================================================================================
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, 1998 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 07102
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 THE PRUDENTIAL LIFE INSURANCE
PRIMCO CAPITAL MANAGEMENT COMPANY OF AMERICA
101 SOUTH FIFTH STREET, SUITE 2150 PRUDENTIAL PLAZA
LOUISVILLE, KENTUCKY 40202 NEWARK, NEW JERSEY 07101
PRINCIPAL MUTUAL LIFE JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY INSURANCE COMPANY
THE PRINCIPAL FINANCIAL GROUP JOHN HANCOCK PLACE, 27th FLOOR
DES MOINES, IOWA 50392-0001 BOSTON, MASSACHUSSETTS 02117
THE CHASE MANHATTAN BANK STATE STREET BANK AND TRUST COMPANY
270 PARK AVENUE 225 FRANKLIN STREET
NEW YORK, NEW YORK 10017 BOSTON, MASSACHUSSETTS 02110-2804
J.P. MORGAN CAISSE des DEPOTS
60 WALL STREET 9 WEST 57th STREET
NEW YORK, NEW YORK 10260 NEW YORK, NEW YORK 10019
METROPOLITAN LIFE INSURANCE Enterprise Common Stock Fund and ESOP Fund
COMPANY PUBLIC SERVICE ENTERPRISE GROUP
ONE MADISON AVENUE INCORPORATED
NEW YORK, NEW YORK 10010-3690 80 PARK PLAZA
NEWARK, NEW JERSEY 07101-1171
ALLSTATE LIFE INSURANCE COMPANY Large Company Stock Index Fund
ALLSTATE PLAZA WEST THE VANGUARD GROUP
3100 SANDERS ROAD INSTITUTIONAL DIVISION
NORTHBROOK, ILLINOIS 60062 P.O. BOX 2900
VALLEY FORGE, PENNSYLVANIA 19482
NEW YORK LIFE INSURANCE Intermediate Government Securities Fund
COMPANY DELAWARE MANAGEMENT COMPANY INC.
501 MADISON AVENUE ONE COMMERCE SQUARE
NEW YORK, NEW YORK 10010 2005 MARKET STREET
PHILADELPHIA, PENNSYLVANIA 19103
FIRST ALLMERICA FINANCIAL LIFE International Stock Fund
INSURANCE COMPANY T. ROWE PRICE INC.
440 LINCOLN STREET 100 EAST PRATT STREET
WORCESTER, MASSACHUSETTS 01653 BALTIMORE, MARYLAND 02120
AIG LIFE INSURANCE COMPANY Mid/Small Company Stock Fund
ONE ALICO PLAZA PUTNAM INVESTMENTS
P.O. BOX 667 P.O. BOX 41203
WILMINGTON, DELAWARE 19899 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, 1998 AND 1997...................................... 5-8
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997........................ 9-12
NOTES TO FINANCIAL STATEMENTS........................................... 13-26
SIGNATURES.............................................................. 27
EXHIBIT INDEX........................................................... 28
<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, 1998 and 1997, 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, 1998
and 1997, 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 4, 1999
<PAGE>
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1998
<CAPTION>
Supplemental Information by Fund
-------------------------------------------------------------------
Intermediate
Stable Enterprise Large Company Government International
Value Fund Common Stock Stock Index Securities Stock
Total 3/98 Fund Fund Fund Fund
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
Plan interest in Master Employee
Benefit Plan Trust $339,949,991 $108,157,316 $ 45,636,056 $86,136,686 $ 3,235,497 $ 10,333,701
Receivables-Interest and Dividends 715,103 595,946 119,039 - - -
----------------------------------------------------------------------------------
Total Assets $340,665,094 $108,753,262 $ 45,755,095 $86,136,686 $ 3,235,497 $ 10,333,701
==================================================================================
LIABILITIES
Accounts Payable $ 435,045 $ 235,729 $ 143,505 $ 323,469 $ (10,834) $ (146,402)
----------------------------------------------------------------------------------
Total Liabilities 435,045 235,729 143,505 323,469 (10,834) (146,402)
----------------------------------------------------------------------------------
Net Assets Available for Benefits $340,230,049 $108,517,533 $ 45,611,590 $85,813,217 $ 3,246,331 $ 10,480,103
==================================================================================
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, 1998
<CAPTION>
Supplemental Information by Fund (Concluded)
------------------------------------------------------------------------------------------------
Mid/Small Cons 3/98 Mod 3/98 Aggressive
Company Pre-Mix Pre-Mix Pre-Mix ESOP Holding Trust
Stock Fund Portfolio Portfolio Portfolio Fund Account Loan Fund
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
Plan interest in Master Employee
Benefit Plan Trust $ 21,621,240 $ 6,426,696 $ 13,963,043 $ 19,500,369 $ 10,169,104 $ 589,355 $ 14,180,928
Receivables-Interest
and Dividends - - - - 118 - -
------------------------------------------------------------------------------------------------
Total Assets $ 21,621,240 $ 6,426,696 $ 13,963,043 $ 19,500,369 $ 10,169,222 $ 589,355 $ 14,180,928
================================================================================================
LIABILITIES
Accounts Payable $ (318,805) $ (50,941) $ (7,140) $ (10,208)$ - $ 327,882 $ (51,210)
------------------------------------------------------------------------------------------------
Total Liabilities (318,805) (50,941) (7,140) (10,208) - 327,882 (51,210)
------------------------------------------------------------------------------------------------
Net Assets Available
for Benefits $ 21,940,045 $ 6,477,637 $ 13,970,183 $ 19,510,577$ 10,169,222 $ 261,473 $ 14,232,138
================================================================================================
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
--------------------------------------------------------------------------
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>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Year Ended December 31, 1998
<CAPTION>
Supplemental Information by Fund
------------------------------------------------------------------
Stable Stable Enterprise
Value Value Fund Common Stock
ADDITIONS Total Fund 3/98 Fund
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Participant Deposits $ 30,676,975 $ 2,216,181 $ $ 7,312,102 $ 4,238,361
Employers Contributions 7,646,330 655,143 2,127,435 602,228
Interfund Transfers - net - (100,770,075) 97,880,420 (85,417)
-------------------------------------------------------------------------------------
Total Deposits and Contributions 38,323,305 (97,898,751) 107,319,957 4,755,172
Plan Interest in Master
