===================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 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 EMPLOYEE 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>
Stable Value Fund AIG LIFE INSURANCE COMPANY
PRIMCO CAPITAL MANAGEMENT ONE ALICO PLAZA
101 SOUTH FIFTH STREET, SUITE 2150 P.O. BOX 667
LOUSIVILLE, KY 40202 WILMINGTON, DELAWARE 19899
THE PRUDENTIAL LIFE INSURANCE CAISSE des DEPOTS
COMPANY OF AMERICA 9 WEST 57th STREET
PRUDENTIAL PLAZA NEW YORK, NEW YORK 10019
NEWARK, NJ 07101
METROPOLITAN LIFE INSURANCE Enterprise Common Stock Fund and
COMPANY ESOP Fund
ONE MADISON AVENUE PUBLIC SERVICE ENTERPRISE GROUP
NEW YORK, NEW YORK 10010-3690 INCORPORATED
80 PARK PLAZA
NEWARK, NJ 07101-1171
ALLSTATE LIFE INSURANCE Large Company Stock Index Fund
COMPANY THE VANGUARD GROUP
ALLSTATE PLAZA WEST INSTITUTIONAL DIVISION
3100 SANDERS ROAD P.O. BOX 2900
NORTHBROOK, ILLINOIS 60062 VALLEY FORGE, PA 19482
J.P. MORGAN Intermediate Government Securities Fund
60 WALL STREET DELAWARE MANAGEMENT COMPANY INC.
NEW YORK, NEW YORK 10260 ONE COMMERCE SQUARE
2005 MARKET STREET
PHILADELPHIA, PA 19103
NEW YORK LIFE INSURANCE International Stock Fund
COMPANY T. ROWE PRICE INC.
501 MADISON AVENUE 100 EAST PRATT STREET
NEW YORK, NEW YORK 10010 BALTIMORE, MARYLAND 02120
THE CHASE MANHATTAN BANK Mid/Small Company Stock Fund
270 PARK AVENUE PUTNAM INVESTMENTS
NEW YORK, NEW YORK 10017 P.O. BOX 41203
PROVIDENCE, RHODE ISLAND 02940
<PAGE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
---------------------------------------
EMPLOYEE SAVINGS PLAN
INDEX
PAGE
INDEPENDENT AUDITORS' REPORT........................................... 4
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997 AND 1996..................................... 5-8
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1997 and 1996....................... 9-12
NOTES TO FINANCIAL STATEMENTS.......................................... 13-25
SIGNATURES............................................................. 26
EXHIBIT INDEX.......................................................... 27
<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 Employee Savings Plan (the
"Plan") as of December 31, 1997 and 1996, 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 1997
and 1996, 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 5, 1998
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1997
<CAPTION>
Supplemental Information by Fund
--------------------------------------------------------------------------
Enterprise Large Intermediate
Stable Common Company Government International
Value Stock Stock Index Securities Stock
Total Fund Fund Fund Fund Fund
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
Plan interest in Master Employee
Benefit Plan Trust $ 267,035,879 $ 98,804,289 $ 31,619,028 $ 60,491,100 $ 2,166,037 $ 8,857,796
Receivables-from Investments Sold 197,360 - 197,360 - - -
Receivables-Interest and Dividends 562,619 560,220 2,399 - - -
-------------------------------------------------------------------------------------------
Total Assets $ 267,795,858 $ 99,364,509 $ 31,818,787 $ 60,491,100 $ 2,166,037 $ 8,857,796
===========================================================================================
LIABILITIES
Accounts Payable $ 1,239,186 $ 223,210 $ 132,065 $ 247,937 $ 926 $ 227,628
Transfer to/from Thrift & Tax-Deferred
Savings Plan 1,943 1,943 - - - -
Forfeitures 9,051 2,057 4,404 924 127 166
-------------------------------------------------------------------------------------------
Total Liabilities 1,250,180 227,210 136,469 248,861 1,053 227,794
-------------------------------------------------------------------------------------------
Net Assets Available for Benefits $ 266,545,678 $ 99,137,299 $ 31,682,318 $ 60,242,239 $ 2,164,984 $ 8,630,002
===========================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1997
<CAPTION>
Supplemental Information by Fund (Concluded)
-------------------------------------------------------------------------------------------
Mid/Small
Company Conservative Moderate Aggressive Trust
Stock Pre-Mix Pre-Mix Pre-Mix ESOP Holding Loan
Fund Portfolio Portfolio Portfolio Fund Account Fund
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
Plan interest in Master Employee
Benefit Plan Trust $ 14,148,879 $ 4,750,911 $ 10,533,788 $ 14,162,641 $ 8,734,091 $ 285,490 $ 12,481,829
Receivables-from Investments Sold - - - - - - -
Receivables-Interest and Dividends - - - - - - -
-------------------------------------------------------------------------------------------
Total Assets $ 14,148,879 $ 4,750,911 $ 10,533,788 $ 14,162,641 $ 8,734,091 $ 285,490 $ 12,481,829
===========================================================================================
LIABILITIES
Accounts Payable 40,336 $ 138,060 $ 36,044 $ 29,871 $ 698 $ 211,116 $ (48,705)
Transfer to/from Thrift & Tax-Deferred
Savings Plan - - - - - - -
Forfeitures 214 418 313 428 - - -
-------------------------------------------------------------------------------------------
Total Liabilities 40,550 138,478 36,357 30,299 698 211,116 (48,705)
-------------------------------------------------------------------------------------------
Net Assets Available for Benefits $ 14,108,329 $ 4,612,433 $ 10,497,431 $ 14,132,342 $ 8,733,393 $ 74,374 $ 12,530,534
===========================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1996
Supplemental Information by Fund
-----------------------------------------------------------------------------
Large
Enterprise Company Interm.
