As filed with the Securities and Exchange Commission on April 20, 1999.
Registration No. 333 -
======================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-3
Registration Statement
Under
The Securities Act of 1933
_______________________
NISOURCE INC.
(Exact name of registrant as specified in its charter)
Indiana 35-1719974
(State or other jurisdiction of (I.R.S employer
of incorporation or organization) identification number)
801 East 86th Avenue
Merrillville, Indiana 46410
(219) 853-5200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Stephen P. Adik
NISOURCE INC.
801 East 86th Avenue
Merrillville, Indiana 46410
(219) 647-6012
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With a copy to:
Lauralyn G. Bengel
Susan J. Lynch
Schiff Hardin & Waite
7200 Sears Tower
Chicago, Illinois 60606-6473
(312) 258-5500
_____________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM
TIME TO TIME AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. [ ]
<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
-------------------------------
Proposed Proposed
Amount maximum maximum
Title of each class to be offering price aggregate Amount of
of securities to be registered registered per share (1) offering price (1) registration fee
------------------------------ ---------- ------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Common Shares, without par value (including 14,000 $27.03 $378,420 $106
associated preferred share purchase rights)
</TABLE>
(1) Estimated solely for the purpose of calculating the registration
fee on the basis of the average of the high and low sales prices
of the Common Shares reported on the New York Stock Exchange on
April 14, 1999 pursuant to Rule 457(c) of the Securities Act of
1933, as amended.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement will thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
this registration statement shall become effective on such date as the
Commission acting pursuant to said Section 8(a) may determine.
<PAGE>
SUBJECT TO COMPLETION - Dated April 20, 1999
PROSPECTUS
NISOURCE INC.
14,000 Shares
Common Shares, Without Par Value
BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES
This Prospectus relates to up to 14,000 Common Shares, without
par value (including associated preferred share purchase rights), of
NiSource Inc., formerly NIPSCO Industries, Inc. (hereinafter
referred to as "NIPSCO"), which may be offered and sold pursuant
to participants in the Bay State Gas Company Savings Plan for
Operating Employees.
The Common Shares are traded on the New York Stock Exchange, the
Chicago Stock Exchange and the Pacific Stock Exchange under the symbol
"NI." On April 14, 1999 the closing sale price of the Common Shares
on the NYSE was $26 7/8 per share. Each purchase or sale of Common
Shares under the Plan will be made at the market price for the Common
Shares on the NYSE at time of such purchase or sale.
This Prospectus should be retained for future reference.
_____________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES
OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_____________________
The date of this Prospectus is April __, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. THE INFORMATION IN THIS PROSPECTUS
IS ACCURATE AS OF THE DATES ON THESE DOCUMENTS, AND YOU SHOULD NOT
ASSUME THAT IT IS ACCURATE AS OF ANY OTHER DATE.
TABLE OF CONTENTS
-----------------
Page
----
NIPSCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . 2
THE BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES . . 3
General . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 3
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . 4
Your Contributions . . . . . . . . . . . . . . . . . . . . . . 5
Company Contributions . . . . . . . . . . . . . . . . . . . . 7
Annual Contributions and Compensation Maximums . . . . . . . . 7
Investment Funds and Investment Instructions . . . . . . . . . 8
Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Participant Loans . . . . . . . . . . . . . . . . . . . . . . 12
Withdrawals While You Are an Employee . . . . . . . . . . . . 15
Distributions After You Terminate Employment with
the Company or After You Attain Age 70-1/2. . . . . . . . . 17
Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . 20
Reemployment with the Company . . . . . . . . . . . . . . . . 20
Federal Tax Consequences of Participation in the Plan . . . . 21
Income Tax Withholding . . . . . . . . . . . . . . . . . . . . 22
Future of the Plan . . . . . . . . . . . . . . . . . . . . . . 23
i
<PAGE>
Plan Administration Issues . . . . . . . . . . . . . . . . . . 23
Other Things You Should Know . . . . . . . . . . . . . . . . . 24
Plan Directory . . . . . . . . . . . . . . . . . . . . . . . . 27
Instructions at a Glance . . . . . . . . . . . . . . . . . . . 29
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 30
INFORMATION INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . 32
LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . 32
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . 32
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . 33
DESCRIPTION OF COMMON SHARES . . . . . . . . . . . . . . . . . . . 33
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ii
<PAGE>
NIPSCO
NIPSCO is an energy and utility-based holding company that
provides natural gas, electricity, water and related services for
residential, commercial and industrial uses through a number of
wholly-owned regulated and non-regulated subsidiaries. NIPSCO
operates primarily in Indiana and, with the acquisition of Bay State
Gas Company ("Bay State"), New England.
NIPSCO distributes natural gas to approximately 739,000 customers
in Northern Indiana through three wholly-owned utility subsidiaries:
Northern Indiana Public Service Company ("Northern Indiana"), Kokomo
Gas and Fuel Company ("Kokomo Gas") and Northern Indiana Fuel and
Light Company, Inc. ("NIFL"). Northern Indiana, Kokomo Gas and NIFL
operate in 41 counties across Northern Indiana, serving an area of
about 13,865 square miles with a population of approximately 2.4
million. Bay State distributes natural gas to more than 300,000
customers in the areas of Brockton, Lawrence and Springfield,
Massachusetts, Lewiston and Portland, Maine and Portsmouth, New
Hampshire. Bay State operates in 12 counties in New England, serving
an area of about 2,152 square miles with a population of approximately
1.8 million. Based on total throughput, NIPSCO is the tenth largest
local gas distribution company in the United States.
NIPSCO's wholly-owned subsidiary, Crossroads Pipeline Company
("Crossroads" and, together with Northern Indiana, Kokomo Gas and
NIFL, the "Energy Utilities"), owns and operates an interstate
pipeline extending from the northwestern corner of Indiana (near the
border with Chicago) eastward into Ohio. In addition, NIPSCO and Bay
State collectively own a 19% share of Portland Natural Gas
Transmission System ("PNGTS"), a 292-mile pipeline being built to
bring Canadian gas from New Brunswick into Maine, New Hampshire and
Massachusetts in order to increase the gas supply to the region.
NIPSCO generates and distributes electricity to the public
primarily through its largest subsidiary, Northern Indiana. Through
its Primary Energy, Inc. ("Primary Energy") subsidiary, NIPSCO also is
active in developing unregulated power projects. Northern Indiana
provides electric services in 30 counties in the northern part of
Indiana, with an area of approximately 12,000 square miles and a
population of approximately 2.2 million. At September 30, 1998,
Northern Indiana provided approximately 419,000 customers with
electricity. For the twelve months ended September 30, 1998,
industrial customers accounted for approximately 42% of Northern
Indiana's electric energy revenues, with residential customers
providing approximately 30% and commercial customers contributing
approximately 28%.
NIPSCO operates the sixth largest investor-owned water utility
business in the United States, serving approximately 252,200 customers
through the utility subsidiaries of IWC Resources Corporation
("IWCR"). These companies supply water for residential, commercial
and industrial uses and for fire protection services in Indianapolis
1
<PAGE>
and the surrounding areas. The territory served by the water
utilities covers an area of approximately 309 square miles in six
counties of central Indiana. IWCR also manages the municipal water
system for Lawrence, Indiana, and participates in partnerships that
operate municipal wastewater treatment facilities in Indianapolis and
Gary, Indiana.
In addition to the activities of Primary Energy described above,
NIPSCO provides non-regulated energy services through its wholly-owned
subsidiaries, NI Energy Services, Inc. ("NESI") and Energy USA, Inc.
NESI provides a variety of energy-related services, including gas
marketing, power generation, gas transmission, supply and storage and
energy efficiency design services. EnergyUSA markets products and
services, such as propane, energy advisory services and home security
services, to customers of local utilities in 22 states. These
products and services are branded and operated either under the local
utility's label or with the EnergyUSA name.
NIPSCO also provides non-regulated utility-related services,
including installation, repair and maintenance of underground
pipelines used in gas, water and sewer transmission and distribution
systems and underground utility locating and marking services.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
Prospectus. It is not a complete summary of all the information
contained in this Prospectus. Participants should therefore read
this Prospectus in its entirety.
Purpose of the Plan
-------------------
The Plan is for the benefit of eligible employees and former
employees of Bay State and affiliated companies and their
beneficiaries. The purpose of the Plan is to provide such eligible
employees a profit-sharing and 401(k) plan designed to help accumulate
savings for retirement and achieve future financial goals.
The Plan offers these advantages:
* Participants choose how much to save, up to 15% of
their eligible pay, through convenient payroll
deduction;
* Participants may save on current taxes, since
contributions and earnings are not subject to current
federal and, in most cases, state income taxes.
The Plan offers flexibility:
* Participants choose how to invest their Accounts among
the investment funds offered.
2
<PAGE>
* Participants may borrow or withdraw from their Accounts
(subject to certain conditions and terms).
* Participants have easy access to Account information by
telephone.
THE BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES
General
-------
The following is a description of the Plan. It is intended to
constitute a "summary plan description" pursuant to the Employee
Retirement Income Security Act of 1974, as amended (ERISA). This
description summarizes certain material provisions of the Plan, and as
such, it does not purport to be complete and is qualified in its
entirety by reference to the Plan. Terms used herein and not otherwise
defined shall have the respective meanings set forth in the Plan.
Introduction
------------
Effective January 1, 1988, Bay State Gas Company (the "Company")
established the Bay State Gas Company Savings Plan for Operating
Employees (the "Plan").
Effective as of February 12, 1999, the Company was merged into NIPSCO
Industries, Inc. and became a wholly owned subsidiary of NIPSCO.
Effective April 15, 1999, NIPSCO Industries, Inc. changed its name
to NiSource Inc. (hereinafter referred to as "NIPSCO"). As a result
of the merger, all of the shares of common stock of Bay State have
been converted into the right to receive cash or shares of common
stock of NIPSCO (the "Common Shares") and amounts held under the
Plan that are subsequently transferred into or contributed to the
Common Stock Fund will be invested in Common Shares.
Notwithstanding the corporate merger, the Plan continues to
be maintained by the Company.
The Plan is governed by the official text of the Plan and Trust
Agreement. The purpose of this Summary Plan Description is to provide
a simplified description of how the Plan works. If the meaning of the
Plan and Trust Agreement differs from that of the Summary Plan
Description in any way, the official text of the Plan and Trust
Agreement will govern in administering the Plan.
References to the Company generally mean Bay State Gas Company, and,
if applicable, its affiliated companies participating in the Plan as
the context requires, except, that with regard to issues related to
service credit, termination of employment or reemployment, references
to Bay State shall also include any affiliated companies not
participating in the Plan. With regard to primarily administrative
matters, however, references to Bay State mean Bay State Gas Company,
the Plan Sponsor and Plan Administrator.
3
<PAGE>
Eligibility
-----------
WHO IS ELIGIBLE?
All employees of the Company who are covered by one of the
following collective bargaining agreements are eligible:
* Lawrence Division, International Brotherhood of Electrical
Workers, Local 326 (a "Local 326-Lawrence Employee");
* Brockton Division, Utility Workers' Union of America, AFL-
CIO, Local 273 (a "Local 273 Operating Brockton Employee");
* Northern Utilities, Inc., Portland Division, Brotherhood of
Utility Workers of New England, Incorporated, Local No. 341
(a "Local 341-Portland Employee");
* Granite State Gas Transmission, Inc., Brotherhood of Utility
Workers of New England, Incorporated, Local No. 341 (a
"Local 341-Granite State Employee");
* Springfield Division, United Steel Workers of America, AFL-
CIO, Local No. 12026 (a "Local 12026-Springfield Employee");
* Springfield Division, International Brotherhood of
Electrical Workers, Local No. 486 (a "Local 486-Springfield
Employee");
* Brockton Division, Utility Workers Union of America, AFL,
CIO, Local 273, Clerical / Technical Unit (a "Local 273, C/T
Brockton Employee");
* Northern Utilities, Inc., Portsmouth Division, United
Steelworkers of America, AFL-CIO-CLC, Local No. 14930 (a
"Local 14930-Portsmouth Employee");
* Brockton Propane, Oil, Chemical and Atomic Workers
International Union, Quincy Local 8-366 (a "Local 8-366-
Brockton Propane Employee");
* Northern Utilities, Inc., Salem Propane, United Steelworkers
of America, AFL-CIO-CLC, Local No. 14930, (a "Local 14930-
Salem Propane Employee").
WHEN DOES PARTICIPATION BEGIN?
If you are an eligible employee, you may participate after you
have completed 12 months of service, if you have worked at least
1,000 hours during that period. Your participation will then
begin on the first day of the next month following the date you
complete these requirements. However, if provided by your
collective bargaining agreement, for purposes of Employee Pre-tax
4
<PAGE>
Contributions only, you may participate on the first day of the
next month after you have completed sixty (60) days of service.
HOURS OF SERVICE
Hours of service are used in determining your eligibility to
participate. You earn one hour of service for each hour you are
paid by the Company (including any back pay you may be awarded).
This includes hours when you do not actually work but receive pay
(such as vacation, holiday, jury duty, sickness or incapacity,
including disability). You receive credit for non-paid Company
time, such as a Company-approved leave of absence, military DUTY
or a temporary layoff.
Service earned while you are not actively at work is based on
your normally scheduled weekly hours. If you are a salaried
employee, or there are no accurate records of your working hours,
you will be credited with a set number of hours for each pay
period in which you are paid for at least one hour. The rates of
hours credited for each pay period are: 45 hours per weekly pay
period, 90 hours per biweekly pay period, 95 hours per semi-
monthly pay period and 190 hours per monthly pay period.
To enroll, refer to Section entitled Instructions At A Glance.
Your Contributions
------------------
You may elect to contribute regularly through payroll deductions once
you are eligible to participate. Your contributions are based on your
eligible pay. Eligible pay for this purpose is straight time wages,
exclusive of all daily or weekly overtime, bonuses, supplementary
compensation payments, retirement benefits and other forms of non-
recurring compensation, but inclusive of shift differentials,
Saturday/Sunday premiums, compensation paid at an alternative rate
(not including compensation paid at an alternative rate if you are a
salesperson) and seventy-five percent of sales commissions paid to you
by the Company while you are a participant in the Plan. Your eligible
pay includes pre-tax contributions you make to this Plan and other
plans sponsored by the Company.
To elect to contribute, refer to Section entitled INSTRUCTIONS AT A
GLANCE.
