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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes o No þ

As of June 30, 2003, 8,785,555 shares of the registrant’s Common Stock, $.01 par value, were outstanding and the aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $51,682,000 based on the New York Stock Exchange closing price on June 30, 2003.

As of February 27, 2004, 8,861,601 shares of the registrant’s Common Stock, $.01 par value, were outstanding.

Parts of the Proxy Statement for the Registrant’s 2004 Annual Meeting of Stockholders are incorporated by reference in Part III of this Form 10-K Report.

Giant Industries, Inc., through our subsidiary Giant Industries Arizona, Inc. and its subsidiaries, refines and sells petroleum products. We do this:


	•	On the East Coast — primarily in Virginia, Maryland, and North Carolina, and

	•	In the Southwest — primarily in New Mexico, Arizona, and Colorado, with a concentration in the Four Corners area where these states meet.

In addition, our Phoenix Fuel Co., Inc. subsidiary distributes commercial wholesale petroleum products primarily in Arizona.

Our refining group operates our Ciniza and Bloomfield refineries in the Four Corners area of New Mexico and the Yorktown refinery in Virginia. It also operates a crude oil gathering pipeline system in New Mexico, two finished products distribution terminals, and a fleet of crude oil and finished product trucks. Our three refineries make various grades of gasoline, diesel fuel, and other products from crude oil, other feedstocks, and blending components. We also acquire finished products through exchange agreements and from various suppliers. We sell these products through our service stations, independent wholesalers and retailers, commercial accounts, and sales and exchanges with major oil companies. We purchase crude oil, other feedstocks and blending components from various suppliers.

Our retail group operates service stations, which include convenience stores or kiosks. We also operated a travel center in New Mexico until June 19, 2003, when the travel center was sold. Our service stations sell various grades of gasoline, diesel fuel, general merchandise, including tobacco and alcoholic and nonalcoholic beverages, and food products to the general public. Our refining group or Phoenix Fuel supplies the gasoline and diesel fuel our retail group sells. We purchase general merchandise and food products from various suppliers. At December 31, 2003, we operated 127 service stations with convenience stores or kiosks.

Phoenix Fuel distributes commercial wholesale petroleum products. It includes several lubricant and bulk petroleum distribution plants, an unmanned fleet fueling operation, a bulk lubricant terminal facility, and a fleet of finished product and lubricant delivery trucks. Phoenix Fuel purchases petroleum fuels and lubricants from suppliers and to a lesser extent from our refining group.

Our Yorktown refinery is located on 570 acres of land known as Goodwin’s Neck, which lies along the York River in York County, Virginia. It has a crude oil throughput capacity of 61,900 barrels per day. The Yorktown refinery is situated adjacent to its own deep-water port on the York River, close to the Norfolk military complex and Hampton Roads shipyards.

Our Yorktown refinery has a Solomon complexity rating of 11.0. The Solomon complexity rating is a relative measure of a refinery’s processing complexity based upon the number and complexity of process units utilized for refining crude oil into finished products. A refinery that has only crude oil distillation capability would have a Solomon complexity rating of 1.0. The most complex refineries have Solomon complexity ratings in excess of 16.0. Our Yorktown refinery can process a wide variety of crude oils into high-value finished products, including both conventional and reformulated gasoline, as well as low- and high-sulfur distillate, including heating oil, diesel fuel, and fuel oil.

The refinery’s location on the York River, and its own deep-water port access, allows us to receive supply shipments from many different locations around the world and provides us the ability to transport finished products by barge, without dependence on area pipelines. This flexibility gives us the opportunity to purchase the most cost-effective crude oil available and to sell finished products in the most cost-effective markets.


(1)	Average barrels per day.

(2)	Since our acquisition of the refinery on May 14, 2002.

(3)	Other products include petroleum coke, converted to a fuel oil equivalent number of barrels.

The operating units at our refineries require regular maintenance, as well as major repair and upgrade shutdowns (known as “turnarounds”) during which they are not in operation. Turnaround cycles vary for different units.

For turnaround purposes, we divide the operating units at our Yorktown refinery into three major groups. Each of these groups has a major turnaround every five years that lasts approximately three to four weeks. The groups are scheduled for a major turnaround in 2006, 2007, and 2008. In addition, some production units must be shut down approximately once a year, for 10 to 14 days at a time, for maintenance that is necessary to improve the efficiency of the unit. During these shutdowns, equipment inspections are made and maintenance is performed. Unscheduled maintenance shutdowns may also occur at the refinery from time to time.

Most of the feedstocks for our Yorktown refinery come from Canada, the North Sea, West Africa, and South America. The refinery can process a wide range of crude oils, including certain lower quality crude oils. The ability to process a wide range of crude oils allows our Yorktown refinery to vary crude oils in order to maximize margins. Lower quality crude oils can generally be purchased at a lower cost, compared to higher quality crude oils, and this can result in improved refinery margins for us. At times, the Yorktown refinery also may purchase some process unit feedstocks to supplement the feedstocks going into various process units, and blendstocks, to optimize refinery operations and blending operations.

We recently entered into a long-term crude oil supply agreement with Statoil Marketing and Trading (USA), Inc., pursuant to which Statoil agreed to supply us and we agreed to purchase acidic crude oil. We believe this arrangement will satisfy a significant portion of our Yorktown refinery’s crude oil needs. We began taking supplies of this crude oil at our Yorktown refinery in February 2004. Following various upgrades at the refinery, which are scheduled to take place in the third quarter of 2004, the deliveries will substantially increase. The term of this agreement expires when we have received the total volumes of crude oil committed to be provided by Statoil, which we believe will be in approximately five years. Either we or Statoil may terminate the agreement earlier, however, in certain circumstances, including:


	•	An event of force majeure, such as an act of God, wars or terrorism, occurs and continues for more than 60 days, or

	•	An event of default occurs and is not cured within the applicable cure period, if any. Events of default include, among others:


	•	Failure of a party to make payments when due;

	•	Failure of a party to perform its obligations;

	•	Bankruptcy or change of control of a party; and

	•	An event of default by us under our senior secured revolving credit agreement or our failure to make any payment in respect of indebtedness of more than $5 million when due.

Our Yorktown refinery’s strategic location on the York River and its own deep-water port access allow it to receive supply shipments from various regions of the world. Crude oil tankers deliver all of the crude oil supplied to our Yorktown refinery and most of the finished products sold by the refinery are shipped out by barge. As a result, we have greater flexibility to receive and move product than some of our competitors who rely on pipeline systems.

The Yorktown Markets. The markets for our Yorktown refinery are grouped into tiers, which represent varying refining margin potential. Tier 1 areas generally have the highest refining margin potential and include the Yorktown region. Tier 2 markets include Salisbury and Baltimore, Maryland and Norfolk, Virginia. North and South Carolina are considered Tier 3 markets, and the New York Harbor area is designated Tier 4. We focus on selling products within Tiers 1, 2 and 3, unless favorable refining margin opportunities arise in the New York Harbor.

To date, we have concentrated our sales of finished products in Tiers 1 and 2. Approximately 75% of this product is shipped out of the refinery by barge, with the remaining amount being shipped out by truck or rail. We primarily use third party trucks to deliver products to our Tier 1 customers. The CSX rail system, which runs through the refinery property, transports shipments of mixed butane and anode coke from the refinery to our customers.

Dock System and Storage. Our refinery’s dock system is capable of handling 98,000-ton deadweight tankers and barges up to 100,000 barrels. We handle all crude oil receipts and the bulk of our finished product deliveries at the dock. The refinery includes approximately 1,900,000 barrels of crude tankage, including approximately 500,000 barrels of storage capacity in a tank leased from Virginia Power. We also own approximately 600,000 barrels of gasoline tank storage, 800,000 barrels of gasoline blend stock tank storage, and 300,000 barrels of distillate tank storage.

Our refined products, including products we acquire from other sources, are sold through independent wholesalers and retailers, commercial accounts, and sales and exchanges with large oil companies. Refined products produced at the refinery were distributed as follows:

Our refining group operates the only active refineries in the Four Corners area. Our Ciniza refinery has a crude oil throughput capacity of 20,800 barrels per day and a total capacity including natural gas liquids of 26,000 barrels per day. It is located on 880 acres near Gallup, New Mexico. Our Bloomfield refinery has a crude oil throughput capacity of 16,000 barrels per day and a total throughput capacity including natural gas liquids of 16,600 barrels per day. It is located on 285 acres near Farmington, New Mexico. We operate the two refineries in an integrated fashion. We achieve efficiency gains and cost reductions by consolidating various administrative and operating functions.

The Four Corners area is the primary market for the refined products and is also the primary source of crude oil and natural gas liquids supplies for both refineries.

We believe the technical capabilities of these two refineries, together with the high quality of locally available feedstocks, enable us to produce a high percentage of high value products. Our Ciniza refinery has a Solomon complexity rating of 7.9. Our Bloomfield refinery has a Solomon complexity rating of 6.7. Each barrel of raw materials processed by our Four Corners refineries has resulted in 90% or more of high-value finished products, including gasoline and diesel fuel. The product slate of both refineries can include 100% unleaded gasoline and 100% low sulfur diesel fuel that satisfies current low sulfur standards.

In general, a major refinery turnaround is scheduled for each of our Four Corners refineries every four years. A typical major refinery turnaround takes approximately 30 days. Our Ciniza refinery is scheduled for a major turnaround in the second quarter of 2004. Our Bloomfield refinery had a major turnaround in the fourth quarter of 2001. In addition, one of the production units at each refinery must be shut down approximately one or two times a year, for approximately ten days at a time, for maintenance that is necessary to improve the efficiency of the unit. During these short shutdowns, equipment inspections are made and maintenance is performed. Unscheduled maintenance shutdowns may also occur at the refineries from time to time.

The primary feedstock for our Four Corners refineries is Four Corners Sweet, a locally produced, high quality crude oil. We supplement the crude oil used at our refineries with other feedstocks. These other feedstocks currently include locally produced natural gas liquids and condensate as well as other feedstocks produced outside of the Four Corners area. The most significant of these other feedstocks are the natural gas liquids, consisting of natural gasoline, normal butane and isobutane.

Our Ciniza refinery is capable of processing approximately 6,000 barrels per day of natural gas liquids. An adequate supply of natural gas liquids is available for delivery to our Ciniza refinery primarily through a pipeline we own that connects the refinery to a natural gas liquids processing plant. We currently acquire the majority of our natural gas liquids feedstocks by a long-term agreement.

In addition, the use of gasoline containing oxygenates has been government-mandated in some areas in which we sell gasoline. Oxygenates are oxygen-containing compounds that can be used as a supplement to reduce carbon monoxide emissions. We anticipate that we will be able to purchase sufficient quantities of oxygenates from suppliers at acceptable prices for the foreseeable future.

We purchase crude oil from a number of sources, including major oil companies and independent producers, under arrangements that contain market-responsive pricing provisions. Many of these arrangements are subject to cancellation by either party or have terms of one year or less. In addition, these arrangements are subject to periodic renegotiation, which could result in our paying higher or lower relative prices for crude oil.

Our Ciniza and Bloomfield refineries continue to be affected by reduced crude oil production in the Four Corners area. The Four Corners basin is a mature production area and as a result is subject to a natural decline in production over time. This natural decline is being offset to some extent by new drilling, field workovers, and secondary recovery projects, which have resulted in additional production from existing reserves.

As a result of the declining production of crude oil in the Four Corners area in recent years, we have not been able to cost-effectively obtain sufficient amounts of crude oil to operate our Four Corners refineries at full capacity. Crude oil utilization rates for our Four Corners refineries have declined from 87% in 1999 to 67% in 2003. Our current projections of Four Corners crude oil production indicate that our crude oil demand will exceed the crude oil supply that is available from local sources for the foreseeable future and that our crude oil capacity utilization rates at our Four Corners refineries will continue to decline. If additional crude oil or other refinery feedstocks become available in the future, we may increase production runs at our Four Corners refineries depending on the demand for finished products and the refining margins attainable. To that end, we continue to assess short-term and long-term options to address the continuing decline in Four Corners crude oil production. The options being considered include:


	•	evaluating potentially economic sources of crude oil produced outside the Four Corners area, including ways to reduce raw material transportation costs to our refineries,

	•	evaluating ways to encourage further production in the Four Corners area,

	•	changes in operation/configuration of equipment at one or both refineries to further the integration of the two refineries, and reduce fixed costs, and

	•	with sufficient further decline in raw material supply, the temporary, partial or permanent discontinuance of operations at one or more refineries.

None of these options, however, may prove to be economically viable. We cannot assure you that the Four Corners crude oil supply for our Ciniza and Bloomfield refineries will continue to be available at all or on acceptable terms for the long term. Because large portions of the refineries’ costs are fixed, any significant interruption or decline in the supply of crude oil or other feedstocks would have an adverse effect on our Four Corners refinery operations and on our overall operations.

Crude oil supply for our Four Corners refineries comes primarily from the Four Corners area and is either connected by pipelines, including pipelines we own, or delivered by our trucks to pipeline injection points or refinery tankage. Our pipeline system reaches into the Paradox and San Juan Basins, located in the Four Corners area, and connects with local common carrier pipelines. We currently own approximately 250 miles of pipeline for gathering and delivering crude oil to the refineries. Our Ciniza refinery receives natural gas liquids primarily through a 13-mile pipeline we own that is connected to a natural gas liquids processing plant.

The Four Corners Market. We group the markets for our Four Corners refineries into two tiers, which represent varying refining margin potential. Tier 1 has the highest refining margin potential and is the Four Corners area. Tier 2 includes both the Albuquerque and Flagstaff areas, the largest markets in New Mexico, and Northern Arizona. The Tier 2 markets are primarily supplied from our Ciniza refinery.

Terminal Operations. We own a finished products terminal near Flagstaff, Arizona, with a daily capacity of 6,000 barrels per day. This terminal has approximately 65,000 barrels of finished product tankage and a truck loading rack with three loading spots. Product deliveries to this terminal are made by truck from our Four Corners refineries.

We also own a finished products terminal in Albuquerque, New Mexico, with a daily capacity of 10,000 barrels per day. This terminal has approximately 170,000 barrels of finished product tankage and a truck loading rack with two loading spots. Product deliveries to this terminal are made by truck from our Ciniza refinery or by pipeline from El Paso, Texas.

Our refined products, including products our refining group acquires from other sources, are sold through independent wholesalers and retailers, commercial accounts, our own retail units, and sales and exchanges with large oil companies. Refined products produced at the refineries were distributed as follows:

We sold our travel center in June 2003. In connection with this sale, we entered into a long-term supply arrangement with the purchaser.

At December 31, 2003, we operated 127 service stations. These service stations are located in New Mexico, Arizona, and Colorado. This represents a decrease of eight units since December 31, 2002.

On December 31, 2003, we had 50 units branded Conoco pursuant to a strategic branding/licensing agreement. In addition, 21 units were branded Giant, 49 units were branded Mustang, 5 units were branded Thriftway, and 1 each were branded Gasman and Diamond Shamrock.

Many of our service stations are modern, high-volume self-service stations. Our service stations are augmented with convenience stores at most locations, which provide items such as general merchandise, tobacco products, alcoholic and nonalcoholic beverages, fast food, health and beauty aids, and automotive products. In addition, most locations offer services such as automated teller machines and free air and water. These stores offer a mix of our own branded food service/delicatessen items and some of the stores offer nationally franchised products. Service stations with kiosks offer limited merchandise, primarily tobacco products, but also candy and other snacks and some automotive products.

Until June 19, 2003, when it was sold, we also owned and operated a travel center adjacent to our Ciniza refinery near Gallup, New Mexico. The travel center provided a direct market for a portion of the Ciniza refinery’s production. In connection with the sale, the refinery group entered into a long-term product supply agreement with the purchaser.


(1)	Includes continuing and discontinued operations.

(2)	2003 figures are from January 1 to June 19.

Phoenix Fuel is a commercial wholesale petroleum products distributor selling diesel fuel, gasoline, jet fuel, kerosene, motor oil, hydraulic oil, gear oil, cutting oil, grease and various chemicals and solvents. As part of these operations, we have lubricant and bulk petroleum distribution plants, unmanned fleet fueling locations, a bulk lubricant terminal facility, and a fleet of finished product transports, finished product tankwagons and lubricant delivery trucks. These operations are located throughout Arizona, and we sell products primarily in Arizona and also in Nevada, New Mexico and Texas. We also offer our customers a variety of related services, including fuel management systems, tank level monitoring, and automated dispatch. We sell under the trade names Phoenix Fuel, Firebird Fuel, Tucson Fuel, Mesa Fuel, and PFC Lubricants. Our principal customers are in the mining, construction, utility, manufacturing, aviation and agriculture industries. We purchase petroleum products for resale from other refiners and marketers and to a lesser extent from our refining group.


(1)	Includes fuel gallons supplied to our retail group and refining group at no margin.

(2)	Calculated as fuel revenues, including delivery charges billed to the customer, less cost of fuel products sold, divided by fuel gallons sold.

On February 29, 2004, we employed the following number of employees in each area of our business:

The Paper, Allied — Industrial, Chemical and Energy Workers International Union Local 2-10 represents the hourly workforce at our Yorktown refinery. The current agreement with the union expires in 2006. At February 29, 2004 there were 124 employees represented by this union. In January 2004, the Paper, Allied — Industrial, Chemical and Energy Workers International Union attempted to organize the employees at our Ciniza refinery and an election was scheduled. The union withdrew from the election before it took place.

We operate in a highly competitive industry. Many of our competitors are large, integrated oil companies which, because of their more diverse operations, stronger capitalization and better brand name recognition, are better able to withstand volatile industry conditions than we are, including shortages or excesses of crude oil or refined products, or intense price competition. The refineries operated by our competitors are typically larger and more efficient than our refineries. As a result, these refineries may have lower per barrel processing costs. Furthermore, mergers between large integrated oil companies, and upgrades to competitors’ refineries have, and in the future may, result in increased competition for our refineries.


	•	the quality, quantity and delivered costs of crude oil, natural gas liquids and other refinery feedstocks,

	•	refinery processing efficiencies,

	•	refined product mix,

	•	refined product selling prices,

	•	refinery processing costs per barrel,

	•	the cost of delivering refined products to markets, and

	•	the ability of competitors to deliver refined products into our market areas by pipeline or other means.


	•	the level of customer service provided,

	•	the location of our service stations,

	•	product selling prices,

	•	product availability and cost, including prices being offered for refined products by major oil companies to our competitors in certain markets,

	•	the appearance and cleanliness of our service stations,


	•	brand acceptance, and

	•	the development of gasoline retail operations by non-traditional marketers, such as supermarkets and club membership warehouses.


	•	the level of customer service provided,

	•	product selling prices,

	•	product availability and cost, including prices being offered for refined products by major oil companies to our competitors in certain markets, and

	•	business integration of new technology.

We compete with major and larger integrated oil companies as well as independent refiners. Including our Yorktown refinery, there are approximately 11 refineries supplying products into our markets. In addition, we compete with refineries in the Gulf Coast via the Colonial Pipeline, which runs from the Gulf Coast area to New Jersey. We also compete with offshore refiners that deliver product by water transport.

We compete with major and larger integrated oil companies and with independent refiners that have refineries located outside the Four Corners area. Refined products can be shipped to Albuquerque, New Mexico and the Four Corners area through three pipelines originating in El Paso, Texas; Amarillo, Texas; and southeastern New Mexico.

We have been informed that the potential conversion and extension of the existing Texas-New Mexico crude oil pipeline to transport refined products from West Texas to New Mexico, including Albuquerque and potentially Bloomfield, has been terminated. We also have been informed, however, that the Longhorn Pipeline project that runs from Houston, Texas to El Paso, Texas and connects the Chevron pipeline to the Albuquerque area and to the Kinder-Morgan pipeline to the Phoenix and Tucson, Arizona markets has a planned starting date of June 2004. In view of past postponements of previously announced start-up dates, we do not know if the Longhorn Pipeline will begin operation in June 2004 or at all. In addition, there are proposals that may eventually increase the volume of product that can be transported by pipeline from El Paso to the Phoenix and Tucson markets. The completion of some or all of these projects, including the Longhorn Pipeline, would result in increased competition by increasing the amount of refined products potentially available in these markets, as well as improving competitor access to these areas. It also could result in new opportunities for us, as we are a net purchaser of refined products in some of these areas.

Our operations are subject to a variety of federal, state and local environmental laws. These laws apply to, among other things:


	•	the discharge of pollutants into the soil, air and water,

	•	product specifications,

	•	the generation, treatment, storage, transportation and disposal of solid and hazardous wastes, and

	•	employee health and safety.

We believe that all of our business units are operating in substantial compliance with current environmental, health and safety laws. Despite our efforts, actual or potential claims and lawsuits involving

Various federal and state programs relating to the composition of motor fuels apply to our operations. We believe that these environmental programs will have the most significant impact on our operations, except for matters relating to alleged regulatory violations and cleanup activities. Significant programs affecting the composition of our motor fuels are described below. It is possible that additional laws affecting motor fuel specifications may be adopted that would impact geographic areas in which we sell our products.

Low Sulfur Fuels. Rules issued by the federal Environmental Protection Agency (“EPA”) require refiners to reduce the sulfur content in gasoline and diesel fuels. Refiners must begin producing gasoline that satisfies low sulfur gasoline standards in 2004, with most refiners required to be in full compliance for all production in 2006. Most refiners also must begin producing highway diesel fuel that satisfies low sulfur diesel standards by June 2006. All refiners and importers must be in full compliance with the new standards by 2010 without exception.

Yorktown Compliance Extension. We applied for temporary relief from the low sulfur gasoline standards at the Yorktown refinery. In March 2003, EPA approved our application and issued a compliance plan. This compliance plan allowed us to postpone in excess of $25,000,000 of capital expenditures for up to three years from the date we would otherwise have begun these expenditures. We must be in full compliance with the gasoline and diesel sulfur standards by January 1, 2008. The compliance plan requires us to provide EPA with an annual report on our adherence to the compliance plan and on our progress in meeting the low sulfur standards. If we fail to comply with the conditions set by EPA, the compliance plan could be modified or revoked. Further, EPA reserved the right to modify or revoke the compliance plan for other reasons. EPA must, however, provide us with reasonable notice of any anticipated changes in the compliance plan and reasonable lead time to implement any modifications due to changes in the compliance plan. Modifications to or revocation of the compliance plan could increase the quantity of high-sulfur products, including product components, that do not meet the new standards. This would likely reduce our refining earnings.

We anticipate that the cost of purchasing and installing the equipment necessary to produce low sulfur gasoline and diesel fuel at the Yorktown refinery will be between $60,000,000 and $70,000,000 depending on the methods selected to reduce the sulfur content and the volume of low sulfur fuel to be produced at the facility. We also anticipate that the majority of these expenditures will occur primarily from 2005 through 2007.

Four Corners Compliance. With respect to the Ciniza and Bloomfield refineries, we believe that we qualify under existing regulations for an extension of the low sulfur gasoline standards until 2007, the date when the annual average sulfur content of our Four Corners gasoline must begin to be reduced. Full compliance is, however, required in 2008. We anticipate that we will spend between $15,000,000 and $20,000,000 to comply with the low sulfur gasoline and low sulfur diesel rules. We also anticipate that the majority of these expenditures will occur primarily in 2005 and 2006.

There are a number of factors that could affect our cost of compliance with the low sulfur standards. For example, because these regulations affect the entire industry, engineering and construction companies will be busy and may charge a premium for their services.

Reformulated Gasoline. Federal law requires the sale of specially formulated gasoline in designated areas of the country, including some market areas serviced by the Yorktown refinery. The Yorktown refinery manufactures gasoline that satisfies the requirements of its markets. Motor fuels produced by our Four Corners refineries are not sold in any areas where the applicable law requires specially formulated gasoline. Arizona, however, has adopted a cleaner burning gasoline program that is applicable to gasolines sold or used in Maricopa County, Arizona, which includes the Phoenix metropolitan area. We do not

MTBE. Methyl tertiary butyl ether (“MTBE”) is a gasoline blending component used by many refiners in producing specially formulated gasoline. MTBE has been phased out, or is in the process of being phased out, in some areas where we market our products. We currently do not anticipate any significant impact on our operations due to the phase out of MTBE in these areas.

Oxygenates. As previously discussed under the heading “Refining Group”, the use of gasoline containing oxygenates has been government-mandated in some areas in which we sell motor vehicle fuel. We anticipate that we will be able to purchase sufficient quantities of oxygenates at acceptable prices for the foreseeable future.

Lawsuits have been filed in over 20 states alleging that MTBE has contaminated water wells. We are aware of three MTBE lawsuits filed in the fourth quarter of 2003 in Virginia state courts in Patrick, Buchanan, and Greensville Counties. We are a named defendant in each suit, but the plaintiffs have not served us with notice. The suits allege MTBE contamination of water wells owned and operated by the plaintiffs. For a further discussion of this matter, see Note 20 to our Consolidated Financial Statements in Item 8, captioned “Commitments and Contingencies.”

Governmental authorities issue notices of violations, compliance orders, and similar notices that allege, among other things, violations of environmental requirements. They also may assess fines for the alleged violations. We have received a draft compliance order for our Ciniza refinery and a compliance order for our Bloomfield refinery from the New Mexico Environment Department alleging violations of air quality regulations. We also have assumed environmental obligations under a preexisting consent decree with EPA at our Yorktown refinery. The consent decree includes provisions for penalties if EPA alleges violations of these obligations. For a discussion of these matters as well as other outstanding orders, see Note 20 to our Consolidated Financial Statements in Item 8, captioned “Commitments and Contingencies.”

We have received other allegations of regulatory violations from governmental authorities from time to time. We have responded or intend to respond in a timely manner to all such matters. Despite our ongoing efforts to comply with environmental laws, we may receive allegations of regulatory violations from governmental authorities in the future.

By their very nature, our operations are inherently subject to accidental spills, discharges or other releases of petroleum or hazardous substances. These events may give rise to liability for us. Accidental discharges of contaminants have occurred from time to time during the normal course of our operations. We have undertaken, intend to undertake, or have completed all investigative or remedial work thus far required by governmental agencies to address potential contamination by us. For a discussion of significant cleanup activities in which we are involved, see Note 20 to our Consolidated Financial Statements in Item 8, captioned “Commitments and Contingencies.”

We are incurring, and anticipate that we will continue to incur from time to time, remedial costs in connection with current and former gasoline service stations operated by us. Our experience has been that these costs generally do not exceed $100,000 per incident, and some of these costs may be reimbursed from state environmental funds.

Although we have invested substantial resources to prevent and minimize future accidental discharges and to remedy contamination resulting from prior discharges, any of the following may occur in the future:


	•	new accidental discharges,

	•	we will fail to adequately remedy past discharges,

	•	governmental agencies may impose fines for past or future contamination,

	•	we may not receive anticipated levels of reimbursement from third parties, or

	•	third parties may assert claims against us for damages allegedly arising out of past or future contamination.

Our operations also are subject to a variety of federal, state, and local laws relating to occupational health and safety. We have ongoing safety and training programs to assist us in complying with health and safety requirements. Our goal is to achieve compliance and to protect our employees and the public. Despite our efforts to comply with health and safety requirements, there can be no assurance that governmental authorities will not allege in the future that violations of law have occurred.

We cannot predict what new environmental, health and safety laws will be enacted or become effective in the future. We also cannot predict how existing or future laws will be administered or interpreted with respect to products or activities to which they have not been previously applied. In addition, environmental, health and safety laws are becoming increasingly stringent. Compliance with more stringent laws, as well as more vigorous enforcement by regulatory agencies, could have an adverse effect on our financial position and the results of our operations and could require substantial expenditures by us for, among other things:


	•	the installation and operation of refinery equipment, pollution control systems and equipment we currently do not possess,

	•	the acquisition or modification of permits applicable to our activities, and

	•	the initiation or modification of cleanup activities.

In connection with our crude oil pipeline gathering system, we have obtained various rights-of-way from various third parties. Irregularities in title may exist with respect to a limited number of these rights-of-way. We have, however, continued our use of the entirety of our pipeline gathering system. As of this date, no claim stemming from any right-of-way matter has been brought against us. We do not believe that any right-of-way matters or irregularities in title will adversely affect our use or enjoyment of the pipeline gathering system.

Certain rights-of-way for our crude oil pipeline system must be renewed periodically. A portion of the system, consisting of eight miles or approximately 3% of the entire system, must be renewed in 2006. We expect that substantial lead time will be required to negotiate and complete renewal of these rights-of-way. Additional rights-of-way for pipeline sections consisting of 174 miles or about 70% of the system must be renewed in 2009, and initial discussions for renewal are expected to begin in 2007.

On April 28, 2003, a breaker failure disrupted operations at the electric generation plant that supplies our Yorktown refinery with power. As a result of the failure, the refinery suffered a complete loss of power and shut down all processing units. We incurred costs of approximately $1,254,000 as a result of the loss of power. Reduced production also resulted in a loss of earnings. We are pursuing reimbursement from the power station owner. For a further discussion of this matter, see Note 20 to our Consolidated Financial Statements in Item 8, captioned “Commitments and Contingencies.”

We are a party to ordinary routine litigation incidental to our business. We also incorporate by reference the discussion of legal proceedings contained in Items 1 and 2 under the headings “Regulatory, Environmental and Other Matters”, the discussions contained in Item 7, and the information regarding certain related party transactions in Note 9 and commitments and contingencies in Note 20 to the Company’s Consolidated Financial Statements in Item 8.

Fred L. Holliger has served as one of our directors since we went public in October 1989 and as our chairman of the board and chief executive officer since March 29, 2002. From October 1989 to March 29, 2002, Mr. Holliger was our executive vice president and chief operating officer. Mr. Holliger joined us as senior vice president, and president of our refining division, in February 1989.

Morgan Gust has served as our president since March 29, 2002. From February 1999 to March 29, 2002, Mr. Gust served as our executive vice president. Mr. Gust joined the company in August 1990, and

C. Leroy Crow has served as executive vice president of our refining group strategic business unit since March 2000. From February 1999 to February 2000, Mr. Crow served as our senior vice president, refinery operations and raw material supply. Mr. Crow joined us in June 1997 when we acquired Phoenix Fuel, and since then has served in various senior management positions for us, including senior vice president, operations division and vice president of operations.

Jack W. Keller has served as the president of our Phoenix Fuel strategic business unit since its formation in February 1999. He also has served as the president of Phoenix Fuel since we acquired it in June 1997 and as chief operating officer of Phoenix Fuel since May 1998.

Robert C. Sprouse has served as executive vice president of our retail group strategic business unit since April 2003. From January 2000 to April 2003, Mr. Sprouse served as our director of retail operations. From 1996 to January 2000, Mr. Sprouse held several management positions with Strasburger Enterprises, Inc., a retail management consulting company.

S. Leland Gould has served as our executive vice president, governmental affairs and real estate since June 2002. From March 2002 to June 2002, Mr. Gould served as our executive vice president of retail operations. Mr. Gould joined us in August 2000 as vice president, strategic business development. Prior to August 2000, Mr. Gould was vice president and national sales manager for Wolf Camera, a photo retail store chain with 800 stores nationwide.

Kim H. Bullerdick has served as our vice president and corporate secretary since December 1998 and our general counsel since May 2000. From December 1998 to May 2000, Mr. Bullerdick was our legal department director.

Mark B. Cox has served as our vice president, treasurer, financial officer and assistant secretary since December 1998. On March 29, 2002, Mr. Cox was named chief financial officer.

Roger D. Sandeen has served as our vice president, chief accounting officer and assistant secretary since July 2003. In January 2004, Mr. Sandeen was also named as our chief information officer. From January 2002 to July 2003, Mr. Sandeen was senior vice president and chief financial officer for Venerable Group, a privately-owned company involved in the real estate, business and information consulting and dental industries. From 2000 through 2001, Mr. Sandeen was an independent financial consultant to several organizations, including the Venerable Group. From 1989 to 2000, Mr. Sandeen was an executive officer for Xcel Energy, Inc. serving from time to time in various senior management positions, including chief financial officer, chief accounting officer and chief information officer.

Our common stock is traded on the New York Stock Exchange. The high and low sales prices for our common stock for each full quarterly period as reported on the New York Stock Exchange Composite Tape for the last two fiscal years are as follows:

We currently do not pay dividends on our common stock. The board of directors will periodically review our policy regarding the payment of dividends. Any future dividends are subject to the results of our operations, declaration by the board of directors, and existing debt covenants, as described below.

We have issued $150,000,000 of 9% Senior Subordinated Notes due 2007 (the “9% Notes”) and $200,000,000 of 11% Senior Subordinated Notes due 2012 (the “11% Notes”). The 9% Notes were issued under an Indenture dated August 26, 1997 (the “9% Indenture”) and the 11% Notes were issued under an Indenture dated May 14, 2002 (the “11% Indenture”, and collectively with the 9% Indenture, the “Indentures”). Both Indentures are among the Company, its subsidiaries, as guarantors, and The Bank of New York, as trustee. The Indentures contain a number of covenants, one of which restricts our ability to pay dividends and to purchase our common stock.

At December 31, 2003, retained earnings available for dividends under the most restrictive terms of the Indentures were approximately $18,402,000.

Also see the “Capital Structure” discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7.

The following table summarizes our recent financial information. This selected financial data should be read with Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7, and the Consolidated Financial Statements and related notes thereto, included in Item 8:

We refine and sell petroleum products and operate service stations and convenience stores. Our operations are divided into three strategic business units, the refining group, the retail group and Phoenix Fuel. The refining group operates two refineries in the Four Corners area of New Mexico and one refinery in Yorktown, Virginia. The refining group sells its products to approximately 700 wholesale distributors and retail chains. Our retail group operated 127 service stations at December 31, 2003. The retail group sells its petroleum products and merchandise to consumers located in New Mexico, Arizona and southern Colorado. Phoenix Fuel distributes commercial wholesale petroleum products primarily in Arizona.

In order to maintain and improve our financial performance, we are focused on several critical and challenging objectives. We will be addressing these objectives in the short-term as well as over the next three to five years. In our view, the most important of these objectives are:


	•	Increasing gross margins through management of inventories and taking advantage of sales and purchasing opportunities, while minimizing or reducing operating expenses and capital expenditures.


	•	Increasing the available crude oil supply for our Four Corners refineries.

	•	Cost effectively complying with current environmental regulations as they apply to our refineries, including future clean air standards, between now and the end of 2008.

	•	Planning for the retirement of our 9% senior subordinated notes, in the principal amount of $150,000,000, due in 2007.

	•	Improving our overall financial health and flexibility by reducing our debt and overall cost of capital, including our interest and financing costs.

A critical step in the preparation of our financial statements is the selection and application of accounting principles, policies, and procedures that affect the amounts that are reported. In order to apply these principles, policies, and procedures, we must make judgments, assumptions, and estimates based on the best available information at the time. Actual results may differ based on the accuracy of the information utilized and subsequent events, some of which we may have little or no control over. In addition, the methods used in applying the above may result in amounts that differ considerably from those that would result from the application of other acceptable methods. The development and selection of these critical accounting policies, and the related disclosure below, have been reviewed with the audit committee of our board of directors.

Our significant accounting policies, including revenue recognition, inventory valuation and maintenance costs, are described in Note 1 to our Consolidated Financial Statements included in Item 8. The following accounting policies are considered critical due to the uncertainties, judgments, assumptions and estimates involved:


	•	accounting for contingencies, including environmental remediation and litigation liabilities,

	•	assessing the possible impairment of long-lived assets,

	•	accounting for asset retirement obligations, and

	•	accounting for our pension and post-retirement benefit plans.

Contingencies, Including Environmental Remediation and Litigation Liabilities

We have recorded various environmental remediation liabilities described in more detail in Note 20 to our Consolidated Financial Statements in Item 8. For the most part, these liabilities result from:


	•	past operations, including liabilities arising out of changes in environmental laws, and

	•	liabilities assumed in connection with acquired assets.

We are remediating these matters. We record liabilities if environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. We do not discount environmental liabilities to their present value. In general, we record environmental liabilities without consideration of potential recoveries from third parties, although we do take into account amounts that others are contractually obligated to pay us. We employ independent consultants or our internal environmental personnel to investigate and assemble pertinent facts, recommend an appropriate remediation plan in light of regulatory standards, assist in estimating remediation costs based on existing technologies, and complete remediation according to approved plans. If we do not use consultants, we estimate remediation costs based on the knowledge and experience of our employees having responsibility for the remediation project. Because of the uncertainty involved in our various remediation efforts and the period of time our efforts may take to complete, estimates are based on current regulatory standards. We update our estimates as needed to reflect changes in the facts known to us, available technology, or applicable laws. We often make subsequent adjustments to estimates, which may be significant, as more information becomes

We record liabilities for litigation matters when it is probable that the outcome of litigation will be adverse and the costs and damages can be reasonably estimated. We estimate these costs and damages based on the facts and circumstances of each case, our knowledge and experience, and the knowledge and experience of others with whom we may consult. We often make subsequent adjustments to our estimates, which may be significant, as more information becomes available to us or as other circumstances change.

We review the carrying values of our long-lived assets, including goodwill and other intangibles, for possible impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. For assets held for sale, we report long-lived assets at the lower of the carrying amount or fair value less cost to sell. For assets held and used, we use an undiscounted cash flow methodology to assess their recoverability. If the sum of the expected future cash flows for these assets is less than their carrying value, we record impairment losses. Goodwill and certain intangible assets with indefinite lives are also subject to an annual impairment test. Changes in current economic conditions, assumptions regarding the timing and amounts of cash flows, or fair market value estimates could result in additional write-downs of these assets in the future. For a discussion of our impairment of long-lived assets, see Note 7 to our Consolidated Financial Statements in Item 8.

We have legal obligations associated with the retirement of some of our long-lived assets. These obligations are related to:


	•	some of our solid waste management facilities,

	•	some of our crude pipeline right-of-way agreements, and

	•	our underground and above-ground storage tanks.

We use a discounted cash flow model to calculate the fair value of the asset retirement obligations. Key assumptions we used in estimating the fair value of these obligations are:


	•	Settlement date occurs at the end of the economic useful life, and

	•	Settlement prices are estimated using consultant proposals and third-party contractor invoices for substantially equivalent work and a market risk premium to cover uncertainties and unforeseeable circumstances.

Changes in current economic conditions, assumptions regarding the timing and amounts of cash flows, or fair market value estimates could result in a change in the obligation in the future.

For a discussion of our asset retirement obligations, see Note 4 to our Consolidated Financial Statements in Item 8.

The plan obligations and related assets of our pension and post retirement plans are presented in Note 17 to our Consolidated Financial Statements. Plan assets, which consist of equity and debt securities, are valued using market prices. Plan obligations and the annual pension and post-retirement medical


	•	Discount rate,

	•	Long-term rate of return on plan assets, and

	•	Healthcare cost trend rates.

Changes in our actuarial assumptions used in calculating our pension and other postretirement benefit liability and expense can have a significant impact on our earnings and financial position. We review these assumptions on an annual basis and adjust them as necessary.

The following chart reflects the sensitivities that a change in certain actuarial assumptions for our Cash Balance Plan would have had on the 2003 projected benefit obligation, our 2003 reported pension liability on our Consolidated Balance Sheet and our 2003 reported pension expense on our Consolidated Statement of Operations:

The following chart reflects the sensitivities that a change in certain actuarial assumptions for our Retiree Medical Plan would have had on the 2003 accumulated postretirement benefit obligation on our Consolidated Balance Sheet and our 2003 reported postretirement benefit expense on our Consolidated Statement of Operation:

The Company’s recent financial information is summarized in Selected Financial Data in Item 6. The following discussion of our Results of Operations should be read in conjunction with the Consolidated Financial Statements and related notes thereto included in Item 8, primarily Note 3 — “Business Segments”.

The comparability of our continuing results of operations for the year ended December 31, 2003 with the year ended December 31, 2002 is affected by, among others, the following factors:


	•	The acquisition of our Yorktown refinery on May 14, 2002.

	•	In the first four and one-half months of operation following its acquisition in 2002, our Yorktown refinery experienced three significant unscheduled unit shutdowns, which impacted the amount of high value products we were able to produce and the volume of crude oil we were able to process at the refinery.

	•	A processing unit turnaround at our Yorktown refinery, which resulted in the refinery being out of operation from March 21, 2003 to April 16, 2003.

	•	On April 28, 2003, a breaker failure disrupted operations at the electric generation plant that supplies our Yorktown refinery with power. As a result of the failure, the refinery suffered a complete loss of power and shut down all processing units. The refinery was operating at full capacity by the middle of May. We incurred costs of approximately $1,254,000 as a result of the loss of power, all of which were expensed in the second quarter of 2003. Reduced production also resulted in the loss of earnings.


	•	Stronger net refining margins at our refineries in 2003, due to, among other things:


	•	lower domestic crude oil and finished product inventories, and

	•	strong domestic finished product demand,


	•	Weaker net refining margins at our refineries in 2002 due to, among other things:


	•	continuing high inventories of distillates resulting from a drop in jet fuel demand following the September 11, 2001 terrorists attack,

	•	warmer than normal winter temperatures in the Northeast,

	•	worldwide crude oil production levels and Middle East tensions, which added to higher crude values,

	•	imported finished products that placed downward pressure on gasoline values, and

	•	losses on various crude oil futures contracts.


	•	Continued reduced production at our Four Corners refineries because of lower crude oil receipts due to supplier production problems and reduced supply availability.

	•	Stronger finished product sales volumes with relatively stable margins for our Phoenix Fuel operations. The shutdown of the Kinder Morgan pipeline, which supplies the Phoenix, Arizona market, in the middle of August 2003 caused some supply imbalances and negatively impacted inventory values. This negative impact was offset in part by higher margins for Phoenix Fuel’s unattended fuel operations.

	•	Strong retail fuel margins and improved merchandise margins in 2003 for several of our market areas. This was offset in part due to increased competition in certain of our markets.

	•	Net losses on the disposal/ write-down of assets of $1,837,000 in 2003. In 2002, we recorded net gains on the disposal/ write-down of assets of $741,000.

Our earnings from continuing operations before income taxes increased $38,884,000 for the year ended December 31, 2003. This increase was primarily due to the following four factors:


	•	An increase in operating earnings from our Yorktown refinery of $28,427,000.

	•	A 29% increase in our Four Corners refineries’ refining margins.

	•	A 26% increase in our retail group fuel margins.

	•	A 7% increase in our retail group merchandise margins.


	•	A 20% increase in our selling, general and administrative costs.

	•	A 9% increase in operating expenses for our operations other than Yorktown.

	•	A 6% decline in our Four Corners refineries’ fuel volumes sold.

	•	A 7% increase in interest expense.

	•	Net losses on the disposal/write-down of assets in 2003 compared to a net gain in 2002.

We owned our Yorktown refinery for all of 2003, but only for seven and one-half months in 2002. The refinery operated at an average throughput rate of approximately 57,700 barrels per day in 2003 and 57,300 barrels per day in 2002. Refining margins for 2003 were $4.07 per barrel and $2.32 for 2002.

Revenues for our Yorktown refinery increased in 2003 due to a 58% increase in finished product volumes sold and a 16% increase in finished product selling prices. Most of the volume increase was due to the number of months of ownership. Sales volumes were reduced in each year because of the items previously discussed above, and additionally in 2003, hurricane Isabel required us to shutdown the refinery for a period of time.

Cost of products sold for our Yorktown refinery increased in 2003 primarily due to the increase in finished product volumes sold and a 10% increase in average crude oil costs.

In February 2004, we entered into a long-term supply agreement with Statoil, which we believe will provide a significant proportion of our Yorktown refinery’s crude oil needs over the next five years. Under the terms of the agreement, supplies of acidic crude oil will be delivered to our Yorktown refinery beginning in late February 2004. In September 2004, we plan to shut down certain units at the refinery for 20 to 30 days for various upgrades related to the acidic crude oil we will be processing. Following these upgrades at the refinery, the deliveries of crude oil under the Statoil agreement will substantially increase. We believe our ability to process this higher acid crude oil will reduce our crude oil costs, improve our high-value product output, and contribute significantly to higher earnings. We believe this agreement will improve our competitiveness and reduce the impact of pricing volatility.

In 2003, our Yorktown refining margins improved due to a combination of factors, including:


	•	Cold weather in the Northeast in the early part of the year, resulting in an increased demand for heating oil,

	•	An extended summer driving season, resulting in part from warmer than normal east coast temperatures, and

	•	Reduced foreign gasoline imports, due in part to the phase in of stricter gasoline specifications.

Operating, SG&A and depreciation expenses for our Yorktown refinery also increased in 2003.

Our Four Corners refineries operated at an average throughput rate of approximately 30,552 barrels per day in 2003 and 32,535 barrels per day in 2002. Refining margins for 2003 were $8.81 per barrel and $6.84 for 2002.

Revenues for our Four Corners refineries increased in 2003 primarily due to a 24% increase in finished product selling prices, offset in part by a 6% decrease in finished product volumes sold. Sales volumes were reduced because of lower crude oil supplies due to the reasons previously discussed. Sales volumes previously sold to our travel center, which was sold in 2003, continue to be sold to the purchaser of the travel center under a long-term supply agreement.

Cost of products sold for our Four Corners refineries increased in 2003 primarily due to a 24% increase in average crude oil costs, offset in part by a 6% decrease in finished product volumes sold.

Our Four Corners refining margins improved 29% in 2003 due to a combination of factors, including:


	•	Refinery supply problems on the west coast,

	•	Refinery turnarounds by our competitors, and

	•	The Kinder-Morgan Pipeline rupture in August 2003, which affected fuel supplies in the Phoenix, Arizona and Northern Arizona markets.

Operating expenses for our Four Corners refineries increased in 2003 due to increased purchased fuel costs, because of higher prices, and higher general insurance costs.

Depreciation expense for our Four Corners refineries declined in 2003 due to lower refinery turnaround amortization costs in 2003. Our Ciniza refinery is scheduled for a major turnaround in the second quarter of 2004.

Average gasoline and diesel margins for our retail group were $0.198 per gallon for 2003 and were $0.157 per gallon for 2002. Gasoline and diesel fuel volumes sold for 2003 increased approximately 1%. Average merchandise margins for our retail group were 29.0% in 2003 and were 27.1% in 2002.

Revenues for our retail group increased in 2003 primarily due to a 16% increase in finished product selling prices.

Cost of products sold for our retail group increased in 2003 primarily due to a 15% increase in finished product purchase prices.

Our retail fuel margins improved 26% in 2003 due to a combination of factors, including


	•	the Kinder-Morgan pipeline rupture, which affected the supply of finished products in the Phoenix, Arizona and Southern Arizona markets,

	•	more effectively managing our fuel pricing, and

	•	more favorable market conditions.

Our retail merchandise margins improved 7% in 2003 due to a combination of factors, including:


	•	more favorable market conditions,

	•	implementation of marketing programs, and

	•	favorable supplier arrangements.

Operating expenses for our retail group increased in 2003 due to higher payroll and related costs, higher credit card processing fees due to higher gasoline and diesel fuel selling prices, and increased environmental costs.

Depreciation expense for our retail group declined in 2003 due to some retail assets becoming fully depreciated.

Gasoline and diesel fuel volumes sold by Phoenix Fuel increased by 14% in 2003. Average gasoline and diesel fuel margins for Phoenix Fuel were $0.053 per gallon for 2003 and were $0.054 per gallon for 2002.

Revenues for Phoenix Fuel increased in 2003 primarily due to a 16% increase in finished product selling prices and a 14% increase in finished product volumes sold. Finished product sales volumes increased due to marketing efforts to attract new customers and increased sales to existing customers because of increased demand and expanded customer operations.

Cost of products sold for Phoenix Fuel increased in 2003 due to a 16% increase in finished product purchase prices and a 14% increase in finished product volumes sold.

Our Phoenix Fuel finished product margins remained relatively stable in 2003, declining approximately 3% as a result of market conditions.

Operating expenses for Phoenix Fuel increased in 2003 due to higher payroll and related costs due to higher sales volumes, and higher repair and maintenance costs due to expanded fleet expenses, also related to higher sales volumes.

For the year ended December 31, 2003, SG&A expenses increased approximately $5,062,000 or 20% to $30,617,000 from $25,555,000 in the comparable 2002 period. The increase includes SG&A increases relating to the Yorktown refinery of $1,569,000. SG&A expense increases for our other operations were due to:


	•	accruals for management incentive bonuses,

	•	increased costs for our self-insured health plan, due to higher claims experience,

	•	higher workers compensation costs,

	•	increased letter of credit fees, and

	•	higher officers and directors insurance premiums.

The first quarter of 2002 included a credit of $471,000 in SG&A expenses for the revision of estimated accruals for 2001 management incentive bonuses, following the determination of bonuses to be paid to employees.

For the year ended December 31, 2003, interest expense increased approximately $2,685,000 or 7% to $38,993,000 from $36,308,000 in the comparable 2002 period. Interest expense increased approximately $8,348,000 due to the issuance of senior subordinated notes for the May 2002 acquisition of our Yorktown refinery. This increase was offset in part by a decrease in interest expense of approximately $4,821,000 relating to our $100,000,000 of 9 3/4% Senior Subordinated Notes due 2003 that were repaid with a portion of the proceeds of the issuance of the senior subordinated notes in 2002, and lower interest expense of approximately $840,000 relating to lower borrowings under our revolving credit facility in 2003.

For the year ended December 31, 2003, we recorded net losses on the disposal/ write-down of assets of $1,837,000. This amount includes the write-off of $901,000 of capitalized costs relating to a capital project associated with our Four Corners refinery operations, which management determined was no longer viable after completing an ongoing evaluation, impairment write-downs of $796,000 related to various retail assets and vacant land and net losses of $140,000 related to other asset sales and write-offs. In 2002, we recorded net gains on the disposal/ write-down of assets of $741,000, primarily related to the sale of various retail units and vacant land, offset in part by impairment write-downs related to various retail assets.

The effective tax rate for the year ended December 31, 2003 was approximately 39%. The effective tax benefit rate for year ended December 31, 2002 was approximately 40%. We believe that the tax benefit created in 2002 will be fully realized.

Discontinued operations include the operations of some of our retail service station/convenience stores and our travel center, which was sold on June 19, 2003. See Note 7 to our Consolidated Financial Statements included in Item 8 for additional information relating to these operations.

Overall, we believe that our current refining fundamentals are more positive now than the same time last year. Fuel and merchandise margins for our retail group are stronger now than they were this time last year, with same store fuel and merchandise volumes above the prior year’s levels. Phoenix Fuel currently continues to see growth in both wholesale and unmanned fleet fueling volumes with relatively stable margins. The businesses we are in, however, are very volatile and there can be no assurance that currently existing conditions will continue for any of our business segments.

Certain factors affecting the Company’s operations for the year ended December 31, 2002, include, among others, the following:


	•	The acquisition of the Yorktown refinery on May 14, 2002. Shortly after the acquisition, the Yorktown refinery experienced three significant unscheduled unit shutdowns, the last of which occurred on July 23, 2002. These shutdowns impacted the amount of high value products we were able to produce and the volume of crude oil we were able to process at the refinery.

	•	Weaker refining margins at our refineries due to, among other things, high nationwide inventories of distillates; an increase in imported finished products; and higher crude values due to worldwide crude oil production levels, Middle East tensions and a labor strike in Venezuela.

	•	A significantly greater volume of products produced and sold by the Yorktown refinery as compared to our other refining operations, results in us having a larger exposure to volatile refinery margins, which will positively or negatively affect our profitability.

	•	Continuing decline in Four Corners’ crude oil supplies.

	•	Competitive conditions in our Phoenix and Tucson retail markets due to increased price competition.

	•	Net gains on the disposal/write-down of assets of $741,000 in 2002. In 2001, we recorded net losses of $5,009,000 on the disposal/write-down of assets.

	•	The fourth quarter of 2002 showed a general improvement in refining margins and finished product margins, for all segments of our operations, compared to those posted for most of the three previous quarters of 2002. This resulted in a significant improvement in operating earnings for the fourth quarter compared to prior 2002 quarters.

For the year ended December 31, 2002, we incurred a loss before income taxes of $18,576,000, compared to earnings before income taxes of $22,547,000 for the year ended December 31, 2001. This decrease was primarily due to the following factors:


	•	A 29% decrease in our Four Corners refineries’ refining margins,

	•	An operating loss of $6,388,000 for our Yorktown refinery, and

	•	Increased interest expense and amortization of financing costs related to our Yorktown refinery acquisition and the refinancing of our 9 3/4% notes.


	•	An 11% decrease in our retail group fuel margins,

	•	A 4% decrease in our retail group fuel volumes sold, and

	•	A 4% decrease in our retail group merchandise margins,


	•	A net gain on the disposal/write-down of assets of $741,000 in 2002 and net losses on the disposal/write-down of assets of $5,009,000 in 2001,

	•	A 14% decrease in our selling, general and administrative costs for our operations other than Yorktown,

	•	A 5% decrease in operating expenses for our operations other than Yorktown, and

	•	An 8% increase in Phoenix Fuel fuel margins.

We owned our Yorktown refinery for seven and one-half months in 2002. The refinery operated at an average throughput rate of approximately 57,300 barrels per day and had refining margins $2.32 per barrel.

Sales volumes for our Yorktown refinery of 13,635,000 barrels were reduced because of the items previously discussed.

Refining margins for Yorktown were $2.32 per barrel for 2002 and were affected by the items previously discussed in addition to a drop in finished product values shortly after our acquisition of the refinery which resulted in low margins because of the higher value of the inventories we acquired.

Our Four Corners refineries operated at an average throughput rate of approximately 32,535 barrels per day in 2002 and 33,167 barrels per day in 2001. Refining margins for our Four corners refineries in 2002 were $6.84 per barrel and were $9.69 per barrel for 2001.

Revenues for our Four Corners refineries decreased in 2002 primarily due to a 10% decrease in finished product selling prices.

Cost of products sold for our Four Corners refineries decreased in 2002 primarily due to a 6% decrease in average crude oil costs.

Refining margins for our Four Corners refineries declined in 2002 by 29% due to the factors previously discussed.

Operating expenses for our Four Corners refineries increased due to higher purchased fuel costs, because of higher prices, higher payroll and related costs, and higher general insurance costs. These increases were offset in part by lower repair and maintenance costs.

Depreciation and amortization expense for our Four Corners refineries was higher in 2002 due to a 2001 revision in the estimated amortization period for certain refinery turnaround costs incurred in 1998, and capital expenditure projects during 2001 and 2002.

Average gasoline and diesel fuel margins for our retail group were $0.157 per gallon for 2002 and were $0.175 per gallon for 2001. Gasoline and diesel fuel volumes sold in 2002 decreased approximately 4%.

Revenues for our retail group decreased in 2002 primarily due to a 7% decrease in finished product selling prices and a 4% decrease in finished product volumes sold.

Cost of products sold for our retail group decreased in 2002 primarily due to a 6% decrease in finished product purchase prices and a 4% decrease in finished product volumes sold.

Our retail fuel margins declined 11% in 2002 primarily due to increased competition from non-traditional marketers, such as supermarkets and club membership warehouses, and from independent and major oil companies.

Our retail merchandise margins declined 4% in 2002 primarily due to market conditions.

Operating expenses for our retail group decreased in 2002 due to, among other things, lower lease expense due to the repurchase of 59 retail units from FFCA Capital Holding Corporation (“FFCA”) in July 2001 that had been sold to FFCA as part of a sale-leaseback transaction in December 1998, reduced expenses for payroll and related costs, and other operating expenses due in part to the sale or closure of 29 retail units since the end of 2000, as well as the implementation of certain cost reduction programs.

Depreciation expense for our retail group decreased in 2002 due to reductions in depreciation expense due to the sale or closure of 29 retail units since the end of 2000 and the non-amortization of goodwill in 2002 due to the adoption of SFAS No. 142. These decreases were partially offset by increases relating to the FFCA transaction discussed above and construction, remodeling and upgrades during 2001 and 2002.

Gasoline and diesel fuel volumes sold by Phoenix Fuel decreased in 2002 by approximately 4%. Average gasoline and diesel fuel margins for Phoenix Fuel were $0.054 per gallon for 2002 and were $0.050 per gallon for 2001.

Revenues for Phoenix Fuel decreased in 2002 primarily due to a 4% decrease in finished product selling prices and a 4% decrease in finished product volumes sold.

Cost of products sold for Phoenix Fuel decreased in 2002 due to a 4% decrease in finished product purchase prices and a 4% decrease in finished product volumes sold.

Our Phoenix Fuel finished product margins increased approximately 8% in 2002 as a result of market conditions.

Operating expenses for Phoenix Fuel were lower in 2002 primarily due to lower payroll and related costs and lower repair and maintenance costs.

Depreciation and amortization expense for Phoenix Fuel decreased in 2002 primarily due to the non-amortization of goodwill in 2002 due to the adoption of SFAS No. 142.

For the year ended December 31, 2002, SG&A expenses decreased approximately $3,486,000 or 12% to $25,555,000 from $29,041,000 in the comparable 2001 period. Included in the decrease are SG&A expenses of $718,000 relating to the Yorktown refinery.


	•	lower expense accruals for management incentive bonuses in 2002,

	•	the revision of estimated accruals for 2001 management incentive bonuses following the determination of bonuses to be paid to employees, and

	•	expenses incurred in 2001 related to certain related party transactions and certain environmental matters.

These decreases were offset in part by expenses recorded for the settlement of certain claims, assessments, and legal matters, including the matter set forth in Note 20 to our Consolidated Financial Statements included in Item 8, and increased letter of credit fees.

For the year ended December 31, 2002, interest expense increased approximately $12,210,000 or 51% to $36,308,000 from $24,098,000 in the comparable 2001 period. Approximately $17,168,000 of the increase is due to the issuance of new senior subordinated notes and borrowings under our new loan facilities entered into in connection with the acquisition of the Yorktown refinery as more fully described in Note 13 to our Consolidated Financial Statements included in Item 8. In addition, because of the timing of the Yorktown refinery acquisition and the 11% Notes financing, we were unable to provide the 45 day notice required by the Indenture supporting our 9 3/4% Notes for refinancing the notes prior to the issuance of the 11% Notes. As a result, we paid interest on the 9 3/4% Notes for 45 days after the financing, which amounted to approximately $1,230,000. These increases were offset in part by a decrease in interest expense of approximately $6,159,000 relating to the repayment of $100,000,000 of 9 3/4% Senior Subordinated Notes due 2003 with a portion of the proceeds of the issuance of $200,000,000 of 11% Notes.

For the year ended December 31, 2002, interest income decreased approximately $1,229,000 or 74% to $432,000 from $1,661,000 in the comparable 2001 period. The decrease was primarily due to a reduction in interest and investment income from the investment of funds in short-term instruments. This reduction was due in part to a reduction in the amount of funds available for investment because of the repurchase of 59 retail units from FFCA in July 2001 and the acquisition of the Yorktown refinery. In addition, no interest income was accrued in 2002 relating to the note from a related party discussed in Note 9 to our Consolidated Financial Statements included in Item 8.

In connection with the acquisition of the Yorktown refinery and the refinancing of 9 3/4% Notes we incurred approximately $17,436,000 of deferred financing costs relating to new senior subordinated debt and new senior secured loan facilities. These costs are being amortized over the term of the related debt.

The increase in the amortization/write-off of financing costs for the year ended December 31, 2002 was $2,492,000, primarily related to the amortization of the costs described above. The increase also includes the write-off of approximately $364,000 in deferred financing costs related to the 9 3/4% Notes that were refinanced.

For the year ended December 31, 2002, we recorded net gains on the disposal/ write-down of assets of $741,000. This amount included net gains of $1,401,000 primarily related to the sale of vacant land and various retail units, offset in part by $418,000 of impairment write-downs related to various retail assets and $242,000 of other write-offs. In 2001, we recorded losses of $5,009,000. This amount included losses of $609,000 on the sale of assets in the ordinary course of business, primarily related to the sale of eleven service station/convenience stores; losses of $1,516,000 on the write-down of assets due to impairment, resulting from the application of Statement of Financial Accounting Standard (“SFAS”) No. 121 due to a strategy to sell certain service station/convenience stores, some of which were closed; losses of $592,000 relating to the value of leasehold improvements included in leased service station/convenience stores returned to the lessors; and losses of $2,292,000 primarily related to the retirement or replacement of certain refinery property, plant, and equipment. In addition, the Company recorded a reserve in the amount of $5,409,000 in 2001, for a note and interest receivable from a related party as discussed in Note 9 to the Company’s Consolidated Financial Statements in Item 8.

The effective tax benefit rate for year ended December 31, 2002 was approximately 40%. We believe that the tax benefit created in 2002 will be fully realized. The effective tax rate for the year ended December 31, 2001 was approximately 38%.

Discontinued operations include the operations of some of our retail service station/convenience stores and our travel center. See Note 7 to our Consolidated Financial Statements included in Item 8 for additional information relating to these operations.

At December 31, 2003 we had long-term debt of $355,601,000, net of the current portion of $11,128,000. At December 31, 2002 our long-term debt was $398,069,000, net of the current portion of $10,251,000. Both of these amounts include:


	•	$150,000,000 of 9% Senior Subordinated Notes due 2007, and

	•	$200,000,000 of 11% Senior Subordinated Notes due 2012.

We also have a $100,000,000 revolving credit facility. The credit facility is primarily a working capital and letter of credit facility. At December 31, 2003, we had no direct borrowings outstanding under this facility and $36,961,000 of letters of credit outstanding. At December 31, 2002, we had $25,000,000 of direct borrowings outstanding under this facility and $41,193,000 of letters of credit outstanding.

We also have a mortgage loan facility that had a balance of $22,000,000 at December 31, 2003 and $32,222,000 at December 31, 2002.

See Note 13 to our Consolidated Financial Statements included in Item 8 for a further description of these obligations.

At December 31, 2003, our long-term debt was 71.8% of total capital. At December 31, 2002, it was 75.8%. Our net debt (long-term debt less cash and cash equivalents) to total capitalization percentage at December 31, 2003, was 70.1%. At December 31, 2002, this percentage was 75.3%. The decrease in each percentage is primarily related to the reduction in long-term debt during 2003.

As described in more detail in Note 13 to our Consolidated Financial Statements included in Item 8, the indentures governing our notes and our credit facility and loan facility contain restrictive covenants and other terms and conditions that if not maintained, if violated, or if certain conditions are met, could result in default, affect our ability to borrow funds, make certain payments, or engage in certain activities. A default under any of the notes, the credit facility or the loan facility could cause such debt, and by reason of cross-default provisions, our other debt to become immediately due and payable. If we are unable to repay such amounts, the lenders under our credit facility and loan facility could proceed against the collateral granted to them to secure that debt. If those lenders accelerate the payment of the credit facility and loan facility, we cannot provide assurance that our assets would be sufficient to pay that debt and other debt or that we would be able to refinance such debt or borrow more money on terms acceptable to us, if at all. Our ability to comply with the covenants, and other terms and conditions, of the indentures, the credit facility and the loan facility may be affected by many events beyond our control, and we cannot provide assurance that our operating results will be sufficient to allow us to comply with the covenants.

We expect to be in compliance with the covenants going forward, and we do not believe that any presently contemplated activities will be constrained. A prolonged period of low refining margins, however, would have a negative impact on our ability to borrow funds and to make expenditures for certain purposes and would have an impact on compliance with our debt covenants.


	•	limit our ability to use cash flow, or obtain additional financing, for future working capital needs, capital expenditures, acquisitions or other general corporate purposes,

	•	restrict our ability to pay dividends or purchase shares of our common stock,


	•	require a substantial portion of our cash flow from operations to make debt service payments,

	•	limit our flexibility to plan for, or react to, changes in business and industry conditions,

	•	place us at a competitive disadvantage compared to less leveraged competitors, and

	•	increase our vulnerability to the impact of adverse economic and industry conditions and, to the extent of our outstanding debt under our floating rate debt facilities, the impact of increases in interest rates.


	•	generate sufficient cash flow from operations,

	•	borrow sufficient funds to service our debt, or

	•	meet our working capital and capital expenditure requirements,

then, due to borrowing base restrictions, increased letter of credit requirements, or otherwise, we may be required to:


	•	sell additional assets,

	•	reduce capital expenditures,

	•	refinance all or a portion of our existing debt, or

	•	obtain additional financing.

We cannot provide assurance that we will be able to do any of these things on terms acceptable to us, or at all.

We presently have senior subordinated ratings of “B3” from Moody’s Investor Services and “B-” from Standard & Poor’s. At the present time, we have no indication from these agencies that they intend to change these ratings in the near future.

Our operating cash flows increased by $24,281,000 for the year ended December 31, 2003 compared to the year ended December 31, 2002, primarily as a result of an increase in net earnings before depreciation and amortization, amortization of financing costs, deferred income taxes, and net (gain) loss on disposal/ write-down of assets in 2003. This increase was offset in part by the use of cash in 2003 related to changes in working capital items while cash was provided by working capital items in 2002.

Our cash flow from operations depends primarily on producing and selling quantities of refined products at margins sufficient to cover fixed and variable expenses. In recent years, crude oil costs and prices of refined products have fluctuated substantially. These costs and prices depend on numerous factors, including:


	•	the supply of and demand for crude oil, gasoline and other refined products;

	•	changes in the economy;

	•	changes in the level of foreign and domestic production of crude oil and refined products;

	•	worldwide political conditions;

	•	the extent of government laws; and

	•	local factors, including market conditions, pipeline capacity, and the level of operations of other refineries in our markets.

Our crude oil requirements are supplied from sources that include major oil companies, large independent producers, and smaller local producers. Except for our long-term supply agreement with

Our sale prices for refined products are influenced by the commodity price of crude oil. Generally, an increase or decrease in the price of crude oil results in a corresponding increase or decrease in the price of gasoline and other refined products. The timing of the relative movement of the prices, however, as well as the overall change in product prices, could reduce profit margins and could have a significant impact on our refining and marketing operations, earnings, and cash flows. In addition, we maintain inventories of crude oil, intermediate products, and refined products, the values of which are subject to rapid fluctuation in market prices. Price level changes during the period between purchasing feedstocks and selling the manufactured refined products could have a significant effect on our operating results. Any long-term adverse relationships between costs and prices could impact our ability to generate sufficient operating cash flows to meet our working capital needs. Furthermore, because of the significantly greater volume of products produced and sold by our Yorktown refinery, as compared to our other refining operations, we have a much larger exposure to volatile refining margins than we had in the past.

Moreover, the industry is highly competitive. Many of our competitors are large, integrated oil companies which, because of their more diverse operations, larger refineries, stronger capitalization and better brand name recognition, may be better able than we are to withstand volatile industry conditions, including shortages or excesses of crude oil or refined products or intense price competition at the wholesale and retail levels. Because some of our competitors’ refineries are larger and more efficient than the our refineries, these refineries may have lower per barrel crude oil refinery processing costs.

Our ability to borrow funds under our current revolving credit facility could be adversely impacted by low product prices that could reduce the borrowing base related to eligible accounts receivable and inventories. In addition, the structuring of the Statoil supply agreement will result in a lower availability of funds under the borrowing base calculation of our credit facility, but because of the terms of the Statoil agreement, our borrowing needs will be reduced. Our debt instruments also contain restrictive covenants that limit our ability to borrow funds if certain thresholds are not maintained. See the discussion above in “Capital Structure” for further information relating to these loan covenants.

We anticipate that working capital, including that necessary for capital expenditures and debt service, will be funded through existing cash balances, cash generated from operating activities, existing credit facilities, and, if necessary, future financing arrangements. Future liquidity, both short and long-term, will continue to be primarily dependent on producing or purchasing, and selling, sufficient quantities of refined products at margins sufficient to cover fixed and variable expenses. Based on the current operating environment for all of our operations, we believe that we will have sufficient working capital to meet our needs over the next 12-month period.

Working capital at December 31, 2003 consisted of current assets of $259,402,000 and current liabilities of $151,055,000, or a current ratio of 1.72:1. At December 31, 2002, the current ratio was 1.76:1, with current assets of $211,684,000 and current liabilities of $120,351,000.

Current assets have increased since December 31, 2002 by $47,718,000, primarily due to increases in cash and cash equivalents, accounts receivable and inventories.

Accounts receivable have increased primarily due to higher trade receivables, due in part to higher finished product selling prices. The receipt of $4,110,000 of income tax refunds in 2003 partially offset these account receivable increases.


	•	increases in refinery onsite crude oil volumes, primarily at Yorktown;

	•	increases in crude oil and refined product prices;

	•	increases in Yorktown, terminal, and Phoenix Fuel refined product volumes; and

	•	increases in retail merchandise inventories.

These increases were offset, in part, by decreases in refined product volumes at the Four Corners refineries and retail operations.

Current liabilities have increased since December 31, 2002 by $30,704,000, primarily due to increases in accounts payable and accrued expenses. Accounts payable have increased primarily due to higher raw material and finished product costs. Accrued expenses have increased primarily as a result of higher fuel taxes payable and accruals for management incentive bonuses.

Net cash used in investing activities for capital expenditures totaled approximately $17,879,000 for the year ended December 31, 2003 and $12,990,000 for the year ended December 31, 2002. Expenditures for 2003 primarily were for turnaround expenditures at the Yorktown refinery and operational and environmental projects for the refineries and retail operations. Expenditures in 2002 were primarily for turnaround expenditures for the Ciniza and Bloomfield refineries, financial accounting software upgrades, and operational and environmental projects for the refineries and retail operations.

We received proceeds of approximately $21,433,000 from the sale of property, plant and equipment and other assets in 2003 and $19,517,000 in 2002. Proceeds received in 2003 primarily were from the sale of our corporate headquarters building and approximately 8 acres of surrounding land, the sale of our travel center, and the sale of nine service station/convenience stores. Proceeds received in 2002 were primarily from the sale of 13 service station/convenience stores and vacant land. In connection with the sale of our headquarters building and surrounding land, we entered into a ten-year agreement to leaseback the building. A gain on the sale of this property of approximately $924,000 has been deferred and is being amortized over the original lease term. In the first quarter of 2004, we entered into an agreement to sell 40 acres of vacant land known as the Jomax property. Under the current terms of the agreement this transaction would close in the second quarter of 2004.

We continue to monitor and evaluate our assets and may sell additional non-strategic or underperforming assets that we identify as circumstances allow. We also continue to evaluate potential acquisitions in our strategic markets, including lease arrangements.

On May 14, 2002, we acquired the Yorktown refinery from BP Corporation North America Inc. and BP Products North America Inc. for $127,500,000 plus $65,182,000 for inventories, the assumption of certain liabilities, and a conditional earn-out, the maximum amount of which cannot exceed $25,000,000. We also incurred transaction costs of approximately $2,000,000 in connection with the acquisition. See Note 6 to our Consolidated Financial Statements in Item 8 for a more detailed discussion of this transaction.

We financed our Yorktown refinery acquisition and the refinancing of our $100,000,000 of 9 3/4% Senior Subordinated Notes due 2003, with the proceeds from our $200,000,000 of 11% Senior Subordinated Notes due 2012, our revolving credit facility, our mortgage loan facility and cash on hand. We also paid approximately $17,436,000 of financing fees to various financial institutions in connection with these financing arrangements.

As part of the Yorktown acquisition, we agreed to pay earn-out payments, up to a maximum of $25,000,000, to the sellers, beginning in 2003 and concluding at the end of 2005 based upon certain market value factors. For the year ended December 31, 2003, we paid $8,854,000 in earn-outs under the

Following the acquisition of our Yorktown refinery, we developed a debt reduction strategy with the goal of reducing indebtedness by $50,000,000 prior to year-end 2002. The goal was to be accomplished by managing inventory to a lower level, reducing non-essential capital expenditures, and selling non-core and/or underperforming assets. Although we did not reach our goal in 2002, the strategy was carried forward into 2003. The result of the debt reduction strategy follows:

These reductions were paid from operating cash flows and the proceeds from the sale of assets described above.

In prior years, we initiated two capital projects relating to our Four Corners refinery operations, and capitalized costs associated with these projects of approximately $3,000,000. In the third quarter of 2003, we completed an ongoing evaluation of these projects and wrote off $901,000 of capitalized costs relating to one project after determining that it was no longer viable. We determined that the other project was potentially still viable and will continue to monitor it.

We have budgeted for up to approximately $50,000,000 for capital expenditures in 2004 excluding any potential acquisitions. Of this amount, approximately $4,800,000 is for the completion of projects that were started in 2003. In addition, approximately $17,800,000 is budgeted for non-discretionary projects that are required by law or regulation or to maintain the physical integrity of existing assets. These expenditures are primarily for operational and environmental projects at our existing refineries, including approximately $7,200,000 for various processing unit turnarounds at our Ciniza refinery, and replacements and upgrades for our retail operations. Another $6,500,000 is budgeted for discretionary projects to sustain or enhance the current level of operations, increase earnings associated with existing or new business and to expand existing operations. This amount includes $5,300,000 for our retail operations to be used to build one new unit and for operational and service upgrades for other units. The remaining budget of $18,900,000 is for discretionary growth projects. This amount includes $17,500,000 for various upgrades at our Yorktown refinery to handle the crude oil we will be receiving under our recently announced long-term supply contract. Our budget also includes $2,000,000 for capital expenditure contingencies.

In future years, we will be making substantial capital expenditures for government mandated environmental projects, including the low sulfur fuel requirements discussed previously. See discussions under the caption Regulatory, Environmental and Other Matters included in Items 1 and 2 for more details of these projects and below under the caption Clean Fuels and Consent Decree Expenditures.

We continue to investigate other capital improvements to our existing facilities. The amount of capital projects that are actually undertaken in 2004 will depend on, among other things, general business conditions and results of operations.

Much of the capital currently budgeted for environmental compliance is integrally related to operations or to operationally required projects. We do not specifically identify capital expenditures related to such projects on the basis of whether they are for environmental as opposed to economic purposes. With

We anticipate that approximately $6,290,000 will be spent in 2004 primarily to satisfy environmental regulations.

With respect to our operating expenses for environmental compliance, while records are not kept specifically identifying or allocating such expenditures, we believe that we incur significant operating expense for such purposes.

Changes in the tax laws and changes in federal and state environmental laws also may increase future capital and operating expenditure levels.

Included in the table below is a list of our obligations to make future payments under contracts and other agreements, as well as certain other contingent commitments.

The amounts set out in the table, including payment dates, are our best estimates at this time, but may vary as circumstances change or we become aware of additional facts.

Raw material and finished product purchases were determined by multiplying contract volumes by the price determined under the contract as of December 31, 2003, or if the contract was not in effect at December 31, 2003, as if the contract was in effect as of December 31, 2003. The contracts underlying these calculations all have variable pricing arrangements.

The above table does not include amounts for outstanding purchase orders at December 31, 2003, amounts under contracts that are cancelable by either party upon giving notice, and amounts under agreements that are based on a percentage of sales, such as credit card processing fees.

We cannot estimate our future pension expenditures beyond 2004. We are obligated to make a lump-sum payment to the pension retirement plan each year. Not included in the table are certain retiree medical and asset retirement obligations for which annual funding is not required. Our asset retirement obligations are discussed in more detail in Note 4 to our Consolidated Financial Statements in Item 8 and our pension plan and retiree medical plan obligations are described in more detail in Note 17.

The indentures governing our notes and our credit facility and loan facility contain restrictive covenants and other terms and conditions that if not maintained, if violated, or if certain conditions are met, could result in default, early redemption of the notes, affect our ability to borrow funds, make certain payments, or engage in certain activities. A default under any of the notes, the credit facility or the loan facility could cause such debt, and by reason of cross-default provisions, our other debt to become immediately due and payable.

Included in the table below is a list of our commitments under our revolving credit facility.


*	Standby letters of credit reduce the availability of funds for direct borrowings under the line of credit. At December 31, 2003 there were no direct borrowings under the line of credit.

We purchase crude oil and other feedstocks from a number of suppliers to operate our refineries. We acquire the feedstocks for our Yorktown refinery from a number of domestic and international suppliers. As to Yorktown, we have not historically participated in these markets, and as such, have not had a credit relationship with these suppliers. Several of these suppliers required us to provide letters of credit for either a portion or the full amount of our purchases, due to the weak economy and the poor profitability experienced by refiners and marketers, including ourselves, throughout 2002. Due to our improved financial condition and the overall improvement in our refining fundamentals in 2003, we will be working with these suppliers to reduce or eliminate these letter of credit requirements.

The availability of letters of credit under our credit facility is $50,000,000. Our inability to post satisfactory letters of credit could constrain our ability to purchase feedstocks on the most beneficial terms.

See discussions under the caption Regulatory, Environmental and Other Matters included in Items 1 and 2 and Note 20 to our Consolidated Financial Statements in Item 8 for more details of these projects.

The following table shows amounts we anticipate spending to meet certain clean fuel regulations and to comply with an environmental consent decree that requires certain actions to be taken at our Yorktown refinery. The table does not include amounts for which environmental accruals have been established, which are instead included in the long-term commitments table above. These amounts are our best estimates at this time, but may vary as circumstances change or we become aware of additional facts.

The amounts shown in the above table are the high end of our estimated costs for these projects. We anticipate that the costs could be between the following ranges:


	•	Yorktown — Clean Fuels — $60,000,000 to $70,000,000

	•	Four Corners — Clean Fuels — $15,000,000 to $20,000,000

	•	RFI/ CMS — Sewer System — $3,000,000 to $5,000,000

	•	Consent Decree — $20,000,000 to $27,000,000

We believe we will have sufficient resources to meet our working capital requirements, including that necessary for capital expenditures and debt service, over the next 12-month period because of:


	•	an improved operating environment for all of our operations;

	•	current cash balances;

	•	availability of funds under our revolving credit facility; and

	•	compliance with our debt covenants.

In order to create additional flexibility and to assist us in meeting future anticipated expenditures, we are in the process of evaluating a number of strategies to further reduce debt and interest expense. Until these strategies are implemented, we will use operating cash flows and borrowings under our revolving credit facility to meet our commitments.

Our board of directors had previously authorized the repurchase of up to 2,900,000 shares of our common stock. This share repurchase program was discontinued in 2002. Over the life of the program we repurchased 2,582,566 shares for approximately $25,716,000, resulting in a weighted average cost of approximately $9.96 per share. The repurchased shares are treated as treasury shares and are available for a number of corporate purposes including, among other things, for options, bonuses, and other employee stock benefit plans.

In the past, we engaged in a number of transactions with related parties, primarily James E. Acridge, our former Chairman, President and Chief Executive Officer (the “Former CEO”). Certain of these transactions are summarized in the table below.

For a discussion of the matters included in the above table, see Note 9 to our Consolidated Financial Statements included in Item 8.

Excluded from the above table are a number of immaterial transactions involving ourselves and our former CEO or entities controlled, or previously controlled, by our former CEO, including: (1) amounts paid to us for purchases of fuel; (2) payments made to entities controlled, or previously controlled, by our former CEO for events held at facilities owned by such entities; (3) reimbursements for certain landscaping and maintenance services provided for our former CEO and entities controlled, or previously controlled, by our former CEO; and (4) the value of products and services provided to us by our former CEO or entities controlled, or previously controlled, by him. Various immaterial amounts involving other related parties are also excluded from the table. Additionally, in 2002, we extended for one year the period of time that our former CEO had to exercise a grant of 55,800 stock options. These stock options were due to expire on June 27, 2002 due to our former CEO’s termination on March 29, 2002. Because the extension changed the terms of the original stock option grant under our 1998 Stock Incentive Plan, we recorded compensation expense in the amount of $79,500.

All of the material foregoing transactions were reviewed and approved by our board of directors or committees of the board.

As discussed in more detail in Note 20 to our Consolidated Financial Statements included in Item 8, our former CEO, and three entities controlled by our former CEO, have commenced Chapter 11 bankruptcy proceedings. We are pursuing claims in the bankruptcy proceedings for, among other things, the following:


	•	the loan and related interest discussed above,

	•	the other receivables outstanding discussed above,

	•	approximately $700,000 of costs incurred through December 31, 2003 to resolve a lease dispute and related litigation in which an entity controlled by our former CEO was a sublessee of ours and a limited liability company in which the bankruptcy estate of an entity controlled by Mr. Acridge formerly owned a 51% interest is the Landlord (costs incurred subsequent to December 31, 2003 also will be pursued),

	•	approximately $124,000 for the time spent by an employee of ours on projects for entities controlled, or previously controlled, by our former CEO,


	•	approximately $89,000 for landscaping services provided by our employees that benefited our former CEO;

	•	approximately $15,600 for what we believe are non-company expenses incurred by our former CEO on one of our credit cards, and

	•	approximately $1,400 of other miscellaneous amounts.

We do not know whether, and to what extent, creditors, including ourselves, will receive any recovery on their respective debts from any of the four bankruptcy estates.

In addition, with respect to the lease dispute described above, we have demanded reimbursement of amounts paid to resolve the dispute from an entity controlled by our former CEO that is not involved in bankruptcy. We do not know whether we will receive any of the amounts we are attempting to recover.

We are exposed to various market risks, including changes in certain commodity prices and interest rates. To manage the volatility relating to these normal business exposures, we may, from time to time, use commodity futures and options contracts to reduce price volatility, to fix margins in our refining and marketing operations, and to protect against price declines associated with our crude oil and finished products inventories. Our policies for the use of derivative financial instruments set limits on quantities, require various levels of approval and require review and reporting procedures.

In 2003 and 2002, we entered into various crude oil and gasoline futures contracts to economically hedge crude oil and other inventories and purchases for our Yorktown refinery operations. For the year ended December 31, 2003, we recognized losses on these contracts of approximately $1,594,000 in cost of products sold. For the year ended December 31, 2002, we recognized losses on similar contracts of approximately $1,637,000. These transactions did not qualify for hedge accounting in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, and accordingly were marked to market each month. There were no open crude oil futures contracts or other commodity derivative contracts at December 31, 2003.

Our credit facility is floating-rate debt tied to various short-term indices. As a result, our annual interest costs associated with this debt may fluctuate. At December 31, 2003, there were no direct borrowings outstanding under this facility.

Our loan facility is floating-rate debt tied to various short-term indices. As a result, our annual interest costs associated with this debt may fluctuate. At December 31, 2003, there was $22,000,000 outstanding under this facility. The potential increase in annual interest expense from a hypothetical 10% adverse change in interest rates on these borrowings at December 31, 2003, would be approximately $24,600.

Our operations are subject to the normal hazards, including fire, explosion and weather-related perils. We maintain various insurance coverages, including business interruption insurance, subject to certain deductibles. We are not fully insured against some risks because some risks are not fully insurable, coverage is unavailable or premium costs, in our judgment, do not justify such expenditures.

Credit risk with respect to customer receivables is concentrated in the geographic areas in which we operate and relates primarily to customers in the oil and gas industry. To minimize this risk, we perform ongoing credit evaluations of our customers’ financial position and require collateral, such as letters of credit, in certain circumstances.

Federal, state and local laws relating to the environment, health and safety affect nearly all of our operations. As is the case with other companies engaged in similar industries, we face significant exposure from actual or potential claims and lawsuits involving environmental, health and safety matters. These

Various laws govern the investigation and remediation of contamination at our current and former properties, as well as at third-party sites to which we sent wastes for disposal. We may be held liable for contamination existing at our current or former properties even though a prior operator of the site, or other third party, caused the contamination. We also may be held responsible for costs associated with contamination cleanup at third-party disposal sites even if the original disposal activities met all applicable regulatory requirements at the time. We are now engaged in a number of these remediation projects.

Our future expenditures for compliance with environmental, health and safety matters cannot be estimated in many circumstances for various reasons. These reasons include:


	•	the speculative nature of remediation and cleanup cost estimates and methods;

	•	imprecise and conflicting data regarding the hazardous nature of various substances;

	•	the number of other potentially responsible parties involved;

	•	defenses that may be available to us; and

	•	changing environmental, health and safety laws, including changing interpretations of these laws.

We cannot give assurance that compliance with laws, investigations, enforcement proceedings, private-party claims, or cleanup requirements will not have a material adverse effect on our business, financial condition or operating results. For a further discussion of environmental, health and safety matters affecting our operations, see the discussion of these matters contained in Items 1 and 2 under the heading “Regulatory, Environmental and Other Matters.”

Rules and regulations implementing federal, state and local laws relating to the environment, health and safety will continue to affect our operations. We cannot predict what new environmental, health or safety legislation or regulations will be enacted or become effective in the future or how existing or future laws or regulations will be administered or enforced with respect to our products or activities. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies, could have an adverse effect on our financial position and operating results and could require substantial expenditures by us for, among other things:


	•	the installation and operation of refinery equipment, pollution control systems and other equipment not currently possessed by us;

	•	the acquisition or modification of permits applicable to our activities; and

	•	the initiation or modification of cleanup activities.

As of December 31, 2003 and 2002, we had environmental liability accruals of approximately $7,592,000 and $8,367,000, respectively, and litigation accruals of approximately $573,000 and $349,000, respectively. The environmental liability accruals summarized in the table below are recorded in the current and long-term sections of our Consolidated Balance Sheets. Note 20 to our Consolidated Financial Statements in Item 8 contains a more detailed discussion of the more significant of these projects.

We have a “cash balance” retirement plan and a retiree medical plan for the employees of our Yorktown refinery. These plans contain many of the same features of plans that were in place for the employees of the former owners. All Yorktown employees meeting the eligibility requirements are automatically included in the cash plan. We must make a lump-sum payment to the cash plan each year. The medical plan is a defined post-retirement benefit plan. The medical plan will pay a percentage of the medical premium for coverage under the plan. Coverage is available to full-time Yorktown employees who are age 50 or older with 10 or more years of service. Note 17 to our Consolidated Financial Statements contains a more detailed discussion of these plans.

As previously discussed, lawsuits have been filed in over 20 states alleging that MTBE, a blendstock used by many refiners in producing specially formulated gasoline, has contaminated water wells. For a discussion of MTBE lawsuits filed against us, see Note 20 to our Consolidated Financial Statements in Item 8, captioned “Commitments and Contingences.”

In February 2003, we filed a complaint against the United States in the United States Court of Federal Claims in connection with military jet fuel that we sold to the Defense Energy Support Center from 1983 through 1994. We asserted that the federal government underpaid us for jet fuel by approximately $17,000,000. For a discussion of this matter, see Note 20 to our Consolidated Financial Statements in Item 8, captioned “Commitments and Contingencies.”

Our Ciniza and Bloomfield refineries primarily process a mixture of high gravity, low sulfur crude oil, condensate and natural gas liquids. The locally produced, high quality crude oil known as Four Corners Sweet is the primary feedstock for these refineries. Our current projections of Four Corners crude oil production indicate that our crude oil demand will exceed the crude oil supply that is available from local sources for the foreseeable future. We expect to operate the Ciniza and Bloomfield refineries at lower levels than otherwise would be scheduled as a result of shortfalls in Four Corners crude oil production. For a further discussion of raw material supply for our refineries, see the discussion contained in Items 1 and 2 under the heading “Raw Material Supply.”

We are aware of a number of actions, proposals or industry discussions regarding product pipeline projects that could impact portions of our marketing areas. The completion of some or all of these projects would result in increased competition by increasing the amount of refined products potentially available in our markets, as well as improving competitor access to these areas. It also could result in new opportunities for us, as we are a net purchaser of refined products in some of these areas. For a further discussion of the potential impact of pipeline projects on our operations, as well as other competitive factors affecting these operations, see the discussion of competitive factors contained in Items 1 and 2 under the heading “Competitive Conditions.”

Our refining activities are conducted at our two refinery locations in New Mexico and the Yorktown refinery in Virginia. These refineries constitute a significant portion of our operating assets, and the two New Mexico refineries supply a significant portion of our retail operations. As a result, our operations would be significantly interrupted if any of the refineries were to experience a major accident, be damaged by severe weather or other natural disaster, or otherwise be forced to shut down. If any of the refineries were to experience an interruption in supply or operations, our business, financial condition and operating results could be materially and adversely affected.

On March 29, 2002, the board of directors terminated James E. Acridge as our President and Chief Executive Officer and replaced him as Chairman of the Board, although he currently remains on the board of directors. For a further discussion of matters relating to Mr. Acridge, see the discussion included under the caption “Related Party Transactions” included in Item 7 and in Notes 9 and 20 to our Consolidated Financial Statements in Item 8.

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities and Exchange Act of 1934. These statements are included throughout this report, including in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements relate to projections of capital expenditures and other financial items. These statements also relate to our business strategy, goals and expectations concerning our market position, future operations, acquisitions, dispositions, margins, profitability, liquidity and capital resources. We have used the words “believe,” “expect,” “anticipate,” “estimate,” “could,” “plan,” “intend,” “may,” “project,” “predict,” “will” and similar terms and phrases to identify forward-looking statements in this report.

Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate, and the forward-looking statements based on these assumptions could be incorrect. While we have made these forward-looking statements in good faith and they reflect our current judgment regarding such matters, actual results could vary materially from the forward-looking statements.

Actual results and trends in the future may differ materially depending on a variety of important factors. These important factors include the following:


	•	the availability of crude oil and the adequacy and costs of raw material supplies generally;

	•	our ability to negotiate new crude oil supply contracts;

	•	the risk that our long-term crude oil supply agreement with Statoil will not supply a significant portion of the crude oil needs of our Yorktown refinery over the term of the agreement, and will not reduce our crude oil costs, improve our high-value product output, contribute significantly to higher earnings, improve our competitiveness, or reduce the impact of crude oil markets’ pricing volatility;

	•	our ability to successfully manage the liabilities, including environmental liabilities, that we assumed in the Yorktown acquisition;

	•	our ability to obtain anticipated levels of indemnification;


	•	competitive pressures from existing competitors and new entrants, including the potential effects of various pipeline projects and various actions that have been undertaken to increase the supply of refined products to El Paso, Texas;

	•	volatility in the difference, or spread, between market prices for refined products and crude oil and other feedstocks;

	•	the risk that our operations will not remain competitive and realize acceptable sales volumes and margins in those markets where they currently do so;

	•	our ability to adequately control operating expenses and non-essential capital expenditures;

	•	the risk of increased costs resulting from employee matters, including unionization efforts and increased employee benefit costs;

	•	the risk that we will not receive the expected amounts from the potential sale of assets;

	•	state, federal or tribal legislation or regulation, or findings by a regulator with respect to existing operations, including the impact of government-mandated specifications for gasoline and diesel fuel on our operations;

	•	unplanned or extended shutdowns in refinery operations;

	•	the risk that we will not remain in compliance with covenants, and other terms and conditions, contained in our notes, credit facility and loan facility;

	•	the risk that we will not be able to post satisfactory letters of credit;

	•	general economic factors affecting our operations, markets, products, services and prices;

	•	unexpected environmental remediation costs;

	•	weather conditions affecting our operations or the areas in which our products are refined or marketed;

	•	the risk we will be found to have substantial liability in connection with existing or pending litigation;

	•	the occurrence of events that cause losses for which we are not fully insured; and

	•	other risks described elsewhere in this report or described from time to time in our other filings with the Securities and Exchange Commission.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entity by the previous statements. Forward-looking statements we make represent our judgment on the dates such statements are made. We assume no obligation to update any information contained in this report or to publicly release the results of any revisions to any forward-looking statements to reflect events or circumstances that occur, or that we become aware of, after the date of this report.

The information required by this item is incorporated herein by reference to the “Risk Management” section in our Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7.

We have audited the accompanying consolidated balance sheets of Giant Industries, Inc. and subsidiaries (“the Company”) as of December 31, 2003 and 2002, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Giant Industries, Inc. and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements, in 2003 the Company changed its method of accounting for asset retirement obligations to comply with Statement of Financial Accounting Standards (“SFAS”) No. 143, “Asset Retirement Obligations” and in 2002 the Company changed its method of accounting for goodwill and other intangible assets to comply with SFAS No. 142, “Goodwill and Other Intangible Assets” and changed its method of accounting for the impairment or disposal of long-lived assets to comply with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”

The accompanying notes are an integral part of these consolidated financial statements.

