File No. 70-7674
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
AMENDMENT NO. 5
(POST-EFFECTIVE)
FORM U-1
DECLARATION
under
THE PUBLIC UTILITY HOLDING COMPANY
ACT OF 1935
_______________________________________
National Fuel Gas Company
10 Lafayette Square
Buffalo, New York 14203
(Name of company filing this statement
and address of principal
executive offices)
_______________________________________
NATIONAL FUEL GAS COMPANY
(Name of top registered holding company)
_______________________________________
R. M. DiValerio, Secretary
National Fuel Gas Company
10 Lafayette Square
Buffalo, New York 14203
(Name and address of agent for service)
The Commission is requested to send copies of all notices,
orders and communications in connection with this declaration to:
K. G. Storie, Senior Attorney
10 Lafayette Square
Buffalo, New York 14203
A. (Section 401(k) plans) of Item 1. Description of Proposed
Transaction is hereby amended to read in its entirety as follows:
National hereby seeks authority to issue from time to time,
through December 31, 1999, no more than 2,000,000 shares of Additional
Common Stock to Vanguard Fiduciary Trust Company ("Vanguard"), trustee
of two plans maintained by National as cash or deferred arrangements
intended to qualify under sections 401(a) and 401(k) of the Internal
Revenue Code of 1986, as amended ("Code").1 These shares of
Additional Common Stock, when issued, would be issued in lieu of cash
contributions to Vanguard respecting the two plans. These two
"section 401(k) plans" are the National Fuel Gas Company Tax-Deferred
Savings Plan ("TDSP"), and the National Fuel Gas Company Tax-Deferred
Savings Plan for Non-union Employees ("Non-union TDSP"). National
seeks authority to, from time to time, (i) to issue up to 1,000,000
shares of Additional Common Stock to Vanguard as trustee of the TDSP,
and (ii) issue up to 1,000,000 shares of Additional Common Stock to
Vanguard as trustee of the Non-union TDSP.
The Non-union TDSP was established effective July 1, 1984, and
the TDSP was established effective July 1, 1989. The terms and
___________________
1 Under the Order issued in Release No. 35-24988 dated November 21,
1989 National was authorized to issue up to 1,000,000 shares of
Additional Common Stock in regard to its two qualified 401(k)
plans. As of September 30, 1994, 508,000 shares had been issued
pursuant to that authority. National registered the 1,000,000
shares authorized for issuance pursuant to Order No. 35-24988 and
intends at such time as it is necessary to register the additional
1,000,000 shares it is seeking authorization to issue hereunder.
-2-
conditions of both plans are complex. Set forth below is a summary of
their most important terms and conditions. The respective plan
documents and prospectuses (see Exhibits C-1 through C-8) provide
greater detail.
Eligible employees may participate in the TDSP or Non-union TDSP
by making elections to reduce their base salary or wages by from 2 to
15% (for union and non-supervisory employees) or 2 to 12% (for
supervisory employees) per payroll period (i.e., to defer receipt of
such percentages of pay), or they may elect not to contribute at all,
if they prefer. Such salary or wage reduction contributions are
accumulated by National and are contributed to Vanguard, as trustee of
the plans, normally once per month. Vanguard receives such
contributions, invests them, and holds such investments in trust for
the participants in and beneficiaries of the plans. The investment of
the assets of both plans is made pursuant to participants' directions.
Participants have seven choices for the investment of their
contributions, one of which is a fund ("National Stock Fund A")
consisting of National Fuel common stock ("Common Stock").
Participants in the TDSP and Non-union TDSP can change their
percentage contribution elections, and their contribution investment
elections, from time to time during the year, and generally may elect
to transfer existing balances among the seven investment choices as
often as they like.
-3-
Under both plans, in addition to contributing participants' wage
and salary deferrals to Vanguard, National and participating
subsidiaries contribute additional cash to Vanguard, in amounts of up
to 3.5% (for union and non-supervisory employees) and 6.0% (for
supervisory personnel) of the base pay of the employees contributing
to the plans. The percentage amount of these employer contributions
("Matching Contributions") allocated to each employee's accounts
depends upon the employee's own contribution percentage to the TDSP or
Non-union TDSP, years of service with a participating National Fuel
Gas system company, and receipt of matching contributions under an
alternative employee benefit plan (i.e., National's "Employees' Thrift
Plan").
All Matching Contributions are allocated to a fund known as
"National Stock Fund B", and no wage or salary reduction contributions
are allocated thereto. Thus, National Stock Fund B consists of
Matching Contributions and the Common Stock purchased therewith.
Matching Contributions are only used to purchase Common Stock; they
are not allocated to any of the seven investment choices available for
employees' wage or salary reduction contributions, and are thus not
subject to Participants' directions or elections.
At August 31, 1994, Vanguard had 961,392 shares of Common Stock
in the Non-union TDSP and 357,208 shares of Common Stock in the TDSP.
For the month of August 1994, employee contributions to National Stock
Fund A for the Non-union TDSP and TDSP respectively were approximately
-4-
$96,432 and $170,659, and Matching Contributions to National Stock
Fund B for those two plans respectively were approximately $177,284
and $86,876. The aggregate base pay of employees currently eligible
to contribute to those two plans respectively was approximately $56
million and $78 million. Approximately 1,128 and 1,925 employees,
respectively, were eligible to participate in those two plans in
September, 1994.
All employee contributions and Matching Contributions, respecting
the TDSP and Non-union TDSP, are fully and immediately vested.
National does not plan to issue Additional Common Stock to
Vanguard for National Stock Fund A (i.e., as an investment choice for
salary or wage reduction contributions). It is anticipated that
National will continue to remit such employee contributions designated
for National Stock Fund A to Vanguard, and Vanguard will continue to
use such contributions to purchase Common Stock on the open market for
National Stock Fund A for both plans.
National plans to continue to contribute Matching Contributions
to Vanguard in cash, which cash then will be paid to National to
purchase Additional Common Stock. The decision, however, to make
Matching Contributions by issuing Additional Common Stock to Vanguard
for National Stock Fund B, or to make Matching Contributions in cash,
will be made from time to time by the officers of National, based,
among other things, upon the following considerations: (i) whether or
not additional equity capital is needed or desired, and (ii) whether
-5-
or not the issue and sale of Additional Common Stock will dilute the
per share book value of outstanding Common Stock.
Employee contributions (in the form of cash) to National Stock
Fund A are pooled by Vanguard and then used to purchase round lots
(increments of 100 shares) of Common Stock for National Stock Fund A
and money market reserves as needed to administer the fund.
Vanguard's National Stock Fund A accounting system employs a unit
value method of accounting similar to the method used for mutual
funds. The unit value of National Stock Fund A is calculated at the
close of each business day. This value is based on the current fair
market value of the fund's total Common Stock and short-term
investments in money market reserves, increased by any fund
receivables (such as unsettled sales of securities and dividends
receivable) and decreased by any fund payables (such as accrued
trustee fees and unsettled purchases of securities). The resulting
sum is then divided by the total number of outstanding units in the
National Stock Fund A -- i.e., the total of all participant units --
to obtain a daily value per fund unit. Each participant's account is
credited with a number of units based on the pro rata share of his
contributions to the total value of National Stock Fund A.
If National issues shares of Additional Common Stock to Vanguard
as Matching Contributions for National Stock Fund B, in lieu of
contributing cash (or in return for a payment by Vanguard to National
of cash previously contributed by National to Vanguard as Matching
-6-
Contributions for National Stock Fund B), for the TDSP or Non-union
TDSP, or both plans, from time to time, the shares of Additional
Common Stock will be valued at fair market value. Fair market value
will be determined by averaging the daily high and low sales prices of
Common Stock on the New York Stock Exchange ("NYSE"), on the date of
issue. If the NYSE is not open for trading on that date, or no shares
of Common Stock were traded on that date, the purchase price of the
Additional Common Stock will be the average of the daily high and low
sales prices for such shares on the next preceding date on which the
NYSE is open for trading and shares of Common Stock were traded.
Historically, Matching Contributions have normally been made to
Vanguard on one day per month, which has normally occurred during the
first two weeks of said month, on the first date administratively
practicable after the appropriate dollar value of the Matching
Contributions to be made has been determined.
Shares of Common Stock credited to the accounts of participants
in both the TDSP and Non-union TDSP, whether held in each plan's
National Stock Fund A or National Stock Fund B, and whether or not
purchased on the open market or issued to Vanguard, are and will be
voted by Vanguard only in accordance with participants' instructions.
If no such instructions are given, shares of Common Stock are not and
will not be voted.
The TDSP and Non-union TDSP are subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
-7-
including its provisions relating to vesting, participation, trusts,
reporting, disclosure and fiduciary responsibility.
C. (Use of Proceeds) is hereby amended to read in its entirety as
follows:
National will receive no proceeds as such from the issuance of
such Additional Common Stock to Vanguard as trustee of the TDSP and
Non-union TDSP, as any such issuance, when made, will be in lieu of
cash Matching Contributions. Because cash payments will be reduced
as a result of any issuance of Additional Common Stock respecting the
TDSP and Non-union TDSP, short-term debt may thereby be replaced with
equity.
Currently, the monthly contributions to Vanguard for National
Stock Fund B are approximately as follows: $86,876 (for the TDSP) and
$177,284 (for the Non-union TDSP). Thus, based upon current figures,
for each year that National issues only Additional Common Stock
respecting National Stock Fund B for both plans, cash outlays will be
reduced by approximately $3.2 million.
Item 5. Procedure
National respectfully requests that the Commission issue an order
permitting the proposed transactions to become effective on or before
December 1, 1994.
-8-
National respectfully requests that the Commission's order herein
be entered pursuant to the provision of Rule 23. If a hearing is
ordered, National waives a recommended decision by a hearing officer,
or any other responsible officer of the Commission, agrees that the
Office of Public Utility Regulation may assist in the preparation of
the Commission decision, and requests that there be no waiting period
between the issuance of the Commission's order and the date on which
it becomes effective.
Item 6. Exhibits and Financial Statements
The following exhibits are made a part of this declaration:
C-7 Prospectus dated June 19, 1992, relating to the
Tax-Deferred Savings Plan for union employees.
C-8 Prospectus dated June 19, 1992, relating to the
Tax-Deferred Savings Plan for non-union employees.
F-1 Opinion of Counsel for National.
F-2 Opinion of Stryker, Tams and Dill, New Jersey
Counsel for National.
H-2 Suggested form of notice of proposed transaction.
The following financial statements are made a part of this
statement.
**____ Balance Sheet as of June 30, 1994.
**____ Statement of Income for the twelve months ended
June 30, 1994.
**____ Statement of Retained Earnings at June 30, 1994.
________________________
**To be filed by amendment
-9-
No material changes not in the ordinary course of business
have occurred since June 30, 1994.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
statement to be signed on its behalf by the undersigned thereunto duly
authorized.
NATIONAL FUEL GAS COMPANY
/S/Richard M. DiValerio
Richard M. DiValerio
Secretary
Dated: October 17, 1994
NATIONAL FUEL GAS COMPANY
TAX-DEFERRED SAVINGS PLAN
_______________
This Prospectus of National Fuel Gas Company
("National") is applicable to all interests to be offered or sold
pursuant to the National Fuel Gas Company Tax-Deferred Savings
Plan and to 500,000 shares of common stock, $1.00 par value, of
National that are offered as set forth herein to eligible
employees of National and of its subsidiaries that adopt the Plan.
_______________
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED.
The date of this Prospectus is June 19, 1992.
TABLE OF CONTENTS
Page
THE PLAN 1
General Information 1
Eligibility and Participation 3
Wage Reduction Contributions 4
Employer Matching Contributions 5
Limits on Contributions 10
Investment of Contributions 12
Participant Accounts 19
Administration 19
Vesting 21
Loans to Participants 21
Withdrawals During Employment 24
Distribution of Benefits 25
Modification or Termination of the Plan 27
RESTRICTIONS ON RESALE 28
FEDERAL INCOME TAX CONSEQUENCES 28
Contributions and Earnings 28
Withdrawals During Employment 30
Lump Sum Distributions 30
Other than Lump Sum Distributions 32
Rollover of Partial Distributions 33
Loans 33
Withholding 34
Early Distribution Tax 34
Excess Distribution Tax 34
Summary 35
DESCRIPTION OF COMMON STOCK 35
Dividend Rights 35
Voting Rights and Classification of the
Board of Directors 36
Liquidation Rights 36
Preemptive Rights 36
Business Combinations 37
INCORPORATION BY REFERENCE 37
AVAILABILITY OF INFORMATION 39
COMMITTEE MEMBERS 39
APPENDIX
THE PLAN
General Information
The National Fuel Gas Company Tax-Deferred Savings Plan
(the "Plan") was adopted on April 10, 1989, pursuant to action of
the Board of Directors of National on March 21, 1989, and was
effective as of July 1, 1989. The Plan has since been amended.
The purpose of the Plan is to encourage employees of National and
of its subsidiaries that adopt the Plan to supplement retirement
income by providing opportunities for long-term capital
accumulation, to promote ownership of National's Common Stock
among those employees, to provide an attractive employee benefit,
and to keep National's employee benefit program competitive with
programs offered by other corporations. The participating
employers in the Plan are National and each subsidiary of
National that, with the consent of the Board of Directors of
National, adopts the Plan. National and each adopting subsidiary
are referred to in this Prospectus as the "Employer" or
"Employers." The address, including the telephone number, of
National is 30 Rockefeller Plaza, New York, New York 10112, (212)
541-7533.
The following subsidiaries of National have adopted the
Plan and are Employers under the Plan:
National Fuel Gas Supply Corporation
National Fuel Gas Distribution Corporation
Penn-York Energy Corporation
Under the Plan, any eligible employee can elect to have
his Base Pay reduced and to have the amount of such reduction
contributed by his Employer to the Plan on his behalf and
invested in any one or a combination of mutual funds, an
investment contract trust fund, and a fund consisting of Common
Stock of National. In addition, his Employer will make a
matching contribution to the Plan for such employee in an amount
equal to a certain percentage of his Base Pay. The matching
contribution is invested in a separate fund consisting of Common
Stock of National. The percentage of the matching contribution
varies depending upon the employee's length of service,
percentage of wage reduction, and percentage of contribution, if
any, to the National Fuel Gas Company Employees' Thrift Plan (the
"Thrift Plan").
The Plan is a defined contribution profit-sharing plan
intended to qualify under Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), containing a cash or
deferred arrangement that is intended to qualify under
Section 401(k) of the Code.
The Plan is subject to all of the provisions of the
Employee Retirement Income Security Act of 1974, as amended,
("ERISA") relating to defined contribution plans, and generally
is subject to the provisions of Titles I and II of ERISA,
including the provisions regarding reporting, disclosure,
participation, vesting, fiduciary responsibility and enforcement
procedures. However, the Plan is not subject to the funding
requirements of Titles I and II of ERISA, and benefits under the
Plan are not guaranteed by the federal government's Pension
Benefit Guaranty Corporation under Title IV of ERISA; these
protections will not be extended by the Employers to employees
participating in the Plan.
The description of the Plan contained in this
Prospectus does not purport to be complete and is qualified in
its entirety by reference to the full text of the Plan. A copy
of the Plan may be obtained, without charge, upon written request
directed to National, 10 Lafayette Square, Buffalo, New York
14203, Attention: Trust Plans Administration. Participants may
obtain additional information about the Plan and its
administrators by writing National at the address set forth
above, or by calling National at (716) 857-7888.
National anticipates that the information contained in
this Prospectus will be updated by appendices or other
appropriate documents that will be distributed from time to time
to all persons who have received a copy of this Prospectus and
who are eligible to participate in the Plan. In the event that
the Plan is amended in material respects other than in accordance
with the description of the Plan contained herein, National will
distribute to such persons an appendix or other appropriate
document containing a description of those amendments.
Certain provisions of the Plan do not reflect
amendments necessary to comply with the requirements of the Tax
Reform Act of 1986 (the "Act") or to comply with other applicable
requirements of the Code. The Plan currently is being, and will
continue to be, administered in accordance with such requirements
as and when effective. However, as permitted by the Act, the
Code and the Internal Revenue Service, the Plan documents have
not yet been amended to reflect such requirements. Thus, in some
circumstances, the Plan is being administered in a manner
different than that provided in the Plan documents. Not later
than December 31, 1993, the Plan will be amended, effective as
required by the Act, the Code and the Internal Revenue Service,
to comply with the provisions of the Act and to comply with other
applicable requirements of the Code and the Internal Revenue
Service. This Prospectus explains the administration of the
Plan, even where the provisions of the Plan have not yet been
amended.
Eligibility and Participation
Participation in the Plan will be available to all
employees who are regularly employed by an Employer and who are
represented by the International Brotherhood of Electrical
Workers ("IBEW"), Locals 2154, 2199, 2199-J and 2279, and
International Brotherhood of Firemen and Oilers ("IBFO"), Locals
22, 23, 25 and 251 ("Eligible Employees").
An Eligible Employee is eligible to participate in the
Plan on the first day of the first payroll period beginning after
the date he has both reached age 21 and completed one year of
service with an Employer. One year of service means a 12-
consecutive month computation period beginning on the date the
Eligible Employee's employment commences, and anniversaries
thereof, in which he is credited with at least 1,000 hours of
service. In general, an "hour of service" is an hour for which
an employee is paid or entitled to payment by National or its
subsidiaries.
Solely for purposes of participation in the Plan, an
Eligible Employee who is credited with 1,000 hours of service by
the last day of the sixth month of a 12-consecutive month
computation period, or by the last day of any subsequent month of
such period, will be deemed to have completed one year of service
on that date. Under this rule a full-time Eligible Employee
normally will be eligible to participate in the Plan (become a
"Participant") on the first day of the payroll period that begins
after he has been employed for six months. (A Participant is a
current or former Eligible Employee who contributed or is
contributing to the Plan and whose accounts have not been
completely distributed.)
To become a Participant, an Eligible Employee must
complete and file an authorization form with the Tax-Deferred
Savings Plan Committee (the "Committee") described in
Administration below. The form contains the Eligible Employee's
election to make wage reduction contributions (see Wage Reduction
Contributions, below) and his designation of the investment fund
or funds in which such contributions are to be invested (see
Investment of Contributions, below). The authorization form must
be filed at least 30 days prior to the date the Eligible Employee
is to join the Plan or within such other period as may be
prescribed by the Committee.
Wage Reduction Contributions
Each Participant in the Plan may elect to have his Base
Pay reduced and to have the amount of the reduction contributed
to the Plan on his behalf by his Employer. This contribution,
called a "Wage Reduction Contribution," begins on the first
payroll period beginning after the Participant joins the Plan.
For federal income tax purposes, Wage Reduction Contributions
will be treated as Employer contributions and will reduce the
Participant's taxable income and the amount of federal income
taxes paid by the Participant. Generally, "Base Pay" is defined
in the Plan to mean a Participant's basic compensation for a
payroll period prior to withholding taxes and contributions to a
flexible spending account or other "cafeteria plan," excluding
bonuses, overtime, commissions, and other special payments, but
including sick pay.
Participants may elect a Wage Reduction Contribution
percentage of 2% to 15% of Base Pay, in increments of 1%;
provided, however, that the 15% limit will be reduced by 1% for
each 1% of Base Pay that the Participant contributes to the
Thrift Plan for the same period. An employee contributing to the
Thrift Plan may elect to contribute 2% to 7% of Base Pay to the
Thrift Plan, depending upon his years of service with National
and its subsidiaries.
To determine a dollar amount of Wage Reduction
Contribution, the percentage that a Participant has elected is
multiplied by the Participant's Base Pay in effect on the date of
his entry into the Plan. Effective with the first payroll period
that begins after he joins the Plan, the Participant's Base Pay
is reduced by such dollar amount, which is contributed to the
Plan on his behalf by his Employer. The Wage Reduction
Contribution is recalculated each February 1 and August 1 to
reflect the Participant's Base Pay as of the immediately
preceding January 1 and July 1.
A Participant may change his percentage rate of wage
reduction (within the permitted percentage limits), effective as
of any February 1 or August 1, by filing a revised authorization
form with the Committee at least 30 days prior to such date or
within such other period as may be prescribed by the Committee.
A Participant may discontinue all of his Wage Reduction
Contributions by filing with the Committee a prescribed notice
that will become effective as soon as administratively
practicable but not earlier than the first payroll period that
commences after the notice is filed. Participants may resume
Wage Reduction Contributions as of any January 1 or July 1 that
occurs at least six months after the effective date of the
discontinuance by filing an authorization form at least 30 days
prior to such date. A Participant who has discontinued Wage
Reduction Contributions remains a Participant in the Plan until
distribution of the value of his accounts in the Plan.
Employer Matching Contributions
The Employers make matching contributions each month to
the Plan for each Participant on whose behalf Wage Reduction
Contributions are made ("Employer Matching Contributions").
Employer Matching Contributions are equal to a percentage of a
Participant's Base Pay, and the percentage varies depending upon
the Participant's length of service, percentage of wage
reduction, and percentage of contribution, if any, to the Thrift
Plan. For purposes of the Plan, Base Pay is recalculated each
February 1 and August 1 to reflect Base Pay as of the preceding
January 1 and July 1, and, for purposes of the Thrift Plan, Base
Pay is recalculated each July 1 to reflect Base Pay as of that
date.
If a Participant does not contribute to the Thrift
Plan, the Employer Matching Contribution made to the Plan will be
calculated in accordance with the following table.
TABLE I
Participant's
Years of Wage Reduction Employer Matching
Service **1.
Less than 5 2-15% 1.0%
5 but less 2 1.0
than 10 3-15 1.5
10 but less 2 1.0
than 15 3 1.5
4-15 2.0
15 but less 2 1.0
than 20 3 1.5
4 2.0
5 2.5
6-15 3.0
20 or more 2 1.0
3 1.5
4 2.0
5 2.5
6 3.0
7-15 3.5
(1)/ A year of service for purposes of the Plan is determined as
of each January 1 and July 1.
If a Participant in the Plan also contributes to the
Thrift Plan, his contributions under the Thrift Plan will be
added to those under the Plan for purposes of determining the
Wage Reduction Contribution percentage and Employer Matching
Contribution percentage under Table I, but the resulting Employer
Matching Contribution percentage will be reduced by the
percentage of matching contributions made to the Thrift Plan.
The following table sets forth the percentage of
matching contributions that will be contributed to the Thrift
Plan on behalf of Participants who contribute to the Thrift Plan.
TABLE II
Participant's Percentage of Matching Contribution
Years of Participant's Contribution Percentage Contributed to
Service **2.
Less than 5 2% 1.0%
5 but less 2 1.0
than 10 3 1.5
10 but less 2 1.0
than 15 3 1.5
4 2.0
15 but less 2 1.0
than 20 3 1.5
4 2.0
5 2.5
6 3.0
20 or more 2 1.0
3 1.5
4 2.0
5 2.5
6 3.0
7 3.5
(2)/ A year of service for purposes of the Thrift Plan is
determined as of each July 1.