Equities Stable Common Stock Utilities Government
Growth Balanced Value Stock Index Equities Securities
Total Fund Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
Plan interest in Master Employee
Benefit Plan Trust $ 216,734,220 $ - $ - $ 100,834,108 $ 25,100,017 $ 36,476,571 $ - $ 2,172,925
Receivables-Interest and Dividends 523,198 - - 514,629 8,236 - - -
--------------------------------------------------------------------------------------------
Total Assets $ 217,257,418 $ - $ - $ 101,348,737 $ 25,108,253 $ 36,476,571 $ - $ 2,172,925
============================================================================================
LIABILITIES
Accounts Payable $ 193,558 $ - $ - $ 319,521 $ 22,896 $ 43,629 $ - $ (773)
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan (181,176) - - (168,771) - - - -
Forfeitures 4,830 - - 2,447 355 911 - 8
--------------------------------------------------------------------------------------------
Total Liabilities 17,212 - - 153,197 23,251 44,540 - (765)
--------------------------------------------------------------------------------------------
Net Assets Available for Benefits $ 217,240,206 $ - $ - $ 101,195,540 $ 25,085,002 $ 36,432,031 $ - $ 2,173,690
============================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1996
Supplemental Information by Fund (Concluded)
---------------------------------------------------------------------------------------------
Mid/Small
International Company Conservative Moderate Aggressive
Stock Stock Pre-Mix Pre-Mix Pre-Mix ESOP Holding Trust
Fund Fund Portfolio Portfolio Portfolio Fund Account Loan Fund
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
Plan interest in Master Employee
Benefit Plan Trust $ 7,989,413 $ 6,686,242 $ 2,704,371 $ 6,801,302 $8,960,644 $ 8,349,458 $ 48,053 $10,611,116
Receivables-Interest and Dividends - - - - - 146 187 -
---------------------------------------------------------------------------------------------
Total Assets $ 7,989,413 $ 6,686,242 $ 2,704,371 $ 6,801,302 $8,960,644 $ 8,349,604 $ 48,240 $10,611,116
=============================================================================================
LIABILITIES
Accounts Payable $ (5,186) $ (66,571) $ 3,906 $ (111,156) $ (10,358)$ 15,147 $ 26,071 $ (43,568)
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan - - (6,190) (6,215) - - - -
Forfeitures 123 479 138 196 173 - - -
---------------------------------------------------------------------------------------------
Total Liabilities (5,063) (66,092) (2,146) (117,175) (10,185) 15,147 26,071 (43,568)
---------------------------------------------------------------------------------------------
Net Assets Available for Benefits $ 7,994,476 $ 6,752,334 $ 2,706,517 $ 6,918,477 $ 8,970,829 $ 8,334,457 $ 22,169 $10,654,684
=============================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1997
<CAPTION>
Supplemental Information by Fund
----------------------------------------------------------------------
Enterprise Large Intermediate
Stable Common Company Government International
Value Stock Stock Index Securities Stock
ADDITIONS Total Fund Fund Fund Fund Fund
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Participant Deposits $ 28,020,575 $ 10,710,685 $ 3,736,563 $ 5,768,228 $ 359,097 $ 1,499,589
Employers Contributions 7,390,107 3,269,873 596,812 1,506,833 101,809 366,779
Interfund Transfers - net - (12,058,995) (2,118,955) 6,255,169 (507,927) (822,923)
-------------------------------------------------------------------------------------
Total Deposits and Contributions 35,410,682 1,921,563 2,214,420 13,530,230 (47,021) 1,043,445
-------------------------------------------------------------------------------------
Plan Interest in Master Trust
Investment Income 34,488,879 6,705,374 6,742,087 13,228,647 176,499 199,968
-------------------------------------------------------------------------------------
Total Additions 69,899,561 8,626,937 8,956,507 26,758,877 129,478 1,243,413
-------------------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 17,808,370 9,495,024 2,191,248 2,463,646 115,889 417,373
Forfeitures 26,886 6,782 9,604 5,717 - 523
Administrative Expenses 473,208 241,710 53,256 90,890 3,844 17,360
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan 2,285,625 941,662 105,083 388,416 18,451 172,631
-------------------------------------------------------------------------------------
Total Deductions 20,594,089 10,685,178 2,359,191 2,948,669 138,184 607,887
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 49,305,472 (2,058,241) 6,597,316 23,810,208 (8,706) 635,526
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 217,240,206 101,195,540 25,085,002 36,432,031 2,173,690 7,994,476
-------------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $ 266,545,678 $ 99,137,299 $ 31,682,318 $ 60,242,239 $ 2,164,984 $ 8,630,002
=====================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1997
<CAPTION>
Supplemental Information by Fund (Concluded)
---------------------------------------------------------------------------------------------------
Mid/Small
Company Conservative Moderate Aggressive Trust
Stock Pre-Mix Pre-Mix Pre-Mix ESOP Holding Loan
ADDITIONS Fund Portfolio Portfolio Portfolio Fund Account Fund
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Participant Deposits $ 1,712,180 $ 534,149 $ 1,431,665 $ 2,268,419 $ - $ - $ -
Employers Contributions 428,970 128,606 398,619 591,806 - - -
Interfund Transfers - net 3,790,187 1,164,220 1,110,726 1,096,413 (208,858) - 2,300,943
---------------------------------------------------------------------------------------------------
Total Deposits and
Contributions 5,931,337 1,826,975 2,941,010 3,956,638 (208,858) - 2,300,943
---------------------------------------------------------------------------------------------------
Plan Interest in Master Trust
Investment Income 1,945,859 486,435 1,261,285 1,877,889 1,812,631 52,205 -
---------------------------------------------------------------------------------------------------
Total Additions 7,877,196 2,313,410 4,202,295 5,834,527 1,603,773 52,205 2,300,943
---------------------------------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 318,370 327,943 511,247 476,127 1,189,126 - 302,377
Forfeitures 1,327 417 312 2,204 - - -
Administrative Expenses 19,521 7,572 16,997 12,330 9,728 - -
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan 181,983 71,562 94,785 182,353 5,983 - 122,716
---------------------------------------------------------------------------------------------------
Total Deductions 521,201 407,494 623,341 673,014 1,204,837 - 425,093
---------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS AVAILABLE
FOR BENEFITS 7,355,995 1,905,916 3,578,954 5,161,513 398,936 52,205 1,875,850
NET ASSETS AVAILABLE
FOR BENEFITS -
BEGINNING OF YEAR 6,752,334 2,706,517 6,918,477 8,970,829 8,334,457 22,169 10,654,684
---------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS -
END OF YEAR $ 14,108,329 $ 4,612,433 $ 10,497,431 $ 14,132,342 $ 8,733,393 $ 74,374 $ 12,530,534
===================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1996
<CAPTION>
Supplemental Information by Fund
-------------------------------------------------------------------------------------------
Large
Enterprise Company Interm.
Equities Stable Common Stock Utilities Gov't.
Growth Balanced Value Stock Index Equities Secur.
ADDITIONS Total Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Participant Deposits $ 25,446,411 $ 2,124,415 $ 911,782 $ 12,099,306 $ 2,601,655 $ 4,305,948 $ 908,928 $ 418,981
Employers Contributions 6,832,948 533,038 231,973 3,384,696 723,595 1,091,139 236,244 109,485
Interfund Transfers-net - (14,049,337) (5,650,428) (1,021,676) (5,400,095) 4,795,229 (6,265,669) (127,450)
---------------------------------------------------------------------------------------------------------
Total Deposits
and Contributions 32,279,359 (11,391,884) (4,506,673) 14,462,326 (2,074,845) 10,192,316 (5,120,497) 401,016
---------------------------------------------------------------------------------------------------------
Plan Interest in Master
Trust Investment Income 14,157,526 1,552,689 320,176 6,327,021 (1,174,986) 6,062,703 281,058 55,842
---------------------------------------------------------------------------------------------------------
Total Additions 46,436,885 (9,839,195) (4,186,497) 20,789,347 (3,249,831) 16,255,019 (4,839,439) 456,858
---------------------------------------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 11,907,962 390,739 210,594 6,978,593 1,538,490 1,355,392 199,146 93,157
Dividends Paid 702,350 - - - - - - -
Forfeitures 19,081 2,319 264 8,381 2,128 2,848 239 18
Transfer to/(from)
Thrift & Tax-Deferred
Savings Plan 10,686 70,049 21,642 (350,283) (29,941) 185,968 25,769 1,879
---------------------------------------------------------------------------------------------------------
Total Deductions 12,640,079 463,107 232,500 6,636,691 1,510,677 1,544,208 225,154 95,054
---------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS AVAILABLE
FOR BENEFITS 33,796,806 (10,302,302) (4,418,997) 14,152,656 (4,760,508) 14,710,811 (5,064,593) 361,804
NET ASSETS AVAILABLE
FOR BENEFITS -
BEGINNING OF YEAR 183,443,400 10,302,302 4,418,997 87,042,884 29,845,510 21,721,220 5,064,593 1,811,886
