SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 Commission File Number 1-973
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
PUBLIC SERVICE ELECTRIC AND GAS COMPANY THRIFT AND TAX-DEFERRED
SAVINGS PLAN
80 PARK PLAZA
NEWARK, NEW JERSEY 07101
MAILING ADDRESS: P.O. Box 570
NEWARK, NEW JERSEY 07101-0570
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
See page 2.
<PAGE>
Equities Growth Fund A
TWENTIETH CENTURY INVESTORS, INC. PROVIDENT NATIONAL ASSURANCE COMPANY
4500 MAIN STREET FOUNTAIN SQUARE
P.O. BOX 419200 CHATTANOOGA, TENNESSEE 37402
KANSAS CITY, MISSOURI 64141-6200
NEW YORK LIFE INSURANCE COMPANY
Balanced Fund B 501 MADISON AVENUE
PHOENIX SERIES FUND NEW YORK, NEW YORK 10010
101 MUNSON STREET
GREENFIELD, MASSACHUSETTS 01301 AIG LIFE INSURANCE COMPANY
ONE ALICO PLAZA
Stable Value Fund C P.O. BOX 667
THE PRUDENTIAL LIFE INSURANCE COMPANY WILMINGTON, DELAWARE 19899
OF AMERICA
PRUDENTIAL PLAZA Enterprise Common Stock Fund D
NEWARK, NEW JERSEY 07101 and ESOP Fund
PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED
METROPOLITAN LIFE INSURANCE COMPANY 80 PARK PLAZA
ONE MADISON AVENUE NEWARK, NEW JERSEY 07101-1171
NEW YORK, NEW YORK 10010-3690
Large Company Stock Index Fund E
BANKERS TRUST COMPANY
PRINCIPAL MUTUAL LIFE INSURANCE 280 PARK AVENUE
COMPANY NEW YORK, NEW YORK 10017
THE PRINCIPAL FINANCIAL GROUP
DES MOINES, IOWA 50392-0001 Utilities Equities Fund F
FIDELITY PORTFOLIOS
82 DEVONSHIRE STREET
JOHN HANCOCK MUTUAL LIFE COMPANY BOSTON, MASSACHUSETTS 02109
JOHN HANCOCK PLACE
P. O. BOX 111 Intermediate Government Securities G
BOSTON, MASSACHUSETTS 02117 Fund G
VOYAGEUR FUND MANAGERS INC.
90 SOUTH SEVENTH STREET
SUITE 4400
ALLSTATE LIFE INSURANCE COMPANY MINNEAPOLIS, MINNESOTA 55402
ALLSTATE PLAZA WEST
3100 SANDERS ROAD International Stock Fund H
NORTHBROOK, ILLINOIS 60062 T. ROWE PRICE INC.
100 EAST PRATT STREET
TRANSAMERICA OCCIDENTAL LIFE INS. BALTIMORE, MARYLAND 2120
1150 SOUTH OLIVE
LOS ANGELES, CALIFORNIA 90015 Mid/Small Company Stock Fund
PUTNAM INVESTMENTS
FIRST ALLMERICA FINANCIAL LIFE P.O. BOX 41203
INSURANCE COMPANY PROVIDENCE, RHODE ISLAND 02940
440 LINCOLN STREET
WORCESTER, MASSACHUSETTS 01653
J.P.MORGAN
60 WALL STREET
NEW YORK, NEW YORK 10260
<PAGE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
INDEX
PAGE
----
INDEPENDENT AUDITORS' REPORT........................................ 4
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1996 AND 1995.................................. 5 -10
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1996 and 1995.................... 11-16
NOTES TO FINANCIAL STATEMENTS....................................... 17-27
SIGNATURES.......................................................... 28
EXHIBIT INDEX....................................................... 29
<PAGE>
INDEPENDENT AUDITORS' REPORT
Employee Benefits Committee of
Public Service Electric and Gas Company:
We have audited the accompanying statements of net assets available for benefits
of the Public Service Electric and Gas Company Thrift and Tax- Deferred Savings
Plan (the "Plan") as of December 31, 1996 and 1995, and the related statements
of changes in net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 1996
and 1995, and the changes in net assets available for benefits for the years
then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information by
fund is presented for the purpose of additional analysis of the basic financial
statements rather than to present information regarding the net assets available
for benefits and changes in net assets available for benefits of the individual
funds, and is not a required part of the basic financial statements. This
information is the responsibility of the Plan's management. Such information has
been subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 25, 1997
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1996
(Supplemental Information by Fund)
<CAPTION>
Equities Enterprise
Growth Balanced Stable Value Common Stock
Total Fund A Fund B Fund C Fund D
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
Plan interest in PSE&G Company $449,181,673 $ - $ - $ 231,052,943 $ 42,281,519
Master Employee Benefit Plan Trust
Receivables-Interest
and Dividends 1,273,044 - - 1,258,680 13,873
---------------------------------------------------------------------
Total Assets $450,454,717 $ - $ - $ 232,311,623 $ 42,295,392
=====================================================================
LIABILITIES
Accounts Payable $ 195,199 $ - $ - $ 143,307 $ 38,569
Transfer to/from PSE&G Company
Employee Savings Plan 181,176 - - 168,771 -
Forfeitures 4,303 - - - 598
---------------------------------------------------------------------
Total Liabilities 380,678 - - 312,078 39,167
---------------------------------------------------------------------
Net Assets Available for Benefits $450,074,039 $ - $ - $ 231,999,545 $ 42,256,225
=====================================================================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1996
(Supplemental Information by Fund (Continued))
<CAPTION>
Intermediate
Large Company Utilities Government International Mid/Small
Stock Index Equities Securities Stock Company
Fund E Fund F Fund G Fund H Stock Fund
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
Plan interest in PSE&G Company
Master Employee Benefit Plan Trust $75,429,866 $ - $5,411,340 $19,716,058 $15,217,008
Receivables-Interest
and Dividends - - - - -
--------------------------------------------------------------------
Total Assets $75,429,866 $ - $5,411,340 $19,716,058 $15,217,008
====================================================================
LIABILITIES
Accounts Payable $ 90,219 $ - $ 2,804 $ (12,800) $ (151,503)
Transfer to/from PSE&G Company
Employee Savings Plan - - - - -
Forfeitures 1,885 - 21 304 1,091
--------------------------------------------------------------------
Total Liabilities 92,104 - 2,825 (12,496) (150,412)
--------------------------------------------------------------------
Net Assets Available for Benefits $75,337,762 $ - $5,408,515 $19,728,554 $15,367,420
====================================================================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1996
(Supplemental Information by Fund (Continued))
<CAPTION>
Conservative Moderate Aggressive
Pre-Mix Pre-Mix Pre-Mix Holding Trust
Portfolio Portfolio Portfolio ESOP Account Loan Fund
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
Plan interest in PSE&G Company
Master Employee Benefit Plan Trust $8,453,723 $20,189,441 $14,165,616 $5,339,552 $89,921 $11,834,686
Receivables-Interest
and Dividends - - - 93 398 -
---------------------------------------------------------------------------------
Total Assets $8,453,723 $20,189,441 $14,165,616 $5,339,645 $90,319 $11,834,686
=================================================================================
LIABILITIES
Accounts Payable $ 9,114 $ 75,319 $ (16,376) $ 9,686 $43,210 $ (36,350)
Transfer to/from PSE&G Company
Employee Savings Plan 6,190 6,215 - - - -
Forfeitures 43 87 274 - - -
---------------------------------------------------------------------------------
Total Liabilities 15,347 81,621 (16,102) 9,686 43,210 (36,350)
---------------------------------------------------------------------------------
Net Assets Available for Benefits $8,438,376 $20,107,820 $14,181,718 $5,329,959 $47,109 $11,871,036
=================================================================================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1995
(Supplemental Information by Fund)
<CAPTION>
Equities Fixed Enterprise
Growth Balanced Income Common Stock
Total Fund A Fund B Fund C Fund D
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
Enterprise Common Stock $ 65,343,084 $ - $ - $ - $57,979,587
Equities Growth Fund 23,362,801 23,362,801 - - -
Balanced Fund 12,096,913 - 12,096,913 - -
Insurance Annuity Contracts (GICs ) 227,071,949 - - 227,071,949 -
Stock Index Equities Fund 52,506,341 - - - -
Utilities Equities Fund 12,524,247 - - - -
Government Securities Fund 6,535,810 - - - -
International Stock Fund 10,913,105 - - - -
---------------------------------------------------------------------------
Total Investments 410,354,250 23,362,801 12,096,913 227,071,949 57,979,587
---------------------------------------------------------------------------
Participant Loans Receivable 13,154,101 - - - -
Receivables-Interest
and Dividends 3,051,675 91,252 (86) 1,299,563 1,018,887
Cash and Temporary Cash
Investments 4,483,854 - - 3,556,107 265,618
---------------------------------------------------------------------------
Total Assets $431,043,880 $23,454,053 $12,096,827 $231,927,619 $59,264,092
===========================================================================
LIABILITIES
Accounts Payable $ 1,591,802 $ 96,698 $ (3,140) $ 272,992 $ 35,405
Purchases of Securities 1,007,474 - - - 1,007,474
Forfeitures 100,450 - - - -
Other (45,570) (5,765) 487 (34,433) 825
---------------------------------------------------------------------------
Total Liabilities 2,654,156 90,933 (2,653) 238,559 1,043,704
---------------------------------------------------------------------------
Net Assets Available for Benefits $428,389,724 $23,363,120 $12,099,480 $231,689,060 $58,220,388
===========================================================================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1995
(Supplemental Information by Fund (Continued))
<CAPTION>
Stock Index Utilities Government T.Rowe Price
Equities Equities Securities Internat.Stock
Fund E Fund F Fund G Fund H ESOP Fund
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
Enterprise Common Stock $ - $ - $ - $ - $7,363,497
Equities Growth Fund - - - - -
Balanced Fund - - - - -
Insurance Annuity Contracts (GICs) - - - - -
Stock Index Equities Fund 52,506,341 - - - -
Utilities Equities Fund - 12,524,247 - - -
Government Securities Fund - - 6,535,810 - -
International Stock Fund - - - 10,913,105 -
-------------------------------------------------------------------------
Total Investments 52,506,341 12,524,247 6,535,810 10,913,105 7,363,497
-------------------------------------------------------------------------
Participant Loans Receivable - - - - -
Receivables-Interest
and Dividends 498,935 (10,121) 43,863 4,514 -
Cash and Temporary Cash
Investments 99,598 - 47 104 56
-------------------------------------------------------------------------
Total Assets $53,104,874 $12,514,126 $6,579,720 $ 10,917,723 $7,363,553
=========================================================================
LIABILITIES
Accounts Payable $ 603,860 $ (12,269) $ 33,454 $ 4,593 44,350
Purchases of Securities - - - - -
Forfeitures - - - - -
Other (6,684) - - - -
-------------------------------------------------------------------------
Total Liabilities 597,176 (12,269) 33,454 4,593 44,350
-------------------------------------------------------------------------
Net Assets Available for Benefits $52,507,698 $12,526,395 $6,546,266 $ 10,913,130 $7,319,203
=========================================================================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1995
(Supplemental Information by Fund (Concluded))
Holding Trust
Account Loan Fund
----------------------------
<S> <C> <C>
ASSETS
Investments
Enterprise Common Stock $ - $ -
Equities Growth Fund - -
Balanced Fund - -
Insurance Annuity Contracts (GICs ) - -
Stock Index Equities Fund - -
Utilities Equities Fund - -
Government Securities Fund - -
International Stock Fund - -
----------------------------
Total Investments - -
----------------------------
Participant Loans Receivable - 13,154,101
Receivables-Interest
and Dividends 104,868 -
Cash and Temporary Cash
Investments 562,324 -
----------------------------
Total Assets $ 667,192 $13,154,101
============================
LIABILITIES
Accounts Payable $ 515,859 $ -
Purchases of Securities - -
Forfeitures 100,450 -
Other - -
----------------------------
Total Liabilities 616,309 -
----------------------------
Net Assets Available for Benefits $ 50,883 $13,154,101
============================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1996
(Supplemental Information by Fund)
<CAPTION>
Equities Enterprise
Growth Balanced Stable Value Common Stock
Total Fund A Fund B Fund C Fund D
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Participant Deposits $ 28,928,457 $ 2,934,890 $ 1,318,684 $ 11,817,518 $ 2,769,588
Employers Contributions 7,724,863 742,012 335,692 3,280,090 798,778
Interfund Transfers - net - (29,036,498) (13,312,480) 862,747 (12,640,657)
-----------------------------------------------------------------------------------
Total Deposits and Contributions 36,653,320 (25,359,596) (11,658,104) 15,960,355 (9,072,291)
-----------------------------------------------------------------------------------
Plan Interest in Master Trust
Investment Income 34,518,823 3,544,014 776,735 15,263,104 (2,279,879)
-----------------------------------------------------------------------------------
Total Additions 71,172,143 (21,815,582) (10,881,369) 31,223,459 (11,352,170)
-----------------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 48,892,615 1,593,537 1,232,029 30,536,100 4,567,152
Dividends Paid 460,678 - - - -
Forfeitures 145,221 24,050 7,723 26,591 14,901
Transfer to/(from) PSE&G Company
Employee Savings Plan (10,686) (70,049) (21,641) 350,283 29,940
-----------------------------------------------------------------------------------
Total Deductions 49,487,828 1,547,538 1,218,111 30,912,974 4,611,993
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 21,684,315 (23,363,120) (12,099,480) 310,485 (15,964,163)
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 428,389,724 23,363,120 12,099,480 231,689,060 58,220,388
-----------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $450,074,039 $ - $ - $231,999,545 $42,256,225
===================================================================================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1996
(Supplemental Information by Fund (Continued))
<CAPTION>
Intermediate
Large Company Utilities Government International Mid/Small
Stock Index Equities Securities Stock Company
Fund E Fund F Fund G Fund H Stock Fund
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Participant Deposits $ 5,247,928 $ 1,009,102 $ 568,171 $ 1,911,492 $ 364,252
Employers Contributions 1,334,628 256,733 149,824 460,294 100,243
Interfund Transfers - net 8,094,861 (13,211,523) (1,356,553) 6,103,664 14,945,307
--------------------------------------------------------------------------
Total Deposits and Contributions 14,677,417 (11,945,688) (638,558) 8,475,450 15,409,802
--------------------------------------------------------------------------
Plan Interest in Master Trust
Investment Income 13,410,802 479,587 133,502 2,462,033 2,161
--------------------------------------------------------------------------
Total Additions 28,088,219 (11,466,101) (505,056) 10,937,483 15,411,963
--------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 5,410,105 1,077,617 625,992 2,127,678 42,832
Dividends Paid - - - - -
Forfeitures 34,030 8,440 8,581 16,493 1,711
Transfer to/(from) PSE&G Company
Employee Savings Plan (185,980) (25,763) (1,878) (22,112) -
--------------------------------------------------------------------------
Total Deductions 5,258,155 1,060,294 632,695 2,122,059 44,543
--------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 22,830,064 (12,526,395) (1,137,751) 8,815,424 15,367,420
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 52,507,698 12,526,395 6,546,266 10,913,130 -
--------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $ 75,337,762 $ - $5,408,515 $19,728,554 $15,367,420
==========================================================================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1996
(Supplemental Information by Fund (Concluded))
<CAPTION>
Conservative Moderate Aggressive
Pre-Mix Pre-Mix Pre-Mix Holding Trust
Portfolio Portfolio Portfolio ESOP Account Loan Fund
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Participant Deposits $ 117,400 $ 450,068 $ 419,364 $ - $ - $ -
Employers Contributions 33,228 110,232 123,109 - - -
Interfund Transfers - net 8,213,054 19,092,946 13,270,165 (704,973) - (320,060)
-------------------------------------------------------------------------
Total Deposits and Contributions 8,363,682 19,653,246 13,812,638 (704,973) - (320,060)
-------------------------------------------------------------------------
Plan Interest in Master Trust
Investment Income 183,442 541,475 435,380 (451,671) (3,774) 21,912
-------------------------------------------------------------------------
Total Additions 8,547,124 20,194,721 14,248,018 (1,156,644) (3,774) (298,148)
-------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 108,705 86,814 63,729 376,876 - 1,043,449
Dividends Paid - - - 460,678 - -
Forfeitures 43 87 2,571 - - -
Transfer to/(from) PSE&G Company
Employee Savings Plan - - - (4,954) - (58,532)
-------------------------------------------------------------------------
Total Deductions 108,748 86,901 66,300 832,600 - 984,917
-------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 8,438,376 20,107,820 14,181,718 (1,989,244) (3,774) (1,283,065)
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR - - - 7,319,203 50,883 13,154,101
-------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $8,438,376 $20,107,820 $14,181,718 $5,329,959 $ 47,109 $11,871,036
=========================================================================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1995
(Supplemental Information by Fund)
<CAPTION>
Equities Fixed Enterprise
Growth Balanced Income Common Stock
Total Fund A Fund B Fund C Fund D
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Participant Deposits $ 27,430,459 $ 2,636,045 $ 1,259,883 $ 13,440,286 $ 3,514,341
Employers Contributions 8,586,992 798,319 386,678 4,278,454 1,162,496
Interfund Transfers - net - 5,039,266 1,992,320 (2,391,755) (11,873,357)
--------------------------------------------------------------------
Total Deposits and Contributions 36,017,451 8,473,630 3,638,881 15,326,985 (7,196,520)
--------------------------------------------------------------------
Income
Interest 15,238,679 - - 15,198,811 29,144
Dividends 11,438,768 3,294,388 911,623 - 4,246,390
Loan Interest Income - 67,557 36,663 466,996 130,067
--------------------------------------------------------------------
Total Income 26,677,447 3,361,945 948,286 15,665,807 4,405,601
--------------------------------------------------------------------
Appreciation(Depreciation) of Investments 24,045,742 (854,855) 950,542 43,710 8,121,182
--------------------------------------------------------------------
Total Additions 86,740,640 10,980,720 5,537,709 31,036,502 5,330,263
--------------------------------------------------------------------
DEDUCTIONS
Withdrawals 27,714,601 712,581 566,824 18,712,599 3,457,371
Dividends Paid 544,112 - - - -
Forfeitures 100,431 21,072 6,704 40,972 9,561
Transfer to/(from) PSE&G Company
Employee Savings Plan 469,847 4,661 (41,453) 269,130 243,817
--------------------------------------------------------------------
Total Deductions 28,828,991 738,314 532,075 19,022,701 3,710,749
--------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 57,911,649 10,242,406 5,005,634 12,013,801 1,619,514
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 370,478,075 13,120,714 7,093,846 219,675,259 56,600,874
--------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $428,389,724 $23,363,120 $12,099,480 $231,689,060 $58,220,388
====================================================================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1995
(Supplemental Information by Fund (Continued))
<CAPTION>
Stock Index Utilities Government T.Rowe Price
Equities Equities Securities Internat.Stock
Fund E Fund F Fund G Fund H ESOP Fund
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Participant Deposits $ 3,638,339 $ 920,075 $ 565,616 $ 1,455,874 $ -
Employers Contributions 1,092,008 291,584 168,475 408,978 -
Interfund Transfers - net 5,829,324 3,135,243 (307,337) (584,566) (430,315)
--------------------------------------------------------------------------------
Total Deposits and Contributions 10,559,671 4,346,902 426,754 1,280,286 (430,315)
--------------------------------------------------------------------------------
Income
Interest - - - 163 8
Dividends 1,232,411 527,187 345,580 337,076 544,113
Loan Interest Income 99,598 28,435 13,927 37,783 -
--------------------------------------------------------------------------------
Total Income 1,332,009 555,622 359,507 375,022 544,121
--------------------------------------------------------------------------------
Appreciation(Depreciation) of Investments 11,453,890 1,757,616 679,124 746,505 1,053,740
--------------------------------------------------------------------------------
Total Additions 23,345,570 6,660,140 1,465,385 2,401,813 1,167,546
--------------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 2,273,899 653,635 276,340 823,621 536,937
Dividends Paid - - - - 544,112
Forfeitures 13,454 4,296 1,691 2,681 -
Transfer to/(from) PSE&G Company
Employee Savings Plan (27,346) (7,698) (16,339) (16,048) (173)
--------------------------------------------------------------------------------
Total Deductions 2,260,007 650,233 261,692 810,254 1,080,876
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 21,085,563 6,009,907 1,203,693 1,591,559 86,670
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 31,422,135 6,516,488 5,342,573 9,321,571 7,232,533
--------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $ 52,507,698 $12,526,395 $ 6,546,266 $ 10,913,130 $ 7,319,203
================================================================================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1995
(Supplemental Information by Fund (Concluded))
<CAPTION>
Holding Trust
Account Loan Fund
---------------------------
<S> <C> <C>
ADDITIONS
Participant Deposits $ - $ -
Employers Contributions - -
Interfund Transfers - net - (408,823)
---------------------------
Total Deposits and Contributions - (408,823)
---------------------------
Income
Interest 10,553 -
Dividends - -
Loan Interest Income - (881,026)
---------------------------
Total Income 10,553 (881,026)
---------------------------
Appreciation(Depreciation) of Investments 59,997 34,291
---------------------------
Total Additions 70,550 (1,255,558)
---------------------------
DEDUCTIONS
Withdrawals 30,685 (329,891)
Dividends Paid - -
Forfeitures - -
Transfer to/(from) PSE&G Company
Employee Savings Plan - 61,296
---------------------------
Total Deductions 30,685 (268,595)
---------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 39,865 (986,963)
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 11,018 14,141,064
---------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $ 50,883 $13,154,101
===========================
<FN>
SEE NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF THE PLAN
The Board of Directors of Public Service Electric and Gas Company (PSE&G or the
Company) adopted the PSE&G Thrift and Tax-Deferred Savings Plan (Plan) to
encourage thrift and savings by eligible employees (Eligible Employees). It was
first offered to Eligible Employees in 1981. Effective January 1, 1996, the
Trust that held the Plan assets became the PSE&G Master Employee Benefit Plan
Trust, (Master Trust), a Master Trust covering this Plan and the PSE&G Employee
Savings Plan (Savings Plan). (See Note 4. Investment in Master Trust.) The Plan
was last amended December 16, 1996, effective December 16, 1996, except for
changes listed below, which are effective as of January 1, 1997. The Plan
amendments made during 1996 provide the following, effective October 1, 1996:
Equities Growth Fund A, Balanced Fund B, and Utilities Equities Fund F were
discontinued; Mid/Small Company Stock Fund, Conservative Pre-Mix Portfolio,
Moderate Pre-Mix Portfolio, and Aggressive Pre-Mix Portfolio were added; Fund C
was renamed Stable Value Fund rather than Fixed Income Fund, Fund E was renamed
Large Company Stock Index Fund rather than Stock Index Equities Fund, and Fund G
was renamed Intermediate Government Securities Fund rather than Government
Securities Fund. Additionally, the Plan merged with U.S. Energy Partners' 401(k)
Plan. The Plan accepted balances from U.S. Energy Partners' Plan with graded
vesting for its employer match. Participation with respect to the U.S. Energy
Partners' accounts became effective December 16, 1996. An employee may
participate in the Plan from the date of hire. Matching Company Contributions
begin when an employee has completed one Year of Service. Any Employee who, at
the time he/she becomes employed by the Company, is a participant in the
Employee Savings Plan, shall automatically be enrolled in the Plan and all
balances in the Employee Savings Plan shall be transferred to the Plan and all
contribution and investment elections in effect for the Employee Savings Plan
shall remain in effect. Participation in the Plan is entirely voluntary, except
with respect to those employees who participated in the Employee Stock Ownership
Plan (ESOP) Fund as a result of their participation in the PSE&G Tax Reduction
Act Employee Stock Ownership Plan (TRASOP) and/or the PSE&G Payroll-Based
Employee Stock Ownership Plan (PAYSOP), which plans were merged into this Plan
in 1988. Eligible Employees are those employees not covered by a collective
bargaining agreement and who were hired by PSE&G or any affiliate of PSE&G
participating in the Plan (together hereafter each called an "Employer" or
collectively "Employers"). Certain Eligible Employees may also elect to have a
distribution from another qualified corporate plan contributed as a rollover
contribution with the approval of the Employee Benefits Committee of PSE&G
(Committee), the Plan Administrator.
