  2009 and added Code §436 limitations, Defense of Marriage Act and minor top-heavy revisions.  

(h)     Eligibility to become a Participant in the Plan was frozen effective July 1, 2010. As a result:  

(1)      Individuals with an Employment Commencement Date on or after July 1,  2010 (including  rehires on or after July 1, 2010) are not Qualified  Employees and are not eligible to become Participants in the Plan.    

(2)     Individuals who are Participants on July 1, 2010 and who are employed by  the Company or an Affiliate on July 1, 2010, but are not Qualified  Employees on July 1, 2010 or are on an approved leave of absence on July 1, 2010, can again become eligible to accrue benefits under the Plan as of the date, if any, that they again become Qualified Employees or return to  active employment status (whichever may apply).  

(3)     Individuals who are employed by the Company or an Affiliate on July 1,  2010, but are not Participants or Qualified Employees on July 1, 2010, cannot become Participants after July 1, 2010, even if they transfer into a position that  would have previously caused them to be eligible to participate in the Plan.  

(i)     This working copy of the Plan document, dated “1-26-15”, includes  all  amendments adopted through December 31, 2014. These amendments include the following:  

(1)     Amendments dated “6-28-10”, which were adopted on June 29, 2010 and  froze pension eligibility so as to exclude individuals with an employment  commencement date on or after July 1, 2010 (including rehires after that date).    

(2)     Amendments dated “10-27-2010”, which were adopted on February 22,  2011, which set forth technical modifications to the Plan provisions requested by the IRS in connection with the favorable determination letter dated November 24, 2010.  

(3)     Amendments dated “12-3-10”, which  were adopted on December 20,  2010, in connection with crediting service for Participants who transfer to DM&E Railroad Company and HEART Act clarifications.  

(4)     Amendments dated “12-8-11”, which were adopted  on  December  21,  2011, which eliminated the lump sum death benefit under Sec. 7.4 of the Plan effect.  
       
(5)     Amendments dated “6-21-13”, which were adopted on July 15, 2013, which were made in connection with a change in the payroll system,  thereby  provisions relating to the commencement date of pension payments and  retroactive annuity starting dates and the definition of Certified Earnings recognized under the Plan.  

(6)     Amendments dated “12-18-14”, which were adopted on December 18,  2014 and provided  that the Plan will recognize same sex marriages, effective September 16, 2013.  

ARTICLE II  

MISCELLANEOUS DEFINITIONS  

     Sec. 2.1      Active Participant.  An employee is an “Active Participant” only while he is both a Participant and a Qualified Employee.  

     Sec. 2.2     Actuary.  “Actuary” means the individual, partnership, corporation, or other organization appointed and acting as such from time to time under Article X.  

     Sec. 2.3     Affiliate.    “Affiliate”  means  any  trade  or  business  entity  under  Common Control with a Participating Employer or under Common Control with a Predecessor Employer while it is such.  

     Sec. 2.4     Board.  The “Board” is the board of directors of the Company, and includes any executive committee thereof authorized to act for said board of directors.  

     Sec. 2.5     Common  Control.    A trade or business entity (whether a corporation, partnership, sole proprietorship or otherwise) is under “Common Control” with another trade or  business entity (i) if both entities are corporations which are members of a controlled group of  corporations as defined in Code section 414(b), (ii) if both entities are trades or businesses  (whether or not incorporated) which are under common control as defined in Code section  414(c), (iii) if both entities are members of an affiliated service group as defined in Code section  414(m), or (iv) if both entities are required to be aggregated pursuant to regulations under Code  section 404(o).  Service for all entities under Common Control shall be treated as service for a  single employer to the extent required by the Code; provided, however, that an individual shall  not be a Qualified Employee by reason of this section. In applying the preceding sentence for  purposes of Sec. 8.12, the provisions of Code section 414(b) and (c) are deemed to be modified  as provided in Code section 415(h).  

     Sec. 2.6     Fund.  “Fund” means the aggregate of assets described in Sec. 9.1.  

     Sec. 2.7     Funding Agency.  “Funding Agency” is a trustee or trustees or an insurance company appointed and acting from time to time under Sec. 9.2 for the purpose of holding, investing, and disbursing all or a part of the Fund.  

     Sec. 2.8     Leased Employee.  “Leased Employees” within the meaning of Code section  414(n)(2) and individuals who would meet those requirements but for failure to complete a year of leased service shall be counted as employees for purposes of determining Years of Eligibility Service and Years of Vesting Service, or to such other extent required by the Code or regulations issued thereunder. Leased Employees are not Participants in the Plan, however, and do not accrue benefits under the Plan.  

     Sec. 2.9     Named Fiduciary.  The Company is a “Named Fiduciary” for purposes of  ERISA with authority to control or manage the operation and administration of the Plan,  including control or management of the assets of the Plan. Other persons are also Named  Fiduciaries under said Act if so provided by said Act or if so identified by the Company, by  action of the Board. Such other person or persons shall have such authority to control or manage the operation and administration of the Plan, including control or management of the assets of  the Plan, as may be provided by said Act or as may be allocated by the Company.  

     Sec. 2.10     Participating Employer.  The Company is a Participating Employer in the  Plan. With the consent of the Company, any other employer may also become a Participating  Employer in the Plan effective as of a date specified by it in its adoption of the Plan. Any  Successor Employer to a Participating Employer shall also be a Participating Employer in the  Plan. As of January 1, 2008, the Company and the Delaware and Hudson Railway Company,  Inc., a Delaware corporation formerly named D&H Corporation, are the only Participating  Employers in the Plan. The Delaware and Hudson Railway Company became a Participating  Employer in the Plan effective January 18, 1991. Canadian Pacific (U.S.) Finance ceased being  
a Participating Employer in the Plan as of December 31, 2004.  By way of clarification, the  DM&E Railroad Company is not, and has never been, a Participating Employer in the Plan.   Accordingly, DM&E employees are not Qualified Employees and are not eligible to accrue  benefits under the Plan, unless, as provided in Sec. 2.13(g), they were Active Participants in the  Plan on July 1, 2010, who later transferred from a position with a Participating Employer to a  position with the DM&E Railroad Company and thus remained Qualified Employees in the Plan.  

     Sec. 2.11     Plan Year.  A “Plan Year” is the 12-consecutive-month period commencing on each January 1 and is the year on which records of the Plan are kept.  

     Sec. 2.12     Predecessor Employer.  Any corporation, partnership, firm, or individual, a  substantial  part  of  the  assets  and  employees  of  which  are  acquired  by  a  successor,  is  a  “Predecessor Employer” if named in this section and subject to any conditions and limitations  with respect thereto imposed by this section; provided, however, that any such corporation,  partnership, firm, or individual may be named as a “Predecessor Employer” only if all of its  employees who become employees of  the successor at the time of the acquisition and  Participants hereunder are treated uniformly, the use of service with it does not produce  discrimination in favor of officers, shareholders, or highly compensated employees, and there is  no duplication of pension benefits for such service. To be considered a “Predecessor Employer,”  the acquisition of assets and employees of a corporation, partnership, firm, or individual must be  by a Participating Employer, by an Affiliate, or by another Predecessor Employer. Each of the  following is a “Predecessor Employer,” subject to any conditions and limitations specified with  respect thereto:  

(a)     The Duluth, South Shore and Atlantic Railway Company.  

(b)     Mineral Range Railroad Company.  

(c)     Minneapolis, St. Paul & Sault Ste. Marie Railway Company.  

(d)     Wisconsin Central Railway Company for the period of its existence prior to March 1, 1954.  

(e)     Wisconsin Central Railroad Company for the period of its existence prior to January 1, 1961.  

(f)     Receiver or receivers and trustee or trustees in bankruptcy of the companies named in (a) through (e) above.  

(g)     Eligibility for new Participants to enter the Plan was frozen on July 1, 2010.   Accordingly, employees with an Employment Commencement Date on or after  July 1, 2010 (both new hires and rehires) are not Qualified Employees and cannot become Qualified Employees. In addition, any individual who was employed by the Company or an Affiliate on July 1, 2010, but was neither a Participant nor a Qualified Employee on July 1, 2010, cannot subsequently become a Qualified  Employee or a Participant.  

(h)     Individuals who were Active Participants in the Plan on July 1, 2010 and who  transfer from a position with a Participating Employer to a position with the  DM&E  Railroad  Company (“DM&E”) after July 1, 2010 remain Qualified Employees for purposes of the Plan while they are employed by the DM&E.  

     Any other employer shall be a Predecessor Employer if so required by regulations  prescribed by the Secretary of the Treasury or his delegate.  

     Sec. 2.13     Qualified  Employee.    “Qualified  Employee” means an employee of a  Participating Employer, subject to the following:  

(a)     An employee is not a Qualified Employee prior to the date as of which his employer becomes a Participating Employer.  

(b)     Eligibility of employees in a collective bargaining unit to participate in the Plan  shall be subject to negotiations with the representative of that unit. During any period that the wages and hours of service of an employee are covered by the  provisions of a  collective bargaining agreement between his Participating Employer and such representative he shall not be considered a Qualified Employee for purposes of this Plan unless such agreement expressly so provides. For purposes of this section only, such an agreement shall be deemed to continue after its formal expiration during collective bargaining negotiations pending the execution of a new agreement.  

(c)     Except as provided in subsection (d), if a Qualified Employee is granted an  authorized leave of absence or is otherwise absent from active service under  circumstances that do not result in his or her Termination of Employment, the employee shall remain a Qualified Employee during such absence.  

(d)     The Company or its Affiliates have an ownership interest in the Davenport, Rock  Island and Northwestern Railroad Company and the Indiana Harbor Belt Railroad  Company. Certain employees of the Company who were on leave of absence to serve said corporations have been treated as Qualified Employees during said leaves of  absence. On and after January 1, 1989, an employee will not be considered a Qualified Employee during such a leave of absence.  

(e)     On and after January 1, 1989, a nonresident alien while not receiving earned  income (within the meaning of Code section  911(b)) from a Participating Employer which constitutes income from sources within the United States (within the meaning of Code section 861(a)(3)) is not a Qualified Employee.  

(f)     On and after January 1, 1989, an employee is not a Qualified Employee unless his  services are performed within the United States, or his principal base of operations to which he frequently returns is within the United States.  

     Sec. 2.14     Successor Employer.  A “Successor Employer” is any entity that succeeds to  the business of a Participating Employer through merger, consolidation, acquisition of all or  substantially all of its assets, or any other means and which elects before or within a reasonable  time after such succession, by appropriate action evidenced in writing, to continue the Plan;  provided,  however,  that  in  the  case  of  such  succession  with  respect  to  any  Participating  Employer other than the Company, the acquiring entity shall be a Successor Employer only if  consent thereto is granted by the Company.  

ARTICLE III  

SERVICE DEFINITIONS AND RULES   

     Sec. 3.1     Employment  Commencement  Date.    “Employment  Commencement  Date”  means the date on which an employee first performs an Hour of Service for a Participating  Employer (whether before or after the Participating Employer becomes such), an Affiliate, or a Predecessor Employer.  

     Sec. 3.2     Termination  of  Employment.    The “Termination  of  Employment” of  an employee (or the date an employee “Terminates Employment”) for purposes of the Plan shall be deemed to occur upon the date of his or her resignation, discharge, retirement, death, failure to  return to work when duly called following a temporary layoff, a separation from service (for  example, a furlough of one year or longer) or upon the happening of any other event or circumstance which, under the policy of his Participating Employer, Affiliate, or Predecessor  Employer, as in effect from time to time, results in the termination of the employer-employee  relationship; provided, however, that “Termination of Employment” shall not be deemed to  occur upon a transfer of employment between any combination of Participating Employers,  Affiliates, and Predecessor Employers. If a Participant becomes disabled (as determined by the  Company in its sole discretion) his or her Termination of Employment shall be deemed not to  have occurred until the Company determines the Participant is no longer disabled; provided,  however, that if a disabled Participant elects to begin receiving pension benefits under this Plan  he or she shall be deemed to have a Termination of Employment for purposes of the Plan when  such benefits become payable. If the employer-employee relationship is terminated because of  the entry of an employee into the armed forces of the United States and if the employee  subsequently returns to employment with a Participating Employer or an Affiliate under  circumstances such that he or she has reemployment rights under the provisions of Uniformed  Service Employment and Reemployment Rights Act of 1994 or any other applicable federal law,  the employee shall be deemed to have been on authorized leave of absence for purposes of the  Plan during the period of military service.  

     Sec. 3.3     Hour of Service.  An “Hour of Service” or “Hours of Service” are determined  in accordance with the following subsections. The Company may round up the number of Hours of Service at the end of each Plan Year or other computation period or more frequently as long as a uniform practice is followed with respect to all employees who the Company determines are in  the same, or a similar, job classification, reasonably defined.  

(a)     Hours of Service are computed only with respect to service with Participating  Employers (for service both before and after the Participating Employer becomes  such), Affiliates and Predecessor Employers and are aggregated for service with all such  employers. Notwithstanding the foregoing, Active  Participants who transferred to the DM&E Railroad Company after July 1, 2010 and remained  Qualified Employees under the Plan pursuant to Sec. 2.13(h) are credited with Hours of Service for their service  with  the DM&E  Railroad Company in accordance with the other provisions of this section.  

(b)     For any period while an employee is in a classification for which a record of hours is maintained, Hours of Service shall be credited as follows:  

(1)     Each hour for which the employee is paid, or entitled to payment, for the performance of duties for his employer is an Hour of Service.  

(2)     Each hour for which the employee is paid, or entitled to payment, by his or  her employer on account of a period of time during which no duties are  performed (irrespective of  whether the employment relationship was terminated)  due  to vacation, holiday, illness, incapacity (including  disability), layoff, jury duty, military duty, or leave of absence, is an Hour of Service. No more than 501 Hours of Service shall be credited under this paragraph for any single continuous  period (whether or not such period occurs in a single computation period). Said 501 hour limit is not applicable, however, to Hours of Service credited under Sec. 3.7(b)(4) for certain periods of long term disability or for military duty that must be  recognized by the Plan pursuant to the provisions of  the Uniformed Services Employment and Reemployment Rights Act of 1994 or Code section 414(u).    Hours of Service shall not be credited under  this  paragraph with respect to payments under a plan maintained solely for the  purpose of complying with     applicable workers’ compensation, unemployment compensation, or disability insurance laws or with respect  to  a  payment  which  solely reimburses the  individual for medical or medically related expenses incurred by the employee.  

(3)     Each hour for which back pay, irrespective of mitigation of damages, is  either awarded or agreed to by the employer is an Hour of Service. Crediting of Hours of Service for back pay awarded or agreed to with  respect to periods  described in paragraph (2) shall be subject to the limitations set forth in that paragraph. Such Hours of Service shall be credited to the period to which the award or agreement for back pay pertains, rather than to the period in which the  award, agreement or payment is made.  

(4)     Hours under this subsection shall be calculated and credited pursuant to  section 2530.200b-2 of the Department of Labor Regulations, which are  incorporated herein by this reference.  

(5)     The Company may use any records to determine Hours of Service which it considers an accurate reflection of the actual facts.  

(c)     For any period while an employee is in a classification for which a record of  hours is not maintained, he shall be credited with 190 Hours of Service for each  month for which he would otherwise be credited with at least one Hour of Service  under subsection (b). 

(d)     Nothing in this section shall be construed as denying an employee credit for an Hour of Service if credit is required by any federal law other than ERISA.  The nature and extent of such credit shall be determined under such other law.  

(e)     In no event shall duplicate credit as an Hour of Service be given for the same hour.  

     Sec. 3.4     Eligibility Computation Period.  An employee's first Eligibility Computation  Period is the 12-consecutive-month period beginning on his Employment Commencement Date. His second Eligibility Computation Period is the Plan Year commencing in said 12-consecutive- month period. Each subsequent Plan Year also is an Eligibility Computation Period.  

     Sec. 3.5     Year  of  Eligibility  Service.    A “Year of Eligibility Service” means an  Eligibility Computation Period in which an employee has at  least 1000 Hours of Service. Service will not be excluded from a Participant's Years of Eligibility Service by virtue of any  subsequent break in service.  

     Sec. 3.6     Year of Vesting Service.  An employee's “Years of Vesting Service” shall be determined as follows:  

(a)     For any Plan Year throughout which a person is an employee of a Participating  Employer, Affiliate, or Predecessor Employer, he shall receive a Year of Vesting  Service.  

(b)     If, during a given Plan Year, a person is not an employee of a Participating  Employer, Affiliate, or Predecessor Employer throughout the Plan Year, he or she shall receive one-twelfth of a Year of Vesting Service for each complete calendar month  within such Plan Year, during which he or she is an employee of a Participating  Employer, Affiliate, or Predecessor Employer. If a Participant becomes disabled before his or her Termination of Employment date, he or she shall receive one-twelfth of a Year of Vesting Service for each month of disability  provided he or she was a Qualified Employee when such disability commenced. The determination of disability for this purpose shall be made by the Company in its sole discretion. Notwithstanding the foregoing, if an individual completes at  least 1000 Hours of Service during a Plan Year, he or she shall receive a full Year of Vesting Service for that Plan Year.  

(c)     Notwithstanding the above provisions of this section, for purposes of determining  Years of Vesting Service, there shall be disregarded any Plan Year prior to the later of:  

(1)     The PlanYear in which the Participant attained age 18.  

(2)     The earlier of (i) the Plan Year in which his Participating Employer first  maintained the Plan or a predecessor plan, or (ii) the earliest Plan Year in which 

any trade or business entity at that time under Common Control with his Participating Employer first maintained the Plan or a predecessor plan.  
 
(d)     Service will not be excluded from a Participant's Years of Vesting Service by virtue of any subsequent break in service.  

(e)     For purposes of this section, service prior to January 24, 1990 with Canadian  Pacific Limited or with any entity under Common Control with Canadian Pacific  Limited shall be treated as service with an Affiliate.  However, the preceding sentence  applies only if the Participant transferred between a Participating Employer and Canadian Pacific Limited (or an entity under Common Control  with Canadian Pacific Limited) and not if the Participant had a Termination of  Employment and subsequent reemployment.  

(f)     Notwithstanding any of the foregoing provisions to the contrary, a former  employee of Delaware and Hudson Railway Company who became an employee  of D&H Corporation on or after January 18, 1991 but before January 1, 1992 is credited with one-twelfth (1/12) of a Year of Vesting for each month during any part of which such employee was an employee of Delaware and Hudson Railway Company or any predecessor railroad thereof.  

     Sec. 3.7     Year of Credited Service.  An employee's “Years of Credited Service” shall be determined as follows:  

(a)     With respect to service prior to January 1, 1976, an employee's Years of Credited  Service shall be determined according to the provisions of the Plan as in effect  prior to said date; provided, however, that service prior to January 1, 1976 shall  not be disregarded by reason of any break in service.  

(b)     For service after December 31, 1975, an employee's Years of Credited Service shall be determined as follows:  

(1)     An employee shall receive one Year of Credited Service for each Plan  Year in which he has at least 1000 Hours of  Service as a Qualified  Employee.  

(2)     If an employee has fewer than 1000 Hours of Service as a Qualified  Employee in a Plan Year in which his Employment Commencement Date,  Termination  of Employment or transfer to or from a position as a Qualified Employee occurs, he shall receive one-twelfth of a Year of  Credited Service for each complete calendar month in such Plan Year throughout which he is a Qualified Employee.  

(3)     Notwithstanding  any  of  the  foregoing  provisions  to  the  contrary,  the  following service shall be disregarded when determining a Participant’s Years of Credited Service:  

(A)     Employed on January 1, 2001 or Initially Hired on or After  January 1, 2001. If a Participant either (i) was an employee of the  Company on January 1, 2001; or (ii) had an initial Employment Commencement Date on or after January 1, 2001 (i.e., the Participant did not have a Termination of Employment date with  the Company prior to January 1, 2001 with a subsequent rehire  date  after January 1, 2001),  Plan Years before the Participant reached age 21 shall be disregarded when determining his or her Years of Credited Service.  

(B)     Termination of Employment Prior to January 1, 2001 and Rehires  after  January 1, 2001. If a Participant  had  a Termination of  Employment prior to January 1, 2001 and he or she was not an employee of  the Company on January 1, 2001, Plan Years described     in (i) or (ii) below     shall be disregarded when determining his or her Years of Credited  Service, even if the Participant is rehired by the Company after January 1, 2001:  

(i)     A Plan Year prior to 1985, if the Participant had not attained age 25 on or before the last day of that Plan Year.  