Trust Investment Income 48,923,493 1,676,870 5,045,500 10,661,851
-------------------------------------------------------------------------------------
Total Additions 87,246,798 (96,221,881) 112,365,457 15,417,023
-------------------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 15,190,853 2,789,858 4,337,691 1,749,230
Forfeitures 2,827 63 - 985
Administrative Expenses 698,504 79,796 197,538 83,819
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan (2,329,757) 45,701 (687,305) (346,283)
-------------------------------------------------------------------------------------
Total Deductions 13,562,427 2,915,418 3,847,924 1,487,751
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 73,684,371 (99,137,299) 108,517,533 13,929,272
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 266,545,678 99,137,299 - 31,682,318
-------------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $ 340,230,049 $ - $ 108,517,533 $ 45,611,590
=====================================================================================
---------------------------------------------------------------
Intermediate
Large Company Government International
Stock Index Securities Stock
ADDITIONS Fund Fund Fund
---------------------------------------------------------------
<S> <C> <C> <C>
Participant Deposits $ 7,453,538 $ 426,320 $ 1,381,603
Employers Contributions 1,873,878 112,338 335,750
Interfund Transfers - net 197,275 435,803 (891,634)
-----------------------------------------------------------
Total Deposits and Contributions 9,524,691 974,461 825,719
Plan Interest in Master
Trust Investment Income 18,291,107 205,842 1,343,005
-----------------------------------------------------------
Total Additions 27,815,798 1,180,303 2,168,724
-----------------------------------------------------------
DEDUCTIONS
Withdrawals 3,005,277 106,798 256,468
Forfeitures 802 99 33
Administrative Expenses 168,986 5,667 22,245
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan (930,245) (13,608) 39,877
-----------------------------------------------------------
Total Deductions 2,244,820 98,956 318,623
-----------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 25,570,978 1,081,347 1,850,101
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 60,242,239 2,164,984 8,630,002
-----------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $ 85,813,217 $ 3,246,331 $ 10,480,103
===========================================================
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, 1998
<CAPTION>
Supplemental Inforamtion by Fund (CONCLUDED)
---------------------------------------------------------------------------------
Mid/Small Conservative Cons 3/98 Moderate Mod 3/98
Company Pre-Mix Pre-Mix Pre-Mix Pre-Mix
ADDITIONS Stock Fund Portfolio Portfolio Portfolio Portfolio
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Participant Deposits $ 2,488,439 $ 129,749 $ 461,823 $ 375,278 $ 1,378,344
Employers Contributions 601,014 32,455 112,805 101,650 365,474
Interfund Transfers - net 1,797,677 (4,874,120) 5,598,193 (11,800,316) 11,647,400
---------------------------------------------------------------------------------
Total Deposits and Contributions 4,887,130 (4,711,916) 6,172,821 (11,323,388) 13,391,218
Plan Interest in Master
Trust Investment Income 3,045,809 290,737 447,106 941,398 966,722
---------------------------------------------------------------------------------
Total Additions 7,932,939 (4,421,179) 6,619,927 (10,381,990) 14,357,940
---------------------------------------------------------------------------------
DEDUCTIONS
Withdrawals 478,690 154,886 129,276 94,505 365,735
Forfeitures 221 - - 174 53
Administrative Expenses 40,471 3,460 8,685 7,960 19,922
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan (418,159) 32,908 4,329 12,802 2,047
---------------------------------------------------------------------------------
Total Deductions 101,223 191,254 142,290 115,441 387,757
---------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 7,831,716 (4,612,433) 6,477,637 (10,497,431) 13,970,183
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 14,108,329 4,612,433 - 10,497,431 -
---------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $ 21,940,045 $ - $ 6,477,637 $ - $13,970,183
=================================================================================
Aggressive
Pre-Mix ESOP Holding Trust
ADDITIONS Portfolio Fund Account Loan Fund
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Participant Deposits $ 2,815,237 $ - $ - $ -
Employers Contributions 726,160 - - -
Interfund Transfers - net (793,602) (306,525) - 1,964,921
------------------------------------------------------------------
Total Deposits and Contributions 2,747,795 (306,525) - 1,964,921
Plan Interest in Master
Trust Investment Income 3,065,612 2,754,835 187,099 -
------------------------------------------------------------------
Total Additions 5,813,407 2,448,310 187,099 1,964,921
------------------------------------------------------------------
DEDUCTIONS
Withdrawals 542,300 973,732 - 206,407
Forfeitures 397 - - -
Administrative Expenses 38,795 21,160 - -
Transfer to/(from) Thrift &
Tax-Deferred Savings Plan (146,320) 17,589 - 56,910
------------------------------------------------------------------
Total Deductions 435,172 1,012,481 - 263,317
------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 5,378,235 1,435,829 187,099 1,701,604
NET ASSETS AVAILABLE FOR
BENEFITS - BEGINNING OF YEAR 14,132,342 8,733,393 74,374 12,530,534
------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS - END OF YEAR $ 19,510,577 $10,169,222 $ 261,473 $ 14,232,138
==================================================================
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>
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 and 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
and 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 December 21, 1998, effective January 1, 1998. The Plan amendments made
during 1998 provide for the following: PSEG Newark Bay Services, Inc. (formerly
known as CEA Newark Bay Services, Inc.) employees are permitted to increase
Basic Deposit from 6% to 8% and the merger, for investment management purposes,
of the Plan and Thrift Plan Stable Value Funds, Conservative and Moderate
Pre-Mixed portfolios.