Significant Noncash Investing and Financing Activities. On January 1, 2003, in accordance with SFAS No. 143, we recorded an asset retirement obligation of $2,198,000, asset retirement costs of $1,580,000 and related accumulated depreciation of $674,000. We also reversed a previously recorded asset retirement obligation for $120,000, and recorded a cumulative effect adjustment of $1,172,000 ($704,000 net of taxes). See Note 4. On April 3, 2003, we contributed 213,776 newly issued shares of our common stock, valued at $900,000, to our 401(k) plan as a discretionary contribution for the year 2002. On September 30, 2003, we paid off certain capital lease obligations by paying approximately $4,703,000 in cash and by applying a $2,000,000 deposit that had been included in “Other Assets”. On November 4, 2003, we sold our corporate headquarters building and approximately 8 acres of surrounding land. In connection with the sale, we entered into a ten-year agreement to lease back our corporate headquarters building. The gain on the sale of the property of approximately $924,000 has been deferred and is being amortized over the original lease term. During 2002, we issued $200,000,000 of 11% Senior Subordinated Notes at a discount of $5,856,000. During 2001, we received 103,430 shares of our own common stock valued at approximately $1,107,000 from James E. Acridge, our former Chairman, President and Chief Executive Officer (the “Former CEO”), as payment for the exercise by the Former CEO of 126,601 common stock options. These shares were immediately cancelled. In addition, we repurchased, for cash, 59 service station/ convenience stores from FFCA Capital Holding Corporation (“FFCA”) for approximately $38,052,000 plus closing costs. These service station/convenience stores had been sold to FFCA in a sale-leaseback transaction completed in December 1998. Certain deferrals on the Balance Sheet relating to the sale-leaseback transaction reduced the cost basis of the assets recorded in “Property, Plant and Equipment” by approximately $1,736,000. These deferrals included a deferred gain on the original sale to FFCA and deferred lease allocations included in “Other Liabilities and Deferred Income,” and deferred costs associated with the original sale included in “Other Assets.”

The accompanying notes are an integral part of these consolidated financial statements.

Giant Industries, Inc., through our subsidiary Giant Industries Arizona, Inc. and its subsidiaries, refines and sells petroleum products. We do this:


	•	On the East Coast — primarily in Virginia, Maryland, and North Carolina, and

	•	In the Southwest — primarily in New Mexico, Arizona, and Colorado, with a concentration in the Four Corners area where these states meet.

In addition, our Phoenix Fuel Co., Inc. subsidiary distributes commercial wholesale petroleum products primarily in Arizona.

See Note 3 for a further discussion of business segments and Notes 6 and 7 for recent acquisitions and dispositions.

Our consolidated financial statements include the accounts of Giant Industries, Inc. and all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

The preparation of our consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Our business units recognize revenues when realized and earned with all of the following criteria being met:


	•	Persuasive evidence of an arrangement exists;

	•	Delivery has occurred or services have been rendered;

	•	The seller’s price to the buyer is fixed or determinable; and

	•	Collectibility is reasonably assured.

We consider all highly liquid instruments with an original maturity of three months or less to be cash equivalents.

Our policies for the use of derivative financial instruments set limits on quantities, require various levels of approval, and require review and reporting procedures.

We are exposed to various market risks, including changes in certain commodity prices and interest rates. To manage the volatility relating to these normal business exposures, from time to time, we use commodity futures and options contracts to reduce price volatility, to fix margins in our refining and marketing operations, and to protect against price declines associated with our crude oil and finished products inventories. For purposes of the Statement of Cash Flows, such transactions are considered to be operating activities.

Gains and losses on all transactions that do not qualify for hedge accounting are reflected in earnings in the period that they occur.

Our credit risk with respect to customer receivables is concentrated in the geographic areas in which we operate and relates primarily to customers in the oil and gas industry. To minimize this risk, we perform ongoing credit evaluations of our customers’ financial position and require collateral, such as letters of credit, in certain circumstances. We maintain our cash and cash equivalents with federally insured banking institutions or other financial service providers. From time to time, balances maintained in these institutions may exceed amounts that are federally insured. All of the financial institutions we use are major banking institutions and reputable financial service providers.

Our trade receivables result primarily from the sale of refined products, various grades of gasoline and diesel fuel, lubricants, and merchandise from our three refineries and Phoenix Fuel. These sales are made to independent wholesalers and retailers, industrial/commercial accounts and major oil companies. In addition, our service station/convenience stores sell refined products, merchandise, and food products, some of which are purchased by the customer by use of a credit card.

We extend credit to our refining and Phoenix Fuel customers based on criteria established by our management, including ongoing credit evaluations. We usually extend credit on an unsecured basis, but we may require collateral, such as letters of credit, in some circumstances. An allowance for doubtful accounts is provided based on a number of factors that include, but are not limited to, the current evaluation of each customer’s credit risk; the delinquent status of a customer’s account; collection efforts made; current economic conditions; past experience and other available information. Uncollectible trade receivables are charged against the allowance for doubtful accounts when we have exhausted all reasonable efforts to collect the amounts due, including litigation if the amounts and circumstances warrant such action. The allowance for doubtful accounts is reflected in our Consolidated Balance Sheets as a reduction of trade receivables.

Our trade receivables are pledged as collateral for borrowings under our revolving credit facility. At December 31, 2003 and 2002, there was $0 and $25,000,000, respectively, of direct borrowings outstanding under this facility.

Our inventories are stated at the lower of cost or market. Costs for crude oil and refined products produced by our refineries, and the lubricants and other merchandise of Phoenix Fuel, are determined by the last-in, first-out (“LIFO”) method. Costs for our retail, exchange and terminal refined products inventories and shop supplies are determined by the first-in, first-out (“FIFO”) method. Costs for merchandise inventories at our retail locations are determined by the retail inventory method. See Note 10 for additional information on inventories.

Our property, plant and equipment are stated at cost and are depreciated on the straight-line method over their respective estimated useful lives.

The estimated useful lives for our various categories of property, plant and equipment are:

Routine maintenance, repairs and replacement costs are charged against earnings as incurred. Turnaround costs, which consist of complete shutdown and inspection of significant units of the refineries at intervals of two or more years for necessary repairs and replacements, are deferred and amortized over the period until the next expected shutdown, which generally ranges from 24 to 60 months depending on the type of shutdown and the unit involved. For turnaround purposes, we divide the operating units at our Yorktown refinery into three major groups. Each of these major groups has a major turnaround every five years. For our Four Corners refineries, major turnarounds are generally scheduled every four years, but may be more frequent for some units. Unscheduled maintenance shutdowns may also occur at the refineries from time to time. Expenditures that materially increase values, expand capacities or extend useful lives are capitalized. Interest expense is capitalized as part of the cost of constructing major facilities and equipment.

In December 2003, the Accounting Standards Executive Committee (“AcSEC”) of the American Institute of Certified Public Accountants (“AICPA”) submitted an exposure draft of a proposed Statement of Position (“SOP”), “Accounting for Certain Costs Related to Property, Plant, and Equipment” to the Financial Accounting Standards Board (“FASB”) for clearance. At December 31, 2003, we had $10,418,000 of deferred turnaround costs included in property, plant and equipment on our balance sheet and classified as machinery and equipment. In the current draft of the SOP, costs of planned major maintenance activities are not considered a separate property, plant and equipment asset or component. Those costs should be charged to expense as incurred, except for acquisitions or replacements of components that are capitalizable under the in-service stage guidance of this SOP. The final SOP is expected to be effective for fiscal years beginning after December 15, 2004. We are evaluating the effect

the SOP will have on our financial position and results of operations, which may include the expensing of certain deferred costs and expensing significant portions of future turnaround costs as incurred.

On January 1, 2002, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” This Statement requires, among other things, that goodwill not be amortized, but be tested for impairment annually, or as events and circumstances indicate. See Note 5 for applicable disclosures.

Goodwill, which results from business acquisitions, represents the excess of the purchase price over the fair value of the net assets acquired and is carried at cost less accumulated amortization and write-offs. Prior to January 1, 2002, goodwill was being amortized on the straight-line method over the period of expected benefit ranging from 15 to 30 years.

On January 1, 2002, we adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This Statement defines impairment as “the condition that exists when the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value.” The Statement provides for a single accounting model for the disposal of long-lived assets, whether previously held or newly acquired. Specific guidance is provided for recognition and measurement and reporting and disclosure for long-lived assets held and used, disposed of other than by sale, and disposed of by sale. This new standard had no impact on our financial position and results of operations at adoption, but we have reflected certain operations as discontinued operations in the years presented to comply with this statement.

In accordance with SFAS No. 144, we review the carrying values of our long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets to be held and used may not be recoverable. For assets to be disposed of, we report long-lived assets and certain identifiable intangibles at the lower of carrying amount or fair value less cost to sell. See Note 7 for information relating to the impairment of certain assets.

We have 3,751,980 shares of our common stock classified as treasury stock. These shares were acquired under a stock repurchase program and an issuer tender offer at a weighted average cost of approximately $9.72 per share. These shares are available for a number of corporate purposes including, among others, for options, bonuses, and other employee stock benefit plans.

Environmental expenditures that relate to current operations are expensed or capitalized depending on the circumstances. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Environmental liabilities are not discounted to their present value and are recorded without consideration of potential recoveries from third parties, although we do take into account amounts that others are contractually obligated to pay us. Subsequent adjustments to estimates, which may be significant, may be made as more information becomes available or as circumstances change. See Note 20.

The provision for income taxes is based on earnings (loss) reported in the financial statements. Deferred income taxes are provided to reflect temporary differences between the basis of assets and liabilities for financial reporting purposes and income tax purposes, as well as the effects of tax credits. We file consolidated federal and state income tax returns for the states in which we operate, except in states that are not unitary.

Earnings per share are calculated in accordance with SFAS No. 128, “Earnings Per Share.” Basic earnings per common share are computed by dividing consolidated net earnings by the weighted average number of shares of common stock outstanding during each period. Earnings per common share assuming dilution are computed by dividing consolidated net earnings by the sum of the weighted average number of shares of common stock outstanding plus additional shares representing the exercise of outstanding common stock options using the treasury stock method, unless such calculation is antidilutive. See Note 8.

For the years ended December 31, 2003, 2002, and 2001, respectively, the only component of other comprehensive income is net income as reported on our Consolidated Statements of Operations.

In December 2002, FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure” (“SFAS No. 148”). SFAS No. 148 amends SFAS No. 123 to permit alternative methods of transition for adopting a fair value based method of accounting for stock-based employee compensation. We use the intrinsic value method to account for stock-based employee compensation. See Note 2 for disclosures relating to stock-based employee compensation.

On January 1, 2003, we adopted SFAS No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”). SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. See Note 4 for disclosures relating to SFAS No. 143 and the related cumulative effect adjustment.

On January 1, 2003, we adopted the provisions of FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“Interpretation No. 45”). Interpretation No. 45 elaborates on existing disclosure requirements for guarantees and clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The adoption of Interpretation No. 45 had no material effect on our financial statements.

In December 2003, FASB issued FASB Interpretation No. 46 (Revised), “Consolidation of Variable Interest Entities” (“Interpretation No. 46 (Revised)”). Interpretation No. 46 (Revised) clarifies the application of existing consolidation requirements to entities where a controlling financial interest is achieved through arrangements that do not involve voting interests. Under Interpretation No. 46 (Revised), a variable interest entity (“VIE”) is consolidated if a company is subject to a majority of the risk of loss from the VIE’s activities or entitled to receive a majority of the entity’s residual returns. We have no existing VIE’s as defined by this Interpretation. The application of Interpretation No. 46 (Revised) is not expected to have any effect on our financial statements.

In May 2003, FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. We have no existing financial instruments that fall within the scope of this statement.

Certain reclassifications have been made to prior years’ consolidated financial statements to conform to the statement classifications used in the current year. These reclassifications relate primarily to the discontinued operation requirements of SFAS No. 144 adopted by us on January 1, 2002. These reclassifications had no effect on reported earnings or stockholders’ equity.

We have a stock-based employee compensation plan that is more fully described in Note 18. We account for this plan under the recognition and measurement principles of Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees”, and related Interpretations. We use the intrinsic value method to account for stock-based employee compensation. In 2002, approximately $48,000 of compensation, net of tax, was recorded in accordance with APB No. 25 relating to certain stock options for which the exercise period had been extended. The following table illustrates the effect on net earnings (loss) and net earnings (loss) per share as if we had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation.

We are organized into three operating segments based on manufacturing and marketing criteria. These segments are the Refining Group, the Retail Group and Phoenix Fuel. A description of each segment and its principal products follows:

Our operations that are not included in any of the three segments are included in the category “Other.” These operations consist primarily of corporate staff operations.

Operating income for each segment consists of net revenues less cost of products sold, operating expenses, depreciation and amortization, and the segment’s SG&A expenses. Cost of products sold reflects current costs adjusted, where appropriate, for LIFO and lower of cost or market inventory adjustments.

The total assets of each segment consist primarily of net property, plant and equipment, inventories, accounts receivable and other assets directly associated with the segment’s operations. Included in the total assets of the corporate staff operations are a majority of our cash and cash equivalents, and various accounts receivable, net property, plant and equipment, and other long-term assets.

Disclosures regarding our reportable segments with reconciliations to consolidated totals are presented below.

On January 1, 2003, we adopted SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement applies to all entities. It addresses legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset, except for certain obligations of lessees. As used in this statement, a legal obligation is an obligation that a party is required to settle as a result of an existing or enacted law, statute, ordinance, or written or oral contract, or by legal construction of a contract under the doctrine of promissory estoppel.

This statement requires that the fair value of a liability for an Asset Retirement Obligation (“ARO”) be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated Asset Retirement Cost (“ARC”) is capitalized as part of the carrying amount of the long-lived asset. To initially recognize our ARO liability, we capitalized the fair value of all ARO’s that we identified, calculated as of the date the liability would have been recognized were SFAS No. 143 in effect at that time. In accordance with SFAS No. 143, we also recognized the cumulative accretion and accumulated depreciation from the date the liability would have been recognized had the provisions of SFAS No. 143 been in effect, to January 1, 2003, the date we adopted SFAS No. 143. As a result, on January 1, 2003, we recorded an ARO liability of $2,198,000, ARC assets of $1,580,000 and related accumulated depreciation of $674,000. We also reversed a previously recorded asset retirement obligation of $120,000, and recorded a cumulative effect adjustment of $1,172,000 ($704,000 net of taxes). Our legally restricted assets that are set aside for purposes of settling ARO liabilities are less than $500,000. These assets are set aside to fund costs associated with the closure of certain solid waste management facilities.


	1. Landfills — pursuant to Virginia law, the two solid waste management facilities at our Yorktown refinery must satisfy closure and post-closure care and financial responsibility requirements.

	2. Crude Pipelines — our right-of-way agreements generally require that pipeline properties be returned to their original condition when the agreements are no longer in effect. This means that the pipeline surface facilities must be dismantled and removed and certain site reclamation performed. We do not believe these right-of-way agreements will require us to remove the underground pipe upon taking the pipeline permanently out of service. Regulatory requirements, however, may mandate that such out-of-service underground pipe be purged.

	3. Storage Tanks — we have a legal obligation under applicable law to remove all underground and aboveground storage tanks, both on owned property and leased property, once they are taken out of service. Under some lease arrangements, we also have committed to restore the leased property to its original condition.

The following table reconciles the beginning and ending aggregate carrying amount of our ARO’s for the years ended December 31, 2003 and 2002.

The effect of the change on earnings, excluding the cumulative effect adjustment, for the year ended December 31, 2003 was approximately $178,000 or $0.02 per diluted share.

The pro forma information below for the years ended December 31, 2002 and 2001 reflect the effects of additional depreciation and accretion expense net of related income taxes as if the requirements of SFAS No. 143 were in effect as of the beginning of the period.

SFAS No. 142, “Goodwill and Other Intangible Assets,” addresses financial accounting and reporting for intangible assets acquired individually or with a group of other assets (but not those acquired in a business combination) at acquisition. This statement also addresses financial accounting and reporting for goodwill and other intangible assets subsequent to their acquisition. SFAS No. 142, among other things, specifies that goodwill and certain intangible assets with indefinite lives no longer be amortized, but instead be subject to periodic impairment testing.

We elected to conduct our annual goodwill impairment test as of the first day of each fourth fiscal quarter (October 1). For 2003, we identified four reporting units for the purpose of the annual impairment test. The reporting units consisted of the Yorktown Refinery Unit, Four Corners Refinery Unit, the Retail Unit and the Phoenix Fuel Unit. The fair value of each reporting unit was determined using a discounted cash flow model based on assumptions applicable to each reporting unit. The fair value of the reporting units exceeded their respective carrying amounts, including goodwill. As a result, the goodwill of each reporting unit was considered not impaired.

In addition to the annual goodwill impairment test, if events and circumstances indicate that goodwill of a reporting unit might be impaired, then goodwill also will be tested for impairment when the impairment indicator arises.

At December 31, 2003 and 2002, we had goodwill of $24,578,000 and $19,465,000, respectively.

The changes in the carrying amount of goodwill for the year ended December 31, 2003 are as follows:

Certain of our retail units classified as held for sale or held and used are tested for impairment when circumstances change. In 2003, offers were received for certain retail units, while others continued to be marketed for sale, and these units were tested for impairment. This resulted in goodwill impairment write-downs for two units of $28,000. Also, goodwill of $113,000 relating to retail units sold was written off and is included in the net gain on the disposal of these units reported as a part of discontinued operations. See Note 7.

Liquor licenses, which are our only indefinite lived intangible assets, were evaluated for impairment as required by SFAS No. 142. We believe that there are no legal, regulatory, contractual, competitive, economic or other factors limiting the useful life of our liquor licenses. If events and circumstances indicate that our liquor licenses might not be recoverable, then an impairment loss would be recognized if the carrying amount of the liquor licenses exceeds their fair value.

Intangible assets with finite lives will continue to be amortized over their respective useful lives and will be tested for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”

A summary of intangible assets that are included in “Other Assets” in the Consolidated Balance Sheets at December 31, 2003 and 2002 are presented below:

Intangible asset amortization expense for the year ended December 31, 2003 was $376,000. Estimated amortization expense for the five succeeding fiscal years is as follows:

The following table sets forth a reconciliation of net earnings (loss) and earnings (loss) per share information for the years ended December 31, 2003, 2002 and 2001 adjusted for the non-amortization provisions of SFAS No. 142.

On May 14, 2002, we acquired the 61,900 bpd Yorktown refinery from BP Corporation North America Inc. and BP Products North America Inc. (collectively “BP”) for $127,500,000 plus $65,182,000 for the value of inventory at closing, the assumption of certain liabilities, and a conditional earn-out. In addition, we incurred direct costs related to this transaction of approximately $2,000,000.

Under SFAS No. 141, “Business Combinations”, the Yorktown acquisition was accounted for as a purchase. As such, the purchase price was allocated to the assets acquired and liabilities assumed based upon their respective fair market values at the date of acquisition. No material adjustments have been made to our initial allocation of the purchase price of the Yorktown refinery except as noted below.

As part of the acquisition, we agreed to pay to BP, beginning in 2003 and concluding at the end of 2005, earn-out payments up to a maximum of $25,000,000 when the average monthly spreads for regular reformulated gasoline or No. 2 distillate over West Texas Intermediate equivalent light crude oil on the New York Mercantile Exchange exceed $5.50 or $4.00 per barrel, respectively. For the year ended December 31, 2003, we incurred $8,854,000 under this provision of the purchase agreement. These earn-out payments are an additional element of cost that represents an excess of purchase price over the net amounts assigned to the assets acquired and liabilities assumed. We allocated $5,254,000 of this amount to goodwill and $3,600,000 to a deferred tax asset.

The Yorktown acquisition was funded with cash on hand, $32,000,000 in borrowings under a $100,000,000 senior secured revolving credit facility, $40,000,000 in borrowings from a senior secured

mortgage loan facility, and part of the proceeds from the issuance of $200,000,000 of 11% Senior Subordinated Notes due 2012 (“the 11% Notes”). In addition, we incurred approximately $17,436,000 of financing costs in connection with these obligations. See Note 13 for a discussion of these obligations.

The December 31, 2002 financial statements include the results of operations of the Yorktown acquisition since the date of acquisition.

In December 1998, we completed a sale-leaseback transaction with FFCA Capital Holding Corporation (“FFCA”). Under the terms of the Sale and Lease Agreement (the “Agreement”), FFCA purchased 83 service station/convenience stores from us for approximately $51,763,000. We, in turn, leased the 83 service station/convenience stores back from FFCA under an operating lease arrangement with an initial term of 15 years and three separate options to continue the lease for successive periods of five years. In the second half of 1999, we reacquired 24 of the service station/convenience stores for approximately $13,711,000, which was the original selling price of these properties. In the second quarter of 2001, FFCA approached us to determine whether we had any interest in reacquiring the remaining 59 service station/convenience stores. Subsequently, in July 2001, we repurchased, for cash, the 59 service station/convenience stores for approximately $38,052,000, which was the original selling price of these properties, plus closing costs. Certain deferrals on the Balance Sheet relating to the sale-leaseback transaction reduced the cost basis of the assets recorded in “Property, Plant and Equipment” by approximately $1,736,000. These deferrals included a deferred gain on the original sale to FFCA, deferred lease allocations, and deferred costs associated with the original sale. Lease expense related to these assets totaled $0 for 2002 and $2,610,000 for 2001. Depreciation expense related to these same assets totaled $3,983,000 for 2002 and $2,937,000 in 2001.

The following table contains information regarding our discontinued operations, all of which are included in our retail group and include some service station/convenience stores and our travel center, which was sold on June 19, 2003.

Included in “Assets Held for Sale” in the accompanying Consolidated Balance Sheets are the following categories of assets.

All of these assets are or were being marketed for sale at the direction of management. We expect to dispose of the remaining properties within the next 12 months. In 2003, certain properties were reclassified to property, plant and equipment because we were unable to dispose of them within 12 months. These properties included:


	•	nine closed retail units with a net book value of $1,219,000;

	•	vacant land — residential/commercial property with a net book value of $6,278,000; and

	•	vacant land — adjacent to retail units with a net book value of $1,189,000.

In addition, two closed retail units were added to assets held for sale, two were sold, one unit was written-off, and impairment write-downs of $796,000 were recorded relating to various other assets.

On June 19, 2003, we completed the sale of our travel center to Pilot Travel Centers LLC (“Pilot”) and received net proceeds of approximately $5,820,000, plus an additional $491,000 for inventories. As a result of this transaction, we recorded a pre-tax loss of approximately $44,600, which included charges that were a direct result of the decision to sell the travel center. In connection with the sale, we entered into a long-term product supply agreement with Pilot. We will receive a supply agreement performance payment at the end of five years if there has been no material breach under the supply agreement and all requirements have been met for such payment.

On November 4, 2003 we sold our corporate headquarters building and approximately 8 acres of surrounding land. In connection with the sale, we entered into a ten-year agreement to lease back our corporate headquarters building. The gain on the sale of the property of approximately $924,000 has been deferred and is being amortized over the original lease term. The deferred gain is included in “Other Liabilities and Deferred Income” on our Consolidated Balance Sheet for December 31, 2003.

The following is a reconciliation of the numerators and denominators of the basic and diluted per share computations for earnings as required by SFAS No. 128:

At December 31, 2003 and 2002, there were 8,785,555 and 8,571,779 shares, respectively, of our common stock outstanding.

On February 25, 2004, we contributed 49,046 newly issued shares of our common stock to fund our 401(k) plan discretionary contribution for the year ended December 31, 2003. In 2003, we contributed 213,776 newly issued shares of our common stock to fund our 401(k) plan discretionary contribution for the year ended December 31, 2002. See Note 16 for a description of the 401(k) plan.

There were no transactions subsequent to December 31, 2003, except as noted above, that if the transactions had occurred before December 31, 2003, would materially change the number of common shares or potential common shares outstanding as of December 31, 2003.


(1)	On January 25, 2001, we accepted an offer from the Former CEO, on behalf of a trust of which the Former CEO is the beneficiary (the “Trust”), to sell a parcel of land (the “Jomax Property”) to us, for the lesser of $5,000,000 or the Jomax Property’s appraisal value. In March 2001, we purchased the Jomax Property for $5,000,000. A portion of the proceeds from the sale was used to pay all interest due and payable as of March 28, 2001 under the terms of an outstanding loan to the Former CEO we had made previously. As part of the transaction, the Trust also was granted an option, exercisable for a period of two years, to repurchase the property at the greater of the amount paid by us to purchase the property and the property’s appraised value, and a right of first refusal, exercisable for a period of two years, to repurchase the property on the same terms as contained in a bona fide offer from a bona fide purchaser.

(2)	On September 20, 2001, we purchased the Trust’s option and right of first refusal (collectively, the “Rights”) for $600,000. At the time of the sale, we were negotiating with a potential purchaser for the sale of the Jomax Property for a price in excess of the purchase price we paid. The potential purchaser was requiring us to represent in the purchase and sale agreement that there were no effective options to purchase, or rights of first refusal, affecting the property. Our purchase of the Rights would have enabled us to make this representation and would have avoided any other complications associated with the Rights that potentially could have affected the sale. The potential purchaser subsequently advised us that it was discontinuing negotiations regarding the possible sale because general market and economic conditions, coupled with the financial uncertainties arising out of the events that occurred on September 11, 2001, had severely depressed the real estate market. We continue to market this property for sale, and in the first quarter of 2004 entered into an agreement to sell it. Under the current terms of the agreement, this transaction would close in the second quarter of 2004.

(3)	In the first quarter of 2001, we purchased artwork from the Former CEO for display in our headquarters building for its appraised value of $162,550. The proceeds of that transaction were used by the Former CEO to pay balances due on certain amounts owed to us by the Former CEO and by entities controlled, or previously controlled, by the Former CEO.


(4)	During 2001, we repurchased 400,000 shares of our common stock from the Former CEO for $3,520,000 or $8.80 per share. This was the market price of our stock on the date our board of directors approved the purchase. We purchased all of these shares under our stock repurchase program, and all of the repurchased shares are treated as treasury shares.

(5)	We loaned $4,000,000 to the Former CEO on September 17, 1998 (the “Loan”). The Loan was originally evidenced by an unsecured promissory note bearing interest at the prime rate published by the Wall Street Journal on September 17, 1998 (the “Prime Rate”) plus 2%. Principal and accrued interest were due and payable in one lump sum on February 28, 1999. On December 23, 1998, we entered into a revised loan agreement with the Former CEO. The amount of the Loan was increased to $5,000,000, the Loan’s interest rate was increased to the Prime Rate plus 3%, and the Loan’s maturity date was extended to February 28, 2001. An initial interest payment was made on February 28, 1999 for interest due through December 31, 1998. Subsequent interest was due and payable semi-annually on June 30 and December 31 of each year.

The Loan was modified again on March 10, 2000. The terms of the Loan were revised so that all principal and interest, including interest that otherwise would have been payable on December 31, 1999, became due and payable on February 28, 2001. As security for the modified loan, we received a pledge by a limited liability company owned by the Former CEO (“Pinnacle Rodeo”) of a 49% equity interest in another limited liability company (“Pinnacle Rawhide”). We believe that Pinnacle Rodeo’s principal asset was full ownership of Pinnacle Rawhide, and that Pinnacle Rawhide’s principal asset was certain real property in north Scottsdale, Arizona, on which the Rawhide Wild West Town is located, which was subject to secured liens (the “Real Property”). The loan was further modified on February 28, 2001 to extend the Loan’s maturity date to March 28, 2001. This modification reflected the fact that our purchase of the Jomax Property had not closed. A portion of the proceeds of this sale was used to pay the interest that became due and payable under the Loan on February 28, 2001. On March 21, 2001, we approved an additional two-year extension of the Loan’s maturity date, making all principal and interest due and payable on March 28, 2003. This extension was conditioned upon, among other things, the Former CEO’s payment of all interest due and payable on March 28, 2001, which was paid. In return for the extension of the Loan, the Former CEO provided additional security for the Loan by pledging all of his equity interest in Pinnacle Rodeo.

On July 18, 2001, we were advised that Pinnacle Rodeo was unable to make the monthly payment due and owing in the month of July under certain loans entered into by Pinnacle Rodeo (the “Rodeo Loans”). We were asked to make this payment, in the amount of $240,833, on behalf of the Former CEO for the benefit of Pinnacle Rodeo. It was our understanding that the Rodeo Loans were secured by prior liens on the Real Property. We made the July payment in order to avoid a default under the Rodeo Loans.

As of December 31, 2001, we established a reserve for the entire amount of the Loan plus interest accrued through December 31, 2001. The amount of the reserve is $5,409,000. Subsequently, the Former CEO personally, and three entities controlled, or previously controlled, by the Former CEO, commenced Chapter 11 Bankruptcy proceedings, including Pinnacle Rodeo and Pinnacle Rawhide. The four bankruptcy cases are jointly administered. It is unknown whether and to what extent creditors, including us, will receive any recovery on their respective debts from any of the four bankruptcy estates. In the course of the bankruptcy proceeding, the bankruptcy court permitted the principal lienholder on the Real Property to take back title to the property. In view of this development, we have continued to maintain the reserve established as of December 31, 2001.

On July 31, 2003, we filed a complaint in the Acridge bankruptcy proceeding in which we sought a determination that certain of the amounts we believe are owed to us by Mr. Acridge, including amounts due on the loan, are not dischargeable in bankruptcy. Included in this complaint is a claim for interest on the loan arising since we established the reserve at December 31, 2001. For 2002, this

amount is $402,226, and for 2003, this amount is $537,500. We have not, however, established a receivable for these interest amounts. The court has entered a default against Mr. Acridge in connection with our complaint. The court, however, has not yet ruled on whether we are entitled to receive any of the damages that we have requested. Even if the court decides that we can receive damages, we do not know whether we would be able to recover any of these damages from Mr. Acridge.


(6)	Total includes amounts due from entities controlled, or previously controlled, by the Former CEO for rent, landscaping, and fuel purchases. Because of the bankruptcy proceedings discussed above, a reserve for these receivables has been recorded as of December 31, 2002.

(7)	In the third quarter of 2001, we transferred to the Former CEO a life insurance policy on his life with a cash surrender value of $251,078. This policy and life insurance policies for another executive had been issued prior to when we went public in 1989. In connection with our determination that the policy should be transferred to the Former CEO, we considered historical information and other relevant matters relating to the policy, including the fact that several life insurance policies on the other executive’s life had previously been transferred to that executive. The cash value of the life insurance policy was considered compensation to the Former CEO for tax purposes in 2001. The $251,078 cash surrender value recorded on our books was expensed in the third quarter and was included in selling, general and administrative expenses (“SG&A”).

In the third quarter of 2001, the Former CEO also submitted statements to us for reimbursement of certain expenditures made by the Former CEO in the current year and prior years. In August 2001, we reimbursed the Former CEO $228,379 in connection with such statements. Of this amount, $204,293 was considered compensation to the Former CEO for tax purposes in 2001. The $204,293 was expensed in the third quarter and was included in SG&A.

In addition, the payment of $240,833 described in footnote five above made on behalf of the Former CEO also was expensed in the third quarter of 2001. This amount was considered compensation to the Former CEO for tax purposes in 2001 and was included in SG&A.

(8)

The total represents the net amount of (i) certain miscellaneous amounts paid by us to the Former CEO or entities controlled, or previously controlled, by the Former CEO, including certain amounts for joint marketing programs, the lease of certain real property for one of our service stations, and the assumption by us of a lease, and (ii) certain miscellaneous amounts paid by, or due from, the Former CEO or entities controlled, or previously controlled, by the Former CEO, including rent for office space in our headquarters building.

Excluded from the above table are a number of immaterial transactions involving us and the Former CEO or entities controlled, or previously controlled, by the Former CEO, including: (i) amounts paid to us for purchases of fuel, (ii) payments made to entities controlled, or previously controlled, by the Former CEO for events held at facilities owned by such entities, (iii) reimbursements for certain landscaping and maintenance services provided for the Former CEO and entities controlled, or previously controlled, by the Former CEO, and (iv) the value of products and services provided to us by the Former CEO or entities controlled, or previously controlled, by him. Various immaterial amounts involving other related parties are also excluded from the table. Additionally, in 2002, we extended for one year the period of time that the Former CEO had to exercise a grant of 55,800 stock options. These stock options were due to expire on June 27, 2002 due to the Former CEO’s termination on March 29, 2002. Because the extension changed the terms of the original stock option grant under our 1998 Stock Incentive Plan, we recorded compensation expense in the amount of $79,500.

All of the material foregoing transactions were reviewed and approved by our board of directors or committees of the board.

As discussed in more detail in Note 20, the Former CEO, and three entities controlled by the Former CEO have commenced Chapter 11 bankruptcy proceedings. We are pursuing claims in the bankruptcy proceedings for, among other things, the following: (i) the loan and related accrued interest discussed above, (ii) the other receivables outstanding as of December 31, 2003 discussed above, (iii) approximately $700,000 of costs incurred through December 31, 2003 to resolve a lease dispute and related litigation in which an entity controlled by the Former CEO was a sublessee of ours and a limited liability company in which the bankruptcy estate of an entity controlled by Mr. Acridge formerly owned a 51% interest was the Landlord (costs incurred subsequent to December 31, 2003 also will be pursued), (iv) approximately $124,000 for the time spent by one of our employees on projects for entities controlled, or previously controlled, by the Former CEO, (v) approximately $89,000 for landscaping services provided by us that benefited the Former CEO, (vi) approximately $15,600 for what we believe are non-company expenses incurred by the Former CEO on a company credit card, and (vii) approximately $1,400 of other miscellaneous amounts. It is unknown whether, and to what extent, creditors, including us, will receive any recovery on their respective debts from any of the four bankruptcy estates.

The portion of inventories valued on a LIFO basis totaled $89,239,000 and $70,329,000 at December 31, 2003 and 2002, respectively. The data in the following paragraph will facilitate comparison with the operating results of companies using the FIFO method of inventory valuation.

If inventories had been determined using the FIFO method at December 31, 2003, 2002 and 2001, net earnings and diluted earnings per share would have been higher (lower) as follows:

We liquidated certain lower cost refinery LIFO inventory layers in 2003, 2002 and 2001, which resulted in an increase in our net earnings and related diluted earnings per share as follows:

In 2001, cost of products sold were increased by approximately $3,302,000 as a result of a reduction in the carrying value of inventories related to a decline in crude oil and refined product prices.

Our direct and indirect wholly-owned subsidiaries jointly and severally guarantee on an unconditional basis, the repayment of the two issues of senior subordinated notes, subject to a limitation designed to ensure that such guarantees do not constitute a fraudulent conveyance. Except as otherwise specified in the indentures pursuant to which the notes were issued, there are no restrictions on the ability of such subsidiaries to transfer funds to us in the form of cash dividends, loans or advances. General provisions of applicable state law, however, may limit the ability of any subsidiary to pay dividends or make distributions to us in certain circumstances.

Separate financial statements of our subsidiaries are not included herein because the aggregate assets, liabilities, earnings, and equity of the subsidiaries are substantially equivalent to our assets, liabilities, earnings, and equity on a consolidated basis; the subsidiaries are jointly and severally liable for the repayment of the notes; and the separate financial statements and other disclosures concerning the subsidiaries are not deemed by us to be material to investors.

The indentures governing the notes contain restrictive covenants that, among other things, restrict our ability to:


	•	create liens;

	•	incur or guarantee debt;

	•	pay dividends;

	•	repurchase shares of our common stock;

	•	sell certain assets or subsidiary stock;

	•	engage in certain mergers;

	•	engage in certain transactions with affiliates; or

	•	alter our current line of business.

In addition, subject to certain conditions, we are obligated to offer to purchase a portion of the notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, with the net cash proceeds of certain sales or other dispositions of assets. Upon a change of control, we would be required to offer to purchase all of the notes at 101% of the principal amount thereof, plus accrued interest, if any, to the date of purchase. At December 31, 2003, retained earnings available for dividends under the most restrictive terms of the indentures were approximately $18,402,000.

We have a $100,000,000 three-year senior secured revolving credit facility (the “Credit Facility”) with a group of banks. We also have a $40,000,000 three-year senior secured mortgage loan facility (the “Loan Facility”) with a group of financial institutions.

The Credit Facility is primarily a working capital and letter of credit facility. The availability of funds under this facility is the lesser of (i) $100,000,000, or (ii) the amount determined under a borrowing base calculation tied to the eligible accounts receivable and inventories. At December 31, 2003 the availability of funds under the Credit Facility was $100,000,000. There were no direct borrowings outstanding under this facility at December 31, 2003, and there were approximately $36,961,000 of irrevocable letters of credit outstanding, primarily to crude oil suppliers, insurance companies and regulatory agencies.

The interest rate applicable to the Credit Facility is tied to various short-term indices. At December 31, 2003, the weighted average rate was approximately 4.9% per annum. We are required to pay a quarterly commitment fee of 0.50% per annum of the unused amount of the facility.

The obligations under the Credit Facility are guaranteed by each of our principal subsidiaries and secured by a security interest in our personal property, including:


	•	accounts receivable;

	•	inventory;

	•	contracts;

	•	chattel paper;

	•	trademarks;

	•	copyrights;

	•	patents;

	•	license rights;

	•	deposits; and

	•	investment accounts and general intangibles.

The obligations under the Credit Facility also are secured by first priority liens on the Bloomfield and Ciniza refineries, including:


	•	the land, improvements, equipment and fixtures related to the refineries;

	•	certain identified New Mexico service station/convenience stores;

	•	the stock of our various direct and indirect subsidiaries; and

	•	all proceeds and products of this additional collateral.

The lenders under the Loan Facility are entitled to participate with the lenders under the Credit Facility in this additional collateral pro rata based on the obligations we owe under the Credit Facility and the Loan Facility.


	•	our ability to incur additional indebtedness;

	•	create liens;

	•	dispose of assets;

	•	consolidate or merge;

	•	make loans and investments;

	•	enter into transactions with affiliates;

	•	use loan proceeds for certain purposes;

	•	guarantee obligations and incur contingent obligations;

	•	enter into agreements restricting the ability of subsidiaries to pay dividends to us;

	•	make distributions or stock repurchases;

	•	make significant changes in accounting practices or change our fiscal year; and

	•	except on terms acceptable to the senior secured lenders, to prepay or modify subordinated indebtedness.

The Credit Facility also requires us to meet certain financial covenants, including maintaining a minimum consolidated tangible net worth, a minimum fixed charge coverage ratio, a total leverage ratio, and a senior leverage ratio of consolidated senior indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”, as defined in the agreement), and to achieve a minimum quarterly consolidated EBITDA.

Pursuant to the Loan Facility, we issued notes to the lenders, which bear interest at a rate that is tied to various short-term indices. At December 31, 2003, this rate was approximately 6.7% per annum. The remainder of the notes fully amortize during the remaining term as follows: 2004 — $11,111,000 and 2005 — $10,889,000.

The Loan Facility is secured by the Yorktown refinery property, fixtures and equipment, excluding inventory, accounts receivable and other Yorktown refinery assets securing the Credit Facility. We and our other principal subsidiaries also guarantee the loan and have granted the lenders the same additional collateral as described above in connection with the Credit Facility. The Loan Facility contains the same negative covenants as in the Credit Facility and requires the Company to meet the same financial covenants as in the Credit Facility.

Our failure to satisfy any of the covenants in the Credit Facility and the Loan Facility is an event of default under both facilities. Both facilities also include other customary events of default, including, among other things, a cross-default to our other material indebtedness and certain changes of control.

In 1997, as part of the acquisition of certain service station/convenience stores, we entered into capital leases. We purchased the remaining assets in 2003 and retired the capital lease obligations of approximately $6,703,000 with $4,703,000 in cash and applying a $2,000,000 deposit that had been included in “Other Assets” in our Consolidated Balance Sheet.

Aggregate annual maturities of long-term debt, excluding unamortized discount, as of December 31, 2003 are: 2004 — $11,128,000; 2005 — $10,889,000; 2006 — $0; 2007 — $150,000,000; 2008 — $0 and all years thereafter — $200,000,000.

The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” as amended by SFAS No. 133. Using available market information and the valuation methodologies described below, we determined the estimated fair value amounts. Considerable judgment is required, however, in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein may not be indicative of the amounts that we could realize in a current market exchange. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

The carrying amounts and estimated fair values of our financial instruments are as follows:

We determined the fair value of fixed rate long-term debt by using quoted market prices, where applicable, or by discounting future cash flows using rates estimated to be currently available for debt of similar terms and remaining maturities.

We believe the carrying values of our cash and cash equivalents, receivables, accounts payable and accrued expenses approximate fair values due to the short-term maturities of these instruments. We believe the carrying value of our variable rate long-term debt instruments approximate fair values because their rates are tied to short-term indices.

We are exposed to various market risks, including changes in commodity prices and interest rates. To manage the volatility relating to these normal business exposures, from time to time, we use commodity futures and options contracts to reduce price volatility, to fix margins in our refining and marketing operations, and to protect against price declines associated with our crude oil and finished products inventories.

In 2003 and 2002, we entered into various crude oil futures contracts in order to economically hedge crude oil inventories and crude oil purchases for the Yorktown refinery operations. For the years ended December 31, 2003 and 2002, we recognized losses on these contracts of approximately $1,594,000 and $1,637,000, respectively, in cost of products sold. In 2001, we incurred losses of $10,000 related to these activities. These transactions did not qualify for hedge accounting in accordance with SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities,” as amended, and accordingly were marked to market each month.

At December 31, 2003 and 2002, we had no open crude oil futures contracts or other commodity derivatives.

Our provision (benefit) for income taxes from continuing operations is comprised of the following:

We paid income taxes in 2003, 2002, and 2001 of $1,150,000, $472,000, and $4,675,000, respectively.

We received income tax refunds in 2003 and 2002 of $4,110,000 and $3,938,000, respectively.

We reconcile the difference between our provision (benefit) for income taxes and income taxes calculated using statutory U.S. federal income tax rates for continuing operations as follows:

We record deferred income taxes to reflect temporary differences in the basis of our assets and liabilities for income tax and financial reporting purposes, as well as available tax credit carryforwards. These temporary differences result in amounts that will be taxable or deductible in future years on our tax returns. The tax effected temporary differences and credit carryforwards which comprise our deferred taxes on our balance sheet are as follows:

At December 31, 2003, we had an alternative minimum tax credit carryforward and a general business credit of approximately $9,841,000 and $4,035,000, respectively. Our alternative minimum tax credits can be carried forward indefinitely to offset future taxable income. Our general business tax credits, that are available to offset future income taxes, expire beginning in 2007 through 2023. Our net operating loss carryover, that can offset future taxable income, will expire in 2022. These credits and loss carryovers are subject to utilization based on various tax laws and tax return situations.

On May 14, 2002, we adopted the Giant Yorktown 401(k) Retirement Savings Plan (“Yorktown 401(k)”). The Yorktown 401(k) is for the employees of our Yorktown refinery who meet plan eligibility

requirements. For purposes of eligibility and vesting, anyone who was employed by the Yorktown refinery on or before December 31, 2002, received credit for time worked for the refinery’s previous owners BP/ Amoco and certain other prior employers. Subject to approval from our board of directors each year, we match the employee’s contributions to the Yorktown 401(k), including after-tax contributions, at a rate of 100% up to a maximum of 7% of the employee’s annual compensation, subject to a per participant maximum contribution amount. For the years ended December 31, 2003 and 2002, we expensed $985,000 and $546,000, respectively, for matching contributions under this plan. Our matching contribution can be invested in available options at the discretion of the participant. We did not make a discretionary contribution to this plan for the year ended December 31, 2003.

For our other employees who meet plan eligibility requirements, we sponsor the Giant Industries, Inc and Affiliated Companies 401(k) Plan (“Giant 401(k)”). Subject to board approval each year, we match the employee’s contributions to the Giant 401(k), including catch-up contributions, at a rate of 50% up to a maximum of 6% of the employee’s annual compensation, subject to a per participant maximum contribution amount. For the years ended December 31, 2003, 2002, and 2001, we expensed $1,231,000, $1,560,000, and $1,454,000, respectively, for matching contributions under this plan. Our matching contribution can be invested in available options at the discretion of the participant. Additional contributions to the Giant 401(k) are made at the discretion of our board of directors. For the year ended December 31, 2003, we accrued $900,000 for a discretionary contribution to the Giant 401(k). This discretionary contribution was funded with 49,046 newly issued shares of our common stock on February 25, 2004. For the year ended December 31, 2002, we accrued $900,000 for a discretionary contribution to the Giant 401(k), which was funded with 213,776 newly issued shares of our common stock. For the year ended December 31, 2001, we made a discretionary cash contribution of $900,000 to the 401(k). The cash contribution was used to purchase shares of our common stock. All shares are allocated to eligible employees’ accounts in the manner set forth in the Giant 401(k). At December 31, 2003 and 2002, the assets of the Giant 401(k) included 1,099,277 and 1,159,384 shares of our common stock, respectively.

In March 2004 the Yorktown 401(k) and the Giant 401(k) were combined into one 401(k) plan for administrative convenience and to reduce costs. The benefits available to Yorktown and non-Yorktown employees did not materially change.

In December 2003, FASB revised SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to enhance disclosures of relevant accounting information by providing additional information on plan assets, obligations, cash flows, and net cost. The revisions are reflected in this footnote.

On December 8, 2003, the President signed the “Medicare Prescription Drug, Improvement and Modernization Act of 2003” (the Act). One feature of the Act is a government subsidy of prescription drug costs. We have not yet quantified the effect, if any, on the accumulated post-retirement benefit obligation or the net periodic post-retirement benefit cost in our financial statements and accompanying notes. Specific accounting guidance for this subsidy is pending, including transition rules.

In 2002, we established the Giant Yorktown Cash Balance Plan (“Cash Plan”). The Cash Plan is a defined benefit plan for our Yorktown employees. The Cash Plan is a “cash balance” retirement plan fully funded by us without employee contributions. All Yorktown employees meeting the eligibility requirements are automatically included in the Cash Plan. Under the Cash Plan, an account is established for each eligible employee that in general reflects pay credits, based on a percentage of eligible pay determined by age or years of service, whichever yields the greater percentage, plus regular interest credits. Interest credits are generally equal to the greater of 5% or the 12-month average of the one-year U.S. Treasury constant maturity rates plus 1%. Yorktown employees who were covered by the BP retirement plan on

July 1, 2000, are generally eligible for a grandfather provision that affects the calculation of the benefit under the plan.

We have established an investment policy for the Cash Plan that targets allocation percentages among various asset classes. This investment policy is designed to reach long-term return goals, while mitigating against downside risk and considering expected cash flows. The current weighted average target for asset allocation is:


	•	equity securities: 50-70%

	•	debt securities: 30-50%

	•	real estate: 0%

	•	other: 0%

Our investment policy is reviewed from time to time to ensure consistency with our objectives. Equity securities do not include any of our common stock.

We must make a lump-sum payment to the Cash Plan each year. The amount of our annual payment is based on various factors, including actuarial calculations linked to the potential retirement ages of Yorktown employees. Our payment to the Cash Plan for the year ending December 31, 2002 was $1,086,000 and was made in September 2003. We expect to contribute about $2,200,000 to the Cash Plan in 2004.

In 2002, we established the Giant Yorktown Retiree Medical Plan (the “Medical Plan”), which is a defined post-retirement benefit plan for Yorktown employees. The Medical Plan will pay a percentage of the medical premium for coverage under the plan. Coverage is generally available to full-time employees who are age 50 or older with 10 or more years of service. We will pay from 50% to 80% of the premium cost, depending on age and years of service. Unlike the Cash Plan, we are not required to fund the Medical Plan annually. We did not make a payment to the Medical Plan for the year ending December 31, 2002 and do not anticipate making a payment to the Medical Plan for the year ending December 31, 2003.

The following table contains certain disclosures for our pension plan and retiree medical plan for 2003 and 2002:

The accumulated benefit obligation for the Cash Plan was $6,592,179 and $3,915,673 at December 31, 2003 and December 31, 2002, respectively.


*	Salary increases are assumed to increase at a rate of 4% per year. An additional 5% increase is added to the ultimate rate for those with less than one year of service grading down to 0% once a participant has five years of service.

We based our expected long-term rate of return on a review of the anticipated long-term performance of individual asset classes and consideration of the appropriate asset allocation strategy, given the anticipated requirements of the Cash Plan, to determine the average rate of earnings expected on the funds invested to provide benefits. Although we consider recent fund performance and historical returns, the assumption is primarily a long-term, prospective rate. We expect the long-term return assumption for the Cash Plan will remain at 8.5% per year.

Our pension plan asset allocations at December 31, 2003, and 2002, by asset category are as follows:

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A 1%-point change in assumed health care cost trend rates would have the following effect:

Under the 1998 Stock Incentive Plan (the “1998 Plan”), shares of our common stock are authorized to be issued to deserving employees in connection with awards of options, appreciation rights, restricted shares, performance shares or performance units, all as defined in the 1998 Plan. Appreciation rights, performance shares and performance units may be settled in cash, our common shares or any combination thereof.

The total number of shares available for grant under the 1998 Plan is 2% of the total number of common shares outstanding as of the first day of each calendar year, which amount was 171,435 shares for 2003, 171,077 shares for 2002, and 178,960 shares for 2001. Grants also are subject to a 400,000 share annual limitation on the number of common shares available for the grant of options that are intended to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code. Common shares available for grant in any particular calendar year that are not, in fact, granted in such year cannot be added to the common shares available for grant in any subsequent calendar year. For 2004, the number of shares available for grant is 175,711.

On May 9, 2003, 140,500 incentive stock options were granted to 15 employees under the 1998 Plan. The exercise price for all of the options was $5.24, which was the closing price of our common stock on the New York Stock Exchange on the date of grant. One-half of each grant vests on May 9, 2004 and the remaining one-half on May 9, 2005. All of the options expire on May 8, 2013.

On December 11, 2002, 171,000 incentive stock options were granted to 13 employees under the 1998 Plan. The exercise price for all of the options was $2.85, which was the closing price of our common stock on the New York Stock Exchange on the date of grant. One-half of each grant vests on December 11, 2003 and the remaining one-half on December 11, 2004. All of the options expire on December 10, 2012.

On May 17, 2001, 177,500 nonqualified stock options were granted to 13 employees under the 1998 Plan. The exercise price for all of the options was $9.95, which was the closing price for our common stock on the New York Stock Exchange on the date of grant. One-third of each grant vested on the date

of grant, one-third on May 17, 2002, and the remaining one-third on May 17, 2003. All of the options expire on May 16, 2011.

The 1998 Plan provides that all grants are subject to restrictions, conditions and terms more specifically described in the 1998 Plan, including, but not limited to, the exercise price for stock options and appreciation rights and time vesting requirements for all awards. In general, the 1998 Plan provides that grants of stock options and appreciation rights must expire no more than 10 years from the date of grant. In addition, all grants under the 1998 Plan are subject to forfeiture under certain circumstances, and all unvested awards may vest immediately under various circumstances defined in the 1998 Plan.

Under our 1989 Stock Incentive Plan (the “1989 Plan”), 500,000 shares of our common stock were authorized to be issued to deserving employees in the form of options and/or restricted stock. At December 31, 2003, no shares were available for future grants under the 1989 Plan because, by its terms, no new awards may be made after December 11, 1999.

All of the remaining options or restricted stock granted under the 1989 Plan expired in 2003.

The following summarizes stock option transactions under the 1989 and 1998 Plans:

The following summarizes information about stock options outstanding under the 1998 Plan at December 31, 2003:

In October 1995, the FASB issued SFAS No. 123 “Accounting for Stock Based Compensation.” At that time, we determined that we would not change to the fair value method prescribed in the Statement and would continue to use the intrinsic value method to account for stock-based employee compensation. In December 2002, FASB issued SFAS No. 148 “Accounting for Stock-Based Compensation — Transition and Disclosure,” an amendment of FASB Statement No. 123. SFAS 148 amends SFAS 123 to permit alternative methods of transition for adopting a fair value based method of accounting for stock-based employee compensation. We have determined that we will not adopt the provisions of SFAS No. 148.

If we had elected to recognize compensation costs based on the fair value at the date of grant, consistent with the provisions of SFAS No. 123, our net earnings (loss) and diluted earnings (loss) per share for the years ended December 31, 2003, 2002, and 2001 would have decreased (increased) by approximately $238,000 and $0.03 per share, $(172,000) and $(0.02) per share, and $530,000 and $0.06 per share, respectively.

The estimated weighted average fair values of options granted during 2003, 2002 and 2001 were $3.28, $1.81 and $5.96 per share, respectively, and were estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

We paid interest of $38,645,000, $34,426,000, and $24,135,000 in 2003, 2002, and 2001, respectively. We did not have any long-term construction projects in these years, so we did not capitalize any interest charges.

As discussed in Note 6, on December 31, 1998, we completed a sale-leaseback transaction with FFCA. Under the terms of the Agreement, FFCA purchased 83 service station/convenience stores from us and we in turn leased the 83 service station/convenience stores back from FFCA under an operating lease arrangement. We reacquired 24 of the service station/convenience stores in the second half of 1999 and the remaining 59 in the third quarter of 2001.

In connection with the sale of an 8.47-acre tract of land in North Scottsdale that included our corporate headquarters building, we entered into a ten-year agreement to lease back our corporate headquarters building.

We are committed to annual minimum rentals under noncancelable operating leases that have initial or remaining lease terms in excess of one year as of December 31, 2003 as follows:

Our total rent expense was $6,760,000, $6,140,000, and $8,459,000 for 2003, 2002, and 2001, respectively.

We have various legal actions, claims, assessments and other contingencies arising in the normal course of our business, including those matters described below, pending against us. Some of these matters involve or may involve significant claims for compensatory, punitive or other damages. These matters are subject to many uncertainties, and it is possible that some of these matters could be ultimately decided, resolved or settled adversely. We have recorded accruals for losses related to those matters that we consider to be probable and that can be reasonably estimated. We currently believe that any amounts exceeding our recorded accruals should not materially affect our financial condition or liquidity. It is possible, however, that the ultimate resolution of these matters could result in a material adverse effect on our results of operations for a particular reporting period.

Federal, state and local laws relating to the environment, health and safety affect nearly all of our operations. As is the case with all companies engaged in similar industries, we face significant exposure from actual or potential claims and lawsuits involving environmental matters. These matters include soil and water contamination, air pollution and personal injuries or property damage allegedly caused by substances made, handled, used, released or disposed of by us or by our predecessors.

Future expenditures related to environmental, health and safety matters cannot be reasonably quantified in many circumstances for various reasons. These reasons include the speculative nature of remediation and clean-up cost estimates and methods, imprecise and conflicting data regarding the hazardous nature of various types of substances, the number of other potentially responsible parties involved, various defenses that may be available to us and changing environmental, health and safety laws, including changing interpretations of those laws.

As of December 31, 2003 and 2002, we had environmental liability accruals of approximately $7,592,000 and $8,367,000, respectively, which are summarized below, and litigation accruals in the

aggregate of $573,000 at December 31, 2003 and $349,000 at December 31, 2002. Environmental accruals are recorded in the current and long-term sections of our Consolidated Balance Sheets.

Approximately $6,820,000 of this accrual is for the following projects discussed below:


	•	the remediation of the hydrocarbon plume that appears to extend no more than 1,800 feet south of our inactive Farmington refinery,

	•	environmental obligations assumed in connection with our acquisitions of the Yorktown refinery and the Bloomfield refinery, and

	•	hydrocarbon contamination on and adjacent to the 5.5 acres that we own in Bloomfield, New Mexico.


	•	the closure of certain solid waste management units at the Ciniza refinery, which is being conducted in accordance with the refinery’s Resource Conservation and Recovery Act permit,

	•	closure of the Ciniza refinery land treatment facility including post-closure expenses,

	•	estimated monitoring well closure costs at the Ciniza refinery, and

	•	amounts for smaller remediation projects.

We assumed certain liabilities and obligations in connection with our purchase of the Yorktown refinery from BP. BP agreed to reimburse us in specified amounts for some matters. Among other things, and subject to certain exceptions, we assumed responsibility for all costs, expenses, liabilities, and obligations under environmental, health and safety laws caused by, arising from, incurred in connection with or relating to the ownership of the refinery or its operation. We agreed to reimburse BP for losses incurred in connection with or related to liabilities and obligations assumed by us.

Environmental obligations assumed by us include BP’s responsibilities relating to the Yorktown refinery under a consent decree among various parties covering many locations (the “Consent Decree”). Parties to the Consent Decree include the United States, BP Exploration and Oil Co., Amoco Oil Company, and Atlantic Richfield Company. We assumed BP’s responsibilities as of January 18, 2001, the date the Consent Decree was lodged with the court. As applicable to the Yorktown refinery, the Consent Decree requires, among other things, reduction of NO_x, SO₂ and particulate matter emissions and upgrades to the refinery’s leak detection and repair program. We estimate that we will incur capital expenditures of between $20,000,000 and $27,000,000 to comply with the Consent Decree through 2006, although we believe we will incur most of those expenditures in 2005 and 2006. In addition, we estimate that we will incur operating expenses associated with the requirements of the Consent Decree of between $1,600,000 and $2,600,000 per year.

In connection with the Yorktown acquisition, we also assumed BP’s obligations under an administrative order issued by EPA in 1991 under the Resource Conservation and Recovery Act. The order requires an investigation of certain areas of the refinery and the development of measures to correct any releases of contaminants or hazardous substances found in these areas. A Resource Conservation and Recovery Act Facility Investigation and a Corrective Measures Study (“RFI/ CMS”) already has been prepared. It was revised by BP, in draft form, to incorporate comments from EPA and the Virginia Department of Environmental Quality (“VDEQ”). A final RFI/ CMS has not yet been approved. The draft RFI/ CMS proposes investigation, sampling, monitoring, and cleanup measures, including the construction of an on-site corrective action management unit that would be used to consolidate hazardous solid materials associated with these measures. These proposed actions relate to soil, sludge, and remediation wastes relating to solid waste management units. Groundwater in the aquifers underlying the refinery, and surface water and sediment in a small pond and tidal salt marsh on the refinery property also will be addressed in the RFI/ CMS.

EPA issued a proposed cleanup plan for public comment in December 2003. EPA will review all comments, will issue an approved RFI and CMS in coordination with VDEQ, and will make a final remedy decision. We estimate that expenses associated with the actions described in the proposed RFI/ CMS will cost from $19,000,000 to $21,000,000, and will be incurred over a period of approximately 30 years. We believe that about $5,000,000 of this amount will be incurred over an initial 3-year period, and additional expenditures of about $5,000,000 will be incurred over the following 3-year period. We may not be responsible, however, for all of these expenditures due to the environmental reimbursement provisions included in our purchase agreement with BP, as more fully discussed below. Additionally, the facility’s underground sewer system will be cleaned, inspected and repaired as needed as part of the RFI/ CMS process. We anticipate that this work will cost from $3,000,000 to $5,000,000 over a period of three to five years, beginning around the time the construction of the corrective action management unit and related remediation work is completed in approximately 2007 or 2008.

BP has agreed to reimburse us for all losses that are caused by or relate to property damage caused by, or any environmental remediation required due to, a violation of environmental health, and safety laws during BP’s operation of the refinery. In order to have a claim against BP, however, the total of all our losses must exceed $5,000,000, in which event our claim only relates to the amount exceeding $5,000,000. After $5,000,000 is reached, our claim is limited to 50% of the amount by which our losses exceed $5,000,000 until the total of all our losses exceeds $10,000,000. After $10,000,000 is reached, our claim

would be for 100% of the amount by which our losses exceed $10,000,000. In applying these provisions, losses amounting to a total of less than $250,000 arising out of the same event are not added to any other losses for purposes of determining whether and when the $5,000,000 or $10,000,000 has been reached. After the $5,000,000 or $10,000,000 has been reached, BP has no obligation to reimburse us for any losses amounting to a total of less than $250,000 arising out of the same event. Except as specified in the refinery purchase agreement, in order to seek reimbursement from BP, we must notify BP of a claim within two years following the closing date. Further, BP’s total liability for reimbursement under the refinery purchase agreement, including liability for environmental claims, is limited to $35,000,000.

In 1973, we constructed the Farmington refinery that was operated until 1982. In 1985, we became aware of soil and shallow groundwater contamination at this facility. We hired environmental consulting firms to investigate the contamination and undertake remedial action. The consultants identified several areas of contamination in the soils and shallow groundwater underlying the Farmington property. One of our consultants indicated that contamination attributable to past operations at the Farmington property has migrated off the refinery property, including a hydrocarbon plume that appears to extend no more than 1,800 feet south of the refinery property. Our remediation activities are ongoing under the supervision of the New Mexico Oil Conservation Division (“OCD”), although OCD has not issued a cleanup order. Our environmental reserve for this matter is about $570,000 at December 31, 2003.

The Farmington refinery property is located next to the Lee Acres Landfill, a closed landfill formerly operated by San Juan County. The landfill is situated on lands owned by the United States Bureau of Land Management (the “BLM”). Industrial and municipal wastes were disposed of in the landfill by numerous sources. While the landfill was operational, we used it to dispose of office trash, maintenance shop trash, used tires and water from the Farmington refinery’s evaporation pond.

The landfill was added to the National Priorities List as a Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) Superfund site in 1990. In connection with this listing, EPA defined the site as the landfill and the landfill’s associated groundwater plume. EPA excluded any releases from the Farmington refinery itself from the definition of the site. In May 1991, EPA notified us that we may be a potentially responsible party under CERCLA for the release or threatened release of hazardous substances, pollutants or contaminants at the landfill.

BLM made a proposed cleanup plan for the landfill available to the public in 1996. Remediation alternatives examined by BLM in connection with the development of its proposed plan ranged in projected cost from no cost to approximately $14,500,000. BLM proposed the adoption of a remedial action alternative that it believes would cost approximately $3,900,000 to implement. BLM’s $3,900,000 cost estimate is based on certain assumptions that may or may not prove to be correct and is contingent on confirmation that the remedial actions, once implemented, are adequately addressing landfill contamination. For example, if assumptions regarding groundwater mobility and contamination levels are incorrect, BLM is proposing to take additional remedial actions with an estimated cost of approximately $1,800,000.

BLM has received public comment on its proposed plan. The final remedy for the site, however, has not yet been selected. Although we were given reason to believe that a final remedy would be selected in 2003, that selection did not occur. We have been advised that the site remedy may be announced in 2004. In 1989, one of our consultants estimated, based on various assumptions, that our share of potential liability could be approximately $1,200,000. This figure was based upon estimated landfill remediation costs significantly higher than those being proposed by BLM. The figure also was based on the consultant’s evaluation of such factors as available clean-up technology, BLM’s involvement at the site and the number

of other entities that may have had involvement at the site, but did not include an analysis of all of our potential legal defenses and arguments, including possible setoff rights.

Potentially responsible party liability is joint and several, which means that a responsible party may be liable for all of the clean-up costs at a site even though the party was responsible for only a small part of the contamination. Although it is possible that we may ultimately incur liability for clean-up costs associated with the landfill, a reasonable estimate of the amount of this liability, if any, cannot be made at this time for various reasons. These reasons include:


	•	the final site remedy has not been selected;

	•	a number of entities had involvement at the site;

	•	allocation of responsibility among potentially responsible parties has not yet been made; and

	•	potentially applicable factual and legal issues have not been resolved.

We have not recorded a liability in relation to BLM’s proposed plan because the amount of any potential liability is currently not determinable.

BLM may assert claims against us and others for reimbursement of investigative, cleanup and other costs incurred by BLM in connection with the landfill and surrounding areas. We may assert claims against BLM in connection with contamination that may be originating from the landfill. Private parties and other governmental entities also may assert claims against us, BLM, and others for property damage, personal injury and other damages allegedly arising out of any contamination originating from the landfill and the Farmington property. Parties also may request judicial determination of their rights and responsibilities, and the rights and responsibilities of others, in connection with the landfill and the Farmington property. Currently, however, there is no outstanding litigation against us by BLM or any other party.

In connection with the acquisition of the Bloomfield refinery, we assumed certain environmental obligations including Bloomfield Refining Company’s (“BRC”) obligations under an administrative order issued by EPA in 1992 pursuant to the Resource Conservation and Recovery Act. The order required BRC to investigate and propose measures for correcting any releases of hazardous waste or hazardous constituents at or from the Bloomfield refinery. EPA has delegated its oversight authority over the order to NMED’s Hazardous Waste Bureau (“HWB”). In December 2002, HWB and OCD approved a cleanup plan for the refinery, subject to various actions to be taken by us to implement the plan. We estimate that remediation expenses associated with the cleanup plan will be approximately $267,000, and that these expenses will be incurred through approximately 2018.

We have discovered hydrocarbon contamination adjacent to a 55,000 barrel crude oil storage tank that was located in Bloomfield, New Mexico. We believe that all or a portion of the tank and the 5.5 acres we own on which the tank was located may have been a part of a refinery, owned by various other parties, that, to our knowledge, ceased operations in the early 1960s. We received approval to conduct a pilot bioventing project to address remaining contamination at the site, which was completed in June 2001. Bioventing involves pumping air into the soil to stimulate bacterial activity which in turn consumes hydrocarbons. Based on the results of the pilot project, we submitted a remediation plan to OCD proposing the use of bioventing to address the remaining contamination. This remediation plan was approved by OCD in June 2002. We anticipate that we will incur about $50,000 in soil remediation expenses through 2005 in connection with the bioventing plan and approximately $20,000 to continue groundwater

monitoring and testing until natural attenuation has completed the process of groundwater remediation. Our environmental accrual for this matter is approximately $67,000 as of December 31, 2003.

In June 2002, we received a draft compliance order from the New Mexico Environment Department (“NMED”) in connection with alleged violations of air quality regulations at the Ciniza refinery. These alleged violations relate to an inspection completed in April 2001.

In August 2002, we received a compliance order from NMED in connection with alleged violations of air quality regulations at the Bloomfield refinery. These alleged violations relate to an inspection completed in September 2001.

In the second quarter of 2003, the EPA informally told us that it also intended to allege air quality violations in connection with the 2001 inspections at both refineries. We have since participated in joint meetings with NMED and EPA. These discussions have included alleged violations through December 31, 2003, in addition to matters relating to the 2001 inspections. In February 2004 NMED and EPA advised us that the potential penalties amount to about $2,000,000. In the first quarter of 2004, EPA informally advised us that its potential penalties could amount to between $1,000,000 and $3,000,000. We have accrued significantly less than these amounts because settlement discussions with NMED and EPA are ongoing. These discussions may result in reductions in the amount of potential penalties. In lieu of fines and as part of an administrative settlement, we expect that EPA and NMED may require us to undertake certain environmentally beneficial projects, known as supplemental environmental projects. We have not yet determined the nature or scope of any work that may be required in lieu of fines.

In the first quarter of 2004, EPA told us that any administrative settlement also must be consistent with the consent decrees EPA has entered with other refiners as part of its national refinery enforcement program. In these other settlements, EPA generally has required that the refiner:


	•	implement controls to reduce emissions of nitrogen oxide, sulfur dioxide, and particulate matter from the largest emitting process units;

	•	upgrade leak-detection and repair practices;

	•	minimize the number and severity of flaring events; and

	•	adopt strategies to ensure compliance with benzene waste requirements.

In February 2003, we filed a complaint against the United States in the United States Court of Federal Claims related to military jet fuel that we sold to the Defense Energy Support Center (“DESC”) from 1983 through 1994. We asserted that the U.S., acting through DESC, underpaid for the jet fuel by about $17,000,000. Our claims include a request that we be made whole in connection with payments that were less than the fair market value of the fuel, as well as a request that we be reimbursed for the value of transporting the fuel in some contracts, as well as for certain additional costs of complying with the government’s special requirements. The U.S. has said that it may counterclaim and assert, based on its interpretation of the contracts, that we owe additional amounts of between $2,100,000 and $4,900,000. The U.S. denied all liability in a motion for partial summary judgment filed in the second quarter of 2003. In July 2003, we responded to the U.S.’s motion and filed our own cross-motion for partial summary judgment. All legal briefs on the U.S.’s motion and our cross-motion were filed with the court by November 2003. We are awaiting further action by the court. Due to the preliminary nature of this matter, there can be no assurance that we will ultimately prevail on our claims or the U.S.’s potential counterclaim, nor is it possible to predict when any payment will be received if we are successful.

Accordingly, we have not recorded a receivable for these claims or a liability for any potential counterclaim.

Lawsuits have been filed in over 20 states alleging that MTBE, a blendstock used by many refiners in producing specially formulated gasoline, has contaminated water wells. MTBE contamination primarily results from leaking underground or aboveground storage tanks. We are aware of three MTBE lawsuits filed in the fourth quarter of 2003 in Virginia state courts in Patrick, Buchanan, and Greensville Counties. Although we are a named defendant in each suit, we have not been served with notice by the plaintiffs. The plaintiffs are two county boards of education and a county water authority. The suits allege MTBE contamination of water wells owned and operated by the plaintiffs. The plaintiffs assert that numerous refiners, distributors, or sellers of MTBE and/or gasoline containing MTBE are responsible for the contamination. The plaintiffs also claim that the defendants are jointly and severally liable for compensatory and punitive damages, costs, and interest. Joint and several liability means that each defendant may be liable for all of the damages even though that party was responsible for only a small part of the damages. The defendants who have been served have moved to remove the suits to Virginia federal court. We have given our consent to removal of the Patrick and Buchanan suits to federal court. We are evaluating whether to consent to removal of the Greensville suit to federal court.

On April 28, 2003, a breaker failure disrupted operations at the electric generation plant that supplies our Yorktown refinery with power. As a result of the failure, the refinery suffered a complete loss of power and shut down all processing units. By the middle of May 2003, the refinery was operating at full capacity. We incurred costs of approximately $1,254,000 as a result of the loss of power, all of which we expensed in the second quarter of 2003. Reduced production also resulted in a loss of earnings. We are pursuing reimbursement from the power station owner. We are currently unable to determine the probability of recovery of any amounts related to this claim, so we have not recorded any receivables related to this claim.

On March 29, 2002, the board of directors terminated James E. Acridge as our President and Chief Executive Officer, and replaced him as our Chairman of the Board. He remains on the board of directors. On July 22, 2002, Mr. Acridge filed a lawsuit in the Superior Court of Arizona for Maricopa County against a number of our officers and directors. The lawsuit was also filed against unidentified accountants, auditors, appraisers, attorneys, bankers and professional advisors. Mr. Acridge alleged that the defendants wrongfully interfered with his employment agreement and caused the board to fire him. The complaint sought unspecified damages to compensate Mr. Acridge for the defendants’ alleged wrongdoing, as well as punitive damages, and costs and attorneys’ fees. The complaint also stated that Mr. Acridge intended to initiate a separate arbitration proceeding against us, alleging that we breached his employment agreement and violated an implied covenant of good faith and fair dealing. The court subsequently ruled that the claims raised in Mr. Acridge’s lawsuit were subject to arbitration and the lawsuit was dismissed. Arbitration proceedings have not been initiated. Subsequent to the filing of the claims, Mr. Acridge filed for bankruptcy. The trustee appointed in the Chapter 11 bankruptcy proceeding has questioned whether the Superior Court should have stayed the lawsuit until after the arbitration was completed instead of dismissing it. Regardless, we believe that the officers and directors sued by Mr. Acridge are entitled to indemnification from us in connection with the defense of, and any liabilities arising out of, the claims alleged by Mr. Acridge.

We have an outstanding loan to Mr. Acridge in the principal amount of $5,000,000. In the fourth quarter of 2001, we established a reserve for the entire amount of the loan plus interest accrued through

December 31, 2001. In view of developments in the bankruptcy proceedings relating to Mr. Acridge described below, we have continued to maintain the reserve.

In addition to Mr. Acridge’s personal bankruptcy filing, Pinnacle Rodeo LLC, Pinnacle Rawhide LLC, and Prime Pinnacle Peak Properties, Inc., three entities originally controlled by Mr. Acridge, have commenced Chapter 11 bankruptcy proceedings. A Chapter 11 trustee has been appointed in these cases. The four bankruptcy cases are administered together. We have filed proofs of claim in the bankruptcy proceedings seeking to recover amounts we believe are owed to us by Mr. Acridge, and the other entities, including amounts relating to the outstanding $5,000,000 loan. We also filed a complaint in the Acridge bankruptcy proceeding on July 31, 2003 in which we sought a determination that certain of the amounts we believe are owed to us by Mr. Acridge are not dischargeable in bankruptcy. The court has entered a default against Mr. Acridge in connection with our complaint. The court, however, has not yet ruled on whether we are entitled to receive any of the damages that we have requested. Even if the court decides that we can receive damages, we do not know whether we would be able to recover any of these damages from Mr. Acridge.

The official committee of unsecured creditors for the bankruptcy cases filed a plan of reorganization on November 7, 2003. The plan describes a process for the liquidation of the estates and the payment of liquidation proceeds to creditors. It will only become effective if approved by the bankruptcy court. Under the committee’s plan, we would make a payment, which would have no material effect on the Company’s financial statements, for the benefit of unsecured creditors in the Acridge estate. Additionally, we would give up all of our claims against the estates, with the exception of a claim for our share of any assets of the Acridge estate that have not yet been identified. In return, the four estates would release us from all of their claims against us, if any. The plan would not preclude us from pursuing our non-dischargeability complaint against Mr. Acridge.

In 2003, the trustee for the Acridge estate asked the bankruptcy court to permit him to engage in discovery to determine whether any claims against us, or persons or entities associated with us, may exist. The bankruptcy court authorized the Acridge trustee to take the deposition of three of our officers or directors and to obtain documents from them.

In order for the committee’s plan to be approved, the committee must first obtain bankruptcy court approval of a disclosure statement which describes the plan and the process by which creditors can vote on the plan. The Acridge trustee and the unsecured creditors committee are working on a summary to be included in the disclosure statement containing each of their positions on whether the committee’s plan should be approved. We anticipate that this statement may not be sent out until after our three officers or directors are deposed.

The trustee in the Prime Pinnacle proceeding filed a separate plan of reorganization. The Prime Pinnacle Trustee initially indicated that he was going to object to the proof of claim that we filed in the Prime Pinnacle proceeding. In addition, the Prime Pinnacle Trustee indicated that he was going to evaluate any possible preferential or fraudulent transfer of assets from Prime Pinnacle to us in satisfaction of debts owed by Mr. Acridge or his other entities. An agreement was subsequently reached between the Prime Pinnacle Trustee, the unsecured creditors committee, and us. The committee agreed to carve out the Prime Pinnacle estate from the Committee’s Plan. We agreed not to receive any distribution on our unsecured claim against the Prime Pinnacle estate. The Prime Pinnacle Trustee agreed to incorporate the terms of the Committee’s settlement with us in the Prime Pinnacle plan and to release us from any claims the Prime Pinnacle estate may have against us. The Prime Pinnacle Trustee’s agreement to release us and our agreement not to receive a distribution from the Prime Pinnacle estate are both conditioned upon the entry of a final court order, which is not subject to appeal, confirming the unsecured creditors committee’s plan.

We do not know whether the unsecured creditors committee’s plan or the plan prepared by the Prime Pinnacle Trustee will be approved. We also do not know whether or when creditors, including us, will receive any recovery on their debts from any of the four bankruptcy estates.


(1)	Subsequent to the previously filed Form 10-Q’s, certain reclassifications have been made to present continuing and discontinued operations in accordance with SFAS No. 144.


(1)	Subsequent to the previously filed Form 10-Q’s, certain reclassifications have been made to present continuing and discontinued operations in accordance with SFAS No. 144.

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the chief executive officer and chief financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective as of the date of that evaluation.

No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Certain information required by Part III is omitted from this report by virtue of the fact that we will file with the Securities and Exchange Commission a definitive proxy statement relating to our Annual Meeting of Stockholders to be held April 29, 2004 pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report, and certain information to be included therein is incorporated herein by reference. We expect to disseminate the proxy statement to stockholders on or about March 19, 2004.

The information required by this item concerning our directors, including our audit committee members and audit committee financial expert, and the information concerning our code of ethics, is incorporated by reference to the information contained in the 2004 proxy statement under the caption “Election of Directors.”

The information concerning our executive officers required by this item is incorporated by reference to the section in Part I of this report entitled “Executive Officers of the Registrant,” following Item 4.

The information concerning compliance with Section 16(a) of the Exchange Act required by this Item is incorporated by reference to the information contained in the 2004 proxy statement under the caption “Section 16(a) Beneficial Ownership Reporting Compliance.”

The information required by this item is incorporated by reference to the information contained in the 2004 proxy statement under the captions “Election of Directors,” “Executive Compensation,” “Compensation Committee Report on Executive Compensation” and “Compensation Committee Interlocks and Insider Participation.”

The following table includes information regarding securities authorized for issuance under our equity compensation plans.

The total number of shares available for grant is 2% of the total number of common shares outstanding as of the first day of each calendar year. Grants also are subject to a 400,000 share annual limitation on the grant of options intended to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code. Common shares available for grant in any particular calendar year that are not, in fact, granted in such year cannot be added to the common shares available for grant in any subsequent calendar year.

For a description of our equity compensation plans see Note 18 to our Consolidated Financial Statements included in Item 8.

The other information required by this item is incorporated by reference to the information contained in the 2004 proxy statement under the captions “Election of Directors,” “Security Ownership of Management” and “Shares Owned by Certain Shareholders.”

The information required by this item is incorporated by reference to the information contained in the 2004 proxy statement under the captions “Compensation Committee Interlocks and Insider Participation,” “Certain Transactions”, “Indebtedness of Management” and “Legal Proceedings”.

The information required by this item is incorporated by reference to the information contained in the 2004 proxy statement under the caption “Audit Fees.”


	(i) Independent Auditors’ Report

	(ii) Consolidated Balance Sheets — December 31, 2003 and 2002

	(iii) Consolidated Statements of Operations — Years ended December 31, 2003, 2002 and 2001

	(iv) Consolidated Statements of Stockholders’ Equity — Years ended December 31, 2003, 2002 and 2001


	(v) Consolidated Statements of Cash Flows — Years ended December 31, 2003, 2002 and 2001

	(vi) Notes to Consolidated Financial Statements

(2) Financial Statement Schedule. The following financial statement schedule of Giant Industries, Inc. for the years ended December 31, 2003, 2002 and 2001 is filed as part of this report and should be read in conjunction with the Consolidated Financial Statements of Giant Industries, Inc.

Schedules not listed above have been omitted because they are not applicable or are not required or because the information required to be set forth therein is included in the Consolidated Financial Statements or Notes thereto.

(3) Exhibits. The Exhibits listed on the accompanying Index to Exhibits immediately following the financial statement schedule are filed as part of, or incorporated by reference into, this Report.

Contracts with management and any compensatory plans or arrangements relating to management are as follows:

(b) Reports on Form 8-K. We filed the following reports on Form 8-K during the fourth quarter of 2003 and to date:


	(i) On November 10, 2003, we filed a Form 8-K dated November 10, 2003, containing a press release detailing our earnings for the third quarter of 2003.

	(ii) On February 12, 2004, we filed a Form 8-K dated February 12, 2004, containing a press release detailing a supply agreement with Statoil Marketing and Trading (USA), Inc.

	(iii) On March 8, 2004, we filed a Form 8-K dated March 8, 2004, containing a press release detailing our earnings for the fourth quarter of 2003 and the year ended December 31, 2003.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	By:	/s/ FRED L. HOLLIGER



	Fred L. Holliger
	Chairman of the Board
	and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

We have audited the consolidated financial statements of Giant Industries, Inc. and subsidiaries (“the Company”) as of December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003, and have issued our report thereon dated March 12, 2004 which expresses an unqualified opinion and includes an explanatory paragraph relating to changes in accounting methods for the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 143, “Asset Retirement Obligations” in 2003 and SFAS No. 142, “Goodwill and Other Intangible Assets” and SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” in 2002; such financial statements and report are included elsewhere in this Form 10-K. Our audits also included the consolidated financial statement schedule of the Company, listed in Item 15. This consolidated financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

Form S-1 — Refers to the Form S-1 Registration Statement under the Securities Act of 1933 as filed October 16, 1989, File No. 33-31584.

Amendment No. 3 — Refers to the Amendment No. 3 to Form S-1 Registration Statement under the Securities Act of 1933 as filed December 12, 1989, File No. 33-31584.

Form S-3 — Refers to the Form S-3 Registration Statement under the Securities Act of 1933 as filed September 22, 1993, File No. 33-69252.


**	Portions have been omitted pursuant to a request for confidential treatment filed by the Registrant with the Commission. The omitted portions have been filed separately with the Commission.