(ii)     A Plan Year after 1984, if the Participant had not attained age 21 on or before the last day of that Plan Year.  

(4)     For purposes of this Sec. 3.7, while an employee is disabled (as  determined by the Company in its sole discretion) and is not otherwise accruing Hours of Service, he or she shall be deemed to have 40 Hours of  Service for each week of such disability before the earlier of the date he or  she elects to begin receiving benefits under the Plan, or the first day of the month following his or  her 65th birthday, provided he or she was a Qualified Employee when such disability commenced.  

(5)     Service will not be excluded from a Participant's Years of Credited Service by virtue of any subsequent break in service.  

(6)     If a Participant ceases to be a Qualified Employee on or after July 1, 1991  because he was transferred to a position in Canada as an employee of a  Participating Employer, he will be deemed to be a Qualified Employee for up to two years of his service as an employee of a Participating Employer in Canada, and such service will be included in his Credited Service. Any service with a Participating Employer in Canada in excess of two years will not be considered  Credited Service or service as a Qualified Employee.  

(c)     If an employee of a Participating Employer who is not a Qualified Employee is  transferred to a position in which he is a Qualified Employee, and if the employee  remains a Qualified Employee for at least 60 calendar months, the employee's  Hours  of  

Service before he became a Qualified Employee shall be used in determining his Years of Credited Service. This subsection (c) will be applied and interpreted as follows:  

(1)     If  the transfer to the Qualified Employee position occurred prior to  January 1, 1989, the prior service shall be credited immediately, regardless  of whether the employee completes 60 calendar months of service as a Qualified Employee.  

(2)     On or after January 1, 1989, an employee needs 60 calendar months of  service as a Qualified Employee following each period of service during which the Participant was not a Qualified Employee in order for the prior service to count as Credited Service. The 60 months of service as a Qualified Employee does not, however, need to be consecutive months in  order to receive the retroactive Credited Service.  

(3)     For purposes of this subsection (c), service will be calculated in full  months only. Partial months will not count, nor will they be rounded up or added together for purposes of meeting the 60 month threshold.  

(4)     This subsection does not apply to service on or after January 1, 1989  during which the employee was not a Qualified Employee due to application of Sec. 2.13(d), (e), or (f).  

(5)     This subsection does not apply to service at any time with Canadian  Pacific Railway Company or with any other employer which both (i) is not  a Participating Employer and (ii) became an Affiliate after December 31, 1988.  

(6)     This subsection (c) will be administered in accordance with procedures  established by the Company or a committee appointed by the Company.  

(7)     This subsection (c) shall only apply to individuals who were both  Participants in the Plan on July 1, 2010 and actively employed by a Participating Employer on July 1, 2010.  

(d)     An employee's aggregate Years of Credited Service may not exceed 30 Years of  Credited Service.  

(e)     Individuals with an Employment Commencement Date on or after July 1, 2010  (both new hires and rehires) are not eligible to participate in the Plan and are not  Qualified Employees for purposes of the Plan.  As a result, new hires and rehires  on or after July 1, 2010 do not receive Credited Service under the Plan for service  on or after July 1, 2010.  

ARTICLE IV  

BENEFIT DEFINITIONS  

     Sec. 4.1     Normal Pension.    A  Participant's Normal Pension is a pension payable  monthly for life, the first payment to be made as of the first day of the month following his  attainment of Normal Retirement Age (if he is living on said first day of the month) and the last  payment to be made as of the first day of the month in which his death occurs, in a monthly  amount equal to his Accrued Monthly Pension.    

     Sec. 4.2     Normal Retirement.    “Normal  Retirement” means any Termination of  Employment of a Participant (except termination by his death) occurring (i) after he attains  Normal Retirement Age and (ii) during the month in which he attains Normal Retirement Age.  

     Sec. 4.3     Late Retirement.  “Late Retirement” means any Termination of Employment  of a Participant (except termination by his death) occurring after the last day of the month in  which he attains Normal Retirement Age.  

     Sec. 4.4     Early Retirement.      “Early Retirement”means any Termination of  Employment of a Participant (except termination by his death) (i) after he has both attained age  55 and completed 10 Years of Vesting Service and (ii) before he attains Normal Retirement Age.  

     Sec. 4.5     Vested Termination.    “Vested Termination” means any Termination of  Employment of a Participant (except termination by his death) that occurs after he has completed  five Years of Vesting Service and that is not defined herein as a form of retirement.  

     Sec. 4.6     Accrued Monthly Pension.    Effective January 1, 2001, a Participant’s  “Accrued Monthly Pension shall be determined as follows:  

(a)     The Accrued Monthly Pension for a Participant, who has a Termination of  Employment date on or after January 1, 2001 and who has at least one Hour of Service on or after January 1, 2001, is equal to the sum of the amounts in (1) and (2) below, multiplied by the number in (3) below, as follows:  

(1)     One-half of one percent (0.5%) of the portion of the Participant’s Final Average Monthly Earnings that does not exceed the Tier I wage base,   

Plus  

(2)     One and one-quarter percent (1.25%) of the portion of the Participant’s Final Average Monthly Earnings in excess of the Tier I wage base, if any,  

Multiplied By  

(3)     The number, not exceeding 30, of the Participant’s Years of Credited Service.  

For purposes of subsection (a), the “Tier I wage base” is one-twelfth (1/12) of the  average of the maximum annual wage bases under Tier I of the Railroad  Retirement Act for the thirty-five years prior to the latest year in which the  Participant ceases to be Qualified Employee. (Note that a Participant can cease to be a Qualified Employee prior to his or her Termination of Employment date.)  

(b)     The Accrued Monthly Pension for a Participant who has a Termination of  Employment date prior to January 1, 2001 and who did not have an Hour of  Service on or after January 1, 2001, shall be determined exclusively under the provisions of the Plan in effect on December 31, 2000.  

(c)     Notwithstanding subsection (a) or (b) of this Sec. 4.6, a Participant’s Accrued  Monthly Pension shall never be less than the greater of (1), (2), (3), (4) or (5) below:  

(1)     The Participant’s Grandfathered Accrued Benefit, if any, described in Appendix D.  

(2)     The Participant’s Accrued Monthly Pension under the terms of the Plan in  effect on December 31, 2000, if  any, assuming the Participant had a  Termination of Employment on December 27, 2001 (or, the actual date of  the Participant’s Termination of Employment if the Participant Terminated  Employment prior to December 27, 2001).  

(3)     If a Participant becomes totally disabled while employed as a Qualified  Employee (as determined by the Company in its sole discretion), his or her  Accrued Monthly Pension shall never be less than his or her Accrued Monthly  Pension determined as of the December 31 immediately preceding the date he or she becomes disabled and is last actively at work.  

(4)     Effective as of January 1, 1994, the annual limit on Certified Earnings  under Code section 401(a)(17) was reduced to $150,000.  However, for  any person who was a Participant on December 31, 1993, his Accrued  Monthly Pension shall not be less than his Accrued Monthly Pension as of  December 31, 1993, using the Code section 401(a)(17) limit as then in  effect, and based on his pay and service through December 31, 1993. Pay and service after December 31, 1993 shall be disregarded for purposes of  this calculation.  

(5)     The Accrued Monthly Pension of any person who was a Participant on  December 31, 1988 shall not be less than whichever of the following  amounts is applicable:  

(A)     If his compensation during 1988 was $78,353 or more, his Accrued  Monthly Pension shall not be less than his Accrued Monthly Pension on December 31, 1988 under the benefit formula then in  effect, based on pay and service through said date, and disregarding any pay or service after said date.  
 
(B)     If his compensation during 1988 was less than $78,353, his  Accrued Monthly Pension shall not be less than his Accrued Monthly Pension on December 31, 1989 (or as of his Termination of Employment if it occurred in 1989). Said amount shall be determined under the benefit formula in effect on December 31, 1988, and shall be based on pay and service through December 31,  1989. Pay and service after December 31,  1989 shall be disregarded for purposes of this calculation.  

“Compensation” referred to in (A) and (B) above means Compensation as  defined in Sec. 8.12(j).  

     Sec. 4.7     Certified Earnings.  “Certified Earnings” of a Participant from a Participating Employer for a Plan Year means the amount determined by the Participating Employer and reported to the Company to be the total compensation paid to the Participant by the Participating Employer during such Plan Year for service as an Active Participant, subject to the following:  

(a)     Discretionary bonuses shall not be included in Certified Earnings, except as provided in subsection (b).  

(b)     For PlanYears beginning with 1985 and ending with 1990, Certified Earnings for  a particular Plan Year shall include the amount of bonus actually paid to the  Participant following the close of that year under the Soo Line Railroad Company Annual Management Incentive Plan, but will not include any amount deferred for later payment under said plan. Certified Earnings does not include bonuses or  incentive payments paid in 1991 with respect to 1990. Certified Earnings for 1991 shall include the 2% bonus payable on or about December 1, 1991, under the Company's Merit Salary Program, and Certified Earnings for 1992 and 1993 shall include any bonus payable with respect to the particular year under such  program. Certified Earnings for 1991, 1992 and 1993 shall include the bonus payable with respect to the particular year under the CP  Rail Incentive  Compensation Plan. Certified Earnings for Plan Years after 1993 shall include the bonus  payable with respect to the particular year under the Company's Performance Incentive Program. If bonuses under the Merit Salary Program, CP Rail Incentive Compensation Plan, or Performance Incentive Program are paid in  the year after they are earned, they will be credited to the year earned rather than  the year paid. For 1991 and thereafter, bonuses paid to Participants employed by Participating Employers other than the Company under comparable merit, salary or incentive compensation programs shall be included in Certified Earnings on the same basis as provided above.  

(c)     Payments or contributions to or for the benefit of the employee under this Plan shall not be included in Certified Earnings.  

(d)     Except as provided in subsection (e), allowances or reimbursements for expenses,  moving allowances, foreign tax equalization payments or other extra payments  made in connection with relocation, severance pay, payments or contributions to or for the benefit  of the employee under any other deferred compensation, pension, profit sharing, insurance, or other employee benefit plan, merchandise  discounts, or benefits in the form of property or the use of property shall not be included in computing Certified Earnings.  

(e)     However, if a Participant has elected to have his or her compensation reduced  pursuant to a cash or deferred arrangement established under Code section 401(k), a cafeteria plan described in Code section 125 or a qualified transportation fringe benefit program under Code section 132(f)(4), Certified Earnings for purposes of  this Plan shall be the amount he or she would have received but for the reduction. If a portion of the reduction is later paid back to the Participant, said payment shall not be included in Certified Earnings.  

(f)     Notwithstanding any of the foregoing provisions to the contrary, if a Participant is  disabled, he or she shall be deemed to have Certified Earnings for each month of  such disability (until the earlier of age 65 or the date he or she elects to begin  receiving benefits under the Plan) in an amount equal to his or her monthly rate of  pay for full time service determined at the time the Participant became disabled. The determination of disability (short-term or long-term) for this purpose shall be made by the Company in its sole discretion. For purposes of determining said rate of pay, amounts referred to in subsections (a), (b), (c), and (d) above shall be excluded.  

(g)     A Participant’s Certified Earnings for any Plan Year may not exceed the limit  under Code section 401(a)(17) as then in effect on the first day of that Plan Year. For example, the limit for the 2014 Plan Year was $260,000 and the limit for the 2015 Plan Year is $265,000. This subsection (g) shall be applied in accordance with regulations prescribed by the Secretary of the Treasury.  

(h)     An Active Participant's Certified Earnings for the year in which his Termination  of Employment occurs shall be equal to the amount he would have received for  the entire year if his compensation had continued until year end at the rate in effect immediately prior to his Termination of Employment.  

(i)     If a Participant had service as an employee of Canadian Pacific Railway (or of  any entity under Common Control with Canadian Pacific Limited prior to its divestiture of the Canadian Pacific Railway) before or after his service as an  employee of a Participating Employer, his compensation from Canadian Pacific  Railway or such other entities shall be treated as Certified Earnings, subject to the limitations and special rules under this section. Compensation for service with Canadian Pacific Railway and other such entities shall be treated as Certified  Earnings only if the Participant transferred 

between service with the Canadian  Pacific  (or  such  other  entities)  and  service  with  a  Participating  Employer, however, and shall not be recognized if the Participant had a Termination of Employment and subsequent reemployment between  such  periods  of  service. Payments made to such a Participant in Canadian dollars during a particular year  or portion thereof shall be converted to U.S. dollars using the rate of exchange as reported by the U.S. Federal Reserve Board for the last month of that year (or partial year if applicable).  

(j)     Salary differential payments made to a Participant during a military leave shall  not constitute Certified Earnings under the Plan, unless required by USERRA or other applicable law.  

(k)     Notwithstanding the foregoing, due to a change in the Company’s payroll system,  a Participant’s Certified Earnings for the 2013 Plan Year shall include part or all  of the pay received by the Participant during the first payroll period ending in  January 2014 to  the extent necessary to reflect the services rendered by the Participant in December 2013.  

(l)     Notwithstanding the foregoing, if a bonus (PIP or otherwise) is designated by the  Company as being non-pensionable or otherwise designated so as not to be included in Certified Earnings under the Plan, the bonus shall not be included in Certified Earnings under the Plan.  

     Sec. 4.8     Final Average Monthly Earnings. A Participant's “Final Average Monthly  Earnings” is (i) 1/12th of his average Certified Earnings for those five consecutive Plan Years  during all of which he is an Active Participant, within the last ten Plan Years during all of which  he is an Active Participant, that produce the highest average, or (ii) 1/12th of his average  Certified Earnings for all of the Plan Years during all of which he is an Active Participant if five  or less, subject to the following:  

(a)     However, a Plan Year during which he is not an Active Participant throughout the  entire year shall be used as one of the five consecutive Plan Years if it results in a  higher average than above.  

(b)     The five consecutive Plan Years as an Active Employee, which are used in  making the computation, will not necessarily be five actual consecutive Plan Years, because Plan Years during all or part of which the Participant is not an Active Participant may not count under the rules above, and the Plan Years that  do not count may be interspersed with Plan Years that do count under those rules.  

(c)     If there are no Plan Years throughout which the Participant was an Active  Participant, his Final Average Monthly Earnings shall be his average adjusted Certified Earnings for the last five Plan Years (or all if less than five) during any part of which he  is an Active Participant. Adjusted Certified Earnings are determined by annualizing his Certified Earnings in such Plan Year or Years to  reflect what they would have been if he had been an Active Participant for the entire Plan Year.  

(d)     Solely for purposes of determining Final Average Monthly Earnings, a person  shall be considered to be an Active Participant during any period when he was an  employee of Canadian Pacific Railway (or of any entity under Common Control with Canadian Pacific Railway or Canadian Pacific Limited prior to its divestiture  of the Canadian Pacific Railway) before or after his service as an employee of a Participating Employer. The preceding sentence applies only if the Participant transferred between a Participating Employer and Canadian Pacific Railway (or an entity under Common Control with Canadian Pacific Railway or Canadian Pacific Limited prior to the divestiture), however, and not if the Participant had a Termination of Employment and subsequent reemployment.  

     Sec. 4.9     Normal Retirement Age. A Participant's “Normal Retirement Age” is age 65.  

     Sec. 4.10     Early Retirement Reduction Factor.  The “Early Retirement Reduction Factor” for purposes of calculating a Participant's Early Retirement benefit under Sec. 6.3 is 100% reduced by 1/3 of 1% for each month that the pension commencement date precedes the earlier of (i) the end of the month in which he attains Normal Retirement Age or (ii) the date he would have both attained age 62 and completed 30 Years of Vesting Service if his Termination of Employment had not occurred and he had continued  in  employment  with  a  Participating  Employer or Affiliate (and all of such employment was recognized for purposes of computing  Years of Vesting Service).  

     Sec. 4.11     Vested Termination Reduction Factor.  The “Vested Termination Reduction Factor” for purposes of calculating a Participant's Pension on Vested Termination under Sec. 6.4 is100% reduced by 5/9 of 1% for each of the first 60 months and 5/18 of 1% for each additional month by which the Participant's pension commencement date precedes the end of the month in which he attains Normal Retirement Age.  

     Sec. 4.12     Actuarial Equivalent.  Each “Actuarial Equivalent” shall be determined by  the Actuary in accordance with the following:  

(a)     For determinations involving benefits payable as a monthly annuity pursuant to  Sec. 7.2 and 7.3, the amount of such benefit shall equal the Actuarial Equivalent of the Participant’s Accrued Monthly Pension. Said Actuarial Equivalent shall be determined using a seven percent (7%) interest rate assumption and the 1994 GAR (Group Annuity Reserving table) unisex mortality table projected to 2002.  

(b)     Effective January 1, 2008 for purposes of determining the maximum limitations  on benefits under Code §415 and Sec. 8.12 of  the Plan, each “Actuarial  Equivalent” or  “present value” shall be determined in accordance with final regulations issued under Code §415 by the Department of Treasury and Internal Revenue Service on April 5, 2007:  

(c)     Effective January 1, 2008, for determinations of lump sum payments of benefits  which would otherwise be payable as monthly annuities, each Actuarial Equivalent shall   be determined on the basis of the following actuarial assumptions:  

(1)     For the Plan Year beginning January 1, 2008 and for each subsequent Plan  Year the interest rate used to calculate the lump sum payments shall be the  “applicable interest rate” under Code Section 417(e), as amended by, and phased in under, the Pension Protection Act (“PPA”), as in effect for November of the Plan Year preceding the Plan Year in which the lump sum payment is made. By  way of illustration, the new interest rate assumptions (based on a corporate bond yield curve) under the PPA will be phased in with the old 30-year Treasury Securities interest rate (the “GATT rate”) as set forth in the following table and in accordance with guidance issued by the Department of Treasury:  

									
	Plan Year	PPA (Corporate Bond Yield Curve) Interest Rate 	GATT: 30-year Treasury Rate
	2008	20%	80%
	2009	40%	60%
	2010	60%	40%
	2011	80%	20%
	2012 an
subsequent
Plan Years
	100%	0%

(2)     For distributions made in 2008 and subsequent Plan Years, the mortality  table used for such determinations is the “applicable mortality table” under  Code Section 417(e), as amended by the Pension Protection Act.  

(d)     For all other purposes, Actuarial Equivalents shall be determined on the basis of a  7% interest rate assumption and the mortality assumptions contained in the 1994 GAR unisex mortality table projected to 2002, which are also used in subsection (a) above.  

(e)     Each determination involving an Actuarial Equivalent shall be made in accordance with and any applicable regulations or other guidance issued by the Secretary of Labor or the Secretary of the Treasury.  

ARTICLE V  

PLAN PARTICIPATION  

     Sec. 5.1     Entry Date.  “Entry Date” means January 1 and July 1 of each Plan Year.  

     Sec. 5.2     Eligibility for Participation. Eligibility to participate in the Plan shall be  determined as follows:  

(a)     Any new employee with an Employment Commencement Date on or after July 1,  2010, shall not be eligible to become a Participant in the Plan and shall not accrue  any benefit under the Plan. Former employees (including those who are still Participants in the Plan pursuant to Sec. 5.3) who are rehired with an Employment Commencement Date on or after July 1, 2010 are not eligible to become Qualified  Employees and cannot accrue any additional benefits or earn additional Credited Service under the Plan on or after July 1, 2010. Notwithstanding the foregoing and for clarification purposes, all employees of the Company and its Affiliates can earn additional Years of Vesting Service on or after July 1, 2010, subject to the provisions of Sec. 3.6.  

(b)     An employee of a Participating Employer with an Employment Commencement  Date prior to July 1, 2010, became a Participant in the Plan on the earliest Entry Date (on  or after the date the Plan became effective with respect to his Participating Employer) on which all of the following requirements are met:  

(1)     He or she was a Qualified Employee.  

(2)     He or she had completed one Year of Eligibility Service.  

(3)     He or she had attained age 21.  

(c)     If a former Active Participant was reemployed prior to July 1, 2010, he or she  again became an Active Participant on his or her rehire date provided that he or she  would have met the requirements of subsection (b) on the immediately preceding Entry Date if he or she had been a Qualified Employee on such Entry Date. Participants who Terminated Employment and are rehired after July 1, 2010 are not eligible to become Qualified Employees or to accrue additional benefits or earn additional Credited Service under the Plan on or after July 1, 2010.  

(d)     If a former employee, who was not previously an Active Participant, was  reemployed as a Qualified Employee prior to July 1, 2010 and would have met  the requirements of subsection (b) on the immediately preceding Entry Date if he or she had been a Qualified Employee on such Entry Date, he or she became an Active Participant on his or her rehire date.  