EMPLOYEE PRE-TAX CONTRIBUTIONS
You may choose to save pre-tax dollars by electing in writing to
contribute any whole percentage, up to 15%, of your eligible pay,
subject to an annual contribution maximum. Refer to item (a) of
Section entitled ANNUAL CONTRIBUTION AND COMPENSATION MAXIMUMS.
If you are a highly compensated employee, as defined by the
Internal Revenue Code and related regulations, you may be limited
to a percentage that is less than 15%. Refer to item (b) of
5
<PAGE>
Section entitled ANNUAL CONTRIBUTION AND COMPENSATION MAXIMUMS.
If you are limited to a percentage that is less than 15%, you
will be notified.
Your Employee Pre-Tax contributions are deposited into your
Employee Pre-Tax Account.<1>
CHANGING, DISCONTINUING OR RESUMING YOUR CONTRIBUTIONS
You may change your contribution percentage election as of the
first day of any month. Your payroll deductions will change the
first time you are paid after your written request has been
processed.
You may discontinue contributions at any time. Your payroll
deductions will stop the first time you are paid after your
written request has been processed. You may resume contributions
as of the first day of any month. Your payroll deductions will
resume the first time you are paid after your written request has
been processed. If you discontinue contributions more than once
in a twelve month period, the Plan Administrator reserves the
right to require a longer waiting period before you can resume
contributions. To change your contribution percentage election
or to discontinue or resume contributions, refer to Section
entitled INSTRUCTIONS AT A GLANCE.
ROLLOVER CONTRIBUTIONS FROM ANOTHER QUALIFIED PLAN
If you receive a distribution eligible for rollover from another
employer's qualified plan (or a qualified plan of the Company) or
if you have a "rollover IRA," you may "roll over" all or part of
that amount into this Plan if you are an eligible employee, even
if you have not yet met the Plan's eligibility requirements. By
making a Rollover contribution, you defer the tax liability on
your distribution and take advantage of the investments offered
in this Plan.
Your Rollover contributions are deposited into your Rollover
Account.<2>
<1>If you are a former participant of the Bay State Gas Company
Employee Savings Plan, your Employee pre-Tax Account may include
amounts transferred on your behalf from the Bay State Gas Company
Employee Savings Plan designated as "Employee Pre-Tax Account" amounts
under that plan.
<2>If you are a former participant of the Bay State Gas Company
Employee Savings Plan, your Rollover Account may include amounts
transferred on your behalf from the Bay State Gas Company Employee
Savings Plan designated as "Rollover Account" amounts under that plan.
6
<PAGE>
To make a Rollover contribution, refer to Section entitled
INSTRUCTIONS AT A GLANCE.
SEPARATE ACCOUNTS
Separate Accounts will be maintained for your contributions as
described above. If you are a former participant of the Bay
State Gas Company Employee Savings Plan, your Accounts may also
include a Prior After-Tax Account for amounts transferred on your
behalf from the Bay State Gas Company Employee Savings Plan
designated as "Prior After-Tax Accounts" amounts under that plan.
Company Contributions
---------------------
EMPLOYER CONTRIBUTIONS
Your eligibility for Employer contributions and the amount the
Company contributes are determined under the terms of your
governing collective bargaining agreement. If your collective
bargaining agreement calls for Employer contributions, the
Employer contributions are based on your Employee Pre-Tax
contributions and are deposited to your Account each time you
contribute.
Employer contributions made on your behalf, if any, are deposited
into your Employer Account.<3>
Annual Contribution and Compensation Maximums
----------------------------------------------
The Internal Revenue Code and related regulations require that a
number of limitations be applied to the Plan. These include (1)
maximum amounts which may be contributed by you or on your behalf in
any year and (2) a maximum amount of your eligible pay that may be
taken into account for purposes of contributions. These limitations
are briefly described below:
(a) MAXIMUM PRE-TAX CONTRIBUTION DOLLAR LIMIT.
Your maximum pre-tax contribution dollar limit (including
any pre-tax contributions you may make to any other 401(k)
plan maintained by any other employer) is $10,000 per
calendar year, and may be adjusted periodically as announced
by the Internal Revenue Service.
<3>If you are a former participant of the Bay State Gas Company
Employee Savings Plan, your Employer Account may include amounts
transferred on your behalf from the Bay State Gas Company Employee
Savings Plan designated as "Employer Match Account" amounts under the
plan.
7
<PAGE>
If you make pre-tax contributions to more than one 401(k)
plan during the calendar year and the combination of your
pre-tax contributions to the plans exceeds the maximum pre-
tax contribution dollar limit, you should notify the Plan
Administrator of this Plan or the plan administrator of the
other plan that an excess has occurred and request that the
excess amount be returned to you no later than April 15 of
the following year. If the excess amount is not returned to
you by April 15 of the following year, the excess amount
will be taxable to you in the year the amount was
contributed and the year the amount is distributed.
(b) MAXIMUM ALLOWABLE CONTRIBUTION PERCENTAGE LIMIT.
If you are a highly compensated employee, your maximum
Employee Pre-Tax contribution percentage may be limited to a
percentage that is less than the percentage described in
Section entitled YOUR CONTRIBUTIONS, as determined by a
factor based on the average Employee Pre-Tax contribution
amount for non-highly compensated employees. Highly
compensated employees generally include employees who earn
more than $80,000 per year, and may be adjusted periodically
as announced by the Internal Revenue Service.
If you are a highly compensated employee and you exceed this
limit at any time, you will be notified and your future
contributions may be reduced or stopped, and any excess may
be refunded to you.
(c) MAXIMUM ANNUAL ADDITION LIMIT.
The maximum amount that may be contributed by you (excluding
rollover contributions) or on your behalf to this Plan or
any other Qualified defined contribution plan sponsored by
the Company is the lesser of (1) 25% of your W-2 taxable
income or (2) $30,000. The $30,000 amount may be adjusted
periodically as announced by the Internal Revenue Service.
(d) MAXIMUM ELIGIBLE PAY LIMIT.
The maximum amount of your eligible pay that may be taken
into account per Plan Year for purposes of contributions is
$150,000, and may be adjusted periodically as announced by
the Internal Revenue Service ($160,000 for the Plan Year
ending December 31, 1999). The $150,000 threshold was set
in 1994.
Investment Funds and Investment Instructions
--------------------------------------------
WHO MAKES THE INVESTMENT DECISIONS?
You make your own investment decisions. When you enroll in the
Plan you may elect the percentage of your Account you want
invested in each investment fund. However, the Plan
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<PAGE>
Administrator reserves the right to set a maximum percentage of
the total election that you may direct into any specific
investment fund. The Company has selected a variety of daily
valued investment funds with different risk and return
characteristics. Investment fund information sheets and
prospectuses provide information about the investment options.
If you have not received this information or would like updated
information, you may obtain this information by telephoning 1-
800-776-4015 and speaking with a participant services
representative (or if you are hearing impaired, telephone 1-800-
772-6009). If you need any additional information regarding the
investment alternatives, or if you have any questions about your
ERISA rights, you may contact: Bay State Gas Company, Benefits
Committee, 300 Friberg Parkway, Westborough, Massachusetts 01581.
Each of the investment funds has specific investment objectives
for both risk and expected return. The specific investment funds
available to you may be changed from time to time.
You should make your investment choices based on your investment
goals and your willingness to assume investment risk in order to
realize potentially higher returns. Investment risk is defined as
a measure of how much the investment returns can vary, either up
or down, from period to period.
If you do not specify an investment fund or funds for the
investment of your contributions, your contributions will be
invested in a default investment fund specified by the Plan
Administrator. The Plan Administrator may change the designation
of the default investment fund from time to time.
The Plan is intended to be a participant directed individual
account plan as described in Section 404(c) of ERISA and the
regulations found in 29 C.F.R. Section 2550.404c-1. Accordingly,
fiduciaries of the Plan may be relieved of liability for any
losses which are the direct and necessary result of investment
instructions given by a participant or beneficiary.
INVESTMENT IN COMPANY STOCK FUND
The investment funds include a Company Stock Fund, which invests
in NIPSCO Common Shares. Previous investments in Bay State Gas
Company common stock prior to the merger of Bay State Gas Company
into a wholly-owned subsidiary of NIPSCO have been converted into
Common Shares. For liquidity purposes, a portion of the Company
Stock Fund will also be invested in money market type assets.
INVESTMENT FUNDS
The value of Accounts invested in an investment fund other than
the Common Stock Fund will be net of any investment manager fees
that may be charged with respect to that particular fund. The
prospectus for each Fund describes the fees and expenses associ-
9
<PAGE>
ated with investing in that fund. You will not be charged any
fees or expenses with respect to investments in the Common Stock
Fund.
Purchases of Common Shares will normally be made as soon as
practicable after the receipt by the Trustee of contributions
which are to be invested in the Common Stock Fund. Purchases or
sales of Common Shares will also normally be made as soon as
practicable after the receipt of an election by you to transfer
amounts to or from the Common Stock Fund. Each such purchase or
sale will be made at the market price for Common Shares on the
New York Stock Exchange at the time of such purchase or sale.
You may upon request obtain additional information about each
Investment Fund (e.g., each Fund's operating expenses, the
prospectus and financial statements of each Fund and a list of
assets comprising each Fund). If you need additional information
regarding the investment alternatives, or if you have any
questions about your ERISA rights, you may contact: Bay State Gas
Company, Benefits Committee, 300 Friberg Parkway, Westborough,
Massachusetts 01581.
PERFORMANCE OF INVESTMENT FUNDS
TOTAL RETURN PERFORMANCE BASED ON NET ASSET VALUE
(NET OF ALL FEES AND EXPENSES) WITH ALL DISTRIBUTIONS
Name of Fund 1997 1996 1995
------------ ---- ---- ----
Stable Value Fund 6.19 % 5.80 % 6.65 %
Masterworks S&P 500 33.07 % 22.62 % 37.15 %
AIM Constellation Fund 18.86 % 11.26 % 33.43 %
Templeton Foreign Fund 6.65 % 18.00 % 11.15 %
Masterworks Life Path 2000 Fund 10.71 % 6.33 % 17.38 %
Masterworks Life Path 2010 Fund 16.60 % 10.74 % 23.98 %
Masterworks Life Path 2020 Fund 21.20 % 13.57 % 27.51 %
Masterworks Life Path 2030 Fund 24.50 % 15.62 % 31.15 %
Masterworks Life Path 2040 Fund 26.85 % 18.65 % 32.54 %
The following table provides information concerning the performance of
the Common Shares in the preceding fiscal years. Participants are
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advised that past performance is not necessarily indicative of the
future performance of Common Shares. In addition, NIPSCO Industries,
Inc. conducted a 2-for-1 stock split in February, 1998. Therefore,
the stock prices for dates prior to 1998 in the following table are
provided prior to the stock split. The returns provided below also
include the dividend granted in each year, if any.
NIPSCO INDUSTRIES, INC.
COMMON SHARES PERFORMANCE
Stock Price 12/30/94 $29.750
Stock Price 12/29/95 $38.250
RETURN 1995 33.8 %
Stock Price 12/29/95 $38.250
Stock Price 12/31/96 $39.625
RETURN 1996 8.0 %
Stock Price 12/31/96 $39.625
Stock Price 12/31/97 $49.438
Return 1997 29.3 %
Stock Price 12/31/97 $49.438
Stock Price 12/31/98 $30.438*
RETURN 1998 27.0 %
* Reflects stock split
HOW MAY I OBTAIN INVESTMENT FUND PERFORMANCE INFORMATION?
You may obtain recent investment fund performance information by
telephoning 1-800-776-4015 (or if you are hearing impaired,
telephone 1-800-772-6009).
HOW MAY I CHANGE MY INVESTMENT INSTRUCTIONS AND WHEN DO MY NEW
INVESTMENT INSTRUCTIONS TAKE EFFECT?
You may change your investment instructions for future
contributions to your Account, for all or any portion of your
existing Account balance, or for both, at any time. You may make
10 investment changes each year at no charge. Your Account will
be charged a fee for each additional change. Currently, this fee
is $10.00 and may be changed from time to time. You will see
these fees on your quarterly statement.
If you telephone on a business day before the close of the New
York Stock Exchange (4 p.m. Eastern time), your investment change
will be processed that day. Otherwise it will be processed the
next business day. For this purpose, a business day is a day on
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<PAGE>
which the stock markets are open for trading. A written
confirmation of your investment instruction change will be sent
within five business days after you make the change by telephone.
To change your investment instructions, refer to Section entitled
INSTRUCTIONS AT A GLANCE.
INFORMATION REGARDING VOTING AND TENDERING COMPANY SHARES
You will be entitled to instruct the Plan Trustee as to the
voting or tendering of any whole and fractional shares of Company
Shares held on your behalf in the Company Stock Fund. The Company
will be responsible for the timely distribution of proxy
solicitation or other material to you in connection with any
shareholder vote or tender decision, including a form for you to
complete to instruct the Trustee with regard to voting or
tendering.
The Trustee is responsible for tabulating and complying with the
voting or tendering instructions it receives from participants.
The Trustee will hold your instructions in confidence and will
not divulge or release specific information regarding such
instructions, on an individual basis, to any person, including
officers or employees of the Company, except to the extent
required by law.
If you do not instruct the Trustee with regard to a shareholder
vote or tender decision, your Common Shares will be voted or
tendered as instructed by the Committee for the Plan.
Vesting
-------
Vesting is a term used to describe the portion of your Account
which you own. Your balance in each of your Accounts is fully
vested at all times.
Participant Loans
-----------------
MAY I BORROW FROM MY ACCOUNT?
You may borrow from all of your Accounts. You may have two loans
outstanding at a time.
HOW MUCH MAY I BORROW?
The minimum loan amount is $1,000.
The maximum you may borrow is 50% of your vested Account balance
or, if less, $50,000. The $50,000 amount is reduced by your
highest outstanding balance on all loans during the preceding 12
months. For purposes of this paragraph, all of the Company's
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<PAGE>
Qualified plans are considered as part of this Plan to the extent
the maximum loan amount would be decreased.
You may obtain information about the amount you may borrow or do
"modeling" to help you decide on the terms of the loan by
telephoning 1-800-776-4015 (or if you are hearing impaired,
telephone 1-800-772-6009).
WHAT IS THE LOAN INTEREST RATE?