EX-4.3 3 p68818exv4w3.txt EXHIBIT 4.3 EXHIBIT 4.3 THE CORPORATEPLAN FOR RETIREMENT(SM) FIDELITY BASIC PLAN DOCUMENT NO. 02 The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. THE CORPORATEPLAN FOR RETIREMENT(SM) PREAMBLE. ARTICLE 1. ADOPTION AGREEMENT. ARTICLE 2. DEFINITIONS. 2.01. DEFINITIONS.......................................................................................... 1 2.02. PRONOUNS............................................................................................. 11 2.03. SPECIAL EFFECTIVE DATES.............................................................................. 11 ARTICLE 3. SERVICE. 3.01. CREDITING OF ELIGIBILITY SERVICE..................................................................... 11 3.02. RE-CREDITING OF ELIGIBILITY SERVICE FOLLOWING TERMINATION OF EMPLOYMENT.............................. 12 3.03. CREDITING OF VESTING SERVICE......................................................................... 12 3.04. APPLICATION OF VESTING SERVICE TO A PARTICIPANT'S ACCOUNT FOLLOWING A BREAK IN VESTING SERVICE....... 12 3.05. SERVICE WITH PREDECESSOR EMPLOYER.................................................................... 12 3.06. CHANGE IN SERVICE CREDITING.......................................................................... 13 ARTICLE 4. PARTICIPATION. 4.01. DATE OF PARTICIPATION................................................................................ 13 4.02. TRANSFERS OUT OF COVERED EMPLOYMENT.................................................................. 13 4.03. TRANSFERS INTO COVERED EMPLOYMENT.................................................................... 14 4.04. RESUMPTION OF PARTICIPATION FOLLOWING REEMPLOYMENT................................................... 14 ARTICLE 5. CONTRIBUTIONS. 5.01. CONTRIBUTIONS SUBJECT TO LIMITATIONS................................................................. 14 5.02. COMPENSATION TAKEN INTO ACCOUNT IN DETERMINING CONTRIBUTIONS......................................... 14 5.03. DEFERRAL CONTRIBUTIONS............................................................................... 15 5.04. EMPLOYEE CONTRIBUTIONS............................................................................... 15 5.05. NO DEDUCTIBLE EMPLOYEE CONTRIBUTIONS................................................................. 15 5.06. ROLLOVER CONTRIBUTIONS............................................................................... 15 5.07. QUALIFIED NONELECTIVE EMPLOYER CONTRIBUTIONS......................................................... 16 5.08. MATCHING EMPLOYER CONTRIBUTIONS...................................................................... 18 5.09. QUALIFIED MATCHING EMPLOYER CONTRIBUTIONS............................................................ 18 5.10. NONELECTIVE EMPLOYER CONTRIBUTIONS................................................................... 18 5.11. VESTED INTEREST IN CONTRIBUTIONS..................................................................... 20 5.12. TIME FOR MAKING CONTRIBUTIONS........................................................................ 20 5.13. RETURN OF EMPLOYER CONTRIBUTIONS..................................................................... 21 ARTICLE 6. LIMITATIONS ON CONTRIBUTIONS. 6.01. SPECIAL DEFINITIONS.................................................................................. 21 6.02. CODE SECTION 402(g) LIMIT ON DEFERRAL CONTRIBUTIONS.................................................. 28 6.03. ADDITIONAL LIMIT ON DEFERRAL CONTRIBUTIONS .......................................................... 28 6.04. ALLOCATION AND DISTRIBUTION OF "EXCESS CONTRIBUTIONS"................................................ 29 6.05. REDUCTIONS IN DEFERRAL CONTRIBUTIONS TO MEET CODE REQUIREMENTS....................................... 30 6.06. LIMIT ON MATCHING EMPLOYER CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS ................................. 30 6.07. ALLOCATION, DISTRIBUTION, AND FORFEITURE OF "EXCESS AGGREGATE CONTRIBUTIONS"......................... 31 6.08. AGGREGATE LIMIT ON "CONTRIBUTION PERCENTAGE AMOUNTS" AND "INCLUDABLE CONTRIBUTIONS".................. 31 6.09. INCOME OR LOSS ON DISTRIBUTABLE CONTRIBUTIONS........................................................ 32 6.10. DEEMED SATISFACTION OF "ADP" TEST.................................................................... 32

The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. i 6.11. DEEMED SATISFACTION OF "ACP" TEST WITH RESPECT TO MATCHING EMPLOYER CONTRIBUTIONS.................... 33 6.12. CODE SECTION 415 LIMITATIONS......................................................................... 34 ARTICLE 7. PARTICIPANTS' ACCOUNTS. 7.01. INDIVIDUAL ACCOUNTS.................................................................................. 37 7.02. VALUATION OF ACCOUNTS................................................................................ 37 ARTICLE 8. INVESTMENT OF CONTRIBUTIONS. 8.01. MANNER OF INVESTMENT................................................................................. 37 8.02. INVESTMENT DECISIONS................................................................................. 38 8.03. PARTICIPANT DIRECTIONS TO TRUSTEE.................................................................... 39 ARTICLE 9. PARTICIPANT LOANS. 9.01. SPECIAL DEFINITIONS.................................................................................. 39 9.02. PARTICIPANT LOANS.................................................................................... 39 9.03. SEPARATE LOAN PROCEDURES............................................................................. 40 9.04. AVAILABILITY OF LOANS................................................................................ 40 9.05. LIMITATION ON LOAN AMOUNT............................................................................ 40 9.06. INTEREST RATE........................................................................................ 40 9.07. LEVEL AMORTIZATION................................................................................... 40 9.08. SECURITY............................................................................................. 40 9.09. TRANSFER AND DISTRIBUTION OF LOAN AMOUNTS FROM PERMISSIBLE INVESTMENTS............................... 41 9.10. DEFAULT.............................................................................................. 41 9.11. EFFECT OF TERMINATION WHERE PARTICIPANT HAS OUTSTANDING LOAN BALANCE................................. 41 9.12. DEEMED DISTRIBUTIONS UNDER CODE SECTION 72(p)........................................................ 41 9.13. DETERMINATION OF ACCOUNT VALUE UPON DISTRIBUTION WHERE PLAN LOAN IS OUTSTANDING...................... 42 ARTICLE 10. IN-SERVICE WITHDRAWALS. 10.01. AVAILABILITY OF IN-SERVICE WITHDRAWALS.............................................................. 42 10.02. WITHDRAWAL OF EMPLOYEE CONTRIBUTIONS................................................................ 42 10.03. WITHDRAWAL OF ROLLOVER CONTRIBUTIONS................................................................ 42 10.04. AGE 59 1/2 WITHDRAWALS.............................................................................. 43 10.05. HARDSHIP WITHDRAWALS................................................................................ 43 10.06. PRESERVATION OF PRIOR PLAN IN-SERVICE WITHDRAWAL RULES.............................................. 44 10.07. RESTRICTIONS ON IN-SERVICE WITHDRAWALS.............................................................. 45 10.08. DISTRIBUTION OF WITHDRAWAL AMOUNTS.................................................................. 45 ARTICLE 11. RIGHT TO BENEFITS. 11.01. NORMAL OR EARLY RETIREMENT.......................................................................... 45 11.02. LATE RETIREMENT..................................................................................... 46 11.03. DISABILITY RETIREMENT............................................................................... 46 11.04. DEATH............................................................................................... 46 11.05. OTHER TERMINATION OF EMPLOYMENT..................................................................... 46 11.06. APPLICATION FOR DISTRIBUTION........................................................................ 47 11.07. APPLICATION OF VESTING SCHEDULE FOLLOWING PARTIAL DISTRIBUTION...................................... 47 11.08. FORFEITURES......................................................................................... 47 11.09. APPLICATION OF FORFEITURES.......................................................................... 48 11.10. REINSTATEMENT OF FORFEITURES........................................................................ 48 11.11. ADJUSTMENT FOR INVESTMENT EXPERIENCE................................................................ 48 ARTICLE 12. DISTRIBUTIONS. 12.01. RESTRICTIONS ON DISTRIBUTIONS....................................................................... 49 12.02. TIMING OF DISTRIBUTION FOLLOWING RETIREMENT OR TERMINATION OF EMPLOYMENT............................ 49

The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. ii 12.03. PARTICIPANT CONSENT TO DISTRIBUTION................................................................. 49 12.04. REQUIRED COMMENCEMENT OF DISTRIBUTION TO PARTICIPANTS............................................... 50 12.05. REQUIRED COMMENCEMENT OF DISTRIBUTION TO BENEFICIARIES.............................................. 50 12.06. WHEREABOUTS OF PARTICIPANTS AND BENEFICIARIES....................................................... 51 ARTICLE 13. FORM OF DISTRIBUTION. 13.01. NORMAL FORM OF DISTRIBUTION UNDER PROFIT SHARING PLAN............................................... 52 13.02. CASH OUT OF SMALL ACCOUNTS.......................................................................... 52 13.03. MINIMUM DISTRIBUTIONS............................................................................... 53 13.04. DIRECT ROLLOVERS.................................................................................... 54 13.05. NOTICE REGARDING TIMING AND FORM OF DISTRIBUTION.................................................... 54 13.06. DETERMINATION OF METHOD OF DISTRIBUTION............................................................. 55 13.07. NOTICE TO TRUSTEE................................................................................... 55 ARTICLE 14. SUPERSEDING ANNUITY DISTRIBUTION PROVISIONS. 14.01. SPECIAL DEFINITIONS................................................................................. 55 14.02. APPLICABILITY....................................................................................... 56 14.03. ANNUITY FORM OF PAYMENT............................................................................. 56 14.04. "QUALIFIED JOINT AND SURVIVOR ANNUITY" AND "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY REQUIREMENTS" ................................................................................... 57 14.05. WAIVER OF THE "QUALIFIED JOINT AND SURVIVOR ANNUITY" AND/OR "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY RIGHTS". ................................................ 57 14.06. SPOUSE'S CONSENT TO WAIVER.......................................................................... 58 14.07. NOTICE REGARDING "QUALIFIED JOINT AND SURVIVOR ANNUITY"............................................. 58 14.08. NOTICE REGARDING "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY"......................................... 58 14.09. FORMER SPOUSE....................................................................................... 59 ARTICLE 15. TOP-HEAVY PROVISIONS. 15.01. DEFINITIONS......................................................................................... 59 15.02. APPLICATION......................................................................................... 61 15.03. MINIMUM CONTRIBUTION................................................................................ 61 15.04. MODIFICATION OF ALLOCATION PROVISIONS TO MEET MINIMUM CONTRIBUTION REQUIREMENTS..................... 62 15.05. ADJUSTMENT TO THE LIMITATION ON CONTRIBUTIONS AND BENEFITS.......................................... 63 15.06. ACCELERATED VESTING................................................................................. 64 15.07. EXCLUSION OF COLLECTIVELY-BARGAINED EMPLOYEES....................................................... 64 ARTICLE 16. AMENDMENT AND TERMINATION. 16.01. AMENDMENTS BY THE EMPLOYER THAT DO NOT AFFECT PROTOTYPE STATUS...................................... 64 16.02. AMENDMENTS BY THE EMPLOYER THAT AFFECT PROTOTYPE STATUS............................................. 65 16.03. AMENDMENT BY THE MASS SUBMITTER SPONSOR AND THE PROTOTYPE SPONSOR................................... 65 16.04. AMENDMENTS AFFECTING VESTED AND/OR ACCRUED BENEFITS................................................. 65 16.05. RETROACTIVE AMENDMENTS.............................................................................. 66 16.06. TERMINATION......................................................................................... 66 16.07. DISTRIBUTION UPON TERMINATION OF THE PLAN........................................................... 66 16.08. MERGER OR CONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS............................................ 67 ARTICLE 17. AMENDMENT AND CONTINUATION OF PRIOR PLAN; TRANSFER OF FUNDS TO OR FROM OTHER QUALIFIED PLANS........ 17.01. AMENDMENT AND CONTINUATION OF PRIOR PLAN............................................................ 67 17.02. TRANSFER OF FUNDS FROM AN EXISTING PLAN............................................................. 68 17.03. ACCEPTANCE OF ASSETS BY TRUSTEE..................................................................... 69 17.04. TRANSFER OF ASSETS FROM TRUST....................................................................... 69 ARTICLE 18. MISCELLANEOUS. 18.01. COMMUNICATION TO PARTICIPANTS....................................................................... 70 18.02. LIMITATION OF RIGHTS................................................................................ 70 18.03. NONALIENABILITY OF BENEFITS......................................................................... 71

The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. iii 18.04. QUALIFIED DOMESTIC RELATIONS ORDERS PROCEDURES...................................................... 71 18.05. ADDITIONAL RULES FOR PAIRED PLANS................................................................... 72 18.06. APPLICATION OF PLAN PROVISIONS IN MULTIPLE EMPLOYER PLANS........................................... 72 18.07. VETERANS REEMPLOYMENT RIGHTS........................................................................ 72 18.08. FACILITY OF PAYMENT................................................................................. 73 18.09. INFORMATION BETWEEN EMPLOYER AND TRUSTEE............................................................ 73 18.10. EFFECT OF FAILURE TO QUALIFY UNDER CODE............................................................. 73 18.11. DIRECTIONS, NOTICES AND DISCLOSURE.................................................................. 73 18.12. GOVERNING LAW....................................................................................... 73 ARTICLE 19. PLAN ADMINISTRATION. 19.01. POWERS AND RESPONSIBILITIES OF THE ADMINISTRATOR.................................................... 74 19.02. NONDISCRIMINATORY EXERCISE OF AUTHORITY............................................................. 74 19.03. CLAIMS AND REVIEW PROCEDURES........................................................................ 74 19.04. NAMED FIDUCIARY..................................................................................... 75 19.05. COSTS OF ADMINISTRATION............................................................................. 75 ARTICLE 20. TRUST AGREEMENT. 20.01. ACCEPTANCE OF TRUST RESPONSIBILITIES................................................................ 75 20.02. ESTABLISHMENT OF TRUST FUND......................................................................... 75 20.03. EXCLUSIVE BENEFIT................................................................................... 76 20.04. POWERS OF TRUSTEE................................................................................... 76 20.05. ACCOUNTS............................................................................................ 77 20.06. APPROVAL OF ACCOUNTS................................................................................ 77 20.07. DISTRIBUTION FROM TRUST FUND........................................................................ 78 20.08. TRANSFER OF AMOUNTS FROM QUALIFIED PLAN............................................................. 78 20.09. TRANSFER OF ASSETS FROM TRUST....................................................................... 78 20.10. SEPARATE TRUST OR FUND FOR EXISTING PLAN ASSETS..................................................... 78 20.11. SELF-DIRECTED BROKERAGE OPTION...................................................................... 79 20.12. EMPLOYER STOCK INVESTMENT OPTION.................................................................... 80 20.13. VOTING; DELIVERY OF INFORMATION..................................................................... 85 20.14. COMPENSATION AND EXPENSES OF TRUSTEE................................................................ 85 20.15. RELIANCE BY TRUSTEE ON OTHER PERSONS................................................................ 86 20.16. INDEMNIFICATION BY EMPLOYER......................................................................... 86 20.17. CONSULTATION BY TRUSTEE WITH COUNSEL................................................................ 86 20.18. PERSONS DEALING WITH THE TRUSTEE.................................................................... 86 20.19. RESIGNATION OR REMOVAL OF TRUSTEE................................................................... 86 20.20. FISCAL YEAR OF THE TRUST............................................................................ 87 20.21. DISCHARGE OF DUTIES BY FIDUCIARIES.................................................................. 87 20.22. AMENDMENT........................................................................................... 87 20.23. PLAN TERMINATION.................................................................................... 87 20.24. PERMITTED REVERSION OF FUNDS TO EMPLOYER............................................................ 88 20.25. GOVERNING LAW....................................................................................... 88