The following changes were effective January 1, 1997:
1. to allow Basic Deposits in any integral multiple of 1% of Compensation to a
total of 8%, rather than 6%;
2. to allow Supplemental Deposits in any integral multiple of 1% of Compensation
to a total of 17%, rather than 19%;
3. all administrative expenses as well as taxes and brokerage costs will be
deducted from the Trust Fund, rather than paid directly by the Company and
its Participating Affiliates;
Under the Plan, each participating Employee (Participant) may elect to make
basic deposits to Investment Funds of such Participant's choosing within the
Thrift Account Fund of 1% - 8% of his/her compensation (Basic Deposits), and
his/her respective Employer will contribute an amount equal to 50% thereof,
subject to certain exceptions and limitations (Employer Contributions). Employer
Contributions with respect to Basic Deposits in excess of 6% of compensation are
made in shares of the Common Stock of Public Service Enterprise Group
Incorporated (Enterprise), the parent of the Company, and are not available for
transfer to any other Fund or withdrawal from the Plan prior to the
Participant's termination of employment. In addition, a Participant may elect to
make supplemental deposits to such Funds in increments of 1% of Compensation up
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (Continued)
to an additional 17% of Compensation (Supplemental Deposits), subject to
certain limitations, without any corresponding matching Employer Contribution. A
Participant may designate such Basic and/or Supplemental Deposits as Nondeferred
(post-income tax contributions) or Deferred (pre-income tax contributions).
Also, each Participant may, within any Plan Year, make one or more Additional
Lump Sum Deposits on a Nondeferred basis in the minimum amount of $250 and in
such total amounts which when aggregated with such Participant's Basic Deposits
and Supplemental Deposits, do not exceed 25% of his or her Compensation for that
Plan Year. The maximum amount of Deferred Deposits to a Participant's Thrift
Account may have to be limited to less than 25% of Compensation to meet
requirements of the Internal Revenue Code of 1986, as amended (IRC). The extent
of any such limitation will be determined from time to time by the Committee
based on the actual pattern of Deferred Deposits by all Participants. If the
maximum permitted percentage of Compensation for Thrift Account Deferred
Deposits is reduced, then all Deferred Deposits in excess of such percentage
will automatically be treated as Nondeferred Deposits. This will result in
taxable income to the affected Participants for Deferred Deposits in excess of
any limit so established. The Committee will attempt to assure that any such
limitation will apply only to future contributions, but it is possible that, in
order to meet requirements of the IRC, the limitation will, in some
circumstances, have to be applied retroactively. Deferred Deposits may not
generally be withdrawn until age 59-1/2. Nondeferred Deposits, on the other
hand, may be withdrawn at any time subject to certain penalties and
restrictions.
Thrift Account Deposits are made through payroll deductions by the Participant's
Employer, rollover contributions from other qualified plans and Additional Lump
Sum Deposits. Deposits by Participants and contributions by their respective
Employers are transferred to a Trustee and separately held in the Plan's Thrift
Account Fund of the Trust Fund for investment and other transactions, as
directed by Participants. Participants are entitled to choose which funds to
invest Deposits and Employer Contributions in from among the Investment Funds
offered under the Plan.
Bankers Trust Company is the Trustee of the Master Trust established pursuant to
the Plan.
Loan Provisions
The Trustee may, subject to the approval of PSE&G's Director, Performance and
Rewards, lend a Participant who is employed by an Employer an amount up to 50%
of the value of the vested portion of such Participant's Thrift Account and ESOP
Fund, but no more than the aggregate value of such Participant's Thrift Account
or $ 50,000, whichever is less. Any Participant loan must be for a principal
amount of $ 1,000 or more and no Participant may have more than two loans
outstanding at any time. All loans, including interest thereon, must be repaid
by payroll deductions in equal monthly installments over a period of 12 to 60
months as selected by the Participant. However, a Participant may prepay any
such loan in full or in part in a lump sum in accordance with such rules as may
be prescribed by the Committee. A Participant may not apply for more than one
loan in any calendar year. A loan to a Participant is considered an investment
of such Participant's Thrift Account and repayments of principal of any loan
together with interest thereon, are invested in the Thrift Account Investment
Funds of the Plan in accordance with the Participant's then-current investment
direction for Deposits and Employer Contributions.
Each loan bears interest at a rate fixed from time to time by the Committee
taking into consideration the then-current interest rates being charged. The
rate of interest applicable to any loan at its inception remains in effect for
the duration of such loan. During 1996, the rate of interest on loans granted to
Participants, by quarter and starting with the first quarter, was 8-1/2%,
8-1/4%, 8-1/4%, and 8-1/4%. (See Note 2. SIGNIFICANT ACCOUNTING POLICIES -
Loans.)
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan have been prepared in accordance with
generally accepted accounting principles.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Dividends and Interest
Dividends, interest, and other income attributable to each Investment Fund of
the Plan are reinvested in that Investment Fund to the extent not used to pay
direct expenses of that Fund. (See Expenses of Plan, below.) All Deposits and
Employer Contributions in the Stable Value Fund C are invested in either
traditional Guaranteed Investment Contracts (traditional GICs) issued by
insurance companies, or Benefit Responsive Agreements (Synthetic GICs) which are
similar to traditional GICs in terms of their ability to preserve principal and
provide a stable rate of return. Synthetic GICs are different in that they are
backed or secured by a separate portfolio of high-quality fixed income
securities that are directly owned by the Fund. The portfolio is wrapped by a
"book value wrapper", usually a financial institution other than the manager of
the Synthetic GIC, which provides a crediting rate and which guarantees that
benefit repayments will be made at book value. Deposits and Employer
Contributions earn interest at the composite rate of all GICs in which the
assets of such fund are then invested. Such rate varies as such Traditional and
Synthetic GICs mature or are entered into, and as Deposits and Employer
Contributions are made to and withdrawn from such contracts. Under the contracts
in effect during 1996, the composite rate of interest earned by such assets so
invested was not less than 6.73%. ESOP Fund Participants receive quarterly
payments directly from the Trustee equal to the dividends paid to the Trustee on
the shares of Enterprise Common Stock held for their ESOP Fund.
Reclassifications
Certain reclassifications of prior year data have been made to conform with the
current presentation.
Valuation of Investments
Investments of Equities Growth Fund A, Balanced Fund B, Enterprise Common Stock
Fund D, Large Company Stock Index Fund E, Utilities Equities Fund F,
Intermediate Government Securities Fund G, International Stock Fund H, and the
shares of Enterprise Common Stock held by the ESOP Fund are based upon quoted
market values. The value of Stable Value Fund C is based on the contract value
of all GICs in which the assets of the fund are invested. The contracts are
included in the financial statements at contract value, which approximates fair
value. Temporary investments are valued at cost which approximates fair market
value. Securities transactions are accounted for on the trade date.
The Plan's financial statements have been prepared in accordance with the
financial reporting requirements of the Employee Retirement Income Security Act
of 1974, as amended (ERISA), as permitted by the applicable rules. Under such
requirements, realized gains and losses from securities transactions are
computed using an adjusted cost basis as prescribed by the Department of Labor's
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (Continued)
(DOL) Rules and Regulations for Reporting and Disclosure. The adjusted cost is
the fair value of the security at the beginning of the Plan year, or cost if
acquired since that date. Unrealized gains and losses on securities held for
investment are computed on the basis of the change in fair value between the
beginning and end of the Plan year.
Expenses of Plan
Effective January 1, 1997, all expenses incurred with the administration of the
Plan, including taxes and brokerage costs, will be deducted from the Trust Fund.
However, in 1996 and 1995, all expenses incurred in connection with the
administration of the Plan, including expenses of the Trustee, but excluding
brokerage commissions and taxes relating to the sale of shares of Enterprise
Common Stock at the direction of Participants, were paid directly by PSE&G and
its Participating Affiliates.
The assets of Common Stock Fund D and ESOP Fund are invested in shares of
Enterprise Common Stock. Shares of Enterprise Common Stock required for Fund D
are purchased by the Trustee either directly from Enterprise, at its sole
discretion, on the open market through a broker or from the ESOP Fund. In
situations where the ESOP is in a "sell" position and Fund D is in a "buy"
position, Fund D will buy from the ESOP at the closing price on the NY Stock
Exchange. In such case, no brokerage commissions are charged on the transaction.
Otherwise, all shares sold for Common Stock Fund D and the ESOP Fund are sold by
the Trustee on the open market through a broker. Brokerage commissions and
transfer taxes are paid by the Trust Fund.
Loans
A loan to a Participant is considered an investment of such Participant's Thrift
Account and the principal amount of the loan is treated as a separate investment
within the various sub-accounts of the Participant's Thrift Account. Repayments
of the principal amount of the loan are credited to each such sub-account, and
repayments of principal along with any accrued interest thereon are invested in
the Plan's Investment Funds in the same manner as the Participant's then-current
investment direction for Deposits and Employer Contributions. Loan amounts are
taken from sub-accounts of a Participant's Thrift Account in the following
order:
(a) Deferred Deposits
(b) Unmatured Vested Employer Contributions
(c) Matured Vested Employer Contributions
(d) Rollover Contributions
(e) Unmatured Post-1986 Nondeferred Deposits
(f) Matured Post-1986 Nondeferred Deposits
(g) Pre-1987 Nondeferred Deposits
Each loan is secured by an assignment of the Participant's entire right, title
and interest in and to the Trust Fund to the extent of the loan and accrued
interest thereon (See Note 1. SUMMARY OF THE PLAN - Loan Provisions).
Interfund Transfers - ESOP Fund to Thrift Account
Participants are permitted to transfer all, but not less than all, shares from
their ESOP Funds to their Thrift Accounts. To effect such transfers, the Trustee
will sell the shares of Enterprise Common Stock held in the ESOP Fund and invest
the proceeds in the Thrift Account Funds designated by the Participant. The cash
value of each share of Enterprise Common Stock transferred will be equal to the
price per share of Enterprise Common Stock actually received by the Trustee. Any
such transfer is treated as a rollover contribution.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (Continued)
Holding Account
The Holding Account is a vehicle to record the transactions from either one fund
to another fund or to an outside source. Daily balances which remain in the
account are invested in temporary cash accounts until disbursement. Activity
within the Holding Account includes inflows and outflows of cash related to fund
transfers, employee and employer contributions, withdrawals, receipts of
dividends and interest, benefit payments and loan transactions.
Vesting
Employer Contributions to a Participant's Thrift Account are immediately vested
upon a Participant's completion of five years of service with the Employer, or
when a Participant is eligible for retirement, is disabled, laid off or dies. A
Participant will become vested in the value of his or her U.S. Energy Partners
Employer Contribution Subaccount according to the following schedule:
Years of Service Vested Percentage
- ---------------- -----------------
Less than one 0%
One 20%
Two 40%
Three 60%
Four 80%
Five or More 100%
All amounts credited to a Participant's ESOP Fund are fully vested.
Penalties Upon Withdrawal
If a Participant withdraws vested Employer Contributions and/or Deposits before
they have been in the Plan for twenty-four months, such Participant loses the
matching Employer Contributions on Deposits made during the subsequent three
months. Distributions to Participants electing to withdraw Nondeferred Deposits
and Employer Contributions are made as soon as practicable after such elections
are received by the Plan's Record Keeper. Nondeferred Deposits may be withdrawn
at any time but certain penalties may apply. Deferred Deposits may not be
withdrawn during employment prior to age 59-1/2 except for reasons of
extraordinary financial hardship and to the extent permitted by the IRC.
Distributions to Participants of approved hardship withdrawals are made as soon
as practicable after such approval.
Benefits Payable
As of December 31, 1996 and 1995, the net assets available for benefits included
benefits due to Participants who elected to withdraw from the Plan in the amount
of $700,450 and $365,707, respectively. Such amounts are not reflected as
liabilities in the financial statements of the Plan.
3. INVESTMENTS
The financial statements of the Plan include the following:
a. Thrift Account Investment Funds
(1) Effective October, 1996, the Equities Growth Fund A was
discontinued. Prior to that date, the assets of
Equities Growth Fund A were invested in the capital
stock of the Twentieth Century Investors Inc. Growth
Fund (the "Twentieth Century Growth Fund"), a no-load,
open-ended mutual fund. The prospectus for the
Twentieth Century Growth Fund indicated that such fund
invests primarily in the common stock of companies
considered by its investment manager to have above
average potential for capital appreciation.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (Continued)
(2) Effective October, 1996, the Balanced Fund B was
discontinued. Prior to that date, the assets of
Balanced Fund B were invested in the capital stock of
Phoenix Balanced Fund, a no-load, open-ended mutual
fund. The prospectus for the Phoenix Balanced Fund
indicated that such fund invests primarily in a
combination of equity and fixed income debt
securities that its investment manager expects to
provide current income along with long-term capital
growth and conservation of capital.
(3) The assets of Stable Value Fund C are invested in
GICs and similar investment instruments issued by
insurance companies or other financial institutions
which contractually provide for a guarantee of
principal and interest for the respective contract
periods. All contract values approximate fair values.
The following Traditional GICs are continuing in
effect:
(i) A four and one half year contract expiring June
30, 1997 and two five year contracts expiring
December 31, 1997 and December 31 1998,
respectively, with Provident National Assurance
Company, effective interest rates of 6.67% and
6.81%, and 5.85% respectively, contract values
of $19,420,500, $24,478,147, and $18,866,187,
respectively;
(ii) A five year and a four and one-half year
contract with Metropolitan Life Insurance
Company, expiring June 30, 1998 and December
31, 1999, respectively, effective interest
rates of 5.70% and 8.17%, respectively,
contract values of $17,537,177 and $13,779,635,
respectively;
(iii) A five year contract with Allstate Life
Insurance Company, expiring June 30, 1998,
effective interest rate of 6.00%, contract
value of $18,371,532;
(iv) A five year contract with the Principal Mutual
Life Insurance Company, expiring on December
31, 1999, effective interest rate of 8.15%,
contract value of $15,198,841;
(v) A four and one-half year contract with
Transamerica Occidental Life Insurance Company,
expiring January 1, 1997, and effective
interest rate of 6.72%, contract value of
$7,535,772;
(vi) A five year contract with First Allmerica
Financial Life Insurance Company, formerly with
State Mutual Life Insurance Company, expiring
January 4, 1999, effective interest rate of
5.66%, contract value of $18,864,933; and
(vii) A five year contract with New York Life
Insurance Company, expiring June 30, 1999,
effective interest rate of 7.07%, contract
value of $31,314,213.
The following Synthetic GIC is continuing in effect:
An open-ended contract with J.P. Morgan as the book
value wrapper and Pacific Investment Management
Company managing the underlying portfolio providing an
effective credit rate, as of December 31, 1996, of
7.15% and a contract value of $35,580,299. The credit
rate for the Synthetic GIC effective January 1, 1997
through March 31, 1997 was 7.22%.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (Continued)
(4) The assets of Enterprise Common Stock Fund D are
invested by the Trustee in Enterprise Common Stock.
(5) The assets of Large Company Stock Index Fund E are
invested by the Trustee in Bankers Trust
Institutional Equity 500 Index Fund ("Stock Index
Equities Fund"), a no-load mutual fund managed by
Bankers Trust Company, so as to achieve the
approximate return of the Standard and Poor's 500
Composite Stock Index.
(6) Effective October, 1996, the Utilities Equities Fund
F was discontinued. Prior to that date, the assets of
Utilities Equities Fund F were invested in the
capital stock of Fidelity Utilities Income Fund (the
"Fidelity Utilities Fund"), a no-load, open-ended
mutual fund. The prospectus for the Fidelity
Utilities Fund indicated that such fund invests
primarily in equity securities of gas and electric
utility companies and companies engaged in the
communications field. The Fidelity Utilities Fund
may, from time to time, include shares of Enterprise
Common Stock or PSE&G Preferred Stock.
(7) The assets of Intermediate Government Securities Fund
G are invested in the capital stock of Voyageur U.S.
Government Securities Fund (the "Voyageur U.S.
Government Securities Fund"), an open-end diversified
mutual fund. The prospectus of the Voyageur U.S.
Government Securities Fund indicates that such fund
invests primarily in U.S. Treasury bills, notes,
bonds and other obligations issued or unconditionally
guaranteed by the U.S. Government, or otherwise
backed by the full faith and credit of the U.S.
Government, and repurchase agreements fully secured
by such obligations.
(8) The assets of International Stock Fund H are invested
in the capital stock of T. Rowe Price International
Funds Inc. (the "T. Rowe Price International Stock
Fund"), a no-load, open-ended mutual fund. The
prospectus for the T. Rowe Price International Stock
Fund indicates that such fund invests primarily in
common stocks of established, non-U.S. companies.
(9) The assets of Mid/Small Company Stock Fund, a new
investment option in 1996, are invested in the Putnam
Vista Fund, an open-ended, diversified management
investment company mutual fund. The prospectus for
the Putnam Vista Fund indicates that such fund
invests in a diversified portfolio of common stocks
which may include widely-traded common stocks of
larger companies as well as common stocks of smaller,
less well-known companies.
(10) The assets of the Conservative Pre-Mix Portfolio, a
new investment option in 1996, are invested in
specific percentages within a mix of five existing
funds: 40% Stable Value, 20% Intermediate Government
Securities, 20% Large Company Stock Index, 10%
International Stock, and 10% Mid/Small Company Stock.
Every quarter the Trustee re-aligns this portfolio to
match its conservative (risk and return) investment
strategy of 60% in bonds and 40% in stocks.
(11) The assets of the Moderate Pre-Mix Portfolio, a new
investment option in 1996, are invested in specific
percentages within a mix of five existing funds: 25%
Large Company Stock Index, 20% Stable Value, 20%
International Stock, 20% Intermediate Government
Securities, and 15% Mid/Small Company Stock. Every
quarter the trustee re-aligns this portfolio to match
its moderate (risk and return) investment strategy of
60% in stocks and 40% in bonds.
(12) The assets of the Aggressive Pre-Mix Portfolio, a new
investment option in 1996, are invested in specific
percentages within a mix of four existing funds: 30%
Large Company Stock Index, 25% International Stock,
25% Mid/Small Company Stock, and 20% Intermediate
Government Securities. Every quarter the Trustee
re-aligns this portfolio to match its aggressive
(risk and return) investment strategy of 80% in
stocks and 20% in bonds.
b. ESOP Fund
Shares of Enterprise Common Stock held as assets of the Plan's
ESOP Fund were transferred to the Plan in 1988 as a result of
the spin-off and merger with the Plan of the non-bargaining
unit portions of PSE&G's former TRASOP and PAYSOP. No
additional contributions in or transfers into the ESOP Fund
are presently permitted or were allowed during 1996.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (Continued)
c. PARTICIPANTS
Participants
As of December 31,
------------------
1996 1995
---- ----
Total Plan Participants 6,156 6,116
Participants by Fund
Equities Growth Fund A (1) -- 1,825
Balanced Fund B (1) -- 1,177
Stable Value Fund C 3,914 4,324
Enterprise Common Stock Fund D 2,099 2,672
Large Company Stock Index Fund E 2,622 2,407
Utilities Equities Fund F (1) -- 1,127
Interm. Government Securities Fund G 749 832
International Stock Fund H 1,495 936
Mid/Small Company Stock Fund (2) 1,091 --
Conservative Pre-Mix Portfolio (2) 435 --
Moderate Pre-Mix Portfolio (2) 930 --
Aggressive Pre-Mix Portfolio (2) 1,045 --
ESOP Fund 559 674
- ---------------------------------------
(1) Fund discontinued in 1996
(2) New Investment Fund in 1996
4. INVESTMENT IN MASTER TRUST
Effective January 1, 1996, the Plan's investments are included in the Master
Trust which was established for the investment of assets of the Plan and the
Savings Plan. Accordingly, a ratio is used to separate the Thrift Plan balances
from the Savings Plan balances based on the Statement of Net Assets Available
for Plan Benefits. The ratio is calculated by dividing individual fund totals
from one Plan by the Master Trust totals. Each percentage has been carried out
to the eighth decimal. As of December 31, 1996, the Plan's interest in the net
assets of the Master Trust was approximately 67%.
The following table presents the fair values of investments for the Master
Trust.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 1996
-----------------
Investments at fair value:
Participant Loans $ 22,451,539
Cash and Cash equivalents 41,413,758
Common Stock of Public Service Enterprise Group 75,274,227
Mutual Funds 218,696,575
Guaranteed Insurance Contracts 308,079,794
-------------
$ 665,915,893
=============
Investment income for the Master Trust is as follows:
Net appreciation in fair value of Mutual Funds $ 30,374,351
Net depreciation in fair value of Common Stock
of Enterprise (11,569,069)
Interest from Mutual Funds 45,265
Interest from Common Stock of Enterprise Funds 154,745
Interest from Guaranteed Insurance Contracts 20,845,795
Dividends from Mutual Funds 2,148,761
Dividends from Common Stock of Enterprise 6,676,501
-------------
$ 48,676,349
=============
5. UNIT VALUE INFORMATION - THRIFT ACCOUNT INVESTMENT FUNDS
Unit values of the Investment Funds are determined at the end of each business
day (Valuation Date) by dividing the market value of net assets available for
benefits by the number of units allocated to all Participants as of the
respective Valuation Date.
