EXHIBIT 99.1
THE PACIFIC GAS AND ELECTRIC COMPANY
SAVINGS FUND PLAN
FOR UNION-REPRESENTED EMPLOYEES
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This is the controlling and definitive statement of the Pacific
Gas and Electric Company Savings Fund Plan for Union-Represented
EMPLOYEES 1/ in effect on and after January 1, 2000. The PLAN, which
covers ELIGIBLE EMPLOYEES of the COMPANY and other EMPLOYERS, is a
further revision of the one originally placed in effect by the COMPANY
as of April 1, 1959. It has since been amended from time to time. The
PLAN as amended may be further amended retroactively in order to meet
applicable rules and regulations of the Internal Revenue Service, the
United States Department of Labor and all other applicable rules and
regulations.
The PLAN is maintained for the exclusive benefit of participants
or their BENEFICIARIES, and contributions or benefits under the PLAN do
not discriminate in favor of HIGHLY COMPENSATED EMPLOYEES.
ELIGIBILITY AND PARTICIPATION
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1. Eligibility
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A union-represented EMPLOYEE becomes an ELIGIBLE EMPLOYEE upon
attainment of regular status. Once eligibility occurs, it
continues as long as the EMPLOYEE remains a union-represented
EMPLOYEE and SERVICE continues.
2. Participation
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To become a participant, an ELIGIBLE EMPLOYEE must provide NOTICE
to the PLAN ADMINISTRATOR of the ELIGIBLE EMPLOYEE'S election to
participate and to be bound by the terms of the PLAN. Through
such NOTICE, the ELIGIBLE EMPLOYEE shall:
(a) authorize the EMPLOYER to reduce his COVERED COMPENSATION by
a stated percentage and to contribute such amount to the
PLAN as a Section 401(k) CONTRIBUTION; and/or
(b) elect to make NON-Section 401(k) CONTRIBUTIONS, if any, to
the PLAN; and
(c) instruct the PLAN ADMINISTRATOR as to the manner in which
EMPLOYEE contributions and matching EMPLOYER CONTRIBUTIONS
are to be invested.
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1/ Words in all capitals are defined in Section 39.
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CONTRIBUTIONS
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3. Employee Contributions
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To become a contributing participant, an ELIGIBLE EMPLOYEE must
make Section 401(k) CONTRIBUTIONS, NON-Section 401(k)
CONTRIBUTIONS, or a combination of both to the PLAN through
payroll deduction.
All contributions withheld by the EMPLOYER from COVERED
COMPENSATION are paid over to the TRUSTEE, unconditionally cred-
ited to the participant's account and invested in accordance with
the participant's instructions.
(a) Section 401(k) CONTRIBUTIONS. A Section 401(k) CONTRIBUTION
is an election to defer the receipt of a specified whole
percentage of COVERED COMPENSATION which would otherwise be
currently payable to a participant. The EMPLOYER shall
reduce the participant's COVERED COMPENSATION by an amount
equal to the percentage of the Section 401(k) CONTRIBUTION
elected by the participant. Under current law, Section
401(k) CONTRIBUTIONS deferred by a participant under the
PLAN are not subject to federal or state income tax until
actually withdrawn or distributed from the PLAN.
(b) NON-Section 401(k) CONTRIBUTIONS. NON-Section 401(k)
CONTRIBUTIONS differ from Section 401(k) CONTRIBUTIONS in
that a participant has already paid taxes on the amounts
contributed to the PLAN. All EMPLOYEE contributions made to
the PLAN as it existed prior to October 1, 1984, are
considered to be NON-Section 401(k) CONTRIBUTIONS and are so
recorded in the accounts maintained by the PLAN
ADMINISTRATOR.
NON-Section 401(k) CONTRIBUTIONS must be made in whole per-
centages of COVERED COMPENSATION, and the sum of all Section
401(k) CONTRIBUTIONS and NON-Section 401(k) CONTRIBUTIONS
made by a participant may not exceed 15 percent of the
participant's COVERED COMPENSATION.
(c) CHANGING CONTRIBUTIONS. By giving NOTICE to the PLAN
ADMINISTRATOR, a participant may direct the PLAN
ADMINISTRATOR to cease or resume making contributions, or to
change the rate of contributions. Any such change shall
become effective within 30 days of receipt by the PLAN
ADMINISTRATOR of such NOTICE.
4. Employer Contributions
----------------------
(a) Each and every time that participants make Section 401(k) or
NON-Section401(k) CONTRIBUTIONS eligible for matching
EMPLOYER CONTRIBUTIONS, the COMPANY shall make a matching
EMPLOYER CONTRIBUTION to the PLAN in cash or in whole shares
of COMMON STOCK, or partly in both. Matching EMPLOYER
CONTRIBUTIONS shall be limited to an amount equal to one-
half of the aggregate participant contributions eligible for
matching EMPLOYER CONTRIBUTIONS under the provisions of
Subsection 4(a)(1). The COMPANY shall charge to each
EMPLOYER its appropriate share of matching EMPLOYER
CONTRIBUTIONS.
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(1) Section401(k) and NON-Section 401(k) CONTRIBUTIONS
Eligible for Matching EMPLOYER CONTRIBUTIONS.
Although a participant may elect to defer up to 15
percent of COVERED COMPENSATION to the PLAN, the
maximum amount of a participant's contributions
eligible for matching EMPLOYER CONTRIBUTIONS shall be
one of the following percentages of COVERED
COMPENSATION:
a) zero percent, with less than three years of
SERVICE; or
b) up to 3 percent, with at least three but less
than five years of SERVICE; or
c) up to 4 percent, with at least five but less than
10 years of SERVICE; or
d) up to 5 percent, with at least 10 but less than
15 years of SERVICE; or
e) up to 6 percent, with at least 15 years of
SERVICE.
f) for a participant who is absent from work and
receiving temporary compensation under any state
Worker's Compensation Law or under the COMPANY's
LONG TERM DISABILITY PLAN, the larger of:
i) the maximum percentage calculated under
(a), (b), (c), (d), or (e), whichever is
applicable; or
ii) the dollar amount which was eligible for
matching EMPLOYER CONTRIBUTIONS immediately
before the participant's absence began.
(b) investment of EMPLOYER CONTRIBUTIONS. All EMPLOYER
CONTRIBUTIONS made to the PLAN shall be invested by the
TRUSTEE in accordance with a participant's INVESTMENT FUND
directions.
5. Rollover Contributions
----------------------
(a) With the approval of the PLAN ADMINISTRATOR, an ELIGIBLE
EMPLOYEE may make a rollover to the PLAN in cash an amount
which constitutes all or part of an eligible rollover
distribution (as defined in Section 402(c)(4) of the CODE).
However, a direct or indirect transfer to this PLAN from
another qualified plan will not be permitted if such
transfer would subject this PLAN to the qualified joint and
survivor rules of CODE Section 401(a)(11).
(b) The EMPLOYER, the PLAN ADMINISTRATOR, and the TRUSTEE have
no responsibility for determining the propriety of, proper
amount or time of, or status as a tax-free transaction of
any transfer under Subsection (a) above.
(c) The PLAN ADMINISTRATOR shall develop such procedures and may
require such information from the individual who is
requesting to make a rollover to the
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PLAN, as necessary or desirable in order to determine that
the proposed rollover will meet the requirements of this
Section 5.
(d) A rollover will be credited to the participant's account and
will be recorded separately as a ROLLOVER CONTRIBUTION by
the PLAN ADMINISTRATOR as soon as practicable following the
receipt thereof by the TRUSTEE.
(e) The PLAN ADMINISTRATOR in its discretion may direct the
return to the participant (or the transfer to another
TRUSTEE or custodian designated by the participant) of any
ROLLOVER CONTRIBUTION and any earnings thereon to the extent
the PLAN ADMINISTRATOR determines that such return may be
necessary to ensure the continued qualification of this PLAN
under Section 401(a) of the CODE.
(f) ROLLOVER CONTRIBUTIONS shall not be eligible for matching
EMPLOYER CONTRIBUTIONS as described in Section 4.
6. Limitations
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(a) Average Deferral Percentage Limitation. In any PLAN YEAR,
the average rate of Section 401(k) CONTRIBUTIONS as a
percentage of compensation for all participating HIGHLY
COMPENSATED ELIGIBLE EMPLOYEES shall not exceed the larger
of:
(1) the average rate of Section 401(k) CONTRIBUTIONS as a
percentage of compensation for all other participating
ELIGIBLE EMPLOYEES multiplied by 1.25 percent; or
(2) the lesser of:
a) the average rate of Section 401(k) CONTRIBUTIONS
as a percentage of compensation for all other
participating ELIGIBLE EMPLOYEES multiplied by 2;
or
b) the average rate of Section 401(k) CONTRIBUTIONS
as a percentage of compensation for all other
participating ELIGIBLE EMPLOYEES plus 2
percentage points, or such lesser amount as the
Secretary of the Treasury may prescribe in order
to prevent the multiple use of this alternative
limitation with respect to any HIGHLY COMPENSATED
participant. If multiple use of the alternative
limitation occurs with respect to the Average
Deferral Percentage Limitation and Average
Contribution Percentage Limitation in this PLAN,
it will be corrected by reducing the actual
contribution percentage of HIGHLY COMPENSATED
participants in the manner described in Section
6(c), below.
The average rate of Section 401(k) CONTRIBUTIONS for a PLAN
YEAR for a designated group of ELIGIBLE EMPLOYEES shall be
the average of the ratios, calculated separately for each
participating ELIGIBLE EMPLOYEE in the group, of the amount
of Section 401(k) CONTRIBUTIONS made by each EMPLOYEE for the
PLAN YEAR, to the EMPLOYEE's compensation for such PLAN
YEAR. As used
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in this subsection, compensation shall mean
compensation paid by an EMPLOYER to the participant during
the PLAN YEAR which is required to be reported as wages on
the participant's form W-2 and shall also include
compensation which is not currently includable in the
participant's gross income by reason of the application of
CODE Sections 125 and 402(e)(3).
For purposes of this subsection, the ratio of the amount of
Section 401(k) CONTRIBUTIONS to a participant's compensation
for any participant who is HIGHLY COMPENSATED for the PLAN
YEAR and who is eligible to have elective deferrals or
qualified employer deferral contributions allocated to his
account under two or more plans or arrangements described in
Section 401(k) of the CODE that are maintained by an employer
or affiliated employer shall be determined as if all such
Section 401(k) CONTRIBUTIONS, elective deferrals and
qualified employer deferral contributions were made under a
single arrangement.
For purposes of determining the ratio of the amount of
Section 401(k) CONTRIBUTIONS to a participant's compensation
for a participant who is HIGHLY COMPENSATED by reason of
being one of the ten highest-paid EMPLOYEES or a 5 percent
owner of the controlled group of corporations, as defined in
Section 414 of the CODE, the Section 401(k) CONTRIBUTIONS and
compensation of such participant shall include the Section
401(k) CONTRIBUTIONS and compensation of the participant's
family members, as defined in Section 414 of the CODE, and
such family members shall be disregarded in determining the
average rate of Section 401(k) CONTRIBUTIONS for non-HIGHLY
COMPENSATED participants.
The determination and treatment of Section 401(k)
CONTRIBUTIONS of any participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(b) Average Contribution Percentage Limitation. In any PLAN
YEAR, the average rate of NON-Section 401(k) CONTRIBUTIONS
and EMPLOYER CONTRIBUTIONS as a percentage of compensation
for all participating HIGHLY COMPENSATED ELIGIBLE EMPLOYEES
shall not exceed the larger of:
(1) the average rate of NON-Section 401(k) CONTRIBUTIONS
and EMPLOYER CONTRIBUTIONS as a percentage of
compensation for all other participating ELIGIBLE
EMPLOYEES multiplied by 1.25; or
(2) the lesser of:
a) the average rate of NON-Section 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS as a
percentage of compensation for all other
participating ELIGIBLE EMPLOYEES multiplied by 2;
or
b) the average rate of NON-Section 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS for all
other participating ELIGIBLE EMPLOYEES plus 2
percentage points, or such lesser amount as the
Secretary of the Treasury may prescribe in order
to prevent the multiple use of this alternative
limitation with respect to any HIGHLY COMPENSATED
participant. If multiple use of the alternative
limitation occurs with respect to the Average
Deferral Percentage Limitation and Average
Contribution
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Percentage Limitation in this PLAN,
it will be corrected by reducing the actual
contribution percentage of HIGHLY COMPENSATED
participants in the manner described in Section
6(c), below.