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 is 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 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 as
defined by the Plan. 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).
Participants employed by PSEG 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, PSEG 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 and subject to the limitations of the Internal Revenue Code of 1986,
as amended (IRC).
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
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 Master
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 PSEG Newark Bay
Services, Inc. and 5% for all others, which are invested in the Enterprise
Common Stock Fund.
Bankers Trust Company is the Trustee of the Master Trust established pursuant to
the Plan. Hewitt Associates is the Record Keeper for the Plan.
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 1998, the rates of interest on
loans granted to Participants, by quarter and starting with the first quarter,
were 8-1/2%, 8-1/2%, 8-1/2%, 8-1/4%. (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.
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 1998, the
composite rate of interest earned by such assets so invested was not less than
6.35%.
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.
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 for the administration of the
Plan, including taxes and brokerage costs, are deducted from the Master Trust
Fund.
The assets of the Enterprise Common Stock Fund and the ESOP Fund are invested in
shares of Enterprise Common Stock. Shares of Enterprise Common Stock required
for the Enterprise 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 Enterprise Common Stock Fund is in a "buy" position, the
Enterprise 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
Enterprise 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 Savings Account Investment Funds in the same manner as the
Participant's then current-investment direction for Deposits and Employer
Contributions.
Loan amounts are taken from sub-accounts of a Participant's 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 Master 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
Investment 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 at the Trustee Bank 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.
3. INVESTMENTS
The financial statements of the Plan include the following:
A. Savings Account Investment Funds
(1) On March 31, 1998, the assets of the Stable Value Fund were
merged, for investment purposes, with the Stable Value Fund
assets of the Thrift Plan. 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 values.
As of December 31, 1998, the Plan's interest in the following
GICs was approximately 33%.
The following Traditional GICs are continuing in effect:
(i) Two four and one-half year contracts with Metropolitan Life
Insurance Company, expiring December 31, 1999, effective
interest rates of 8.12% and 8.17%, respectively, contract
values of $6,829,806 and $16,123,205, respectively;
(ii) A five year contract with the Principal Life Insurance
Company, expiring on December 31, 1999, effective interest
rate of 8.15%, contract value of $17,777,206;
(iii)A five year contract with First Allmerica Financial Life
Insurance Company, formerly known as State Mutual Life
Insurance Company, expiring January 4, 1999, effective
interest rate of 5.66%, contract value of $10,532,028;
(iv) Two five year contracts with New York Life Insurance
Company, expiring June 30, 1999, each with an effective
interest rate of 7.07%, contract values of $6,016,969 and
$9,485,531, respectively;
(v) A five year contract expiring January 4, 1999, with Allstate
Life Insurance Company, effective interest rate of 5.65%,
contract value of $7,879,645;
(vi) A five year contract expiring December 31, 1999, with
Prudential Life Insurance Company, effective interest rate
of 8.01%, contract value of $15,630,942; and
(vii)A five year contract expiring June 30, 2000, with AIG Life
Insurance Company, effective interest rate of 6.14%,
contract value of $8,979,549.
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 crediting
rate as of December 31, 1998 of 6.91% and a contract value
of $63,514,786. The crediting rate for the Synthetic GIC
effective January 1, 1999 through March 31, 1999 was 6.91%;
(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, 1998 of 6.48% and a contract value of
$35,249,217. The crediting rate effective March 31, 1999 was
6.76%;
(iii)An open-ended contract with Allstate Life Insurance Company
as the book value wrapper and PRIMCO Capital Management
managing the underlying portfolio providing an effective
crediting rate as of December 31, 1998 of 5.89% and a
contract value of $57,920,302. The crediting rate effective
March 31, 1999 was 5.96%;
(iv) An open-ended contract with State Street Bank and Trust
Company as the book value wrapper and PRIMCO Capital
Management managing the underlying portfolio providing an
effective crediting rate as of December 31, 1998 of 5.42%
and a contract value of $30,846,390. The crediting rate
effective March 31, 1999 was 5.21%;
(v) A pooled separate account expiring May 1, 2007 with John
Hancock Mutual Life Insurance Company as the book value
wrapper and managing the underlying portfolio providing an
effective crediting rate as of December 31, 1998 of 5.18%
and a contract value of $8,198,099. The crediting rate
effective March 31, 1999 was 5.28%;
(vi) Two five year floating rate contracts with Caisse des
Depots, expiring November 26, 2002, effective crediting rate
on each contract as of December 31, 1998 of 4.80%, contract
values of $4,018,540 and $2,009,270. The crediting rate
effective on each contract as of March 31, 1999 was 5.29%;
(vii)Two five year floating rate contracts with Caisse des
Depots, expiring December 12, 2002, effective crediting rate
on each contract as of December 31, 1998 of 4.52%, contract
values of $4,009,701 and $2,004,851. The crediting rate
effective on each contract as of March 31, 1999 was 5.32%;
and
(viii) A five year floating-rate contract with Caisse des Depots,
expiring February 3, 2003, effective crediting rate as of
December 31, 1998 of 4.32%, contract value of $3,020,580.