New units are allocated to each Participant's Thrift Account at the end of each
business day by dividing Deposits made by, or on behalf of, such Participant for
such business day and the related Employer Contributions, if any, together with
repayment of the principal amount of any loan to the Participant's Thrift
Account including interest earned thereon by the unit value determined as of the
end of the Valuation Date. If a Participant makes a transfer between Investment
Funds, makes a withdrawal, receives a distribution or a loan, or makes a
rollover contribution, the amount so transferred, withdrawn, distributed,
loaned, or rolled over is also determined by the unit value of each Investment
Fund as of the applicable Valuation Date for such transaction.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -(Continued)
The unit information of investments by Investment Fund as of the last business
day of each year is as follows:
Unit Value
Investment Fund Year (Dollars) Number of Units
- ---------------- ---- ----------- ---------------
Equities Growth Fund A (1) 1996 10.000000 ---
1995 19.390000 1,204,889.170
Equities Fund B (1) 1996 10.000000 ---
1995 16.800000 720,054.345
Stable Value Fund C 1996 12.154370 19,100,248.073
1995 11.387117 19,941,127.241
Enterprise Common Stock Fund D 1996 9.916231 4,264,794.978
1995 11.708390 4,951,969.229
Large Company Stock Index Fund E 1996 11.659470 6,461,508.254
1995 13.970000 3,758,506.872
Utilities Equities Fund F (1) 1996 10.000000 ---
1995 16.160000 775,015.285
Intermediate Government Securities
Fund G 1996 10.507339 514,736.944
1995 10.780339 606,271.287
International Stock Fund H 1996 10.966759 1,798,940.875
1995 12.230000 892,322.567
Mid/Small Company Stock Fund (2) 1996 9.984863 1,539,071.772
Conservative Pre-Mix Portfolio (2) 1996 10.316256 817,968.831
Moderate Pre-Mix Portfolio (2) 1996 10.369822 1,939,070.825
Aggressive Pre-Mix Portfolio (2) 1996 10.399420 1,364,886.881
- -----------------------------------
(1) Investment Fund discontinued in 1996
(2) New Investment Fund in 1996
ESOP FUND VALUATION
Enterprise Common Stock share value is determined by using the closing market
price on the New York Stock Exchange as reported in the Wall Street Journal as
Composite Transactions. If a Participant withdraws shares, the shares are, at
the Participant's election, either distributed to such Participant or sold by
the Trustee and the proceeds, net of commissions and taxes, are distributed to
the Participant.
The ESOP Fund information as of the last business day of each year is as
follows:
Year Price per share Number of shares
---- --------------- ----------------
ESOP Fund 1996 $27.250 195,947
1995 $30.625 240,441
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (Concluded)
5. FEDERAL INCOME TAXES
The Company believes that the Plan and its related Trust including the portions
of the former TRASOP and PAYSOP applicable to non-bargaining unit Participants,
which portions were spun-off and merged with the Plan effective January 1, 1988,
are qualified under Sections 401(a) and 501(a) of the IRC and, as such, the Plan
is exempt from taxation on its earnings. A determination letter to such effect,
dated December 29, 1995, was obtained from the Internal Revenue Service.
Participants are not taxed on Deferred Deposits, Employer Contributions or on
the earnings credited to their Thrift Account Fund, until distribution of such
Thrift Account Fund.
6. COMPLIANCE WITH ERISA
The Plan is generally subject to the provisions of Titles I and II of ERISA,
including the provisions with respect to reporting, disclosure, participation,
vesting and fiduciary responsibility. However, it is not subject to the funding
requirements of Title I, and benefits under the Plan are not guaranteed by the
Pension Benefit Guarantee Corporation under Title IV of ERISA.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
Public Service Electric and Gas Company
Thrift and Tax-Deferred Savings Plan
-------------------------------------------------------
(Name of Plan)
By M. PETER MELLETT
---------------------------------------
M. PETER MELLETT
Chairman of the Employee
Benefits Committee
Date: June 30, 1997
<PAGE>
EXHIBIT INDEX
Exhibit Number
- --------------
1 Public Service Electric and Gas Company Thrift
and Tax-Deferred Savings Plan, as amended as of
December 16, 1996, and effective December 16,
1996.
2 Independent Auditors' Consent.
EXHIBIT I
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
Amended Effective December 16, 1996
<PAGE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
TABLE OF CONTENTS
Page
ARTICLE I Amendment and Restatement - Purpose.................... 1
Section 1.1 Amendment and Restatement of the Plan............ 1
Section 1.2 Purpose.......................................... 1
ARTICLE II Definitions............................................ 1
Section 2.1 Account......................................... 1
Section 2.2 Active Participant.............................. 1
Section 2.3 Additional Lump Sum Deposits.................... 1
Section 2.4 Affiliate....................................... 1
Section 2.5 Balanced Fund................................... 1
Section 2.6 Basic Deposits.................................. 2
Section 2.7 Board of Directors.............................. 2
Section 2.8 Cash Balance Plan............................... 2
Section 2.9 Code............................................ 2
Section 2.10 Commissioner..................................... 2
Section 2.11 Committee or Employee Benefits Committee......... 2
Section 2.12 Company.......................................... 2
Section 2.13 Compensation..................................... 2
Section 2.14 Deferred......................................... 3
Section 2.15 Deposits......................................... 3
Section 2.16 Disability....................................... 4
Section 2.17 Effective Date................................... 4
Section 2.18 Eligible Employee................................ 4
Section 2.19 Employee......................................... 4
Section 2.20 Employee Savings Plan............................ 4
Section 2.21 Employer......................................... 4
Section 2.22 Employer Contributions........................... 4
Section 2.23 Enrollment Date.................................. 4
Section 2.24 Enterprise....................................... 4
Section 2.25 Enterprise Common Stock.......................... 4
Section 2.26 Enterprise Common Stock Fund..................... 4
Section 2.27 Equities Fund.................................... 5
Section 2.28 Equities Index Fund.............................. 5
Section 2.29 ERISA............................................ 5
Section 2.30 ESOP Account..................................... 5
Section 2.31 Fixed Income Fund................................ 5
Section 2.32 Funds............................................ 5
Section 2.33 General Manager.................................. 5
Section 2.34 Government Obligations Fund...................... 5
Section 2.35 Highly Compensated Employee...................... 5
Section 2.36 Highly Compensated Participant................... 7
Section 2.37 Hour of Service.................................. 7
Section 2.38 Investment Manager............................... 7
Section 2.39 Lay Off or Laid Off.............................. 7
Section 2.40 Leased Employee.................................. 7
Section 2.41 Matured.......................................... 7
Section 2.42 Nondeferred...................................... 8
Section 2.43 Participant...................................... 8
Section 2.44 Participating Affiliate.......................... 8
Section 2.45 Plan............................................. 8
Section 2.46 Plan Year........................................ 8
Section 2.47 Qualified Domestic Relations Order or "QDRO"..... 8
Section 2.48 Recordkeeper..................................... 9
Section 2.49 Required Beginning Date.......................... 9
Section 2.50 Retirement....................................... 9
Section 2.51 Retirement Choice Program........................ 9
Section 2.52 Rollover Contributions........................... 9
Section 2.53 Supplemental Deposits............................ 9
Section 2.54 Thrift Account................................... 9
Section 2.55 Trust Agreement.................................. 10
Section 2.56 Trust Fund....................................... 10
Section 2.57 Trustee.......................................... 10
Section 2.58 Year of Service.................................. 10
ARTICLE III Participation.......................................... 11
Section 3.1 Participation.................................... 11
Section 3.2 Effective Date of Participation................. 11
ARTICLE IV Deposits............................................... 12
Section 4.1 Basic Deposits................................. 12
Section 4.2 Supplemental Deposits.......................... 12
Section 4.3 Additional Lump Sum Deposits................... 13
Section 4.4 Method of Deposits............................. 13
Section 4.5 Limit on Deferred Deposits..................... 13
Section 4.6 Distribution of Excess Deferral Amounts........ 13
Section 4.7 Code Section 401(k) Limits on Deferred Deposits 14
Section 4.8 Unmatched Employer Contributions............... 15
<PAGE>
Section 4.9 Code Section 401(m) Limits on Nondeferred
Deposits and Employer Contributions............. 15
Section 4.10 Changing Deposit Percentages.................... 16
Section 4.11 Suspension of Deposits.......................... 16
Section 4.12 Limit on Additional Lump Sum Deposits........... 17
Section 4.13 Elections....................................... 17
Section 4.14 Rollover Contributions.......................... 17
Section 4.15 Transfer from the Employee Savings Plan......... 17
ARTICLE V Employer Contributions................................. 17
Section 5.1 Amount and Payment of Employer Contributions... 17
Section 5.2 Employer Contributions in Enterprise Common
Stock.......................................... 18
Section 5.3 Reduction of Employer Contributions by
Forfeitures.................................... 18
Section 5.4 Maximum Annual Additions....................... 18
Section 5.5 Return of Employer Contributions............... 18
Section 5.6 Allocation from Cash Balance Plan.............. 18
ARTICLE VI Thrift Account Investments............................. 18
Section 6.1 Investment of Deposits, Rollover
Contributions and Employer Contributions....... 19
Section 6.2 Change in Investment Direction................. 19
Section 6.3 Transfer of Investments........................ 19
Section 6.4 Loans.......................................... 20
ARTICLE VII Thrift Account Funds.......................................... 20
Section 7.1 Establishment of Funds......................... 20
Section 7.2 Enterprise Common Stock Fund................... 22
ARTICLE VIII Thrift Accounts............................................... 22
Section 8.1 Establishment of Thrift Accounts............... 22
Section 8.2 Measure of Thrift Accounts..................... 23
Section 8.3 Valuation of Funds............................. 23
Section 8.4 Valuation of Thrift Accounts................... 23
Section 8.5 Separate Accounting............................ 23
ARTICLE IX ESOP Accounts.......................................... 23
Section 9.1 Maintenance of Separate Accounts............... 23
Section 9.2 Allocation of Distributions.................... 23
Section 9.3 Withdrawals or Transfers During Employment..... 24
Section 9.4 Dividends and Other Income..................... 25
Section 9.5 Voting of ESOP Account Common Stock............ 25
ARTICLE X Vesting................................................ 25
Section 10.1 Vesting of Employer Contributions.............. 26
Section 10.2 Vesting of Deposits, Rollover Contributions
and the ESOP Account........................... 27
ARTICLE XI Account Distributions and Withdrawals.................. 27
Section 11.1 Distribution Upon Retirement, Disability,
Lay Off or Death................................ 27
Section 11.2 Distribution Upon Other Termination
of Employment................................... 27
Section 11.3 Withdrawal of Nondeferred Deposits
and Employer Contributions During Employment.... 28
Section 11.4 Withdrawals of Deferred Deposits During
Employment After Age 591/2...................... 29
Section 11.5 Hardship Withdrawals............................ 29
Section 11.6 Suspension of Participation..................... 32
Section 11.7 Transfer of Employment.......................... 32
Section 11.8 Form of Distributions........................... 32
Section 11.9 Time of Distributions........................... 34
Section 11.10 Limitation on Post Age 701/2Distributions....... 34
Section 11.11 Distribution in the Case of Certain Disabilities 35
Section 11.12 Loans........................................... 35
Section 11.13 Inability to Locate Payee....................... 37
Section 11.14 Federal Income Tax Withholding
on Distributions and Withdrawals............ 37
Section 11.15 Direct Rollover to Another Plan or IRA.......... 37
ARTICLE XII Limits on Benefits and Contributions Under
Qualified Plans........................................ 38
Section 12.1 Definitions.................................... 38
Section 12.2 Annual Addition Limits......................... 45
Section 12.3 Overall Limit.................................. 47
Section 12.4 Special Rules.................................. 48
ARTICLE XIII Top-Heavy Requirements........................................ 48
Section 13.1 Definitions.................................... 48
Section 13.2 General Requirements........................... 50
Section 13.3 Maximum Compensation........................... 50
Section 13.4 Vesting........................................ 50
Section 13.5 Minimum Contributions.......................... 50
Section 13.6 Participants Under Defined Benefit Plans....... 52
Section 13.7 Super Top-Heavy Plans.......................... 52
Section 13.8 Determination of Top Heaviness................. 52
Section 13.9 Determination of Super Top Heaviness........... 52
Section 13.10 Calculation of Top-Heavy Ratios............... 53
Section 13.11 Cumulative Accounts and Cumulative
Accrued Benefits........................... 53
ARTICLE XIV Beneficiary in Event of Death................................. 54
Section 14.1 Designation and Change of Beneficiary........... 54
ARTICLE XV Administration................................................ 56
Section 15.1 Named Fiduciary................................. 56
Section 15.2 Administration.................................. 56
Section 15.3 Control and Management of Assets................ 57
Section 15.4 Benefits to be Paid from Trust.................. 57
Section 15.5 Expenses........................................ 57
ARTICLE XVI Claims Procedure.............................................. 58
Section 16.1 Filing of Claims................................ 58
Section 16.2 Appeal of Claims................................ 58
Section 16.3 Review of Appeals............................... 58
ARTICLE XVII Merger or Consolidation....................................... 58
Section 17.1 Merger or Consolidation......................... 58
ARTICLE XVIII Non-Alienation of Benefits.................................... 58
Section 18.1 Non-Alienation of Benefits...................... 58
ARTICLE XIX Amendments.................................................... 59
Section 19.1 Amendment Process............................... 59
ARTICLE XX Termination................................................... 59
Section 20.1 Authority to Terminate.......................... 59
Section 20.2 Distribution Upon Termination................... 59
ARTICLE XXI Plan Confers No Right to Employment........................... 59
Section 21.1 No right to Employment.......................... 59
ARTICLE XXII Alternate Payees.............................................. 60
Section 22.1 Alternate Payees Under QDROs.................... 60
ARTICLE XXIII Construction.................................................. 60
Section 23.1 Governing Law................................... 60
Section 23.2 Headings........................................ 60
<PAGE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
THRIFT AND TAX-DEFERRED SAVINGS PLAN
ARTICLE I
AMENDMENT - PURPOSE
Section 1.1 Amendment of the Plan. Public Service Electric and Gas Company
hereby further amends, on December 16, 1996 and effective December 16, 1996, its
Thrift and Tax-Deferred Savings Plan, a savings, profit-sharing and tax-credit
employee stock ownership plan for its Employees and those of its Affiliates. The
Plan was originally adopted as of July 1, 1981 and was formerly known as the
Public Service Electric and Gas Company Thrift Plan.
Section 1.2 Purpose. The purpose of the Plan is to encourage and assist
thrift and savings by eligible non-bargaining unit employees of Public Service
Electric and Gas Company and certain of its Affiliates through tax-sheltered
forms of investment.
ARTICLE II
DEFINITIONS
When used herein, the words and phrases hereinafter defined shall have the
following meanings unless a different meaning is clearly required by the context
of the Plan:
Section 2.1 "Account" shall mean the separate account maintained in the
Plan for each Participant which consists of the Participant's Thrift Account
(including, for some Participants, the U.S. Energy Partners Account) and/or the
Participant's ESOP Account.
Section 2.2 "Active Participant" shall mean a Participant who is an
Eligible Employee presently making Nondeferred Deposits or for whom Deferred
Deposits are presently being made.
Section 2.3 "Additional Lump Sum Deposits" shall mean that amount which is
contributed to the Plan by a Participant on a lump sum basis. Additional Lump
Sum Deposits shall not be entitled to be matched by Employer Contributions.
Section 2.4 "Affiliate" shall mean any organization which is a member of a
controlled group of corporations (as defined in Code section 414(b) as modified
by Code section 415(h)) which includes the Company, or any trades or businesses
(whether or not incorporated) which are under common control (as defined in Code
section 414(c) as modified by Code section 415(h)) with the Company, or a member
of an affiliated service group (as defined in Code section 414(m)) which
includes the Company, or any other entity required to be aggregated with the
Company pursuant to regulations promulgated pursuant to Code section 414(o).
Section 2.5 "Balanced Fund" shall mean the Fund or Funds established
pursuant to Section 7.1(f).
Section 2.6 "Basic Deposits" shall mean that amount, not less than 1%, nor
more than 6% (8%, effective January 1, 1997) (or such lower maximum percentage
as may be established by the Committee) of a Participant's Compensation,
contributed to the Plan through payroll deduction by or on behalf of a
Participant which is entitled to be matched by Employer Contributions.
Section 2.7 "Board of Directors" shall mean the Board of Directors of the
Company.
Section 2.8 "Cash Balance Plan" shall mean the Cash Balance Pension Plan of
Public Service Electric and Gas Company.
Section 2.9 "Code" shall mean the Internal Revenue Code of 1986, as
amended, or as it may be amended from time to time.
Section 2.10 "Commissioner" shall mean the Commissioner of Internal
Revenue.
Section 2.11 "Committee" or "Employee Benefits Committee" shall mean the
Employee Benefits Committee of the Company appointed by the Board of Directors.
Section 2.12 "Company" shall mean Public Service Electric and Gas Company.
Section 2.13 "Compensation" shall mean the total remuneration paid to a
Participant for services rendered to an Employer excluding the Employer's cost
for any public or private employee benefit plan, but including all Deferred
Basic and Supplemental Deposits made by a Participant or on a Participant's
behalf to this Plan and all elective contributions that are made by an Employer
on behalf of a Participant which are not includable in income under Code section
125, under rules adopted by the Committee which are uniformly applicable to all
Participants similarly situated. However, Compensation shall not include the
following:
(a) any amounts which are deferred under any Deferred Compensation Plan of
any Employer and any payments from any such plans of any previously
deferred amount;
(b) any amounts received as an award pursuant to any of the following
incentive compensation programs:
(1) the Company's Management Incentive Compensation Plan;
(2) the Community Energy Alternatives Incorporated Executive
Long-Term Incentive Compensation Plan;
(3) the Energy Development Corporation Management Incentive Plan;
(4) the Energy Development Corporation Long-Term Incentive
Compensation Plan;
<PAGE>
(5) the Enterprise Diversified Holdings Incorporated Management
Incentive Compensation Plan;
(6) the Public Service Enterprise Group Incorporated 1989 Long-Term
Incentive Plan;
(7) the Public Service Conservation Resources Corporation Executive
Long-Term Incentive Compensation Plan;
(8) the Public Service Conservation Resources Corporation Employee
Long-Term Incentive Compensation Plan; and
(9) the Community Energy Alternatives Incorporated 1987 Stock
Appreciation Rights Plan;
(c) any amounts which constitute reimbursement of expenses;
(d) the following miscellaneous payments:
(1) Separation pay;
(2) Gratuity Payments upon death;
(3) Payment for vacation due at time of death;
(4) Worker's Compensation for permanent partial disability;
(5) Employer contributions for social security, unemployment
compensation or other taxes; and
(6) Employer reimbursement towards adoption expenses;
(e) the following special international payments:
(1) International service premium;
(2) Cost of living allowance;
(3) Equalization Pay;
(4) Foreign service pay; and
(5) Hardship allowance; and
(f) any amounts received by a Participant as a result of the sale of
vacation entitlements.
In any case, however, for the purposes of the Plan, Compensation for any
Plan Year shall not exceed the limit imposed by Code section 401(a)(17).
Section 2.14 "Deferred" in reference to Deposits shall mean that such
Deposits are deferred from current federal income taxation under Code section
401(k).
Section 2.15 "Deposits" shall mean the aggregate of Additional Lump Sum
Deposits, Basic Deposits and Supplemental Deposits made by or on behalf of a
Participant to his or her Thrift Account. The total of all Deposits made by or
<PAGE>
on behalf of a Participant in any Plan Year shall notexceed 25% of the
Participant's Compensation for such Plan Year. Deposits shall include "Deferred
Compensation" credited to the Participant under the U.S. Energy Partners 401(k)
Plan.
Section 2.16 "Disability" shall mean any physical or mental condition which
renders a Participant incapable of performing further work for his or her
Employer, as certified in writing by a Doctor of Medicine designated and
approved by the Committee.
Section 2.17 "Effective Date" shall mean October 1, 1996.
Section 2.18 "Eligible Employee" shall mean any Employee who has completed
at least one Year of Service whether or not he or she actually elects to make
any Deposits.
Section 2.19 "Employee" shall mean any individual in the employ of an
Employer who is not included in a unit of employees covered by a collective
bargaining agreement. The term "Employee" shall not include a director of an
Employer who serves in no capacity other than as a director, a consultant or
independent contractor doing work for an Employer or a person employed by a
consultant or independent contractor doing work for an Employer.
Section 2.20 "Employee Savings Plan" shall mean the Public Service Electric
and Gas Company Employee Savings Plan.
Section 2.21 "Employer" shall mean the Company and any Participating
Affiliate.
Section 2.22 "Employer Contributions" shall mean the amounts contributed to
the Plan on behalf of Participants by an Employer in accordance with Article V.
Employer Contributions shall include "Employer's Matching Contributions"
credited to the Participant under the U.S. Energy Partners 401(k) Plan.
Section 2.23 "Enrollment Date" shall mean the earliest of: (a) the first
day of the first payroll period in which payroll deductions from a Participant's
Compensation are made for Deposits under the Plan; (b) the date an Additional
Lump Sum Deposit is accepted by the Plan from a Participant; (c) the date a
Rollover Contribution is accepted from a Participant for payment to the Trustee
for investment in the Plan in accordance with Section 4.14; or (d) the date an
ESOP Account or a U.S. Energy Partners Account is established on behalf of a
Participant.
Section 2.24 "Enterprise" shall mean the Company's parent, Public Service
Enterprise Group Incorporated.
Section 2.25 "Enterprise Common Stock" shall mean the Common Stock, without
nominal or par value, of Enterprise.
Section 2.26 "Enterprise Common Stock Fund" shall mean the Fund established
pursuant to Section 7.1(c).
Section 2.27 "Equities Fund" shall mean the Fund or Funds established
pursuant to Section 7.1(a).
Section 2.28 "Equities Index Fund" shall mean the Fund established pursuant
to Section 7.1(d).
Section 2.29 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, or as it may be amended from time to time.