The interest rate is fixed at the time you borrow and shall be a
reasonable rate of interest, determined by the Plan
Administrator, which provides the Plan with a return commensurate
with the prevailing interest rate charged by persons in the
business of lending money for loans which would be made under
similar circumstances.
The interest rate may be changed from time to time. You may
obtain information about the current interest rate by telephoning
1-800-776-4015 (or if you are hearing impaired, telephone 1-800-
772-6009).
WHAT IS THE LOAN REPAYMENT TERM?
The loan repayment term may be for a period not to exceed five
years.
HOW DO I MAKE LOAN PAYMENTS AND HOW ARE THE PAYMENTS INVESTED?
Loan payments, consisting of principal and interest, are made
through convenient payroll deduction (or by check during any
period you are temporarily ineligible for payroll deduction), and
each payment is credited to your Account. You may make
additional loan payments at any time by check or pay off the
remaining balance of your loan at any time by cashier's check,
certified check or money order. You may obtain your loan payoff
amount by telephoning 1-800-776-4015 (or if you are hearing
impaired, telephone 1-800-772-6009).
Loan payments credited to your Account are invested in accordance
with your current investment instructions for future
contributions to your Account at the time the loan payment is
deposited into your Account.
WHAT HAPPENS IF MY EMPLOYMENT TERMINATES?
Your outstanding loan balance is due should your employment with
the Company terminate for any reason. Your outstanding loan
balance is due upon the earlier of the date you request a
distribution from your Account or 90 days after you terminate
employment with the Company. If you do not repay your loan
balance before you request a distribution from your account or
within 90 days from your termination of employment, the Plan
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<PAGE>
Administrator will send you a written notice of default and a
demand for past due amounts. You have 30 days from receipt of
the written notice of default in which to repay the remaining
loan balance before the default becomes final. Upon default, the
unpaid balance will become a taxable distribution to you, except
to the extent any portion of the unpaid balance represents a
return of after-tax contributions.
HOW IS MY LOAN SECURED?
Your loan will be evidenced by a promissory note, secured by the
portion of your Account from which the loan is made. The Plan
shall have a lien on this portion of your Account.
A suspension of loan payments may be authorized for up to 12
months if you are on leave of absence without pay. During the
suspension period interest on your outstanding loan balance will
continue to accrue. All past due amounts will be due at the end
of the suspension period unless otherwise authorized.
A loan is treated as in default if scheduled loan payments are
more than 90 days late. You will have 30 days from the time you
receive written notice of a default and demand for past due
amounts to correct the default before it becomes final. In the
event the default becomes final, the default will be treated as a
taxable distribution to you, except to the extent any portion of
the unpaid balance represents a return of after-tax
contributions. However, your promissory note will not be
distributed and interest will continue to accrue on your
outstanding loan balance, until such time as you are otherwise
eligible for an in-service withdrawal or a distribution from your
Account.
WHAT HAPPENS TO MY LOAN IF I FILE FOR BANKRUPTCY?
Under federal law, the Plan is generally not allowed to accept
your loan repayments while you are in bankruptcy. Once your
bankruptcy is discharged, if your loan is not in default you may
restart you loan payments. A loan is treated as in default if
scheduled loan payments are not made for more than 90 days. You
will have 30 days from the time you receive written notice of a
default and demand for past due amounts to correct the default
before it becomes final. If your bankruptcy is not discharged
within this period of time, your loan will be in default. The
default will be treated as a taxable distribution to you, except
to the extent any portion of the unpaid balance represents a
return of after-tax contributions. However, your promissory note
will not be distributed and interest will continue to accrue on
your outstanding loan balance, until such time as you are
otherwise eligible for an in-service withdrawal or a distribution
from your Account.
14
<PAGE>
ARE THERE ANY LOAN FEES?
A loan maintenance fee of $3.50 will be assessed to your Account
for each month your Account has a loan balance. The fee will be
charged quarterly to your Account. You will see these fees on
your quarterly statement.
WHAT HAPPENS WHEN I REQUEST A LOAN?
Upon processing of your request, your investments will be
redeemed as needed to fund your loan. Within each Account used
for funding your loan, amounts will be redeemed from your
investment funds in direct proportion to the value of your
interest in each investment fund as of the date the loan is
processed. As the Plan's investment funds are daily valued
investment funds, your investments are redeemed based on the
value of each such investment on the day your loan is processed.
Your check and loan documents are generally issued within three
business days thereafter.
To request a loan, refer to Section entitled Instructions At A
Glance.
Withdrawals While You Are an Employee
-------------------------------------
UNDER WHAT CIRCUMSTANCES MAY I MAKE A WITHDRAWAL FROM THE PLAN
WHILE I AM AN EMPLOYEE?
Withdrawals while you are an employee are permitted as described
below and after attainment of age 70-1/2 (refer to Section
entitled DISTRIBUTIONS AFTER YOU TERMINATE EMPLOYMENT WITH THE
COMPANY OR AFTER YOU ATTAIN AGE 70-1/2). These withdrawals are
referred to as in-service withdrawals.
There is no minimum amount for any type of in-service withdrawal.
* HARDSHIP WITHDRAWAL
You may make an in-service withdrawal in certain cases of
financial hardship. You may withdraw from all of your
Accounts, except for any earnings credited to your Employee
Pre-Tax Account after the start of the first Plan Year
beginning after December 31, 1988.
The amount you may withdraw may be no greater than the
amount necessary to satisfy your financial need including
amounts necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result from the
withdrawal.
For this purpose, hardship is a financial need to:
15
<PAGE>
* Purchase your principal residence.
* Pay unreimbursable medical expenses incurred or to be
incurred by you, your spouse or dependents.
* Pay unreimbursable tuition, related educational fees
and room and board for up to the next 12 months of
post-secondary education for you, your spouse or
dependents.
* Pay amounts necessary to prevent losing your principal
residence through eviction or foreclosure on your
mortgage.
You may qualify for a Hardship Withdrawal by first borrowing
and withdrawing all other available amounts from this Plan
(and from any other plan maintained by the Company), other
than hardship withdrawals. You will be ineligible to
contribute to the Plan for 12 months from the date of your
Hardship Withdrawal. A special limitation may reduce the
maximum amount of Employee Pre-Tax contributions you may
contribute in the calendar year following the calendar year
of your Hardship Withdrawal.
* PRIOR AFTER-TAX ACCOUNT WITHDRAWAL
You may make a Prior After-Tax Account Withdrawal once in
any 12-month period.
* ROLLOVER ACCOUNT WITHDRAWAL
You may make a Rollover Account Withdrawal once in any 12-
month period.
* OVER AGE 59-1/2 WITHDRAWAL
Once you have attained age 59-1/2, you may make an Over Age
59-1/2 Withdrawal once in any 12-month period.
You may withdraw from all of your Accounts. If you have a
Prior After-Tax Account, you will need to designate whether
you want to withdraw from this Account first as part of your
Over Age 59-1/2 Withdrawal.
* PRIOR COMPANY ACCOUNT PLUS WITHDRAWAL
You may make a Prior Company Account Plus Withdrawal once in
any 12- month period.
You may withdraw from your Prior After-Tax, Rollover and
Prior Company Accounts.
16
<PAGE>
WHAT ARE MY IN-SERVICE WITHDRAWAL PAYMENT OPTIONS?
Your in-service withdrawal will be paid in a single lump sum, in
cash.
WHAT ARE MY IN-SERVICE WITHDRAWAL METHODS?
You may choose to have all or a portion of your in-service
withdrawal that is eligible for rollover be made payable directly
to an IRA, another employer's qualified plan or to you. The
portion of your in-service withdrawal representing a return of
after-tax contributions is not eligible for rollover and will be
made payable to you. Regarding the portion of your in-service
withdrawal that is eligible for rollover and that is made payable
to you, the law requires that, except for hardship withdrawals,
20% of that amount be withheld for federal taxes. Your actual
tax liability may be more or less depending on your personal tax
situation.
WHAT HAPPENS WHEN I REQUEST AN IN-SERVICE WITHDRAWAL?
An IRS Tax Notice is required to be provided to you no more than
90 days before your in-service withdrawal is made. The IRS Tax
Notice summarizes the rules related to rollovers, income tax and
penalties that may apply to your in-service withdrawal. You
should review the IRS Tax Notice prior to requesting an in-
service withdrawal.
Upon processing of your request, your investments will be
redeemed as needed to fund your in-service withdrawal. Within
each Account used for funding your in- service withdrawal,
amounts will be redeemed from your investment funds in direct
proportion to the value of your interest in each investment fund
as of the date the in-service withdrawal is processed. As the
Plan's investment funds are daily valued investment funds, your
investments are redeemed based on the value of each such
investment on the day your in-service withdrawal is processed.
Your check is generally issued within three business days
thereafter.
To request an in-service withdrawal, refer to Section entitled
INSTRUCTIONS AT A GLANCE.
Distributions After You Terminate Employment with the Company or After
You Attain Age 70-1/2
----------------------------------------------------------------------
WHAT ARE MY DISTRIBUTION PAYMENT OPTIONS?
If your vested Account balance is $5,000 or less, and if your
vested Account balance at the time of any prior in-service
withdrawal or distribution did not exceed $5,000, your
distribution payment options are limited to a single lump sum.
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<PAGE>
Otherwise, you may choose to have your vested Account balance
distributed as follows:
* paid in a single lump sum,
* a portion paid in a lump sum, and the remainder paid later,
or
* paid in periodic installments over a period not to exceed
the life expectancy of you and your beneficiary.
Your distribution will be paid in cash, except to the extent of
the distribution of your outstanding loan balance, if any, and
except (if your Account is distributed in a lump sum) to the
extent you choose to receive the portion of your distribution
attributable to your Account balance invested in the Company
Stock Fund in the form of whole shares of Company Shares and cash
in lieu of fractional shares.
WHAT ARE MY DISTRIBUTION METHODS?
You may choose to have all or a portion of your distribution that
is eligible for rollover be made payable directly to an IRA,
another employer's qualified plan or to you. The portion of your
distribution representing a return of after-tax contributions is
not eligible for rollover and will be made payable to you. If
your vested Account balance is $5,000 or less, and if your vested
Account balance at the time of any prior in-service withdrawal or
distribution did not exceed $5,000 if you do not request a
distribution, your vested Account balance may be distributed to
you without your consent in a check made payable to you.
Regarding the portion of your distribution that is eligible for
rollover and that is made payable to you, the law requires that
20% of that amount be withheld for federal taxes. Your actual
tax liability may be more or less depending on your personal tax
situation.
If you elect distribution in periodic installments, your Account
will be charged a fee for each installment payment. You will see
these fees on your quarterly statement. Currently, this fee is
$3.00 per check and may be changed from time to time.
WHEN ARE DISTRIBUTIONS MADE?
You may generally choose when to take a distribution of your
vested Account balance at any time following your termination of
employment with the Company on or before age 65. However, if
your vested Account balance is $5,000 or less, and if at the time
of any prior inservice withdrawal or distribution your vested
Account balance did not exceed $5,000, you should request a
distribution of your vested Account balance at the time you
terminate employment with the Company or shortly thereafter. If
18
<PAGE>
you do not request a distribution, your vested Account balance
may be distributed to you without your consent in a check made
payable to you. Mandatory 20% federal tax withholding will apply
as described above.
The law requires that you start taking distributions from your
Account by April 1 of the calendar year following the later of
either: (1) the calendar year in which you reach age 70-1/2, or
(2) the calendar year in which you retire. As a result, you are
not required to start taking distributions by April 1 of the
calendar year in which you reach age 70-1/2 if you are still
working for the Company at that time.
Your Account will continue to be invested as you direct until it
is distributed to you.
WHAT HAPPENS WHEN I REQUEST A DISTRIBUTION AFTER I TERMINATE OR
AFTER I ATTAIN AGE 70-1/2?
An IRS Tax Notice is required to be provided to you no more than
90 days before your distribution is made. The IRS Tax Notice
summarizes the rules related to rollovers, income tax and
penalties that may apply to your distribution. You should review
the IRS Tax Notice prior to requesting a distribution.
Upon processing of your request, your investments will be
redeemed as needed to fund your distribution. Within each
Account used for funding your distribution, amounts will be
redeemed from your investment funds in direct proportion to the
value of your interest in each investment fund as of the date the
distribution is processed. As the Plan's investment funds are
daily valued investment funds, your investments are redeemed
based on the value of each such investment on the day your
distribution is processed. Your check is generally issued within
three business days thereafter. If you choose to receive the
portion of your distribution attributable to your Account balance
in the Company Stock Fund in the form of whole shares of Company
Shares and cash in lieu of fractional shares, your stock
certificate will be issued within a few weeks thereafter.
To request a distribution upon termination of employment with the
Company or a distribution after attainment of age 70-1/2, refer
to Section entitled INSTRUCTIONS AT A GLANCE.
WHAT ARE THE TAX TREATMENTS, TAXES AND PENALTIES FOR
DISTRIBUTIONS?
The IRS Tax Notice summarizes the rules related to rollovers, TAX
treatments, income tax and penalties that may apply to your
distribution.
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<PAGE>
Death Benefits
--------------
WHAT HAPPENS TO MY PLAN BENEFIT IF I DIE?
Upon your death, your Account becomes payable to your
beneficiary(ies). If you die while an employee, your Account
will become fully vested, if not otherwise fully vested. In
general, your beneficiary has the same options as you do
regarding when and how to receive payment, except that a
distribution to your beneficiary may only be eligible for
rollover if your beneficiary is your spouse. Your beneficiary
should contact Culture Development for further instructions.
HOW MAY I DESIGNATE MY BENEFICIARY?
When you become eligible to participate in the Plan or, if
earlier, at the time you make a Rollover Contribution, complete
and file a Beneficiary Designation Form stating who is to receive
your Account balance if you die. You may change your
beneficiary(ies) at any time by completing and filing a new
Beneficiary Designation Form. The change takes effect on the
date your new completed Beneficiary Designation Form is on file
with Culture Development
If you are married, your spouse is automatically your sole
primary beneficiary. To designate someone in addition to or
other than your spouse as a primary beneficiary, you must obtain
your spouse's written consent to your designation and your
spouse's signature must be witnessed by a Plan representative or
Notary Public. If you complete and file a Beneficiary
Designation Form and later become married or remarry, your
earlier Beneficiary Designation Form will not be valid. You will
need to complete and file a new Beneficiary Designation Form.