The crediting rate effective March 31, 1999 was 4.73%.
(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 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, a no-load mutual fund managed by the
Delaware Management Company, Inc. The prospectus for 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 the T. Rowe Price International Stock Fund, a
no-load mutual fund managed by Rowe Price-Fleming International,
Inc. The prospectus for the T. Rowe Price International Stock
Fund indicates that such fund invests primarily in common stocks
of established, non-U.S. companies.
(6) The assets of the Mid/Small Company Stock Fund are invested in
the capital stock of the Putnam Vista Fund, a no-load mutual fund
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.
(7) On March 31, 1998, the assets of the Conservative Pre-Mix
Portfolio were merged, for investment purposes, with the
Conservative Pre-Mix Portfolio assets of the Thrift Plan. 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) On March 31, 1998, the assets of the Moderate Pre-Mix Portfolio
were merged, for investment purposes, with the Moderate Pre-Mix
Portfolio assets of the Thrift Plan. 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 1998.
<PAGE>
C. Participants
Participants
As of December 31,
------------------
1998 1997
---- ----
Total Plan Participants 6,096 6,077
Participants by Fund
--------------------
Stable Value Fund 3,921 4,146
Enterprise Common Stock Fund 5,224 5,098
Large Company Stock Index Fund 3,293 3,051
Intermediate Government Securities Fund 539 493
International Stock Fund 1,253 1,271
Mid/Small Company Stock Fund 1,668 1,404
Conservative Pre-Mix Portfolio 487 396
Moderate Pre-Mix Portfolio 1,048 917
Aggressive Pre-Mix Portfolio 1,467 1,265
ESOP Fund 988 1,067
<PAGE>
4. INVESTMENT OF THE PLAN AND THRIFT PLAN IN THE MASTER TRUST
The Plan's investments are 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, 1998 and 1997. As of December 31, 1998 and 1997, the Plan's interest in such
assets of the Master Trust were approximately 36% and 35%, respectively.
December 31,
------------
1998 1997
---- ----
Investments at fair value:
Participant Loans $ 25,454,147 $ 23,576,663
Cash and Cash equivalents 45,231,345 47,743,519
Common Stock of Public
Service Enterprise Group 119,349,502 92,087,265
Mutual Funds 424,228,419 326,616,013
Guaranteed Insurance Contracts 310,046,617 279,675,584
------------- -------------
$ 924,310,030 $ 769,699,044
============= =============
<TABLE>
<CAPTION>
December 31,
------------
1998 1997
---- ----
<S> <C> <C>
Investment income recognized:
Net appreciation in fair value of Mutual Funds* $ 79,392,487 $ 57,823,392
Net appreciation/(depreciation) in fair value of
Common Stock of Enterprise 24,932,427 14,876,883
Interest from Mutual Funds 1,074,445 864,144
Interest from Common Stock of
Enterprise Funds 272,697 319,066
Interest from Guaranteed Insurance Contracts 20,481,619 20,956,370
Dividends from Common Stock of Enterprise 5,405,541 5,268,123
------------- -------------
$ 131,559,216 $ 100,107,978
============= =============
* Includes Dividends earned from Mutual Funds.
</TABLE>
<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:
<TABLE>
<CAPTION>
Investment Fund Year Unit Value (Dollars) Number of Units
- --------------- ---- -------------------- ---------------
<S> <C> <C> <C>
Stable Value Fund (1) 1998 $10.47 10,365,053
1997 $12.87 7,702,788
Enterprise Common Stock Fund 1998 $14.42 3,164,023
1997 $11.55 2,742,071
Large Company Stock Index Fund 1998 $19.93 4,304,776
1997 $15.51 3,884,340
Intermediate Govt. Securities Fund 1998 $12.33 263,237
1997 $11.44 189,184
International Stock Fund 1998 $13.02 804,676
1997 $11.24 767,864
Mid/Small Company Stock Fund 1998 $14.64 1,498,289
1997 $12.28 1,149,213
Conservative Pre-Mix Portfolio (1) 1998 $10.71 605,098
1997 $11.71 393,920
Moderate Pre-Mix Portfolio (1) 1998 $10.73 1,302,363
1997 $11.94 878,894
Aggressive Pre-Mix Portfolio 1998 $14.64 1,332,944
1997 $12.26 1,152,300
- --------------------------------------------------
(1) As a result of the merger of Stable Value Funds, Conservative and Moderate
Pre-Mixed Portfolios on March 31, 1998 unit values were reset to $10.00.
</TABLE>
<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
---- --------------- ----------------
1998 $40.0000 254,231
1997 $31.6875 275,610
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 30, 1999
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Number
- --------------
1 Public Service Electric and Gas Company Employee Savings Plan, amended
December 21, 1998.