(e)     If an employee of a Participating Employer or an Affiliate, whose latest  Employment Commencement Date was prior to July 1, 2010, was neither a Participant nor a Qualified Employee on July 1, 2010, he or she is not eligible to become a Qualified Employee or a Participant under the Plan after that date. In other words, employees who transfer into Qualified Employee status on or after  July 1, 2010 cannot become Participants in the Plan unless they were already Participants on July 1, 2010.  

     Sec. 5.3      Duration of Participation.  A Participant shall continue to be such until the  later of (i) his Termination of Employment or (ii) the date all benefits, if any, to which he is  entitled hereunder have been distributed to him from the Fund.  

     Sec. 5.4     No Guarantee of Employment.  Participation in the Plan does not constitute a guarantee or contract of employment with the employee's Participating Employer.    Such participation shall in no way interfere with any rights the Participating Employer would have in the absence of such participation to determine the duration of the employee's employment with the Participating Employer.  

ARTICLE VI  

PENSION BENEFITS  

     Sec. 6.1     Pension on Normal Retirement.  On Normal Retirement a Participant shall be entitled to his Normal Pension provided he is living on the first day of the month following the month in which he attains Normal Retirement Age. This pension is subject to all the provisions of the Plan, and in this regard special reference is to be made to the provisions of Articles VI, VII, and VIII.  

     Sec. 6.2     Pension  on  Late  Retirement.    On Late Retirement a Participant shall  be  entitled to a pension payable monthly for life, the first payment to be made as of the first day of  the month following his Late Retirement (if he is living on said first day of the month) and the  last payment to be made is of the first day of the month in which his death occurs, in a monthly  amount equal to his Accrued Monthly Pension. The pension payable under this section is subject  to all the provisions of the Plan, and in this regard special reference is to be made to the  provisions of Articles VI, VII, and VIII.    

     Sec. 6.3     Pension on Early Retirement. If a Participant's Early Retirement occurs, he  shall be entitled to a pension payable monthly for life, the first payment to be made as of the first  day of any month he shall elect which is after his Early Retirement but not later than the first day  of the month after his Normal Retirement Age (if he is living on the commencement date so  elected) and the last payment to be made as of the first day of the month in which his death  occurs. The election shall be made by requesting the appropriate form from the Company and  completing, signing, and filing the form with the Company before the commencement date  requested. The monthly amount of said pension shall be equal to his Accrued Monthly Pension  multiplied by the appropriate Early Retirement Reduction Factor. The pension payable under  this section is subject to all the provisions of the Plan, and in this regard special reference is to be  made to the provisions of Articles VI, VII, and VIII.   

     Sec. 6.4     Pension on Vested Termination.  On a Vested Termination, a Participant shall be entitled to his Normal Pension.  

     However, if the Participant has completed 10 Years of Vesting Service prior to his  Termination of Employment, he may elect a monthly pension which is in lieu of the aforesaid  pension, the first payment to be made as of the first day of any month after the Participant's  Vested Termination and attainment of age 55 and the last payment to be made as of the first day  of the month in which his death occurs. The election shall be made by requesting the appropriate  form from the Company and completing, signing, and filing the form with the Company before  the commencement date requested. The monthly amount of said pension shall be equal to his  Accrued Monthly Pension multiplied by the appropriate Vested Termination Reduction Factor.  

     If the Participant completed 5 but less than 10 Years of Vesting Service prior to his  Termination of Employment, he may not elect to receive the monthly pension described in the  

preceding paragraph in lieu of his Normal Pension and, subject to Sec. 8.2, must wait until  Normal Retirement Age before pension payments can commence.  

     The pension payable under this section is subject to all the provisions of the Plan, and in  this regard special reference is to be made to the provisions of Articles VI, VII, and VIII.   

     Sec. 6.5     Deduction  for  Other  Pension  Payments.    Notwithstanding the foregoing provisions, the monthly amounts otherwise payable thereunder shall be reduced by the amount (expressed on a comparable basis that is an Actuarial Equivalent) of the monthly pension (not including railroad retirement benefits), if any, to which the Participant is entitled under any other pension plan that meets the requirements of Code section 401(a) or any successor thereto, or any comparable requirements applicable in any other jurisdiction, but only to the extent such other pension is attributable to employer contributions and to the same service for which the pension is being paid under this Plan. However, said reduction does not apply with respect to any pension paid under a pension plan of Canadian Pacific Limited for the purpose of increasing the  Participant's pension benefit for U.S. service to the amount he would have received if such  service had been for Canadian Pacific Limited in Canada.  

     Sec. 6.6     Amendments Affecting Pension Rights.    Notwithstanding the foregoing  provisions, in the event of an amendment to the Plan, the following shall be applicable:  

(a)     The amendment shall not reduce the accrued benefit, within the meaning of Code section 411(d)(6), of a Participant determined at the time of such amendment  except in conformity with said section.  

(b)     If the amendment to the Plan should change the vesting schedule of the Plan, each  Participant having not less than three Years of Vesting Service by the end of the  election period with respect to such amendment shall be permitted within such  election period to elect in writing to have his vested percentage computed under  the Plan without regard to such amendment. The election period shall be a reasonable period determined by the Company commencing not later than the  date the amendment is adopted. However, the Company need not provide such an  election for any Participant whose vested percentage under the Plan, as amended, at any time cannot be less than such percentage determined without regard to such amendment.  

     Sec. 6.7     Suspension of Benefits and Effect of Reemployment.  If a Participant has a  Termination of Employment and is subsequently reemployed by a Participating Employer or  Affiliate, or if a Participant's employment with a Participating Employer or Affiliate continues  after he attains Normal Retirement Age, the following shall be applicable:  

(a)     If a Participant, who is receiving benefits under the Plan, is reemployed by a  Participating Employer or an Affiliate on or after January 1, 2013, his or her benefit payments shall not be suspended during the period of reemployment.  

(b)     If a Participant, who was receiving benefits under the Plan, was reemployed prior  to January 1, 2013, his or her benefits under the Plan were subject to suspension during the period of reemployment pursuant to the provisions of the Plan as in  effect prior to January 1, 2013.  

(c)     If pension payments have been withheld pursuant to subsection (a)(2) or (b),  payments shall resume or commence no later than the first day of the third  calendar month following the last month subject to withholding. The initial payment shall include the payment for the month in which payments resume and any amounts withheld during  the period between the last month subject to withholding under subsection (a)(2) or (b) and the resumption of payments, less any amounts which are subject to offset.  

(d)     If a monthly pension payment is made for a calendar month and it later is determined that such payment was subject to permanent withholding, the amount  of  such payment shall be applied as an offset against subsequent monthly payments unless     the Participant has previously repaid     the overpayment. However, the amount of any such offset shall not exceed, in any one month, after the Participant attains Normal Retirement Age, 25 percent of the monthly total benefit payment that would have been paid but for the offset (excluding the initial  payment described in subsection (c), which is subject to offset without limitation).  

(e)     The Company shall notify a Participant of any suspension under subsection (a)(2)  or (b). The notice shall conform to the requirements of section 2530.203-3(b)(4) of the Department of Labor Regulations.  

(f)     When a Participant's benefit payments resume following any period of suspension  under subsection (a), the pension to which he is entitled under the Plan shall be paid under the same form as previously in effect and shall be in a monthly amount equal to the sum of (i) the monthly amount payable prior to the suspension plus  (ii) any additional     amount based on his service during the period of reemployment. However, notwithstanding any other provision of the Plan to the  contrary, no additional amount will be accrued for any Plan Year during the  period of reemployment prior to the earliest Plan Year therein during which the  Participant completes 1000 or more Hours of Service.  

(g)     If a former employee with vested rights is rehired and serves as a Qualified Employee before his pension    begins, when he subsequently terminates employment, his  entire pension will be redetermined as of the date of  his subsequent Termination of Employment.  

(h)     The provisions of this section shall be administered in accordance with section 2530.203-3 of the Department of Labor Regulations.  

(i)     Notwithstanding the foregoing provisions of this Sec. 6.7, any Participant who was receiving pension payments under the Plan on October 4, 2007, the date the Company acquired the DM&E Railroad Corporation and who was employed by the DM&E Railroad Company on October 4, 2007 shall continue to receive his or  her pension payments under the Plan, unless he or she subsequently becomes an  employee of the Company or an Affiliate other than the DM&E Railroad Corporation.  

     Sec. 6.8     Nonforfeitable Benefits.  Notwithstanding any provision of the Plan to the contrary, a Participant’s Accrued Monthly Pension is nonforfeitable upon attaining Normal  Retirement Age prior to Termination of Employment or completing five or more Years of  Vesting Service prior to Termination of Employment.  

ARTICLE VII   

DEATH BENEFITS AND OPTIONAL SETTLEMENTS  

     Sec. 7.1     Qualified Preretirement Survivor Annuity.    A Qualified Preretirement  Survivor Annuity shall be payable to a Participant’s surviving, qualified spouse (if any) following the Participant’s death, subject to the following:  

 (a)     A Qualified Preretirement Survivor Annuity shall be payable only if all of the following conditions are satisfied:  

(1)     Immediately prior to the Participant’s death he or she had five years completed of vesting service or had attained age 65.  

(2)     The Participant’s death occurred before the due date of his or her first pension payment.  

(3)     The Participant is survived by a qualified spouse.  

(4)     The Participant had at least one Hour of Service on or after August 23, 1984, or satisfied the requirements of subsection (g) below.  

(b)     If the Participant’s death occurs on or after the earliest retirement date, described in subsection (e), the Qualified Preretirement Survivor Annuity shall be the same as the  annuity that would have been payable to the Participant’s qualified spouse if the Participant had retired with an immediate Qualified Joint and 50% Survivor Annuity on the day before the date of death. The first monthly installment of said annuity shall be paid as of the first day of the month following Participant’s death, and the last monthly installment shall be paid as of the first day of the month in which the qualified spouse’s death occurs.  

(c)     If the Participant’s death occurs before the earliest retirement date described in  subsection (e), the Qualified Preretirement Survivor Annuity shall be the same as  the annuity that would have been payable to the Participant's qualified spouse under the following circumstances:  

(1)     The Participant’s Termination of Employment occurred on the date of death, or on his actual date of Termination of Employment, if earlier.  

(2)     The Participant survived to the earliest retirement date.  

(3)     The Participant commenced receiving a pension in the form of a Qualified Joint and 50% Survivor Annuity on the earliest retirement date.  

(4)     The Participant died on the day after the earliest retirement date.    

The first monthly installment of said annuity shall be paid as of the earliest retirement date and the last monthly installment shall be paid as of the first day of  the month in which the qualified spouse’s death occurs.  

(d)     A person is a “qualified spouse” of a Participant if, and only if, such person and  the Participant have been married to each other throughout the one-year period ending on the date of the Participant’s death.  

(e)     For purposes of  this section, the “earliest retirement date” with respect to a Participant means:  

(1)      If the Participant has completed ten years of Vesting Service, the first day of the month coincident with or next following the date he or she would have attained age 55.  

(2)      If the Participant has completed less than ten years of Vesting Service, the  month coincident with or next following the month in which he or she would have reached Normal Retirement Age.  

(f)     Notwithstanding subsection (b) or (c) from the contrary, if the Participant is a  Qualified Employee at the time of his or her death, the monthly amount payable  to his or her Qualified Spouse will not be less than 1/12 of 20% of his or her Certified Earnings for the Plan Year immediately preceding the Plan Year in  which his or her death occurs.  

(g)     Notwithstanding subsection (a) to the contrary, even if a Participant did not have  an Hour of Service on or after August 23, 1984 his or her surviving spouse shall  still  be  eligible for a Preretirement Survivor Annuity if all of the following conditions are met:  

(1)     The Participant had at least one Hour of Service in the 1976 Plan Year, and   

(2)     The Participant had at least 10 years of Vesting Service when he or she Terminated Employment, and  

(3)     The Participant had not commenced receiving Pension Payments on or before August 23, 1984.  

     Sec. 7.2     Qualified  Joint  and  Survivor  Annuity.    Notwithstanding the foregoing  provisions, the pension otherwise payable to the Participant for his life only shall instead be paid  as a Qualified Joint and Survivor Annuity which is the Actuarial Equivalent of said life only pension unless the Participant elects otherwise within the Election Period, subject to all of the  following:  

(a)     There are two types of Qualified Joint and Survivor Annuities under the Plan: a  Qualified Joint and 50% Survivor Annuity and an Optional Qualified Joint and 75% Survivor Annuity, which are described below:  

(1)     A  “Qualified  Joint  and  50%  Survivor  Annuity”  is  a  pension  payable monthly for the life of the Participant, with a survivor annuity payable monthly for the life of the surviving spouse which is 50% of the monthly amount payable to the Participant during his or her lifetime.  

(2)     In lieu of the Qualified Joint and 50% Survivor Annuity, the Participant  can elect an “Optional Qualified Joint and 75% Survivor Annuity”, which is a pension payable monthly for the life of the Participant, with a survivor annuity payable monthly for the life of the surviving spouse which is 75% of the monthly amount payable to the Participant during his or her lifetime.   

Both the Qualified Joint and 50% Survivor Annuity and the Optional Qualified  Joint  and  75%  Survivor  Annuity,  constitute  a  Qualified  Joint  and  Survivor  Annuity, which can be elected under the Plan without spousal consent.  If no  election is made, or spousal consent is not obtained, before benefits are required  to commence, the benefit will be paid in the form of the Qualified Joint and 50%  Survivor  Annuity.    As  provided  in  Sec.  7.1,  the  Qualified  Pre-Retirement  Survivor Annuity is based on the Qualified Joint and 50% Survivor Annuity that  would have otherwise been payable to the Participant had he or she survived until  his or her earliest retirement date, as described in Sec. 7.1(c).  

(b)     For purposes of this section the “Election Period” is the 180-day period ending on the due date of the Participant's first pension payment.  

(c)     The Company within a reasonable period of time (which shall be at least 30 days  unless waived by the Participant and his or her spouse) before the due date for the Participant's first pension payment shall furnish the Participant with a written explanation in nontechnical language of the following:   

(1)     The terms and conditions of the Qualified Joint and Survivor Annuity.  

(2)     The Participant's right to make, and the effect of, an election to waive the Qualified Joint and Survivor Annuity form of benefit.  

(3)     The rights of the Participant's spouse with respect to the spouse's required  consent to the Participant's election to waive the Qualified Joint and Survivor Annuity form of benefit.  

(4)     The right to make, and the effect of, a revocation of the Participant's  election to waive the Qualified Joint and Survivor Annuity form of benefit.  

(d)     All elections shall be made on the appropriate form available from the Company  and shall be effective only upon completing, signing, and filing of the form with  the Company during the Election Period. An election under this section may be revoked in writing during the Election Period, and after such revocation another written election may be made during the Election Period.  
     
(e)     A Participant who elects not to receive his pension in the form of a Qualified Joint  and Survivor Annuity or other Optional Settlement described in Sec. 7.3 shall receive a pension for his or her life only.  

(f)     A Qualified Joint and Survivor Annuity will not be provided unless the Participant and the Participant's surviving spouse were legally married to each other on the date as of which the Participant's pension commences. If there is a spouse meeting the requirements of the preceding sentence, that spouse and the Participant are subsequently  divorced, and said former spouse survives the Participant, the former spouse is not disqualified from receiving the survivor annuity under the Plan by reason of the fact he or she was not married to the Participant at the time of the Participant's death. However, the rights of any former spouse to a benefit under this section are subject to the terms of any  applicable qualified domestic relations order.  

(g)     A Participant's election made on or after January 1, 1985 to waive the Qualified  Joint and Survivor Annuity shall not take effect unless one of the following conditions is satisfied:  

(1)     The spouse of the Participant consents in writing to such election, and the  spouse's consent acknowledges the effect of such election and is witnessed by a Plan representative or a notary public.  

(2)     It is established to the satisfaction of a Plan representative that the consent  required under paragraph (1) above may not be obtained because there is no spouse, because the spouse cannot be located, or because of such other  circumstances as the Secretary of Treasury may by regulations prescribe.  

Any consent by a spouse, or establishment that the consent of a spouse may not be  obtained, shall be effective only with respect to such spouse.  

(h)     The provisions of this Sec. 7.2  shall be administered in accordance with applicable regulations prescribed by the Secretary of the Treasury.  

     Sec. 7.3     Optional Settlements.  In lieu of the amount and form of pension payable to him under the Plan, and subject to any consent required under Sec. 7.2, a Participant may, under such rules as the Company may prescribe, elect to have a pension which is the Actuarial  Equivalent of his life only pension payable under one of the following options:  

(a)     An option providing a reduced monthly pension payable to the Participant commencing on the same date as that upon which payments would otherwise commence and terminating with the last monthly payment before his death. If his death occurs on or after the due date of the first monthly payment under the option and before 120 monthly payments have been made to him such benefit shall be continued to his beneficiary until a total of 120 monthly payments have been made to him and his beneficiary.  

(b)     An option providing a reduced monthly pension payable to the Participant with  payments commencing on the same date as that upon which payments would  otherwise commence and continuing through the last monthly payment before the Participant's death, with the provision for continuance after his death of payments equal to either 100% or 50% (as elected by the Participant) of such reduced amount for life to a joint annuitant designated by him if such joint annuitant  survives him. An election of this option shall be automatically canceled if either  the person electing the option or his joint annuitant dies before the due date of the  first monthly payment under the option. Unless the Participant designates his spouse as his joint annuitant, he may not elect an optional settlement under this subsection unless the actuarial present value of payments to be made to him, determined as of the date payments begin, is more than 50% of the actuarial  present value as of said date of the total payments to be made under the optional settlement.  

(c)     Notwithstanding any provision of the Plan to the contrary, no optional settlement  shall be permitted that does not satisfy the requirements of  Code section 401(a)(9)(G) and the regulations thereunder.  

     Election of an option may be made at any time prior to commencement of pension  payments. Notwithstanding the foregoing, if a Participant remains in the employ of a Participating Employer or Affiliate after the end of the month in which he attains Normal  Retirement Age, if his death occurs thereafter prior to his Termination of Employment, if he  elected an optional settlement under this section which was not revoked prior to his death, and if  a benefit under Sec. 7.1 is not payable to his surviving spouse, the same benefit shall be provided  his beneficiary or joint or contingent annuitant under the option as though the Participant's  Termination of Employment had occurred for a reason other than death on the later of (i) the first  day of the month following the month in which he attained Normal Retirement Age or (ii) the  last day of the month preceding his death.  

     Sec. 7.4     Lump  Sum  Death  Benefit.    If an Active Participant's Termination of  Employment occurs for a reason other than his death, and the Termination of Employment was a  Normal Retirement, Late Retirement, or Early Retirement, upon his subsequent death, his  Beneficiary shall receive a single sum death benefit, subject to the following:  

(a)     The Participant must have died prior to September 1, 2012.  

(b)     The amount of said single sum death benefit shall be $10,000.00 for Participants  whose Normal Retirement, Late Retirement or Early Retirement occurs on or after  

January 1, 1993. The amount of said single sum death benefit with respect to  Participants  whose Normal Retirement, Late Retirement or Early Retirement occurs prior to January  1, 1993 shall be $4,000.00. Notwithstanding the foregoing, in the case of any person listed in Appendix B, the amount of the single sum death benefit shall be the amount set forth in Appendix B.  

(c)     The Participant's Beneficiary shall be the person or persons designated as such by  the Participant. Any Beneficiary designation must be in writing, in a form acceptable to the Company, and must be filed with the Company prior to the Participant's death. A  Participant  may  at  any  time  revoke  his  Beneficiary  designation and designate another Beneficiary. If there is no effective Beneficiary designation, or if no designated Beneficiary survives the Participant, then the Beneficiary shall be the Participant's spouse, if she survives him, or his estate, if there is no surviving spouse.  

(d)     The death benefit under this section will be paid only if the Participant's death  occurred on or after January 1, 1985 and before September 1, 2012. It is not  necessary, however, for the Participant to have had a Termination of Employment after 1984, so long as the Participant satisfied the requirements for a Normal, Late or Early Retirement under the Plan before his or her death.  

(e)     If a Participant is receiving an automatic cash-out of his or her Accrued Monthly  Pension pursuant to Sec. 8.2, the benefit under this Sec. 7.4 will also be paid as  soon as feasible following the Participant’s Termination of Employment, rather  than after the Participant’s death. In this case, the benefit under this Sec. 7.4 will be a lump amount  that is equal to the Actuarial  Equivalent  present value (determined as of the date of distribution) of the Lump Sum Death Benefit that would otherwise be payable following the Participant’s death.  