---------------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS -
END OF YEAR $217,240,206 $ - $ - $101,195,540 $25,085,002 $36,432,031 $ - $2,173,690
=========================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1996
<CAPTION>
Supplemental Information by Fund (Concluded)
---------------------------------------------------------------------------------------------------------
Mid/Small
International Company Conservative Moderate Aggressive
Stock Stock Pre-Mix Pre-Mix Pre-Mix ESOP Holding Trust
ADDITIONS Fund Fund Portfolio Portfolio Portfolio Fund Account Loan Fund
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Participant Deposits $ 1,147,174 $ 264,750 $ 82,986 $ 218,743 $ 361,743 $ - $ - $ -
Employers Contributions 275,435 66,725 19,434 62,437 98,747 - - -
Interfund Transfers-net 2,483,959 6,479,440 2,591,459 6,555,161 8,294,731 (498,329) - 1,813,005
---------------------------------------------------------------------------------------------------------
Total Deposits
and Contributions 3,906,568 6,810,915 2,693,879 6,836,341 8,755,221 (498,329) - 1,813,005
---------------------------------------------------------------------------------------------------------
Plan Interest in Master
Trust Investment Income 852,322 9,624 67,943 167,343 272,023 (636,417) 11,683 (11,498)
---------------------------------------------------------------------------------------------------------
Total Additions 4,758,890 6,820,539 2,761,822 7,003,684 9,027,244 (1,134,746) 11,683 1,801,507
---------------------------------------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 245,548 67,929 55,167 85,011 56,025 492,326 - 139,845
Dividends Paid - - - - - 702,350 - -
Forfeitures 1,884 276 138 196 390 - - -
Transfer to/(from)
Thrift & Tax-Deferred
Savings Plan 22,113 - - - - 4,958 - 58,532
---------------------------------------------------------------------------------------------------------
Total Deductions 269,545 68,205 55,305 85,207 56,415 1,199,634 - 198,377
---------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS AVAILABLE
FOR BENEFITS 4,489,345 6,752,334 2,706,517 6,918,477 8,970,829 (2,334,380) 11,683 1,603,130
NET ASSETS AVAILABLE
FOR BENEFITS -
BEGINNING OF YEAR 3,505,131 - - - - 10,668,837 10,486 9,051,554
---------------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS -
END OF YEAR $ 7,994,476 $6,752,334 $2,706,517 $6,918,477 $8,970,829 $8,334,457 $22,169 $10,654,684
=========================================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
</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 Public Service Electric and Gas Company Employee Savings
Plan (Plan) to encourage thrift and savings by eligible bargaining unit
employees of PSE&G (Eligible Employees). It was first offered to Eligible
Employees in 1987 as a result of collective bargaining and contributions began
in January 1988. Effective January 1, 1996, the trust that holds the Plan assets
was converted into the Public Service Electric & Gas Company Master Employee
Benefit Plan Trust, (Master Trust), a master trust covering all of the Company's
qualified retirement plans including the Plan and the Public Service Electric &
Gas Company Thrift and Tax-Deferred Savings Plan (Thrift Plan) (See Note 4.
Investment of the Plan and Thrift Plan in the Master Trust.) The Plan was last
amended August 11, 1997, effective August 11, 1997, except for changes listed
below, which are effective subsequent to December 31, 1997. The Plan amendments
made during 1997 provide for the following: an automatic rebalancing of
investment funds; administrative and wording changes made, including the
transfer of age and service credits and availability of transferred amounts from
the Cash Balance Plan; partial withdrawals of nondeferred deposits and related
earnings permitted after termination of employment and prior to age 70 1/2.
The Plan permits, among other things, participation in the Plan by Affiliates of
PSE&G and their bargaining unit employees (each such participating Affiliate
with PSE&G, an "Employer"). Participation in the Plan is entirely voluntary,
except with respect to those employees who participate 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.
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. At the
time any employee who is a Participant in the Thrift Plan becomes an Eligible
Employee for the Plan, that employee will automatically be enrolled in the Plan,
all balances in the Thrift Plan will be transferred to the Plan and all
contributions and investment elections in effect for the Thrift Plan will remain
in effect. Certain Eligible Employees may also elect to have a distribution from
another qualified corporate plan contributed as a rollover contribution with the
approval of PSE&G's Employee Benefits Committee (Committee), the Plan
Administrator.
Under the Plan, each participating employee (Participant), except as otherwise
noted, may elect to make basic deposits to Investment Funds of such
Participant's choosing within the Savings Account Fund of 1% - 7% of his/her
Compensation (Basic Deposits), and his/her Employer will contribute an amount
equal to 50% thereof, subject to certain exceptions and limitations (Employer
Contributions). Employer Contributions for Participants who are employed by the
Company with respect to Basic Deposits in excess of 5% and up to 7% 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 his/her Savings Account Fund in
increments of 1% of Compensation up to an additional 18% of Compensation
(Supplemental Deposits), subject to certain limitations, without any
corresponding matching Employer Contribution. Participants may designate such
Basic and/or Supplemental Deposits as Nondeferred (post-income tax
contributions) or Deferred (pre-income tax contributions).
<PAGE>
Participants employed by CEA Newark Bay Services, Inc., an affiliate of PSE&G,
may elect to make basic deposits to Investment Funds of such Participant's
choosing within the Savings Account Fund of 1% - 8% of their Compensation, and
the Employer will contribute an amount equal to 50% thereof, subject to certain
exceptions and limitations (Employer Contributions). In addition, CEA Newark Bay
Services, Inc. Participants may elect to make supplemental deposits to their
Savings Account Fund in increments of 1% of Compensation up to an additional 17%
of Compensation (Supplemental Deposits), subject to certain limitations, without
any corresponding matching Employer Contribution. Participants may designate
such Basic and/or Supplemental Deposits as Nondeferred (post-income tax
contributions) or Deferred (pre-income tax contributions).
Each Participant may also, within any Plan Year, make one or more Additional
Lump Sum Deposits on a Nondeferred basis in minimum amounts 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 Savings 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 Savings 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.
Savings Account Deposits are made through payroll deductions by the Employer,
rollover contributions from other qualified plans and Additional Lump Sum
Deposits. Deposits by Participants and Employer Contributions are transferred to
a Trustee and separately held in the Plan's Savings Account Fund of the Trust
Fund for investment and other transactions, as directed by Participants. Each
Participant is entitled to choose the investment Funds in which his/her Deposits
and Employer Contributions will be invested from among the investment Funds
offered under the Plan, except for Employer Contributions with respect to Basic
Deposits in excess of 6% for Participants employed by CEA Newark Bay Services,
Inc. and 5% for all others.
Bankers Trust Company is the Trustee of the Master Trust established pursuant to
the Plan.
The following Plan changes were effective subsequent to December 31, 1997:
1. Savings Plan amended to permit CEA Newark Bay Services, Inc. employees to
increase Basic Deposits from 6% to 8% of Compensation. The Employer
Contribution related to Basic Deposits in excess of 6% of Compensation
will be made in shares of Enterprise Common Stock and will not be
available for withdrawals or transfer prior to termination of employment.
2. The merger, for investment management purposes, of the Stable Value Funds
and the Conservative and Moderate Pre-Mixed Portfolios in the Plan and
Thrift and Tax Deferred Savings Plan.
<PAGE>
Loan Provisions
The Trustee may, subject to the approval of PSE&G's Director Performance and
Rewards, lend a Participant an amount up to 50% of the value of the vested
portion of such Participant's Savings Account and ESOP Fund, but no more than
the aggregate value of such Participant's Savings 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 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 are 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 Savings Account and repayments
of principal of any loan, together with interest thereon, are invested in the
Savings 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 by other
lenders. The rate of interest applicable to any loan at its inception remains in
effect for the duration of such loan. During 1997, the rate of interest on loans
granted to Participants, by quarter and starting with the first quarter, was
8-1/4%, 8-1/2%, 8-1/2%, 8-1/2% (See Note 2. SIGNIFICANT ACCOUNTING POLICIES -
Loans.)