2 Independent Auditors' Consent.
EXHIBIT 1
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
Amended December 21, 1998, Effective January 1, 1998
<PAGE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
EMPLOYEE SAVINGS PLAN
TABLE OF CONTENTS
Page
----
ARTICLE I Amendment and Restatement - Purpose.................... 1
Section 1.1 Amendment of the Plan............................ 1
Section 1.2 Purpose.......................................... 1
ARTICLE II Definitions............................................ 1
Section 2.1 Account.......................................... 1
Section 2.2 Active Participant............................... 1
Section 2.3 Additional Lump Sum Deposits..................... 1
Section 2.4 Affiliate........................................ 1
Section 2.5 Balanced Fund.................................... 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 Employee Savings 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/ Reallocation of Investments...........18
Section 6.4 Quarterly Automatic Rebalancing.................19
Section 6.5 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.......................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.......................24
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 Partial Distributions Following Termination of
Employment....................................25
Section 11.4 Withdrawal of Nondeferred Deposits
and Employer Contributions During Employment.26
Section 11.5 Withdrawals of Deferred Deposits During
Employment After Age 591/2...................27
Section 11.6 Hardship Withdrawals............................27
Section 11.7 Suspension of Participation.....................29
Section 11.8 Transfer of Employment..........................29
Section 11.9 Form of Distributions...........................30
Section 11.10 Time of Distributions..........................31
Section 11.11 Limitation on Post Age 701/2 Distributions......32
Section 11.12 Distribution in the Case of Certain
Disabilities................................32
Section 11.13 Loans...........................................33
Section 11.14 Inability to Locate Payee.......................33
Section 11.15 Federal Income Tax Withholding on
Distributions and Withdrawals................33
Section 11.16 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
Section 15.6 Overpayments....................................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..........................54
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 December 21, 1998 and effective January 1,
1998, 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 7%, except that Participants who are Employees of CEA Newark Bay
Services, Inc. shall be entitled to elect maximum Basic Deposits of 8%, (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 the Company or any Affiliate 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 payments toward reimbursement of 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) Commodities and services allowance;
(3) Equalization Pay;
(4) Transportation allowance;
(5) Foreign service pay; and
(6) Hardship allowance; and
(e) any amounts received by a Participant as a result of the sale of
vacation entitlements.
In any case, however, In any case, however, Compensation of each
Participant taken into account for any Plan Year shall not exceed the applicable
compensation limit for such year determined under Code Section 401(a)(17). The
compensation limit for a Plan Year beginning on or after January 1, 1997 is
$160,000 (as indexed). The Pension of a Code section 401(a)(17) Employee (as
defined in Treasury Regulation section 1.401(a)(17)-1(e)(2)(I)) shall be
determined by utilizing the method described in Treasury Regulation section
1.401(a)(4)-13(c)(4)(iii) (formula with extended wear-away).
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 person, included in a unit of
Employees covered by a collective bargaining agreement who is an employee (such
term having its customary meaning) of the Company or a Participating Affiliate
and who is receiving remuneration for personal services rendered to the Company
or Participating Affiliate other than (1) solely as a director of the Company or
a Participating Affiliate, (2) as a consultant or (3) as an independent
contractor (regardless of whether a determination is made by the Internal
Revenue Service or other governmental agency or court after the individual is
engaged to perform such services that the individual is an employee of the
Company or Participating Affiliate for the purposes of the Code or otherwise).
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 or Funds
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) for the preceding Plan Year, received Compensation from the
Company or an Affiliate in excess of $80,000 (as adjusted
for cost of living increases); and
(3) if the Company or an Affiliate elects, of was in the
top-paid group of Employees for the preceding Plan Year.
(b) 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.
(c) 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.
(d) For purposes of determining the top-paid group under paragraph
(d), the following Employees shall be excluded: (1) Employees who
have not completed six 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)).
(e) 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.
(f) 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. "Record Keeper" 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(s) or corporation(s)
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 Record Keeper 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 Record Keeper 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, (d) authorize his or
her Employer to accept a Rollover Contribution from another qualified corporate
plan in accordance with Section 4.12 and (e) authorize the Record Keeper 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 Record Keeper 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 8%, 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 8%, 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 8% 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 17% 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
17% 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 17% 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 Record Keeper 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 Record Keeper 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. Each
Employer shall contribute to the Plan on behalf of Participants who are Eligible
Employees, who are its Employees and who are making or having 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 11.4.
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.
Employer Contributions with respect to Basic Deposits in excess of 6% of
Compensation for Participants who are employed by 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. Notwithstanding the foregoing, any portion of a
Participant's Account invested in the Enterprise Common Stock Fund that is
apportioned for an alternate payee under a QDRO in accordance with Article XXII
may be transferred out of such Fund or withdrawn from the Plan at any time.
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 11.14.
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 made in shares of Enterprise
Common Stock, 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/ Reallocation of Investments. Subject to Section
5.2 with respect to the limitation on the transfer of Employer Contributions
made in shares of Enterprise Common Stock, a Participant may:
(a) 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 integral multiples of
1%, 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; or
(b) reallocate all or any part (in integral multiples of 1%) of his
or her interest among the Funds, except that no funds may be
reallocated into or out of a Participant's ESOP Account. Any such
reallocation shall be subject to such contractual limitations as
may exist from time to time under the contracts governing
investments held in such Funds. A direction to reallocate 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
reallocation shall be made as soon as practicable after receipt
of the notice of such reallocation by the Record Keeper;
Section 6.4. Quarterly Automatic Rebalancing. Subject to the limitation
contained in Section 5.2 with respect to the transfer of Employer Contributions
made in shares of Enterprise Common Stock and excluding investments in the
Participant's ESOP Account, a Participant may elect automatically rebalance his
or her Account among some or all of the Funds at the end of each calendar
quarter. Any such rebalancing shall also be subject to those contractual
limitations regarding transfers from certain Funds as may exist from time to
time under the contracts governing investments held in such Funds. A direction
to elect to quarterly automatic rebalancing of a Participant's Account shall be
made by giving notice in the form prescribed by the Committee and shall be in
effect until an election is made to discontinue such rebalancing. Subject to any
applicable contractual limitations, such rebalancing shall commence as soon as
practicable after the Record Keeper's receipt of the notice of such election and
shall occur on, or as soon as practicable following, the end of each subsequent
calendar quarter.