The calculation of the percentage of Employer Matching
Contributions, as described above, is illustrated by the
following examples:
Example 1. A Participant with twenty-one years of
service who contributes 10% of Base Pay to the Plan and does not
contribute to the Thrift Plan will receive an Employer Matching
Contribution of 3.5% (Table I). A Participant with twenty-one
years of service who contributes 10% of Base Pay to the Plan and
the Thrift Plan, in the aggregate, is entitled to a matching
contribution of 3.5% (Table I). If that Participant contributes
5% of Base Pay to each of the Plan and the Thrift Plan, he will
receive a 2.5% matching contribution to the Thrift Plan
(Table II) and a 1% Employer Matching Contribution to the Plan.
If that Participant instead contributes 4% of Base Pay to the
Thrift Plan and 6% of Base Pay to the Plan, he will receive a 2%
matching contribution to the Thrift Plan (Table II), and a 1.5%
Employer Matching Contribution to the Plan.
Example 2. A Participant with six years of service who
contributes 7% of Base Pay to the Plan will receive an Employer
Matching Contribution of 1.5% (Table I). If that Participant
contributes an additional 3% of Base Pay to the Thrift Plan, for
an aggregate of 10%, he is entitled to a matching contribution of
1.5% (Table I), and the entire 1.5% matching contribution will be
contributed to the Thrift Plan (Table II). If that Participant
instead contributes 2% of Base Pay to the Thrift Plan and 8% of
Base Pay to the Plan, he will receive a 1% matching contribution
to the Thrift Plan (Table II) and a .5% Employer Matching
Contribution to the Plan.
For the convenience of the Participants, the following
table sets forth the percentages of matching contributions that
will be made to the Thrift Plan and the Plan for all possible
combinations of Participant contributions to the Thrift Plan and
the Plan.
TABLE III
Wage Reduction Percentage of Matching Employer Matching
Contribution Participant's Contribution Contribution
Participant's Percentage to Percentage Percentage
Years of Contributed Contribution Contributed to Contributed
Service to Plan Thrift Plan Thrift Plan to Plan
Less than 5 2% or greater 0% 0% 1.0%
2 1.0 0
5 but less
than 10 2 0% 0% 1.0%
2 1.0 .5
3 1.5 0
3% or greater 0% 0% 1.5%
2 1.0 .5
3 1.5 0
10 but less
than 15 2% 0% 0% 1.0%
2 1.0 1.0
3 1.5 .5
4 2.0 0
3% 0% 0% 1.5%
2 1.0 1.0
3 1.5 .5
4 2.0 0
4% or greater 0% 0% 2.0%
2 1.0 1.0
3 1.5 .5
4 2.0 0
15 but less
than 20 2% 0% 0% 1.0%
2 1.0 1.0
3 1.5 1.0
4 2.0 1.0
5 2.5 .5
6 3.0 0
3% 0% 0% 1.5%
2 1.0 1.5
3 1.5 1.5
4 2.0 1.0
5 2.5 .5
6 3.0 0
4% 0% 0% 2.0%
2 1.0 2.0
3 1.5 1.5
4 2.0 1.0
5 2.5 .5
6 3.0 0
5% 0% 0% 2.5%
2 1.0 2.0
3 1.5 1.5
4 2.0 1.0
5 2.5 .5
6 3.0 0
6% or greater 0% 0% 3.0%
2 1.0 2.0
3 1.5 1.5
4 2.0 1.0
5 2.5 .5
6 3.0 0
20 or more 2% 0% 0% 1.0%
2 1.0 1.0
3 1.5 1.0
4 2.0 1.0
5 2.5 1.0
6 3.0 .5
7 3.5 0
3% 0% 0% 1.5%
2 1.0 1.5
3 1.5 1.5
4 2.0 1.5
5 2.5 1.0
6 3.0 .5
7 3.5 0
4% 0% 0% 2.0
2 1.0 2.0
3 1.5 2.0
4 2.0 1.5
5 2.5 1.0
6 3.0 .5
7 3.5 0
5% 0% 0% 2.5%
2 1.0 2.5
3 1.5 2.0
4 2.0 1.5
5 2.5 1.0
6 3.0 .5
7 3.5 0
6% 0% 0% 3.0%
2 1.0 2.5
3 1.5 2.0
4 2.0 1.5
5 2.5 1.0
6 3.0 .5
7 3.5 0
7% or greater 0% 0% 3.5%
2 1.0 2.5
3 1.5 2.0
4 2.0 1.5
5 2.5 1.0
6 3.0 .5
7 3.5 0
Limits on Contributions
Section 401(a)(17) of the Code limits the amount of
Base Pay that may be taken into account in any Plan Year (the
calendar year) in determining Wage Reduction Contributions. It
is not expected that the Base Pay of any Participant will exceed
this limit.
For a Participant's 1992 taxable year, the aggregate
amount of a Participant's (i) Wage Reduction Contributions under
the Plan plus (ii) deferrals under all other cash or deferred
arrangements in which he participates, whether sponsored by the
Employers or an unrelated employer, (hereafter referred to as
"Elective Deferral") is $8,728 (subject to indexing in subsequent
years to reflect increases in the cost of living). Such cash or
deferred arrangements include arrangements qualified under
Section 401(k) of the Code and tax-sheltered annuities to which a
contribution is made under a wage reduction agreement with a
charitable organization or public school; however, an additional
amount may be contributed on behalf of the Participant to tax-
sheltered annuities, for a combined maximum of $9,500. See
FEDERAL INCOME TAX CONSEQUENCES - Contributions and Earnings,
below for a description of tax consequences, and permitted
adjustments that may be made, in the event Elective Deferrals
exceed the foregoing limits.
Sections 401(k) and 401(m) of the Code contain
limitations on the maximum Wage Reduction Contributions and
Employer Matching Contributions that may be made for any Plan
Year (the calendar year) on behalf of Participants who are
considered "highly compensated employees" for that year. The
rules are complex, but, in general, an employee will be
considered a highly compensated employee for a Plan Year if,
during the Plan Year, his compensation, including overtime,
exceeds $93,518, or exceeds $62,345 and he is a member of the
top-paid group of employees of National and its subsidiaries. An
employee is in the top-paid group of employees of National and
its subsidiaries for a particular year if the employee is in the
group consisting of the top 20% of the employees of National and
its subsidiaries when ranked on the basis of compensation
received during the year. The foregoing amounts are subject to
increase to reflect increases in the cost of living.
If any Participants are highly compensated employees
and if the limitations in Sections 401(k) and 401(m) of the Code
could be exceeded, the Committee, during the course of a Plan
Year, may reduce the percentage rates of wage reduction elected
by certain Participants who are highly compensated employees for
the Plan Year so that average contributions of highly compensated
employees for the Plan Year will be reduced to a level that the
Committee has selected as appropriate to comply with the
limitations in Sections 401(k) and 401(m) of the Code. Any
required reduction is accomplished by first reducing, by 1%, the
elected percentage rate of each highly compensated employee who
has elected the highest rate then in effect. If further
reduction is necessary, the elected percentage rate of the
Participants initially reduced, and of each highly compensated
Participant who has elected a rate equal to the reduced rate,
will be reduced by 1%. Successive reductions will be made in this
manner until the level selected by the Committee for compliance
with the limitations in Sections 401(k) and 401(m) of the Code
will not be exceeded. It is possible, but not anticipated, that
a reduction in the elected percentage rates will require a
reduction in the Employer Matching Contribution percentages.
If any Participants are highly compensated employees
and make contributions to the Plan for a Plan Year that exceed
the contribution limits under Sections 401(k) and 401(m) of the
Code ("Excess Contributions"), the Plan will distribute the
Excess Contributions and income allocable thereto during the
following Plan Year. Excess Contributions and income allocable
thereto for any Plan Year will be distributed to those highly
compensated employees deemed to have caused the limitations to be
exceeded, in a manner similar to the leveling method of reducing
elected percentages of wage reduction described above. It is
intended that distributions of Excess Contributions will be
avoided by prospective reduction of percentages of wage reduction.
Contributions to the Plan, and contributions to and
benefit accruals under the Thrift Plan and National's retirement
plan, are subject to other limitations contained in Section 415
of the Code. These limits are not expected to have any impact on
Participants.
Investment of Contributions
A Participant's Wage Reduction Contributions made
during each month, and the Employer Matching Contributions
relating thereto, are transmitted to the Trustee of the Plan (the
"Trustee") as soon as practicable after the last business day of
each month. As of the date this Prospectus is issued, the
Trustee is Manufacturers Hanover Trust Company, 530 Fifth Avenue,
New York, New York. On or about August 31, 1992, Manufacturers
Hanover Trust Company will cease to act as the Trustee, and
thereafter the Trustee will be Vanguard Fiduciary Trust Company
("Vanguard"), Vanguard Financial Center, Valley Forge, PA 19482.
Wage Reduction Contributions will be invested by the
Trustee, as directed by the Participant, in one or more of the
investment funds described below ("Investment Funds"). A
Participant may direct that all or any multiple of 10% of his
Wage Reduction Contributions be invested in any one or more of
the Investment Funds. In the authorization form that an Eligible
Employee files with the Committee before he becomes a
Participant, he designates the Investment Fund or Investment
Funds in which his Wage Reduction Contributions are to be
invested. All income derived from an Investment Fund, including
capital gains distributions of mutual funds, will be reinvested
in the same Investment Fund.
Investment Funds Available On or After August 1, 1992.
Effective August 1, 1992, the Investment Funds available for
receipt of Participants' contributions are as follows:
National Stock Fund A - consisting of shares of
National's Common Stock that will be purchased by the
Trustee at fair market value either on the New York
Stock Exchange or in private transactions. The Trustee
will not purchase any shares from National or any of
its subsidiaries except by exercise of rights or
warrants at a price per share not greater than the
price per share at which shares are offered to National
stockholders generally.
Vanguard Investment Contract Trust - is a
collective investment fund for tax-qualified pension
and profit sharing plan assets. The Trust seeks to
provide an attractive rate of interest and safety of
principal by investing primarily in investment
contracts issued by insurance companies and commercial
banks, and other types of fixed principal investments
selected by Vanguard Fiduciary Trust Company. For
liquidity purposes, the Trust invests up to 15% of
assets in short-term U.S. Government obligations or
Federally insured deposits. The Trust expects to
maintain an average weighted maturity of two to three
years.
Mutual Funds - consisting of a number of separate
Mutual Funds. Each Mutual Fund offered under the Plan
is considered as a separate Investment Fund.
Vanguard Money Market Reserves, Inc. - Prime
Portfolio - A money market mutual fund seeking to
obtain income consistent with the preservation of
capital and liquidity by investing primarily in
money market obligations issued by financial
institutions, nonfinancial corporations, and the
U.S. Government that mature in one year or less.
The Portfolio's average maturity is less than 90
days. The Prime Portfolio is managed by the
officers of Vanguard Money Market Reserves, Inc.,
and receives investment advisory services from an
investment management staff employed by The
Vanguard Group, Inc., an affiliate of Vanguard
Money Market Reserves, Inc. Shares of the Prime
Portfolio are purchased at the then current net
asset value per share.
Vanguard Bond Market Fund, Inc. - A mutual fund
seeking to provide investment results that
correspond to the total return of the Salomon
Brothers Broad Investment Grade Bond Index (the
"Index"), by normally investing at least 80% of
its assets in securities held by the Index,
including no less than 65% in U.S. Government or
corporate bonds. The Fund also may invest up to
20% of its assets in short-term money market
instruments, and may invest in bond (interest)
rate future contracts and options to a limited
extent. An investment management staff employed
by The Vanguard Group, Inc. provides investment
advisory services to the Fund. The Fund attempts
to duplicate the return of the Index by holding a
combination of securities which, taken together,
are expected by the investment management staff to
perform similarly to the Index as a whole. Shares
of the Fund are purchased at the then current net
asset value per share.
Vanguard Index Trust - 500 Portfolio - A mutual
fund seeking to provide investment results that
correspond to the aggregate price and yield
performance of a diversified list of publicly-
traded common stocks represented by the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500
Index"). The S&P 500 Index currently represents
more than 70%, by value, of the American stock
market. The Portfolio's policy is to be fully
invested in common stocks represented by the S&P
500 Index, and it is expected that cash or cash
items would normally be less than 1% of the
assets. The officers of Vanguard Index Trust
manage the operations of the Portfolio. Stocks
are selected for inclusion in the Portfolio in the
order of their weightings in the S&P 500 Index,
beginning with the heaviest weighted stocks.
Shares of the Portfolio are purchased at the then
current net asset value per share.
Vanguard International Equity Index Fund, Inc. -
European Portfolio - A mutual fund seeking to
provide investment results paralleling those of
the Morgan Stanley Capital International Europe
(Free) Index ("MSCI-Europe"), a diversified,
capitalization weighted index consisting of
companies located in 13 European countries. The
European Portfolio's policy is to be fully
invested in common stocks, at least 80% of which
will be stocks that are represented in the MSCI-
Europe, and it is expected that cash or cash items
normally would be less than 1% of the assets. As
of December 31, 1991, 41, 14, and 15% of the
European Portfolio was invested in United Kingdom,
French and German stocks, respectively. The
officers of the Vanguard International Equity
Index Fund manage the operation of the European
Portfolio. The European Portfolio attempts to
approximate the investment performance of the
MSCI-Europe through statistical procedures.
Vanguard International Equity Index Fund, Inc. -
Pacific Portfolio - A mutual fund seeking to
provide investment results paralleling those of
the Morgan Stanley Capital International Pacific
Index ("MSCI-Pacific"), a diversified,
capitalization weighted index consisting of
companies located in Australia, Japan, Hong Kong,
New Zealand and Singapore. The Pacific
Portfolio's policy is to be fully invested in
common stocks, at least 80% of which will be
stocks that are represented in the MSCI-Pacific,
and it is expected that cash or cash items
normally would be less than 1% of the assets. As
of December 31, 1991, 89% of the Pacific Portfolio
was invested in Japanese stocks. The officers of
the Vanguard International Equity Index Fund
manage the operation of the Pacific Portfolio.
The Pacific Portfolio attempts to approximate the
investment performance of the MSCI-Pacific through
statistical procedures.
No attempt is made to actively manage any of the
Mutual Funds according to traditional methods of active
investment management, including the buying and selling
of assets based upon economic, financial and market
analysis and investment judgement. There is no
assurance that the objectives of any of the Mutual Fund
will be obtained.
The Mutual Funds are more fully described in
prospectuses that are available, upon request, from
either the Committee or the distributor, which is The
Vanguard Group, Inc., Vanguard Financial Center, Valley
Forge, Pennsylvania 19482, (800) 523-1188. The
description of the Mutual Funds contained above was
obtained from such prospectuses. The offer to invest
in the above Mutual Funds is made only by such
prospectuses, not by this Prospectus, and each employee
is urged to read such prospectuses carefully before
electing to invest his Wage Reduction Contributions in
those funds.
The Appendix dated June 19, 1992 contains a description
of the Investment Funds available to Participants prior to
August 1, 1992, and a description of the rules for mandatory
transfers out of certain of those funds.
Investment Fund Selection Procedures. Beginning on or
about November 1, 1992, a Participant generally may change his
election with regard to the investment of his future Wage
Reduction Contributions as often as he wishes. In connection
with investments of future Wage Reduction Contributions, however,
there are two important Plan features that apply. First, because
Wage Reduction Contributions are transmitted to the Trustee once
a month, it will be the last investment election a Participant
makes prior to National's transmission of the contributions to
the Trustee that will determine how future Wage Reduction
Contributions made on the Participant's behalf will be invested.
Second, future Wage Reduction Contributions may be invested in
the Vanguard Investment Contract Trust (the "VICT") as often as
the Participant wishes. However, once contributions actually are
transmitted to the Trustee and invested in the VICT, there are
restrictions on the transfer of assets from the VICT into other
Investment Funds (see discussion below). In connection with
existing account balances, a Participant generally may transfer
his account balances attributable to Wage Reduction Contributions
between Investment Funds as often as he wishes. However, there
are restrictions on the frequency of transfers of existing
account balances into or out of the VICT (see discussion below).
Participants will be able to change investment elections for
future Wage Reduction Contributions and existing account balances
by calling a toll-free number during regular business hours
(Monday through Friday 8:30 a.m. to 7:00 p.m. Eastern time), and
the Company will no longer process such changes.
Restrictions on Transfers Between the Vanguard
Investment Contract Trust and Other Investment Funds. Beginning
on or about November 1, 1992, Participants may transfer existing
Plan assets into the Vanguard Investment Contract Trust (the
"VICT") once per calendar quarter. Participants may transfer
their interest in the VICT out of the VICT and into National
Stock Fund A, the Vanguard Index Trust - 500 Portfolio or the
Vanguard International Equity Index Fund, Inc. - European and
Pacific Portfolios (the "Equity Funds") once per calendar
quarter. Assets moved from the VICT to the Equity Funds must
remain in an Equity Fund for a minimum of 90 days. Participants
may transfer the greater of $500 or 25% of their interest in the
VICT out of the VICT and into the Vanguard Money Market Reserves,
Inc. - Prime Portfolio or the Vanguard Bond Market Fund, Inc.
(the "Fixed Income Funds") once a year, during January.
Participants with less than $500 invested in the VICT may
transfer their total interest in the VICT out of the VICT and
into the Fixed Income Funds once a year, during January.
Employer Matching Contributions. Employer Matching
Contributions for all Participants are invested exclusively in an
additional fund, National Stock Fund B, that consists of shares
of National's Common Stock. National may make its Employer
Matching Contributions to National Stock Fund B either in cash
(that would then be used by the Trustee to purchase Common Stock
either on the open market or directly from National), or in
shares of Common Stock, including original issue shares, having a
fair market value when contributed equal to the amount of cash in
lieu of which such shares are contributed. Employer Matching
Contributions remain in National Stock Fund B; no transfers of
investments may be made in or out of that fund.
When considering how to direct the investment of their
Wage Reduction Contributions, Participants should recognize that
the market prices of common stocks (including National's Common
Stock) and other forms of securities vary as a result of changes
in domestic and international economic and political conditions,
changes in the rate of inflation, prevailing interest rates, and
other factors. As a consequence, there is no guarantee that the
benefits ultimately distributed to a Participant will be equal to
the contributions made to the Plan over the years. Each
Participant assumes all risks in connection with investment in
each Investment Fund, including the risk of fluctuations in the
stock and bond markets.
The past performance of each of the Investment Funds
described above and of National Stock Fund B is set forth below.
Percentage Total Annual Return of Each Fund
1/1/92-
Investment Fund 1987 1988 1989 1990 1991 5/31/92
Vanguard Money
Market Reserves, Inc.
- -Prime Portfolio (1) 6.65% 7.58% 9.39% 8.27% 6.14% 1.73%
Vanguard Investment
Contract Trust (2) -- -- 8.96% 8.53% 7.97% 2.83%
Vanguard Bond
Market Fund, Inc. (3) 1.14% 7.35% 13.66% 8.64% 15.25% 2.83%
Vanguard Index Trust
- -500 Portfolio (4) 4.69% 16.22% 31.36% - 3.32% 30.19% 0.75%
Vanguard International
Equity Index Fund
European Portfolio (5) 3.7% 15.8% 28.5% - 2.0% 12.40% 8.27%
Pacific Portfolio (5) 39.7% 35.0% 2.5% - 34.3% 10.65% -16.45%
National Stock Fund A -8.96% 21.46% 54.46% - 8.97% 9.56% 6.8%
National Stock Fund B -8.96% 21.46% 54.46% - 8.97% 9.56% 6.8%
(1) The Vanguard Money Market Reserves, Inc. - Prime Portfolio
was first available under the Plan on January 1, 1989.
(2) The Vanguard Investment Contract Trust becomes available
under the Plan on August 1, 1992. It did not commence
operation until January 1, 1989.
(3) The Vanguard Bond Market Fund, Inc. was first available
under the Plan on January 1, 1989.
(4) The Vanguard Index Trust - 500 Portfolio has been available
under the Plan since July 1, 1989.
(5) The Vanguard International Equity Index Fund - European and
Pacific Portfolios become available under the Plan on
August 1, 1992. The European and Pacific Portfolios did not
commence operations until June 18, 1990. Returns shown for
1987, 1988, 1989 and 1990 therefore are the returns of the
MSCI-Europe and the MSCI-Pacific indices that are described
above.
The foregoing table sets forth historical results for
the Investment Funds and National Stock Fund B and should not be
relied upon as indications of future performance. The annual
returns contained in the table assume that a single contribution
was invested on January 1 of a year and remained in the fund
until December 31 of that year, and also assumes that dividends
and interest and capital gains distributions were reinvested in
the same fund at then-current share values. The percentage
changes in the value of Participants' accounts may be different
from those set forth in the table since contributions on behalf
of Participants are invested monthly and since certain costs and
fees, as described in Administration, below, may be charged
against the Investment Funds or Participants' accounts.
Participant Accounts
Until on or about August 31, 1992, the Committee
maintains the accounts and records of the Plan. Thereafter,
Vanguard will maintain the accounts and records of the Plan. A
separate account is maintained showing the interest of each
Participant attributable to Wage Reduction Contributions in each
of the Investment Funds, and the interest of each Participant in
National Stock Fund B. Each Participant is advised quarterly as
to the status of his accounts, including contributions to and
transfers between each of the Investment Funds, withdrawals from
such funds and loan transactions.
Administration
The Plan is administered by the Committee. The
Committee consists of at least three persons and not more than
ten persons who are appointed by and serve at the pleasure of
National's Board of Directors. The Committee has full power to
control and manage the operation and administration of the Plan,
to interpret the Plan, and to adopt regulations regarding the
administration of the Plan. The Committee may authorize any
person, whether or not such person is a member of the Committee,
to carry out its responsibilities under the Plan. Members of the
Committee may not participate in the decision on any questions as
to their own rights under the Plan, and members who are employees
of the Employers receive no compensation for their services under
the Plan, except for reimbursement of expenses. Any member of
the Committee may be removed at any time by National's Board of
Directors, with or without cause. The Committee exercises
National's duties as "plan administrator" under ERISA and is
designated as the "named fiduciary" required by ERISA. The
current members of the Committee are listed in the last section
of the Prospectus.
Assets of the Plan are held in trust under a trust
agreement between National and the Trustee. The Trustee has
responsibility for safekeeping the assets of the Plan and
investing such assets in the Investment Funds selected by the
Participants. The Trustee also has responsibility for purchasing
shares of Common Stock for the Plan, and for temporarily
investing in short-term debt obligations. The Committee directs
the Trustee as to the disbursement of Plan assets, including the
payment of Plan benefits. National may remove the Trustee at any
time.
Participants are entitled to vote shares of Common
Stock credited to their accounts in National Stock Fund A and
National Stock Fund B. Within a reasonable time before the
voting rights of such Participants are to be exercised, forms
requesting the Participants' instructions on how to vote the
shares, together with all information distributed to stockholders
regarding the exercise of such voting rights, will be furnished
to the Participants and to the Trustee. The Trustee will vote
such shares as instructed by the Participants, and in the absence
of instructions, will not vote the shares. Participants also
will be advised of any tender or exchange offer for shares of
Common Stock. All communications directed generally to the
owners of shares of Common Stock and all communications that the
Trustee may receive from the offeror relating to the tender or
exchange offer will be provided to Participants. The Trustee
will not sell, convey or exchange shares of Common Stock in
response to such offer, except to the extent that it is timely
directed in writing by the Participants to do so.