The average rate of NON-Section 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS for a
PLAN YEAR for a designated group of ELIGIBLE
EMPLOYEES shall be the average of the ratios,
calculated separately for each participating
ELIGIBLE EMPLOYEE in the group, of the amount of
NON-Section 401(k) CONTRIBUTIONS and EMPLOYER
CONTRIBUTIONS made by and on behalf of each
EMPLOYEE for the PLAN YEAR, to the EMPLOYEE's
compensation for such PLAN YEAR. As used in this
subsection, compensation shall mean compensation
paid by an EMPLOYER to the participant during the
PLAN YEAR which is required to be reported as
wages on the participant's form W-2 and shall also
include compensation which is not currently
includable in the participant's gross income by
reason of the application of CODE Sections 125 and
402(e)(3).
For purposes of this subsection, the ratio of the amount of
NON-Section 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS
to a participant's compensation for any participant who is
HIGHLY COMPENSATED for the PLAN YEAR and who is eligible to
have elective deferrals or qualified employer deferral
contributions allocated to his account under two or more
plans or arrangements described in Section 401(k) of the CODE
that are maintained by an employer or affiliated employer
shall be determined as if all such NON-Section 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS, elective deferrals
and qualified employer deferral contributions were made under
a single arrangement.
For purposes of determining the ratio of the amount of
NON-Section 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS
to a participant's compensation for a participant who is
HIGHLY COMPENSATED by reason of being one of the ten highest-
paid EMPLOYEES or a 5 percent owner of the controlled group
of corporations, as defined in Section 414 of the CODE, the
NON-Section 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS
and compensation of such participant shall include the
NON-Section 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS
and compensation of the participant's family members, as
defined in Section 414 of the CODE, and such family members
shall be disregarded in determining the average rate of NON-
Section 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS for
non-HIGHLY COMPENSATED participants.
The determination and treatment of NON-Section 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS of any participant
shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
(c) In the event that the EMPLOYEE BENEFIT ADMINISTRATIVE
COMMITTEE, in its sole and absolute discretion, determines
that the rate of Section 401(k) CONTRIBUTIONS, and/or the
rate of NON-Section 401(k) CONTRIBUTIONS and EMPLOYER
CONTRIBUTIONS will exceed either or both of the maximum
limitations contained in Subsections 6(a) and 6(b), the
EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall instruct the
PLAN ADMINISTRATOR
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to reduce the rate of contributions made
by HIGHLY COMPENSATED participants so that the limitations
will be met.
The PLAN ADMINISTRATOR shall first determine the maximum
average rate of contributions which can be made by the HIGHLY
COMPENSATED participants. The contributions made by HIGHLY
COMPENSATED participants shall then be reduced, on a
prospective basis, until the limitations are met. Any
necessary reduction shall be made by first reducing the
highest rate of Section 401(k) CONTRIBUTIONS or NON-Section
401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS as may be
appropriate, currently authorized by participants, with such
rate to be reduced in 1 percent increments until the maximum
permissible average rate of contributions is met.
Notwithstanding any other provision of the PLAN, if, as of
the end of a PLAN YEAR, the PLAN fails to meet either or both
of the tests described in Subsections 6(a) or 6(b), the PLAN
ADMINISTRATOR shall, on or before December 31 of the
following PLAN YEAR distribute to each HIGHLY COMPENSATED
participant, beginning with the participant having the higher
ratio, such excess portion of the participant's Section
401(k) CONTRIBUTIONS, and/or NON-Section 401(k) CONTRIBUTIONS
and EMPLOYER CONTRIBUTIONS (and any income allocable to such
portion), until the PLAN satisfies both of the tests.
Distributions made to satisfy the limitations described in
Subsection 6(b) shall include both NON-Section 401(k)
CONTRIBUTIONS and related matching EMPLOYER CONTRIBUTIONS in
accordance with the requirements of Treasury Regulation
Section 1.401(m)-l(e)(4). If there is a loss allocable to
such excess amount, the amount of the distribution shall in
no event be less than the lesser of the (i) participant's
account or (ii) the participant's Section 401(k)
CONTRIBUTIONS, or NON-Section 401(k) CONTRIBUTIONS and
EMPLOYER CONTRIBUTIONS, as appropriate, for the PLAN YEAR.
(d) Annual Section 401(k) Limitation. Effective as of
January 1, 1987, no participant shall be permitted to make
Section 401(k) CONTRIBUTIONS to the PLAN during any PLAN
YEAR in excess of $7,000, multiplied by the adjustment
factor prescribed by the Secretary of the Treasury under
Section 415(d) of the CODE for years beginning after Decem-
ber 31, 1987, as applied to elective deferrals.
(e) Section 415 Limitation. Anything herein to the contrary
notwithstanding, in no event shall the annual additions to a
participant's accounts in a YEAR exceed the lesser of (1)
25 percent of the participant's compensation (as defined in
subparagraph 6(e)(1), below) for the year or (2) $30,000,
or, if greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the CODE as in
effect for the PLAN YEAR. For purposes of applying the
limitations of Section 415 of the CODE, the annual additions
which must be kept within the limits set forth above, shall
mean the sum credited to a participant's account for any
PLAN YEAR of (i) EMPLOYER CONTRIBUTIONS and Section 401(k)
CONTRIBUTIONS, (ii) NON-Section 401(k) CONTRIBUTIONS, and
(iii) any amounts allocated to an individual medical
account, as defined in Sections 415(l)(2) and 419A(d)(2) of
the CODE. The compensation limitation percentage referred
to above shall not apply to (i) any contribution for medical
benefits, as defined in Section 419A(f)(2) of the CODE,
after a participant's separation from SERVICE which is
otherwise treated as an annual addition, or (ii) any amount
which is otherwise treated as an annual addition under
Section 415(l)(1) of the CODE.
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(1) Solely for purposes of applying the Section 415
limitations, compensation shall include all of a
participant's wages, salaries, fees for professional
service, and other amounts received for personal
services actually rendered in the course of employment
with an EMPLOYER (including, but not limited to,
commissions paid to salesmen, compensation for
services on the basis of a percentage of profits,
commissions on insurance premiums, tips, and
bonuses). For purposes of applying the Section 415
limitations, compensation shall not include any of the
following:
a)Contributions made by an EMPLOYER to a plan of
deferred compensation to the extent that, before
the application of the Section 415 limitations to
that plan, the contributions are not includable
in the gross income of the participant for the
taxable year in which contributed. Any
distributions from a plan of deferred
compensation are not considered as compensation
for Section 415 purposes, regardless of whether
such amounts are includable in the gross income
of the EMPLOYEE when distributed. However, any
amounts received by a participant pursuant to an
unfunded, nonqualified plan may be considered as
compensation for Section 415 purposes in the year
such income is includable in the gross income of
the EMPLOYEE.
b) Amounts realized from the exercise of a
nonqualified stock option, or when restricted
stock (or property) held by a participant either
becomes freely transferable or is no longer
subject to a substantial risk of forfeiture.
c) Amounts realized from the sale, exchange, or
other disposition of stock acquired under a
qualified stock option.
d) Other amounts which receive special tax benefits
such as premiums for group term life insurance
(but only to the extent that the premiums are not
includable in the gross income of the
participant).
In the event that the annual additions to a
participant's accounts would exceed the Section
415 limitations, the PLAN ADMINISTRATOR shall
first reduce the participant's NON-Section 401(k)
CONTRIBUTIONS until the Section 415 limitations
are met.
(f) If a participant of this PLAN is also a participant in the
COMPANY's RETIREMENT PLAN, Section 415 of the CODE imposes a
combined benefit limitation. Contributions to this PLAN
will nevertheless be permitted to the maximum extent
permitted by Section 415 of the CODE and the terms of the
PLAN. If the combined maximum benefit permitted would be
exceeded, the benefit from the COMPANY's RETIREMENT PLAN
shall be reduced so that the limitation will be met. The
combined maximum benefit for a participant shall be
determined pursuant to the provisions of Section 415(e) of
the CODE.
At the election of the PLAN ADMINISTRATOR, special
transitional rules may apply for both the defined benefit
fraction and the defined contribution fraction for EMPLOYEES
who were participants as of December 31, 1982.
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(g) Top Heavy Provisions. In the event that the PLAN is or
becomes "Top Heavy," as that term is defined in Section
416(g) of the CODE, the provision contained in Special
Provision A shall supersede any conflicting provision of the
PLAN.
(h) For purposes of determining all benefits under the PLAN, for
PLAN YEARS beginning after 1988 and before 1994, the maximum
compensation of each EMPLOYEE that may be taken into account
each PLAN YEAR shall not exceed $200,000 (as adjusted by the
Secretary of the Treasury under Section 401(a)(17) of the
CODE. For purposes of determining all benefits under the
PLAN, for PLAN YEARS beginning after 1993, the maximum
compensation of each EMPLOYEE that may be taken into account
each PLAN YEAR shall not exceed $150,000 (as adjusted by the
Secretary of the Treasury under Section 401(a)(17) of the
CODE). In determining the compensation of a HIGHLY
COMPENSATED EMPLOYEE for purposes of this limitation, the
rules of Section 414(q)(6) of the CODE shall apply, except
that the term "family" shall include only the spouse of the
EMPLOYEE and any lineal descendants of the EMPLOYEE who have
not attained age 19 before the close of the YEAR. If the
aggregate compensation of family members exceeds the
applicable compensation limit of compensation as limited by
Section 401(a)(17) of the CODE, then the amount of
compensation considered under the PLAN for each family
member is proportionately reduced so that the total equals
the applicable compensation limitation under Section
401(a)(17) of the CODE.
SELECTION OF INVESTMENT FUNDS
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7. Selection of Investment Funds
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(a) Section 401(k) CONTRIBUTIONS, NON-Section 401(k)
CONTRIBUTIONS, and EMPLOYER CONTRIBUTIONS. By giving
NOTICE, a participant shall instruct the PLAN ADMINISTRATOR
to invest his Section 401(k) CONTRIBUTIONS, NON-Section
401(k) CONTRIBUTIONS, and EMPLOYER CONTRIBUTIONS in one or
more INVESTMENT FUNDS. The minimum amount which can be
invested in any single INVESTMENT FUND shall be 1 percent of
a participant's current contributions to the PLAN. A
participant may elect to invest more than the minimum amount
in any INVESTMENT FUND, provided that any such increase must
be in increments of 1 percent.
(b) CHANGE OF INVESTMENT FUND ALLOCATIONS. By giving NOTICE to
the PLAN ADMINISTRATOR, a participant may (1) change the
percentage levels of future contributions which are to be
allocated to any INVESTMENT FUND or FUNDS or, (2) change the
INVESTMENT FUNDS in which his future contributions are to be
invested. Each election regarding investment of future
contributions shall be effective with the next deposit of
contributions.
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THE INVESTMENT FUNDS
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8. PG&E Corporation Stock Fund
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This FUND is invested primarily in COMMON STOCK of PG&E
Corporation 2/, with a small portion invested in cash or cash
equivalents. The FUND also holds COMMON STOCK and the earnings
thereon attributable to EMPLOYER CONTRIBUTIONS and participant
contributions made to the Basic Fund of the PLAN as it existed
prior to April 1, 1984, as well as all COMMON STOCK which has been
transferred to this PLAN from the TRASOP and PAYSOP Plan. All
cash dividends received by the TRUSTEE on COMMON STOCK are
reinvested in the FUND.