The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. iv PREAMBLE. This prototype plan consists of three parts: (1) an Adoption Agreement that is a separate document incorporated by reference into this Basic Plan Document; (2) this Basic Plan Document; and (3) a Trust Agreement that is a part of this Basic Plan Document and is found in Article 20. Each part of the prototype plan contains substantive provisions that are integral to the operation of the plan. The Adoption Agreement is the means by which an adopting Employer elects the optional provisions that shall apply under its plan. The Basic Plan Document describes the standard provisions elected in the Adoption Agreement. The Trust Agreement describes the powers and duties of the Trustee with respect to plan assets. The prototype plan is intended to qualify under Code Section 401(a). Depending upon the Adoption Agreement completed by an adopting Employer, the prototype plan may be used to implement a money purchase pension plan, a profit sharing plan, or a profit sharing plan with a cash or deferred arrangement intended to qualify under Code Section 401(k). ARTICLE 1. ADOPTION AGREEMENT. ARTICLE 2. DEFINITIONS. 2.01. DEFINITIONS. Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context: (a) "ACCOUNT" means an account established for the purpose of recording any contributions made on behalf of a Participant and any income, expenses, gains, or losses incurred thereon. The Administrator shall establish and maintain sub-accounts within a Participant's Account as necessary to depict accurately a Participant's interest under the Plan. (b) "ACTIVE PARTICIPANT" means any Eligible Employee who has met the requirements of Article 4 to participate in the Plan and who may be entitled to receive allocations under the Plan. (c) "ADMINISTRATOR" means the Employer adopting this Plan, as listed in Subsection 1.02(a) of the Adoption Agreement, or any other person designated by the Employer in Subsection 1.01(c) of the Adoption Agreement. (d) "ADOPTION AGREEMENT" means Article 1, under which the Employer establishes and adopts, or amends the Plan and Trust and designates the optional provisions selected by the Employer, and the Trustee accepts its responsibilities under Article 20. The provisions of the Adoption Agreement shall be an integral part of the Plan. (e) "ANNUITY STARTING DATE" means the first day of the first period for which an amount is payable as an annuity or in any other form permitted under the Plan. (f) "BASIC PLAN DOCUMENT" means this Fidelity prototype plan document, qualified with the National Office of the Internal Revenue Service as Basic Plan Document No. 02. (g) "BENEFICIARY" means the person or persons (including a trust) entitled under Section 11.04 or 14.04 to receive benefits under the Plan upon the The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 1 death of a Participant; provided, however, that for purposes of Section 13.03 such term shall be applied in accordance with Code Section 401(a)(9) and the regulations thereunder. (h) "BREAK IN VESTING SERVICE" means a 12-consecutive-month period beginning on an Employee's Severance Date or any anniversary thereof in which the Employee is not credited with an Hour of Service. Notwithstanding the foregoing, the following special rules apply in determining whether an Employee who is on leave has incurred a Break in Vesting Service: (1) If an individual is absent from work because of "maternity/ paternity leave" beyond the first anniversary of his Severance Date, the 12-consecutive-month period beginning on the individual's Severance Date shall not constitute a Break in Vesting Service. For purposes of this paragraph, "maternity/paternity leave" means a leave of absence (A) by reason of the pregnancy of the individual, (B) by reason of the birth of a child of the individual, (C) by reason of the placement of a child with the individual in connection with the adoption of such child by the individual, or (D) for purposes of caring for a child for the period beginning immediately following such birth or placement. (2) If an individual is absent from work because of "FMLA leave" and returns to employment with the Employer or a Related Employer following such "FMLA leave", he shall not incur a Break in Vesting Service during any 12-consecutive-month period beginning on his Severance Date or anniversaries thereof in which he is absent because of such "FMLA leave". For purposes of this paragraph, "FMLA leave" means an approved leave of absence pursuant to the Family and Medical Leave Act of 1993. (i) "CODE" means the Internal Revenue Code of 1986, as amended from time to time. (j) "COMPENSATION" means wages as defined in Code Section 3401(a) and all other payments of compensation to an Eligible Employee by the Employer (in the course of the Employer's trade or business) for services to the Employer while employed as an Eligible Employee for which the Employer is required to furnish the Eligible Employee a written statement under Code Sections 6041(d) and 6051(a)(3). Compensation must be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). For any Self-Employed Individual, Compensation means Earned Income; provided, however, that if the Employer elects to exclude specified items from Compensation, such Earned Income shall be adjusted in a similar manner so that it is equivalent under regulations issued under Code Section 414(s) to Compensation for Participants who are not Self-Employed Individuals. Compensation shall generally be based on the amount actually paid to the Eligible Employee during the Plan Year or, for purposes of Articles 5 (and, for Plan Years beginning prior to January 1, 2003, Article 15) so elected by the Employer in Subsection 1.05(c) of the Adoption Agreement, during that portion of the Plan Year during which the Eligible Employee is an Active Participant. Notwithstanding the preceding sentence, Compensation for purposes of Section 6.12 (Code Section 415 Limitations) shall be based on the The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 2 amount actually paid or made available to the Participant during the Limitation Year. If the initial Plan Year of a new plan consists of fewer than 12 months, calculated from the Effective Date listed in Subsection 1.01(g)(1) of the Adoption Agreement through the end of such initial Plan Year, Compensation for such initial Plan Year shall be determined as follows: (1) If the Plan is a profit sharing plan, for purposes of allocating Nonelective Employer Contributions under Section 1.11 of the Adoption Agreement (other than Nonelective Employer Contributions made in accordance with the Safe Harbor Nonelective Employer Contributions Addendum to the Adoption Agreement) and determining Highly Compensated Employees under Subsection 2.01(z), the initial Plan Year shall be the 12-month period ending on the last day of the Plan Year. (2) For purposes of Section 6.12 (Code Section 415 Limitations) where the Limitation Year is based on the Plan Year, the Limitation Year shall be the 12-month period ending on the last day of the Plan Year. (3) For all other purposes, the initial Plan Year shall be the period from the Effective Date listed in Subsection 1.01(g)(1) of the Adoption Agreement through the end of the initial Plan Year. The annual Compensation of each Active Participant taken into account for determining benefits provided under the Plan for any determination period shall not exceed the annual Compensation limit under Code Section 401(a)(17) as in effect on the first day of the determination period. This limit shall be adjusted by the Secretary to reflect increases in the cost of living, as provided in Code Section 401(a)(17)(B); provided, however, that the dollar increase in effect on January 1 of any calendar year is effective for determination periods beginning in such calendar year. If a Plan determines Compensation over a determination period that contains fewer than 12 calendar months (a "short determination period"), then the Compensation limit for such "short determination period" is equal to the Compensation limit for the calendar year in which the "short determination period" begins multiplied by the ratio obtained by dividing the number of full months in the "short determination period" by 12; provided, however, that such proration shall not apply if there is a "short determination period" because (i) the Employer elected in Subsection 1.05(c) of the Adoption Agreement to determine contributions based only on Compensation paid during the portion of the Plan Year during which an individual was an Active Participant, (ii) an Employee is covered under the Plan less than a full Plan Year, or (iii) Deferral Contributions and/or Matching Employer Contributions are contributed for each pay period during the Plan Year and are based on Compensation for that pay period. (k) "CONTRIBUTION PERIOD" means the period for which Matching Employer and Nonelective Employer Contributions are made and calculated. The Contribution Period for additional Matching Employer Contributions, as described in Subsection 1.10(b) of the Adoption Agreement and Nonelective Employer Contributions is the Plan Year. The Contribution Period for basic Matching Employer Contributions, as described in Subsection 1.10(a)of the Adoption Agreement, is the period specified by the Employer in Subsection 1.10(c) of the Adoption Agreement. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 3 (l) "DEFERRAL CONTRIBUTION" means any contribution made to the Plan by the Employer in accordance with the provisions of Section 5.03. (m) "EARLY RETIREMENT AGE" means the early retirement age specified in Subsection 1.13(b) of the Adoption Agreement, if any. (n) "EARNED INCOME" means the net earnings of a Self-Employed Individual derived from the trade or business with respect to which the Plan is established and for which the personal services of such individual are a material income-providing factor, excluding any items not included in gross income and the deductions allocated to such items, except that net earnings shall be determined with regard to the deduction allowed under Code Section 164(f), to the extent applicable to the Employer. Net earnings shall be reduced by contributions of the Employer to any qualified plan, to the extent a deduction is allowed to the Employer for such contributions under Code Section 404. (o) "EFFECTIVE DATE" means the effective date specified by the Employer in Subsection 1.01(g)(1) or (2) of the Adoption Agreement with respect to the Plan, if this is a new plan, or with respect to the amendment and restatement, if this is an amendment and restatement of the Plan. The Employer may select special Effective Dates with respect to specified Plan provisions, as set forth in Section (a) of the Special Effective Dates Addendum to the Adoption Agreement. In the event that another plan is merged into and made a part of the Plan, the effective date of the merger shall be reflected in Section (b) of the Special Effective Dates Addendum to the Adoption Agreement. If this is an amendment and restatement of the Plan, and the Plan was not amended prior to the effective date specified by the Employer in Subsection 1.01(g)(2) of the Adoption Agreement to comply with the requirements of the Acts specified in the Snap Off Addendum to the Adoption Agreement, the effective dates specified in such Snap Off Addendum shall apply with respect to those provisions specified therein. Such effective dates may be earlier than the date specified in Subsection 1.01(g)(2) of the Adoption Agreement. (p) "ELIGIBILITY COMPUTATION PERIOD" means each 12-consecutive-month period beginning with an Employee's Employment Commencement Date and each anniversary thereof. (q) "ELIGIBILITY SERVICE" means an Employee's service that is taken into account in determining his eligibility to participate in the Plan as may be required under Subsection 1.04(b) of the Adoption Agreement. Eligibility Service shall be credited in accordance with Article 3. (r) "ELIGIBLE EMPLOYEE" means any Employee of the Employer who is in the class of Employees eligible to participate in the Plan. The Employer must specify in Subsection 1.04(c) of the Adoption Agreement any Employee or class of Employees not eligible to participate in the Plan. If Article 1 of the Employer's Plan is a Non-Standardized Adoption Agreement, regardless of the Employer's selection in Subsection 1.04(c) of the Adoption Agreement, the following Employees are automatically excluded from eligibility to participate in the Plan: (1) any individual who is a signatory to a contract, letter of agreement, or other document that acknowledges his status as an The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 4 independent contractor not entitled to benefits under the Plan or who is not otherwise classified by the Employer as a common law employee and with respect to whom the Employer does not withhold income taxes and file Form W-2 (or any replacement Form), with the Internal Revenue Service and does not remit Social Security payments to the Federal government, even if such individual is later adjudicated to be a common law employee; and (2) any Employee who is a resident of Puerto Rico. If the Employer elects to exclude collective bargaining employees from the eligible class, the exclusion applies to any Employee of the Employer included in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, unless the collective bargaining agreement requires the Employee to be covered under the Plan. The term "employee representatives" does not include any organization more than half the members of which are owners, officers, or executives of the Employer. If the Employer does not elect to exclude Leased Employees from the eligible class, contributions or benefits provided by the leasing organization which are attributable to services performed for the Employer shall be treated as provided by the Employer and there shall be no duplication of benefits under this Plan. (s) "EMPLOYEE" means any common law employee of the Employer or a Related Employer, any Self-Employed Individual, and any Leased Employee. Notwithstanding the foregoing, a Leased Employee shall not be considered an Employee if Leased Employees do not constitute more than 20 percent of the Employer's non-highly compensated work-force (taking into account all Related Employers) and the Leased Employee is covered by a money purchase pension plan maintained by the leasing organization and providing (1) a nonintegrated employer contribution rate of at least 10 percent of compensation, as defined for purposes of Code Section 415(c)(3), but including amounts contributed pursuant to a salary reduction agreement which are excludable from gross income under Code Section 125, 132(f)(4), 402(e)(3), 402(h) or 403(b), (2) full and immediate vesting, and (3) immediate participation by each employee of the leasing organization. (t) "EMPLOYEE CONTRIBUTION" means any after-tax contribution made by an Active Participant to the Plan. (u) "EMPLOYER" means the employer named in Subsection 1.02(a) of the Adoption Agreement and any Related Employer included as an Employer under this Subsection 2.01(u). If Article 1 of the Employer's Plan is a Standardized Adoption Agreement, the term "Employer" includes all Related Employers; provided, however, that if an employer becomes a Related Employer as a result of an asset or stock acquisition, merger or other similar transaction, the term "Employer" shall not include such employer for periods prior to the earlier of (1) the date as of which Subsection 1.02(b) of the Adoption Agreement is amended to name such employer or (2) the first day of the second Plan Year beginning after the date of such transaction. If Article 1 of the Employer's Plan is a Non-Standardized Adoption Agreement, the term "Employer" includes only those Related Employers designated in Subsection 1.02(b) of the Adoption Agreement. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 5 If the organization or other entity named in the Adoption Agreement is a sole proprietor or a professional corporation and the sole proprietor of such proprietorship or the sole shareholder of the professional corporation dies, then the legal representative of such sole proprietor or shareholder shall be deemed to be the Employer until such time as, through the disposition of such sole proprietor's or sole shareholder's estate or otherwise, any organization or other entity succeeds to the interests of the sole proprietor in the proprietorship or the sole shareholder in the professional corporation. The legal representative of a sole proprietor or shareholder shall be (1) the person appointed as such by the sole proprietor or shareholder prior to his death under a legally enforceable power of attorney, or, if none, (2) the executor or administrator of the sole proprietor's or shareholder's estate. If one of the Employers designated in Subsection 1.02(b) of the Adoption Agreement is not a Related Employer, the term "Employer" includes such un-Related Employer and the provisions of Section 18.06 shall apply. (v) "EMPLOYMENT COMMENCEMENT DATE" means the date on which an Employee first performs an Hour of Service. (w) "ENTRY DATE" means the date specified by the Employer in Subsection 1.04(d) or (e) of the Adoption Agreement as of which an Eligible Employee who has met the applicable eligibility requirements begins to participate in the Plan. The Employer may specify different Entry Dates for purposes of eligibility to participate in the Plan by (1) making Deferral Contributions and (2) receiving allocations of Matching and/or Nonelective Employer Contributions. (x) "ERISA" means the Employee Retirement Income Security Act of 1974, as from time to time amended. (y) "FUND SHARE" means the share, unit, or other evidence of ownership in a Permissible Investment. (z) "HIGHLY COMPENSATED EMPLOYEE" means both highly compensated active Employees and highly compensated former Employees. A highly compensated active Employee includes any Employee who performs service for the Employer during the "determination year" and who (1) at any time during the "determination year" or the "look-back year" was a five percent owner or (2) received Compensation from the Employer during the "look-back year" in excess of $80,000 (as adjusted pursuant to Code Section 415(d)) and, if elected by the Employer in Section 1.06 of the Adoption Agreement, was a member of the top-paid group for such year. For this purpose, the "determination year" shall be the Plan Year. The "look-back year" shall be the twelve-month period immediately preceding the "determination year", unless the Employer has elected in Section 1.06 of the Adoption Agreement to make the "look-back year" the calendar year beginning within the preceding Plan Year. A highly compensated former Employee includes any Employee who separated from service (or was deemed to have separated) prior to the "determination year", performs no service for the Employer during the "determination year", and was a highly compensated active Employee for either the separation year or any "determination year" ending on or after the Employee's 55th birthday, The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 6 as determined under the rules in effect for determining Highly Compensated Employees for such separation year or "determination year". The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, shall be made in accordance with Code Section 414(q) and the Treasury Regulations issued thereunder. For purposes of this Subsection 2.01(z), Compensation shall include amounts that are not includable in the gross income of an Employee under a salary reduction agreement by reason of the application of Code Section 125, 132(f)(4), 402(e)(3), 402(h), or 403(b). (aa) "HOUR OF SERVICE", with respect to any individual, means: (1) Each hour for which the individual is directly or indirectly paid, or entitled to payment, for the performance of duties for the Employer or a Related Employer, each such hour to be credited to the individual for the Eligibility Computation Period in which the duties were performed; (2) Each hour for which the individual is directly or indirectly paid, or entitled to payment, by the Employer or a Related Employer (including payments made or due from a trust fund or insurer to which the Employer contributes or pays premiums) on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity, disability, layoff, jury duty, military duty, or leave of absence, each such hour to be credited to the individual for the Eligibility Computation Period in which such period of time occurs, subject to the following rules: (A) No more than 501 Hours of Service shall be credited under this paragraph (2) on account of any single continuous period during which the individual performs no duties, unless the individual performs no duties because of military duty, the individual's employment rights are protected by law, and the individual returns to employment with the Employer or a Related Employer during the period that his employment rights are protected under Federal law; (B) Hours of Service shall not be credited under this paragraph (2) for a payment which solely reimburses the individual for medically-related expenses, or which is made or due under a plan maintained solely for the purpose of complying with applicable worker's compensation, unemployment compensation or disability insurance laws; and (C) If the period during which the individual performs no duties falls within two or more Eligibility Computation Periods and if the payment made on account of such period is not calculated on the basis of units of time, the Hours of Service credited with respect to such period shall be allocated between not more than the first two such Eligibility Computation Periods on any reasonable basis consistently applied with respect to similarly situated individuals; (3) Each hour not counted under paragraph (1) or (2) for which he would have been scheduled to work for the Employer or a Related Employer during the period that he is absent from work because of military duty, provided The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 7 the individual's employment rights are protected under Federal law and the individual returns to work with the Employer or a Related Company during the period that his employment rights are protected, each such hour to be credited to the individual for the Eligibility Computation Period for which he would have been scheduled to work; and (4) Each hour not counted under paragraph (1), (2), or (3) for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to be paid by the Employer or a Related Employer, shall be credited to the individual for the Eligibility Computation Period to which the award or agreement pertains rather than the Eligibility Computation Period in which the award, agreement, or payment is made. For purposes of paragraphs (2) and (4) above, Hours of Service shall be calculated in accordance with the provisions of Section 2530.200b-2(b) of the Department of Labor regulations, which are incorporated herein by reference. Notwithstanding any other provision of this Subsection to the contrary, the Employer may elect to credit Hours of Service in accordance with any of the equivalencies set forth in paragraphs (d), (e), or (f) of Department of Labor Regulations Section 2530.200b-3. (bb) "INACTIVE PARTICIPANT" means any individual who was an Active Participant, but is no longer an Eligible Employee and who has an Account under the Plan. (cc) "LEASED EMPLOYEE" means any individual who provides services to the Employer or a Related Employer (the "recipient") but is not otherwise an employee of the recipient if (1) such services are provided pursuant to an agreement between the recipient and any other person (the "leasing organization"), (2) such individual has performed services for the recipient (or for the recipient and any related persons within the meaning of Code Section 414(n)(6)) on a substantially full-time basis for at least one year, and (3) such services are performed under primary direction of or control by the recipient. The determination of who is a Leased Employee shall be made in accordance with any rules and regulations issued by the Secretary of the Treasury or his delegate. (dd) "LIMITATION YEAR" means the 12-consecutive-month period designated by the Employer in Subsection 1.01(f) of the Adoption Agreement. If no other Limitation Year is designated by the Employer, the Limitation Year shall be the calendar year. All qualified plans of the Employer and any Related Employer must use the same Limitation Year. If the Limitation Year is amended to a different 12-consecutive-month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. (ee) "MATCHING EMPLOYER CONTRIBUTION" means any contribution made by the Employer to the Plan in accordance with Section 5.08 or 5.09 on account of an Active Participant's Deferral Contributions. (ff) "MASS SUBMITTER SPONSOR" means Fidelity Management & Research Company or its successor. (gg) "NONELECTIVE EMPLOYER CONTRIBUTION" means any contribution made by the Employer to the Plan in accordance with Section 5.10. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 8 (hh) "NON-HIGHLY COMPENSATED EMPLOYEE" means any Employee who is not a Highly Compensated Employee. (ii) "NORMAL RETIREMENT AGE" means the normal retirement age specified in Subsection 1.13(a) of the Adoption Agreement. If the Employer enforces a mandatory retirement age in accordance with Federal law, the Normal Retirement Age is the lesser of that mandatory age or the age specified in Subsection 1.13(a) of the Adoption Agreement. (jj) "PARTICIPANT" means any individual who is either an Active Participant or an Inactive Participant. (kk) "PERMISSIBLE INVESTMENT" means the investments specified by the Employer as available for investment of assets of the Trust and agreed to by the Trustee and the Prototype Sponsor. The Permissible Investments under the Plan shall be listed in the Service Agreement. (ll) "PLAN" means the plan established by the Employer in the form of the prototype plan, as set forth herein as a new plan or as an amendment to an existing plan, by executing the Adoption Agreement, together with any and all amendments hereto. (mm) "PLAN YEAR" means the 12-consecutive-month period ending on the date designated by the Employer in Subsection 1.01(d) of the Adoption Agreement, except that the initial Plan Year of a new Plan may consist of fewer than 12 months, calculated from the Effective Date listed in Subsection 1.01(g)(1) of the Adoption Agreement through the end of such initial Plan Year, in which event Compensation for such initial Plan Year shall be treated as provided in Subsection 2.01(j). (nn) "PROTOTYPE SPONSOR" means Fidelity Management & Research Company or its successor. (oo) "QUALIFIED MATCHING EMPLOYER CONTRIBUTION" means any contribution made by the Employer to the Plan on account of Deferral Contributions or Employee Contributions made by or on behalf of Active Participants in accordance with Section 5.09, that may be included in determining whether the Plan meets the "ADP" test described in Section 6.03. (pp) "QUALIFIED NONELECTIVE EMPLOYER CONTRIBUTION" means any contribution made by the Employer to the Plan on behalf of Non-Highly Compensated Employees in accordance with Section 5.07, that may be included in determining whether the Plan meets the "ADP" test described in Section 6.03 or the "ACP" test described in Section 6.06. (qq) "REEMPLOYMENT COMMENCEMENT DATE" means the date on which an Employee who terminates employment with the Employer and all Related Employers first performs an Hour of Service following such termination of employment. (rr) "RELATED EMPLOYER" means any employer other than the Employer named in Subsection 1.02(a) of the Adoption Agreement if the Employer and such other employer are members of a controlled group of corporations (as defined in Code Section 414(b)) or an affiliated service group (as defined in Code Section 414(m)), or are trades or businesses (whether or not incorporated) which are under common control (as defined in Code Section 414(c)), or such other employer is required to be aggregated with the Employer pursuant to The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 9 regulations issued under Code Section 414(o); provided, however, that if Article 1 of the Employer's Plan is a Standardized Adoption Agreement, for purposes of Subsection 1.02(b) of the Adoption Agreement, the term "Related Employer" shall not include any employer that becomes a Related Employer as a result of an asset or stock acquisition, merger or other similar transaction with respect to any period prior to the earlier of (1) the date as of which Subsection 1.02(b) of the Adoption Agreement is amended to name such employer or (2) the first day of the second Plan Year beginning after the date of such transaction. (ss) "REQUIRED BEGINNING DATE" means: (1) for a Participant who is not a five percent owner, April 1 of the calendar year following the calendar year in which occurs the later of (i) the Participant's retirement or (ii) the Participant's attainment of age 70 1/2 provided, however, that a Participant may elect to have his Required Beginning Date determined without regard to the provisions of clause (i). (2) for a Participant who is a five percent owner, April 1 of the calendar year following the calendar year in which the Participant attains age 70 1/2. Once the Required Beginning Date of a five percent owner or a Participant who has elected to have his Required Beginning Date determined in accordance with the provisions of Section 2.01(ss)(1)(ii) has occurred, such Required Beginning Date shall not be re-determined, even if the Participant ceases to be a five percent owner in a subsequent year or continues in employment with the Employer or a Related Employer. For purposes of this Subsection 2.01(ss), a Participant is treated as a five percent owner if such Participant is a five percent owner as defined in Code Section 416(i) (determined in accordance with Code Section 416 but without regard to whether the Plan is top-heavy) at any time during the Plan Year ending with or within the calendar year in which such owner attains age 70 1/2. (tt) "ROLLOVER CONTRIBUTION" means any distribution from a qualified plan (or an individual retirement account holding only assets allocable to a distribution from a qualified plan) that an Employee elects to contribute to the Plan in accordance with the provisions of Section 5.06. (uu) "SELF-EMPLOYED INDIVIDUAL" means an individual who has Earned Income for the taxable year from the Employer or who would have had Earned Income but for the fact that the trade or business had no net profits for the taxable year, including, but not limited to, a partner in a partnership, a sole proprietor, a member in a limited liability company or a shareholder in a subchapter S corporation. (vv) "SERVICE AGREEMENT" means the agreement between the Employer and the Prototype Sponsor (or an agent or affiliate of the Prototype Sponsor) relating to the provision of investment and other services to the Plan and shall include any addendum to the agreement and any other separate written agreement between the Employer and the Prototype Sponsor (or an agent or affiliate of the Prototype Sponsor) relating to the provision of services to the Plan. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 10 (ww) "SEVERANCE DATE" means the earlier of (i) the date an Employee retires, dies, quits, or is discharged from employment with the Employer and all Related Employers or (ii) the 12-month anniversary of the date on which the Employee was otherwise first absent from employment; provided, however, that if an individual terminates or is absent from employment with the Employer and all Related Employers because of military duty, such individual shall not incur a Severance Date if his employment rights are protected under Federal law and he returns to employment with the Employer or a Related Employer within the period during which he retains such employment rights, but, if he does not return to such employment within such period, his Severance Date shall be the earlier of (1) the anniversary of the date his absence commenced or (2) the last day of the period during which he retains such employment rights. (xx) "TRUST" means the trust created by the Employer in accordance with the provisions of Section 20.01. (yy) "TRUST AGREEMENT" means the agreement between the Employer and the Trustee, as set forth in Article 20, under which the assets of the Plan are held, administered, and managed. (zz) "TRUSTEE" means Fidelity Management Trust Company or its successor. The term Trustee shall include any delegate of the Trustee as may be provided in the Trust Agreement. (aaa) "TRUST FUND" means the property held in Trust by the Trustee for the Accounts of Participants and their Beneficiaries. (bbb) "VESTING SERVICE" means an Employee's service that is taken into account in determining his vested interest in his Matching Employer and Nonelective Employer Contributions Accounts as may be required under Section 1.15 of the Adoption Agreement. Vesting Service shall be credited in accordance with Article 3. 2.02. PRONOUNS. Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise. 2.03. SPECIAL EFFECTIVE DATES. Some provisions of the Plan are only effective beginning as of a specified date or until a specified date. Any such special effective dates are specified within Plan text where applicable and are exceptions to the general Plan Effective Date as defined in Section 2.01(o). ARTICLE 3. SERVICE. 3.01. CREDITING OF ELIGIBILITY SERVICE. If the Employer has selected an Eligibility Service requirement in Subsection 1.04(b) of the Adoption Agreement for an Eligible Employee to become an Active Participant, Eligibility Service shall be credited to an Employee as follows: (a) If the Employer has selected the one or two year(s) of Eligibility Service requirement described in Subsection 1.04(b)(1)(C) or (D) of the Adoption Agreement, an Employee shall be credited with a year of Eligibility Service for each Eligibility Computation Period during which the Employee has been credited with at least 1,000 Hours of Service. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 11 (b) If the Employer has selected the months of Eligibility Service requirement described in Subsection 1.04(b)(1)(B) of the Adoption Agreement, an Employee shall be credited with Eligibility Service for the aggregate of the periods beginning with the Employee's Employment Commencement Date (or Reemployment Commencement Date) and ending on his subsequent Severance Date; provided, however, that an Employee who has a Reemployment Date within the 12-consecutive-month period following the earlier of the first date of his absence or his Severance Date shall be credited with Eligibility Service for the period between his Severance Date and his Reemployment Date. Months of Eligibility Service shall be measured from the Employee's Employment Commencement Date or Reemployment Commencement Date to the coinciding date in the applicable following month. 3.02. RE-CREDITING OF ELIGIBILITY SERVICE FOLLOWING TERMINATION OF EMPLOYMENT. An Employee whose employment with the Employer and all Related Employers terminates and who is subsequently reemployed by the Employer or a Related Employer shall be re-credited upon reemployment with his Eligibility Service earned prior to his termination of employment. 3.03. CREDITING OF VESTING SERVICE. If the Plan provides for Matching Employer and/or Nonelective Employer Contributions that are not 100 percent vested when made, Vesting Service shall be credited to an Employee for the aggregate of the periods beginning with the Employee's Employment Commencement Date (or Reemployment Commencement Date) and ending on his subsequent Severance Date; provided, however, that an Employee who has a Reemployment Date within the 12-consecutive-month period following the earlier of the first date of his absence or his Severance Date shall be credited with Vesting Service for the period between his Severance Date and his Reemployment Date. Fractional periods of a year shall be expressed in terms of days. 3.04. APPLICATION OF VESTING SERVICE TO A PARTICIPANT'S ACCOUNT FOLLOWING A BREAK IN VESTING SERVICE. The following rules describe how Vesting Service earned before and after a Break in Vesting Service shall be applied for purposes of determining a Participant's vested interest in his Matching Employer and Nonelective Employer Contributions Accounts. (a) If a Participant incurs five-consecutive Breaks in Vesting Service, all years of Vesting Service earned by the Employee after such Breaks in Service shall be disregarded in determining the Participant's vested interest in his Matching Employer and Nonelective Employer Contributions Account balances attributable to employment before such Breaks in Vesting Service. However, Vesting Service earned both before and after such Breaks in Vesting Service shall be included in determining the Participant's vested interest in his Matching Employer and Nonelective Employer Contributions Account balances attributable to employment after such Breaks in Vesting Service. (b) If a Participant incurs fewer than five-consecutive Breaks in Vesting Service, Vesting Service earned both before and after such Breaks in Vesting Service shall be included in determining the Participant's vested interest in his Matching Employer and Nonelective Employer Contributions Account balances attributable to employment both before and after such Breaks in Vesting Service. 3.05. SERVICE WITH PREDECESSOR EMPLOYER. If the Plan is the plan of a predecessor employer, an Employee's Eligibility and Vesting Service shall include The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 12 years of service with such predecessor employer. In any case in which the Plan is not the plan maintained by a predecessor employer, service for such predecessor employer shall be treated as Eligibility and Vesting Service if so specified in Section 1.16 of the Adoption Agreement. 3.06. CHANGE IN SERVICE CREDITING. If an amendment to the Plan or a transfer from employment as an Employee covered under another qualified plan maintained by the Employer or a Related Employer results in a change in the method of crediting Eligibility and/or Vesting Service with respect to a Participant between the Hours of Service crediting method set forth in Section 2530.200b-2 of the Department of Labor Regulations and the elapsed-time crediting method set forth in Section 1.410(a)-7 of the Treasury Regulations, each Participant with respect to whom the method of crediting Eligibility and/or Vesting Service is changed shall be treated in the manner set forth in Section 1.410(a)-7(f)(1) of the Treasury Regulations which are incorporated herein by reference. ARTICLE 4. PARTICIPATION. 4.01. DATE OF PARTICIPATION. If the Plan is an amendment and restatement of a prior plan, all Eligible Employees who were active participants in the Plan immediately prior to the Effective Date shall continue as Active Participants on the Effective Date. All Eligible Employees who are in the service of the Employer on the Effective Date (and, if this is an amendment and restatement of a prior plan, were not active participants in the prior plan immediately prior to the Effective Date) shall become Active Participants on the date elected by the Employer in Subsection 1.04(f) of the Adoption Agreement. Any other Eligible Employee shall become an Active Participant in the Plan on the Entry Date coinciding with or immediately following the date on which he first satisfies the eligibility requirements set forth in Subsections 1.04(a) and 1.04(b) of the Adoption Agreement. The Employer may elect different Eligibility Service requirements for purposes of eligibility (a) to make Deferral Contributions and (b) to receive Nonelective and/or Matching Employer Contributions. Any Eligibility Service requirement that the Employer elects to apply in determining an Eligible Employee's eligibility to make Deferral Contributions shall also apply in determining an Eligible Employee's eligibility to make Employee Contributions, if Employee Contributions are permitted under the Plan, and to receive Qualified Nonelective Employer Contributions. If an Employer elects to have different Eligibility Service requirements apply, an Eligible Employee who has met the eligibility requirements with respect to certain contributions, but who has not met the eligibility requirements with respect to other contributions, shall become an Active Participant in accordance with the provisions of the preceding paragraph, but only with respect to the contributions for which he has met the eligibility requirements. 4.02. TRANSFERS OUT OF COVERED EMPLOYMENT. If any Active Participant ceases to be an Eligible Employee, but continues in the employ of the Employer or a Related Employer, such Employee shall cease to be an Active Participant, but shall continue as an Inactive Participant until his entire Account balance is forfeited or distributed. An Inactive Participant shall not be entitled to receive an allocation of contributions or forfeitures under the Plan for the period that he is not an Eligible Employee and wages and other payments made to him by the Employer or a Related Employer for services other than as an Eligible Employee shall not be included in Compensation for purposes of determining the amount and The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 13 allocation of any contributions to the Account of such Inactive Participant. Such Inactive Participant shall continue to receive credit for Vesting Service completed during the period that he continues in the employ of the Employer or a Related Employer. 4.03. TRANSFERS INTO COVERED EMPLOYMENT. If an Employee who is not an Eligible Employee becomes an Eligible Employee, such Eligible Employee shall become an Active Participant immediately as of his transfer date if such Eligible Employee has already satisfied the eligibility requirements and would have otherwise previously become an Active Participant in accordance with Section 4.01. Otherwise, such Eligible Employee shall become an Active Participant in accordance with Section 4.01. Wages and other payments made to an Employee prior to his becoming an Eligible Employee by the Employer or a Related Employer for services other than as an Eligible Employee shall not be included in Compensation for purposes of determining the amount and allocation of any contributions to the Account of such Eligible Employee. 4.04. RESUMPTION OF PARTICIPATION FOLLOWING REEMPLOYMENT. If a Participant who terminates employment with the Employer and all Related Employers is reemployed as an Eligible Employee, he shall again become an Active Participant on his Reemployment Date. Any other Employee who terminates employment with the Employer and all Related Employers and is reemployed by the Employer or a Related Employer shall become an Active Participant as provided in Section 4.01 or 4.03. Any distribution which a Participant is receiving under the Plan at the time he is reemployed by the Employer or a Related Employer shall cease except as otherwise required under Section 12.04. ARTICLE 5. CONTRIBUTIONS. 5.01. CONTRIBUTIONS SUBJECT TO LIMITATIONS. All contributions made to the Plan under this Article 5 shall be subject to the limitations contained in Article 6. 5.02. COMPENSATION TAKEN INTO ACCOUNT IN DETERMINING CONTRIBUTIONS. In determining the amount or allocation of any contribution that is based on a percentage of Compensation, only Compensation paid to a Participant for services rendered to the Employer while employed as an Eligible Employee shall be taken into account. Except as otherwise specifically provided in this Article 5, for purposes of determining the amount and allocation of contributions under this Article 5, Compensation shall not include reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, deferred compensation, welfare benefits, and any items elected by the Employer with respect to such contributions in Subsection 1.05(a) or (b), as applicable, of the Adoption Agreement, but shall include amounts that are not includable in the gross income of the Participant under a salary reduction agreement by reason of the application of Code Section 125, 132(f)(4), 402(e)(3), 402(h), 403(b), or 457(b). If the initial Plan Year of a new plan consists of fewer than 12 months, calculated from the Effective Date listed in Subsection 1.01(g)(1) of the Adoption Agreement through the end of such initial Plan Year, except as otherwise provided in this paragraph, Compensation for purposes of determining the amount and allocation of contributions under this Article 5 for such initial Plan Year shall include only Compensation for services during the period beginning on the Effective Date listed in Subsection 1.01(g)(1) of the Adoption Agreement and The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 14 ending on the last day of the initial Plan Year. Notwithstanding the foregoing, if the Plan is a profit sharing plan, Compensation for purposes of determining the amount and allocation of non-safe harbor Nonelective Employer Contributions under this Article 5 for such initial Plan Year shall include Compensation for the full 12-consecutive-month period ending on the last day of the initial Plan Year. 5.03. DEFERRAL CONTRIBUTIONS. If so provided by the Employer in Subsection 1.07(a) of the Adoption Agreement, each Active Participant may elect to execute a salary reduction agreement with the Employer to reduce his Compensation by a specified percentage or dollar amount, not exceeding the percentage specified by the Employer in Subsection 1.07(a)(1) of the Adoption Agreement, per payroll period, subject to any exceptions elected by the Employer in Subsections 1.07(a)(2) and (3) of the Adoption Agreement, and equal to a whole number multiple of one percent. If elected by the Employer in Subsection 1.07(a)(1)(A) of the Adoption Agreement, in lieu of specifying a percentage of Compensation reduction, an Active Participant may elect to reduce his Compensation by a specified dollar amount per payroll period, provided that such dollar amount may not exceed the percentage of Compensation specified by the Employer in Subsection 1.07(a)(1) of the Adoption Agreement, subject to any exceptions elected by the Employer in Subsections 1.07(a)(2) and (3) of the Adoption Agreement. An Active Participant's salary reduction agreement shall become effective on the first day of the first payroll period for which the Employer can reasonably process the request, but not earlier than the later of (a) the effective date of the provisions permitting Deferral Contributions or (b) the date the Employer adopts such provisions. The Employer shall make a Deferral Contribution on behalf of the Participant corresponding to the amount of said reduction. Under no circumstances may a salary reduction agreement be adopted retroactively. An Active Participant may elect to change or discontinue the percentage or dollar amount by which his Compensation is reduced by notice to the Employer as provided in Subsection 1.07(a)(1)(B) or (C) of the Adoption Agreement. Notwithstanding the Employer's election in Subsection 1.07(a)(1)(B) or (C) of the Adoption Agreement, if the Employer has elected one of the safe harbor contributions in Subsection 1.10(a)(3) or 1.11(a)(3) of the Adoption Agreement, an Active Participant may elect to change or discontinue the percentage or dollar amount by which his Compensation is reduced by notice to the Employer within a reasonable period, as specified by the Employer (but not less than 30 days), of receiving the notice described in Section 6.10. 5.04. EMPLOYEE CONTRIBUTIONS. If the Employer elected to permit Deferral Contributions in Subsection 1.07(a) of the Adoption Agreement and if so provided by the Employer in Subsection 1.08(a)(1) of the Adoption Agreement, each Active Participant may elect to make non-deductible Employee Contributions to the Plan in accordance with the rules and procedures established by the Employer and in an amount not less than one percent of such Participant's Compensation for the Plan Year. 5.05. NO DEDUCTIBLE EMPLOYEE CONTRIBUTIONS. No deductible Employee Contributions may be made to the Plan. Deductible Employee Contributions made prior to January 1, 1987 shall be maintained in a separate Account. No part of the deductible Employee Contributions Account shall be used to purchase life insurance. 5.06. ROLLOVER CONTRIBUTIONS. An Eligible Employee who is or was entitled to receive an eligible rollover distribution, as defined in Code Section 402(c)(4) The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 15 and Treasury Regulations issued thereunder, from a qualified plan (or an individual retirement account holding only assets attributable to a distribution from a qualified plan) may elect to contribute all or any portion of such distribution to the Trust directly from such qualified plan or individual retirement account or within 60 days of receipt of such distribution to the Eligible Employee. Rollover Contributions shall only be made in the form of cash, allowable Fund Shares, or, if and to the extent permitted by the Employer with the consent of the Trustee, promissory notes evidencing a plan loan to the Eligible Employee; provided, however, that Rollover Contributions shall only be permitted in the form of promissory notes if the Plan otherwise provides for loans. An Eligible Employee who has not yet become an Active Participant in the Plan in accordance with the provisions of Article 4 may make a Rollover Contribution to the Plan. Such Eligible Employee shall be treated as a Participant under the Plan for all purposes of the Plan, except eligibility to have Deferral Contributions made on his behalf and to receive an allocation of Matching Employer or Nonelective Employer Contributions. The Administrator shall develop such procedures and require such information from Eligible Employees as it deems necessary to ensure that amounts contributed under this Section 5.06 meet the requirements for tax-deferred rollovers established by this Section 5.06 and by Code Section 402(c). No Rollover Contributions may be made to the Plan until approved by the Administrator. If a Rollover Contribution made under this Section 5.06 is later determined by the Administrator not to have met the requirements of this Section 5.06 or of the Code or Treasury regulations, the Trustee shall, within a reasonable time after such determination is made, and on instructions from the Administrator, distribute to the Employee the amounts then held in the Trust attributable to such Rollover Contribution. A Participant's Rollover Contributions Account shall be subject to the terms of the Plan, including Article 14, except as otherwise provided in this Section 5.06. Notwithstanding any other provision of this Section 5.06, the Employer may direct the Trustee not to accept Rollover Contributions. 5.07. QUALIFIED NONELECTIVE EMPLOYER CONTRIBUTIONS. The Employer may, in its discretion, make a Qualified Nonelective Employer Contribution for the Plan Year in any amount necessary to satisfy or help to satisfy the "ADP" test, described in Section 6.03, and/or the "ACP" test, described in Section 6.06. Qualified Nonelective Employer Contributions shall be made and allocated based on Participants' "testing compensation", as defined in Subsection 6.01(t), rather than Compensation, as defined in Subsection 2.01(j). Any Qualified Nonelective Employer Contribution shall be allocated among the Accounts of Non-Highly Compensated Employees who are Active Participants at any time during the Plan Year as follows: (a) Unless the Employer elects the allocation formula in Subsection 1.09(a)(1) of the Adoption Agreement, the Qualified Nonelective Employer Contribution shall be allocated at the election of the Employer either (1) in the ratio that each eligible Active Participant's "testing compensation", as defined in Subsection 6.01(t), for the Plan Year bears The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 16 to the total "testing compensation" paid to all eligible Active Participants for the Plan Year; or (2) as a uniform flat dollar amount for each eligible Active Participant for the Plan Year. (b) If the Employer elects the allocation formula in Subsection 1.09(a)(1) of the Adoption Agreement, the Qualified Nonelective Employer Contribution shall be allocated as follows: (1) The eligible Active Participant with the least "testing compensation", as defined in Subsection 6.01(t), for the Plan Year shall receive an allocation equal to the lowest of: (A) the maximum amount that may be contributed on the eligible Active Participant's behalf under Code Section 415, taking into account all other contributions made by or on behalf of the eligible Active Participant to plans maintained by the Employer or a Related Employer that are includable as "annual additions", as defined in Subsection 6.01(b); or (B) the full amount of the Qualified Nonelective Employer Contribution. (2) The eligible Active Participant with the next lowest "testing compensation", as defined in Subsection 6.01(t), for the Plan Year shall receive an allocation equal to the lowest of: (A) the maximum amount that may be contributed on the eligible Active Participant's behalf under Code Section 415, taking into account all other contributions made by or on behalf of the eligible Active Participant to plans maintained by the Employer or a Related Employer that are includable as "annual additions", as defined in Subsection 6.01(b); or (B) the balance of any Qualified Nonelective Employer Contribution remaining after allocation is made as provided in Subsection 5.07(b)(1) above. (3) The allocation in Subsection 5.07(b)(2) shall be applied individually to each remaining eligible Active Participant, in ascending order of "testing compensation", until the Qualified Nonelective Employer Contribution is fully allocated. Once the Qualified Nonelective Employer Contribution is fully allocated, no further allocation shall be made to the remaining eligible Active Participants. Active Participants shall not be required to satisfy any Hours of Service or employment requirement for the Plan Year in order to receive an allocation of Qualified Nonelective Employer Contributions. Qualified Nonelective Employer Contributions shall be distributable only in accordance with the distribution provisions that are applicable to Deferral Contributions; provided, however, that a Participant shall not be permitted to take a hardship withdrawal of amounts credited to his Qualified Nonelective Employer Contributions Account after the later of December 31, 1988 or the last day of the Plan Year ending before July 1, 1989. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 17 5.08. MATCHING EMPLOYER CONTRIBUTIONS. If so provided by the Employer in Section 1.10 of the Adoption Agreement, the Employer shall make a Matching Employer Contribution on behalf of each eligible Active Participant, as determined in accordance with Subsection 1.10(d) and Section 1.12 of the Adoption Agreement, who had Deferral Contributions made on his behalf during the Contribution Period. The amount of the Matching Employer Contribution shall be determined in accordance with Subsection 1.10(a) and/or (b) and/or the Safe Harbor Matching Employer Contribution Addendum to the Adoption Agreement, as applicable. 5.09. QUALIFIED MATCHING EMPLOYER CONTRIBUTIONS. If so provided by the Employer in Subsection 1.10(e) of the Adoption Agreement, prior to making its Matching Employer Contribution (other than any safe harbor Matching Employer Contribution) to the Plan, the Employer may designate all or a portion of such Matching Employer Contribution as a Qualified Matching Employer Contribution. The Employer shall notify the Trustee of such designation at the time it makes its Matching Employer Contribution. Qualified Matching Employer Contributions shall be distributable only in accordance with the distribution provisions that are applicable to Deferral Contributions; provided, however, that a Participant shall not be permitted to take a hardship withdrawal of amounts credited to his Qualified Matching Employer Contributions Account after the later of December 31, 1988 or the last day of the Plan Year ending before July 1, 1989. If the amount of an Employer's Qualified Matching Employer Contribution is determined based on a Participant's Compensation, and the Qualified Matching Employer Contribution is necessary to satisfy the "ADP" test described in Section 6.03, the compensation used in determining the amount of the Qualified Matching Employer Contribution shall be "testing compensation", as defined in Subsection 6.01(t). If the Qualified Matching Employer Contribution is not necessary to satisfy the "ADP" test described in Section 6.03, the compensation used to determine the amount of the Qualified Matching Employer Contribution shall be Compensation as defined in Subsection 2.01(j), modified as provided in Section 5.02. 5.10. NONELECTIVE EMPLOYER CONTRIBUTIONS. If so provided by the Employer in Section 1.11 of the Adoption Agreement, the Employer shall make Nonelective Employer Contributions to the Trust in accordance with Subsection 1.11(a)and/or (b) of the Adoption Agreement to be allocated as follows: (a) If the Plan is a money purchase pension plan or the Employer has elected a fixed contribution formula, Nonelective Employer Contributions shall be allocated among eligible Active Participants, as determined in accordance with Subsection 1.11(c) and Section 1.12 of the Adoption Agreement, in the manner specified in Subsection 1.11(a) or the Safe Harbor Nonelective Employer Contribution Addendum to the Adoption Agreement, as applicable. (b) If the Employer has elected a discretionary contribution amount, Nonelective Employer Contributions shall be allocated among eligible Active Participants, as determined in accordance with Subsection 1.11(c) and Section 1.12 of the Adoption Agreement, as follows: (1) If the non-integrated formula is elected in Subsection 1.11(b)(1) of the Adoption Agreement, Nonelective Employer Contributions shall be allocated to eligible Active Participants in the ratio that each eligible Active Participant's Compensation bears to the total Compensation paid to all eligible Active Participants for the Plan Year; provided, however, that if the Plan is or is deemed to be a "top-heavy plan", as defined in The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 18 Subsection 15.01(f), for any Plan Year, these allocation provisions shall be modified as provided in Section 15.04; or (2) If the integrated formula is elected in Subsection 1.11(b)(2) of the Adoption Agreement, Nonelective Employer Contributions shall be allocated in the following steps: (A) First, to each eligible Active Participant in the same ratio that the sum of the eligible Active Participant's Compensation and "excess Compensation" for the Plan Year bears to the sum of the Compensation and "excess Compensation" of all eligible Active Participants for the Plan Year. This allocation as a percentage of the sum of each eligible Active Participant's Compensation and "excess Compensation" shall not exceed the "permitted disparity limit", as defined in Section 1.11 of the Adoption Agreement. Notwithstanding the foregoing, if in any Plan Year an eligible Active Participant has reached the "cumulative permitted disparity limit", such eligible Active Participant shall receive an allocation under this Subsection 5.10(b)(2)(A) based on two times his Compensation for the Plan Year, rather than the sum of his Compensation and "excess Compensation" for the Plan Year. If an Active Participant did not benefit under a qualified defined benefit plan or target benefit plan for any Plan Year beginning on or after January 1, 1994, the Active Participant shall have no "cumulative disparity limit". (B) Second, if any Nonelective Employer Contributions remain after the allocation in Subsection 5.10(b)(2)(A), the remaining Nonelective Employer Contributions shall be allocated to each eligible Active Participant in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all eligible Active Participants for the Plan Year. Notwithstanding the provisions of Subsections 5.10(b)(2)(A) and (B) above, if in any Plan Year an eligible Active Participant benefits under another qualified plan or simplified employee pension, as defined in Code Section 408(k), that provides for or imputes permitted disparity, the Nonelective Employer Contributions for the Plan Year allocated to such eligible Active Participant shall be in the ratio that his Compensation for the Plan Year bears to the total Compensation paid to all eligible Active Participants. If the Plan is or is deemed to be a "top-heavy plan", as defined in Subsection 15.01(f), for any Plan Year, the allocation steps in Subsections 5.10(b)(2)(A) and (B) shall be modified as provided in Section 15.04. For purposes of this Subsection 5.10(b)(2), the following definitions shall apply: (C) "CUMULATIVE PERMITTED DISPARITY LIMIT" means 35 multiplied by the sum of an Active Participant's annual permitted disparity fractions, as defined in Sections 1.401(l)-5(b)(3) through (b)(7) of the Treasury Regulations, attributable to the Active Participant's total years of service under the Plan and any other qualified plan The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 19 or simplified employee pension, as defined in Code Section 408(k), maintained by the Employer or a Related Employer. For each Plan Year commencing prior to January 1, 1989, the annual permitted disparity fraction shall be deemed to be one, unless the Participant never accrued a benefit under any qualified plan or simplified employee pension maintained by the Employer or a Related Employer during any such Plan Year. In determining the annual permitted disparity fraction for any Plan Year, the Employer may elect to assume that the full disparity limit has been used for such Plan Year. (D) "EXCESS COMPENSATION" means Compensation in excess of the "integration level" specified by the Employer in Subsection 1.11(b)(2) of the Adoption Agreement. 5.11. VESTED INTEREST IN CONTRIBUTIONS. A Participant's vested interest in the following sub-accounts shall be 100 percent: (a) his Deferral Contributions Account; (b) his Qualified Nonelective Contributions Account; (c) his Qualified Matching Employer Contributions Account; (d) his Nonelective Employer Contributions Account attributable to Nonelective Employer Contributions made in accordance with the Safe Harbor Nonelective Employer Contribution Addendum to the Adoption Agreement that are intended to satisfy the safe harbor contribution requirement for deemed satisfaction of the "ADP" test described in Section 6.03; (e) his Matching Employer Contributions Account attributable to Matching Employer Contributions made in accordance with the Safe Harbor Matching Employer Contribution Addendum to the Adoption Agreement that are intended to satisfy the safe harbor contribution requirement for deemed satisfaction of the "ADP" test described in Section 6.03; (f) his Rollover Contributions Account; (g) his Employee Contributions Account; and (h) his deductible Employee Contributions Account. A Participant's vested interest in his Nonelective Employer Contributions Account attributable to Nonelective Employer Contributions other than those described in Subsection 5.11(d) above, shall be determined in accordance with the vesting schedule elected by the Employer in Subsection 1.15(b)(1) of the Adoption Agreement. A Participant's vested interest in his Matching Employer Contributions Account attributable to Matching Employer Contributions other than those described in Subsection 5.11(e) above, shall be determined in accordance with the vesting schedule elected by the Employer in Subsection 1.15(b)(2) of the Adoption Agreement. 5.12. TIME FOR MAKING CONTRIBUTIONS. The Employer shall pay its contribution for each Plan Year not later than the time prescribed by law for filing the Employer's Federal income tax return for the fiscal (or taxable) year with or within which such Plan Year ends (including extensions thereof). The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 20 The Employer shall remit any safe harbor Matching Employer Contributions made during a Plan Year quarter to the Trustee no later than the last day of the immediately following Plan Year quarter. The Employer should remit Employee Contributions and Deferral Contributions to the Trustee as of the earliest date on which such contributions can reasonably be segregated from the Employer's general assets, but not later than the 15th business day of the calendar month following the month in which such amount otherwise would have been paid to the Participant, or within such other time frame as may be determined by applicable regulation or legislation. The Trustee shall have no authority to inquire into the correctness of the amounts contributed and paid over to the Trustee, to determine whether any contribution is payable under this Article 5, or to enforce, by suit or otherwise, the Employer's obligation, if any, to make a contribution to the Trustee. 5.13. RETURN OF EMPLOYER CONTRIBUTIONS. The Trustee shall, upon request by the Employer, return to the Employer the amount (if any) determined under Section 20.24. Such amount shall be reduced by amounts attributable thereto which have been credited to the Accounts of Participants who have since received distributions from the Trust, except to the extent such amounts continue to be credited to such Participants' Accounts at the time the amount is returned to the Employer. Such amount shall also be reduced by the losses of the Trust attributable thereto, if and to the extent such losses exceed the gains and income attributable thereto, but shall not be increased by the gains and income of the Trust attributable thereto, if and to the extent such gains and income exceed the losses attributable thereto. To the extent such gains exceed losses, the gains shall be forfeited and applied as provided in Section 11.09. In no event shall the return of a contribution hereunder cause the balance of the individual Account of any Participant to be reduced to less than the balance which would have been credited to the Account had the mistaken amount not been contributed. ARTICLE 6. LIMITATIONS ON CONTRIBUTIONS. 6.01. SPECIAL DEFINITIONS. For purposes of this Article, the following definitions shall apply: (a) "AGGREGATE LIMIT" means the greater of (1) or (2) where (1) is the sum of (A) 125 percent of the greater of the average "deferral ratio" of the Active Participants who are Non-Highly Compensated Employees for the "testing year" or the average "contribution percentage" of Active Participants who are Non-Highly Compensated Employees for the "testing year" beginning with or within the "testing year" of the cash or deferred arrangement and (B) the lesser of 200 percent or two plus the lesser of such average "deferral ratio" or average "contribution percentage" and where (2) is the sum of (A) 125 percent of the lesser of the average "deferral ratio" of the Active Participants who are Non-Highly Compensated Employees for the "testing year" or the average "contribution percentage" of the Active Participants who are Non-Highly Compensated Employees for the "testing year" beginning with or within the "testing year" of the cash or deferred arrangement and (B) the lesser of 200 percent or two plus the greater of such average "deferral ratio" or average "contribution percentage". The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 21 (b) "ANNUAL ADDITIONS" mean the sum of the following amounts allocated to an Active Participant for a Limitation Year: (1) all employer contributions allocated to an Active Participant's account under qualified defined contribution plans maintained by the "415 employer", including amounts applied to reduce employer contributions as provided under Section 11.09; (2) all employee contributions allocated to an Active Participant's account under a qualified defined contribution plan or a qualified defined benefit plan maintained by the "415 employer" if separate accounts are maintained with respect to such Active Participant under the defined benefit plan; (3) all forfeitures allocated to an Active Participant's account under a qualified defined contribution plan maintained by the "415 employer"; (4) all amounts allocated, after March 31, 1984, to an "individual medical benefit account" which is part of a pension or annuity plan maintained by the "415 employer"; (5) all amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits allocated to the separate account of a key employee, as defined in Code Section 419A(d)(3), under a "welfare benefit fund" maintained by the "415 employer"; and (6) all allocations to an Active Participant under a "simplified employee pension". (c) "CONTRIBUTION PERCENTAGE" means the ratio (expressed as a percentage) of (1) the "contribution percentage amounts" allocated to an "eligible participant's" accounts for the Plan Year to (2) the "eligible participant's" "testing compensation" for the Plan Year. (d) "CONTRIBUTION PERCENTAGE AMOUNTS" mean: (1) any Employee Contributions made by an "eligible participant" to the Plan; (2) any Matching Employer Contributions, but excluding (A) Qualified Matching Employer Contributions that are taken into account in satisfying the "ADP" test described in Section 6.03 (except that such exclusion shall not apply for any Plan Year in which the "ADP" test described in Section 6.03 is deemed satisfied pursuant to Section 6.10) and (B) Matching Employer Contributions that are forfeited either to correct "excess aggregate contributions" or because the contributions to which they relate are "excess deferrals", "excess contributions", or "excess aggregate contributions"; (3) at the election of the Employer, Qualified Nonelective Employer Contributions, excluding Qualified Nonelective Employer Contributions that are taken into account in satisfying the "ADP" test described in Section 6.03; and The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 22 (4) at the election of the Employer, Deferral Contributions, excluding Deferral Contributions that are taken into account in satisfying the "ADP" test described in Section 6.03. Notwithstanding the foregoing, for any Plan Year in which the "ADP" test described in Section 6.03 is deemed satisfied pursuant to Section 6.10, "contribution percentage amounts" shall not include the following: (5) any Deferral Contributions; and (6) if the requirements described in Section 6.11 for deemed satisfaction of the "ACP" test with respect to Matching Employer Contributions are met, any Matching Employer Contributions; or if the requirements described in Section 6.11 for deemed satisfaction of the "ACP" test with respect to Matching Employer Contributions are not met, any Matching Employer Contributions made on behalf of an "eligible participant" for the Plan Year that do not exceed four percent of the "eligible participant's" Compensation for the Plan Year. To be included in determining an "eligible participant's" "contribution percentage" for a Plan Year, Employee Contributions must be made to the Plan before the end of such Plan Year and other "contribution percentage amounts" must be allocated to the "eligible participant's" Account as of a date within such Plan Year and made before the last day of the 12-month period immediately following the Plan Year to which the "contribution percentage amounts" relate. If an Employer has elected the prior year testing method described in Subsection 1.06(a)(2) of the Adoption Agreement, "contribution percentage amounts" that are taken into account for purposes of determining the "contribution percentages" of Non-Highly Compensated Employees for the prior year relate to such prior year. Therefore, such "contribution percentage amounts" must be made before the last day of the Plan Year being tested. Effective for Plan Years beginning on or after January 1, 1999, if an Employer elects to change from the current year testing method described in Subsection 1.06(a)(1) of the Adoption Agreement to the prior year testing method described in Subsection 1.06(a)(2) of the Adoption Agreement, the following shall not be considered "contribution percentage amounts" for purposes of determining the "contribution percentages" of Non-Highly Compensated Employees for the prior year immediately preceding the Plan Year in which the change is effective: (7) Qualified Matching Employer Contributions that were taken into account in satisfying the "ADP" test described in Section 6.03 for such prior year; (8) Qualified Nonelective Employer Contributions that were taken into account in satisfying the "ADP" test described in Section 6.03 or the "ACP" test described in Section 6.06 for such prior year; and (9) all Deferral Contributions. (e) "DEFERRAL RATIO" means the ratio (expressed as a percentage) of (1) the amount of "includable contributions" made on behalf of an Active Participant for the Plan Year to (2) the Active Participant's "testing compensation" for such Plan Year. An Active Participant who does not receive "includable contributions" for a Plan Year shall have a "deferral ratio" of zero. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 23 (f) "DEFINED BENEFIT FRACTION" means a fraction, the numerator of which is the sum of the Active Participant's annual benefits (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or qualified joint and survivor annuity) under all the defined benefit plans (whether or not terminated) maintained by the "415 employer", each such annual benefit computed on the assumptions that the Active Participant shall remain in employment until the normal retirement age under each such plan (or the Active Participant's current age, if later) and that all other factors used to determine benefits under such plan shall remain constant for all future Limitation Years, and the denominator of which is the lesser of 125 percent of the dollar limitation determined for the Limitation Year under Code Sections 415(b)(1)(A) and 415(d) or 140 percent of the Active Participant's highest average Compensation for three consecutive calendar years of service during which the Active Participant was active in each such plan, including any adjustments under Code Section 415(b). However, if the Active Participant was a participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by the "415 employer" which were in existence on May 6, 1986 then the denominator of the "defined benefit fraction" shall not be less than 125 percent of the Active Participant's total accrued benefit as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any changes in the terms and conditions of such plans made after May 5, 1986, under all such defined benefit plans that met, individually and in the aggregate, the requirements of Code Section 415 for all Limitation Years beginning before January 1, 1987. (g) "DEFINED CONTRIBUTION FRACTION" means a fraction, the numerator of which is the sum of all "annual additions" credited to an Active Participant for the current Limitation Year and all prior Limitation Years and the denominator of which is the sum of the "maximum permissible amounts" for the current Limitation Year and all prior Limitation Years during which the Participant was an Employee (regardless of whether the "415 employer" maintained a defined contribution plan in any such Limitation Year). If the Active Participant was a participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined contribution plans maintained by the "415 employer" which were in existence on May 6, 1986, then the numerator of the "defined contribution fraction" shall be adjusted if the sum of this fraction and the "defined benefit fraction" would otherwise exceed 1.0 under the terms of the Plan. Under the adjustment an amount equal to the product of (1) the excess of the sum of the fractions over 1.0 and (2) the denominator of this fraction shall be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the plans made after May 6, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. For purposes of determining the "defined contribution fraction", the "annual additions" for Limitation Years beginning before January 1, 1987 shall not be recomputed to treat all employee contributions as "annual additions". The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 24 (h) "DETERMINATION YEAR" means (1) for purposes of determining income or loss with respect to "excess deferrals", the calendar year in which the "excess deferrals" were made and (2) for purposes of determining income or loss with respect to "excess contributions", and "excess aggregate contributions", the Plan Year in which such "excess contributions" or "excess aggregate contributions" were made. (i) "ELECTIVE DEFERRALS" mean all employer contributions, other than Deferral Contributions, made on behalf of a Participant pursuant to an election to defer under any qualified CODA as described in Code Section 401(k), any simplified employee pension cash or deferred arrangement as described in Code Section 402(h)(1)(B), any eligible deferred compensation plan under Code Section 457, any plan as described under Code Section 501(c)(18), and any employer contributions made on behalf of a Participant pursuant to a salary reduction agreement for the purchase of an annuity contract under Code Section 403(b). "Elective deferrals" shall not include any deferrals properly distributed as excess "annual additions". (j) "ELIGIBLE PARTICIPANT" means any Active Participant who is eligible to make Employee Contributions, or Deferral Contributions (if the Employer takes such contributions into account in calculating "contribution percentages"), or to receive a Matching Employer Contribution. Notwithstanding the foregoing, the term "eligible participant" shall not include any Active Participant who is included in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers. (k) "EXCESS AGGREGATE CONTRIBUTIONS" with respect to any Plan Year mean the excess of (1) The aggregate "contribution percentage amounts" actually taken into account in computing the average "contribution percentages" of "eligible participants" who are Highly Compensated Employees for such Plan Year, over (2) The maximum amount of "contribution percentage amounts" permitted to be made on behalf of Highly Compensated Employees under Section 6.06 (determined by reducing "contribution percentage amounts" made for the Plan Year on behalf of "eligible participants" who are Highly Compensated Employees in order of their "contribution percentages" beginning with the highest of such "contribution percentages"). "Excess aggregate contributions" shall be determined after first determining "excess deferrals" and then determining "excess contributions". (l) "EXCESS CONTRIBUTIONS" with respect to any Plan Year mean the excess of (1) The aggregate amount of "includable contributions" actually taken into account in computing the average "deferral percentage" of Active Participants who are Highly Compensated Employees for such Plan Year, over (2) The maximum amount of "includable contributions" permitted to be made on behalf of Highly Compensated Employees under Section 6.03 (determined by reducing "includable contributions" made for the Plan Year on behalf of Active Participants who are Highly Compensated Employees in The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 25 order of their "deferral ratios", beginning with the highest of such "deferral ratios"). (m) "EXCESS DEFERRALS" mean those Deferral Contributions and/or "elective deferrals" that are includable in a Participant's gross income under Code Section 402(g) to the extent such Participant's Deferral Contributions and/or "elective deferrals" for a calendar year exceed the dollar limitation under such Code Section for such calendar year. (n) "EXCESS 415 AMOUNT" means the excess of an Active Participant's "annual additions" for the Limitation Year over the "maximum permissible amount". (o) "415 EMPLOYER" means the Employer and any other employers which constitute a controlled group of corporations (as defined in Code Section 414(b) as modified by Code Section 415(h)) or which constitute trades or businesses (whether or not incorporated) which are under common control (as defined in Code Section 414(c) as modified by Code Section 415(h)) or which constitute an affiliated service group (as defined in Code Section 414(m)) and any other entity required to be aggregated with the Employer pursuant to regulations issued under Code Section 414(o). (p) "INCLUDABLE CONTRIBUTIONS" mean: (1) any Deferral Contributions made on behalf of an Active Participant, including "excess deferrals" of Highly Compensated Employees, but excluding (a) "excess deferrals" of Non-Highly Compensated Employees that arise solely from Deferral Contributions made under the Plan or plans maintained by the Employer or a Related Employer and (b) Deferral Contributions that are taken into account in satisfying the "ACP" test described in Section 6.06; (2) at the election of the Employer, Qualified Nonelective Employer Contributions, excluding Qualified Nonelective Employer Contributions that are taken into account in satisfying the "ACP" test described in Section 6.06; and (3) at the election of the Employer, Qualified Matching Employer Contributions; provided, however, that the Employer may not elect to treat Qualified Matching Employer Contributions as "includable contributions" for any Plan Year in which the "ADP" test described in Section 6.03 is deemed satisfied pursuant to Section 6.10. To be included in determining an Active Participant's "deferral ratio" for a Plan Year, "includable contributions" must be allocated to the Participant's Account as of a date within such Plan Year and made before the last day of the 12-month period immediately following the Plan Year to which the "includable contributions" relate. If an Employer has elected the prior year testing method described in Subsection 1.06(a)(2) of the Adoption Agreement, "includable contributions" that are taken into account for purposes of determining the "deferral ratios" of Non-Highly Compensated Employees for the prior year relate to such prior year. Therefore, such "includable contributions" must be made before the last day of the Plan Year being tested. Effective for Plan Years beginning on or after January 1, 1999, if an Employer elects to change from the current year testing method described in The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 26 Subsection 1.06(a)(1) of the Adoption Agreement to the prior year testing method described in Subsection 1.06(a)(2) of the Adoption Agreement, the following shall not be considered "includable contributions" for purposes of determining the "deferral ratios" of Non-Highly Compensated Employees for the prior year immediately preceding the Plan Year in which the change is effective: (4) Deferral Contributions that were taken into account in satisfying the "ACP" test described in Section 6.06 for such prior year; (5) Qualified Nonelective Employer Contributions that were taken into account in satisfying the "ADP" test described in Section 6.03 or the "ACP" test described in Section 6.06 for such prior year; and (6) all Qualified Matching Employer Contributions. (q) "INDIVIDUAL MEDICAL BENEFIT ACCOUNT" means an individual medical benefit account as defined in Code Section 415(l)(2). (r) "MAXIMUM PERMISSIBLE AMOUNT" means for a Limitation Year with respect to any Active Participant the lesser of (1) $30,000 (adjusted as provided in Code Section 415(d)) or (2) 25 percent of the Active Participant's Compensation for the Limitation Year. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different 12-consecutive-month period, the dollar limitation specified in clause (1) above shall be adjusted by multiplying it by a fraction the numerator of which is the number of months in the short Limitation Year and the denominator of which is 12. The Compensation limitation specified in clause (2) above shall not apply to any contribution for medical benefits within the meaning of Code Section 401(h) or 419A(f)(2) after separation from service which is otherwise treated as an "annual addition" under Code Section 419A(d)(2) or 415(l)(1). (s) "SIMPLIFIED EMPLOYEE PENSION" means a simplified employee pension as defined in Code Section 408(k). (t) "TESTING COMPENSATION" means compensation as defined in Code Section 414(s). "Testing compensation" shall be based on the amount actually paid to a Participant during the "testing year" or, at the option of the Employer, during that portion of the "testing year" during which the Participant is an Active Participant; provided, however, that if the Employer elected different Eligibility Service requirements for purposes of eligibility to make Deferral Contributions and to receive Matching Employer Contributions, then "testing compensation" must be based on the amount paid to a Participant during the full "testing year". The annual "testing compensation" of each Active Participant taken into account in applying the "ADP" test described in Section 6.03 and the "ACP" test described in Section 6.06 for any "testing year" shall not exceed the annual compensation limit under Code Section 401(a)(17) as in effect on the first day of the "testing year". This limit shall be adjusted by the Secretary to reflect increases in the cost of living, as provided in Code Section 401(a)(17)(B); provided, however, that the dollar increase in effect on January 1 of any calendar year is effective for "testing years" beginning in such calendar year. If a Plan determines "testing compensation" over a The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 27 period that contains fewer than 12 calendar months (a "short determination period"), then the Compensation limit for such "short determination period" is equal to the Compensation limit for the calendar year in which the "short determination period" begins multiplied by the ratio obtained by dividing the number of full months in the "short determination period" by 12; provided, however, that such proration shall not apply if there is a "short determination period" because (1) the Employer elected in accordance with any rules and regulations issued by the Secretary of the Treasury or his delegate to apply the "ADP" test described in Section 6.03 and/or the "ACP" test described in Section 6.06 based only on Compensation paid during the portion of the "testing year" during which an individual was an Active Participant or (2) an Employee is covered under the Plan for fewer than 12 calendar months. (u) "TESTING YEAR" means (1) if the Employer has elected the current year testing method in Subsection 1.06(a)(1) of the Adoption Agreement, the Plan Year being tested. (2) if the Employer has elected the prior year testing method in Subsection 1.06(a)(2) of the Adoption Agreement, the Plan Year immediately preceding the Plan Year being tested. (v) "WELFARE BENEFIT FUND" means a welfare benefit fund as defined in Code Section 419(e). 6.02. CODE SECTION 402(g) LIMIT ON DEFERRAL CONTRIBUTIONS. In no event shall the amount of Deferral Contributions made under the Plan for a calendar year, when aggregated with the "elective deferrals" made under any other plan maintained by the Employer or a Related Employer, exceed the dollar limitation contained in Code Section 402(g) in effect at the beginning of such calendar year. A Participant may assign to the Plan any "excess deferrals" made during a calendar year by notifying the Administrator on or before March 15 following the calendar year in which the "excess deferrals" were made of the amount of the "excess deferrals" to be assigned to the Plan. A Participant is deemed to notify the Administrator of any "excess deferrals" that arise by taking into account only those Deferral Contributions made to the Plan and those "elective deferrals" made to any other plan maintained by the Employer or a Related Employer. Notwithstanding any other provision of the Plan, "excess deferrals", plus any income and minus any loss allocable thereto, as determined under Section 6.09, shall be distributed no later than April 15 to any Participant to whose Account "excess deferrals" were so assigned for the preceding calendar year and who claims "excess deferrals" for such calendar year. Any Matching Employer Contributions attributable to "excess deferrals", plus any income and minus any loss allocable thereto, as determined under Section 6.09, shall be forfeited and applied as provided in Section 11.09. "Excess deferrals" shall be treated as "annual additions" under the Plan, unless such amounts are distributed no later than the first April 15 following the close of the calendar year in which the "excess deferrals" were made. 6.03. ADDITIONAL LIMIT ON DEFERRAL CONTRIBUTIONS ("ADP" TEST). Notwithstanding any other provision of the Plan to the contrary, the Deferral Contributions made with respect to a Plan Year on behalf of Active Participants who are Highly The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 28 Compensated Employees for such Plan Year may not result in an average "deferral ratio" for such Active Participants that exceeds the greater of: (a) the average "deferral ratio" for the "testing year" of Active Participants who are Non-Highly Compensated Employees for the "testing year" multiplied by 1.25; or (b) the average "deferral ratio" for the "testing year" of Active Participants who are Non-Highly Compensated Employees for the "testing year" multiplied by two, provided that the average "deferral ratio" for Active Participants who are Highly Compensated Employees for the Plan Year being tested does not exceed the average "deferral ratio" for Participants who are Non-Highly Compensated Employees for the "testing year" by more than two percentage points. For the first Plan Year in which the Plan provides a cash or deferred arrangement, the average "deferral ratio" for Active Participants who are Non-Highly Compensated Employees used in determining the limits applicable under Subsections 6.03(a) and (b) shall be either three percent or the actual average "deferral ratio" for such Active Participants for such first Plan Year, as elected by the Employer in Section 1.06(b) of the Adoption Agreement. The deferral ratios of Active Participants who are included in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement shall be disaggregated from the "deferral ratios" of other Active Participants and the provisions of this Section 6.03 shall be applied separately with respect to each group. The "deferral ratio" for any Active Participant who is a Highly Compensated Employee for the Plan Year being tested and who is eligible to have "includable contributions" allocated to his accounts under two or more cash or deferred arrangements described in Code Section 401(k) that are maintained by the Employer or a Related Employer, shall be determined as if such "includable contributions" were made under a single arrangement. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Code Section 401(k). If this Plan satisfies the requirements of Code Section 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code Sections only if aggregated with this Plan, then this Section 6.03 shall be applied by determining the "deferral ratios" of Employees as if all such plans were a single plan. Plans may be aggregated in order to satisfy Code Section 401(k) only if they have the same plan year. The Employer shall maintain records sufficient to demonstrate satisfaction of the "ADP" test and the amount of Qualified Nonelective and/or Qualified Matching Employer Contributions used in such test. 6.04. ALLOCATION AND DISTRIBUTION OF "EXCESS CONTRIBUTIONS". Notwithstanding any other provision of this Plan, the "excess contributions" allocable to the Account of a Participant, plus any income and minus any loss allocable thereto, as determined under Section 6.09, shall be distributed to the Participant no later than the last day of the Plan Year immediately following the Plan Year in which The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 29 the "excess contributions" were made. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which the "excess contributions" were made, a ten percent excise tax shall be imposed on the Employer maintaining the Plan with respect to such amounts. The "excess contributions" allocable to a Participant's Account shall be determined by reducing the "includable contributions" made for the Plan Year on behalf of Active Participants who are Highly Compensated Employees in order of the dollar amount of such "includable contributions", beginning with the highest such dollar amount. "Excess contributions" shall be treated as "annual additions". Any Matching Employer Contributions attributable to "excess contributions", plus any income and minus any loss allocable thereto, as determined under Section 6.09, shall be forfeited and applied as provided in Section 11.09. 6.05. REDUCTIONS IN DEFERRAL CONTRIBUTIONS TO MEET CODE REQUIREMENTS. If the Administrator anticipates that the Plan will not satisfy the "ADP" and/or "ACP" test for the year, the Administrator may objectively reduce the rate of Deferral Contributions of Participants who are Highly Compensated Employees to an amount determined by the Administrator to be necessary to satisfy the "ADP" and/or "ACP" test. 6.06. LIMIT ON MATCHING EMPLOYER CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS ("ACP" TEST). The provisions of this Section 6.06 shall not apply to Active Participants who are included in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers. Notwithstanding any other provision of the Plan to the contrary, Matching Employer Contributions and Employee Contributions made with respect to a Plan Year by or on behalf of "eligible participants" who are Highly Compensated Employees for such Plan Year may not result in an average "contribution percentage" for such "eligible participants" that exceeds the greater of: (a) the average "contribution percentage" for the "testing year" of "eligible participants" who are Non-Highly Compensated Employees for the "testing year" multiplied by 1.25; or (b) the average "contribution percentage" for the "testing year" of "eligible participants" who are Non-Highly Compensated Employees for the "testing year" multiplied by two, provided that the average "contribution percentage" for the Plan Year being tested of "eligible participants" who are Highly Compensated Employees does not exceed the average "contribution percentage" for the "testing year" of "eligible participants" who are Non-Highly Compensated Employees for the "testing year" by more than two percentage points. For the first Plan Year in which the Plan provides for "contribution percentage amounts" to be made, the "ACP" for "eligible participants" who are Non-Highly Compensated Employees used in determining the limits applicable under paragraphs (a) and (b) of this Section 6.06 shall be either three percent or the actual "ACP" of such eligible participants for such first Plan Year, as elected by the Employer in Section 1.06(b). The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 30 The "contribution percentage" for any "eligible participant" who is a Highly Compensated Employee for the Plan Year and who is eligible to have "contribution percentage amounts" allocated to his accounts under two or more plans described in Code Section 401(a) that are maintained by the Employer or a Related Employer, shall be determined as if such "contribution percentage amounts" were contributed under a single plan. If a Highly Compensated Employee participates in two or more such plans that have different plan years, all plans ending with or within the same calendar year shall be treated as a single plan. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under Treasury Regulations issued under Code Section 401(m). If this Plan satisfies the requirements of Code Section 401(m), 401(a)(4) or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code Sections only if aggregated with this Plan, then this Section 6.06 shall be applied by determining the "contribution percentages" of Employees as if all such plans were a single plan. Plans may be aggregated in order to satisfy Code Section 401(m) only if they have the same plan year. The Employer shall maintain records sufficient to demonstrate satisfaction of the "ACP" test and the amount of Deferral Contributions, Qualified Nonelective Employer Contributions, and/or Qualified Matching Employer Contributions used in such test. 6.07. ALLOCATION, DISTRIBUTION, AND FORFEITURE OF "EXCESS AGGREGATE CONTRIBUTIONS". Notwithstanding any other provision of the Plan, the "excess aggregate contributions" allocable to the Account of a Participant, plus any income and minus any loss allocable thereto, as determined under Section 6.09, shall be forfeited, if forfeitable, or if not forfeitable, distributed to the Participant no later than the last day of the Plan Year immediately following the Plan Year in which the "excess aggregate contributions" were made. If such excess amounts are distributed more than 2 """ months after the last day of the Plan Year in which such "excess aggregate contributions" were made, a ten percent excise tax shall be imposed on the Employer maintaining the Plan with respect to such amounts. The "excess aggregate contributions" allocable to a Participant's Account shall be determined by reducing the "contribution percentage amounts" made for the Plan Year on behalf of "eligible participants" who are Highly Compensated Employees in order of the dollar amount of such "contribution percentage amounts", beginning with the highest such dollar amount. "Excess aggregate contributions" shall be treated as "annual additions". "Excess aggregate contributions" shall be forfeited or distributed from a Participant's Employee Contributions Account, Matching Employer Contributions Account and if applicable, the Participant's Deferral Contributions Account and/or Qualified Nonelective Employer Contributions Account in the order prescribed by the Employer, who shall direct the Trustee, and which order shall be uniform with respect to all Participants and non-discriminatory. Forfeitures of "excess aggregate contributions" shall be applied as provided in Section 11.09. 6.08. AGGREGATE LIMIT ON "CONTRIBUTION PERCENTAGE AMOUNTS" AND "INCLUDABLE CONTRIBUTIONS". The sum of the average "deferral ratio" and the average The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 31 "contribution percentage" of those Active Participants who are Highly Compensated Employees during the Plan Year shall not exceed the "aggregate limit". The average "deferral ratio" and average "contribution percentage" of such Active Participants shall be determined after any corrections required to meet the "ADP" test, described in Section 6.03, and the "ACP" test, described in Section 6.06, have been made. Notwithstanding the foregoing, the "aggregate limit" shall not be exceeded if either the average "deferral ratio" or the average "contribution percentage" of such Active Participants for the Plan Year does not exceed 1.25 multiplied by the average "deferral ratio" or the average "contribution percentage", as applicable, for the "testing year" of the Active Participants who are Non-Highly Compensated Employees for the "testing year". If the "aggregate limit" would be exceeded for any Plan Year, then the limit shall be met by reducing the "contribution percentage amounts" contributed for the Plan Year on behalf of the Active Participants who are Highly Compensated Employees for such Plan Year (in order of their "contribution percentages", beginning with the highest such "contribution percentage"). "Contribution percentage amounts" that are reduced as provided herein shall be treated as "excess aggregate contributions". If for any Plan Year in which the "ADP" test described in Section 6.03 is deemed satisfied pursuant to Section 6.10, the average "deferral ratio" of those Active Participants who are Highly Compensated Employees during the Plan Year does not meet the "aggregate limit" after reducing the "contribution percentage amounts" contributed on behalf of such Active Participants to zero, no further reduction shall be required under this Section 6.08. 6.09. INCOME OR LOSS ON DISTRIBUTABLE CONTRIBUTIONS. The income or loss allocable to "excess deferrals", "excess contributions", and "excess aggregate contributions" shall be determined under one of the following methods: (a) the income or loss for the "determination year" allocable to the Participant's Account to which such contributions were made multiplied by a fraction, the numerator of which is the amount of the distributable contributions and the denominator of which is the balance of the Participant's Account to which such contributions were made, determined without regard to any income or loss occurring during the "determination year"; or (b) the income or loss for the "determination year" determined under any other reasonable method, provided that such method is used consistently for all Participants in determining the income or loss allocable to distributable contributions hereunder for the Plan Year, and is used by the Plan in allocating income or loss to Participants' Accounts. Income or loss allocable to the period between the end of the "determination year" and the date of distribution shall be disregarded in determining income or loss. 6.10. DEEMED SATISFACTION OF "ADP" TEST. Notwithstanding any other provision of this Article 6 to the contrary, for any Plan Year beginning on or after January 1, 1999, if the Employer has elected one of the safe harbor contributions in Subsection 1.10(a)(3) or 1.11(a)(3) of the Adoption Agreement and complies with the notice requirements described herein for such Plan Year, the Plan shall be deemed to have satisfied the "ADP" test described in Section 6.03. The Employer shall provide a notice to each Active Participant during the Plan Year describing the following: The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 32 (a) the formula used for determining the amount of the safe harbor contribution to be made on behalf of Active Participants for the Plan Year or a statement that the Plan may be amended during the Plan Year to provide for a safe harbor Nonelective Employer Contribution for the Plan Year equal to at least three percent of each Active Participant's Compensation for the Plan Year; (b) any other employer contributions provided under the Plan and any requirements that Active Participants must satisfy to be entitled to receive such employer contributions; (c) the type and amount of Compensation that may be deferred under the Plan as Deferral Contributions; (d) the procedures for making a cash or deferred election under the Plan and the periods during which such elections may be made or changed; and (e) the withdrawal and vesting provisions applicable to contributions under the Plan. The descriptions required in (b) through (e) may be provided by cross references to the relevant sections of an up to date summary plan description. Such notice shall be written in a manner calculated to be understood by the average Active Participant. The Employer shall provide the notice to each Active Participant within one of the following periods, whichever is applicable: (f) if the employee is an Active Participant 90 days before the beginning of the Plan Year, within the period beginning 90 days and ending 30 days before the first day of the Plan Year; or (g) if the employee becomes an Active Participant after the date described in paragraph (f) above, within the period beginning 90 days before and ending on the date he becomes an Active Participant; provided, however, that such notice shall not be required to be provided to an Active Participant earlier than is required under any guidance published by the Internal Revenue Service. If an Employer that provides notice that the Plan may be amended to provide a safe harbor Nonelective Employer Contribution for the Plan Year does amend the Plan to provide such contribution, the Employer shall provide a supplemental notice to all Active Participants stating that a safe harbor Nonelective Employer Contribution in the specified amount shall be made for the Plan Year. Such supplemental notice shall be provided to Active Participants at least 30 days before the last day of the Plan Year. 6.11. DEEMED SATISFACTION OF "ACP" TEST WITH RESPECT TO MATCHING EMPLOYER CONTRIBUTIONS. A Plan that satisfies the requirements of Section 6.10 shall also be deemed to have satisfied the "ACP" test described in Section 6.06 with respect to Matching Employer Contributions, if Matching Employer Contributions to the Plan for the Plan Year meet all of the following requirements: (a) the percentage of Deferral Contributions matched does not increase as the percentage of Compensation contributed increases; (b) Highly Compensated Employees are not provided a greater percentage match than Non-Highly Compensated Employees; (c) Deferral Contributions matched do not exceed six percent of a Participant's Compensation; and (d) if the Employer elected in Subsection 1.10(a)(2) or 1.10(b) of the Adoption Agreement to provide discretionary Matching Employer The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 33 Contributions, the Employer also elected in Subsection 1.10(a)(2)(A) or 1.10(b)(1) of the Adoption Agreement, as applicable, to limit the dollar amount of such discretionary Matching Employer Contributions allocated to a Participant for the Plan Year to no more than four percent of such Participant's Compensation for the Plan Year. If such Plan provides for Employee Contributions, the "ACP" test described in Section 6.06 must be applied with respect to such Employee Contributions. For purposes of applying the "ACP" test with respect to Employee Contributions, Matching Employer Contributions and Nonelective Employer Contributions that satisfy the vesting and distribution requirements applicable to safe harbor contributions, but which are not required to comply with the safe harbor contribution requirements may be taken into account. 6.12. CODE SECTION 415 LIMITATIONS. Notwithstanding any other provisions of the Plan, the following limitations shall apply: (a) Employer Maintains Single Plan: If the "415 employer" does not maintain any other qualified defined contribution plan or any "welfare benefit fund", "individual medical benefit account", or "simplified employee pension" in addition to the Plan, the provisions of this Subsection 6.12(a) shall apply. (1) If a Participant does not participate in, and has never participated in any other qualified defined contribution plan, "welfare benefit fund", "individual medical benefit account", or "simplified employee pension" maintained by the "415 employer", which provides an "annual addition", the amount of "annual additions" to the Participant's Account for a Limitation Year shall not exceed the lesser of the "maximum permissible amount" or any other limitation contained in the Plan. If a contribution that would otherwise be contributed or allocated to the Participant's Account would cause the "annual additions" for the Limitation Year to exceed the "maximum permissible amount", the amount contributed or allocated shall be reduced so that the "annual additions" for the Limitation Year shall equal the "maximum permissible amount". (2) Prior to the determination of a Participant's actual Compensation for a Limitation Year, the "maximum permissible amount" may be determined on the basis of a reasonable estimation of the Participant's Compensation for such Limitation Year, uniformly determined for all Participants similarly situated. Any Employer contributions based on estimated annual Compensation shall be reduced by any "excess 415 amounts" carried over from prior Limitation Years. (3) As soon as is administratively feasible after the end of the Limitation Year, the "maximum permissible amount" for such Limitation Year shall be determined on the basis of the Participant's actual Compensation for such Limitation Year. (4) If there is an "excess 415 amount" with respect to a Participant for a Limitation Year as a result of the estimation of the Participant's Compensation for the Limitation Year, the allocation of forfeitures to the Participant's Account, or a reasonable error in determining the amount of Deferral Contributions that may be made on behalf of the Participant under the limits of this Section 6.12, such "excess 415 amount" shall be disposed of as follows: The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 34 (A) Any Employee Contributions shall be reduced to the extent necessary to reduce the "excess 415 amount". (B) If after application of Subsection 6.12(a)(4)(A) an "excess 415 amount" still exists, any Deferral Contributions that have not been matched shall be reduced to the extent necessary to reduce the "excess 415 amount". (C) If after application of Subsection 6.12(a)(4)(B) an "excess 415 amount" still exists, any Deferral Contributions that have been matched and the Matching Employer Contributions attributable thereto shall be reduced to the extent necessary to reduce the "excess 415 amount". (D) If after the application of Subsection 6.12(a)(4)(C) an "excess 415 amount" still exists, any Nonelective Employer Contributions shall be reduced to the extent necessary to reduce the "excess 415 amount". (E) If after the application of Subsection 6.12(a)(4)(D) an "excess 415 amount" still exists, any Qualified Nonelective Employer Contributions shall be reduced to the extent necessary to reduce the "excess 415 amount". Employee Contributions and Deferral Contributions that are reduced as provided above shall be returned to the Participant. Any income allocable to returned Employee Contributions or Deferral Contributions shall also be returned or shall be treated as additional "annual additions" for the Limitation Year in which the excess contributions to which they are allocable were made. If Matching Employer, Nonelective Employer, or Qualified Nonelective Employer Contributions to a Participant's Account are reduced as an "excess 415 amount", as provided above, and the individual is still an Active Participant at the end of the Limitation Year, then such "excess 415 amount" shall be reapplied to reduce future Employer contributions under the Plan for the next Limitation Year (and for each succeeding Limitation Year, as necessary) for such Participant, so that in each such Limitation Year the sum of the actual Employer contributions made on behalf of such Participant plus the reapplied amount shall equal the amount of Employer contributions which would otherwise be made to such Participant's Account. If the individual is not an Active Participant at the end of a Limitation Year, then such "excess 415 amount" shall be held unallocated in a suspense account. The suspense account shall be applied to reduce future Employer contributions for all remaining Active Participants in the next Limitation Year and each succeeding Limitation Year if necessary. If a suspense account is in existence at any time during the Limitation Year pursuant to this Subsection 6.12(a)(4), it shall participate in the allocation of the Trust Fund's investment gains and losses. All amounts in the suspense account must be allocated to the Accounts of Active Participants before any Employer contribution may be made for the Limitation Year. Except as otherwise specifically provided in this Subsection 6.12, "excess 415 amounts" may not be distributed to Participants. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 35 (b) Employer Maintains Multiple Defined Contribution Type Plans: Unless the Employer specifies another method for limiting "annual additions" in the 415 Correction Addendum to the Adoption Agreement, if the "415 employer" maintains any other qualified defined contribution plan or any "welfare benefit fund", "individual medical benefit account", or "simplified employee pension" in addition to the Plan, the provisions of this Subsection 6.12(b) shall apply. (1) If a Participant is covered under any other qualified defined contribution plan or any "welfare benefit fund", "individual medical benefit account", or "simplified employee pension" maintained by the "415 employer", that provides an "annual addition", the amount of "annual additions" to the Participant's Account for a Limitation Year shall not exceed the lesser of (A) the "maximum permissible amount", reduced by the sum of any "annual additions" to the Participant's accounts for the same Limitation Year under such other qualified defined contribution plans and "welfare benefit funds", "individual medical benefit accounts", and "simplified employee pensions", or (B) any other limitation contained in the Plan. If the "annual additions" with respect to a Participant under other qualified defined contribution plans, "welfare benefit funds", "individual medical benefit accounts", and "simplified employee pensions" maintained by the "415 employer" are less than the "maximum permissible amount" and a contribution that would otherwise be contributed or allocated to the Participant's Account under the Plan would cause the "annual additions" for the Limitation Year to exceed the "maximum permissible amount", the amount to be contributed or allocated shall be reduced so that the "annual additions" for the Limitation Year shall equal the "maximum permissible amount". If the "annual additions" with respect to the Participant under such other qualified defined contribution plans, "welfare benefit funds", "individual medical benefit accounts", and "simplified employee pensions" in the aggregate are equal to or greater than the "maximum permissible amount", no amount shall be contributed or allocated to the Participant's Account under the Plan for the Limitation Year. (2) Prior to the determination of a Participant's actual Compensation for the Limitation Year, the amounts referred to in Subsection 6.12(b)(1)(A) above may be determined on the basis of a reasonable estimation of the Participant's Compensation for such Limitation Year, uniformly determined for all Participants similarly situated. Any Employer contribution based on estimated annual Compensation shall be reduced by any "excess 415 amounts" carried over from prior Limitation Years. (3) As soon as is administratively feasible after the end of the Limitation Year, the amounts referred to in Subsection 6.12(b)(1)(A) shall be determined on the basis of the Participant's actual Compensation for such Limitation Year. (4) Notwithstanding the provisions of any other plan maintained by a "415 employer", if there is an "excess 415 amount" with respect to a The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 36 Participant for a Limitation Year as a result of estimation of the Participant's Compensation for the Limitation Year, the allocation of forfeitures to the Participant's account under any qualified defined contribution plan maintained by the "415 employer", or a reasonable error in determining the amount of Deferral Contributions that may be made on behalf of the Participant to the Plan or any other qualified defined contribution plan maintained by the "415 employer" under the limits of this Subsection 6.12(b), such "excess 415 amount" shall be deemed to consist first of the "annual additions" allocated to this Plan and shall be reduced as provided in Subsection 6.12(a)(4); provided, however, that if the "415 employer" maintains both a profit sharing plan and a money purchase pension plan under this Basic Plan Document, "annual additions" to the money purchase pension plan shall be reduced only after all "annual additions" to the profit sharing plan have been reduced. (c) Employer Maintains or Maintained Defined Benefit Plan: For Limitation Years beginning prior to January 1, 2000, if the "415 employer" maintains, or at any time maintained, a qualified defined benefit plan, the sum of any Participant's "defined benefit plan fraction and "defined contribution plan fraction" shall not exceed the combined plan limitation of 1.00 in any such Limitation Year. The combined plan limitation shall be met by reducing "annual additions" under the Plan, unless otherwise provided in the qualified defined benefit plan. (d) Adjustment to Compensation: Compensation for purposes of this Section 6.12 shall include amounts that are not includable in the gross income of the Participant under a salary reduction agreement by reason of the application of Code Section 125, 132(f)(4), 402(e)(3), 402(h), or 403(b). ARTICLE 7. PARTICIPANTS' ACCOUNTS. 7.01. INDIVIDUAL ACCOUNTS. The Administrator shall establish and maintain an Account for each Participant that shall reflect Employer and Employee contributions made on behalf of the Participant and earnings, expenses, gains and losses attributable thereto, and investments made with amounts in the Participant's Account. The Administrator shall establish and maintain such other accounts and records as it decides in its discretion to be reasonably required or appropriate in order to discharge its duties under the Plan. The Administrator shall notify the Trustee of all Accounts established and maintained under the Plan. 7.02. VALUATION OF ACCOUNTS. Participant Accounts shall be valued at their fair market value at least annually as of a date specified by the Administrator in accordance with a method consistently followed and uniformly applied, and on such date earnings, expenses, gains and losses on investments made with amounts in each Participant's Account shall be allocated to such Account. Participants shall be furnished statements of their Account values at least once each Plan Year. ARTICLE 8. INVESTMENT OF CONTRIBUTIONS. 8.01. MANNER OF INVESTMENT. All contributions made to the Accounts of Participants shall be held for investment by the Trustee. Except as otherwise specifically provided in Section 20.10, the Accounts of Participants shall be The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 37 invested and reinvested only in Permissible Investments selected by the Employer and designated in the Service Agreement. 8.02. INVESTMENT DECISIONS. Investments shall be directed by the Employer or by each Participant or both, in accordance with the Employer's election in Subsection 1.23 of the Adoption Agreement. Pursuant to Section 20.04, the Trustee shall have no discretion or authority with respect to the investment of the Trust Fund; however, an affiliate of the Trustee may exercise investment management authority in accordance with Subsection (e) below. (a) With respect to those Participant Accounts for which Employer investment direction is elected, the Employer (in its capacity as a named fiduciary under ERISA) has the right to direct the Trustee in writing with respect to the investment and reinvestment of assets comprising the Trust Fund in the Permissible Investments designated in the Service Agreement. (b) With respect to those Participant Accounts for which Participant investment direction is elected, each Participant shall direct the investment of his Account among the Permissible Investments designated in the Service Agreement. The Participant shall file initial investment instructions with the Administrator, on such form as the Administrator may provide, selecting the Permissible Investments in which amounts credited to his Account shall be invested. (1) Except as provided in this Section 8.02, only authorized Plan contacts and the Participant shall have access to a Participant's Account. While any balance remains in the Account of a Participant after his death, the Beneficiary of the Participant shall make decisions as to the investment of the Account as though the Beneficiary were the Participant. To the extent required by a qualified domestic relations order as defined in Code Section 414(p), an alternate payee shall make investment decisions with respect to any segregated account established in the name of the alternate payee as provided in Section 18.04. (2) If the Trustee receives any contribution under the Plan as to which investment instructions have not been provided, the Trustee shall promptly notify the Administrator and the Administrator shall take steps to elicit instructions from the Participant. The Trustee shall credit any such contribution to the Participant's Account and such amount shall be invested in the Permissible Investment selected by the Employer for such purposes or, absent Employer selection, in the most conservative Permissible Investment designated in the Service Agreement, until investment instructions have been received by the Trustee. If the Employer elects to allow Participants to direct the investment of their Account in Subsection 1.23(b) or (c) of the Adoption Agreement, the Plan is intended to constitute a plan described in ERISA Section 404(c) and regulations issued thereunder. The fiduciaries of the Plan shall be relieved of liability for any losses that are the direct and necessary result of investment instructions given by the Participant, his Beneficiary, or an alternate payee under a qualified domestic relations order. The Employer shall not be relieved of fiduciary responsibility for the selection and monitoring of the Permissible Investments under the Plan. (c) All dividends, interest, gains and distributions of any nature received in respect of Fund Shares shall be reinvested in additional shares of that Permissible Investment. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 38 (d) Expenses attributable to the acquisition of investments shall be charged to the Account of the Participant for which such investment is made. (e) The Employer may appoint an investment manager (which may be the Trustee or an affiliate) to determine the allocation of amounts held in Participants' Accounts among various investment options (the "Managed Account" option) for Participants who direct the Trustee to invest any portion of their accounts in the Managed Account option. The investment options utilized under the Managed Account option may be those generally available under the Plan or may be as selected by the investment manager for use under the Managed Account option. Participation in the Managed Account option shall be subject to such conditions and limitations (including account minimums) as may be imposed by the investment manager. 8.03. PARTICIPANT DIRECTIONS TO TRUSTEE. The method and frequency for change of investments shall be determined under (a) the rules applicable to the Permissible Investments selected by the Employer and designated in the Service Agreement and (b) any additional rules of the Employer limiting the frequency of investment changes, which are included in a separate written administrative procedure adopted by the Employer and accepted by the Trustee. The Trustee shall have no duty to inquire into the investment decisions of a Participant or to advise him regarding the purchase, retention, or sale of assets credited to his Account. ARTICLE 9. PARTICIPANT LOANS. 9.01. SPECIAL DEFINITIONS. For purposes of this Article, the following special definitions shall apply: (a) A "PARTICIPANT" is any Participant or Beneficiary, including an alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), who is a party-in-interest (as determined under ERISA Section 3(14)) with respect to the Plan. (b) An "OWNER-EMPLOYEE" is, if the Employer is a sole proprietorship for Federal income tax purposes (regardless of its characterization under state law), the individual who is the sole proprietor or sole member, as applicable; if the Employer is a partnership for Federal income tax purposes (regardless of its characterization under state law), a partner or member, as applicable, who owns more than 10 percent of either the capital interest or the profits interest of the partnership. (c) A "SHAREHOLDER-EMPLOYEE" is an employee or officer of an electing small business (Subchapter S) corporation who owns (or is considered as owning within the meaning of Code Section 318(a)(1)), on any day during the taxable year of such corporation, more than five percent of the outstanding stock of the corporation. 9.02. PARTICIPANT LOANS. If so provided by the Employer in Section 1.17 of the Adoption Agreement, the Administrator shall allow "participants" to apply for a loan from their Accounts under the Plan, subject to the provisions of this Article 9. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 39 9.03. SEPARATE LOAN PROCEDURES. All Plan loans shall be made and administered in accordance with separate loan procedures that are hereby incorporated into the Plan by reference. 9.04. AVAILABILITY OF LOANS. Loans shall be made available to all "participants" on a reasonably equivalent basis. Notwithstanding the preceding sentence, no loans shall be made to (a) an Eligible Employee who makes a Rollover Contribution in accordance with Section 5.06, but who has not satisfied the requirements of Section 4.01 to become an Active Participant or (b) a "shareholder-employee" or "owner-employee". Loans shall not be made available to "participants" who are Highly Compensated Employees in an amount greater than the amount made available to other "participants". 9.05. LIMITATION ON LOAN AMOUNT. No loan to any "participant" shall be made to the extent that such loan when added to the outstanding balance of all other loans to the "participant" would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of plan loans during the one-year period ending on the day before the loan is made over the outstanding balance of plan loans on the date the loan is made, or (b) one-half the present value of the "participant's" vested interest in his Account. For purposes of the above limitation, plan loans include all loans from all plans maintained by the Employer and any Related Employer. 9.06. INTEREST RATE. All loans shall bear a reasonable rate of interest as determined by the Administrator based on the prevailing interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances. The determination of a reasonable rate of interest must be based on appropriate regional factors unless the Plan is administered on a national basis in which case the Administrator may establish a uniform reasonable rate of interest applicable to all regions. 9.07. LEVEL AMORTIZATION. All loans shall by their terms require that repayment (principal and interest) be amortized in level payments, not less than quarterly, over a period not extending beyond five years from the date of the loan unless such loan is for the purchase of a "participant's" primary residence. Notwithstanding the foregoing, the amortization requirement may be waived for a period not exceeding one year during which a "participant" is on a leave of absence from employment with the Employer and any Related Employer either without pay or at a rate of pay which, after withholding for employment and income taxes, is less than the amount of the installment payments required under the terms of the loan. Installment payments must resume after such leave of absence ends or, if earlier, after the first year of such leave of absence, in an amount that is not less than the amount of the installment payments required under the terms of the original loan. No waiver of the amortization requirements shall extend the period of the loan beyond five years from the date of the loan, unless the loan is for purchase of the "participant's" primary residence. 9.08. SECURITY. Loans must be secured by the "participant's" vested interest in his Account not to exceed 50 percent of such vested interest. If the provisions of Section 14.04 apply to a Participant, a Participant must obtain the consent of his or her spouse, if any, to use his vested interest in his Account as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 40 be witnessed by a Plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting spouse or any subsequent spouse with respect to that loan. 9.09. TRANSFER AND DISTRIBUTION OF LOAN AMOUNTS FROM PERMISSIBLE INVESTMENTS. The Employer shall confirm the order in which the Permissible Investments shall be liquidated in order that the loan amount can be transferred and distributed. 9.10. DEFAULT. The Administrator shall treat a loan in default if (a) any scheduled repayment remains unpaid at the end of the period specified in the separate loan procedures (unless payment is not made due to a waiver of the amortization schedule for a "participant" who is on a leave of absence, as described in Section 9.07), or (b) there is an outstanding principal balance existing on a loan after the last scheduled repayment date. Upon default, the entire outstanding principal and accrued interest shall be immediately due and payable. If a distributable event (as defined by the Code) has occurred, the Administrator shall direct the Trustee to foreclose on the promissory note and offset the "participant's" vested interest in his Account by the outstanding balance of the loan. If a distributable event has not occurred, the Administrator shall direct the Trustee to foreclose on the promissory note and offset the "participant's" vested interest in his Account as soon as a distributable event occurs. The Trustee shall have no obligation to foreclose on the promissory note and offset the outstanding balance of the loan except as directed by the Administrator. 9.11. EFFECT OF TERMINATION WHERE PARTICIPANT HAS OUTSTANDING LOAN BALANCE. If a Participant has an outstanding loan balance at the time his employment terminates, the entire outstanding principal and accrued interest shall be immediately due and payable. Any outstanding loan amounts that are immediately due and payable hereunder shall be treated in accordance with the provisions of Sections 9.10 and 9.12 as if the Participant had defaulted on the outstanding loan. 9.12. DEEMED DISTRIBUTIONS UNDER CODE SECTION 72(p). Notwithstanding the provisions of Section 9.10, if a "participant's" loan is in default, the "participant" shall be treated as having received a taxable "deemed distribution" for purposes of Code Section 72(p), whether or not a distributable event has occurred. The amount of a loan that is a deemed distribution ceases to be an outstanding loan for purposes of Code Section 72, except as otherwise specifically provided herein, and a Participant shall not be treated as having received a taxable distribution when the Participant's Account is offset by the outstanding balance of the loan amount as provided in Section 9.10. In addition, interest that accrues on a loan after it is deemed distributed shall not be treated as an additional loan to the Participant and shall not be included in the income of the Participant as a deemed distribution. Notwithstanding the foregoing, unless a Participant repays a loan that has been deemed distributed, with interest thereon, the amount of such loan, with interest, shall be considered an outstanding loan under Code Section 72(p) for purposes of determining the applicable limitation on subsequent loans under Section 9.05. If a Participant makes payments on a loan that has been deemed distributed, payments made on the loan after the date it was deemed distributed shall be The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 41 treated as Employee Contributions to the Plan for purposes of increasing the Participant's tax basis in his Account, but shall not be treated as Employee Contributions for any other purpose under the Plan, including application of the "ACP" test described in Section 6.06 and application of the Code Section 415 limitations described in Section 6.12. The provisions of this Section 9.12 regarding treatment of loans that are deemed distributed shall be effective as of (a) the Effective Date, if the Plan is a new plan or is an amendment and restatement of a plan that administered loans in accordance with the provisions of Q & A 19 and 20 of Section 1.72(p)-1 of the Proposed Treasury Regulations immediately prior to the Effective Date or (b) as of the January 1 coinciding with or immediately following the Effective Date, in any other case. Any loan that was deemed distributed prior to the date the provisions of this Section 9.12 are effective shall be administered in accordance with the provisions of this Section 9.12 to the extent such administration is consistent with the transition rules in Q & A 21(c)(2) of Section 1.72(p)-1 of the Proposed Treasury Regulations. 9.13. DETERMINATION OF ACCOUNT VALUE UPON DISTRIBUTION WHERE PLAN LOAN IS OUTSTANDING. Notwithstanding any other provision of the Plan, the portion of a "participant's" vested interest in his Account that is held by the Plan as security for a loan outstanding to the "participant" in accordance with the provisions of this Article shall reduce the amount of the Account payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. If less than 100 percent of a "participant's" vested interest in his Account (determined without regard to the preceding sentence) is payable to the "participant's" surviving spouse or other Beneficiary, then the Account shall be adjusted by first reducing the "participant's" vested interest in his Account by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse or other Beneficiary. ARTICLE 10. IN-SERVICE WITHDRAWALS. 10.01. AVAILABILITY OF IN-SERVICE WITHDRAWALS. Except as otherwise permitted under Section 11.02 with respect to Participants who continue in employment past Normal Retirement Age, or as required under Section 12.04 with respect to Participants who continue in employment past their Required Beginning Date, a Participant shall not be permitted to make a withdrawal from his Account under the Plan prior to retirement or termination of employment with the Employer and all Related Employers, if any, except as provided in this Article. 10.02. WITHDRAWAL OF EMPLOYEE CONTRIBUTIONS. A Participant may elect to withdraw, in cash, up to 100 percent of the amount then credited to his Employee Contributions Account. Such withdrawals may be made at any time, unless the Employer elects in Subsection 1.18(c)(1)(A) of the Adoption Agreement to limit the frequency of such withdrawals. 10.03. WITHDRAWAL OF ROLLOVER CONTRIBUTIONS. A Participant may elect to withdraw, in cash, up to 100 percent of the amount then credited to his Rollover Contributions Account. Such withdrawals may be made at any time. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 42 10.04. AGE 59 1/2 WITHDRAWALS. If so provided by the Employer in Subsection 1.18(b) or the Protected In-Service Withdrawals Addendum to the Adoption Agreement, a Participant who continues in employment as an Employee and who has attained the age of 59 1/2 is permitted to withdraw upon request all or any portion of the Accounts specified by the Employer in Subsection 1.18(b) or the Protected In-Service Withdrawals Addendum to the Adoption Agreement, as applicable. 10.05. HARDSHIP WITHDRAWALS. If so provided by the Employer in Subsection 1.18(a) of the Adoption Agreement, a Participant who continues in employment as an Employee may apply to the Administrator for a hardship withdrawal of all or any portion of his Deferral Contributions Account (excluding any earnings thereon accrued after the later of December 31, 1988 or the last day of the last Plan Year ending before July 1, 1989) and, if so provided by the Employer in Subsection 1.18(d)(2), such other Accounts as may be specified in Subsection (c) of the Protected In-Service Withdrawals Addendum to the Adoption Agreement. The minimum amount that a Participant may withdraw because of hardship is $500. For purposes of this Section 10.05, a withdrawal is made on account of hardship if made on account of an immediate and heavy financial need of the Participant where such Participant lacks other available resources. Determinations with respect to hardship shall be made by the Administrator and shall be conclusive for purposes of the Plan, and shall be based on the following special rules: (a) The following are the only financial needs considered immediate and heavy: (1) expenses incurred or necessary for medical care (within the meaning of Code Section 213(d)) of the Participant, the Participant's spouse, children, or dependents; (2) the purchase (excluding mortgage payments) of a principal residence for the Participant; (3) payment of tuition, related educational fees, and room and board for the next 12 months of post-secondary education for the Participant, the Participant's spouse, children or dependents; (4) the need to prevent the eviction of the Participant from, or a foreclosure on the mortgage of, the Participant's principal residence; or (5) any other financial need determined to be immediate and heavy under rules and regulations issued by the Secretary of the Treasury or his delegate. (b) A distribution shall be considered as necessary to satisfy an immediate and heavy financial need of the Participant only if: (1) The Participant has obtained all distributions, other than the hardship withdrawal, and all nontaxable (at the time of the loan) loans currently available under all plans maintained by the Employer or any Related Employer; The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 43 (2) The Participant suspends Deferral Contributions and Employee Contributions to the Plan for the 12-month period following the date of his hardship withdrawal. The suspension must also apply to all elective contributions and employee contributions to all other qualified plans and non-qualified plans maintained by the Employer or any Related Employer, other than any mandatory employee contribution portion of a defined benefit plan, including stock option, stock purchase, and other similar plans, but not including health and welfare benefit plans (other than the cash or deferred arrangement portion of a cafeteria plan); (3) The withdrawal amount is not in excess of the amount of an immediate and heavy financial need (including amounts necessary to pay any Federal, state or local income taxes or penalties reasonably anticipated to result from the distribution); and (4) The Participant agrees to limit Deferral Contributions (and "elective deferrals", as defined in Subsection 6.01(i)) to the Plan and any other qualified plan maintained by the Employer or a Related Employer for the calendar year immediately following the calendar year in which the Participant received the hardship withdrawal to the applicable limit under Code Section 402(g) for such calendar year less the amount of the Participant's Deferral Contributions (and "elective deferrals") for the calendar year in which the Participant received the hardship withdrawal. 10.06. PRESERVATION OF PRIOR PLAN IN-SERVICE WITHDRAWAL RULES. As indicated by the Employer in Subsection 1.18(d) of the Adoption Agreement, to the extent required under Code Section 411(d)(6), in-service withdrawals that were available under a prior plan shall be available under the Plan. (a) If the Plan is a profit sharing plan, the following provisions shall apply to preserve prior in-service withdrawal provisions. (1) If the Plan is an amendment and restatement of a prior plan or is a transferee plan of a prior plan that provided for in-service withdrawals from a Participant's Matching Employer and/or Nonelective Employer Contributions Accounts of amounts that have been held in such Accounts for a specified period of time, a Participant shall be entitled to withdraw at any time prior to his termination of employment, subject to any restrictions applicable under the prior plan that the Employer elects in Subsection 1.18(d)(1)(A)(i) of the Adoption Agreement to continue under the Plan as amended and restated hereunder (other than any mandatory suspension of contributions restriction), any vested amounts held in such Accounts for the period of time specified by the Employer in Subsection 1.18(d)(1)(A) of the Adoption Agreement. (2) If the Plan is an amendment and restatement of a prior plan or is a transferee plan of a prior plan that provided for in-service withdrawals from a Participant's Matching Employer and/or Nonelective Employer Contributions Accounts by Participants with at least 60 months of participation, a Participant with at least 60 months of participation shall be entitled to withdraw at any time prior to his termination of employment, subject to any restrictions applicable under the prior plan that the Employer elects in Subsection 1.18(d)(1)(B)(i) of the Adoption Agreement to continue under the Plan as amended and restated hereunder (other than any mandatory suspension of contributions restriction), any vested amounts held in such Accounts. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 44 (3) If the Plan is an amendment and restatement of a prior plan or is a transferee plan of a prior plan that provided for in-service withdrawals from a Participant's Matching Employer and/or Nonelective Employer Contributions Accounts under any other circumstances, a Participant who has met any applicable requirements, as set forth in the Protected In-Service Withdrawals Addendum to the Adoption Agreement, shall be entitled to withdraw at any time prior to his termination of employment any vested amounts held in such Accounts, subject to any restrictions applicable under the prior plan that the Employer elects to continue under the Plan as amended and restated hereunder, as set forth in the Protected In-Service Withdrawal Addendum to the Adoption Agreement. (b) If the Plan is a money purchase pension plan that is an amendment and restatement of a prior profit sharing plan or is a transferee plan of a prior profit sharing plan that provided for in-service withdrawals from any portion of a Participant's Account other than his Employee Contributions and/or Rollover Contributions Accounts, a Participant who has met any applicable requirements, as set forth in the Protected in-Service Withdrawals Addendum to the Adoption Agreement, shall be entitled to withdraw at any time prior to his termination of employment his vested interest in amounts attributable to such prior profit sharing accounts, subject to any restrictions applicable under the prior plan that the Employer elects to continue under the Plan as amended and restated hereunder (other than any mandatory suspension of contributions restriction), as set forth in the Protected In-Service Withdrawal Addendum to the Adoption Agreement. 10.07. RESTRICTIONS ON IN-SERVICE WITHDRAWALS. The following restrictions apply to any in-service withdrawal made from a Participant's Account under this Article: (a) If the provisions of Section 14.04 apply to a Participant's Account, the Participant must obtain the consent of his spouse, if any, to obtain an in-service withdrawal. (b) In-service withdrawals shall be made in a lump sum payment, except that if the provisions of Section 14.04 apply to a Participant's Account, the Participant may receive the in-service withdrawal in the form of a "qualified joint and survivor annuity", as defined in Subsection 14.01(a). (c) Notwithstanding any other provision of the Plan to the contrary other than the provisions of Section 11.02, a Participant shall not be permitted to make an in-service withdrawal from his Account of amounts attributable to contributions made to a money purchase pension plan, except employee and/or rollover contributions that were held in a separate account(s) under such plan. 10.08. DISTRIBUTION OF WITHDRAWAL AMOUNTS. The Employer shall confirm the order in which the Permissible Investments shall be liquidated in order that the withdrawal amount can be distributed. ARTICLE 11. RIGHT TO BENEFITS. 11.01. NORMAL OR EARLY RETIREMENT. Each Participant who continues in employment as an Employee until his Normal Retirement Age or, if so provided by the Employer in Subsection 1.13(b) of the Adoption Agreement, Early Retirement Age, shall have The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 45 a vested interest in his Account of 100 percent regardless of any vesting schedule elected in Section 1.15 of the Adoption Agreement. If a Participant retires upon the attainment of Normal or Early Retirement Age, such retirement is referred to as a normal retirement. 11.02. LATE RETIREMENT. If a Participant continues in employment as an Employee after his Normal Retirement Age, he shall continue to have a 100 percent vested interest in his Account and shall continue to participate in the Plan until the date he establishes with the Employer for his late retirement. Until he retires, he has a continuing election to receive all or any portion of his Account. 11.03. DISABILITY RETIREMENT. If so provided by the Employer in Subsection 1.13(c) of the Adoption Agreement, a Participant who becomes disabled while employed as an Employee shall have a 100 percent vested interest in his Account regardless of any vesting schedule elected in Section 1.15 of the Adoption Agreement. An Employee is considered disabled if he satisfies any of the requirements for disability retirement selected by the Employer in Section 1.14 of the Adoption Agreement and terminates his employment with the Employer. Such termination of employment is referred to as a disability retirement. Determinations with respect to disability shall be made by the Administrator. 11.04. DEATH. If a Participant who is employed as an Employee dies, his Account shall become 100 percent vested and his designated Beneficiary shall be entitled to receive the balance of his Account, plus any amounts thereafter credited to his Account. If a Participant whose employment as an Employee has terminated dies, his designated Beneficiary shall be entitled to receive the Participant's vested interest in his Account. A copy of the death notice or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the Participant's Account, such amount shall be paid to his surviving spouse or, if none, to his estate (such spouse or estate shall be deemed to be the Beneficiary for purposes of the Plan). If a Beneficiary dies after benefits to such Beneficiary have commenced, but before they have been completed, and, in the opinion of the Administrator, no person has been designated to receive such remaining benefits, then such benefits shall be paid in a lump sum to the deceased Beneficiary's estate. Subject to the requirements of Section 14.04, a Participant may designate a Beneficiary, or change any prior designation of Beneficiary by giving notice to the Administrator on a form designated by the Administrator. If more than one person is designated as the Beneficiary, their respective interests shall be as indicated on the designation form. In the case of a married Participant, the Participant's spouse shall be deemed to be the designated Beneficiary unless the Participant's spouse has consented to another designation in the manner described in Section 14.06. 11.05. OTHER TERMINATION OF EMPLOYMENT. If a Participant terminates his employment with the Employer and all Related Employers, if any, for any reason other than death or normal, late, or disability retirement, he shall be entitled to a termination benefit equal to the sum of (a) his vested interest in the balance of his Matching Employer and/or Nonelective Employer Contributions Account(s), other than the balance attributable to safe harbor Matching Employer and/or safe harbor Nonelective Employer Contributions elected by the Employer in Subsection 1.10(a)(3) or 1.11(a)(3) of the Adoption Agreement, such vested The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 46 interest to be determined in accordance with the vesting schedule(s) selected by the Employer in Section 1.15 of the Adoption Agreement, and (b) the balance of his Deferral, Employee, Qualified Nonelective Employer, Qualified Matching Employer, and Rollover Contributions Accounts, and the balance of his Matching Employer or Nonelective Employer Contributions Account that is attributable to safe harbor Matching Employer and/or safe harbor Nonelective Employer Contributions. 11.06. APPLICATION FOR DISTRIBUTION. Unless a Participant's Account is cashed out as provided in Section 13.02, a Participant (or his Beneficiary, if the Participant has died) who is entitled to a distribution hereunder must make application, in a form acceptable to the Administrator, for a distribution from his Account. No distribution shall be made hereunder without proper application therefore, except as otherwise provided in Section 13.02. 11.07. APPLICATION OF VESTING SCHEDULE FOLLOWING PARTIAL DISTRIBUTION. If a distribution from a Participant's Matching Employer and/or Nonelective Employer Contributions Account has been made to him at a time when he is less than 100 percent vested in such Account balance, the vesting schedule(s) in Section 1.15 of the Adoption Agreement shall thereafter apply only to the balance of his Account attributable to Matching Employer and/or Nonelective Employer Contributions allocated after such distribution. The balance of the Account from which such distribution was made shall be transferred to a separate account immediately following such distribution. At any relevant time prior to a forfeiture of any portion thereof under Section 11.08, a Participant's vested interest in such separate account shall be equal to P(AB + (RxD))-(RxD), where P is the Participant's vested interest at the relevant time determined under Section 11.05; AB is the account balance of the separate account at the relevant time; D is the amount of the distribution; and R is the ratio of the account balance at the relevant time to the account balance after distribution. Following a forfeiture of any portion of such separate account under Section 11.08 below, any balance in the Participant's separate account shall remain 100 percent vested. 11.08. FORFEITURES. If a Participant terminates his employment with the Employer and all Related Employers before he is 100 percent vested in his Matching Employer and/or Nonelective Employer Contributions Accounts, the non-vested portion of his Account (including any amounts credited after his termination of employment) shall be forfeited by him as follows: (a) If the Inactive Participant elects to receive distribution of his entire vested interest in his Account, the non-vested portion of his Account shall be forfeited upon the complete distribution of such vested interest, subject to the possibility of reinstatement as provided in Section 11.10. For purposes of this Subsection, if the value of an Employee's vested interest in his Account balance is zero, the Employee shall be deemed to have received a distribution of his vested interest immediately following termination of employment. (b) If the Inactive Participant elects not to receive distribution of his vested interest in his Account following his termination of employment, the non-vested portion of his Account shall be forfeited after the Participant has incurred five consecutive Breaks in Vesting Service. No forfeitures shall occur solely as a result of a Participant's withdrawal of Employee Contributions. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 47 11.09. APPLICATION OF FORFEITURES. Any forfeitures occurring during a Plan Year shall be applied to reduce the contributions of the Employer, unless the Employer has elected in Subsection 1.15(d)(3) of the Adoption Agreement that such remaining forfeitures shall be allocated among the Accounts of Active Participants who are eligible to receive allocations of Nonelective Employer Contributions for the Plan Year in which the forfeiture occurs. Forfeitures that are allocated among the Accounts of eligible Active Participants shall be allocated in the same manner as Nonelective Employer Contributions. If the plan is a money purchase pension plan or the Employer has elected a fixed Nonelective Employer Contribution rate rather than a discretionary rate, forfeitures shall incrementally increase the amount allocated to the Accounts of eligible Active Participants. Notwithstanding any other provision of the Plan to the contrary, forfeitures may first be used to pay administrative expenses under the Plan, as directed by the Employer. To the extent that forfeitures are not used to reduce administrative expenses under the Plan, as directed by the Employer, forfeitures will be applied in accordance with this Section 11.09. Pending application, forfeitures shall be held in the Permissible Investment selected by the Employer for such purpose or, absent Employer selection, in the most conservative Permissible Investment designated by the Employer in the Service Agreement. Notwithstanding any other provision of the Plan to the contrary, in no event may forfeitures be used to reduce the Employer's obligation to remit to the Trust (or other appropriate Plan funding vehicle) loan repayments made pursuant to Article 9, Deferral Contributions or Employee Contributions. 11.10. REINSTATEMENT OF FORFEITURES. If a Participant forfeits any portion of his Account under Subsection 11.08(a) because of distribution of his complete vested interest in his Account, but again becomes an Employee, then the amount so forfeited, without any adjustment for the earnings, expenses, losses, or gains of the assets credited to his Account since the date forfeited, shall be recredited to his Account (or to a separate account as described in Section 11.07, if applicable) if he meets all of the following requirements: (a) he again becomes an Employee before the date he incurs five-consecutive Breaks in Vesting Service following the date complete distribution of his vested interest was made to him; and (b) he repays to the Plan the amount previously distributed to him, without interest, within five years of his Reemployment Date. If an Employee is deemed to have received distribution of his complete vested interest as provided in Section 11.08, the Employee shall be deemed to have repaid such distribution on his Reemployment Date. Upon such an actual or deemed repayment, the provisions of the Plan (including Section 11.07) shall thereafter apply as if no forfeiture had occurred. The amount to be recredited pursuant to this paragraph shall be derived first from the forfeitures, if any, which as of the date of recrediting have yet to be applied as provided in Section 11.09 and, to the extent such forfeitures are insufficient, from a special contribution to be made by the Employer. 11.11. ADJUSTMENT FOR INVESTMENT EXPERIENCE. If any distribution under this Article 11 is not made in a single payment, the amount retained by the Trustee after the distribution shall be subject to adjustment until distributed to reflect the income and gain or loss on the investments in which such amount is The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 48 invested and any expenses properly charged under the Plan and Trust to such amounts. ARTICLE 12. DISTRIBUTIONS. 12.01. RESTRICTIONS ON DISTRIBUTIONS. A Participant, or his Beneficiary, may not receive a distribution from his Deferral Contributions, Qualified Nonelective Employer Contributions, Qualified Matching Employer Contributions, safe harbor Matching Employer Contributions or safe harbor Nonelective Employer Contributions Accounts earlier than upon the Participant's separation from service with the Employer and all Related Employers, death, or disability, except as otherwise provided in Article 10, Section 11.02 or Section 12.04. Notwithstanding the foregoing, amounts may also be distributed from such Accounts, in the form of a lump sum only, upon (a) Termination of the Plan without establishment of another defined contribution plan, other than an employee stock ownership plan (as defined in Code Section 4975(e) or 409) or a simplified employee pension plan as defined in Code Section 408(k). (b) The disposition by a corporation to an unrelated corporation of substantially all of the assets (within the meaning of Code Section 409(d)(2)) used in a trade or business of such corporation if such corporation continues to maintain the Plan after the disposition, but only with respect to former Employees who continue employment with the corporation acquiring such assets. (c) The disposition by a corporation to an unrelated entity of such corporation's interest in a subsidiary (within the meaning of Code Section 409(d)(3)) if such corporation continues to maintain this Plan, but only with respect to former Employees who continue employment with such subsidiary. 12.02. TIMING OF DISTRIBUTION FOLLOWING RETIREMENT OR TERMINATION OF EMPLOYMENT. Except as otherwise elected by the Employer in Subsection 1.20(b) and provided in the Postponed Distribution Addendum to the Adoption Agreement, the balance of a Participant's vested interest in his Account shall be distributable upon his termination of employment with the Employer and all Related Employers, if any, because of death, normal, early, or disability retirement (as permitted under the Plan), or other termination of employment. Notwithstanding the foregoing, a Participant whose vested interest in his Account exceeds $5,000 as determined under Section 13.02 (or such larger amount as may be specified in Code Section 417(e)(1)) may elect to postpone distribution of his Account until his Required Beginning Date. A Participant who elects to postpone distribution has a continuing election to receive such distribution prior to the date as of which distribution is required, unless such Participant is reemployed as an Employee. 12.03. PARTICIPANT CONSENT TO DISTRIBUTION. If a Participant's vested interest in his Account exceeds $5,000 as determined under Section 13.02 (or such larger amount as may be specified in Code Section 417(e)(1)), no distribution shall be made to the Participant before he reaches his Normal Retirement Age (or age 62, if later), unless the consent of the Participant has been obtained. Such consent shall be made within the 90-day period ending on the Participant's Annuity Starting Date. The consent of the Participant's spouse must also be obtained if the Participant's Account is subject to the provisions of Section 14.04, unless the The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 49 distribution shall be made in the form of a "qualified joint and survivor annuity" as defined in Section 14.01. A spouse's consent to early distribution, if required, must satisfy the requirements of Section 14.06. Neither the consent of the Participant nor the Participant's spouse shall be required to the extent that a distribution is required to satisfy Code Section 401(a)(9) or Code Section 415. In addition, upon termination of the Plan if it does not offer an annuity option (purchased from a commercial provider) and if the Employer or any Related Employer does not maintain another defined contribution plan (other than an employee stock ownership plan as defined in Code Section 4975(e)(7)) the Participant's Account shall, without the Participant's consent, be distributed to the Participant. However, if any Related Employer maintains another defined contribution plan (other than an employee stock ownership plan as defined in Code Section 4975(e)(7)) then the Participant's Account shall be transferred, without the Participant's consent, to the other plan if the Participant does not consent to an immediate distribution. 12.04. REQUIRED COMMENCEMENT OF DISTRIBUTION TO PARTICIPANTS. In no event shall distribution to a Participant commence later than the earlier of the dates described in (a) and (b) below: (a) unless the Participant (and his spouse, if appropriate) elects otherwise, the 60th day after the close of the Plan Year in which occurs the latest of (i) the date on which the Participant attains Normal Retirement Age, or age 65, if earlier, (ii) the date on which the Participant's employment with the Employer and all Related Employers ceases, or (iii) the 10th anniversary of the year in which the Participant commenced participation in the Plan; and (b) the Participant's Required Beginning Date. Notwithstanding the provisions of Subsection 12.04(a) above, the failure of a Participant (and the Participant's spouse, if applicable) to consent to a distribution as required under Section 12.03, shall be deemed to be an election to defer commencement of payment as provided in Subsection 12.04(a) above. 12.05. REQUIRED COMMENCEMENT OF DISTRIBUTION TO BENEFICIARIES. If a Participant dies before his Annuity Starting Date, the Participant's Beneficiary shall receive distribution of the Participant's vested interest in his Account in the form provided under Article 13 or 14, as applicable, beginning as soon as reasonably practicable following the date the Beneficiary's application for distribution is filed with the Administrator. Unless distribution is to be made over the life or over a period certain not greater than the life expectancy of the Beneficiary, distribution of the Participant's entire vested interest shall be made to the Beneficiary no later than the end of the fifth calendar year beginning after the Participant's death. If distribution is to be made over the life or over a period certain no greater than the life expectancy of the Beneficiary, distribution shall commence no later than: (a) If the Beneficiary is not the Participant's spouse, the end of the first calendar year beginning after the Participant's death; or (b) If the Beneficiary is the Participant's spouse, the later of (i) the end of the first calendar year beginning after the Participant's death or (ii) the end of the calendar year in which the Participant would have attained age 70 1/2. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 50 If distribution is to be made to a Participant's spouse, it shall be made available within a reasonable period of time after the Participant's death that is no less favorable than the period of time applicable to other distributions. In the event such spouse dies prior to the date distribution commences, he shall be treated for purposes of this Section 12.05 (other than Subsection 12.05(b) above) as if he were the Participant. Any amount paid to a child of the Participant shall be treated as if it had been paid to the surviving spouse if the amount becomes payable to the surviving spouse when the child reaches the age of majority. If the Participant has not designated a Beneficiary, or the Participant or Beneficiary has not effectively selected a method of distribution, distribution of the Participant's benefit shall be completed by the close of the calendar year in which the fifth anniversary of the death of the Participant occurs. If a Participant dies on or after his Annuity Starting Date, but before his entire vested interest in his Account is distributed, his Beneficiary shall receive distribution of the remainder of the Participant's vested interest in his Account beginning as soon as reasonably practicable following the Participant's date of death in a form that provides for distribution at least as rapidly as under the form in which the Participant was receiving distribution. 12.06. WHEREABOUTS OF PARTICIPANTS AND BENEFICIARIES. The Administrator shall at all times be responsible for determining the whereabouts of each Participant or Beneficiary who may be entitled to benefits under the Plan and shall at all times be responsible for instructing the Trustee in writing as to the current address of each such Participant or Beneficiary. The Trustee shall be entitled to rely on the latest written statement received from the Administrator as to such addresses. The Trustee shall be under no duty to make any distributions under the Plan unless and until it has received written instructions from the Administrator satisfactory to the Trustee containing the name and address of the distributee, the time when the distribution is to occur, and the form which the distribution shall take. Notwithstanding the foregoing, if the Trustee attempts to make a distribution in accordance with the Administrator's instructions but is unable to make such distribution because the whereabouts of the distributee is unknown, the Trustee shall notify the Administrator of such situation and thereafter the Trustee shall be under no duty to make any further distributions to such distributee until it receives further written instructions from the Administrator. If the Administrator is unable after diligent attempts to locate a Participant or Beneficiary who is entitled to a benefit under the Plan, the benefit otherwise payable to such Participant or Beneficiary shall be forfeited and applied as provided in Section 11.09. If a benefit is forfeited because the Administrator determines that the Participant or Beneficiary cannot be found, such benefit shall be reinstated by the Employer if a claim is filed by the Participant or Beneficiary with the Administrator and the Administrator confirms the claim to the Employer. Notwithstanding the above, forfeiture of a Participant's or Beneficiary's benefit may occur only if a distribution could be made to the Participant or Beneficiary without obtaining the Participant's or Beneficiary's consent in accordance with the requirements of Section 1.411(a)-11 of the Treasury Regulations. ARTICLE 13. FORM OF DISTRIBUTION. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 51 13.01. NORMAL FORM OF DISTRIBUTION UNDER PROFIT SHARING PLAN. Unless the Plan is a money purchase pension plan subject to the requirements of Article 14, or a Participant's Account is otherwise subject to the requirements of Section 14.03 or 14.04, distributions to a Participant or to the Beneficiary of the Participant shall be made in a lump sum in cash or, if elected by the Participant (or the Participant's Beneficiary, if applicable) and provided by the Employer in Section 1.19 of the Adoption Agreement, under a systematic withdrawal plan (installments). A Participant (or the Participant's Beneficiary, if applicable) who is receiving distribution under a systematic withdrawal plan may elect to accelerate installment payments or to receive a lump sum distribution of the remainder of his Account balance. Distribution may also be made hereunder in any non-annuity form that is a protected benefit and is provided by the Employer in Section 1.19(d) of the Adoption Agreement. Notwithstanding anything herein to the contrary, if a distribution to a Participant commences on the Participant's Required Beginning Date as determined under Subsection 2.01(ss), the Participant may elect to receive distributions under a systematic withdrawal plan that provides the minimum distributions required under Code Section 401(a)(9). Distributions shall be made in cash, except that distributions may be made in Fund Shares of marketable securities (as defined in Code Section 731(c)(2)), other than Fund Shares of Employer Stock, at the election of the Participant, pursuant to the qualifying rollover of such distribution to a Fidelity Investments(R) individual retirement account. A distribution may be made in the form of Fund Shares of Employer Stock or an in-kind distribution of Plan investments that are not marketable securities only if and to the extent provided in Section 1.19(d) of the Adoption Agreement; provided, however, that notwithstanding any other provision of the Plan to the contrary, the right of a Participant to receive a distribution in the form of Fund Shares of Employer Stock or an in-kind distribution of Plan investments that are not marketable securities applies only to that portion of the Participant's Account invested in such form at the time of distribution. 13.02. CASH OUT OF SMALL ACCOUNTS. Notwithstanding any other provision of the Plan to the contrary, if a Participant's vested interest in his Account is $5,000 (or such larger amount as may be specified in Code Section 417(e)(1)) or less, the Participant's vested interest in his Account shall be distributed in a lump sum as soon as practicable following the Participant's termination of employment because of retirement, disability, death or other termination of employment. For purposes of this Section, until final Treasury Regulations are issued to the contrary, if either (a) a Participant has commenced distribution of his Account under a systematic withdrawal plan or (b) his Account is subject to the provisions of Section 14.04 and the Participant's Annuity Starting Date has occurred with respect to amounts currently held in his Account, the Participant's vested interest in his Account shall be deemed to exceed $5,000 (or such larger amount as may be specified in Code Section 417(e)(1)) if the Participant's vested interest in such amounts exceeded such dollar amount on the Participant's Annuity Starting Date. Notwithstanding the provisions of this Section 13.02, the Employer may determine not to cash out Participant Accounts in accordance with the foregoing provisions, provided that such determination is uniform with respect to all Participants and non-discriminatory. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 52 13.03. MINIMUM DISTRIBUTIONS. This Section applies to distributions under a systematic withdrawal plan that are made on or after a Participant's Required Beginning Date or his date of death, if earlier. This Section shall be interpreted and applied in accordance with the regulations under Code Section 401(a)(9), including the minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2 of the Proposed Treasury Regulations, or any successor regulations of similar import. Distribution must be made in substantially equal annual, or more frequent, installments, in cash, over a period certain which does not extend beyond the life expectancy or joint life expectancies of the Participant and his Beneficiary or, if the Participant dies prior to the commencement of distributions from his Account, the life expectancy of the Participant's Beneficiary. The amount to be distributed for each calendar year for which a minimum distribution is required shall be at least an amount equal to the quotient obtained by dividing the Participant's interest in his Account by the life expectancy of the Participant or Beneficiary or the joint life and last survivor expectancy of the Participant and his Beneficiary, whichever is applicable. The amount to be distributed for each calendar year shall not be less than an amount equal to the quotient obtained by dividing the Participant's interest in his Account by the lesser of (a) the applicable life expectancy, or (b) if a Participant's Beneficiary is not his spouse, the applicable divisor determined under Section 1.401(a)(9)-2, Q&A 4 of the Proposed Treasury Regulations, or any successor regulations of similar import. Distributions after the death of the Participant shall be made using the applicable life expectancy under (a) above, without regard to Section 1.401(a)(9)-2 of such regulations. For purposes of this Section 13.03, life expectancy and joint life and last survivor expectancy shall be computed by use of the expected return multiples in Table V and VI of Section 1.72-9 of the Treasury Regulations. For purposes of this Section 13.03, the life expectancy of a Participant or a Beneficiary who is the Participant's surviving spouse shall be recalculated annually unless the Participant or the Participant's spouse irrevocably elects otherwise prior to the time distributions are required to begin. If not recalculated in accordance with the foregoing, life expectancy shall be calculated using the attained age of the Participant or Beneficiary, whichever is applicable, as of such individual's birth date in the first year for which a minimum distribution is required reduced by one for each elapsed calendar year since the date life expectancy was first calculated. If the Participant dies after distribution of his benefits has begun, distributions to the Participant's Beneficiary shall be made at least as rapidly as under the method of distribution being used as of the date of the Participant's death. A Participant's interest in his Account for purposes of this Section 13.03 shall be determined as of the last valuation date in the calendar year immediately preceding the calendar year for which a minimum distribution is required, increased by the amount of any contributions allocated to, and decreased by any distributions from, such Account after the valuation date. Any distribution for the first year for which a minimum distribution is required made after the close of such year shall be treated as if made prior to the close of such year. The Administrator shall notify the Trustee in writing whenever a distribution is necessary in order to comply with the minimum distribution rules set forth in this Section 13.03. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 53 13.04. DIRECT ROLLOVERS. Notwithstanding any other provision of the Plan to the contrary, a "distributee" may elect, at the time and in the manner prescribed by the Administrator, to have any portion or all of an "eligible rollover distribution" paid directly to an "eligible retirement plan" specified by the "distributee" in a direct rollover; provided, however, that this provision shall not apply if the total "eligible rollover distribution" that the "distributee" is reasonably expected to receive for the calendar year is less than $200 and that a "distributee" may not elect a direct rollover with respect to a portion of an "eligible rollover distribution" if such portion totals less than $500. For purposes of this Section 13.04, the following definitions shall apply: (a) "Distributee" means a Participant , the Participant's surviving spouse, and the Participant's spouse or former spouse who is the alternate payee under a qualified domestic relations order, who is entitled to receive a distribution from the Participant's vested interest in his Account. (b) "Eligible retirement plan" means an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 401(a), that accepts "eligible rollover distributions". However, in the case of an "eligible rollover distribution" to a surviving spouse, an "eligible retirement plan" means an individual retirement account or individual retirement annuity. (c) "Eligible rollover distribution" means any distribution of all or any portion of the balance to the credit of the "distributee", except that an "eligible rollover distribution" does not include the following: (1) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the "distributee" or the joint lives (or joint life expectancies) of the "distributee" and the "distributee's" designated beneficiary, or for a specified period of ten years or more; (2) any distribution to the extent such distribution is required under Code Section 401(a)(9); (3) the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); (4) any hardship withdrawal of Deferral Contributions made in accordance with the provisions of Section 10.05 or the Protected In-Service Withdrawals Addendum to the Adoption Agreement. 13.05. NOTICE REGARDING TIMING AND FORM OF DISTRIBUTION. Within the period beginning 90 days before a Participant's Annuity Starting Date and ending 30 days before such date, the Administrator shall provide such Participant with written notice containing a general description of the material features and an explanation of the relative values of the forms of benefit available under the Plan and informing the Participant of his right to defer receipt of the distribution until his Required Beginning Date and his right to make a direct rollover. Distribution may commence fewer than 30 days after such notice is given, provided that: The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 54 (a) the Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option); (b) the Participant, after receiving the notice, affirmatively elects a distribution, with his spouse's written consent, if necessary; (c) if the Participant's Account is subject to the requirements of Section 14.04, the following additional requirements apply: (1) the Participant is permitted to revoke his affirmative distribution election at any time prior to the later of (A) his Annuity Starting Date or (B) the expiration of the seven-day period beginning the day after such notice is provided to him; and (2) distribution does not begin to such Participant until such revocation period ends. 13.06. DETERMINATION OF METHOD OF DISTRIBUTION. Subject to Section 13.02, the Participant shall determine the method of distribution of benefits to himself and may determine the method of distribution to his Beneficiary. Such determination shall be made prior to the time benefits become payable under the Plan. If the Participant does not determine the method of distribution to his Beneficiary or if the Participant permits his Beneficiary to override his determination, the Beneficiary, in the event of the Participant's death, shall determine the method of distribution of benefits to himself as if he were the Participant. A determination by the Beneficiary must be made no later than the close of the calendar year in which distribution would be required to begin under Section 12.05 or, if earlier, the close of the calendar year in which the fifth anniversary of the death of the Participant occurs. 13.07. NOTICE TO TRUSTEE. The Administrator shall notify the Trustee in any medium acceptable to the Trustee, which may be specified in the Service Agreement, whenever any Participant or Beneficiary is entitled to receive benefits under the Plan. The Administrator's notice shall indicate the form of payment of benefits that such Participant or Beneficiary shall receive, (in the case of distributions to a Participant) the name of any designated Beneficiary or Beneficiaries, and such other information as the Trustee shall require. ARTICLE 14. SUPERSEDING ANNUITY DISTRIBUTION PROVISIONS. 14.01. SPECIAL DEFINITIONS. For purposes of this Article, the following special definitions shall apply: (a) "QUALIFIED JOINT AND SURVIVOR ANNUITY" means (1) if the Participant is not married on his Annuity Starting Date, an immediate annuity payable for the life of the Participant or (2) if the Participant is married on his Annuity Starting Date, an immediate annuity for the life of the Participant with a survivor annuity for the life of the Participant's spouse (to whom the Participant was married on the Annuity Starting Date) which is equal to at least 50 percent of the amount of the annuity which is payable during the joint lives of the Participant and such spouse, provided that the survivor annuity shall not be payable to a Participant's spouse if such spouse is not The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 55 the same spouse to whom the Participant was married on his Annuity Starting Date. (b) "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY" means an annuity purchased with at least 50 percent of a Participant's vested interest in his Account that is payable for the life of a Participant's surviving spouse. The Employer shall specify that portion of a Participant's vested interest in his Account that is to be used to purchase the "qualified preretirement survivor annuity" in Section 1.19 of the Adoption Agreement. 14.02. APPLICABILITY. The provisions of this Article shall apply to a Participant's Account if: (a) the Plan is a money purchase pension plan; (b) the Plan is an amendment and restatement of a plan that provided an annuity form of payment and such form of payment has not been eliminated pursuant to Subsection 1.19(e) and the Forms of Payment Addendum to the Adoption Agreement; (c) the Participant's Account contains assets attributable to amounts directly or indirectly transferred from a plan that provided an annuity form of payment and such form of payment has not been eliminated pursuant to Subsection 1.19(e) and the Forms of Payment Addendum to the Adoption Agreement. 14.03. ANNUITY FORM OF PAYMENT. To the extent provided in Section 1.19 of the Adoption Agreement, a Participant may elect distributions made in whole or in part in the form of an annuity contract. Any annuity contract distributed under the Plan shall be subject to the provisions of this Section 14.03 and, to the extent provided therein, Sections 14.04 through 14.09. (a) At the direction of the Administrator, the Trustee shall purchase the annuity contract on behalf of a Participant or Beneficiary from an insurance company. Such annuity contract shall be nontransferable. (b) The terms of the annuity contract shall comply with the requirements of the Plan and distributions under such contract shall be made in accordance with Code Section 401(a)(9) and the regulations thereunder. (c) The annuity contract may provide for payment over the life of the Participant and, upon the death of the Participant, may provide a survivor annuity continuing for the life of the Participant's designated Beneficiary. Such an annuity may provide for an annuity certain feature for a period not exceeding the life expectancy of the Participant or, if the annuity is payable to the Participant and a designated Beneficiary, the joint life and last survivor expectancy of the Participant and such Beneficiary. If the Participant dies prior to his Annuity Starting Date, the annuity contract distributed to the Participant's Beneficiary may provide for payment over the life of the Beneficiary, and may provide for an annuity certain feature for a period not exceeding the life expectancy of the Beneficiary. The types of annuity contracts provided under the Plan shall be limited to the types of annuities described in Section 1.19 and the Forms of Payment Addendum to the Adoption Agreement. (d) The annuity contract must provide for nonincreasing payments. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 56 14.04. "QUALIFIED JOINT AND SURVIVOR ANNUITY" AND "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY" REQUIREMENTS. The requirements of this Section 14.04 apply to a Participant's Account if: (a) the Plan is a money purchase pension plan; (b) the Plan is a profit sharing plan and the Employer has selected distribution in the form of a life annuity as the normal form of distribution with respect to such Participant's Account in Subsection 1.19(c)(2)(B) of the Adoption Agreement; or (c) the Plan is a profit sharing plan and the Employer has specified distribution in the form of a life annuity as the normal form of distribution in Subsection (c)(2)(B) of the Forms of Payment Addendum to the Adoption Agreement and the Participant's Annuity Starting Date occurs prior to the date specified in Subsection (c)(4) of the Forms of Payment Addendum to the Adoption Agreement; (d) the Participant is permitted to elect and has elected distribution in the form of an annuity contract payable over the life of the Participant. If a Participant's Account is subject to the requirements of this Section 14.04, distribution shall be made to the Participant in the form of a "qualified joint and survivor annuity" (with a survivor annuity in the percentage amount specified by the Employer in Subsection 1.19 of the Adoption Agreement), unless the Participant waives the "qualified joint and survivor annuity" as provided in Section 14.05. If the Participant dies prior to his Annuity Starting Date, distribution shall be made to the Participant's surviving spouse, if any, in the form of a "qualified preretirement survivor annuity", unless the Participant waives the "qualified preretirement survivor annuity" as provided in Section 14.05, or the Participant's surviving spouse elects in writing to receive distribution in one of the other forms of payment provided under the Plan. If the Employer has specified in Section 1.19 of the Adoption Agreement that less than 100 percent of a Participant's Account shall be used to purchase the "qualified preretirement survivor annuity", distribution of the balance of the Participant's vested interest in his Account that is not used to purchase the "qualified preretirement survivor annuity" shall be distributed to the Participant's designated Beneficiary in accordance with the provisions of Sections 11.04 and 12.05. 14.05. WAIVER OF THE "QUALIFIED JOINT AND SURVIVOR ANNUITY" AND/OR "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY" RIGHTS. A Participant may waive the "qualified joint and survivor annuity" described in Section 14.04 and elect another form of distribution permitted under the Plan at any time during the 90-day period ending on his Annuity Starting Date; provided, however, that if the Participant is married, his spouse must consent in writing to such election as provided in Section 14.06. Spousal consent is not required if the Participant elects distribution in the form of a different "qualified joint and survivor annuity". A Participant may waive the "qualified preretirement survivor annuity" and designate a non-spouse Beneficiary at any time during the "applicable election period"; provided, however, that the Participant's spouse must consent in writing to such election as provided in Section 14.06. The "applicable election period" begins on the later of (1) the date the Participant's Account becomes subject to the requirements of Section 14.04 or (2) the first day of the Plan Year in which the Participant attains age 35 or, if he terminates employment prior to such The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 57 date, the date he terminates employment with the Employer and all Related Employers. The "applicable election period" ends on the earlier of the Participant's Annuity Starting Date or the date of the Participant's death. A Participant whose employment has not terminated may elect to waive the "qualified preretirement survivor annuity" prior to the Plan Year in which he attains age 35, provided that any such waiver shall cease to be effective as of the first day of the Plan Year in which the Participant attains age 35. If the Employer has specified in Section 1.19 of the Adoption Agreement that less than 100 percent of a Participant's Account shall be used to purchase the "qualified preretirement survivor annuity", the Participant may designate a non-spouse Beneficiary for the balance of the Participant's vested interest in his Account that is not used to purchase the "qualified preretirement survivor annuity". Such designation shall not be subject to the spousal consent requirements of Section 14.06. 14.06. SPOUSE'S CONSENT TO WAIVER. A spouse's written consent to a Participant's waiver of the "qualified joint and survivor annuity" or "qualified preretirement survivor annuity" forms of distribution must acknowledge the effect of the Participant's election and must be witnessed by a Plan representative or a notary public. In addition, the spouse's written consent must either (a) specify the form of distribution elected instead of the "qualified joint and survivor annuity", if applicable, and that such form may not be changed (except to a "qualified joint and survivor annuity") without written spousal consent and specify any non-spouse Beneficiary designated by the Participant, if applicable, and that such designation may not be changed without written spousal consent or (b) acknowledge that the spouse has the right to limit consent as provided in clause (a) above, but permit the Participant to change the form of distribution elected or the designated Beneficiary without the spouse's further consent. A Participant's spouse shall be deemed to have given written consent to a Participant's waiver if the Participant establishes to the satisfaction of a Plan representative that spousal consent cannot be obtained because the spouse cannot be located or because of other circumstances set forth in Code Section 401(a)(11) and Treasury Regulations issued thereunder. Any written consent given or deemed to have been given by a Participant's spouse hereunder shall be irrevocable and shall be effective only with respect to such spouse and not with respect to any subsequent spouse. A spouse's consent to a Participant's waiver shall be valid only if the applicable notice described in Section 14.07 or 14.08 has been provided to the Participant. 14.07. NOTICE REGARDING "QUALIFIED JOINT AND SURVIVOR ANNUITY". The notice provided to a Participant under Section 14.05 shall include a written explanation of (a) the terms and conditions of the "qualified joint and survivor annuity" provided herein, (b) the Participant's right to make, and the effect of, an election to waive the "qualified joint and survivor annuity", (c) the rights of the Participant's spouse under Section 14.06, and (d) the Participant's right to revoke an election to waive the "qualified joint and survivor annuity" prior to his Annuity Starting Date. 14.08. NOTICE REGARDING "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY". If a Participant's Account is subject to the requirements of Section 14.04, the Administrator shall provide the Participant with a written explanation of the "qualified preretirement survivor annuity" comparable to the written explanation The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 58 provided with respect to the "qualified joint and survivor annuity", as described in Section 14.07. Such explanation shall be furnished within whichever of the following periods ends last: (a) the period beginning with the first day of the Plan Year in which the Participant reaches age 32 and ending with the end of the Plan Year preceding the Plan Year in which he reaches age 35; (b) a reasonable period ending after the Employee becomes an Active Participant; (c) a reasonable period ending after Section 14.04 first becomes applicable to the Participant's Account; or (d) in the case of a Participant who separates from service before age 35, a reasonable period ending after such separation from service. For purposes of the preceding sentence, the two-year period beginning one year prior to the date of the event described in Subsection 14.08(b), (c) or (d) above, whichever is applicable, and ending one year after such date shall be considered reasonable, provided, that in the case of a Participant who separates from service under Subsection 14.08(d) above and subsequently recommences employment with the Employer, the applicable period for such Participant shall be redetermined in accordance with this Section 14.08. 14.09. FORMER SPOUSE. For purposes of this Article, a former spouse of a Participant shall be treated as the spouse or surviving spouse of the Participant, and a current spouse shall not be so treated, to the extent required under a qualified domestic relations order, as defined in Code Section 414(p). ARTICLE 15. TOP-HEAVY PROVISIONS. 15.01. DEFINITIONS. For purposes of this Article, the following special definitions shall apply: (a) "DETERMINATION DATE" means, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, "determination date" means the last day of that Plan Year. (b) "DETERMINATION PERIOD" means the Plan Year containing the "determination date" and the four preceding Plan Years. (c) "KEY EMPLOYEE" means any Employee or former Employee (and the Beneficiary of any such Employee) who at any time during the "determination period" was (1) an officer of the Employer or a Related Employer whose annual Compensation exceeds 50 percent of the dollar limitation under Code Section 415(b)(1)(A), (2) one of the ten Employees whose annual Compensation from the Employer or a Related Employer exceeds the dollar limitation under Code Section 415(c)(1)(A) and who owns (or is considered as owning under Code Section 318) one of the largest interests in the Employer and all Related Employers, (3) a five percent owner of the Employer and all Related Employers, or (4) a one percent owner of the Employer and all Related Employers whose annual Compensation exceeds $150,000. The determination of who is a "key employee" shall be made in accordance with Code Section 416(i)(1) and regulations issued thereunder. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 59 (d) "PERMISSIVE AGGREGATION GROUP" means the "required aggregation group" plus any other qualified plans of the Employer or a Related Employer which, when considered as a group with the "required aggregation group", would continue to satisfy the requirements of Code Sections 401(a)(4) and 410. (e) "REQUIRED AGGREGATION GROUP" means: (1) Each qualified plan of the Employer or Related Employer in which at least one "key employee" participates, or has participated at any time during the "determination period" (regardless of whether the plan has terminated), and (2) any other qualified plan of the Employer or Related Employer which enables a plan described in Subsection 15.01(e)(1) above to meet the requirements of Code Section 401(a)(4) or 410. (f) "TOP-HEAVY PLAN" means a plan in which any of the following conditions exists: (1) the "top-heavy ratio" for the plan exceeds 60 percent and the Plan is not part of any "required aggregation group" or "permissive aggregation group"; (2) the plan is a part of a "required aggregation group" but not part of a "permissive aggregation group" and the "top-heavy ratio" for the "required aggregation group" exceeds 60 percent; or (3) the plan is a part of a "required aggregation group" and a "permissive aggregation group" and the "top-heavy ratio" for both groups exceeds 60 percent. (g) "TOP-HEAVY RATIO" means: (1) With respect to the Plan, or with respect to any "required aggregation group" or "permissive aggregation group" that consists solely of defined contribution plans (including any simplified employee pension, as defined in Code Section 408(k)), a fraction, the numerator of which is the sum of the account balances of all "key employees" under the plans as of the "determination date" (including any part of any account balance distributed during the five-year period ending on the "determination date"), and the denominator of which is the sum of all account balances (including any part of any account balance distributed during the five-year period ending on the "determination date") of all participants under the plans as of the "determination date". Both the numerator and denominator of the "top-heavy ratio" shall be increased, to the extent required by Code Section 416, to reflect any contribution which is due but unpaid as of the "determination date". (2) With respect to any "required aggregation group" or "permissive aggregation group" that includes one or more defined benefit plans which, during the five-year period ending on the "determination date", has covered or could cover an Active Participant in the Plan, a fraction, the numerator of which is the sum of the account balances under the defined contribution plans for all "key employees" and the present value of accrued benefits under the defined benefit plans for all "key employees", The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 60 and the denominator of which is the sum of the account balances under the defined contribution plans for all participants and the present value of accrued benefits under the defined benefit plans for all participants. Both the numerator and denominator of the "top-heavy ratio" shall be increased for any distribution of an account balance or an accrued benefit made during the five-year period ending on the "determination date" and any contribution due but unpaid as of the "determination date". For purposes of Subsections 15.01(g)(1) and (2) above, the value of accounts and the present value of accrued benefits shall be determined as of the most recent "determination date", except as provided in Code Section 416 and the regulations issued thereunder for the first and second plan years of a defined benefit plan. When aggregating plans, the value of accounts and accrued benefits shall be calculated with reference to the "determination dates" that fall within the same calendar year. The present value of accrued benefits shall be determined using the interest rate and mortality table specified in Subsection 1.21(b) of the Adoption Agreement. The accounts and accrued benefits of a Participant who is not a "key employee" but who was a "key employee" in a prior year, or who has not performed services for the Employer or any Related Employer at any time during the five-year period ending on the "determination date", shall be disregarded. The calculation of the "top-heavy ratio", and the extent to which distributions, rollovers, and transfers are taken into account, shall be made in accordance with Code Section 416 and the regulations issued thereunder. Deductible employee contributions shall not be taken into account for purposes of computing the "top-heavy ratio". For purposes of determining if the Plan, or any other plan included in a "required aggregation group" of which the Plan is a part, is a "top-heavy plan", the accrued benefit in a defined benefit plan of an Employee other than a "key employee" shall be determined under the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Employer or a Related Employer, or, if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate of Code Section 411(b)(1)(C). 15.02. APPLICATION. If the Plan is or becomes a "top-heavy plan" in any Plan Year or is automatically deemed to be a "top-heavy plan" in accordance with the Employer's selection in Subsection 1.21(a)(1) of the Adoption Agreement, the provisions of this Article shall apply and shall supersede any conflicting provision in the Plan. 15.03. MINIMUM CONTRIBUTION. Except as otherwise specifically provided in this Section 15.03, the Nonelective Employer Contributions made for the Plan Year on behalf of any Active Participant who is not a "key employee" shall not be less than the lesser of three percent (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement) of such Participant's Compensation for the Plan Year or, in the case where neither the Employer nor any Related Employer maintains a defined benefit plan which uses the Plan to satisfy Code Section 401(a)(4) or 410, the largest percentage of Employer contributions made on behalf of any "key employee" for the Plan Year, expressed as a percentage of the "key employee's" Compensation for the Plan Year, unless the Employer has provided in Subsection 1.21(c) of the Adoption Agreement that the minimum contribution requirement shall be met under the other plan or plans of the Employer. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 61 The minimum contribution required under this Section 15.03 shall be made to the Account of an Active Participant even though, under other Plan provisions, the Active Participant would not otherwise be entitled to receive a contribution, or would have received a lesser contribution for the Plan Year, because (a) the Active Participant failed to complete the Hours of Service requirement selected by the Employer in Subsection 1.10(d) or 1.11(c) of the Adoption Agreement, or (b) the Participant's Compensation was less than a stated amount; provided, however, that no minimum contribution shall be made for a Plan Year to the Account of an Active Participant who is not employed by the Employer or a Related Employer on the last day of the Plan Year. The minimum contribution for the Plan Year made on behalf of each Active Participant who is not a "key employee" and who is a participant in a defined benefit plan maintained by the Employer or a Related Employer shall not be less than five percent of such Participant's Compensation for the Plan Year, unless the Employer has provided in Subsection 1.21(c) of the Adoption Agreement that the minimum contribution requirement shall be met under the other plan or plans of the Employer. That portion of a Participant's Account that is attributable to minimum contributions required under this Section 15.03, to the extent required to be nonforfeitable under Code Section 416(b), may not be forfeited under Code Section 411(a)(3)(B). Notwithstanding any other provision of the Plan to the contrary, for purposes of this Article, Compensation shall include amounts that are not includable in the gross income of the Participant under a salary reduction agreement by reason of the application of Code Section 125, 132(f)(4), 402(e)(3), 402(h), or 403(b). Compensation shall generally be based on the amount actually paid to the Eligible Employee during the Plan Year or during that portion of the Plan Year during which the Eligible Employee is an Active Participant, as elected by the Employer in Subsection 1.05(c) of the Adoption Agreement. 15.04. MODIFICATION OF ALLOCATION PROVISIONS TO MEET MINIMUM CONTRIBUTION REQUIREMENTS. If the Employer elected a discretionary Nonelective Employer Contribution in Subsection 1.11(b) of the Adoption Agreement, the provisions for allocating Nonelective Employer Contributions described in Subsection 5.10(b) shall be modified as provided herein to meet the minimum contribution requirements of Section 15.03. (a) If the Employer selected the non-integrated formula in Subsection 1.11(b)(1) of the Adoption Agreement, Nonelective Employer Contributions shall be allocated as follows: (1) Nonelective Employer Contributions shall be allocated to each eligible Active Participant, as determined under this Section 15.04, who is not a "key employee" in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all such eligible Active Participants for the Plan Year; provided, however that such ratio shall not exceed three percent of a Participant's Compensation for the Plan Year (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement). (2) If any Nonelective Employer Contributions remain after the allocation in Subsection 15.04(a)(1) above, the remaining Nonelective Employer Contributions shall be allocated to each eligible Active The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 62 Participant, as determined under this Section 15.04, who is a "key employee" in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all such eligible Active Participants for the Plan Year; provided, however that such ratio shall not exceed three percent of a Participant's Compensation for the Plan Year (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement). (3) If any Nonelective Employer Contributions remain after the allocation in Subsection 15.04(a)(2) above, the remaining Nonelective Employer Contributions shall be allocated to each eligible Active Participant, as determined under this Section 15.04, in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all such eligible Active Participants for the Plan Year. (b) If the Employer selected the integrated formula in Subsection 1.11(b)(2) of the Adoption Agreement, the "permitted disparity limit", as defined in Subsection 1.11(b)(2) of the Adoption Agreement, shall be reduced by the percentage allocated under Subsection 15.04(b)(1) or (2) below, and the allocation steps in Subsection 5.10(b)(2) shall be preceded by the following steps: (1) Nonelective Employer Contributions shall be allocated to each eligible Active Participant, as determined under this Section 15.04, who is not a "key employee" in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all such eligible Active Participants for the Plan Year; provided, however that such ratio shall not exceed three percent of a Participant's Compensation for the Plan Year (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement). (2) If any Nonelective Employer Contributions remain after the allocation in Subsection 15.04(b)(1) above, the remaining Nonelective Employer Contributions shall be allocated to each eligible Active Participant, as determined under this Section 15.04, who is a "key employee" in the same ratio that the eligible Active Participant's Compensation for the Plan Year bears to the total Compensation of all such eligible Active Participants for the Plan Year; provided, however that such ratio shall not exceed three percent of a Participant's Compensation for the Plan Year (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement). (3) If any Nonelective Employer Contributions remain after the allocation in Subsection 15.04(b)(2) above, the remaining Nonelective Employer Contributions shall be allocated to each eligible Active Participant in the same ratio that the eligible Active Participant's Excess Compensation for the Plan Year bears to the total Excess Compensation of all eligible Participants for the Plan Year; provided, however, that such ratio shall not exceed three percent (or such other percentage selected by the Employer in Subsection 1.21(c) of the Adoption Agreement). 15.05. ADJUSTMENT TO THE LIMITATION ON CONTRIBUTIONS AND BENEFITS. For Limitation Years beginning prior to January 1, 2000, if the Plan is a "top-heavy plan", the number 100 shall be substituted for the number 125 in determining the The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 63 "defined benefit fraction", as defined in Subsection 6.01(f) and the "defined contribution fraction", as defined in Subsection 6.01(g). However, this substitution shall not take effect with respect to the Plan in any Plan Year in which the following requirements are satisfied: (a) The Employer contributions for such Plan Year made on behalf of each eligible Active Participant, as determined under Section 15.03, who is not a "key employee" and who is a participant in a defined benefit plan maintained by the Employer or a Related Employer is not less than 7 """ percent of such eligible Active Participant's Compensation. (b) The "top-heavy ratio" for the Plan (or the "required aggregation group" or "permissible aggregation group", as applicable) does not exceed 90 percent. The substitutions of the number 100 for 125 shall not take effect in any Limitation Year with respect to any Participant for whom no benefits are accrued or contributions made for the Limitation Year. 15.06. ACCELERATED VESTING. For any Plan Year in which the Plan is or is deemed to be a "top-heavy plan" and all Plan Years thereafter, the top-heavy vesting schedule selected by the Employer in Subsection 1.21(d) of the Adoption Agreement shall automatically apply to the Plan. The top-heavy vesting schedule applies to all benefits within the meaning of Code Section 411(a)(7) except those already subject to a vesting schedule which vests at least as rapidly in all cases as the schedule elected in Subsection 1.21(d) of the Adoption Agreement, including benefits accrued before the Plan becomes a "top-heavy plan". Notwithstanding the foregoing provisions of this Section 15.06, the top-heavy vesting schedule does not apply to the Account of any Participant who does not have an Hour of Service after the Plan initially becomes or is deemed to have become a "top-heavy plan" and such Employee's Account attributable to Employer Contributions shall be determined without regard to this Section 15.06. 15.07. EXCLUSION OF COLLECTIVELY-BARGAINED EMPLOYEES. Notwithstanding any other provision of this Article 15, Employees who are included in a unit covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers shall not be included in determining whether or not the Plan is a "top-heavy plan". In addition, such Employees shall not be entitled to a minimum contribution under Section 15.03 or accelerated vesting under Section 15.06, unless otherwise provided in the collective bargaining agreement. ARTICLE 16. AMENDMENT AND TERMINATION. 16.01. AMENDMENTS BY THE EMPLOYER THAT DO NOT AFFECT PROTOTYPE STATUS. The Employer reserves the authority through a board of directors' resolution or similar action, subject to the provisions of Article 1 and Section 16.04, to amend the Plan as provided herein, and such amendment shall not affect the status of the Plan as a prototype plan. (a) The Employer may amend the Adoption Agreement to make a change or changes in the provisions previously elected by it. Such amendment may be made either by (1) completing an amended Adoption Agreement on which the Employer has indicated the change or changes, or (2) adopting an amendment, executed by the Employer only, in the form provided by the The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 64 Prototype Sponsor, that provides replacement pages to be inserted into the Adoption Agreement, which pages include the change or changes. Any such amendment must be filed with the Trustee. (b) The Employer may make a separate amendment to the Plan as necessary to satisfy Code Section 415 or 416 because of the required aggregation of multiple plans by completely overriding the Basic Plan Document provisions. (c) The Employer may adopt certain model amendments published by the Internal Revenue Service which specifically provide that their adoption shall not cause the Plan to be treated as an individually designed plan. 16.02. AMENDMENTS BY THE EMPLOYER THAT AFFECT PROTOTYPE STATUS. The Employer reserves the authority through a board of directors' resolution or similar action, subject to the provisions of Section 16.04, to amend the Plan in a manner other than that provided in Section 16.01. However, upon making such amendment, including, if the Plan is a money purchase pension plan, a waiver of the minimum funding requirement under Code Section 412(d), the Employer may no longer participate in this prototype plan arrangement and shall be deemed to have an individually designed plan. Following such amendment, the Trustee may transfer the assets of the Trust to the trust forming part of such newly adopted plan upon receipt of sufficient evidence (such as a determination letter or opinion letter from the Internal Revenue Service or an opinion of counsel satisfactory to the Trustee) that such trust shall be a qualified trust under the Code. 16.03. AMENDMENT BY THE MASS SUBMITTER SPONSOR AND THE PROTOTYPE SPONSOR. The Mass Submitter Sponsor may in its discretion amend the mass submitter prototype plan at any time, subject to the provisions of Article 1 and Section 16.04, and provided that the Mass Submitter Sponsor mails a copy of such amendment to each Prototype Sponsor that maintains the prototype plan or a minor modifier of the prototype plan. Each Prototype Sponsor shall provide a copy of such amendment to each Employer adopting its prototype plan at the Employer's last known address as shown on the books maintained by the Prototype Sponsor or its affiliates. The Prototype Sponsor may, in its discretion, amend the Plan or the Adoption Agreement, subject to the provisions of Article 1 and Section 16.04, and provided that such amendment does not change the Plan's status as a word for word adoption of the mass submitter prototype plan or a minor modifier of the mass submitter prototype plan, unless such Prototype Sponsor elects no longer to be a sponsoring organization with respect to the mass submitter prototype plan. The Prototype Sponsor shall provide a copy of such amendment to each Employer adopting its prototype plan at the Employer's last known address as shown on the books maintained by the Prototype Sponsor or its affiliates. 16.04. AMENDMENTS AFFECTING VESTED AND/OR ACCRUED BENEFITS. Except as permitted by Section 16.05, Section 1.19(e) and the Forms of Payment Addendum to the Adoption Agreement, and/or Code Section 411(d)(6) and regulations issued thereunder, no amendment to the Plan shall be effective to the extent that it has the effect of decreasing a Participant's Account or eliminating an optional form of benefit with respect to benefits attributable to service before the amendment. Furthermore, if the vesting schedule of the Plan is amended, the nonforfeitable interest of a Participant in his Account, determined as of the later of the date the amendment is adopted or the date it becomes effective, shall not be less than the Participant's nonforfeitable interest in his Account determined without regard to such amendment. If the Plan is a money purchase pension plan, no amendment to the Plan that provides for a significant reduction in contributions to the Plan shall be made The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 65 unless notice has been furnished to Participants and alternate payees under a qualified domestic relations order as provided in ERISA Section 204(h). If the Plan's vesting schedule is amended because of a change to "top-heavy plan" status, as described in Subsection 15.01(f), the accelerated vesting provisions of Section 15.06 shall continue to apply for all Plan Years thereafter, regardless of whether the Plan is a "top-heavy plan" for such Plan Year. If the Plan's vesting schedule is amended and an Employee's vested interest, as calculated by using the amended vesting schedule, is less in any year than the Employee's vested interest calculated under the Plan's vesting schedule immediately prior to the amendment, the amended vesting schedule shall apply only to Employees hired on or after the effective date of the change in vesting schedule. 16.05. RETROACTIVE AMENDMENTS MADE BY MASS SUBMITTER OR PROTOTYPE SPONSOR. An amendment made by the Mass Submitter Sponsor or Prototype Sponsor in accordance with Section 16.03 may be made effective on a date prior to the first day of the Plan Year in which it is adopted if, in published guidance, the Internal Revenue Service either permits or requires such an amendment to be made to enable the Plan and Trust to satisfy the applicable requirements of the Code and all requirements for the retroactive amendment are satisfied. 16.06. TERMINATION. The Employer has adopted the Plan with the intention and expectation that contributions shall be continued indefinitely. However, said Employer has no obligation or liability whatsoever to maintain the Plan for any length of time and may amend the Plan to discontinue contributions under the Plan or terminate the Plan at any time without any liability hereunder for any such discontinuance or termination. The Employer may terminate the Plan by written notice delivered to the Trustee. 16.07. DISTRIBUTION UPON TERMINATION OF THE PLAN. Upon termination or partial termination of the Plan or complete discontinuance of contributions thereunder, each Participant (including a terminated Participant with respect to amounts not previously forfeited by him) who is affected by such termination or partial termination or discontinuance shall have a vested interest in his Account of 100 percent. Subject to Section 12.01 and Article 14, upon receipt of written instructions from the Administrator, the Trustee shall distribute to each Participant or other person entitled to distribution the balance of the Participant's Account in a single lump sum payment. In the absence of such instructions, the Trustee shall notify the Administrator of such situation and the Trustee shall be under no duty to make any distributions under the Plan until it receives written instructions from the Administrator. Upon the completion of such distributions, the Trust shall terminate, the Trustee shall be relieved from all liability under the Trust, and no Participant or other person shall have any claims thereunder, except as required by applicable law. If distribution is to be made to a Participant or Beneficiary who cannot be located, the Administrator shall give written instructions to the Trustee to (a) escheat the distributable amount to the State or Commonwealth of the distributee's last known address or (b) draw a check in the distributable amount and mail it to the distributee's last known address. In the absence of such instructions, the Trustee shall make distribution to the distributee by drawing a check in the distributable amount and mailing it to the distributee's last known address. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 66 16.08. MERGER OR CONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS. In case of any merger or consolidation of the Plan with, or transfer of assets and liabilities of the Plan to, any other plan, provision must be made so that each Participant would, if the Plan then terminated, receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer if the Plan had then terminated. ARTICLE 17. AMENDMENT AND CONTINUATION OF PRIOR PLAN; TRANSFER OF FUNDS TO OR FROM OTHER QUALIFIED PLANS. 17.01. AMENDMENT AND CONTINUATION OF PRIOR PLAN. In the event the Employer has previously established a plan (the "prior plan") which is a defined contribution plan under the Code and which on the date of adoption of the Plan meets the applicable requirements of Code Section 401(a), the Employer may, in accordance with the provisions of the prior plan, amend and restate the prior plan in the form of the Plan and become the Employer hereunder, subject to the following: (a) Subject to the provisions of the Plan, each individual who was a Participant in the prior plan immediately prior to the effective date of such amendment and restatement shall become a Participant in the Plan. (b) Except as provided in Section 16.04, no election may be made under the vesting provisions of the Adoption Agreement if such election would reduce the benefits of a Participant under the Plan to less than the benefits to which he would have been entitled if he voluntarily separated from the service of the Employer immediately prior to such amendment and restatement. (c) No amendment to the Plan shall decrease a Participant's accrued benefit or eliminate an optional form of benefit, except as permitted under Section 1.19(e) and the Forms of Payment Addendum to the Adoption Agreement. (d) The amounts standing to the credit of a Participant's account immediately prior to such amendment and restatement which represent the amounts properly attributable to (1) contributions by the Participant and (2) contributions by the Employer and forfeitures shall constitute the opening balance of his Account or Accounts under the Plan. (e) Amounts being paid to an Inactive Participant or to a Beneficiary in accordance with the provisions of the prior plan shall continue to be paid in accordance with such provisions. (f) Any election and waiver of the "qualified preretirement survivor annuity", as defined in Section 14.01, in effect after August 23, 1984, under the prior plan immediately before such amendment and restatement shall be deemed a valid election and waiver of Beneficiary under Section 14.04 if such designation satisfies the requirements of Sections 14.05 and 14.06, unless and until the Participant revokes such election and waiver under the Plan. (g) Unless the Employer and the Trustee agree otherwise, all assets of the predecessor trust shall be deemed to be assets of the Trust as of the effective date of such amendment. Such assets shall be invested by the Trustee as soon as reasonably practicable pursuant to Article 8. The Employer agrees to assist the Trustee in any way requested by the Trustee in order to The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 67 facilitate the transfer of assets from the predecessor trust to the Trust Fund. 17.02. TRANSFER OF FUNDS FROM AN EXISTING PLAN. The Employer may from time to time direct the Trustee, in accordance with such rules as the Trustee may establish, to accept cash, allowable Fund Shares or participant loan promissory notes transferred for the benefit of Participants from a trust forming part of another qualified plan under the Code, provided such plan is a defined contribution plan. Such transferred assets shall become assets of the Trust as of the date they are received by the Trustee. Such transferred assets shall be credited to Participants' Accounts in accordance with their respective interests immediately upon receipt by the Trustee. A Participant's interest under the Plan in transferred assets which were fully vested and nonforfeitable under the transferring plan or which were transferred to the Plan in a manner intended to satisfy the requirements of subsection (b) of this Section 17.02 shall be fully vested and nonforfeitable at all times. A Participant's interest under the Plan in transferred assets which were transferred to the Plan in a manner intended to satisfy the requirements of subsection (a) of this Section 17.02 shall be determined in accordance with the terms of the Plan unless the transferor plan's vesting schedule is more favorable. Such transferred assets shall be invested by the Trustee in accordance with the provisions of Subsection 17.01(g) as if such assets were transferred from a prior plan. Except as otherwise provided below, no transfer of assets in accordance with this Section 17.02 may cause a loss of an accrued or optional form of benefit protected by Code Section 411(d)(6). Effective for transfers made on or after January 1, 2002, the terms of the Plan as in effect at the time of the transfer shall apply to the amounts transferred regardless of whether such application would have the effect of eliminating or reducing an optional form of benefit protected by Code Section 411(d)(6) which was previously available with respect to any amount transferred to the Plan pursuant to this Section 17.02, provided that such transfer satisfies the requirements set forth in either (a) or (b): (a)(1) The transfer is conditioned upon a voluntary, fully informed election by the Participant to transfer his entire account balance to the Plan. As an alternative to the transfer, the Participant is offered the opportunity to retain the form of benefit previously available to him (or, if the transferor plan is terminated, to receive any optional form of benefit for which the participant is eligible under the transferor plan as required by Code Section 411(d)(6)); (2) If the defined contribution plan from which the transfer is made is a money purchase pension plan, the Plan is a money purchase plan or, if the defined contribution plan from which the transfer is made includes a qualified cash or deferred arrangement, the Plan includes a cash or deferred arrangement; and (3) The transfer is made either in connection with an asset or stock acquisition, merger or other similar transaction involving a change in employer of the employees of a trade or business (i.e., an acquisition or disposition within the meaning of Section 1.410(b)-2(f)) or in connection with the participant's change in employment status such that the participant is not entitled to additional allocations under the transferor plan. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 68 (b)(1) The transfer satisfies the requirements of subsection (a)(1) of this Section 17.02; (2) The transfer occurs at a time when the Participant is eligible, under the terms of the transferor plan, to receive an immediate distribution of his account; (3) If the transfer occurs on or after January 1, 2002, the transfer occurs at a time when the participant is not eligible to receive an immediate distribution of his entire nonforfeitable account balance in a single sum distribution that would consist entirely of an eligible rollover distribution within the meaning of Code Section 401(a)(31)(C); and (4) The amount transferred, together with the amount of any contemporaneous Code Section 401(a)(31) direct rollover to the Plan, equals the entire nonforfeitable account of the participant whose account is being transferred. It is the Employer's obligation to ensure that all assets of the Plan, other than those maintained in a separate trust or fund pursuant to the provisions of Section 20.10, are transferred to the Trustee. The Trustee shall have no liability for and no duty to inquire into the administration of such transferred assets for periods prior to the transfer. 17.03. ACCEPTANCE OF ASSETS BY TRUSTEE. The Trustee shall not accept assets which are not either in a medium proper for investment under the Plan, as set forth in the Plan and the Service Agreement, or in cash. Such assets shall be accompanied by instructions in writing (or such other medium as may be acceptable to the Trustee) showing separately the respective contributions by the prior employer and by the Participant, and identifying the assets attributable to such contributions. The Trustee shall establish such accounts as may be necessary or appropriate to reflect such contributions under the Plan. The Trustee shall hold such assets for investment in accordance with the provisions of Article 8, and shall in accordance with the written instructions of the Employer make appropriate credits to the Accounts of the Participants for whose benefit assets have been transferred. 17.04. TRANSFER OF ASSETS FROM TRUST. Effective on or after January 1, 2002, the Employer may direct the Trustee to transfer all or a specified portion of the Trust assets to any other plan or plans maintained by the Employer or the employer or employers of an Inactive Participant or Participants, provided that the Trustee has received evidence satisfactory to it that such other plan meets all applicable requirements of the Code, subject to the following: (a) The assets so transferred shall be accompanied by instructions in writing (or such other medium as may be acceptable to the Trustee) from the Employer naming the persons for whose benefit such assets have been transferred, showing separately the respective contributions by the Employer and by each Inactive Participant, if any, and identifying the assets attributable to the various contributions. The Trustee shall not transfer assets hereunder until all applicable filing requirements are met. The Trustee shall have no further liabilities with respect to assets so transferred. (b) A transfer of assets made pursuant to this Section 17.04 may result in the elimination or reduction of an optional form of benefit protected by Code The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 69 Section 411(d)(6), provided that the transfer satisfies the requirements set forth in either (1) or (2): (1)(i) The transfer is conditioned upon a voluntary, fully informed election by the Participant to transfer his entire Account to the other defined contribution plan. As an alternative to the transfer, the Participant is offered the opportunity to retain the form of benefit previously available to him (or, if the Plan is terminated, to receive any optional form of benefit for which the Participant is eligible under the Plan as required by Code Section 411(d)(6)); (ii) If the Plan is a money purchase pension plan, the defined contribution plan to which the transfer is made must be a money purchase pension plan and if the Plan includes a qualified cash or deferred arrangement under Code Section 401(k), the defined contribution plan to which the transfer is made must include a qualified cash or deferred arrangement; and (iii) The transfer is made either in connection with an asset or stock acquisition, merger or other similar transaction involving a change in employer of the employees of a trade or business (i.e., an acquisition or disposition within the meaning of Section 1.410(b)-2(f)) or in connection with the Participant's change in employment status such that the Participant becomes an Inactive Participant. (2)(i) The transfer satisfies the requirements of subsection (1)(i) of this Section 17.04; (ii) The transfer occurs at a time when the Participant is eligible, under the terms of the Plan, to receive an immediate distribution of his benefit; (iii) If the transfer occurs on or after January 1, 2002, the transfer occurs at a time when the Participant is not eligible to receive an immediate distribution of his entire nonforfeitable Account in a single sum distribution that would consist entirely of an eligible rollover distribution within the meaning of Code Section 401(a)(31)(C); (iv) The Participant is fully vested in the transferred amount in the transferee plan; and (v) The amount transferred, together with the amount of any contemporaneous Code Section 401(a)(31) direct rollover to the transferee plan, equals the entire nonforfeitable Account of the Participant whose Account is being transferred. ARTICLE 18. MISCELLANEOUS. 18.01. COMMUNICATION TO PARTICIPANTS. The Plan shall be communicated to all Eligible Employees by the Employer promptly after the Plan is adopted. 18.02. LIMITATION OF RIGHTS. Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 70 the payment of any benefits, shall be construed as giving to any Participant or other person any legal or equitable right against the Employer, Administrator or Trustee, except as provided herein; and in no event shall the terms of employment or service of any Participant be modified or in any way affected hereby. It is a condition of the Plan, and each Participant expressly agrees by his participation herein, that each Participant shall look solely to the assets held in the Trust for the payment of any benefit to which he is entitled under the Plan. 18.03. NONALIENABILITY OF BENEFITS. Except as provided in Code Sections 401(a)(13)(C) and (D) (relating to offsets ordered or required under a criminal conviction involving the Plan, a civil judgment in connection with a violation or alleged violation of fiduciary responsibilities under ERISA, or a settlement agreement between the Participant and the Department of Labor in connection with a violation or alleged violation of fiduciary responsibilities under ERISA), Section 1.401(a)-13(b)(2) of the Treasury Regulations (relating to Federal tax levies), or as otherwise required by law, the benefits provided hereunder shall not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, either voluntarily or involuntarily, and any attempt to cause such benefits to be so subjected shall not be recognized. The preceding sentence shall also apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless such order is determined by the Administrator to be a qualified domestic relations order, as defined in Code Section 414(p), or any domestic relations order entered before January 1, 1985. 18.04. QUALIFIED DOMESTIC RELATIONS ORDERS PROCEDURES. The Administrator must establish reasonable procedures to determine the qualified status of a domestic relations order. Upon receiving a domestic relations order, the Administrator shall promptly notify the Participant and any alternate payee named in the order, in writing, of the receipt of the order and the Plan's procedures for determining the qualified status of the order. Within a reasonable period of time after receiving the domestic relations order, the Administrator must determine the qualified status of the order and must notify the Participant and each alternate payee, in writing, of its determination. The Administrator shall provide such notice by mailing to the individual's address specified in the domestic relations order, or in a manner consistent with the Department of Labor regulations. If any portion of the Participant's Account is payable during the period the Administrator is making its determination of the qualified status of the domestic relations order, the Administrator must make a separate accounting of the amounts payable. If the Administrator determines the order is a qualified domestic relations order within 18 months of the date amounts first are payable following receipt of the order, the Administrator shall direct the Trustee to distribute the payable amounts in accordance with the order. If the Administrator does not make his determination of the qualified status of the order within the 18-month determination period, the Administrator shall direct the Trustee to distribute the payable amounts in the manner the Plan would distribute if the order did not exist and shall apply the order prospectively if the Administrator later determines the order is a qualified domestic relations order. The Trustee shall set up segregated accounts for each alternate payee when properly notified by the Administrator. A domestic relations order shall not fail to be deemed a qualified domestic relations order merely because it requires the distribution or segregation of all or part of a Participant's Account with respect to an alternate payee prior to the Participant's earliest retirement age (as defined in Code Section 414(p)) The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 71 under the Plan. A distribution to an alternate payee prior to the Participant's attainment of the earliest retirement age is available only if (a) the order specifies distribution at that time and (b) if the present value of the alternate payee's benefits under the Plan exceeds $5,000 as determined under Section 13.02 (or such larger amount as may be specified in Code Section 417(e)(1)), and the order requires, and the alternate payee consents to, a distribution occurring prior to the Participant's attainment of earliest retirement age. 18.05. ADDITIONAL RULES FOR PAIRED PLANS. If the Employer has adopted both a money purchase pension plan and a profit sharing plan under this Basic Plan Document which are to be considered paired plans, the elections in Section 1.04 of the Adoption Agreement must be identical with respect to both plans. When the paired plans are "top-heavy plans", as defined in Subsection 15.01(f), or are deemed to be "top-heavy plans", the money purchase pension plan shall provide the minimum contribution required under Section 15.03, unless contributions under the money purchase pension plan are frozen. 18.06. APPLICATION OF PLAN PROVISIONS IN MULTIPLE EMPLOYER PLANS. Notwithstanding any other provision of the Plan to the contrary, if one of the Employers designated in Subsection 1.02(b) of the Adoption Agreement is not a Related Employer, the Prototype Sponsor reserves the right to take any or all of the following actions: (a) treat the Plan as a multiple employer plan; (b) permit the Employer to amend the Plan to exclude the un-Related Employer from participation in the Plan; or (c) treat the Employer as having amended the Plan in the manner described in Section 16.02 such that the Employer may no longer participate in this prototype plan arrangement. For the period, if any, that the Prototype Sponsor elects to treat the Plan as a multiple employer plan, each un-Related Employer shall be treated as a separate Employer for purposes of contributions, application of the "ADP" and "ACP" tests described in Sections 6.03 and 6.06, application of the Code Section 415 limitations described in Section 6.12, top-heavy determinations and application of the top-heavy requirements under Article 15, and application of such other Plan provisions as the Employers determine to be appropriate. For any such period, the Prototype Sponsor shall continue to treat the Employer as participating in this prototype plan arrangement for purposes of Plan administration, notices or other communications in connection with the Plan, and other Plan-related services; provided, however, that if the Employer applies to the Internal Revenue Service for a determination letter, the multiple employer plan shall be filed on the form appropriate for multiple employer plans. The Administrator shall be responsible for administering the Plan as a multiple employer plan. 18.07. VETERANS REEMPLOYMENT RIGHTS. Notwithstanding any other provision of the Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service shall be provided in accordance with Code Section 414(u). The Administrator shall notify the Trustee of any Participant with respect to whom additional contributions are made because of qualified military service. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 72 18.08. FACILITY OF PAYMENT. In the event the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may direct the Trustee to disburse such payments to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under state law for the care and control of such recipient. The receipt by such person or institution of any such payments shall be complete acquittance therefore, and any such payment to the extent thereof, shall discharge the liability of the Trust for the payment of benefits hereunder to such recipient. 18.09. INFORMATION BETWEEN EMPLOYER AND TRUSTEE. The Employer agrees to furnish the Trustee, and the Trustee agrees to furnish the Employer, with such information relating to the Plan and Trust as may be required by the other in order to carry out their respective duties hereunder, including without limitation information required under the Code and any regulations issued or forms adopted by the Treasury Department thereunder or under the provisions of ERISA and any regulations issued or forms adopted by the Department of Labor thereunder. 18.10. EFFECT OF FAILURE TO QUALIFY UNDER CODE. Notwithstanding any other provision contained herein, if the Employer fails to obtain or retain approval of the Plan by the Internal Revenue Service as a qualified Plan under the Code, the Employer may no longer participate in this prototype Plan arrangement and shall be deemed to have an individually designed plan. 18.11. DIRECTIONS, NOTICES AND DISCLOSURE. Any notice or other communication in connection with this Plan shall be deemed delivered in writing if addressed as provided below and if either actually delivered at said address or, in the case of a letter, three business days shall have elapsed after the same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified: (a) If to the Employer or Administrator, to it at the address set forth in the Adoption Agreement, and, if to the Employer, to the attention of the contact specified in Subsection 1.02(a) of the Adoption Agreement; (b) If to the Trustee, to it at the address set forth in Subsection 1.03(a) the Adoption Agreement; or, in each case at such other address as the addressee shall have specified by written notice delivered in accordance with the foregoing to the addressor's then effective notice address. Any direction, notice or other communication provided to the Employer, the Administrator or the Trustee by another party which is stipulated to be in written form under the provisions of this Plan may also be provided in any medium which is permitted under applicable law or regulation. Any written communication or disclosure to Participants required under the provisions of this Plan may be provided in any other medium (electronic, telephone or otherwise) that is permitted under applicable law or regulation. 18.12. GOVERNING LAW. The Plan and the accompanying Adoption Agreement shall be construed, administered and enforced according to ERISA, and to the extent not preempted thereby, the laws of the Commonwealth of Massachusetts. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 73 Nothing contained in Sections 8.02, 19.01 or 19.05 or this Section 18.13 shall be construed in a manner which subjects a governmental plan (as defined in Code Section 414(d)) or a non-electing church plan (as described in Code Section 410(d)) to the fiduciary provisions of Title I of ERISA. ARTICLE 19. PLAN ADMINISTRATION. 19.01. POWERS AND RESPONSIBILITIES OF THE ADMINISTRATOR. The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the requirements of ERISA. In addition to the powers and authorities expressly conferred upon it in the Plan, the Administrator shall have all such powers and authorities as may be necessary to carry out the provisions of the Plan, including the discretionary power and authority to interpret and construe the provisions of the Plan, such interpretation to be final and conclusive on all persons claiming benefits under the Plan; to make benefit determinations; to utilize the correction programs or systems established by the Internal Revenue Service (such as the Employee Plans Compliance and Resolution System) or the Department of Labor; and to resolve any disputes arising under the Plan. The Administrator may, by written instrument, allocate and delegate its fiduciary responsibilities in accordance with ERISA Section 405, including allocation of such responsibilities to an administrative committee formed to administer the Plan. 19.02. NONDISCRIMINATORY EXERCISE OF AUTHORITY. Whenever, in the administration of the Plan, any discretionary action by the Administrator is required, the Administrator shall exercise its authority in a nondiscriminatory manner so that all persons similarly situated shall receive substantially the same treatment. 19.03. CLAIMS AND REVIEW PROCEDURES. Except to the extent that the provisions of any collective-bargaining agreement provide another method of resolving claims for benefits under the Plan, the provisions of this Section 19.03 shall control with respect to the resolution of such claims; provided, however, that the Employer may institute alternative claims procedures that are more restrictive on the Employer and more generous with respect to persons claiming a benefit under the Plan. (a) Claims Procedure. Whenever a request for benefits under the Plan is wholly or partially denied, the Administrator shall notify the person claiming such benefits of its decision in writing. Such notification shall contain (1) specific reasons for the denial of the claim, (2) specific reference to pertinent Plan provisions, (3) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (4) information as to the steps to be taken if the person wishes to submit a request for review. Such notification shall be given within 90 days after the claim is received by the Administrator (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period). If such notification is not given within such period, the claim shall be considered denied as of the last day of such period and such person may request a review of his claim. (b) Review Procedure. Within 60 days after the date on which a person receives a written notice of a denied claim (or, if applicable, within 60 days after the date on which such denial is considered to have occurred), The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 74 such person (or his duly authorized representative) may (1) file a written request with the Administrator for a review of his denied claim and of pertinent documents and (2) submit written issues and comments to the Administrator. The Administrator shall notify such person of its decision in writing. Such notification shall be written in a manner calculated to be understood by such person and shall contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The decision on review shall be made within 60 days after the request for review is received by the Administrator (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period). If the decision on review is not made within such period, the claim shall be considered denied. 19.04. NAMED FIDUCIARY. The Administrator is a "named fiduciary" for purposes of ERISA Section 402(a)(1) and has the powers and responsibilities with respect to the management and operation of the Plan described herein. 19.05. COSTS OF ADMINISTRATION. Unless some or all are paid by the Employer, all reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator and the Trustee in administering the Plan and Trust may be paid from the forfeitures (if any) resulting under Section 11.08, or from the remaining Trust Fund. All such costs and expenses paid from the Trust Fund shall, unless allocable to the Accounts of particular Participants, be charged against the Accounts of all Participants on a pro rata basis or in such other reasonable manner as may be directed by the Employer and accepted by the Trustee. ARTICLE 20. TRUST AGREEMENT. 20.01. ACCEPTANCE OF TRUST RESPONSIBILITIES. By executing the Adoption Agreement, the Employer establishes a trust to hold the assets of the Plan that are invested in Permissible Investments. By executing the Adoption Agreement, the Trustee agrees to accept the rights, duties and responsibilities set forth in this Article. If the Plan is an amendment and restatement of a prior plan, the Trustee shall have no liability for and no duty to inquire into the administration of the assets of the Plan for periods prior to the date such assets are transferred to the Trust. 20.02. ESTABLISHMENT OF TRUST FUND. A trust is hereby established under the Plan. The Trustee shall open and maintain a trust account for the Plan and, as part thereof, Accounts for such individuals as the Employer shall from time to time notify the Trustee are Participants in the Plan. The Trustee shall accept and hold in the Trust Fund such contributions on behalf of Participants as it may receive from time to time from the Employer. The Trust Fund shall be fully invested and reinvested in accordance with the applicable provisions of the Plan in Fund Shares or as otherwise provided in Section 20.10. The Trust is intended to qualify as a domestic trust in accordance with Code Section 7701(a)(30)(E) and any regulations issued thereunder. Accordingly, only United States persons (as defined in Code Section 7701(a)(30) may have the authority to control all substantial decisions regarding the Trust (including decisions to appoint, retain or replace the Trustee), unless the Plan filed a domestic trust election pursuant to Treasury Regulation Section 301.7701-7(f) or The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 75 any subsequent guidance issued by the Internal Revenue Service, or except as otherwise provided in applicable regulation or legislation. 20.03. EXCLUSIVE BENEFIT. The Trustee shall hold the assets of the Trust Fund for the exclusive purpose of providing benefits to Participants and Beneficiaries and defraying the reasonable expenses of administering the Plan. No assets of the Plan shall revert to the Employer except as specifically permitted by the terms of the Plan. 20.04. POWERS OF TRUSTEE. The Trustee shall have no discretion or authority with respect to the investment of the Trust Fund but shall act solely as a directed trustee of the funds contributed to it. In addition to and not in limitation of such powers as the Trustee has by law or under any other provisions of the Plan, the Trustee shall have the following powers, each of which the Trustee exercises solely as directed Trustee in accordance with the written direction of the Employer except to the extent a Plan asset is subject to Participant direction of investment and provided that no such power shall be exercised in any manner inconsistent with the provisions of ERISA: (a) to deal with all or any part of the Trust Fund and to invest all or a part of the Trust Fund in Permissible Investments, without regard to the law of any state regarding proper investment; (b) to transfer to and invest all or any part of the Trust in any collective investment trust which is then maintained by a bank or trust company (or any affiliate) and which is tax-exempt pursuant to Code Section 501(a) and Rev. Rul. 81-100; provided that such collective investment trust is a Permissible Investment; and provided, further, that the instrument establishing such collective investment trust, as amended from time to time, shall govern any investment therein, and is hereby made a part of the Plan and this Trust Agreement to the extent of such investment therein; (c) to retain uninvested such cash as it may deem necessary or advisable, without liability for interest thereon, for the administration of the Trust; (d) to sell, lease, convert, redeem, exchange, or otherwise dispose of all or any part of the assets constituting the Trust Fund; (e) to borrow funds from a bank or other financial institution not affiliated with the Trustee in order to provide sufficient liquidity to process Plan transactions in a timely fashion, provided that the cost of borrowing shall be allocated in a reasonable fashion to the Permissible Investment(s) in need of liquidity; (f) to enforce by suit or otherwise, or to waive, its rights on behalf of the Trust, and to defend claims asserted against it or the Trust, provided that the Trustee is indemnified to its satisfaction against liability and expenses; (g) to employ such agents and counsel as may be reasonably necessary in collecting, managing, administering, investing, distributing and protecting the Trust Fund or the assets thereof and to pay them reasonable compensation; (h) to compromise, adjust and settle any and all claims against or in favor of it or the Trust; The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 76 (i) to oppose, or participate in and consent to the reorganization, merger, consolidation, or readjustment of the finances of any enterprise, to pay assessments and expenses in connection therewith, and to deposit securities under deposit agreements; (j) to apply for or purchase annuity contracts in accordance with Article 14; (k) to hold securities unregistered, or to register them in its own name or in the name of nominees; (l) to appoint custodians to hold investments within the jurisdiction of the district courts of the United States and to deposit securities with stock clearing corporations or depositories or similar organizations; (m) to make, execute, acknowledge and deliver any and all instruments that it deems necessary or appropriate to carry out the powers herein granted; (n) generally to exercise any of the powers of an owner with respect to all or any part of the Trust Fund; and (o) to take all such actions as may be necessary under the Trust Agreement, to the extent consistent with applicable law. The Employer specifically acknowledges and authorizes that affiliates of the Trustee may act as its agent in the performance of ministerial, nonfiduciary duties under the Trust. The expenses and compensation of such agent shall be paid by the Trustee. The Trustee shall provide the Employer with reasonable notice of any claim filed against the Plan or Trust or with regard to any related matter, or of any claim filed by the Trustee on behalf of the Plan or Trust or with regard to any related matter. 20.05. ACCOUNTS. The Trustee shall keep full accounts of all receipts and disbursements and other transactions hereunder. Within 120 days after the close of each Plan Year, within 90 days after termination of the Trust, and at such other times as may be appropriate, the Trustee shall determine the then net fair market value of the Trust Fund as of the close of the Plan Year, as of the termination of the Trust, or as of such other time, whichever is applicable, and shall render to the Employer and Administrator an account of its administration of the Trust during the period since the last such accounting, including all allocations made by it during such period. 20.06. APPROVAL OF ACCOUNTS. To the extent permitted by law, the written approval of any account by the Employer or Administrator shall be final and binding, as to all matters and transactions stated or shown therein, upon the Employer, Administrator, Participants and all persons who then are or thereafter become interested in the Trust. The failure of the Employer or Administrator to notify the Trustee within six months after the receipt of any account of its objection to the account shall, to the extent permitted by law, be the equivalent of written approval. If the Employer or Administrator files any objections within such six month period with respect to any matters or transactions stated or shown in the account, and the Employer or Administrator and the Trustee cannot amicably settle the question raised by such objections, the Trustee shall have the right to have such questions settled by judicial proceedings. Nothing herein contained shall be construed so as to deprive the Trustee of the right to have judicial The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 77 settlement of its accounts. In any proceeding for a judicial settlement of any account or for instructions, the only necessary parties shall be the Trustee, the Employer and the Administrator. 20.07. DISTRIBUTION FROM TRUST FUND. The Trustee shall make such distributions from the Trust Fund as the Employer or Administrator may direct (in writing or such other medium as may be acceptable to the Trustee), consistent with the terms of the Plan and either for the exclusive benefit of Participants or their Beneficiaries, or for the payment of expenses of administering the Plan. 20.08. TRANSFER OF AMOUNTS FROM QUALIFIED PLAN. If amounts are to be transferred to the Plan from another qualified plan or trust under Code Section 401(a), such transfer shall be made in accordance with the provisions of the Plan and with such rules as may be established by the Trustee. The Trustee shall only accept assets which are in a medium proper for investment under this Trust Agreement or in cash, and that are accompanied in a timely manner, as agreed to by the Administrator and the Trustee, by instructions in writing (or such other medium as may be acceptable to the Trustee) showing separately the respective contributions by the prior employer and the transferring Employee, the records relating to such contributions, and identifying the assets attributable to such contributions. The Trustee shall hold such assets for investment in accordance with the provisions of this Trust Agreement. 20.09. TRANSFER OF ASSETS FROM TRUST. Subject to the provisions of the Plan, the Employer may direct the Trustee to transfer all or a specified portion of the Trust assets to any other plan or plans maintained by the Employer or the employer or employers of an Inactive Participant or Participants, provided that the Trustee has received evidence satisfactory to it that such other plan meets all applicable requirements of the Code. The assets so transferred shall be accompanied by written instructions from the Employer naming the persons for whose benefit such assets have been transferred, showing separately the respective contributions by the Employer and by each Participant, if any, and identifying the assets attributable to the various contributions. The Trustee shall have no further liabilities with respect to assets so transferred. 20.10. SEPARATE TRUST OR FUND FOR EXISTING PLAN ASSETS. With the consent of the Trustee, the Employer may maintain a trust or fund (including a group annuity contract) under this prototype plan document separate from the Trust Fund for Plan assets purchased prior to the adoption of this prototype plan document which are not Permissible Investments listed in the Service Agreement. The Trustee shall have no authority and no responsibility for the Plan assets held in such separate trust or fund. The Employer shall be responsible for assuring that such separate trust or fund is maintained pursuant to a separate trust agreement signed by the Employer and the trustee. The duties and responsibilities of the trustee of a separate trust shall be provided by the separate trust agreement, between the Employer and the trustee. Notwithstanding the preceding paragraph, the Trustee or an affiliate of the Trustee may agree in writing to provide ministerial recordkeeping services for guaranteed investment contracts held in the separate trust or fund. The guaranteed investment contract(s) shall be valued as directed by the Employer or the trustee of the separate trust. The trustee of the separate trust (hereafter referred to as "trustee") shall be the owner of any insurance contract purchased prior to the adoption of this prototype plan document. The insurance contract(s) must provide that proceeds The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 78 shall be payable to the trustee; provided, however, that the trustee shall be required to pay over all proceeds of the contract(s) to the Participant's designated Beneficiary in accordance with the distribution provisions of this Plan. A Participant's spouse shall be the designated Beneficiary of the proceeds in all circumstances unless a qualified election has been made in accordance with Article 14. Under no circumstances shall the trust retain any part of the proceeds. In the event of any conflict between the terms of the Plan and the terms of any insurance contract purchased hereunder, the Plan provisions shall control. Any life insurance contracts held in the Trust Fund or in the separate trust are subject to the following limits: (a) Ordinary life - For purposes of these incidental insurance provisions, ordinary life insurance contracts are contracts with both nondecreasing death benefits and nonincreasing premiums. If such contracts are held, less than 1/2 of the aggregate employer contributions allocated to any Participant shall be used to pay the premiums attributable to them. (b) Term and universal life - No more than 1/2 of the aggregate employer contributions allocated to any participant shall be used to pay the premiums on term life insurance contracts, universal life insurance contracts, and all other life insurance contracts which are not ordinary life. (c) Combination - The sum of 1/2 of the ordinary life insurance premiums and all other life insurance premiums shall not exceed 1/2 of the aggregate employer contributions allocated to any Participant. 20.11. SELF-DIRECTED BROKERAGE OPTION. If one of the Permissible Investments under the Plan is the self-directed brokerage option, the Employer hereby directs the Trustee to use Fidelity Brokerage Services LLC, Member NYSE, SIPC or any of the Trustee's affiliates or subsidiaries (collectively, "FBS"), an affiliate of the Trustee, to purchase or sell individual securities for Participant Accounts in accordance with investment directions provided by such Participants. The provision of brokerage services by FBS shall be subject to the following: (a) The Trustee shall provide the Employer with an annual report which summarizes brokerage transactions and transaction-related charges incurred by the Plan. (b) Any successor organization of FBS, through reorganization, consolidation, merger, or otherwise, shall, upon consummation of such transaction, become the successor broker in accordance with the terms of this direction provision. (c) The Trustee and FBS shall continue to rely on this direction provision until notified to the contrary. The Employer reserves the right to terminate this direction upon sixty (60) days written notice to FBS (or its successor) and the Trustee, and such termination shall also have the effect of terminating the self-directed brokerage option for the Plan. (d) The Trustee shall provide the Employer with a list of the types of securities that may not be purchased or held under this self-directed brokerage option. The Trustee shall provide the Employer with administrative procedures and fees governing investment in and withdrawals or exchanges from The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 79 the self-directed brokerage option. The Trustee shall have no liability in the event a Participant purchases a restricted security. (e) Participants may authorize the use of an agent to have limited trading authority over assets in their Accounts invested under the self-directed brokerage option provided that the Participant completes and files with FBS a limited trading authorization and indemnification form in the form prescribed by FBS. (f) FBS shall provide all proxies and other shareholder materials to each Participant with such securities allocated to his or her Account under the self-directed brokerage option. The Participant shall have the authority to direct the exercise of all shareholder rights attributable to the securities allocated to his or her Account and it is intended that all such Participant directions shall be subject to ERISA Section 404(c). The Trustee shall not exercise any such shareholder rights in the absence of a direction from the Participant. (g) Self-directed brokerage accounts held under the Plan are subject to fees as more fully described in the related self-directed brokerage documents provided to the Employer. If there are insufficient funds to cover the self-directed brokerage account trades and expenses, a liquidation may be made to cover the debit balance and, in doing so, the Trustee shall not be deemed to have exercised any discretion. 20.12. EMPLOYER STOCK INVESTMENT OPTION. If one of the Permissible Investments is equity securities issued by the Employer or a Related Employer ("Employer Stock"), such Employer Stock must be publicly traded and "qualifying employer securities" within the meaning of Section 407(d)(5) of ERISA. Plan investments in Employer Stock shall be made via the Employer Stock Investment Fund (the "Stock Fund") which shall consist of either (i) the shares of Employer Stock held for each Participant who participates in the Stock Fund (a "Share Accounting Stock Fund"), or (ii) a combination of shares of Employer Stock and short-term liquid investments, consisting of mutual fund shares or commingled money market pool units as agreed to by the Employer and the Trustee, which are necessary to satisfy the Stock Fund's cash needs for transfers and payments (a "Unitized Stock Fund"). Dividends received by the Stock Fund are reinvested in additional shares of Employer Stock or, in the case of a Unitized Stock Fund, in short-term liquid investments. The determination of whether each Participant's interest in the Stock Fund is administered on a share-accounting or a unitized basis shall be determined by the Employer's election in the Service Agreement. In the case of a Unitized Stock Fund, such units shall represent a proportionate interest in all assets of the Unitized Stock Fund, which includes shares of Employer Stock, short-term investments, and at times, receivables for dividends and/or Employer Stock sold and payables for Employer Stock purchased. A net asset value per unit shall be determined daily for each cash unit outstanding of the Unitized Stock Fund. The return earned by the Unitized Stock Fund shall represent a combination of the dividends paid on the shares of Employer Stock held by the Unitized Stock Fund, gains or losses realized on sales of Employer Stock, appreciation or depreciation in the market price of those shares owned, and interest on the short-term investments held by the Unitized Stock Fund. A target range for the short-term liquid investments shall be maintained for the Unitized Stock Fund. The Named Fiduciary shall, after consultation with the Trustee, establish and communicate to the Trustee in writing such target range and a drift allowance for such short-term liquid investments. Such target range and drift allowance may be changed by the Named Fiduciary, after consultation with the The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 80 Trustee, provided any such change is communicated to the Trustee in writing. The Trustee is responsible for ensuring that the actual short-term liquid investments held in the Unitized Stock Fund fall within the agreed upon target range over time, subject to the Trustee's ability to execute open-market trades in Employer Stock or to otherwise trade with the Employer. Investments in Employer Stock shall be subject to the following limitations: (a) Acquisition Limit. Pursuant to the Plan, the Trust may be invested in Employer Stock to the extent necessary to comply with investment directions under Section 8.02 of the Plan. Notwithstanding the foregoing, effective for Deferral Contributions made for Plan Years beginning on or after January 1, 1999, the portion of a Participant's Deferral Contributions that the Employer may require to be invested in Employer Stock for a Plan Year cannot exceed one percent of such Participant's Compensation for the Plan Year. (b) Fiduciary Duty of Named Fiduciary. The Administrator or any person designated by the Administrator as a named fiduciary under Section 19.01 (the "named fiduciary") shall continuously monitor the suitability under the fiduciary duty rules of ERISA Section 404(a)(1) (as modified by ERISA Section 404(a)(2)) of acquiring and holding Employer Stock. The Trustee shall not be liable for any loss, or by reason of any breach, which arises from the directions of the named fiduciary with respect to the acquisition and holding of Employer Stock, unless it is clear on their face that the actions to be taken under those directions would be prohibited by the foregoing fiduciary duty rules or would be contrary to the terms of the Plan or this Trust Agreement. (c) Execution of Purchases and Sales. Purchases and sales of Employer Stock shall be made on the open market on the date on which the Trustee receives in good order all information and documentation necessary to accurately effect such purchases and sales or (i) if later, in the case of purchases, the date on which the Trustee has received a transfer of the funds necessary to make such purchases, (ii) as otherwise provided in the Service Agreement, or (iii) as provided in Subsection (d) below. Such general rules shall not apply in the following circumstances: (1) If the Trustee is unable to determine the number of shares required to be purchased or sold on such day; (2) If the Trustee is unable to purchase or sell the total number of shares required to be purchased or sold on such day as a result of market conditions; or (3) If the Trustee is prohibited by the Securities and Exchange Commission, the New York Stock Exchange, or any other regulatory body from purchasing or selling any or all of the shares required to be purchased or sold on such day. In the event of the occurrence of the circumstances described in (1), (2), or (3) above, the Trustee shall purchase or sell such shares as soon as possible thereafter and, in the case of a Share Accounting Stock Fund, shall determine the price of such purchases or sales to be the average purchase or sales price of all such shares purchased or sold, respectively. (d) Purchases and Sales from or to Employer. If directed by the Employer in writing prior to the trading date, the Trustee may purchase or sell Employer The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 81 Stock from or to the Employer if the purchase or sale is for adequate consideration (within the meaning of ERISA Section 3(18)) and no commission is charged. If Employer contributions or contributions made by the Employer on behalf of the Participants under the Plan are to be invested in Employer Stock, the Employer may transfer Employer Stock in lieu of cash to the Trust. In such case, the shares of Employer Stock to be transferred to the Trust will be valued at a price that constitutes adequate consideration (within the meaning of ERISA Section 3(18)). (e) Use of Broker to Purchase Employer Stock. The Employer hereby directs the Trustee to use Fidelity Capital Markets, Inc., an affiliate of the Trustee, or any other affiliate or subsidiary of the Trustee (collectively, "Capital Markets"), to provide brokerage services in connection with all market purchases and sales of Employer Stock for the Stock Fund, except in circumstances where the Trustee has determined, in accordance with its standard trading guidelines or pursuant to Employer direction, to seek expedited settlement of trades. The Trustee shall provide the Employer with the commission schedule for such transactions, a copy of Capital Markets' brokerage placement practices, and an annual report which summarizes all securities transaction-related charges incurred by the Plan. The following shall apply as well: (1) Any successor organization of Capital Markets through reorganization, consolidation, merger, or similar transactions, shall, upon consummation of such transaction, become the successor broker in accordance with the terms of this provision. (2) The Trustee shall continue to rely on this Employer direction until notified to the contrary. The Employer reserves the right to terminate this authorization upon sixty (60) days written notice to Capital Markets (or its successor) and the Trustee and the Employer and the Trustee shall decide on a mutually-agreeable alternative procedure for handling brokerage transactions on behalf of the Stock Fund. (f) Securities Law Reports. The named fiduciary shall be responsible for filing all reports required under Federal or state securities laws with respect to the Trust's ownership of Employer Stock; including, without limitation, any reports required under Section 13 or 16 of the Securities Exchange Act of 1934 and shall immediately notify the Trustee in writing of any requirement to stop purchases or sales of Employer Stock pending the filing of any report. The Trustee shall provide to the named fiduciary such information on the Trust's ownership of Employer Stock as the named fiduciary may reasonably request in order to comply with Federal or state securities laws. (g) Voting and Tender Offers. Notwithstanding any other provision of the Trust Agreement the provisions of this Subsection shall govern the voting and tendering of Employer Stock. For purposes of this Subsection, each Participant shall be designated as a named fiduciary under ERISA with respect to shares of Employer Stock that reflect that portion, if any, of the Participant's interest in the Stock Fund not acquired at the direction of the Participant in accordance with ERISA Section 404(c). The Employer, after consultation with the Trustee, shall provide and pay for all printing, mailing, tabulation and other costs associated with the voting and tendering of Employer Stock, except as required by law. The Trustee, after consultation with the Employer, shall prepare the necessary The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 82 documents associated with the voting and tendering of Employer Stock, unless the Employer directs the Trustee not to do so. (1) Voting. (A) When the issuer of the Employer Stock prepares for any annual or special meeting, the Employer shall notify the Trustee thirty (30) days in advance of the intended record date and shall cause a copy of all proxy solicitation materials to be sent to the Trustee. If requested by the Trustee, the Employer shall certify to the Trustee that the aforementioned materials represent the same information that is distributed to shareholders of Employer Stock. Based on these materials the Trustee shall prepare a voting instruction form. At the time of mailing of notice of each annual or special stockholders' meeting of the issuer of the Employer Stock, the Employer shall cause a copy of the notice and all proxy solicitation materials to be sent to each Participant with an interest in Employer Stock held in the Trust, together with the foregoing voting instruction form to be returned to the Trustee or its designee. The form shall show the proportional interest in the number of full and fractional shares of Employer Stock credited to the Participant's Sub-Accounts held in the Stock Fund. The Employer shall provide the Trustee with a copy of any materials provided to the Participants and shall (if the mailing is not handled by the Trustee) notify the Trustee that the materials have been mailed or otherwise sent to Participants. (B) Each Participant with an interest in the Stock Fund shall have the right to direct the Trustee as to the manner in which the Trustee is to vote (including not to vote) that number of shares of Employer Stock that is credited to his Account, if the Plan uses share accounting, or, if accounting is by units of participation, that reflects such Participant's proportional interest in the Stock Fund (both vested and unvested). Directions from a Participant to the Trustee concerning the voting of Employer Stock shall be communicated in writing, or by such other means mutually acceptable to the Trustee and the Employer. These directions shall be held in confidence by the Trustee and shall not be divulged to the Employer, or any officer or employee thereof, or any other person, except to the extent that the consequences of such directions are reflected in reports regularly communicated to any such persons in the ordinary course of the performance of the Trustee's services hereunder. Upon its receipt of the directions, the Trustee shall vote the shares of Employer Stock that reflect the Participant's interest in the Stock Fund as directed by the Participant. The Trustee shall not vote shares of Employer Stock that reflect a Participant's interest in the Stock Fund for which the Trustee has received no direction from the Participant, except as required by law. (2) Tender Offers. (A) Upon commencement of a tender offer for any securities held in the Trust that are Employer Stock, the Employer shall timely notify the Trustee in advance of the intended tender date and shall cause a copy of all materials to be sent to the Trustee. The Employer shall certify to the Trustee that the aforementioned materials represent the same information distributed to shareholders of Employer Stock. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 83 Based on these materials, and after consultation with the Employer, the Trustee shall prepare a tender instruction form and shall provide a copy of all tender materials to be sent to each Participant with an interest in the Stock Fund, together with the foregoing tender instruction form, to be returned to the Trustee or its designee. The tender instruction form shall show the number of full and fractional shares of Employer Stock credited to the Participant's Account, if the Plan uses share accounting, or, if accounting is by units of participation, that reflect the Participant's proportional interest in the Stock Fund (both vested and unvested). The Employer shall notify each Participant with an interest in such Employer Stock of the tender offer and utilize its best efforts to timely distribute or cause to be distributed to the Participant the tender materials and the tender instruction form described herein. The Employer shall provide the Trustee with a copy of any materials provided to the Participants and shall (if the mailing is not handled by the Trustee) notify the Trustee that the materials have been mailed or otherwise sent to Participants. (B) Each Participant with an interest in the Stock Fund shall have the right to direct the Trustee to tender or not to tender some or all of the shares of Employer Stock that are credited to his Account, if the Plan uses share accounting, or, if accounting is by units of participation, that reflect such Participant's proportional interest in the Stock Fund (both vested and unvested). Directions from a Participant to the Trustee concerning the tender of Employer Stock shall be communicated in writing, or by such other means as is agreed upon by the Trustee and the Employer under the preceding paragraph. These directions shall be held in confidence by the Trustee and shall not be divulged to the Employer, or any officer or employee thereof, or any other person, except to the extent that the consequences of such directions are reflected in reports regularly communicated to any such persons in the ordinary course of the performance of the Trustee's services hereunder. The Trustee shall tender or not tender shares of Employer Stock as directed by the Participant. Except as otherwise required by law, the Trustee shall not tender shares of Employer Stock that are credited to a Participant's Account, if the Plan uses share accounting, or, if accounting is by units of participation, that reflect a Participant's proportional interest in the Stock Fund for which the Trustee has received no direction from the Participant. (C) A Participant who has directed the Trustee to tender some or all of the shares of Employer Stock that reflect the Participant's proportional interest in the Stock Fund may, at any time prior to the tender offer withdrawal date, direct the Trustee to withdraw some or all of such tendered shares, and the Trustee shall withdraw the directed number of shares from the tender offer prior to the tender offer withdrawal deadline. A Participant shall not be limited as to the number of directions to tender or withdraw that the Participant may give to the Trustee. (D) A direction by a Participant to the Trustee to tender shares of Employer Stock that reflect the Participant's proportional interest in the Stock Fund shall not be considered a written election under the Plan by the Participant to withdraw, or have distributed, any or The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 84 all of his withdrawable shares. If the Plan uses share accounting, the Trustee shall credit to the Participant's Account the proceeds received by the Trustee in exchange for the shares of Employer Stock tendered from the Participant's Account. If accounting is by units of participation, the Trustee shall credit to each proportional interest of the Participant from which the tendered shares were taken the proceeds received by the Trustee in exchange for the shares of Employer Stock tendered from that interest. Pending receipt of direction (through the Administrator) from the Participant or the named fiduciary, as provided in the Plan, as to which of the remaining Permissible Investments the proceeds should be invested in, the Trustee shall invest the proceeds in the Permissible Investment specified for such purposes in the Service Agreement or, if no such Permissible Investment has been specified, the most conservative Permissible Investment designated by the Employer in the Service Agreement. (h) Shares Credited. If accounting with respect to the Stock Fund is by units of participation, then for all purposes of this Section 20.12, the number of shares of Employer Stock deemed "reflected" in a Participant's proportional interest shall be determined as of the last preceding valuation date. The trade date is the date the transaction is valued. (i) General. With respect to all rights other than the right to vote, the right to tender, and the right to withdraw shares previously tendered, in the case of Employer Stock credited to a Participant's Account or proportional interest in the Stock Fund, the Trustee shall follow the directions of the Participant and if no such directions are received, the directions of the named fiduciary. The Trustee shall have no duty to solicit directions from Participants. (j) Conversion. All provisions in this Section 20.12 shall also apply to any securities received as a result of a conversion to Employer Stock. 20.13. VOTING; DELIVERY OF INFORMATION. The Trustee shall deliver, or cause to be executed and delivered, to the Employer or Administrator all notices, prospectuses, financial statements, proxies and proxy soliciting materials received by the Trustee relating to securities held by the Trust or, if applicable, deliver these materials to the appropriate Participant or the Beneficiary of a deceased Participant. The Trustee shall not vote any securities held by the Trust except in accordance with the instructions of the Employer, Participant, or the Beneficiary of the Participant if the Participant is deceased; provided, however, that the Trustee may, in the absence of instructions, vote "present" for the sole purpose of allowing such shares to be counted for establishment of a quorum at a shareholders' meeting. The Trustee shall have no duty to solicit instructions from Participants, Beneficiaries, or the Employer. 20.14. COMPENSATION AND EXPENSES OF TRUSTEE. The Trustee's fee for performing its duties hereunder shall be such reasonable amounts as the Trustee may from time to time specify in the Service Agreement or any other written agreement with the Employer. Such fee, any taxes of any kind which may be levied or assessed upon or with respect to the Trust Fund, and any and all expenses, including without limitation legal fees and expenses of administrative and judicial proceedings, reasonably incurred by the Trustee in connection with its duties and responsibilities hereunder shall, unless some or all have been paid by said Employer, be paid either from forfeitures resulting under Section 11.08, or from The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 85 the remaining Trust Fund and shall, unless allocable to the Accounts of particular Participants, be charged against the respective Accounts of all Participants, in such reasonable manner as the Trustee may determine. 20.15. RELIANCE BY TRUSTEE ON OTHER PERSONS. The Trustee may rely upon and act upon any writing from any person authorized by the Employer or the Administrator pursuant to the Service Agreement or any other written direction to give instructions concerning the Plan and may conclusively rely upon and be protected in acting upon any written order from the Employer or the Administrator or upon any other notice, request, consent, certificate, or other instructions or paper reasonably believed by it to have been executed by a duly authorized person, so long as it acts in good faith in taking or omitting to take any such action. The Trustee need not inquire as to the basis in fact of any statement in writing received from the Employer or the Administrator. The Trustee shall be entitled to rely on the latest certificate it has received from the Employer or the Administrator as to any person or persons authorized to act for the Employer or the Administrator hereunder and to sign on behalf of the Employer or the Administrator any directions or instructions, until it receives from the Employer or the Administrator written notice that such authority has been revoked. Notwithstanding any provision contained herein, the Trustee shall be under no duty to take any action with respect to any Participant's Account (other than as specified herein) unless and until the Employer or the Administrator furnishes the Trustee with written instructions on a form acceptable to the Trustee, and the Trustee agrees thereto in writing. The Trustee shall not be liable for any action taken pursuant to the Employer's or the Administrator's written instructions (nor for the collection of contributions under the Plan, nor the purpose or propriety of any distribution made thereunder). 20.16. INDEMNIFICATION BY EMPLOYER. The Employer shall indemnify and save harmless the Trustee, and all affiliates, employees, agents and sub-contractors of the Trustee, from and against any and all liability or expense (including reasonable attorneys' fees) to which the Trustee, or such other individuals or entities, may be subjected by reason of any act or conduct being taken in the performance of any Plan-related duties, including those described in this Trust Agreement and the Service Agreement, unless such liability or expense results from the Trustee's, or such other individuals' or entities', negligence or willful misconduct. 20.17. CONSULTATION BY TRUSTEE WITH COUNSEL. The Trustee may consult with legal counsel (who may be but need not be counsel for the Employer or the Administrator) concerning any question which may arise with respect to its rights and duties under the Plan and Trust, and the opinion of such counsel shall, to the extent permitted by law, be full and complete protection in respect of any action taken or omitted by the Trustee hereunder in good faith and in accordance with the opinion of such counsel. 20.18. PERSONS DEALING WITH THE TRUSTEE. No person dealing with the Trustee shall be bound to see to the application of any money or property paid or delivered to the Trustee or to inquire into the validity or propriety of any transactions. 20.19. RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may resign at any time by written notice to the Employer, which resignation shall be effective 60 days The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 86 after delivery to the Employer. The Trustee may be removed by the Employer by written notice to the Trustee, which removal shall be effective 60 days after delivery to the Trustee or such shorter period as may be mutually agreed upon by the Employer and the Trustee. Except in the case of Plan termination, upon resignation or removal of the Trustee, the Employer shall appoint a successor trustee. Any such successor trustee shall, upon written acceptance of his appointment, become vested with the estate, rights, powers, discretion, duties and obligations of the Trustee hereunder as if he had been originally named as Trustee in this Agreement. Upon resignation or removal of the Trustee, the Employer shall no longer participate in this prototype plan and shall be deemed to have adopted an individually designed plan. In such event, the Employer shall appoint a successor trustee within said 60-day period and the Trustee shall transfer the assets of the Trust to the successor trustee upon receipt of sufficient evidence (such as a determination letter or opinion letter from the Internal Revenue Service or an opinion of counsel satisfactory to the Trustee) that such trust shall be a qualified trust under the Code. The appointment of a successor trustee shall be accomplished by delivery to the Trustee of written notice that the Employer has appointed such successor trustee, and written acceptance of such appointment by the successor trustee. The Trustee may, upon transfer and delivery of the Trust Fund to a successor trustee, reserve such reasonable amount as it shall deem necessary to provide for its fees, compensation, costs and expenses, or for the payment of any other liabilities chargeable against the Trust Fund for which it may be liable. The Trustee shall not be liable for the acts or omissions of any successor trustee. 20.20. FISCAL YEAR OF THE TRUST. The fiscal year of the Trust shall coincide with the Plan Year. 20.21. DISCHARGE OF DUTIES BY FIDUCIARIES. The Trustee and the Employer and any other fiduciary shall discharge their duties under the Plan and this Trust Agreement solely in the interests of Participants and their Beneficiaries in accordance with the requirements of ERISA. 20.22. AMENDMENT. In accordance with provisions of the Plan, and subject to the limitations set forth therein, this Trust Agreement may be amended by an instrument in writing signed by the Employer and the Trustee. No amendment to this Trust Agreement shall divert any part of the Trust Fund to any purpose other than as provided in Section 20.03. 20.23. PLAN TERMINATION. Upon termination or partial termination of the Plan or complete discontinuance of contributions thereunder, the Trustee shall make distributions to the Participants or other persons entitled to distributions as the Employer or Administrator directs in accordance with the provisions of the Plan. In the absence of such instructions and unless the Plan otherwise provides, the Trustee shall notify the Employer or Administrator of such situation and the Trustee shall be under no duty to make any distributions under the Plan until it receives written instructions from the Employer or Administrator. Upon the completion of such distributions, the Trust shall terminate, the Trustee shall be relieved from all liability under the Trust, and no Participant or other person shall have any claims thereunder, except as required by applicable law. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 87 20.24. PERMITTED REVERSION OF FUNDS TO EMPLOYER. If it is determined by the Internal Revenue Service that the Plan does not initially qualify under Code Section 401, all assets then held under the Plan shall be returned by the Trustee, as directed by the Administrator, to the Employer, but only if the application for determination is made by the time prescribed by law for filing the Employer's return for the taxable year in which the Plan was adopted or such later date as may be prescribed by regulations. Such distribution shall be made within one year after the date the initial qualification is denied. Upon such distribution the Plan shall be considered to be rescinded and to be of no force or effect. Contributions under the Plan are conditioned upon their deductibility under Code Section 404. In the event the deduction of a contribution made by the Employer is disallowed under Code Section 404, such contribution (to the extent disallowed) must be returned to the Employer within one year of the disallowance of the deduction. Any contribution made by the Employer because of a mistake of fact must be returned to the Employer within one year of the contribution. 20.25. GOVERNING LAW. This Trust Agreement shall be construed, administered and enforced according to ERISA and, to the extent not preempted thereby, the laws of the Commonwealth of Massachusetts. Nothing contained in Sections 20.04, 20.13 or 20.21 or this Section 20.25 shall be construed in a manner which subjects a governmental plan (as defined in Code Section 414(d)) or a non-electing church plan (as described in Code Section 410(d)) to the fiduciary provisions of Title I of ERISA. The CORPORATEplan for Retirement(SM) Basic Plan Document 02 10/9/2003 (C)2003 FMR Corp. All rights reserved. 88 ADDENDUM IRS Model Amendment for Proposed Regulations Under Section 401(a)(9) of the Internal Revenue Code Distributions for Calendar Years Beginning on or After 2002. With respect to distributions under the Plan for calendar years beginning on or after January 1, 2002, the Plan will apply the minimum distribution requirements of section 401(a)(9) of the Internal Revenue Code in accordance with the regulations under section 401(a)(9) that were proposed on January 17, 2001, notwithstanding any provision of the Plan to the contrary. This amendment shall continue in effect until the end of the last calendar year beginning before the effective date of final regulations under section 401(a)(9) or such other date as may be specified in guidance published by the Internal Revenue Service. (C)2003 FMR Corp. All rights reserved. 1 THE CORPORATEPLAN FOR RETIREMENT(SM) ADDENDUM RE: ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 ("EGTRRA") AMENDMENTS FOR FIDELITY BASIC PLAN DOCUMENT NO. 02 PREAMBLE ADOPTION AND EFFECTIVE DATE OF AMENDMENT. This amendment of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This amendment is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided below, this amendment shall be effective as of the first day of the first plan year beginning after December 31, 2001. SUPERSESSION OF INCONSISTENT PROVISIONS. This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment. 1. Section 2.01(j), "Compensation," is hereby amended by adding the following paragraph to the end thereof: Notwithstanding anything herein to the contrary, the annual Compensation of each Participant taken into account in determining allocations for any Plan Year beginning after December 31, 2001, shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B). Annual Compensation means Compensation during the Plan Year or such other consecutive 12-month period over which Compensation is otherwise determined under the Plan (the determination period). The cost-of-living adjustment in effect for a calendar year applies to annual Compensation for the determination period that begins with or within such calendar year. 2. Section 2.01(l), "Deferral Contribution," is hereby amended by replacing the period with a semicolon and adding the following to the end thereof: provided, however, that the term `Deferral Contribution' shall exclude all catch-up contributions as described in Section 5.03(b)(1) for purposes of Matching Employer Contributions as described in Section 1.10 of the Adoption Agreement, unless otherwise elected by the Employer in Section (c) of the EGTRRA Amendments Addendum to the Adoption Agreement. 3. Section 2.01(tt) "Rollover Contribution" is hereby amended as follows: `Rollover Contribution' means any distribution from an eligible retirement plan as defined in Section 5.06 that an Employee elects to contribute to the Plan in accordance with the terms of such Section 5.06. 4. The existing text of Section 5.03 is hereby redesignated as Section 5.03(a), and a new Section 5.03(b) is hereby added to read as follows (B) CATCH-UP CONTRIBUTIONS. (1) If elected by the Employer in Section (a) of the EGTRRA Amendments Addendum to the Adoption Agreement, all Participants who are eligible to make Deferral Contributions under the Plan and who are projected to attain age 50 before the close of the calendar year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Code Section 414(v). Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code Sections 402(g) and 415. The Plan shall not be treated (C)2003 FMR Corp. All rights reserved. 1 as failing to satisfy the provisions of the Plan implementing the requirements of Code Section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of such catch-up contributions. (2) Unless otherwise elected by the Employer in Section (b) of the EGTRRA Amendments Addendum to the Adoption Agreement, if the Plan permits catch-up contributions, as described in paragraph (1) above on April 1, 2002, then, notwithstanding anything herein to the contrary, effective April 1, 2002, the limit on Deferral Contributions, as otherwise provided in Section 1.07(a)(1) (the "Plan Limit") shall be 60% of Compensation for the payroll period in question, provided, however, that this Section 5.03(b)(2) shall be inapplicable if the Plan's Section 1.01(g)(2)(B) Amendment Effective Date is after April 1, 2002. (3) In the event that the Plan Limit is changed during the Plan Year, for purposes of determining catch-up contributions for the Plan Year, as described in paragraph (1) above, the Plan Limit shall be determined pursuant to the time-weighted average method described in Proposed Income Tax Regulation Section 1.414(v)-1(b)(2)(i). 5. Section 5.06 is hereby amended to add the following paragraph to the end thereof: Unless otherwise elected by the Employer in Section (e) of the EGTRRA Amendments Addendum to the Adoption Agreement, the Plan will accept Participant Rollover Contributions and/or direct rollovers of distributions made after December 31, 2001 (including Rollover Contributions received by the Participant as a surviving spouse, or a spouse or former spouse who is an alternate payee under a qualified domestic relations order), from the following types of plans: (a) a qualified plan described in Code Section 401(a) or 403(a), including after-tax employee contributions (provided, however, that any such after-tax employee contributions must be contributed in a direct rollover); (b) an annuity contract described in Code Section 403(b), excluding after-tax employee contributions; (c) an eligible plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state; and (d) Participant Rollover Contributions of the portion of a distribution from an individual retirement account or annuity described in Code Section 408(a) or 408(b) that is eligible to be rolled over and would otherwise be includible in gross income, provided, however, that the Plan will in no event accept a rollover contribution consisting of nondeductible individual retirement account or annuity contributions. 6. The first paragraph of Section 6.02 is hereby amended by replacing the first sentence thereof with the following: In no event shall the amount of Deferral Contributions made under the Plan for a calendar year, when aggregated with the `elective deferrals' made under any other plan maintained by the Employer or a Related Employer, exceed the dollar limitation contained in Code Section 402(g) in effect at the beginning of such calendar year, except to the extent permitted under Section 5.03(b)(1) and Code Section 414(v), if applicable. 7. Section 6.08 is hereby amended by adding the following sentence to the end thereof: Notwithstanding anything herein to the contrary, the multiple use test described in Treasury Regulation Section 1.401(m)-2 and this Section 6.08 shall not apply for Plan Years beginning after December 31, 2001. 8. Section 6.12 is hereby amended by adding a new subsection 6.12(e) thereto as follows: (e) Maximum Annual Additions for Limitation Years Beginning After December 31, 2001. Notwithstanding anything herein to the contrary, this subsection (e) shall be effective for Limitation (C)2003 FMR Corp. All rights reserved. 2 Years beginning after December 31, 2001. Except to the extent permitted under Section 5.03(b)(1) and Code Section 414(v), if applicable, the `annual additions' that may be contributed or allocated to a Participant's Account under the Plan for any Limitation Year shall not exceed the lesser of: (1) $40,000, as adjusted for increases in the cost-of-living under Code Section 415(d), or (2) 100 percent of the Participant's compensation, within the meaning of Code Section 415(c)(3), for the Limitation Year. The compensation limit referred to in (2) shall not apply to any contribution for medical benefits after separation from service (within the meaning of Code Section 401(h) or 419A(f)(2)) that is otherwise treated as an `annual addition'. 9. Section 9.04 is hereby amended by replacing the final period in the first paragraph with a semi-colon and adding the following to the end thereof: provided, however, that notwithstanding anything herein to the contrary, effective for Plan loans made after December 31, 2001, Plan provisions prohibiting loans to any `owner-employee' or `shareholder-employee' shall cease to apply. 10. Section 10.05(b)(2) is hereby amended by replacing the semicolon with a period and adding the following to the end thereof: Notwithstanding anything herein to the contrary, the rule in this Section 10.05(b)(2) shall be applied to a Participant who receives a distribution after December 31, 2001, on account of hardship, by substituting the phrase `the 6-month period' for the phrase `the 12-month period'. 11. Section 10.05(b)(4) is hereby amended by adding the following phrase to the beginning thereof: Effective for calendar years beginning before January 1, 2002, for a Participant who received a hardship distribution before January 1, 2001, 12. The existing text of Section 11.05 is hereby redesignated as Section 11.05(a), and a new Section 11.05(b) is hereby added to read as follows: (b) VESTING OF MATCHING EMPLOYER CONTRIBUTIONS. Notwithstanding anything herein to the contrary, the vesting schedule elected by the Employer in Section (d)(1) of the EGTRRA Amendments Addendum to the Adoption Agreement shall apply to all accrued benefits derived from Matching Employer Contributions for Participants who complete an Hour of Service in a Plan Year beginning after December 31, 2001, except as otherwise elected by the Employer in Section (d)(2) or Section (d)(3) of the EGTRRA Amendments Addendum to the Adoption Agreement. With respect to Participants covered by a collective bargaining agreement, the vesting schedule elected in Section (d)(1) of the EGTRRA Amendments Addendum to the Adoption Agreement shall take effect on a later date if so elected in Section (d)(2). If so elected in Section (d)(3) of the EGTRRA Amendments Addendum to the Adoption Agreement, the vesting schedule elected in Section (d)(1) shall apply only to the accrued benefits derived from Matching Employer Contributions made with respect to Plan Years beginning after December 31, 2001 (or such later date as may be provided in Section (d)(2) for Participants covered by a collective bargaining agreement). 13. The existing text of Section 12.01 is hereby redesignated as Section 12.01(a), current subsections (a), (b), and (c) thereof are redesignated as paragraphs (1), (2), and (3), respectively, and the first sentence thereof is replaced with the following: Subject to the application of Section 12.01(b), a Participant or his Beneficiary may not receive a distribution from his Deferral Contributions, Qualified Nonelective Employer Contributions, Qualified Matching Employer Contributions, safe harbor Matching Employer Contributions or safe harbor Nonelective Employer (C)2003 FMR Corp. All rights reserved. 3 Contributions Accounts earlier than upon the Participant's separation from service with the Employer and all Related Employers, death, or disability, except as otherwise provided in Article 10 or Section 12.04. 14. Section 12.01 is hereby amended by adding a new subsection (b) to the end thereof: (b) If elected by the Employer in Section (f) of the EGTRRA Amendments Addendum to the Adoption Agreement, notwithstanding subsection (a) of this Section 12.01, a Participant, or his Beneficiary, may receive a distribution after December 31, 2001 (or such later date as specified therein), from his Deferral Contributions, Qualified Nonelective Employer Contributions, Qualified Matching Employer Contributions, safe harbor Matching Employer Contributions or safe harbor Nonelective Employer Contributions Accounts on account of the Participant's severance from employment occurring after the dates specified in Section (f) of the EGTRRA Amendments Addendum to the Adoption Agreement. 15. Section 13.04 is hereby amended by adding the following paragraph to the end thereof: Notwithstanding anything herein to the contrary, the following provisions shall apply to distributions made after December 31, 2001: (i) Modification of definition of eligible retirement plan. For purposes of this Section 13.04, an `eligible retirement plan' shall also mean an annuity contract described in Code Section 403(b) and an eligible deferred compensation plan under Code Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. The definition of `eligible retirement plan' shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p). (ii) Modification of definition of eligible rollover distribution to exclude hardship distributions. For purposes of this Section 13.04, any amount that is distributed on account of hardship shall not be an `eligible rollover distribution' and the `distributee' may not elect to have any portion of such a distribution paid directly to an `eligible retirement plan.' (iii) Modification of definition of eligible rollover distribution to include after-tax Employee Contributions. For purposes of this Section 13.04, a portion of a distribution shall not fail to be an "eligible rollover distribution" merely because the portion consists of after-tax Employee Contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Code Section 408(a) or (b), or to a qualified defined contribution plan described in Code Section 401(a) or 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible. 16. Article 15 is hereby amended by adding a new Section 15.08 at the end thereof as follows: 15.08. MODIFICATION OF TOP-HEAVY PROVISIONS. Notwithstanding anything herein to the contrary, this Section 15.08 shall apply for purposes of determining whether the Plan is a top-heavy plan under Code Section 416(g) for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of Code Section 416(c) for such years. This Section modifies the rules in this Article 15 of the Plan for Plan Years beginning after December 31, 2001. (a) Determination of top-heavy status. (1) Key employee. Key employee means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the determination date was an officer of the Employer having annual compensation greater than $130,000 (as adjusted under Code Section 416(i)(1) for Plan Years beginning after December 31, 2002), a 5-percent owner of the Employer, or a 1-percent owner of (C)2003 FMR Corp. All rights reserved. 4 the Employer having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of Code Section 415(c)(3). The determination of who is a key employee will be made in accordance with Code Section 416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder. (2) Determination of present values and amounts. This Section 15.08(a)(2) shall apply for purposes of determining the present values of accrued benefits and the amounts of account balances of Employees as of the determination date. (A) Distributions during year ending on the determination date. The present values of accrued benefits and the amounts of account balances of an Employee as of the determination date shall be increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under Code Section 416(g)(2) during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i). In the case of a distribution made for a reason other than separation from service, death, or disability, this provision shall be applied by substituting the phrase "5-year period" for the phrase "1-year period." (B) Employees not performing services during year ending on the determination date. The accrued benefits and accounts of any individual who has not performed services for the Employer during the 1-year period ending on the determination date shall not be taken into account. (b) Minimum benefits. (1)Matching contributions. Matching Employer Contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Code Section 416(c)(2) and the Plan. The preceding sentence shall apply with respect to Matching Employer Contributions under the Plan or, if the Plan provides that the minimum contribution requirement shall be met in another plan, such other plan. Matching Employer Contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of Code Section 401(m). (2)Contributions under other plans. The Employer may provide in the Adoption Agreement that the minimum benefit requirement shall be met in another plan (including another plan that consists solely of a cash or deferred arrangement which meets the requirements of Code Section 401(k)(12) and matching contributions with respect to which the requirements of Code Section 401(m)(11) are met). (c) Other Modifications. The top-heavy requirements of Code Section 416 and this Article 15 shall not apply in any year beginning after December 31, 2001, in which the Plan consists solely of a cash or deferred arrangement which meets the requirements of Code Section 401(k)(12) and Matching Employer Contributions with respect to which the requirements of Code Section 401(m)(11) are met. (C)2003 FMR Corp. All rights reserved. 5 ADDENDUM IRS MODEL AMENDMENT FOR FINAL AND TEMPORARY REGULATIONS UNDER INTERNAL REVENUE CODE SECTION 401(a)(9) Section 1. General Rules 1.1 Effective Date. The provisions of this addendum will apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar year. 1.2 Precedence. The requirements of this addendum will take precedence over any inconsistent provisions of the Plan. 1.3 Requirements of Treasury Regulations Incorporated. All distributions required under this addendum will be determined and made in accordance with the Treasury regulations under section 401(a)(9) of the Internal Revenue Code. 1.4 TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of this addendum, distributions may be made under a designation made before January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that relate to section 242(b)(2) of TEFRA. Section 2. Time and Manner of Distribution. 2.1 Required Beginning Date. The Participant's entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant's Required Beginning Date. 2.2 Death of Participant Before Distributions Begin. If the Participant dies before distributions begin, the Participant's entire interest will be distributed, or begin to be distributed, no later than as follows: (a) If the Participant's surviving spouse is the Participant's sole designated Beneficiary, then, except as otherwise elected under section 6, distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70 -1/2, if later. (b) If the Participant's surviving spouse is not the Participant's sole designated Beneficiary, then, except as otherwise elected under section 6, distributions to the designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died. (c) If there is no designated Beneficiary as of September 30 of the year following the year of the Participant's death, the Participant's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. (d) If the Participant's surviving spouse is the Participant's sole designated Beneficiary and the surviving spouse dies after the Participant but before distributions to the surviving spouse begin, this section 2.2, other than section 2.2(a), will apply as if the surviving spouse were the Participant. For purposes of this section 2.2 and section 4, unless section 2.2(d) applies, distributions are considered to begin on the Participant's Required Beginning Date. If section 2.2(d) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under section 2.2(a). If distributions under an annuity purchased from an insurance company irrevocably commence to the Participant before the Participant's Required Beginning Date (or to the Participant's surviving spouse before the date distributions are required to begin to the surviving spouse under section 2.2(a)), the date distributions are considered to begin is the date distributions actually commence. 2.3 Forms of Distribution. Unless the Participant's interest is distributed in the form of an annuity purchased from an (C)2003 FMR Corp. All rights reserved. 6 insurance company or in a single sum on or before the Required Beginning Date, as of the first distribution calendar year distributions will be made in accordance with sections 3 and 4 of this addendum. If the Participant's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of section 401(a)(9) of the Code and the Treasury regulations. Section 3. Required Minimum Distributions During Participant's Lifetime. 3.1 Amount of Required Minimum Distribution For Each Distribution Calendar Year. During the Participant's lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of: (a) the quotient obtained by dividing the Participant's account balance by the distribution period in the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participant's age as of the Participant's birthday in the distribution calendar year; or (b) if the Participant's sole designated Beneficiary for the distribution calendar year is the Participant's spouse, the quotient obtained by dividing the Participant's account balance by the number in the Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participant's and spouse's attained ages as of the Participant's and spouse's birthdays in the distribution calendar year. 3.2 Lifetime Required Minimum Distributions Continue Through Year of Participant's Death. Required minimum distributions will be determined under this section 3 beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the Participant's date of death. Section 4. Required Minimum Distributions After Participant's Death. 4.1 Death On or After Date Distributions Begin. (a) Participant Survived by Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is a designated Beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant's death is the quotient obtained by dividing the Participant's account balance by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant's designated Beneficiary, determined as follows: (1) The Participant's remaining life expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year. (2) If the Participant's surviving spouse is the Participant's sole designated Beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the Participant's death using the surviving spouse's age as of the spouse's birthday in that year. For distribution calendar years after the year of the surviving spouse's death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse's birthday in the calendar year of the spouse's death, reduced by one for each subsequent calendar year. (3) If the Participant's surviving spouse is not the Participant's sole designated Beneficiary, the designated Beneficiary's remaining life expectancy is calculated using the age of the Beneficiary in the year following the year of the Participant's death, reduced by one for each subsequent year. (b) No Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is no designated Beneficiary as of September 30 of the year after the year of the Participant's death, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant's death is the quotient obtained by dividing the Participant's account balance by the Participant's remaining life expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year. 4.2 Death Before Date Distributions Begin. (C)2003 FMR Corp. All rights reserved. 2 (a) Participant Survived by Designated Beneficiary. Except as otherwise elected under section 6, if the Participant dies before the date distributions begin and there is a designated Beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant's death is the quotient obtained by dividing the Participant's account balance by the remaining life expectancy of the Participant's designated Beneficiary, determined as provided in section 4.1. (b) No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no designated Beneficiary as of September 30 of the year following the year of the Participant's death, distribution of the Participant's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. (c) Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin. If the Participant dies before the date distributions begin, the Participant's surviving spouse is the Participant's sole designated Beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under section 2.2(a), this section 4.2 will apply as if the surviving spouse were the Participant. Section 5. Definitions. 5.1 Designated Beneficiary. The individual who is the designated Beneficiary, as such term is defined under section 2.01 of the Plan, and is the designated Beneficiary under section 401(a)(9) of the Internal Revenue Code and section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations. 5.2 Distribution calendar year. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant's Required Beginning Date. For distributions beginning after the Participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin under section 2.2. The required minimum distribution for the Participant's first distribution calendar year will be made on or before the Participant's Required Beginning Date. The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant's Required Beginning Date occurs, will be made on or before December 31 of that distribution calendar year. 5.3 Life expectancy. Life expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury regulations. 5.4 Participant's account balance. The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year. 5.5 Required Beginning Date. The Required Beginning Date, as such term is defined in section 2.01 of the Plan. Section 6. Elections. (a) Participants or Beneficiaries May Elect 5-Year Rule. Participants or Beneficiaries may elect on an individual basis whether the 5-year rule or the life expectancy rule in sections 2.2 and 4.2 of this addendum applies to distributions after the death of a Participant who has a designated Beneficiary. The election must be made no later than the earlier of September 30 of the calendar year in which distribution would be required to begin under section 2.2 of this addendum, or by September 30 of the calendar year which contains the fifth anniversary of the Participant's (or, if applicable, the surviving spouse's) death. If neither the Participant nor the Beneficiary makes an election under this section 6, distributions will be made in accordance with sections 2.2 and 4.2 of this addendum. (C)2003 FMR Corp. All rights reserved. 3 (b) Designated Beneficiary Receiving Distributions Under 5-Year Rule May Elect Life Expectancy Distributions. A designated Beneficiary who is receiving payments under the 5-year rule may make a new election to receive payments under the life expectancy rule until December 31, 2003, provided that all amounts that would have been required to be distributed under the life expectancy rule for all distribution calendar years before 2004 are distributed by the earlier of December 31, 2003 or the end of the 5-year period. (C)2003 FMR Corp. All rights reserved. 4 THE CORPORATEPLAN FOR RETIREMENT(SM) ADDENDUM RE: ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 ("EGTRRA") SECOND AMENDMENT FOR FIDELITY BASIC PLAN DOCUMENT NO. 02 PREAMBLE ADOPTION AND EFFECTIVE DATE OF AMENDMENT. This amendment of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This amendment is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. This amendment shall be effective December 1, 2003. SUPERSESSION OF INCONSISTENT PROVISIONS. This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment. The following paragraph is hereby added to the end of Section 16.04: Notwithstanding anything in the Basic Plan Document or Adoption Agreement (including addenda thereto) to the contrary, to the extent permitted by any regulation or other guidance under the Code, forms of payment may be eliminated without the application of a waiting period and without prior notice to Participants effective with respect to Participants whose Annuity Starting Dates occur on or after the date the Plan amendment eliminating such forms of payment is adopted; provided, however, that to the extent any regulation or other guidance under the Code requires prior notice to Participants as a precondition to the elimination of any form of payment or imposes any other requirement on such elimination, no such elimination shall be effective unless the Plan Administrator has complied with such notice or other requirement. (C)2003 FMR Corp. All rights reserved. 1 EX-4.7 4 p68818exv4w7.txt EXHIBIT 4.7 Exhibit 4.7 ADOPTION AGREEMENT ARTICLE 1 NON-STANDARDIZED PROFIT SHARING/401(K) PLAN 1.01 PLAN INFORMATION (a) NAME OF PLAN: This is the Giant Industries, Inc. & Affiliated Companies 401(k) Plan (the "Plan") 1.04 COVERAGE ALL EMPLOYEES WHO MEET THE CONDITIONS SPECIFIED BELOW SHALL BE ELIGIBLE TO PARTICIPATE IN THE PLAN: (a) AGE REQUIREMENT (check one): (1) [X] no age requirement. (2) [ ] must have attained age: _____ (NOT TO EXCEED 21). (b) ELIGIBILITY SERVICE REQUIREMENT (1) ELIGIBILITY TO PARTICIPATE IN PLAN (check one): (A) [ ] no Eligibility Service requirement. (B) [ ] ____ (NOT TO EXCEED 11) months of Eligibility Set-vice requirement (no minimum number Hours of Service can be required). (C) [X] one year of Eligibility Service requirement (at least 1,000 Hours of Service are required during the Eligibility Computation Period). (D) [ ] two years of Eligibility Service requirement (at least 1,000 Hours of Service are required during each Eligibility Computation Period). (DO NOT SELECT IF OPTION 1.01(b)(1), 401(k) ONLY, IS CHECKED, UNLESS A DIFFERENT ELIGIBILITY SERVICE REQUIREMENT APPLIES TO DEFERRAL CONTRIBUTIONS UNDER OPTION 1.04(b) (2).) NOTE: If the Employer selects the two year Eligibility Service requirement, then contributions subject to such Eligibility Service requirement must be 100% vested when made. (2) [X] SPECIAL ELIGIBILITY SERVICE REQUIREMENT FOR DEFERRAL CONTRIBUTIONS AND/OR MATCHING EMPLOYER CONTRIBUTIONS: (A) The special Eligibility Service requirement applies to (check the appropriate box(es)): (i) [X] Deferral Contributions. Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 1 (ii) [X] Matching Employer Contributions (B) The special Eligibility Service requirement is: (A) (Fill in (A),(B), or (C) from Subsection 1.04(b)(1) above). (c) ELIGIBLE CLASS OF EMPLOYEES (check one): NOTE: The Plan may not cover employees who are residents of Puerto Rico. These employees are automatically excluded from the eligible class, regardless of the Employer's selection under this Subsection 1.04(c). (1) [ ] includes all Employees of the Employer. (2) [X] includes all Employees of the Employer except for (check the appropriate box(es)): (A) [X] employees covered by a collective bargaining agreement. (B) [ ] Highly Compensated Employees as defined in Code Section 414(q). (C) [X] Leased Employees as defined in Subsection 2.0l(cc). (D) [X] nonresident aliens who do not receive any earned income from the Employer which constitutes United States source income. (E) [X] other: An employee who is classified by the Employer as an employee of Giant Yorktown, Inc. NOTE: The Employer should exercise caution when excluding employees from participation in the Plan. Exclusion of employees may adversely affect the Plan's satisfaction of the minimum coverage requirements, as provided in Code Section 410(b). (d) THE ENTRY DATES SHALL BE (check one): (1) [ ] immediate upon meeting the eligibility requirements specified in Subsections 1.04(a), (b), and (c). (2) [ ] the first day of each Plan Year and the first day of the seventh month of each Plan Year. (3) [X] the first day of each Plan Year and the first day of the fourth, seventh, and tenth months of each Plan Year. (4) [ ] the first day of each month. (5) [ ] the first day of each Plan Year. (DO NOT SELECT IF THERE IS AN ELIGIBILITY SERVICE REQUIREMENT OF MORE THAN SIX MONTHS IN SUBSECTION 1.04(b) OR IF THERE IS AN AGE REQUIREMENT OF MORE THAN 20 1/2 IN SUBSECTION 1.04(a).) Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 2 (e) [X] SPECIAL ENTRY DATE(s) - In addition to the Entry Dates specified in Subsection 1.04(d) above, the following special Entry Date(s) apply for Deferral and/or Matching Employer Contributions. (SPECIAL ENTRY DATES MAY ONLY BE SELECTED if OPTION 1.04 (b) (2), SPECIAL ELIGIBILITY SERVICE REQUIREMENT, IS CHECKED. THE SAME ENTRY DATES MUST BE SELECTED FOR CONTRIBUTIONS THAT ARE SUBJECT TO THE SAME ELIGIBILITY SERVICE REQUIREMENTS.) (1) The special Entry Date(s) shall apply to (check the appropriate box(es)): (A) [X] Deferral Contributions. (B) [X] Matching Employer Contributions (2) The special Entry Date(s) shall be: (1) (Fill in (1), (2), (3), (4), or (5) from Subsection 1.04(d) above). (f) DATE OF INITIAL PARTICIPATION - An Employee shall become a Participant unless excluded by Subsection 1.04(c) above on the Entry Date immediately following the date the Employee completes the service and age requirement(s) in Subsections 1.04(a) and (b), if any, except (check one): (1) [X] no exceptions. (2) [ ] Employees employed on the Effective Date in Subsection 1.01 (g)(1) or (2) shall become Participants on that date. (3) [ ] Employees who meet the age and service requirement(s) of Subsections 1.04(a) and (b) on the Effective Date in Subsection 1.01 (g)(1) or (2) shall become Participants on that date. Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 3 1.10 MATCHING EMPLOYER CONTRIBUTIONS (ONLY IF OPTION 1.07(a), DEFERRAL CONTRIBUTIONS, IS CHECKED) (a) [X] BASIC MATCHING EMPLOYER CONTRIBUTIONS (check one): (1) [ ] NON-DISCRETIONARY MATCHING EMPLOYER CONTRIBUTIONS - The Employer shall make a basic Matching Employer Contribution on behalf of each Participant in an amount equal to the following percentage of a Participant's Deferral Contributions during the Contribution Period (check (A) or (B) and, if applicable, (C)): NOTE: Effective for Plan Years beginning on or after January 1, 1999, if the Employer elected Option l.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions and meets the requirements for deemed satisfaction of the "ADP" test in Section 6.10 for a Plan Year, the Plan will also be deemed to satisfy the "ACP" test for such Plan Year with respect to Matching Employer Contributions if Matching Employer Contributions hereunder meet the requirements in Section 6.11. (A) [ ] Single Percentage Match: _____% (B) [ ] Tiered Match: ______% of the first ______% of the Active Participant's Compensation contributed to the Plan, ______% of the next ______% of the Active Participant's Compensation contributed to the Plan, _____% of the next _____% of the Active Participants Compensation contributed to the Plan. NOTE: The percentages specified above for basic Matching Employer Contributions may not increase as the percentage of Compensation contributed increases. (C) [ ] Limit on Non-Discretionary Matching Employer Contributions (check the appropriate box(es)): (i) [ ] Deferral Contributions in excess of ______% of the Participant's Compensation for the period in question shall not be considered for non-discretionary Matching Employer Contributions. NOTE: If the Employer elected a percentage limit in (i) above and requested the Trustee to account separately for matched and unmatched Deferral Contributions made to the Plan, the non-discretionary Matching Employer Contributions allocated to each Participant must be computed, and the percentage limit applied, based upon each payroll period. (ii) [ ] Matching Employer Contributions for each Participant for each Plan Year shall be limited to $______. Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 4 (2) [X] DISCRETIONARY MATCHING EMPLOYER CONTRIBUTIONS - The Employer may make a basic Matching Employer Contribution on behalf of each Participant in an amount equal to the percentage declared for the Contribution Period, if any, by a Board of Directors' Resolution (or by a Letter of Intent for a sole proprietor or partnership) of the Deferral Contributions made by each Participant during the Contribution Period. The Board of Directors' Resolution (or Letter of Intent, if applicable) may limit the Deferral Contributions matched to a specified percentage of Compensation or limit the amount of the match to a specified dollar amount. (A) [ ] 4% Limitation on Discretionary Matching Employer Contributions for Deemed Satisfaction of "ACP" Test - In no event may the dollar amount of the discretionary Matching Employer Contribution made on a Participant's behalf for the Plan Year exceed 4% of the Participant's Compensation for the Plan Year. (ONLY IF OPTION 1.11(a) (3), SAFE HARBOR FORMULA, WITH RESPECT TO NONELECTIVE EMPLOYER CONTRIBUTIONS IS CHECKED.) (3) [ ] SAFE HARBOR MATCHING EMPLOYER CONTRIBUTIONS - Effective only for Plan Years beginning on or after January 1, 1999, if the Employer elects one of the safe harbor formula Options provided in the Safe Harbor Matching Employer Contribution Addendum to the Adoption Agreement and provides written notice each Plan Year to all Active Participants of their rights and obligations under the Plan, the Plan shall be deemed to satisfy the "ADP" test and, under certain circumstances, the "ACP" test. (b) [ ] ADDITIONAL MATCHING EMPLOYER CONTRIBUTIONS - The Employer may at Plan Year end make an additional Matching Employer Contribution equal to a percentage declared by the Employer, through a Board of Directors' Resolution (or by a Letter of Intent for a sole proprietor or partnership), of the Deferral Contributions made by each Participant during the Plan Year. (ONLY IF OPTION 1.10(A) (1) OR (3) IS CHECKED.) The Board of Directors' Resolution (or Letter of Intent, if applicable) may limit the Deferral Contributions matched to a specified percentage of Compensation or limit the amount of the match to a specified dollar amount. (1) [ ] 4% LIMITATION ON ADDITIONAL MATCHING EMPLOYER CONTRIBUTIONS FOR DEEMED SATISFACTION OF "ACP" TEST - In no event may the dollar amount of the additional Matching Employer Contribution made on a Participant's behalf for the Plan Year exceed 4% of the Participant's Compensation for the Plan Year. (ONLY IF OPTION 1.10(a) (3), SAFE HARBOR MATCHING EMPLOYER CONTRIBUTIONS, OR OPTION 1.11(a)(3), SAFE HARBOR FORMULA, WITH RESPECT TO NONELECTIVE EMPLOYER CONTRIBUTIONS IS CHECKED.) NOTE: If the Employer elected Option 1.1 0(a)(3), Safe Harbor Matching Employer Contributions, above and wants to be deemed to have satisfied the "ADP" test for Plan Years beginning on or after January 1, 1999, the additional Matching Employer Contribution must meet the requirements of Section 6.10. In addition to the foregoing requirements, if the Employer elected either Option 1.1 0(a)(3), Safe Harbor Matching Employer Contributions, or Option 1.11 (a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions, and wants to be deemed to have satisfied the "ACP" test with respect to Matching Employer Contributions for the Plan Year, the Deferral Contributions matched may not exceed the limitations in Section 6.11. (c) CONTRIBUTION PERIOD FOR MATCHING EMPLOYER CONTRIBUTIONS - The Contribution Period for purposes of calculating the amount of basic Matching Employer Contributions described in Subsection 1.10(a) is: (1) [ ] each calendar month. (2) [ ] each Plan Year quarter. Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 5 (3) [ ] each Plan Year. (4) [X] each payroll period The Contribution Period for additional Matching Employer Contributions described in Subsection 1.10(b) is the Plan Year. (D) CONTINUING ELIGIBILITY REQUIREMENT(s) - A Participant who makes Deferral Contributions during a Contribution Period shall only be entitled to receive Matching Employer Contributions under Section 1.10 for that Contribution Period if the Participant satisfies the following requirement(s) (Check the appropriate box(es). Options (3) and (4) may not be elected together; Option (5) may not be elected with Option (2), (3), or (4); Options (2), (3), (4), (5), and (7) may not be elected with respect to basic Matching Employer Contributions if Option 1. 10(a)(3), Safe Harbor Matching Employer Contributions, is checked): (1) [X] No requirements. (2) [ ] Is employed by the Employer or a Related Employer on the last day of the Contribution Period. (3) [ ] Earns at least 501 Hours of Service during the Plan Year. (ONLY IF THE CONTRIBUTION PERIOD IS THE PLAN YEAR.) (4) [ ] Earns at least 1,000 Hours of Service during the Plan Year. (ONLY IF THE CONTRIBUTION PERIOD IS THE PLAN YEAR.) (5) [ ] Either earns at least 501 Hours of Service during the Plan Year or is employed by the Employer or a Related Employer on the last day of the Plan Year. (ONLY IF THE CONTRIBUTION PERIOD IS THE PLAN YEAR.) (6) [ ] Is not a Highly Compensated Employee for the Plan Year. (7) [ ] Is not a partner or a member of the Employer, if the Employer is a partnership or an entity taxed as a partnership. (8) [ ] Special continuing eligibility requirement(s) for additional Matching Employer Contributions. (ONLY IF OPTION 1.10(b), ADDITIONAL MATCHING EMPLOYER CONTRIBUTIONS, IS CHECKED.) (A) The continuing eligibility requirement(s) for additional Matching Employer Contributions is/are: (Fill in number of applicable eligibility requirement(s) from above.) NOTE: If Option (2), (3), (4), or (5) above is selected, then Matching Employer Contributions can only be FUNDED by the Employer AFTER the Contribution Period or Plan Year ends. Matching Employer Contributions funded during the Contribution Period or Plan Year shall not be subject to the eligibility requirements of Option (2), (3), (4), or (5). If Option (2), (3), (4), or (5) is adopted during a Contribution Period or Plan Year, as applicable, such Option shall not become effective until the first day of the next Contribution Period or Plan Year. (e) [X] QUALIFIED MATCHING EMPLOYER CONTRIBUTIONS - Prior to making any Matching Employer Contribution hereunder (other than a safe harbor Matching Employer Contribution), the Employer may designate all or a portion of such Matching Employer Contribution as a Qualified Matching Employer Contribution that may be used to satisfy the "ADP" test on Deferral Contributions and excluded in applying the "ACP" test on Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 6 Employee and Matching Employer Contributions. Unless the additional eligibility requirement is selected below, Qualified Matching Employer Contributions shall be allocated to all Participants who meet the continuing eligibility requirement(s) described in Subsection 1.10(d) above for the type of Matching Employer Contribution being characterized as a Qualified Matching Employer Contribution. (1) [ ] To receive an allocation of Qualified Matching Employer Contributions a Participant must also be a Non-Highly Compensated Employee for the Plan Year. NOTE: Qualified Matching Employer Contributions may ~ be excluded in applying the "ACP" test for a Plan Year if the Employer elected Option 1. 10(a)(3), Safe Harbor Matching Employer Contributions, or Option 1.11 (a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions, and the "ADP" test is deemed satisfied under Section 6.10 for such Plan Year. Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 7 1.15 VESTING A PARTICIPANT'S VESTED INTEREST IN MATCHING EMPLOYER CONTRIBUTIONS AND/OR NONELECTIVE EMPLOYER CONTRIBUTIONS, OTHER THAN SAFE HARBOR MATCHING EMPLOYER AND/OR NONELECTIVE EMPLOYER CONTRIBUTIONS ELECTED IN SUBSECTION 1.10(A) (3) OR 1.11(a) (3), SHALL BE BASED UPON HIS YEARS OF VESTING SERVICE AND THE SCHEDULE(s) SELECTED BELOW, EXCEPT AS PROVIDED IN SUBSECTION 1.21(d) OR IN THE VESTING SCHEDULE ADDENDUM TO THE ADOPTION AGREEMENT. (A) [ ] YEARS OF VESTING SERVICE SHALL EXCLUDE (1) [ ] for new plans, service prior to the Effective Date as defined in Subsection 1.01(g)(1). (2) [ ] for existing plans converting from another plan document, service prior to the original Effective Date as defined in Subsection 1.01(g)(2). (B) VESTING SCHEDULE(s) NOTE: The vesting schedule selected below applies only to Nonelective Employer Contributions and Matching Employer Contributions other than safe harbor contributions under Option 1.11(a)(3) or Option 1.10(a)(3). Safe harbor contributions under Options 1.11(a)(3) and 1.10(a)(3) are always 100% vested immediately. (1)NONELECTIVE EMPLOYER CONTRIBUTIONS (2) MATCHING EMPLOYER CONTRIBUTIONS (check one): (check one): (A) [ ] N/A - No Nonelective (A) [ ] N/A - No Matching Employer Contributions Employer Contributions (B) [ ] 100% Vesting immediately (B) [ ] 100% Vesting immediately (C) [X] 3 year cliff (see C below) (C) [X] 3 year cliff (see C below) (D) [ ] 5 year cliff (see D below) (D) [ ] 5 year cliff (see D below) (E) [ ] 6 year graduated (see E below) (E) [ ] 6 year graduated (see E below) (F) [ ] 7 year graduated (see F below) (F) [ ] 7 year graduated (see F below) (G) [ ] Other vesting (G) [ ] Other vesting (complete G1 below) (complete G2 below)

Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 8
YEARS OF APPLICABLE VESTING SCHEDULE(s) VESTING SERVICE - ------------------------------------------------------- C D E F G1 G2 - ------------------------------------------------------- 0 0% 0% 0% 0% _____% _____% 1 0% 0% 0% 0% _____% _____% 2 0% 0% 20% 0% _____% _____% 3 100% 0% 40% 20% _____% _____% 4 100% 0% 60% 40% _____% _____% 5 100% 100% 80% 60% _____% _____% 6 100% 100% 100% 80% _____% _____% 7 or more 100% 100% 100% 100% 100 % 100 %
NOTE: A schedule elected under G1 or 02 above must be at least as favorable as one of the schedules in C, D, E or F above. NOTE: If the Plan is being amended to provide a more restrictive vesting schedule, the more favorable vesting schedule shall continue to apply to Participants who are Active Participants immediately prior to the later of (1) the effective date of the amendment or (2) the date the amendment is adopted. (C) [X] A VESTING SCHEDULE MORE FAVORABLE THAN THE VESTING SCHEDULE(s) SELECTED ABOVE APPLIES TO CERTAIN PARTICIPANTS. Please complete the Vesting Schedule Addendum to the Adoption Agreement. (D) APPLICATION OF FORFEITURES - If a Participant forfeits any portion of his non-vested Account balance as provided in Section 6.02, 6.04, 6.07, or 11.08, such forfeitures shall be (check one): (1) [ ] N/A - Either (A) no Matching Employer Contributions are made with respect to Deferral Contributions under the Plan and all other Employer Contributions are 100% vested when made or (B) there are no Employer Contributions under the Plan. (2) [X] applied to reduce Employer contributions. (3) [ ] allocated among the Accounts of eligible Participants in the manner provided in Section 1.11. (ONLY IF OPTION 1.11(A) OR (B) IS CHECKED.) Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 9 AMENDMENT EXECUTION PAGE This page is to be completed in the event the Employer modifies any prior election(s) or makes a new election(s) in this Adoption Agreement. Attach the amended page(s) of the Adoption Agreement to this execution page. The following section(s) of the Plan are hereby amended effective as of the date(s) set forth below:
Section Amended Page Effective Date - --------------- ---- -------------- ~~1.15 b and c 1/1/04 1.10 c and d 1/1/04 1.04 b 2 A 1/1/04 1.04 e 1 B 1/1/04~~
IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed this 8th day of December , 2003 . Employer: Giant Industries, Inc. Employer: ----------------------- --------------------------- By: /s/ NATALIE R. DOPP By: --------------------------- Title: VP, Human Resources Title: --------------------------- Accepted by: Fidelity Management Trust Company, as Trustee By: /s/ ROBERT Q. BUCKLES Date: January 22, 2004 ------------------------- Robert Q. Buckles Title: Authorized Signatory Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 10 ADDENDUM RE: VESTING SCHEDULE FOR PLAN NAME: Giant Industries, Inc.& Affiliated Companies 401(k) Plan (a) MORE FAVORABLE VESTING SCHEDULE (1) The following vesting schedule applies to the class of Participants described in (a)(2) below: Source: Discretionary Match, Discretionary Profit Sharing YEARS OF SERVICE VESTING PERCENT ---------------- --------------- less than 1 100 1 100 (2) The vesting schedule specified in (a)(1) above applies to the following class of Participants: Employees hired prior to 1/1/04 (b) [ ] ADDITIONAL VESTING SCHEDULE (1) The following vesting schedule applies to the class of Participants described in (b)(2) below: __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ (2) The vesting schedule specified in (b)(1) above applies to the following class of Participants: __________________________________________________________________ Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 11 EX-4.8 5 p68818exv4w8.txt EXHIBIT 4.8 Exhibit 4.8 FOURTH AMENDMENT TO THE GIANT INDUSTRIES, INC. & AFFILIATED COMPANIES 401(k) PLAN WHEREAS, Giant Industries, Inc. (the "Corporation") has adopted and subsequently amended and restated the GIANT INDUSTRIES, INC. & AFFILIATED COMPANIES 401(k) PLAN (the "Giant Plan"), in the form of The CORPORATEplan for Retirement(SM) Profit Sharing/401(k) Plan Fidelity Basic Plan Document No. 02 (a prototype plan sponsored by Fidelity Management and Research Corporation), by executing an Adoption Agreement; and WHEREAS, Giant Industries, Inc. (the "Corporation") has adopted and subsequently amended and restated the GIANT YORKTOWN 401(k) RETIREMENT SAVINGS PLAN (the "Yorktown Plan"), in the form of The CORPORATEplan for Retirement(SM) Profit Sharing/401(k) Plan Fidelity Basic Plan Document No. 02 (a prototype plan sponsored by Fidelity Management and Research Corporation), by executing an Adoption Agreement; and WHEREAS, Section 16.02 of The CORPORATEplan for Retirement(SM) Profit Sharing/401(k) Plan Fidelity Basic Plan Document No. 02 provides for the amendment of the Plan by the Employer; and WHEREAS, the Corporation desires to merge the Giant Yorktown 401(k) Retirement Savings Plan with the Giant Industries, Inc. & Affiliated Companies 401(k) Plan; and NOW THEREFORE, 1. Effective March 1, 2004, Sections 1.01(g)(2), (3), and (5) are amended as shown on page 1 of the attachment. 2. Effective March 1, 2004, Section 1.04(c)(2)(E) is amended as shown on page 1 of the attachment. 3. Effective March 1, 2004, Sections 1.05(a) and (b) are amended by deleting the following at the conclusion of 1.05(b)(2): "..., and any Compensation for the portion of the Plan Year during which the employee is classified by the Employer as an employee of Giant Yorktown, Inc." 4. Effective March 1, 2004, Section 1.10(a)(2) is amended by adding the following at the conclusion: "With regard to Deferral Contributions, the Employer may make a Matching Employer Contribution using a separate matching contribution formula for each group classified by the Employer, with respect to the Deferral Contributions and Compensation while the Participant is a member of the respective group. The separate groups shall be: (1) those Participants who are employees of the Employer (other than those classified by the Employer as employees of Giant Yorktown, Inc.) (the "Giant Group") and (2) those Participants classified by the Employer as employees of Giant Yorktown, Inc. (the "Yorktown Group"). "With regard to Catch-up Contributions, the Employer may make a Matching Employer Contribution only for those Participants in the Giant Group. "For purposes of this Section 1.10(a)(2), and only with respect to Participants in the Yorktown Group, After-Tax Contributions shall be included in Deferral Contributions." 5. Effective March 1, 2004, Section 1.11(b)(1) is amended by adding the following as a second paragraph: "For purposes of this Section 1.11(b)(1) the term 'eligible Active Participant' shall be defined as those Participants in the Giant Group. In the case of a Participant who is in the Yorktown Group for part of the Plan Year and in the Giant Group for part of the Plan Year, Compensation shall exclude Compensation while part of the Yorktown Group." 6. Effective March 1, 2004, Section 1.14(a) is amended as shown on page 2 of the attachment. 7. Effective March 1, 2004, Section 1.18(c)(1)(A) is amended as shown on page 2 of the attachment. 8. Effective March 1, 2004, Section 1.19(b) is amended as shown on page 3 of the attachment. 9. Effective March 1, 2004, Section 1.21(d)(2) is amended as shown on page 3 of the attachment. 2 10. Effective March 1, 2004, the Addendum re: Vesting Schedule, Section (a)(2) is revised to state: "Employees hired as a member of the Giant Group prior to January 1, 2004." 11. Effective March 1, 2004, Section 10.05(a)(5) of the Basic Plan Document is renumbered as 10.05(a)(6), and the following Section 10.05(a)(5) is add: "(5) payment of funeral expenses for the Participant's spouse, children or dependants; or IN WITNESS WHEREOF THE EMPLOYER has caused this amendment to be executed this _____ day of February, 2004, by its duly authorized officer, effective as stated herein. GIANT INDUSTRIES, INC. By: /s/ NATALIE R. DOPP --------------------- Title: VP, Human Resources 3 THE CORPORATEPLAN FOR RETIREMENTS(SM) (PROFIT SHARING/401(K) PLAN) A FIDELITY PROTOTYPE PLAN Non-Standardized Adoption Agreement No. 001 For use With Fidelity Basic Plan Document No. 02 Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. ADOPTION AGREEMENT ARTICLE 1 NON-STANDARDIZED PROFIT SHARING/401(K) PLAN 1.01 (g) PLAN STATUS (check appropriate box(es)): (2) [X] Amendment Effective Date: 03/01/2004 This is (check one): (A) [x] an amendment and restatement of a Basic Plan Document No. 02 Adoption Agreement previously executed by the Employer; or (3) [ ] This is an amendment and restatement of the Plan and the Plan was not amended prior to the effective date specified in Subsection 1.01 (g)(2) above to comply with the requirements of the Acts specified in the Snap Off Addendum to the Adoption Agreement. The provisions specified in the Snap Off Addendum are effective as of the dates specified in the Snap Off Addendum, which dates may be prior to the Amendment Effective Date. Please read and complete, if necessary, the Snap Off Addendum to the Adoption Agreement. (5) [ ] PLAN MERGER EFFECTIVE DATES. Certain plan(s) were merged into the Plan and certain provisions of the Plan are effective with respect to the merged plan(s) as of a date other than the date specified above. Please complete the Special Effective Dates Addendum to the Adoption Agreement indicating the plan(s) that have merged into the Plan and the effective date(s) of such merger(s). 1.04 COVERAGE (c) ELIGIBLE CLASS OF EMPLOYEES (check one): NOTE: The Plan may not cover employees who are residents of Puerto Rico. These employees are automatically excluded from the eligible class, regardless of the Employer's selection under this Subsection 1.04(c). (1) [ ] includes all Employees of the Employer. (2) [X] includes all Employees of the Employer except for (check the appropriate box(es)): (A) [X] employees covered by a collective bargaining agreement. (B) [ ] Highly Compensated Employees as defined in Code Section 414(q). (C) [X] Leased Employees as defined in Subsection 2.01(cc). Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 1 (D) [X] nonresident aliens who do not receive any earned income from the Employer which constitutes United States source income. (E) [ ] other: NOTE: The Employer should exercise caution when excluding employees from participation in the Plan. Exclusion of employees may adversely affect the Plan's satisfaction of the minimum coverage requirements, as provided in Code Section 4 10(b). 1.14 DEFINITION OF DISABLED A Participant is disabled if he/she (check the appropriate box(es)): (a) [X] satisfies the requirements for benefits under the Employer's long-term disability plan. (b) [X] satisfies the requirements for Social Security disability benefits. (c) [ ] is determined to be disabled by a physician approved by the Employer. 1.18 IN-SERVICE WITHDRAWALS PARTICIPANTS MAY MAKE WITHDRAWALS PRIOR TO TERMINATION OF EMPLOYMENT UNDER THE FOLLOWING CIRCUMSTANCES (check the appropriate box(es)): (c) WITHDRAWAL OF EMPLOYEE CONTRIBUTIONS AND ROLLOVER CONTRIBUTIONS - (1) Unless otherwise provided below, Employee Contributions may be withdrawn in accordance with Section 10.02 at any time. (A) [ ] Employees may not make withdrawals of Employee Contributions more frequently than: Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 2 1.19 FORM OF DISTRIBUTIONS SUBJECT TO SECTION 13.01, 13.02 AND ARTICLE 14, DISTRIBUTIONS UNDER THE PLAN SHALL BE PAID AS PROVIDED BELOW. (Check the appropriate box(es) and, if any forms of payment selected in (b), (c) and/or (d) apply only to a specific class of Participants, complete Subsection (b) of the Forms of Payment Addendum.) (a) LUMP SUM PAYMENTS - Lump sum payments are always available under the Plan. (b) [X] INSTALLMENT PAYMENTS - Participants may elect distribution under a systematic withdrawal plan (installments). 1.21 TOP HEAVY STATUS (d) IF THE PLAN IS OR IS TREATED AS A "TOP-HEAVY PLAN" FOR A PLAN YEAR, THE FOLLOWING VESTING SCHEDULE SHALL APPLY INSTEAD OF THE SCHEDULE(S) ELECTED IN SUBSECTION 1.15(b) FOR SUCH PLAN YEAR AND EACH PLAN YEAR THEREAFTER (check one): (1) [ ] Not applicable. (CHOOSE ONLY IF EITHER (a) PLAN PROVIDES FOR NONELECTIVE EMPLOYER CONTRIBUTIONS AND THE SCHEDULE ELECTED IN SUBSECTION 1.15(b) (1) IS AT LEAST AS FAVORABLE IN ALL CASES AS THE SCHEDULES AVAILABLE BELOW OR (b) PLAN COVERS ONLY EMPLOYEES SUBJECT TO A COLLECTIVE BARGAINING AGREEMENT.) (2) [X] 100% vested after 3 (NOT IN EXCESS OF 3) years of Vesting Service. (3) [ ] Graded vesting:
MUST YEARS OF VESTING SERVICE VESTING BE PERCENTAGE AT LEAST - ---------------------------------------------- 0 0% 1 0% 2 20% 3 40% 4 60% 5 80% 6 or more 100%
NOTE: If the Plan provides for Nonelective Employer Contributions and the schedule elected in Subsection 1.1 5(b)( 1) is more favorable in all cases than the schedule elected in Subsection 1.21(d) above, then the schedule in Subsection 1.1 5(b)( 1) shall continue to apply even in Plan Years in which the Plan is a "top-heavy plan". Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 3 AMENDMENT EXECUTION PAGE This page is to be completed in the event the Employer modifies any prior election(s) or makes a new election(s) in this Adoption Agreement. Attach the amended page(s) of the Adoption Agreement to this execution page. The following section(s) of the Plan are hereby amended effective as of the date(s) set forth below:
Section Amended Page Effective Date - ------------------------------------- 1.01 03/01/2004 1.04 03/01/2004 1.14 03/01/2004 1.18 03/01/2004 1.19 03/01/2004 1.21 03/01/2004
IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed this 23rd day of February, 2004. Employer: Giant Industries, Inc. Employer: By: /s/ NATALIE R. DOPP By: ----------------------- ------------------------------- Title: VP, Human Resources Title: Accepted by: Fidelity Management Trust Company, as Trustee By: Date: --------------------------- ---------------------- Title: --------------------------- Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 4 ADDENDUM RE: SPECIAL EFFECTIVE DATES FOR PLAN NAME: Giant Industries. Inc. & Affiliated Companies 401(k) Plan (b) [x] PLAN MERGER EFFECTIVE DATES - The following plan(s) were merged into the Plan after the Effective Date indicated in Subsection 1.01 (g)( 1) or (2), as applicable. The provisions of the Plan are effective with respect to the merged plan(s) as of the date(s) indicated below: (1) NAME OF MERGED PLAN:_________________________________________________ Giant Yorktown 401(k) Retirement Savings Plan________________________ _____________________________________________________________________ Effective date: 03/01/2004 Plan Number: 40292 The CORPORATEp1an for Retirement(SM) Non-Std PS Plan 12/05/2001 (C) 2001 FMR Corp. All rights reserved. 5 EX-10.3 6 p68818exv10w3.txt EXHIBIT 10.3 Exhibit 10.3 SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT This SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "SECOND AMENDMENT") is entered into effective as of September 30, 2003 (the "AMENDMENT EFFECTIVE DATE"), among GIANT INDUSTRIES, INC., a Delaware corporation (the "COMPANY"), the financial institutions from time to time parties to the Credit Agreement (collectively, the "LENDERS"), and BANK OF AMERICA, N.A. as administrative agent (the "ADMINISTRATIVE AGENT") for the Lenders and as a Lender and as Letter of Credit Issuing Bank. Capitalized terms which are used herein without definition and which are defined in the Credit Agreement referred to below shall have the meanings ascribed to them in the Credit Agreement. WHEREAS, the Company, the Administrative Agent and the Lenders are parties to that certain Second Amended and Restated Credit Agreement dated as of May 14, 2002 and amended by the First Amendment dated October 28, 2002 (the "CREDIT AGREEMENT"); and WHEREAS, the Company desires to modify the Credit Agreement to permit the Company to enter into certain leases as herein described; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Amendment to Schedule 8.05 of the Credit Agreement. Subject to satisfaction of the condition precedent set forth in Section 3 of this Second Amendment, Schedule 8.05 of the Credit Agreement is amended by adding the following: 7. Lease of the headquarters building pursuant to sale-leaseback arrangement to be entered into in calendar year 2003. 8. Lease of two convenience stores in Flagstaff, Arizona to be entered into in calendar year 2003. SECTION 2. Representations and Warranties. In order to induce the Administrative Agent and the Lenders to enter into this Second Amendment, the Company represents and warrants to the Administrative Agent and to each Lender that: (a) This Second Amendment, the Credit Agreement as amended hereby and each Loan Document have been duly authorized, executed and delivered by the Company and the applicable Loan Parties and constitute their legal, valid and binding obligations enforceable in accordance with their respective terms (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors' rights generally and to general principles of equity). 2 (b) The representations and warranties set forth in ARTICLE VI of the Credit Agreement are true and correct in all material respects on and as of the Amendment Effective Date, after giving effect to, as if made on and as of the Amendment Effective Date. (c) As of the date hereof, at the time of and after giving effect to this Second Amendment, no Default or Event of Default has occurred and is continuing. (d) No approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution and delivery of this Second Amendment or the performance by the Company or any Loan Party of its obligations hereunder. This Second Amendment has been duly authorized by all necessary corporate action, and the execution, delivery and performance of this Second Amendment and the documents and transactions contemplated hereby does not and will not (a) contravene the terms of the Company's or any Loan Party's Organization Documents; (b) conflict with or result in any breach or contravention of, or result in or require the imposition or creation of any Lien under, any document evidencing any material Contractual Obligation to which the Company or any Loan Party is a party or any order, injunction, writ or decree of any Governmental Authority to which the Company or any Loan Party is subject; or (c) violate any Requirement of Law. SECTION 3. Conditions of Effectiveness. The amendments to the Credit Agreement set forth in SECTION 1 of this Second Amendment shall be effective upon receipt by the Administrative Agent shall have received counterparts of this Second Amendment duly executed by the Company, the Loan Parties, the Administrative Agent, and the Majority Lenders. SECTION 4. Costs. The Company agrees to pay on demand reasonable Attorney Costs of the Administrative Agent and all other costs and expenses of the Administrative Agent, in connection with the preparation, execution and delivery of this Second Amendment and any other documents executed in connection herewith. SECTION 5. Effect of Amendment. This Second Amendment (i) except as expressly provided herein, shall not be deemed to be a consent to the modification or waiver of any other term or condition of the Credit Agreement or of any of the instruments or agreements referred to therein and (ii) shall not prejudice any right or rights which the Administrative Agent, the Issuing Bank or the Lenders may now have under or in connection with the Credit Agreement, as amended by this Second Amendment. Except as otherwise expressly provided by this Second Amendment, all of the terms, conditions and provisions of the Credit Agreement shall remain the same. It is declared and agreed by each of the parties hereto that the Credit Agreement, as amended hereby, shall continue in full force and effect, and that this Second Amendment and such Credit Agreement shall be read and construed as one instrument. The Company and each of the other Loan Parties hereby confirm and agree that all Liens and other security now or hereafter held by the Administrative Agent for the benefit of the Lenders as security 3 for payment of the Obligations are the legal, valid and binding obligations of the Company and the Loan Parties, remain in full force and effect, are unimpaired by this Second Amendment, and are hereby ratified and confirmed as security for payment of the Obligations. SECTION 6. Miscellaneous. This Second Amendment shall for all purposes be construed in accordance with and governed by the laws of the State of New York and applicable federal law. The captions in this Second Amendment are for convenience of reference only and shall not define or limit the provisions hereof. This Second Amendment may be executed in separate counterparts, each of which when so executed and delivered shall be an original, but all of which together shall constitute one instrument. In proving this Second Amendment, it shall not be necessary to produce or account for more than one such counterpart. This Second Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. [SIGNATURES BEGIN ON NEXT PAGE] 4 THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT THE CREDIT AGREEMENT (AS AMENDED BY THIS SECOND AMENDMENT) AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered by their proper and duly authorized officers as of the date and year first above written. GIANT INDUSTRIES, INC. By: /s/ MARK B. COX ------------------------------ Name: Mark B. Cox Title: Vice President, Treasurer and CFO [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT BANK OF AMERICA, N.A., as Administrative Agent, as Letter of Credit Issuing Bank and as a Lender By: /s/ CLAIRE M. LIU ----------------------- Claire M. Liu Managing Director [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT BANK OF SCOTLAND By: /s/ JOSEPH FRATUS -------------------------------- Name: Joseph Fratus Title: First Vice President [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT BNP PARIBAS By: /s/ MARK A. COX --------------------- Name: Mark A. Cox Title: Director By: /s/ GREG SMOTHERS ----------------------- Name: Greg Smothers Title: Vice President [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT COMERICA BANK-CALIFORNIA By: /s/ PETER FITZPATRICK --------------------------------- Name: Peter Fitzpatrick Title: Vice President [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT FLEET NATIONAL BANK By: /s/ ALLISON I. ROSSI -------------------------- Name: Allison I. Rossi Title: Director [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT HIBERNIA NATIONAL BANK By: /s/ CORWIN DUPREE ----------------------- Name: Corwin Dupree Title: Asst. Vice-President [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT RZB FINANCE LLC By: /s/ CHRISTOPH HOEDEL --------------------------------- Name: Christoph Hoedl Title: Vice President By: /s/ ELIZABETH HIRST -------------------------------- Name: Elizabeth Hirst Title: Assistant Vice President [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT WELLS FARGO BANK, N.A. By: /s/ ART KRASNY -------------------- Name: Art Krasny Title: Relationship Manager THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT RATIFICATION AND AGREEMENT Each of the undersigned Loan Parties hereby consents to and accepts the terms and conditions of the foregoing Second Amendment and the transactions contemplated thereby, agrees to be bound by the terms and conditions thereof, and ratifies and confirms that each of the Loan Documents to which it is a party is, and shall remain, in full force and effect after giving effect to the foregoing Second Amendment. GIANT INDUSTRIES ARIZONA, INC., GIANT FOUR CORNERS, INC., DEGUELLE OIL COMPANY, GIANT MID-CONTINENT, INC., GIANT STOP-N-GO OF NEW MEXICO, INC., SAN JUAN REFINING COMPANY, CINIZIA PRODUCTION COMPANY, PHOENIX FUEL CO., INC., GIANT PIPELINE COMPANY, and GIANT YORKTOWN, INC. as Loan Parties By: /s/ MARK B. COX --------------------- Name: Mark B. Cox Vice President, Treasurer and CFO THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT EX-10.4 7 p68818exv10w4.txt EXHIBIT 10.4 Exhibit 10.4 THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT This THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "THIRD AMENDMENT") is entered into effective as of February 9, 2004 (the "AMENDMENT EFFECTIVE DATE"), among GIANT INDUSTRIES, INC., a Delaware corporation (the "COMPANY"), the financial institutions from time to time parties to the Credit Agreement (collectively, the "LENDERS"), and BANK OF AMERICA, N.A. as administrative agent (the "ADMINISTRATIVE AGENT") for the Lenders and as a Lender and as Letter of Credit Issuing Bank. Capitalized terms which are used herein without definition and which are defined in the Credit Agreement referred to below shall have the meanings ascribed to them in the Credit Agreement. WHEREAS, the Company, the Administrative Agent and the Lenders are parties to that certain Second Amended and Restated Credit Agreement dated as of May 14, 2002, as amended by the First Amendment dated October 28, 2002 and by the Second Amendment dated September 30, 2003 (the "CREDIT AGREEMENT"); and WHEREAS, the Company desires to modify the Credit Agreement to permit the Company to enter into a certain crude oil purchase and sale transaction with Statoil Marketing & Trading (US) Inc. as herein described; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Definitions. Section 1.01 of the Credit Agreement is hereby amended to add the following definitions: "BARREL" means a volume of forty-two (42) US gallons corrected for temperature to sixty (60) degrees Fahrenheit. "STATOIL" means Statoil Marketing & Trading (US) Inc. "STATOIL COMMINGLED INVENTORIES" means the commingled product or mass resulting from the commingling (whether by blending, mixing, processing or otherwise) of Eligible Refinery Hydrocarbon Inventory with crude oil supplied by Statoil and that constitutes Commingled Inventories within the meaning of the Statoil Intercreditor Agreement. For purposes of calculation of the Borrowing Base, the value of Statoil Commingled Inventories shall be equal to the product obtained by multiplying (x) the applicable quantities of Statoil Commingled Inventories (measured in Barrels in accordance with the Statoil Purchase Agreement) by (y) the lowest price per Barrel of the lowest priced crude oil (using the lower of cost or market value) included in Statoil Commingled Inventories. For purposes of clarity, the "lowest price" shall be the absolute lowest figure and not the average of applicable prices during the applicable time period. "STATOIL SEGREGATED INVENTORIES" means crude oil supplied by Statoil to Giant Yorktown pursuant to the Statoil Purchase Agreement and that constitutes segregated, identifiable Statoil Inventories within the meaning of the Statoil Intercreditor Agreement. Statoil Segregated Inventories shall at all times be excluded from Eligible Refinery Hydrocarbon Inventory for purposes of calculation of the Borrowing Base, but may otherwise be included within the Collateral. "STATOIL INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement dated as of February 9, 2004 between Statoil and the Administrative Agent. "STATOIL PURCHASE AGREEMENT" means that certain Grane Crude Oil Purchase/Sale Agreement 2004/2008 between Statoil and Giant Yorktown, as the same may be amended in compliance with the terms of this Credit Agreement. SECTION 2. Amendment to the Definition of Consolidated Funded Indebtedness. Clause (a) of the definition of "Consolidated Funded Indebtedness" in the Credit Agreement is hereby amended to read as follows: "(a) all Indebtedness (other than undrawn or unfunded amounts under outstanding Surety Instruments and Indebtedness of the type described in CLAUSE (h)(ii) of the definition of Indebtedness, and, provided that the Company is in compliance with SECTION 8.21 of this Credit Agreement, other than Indebtedness owed to Statoil pursuant to the Statoil Purchase Agreement)," SECTION 3. Amendment to the Definition of Subordinated Notes. The definition of "Subordinated Notes" in the Credit Agreement is hereby amended in its entirety to read as follows: "'SUBORDINATED NOTES' shall mean (i) the BNY $150,000,000 Subordinated Notes issued under the BNY $150,000,000 Indenture, (ii) the BNY $200,000,000 Subordinated Notes issued under the BNY $200,000,000 Indenture and (iii) notes issued in refinancing of the BNY $150,000,000 Subordinated Notes and/or the BNY $200,000,000 Subordinated Notes, in whole or in part, whether with the same or different noteholders and the same or different indenture trustees, provided that such other notes and refinancing notes (or the indenture or note purchase agreement, as applicable) (x) contain subordination terms at least as favorable to the Lenders as the BNY $150,000,000 Subordinated Notes and/or the BNY $200,000,000 Subordinated Notes being refinanced, and (y) contain other terms no more restrictive on the Company and its Subsidiaries than the BNY $150,000,000 Subordinated Notes and/or the BNY $200,000,000 Subordinated Notes being refinanced, including refinancings thereof. Notes shall not be considered `Subordinated Notes' unless and until the Administrative Agent shall have received copies of the documentation evidencing or relating to such notes evidencing the terms and conditions of subordination required hereunder." 2 SECTION 4. Amendment to Section 2.07 of the Credit Agreement (Borrowing Base). Clauses (i), (ii) and (iii) of Section 2.07(a) of the Credit Agreement are hereby amended in their entirety to read as follows: "(i) eighty percent (80%) of Eligible Refinery Hydrocarbon Inventory (except for (A) Eligible Refinery Hydrocarbon Inventory at the Company's and its Subsidiaries' service stations and travel centers, and (B) Statoil Commingled Inventories), plus (ii) fifty percent (50%) of Eligible Refinery Hydrocarbon Inventory at the Company's and its Subsidiaries' service stations and travel centers, plus (iii) sixty percent (60%) of the Lenders' prorata share of Statoil Commingled Inventories (determined in accordance with the Statoil Intercreditor Agreement), provided, however, that if the Company shall fail to be in compliance with SECTION 7.03(j) or SECTION 8.21 of this Credit Agreement, or if Statoil fails to comply with its obligations under the Intercreditor Agreement in any material respect, then in any such case, 0% of the Statoil Commingled Inventories, plus" SECTION 5. Amendment to Section 7.02 of the Credit Agreement (Recordkeeping for Statoil Supplied Crude Oil). Section 7.02 of the Credit Agreement is hereby amended by adding new Sections 7.02(h) and (i) to the end thereof, as follows: "(h) Giant Yorktown shall establish the quantity of Statoil Segregated Inventories and Statoil Commingled Inventories on at least a weekly basis in accordance with the provisions of Article 14 of the Statoil Purchase Agreement with respect to inventory records, and in accordance with the procedures and standards for quantity measurement set forth in Article 12 of the Statoil Purchase Agreement. Giant Yorktown shall furnish the Administrative Agent with copies of all audits, reports, statements and information with respect to Statoil Inventories required to be provided to Statoil under the Statoil Purchase Agreement and any related agreement, as and when such are provided to Statoil. "(i) Giant Yorktown's audit and inventory procedures and reports shall reflect: (i) the actual volume of crude oil delivered or supplied by Statoil; (ii) the volume of Statoil's deemed crude oil inventory; and (iii) the ownership and volumes of all persons (including Giant Yorktown and its Affiliates) who share commingled storage at the Yorktown Refinery for crude oil inventory. Each of the foregoing figures shall include tank identification numbers and volumes in each tank." SECTION 6. Amendment to Section 7.03 of the Credit Agreement (Notices of Amendments to the Statoil Purchase Agreement). Section 7.03 of the Credit Agreement is hereby amended by adding a new Section 7.03(j) to the end thereof, as follows: "(j) of any amendment to the Statoil Purchase Agreement, such notice to be given not less than 10 days prior to effective date of such amendment, and to be accompanied by a copy of such amendment;" 3 SECTION 7. Amendment to Section 7.10(b) of the Credit Agreement (Inspection of Yorktown Refinery). The Credit Agreement is hereby amended by adding the following at the end of Section 7.10(b) thereof: "Without limitation of the foregoing, representatives of the Administrative Agent shall have the right to physically inspect the Yorktown Refinery to verify compliance with the terms of the Statoil Intercreditor Agreement." SECTION 8. Amendment to Section 7.14 (Subordinated Indebtedness). The first sentence of Section 7.14 of the Credit Agreement is hereby amended to read as follows: "The Company shall maintain not less than $350,000,000 principal amount of Subordinated Notes outstanding at all times throughout the term hereof; provided, that the Company shall be permitted to have a lesser amount outstanding to the extent the Company prepays or redeems Subordinated Notes after February 9, 2004 with the proceeds of equity offerings." SECTION 9. Add New Section 7.17 of the Credit Agreement (Segregation of Statoil Supplied Crude Oil). The Credit Agreement is hereby amended by adding a new Section 7.17 thereto, as follows: "7.17 Segregation of Statoil Supplied Crude Oil. To the extent feasible and consistent with prudent and safe refinery practices, Giant Yorktown shall exercise all commercially reasonable efforts to physically segregate Statoil Inventories (as defined in the Statoil Intercreditor Agreement) from Eligible Refinery Hydrocarbon Inventory, and to physically segregate Eligible Refinery Hydrocarbon Inventory from Statoil Inventories, located at the Yorktown Refinery. In the event of any commingling of Statoil Inventories and Eligible Refinery Hydrocarbon Inventory, then only the Lenders' prorata share of such Statoil Commingled Inventories (as determined in accordance with the Statoil Intercreditor Agreement) shall be considered Eligible Refinery Hydrocarbon Inventory for purposes of calculation of the Borrowing Base (provided that such Statoil Commingled Inventories otherwise meet the definition of Eligible Refinery Hydrocarbon Inventory." SECTION 10. Amendment to Section 8.01 of the Credit Agreement (Limitation on Liens). A new subsection (i) is hereby added to Section 8.01 of the Credit Agreement as follows (and existing subsection (i) is renumbered as subsection (j)): "(i) Liens (including Liens on Collateral to the extent provided herein) on crude oil supplied by Statoil pursuant to the Statoil Purchase Agreement, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property after February 9, 2004; provided, that (i) any such Lien has attached prior to acquisition of such property or attaches to such property concurrently with or within 20 days after the acquisition thereof, (ii) such 4 Lien attaches solely to the property so acquired in such transaction, (iii) the principal amount of the debt secured thereby does not exceed 100% of the cost of such property, (iv) the principal amount of the Indebtedness secured by any and all such purchase money security interests in favor of Statoil shall not be increased in excess of the amount contemplated by the Statoil Purchase Agreement as in effect on February 9, 2004, and (v) such Liens in favor of Statoil shall be subject to the terms of an intercreditor agreement between Statoil and the Administrative Agent, such intercreditor agreement to be in form and substance satisfactory to the Administrative Agent and the Majority Lenders; and" SECTION 11. Amendment to Section 8.05 of the Credit Agreement (Limitation on Indebtedness and Contingent Liabilities). Subsection (h) of Section 8.05 of the Credit Agreement is hereby amended to read as follows: "(h) Indebtedness in respect of purchase money obligations within the limitations set forth in SECTIONS 8.01(h) and (i)." SECTION 12. Amendment to Section 8.11 of the Credit Agreement (Subordinated Notes). Section 8.11 of the Credit Agreement is hereby amended in its entirety to read as follows: "8.11 Subordinated Notes. The Company shall not, and shall not permit any Subsidiary to: (a) amend, modify or change, or consent or agree to any amendment, modification or change to, any of the terms of the Indentures, the Subordinated Notes or the guarantees executed in connection therewith, other than (i) any such amendment or modification which would extend the maturity or reduce the amount of any payment of principal thereof or which would reduce the rate or extend the date of payment of interest thereon, (ii) ministerial amendments that do not affect the Lenders, including amendments pursuant to Sections 9.01(1) through 9.01(5) of the BNY $150,000,000 Indenture and the BNY $200,000,000 Indenture, (iii) amendments of any representation or warranty, covenant, obligation or default of the Company to any holder of Subordinate Notes or to any trustee acting under the Indentures (including, without limitation, financial ratios) in a manner which either eliminates such representations and warranties, covenants, obligations or defaults or renders them less restrictive or onerous than those contained in the Subordinate Notes and/or the Indentures as in effect on February 9, 2004, and (iv) such other amendments and modifications acceptable to the Majority Lenders; or (b) make any payments to the holders of the Subordinated Notes or to any trustee acting under the Indentures which is prohibited by the Indentures or (c) make any prepayment of or redeem in whole or in part the Subordinated Notes except with (i) proceeds of refinancing Subordinated Notes described in clause (iii) of the definition of `Subordinated Notes or (ii) proceeds of equity offerings (or any combination of refinancing or equity offerings).'" SECTION 13. Add New Section 8.21 to the Credit Agreement (Amendments to the Statoil Purchase Agreement. A new Section 8.21 is hereby added to the Credit Agreement as follows: 5 "8.21 Amendments to the Statoil Purchase Agreement; No Prepayments. The Company agrees that it shall not amend, and shall not permit Giant Yorktown to amend, the Statoil Purchase Agreement in any manner that could, in the reasonable opinion of the Administrative Agent or the Majority Lenders, adversely affect the Lenders. The Company agrees that, so long as no Collateral Event (as defined in the Statoil Purchase Agreement) under the Statoil Purchase Agreement has occurred and is continuing, it shall not pay, prepay or secure by letter of credit, and shall not permit Giant Yorktown to pay for, prepay or secure by letter of credit, any crude oil supplied under the Statoil Purchase Agreement prior to the time such crude oil is deemed to have been Delivered (as defined in the Statoil Purchase Agreement as in effect on February 9, 2004) to Giant Yorktown and obligations in respect of such crude oil Delivered are due and payable in accordance with the terms of the Statoil Purchase Agreement as in effect on February 9, 2004. After the occurrence and during the continuance of a Collateral Event, the Company and/or Giant Yorktown may prepay or secure by letter of credit crude oil supplied under the Statoil Purchase Agreement to the extent same is required by the terms of the Statoil Purchase Agreement as in effect on February 9, 2004, but the Company shall, and shall cause Giant Yorktown to, use commercially reasonably efforts to obtain the release by Statoil of all claims to, liens on and security interests in all crude oil so prepaid or secured, by written release in form and substance reasonably satisfactory to the Administrative Agent." SECTION 14. Amendment to Section 9.01(e) of the Credit Agreement (Cross-Default). Section 9.01(e) of the Credit Agreement is hereby amended by adding a new CLAUSE (IV) to the end thereof, as follows: "(iv) A "Default" or an "Event of Default" shall occur under and as defined in the Statoil Purchase Agreement; or" SECTION 15. Amendment to Exhibit H to Credit Agreement (Borrowing Base Certificate). Exhibit H to the Credit Agreement (Borrowing Base Certificate) is hereby amended to read as set forth in Exhibit H attached hereto. SECTION 16. Authority of Administrative Agent to Enter into Intercreditor Agreement. The Lenders authorize the Administrative Agent to enter into an Intercreditor Agreement in the form attached as Exhibit A hereto, with such changes as the Administrative Agent may approve. SECTION 17. Representations and Warranties. In order to induce the Administrative Agent and the Lenders to enter into this Third Amendment, the Company represents and warrants to the Administrative Agent and to each Lender that: (a) This Third Amendment, the Credit Agreement as amended hereby and each Loan Document have been duly authorized, executed and delivered by the Company and 6 the applicable Loan Parties and constitute their legal, valid and binding obligations enforceable in accordance with their respective terms (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors' rights generally and to general principles of equity). (b) The representations and warranties set forth in ARTICLE VI of the Credit Agreement are true and correct in all material respects on and as of the Amendment Effective Date, after giving effect to, as if made on and as of the Amendment Effective Date. (c) As of the date hereof, at the time of and after giving effect to this Third Amendment, no Default or Event of Default has occurred and is continuing. (d) No approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution and delivery of this Third Amendment or the performance by the Company or any Loan Party of its obligations hereunder. This Third Amendment has been duly authorized by all necessary corporate action, and the execution, delivery and performance of this Third Amendment and the documents and transactions contemplated hereby does not and will not (a) contravene the terms of the Company's or any Loan Party's Organization Documents; (b) conflict with or result in any breach or contravention of, or result in or require the imposition or creation of any Lien under, the Subordinated Notes, the Yorktown Term Loan Documents, as amended, or any document evidencing any other material Contractual Obligation to which the Company or any Loan Party is a party or any order, injunction, writ or decree of any Governmental Authority to which the Company or any Loan Party is subject; or (c) violate any Requirement of Law. (e) The execution, delivery and performance by the Company and Giant Yorktown of the Statoil Purchase Agreement and the documents and transactions contemplated hereby (including the Statoil Intercreditor Agreement to the extent applicable to the Company and Giant Yorktown) does not and will not (a) contravene the terms of the Company's or any Loan Party's Organization Documents; (b) conflict with or result in any breach or contravention of, or result in or require the imposition or creation of any Lien under, the Subordinated Notes, the Yorktown Term Loan Documents, as amended, or any document evidencing any other material Contractual Obligation to which the Company or any Loan Party is a party or any order, injunction, writ or decree of any Governmental Authority to which the Company or any Loan Party is subject, other than Liens in favor of Statoil to the extent provided in the Statoil Purchase Agreement as in effect on February 9, 2004; or (c) violate any Requirement of Law. SECTION 18. Conditions of Effectiveness. The amendments to the Credit Agreement set forth in SECTIONS 1 through 15 of this Third Amendment shall be effective on the Amendment Effective Date, provided that the Administrative Agent shall have received: 7 (a) counterparts of this Third Amendment duly executed by the Company, the Loan Parties, the Administrative Agent, and the Majority Lenders; (b) counterparts of the Statoil Intercreditor Agreement duly executed by Statoil and consented to by the Company and Giant Yorktown; (c) a copy of the Statoil Purchase Agreement, executed by Statoil and Giant Yorktown in the same form as previously provided to the Lenders; (d) the Company shall have paid the amendment fee described in SECTION 19 of this Third Amendment, and all accrued, unpaid fees, costs and expenses owed pursuant to this Third Amendment, the Credit Agreement or any other agreement related thereto, to the extent then due and payable, together with Attorney Costs of the Administrative Agent to the extent then invoiced prior to or on the closing date of this Third Amendment; and (e) such other documents as the Administrative Agent may require in connection with the foregoing. SECTION 19. Amendment Fee. The Company agrees to pay to the Administrative Agent for the account of each Lender which timely executes a counterpart of this Third Amendment, in accordance with its Pro Rata Share, an amendment fee equal to 0.05% of the total Commitments. Such amendment fee shall be due and payable in full on the date of execution of this Third Amendment by the Company and such Lender, shall be fully earned when due and payable, and shall be in addition to any other fee, cost or expense payable pursuant to the Credit Agreement. SECTION 20. Costs. The Company agrees to pay on demand reasonable Attorney Costs of the Administrative Agent and all other costs and expenses of the Administrative Agent, in connection with the preparation, execution and delivery of this Third Amendment, the Statoil Intercreditor Agreement, and any other documents executed in connection therewith. SECTION 21. Effect of Amendment. This Third Amendment (i) except as expressly provided herein, shall not be deemed to be a consent to the modification or waiver of any other term or condition of the Credit Agreement or of any of the instruments or agreements referred to therein and (ii) shall not prejudice any right or rights which the Administrative Agent, the Issuing Bank or the Lenders may now have under or in connection with the Credit Agreement, as amended by this Third Amendment. Except as otherwise expressly provided by this Third Amendment, all of the terms, conditions and provisions of the Credit Agreement shall remain the same. It is declared and agreed by each of the parties hereto that the Credit Agreement, as amended hereby, shall continue in full force and effect, and that this Third Amendment and such Credit Agreement shall be read and construed as one instrument. The Company and each of the other Loan Parties hereby confirm and agree that all Liens and other security now or hereafter held by the Administrative Agent for the benefit of the Lenders as security for 8 payment of the Obligations are the legal, valid and binding obligations of the Company and the Loan Parties, remain in full force and effect, are unimpaired by this Third Amendment, and are hereby ratified and confirmed as security for payment of the Obligations. SECTION 22. Miscellaneous. This Third Amendment shall for all purposes be construed in accordance with and governed by the laws of the State of New York and applicable federal law. The captions in this Third Amendment are for convenience of reference only and shall not define or limit the provisions hereof. This Third Amendment may be executed in separate counterparts, each of which when so executed and delivered shall be an original, but all of which together shall constitute one instrument. In proving this Third Amendment, it shall not be necessary to produce or account for more than one such counterpart. This Third Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. [SIGNATURES BEGIN ON NEXT PAGE] 9 THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT THE CREDIT AGREEMENT (AS AMENDED BY THIS THIRD AMENDMENT) AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed and delivered by their proper and duly authorized officers as of the date and year first above written. GIANT INDUSTRIES, INC. By: /s/ MARK B. COX ------------------------- Name: Mark B. Cox Title: CFO [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT BANK OF AMERICA, N.A., as Administrative Agent, as Letter of Credit Issuing Bank and as a Lender By: /s/ CLAIR M. LIU ---------------------- Claire M. Liu Managing Director [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT BANK OF SCOTLAND By: /s/ JOSEPH FRATUS ----------------------- Name: Joseph Fratus Title: First Vice President [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT BNP PARIBAS By: /s/ MARK A. COX --------------------- Name: Mark A. Cox Title: Director By: /s/ GREG SMOTHERS ----------------------- Name: Greg Smothers Title: Vice President [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT COMERICA BANK-CALIFORNIA By: /s/ PETER F. FITZPATRICK ------------------------------ Name: Peter F. Fitzpatrick Title: Vice President [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT FLEET NATIONAL BANK By: /s/ ALLISON ROSSI ----------------------- Name: Allison Rossi Title: Director [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT HIBERNIA NATIONAL BANK By: /s/ NANCY G. MORAGAS -------------------------- Name: Nancy G. Moragas Title: Vice President [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT RZB FINANCE LLC By: /s/ JOHN A. VALISKA ------------------------- Name: John A. Valiska Title: Group Vice President By: /s/ ELISABETH HIRST ----------------------------- Name: Elisabeth Hirst Title: Assistant Vice President [SIGNATURES CONTINUED ON NEXT PAGE] THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT WELLS FARGO BANK, N.A. By: /s/ ART KRASNY -------------------- Name: Art Krasny Title: Relationship Manager THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT RATIFICATION AND AGREEMENT Each of the undersigned Loan Parties hereby consents to and accepts the terms and conditions of the foregoing Third Amendment and the transactions contemplated thereby, agrees to be bound by the terms and conditions thereof, and ratifies and confirms that each of the Loan Documents to which it is a party is, and shall remain, in full force and effect after giving effect to the foregoing Third Amendment. GIANT INDUSTRIES ARIZONA, INC., GIANT FOUR CORNERS, INC., DEGUELLE OIL COMPANY, GIANT MID-CONTINENT, INC., GIANT STOP-N-GO OF NEW MEXICO, INC., SAN JUAN REFINING COMPANY, CINIZIA PRODUCTION COMPANY, PHOENIX FUEL CO., INC., GIANT PIPELINE COMPANY, and GIANT YORKTOWN, INC. as Loan Parties By: /s/ MARK COX ------------------ Name: Mark Cox in each case, as Vice President and Chief Financial Officer THIS IS A SIGNATURE PAGE TO THE GIANT INDUSTRIES, INC. THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT EXHIBIT H (BORROWING BASE REPORT) GIANT INDUSTRIES, INC. (See attached) EX-10.9 8 p68818exv10w9.txt EXHIBIT 10.9 Exhibit 10.9 EXECUTION COPY ================================================================================ FOURTH AMENDMENT TO LOAN AGREEMENT AND OMNIBUS AMENDMENT Dated as of February 9, 2004 in respect of GIANT YORKTOWN, INC. ================================================================================ FOURTH AMENDMENT TO LOAN AGREEMENT AND OMNIBUS AMENDMENT This FOURTH AMENDMENT TO LOAN AGREEMENT AND OMNIBUS AMENDMENT (this "Amendment") dated as of February 9, 2004 is among GIANT YORKTOWN, INC., a Delaware corporation (the "Borrower"), GIANT INDUSTRIES, INC., a Delaware corporation ("Giant Industries"), GIANT INDUSTRIES ARIZONA, INC., an Arizona corporation ("Giant Arizona", and together with Giant Industries, the "Parent Guarantors"), WELLS FARGO BANK NEVADA, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity (except as specifically set forth herein), but solely in its capacity as collateral agent (the "Collateral Agent"), and each of the Persons listed on the signature pages hereto as a Lender (each, a "Lender"). RECITALS: A. The Borrower, the Collateral Agent and the Lenders have heretofore entered into that certain Loan Agreement dated as of May 14, 2002 (as amended by that certain Amendment to Loan Agreement and Omnibus Amendment dated as of May 22, 2002 (the "First Amendment"), that certain Second Amendment to Loan Agreement and Omnibus Amendment dated as of October 28, 2002 (the "Second Amendment"), that certain Third Amendment to Loan Agreement and Omnibus Amendment dated as of December 20, 2002 (the "Third Amendment"), and as further amended, supplemented or otherwise modified from time to time, the "Loan Agreement"). Giant Industries and Giant Arizona have heretofore entered into that certain Parent Guaranty Agreement dated as of May 14, 2002 (as amended by the First Amendment, the Second Amendment, the Third Amendment and the Second Amendment to Parent Guaranty Agreement dated as of October 15, 2003, and as further amended, supplemented or otherwise modified from time to time, the "Parent Guaranty"). Capitalized terms used, but not otherwise defined in this Amendment, shall have those meanings assigned to such terms in Section 1 to the Loan Agreement, as amended hereby. B. The parties hereto desire to amend the Loan Agreement and certain of the other Operative Documents. C. All requirements of law have been fully complied with and all other acts and things necessary to make this Amendment a valid, legal and binding instrument according to its terms for the purposes herein expressed have been done or performed. NOW, THEREFORE, in consideration of good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows: SECTION 1. AMENDMENTS TO LOAN AGREEMENT. Section 1.1. Section 1. (a) Section 1 of the Loan Agreement shall be and is hereby amended by amending and restating in their entirety the following definitions to read as follows: Giant Yorktown, Inc. Fourth Amendment to Loan Agreement ""Consolidated Funded Indebtedness" means, for Giant Industries and its Consolidated Subsidiaries, at any time, without duplication, the sum of: (a) all Indebtedness (other than undrawn or unfunded amounts under outstanding Surety Instruments and Indebtedness of the type described in clause (h)(ii) of the definition of Indebtedness, and, provided that Giant Industries is in compliance with Section 6A(u) of the Parent Guaranty, other than Indebtedness owed to Statoil pursuant to the Statoil Purchase Agreement), (b) obligations to redeem or purchase any stock or other equity security of Giant Industries or a Subsidiary, and (c) any guaranty obligations in respect of any of the foregoing." ""Subordinated Notes" shall mean (i) the BNY $150,000,000 Subordinated Notes issued under the BNY $150,000,000 Indenture, (ii) the BNY $200,000,000 Subordinated Notes issued under the BNY $200,000,000 Indenture and (iii) notes issued in refinancing of the BNY $150,000,000 Subordinated Notes and/or the BNY $200,000,000 Subordinated Notes, in whole or in part, whether with the same or different noteholders and the same or different indenture trustees, provided that such refinancing notes (or the indenture or note purchase agreement, as applicable) (x) contain subordination terms at least as favorable to the Lenders as the BNY $150,000,000 Subordinated Notes and/or the BNY $200,000,000 Subordinated Notes being refinanced, and (y) contain other terms no more restrictive on the Company and its Subsidiaries than the BNY $150,000,000 Subordinated Notes and/or the BNY $200,000,000 Subordinated Notes being refinanced, including refinancings thereof. Notes shall not be considered "Subordinated Notes" unless and until the Collateral Agent shall have received copies of the documentation evidencing or relating to such notes evidencing the terms and conditions of subordination required hereunder." (b) Section 1 of the Loan Agreement shall be and is hereby further amended by inserting in alphabetical order the following new defined terms: ""Statoil" means Statoil Marketing & Trading (US) Inc." ""Statoil Intercreditor Agreement" means that certain Intercreditor Agreement dated as of February 9, 2004 between Statoil and the "Administrative Agent" under the Giant Industries Credit Agreement." ""Statoil Purchase Agreement" means that certain Grane Crude Oil Purchase/Sale Agreement 2004/2008 between Statoil and the Borrower, as the same may be amended in compliance with the terms of Section 6A(u) of the Parent Guaranty." (c) Section 8.1(e) of the Loan Agreement shall be and is hereby amended by adding the following as a new clause (iv) thereof: "(iv) A "Default" or an "Event of Default" shall occur under and as defined in the Statoil Purchase Agreement; or" -2- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement SECTION 2. AMENDMENTS TO PARENT GUARANTY. Section 2.1. Section 6. (a) Subparagraph (c) of Section 6 of the Parent Guaranty shall be amended by adding a new clause (xii) thereto to read as follows: "(xii) of any amendment to the Statoil Purchase Agreement, such notice to be given not less than 10 days prior to effective date of such amendment, and to be accompanied by a copy of such amendment." (b) The first sentence of subparagraph (n) of Section 6 of the Parent Guaranty shall be and is hereby amended and restated in its entirety to read as follows: "Giant Industries shall maintain not less than $350,000,000 principal amount of Subordinated Notes outstanding at all times throughout the Loan Term; provided, however, that Giant Industries shall be permitted to have a lesser amount outstanding to the extent Giant Industries prepays or redeems Subordinated Notes after February 9, 2004 with the proceeds of equity offerings." Section 2.2. Section 6A. (a) Subparagraph (a) of Section 6A of the Parent Guaranty shall be and is hereby amended by renumbering clause (x) thereof as clause (xi) and adding a new clause (x) to read as follows: "(x) Liens on crude oil supplied by Statoil pursuant to the Statoil Purchase Agreement, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property after February 9, 2004; provided, that (A) any such Lien has attached prior to acquisition of such property or attaches to such property concurrently with or within 20 days after the acquisition thereof, (B) such Lien attaches solely to the property so acquired in such transaction, (C) the principal amount of the debt secured thereby does not exceed 100% of the cost of such property, and (D) the principal amount of the Indebtedness secured by any and all such purchase money security interests in favor of Statoil shall not be increased in excess of the amount contemplated by the Statoil Purchase Agreement as in effect on February 9, 2004; and" (b) Clause (ix) of Subparagraph (e) of Section 6A of the Parent Guaranty shall be and is hereby amended and restated in its entirety to read as follows: "(ix) Indebtedness in respect of purchase money obligations within the limitations set forth SECTION 6A(a)(viii) and (x)." (c) Subparagraph (k) of Section 6A of the Parent Guaranty shall be and hereby is amended and restated in its entirety to read as follows: "(k) Subordinated Notes. Giant Industries shall not, and shall not permit any Subsidiary to: (i) amend, modify or change, or consent or agree to any amendment, modification or change to, any of the terms of the Indentures, the Subordinated Notes or the guarantees executed in connection therewith, other than (A) any such amendment or -3- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement modification which would extend the maturity or reduce the amount of any payment of principal thereof or which would reduce the rate or extend the date of payment of interest thereon, (B) ministerial amendments that do not affect the Lenders, including amendments pursuant to Sections 9.01(1) through 9.01(5) of the BNY $150,000,000 Indenture and the BNY $200,000,000 Indenture, (C) amendments of any representation or warranty, covenant, obligation or default of Giant Industries to any holder of Subordinated Notes or to any trustee acting under the Indentures (including, without limitation, financial ratios) in a manner which either eliminates such representations and warranties, covenants, obligations or defaults or renders them less restrictive or onerous than those contained in the Subordinate Notes and/or the Indentures as in effect on February 9, 2004, and (D) such other amendments and modifications acceptable to the Required Lenders; or (ii) make any payments to the holders of the Subordinated Notes or to any trustee acting under the Indentures which is prohibited by the Indentures or (iii) make any prepayment of or redeem in whole or in part the Subordinated Notes, except with (1) proceeds of refinancing Subordinated Notes described in clause (iii) of the definition of "Subordinated Notes" or (2) proceeds of equity offerings (or any combination of refinancing or equity offerings)." (d) The following shall be added as a new Subparagraph (u) of Section 6A of the Parent Guaranty: "(u) Giant Industries agrees that it shall not amend, and shall not permit the Borrower to amend, the Statoil Purchase Agreement in any manner that could, in the reasonable opinion of the Majority Lenders, adversely affect the Lenders." SECTION 3. REPRESENTATIONS AND WARRANTIES In order to induce the Collateral Agent and the Lenders to enter into this Amendment, the Borrower and the Guarantors each represent and warrant to the Collateral Agent and to each Lender that: (a) This Amendment, the Loan Agreement and the Parent Guaranty (each as amended hereby) and each other Operative Document have been duly authorized, executed and delivered by the Borrower and the Guarantors and constitute their legal, valid and binding obligations enforceable in accordance with their respective terms (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors' rights generally and to general principles of equity). (b) The representations and warranties set forth in Section 2 of the Loan Agreement and Section 5 of the Parent Guaranty are true and correct in all material respects on and as of the Amendment Effective Date, after giving effect to this Amendment, as if made on and as of the Amendment Effective Date. (c) As of the date hereof, at the time of and after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing. -4- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement (d) No approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution and delivery of this Amendment or the performance by the Borrower or any Guarantor of its obligations hereunder and under the other Operative Documents. This Amendment and the other Operative Documents have been duly authorized by all necessary corporate action, and the execution, delivery and performance of this Amendment and the other Operative Documents and the documents and transactions contemplated hereby does not and will not (a) contravene the terms of the Borrower's or any Guarantor's Organization Documents; (b) conflict with or result in any breach or contravention of, or result in or require the imposition or creation of any Lien under, the Subordinated Notes, the Giant Industries Credit Agreement, as amended, or any document evidencing any other material Contractual Obligation to which the Borrower or any Guarantor is a party or any order, injunction, writ or decree of any Governmental Authority to which the Borrower or any Guarantor is subject; or (c) violate any Requirement of Law. (e) The execution, delivery and performance by Giant Industries and the Borrower of the Statoil Purchase Agreement and the documents and transactions contemplated thereby (including the Statoil Intercreditor Agreement to the extent applicable to Giant Industries and the Borrower) does not and will not (a) contravene the terms of the Borrower's or any Guarantor's Organization Documents; (b) conflict with or result in any breach or contravention of, or result in or require the imposition or creation of any Lien under, the Subordinated Notes, the Giant Industries Credit Agreement, as amended, or any document evidencing any other material Contractual Obligation to which the Borrower or any Guarantor is a party or any order, injunction, writ or decree of any Governmental Authority to which the Borrower or any Guarantor is subject, other than Liens in favor of Statoil to the extent provided in the Statoil Purchase Agreement as in effect on February 9, 2004; or (c) violate any Requirement of Law. SECTION 4. EFFECTIVENESS. This Amendment shall become effective on February 9, 2004 (the "Amendment Effective Date") upon the satisfaction of the following conditions precedent: (a) Amendment. The Collateral Agent and the Lenders shall have received counterparts of this Amendment duly executed by Giant Industries, Giant Arizona, the Borrower, the Constituent Company Guarantors, the Collateral Agent, and the Required Lenders. (b) No Default under, and Amendment of, Giant Industries Credit Agreement. Giant Industries shall have provided evidence satisfactory to the Collateral Agent and the Lenders that (i) the Giant Industries Credit Agreement has been amended pursuant to a Third Amendment thereto in form and substance satisfactory to the Lenders and (ii) no default or event of default shall exist under the Giant Industries Credit Agreement. -5- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement (c) Statoil Purchase Agreement. The Collateral Agent and the Lenders shall have received an executed copy of the Statoil Purchase Agreement, executed by Statoil and the Borrower in the same form as previously provided to the Lenders. (d) No Material Adverse Effect. Except as disclosed in writing to the Collateral Agent and the Lenders prior to the Amendment Effective Date, no event or circumstance has occurred that has resulted or would reasonably be expected to result in a Material Adverse Effect. (e) No Default. As of the Amendment Effective Date, no Default or Event of Default shall have occurred or be continuing. (f) Payment of Fees. Giant Industries shall have paid the Amendment Fee in accordance with Section 5 and all accrued, unpaid fees, costs and expenses owed pursuant to this Amendment, the Operative Documents or any other agreement between the Parent Guarantors and the Borrower and the Collateral Agent or any Lender, to the extent then due and payable, together with Attorney Costs of the Collateral Agent to the extent then invoiced prior to or on the closing date of this Amendment. (g) Other. The Lenders shall have received such other approvals, opinions and documents as the Lenders deem appropriate. Upon satisfaction of the foregoing conditions precedent set forth in this Section 4, the Collateral Agent shall notify Giant Industries and the Lenders in writing, and the date set forth in such notice shall be the effective date of this Amendment. SECTION 5. AMENDMENT FEE. Giant Industries agrees to pay to the Collateral Agent for the account of each Lender which timely executes a counterpart of this Amendment, an amendment fee equal to 0.05% of such Lender's Commitment. Such amendment fee shall be due and payable in full on the date of execution of this Amendment by Giant Industries and such Lender, shall be fully earned when due and payable, and shall be in addition to any other fee, cost or expense payable pursuant to the Operative Documents. SECTION 6. COSTS AND EXPENSES. Giant Industries agrees to pay on demand reasonable Attorney Costs of the Lenders and the Collateral Agent and all other costs and expenses of the Lenders and the Collateral Agent in connection with the preparation, execution and delivery of this Amendment and the other documents and instruments contemplated hereby. -6- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement SECTION 6. MISCELLANEOUS. Section 6.1. Guarantor Obligations. Each Guarantor hereby ratifies and affirms in all respects it obligations under its guaranty and acknowledges that such guaranty shall remain in full force and effect. Section 6.2. Construction. This Amendment shall be construed in connection with and as part of the Loan Agreement and the other Operative Documents, and except as modified and expressly amended by this Amendment, all terms, conditions and covenants contained in the Loan Agreement and the other Operative Documents are hereby ratified and shall be and remain in full force and effect. Section 6.3. Headings and Table of Contents. The headings of the Sections of this Amendment are inserted for purposes of convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof and any reference to numbered Sections, unless otherwise indicated, are to Sections of this Amendment. Section 6.4. References. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Amendment may refer to the Loan Agreement and the other Operative Documents without making specific reference to this Amendment but nevertheless all such references shall be deemed to include this Amendment unless the context otherwise requires. Section 6.5. Counterparts. This Amendment may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one Amendment. Section 6.6. Governing Law. This Amendment shall be governed by and construed in accordance under the laws of the State of New York without regard to conflict of law principles (other than Title 14 of Article V of the New York General Obligation Law). [Signature Pages begin on Next Page] -7- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement Executed and delivered as of this 9th day of February, 2004. GIANT YORKTOWN, INC., as Borrower By: /s/ ROGER D. SANDEEN ----------------------------------------- Name: Roger D. Sandeen Its: VP & CAO GIANT INDUSTRIES, INC., as a Guarantor By: /s/ ROGER D. SANDEEN ----------------------------------------- Name: Roger D. Sandeen Its: VP & CAO GIANT INDUSTRIES ARIZONA, INC. , as a Guarantor By: /s/ ROGER D. SANDEEN ----------------------------------------- Name: Roger D. Sandeen Its: VP & CAO -8- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement BLACK DIAMOND INTERNATIONAL FUNDING, LTD., as a Lender By: /s/ ALAN CORKISH ----------------------------------------- Name: Alan Corkish Title: Director -9- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement TRS1 LLC, as a Lender By: /s/ DEBORAH O'KEEFFE ------------------------------------------ Name: Deborah O'Keeffe Title: Vice President -10- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement GMAC COMMERCIAL FINANCE LLC (SUCCESSOR BY MERGER TO GMAC BUSINESS CREDIT, LLC), as a Lender By: /s/ L. M. STEVENS ----------------------------------------- Name: L. M. Stevens Title: Division Chief Credit Officer -11- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement ORIX FINANCIAL SERVICES, INC., as a Lender By: /s/ F. R. RUCKER ---------------------------------------- Name: F. R. Rucker Title: VP -12- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement TRANSAMERICA EQUIPMENT FINANCIAL SERVICES CORPORATION, as a Lender By: /s/ JAMES R. BATES ------------------------------------------ Name: James R. Bates Title: VP -13- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement WELLS FARGO BANK NEVADA, NATIONAL ASSOCIATION, as Collateral Agent By /s/ ERIC MORGAN ------------------------------------------ Name: Eric Morgan Title: Trust Officer -14- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement Each of the undersigned hereby acknowledges and agrees to the terms of the foregoing Amendment and further confirms its continued guaranty of the obligations of the Borrower under the Loan Agreement, as amended hereby, pursuant to the terms of its guaranty on this ______ day of February, 2004. GIANT FOUR CORNERS, INC. By /s/ MARK B. COX ------------------------------------------ Name: Mark B. Cox Title: CFO Address: c/o Giant Industries, Inc. 23733 North Scottsdale Road Scottsdale, Arizona 85255-3465 Attention: President SAN JUAN REFINING COMPANY By /s/ MARK B. COX ------------------------------------------ Name: Mark B. Cox Title: CFO Address: c/o Giant Industries, Inc. 23733 North Scottsdale Road Scottsdale, Arizona 85255-3465 Attention: President PHOENIX FUEL CO., INC. By /s/ MARK B. COX ------------------------------------------- Name: Mark B. Cox Title: CFO Address: c/o Giant Industries, Inc. 23733 North Scottsdale Road Scottsdale, Arizona 85255-3465 Attention: President -15- Giant Yorktown, Inc. Fourth Amendment to Loan Agreement GIANT MID-CONTINENT, INC. By /s/ MARK B. COX ------------------------------------------ Name: Mark B. Cox Title: CFO Address: c/o Giant Industries, Inc. 23733 North Scottsdale Road Scottsdale, Arizona 85255-3465 Attention: President GIANT STOP-N-GO OF NEW MEXICO, INC. By /s/ MARK B. COX ------------------------------------------ Name: Mark B. Cox Title: CFO Address: c/o Giant Industries, Inc. 23733 North Scottsdale Road Scottsdale, Arizona 85255-3465 Attention: President -16- EX-10.28 9 p68818exv10w28.txt EXHIBIT 10.28 Exhibit 10.28 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of this 12th day of December, 2003, between Giant Industries, Inc., a Delaware corporation (the "Company"), and Fred L. Holliger (the "Executive"). RECITALS A. The Company desires to retain the services of the Executive as its Chief Executive Officer, and the Executive desires and is willing to continue employment with the Company in that capacity. B. The Company and the Executive desire to embody the terms and conditions of the Executive's employment in a written agreement, which will supersede all prior agreements of employment, whether written or oral, including without limitation the Employment Agreement, dated the 11th day of December, 1997, between the Company and the Executive, pursuant to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of their mutual covenants and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I DUTIES AND TERM 1.1 Employment. The Executive is employed as the Chief Executive Officer of the Company. In this capacity, the Executive shall have such duties and responsibilities as shall be assigned to the Executive from time to time by the Board of Directors of the Company (the "Board"), in each case not inconsistent with the Executive's position with the Company, including the performance of duties with respect to subsidiaries of the Company. 1.2 Term. The term of this Agreement shall commence on the date first written above and shall continue, unless sooner terminated pursuant to Article III, for three years (the "Initial Term"). Thereafter, the term of this Agreement shall automatically be extended for successive one year periods ("Renewal Terms") unless either the Board or the Executive gives written notice to the other at least 180 days prior to the end of the Initial Term or any Renewal Term, as the case may be, of its or the Executive's intention not to renew the term of this Agreement or unless this Agreement is sooner terminated pursuant to Article III. The Initial Term and any Renewal Terms of this Agreement shall be collectively referred to as the "Term." 1.3 Location. During the Term of this Agreement, the Executive shall be based in the principal offices of the Company in Maricopa County, Arizona, and shall not be required to be based anywhere other than Maricopa County, Arizona except for travel reasonably required in the performance of the Executive's duties hereunder and except as may be otherwise agreed to by the Executive. ARTICLE II COMPENSATION 2.1 Base Salary. Subject to the further provisions of this Agreement, the Company shall pay the Executive during the Term of this Agreement an annual base salary of not less than $450,000 (the "Base Salary"). The Base Salary shall be reviewed at least annually by the Board and the Board may, in its discretion, increase the Base Salary. The Base Salary of the Executive shall not be decreased at any time during the Term of this Agreement from the amount of Base Salary then in effect, except in connection with across-the-board salary reductions similarly affecting all senior executives of the Company. Participation in deferred compensation, discretionary bonus, retirement, stock option and other employee benefit plans and in fringe benefits shall not reduce the Base Salary payable to the Executive under this Section 2.1. The Base Salary under this Section 2.1 shall be payable by the Company to the Executive not less frequently than semi-monthly. 2.2 Discretionary Bonuses. Subject to the further provisions of this Agreement, during the Term of this Agreement the Executive shall be entitled to participate in an equitable manner with all other senior executives of the Company in such discretionary bonuses including, but not limited to, bonuses provided pursuant to any management bonus plan that the Company may adopt, as may be authorized and declared by the Board (including any duly authorized committee of the Board) to the Company's senior executives. Nothing in this Section shall be deemed to limit the ability of the Executive to be paid and receive discretionary bonuses from the Company, based solely on the Executive's performance, without regard to the payment of discretionary bonuses to any other senior executives of the Company. 2.3 Participation in Retirement and Employee Benefit Plans; Fringe Benefits. The Executive shall be entitled to participate in all plans of the Company relating to stock options, stock purchases, pension, thrift, profit sharing, life insurance, hospitalization and medical coverage, disability, travel or accident insurance, education or other retirement or employee benefits that the Company has adopted or may adopt for the benefit of its senior executives, subject to the provisions of those plans. In addition, the Executive shall be entitled to participate in any other fringe benefits, such as automobile allowances, club dues and fees of professional organizations and associations, which are now or may become applicable to the Company's senior executives, and any other benefits which are commensurate with the duties and responsibilities to be performed by the Executive under this Agreement. The Executive shall, during the Term of the Executive's employment hereunder, continue to be provided with benefits at a level which shall in no event be less in any material respect than the benefits available to the Executive as of the date of this Agreement. Notwithstanding the foregoing, the Company may change, terminate or reduce benefits under any benefit plans and programs to the extent such changes, terminations or reductions apply uniformly to all senior executives entitled to participate therein, and the Executive's benefits shall be changed, terminated or reduced or terminated accordingly. 2.4 Vacations. The Executive shall be entitled to an annual paid vacation of four weeks per year or such longer period as the Board may approve; provided, however, that the Executive may not carry over more than one week of vacation time to any subsequent year without the prior approval of the Board. The timing of paid vacations shall be scheduled in a manner reasonably acceptable to the Company. 2 ARTICLE III TERMINATION OF EMPLOYMENT 3.1 Death or Retirement of Executive. This Agreement shall automatically terminate upon the death or Retirement (as defined in Section 3.4) of the Executive. 3.2 By the Executive. The Executive shall be entitled to terminate this Agreement by giving written notice to the Company: (a) at least 180 days prior to the end of the Initial Term or any Renewal Term of this Agreement; (b) at any time for Good Reason (as defined in Section 3.4); and (c) at any time without Good Reason upon 30 days advance notice to the Company. 3.3 By the Company. The Company shall be entitled to terminate this Agreement by giving written notice to the Executive: (a) at least 180 days prior to the end of the Initial Term or any Renewal Term of this Agreement; (b) in the event of the Executive's Disability (as defined in Section 3.4); (c) for cause; and (d) at any time without cause upon such advance notice to the Executive, if any, as determined by the Board. 3.4 Definitions. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Change of Control" shall mean a change in ownership or control of the Company effected through any of the following transactions: (i) the direct or indirect acquisition by any person or related group of persons (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than 50% of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders or other transaction; or 3 (ii) a change in the composition of the Board over a period of 36 consecutive months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time such election or nomination was approved by the Board; or (iii) a merger or consolidation approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iv) the sale, transfer or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company approved by the stockholders or the complete liquidation or dissolution of the Company approved by the stockholders. (b) "Disability" shall mean the Executive's inability, with or without reasonable accommodation, to perform one or more of the essential functions of the Executive's position hereunder on a full-time basis for a period exceeding 180 consecutive days or for periods aggregating more than 180 days during any 12 month period as a result of incapacity due to physical or mental impairment not due to drug or alcohol abuse. If there is a dispute as to whether the Executive is or was physically or mentally unable to perform the essential functions of the Executive's position under this Agreement, such dispute shall be submitted for resolution to a licensed physician agreed upon by the Board and the Executive, or if an agreement cannot be promptly reached, the Board and the Executive will each select a physician, and if these physicians cannot agree, they will pick a third physician whose decision shall be binding on all parties. If such a dispute arises, the Executive shall submit to such examinations and shall provide such information as such physician(s) may request, and the determination of the physician(s) may be released to the Company and, as to the Executive's physical or mental condition, shall be binding and conclusive. (c) "Good Reason" shall mean any of the following if the same shall occur without the Executive's express prior written consent: (i) a material change by the Company in the Executive's function, duties or responsibilities (including reporting responsibilities) which would cause the Executive's position with the Company to become of less dignity, responsibility and importance than those associated with the Executive's functions, duties or responsibilities as of the date of this Agreement, as of the first day of any Renewal Term, or during the 90 day period immediately preceding the date a Change of Control occurs, as the case may be; 4 (ii) the Executive's Base Salary is reduced by the Company, unless such reduction is pursuant to a salary reduction program as described in Section 2.1 hereof, or there is a material reduction in the benefits that are in effect for the Executive, unless such reduction is pursuant to a uniform reduction in benefits for all senior executives as described in Section 2.3 hereof; (iii) relocation of the Executive's principal place of employment to a place located outside of Maricopa County, Arizona; (iv) the failure by the Company to obtain the assumption by operation of law or otherwise of this Agreement by any entity which is the surviving entity in any merger or other form of corporate reorganization involving the Company or by any entity which acquires all or substantially all of the Company's assets in a Change of Control transaction; or (v) other material breach of this Agreement by the Company, which breach shall not be cured within 15 days after written notice thereof to the Company. (d) "Retirement" shall mean normal retirement at age 65 or in accordance with retirement rules generally applicable to the Company's senior executives. ARTICLE IV COMPENSATION UPON TERMINATION OF EMPLOYMENT 4.1 Termination Prior to a Change of Control; Termination More than Three Years Following a Change of Control; Termination for Death or Disability; Termination by Executive without Good Reason. If, at any time during this Agreement, the Executive's employment is terminated by reason of the Executive's death or Disability, or by the Executive without Good Reason, or if prior to a Change of Control, or more than three years following a Change of Control, the Executive's employment is terminated by the Company with cause, the Company shall: (a) pay the Executive (or the Executive's estate or beneficiaries) any Base Salary which has accrued but not been paid as of the termination date; (b) reimburse the Executive (or the Executive's estate or beneficiaries) for expenses incurred by him prior to the date of termination which are subject to reimbursement pursuant to applicable Company policies then in effect; (c) provide to the Executive (or the Executive's estate or beneficiaries) any accrued and vested benefits required to be provided by the terms of any Company-sponsored benefit plans or programs, together with any benefits required to be paid or provided in the event of the Executive's death or Disability under applicable law; (d) pay the Executive (or the Executive's estate or beneficiaries) any discretionary bonus with respect to a prior fiscal year which has accrued and been earned but has not been paid; and 5 (e) in addition, the Executive (or the Executive's estate or beneficiaries) shall have the right to exercise all vested, unexercised stock options outstanding at the termination date in accordance with terms of the plans and agreements pursuant to which such options were issued; provided, however, that unless expressly prohibited under the terms of such plans and applicable laws, the Executive shall have a period of up to one year from the termination date to exercise such stock options. 4.2 Termination Within Three Years Following a Change of Control. If, at any time within a three year period following a Change of Control, the Executive's employment is terminated by the Company with or without cause or by the Executive with Good Reason, or upon expiration of the Term of this Agreement within a three year period following a Change of Control, the Company shall: (a) make the payments and provide to the Executive the benefits under Section 4.1, other than under Section 4.1(e); (b) pay to the Executive an amount equal to three times the sum of: (i) the Executive's Base Salary in effect immediately prior to the time such termination occurs; and (y) the average of the annual bonuses paid to the Executive for the three fiscal years immediately preceding the fiscal year in which the termination occurs, provided that in determining such average, for any fiscal year for which the Executive's annual bonus was less than 25% of the Executive's then Base Salary, such bonus shall be deemed to be equal to 25% of the Executive's then Base Salary. Such amount shall be paid, at the Executive's option, in a lump sum on or prior to the 30th day following the termination date, or in 12 equal monthly installments beginning on the first day of the month following the termination date and continuing on the first day of each month thereafter; and (c) in addition, unless expressly prohibited under the terms of such plans and applicable laws, all unvested stock options or other stock awards owned by the Executive that would otherwise have vested after the termination date shall become fully vested and exercisable at the termination date, and the Executive (or the Executive's estate or beneficiaries) shall have the right to exercise all vested, unexercised stock options or awards outstanding at the termination date (including the accelerated options and awards) in accordance with the terms (except the vesting terms with respect to the accelerated options and awards) of the plans and agreements pursuant to which such options and other awards were issued; provided, however, that unless expressly prohibited under the terms of such plans and applicable laws, the Executive shall have a period of up to one year from the termination date to exercise such stock options. (d) The Internal Revenue Code of 1986, as amended (the "Code"), imposes significant tax burdens on the Executive and the Company if the total amounts received by the Executive due to a Change of Control exceed prescribed limits. These tax burdens include a requirement that the Executive pay a 20% excise tax on certain amounts received in excess of the prescribed limits and a loss of deduction for the Company. If, as a result of these Code provisions, the Executive is required to pay such excise tax, then upon written notice from the Executive to the Company, the Company shall pay the Executive an amount equal to the total excise tax imposed on the Executive (including the excise taxes on any excise tax reimbursements due pursuant to this sentence and the excise taxes on any income tax reimbursements due pursuant to the next sentence). 6 If the Company is obligated to pay the Executive pursuant to the preceding sentence, the Company also shall pay the Executive an amount equal to the "total presumed federal and state taxes" that could be imposed on the Executive with respect to the excise tax reimbursements due to the Executive pursuant to the preceding sentence and the income tax reimbursements due to the Executive pursuant to this sentence. For purposes of the preceding sentence, the "total presumed federal and state taxes" that could be imposed on the Executive shall be conclusively calculated using a combined tax rate equal to the sum of the then prevailing maximum marginal federal and state income tax rates and the hospital insurance portion of FICA. No adjustments will be made in this combined rate for the deduction of state taxes on the federal return, the loss of itemized deductions or exemptions, or for any other purpose. The Executive shall be responsible for paying the actual taxes. The amounts payable to the Executive pursuant to this or any other agreement or arrangement with Company shall not be limited in any way by the amount that may be paid pursuant to the Code without the imposition of an excise tax or the loss of Company deductions. Either the Executive or the Company may elect to challenge any excise taxes imposed by the Internal Revenue Service, and the Company and the Executive agree to cooperate with each other in prosecuting such challenges. If the Executive elects to litigate or otherwise challenge the imposition of such excise tax, however, the Company will join the Executive in such litigation or challenge only if the Board determines in good faith that the Executive's position has substantial merit and that the issues should be litigated from the standpoint of the Company's best interest. 4.3 Termination by Executive for Good Reason or by Company Without Cause Prior to a Change of Control or More than Three Years Following a Change of Control. If, prior to a Change of Control, or more than three years following a Change of Control, the Executive's employment is terminated by the Executive for Good Reason, by the Company without cause or the Company or the Board gives written notice to the Executive of its intention to not renew this Agreement at the end of the Initial Term or any Renewal Term, the Company shall: (a) make the payments and provide to the Executive the benefits under Section 4.1; and (b) pay to the Executive a lump sum payment on or prior to the 30th day following the termination date in an amount equal to the Executive's Base Salary in effect immediately prior to the time such termination occurs. This lump sum payment shall not be considered due and owing until the 30th day following the termination date. 4.4 Releases and Resignations. Notwithstanding the provisions of Sections 4.1, 4.2 and 4.3, it shall be a condition to the Company's obligations to pay any amount to the Executive in excess of any amounts required by law that the Executive provide to the Company and its subsidiaries, officers, directors, employees and agents a complete general release of all claims, known or unknown, that the Executive may have against any of them. Such release shall be in customary form, and shall specifically include employment-related claims. In addition, upon termination of employment, the Executive shall, upon demand, resign as an officer and director of the Company or any subsidiary of the Company, as applicable. 7 ARTICLE V RESTRICTIVE COVENANTS 5.1 Confidentiality. (a) The Executive agrees to keep all trade secrets and/or proprietary information (collectively, "Confidential Information") of the Company in strict confidence and agrees not to disclose any Confidential Information to any other person, firm, association, partnership, corporation or other entity for any reason except as such disclosure may be required in connection with the Executive's employment hereunder. The Executive further agrees not to use any Confidential Information for any purpose except on behalf of the Company. (b) For purposes of this Agreement, "Confidential Information" shall mean any information, process or idea that is not generally known in the industry, that the Company considers confidential, and/or that gives the Company a competitive advantage, including, without limitation, suppliers, production costs or production information; marketing plans; business forecasts; and sales records. The Executive understands that the above list is intended to be illustrative and that other Confidential Information may currently exist or arise in the future. If the Executive is unsure whether certain information or material is Confidential Information, the Executive shall treat that information or material as confidential unless the Executive is informed by the Company, in writing, to the contrary. "Confidential Information" shall not include any information which: (i) is or becomes publicly available through no act or failure of the Executive; (ii) was or is rightfully learned by the Executive from a source other than the Company before being received from the Company; or (iii) becomes independently available to the Executive as matter of right from a third party. If only a portion of the Confidential Information is or becomes publicly available, then only that portion shall not be Confidential Information hereunder. (c) The Executive further agrees that upon termination of the Executive's employment with the Company, for whatever reason, the Executive will surrender to the Company all of the property, notes, manuals, reports, documents and other things in the Executive's possession, including copies or computerized records thereof, which relate directly or indirectly to Confidential Information. 5.2 Competition. (a) The Executive agrees that during the Term of the Executive's employment with the Company hereunder, and for a period of one year following the termination of the Executive's employment, unless such termination was by the Company and without cause, the Executive shall not: (i) except as a passive investor in publicly-held companies, and except for investments held as of the date hereof, directly or indirectly own, operate, manage, consult with, control, participate in the management or control of, be employed by, maintain or continue any interest whatsoever in any refining company or any company that markets petroleum products, in each case that directly competes with the Company; or (ii) directly or indirectly influence customers or suppliers of the 8 Company to divert their business to any competitor of the Company; or (iii) employ, or directly or indirectly solicit, or cause the solicitation of, any employees of the Company who are in the employ of the Company on the termination date of the Executive's employment hereunder for employment by others in competition with the Company. (b) The Executive expressly agrees and acknowledges that: (i) the covenants in Section 5.2(a) are reasonably necessary for the protection of the interests of the Company and are reasonable in scope and do not place any unreasonable burden upon him; (ii) the general public will not be harmed as a result of enforcement of the covenants in Section 5.2(a); (iii) the Executive's personal legal counsel has reviewed the covenants in Section 5.2(a); and (iv) he understands and hereby agrees to each and every term and condition of the covenants in Section 5.2(a). 5.3 Remedies. The Executive expressly agrees and acknowledges that the covenants set forth in Section 5.2 are necessary for the Company's and its affiliates' protection because of the nature and scope of their business and the Executive's position with the Company. Further, the Executive acknowledges that, in the event of the Executive's breach of the Executive's covenants, money damages will not sufficiently compensate the Company for its injury caused thereby, and he accordingly agrees that in addition to such money damages he may be restrained and enjoined from any continuing or future breach of the covenants without any bond or other security being required. The Executive acknowledges that any breach of the covenants would result in irreparable damage to the Company. The Executive further acknowledges and agrees that if the Executive fails to comply with this Article V, the Company has no obligation to provide any compensation or other benefits described in Article IV hereof. The Executive acknowledges that the remedy at law for any breach or threatened breach of Sections 5.1 and 5.2 will be inadequate and, accordingly, that the Company shall, in addition to all other available remedies (including without limitation, seeking such damages as it can show it has sustained by reason of such breach), be entitled to injunctive relief or specific performance. ARTICLE VI MISCELLANEOUS 6.1 No Assignments. This Agreement is personal to each of the parties hereto. No party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto, except that this Agreement shall be binding upon and inure to the benefit of any successor corporation to the Company. (a) The Company shall use reasonable efforts to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the 9 business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as defined herein and any successor to its business and/or assets which assumes this Agreement by operation of law or otherwise. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive and the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder had he continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee or other designee, or if there is no such designee, to the Executive's estate. 6.2 Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other addresses as either party may have furnished to the other in writing in accordance herewith, except that notice of a change of address shall be effective only upon actual receipt: To the Company: Giant Industries, Inc. 23733 North Scottsdale Road Scottsdale, Arizona 85255 Attention: General Counsel To the Executive: Fred L. Holliger 23733 North Scottsdale Road Scottsdale, Arizona 85255 Notices pursuant to Article III of this Agreement shall specify the specific termination provision relied upon by the party giving notice and shall state the effective date of the termination. 6.3 Amendments or Additions. No amendments or additions to this Agreement shall be binding unless in writing and signed by each of the parties hereto. 6.4 Section Headings. The Section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. 6.5 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If, in any judicial proceedings, a court shall refuse to enforce one or more of the covenants or agreements contained herein because the duration thereof is too long, or the scope thereof is too broad, it is expressly agreed between the parties hereto that such scope or duration shall be deemed reduced to the extent necessary to permit the enforcement of such covenants or agreements. 10 6.6 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 6.7 Arbitration. (a) Except as necessary to obtain injunctive relief to enforce the provisions of Article V of this Agreement, any dispute or controversy arising, directly or indirectly, under or in connection with this Agreement, the Executive's employment with the Company pursuant to this Agreement, the termination of the Executive's employment with the Company or any other matter reasonably related thereto, asserted by the Company against the Executive or by the Executive against the Company, its subsidiaries, affiliates, officers, directors, employees, agents, attorneys or representatives, shall be settled exclusively by arbitration, conducted before a panel of three arbitrators in Maricopa County, Arizona in accordance with the rules of the American Arbitration Association then in effect. The decision of the arbitrators shall be final and binding on the parties, and judgment may be entered on the arbitrators' award in any court having jurisdiction. The costs and expenses of such arbitration shall be borne in accordance with the determination of the arbitrators. (b) Without limiting the generality of Section 6.7(a), this Section 6.7 is intended to cover all disputes between and among the Executive, on the one hand, and the Company and its subsidiaries, affiliates, officers, directors, employees, agents, attorneys or representatives, on the other hand, including contract claims, statutory claims and tort claims (including without limitation violations of the Arizona Civil Rights Act, the Civil Rights Acts of 1866, 1871, 1964 and 1991, the Arizona Employment Protection Act, Arizona's wage payment statute, unemployment compensation laws, the Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act of 1967, the Fair Labor Standards Act, the Rehabilitation Act of 1973, the Occupational Safety and Health Act, or the Americans with Disabilities Act, wrongful discharge in violation of public policy, including the public policy of whistleblowing, breach of an express and/or implied employment contract, breach of the covenant of good faith and fair dealing, tortious interference with contract, tortious interference with prospective business advantage, libel, slander, defamation, false light, invasion of privacy, and intentional and/or negligent infliction of emotional distress). (c) Notwithstanding any other provision of this Agreement, if any termination of this Agreement becomes subject to arbitration, the Company shall not be required to pay any amounts to the Executive (except those amounts required by law) until the completion of the arbitration and the rendering of the arbitrators' decision. If the Company voluntarily makes any payments to the Executive during the pendency of the arbitration, such payments shall be credited to the amounts, if any, determined by the arbitrators to be owed by the Company to the Executive. The amounts, if any, determined by the arbitrators to be owed by the Company to the Executive shall be paid within five days after the decision by the arbitrators is rendered. 11 (d) The Company and the Executive acknowledge and agree that the Company's subsidiaries, affiliates, officers, directors, employees, agents, attorneys and representatives are intended third-party beneficiaries of this Section 6.7. 6.8 Modifications and Waivers. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer of the Company as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 6.9 Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Arizona without regard to its conflicts of law principles. 6.10 Taxes. Any payments provided for hereunder shall be paid net of any applicable employment taxes or other withholdings required under federal, state or local law. 6.11 Survival. The obligations of the Company under Article IV hereof, the obligations of the Executive under Article V hereof, and the provisions of Section 6.7 shall survive the expiration of this Agreement. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first indicated above. THE COMPANY: GIANT INDUSTRIES, INC., a Delaware corporation By: /s/ Larry L. DeRoin ------------------------------ Larry L. DeRoin Its: Chairman, Compensation Committee THE EXECUTIVE: /s/ Fred L. Holliger ------------------------------------ Fred L. Holliger 12 EX-10.29 10 p68818exv10w29.txt EXHIBIT 10.29 Exhibit 10.29 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of this 12th day of December, 2003, between Giant Industries, Inc., a Delaware corporation (the "Company"), and Morgan Gust (the "Executive"). RECITALS A. The Company desires to retain the services of the Executive as its President, and the Executive desires and is willing to continue employment with the Company in that capacity. B. The Company and the Executive desire to embody the terms and conditions of the Executive's employment in a written agreement, which will supersede all prior agreements of employment, whether written or oral, including without limitation the Employment Agreement, dated the 11th day of December, 1997, between the Company and the Executive, pursuant to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of their mutual covenants and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I DUTIES AND TERM 1.1 Employment. The Executive is employed as the President of the Company. In this capacity, the Executive shall have such duties and responsibilities as shall be assigned to the Executive from time to time by the Board of Directors of the Company (the "Board"), in each case not inconsistent with the Executive's position with the Company, including the performance of duties with respect to subsidiaries of the Company. 1.2 Term. The term of this Agreement shall commence on the date first written above and shall continue, unless sooner terminated pursuant to Article III, for three years (the "Initial Term"). Thereafter, the term of this Agreement shall automatically be extended for successive one year periods ("Renewal Terms") unless either the Board or the Executive gives written notice to the other at least 180 days prior to the end of the Initial Term or any Renewal Term, as the case may be, of its or the Executive's intention not to renew the term of this Agreement or unless this Agreement is sooner terminated pursuant to Article III. The Initial Term and any Renewal Terms of this Agreement shall be collectively referred to as the "Term." 1.3 Location. During the Term of this Agreement, the Executive shall be based in the principal offices of the Company in Maricopa County, Arizona, and shall not be required to be based anywhere other than Maricopa County, Arizona except for travel reasonably required in the performance of the Executive's duties hereunder and except as may be otherwise agreed to by the Executive. ARTICLE II COMPENSATION 2.1 Base Salary. Subject to the further provisions of this Agreement, the Company shall pay the Executive during the Term of this Agreement an annual base salary of not less than $325,000 (the "Base Salary"). The Base Salary shall be reviewed at least annually by the Board and the Board may, in its discretion, increase the Base Salary. The Base Salary of the Executive shall not be decreased at any time during the Term of this Agreement from the amount of Base Salary then in effect, except in connection with across-the-board salary reductions similarly affecting all senior executives of the Company. Participation in deferred compensation, discretionary bonus, retirement, stock option and other employee benefit plans and in fringe benefits shall not reduce the Base Salary payable to the Executive under this Section 2.1. The Base Salary under this Section 2.1 shall be payable by the Company to the Executive not less frequently than semi-monthly. 2.2 Discretionary Bonuses. Subject to the further provisions of this Agreement, during the Term of this Agreement the Executive shall be entitled to participate in an equitable manner with all other senior executives of the Company in such discretionary bonuses including, but not limited to, bonuses provided pursuant to any management bonus plan that the Company may adopt, as may be authorized and declared by the Board (including any duly authorized committee of the Board) to the Company's senior executives. Nothing in this Section shall be deemed to limit the ability of the Executive to be paid and receive discretionary bonuses from the Company, based solely on the Executive's performance, without regard to the payment of discretionary bonuses to any other senior executives of the Company. 2.3 Participation in Retirement and Employee Benefit Plans; Fringe Benefits. The Executive shall be entitled to participate in all plans of the Company relating to stock options, stock purchases, pension, thrift, profit sharing, life insurance, hospitalization and medical coverage, disability, travel or accident insurance, education or other retirement or employee benefits that the Company has adopted or may adopt for the benefit of its senior executives, subject to the provisions of those plans. In addition, the Executive shall be entitled to participate in any other fringe benefits, such as automobile allowances, club dues and fees of professional organizations and associations, which are now or may become applicable to the Company's senior executives, and any other benefits which are commensurate with the duties and responsibilities to be performed by the Executive under this Agreement. The Executive shall, during the Term of the Executive's employment hereunder, continue to be provided with benefits at a level which shall in no event be less in any material respect than the benefits available to the Executive as of the date of this Agreement. Notwithstanding the foregoing, the Company may change, terminate or reduce benefits under any benefit plans and programs to the extent such changes, terminations or reductions apply uniformly to all senior executives entitled to participate therein, and the Executive's benefits shall be changed, terminated or reduced or terminated accordingly. 2.4 Vacations. The Executive shall be entitled to an annual paid vacation of four weeks per year or such longer period as the Board may approve; provided, however, that the Executive may not carry over more than one week of vacation time to any subsequent year without the prior approval of the Board. The timing of paid vacations shall be scheduled in a manner reasonably acceptable to the Company. 2 ARTICLE III TERMINATION OF EMPLOYMENT 3.1 Death or Retirement of Executive. This Agreement shall automatically terminate upon the death or Retirement (as defined in Section 3.4) of the Executive. 3.2 By the Executive. The Executive shall be entitled to terminate this Agreement by giving written notice to the Company: (a) at least 180 days prior to the end of the Initial Term or any Renewal Term of this Agreement; (b) at any time for Good Reason (as defined in Section 3.4); and (c) at any time without Good Reason upon 30 days advance notice to the Company. 3.3 By the Company. The Company shall be entitled to terminate this Agreement by giving written notice to the Executive: (a) at least 180 days prior to the end of the Initial Term or any Renewal Term of this Agreement; (b) in the event of the Executive's Disability (as defined in Section 3.4); (c) for cause; and (d) at any time without cause upon such advance notice to the Executive, if any, as determined by the Board. 3.4 Definitions. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Change of Control" shall mean a change in ownership or control of the Company effected through any of the following transactions: (i) the direct or indirect acquisition by any person or related group of persons (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than 50% of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders or other transaction; or (ii) a change in the composition of the Board over a period of 36 consecutive months or less such that a majority of the Board members (rounded up to the next 3 whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time such election or nomination was approved by the Board; or (iii) a merger or consolidation approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iv) the sale, transfer or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company approved by the stockholders or the complete liquidation or dissolution of the Company approved by the stockholders. (b) "Disability" shall mean the Executive's inability, with or without reasonable accommodation, to perform one or more of the essential functions of the Executive's position hereunder on a full-time basis for a period exceeding 180 consecutive days or for periods aggregating more than 180 days during any 12 month period as a result of incapacity due to physical or mental impairment not due to drug or alcohol abuse. If there is a dispute as to whether the Executive is or was physically or mentally unable to perform the essential functions of the Executive's position under this Agreement, such dispute shall be submitted for resolution to a licensed physician agreed upon by the Board and the Executive, or if an agreement cannot be promptly reached, the Board and the Executive will each select a physician, and if these physicians cannot agree, they will pick a third physician whose decision shall be binding on all parties. If such a dispute arises, the Executive shall submit to such examinations and shall provide such information as such physician(s) may request, and the determination of the physician(s) may be released to the Company and, as to the Executive's physical or mental condition, shall be binding and conclusive. (c) "Good Reason" shall mean any of the following if the same shall occur without the Executive's express prior written consent: (i) a material change by the Company in the Executive's function, duties or responsibilities (including reporting responsibilities) which would cause the Executive's position with the Company to become of less dignity, responsibility and importance than those associated with the Executive's functions, duties or responsibilities as of the date of this Agreement, as of the first day of any Renewal Term, or during the 90 day period immediately preceding the date a Change of Control occurs, as the case may be; (ii) the Executive's Base Salary is reduced by the Company, unless such reduction is pursuant to a salary reduction program as described in Section 2.1 hereof, or there is a material reduction in the benefits that are in effect for the Executive, unless such reduction is pursuant to a uniform reduction in benefits for all senior executives as described in Section 2.3 hereof; 4 (iii) relocation of the Executive's principal place of employment to a place located outside of Maricopa County, Arizona; (iv) the failure by the Company to obtain the assumption by operation of law or otherwise of this Agreement by any entity which is the surviving entity in any merger or other form of corporate reorganization involving the Company or by any entity which acquires all or substantially all of the Company's assets in a Change of Control transaction; or (v) other material breach of this Agreement by the Company, which breach shall not be cured within 15 days after written notice thereof to the Company. (d) "Retirement" shall mean normal retirement at age 65 or in accordance with retirement rules generally applicable to the Company's senior executives. ARTICLE IV COMPENSATION UPON TERMINATION OF EMPLOYMENT 4.1 Termination Prior to a Change of Control; Termination More than Three Years Following a Change of Control; Termination for Death or Disability; Termination by Executive without Good Reason. If, at any time during this Agreement, the Executive's employment is terminated by reason of the Executive's death or Disability, or by the Executive without Good Reason, or if prior to a Change of Control, or more than three years following a Change of Control, the Executive's employment is terminated by the Company with cause, the Company shall: (a) pay the Executive (or the Executive's estate or beneficiaries) any Base Salary which has accrued but not been paid as of the termination date; (b) reimburse the Executive (or the Executive's estate or beneficiaries) for expenses incurred by him prior to the date of termination which are subject to reimbursement pursuant to applicable Company policies then in effect; (c) provide to the Executive (or the Executive's estate or beneficiaries) any accrued and vested benefits required to be provided by the terms of any Company-sponsored benefit plans or programs, together with any benefits required to be paid or provided in the event of the Executive's death or Disability under applicable law; (d) pay the Executive (or the Executive's estate or beneficiaries) any discretionary bonus with respect to a prior fiscal year which has accrued and been earned but has not been paid; and (e) in addition, the Executive (or the Executive's estate or beneficiaries) shall have the right to exercise all vested, unexercised stock options outstanding at the termination date in accordance with terms of the plans and agreements pursuant to which such options were issued; provided, however, that unless expressly prohibited under the terms of such plans and applicable laws, the Executive shall have a period of up to one year from the termination date to exercise such stock options. 5 4.2 Termination Within Three Years Following a Change of Control. If, at any time within a three year period following a Change of Control, the Executive's employment is terminated by the Company with or without cause or by the Executive with Good Reason, or upon expiration of the Term of this Agreement within a three year period following a Change of Control, the Company shall: (a) make the payments and provide to the Executive the benefits under Section 4.1, other than under Section 4.1(e); (b) pay to the Executive an amount equal to three times the sum of: (i) the Executive's Base Salary in effect immediately prior to the time such termination occurs; and (y) the average of the annual bonuses paid to the Executive for the three fiscal years immediately preceding the fiscal year in which the termination occurs, provided that in determining such average, for any fiscal year for which the Executive's annual bonus was less than 25% of the Executive's then Base Salary, such bonus shall be deemed to be equal to 25% of the Executive's then Base Salary. Such amount shall be paid, at the Executive's option, in a lump sum on or prior to the 30th day following the termination date, or in 12 equal monthly installments beginning on the first day of the month following the termination date and continuing on the first day of each month thereafter; and (c) in addition, unless expressly prohibited under the terms of such plans and applicable laws, all unvested stock options or other stock awards owned by the Executive that would otherwise have vested after the termination date shall become fully vested and exercisable at the termination date, and the Executive (or the Executive's estate or beneficiaries) shall have the right to exercise all vested, unexercised stock options or awards outstanding at the termination date (including the accelerated options and awards) in accordance with the terms (except the vesting terms with respect to the accelerated options and awards) of the plans and agreements pursuant to which such options and other awards were issued; provided, however, that unless expressly prohibited under the terms of such plans and applicable laws, the Executive shall have a period of up to one year from the termination date to exercise such stock options. (d) The Internal Revenue Code of 1986, as amended (the "Code"), imposes significant tax burdens on the Executive and the Company if the total amounts received by the Executive due to a Change of Control exceed prescribed limits. These tax burdens include a requirement that the Executive pay a 20% excise tax on certain amounts received in excess of the prescribed limits and a loss of deduction for the Company. If, as a result of these Code provisions, the Executive is required to pay such excise tax, then upon written notice from the Executive to the Company, the Company shall pay the Executive an amount equal to the total excise tax imposed on the Executive (including the excise taxes on any excise tax reimbursements due pursuant to this sentence and the excise taxes on any income tax reimbursements due pursuant to the next sentence). If the Company is obligated to pay the Executive pursuant to the preceding sentence, the Company also shall pay the Executive an amount equal to the "total presumed federal and state taxes" that could be imposed on the Executive with respect to the excise tax reimbursements due to the Executive pursuant to the preceding sentence and the income tax reimbursements due to the Executive pursuant to this sentence. For purposes of the preceding sentence, the "total presumed federal and state taxes" that could be imposed on the Executive shall be conclusively calculated 6 using a combined tax rate equal to the sum of the then prevailing maximum marginal federal and state income tax rates and the hospital insurance portion of FICA. No adjustments will be made in this combined rate for the deduction of state taxes on the federal return, the loss of itemized deductions or exemptions, or for any other purpose. The Executive shall be responsible for paying the actual taxes. The amounts payable to the Executive pursuant to this or any other agreement or arrangement with Company shall not be limited in any way by the amount that may be paid pursuant to the Code without the imposition of an excise tax or the loss of Company deductions. Either the Executive or the Company may elect to challenge any excise taxes imposed by the Internal Revenue Service, and the Company and the Executive agree to cooperate with each other in prosecuting such challenges. If the Executive elects to litigate or otherwise challenge the imposition of such excise tax, however, the Company will join the Executive in such litigation or challenge only if the Board determines in good faith that the Executive's position has substantial merit and that the issues should be litigated from the standpoint of the Company's best interest. 4.3 Termination by Executive for Good Reason or by Company Without Cause Prior to a Change of Control or More than Three Years Following a Change of Control. If, prior to a Change of Control, or more than three years following a Change of Control, the Executive's employment is terminated by the Executive for Good Reason, by the Company without cause or the Company or the Board gives written notice to the Executive of its intention to not renew this Agreement at the end of the Initial Term or any Renewal Term, the Company shall: (a) make the payments and provide to the Executive the benefits under Section 4.1; and (b) pay to the Executive a lump sum payment on or prior to the 30th day following the termination date in an amount equal to the Executive's Base Salary in effect immediately prior to the time such termination occurs. This lump sum payment shall not be considered due and owing until the 30th day following the termination date. 4.4 Releases and Resignations. Notwithstanding the provisions of Sections 4.1, 4.2 and 4.3, it shall be a condition to the Company's obligations to pay any amount to the Executive in excess of any amounts required by law that the Executive provide to the Company and its subsidiaries, officers, directors, employees and agents a complete general release of all claims, known or unknown, that the Executive may have against any of them. Such release shall be in customary form, and shall specifically include employment-related claims. In addition, upon termination of employment, the Executive shall, upon demand, resign as an officer and director of the Company or any subsidiary of the Company, as applicable. ARTICLE V RESTRICTIVE COVENANTS 5.1 Confidentiality. (a) The Executive agrees to keep all trade secrets and/or proprietary information (collectively, "Confidential Information") of the Company in strict confidence and agrees not to disclose any Confidential Information to any other person, firm, association, partnership, corporation or other entity for any reason except as such disclosure may be required in connection 7 with the Executive's employment hereunder. The Executive further agrees not to use any Confidential Information for any purpose except on behalf of the Company. (b) For purposes of this Agreement, "Confidential Information" shall mean any information, process or idea that is not generally known in the industry, that the Company considers confidential, and/or that gives the Company a competitive advantage, including, without limitation, suppliers, production costs or production information; marketing plans; business forecasts; and sales records. The Executive understands that the above list is intended to be illustrative and that other Confidential Information may currently exist or arise in the future. If the Executive is unsure whether certain information or material is Confidential Information, the Executive shall treat that information or material as confidential unless the Executive is informed by the Company, in writing, to the contrary. "Confidential Information" shall not include any information which: (i) is or becomes publicly available through no act or failure of the Executive; (ii) was or is rightfully learned by the Executive from a source other than the Company before being received from the Company; or (iii) becomes independently available to the Executive as matter of right from a third party. If only a portion of the Confidential Information is or becomes publicly available, then only that portion shall not be Confidential Information hereunder. (c) The Executive further agrees that upon termination of the Executive's employment with the Company, for whatever reason, the Executive will surrender to the Company all of the property, notes, manuals, reports, documents and other things in the Executive's possession, including copies or computerized records thereof, which relate directly or indirectly to Confidential Information. 5.2 Competition. (a) The Executive agrees that during the Term of the Executive's employment with the Company hereunder, and for a period of one year following the termination of the Executive's employment, unless such termination was by the Company and without cause, the Executive shall not: (i) except as a passive investor in publicly-held companies, and except for investments held as of the date hereof, directly or indirectly own, operate, manage, consult with, control, participate in the management or control of, be employed by, maintain or continue any interest whatsoever in any refining company or any company that markets petroleum products, in each case that directly competes with the Company; or (ii) directly or indirectly influence customers or suppliers of the Company to divert their business to any competitor of the Company; or (iii) employ, or directly or indirectly solicit, or cause the solicitation of, any employees of the Company who are in the employ of the Company on the termination date of the Executive's employment hereunder for employment by others in competition with the Company. (b) The Executive expressly agrees and acknowledges that: 8 (i) the covenants in Section 5.2(a) are reasonably necessary for the protection of the interests of the Company and are reasonable in scope and do not place any unreasonable burden upon him; (ii) the general public will not be harmed as a result of enforcement of the covenants in Section 5.2(a); (iii) the Executive's personal legal counsel has reviewed the covenants in Section 5.2(a); and (iv) he understands and hereby agrees to each and every term and condition of the covenants in Section 5.2(a). 5.3 Remedies. The Executive expressly agrees and acknowledges that the covenants set forth in Section 5.2 are necessary for the Company's and its affiliates' protection because of the nature and scope of their business and the Executive's position with the Company. Further, the Executive acknowledges that, in the event of the Executive's breach of the Executive's covenants, money damages will not sufficiently compensate the Company for its injury caused thereby, and he accordingly agrees that in addition to such money damages he may be restrained and enjoined from any continuing or future breach of the covenants without any bond or other security being required. The Executive acknowledges that any breach of the covenants would result in irreparable damage to the Company. The Executive further acknowledges and agrees that if the Executive fails to comply with this Article V, the Company has no obligation to provide any compensation or other benefits described in Article IV hereof. The Executive acknowledges that the remedy at law for any breach or threatened breach of Sections 5.1 and 5.2 will be inadequate and, accordingly, that the Company shall, in addition to all other available remedies (including without limitation, seeking such damages as it can show it has sustained by reason of such breach), be entitled to injunctive relief or specific performance. ARTICLE VI MISCELLANEOUS 6.1 No Assignments. This Agreement is personal to each of the parties hereto. No party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto, except that this Agreement shall be binding upon and inure to the benefit of any successor corporation to the Company. (a) The Company shall use reasonable efforts to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as defined herein and any successor to its business and/or assets which assumes this Agreement by operation of law or otherwise. 9 (b) This Agreement shall inure to the benefit of and be enforceable by the Executive and the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder had he continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee or other designee, or if there is no such designee, to the Executive's estate. 6.2 Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other addresses as either party may have furnished to the other in writing in accordance herewith, except that notice of a change of address shall be effective only upon actual receipt: To the Company: Giant Industries, Inc. 23733 North Scottsdale Road Scottsdale, Arizona 85255 Attention: General Counsel To the Executive: Morgan Gust 23733 North Scottsdale Road Scottsdale, Arizona 85255 Notices pursuant to Article III of this Agreement shall specify the specific termination provision relied upon by the party giving notice and shall state the effective date of the termination. 6.3 Amendments or Additions. No amendments or additions to this Agreement shall be binding unless in writing and signed by each of the parties hereto. 6.4 Section Headings. The Section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. 6.5 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If, in any judicial proceedings, a court shall refuse to enforce one or more of the covenants or agreements contained herein because the duration thereof is too long, or the scope thereof is too broad, it is expressly agreed between the parties hereto that such scope or duration shall be deemed reduced to the extent necessary to permit the enforcement of such covenants or agreements. 6.6 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 10 6.7 Arbitration. (a) Except as necessary to obtain injunctive relief to enforce the provisions of Article V of this Agreement, any dispute or controversy arising, directly or indirectly, under or in connection with this Agreement, the Executive's employment with the Company pursuant to this Agreement, the termination of the Executive's employment with the Company or any other matter reasonably related thereto, asserted by the Company against the Executive or by the Executive against the Company, its subsidiaries, affiliates, officers, directors, employees, agents, attorneys or representatives, shall be settled exclusively by arbitration, conducted before a panel of three arbitrators in Maricopa County, Arizona in accordance with the rules of the American Arbitration Association then in effect. The decision of the arbitrators shall be final and binding on the parties, and judgment may be entered on the arbitrators' award in any court having jurisdiction. The costs and expenses of such arbitration shall be borne in accordance with the determination of the arbitrators. (b) Without limiting the generality of Section 6.7(a), this Section 6.7 is intended to cover all disputes between and among the Executive, on the one hand, and the Company and its subsidiaries, affiliates, officers, directors, employees, agents, attorneys or representatives, on the other hand, including contract claims, statutory claims and tort claims (including without limitation violations of the Arizona Civil Rights Act, the Civil Rights Acts of 1866, 1871, 1964 and 1991, the Arizona Employment Protection Act, Arizona's wage payment statute, unemployment compensation laws, the Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act of 1967, the Fair Labor Standards Act, the Rehabilitation Act of 1973, the Occupational Safety and Health Act, or the Americans with Disabilities Act, wrongful discharge in violation of public policy, including the public policy of whistleblowing, breach of an express and/or implied employment contract, breach of the covenant of good faith and fair dealing, tortious interference with contract, tortious interference with prospective business advantage, libel, slander, defamation, false light, invasion of privacy, and intentional and/or negligent infliction of emotional distress). (c) Notwithstanding any other provision of this Agreement, if any termination of this Agreement becomes subject to arbitration, the Company shall not be required to pay any amounts to the Executive (except those amounts required by law) until the completion of the arbitration and the rendering of the arbitrators' decision. If the Company voluntarily makes any payments to the Executive during the pendency of the arbitration, such payments shall be credited to the amounts, if any, determined by the arbitrators to be owed by the Company to the Executive. The amounts, if any, determined by the arbitrators to be owed by the Company to the Executive shall be paid within five days after the decision by the arbitrators is rendered. (d) The Company and the Executive acknowledge and agree that the Company's subsidiaries, affiliates, officers, directors, employees, agents, attorneys and representatives are intended third-party beneficiaries of this Section 6.7. 6.8 Modifications and Waivers. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer of the Company as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or 11 compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 6.9 Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Arizona without regard to its conflicts of law principles. 6.10 Taxes. Any payments provided for hereunder shall be paid net of any applicable employment taxes or other withholdings required under federal, state or local law. 6.11 Survival. The obligations of the Company under Article IV hereof, the obligations of the Executive under Article V hereof, and the provisions of Section 6.7 shall survive the expiration of this Agreement. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first indicated above. THE COMPANY: GIANT INDUSTRIES, INC., a Delaware corporation By: /s/ Larry L. DeRoin ---------------------------- Larry L. DeRoin Its: Chairman, Compensation Committee THE EXECUTIVE: /s/ Morgan Gust ----------------------------- Morgan Gust 12 EX-10.30 11 p68818exv10w30.txt EXHIBIT 10.30 Exhibit 10.30 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of this 12th day of December, 2003, between Giant Industries, Inc., a Delaware corporation (the "Company"), and Mark B. Cox (the "Executive"). RECITALS A. The Company desires to retain the services of the Executive as its Vice President, Treasurer, Chief Financial Officer and Assistant Secretary and the Executive desires and is willing to continue employment with the Company in that capacity. B. The Company and the Executive desire to embody the terms and conditions of the Executive's employment in a written agreement, which will supersede all prior agreements of employment, whether written or oral, pursuant to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of their mutual covenants and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I DUTIES AND TERM 1.1. Employment. The Executive is employed as the Vice President, Treasurer, Chief Financial Officer and Assistant Secretary of the Company. In this capacity, the Executive shall have such duties and responsibilities as shall be assigned to the Executive from time to time by the Board of Directors of the Company (the "Board") or as otherwise provided in the Company's bylaws, in each case not inconsistent with the Executive's position with the Company, including the performance of duties with respect to subsidiaries of the Company. 1.2 Term. The term of this Agreement shall commence on the date first written above and shall continue, unless sooner terminated pursuant to Article III, for two years (the "Initial Term"). Thereafter, the term of this Agreement shall automatically be extended for successive one year periods ("Renewal Terms") unless either the Board or the Executive gives written notice to the other at least 180 days prior to the end of the Initial Term or any Renewal Term, as the case may be, of its or the Executive's intention not to renew the term of this Agreement or unless this Agreement is sooner terminated pursuant to Article III. The Initial Term and any Renewal Terms of this Agreement shall be collectively referred to as the "Term." 1.3 Location. During the Term of this Agreement, the Executive shall be based in the principal offices of the Company in Maricopa County, Arizona, and shall not be required to be based anywhere other than Maricopa County, Arizona except for travel reasonably required in the performance of his duties hereunder and except as may be otherwise agreed to by the Executive. ARTICLE II COMPENSATION 2.1 Base Salary. Subject to the further provisions of this Agreement, the Company shall pay the Executive during the Term of this Agreement an annual base salary of not less than $180,000 (the "Base Salary"). The Base Salary shall be reviewed at least annually by the Company's Chief Executive Officer ("CEO") and the CEO may, subject to approval by the Company's Compensation Committee, increase the Base Salary. The Base Salary of the Executive shall not be decreased at any time during the Term of this Agreement from the amount of Base Salary then in effect, except in connection with across-the-board salary reductions similarly affecting all senior executives of the Company. Participation in deferred compensation, discretionary bonus, retirement, stock option and other employee benefit plans and in fringe benefits shall not reduce the Base Salary payable to the Executive under this Section 2.1. The Base Salary under this Section 2.1 shall be payable by the Company to the Executive not less frequently than semi-monthly. 2.2 Discretionary Bonuses. Subject to the further provisions of this Agreement, during the Term of this Agreement the Executive shall be entitled to participate in an equitable manner with all other senior executives of the Company in such discretionary bonuses including, but not limited to, bonuses provided pursuant to any management bonus plan that the Company may adopt, as may be authorized and declared by the Board (including any duly authorized committee of the Board) to the Company's senior executives. Nothing in this Section shall be deemed to limit the ability of the Executive to be paid and receive discretionary bonuses from the Company, based solely on the Executive's performance, without regard to the payment of discretionary bonuses to any other senior executives of the Company. 2.3 Participation in Retirement and Employee Benefit Plans; Fringe Benefits. The Executive shall be entitled to participate in all plans of the Company relating to stock options, stock purchases, pension, thrift, profit sharing, life insurance, hospitalization and medical coverage, disability, travel or accident insurance, education or other retirement or employee benefits that the Company has adopted or may adopt for the benefit of its senior executives, subject to the provisions of those plans. In addition, the Executive shall be entitled to participate in any other fringe benefits, such as automobile allowances, club dues and fees of professional organizations and associations, which are now or may become applicable to the Company's senior executives, and any other benefits which are commensurate with the duties and responsibilities to be performed by the Executive under this Agreement. The Executive shall, during the Term of the Executive's employment hereunder, continue to be provided with benefits at a level which shall in no event be less in any material respect than the benefits available to the Executive as of the date of this Agreement. Notwithstanding the foregoing, the Company may change, terminate or reduce benefits under any benefit plans and programs to the extent such changes, terminations or reductions apply uniformly to all senior executives entitled to participate therein, and the Executive's benefits shall be changed, terminated or reduced accordingly. 2 2.4 Vacations. The Executive shall be entitled to an annual paid vacation of four weeks per year or such longer period as the Board or the CEO may approve; provided, however, that the Executive may not carry over more than one week of vacation time to any subsequent year without the prior approval of the CEO. The timing of paid vacations shall be scheduled in a manner reasonably acceptable to the Company. ARTICLE III TERMINATION OF EMPLOYMENT 3.1 Death or Retirement of Executive. This Agreement shall automatically terminate upon the death or Retirement (as defined in Section 3.4) of the Executive. 3.2 By the Executive. The Executive shall be entitled to terminate this Agreement by giving written notice to the Company: (a) at least 180 days prior to the end of the Initial Term or any Renewal Term of this Agreement; (b) at any time for Good Reason (as defined in Section 3.4); and (c) at any time without Good Reason upon 30 days advance notice to the Company. 3.3. By the Company. The Company shall be entitled to terminate this Agreement by giving written notice to the Executive: (a) at least 180 days prior to the end of the Initial Term or any Renewal Term of this Agreement; (b) in the event of the Executive's Disability (as defined in Section 3.4); (c) for cause ; and (d) at any time without cause upon such advance notice to the Executive, if any, as determined by the Board. 3.4 Definitions. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Change of Control" shall mean a change in ownership or control of the Company effected through any of the following transactions: (i) the direct or indirect acquisition by any person or related group of persons (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in 3 substantially the same proportions as their ownership of stock of the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than 50% of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders or other transaction; or (ii) a change in the composition of the Board over a period of 36 consecutive months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time such election or nomination was approved by the Board; or (iii) a merger or consolidation approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iv) the sale, transfer or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company approved by the stockholders or the complete liquidation or dissolution of the Company approved by the stockholders. (b) "Disability" shall mean the Executive's inability, with or without reasonable accommodation, to perform one or more of the essential functions of the Executive's position hereunder on a full-time basis for a period exceeding 180 consecutive days or for periods aggregating more than 180 days during any 12 month period as a result of incapacity due to physical or mental impairment not due to drug abuse. If there is a dispute as to whether the Executive is or was physically or mentally unable to perform the essential functions of the Executive's position under this Agreement, such dispute shall be submitted for resolution to a licensed physician agreed upon by the Board and the Executive, or if an agreement cannot be promptly reached, the Board and the Executive will each select a physician, and if these physicians cannot agree, they will pick a third physician whose decision shall be binding on all parties. If such a dispute arises, the Executive shall submit to such examinations and shall provide such information as such physician(s) may request, and the determination of the physician(s) may be released to the Company and, as to the Executive's physical or mental condition, shall be binding and conclusive. (c) "Good Reason" shall mean any of the following if the same shall occur without the Executive's express prior written consent: 4 (i) a material change by the Company in the Executive's function, duties or responsibilities (including reporting responsibilities) which would cause the Executive's position with the Company to become of less dignity, responsibility and importance than those associated with the Executive's functions, duties or responsibilities as of the date of this Agreement, as of the first day of any Renewal Term, or during the 90-day period immediately preceding the date a Change of Control occurs, as the case may be; (ii) the Executive's Base Salary is reduced by the Company, unless such reduction is pursuant to a salary reduction program as described in Section 2.1 hereof, or there is a material reduction in the benefits that are in effect for the Executive, unless such reduction is pursuant to a uniform reduction in benefits for all senior executives as described in Section 2.3 hereof; (iii) relocation of the Executive's principal place of employment to a place located outside of Maricopa County, Arizona; (iv) the failure by the Company to obtain the assumption by operation of law or otherwise of this Agreement by any entity which is the surviving entity in any merger or other form of corporate reorganization involving the Company or by any entity which acquires all or substantially all of the Company's assets in a Change of Control transaction; or (v) other material breach of this Agreement by the Company, which breach shall not be cured within 15 days after written notice thereof to the Company. (d) "Retirement" shall mean normal retirement at age 65 or in accordance with retirement rules generally applicable to the Company's senior executives. ARTICLE IV COMPENSATION UPON TERMINATION OF EMPLOYMENT 4.1 Termination Prior to a Change of Control; Termination More than Two Years Following a Change of Control; Termination for Death or Disability; Termination by Executive without Good Reason. If, at any time during this Agreement, the Executive's employment is terminated by reason of the Executive's death or Disability, or by the Executive without Good Reason, or if, prior to a Change of Control, or more than two years following a Change of Control, the Executive's employment is terminated by the Company with cause, the Company shall: (a) pay the Executive (or the Executive's estate or beneficiaries) any Base Salary which has accrued but not been paid as of the termination date; (b) reimburse the Executive (or the Executive's estate or beneficiaries) for expenses incurred by him prior to the date of termination which are subject to reimbursement pursuant to applicable Company policies then in effect; 5 (c) provide to the Executive (or the Executive's estate or beneficiaries) any accrued and vested benefits required to be provided by the terms of any Company-sponsored benefit plans or programs, together with any benefits required to be paid or provided in the event of the Executive's death or Disability under applicable law; (d) pay the Executive (or the Executive's estate or beneficiaries) any discretionary bonus with respect to a prior fiscal year which has accrued and been earned but has not been paid; and (e) in addition, the Executive (or the Executive's estate or beneficiaries) shall have the right to exercise all vested, unexercised stock options outstanding at the termination date in accordance with terms of the plans and agreements pursuant to which such options were issued; provided, however, that unless expressly prohibited under the terms of such plans and applicable laws, the Executive shall have a period of up to one year from the termination date to exercise such stock options. 4.2 Termination Within Two Years Following a Change of Control. If, at any time within a two year period following a Change of Control, the Executive's employment is terminated by the Company with or without cause or by the Executive with Good Reason, or upon expiration of the Term of this Agreement within a two year period following a Change of Control, the Company shall: (a) make the payments and provide to the Executive the benefits under Section 4.1, other than under Section 4.1(e); (b) pay to the Executive an aggregate amount equal to two times the sum of: (i) the Executive's Base Salary in effect immediately prior to the time such termination occurs; and (ii) the average of the annual bonuses paid to the Executive for the two fiscal years immediately preceding the fiscal year in which the termination occurs, provided that in determining such average, for any fiscal year for which the Executive's annual bonus was less than 25% of the Executive's then Base Salary, such bonus shall be deemed to be equal to 25% of the Executive's then Base Salary. Such amount shall be paid, at the Executive's option, in a lump sum on or prior to the 30th day following the termination date, or in 12 equal monthly installments beginning on the first day of the month following the termination date and continuing on the first day of each month thereafter; and (c) in addition, unless expressly prohibited under the terms of such plans and applicable laws, all unvested stock options or other stock awards owned by the Executive that would otherwise have vested after the termination date shall become fully vested and exercisable at the termination date, and the Executive (or the Executive's estate or beneficiaries) shall have the right to exercise all vested, unexercised stock options or awards outstanding at the termination date (including the accelerated options and awards) in accordance with the terms (except the vesting terms with respect to the accelerated options and awards) of the plans and agreements pursuant to which such options and other awards were issued; provided, however, that unless expressly 6 prohibited under the terms of such plans and applicable laws, the Executive shall have a period of up to one year from the termination date to exercise such stock options. (d) The Internal Revenue Code of 1986, as amended (the "Code"), imposes significant tax burdens on the Executive and the Company if the total amounts received by the Executive due to a Change of Control exceed prescribed limits. These tax burdens include a requirement that the Executive pay a 20% excise tax on certain amounts received in excess of the prescribed limits and a loss of deduction for the Company. If, as a result of these Code provisions, the Executive is required to pay such excise tax, then upon written notice from the Executive to the Company, the Company shall pay the Executive an amount equal to the total excise tax imposed on the Executive (including the excise taxes on any excise tax reimbursements due pursuant to this sentence and the excise taxes on any income tax reimbursements due pursuant to the next sentence). If the Company is obligated to pay the Executive pursuant to the preceding sentence, the Company also shall pay the Executive an amount equal to the "total presumed federal and state taxes" that could be imposed on the Executive with respect to the excise tax reimbursements due to the Executive pursuant to the preceding sentence and the income tax reimbursements due to the Executive pursuant to this sentence. For purposes of the preceding sentence, the "total presumed federal and state taxes" that could be imposed on the Executive shall be conclusively calculated using a combined tax rate equal to the sum of the then prevailing maximum marginal federal and state income tax rates and the hospital insurance portion of FICA. No adjustments will be made in this combined rate for the deduction of state taxes on the federal return, the loss of itemized deductions or exemptions, or for any other purpose. The Executive shall be responsible for paying the actual taxes. The amounts payable to the Executive pursuant to this or any other agreement or arrangement with Company shall not be limited in any way by the amount that may be paid pursuant to the Code without the imposition of an excise tax or the loss of Company deductions. Either the Executive or the Company may elect to challenge any excise taxes imposed by the Internal Revenue Service, and the Company and the Executive agree to cooperate with each other in prosecuting such challenges. If the Executive elects to litigate or otherwise challenge the imposition of such excise tax, however, the Company will join the Executive in such litigation or challenge only if the Board determines in good faith that the Executive's position has substantial merit and that the issues should be litigated from the standpoint of the Company's best interest. 4.3 Termination by Executive for Good Reason or by Company Without Cause Prior to a Change of Control or More than Two Years Following a Change of Control. If, prior to a Change of Control, or more than two years following a Change of Control, the Executive's employment is terminated by the Executive for Good Reason, by the Company without cause or the Company or the Board gives written notice to the Executive of its intention to not renew this Agreement at the end of the Initial Term or any Renewal Term, the Company shall: (a) make the payments and provide to the Executive the benefits under Section 4.1; and 7 (b) pay to the Executive a lump sum payment on or prior to the 30th day following the termination date in an amount equal to the Executive's Base Salary in effect immediately prior to the time such termination occurs. This lump sum payment shall not be considered due and owing until the 30th day following the termination date. 4.4 Releases and Resignations. Notwithstanding the provisions of Sections 4.1, 4.2 and 4.3, it shall be a condition to the Company's obligations to pay any amount to the Executive in excess of any amounts required by law that the Executive provide to the Company and its subsidiaries, officers, directors, employees and agents a complete general release of all claims, known or unknown, that the Executive may have against any of them. Such release shall be in customary form, and shall specifically include employment-related claims. In addition, upon termination of employment, the Executive shall, upon demand, resign as an officer and director of the Company or any subsidiary of the Company, as applicable. ARTICLE V RESTRICTIVE COVENANTS 5.1 Confidentiality. (a) The Executive agrees to keep all trade secrets and/or proprietary information (collectively, "Confidential Information") of the Company in strict confidence and agrees not to disclose any Confidential Information to any other person, firm, association, partnership, corporation or other entity for any reason except as such disclosure may be required in connection with the Executive's employment hereunder. The Executive further agrees not to use any Confidential Information for any purpose except on behalf of the Company. (b) For purposes of this Agreement, "Confidential Information" shall mean any information, process or idea that is not generally known in the industry, that the Company considers confidential, and/or that gives the Company a competitive advantage, including, without limitation, suppliers, production costs or production information; marketing plans; business forecasts; and sales records. The Executive understands that the above list is intended to be illustrative and that other Confidential Information may currently exist or arise in the future. If the Executive is unsure whether certain information or material is Confidential Information, the Executive shall treat that information or material as confidential unless the Executive is informed by the Company, in writing, to the contrary. "Confidential Information" shall not include any information which: (i) is or becomes publicly available through no act or failure of the Executive; (ii) was or is rightfully learned by the Executive from a source other than the Company before being received from the Company; or (iii) becomes independently available to the Executive as matter of right from a third party. If only a portion of the Confidential Information is or becomes publicly available, then only that portion shall not be Confidential Information hereunder. (c) The Executive further agrees that upon termination of the Executive's employment with the Company, for whatever reason, the Executive will surrender to the Company all of the property, notes, manuals, reports, documents and other things in the Executive's 8 possession, including copies or computerized records thereof, which relate directly or indirectly to Confidential Information. 5.2 Competition. (a) The Executive agrees that during the Term of the Executive's employment with the Company hereunder, and for a period of one year following the termination of the Executive's employment, unless such termination was by the Company and without cause, the Executive shall not: (i) except as a passive investor in publicly-held companies, and except for investments held as of the date hereof, directly or indirectly own, operate, manage, consult with, control, participate in the management or control of, be employed by, maintain or continue any interest whatsoever in any refining company or any company that markets petroleum products, in each case that directly competes with the Company; or (ii) directly or indirectly influence customers or suppliers of the Company to divert their business to any competitor of the Company; or (iii) employ, or directly or indirectly solicit, or cause the solicitation of, any employees of the Company who are in the employ of the Company on the termination date of the Executive's employment hereunder for employment by others in competition with the Company. (b) The Executive expressly agrees and acknowledges that: (i) the covenants in Section 5.2(a) are reasonably necessary for the protection of the interests of the Company and are reasonable in scope and do not place any unreasonable burden upon him; (ii) the general public will not be harmed as a result of enforcement of the covenants in Section 5.2(a); (iii) the Executive's personal legal counsel has reviewed the covenants in Section 5.2(a); and (iv) he understands and hereby agrees to each and every term and condition of the covenants in Section 5.2(a). 5.3 Remedies. The Executive expressly agrees and acknowledges that the covenants in Section 5.2 are necessary for the Company's and its affiliates' protection because of the nature and scope of their business and the Executive's position with the Company. Further, the Executive acknowledges that, in the event of the Executive's breach of the Executive's covenants, money damages will not sufficiently compensate the Company for its injury caused thereby, and he accordingly agrees that in addition to such money damages he may be restrained and enjoined from 9 any continuing or future breach of the covenants without any bond or other security being required. The Executive acknowledges that any breach of the covenants would result in irreparable damage to the Company. The Executive further acknowledges and agrees that if the Executive fails to comply with this Article V, the Company has no obligation to provide any compensation or other benefits described in Article IV hereof. The Executive acknowledges that the remedy at law for any breach or threatened breach of Sections 5.1 and 5.2 will be inadequate and, accordingly, that the Company shall, in addition to all other available remedies (including without limitation, seeking such damages as it can show it has sustained by reason of such breach), be entitled to injunctive relief or specific performance. ARTICLE VI MISCELLANEOUS 6.1 No Assignments. This Agreement is personal to each of the parties hereto. No party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto, except that this Agreement shall be binding upon and inure to the benefit of any successor corporation to the Company. (a) The Company shall use reasonable efforts to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as defined herein and any successor to its business and/or assets which assumes this Agreement by operation of law or otherwise. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive and the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder had he continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee or other designee, or if there is no such designee, to the Executive's estate. 6.2 Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other addresses as either party may have furnished to the other in writing in accordance herewith, except that notice of a change of address shall be effective only upon actual receipt: To the Company: Giant Industries, Inc. 23733 North Scottsdale Road Scottsdale, Arizona 85255 Attention: General Counsel 10 To the Executive: Mark B. Cox 23733 North Scottsdale Road Scottsdale, Arizona 85255 Notices pursuant to Article III of this Agreement shall specify the specific termination provision relied upon by the party giving notice and shall state the effective date of the termination. 6.3 Amendments or Additions. No amendments or additions to this Agreement shall be binding unless in writing and signed by each of the parties hereto. 6.4 Section Headings. The Section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. 6.5 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If, in any judicial proceedings, a court shall refuse to enforce one or more of the covenants or agreements contained herein because the duration thereof is too long, or the scope thereof is too broad, it is expressly agreed between the parties hereto that such scope or duration shall be deemed reduced to the extent necessary to permit the enforcement of such covenants or agreements. 6.6 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 6.7 Arbitration. (a) Except as necessary to obtain injunctive relief to enforce the provisions of Article V of this Agreement, any dispute or controversy arising, directly or indirectly, under or in connection with this Agreement, the Executive's employment with the Company pursuant to this Agreement, the termination of the Executive's employment with the Company or any other matter reasonably related thereto, asserted by the Company against the Executive or by the Executive against the Company, its subsidiaries, affiliates, officers, directors, employees, agents, attorneys or representatives, shall be settled exclusively by arbitration, conducted before a panel of three arbitrators in Maricopa County, Arizona in accordance with the rules of the American Arbitration Association then in effect. The decision of the arbitrators shall be final and binding on the parties, and judgment may be entered on the arbitrators' award in any court having jurisdiction. The costs and expenses of such arbitration shall be borne in accordance with the determination of the arbitrators. 11 (b) Without limiting the generality of Section 6.7(a), this Section 6.7 is intended to cover all disputes between and among the Executive, on the one hand, and the Company and its subsidiaries, affiliates, officers, directors, employees, agents, attorneys or representatives, on the other hand, including contract claims, statutory claims and tort claims (including without limitation violations of the Arizona Civil Rights Act, the Civil Rights Acts of 1866, 1871, 1964 and 1991, the Arizona Employment Protection Act, Arizona's wage payment statute, unemployment compensation laws, the Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act of 1967, the Fair Labor Standards Act, the Rehabilitation Act of 1973, the Occupational Safety and Health Act, or the Americans with Disabilities Act, wrongful discharge in violation of public policy, including the public policy of whistleblowing, breach of an express and/or implied employment contract, breach of the covenant of good faith and fair dealing, tortious interference with contract, tortious interference with prospective business advantage, libel, slander, defamation, false light, invasion of privacy, and intentional and/or negligent infliction of emotional distress). (c) Notwithstanding any other provision of this Agreement, if any termination of this Agreement becomes subject to arbitration, the Company shall not be required to pay any amounts to the Executive (except those amounts required by law) until the completion of the arbitration and the rendering of the arbitrators' decision. If the Company voluntarily makes any payments to the Executive during the pendency of the arbitration, such payments shall be credited to the amounts, if any, determined by the arbitrators to be owed by the Company to the Executive. The amounts, if any, determined by the arbitrators to be owed by the Company to the Executive shall be paid within five days after the decision by the arbitrators is rendered. (d) The Company and the Executive acknowledge and agree that the Company's subsidiaries, affiliates, officers, directors, employees, agents, attorneys and representatives are intended third-party beneficiaries of this Section 6.7. 6.8 Modifications and Waivers. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer of the Company as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 6.9 Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Arizona without regard to its conflicts of law principles. 6.10 Taxes. Any payments provided for hereunder shall be paid net of any applicable employment taxes or other withholdings required under federal, state or local law. 12 6.2 Survival. The obligations of the Company under Article IV hereof, the obligations of the Executive under Article V hereof and the provisions of Section 6.7 shall survive the expiration of this Agreement. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first indicated above. THE COMPANY: GIANT INDUSTRIES, INC., a Delaware corporation By: /s/ Larry L. DeRoin ----------------------------- Larry L. DeRoin Its: Chairman, Compensation Committee THE EXECUTIVE: /s/ Mark B. Cox --------------------------------- Mark B. Cox 13 EX-10.31 12 p68818exv10w31.txt EXHIBIT 10.31 Exhibit 10.31 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of this 12th day of December, 2003, between Giant Industries, Inc., a Delaware corporation (the "Company"), and Kim H. Bullerdick (the "Executive"). RECITALS A. The Company desires to retain the services of the Executive as its Vice President, General Counsel and Secretary, and the Executive desires and is willing to continue employment with the Company in that capacity. B. The Company and the Executive desire to embody the terms and conditions of the Executive's employment in a written agreement, which will supersede all prior agreements of employment, whether written or oral, pursuant to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of their mutual covenants and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I DUTIES AND TERM 1.1. Employment. The Executive is employed as the Vice President, General Counsel and Secretary of the Company. In this capacity, the Executive shall have such duties and responsibilities as shall be assigned to the Executive from time to time by the Board of Directors of the Company (the "Board") or as otherwise provided in the Company's bylaws, in each case not inconsistent with the Executive's position with the Company, including the performance of duties with respect to subsidiaries of the Company. 1.2 Term. The term of this Agreement shall commence on the date first written above and shall continue, unless sooner terminated pursuant to Article III, for two years (the "Initial Term"). Thereafter, the term of this Agreement shall automatically be extended for successive one year periods ("Renewal Terms") unless either the Board or the Executive gives written notice to the other at least 180 days prior to the end of the Initial Term or any Renewal Term, as the case may be, of its or the Executive's intention not to renew the term of this Agreement or unless this Agreement is sooner terminated pursuant to Article III. The Initial Term and any Renewal Terms of this Agreement shall be collectively referred to as the "Term." 1.3 Location. During the Term of this Agreement, the Executive shall be based in the principal offices of the Company in Maricopa County, Arizona, and shall not be required to be based anywhere other than Maricopa County, Arizona except for travel reasonably required in the performance of his duties hereunder and except as may be otherwise agreed to by the Executive. ARTICLE II COMPENSATION 2.1 Base Salary. Subject to the further provisions of this Agreement, the Company shall pay the Executive during the Term of this Agreement an annual base salary of not less than $160,000 (the "Base Salary"). The Base Salary shall be reviewed at least annually by the Company's Chief Executive Officer ("CEO") and the CEO may, subject to approval by the Company's Compensation Committee, increase the Base Salary. The Base Salary of the Executive shall not be decreased at any time during the Term of this Agreement from the amount of Base Salary then in effect, except in connection with across-the-board salary reductions similarly affecting all senior executives of the Company. Participation in deferred compensation, discretionary bonus, retirement, stock option and other employee benefit plans and in fringe benefits shall not reduce the Base Salary payable to the Executive under this Section 2.1. The Base Salary under this Section 2.1 shall be payable by the Company to the Executive not less frequently than semi-monthly. 