Section 2.30 "ESOP Account" shall mean that separate portion of an Account
established pursuant to Section 9.1 which evidences the shares of Enterprise
Common Stock transferred to the Plan for the Account of a Participant, pursuant
to the merger with this Plan with the Public Service Electric and Gas Company
Tax Reduction Act Employee Stock Ownership Plan (TRASOP) and/or the Public
Service Electric and Gas Company Payroll-Based Employee Stock Ownership Plan
(PAYSOP), including the net worth of the Trust Fund attributable thereto.
Section 2.31 "Fixed Income Fund" shall mean the Fund or Funds established
pursuant to Section 7.1(b).
Section 2.32 "Funds" shall mean the several investment Funds established
pursuant to Section 7.1. As used in the singular, "Fund" shall mean one of such
Funds.
Section 2.33 "General Manager" shall mean the Director - Performance and
Rewards of the Company.
Section 2.34 "Government Obligations Fund" shall mean the Fund or Funds
established pursuant to Section 7.1(e).
Section 2.35 "Highly Compensated Employee" shall mean:
(a) For any Plan Year, any Employee who, during the Plan Year or the
preceding Plan Year--
(1) was at any time a 5% owner;
(2) received Compensation for such Plan Year from the Company or an
Affiliate in excess of the amount provided for by Code section
414(q)(1)(B);
(3) received Compensation for such Plan Year from the Company or an
Affiliate in excess of the amount provided for by Code section
414(q)(1)(C) and was in the top-paid group of Employees; or
(4) was at any time an officer of the Company or of an Affiliate and
received Compensation for such Plan Year greater than 50% of the
amount provided for by Code section 415(b)(1)(A).
(b) In the case of the Plan Year for which the relevant determination is
being made, an Employee not described in subparagraph (a)(2), (a)(3)
or (a)(4) of this Section for the preceding Plan Year (without regard
to this paragraph) shall not be treated as described in such
subparagraphs (a)(2), (a)(3) or (a)(4) unless such Employee is a
member of the group consisting of the 100 Employees paid the greatest
Compensation during the year for which such determination is being
made.
(c) For purposes of this Section, an Employee shall be treated as a 5%
owner for any Plan Year if at any time during such Plan Year such
Employee was a 5% owner (as defined in Code section 416(i)(1)) of the
Company or an Affiliate.
(d) For purposes of this Section, an Employee shall be considered as being
in the top-paid group of Employees for any Plan Year if such Employee
is in the group consisting of the top 20% of the Employees when ranked
on the basis of Compensation paid during such Plan Year.
(e) For purposes of determining the top-paid group under paragraph (d),
the following Employees shall be excluded:
(1) Employees who have not completed 6 months of service;
(2) Employees who normally work less than 171/2hours per week;
(3) Employees who normally work during not more than six months
during any year;
(4) Employees who have not attained age 21; and
(5) Employees who are nonresident aliens and who receive no earned
income (within the meaning of Code section 911(d)(2)) from the
Company or an Affiliate which constitutes income from sources
within the United States (within the meaning of Code section
861(a)(3)).
(f) For purposes of subparagraph (a)(4) of this Section, no more than 50
Employees (or, if lesser, the greater of three Employees or 10% of the
Employees) shall be treated as officers. If for any year no officer of
the Company or an Affiliate is described in subparagraph (a)(4) of
this Section, the highest paid of the officers of the Company or an
Affiliate for such Plan Year shall be treated as described in such
subparagraph.
(g) If any individual is a member of the family of a 5% owner or of a
Highly Compensated Employee in the group consisting of the 10 Highly
Compensated Employees paid the greatest Compensation during the Plan
Year, then: (1) except for purposes of Section 4.5, such individual
shall not be considered a separate Employee; and (2) any Compensation
paid to such individual (and any applicable contribution on behalf of
such individual) shall be treated as if it were paid to (or on behalf
of) the 5% owner or Highly Compensated Employee. For purposes of this
subparagraph (g), the term "family" shall mean, with respect to any
Employee, such Employee's spouse and lineal ascendants or descendants
and spouses of such lineal ascendants or descendants; provided,
however, that for purposes of determining whether the limit on
includable Compensation contained in Code section 401(a)(17) (see
Section 2.12) has been exceeded, the term "family" shall mean, with
respect to any Employee, such Employee's spouse and the children of
such Employee who have not attained age 19 by the close of the Plan
Year.
(h) For purposes of this Section, the term "Compensation" shall mean
Compensation within the meaning of Section 12.1, but including salary
reduction contributions to a cafeteria plan, a 401(k) plan and a
simplified employee pension.
(i) A former Employee shall be treated as a Highly Compensated Employee if
(1) such Employee was a Highly Compensated Employee when such Employee
separated from service or (2) such Employee was a Highly Compensated
Employee at any time after attaining age 55.
Section 2.36 "Highly Compensated Participant" shall mean:
(a) those Highly Compensated Employees who are Participants or
(b) those Highly Compensated Employees who are Eligible Employees, who
have satisfied all conditions for participation under Section 3.1,
whether or not they actually elect to make any Deposits or Rollover
Contributions to the Plan.
Section 2.37 "Hour of Service" shall mean each hour for which an Employee
is directly or indirectly paid remuneration or entitled to such payment by an
Employer including any hours for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer.
Section 2.38 "Investment Manager" shall mean an investment manager as
defined in ERISA section 3(38).
Section 2.39 "Lay Off" or Laid Off" shall mean a Participant's involuntary
separation from service with an Employer because of a reduction in work forces
at a time when there is no further work available with the Employer for which
the Participant is qualified.
Section 2.40 "Leased Employee" shall mean an individual who is not an
Employee but who would be a leased employee as defined in Code section 414(n),
but for the one year service requirement of Code section 414(n)(2)(B).
Section 2.41 "Matured" in reference to Deposits and Employer Contributions
shall mean that the respective amount has been held in the Plan for at least
twenty-four months. The twenty-four month period will include periods during
which Deposits and Employer Contributions held in the Participant's U.S. Energy
Partners Account were held in the U.S. Energy Partners 401(k) Plan.
Section 2.42 "Nondeferred" in reference to Deposits shall mean that such
Deposits are not deferred from current federal income taxation under Code
section 401(k).
Section 2.43 "Participant" shall mean any person who has an interest in the
Trust Fund.
Section 2.44 "Participating Affiliate" shall mean any Affiliate of the
Company which: (a) adopts the Plan with the approval of the Board of Directors;
(b) authorizes the Board of Directors and the Employee Benefits Committee to act
for it in all matters arising under or with respect to the Plan; and (c)
complies with such other terms and conditions relating to the Plan as may be
imposed by the Board of Directors.
Section 2.45 "Plan" shall mean this Public Service Electric and Gas Company
Thrift and Tax-Deferred Savings Plan, including all amendments hereto which may
hereafter be made.
Section 2.46 "Plan Year" shall mean the calendar year.
Section 2.47 "Qualified Domestic Relations Order" or "QDRO" shall mean any
judgment, decree or order pursuant to a state domestic relations or community
property law which relates to the provision of child support or marital property
rights, which creates or recognizes the existence of an alternate payee's right
to (or assigns to an alternate payee the right to) receive all or part of a
Participant's Account, and which meets the requirements of (a) and (b) below, as
interpreted in accordance with Code section 414(p):
(a) such order specifies:
(1) the name and last known mailing address of the Participant and
each alternate payee;
(2) the amount or the percentage of the Participant's Account to be
paid to each alternate payee, or the manner in which such amount
or percentage is to be determined;
(3) the number of payments or the period to which the order applies;
and
(4) each plan to which such order applies; and
(b) such order does not require the Plan to:
(1) provide any type or form of benefit or option not otherwise
provided under the Plan;
(2) provide increased benefits; or
(3) pay to an alternate payee amounts required to be paid to another
alternate payee under a prior QDRO.
Section 2.48 "Recordkeeper" shall mean the person(s) or entity(is)
designated by the Committee to maintain the records of the Plan and Plan
Accounts and to perform such other functions as may be designated by the
Committee.
Section 2.49 "Required Beginning Date" shall mean with respect to
distributions to any Participant, April 1 of the calendar year following the
calendar year in which the Participant attains age 70 1/2; provided, however,
that with respect to distributions to any Participant who attained age 70 before
July 1, 1987 and who was not a "5% owner" as defined in Section 13.1(f)(3), the
Required Beginning Date for such Participant shall be April 1 of the calendar
year following the calendar year in which (1) the Participant attains age 70 1/2
or (2) the Participant retires, whichever is later.
Section 2.50 "Retirement" shall mean the termination of employment by a
Participant other than by reason of his or her death:
(a) under circumstances entitling the Participant to an immediately
payable periodic retirement benefit under the Pension Plan of Public
Service Electric and Gas Company or the Cash Balance Pension Plan of
Public Service Electric and Gas Company, or
(b) at or after age 65.
Section 2.51 "Retirement Choice Program" shall mean the Public Service
Electric and Gas Company Retirement Choice Program.
Section 2.52 "Rollover Contributions" shall mean Employee contributions
transferred to the Plan, in accordance with Section 4.14, from a trust under
another corporate plan, each qualified under Code sections 501(a) and 401(a),
respectively.
Section 2.53 "Supplemental Deposits" shall mean the amount, if any, of
Compensation contributed to the Plan through payroll deduction by or on behalf
of a Participant which is greater than the maximum permitted Basic Deposit.
Supplemental Deposits shall include "Deferred Compensation" credited to the
Participant under the U.S. Energy Partners 401(k) Plan.
Section 2.54 "Thrift Account" shall mean that separate portion of an
Account established pursuant to Section 8.1 and which consists of the sum of the
following subaccounts of such Participant:
(a) Basic Deposit Subaccount shall mean that portion of a Participant's
Thrift Account which evidences the value of Basic Deposits by or on
behalf of a Participant under the Plan, including the net worth of the
Trust Fund attributable thereto.
(b) Supplemental Deposit Subaccount shall mean that portion of a
Participant's Thrift Account which evidences the value of Supplemental
Deposits and Additional Lump Sum Deposits under the Plan, assets
transferred by the Participant from his or her ESOP Account and
Rollover Contributions to the Plan by or on behalf of a Participant,
including the net worth of the Trust Fund attributable thereto, and
his or her U.S. Energy Partners Deposit Subaccount.
(c) Employer Contribution Subaccount shall mean that portion of a
Participant's Thrift Account which evidences the value of Employer
Contributions which have been credited to a Participant's Account
under Section 5.1 of the Plan (less any forfeitures), including the
net worth of the Trust Fund attributable thereto, and his or her U.S.
Energy Partners Employer Contribution Subaccount.
Section 2.55 "Trust Agreement" shall mean the agreement between the Company
and the Trustee which provides for the management of the Trust Fund and the
investment of Deposits, Employer Contributions and Rollover Contributions to the
Plan and investment of the assets of ESOP Accounts and U.S. Energy Partners
Accounts.
Section 2.56 "Trust Fund" shall mean the aggregate of Basic and
Supplemental Deposits made by or on behalf of Participants, Rollover
Contributions and Employer Contributions, together with ESOP Accounts and U.S.
Energy Partners Accounts, increased by any profits or income thereon, and
decreased by any losses thereon and by any payments made therefrom.
Section 2.57 "Trustee" shall mean any individual or individuals or
corporation or corporations by whom any assets of the Plan are held under the
Trust Agreement.
Section 2.58 "U.S. Energy Partners Account" shall mean that separate
portion of an Account which evidences the assets transferred to the Plan for the
Account of a Participant, pursuant to the merger of this Plan with the U.S.
Energy Partners 401(k) Plan, and which consists of the sum of the following
subaccounts of such Participant:
(a) U.S. Energy Partners Deposit Subaccount shall mean the portion of a
Participant's U.S. Energy Partners Account which evidences the value
of "Deferred Compensation" credited to the Participant under the U.S.
Energy Partners 401(k) Plan, including the net worth of the Trust Fund
attributable thereto.
(b) U.S. Energy Partners Employer Contribution Subaccount shall mean the
portion of a Participant's U.S. Energy Partners Account which
evidences the value of "Employer's Matching Contributions" credited to
the Participant under the U.S. Energy Partners 401(k) Plan, including
the net worth of the Trust Fund attributable thereto."
<PAGE>
Section 2.59 "Year of Service" shall mean the twelve consecutive month
period beginning on the first day of the month in which an Employee commences
employment with the Company or an Affiliate and each succeeding twelve
consecutive month period beginning on the yearly anniversary of such day, during
which the Employee completes not less than 1,000 Hours of Service; and the
determination of whether an Employee shall have completed not less than 1,000
Hours of Service during any such period shall be made by crediting such Employee
with 190 Hours of Service for each calendar month during such period in which
the Employee is entitled to be credited with at least one Hour of Service for
such month. For the purposes of this Section, there shall be included service
with the Company, U.S. Energy Partners or an Affiliate as an Employee or as a
Leased Employee.
ARTICLE III
PARTICIPATION
Section 3.1 Participation. Each Employee may become a Participant by
applying with the Recordkeeper to establish a Thrift Account, accept a Rollover
Contribution on such Employee's behalf or when an ESOP Account or a U.S. Energy
Partners Account was established on his or her behalf. An Employee who, at the
time he/she becomes employed by the Company or a Participating Affiliate is a
participant in the Employee Savings Plan, may transfer account balances held in
that plan to this Plan.
By contacting the Recordkeeper and using its automatic voice response
system, the Employee can (a) arrange for the payment of an Additional Lump Sum
Deposit to the Plan, (b) authorize his or her Employer to withhold an amount in
a specified percentage of his or her Compensation, (c) authorize the
Recordkeeper and/or Employer to pay such amount to the Trustee for investment in
a Thrift Account under the Plan in accordance with the Employee's instructions
and (d) authorize his or her Employer to accept a Rollover Contribution from
another qualified corporate plan in accordance with Section 4.12 and to pay such
amount to the Trustee for investment under the Plan in accordance with such
Employee's instructions.
Participation in the Plan is entirely voluntary.
Section 3.2 Effective Date of Participation. Participation in the Plan
shall be effective for an Employee and payroll deductions shall commence, as
soon as practicable after the Employee has applied to the Recordkeeper for
participation. Participation in the Plan for an Employee who, at the time he/she
becomes employed by the Company or a Participating Affiliate, is a participant
in the Employee Savings Plan, shall be effective from the date he/she first
becomes an Employee. Participation in the Plan for an Employee making a Rollover
Contribution shall be effective as soon as practicable after such Employee's
Rollover Contribution is accepted for transfer in accordance with Section 4.12.
Participation of an Employee in the Plan with respect to the ESOP Account became
effective upon receipt by the Plan of the assets credited to the account of such
Employee in the Company's TRASOP and/or PAYSOP pursuant to a merger of such plan
or plans with this Plan. Participation of an Employee in the Plan with respect
to the U.S. Energy Partners Account became effective December 16, 1996.
ARTICLE IV
DEPOSITS
Section 4.1 Basic Deposits. An Eligible Employee may elect:
(a) to make Basic Nondeferred Deposits to the Plan in an amount equal to
any integral multiple of 1% of his or her Compensation up to a total
of 6% (8%, effective January 1, 1997) each pay period; or
(b) to have Basic Deferred Deposits made to the Plan by an Employer on his
or her behalf in an amount equal to any integral multiple of 1% of his
or her Compensation up to a total of 6% (8%, effective January 1,
1997) each pay period; or
(c) to make, or have made by an Employer on his or her behalf, any
combination of Deposits under (a) or (b) above, totaling up to 6% (8%
effective January 1, 1997) of his or her Compensation each pay period;
subject to the limitations of Sections 4.5 and 5.4. Basic Deposits made by or on
behalf of a Participant shall be paid over by the Employer to the Trustee and
deposited in the Trust Fund as soon as practicable after deduction and, in any
event, within 90 days of deduction. Such Basic Deposits shall be credited as
soon as practicable to such Participant's Basic Deposit Subaccount in the Plan.
Section 4.2 Supplemental Deposits. Each Participant who is electing the
maximum permitted Basic Deposit to the Plan may also elect:
(a) to make Supplemental Nondeferred Deposits to the Plan in an amount
equal to any integral multiple of 1% of his or her Compensation to a
total of 19% (17%, effective January 1, 1997) of his or her
Compensation each pay period; or
(b) to have Supplemental Deferred Deposits made by an Employer on his or
her behalf in an amount equal to any integral multiple of 1% of his or
her Compensation up to a total of 19% (17%, effective January 1, 1997)
of his or her Compensation each pay period; or
(c) to make, or have made by an Employer on his or her behalf, any
combination of the Deposits specified in (a) or (b) above, totaling up
to 19% (17%, effective January 1, 1997) of his or her Compensation
each pay period; subject to limitations of Sections 4.5 and 5.4.
Supplemental Deposits made by or on behalf of a Participant shall be
paid over by an Employer to the Trustee and deposited in the Trust
Fund as soon as practicable after deduction and, in any event, within
90 days of deduction. Such Supplemental Deposits shall be credited as
soon as practicable to such Participant's Supplemental Deposit
Subaccount in the Plan.
Section 4.3 Additional Lump Sum Deposits. Within any Plan Year, each
Participant may make one or more Additional Lump Sum Deposits on a Nondeferred
basis in the minimum amount of $250.00 and in such total amounts which, when
aggregated with such Participant's Basic Deposits and Supplemental Deposits, do
not exceed 25% of his or her Compensation for that Plan Year and subject to the
limitations of Sections 4.5, 4.12 and 5.4. Additional Lump Sum Deposits made by
a Participant shall be paid over by the Recordkeeper to the Trustee and
deposited in the Trust Fund as soon as practicable, but no later than 90 days,
after receipt. Such Additional Lump Sum Deposits shall be credited as soon as
practicable to such Participant's Supplemental Deposit Subaccount in the Plan.
Section 4.4. Method of Deposits. Basic Deposits and Supplemental Deposits
by or on behalf of Active Participants shall be made by means of payroll
deduction. For convenience of administration, if the percentage of Compensation
elected to be contributed to the Plan by an Active Participant is not equal to a
whole dollar amount, such amount will be increased to the next whole dollar
amount in establishing the deduction to be made from such Active Participant's
pay. In addition, if an Active Participant's Compensation is changed, the
resulting change in deduction shall be made as soon as practicable after such
change in Compensation.
Additional Lump Sum Deposits shall be paid directly by Participants to the
Recordkeeper who shall forward them to the Trustee for investment in the
Participant's Thrift Account in accordance with his or her then current
investment direction.
Section 4.5 Limit on Deferred Deposits. In no event may Deferred Deposits
for any Participant attributable to any taxable year of such Participant
(presumably the calendar year) exceed the amount permitted by Code section
402(g). Where a Participant elects under Section 4.1 to have Deferred Deposits
made by an Employer to the Plan which would otherwise exceed the limit of this
Section 4.5, such excessive Deferred Deposits shall be deemed to be Nondeferred
Deposits to the Plan ("Deemed Nondeferred Deposits") rather than Deferred
Deposits to the Plan; provided, however, that such Deemed Nondeferred Deposits
shall be subject to the limits and rules of Sections 4.1 and 4.2; and provided
further, that such Deemed Nondeferred Deposits shall be deemed to be Basic
Nondeferred Deposits (and, therefore, matched by Employer Contributions as set
forth in Article V) to the extent possible under the limits of Sections 2.6 and
4.1, taking into account other Basic Deferred and Nondeferred Deposits of the
Participant.
Section 4.6. Distribution of Excess Deferral Amounts.
(a) Notwithstanding any other provision of the Plan to the contrary, an
Employer shall distribute any Excess Deferral Amount (as defined
below), adjusted according to Section 4.6(d), to Participants who
claim such allocable Excess Deferral Amounts for a calendar year. Such
distribution shall be made no later than the April 15th next following
the end of the calendar year for which such claim is made.
(b) For purposes of this Section 4.6, "Excess Deferral Amount" shall mean
the amount of Deferred Deposits for a calendar year that the
Participant allocates to this Plan and claims pursuant to the election
procedure set forth in Section 4.6(c) below.
(c) A Participant's election to claim an Excess Deferral Amount for a
calendar year shall be in writing, shall be submitted to the Committee
no later than the March 1st next following the end of such calendar
year, shall specify the Excess Deferral Amount and shall state that if
such amount is not distributed, such Excess Deferral Amount, when
added to amounts deferred under other plans or arrangements described
in Code sections 401(k), 408(k) or 403(b), exceeds the limit imposed
on the Participant by Code section 402(g) for the taxable year
(calendar year) in which the deferral occurred.
(d) The amount distributed to a Participant pursuant to this Section 4.6
with respect to a calendar year shall be increased or decreased, as
applicable, by investment income or losses attributable thereto. If a
loss is allocable to the Excess Deferral Amount, the amount
distributed shall not be less than the lesser of (1) the Participant's
Deferred Deposit Subaccount or (2) the Participant's Deferred Deposits
for the Plan Year during which the Excess Deferral Amount occurred.
Section 4.7 Code Section 401(k) Limits on Deferred Deposits.
(a) Correction of Excess Nondeferred Deposits and Employer Contributions.
If the Committee determines after the end of the Plan Year that the
nondiscrimination limitation of Code section 401(m) has not been
satisfied, Nondeferred Deposits and Employer Contributions (adjusted
to reflect any income or losses allocable to such excess contributions
for the Plan Year in which such excess contributions were made) of the
Highly Compensated Employees shall be distributed to such Highly
Compensated Employees to eliminate such excess Nondeferred Deposits
and Employer Contributions; provided, however, that the amount of
excess Nondeferred Deposits and Employer Contributions for a Plan Year
shall be determined after the excess Nondeferred Deposits and Employer
Contributions that are treated as employee contributions due to
recharacterization under Treasury Regulation section
1.401(m)-1(e)(2)(iii).
(b) Elimination of Amount of Excess Nondeferred Deposits and Employer
Contributions. The amount of excess Nondeferred Deposits and Employer
Contributions for a Highly Compensated Employee for a Plan Year is to
be determined by the following leveling method, under which the
contribution percentage of a Highly Compensated Employee with the
highest contribution percentage is reduced to the extent required to--
(1) enable the Plan to satisfy the contribution percentage
limitation, or
(2) cause such Highly Compensated Employee's contribution percentage
to equal the percentage of the Highly Compensated Employee with
the next highest contribution percentage.
This process must be repeated until the Plan satisfies the actual
contribution percentage test.
(c) Return of Excess Nondeferred Deposits and Employer Contributions.