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan have been prepared in accordance with
generally accepted accounting principles.
<PAGE>
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 Investment Fund. (See Expenses of Plan, below.)
All Deposits and Employer Contributions in the Stable Value Fund are invested in
either traditional Guaranteed Investment Contracts issued by insurance companies
or other financial intermediaries (Traditional GICs) 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
Plan. The portfolio is wrapped by a "book value wrapper", usually a financial
institution other than the investment 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 the Stable Value 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 1997, the
composite rate of interest earned by such assets so invested was not less than
6.38%.
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.
Valuation of Investments
The value of the Enterprise Common Stock Fund, the Large Company Stock Index
Fund, the Intermediate Government Securities Fund, the International Stock Fund,
the Mid/Small Company Stock Fund and the shares of Enterprise Common Stock held
by the ESOP Fund are based upon quoted market values. The value of the Stable
Value Fund is based on the contract value of all GICs in which the assets of the
Stable Value Fund are invested. These 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.
<PAGE>
The Plan's financial statements have been prepared in accordance with financial
reporting requirements of the Employee Retirement Income Security Act of 1974,
as amended, (ERISA) as permitted by 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 (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, are deducted from the Trust Fund.
However, prior to January 1, 1997, 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 the
Employers.
The assets of the Common Stock Fund and the ESOP Fund are invested in shares of
Enterprise Common Stock. Shares of Enterprise Common Stock required for the
Common Stock Fund 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 Fund is in a "sell" position and the Common
Stock Fund is in a "buy" position, the Common Stock Fund will buy from the ESOP
Fund at the closing price on the New York Stock Exchange for that day. In such
case, no brokerage commissions will be charged on the transaction. Otherwise,
all shares sold for the Common Stock Fund and the ESOP Fund are sold by the
Trustee on the open market through a broker. The proceeds, net of brokerage
commissions and transfer taxes, are distributed to the Participant.
Loans
A loan to a Participant is considered an investment in such Participant's
Savings Account and the principal amount of the loan is treated as a separate
investment within the various sub-accounts of the Participant's Savings 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.
<PAGE>
Loan amounts are taken from sub-accounts of a Participant's Savings 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 Savings Account
Participants are permitted to transfer all, but not less than all, shares of
Enterprise Common Stock from their ESOP Funds to their Savings 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 Savings 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.
Holding Account
The Holding Account is a vehicle to record the transactions either from one
investment Fund to another investment Fund or from an investment Fund to an
outside source. Daily balances which remain in the Holding Account are
temporarily invested in short-term, liquid investments until disbursement.
Activity within the Holding Account includes inflows and outflows of cash
related to investment Fund transfers, Deposits, Employer Contributions,
withdrawals, receipts of dividends and interest, expenses incurred in connection
with the administration of the Plan, benefit payments and loan transactions.
Vesting
Employer Contributions to a Participant's Savings Account are immediately
vested upon a Participant's completion of five years of service with an
Employer, or when a Participant is eligible for retirement, disabled, laid off
or dies. 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 will lose
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
(hardship withdrawals). Distributions to Participants of approved hardship
withdrawals are made as soon as practicable after such approval.
Rights Upon Termination
The Company expects and intends to continue the Plan indefinitely, but has
reserved the right to amend, suspend or terminate the Plan at any time. In the
event of termination of the Plan, the net assets of the Plan would be
distributed to the Participants based on the balances in their individual
accounts at the date of termination.
<PAGE>
3. INVESTMENTS
The financial statements of the Plan include the following:
A. Savings Account Investment Funds
(1) The assets of the Stable Value Fund 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. Effective October
1997, PRIMCO Capital Management was hired to manage the assets of the
Stable Value Fund. All contract values approximate fair value.
The following Traditional GICs are continuing in effect:
(i)A four and one-half year contract expiring December 31, 1999, with
Metropolitan Life Insurance Company, effective interest rate of
8.12%, contract value of $6,316,876;
(ii) A five-year contract expiring January 4, 1999, with Allstate Life
Insurance Company, effective interest rate of 5.65%, contract value
of $14,916,508;
(iii) A five-year contract expiring June 30, 1999, with New York Life
Insurance Company, effective interest rate of 7.07%, contract value
of $8,859,186;
(iv) A five-year contract expiring December 31, 1999, with Prudential
Life Insurance Company, effective interest rate of 8.01%, contract
value of $14,471,754; and
(v)A five-year contract expiring June 30, 2000, with AIG Life Insurance
Company, effective interest rate of 6.14%, contract value of
$8,460,099.
The following Synthetic GICs are continuing in effect:
(i)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,
1997, of 7.29% and contract value of $21,036,619. The credit rate for
the Synthetic GIC effective January 1, 1998 through March 31, 1998
was 7.47%.
(ii) An open-ended contract with The Chase Manhattan Bank as the book
value wrapper and Seix Investment Advisors managing the underlying
portfolio providing an effective crediting rate, as of December 31,
1997, of 6.96% and contract value of $16,508,149. The crediting rate
effective March 31, 1998 was 7.03%.
<PAGE>
(iii) A five year floating-rate contract with Caisse des Depots,
expiring November 26, 2002, effective crediting rate as of December
31, 1997 of 5.95%, contract value of $2,011,115. The crediting rate
effective March 31, 1998 was 5.62%.
(2) The assets of the Enterprise Common Stock Fund are invested in
Enterprise Common Stock.
(3) Effective September 1997, the assets of the Large Company Stock Index
Fund are invested in the capital stock of the Vanguard Institutional
Index Fund ("Stock Index Equities Fund"), a no-load mutual fund managed
by The Vanguard Group, Inc. The prospectus for the Stock Index Equities
Fund indicates that such fund seeks to replicate the investment
performance of the Standard and Poor's 500 Composite Stock Price Index.
Prior to September 1997, the assets of the Large Company Stock Index
Fund were invested in the Bankers Trust Institutional Equity 500 Index
Fund managed by Bankers Trust Company.
(4) The assets of the Intermediate Government Securities Fund are invested
in the capital stock of the Delaware-Voyageur U.S. Government Securities
Fund ("Delaware-Voyageur U.S. Government Securities Fund"), an
open-ended mutual fund managed by the Delaware Management Company, Inc.
The prospectus of the Delaware-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.
(5) The assets of the International Stock Fund are invested in the capital
stock of T. Rowe Price International Funds Inc. ("T. Rowe Price
International Stock Fund"), a no-load, open-ended investment company or
mutual fund managed by Rowe Price-Fleming International, Inc. The
prospectus for T. Rowe Price International Stock Fund indicates that
such fund invests primarily in common stocks of established, non-U.S.
companies.
(6) The assets of the Mid/Small Company Stock Fund are invested in the
capital stock of Putnam Vista Fund, an open-ended investment company
managed by Putnam Investment Management, Inc. 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.
<PAGE>
(7) The assets of the Conservative Pre-Mix Portfolio are invested in
specific percentages within a mix of five existing Plan investment
Funds: 40% Stable Value Fund, 20% Intermediate Government Securities
Fund, 20% Large Company Stock Index Fund, 10% International Stock Fund,
and 10% Mid/Small Company Stock Fund. 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.