(a) Investment Generally. Whenever the TRUSTEE invests cash in
COMMON STOCK, the EMPLOYEE BENEFIT FINANCE COMMITTEE shall
direct the TRUSTEE to purchase the COMMON STOCK either (i)
at a public sale on a recognized stock exchange,
(ii) directly from PG&E Corporation at a price equal to that
day's closing price for COMMON STOCK on the New York Stock
Exchange, or (iii) from a private source at a price no
higher than the price that would have been payable under
(i).
(b) Voting of COMMON STOCK. Each and every time common
shareholders of PG&E Corporation who are not participants in
the PLAN are entitled to vote COMMON STOCK, participants
shall have an absolute right to vote COMMON STOCK. Whenever
participants are given the opportunity to vote COMMON STOCK,
the TRUSTEE shall inform each participant of all relevant
material received by the TRUSTEE with a written request for
confidential voting instructions. The TRUSTEE is required
to vote the COMMON STOCK credited to a participant's account
as the participant directs. If the participant does not
give such instructions within the required time, the TRUSTEE
may not vote any COMMON STOCK credited to a participant's
account.
(c) Cost of UNITS. The cost of a UNIT shall be the current
value of a UNIT as determined by the TRUSTEE as of the
valuation date immediately preceding the date that the
TRUSTEE invests contributions in the PG&E CORPORATION STOCK
FUND.
(d) Value of UNITS. The value of a UNIT is the value of the
COMMON STOCK held in the FUND at the closing price on the
New York Stock Exchange plus the cash held in the FUND, as
determined by the TRUSTEE each BUSINESS DAY, less any fees
or other expenses which are charged to the FUND which shall
reduce the earnings of that fund, divided by the number of
UNITS. Each payment into the PG&E CORPORATION STOCK FUND of
contributions shall increase, and each payment out of the
PG&E CORPORATION STOCK FUND shall decrease, the number of
UNITS by a number equal to the amount of the payment divided
by the last UNIT value determination immediately preceding
the date of payment.
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2/ Prior to January 1, 1997, this FUND was invested primarily in the
common stock of the Pacific Gas and Electric Company. Effective
January 1, 1997, all PG&E common stock was converted to common
stock of PG&E Corporation by operation of the formation of PG&E
Corporation.
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9. U.S. Bond Fund
--------------
This FUND was maintained for the purpose of investing EMPLOYEE
contributions in United States BONDS. This FUND also holds all
BONDS attributable to participant contributions made to the Basic
Fund of the PLAN as it existed prior to April 1, 1984. Income
from BONDS is reflected in the greater redemption values of the
BONDS. BONDS held in this FUND cannot be transferred to another
INVESTMENT FUND under the transfer provisions of Section 18.
Effective July 1, 1991, the U.S. BOND FUND no longer accepts
EMPLOYEE contributions. BONDS purchased to date with EMPLOYEE
contributions will continue to be held in the PLAN until a
distribution is requested by the EMPLOYEE in accordance with
current PLAN provisions.
10. Large Company Stock Index Fund (LCSF)
--------------------------------------
This FUND is maintained for the purpose of investing in a
diversified portfolio consisting principally of common stock of
large U.S. companies and securities convertible into common
stock. However, at no time shall the LCSF be invested in
securities issued or guaranteed by the COMPANY or any of its
subsidiaries, except to the extent that any such securities are
held in a commingled account invested in by the LCSF INVESTMENT
MANAGER.
The LCSF INVESTMENT MANAGER directs the day-to-day investment of
the FUND. Contributions to this FUND are paid over to the
TRUSTEE and invested in accordance with instructions received
from the LCSF INVESTMENT MANAGER. A participant's account is
credited with the number of LCSF UNITS purchased with
contributions allocated to his account.
(a) Cost of LCSF UNITS. The cost of a LCSF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of
the valuation date immediately preceding the date that the
TRUSTEE invests contributions in the LCSF.
(b) Value of LCSF UNITS. The value of a LCSF UNIT is the value
of the FUND assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the FUND), divided by the number of LCSF
UNITS. Each payment into the FUND of contributions shall
increase, and each payment out of the FUND shall decrease,
the number of FUND UNITS by a number equal to the amount of
the payment divided by the last UNIT value determination
immediately preceding the date of the payment.
11. Small Company Stock Index Fund (SCSF)
-------------------------------------
This FUND is maintained for the purpose of investing in a
diversified portfolio consisting principally of common stock of
small capitalization U.S. companies and securities convertible
into common stock. However, at no time shall the SCSF be
invested in securities issued or guaranteed by the COMPANY or any
of its subsidiaries, except to the extent that any such
securities are held in a commingled account invested in by the
SCSF INVESTMENT MANAGER.
<PAGE>
The SCSF INVESTMENT MANAGER directs the day-to-day investment of
the FUND. Contributions to this FUND are paid over to the
TRUSTEE and invested in accordance with instructions received
from the SCSF INVESTMENT MANAGER. A participant's account is
credited with the number of SCSF UNITS purchased with
contributions allocated to his account.
(a) Cost of SCSF UNITS. The cost of a SCSF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of
the valuation date immediately preceding the date that the
TRUSTEE invests contributions in the SCSF.
(b) Value of SCSF UNITS. The value of a SCSF UNIT is the value
of the FUND assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the FUND), divided by the number of SCSF
UNITS. Each payment into the FUND of contributions shall
increase, and each payment out of the FUND shall decrease,
the number of FUND UNITS by a number equal to the amount of
the payment divided by the last UNIT value determination
immediately preceding the date of the payment.
12. International Stock Index Fund (ISF)
------------------------------------
This FUND is maintained for the purpose of investing in a
diversified portfolio consisting principally of non-U.S. common
stock and securities convertible into common stock. However, at
no time shall the ISF be invested in securities issued or
guaranteed by the COMPANY or any of its subsidiaries, except to
the extent that any such securities are held in a commingled
account invested in by the ISF INVESTMENT MANAGER.
The ISF INVESTMENT MANAGER directs the day-to-day investment of
the FUND. Contributions to this FUND are paid over to the
TRUSTEE and invested in accordance with instructions received
from the ISF INVESTMENT MANAGER. A participant's account is
credited with the number of ISF UNITS purchased with
contributions allocated to his account.
(a) Cost of ISF UNITS. The cost of a ISF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of
the valuation date immediately preceding the date that the
TRUSTEE invests contributions in the ISF.
(b) Value of ISF UNITS. The value of a ISF UNIT is the value of
the FUND assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the FUND), divided by the number of ISF
UNITS. Each payment into the FUND of contributions shall
increase, and each payment out the FUND shall decrease, the
number of FUND UNITS by a number equal to the amount of the
payment divided by the last UNIT value determination
immediately preceding the date of the payment.
13. Stable Value Fund ( SVF)
------------------------
This FUND is designed to provide participants with preservation
of principal while earning a stable and consistent rate of
return. The FUND is made up of investment contracts with a
diversified group of insurance companies, banks, and other
financial institutions which provide for credited interest rates
and terms that are negotiated at the time of purchase.
<PAGE>
Contributions made to the SVF are invested in a portfolio of
investment contracts. The SVF INVESTMENT MANAGER directs the
day-to-day investment of the FUND. The blended interest earned
on all contracts held in the portfolio is posted daily to the
participant's account.
(a) Cost of SVF UNITS. The cost of a SVF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of
the valuation date immediately preceding the date that the
TRUSTEE invests contributions in the SVF.
(b) Value of SVF UNITS. The value of a SVF UNIT is the value of
the SVF assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the SVF), divided by the number of SVF
UNITS. Each payment into the SVF of contributions shall
increase, and payments out of the SVF shall decrease, the
number of SVF UNITS by a number equal to the amount of the
payment divided by the last UNIT value determination
immediately preceding the date of payment.
14. Bond Index Fund (BIF)
---------------------
The BIF is maintained for the purpose of investing in a diversi-
fied portfolio consisting principally of marketable fixed-income
securities. At no time shall the BIF be invested in securities
issued or guaranteed by the COMPANY or any of its subsidiaries,
except to the extent that any such securities are held in a
commingled account invested in by the BIF INVESTMENT MANAGER. The
BIF INVESTMENT MANAGER directs the day-to-day investment of the
BIF.
Contributions to the BIF are paid over to the TRUSTEE and invested
in accordance with instructions received from the BIF INVESTMENT
MANAGER. A participant's account is credited with the number of
BIF UNITS purchased with contributions allocated to his account.
(a) Cost of BIF UNITS. The cost of a BIF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of
the valuation date immediately preceding the date that the
TRUSTEE invests contributions in the BIF.
(b) Value of BIF UNITS. The value of a BIF UNIT is the value of
the BIF assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the BIF), divided by the number of BIF
UNITS. Each payment into the BIF of contributions shall
increase, and each payment out of the BIF shall decrease,
the number of BIF UNITS by a number equal to the amount of
the payment divided by the last UNIT value determination
immediately preceding the date of payment.
15. Conservative Asset Allocation Fund (CAAF)
-----------------------------------------
This FUND is maintained for the purpose of investing in a
diversified portfolio with a primary emphasis on BONDS and a
secondary emphasis on stocks. This FUND has an allocation to
each of the following FUNDS: the SMALL COMPANY STOCK INDEX FUND
(SCSF), the LARGE COMPANY STOCK INDEX FUND (LCSF), the
INTERNATIONAL STOCK INDEX FUND (ISF), and the BOND INDEX FUND
(BIF). At no time shall the CAAF be invested in securities
issued or guaranteed by the
<PAGE>
COMPANY or any of its subsidiaries,
except to the extent that any such securities are held in a
commingled account invested in by the CAAF INVESTMENT MANAGER.
The CAAF INVESTMENT MANAGER directs the day-to-day investment of
the FUND. Contributions to this FUND are paid over to the
TRUSTEE and invested in accordance with instructions received
from the CAAF INVESTMENT MANAGER. A participant's account is
credited with the number of CAAF UNITS purchased with
contributions allocated to his account.
(a) Cost of CAAF UNITS. The cost of a CAAF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of
the valuation date immediately preceding the date that the
TRUSTEE invests contributions in the CAAF.
(b) Value of CAAF UNITS. The value of a CAAF UNIT is the value
of the FUND assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the FUND), divided by the number of CAAF
UNITS. Each payment into the FUND of contributions shall
increase, and each payment out of the FUND shall decrease,
the number of FUND UNITS by a number equal to the amount of
the payment divided by the last UNIT value determination
immediately preceding the date of the payment.
16. Moderate Asset Allocation Fund (MAAF)
-------------------------------------
This FUND is maintained for the purpose of investing in a
diversified portfolio with an emphasis on stocks and BONDS. This
FUND has an allocation to each of the following FUNDS: the SMALL
COMPANY STOCK INDEX FUND (SCSF), the LARGE COMPANY STOCK INDEX
FUND (LCSF), the INTERNATIONAL STOCK INDEX FUND (ISF) and the
BOND INDEX FUND (BIF). However, at no time shall the MAAF be
invested in securities issued or guaranteed by the COMPANY or any
of its subsidiaries, except to the extent that any such
securities are held in a commingled account invested in by the
MAAF INVESTMENT MANAGER.
The MAAF INVESTMENT MANAGER directs the day-to-day investment of
the FUND. Contributions to this FUND are paid over to the
TRUSTEE and invested in accordance with instructions received
from the MAAF INVESTMENT MANAGER. A participant's account is
credited with the number of MAAF UNITS purchased with
contributions allocated to his account.
(a) Cost of MAAF UNITS. The cost of a MAAF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of
the valuation date immediately preceding the date that the
TRUSTEE invests contributions in the MAAF.