(f)     No benefit will be payable under Sec. 7.4 unless the Participant was a Qualified Employee when he or she Terminated Employment.  

(g)     No death benefits will be paid pursuant to this Sec. 7.4 to a Beneficiary of a  Participant who is rehired with an Employment Commencement Date on or after July 1, 2010, even if the Participant subsequently satisfies the age and service requirements for an Early Retirement, Normal Retirement or Late Retirement. New hires on or after July 1, 2010 are not eligible to participate in the Plan, and therefore their Beneficiaries are not eligible for the death benefit under this Sec. 7.4.  

(h)     The special death benefit under this Sec. 7.4 was eliminated effective September 1, 2012.  

Sec. 7.5   Definition of Spouse and Marriage.   Effective September 16, 2013, the Plan  will recognize any marriage (same sex or otherwise) that is valid either under the laws of the  State of Minnesota or the state in which the marriage took  place. This Section shall be administered in accordance with guidance issued by the Department of Treasury.  

ARTICLE VIII  

MISCELLANEOUS BENEFIT PROVISIONS  

     Sec. 8.1     Commencement Date for Pension Payments. Pension payments under this  Plan shall be subject to the following rules:  

(a)     The Company shall provide Participants with a distribution election (or consent)  form and notice 30 to 180 days in advance of the Participant’s annuity starting  date or Lump Sum Distribution date. Participants can, however, elect to waive the 30 day advance notice period if they wish. The distribution election materials shall include the following:  

(1)     An explanation of the right to defer commencement of benefits and the consequences of failing to defer receipt of benefits;   

(2)     An explanation of the material features and relative value of the various forms of benefit payment available under the Plan;   

(3)     The special tax and rollover notice referenced in Code Section 402(f); and  

(4)     If the Participant is married, the written explanation of the Qualified Joint  and 50% Survivor Annuity and Optional Qualified Joint and 75% Survivor  Annuity described in Sec. 7.2(c) of the Plan.  

 Unless the Participant elects otherwise, or a required consent to a distribution is  not  obtained, pension  payments shall commence as soon as administratively feasible after  the date specified by the applicable Plan provisions for the commencement of pension payments; but not later than the 60th day after the close of the Plan Year in which the Participant reaches Normal Retirement Age or has a Termination of Employment,  whichever is later. If the amount of the payment to be made cannot be determined by the latest of said dates, a payment  retroactive to such date may be made no later than 60 days after the earliest date on which the amount of such payment can be ascertained.  Notwithstanding the foregoing and as permitted by regulations issued under Code Section 401(a)(14), the Plan Administrator may require Participants to apply for benefits under the Plan before benefit payments will commence. Accordingly, since the Plan allows the  Participants to elect the commencement date for his or her benefits, the requirements of Code Section 401(a)(14) are satisfied.  

(b)     Following a Participant’s Termination of Employment, monthly pension  payments shall commence, or a Lump Sum Distribution shall be made, as soon as  feasible after the date elected by the Member, but not later than April 1 following the Plan Year in which the Participant reaches age 70 1⁄2.    

(c)     Except as provided in this subsection or Sec. 6.7(b), a Participant’s pension will  not commence or be paid prior to his or her Termination of Employment, except  as follows:  

(1)     If a Participant attains age 701⁄2 on or after January 1, 1988 and on or  before December 31, 1998, his or her pension will commence not later than April 1 following the Plan Year in which he or she attains age 701⁄2.  

(2)     If a Participant is a 5% owner (as defined in Code § 416) during the Plan  Year in which he or she attains age 701⁄2, his or her pension will commence not later than April 1 of the following Plan Year.  

(3)     If the Plan is terminated, pension payments shall be made as provided in Sec. 12.4.  

(d)     If, because of the application of subsection (c), a Participant’s pension  commences after the April 1 following the Plan Year in which he or she attains age 701⁄2, the monthly pension amount will be increased by an amount which is the Actuarial Equivalent (as defined in Sec. 4.12(d)) of the additional pension  payments he or she would have received if (i) his or her pension had commenced April 1 following the Plan Year he or she attained age 701⁄2, and (ii) the monthly  pension  amount  was  adjusted  each January 1 thereafter to reflect additional benefit accruals.  

Sec. 8.2     Automatic  Cash-Outs  and  Default  Rollovers.    If a Participant has a Termination of Employment or dies before benefit payments have commenced, and the Actuarial  Equivalent present value of the Participant’s Accrued Monthly Pension (which does not include  the lump sum death benefit under Sec. 7.4) is $5,000 or less, the benefit shall be paid in a single  lump sum rather than an annuity. In that case, the benefit shall be paid as soon as administratively feasible following the Participant’s Termination of Employment or death. In  addition, effective March 28, 2005, if the Participant (or Qualified Spouse) fails to make an  election between a cash distribution or a Direct Rollover (pursuant to Sec. 8.15) within 90 days  following receipt of his or her distribution election form, the following rules shall apply:  

(a)     If the total present value of the Participant’s Accrued Monthly Pension is $1,000 or less but not more than $5,000, and the Participant is alive, the Company will cause  the  balance in the Participant’s Accounts to be Directly Rolled over to an individual retirement plan (“IRA”) designated by the Company.  

(b)     If the total present value of the Participant’s Accrued Monthly Pension is $1,000 or less and the Participant is alive, a single-sum cash distribution shall be made to the  Participant as soon as administratively feasible following the expiration of the 90-day election period.  

(c)     If the Participant has died, the total Actuarial Equivalent present value of  the  Participant’s Accrued Monthly Pension (payable in the form of a Qualified Preretirement  

Survivor Annuity) shall be distributed to the Qualified Spouse in the form of a single sum cash distribution as soon as  administratively feasible following the expiration of the 90 day election period. By way of clarification, no default Direct Rollovers to IRA’s will be made on behalf of spouses of deceased Participants, pursuant to this  Section. Qualified  Spouses are, however, eligible to elect Direct Rollovers pursuant to Sec. 8.15.    

(d)     For purposes of this section, a Participant (or spouse of a deceased Participant) is deemed to have received his or her distribution election form five days after the form is mailed to his or her last known address.      

(e)     The default rollover provisions of this Section shall not apply to Participants who Terminate Employment after Normal Retirement Age or  to alternate payees under a qualified domestic relations order. These  distributions shall be made in the form of a single sum cash payment.  

(f)     If by the end of the second full Plan Year following a Participant’s Termination  of Employment a distribution (including a default Direct Rollover under this Section) has been made to such Participant of the Actuarial Equivalent present value of his or her entire Accrued Monthly  Pension under the Plan, thereafter, in the event he or she is subsequently reemployed by a Participating Employer, service performed by the  Participant with respect to which such distribution was made shall be disregarded in determining his or her right to an accrued benefit derived from employer contributions under the Plan. If the distribution described in the preceding sentence is not made by the end of the second full Plan Year following the Participant’s Termination of Employment  and  the Participant is later reemployed, his pension upon termination of said period of reemployment will be reduced by the Actuarial Equivalent of the  amount     previously     distributed to him or her under this section. Notwithstanding the foregoing, if the Plan is Top-Heavy or otherwise  provides for a distribution of less than the present value of a Participant’s entire Accrued Monthly Pension, the provisions of Sec. 14.8 shall apply.  

     Sec. 8.3     No Other Benefits.  No benefits other than those specifically provided for  herein are to be provided under the Plan.  

     Sec. 8.4     Source of Benefits.  All benefits to which persons become entitled hereunder shall be provided only out of the Fund and only to the extent that the Fund is adequate therefor. No benefits are provided under the Plan except those expressly described herein.  

     Sec. 8.5     Incompetent Payee.  If in the opinion of the Company a person entitled to  payments hereunder is disabled from caring for his affairs because of mental condition, physical  condition, or age, payment due such person may be made to such person's guardian, conservator,  or other legal personal representative upon furnishing the Company with evidence satisfactory to  the Company of such status. Prior to the furnishing of such evidence, the Company may cause  payments due the person under disability to be made, for such person's use and benefit, to any  person or institution then in the opinion of the Company caring for or maintaining the person  under disability. The Company shall have no liability with respect to payments so made. The  

Company shall have no duty to make inquiry as to the competence of any person entitled to  receive payments hereunder.  

     Sec. 8.6     Assignment or Alienation of Benefits.    Except as otherwise expressly  permitted by the Plan or required by law, the interests of persons entitled to benefits under the  Plan may not in any manner whatsoever be assigned or alienated, whether voluntarily or involuntarily, or directly or indirectly, subject to the following:  

(a)     Once a Participant, beneficiary, or contingent annuitant begins receiving benefits  under the Plan, he may assign or alienate the right to future benefit payments; provided that the assignments or alienations (i) are voluntary and revocable, (ii) do not in the aggregate exceed 10% of any benefit payment, and (iii) are neither for the purpose, nor have the effect of defraying Plan administration costs.  

(b)     An arrangement whereby a Participant, beneficiary, or contingent annuitant  directs the Plan to pay all or any portion of a Plan benefit to a third party will not  constitute an “assignment or alienation” for purposes of this section if (i) it is  revocable at any time by the Participant, beneficiary, or contingent annuitant, and (ii) the third party files a written acknowledgement with the Company stating that the third party has no enforceable right in, or to, any Plan benefit payment or  portion thereof (except to the extent of payments actually received pursuant to the  arrangement). The written acknowledgement must be filed with the Company not  later than 90 days after the arrangement is entered into.  

(c)     Notwithstanding any other provisions of the Plan to the contrary, all benefits  otherwise payable under the Plan with respect to a Participant shall be adjusted to  the extent necessary to comply with a qualified domestic relations order. The Company shall establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under such qualified orders. Where payments are to be made under a qualified domestic relations  order before payments commence to the Participant, the present value of the  benefit actually accrued for the Participant shall be determined on an Actuarial Equivalent basis.  

     Sec. 8.7     Payment of Taxes.  The Funding Agency may pay any estate, inheritance,  income, or other tax, charge, or assessment attributable to any benefit payable hereunder which  in the Funding Agency's opinion it shall be or may be required to pay out of such benefit. The  Funding Agency may require, before making any payment, such release or other document from  any taxing authority and such indemnity from the intended payee as the Funding Agency shall  deem necessary for its protection.  

     Sec. 8.8     Conditions Precedent.  No person shall be entitled to a benefit hereunder until  his right thereto has been finally determined by the Company nor until he has submitted to the  Company relevant data reasonably requested by the Company, including, but not limited to,  proof of birth or death.  

     Sec. 8.9     Company Directions to Funding Agency.  The Company shall issue such  written directions to the Funding Agency as are necessary to accomplish distributions to the  Participants and beneficiaries in accordance with the provisions of the Plan.  

     Sec. 8.10     Effect on Unemployment Compensation.  For purposes of any unemployment  compensation law (including but not limited to the Railroad Unemployment Insurance Act), a distribution hereunder in one sum shall be considered to be a severance payment and shall be  allocated over a period of weeks equal to the one sum payment divided by the employee's regular weekly pay while employed by his Participating Employer, which period  shall commence immediately following the employee's Termination of Employment.  

     Sec. 8.11     Benefits Not Increased by Actuarial Gains.  Forfeitures arising from severance of employment, death, or for any other reason shall not be applied to increase the benefits that any person would otherwise receive under the Plan.  

     Sec. 8.12     Maximum Limitations on Benefits.  Notwithstanding any provision of the  Plan to the contrary, a Participant’s benefit under the Plan shall not exceed the maximum amount  permitted under Code §415. In that regard, with respect to Participants who have an Hour of  Service on January 1, 1999, the limits under Code §415 shall be applied so as to provide the  Participant with the maximum permissible benefit under Code §415. This Section shall be  applied in accordance with final regulations under Code §415 that were issued by the  Department of Treasury and Internal Revenue Service on April 5, 2007.  

For purposes of applying the limitations of Code §415, “Compensation” means a Participant’s  earned  income, wages, salaries, and other amounts received for personal services actually rendered in the course of employment with the Company, or an Affiliate, subject to the following:  

(a)     Subject to paragraph (2) below, Compensation excludes employer contributions to  a plan of deferred compensation which are not includable in the Participant’s gross income for the taxable year in which contributed, and other amounts which received special tax benefits. However, any amounts received by a Participant pursuant to an  unfunded non-qualified plan of deferred compensation are Compensation in the year such amounts are includable in the Participant’s gross  income.  

(b)     Effective for the 1998 and subsequent Plan Years, salary reduction contributions  to a cash or deferred arrangement under Code §401(k), a Code §403(b) plan, a cafeteria plan under Code §125, or a plan of deferred compensation under Code §457 are  includable as Compensation. Effective after December  31,  2000, Compensation shall include elective amounts that are not includable in the gross income of the employee under Code §132(f)(4).  

(c)     Compensation recognized for an employee for a Plan Year shall not exceed the limit under Code §401(a)(17) as adjusted by the Secretary of Treasury.  

(d)     Payments made by the later of 2 1⁄2 months after a Participant’s severance from  employment or the end of the Plan Year in which the severance from employment  occurred are included in Compensation for the limitation year if, absent a severance  from  employment, such payments would have been paid to the Participant while the Participant continued in employment with the Company or an Affiliate and are regular earnings for services during the Participant’s regular working hours, compensation for services  outside the Participant’s regular working hours (such as overtime or shift differential), commissions, bonuses or  other similar compensation. This provision shall be applied consistent with the requirements of Treas. Reg. §1.415(c)-2, effective for limitation years beginning on or after July 1, 2007.  

(e)     Effective January 1, 2009, Compensation includes any military differential pay paid to a Participant by a Participating Employer.  

     Sec. 8.13     Special Benefit Limitation on Distributions to Highly Compensated  Employees.  Notwithstanding any other provision of the Plan to the contrary, the payment of  benefits under the conditions set forth in this section shall be limited as follows:  

(a)     The benefit of any Participant who is either a “highly compensated employee” or  a “highly compensated former employee” shall be limited to a benefit that is  nondiscriminatory under Code Section 401(a)(4).  

(b)     The annual benefit payable under the Plan to any Participant described in subsection (c) of this section shall not exceed an amount equal to the payments which would be made to him in that year under a straight life annuity that is the Actuarial Equivalent of the nonforfeitable benefit to which he is entitled under the Plan; provided that the restrictions set forth in this subsection (b) shall not apply  if:  

(1)     after payment to the Participant of his benefit under the Plan, the value of  the Plan's assets equals or exceeds 110% of the value of the Plan's current  liabilities,   

(2)     the value of such Participant's benefit under the Plan is less than 1% of the value of such current liabilities, or   

(3)     the Actuarial Equivalent value of the Participant’s Accrued Benefit is $5,000 or less.  

(c)     The restriction set forth in subsection (b) shall apply to benefits payable under the  Plan for any Plan Year to any Participant who is either a “highly compensated  employee” or “highly compensated former employee” with respect to such Plan Year; provided, that if the number of such highly compensated employees and  highly  compensated former employees for any Plan Year exceeds 25, the restriction set forth in subsection (b) shall apply for the Plan Year only to the 25 such highly compensated 

employees and highly compensated former employees with the greatest Compensation (as defined in Sec. 8.12(k)) for the current or any  prior Plan Year.  

(d)     For purposes of this section, the terms “highly compensated employee” and  “highly compensated former employee” shall have the meanings ascribed to such terms in Code Sections 414(q)(1) and 414(q)(9), respectively.  

     Sec. 8.14     Distributions Made in Accordance With Code §401(a)(9).   Notwithstanding any other provisions of the Plan, all distributions under this Plan shall comply  with the minimum distribution requirements of Code §401(a)(9) of the Code and Treasury  Regulations §§1.401(a)(9)-2 through 1.401(a)(9)-9, including the incidental benefit requirements  of Code §401(a)(9)(G). With respect to distributions made on or after January 1, 2003, the Plan  will apply the minimum distribution requirements of Code §401(a)(9) in accordance with the  final and proposed regulations issued thereunder by the Department of Treasury on April 17,  2002 and any other guidance, rulings or notices issued by the Internal Revenue Service.  

     Sec. 8.15     Rollovers and Transfers to Other Eligible Plans.  A distributee may elect, at  the time and in the manner prescribed by the Company, to have any portion of an eligible  rollover distribution paid directly to an eligible retirement plan specified by the distributee in a  direct rollover. The following definitions shall be used in administering the provisions of this  section.  

(a)     Eligible rollover distribution.  For purposes of this section, an eligible rollover  distribution is any distribution of all or any portion of the balance to the credit of  the distributee that is paid in a single lump sum pursuant to Sec. 7.4 or 8.2.  

(b)     Eligible Retirement Plan.  An eligible retirement plan is one of the following  plans or arrangements that agrees to accept the distributee’s eligible rollover  contribution: (i) a qualified trust described in Code section 401(a), (ii) an individual retirement account described in Code section 408(a), (iii) an individual retirement  annuity described in Code section 408(b), (iv) an annuity  plan  described in Code section 457(b) maintained by a governmental entity such as a  state, political subdivision or a state, or agency or instrumentality of a state or political subdivision of a state that agrees to separately account for amounts transferred from this Plan, (v) a Roth IRA described in Code section 408A, or (vi) a tax sheltered annuity contract described in Code section 403(b).  

(c)     Distributee.  A distributee means a Participant, a Participant’s surviving spouse, a  surviving non-spouse Beneficiary of the Participant, or a former spouse who is the  alternate payee under a qualified domestic relations order, as defined in Code  section 414(p). Entities or individuals other than those named in this subsection are not permitted to rollover distributions from the Plan.  

(d)     Direct Rollover.  A direct rollover is a payment by the Funding Agency to the  eligible retirement plan specified by the distributee, or in the case of a default  Direct 

Rollover pursuant to Sec. 8.2(a), to the Individual Retirement Account  (“IRA”) designated by the Company.  

(e)     Direct Transfers by Non-Spousal Beneficiaries.  Effective January 1, 2008, a  designated Beneficiary who is not the Participant’s spouse can, following the  death of a Participant, request a direct trustee to trustee transfer of part or all of  his or her lump sum distribution from the Plan but only to an individual retirement  account or annuity described in Code Sec. 408(a) or 408(b) (an “IRA”) that is  designated as an “inherited IRA”. The request must be made within 90 days following the Participant’s death. The transfer shall be made as soon as practicable following the Beneficiary’s request. Amounts transferred to an inherited IRA under this subsection are subject to the required minimum distribution rules of Code section 401(a)(9). Also, any required minimum distributions that would otherwise be due to the Participant or Beneficiary shall be  made to the Beneficiary before any such direct transfer is made to the inherited IRA. The inherited IRA must be established in a manner that identifies it as an inherited IRA with respect to the deceased Participant and must also identify the Beneficiary. Transfers under this Section shall be administered in accordance with applicable regulations or other guidance issued by the Department of Treasury.  

     Sec. 8.16     Deemed Cash-Out Upon Termination of Employment.  A Participant who  is zero percent vested and experiences a Termination of Employment is deemed upon his or her  Termination of Employment to have received an immediate cash-out of his or her Accrued  Monthly Pension under the Plan and to have forfeited the unvested portion of his or her Accrued  Monthly Pension under the Plan.  

     Sec. 8.17     Retroactive Annuity Starting Dates.  A Participant may elect to have his or her pension begin as of a “retroactive annuity starting date”, subject to the following:  

(a)     “Retroactive Annuity Starting Date” means a date elected by a Participant which  is prior to the date the written explanation of the Qualified Joint and Survivor Annuity required by Code § 417(a)(3) is provided to the Participant.  

(b)     The retroactive annuity starting date may be the first day of any month coincident with or next following the Participant’s 65th birthday.  

(c)     The monthly pension amount payable under this section will be equal to the  amount that would have been payable if the Participant’s pension had begun on  the retroactive annuity starting date.    

(d)     A Participant who elects a pension with a retroactive annuity starting date shall  receive a makeup payment reflecting any missed payments from the retroactive annuity starting date through the date the makeup payment is paid. The makeup payment shall include interest on each missed payment for the period beginning on the date the missed  payment would have been paid if the pension had commenced on the retroactive annuity starting date and ending on the date the  makeup payment is paid. Interest for this purpose shall be determined using simple interest and the applicable interest rate under Code § 

417(e) (and used in  Sec. 4.12(c) for determining lump sums) for the month of November preceding  the Plan Year in which the makeup payment is made.  