(8) The assets of the Moderate Pre-Mix Portfolio are invested in specific
percentages within a mix of five existing Plan investment Funds: 25%
Large Company Stock Index Fund, 20% Stable Value Fund, 20% International
Stock Fund, 20% Intermediate Government Securities Fund, and 15%
Mid/Small Company Stock Fund. 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.
(9) The assets of the Aggressive Pre-Mix Portfolio are invested in
specific percentages within a mix of four existing Plan investment
Funds: 30% Large Company Stock Index Fund, 25% International Stock Fund,
25% Mid/Small Company Stock Fund, and 20% Intermediate Government
Securities Fund. 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 bargaining unit portions of PSE&G's former
TRASOP and PAYSOP. No additional contributions to or transfers into the
ESOP Fund are presently permitted or were allowed during 1997.
<PAGE>
C. PARTICIPANTS
Participants
As of December 31,
------------------
1997 1996
----- -----
Total Plan Participants 7,708 7,704
Participants by Fund
Stable Value Fund 4,146 1,968
Enterprise Common Stock Fund 5,098 1,812
Large Company Stock Index Fund 3,051 1,251
Intermediate Government Securities Fund 493 245
International Stock Fund 1,271 630
Mid/Small Company Stock Fund (1) 1,404 454
Conservative Pre-Mix Portfolio (1) 396 144
Moderate Pre-Mix Portfolio (1) 917 326
Aggressive Pre-Mix Portfolio (1) 1,265 446
ESOP Fund 1,067 1,176
------------------------------------------
(1) New Investment Option in 1996.
<PAGE>
4. INVESTMENT OF THE PLAN AND THRIFT PLAN IN THE MASTER TRUST
Since January 1, 1996, the Plan's investments have been included in the Master
Trust which was established for the investment of assets of all of the Company's
qualified retirement plans including the Plan and the Thrift Plan. The following
tables present the fair values of and the investment income recognized by the
investments of the Plan and Thrift Plan in the Master Trust as of and for the
periods ending December 31, 1997 and 1996. As of December 31, 1997 and 1996, the
Plan's interest in such assets of the Master Trust were approximately 35% and
37%, respectively.
December 31,
------------
1997 1996
---- ----
Investments at fair value:
Participant Loans $ 23,576,663 $ 22,451,539
Cash and Cash equivalents 47,743,519 41,413,758
Common Stock of Public
Service Enterprise Group 92,087,265 75,274,227
Mutual Funds 326,616,013 218,696,575
Guaranteed Insurance Contracts 279,675,584 308,079,794
------------- -------------
$769,699,044 $665,915,893
============= =============
December 31,
------------
1997 1996
---- ----
Investment income recognized:
Net appreciation in fair value of
Mutual Funds* $ 57,823,392 $32,523,112
Net appreciation/(depreciation) in
fair value of Common Stock
of Enterprise 14,876,883 (11,569,069)
Interest from Mutual Funds 864,144 45,265
Interest from Common Stock of
Enterprise Funds 319,066 154,745
Interest from Guaranteed Insurance
Contracts 20,956,370 20,845,795
Dividends from Common Stock of
Enterprise 5,268,123 6,676,501
------------ ------------
$100,107,978 $48,676,349
============ ============
* Includes Dividends earned from Mutual Funds.
<PAGE>
5. UNIT VALUE INFORMATION -- SAVINGS ACCOUNT INVESTMENT FUNDS
Unit values of the Investment Funds are determined at the end of each business
day (Valuation Day) 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 Savings 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 Savings
Account, including interest paid 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.
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
--------------- ---- --------- ---------------
Stable Value Fund 1997 $12.870313 7,702,788.469
1996 $12.098876 8,350,095.525
Enterprise Common Stock 1997 $11.554155 2,742,071.404
Fund 1996 $ 9.916231 2,526,215.433
Large Company Stock Index 1997 $15.509003 3,884,339.868
Fund 1996 $11.659470 3,124,673.082
Intermediate Govt. 1997 $11.443806 189,183.902
Securities Fund 1996 $10.507339 206,692.815
International Stock Fund 1997 $11.238976 767,863.690
1996 $10.966759 728,973.380
Mid/Small Company Stock 1997 $12.276519 1,149,212.528
Fund (1) 1996 $ 9.984863 676,256.863
Conservative Pre-Mix 1997 $11.709055 393,920.168
Portfolio (1) 1996 $10.316356 261,752.007
Moderate Pre-Mix 1997 $11.943916 878,893.594
Portfolio (1) 1996 $10.370244 666,547.701
Aggressive Pre-Mix 1997 $12.264464 1,152,300.026
Portfolio (1) 1996 $10.399420 861,443.643
- -----------------------------
(1) New Investment Option in 1996.
<PAGE>
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
---- --------------- ----------------
1997 $31.6875 275,610
1996 $27.2500 306,402
6. FEDERAL INCOME TAXES
The Company believes that the Plan and its related Trust, including the portions
of the former TRASOP and PAYSOP applicable to 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 April 8, 1998, was obtained from the Internal Revenue Service.
Participants are not taxed on Company Contributions, Deferred Deposits, or on
the earnings credited to their Savings Account, until distribution of such
amounts from the Plan.
7. 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
Employee Savings Plan
--------------------------------------------
(Name of Plan)
By: M. PETER MELLETT
-----------------------------------
M. Peter Mellett
Chairman of Employee
Benefits Committee
Date: June 23, 1998
<PAGE>
EXHIBIT INDEX
Exhibit Number
1 Public Service Electric and Gas Company Employee Savings Plan, amended
effective August 11, 1997.