Section 6.5 Loans. Participants may receive loans from their Savings
Accounts under the provisions of Section 11.13. 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. Except as provided in subparagraph
7.1(b), 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.
At the election of the Committee, any Fixed Income Fund established
hereunder may be merged or combined with the fixed income fund maintained by the
Company pursuant to the Employee Savings Plan.
(c) An "Enterprise Common Stock Fund", the assets of which shall
principally be invested in Enterprise Common Stock.
(d) One or more "Equities Index Funds", 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. Inc. 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
(a) Notwithstanding any provision in the Plan to the contrary, a
Participant may withdraw in accordance with Section 11.3 or 11.4
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 Record Keeper 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 Record Keeper 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.
(d) A Participant may not borrow from his or her ESOP Account.
Section 9.4. Dividends and Other Income. Unless otherwise directed as
hereinafter provided, dividends paid in cash with respect to Enterprise Common
Stock allocated to a Participant's ESOP Account shall be distributed to the
Participant as soon thereafter as practicable and, in any event, not later than
90 days after the close of the Plan Year in which paid. Enterprise Common Stock
delivered to the Trustee pursuant to a stock dividend, stock split or
reorganization, shall be allocated to the ESOP Account of Participants in that
proportion which the shares of each Participant's ESOP Account bears to the
total shares of all Participants' ESOP Accounts.
Section 9.5. Voting of ESOP Account Common Stock. As provided in
Section 7.2 with respect to the Enterprise Common Stock Fund, all voting
discretion with respect to stock held in a Participant's ESOP Account, including
the power to decide whether or not to tender Enterprise Common Stock in
connection with a tender offer, shall be vested in the Trustee. Each Participant
shall be entitled to direct the Trustee as to the manner in which voting rights
attributable to Enterprise Common Stock (including fractional shares or
fractional rights to shares) allocated to such Participant's ESOP Account are to
be exercised. Within a reasonable time before voting rights are to be exercised,
the Trustee or the 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 terminates employment on account of Retirement or
Disability, is Laid Off or 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:
(a) if the value of such Account as so determined is $3,500 ($5,000
for Annuity Starting Dates after 12/31/98) (or such other amount
established by law) or less, be distributed, subject to the
provisions of Section 11.10(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
(b) if the value of such Account as so determined shall exceed $3,500
($5,000 for Annuity Starting Dates after 12/31/98) (or such other
amount established by law), be distributed upon the earliest of
the Participant's Required Beginning Date, the death of such
Participant or the receipt by the Record Keeper of an application
for distribution (which may be for less than all of the
Participant's Account balance provided, however, that the amount
of distribution shall be at least $200, unless such distribution
is of 100% of the remaining value of such Participant's Account)
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 ($5,000
for Annuity Starting Dates after 12/31/98) (or such other amount
established by law) 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
($5,000 for Annuity Starting Dates after 12/31/98)(or such other
amount established by law) be distributed upon the earliest of
the Participant's Required Beginning Date, the death of the
Participant or the receipt by the Record Keeper of an application
for distribution (which may be for less than all of the
Participant's Account balance provided, however, that the amount
of distribution shall be at least $200, unless such distribution
is of 100% of the remaining value of such Participant's Account)
in a form prescribed by the Committee.
Any nonvested portion of the Participant's Account, determined as of
the date of termination, shall be forfeited and shall be applied thereafter to
reduce a subsequent contribution or contributions of the Employer as provided in
Section 5.2. If such former Participant is rehired by an Employer on or before
the end of and is employed by an Employer at the end of the fifth Plan Year
after the Plan Year in which such termination occurred, then such nonvested
portion of the Participant's Account shall be reinstated by the Employer and the
Participant's right thereto shall be determined as if the Participant had not
terminated employment, provided that the Participant repays to the Plan the
amount of any distribution paid to him or her on account of the termination of
employment.
The nonvested portion of the Participant's Account, determined as of
the date of termination, shall be forfeited as of the earlier of (i) the date
the Participant receives a cash-out distribution as described in Treasury
Regulation section 1.411(a)-7(d) or (ii) the time at which the terminated
Participant experiences five consecutive one-year breaks in service, and shall
be applied thereafter to reduce a subsequent contribution or contributions of
the Employer as provided in Section 5.2.
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 Partial Distributions Following Termination of Employment.
A Participant who elects pursuant to Section 11.1(b) or 11.2(b) to continue
participation in the Plan following termination of employment may, subsequent to
such Participant's termination of employment but prior to his or her Required
Beginning Date, upon application to the Committee in such format as it may
determine, withdraw all or part of such Participant's Account in minimum amounts
of $200.00 per withdrawal. Such withdrawals may be limited to after-tax
withdrawals.
Withdrawals shall be taken from a Participant's Plan subaccounts in the
following order:
(a) After-tax withdrawals:
(1) Pre-87 Nondeferred Deposits;
(2) Post-86 Nondeferred Deposits and earnings thereon;
(3) Earnings on Pre-87 Nondeferred Deposits.