Brokerage commissions, transfer taxes and similar costs
of acquiring or selling securities and managing portfolios that
are incurred by an Investment Fund or National Stock Fund A or B
are charged to that fund. Service fees in connection with
transfers between Mutual Funds may be charged to the accounts of
the Participants directing the transfers. The Employers bear all
other expenses of administering the Plan, including the fees and
disbursements of the Trustee, insurance company administrative
expense charges under contracts held in the Guaranteed Investment
Fund, and any sales commissions and similar "load" charges
incurred in the acquisition of shares of a Mutual Fund.
(Currently there are not, and it is not expected that there will
be in the future, any service fees for transfers between mutual
funds, or load charges.) The Trustee has the authority to
withdraw its expenses from the assets of the Plan if not paid by
the Employers, and has a lien on such assets for its unpaid fees.
The Committee has the authority to charge any or all of the
foregoing expenses against the accounts of Participants.
Except with respect to the Trustee's lien, and the loan
provisions described below (see Loans to Participants), no person
has or may create a lien on any funds, securities or other
property held under the Plan. Except with respect to
distribution of benefits upon a Participant's death, no
Participant or beneficiary may sell, assign, hypothecate or
otherwise transfer any right or interest in the Plan. As
required by ERISA, however, a Participant's spouse, former
spouse, or other dependent, pursuant to a court order entered in
a domestic relations proceeding and meeting certain requirements
of ERISA, may be entitled to receive a portion of the
Participant's interest in the Plan.
Vesting
A Participant's interest in the Plan, as represented by
his accounts, is at all times 100% vested and is not subject to
forfeiture for any reason. However, Participants are subject to
restrictions on the withdrawal of contributions to the Plan. See
Withdrawals During Employment and Distribution of Benefits, below.
Loans to Participants
A Participant whose Account balances have an aggregate
value of at least $2,000 may borrow from the Plan an amount that
is not less than $1,000 nor more than $50,000. A Participant may
have only one loan other than a "home loan" (as described below),
and one "home loan," outstanding at one time. The total
outstanding balance of all of a Participant's loans from the Plan
may not exceed $50,000 reduced by the excess (if any) of (i) the
highest outstanding balance of loans to the borrower from the
Plan during the one-year period ending on the day before the date
on which the loan is made, over (ii) the outstanding balance of
loans to the borrower from the Plan on the date on which the loan
is made. Further, no loan, when added to the outstanding balance
of any other loan from the Plan, may exceed one-half of the
aggregate value of the borrower's accounts.
Under the Plan, a separate account is maintained for
each Participant showing his interest in each Investment Fund
attributable to Wage Reduction Contributions and his interest in
National Stock Fund B attributable to Employer Matching
Contributions. Effective on or about November 1, 1992, to the
extent there are sufficient assets in a Participant's Investment
Funds attributable to Wage Reduction Contributions, a loan will
be charged against each of the Participant's Investment Fund
accounts in the same proportion that each such Investment Fund
account bears to the total interest of the Participant in his
Investment Fund accounts. If you have balances in the guaranteed
investment contracts maturing on July 31, 1994 (that are
described in the Appendix dated June 19, 1992), a loan will be
charged to those contracts only if the assets in your other
Investment Fund accounts are of an insufficient amount against
which to charge the loan. Finally, a loan will be charged
against a Participant's National Stock Fund B account only if the
assets in the Participant's Investment Fund accounts are of an
insufficient amount against which to charge the loan. For
example, if a Participant borrows $2,000 from the Plan and $5,000
of his total Plan interest is invested in the Vanguard Investment
Contract Trust, $10,000 of his total Plan interest is invested in
the Vanguard Bond Market Fund, and $5,000 of his total Plan
interest is invested in National Stock Fund B, the loan will be
charged to the Participant's accounts as follows: $667 will be
charged to his Vanguard Investment Contract Trust account, $1,333
will be charged to his Vanguard Bond Market Fund account, and
nothing will be charged to his National Stock Fund B account.
Assets of such accounts will be liquidated to provide monies for
the loan. A promissory note executed by the Participant to
evidence the loan will be delivered to the Trustee. For a
discussion of the rules regarding the manner in which loans are
charged to a Participant's Investment Fund accounts prior to
July 17, 1992, and the temporary freeze on loans in connection
with the change of Trustees, see the Appendix dated June 19, 1992.
Effective on or about September 1, 1992, loan
repayments, including repayments for loans taken out before
September 1, 1992, will be invested in Investment Funds in the
same proportion as the Participant's current Wage Reduction
Contributions are being invested by the Trustees at the time loan
repayments are made. Thus, if the Participant is contributing
100% of his Wage Reduction Contributions to National Stock
Fund A, 100% of his loan repayments will be invested in National
Stock Fund A. (If the Participant is making no Wage Reduction
Contributions to the Plan at the time loan repayments are made,
the Participant may designate how loan repayments shall be
invested.) For a discussion of the rules regarding the
investment of loan repayments in effect prior to September 1,
1992, see the Appendix dated June 19, 1992.
The interest rate on any loan shall be 1% higher than
the prime rate published in The Wall Street Journal on the last
business day preceding the date of the loan as the base rate on
corporate loans at large American money center commercial banks,
unless the Committee determines a different rate. Any such
different rate shall be commercially reasonable at the date of
the loan, based upon interest rates charged by commercial lenders
on loans made in Buffalo, New York, under circumstances that are,
in the determination of the Committee, similar to loans under the
Plan.
All loans must be repaid within five years, except
loans qualifying as "home loans," which are loans used within a
reasonable time to acquire the principal residence of a
Participant. A "home loan" is subject to all the requirements to
which other loans are subject, except that a "home loan" will
have a repayment term determined by the Committee, which shall be
at least five years and not more than twenty-five years. Loans
may be prepaid in full or in part, at any time, without penalty,
provided that a partial prepayment must be at least $1,000.
Each loan will be secured by a lien on one-half of the
borrower's Accounts existing at any time, but no less than one-
half of the borrower's Accounts on the date of the loan. Such
lien shall be applied to the borrower's Accounts in the same
order of priority as is used to determine the investment of
repayments to the loan account (described above). The Committee
may require a Participant to provide additional security for a
loan at any time when it deems the loan inadequately secured.
It shall be a condition of each loan to a Participant
who is an active employee that the Participant execute a payroll
deduction form authorizing his Employer to withhold loan
repayments from his Base Pay, unless the Committee determines
otherwise.
Any such loan shall be limited to an amount which will
require weekly or other regular payments not in excess of the
estimated net amount of the Participant's Base Pay, reduced by
payroll taxes and other expected withholdings. The Committee may
require as a condition of the making of a loan that a
Participant's spouse consent in writing to the creation and
enforcement of the lien on the Participant's Account and the
distribution of the note in satisfaction or partial satisfaction
of the balance of the loan, or either. The Committee will not
grant any loan application if, in the determination of the
Committee, such grant might cause the Plan to be disqualified
under Section 401(a) of the Code.
Upon any default in payment, the Committee may without
notice accelerate the balance unpaid on the loan. In such case,
in the discretion of the Committee and provided the Participant
has attained age 59 1/2, become totally or permanently disabled,
or incurred a financial hardship that the Committee determines
would permit a hardship withdrawal as described in the Prospectus
under Withdrawals During Employment, the balance of the loan may
be satisfied in the manner described in the following sentence.
Each loan becomes due upon the Participant's termination of
employment for any reason and, unless repaid within thirty days
of becoming due, the balance of the loan will be satisfied by
distribution to the Participant for his beneficiary of his
promissory note and by cancellation of a portion of his Accounts,
or both, as the Committee determines. A transfer to a Company
that is not an Employer shall not be deemed a termination of
employment for this purpose.
Withdrawals During Employment
A Participant who has attained age 59 1/2 or who has
become totally and permanently disabled, but whose employment has
not terminated, may withdraw no less than $1,000 (unless it is
the balance of the Participant's accounts) and no more than 100%
of his accounts without terminating his participation in the
Plan. Only one such withdrawal may be made in any calendar year.
A Participant who has an outstanding loan from the Plan may make
such withdrawals only to the extent that the Committee determines
that the lien on his accounts may be released without impairing
the adequacy of the security for the loan. Moreover, if the
outstanding principal loan balance is more than $10,000, the
Participant may not make withdrawals that would reduce the value
of his accounts (including his loan account) below an amount
equal to twice such loan balance, and if the outstanding
principal loan balance is less than or equal to $10,000 he may
not make withdrawals that would reduce the value of his accounts
(including his loan account) below such loan balance.
A Participant who has not attained age 59 1/2 and who
has suffered a financial hardship also may withdraw up to 100% of
his accounts, but only if, and to the extent that, he cannot meet
the hardship with funds from other sources. Hardship withdrawals
can only be received out of Wage Reduction Contributions (and
earnings thereon credited as of December 31, 1988) and not from
earnings after December 31, 1988 or from Employer Matching
Contributions or the earnings thereon. Hardship withdrawals will
not be permitted unless they are on account of an immediate and
heavy financial need, such as an uninsured medical expense of the
Participant or his spouse or dependents, the purchase of a
principal residence for the Participant, post-secondary education
tuition (for the next 12 months) for the Participant or his
spouse, child or dependent, or the prevention of a Participant's
eviction from his principal residence or the foreclosure of
mortgage on his principal residence. Whether a Participant has
an immediate and heavy financial need will be determined by the
Committee on the basis of the facts and circumstances. However,
a financial need attributable to one of the reasons described in
the preceding sentence will be deemed an immediate and heavy
financial need.
Hardship withdrawals will be limited to the amount
required to meet the financial hardship, after consideration of
all other financial resources available to the Participant,
including reimbursement or compensation by insurance or
otherwise, reasonable liquidation of his assets to the extent
such liquidation would not itself cause an immediate and heavy
financial need, property owned by the Participant's spouse or his
minor children that is reasonably available to him, loans
available under the Plan or from commercial sources on reasonable
commercial terms, any funds available under the Thrift Plan, and
monies that will become available if the Participant discontinues
contributions to the Plan and to the Thrift Plan. To establish
the amount necessary to meet the financial hardship, a
Participant will be required to submit to the Committee a
complete financial statement or other information acceptable to
the Committee.
The Plan also offers an alternative procedure for
determining whether a withdrawal is necessary to satisfy the
financial hardship. Under the alternative procedure, the
withdrawal will be deemed necessary to satisfy a Participant's
need provided that the withdrawal is not in excess of the amount
of the financial need and the Participant has obtained all
distributions other than hardship distributions and all
nontaxable loans currently available under the Plan, the Thrift
Plan and all other plans maintained by National or any other
Employer. If a Participant elects this alternative procedure,
the Participant will not be eligible to make Wage Reduction
Contributions under the Plan or to make employee contributions
under the Thrift Plan, or to make contributions to any other plan
of deferred compensation of National or any other Employer, for a
period of 12 months after receipt of the hardship withdrawal. In
addition, the Participant's Wage Reduction Contributions, and any
other elective deferral under any other plan of National or any
other Employer, for his taxable year following the taxable year
in which the hardship withdrawal is received is limited to
statutory limit on Elective Deferrals (as described in Limits on
Contributions, above) for such following taxable year, reduced by
the amount of the Participant's Salary Reduction Contributions
and other Elective Deferrals made during the taxable year in
which the hardship withdrawal is received.
Distribution of Benefits
(a) Retirement and Other Termination of Employment.
When a Participant retires or otherwise ceases to be employed by
National or its subsidiaries for any reason other than death, the
value of his accounts will be distributed to him in a lump sum as
soon as administratively practicable, but in no event later than
60 days after the last day of the Plan Year in which the
retirement or cessation of employment occurs. If, however, the
value of a Participant's accounts exceeds $3,500, distribution
will not be made before the Participant attains age 65 unless the
Participant consents in writing to such distribution. A
Participant may elect to defer distribution of his accounts until
the month of January immediately following the date of his
retirement or other termination of employment. A Participant
whose employment terminates after age 59 1/2 or after he becomes
eligible for an immediate pension under National's retirement
plan also may elect to defer all or a portion of the distribution
(provided that any partial deferral has a value of at least
$1,000) until as late as the end of the year in which he attains
age 70 1/2. However, the distribution must be completed no later
than the following April 1.
A Participant may revoke a deferral election, in whole
or part, at any time, by filing written notice to this effect
with the Committee, but now may do so no more than once during
any calendar year. Also, a revocation concerning less than all
of the Participant's accounts shall not be effective unless it
shall apply to a portion thereof having a value of at least
$1,000.
Distributions from all Funds other than National Stock
Fund A and National Stock Fund B shall be in cash, except that if
the Participant requests, and the Committee and the rules of a
mutual fund permit, a Participant's interest in a mutual fund may
be distributed in the form of shares of such mutual fund.
(b) Death. Upon a Participant's death during
employment, or after termination of employment but before
distribution of his accounts has been completed, the value of his
accounts will be distributed in a lump sum as soon as practicable
after the Committee receives notice of his death. If the
Participant was married at his death, distribution will be made
to his surviving spouse unless another beneficiary was designated
by the Participant and the spouse consented in writing to such
designation on a form provided by the Committee. Such form will
include the written designation of a beneficiary or beneficiaries
that must remain unchanged unless the consent expressly permits
designations by the Participant without any requirement of
further consent by the spouse. Also, such form will require that
the spouse acknowledge on the form that he or she understands the
effect of the consent and the spouse's signature must be
witnessed by a notary public. A spouse's consent is irrevocable.
If the Participant was not married at his death, or if the spouse
consented to the designation of a beneficiary, distribution will
be made to his designated beneficiary or beneficiaries. If no
designated beneficiary survives the Participant, distribution
will be made to the Participant's spouse, if any, and otherwise
to the estate of the Participant. A beneficiary designation will
not be effective unless it is filed with the Committee prior to
the Participant's death (together with the consent of the
Participant's spouse, if required). A Participant may revoke a
designation of beneficiary, other than his spouse, at any time by
written notice filed with the Committee, without the consent of
the beneficiary or spouse. A beneficiary need not be a natural
person.
(c) Attainment of Age 70 1/2. A Participant whose
employment has not terminated will receive distribution of the
value of his accounts in the Plan not later than April 1 of the
calendar year following the calendar year in which he attains age
70 1/2. If he continues to contribute to the Plan, the value of
his accounts in the Plan will be distributed to him no later than
April 1 of each succeeding year.
Modification or Termination of the Plan
The terms of the Plan do not contemplate any specific
termination date. The Plan may be amended at any time,
prospectively or retroactively, by the Board of Directors of
National or by joint or several action of National's President
and Secretary. However, only the Board of Directors may make an
amendment that materially increases the benefits under the Plan
or the cost of the Plan to the Employers. No amendment shall
make it possible for assets of the Plan to be used for purposes
other than the exclusive benefit of Participants or their
beneficiaries or the reasonable administrative expenses of the
Plan. The Board of Directors of National may terminate the Plan
in whole or in part at any time. An Employer other than National
may at any time terminate its participation in the Plan.
Upon complete termination of the Plan, all Participants
would cease to actively participate but their accounts would be
maintained until distributed in accordance with the rules
described above under Withdrawals During Employment and
Distribution of Benefits, or, subject to the Code and regulations
thereunder, at such other time as the Committee may determine.
Upon partial termination by National, or upon termination of
participation by an Employer other than National, affected
employees would cease to actively participate but their accounts
would be maintained until distributed in accordance with such
rules or, subject to the Code and regulations thereunder, at such
other time as the Committee may determine.
RESTRICTIONS ON RESALE
Any Participant who is an "affiliate" of National and
who becomes the owner of any shares of Common Stock under the
Plan is prohibited from reselling such shares except pursuant to
an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or under the provisions
of Rule 144 of the Securities Act or another exemption from the
registration requirements of the Securities Act. An "affiliate,"
as defined by Rule 405 of the Securities Act, means any person
who directly or indirectly controls, is controlled by, or is
under common control with, National.
FEDERAL INCOME TAX CONSEQUENCES
National intends to request a determination letter from
the Internal Revenue Service indicating that the Plan qualifies
under Sections 401(a) and 401(k) of the Code. Amendments have
been made to the Plan since the Plan first was established and,
not later than December 31, 1993, the Plan will be further
amended, effective as required by the Act, the Code and the
Internal Revenue Service, to comply with the provisions of the
Act and to comply with other applicable requirements of the
Internal Revenue Service. After such further amendments, a
determination letter will be requested from the Internal Revenue
Service.
The Plan currently is being, and will continue to be,
administered in accordance with the requirements of the Act and
other applicable requirements of the Code. However, as permitted
by the Act, the Code and the Internal Revenue Service, the Plan
has not yet been amended to incorporate these requirements.
Under present law, participation in the Plan will have the
following federal income tax consequences, provided the Plan as
amended is determined to be qualified and provided that it
operates and is administered in accordance with the requirements
of the Code.
Contributions and Earnings
Wage Reduction Contributions and Employer Matching
Contributions are deductible by the Employers, subject to
applicable limitations contained in the Code. Participants are
not subject to federal or New York income tax on such
contributions until they are withdrawn or distributed.
Participants subject to the Pennsylvania income tax must include
Wage Reduction Contributions in income for purposes of such tax.
Wage Reduction Contributions are subject to Social Security
taxes. The earnings and gains on the assets of the Plan are not
subject to federal income taxation until withdrawn or distributed.
The Employers do not intend to permit any Participant
to make Wage Reduction Contributions in excess of the limit on
Elective Deferrals established in the Code ($8,728 for calendar
year 1992). If a Participant's Elective Deferrals exceed such
limits, the excess amounts will be returned and will be
includable in the Participant's gross income.
If contributions are made on behalf of a Participant
under the Plan for a taxable year and contributions are made on
his behalf by the Employers or an unrelated employer under
another plan with a cash or deferred arrangement as described
above in THE PLAN -- Limits on Contributions, for the same
taxable year and if the total amount of deferrals contributed on
his behalf exceeds the limits established in the Code, such
excess amounts ("Excess Deferrals") are included in the
Participant's gross income for the taxable year in which the
deferrals were made. Prior to March 1 of the year following the
taxable year in which the deferrals were made, the Participant
may allocate Excess Deferrals among such plans in which he
participated and notify the administrator of each such plan,
including the Committee, of the portion of Excess Deferrals
allocated to such plan. Each such plan may then distribute the
portion of the Excess Deferrals allocated to it and the income
attributable to such portion to the Participant by April 15 of
that year. Such a distribution will not be subject to the 10%
excise tax on early withdrawals from qualified plans, or the 15%
tax on excess distributions from qualified plans, both discussed
below. In the event any Excess Deferrals are not distributed
prior to April 15, they will be subject to the Plan's regular
restrictions on withdrawals and, even though such deferrals were
included in income for the year of deferral, they will be
included again, together with income thereon, upon future
distribution.
Excess Contributions and the income allocable thereto
(see THE PLAN - Limits on Contributions, above) may be
distributed to certain highly compensated employees during the
Plan Year following the Plan Year to which the contribution
relates. If distributed on or before March 15 of the year
following the Plan Year to which the contributions relate, the
Excess Contributions and income allocable thereto are includable
in the employee's gross income for such Plan Year. However, if
distributed after March 15 of the year following the Plan Year to
which the contributions relate, or if distributed on or before
that date and in an amount less than $100, Excess Contributions
and income allocable thereto are includable in gross income for
the year in which distributed.
Withdrawals During Employment
Amounts withdrawn by a Participant while employed are
subject to federal income tax upon receipt as ordinary income,
and taxable amounts withdrawn prior to attaining age 59 1/2 are,
with certain exceptions, subject to a uniform additional 10%
"early distribution tax." See Early Distribution Tax, below.
However, if the Participant has attained age 59 1/2 and withdraws
in one taxable year the balance of his accounts under the Plan
and the Thrift Plan, he may be eligible for the special tax
treatment accorded lump sum distributions. See Lump Sum
Distributions, below.
Lump Sum Distributions
A lump sum distribution is a distribution in one
taxable year of the balance of the Participant's accounts under
the Plan and the Thrift Plan, that becomes payable on account of
the Participant's termination of employment, death or permanent
and total disability, or after the Participant has attained age
59 1/2.
(a) Amount of Taxable Income. A Participant receiving
a lump sum distribution of cash, mutual fund shares or
Common Stock under the Plan will have taxable income in an
amount equal to the cash distributed plus the market value
of the mutual fund shares on the date of distribution plus
the cost to the Plan of acquiring the Common Stock
distributed (or, if lower, the market value of the Common
Stock on the date of distribution). In addition, if a
Participant receives a lump sum distribution on account of
termination of employment prior to the year in which he
attains age 55, the taxable amount of such distribution will
generally be subject to an additional 10% "early
distribution tax." See Early Distribution Tax, below.
(b) Type of Income. The income realized on the
receipt of the lump sum distribution will be taxed as
ordinary income. However, a Participant who has completed
at least five years of participation in the Plan prior to
the taxable year in which the distribution occurs and has
attained age 59 1/2 (or attained age 50 before January 1,
1986) may elect to have the distribution taxed under the
special five-year averaging method. A Participant may make
only one such election in his lifetime; however, for
purposes of applying this one-time-only rule, a Participant
may disregard any election made with respect to a lump sum
distribution received prior to January 1, 1987, if he had
not attained age 59 1/2 at the time of such prior election.
The election must be made with respect to all lump sum
distributions received in the year. If a lump sum
distribution is made on account of the Participant's death,
the special five-year averaging method may be elected by the
recipient even if the Participant did not participate in the
Plan for at least five years before his death. (Up to
$5,000 of employee death benefits, which include lump sum
distributions under the Plan, may be excluded from income
with respect to a Participant.)
The Code provides a special rule that enables a
recipient who had attained age 50 before January 1, 1986, to
elect to apply the ten-year averaging method available under
prior law rather than the five-year averaging method. A
Participant making such an election must use the 1986 tax
rates and zero bracket amount, rather than the rates and
standard deduction applicable in the year of distribution.
(c) Sale of Common Stock Distributed. Upon a
subsequent sale of the Common Stock distributed in a lump
sum distribution, the Participant's basis for determining
gain or loss is the amount includable in income with respect
to the Common Stock when it was distributed from the Plan.
See Amount of Taxable Income, above.
If the Common Stock distributed from the Plan is sold
at a gain, the amount of the gain recognized, up to an
amount equal to the net unrealized appreciation in the
Common Stock, is treated as long-term capital gain. The net
unrealized appreciation equals the excess, if any, of the
market value of the Common Stock on the date of distribution
over the cost to the Plan of acquiring such stock. Any
recognized gain from the sale in excess of the net
unrealized appreciation in the Common Stock will be treated
as long-term or short-term capital gain, depending upon the
holding period of the Common Stock since the date of
distribution.