(b) Value of MAAF UNITS. The value of a MAAF UNIT is the value
of the FUND assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the FUND), divided by the number of MAAF
UNITS. Each payment into the FUND of contributions shall
increase, and each payment out of the FUND shall decrease,
the number of FUND UNITS by a number equal to the amount of
the payment divided by the last UNIT value determination
immediately preceding the date of the payment.
<PAGE>
17. Aggressive Asset Allocation Fund (AAAF)
---------------------------------------
This FUND is maintained for the purpose of investing in a
diversified portfolio with a primary emphasis on stocks and a
secondary emphasis on BONDS. This FUND has an allocation to each
of the following FUNDS: the SMALL COMPANY STOCK INDEX FUND
(SCSF), the LARGE COMPANY STOCK INDEX FUND (LCSF), the
INTERNATIONAL STOCK INDEX FUND (ISF) and the BOND INDEX FUND
(BIF). However, at no time shall the AAAF be invested in
securities issued or guaranteed by the COMPANY or any of its
subsidiaries, except to the extent that any such securities are
held in a commingled account invested in by the AAAF INVESTMENT
MANAGER.
THE AAAF INVESTMENT MANAGER directs the day-to-day investment of
the FUND. Contributions to this FUND are paid over to the
TRUSTEE and invested in accordance with instructions received
from the AAAF INVESTMENT MANAGER. A participant's account is
credited with the number of AAAF UNITS purchased with
contributions allocated to his account.
(a) Cost of AAAF UNITS. The cost of an AAAF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of
the valuation date immediately preceding the date that the
TRUSTEE invests contributions in the AAAF.
(b) Value of AAAF UNITS. The value of an AAAF UNIT is the value
of the FUND assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the FUND), divided by the number of AAAF
UNITS. Each payment into the FUND of contributions shall
increase, and each payment out of the FUND shall decrease,
the number of FUND UNITS by a number equal to the amount of
the payment divided by the last UNIT value determination
immediately preceding the date of the payment.
18. Transfer of Investment Fund Balances
------------------------------------
(a) By giving NOTICE to the PLAN ADMINISTRATOR, a participant
may elect to transfer any portion of the contributions held
in his account, plus the earnings thereon, from any
INVESTMENT FUND to another INVESTMENT FUND or FUNDS. A
transfer shall be effective and shall be valued on the day
it is made, if such day is a BUSINESS DAY, and the
participant provides NOTICE of such transfer prior to the
closing time of the New York Stock Exchange. All other
transfers shall be effective and valued as of the next
BUSINESS DAY.
Upon receipt of a transfer NOTICE, the TRUSTEE shall value
the UNITS to be transferred from the FUND and convert the
UNITS to cash. The FUND account of the participant shall be
debited with the number of UNITS transferred from that FUND
and the TRUSTEE shall purchase with the cash proceeds
realized from the converted UNITS, UNITS in the appropriate
FUND or FUNDS, as designated by the participant. The cost of
the UNITS purchased shall be the value of the FUND UNITS as
determined on the date of transfer, and the number of UNITS
purchased shall be credited to the appropriate INVESTMENT
FUND account of the participant.
(b) PG&E CORPORATION STOCK FUND -- Overall Limitation. Anything
herein to the contrary notwithstanding, if, as of any single
month, the TRUSTEE is required, as a result of the transfer
provisions of this Section 18, to sell on the open market
<PAGE>
more than 1 percent of the number of outstanding shares
of COMMON STOCK, then the TRUSTEE shall immediately
so advise the EMPLOYEE BENEFIT FINANCE COMMITTEE. The EMPLOYEE
BENEFIT FINANCE COMMITTEE may, in its sole discretion,
limit, prorate, or temporarily suspend further sales of
COMMON STOCK by the PLAN or take whatever steps necessary to
ensure an orderly market in COMMON STOCK. The percentage
limitation set forth in this subsection shall be applied to
the excess of shares sold on the open market less shares
purchased to meet Section 18 requirements for the applicable
period.
(c) Eligible Transfers of PG&E Corporation Stock Fund: PLAN
participants shall not be permitted to make more than one
exchange into or out of the PG&E Corporation stock fund in
any 7-day period.
PARTICIPANT'S INTEREST IN THE PLAN
----------------------------------
19. Participant Accounts
---------------------
The PLAN ADMINISTRATOR maintains a separate account for each PLAN
participant which records the participant's interest in each of
the INVESTMENT FUNDS, together with EMPLOYER CONTRIBUTIONS made on
his behalf. Each account is charged with participant transfers
and withdrawals and credited with its appropriate share of FUND
income. The account maintained by the PLAN ADMINISTRATOR for each
participant also records separately the participant's Section
401(k) CONTRIBUTIONS and NON-Section 401(k) CONTRIBUTIONS, the
UNITS purchased therewith, and the earnings thereon. All Basic
Contributions and Supplemental Contributions made to the PLAN as
it existed prior to October 1, 1984, are recorded as NON-Section
401(k) CONTRIBUTIONS on the records maintained by the PLAN
ADMINISTRATOR.
Whenever UNITS attributable to a participant's Section 401(k)
CONTRIBUTIONS are transferred to another FUND or FUNDS, the
resulting UNITS are also recorded as attributable to Section
401(k) CONTRIBUTIONS. Similarly, UNITS attributable to NON-
Section 401(k) CONTRIBUTIONS which are transferred to another FUND
or FUNDS are also recorded as NON-Section 401(k) CONTRIBUTIONS. A
participant is at all times fully vested in his own contributions
and all EMPLOYER CONTRIBUTIONS credited to his account, together
with income attributable thereto.
20. Account Statements
------------------
As soon as practicable after the end of each CALENDAR QUARTER, all
participants will receive from the ADMINISTRATOR a statement of
their interest in the PLAN.
<PAGE>
LOANS
-----
21. Loan Administration
-------------------
(a) PLAN ADMINISTRATOR Shall Administer the Loan Program. The
PLAN ADMINISTRATOR shall administer the loan program in
accordance with the provisions under this Section 21 in a
uniform and nondiscriminatory manner.
(b) Availability of Loans. Upon application by a participant who
is an ELIGIBLE EMPLOYEE, the PLAN ADMINISTRATOR may direct
the TRUSTEE to make a loan to the participant from his
account.
(c) Maximum Number of Loans. A participant may only have one
outstanding loan at any given time.
(d) Promissory Note. A participant may obtain a loan only if he
executes a promissory note in a form approved by the PLAN
ADMINISTRATOR.
22. Conditions of Loan
------------------
(a) Minimum Amount. The minimum loan amount shall be $1,000.
(b) Maximum Amount. The loan shall not exceed the lesser of (i)
$50,000 reduced by the highest outstanding loan balance
during the one-year period ending on the day before the date
the current loan is made, or (ii) 50 percent of the market
value of the participant's account balance.
(c) Repayment Period. The term of the loan shall not be less
than twelve months and not more than five years in
increments of twelve months. However, the term may be for
any period not to exceed fifteen years in increments of
twelve months if the purpose of the loan is to acquire the
participant's principal residence.
(d) Interest Rate. The interest rate will be set at the time of
the loan application at the prime rate as determined monthly
by the TRUSTEE, plus one percentage point and will be fixed
for the term of the loan.
(e) Security for Repayment. Each loan hereunder will be a
participant directed investment for the benefit of the
participant requesting such loan; accordingly, any default
in the repayment of principal or interest of any loan
hereunder will reduce the amount available for distribution
to such participant (or his BENEFICIARY). Any loan
hereunder will be secured by 50 percent of the participant's
account balance.
(f) Repayment. A loan must be repaid in level installments of
principal and interest by payroll deduction. If the
participant is granted an unpaid leave of absence or is
transferred to a position or location with an affiliated
company that is not covered by the PLAN (or ceases to have
sufficient compensation from which the loan payment can be
made), the participant may continue to make timely level
installment payments of principal and interest to the
TRUSTEE, by certified check or cashier's check. If the
automatic payroll arrangement lapses for any reason or is
canceled, and a new arrangement is not in place before the
next
<PAGE>
payment is due, the loan shall be in default. Except
as provided above, if a participant's SERVICE is terminated
for any reason, the entire unpaid principal and interest of
any loan outstanding to such participant shall become
immediately due and payable.
(g) Prepayment. A participant may prepay a loan, in full, at
any time and without penalty by certified check or cashier's
check. Partial prepayment of a loan is not permitted.
(h) Costs and Fees. Any costs or fees associated with the
origination of a loan from the PLAN shall be borne by the
participant requesting the loan. Any costs or fees
associated with the origination of a loan will be deducted
from the participant's account after the loan issuance.
(i) Default. A loan is treated as a default if scheduled loan
payments are more than 60 days late. A participant shall
then have 30 days from the time he receives written NOTICE
of the default and a demand for past due amounts to cure the
default before it becomes final.
In the event of a default, the PLAN ADMINISTRATOR may direct
the TRUSTEE to report the default as a taxable distribution.
As soon as a PLAN withdrawal or distribution to such
participant would otherwise be permitted, the PLAN
ADMINISTRATOR may instruct the TRUSTEE to execute upon its
security interest in the participant's account by
distributing the note to the participant.
23. Accounting for Loans
--------------------
(a) Source of Loan. Whenever the PLAN ADMINISTRATOR is required
to process a loan under this Section 23, the PLAN
ADMINISTRATOR shall first withdraw UNITS and earnings
thereon attributable to a participant's NON-Section 401(k)
CONTRIBUTIONS, followed by UNITS and earnings thereon
attributable to ROLLOVER CONTRIBUTIONS, followed by UNITS
and earnings thereon attributable to EMPLOYER CONTRIBUTIONS,
followed by UNITS and earnings thereon attributable to a
participant's Section 401(k) CONTRIBUTIONS.
Loans will be funded upon the receipt of an accurately
completed application form. The TRUSTEE shall make payment
to the participant as soon thereafter as administratively
feasible.
(b) Loan Investment Account. The PLAN ADMINISTRATOR will
establish and maintain a loan investment account for each
borrowing participant. A loan shall be treated by the PLAN
ADMINISTRATOR as a separate investment of the borrowing
participant's account. The unpaid principal and accrued but
unpaid interest on the loan to a participant will be
reflected for plan accounting purposes in the participant's
loan account. Repayments of principal and interest by the
participant will be credited to the participant's account in
the reverse order that they were liquidated to make the
loan. Repayments will be invested in the investment funds
according to a participant's current investment elections.
<PAGE>
24. Distribution to Participant with Loan
-------------------------------------
In the case of any participant who terminates employment with a
loan outstanding hereunder, the cash amount available for
distribution to such participant (or the BENEFICIARY) will
consist of the portion of the participant's account invested in
the investment funds. The participant's promissory note will be
deemed distributed to the participant (or the BENEFICIARY), and
the TRUSTEE will report the value of the promissory note (equal
to the amount of unpaid principal) as income for tax purposes in
addition to the cash amount distributed to the participant.
25. Call Feature
------------
The PLAN ADMINISTRATOR shall have the right to call any
participant loan once a participant's employment with all
affiliated companies has terminated or if the PLAN is terminated.
PLAN WITHDRAWALS
----------------
26. Withdrawal During Service
-------------------------
Except as provided in this section, withdrawals of any part of a
participant's interest in the PLAN are not permitted as long as
SERVICE continues. A participant may never replace in the TRUST
FUND any UNITS or cash which have been withdrawn. By submitting a
withdrawal Form, a participant may make withdrawals as provided
below.
(a) Section 401(k) CONTRIBUTIONS.
(1) A participant may withdraw all or part of the UNITS,
including income thereon and including additional
UNITS attributable thereto, bought with the
participant's Section 401(k) CONTRIBUTIONS upon the
occurrence of any of the following events:
a) the participant is disabled and is receiving
benefits under the LONG TERM DISABILITY PLAN; or
b) the participant has attained age 59-1/2.