If you fail to complete and file a Beneficiary Designation Form
before you die, your benefit upon death will be paid to the
individual(s) in the first of the following categories in which
there is at least one survivor: your spouse; your children, (in
equal shares) by right of representation; or your estate.
Reemployment with the Company
-----------------------------
WHEN CAN I RESUME MY PARTICIPATION?
If you were a Plan participant before your employment with the
Company terminated and you are rehired by the Company, you may
resume participation on the date of your rehire as an eligible
employee. If you were not a participant when your employment
with the Company terminated, you will enter the Plan as described
in Section entitled ELIGIBILITY, but no earlier than the date you
20
<PAGE>
would have entered the Plan if you had not terminated your
employment with the Company.
Federal Tax Consequences of Participation in the Plan
-----------------------------------------------------
The Plan is operated as a qualified plan under Sections 401(a)
and 401(k) of the Internal Revenue Code. As a result, the amount
of your pay which you elect to defer under the Plan through
Employee Pre-Tax contributions, your Rollover contributions and
Employer Contributions, if any, and any earnings on, or
appreciation of, your Account balance are not subject to Federal
income taxes until such amounts are withdrawn or distributed to
you or your beneficiary. The amount of your Employee Pre-Tax
contributions will, however, be included in your income in the
year in which such amounts are earned for purposes of Social
Security taxes. Distributions and withdrawals generally become
taxable in the year in which you receive them.
A distribution or withdrawal may be rolled over to a qualified
retirement plan of another employer or to an individual
retirement account or individual retirement annuity ("IRA") if
the distribution is an "eligible rollover distribution" as
defined in the Internal Revenue Code. In such event, the amount
rolled over and earnings thereon are not subject to income tax
until subsequently distributed to you or your beneficiary. Any
amount of an "eligible rollover distribution" that is not rolled
over may be subject to a mandatory 20% withholding requirement
(see "Income Tax Withholding" below).
If a lump sum distribution includes Common Shares, the excess, if
any, of the fair market value of such Common Shares over the cost
of the Common Shares to the Trustee is not subject to federal
income tax at the time of distribution but generally will be
subject to federal income tax when such Common Shares are
subsequently sold. To the extent provided by the Internal
Revenue Code, you may elect not to defer the tax on net
unrealized appreciation in Common Shares until the year of
disposition of such Common Shares, thus subjecting the entire
distribution to federal income tax at the time of distribution.
An additional 10% excise tax will be imposed on any distribution
or withdrawal received by you before you reach age 59-1/2 unless
such distribution or withdrawal is (i) rolled over to another
qualified plan or an IRA, (ii) made to a beneficiary after your
death, (iii) made on account of your retirement due to disability
(as defined in the Plan), (iv) made after separation from service
after attainment of age 55, (v) made to you for payment of
medical expenses that could be deducted on your tax return or
(vi) made to an alternate payee pursuant to a qualified domestic
relations order.
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<PAGE>
Amounts that are included in taxable income may qualify for 5-
year forward averaging tax treatment if you receive the amount in
a lump sum distribution prior to January 1, 2000 but after you
reach age 59-1/2 and you actively participated in the Plan for at
least five years prior to the year in which the lump sum is
distributed to you. Under a transitional rule, if you reached
age 50 before January 1, 1986, you may make one election, without
regard to the age 59-1/2 requirement, to use either 5-year
forward averaging (using current tax rates) or 10-year forward
averaging (using the 1986 tax rates) with respect to the lump sum
distribution, if otherwise eligible. Five year forward averaging
will not be available for distributions received on or after
January 1, 2000.
Employee Pre-Tax contributions and Employer Contributions, if
any, made to the Plan by the Company on your behalf are
deductible by the Company in the year in which the contributions
are made.
The rules governing the Federal income taxation of a distribution
are complex and are subject to change. Accordingly, you should
seek the advice of a personal tax advisor in connection with a
distribution.
Income Tax Withholding
----------------------
Most Plan distributions and withdrawals are subject to mandatory
federal income tax withholding. The Trustee is required to
withhold 20% of any "eligible rollover distribution", unless you
elect to have the Trustee make a direct rollover of such
distribution into another employer's qualified retirement plan
that accepts rollovers or to an individual retirement account or
an individual retirement annuity. A distribution or withdrawal
is not an "eligible rollover distribution", and thus may not be
rolled over, if it is (i) a series of substantially equal
periodic installments over more than ten years, or over your life
expectancy or the joint life expectancies of you and your
beneficiary, (ii) a distribution of after-tax contributions,
(iii) a required distribution due to attaining age 70-1/2 (or if
later, due to retiring) or (iv) a distribution made to a
nonspousal beneficiary. If you request a distribution from the
Common Stock Fund in the form of Common Shares rather than cash,
the portion of your Account in the Common Stock Fund will not be
liquidated to pay the withholding tax; however, the applicable
taxes will be withheld from any cash portion of the distribution.
A distribution or withdrawal that is not an "eligible rollover
distribution" is subject to voluntary federal income tax
withholding, which means that you can request that no withholding
tax be deducted from your distribution.
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<PAGE>
Future of the Plan
------------------
The Company intends for the Plan to be a permanent part of your
total benefits program. However, the Company reserves the right
to terminate the Plan at any time. If the Plan is terminated all
Accounts will become fully vested, if not otherwise fully vested,
and payable as determined by the Plan Administrator.
The Company reserves the right to amend the Plan at any time if
it becomes desirable or necessary. You will be notified within
210 days after the end of the Plan Year of any relevant Plan
amendment. The Plan (including any amendments) is subject to
approval by the IRS. From time to time, changes in the details
of the Plan may be required by the IRS. However, no Plan
amendment may take away any benefits you have earned.
As the Plan benefits are provided by fully funded individual
participant Accounts, benefits under this Plan are not insured by
the Pension Benefit Guaranty Corporation (PBGC). PBGC insurance
does not apply to this type of plan.
Plan Administration Issues
--------------------------
ACCOUNT STATEMENTS AND ACCOUNT INFORMATION
You will receive statements four times each year. They will
normally be sent to you within three weeks after the end of each
quarter of the Plan Year.
You have easy access to information regarding your Account at any
time.
To obtain information regarding your Account, refer to Section
entitled INSTRUCTIONS AT A GLANCE.
PLAN ADMINISTRATOR
The Company is the Plan Administrator. The Company may appoint
an administrative committee and delegate to it all or part of its
duties to oversee the Plan's operations. As a Plan fiduciary,
the Company acts on your behalf to see that the Plan is
administered fairly according to standards outlined in the law
and the terms of the Plan and Trust Agreement.
Plan records are maintained on a Plan Year basis. The Plan Year
ends on December 31.
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<PAGE>
AGENT FOR SERVICE OF LEGAL PROCESS
Service of legal process may be made upon the Company, as Plan
Administrator, or Plan Trustee at the address listed in Section
entitled PLAN DIRECTORY.
TYPE OF PLAN
This Plan is a profit sharing plan with a pre-tax salary deferral
(401(k)) feature.
TOP HEAVY CONTRIBUTION PROVISIONS
The Plan includes provisions which apply only if the Plan is "top
heavy." A plan is top heavy if more than 60% of the total plan
assets belong to "key employees." Key employees include certain
officers, shareholders and owners. If the plan is top heavy,
contributions may not be made by or on behalf of key employees,
other than a Rollover contribution, unless the Company makes a
minimum contribution to all eligible employees.
Other Things You Should Know
----------------------------
TRUST FUND
All of the Plan's assets are held in a trust fund which is the
sole source of all benefit payments. The trust fund is a
separate and distinct legal entity, and is not part of the
Company. The assets of the trust fund are not commingled with
Company assets. Generally, no part of the trust fund can be
attached by creditors of any Plan participant or of the Company.
Assets of the trust fund are held exclusively to pay Plan
benefits and expenses, and cannot revert to or be paid to the
Company, except under certain limited circumstances permitted by
law.
The Plan Trustee holds the Plan's assets, executes all of the
investments, maintains the financial records relating to the
trust, and makes all benefit payments as directed by the Plan
Administrator.
PLAN FEES AND EXPENSES
The Company pays all administrative fees and expenses related to
maintaining the Plan as a whole. The Company may, at a later
date, choose to have all or a portion of such fees and expenses
paid by participants. The Company will notify you in advance of
any such change. If changed, an administrative fee will be
assessed to your Account each month and charged quarterly to your
Account, except that no fee may reduce your Account balance below
zero.
24
<PAGE>
You will pay any special fees related to your own Account, such
as loan fees, fees for installment payments and for change of
your investment instructions more than 10 times per year. You
will see these fees on your quarterly statement.
PLAN PARTICIPATION PURSUANT TO A COLLECTIVE BARGAINING AGREEMENT
The Plan is maintained pursuant to one or more collective
bargaining agreements. You may obtain a copy of each such
collective bargaining agreement by contacting the Plan
Administrator or Culture Development.
CLAIM REVIEW PROCEDURES
As the Plan Administrator, the Company is responsible for
determining and informing you of your entitlement to a benefit
and of any amounts payable to you. If you disagree with a
decision, you or your authorized representative may ask for a
review by submitting a written request to Culture Development.
Your request should include the issues and comments you feel are
important. You also have the right to review pertinent
documents.
The review process sets the following limits on the amount of
time you may take to make your request and for the Company to
respond:
Days To Respond
Action From Prior Action
------ -----------------
Company sends you a benefit statement . . . . . . --
You request an initial review . . . . . . 60 days
Company sends you its initial decision . . . . . . 90 days
You request a final review . . . . . . 60 days
Company sends you its final decision . . . . . . 60 days
The Company will either approve your claim or explain why your
claim is being denied (by referring to specific Plan provisions)
and how applications are reviewed. In special circumstances, the
Company may notify you and take up to an additional 90 days for
its initial review and 60 days for its final review.
NO ASSIGNMENT OF YOUR ACCOUNT IS PERMITTED
Under this Plan, you may not assign, sell, transfer or use your
Account as collateral, other than for a loan from your Account as
described in Section entitled PARTICIPANT LOANS. In addition,
creditors may not attach your Account as a means of collecting
debts. However, the Plan Administrator will comply with a
"qualified domestic relations order" (QDRO). This is an order or
judgment from a state court directing that a participant's
Account, or portion thereof, be paid to an Alternate Payee
25
<PAGE>
(spouse, former spouse, child or other dependent of the
participant) as child support, alimony or part of a division of
marital property rights, provided that the order meets certain
requirements of federal law.
NO EMPLOYMENT RIGHTS
Your participation in the Plan does not give you any employment
rights with the Company.
YOUR RIGHTS UNDER FEDERAL LAW
As a participant of this Plan you are entitled to certain rights
and protection under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). ERISA provides that all Plan
participants shall be entitled to:
* Examine, without charge, at the Plan Administrator's office,
all Plan documents and copies of all documents filed by the
Plan with the U.S. Department of Labor, such as annual
reports;
* Obtain copies of all Plan documents and information upon
written request to the Plan Administrator. The Plan
Administrator may make a reasonable charge for the copies;
* Receive a summary of the Plan's annual financial report.
The Plan Administrator is required by law to furnish each
participant with a copy of this summary annual report; and
* Obtain a statement telling you the amount of your Account
balance, the portion of your Account balance you currently
have a right to and when you will have the right to receive
payment. If you do not have a right to a benefit, the
statement will tell you how many years you have to work to
get this right. This statement must be requested in writing
and is not required to be given more than once a year. The
Plan Administrator must provide the statement free of
charge.
In addition to creating rights for Plan participants, ERISA
imposes duties upon the people who are responsible for the
operation of the Plan. The people who operate your Plan, called
"fiduciaries" of the Plan, have a duty to do so prudently and in
the interest of you and other Plan participants and
beneficiaries.
No one, including your employer or any other person, may
terminate you or otherwise discriminate against you in any way to
prevent you from obtaining a benefit or exercising your rights
under ERISA.
26
<PAGE>
If your claim for a benefit is denied in whole or in part, you
must receive a written explanation of the reason for the denial.
You have the right to have the Plan Administrator review and
reconsider your claim.
Under ERISA, there are steps you can take to enforce the above
rights. For instance, if you request written materials from the
Plan Administrator and do not receive them within 30 days, you
may file suit in federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay
you up to $100 a day until you receive the materials, unless the
materials were not sent because of reasons beyond the control of
the Plan Administrator.
If you have a claim for a benefit which is denied or ignored, in
whole or in part, you may file suit in a state or federal court.
If it should happen that Plan fiduciaries misuse the Plan's
money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. The court will
decide who should pay court costs and legal fees. If you are
successful, the court may order the person you have sued to pay
these costs and fees. If you lose, the court may order you to
pay the costs and fees if, for example, it finds your claim is
frivolous.
If you have any questions about your Plan, you should contact
Culture Development. If you have any questions about this
statement of your rights under ERISA, you should contact the
nearest Area Office of the Pension and Welfare Benefits
Administration, U.S. Department of Labor, listed in your
telephone directory or the Division of Technical Assistance and
Inquiries, Pension and Welfare Benefits Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington
D.C. 20210.
PLAN DIRECTORY
* OFFICIAL PLAN NAME --
Bay State Gas Company Savings Plan for Operating Employees
* EMPLOYER AND PLAN NUMBER --
Employer's Identification Number (EIN) is 04-2548120
Plan Identification Number (PIN) 011
* OTHER PARTICIPATING COMPANIES --
Northern Utilities, Inc.
Granite State Gas Transmission, Inc.
Energy USA
* PLAN YEAR --
January 1 through December 31
27
<PAGE>
* PLAN SPONSOR --
Bay State Gas Company
300 Friberg Parkway
Westborough, Massachusetts 01581
(508) 836-7114
* INITIAL EFFECTIVE DATE --
January 1, 1988
* NAME OF PLAN ADMINISTRATIVE COMMITTEE
Benefits Committee Bay State Gas Company
* Plan Trustee --
Merrill Lynch
Group Employee Services
P.O. Box 6610
9603 Meridian Boulevard
B3-GES-CS
Englewood, CO 80155-6610
(800) 776-4015
28
<PAGE>
INSTRUCTIONS AT A GLANCE
IF YOU WANT TO YOU NEED TO DO THE FOLLOWING
Enroll In The Plan
And Elect To Make
Contributions: Complete a Plan Enrollment Form and
Beneficiary Designation Form. Return the
forms to Culture Development for processing.