Excess Nondeferred Deposits and Employer Contributions which are
returned to Highly Compensated Employees pursuant to this section 4.7
shall be distributed to such Employees as soon as practicable, without
regard to any limitation otherwise imposed by law or by the provisions
of this Plan. The amount of excess Nondeferred Deposits and Employer
Contributions for a Highly Compensated Employee is then equal to total
Nondeferred Deposits and Employer Contributions taken into account for
the actual contribution percentage test, minus the product of the
Employee's contribution ratio and the Employee's Compensation used in
determining such ratio.
(d) Family Aggregation Rules. In the case of a Highly Compensated Employee
whose actual contribution ratio is determined under the family
aggregation rules, the determination of the amount of excess aggregate
contributions shall be made as follows:
(1) the actual contribution ratio shall be reduced pursuant to the
leveling method described above, and
(2) the excess aggregate contributions are allocated among the family
members in proportion to the contribution of each such family
member.
Section 4.8 Unmatched Employer Contributions. If, as the result of the
operation of Sections 4.5, 4.6 and/or 4.7, and before the operation of Section
4.9, the combined Deposits of a Participant are adjusted in such a way that
Employer Contributions previously made on behalf of a Participant for a Plan
Year are no longer matched by such Participant's Basic Deposits, then the
matching Employer Contributions allocated to such Participant's Account for such
Plan Year shall be reduced, under nondiscriminatory rules established by the
Committee, to the extent necessary to equal the percentage of Employer
Contributions (as set forth in Article V) with respect to the Participant's
remaining Basic Deposits for such Plan Year. The amount, if any, of previously
allocated Employer Contributions in excess of the percentage of Employer
Contributions (as set forth in Article V) of the Participant's remaining Basic
Deposits shall be forfeited and applied to reduce future Employer Contributions
to the Plan.
Section 4.9 Code Section 401(m) Limits on Nondeferred Deposits and Employer
Contributions.
(a) Limitation. Nondeferred Deposits by, together with Employer
Contributions on behalf of, Highly Compensated Participants for a Plan
Year shall not exceed the amount permissible to meet the
nondiscrimination tests of Code section 401(m).
(b) Distribution of Excess Contributions The Committee shall, consistent
with regulations under the Code, establish nondiscriminatory rules to
meet the requirements of this Section 4.9.
Section 4.10 Changing Deposit Percentages The percentage of Compensation
deposited in the Plan by or on behalf of an Active Participant shall continue in
effect until such Active Participant shall change the rate of such Deposits. An
Active Participant may change the rate of Deposits to a higher or lower
percentage of Compensation within the limitations of Sections 4.1, 4.2 and 4.5
by arranging for such change with the Recordkeeper or as otherwise prescribed by
the Committee. Any such change shall become effective as soon as practicable
after receipt of the notice of change by the Recordkeeper.
Section 4.11 Suspension of Deposits.
(a) An Active Participant may suspend all of the Deposits to the Plan made
by such Participant or on his or her behalf at any time by arranging
for such suspension with the Recordkeeper or as otherwise prescribed
by the Committee. Such suspension shall be effective as soon as
practicable after receipt of the notice of suspension by the
Recordkeeper, and shall continue until such Participant elects to have
Deposits resumed by arranging therefor with the Recordkeeper. Payroll
deductions under the Plan shall begin again as soon as practicable
after such notice is received by the Recordkeeper.
(b) If, after other required and authorized deductions from an Active
Participant's pay, there is not sufficient money available in any pay
period to make the entire authorized payroll deduction for such
Participant's Nondeferred Deposits, no payroll deduction shall be made
therefor for that pay period.
(c) In case of any such total suspension of Deposits, pursuant to Section
4.11(a), Employer Contributions on behalf of such Participant shall be
automatically suspended for a like period.
Section 4.12 Limit on Additional Lump Sum Deposits. No Additional Lump Sum
Deposits may be made by any Participant in any Plan Year in which the aggregate
amount of all of such Participant's Deposits under the Plan exceeds 25% of such
Participant's Compensation for that Plan Year. Any Additional Lump Sum Deposits
inadvertently received in excess of this limitation shall be refunded to the
Participant as soon as practicable following determination of such excess.
Section 4.13 Elections. All elections under this Article IV shall be made
at the time, in the manner and subject to the conditions as are specified by the
Committee. Elections of Deferred Deposits shall in all cases be irrevocably made
prior to the beginning of the payroll period for which such elections shall
apply. In any year in which the Committee deems it necessary to do so to meet
the requirements of Section 4.5, 4.7, 4.9 or 5.4 or the Code and the regulations
thereunder, the Committee may reduce, for that Plan Year, the permissible amount
of Deposits by or on behalf of any or all Active Participants.
Section 4.14 Rollover Contributions. Subject to such rules as may be
established by the Committee, an Employee may transfer Rollover Contributions to
the Plan, to be deposited in his or her Supplemental Deposit Account. The
Employee must certify that such amount to be transferred as a Rollover
Contribution qualifies for such transfer under the Code and regulations
thereunder and must submit such information or evidence, satisfactory to the
Committee, that it may require in order to approve such transfer. The Committee
may impose such nondiscriminatory requirements on such transfer as it deems
necessary or desirable. In addition, Rollover Contributions shall then be
subject to all terms and conditions of this Plan and the Trust Agreement and
shall be treated in the same manner as Supplemental Deposits, unless the context
of the Plan or Trust requires otherwise.
Section 4.15 Transfers from the Employee Savings Plan. Any Employee who, at
the time he/she becomes employed by the Company or a Participating Affiliate, is
a participant in the Employee Savings Plan, shall automatically be enrolled in
the Plan and all balances in the Employee Savings Plan shall be transferred to
the Plan and all contribution and investment elections in effect for the
Employee Savings Plan shall remain in effect, subject to change pursuant to the
operation of Sections 4.10, 4.11 and 6.2 hereof.
ARTICLE V
EMPLOYER CONTRIBUTIONS
Section 5.1 Amount and Payment of Employer Contributions. Each Employer
shall contribute to the Plan on behalf of Participants who are Eligible
Employees, who are its Employees and who are making or having their Employer
make on their behalf Basic Deposits to the Plan an amount equal to 50% of the
aggregate of such Basic Deposits, except to the extent that such Basic Deposits
are reduced or distributed as provided in Sections 4.5 through 4.9, and except
as provided in this Article V and in Section 11.3. Employer Contributions shall
be allocated as Nondeferred. Employer Contributions with respect to a Plan Year
shall be paid to the Trustee not later than the due date (including extensions
of time) for filing Enterprise's consolidated Federal income tax return for such
year. All Employer Contributions may be made without regard to current or
accumulated earnings of the Company or any Participating Affiliate.
Notwithstanding the foregoing, the Plan shall be designated a profit sharing
plan for purposes of Code sections 401(a), 402, 412 and 417.
Section 5.2. Employer Contributions in Enterprise Common Stock. Employer
Contributions with respect to Basic Deposits in excess of 6% of Compensation
shall be made in shares of Enterprise Common Stock. Any such shares credited to
a Participant's account shall be acquired in the same manner as shares acquired
for the Enterprise Common Stock Fund established pursuant to Section 7.2, be
invested in that Fund and shall not be available for transfer to any other Fund
or withdrawal from the Plan prior to the Participant's termination of employment
by the Company or any Affiliate.
Section 5.3. Reduction of Employer Contributions by Forfeitures. The amount
of an Employer's Contribution shall be reduced by the amount of the reduction of
an unmatched Employer Contribution allocable to a Highly Compensated Participant
as provided in Sections 4.7, 4.8 and 4.9, by the amount of any forfeiture as a
result of termination of the employment of an Active Participant as provided in
Section 11.2 or as a result of the Employer's inability to locate a Participant
or beneficiary to whom a benefit hereunder is due as provided in Section 11.13.
Section 5.4. Maximum Annual Additions. The maximum Annual Addition, as
defined in Section 12.1, for any Plan Year to any Participant's Account may not
exceed the amount provided for by Code section 415(c). The rules governing the
application of this Section 5.4 and other limitations imposed by Code section
415 are more fully set forth in Article XII.
Section 5.5. Return of Employer Contributions.
(a) Notwithstanding any provision of the Plan to the contrary, any
Employer Contribution made to the Plan by reason of mistake of fact
may be returned to the Employer making such Employer Contribution,
provided the return of such Employer Contribution is made within one
year from the date the mistaken payment was made and any amount so
returned shall be disposed of as the Committee shall direct.
(b) If the Internal Revenue Service determines that any contribution by an
Employer to the Plan is not deductible under Code section 404, such
Employer shall have the option, which it may exercise within one year
after the date of the disallowance of such deduction, to have such
contribution returned to the Employer and any amount so returned shall
be disposed of as the Committee shall direct.
Section 5.6 Allocation from Cash Balance Plan. Pursuant to the Cash Balance
Plan and the Retirement Choice Program, Participants who so elect may have
certain service and age points otherwise allocate to them under the Cash Balance
Plan made as an Employer Contribution to their Accounts under this Plan. All
amounts so elected shall be accepted by the Trustee and invested in accordance
with Section 6.1.
ARTICLE VI
THRIFT ACCOUNT INVESTMENTS
Section 6.1 Investment of Deposits, Rollover Contributions and Employer
Contributions. Deposits, Rollover Contributions and Employer Contributions to
the Plan shall be invested by the Trustee under the Trust Agreement in the Funds
established pursuant to Section 7.1. Upon enrolling in the Plan, each
Participant shall specify, in such form as shall be prescribed by the Committee,
the percentage (which shall be an integral multiple of 1% - including 0% but not
exceeding 100% in the aggregate) of Deposits to his or her Thrift Account which
shall be invested in each of such Funds. Subject to Section 5.2 with respect to
Employer Contributions related to Basic Deposits in excess of 6% of
Compensation, Employer Contributions shall be invested by the Trustee for the
Account of an Active Participant in the same Funds and in the same percentages
as directed by such Participant with respect to the Basic Deposits to his or her
Thrift Account. Rollover Contributions may be invested in funds under the Plan
in such dollar amounts as shall be designated by the Participant.
Notwithstanding anything to the contrary herein, a Participant who, at the time
he/she becomes an Employee, is a participant in the Employee Savings Plan, shall
continue the same investment elections as he/she maintained in the Employee
Savings Plan until a change in investment direction is made in conformity with
the Section 6.2 hereof. Each Participant with a U.S. Energy Partners Account
shall specify, in such form as shall be prescribed by the Committee, the
percentage (which shall be an integral multiple of 1% including 0% but not
exceeding 100% in the aggregate) of his or her U.S. Energy Partners Account
which shall be invested in each of the Funds established pursuant to Section
7.1; provided, however, that if the Participant fails to so specify, the U.S.
Energy Partners Account shall be invested in a "Fixed Income Fund".
Section 6.2 Change in Investment Direction. Any investment direction given
by a Participant under Section 6.1 shall continue in effect until changed by the
Participant. A Participant may change any such direction by giving notice of
such change in the form prescribed by the Committee. Any such change shall
become effective as soon as practicable after receipt of the notice of change by
the Recordkeeper. A change in investment direction under this Section 6.2 shall
not automatically cause a transfer of investments under Section 6.3.
Section 6.3 Transfer of Investments. Subject to Section 5.2 with respect to
the limitation on the transfer of Employer Contributions made in shares of
Enterprise Common Stock, a Participant may direct that all or any part (in
integral multiples of 1%) of his or her interest in any one or more of the Funds
be transferred to any one or more of the other Funds, except that no transfer
may be made into a Participant's ESOP Account. A Participant may also transfer
his or her ESOP Account assets (in 1% integral multiples but not exceeding 100%
in the aggregate) into any one or several of the Funds. However, any transfer
from a Fund shall be subject to such contractual limitations regarding transfers
from such Fund as may exist from time to time under the contracts governing
investments held in such Fund. A direction to transfer all or a portion of a
Participant's interest in a Fund shall be made by giving notice in the form
prescribed by the Committee. Subject to any contractual limitations that may be
applicable, any such transfer shall be made as soon as practicable after receipt
of the notice of such transfer by the Recordkeeper.
Section 6.4 Loans. Participants may receive loans from their Thrift
Accounts under the provisions of Section 11.12. A loan to a Participant shall be
considered an investment of such Participant's Thrift Account and the principal
amount of the loan shall be treated as a separate investment within the various
subaccounts. Repayments of the principal amount of the loan shall reduce such
corresponding investments of each such subaccount in the inverse order of such
investment and repayments of such principal along with any accrued interest
thereon shall be invested in the Funds in accordance with the Participant's then
current investment direction. Loan amounts shall be taken from subaccounts in
the following order:
(a) Deferred Deposits;
(b) Unmatured Vested Employer Contributions;
(c) Matured Vested Employer Contributions;
(d) Rollover Contributions;
(e) Unmatured Post-1986 Nondeferred Deposits;
(f) Matured Post-1986 Nondeferred Deposits;
(g) Pre-1987 Nondeferred Deposits.
Loan proceeds shall not be taken from a Participant's ESOP Account nor from
that portion of a Participant's Thrift Account attributable to Employer
Contributions made in shares of Enterprise Common Stock.
ARTICLE VII
THRIFT ACCOUNT FUNDS
Section 7.1. Establishment of Funds. The following Funds shall be
established exclusively for the collective investment of Trust Fund assets
attributable to Participant Thrift Accounts, as directed by Participants:
(a) One or more "Equities Funds", the assets of which shall principally be
invested, directly or indirectly, in common stocks of domestic or
foreign corporations. To the extent practicable, no Equities Fund
shall invest in Enterprise Common Stock.
(b) One or more "Fixed Income Funds" the assets of which shall be (1) held
by an insurance company, banking institution or other corporate entity
pursuant to an agreement containing provisions for the repayment in
full of the amounts transferred to the insurance company, banking
institution or other corporate entity plus interest at a fixed annual
rate for a specified period, or (2) invested in direct obligations of
the United States Government agencies thereof, or in obligations
guaranteed as to the payment of principal and interest by the United
States Government or agencies thereof, or in fully insured bank
deposits, or fixed income private or public securities or (3) invested
in assets that meet the criteria in (1) and (2) whose benefit
responsiveness, liquidity and/or maturity date is provided for by a
third party, or (4) invested in short-term investments, including, in
all cases, a commingled fund or common trust and excluding, in all
cases, securities issued by any Employer, except that this limitation
shall not apply to securities held by any commingled fund or common
trust in which any portion of a "Fixed Income Fund" shall be invested.
The terms of such agreements and the identity of such insurance
companies, banking institutions, other corporate entities and/or third
parties shall be determined by the Committee from time to time.
(c) An "Enterprise Common Stock Fund", the assets of which shall
principally be invested in Enterprise Common Stock.
(d) An "Equities Index Fund", the assets of which shall principally be
invested, directly or indirectly, in common stocks substantially
comprising the Standard and Poor's 500 Index.
(e) One or more "Government Obligations Funds", the assets of which shall
principally be invested, directly or indirectly, in debt obligations
issued or guaranteed by the U. S. Government, its agencies or
instrumentalities.
(f) One or more "Balanced Funds", the assets of which shall be principally
invested, directly or indirectly, in a combination of the common
stocks and fixed-income securities of domestic corporations.
Notwithstanding the foregoing, any or all of the above Funds may be
temporarily maintained in cash, or may be invested directly or indirectly in
certain short-term obligations as permitted by the Trust Agreement. Dividends,
interest and other income in respect of any Fund shall be reinvested in the same
Fund to the extent not used to pay expenses of the Plan. Except as otherwise
limited by the provisions of this Plan, withdrawals, distributions and
forfeitures, except as otherwise specified in the Plan, shall be charged pro
rata against the various Funds in which the subaccounts from which such
withdrawals, distributions or forfeitures are then invested.
Section 7.2 Enterprise Common Stock Fund.
(a) Enterprise Common Stock purchased for the Enterprise Common Stock Fund
shall be purchased by the Trustee on the open market or directly from
Enterprise should Enterprise elect to make such sales.
(b) If Enterprise shall elect to sell shares of Enterprise Common Stock
directly to the Plan, the price to be paid by the Trustee for any such
purchases shall be the average of the high and low sales prices of
Enterprise Common Stock as reported by the New York Stock Exchange on
the date of purchase.
(c) All voting discretion, including the power to decide whether or not to
tender Enterprise Common Stock in connection with a tender offer, with
respect to the shares of Enterprise Common Stock held under the
Enterprise Common Stock Fund for the Account of a Participant (whether
vested or not vested) shall be vested in the Trustee. However, the
Trustee shall vote all such shares in accordance with the directions
of such Participant. Within a reasonable time before voting rights are
to be exercised, the Company or the Trustee shall cause to be sent to
each Participant entitled to give voting instructions all information
that Enterprise has or will distribute to shareholders of Enterprise
Common Stock regarding the exercise of such voting rights. Shares with
respect to which no voting instructions are received shall not be
voted by the Trustee.
(d) If, during the course of the Plan, Enterprise should grant to the
holders of Enterprise Common Stock rights to subscribe to an issue or
issues of securities of Enterprise, any such rights attaching to the
shares of Enterprise Common Stock held by the Trustee under the
Enterprise Common Stock Fund shall be sold by the Trustee and the net
proceeds applied by the Trustee to the purchase of Enterprise Common
Stock on the open market for such Fund. Stock dividends on shares held
by the Enterprise Common Stock Fund, and stock issued upon any split
of such shares, shall be credited to such Enterprise Common Stock
Fund.
ARTICLE VIII
THRIFT ACCOUNTS
Section 8.1 Establishment of Thrift Accounts. The Committee shall maintain
or cause to be maintained a Thrift Account for each Participant which shall
consist of the following subaccounts: Basic Deposit Subaccount, Supplemental
Deposit Subaccount and Employer Contribution Subaccount, the assets of which
shall be invested as provided in Section 5.2 or pursuant to the direction of the
Participant as provided in Article VI. The assets of each such subaccount of the
Thrift Account shall be identified as to Nondeferred or Deferred.
Section 8.2 Measure of Thrift Accounts.
(a) The interests of Participants in the Funds shall be measured by
participating units in the particular Fund, the number and value of
which shall be determined as of each business day as provided in the
next paragraph. Each participating unit shall have an equal beneficial
interest in the Fund, and none shall have priority or preference over
any other.
(b) As soon as practicable at the end of each business day, the Trustee
shall determine the value of each such Fund as of such business day in
the manner prescribed in Section 8.3. The value so determined shall be
divided by the total number of participating units allocated to the
Accounts of Participants participating in such Fund in accordance with
subsection (a) as of the prior business day. The resulting quotient
shall be the value of a participating unit as of such business day and
participating units shall be allocated, as such value, to and from the
Fund subaccounts of Participants for all transactions by them or on
their behalf with respect to the current business day. The value of
all participating units allocated to Participants' Fund subaccounts
shall be redetermined in a similar manner each succeeding business day
and participating units shall be allocated to and from the Accounts of
Participants participating in such Fund at such value for all
transactions with respect to such business day. Fractional units shall
be calculated to such number of decimal places as shall be determined
by the Committee from time to time.
(c) If a Participant shall direct pursuant to Section 6.3 that his or her
interest in a Fund or any part thereof shall be transferred to another
Fund or Funds, or if such Participant's interest in a Fund or any part
thereof is distributed, withdrawn, borrowed or forfeited under
Articles IV or XI, the number of participating units representing such
interest or portion thereof as of the applicable business day shall be
cancelled for purposes of any subsequent determination of the number
of and value of the participating units in such Fund.
Section 8.3 Valuation of Funds. The value of a Fund as of any business day
shall be the market value of all assets (including any uninvested cash) held by
the Fund as determined by the Trustee, reduced by the amount of any accrued
liabilities of the Fund on such business day and by Deposits, Rollover
Contributions and Employer Contributions with respect to such business day. The
Trustee's determination of market value shall be binding and conclusive upon all
parties.
Section 8.4 Valuation of Thrift Accounts. The value of a Participant's
subaccount for any Fund as of any business day shall be the value of the
participating units allocated to the Participant's subaccount for such Fund as
of such business day. The value of a Participant's Account as of any business
day shall be the aggregate of the values of such subaccounts, determined as
provided in the preceding Sections of this Article VIII.
Section 8.5 Separate Accounting. The amounts of Deferred Deposits in a
Participant's Thrift Account shall at all times be separately accounted for from
other amounts in such Thrift Account, by allocating investment gains and losses
on Deferred Deposit amounts on a reasonable pro rata basis and by adjusting the
Deferred and other portions of the subaccounts of a Participant's Thrift Account
for withdrawals, distributions, borrowings and contributions. Gains, losses,
withdrawals, distributions, borrowings, forfeitures and other credits or charges
shall be separately allocated between such Deferred Deposit amounts and other
portions of the subaccounts on a reasonable and consistent basis.
ARTICLE IX
ESOP ACCOUNTS
Section 9.1 Maintenance of Separate Accounts. Each ESOP Account shall be
maintained on the basis of shares of Enterprise Common Stock allocated to such
ESOP Account, with each ESOP Account being credited with the number of full and
fractional shares of Enterprise Common Stock so allocated.
Section 9.2 Allocation of Distributions. Any distributions received by the
Plan with respect to Enterprise Common Stock allocated to a Participant's ESOP
Account shall be allocated to such ESOP Account.
Section 9.3 Withdrawals or Transfers During Employment.
(a) Notwithstanding any provision in the Plan to the contrary, a
Participant may withdraw in accordance with Section 11.3 or transfer
in accordance with Section 6.3, the shares of Enterprise Common Stock
allocated to Participant's ESOP Account or the cash value thereof.
(b) With respect to an election of a Participant to withdraw Enterprise
Common Stock from Participant's ESOP Account, the shares of Enterprise
Common Stock, or the cash value at the election of the Participant,
shall be distributed in accordance with Article XI, provided that such
Participant elects to withdraw all full and fractional shares of
Enterprise Common Stock allocated to such ESOP Account or the cash
value thereof. Such distribution shall be made as soon as practicable
after receipt by the Recordkeeper of the Participant's election to
withdraw.
(c) With respect to an election of a Participant to transfer the cash
value of all full and fractional shares of Enterprise Common Stock
from the Participant's ESOP Account to the Participant's Thrift
Account, such transfer shall be made as soon as practicable after
receipt by the Recordkeeper of the Participant's election to transfer,
shall be deposited in the Participant's Thrift Account, shall be
invested in one or more (in multiples of 1% up to an aggregate of
100%) of the Thrift Account Funds as such Participant shall designate
and thereafter shall be deemed a Rollover Contribution and treated
accordingly. The cash value of each share of Enterprise Common Stock
so transferred shall be equal to the price of a share of Enterprise
Common Stock actually received by the Trustee.
(d) A Participant may not borrow from his or her ESOP Account.