(e)     If the Participant is married on the date the first pension payment is actually paid,  the Participant’s election is subject to the consent of his or her spouse. However, said  spouse’s consent is not required if  the Participant elects to receive the retroactive pension as a Qualified Joint and Survivor Annuity and the death  benefit payable to said spouse is at least equal to the death benefit the spouse would have received if the benefit commenced on the date the first pension payment actually is paid and in the form of a Qualified Joint and 50% or 75% Survivor Annuity.  

(f)     If the Participant was married on the Retroactive Annuity Starting Date, but is no  longer married to that spouse on the date the first pension payment actually is paid, the  consent of the former spouse is not required except to the extent provided in any applicable qualified domestic relations order.  

     Sec. 8.18     Benefits of Reemployed Veterans.  Notwithstanding any provisions of this  Plan to the contrary, contributions, benefits and service credit with respect to Qualified Military  Service will be provided in accordance with Code §414(u). For this purpose:  

(a)     As provided by Code §414(u), “Qualified Military Service” means service in the  uniformed services (as defined in Chapter 43 of Title 38, United States Code) by  an individual if he or she is qualified under such chapter to reemployment rights with the Company or an Affiliate following such military service.  

(b)     “USERRA” means the Uniformed Services Employment and Reemployment Rights Act of 1994 as amended.  

(c)     If an individual returns to employment with the Company or an Affiliate following a period of Qualified Military Service under circumstances that he or she has reemployment rights under USERRA, and the individual reports for said reemployment  within the time frame required by USERRA, the following provisions shall apply:  

(1)     The Qualified Military Service shall be recognized as years of Credited  Service and Years of Vesting Service to the same extent as it would have been if  the employee had remained continuously employed with the Company or an Affiliate rather than going into the military.  

(2)     Certified  Earnings  shall  be  determined  for  the  individual  as  of  each January 1 during the period of Qualified Military Service. The amount of  Certified Earnings shall be determined by the Company consistent with the requirements of the USERRA, and shall reflect the Company’s best estimate of the earnings the individual would have received but for the Qualified Military Service.  

(d)     The Plan shall comply with the provisions of the Heroes Earnings Assistance and  Relief Tax Act (the “HEART  Act”),  which amended certain provisions of USERRA.  The HEART Act is generally effective January 1, 2007 and provides  as follows:  

(1)     If a Participant dies while performing “qualified military service” (as  defined in USERRA), the Participant’s survivors shall receive the same benefits under the Plan as if the Participant died while employed by a Participating Employer. This rule does not, however, require survivors to be provided with any additional benefit accruals relating to the period of qualified military service.  

(2)     Effective January 1, 2009, shift differential pay shall be treated as  Certified Earnings under the Plan. After December 31,  2008, shift differential  pay is subject to federal income tax withholding if the employee is on active duty with the uniformed services for more than 30 days. FICA and FUTA withholding, however, is not required.  

(e)     The foregoing provisions are intended to provide the benefits required by USERRA, and are not intended to provide any other benefits. This section shall be construed consistently with said intent.  

     Sec. 8.19    Limitations Under Code §436.  To the extent required by Code §436 and any  applicable regulations or other guidance, the Plan is subject to the following limitations:  

(a)     Limitation on unpredictable contingent event benefits. Any unpredictable  contingent event benefit will not be paid if the event occurs at a time when the Plan’s AFTAP, as defined in subsection (e), is less than 60% (or would be less than 60% if the unpredictable contingent event benefit were taken into account). For this purpose, “unpredictable contingent event benefit” means any benefit (or increase in benefits) that is contingent on a plant shutdown or similar event, or on  a factor other than age, service, compensation, death or disability.  

(b)     Limitation on Plan amendments. No amendment that has the effect of increasing  liabilities of the Plan will take effect at a time when the Plan’s AFTAP is less than 80% (or would be less than 80% if the amendment were taken into account). However, this restriction does not apply to a benefit increase under a formula which is not based on a participant’s compensation, provided the rate of increase does not exceed the contemporaneous rate of increase in wages of Participants  covered by the amendment.  

(c)     Limitation on accelerated benefit payments. The following limitations apply to  amounts which are considered “prohibited  payments” for purposes of Code §436(d):  

(1)     If the Plan’s AFTAP is less than 60%, the Plan will not pay any prohibited  payment with an annuity starting date on or after the applicable Code §436  measurement date.  

(2)     The Plan will not pay any prohibited payment with an annuity starting date  while the Company is in bankruptcy, provided, however, that this restriction does not apply if the Plan’s Actuary certifies that the Plan’s AFTAP is not less than 100%.  

(3)     If the Plan’s AFTAP is 60% or more but less than 80%, prohibited payments will be restricted to the extent required by applicableregulations.  
 
(4)     For purposes of this subsection, an amount payable for a month is a  “prohibited payment” to the extent it exceeds the sum of (i) the amount  payable for that month under a straight life annuity with the same annuity starting date plus (ii) any social security supplement payable under the Plan for that month.    Purchase of an irrevocable annuity is also a prohibited payment, as is any other form of payment so identified in applicable guidance. However, a lump sum payment under Sec. 7.6 of the Plan is not a prohibited payment.    

(d)     Limitation on benefit accruals. If the Plan’s AFTAP is less than 60%, benefit  accruals under the Plan will cease until such time as the Plan’s AFTAP is at least  60%.  

(e)     AFTAP. The Plans “AFTAP” is its Adjusted Funded Target Attained Percentage as determined by the Plan Actuary in accordance with Code §436 and §430.  

(f)     Rules of construction. The foregoing provisions are intended to limit benefits to  the extent required by Code §436 and are not intended to impose any other limitations.  This section shall be construed consistently with that intent.  

ARTICLE IX  

FUND  

     Sec. 9.1     Composition.    All sums of money and all securities and other property received by the Funding Agency for purposes of the Plan, together with all investment made  therewith, the proceeds thereof, and all earnings and accumulations thereon, and the part from  time to time remaining shall constitute the “Fund.” The Company may cause the Fund to be  divided into any number of parts for investment purposes or any other purposes necessary or  advisable for the proper administration of the Plan. If for any purpose it is necessary to  determine the value of an asset in the Fund for which fair market value is not available, the value  of such asset shall be its fair value as determined in good faith by the Company or other Named  Fiduciary assigned such function, or if the asset is held in trust and the trust agreement so  provides, as determined in good faith by the trustee.  

     Sec. 9.2     Funding Agency.  The Fund may be held and invested as one fund or may be  divided into any number of parts for investment purposes. Each part of the Fund, or the entire  Fund if it is not divided into parts for investment purposes, shall be held and invested by one or  more trustees or by an insurance company. The trustee or trustees or the insurance company so  acting with respect to any part of the Fund is referred to herein as the Funding Agency with  respect to such part of the Fund. The selection and appointment of each Funding Agency shall  be made by the Company by action of its board of directors. The Company shall have the right  at any time to remove a Funding Agency and appoint a successor hereto, subject only to the  terms of any applicable trust agreement or group annuity contract. The Company shall have the  right to determine the form and substance of each trust agreement and group annuity contract  under which any part of the Fund is held, subject only to the requirement that they are not  inconsistent with the provisions of the Plan. Any such trust agreement may contain provisions  pursuant to which the trustee will make investments on direction of a third party.  

     Sec. 9.3     Compensation and Expenses of Funding Agency.  The Funding Agency shall  be entitled to receive such reasonable compensation for its services as may be agreed upon with  the Company. The Funding Agency shall also be entitled to reimbursement for all reasonable and necessary costs, expenses, and disbursements incurred by it in the performance  of its services. Such compensation and reimbursements shall be paid from the Fund if not paid  directly by the Participating Employers in such proportions as the Company shall determine.  

     Sec. 9.4     Funding Policy.  The Company shall adopt a procedure, and revise it from  time to time as it shall consider advisable, for establishing and carrying out a funding policy and  method consistent with the objectives of the Plan and the requirements of ERISA. It shall advise  each Funding Agency of the funding policy in effect from time to time.  

     Sec. 9.5     Securities and Property of Participating Employers.  An agreement with a  Funding Agency may provide that the Fund may be invested in qualifying employer securities or  qualifying employer real property, as those terms are used in ERISA, and to the extent permitted  by  said  Act. If qualifying employer securities or qualifying employer real property are 

purchased or sold as an investment of the Fund from or to a disqualified person or party in  interest, as those terms are used in ERISA, and if there is no generally recognized market for  such securities or property, the purchase shall be for not more than fair market value and the sale shall be for not less than fair market value, as determined in good faith by the Company or other  Named Fiduciary assigned such function, or if such assets are held in trust and the trust agreement so provides, as determined in good faith by the trustee.  

     Sec. 9.6     No Diversion.  The Fund shall be for the exclusive purpose of providing  benefits to Participants and their beneficiaries and defraying reasonable expenses of administering the Plan. Such expenses may include premiums for the bonding of Plan officials  required by ERISA and may also include premiums payable to the Pension Benefit Guaranty  Corporation other than premiums for contingent liability coverage. No part of the Fund may be  used for, or diverted to, purposes other than for the exclusive benefit of employees of the  Participating Employers or their beneficiaries. Notwithstanding the foregoing:  

(a)     If any contribution or portion thereof is made by a Participating Employer by a  mistake of fact, the Funding Agency shall, upon written request of the Company, return such contribution or portion thereof to the Participating Employer within one year after the payment of the contribution to the Funding Agency; however, earnings attributable to such contribution or portion thereof shall not be returned  to the Participating Employer but shall remain in the Fund, and the amount returned to the Participating Employer shall be reduced by any losses attributable to such contribution or portion thereof.  

(b)     Contributions by the Participating Employers are conditioned upon the deductibility of each contribution under Code section 404. To the extent the deduction is disallowed, the Funding Agency shall, upon written request of the Company, return such contribution to the Participating Employer within one year after the disallowance of the deduction; however, earnings attributable to such contribution (or disallowed portion  thereof) shall not be returned to the Participating Employer but shall remain in the Fund, and the amount returned to the Participating Employer shall be reduced by any losses attributable to such contribution (or disallowed portion thereof).  

(c)     If, upon termination of the Plan, any residual assets remain in the Fund after all  liabilities of the Plan to Participants and their beneficiaries have been satisfied,  such residual assets shall be returned to the Participating Employers in such proportions as the Company may determine.  

     Sec. 9.7     Employer  Contributions.    The Participating Employers shall make such  contributions to the Fund from time to time as they consider advisable which shall not be less  than the minimum contributions required by the ERISA. All such contributions are conditioned  upon the deductibility thereof under Code section 404.  

ARTICLE X   

ACTUARY  

     Sec. 10.1     Appointment.  The Company shall appoint as Actuary hereunder an individual who is an enrolled actuary as defined in ERISA or a partnership, corporation, or other  organization which has as a partner or employee thereof such an enrolled actuary.  

     Sec. 10.2     Responsibilities.    The Actuary shall have the responsibilities expressly  allocated to it hereunder and shall have such other responsibilities with respect to the Plan as  may be agreed upon by the Company and the Actuary.  

     Sec. 10.3     Compensation.  The Actuary shall receive such reasonable compensation for its services hereunder as may be agreed upon by the Company and the Actuary. To the extent  not paid from the Fund, such compensation shall be paid by the Participating Employers in such  proportions as the Company shall determine.  

     Sec. 10.4     Resignation, Removal and Successor.  Any agreement between the Company and the Actuary for services hereunder may be terminated by either party on 30 days written  notice to the other. In the event of a vacancy in the office of Actuary, the Company shall appoint a successor.  

ARTICLE XI   

ADMINISTRATION OF PLAN  

     Sec. 11.1     Administration by Company.  The Company is the “administrator” of the Plan for purposes of ERISA.  Except as expressly otherwise provided herein, the Company, and not the other Participating Employers, shall control and manage the operation and administration of the Plan and make all decisions and determinations incident thereto. Such control and  management shall include, but is not limited to, interpretation of provisions of the Plan and  determination of a Participant's eligibility for benefits under the Plan and the amount, if any, and  form of payment of such benefits. In carrying out its Plan responsibilities, the Company shall  have discretionary authority to construe the terms of the Plan. Except in cases where the Plan  expressly requires action on behalf of the Company to be taken by the Board, action on behalf of  the Company may be taken by any of the following:  

(a)     The Board.  

(b)     The chief executive officer of the Company.  

(c)     Any person or     persons, natural or otherwise, or committee,    to whom responsibilities for the operation and administration of the Plan are allocated by the Company, by resolution of the Board or by written instrument executed by the chief executive officer of the Company and filed with its permanent records, but action of such person or persons or committee shall be within the scope of said allocation.  

     Sec. 11.2     Certain Fiduciary Provisions.  For purposes of the Plan:  

(a)     Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan.  

(b)     A Named Fiduciary, or a fiduciary designated by a Named Fiduciary pursuant to  the provisions of the Plan, may employ one or more persons to render advice with  regard to any responsibility such fiduciary has under the Plan.  

(c)     To  the  extent  permitted by any applicable trust agreement or group annuity contract a Named Fiduciary with respect to control or management of the assets of the  Plan may appoint an investment manager or managers, as defined in  ERISA, to manage (including the power to acquire and dispose of) any assets of the Plan.  

(d)     At any time that the Plan has more than one Named Fiduciary, if pursuant to the  Plan provisions fiduciary responsibilities are not already allocated among such Named Fiduciaries, the Company, by action of the Board or its chief executive officer may provide for such allocation; except that such allocation shall not include any responsibility, if any, in a trust agreement to manage or control the assets of the Plan 

other than a power under the trust agreement to appoint an investment manager as defined in ERISA.  
 
(e)     Unless expressly prohibited in the appointment of a Named Fiduciary which is not  the Company acting as provided in Sec. 11.1, such Named Fiduciary by written  instrument may designate a person or persons other than such Named Fiduciary to  carry out any or all of the fiduciary responsibilities under the Plan of such Named Fiduciary; except that such designation shall not include any responsibility, if any, in a trust agreement to manage or control the assets of the Plan other than a power under the trust agreement to appoint an investment manager as defined in ERISA.  

(f)     A person who is a fiduciary with respect to the Plan, including a Named  Fiduciary, shall be recognized and treated as a fiduciary only with respect to the  particular fiduciary functions as to which such person has responsibility.  

     Each Named Fiduciary (other than the Company), each other fiduciary, each person  employed pursuant to subsection (b) above, and each investment manager shall be entitled to  receive reasonable compensation for services rendered, or for the reimbursement of expenses  properly and actually incurred in the performance of their duties with the Plan and to payment  therefor from the Fund if not paid directly by the Participating Employers in such proportions as  the Company shall determine.  However, no person so serving who already receives full-time  pay from any Participating Employer shall receive compensation from the Plan, except for  reimbursement of expenses properly and actually incurred.  

     Sec. 11.3     Discrimination Prohibited.  No person or persons in exercising discretion in  the operation and administration of the Plan shall discriminate in favor of highly compensated  employees (as defined in Code section 414(q)).  

     Sec. 11.4     Evidence.  Evidence required of anyone under this Plan may be by certificate, affidavit, document, or other instrument which the person acting in reliance thereon considers to be pertinent and reliable and to be signed, made, or presented by the proper party.  

     Sec. 11.5     Correction of Errors.  It is recognized that in the operation and administration of the Plan certain mathematical and accounting errors may be made or mistakes may arise by  reason of factual errors in information supplied to the Company or Funding Agency. The Company shall have power to cause such equitable adjustments to be made to correct for such errors as the Company in its discretion considers appropriate. Such adjustments shall be final and binding on all persons.  

     Sec. 11.6     Records.  Each Participating Employer, each fiduciary with respect to the  Plan, and each other person performing any functions in the operation or administration of the  Plan or the management or control of the assets of the Plan shall keep such records as may be  necessary or appropriate in the discharge of their respective functions hereunder, including  records required by ERISA or any other applicable law. Records shall be retained as long as  

necessary for the proper administration of the Plan and at least for any period required by said  Act or other applicable law.  

     Sec. 11.7     General Fiduciary Standard.  Each fiduciary shall discharge his duties with  respect to the Plan solely in the interests of Participants and their beneficiaries and with the care,  skill, prudence, and diligence under the circumstances then prevailing 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.  

     Sec. 11.8     Prohibited Transactions.  A fiduciary with respect to the Plan shall not cause the Plan to engage in any prohibited transaction within the meaning of ERISA.  

     Sec. 11.9     Claims  Procedure.    The Company shall establish a claims procedure  consistent with the requirements of ERISA. Such claims procedure shall provide adequate notice  in writing to any Participant or beneficiary whose claim for benefits under the Plan has been  denied, setting forth the specific reasons for such denial written in a manner calculated to be  understood by the claimant and shall afford a reasonable opportunity to a claimant whose claim  for benefits has been denied for a full and fair review by the appropriate Named Fiduciary of the  decision denying the claim. No person claiming a benefit under the Plan may initiate a civil  action regarding the claim until all steps under the claims procedure (including appeals) have  been completed.  

     Sec. 11.10   Bonding.  Plan personnel shall be bonded to the extent required by ERISA.   Premiums for such bonding may, in the sole discretion of the Company, be paid in whole or in  part from the Fund. Such premiums may also be paid in whole or in part by the Participating  Employers in such proportions as the Company shall determine. The Company may provide by  agreement with any person that the premium for required bonding shall be paid by such person.  

     Sec. 11.11   Waiver of Notice.  Any notice required hereunder may be waived by the  person entitled thereto.  

     Sec. 11.12   Agent For Legal Process.  The Company shall be the agent for service of  legal process with respect to any matter concerning the Plan, unless and until the Company  designates some other person as such agent.  

     Sec. 11.13   Indemnification.    In addition to any other applicable provisions for  indemnification, the Participating Employers jointly and severally agree to indemnify and hold  harmless, to the extent permitted by law, each director, officer, and employee (collectively  referred to as the “Indemnitee”) of the Participating Employers against any and all liabilities,  losses, costs, or expenses (including legal fees) of whatsoever kind and nature which may be  imposed on, incurred by, or asserted against such person at any time by reason of such person's  services as a fiduciary in connection with the Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such  liability, loss, cost, or expense arises. The Company shall have the right, but not the obligation,  

to select counsel and control the defense and settlement of any action against the Indemnitee for  which the Indemnitee may be entitled to indemnification.  

ARTICLE XII  

AMENDMENT, TERMINATION, MERGER  

     Sec. 12.1     Amendment.    Subject to the non-diversion provisions of Sec. 9.6, the  Company, by action of the Board, or by action of a person so authorized by resolution of the  Board, may amend the Plan at any time and from time to time. No amendment of the Plan shall  have the effect of changing the rights, duties, and liabilities of any Funding Agency without its  written consent. Also, no amendment shall divest a Participant or beneficiary of benefits accrued  prior to the amendment. The Company agrees that promptly upon adoption of any amendment to  the Plan it will furnish a copy of the amendment together with a certificate evidencing its due  adoption to each Funding Agency then acting. The Company has sole authority to amend the  Plan; the Plan may not be amended by the other Participating Employers.  

     Sec. 12.2     Discontinuance of Joint Participation in Plan by a Participating Employer.  A Participating Employer, by action of its board of directors and on appropriate written notice to  the Company and each Funding Agency then acting, may discontinue its joint participation in the  Plan with the other Participating Employers. The Company shall cause a determination to be  made of the equitable part of the Fund assets held on account of Participants of the withdrawing  employer and their beneficiaries. The Company shall direct the Funding Agency or Funding  Agencies to transfer assets representing such equitable part to a separate fund for the plan of the  withdrawing employer; provided, however, that such transfer shall be made only if and when the  Company in its sole judgment is satisfied that the transfer can be made in full compliance with  the applicable requirements of ERISA. Such withdrawing employer may thereafter exercise, in  respect of such separate fund, all the rights and powers reserved to the Company with respect to  the Fund. The plan of the withdrawing employer shall, until amended by the withdrawing  employer, continue with the same terms as the Plan herein, except that with respect to the  separate plan of the withdrawing employer the words “Participating Employer,” “Participating  Employers,” and “Company” shall thereafter be considered to refer only to the withdrawing  employer. Any discontinuance of participation by a Participating Employer shall be effected in  such manner that each Participant or beneficiary would (if the Plan and the plan of the  withdrawing employer then terminated) receive a benefit immediately after such discontinuance  of participation which is equal to or greater than the benefit he would have been entitled to  receive immediately before such discontinuance of participation if the Plan had then terminated.   No transfer of assets pursuant to this section shall be effected until such statements with respect  thereto, if any, required by ERISA to be filed in advance thereof have been filed.  