If the Common Stock distributed from the Plan is sold
at a loss, the loss will be treated as a long-term or short-
term capital loss depending upon the holding period of the
Common Stock since the date of distribution.
(d) Redemption of Mutual Fund Shares Distributed.
Upon a subsequent redemption of mutual fund shares received
in a lump sum distribution, the Participant's basis for
determining gain or loss realized on the redemption is the
market value of the shares on the date of distribution. Any
gain or loss recognized on such redemption will be treated
as long-term or short-term capital gain or loss, depending
upon the holding period of the shares since the date of
distribution.
(e) Rollovers. Taxation of a lump sum distribution
may be deferred to the extent that all or a portion of the
cash, Common Stock or mutual fund shares received in the
distribution (or the proceeds from a sale of the Common
Stock or redemption of mutual fund shares) is transferred
within 60 days after receipt of the distribution to an
individual retirement account, an individual retirement
annuity or another qualified employee benefit plan. If only
a portion of the distribution is so transferred, the balance
of the distribution will be taxable as ordinary income
without the benefit of the special five-year or ten-year
averaging method. However, to the extent that the balance
of the distribution consists of Common Stock, taxation of
the net unrealized appreciation in the Common Stock will be
deferred until a subsequent sale of such stock. If a lump
sum distribution includes a distribution from the Thrift
Plan, any amount of such distribution that consists of
employee after-tax contributions that are not taxable,
cannot be rolled over.
A Participant who transfers all or a portion of his
distribution from the Plan to an individual retirement
account will lose the benefit of five-year or ten-year
averaging and deferred tax on net unrealized appreciation on
Common Stock when he ultimately receives the distribution
from the individual retirement account. If, however, a
transfer is made to a qualified employee benefit plan, the
special five-year or ten-year averaging method may be
available under certain circumstances with respect to
distributions from such plan.
Other than Lump Sum Distributions
A distribution that does not qualify as a lump sum
distribution generally will be taxable as ordinary income in an
amount equal to the cash distributed plus the market value on the
date of distribution of any Common Stock and any mutual fund
shares. Upon a subsequent sale of Common Stock or redemption of
mutual fund shares, the Participant's basis for determining gain
or loss on the sale is the market value of the Common Stock or
mutual fund shares on the date of distribution. Any gain or loss
on such sale or redemption will be treated as long-term or short-
term capital gain or loss, depending upon the holding period of
the shares since the date of distribution. If a distribution
that does not qualify as a lump sum distribution is at least 50%
of the balance of the Participant's accounts under the Plan and
is made on account of death, permanent and total disability, or
termination of employment, he may be eligible for rollover
treatment applicable to partial distributions. See Rollover of
Partial Distributions, below.
Rollover of Partial Distributions
If a Participant receives a distribution of at least
50% of the balance of his accounts under the Plan on account of
termination of employment, permanent and total disability, or
death, and he makes an election prescribed by the Code, taxation
may be deferred to the extent that all or a portion of the cash,
Common Stock or mutual fund shares received in the distribution
(or the proceeds from a sale of the Common Stock or redemption of
mutual fund shares) is transferred within 60 days to an
individual retirement account or an individual retirement
annuity. If only a portion of the distribution is so
transferred, the balance of the distribution will be taxable as
ordinary income without the benefit of five-year or ten-year
averaging. If a Participant makes the election mentioned above
he may not take advantage of the special five-year or ten-year
averaging method for any future lump sum distribution under
either the Plan, any employee stock ownership plan of National,
or the Thrift Plan.
Loans
Unless the proceeds of a Plan loan are allocable to
investment or business property or interests therein, no interest
paid on such a loan will be deductible. No interest deduction
will be allowed where the loan is secured by a Participant's
elective deferrals, regardless of the use of proceeds. The
legislative history of Section 72(p) of the Code indicates, and
it is anticipated that regulations will provide, that if a
Participant's loan from the Plan (other than a "home loan") is
not repaid within five years the Participant will be treated as
having received at the expiration of the five-year period a
distribution from the Plan equal to the balance of the loan,
which would be taxable as ordinary income. This treatment would
not relieve the Participant of his obligation to repay the
balance of the loan.
Withholding
Plan distributions are subject to federal income tax
withholding unless the payee files an election not to have
withholding applied.
Early Distribution Tax
A uniform additional 10% "early distribution tax" will
be imposed on the taxable portion of any distribution received by
a Participant before attaining age 59 1/2. A number of types of
distributions are excepted from this tax, including the
following: (i) a distribution after separation from service if
the participant separated from service during or after the
calendar year in which he attains age 55; (ii) a distribution
attributable to permanent and total disability; (iii) a
distribution to a Participant, to the extent such distribution
does not exceed the amount allowable to the Participant as a
deduction for medical expenses under Section 213 of the Code for
such year; (iv) a distribution made to a Participant's
beneficiary or estate on account of his death; (v) a distribution
to an alternative payee pursuant to a qualified domestic
relations order; and (vi) a distribution of Excess Contributions
made on behalf of highly compensated employees.
Excess Distribution Tax
A uniform additional 15% tax is imposed on the taxable
amount of distributions or withdrawals received by a Participant
in one calendar year in excess of $150,000 (or, if greater,
$112,500 adjusted for inflation). Distributions or withdrawals
subject to this tax include distributions from all qualified
plans (including plans of National), tax sheltered annuities,
individual retirement accounts, and individual retirement
annuities. Qualified plans of National include the Plan, Thrift
Plan, National's retirement plan and National's employee stock
ownership plans. Certain amounts are excluded from determination
of application of this tax. Excludable distributions include:
(i) amounts excluded from the recipient's income due to a
rollover into an individual retirement account, an individual
retirement annuity or other qualified plan; (ii) amounts paid
pursuant to a qualified domestic relations order and not
includable in the Participant's income; (iii) amounts paid after
the death of the Participant; and (iv) amounts representing
Excess Contributions made on behalf of highly compensated
employees. A separate maximum amount ("lump sum maximum")
applies to lump sum distributions if five-year or ten-year income
averaging is elected. The lump sum maximum is five times the
otherwise applicable ceiling for a calendar year. Other
retirement benefits are not aggregated with a lump sum
distribution in applying the lump sum maximum. In addition,
certain benefits accrued before August 1, 1986 are exempt if the
accrued benefit on August 1, 1986 was in excess of $562,500 and
the Participant makes an election on a return filed for a taxable
year ending prior to January 1, 1989 to have one of two pro rata
exclusion grandfather rules apply.
If a Participant dies with undistributed funds in the
Plan or another tax-favored retirement plan, an additional estate
tax may be imposed.
Summary
The foregoing is intended only as a general summary of
the federal income tax consequences of participation in the Plan
and does not purport to be a complete statement of such
consequences. Further, the summary does not include information
on federal estate and gift taxation and state and local taxation,
except as to the New York, and Pennsylvania income taxation of
Wage Reduction Contributions described in Contributions and
Earnings, above. Therefore, each Participant is urged to consult
with his own tax adviser.
DESCRIPTION OF COMMON STOCK
National's authorized capital stock consists of
100,000,000 shares of Common Stock with $1.00 par value, and
3,200,000 shares of Preferred Stock having a par value of $25.00
per share. No shares of Preferred Stock are currently
outstanding. The following is a summary of certain of the terms
and provisions of National's Common Stock.
Dividend Rights
The holders of Common Stock are entitled to receive
such dividends as are declared by the Board of Directors of
National, after payment of or provision for full cumulative
dividends and sinking funds, if any, for any outstanding
Preferred Stock, and subject to certain other limitations
relating to outstanding indebtedness and Preferred Stock of
National. In general, these limitations prohibit or restrict the
amount of payment of cash dividends on, or the purchase or
redemption of, Common Stock in the following situations:
(i) cumulative dividends on and amounts paid for purchase or
redemption of Common Stock and Preferred Stock since December 31,
1967 exceed or would exceed consolidated net income available for
dividends for that same period plus $10,000,000 plus any
additional amount authorized or approved, upon application of
National, by the Securities and Exchange Commission; (ii) the sum
of Common Stock capital and consolidated surplus (as adjusted) is
or would become less than the aggregate involuntary liquidating
value of outstanding Preferred Stock, if any; or (iii) Common
Stock equity is or would become less than 25% of total
consolidated capitalization (as defined).
Voting Rights and Classification of the Board of Directors
The holders of Common Stock are entitled to one vote
per share. Whenever dividends on all outstanding series of
Preferred Stock, if any, are in default in an amount equivalent
to four full quarterly dividends, and thereafter until all such
dividends are paid or declared and set aside for payment, the
holders of all shares of Preferred Stock, if any, voting as a
class are entitled to elect additional directors necessary to
constitute a majority of the Board of Directors. The affirmative
vote of the majority of the votes cast by the holders of the
Common Stock is required for the merger or consolidation of
National or for the sale of substantially all of its assets. In
addition, the approval of the holders of a majority of the
outstanding shares of Preferred Stock, if any, voting as a
separate class, is required for any such transaction unless the
transaction is ordered, exempted, approved or permitted by the
Securities and Exchange Commission. The Board of Directors is
divided into three classes, with, as nearly as possible, an equal
number of directors. The approval of at least three-fourths of
the entire Board of Directors or, in the event that the Board of
Directors consists of directors elected by the holders of
Preferred Stock, the approval of a majority of the entire Board
is required to amend or repeal the classified board provisions
contained in the Restated Certificate of Incorporation, as
amended.
Liquidation Rights
Upon any dissolution, liquidation or winding up of
National, the holders of Common Stock are entitled to receive pro
rata all of National's assets and funds remaining after payment
of or provision for creditors and distribution of or provision
for distribution of preferential amounts and unpaid accumulated
dividends to holders of Preferred Stock, if any.
Preemptive Rights
Holders of Common Stock and Preferred Stock have no
preemptive right to purchase or subscribe for any shares of
capital stock of National.
Business Combinations
National's Restated Certificate of Incorporation, as
amended, provides that certain conditions must be met before the
consummation of any merger or other "Business Combination," as
defined therein, by National or any of its subsidiaries with any
stockholder who is directly or indirectly the beneficial owner of
5% or more of National's outstanding Common Stock ("Substantial
Stockholder") or with an affiliate of such stockholder
("Affiliate"). The term Substantial Stockholder does not include
National, any of its subsidiaries, or any trustee holding Common
Stock of National for the benefit of the employees of National or
any of its subsidiaries pursuant to one or more employee benefit
plans or arrangements. The conditions, which are in addition to
those otherwise required by law, prescribe the minimum amount per
share that must be paid to holders of Common Stock and the form
of consideration paid, and require that the holders of Common
Stock be furnished certain information about the Business
Combination prior to voting on it. Business Combination
generally means any of the following transactions: a merger,
consolidation or share exchange; a sale, lease, exchange or other
disposition of any assets in exchange for property having a fair
market value of more than $10,000,000, if determined to be a
Business Combination by certain directors of National in
accordance with provisions of the Restated Certificate of
Incorporation, as amended; the issuance or transfer of securities
in exchange for property having a fair market value of more than
$10,000,000, if determined to be a Business Combination by
certain directors of National in accordance with provisions of
the Restated Certificate of Incorporation, as amended; the
adoption of a plan of liquidation or dissolution of National; or
any reclassification of securities, recapitalization or
reorganization that has the effect of increasing the
proportionate share of the outstanding shares of any class of
securities of National that is owned by any Substantial
Stockholder or by an Affiliate of a Substantial Stockholder. The
approval of at least three-fourths of the entire Board of
Directors or, in the event that the Board of Directors consists
of directors elected by the holders of Preferred Stock, the
approval of a majority of the entire board, is required to amend
or repeal the business combination provisions contained in the
Restated Certificate of Incorporation, as amended.
INCORPORATION BY REFERENCE
National and the Plan hereby incorporate by reference
the following documents:
(a) National's Annual Report on Form 10-K for the
fiscal year ended September 30, 1991;
(b) National's Quarterly Report on Form 10-Q for the
period ended December 31, 1991;
(c) National's Quarterly Report on Form 10-Q for the
period ended March 31, 1992;
(d) The Plan's Annual Report on Form 11-K for the
fiscal year ended December 31, 1991.
All documents filed by National or the Plan pursuant to
Section 13, 14 or 15(d) of the Exchange Act after the date hereof
and prior to the filing of a post-effective amendment which
indicates that all participations and shares of Common Stock
offered under the Plan have been sold or which deregisters all
such participations and shares then remaining unsold, shall be
deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the respective dates of filing of such
documents.
AVAILABILITY OF INFORMATION
National will provide without charge to each
Participant upon written or oral request, a copy of any and all
of the documents described above (other than those incorporated
by reference into such documents, which documents are
incorporated by reference herein). National also will furnish
without charge to each Participant upon written or oral request
of such Participant, a copy of any one of the following:
(1) National's annual report to shareholders for its latest
fiscal year, and (2) National's annual report on Form 10-K for
its latest fiscal year. Requests for such documents shall be
made to National Fuel Gas Company, 10 Lafayette Square, Buffalo,
New York 14203, Attn: Trust Plans Administration, telephone
number (716) 857-7888.
COMMITTEE MEMBERS
The members of the Committee and their positions on the
Committee, relationships with National and its subsidiaries, and
business addresses and telephone numbers are as follows:
Richard M. DiValerio Chairman of Committee
Secretary of National Fuel Gas
Company and Enerop Corporation
Secretary & General Counsel, and
Director of National Fuel Gas Supply
Corporation
Vice President & Secretary, and
Director of Penn-York Energy
Corporation
10 Lafayette Square
Buffalo, New York 14203
Telephone No.: (716) 857-7000
Philip C. Ackerman Member of Committee
Senior Vice President of National
Fuel Gas Company
President and Director of Penn-York
Energy Corporation, Seneca Resources
Corporation, Utility Constructors,
Inc., Empire Exploration, Inc.,
Highland Land and Minerals, Inc.,
Data Track Account Services, Inc. and
Enerop Corporation
Executive Vice President and
Director of National Fuel Gas
Distribution Corporation
10 Lafayette Square
Buffalo, New York 14203
Telephone No.: (716) 857-7000
William J. Hill, Jr. Member of Committee
President and Director of National
Fuel Gas Distribution Corporation
10 Lafayette Square
Buffalo, New York 14203
Telephone No.: (716) 857-7000
Dennis J. Seeley Member of Committee
Senior Vice President of
National Fuel Gas Distribution
Corporation
Director of Enerop Corporation
10 Lafayette Square
Buffalo, New York 14203
Telephone No.: (716) 857-7000
Dated: June 19, 1992
APPENDIX
This Appendix dated June 19, 1992 supplements the
Prospectus dated June 19, 1992, relating to the National Fuel Gas
Company Tax-Deferred Savings Plan (the "Plan"). Except as
specifically described below, the information set forth in this
Appendix no longer will be relevant to the Plan after November 1,
1992. Reference is made to the Prospectus for the meaning of
defined terms used in this Appendix.
Investment of Contributions
Investment Funds Available Before August 1, 1992.
Until July 31, 1992, the Investment Funds available for receipt
of Participants' contributions are as follows:
National Stock Fund A - see description of this
Investment Fund in the Prospectus.
Guaranteed Investment Fund - consisting of one or
more insurance company contracts or bank contracts that
guarantee principal and provide for the crediting of
interest at an agreed rate. The Guaranteed Investment
Fund consists of two cycles. The contracts in the
first cycle mature on July 31, 1992, and the proceeds
must then be reinvested by Participants in one of the
Investment Funds described in the Prospectus. The
second cycle, that has a contribution period of
August 1, 1990 through July 31, 1992, has two
contracts, both of which mature on July 31, 1994. One
of those contracts is issued by Continental Assurance
Company and has a term of August 1, 1990 to July 31,
1994. Contributions for periods from August 1, 1990 to
July 31, 1991 will be credited with interest at an
effective annual rate of 9.42% from the date the
contributions are invested until July 31, 1994. The
second contract is issued by Provident National
Assurance Company and has a term of August 1, 1991 to
July 31, 1994. Contributions for periods from
August 1, 1991 to July 31, 1992 will be credited with
interest at an effective annual rate of 7.64% from the
date the contributions are invested until July 31,
1994. Participants who made contributions to the
Guaranteed Investment Fund for periods between
August 1, 1990 and July 31, 1992 will remain invested
in this Fund until those contracts mature on July 31,
1994.
Mutual Funds - consisting of a number of separate
Mutual Funds. Each Mutual Fund offered under the Plan
is considered as a separate Investment Fund.
Vanguard Money Market Reserves, Inc. - Federal
Portfolio - A money market mutual fund seeking to
obtain income consistent with the preservation of
capital and liquidity by investing exclusively in
short-term securities issued by the U.S. Treasury and
agencies of the U.S. Government that mature in one year
or less. The Federal Portfolio's average maturity is
less than 90 days. The Federal Portfolio is managed by
the officers of Vanguard Money Market Reserves, Inc.,
and receives investment advisory services from an
investment management staff employed by The Vanguard
Group, Inc., an affiliate of Vanguard Money Market
Reserves, Inc. Shares of the Federal Portfolio are
purchased at the then current net asset value per
share. The Federal Portfolio has been available under
the Plan since February 1, 1987. No contributions may
be directed to the Federal Portfolio after July, 1992.
The percentage total annual returns of the Federal
Portfolio since 1987 are as follows:
Year Return
1987 6.37%
1988 7.33%
1989 9.15%
1990 8.07%
1991 5.95%
1/1/92 - 5/31/92 1.70%
Vanguard Money Market Reserves, Inc. - Prime
Portfolio - see description of this Investment Fund in
the Prospectus.
Vanguard Bond Market Fund, Inc. - see description
of this Investment Fund in the Prospectus.
Vanguard Index Trust - 500 Portfolio - see
description of this Investment Fund in the Prospectus.
There is no assurance that the objectives of any
of the Mutual Funds will be obtained.
The Mutual Funds are more fully described in
prospectuses that are available, upon request, from
either the Committee or the distributor, which is The
Vanguard Group, Inc., Vanguard Financial Center, Valley
Forge, Pennsylvania 19482 (800) 523-1188. The description of the
Mutual Funds contained above was obtained from such prospectuses.
The offer to invest in the above Mutual Funds is made only by
such prospectuses, not by this Prospectus, and each employee is
urged to read such prospectuses carefully before electing to
invest his Salary Reduction Contributions in those funds.
Investment Fund Selection Procedures in Effect Prior to
August 1, 1992. A Participant, with the exception of
contributions directed to the Guaranteed Investment Fund, may
change his investment election for future contributions,
effective as of any February 1 or August 1, by written notice
filed with the Committee at least 30 days prior to such date or
with such other notice as the Committee requires. Except with
respect to the Guaranteed Investment Fund, a Participant may
transfer among Investment Funds his account balances allocable to
Salary Reduction Contributions, effective as soon as
administratively practicable, by filing a written notice with the
Committee. Restrictions imposed on Participants investing
contributions in the Guaranteed Investment Fund are described
below.
Restrictions on Changes in Salary Reduction
Contributions Directed to Guaranteed Investment Fund. A
Participant who is contributing to the Guaranteed Investment Fund
is not permitted prior to July 31, 1992 to reduce his percentage
of Wage Reduction Contributions if it would decrease the amount
of his contribution directed to such fund, unless he suspends
Wage Reduction Contributions altogether.
Restrictions on Changes in Investment Elections. A
Participant who is contributing to the Guaranteed Investment Fund
is not permitted prior to July 31, 1992 to direct future
contributions to a different fund if it would decrease the amount
of his contributions to the Guaranteed Investment Fund. After
July 31, 1992, a Participant will have no further opportunity to
direct future Salary Reduction Contributions to the Guaranteed
Investment Fund.
Restrictions on Transfers between the Guaranteed
Investment Fund and Other Investment Funds. Under the terms of
the Plan and the contracts in the Guaranteed Investment Fund,
(i) a Participant, prior to the terminal date of each contract,
will not be permitted to transfer any portion of his interests in
those contracts out of the Guaranteed Investment Fund and into
other Investment Funds, (ii) prior to August 1, 1992, a
Participant will not be permitted to transfer into the Guaranteed
Investment Fund any portion of his interest in Vanguard Money
Market Reserves, Inc. - Federal Portfolio, Vanguard Money Market
Reserves, Inc. - Prime Portfolio, or Vanguard Bond Market Fund,
Inc., and (iii) after July 31, 1992, a Participant will not be
permitted to transfer any portion of his interests in any
Investment Fund into the Guaranteed Investment Fund.
Required Transfers. All Participants who have elected
to direct contributions to the Vanguard Money Market Reserves,
Inc. - Federal Portfolio or the Guaranteed Investment Fund will
be required to change their election for future Wage Reduction
Contributions effective as of August 1, 1992. The Investment
Funds available for future contributions made on or after
August 1, 1992 are described in the Prospectus. Participants who
have an account balance in the Vanguard Money Market Reserves,
Inc. - Federal Portfolio will be required to transfer such
account balance out of the Federal Portfolio as of August 1, 1992
and into any other Investment Fund that is available on or after
August 1, 1992. Participants will be notified as to the manner
of effecting the transfer. The transfer of a Participant's
Federal Portfolio Account into a new Investment Fund selected by
the Participant will be made as soon as practicable after
August 1, 1992. During the period between August 1, 1992 and the
time the account balance actually is transferred to the new
Investment Fund, the account balance will be invested in an
interest bearing account. If no transfer is made by the
Participant, his account will automatically be transferred to the
Vanguard Money Market Reserves, Inc. - Prime Portfolio.
Participants who have account balances in the Guaranteed
Investment Fund contracts that mature on July 31, 1992 will be
required to transfer such account balances to any other
Investment Fund that is available on or after August 1, 1992.
Participants will be notified as to the manner of effecting the
transfer. The transfer of a Participant's Guaranteed Investment
Fund account balances into a new Investment Fund selected by the
Participant will be made as soon as practicable after August 1,
1992. During the period between August 1, 1992 and the date on
which the account balance actually is transferred to the new
Investment Fund, the account balances will be invested in an
interest bearing account. If no transfer is made by the
Participant, his account will automatically be transferred to the
Vanguard Investment Contract Trust.
Transition Period. With respect to the August 1, 1992
investment election date for designating investments of future
Salary Reduction Contributions, Participants must submit their
written election forms to the Committee by no later than July 17,
1992. The Committee will not accept any investment elections for
future Wage Reduction Contributions after that date. Between
July 17, 1992 and approximately November 1, 1992 (the "Transition
Period"), Participants may not change the manner in which future
Wage Reduction Contributions are invested. This freeze on
Participant investment designations for future Wage Reduction
Contributions is necessary to accommodate the change in Trustees
from Manufacturers Hanover Trust Company to Vanguard Fiduciary
Trust Company. Although it is necessary to temporarily ask
Participants not to change their elections with respect to
investments of future Wage Reduction Contributions, Wage
Reduction Contributions will continue to be withheld from
Participants' paychecks and transmitted monthly to the Trustee
throughout the Transition Period. Investments of Wage Reduction
Contributions during the Transition Period will be invested in
accordance with the last investment election the Participant
submitted prior to the July 17, 1992 deadline. As a result of
the change in Trustees, it also will be necessary to temporarily
freeze the Participants' ability to transfer existing account
balances attributable to Wage Reduction Contributions between
Investment Funds. Therefore, between July 17, 1992 and
approximately November 1, 1992, participants also will be unable
to change the manner in which existing account balances are
invested.