(2) A participant may withdraw an amount equal to his
Section 401(k) CONTRIBUTIONS (as well as any income
and UNITS attributable to income accrued thereon prior
to January 1, 1989), upon receipt of satisfactory
proof by the PLAN ADMINISTRATOR that the withdrawal is
required to meet immediate and heavy financial needs
of the participant which constitute a valid hardship
as defined under the CODE and regulations issued by
the Secretary of the Treasury. A request for a
withdrawal for one of the following reasons will be
deemed to be on account of a valid hardship:
a) To cover medical expenses (as defined in Section
213(d) of the CODE) of the participant, the
participant's spouse or dependents (as defined in
Section 152 of the CODE);
<PAGE>
b) The purchase of a participant's principal place
of residence, but not including mortgage
payments;
c) To meet tuition payments for the next semester or
quarter of post-secondary education for the
participant, his spouse, children or dependents;
or
d) To prevent the eviction of the participant from
his principal place of residence, or to prevent a
foreclosure of the mortgage on the participant's
principal place of residence.
A request for a withdrawal under this Subsection
26(a)(2) will not be deemed to be for immediate and
heavy financial needs unless the participant represents
that the need cannot be met from the following
resources:
a) through reimbursement or compensation by insurance
or otherwise,
b) by reasonable liquidation of the participant's
resources,
c) by cessation of contributions to the PLAN, or
d) by other distributions, withdrawals or nontaxable
loans from any plans maintained by an EMPLOYER, or
by borrowing from commercial sources on reasonable
commercial terms.
For purposes of this Subsection 26(a)(2), a
participant's resources shall be deemed to include any
assets of his spouse and minor children that are
reasonably available to the participant. In addition,
withdrawals under Subsection 26(a)(2) may not exceed
the amount actually required to meet the participant's
immediate financial needs.
(3) A participant who withdraws UNITS under Subsection
26(a) will automatically be suspended from the PLAN
and will not be permitted to resume making
contributions to the PLAN for six months following the
date upon which the withdrawal Form is processed by
the PLAN ADMINISTRATOR. After suspension ends,
contributions may be resumed by giving NOTICE to the
PLAN ADMINISTRATOR.
(b) NON-Section 401(k) CONTRIBUTIONS. A participant may at any-
time elect to withdraw all or any part of the UNITS
including income thereon and including additional UNITS
attributable thereto, bought with the participant's NON-
Section 401(k) CONTRIBUTIONS to the PLAN. Such an election
will not cause suspension from the PLAN.
(c) EMPLOYER CONTRIBUTIONS.
(1) A participant may withdraw all or any part of the
UNITS, including the income attributable thereto,
bought with EMPLOYER CONTRIBUTIONS which were made to
the PLAN at anytime prior to the second YEAR preceding
the current year. For example, UNITS, including the
income attributable thereto, purchased with EMPLOYER
CONTRIBUTIONS made in 1981 and prior years may be
withdrawn in 1984 or anytime thereafter. Such an
election will not cause suspension from the PLAN.
<PAGE>
(2) UNITS, including the income attributable thereto,
bought with EMPLOYER CONTRIBUTIONS which would not be
withdrawable under Subsection 26(c)(1), shall nonethe-
less be withdrawable upon the occurrence of the any of
the following events:
a) the participant is disabled and is receiving
benefits under the LONG TERM DISABILITY PLAN;
b) the participant has attained age 59-1/2; or
c) the participant has requested and is entitled to
receive a hardship distribution which meets the
requirements of Subsection 26(a)(2) but only if
all amounts distributable under Subsection 26(a)
have been exhausted.
Anything herein to the contrary notwithstanding, if as of any
single month, the TRUSTEE is required as a result of the
withdrawal provisions of this Subsection 26(c), to sell on
the open market more than 1 percent of the outstanding shares
of COMMON STOCK, then the TRUSTEE shall immediately so advise
the EMPLOYEE BENEFIT FINANCE COMMITTEE. The EMPLOYEE BENEFIT
FINANCE COMMITTEE may, in its sole discretion, limit,
prorate, or temporarily suspend further sales of COMMON STOCK
by the PLAN or take whatever steps necessary to ensure an
orderly market in COMMON STOCK.
A participant shall submit the appropriate Form to the
SAVINGS FUND PLAN directing the PLAN ADMINISTRATOR as to the
amount of the withdrawal. Distribution will be made as soon
as practicable after receipt of the withdrawal Form. Upon
each withdrawal, the UNITS credited to the appropriate FUND
or FUNDS will be reduced by the number of UNITS withdrawn.
Withdrawals from the BOND FUND can only be made in United
States BONDS. Withdrawals from the PG&E CORPORATION STOCK
FUND may be made in cash or whole shares of stock at the
election of the participant. Withdrawals of LCSF, SCSF, ISF,
SVF, BIF, CAAF, MAAF or AAAF UNITS will be made in cash at
the then current value of the UNITS; or, at the election of
the participant, the UNITS will be transferred to the PG&E
CORPORATION STOCK FUND pursuant to Section 18 and distribu-
tion will be made in whole shares of COMMON STOCK.
(d) ROLLOVER CONTRIBUTIONS. A participant may at any time elect
to withdraw all or any part of the UNITS including income
thereon bought with the participant's ROLLOVER CONTRIBUTIONS
to the PLAN. Such an election will not cause suspension
from the PLAN.
(e) ORDERING OF WITHDRAWALS. Whenever the PLAN ADMINISTRATOR is
required to make a distribution under this Section 26 or
Section 27, the PLAN ADMINISTRATOR shall first withdraw
UNITS and earnings thereon attributable to a participant's
NON-Section 401(k) CONTRIBUTIONS made prior to 1987,
followed by UNITS and earnings thereon attributable to NON-
Section 401(k) CONTRIBUTIONS made after 1986, followed by
UNITS and earnings thereon attributable to ROLLOVER
CONTRIBUTIONS, followed by UNITS withdrawable under
Subsection 21(c)(1) followed by UNITS withdrawable under
Subsection 26(c)(2), but only if available for withdrawal
under that subsection, followed by UNITS and earnings
thereon attributable to a participant's Section 401(k)
CONTRIBUTIONS,
<PAGE>
but only to the extent that such UNITS can be
withdrawn by the participant under Subsection 26(a).
27. Termination of Participation
----------------------------
Participation in the PLAN ends as of the date that a participant
ceases to be an ELIGIBLE EMPLOYEE. Although a former participant
may elect to have an account balance held in the PLAN under
Section 28 after participation ends, a former participant may not
contribute to the PLAN, except that contributions to the PLAN will
be accepted with respect to retroactive wage payments. A former
participant who has an account balance in the PLAN may make
withdrawals from the account balance, and transfer from one or
more FUNDS to another FUND or FUNDS pursuant to the terms of the
PLAN.
Upon the death of a participant, the PLAN ADMINISTRATOR shall
distribute the participant's account balance to the participant's
BENEFICIARY within a reasonable time but not later than 60 days
after receipt of a completed withdrawal form or 180 days after the
PLAN ADMINISTRATOR receives NOTICE of the participant's death. If
the BENEFICIARY does not complete a withdrawal form within the
time periods set forth above, the distribution shall be in cash
and paid directly to the BENEFICIARY.
28. Distribution of Plan Benefits
-----------------------------
(a) Upon termination of participation, a distribution shall be
made of the balances allocated to a participant's accounts
if the value of the participant's account is $3,500 or
less. Such distribution shall be made no later than the
60th day following the close of the PLAN YEAR in which
participation terminates, unless the participant elects to
receive distribution at an earlier date. If the value of a
participant's account exceeds $3,500, distribution will be
made upon receipt by the PLAN ADMINISTRATOR of the prior
written distribution request of the participant.
Distribution will therefore be made within 60 days of the
receipt of such distribution request. Any provision of the
PLAN notwithstanding, if participation continues beyond the
end of the YEAR in which the participant attains age 70-1/2,
distribution of the participant's entire interest in the
PLAN shall be made no later than April 1 of the YEAR
following the YEAR in which the participant attains age
70-1/2.
All distributions due under the PLAN shall be payable only
out of the PLAN's assets as directed by the ADMINISTRATOR.
Unless a cash distribution is requested, the TRUSTEE will
distribute a certificate for the whole shares of COMMON
STOCK, the United States BONDS, and the TRUSTEE's check for
the then current value of all other UNITS credited to the
participant's account, plus any uninvested cash. Alterna-
tively, at the direction of the participant, FUND UNITS other
than U.S. SAVINGS BONDS may be transferred to the PG&E
CORPORATION STOCK FUND pursuant to Section 18 and
distribution will be made in whole shares of COMMON STOCK.
If a participant elects a cash distribution, upon receipt of
the appropriate Form requesting such distribution, the
TRUSTEE will distribute the then current value of the
INVESTMENT FUND UNITS and uninvested cash. Until the TRUSTEE
converts INVESTMENT FUND UNITS to cash, all UNITS shall
continue to share
<PAGE>
in investment gains and losses. Distribu-
tions from the BOND FUND can only be made in United States
BONDS.
(b) Any provision of the PLAN notwithstanding:
Unless the participant otherwise elects, distribution to such
participant shall be made (or shall commence) not later than
the 60th day after the close of the PLAN YEAR in which occurs
the latest of the following events:
(1) The participant attains age 65;
(2) The participant attains the 10th anniversary of the
date on which he or she became a participant under the
PLAN; or
(3) The participant's termination of employment with the
EMPLOYER.
(c) Distributions hereunder will be made in accordance with
Section 401(a)(9) of the CODE and the regulations
thereunder, including Treasury regulation Section
1.401(a)(9)-2, which are incorporated by reference herein.
29. Direct Rollovers
----------------
Notwithstanding any provision of the PLAN to the contrary that
would otherwise limit a participant's election under this section,
effective January 1, 1993, a participant or BENEFICIARY who is a
surviving spouse may elect, at the time and in the manner
prescribed by the PLAN ADMINISTRATOR, to have any portion of an
eligible rollover distribution, as defined below, paid directly to
an eligible RETIREMENT PLAN, as defined below, specified by the
participant or BENEFICIARY who is a surviving spouse in a direct
rollover. Any taxable portion of an eligible rollover
distribution that is not transferred directly to an eligible
RETIREMENT PLAN will be subject to mandatory federal income tax
withholding.
(a) An eligible rollover distribution shall mean any
distribution of all or any portion of the balance to the
credit of the participant, except that an eligible rollover
distribution does not include any distribution that is one
of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life
expectancy) of the participant or the joint lives (joint
life expectancies) of the participant and his or her
designated BENEFICIARY, or for a specified period of 10
YEARS or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the
CODE; and 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).
(b) An eligible RETIREMENT PLAN shall mean an individual
retirement account described in Section 408(a) of the CODE,
an individual retirement annuity described in Section 408(b)
of the CODE, an annuity plan described in Section 403(a) of
the CODE, or a qualified trust described in Section 401(a)
of the CODE, that accepts the participant's eligible
rollover distribution. However, in the case of an eligible
rollover distribution to the surviving spouse, an eligible
RETIREMENT PLAN is an individual retirement account or
individual retirement annuity.
<PAGE>
ADMINISTRATIVE PROVISIONS
-------------------------
30. Company's Powers and Duties
---------------------------
The COMPANY, acting through its BOARD OF DIRECTORS or Executive
Committee, reserves to itself the exclusive power to amend,
suspend or terminate the PLAN as provided below and to appoint and
remove from time to time:'
(a) The individuals comprising the EMPLOYEE BENEFIT FINANCE
COMMITTEE;
(b) The individuals comprising the EMPLOYEE BENEFIT
ADMINISTRATIVE COMMITTEE; and
(c) The EMPLOYERS whose EMPLOYEES may participate in the PLAN.