2 Independent Auditors' Consent
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
Amended Effective August 11, 1997
<PAGE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
TABLE OF CONTENTS
Page
ARTICLE I AMENDMENT - PURPOSE........................................ 1
Section 1.1. Amendment of the Plan............................. 1
Section 1.2. Purpose........................................... 1
ARTICLE IIDEFINITIONS................................................ 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"................................... 2
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"...................................... 3
Section 2.17. "Eligible Employee"............................... 3
Section 2.18. "Employee"........................................ 3
Section 2.19. "Employer"........................................ 4
Section 2.20. "Employer Contributions".......................... 4
Section 2.21. "Enrollment Date"................................. 4
Section 2.22. "Enterprise"...................................... 4
Section 2.23. "Enterprise Common Stock"......................... 4
Section 2.24. "Enterprise Common Stock Fund".................... 4
Section 2.25. "Equities Fund"................................... 4
Section 2.26. "Equities Index Fund"............................. 4
Section 2.27. "ERISA"........................................... 4
Section 2.28. "ESOP Account".................................... 4
Section 2.29. "Fixed Income Fund"............................... 4
Section 2.30. "Funds"........................................... 4
Section 2.31. "General Manager"................................. 5
Section 2.32. "Government Obligations Fund"..................... 5
Section 2.33. "Highly Compensated Employee" .................... 5
Section 2.34. "Highly Compensated Participant".................. 6
Section 2.35. "Hour of Service"................................. 7
Section 2.36. "Investment Manager".............................. 7
Section 2.37. "Lay Off" or Laid Off"............................ 7
Section 2.38. "Leased Employee"................................. 7
Section 2.39. "Matured"......................................... 7
Section 2.40. "Nondeferred"..................................... 7
Section 2.41. "Participant"..................................... 7
Section 2.42. "Participating Affiliate"......................... 7
Section 2.43. "Plan"............................................ 7
Section 2.44. "Plan Year"....................................... 7
Section 2.45. "Qualified Domestic Relations Order" or "QDRO".... 7
Section 2.46. "Record Keeper"................................... 8
Section 2.47. "Required Beginning Date"......................... 8
Section 2.48. "Retirement"...................................... 8
Section 2.49. "Retirement Choice Program"....................... 8
Section 2.50. "Rollover Contributions".......................... 9
Section 2.51. "Savings Account"................................. 9
Section 2.52. "Supplemental Deposits"........................... 9
Section 2.53. "Thrift and Tax-Deferred Savings Plan"............ 9
Section 2.54. "Trust Agreement"................................. 9
Section 2.55. "Trust Fund"...................................... 9
Section 2.56. "Trustee"......................................... 9
Section 2.57. "Year of Service"................................. 10
ARTICLE III PARTICIPATION........................................... 10
Section 3.1. Participation..................................... 10
Section 3.2. Effective Date of Participation................... 10
ARTICLE IV DEPOSITS.................................................. 11
Section 4.1. Basic Deposits.................................... 11
Section 4.2. Supplemental Deposits............................. 12
Section 4.3. Additional Lump Sum Deposits...................... 12
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.................. 14
Section 4.9. Code Section 401(m) Limits on Nondeferred
Deposits and Employer Contributions............ 14
Section 4.10. Changing Deposit Percentages...................... 15
Section 4.11. Suspension of Deposits............................ 15
Section 4.12. Limit on Additional Lump Sum Deposits............. 15
Section 4.13. Elections......................................... 15
Section 4.14. Rollover Contributions............................ 16
Section 4.15. Transfer from the Thrift Plan..................... 16
ARTICLE V EMPLOYER CONTRIBUTIONS..................................... 16
Section 5.1. Amount and Payment of Employer Contributions...... 16
Section 5.2. Employer Contributions in Enterprise Common Stock. 17
Section 5.3 Reduction of Employer Contributions by Forfeitures. 17
Section 5.4. Maximum Annual Additions.......................... 17
Section 5.5. Return of Employer Contributions.................. 17
Section 5.6. Allocation from Cash Balance Plan................. 17
ARTICLE VI SAVINGS ACCOUNT INVESTMENTS.............................. 18
Section 6.1. Investment of Deposits, Rollover Contributions
and Employer Contributions................. 18
Section 6.2. Change in Investment Direction.................. 18
Section 6.3. Transfer of Investments......................... 18
Section 6.4. Loans........................................... 19
ARTICLE VII SAVINGS ACCOUNT FUNDS................................... 19
Section 7.1. Establishment of Funds.......................... 19
Section 7.2. Enterprise Common Stock Fund.................... 21
ARTICLE VIII SAVINGS ACCOUNTS........................................ 21
Section 8.1. Establishment of Savings Accounts............... 21
Section 8.2. Measure of Savings Accounts..................... 21
Section 8.3. Valuation of Funds.............................. 22
Section 8.4. Valuation of Savings Accounts................... 22
Section 8.5. Separate Accounting............................. 22
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...... 23
Section 9.4. Dividends and Other Income...................... 23
Section 9.5. Voting of ESOP Account Common Stock............. 24
ARTICLE X VESTING................................................... 24
Section 10.1. Vesting of Employer Contributions................ 24
Section 10.2. Vesting of Deposits, Rollover Contributions and
the ESOP Account............................... 34
ARTICLE XI ACCOUNT DISTRIBUTIONS AND WITHDRAWALS................... 25
Section 11.1. Distribution Upon Retirement, Disability, Lay Off
or Death........................................ 25
Section 11.2. Distribution Upon Other Termination of Employment 25
Section 11.3. Withdrawal of Nondeferred Deposits and Employer
Contributions During Employment................ 26
Section 11.4. Withdrawals of Deferred Deposits During
Employment After Age 591/2..................... 27
Section 11.5. Hardship Withdrawals............................. 27
Section 11.6. Suspension of Participation...................... 29
Section 11.7. Transfer of Employment........................... 29
Section 11.8. Form of Distributions............................ 30
Section 11.9. Time of Distributions............................ 31
Section 11.10 Limitation on Post Age 701/2Distributions........ 32
Section 11.11 Distribution in the Case of Certain.............. 32
Section 11.12. Loans........................................... 33
Section 11.13. Inability to Locate Payee....................... 33
Section 11.14. Federal Income Tax Withholding on Distributions
and Withdrawals............................... 33
Section 11.15. Direct Rollover to Another Plan or IRA.......... 34
ARTICLE XII LIMITS ON BENEFITS AND CONTRIBUTIONS UNDER QUALIFIED
PLANS.......................................... 35
Section 12.1. Definitions...................................... 35
Section 12.2. Annual Addition Limits........................... 41
Section 12.3. Overall Limit.................................... 42
Section 12.4. Special Rules.................................... 43
ARTICLE XIII TOP-HEAVY REQUIREMENTS................................. 44
Section 13.1. Definitions...................................... 44
Section 13.2. General Requirements............................. 45
Section 13.3. Maximum Compensation............................. 45
Section 13.4. Vesting.......................................... 45
Section 13.5. Minimum Contributions............................ 46
Section 13.6. Participants Under Defined Benefit Plans......... 46
Section 13.7. Super Top-Heavy Plans............................ 47
Section 13.8. Determination of Top-Heaviness................... 47
Section 13.9. Determination of Super Top-Heaviness. ........... 47
Section 13.10. Calculation of Top-Heavy Ratios. ............... 47
Section 13.11. Cumulative Accounts and Cumulative Accrued
Benefits...................................... 48
ARTICLE XIV BENEFICIARY IN EVENT OF DEATH........................... 49
Section 14.1. Designation and Change of Beneficiary............ 49
ARTICLE XV ADMINISTRATION.......................................... 50
Section 15.1. Named Fiduciary.................................. 50
Section 15.2. Administration................................... 50
Section 15.3. Control and Management of Assets................. 51
Section 15.4. Benefits to be Paid from Trust................... 51
Section 15.5. Expenses......................................... 51
ARTICLE XVI CLAIMS PROCEDURE........................................ 52
Section 16.1. Filing of Claims................................. 52
Section 16.2. Appeal of Claims................................. 52
Section 16.3. Review of Appeals................................ 52
ARTICLE XVII MERGER OR CONSOLIDATION................................ 52
Section 17.1. Merger or Consolidation.......................... 52
ARTICLE XVIII NON-ALIENATION OF BENEFITS............................ 52
Section 18.1. Non-Alienation of Benefits....................... 52
ARTICLE XIX AMENDMENTS.............................................. 53
Section 19.1. Amendment Process................................ 53
ARTICLE XX TERMINATION............................................... 53
Section 20.1. Authority to Terminate............................ 53
Section 20.2. Distribution Upon Termination..................... 53
ARTICLE XXI PLAN CONFERS NO RIGHT TO EMPLOYMENT....................... 53
Section 21.1. No Right to Employment............................ 53
ARTICLE XXII ALTERNATE PAYEES........................................ 54
Section 22.1. Alternate Payees Under QDROs...................... 54
ARTICLE XXIII CONSTRUCTION........................................... 54
Section 23.1. Governing Law..................................... 54
Section 23.2. Headings.......................................... 54
<PAGE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
ARTICLE I
AMENDMENT - PURPOSE
Section 1.1. Amendment of the Plan. Public Service Electric and Gas Company
hereby further amends, on and effective August 11, 1997, its Employee Savings
Plan, a savings, profit-sharing and tax-credit employee stock ownership plan for
its Employees and those of its Affiliates.