Loans to Participants
Temporary Loan Freeze. To accommodate the change in
Trustees from Manufacturers Hanover Trust Company to Vanguard
Fiduciary Trust Company, it will be necessary to freeze the
Participant loan program under the Plan. Beginning July 17,
1992, the Committee will temporarily suspend its processing of
Participant loan applications. The Committee will not resume
processing Participant loan applications until on or about
November 1, 1992. The freeze on the processing of loan
applications will not affect the obligation of Participants with
outstanding loans to continue making loan repayments. Loan
repayments must continue to be made throughout the Transition
Period. For a discussion of the investment of loan repayments
made before September 1, 1992, see discussion below. For a
discussion of the investment of loan repayments on or after
September 1, 1992, see the Prospectus.
Charging Loans Against Investment Fund Accounts Before
July 17, 1992. A loan will be charged against the Participant's
accounts, if any, in mutual funds, the Guaranteed Investment
Fund, National Stock Fund A, and National Stock Fund B, in that
order or in such other order of priority as the Committee shall
determine. Assets or such accounts will be liquidated to provide
monies for the loan.
Investments of Loan Repayments Made Before September 1,
1992. Before September 1, 1992, loan repayments will be invested
in the Investment Fund or Funds (other than National Stock
Fund B) that have been designated by the Participant. However,
principal amounts borrowed from the Guaranteed Investment Fund,
National Stock Fund A and National Stock Fund B must be repaid to
such funds before repayments of principal can be invested in
mutual funds.
NATIONAL FUEL GAS COMPANY
TAX-DEFERRED SAVINGS PLAN
FOR NON-UNION EMPLOYEES
_______________
This Prospectus of National Fuel Gas Company
("National") is applicable to all interests to be offered or sold
pursuant to the National Fuel Gas Company Tax-Deferred Savings
Plan for Non-Union Employees and to 500,000 shares of common
stock, $1.00 par value, of National that are offered as set forth
herein to eligible employees of National and of its subsidiaries
that adopt the Plan.
_______________
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1993, AS AMENDED.
The date of this Prospectus is June 19, 1992.
TABLE OF CONTENTS
Page
THE PLAN 1
General Information 1
Eligibility and Participation 3
Salary Reduction Contributions 4
Employer Matching Contributions 5
Limits on Contributions 9
Investment of Contributions 11
Participant Accounts 19
Administration 19
Vesting 21
Loans to Participants 21
Withdrawals During Employment 24
Distribution of Benefits 25
Modification or Termination of the Plan 27
RESTRICTIONS ON RESALE 28
FEDERAL INCOME TAX CONSEQUENCES 28
Contributions and Earnings 28
Withdrawals During Employment 30
Lump Sum Distributions 30
Other than Lump Sum Distributions 32
Rollover of Partial Distributions 33
Loans 33
Withholding 33
Early Distribution Tax 34
Excess Distribution Tax 34
Summary 35
DESCRIPTION OF COMMON STOCK 35
Dividend Rights 35
Voting Rights and Classification of the Board of
Directors 36
Liquidation Rights 36
Preemptive Rights 36
Business Combinations 36
INCORPORATION BY REFERENCE 37
AVAILABILITY OF INFORMATION 39
COMMITTEE MEMBERS 39
APPENDIX
THE PLAN
General Information
The National Fuel Gas Company Tax-Deferred Savings Plan
for Non-Union Employees (the "Plan") was adopted by the Board of
Directors of National on July 26, 1984, effective as of July 1,
1984, and has since been amended. The purpose of the Plan is to
encourage employees of National and of its subsidiaries that
adopt the Plan to supplement retirement income by providing
opportunities for long-term capital accumulation, to promote
ownership of National's Common Stock among those employees, to
provide an attractive employee benefit, and to keep National's
employee benefit program competitive with programs offered by
other corporations. The participating employers in the Plan are
National and each subsidiary of National that, with the consent
of the Board of Directors of National, adopts the Plan. National
and each adopting subsidiary are referred to in this Prospectus
as the "Employer" or "Employers." The address, including the
telephone number, of National is 30 Rockefeller Plaza, New York,
New York 10112, (212) 541-7533.
The following subsidiaries of National have adopted the
Plan and are Employers under the Plan:
National Fuel Gas Supply Corporation
National Fuel Gas Distribution Corporation
Penn-York Energy Corporation
Seneca Resources Corporation
Empire Exploration, Inc.
Enerop Corporation
Utility Constructors, Inc.
There are two groups of eligible employees that are
able to participate in the Plan. The first group of eligible
employees consists of (i) non-supervisory employees (i.e., those
employees who are paid on an hourly basis) of National Fuel Gas
Company, National Fuel Gas Supply Corporation, National Fuel Gas
Distribution Corporation, Penn-York Energy Corporation, Empire
Exploration, Inc., and Enerop Corporation; (ii) the non-
supervisory employees of Seneca Resources Corporation who are
employed in New York or Pennsylvania (hereafter referred to as
"Seneca North East"); and (iii) all employees of Utility
Constructors, Inc., and all employees of Seneca Resources
Corporation who are not employed in New York or Pennsylvania
(hereafter referred to as "Seneca South West"). This first group
of employees who are eligible for the Plan will be referred to in
this Prospectus as "Group I Employees." The second group of
eligible employees consists of all executive and supervisory
employees (i.e., those employees who are paid on a salaried
basis) of the corporations listed in (i) above as well as the
executive and supervisory employees of Seneca North East, and
will be referred to in this Prospectus as "Group II Employees."
Under the Plan, any eligible employee can elect to have
his Base Pay reduced and to have the amount of such reduction
contributed by his Employer to the Plan on his behalf and
invested in any one or a combination of mutual funds, an
investment contract trust fund, and a fund consisting of Common
Stock of National. In addition, his Employer will make a
matching contribution to the Plan for such employee in an amount
equal to a certain percentage of his Base Pay. The matching
contribution is invested in a separate fund consisting of Common
Stock of National. The percentage of the matching contribution
varies depending upon the employee's length of service,
percentage of salary reduction, percentage of contribution, if
any, to the National Fuel Gas Company Employees' Thrift Plan (the
"Thrift Plan"), and whether the employee is a Group I Employee or
a Group II Employee. Effective February 1, 1992, executive and
supervisory employees no longer may participate in the Thrift
Plan.
The Plan is a defined contribution profit-sharing plan
intended to qualify under Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), containing a cash or
deferred arrangement that is intended to qualify under
Section 401(k) of the Code.
The Plan is subject to all of the provisions of the
Employee Retirement Income Security Act of 1974, as amended,
("ERISA") relating to defined contribution plans, and generally
is subject to the provisions of Titles I and II of ERISA,
including the provisions regarding reporting, disclosure,
participation, vesting, fiduciary responsibility and enforcement
procedures. However, the Plan is not subject to the funding
requirements of Titles I and II of ERISA, and benefits under the
Plan are not guaranteed by the federal government's Pension
Benefit Guaranty Corporation under Title IV of ERISA; these
protections will not be extended by the Employers to employees
participating in the Plan.
The description of the Plan contained in this
Prospectus does not purport to be complete and is qualified in
its entirety by reference to the full text of the Plan. A copy
of the Plan may be obtained, without charge, upon written request
directed to National, 10 Lafayette Square, Buffalo, New York
14203, Attention: Trust Plans Administration. Participants may
obtain additional information about the Plan and its
administrators by writing National at the address set forth
above, or by calling National at (716) 857-7888. Certain
provisions of the Plan, however, will be amended prior to
December 31, 1992 to reflect amendments to the Plan authorized by
the Board of Directors of National on February 20, 1992.
Generally, those amendments increase the rate of matching
contributions for Group II Employees, and reduce the maximum rate
of salary reduction contributions by Group II Employees to 12%
from 15%. The description of the Plan contained in this
Prospectus is a summary of the Plan as it will be amended as
authorized by the Board of Directors, to be retroactively
effective on February 1, 1992, except as otherwise described in
this Prospectus.
National anticipates that the information contained in
this Prospectus will be updated by appendices or other
appropriate documents that will be distributed from time to time
to all persons who have received a copy of this Prospectus and
who are eligible to participate in the Plan. In the event that
the Plan is amended in material respects other than in accordance
with the description of the Plan contained herein, National will
distribute to such persons an appendix or other appropriate
document containing a description of those amendments.
Certain provisions of the Plan do not reflect
amendments necessary to comply with the requirements of the Tax
Reform Act of 1986 (the "Act") or to comply with other applicable
requirements of the Code. The Plan currently is being, and will
continue to be, administered in accordance with such requirements
as and when effective. However, as permitted by the Act, the
Code and the Internal Revenue Service, the Plan documents have
not yet been amended to reflect such requirements. Thus, in some
circumstances, the Plan is being administered in a manner
different than that provided in the Plan documents. Not later
than December 31, 1993, the Plan will be amended, effective as
required by the Act, the Code and the Internal Revenue Service,
to comply with the provisions of the Act and to comply with other
applicable requirements of the Code and the Internal Revenue
Service. This Prospectus explains the administration of the
Plan, even where the provisions of the Plan have not yet been
amended.
Eligibility and Participation
Participation in the Plan will be available to all
employees who are regularly employed by an Employer and not
covered by a collective bargaining agreement, except hourly paid
employees of Utility Constructors, Inc. ("Eligible Employees").
An Eligible Employee is eligible to participate in the
Plan on the first day of the calendar month following or
coinciding with the date he has both reached age 21 and completed
one year of service with an Employer. One year of service means
a 12-consecutive month computation period beginning on the date
the Eligible Employee's employment commences, and anniversaries
thereof, in which he is credited with at least 1,000 hours of
service. In general, an "hour of service" is an hour for which
an employee is paid or entitled to payment by National or its
subsidiaries; employees for whom hourly records are not
maintained are credited with 45 hours for any week or part
thereof for which they are paid.
Solely for purposes of participation in the Plan, an
Eligible Employee who is credited with 1,000 hours of service by
the last day of the sixth month of a 12-consecutive month
computation period, or by the last day of any subsequent month of
such period, will be deemed to have completed one year of service
on that date. Under this rule a full-time Eligible Employee
normally will be eligible to participate in the Plan (become a
"Participant") on the first day of the payroll period that begins
after he has been employed for six months. (A Participant is a
current or former Eligible Employee who contributed or is
contributing to the Plan and whose accounts have not been
completely distributed.)
To become a Participant, an Eligible Employee must
complete and file an authorization form with the Tax-Deferred
Savings Plan Committee (the "Committee") described in
Administration below. The form contains the Eligible Employee's
election to make salary reduction contributions (see Salary
Reduction Contributions, below) and his designation of the
investment fund or funds in which such contributions are to be
invested (see Investment of Contributions, below). The
authorization form must be filed at least 30 days prior to the
date the Eligible Employee is to join the Plan or within such
other period as may be prescribed by the Committee.
Salary Reduction Contributions
Each Participant in the Plan may elect to have his Base
Pay reduced and to have the amount of the reduction contributed
to the Plan on his behalf by his Employer. This contribution,
called a "Salary Reduction Contribution," begins on the first
payroll period beginning after the Participant joins the Plan.
"Base Pay" is defined in the Plan to mean a Participant's basic
compensation for a payroll period prior to withholding taxes and
contributions to a flexible spending account in other "cafeteria
plan," excluding bonuses, commissions, overtime, and other
special payments, but including sick pay. Base Pay also excludes
salary deferred pursuant to the National Fuel Gas Company
Deferred Compensation Plan. No more than an aggregate of
$228,860 of Base Pay (this is the 1992 limit; the limit is
indexed each year to reflect increases in the cost of living) can
be taken into account for any Plan Year (the calendar year).
Effective February 1, 1992, Group II Employees may
elect a Salary Reduction Contribution percentage of 2% to 12% of
Base Pay, in increments of 1%. Group I Employees may elect a
Salary Reduction Contribution percentage of 2% to 15% of Base
Pay, in increments of 1%. For Group I Employees who are eligible
to contribute to both the Thrift Plan and this Plan, no more than
15% of Base Pay can be contributed to the Plan and to the Thrift
Plan, in the aggregate. A Group I Employee may elect to
contribute 2% to 7% of Base Pay to the Thrift Plan, depending
upon his years of service with National and its subsidiaries.
To determine a dollar amount of Salary Reduction
Contribution, the percentage that a Participant has elected is
multiplied by the Participant's Base Pay in effect on the date of
his entry into the Plan. Effective with the first payroll period
that begins after he joins the Plan, the Participant's Base Pay
is reduced by such dollar amount, which is contributed to the
Plan on his behalf by his Employer. The Salary Reduction
Contribution is recalculated each February 1 and August 1 to
reflect the Participant's Base Pay at such date.
A Participant may change his percentage rate of salary
reduction (within the permitted percentage limits), effective as
of any February 1 or August 1, by filing a revised authorization
form with the Committee at least 30 days prior to such date or
within such other period as may be prescribed by the Committee.
A Participant may discontinue all of his Salary
Reduction Contributions by filing with the Committee a prescribed
notice that will become effective as soon as administratively
practicable but not earlier than the first payroll period that
commences after the notice is filed. Participants may resume
Salary Reduction Contributions as of any January 1 or July 1 that
occurs at least six months after the effective date of the
discontinuance by filing an authorization form at least 30 days
prior to such date. A Participant who has discontinued Salary
Reduction Contributions remains a Participant in the Plan until
distribution of the value of his accounts in the Plan.
Employer Matching Contributions
The Employers make matching contributions each month to
the Plan for each Participant on whose behalf Salary Reduction
Contributions are made ("Employer Matching Contributions").
Effective February 1, 1992, the schedule for determining the
Employer Matching Contribution percentage was amended for
Group II Employees. Employer Matching Contributions are equal to
a percentage of a Participant's Base Pay, and the percentage
varies depending upon the Participant's length of service,
percentage of salary reduction, percentage of contribution, if
any, to the Thrift Plan, and whether the employee is a Group I
Employee or a Group II Employee.
Matching Contributions for Group I Employees. The
percentage rate of Employer Matching Contributions for Group I
Employees is as follows:
Salary Reduction
Contribution Percentage Aggregate Percentage of
Participant's Plus Percentage Rate of Matching Contribution
Years of Participant's Contribution Contributed to Plan and
Service **1.
Less than 5 2-15% 1%
5 but less than 10 2 1
3-15 1.5
10 but less than 15 2 1
3 1.5
4-15 2
15 but less than 20 2 1
3 1.5
4 2
5 2.5
6-15 3
20 or more 2 1
3 1.5
4 2
5 2.5
6 3
7-15 3.5
(1)/ A year of service for purposes of the Thrift Plan is
determined as of each July 1, and for purposes of the Plan, is
determined as of each January 1 and July 1.
Matching contributions are contributed first to the Thrift Plan,
to the extent permitted under the Thrift Plan, and then the
remainder, if any, is contributed to the Plan. The following
table sets forth the percentage of matching contributions that
will be contributed to the Thrift Plan on behalf of Participants
who contribute to the Thrift Plan. The percentage varies
depending upon the Participant's years of service with National
and its subsidiaries and the Participant's percentage rate of
contribution to the Thrift Plan, which may vary from 2% - 7% of
his Base Pay.
Participant's Percentage Rate of Percentage of Matching
Years of Participant's Contribution Contribution Contributed
of Service to Thrift Plan to Thrift Plan
Less than 5 2% 1%
5 but less than 10 2 1
3 1.5
10 but less than 15 2 1
3 1.5
4 2
15 but less than 20 2 1
3 1.5
4 2
5 2.5
6 3
20 or more 2 1
3 1.5
4 2
5 2.5
6 3
7 3.5
Any percentage of matching contributions remaining after the
allocation of matching contributions to the Thrift Plan is the
percentage of Employer Matching Contributions that will be
contributed to the Plan.
Matching Contributions for Group II Employees.
Effective February 1, 1992, the percentage rate of Employer
Matching Contributions for Group II Employees is as follows:
Participant's Salary Reduction Employer
Years of Contribution % Matching
Service **2.
Less than 5 2% 2%
3 2.5
4 3
5-12 3.5
5 but less than 10 2 2
3 3
4 3.5
5-12 4
10 but less than 15 2 2
3 3
4 4
5-12 4.5
15 but less than 20 2 2
3 3
4 4
5 5
6-12 5.5
20 or more 2 2
3 3
4 4
5 5
6 5.5
7-12 6
(2)/ A year of service for purposes of the Plan is determined as
of each January 1 or July 1.
Group II Employees are not eligible to participate in the Thrift
Plan on or after February 1, 1992. Thus, the Employer Matching
Contribution percentage that applies to a Group II Employee
participating in the Plan no longer depends upon the matching
contribution percentage under the Thrift Plan.
Examples. The calculation of the percentage of Employer Matching
Contributions, as described above, is illustrated by the following example:
Example 1. A Participant who is a Group I Employee with 21 years of
service and who contributes 10% of Base Pay to the Plan and the Thrift Plan, in
the aggregate, is entitled to a matching contribution of 3.5%. If that
Participant contributes 5% of Base Pay to each of the Plan and the Thrift Plan,
he will receive a 2.5% matching contribution to the Thrift Plan and a 1%
Employer Matching Contribution to the Plan. If that Participant contributes 4%
of Base Pay to the Thrift Plan and 6% of Base Pay to the Plan, he will receive
a 2% matching contribution to the Thrift Plan, and a 1.5% Employer Matching
Contribution to the Plan.
Example 2. A Participant who is a Group I Employee with six years of
service and who contributes 10% of Base Pay to the Plan and the Thrift Plan, in
the aggregate, is entitled to a matching contribution of 1.5%. If that
Participant contributes 3% of Base Pay to the Thrift Plan and 7% of Base Pay to
the Plan, the entire 1.5% matching contribution will be contributed to the
Thrift Plan. If that Participant contributes 2% of Base Pay to the Thrift Plan
and 8% of Base Pay to the Plan, he will receive a 1% matching contribution to
the Thrift Plan and a .5% Employer Matching Contribution to the Plan.
Example 3. A Participant who is a Group II Employee with 13 years of
service and who contributes 10% of Base Pay to the Plan is entitled to a
matching contribution of 4.5%. The full amount of the match is an Employer
Matching Contribution that will be made to the Plan. This Participant is not
eligible to contribute to the Thrift Plan on or after February 1, 1992.
Limits on Contributions
Section 401(a)(17) of the Code limits the amount of Base Pay that may
be taken into account in any Plan Year (the calendar year) in determining
Salary Reduction Contributions. The 1992 limit is $228,860. The limit will
increase in subsequent years to reflect increases in the cost of living.
There is another limit concerning Plan contributions that is more
likely to affect Participants. For a Participant's 1992 taxable year, the
aggregate amount of a Participant's (i) Salary Reduction Contributions under
the Plan plus (ii) deferrals under all other cash or deferred arrangements in
which he participates, whether sponsored by the Employers or an unrelated
employer, (hereafter referred to as "Elective Deferral") is $8,728 (subject to
indexing in subsequent years to reflect increases in the cost of living). Such
cash or deferred arrangements include arrangements qualified under Section
401(k) of the Code and tax-sheltered annuities to which a contribution is made
under a salary reduction agreement with a charitable
organization or public school; however, an additional amount may be contribute
on behalf of the Participant to tax-sheltered annuities, for a combined maximum
of $9,500. See FEDERAL INCOME TAX CONSEQUENCES - Contributions and Earnings,
below for a description of tax consequences, and permitted adjustments that may
be made, in the event Elective Deferrals exceed the foregoing limits.
Sections 401(k) and 401(m) of the Code contain limitations on the
maximum Salary Reduction Contributions and Employer Matching Contributions that
may be made for any Plan Year (the calendar year) on behalf of Participants who
are considered "highly compensated employees" for that year. The rules are
complex, but, in general, an employee will be considered a highly compensated
employee for a Plan Year if, during the Plan Year, his compensation exceeds
$93,518, or exceeds $62,345 and he is a member of the top-paid group of
employees of National and its subsidiaries. An employee is in the top-paid
group of employees of National and its subsidiaries for a particular year if
the employee is in the group consisting of the top 20% of the employees of
National and its subsidiaries when ranked on the basis of compensation received
during the year. The foregoing amounts are subject to increase to reflect
increases in the cost of living.
During the course of a Plan Year, the Committee may reduce the
percentage rates of salary reduction elected by certain Participants who are
highly compensated employees for the Plan Year so that average contributions of
highly compensated employees for the Plan Year will be reduced to a level that
the Committee has selected as appropriate to comply with the limitations in
Sections 401(k) and 401(m) of the Code. Any required reduction is accomplished
by first reducing, by 1%, the elected percentage rate of each highly
compensated employee who has elected the highest rate then in effect. If
further reduction is necessary, the elected percentage rate of the Participants
initially reduced, and of each highly compensated Participant who has elected a
rate equal to the reduced rate, will be reduced by 1%. Successive reductions
will be made in this manner until the level selected by the Committee for
compliance with the limitations in Sections 401(k) and 401(m) of the Code will
not be exceeded. It is possible, but not anticipated, that a reduction in the
elected percentage rates will require a reduction in the Employer Matching
Contribution percentages.
If contributions actually made to the Plan for a Plan
Year on behalf of highly compensated employees exceed the
contribution limits under Sections 401(k) and 401(m) of the Code
("Excess Contributions"), the Plan will distribute the Excess
Contributions and income allocable thereto during the following
Plan Year. Excess Contributions and income allocable there to
for any Plan Year will be distributed to those highly compensated
employees deemed to have caused the limitations to be exceeded,
in a manner similar to the leveling method of reducing elected
percentages of salary reduction described above. It is intended
that distributions of Excess Contributions will be avoided by
prospective reduction of percentages of salary reduction.
Under limitations required by Section 415 of the Code,
contributions under the Plan for any Participant during any year
ending September 30 (plus employer and employee contributions
under the Thrift Plan during such year) may not exceed the lesser
of 25% of the Participant's taxable compensation for that year of
$30,000 (as adjusted as permitted by law to reflect increases in
the cost of living). If any reductions are necessary to meet
these limitations, employee contributions under the Thrift Plan
and related matching contributions will be reduced first, and, if
necessary, Salary Reduction Contributions under the Plan that are
not matched by the Employer will be reduced next. In the event
that contributions under the Plan (plus contributions under the
Thrift Plan) by and for a Participant, together with benefits
accrued by him under National's retirement plan, would exceed the
combined limitations for defined contribution and defined benefit
plans prescribed by Section 415 of the Code, the Participant's
benefits under the retirement plan will be reduced. Reductions
on account of the limitations under Section 415 of the Code are
not anticipated.