Your Enrollment Form will be forwarded to
Merrill Lynch for processing of your
Investment Fund instructions. You will
receive a Personal Identification Number (PIN)
for the Bay State Gas Company Savings Plan for
Operating Employees in a secured envelope as a
separate mailing.
Make A Rollover
Contribution: Request a Rollover Contribution Form from
Culture Development. Complete and return the
form to Culture Development Department for
approval and forwarding to Merrill Lynch for
processing.
Change Your
Contribution
Percentage Election
Or Discontinue Or
Resume Your
Contributions: Request a Contribution Change Form from
Culture Development. Complete and return the
form to Culture Development for processing.
Change Your
Investment Telephone Merrill Lynch at 1-800-776-4015 (or
Instructions: if you are hearing impaired telephone 1-800-
772-6009).
Request A
Participant Loan: Telephone Merrill Lynch at 1-800-776-4015 (or
if you are hearing impaired telephone 1-800-
772-6009).
Request An In-
Service Withdrawal: Telephone Merrill Lynch at 1-800-776-4015 (or
if you are hearing impaired telephone 1-800-
772-6009). If you have not already received an
IRS Tax Notice within the last 90 days, an IRS
Tax Notice will be provided to you.
29
<PAGE>
IF YOU WANT TO YOU NEED TO DO THE FOLLOWING
If you are requesting a Hardship Withdrawal,
Merrill Lynch will send you a Hardship
Withdrawal Request Form. Upon completion,
return the form to Culture Development for
approval and forwarding to Merrill Lynch for
processing.
Request A
Distribution Upon
Termination: Telephone Merrill Lynch at 1-800-776-4015 (or
if you are hearing impaired telephone 1-800-
772-6009). If you have not already received
an IRS Tax Notice within the last 90 days, an
IRS Tax Notice will be provided to you.
Request An Age
70-1/2 Or Over
Distribution
Required By Law: Request an Age 70-1/2 Distribution Packet
from Culture Development. The packet will
include instructions for processing and an IRS
Tax Notice.
Obtain Information
Regarding Your
Account, Investment
Fund Prices, Loan
Interest Rate Etc.: Telephone * Merrill Lynch at 1-800-776-4015 (or
if you are hearing impaired telephone 1-800-
772-6009).
_____________________________
* ALL OR A PORTION OF THE CALLS ARE TAPE RECORDED FOR YOUR
PROTECTION.
The EVA operates 24 hours a day, 7 days a week. If the information
you need or the transaction you want to perform is not available
through EVA, or if you prefer to speak to a participant services
representative, press "0" as soon as EVA answers. If you have a
rotary phone, simply stay on the line. PARTICIPANT SERVICES
REPRESENTATIVES ARE AVAILABLE ON ANY BUSINESS DAY BETWEEN 8 A.M. AND 8
P.M. (EASTERN TIME).
AVAILABLE INFORMATION
NIPSCO files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). You may
read and copy any of these reports, proxy statements and other infor-
mation at the Commission's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You may obtain information on the
30
<PAGE>
operation of the Public Reference Room by calling the Commission at 1-
800-SEC-0030. The Commission also maintains a site on the World Wide
Web that contains reports, proxy statements and other information
regarding NIPSCO. The address of the Commission's Web site is
http://www.sec.gov. Information about NIPSCO is also available at
http://www.nipsco.com; that information, however, it not a part of
this Prospectus except to the extent it is specifically incorporated
by reference in this Prospectus.
NIPSCO has filed with the Commission a Registration Statement on
Form S-3 (including any amendments thereto, the "Registration
Statement") under the Securities Act of 1933 (the "Securities Act")
with respect to the securities offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all
of the information set forth in the Registration Statement. For
further information about NIPSCO and the Common Shares offered hereby,
reference is made to the Registration Statement and the exhibits
thereto, which may be inspected at the Commission's Public Reference
Room or through the Commission's Web site.
31
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed by NIPSCO with the
Commission are incorporated by reference into this Prospectus:
(1) NIPSCO's Annual Report on Form 10-K and Form 10-KA for the
year ended December 31, 1998;
(2) NIPSCO's Current Report on Form 8-K dated February 8, 1999
and filed February 9, 1999;
(3) The description of NIPSCO's Common Shares contained in
NIPSCO's Registration Statement on Form 8-B filed with the
Commission on November 25, 1987; and
(4) Bay State's Annual Report on Form 10-K for the year ended
September 30, 1998.
All documents filed by NIPSCO with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Prospectus and prior to the termination of the offering of the Common
Shares under the Plan, shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference shall be
deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other
subsequently filed document, which is also deemed to be incorporated
by reference modifies or replaces such statement.
NIPSCO WILL PROVIDE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON, A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED
BY REFERENCE HEREIN (OTHER THAN EXHIBITS NOT SPECIFICALLY INCORPORATED
BY REFERENCE INTO THE TEXTS OF SUCH DOCUMENTS). REQUESTS FOR SUCH
DOCUMENTS SHOULD BE DIRECTED TO SHAREHOLDER SERVICES, NISOURCE
INC., 5265 HOHMAN AVENUE, HAMMOND, INDIANA 46320
(TELEPHONE: 1-800-348-6466).
LIMITATION OF LIABILITY
Neither NIPSCO, Bay State, nor any of its agents (including Bay
State or NIPSCO if it is acting as such) in administering the Plan,
shall be liable for any act done in good faith or for the good faith
omission to act in connection with the Plan. However, nothing
contained herein shall affect a Participant's right to bring a cause
of action based on alleged violations of federal securities laws.
USE OF PROCEEDS
Because the Plan is maintained in accordance with Section 401 et
seq. of the Internal Revenue Code of 1986, as amended and the Employee
32
<PAGE>
Retirement Income Security Act of 1974, as amended and because it is
intended that all purchases of Common Shares will be made on the open
market by the Trustee of the Plan, NIPSCO does not intend to have any
net proceeds from the sale of the Common Shares offered under the
terms of the Plan.
PLAN OF DISTRIBUTION
The Common Shares being offered are offered pursuant to the Plan,
the terms of which provide for the purchase of Common Shares.
DESCRIPTION OF COMMON SHARES
NIPSCO's certificate of incorporation authorizes the issuance of
400,000,000 Common Shares, without par value, of which 117,525,257
were issued and outstanding on October 31, 1998. The description of
the Common Shares is incorporated by reference into this Prospectus.
See "Incorporation of Information by Reference" for information on how
to obtain a copy of this description.
EXPERTS
The consolidated financial statements and schedules of NIPSCO and
its subsidiaries incorporated by reference in this Prospectus from
NIPSCO's Annual Report on Form 10-K for the year ended December 31,
1998, and the Current Report on Form 8-K dated February 8, 1999, have
been audited by Arthur Andersen LLP, independent public accountants,
as indicated in their reports with respect thereto, and are incorporated
herein in reliance upon the authority of such firm as experts in giving
said reports.
The consolidated financial statements and schedule of Bay State
and subsidiaries as of September 30, 1998 and 1997, and for each of
the years in the three-year period ended September 30, 1998, have been
incorporated by reference herein and in the registration statement in
reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The reports of KPMG Peat Marwick LLP covering the September 30,
1998 financial statements contains an explanatory paragraph that
states that Bay State changed its method of accounting for
postretirement benefit plans during the year ended September 30, 1998.
LEGAL MATTERS
Certain legal matters in connection with the Common Shares
offered hereby have been passed upon for NIPSCO by Schiff Hardin &
Waite, Chicago, Illinois.
33
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the offering are as
follows:
Registration fee under the Securities Act . . . . . . $ 106
Legal fees and expenses . . . . . . . . . . . . . . . 25,000
Accounting fees and expenses . . . . . . . . . . . . . 15,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . 7,500
------
$ 47,606
Total . . . . . . . . . . . . . . . . . $
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-Laws of NIPSCO provide for indemnification by NIPSCO of
each of its directors and officers to the fullest extent permitted by
law for liability of such director or officer arising by reason of his
or her status as a director or officer of NIPSCO or its subsidiaries.
Under NIPSCO's By-Laws as well as the Indiana Business Corporation Law
(the "Indiana BCL"), NIPSCO is required to indemnify its directors and
officers against expenses, judgments, decrees, fines, penalties and
settlements actually and reasonably incurred by such person in
connection with any action, suit or proceeding, whether civil,
criminal, administrative or investigative, to which such person is a
party by reason of his or her connection with NIPSCO, provided that
such person acted in good faith and in a manner he or she reasonably
believed to be in the best interest of NIPSCO, or, with respect to a
criminal proceeding, has no reasonable cause to believe that his or
her conduct was unlawful.
The By-Laws of NIPSCO provide that, except where a director or
officer is substantially and finally successful on the merits, NIPSCO
may not indemnify a director or officer (unless ordered by a court)
until after a determination has been made that indemnification of the
director or officer is permissible because he or she met the
applicable standards of conduct. NIPSCO also may not advance expenses
prior to the disposition of an action, suit or proceeding until: (a)
the director or officer provides NIPSCO with a written affirmation of
his or her good faith belief that he or she has met the applicable
standards of conduct and an undertaking to repay the advance if it is
ultimately determined that he or she did not meet the applicable
standards of conduct, and (b) a determination has been made, that,
based on the facts then known to those making the determination, the
director or officer met the applicable standards of conduct. The
determination that a director or officer has met the applicable
standards of conduct may be made by a majority vote of a quorum
consisting of disinterested directors, a majority vote of a committee
designated by the board of directors consisting of two or more
disinterested directors (only if a quorum of the board cannot be
II-1
<PAGE>
obtained), special legal counsel or a majority vote of disinterested
shareholders.
As authorized under NIPSCO's By-Laws and the Indiana BCL, NIPSCO
and its subsidiaries have insurance which insures directors and
officers for acts committed as such directors or officers which are
determined not to be indemnifiable under NIPSCO's indemnity
provisions.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of NIPSCO pursuant to the foregoing provisions, or
otherwise, NIPSCO has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by NIPSCO of expenses
incurred or paid by a director, officer or controlling person of
NIPSCO in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection
with the securities being registered, NIPSCO will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 16. EXHIBITS.
The Exhibits filed herewith are set forth on the Exhibit Index
filed as part of this Registration Statement.
ITEM 17. UNDERTAKINGS.
(a) NIPSCO hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
II-2
<PAGE>
reflected in the form of prospectus filed with the
Commission pursuant to Rule 242(b) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to
such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii)
of this section do not apply if the registration statement
is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with
or furnished to the Commission by NIPSCO pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorpo-
rated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) NIPSCO hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of
NIPSCO's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15 (d) of the
Exchange Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of NIPSCO pursuant to the foregoing provisions, or otherwise,
NIPSCO has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by NIPSCO of expenses incurred or paid by a director, officer
or controlling person of NIPSCO in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
II-3
<PAGE>
controlling person in connection with the securities being registered,
NIPSCO will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Merrillville,
State of Indiana, on December 1, 1998.
NIPSCO INDUSTRIES, INC.
(Registrant)
By: /s/ Gary L. Neale
-------------------------------
Gary L. Neale
Chairman and President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Stephen P. Adik the true and lawful attorney-in-fact and
agent of the undersigned, with full power of substitution and
resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission,
and hereby grants to such attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
necessary to be done, fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Gary L. Neale Chairman, President and Director December 1, 1998
----------------------------------- (Principal Executive Officer)
Gary L. Neale
/s/ Stephen P. Adik Executive Vice President (Principal December 1, 1998
----------------------------------- Financial Officer and Principal
Stephen P. Adik Accounting Officer)
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Steven C. Beering Director December 1, 1998
-----------------------------------
Steven C. Beering
/s/ Arthur J. Decio Director December 1, 1998
-----------------------------------
Arthur J. Decio
/s/ James T. Morris Director December 1, 1998
-----------------------------------
James T. Morris
/s/ Denis E. Ribordy Director December 1, 1998
-----------------------------------
Denis E. Ribordy
/s/ Ian M. Rolland Director December 1, 1998
-----------------------------------
Ian M. Rolland
/s/ John W. Thompson Director December 1, 1998
-----------------------------------
John W. Thompson
/s/ Robert J. Welsh Director December 1, 1998
-----------------------------------
Robert J. Welsh
/s/ Carolyn Y. Woo Director December 1, 1998
-----------------------------------
Carolyn Y. Woo
----------------------------------- Director
Roger A. Young
/TABLE
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.1 Form of Bay State Gas Company Savings Plan for Operating
Employees.
4.2* Amended and Restated Agreement and Plan of Merger dated as
of December 18, 1997, and amended and restated as of March
4, 1998, and further amended as of November 16, 1998, among
NIPSCO Industries, Inc., Bay State Gas Company and
Acquisition Gas Company, Inc. contained in Bay State's
Current Report on Form 8-K filed with the Commission on
November 25, 1998.
4.3* The description of NIPSCO's Common Shares contained in
NIPSCO's Registration Statement on Form 8-B filed with the
Commission on November 25, 1987.
5 Opinion of Schiff Hardin & Waite.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Schiff Hardin & Waite (included in its opinion
filed as Exhibit 5).
24 Powers of Attorney (as set forth in the signature pages
hereto).
__________
* Incorporated by reference.
EXHIBIT 4.1
-----------
BAY STATE GAS COMPANY
SAVINGS PLAN FOR
OPERATING EMPLOYEES
Plan and Trust Agreement
As Amended and Restated
Effective April 1, 1995
<PAGE>
BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES AND TRUST
AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 1995
Bay State Gas Company previously established the Bay State Gas Company
Savings Plan for Operating Employees for the benefit of eligible
employees of the Company and its participating affiliates. The Plan
is intended to constitute a qualified profit sharing plan, as
described in Code section 401(a), which includes a qualified cash or
deferred arrangement, as described in Code section 401(k).
The provisions of this Plan and Trust relating to the Trustee
constitute the trust agreement which is entered into by and between
Bay State Gas Company and Wells Fargo Bank, National Association. The
Trust is intended to be tax exempt as described under Code section
501(a).
The Plan constitutes an amendment and restatement of the Bay State Gas
Company Savings Plan for Operating Employees effective April 1, 1995,
which was originally established effective as of January 1, 1988, and
its related trust agreement.
The Bay State Gas Company Savings Plan for Operating Employees and
Trust, as set forth in this document, is hereby amended and restated
effective as of April 1, 1995.