(b) Partial withdrawals:
(1) Pre-1987 Nondeferred Deposits;
(2) Post-1986 Nondeferred Deposits and earnings thereon;
(3) Rollover Contributions and earnings thereon;
(4) Earnings on pre-1987 Nondeferred Deposits;
(5) Vested Employer Cash Contributions and earnings thereon;
(6) Vested Employer Stock Contributions and earnings thereon;
(7) Vested Employer Cash Balance Contributions and earnings
thereon; (8) Deferred Deposits and earnings thereon.
Section 11.4. 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 11.5. 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 Record Keeper. 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 11.6. 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 11.6 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 11.4, but
without regard to the limitations on withdrawals of Section
11.4;
(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
11.6, 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 11.7. 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 11.8. 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 11.9. 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 11.6, a
Participant may, by notice to the Record Keeper 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 Record Keeper of the notice of
withdrawal in the case of a distribution under Sections 11.3 or
11.4. 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, 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.
(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 11.6.
(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 11.10. 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, 11.4, and 11.5.
(b) In the case of a distribution over a period of years under
subparagraph (b) of Section 11.9, the initial payment shall be
made at a time determined in accordance with subparagraph (a) of
this Section 11.10. 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 11.9 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 11.9 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 11.11, 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 ($5,000 for
Annuity Starting Dates after 12/31/98), 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 11.11. Limitation on Post Age 70 1/2 Distributions.
Notwithstanding the provisions of Sections 11.9 and 11.10:
(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 11.11 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 11.12. 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 11.13. 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 Record Keeper
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 scured 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 11.14. 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 11.15. 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 11.16 Direct Rollover to Another Plan or IRA. On or after
January 1, 1993, at the election of a Participant or his spouse or former spouse
entitled to a distribution under Section 22.1 or the foregoing provisions of
this Article XI, the Committee shall direct the Trustee to make a direct
rollover to the trustee or other custodian of an "eligible retirement plan" by
any reasonable means (including providing the Participant or spouse or former
spouse with a check made payable only to the trustee or custodian) of all, or a
specified portion, of an "eligible rollover distribution," subject to the
following restrictions:
(a) An "eligible rollover distribution" is any distribution of all or
any portion of the Participant's Account, except that an
"eligible rollover distribution" does not include (i) any
distribution that is one of a series of substantially equal
periodic payments (made not less frequently than annually) made
for the life (or life expectancy) of the recipient or the joint
lives (or joint life expectancies) of the recipient and the
recipient's designated beneficiary, or for a specified period of
at least ten years; or (ii) any distribution required under Code
section 401(a)(9).
(b) An "eligible retirement plan" is an individual retirement account
described in Code section 408(a), an individual retirement
annuity described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust described
in Code section 401(a), that accepts the recipient's "eligible
rollover distribution." If the recipient is the Participant's
surviving spouse, but not an alternate payee receiving a
distribution pursuant to a Qualified Domestic Relations Order, an
"eligible retirement plan" is an individual retirement account
described in Code section 408(a) or an individual retirement
annuity described in Code section 408(b) that accepts the
surviving spouse's "eligible rollover distribution," but not an
annuity plan described in Code section 403(a) nor a qualified
trust described in Code section 401(a).
(c) The Participant or his or her spouse or former spouse must
specify, in such form and at such time as the Committee may
prescribe, the "eligible retirement plan" to which the
distribution is to be paid and may specify more than one
"eligible retirement plan."
(d) The Participant or his or her spouse or former spouse must
provide to the Committee in a timely manner adequate information
regarding the designated "eligible retirement plan."
ARTICLE XII
LIMITS ON BENEFITS AND CONTRIBUTIONS UNDER QUALIFIED PLANS
Section 12.1. Definitions. For purposes of this Article XII, the
following definitions and rules of interpretation shall apply:
(a) "Annual Additions" to a participant's account under a defined
benefit plan or a defined contribution plan is the sum, credited
to a participant's account for any Limitation Year, of:
(1) Company contributions,
(2) Forfeitures, if any,
(3) Employee contributions and
(4) Amounts, if any, attributable to medical benefits allocated
to an account established under Code section 419 A (d)(2) on
behalf of such Participant.
(b) "Annual Benefit"
(1) A benefit which is payable annually in the form of a
straight life annuity under a defined benefit plan. Such
benefit does not include any benefits attributable to either
employee contributions or rollover contributions. If the
defined benefit plan provides for a benefit which is not
payable in the form of a straight life annuity, the benefit
is adjusted in accordance with Section 12.1(b)(5) below.
(2) Where a defined benefit plan provides for mandatory employee
contributions (as defined in Code section 411(c)(2)(C)), the
Annual Benefit attributable to such contributions is not
taken into account. The Annual Benefit attributable to
mandatory contributions is determined by using the factors
described in Code section 411(c)(2)(B) and the regulations
thereunder. However, mandatory employee contributions and
any voluntary employee contributions are all considered a
separate defined contribution plan maintained by the
Company.
(3) If rollover contributions are made to a defined benefit
plan, the Annual Benefit attributable to these contributions
is determined on the basis of reasonable actuarial
assumptions.
(4) When there is a transfer of assets or liabilities from one
qualified defined benefit plan to another, the Annual
Benefit attributable to the assets transferred shall not be
taken into account by the transferee plan in applying the
limitations of Code section 415. The Annual Benefit payable
on account of the transfer for any individual that is
attributable to the assets transferred will be equal to the
Annual Benefit transferred on behalf of such individual
multiplied by a fraction, the numerator of which is the
total assets transferred and the denominator of which is the
total liabilities transferred.