Investment of Contributions
A Participant's Salary Reduction Contributions made
during each month, and the Employer Matching Contributions
relating thereto, are transmitted to the Trustee of the Plan (the
"Trustee") as soon as practicable after the last business day of
each month. As of the date this Prospectus is issued, the
Trustee is Manufacturers Hanover Trust Company, 530 Fifth Avenue,
New York, New York. On or about August 31, 1992, Manufacturers
Hanover Trust Company will cease to act as the Trustee, and
thereafter the Trustee will be Vanguard Fiduciary Trust Company
("Vanguard"), Vanguard Financial Center, Valley Forge, PA 19482.
Salary Reduction Contributions will be invested by the
Trustee, as directed by the Participant, in one or more of the
investment funds described below ("Investment Funds"). A
Participant may direct that all or any multiple of 10% of his
Salary Reduction Contributions be invested in any one or more of
the Investment Funds. In the authorization form that an Eligible
Employee files with the Committee before he becomes a
Participant, he designates the Investment Fund or Investment
Funds in which his Salary Reduction Contributions are to be
invested. All income derived from an Investment Fund, including
capital gains distributions of mutual funds, will be reinvested
in the same Investment Fund.
Investment Funds Available On or After August 1, 1992.
Effective August 1, 1992, the Investment Funds available for
receipt of Participants' contributions are as follows:
National Stock Fund A - consisting of shares of
National's Common Stock that will be purchased by the
Trustee at fair market value either on the New York
Stock Exchange or in private transactions. The Trustee
will not purchase any shares from National or any of
its subsidiaries except by exercise of rights or
warrants at a price per share not greater than the
price per share at which shares are offered to National
stockholders generally.
Vanguard Investment Contract Trust - is a
collective investment fund for tax-qualified pension
and profit sharing plan assets. The Trust seeks to
provide an attractive rate of interest and safety of
principal by investing primarily in investment
contracts issued by insurance companies and commercial
banks, and other types of fixed principal investments
selected by Vanguard Fiduciary Trust Company. For
liquidity purposes, the Trust invests up to 15% of
assets in short-term U.S. Government obligations or
Federally insured deposits. The Trust expects to
maintain an average weighted maturity of two to three
years.
Mutual Funds - consisting of a number of separate
Mutual Funds. Each Mutual Fund offered under the Plan
is considered as a separate Investment Fund.
Vanguard Money Market Reserves, Inc. - Prime
Portfolio - A money market mutual fund seeking to
obtain income consistent with the preservation of
capital and liquidity by investing primarily in
money market obligations issued by financial
institutions, nonfinancial corporations, and the
U.S. Government that mature in one year or less.
The Portfolio's average maturity is less than 90
days. The Prime Portfolio is managed by the
officers of Vanguard Money Market Reserves, Inc.,
and receives investment advisory services from an
investment management staff employed by The
Vanguard Group, Inc., an affiliate of Vanguard
Money Market Reserves, Inc. Shares of the Prime
Portfolio are purchased at the then current net
asset value per share.
Vanguard Bond Market Fund, Inc. - A mutual fund
seeking to provide investment results that
correspond to the total return of the Salomon
Brothers Broad Investment Grade Bond Index (the
"Index"), by normally investing at least 80% of
its assets in securities held by the Index,
including no less than 65% in U.S. Government or
corporate bonds. The Fund also may invest up to
20% of its assets in short-term money market
instruments, and may invest in bond (interest)
rate future contracts and options to a limited
extent. An investment management staff employed
by The Vanguard Group, Inc. provides investment
advisory services to the Fund. The Fund attempts
to duplicate the return of the Index by holding a
combination of securities which, taken together,
are expected by the investment management staff to
perform similarly to the Index as a whole. Shares
of the Fund are purchased at the then current net
asset value per share.
Vanguard Index Trust - 500 Portfolio - A mutual
fund seeking to provide investment results that
correspond to the aggregate price and yield
performance of a diversified list of publicly-
traded common stocks represented by the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500
Index"). The S&P 500 Index currently represents
more than 70%, by value, of the American stock
market. The Portfolio's policy is to be fully
invested in common stocks represented by the S&P
500 Index, and it is expected that cash or cash
items would normally be less than 1% of the
assets. The officers of Vanguard Index Trust
manage the operations of the Portfolio. Stocks
are selected for inclusion in the Portfolio in the
order of their weightings in the S&P 500 Index,
beginning with the heaviest weighted stocks.
Shares of the Portfolio are purchased at the then
current net asset value per share.
Vanguard International Equity Index Fund, Inc. -
European Portfolio - A mutual fund seeking to
provide investment results paralleling those of
the Morgan Stanley Capital International Europe
(Free) Index ("MSCI-Europe"), a diversified,
capitalization weighted index consisting of
companies located in 13 European countries. The
European Portfolio's policy is to be fully
invested in common stocks, at least 80% of which
will be stocks that are represented in the MSCI-
Europe, and it is expected that cash or cash items
normally would be less than 1% of the assets. As
of December 31, 1991, 41, 14, and 15% of the
European Portfolio was invested in United Kingdom,
French and German stocks, respectively. The
officers of the Vanguard International Equity
Index Fund manage the operation of the European
Portfolio. The European Portfolio attempts to
approximate the investment performance of the
MSCI-Europe through statistical procedures.
Vanguard International Equity Index Fund, Inc -
Pacific Portfolio - A mutual fund seeking to
provide investment results paralleling those of
the Morgan Stanley Capital International Pacific
Index ("MSCI-Pacific"), a diversified,
capitalization weighted index consisting of
companies located in Australia, Japan, Hong Kong,
New Zealand and Singapore. The Pacific
Portfolio's policy is to be fully invested in
common stocks, at least 80% of which will be
stocks that are represented in the MSCI-Pacific,
and it is expected that cash or cash items
normally would be less than 1% of the assets. As
of December 31, 1991, 89% of the Pacific Portfolio
was invested in Japanese stocks. The officers of
the Vanguard International Equity Index Fund
manage the operation of the Pacific Portfolio.
The Pacific Portfolio attempts to approximate the
investment performance of the MSCI-Pacific through
statistical procedures.
No attempt is made to actively manage any of the
Mutual Funds according to traditional methods of active
investment management, including the buying and selling
of assets based upon economic, financial and market
analysis and investment judgement. There is no
assurance that the objectives of any of the Mutual
Funds will be obtained.
The Mutual Funds are more fully described in
prospectuses that are available, upon request, from
either the Committee or the distributor, which is The
Vanguard Group, Inc., Vanguard Financial Center, Valley
Forge, Pennsylvania 19482, (800) 523-1188. The
description of the Mutual Funds contained above was
obtained from such prospectuses. The offer to invest
in the above Mutual Funds is made only by such
prospectuses, not by this Prospectus, and each employee
is urged to read such prospectuses carefully before
electing to invest his Salary Reduction Contributions
in those funds.
The Appendix dated June 19, 1992 contains a description
of the Investment Funds available to Participants prior to
August 1, 1992, and a description of the rules for mandatory
transfers out of certain of those funds.
Investment Fund Selection Procedures. Beginning on or
about November 1, 1992, a Participant generally may change his
election with regard to the investment of his future Salary
Reduction Contributions as often as he wishes. In connection
with investments of future Salary Reduction Contributions,
however, there are two important Plan features that apply.
First, because Salary Reduction Contributions are transmitted to
the Trustee once a month, it will be the last investment election
a Participant makes prior to National's transmission of the
contributions to the Trustee that will determine how future
Salary Reduction Contributions made on the Participant's behalf
will be invested. Second, future Salary Reduction Contributions
may be invested in the Vanguard Investment Contract Trust (the
"VICT") as often as the Participant wishes. However, once
contributions actually are transmitted to the Trustee and
invested in the VICT, there are restrictions on the transfer of
assets from the VICT into other Investment Funds (see discussion
below). In connection with existing account balances, a
Participant generally may transfer his account balances
attributable to Salary Reduction Contributions between Investment
Funds as often as he wishes. However, there are restrictions on
the frequency of transfers of existing account balances into or
out of the VICT (see discussion below). Participants will be
able to change investment elections for future Salary Reduction
Contributions and existing account balances by calling a toll
- -free number during regular business hours (Monday through Friday
8:30 a.m. to 7:00 p.m. Eastern time), and the Company will no
longer process such changes.
Restrictions on Transfers Between the Vanguard
Investment Contract Trust and Other Investment Funds. Beginning
on or about November 1, 1992, Participants may transfer existing
Plan assets into the Vanguard Investment Contract Trust (the
"VICT") once per calendar quarter. Participants may transfer
their interest in the VICT out of the VICT and into National
Stock Fund A, the Vanguard Index Trust -500 Portfolio or the
Vanguard International Equity Index Fund, Inc. - European and
Pacific Portfolios (the "Equity Funds") once per calendar
quarter. Assets moved from the VICT to any of the Equity Funds
must remain in an Equity Fund for a minimum of 90 days.
Participants may transfer the greater of $500 or 25% of their
interest in the VICT out of the VICT and into the Vanguard Money
Market Reserves, Inc. - Prime Portfolio or the Vanguard Bond
Market Fund, Inc. (the "Fixed Income Funds") once a year, during
January. Participants with less than $500 invested in the VICT
may transfer their total interest in the VICT out of the VICT and
into the Fixed Income Funds once a year, during January.
Employer Matching Contributions. Employer Matching
Contributions for all Participants are invested exclusively in an
additional fund, National Stock Fund B, that consists of shares
of National's Common Stock. National may make its Employer
Matching Contributions to National Stock Fund B either in cash
(that would then be used by the Trustee to purchase Common Stock
either on the open market or directly from National), or in
shares of Common Stock, including original issue shares, having a
fair market value when contributed equal to the amount of cash in
lieu of which such shares are contributed. Employer Matching
Contributions remain in National Stock Fund B; no transfers of
investments may be made in or out of that fund.
When considering how to direct the investment of Salary
Reduction Contributions, Participants should recognize that the
market prices of common stocks (including National's Common
Stock) and other forms of securities vary as a result of changes
in domestic and international economic and political conditions,
changes in the rate of inflation, prevailing interest rates and
other factors. As a consequence, there is no guarantee that the
benefits ultimately distributed to a Participant will be equal to
the contributions made to the Plan over the years. Each
Participant assumes all risks in connection with investment in
each Investment Fund, including the risk of fluctuations in the
stock and bond markets.
The past performance of each of the Investment Funds
described above and of National Stock Fund B is set forth as
follows.
Percentage Total Annual Return of Each Fund
1/1/92-
Investment Fund 1987 1988 1989 1990 1991 5/31/92
Vanguard Money
Market Reserves, Inc.
- -Prime Portfolio (1) 6.65% 7.58% 9.39% 8.27% 6.14% 1.73%
Vanguard Investment
Contract Trust (2) -- -- 8.96% 8.53% 7.97% 2.83%
Vanguard Bond
Market Fund, Inc. (3) 1.14% 7.35% 13.66% 8.64% 15.25% 1.26%
Vanguard Index Trust
- -500 Portfolio (4) 4.69% 16.22% 31.36% - 3.32% 30.19% 0.75%
Vanguard International
Equity Index Fund
European Portfolio (5) 3.7% 15.8% 28.5% - 2.0% 12.40% 8.27%
Pacific Portfolio (5) 39.7% 35.0% 2.5% - 34.3% 10.65% -16.45%
National Stock Fund A -8.96% 21.46% 54.46% - 8.97% 0.56% 6.8%
National Stock Fund B -8.96% 21.46% 54.46% - 8.97% 9.56% 6.8%
(1) The Vanguard Money Market Reserves, Inc. - Prime Portfolio
was first available under the Plan on January 1, 1989.
(2) The Vanguard Investment Contract Trust becomes available
under the Plan on August 1, 1992. It commenced operation
January 1, 1989.
(3) The Vanguard Bond Market Fund, Inc. was first available
under the Plan on January 1, 1989.
(4) The Vanguard Index Trust - 500 Portfolio has been available
under the Plan since February 1, 1987.
(5) The Vanguard International Equity Index Fund - European and
Pacific Portfolios become available under the Plan on
August 1, 1992. The European and Pacific Portfolios did not
commence operations until June 18, 1990. Returns shown for
1987, 1988, 1989 and 1990 therefore are the returns of the
MSCI-Europe and the MSCI-Pacific indices that are described
above.
The foregoing table sets forth historical results for the
Investment Funds and National Stock Fund B and should not be
relied upon as indications of future performance. The annual
returns contained in the table assume that a single contribution
was invested on January 1 of a year and remained in the fund
until December 31 of that year, and also assumes that dividends
and interest and capital gains distributions were reinvested in
the same fund at then-current share values. The percentage
changes in the value of Participants' accounts may be different
from those set forth in the table since contributions on behalf
of Participants are invested monthly and since certain costs and
fees, as described in Administration, below, may be charged
against the Investment Funds or Participants' accounts.
Participant Accounts
Until on or about August 31, 1992, the Committee
maintains the accounts and records of the Plan. Thereafter,
Vanguard will maintain the accounts and records of the Plan. A
separate account is maintained showing the interest of each
Participant attributable to Salary Reduction Contributions in
each of the Investment Funds, and the interest of each
Participant in National Stock Fund B. Each Participant is
advised quarterly as to the status of his accounts, including
contributions to and transfers between each of the Investment
Funds, withdrawals from such funds and loan transactions.
Administration
The Plan is administered by the Committee. The
Committee consists of at least three persons and not more than
ten persons who are appointed by and serve at the pleasure of
National's Board of Directors. The Committee has full power to
control and manage the operation and administration of the Plan,
to interpret the Plan, and to adopt regulations regarding the
administration of the Plan. The Committee may authorize any
person, whether or not such person is a member of the Committee,
to carry out its responsibilities under the Plan. Members of the
Committee may not participate in the decision on any questions as
to their own rights under the Plan, and members who are employees
of the Employers receive no compensation for their services under
the Plan, except for reimbursement of expenses. Any member of
the Committee may be removed at any time by National's Board of
Directors, with or without cause. The Committee exercises
National's duties as "plan administrator" under ERISA and is
designated as the "named fiduciary" required by ERISA. The
current members of the Committee are listed in the last section
of the Prospectus.
Assets of the Plan are held in trust under a trust
agreement between National and the Trustee. The Trustee has
responsibility for safekeeping the assets of the Plan and
investing such assets in the Investment Funds selected by the
Participants. The Trustee also has responsibility for purchasing
shares of Common Stock for the Plan, and for temporarily
investing in short-term debt obligations. The Committee directs
the Trustee as to the disbursement of Plan assets, including the
payment of Plan benefits. National may remove the Trustee at any
time.
Participants are entitled to vote shares of Common
Stock credited to their accounts in National Stock Fund A and
National Stock Fund B. Within a reasonable time before the
voting rights of such Participants are to be exercised, forms
requesting the Participants' instructions on how to vote the
shares, together with all information distributed to stockholders
regarding the exercise of such voting rights, will be furnished
to the Participants and to the Trustee. The Trustee will vote
such shares as instructed by the Participants, and in the absence
of instructions, will not vote the shares. Participants also
will be advised of any tender or exchange offer for shares of
Common Stock. All communications directed generally to the
owners of shares of Common Stock and all communications that the
Trustee may receive from the offeror relating to the tender or
exchange offer will be provided to Participants. The Trustee
will not sell, convey or exchange shares of Common Stock in
response to such offer, except to the extent that it is timely
directed in writing by the Participants to do so.
Brokerage commissions, transfer taxes and similar costs
of acquiring or selling securities and managing portfolios that
are incurred by an Investment Fund or National Stock Fund A or B
are charged to that fund. Service fees in connection with
transfers between Mutual Funds may be charged to the accounts of
the Participants directing the transfers. The Employers bear all
other expenses of administering the Plan, including the fees and
disbursements of the Trustee, insurance company administrative
expense charges under contracts held in the Guaranteed Investment
Fund, and any sales commissions and similar "load" charges
incurred in the acquisition of shares of a Mutual Fund.
(Currently there are not, and it is not expected that there will
be in the future, any service fees for transfers between mutual
funds, or load charges.) The Trustee has the authority to
withdraw its expenses from the assets of the Plan if not paid by
the Employers, and has a lien on such assets for its unpaid fees.
The Committee has the authority to charge any or all of the
foregoing expenses against the accounts of Participants.
Except with respect to the Trustee's lien, and the loan
provisions described below (see Loans to Participants), no person
has or may create a lien on any funds, securities or other
property held under the Plan. Except with respect to
distribution of benefits upon a Participant's death, no
Participant or beneficiary may sell, assign, hypothecate or
otherwise transfer any right or interest in the Plan. As
required by ERISA, however, a Participant's spouse, former
spouse, or other dependent, pursuant to a court order entered in
a domestic relations proceeding and meeting certain requirements
of ERISA, may be entitled to receive a portion of the
Participant's interest in the Plan.
Vesting
A Participant's interest in the Plan, as represented by
his accounts, is at all times 100% vested and is not subject to
forfeiture for any reason. However, Participants are subject to
restrictions on the withdrawal of contributions to the Plan. See
Withdrawals During Employment and Distribution of Benefits, below.
Loans to Participants
A Participant whose Account balances have an aggregate
value of at least $2,000 may borrow from the Plan an amount that
is not less than $1,000 nor more than $50,000. A Participant may
have only one loan other than a "home loan" (as described below),
and one "home loan," outstanding at one time. The total
outstanding balance of all of a Participant's loans from the Plan
may not exceed $50,000 reduced by the excess (if any) of (i) the
highest outstanding balance of loans to the borrower from the
Plan during the one-year period ending on the day before the date
on which the loan is made, over (ii) the outstanding balance of
loans to the borrower from the Plan on the date on which the loan
is made. Further, no loan, when added to the outstanding balance
of any other loan from the Plan, may exceed one-half of the
aggregate value of the borrower's accounts.
Under the Plan, a separate account is maintained for
each Participant showing his interest in each Investment Fund
attributable to Salary Reduction Contributions and his interest
in National Stock Fund B attributable to Employer Matching
Contributions. Effective on or about November 1, 1992, to the
extent there are sufficient assets in a Participant's Investment
Funds attributable to Salary Reduction Contributions, a loan will
be charged against each of the Participant's Investment Fund
accounts in the same proportion that each such Investment Fund
account bears to the total interest of the Participant in his
Investment Fund accounts. If you have balances in the guaranteed
investment contracts maturing on July 31, 1994 (that are
described in the Appendix dated June 19, 1992), a loan will be
charged to these contracts only if the assets in your other
Investment Fund accounts are of an insufficient amount against
which to charge the loan. Finally, a loan will be charged
against a Participant's National Stock Fund B account only if the
assets in the Participant's Investment Fund accounts are of an
insufficient amount against which to charge the loan. For
example, if a Participant borrows $2,000 from the Plan and $5,000
of his total Plan interest is invested in the Vanguard Investment
Contract Trust, $10,000 of his total Plan interest is invested in
the Vanguard Bond Market Fund, and $5,000 of his total Plan
interest is invested in National Stock Fund B, the loan will be
charged to the Participant's accounts as follows: $667 will be
charged to his Vanguard Investment Contract Trust account,
$1,333 will be charged to his Vanguard Bond Market Fund account,
and nothing will be charged to his National Stock Fund B account.
Assets of such accounts will be liquidated to provide monies for
the loan. A promissory note executed by the Participant to
evidence the loan will be delivered to the Trustee. For a
discussion of the rules regarding the manner in which loans are
charged to a Participant's Investment Fund accounts prior to
July 17, 1992, and the temporary freeze on loans in connection
with the change of Trustees, see the Appendix dated June 19, 1992.
Effective on or about September 1, 1992, loan
repayments, including repayments for loans taken out before
September 1, 1992, will be invested in Investment Funds in the
same proportion as the Participant's current Salary Reduction
Contributions are being invested by the Trustees at the time loan
repayments are made. Thus, if the Participant is contributing
100% of his Salary Reduction Contributions to National Stock
Fund A, 100% of his loan repayments will be invested in National
Stock Fund A. (If the Participant is making no Salary Reduction
Contributions to the Plan at the time loan repayments are made,
the Participant may designate how loan repayments shall be
invested.) For a discussion of the rules regarding the
investment of loan repayments in effect prior to September 1,
1992, see the Appendix dated June 19, 1992.
The interest rate on any loan shall be 1% higher than
the prime rate published in The Wall Street Journal on the last
business day preceding the date of the loan as the base rate on
corporate loans at large American money center commercial banks,
unless the Committee determines a different rate. Any such
different rate shall be commercially reasonable at the date of
the loan, based upon interest rates charged by commercial lenders
<PAGE>
on loans made in Buffalo, New York, under circumstances that are,
in the determination of the Committee, similar to loans under the
Plan.
All loans must be repaid within five years, except
loans qualifying as "home loans," which are loans used within a
reasonable time to acquire the principal residence of a
Participant. A "home loan" is subject to all the requirements to
which other loans are subject, except that a "home loan" will
have a repayment term determined by the Committee, which shall be
at least five years and not more than twenty-five years. Loans
may be prepaid in full or in part, at any time, without penalty,
provided that a partial prepayment must be at least $1,000.
Each loan will be secured by a lien on one-half of the
borrower's Accounts existing at any time, but no less than one-
half of the borrower's Accounts on the date of the loan. Such
lien shall be applied to the borrower's Accounts in the same
order of priority as is used to determine the investment of
repayments to the loan account (described above). The Committee
may require a Participant to provide additional security for a
loan at any time when it deems the loan inadequately secured.
It shall be a condition of each loan to a Participant
who is an active employee that the Participant execute a payroll
deduction form authorizing his Employer to withhold loan
repayments from his Base Pay, unless the Committee determines
otherwise.
Any such loan shall be limited to an amount which will
require weekly or other regular payments not in excess of the
estimated net amount of the Participant's Base Pay, reduced by
payroll taxes and other expected withholdings. The Committee may
require as a condition of the making of a loan that a
Participant's spouse consent in writing to the creation and
enforcement of the lien on the Participant's Account and the
distribution of the note in satisfaction or partial satisfaction
of the balance of the loan, or either. The Committee will not
grant any loan application if, in the determination of the
Committee, such grant might cause the Plan to be disqualified
under Section 401(a) of the Code.
Upon any default in payment, the Committee may without
notice accelerate the balance unpaid on the loan. In such case,
in the discretion of the Committee and provided the Participant
has attained age 59 1/2, become totally or permanently disabled,
or incurred a financial hardship that the Committee determines
would permit a hardship withdrawal as described in the Prospectus
under Withdrawals During Employment, the balance of the loan may
be satisfied in the manner described in the following sentence.
Each loan becomes due upon the Participant's termination of
employment for any reason and, unless repaid within thirty days
of becoming due, the balance of the loan will be satisfied by
distribution to the Participant for his beneficiary of his
promissory note and by cancellation of a portion of his Accounts,
or both, as the Committee determines. A transfer to a Company
that is not an Employer shall not be deemed a termination of
employment for this purpose.
Withdrawals During Employment
A Participant who has attained age 59 1/2 or who has
become totally and permanently disabled, but whose employment has
not terminated, may withdraw no less than $1,000 (unless it is
the balance of the Participant's accounts) and no more than 100%
of his accounts without terminating his participation in the
Plan. Only one such withdrawal may be made in any calendar year.