Section 1.2. Purpose. The purpose of the Plan is to encourage and assist
thrift and savings by eligible bargaining unit employees of Public Service
Electric and Gas Company and 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 Savings 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 5% (7% effective January 1, 1997), except that Participants who are
Employees of CEA Newark Bay Services, Inc. shall be entitled to elect maximum
Basic Deposits of 6%, (or such lower maximum percentages 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
for Represented Employees of Public Service Electric and Gas Company or the
Public Service Electric and Gas Company Cash Balance Pension Plan.
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 which constitute a reimbursement of expenses;
(c) 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;
(6) Employer reimbursement towards adoption expenses; and
(7) Payments made expressly for the purpose of satisfying
withholding tax liabilities on awards earned pursuant to any
employee suggestion program of any Employer;
(d) 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;
(e) 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 Savings Account. The total of all Deposits made by or
on behalf of a Participant in any Plan Year shall not exceed 25% of the
Participant's Compensation for such Plan Year.
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. "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 2.18. "Employee" shall mean any individual in the employ of an
Employer who is included in a unit of employees covered by a collective
bargaining agreement. The term "Employee" shall not include 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 2.19. "Employer" shall mean the Company and any Participating
Affiliate.
Section 2.20. "Employer Contributions" shall mean the amounts contributed
to the Plan on behalf of Participants by an Employer in accordance with Article
V.
Section 2.21. "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 is established on behalf of a Participant.
Section 2.22. "Enterprise" shall mean the Company's parent, Public Service
Enterprise Group Incorporated.
Section 2.23. "Enterprise Common Stock" shall mean the Common Stock,
without nominal or par value, of Enterprise.
Section 2.24. "Enterprise Common Stock Fund" shall mean the Fund
established pursuant to Section 7.1(c).
Section 2.25. "Equities Fund" shall mean the Fund or Funds established
pursuant to Section 7.1(a).
Section 2.26. "Equities Index Fund" shall mean the Fund established
pursuant to Section 7.1(d).
Section 2.27. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, or as it may be amended from time to time.
Section 2.28. "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 2.29. "Fixed Income Fund" shall mean the Fund or Funds established
pursuant to Section 7.1(b).
Section 2.30. "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 2.31. "General Manager" shall mean the Director, Performance and
Rewards of the Company.
Section 2.32. "Government Obligations Fund" shall mean the Fund or Funds
established pursuant to Section 7.1(e).
Section 2.33. "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 17 1/2 hours 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 2.13) 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 2.34. "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 2.35. "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 2.36. "Investment Manager" shall mean an investment manager as
defined in ERISA section 3(38).
Section 2.37. "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 an Employer for which the
Participant is qualified.
Section 2.38. "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 2.39. "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.
Section 2.40. "Nondeferred" in reference to Deposits shall mean that such
Deposits are not deferred from current federal income taxation under Code
section 401(k).
Section 2.41. "Participant" shall mean any person who has an interest in
the Trust Fund.
Section 2.42. "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 2.43. "Plan" shall mean this Public Service Electric and Gas
Company Employee Savings Plan, including all amendments hereto which may
hereafter be made.
Section 2.44. "Plan Year" shall mean the calendar year.
Section 2.45. "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 2.46. "Recordkeeper" shall mean the person(s) or entity(ies)
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 2.47. "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 2.48. "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, the Cash Balance Pension Plan of
Public Service Electric and Gas Company or the Cash Balance Pension
Plan for Represented Employees of Public Service Electric and Gas
Company; and
(b) at or after age 65.
Section 2.49. "Retirement Choice Program" shall mean the Retirement Choice
Program for Represented Employees of Public Service Electric and Gas Company or
the Public Service Electric and Gas Company Retirement Choice Program.
Section 2.50. "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 2.51. "Savings 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
Savings 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 Savings 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.
(c) Employer Contribution Subaccount shall mean that portion of a
Participant's Savings 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.
Section 2.52. "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 more than the maximum permitted Basic Deposit.
Section 2.53. "Thrift Plan" shall mean the Public Service Electric and Gas
Company Thrift and Tax-Deferred Savings Plan; and
Section 2.54. "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.
Section 2.55. "Trust Fund" shall mean the aggregate of Additional Lump Sum
Deposits, Basic and Supplemental Deposits made by or on behalf of Participants,
Rollover Contributions and Employer Contributions, together with ESOP Accounts,
increased by any profits or income thereon, and decreased by any losses thereon
and by any payments made therefrom.
Section 2.56. "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 2.57. "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 an Employer 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 an Employer 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 Savings Account or accept a
Rollover Contribution on such Employee's behalf, when an ESOP Account was
established on his or her behalf or when the Employee elects to make transfers
of age and service credits pursuant to the terms of the Cash Balance Plan and
the Retirement Choice Program. An Employee who, at the time he/she becomes
employed by the Company or a Participating Affiliate is a participant in the
Thrift Plan shall be automatically enrolled in the Plan and account balances
held in that plan shall be transferred 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 establishing an
account to accept transfers of age and service credits pursuant to the terms of
the Cash Balance Plan and the Retirement Choice Program and (d) authorize his or
her Employer to accept a Rollover Contribution from another qualified corporate
plan in accordance with Section 4.12 and authorize the Recordkeeper and/or
Employer to pay any such amount to the Trustee for investment in a Savings
Account under the Plan in accordance with the Employee's instructions.
Participation in the Plan is entirely voluntary.
Section 3.2. Effective Date of Participation. The effective date of
participation shall be the earliest of the following (a) 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; (b) 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 Thrift Plan, shall be effective from the date he/she first
became a participant in that plan; (c) participation in the Plan for an Employee
making a Rollover Contribution or a transfer of age and service credits pursuant
to the terms of the Cash Balance Plan and the Retirement Choice Program shall be
effective as soon as practicable after such Employee's Rollover Contribution or
transferred age and service credits are accepted for transfer; (d) 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.
ARTICLE IV
DEPOSITS
Section 4.1. Basic Deposits.
(a) An Eligible Employee who is not employed by CEA Newark Bay Services,
Inc. may elect:
(1) 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 7% each pay period; or
(2) to have Basic Deferred Deposits made to the Plan by the Company
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 7% each pay
period; or
(3) to make, or have made by the Company on his or her behalf, any
combination of Deposits under (1) or (2) above, totaling up to 7%
of his or her Compensation each pay period;
(b) An Eligible Employee who is employed by CEA Newark Bay Services, Inc.
may elect:
(1) to make Basic Nondeferred Deposits to the Plan in an amount equal
to any integral multiple of 1%, up to 6%, of his or her
Compensation each pay period; or
(2) to have Basic Deferred Deposits made to the Plan by his or her
Employer on his or her behalf in an amount equal to any integral
multiple of 1%, up to 6%, of his or her Compensation each pay
period; or
(3) to make, or have made by his or her Employer on his or her
behalf, any combination of Deposits under (1) or (2) above,
totaling up to 6% 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 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 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
(a) who is not employed by CEA Newark Bay Services, Inc. and who is
electing the maximum permitted Basic Deposit to the Plan may also
elect:
(1) to make Supplemental 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 18% of his or her Compensation each
pay period; or
(2) to have Supplemental Deferred Deposits made by the Company on his
or her behalf in an amount equal to any integral multiple of 1%
up to a total of 18%, of his or her Compensation each pay period;
or
(3) to make, or have made by the Company on his or her behalf, any
combination of the Deposits specified in (1) or (2) above,
totaling up to 18% of his or her Compensation each pay period;
(b) who is employed by CEA Newark Bay Services, Inc. and who is electing
the maximum permitted Basic Deposit to the Plan may also elect:
(1) 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% of his or her Compensation each
pay period; or
(2) 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% of his or her
Compensation each pay period; or
(3) to make, or have made by an Employer on his or her behalf, any
combination of the amounts specified in (1) or (2) above,
totaling up to 19% 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 Savings Account in accordance with his or her then current
investment direction.