     Sec. 12.3     Reorganization  of  Participating  Employers.    In the event two or more  Participating Employers shall be consolidated or merged or in the event one or more Participating Employers shall acquire the assets of another Participating Employer, the Plan shall  be deemed to have continued, without termination and without a complete discontinuance of  contributions, as to all the Participating Employers involved in such reorganization and their  employees. In such event, in administering the Plan the corporation resulting from the  consolidation, the surviving corporation in the merger, or the employer acquiring the assets shall  

be considered as a continuation of all of the Participating Employers involved in the reorganization.  

     Sec. 12.4     Termination.  The Plan may be terminated by action of all of the Participating Employers jointly participating therein at the time by action of their respective boards of directors. An employer which has discontinued its joint participation in the Plan with the other Participating Employers shall also have the right to terminate its separate plan which resulted from such discontinuance at any time by action of its board of directors. Any such voluntary termination of the Plan, or separate plan, shall be made in compliance with all applicable provisions of ERISA. The Plan or separate plan, may also be terminated by action of the Pension Benefit Guaranty Corporation pursuant to the provisions of said Act. Upon termination of the Plan, or separate plan, the following shall be applicable:  

(a)     No further benefits shall accrue under the terminated Plan, and the rights of each  employee thereunder to benefits accrued to the date of such termination, to the  extent  then  funded, shall be nonforfeitable, provided, however, that the sole recourse for satisfaction of such rights shall be to the Fund and where applicable, to the Pension Benefit Guaranty Corporation.  

(b)     The Funding Agency shall receive for the Fund of the applicable terminated plan any amount recovered under section 4045 of ERISA.  

(c)     The Funding Agency shall deduct from the Fund of the terminated Plan its  compensation, expenses properly chargeable thereto, and any and all taxes that may be imposed upon the Fund by virtue of the termination of the Plan or otherwise; provided,  however, that the Funding Agency may accept such reasonable indemnity therefor from the Participating Employers as the Funding Agency shall specify.  

(d)     If adequate the Fund of the terminated Plan shall then be applied to provide, in  accordance with the provisions of such terminated plan as in effect at the time of such termination, all benefits accrued to the date of such termination whether vested or not.  

(e)     If the Fund of the terminated plan is not adequate to provide all benefits accrued  to the date of termination, the assets of the Fund of the terminated plan shall be  allocated to provide benefits in the following order of priority subject to any  applicable regulations promulgated by the Pension Benefit Guaranty Corporation or the Secretary of the Treasury or his delegate:  

(1)     In the case of benefits payable as an annuity:  

(A)     In the case of the benefit of a Participant or beneficiary which was  in pay status as of the beginning of the 3-year period ending on the  termination date of the Plan, to provide each such benefit, based on  the provisions of the Plan (as in effect during the 5-year period ending on such date) under which such benefit would be the least. The lowest benefit in 

pay status during the 3-year period shall be considered the benefit in pay status for such period.  

(B)     In the case of the benefit of a Participant or beneficiary (other than  a benefit described in subparagraph (A) above) which would have been in pay status as of the beginning of the 3-year period ending on the termination date of the Plan if the Participant had retired prior to the beginning of the 3-year period and if his benefits had commenced as a life only annuity as of the beginning of such  period, to provide each such benefit based on the provisions of the  Plan (as in effect during the 5-year period ending on such date) under which such benefit would be the least.  

(2)     To provide all other benefits, if any, of individuals under the Plan  guaranteed under ERISA (determined without regard to section 4022(b)(5) of  said Act), and the additional benefits, if any, which would be so provided if section 4022(b)(6) of said Act did not apply. In determining such benefits, section 4021 of said Act shall be applied without regard to subsection (c) thereof.  

(3)     To provide all other nonforfeitable benefits under the Plan. If the assets  available are not sufficient to satisfy in full such benefits:  

(A)     The assets shall be allocated to provide individuals with such  benefits accrued under the Plan as in effect at the beginning of the 5-year period ending on the date of Plan termination.  

(B)     If the assets available for allocation under subparagraph (A) above  are sufficient to satisfy in full the benefits described therein (without regard to this subparagraph (B)), then for purposes of  subparagraph (A),  benefits of individuals thereunder shall be determined on the basis of the Plan as amended by the most recent Plan amendment effective during such 5-year period under which  the assets available for allocation are sufficient to satisfy in full the benefits of such individuals, and any assets remaining  to be allocated shall be allocated on the basis of the Plan as amended by  the next succeeding Plan amendment effective during such period.  

(4)     To provide all other accrued benefits under the Plan.  

The amount allocated under any of paragraphs (1) through (4) above with respect  to any benefit shall be properly adjusted for any allocation of assets with respect  to that benefit under any of the preceding of said paragraphs. Except as otherwise  provided in paragraph (3) above, if the assets available for allocation under any of  said paragraphs are insufficient to satisfy in full the benefits to be provided  individuals under such paragraph, the assets shall be allocated pro rata among  such individuals on the basis of the present value, as of the termination date of the  Plan, of their respective benefits described in such paragraph. If the Secretary of  

the Treasury or his delegate determines that the allocation made pursuant to this  subsection results in discrimination prohibited by Code section 401(a)(4) then, if  required to prevent the disqualification of the Plan (or any trust under the Plan) the assets shall be reallocated to the extent necessary to avoid such discrimination  but only to the extent permitted by ERISA.  

(f)     If all liabilities of the Plan to Participants and their beneficiaries have been satisfied, any residual assets of the Plan shall be returned to the Participating Employer if such distribution does not contravene any provision of law.  

(g)     Except as otherwise required by the Pension Benefit Guaranty Corporation or its  duly authorized agents, benefits on termination of the Plan shall be distributed as  provided  in  this  subsection. The Company shall determine the method and manner in which such benefits shall be distributed to the persons entitled thereto. The Company shall have the right to postpone the distribution of benefits for a reasonable time, to require the total or partial liquidation of the Fund, to provide for the payment of certain benefits in one sum and others in installments, and to arrange for the application of all or a part of the value to be provided for any person toward the purchase of an annuity contract issued by an insurance company. In exercising such right the Company shall give recognition, to the extent it may deem it advisable or practicable to do so, to the fact that a purpose of the Plan is to provide life incomes to Participants after they have attained their  respective Normal Retirement Ages but that the exigencies of a particular case may require or make advisable a lump sum cash settlement or other distributions  in   lieu  of  such  installment  benefits. In no event, however, shall the commencement of distributions be postponed to a date later than that permitted by other provisions of the Plan, nor shall settlements be made which would be prohibited by the provisions of the Plan that relate to optional settlements.  

(h)     In the event of the termination of the Plan, all Plan provisions and any agreements  with Funding Agencies relating to the Plan shall continue to have effect for the  purpose of completing distributions in accordance with this section.  

     Sec. 12.5     Partial Termination.  If there is a partial termination of the Plan, either by  operation of law, by amendment of the Plan, or for any other reason, which partial termination  shall be confirmed by the Company, the Company shall:  

(a)     Determine the equitable part of the Fund assets held on account of Participants  with respect to when the Plan is terminated and their beneficiaries as though the partial termination was a discontinuance of joint participation in the Plan by a Participating Employer under Sec. 12.2.  

(b)     Cause that portion of the Fund allocated to those Participants (and their beneficiaries) with respect to whom the partial termination takes place to be treated as the Fund of a terminated plan with respect to such persons.  

(c)     Cause that portion of the Fund that is not allocated to those Participants (and their  beneficiaries) with respect to whom the partial termination takes place to continue to be held and administered under the Plan for the benefit of the other Participants (and their beneficiaries).  

     The provisions of Sec. 12.4 shall be applicable to the partially terminated plan, to the  Participants (and their beneficiaries) with respect to whom the partial termination takes place,  and to the funds allocated to such persons, as though it constituted a separate plan; provided,  however, that any residual assets shall be credited to the portion of the Fund referred to in  subsection (c) above rather than being returned to the Participating Employer.  

     Sec. 12.6     Merger, Consolidation, or Transfer of Plan Assets.  In the case of any merger  or consolidation of the Plan with any other plan, or in the case of the transfer of assets or  liabilities of the Plan to any other plan, provision shall be made so that each Participant and  beneficiary would (if such other plan then terminated) receive a benefit immediately after the  merger, consolidation, or transfer which is equal to or greater than the benefit he would have  been entitled to receive immediately before the merger, consolidation, or transfer (if the Plan had  then  terminated). No such  merger, consolidation, or transfer shall be effected until such statements with respect thereto, if any, required by ERISA to be filed in advance thereof have  been filed.  

     Sec. 12.7     Deferral of Distributions.  Notwithstanding any provisions of the Plan to the  contrary, in the case of a complete or partial termination of the Plan, the Company or the  Funding Agency may defer any distribution of benefit payments to Participants and beneficiaries  with respect to which such termination applies until after the following have occurred:  

(a)     Receipt of a final determination from the Treasury Department or any court of  competent jurisdiction regarding the effect of such termination on the qualified status of the Plan under Code section 401(a).  

(b)     Appropriate adjustment of the Fund to reflect taxes, costs, and expenses, if any, incident to such termination.  

ARTICLE XIII  

MISCELLANEOUS PROVISIONS  

     Sec. 13.1     Insurance Company Not Responsible for Validity of Plan.  No insurance  company that issues a contract under the Plan shall have any responsibility for the validity of the  Plan. An insurance company to which an application may be submitted hereunder may accept  such application and shall have no duty to make any investigation or inquiry regarding the  authority of the applicant to make such application or any amendment thereto or to inquire as to  whether a person on whose life any contract is to be issued is entitled to such contract under the  Plan.  

     Sec. 13.2     Headings.  Headings at the beginning of articles and sections hereof are for convenience of reference, shall not be considered a part of the text of the Plan, and shall not  influence its construction.  

     Sec. 13.3     Capitalized Definitions.  Capitalized terms used in the Plan shall have their meaning as defined in the Plan unless the context clearly indicates to the contrary.  

     Sec. 13.4     Gender.  Any references to the masculine gender include the feminine and  vice versa.  

     Sec. 13.5     Use of Compounds of Word “Here”.  Use of the words “hereof,” “herein,”  “hereunder,” or similar compounds of the word “here” shall mean and refer to the entire Plan  unless the context clearly indicates to the contrary.  

     Sec. 13.6     Construed as a Whole.  The provisions of the Plan shall be construed as a  whole in such manner as to carry out the provisions thereof and shall not be construed separately  without relation to the context.  

ARTICLE XIV  

TOP-HEAVY PLAN PROVISIONS  

     Sec. 14.1     Effective  Date.    The following provisions shall apply for Plan Years  beginning after December 31, 2001.  

     Sec. 14.2     Key Employee Defined.  “Key Employee” means any employee or former  employee of the employer (including any deceased employee) who at any time during the Plan  Year that includes the determination date was an officer of the Company or an Affiliate having  annual compensation greater than $130,000 (as adjusted under Code § 416(i)(1) for Plan Years  beginning after December 31, 2002), a five-percent owner of the Company or an Affiliate, or a  one-percent owner of the Company having annual compensation of more than $150,000. For  this purpose, annual compensation means compensation within the meaning of Code § 415(c)(3).   The determination of who is a key employee will be made in accordance with Code § 416(i)(1)  and the applicable regulations and other guidance of general applicability issued thereunder.  

     Sec. 14.3     Determination of Top-Heavy Status.  The top-heavy status of the Plan shall be determined according to the following standards and definitions:  

(a)     The Plan is a Top-Heavy Plan if the top-heavy ratio for this Plan exceeds 60  percent or if this Plan is part of a required aggregation group of plans and the top- heavy ratio for the group of plans exceeds 60 percent. However, the Plan is not a Top-Heavy  Plan with respect to a Plan Year if it is part of a permissive aggregation group of plans for which the top-heavy ratio does not exceed 60 percent.  

     (b)     The “top heavy ratio” shall be determined as follows:  

(1)     If the ratio is being determined only for this Plan or if the aggregation  group only includes defined benefit pension plans, the top heavy ratio is a  fraction, the numerator of which is the sum of the present values of the accrued benefits of all Key Employees under the Plan or plans as of the determination date (including any part of any accrued benefit distributed in the one-year period ending on the determination date), and the denominator of which is the sum of present value of all accrued benefits (including any part of any accrued benefit distributed in the one-year  period ending on the determination date) of all employees under the Plan or plans as of the determination date. Both the  numerator and the denominator referred to in the preceding sentence shall be computed in accordance with Code section 416 and the regulations thereunder.  The preceding provisions shall also apply to distributions under a terminated plan which, had it not terminated, would have been aggregated with the Plan under Code section 416(g)(2)(A). In the case of a distribution made for a reason other than severance of employment, death or disability, the one year period referred to above shall be applied by substituting “five year period” for “one year period”.    

(The “plans” referred to in the preceding sentence are the plans in the required or permissive aggregation  group under Code section 416(g)(2).)  

(2)     If the determination is being made for a required or permissive aggregation group which includes one or more defined contribution plans, the top-heavy ratio is a fraction, the numerator of which is the sum of account balances of all Key Employees under the defined contribution plans and the present value of accrued benefits under the defined benefit  plans for all Key Employees as of the determination date (including any part of any account balance or accrued benefit distributed in the one-year  period ending on the determination date), and the denominator of which is the sum of the account balances under the defined contribution plans for all employees and the present value of accrued benefits under the defined benefit plans for all employees as of the determination date (including any part of any account balance or accrued benefit distributed in the one-year period ending on the determination date subject to the special aggregation rule for terminated plans in paragraph (1) above). In the case of a  distribution made for a reason other than severance from employment, death or disability, the one-year period referred to above shall be applied by substituting “five-year period” for “one-year period”. (The “plans” referred to in the preceding sentence are the plans in the required or permissive aggregation group under Code section 416(g)(2).) Both the numerator and denominator of the top-heavy ratio shall be adjusted to reflect any contribution due but unpaid as of the determination date.  

(3)     For purposes of paragraphs (1) and (2), the value of account balances and  the present value of accrued benefits will be determined as of the most  recent valuation date that falls within the 12-month period ending on the determination date. The account balances and accrued benefits of an  employee who is not a Key Employee but who was a Key Employee in a  prior year will be disregarded. The calculation of the top-heavy ratio and  the extent to which distributions, rollovers, and transfers are taken into account will be made in accordance with Code section 416 and the regulations thereunder. When aggregating plans, the value of account  balances and accrued benefits will be calculated with reference to the determination dates that fall within the same calendar year.  

(c)     “Required aggregation group” means (i) each qualified plan of the employer in  which at least one Key Employee participates, and (ii) any other qualified plan of  the Employer that enables a plan described in (i) to meet the requirements of Code  sections 401(a)(4) or 410.  

(d)     “Permissive aggregation group” means the required aggregation group of plans  plus any other plan or plans of the employer which, when consolidated as a group  with the required aggregation group, would continue to satisfy the requirements of  Code sections 401(a)(4) and 410.  

(e)     “Determination date” for any Plan Year means the last day of the preceding Plan Year.  

(f)     The “valuation date” is the last day of each Plan Year and is the date as of which  account balances or accrued benefits are valued for purposes of calculating the top-heavy ratio.  

(g)     The “present value” of benefits under this Plan and all other defined benefit plans  of the employer for purposes of computing the top-heavy ratio shall be based on 5% interest and mortality rates based on the 1983 Male Group Annuity Mortality Table.  

(h)     If an individual has not performed any services for the employer during the one- year period ending on the determination date with respect to a Plan Year, any account balance or accrued benefit for such individual shall not be taken into  account for such Plan Year.  

(i)     For purposes of Top Heavy testing, proportional subsidies are ignored and non- proportional subsidies are considered as provided in applicable Treasury regulations.  

(j)     For purposes of Top Heavy testing, the accrued benefit of any Participant (other than a Key Employee) shall be determined:  

(1)     under the method which is used for accrual purposes for all plans of the  Participating Employers and their Affiliates; or  

(2)     if there is no method described in clause (i), as if such benefit accrued not  more rapidly than the slowest accrual rate permitted under Code section  411(b)(1)(C).  

     Sec. 14.4     Minimum Accrued Benefit.  If the Plan is a Top-Heavy Plan, notwithstanding any other provisions of this Plan, each Participant who is not a Key Employee shall have a minimum accrued benefit (to be provided by employer contributions and expressed as a single life annuity, with no ancillary benefits, commencing at Normal Retirement Age) equal to the applicable percentage of the Participant's average monthly compensation for years in the testing period.  

(a)     For purposes of this section:  

(1)     The “applicable percentage” is the lesser of 2 percent multiplied by the  Participant's number of years of service with the employer, or 20 percent. For purposes of this paragraph (1), a Participant has a year of service for each Plan Year in which he completes 1000 Hours of Service; provided, however, that the following years shall not be taken into account:  

(A)     Plan Years commencing before January 1, 1984.  

(B)     Plan Years in which the Plan is not a Top-Heavy Plan.  

(C)     Plan Years in which the Participant is a Key Employee.  

(D)     Plan Years that end before the Participant attains age 18.  

(E)     Plan Years during which the employer did not maintain the Plan or a predecessor plan.  

(2)     “Compensation” is as defined in Sec. 8.12(j).  

(3)     A Participant's “testing period” comprises the five consecutive Plan Years  during which the Participant had the greatest aggregate compensation from the employer, subject to the following:  

(2)     The Plan Years taken into account for purposes of this paragraph  shall be adjusted for years not included in years of service for  purposes of  paragraph (1) above, as provided in Code section 416(c)(1)(D)(ii).  

(3)     The following Plan Years shall be disregarded for purposes of this  paragraph if by disregarding such Plan Years the Participant's average monthly compensation for years in the testing period will be reduced:  

(i)     Any Plan Year beginning before January 1, 1984.  

(ii)     Any Plan Year commencing after the last Plan Year in which the Plan was a Top-Heavy Plan.  

(b)     If a Participant becomes entitled to a benefit under the Plan, and (i) if the form of  the benefit is other than a single life annuity and/or (ii) if the benefit commences at a date other than at Normal Retirement Age, the benefit payable to Participant must be at least the Actuarial Equivalent of the minimum single life annuity benefit commencing at Normal Retirement Age.  

(c)     A Participant's minimum accrued benefit required under this section, to the extent  required to be nonforfeitable under Sec. 14.5, shall not be subject to suspension of payment under Sec. 6.7(a)(2), unless suspension is permissible under the Code or  regulations prescribed by the Secretary of the Treasury.  

(d)     This section shall not apply to any Participant who is covered under any other  defined benefit plan of the employer to the extent the minimum benefit requirement otherwise applicable under this Plan will be satisfied by such other plan.  

     Sec. 14.5     Vesting Schedule.  If a Participant's Termination of Employment occurs under such circumstances that he is not entitled to a benefit under Article VI, and if he was an Active Participant during a Plan Year for which the Plan was a Top-Heavy Plan, he shall be entitled to a benefit under this section. Except as modified by this section, such benefit shall be payable under the terms and conditions that would be applicable to a Vested Termination benefit under  Sec. 6.5.  

(a)     The monthly amount of the benefit under this section shall be an amount equal to  the Participant's Accrued Monthly Pension multiplied by the vested percentage determined according to the number of his Years of Vesting Service, as follows:  

               Years of Vesting Service      Vested Percentage  
       
                    Less than 2                0%  
                    2 but less than 3          20%  
                    3 but less than 4           40%  
                    4 but less than 5          60%  
                    5 or more               100%  

(b)     Years of Vesting Service for purposes of this section shall be as defined in Sec. 3.6.  

(c)     This section shall not apply to a Participant who has no Hours of Service after the Plan becomes a Top-Heavy Plan.  

(d)     If the Plan ceases to be a Top-Heavy Plan and continues to be a non-Top-Heavy  Plan until the Participant's Termination of Employment, the benefit to which the Participant is entitled under this section shall not exceed the benefit to which he would have been entitled if his Termination of Employment had occurred on the date of such cessation.  

     Sec. 14.6     Definition of Employer.    For purposes of this Article XIV, the term  “employer” means the Company and any trade or business entity under Common Control with  the Company.  

     Sec. 14.7     Exception For Collective Bargaining Unit.  Sections 14.4 and 14.5 shall not apply with respect to any employee included in a unit of employees covered by an agreement  which the Secretary of Labor finds to be a collective bargaining agreement between employee  representatives and one or more employers if there is evidence that retirement benefits were the  subject of good faith bargaining between such employee representative and such employer or  employers.  