Section 9.4 Dividends and Other Income. Unless otherwise directed as
hereinafter provided, dividends paid in cash with respect to Enterprise Common
Stock allocated to a Participant's ESOP Account shall be distributed to the
Participant as soon thereafter as practicable and, in any event, not later than
90 days after the close of the Plan Year in which paid. Enterprise Common Stock
delivered to the Trustee pursuant to a stock dividend, stock split or
reorganization, shall be allocated to the ESOP Account of Participants in that
proportion which the shares of each Participant's ESOP Account bears to the
total shares of all Participants' ESOP Accounts.
Section 9.5 Voting of ESOP Account Common Stock. As provided in Section 7.2
with respect to the Enterprise Common Stock Fund, all voting discretion with
respect to stock held in a Participant's ESOP Account, including the power to
decide whether or not to tender Enterprise Common Stock in connection with a
tender offer, shall be vested in the Trustee. Each Participant shall be entitled
to direct the Trustee as to the manner in which voting rights attributable to
Enterprise Common Stock (including fractional shares or fractional rights to
shares) allocated to such Participant's ESOP Account are to be exercised. Within
a reasonable time before voting rights are to be exercised, the Trustee or the
Company shall cause to be sent to each Participant entitled to give voting
instructions all information that Enterprise has or will distribute to
shareholders of Enterprise Common Stock regarding the exercise of such voting
rights. Such voting rights shall be exercised by the Trustee but only to the
extent directed by a Participant. Shares with respect to which no voting
instructions are received shall not be voted by the Trustee.
ARTICLE X
VESTING
Section 10.1 Vesting of Employer Contributions.
(a) Upon completion of five Years of Service, a Participant shall have a
100% vested interest in his or her Thrift Account attributable to
Employer Contributions made on behalf of such Participant during any
Plan Year. In addition, if a Participant is eligible for Retirement,
suffers a Disability, is Laid Off or dies, such Participant shall have
a 100% vested interest in his or her Thrift Account attributable to
Employer Contributions for all Plan Years.
(b) A Participant will become vested in the value of his or her U.S.
Energy Partners Employer Contribution Subaccount according to the
following schedule based on his or her Years of Service:
Years of Vested
Service Percentage
------- ----------
Less than one 0
One 20
Two 40
Three 60
Four 80
Five or more 100
In the case of a Participant who has received a withdrawal
or a distribution under Article XI at a time when his or
her vested percentage in his or her U.S. Energy Partners
Employer Contribution Subaccount was at least 20% but less
than 100%, and who is employed by the Company or an
Affiliated Company after receiving such a withdrawal or
distribution, the amount of the vested portion of his or
her U.S. Energy Partners Employer Contribution Subaccount
shall be determined according to the following formula:
Amount of the Vested Portion = P(AB + D) - D
P is the vested percentage at the relevant time (e.g., at
subsequent termination of employment). AB is the U.S.
Energy Partners Employer Contribution Subaccount
balance at the relevant time. D is the amount of the
prior distribution attributable to U.S. Energy Employer
Contribution Subaccount.
(c) For purposes of determining Years of Service, a
Participant shall not be considered to have interrupted
his or her continuous service as a result of a leave of
absence or as a result of a termination of employment;
provided, however, that the periods of absence from
employment for these reasons shall not be counted toward
Years of Service for vesting purposes.
Section 10.2 Vesting of Deposits, Rollover Contributions and the ESOP
Account. A Participant's interest in his or her Thrift Account attributable to
Deposits and Rollover Contributions for all Plan Years and in his or her ESOP
Account shall be 100% vested at all times.
ARTICLE XI
ACCOUNT DISTRIBUTIONS AND WITHDRAWALS
Section 11.1 Distribution Upon Retirement, Disability, Lay Off or Death. If
a Participant
(a) terminates employment on account of Retirement or Disability;
(b) is Laid Off; or
(c) dies, then, in that event, the Participant's Thrift Account,
determined as of the business day coinciding with or next following
the date of the last Deposit made by or which would have been made on
behalf of such Participant, together with the Participant's ESOP
Account, shall:
(1) if the value of such Account as so determined is $3,500 or less,
be distributed, subject to the provisions of Section 11.9(c), as
soon as practicable to the Participant, or in the case of death
of the Participant, to the Participant's beneficiary as
determined in accordance with Article XIV or, if none, to the
Participant's estate; or
(2) if the value of such Account as so determined shall exceed
$3,500, be distributed upon the earliest of the Participant's
Required Beginning Date, the death of such Participant or the
receipt by the Recordkeeper of an application for distribution in
a form prescribed by the Committee.
Section 11.2 Distribution Upon Other Termination of Employment. Upon
termination of a Participant's employment with an Employer or for reasons other
than Retirement, Disability, Lay Off or death, the vested portion of the
Participant's Account, determined as of the business day coinciding with or next
following the date of the last Deposit made by or which would have been made on
behalf of such Participant, or, if none, the business day coinciding with or
next following the date of termination, shall:
(a) if the value of such Account as so determined is $3,500 or less, be
distributed, subject to the provisions of Section 11.9(c), as soon as
practicable to the Participant, or, in the case of death of the
Participant after termination of employment but prior to such
distribution, to the Participant's beneficiary, or, if none, to the
Participant's estate; or
(b) if the value of such Account as so determined shall exceed $3,500, be
distributed upon the earliest of the Participant's Required Beginning
Date, the death of the Participant or the receipt by the Recordkeeper
of an application for distribution in a form prescribed by the
Committee.
The nonvested portion of the Participant's Account, determined as of the
date of termination, shall be forfeited and shall be applied thereafter to
reduce a subsequent contribution or contributions of the Employer as provided in
Section 5.2. If such former Participant is rehired by an Employer on or before
the end of and is employed by an Employer at the end of the fifth Plan Year
after the Plan Year in which such termination occurred, then such nonvested
portion of the Participant's Account shall be reinstated by the Employer and the
Participant's right thereto shall be determined as if the Participant had not
terminated employment, provided that the Participant repays to the Plan the
amount of any distribution paid to him or her on account of the termination of
employment.
The nonvested portion of the Participant's account, determined as of the
date of termination, shall be forfeited as of the earlier of (i) the date the
Participant receives a cash-out distribution as described in Treasury Regulation
section 1.411(a)-7(d) or (ii) the time at which the terminated Participant
experiences five consecutive one-year breaks in service, and shall be applied
thereafter to reduce a subsequent contribution or contributions of the Employer
as provided in Section 5.2.
Section 11.3 Withdrawal of Nondeferred Deposits and Employer Contributions
During Employment.
(a) A Participant may, by application to the Recordkeeper in the form
prescribed by the Committee, request to withdraw from the Plan any or
all of his or her Nondeferred Deposits and earnings thereon, Rollover
Contributions and earnings thereon and Vested Employer Contributions
as well as earnings thereon; provided, however, that the amount
withdrawn shall be at least $200, unless such withdrawal is of 100% of
the value of such Participant's Thrift Account.
(b) If a withdrawal includes Deposits that are not Matured, Employer
Contributions with respect to such Participant shall be suspended for
a period of three months.
(c) Withdrawals shall be taken from a Participant's Thrift Plan
subaccounts in the following order:
(1) Pre-1987 Nondeferred Deposits;
(2) Matured Post-1986 Nondeferred Deposits and earnings thereon;
(3) Unmatured Post-1986 Nondeferred Deposits and earnings thereon;
(4) Rollover Contributions and earnings thereon;
(5) Earnings on pre-1987 Nondeferred Deposits;
(6) Matured Vested Employer Contributions and earnings thereon;
(7) Unmatured Vested Employer Contributions and earnings thereon.
(d) Any withdrawal made by a Participant pursuant to this Section 11.3
shall be made from all Funds in which the Nondeferred Deposits,
Rollover Contributions and Employer Contributions by or on behalf of
such Participant are invested and shall be charged pro rata against
such subaccounts in the Participant's Thrift Account.
(e) The amount of any withdrawal made by a Participant pursuant to this
Section 11.3 shall be determined as of the close of the business day
on which the notice of withdrawal is received by the Recordkeeper.
(f) Notwithstanding any of the foregoing, no withdrawals of Employer
Contributions made in shares of Enterprise Common Stock shall be
permitted prior to the date that the Participant terminates his or her
employment.
Section 11.4 Withdrawals of Deferred Deposits During Employment After Age
59 1/2. A Participant over the age 59 1/2 may withdraw all or a portion of the
value of his or her Thrift Account attributable to the Deferred Deposits. The
value of such Deferred Deposits for the purpose of such withdrawal shall be
determined as of the close of the business day in which the notice of withdrawal
is received by the Recordkeeper. The minimum withdrawal permitted shall be $200,
unless such withdrawal is 100% of the current value of the Deferred portion of a
Participant's Thrift Account.
Section 11.5 Hardship Withdrawals.
(a) Upon the application of any Participant, or his or her legal
representative, the Committee, in accordance with a uniform
nondiscriminatory policy, shall permit such Participant to withdraw
such portion of the value of his or her vested Thrift Account as
deemed to be necessary for the purpose of:
(1) Expenses for medical care described in Code section 213(d)
previously incurred by the Participant, the Participant's spouse
or any dependents (as defined in Code section 152) of the
Participant or necessary for these persons to obtain medical care
described in Code section 213(d);
(2) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence of the Participant;
(3) Payment of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, the
Participant's spouse, children or any dependents (as defined in
Code section 152) of the Participant; or
(4) Payments necessary to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of
the Participant's principal residence.
(b) A Participant or legal representative making application under this
Section 11.5 shall have the burden of presenting to the Committee
satisfactory proof of such need. The Committee shall not permit
withdrawal under this Section without first receiving such proof as it
shall deem necessary to demonstrate such hardship.
(c) The amount which may be withdrawn shall be withdrawn, as necessary, in
the following order:
(1) Nondeferred Deposits together with vested Employer Contributions,
in the order prescribed by Section 11.3, but without regard to
the limitations on withdrawals of Section 11.3;
(2) Deferred Supplemental Deposits; and
(3) Deferred Basic Deposits.
(d) A withdrawal will be deemed to be necessary to satisfy an immediate
and heavy financial need of a Participant if all of the following
requirements are satisfied:
(1) The withdrawal is not in excess of the amount of the immediate
and heavy financial need of the Participant,
(2) The Participant has obtained all distributions, other than
hardship withdrawals, and all nontaxable loans currently
available under all plans maintained by his or her Employer,
(3) The Participant is prohibited under the terms of the Plan or an
otherwise legally enforceable agreement from making elective
contributions and employee contributions to the Plan and all
other plans maintained by the Company or an Affiliate for at
least 12 months after receipt of the hardship withdrawal, and
(4) The Plan and all other plans maintained by the Employer, provide
that the Participant may not make elective contributions for the
Participant's taxable year immediately following the taxable year
of the hardship withdrawal in excess of the applicable limit
under Code section 402(g) for such next taxable year less the
amount of such Participant's elective contributions for the
taxable year of the hardship withdrawal. A Participant shall not
fail to be treated as an eligible Participant for purposes of
paragraph (b) of this Section merely because he is suspended in
accordance with this provision.
(e) If a Participant shall make a withdrawal pursuant to this Section
11.5, then
(1) the Participant shall not be permitted to make Deposits
(including Additional Lump Sum Deposits) to the Plan during the
one year period beginning on the date of receipt of such
withdrawal; and
(2) a Participant's Deferred Deposits for the Participant's taxable
year next following the taxable year of the hardship withdrawal
may not exceed the limit established under Code section 402(g)
less the amount of Deferred Deposits made by the Participant in
the year of such withdrawal.
(f) Amounts available for hardship withdrawals with respect to Deferred
Deposits will be limited to the amount of a Participant's Deferred
Deposits, plus earnings allocable thereto which were credited to
Participant's Accounts as of December 31, 1988, less the amount of any
previous hardship withdrawals.
(g) A hardship withdrawal from the Thrift Account shall not be permitted
unless and until a Participant has withdrawn, pursuant to Section 9.3,
all Enterprise Common Stock from his or her ESOP Account.
(h) The hardship withdrawal shall be paid to the Participant in the amount
approved as soon as practicable after his or her application is
approved by the Committee.
(i) Notwithstanding any of the foregoing, no withdrawals of Employer
Contributions made in shares of Enterprise Common Stock shall be
permitted prior to the date that the Participant terminates his or his
employment.
Section 11.6. Suspension of Participation. If a Participant shall cease to
be an Eligible Employee, Deposits and Employer Contributions to his or her
Thrift Account shall be suspended and no Additional Lump Sum Deposits shall be
permitted to be made during the period of ineligibility. Distribution of such
Participant's Account shall be deferred until such Participant's termination of
employment with an Employer, whereupon the Participant's Thrift Account shall be
distributed in accordance with the applicable provisions of this Article XI.
Such Participant shall continue to be deemed a Participant for all purposes
other than for Articles IV and V during such period of ineligibility.
Section 11.7 Transfer of Employment. If a Participant shall be transferred
to the employ of an Affiliate which is not an Employer, distribution of such
Participant's Account shall be deferred until the Participant is no longer in
the employ of the Employer or any Affiliate, whereupon the Participant's Account
shall be distributed in accordance with the applicable provisions of this
Article XI. Such transferred Participant shall continue to be deemed a
Participant for all purposes other than for Articles IV and V during such period
of deferral of distribution.
Section 11.8 Form of Distributions.
(a) All distributions from the Plan shall be made in money by check,
except that in the case of a lump sum distribution only, other than a
hardship withdrawal in accordance with Section 11.5, a Participant
may, by notice to the Recordkeeper in the form prescribed by the
Committee, elect to have any whole shares of Enterprise Common Stock
held for such Participant's Enterprise Common Stock Fund subaccount
and/or ESOP Account distributed in shares of Enterprise Common Stock.
The value of any fractional shares shall be paid in money by check.
Such an election may be made at any time prior to the distribution
under Section 11.1 and 11.2 or prior to receipt by the Recordkeeper of
the notice of withdrawal in the case of a distribution under Section
11.3. If no such election is made, the entire value of the amount of
the Participant's Account being distributed shall be distributed in
money by check.
(b) All distributions from the Plan shall be made in one lump sum, with
the following exceptions:
(1) In the case of a distribution from a Participant's Account on
account of a Participant's Retirement, such Participant may elect
to have his or her Account, including the ESOP Account, which is
to be transferred into one of the Thrift Account Funds,
distributed in annual or quarterly payments in money by check by
the Trustee in amounts as nearly equal as possible for a
specified number of years up to ten years. Each payment shall be
an amount equal to the Participant's Thrift Account as of the
applicable date divided by the number of payments remaining.
(2) In the case of a distribution from a Participant's U.S. Energy
Partners Account which exceeds, or has ever exceeded at the time
of any prior distribution, $3,500, if any, the Participant may
elect to have his or her U.S. Energy Partners Account distributed
in one of the following forms:
(A) in the form of a joint and survivor annuity with a benefit
following the Participant's death continuing to the
Participant's spouse during the spouse's lifetime at a rate
equal to 100% (or, at the Participant's election, 50%) of
the rate at which benefits were payable to the Participant.
(B) in the form of a single life annuity, provided that the
Participant's spouse consents.
(c) If a Participant shall die prior to complete distribution of his or
her Thrift Account pursuant to subsection (b), the value of the
Participant's Thrift Account shall be distributed as soon as
practicable in a lump sum to the Participant's beneficiary, or, if
none, to the Participant's estate. The amount so distributed after a
Participant's death shall be the remaining value of Participant's
Thrift Account determined as of the business day coinciding with or
next following the date of the Participant's death. Notwithstanding
the foregoing, if a Participant who has a U.S. Energy Partners Account
which exceeds, or has ever exceeded at the time of any prior
distribution, $3,500 dies before amounts have become distributable
under subsection (b), his or her surviving spouse, if any, may elect
to have the U.S. Energy Partners Account paid in the form of a pre
retirement survivor annuity. In addition, if a Participant who has a
U.S. Energy Partners Account dies after amounts have become
distributable under paragraph (2) of subsection (b), survivor
benefits, if any, will be paid in accordance with the annuity elected.
(d) If no election is made under subparagraph (b) above, and the value of
a Participant's Thrift Account, when aggregated with the value of any
ESOP Account and/or U.S. Energy Partners Account of the Participant,
determined in accordance with Article IX, exceeds $3,500, a
distribution will be made in one lump sum at the time provided for in
Section 11.1 or Section 11.2, except as otherwise provided in Section
11.5.
(e) Anything to the contrary notwithstanding, any Thrift Account
distribution to be made to a Participant under subparagraph (b) (1)
above shall be made in such a manner that the present value of the
payments to be made to the Participant during his or her life
expectancy are calculated to be more than 50% of the present value of
the total payments to be made to the Participant and any
beneficiaries.
Section 11.9 Time of Distributions.
(a) All distributions from the Plan shall commence as soon as practicable,
and in any event no later than 60 days after the close of the Plan
Year in which the Participant terminates employment, reaches his or
her Required Beginning Date, dies, or, if applicable, requests
distribution under Section 11.1 and 11.2, or 60 days after the close
of the Plan Year in which the Participant elects to withdraw funds
from the Plan in the case of distributions under Sections 9.3, 9.4,
11.3, and 11.4.
(b) In the case of a distribution over a period of years under
subparagraph (b) of Section 11.8, the initial payment shall be made at
a time determined in accordance with subparagraph (a) of this Section
11.9. In the case of annual distributions, the remaining annual
payments shall be made in successive calendar years on such date each
year as shall be determined by the Committee, subject to the
provisions of subparagraph (b) of Section 11.8 in the case of the
Participant's death. In the case of quarterly distributions, the
remaining payments shall be made each successive three month period on
such day during the period as may be established by the Committee,
subject to the provisions of subparagraph (b) of Section 11.8 in the
case of the Participant's death.
(c) In the case of a distribution on account of a Participant's
Retirement, subject to the provisions of subsection 11.10, the
Participant may elect to have his or her Account distributed as a lump
sum during (1) the Plan Year next following the Plan Year of his or
her Retirement or (2) the next succeeding Plan Year thereafter or (3)
if the Account value exceeds $3,500, at any time up to the
Participant's Required Beginning Date. If no such election is made,
distribution shall commence in accordance with Section 11.1 and
subparagraph (a) above.
Section 11.10 Limitation on Post Age 70 1/2 Distributions.
Notwithstanding the provisions of Sections 11.8 and 11.9:
(a) the entire interest of a Participant must:
(1) be distributed not later than the Participant's Required
Beginning Date, or,
(2) commence no later than such Required Beginning Date and be
payable in accordance with regulations under the Code over a
period not extending beyond the life expectancy of such
Participant.
(b) If a Participant dies before his or her entire interest has been
distributed, then such entire interest (or the remaining part of such
interest if distribution thereof has commenced) shall be distributed
within five years after the Participant's death, and, if distribution
has commenced prior to death, shall be distributed at least as rapidly
as the method of distribution being used as of the date of such
Participant's death.
(c) The amount of the distribution required by this Section 11.10 is to be
determined by Treasury Regulations Section 1.72-9, Table V using the
attained age of the Participant as provided in regulations without
recalculation of the life expectancy; provided, however, that the
amount of the distribution required by this Section 11.10 with respect
to a Participant's U.S. Energy Partners Account, if any, is to be
determined by Treasury Regulations Section 1.72-9, using the attained
age or ages of the Participant and his or her designated beneficiary
as provided in regulations with recalculation of the life expectancies
as the Participant may elect. Distribution will be made in accordance
with the regulations under Code section 401(a)(9), including the
minimum distribution incidental death benefit requirement of section
1.401(a)(9)-2, and such regulations shall override any inconsistent
Plan provisions.
Section 11.11 Distribution in the Case of Certain Disabilities. In the
event that the Committee shall find that any person entitled to a distribution
under the Plan is unable to care for his or her affairs because of illness or
accident or because the person is a minor or has died, the Committee may direct
that any distribution due such person, unless claim shall have been made
therefor by a duly appointed legal representative, be paid or applied to or for
the benefit of such person, or his or her spouse, any child of such person
(including an adopted child), any parent or other blood relative of such person,
or a person with whom the person resides, or any of them, and any such payment
or application so made shall be a complete discharge of the liabilities of the
Plan therefor.
Section 11.12 Loans.
(a) The Committee shall have complete authority to establish and
administer a loan program to provide loans to Participants. The loan
program shall be contained in a separate written document which shall
constitute part of the Plan, and shall include the following:
(1) A procedure for applying for loans;
(2) The basis on which loans will be approved or denied;
(3) Limitations (if any) on the types and amounts of loans offered;
(4) The procedure under the loan program for determining a reasonable
rate of interest;
(5) The types of collateral which may secure a loan; and
(6) The events constituting default and the steps that will be taken
to preserve plan assets in the event of such default.
The rules and applicable limitations established by the loan
program shall be such as to prevent any loan from constituting a
prohibited transaction under Code section 4975 and ERISA section
406, or a Plan distribution under Code section 72(p).
(b) The Trustee shall, subject to the approval of the General Manager and
compliance with the written loan program and the provisions of the
Code, lend a Participant, who is employed by an Employer, an amount up
to 50% of the vested portion of his or her Account, including the ESOP
Account, but not more than $50,000 in the aggregate as of the date on
which the loan is approved reduced by the highest outstanding loan
balance during the preceding twelve months. However, no amount may be
loaned directly from any ESOP Account nor from any portion of the
Enterprise Common Stock Fund attributable to Employer Contributions
made in shares of stock. The General Manager shall review each
application for a loan in a nondiscriminatory manner and in accordance
with such rules as may be prescribed by the Committee. Loans, if
approved, shall be made as soon thereafter as practicable.
(c) In addition to such rules and regulations as the Committee may adopt,
all loans shall comply with the following terms and conditions:
(1) An application for a loan by an eligible Participant shall be
made by making application therefor to the Recordkeeper in the
form prescribed by the Committee.
(2) An eligible Participant may not apply for more than one loan in
any calendar year nor for a loan with an initial principal amount
of less than $1,000 and, in any event, may not have more than two
(2) loans outstanding at any one time.
(3) All loans, including interest thereon, shall be repaid by payroll
deduction in equal monthly installments over a period of 12 to 60
months as selected by the Participant. Nothing herein, however,
shall prohibit a Participant from prepaying such loan in whole or
in part in a lump sum in accordance with such rules as may be
established from time to time by the Committee.
(4) Each loan shall be secured by an assignment of the Participant's
entire right, title and interest in and to the Trust Fund to the
extent of the loan and accrued interest thereon and shall be
evidenced by the Participant's promissory note for the amount of
the loan, including interest, payable to the order of the
Trustee.