(5) If a defined benefit plan provides a retirement benefit in
any form other than a straight life annuity, the plan
benefit is adjusted to a straight life annuity beginning at
the same age which is the actuarial equivalent of such
benefit in accordance with the rules determined by the
Commissioner. However, the following values are not taken
into account:
(i) The value of a qualified joint and survivor annuity (as
defined in Code section 417 and the regulations
thereunder) provided by the plan to the extent that
such value exceeds the sum of (A) the value of a
straight life annuity beginning on the same date and
(B) the value of any post-retirement death benefits
which would be payable even if the annuity was not in
the form of a joint and survivor annuity.
(ii) The value of benefits that are not directly related to
retirement benefits (such as pre-retirement disability
and death benefits and post-retirement medical
benefits).
(iii)The value of benefits provided by the plan which
reflect post-retirement cost of living increases to the
extent that such increases are in accordance with Code
section 415(d) and the regulations thereunder.
(6) Where a defined benefit plan provides a retirement benefit
beginning before a participant has attained the Social
Security Retirement Age, the plan benefit shall, in
accordance with rules determined by the Commissioner, be
adjusted to the actuarial equivalent of a benefit commencing
at the Social Security Retirement Age. This adjustment is
only for purposes of applying the dollar limitation
described in Code section 415(b)(1)(A) and Section
12.1(f)(1) to the Annual Benefit of the participant.
(7) Where a participant has less than 10 Years of Service with
the Company at the time the Participant begins to receive
retirement benefits under the defined benefit plan, the
benefit limitations described in Code sections 415(b)(1)(B)
and 415(b)(4) and Section 12.1(f)(2) are to be reduced by
multiplying the otherwise applicable limitation by a
fraction:
(i) the numerator which is the Years of Service (and
fractions thereof) with the Company as of, and
including the current Limitation Year, and
(ii) the denominator of which is 10. The preceding sentence
shall also apply for purposes of reducing the benefit
limitation described in Code section 415(b)(1)(A) and
Section 12.1(f)(1), by substituting years of
participation for Years of Service wherever it appears
in such sentence.
(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 11.13, 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.
Section 15.6 Overpayments. Any overpayment made to a Participant may be
withheld from subsequent payments made to such Participant or from payments made
to his/her surviving spouse or beneficiary until the overpayment has been
recouped.
ARTICLE XVI
CLAIMS PROCEDURE
Section 16.1. Filing of Claims. Claims for benefits under the Plan
shall be filed in writing on such form or forms as may be prescribed by the
Committee with the General Manager.
Section 16.2. Appeal of Claims. Written notice shall be given to the
claiming Participant or beneficiary of the disposition of such claim, setting
forth specific reasons for any denial of such claim in whole or in part. If a
claim is denied in whole or in part, the notice shall state that such
Participant or beneficiary may, within sixty days of the receipt of such denial,
request in writing that the decision denying the claim be reviewed by the
Committee and provide the Committee with information in support of his or her
position by submitting such information in writing to the Secretary of the
Committee.
Section 16.3. Review of Appeals. The Committee shall review each claim
for benefits which has been denied in whole or in part and for which such review
has been requested and shall notify, in writing, the affected Participant or
beneficiary of its decision and of the reasons therefor. All decisions of the
Committee shall be final and binding upon all of the parties involved.
ARTICLE XVII
MERGER OR CONSOLIDATION
Section 17.1. Merger or Consolidation. In the case of any merger or
consolidation of the Plan with, or transfer of assets or liabilities to, any
other plan, each Participant or beneficiary shall be entitled to receive a
benefit immediately after the merger, consolidation or transfer (if the Plan had
been terminated) which is equal to or greater than the benefit he or she would
have been entitled to receive immediately before the merger, consolidation or
transfer (if the Plan had then terminated). A merger or consolidation of the
Plan with, or transfer of assets or liabilities to, any other plan shall not be
deemed to be a termination or discontinuance of deposits and contributions
having the effect of such termination of the Plan.
ARTICLE XVIII
NON-ALIENATION OF BENEFITS
Section 18.1. Non-Alienation of Benefits. Except as provided under
Sections 11.13 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.
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 11.13. If a QDRO is issued and
the amount awarded the alternate payee exceeds the value of the Participant's
Account less the outstanding loan balance, such loan shall be deemed to be in
default and the Participant shall immediately repay the loan. Notwithstanding
the provisions of this Article, the Plan may, without the consent of any such
alternate payee, pay to such alternate payee the value of his or her respective
share of the apportioned Account of the Participant, if the value thereof as so
determined is $3,500.00 or less. If a QDRO so provides, benefits may be paid to
an alternate payee before they would otherwise be distributable under the Plan,
and no such distribution to an alternate payee shall be treated as a withdrawal
by the Participant for purposes of Article XI.
ARTICLE XXIII
CONSTRUCTION
Section 23.1. Governing Law. The Plan shall be governed by and
construed and administered under the laws of the State of New Jersey, except to
the extent superseded by ERISA.
Section 23.2. Headings. The headings are for reference only. In the
event of a conflict between a heading and the content of an article or Section,
the content shall control.
EXHIBIT 2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-18417 and 33-44582 on Forms S-8 of Public Service Enterprise Group
Incorporated of our report dated June 4, 1999 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, 1998.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 30, 1999