     Sec. 14.8     Special Rule for Automatic Cash Outs of Partially Vested Benefits.  This  Section shall only apply in the unlikely event that the Participant is partially vested under Sec.  14.5 or because the provisions of the Plan are changed to provide for a graduated vesting  

schedule as opposed to five year cliff vesting.  In either of those unlikely events, if the Actuarial  Equivalent present value of the vested portion of an individual’s partially vested benefit is  $5,000 or less ($3,500 or less for Participants who had Terminations of Employment before  January 1, 1999), the benefit shall be paid as provided in Sec. 8.2.  

APPENDIX A  

SOO LINE RAILROAD FUNDED PENSION PLAN
Modifications Applicable to Certain  
Former Participants in the Minneapolis, Northfield
and Southern Railway Retirement Plan  

     Prior to September 1, 1982, Minneapolis, Northfield and Southern Railway, Inc.  maintained the Minneapolis, Northfield and Southern Railway Retirement Plan (the “MN&S  Plan”) for the benefit of its eligible employees. Effective as of September 1, 1982, the MN&S  Plan is being merged with and into the Soo Line Railroad Funded Pension Plan (the “Plan”).   Persons who were participants in the MN&S Plan and who terminated employment on or after  September 1, 1982 are hereafter referred to as “MN&S Plan Participants.” Benefits payable to  MN&S Plan Participants shall be determined and paid under the Plan as modified by this  Appendix A.  

     Benefits payable with respect to any participant in the MN&S Plan who terminated  employment prior to September 1, 1982 shall be determined according to the MN&S Plan as in  effect prior to September 1, 1982. Such persons are not considered to be “MN&S  Plan Participants” for purposes of this Appendix.  

1.  

     Each MN&S Plan Participant is a Participant effective as of September 1, 1982.  

2.  

     An MN&S Plan Participant's Years of Vesting Service shall be equal to the sum of the  following:  

(a)     His years of vesting service prior to November 1, 1982 determined under Sec. 3.  10 of the MN&S Plan as if said Plan had remained in effect until October 31, 1982.  

(b)     His Years of Vesting Service after December 31, 1981 determined under Sec. 3.6  of the Plan.  For purposes of said computation, service with the Minneapolis, Northfield and Southern Railway, Inc. after December 31, 1981 and prior to July 1, 1982 shall be treated as service with the Company.  

     However, if an MN&S Plan Participant either (i) has an Employment Commencement  Date which is prior to September 1, 1977 or (ii) has, on September 1, 1982, at least five years of  vesting service as defined in Sec. 3.10 of the MN&S Plan, his Years of Vesting Service shall not  be less than the years of vesting service he would have had under Sec. 3.10 of the MN&S Plan if  said plan had remained in effect until his Termination of Employment.  

3.  

     Sec. 3.7 is modified by adding a new subsection (e) reading as follows immediately after  subsection (d) thereof:  

(a)     In the case of any MN&S Plan Participant, his Years of Credited Service shall be equal to the sum of the following, but may not exceed 30 years:  

(1)     His credited service prior to November 1, 1981 determined under Sec. 4.10 of the MN&S Plan.  

(2)     One twelfth of a Year of Credited Service for each of November and  December, 1981, provided he completed one or more Hours of Service in each of said months. No Credited Service shall be given for either of said months if he performed no Hours of Service in said month.  

(3)     His Years of Credited Service for 1982 and each subsequent Plan Year  determined under 3.7(b). For purposes of said computation, service with the Minneapolis, Northfield and Southern Railway, Inc. after December 31, 1981 and prior to July 1, 1982 shall be treated as service with the  Company.  

4.  

     An MN&S Plan Participant's Accrued Monthly Pension under Sec. 4.6 of the Plan shall  not be less than his accrued monthly pension determined as of August 31, 1982 under Sec. 4.7 of  the MN&S Plan. For purposes of determining the benefit under said Sec. 4.7, his service and  compensation after August 31, 1982 shall be disregarded.  

5.  

     For purposes of determining an MN&S Plan Participant's Certified Earnings under Sec.  4.7 of the Plan, compensation paid by a participating employer in the MN&S Plan prior to July 1,  1982 shall be treated as compensation from the Company.  

APPENDIX B  

SOO LINE RAILROAD FUNDED PENSION PLAN
Schedule of Modified Lump Sum  
Death Benefits Under Section 7.4  

     Pursuant to section 7.4 of the Plan certain Participants are eligible for lump sum death  benefits in an amount other than $4,000. The following individuals shall receive a single sum  death benefit in the amount set forth opposite their name: [Redacted]

APPENDIX C  

SOO LINE RAILROAD FUNDED PENSION PLAN
Modifications Applicable to Certain  
Former Participants in the Pension Plan of  
Chicago, Milwaukee, St. Paul, and Pacific Railroad Company  

     Prior to February 19, 1985 (the “Acquisition Date”), Chicago, Milwaukee, St. Paul, and  Pacific Railroad Company (the “Milwaukee Road”) maintained the Pension Plan of Chicago,  Milwaukee, St. Paul, and Pacific Railroad Company (the “Milwaukee Road Plan”) for the benefit  of its eligible employees. On the Acquisition Date, the assets of the Milwaukee Road were acquired by SLRCO, Inc., an Affiliate of the Company.  

     Effective as of the Acquisition Date, the Milwaukee Road Plan is being merged with and  into the Soo Line Railroad Funded Pension Plan (the “Plan”). (While the merger is effective as  of the Acquisition Date, assets of the two Plans will be combined no earlier than December 1,  1985.)  

     Persons who were participants in the Milwaukee Road Plan and who terminated  employment after the Acquisition Date are hereafter referred to as “Milwaukee Road Plan  Participants.” Benefits payable to Milwaukee Road Plan Participants shall be determined and  paid under the Plan as modified by this Appendix C.  

     Benefits payable with respect to any participant in the Milwauke Road Plan who  terminated employment on or before the Acquisition Date shall be determined according to the  Milwaukee Road Plan as in effect prior to the Acquisition Date. Such persons are not considered  to be “Milwaukee Road Plan Participants”  for purposes of this Appendix. However, preretirement death benefits are provided with respect to certain such participants under Part 8 of  this Appendix, and pensions which would otherwise be payable with respect to such participants  in small monthly amounts may be paid in single sums or less frequent installments pursuant to  Sec. 8.2 of the Plan.  

1.  

     Each Milwaukee Road Plan Participant is a Participant effective as of the Acquisition  Date.  

2.  

     The Milwaukee Road Inc. (formerly named SLRCO, Inc.) is a Participating Employer  effective as of the Acquisition Date.  

3.  

     A Milwaukee Road Plan Participant's Years of Vesting Service shall be equal to the sum  of the following:  

(a)     His Years of Service prior to January 1, 1986 determined under Sec. 1.18(b) of  the Milwaukee Road Plan as if said Plan had remained in effect until December  31, 1985.  

(b)     His Years of Vesting Service after December 31, 1985 determined under Sec. 3.6  of the Plan.  

     However, if a Milwaukee Road Plan Participant either (i) has an Employment  Commencement Date which is prior to January 1, 1981 or (ii) has, on December 31, 1985 at least  five Years of Service as defined in Sec. 1.18(b) of the Milwaukee Road Plan, his Years of  Service shall not be less than the Years of Service he would have had under Sec. 1.18(b) of the  Milwaukee Road Plan if said plan had remained in effect until his Termination of Employment.  

4.  

     Sec. 3.7 is modified by adding a new subsection (e) reading as follows immediately after  subsection (d) thereof:  

(a)     In the case of any Milwaukee Road Plan Participant, his Years of Credited  Service shall be equal to the sum of the following, but may not exceed 30 years:  

(1)     His Credited Service prior to January 1, 1986 determined under Sec. 1.19  of the Milwaukee Road Plan.  

(2)     His Years of Credited Service for 1986 and each subsequent Plan Year  determined under Sec. 3.7(b).  

5.  

     If as of December 31, 1984, service prior to that date was not recognized under the  Milwaukee Road Plan because the service was followed by a break in service, that service will  not be recognized in determining Years of Credited Service or Years of Vesting Service under  the Plan.  Service recognized as of December 31, 1984 under the Milwaukee Road Plan shall not  be disregarded due to a break in service occurring in 1985 or thereafter.  

6.  

     A Milwaukee Road Plan Participant's Accrued Monthly Pension under Sec. 4.6 of the  Plan shall not be less than his accrued benefit determined as of December 31, 1985 (or the date  of his Termination of Employment, if earlier) under Sec. 1.28 of the Milwaukee Road Plan. For  purposes of determining the benefit under said Sec. 1.28, his service and compensation after  December 1985 (or the date of his Termination of Employment, if earlier) shall be disregarded.  

7.  

     For purposes of determining a Milwaukee Road Plan Participant's Certified Earnings  under Sec. 4.7 of the Plan:  

(a)     Total compensation paid for service as a participant in the Milwaukee Road Plan  shall be included in Certified Earnings;  provided,  however, that Certified Earnings shall be limited or adjusted as provided in Sec. 4.7(a), (d), and (f) of the Plan.  

(b)     However, deferred wages shall be included in the years 1980 and 1981, as if paid,  and when paid later in cash or in the form of preferred stock, will be excluded from Certified Earnings.  

(c)     Certified Earnings does not include any amount by which wages were reduced  under the reduced wage agreements in effect during 1982, 1983, and 1984.  

(d)     Payments made under Exhibit K or in lieu thereof are excluded from Certified Earnings.  

8.  

     If a Participant in the Milwaukee Road Plan had a Termination of Employment prior to  the Acquisition Date, a death benefit will be paid under Plan Sec. 7.1 to a Qualified Spouse if the  following requirements are met:  

(a)     His death occurred on or after August 23, 1984.  

(b)     He was entitled to a pension under the Milwaukee Road Plan, but his death  occurred prior to his benefit commencement date.  

(c)     He elected to be covered by this option and the election was made in accordance  with procedures established by the Company.  

APPENDIX D  

GRANDFATHERED ACCRUED BENEFIT  

     This Appendix D describes eligibility requirements for the Grandfathered Accrued  Benefit, referenced in Sec. 4.6(c)(1). This Appendix D also describes the amount of  the  Grandfathered Accrued Benefit. Capitalized terms used herein that are not defined in this  Appendix have the same meaning as defined in the main text of the Plan document.  

1.  

     Eligibility  for  Grandfathered  Benefit.  A Participant shall be eligible to receive the  Grandfathered Accrued Benefit described in Sec. D.2 only if requirements in (a), (b) and (c)  below are all satisfied:  

(a)     The Participant must have been actively employed by the Company or an Affiliate  (including Canadian Affiliates) on December 31, 2000.  For the purposes of this  subsection (a), a Participant who was disabled (as determined by the Company in  its sole discretion) or on an approved leave of absence (including short term sick  leave) on December 31, 2000, shall be treated as being actively employed on that  date; and  

(b)     The Participant must have had at least a portion of a Year of Credited Service on  December  31, 2000. Notwithstanding the foregoing, if a Participant was a Qualified Employee on December 31, 2000 and subsequently receives at least a  portion of a Year of Credited Service, attributable to pre-January 1, 2001 service, due to the application of the special rules for transfers to Qualified Employee positions described in Sec. 3.7(c),  the Participant will be treated as having satisfied the requirements of this subsection (b); and  

(c)     The Participant must have completed at least one Hour of Service on or after January 1, 2001.  

2.  

     Amount of Grandfathered Accrued Benefit.  Subject to the provisions of subsection (c) of  this Sec. D.2, an eligible Participant’s Grandfathered Accrued Benefit shall be equal to the sum  of the “prior service portion” described in (a) below and the “future service portion” described in  (b) below, determined as follows:  

(a)     Prior Service Portion Attributable to Service Prior to January 1, 2001:  

 The portion of a Grandfathered Participant’s Accrued Monthly Pension that is  attributable to pre-January 1, 2001 Years of Credited Service is equal to the  amount in (1) below, minus the amounts in (2) and (3) below, multiplied by the  factor described in (4) below. 

(1)     One and four tenths percent (1.40%) of the Participant’s Final Average  Monthly Earnings (determined as of December 31, 2000) multiplied by  the number, not exceeding 30, of his or her Years of Credited Service  attributable to service performed prior to January 1, 2001;  

Minus  

(2)     One-half of one percent (0.5%) of the amount in (A) or (B), whichever is  less, multiplied by the number, not exceeding 30, of the Participant’s Years of  Credited Service attributable to service performed prior to January 1, 2001:  

(A)     The Participant’s Final Average Monthly Earnings (determined as of December 31, 2000).  

(B)     $2,755, which is one-twelfth (1/12) of the average (without  indexing) of the annual wage bases under Tier I of the Railroad Retirement Act in effect for the 35-year period ending with the year 1999.  

Minus  

(3)     One-half of one percent (0.5%) of the amount in (A) or (B), whichever is  less, multiplied by the number, not exceeding 30, of the Participant’s Years of  Credited Service attributable to service performed prior to January 1, 2001:  

(A)     The Participant’s Final Average Monthly Earnings determined as of December 31, 2000.  

(B)     $4,080, which is one-twelfth (1/12) of the average of the annual  wage bases under Tier II of the Railroad Retirement Act for the five years ending with the year 1999.  

However, if the Participant has a Termination of Employment after  attaining age 55 but before attaining age 60, the one-half of one percent  (0.5%) factor in this paragraph (3) shall be multiplied by the appropriate  percentage from the following table based on the Participant’s age when  pension payments commence:  
       

          Age When Pension  
          Payments Commence        Percentage  

                     59                    92%  
                     58                    84%  
                     57                    76%  
                     56                    68%  
                     55                    60%  

           In applying said table, straight line interpolation shall be used.  

Multiplied By  

(3)     A factor equal to the quotient (not less than one) obtained by dividing (i)  the Participant’s Final Average Monthly Earnings, determined as of the  date of his or her Termination of Employment, by (ii) the Participant’s  Final Average Monthly Earnings, determined as of December 31, 2000.  

For purposes of applying the provisions of this subsection (a) the reductions in  paragraphs (2) and (3) apply without regard to whether the Participant is eligible  for either a benefit payable under the Railroad Retirement Act or the Social  Security Act.   

(b)     Future Service Portion Attributable to Service After December 31, 2000:  

The portion of a Grandfathered Participant’s Accrued Monthly Pension that is  attributable to post-December 31, 2000 Years of Credited Service is equal to the  sum of the amounts in (1) and (2) below, multiplied by the number in (3) below as  follows:  

(1)     One half of one percent (0.5%) of the portion of the Participant’s Final  Average Monthly Earnings that does not exceed one-twelfth (1/12) of the  average annual wage bases under Tier I of the Railroad Retirement Act,  

Plus  

(2)     One and one quarter percent (1.25%) of the portion of the Participant’s  Final Average Monthly Earnings in excess of one-twelfth (1/12) of the  average annual wage bases under Tier I of the Railroad Retirement Act, if  any,  

Multiplied By  

(3)     The number of the Participant’s total Years of Credited Service, (not  exceeding 30), minus the number of the Participant’s pre-January 1, 2001 Years of Credited Service (not exceeding 30), recognized in subsection (a) above.  

 For purposes of this subsection (b), the “average annual wage bases under Tier I  of the Railroad Retirement Act” is the average of the maximum annual wage  bases under Tier I of the Railroad Retirement Act for the thirty-five years prior to  the latest year in which the Participant ceases to be a Qualified Employee.   

(c)     Special Rules for Transfers Into Qualified Employee Status:  

This subsection (c) applies to employees who transfer into Qualified Employee positions and qualify for Years of Credited Service attributable to service  performed as a non-Qualified Employee prior to the transfer, under the  circumstances described in Sec. 3.7(c).  The following special rules apply to these  individuals when determining the amount, if any, of their Grandfathered Accrued  Benefit under Sec. D.2 of this Appendix.  

(1)     If, on December 31, 2000, a Participant has Years of Credited Service  attributable to service performed prior to January 1, 2001, but is not a  Qualified Employee on December 31, 2000, the wage bases for the Social Security Act, and Tier I and Tier II of the Railroad Retirement Act as in  effect at the end of the Participant’s pre-January 1, 2001 Years of Credited  Service shall be used for purposes of determining the offsets in D.2(a)(2) and (3) (rather than using the years ending in the year 1999).  

(2)     If a Participant is not a Qualified  Employee on December 31, 2000,  because the Participant’s wages and hours are covered by the provisions of  a  collective bargaining agreement as provided in Sec. 2.13(b), the Participant’s Grandfathered Accrued Benefit, if any, attributable to pre- January 1, 2001 Years of Credited Service, described in Sec. D.2(a), shall be determined without using the factor described in Sec. D.2(a)(4), unless the Participant again becomes a Qualified Employee on or after January 1, 2001, in which case the factor described in D.2(a)(4) shall be used.  

(3)     If a Participant is a Qualified Employee on December 31, 2000 and  subsequently completes the 60-month requirement  under Sec. 3.7(c), thereby entitling the Participant to pre-January 1, 2001 Years of Credited  Service, the  Years of Credited Service attributable to service prior to January1, 2001 shall be included in the “Prior Service Portion” of his or her Grandfathered Accrued Benefit described in Sec. D.2(a). If a Participant, who was a Qualified Employee  on December 31, 2000, subsequently becomes entitled to Years of Credited Service attributable to  post-2000 service due to the application of Sec. 3.7(c),  such post- December 31, 2000 Years of Credited Service shall be included in the  “Future Service Portion” of his or her Grandfathered Accrued Benefit  described in Sec. D.2(b).EX-4.75

  Exhibit 4.75

   

   

   

   

  AVISTA CORPORATION

  DESCRIPTION OF COMMON STOCK

  (Registered under Section 12(b) of the Securities Exchange Act of 1934, as amended)

   

   

   

  General

  The authorized capital stock of Avista, as set forth in its Restated Articles of Incorporation (the “Articles”), consists of 10,000,000 shares of Preferred Stock, cumulative, without nominal or par value (the “Preferred Stock”), which is issuable in series, and 200,000,000 shares of Common Stock without nominal or par value (the “Common Stock”). The Common Stock is listed on the New York Stock Exchange and is registered as a class under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Preferred Stock is registered as a class under Section 12(g) of the Exchange Act. As of December 31, 2021, no shares of preferred stock were outstanding. However, subject to the limitations set forth in the Articles and such other limitations as are provided by law, the Board of Directors has the authority to establish series of preferred stock, to determine the relative rights of series of preferred stock so established and to cause the Company to issue and sell the shares of any such series of preferred stock.

   

  The following is a description of certain of the rights and privileges of the Common Stock.

   

  The terms of the Common Stock include those stated in the Articles and Avista’s Bylaws (the “Bylaws”) and those made applicable thereto by the Washington Business Corporation Act (the “Washington BCA”). The following summary is not complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Articles, the Bylaws and the Washington BCA. Avista has filed the Articles and the Bylaws as exhibits to its reports filed under the Exchange Act. Whenever particular provisions of the Articles, the Bylaws or the Washington BCA are referred to, the summaries of those provisions set forth herein are qualified in their entirety by reference to the actual provisions set forth in the Articles, the Bylaws or the Washington BCA, as the case may be.

   

   

  		 

  

   

  Dividend Rights; Rights upon Liquidation; No Pre-Emptive Rights

  After full provision for all Preferred Stock dividends declared or in arrears, the holders of Common Stock are entitled to receive such dividends as may be lawfully declared from time to time by the Board of Directors.

   

  In the event of any liquidation or dissolution of Avista, after satisfaction of the preferential liquidation rights of the Preferred Stock (including accumulated dividends), the holders of Common Stock would be entitled to share ratably in all assets of Avista available for distribution to shareholders.

   

  No holder of Common Stock has any pre-emptive rights.

   

  Voting Rights

   

  General; Quorum

  The holders of the Common Stock have sole voting power, except as indicated below or as otherwise provided by law. Each holder of Common Stock is entitled to one vote per share.

   

  Under the Washington BCA, a majority of the votes entitled to be cast on a corporate action by a voting group constitutes a quorum of that group for that corporate action. If a quorum exists, a corporate action, other than the election of directors, is approved by the voting group if the votes cast within the voting group favoring the corporate action exceed the votes cast within the voting group opposing the corporate action.