All powers and duties not reserved to the COMPANY are delegated to
the EMPLOYEE BENEFIT FINANCE COMMITTEE and to the EMPLOYEE BENEFIT
ADMINISTRATIVE COMMITTEE. Action of either committee shall be by
vote of a majority of the members of the committee at a meeting,
or in writing without a meeting and evidenced by the signature of
any member who is so authorized by the committee. The COMPANY
indemnifies each member of each committee against any personal
liability or expense arising out of any action or inaction of the
committee or of any member of the committee or of such individual,
except that due to his own willful misconduct.
31. Funding and Investment Provisions
---------------------------------
The EMPLOYEE BENEFIT FINANCE COMMITTEE appointed by the COMPANY's
BOARD OF DIRECTORS to serve at its pleasure has the express powers
and duties described in this section.
(a) Appointments. The EMPLOYEE BENEFIT FINANCE COMMITTEE has
the sole power and duty from time to time to appoint and
remove the TRUSTEE, the INVESTMENT MANAGER, actuaries,
accountants and such other advisors and consultants as may
be needed for the proper financial administration and
investment of the assets of the PLAN. Supplementing such
appointments, the EMPLOYEE BENEFIT FINANCE COMMITTEE may
enter into appropriate agreements with each TRUSTEE,
INVESTMENT MANAGER or other advisors appointed under this
paragraph and delegate to them appropriate powers and
duties. The EMPLOYEE BENEFIT FINANCE COMMITTEE may appoint
and delegate to one or more individuals the power and duty
to handle the day-to-day financial administration of the
PLAN. Such individuals need not be members of the committee
and shall serve at the pleasure of the committee.
(b) Investment Policy. The funding policy is set forth in
Sections 3 and 4. The EMPLOYEE BENEFIT FINANCE COMMITTEE
has the sole power and duty to establish the investment
policy and to review and revise it from time to time as the
committee shall determine in its sole discretion. A copy of
the current investment policy will be available for
participants' review in the ADMINISTRATOR's office. Any
revision of the investment policy shall not be an amendment
of the PLAN.
<PAGE>
32. Administration
--------------
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE, appointed by the
COMPANY's BOARD OF DIRECTORS to serve at its pleasure, is the
ADMINISTRATOR of the PLAN and is responsible for the overall
administration of the PLAN. The ADMINISTRATOR has the sole power
and duty to establish, and from time to time revise, such rules
and regulations as may be necessary to administer the PLAN in a
nondiscriminatory manner for the exclusive benefit of participants
and all other persons entitled to benefits under the PLAN.
The ADMINISTRATOR shall also maintain such records and make such
computations, interpretations and decisions as may be necessary or
desirable for the proper administration of the PLAN. The
ADMINISTRATOR shall maintain for participants' inspection copies
of the PLAN, TRUST AGREEMENT, investment policy, each agreement
with an INVESTMENT MANAGER, the latest annual report, PLAN
description and summary description and any amendments or changes
in any of these documents. On written request, participants may
obtain from the ADMINISTRATOR a copy of any of these documents at
a cost established by the ADMINISTRATOR from time to time.
The ADMINISTRATOR may appoint and delegate to one or more
individuals the power and duty to handle the day-to-day
administration of the PLAN. Such individuals need not be members
of the committee and shall serve at the pleasure of the committee.
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall serve as the
final review committee under the PLAN, to determine conclusively
for all parties any and all questions arising from the
administration of the PLAN and shall have sole and complete
discretionary authority and control to manage the operation and
administration of the PLAN, including, but not limited to, the
determination of all questions relating to eligibility for
participation and benefits, interpretation of all PLAN provisions,
determination of the amount and kind of benefits payable to any
participant or BENEFICIARY, and construction of disputed or
doubtful terms. Such decisions shall be conclusive and binding on
all parties and not subject to further review.
33. Claims and Appeals Procedure
----------------------------
If a claim is denied in whole or in part, the ADMINISTRATOR shall
furnish to the claimant a written NOTICE setting forth:
(a) Specific reason(s) for the denial;
(b) The PLAN provision(s) on which the denial is based;
(c) A description of any material or information, if any,
necessary for the claimant to perfect the claim, and an
explanation of why such material or information is
necessary; and
(d) Information concerning the steps to be taken if claimant
wishes to submit a claim for review.
The above information shall be furnished to the claimant within
90 days after the claim is received by the ADMINISTRATOR.
<PAGE>
If a claimant is not satisfied with the written NOTICE described
in the preceding paragraph, such claimant may request a full and
fair review by so notifying the ADMINISTRATOR in writing within
90 days after receiving such NOTICE. If a review is requested the
claimant shall also be entitled, upon written request, to review
pertinent documents and to submit issues and comments in writing.
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall furnish the
claimant with a written final decision within 60 days after
receipt of the request for review.
Alternatively, a participant who is a member of a bargaining unit
under any Collective Bargaining Agreement between an EMPLOYER and
any Union may use the grievance or adjustment procedure of the
appropriate Collective Bargaining Agreement to resolve any dispute
concerning any question of SERVICE, status or membership under the
PLAN.
34. Qualified Domestic Relations Orders
-----------------------------------
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall apply the
provisions of this section with regard to a Domestic Relations
Order (as defined below) to the extent not inconsistent with
Section 414(p) of the CODE.
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall establish
procedures, consistent with Section 414(p) of the CODE, to
determine the qualified status of any Domestic Relations Order, to
administer distributions under any Qualified Domestic Relations
Order (as defined below), and to provide to the Participant and
the Alternate Payee(s) (as defined below) all notices required
under Section 414(p) of the CODE with respect to any Domestic
Relations Order.
Within a reasonable period of time after the receipt of a Domestic
Relations Order (or any modification thereof), the EMPLOYEE
BENEFIT ADMINISTRATIVE COMMITTEE shall determine whether such
order is a Qualified Domestic Relations Order.
For purposes of this section:
(a) Alternate Payee shall mean any spouse, former spouse, child,
or other dependent of a participant who is recognized by a
Domestic Relations Order as having a right to receive all,
or a portion of, the benefits payable under the PLAN with
respect to such Participant.
(b) Domestic Relations Order shall mean any judgment, decree, or
order (including approval of a property settlement
agreement) which:
(1) relates to the provision of child support, alimony
payments, or marital property rights to a spouse,
former spouse, child, or other dependent of a
participant; and
(2) is made pursuant to a state domestic relations law
(including a community property law).
(c) Qualified Domestic Relations Order shall mean a Domestic
Relations Order which meets the requirements of Section
414(p)(1) of the CODE.
<PAGE>
35. Lost Participant or Beneficiary
-------------------------------
If, after three years, the ADMINISTRATOR cannot locate a partici-
pant or BENEFICIARY who is entitled to a distribution from an
account, the UNITS, cash or COMMON STOCK in the account shall be
applied to reduce the amount of future EMPLOYER CONTRIBUTIONS
payable to the PLAN. A participant or BENEFICIARY who is
entitled to a distribution from an account which has previously
been applied to reduce EMPLOYER CONTRIBUTIONS under this
Section 35 shall, upon filing a written claim, have the account
reinstated in full and upon such reinstatement shall receive a
distribution of the balance in the reinstated account, with
interest at the prevailing legal rate accrued from the date his
account was applied to reduce EMPLOYER CONTRIBUTIONS.
36. Benefits Are Not Assignable
---------------------------
Except as may be required by law, a participant's interest in the
PLAN and that of a participant's BENEFICIARY or spouse shall not
be subject in any manner to assignment, anticipation, alienation,
sale, transfer, pledge, encumbrance or charge, whether voluntary
or involuntary, and any attempt to so assign, anticipate, sell,
transfer, pledge, encumber or charge the same shall be void.
37. Facility of Payment
-------------------
If the ADMINISTRATOR determines that any individual entitled to
any payment under the PLAN is physically or mentally incompetent
and no guardian or conservator has been appointed to receive such
payment, the ADMINISTRATOR may cause all payments thereafter
becoming due to such individual to be applied for and on behalf
of and for the benefit of such individual. Payments made
pursuant to this provision shall completely discharge the
EMPLOYER, the ADMINISTRATOR, the TRUSTEE and all fiduciaries of
all further responsibility with respect to such individual.
38. Future of the Plan
------------------
If participation in the PLAN is ended because a substantial
portion of an EMPLOYER's property is sold or otherwise disposed
of or because an EMPLOYER withdraws from the PLAN, a
participant's interest is determined in accordance with the
provisions of the next paragraphs as if the PLAN itself has been
terminated.
The COMPANY hopes and expects to continue this PLAN indefinitely,
but because future conditions cannot be foreseen, its BOARD OF
DIRECTORS necessarily reserves the right to amend or terminate
the PLAN at any time.
However, no amendment, merger or consolidation of the PLAN may be
made which would reduce the right that any individual may then
have with respect to the PLAN's assets then being held under the
PLAN or permit any funds to revert to an EMPLOYER or to be used
for any purpose except for the exclusive benefit of participants,
spouses and BENEFICIARIES.
If the PLAN is terminated, all contributions to the PLAN shall
cease but the PLAN shall continue to operate in all other
respects until all of the TRUST assets have been
<PAGE>
distributed in accordance with the provisions of the PLAN in effect
on the date of its termination. In the event of a merger or
consolidation with, or transfer of assets or liabilities to any other
plan, if such other plan is then terminated, participant shall receive
a benefit immediately after such merger, consolidation, or transfer
which is equal to or greater than the benefit which participant
would have received had the PLAN terminated immediately prior to
such merger, consolidation, or transfer.
39. Definitions
-----------
AAAF: The Aggressive Asset
---- Allocation Fund.
Aggressive Asset Allocation Fund: A fund invested in a
-------------------------------- diversified portfolio with a
primary emphasis on stocks and
a secondary emphasis on bonds.
(See Section 17)
Administrator: Employee Benefit
------------- Administrative Committee, 245
Market Street, 3d Floor, Mail
Code N3X, P.O. Box 770000, San
Francisco, California 94177
Beneficiary: The person or persons entitled
----------- To receive any distribution
due under the Plan in the
event of a participant's
death. For a married
participant, the participant's
spouse shall automatically be
the Beneficiary unless the
participant, with the written
consent of his spouse, elects
to designate another person or
persons to be Beneficiary.
The consent of the spouse
shall be in writing, shall
acknowledge the effect of the
consent, and shall be
witnessed by a notary public
or Plan representative. A
participant designates a
Beneficiary on a Designation
of Beneficiary Form available
from the Plan Administrator.
In the event an unmarried
participant does not designate
a Beneficiary, the
participant's estate shall be
deemed to be the Beneficiary.
BIF: The Bond Index Fund.
---
Board of Directors: The Board of Directors of
------------------ Pacific Gas and Electric
Company.
Bond Index Fund: A fund invested in marketable
--------------- fixed-income securities. (See
Section 14)
<PAGE>
Bonds: Series "EE" Savings Bonds
----- issued by the United States
Treasury. If the issuance of
Series "EE" Bonds is
discontinued, Bonds will refer
to any other Bond issued by
the United States Treasury
which the Employee Benefit
Finance Committee selects for
purchase under the Plan.
Business Day: Any day that the New York
------------ Stock Exchange is open for
business.
CAAF: The Conservative Asset
---- Allocation Fund
Calendar Quarter: The three month period
---------------- commencing on January 1,
April 1, July 1 or October 1.
Code: The Internal Revenue Code of
---- 1986, as amended from time to
time.
Company: Pacific Gas and Electric
------- Company.
Common Stock: The common stock issued by
------------ PG&E Corporation.