Date: January 31, 1996 Bay State Gas Company
By: /s/ Charles H. Tenney III
-----------------------------------------
Title: Chairman of Benfits Committee
The trust agreement set forth in those provisions of this Plan and
Trust which relate to the Trustee is hereby executed.
Date: February 6, 1996 BZW Barclays Global Investors,
National Association
By: /s/
-----------------------------------------
Title: Principal
Date: February 6, 1996 BZW Barclays Global Investors,
National Association
By: /s/ Gwyn E. Slack
-----------------------------------------
Title: Principal
<PAGE>
TABLE OF CONTENTS
1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
2 ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Ineligible Employees . . . . . . . . . . . . . . . . . 10
2.3 Ineligible or Former Participants . . . . . . . . . . . 10
3 PARTICIPANT CONTRIBUTIONS . . . . . . . . . . . . . . . . . 10
3.1 Employee Pre-Tax Contribution Election . . . . . . . . 10
3.2 Changing a Contribution Election . . . . . . . . . . . 10
3.3 Revoking and Resuming a Contribution Election . . . . . 11
3.4 Contribution Percentage Limits . . . . . . . . . . . . 11
3.5 Refunds When Contribution Dollar Limit Exceeded . . . . 11
3.6 Timing, Posting and Tax Considerations . . . . . . . . 12
4 ROLLOVERS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS . 12
4.1 Rollovers . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Transfers From and To Other Qualified Plans . . . . . . 13
5 EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 13
5.1 Employer Contributions . . . . . . . . . . . . . . . . 13
6 ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Individual Participant Accounting . . . . . . . . . . . 14
6.2 Sweep Account is Transaction Account . . . . . . . . . 14
6.3 Trade Date Accounting and Investment Cycle . . . . . . 14
6.4 Accounting for Investment Funds . . . . . . . . . . . . 14
6.5 Payment of Fees and Expenses . . . . . . . . . . . . . 15
6.6 Accounting for Participant Loans . . . . . . . . . . . 16
6.7 Error Correction . . . . . . . . . . . . . . . . . . . 16
6.8 Participant Statements . . . . . . . . . . . . . . . . 16
6.9 Special Accounting During Conversion Period . . . . . . 16
6.10 Accounts for QDRO Beneficiaries . . . . . . . . . . . . 16
7 INVESTMENT FUNDS AND ELECTIONS . . . . . . . . . . . . . . . 17
7.1 Investment Funds . . . . . . . . . . . . . . . . . . . 17
7.2 Investment Fund Elections . . . . . . . . . . . . . . . 17
7.3 Responsibility for Investment Choice . . . . . . . . . 18
7.4 Default if No Election . . . . . . . . . . . . . . . . 18
7.5 Timing . . . . . . . . . . . . . . . . . . . . . . . . 18
7.6 Investment Fund Election Change Fees . . . . . . . . . 18
8 VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.1 Fully Vested Contribution Accounts . . . . . . . . . . 18
9 PARTICIPANT LOANS . . . . . . . . . . . . . . . . . . . . . 19
9.1 Participant Loans Permitted . . . . . . . . . . . . . . 19
9.2 Loan Application, Note and Security . . . . . . . . . . 19
9.3 Spousal Consent . . . . . . . . . . . . . . . . . . . . 19
i 11/17/95
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9.4 Loan Approval . . . . . . . . . . . . . . . . . . . . . 19
9.5 Loan Funding Limits, Account Sources and Funding Order 19
9.6 Maximum Number of Loans . . . . . . . . . . . . . . . . 20
9.7 Source and Timing of Loan Funding . . . . . . . . . . . 20
9.8 Interest Rate . . . . . . . . . . . . . . . . . . . . . 20
9.9 Loan Payment . . . . . . . . . . . . . . . . . . . . . 20
9.10 Loan Payment Hierarchy . . . . . . . . . . . . . . . . 21
9.11 Repayment Suspension . . . . . . . . . . . . . . . . . 21
9.12 Loan Default . . . . . . . . . . . . . . . . . . . . . 21
9.13 Call Feature . . . . . . . . . . . . . . . . . . . . . 21
10 IN-SERVICE WITHDRAWALS . . . . . . . . . . . . . . . . . . . 22
10.1 In-Service Withdrawals Permitted . . . . . . . . . . . 22
10.2 In-Service Withdrawal Application and Notice . . . . . 22
10.3 Spousal Consent . . . . . . . . . . . . . . . . . . . . 22
10.4 In-Service Withdrawal Approval . . . . . . . . . . . . 22
10.5 Minimum Amount, Payment Form and Medium . . . . . . . . 23
10.6 Source and Timing of In-Service Withdrawal Funding . . 23
10.7 Hardship Withdrawals . . . . . . . . . . . . . . . . . 23
10.8 Prior After-Tax Account Withdrawals . . . . . . . . . . 25
10.9 Rollover Account Withdrawals . . . . . . . . . . . . . 25
10.10 Over Age 59 1/2 Withdrawals . . . . . . . . . . . . . 26
10.11 Prior Company Account Plus Withdrawals . . . . . . . . 26
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW . . 27
11.1 Benefit Information, Notices and Election . . . . . . . 27
11.2 Spousal Consent . . . . . . . . . . . . . . . . . . . . 28
11.3 Payment Form and Medium . . . . . . . . . . . . . . . . 28
11.4 Distribution of Small Amounts . . . . . . . . . . . . . 28
11.5 Source and Timing of Distribution Funding . . . . . . . 28
11.6 Latest Commencement Permitted . . . . . . . . . . . . . 29
11.7 Payment Within Life Expectancy . . . . . . . . . . . . 29
11.8 Incidental Benefit Rule . . . . . . . . . . . . . . . . 29
11.9 Payment to Beneficiary . . . . . . . . . . . . . . . . 30
11.10 Beneficiary Designation . . . . . . . . . . . . . . . 30
12 ADP AND ACP TESTS . . . . . . . . . . . . . . . . . . . . . 31
12.1 Contribution Limitation Definitions . . . . . . . . . . 31
12.2 ADP and ACP Tests . . . . . . . . . . . . . . . . . . . 34
12.3 Correction of ADP and ACP Tests . . . . . . . . . . . . 34
12.4 Multiple Use Test . . . . . . . . . . . . . . . . . . . 36
12.5 Correction of Multiple Use Test . . . . . . . . . . . . 36
12.6 Adjustment for Investment Gain or Loss . . . . . . . . 36
12.7 Testing Responsibilities and Required Records . . . . . 36
12.8 Separate Testing . . . . . . . . . . . . . . . . . . . 37
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS . . . . . . . . 37
13.1 "Annual Addition" Defined . . . . . . . . . . . . . . . 37
13.2 Maximum Annual Addition . . . . . . . . . . . . . . . . 37
13.3 Avoiding an Excess Annual Addition . . . . . . . . . . 38
13.4 Correcting an Excess Annual Addition . . . . . . . . . 38
13.5 Correcting a Multiple Plan Excess . . . . . . . . . . . 38
ii 11/17/95
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13.6 "Defined Benefit Fraction" Defined . . . . . . . . . . 38
13.7 "Defined Contribution Fraction" Defined . . . . . . . . 39
13.8 Combined Plan Limits and Correction . . . . . . . . . . 39
14 TOP HEAVY RULES . . . . . . . . . . . . . . . . . . . . . . 39
14.1 Top Heavy Definitions . . . . . . . . . . . . . . . . . 39
14.2 Special Contributions . . . . . . . . . . . . . . . . . 41
14.3 Adjustment to Combined Limits for Different Plans . . . 42
15 PLAN ADMINISTRATION . . . . . . . . . . . . . . . . . . . . 42
15.1 Plan Delineates Authority and Responsibility . . . . . 42
15.2 Fiduciary Standards . . . . . . . . . . . . . . . . . . 42
15.3 Company is ERISA Plan Administrator . . . . . . . . . . 43
15.4 Administrator Duties . . . . . . . . . . . . . . . . . 43
15.5 Advisors May be Retained . . . . . . . . . . . . . . . 44
15.6 Delegation of Administrator Duties . . . . . . . . . . 44
15.7 Committee Operating Rules . . . . . . . . . . . . . . . 44
16 MANAGEMENT OF INVESTMENTS . . . . . . . . . . . . . . . . . 45
16.1 Trust Agreement . . . . . . . . . . . . . . . . . . . . 45
16.2 Investment Funds . . . . . . . . . . . . . . . . . . . 45
16.3 Authority to Hold Cash . . . . . . . . . . . . . . . . 46
16.4 Trustee to Act Upon Instructions . . . . . . . . . . . 46
16.5 Administrator Has Right to Vote Registered Investment
Company Shares . . . . . . . . . . . . . . . . . . . . 46
16.6 Custom Fund Investment Management . . . . . . . . . . . 46
16.7 Master Custom Fund . . . . . . . . . . . . . . . . . . 47
16.8 Authority to Segregate Assets . . . . . . . . . . . . . 48
16.9 Maximum Permitted Investment in Company Stock . . . . . 48
16.10 Participants Have Right to Vote and Tender Company
Stock . . . . . . . . . . . . . . . . . . . . . . . . . 48
16.11 Registration and Disclosure for Company Stock . . . . 48
17 TRUST ADMINISTRATION . . . . . . . . . . . . . . . . . . . . 49
17.1 Trustee to Construe Trust . . . . . . . . . . . . . . . 49
17.2 Trustee To Act As Owner of Trust Assets . . . . . . . . 49
17.3 United States Indicia of Ownership . . . . . . . . . . 49
17.4 Tax Withholding and Payment . . . . . . . . . . . . . . 50
17.5 Trust Accounting . . . . . . . . . . . . . . . . . . . 50
17.6 Valuation of Certain Assets . . . . . . . . . . . . . . 50
17.7 Legal Counsel . . . . . . . . . . . . . . . . . . . . . 51
17.8 Fees and Expenses . . . . . . . . . . . . . . . . . . . 51
17.9 Trustee Duties and Limitations . . . . . . . . . . . . 51
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION . . . . . 51
18.1 Plan Does Not Affect Employment Rights . . . . . . . . 51
18.2 Limited Return of Contributions . . . . . . . . . . . . 52
18.3 Assignment and Alienation . . . . . . . . . . . . . . . 52
18.4 Facility of Payment . . . . . . . . . . . . . . . . . . 52
18.5 Reallocation of Lost Participant's Accounts . . . . . . 53
18.6 Claims Procedure . . . . . . . . . . . . . . . . . . . 53
18.7 Construction . . . . . . . . . . . . . . . . . . . . . 54
iii 11/17/95
<PAGE>
18.8 Jurisdiction and Severability . . . . . . . . . . . . . 54
18.9 Indemnification by Employer . . . . . . . . . . . . . . 54
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION . . . . . . 55
19.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . 55
19.2 Merger . . . . . . . . . . . . . . . . . . . . . . . . 56
19.3 Divestitures . . . . . . . . . . . . . . . . . . . . . 56
19.4 Plan Termination . . . . . . . . . . . . . . . . . . . 56
19.5 Amendment and Termination Procedures . . . . . . . . . 57
19.6 Termination of Employer's Participation . . . . . . . . 57
19.7 Replacement of the Trustee . . . . . . . . . . . . . . 58
19.8 Final Settlement and Accounting of Trustee . . . . . . 58
APPENDIX A - INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . 59
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES . . . . . . . . . 60
APPENDIX C - LOAN INTEREST RATE . . . . . . . . . . . . . . . . . 61
SCHEDULE A - EMPLOYER CONTRIBUTIONS LOCAL 326 -
LAWRENCE EMPLOYEES . . . . . . . . . . . . . . . . . 62
SCHEDULE B - EMPLOYER CONTRIBUTIONS LOCAL 273 -
BROCKTON EMPLOYEES . . . . . . . . . . . . . . . . . 63
SCHEDULE C - EMPLOYER CONTRIBUTIONS LOCAL 341 -
PORTLAND EMPLOYEES . . . . . . . . . . . . . . . . . 64
SCHEDULE D - EMPLOYER CONTRIBUTIONS LOCAL 341 -
GRANITE STATE EMPLOYEES . . . . . . . . . . . . . . 65
SCHEDULE D - EMPLOYER CONTRIBUTIONS LOCAL 12026 -
SPRINGFIELD EMPLOYEES . . . . . . . . . . . . . . . 66
SCHEDULE E - EMPLOYER CONTRIBUTIONS LOCAL 486 -
SPRINGFIELD EMPLOYEES . . . . . . . . . . . . . . . 67
SCHEDULE F - EMPLOYER CONTRIBUTIONS LOCAL 14930 -
PORTSMOUTH EMPLOYEES . . . . . . . . . . . . . . . . 68
SCHEDULE G - EMPLOYER CONTRIBUTIONS LOCAL 8-366 -
BROCKTON PROPANE EMPLOYEES . . . . . . . . . . . . . 69
SCHEDULE H - EMPLOYER CONTRIBUTIONS LOCAL 14930 -
LEWISTON EMPLOYEES . . . . . . . . . . . . . . . . . 70
SCHEDULE I - EMPLOYER CONTRIBUTIONS LOCAL 14930 -
SALEM PROPANE EMPLOYEES . . . . . . . . . . . . . . 71
iv 11/17/95
<PAGE>
1 DEFINITIONS
When capitalized, the words and phrases below have the following
meanings unless different meanings are clearly required by the
context:
1.1 "Account". The records maintained for purposes of
accounting for a Participant's interest in the Plan.
"Account" may refer to one or all of the following accounts
which have been created on behalf of a Participant to hold
specific types of Contributions under the Plan or amounts
transferred from the Bay State Gas Company Employee Savings
Plan on behalf of a Participant who was a former participant
in the Bay State Gas Company Employee Savings Plan:
(a) "Employee Pre-Tax Account". An account created to hold
Employee Pre-Tax Contributions or amounts transferred
from the Bay State Gas Company Employee Savings Plan
designated as "Employee Pre-Tax Account" amounts
thereunder.
(b) "Prior After-Tax Account". An account created to hold
amounts transferred from the Bay State Gas Company
Employee Savings Plan designated as "Prior After-Tax
Account" amounts thereunder.
(c) "Rollover Account". An account created to hold
Rollover Contributions or amounts transferred from the
Bay State Gas Company Employee Savings Plan designated
as "Rollover Account" amounts thereunder.