A Participant who has an outstanding loan from the Plan may make
such withdrawals only to the extent that the Committee determines
that the lien on his accounts may be released without impairing
the adequacy of the security for the loan. Moreover, if the
outstanding principal loan balance is more than $10,000, the
Participant may not make withdrawals that would reduce the value
of his accounts (including his loan account) below an amount
equal to twice such loan balance, and if the outstanding
principal loan balance is less than or equal to $10,000 he may
not make withdrawals that would reduce the value of his accounts
(including his loan account) below such loan balance.
A Participant who has not attained age 59 1/2 and who
has suffered a financial hardship also may withdraw up to 100% of
his accounts, but only if, and to the extent that, he cannot meet
the hardship with funds from other sources. Hardship withdrawals
can only be received out of Salary Reduction Contributions (and
earnings thereon credited as of December 31, 1988) and not from
earnings after December 31, 1988 or from Employer Matching
Contributions or the earnings thereon. Hardship withdrawals will
not be permitted unless they are on account of an immediate and
heavy financial need, such as an uninsured medical expense of the
Participant or his spouse or dependents, the purchase of a
principal residence for the Participant, post-secondary education
tuition (for the next 12 months) for the Participant or his
spouse, child or dependent, or the prevention of a Participant's
eviction from his principal residence or the foreclosure of
mortgage on his principal residence. Whether a Participant has
an immediate and heavy financial need will be determined by the
Committee on the basis of the facts and circumstances. However,
a financial need attributable to one of the reasons described in
the preceding sentence will be deemed an immediate and heavy
financial need.
Hardship withdrawals will be limited to the amount
required to meet the financial hardship, after consideration of
all other financial resources available to the Participant,
including reimbursement or compensation by insurance or
otherwise, reasonable liquidation of his assets to the extent
such liquidation would not itself cause an immediate and heavy
financial need, property owned by the Participant's spouse or his
minor children that is reasonably available to him, loans
available under the Plan or from commercial sources on reasonable
commercial terms, any funds available under the Thrift Plan, and
monies that will become available if the Participant discontinues
contributions to the Plan and to the Thrift Plan. To establish
the amount necessary to meet the financial hardship, a
Participant will be required to submit to the Committee a
complete financial statement or other information acceptable to
the Committee.
The Plan also offers an alternative procedure for
determining whether a withdrawal is necessary to satisfy the
financial hardship. Under the alternative procedure, the
withdrawal will be deemed necessary to satisfy a Participant's
need provided that the withdrawal is not in excess of the amount
of the financial need and the Participant has obtained all
distributions other than hardship distributions and all
nontaxable loans currently available under the Plan, the Thrift
Plan and all other plans maintained by National or any other
Employer. If a Participant elects this alternative procedure,
the Participant will not be eligible to make Salary Reduction
Contributions under the Plan or to make employee contributions
under the Thrift Plan, or to make contributions to any other plan
of deferred compensation of National or any other Employer, for a
period of 12 months after receipt of the hardship withdrawal. In
addition, the Participant's Salary Reduction Contributions, and
any other elective deferral under any other plan of National or
any other Employer, for his taxable year following the taxable
year in which the hardship withdrawal is received, is limited to
statutory limit on Elective Deferrals (as described in Limits on
Contributions, above) for such following taxable year, reduced by
the amount of the Participant's Salary Reduction Contributions
and other Elective Deferrals made during the taxable year in
which the hardship withdrawal is received.
Distribution of Benefits
(a) Retirement and Other Termination of Employment.
When a Participant retires or otherwise ceases to be employed by
National or its subsidiaries for any reason other than death, the
value of his accounts will be distributed to him in a lump sum as
soon as administratively practicable, but in no event later than
60 days after the last day of the Plan Year in which the
retirement or cessation of employment occurs. If, however, the
value of a Participant's accounts exceeds $3,500, distribution
will not be made before the Participant attains age 65 unless the
Participant consents in writing to such distribution. A
Participant may elect to defer distribution of his accounts until
the month of January immediately following the date of his
retirement or other termination of employment. A Participant
whose employment terminates after age 59 1/2 or after he becomes
eligible for an immediate pension under National's retirement
plan also may elect to defer all or a portion of the distribution
(provided that any partial deferral has a value of at least
$1,000) until as late as the end of the year in which he attains
age 70 1/2. However, the distribution must be completed no later
than the following April 1.
A Participant may revoke a deferral election, in whole
or part, at any time, by filing written notice to this effect
with the Committee, but now may do so no more than once during
any calendar year. Also, a revocation concerning less than all
of the Participant's accounts shall not be effective unless it
shall apply to a portion thereof having a value of at least
$1,000.
Distributions from all Funds other than National Stock
Fund A and National Stock Fund B shall be in cash, except that if
the Participant requests, and the Committee and the rules of a
mutual fund permit, a Participant's interest in a mutual fund may
be distributed in the form of shares of such mutual fund.
(b) Death. Upon a Participant's death during
employment, or after termination of employment but before
distribution of his accounts has been completed, the value of his
accounts will be distributed in a lump sum as soon as practicable
after the Committee receives notice of his death. If the
Participant was married at his death, distribution will be made
to his surviving spouse unless another beneficiary was designated
by the Participant and the spouse consented in writing to such
designation on a form provided by the Committee. Such form will
include the written designation of a beneficiary or beneficiaries
that must remain unchanged unless the consent expressly permits
designations by the Participant without any requirement of
further consent by the spouse. Also, such form will require that
the spouse acknowledge on the form that he or she understands the
effect of the consent and the spouse's signature must be
witnessed by a notary public. A spouse's consent is irrevocable.
If the Participant was not married at his death, or if the spouse
consented to the designation of a beneficiary, distribution will
be made to his designated beneficiary or beneficiaries. If no
designated beneficiary survives the Participant, distribution
will be made to the Participant's spouse, if any, and otherwise
to the estate of the Participant. A beneficiary designation will
not be effective unless it is filed with the Committee prior to
the Participant's death (together with the consent of the
Participant's spouse, if required). A Participant may revoke a
designation of beneficiary, other than his spouse, at any time by
written notice filed with the Committee, without the consent of
the beneficiary or spouse. A beneficiary need not be a natural
person.
(c) Attainment of Age 70 1/2. A Participant whose
employment has not terminated will receive distribution of the
value of his accounts in the Plan not later than April 1 of the
calendar year following the calendar year in which he attains age
70 1/2. If he continues to contribute to the Plan, the value of
his accounts in the Plan will be distributed to him no later than
April 1 of each succeeding year.
Modification or Termination of the Plan
The terms of the Plan do not contemplate any specific
termination date. The Plan may be amended at any time,
prospectively or retroactively, by the Board of Directors of
National or by joint or several action of National's President
and Secretary. However, only the Board of Directors may make an
amendment that materially increases the benefits under the Plan
or the cost of the Plan to the Employers. No amendment shall
make it possible for assets of the Plan to be used for purposes
other than the exclusive benefit of Participants or their
beneficiaries or the reasonable administrative expenses of the
Plan. The Board of Directors of National may terminate the Plan
in whole or in part at any time. An Employer other than National
may at any time terminate its participation in the Plan.
Upon complete termination of the Plan, all Participants
would cease to actively participate but their accounts would be
maintained until distributed in accordance with the rules
described above under Withdrawals During Employment and
Distribution of Benefits, or, subject to the Code and regulations
thereunder, at such other time as the Committee may determine.
Upon partial termination by National, or upon termination of
participation by an Employer other than National, affected
employees would cease to actively participate but their accounts
would be maintained until distributed in accordance with such
rules or, subject to the Code and regulations thereunder, at such
other time as the Committee may determine.
RESTRICTIONS ON RESALE
Any Participant who is an "affiliate" of National and
who becomes the owner of any shares of Common Stock under the
Plan is prohibited from reselling such shares except pursuant to
an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or under the provisions
of Rule 144 of the Securities Act or another exemption from the
registration requirements of the Securities Act. An "affiliate,"
as defined by Rule 405 of the Securities Act, means any person
who directly or indirectly controls, is controlled by, or is
under common control with, National.
FEDERAL INCOME TAX CONSEQUENCES
National has received determination letters from the
Internal Revenue Service indicating that the Plan qualifies under
Sections 401(a) and 401(k) of the Code. Amendments have been
made to the Plan since the receipt of the last determination
letter and, not later than December 31, 1993, the Plan will be
further amended, effective as required by the Act, the Code and
the Internal Revenue Service, to comply with the provisions of
the Act and to comply with other applicable requirements of the
Internal Revenue Service. After such further amendments, a new
determination letter will be requested from the Internal Revenue
Service.
The Plan currently is being, and will continue to be,
administered in accordance with the requirements of the Act and
other applicable requirements of the Code. However, as permitted
by the Act, the Code and the Internal Revenue Service, the Plan
has not yet been amended to incorporate these requirements.
Under present law, participation in the Plan will have the
following federal income tax consequences, provided the Plan as
amended is determined to be qualified and provided that it
operates and is administered in accordance with the requirements
of the Code.
Contributions and Earnings
Salary Reduction Contributions and Employer Matching
Contributions are deductible by the Employers, subject to
applicable limitations contained in the Code. Participants are
not subject to federal or New York or California income tax on
such contributions until they are withdrawn or distributed.
Participants subject to the Pennsylvania income tax must include
Salary Reduction Contributions in income for purposes of such
tax. Salary Reduction Contributions are subject to Social
Security taxes. The earnings and gains on the assets of the Plan
are not subject to federal income taxation until withdrawn or
distributed.
The Employers do not intend to permit any Participant
to make Salary Reduction Contributions in excess of the limit on
Elective Deferrals established in the Code ($8,728 for calendar
year 1992). If a Participant's Elective Deferrals exceed such
limits, the excess amounts will be returned and will be
includable in the Participant's gross income.
If contributions are made on behalf of a Participant
under the Plan for a taxable year and contributions are made on
his behalf by the Employers or an unrelated employer under
another plan with a cash or deferred arrangement as described
above in THE PLAN -- Limits on Contributions, for the same
taxable year and if the total amount of deferrals contributed on
his behalf exceeds the limits established in the Code, such
excess amounts ("Excess Deferrals") are included in the
Participant's gross income for the taxable year in which the
deferrals were made. Prior to March 1 of the year following the
taxable year in which the deferrals were made, the Participant
may allocate Excess Deferrals among such plans in which he
participated and notify the administrator of each such plan,
including the Committee, of the portion of Excess Deferrals
allocated to such plan. Each such plan may then distribute the
portion of the Excess Deferrals allocated to it and the income
attributable to such portion to the Participant by April 15 of
that year. Such a distribution will not be subject to the 10%
excise tax on early withdrawals from qualified plans, or the 15%
tax on excess distributions from qualified plans, both discussed
below. In the event any Excess Deferrals are not distributed
prior to April 15, they will be subject to the Plan's regular
restrictions on withdrawals and, even though such deferrals were
included in income for the year of deferral, they will be
included again, together with income thereon, upon future
distribution.
Excess Contributions and the income allocable thereto
(see THE PLAN - Limits on Contributions, above) may be
distributed to certain highly compensated employees during the
Plan Year following the Plan Year to which the contribution
relates. If distributed on or before March 15 of the year
following the Plan Year to which the contributions relate, the
Excess Contributions and income allocable thereto are includable
in the employee's gross income for such Plan Year. However, if
distributed after March 15 of the year following the Plan Year to
which the contributions relate, or if distributed on or before
that date and in an amount less than $100, Excess Contributions
and income allocable thereto are includable in gross income for
the year in which distributed.
Withdrawals During Employment
Amounts withdrawn by a Participant while employed are
subject to federal income tax upon receipt as ordinary income,
and taxable amounts withdrawn prior to attaining age 59 1/2 are,
with certain exceptions, subject to a uniform additional 10%
"early distribution tax." See Early Distribution Tax, below.
However, if the Participant has attained age 59 1/2 and withdraws
in one taxable year the balance of his accounts under the Plan
and the Thrift Plan, he may be eligible for the special tax
treatment accorded lump sum distributions. See Lump Sum
Distributions, below.
Lump Sum Distributions
A lump sum distribution is a distribution in one
taxable year of the balance of the Participant's accounts under
the Plan and the Thrift Plan, that becomes payable on account of
the Participant's termination of employment, death or permanent
and total disability, or after the Participant has attained age
59 1/2.
(a) Amount of Taxable Income. A Participant receiving
a lump sum distribution of cash, mutual fund shares or
Common Stock under the Plan will have taxable income in an
amount equal to the cash distributed plus the market value
of the mutual fund shares on the date of distribution plus
the cost to the Plan of acquiring the Common Stock
distributed (or, if lower, the market value of the Common
Stock on the date of distribution). In addition, if a
Participant receives a lump sum distribution on account of
termination of employment prior to the year in which he
attains age 55, the taxable amount of such distribution will
generally be subject to an additional 10% "early
distribution tax." See Early Distribution Tax, below.
(b) Type of Income. The income realized on the
receipt of the lump sum distribution will be taxed as
ordinary income. However, a Participant who has completed
at least five years of participation in the Plan prior to
the taxable year in which the distribution occurs and has
attained age 59 1/2 (or attained age 50 before January 1,
1986) may elect to have the distribution taxed under the
special five-year averaging method. A Participant may make
only one such election in his lifetime; however, for
purposes of applying this one-time-only rule, a Participant
may disregard any election made with respect to a lump sum
distribution received prior to January 1, 1987, if he had not
attained age 59 1/2 at the time of such prior election. The
election must be made with respect to all lump sum distributions
received in the year. If a lump sum distribution is made on
account of the Participant's death, the special five-year
averaging method may be elected by the recipient even if the
Participant did not participate in the Plan for at least five
years before his death. (Up to $5,000 of employee death
benefits, which include lump sum distributions under the Plan,
may be excluded from income with respect to a Participant.)
The Code provides a special rule that enables a
recipient who had attained age 50 before January 1, 1986, to
elect to apply the ten-year averaging method available
under prior law rather than the five-year averaging method.
A Participant making such an election must use the 1986 tax
rates and zero bracket amount, rather than the rates and
standard deduction applicable in the year of distribution.
(c) Sale of Common Stock Distributed. Upon a
subsequent sale of the Common Stock distributed in a lump
sum distribution, the Participant's basis for determining
gain or loss is the amount includable in income with respect
to the Common Stock when it was distributed from the Plan.
See Amount of Taxable Income, above.
If the Common Stock distributed from the Plan is sold
at a gain, the amount of the gain recognized, up to an
amount equal to the net unrealized appreciation in the
Common Stock, is treated as long-term capital gain. The net
unrealized appreciation equals the excess, if any, of the
market value of the Common Stock on the date of distribution
over the cost to the Plan of acquiring such stock. Any
recognized gain from the sale in excess of the net
unrealized appreciation in the Common Stock will be treated
as long-term or short-term capital gain, depending upon the
holding period of the Common Stock since the date of
distribution.
(d) Redemption of Mutual Fund Shares Distributed.
Upon a subsequent redemption of mutual fund shares received
in a lump sum distribution, the Participant's basis for
determining gain or loss realized on the redemption is the
market value of the shares on the date of distribution. Any
gain or loss recognized on such redemption will be treated
as long-term or short-term capital gain or loss, depending
upon the holding period of the shares since the date of
distribution.
(e) Rollovers. Taxation of a lump sum distribution
may be deferred to the extent that all or a portion of the
cash, Common Stock or mutual fund shares received in the
distribution (or the proceeds from a sale of the Common
Stock or redemption of mutual fund shares) is transferred
within 60 days after receipt of the distribution to an
individual retirement account, an individual retirement
annuity or another qualified employee benefit plan. If only
a portion of the distribution is so transferred, the balance
of the distribution will be taxable as ordinary income
without the benefit of the special five-year or ten-year
averaging method. However, to the extent that the balance
of the distribution consists of Common Stock, taxation of
the net unrealized appreciation in the Common Stock will be
deferred until a subsequent sale of such stock. If a lump
sum distribution includes a distribution from the Thrift
Plan, any amount of such distribution that consists of
employee after-tax contributions that are not taxable,
cannot be rolled over.
A Participant who transfers all or a portion of his
distribution from the Plan to an individual retirement
account will lose the benefit of five-year or ten-year
averaging and deferred tax on net unrealized appreciation on
Common Stock when he ultimately receives the distribution
from the individual retirement account. If, however, a
transfer is made to a qualified employee benefit plan, the
special five-year or ten-year averaging method may be
available under certain circumstances with respect to
distributions from such plan.
Other than Lump Sum Distributions
A distribution that does not qualify as a lump sum
distribution generally will be taxable as ordinary income in an
amount equal to the cash distributed plus the market value on the
date of distribution of any Common Stock and any mutual fund
shares. Upon a subsequent sale of Common Stock or redemption of
mutual fund shares, the Participant's basis for determining gain
or loss on the sale is the market value of the Common Stock or
mutual fund shares on the date of distribution. Any gain or loss
on such sale or redemption will be treated as long-term or short-
term capital gain or loss, depending upon the holding period of
the shares since the date of distribution. If a distribution
that does not qualify as a lump sum distribution is at least 50%
of the balance of the Participant's accounts under the Plan and
is made on account of death, permanent and total disability, or
termination of employment, he may be eligible for rollover
treatment applicable to partial distributions. See Rollover of
Partial Distributions, below.
Rollover of Partial Distributions
If a Participant receives a distribution of at least
50% of the balance of his accounts under the Plan on account of
termination of employment, permanent and total disability, or
death, and he makes an election prescribed by the Code, taxation
may be deferred to the extent that all or a portion of the cash,
Common Stock or mutual fund shares received in the distribution
(or the proceeds from a sale of the Common Stock or redemption of
mutual fund shares) is transferred within 60 days to an
individual retirement account or an individual retirement
annuity. If only a portion of the distribution is so
transferred, the balance of the distribution will be taxable as
ordinary income without the benefit of five-year or ten-year
averaging. If a Participant makes the election mentioned above
he may not take advantage of the special five-year or ten-year
averaging method for any future lump sum distribution under
either the Plan, any employee stock ownership plan of National,
or the Thrift Plan.
Loans
Unless the proceeds of a Plan loan are allocable to
investment or business property or interests therein, no interest
paid on such a loan will be deductible. No interest deduction
will be allowed where the loan is secured by a Participant's
elective deferrals, regardless of the use of proceeds. The
legislative history of Section 72(p) of the Code indicates, and
it is anticipated that regulations will provide, that if a
Participant's loan from the Plan (other than a "home loan") is
not repaid within five years the Participant will be treated as
having received at the expiration of the five-year period a
distribution from the Plan equal to the balance of the loan,
which would be taxable as ordinary income. This treatment would
not relieve the Participant of his obligation to repay the
balance of the loan.
Withholding
Plan distributions are subject to federal income tax
withholding unless the payee files an election not to have
withholding applied.
Early Distribution Tax
A uniform additional 10% "early distribution tax" will
be imposed on the taxable portion of any distribution received by
a Participant before attaining age 59 1/2. A number of types of
distributions are excepted from this tax, including the
following: (i) a distribution after separation from service if
the participant separated from service during or after the
calendar year in which he attains age 55; (ii) a distribution
attributable to permanent and total disability; (iii) a
distribution to a Participant, to the extent such distribution
does not exceed the amount allowable to the Participant as a
deduction for medical expenses under Section 213 of the Code for
such year; (iv) a distribution made to a Participant's
beneficiary or estate on account of his death; (v) a distribution
to an alternative payee pursuant to a qualified domestic
relations order; and (vi) a distribution of Excess Contributions
made on behalf of highly compensated employees.
Excess Distribution Tax
A uniform additional 15% tax is imposed on the taxable
amount of distributions or withdrawals received by a Participant
in one calendar year in excess of $150,000 (or, if greater,
$112,500 adjusted for inflation). Distributions or withdrawals
subject to this tax include distributions from all qualified
plans (including plans of National), tax sheltered annuities,
individual retirement accounts, and individual retirement
annuities. Qualified plans of National include the Plan, Thrift
Plan, National's retirement plan and National's employee stock
ownership plans. Certain amounts are excluded from determination
of application of this tax. Excludable distributions include:
(i) amounts excluded from the recipient's income due to a
rollover into an individual retirement account, an individual
retirement annuity or other qualified plan; (ii) amounts paid
pursuant to a qualified domestic relations order and not
includable in the Participant's income; (iii) amounts paid after
the death of the Participant; and (iv) amounts representing
Excess Contributions made on behalf of highly compensated
employees. A separate maximum amount ("lump sum maximum")
applies to lump sum distributions if five-year or ten-year income
averaging is elected. The lump sum maximum is five times the
otherwise applicable ceiling for a calendar year. Other
retirement benefits are not aggregated with a lump sum
distribution in applying the lump sum maximum. In addition,
certain benefits accrued before August 1, 1986 are exempt if the
accrued benefit on August 1, 1986 was in excess of $562,500 and
the Participant makes an election on a return filed for a taxable
year ending prior to January 1, 1989 to have one of two pro rata
exclusion grandfather rules apply.
If a Participant dies with undistributed funds in the
Plan or another tax-favored retirement plan, an additional estate
tax may be imposed.
Summary
The foregoing is intended only as a general summary of
the federal income tax consequences of participation in the Plan
and does not purport to be a complete statement of such
consequences. Further, the summary does not include information
on federal estate and gift taxation and state and local taxation,
except as to the New York, Pennsylvania and California income
taxation of Salary Reduction Contributions described in
Contributions and Earnings, above. Therefore, each Participant
is urged to consult with his own tax adviser.
DESCRIPTION OF COMMON STOCK
National's authorized capital stock consists of
100,000,000 shares of Common Stock with $1.00 par value, and
3,200,000 shares of Preferred Stock having a par value of $25.00
per share. No shares of Preferred Stock are currently
outstanding. The following is a summary of certain of the terms
and provisions of National's Common Stock.
Dividend Rights
The holders of Common Stock are entitled to receive
such dividends as are declared by the Board of Directors of
National, after payment of or provision for full cumulative
dividends and sinking funds, if any, for any outstanding
Preferred Stock, and subject to certain other limitations
relating to outstanding indebtedness and Preferred Stock of
National. In general, these limitations prohibit or restrict the
amount of payment of cash dividends on, or the purchase or
redemption of, Common Stock in the following situations:
(i) cumulative dividends on and amounts paid for purchase or
redemption of Common Stock and Preferred Stock since December 31,
1967 exceed or would exceed consolidated net income available for
dividends for that same period plus $10,000,000 plus any
additional amount authorized or approved, upon application of
National, by the Securities and Exchange Commission; (ii) the sum
of Common Stock capital and consolidated surplus (as adjusted) is
or would become less than the aggregate involuntary liquidating
value of outstanding Preferred Stock, if any; or (iii) Common
Stock equity is or would become less than 25% of total
consolidated capitalization (as defined).