Conservative Asset Allocation Fund: A fund invested in a
---------------------------------- diversified portfolio with a
primary emphasis on bonds and
a secondary emphasis on
stocks. (See Section 15)
Covered Compensation: Earnings from an Employer,
-------------------- including straight-time pay
for hours worked, shift and
nuclear premiums at the
straight-time rate, straight-
time pay for temporary
upgrades, vacation pay
(including vacation pay upon
retirement), inclement weather
pay, sick leave pay, holiday
pay, differential pay for
military training, pay for
other time off with permission
carrying full pay, temporary
compensation under any state
Worker's Compensation Law,
payments under the Long Term
Disability Plan, or
supplemental benefits for
industrial injury. Covered
Compensation shall also
include the 1988 Ratification
Bonus, and lump sum bonus
payments received by clerical
Employees in 1988 and 1989, in
accordance with the Clerical
Agreement. Covered
Compensation shall not include
pay or shift and nuclear
premiums for more than 40
hours per week, overtime
bonuses, vacation or holiday
pay requests, other special
fees or allowances,
<PAGE>
per diem
allowances, payments, other
than temporary compensation,
made under any Workers'
Compensation Law, voluntary
wage benefit or state
disability plans, or any other
benefit plan. For Plan Years
beginning after 1988 and
before 1994, the maximum
Covered Compensation of each
Employee that may be taken
into account each Plan Year
shall not exceed $200,000 (as
adjusted by the Secretary of
the Treasury under Section
401(a)(17) of the Code. For
Plan Years beginning after
1993, the maximum Covered
Compensation of each Employee
that may be taken into account
each Plan Year shall not
exceed $150,000 (as adjusted
by the Secretary of the
Treasury under Section
401(a)(17) of the Code). In
determining the Covered
Compensation of a Highly
Compensated Employee for
purposes of this limitation,
the rules of Section 414(q)(6)
of the Code shall apply,
except that the term "family"
shall include only the spouse
of the Employee and any lineal
descendants of the Employee
who have not attained age 19
before the close of the Year.
If the aggregate Covered
Compensation of family members
exceeds the applicable
compensation limit as limited
by Section 401(a)(17) of the
Code, then the amount of
Covered Compensation
considered under the Plan for
each family member is
proportionately reduced so
that the total equals the
applicable compensation
limitation under Section
401(a)(17) of the Code.
Eligible Employee: One entitled to become a
----------------- contributing participant,
provided, however, that a
"leased employee" as defined in
Section 414(n)(2) of the Code
shall not be entitled to become
an Eligible Employee.
Employee: An Employee of an Employer who
-------- is in a bargaining unit
represented by Local Union
1245, International Brotherhood
of Electrical Workers,
Engineers and Scientists of
California, or International
Union of Security Officers.
Employee Benefit Administrative The Employee Benefit
------------------------------- Administrative Committee
Committee referred to in Section 32.
---------
Employee Benefit Finance Committee The Employee Benefit Finance
---------------------------------- Committee referred to in
Section 31.
Employer: Pacific Gas and Electric
-------- Company, Pacific Service
Employees Association, and any
other company, association, or
credit union designated by the
Board of Directors as eligible
to participate in this Plan as
an Employer.
Employer Contributions: Any contributions to the Plan
---------------------- by Company.
Fund: The PG&E Corporation Stock
---- Fund, the U.S. Bond Fund, the
Bond Index Fund, the Large
Company Stock Index Fund, the
Small Company Stock Index
Fund, the International Stock
Index Fund, the Stable Value
Fund, the Conservative Asset
Allocation Fund, the Moderate
Asset Allocation Fund and the
Aggressive Asset Allocation
Fund or any of them.
Highly Compensated: Whether an Eligible Employee is
------------------ Highly Compensated shall be
determined using the simplified
method under Code Section 414-
(q)(12) as described in
applicable Treasury regulations
or other guidance issued by the
Internal Revenue Service.
International Stock Index Fund: A fund invested in a
------------------------------ diversified portfolio
consisting principally of non-
U.S. common stock. (See
Section 12)
Investment Fund: The PG&E Corporation Stock
--------------- Fund, the U.S. Bond Fund, the
Bond Index Fund, the Large
Company Stock Index Fund, the
Small Company Stock Index
Fund, the International Stock
Index Fund, the Stable Value
Fund, the Conservative Asset
Allocation Fund, the Moderate
Asset Allocation Fund and the
Aggressive Asset Allocation
Fund or any of them.
Investment Manager: STABLE VALUE FUND. PRIMCO
------------------ Capital Management, Inc., 101
South Fifth Street,
Louisville, KY 40202, or such
other firm or individual as
may be
<PAGE>
selected from time to
time by the Employee Benefit
Finance Committee.
BOND INDEX FUND. State Street
Bank and Trust, Two
International Place, Boston,
MA 02110, or such other firm
or individual as may be
selected from time to time by
the Employee Benefit Finance
Committee.
LARGE COMPANY STOCK INDEX
FUND. State Street Bank and
Trust, Two International
Place, Boston, MA 02110, or
such other firm or individual
as may be selected from time
to time by the Employee
Benefit Finance Committee.
SMALL COMPANY STOCK INDEX
FUND. State Street Bank and
Trust, Two International
Place, Boston, MA 02110, or
such other firm or individual
as may be selected from time
to time by the Employee
Benefit Finance Committee.
INTERNATIONAL STOCK INDEX
FUND. State Street Bank and
Trust, Two International
Place, Boston, MA 02110, or
such other firm or individual
as may be selected from time
to time by the Employee
Benefit Finance Committee.
CONSERVATIVE ASSET ALLOCATION
FUND. State Street Bank and
Trust, Two International
Place, Boston, MA 02110, or
such other firm or individual
as may be selected from time
to time by the Employee
Benefit Finance Committee.
MODERATE ASSET ALLOCATION
FUND. State Street Bank and
Trust, Two International
Place, Boston, MA 02110, or
such other firm or individual
as may be selected from time
to time by the Employee
Benefit Finance Committee.
AGGRESSIVE ASSET ALLOCATION
FUND. State Street Bank and
Trust, Two International
Place, Boston, MA 02110, or
such other firm or individual
as may be selected from time
to time by the Employee
Benefit Finance Committee.
<PAGE>
ISF: The International Stock Index
--- Fund.
Large Company Stock Index Fund: A fund invested in a
------------------------------ diversified portfolio
consisting principally of
common stock of large U.S.
companies. (See Section 10)
LCSF: The Large Company Stock Index
---- Fund.
Long Term Disability Plan: Part B of the Group Life
------------------------- Insurance and Long Term
Disability Plan of Pacific Gas
and Electric Company as amended
January 1, 1991.
MAAF: The Moderate Asset Allocation
---- Fund.
Moderate Asset Allocation Fund: A fund invested in a
------------------------------ diversified portfolio with an
emphasis on stocks and bonds.
(See Section 16)
Non-Section 401(k) Contributions: Employee contributions to the
-------------------------------- Plan as described in Subsection
3(b) and all Employee
Contributions made prior to
October 1, 1984. Non-Section
401(k) Contributions are made
with after-tax dollars.
Notice: Any method of communication,
------ whether electronic, telephonic,
written or other, provided that
the Plan Administrator has
communicated in writing to
participants any such method
and its format as appropriate
and acceptable.
PG&E Corporation Stock Fund: A fund invested in the common
--------------------------- stock issued by PG&E
Corporation. (See
Section 8)
Plan: This Company's Savings Fund
---- Plan for Union-Represented
Employees, as amended, revised
and set forth herein.
Retirement Plan: The Company's Retirement Plan
--------------- as revised from time to time.
Rollover Contribution: An amount contributed by a
--------------------- participant which originated
from another employer's
qualified plan which is
eligible for rollover under
Section 402(c)(4) of the Code.
<PAGE>
Savings Fund Plan Office: 245 Market Street, 3d Floor
------------------------ Mail Code N3X
P.O. Box 770000
San Francisco, CA 94177
Section 401(k) Contributions:Amounts deferred from a
---------------------------- Participant's Covered
Compensation as described in
Subsection 3(a). Section
401(k) Contributions are made
with pre-tax dollars.
SCSF: The Small Company Stock Index
---- Fund.
Service: The period of time commencing
------- with the first day of
employment or reemployment for
an Employer and ending on
participant's Severance from
Service Date. If an Employee
with less than one year of
Service is rehired after a
period of severance which
extends for 12 months or more,
the Employee shall be treated
as a new Employee for all
purposes, and the Service and
compensation before the
Severance from Service Date
shall not be recognized for
any purpose of the Plan.
Participants who have a period
of severance after they have
completed at least one year of
Service and who are later
rehired, immediately become
Eligible Employees entitled to
contribute in accordance with
their total years of Service.
For an Employee who has less
than five years of Service,
Service is not ended by layoff
unless the layoff extends for
a continuous period of more
than 12 months. For Employees
with five or more years of
Service, Service is not ended
by layoff unless the layoff
extends for a continuous
period of more than 24 months.
Service shall also include all
years of Service with:
(a) Any corporation which is a
member of the same
controlled group of
corporations as the
Company or of any other
Employer (within the
meaning of Section 414(b)
of the Code);
(b) Any trade or business
under the common control
of the Company or of any
other Employer (within
<PAGE>
the meaning of Section
414(c) of the Code);
(c) Any service organization
which is a member of the
same affiliated service
group as the Company or
of any other Employer
(within the meaning of
Section 414(m) of the
Code).
Severance From Service Date: A. The date on which an
--------------------------- Employee quits,
retires, is
discharged or dies;
or
B. The first anniversary of
the first date of a
period in which a
participant remains
absent from work for
an Employer for any
reason other than
resignation,
retirement,
discharge, or
death.
C. For the purpose of
determining the
Severance
from Service Date,
the following periods
shall not be considered
as absences from work
for an Employer:
(1) Absence on a leave
of absence
authorized by an
Employer.
(2) Absence because of
illness or injury as
long as the
participant is
entitled to receive
sick leave pay or is
entitled to receive
benefits under the
provisions of the
Voluntary Wage
Benefit Plan, a
state disability
plan, the Long Term
Disability Plan, or
a Workers'
Compensation Law.
(3) Absence for military
service or service
in the Merchant
Marines so long as
reemployment rights
are protected by
law.
(4) Absence caused by
layoff for lack of
work of less than 12
continuous months
for a Participant
who has
<PAGE>
less than
five years of
service, or 24
continuous months
for a Participant
who has five or more
years of service.
Small Company Stock Index Fund: A fund invested in a
------------------------------ diversified portfolio
consisting principally of
common stock of small
capitalization U.S. Companies.
(See Section 11)
Stable Value Fund: A fund invested in fixed rate,
----------------- fixed term investment
contracts. (See Section 13)
SVF: The Stable Value Fund.
---
Trust: The Trust into which all
----- contributions are deposited and
from which all distributions
are made.
Trustee State Street Bank and Trust
------- Company, 225 Franklin Street,
Boston, Massachusetts 02101, or
such other bank or trust
company selected by the
Employee Benefit Finance
Committee which agrees to act
as Trustee or successor Trustee
of the Trust pursuant to the
Trust Agreement.
Trust Agreement: The agreement between the
--------------- Company and the Trustee.
Unit: A measurement of participant's
---- interest in the Investment
Funds. For purposes of the
Bond Fund, a unit shall be a
United States Bond.
U.S. Bond Fund: A fund invested in United
-------------- States Savings Bonds. (See
Section 9)
Year: The calendar year beginning
---- January 1 and ending
December 31.
<PAGE>
SPECIAL PROVISION A
TOP HEAVY PROVISIONS
--------------------
(a) General Rule
------------
For any PLAN YEAR for which this PLAN is a "top-heavy PLAN" as
defined in Subsection (e) below, any other provisions of this PLAN
to the contrary notwithstanding, this PLAN shall be subject to the
following provisions:
(1) The minimum contribution provisions of Subsection (b).
(2) The limitation on contribution set by Subsection (c).