   

  Election of Directors

  In an uncontested election of directors, each vote may be cast “for” or “against” one or more candidates, or a shareholder may “abstain” with respect to one or more candidates. A candidate is elected to the Board of Directors only if the number of votes “for” such candidate exceeds the number of votes “against” such candidate. Shares otherwise present at the meeting but for which there is an “abstention” or as to which no authority or direction is given or specified with respect to a candidate are not counted as votes “for” or “against”. If an incumbent director does not receive a majority of votes cast, he or she would continue to serve a term that would terminate on the date that is the earliest of (a) the date of the commencement of the term of a new director selected by the Board to fill the office held by such director, (b) the effective date of the resignation of such director and (c) the later of (i) the last day of the sixth calendar month commencing after the election and (ii) December 31 of the calendar year in which the election occurred. In a contested election — that is, an election in which the number of candidates exceeds the total number of directors to be elected — shareholders would be allowed to vote “for” one or more candidates (not to exceed the number of directors to be elected) or “withhold” votes with respect to one or more candidates. The candidates elected would be those receiving the largest number of votes (up to the number of directors to be elected). Shareholders are not allowed to cumulate their votes in any election of directors (whether or not contested).

   

  Senior Class of Stock; Major Corporate Transaction

  Under the Articles, the approval of the holders of the majority of the outstanding shares of Common Stock is required to create a new class of stock, including, for example, preference stock or any other class of stock senior to the Common Stock. In addition, in any circumstance in which 

  2

  		 

  

   

  the Washington BCA would require the approval of shareholders to authorize (1) the merger of the Company with or into another entity or a statutory share exchange with another entity, (2) a sale, lease, exchange or other disposition of property of the Company or (3) the dissolution of the Company, the requisite shareholder approval (in addition to any required approval by the holders of Preferred Stock) is the affirmative vote of the holders of a majority of the outstanding shares of Common Stock, unless the Washington BCA requires a higher standard.

   

  Voting Rights of Preferred Stock

  Under the Articles, whenever and as often as, at any date, dividends payable on any shares of Preferred Stock shall be in arrears in an amount equal to the aggregate amount of dividends accumulated on such shares of Preferred Stock over the eighteen (18) month period ended on such date, the holders of the Preferred Stock, voting separately and as a single class, are entitled to elect a majority of the Board of Directors, and the holders of the Common Stock, voting separately and as a single class, are entitled to elect the remaining directors. Such voting rights of the holders of the Preferred Stock cease when all defaults in the payment of dividends on the Preferred Stock have been cured.

   

  In addition, the consent of various proportions of the Preferred Stock at the time outstanding is required to adopt any amendment to the Articles which would authorize any new class of stock ranking prior to or on a parity with the Preferred Stock as to certain matters, to increase the authorized number of shares of the Preferred Stock, to change any of the rights or preferences of outstanding Preferred Stock or to issue additional shares of Preferred Stock unless an earnings test is satisfied.

   

  Under the Washington BCA, the approval of the holders of a majority of the outstanding shares of Preferred Stock is required in connection with certain changes in the capital structure of Avista or in certain rights and preferences of the Preferred Stock, including certain of the changes referred to in the preceding paragraph. In addition, the Washington BCA requires approval of certain mergers, share exchanges and other major corporate transactions by the holders of two-thirds of the outstanding Preferred Stock.

   

  Board of Directors

  The Articles provide that the number of directors of the Company will be the number, not to exceed eleven, that the Board of Directors specifies from time to time in the Bylaws, subject to the rights of holders of the Preferred Stock to elect directors in certain circumstances. Both the Articles and the Bylaws provide that all directors will be elected at each annual meeting for a term that will expire at the next succeeding annual meeting.

   

  Vacancies occurring in the Board of Directors may be filled by the Board. Directors may be removed only for cause and only if the number of votes cast by holders of Common Stock for the removal of a director exceeds the number of votes cast against such removal.

   

  The Articles and the Bylaws further require an affirmative vote of the holders of at least 80% of the outstanding shares of Common Stock to alter, amend or repeal the provisions relating to the Board of Directors and the filling of vacancies on, and the removal of members from, the Board of Directors.

   

  3

  		 

  

   

  Advance Notice of Shareholder Nominations for Director and Proposals of Other Business

  Under the Bylaws, at an annual meeting of shareholders only such nominations of individuals for election to the Board of Directors shall be made as shall have been properly made and only such other business shall be transacted as shall be properly brought before the meeting, in accordance with the timing and information requirements set forth in the Bylaws. In general, a shareholder’s notice of intention to nominate a candidate for director or bring other business before the meeting must be delivered in writing not less than 90 nor more than 180 days prior to the first anniversary date of the preceding year’s annual meeting, and the information contained in or accompanying such notice shall be updated periodically up to the time of the meeting. Only shareholders of record (as of the date of the notice and the date of the meeting) who have complied with the procedures set forth in the Bylaws and appear at the meeting in person or by qualified representative are eligible to nominate a candidate for director or bring other business before the meeting.

   

  A shareholder notice must contain information regarding the proponent, the nominee (if any) and their respective shareholdings and derivative transactions and, in addition, information as to:

  •persons associated, affiliated or acting in concert with, the shareholder and the nominee (if any);

  •purchases and sales by the shareholder of Avista’s stock during the 24 month period preceding the shareholder notice;

  •agreements, arrangements or understandings between or among the shareholder, any shareholder associated person or any other person that relates to the proposed business or proposal; and

  •additional information about a shareholder’s nominee, including (i) the nominee’s occupation, and (ii) any related person transactions between the nominating shareholder and shareholder associated persons, and the nominee and nominee associated persons.

   

  A shareholder proposing to nominate an individual for election as a director must submit a questionnaire (similar to Avista’s directors’ and officers’ questionnaire) completed and signed by the nominee, which also includes representations by the nominee concerning (i) the absence of certain voting commitments and compensation or indemnification arrangements and (ii) the nominee’s compliance with the applicable law and Avista’s policies.

   

  Proposed business will not be transacted and proposed nominations will not be made if the shareholder (or qualified representative) does not appear at the meeting and satisfy the other requirements of the Bylaws.

   

  These procedures and information requirements apply to any nomination to be made at, or other business to be brought before, a shareholder meeting, including any proposal that is to be included in Avista’s Proxy Statement pursuant to Rule 14a-8 under the Exchange Act.

   

  Proxy Access

  4

  		 

  

   

   

  General

  Subject to the conditions, limitations and exceptions set forth in the Bylaws, each Eligible Access Shareholder (as defined) may designate one nominee to election as a director of the Company (an “Access Nominee”) for inclusion in the proxy statement and proxy card of the Board of Directors used for each annual meeting of shareholders.

   

  In order to so designate an Access Nominee, an Eligible Access Shareholder shall comply with all requirements relating to the nomination of a candidate for election as a director and shall deliver, no later than the Access Notice Date (as defined), the notice and accompanying documentation required for the nomination of such candidate, as described above under “Advance Notice of Shareholder Nominations for Director and Proposals of Other Business.” In addition, no later than the Access Notice Date, the Eligible Access Shareholder shall deliver:

  •a request that the Access Nominee be included in the Board of Director’s proxy statement and proxy card, together with the written consent of such Access Nominee to be so included and to serve if elected;

  •agreements and instruments, specified in the Bylaws, containing various representations and warranties as to such Eligible Access Shareholder and such Access Nominee and various agreements on the part of each of them;

  •any statement (not to exceed 500 words) that the Eligible Access Shareholder requests to be included in such proxy statement.

   

   

  5

  		 

  

   

  Number of Nominees

  Each Eligible Access Shareholder (including, for this purpose, its affiliates) has the right to designate one, but no more than one, Access Nominee, except that the Board of Directors is not required to include in its proxy statement or on its proxy card more than the Maximum Number of Access Nominees. If there are more than the Maximum Number of Access Nominees for any annual meeting of shareholders, the Access Nominees will be included in the order of the number (largest to smallest) of shares of the Common Stock Owned of the Eligible Access Shareholders proposing such nominees.

   

  Exceptions and Limitations

  Anything in the Bylaws to the contrary notwithstanding, if, among other things:

  •the Company receives proper notice that any shareholder intends to nominate a candidate for director at the annual meeting and not request the inclusion of such candidate in the proxy statement of the Board of Directors;

  •the Board of Directors determines that (i) any Access Nominee’s nomination or election to the Board of Directors would result in the Company violating or failing to be in compliance with any applicable law, rule or regulation or the Articles or Bylaws or (ii) any Access Nominee would not be independent under various applicable standards, is the subject of a pending criminal proceeding or has been convicted in such a proceeding within the past ten years, or, without authorization of the Federal Energy Regulatory Commission, would upon election to the Board of Directors, be in violation of the Federal Power Act;

  •any Access Nominee was included in the proxy statement and proxy card of the Board of Directors and nominated for election to the Board of Directors at one of the Company’s two preceding annual meetings of shareholders and received a vote of less than 25% of the shares of Common Stock;

  •any of the representations or warranties made, or any of the other information provided, by any Eligible Access Shareholder or any Access Nominee in any of the documents delivered to the Company contains any misstatement or omission of a material fact or if there occurs a material breach of any of the agreements or other obligations contained in such documents; or

  •any Eligible Access Shareholder, or a qualified representative, fails to appear at the annual meeting of shareholders and nominate an Access Nominee;

  •then, in any such case, among other things,

  •the Board of Directors will not be required to include such Access Nominee (any Access Nominee in the case of the first bullet point above) in its proxy statement and proxy card;

  •the nomination (if made) of such Access Nominee will be disregarded; and/or

  •in any event, such Access Nominee will not be voted on at the annual meeting of shareholders, whether or not such Access Nominee was included in the proxy 

  6

  		 

  

   

  statement and proxy card of the Board of Directors and whether or not proxies in respect of a vote on such Access Nominee have been solicited or received by the Board of Directors.

   

  Anything in the Bylaws to the contrary notwithstanding, the Board of Directors may omit from its proxy statement, or may supplement or correct, any information, including all or any portion of the statement in support of any Access Nominee, if the Board of Directors determines, among other things, that such information contains misstatements or omissions of material facts or that the inclusion of such information would violate applicable law.

   

  Nothing in the Bylaws limits the Company’s right to solicit against and include in its proxy statement its own statements relating to, any Access Nominee.

   

  Definitions

  As used in this section:

   

  “Access Notice Date” means the thirtieth (30th) day following the earliest date on which a shareholder notice of a proposed nomination of a candidate for director may be made under the applicable provision of the Bylaws, as generally described above under “Advance Notice of Shareholder Nominations for Director and Proposals of Other Business.”

   

  “Eligible Access Shareholder” means, subject to the specific provisions of the Bylaws, a shareholder who (1) is eligible under the Bylaws to nominate a candidate for director (or a group of not more than 20 such shareholders) and (2)(a) has continuously Owned at least the Minimum Number of shares of the Common Stock throughout the preceding three-year period and through the date of the annual meeting of shareholders and (b) otherwise satisfies the conditions and complies with the provisions of the Bylaws.

   

  “Maximum Number” means, except as otherwise set forth in the Bylaws, the number of members of the Board of Directors that constitutes 20% of the total number of such members as of the Access Notice Date (rounded down to the nearest whole number); provided, however, that the Maximum Number for a particular annual meeting shall be reduced as set forth in the Bylaws.

   

  “Minimum Number” means the number of shares of the Common Stock that constitutes 3% of the total number of shares outstanding as of the most recent date prior to the Access Notice Date as of which such number is given in any document filed by the Company pursuant to the Exchange Act.

   

  “Own,” with respect to shares of the Common Stock, means, except as otherwise set forth in the Bylaws, to possess both the full voting and investment rights pertaining to, and the full economic interest in, such shares; provided, however, that the number of shares so Owned shall not include, or shall be reduced by, any shares purchased or sold in an unsettled transaction, sold short, borrowed or subject to any derivative or similar agreement that reduces the holder’s voting rights in respect of such shares or hedges or offsets the economic interest otherwise attributable to such shares.

   

  Special Meetings of Shareholders

  7

  		 

  

   

  The Articles provide that a special meeting of shareholders may be called by certain corporate officers and shall be called by the President at the request of the holders of two-thirds of the outstanding shares of Common Stock.

   

  “Fair Price” Provision

  The Articles contain a “fair price” provision which requires the affirmative vote of the holders of at least 80% of the outstanding shares of Common Stock for the consummation of certain business combinations, including mergers, consolidations, recapitalizations, certain dispositions of assets, certain issuances of securities, liquidations and dissolutions involving Avista and a person or entity who is or, under certain circumstances, was, a beneficial owner of 10% or more of the outstanding shares of Common Stock (an “Interested Shareholder”) unless

  •such business combination has been approved by a majority of the directors unaffiliated with the Interested Shareholder, or

  •certain minimum price and procedural requirements are met. The Articles provide that the “fair price” provision may be altered, amended or repealed only by the affirmative vote of the holders of at least 80% of the outstanding shares of Common Stock.

  Statutory Limitation on “Significant Business Transactions”

   

  General

  The Washington BCA contains provisions that limit our ability to engage in “significant business transactions” with an “acquiring person”, each as defined below. Avista has no right to waive the applicability of these provisions.

   

   

  8

  		 

  

   

  Significant Business Transactions Within Five Years of Share Acquisition Time

  Subject to certain exceptions, for five years after an “acquiring person’s” “share acquisition time,” Avista may not engage in any “significant business transaction” with such “acquiring person” unless:

  •before such “share acquisition time”, a majority of the Board of Directors approves either:

  osuch “significant business transaction”; or

  othe purchase of shares made by such “acquiring person”; or

  •at or subsequent to such “share acquisition time”, such “significant business transaction” has been approved by:

  oa majority of the Board of Directors; and

  othe holders of 2/3 of the outstanding shares of Common Stock (except shares beneficially owned by or under the voting control of the “acquiring person”).

   

  Significant Business Transactions More Than Five Years After Share Acquisition Time

  Avista may not engage in certain “significant business transactions” (including mergers, share exchanges and consolidations) with any “acquiring person” unless:

  •the transaction complies with certain “fair price” provisions specified in the statute; or

  •no earlier than five years after the “acquiring person’s” “share acquisition time”, the “significant business transaction” is approved at an annual or special meeting of shareholders by holders of a majority of the outstanding shares of common stock by or under the voting control of the "acquiring person" may not be counted in determining whether the “significant business transaction” has been approved.

   

   

  9

  		 

  

   

  Definitions

  As used in this section:

   

  “Significant business transaction” means any of various specified transactions involving an “acquiring person”, including:

  •a merger, share exchange, or consolidation of Avista or any of its subsidiaries with an “acquiring person” or its affiliate;

  •a sale, lease, transfer or other disposition to an “acquiring person” or its affiliate of assets of Avista or any of its subsidiaries having an aggregate market value equal to 5% or more of all of the assets determined on a consolidated basis, or all the outstanding shares of Avista, or representing 5% or more of its earning power or net income determined on a consolidated basis;

  •termination, at any time over the five-year period following the “share acquisition time”, of 5% or more of the employees of Avista as a result of the “acquiring person’s” acquisition of 10% or more of the shares of Avista; and

  •the issuance or redemption by Avista or any of its subsidiaries of shares (or of options, warrants, or rights to acquire shares) of Avista or any of its subsidiaries to or beneficially owned by an “acquiring person” or its affiliate except pursuant to an offer, dividend distribution or redemption paid or made pro rata to all shareholders (or holders of options, warrants or rights).

  “Acquiring person” means, with certain exceptions, a person (or group of persons) other than Avista or its subsidiaries who beneficially owns 10% or more of the outstanding Common Stock of Avista.

   

  “Share acquisition time” means the time at which a person first becomes an “acquiring person” of Avista.

   

   

  10

  		 

  

   

  Regulatory Approvals Required for An Acquisition of Avista

   

  General

  As a public utility company, Avista is subject to the jurisdiction of the federal and state utility regulatory commissions listed below. Although there is specific statutory language in each jurisdiction that defines the transactions that would require commission approval, in general any acquisition of direct or indirect control over, or other direct or indirect transfer or acquisition of the utility facilities of, Avista by any means (any such transaction being called, for convenience, an “Acquisition”), would be subject to the approval of such commissions. The following is an outline of the primary standards for approval in each jurisdiction, but it is not a complete list of all approvals that would be required.

   

  Washington

  As a condition to its approval of a proposed Acquisition, the Washington Utilities and Transportation Commission would have to conclude, among other things, that the Acquisition would provide a “net benefit” to Avista’s customers and would otherwise be “consistent with the public interest.”

   

  Idaho

  As a condition to its approval of a proposed Acquisition, the Idaho Public Utilities Commission (the “IPUC”) would have to conclude, among other things, that the Acquisition would be “consistent with the public interest”. In addition, because any Acquisition would include hydropower water rights used in the generation of electric power, the Idaho Department of Water Resources would have to issue conditions protecting the public interest and holders of existing water rights with respect to the hydropower water rights to be transferred.

   

  In addition, a separate Idaho statute, on its face, provides, subject to certain exceptions, that no interest in any electric public utility property may be transferred to or acquired by, directly or indirectly, (1) any government or governmental or political entity organized or existing under the laws of any other state, or any corporation or other organization whose capital stock or other evidence of ownership is owned or controlled, directly or indirectly, by any of the foregoing or (2) any corporation or other organization that (a) is organized under the laws of any other state and (b) is not an “electric public utility” or “electrical corporation” subject to the jurisdiction of the IPUC.

   

  Montana

  As a condition to its approval of a proposed Acquisition, the Public Service Commission of the State of Montana (the “MPSC”) would have to conclude, among other things, that the Acquisition would satisfy any of three standards – the “public interest” standard, the “no-harm-to-consumers” standard or the “net-benefit-to-consumers” standard. The MPSC has not enunciated a specific standard, applicable in every case, because of the variety of situations that can arise.

   

   

  11

  		 

  

   

  Oregon

  In addition to requiring approval by the Public Utility Commission of Oregon (the “OPUC”) of any Acquisition, Oregon law separately requires OPUC approval of any transaction whereby any person, directly or indirectly, would “acquire the power to exercise any substantial influence over the policies and actions of a public utility” if such person is, or would become, an “affiliated interest” with such public utility (defined to include a person owning or holding, directly or indirectly, 5% or more of the voting securities of a public utility). As a condition to its approval of the acquisition of such a “substantial influence”, as described above, the OPUC would have to conclude, among other things, that the proposed transaction would “serve the public utility’s customers and [be] in the public interest” (which the OPUC interprets as a “net benefits” test).

   

  Alaska

  Alaska law would require the approval by the Regulatory Commission of Alaska (the “RCA”) for any Acquisition since such a transaction would constitute an indirect acquisition of a controlling interest in Alaska Electric Light and Power Company, which is an indirect, wholly owned subsidiary of Avista. As a condition to its approval of a proposed Acquisition, the RCA would have to conclude, among other things, that the proposed acquiror is "fit, willing and able" and that the proposed transaction is “consistent with the convenience and necessity of the public.”

   

  Federal

  As a condition to its approval of a proposed Acquisition, the Federal Energy Regulatory Commission would have to conclude, among other things, that the Acquisition would be “consistent with the public interest”, considering, among other things, the effect of the transaction on competition in wholesale electric power markets and the rates for wholesale power sales or electric transmission services.

   

  Anti-Takeover Effect

  Certain provisions of the Articles and the Bylaws described above under “Board of Directors”, the provisions of the Bylaws described above under “Advance Notice of Shareholder Nominations for Director and Proposals of Other Business” and the provisions of the Articles described above under “Special Meetings of Shareholders” and “‘Fair Price’ Provision”, together with the provisions of the Washington BCA described above under “Statutory Limitations on ‘Significant Business Transactions’”, considered either individually or in the aggregate, may have an “anti-takeover” effect. These provisions could discourage a future takeover attempt which is not approved by Avista’s Board of Directors, but which individual shareholders might deem to be in their best interests or in which shareholders would receive a premium for their shares over current market prices.

   

  In addition, the provisions of federal and state utility law described under “Regulatory Approval Required for an Acquisition of Avista” could discourage any future takeover attempt or other business combination, even if it were approved by the Company’s Board of Directors and even if individual shareholders might deem it to be in their best interests.

   

   

  12

  		 

  

   

  Miscellaneous

  The outstanding shares of Common Stock are fully paid and non-assessable. The holders of shares of Common Stock are not and will not be subject to liability for further calls or assessment by, or for liabilities of, Avista.

   

  The outstanding shares of Common Stock are listed on the New York Stock Exchange under the symbol “AVA.” Any new shares of Common Stock will also be listed on that Exchange subject to official notice of issuance.

   

  The Transfer Agent and Registrar for the Common Stock is Computershare Shareowner Services LLC, P.O. Box 505000, Louisville, KY 40233. 

   

  13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00340-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00340-of-00352.parquet"}]]