Voting Rights and Classification of the Board of Directors
The holders of Common Stock are entitled to one vote
per share. Whenever dividends on all outstanding series of
Preferred Stock, if any, are in default in an amount equivalent
to four full quarterly dividends, and thereafter until all such
dividends are paid or declared and set aside for payment, the
holders of all shares of Preferred Stock, if any, voting as a
class are entitled to elect additional directors necessary to
constitute a majority of the Board of Directors. The affirmative
vote of the majority of the votes cast by the holders of the
Common Stock is required for the merger or consolidation of
National or for the sale of substantially all of its assets. In
addition, the approval of the holders of a majority of the
outstanding shares of Preferred Stock, if any, voting as a
separate class, is required for any such transaction unless the
transaction is ordered, exempted, approved or permitted by the
Securities and Exchange Commission. The Board of Directors is
divided into three classes, with, as nearly as possible, an equal
number of directors. The approval of at least three-fourths of
the entire Board of Directors or, in the event that the Board of
Directors consists of directors elected by the holders of
Preferred Stock, the approval of a majority of the entire Board
is required to amend or repeal the classified board provisions
contained in the Restated Certificate of Incorporation, as
amended.
Liquidation Rights
Upon any dissolution, liquidation or winding up of
National, the holders of Common Stock are entitled to receive pro
rata all of National's assets and funds remaining after payment
of or provision for creditors and distribution of or provision
for distribution of preferential amounts and unpaid accumulated
dividends to holders of Preferred Stock, if any.
Preemptive Rights
Holders of Common Stock and Preferred Stock have no
preemptive right to purchase or subscribe for any shares of
capital stock of National.
Business Combinations
National's Restated Certificate of Incorporation, as
amended, provides that certain conditions must be met before the
consummation of any merger or other "Business Combination," as
defined therein, by National or any of its subsidiaries with any
stockholder who is directly or indirectly the beneficial owner of
5% or more of National's outstanding Common Stock ("Substantial
Stockholder") or with an affiliate of such stockholder
("Affiliate"). The term Substantial Stockholder does not include
National, any of its subsidiaries, or any trustee holding Common
Stock of National for the benefit of the employees of National or
any of its subsidiaries pursuant to one or more employee benefit
plans or arrangements. The conditions, which are in addition to
those otherwise required by law, prescribe the minimum amount per
share that must be paid to holders of Common Stock and the form
of consideration paid, and require that the holders of Common
Stock be furnished certain information about the Business
Combination prior to voting on it. Business Combination
generally means any of the following transactions: a merger,
consolidation or share exchange; a sale, lease, exchange or other
disposition of any assets in exchange for property having a fair
market value of more than $10,000,000, if determined to be a
Business Combination by certain directors of National in
accordance with provisions of the Restated Certificate of
Incorporation, as amended; the issuance or transfer of securities
in exchange for property having a fair market value of more than
$10,000,000, if determined to be a Business Combination by
certain directors of National in accordance with provisions of
the Restated Certificate of Incorporation, as amended; the
adoption of a plan of liquidation or dissolution of National; or
any reclassification of securities, recapitalization or
reorganization that has the effect of increasing the
proportionate share of the outstanding shares of any class of
securities of National that is owned by any Substantial
Stockholder or by an Affiliate of a Substantial Stockholder. The
approval of at least three-fourths of the entire Board of
Directors or, in the event that the Board of Directors consists
of directors elected by the holders of Preferred Stock, the
approval of a majority of the entire board, is required to amend
or repeal the business combination provisions contained in the
Restated Certificate of Incorporation, as amended.
INCORPORATION BY REFERENCE
National and the Plan hereby incorporate by reference
the following documents:
(a) National's Annual Report on Form 10-K for the
fiscal year ended September 30, 1991;
(b) National's Quarterly Report on Form 10-Q for the
period ended December 31, 1991;
(c) National's Quarterly Report on Form 10-Q for the
period ended March 31, 1992;
(d) The Plan's Annual Report on Form 11-K for the
fiscal year ended December 31, 1991.
All documents filed by National or the Plan pursuant to
Section 13, 14 or 15(d) of the Exchange Act after the date hereof
and prior to the filing of a post-effective amendment which
indicates that all participations and shares of Common Stock
offered under the Plan have been sold or which deregisters all
such participations and shares then remaining unsold, shall be
deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the respective dates of filing of such
documents.
AVAILABILITY OF INFORMATION
National will provide without charge to each
Participant upon written or oral request, a copy of any and all
of the documents described above (other than those incorporated
by reference into such documents, which documents are
incorporated by reference herein). National also will furnish
without charge to each Participant upon written or oral request
of such Participant, a copy of any one of the following:
(1) National's annual report to shareholders for its latest
fiscal year, and (2) National's annual report on Form 10-K for
its latest fiscal year. Requests for such documents shall be
made to National Fuel Gas Company, 10 Lafayette Square, Buffalo,
New York 14203, Attn: Trust Plans Administration, telephone
number (716) 857-7888.
COMMITTEE MEMBERS
The members of the Committee and their positions on the
Committee, relationships with National and its subsidiaries, and
business addresses and telephone numbers are as follows:
Richard M. DiValerio Chairman of Committee
Secretary of National Fuel Gas
Company and Enerop Corporation
Secretary & General Counsel, and
Director of National Fuel Gas Supply
Corporation
Vice President & Secretary, and
Director of Penn-York Energy
Corporation
10 Lafayette Square
Buffalo, New York 14203
Telephone No.: (716) 857-7000
Philip C. Ackerman Member of Committee
Senior Vice President of National
Fuel Gas Company
President and Director of Penn-York
Energy Corporation, Seneca Resources
Corporation, Utility Constructors,
Inc., Empire Exploration, Inc.,
Highland Land and Minerals, Inc.,
Data Track Account Services, Inc. and
Enerop Corporation
Executive Vice President and
Director of National Fuel Gas
Distribution Corporation
10 Lafayette Square
Buffalo, New York 14203
Telephone No.: (716) 857-7000
William J. Hill, Jr. Member of Committee
President and Director of National
Fuel Gas Distribution Corporation
10 Lafayette Square
Buffalo, New York 14203
Telephone No.: (716) 857-7000
Dennis J. Seeley Member of Committee
Senior Vice President and Director
of National Fuel Gas Distribution
Corporation
Director of Enerop Corporation
10 Lafayette Square
Buffalo, New York 14203
Telephone No.: (716) 857-7000
Dated: June 19, 1992
APPENDIX
This Appendix dated June 19, 1992 supplements the
Prospectus dated June 19, 1992, relating to the National Fuel Gas
Company Tax-Deferred Savings Plan for Non-Union Employees (the
"Plan"). Except as specifically described below, the information
set forth in this Appendix no longer will be relevant to the Plan
after November 1, 1992. Reference is made to the Prospectus for
the meaning of defined terms used in this Appendix.
Investment of Contributions
Investment Funds Available Before August 1, 1992.
Until July 31, 1992, the Investment Funds available for receipt
of Participants' contributions are as follows:
National Stock Fund A - see description of this
Investment Fund in the Prospectus.
Guaranteed Investment Fund - consisting of one or
more insurance company contracts or bank contracts that
guarantee principal and provide for the crediting of
interest at an agreed rate. The Guaranteed Investment
Fund consists of two cycles. The contracts in the
first cycle mature on July 31, 1992, and the proceeds
must then be reinvested by Participants in one of the
Investment Funds described in the Prospectus. The
second cycle, that has a contribution period of
August 1, 1990 through July 31, 1992, has two
contracts, both of which mature on July 31, 1994. One
of those contracts is issued by Continental Assurance
Company and has a term of August 1, 1990 to July 31,
1994. Contributions for periods from August 1, 1990 to
July 31, 1991 will be credited with interest at an
effective annual rate of 9.42% from the date the
contributions are invested until July 31, 1994. The
second contract is issued by Provident National
Assurance Company and has a term of August 1, 1991 to
July 31, 1994. Contributions for periods from
August 1, 1991 to July 31, 1992 will be credited with
interest at an effective annual rate of 7.64% from the
date the contributions are invested until July 31,
1994. Participants who made contributions to the
Guaranteed Investment Fund for periods between
August 1, 1990 and July 31, 1992 will remain invested
in this Fund until those contracts mature on July 31,
1994.
Mutual Funds - consisting of a number of separate
Mutual Funds. Each Mutual Fund offered under the Plan
is considered as a separate Investment Fund.
Vanguard Money Market Reserves, Inc. - Federal
Portfolio - A money market mutual fund seeking to
obtain income consistent with the preservation of
capital and liquidity by investing exclusively in
short-term securities issued by the U.S. Treasury and
agencies of the U.S. Government that mature in one year
or less. The Federal Portfolio's average maturity is
less than 90 days. The Federal Portfolio is managed by
the officers of Vanguard Money Market Reserves, Inc.,
and receives investment advisory services from an
investment management staff employed by The Vanguard
Group, Inc., an affiliate of Vanguard Money Market
Reserves, Inc. Shares of the Federal Portfolio are
purchased at the then current net asset value per
share. The Federal Portfolio has been available under
the Plan since February 1, 1987. No contributions may
be directed to the Federal Portfolio after July, 1992.
The percentage total annual return of the Federal
Portfolio since 1987 are as follows:
Year Return
1987 6.37%
1988 7.33%
1989 9.15%
1990 8.07%
1991 5.95%
1/1/92 -
5/31/92 1.70%
Vanguard Money Market Reserves, Inc. - Prime
Portfolio - see description of this Investment Fund in
the Prospectus.
Vanguard Bond Market Fund, Inc. - see description
of this Investment Fund in the Prospectus.
Vanguard Index Trust - 500 Portfolio - see
description of this Investment Fund in the Prospectus.
There is no assurance that the objectives of any
of the Mutual Funds will be obtained.
The Mutual Funds are more fully described in
prospectuses that are available, upon request, from
either the Committee or the distributor, which is The
Vanguard Group, Inc., Vanguard Financial Center, Valley
Forge, Pennsylvania 19482 (800) 523-1188. The
description of the Mutual Funds contained above was
obtained from such prospectuses. The offer to invest
in the above Mutual Funds is made only by such
prospectuses, not by this Prospectus, and each employee
is urged to read such prospectuses carefully before
electing to invest his Salary Reduction Contributions
in those funds.
Investment Fund Selection Procedures in Effect Prior to
August 1, 1992. A Participant, with the exception of
contributions directed to the Guaranteed Investment Fund, may
change his investment election for future contributions,
effective as of any February 1 or August 1, by written notice
filed with the Committee at least 30 days prior to such date or
with such other notice as the Committee requires. Except with
respect to the Guaranteed Investment Fund, a Participant may
transfer among Investment Funds his account balances allocable to
Salary Reduction Contributions, effective as soon as
administratively practicable, by filing a written notice with the
Committee. Restrictions imposed on Participants investing
contributions in the Guaranteed Investment Fund are described
below.
Restrictions on Changes in Salary Reduction
Contributions Directed to Guaranteed Investment Fund. A
Participant who is contributing to the Guaranteed Investment Fund
is not permitted prior to July 31, 1992 to reduce his percentage
of Salary Reduction Contributions if it would decrease the amount
of his contribution directed to such fund, unless he suspends
Salary Reduction Contributions altogether.
Restrictions on Changes in Investment Elections. A
Participant who is contributing to the Guaranteed Investment Fund
is not permitted prior to July 31, 1992 to direct future
contributions to a different fund if it would decrease the amount
of his contributions to the Guaranteed Investment Fund. After
July 31, 1992, a Participant will have no further opportunity to
direct future Salary Reduction Contributions to the Guaranteed
Investment Fund.
Restrictions on Transfers between the Guaranteed
Investment Fund and Other Investment Funds. Under the terms of
the Plan and the contracts in the Guaranteed Investment Fund,
(i) a Participant, prior to the terminal date of each contract,
will not be permitted to transfer any portion of his interests in
those contracts out of the Guaranteed Investment Fund and into
other Investment Funds, (ii) prior to August 1, 1992, a
Participant will not be permitted to transfer into the Guaranteed
Investment Fund any portion of his interest in Vanguard Money
Market Reserves, Inc. - Federal Portfolio, Vanguard Money Market
Reserves, Inc. - Prime Portfolio, or Vanguard Bond Market Fund,
Inc., and (iii) after July 31, 1992, a Participant will not be
permitted to transfer any portion of his interests in any
Investment Fund into the Guaranteed Investment Fund.
Required Transfers. All Participants who have elected
to direct contributions to the Vanguard Money Market Reserves,
Inc. - Federal Portfolio or the Guaranteed Investment Fund will
be required to change their election for future Salary Reduction
Contributions effective as of August 1, 1992. The Investment
Funds available for future contributions made on or after
August 1, 1992 are described in the Prospectus. Participants who
have an account balance in the Vanguard Money Market Reserves,
Inc. - Federal Portfolio will be required to transfer such
account balance, out of the Federal Portfolio as of August 1,
1992 and into any other Investment Fund that is available on or
after August 1, 1992. Participants will be notified as to the
manner of effecting the transfer. The transfer of a
Participant's Federal Portfolio Account into a new Investment
Fund selected by the Participant will be made as soon as
practicable after August 1, 1992. During the period between
August 1, 1992 and the time the account balance actually is
transferred to the new Investment Fund, the account balance will
be invested in an interest bearing account. If no transfer is
made by the Participant, his account will automatically be
transferred to the Vanguard Money Market Reserves, Inc. - Prime
Portfolio. Participants who have account balances in the
Guaranteed Investment Fund contracts that mature on July 31, 1992
will be required to transfer such account balances to any other
Investment Fund that is available on or after August 1, 1992.
Participants will be notified as to the manner of effecting the
transfer. The transfer of a Participant's Guaranteed Investment
Fund account balances into a new Investment Fund selected by the
Participant will be made as soon as practicable after August 1,
1992. During the period between August 1, 1992 and the date on
which the account balance actually is transferred to the new
Investment Fund, the account balances will be invested in an
interest bearing account. If no transfer is made by the
Participant, his account will automatically be transferred to the
Vanguard Investment Contract Trust.
Transition Period. With respect to the August 1, 1992
investment election date for designating investments of future
Salary Reduction Contributions, Participants must submit their
written election forms to the Committee by no later than July 17,
<PAGE>
1992. The Committee will not accept any investment elections for
future Salary Reduction Contributions after that date. Between
July 17, 1992 and approximately November 1, 1992 (the "Transition
Period"), Participants may not change the manner in which future
Salary Reduction Contributions are invested. This freeze on
Participant investment designations for future Salary Reduction
Contributions is necessary to accommodate the change in Trustees
from Manufacturers Hanover Trust Company to Vanguard Fiduciary
Trust Company. Although it is necessary to temporarily ask
Participants not to change their elections with respect to
investments of future Salary Reduction Contributions, Salary
Reduction Contributions will continue to be withheld from
Participants' paychecks and transmitted monthly to the Trustee
throughout the Transition Period. Investments of Salary
Reduction Contributions during the Transition Period will be
invested in accordance with the last investment election the
Participant submitted prior to the July 17, 1992 deadline. As a
result of the change in Trustees, it also will be necessary to
temporarily freeze the Participants' ability to transfer existing
account balances attributable to Salary Reduction Contributions
between Investment Funds. Therefore, between July 17, 1992 and
approximately November 1, 1992, participants also will be unable
to change the manner in which existing account balances are
invested.
Loans to Participants
Temporary Loan Freeze. To accommodate the change in
Trustees from Manufacturers Hanover Trust Company to Vanguard
Fiduciary Trust Company, it will be necessary to freeze the
Participant loan program under the Plan. Beginning July 17,
1992, the Committee will temporarily suspend its processing of
Participant loan applications. The Committee will not resume
processing Participant loan applications until on or about
November 1, 1992. The freeze on the processing of loan
applications will not affect the obligation of Participants with
outstanding loans to continue making loan repayments. Loan
repayments must continue to be made throughout the Transition
Period. For a discussion of the investment of loan repayments
made before September 1, 1992, see discussion below. For a
discussion of the investment of loan repayments on or after
September 1, 1992, see the Prospectus.
Charging Loans Against Investment Fund Accounts Before
July 17, 1992. A loan will be charged against the Participant's
accounts, if any, in mutual funds, the Guaranteed Investment
Fund, National Stock Fund A, and National Stock Fund B, in that
order or in such other order of priority as the Committee shall
determine. Assets of such accounts will be liquidated to provide
monies for the loan.
Investments of Loan Repayments Made Before September 1,
1992. Before September 1, 1992, loan repayments will be invested
in the Investment Fund or Funds (other than National Stock
Fund B) that have been designated by the Participant. However,
principal amounts borrowed from the Guaranteed Investment Fund,
National Stock Fund A and National Stock Fund B must be repaid to
such funds before repayments of principal can be invested in
mutual funds.
EXHIBIT F-1
October 12, 1989
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: National Fuel Gas Company
File No: 70-7674
Gentlemen:
With reference to Amendment No. 5 (Post Effective) to the subject
Declaration filed on this date by National Fuel Gas Company
("National") under the Public Utility Holding Company Act of 1935, as
amended, regarding National's proposal to issue up to 2,000,000 shares
of its common stock, no par value, ("Additional Common Stock") in
connection with two 401(k) plans, all as more fully described in such
Amendment, I am of the opinion that, upon the completion of such
proposed transactions:
(1) All state laws that I deem applicable to the proposed
transactions will have been complied with;
(2) The consummation of the proposed transactions will not
violate the rights of the holders of any securities issued
by National or its subsidiaries; and
With respect to the valid organization and due existence of
National, the valid issuance and nonassessability of the Additional
Common Stock, and the rights of the holders thereof, I refer you to
the opinion of Stryker, Tams & Dill.
I hereby consent to the use of this opinion in connection with
this Declaration.
Very truly yours,
Kyle G. Storie
EXHIBIT F-2
STRYKER, TAMS & DILL
TWO PENN PLAZA EAST
NEWARK, N.M. 07105
(201) 491-9500
October 12, 1994
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Fuel Gas Company
Post-Effective Amendment No. 5 to Declaration
on Form U-1 (File No. 70-7674)
Ladies and Gentlemen:
This opinion relates to Post-Effective Amendment No. 5, filed on
or about the date hereof, to the Declaration (as so amended, the
"Amended Declaration") heretofore filed by National Fuel Gas Company
(the "Company") under the Public Utility Holding Company Act of 1935,
as amended, seeking authorization to issue and deliver up to 2,000,000
shares of authorized but unissued common stock of the Company, $1.00
par value per share (the "Additional Common Stock"), to the trustee of
the Company Tax-Deferred Savings Plan and the Company Tax-Deferred
Savings Plan for Non-Union Employees (collectively, the "Plans") in
lieu of the matching cash contributions required of the Company
thereunder.
In this connection, we have examined the Restated Certificate of
Incorporation and By-Laws of the Company, each as amended, the
pertinent Plan documents, the description of the Plans in the Amended
Declaration, and such other documents, certificates and corporate
records and such questions of law as we have deemed necessary for the
purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of New Jersey.
2. If (i) the proposed transactions are consummated in
accordance with the Amended Declaration and the orders of the
Securities and Exchange Commission thereon, (ii) the
Securities and Exchange Commission
October 12, 1994
Page -2-
Additional Common Stock is duly registered under the Securities Act of
1933, as amended, and the registration statement of the Company with
respect thereto is duly filed and becomes effective, (iii) the Board
of Directors of the Company or a duly appointed committee thereof
shall have authorized the issuance of the Additional Common Stock
pursuant to and in accordance with the terms of the Plans, and (iv)
the certificates representing the Additional Common Stock so issued
shall have been duly executed, countersigned, registered and delivered
pursuant to the terms of, and subject to the conditions set forth in,
the Plans:
(A) All laws of the State of New Jersey that we
consider applicable to the proposed transactions will have been
complied with;
(B) The Additional Common Stock issued pursuant to
the Plans will be validly issued, fully paid and nonasessable;
(C) Subject to the terms of the Plans, the holders
of the Additional Common Stock so issued will be entitled to the
rights and privileges pertaining thereto, as set forth in the Restated
Certificate of Incorporation of the Company, as amended; and
(D) The legal rights of the holders of any
securities issued by the Company will not have been violated.
We have not been requested to and, therefore, do not express any
opinion herein concerning the applicability of federal or state
securities or "blue sky" laws (including, without limitation, the New
Jersey Uniform Securities Law, as amended) to the proposed issuance of
the Additional Common Stock.
We consent to the use of this opinion as an exhibit to the Amended
Declaration.
Very truly yours,
/s/Stryker, Tams & Dill
STRYKER, TAMS & DILL
STRYKER TAMS & DILL
EXHIBIT H-2
[Suggested Form of Notice of Proposed Transaction]
UNITED STATES OF AMERICA
before the
SECURITIES EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. _______________
__________________________________
In the Matter of
NATIONAL FUEL GAS COMPANY
10 Lafayette Square
Buffalo, New York 14203 File No. 70-7674
( )
__________________________________
NOTICE OF PROPOSAL TO ISSUE ADDITIONAL COMMON
STOCK TO EMPLOYEE BENEFIT PLANS; EXCEPTION FROM
COMPETITIVE BIDDING
National Fuel Gas Company ("National"), 10 Lafayette Square,
Buffalo, New York 14203, a registered holding company, has filed a
declaration pursuant to Sections 6(a) and 7 of the Public Utility
Holding Company Act of 1935, as amended, and Rule 50(a)(5) promulgated
thereunder.
Pursuant to the Commission's Order in Release No. 35-24988
issued November 21, 1989, National was authorized to issue up to
1,000,000 shares of its common stock in regard to its two qualified
401(k) plans (the "Additional Common Stock"). National is hereby
seeking authority to increase the Additional Common Stock to 2,000,000
shares and extend the authorized issuance period through December 31,
-2-
1999. National proposes to issue up to 2,000,000 shares of Additional
Common Stock to Vanguard Fiduciary Trust Company ("Vanguard"), trustee
under each of two "section 401(k) plans" maintained by National, one
of which benefits most of the non-union employees of National and its
subsidiaries, and the second of which benefits certain union
employees.
Under the two section 401(k) plans, eligible employees who
elect to participate may, by means of salary reduction contributions,
contribute from a portion of their base pay. They then are credited
with Company matching contributions, the amount of which depends on
their level of contributions, years of employment, and receipt of
matching contributions through another plan. Matching contributions
would be made by National and its subsidiaries to Vanguard in cash,
and would be used by Vanguard to purchase Additional Common Stock.
National states that any Additional Common Stock contributed
to Vanguard will be valued at "fair market value." Fair market value
will be the average of the high and low market price for National's
Common Stock on the date on which the Additional Common Stock is
issued.
The Declaration and any amendments thereto are available for
public inspection through the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing should
submit their views in writing by ______________, to the Secretary,
Securities and Exchange Commission, Washington, D.C. 20549, and serve
-3-
a copy on the declarant at the address specified above. Proof of
service (by affidavit, or in the case of attorney-at-law, by
certificate) should be filed with the request. A request for a
hearing shall identify specifically the issues of fact or law that are
disputed. A person who so requests will be notified of any hearing,
if ordered, and will receive a copy of any notice or order in this
matter. After said date, the Declaration, as filed and as it may be
amended, may be granted and/or permitted to become effective.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