(d) "Employer Account". An account created to hold
Employer Contributions or amounts transferred from the
Bay State Gas Company Employee Savings Plan designated
as "Employer Match Account" amounts thereunder.
(e) "Prior Company Account". An account created to hold
amounts transferred from the Bay State Gas Company
Employee Savings Plan designated as "Prior Company
Account" amounts thereunder.
1.2 "ACP" or "Average Contribution Percentage". The percentage
calculated in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all or a
portion of the duties of the Administrator under the Plan to
a Committee in accordance with Section 15.6.
1.4 "ADP" or "Average Deferral Percentage". The percentage
calculated in accordance with Section 12.1.
1 11/17/95
<PAGE>
1.5 "Beneficiary". The person or persons who is to receive
benefits after the death of the Participant pursuant to the
"Beneficiary Designation" paragraph in Section 11, or as a
result of a QDRO.
1.6 "Code". The Internal Revenue Code of 1986, as amended.
Reference to any specific Code section shall include such
section, any valid regulation promulgated thereunder, and
any comparable provision of any future legislation amending,
supplementing or superseding such section.
1.7 "Committee". If applicable, the committee which has been
appointed by the Company to administer the Plan in
accordance with Section 15.6.
1.8 "Company". Bay State Gas Company or any successor by
merger, purchase or otherwise.
1.9 "Company Stock". Shares of common stock of the Company,
its predecessor(s), or its successors or assigns, or any
corporation with or into which said corporation may be
merged, consolidated or reorganized, or to which a majority
of its assets may be sold.
1.10 "Compensation". The sum of a Participant's Taxable Income
and salary reductions, if any, pursuant to Code sections
125, 402(e)(3), 402(h), 403(b), 414(h)(2) or 457.
For purposes of determining benefits under this Plan,
Compensation is limited to $150,000, (as adjusted for the
cost of living pursuant to Code sections 401(a)(17) and
415(d)) per Plan Year. For purposes of the preceding
sentence, in the case of an HCE who is a 5% Owner or one of
the 10 most highly compensated Employees, (i) such HCE and
such HCE's family group (as defined below) shall be treated
as a single employee and the Compensation of each family
group member shall be aggregated with the Compensation of
such HCE, and (ii) the limitation on Compensation shall be
allocated among such HCE and his or her family group members
in proportion to each individual's Compensation before the
application of this sentence. For purposes of this Section,
the term "family group" shall mean an Employee's spouse and
lineal descendants who have not attained age 19 before the
close of the year in question.
For purposes of determining HCEs and key employees,
Compensation for the entire Plan Year shall be used. For
purposes of determining ADP and ACP, Compensation shall be
limited to amounts paid to an Eligible Employee while a
Participant.
2 11/17/95
<PAGE>
1.11 "Contribution". An amount contributed to the Plan by the
Employer or an Eligible Employee, and allocated by
contribution type to Participants' Accounts, as described in
Section 1.1. Specific types of contribution include:
(a) "Employee Pre-Tax Contribution". An amount contributed
by an eligible Participant in conjunction with his or
her Code section 401(k) salary deferral election which
shall be treated as made by the Employer on an eligible
Participant's behalf.
(b) "Rollover Contribution". An amount contributed by an
Eligible Employee which originated from another
employer's or an Employer's qualified plan.
(c) "Employer Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon
the amount contributed by the eligible Participant,
except that for certain periods prior to the Effective
Date "and allocated on a pay based formula" shall be
substituted for the preceding reference to "based upon
the amount contributed by the eligible Participant".
1.12 "Contribution Dollar Limit". The annual limit placed on
each Participant's Employee Pre-Tax Contributions, which
shall be $7,000 per calendar year (as adjusted for the cost
of living pursuant to Code sections 402(g)(5) and 415(d)).
For purposes of this Section, a Participant's Employee Pre-
Tax Contributions shall include (i) any employer
contribution made under any qualified cash or deferred
arrangement as defined in Code section 401(k) to the extent
not includible in gross income for the taxable year under
Code section 402(e)(3) or 402(h)(1)(B) (determined without
regard to Code section 402(g)), and (ii) any employer
contribution to purchase an annuity contract under Code
section 403(b) under a salary reduction agreement (within
the meaning of Code section 3121(a)(5)(D)).
1.13 "Conversion Period". The period of converting the prior
accounting system of the Plan and Trust, if such Plan and
Trust were in existence prior to the Effective Date, or the
prior accounting system of any plan and trust which is
merged into this Plan and Trust subsequent to the Effective
Date, to the accounting system described in Section 6.
1.14 "Direct Rollover". An Eligible Rollover Distribution that
is paid directly to an Eligible Retirement Plan for the
benefit of a Distributee.
1.15 "Disability". A Participant's total and permanent, mental
or physical disability resulting in termination of
3 11/17/95
<PAGE>
employment as evidenced by presentation of medical evidence
satisfactory to the Administrator.
1.16 "Distributee". An Employee or former Employee, the
surviving spouse of an Employee or former Employee and a
spouse or former spouse of an Employee or former Employee
determined to be an alternate payee under a QDRO.
1.17 "Effective Date". The date upon which the provisions of
this document become effective. This date is April 1, 1995,
unless stated otherwise. ln general, the provisions of this
document only apply to Participants who are Employees on or
after the Effective Date. However, investment and
distribution provisions apply to all Participants with
Account balances to be invested or distributed after the
Effective Date.
1.18 "Eligible Employee". An Employee of an Employer, whose
compensation and conditions of employment are covered by a
collective bargaining agreement to which an Employer is a
party, which agreement calls for the Employee's
participation in the Plan, which collective bargaining units
as of the Effective Date are:
(a) Lawrence Division, International Brotherhood of
Electrical Workers, Local 326 (a "Local 326 - Lawrence
Employee");
(b) Brockton Division, Utility Workers' Union of America,
AFL-CIO, Local 273 (a "Local 273 - Brockton Employee");
(c) Northern Utilities, Inc., Portland Division,
Brotherhood of Utility Workers of New England,
Incorporated, Local No. 341 (a "Local 341 - Portland
Employee");
(d) Granite State Gas Transmission, Inc., Brotherhood of
Utility Workers of New England, Incorporated, Local No.
341 (a "Local 341 - Granite State Employee");
(e) Springfield Division, United Steel Workers of America,
AFL-CIO, Local - No. 12026 (a "Local 12026 -
Springfield Employee");
(f) Springfield Division, International Brotherhood of
Electrical Workers, Local No. 486 (a "Local 486 -
Springfield Employee");
(g) Northern Utilities, Inc, Portsmouth Division, United
Steelworkers of America, AFL-CIO-CLC, Local No. 14930
(a "Local 14930 - Portsmouth Employee");
4 11/17/95
<PAGE>
(h) Brockton Propane, Oil, Chemical and Atomic Workers
International Union, Quincy Local 8-366 (a "Local 8-366
- Brockton Propane Employee");
(i) Northern Utilities, Inc., Lewiston Division, United
Steelworkers of America, AFL-CIO, Amalgamated Local No.
14930, formerly Local No. 13868 (a "Local 14930 -
Lewiston Employee"); and
(j) Northern Utilities, Inc., Salem Propane, United
Steelworkers of America, AFL-CIO-CLC, Local No. 14930,
(a "Local 14930 - Salem Propane Employee").
1.19 "Eligible Retirement Plan". 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 a Distributee's Eligible Rollover Distribution,
except that with regard to an Eligible Rollover Distribution
to a surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement
annuity.
1.20 "Eligible Rollover Distribution". A distribution of all or
any portion of the balance to the credit of a Distributee,
excluding a distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of a
Distributee or the joint lives (or joint life expectancies)
of a Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more;
a distribution to the extent such distribution is required
under Code section 401(a)(9); and the portion of a
distribution that is not includible in gross income
(determined without regard to the exclusion for net
unrealized appreciation with respect to Employer
securities).
1.21 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom
any income for such employment is subject to
withholding of income or social security taxes, or
(b) a Leased Employee.
1.22 "Employer". The Company and any Subsidiary or other Related
Company of either the Company or a Subsidiary which adopts
this Plan with the approval of the Company.
5 11/17/95
<PAGE>
1.23 "ERISA". The Employee Retirement Income Security Act of
1974, as amended. Reference to any specific section shall
include such section, any valid regulation promulgated
thereunder, and any comparable provision of any future
legislation amending, supplementing or superseding such
section.
1.24 "HCE" or "Highly Compensated Employee". An Employee
described as a Highly Compensated Employee in Section 12.
1.25 "Hour of Service". Each hour for which an Employee is
entitled to:
(a) payment for the performance of duties for any Related
Company;
(b) payment from any Related Company for any period during
which no duties are performed (irrespective of whether
the employment relationship has terminated) due to
vacation, holiday, sickness, incapacity (including
disability), layoff, leave of absence, jury duty or
military service;
(c) back pay, irrespective of mitigation of damages, by
award or agreement with any Related Company (and these
hours shall be credited to the period to which the
agreement pertains); or
(d) no payment, but is on a Leave of Absence (and these
hours shall be based upon his or her normally scheduled
hours per week or a 40 hour week if there is no regular
schedule).
The crediting of hours for which no duties are performed
shall be in accordance with Department of Labor regulation
sections 2530.200b-2(b) and (c). Actual hours shall be used
whenever an accurate record of hours are maintained for an
Employee. Otherwise, an equivalent number of hours shall be
credited for each payroll period in which the Employee would
be credited with at least 1 hour. The payroll period
equivalencies are 45 hours weekly, 90 hours biweekly, 95
hours semimonthly and 190 hours monthly.
An Employee's service with a predecessor or acquired company
shall only be counted in the determination of his or her
Hours of Service for eligibility and/or vesting purposes if
(1) the Company directs that credit for such service be
granted, or (2) a qualified plan of the predecessor or
acquired company is subsequently maintained by any Employer
or Related Company.
6 11/17/95
<PAGE>
1.26 "Ineligible". The Plan status of an individual during the
period in which he or she is (1) an Employee of a Related
Company which is not then an Employer, (2) an Employee, but
not an Eligible Employee, or (3) not an Employee.
1.27 "Investment Fund" or "Fund". An investment fund as
described in Section 16.2. The Investment Funds
authorized by the Administrator to be offered under the
Plan as of the Effective Date are set forth in Appendix
A.
1.28 "Leased Employee". An individual who is deemed to be an
employee of any Related Company as provided in Code section
414(n) or (o).
1.29 "Leave of Absence". A period during which an individual is
deemed to be an Employee, but is absent from active
employment, provided that the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed
forces and the individual returns to active employment
within the period during which he or she retains
employment rights under federal law.
1.30 "Loan Account". The record maintained for purposes of
accounting for a Participant's loan and payments of
principal and interest thereon.
1.31 "NHCE" or "Non-Highly Compensated Employee". An Employee
described as a Non-Highly Compensated Employee in Section
12.
1.32 "Normal Retirement Date". The date of a Participant's 65th
birthday.
1.33 "Owner". A person with an ownership interest in the
capital, profits, outstanding stock or voting power of a
Related Company within the meaning of Code section 318 or
416 (which exclude indirect ownership through a qualified
plan).
1.34 "Participant". An Eligible Employee who begins to
participate in the Plan after completing the eligibility
requirements as described in Section 2.1. An Eligible
Employee who makes a Rollover Contribution prior to
completing the eligibility requirements as described in
Section 2.1 shall also be considered a Participant, except
that he or she shall not be considered a Participant for
purposes of provisions related to Contributions, other than
a Rollover Contribution, until he or she completes the
7 11/17/95
<PAGE>
eligibility requirements as described in Section 2.1. A
Participant's participation continues until his or her
employment with all Related Companies ends and his or her
Account is distributed or forfeited.
1.35 "Pay". The straight time wages, exclusive of all daily or
weekly overtime, bonuses, supplementary compensation
payments, retirement benefits and other forms of non-
recurring compensation, but inclusive of shift
differentials, Saturday/Sunday premiums, compensation paid
at an alternative rate (not including compensation paid at
an alternative rate to a salesperson) and seventy-five
percent of sales commissions, paid to an Eligible Employee
by an Employer while a Participant during the current
period.
Pay is neither increased by any salary credit or decreased
by any salary reduction pursuant to Code sections 125 or
402(e)(3). Pay is limited to $150,000 (as adjusted for the
cost of living pursuant to Code sections 401(a)(17) and
415(d)) per Plan Year.
1.36 "Plan". The Bay State Gas Company Savings Plan for
Operating Employees set forth in this document, as from
time to time amended.
1.37 "Plan Year". The annual accounting period of the Plan and
Trust which ends on each December 31.
1.38 "QDRO". A domestic relations order which the Administrator
has determined to be a qualified domestic relations order
within the meaning of Code section 414(p).
1.39 "Related Company". With respect to any Employer, that
Employer and any corporation, trade or business which is,
together with that Employer, a member of the same controlled
group of corporations, a trade or business under common
control, or an affiliated service group within the meaning
of Code sections 414(b), (c), (m) or (o), except that for
purposes of Section 13 "within the meaning of Code sections
414(b), (c), (m) or (o), as modified by Code section 415(h)"
shall be substituted for the preceding reference to "within
the meaning of Code section 414(b), (c), (m) or (o)".
1.40 "Settlement Date". For each Trade Date, the Trustee's next
business day.
1.41 "Spousal Consent". The written consent given by a spouse to
a Participant's Beneficiary designation. The spouse's
consent must acknowledge the effect on the spouse of the
Participant's designation, and be duly witnessed by a Plan
representative or notary public. Spousal Consent shall be
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valid only with respect to the spouse who signs the Spousal
Consent and only for the particular choice made by the
Participant which requires Spousal Consent. A Participant
may revoke (without Spousal Consent) a prior designation
that required Spousal Consent at any time before payments
begin. Spousal Consent also means a determination by the
Administrator that there is no spouse, the spouse cannot be
located, or such other circumstances as may be established
by applicable law.
1.42 "Subsidiary". A company which is 50% or more owned,
directly or indirectly, by the Company.
1.43 "Sweep Account". The subsidiary Account for each
Participant through which all transactions are processed,
which is invested in interest bearing deposits of the
Trustee.
1.44 "Sweep Date". The cut off date and time for receiving
instructions for transactions to be processed on the next
Trade Date.
1.45 "Taxable Income". Compensation in the amount reported by
the Employer or a Related Company as 'Wages, tips, other
compensation" on Form W-2, or any successor method of
reporting under Code section 6041(d).