(b) Minimum Contribution Provisions
Each participant who (i) is a non-key EMPLOYEE (as defined in
Subsection (g) below) and (ii) is employed on the last day of the
PLAN YEAR, even if such individual is excluded from the PLAN for
failing to make mandatory contributions to the PLAN, shall be
entitled to have contributions allocated to his account of not
less than 3 percent (the "minimum contribution percentage") of the
participant's compensation (within the meaning of Section 415 of
the CODE). In determining the minimum contribution percentage to
be allocated to an EMPLOYEE'S account, a key EMPLOYEE's Section
401(k) CONTRIBUTIONS shall be considered as an EMPLOYER
CONTRIBUTION. However, Section 401(k) CONTRIBUTIONS on behalf of
EMPLOYEES other than key EMPLOYEES will not be considered as
EMPLOYER CONTRIBUTIONS.
The minimum contribution percentage set forth above shall be
reduced for any PLAN YEAR in which the percentage at which
contributions are made (or required to be made) under the PLAN for
the PLAN YEAR for the key EMPLOYEE for whom such percentage is the
highest for such PLAN YEAR is less than 3 percent. For this
purpose, the percentage with respect to a key EMPLOYEE (as defined
in Subsection (f) below) shall be determined by dividing the
contributions (including forfeitures and Section 401(k)
CONTRIBUTIONS) made for such key EMPLOYEES by so much of his total
compensation for the PLAN YEAR.
Contributions taken into account under the immediately preceding
sentence shall include contributions under this PLAN and under all
other defined contribution plans required to be included in an
aggregation group (as defined in Subsection (e)(3) below) but
shall not include any plan required to be included in such
aggregation group if such plan enables a defined contribution plan
required to be included in such group to meet the requirements of
the CODE prohibiting discrimination as to contributions or
benefits in favor of EMPLOYEES who are officers, shareholders or
the highly-compensated or prescribing the minimum participation
standards.
Contributions taken into account under this Subsection (b) shall
not include any contributions under the Social Security Act or any
other Federal or State law.
<PAGE>
(c) Limitations on Contributions
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In the event that the EMPLOYER also maintains a defined benefit
PLAN providing benefits on behalf of participants in this PLAN,
one of the two following provisions shall apply:
(1) If for the PLAN YEAR this PLAN would not be a "top-heavy
PLAN" as defined in Subsection (e) below if "90 percent" were
substituted for "60 percent," then Subsection (b) shall apply
for such PLAN YEAR as if amended so that "4 percent" were
substituted for "3 percent."
(2) If for the PLAN YEAR this PLAN would continue to be a "top-
heavy PLAN" as defined in Subsection (e) below if "90
percent" were substituted for "60 percent," then the
denominator of both the defined contribution PLAN fraction
and the defined benefit PLAN fraction shall be calculated as
set forth in Section 415(e) of the CODE for the limitation
YEAR ending in such PLAN YEAR by substituting "1.0" for
"1.25" in each place such figure appears, except with respect
to any individual for whom there are no EMPLOYER
CONTRIBUTIONS allocated or any accruals for such individual
under the defined benefit PLAN. Furthermore, the
transitional rule set forth in Section 415(e) of the CODE
shall be applied by substituting "$41,500" for "$51,875."
(d) Coordination with Other Plans
-----------------------------
In the event that another defined contribution or defined benefit
plan maintained by the EMPLOYER provides contributions or benefits
on behalf of participants in this PLAN, such other plan shall be
treated as a part of this PLAN pursuant to applicable principles
(such as Rev. Rul. 81-202 or any successor ruling or regulations)
in determining whether this PLAN satisfies the requirements of
Subsection (b), (c) and (d). Such determination shall be made
upon the advice of counsel by the EMPLOYEE BENEFIT ADMINISTRATIVE
COMMITTEE.
(e) Top-Heavy Plan Definition
-------------------------
This PLAN shall be a "top-heavy PLAN" for any PLAN YEAR if, as of
the determination date (as defined in Subsection (e)(1) below),
the aggregate of the accounts under the PLAN and any required
aggregation group or permissive aggregation group of plans for
participants (including former participants) who are key EMPLOYEES
(as defined in Subsection (f) below but not including accounts of
individuals excluded under Section 416(g)(4)(E) of the CODE)
exceeds 60 percent of the present value of the aggregate of the
accounts for all participants, excluding former key EMPLOYEES, or
if this PLAN is required to be in an aggregate group (as defined
in Subsection (e)(3) below) which for such PLAN YEAR is a top-
heavy group (as defined in Subsection (e)(4) below).
(1) "Determination date" means for any PLAN YEAR the last day of
the immediately preceding PLAN YEAR.
(2) "Valuation date" means the last day of each PLAN YEAR.
(3) "Aggregation group" means the group of plans, if any, that
includes both the group of plans that are required to be
aggregated and the group of plans that are permitted to be
aggregated.
<PAGE>
(A) The group of plans that are required to be aggregated
(the "required aggregation group") includes
(i) Each plan of the EMPLOYER (as defined in
Subsection (h) below) in which a key EMPLOYEE is a
participant, including collectively-bargained
plans, and
(ii) Each other plan, including collectively-bargained
plans of the EMPLOYER (as defined in Subsection
(h) below) which enables a plan in which a key
EMPLOYEE is a participant to meet the requirements
of the CODE prohibiting discrimination as to
contributions or benefits in favor of EMPLOYEES
who are officers, shareholders or the highly-
compensated or prescribing the minimum
participation standards.
(B) The group of plans that are permitted to be aggregated
(the "permissive aggregation group") includes the
required aggregation group plus one or more plans of
the EMPLOYER (as defined in Subsection (h) below) that
is not part of the required aggregation group and that
the EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE certifies
as constituting a plan within the permissive
aggregation group. Such plan or plans may be added to
the permissive aggregation group only if, after the
addition, the aggregation group as a whole continues
not to discriminate as to contributions or benefits in
favor of officers, shareholders or the highly-
compensated and to meet the minimum participation
standards under the CODE.
(4) "Top-heavy group" means the aggregation group, if as of the
applicable determination date, the sum of the present value
of the cumulative accrued benefits for key EMPLOYEES under
all defined benefit plans included in the aggregation group
plus the aggregate of the accounts of key EMPLOYEES under all
defined contribution plans included in the aggregation group
exceeds 60 percent of the sum of the present value of the
cumulative accrued benefits for all EMPLOYEES, excluding
former key EMPLOYEES, under all such defined benefit plans
plus the aggregate accounts for all EMPLOYEES, excluding
former key EMPLOYEES, under such defined contribution plans.
If the aggregation group that is a top-heavy group is a
required aggregation group, each plan in the group will be
top heavy. If the aggregation group that is a top-heavy
group is a permissive aggregation group, only those plans
that are part of the required aggregation group will be
treated as top-heavy. If the aggregation group is not a top-
heavy group, no plan within such group will be top-heavy.
(5) In determining whether this PLAN constitutes a "top-heavy
PLAN," the EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE (or its
agent) shall make the following adjustments in connection
therewith:
(A) When more than one plan is aggregated, the EMPLOYEE
BENEFIT ADMINISTRATIVE COMMITTEE shall determine
separately for each plan as of each plan's
determination date the present value of the accrued
benefits or account balance. The results shall then be
aggregated separately by adding the results of each
plan as of the determination dates for such plans that
fall with the same calendar YEAR.
<PAGE>
(B) In determining the present value of the cumulative
accrued benefit or the amount of the account of any
EMPLOYEE, such present value or account shall include
the amount in dollar value of the aggregate
distributions made to such EMPLOYEE under the
applicable PLAN during the five-year period ending on
the determination date, unless reflected in the value
of the accrued benefit or account balance as of the
most recent valuation date. Such amounts shall include
distributions to EMPLOYEES which represented the entire
amount credited to their accounts under the applicable
PLAN.
(C) Further, in making such determination, in any case
where an individual is a "non-key EMPLOYEE" as defined
in Subsection (g) below, with respect to an applicable
plan, but was a key EMPLOYEE with respect to such plan
for any prior PLAN YEAR, any accrued benefit and any
account of such EMPLOYEE shall be altogether
disregarded. For this purpose, to the extent that a key
EMPLOYEE is deemed to be a key EMPLOYEE if he or she
met the definition of key EMPLOYEE within any of the
four preceding PLAN YEARS, this provision shall apply
following the end of such period of time.
(f) Key Employee
The term "key EMPLOYEE" means any EMPLOYEE or former EMPLOYEE
under this PLAN who, at any time during the PLAN YEAR containing
the determination date or during any of the four preceding PLAN
YEARS, is or was one of the following:
(1) An officer of the EMPLOYER having an annual compensation
greater than 50 percent of the amount in effect under Section
415(b)(1)(A) of the CODE for such PLAN YEAR. Whether an
individual is an officer shall be determined by the EMPLOYEE
BENEFIT ADMINISTRATIVE COMMITTEE on the basis of all the
facts and circumstances, such as an individual's authority,
duties and term of office, not on the mere fact that the
individual has the title of officer. For any such PLAN YEAR,
these shall be treated as officers no more than the lesser
of:
(A) 50 EMPLOYEES, or
(B) the greater of three EMPLOYEES or 10 percent of the
EMPLOYEES.
For this purpose, if there are more than 50 officers, the 50
highest-paid officers shall be the key EMPLOYEES.
(2) One of the ten EMPLOYEES owning (or considered as owning,
within the meaning of the constructive ownership rules of the
CODE) the largest interests in the EMPLOYER (as defined in
Subsection (h)). An EMPLOYEE who has some ownership interest
is considered to be one of the top ten owners unless at least
ten other EMPLOYEES own a greater interest than that
EMPLOYEE. However, an EMPLOYEE will not be considered a top
ten owner for a PLAN YEAR if the EMPLOYEE earns an amount
equal to or less than the maximum dollar limitation on
contributions and other annual additions to a participant's
account in a defined contribution PLAN under the CODE as in
effect for the calendar YEAR in which the determination date
falls.
(3) Any person who owns (or is considered as owning within the
meaning of the constructive ownership rules of the CODE) more
than 5 percent of the outstanding
<PAGE>
stock of the EMPLOYER or
stock possessing more than 5 percent of the combined total
voting power of all stock of the EMPLOYER.
(4) A 1 percent owner of the EMPLOYER having an annual
compensation from the EMPLOYER of more than $150,000, and who
owns more than 1 percent of the outstanding stock of the
EMPLOYER or stock possessing more than 1 percent of the
combined total voting power of all stock of the EMPLOYER.
For purposes of this subsection, compensation means all items
includable as compensation for purposes of applying the
limitations on contributions and other annual additions to a
participant's account in a defined contribution plan and the
maximum benefit payable under a defined benefit plan under
the CODE.
For purposes of parts (1), (2), (3) and (4) of this defini-
tion, a BENEFICIARY of a key EMPLOYEE shall be treated as a
key EMPLOYEE. For purposes of parts (3) and (4), each
EMPLOYER is treated separately (without regard to the
definition in Subsection (h)) in determining ownership
percentages; but, in determining the amount of compensation,
the definition of EMPLOYER in Subsection (h) is taken into
account.
(g) Non-key Employee
The term "non-key EMPLOYEE" means any EMPLOYEE (and any
BENEFICIARY or an EMPLOYEE) who is not a key EMPLOYEE.
(h) Employer
The term "EMPLOYER" as defined in Section 39 of this PLAN.
<PAGE>
I, Leslie H. Everett, do hereby certify that I am the Vice
President and Corporate Secretary of the PACIFIC GAS AND ELECTRIC
COMPANY, a corporation organized and existing under the laws of the
State of California, and that the above and foregoing is a full, true
and correct copy of the Pacific Gas and Electric Company SAVINGS FUND
PLAN FOR UNION-REPRESENTED EMPLOYEES as the same exists at the date of
this certification.
WITNESS my hand and the seal of the said corporation hereunto
affixed this day of
Leslie H. Everett
Vice President and Corporate Secretary of
PACIFIC GAS AND ELECTRIC COMPANY