2.2 Discretionary Bonuses. Subject to the further provisions of this Agreement, during the Term of this Agreement the Executive shall be entitled to participate in an equitable manner with all other senior executives of the Company in such discretionary bonuses including, but not limited to, bonuses provided pursuant to any management bonus plan that the Company may adopt, as may be authorized and declared by the Board (including any duly authorized committee of the Board) to the Company's senior executives. Nothing in this Section shall be deemed to limit the ability of the Executive to be paid and receive discretionary bonuses from the Company, based solely on the Executive's performance, without regard to the payment of discretionary bonuses to any other senior executives of the Company. 2.3 Participation in Retirement and Employee Benefit Plans; Fringe Benefits. The Executive shall be entitled to participate in all plans of the Company relating to stock options, stock purchases, pension, thrift, profit sharing, life insurance, hospitalization and medical coverage, disability, travel or accident insurance, education or other retirement or employee benefits that the Company has adopted or may adopt for the benefit of its senior executives, subject to the provisions of those plans. In addition, the Executive shall be entitled to participate in any other fringe benefits, such as automobile allowances, club dues and fees of professional organizations and associations, which are now or may become applicable to the Company's senior executives, and any other benefits which are commensurate with the duties and responsibilities to be performed by the Executive under this Agreement. The Executive shall, during the Term of the Executive's employment hereunder, continue to be provided with benefits at a level which shall in no event be less in any material respect than the benefits available to the Executive as of the date of this Agreement. Notwithstanding the foregoing, the Company may change, terminate or reduce benefits under any benefit plans and programs to the extent such changes, terminations or reductions apply uniformly to all senior executives entitled to participate therein, and the Executive's benefits shall be changed, terminated or reduced accordingly. 2 2.4 Vacations. The Executive shall be entitled to an annual paid vacation of four weeks per year or such longer period as the Board or the CEO may approve; provided, however, that the Executive may not carry over more than one week of vacation time to any subsequent year without the prior approval of the CEO. The timing of paid vacations shall be scheduled in a manner reasonably acceptable to the Company. ARTICLE III TERMINATION OF EMPLOYMENT 3.1 Death or Retirement of Executive. This Agreement shall automatically terminate upon the death or Retirement (as defined in Section 3.4) of the Executive. 3.2 By the Executive. The Executive shall be entitled to terminate this Agreement by giving written notice to the Company: (a) at least 180 days prior to the end of the Initial Term or any Renewal Term of this Agreement; (b) at any time for Good Reason (as defined in Section 3.4); and (c) at any time without Good Reason upon 30 days advance notice to the Company. 3.3. By the Company. The Company shall be entitled to terminate this Agreement by giving written notice to the Executive: (a) at least 180 days prior to the end of the Initial Term or any Renewal Term of this Agreement; (b) in the event of the Executive's Disability (as defined in Section 3.4); (c) for cause ; and (d) at any time without cause upon such advance notice to the Executive, if any, as determined by the Board. 3.4 Definitions. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Change of Control" shall mean a change in ownership or control of the Company effected through any of the following transactions: (i) the direct or indirect acquisition by any person or related group of persons (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in 3 substantially the same proportions as their ownership of stock of the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than 50% of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders or other transaction; or (ii) a change in the composition of the Board over a period of 36 consecutive months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time such election or nomination was approved by the Board; or (iii) a merger or consolidation approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iv) the sale, transfer or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company approved by the stockholders or the complete liquidation or dissolution of the Company approved by the stockholders. (b) "Disability" shall mean the Executive's inability, with or without reasonable accommodation, to perform one or more of the essential functions of the Executive's position hereunder on a full-time basis for a period exceeding 180 consecutive days or for periods aggregating more than 180 days during any 12 month period as a result of incapacity due to physical or mental impairment not due to drug abuse. If there is a dispute as to whether the Executive is or was physically or mentally unable to perform the essential functions of the Executive's position under this Agreement, such dispute shall be submitted for resolution to a licensed physician agreed upon by the Board and the Executive, or if an agreement cannot be promptly reached, the Board and the Executive will each select a physician, and if these physicians cannot agree, they will pick a third physician whose decision shall be binding on all parties. If such a dispute arises, the Executive shall submit to such examinations and shall provide such information as such physician(s) may request, and the determination of the physician(s) may be released to the Company and, as to the Executive's physical or mental condition, shall be binding and conclusive. (c) "Good Reason" shall mean any of the following if the same shall occur without the Executive's express prior written consent: 4 (i) a material change by the Company in the Executive's function, duties or responsibilities (including reporting responsibilities) which would cause the Executive's position with the Company to become of less dignity, responsibility and importance than those associated with the Executive's functions, duties or responsibilities as of the date of this Agreement, as of the first day of any Renewal Term, or during the 90-day period immediately preceding the date a Change of Control occurs, as the case may be; (ii) the Executive's Base Salary is reduced by the Company, unless such reduction is pursuant to a salary reduction program as described in Section 2.1 hereof, or there is a material reduction in the benefits that are in effect for the Executive, unless such reduction is pursuant to a uniform reduction in benefits for all senior executives as described in Section 2.3 hereof; (iii) relocation of the Executive's principal place of employment to a place located outside of Maricopa County, Arizona; (iv) the failure by the Company to obtain the assumption by operation of law or otherwise of this Agreement by any entity which is the surviving entity in any merger or other form of corporate reorganization involving the Company or by any entity which acquires all or substantially all of the Company's assets in a Change of Control transaction; or (v) other material breach of this Agreement by the Company, which breach shall not be cured within 15 days after written notice thereof to the Company. (d) "Retirement" shall mean normal retirement at age 65 or in accordance with retirement rules generally applicable to the Company's senior executives. ARTICLE IV COMPENSATION UPON TERMINATION OF EMPLOYMENT 4.1 Termination Prior to a Change of Control; Termination More than Two Years Following a Change of Control; Termination for Death or Disability; Termination by Executive without Good Reason. If, at any time during this Agreement, the Executive's employment is terminated by reason of the Executive's death or Disability, or by the Executive without Good Reason, or if, prior to a Change of Control, or more than two years following a Change of Control, the Executive's employment is terminated by the Company with cause, the Company shall: (a) pay the Executive (or the Executive's estate or beneficiaries) any Base Salary which has accrued but not been paid as of the termination date; (b) reimburse the Executive (or the Executive's estate or beneficiaries) for expenses incurred by him prior to the date of termination which are subject to reimbursement pursuant to applicable Company policies then in effect; 5 (c) provide to the Executive (or the Executive's estate or beneficiaries) any accrued and vested benefits required to be provided by the terms of any Company-sponsored benefit plans or programs, together with any benefits required to be paid or provided in the event of the Executive's death or Disability under applicable law; (d) pay the Executive (or the Executive's estate or beneficiaries) any discretionary bonus with respect to a prior fiscal year which has accrued and been earned but has not been paid; and (e) in addition, the Executive (or the Executive's estate or beneficiaries) shall have the right to exercise all vested, unexercised stock options outstanding at the termination date in accordance with terms of the plans and agreements pursuant to which such options were issued; provided, however, that unless expressly prohibited under the terms of such plans and applicable laws, the Executive shall have a period of up to one year from the termination date to exercise such stock options. 4.2 Termination Within Two Years Following a Change of Control. If, at any time within a two year period following a Change of Control, the Executive's employment is terminated by the Company with or without cause or by the Executive with Good Reason, or upon expiration of the Term of this Agreement within a two year period following a Change of Control, the Company shall: (a) make the payments and provide to the Executive the benefits under Section 4.1, other than under Section 4.1(e); (b) pay to the Executive an aggregate amount equal to two times the sum of: (i) the Executive's Base Salary in effect immediately prior to the time such termination occurs; and (ii) the average of the annual bonuses paid to the Executive for the two fiscal years immediately preceding the fiscal year in which the termination occurs, provided that in determining such average, for any fiscal year for which the Executive's annual bonus was less than 25% of the Executive's then Base Salary, such bonus shall be deemed to be equal to 25% of the Executive's then Base Salary. Such amount shall be paid, at the Executive's option, in a lump sum on or prior to the 30th day following the termination date, or in 12 equal monthly installments beginning on the first day of the month following the termination date and continuing on the first day of each month thereafter; and (c) in addition, unless expressly prohibited under the terms of such plans and applicable laws, all unvested stock options or other stock awards owned by the Executive that would otherwise have vested after the termination date shall become fully vested and exercisable at the termination date, and the Executive (or the Executive's estate or beneficiaries) shall have the right to exercise all vested, unexercised stock options or awards outstanding at the termination date (including the accelerated options and awards) in accordance with the terms (except the vesting terms with respect to the accelerated options and awards) of the plans and agreements pursuant to 6 which such options and other awards were issued; provided, however, that unless expressly prohibited under the terms of such plans and applicable laws, the Executive shall have a period of up to one year from the termination date to exercise such stock options. (d) The Internal Revenue Code of 1986, as amended (the "Code"), imposes significant tax burdens on the Executive and the Company if the total amounts received by the Executive due to a Change of Control exceed prescribed limits. These tax burdens include a requirement that the Executive pay a 20% excise tax on certain amounts received in excess of the prescribed limits and a loss of deduction for the Company. If, as a result of these Code provisions, the Executive is required to pay such excise tax, then upon written notice from the Executive to the Company, the Company shall pay the Executive an amount equal to the total excise tax imposed on the Executive (including the excise taxes on any excise tax reimbursements due pursuant to this sentence and the excise taxes on any income tax reimbursements due pursuant to the next sentence). If the Company is obligated to pay the Executive pursuant to the preceding sentence, the Company also shall pay the Executive an amount equal to the "total presumed federal and state taxes" that could be imposed on the Executive with respect to the excise tax reimbursements due to the Executive pursuant to the preceding sentence and the income tax reimbursements due to the Executive pursuant to this sentence. For purposes of the preceding sentence, the "total presumed federal and state taxes" that could be imposed on the Executive shall be conclusively calculated using a combined tax rate equal to the sum of the then prevailing maximum marginal federal and state income tax rates and the hospital insurance portion of FICA. No adjustments will be made in this combined rate for the deduction of state taxes on the federal return, the loss of itemized deductions or exemptions, or for any other purpose. The Executive shall be responsible for paying the actual taxes. The amounts payable to the Executive pursuant to this or any other agreement or arrangement with Company shall not be limited in any way by the amount that may be paid pursuant to the Code without the imposition of an excise tax or the loss of Company deductions. Either the Executive or the Company may elect to challenge any excise taxes imposed by the Internal Revenue Service, and the Company and the Executive agree to cooperate with each other in prosecuting such challenges. If the Executive elects to litigate or otherwise challenge the imposition of such excise tax, however, the Company will join the Executive in such litigation or challenge only if the Board determines in good faith that the Executive's position has substantial merit and that the issues should be litigated from the standpoint of the Company's best interest. 4.3 Termination by Executive for Good Reason or by Company Without Cause Prior to a Change of Control or More than Two Years Following a Change of Control. If, prior to a Change of Control, or more than two years following a Change of Control, the Executive's employment is terminated by the Executive for Good Reason, by the Company without cause or the Company or the Board gives written notice to the Executive of its intention to not renew this Agreement at the end of the Initial Term or any Renewal Term, the Company shall: (a) make the payments and provide to the Executive the benefits under Section 4.1; and (b) pay to the Executive a lump sum payment on or prior to the 30th day following the termination date in an amount equal to the Executive's Base Salary in effect 7 immediately prior to the time such termination occurs. This lump sum payment shall not be considered due and owing until the 30th day following the termination date. 4.4 Releases and Resignations. Notwithstanding the provisions of Sections 4.1, 4.2 and 4.3, it shall be a condition to the Company's obligations to pay any amount to the Executive in excess of any amounts required by law that the Executive provide to the Company and its subsidiaries, officers, directors, employees and agents a complete general release of all claims, known or unknown, that the Executive may have against any of them. Such release shall be in customary form, and shall specifically include employment-related claims. In addition, upon termination of employment, the Executive shall, upon demand, resign as an officer and director of the Company or any subsidiary of the Company, as applicable. ARTICLE V RESTRICTIVE COVENANTS 5.1 Confidentiality. (a) The Executive agrees to keep all trade secrets and/or proprietary information (collectively, "Confidential Information") of the Company in strict confidence and agrees not to disclose any Confidential Information to any other person, firm, association, partnership, corporation or other entity for any reason except as such disclosure may be required in connection with the Executive's employment hereunder. The Executive further agrees not to use any Confidential Information for any purpose except on behalf of the Company. (b) For purposes of this Agreement, "Confidential Information" shall mean any information, process or idea that is not generally known in the industry, that the Company considers confidential, and/or that gives the Company a competitive advantage, including, without limitation, suppliers, production costs or production information; marketing plans; business forecasts; and sales records. The Executive understands that the above list is intended to be illustrative and that other Confidential Information may currently exist or arise in the future. If the Executive is unsure whether certain information or material is Confidential Information, the Executive shall treat that information or material as confidential unless the Executive is informed by the Company, in writing, to the contrary. "Confidential Information" shall not include any information which: (i) is or becomes publicly available through no act or failure of the Executive; (ii) was or is rightfully learned by the Executive from a source other than the Company before being received from the Company; or (iii) becomes independently available to the Executive as matter of right from a third party. If only a portion of the Confidential Information is or becomes publicly available, then only that portion shall not be Confidential Information hereunder. (c) The Executive further agrees that upon termination of the Executive's employment with the Company, for whatever reason, the Executive will surrender to the Company all of the property, notes, manuals, reports, documents and other things in the Executive's possession, including copies or computerized records thereof, which relate directly or indirectly to Confidential Information. 8 5.2 Competition. (a) The Executive agrees that during the Term of the Executive's employment with the Company hereunder, and for a period of one year following the termination of the Executive's employment, unless such termination was by the Company and without cause, the Executive shall not: (i) except as a passive investor in publicly-held companies, and except for investments held as of the date hereof, directly or indirectly own, operate, manage, consult with, control, participate in the management or control of, be employed by, maintain or continue any interest whatsoever in any refining company or any company that markets petroleum products, in each case that directly competes with the Company; or (ii) directly or indirectly influence customers or suppliers of the Company to divert their business to any competitor of the Company; or (iii) employ, or directly or indirectly solicit, or cause the solicitation of, any employees of the Company who are in the employ of the Company on the termination date of the Executive's employment hereunder for employment by others in competition with the Company. (b) The Executive expressly agrees and acknowledges that: (i) the covenants in Section 5.2(a) are reasonably necessary for the protection of the interests of the Company and are reasonable in scope and do not place any unreasonable burden upon him; (ii) the general public will not be harmed as a result of enforcement of the covenants in Section 5.2(a); (iii) the Executive's personal legal counsel has reviewed the covenants in Section 5.2(a); and (iv) he understands and hereby agrees to each and every term and condition of the covenants in Section 5.2(a). 5.3 Remedies. The Executive expressly agrees and acknowledges that the covenants in Section 5.2 are necessary for the Company's and its affiliates' protection because of the nature and scope of their business and the Executive's position with the Company. Further, the Executive acknowledges that, in the event of the Executive's breach of the Executive's covenants, money damages will not sufficiently compensate the Company for its injury caused thereby, and he accordingly agrees that in addition to such money damages he may be restrained and enjoined from any continuing or future breach of the covenants without any bond or other security being required. 9 The Executive acknowledges that any breach of the covenants would result in irreparable damage to the Company. The Executive further acknowledges and agrees that if the Executive fails to comply with this Article V, the Company has no obligation to provide any compensation or other benefits described in Article IV hereof. The Executive acknowledges that the remedy at law for any breach or threatened breach of Sections 5.1 and 5.2 will be inadequate and, accordingly, that the Company shall, in addition to all other available remedies (including without limitation, seeking such damages as it can show it has sustained by reason of such breach), be entitled to injunctive relief or specific performance. ARTICLE VI MISCELLANEOUS 6.1 No Assignments. This Agreement is personal to each of the parties hereto. No party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto, except that this Agreement shall be binding upon and inure to the benefit of any successor corporation to the Company. (a) The Company shall use reasonable efforts to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as defined herein and any successor to its business and/or assets which assumes this Agreement by operation of law or otherwise. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive and the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder had he continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee or other designee, or if there is no such designee, to the Executive's estate. 6.2 Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other addresses as either party may have furnished to the other in writing in accordance herewith, except that notice of a change of address shall be effective only upon actual receipt: To the Company: Giant Industries, Inc. 23733 North Scottsdale Road Scottsdale, Arizona 85255 Attention: General Counsel 10 To the Executive: Kim H. Bullerdick 23733 North Scottsdale Road Scottsdale, Arizona 85255 Notices pursuant to Article III of this Agreement shall specify the specific termination provision relied upon by the party giving notice and shall state the effective date of the termination. 6.3 Amendments or Additions. No amendments or additions to this Agreement shall be binding unless in writing and signed by each of the parties hereto. 6.4 Section Headings. The Section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. 6.5 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If, in any judicial proceedings, a court shall refuse to enforce one or more of the covenants or agreements contained herein because the duration thereof is too long, or the scope thereof is too broad, it is expressly agreed between the parties hereto that such scope or duration shall be deemed reduced to the extent necessary to permit the enforcement of such covenants or agreements. 6.6 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 6.7 Arbitration. (a) Except as necessary to obtain injunctive relief to enforce the provisions of Article V of this Agreement, any dispute or controversy arising, directly or indirectly, under or in connection with this Agreement, the Executive's employment with the Company pursuant to this Agreement, the termination of the Executive's employment with the Company or any other matter reasonably related thereto, asserted by the Company against the Executive or by the Executive against the Company, its subsidiaries, affiliates, officers, directors, employees, agents, attorneys or representatives, shall be settled exclusively by arbitration, conducted before a panel of three arbitrators in Maricopa County, Arizona in accordance with the rules of the American Arbitration Association then in effect. The decision of the arbitrators shall be final and binding on the parties, and judgment may be entered on the arbitrators' award in any court having jurisdiction. The costs and expenses of such arbitration shall be borne in accordance with the determination of the arbitrators. (b) Without limiting the generality of Section 6.7(a), this Section 6.7 is intended to cover all disputes between and among the Executive, on the one hand, and the Company and its 11 subsidiaries, affiliates, officers, directors, employees, agents, attorneys or representatives, on the other hand, including contract claims, statutory claims and tort claims (including without limitation violations of the Arizona Civil Rights Act, the Civil Rights Acts of 1866, 1871, 1964 and 1991, the Arizona Employment Protection Act, Arizona's wage payment statute, unemployment compensation laws, the Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act of 1967, the Fair Labor Standards Act, the Rehabilitation Act of 1973, the Occupational Safety and Health Act, or the Americans with Disabilities Act, wrongful discharge in violation of public policy, including the public policy of whistleblowing, breach of an express and/or implied employment contract, breach of the covenant of good faith and fair dealing, tortious interference with contract, tortious interference with prospective business advantage, libel, slander, defamation, false light, invasion of privacy, and intentional and/or negligent infliction of emotional distress). (c) Notwithstanding any other provision of this Agreement, if any termination of this Agreement becomes subject to arbitration, the Company shall not be required to pay any amounts to the Executive (except those amounts required by law) until the completion of the arbitration and the rendering of the arbitrators' decision. If the Company voluntarily makes any payments to the Executive during the pendency of the arbitration, such payments shall be credited to the amounts, if any, determined by the arbitrators to be owed by the Company to the Executive. The amounts, if any, determined by the arbitrators to be owed by the Company to the Executive shall be paid within five days after the decision by the arbitrators is rendered. (d) The Company and the Executive acknowledge and agree that the Company's subsidiaries, affiliates, officers, directors, employees, agents, attorneys and representatives are intended third-party beneficiaries of this Section 6.7. 6.8 Modifications and Waivers. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer of the Company as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 6.9 Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Arizona without regard to its conflicts of law principles. 6.10 Taxes. Any payments provided for hereunder shall be paid net of any applicable employment taxes or other withholdings required under federal, state or local law. 6.2 Survival. The obligations of the Company under Article IV hereof, the obligations of the Executive under Article V hereof and the provisions of Section 6.7 shall survive the expiration of this Agreement. 12 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first indicated above. THE COMPANY: GIANT INDUSTRIES, INC., a Delaware corporation By: /s/ Larry L. DeRoin --------------------------- Larry L. DeRoin Its: Chairman, Compensation Committee THE EXECUTIVE: /s/ Kim H. Bullerdick -------------------------------- Kim H. Bullerdick 13 EX-10.33 13 p68818exv10w33.txt EXHIBIT 10.33 Exhibit 10.33 FOIA CONFIDENTIAL TREATMENT REQUEST COPY WITH REDACTED AREAS CRUDE OIL PURCHASE/SALE AGREEMENT INDEX OF CONFIDENTIAL TERMS (i) Page 1, Title Page, Heading (ii) Page 3, Table of Contents (iii) Pages 5, 8 and 9, Article 2.1 (iv) Page 11, Articles 3.1 and 3.2 (v) Page 12, Article 4.1 (vi) Page 15, Article 7.2(b)(ii) (vii) Page 22, Articles 10.2, 10.4 and 10.5 (viii) Page 36, Article 17 GIANT INDUSTRIES, INC. FORM 10-K FISCAL YEAR ENDED DECEMBER 31, 2003 PORTIONS HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED BY THE REGISTRANT WITH THE COMMISSION. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH THE COMMISSION. =========================================================================== ***** CRUDE OIL PURCHASE / SALE AGREEMENT 2004 - 2008 between STATOIL MARKETING & TRADING (US) INC. and GIANT YORKTOWN, INC. Contract Reference Number - CTC 2004/01 *****Confidential treatment requested. Confidential information redacted. =========================================================================== TABLE OF CONTENTS ARTICLE PAGE # ---------------------------- ------ 1. CONTRACT PARTIES 4 2. DEFINITIONS AND CONSTRUCTION 5 3. QUALITY 11 4. VOLUME AND DELIVERY RATE 12 5. TITLE 13 6. RISK OF LOSS 13 7. SUPPLY AND DELIVERY 14 8. SHIPPING AND DISCHARGE PORT 17 9. NOMINATION 19 10. PRICE COMPONENTS 20 11. PAYMENT 23 12. MEASUREMENT AND INSPECTION 25 13. LAYTIME AND DEMURRAGE 28 14. CREDIT CONDITIONS 31 15. TAXES, DUTIES AND CHARGES 34 16. INSURANCE 35 17. TERM OF AGREEMENT 36 18. REPRESENTATIONS, WARRANTIES AND COVENANTS 36 19. AUDIT AND INSPECTION RIGHTS 39 20. SUSPENSION AND TERMINATION 39 2 21. OBLIGATIONS AT TERMINATION 42 22. INDEMNIFICATION AND CLAIMS 44 23. DAMAGES 46 24. ASSIGNMENT 46 25. NOTICES AND ADDRESSES 47 26. WARRANTIES AND WAIVERS 48 27. APPLICABLE LAW, LITIGATION AND ARBITRATION 49 28. VOICE RECORDING 51 29. DISPOSAL 51 30. NOTICE OF NORWEGIAN STATE'S SOURCED CRUDE OIL 51 31. CONFIDENTIALITY 52 32. MISCELLANEOUS 52 APPENDIX I ADJUSTMENT TO QUALITY DIFFERENTIALS FOR ***** APPENDIX II THE ***** CRUDE OIL ASSAY APPENDIX III BUYER'S PRICING TRIGGER PROCEDURE APPENDIX IV CRUDE OPTIMIZATION PROCEDURE APPENDIX V INVENTORY AND DELIVERY STATEMENTS APPENDIX VI INTERCREDITOR AGREEMENT APPENDIX VII TANK OWNER'S AGREEMENT *****Confidential treatment requested. Confidential information redacted. 3 ARTICLE 1 CONTRACT PARTIES THIS CRUDE OIL PURCHASE/SALE AGREEMENT (this "AGREEMENT"), is made and entered into as of the Effective Date between: BUYER: Giant Yorktown, Inc. 23733 North Scottsdale Road Scottsdale, AZ 85255 SELLER: Statoil Marketing & Trading (US) Inc. 225 High Ridge Road Stamford, CT 06905 WHEREAS, the Parties agree that Seller shall sell and Buyer shall purchase Oil on the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the premises and the respective promises, conditions and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows: 4 ARTICLE 2 DEFINITIONS AND CONSTRUCTION 2.1 DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings indicated below: "ACIDIC" means that the total acid number ("TAN") of the crude oil analyzed is more than 1.3 mgKOH/Kg. "AGREEMENT" or "THIS AGREEMENT" means this ***** Crude Oil Purchase/Sale Agreement, as it may be amended, modified, supplemented, extended, renewed or restated from time to time in accordance with the terms hereof, including the Appendices and Exhibits hereto. "API" means American Petroleum Institute. "ASTM" means American Society for Testing Materials. "BANKRUPT" means a Person that (i) dissolved, other than pursuant to a consolidation, amalgamation or merger, (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due, (iii) makes a general assignment or arrangement for the benefit of its creditors, (iv) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any similar law affecting creditor's rights, or a petition is presented against it for its winding-up or liquidation, (v) institutes a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or for reorganization relief under the winding-up or liquidation, (vi) has a resolution passed for its winding-up or liquidation, other than pursuant to a consolidation, amalgamation or merger, (vii) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for all or substantially all of its assets, (viii) has a secured party take possession of all or substantially all of its assets, or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets, (ix) files an answer or other pleading admitting or failing to contest the allegations of a petition filed against it in any proceeding of the foregoing nature or (x) takes any other action to authorize any of the actions set forth above. "BANKRUPTCY CODE" means Chapter 11 of Title 11, U.S. Code, as amended. "BARREL" means a volume of forty-two (42) US gallons corrected for temperature to sixty (60) degrees Fahrenheit, unless stated otherwise. "BFO" means Brent/Forties/Oseberg. *****Confidential treatment requested. Confidential information redacted. 5 "BUSINESS DAY" means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in New York, New York. "BUYER'S REFINERY UPGRADING TURNAROUND" means the scheduled upgrade of the Refinery, including the installation of metallurgy and desalting facilities, that Buyer shall implement and complete during the fourth quarter of 2004. "BUYER'S SUPPLY WINDOW" has the meaning given such term in Article 9(a). "CARGO" means any particular quantity of Oil loaded or to be loaded into Vessel as set out in this Agreement and includes part Cargoes. "COLLATERAL" has the meaning given such term in Article 14.3. "COLLATERAL EVENT" has the meaning given such term in Article 14.3. "COMMODITY EXCHANGE ACT" means 7 U.S.C. Section 1, et seq. "COMPLETION OF DISCHARGE" means, in respect of a Cargo, the final disconnection from a Vessel's discharge manifold following the discharge of Oil. "CRUDE FIELD" means Buyer's crude oil storage tanks, including VEPCO tanks "C", "D", and "E" if agreed to in advance by Seller, but excluding Buyer's Daily Charge Tanks. "DAILY CHARGE TANKS" means Buyer's crude oil tanks used to charge crude oil to Buyer's crude units, excluding Buyer's Crude Field tanks. "DEFAULT INTEREST RATE" means the lesser of (i) the applicable LIBOR rate plus two (2) percentage points and (ii) the maximum rate of interest permitted by Law. "DELIVERED" or "DELIVERY" or "DELIVER" means when the Oil passes the title transfer point from Seller to Buyer. "DISCHARGE PORT" means the customary dockage, anchorage or place where a Vessel may lie in connection with discharging a Cargo to the Refinery. "DOLLARS" or "USD" or "US DOLLARS" or "$" means dollars of the United States of America. "EFFECTIVE DATE" means the date on which Buyer obtains all necessary amendments to (i) the Credit Agreement referenced in Article 14.1 of this Agreement and (ii) the term Loan Agreement dated as of May 14, 2002 (as the same has been amended from time to time, the "Term Loan Agreement") between Giant Yorktown, Inc., Wells Fargo Bank Nevada, 6 National Association, and each of the Lenders named on Schedule IA of the Term Loan Agreement, and the Parent Guaranty Agreement related to the Term Loan Agreement. "ENVIRONMENTAL LAW" means any Law, policy, judicial or administrative interpretation thereof or any legally binding requirement that governs or purports to govern the protection of persons, natural resources or the environment (including the protection of ambient air, surface water, groundwater, land surface or subsurface strata, endangered species or wetlands), occupational health and safety and the manufacture, processing, distribution, use, generation, handling, treatment, storage, disposal, transportation, release or management of solid waste, industrial waste or hazardous substances or materials, as may be amended or modified from time to time. "ESTIMATED WEEKLY QUANTITY" or "EWQ" means the approximate quantity of Oil Delivered to Buyer during a period of one (1) week (between midnight on a Wednesday to midnight on the previous Wednesday), as estimated by Buyer and stated on the EWQ statement in the format of Appendix V. "E.T." means the applicable, local Eastern Time in New York, New York. "EVENT OF DEFAULT" or "DEFAULT" has the meaning given such term in Article 20.1. "FORCE MAJEURE" means any cause or event reasonably beyond the control of a Party including perils of navigation, fires, acts of God, wars (declared or undeclared), terrorism, or any act, order, directive or necessity of any governmental, civil or military authority (de facto or de jure), or any regulation or interference (including regulation or interference requiring the shutting down of the Refinery or any of its operating units or requiring a substantial change in the manner of operating same), labor disputes (whether or not involving a Party's employees), or partial failure of producing, transportation, utility, loading or delivery facilities, inability of Seller or Vessels selected by it to obtain war risk insurance from usual commercial markets, closing of or restrictions on use of harbors, docks, canals, or other assistance to or adjuncts of shipping or navigation, actions by Seller to comply with directives of a member government or agency thereof in the implementation of an emergency allocation program of the International Energy Agency, or any other cause reasonably beyond the control of either Party whether or not similar to the foregoing and whether or not foreseeable, all of which by the exercise of due diligence such Party is unable to prevent or overcome. For purposes hereof, "failure of producing facilities" means a major disruption to the Production Facilities and Loading Terminal associated with them. "FOUR-DAY SUPPLY WINDOW" has the meaning given such term in Article 9(c). "GALLON" means a U.S. standard gallon of 231 cubic inches at 60 degrees Fahrenheit. 7 "GIANT" means Giant Industries, Inc., a Delaware corporation. Giant is the ultimate parent company of Buyer and the Guarantor described in Article 14.1(c). "GOVERNMENTAL AUTHORITY" means any federal, state, regional, local, or municipal governmental body, agency, instrumentality, authority or entity established or controlled by a governmental or subdivision thereof, including any legislative, administrative or judicial body, or any Person purporting to act therefore. "GPW" means Gross Product Worth as defined in Appendix I. "*****" means ***** crude oil of normal export quality. "INDEPENDENT INSPECTOR" means a company that is approved by U.S. Customs and that is mutually appointed by the Parties for reporting the measurement of quality and quantity of Oil. "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement substantially in the form attached hereto as Appendix VI. "INVENTORY" OR "INVENTORIES" means the Oil inventories that Seller owns and intends to sell to Buyer under this Agreement, wherever located, including at the Refinery, VEPCO tanks `C', `D' or `E', loaded upon Vessels and injected into or received from pipelines or other transport. "IPE" means International Petroleum Exchange. "LAW" means (i) any law, statute, regulation, code, ordinance, license, decision, order, writ, injunction, decision, directive, judgment, policy, decree and any judicial or administrative interpretations thereof, (ii) any agreement, concession or arrangement with any Governmental Authority and (iii) any license, permit or compliance requirement, in each case applicable to either Party and as amended or modified from time to time. "LIABILITIES" means any losses, claims, charges, damages, deficiencies, assessments, interests, penalties, costs and expenses of any kind (including reasonable attorneys' fees and other fees, court costs and other disbursements), including any Liabilities directly or indirectly arising out of or related to any suit, proceeding, judgment, settlement or judicial or administrative order and any Liabilities with respect to Environmental Law. "LIBOR" means, as of the date of any determination, the London Interbank Offered Rate for One-Month U.S. Dollar deposits appearing on page 3750 of the Telerate screen (or any successor page) at approximately 11:00 a.m. (London time). If such rate does not appear on page 3750 of the Telerate screen (or otherwise on such screen), LIBOR shall be determined by reference to such other comparable publicly available service for displaying Eurodollar rates as the Parties may mutually select. LIBOR shall be established on the first day on which a determination of the interest rate is to be made *****Confidential treatment requested. Confidential information redacted. 8 under this Agreement and shall be adjusted daily based on the LIBOR quotes made available through the foregoing sources. "LOADING TERMINAL" means the port of loading of the Vessel for the applicable Oil being Supplied. "MONTH" means a calendar month. Where a specified Month is defined as Month "M", Month M-1 shall mean the Month prior to Month M and Month M+1 shall mean the Month subsequent to Month M. "OIL" means crude oil specified in this Agreement. "NORMAL REFINERY OPERATIONS" means periods of time when the Refinery is operating in a routine manner with all operating units on-line. Normal Refinery Operations exclude maintenance turnarounds and shutdown periods. For any periods of time other than during Normal Refinery Operations, Buyer shall invoke the provisions of Articles 7.2 and/or 7.3. "PARTY" or "PARTIES" means each Buyer and Seller defined in Article 1 "Contract Parties" and collectively, both Buyer and Seller. "PERSON" means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization, joint stock company or any other private entity or organization or Governmental Authority, whether acting in an individual, fiduciary or other capacity. "PREPRODUCTION ASSAY" means the ***** Crude Oil Assay, (Report number 04263/96, dated August 23, 1996) attached as Appendix II. "PRODUCTION FACILITIES" means the offshore field production facilities used for the production of *****. "PROPERTY TAX" means any and all tangible personal property taxes, ad valorem property taxes or the like imposed on the value of the Oil held for sale by Seller to Buyer under this Agreement. "REFINERY" means the petroleum processing and refining facilities located in Yorktown, Virginia that are currently owned and operated by Buyer. "SAMPLER" means an automatic in-line sampler located in the immediate vicinity of the Vessel's discharge manifold and the Refinery's receiving pipeline connection. "SELLER'S SUPPLY WINDOW" has the meaning given such term in Article 9(b). *****Confidential treatment requested. Confidential information redacted. 9 "SUPPLIED" or "SUPPLY" or "SUPPLIES" means or refers to when the Oil passes the flange connection between Seller's Vessel's permanent discharge manifold and the receiving pipeline or hose at the Discharge Port. "TANK OWNER'S AGREEMENT" means the Tank Owner's Agreement substantially in the form attached hereto as Appendix VII. "TAXES" means any and all (i) U.S. federal, state and local taxes, duties, fees and charges of every description, including all fuel, excise, environmental, spill, gross earnings, gross receipts and sales and use taxes, however designated (except for taxes on income), paid or incurred with respect to the purchase, storage, exchange, use, transportation, resale, importation or handling of the Oil and (ii) Property Taxes. "TERMINATION DATE" has the meaning given such term in Article 21.1. "UCC" means the Uniform Commercial Code in effect in the relevant state jurisdiction. "VESSEL" means the ship or barge, whether owned or chartered or otherwise obtained by Seller and employed by Seller to transport the Oil to the Discharge Port. 2.2 CONSTRUCTION. (a) All headings herein are intended solely for convenience of reference and shall not affect the meaning or interpretation of the provisions of this Agreement. (b) Unless expressly provided otherwise, the word "including" as used herein does not limit the preceding words or terms. (c) Unless expressly provided otherwise, all references to days, weeks, months and quarters mean calendar days, weeks, Months and quarters, respectively. For purposes of this Agreement, a calendar day shall begin at 12:00 a.m. E.T. and end at 11:59 p.m. E.T. (d) Unless expressly provided otherwise, references herein to "consent" mean the prior written consent of the Party at issue, which shall not be unreasonably withheld, delayed or conditioned. (e) The Parties acknowledge that they and their counsel have reviewed and revised this Agreement and that no presumption of contract interpretation or construction shall apply to the advantage or disadvantage of the drafter of this Agreement. 10 ARTICLE 3 QUALITY 3.1 NORMAL EXPORT QUALITY. The Oil to be Supplied under this Agreement shall be ***** crude oil of normal export quality. Other crude oils may be Supplied under this Agreement to replace part of the ***** should a substitution be agreed to between the Parties. Any such substitution will be made in accordance with the procedures set out in Appendix IV. 3.2 VARIATIONS IN QUALITY. Both Parties recognize that the quality of ***** may vary from the quality of ***** defined in the Preproduction Assay and as included as Appendix II. A significant variation in the quality of ***** from the Preproduction Assay to subsequent assays will result in an adjustment of the price as set out in Appendix I. Notwithstanding any quality variation, Seller shall Supply the ***** and Buyer shall receive of the ***** subject to the following: (a) In the event the quality of the ***** is substantially different from the quality defined in the Preproduction Assay, and this directly results in significant technical problems to Buyer's Refinery or Buyer is not able to manufacture finished petroleum products meeting current specifications for the products in Buyer's normal markets except under significant economic hardship, then the Parties agree to meet in an expeditious manner to resolve the situation in good faith. In order to resolve the technical problems associated with the quality of the ***** being substantially different from the quality defined in the Preproduction Assay, Buyer shall take reasonable measures to receive alternative crude oils or crude oil blends (Acidic or non-Acidic crude oils) Supplied by Seller in substitution for the *****. (b) In the event that the quality of the ***** is substantially different from the quality defined in the Preproduction Assay such that ***** is clearly worth substantially more than the Agreement price based on market prices obtained by Seller from third parties, the Parties agree to meet and discuss in good faith how to reduce Seller's economic disadvantage from Supplying ***** to Buyer according to the agreed prices. Buyer shall take reasonable measures to receive alternative crude oils or crude oil blends (Acidic or non-Acidic crude oils) Supplied by Seller in substitution for the *****. Seller shall take reasonable measures to Supply crude oils or crude oil blends at prices that provide Buyer with comparable economics as if Buyer were receiving ***** as defined in the Preproduction Assay. - ---------- ***** Confidential treatment requested. Confidential information redacted. 11 ARTICLE 4 VOLUME AND DELIVERY RATE 4.1 TOTAL VOLUME. Seller shall Deliver, and Buyer shall take Delivery of, a minimum of ***** Barrels of Oil under this Agreement. Buyer shall take delivery of all Oil Supplied under this Agreement to the Refinery. The intent of the Parties is that the first Cargo shall be Supplied during February 2004. The last Cargo to be Supplied under this Agreement will include the ***** Barrel, so that it is ensured that the minimum quantity is Supplied. Any quantity in addition to the minimum that is Supplied in the last Cargo will be considered to be part of the quantity to be Delivered under the Agreement. 4.2 DELIVERY RATE. (a) Delivery Prior to Buyer's Refinery Upgrading Turnaround. From March 1st 2004, until the last day prior to Buyer's Refinery Upgrading Turnaround, Buyer shall take Delivery of the Oil ratably at twenty thousand (20,000) Barrels per day during periods of Normal Refinery Operations. (b) Delivery Subsequent to Buyer's Refinery Upgrading Turnaround. From the first day after the completion of Buyer's Refinery Upgrading Turnaround, Buyer shall take Delivery of the Oil ratably at forty thousand (40,000) Barrels per day during periods of Normal Refinery Operations; except that, if Buyer is able to complete its turnaround prior to the end of September 2004, Seller shall have the right to Deliver Oil at the rate of twenty thousand (20,000) Barrels per day until September 30, 2004 and shall increase the rate of delivery of Oil to forty thousand (40,000) Barrels per day beginning October 1, 2004. Notwithstanding the foregoing, Buyer and Seller may mutually agree to an increase in the rate of Deliveries prior to October 1, 2004, should this be acceptable to both Parties. If Buyer is unable to take delivery at the higher rate as soon as reasonably practical following Buyer's Refinery Upgrading Turnaround, then Buyer shall invoke the provisions of Article 7.2 below, citing unscheduled downtime. (c) Intended Delivery Rate. Buyer shall make best efforts to take Delivery of the Oil at a rate as close as operationally possible to the agreed rate. For the avoidance of doubt, this shall not mean that Buyer shall be required to take Delivery on any day at that exact rate but that, as a maximum deviation from ratability, should Buyer be taking Deliveries at a higher or lower rate than the agreed rate for a period of approximately two (2) Months (as first evidenced by Buyer's EWQ's), then Buyer shall undertake to reduce or increase Deliveries, as the case may be, in the third Month in order to compensate for the deviation in the previous two (2) Months. In any case, excluding any reduction in volume as a result of Articles 7.2 and/or 7.3 being invoked, the maximum deviation from ratability over any Month shall be plus or minus five percent (5%). - ---------- ***** Confidential treatment requested. Confidential information redacted. 12 ARTICLE 5 TITLE 5.1 TRANSFER OF TITLE. Title to the Oil shall pass from Seller to Buyer when the Oil passes through the outlet flange of Buyer's Daily Charge Tanks. Delivery shall be considered to be taken by Buyer at the same point as title passes to Buyer. 5.2 COMMINGLED INVENTORY. (a) Seller shall not have, or assert any claim to, title over, or any other interest in, Buyer's segregated inventory or any portion of unsegregated inventory with which the Oil inventories owned by Seller are commingled in storage. (b) Buyer shall not have or assert any claim to, title over, or any other interest in, or cause or allow any claim to, title over or any other interest in, Seller's portion of any segregated or commingled Oil with which the crude oil inventories owned by Buyer are commingled in storage. Nothing in this Agreement shall be deemed to grant to Buyer or any person claiming by, through or against Buyer, title to or create a security interest in, any of Seller's Oil. Buyer authorizes Seller to file in all appropriate jurisdictions one (1) or more UCC financing statements. ARTICLE 6 RISK OF LOSS Risk of loss of the Oil shall pass from Seller to Buyer when the Oil passes the flange connection between Vessel's permanent discharge manifold and the receiving pipeline or hose at the Discharge Port. [This space intentionally left blank] 13 ARTICLE 7 SUPPLY AND DELIVERY 7.1 SUPPLY. (a) All Cargoes Supplied under this Agreement will be nominated in accordance with Article 9 hereof and shall be subject to draught restrictions at the Discharge Port as detailed in Article 8. All Oil will be Supplied outside of U.S. Customs at the Refinery. (b) The Oil shall be Supplied in Cargoes in a normal range of volume between five hundred seventy thousand (570,000) Barrels and six hundred twenty thousand (620,000) Barrels into Buyer's Refinery. Deviations to the normal range of volume may occur in accordance with the following: (i) Seller has the option at any time prior to the day that Seller designates the Four-Day Supply Window to Supply Cargoes of a volume between four hundred thousand (400,000) Barrels and seven hundred thousand (700,000) Barrels. Seller shall communicate to Buyer its intention to nominate such a volume so that Buyer can exercise its right to re-nominate subsequent Cargoes in accordance with Article 9.3, and further, Seller will ensure that it can comply with any changes to the Supply of subsequent Cargoes. Seller may Supply Cargoes of volume less than four hundred thousand (400,000) Barrels only with Buyer's prior consent. (ii) Seller has the option, with Buyer's prior consent, to Supply Cargoes up to approximately one million (1,000,000) Barrels. Buyer shall be granted substantially earlier notice of such Supply and shall be able to nominate a narrower Buyer's Supply Window. Buyer agrees to use its best efforts to accommodate Seller's option. (c) Seller may not change any Cargo volume fewer than twenty (20) days prior to the beginning of the subject Cargo's Four-Day Supply Window without Buyer's prior consent. (d) For Oil Supplied pursuant to this Agreement, Buyer represents to Seller that Buyer shall not use any tanks leased from any third parties, including, but not limited to, VEPCO, without first notifying Seller and obtaining either a Tank Owner's Agreement substantially in the form attached hereto as Appendix VII or providing additional security in the form of a letter of credit or cash deposit reasonably satisfactory to Seller. 7.2 SCHEDULED AND UNSCHEDULED DISRUPTION TO SUPPLY OR RECEIPT OF OIL. Any reduction in volume as a result of the provisions of this Article 7.2 shall only be temporary and the total volume of Oil to be Delivered under this Agreement shall not be affected. The Parties agree that the provisions of this Article 7.2 shall not be used for commercial gain. (a) Buyer's Refinery. (i) Scheduled Maintenance. Buyer shall give Seller at least ninety (90) days' notice of any scheduled maintenance at the Refinery, which could affect the rate at which the 14 Oil is Delivered. During such scheduled maintenance, Buyer's obligation to take Delivery of Oil from Seller will be reduced, to the extent required, for the affected period. (ii) Unscheduled Downtime. Unscheduled downtime at the Refinery due to an event of Force Majeure shall be handled in accordance with Article 7.3. During any period of unscheduled downtime not caused by an event of Force Majeure, Buyer shall make reasonable attempts to take Delivery of Oil under this Agreement. Should unscheduled downtime not caused by an event of Force Majeure exceed five (5) days, Buyer is entitled to request the rescheduling of future Cargoes. However, Seller shall not be required to reschedule or delay any Cargo that has been accepted by Buyer for Supply within a forty-five (45) day period immediately following the date Buyer gives Seller notice of unscheduled downtime. (b) Seller's Production Facilities and Loading Terminal. (i) Scheduled Maintenance. Seller shall give Buyer at least ninety (90) days notice of any scheduled maintenance at the Production Facilities or at the Loading Terminal that could affect Supply of Oil under this Agreement. (ii) Supply Shortage. If, by reason of any of the causes described in this Article 7.2, or by reason of production problems at the offshore facility or any problems at the Loading Terminal or reduction of production by a Governmental Authority, a shortage of supply occurs such that the total of Seller's volumes, SDFI volumes ("State Direct Financial Interest" volumes), and other third party volumes under long term contracts to Seller, of ***** for any such period of supply shortage is lower than the total of Seller's own system requirements (meaning Seller's own refining system and its long term processing arrangements) and the total nominated deliveries committed to other supply agreements for that period, then Seller has the right to freely withhold, reduce or suspend Deliveries under this Agreement to a level below the nominated quantity for that period as set forth below. Any shortage of supply shall result in Seller first canceling any uncommitted spot volumes. If that is not sufficient to deal with the supply shortage, then any reduction in Deliveries under this Agreement that Seller imposes shall correspond with the reduction in volume imposed on other third party long-term buyers of ***** from Seller. For the purposes hereof, Buyer shall be considered a long-term ***** customer. If Seller has to reduce Deliveries under any of the above circumstances, the Parties will discuss in good faith a new nomination plan to take into account the reduced ***** volume. The Parties also shall discuss the option of substituting alternative crude oils for any reduced ***** volumes. Such alternative crude oils will be considered, where possible, on spot terms, based on fair market prices and relative values to *****. Should the Parties fail to agree on terms for the supply of alternative crude oils, Buyer shall have the option to secure such supplies directly from third parties. In this case, Buyer shall propose to Seller for its consent an amended nomination schedule for future deliveries of Oil. - ---------- ***** Confidential treatment requested. Confidential information redacted. 15 7.3 FORCE MAJEURE. The Parties agree that the provisions of this Article 7.3 shall not be used for commercial gain. (a) Neither Party shall be liable to the other if it is rendered unable by an event of Force Majeure to perform in whole or in part any obligation or condition of this Agreement, for so long as the event of Force Majeure exists and to the extent that performance is hindered by the event of Force Majeure; provided, however, that the Party unable to perform shall use any and all commercially reasonable efforts to avoid or remove the event of Force Majeure. (Notwithstanding the foregoing, neither Party shall be required to (i) settle labor disputes by acceding to the demands of the opposing party or parties to such disputes or (ii) incur a major capital expenditure). During the period that performance by one (1) of the Parties of a part or whole of its obligations has been suspended by reason of an event of Force Majeure, the other Party likewise may suspend the performance of all or a part of its obligations to the extent that such suspension is commercially reasonable, except for any payment and indemnification obligations. (b) The Party rendered unable to perform shall give written notice to the other Party as soon as reasonably possible after receiving notice of the occurrence of an event of Force Majeure, including, to the extent feasible, the details and the expected duration of the event of Force Majeure and the volume of Oil affected. Such Party also shall promptly notify the other when the event of Force Majeure is terminated. (c) Upon the occurrence of an event of Force Majeure involving the Oil, the Parties may mutually agree to the delivery of other alternative crude oils. (d) In the event that a Party's performance is suspended due to an event of Force Majeure in excess of sixty (60) consecutive days from the date that notice of such event is given, and so long as such event is continuing, either Party, in its sole discretion, may terminate this Agreement by written notice to the other, and neither Party shall have any further liability to the other in respect of this Agreement except for rights and remedies previously accrued under this Agreement and any payment and indemnification obligations by either Party under this Agreement. [This space intentionally left blank] 16 ARTICLE 8 SHIPPING AND DISCHARGE PORT 8.1 SELECTION OF VESSEL. (a) The Oil under this Agreement shall be Supplied on Vessels acceptable to Buyer. Buyer shall not unreasonably withhold such acceptance. Seller shall submit to Buyer for its approval a list of Vessels that may be employed by Seller to Supply the Oil. The list shall be regularly reviewed by both Parties and shall only include Vessels built within twenty (20) years of the Cargo nomination date. Seller immediately shall notify Buyer of any change in a Vessel's status or performance, which could affect a Vessel's approval by Buyer. Buyer shall have the option to remove a Vessel that is no longer acceptable to it from the approved list, provided such Vessel has not already been accepted by Buyer and scheduled to be employed for a specific voyage. Seller shall have the right, subject to Buyer's acceptance, to nominate a Vessel not included in the list. (b) Buyer agrees to accept or reject any Vessel nominated by Seller within two (2) hours of receipt from Seller of all information requested by Buyer concerning that Vessel, provided that Buyer receives such information by 4:00 p.m. E.T. on a Business Day. 8.2 INSTRUCTIONS TO VESSEL. Seller shall instruct all Vessels to comply with Buyer's then current rules and regulations and all Law at the Discharge Port. Buyer shall provide Seller with an electronic copy of its rules and regulations and any amendments thereto. 8.3 BERTH AND DISCHARGE PORT CONDITIONS AND COSTS. Buyer shall provide free of charge, a berth or berths at the Discharge Port which Vessel can safely reach and leave and at which Vessel can lie and discharge always afloat. This Agreement is based on Buyer's confirmation that, at high tide, any Vessel can safely transit to, lie alongside and discharge with a draught up to and including thirty-six feet and six inches (36'06") salt water. In the event that the permissible draught is reduced to less than 36'06" salt water, then any reasonable associated costs, including possible deadfreight, will be for Buyer's account so long as Seller mitigates its damages and follows the reasonable recommendations of Buyer. Any reasonable costs associated with the Supply of the Oil into a port other than the Discharge Port, or to a berth other than at the Refinery at the Discharge Port, shall, unless for a reason attributable to the Vessel or Seller, be for the account of the Buyer. [This space intentionally left blank] 17 8.4 WAR RISK TO CARGO & VESSEL. The Seller reserves the right to refuse at any time, without being considered in breach of this Agreement: a) to direct any Vessel to undertake or to complete the voyage to the Discharge Port if such Vessel is required in the performance of this Agreement: i) to transit or to proceed to or to remain in waters so that the Vessel concerned would be involved in a breach of any Institute Warranties (if applicable) or, in the Seller's reasonable opinion, to risk its safety; or ii) to transit or to proceed to or to remain in waters where there is war or terrorist activity (de facto or de jure) or threat thereof. b) prior to the commencement of loading, to direct any Vessel to undertake the voyage to the intended Discharge Port if such Vessel is required in the performance of the terms of this Agreement to transit waters which, in the Seller's reasonably held opinion, would involve abnormal delay; or c) to undertake any activity in furtherance of the voyage which in the opinion of the Vessel's master could place the Vessel, its cargo or crew at risk. However, at Buyer's request, if Seller agrees to direct a Vessel to undertake or to complete the voyage as referred to in subsections a), b) or c) above, then Buyer undertakes to reimburse the Seller, in addition to the price payable under the Agreement, for costs incurred by the Seller in respect of any additional insurance (cargo or Vessel) premia and any other sums that the Seller may be required to pay to the Vessel's owner including but not limited to any sums in respect of any amounts deductible under such owner's insurance and any other costs and/or expenses incurred by the Seller. [This space intentionally left blank] 18 ARTICLE 9 NOMINATION 9.1 NOMINATION WINDOWS. (a) Buyer shall nominate to Seller a ten (10) day supply window ("BUYER'S SUPPLY WINDOW") for each Cargo no later than the 1st day of any Month M-1. The first day of such ten (10) day supply window shall fall between the 15th day of Month M and the 14th day of Month M+1. (b) No later than the 20th day of Month M-1, Seller shall nominate to Buyer a ten (10) day supply window ("SELLER'S SUPPLY WINDOW") with the first day of such ten (10) day supply window no more than three (3) days earlier and no more than one (1) day later than the first day of Buyer's Supply Window. (c) Seller shall narrow Seller's Supply Window and nominate to Buyer a four (4) day supply window ("FOUR-DAY SUPPLY WINDOW"), falling wholly within Seller's Supply Window, no later than twenty (20) days prior to the first day of the Four-Day Supply Window. 9.2 REQUIRED INFORMATION. At the time of Seller's nomination of the Four-Day Supply Window, Seller shall provide to Buyer: (a) the volume of the Cargo, subject to a shipping operational tolerance of plus or minus five percent (5%); (b) the name of the Vessel (which must be pre-approved by Buyer); (c) the expected Supply date at Buyer's Refinery; and (d) the Loading Terminal for, and origin of, the Oil. Seller shall notify Buyer as soon as reasonably possible on a Business Day should any of the information change, and information that could be considered time critical will be communicated immediately. In addition, Seller shall update Buyer on a regular basis of Seller's intended Supply plan. Once the Cargo has loaded at the Loading Terminal, each Business Day Seller shall provide Buyer with an updated estimated arrival date and time at the Refinery. 9.3 NOMINATIONS OUTSIDE NORMAL RANGE. Should Seller nominate a Cargo with a volume outside the range of between five hundred seventy thousand (570,000) Barrels and six hundred twenty thousand (620,000) Barrels, Buyer shall have the right to re-nominate a new ten (10) day Supply window for any subsequent Cargo for which a ten (10) day window has already been nominated, in order to reflect a change in expected volume on that Cargo. The new window will replace Seller's Supply Window. Both Parties shall follow the normal nomination procedures thereafter. Notwithstanding the above, it is the intent of the Parties (i) to continuously have sufficient Oil in inventory at Buyer's Refinery to allow Buyer to take Delivery of the Oil at the rate agreed, (ii) to permit Seller commercially reasonable flexibility in managing its lifting requirements at the Loading Terminal, and (iii) that Seller shall not normally Supply two (2) consecutive Cargoes with fewer than seven (7) days separation. 19 ARTICLE 10 PRICE COMPONENTS The price per Barrel net of S&W for Oil Delivered under this Agreement shall be computed as the sum of the components: (10.1) pricing element (10.2) quality differential (10.3) Trigger Adjustment and (10.4) Gross Product Worth adjustment. 10.1 PRICING ELEMENT. (a) Volume (i) Deemed Volumes. The total volume of Oil that will be priced in each Month shall be deemed. Because volumes will be deemed significantly earlier than the Oil is Delivered, the Parties acknowledge that actual Delivered volumes may not exactly match the deemed volumes. Notwithstanding the foregoing, it is the intent of the Parties that the volume that is deemed to price in each Month shall be approximately equal to the volume that is Delivered in each Month, and Buyer agrees to adjust (from time to time) the rate at which Delivery is taken, so that the rate of pricing matches the rate of Delivery. (ii) First Pricing Period. The first pricing period for the Oil to be Delivered will commence on 1st March 2004, and will continue until the last day prior to Buyer's Refinery Upgrading Turnaround. Pricing will be suspended from (and including) the first day, to (and including) the last day of Buyer's Refinery Upgrading Turnaround. The volume deemed to price during each Month of this first pricing period will be calculated based on a daily rate of twenty thousand (20,000) Barrels for all days in that Month, which are included in such first pricing period, subject to any adjustments detailed below. (iii) Second Pricing Period. On the first day following the completion of Buyer's Refinery Upgrading Turnaround, the second pricing period will commence and continue until all the Oil to be Delivered under this Agreement has been priced. The volume that shall be deemed to be priced during each Month of the second pricing period will be calculated based on a daily rate of forty-thousand (40,000) Barrels for all day in that Month, which are included in such second pricing period, subject to any adjustments detailed below. Should Seller exercise the right not to increase the rate of Delivery following the turnaround, the volume to be priced shall be reduced accordingly. (iv) Changes to Delivery Rate. In cases where Deliveries are suspended as a result of a situation covered in Articles 7.2 or 7.3, the Parties shall agree to a modification to the pricing structure. Buyer shall advise Seller of a reduced Delivery rate resulting from any reduction or suspension in Deliveries, and the volume of Oil to be priced during that period will be reduced to match the reduced rate of Delivery. The normal rate of pricing will be resumed when Buyer's normal rate of Delivery is resumed. Notwithstanding the foregoing, there shall be no volume reduction in any pricing period that has already commenced, unless mutually agreed by the Parties. Furthermore, the volume that shall price in any Month cannot be any lower than the volume of Oil that has 20 already been triggered in that Month unless the Parties agree otherwise. Should Buyer request to reduce the volume below the volume that has been triggered, then this reduction can only occur with Seller's agreement, and should Seller request to reduce the volume below the volume that has been triggered, then this reduction can only occur with Buyer's agreement. Should a situation covered in Article 7.2 or 7.3 above occur that would lead to a volume reduction in any pricing period that cannot be reduced for these reasons, then any reduction that cannot occur in the Month for which Article 7.2 or 7.3 has been invoked shall lead to that reduction occurring in the following Month. Should the Parties agree to increase the rate of Delivery of the Oil, they shall agree to a concomitant increase in the volume to be priced. (b) Pricing Basis. All Oil sold under this Agreement shall be priced on one of the following pricing bases, or a combination of both, at Buyer's election: (i) ("WTI BASIS") WTI NYMEX Crude Oil First Line Futures Settlements - to be determined as the average of the daily NYMEX settlement prices for WTI Crude Oil First Line Futures for all settlement days in the applicable Month; or (ii) ("DATED BASIS") Dated (BFO) Platts quotation - to be determined as the average of the daily mean of the low and high price quotations for Brent (DTD) assessments for BFO Cargoes as currently published in Platts Crude Oil Marketwire ("Platts") (or other suitable price marker) for all quotation days in the applicable Month. Buyer shall have the option to determine the volume in each Month that will price on the WTI BASIS and the volume that will price on the DATED BASIS. If the relevant Platts index ceases to be published or is not published for any portion of any period applicable to calculation of a sale price, or if the Parties mutually agree to cease using the Platts index for purposes of this Agreement, the Parties shall cooperate in good faith to select an alternative publication or other reference source that reflects as nearly as possible the same information as would have been published in the Platts index. In the event that the Dated BFO component ceases to be the representative North Sea Benchmark for pricing purposes or ceases to be quoted in any agreed publication or reference source, then the Parties shall agree on an alternative North Sea grade and formula for pricing purposes. (c) Calculation of Pricing Element. The pricing element shall be determined as the sum of the fraction of the total volume deemed to price on the WTI BASIS multiplied by the WTI BASIS price, and the fraction of the total volume deemed to price on the DATED BASIS multiplied by the DATED BASIS price. The pricing element shall be calculated to four (4) decimal places. 21 10.2 QUALITY DIFFERENTIAL. The quality differential to be applied to all volumes shall be determined in accordance with the following: (a) For the first ***** Barrels, ***** (b) For the next ***** Barrels, ***** *****and (c) For all the remaining Barrels, ***** 10.3 TRIGGER ADJUSTMENT. The Trigger Adjustment to be applied for all volume deemed to price in Month M shall be determined according to the difference in market value between: (i) Dated BFO for Month M-1, and (ii) the pricing basis for Month M, as defined in Article 10.1(b). When Buyer triggers all or part of the volume of the Oil for each Month, it shall invoke the procedures described in Appendix III to determine the Trigger Adjustment for that volume. The objective of Appendix III is to give Buyer a fair and market related mechanism to determine the Trigger Adjustment, and to define clear practical procedures to effect the conversion and make the necessary price adjustments. 10.4 GPW AND QUALITY ESCALATORS. An adjustment will be made to the price of ***** to reflect the changes in quality from time to time of the ***** that is being Supplied using the procedures in Appendix I. The adjustment will be calculated in the form of a per Barrel differential, which shall be applied to the price of ***** as calculated in this Article 10 and shall apply for all ***** Supplied under this Agreement. 10.5 MARGIN SHARING AGREEMENTS. Buyer and Seller shall make best efforts to agree in good faith during 2004 on a margin sharing arrangement based on the following principles: (a) Seller will provide an additional discount of ***** per Barrel for any volume on which margin is to be shared. (b) Margin sharing will occur above a benchmark likely based on historical average refining margins. The difference between the actual margin and that benchmark will be subject to profit sharing when the actual margin is higher than the benchmark. (c) The margin to be used will be either Buyer's actual, independently audited refinery margin, or a margin constructed from published prices to closely simulate Buyer's actual margin. There shall be no margin sharing arrangements under this Agreement absent the mutual agreement of the Parties. - ---------- ***** Confidential treatment requested. Confidential information redacted. 22 ARTICLE 11 PAYMENT Payment for Oil Delivered under this Agreement shall be made in full, without discount, deduction, withholding, set-off or counterclaim upon presentation of Seller's commercial invoice, on or before the payment due date pursuant to the provisions in Article 11.1. 11.1 PAYMENT TERMS. Payment shall be made in US Dollars by wire transfer of immediately available funds (same day funds) into Seller's designated bank account on the next Business Day after receipt of Seller's invoice and supporting documentation, delivered by facsimile, electronic mail or U.S. mail. 11.2 INVOICING. Buyer shall provide to Seller an EWQ in the format set forth in Appendix V, Section (A) no later than 12:00 p.m. ET on the Thursday or the first Business Day after the EWQ is determined. The EWQ shall include any necessary volume adjustment for over or under billed volumes from a previous period, as described in Article 11.3. Seller shall invoice Buyer for the EWQ as soon as possible after receipt. Seller's invoice also shall include any payment adjustment resulting from a true-up between provisional prices and actual prices pursuant to Article 11.4. 11.3 DETERMINATION OF ESTIMATED WEEKLY QUANTITY AND RESULTING INVOICE. (a) The EWQ will be the approximate quantity Delivered between midnight Wednesday and midnight on the previous Wednesday, as estimated by Buyer. The estimate shall be determined using the pumphouse computer automatic tankdip readings at midnight for each tank in the Crude Field and the Daily Charge Tanks, and Buyer's estimate of the percentage of Oil in each tank that is owned by Seller. In addition, Buyer shall establish a part-EWQ for the period between midnight on the last day of the Month and midnight on the immediately previous Wednesday. (b) The sum of all EWQ's for a Month (including any part-EWQ's for shorter periods at the beginning or end of such Month) shall be compared with the actual quantity Delivered during such Month as determined pursuant to Article 12.1(c), and the volume difference will be established. (c) On the first payment date in Month M+1, the volume to be invoiced will be adjusted in accordance with any such volume difference. However, if the first payment due date for Month M+1 occurs within three (3) Business Days of the beginning of such Month, then the volume adjustment shall be made to the volume for payment on the second payment due date of such Month. (d) Should the sum of all EWQ's (including all part-EWQ's) be greater than the total quantity Delivered, then the volume due for payment on the appropriate payment due date, shall be reduced by the volume difference as provided in Article 11.3(c). Should the sum of all EWQ's (including all part-EWQ's) be less than the total quantity Delivered, the volume due for payment shall be increased by the volume difference. Buyer shall determine a part-EWQ for the period 23 between midnight on the last day of the Month and midnight on the first Wednesday of the subsequent Month. 11.4 PAYMENT ADJUSTMENTS. If the final price per Barrel for any EWQ has not been determined by four (4) Business Days before the payment due date, Buyer and Seller shall agree to a provisional price at that time to be paid by Buyer on the payment due date. On the first payment due date after the final price is determined for all EWQ's for which that final price applies, a payment adjustment shall be made. The payment adjustment shall be equal to the difference between the total of all payments on such EWQ's based on provisional prices agreed to by the Parties and the total of all payments on such EWQ's based on the actual prices determined by the Parties. If the total of such provisional payments is greater than the total payments, then Seller shall net the difference off the next payment on the next payment due date. If the total of such provisional payment is less that the total payments, then Buyer shall pay to Seller the difference on the next payment due date. The adjustment payable shall be subject to interest chargeable at the one (1) Month LIBOR rate in effect on the Business Day the provisional payment is due and charged from (and including) the Business Day the provisional payment is due and ending (but excluding) the Business Day the payment adjustment is paid. 11.5 LATE PAYMENT. Any amounts not paid when due under this Agreement shall bear interest from and including the date payment was originally to be made to but excluding the date payment is actually made at the Default Interest Rate. Interest shall be computed for the actual number of days elapsed on the basis of a year consisting of 360 days. Acceptance of late payments shall not constitute a waiver of rights to interest and shall in no circumstance be considered as an agreement to provide extended credit. Any sum not paid by Buyer when due for any reason related to Seller, shall not incur interest. [This space intentionally left blank] 24 ARTICLE 12 MEASUREMENT AND INSPECTION 12.1 MEASUREMENT. At the end of each Month, the Parties shall determine a reconciliation of the following volumes of Oil: (i) the Oil Supplied by Seller to the Refinery; (ii) the Oil Delivered by Seller to Buyer; (iii) the Oil in Seller's Inventory in the Refinery; and (iv) the Oil in Buyer's inventory in the Refinery, using the following measurements: (a) The actual volume of Oil in Inventory that is owned by Seller at the Refinery shall be determined by Buyer and advised to Seller in a table format as shown in Appendix V, Section (B). Each tank in which Seller owns Oil shall be measured by an Independent Inspector mutually agreeable to both Parties, and the costs shall be shared equally between the Parties. The tank measurements shall be made according to standard industry practice, using a method to determine the total inventory at the end of each Month. (Buyer's computer calculation for the percentage of Oil in each tank that is owned by Seller shall be used together with the Independent Inspector's determination of the total volume of Oil in each tank to calculate the total volume of Oil owned by Seller at the end of each Month, and to provide the information for the table in Appendix V.) (b) The volume of Oil Supplied by Seller to the Refinery on each Vessel will be determined according to the procedures in Article 12.2. (c) The actual volume of Oil Delivered equals Seller's Inventory at the beginning of the Month (as determined in Appendix V), plus the volume of Oil Supplied to Buyer during that Month (as determined in this Article 12) minus the volume of Oil in Seller's Inventory at the end of that Month (as determined in Appendix V). 12.2 INSPECTION. The quality, quantity and volume of line displacement shall be determined by an Independent Inspector acceptable to both Parties, and the cost of such Independent Inspector shall be shared equally by the Parties. The Independent Inspector's determination shall be binding on both Parties, except for fraud or manifest error, and shall be used for invoicing purposes. Each Party may have a representative present during all tests and measurements. All measurements shall be in accordance with the latest API and ASTM standards and principles then in effect and with generally accepted standards within the petroleum industry. All quantity determinations shall be corrected to 60(degrees) F in accordance with the latest supplement or amendment to ASTM-IP petroleum measurement tables (ASTM designated D#1250, table 6(A)). (a) Inspection for Quantity Supplied. The quantity of Oil Supplied shall be determined by one of the three following methods, in descending order of preference: 25 1. The quantity of Oil Supplied shall be determined by proven meters, in the immediate vicinity of the berth, at the Refinery. 2. If meters are unavailable, or not proven, or not functioning correctly, or determined by the Independent Inspector to be inaccurate or not to represent the quantity Supplied by the Vessel, then the outturn quantity shall be based on static shore tank upgauge measurements at the Refinery, with receiving shore tanks in conditions recommended in API Chapter 3.1A for determining accurate measurement, and meeting the criteria specified below. In the event that the outturn quantity is to be based on shore tank measurements, then each receiving shore tank shall be static from the opening official gauge measurement until the closing official gauge measurement and shall have a liquid oil surface at the official point of calibration. Additionally, all receiving shore tanks shall contain sufficient oil, prior to receipt, to ensure that the floating roofs are afloat and clear of the critical zone by a minimum of six (6) inches. All receiving shore tanks shall be calibrated for critical measurement as set forth by API 2.2 ASTM designation 1220. 3. If the shore tanks are active or do not meet the criteria above, the Independent Inspector cannot verify the shore tank measurements prior to or after discharge, the Independent Inspector determines that these shore tank measurements are inaccurate or are not representative of the volume Supplied by the Vessel, or the receiving tanks are located at a location other than the Refinery, then the Vessel's arrival figure, less the volume remaining on board, adjusted by the Vessel's loading experience factor, as calculated by the Independent Inspector, shall be used to determine the outturn quantity. (For the purpose of this Agreement, the tanks currently designated as VEPCO tanks `C', `D' and `E' shall be deemed to be located at the Refinery.) In the event the Oil is Supplied by Seller to Buyer ex-Seller's lightering vessel or barge into the Refinery, the quantity Supplied shall be determined by Articles 12.2(a)1, 2 or 3. (b) Inspection for Quality Supplied. The quality determined will reflect full deduction for sediment and water, measured in accordance with the latest API/ASTM standards and methods in effect at the time of discharge, as determined from a representative sample drawn by the Sampler. In the event that the Sampler is not available, malfunctions during the transfer, or the Independent Inspector determines that the samples drawn by such Sampler are not representative of the material on board the Vessel on arrival at the Refinery (including, making a comparison with the total of Vessel's arrival composite sample analysis results and Vessel's arrival free water), then sediment and water deduction shall be determined by using the Vessel's volumetrically correct composite sample and Vessel's free water Supplied volume. (c) Line Displacement. In the event that outturn quantity is to be based on shore tank measurements, or if meters are to be used, but are not located in the immediate vicinity of the berth, then, at the commencement of discharge, after opening shore tank gauges have been established, the Independent Inspector 26 shall monitor the performance of a line displacement consisting of the delivering Vessel pumping to the furthest receiving shore tank. The Parties agree that two (2) line displacements may occur when Supplying from the same Vessel to both the Crude Field and the VEPCO tanks `C', `D' or `E'. The line displacement shall be carried out in accordance with API Chapter 17.6.10.3. The quantity displaced shall be at least 120 percent of the combined capacity of all designated Vessel and shore transfer lines (API Chapter 17.6.10.3.5). The Independent Inspector's conclusions regarding the results of the line displacement shall be binding on all Parties absent manifest error or fraud, and the final shore outturn quantity shall be credited, as detailed below, as necessary. The accepted volume tolerance for the line displacement will be two hundred and fifty (250) Barrels, which represents the agreed combined measurement precision limit for the opening and closing gauges for both the receiving shore tank and the supplying Vessel tank. If, during such line displacement, the difference between the volume that the shore tank receives and the volume that the Vessel Supplies is within the accepted tolerance, or if the volume that the shore tank receives is in excess of the volume that the Vessel Supplies by an amount either within or in excess of the accepted tolerance, then the shore line is to be considered full. If, during such line displacement, the volume that the shore tank receives is less than the volume that the Vessel Supplies by an amount greater than the accepted tolerance, then the line shall be considered slack. In cases when the line is found to be slack, the entire difference between the volume that the shore tank receives and the volume that the Vessel Supplies shall be credited to the final outturn quantity. If the shore and Vessel volumes differ by more than the accepted tolerance, Buyer may exercise the option of carrying out a second line displacement (as detailed in API Chapter 17.6.10.3.7 Step 4). If a second displacement is carried out, the same accepted tolerance shall apply. If the Vessel delivery and Refinery receipt volumes differ for the second displacement and the difference is within the accepted tolerance, then only the entire difference resulting from the first displacement shall be credited to the final outturn quantity. If, in the second displacement, the volume that the shore tank receives is less than the volume that the Vessel Supplies by an amount greater than the accepted tolerance, then the total of the entire differences resulting from the first displacement plus the second displacement shall be credited to the final outturn quantity. The Refinery shall confirm the line displacement volumes before the discharge of the Vessel resumes. Refinery personnel (the pump house supervisor or his designated representative) present at the discharge are required to have the necessary authority to agree to all measurements carried out in relation to the line displacement. Any delays incurred resulting from a line displacement dispute, including the carrying out of a second line displacement, are for Buyer's account until the discharge has resumed, provided such delay is the direct and sole result of the line displacement dispute. 12.3 ADDITIONAL ANALYSIS. The API gravity (by method ASTM D1298) and sulfur (% wt., by method ASTM D2622) of the Oil on each Cargo shall be analyzed at the Loading Terminal. Buyer shall be advised of this information no more than three (3) Business Days after the loading of the Cargo is completed. 27 ARTICLE 13 LAYTIME AND DEMURRAGE 13.1 LAYTIME. (a) Vessel shall tender notice of readiness to Buyer on arrival at the pilot station or customary anchorage, or at an area agreed between Buyer and Seller, whichever is applicable at the Discharge Port. (b) Allowed laytime at the Discharge Port, including Sundays and holidays, shall commence as set forth in Article 13.1(c) and be calculated as follows: (i) for Cargo sizes up to and including six hundred twenty thousand (620,000) Barrels, thirty-six (36) hours; and (ii) for Cargo sizes above six hundred twenty thousand (620,000) Barrels, but less than seven hundred thousand (700,000) Barrels, Buyer shall be allowed one (1) additional hour for each twelve thousand (12,000) Barrels of Cargo Supplied, or pro-rata, over and above 620,000 Barrels. Laytime for any Cargo above seven hundred thousand (700,000) Barrels shall be negotiated by the Parties prior to accepting such Cargo nomination. Any time incurred in excess of the described above laytime shall be for Buyer's account, and shall be considered demurrage, except as detailed in Articles 13.2 and 13.3 below. (c) Time allowed to Buyer shall commence as follows: (i) If Vessel tenders notice of readiness within the nominated Four-Day Supply Window at the Discharge Port, time allowed to Buyer shall commence six (6) hours after notice of readiness or when the Vessel is all fast at the Refinery, whichever occurs first. (ii) If Vessel tenders notice of readiness after the nominated Four-Day Supply Window at the Discharge Port, time allowed to Buyer shall commence when Vessel is all fast at the Refinery. Buyer shall make best effort to berth Vessel as soon as possible. (iii) If Vessel tenders notice of readiness prior to the nominated Four-Day Supply Window, then time allowed to Buyer shall commence at 06:00 hours on the first day of the nominated Four-Day Supply Window, or all fast, whichever occurs first. (d) Laytime shall cease upon Completion of Discharge. 13.2 TIME NOT INCLUDED AS LAYTIME OR DEMURRAGE. The following time shall not count as laytime or time on demurrage: (a) time spent by Vessel on inward passage (from arrival, or from anchor aweigh to all fast), in handling ballast (unless concurrent with discharge), or discharging slops; 28 (b) any time resulting from delay caused by strike, lockout, stoppage or restraint of labor for master, officers or crew of the Vessel; (c) time delays incurred due to Vessel's condition or breakdown or inability of the Vessel's facilities to discharge the Cargo within the time allowed; (d) where time delay is caused to Vessel getting into berth after notice of readiness for customary regulatory or compliance inspections or where there is a delay in discharge once Vessel is alongside berth for customary regulatory or compliance inspections. Delays and costs due to inspections and other requirements related to the MSA/ISPS Code, may be determined at a later date, subject to any subsequent legislation. The Parties agree to meet in good faith to discuss any such costs. Seller shall not solely be responsible for such delays or costs unless the inspections reflect that the Vessel is not in compliance with the relevant regulations. (e) the time incurred awaiting the next published high tide accessible to the Vessel after Vessel tenders notice of readiness; (f) the time incurred performing lightering operations prior to berthing; and (g) for avoidance of doubt, Article 7.3 shall not apply to this Article 13.2. 13.3 TIME INCLUDED AS HALF TIME. The following laytime or time on demurrage shall only count as one-half time for Buyer's account: (a) time incurred as a result of fire, explosion, strike, lockout, stoppage or restraint of labor or by breakdown of machinery or equipment in or about the Refinery, including power failures; (b) any time delays incurred in berthing Vessel for discharge which are directly or indirectly due to weather conditions, always provided that such weather delays occur before the Vessel is on demurrage (Buyer shall be responsible for full time for such weather delays while Vessel is on demurrage); and (c) for avoidance of doubt, Article 7.3 shall not apply to this Article 13.3. 13.4 LIGHTERED CARGOES. In the event that Seller requests and Buyer accepts a Cargo such that it is necessary for Seller to lighter Seller's Vessel to meet applicable draught restrictions, then: a) time allowed to Buyer to receive that part of the Cargo Supplied by the Vessel shall be as determined in this Article 13 unless the lightering process causes any delays, which delays shall not constitute laytime; and b) time allowed to Buyer to receive that part of the Cargo Supplied by the lightering barge or vessel shall be agreed between the Parties prior to Buyer's acceptance of the total Cargo. 29 Any time used by Buyer in excess of the agreed additional time allowed shall be considered demurrage as per this Article 13. 13.5 DISCHARGE RATE. Seller warrants that the Vessel is able to discharge the entire Cargo within thirty-two (32) hours, (eight (8) hours less if crude oil washing is not conducted), or maintain an average discharge pressure of one hundred (100) PSI at Vessel's manifold provided shore facilities permit. Time lost as a result of Vessel being unable to discharge the Cargo as stated above shall not count as laytime or time on demurrage. Suspension of discharge for final draining and stripping purposes for a maximum two (2) hours shall be allowed provided Vessel maintains an average discharge pressure of one hundred (100) PSI at Vessel's manifold during bulk discharge or meets such lesser performance required pursuant to a restriction imposed by the Refinery. 13.6 DEMURRAGE CLAIMS. (a) Seller shall provide Buyer with a commercial invoice for any demurrage claim based on Vessel's charter party demurrage rate per day, supported by a copy of the charter party fixture recap evidencing the demurrage rate, and supporting documents. In case of a lightering vessel, the demurrage rate used shall be the contract overtime rate per day, where such rate shall be competitive with general market conditions at the time of charter, or in the absence thereof, at Worldscale at the Average Freight Rate Assessment ("AFRA") appropriate to the size of Vessel as provided by the London Tanker Brokers Panel and current on the date of commencement of laytime. For avoidance of doubt, laytime calculations shall be pursuant to the terms and conditions of this Agreement. (b) Seller shall provide Buyer with an invoice and supporting documents for a demurrage claim within ninety (90) days from Completion of Discharge at the Refinery. If Seller is unable to support a demurrage claim within ninety (90) days of the Completion of Discharge, Buyer agrees to extend the ninety (90) day demurrage notification period by thirty (30) days upon Buyer's receipt of notice from Seller of a forthcoming claim. Seller shall provide Buyer with such notice within the ninety (90) day demurrage notification period. (c) Undisputed demurrage shall be paid by Buyer to Seller no later than seventy-five (75) days after Buyer's receipt of Seller's invoice supported by appropriate documentation. In the event that payment for undisputed demurrage has not been made by the due date, then interest on overdue payments shall be paid for the period starting on and including the due date for payment and ending on but excluding the receipt date of the payment, at the Default Interest Rate. (d) In the event that Buyer disputes Seller's demurrage claim, Buyer shall pay the undisputed portion of the claim by the due date and shall address the amount in dispute within seventy-five (75) days after receipt of Seller's demurrage calculations. Furthermore, Buyer and Seller shall make best efforts to reach an agreement on the issues in dispute in an efficient and timely manner, and payment for the agreed amount shall be made immediately upon agreement. 30 ARTICLE 14 CREDIT CONDITIONS 14.1 CREDIT SUPPORT. (a) To protect Seller's ownership interest in the Oil, Buyer shall facilitate the execution of the Intercreditor Agreement (the "INTERCREDITOR AGREEMENT") by and among Seller, Buyer, and Bank of America, N.A., as administrative agent under the Second Amended and Restated Credit Agreement dated May 14, 2002 between Giant Industries, Inc., Bank of America N.A., BNP Paribas, Fleet National Bank and Banc of America Securities LLC (the "CREDIT AGREEMENT") as may be renewed, modified, amended, or replaced. Buyer shall operate in compliance with the Intercreditor Agreement. (b) Seller shall continuously have and retain title to the Oil in Buyer's tanks and leased tankage at all times during this Agreement. Buyer shall facilitate the execution of a Tank Owner's Agreement for each tank not owned by Buyer in which the tank owner shall acknowledge Seller's unencumbered title to the Oil. Buyer shall not enter into any agreement that adversely affects Seller's title to such Oil or its rights and protections under the Intercreditor Agreement or Tank Owner's Agreement. Oil owned by Seller may be commingled with Buyer's oil only as provided in this Agreement; provided, however, that Buyer shall make reasonable efforts to segregate Seller's Oil, where practicable, and shall provide the necessary reporting as required in this Agreement and the Intercreditor Agreement. (c) To further secure the obligations of this Agreement, it is agreed that Buyer's ultimate parent company, Giant Industries, Inc. (the "GUARANTOR"), shall provide an irrevocable guaranty (the "GUARANTY") for the term of this Agreement, in form and substance reasonably acceptable to Seller. 14.2 REPORTING REQUIREMENTS. (a) Buyer shall provide Seller with: (i) Any and all borrowing base determinations made by Giant for the benefit of lenders and banking institutions for which Giant borrows money or for letters of credit or other financing arrangements entered into by Giant. Giant shall send such borrowing base determinations to Seller at or around the same time they are sent to the lenders and or banking institutions for which they are currently sent on a weekly basis. (ii) Balance sheet information for Giant on a monthly basis including assets, liabilities and debt levels for the Months these figures are not available in public financial statements. Seller shall treat any non-public information on a confidential basis. (iii) Publicly available information sufficient to enable Seller to ascertain Giant's current financial condition and for Seller to assure itself of the security of Oil owned by Seller that is in Buyer's custody. 31 (iv) A weekly schedule with detailed inventory records reflecting the volume of Oil to which Seller has title, as well as the volumes of Buyer's oil in commingled storage, in the format of Appendix V. (b) Buyer shall notify Seller within twenty-four (24) hours of the time that Buyer becomes aware of any event that could reasonably be expected to have a material adverse effect on Buyer's financial condition, operations, business or prospects taken as a whole, including adverse changes in Buyer's debt to equity ratio, default under the Credit Agreement, default in the payment when due of any principal of or interest on any indebtedness aggregating One Million Dollars ($1,000,000) or more, a final judicial or administrative judgment against Giant that is in excess of One Million Dollars ($1,000,000) in the aggregate, a downgrading of Giant's credit and debt rating by a national credit agency and Giant's bank borrowing line availability declines below thirty million US Dollars ($30,000,000). (c) Giant shall notify (i) any and all debt holders or lenders under the Credit Agreement; and (ii) any person who holds a security interest in Buyer's inventory in Buyer's Crude Field tankage and Daily Charge Tanks of Seller's ownership of Oil in both segregated tanks and in commingled storage. (d) Failure to comply with any of the requirements of Articles 14.1 or 14.2 stated above shall first trigger a Collateral Event as described in Article 14.3 and, if not satisfied, an Event of Default as described in Article 20. 14.3 COLLATERAL EVENT. (a) Seller reserves the right, immediately and without prior notice, to terminate or suspend any credit facility and any other credit arrangements that Seller shall make available to Buyer under this Agreement or for any other business purpose, whenever, in its reasonable judgment, Seller considers Buyer's financial condition to present an undue risk to the security of Seller's accounts receivable, margin sharing as in Article 10.5, or Oil in Buyer's custody or should Seller conclude that it has not or cannot obtain sufficient information to ascertain the security of such Oil (each, a "COLLATERAL EVENT"). When a Collateral Event occurs, Seller shall immediately notify Buyer and Buyer shall provide, at its option, any of the following forms of collateral ("COLLATERAL") in an amount determined by Seller in its sole discretion: (i) Sellers accounts receivable: Prepayment or Standby Letter of Credit (ii) Margin participation: Prepayment or Standby Letter of Credit (iii) Oil in Buyers custody: Standby Letter of Credit (b) Collateral in the form of prepayment shall be sent via wire transfer in immediately available funds within two (2) Business Days from receipt of Seller's request. Prepayments shall be discounted for the number of days early payment was effected to the normal payment due date and shall earn interest at the one (1) Month LIBOR rate basis 360 day year. (c) In lieu of prepayment or in the case of Oil in Buyer's custody, Buyer may post a Standby Letter of Credit within two (2) Business Days from receipt of Seller's request. The Standby 32 Letter of Credit shall be opened in a form, amount, term and from a bank acceptable to Seller and shall be deemed received upon receipt by Seller's advising bank. All bank charges and any additional costs related to the opening of such Standby Letter of Credit shall be strictly for the account of Buyer. [This space intentionally left blank] 33 ARTICLE 15 TAXES, DUTIES AND CHARGES 15.1 IMPORTER OF RECORD. Buyer shall be the importer of record for U.S. Customs purposes and shall be responsible for importation documentation and all associated costs. Buyer shall comply with all Law, procure all necessary licenses and permissions and shall pay, or cause to be paid, all importation duties and Taxes. Seller shall provide Buyer with sufficient information and all necessary documents (including a certificate of origin) to timely facilitate importation and reporting. 15.2 COMPLIANCE. (a) Each Party represents that it is in material compliance with all Law relating to the reporting and payment of applicable Taxes imposed on the Oil. Buyer and Seller each represents and covenants that it will file appropriate Tax returns and pay all applicable Taxes arising from or related to this Agreement. Buyer and Seller agree to cooperate in order to minimize any Tax liability to the extent legally permissible. Prior to the scheduled delivery date of Oil to Buyer, Buyer and Seller each shall provide the other with proper exemption certificates or direct pay permits as may be required under Law. (b) Buyer shall pay or reimburse Seller the amount of Taxes paid or incurred by Seller with respect to or in connection with the sales of Oil to Buyer under this Agreement. Buyer hereby indemnifies and holds Seller harmless for any such Tax liability, whether determined or determinable during the duration of this Agreement or on audit after termination; provided, however, that Buyer's obligation to reimburse Seller for Taxes shall survive termination of this Agreement for a period which equals the statute of limitations applicable to the specific Tax in question. (c) If Seller receives any refund of, or realizes the benefit of any credit with respect to, Taxes that Buyer previously had paid to Seller, Seller shall pay the amount of such refund or credit to Buyer, together with any interest thereon paid to Seller by the Governmental Authority, but otherwise without interest thereon. If it is later determined that Seller was not entitled to such refund, credit or interest, then the portion thereof which is repaid, recaptured or disallowed shall be treated as a Tax for which Buyer shall reimburse and indemnify Seller pursuant to this Article 15.2. (d) Any amounts due under this Article 15.2 and not invoiced as part of the price of the Oil shall be paid within two (2) Business Days after demand for payment is made. 15.3 PORT FEES. Notwithstanding the foregoing, (i) all customary agency fees, towage, pilotage and similar port charges, port duties and other Taxes against the Vessel at the Discharge Port, shall be paid by Seller, and (ii) all import fees and other port fees and charges normally paid by Buyer and/or importer shall be borne by Buyer. 34 ARTICLE 16 INSURANCE 16.1 INSURANCE REQUIRED FOR BUYER. Buyer shall, at its sole expense, carry and maintain in full force and effect throughout the term of this Agreement insurance coverages, with insurance companies rated not less than A-, IX by A.M. Best or otherwise reasonably satisfactory to Seller, of the following types and amounts: (a) Workers compensation coverage in compliance with the Law of the states having jurisdiction over each employee and employer's liability coverage in a minimum amount of One Million Dollars ($1,000,000) per accident. (b) Automobile liability coverage in a minimum amount of One Million Dollars ($1,000.000). (c) Comprehensive or commercial general liability coverage and umbrella or excess liability coverage, which includes bodily injury, broad form property damage and contractual liability in a minimum amount of one Million Dollars ($1,000,000) per occurrence and one Hundred Million Dollars ($100,000,000) in the aggregate. (d) Pollution liability coverage, which includes Liabilities under any Environmental Law or for any environmental damages and "sudden and accidental pollution" liability coverages. (e) Standard fire and extended coverage (or alternatively, so-called "all risk" coverage) on the Refinery that shall provide for the full replacement cost of any Oil owned by Seller and stored by Buyer. 16.2 ADDITIONAL INSURANCE REQUIREMENTS. (a) Buyer shall cause its insurance carriers to furnish to Seller insurance certificates, in a form and from a party reasonably satisfactory to Seller, evidencing the existence of the coverages and endorsements required. The certificates shall specify that no insurance shall be canceled or materially changed during the term of this Agreement unless the other is given thirty (30) days notice prior to cancellation or prior to a material change becoming effective. Buyer shall promptly provide Seller with renewal certificates. (b) Seller shall be named as an "additional insured as its interests may appear" on each of Buyer's insurance policies described in Article 16.1 above. (c) The foregoing policies of Buyer shall include an endorsement that the underwriters waive all rights of subrogation against Seller. (d) Buyer shall notify Seller if any self-insured retentions or deductibles exist in the foregoing policies, and all self-insured retentions or deductibles that exist in the foregoing policies of Buyer shall be the sole responsibility of Buyer. (e) The mere purchase and existence of insurance does not reduce or release either Party from any liability incurred or assumed under this Agreement. 35 ARTICLE 17 TERM OF AGREEMENT This Agreement shall become effective on the Effective Date and shall expire when title to all of the Oil on the last Cargo containing the ***** Delivered under this Agreement has passed to Buyer and all other obligations have been fulfilled. ARTICLE 18 REPRESENTATIONS, WARRANTIES AND COVENANTS 18.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Buyer and Seller each represents and warrants to the other as of the Effective Date and as of each Delivery that: (a) There are not suits, proceedings, judgments, ruling or orders by or before any court or any Governmental Authority that materially and adversely affect its ability to perform or the rights of the other Party under this Agreement. (b) It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and it has the legal right, power and authority and is qualified to conduct its business and perform its obligations hereunder. (c) The making and performance by it of this Agreement is within its powers and has been duly authorized by all necessary action on its part. (d) This Agreement constitutes a legal, valid and binding act and obligation of it, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws affecting creditor's rights generally. (e) No Event of Default under Article 20.1 with respect to it or event, which with notice and or a lapse of time would constitute such an Event of Default, has occurred and is continuing, and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement. (f) It is an "Eligible Contract Participant" as defined in Section 1a(12) of the Commodity Exchange Act, as amended. (g) It is a "forward contract merchant" in respect of this Agreement and each sale of Oil hereunder, and each sale of Oil hereunder is a forward contract for purposes of the Bankruptcy Code. (h) Neither it nor any of its affiliates has been contacted by or negotiated with any finder, broker or other intermediary in connection with the sale of Oil hereunder who is entitled to any compensation with respect thereto. - ---------- **** Confidential treatment requested. Confidential information redacted. 36 (i) All governmental and other authorizations, approvals, consents, notices and filings that are required to have been obtained or submitted by it with respect to this Agreement and its performance hereunder and the consummation by it of the transactions contemplated hereby have been obtained or submitted and are in full force and effect, and all conditions of any such authorizations, approvals, consents, notices and filings have been complied with. (j) The execution, delivery and performance of this Agreement do not violate or conflict with (i) any law applicable to it, (ii) any provision of its constitutional documents, (iii) any order or judgment of any court or Governmental Authority applicable to it or any of its assets or (iv) any contractual restriction binding on or affecting it or any of its assets. (k) It possesses all necessary permits, authorizations, registrations and licenses required to perform its obligations hereunder and to consummate the transactions contemplated hereby. (l) It is not bound by any other agreement that would preclude or hinder its execution, delivery, or performance of this Agreement. 18.2 MUTUAL COVENANTS. (a) Each Party shall, in the performance of its duties under this Agreement, comply in all material respects with Law, including all Environmental Law. Buyer and Seller each shall maintain the records required to be maintained by Environmental Law and shall make such records available to the other upon their request. Buyer and Seller each shall also immediately notify the other of any violation or alleged violation with respect to the Oil sold or purchased under this Agreement, and, upon request shall provide the other with all evidence of environmental inspections or audits by any Governmental Authority with respect to such Oil. (b) All reports or documents rendered by Buyer or Seller to the other shall, to the best of its knowledge and belief, accurately and completely reflect the facts about the activities and transactions to which they relate. Buyer and Seller each promptly shall notify the other if at any time it has reason to believe that the records or documents previously furnished no longer are accurate or complete. 18.3 ENVIRONMENTAL COVENANTS OF BUYER. Buyer covenants as of the Effective Date and throughout the term of this Agreement that: (a) It is in material compliance with Environmental Law applicable to operations at the Refinery and has not received any formal notification that it is not presently so in compliance. (b) The Refinery is structurally sound and safe and it does not know of any leaks in the storage tanks, pipelines or other equipment or of any other situation at the Refinery that could cause significant environmental danger, generate significant environmental Liabilities or have a significant detrimental impact on the environment or to Seller's interests. (c) It shall maintain and operate the Refinery in good serviceable condition and in a manner that materially complies with reasonable and prudent industry standards adopted and used in 37 commercial, high quality petroleum refineries and with all Laws, including all Environmental Law. (d) It is in material compliance with all Law regarding worker occupational safety and training. (e) It is in material compliance, and will maintain such compliance, with all Law relating to marine oil pollution. (f) All tanks used for the storage and throughput of Seller's Oil are above ground. (g) It promptly will provide Seller with notice of any changes to the representations and covenants in this Article 18.3. (h) In the event of any Oil spill or discharge reportable under Law, or other environmental pollution occurring at the Refinery or in connection with any transfer, delivery, transportation or receipt of Oil, Buyer shall take all steps (if any) required under Law, including undertaking measures to prevent or mitigate resulting pollution damage. Even if not required by Law, Buyer nevertheless may determine to undertake such measures to prevent or mitigate pollution damage as it deems appropriate or necessary or is required by any Governmental Authority. Buyer shall notify Seller immediately of any such operations, and shall perform such operations in accordance with the National Contingency Plan and any other Law, or as may be directed by the U.S. Coast Guard or any other Governmental Authority. (i) In the event that a Party incurs costs to clean up or contain a spill or discharge or to prevent or mitigate resulting pollution damage, such Party reserves any rights provided by law to recover such costs from the other Party, as well as any third party. In the event a third party is legally liable for such costs and expenses, each Party shall cooperate with the other Party for the purpose of obtaining reimbursement. Each Party shall also cooperate with the other Party for the purpose of obtaining reimbursement from any other applicable entity or source under Law. [This space intentionally left blank] 38 ARTICLE 19 AUDIT AND INSPECTION RIGHTS Seller shall have the right, during Buyer's normal business hours and after reasonable advance notice to Buyer so as not to disrupt Buyer's operations: (i) to make periodic operational inspections of the storage facilities located at the Refinery upon one (1) Business Day's notice, (ii) to conduct audits of any pertinent books and records, including those related to receipts, deliveries and inventories of Oil upon three (3) Business Days' notice and (iii) to conduct physical verifications of the amount of Oil stored at the Refinery. Seller shall have the right to conduct physical inspections of the storage facilities at the Refinery for a period of ninety (90) days following the Termination Date and to conduct audits of any pertinent records for a period of one (1) year following the Termination Date. During any audits or inspections, Seller shall comply with all applicable rules and regulations of the Refinery, as well as any applicable Law. ARTICLE 20 SUSPENSION AND TERMINATION 20.1 EVENTS OF DEFAULT. Upon the occurrence of any of the events listed below (each, an "EVENT OF DEFAULT" or "DEFAULT") with respect to a Party (the "DEFAULTING PARTY"), the other Party (the "NON-DEFAULTING PARTY") may, in its sole discretion, and in addition to any other legal remedies it may have, in law or equity, upon giving notice to the Defaulting Party, (i) suspend its performance under this Agreement, including, as appropriate, the suspension of Seller's Supply of Oil and Buyer's taking Delivery of Oil, (ii) terminate this Agreement, or (iii) if Buyer is the Defaulting Party, Seller may immediately remove all Oil from the storage facilities at the Refinery: (a) Any Party fails to make payment when due under this Agreement within two (2) Business Days of a demand for payment; (b) Any Party fails to perform, breaches or repudiates any obligation to the other Party under this Agreement, other than an Event of Default described in clause (a) above or breaches any representation, covenant or warranty in any material respect under this Agreement, that, if capable of being cured, is not cured to the satisfaction of the other Parties, within five (5) Business Days from notice to such Party that corrective action is needed, or longer than five (5) Business Days if the Party that fails to perform, breaches or repudiates demonstrates to the other Party within five (5) Business Days after receiving notice that corrective action is needed, to the reasonable satisfaction of the other Party, that such cure will be successful and such Party provides a reasonable estimate of the time necessary in order to complete the curative actions; (c) A Party or the Guarantor becomes Bankrupt; (d) There is a change in more than fifty percent (50%) of the direct or indirect ownership of a Party or a Party sells all or substantially all of its assets; 39 (e) A Party fails to give adequate assurances of its ability to perform within two (2) Business Days upon a reasonable request therefore by the other Party; (f) A Party ceases, or threatens to cease, to carry on its business or a major part thereof, or a distress, execution, or other process is levied or enforced upon or against any significant part of the property of such Party that has a material adverse effect on a Party's business or a major part thereof, or the other Party reasonably determines that any of the foregoing events is reasonably likely to occur; (g) Buyer, Giant or any other subsidiary of Giant fails to make any payment in respect of indebtedness of more than Five Million Dollars ($5,000,000) when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues and is not discharged within five (5) Business Days; (h) Buyer has a loss of a material permit by any Governmental Authority or fails to renew any material license, permit or franchise of the Buyer or any material subsidiary of Buyer's parent company directly or indirectly or suffers the imposition of any restraining order, escrow, suspension or impounding of significant funds in connection with any proceeding (judicial or administrative) with respect to any material license, permit or franchise which has a material adverse impact on Buyer's business or a major part thereof; (i) Giant fails to maintain the Guaranty in a form reasonably acceptable to Seller and covering all obligations due under this Agreement, or such Guaranty is for any reason partially or wholly revoked or invalidated or otherwise ceases to be in full force and effect, or Guarantor denies that it has any further liability or obligation thereunder; (j) Buyer fails to satisfy the Collateral requirements pursuant to Article 14.3; (k) Except as otherwise agreed by the Parties, any event of default or automatic early termination event under any other agreement or contract that may from time to time be entered into between Buyer and Seller, including the Intercreditor Agreement and Tank Owner's Agreement; and (l) Any Event of Default or automatic early termination event under Buyer's Credit Agreement or the Guaranty. In the case of an Event of Default described in Article 20.1(c) above, termination automatically shall be deemed to occur as of the moment immediately preceding such Event of Default, and no prior notice to the Defaulting Party is required. [This space intentionally left blank] 40 20.2 REMEDIES. The Non-Defaulting Party's rights under this Article 20 shall be in addition to, and not in limitation or exclusion of, any other rights that it may have (whether by agreement, operation of law or otherwise), including any rights and remedies under the UCC. The Non-Defaulting Party may enforce any of its remedies under this Agreement successively or concurrently at its option. No delay or failure on the part of a Non-Defaulting Party to exercise any right or remedy to which it may become entitled on account of an Event of Default shall constitute an abandonment of any such right, and the Non-Defaulting Party shall be entitled to exercise such right or remedy at any time during the continuance of an Event of Default. All of the remedies and other provisions of this Article 20 shall be without prejudice and in addition to any right to which any Party is at any time otherwise entitled (whether by operation of law, in equity, under contract or otherwise). 20.3 INDEMNIFICATION. The Defaulting Party shall indemnify and hold harmless the Non-Defaulting Party for all Liabilities incurred as a result of the Event of Default or in the exercise of any remedies under this Article 20, including any damages, losses and expenses incurred in obtaining, maintaining or liquidating commercially reasonable hedges relating to the Oil sold and purchased hereunder, all as determined in a commercially reasonable manner by the Non-Defaulting Party. 20.4 GOVERNMENTAL ACTION. Should the enactment and implementation of changes in U.S. import or export taxes, duties, or other governmental action, in its effects or consequences, result in materially reduced economic incentives for Seller, associated with or related to the Oil hereunder (which shall be documented by Seller), then the Parties shall at Seller's written request meet in order to agree on adjustment of the Agreement, which will eliminate such materially reduced incentives. If the Parties fail to agree within thirty (30) days after the request for a meeting is received, then Seller shall have the right to terminate this Agreement. [This space intentionally left blank] 41 ARTICLE 21 OBLIGATIONS AT TERMINATION 21.1 ACTION UPON TERMINATION. Upon expiration or termination of this Agreement for any reason, the Parties agree and shall undertake to do the following: (a) On the date of expiration of this Agreement or the date of early termination (the "TERMINATION DATE"), Buyer shall purchase from Seller all Inventories located at the Refinery (or any such alternate storage facilities previously agreed to by the Parties for the storage of Seller's Oil pending sale to Buyer), as well as any Oil nominated for supply to Buyer, subject to the provisions of Article 21.2. The volume and price of such Oil shall be determined in accordance with this Agreement. Seller shall prepare and provide Buyer with an invoice for the sale of such Inventories. In each case, title and risk of loss to the Inventories shall pass from Seller to Buyer upon receipt of payment into Seller's designated account. (b) If this Agreement is terminated due to a Default by Buyer, Seller shall calculate within ten (10) days of the Termination Date (or within such longer period as is necessary under the circumstances) all damages, losses and expenses incurred by Seller in liquidating all Inventories, as determined in a commercially reasonable manner by Seller and any damages incurred by Seller as allowed pursuant to Article 23 herein, and Buyer shall be required to compensate Seller for all such damages, losses and expenses upon demand. Seller shall be entitled to deduct any such damages from any deposits or other available credit support or Collateral. (c) If this Agreement is terminated due to a Default by Seller, Buyer shall calculate within ten (10) days of the Termination Date (or within such longer period as is necessary under the circumstances) all damages incurred by Buyer as allowed pursuant to Article 23 herein, as determined in a commercially reasonable manner by Buyer, and Seller shall be required to compensate Buyer for all such damages upon demand. (d) As soon as practicable after the Termination Date, Seller shall calculate a final reconciliation of any amounts due between Seller and Buyer under this Agreement (in addition to the amounts due for repurchase of the Inventories) and provide a statement to Buyer. The Party owing any amount due shall pay such amount on the same Business Day of receipt of an invoice by the other Party. 21.2 NOMINATED VOLUMES. (a) If this Agreement is terminated due to a Default by Buyer, Seller shall have the option to Deliver to Buyer any volumes of Oil nominated by Buyer but not yet Delivered at such payment terms as it determines are appropriate in its sole discretion or to sell such volumes to a third party. Buyer shall compensate Seller for any resulting additional costs, damages, losses or expenses. (b) If this Agreement is terminated due to a Default by Seller, Buyer shall have the option to take Delivery of any or all volumes of Oil nominated by Buyer but not yet Delivered or to cancel 42 such volumes. Seller shall compensate Buyer for any resulting additional costs, damages, losses or expenses. (c) In either event, if nominated volumes are sold to Buyer, the purchase price shall be the price that would have applied had the nominated volumes been timely Delivered prior to the date of termination of this Agreement. 21.3 FAILURE TO REPURCHASE OIL. (a) If Buyer fails to pay Seller for the Inventories on the Termination Date, Seller may elect at its sole discretion to sell any or all of the Inventories to third parties pursuant to such terms and conditions as it deems appropriate in its sole discretion. Seller shall notify Buyer of this election and the instructions for delivery of the Oil to Seller's customers or consignees. (b) If Seller elects to sell the Oil to third parties pursuant to Article 21.3 (a), then Seller shall be entitled to a reasonable period of time from the Termination Date to remove the Oil from the Refinery or other storage facilities. Seller shall have reasonable access to such storage facilities for the purpose of removing its Oil or effectuating any third-party sales. (c) In no event shall Seller be responsible for tank bottoms, and Buyers shall compensate Seller for the value of such bottoms remaining in the tanks after the Termination Date if not purchased from Seller. (d) Buyer shall indemnify and hold harmless Seller against any Liabilities incurred in connection with its failure to purchase the Inventories in accordance with this Article 21, including any losses and expenses incurred in obtaining, maintaining or liquidating commercially reasonable hedges or related trading positions, all as determined by Seller in a commercially reasonable manner. 21.4 RESTRICTED USE OF TANKS. If Seller's use of the tanks is materially restrained or enjoined by judicial process, terminated by municipal or other Governmental Authority or by right of eminent domain, Buyer and Seller shall cooperate to dispose of any Oil related to such tanks. Seller shall use commercially reasonable efforts to sell such Oil to third parties, and Buyer shall be liable to Seller for any shortfall between (i) the gross revenues received by Seller from such third-party sales and (ii) the contract price that Buyer would have paid Seller hereunder, plus reasonable costs of cover and documented hedge expenses. [This space intentionally left blank] 43 ARTICLE 22 INDEMNIFICATION AND CLAIMS 22.1 INDEMNIFICATION. (a) To the fullest extent permitted by Law and except as specified otherwise elsewhere in this Agreement, Buyer shall defend, indemnify and hold harmless Seller, its affiliates, and their directors, officers, employees, representatives, agents and contractors from and against any Liabilities arising out of injury, disease, or death of any person or damage to or loss of any property, fine or penalty, as well as any Liabilities arising out of or relating to violations of Environmental Law, to the extent caused by the Buyer or its employees, representatives, agents or contractors, in performing its obligations under this Agreement. (b) To the fullest extent permitted by Law and except as specified otherwise elsewhere in this Agreement, Seller shall defend, indemnify and hold harmless Buyer and its affiliates, and their directors, officers, employees, representatives, agents and contractors, from and against any Liabilities arising out of injury, disease, or death of any person or damage to or loss of any property, fine or penalty, as well as any Liabilities arising out of or relating to violations of Environmental Law, to the extent caused by Seller or its employees in performing its obligations under this Agreement. (c) In addition to the indemnification obligations set forth in this Article 22 and elsewhere in this Agreement, each Party (the "INDEMNIFYING PARTY") shall indemnify and hold the other Party (the "INDEMNIFIED PARTY"), its affiliates, and their employees, directors, officers, representatives, agents and contractors, harmless from and against any and all Liabilities arising from (i) the Indemnifying Party's breach of this Agreement, (ii) the Indemnifying Party's failure to comply with Law with respect to the sale, transportation, storage, handling or consumption of Oil, except to the extent that such liability results from the Indemnified Party's negligence or willful misconduct or (iii) any material inaccuracy in or breach of any of the Indemnifying Party's representations and warranties made herein at the time such representations and warranties were made. (d) A Party's obligation to indemnify the other Party pursuant hereto shall not be nullified or otherwise effected by the allocation of risk of loss pursuant to Article 6 hereof, or the transfer of title to the Oil pursuant to Article 5 hereof, at the time any such Liabilities arise. (e) The Parties' obligations to defend, indemnify, and hold each other harmless under the terms of this Agreement shall not vest any rights in any third party (whether a Governmental Authority or private entity), nor shall they be considered an admission of liability or responsibility for any purposes other than those enumerated in this Agreement. 22.2 CLAIMS. Upon receipt by the Indemnified Party of notice of any claim, demand, suit or proceeding brought against it that might give rise to an indemnity claim under this Agreement (such claim, demand, suit or proceeding, a "THIRD PARTY CLAIM"), the Indemnified Party shall as soon as practicable send to the Indemnifying Party a notice specifying the nature of such Third Party Claim and the amount or estimated amount thereof if known (which amount or estimated 44 amount shall not be conclusive of the final amount, if any, of such claim, demand or suit); provided, however, that any delay or failure by the Indemnified Party to give notice to the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent, if at all, that the Indemnifying Party shall have been materially prejudiced by reason of such delay or failure. The Indemnifying Party shall have the right to assume the defense, at its own expense and by its own counsel, of any Third Party Claim; provided, however, that such counsel is reasonably acceptable to the Indemnified Party. Notwithstanding an Indemnifying Party's election to appoint counsel to represent an Indemnified Party in connection with a Third Party Claim, an Indemnified Party shall have the right to employ separate counsel, and the Indemnifying Party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Indemnifying Party to represent the Indemnified Party would present such counsel with a conflict of interest or (ii) the Indemnifying Party shall not have employed counsel to represent the Indemnified Party within a reasonable time after notice of the institution of such Third Party Claim. If requested by the Indemnifying Party, the Indemnified Party agrees to reasonably cooperate with the Indemnifying Party and its counsel in contesting any claim, demand or suit that the Indemnifying Party defends, or, if appropriate and related to the claim, demand, suit or proceeding in question, in making any counterclaim against the Person asserting the Third Party Claim, or any cross-complaint against any Person. All reasonable costs and expenses incurred in connection with the Indemnified Party's cooperation shall be borne by the Indemnifying Party. No Third Party Claim may be settled or compromised (i) by the Indemnified Party without the prior consent of the Indemnifying Party or (ii) by the Indemnifying Party without the prior consent of the Indemnified Party. Notwithstanding the foregoing, an Indemnifying Party shall not be entitled to assume responsibility for and control of any judicial or administrative proceeding if such proceeding involves an Event of Default by the Indemnifying Party under this Agreement which shall have occurred and be continuing. [This space intentionally left blank] 45 ARTICLE 23 DAMAGES Except for Third Party Claims for such damages, the Parties' liability for damages under this Agreement is limited to direct, actual damages only and neither Party shall be liable for lost profits or other business interruption damages, or special, consequential, punitive, exemplary damages, in tort, contract or otherwise, of any kind, arising out of or in any way connected with the performance, the suspension of performance, the failure to perform, or the termination of this Agreement. Each Party acknowledges the duty to mitigate damages hereunder. ARTICLE 24 ASSIGNMENT (a) This Agreement shall inure to the benefit of and be binding upon the Parties hereto, their respective successors and permitted assigns. (b) Except as specifically provided herein, neither Party shall assign any of its rights and obligations hereunder, in whole or in part, without the prior written consent of the other Party, which in the case of an affiliate, shall not be unreasonably withheld. The assigning Party shall remain liable hereunder for due and proper performance of all provisions of this Agreement, including any provisions governing the credit aspects of this Agreement. (c) Seller may assign to the Norwegian State, or to whom the Norwegian State nominates, all rights and obligations under this Agreement, whether in whole or in part, for the Norwegian State sourced volumes without the consent of Buyer. (d) Any attempted assignment in violation of this Article 24 shall be null and void ab initio and the non-assigning Party shall have the right, without prejudice to any other rights or remedies it may have hereunder or otherwise, to terminate this Agreement effective immediately upon notice to the Party attempting such assignment. [This space intentionally left blank] 46 ARTICLE 25 NOTICES AND ADDRESSES Unless otherwise agreed in writing, any notices, statements, invoices, requests or other communications to be given by either Party pursuant to this Agreement (each, a "NOTICE") shall be in writing and sent by certified mail, return receipt requested, overnight U.S. Mail, overnight reputable courier, electronic mail or by facsimile. A Notice shall be deemed to have been received when transmitted (if confirmed by the notifying Party's transmission report), or on the following Business Day if received after 5:00 p.m. ET at the respective Party's address set forth below and to the attention of the person or department indicated (except that invoices received after 1:00 p.m. ET shall be treated as received on the next Business Day). A Party may change its address, electronic mail address or facsimile number by giving Notice in accordance with this Article 25, which is effective upon receipt. IF TO SELLER: Statoil Marketing & Trading (US) Inc. 225 High Ridge Road West Building, 2nd Floor Stamford, Connecticut 06905 Attention: Crude Oil Operations Fax Number: (203) 978-6952 Telephone Number: (203) 978-6900 E-Mail: USCRUDE@Statoil.com IF TO BUYER: Giant Industries, Inc. 23733 North Scottsdale Road Scottsdale, Arizona 85255 Attention: David Boring, General Manager, Crude Oil Supply Fax number: (480) 585-8892 Telephone Number: (480) 585-8830 E-Mail: DBoring@Giant.com 47 ARTICLE 26 WARRANTIES AND WAIVERS Seller warrants good title to the Oil sold under this Agreement and warrants it conforms to the quality specifications set forth in Article 3 and shall be free from all royalties, taxes, liens, claims and other charges and encumbrances. HOWEVER, SELLER MAKES NO WARRANTY AGAINST INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT. FURTHER, EXCEPT AS PROVIDED HEREIN, SELLER MAKES NO OTHER REPRESENTATION OR WARRANTY, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY REPRESENTATION OR WARRANTY THAT THE OIL SOLD TO BUYER WILL BE MERCHANTABLE OR FIT FOR A PARTICULAR PURPOSE, OR WILL CONFORM TO MODELS OR SAMPLES, OR THAT IT WILL MEET SPECIFICATIONS OTHER THAN THOSE EXPRESSLY PROVIDED HEREIN. [This space intentionally left blank] 48 ARTICLE 27 APPLICABLE LAW, LITIGATION AND ARBITRATION (a) Except as otherwise provided for in Article 27 herein, the existence, validity, interpretation and enforcement of this Agreement, and any controversy, claim or dispute hereunder, whether in contract, tort, equity or otherwise, shall be governed by, construed and enforced in accordance with the laws of the State of New York (without reference to its choice of law doctrine). (b) The Parties shall make every attempt in good faith and within ten (10) days following receipt from either Party of a written notice of such controversy, claim or dispute, to resolve by mutual agreement such controversy, claim or dispute by direct dialogue between senior management of both Parties. If a resolution is not achieved within thirty (30) days from the initiation of such discussions, the matter shall be settled as provided in this Article. (c) Except as provided for in Article 27(d), (e) and (f), each Party irrevocably (i) submits to the exclusive jurisdiction of the United States Federal District Court for the Southern District of New York located in the Borough of Manhattan, New York, and to service of process by certified mail, delivered to the Party at the address indicated in this Agreement, and (ii) waives any objection which it may have at any time to the laying of venue of any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such Party. Further, each Party waives, to the fullest extent permitted by Law, any right it may have to a trial by jury in respect of any proceedings relating to this Agreement. Nothing in the Agreement precludes either Party from bringing proceedings in any other jurisdiction in order to enforce any judgment obtained in any proceedings referred to in this Article, nor will the bringing of such enforcement proceedings in any one or more jurisdictions preclude the bringing of enforcement proceedings in any other jurisdiction. (d) Any controversy, claim or dispute (other than a claim or dispute as described in Article 27(e) and (f)) that may arise in connection with or as a result of this Agreement, where the amount in dispute does not exceed the sum of One Hundred Thousand Dollars ($100,000), and which the Parties are unable to resolve by mutual agreement, shall be settled by arbitration in New York, New York before three (3) disinterested arbitrators in accordance with the International Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof, provided, however, that the Parties may elect to proceed with only one (1) arbitrator. Each Party shall appoint one (1) arbitrator and the third arbitrator, who shall act as chairman, shall be appointed by the American Arbitration Association, provided that each arbitrator shall be knowledgeable of and experienced in the international sale and purchase of crude oil. The arbitration shall be conducted in English and the arbitration award shall be final and binding on both Parties without appeal to the courts. Any controversy, claim or dispute (other than a claim or dispute as described in Article 27(e) and (f)) that may arise in connection with or as a result of this Agreement, where the amount in dispute equals or exceeds the sum of One Hundred Thousand Dollars ($100,000), and which the Parties are unable to resolve by mutual agreement, shall be settled pursuant to the provisions of Article 27(c) herein. 49 (e) Any controversy, claim or dispute that may arise in connection with or as a result of Articles 12 or 13, where the amount in dispute does not exceed the sum of One Hundred Thousand Dollars ($100,000), and which the Parties are unable to resolve by mutual agreement, shall be settled by the "Shortened Arbitration Procedure" of the Society of Maritime Arbitrators, Inc ("SMA") of New York in New York, New York pursuant to the "Rules for the Shortened Arbitration Procedure of the Society of Maritime Arbitrators, Inc." then in force. The arbitration shall be conducted in English and the arbitration award shall be final and binding on both Parties without appeal to the courts and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. In addition to the requirements of Article 27(a), any controversy, claim or dispute shall also be governed by, construed and enforced under the maritime law of the United States without giving effect to its conflict of laws principles. (f) Any controversy, claim or dispute that may arise in connection with or as a result of Articles 12 or 13, where the amount in dispute equals or exceeds the sum of One Hundred Thousand Dollars ($100,000) but is less than Two Hundred and Fifty Thousand Dollars ($250,000), and which the Parties are unable to resolve by mutual agreement, shall be settled by arbitration in New York, New York pursuant to the "Maritime Arbitration Rules" of the SMA then in force. Each Party shall appoint one (1) arbitrator and the third arbitrator, who shall act as chairman, shall be appointed by the SMA; provided, however, that all three (3) arbitrators shall be knowledgeable of and experienced in the international sale and purchase of crude oil and SMA members. The arbitration shall be conducted in English and the arbitration award shall be final and binding on both Parties without appeal to the courts and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. In addition to the requirements of Article 27(a), any such controversy, claim or dispute shall also be governed by, construed and enforced under the maritime law of the United States without giving effect to its conflict of laws principles. For any controversy, claim or dispute that may arise in connection with or as a result of Articles 12 or 13, where the amount in dispute exceeds the sum of Two Hundred and Fifty Thousand Dollars ($250,000), and which the Parties are unable to resolve by mutual agreement, shall be settled pursuant to the provisions of Article 27(c) herein. [This space intentionally left blank] 50 ARTICLE 28 VOICE RECORDING The Parties agree that each may electronically record all telephone conversations between them, with or without the use of a warning tone, and that any such recordings may be submitted in evidence to any court or in any proceeding for the purpose of establishing the formation or existence of a transaction and the terms thereof. Each Party agrees to obtain the consent of its employees and agents to such recording to the extent required by New York law. The Parties agree that the recording of any conversation regarding a transaction under this Agreement, whether written or oral, shall not be treated as sufficient evidence of a contract between the Parties unless the material terms are expressly stated, including at a minimum, those required to (i) calculate the cash flows payable by the parties, (ii) establish the dates of payment, and (iii) describe any options held by a Party, if any. Notwithstanding the foregoing, either Party reserves the right to object to the admissibility of any recording on the grounds of authenticity, relevance, and/or materiality, and neither Party waives its rights to such objections. ARTICLE 29 DISPOSAL Buyer shall not under any circumstances refine or dispose of the Oil to countries with which the Norwegian or United States Governments have decided not to have trade relations. Without diminution of such obligations on Buyer, Seller undertakes to inform Buyer as soon as practicable of any changes in laws, regulations, rules or guidelines which become known to Seller. Buyer acknowledges that at the date hereof it is informed of all such laws, regulations, rules and guidelines relevant to its undertakings under this Article 29. In the event the Oil is disposed of to a third party, Buyer shall ensure that the end user abides by the restrictions set forth herein and without delay provide Seller with all relevant information as Seller may require related to such alternative disposal including name or end user, discharge port and name or refinery. ARTICLE 30 NOTICE OF THE NORWEGIAN STATE'S SOURCED CRUDE OIL Whereas Seller, following the partial privatization of the company, has been established as the sole marketer and seller of the Norwegian State's sourced crude oil in accordance with the instruction established in the shareholders resolution which presently is effective, and the crude oil sold under this Agreement may include such Norwegian State sourced crude oil, to which Statoil ASA originally held title. 51 ARTICLE 31 CONFIDENTIALITY The Parties shall treat the contents of this Agreement and all information furnished by one Party to another as confidential except to the extent that disclosure of any such information is required solely for the limited purpose of enabling either of the Parties hereto to fulfill their respective obligations pursuant to this Agreement; provided that nothing herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) to counsel for either Party, (iii) to auditors, accountants or other professional advisors or lenders of either Party, (iv) to the employees, officers or directors of either Party, (v) in connection with any court proceeding or arbitration to which either Party is a party or (vi) to a subsidiary or Affiliate of either Party. ARTICLE 32 MISCELLANEOUS 32.1 RELATIONSHIP OF PARTIES. This Agreement shall not be construed as creating a partnership, association or joint venture between the Parties. It is understood that each Party is an independent contractor with complete charge of its employees and agents in the performance of its duties hereunder, and nothing herein shall be construed to make either Party, or any employee or agent of either Party, an agent or employee of the other Party. 32.2 NATURE OF SELLER'S INTEREST IN OIL. Although the Parties intend and expect that the transactions contemplated hereunder constitute purchases and sales of Oil between them, if the transactions contemplated hereunder are reconstrued by any court, bankruptcy trustee or similar authority to constitute a loan from Seller to Buyer, then Buyer shall be deemed to have pledged the Oil as security for the performance of Buyer's obligations under this Agreement, and shall be deemed to have granted to Seller a first priority lien and security interest in the Oil and all the proceeds thereof. The filing of any UCC financing statements made pursuant to this Agreement shall in no way be construed as being contrary to the intent of the Parties that the transactions evidenced by this Agreement be treated as sales of Oil by Seller to Buyer. 32.3 INVALIDITY. If any Article or provision of this Agreement shall be determined to be null and void, voidable or invalid by a court of competent jurisdiction, then for such period that the same is void or invalid, it shall be deemed to be deleted from this Agreement and the remaining portions of this Agreement shall remain in full force and effect. 32.4 ENTIRETY. The terms of this Agreement (including the Appendices hereto) constitute the entire agreement between the Parties with respect to the matters set forth in this Agreement, and no representations or warranties shall be implied or provisions added in the absence of a written agreement to such effect between the Parties. This Agreement shall not be modified or changed except by written instrument executed by each of the Parties' duly authorized representatives. No promise, representation or inducement has been made by any Party that is not embodied in this Agreement, and no Party shall be bound by or liable for any alleged representation, promise or inducement not so set forth. 52 32.5 NO THIRD PARTY BENEFICIARY. The Parties do not intend, and nothing in this Agreement shall be deemed, to give any Person other than the Parties hereto any right or interest based on this Agreement. The Parties reserve the right to amend this Agreement by mutual written consent without notice to or consent of any Person, or to terminate it without notice to or consent of any Person not a party to this Agreement. 32.6 COOPERATION. Each Party agrees, at any time and from time to time upon the request of another Party, to execute, deliver and acknowledge, or cause to execute, deliver and acknowledge, such further documents and instruments and do such other acts and things as another Party may reasonably request in order to fully effect the purposes of this Agreement. 32.7 SURVIVAL. Article 19 (Audit and Inspection Rights), Article 15 (Taxes, Duties and Charges), Article 20 (Suspension and Termination), Article 22 (Indemnification and Claims), Article 23 (Damages) and Article 27 (Applicable Law, Litigation and Arbitration) shall survive the expiration or termination of this Agreement. 32.8 COUNTERPARTS. This Agreement may be executed by the Parties in separate counterparts and initially delivered by facsimile transmission or otherwise, with original signature pages to follow, and all such counterparts shall together constitute one and the same instrument. IN WITNESS WHEREOF, the Parties hereto, by their proper officers thereunto duly authorized, have executed and delivered this Agreement in duplicate and signed on the Effective Date. By: /s/ LUANN G. SMITH By: /s/ MORGAN GUST --------------------------------- --------------------------- STATOIL MARKETING & TRADING (US) INC. GIANT YORKTOWN, INC. Name: Luann G. Smith Name: Morgan Gust Title: President Title: President 53 EX-14.1 14 p68818exv14w1.txt EXHIBIT 14.1 EXHIBIT 14.1 GIANT INDUSTRIES, INC. CODE OF BUSINESS CONDUCT AND ETHICS FOR DIRECTORS AND EMPLOYEES ADOPTED MARCH 11, 2004 INTRODUCTION This Code of Business Conduct and Ethics (the "Code") covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide all directors of Giant Industries, Inc. and its subsidiaries (collectively, the "Company") and all employees, including officers, of the Company. All of our employees and directors must conduct themselves in accordance with the Code and seek to avoid the appearance of improper behavior. If a law or regulation conflicts with a policy in this code, you must comply with the law; however, if a local custom or policy conflicts with this Code, you must comply with the Code. QUESTIONS SHOULD BE REFERRED TO THE EMPLOYEE'S SUPERVISOR OR TO THE COMPANY'S LEGAL DEPARTMENT BEFORE ACTION IS TAKEN IF YOU ARE UNSURE WHAT TO DO. Those who violate the standards in this Code will be subject to disciplinary action, up to and including termination. If you are in a situation that you believe may violate or lead to a violation of this Code, follow the guidelines described in Sections 11 and 12 of this Code. 1. COMPLIANCE WITH LAWS, RULES AND REGULATIONS Doing what is right, treating others as you would want to be treated, and obeying the law, both in letter and in spirit, are the foundations on which this Company's ethical standards are built. We expect all of our employees and directors to endeavor to respect and obey the applicable laws of the relevant jurisdictions in which we operate. Although not all employees and directors are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or the Company's Legal Department. 2. CONFLICTS OF INTEREST A "conflict of interest" exists when a person's private interest interferes in any way - or appears to interfere - with the interests of the Company. A conflict situation can arise when an employee or director takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interests also may arise when an employee or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company. It is almost always a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier. Employees are not allowed to work for a competitor as an employee, consultant or board member. The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on the Company's behalf. Directors should inform the Chair of the Corporate Governance and Nominating Committee and the CEO prior to accepting appointments to the board of directors or the advisory board of any public or privately held company. The disclosure requirements and other possible conflict of interest issues involved must be analyzed and discussed. 1 Except as approved in advance by the Board of Directors (the "Board"), or as otherwise specified by the Board, conflicts of interest are prohibited as a matter of Company policy. Conflicts of interest may not always be clear cut, so if an employee or a director has a question, he or she should consult with higher levels of management or the Company's Legal Department. Any employee or director who becomes aware of a conflict or potential conflict should bring it to the attention of a supervisor, manager or other appropriate personnel or consult the procedures described in Section 12 of this Code. 3. INSIDER TRADING As more particularly described in the Company's Personnel Reference Manual and the Company's Policies and Procedures, employees and directors who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business. All non-public information about the Company and its business relationships should be considered confidential information. To use non-public information for personal financial benefit or to "tip" others who might make an investment decision on the basis of this information is not only unethical but also illegal. If you have any questions, please consult the Company's Legal Department. 4. CORPORATE OPPORTUNITIES Employees and directors are prohibited from taking for themselves personally, or for members of their family, opportunities that are discovered through the use of corporate property, information or position without the consent of the Board. No employee or director may use corporate property, information, or position for improper personal gain, and no employee may compete with the Company directly or indirectly. Employees and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. 5. COMPETITION AND FAIR DEALING We seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through illegal business practices. Stealing, or inducing others to steal, proprietary information of other companies is prohibited. Each employee should endeavor to respect the rights of and deal fairly with the Company's customers, suppliers, and employees. To maintain the Company's valuable reputation, compliance with our quality processes and safety requirements is essential. In the context of ethics, our products should be designed and manufactured, and our services should be performed, to meet our obligations to customers. All inspection and testing documents must be handled in accordance with all applicable regulations. The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships. No gift or entertainment should ever be offered, given, provided or accepted by any Company employee, director, agent, or family member thereof, unless it: (i) is not a cash gift; (ii) is consistent with customary business practices; (iii) cannot be construed as a bribe or payoff and (iv) does not violate any laws or regulations or the Gift Policy set forth in the Company's Personnel Reference Manual. Employees should discuss with their supervisors or the Company's Legal Department and directors should discuss with the Company's Legal Department, any gifts or proposed gifts that they are not certain are appropriate. 2 6. DISCRIMINATION AND HARASSMENT We are firmly committed to providing equal opportunity in all aspects of employment and, as more particularly described in the Company's Personnel Reference Manual, we will not tolerate any illegal discrimination or harassment of any kind. 7. HEALTH AND SAFETY As more particularly described in the Company's Personnel Reference Manual, the Company strives to provide each employee with a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions. As more particularly described in the Company's Personnel Reference Manual, employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. 8. RECORD-KEEPING The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions. For example, only the true and actual number of hours worked should be reported. Many employees regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is appropriate, ask your supervisor or the Accounting Department. Rules and guidelines are set forth in the Company's Policies and Procedures and are available from the Accounting Department. All of the Company's books, records, accounts and financial statements should be maintained in reasonable detail, should appropriately reflect the Company's transactions, and should conform to currently applicable legal requirements, generally accepted accounting principles (GAAP), and the Company's system of internal controls. Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and formal reports. Records should be retained or destroyed according to the Company's record retention policy set forth in the Company's Policies and Procedures. In accordance with those policies, in the event of litigation or governmental investigation please consult the Company's Legal Department. 9. CONFIDENTIALITY As more particularly described in the Company's Personnel Reference Manual and the Company's Policies and Procedures, employees and directors must maintain the confidentiality of confidential information entrusted to them by the Company, its advisors, or its customers, except when disclosure is authorized by the Legal Department or required by laws or regulations. Confidential information includes all non-public information that might be of use to competitors, or harmful or embarrassing to the Company or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us. The obligation to preserve confidential information continues even after employment or directorship terminates. 3 10. PROTECTION AND PROPER USE OF COMPANY ASSETS Employees and directors should endeavor to protect the Company's assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Company's profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. Company equipment should not be used for non-Company business, though incidental personal use may be permitted. The obligation of employees and directors to protect the Company's assets includes its proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information violates Company policy. It could also be illegal and result in civil or even criminal penalties. 11. REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR Employees and directors are encouraged to talk to supervisors, managers, the Company's Legal Department or other appropriate personnel about observed illegal or unethical behavior and, when in doubt, about the best course of action in a particular situation. It is the policy of the Company not to allow retaliation for reports of misconduct by others made in good faith by employees. Employees are expected to cooperate in internal investigations of misconduct. 12. COMPLIANCE PROCEDURES We must all work to ensure prompt and consistent action against violations of this Code. In some situations, however, it is difficult to know right from wrong. Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a new question or problem. These are the steps directors and employees should keep in mind: - Make sure you have all the facts. In order to reach the right solutions, we must be as fully informed as possible. - Ask yourself: What specifically am I being asked to do? Does it seem illegal or improper? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your judgment and common sense. - Clarify your responsibility and role. In many situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem. - Discuss the problem with your supervisor. This is the basic guidance for all situations. In many cases, your supervisor will be more knowledgeable about the question, and will appreciate being brought into the decision-making process. Remember that it is your supervisor's responsibility to help solve problems. - Seek help from Company resources. In a case where it may not be appropriate to discuss an issue with your supervisor, or where you do not feel comfortable approaching your supervisor with your question, discuss it locally with your office manager or your Human Resources manager. If that also is not appropriate, call 800-937-4937, Ext. 8797, the Company's toll-free Business Practices Hot Line. 4 - Report ethical violations in confidence and without fear of retaliation. You are encouraged to report ethical violations. If your situation requires that your identity be kept secret, your anonymity will be protected to the extent permitted by law. The Company does not permit retaliation against employees for good faith reports of ethical violations. - Always ask first, act later. If you are unsure of what to do in any situation, seek guidance before you act. 13. PROVISIONS APPLICABLE TO THE PRINCIPAL EXECUTIVE OFFICER AND TO THE SENIOR FINANCIAL OFFICERS The Company's principal executive officer, principal financial officer, principal accounting officer, controller, and other persons performing similar functions (collectively, the "Financial Officers") are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the Company with the Securities and Exchange Commission. As a result, the Financial Officers of the Company are subject to the following specific provisions: - The Financial Officers shall promptly bring to the attention of the Company's Disclosure Committee any material information of which he or she may become aware that could affect the disclosures made by the Company in its public filings or otherwise assist management in fulfilling its responsibilities. - The Financial Officers shall promptly bring to the attention of the Company's Disclosure Committee and the Audit Committee any information he or she may have concerning: (i) significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data; or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's financial reporting, disclosures or internal controls. - The Financial Officers shall promptly bring to the attention of the General Counsel and the Audit Committee any information he or she may have concerning any material violation of this Code by any management or other employees who have a significant role in the Company's financial reporting, disclosures or internal controls. - The Financial Officers shall promptly bring to the attention of the General Counsel, the Audit Committee and the Chief Executive Officer (the "CEO") any information he or she may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof, or of violation of this Code. - The Financial Officers shall promptly bring to the attention of the General Counsel, the Audit Committee and the CEO (unless the CEO is a party to the transaction or the relationship) any material transaction or relationship that arises and of which he or she becomes aware that reasonably could be expected to give rise to an actual or apparent conflict of interest. 14. WAIVERS OF THE CODE OF BUSINESS CONDUCT AND ETHICS Every effort will be made to resolve potential conflicts of interest or other situations involving potential violations of this Code when they are disclosed promptly to management and the parties involved have acted in good faith. In the unlikely event potential conflicts cannot be resolved, waivers 5 will only be given for matters where it is appropriate under the circumstances and the granting of such a waiver will not present a material financial or reputational risk to the Company. All such waivers must be approved, in advance, by the Board or as otherwise specified by the Board. 15. EMPLOYEE COMPLAINT PROCEDURES Any employee of the Company may submit a good faith complaint regarding the business practices of the Company to the management of the Company without fear of dismissal or retaliation. The Company is committed to achieving compliance with all applicable laws and regulations, accounting standards, accounting controls and audit practices. The Company's Audit Committee will oversee treatment of employee concerns in this area. In order to facilitate the reporting of employee complaints, the Company's Audit Committee has established the following procedures for: (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters ("Accounting Matters"); (ii) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters; and (iii) the receipt, retention, and treatment of complaints or concerns regarding any other business practices of the Company. Receipt of Employee Complaints - - Employees may forward complaints on a confidential or anonymous basis to the following: Giant Industries, Inc. Business Practices Hotline 800-937-4937, Ext. 8797 - - Employees with concerns also may report their concerns directly to the Company's General Counsel. Treatment of Complaints - - All messages received on the Business Practices Hotline will be logged into a record kept by the Legal Department and will be initially referred to the Company's General Counsel (the "GC") and Chief Accounting Officer (the "CAO"). Messages involving material dollar amounts and/or executive officers of the Company also will immediately be referred to the Chairman of the Company's Audit Committee and the Company's CEO. - - The Audit Committee will coordinate the investigation of all messages involving material dollar amounts and/or executive officers of the Company. The GC and the CAO will coordinate the investigation of all other messages received. The Audit Committee, GC and CAO may delegate tasks to any Company employee or independent third party they deem appropriate. They also will regularly report to the CEO and the President on the status and/or outcome of the investigations of each matter; provided that, matters involving either the CEO or the President of the Company will be reported to the full Board. - - A written record of the course of each investigation and the outcome will be created and maintained in the Legal Department or by an independent third party if so directed by the Audit Committee. 6 - - At each regularly scheduled meeting of the Company's Audit Committee and at any other time requested by the Audit Committee or the Board, the GC and/or CAO will give a report on all the messages received and the status and/or outcome of the investigations of each matter. - - The Company will not discharge, demote, suspend, threaten, harass or in any manner discriminate against any employee in the terms and conditions of employment based upon any lawful actions of such employee with respect to good faith reporting of complaints regarding accounting matters or otherwise as specified in Section 806 of the Sarbanes-Oxley Act of 2002. 7 EX-21.1 15 p68818exv21w1.txt EXHIBIT 21.1 . . . EXHIBIT 21.1 SUBSIDIARIES OF GIANT INDUSTRIES, INC. (A DELAWARE CORPORATION)
Jurisdiction of Names Under Which Subsidiary Incorporation Company Does Business - --------------------------------------- --------------- ------------------------ Giant Industries Arizona, Inc. Arizona Giant Refining Company Ciniza Pipe Line Company Giant Transportation Giant Service Stations Giant Travel Center TransWest Tank Lines - - Giant Four Corners, Inc.* Arizona - - Navajo Convenient Stores Co., LLC** New Mexico - - Giant Mid-Continent, Inc.* Arizona - - Phoenix Fuel Co., Inc.* Arizona Phoenix Fuel Company Mesa Fuel Company Tucson Fuel Company Firebird Fuel Company PFC Lubricants Company - - Ciniza Production Company* New Mexico - - Giant Stop-N-Go of New Mexico, Inc.* New Mexico - - San Juan Refining Company* New Mexico - - Giant Pipeline Company* New Mexico - - Giant Yorktown, Inc.* Delaware - - Giant Yorktown Holding Company* Delaware
- --------------- * A wholly-owned subsidiary of Giant Industries Arizona, Inc. ** Giant Four Corners, Inc. has a 66 2/3% interest in this entity. EX-23.1 16 p68818exv23w1.txt EXHIBIT 23.1 Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 33-35357, 333-80577 and 333-104248 of Giant Industries, Inc. and subsidiaries ("the Company") each on Form S-8, of our reports dated March 12, 2004, which express unqualified opinions and include an explanatory paragraph relating to the adoption of Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations" in 2003, and the adoption of SFAS No. 142, "Goodwill and Other Intangible Assets" and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" in 2002, on the financial statements and financial statement schedule, each report appearing in the Annual Report on Form 10-K of the Company for the year ended December 31, 2003. /s/ DELOITTE & TOUCHE LLP Phoenix, Arizona March 12, 2004 EX-31.1 17 p68818exv31w1.htm EXHIBIT 31.1 exv31w1

EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
         I, Fred L. Holliger, certify that:
         1.      I have reviewed this annual report on Form 10-K of Giant Industries, Inc.;
         2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
         3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
         4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
              (a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
              (b)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
              (c)      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
         5.      The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
            (a)      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
            (b)      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 15, 2004.

By: /s/ FRED L. HOLLIGER

Name: Fred L. Holliger

Title: Chief Executive Officer


(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the fiscal year ended December 31, 2003.

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period to .


Delaware		86-0642718
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

23733 North Scottsdale Road, Scottsdale, Arizona (Address of principal executive offices)		85255 (Zip Code)


PART I
	Items 1. and 2. Business and Properties.
	General
	Refining Group
	Retail Group
	Phoenix Fuel
	Refining Group
	Retail Group
	Phoenix Fuel
	Employees
	Other Matters
	Regulatory, Environmental and Other Matters
	Motor Fuel Programs
	MTBE Litigation
	Alleged Regulatory Violations
	Discharges, Releases and Cleanup Activities
	Health and Safety
	Changes in Environmental, Health and Safety Laws
	Rights-Of-Way
	Jet Fuel Claims
	Yorktown Power Outage Claim
	Item 3. Legal Proceedings.
	Item 4. Submission of Matters to a Vote of Security Holders.
	Executive Officers of the Registrant
PART II
	Item 5. Market For the Registrant’s Common Equity and Related Stockholder Matters
	Item 6. Selected Financial Data.
FINANCIAL AND OPERATING HIGHLIGHTS
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Company Overview
	Critical Accounting Policies
	Contingencies, Including Environmental Remediation and Litigation Liabilities
	Impairment of Long-Lived Assets
	Asset Retirement Obligations
	Pension and Post-Retirement Plans
	Results of Operations
	Comparison of the Years Ended December 31, 2003 and December 31, 2002
	Discontinued Operations
	Outlook
	Comparison of the Years Ended December 31, 2002 and December 31, 2001
	Discontinued Operations
	Liquidity and Capital Resources
	Item 7A. Quantitative and Qualitative Disclosures about Market Risk
	Item 8. Financial Statements and Supplementary Data
INDEPENDENT AUDITORS’ REPORT
GIANT INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
GIANT INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
GIANT INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
GIANT INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
GIANT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	Note 1 -- Organization and Significant Accounting Policies:
	Note 2 -- Stock-Based Employee Compensation:
	Note 3 -- Business Segments:
	Refining Group
	Retail Group
	Phoenix Fuel
	Note 4 -- Asset Retirement Obligations:
	Note 5 -- Goodwill and Other Intangible Assets:
	Note 6 -- Acquisitions:
	Note 7 -- Discontinued Operations, Asset Disposals, and Assets Held For Sale:
	Note 8 -- Earnings Per Share:
	Note 9 -- Related Party Transactions:
	Note 10 -- Inventories:
	Note 11 -- Property, Plant and Equipment:
	Note 12 -- Accrued Expenses:
	Note 13 -- Long-Term Debt:
	Note 14 -- Financial Instruments and Hedging Activity:
	Note 15 -- Income Taxes:
	Note 16 -- 401(k) Plans:
	Note 17 -- Pension and Post-Retirement Benefits:
	Weighted Average Plan Assumptions
	Plan Assets
	Assumed Health Care Cost Trend Rates
	Note 18 -- Stock Incentive Plans:
	Note 19 -- Interest, Operating Leases and Rent Expense:
	Note 20 -- Commitments and Contingencies:
	Environmental and Litigation Accruals
	Yorktown Environmental Liabilities
	Yorktown Consent Decree
	Yorktown 1991 Order
	Claims for Reimbursement from BP
	Farmington Refinery Matters
	Lee Acres Landfill
	Bloomfield Refinery Environmental Obligations
	Bloomfield Tank Farm (Old Terminal)
	Notices of Violation at Four Corners Refineries
	Jet Fuel Claim
	MTBE Litigation
	Yorktown Power Outage Claim
	Former CEO Matters
	Note 21 -- Quarterly Financial Information (Unaudited)
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
	Item 9A. Controls and Procedures
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
	Item 14. Principal Accountant Fees and Services
PART IV
	Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
SIGNATURES
INDEPENDENT AUDITORS’ REPORT
	SCHEDULE II
GIANT INDUSTRIES, INC. AND SUBSIDIARIES Valuation and Qualifying Accounts Three Years Ended December 31, 2003
ANNUAL REPORT ON FORM 10-K Year Ended December 31, 2003
INDEX TO EXHIBITS
Exhibit 4.3
Exhibit 4.7
Exhibit 4.8
Exhibit 10.3
Exhibit 10.4
Exhibit 10.9
Exhibit 10.28
Exhibit 10.29
Exhibit 10.30
Exhibit 10.31
Exhibit 10.33
Exhibit 14.1
Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2


	2003		2002

Direct sales to wholesalers, retailers and commercial customers		81%		95%
Sales and exchanges with large oil companies		19%		5%



			Year Ended December 31,

			2003			2002			2001			2000			1999

Feedstock throughput:(1)
	Crude oil			24,500			26,600			27,000			29,600			31,900
	Natural gas liquids and oxygenates			6,100			5,900			6,200			5,800			6,500

		Total		30,600			32,500			33,200			35,400			38,400

Crude oil throughput (as a % of total)				80	%		82	%		82	%		84	%		83	%
Rated crude oil capacity utilized				67	%		72	%		73	%		80	%		87	%
Refinery margin ($ per barrel)			$	8.81		$	6.84		$	9.69		$	7.63		$	6.89
Products:(1)
	Gasoline			20,900			21,400			21,400			22,500			23,800
	Diesel fuel			6,900			8,100			8,600			9,600			10,700
	Other			2,800			3,000			3,200			3,300			3,900

		Total		30,600			32,500			33,200			35,400			38,400

High Value Products (as a % of total):
	Gasoline			68	%		66	%		65	%		64	%		62	%
	Diesel fuel			23	%		25	%		26	%		27	%		28	%

		Total		91	%		91	%		91	%		91	%		90	%


Title of Each Class		Name of Each Exchange on Which Registered

Common Stock, $.01 par value		New York Stock Exchange


	•	Our refining group,

	•	Our retail group, and

	•	Phoenix Fuel



			Year Ended
			December 31,

			2003			2002(2)

Feedstock throughput(1):
	Crude oil			51,600			53,300
	Residual feedstocks and intermediates			6,100			4,000

		Total		57,700			57,300

Crude oil throughput (as a % of total)				89	%		93	%
Rated crude oil capacity utilized				83	%		86	%
Refinery margin ($ per barrel)			$	4.07		$	2.32
Products(1):
	Gasoline			30,200			30,400
	Diesel fuel and No. 2 fuel oil			20,500			19,100
	Other(3)			7,000			7,800

		Total		57,700			57,300

High-value products (as a % of total):
	Gasoline			52	%		53	%
	Diesel fuel and No. 2 fuel oil			35	%		33	%

		Total		87	%		86	%


	Full-Time		Part-Time		Total

Refining group		618		1		619
Retail group		1,289		116		1,405
Phoenix Fuel		213		1		214
Corporate staff operations		88		—		88

		2,208		118		2,326


Item 4.	*Submission of Matters to a Vote of Security Holders.*


Name	Age		Position	Executive Officer Since

Fred L. Holliger		56	Chairman of the Board and Chief Executive Officer		October 1989
Morgan Gust		56	President		August 1990
C. Leroy Crow		53	Executive Vice President of our Refining Group Strategic Business Unit		February 2000
Jack W. Keller		59	President of Phoenix Fuel Strategic Business Unit		February 1999
Robert C. Sprouse		47	Executive Vice President of our Retail Group Strategic Business Unit		April 2003
S. Leland Gould		47	Executive Vice President, Governmental Affairs and Real Estate		March 2002
Kim H. Bullerdick		50	Vice President, General Counsel, and Secretary		February 1999
Mark B. Cox		45	Vice President, Treasurer, Chief Financial Officer, and Assistant Secretary		February 1999
Roger D. Sandeen		58	Vice President, Chief Accounting Officer, and Assistant Secretary		July 2003


Item 5.	*Market For the Registrant’s Common Equity and Related Stockholder Matters*


Quarter Ended	High		Low

December 31, 2003	$	12.73	$	7.10
September 30, 2003		8.10		5.57
June 30, 2003		6.32		4.42
March 31, 2003		5.50		2.85
December 31, 2002	$	3.85	$	1.86
September 30, 2002		8.13		3.15
June 30, 2002		12.55		7.50
March 31, 2002		10.39		8.21


Item 7.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*



		Increase/(Decrease)

		Impact on Projected			Impact on			Impact on
Actuarial Assumption(a)		Benefit Obligation			Pension Liability			Pension Expense

Discount rate:
	Increase 1%	$	(1,686,000	)	$	(289,000	)	$	(289,000	)
	Decrease 1%		1,961,000			387,000			387,000
Expected long-term rate of return on plan assets:
	Increase 1%		—			(3,000	)		(3,000	)
	Decrease 1%		—			3,000			3,000


	*Our Yorktown Refinery*


	Refining


	Turnarounds


	Raw Material Supply


(a)		Each fluctuation assumes that the other components of the calculation are held constant.


(a)		Each fluctuation assumes that the other components of the calculation are held constant.

(b)		This assumes a 1% change in the initial and ultimate health care cost trend rate.


	*Earnings (Loss) From Continuing Operations Before Income Taxes*


	*Selling, General and Administrative Expenses from Continuing Operations*


	*Net (Gain) Loss on the Disposal/ Write-Down of Assets from Continuing Operations*


	*Amortization/ Write-Off of Financing Costs from Continuing Operations*


	2003 Reduction		2002 Reduction		Total Reduction

Revolving credit facility	$	25,000,000	$	35,000,000	$	60,000,000
Term loan		10,222,000		7,778,000		18,000,000
Capital lease obligations		6,703,000		—		6,703,000

Total	$	41,925,000	$	42,778,000	$	84,703,000


	•	2003 — $2,468,000

	•	2002 — $565,000; and

	•	2001 — $1,900,000.



			Payments Due

															All Remaining
			Total		2004		2005		2006		2007		2008		Years


			(In thousands)
Long-Term Debt*			$	372,017	$	11,128	$	10,889	$	—	$	150,000	$	—	$	200,000
Operating Leases				37,529		6,034		4,890		4,229		3,408		2,878		16,090
Purchase Obligations:
	Raw Material Purchases			2,013,954		281,701		453,617		427,196		429,936		421,504		—
	Finished Product Purchases			13,167		13,167		—		—		—		—		—
	Services			328		140		113		75		—		—		—

		Total		2,027,449		295,008		453,730		427,271		429,936		421,504		—

Other Long-Term Obligations:
	Aggregate environmental reserves			7,592		1,253		1,061		2,456		923		663		1,236
	Pension Obligations			2,200		2,200		—		—		—		—		—
	Aggregate Litigation Reserves			573		573		—		—		—		—		—
	Interest Obligations			235,240		36,601		36,037		35,500		30,987		22,000		74,115

		Total		245,605		40,627		37,098		37,956		31,910		22,663		75,351

Total Obligations			$	2,682,600	$	352,797	$	506,607	$	469,456	$	615,254	$	447,045	$	291,441



	Amount of Commitment Expiration

													All Remaining
Other Commercial Commitments	Total		2004		2005		2006		2007		2008		Years


	(In thousands)
Line of Credit* (including Standby Letters of Credit)	$	100,000	$	—	$	100,000	$	—	$	—	$	—	$	—
Standby Letters of Credit		36,961		36,961		—		—		—		—		—


Projected Capital Expenditures	Amount

Yorktown — Clean Fuels	$	70,000
Four Corners — Clean Fuels		20,000
RFI/ CMS — Sewer System		5,000
Yorktown Consent Decree		27,000

Total Anticipated Cash Obligations	$	122,000


		As of		Increase						As of		Increase					As of
		12/31/01		(Decrease)			Payments			12/31/02		(Decrease)		Payments			12/31/03


		(In thousands)
Farmington Refinery		$	570	$	—		$	—		$	570	$	—	$	—		$	570
Ciniza — Land Treatment Facility			208		—			(19	)		189		—		(3	)		186
Bloomfield Tank Farm (Old Terminal)			149		(48	)		(12	)		89		—		(22	)		67
Ciniza — Solid Waste Management Units			286		—			(11	)		275		—		—			275
Bloomfield Refinery			977		(412	)		(255	)		310		—		(43	)		267
Ciniza Well Closures			100		—			—			100		40		—			140
Retail Service Stations — Various			194		—			(75	)		119		60		(33	)		146
East Outfall — Bloomfield			—		—			—			—		202		(177	)		25
Yorktown Refinery			—		7,500			(785	)		6,715		—		(799	)		5,916

	Totals	$	2,484	$	7,040		$	(1,157	)	$	8,367	$	302	$	(1,077	)	$	7,592


Item 7A.	*Quantitative and Qualitative Disclosures about Market Risk*


Item 8.	*Financial Statements and Supplementary Data*



	Common Stock

							Additional						Treasury Stock					Total
	Shares			Par			Paid-in			Retained								Stockholders’
	Issued			Value			Capital			Earnings			Shares		Cost			Equity


	(In thousands, except number of shares)
Balances, January 1, 2001		12,282,688		$	122		$	73,099		$	87,262			3,334,680	$	(32,780	)	$	127,703
Purchase of treasury stock		—			—			—			—			417,300		(3,674	)		(3,674	)
Stock options exercised		126,601			2			1,105			—			—		—			1,107
Shares cancelled on net exercise of stock options		(103,430	)		(1	)		(615	)		(491	)		—		—			(1,107	)
Net earnings		—			—			—			12,381			—		—			12,381

Balances, December 31, 2001		12,305,859			123			73,589			99,152			3,751,980		(36,454	)		136,410
Stock options exercised		17,900			—			94			—			—		—			94
Stock option compensation		—			—			80			—			—		—			80
Net loss		—			—			—			(9,267	)		—		—			(9,267	)

Balances, December 31, 2002		12,323,759			123			73,763			89,885			3,751,980		(36,454	)		127,317
401(k) plan contribution		213,776			3			897			—			—		—			900
Net earnings		—			—			—			11,219			—		—			11,219

Balances, December 31, 2003		12,537,535		$	126		$	74,660		$	101,104			3,751,980	$	(36,454	)	$	139,436


	*Use of Estimates in the Preparation of Financial Statements*


	2003		2002

Trade	$	75,529	$	66,944
Credit cards		1,397		2,367

	$	76,926	$	69,311


Buildings and improvements			7-30 years
Machinery and equipment			3-24 years
Pipelines			30 years
Furniture and fixtures			2-15 years
Vehicles			3-7 years



				As of and for the Year Ended December 31, 2003

				Refining		Retail			Phoenix					Reconciling
				Group		Group			Fuel		Other			Items			Consolidated


				(In thousands)
Customer net revenues:
	Finished products:
		Four Corners operations		$	287,288
		Yorktown operations			752,115

			Total	$	1,039,403	$	201,278		$	397,163	$	—		$	—		$	1,637,844
	Merchandise and lubricants				—		133,039			26,262		—			—			159,301
	Other				20,797		16,184			1,775		537			—			39,293

			Total		1,060,200		350,501			425,200		537			—			1,836,438

Intersegment net revenues:
	Finished products				175,898		—			47,304		—			(223,202	)		—
	Other				15,862		—			—		—			(15,862	)		—

			Total		191,760		—			47,304		—			(239,064	)		—

Total net revenues					1,251,960		350,501			472,504		537			(239,064	)		1,836,438
Net revenues of discontinued operations					—		28,179			—		—			—			28,179

Net revenues of continuing operations				$	1,251,960	$	322,322		$	472,504	$	537		$	(239,064	)	$	1,808,259

Operating income (loss):
	Four Corners operations			$	41,932
	Yorktown operations				22,039

		Total operating income (loss)		$	63,971	$	13,476		$	8,483	$	(20,995	)	$	(1,791	)	$	63,144
	Discontinued operations				—		(736	)		—		—			46			(690	)

	Operating income (loss) from continuing operations			$	63,971	$	14,212		$	8,483	$	(20,995	)	$	(1,837	)	$	63,834
Interest expense																		(38,993	)
Amortization of financing costs																		(4,696	)
Interest income																		163

Earnings from continuing operations before income taxes																	$	20,308

Depreciation and amortization:
	Four Corners operations			$	15,846
	Yorktown operations				7,951

		Total		$	23,797	$	10,656		$	1,763	$	1,301		$	—		$	37,517
	Discontinued operations				—		741			—		—			—			741

	Continuing operations			$	23,797	$	9,915		$	1,763	$	1,301		$	—		$	36,776
Total assets				$	459,253	$	116,083		$	72,188	$	59,830		$	—		$	707,354
Capital expenditures				$	14,428	$	2,322		$	295	$	834		$	—		$	17,879
Yorktown refinery acquisition				$	8,854	$	—		$	—	$	—		$	—		$	8,854


				December 31, 2002
	December 31, 2003			(Pro Forma)


	(In thousands)
Liability beginning of year	$	2,198		$	1,719
Liabilities incurred		—			340
Liabilities settled		(146	)		—
Accretion expense		171			139
Revision to estimated cash flows		—			—

Liability end of period	$	2,223		$	2,198