Section 4.5. Limit on Deferred Deposits. In no event may the sum of a
Participant's Deferred Deposits (including all other deferrals under other
plans, contracts, or arrangements maintained by the Company or an Affiliate on
such Participant's behalf) attributable to any taxable year of such Participant
(presumably the calendar year) exceed the amount permitted by Code section
402(g) for the calendar year in which such taxable year commences. 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; provided, however, that
the "Excess Deferral Amount" to be distributed for a taxable year will
be reduced by excess Deferred Deposits previously distributed to the
Participant during the Plan Year beginning in such taxable year of the
Participant.
(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) Limitation. Deferred Deposits on behalf of Highly Compensated
Participants for a Plan Year shall not exceed the amount permissible
to meet the nondiscrimination test of Code section 401(k).
(b) Distribution of Excess Contributions. The Committee shall, consistent
with regulations under the Code, establish nondiscriminatory rules to
meet the requirements of this Section 4.7; provided, however, that the
amount of Deferred Deposits which must be distributed to any
Participant under this section for a Plan Year shall be reduced by
"Excess Deferral Amounts" previously distributed to the Participant
for the taxable year of such Participant ending during the Plan Year.
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 Record Keeper 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 Record Keeper.
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 Record Keeper 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 Record
Keeper, and shall continue until such Participant elects to have
Deposits resumed by arranging therefor with the Record Keeper. Payroll
deductions under the Plan shall begin again as soon as practicable
after such notice is received by the Record Keeper.
(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 further 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 that 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 Thrift Plan. Any Employee who, at the time
he/she becomes employed by the Company or a Participating Affiliate, is a
participant in the Thrift Plan, shall automatically be enrolled in the Plan and
all balances in the Thrift Plan shall be transferred to the Plan and all
contribution and investment elections in effect for the Thrift 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.
(a) Each Employer, other than CEA Newark Bay Services, Inc., shall
contribute to the Plan on behalf of Participants who are Eligible
Employees, who are its Employees and who are making or having Basic
Deposits to the Plan made on their behalf, 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.
(b) CEA Newark Bay Services, Inc. shall contribute to the Plan on behalf
of Participants who are Eligible Employees, who are its Employees and
who are making or having Basic Deposits to the Plan made on their
behalf an amount equal to 50% of such aggregate Basic Deposits, except
to the extent that such Basic Deposits are reduced or distributed as
provided on 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 Employer.
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 5% of Compensation for
Participants who are employed by an Employer other than CEA Newark Bay Services,
Inc. 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 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 allocated to them under the Cash
Balance Plan made as an Employer Contribution to their Savings Accounts under
this Plan. All amounts so elected shall be accepted by the Trustee and invested
in accordance with Section 6.1. No amounts attributable to Employer
Contributions resulting from Participant elections made pursuant to the Cash
Balance Plan and the Retirement Choice Program shall be available for withdrawal
from the Plan until the Participant's termination of employment by the Company
or any Affiliate.
ARTICLE VI
SAVINGS 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
Savings 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 5% of Compensation of Participants who are Employees of Employers
other than CEA Newark Bay Services, Inc., Employer Contributions with respect to
Basic Deposits shall be invested by the Trustee for the Account of the 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 Savings 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 Thrift Plan, shall continue the same investment
elections as he/she maintained in the Thrift Plan until a change in investment
direction is made in conformity with Section 6.2 hereof.
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 Record Keeper. 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 the limitation contained
in Section 5.2 with respect to 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% 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 Record Keeper.
Section 6.4. Loans. Participants may receive loans from their Savings
Accounts under the provisions of Section 11.12. A loan to a Participant shall be
considered an investment of such Participant's Savings 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, from that
portion of a Participant's Savings Account attributable to Employer
Contributions made in shares of Enterprise Common Stock or from that portion of
a Participant's Savings Account attributable to age and service credits
transferred from the Cash Balance Plan as a result of Participant elections made
pursuant to the Cash Balance Plan and the Retirement Choice Program.
ARTICLE VII
SAVINGS 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 Savings 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 Employer 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
SAVINGS ACCOUNTS
Section 8.1. Establishment of Savings Accounts. The Committee shall
maintain or cause to be maintained a Savings 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 Savings Account shall be identified as to Nondeferred or
Deferred.
Section 8.2. Measure of Savings 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
canceled 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 increased 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 Savings 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 Savings Account shall at all times be separately accounted for
from other amounts in such Savings 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
Savings 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 Savings
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 Savings Account, shall be
invested in one or more (in multiples of 1% up to an aggregate of
100%) of the Savings 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.
(e) 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
Employer 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 Savings 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 Savings Account attributable to
Employer Contributions for all Plan Years.
(b) 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 Savings 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 Savings 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 date 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.
Any Participant who receives a distribution under this Section 11.2 shall
be prohibited from participating in the Plan for the period of three months
following such distribution.
Section 11.3. Withdrawal of Nondeferred Deposits and Employer Contributions
During Employment.
(a) A Participant may, by application to the Record Keeper 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
(except for Employer Contributions resulting from Participant
elections made pursuant to the Cash Balance Plan and the Retirement
Choice Program) 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 Savings 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 Savings 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 Savings 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 Record Keeper.
(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 Savings 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 Savings 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 Savings 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 the Company or an
Affiliate,
(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 Savings 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 or resulting
from Participant elections made pursuant to the Cash Balance Plan and
the Retirement Choice Program shall be permitted prior to the date
that the Participant terminates his or her 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
Savings 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 Savings 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 of the Company, distribution of such Participant's
Account shall be deferred until the Participant is no longer in the employ of
the Company 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, except
that: (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 Savings 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 Savings Account as of the applicable date divided by the
number of payments remaining. If a Participant shall die prior to
complete distribution of his or her Savings Account pursuant to this
subparagraph (b)(1), the value of the Participant's Savings 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 Savings Account determined as of the
business day coinciding with or next following the date of the
Participant's death. (2) A Participant may, subsequent to termination
of employment but prior to his or her Required Beginning Date, upon
application to the Committee in conformance with Section 11.1 or 11.2,
withdraw all or part of such participant's Account in minimum amounts
of $200.00 per withdrawal.
(c) If no election is made under subparagraph (b) above, and the value of
a Participant's Savings Account, when aggregated with the value of any
ESOP 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.
(d) Anything to the contrary notwithstanding, any Savings Account
distribution to be made to a Participant under subparagraph (b) 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.
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 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,
subject to 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 or resulting from Participant
elections made pursuant to the Cash Balance Plan and the Retirement
Choice Program. The Director 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 on a 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."
<PAGE>
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.
(8) 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.
(9) 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.
(10) 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), below, 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)); or
(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.
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 the Company 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.
<PAGE>
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, subject to collective
bargaining, 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 the Company 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 Accounting Period 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.
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-18417 and 33-44582 on Forms S-8 of Public Service Enterprise Group
Incorporated of our report dated June 5, 1998 appearing in this Annual Report
on Form 11-K of the Public Service Electric and Gas Company Employee Savings
Plan for the year ended December 31, 1997.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 23, 1998