(5) Each loan shall bear interest at a reasonable rate (which rate
may be a variable rate) to be established from time to time by
the Committee, not in violation of any applicable usury laws. In
determining the interest rate, the Committee shall take into
consideration interest rates being charged by other lenders at
the time of such determination.
(d) No distribution shall be made to any Participant or beneficiary
thereof unless and until all unpaid loans, including interest thereon,
have been repaid.
Section 11.13 Inability to Locate Payee. Any benefit payable to a
Participant or beneficiary shall be forfeited if the Employer, after reasonable
effort, is unable to locate such Participant or beneficiary to whom payment is
due. The amount of any such forfeited benefit shall be applied to reduce the
amount of Employer Contributions required under the Plan as provided in Section
5.3. However, any such forfeited benefit shall be reinstated and become payable
if a claim therefor is made by such Participant or beneficiary.
Section 11.14 Federal Income Tax Withholding on Distributions and
Withdrawals. Distributions and withdrawals under this Plan shall be subject to
Federal income tax withholding as prescribed by Code section 3405 and the
regulations thereunder.
Section 11.15 Direct Rollover to Another Plan or IRA On or after January 1,
1993, at the election of a Participant or his spouse or former spouse entitled
to a distribution under Section 22.1 or the foregoing provisions of this Article
XI, the Committee shall direct the Trustee to make a direct rollover to the
trustee or other custodian of an "eligible retirement plan" by any reasonable
means (including providing the Participant or spouse or former spouse with a
check made payable only to the trustee or custodian) of all, or a specified
portion, of an "eligible rollover distribution," subject to the following
restrictions:
(a) An "eligible rollover distribution" is any distribution of all or any
portion of the Participant's Account, except that an "eligible
rollover distribution" does not include
(i) any distribution that is one of a series of substantially equal
periodic payments (made not less frequently than annually) made
for the life (or life expectancy) of the recipient or the joint
lives (or joint life expectancies) of the recipient and the
recipient's designated beneficiary, or for a specified period of
at least ten years; or
(ii) any distribution required under Code section 401(a)(9).
(b) An "eligible retirement plan" is an individual retirement account
described in Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan described in Code
section 403(a), or a qualified trust described in Code section 401(a),
that accepts the recipient's "eligible rollover distribution." If the
recipient is the Participant's surviving spouse, but not an alternate
payee receiving a distribution pursuant to a Qualified Domestic
Relations Order, an "eligible retirement plan" is an individual
retirement account described in Code section 408(a) or an individual
retirement annuity described in Code section 408(b) that accepts the
surviving spouse's "eligible rollover distribution," but not an
annuity plan described in Code section 403(a) nor a qualified trust
described in Code section 401(a).
(c) The Participant or his or her spouse or former spouse must specify, in
such form and at such time as the Committee may prescribe, the
"eligible retirement plan" to which the distribution is to be paid and
may specify more than one "eligible retirement plan."
(d) The Participant or his or her spouse or former spouse must provide to
the Committee in a timely manner adequate information regarding the
designated "eligible retirement plan."
ARTICLE XII
LIMITS ON BENEFITS AND CONTRIBUTIONS UNDER QUALIFIED PLANS
Section 12.1. Definitions. For purposes of this Article XII, the following
definitions and rules of interpretation shall apply:
(a) "Annual Additions" to a participant's account under a defined benefit
plan or a defined contribution plan is the sum, credited to a
participant's account for any Limitation Year, of:
(1) Company contributions,
(2) Forfeitures, if any,
(3) Employee contributions and
(4) Amounts, if any, attributable to medical benefits allocated to an
account established under Code section 419 A (d)(2) on behalf of
such Participant.
(b) "Annual Benefit"
(1) A benefit which is payable annually in the form of a straight
life annuity under a defined benefit plan. Such benefit does not
include any benefits attributable to either employee
contributions or rollover contributions. If the defined benefit
plan provides for a benefit which is not payable in the form of a
straight life annuity, the benefit is adjusted in accordance with
Section 12.1(b)(5) below.
(2) Where a defined benefit plan provides for mandatory employee
contributions (as defined in Code section 411(c)(2)(C)), the
Annual Benefit attributable to such contributions is not taken
into account. The Annual Benefit attributable to mandatory
contributions is determined by using the factors described in
Code section 411(c)(2)(B) and the regulations thereunder.
However, mandatory employee contributions and any voluntary
employee contributions are all considered a separate defined
contribution plan maintained by the Company.
(3) If rollover contributions are made to a defined benefit plan, the
Annual Benefit attributable to these contributions is determined
on the basis of reasonable actuarial assumptions.
(4) When there is a transfer of assets or liabilities from one
qualified defined benefit plan to another, the Annual Benefit
attributable to the assets transferred shall not be taken into
account by the transferee plan in applying the limitations of
Code section 415. The Annual Benefit payable on account of the
transfer for any individual that is attributable to the assets
transferred will be equal to the Annual Benefit transferred on
behalf of such individual multiplied by a fraction, the numerator
of which is the total assets transferred and the denominator of
which is the total liabilities transferred.
(5) If a defined benefit plan provides a retirement benefit in any
form other than a straight life annuity, the plan benefit is
adjusted to a straight life annuity beginning at the same age
which is the actuarial equivalent of such benefit in accordance
with the rules determined by the Commissioner. However, the
following values are not taken into account:
(i) The value of a qualified joint and survivor annuity (as
defined in Code section 417 and the regulations thereunder)
provided by the plan to the extent that such value exceeds
the sum of
(A) the value of a straight life annuity beginning on the
same date and
(B) the value of any post-retirement death benefits which
would be payable even if the annuity was not in the
form of a joint and survivor annuity.
(ii) The value of benefits that are not directly related to
retirement benefits (such as pre-retirement disability and
death benefits and post-retirement medical benefits).
(iii)The value of benefits provided by the plan which reflect
post-retirement cost of living increases to the extent that
such increases are in accordance with Code section 415(d)
and the regulations thereunder.
(6) Where a defined benefit plan provides a retirement benefit
beginning before a participant has attained the Social Security
Retirement Age, the plan benefit shall, in accordance with rules
determined by the Commissioner, be adjusted to the actuarial
equivalent of a benefit commencing at the Social Security
Retirement Age. This adjustment is only for purposes of applying
the dollar limitation described in Code section 415(b)(1)(A) and
Section 12.1(f)(1) to the Annual Benefit of the participant.
(7) Where a participant has less than 10 Years of Service with the
Company at the time the Participant begins to receive retirement
benefits under the defined benefit plan, the benefit limitations
described in Code sections 415(b)(1)(B) and 415(b)(4) and Section
12.1(f)(2) are to be reduced by multiplying the otherwise
applicable limitation by a fraction:
(i) the numerator which is the Years of Service (and fractions
thereof) with the Company as of, and including the current
Limitation Year, and
(ii) the denominator of which is 10.
The preceding sentence shall also apply for purposes of
reducing the benefit limitation described in Code section
415(b)(1)(A) and Section 12.1(f)(1), by substituting years
of participation for Years of Service wherever it appears in
such sentence.
(iii)If the retirement benefit under a defined benefit plan
begins after the Participant has attained the Social
Security Retirement Age, the determination as to whether the
Maximum Permissible Defined Benefit Amount limitation has
been satisfied shall be made in accordance with regulations
prescribed by the Commissioner by adjusting such benefit so
that it is actuarially equivalent to such a benefit
beginning at the Social Security Retirement Age. This
adjustment is only for purposes of applying the limitation
described in Code section 415(b)(1)(A) and Section
12.1(f)(1) to the Annual Benefit of the participant.
(8) The Annual Benefit to which a participant is entitled at any time
under all defined benefit plans maintained by the Company shall
not, during the Limitation Year, exceed the Maximum Permissible
Defined Benefit Amount.
(9) In determining the actuarial equivalency for purposes of Sections
12.1(b)(5), 12.1(b)(6) and 12.1(b)(8) above, the interest rate
shall be 5%.
(c) "Company" shall mean the Company, as described in Section 2.11 and any
Affiliate as defined in Section 2.4.
(d) "Compensation" with respect to a Limitation Year -
(1) includes amounts paid to a Participant (regardless of whether he
or she was such during the entire Limitation Year);
(i) as wages, salaries, fees for professional services and other
amounts received (without regard to whether or not an amount
is paid in cash) for personal services actually rendered in
the course of employment with any Company including but not
limited to commissions, compensation for services on the
basis of a percentage of profits, fringe benefits,
reimbursements and other expense allowances under
nonaccountable plans (as described in Treasury Regulation
1.b2-2(c)) and bonuses;
(ii) for purposes of (A) above, earned income from sources from
outside the United States (as defined in Code section
911(b)), whether or not excludable from gross income under
Code section 911 or deductible under Code sections 931 and
933;
(iii)amounts described in Code sections 104(a)(3), 105(a) and
105(h) but only to the extent that these amounts are
includable in the gross income of the Participant;
(iv) in the case of an employee within the meaning of Code
section 401(c)(1) and the regulations thereunder, the
Participant's earned income (as described in Code section
401(c)(2) and the regulations thereunder);
(v) amounts paid or reimbursed by the Company for moving
expenses incurred by the Participant, but only to the extent
that these amounts are not deductible by the Participant
under Code section 217.
(vi) The value of a nonqualified stock option granted to a
Participant by a Company, but only to the extent that the
value of the option is includable in the gross income of the
Participant for the taxable year in which granted.
(vii)The amount includable in the gross income of a Participant
upon making the election described in Code section 83(b).
(2) Compensation does not include -
(i) notwithstanding subsection (1)(A) of this Section 12.1(d),
there shall be excluded from Compensation amounts
contributed to a plan qualified under section 401(k) of the
Code as salary reduction contributions (and not
recharacterized as employee contributions thereunder);
(ii) other contributions made by the Company to a plan of
deferred compensation to the extent that, before the
application of the Code section 415 limitations to the plan,
the contributions are not includable in the gross income of
the Participant for the taxable year in which contributed.
In addition, Company contributions made on behalf of a
Participant to a simplified Participant pension described in
Code section 408(k) are not considered as Compensation for
the taxable year in which contributed to the extent such
contributions are deductible by the Participant under Code
section 219(b)(7). Additionally, any distributions from a
plan of deferred compensation are not considered as
Compensation, regardless of whether such amounts are
includable in the gross income of the Participant when
distributed. However, any amounts received by a Participant
pursuant to an unfunded nonqualified plan shall be
considered as Compensation in the year such amounts are
includable in the gross income of the Participant;
(iii)amounts realized from the exercise of a nonqualified stock
option or when restricted stock (or property) held by a
Participant either becomes freely transferable or is no
longer subject to a substantial risk of forfeiture (see Code
section 83 and the regulations thereunder);
(iv) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option;
(v) other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the
extent that the premiums are not includable in the gross
income of the Participant);
(e) "Limitation Year" - the Plan Year;
(f) "Maximum Permissible Defined Benefit Amount" - for a Limitation Year
the Maximum Permissible Defined Benefit Amount with respect to any
Participant shall be the lesser of:
(1) $90,000, or,
(2) 100% of the Participant's average Compensation for his or her
high three consecutive Years of Service, subject to the following
rules:
(i) As of January 1 of each calendar year commencing with the
calendar year 1988, the dollar limitation set forth in
Paragraph (1) above shall be adjusted automatically to equal
the dollar limitation as determined by the Commissioner for
that calendar year under Code section 415(d)(1)(A). This
adjustment dollar limitation applies for the Limitation Year
ending with or within the calendar year. It is applicable to
Employees who are Participants in the Plan and to Employees
who have retired or otherwise terminated their service under
the Plan with a nonforfeitable right to accrued benefits,
regardless of whether they have actually begun to receive
such benefits. The Annual Benefit payable to a terminated
Participant which is otherwise limited by the dollar
limitation shall be increased to take into account the
adjustment of the dollar limitation.
(ii) With regard to Participants who have separated from service
with a nonforfeitable right to an accrued benefit, the
compensation limitation described in paragraph (2) above
applicable to Limitation Years commencing on and after
January 1, 1976 shall be adjusted annually to take into
account increases in the cost of living. For any Limitation
Year beginning after the separation occurs, the adjustment
of the compensation limitation is made as specified in
regulations and rules prescribed by the Commissioner. In the
case of a Participant who separated from service prior to
January 1, 1976, the cost of living adjustment of the
compensation limitation under this paragraph for all
Limitation Years prior to January 1, 1976, is to be
determined as provided by the Commissioner.
(iii)Anything herein to the contrary notwithstanding, in the
case of an individual who was a Participant in the Plan
before January 1, 1983, if such Participant's "current
accrued benefit" (as defined in section 235(g)(4) of the Tax
Equity and Fiscal Responsibility Act of 1982 ("TEFRA"))
under the Plan as of the close of the last Limitation Year
beginning before January 1, 1983 exceeded the dollar
limitation with respect to such Participant under Section
12.1(g)(1) shall be equal to such current accrued benefit.
(iv) Anything herein to the contrary notwithstanding, for any
individual who was a Participant in the Plan on January 1,
1987, if such Participant's "current accrued benefit" under
the Plan, as that term is defined in section 1106(i)(3)(B)
of the Tax Reform Act of 1986, as of the close of the last
Limitation Year beginning before January 1, 1987 exceeded
the limitation described in Section 12.1(f)(1) above, the
dollar limitation with respect to such Participant under
Section 12.1(f)(1) shall be equal to such current accrued
benefit.
(g) "Maximum Permissible Defined Contribution Amount" - for a Limitation
Year the Maximum Permissible Defined Contribution Amount with respect
to any Participant shall be the lesser of:
(1) $30,000, or if greater, one fourth of the limitation in effect
under Code section 415(b)(1)(A) (as adjusted by Code section
415(d)(1)(A)).
(2) 25% of the Participant's Compensation for the Limitation year.
Notwithstanding the foregoing, or anything herein to the contrary, the
percentage of compensation limitation of this Section 12.1(g)(2)
shall not apply to any Annual Additions pursuant to Section
12.1(a)(4) above.
(h) "Projected Annual Benefit" - the Annual Benefit to which a Participant
would be entitled under the Plan on the assumption that he or she
continues employment until the normal retirement age (or current age,
if that is later) thereunder, that his or her Compensation continues
at the same rate as in effect for the Limitation Year under
consideration until such age, and that all other relevant factors used
to determine benefits under the Plan remain constant as of the current
Limitation Year for all future Limitation Years;
(i) "Social Security Retirement Age" - the age used as the retirement age
under Social Security Act section 216(1) except that such section
shall be applied:
(1) without regard to the age increase factor, and,
(2) as if the early retirement age under Social Security Act section
216(1)(2) were 62.
(j) For purposes of applying the limitations of Code sections 415(b), (c)
and (e) to a Participant for a particular Limitation Year, all
qualified defined benefit plans (without regard to whether a plan has
been terminated) ever maintained by the Company will be treated as one
defined benefit plan and all qualified defined contribution plans
(without regard to whether a plan has been terminated) ever maintained
by the Company will be treated as part of this Plan.
Section 12.2 Annual Addition Limits. The amount of the Annual Addition
which may be credited under this Plan to any Participant's Account as of any
allocation date shall not exceed the Maximum Permissible Defined Contribution
Amount (based upon his or her Compensation up to such allocation date) reduced
by the sum of any credits of Annual Additions made to the Participant's Account
under all defined contribution plans as of any preceding allocation date within
the Limitation Year. If an allocation date of this Plan coincides with an
allocation date of any other qualified defined contribution plan maintained by
the Company, the amount of the Annual Additions which may be credited under this
Plan to any Participant's Account as of such date shall be an amount equal to
the product of the amount to be credited under this Plan without regard to this
Section 12.2 multiplied by the lesser of one or a fraction, the numerator of
which is the amount described in this Section 12.2 during the Limitation Year
and the denominator of which is the amount that would be otherwise credited on
this allocation date under all defined contribution plans without regard to this
Section 12.2. However, if a security is not allocated to a Participant's Account
under any qualified tax credit employee stock ownership plan of the Company
because of the operation of the limitations of Code section 415 and the
provisions of this Section 12.2, no other amount may be allocated to the
Participant's Account under this Plan after the allocation date for such tax
credit employee stock ownership plan's plan year, until all such unallocated
securities have been allocated in accordance with the provisions of such tax
credit employee stock ownership plan. If contributions to this Plan on behalf of
a Participant are to be reduced as a result of this Section 12.2, such reduction
shall be effected by reducing contributions in the following order: Supplemental
Nondeferred Deposits, Basic Nondeferred Deposits and corresponding matching
Company Contributions, Supplemental Deferred Deposits and finally, if necessary,
Basic Deferred Deposits and corresponding remaining matching Company
Contributions. If, as a result of a reasonable error in estimating a
Participant's Compensation, or under the limited facts and circumstances which
the Commissioner finds justify the availability of the rules set forth in
paragraphs (a)-(c) of this Section 12.2, the allocation of Annual Additions
under the terms of the Plan for a particular Participant would cause the
limitations of Code section 415 applicable to that Participant for the
Limitation Year to be exceeded, the excess amounts shall not be deemed to be
Annual Additions in that Limitation Year if they are treated as follows:
(a) To the extent necessary, Deferred Deposits to the Plan shall be
recharacterized as Nondeferred Deposits and the Participant's
Nondeferred Deposits to the Plan (including Deferred Deposits
recharacterized as Nondeferred Deposits hereunder) and earnings
thereon shall be returned to the Participant.
(b) The excess amounts in the Participant's Account consisting of Company
Contributions shall be used to reduce Company Contributions for the
next Limitation Year (and succeeding Limitation Years, as necessary)
for that Participant if that Participant is covered by the Plan as of
the end of the Limitation Year. However, if that Participant is not
covered by the Plan as of the end of the Limitation Year then the
excess amounts must be held unallocated in a suspense account for the
Limitation Year and allocated and reallocated in the next Limitation
Year to all of the remaining Participants in the Plan. If a suspense
account is in existence at any time during a particular Limitation
Year, other than the first Limitation Year described in the preceding
sentence, all amounts in the suspense account must be allocated and
reallocated to Participants' Accounts (subject to the limitations of
Code section 415) before any Company Contributions, may be made to the
Plan for that Limitation Year. Furthermore, the excess amounts must be
used to reduce Company Contributions for the next Limitation Year (and
succeeding Limitation Years, as necessary) for all of the remaining
Participants in the Plan. For purposes of this subdivision, except as
provided in (a) of this Section 12.2, excess amounts may not be
distributed to Participants or former Participants.
(c) In the event of a termination of the Plan, the suspense account
described in (b) of this Section 12.2 shall revert to the Company to
the extent it may not then be allocated to any Participant's Account.
(d) Notwithstanding any other provision in this Section 12.2, the Company
shall not contribute any amount that would cause an allocation to the
suspense account as of the date the contribution is allocated. If the
contribution is made prior to the date as of which it is to be
allocated, then such contribution shall not exceed an amount that
would cause an allocation to the suspense account if the date of
contribution were an allocation date.
Section 12.3 Overall Limit. For any Participant of this Plan who at any
time participated in a defined benefit plan maintained by the Company, the rate
of benefit accrual by such Participant in each defined benefit plan in which the
Participant participates during the Limitation Year will be reduced to the
extent necessary to prevent the sum of the following fractions, computed as of
the close of the Limitation Year, from exceeding 1.0:
(a) Defined Benefit Plan Fraction. Projected Annual Benefit of the
Participant under all defined benefit plans divided by: the lesser of
(1) the product of 1.25, multiplied by the dollar limitation in effect
under Code section 415(b)(1)(A) for such Limitation Year, or (2) the
product of 1.4 multiplied by the amount which may be taken into
account under Code section 415(b)(1)(B) with respect to such
Participant for such Limitation Year. and
(b) Defined Contribution Plan Fraction. Sum of Annual Additions to such
Participant's Account under all defined contribution plans in such
Limitation Year and for all prior Limitation Years divided by: the sum
of the lesser of the following amounts determined for such year and
for each prior Year of Service with the Company: (1) the product of
1.25, multiplied by the dollar limitation in effect under Code section
415(c)(1)(A) for such Limitation Year, or (2) the product of (a) 1.4,
multiplied by (b) 25% of the Participant's Compensation for such
Limitation Year.
Section 12.4 Special Rules.
(a) For purposes of applying the Defined Contribution Plan Fraction in
Section 12.3 for any Limitation Year beginning after December 31, 1975
to Limitation Years before January 1, 1976, the aggregate amount taken
into account in determining the numerator of such fraction is deemed
not to exceed the aggregate amount taken into account in determining
the denominator of the fraction.
(b) In any case where the sum of the fractions in Section 12.3 is greater
than 1.0, calculated as of the close of the last Limitation Year
beginning before January 1, 1983 for a Participant, in accordance with
regulations prescribed by the Commissioner pursuant to TEFRA section
235(g)(3), an amount shall be subtracted from the numerator of the
defined contribution plan fraction so that the sum of such fractions
does not exceed 1.0 for such Limitation Year.
(c) If the sum of the fractions in Section 12.3 would exceed 1.0,
calculated as of the close of the last Limitation Year beginning
before January 1, 1987 for a Participant, in accordance with
regulations prescribed by the Commissioner pursuant to section
1106(i)(4) of the Tax Reform Act of 1986, an amount shall be
subtracted from the numerator of the defined contribution plan
fraction (not exceeding such numerator) so that the sum of such
fractions does not exceed 1.0. This numerator, as adjusted herein,
will be used for the calculation of the defined contribution plan
fraction for Limitation Years commencing on or after January 1, 1987.
ARTICLE XIII
TOP-HEAVY REQUIREMENTS
Section 13.1 Definitions. For purposes of this Article XIII, the following
definitions shall apply, to be interpreted in accordance with the provisions of
Code section 416 and the regulations thereunder:
(a) "Aggregation Group" shall mean a plan or group of plans which includes
all plans maintained by the Employers in which a Key Employee is a
Participant or which enables any plan in which a Key Employee is a
Participant to meet the requirements of Code section 401(a)(4) or Code
section 410, as well as all other plans selected by the Company for
permissive aggregation inclusion of which would not prevent the group
of plans from continuing to meet the requirements of such Code
sections.
(b) "Compensation" with respect to a Plan Year shall be as defined in
Section XII without regard to Section 12.1(d)(2)(A).
(c) "Determination Date" shall mean, with respect to any Plan Year,
(1) the last day of the preceding Plan Year, or,
(2) in the case of the first Plan Year of any Plan, the last day of
such Plan Year.
(d) "Employee" shall mean, for purposes of this Article XIII, any person
employed by an Employer and shall also include any beneficiary of such
person, provided that the requirements of Sections 13.3, 13.4 and 13.5
shall not apply to any person included in a unit of Employees covered
by an agreement which the Secretary of Labor finds to be a collective
bargaining agreement between Employee representatives and one or more
Employers if there is evidence that retirement benefits were the
subject of good faith bargaining between such Employee representatives
and such Employer or Employers.
(e) "Employer" shall mean, any corporation which is a member of a
controlled group of corporations (as defined in Code section 414(b))
which includes the Company or any trades or business (whether or not
incorporated) which are under common control (as defined in Code
section 414(c)) with the Company, or a member of an affiliated service
group (as defined in Code section 414(m)) which includes the Company.
(f) "Key Employee" shall mean, any Employee or former Employee who is, at
any time during the Plan Year, or was, during any one of the four
preceding Plan Years any one or more of the following:
(1) An officer of an Employer having an annual Compensation greater
than 50% of the amount in effect under Code section 415(b)(1)(A)
for any Plan Year unless 50 other such officers (or, if lesser, a
number of such officers equal to the greater of three or 10% of
the Employees) have higher annual Compensation.
(2) One of the 10 persons employed by an Employer having annual
Compensation greater than the limitation in effect under Code
section 415(c)(1)(A) for any Plan Year, and owning (or considered
as owning within the meaning of Code section 318) the largest
interests in the Employers. For purposes of this paragraph (2),
if two Employees have the same interest, the one with the greater
Compensation shall be treated as owning the larger interest.
(3) Any person owning (or considered as owning within the meaning of
Code section 318) more than 5% of the outstanding stock of an
Employer or stock possessing more than 5% of the total combined
voting power of such stock.
(4) A person who would be described in paragraph (3) above if "1%"
were substituted for "5%" each place it appears in paragraph (3)
above, and who has annual Compensation of more than $150,000. For
purposes of determining ownership under this Section 13.11(f),
Code section 318(a)(2)(C) shall be applied by substituting "5%"
for "50%" and the rules of subsections (b), (c) and (m) of Code
section 414 shall not apply.
(g) "Year of Service" shall mean, a year which constitutes a "Year of
Service" under the rules of paragraphs (4), (5) and (6) of Code
section 411(a) to the extent not inconsistent with the provisions of
this Article XIII.
Section 13.2 General Requirements. For any Plan Year beginning after 1983
in which the Plan is a Top-Heavy Plan, the requirements of this Article XIII
must be met in accordance with Code section 416 and the regulations thereunder.
The provisions of this Article XIII shall be inapplicable unless and until the
Plan is a Top-Heavy Plan.
Section 13.3 Maximum Compensation. Compensation for any Employee shall not
be taken into account under the Plan in excess of the amount provided for
pursuant to Code section 401(a)(17) and the regulations thereunder.
Section 13.4 Vesting. A Participant who is credited with an Hour of Service
while the Plan is Top-Heavy, or in any Plan Year after a Plan Year in which the
Plan is Top-Heavy, and who has completed at least three Years of Service shall
have a nonforfeitable right to 100% of his or her accrued benefit derived from
Employer Contributions and no such amount may become forfeitable if the Plan
later ceases to be Top-Heavy nor may such amount be forfeited under the
provisions of Code sections 411(a)(3)(B) or 411 (a)(3)(D). Such accrued benefit
shall include benefits accrued before the Plan becomes Top-Heavy, including
benefits accrued prior to January 1, 1984. Notwithstanding any other provisions
of this Plan to the contrary, once the vesting requirements of this Section 13.4
become applicable, they shall remain applicable even if the Plan later ceases to
be Top-Heavy.
Section 13.5 Minimum Contributions. Minimum Employer Contributions for a
Participant (not including a beneficiary of any Participant) who is not a Key
Employee shall be required under the Plan for the Plan Year as follows:
(a) The amount of the minimum contribution shall be the lesser of the
following percentages of Compensation:
(1) four percent, or,
(2) the highest percentage at which such contributions are made under
the Plan for the Plan Year on behalf of a Key Employee.
(i) For purposes of this paragraph (2), all defined contribution
plans required to be included in an Aggregation Group shall
be treated as one plan.
(ii) This paragraph (2) shall not apply if the Plan is required
to be included in an Aggregation Group and the Plan enables
a defined benefit plan required to be included in the
Aggregation Group to meet the requirements of Code sections
401(a)(4) or 410.
(iii)For purposes of this paragraph (2), the calculation of the
percentage at which Employer Contributions are made for a
Key Employee shall be based only on his or her Compensation
not in excess of maximum counted compensation as provided in
Section 13.3.
(b) There shall be disregarded for purposes of this Section 13.5,
contributions or benefits under Code section 3111, Title II of the
Social Security Act or any other federal or state law, and for Plan
Years beginning before December 31, 1984, there shall also be
disregarded any contributions attributable to a salary reduction or a
similar arrangement.
(c) For purposes of this Section 13.5, the term "Participant" shall be
deemed to refer to all Participants who have not separated from
service at the end of the Plan Year including, without limitation,
individuals who:
(1) failed to complete 1000 Hours of Service during the Plan Year, or
(2) declined to make mandatory contributions to the Plan, or
(3) are excluded from the Plan because their Compensation is less
than a stated amount but who must be considered Participants for
the Plan to satisfy the coverage requirements of Code section
410(b) in accordance with Code section 401(a)(5).
Section 13.6 Participants Under Defined Benefit Plans. If any Plan
Participant other than a Key Employee is also a Participant under a defined
benefit plan of an Employer, then Section 13.5(a) shall not apply and the
required minimum annual Employer Contribution for such Participant (not
including a beneficiary of a Participant) under this Plan shall be 7 1/2% of
Compensation, or such lesser amount as may be required to satisfy the
requirements of the Code related to Top-Heavy Plans. Such Employer Contribution
shall be made without regard to the amount of contributions, if any, made to the
Plan on behalf of Key Employees.
Section 13.7 Super Top-Heavy Plans. If for any Plan Year in which the Plan
is a Top-Heavy Plan it is also a Super Top-Heavy Plan, then for purposes of the
limitations on Employer Contributions and benefits provided in Code section 415,
and Section 5.3. and Article XII of the Plan, the dollar limitations in the
defined benefit plan fraction and the defined contribution plan fraction shall
be multiplied by 1.0 rather than 1.25. However, if the application of the
provisions of this Section 13.7 would cause any Participant to exceed the
combined Code section 415 limitations on Employer Contributions and benefits,
then the application of the provisions of this Section 13.7 shall be suspended
as to such Participant until such time as he or she no longer exceeds such
limitations as modified by this Section 13.7. During the period of such
suspension, there shall be no Employer Contributions, forfeitures or
Non-Deferred Supplemental Deposits allocated to such Participant under this or
any other defined contribution plan of the Employers and there shall be no
accruals for such Participant under any defined benefit plan of the Employers.
Section 13.8 Determination of Top-Heaviness. The determination of whether
this Plan is Top-Heavy shall be made as follows:
(a) If the Plan is not required to be included in an Aggregation Group
with other plans, then it shall be Top-Heavy only if when considered
by itself it is a Top-Heavy Plan and it is not included in a
permissive Aggregation Group that is not a Top-Heavy Group.
(b) If the Plan is required to be included in an Aggregation Group with
other plans, it shall be Top-Heavy only if the Aggregation Group,
including any permissively aggregated plans is Top-Heavy.
(c) If a plan is not a Top-Heavy Plan and is not required to be included
in an Aggregation Group, then it shall not be Top-Heavy even if it is
permissively aggregated in an Aggregation Group which is a Top-Heavy
Group.
Section 13.9 Determination of Super Top-Heaviness. This Plan shall be a
Super Top-Heavy Plan if it would be a Top-Heavy Plan under the provisions of
Section 13.8, but substituting "90%" for "60%" in the ratio test of Section
13.10.
Section 13.10 Calculation of Top-Heavy Ratios. A Plan shall be Top-Heavy
and an Aggregation Group shall be a Top-Heavy Group with respect to any Plan
Year as of the Determination Date if the sum as of the Determination Date of the
Cumulative Accrued Benefits and the Cumulative Accounts of Employees who are Key
Employees for the Plan Year exceeds 60% of a similar sum determined for all
Employees, excluding former Key Employees.
Section 13.11 Cumulative Accounts and Cumulative Accrued Benefits. The
Cumulative Accounts and Cumulative Accrued Benefits for any Employee shall be
determined as follows:
(a) "Cumulative Account" shall mean the sum of the amount of an Employee's
Account under a defined contribution plan (for an unaggregated Plan)
or under all defined contribution plans included in an Aggregation
Group (for aggregated plans) determined as of the most recent plan
valuation date within a 12-month period ending on the Determination
Date, increased by any contributions due after such valuation date and
before Determination Date.
(b) "Cumulative Accrued Benefit" shall mean the sum of the present value
of an Employee's accrued benefits under a defined benefit plan (for an
unaggregated plan) or under all defined benefit plans included in an
Aggregation Group (for aggregated plans), determined under the
actuarial assumptions set forth in such Plan or Plans, as of the most
recent plan valuation date used by the Plan actuary within the
12-month period ending on the Determination Date as if the Employee
voluntarily terminated service as of such valuation date. The accrued
benefit of any Employee who is not a Key Employee shall be determined
under the method used for accrual purposes for all plans in the
Aggregation Group or, if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted under
Code section 411(b)(1)(c).
(c) Accounts and benefits shall be calculated to include all amounts
attributable to both Employer and Employee contributions but excluding
amounts attributable to voluntary deductible Employee contributions.
(d) Accounts and benefits shall be increased by the aggregate
distributions during the five-year period ending on the Determination
Date made with respect to an Employee under the Plan or Plans as the
case may be or under a terminated plan which, if it had not been
terminated, would have been required to be included in the Aggregation
Group.
(e) Rollover Contributions and direct plan to plan transfers shall be
handled as follows:
(1) If the transfer is initiated by the Employee and made from a plan
maintained by one employer to a plan maintained by another
employer, the transferring plan continues to count the amount
transferred under the rules for counting distributions. The
receiving plan does not count the amount if accepted after
December 31, 1983, but does count it if accepted prior to
December 31, 1983.
(2) If the transfer is not initiated by the Employee or is made
between plans maintained by the Employers, the transferring plan
shall no longer count the amount transferred and the receiving
plan shall count the amount transferred.
(3) For purposes of this subsection (e), all Employers aggregated
under the rules of Code sections 414(b), (c) and (m) shall be
considered a single employer.
(f) For plan years beginning after December 31, 1984, the accrued benefits
and accounts of any Employee who has not performed services for any
Employer at any time during the five-year period ending on the
Determination Date shall not be taken into account.
ARTICLE XIV
BENEFICIARY IN EVENT OF DEATH
Section 14.1 Designation and Change of Beneficiary. Upon the death of a
married Participant, the spouse of the Participant shall be deemed the
designated beneficiary of the Participant, unless such spouse has consented, in
writing, to the designation of another beneficiary or beneficiaries (which may
include the estate of the Participant) or any change thereof. If such other
designated beneficiary or beneficiaries predecease a married Participant, such
Participant's spouse shall be deemed the designated beneficiary of the
Participant. If, in such case, the Participant's spouse has also predeceased the
Participant, the value of the Participant's Account shall be paid to his or her
estate.
Each unmarried Participant shall have the right to designate a beneficiary
or beneficiaries to receive any distributions to be made under Article XI upon
the death of such Participant. An unmarried Participant may from time to time,
without the consent of any beneficiary, change or cancel any such designation.
If no beneficiary has been named by a deceased unmarried Participant, or the
designated beneficiary has predeceased such Participant, the value of the
Participant's Account shall be paid to his or her estate as beneficiary.
Any spousal consent, beneficiary designation and any change therein shall
be made in the form and manner prescribed by the Committee and shall be filed
with the General Manager. Any distribution made to a beneficiary of a deceased
Participant under the Plan shall be made to the beneficiary as soon as
practicable after such Participant's death and shall be in the form of a lump
sum payment, regardless of the form of benefit selected by the deceased
Participant. The beneficiary may elect to have such payment made in money by
check, or may elect to have any whole shares of Enterprise Common Stock held for
the deceased Participant's Enterprise Common Stock Fund subaccount and ESOP
Account distributed in shares of Enterprise Common Stock and the balance of the
deceased Participant's Account (including the value of any fractional shares of
Enterprise Common Stock) paid in money by check. If no election is made, the
entire distribution to the beneficiary shall be made in money by check.
<PAGE>
ARTICLE XV
ADMINISTRATION
Section 15.1 Named Fiduciary. The Committee (and each member of the
Committee acting as such) shall be the named fiduciary of the Plan with
authority to control and manage the operation and administration of the Plan.
Section 15.2 Administration.
(a) The Committee shall have full discretionary authority to interpret the
Plan and to answer all questions which arise concerning the
application, administration and interpretation of the Plan. The
Committee shall adopt such rules and procedures as in its opinion are
necessary and advisable to administer the Plan and to transact its
business. Subject to the other requirements of this Article XV, the
Committee may --
(1) Employ agents to carry out non-fiduciary responsibilities;
(2) Employ agents to carry out fiduciary responsibilities (other than
trustee responsibilities as defined in ERISA Section 405(c)(3));
(3) Consult with counsel, who may be of counsel to an Employer or an
Affiliate; and
(4) Provide for the allocation of fiduciary responsibilities (other
than trustee responsibilities as defined in ERISA Section
405(c)(3)) among its members. However, any action described in
subparagraphs (2) or (4) of this subparagraph (a) and any
modification or rescission of any such action, may be effected by
the Committee only by a resolution approved by a majority of the
Committee.
(b) The Committee shall keep written minutes of all its proceedings, which
shall be open to inspection by the Board of Directors. In the case of
any decision by the Committee with respect to a claim for benefits
under the Plan, the Committee shall include in its minutes a brief
explanation of the grounds upon which such decision was based.
(c) In performing their duties, the members of the Committee shall act
solely in the interest of the Participants in the Plan and their
beneficiaries and:
(1) for the exclusive purpose of providing benefits to the
Participants and their beneficiaries;
(2) with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man or woman acting
in like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims;
and
(3) in accordance with the documents and instruments governing the
Plan insofar as such documents and instruments are consistent
with the provisions of Title I of ERISA. In addition to any other
duties the Committee may have, the Committee shall periodically
review the performance of the Trustee and any Investment Managers
and the performance of all other persons to whom fiduciary duties
have been delegated or allocated pursuant to the provisions of
this Article XV.
(d) The Company agrees to indemnify and reimburse, to the fullest extent
permitted by law, members of the Committee, directors and Employees of
an Employer and all such former members, directors and Employees, for
any and all expenses, liabilities or losses arising out of any act or
omission relating to the rendition of services for or the management
and administration of the Plan.
(e) No member of the Committee nor any of its delegates shall be
personally liable by virtue of any contract, agreement or other
instrument made or executed by him or her or on his or her behalf in
such capacity.
Section 15.3 Control and Management of Assets. The assets of the Plan shall
be held by the Trustee, in trust, and shall be managed by the Trustee and/or one
or more Investment Managers appointed from time to time by the Committee;
provided, however, that the Committee shall have investment authority with
respect to loans approved pursuant to Section 11.12, and may, from time to time,
determine that the Trustee shall be subject to the direction of the Committee
with respect to certain other investments, in which case the Trustee shall be
subject to proper directions of the Committee which are in accordance with the
terms of the Plan and which are not contrary to applicable law.
Section 15.4 Benefits to be Paid from Trust. Benefits under the Plan shall
be payable only from the Trust Fund and only to the extent that such Trust Fund
shall suffice therefore and each Participant assumes all risk connected with any
decrease in market price of any securities in the respective Funds. Neither the
Company nor any Affiliate shall have any liability to make or continue from its
own funds the payment of any benefits under the Plan.
Section 15.5 Expenses. There shall be paid from the Trust Fund all expenses
incurred in connection with the administration of the Plan, including but not
limited to the compensation of the Trustee, record keeping fees, the reasonable
fees of counsel for the Trustee for legal services rendered to the Trustee and
the fees of Investment Managers appointed with respect to the investment and
reinvestment of the Trust Fund, except to the extent that such expenses and fees
are paid by the Employer. There shall be paid from the Trust Fund all taxes of
any and all kinds whatsoever that may be levied or assessed under existing or
future laws upon or in respect of the Trust Fund or any property of any kind
forming a part thereof, and all expenses including brokerage costs and transfer
taxes incurred in connection with the investment and reinvestment of the Trust
Fund.
ARTICLE XVI
CLAIMS PROCEDURE
Section 16.1 Filing of Claims. Claims for benefits under the Plan shall be
filed in writing on such form or forms as may be prescribed by the Committee
with the General Manager.
Section 16.2 Appeal of Claims. Written notice shall be given to the
claiming Participant or beneficiary of the disposition of such claim, setting
forth specific reasons for any denial of such claim in whole or in part. If a
claim is denied in whole or in part, the notice shall state that such
Participant or beneficiary may, within sixty days of the receipt of such denial,
request in writing that the decision denying the claim be reviewed by the
Committee and provide the Committee with information in support of his or her
position by submitting such information in writing to the Secretary of the
Committee.
Section 16.3 Review of Appeals. The Committee shall review each claim for
benefits which has been denied in whole or in part and for which such review has
been requested and shall notify, in writing, the affected Participant or
beneficiary of its decision and of the reasons therefor. All decisions of the
Committee shall be final and binding upon all of the parties involved.
ARTICLE XVII
MERGER OR CONSOLIDATION
Section 17.1 Merger or Consolidation. In the case of any merger or
consolidation of the Plan with, or transfer of assets or liabilities to, any
other plan, each Participant or beneficiary shall be entitled to receive a
benefit immediately after the merger, consolidation or transfer (if the Plan had
been terminated) which is equal to or greater than the benefit he or she would
have been entitled to receive immediately before the merger, consolidation or
transfer (if the Plan had then terminated). A merger or consolidation of the
Plan with, or transfer of assets or liabilities to, any other plan shall not be
deemed to be a termination or discontinuance of deposits and contributions
having the effect of such termination of the Plan.
ARTICLE XVIII
NON-ALIENATION OF BENEFITS
Section 18.1 Non-Alienation of Benefits. Except as provided under Sections
11.12 and 22.1, no benefit or right under the Plan shall in any manner or to any
extent be assigned, alienated or transferred by any Participant or beneficiary
under the Plan or be subject to attachment, garnishment or other legal process.
ARTICLE XIX
AMENDMENTS
Section 19.1 Amendment Process. The Company reserves the right, by action
of the Board of Directors, but subject to applicable law, at any time and from
time to time, to modify, suspend or amend in whole or in part any or all of the
provisions of the Plan, provided that no modification, suspension or amendment
shall make it possible to deprive any Participant or beneficiary of a previously
acquired right; and provided further that no such modification, suspension or
amendment shall make it possible for any part of the assets of the Plan to be
used for or diverted to purposes other than for the exclusive benefit of
Participants and their beneficiaries under the Plan and for the payment of
expenses of the Plan.
ARTICLE XX
TERMINATION
Section 20.1 Authority to Terminate. The Plan may be terminated in whole or
in part at any time by the Board of Directors, but only upon condition that such
action is taken as shall render it impossible for any part of the corpus or
income of the Trust Fund to be used for or diverted to purposes other than for
the exclusive benefit of the Participants or their beneficiaries and for the
payment of expenses of the Plan.
Section 20.2 Distribution Upon Termination. Upon termination or partial
termination of the Plan or upon the complete discontinuance of Deposits and
Employer Contributions under the Plan, the assets of the Trust Fund shall be
administered and distributed to the Participants or their beneficiaries at such
time or times and in such nondiscriminatory manner as is determined by the
Committee. Upon termination or partial termination of the Plan or upon the
complete discontinuance of Deposits and Employer Contributions under the Plan,
the rights of all affected Participants as of the date of such termination,
partial termination or discontinuance of Deposits and Employer Contributions
shall be nonforfeitable.
ARTICLE XXI
PLAN CONFERS NO RIGHT TO EMPLOYMENT
Section 21.1 No Right to Employment. Nothing contained in the Plan shall be
construed as conferring any legal rights upon any Employee for a continuation of
employment or shall interfere with the rights of an Employer or an Affiliate to
discharge any Employee or otherwise to treat him or her without regard to the
effect which such treatment might have upon such Employee with respect to the
Plan, except as may be limited by applicable law.
<PAGE>
ARTICLE XXII
ALTERNATE PAYEES
Section 22.1 Alternate Payees Under QDROs. In the event that a domestic
relations order of any State is received by the Plan and thereafter determined
to be a Qualified Domestic Relations Order (QDRO) within the meaning of Code
section 414p, the vested portion of the Account of the Participant to which such
QDRO is directed shall be apportioned as specified in such QDRO, valued as of
the business day preceding the date specified in such QDRO. Upon notice to the
Committee that a QDRO is being sought with respect to a Participant's Account,
no distribution or loan shall be made to a Participant until such time as the
status of the QDRO is determined. The alternate payee of the Participant's
Account shall thereafter participate in the Plan in accordance with its terms,
except such person shall not have the rights or benefits provided in Article IV,
Article V and in Section 11.12. If a QDRO is issued and the amount awarded the
alternate payee exceeds the value of the Participant's Account less the
outstanding loan balance, such loan shall be deemed to be in default and the
Participant shall immediately repay the loan. Notwithstanding the provisions of
this Article, the Plan may, without the consent of any such alternate payee, pay
to such alternate payee the value of his or her respective share of the
apportioned Account of the Participant, if the value thereof as so determined is
$3,500.00 or less. If a QDRO so provides, benefits may be paid to an alternate
payee before they would otherwise be distributable under the Plan, and no such
distribution to an alternate payee shall be treated as a withdrawal by the
Participant for purposes of Article XI.
ARTICLE XXIII
CONSTRUCTION
Section 23.1 Governing Law. The Plan shall be governed by and construed and
administered under the laws of the State of New Jersey, except to the extent
superseded by ERISA.
Section 23.2 Headings. The headings are for reference only. In the event of
a conflict between a heading and the content of an Article or Section, the
content shall control.
EXHIBIT 2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-4780 and 33-44581 on Forms S-8 of Public Service Enterprise Group
Incorporated of our report dated June 25, 1997 appearing in this Annual Report
on Form 11-K of the Public Service Electric and Gas Company Thrift and
Tax-Deferred Savings Plan for the year ended December 31, 1996.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 30, 1997