1.46 "Trade Date". Each day the Investment Funds are valued,
which is normally every day the assets of such Funds are
traded.
1.47 "Trust". The legal entity created by those provisions of
this document which relate to the Trustee. The Trust is
part of the Plan and holds the Plan assets which are
comprised of the aggregate of Participants' Accounts and any
unallocated funds invested in deposit or money market type
assets pending allocation to Participants' Accounts or
disbursement to pay Plan fees and expenses.
1.48 "Trustee". Wells Fargo Bank, National Association.
2 ELIGIBILITY
2.1 Eligibility
All Participants as of April 1, 1995 shall continue their
eligibility to participate. Each other Eligible Employee
shall become a Participant on the first day of the next
month after the date he or she completes a 12-month
eligibility period in which he or she is credited with at
least 1,000 Hours of Service. The initial eligibility
period begins on the date an Employee first performs an Hour
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of Service. Subsequent eligibility periods begin with the
start of each Plan Year beginning after the first Hour of
Service is performed.
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements,
but is Ineligible at the time participation would otherwise
begin (if he or she were not Ineligible), he or she shall
become a Participant on the first subsequent date on which
he or she is an Eligible Employee.
2.3 Ineligible or Former Participants
A Participant may not make or share in Plan Contributions,
nor generally be eligible for a new Plan loan, during the
period he or she is Ineligible, but he or she shall continue
to participate for all other purposes. An Ineligible
Participant or former Participant shall automatically become
an active Participant on the date he or she again becomes an
Eligible Employee.
3 PARTICIPANT CONTRIBUTIONS
3.1 Employee Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect
to reduce his or her Pay by an amount which does not exceed
the Contribution Dollar Limit, within the limits described
in the Contribution Percentage Limits paragraph of this
Section 3, and have such amount contributed to the Plan by
the Employer as an Employee Pre-Tax Contribution. The
election shall be made as a whole percentage of Pay in such
manner and with such advance notice as prescribed by the
Administrator. In no event shall an Employee's Employee
Pre-Tax Contributions under the Plan and comparable
contributions to all other plans, contracts or arrangements
of all Related Companies exceed the Contribution Dollar
400147Limit for the Employee's taxable year beginning in the
Plan Year.
3.2 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or
her Employee Pre-Tax Contribution election as of the first
day of any month in such manner and with such advance notice
as prescribed by the Administrator, and such election shall
be effective with the first payroll paid after such date.
Participants' Contribution election percentages shall
automatically apply to Pay increases or decreases.
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3.3 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution election at
any time in such manner and with such advance notice as
prescribed by the Administrator, and such revocation shall
be effective with the first payroll paid after such date.
A Participant who is an Eligible Employee may resume
Contributions by making a new Contribution election at the
same time in which a Participant may change his or her
election in such manner and with such advance notice as
prescribed by the Administrator, and such election shall be
effective with the first payroll paid after such date.
3.4 Contribution Percentage Limits
The Administrator may establish and change from time to
time, in writing, without the necessity of amending this
Plan and Trust, the minimum, if applicable, and maximum
Employee Pre-Tax Contribution percentages, prospectively
(for the current Plan Year), for all Participants. In
addition, the Administrator may establish any lower
percentage limits for Highly Compensated Employees as it
deems necessary to satisfy the tests described in Section
12. As of the Effective Date, the Employee Pre-Tax
Contribution maximum percentage is 15%.
Irrespective of the limits that may be established by the
Administrator in accordance with this paragraph, in no event
shall the contributions made by or on behalf of a
Participant for a Plan Year exceed the maximum allowable
under Code section 415.
3.5 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Employee Pre-Tax Contributions for a
calendar year to this Plan and comparable contributions to
any other qualified defined contribution plan in excess of
the Contribution Dollar Limit may notify the Administrator
in writing by the following March 1 (or as late as April 14
if allowed by the Administrator) that an excess has
occurred. In this event, the amount of the excess specified
by the Participant adjusted for investment gain or loss,
shall be refunded to him or her by April 15 and shall not be
included as an Annual Addition under Code section 415 for
the year contributed. Refunds shall not include investment
gain or loss for the period between the end of the
applicable calendar year and the date of distribution.
Excess amounts shall first be taken from unmatched Employee
Pre-Tax Contributions and then from matched Employee Pre-Tax
Contributions. Any Employer Contributions attributable to
refunded excess Employee Pre-Tax Contributions as described
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in this Section shall be forfeited and used to reduce
Contributions made by an Employer as soon as
administratively feasible.
3.6 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover
Contributions, may only be made through payroll deduction.
Such amounts shall be paid to the Trustee in cash and posted
to each Participant's Account(s) as soon as such amounts can
reasonably be separated from the Employer's general assets
and balanced against the specific amount made on behalf of
each Participant. In no event, however, shall such amounts
be paid to the Trustee more than 90 days after the date
amounts are deducted from a Participant's Pay. Employee
Pre-Tax Contributions shall be treated as Contributions made
by an Employer in determining tax deductions under Code
section 404(a).
4 ROLLOVERS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS
4.1 Rollovers
The Administrator may authorize the Trustee to accept a
rollover contribution, within the meaning of Code section
402(c) or 408(d)(3)(A)(ii), in cash, directly from an
Eligible Employee or as a Direct Rollover from another
qualified plan on behalf of the Eligible Employee, even if
he or she is not yet a Participant. The Employee shall be
responsible for furnishing satisfactory evidence, in such
manner as prescribed by the Administrator, that the amount
is eligible for rollover treatment. A rollover contribution
received directly from an Eligible Employee must be paid to
the Trustee in cash within 60 days after the date received
by the Eligible Employee from a qualified plan or conduit
individual retirement account. Contributions described in
this paragraph shall be posted to the applicable Employee's
Rollover Account as of the date received by the Trustee.
If it is later determined that an amount contributed
pursuant to the above paragraph did not in fact qualify as a
rollover contribution under Code section 402(c) or
408(d)(3)(A)(ii), the balance credited to the Employee's
Rollover Account shall immediately be (1) segregated from
all other Plan assets, (2) treated as a nonqualified trust
established by and for the benefit of the Employee, and (3)
distributed to the Employee. Any such nonqualifying
rollover shall be deemed never to have been a part of the
Plan.
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<PAGE>
4.2 Transfers From and To Other Qualified Plans
The Administrator may instruct the Trustee to receive assets
in cash or in kind directly from another qualified plan or
transfer assets in cash or in kind directly to another
qualified plan; provided that a transfer should not be
directed if:
(a) any amounts are not exempted by Code section
401(a)(11)(B) from the annuity requirements of Code
section 417 unless, in the event of a receipt of
assets, the Plan complies with such requirements or, in
the event of a transfer of assets, the receiving plan
complies with such requirements; or
(b) any amounts include benefits protected by Code section
411(d)(6) which would not be preserved under applicable
Plan provisions, in the event of a receipt of assets
or, under the applicable provisions of the receiving
plan, in the event of a transfer of assets.
The Trustee may refuse the receipt of any transfer if:
(a) the Trustee finds the in-kind assets unacceptable; or
(b) instructions for posting amounts to Participants'
Accounts are incomplete.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee.
5 EMPLOYER CONTRIBUTIONS
5.1 Employer Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer
shall make Employer Contributions on behalf of each
Participant who contributed during the period and is so
eligible for Employer Contributions under his or her
governing collective bargaining agreement as set forth
in Schedules A though I.
(b) Amount and Allocation Method. The Employer
Contributions for each period shall be in an amount
determined by and allocated in accordance with the
governing collective bargaining agreement as set forth
in Schedules A through I.
(c) Timing, Medium and Posting. The Employer shall make
each period's Employer Contribution in cash as soon as
administratively feasible, and for purposes of
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<PAGE>
deducting such Contribution, not later than the
Employer's federal tax filing date, including
extensions. The Trustee shall post such amount to each
Participant's Employer Account once the total
Contribution received has been balanced against the
specific amount to be credited to each Participant's
Employer Account.
6 ACCOUNTING
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of
Accounts for each Participant in order to reflect
transactions both by type of Contribution and investment
medium. Financial transactions shall be accounted for at
the individual Account level by posting each transaction to
the appropriate Account of each affected Participant.
Participant Account values shall be maintained in shares for
the Investment Funds and in dollars for the Sweep and Loan
Accounts. At any point in time, the Account value shall be
determined using the most recent Trade Date values provided
by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep
Account shall be credited with interest up until the date on
which it is removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each
Trade Date. For any transaction to be processed as of a
Trade Date, the Trustee must receive instructions for the
transaction by the Sweep Date. Such instructions shall
apply to amounts held in the Account on that Sweep Date.
Financial transactions of the Investment Funds shall be
posted to Participants' Accounts as of the Trade Date, based
upon the Trade Date values provided by the Trustee, and
settled on the Settlement Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in
shares. The Trustee is responsible for determining the
share values of each Investment Fund as of each Trade Date.
To the extent an Investment Fund is comprised of collective
investment funds of the Trustee, or any other fiduciary to
the Plan, the share values shall be determined in accordance
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<PAGE>
with the rules governing such collective investment funds,
which are incorporated herein by reference. All other share
values shall be determined by the Trustee. The share value
of each Investment Fund shall be based on the fair market
value of its underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to
Account maintenance, transaction and Investment Fund
management and maintenance, as set forth below, are paid by
the Employer directly, such fees and expenses shall be paid
as set forth below. The Employer may pay a lower portion of
the fees and expenses allocable to the Accounts of
Participants who are no longer Employees or who are not
Beneficiaries, unless doing so would result in
discrimination.
(a) Account Maintenance: Account maintenance fees and
expenses, may include but are not limited to,
administrative, Trustee, government annual report
preparation, audit, legal, nondiscrimination testing
and fees for any other special services. Account
maintenance fees shall be charged to Participants on a
per Participant basis provided that no fee shall reduce
a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include
but are not limited to, periodic installment payment,
Investment Fund election change and loan fees.
Transaction fees shall be charged to the Participant's
Account involved in the transaction provided that no
fee shall reduce a Participant's Account balance below
zero.
(c) Investment Fund Management and Maintenance: Management
and maintenance fees and expenses related to the
Investment Funds shall be charged at the Investment
Fund level and reflected in the net gain or loss of
each Fund.
As of the Effective Date, a breakdown of which Plan fees and
expenses shall generally be borne by the Trust (and charged
to individual Participants' Accounts or charged at the
Investment Fund level and reflected in the net gain or loss
of each Fund) and those that shall be paid by the Employer
is set forth in Appendix B and may be changed from time to
time by the Administrator, in writing, without the necessity
of amending this Plan and Trust.
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<PAGE>
The Trustee shall have the authority to pay any such fees
and expenses, which remain unpaid by the Employer for 60
days, from the Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Loan Account
of the Participant and accounted for in dollars as an
earmarked asset of the borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's
Account balance with the amount that would be credited to
the Account had no error or omission been made. Funds
necessary for any such restoration shall be provided through
payment made by the Employer, or by the Trustee to the
extent the error or omission is attributable to actions or
inactions of the Trustee.
6.8 Participant Statements
The Administrator shall provide Participants with statements
of their Accounts as soon after the end of each quarter of
the Plan Year as administratively feasible.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable
accounting methods in performing their respective duties
during any Conversion Period. This includes, but is not
limited to, the method for allocating net investment gains
or losses and the extent, if any, to which contributions
received by and distributions paid from the Trust during
this period share in such allocation.
6.10 Accounts for QDRO Beneficiaries
A separate Account shall be established for an alternate
payee entitled to any portion of a Participant's Account
under a QDRO as of the date and in accordance with the
directions specified in the QDRO. In addition, a separate
Account may be established during the period of time the
Administrator, a court of competent jurisdiction or other
appropriate person is determining whether a domestic
relations order qualifies as a QDRO. Such a separate
Account shall be valued and accounted for in the same manner
as any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so
provides, the portion of a Participant's Account
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<PAGE>
payable to an alternate payee may be distributed, in a
form as permissible under Section 11, to the alternate
payee at the time specified in the QDRO, regardless of
whether the Participant is entitled to a distribution
from the Plan at such time.
(b) Participant Loans. Except to the extent required by
law, an alternate payee, on whose behalf a separate
Account has been established, shall not be entitled to
borrow from such Account. If a QDRO specifies that the
alternate payee is entitled to any portion of the
Account of a Participant who has an outstanding loan
balance, all outstanding loans shall generally continue
to be held in the Participant's Account and shall not
be divided between the Participant's and alternate
payee's Accounts.
(c) Investment Direction. Where a separate Account has
been established on behalf of an alternate payee and
has not yet been distributed, the alternate payee may
direct the investment of such Account in the same
manner as if he or she were a Participant.
7 INVESTMENT FUNDS AND ELECTIONS
7.1 Investment Funds
Except for Participants' Sweep and Loan Accounts, the Trust
shall be maintained in various Investment Funds. The
Administrator shall select the Investment Funds offered to
Participants and may change the number or composition of the
Investment Funds, subject to the terms and conditions agreed
to with the Trustee. As of the Effective Date, a list of
the Investment Funds offered under the Plan is set forth in
Appendix A, and may be changed from time to time by the
Administrator, in writing, and as agreed to by the Trustee,
without the necessity of amending this Plan and Trust.
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of his
or her Contribution Accounts.
A Participant shall make his or her investment election in
any combination of one or any number of the Investment Funds
offered in accordance with the procedures established by the
Administrator and Trustee. However, during any Conversion
Period, Trust assets may be held in any investment vehicle
permitted by the Plan, as directed by the Administrator,
irrespective of Participant investment elections.
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<PAGE>
The Administrator may set a maximum percentage of the total
election that a Participant may direct into any specific
Investment Fund, which maximum, if any, as of the Effective
Date is set forth in Appendix A, and may be changed from
time to time by the Administrator, in writing, without the
necessity of amending this Plan and Trust.
7.3 Responsibility for Investment Choice
Each Participant shall be solely responsible for the
selection of his or her Investment Fund choices. No
fiduciary with respect to the Plan is empowered to advise a
Participant as to the manner in which his or her Accounts
are to be invested, and the fact that an Investment Fund is
offered shall not be construed to be a recommendation for
investment.
7.4 Default if No Election
The Administrator shall specify an Investment Fund for the
investment of that portion of a Participant's Account which
is not yet held in an Investment Fund and for which no valid
investment election is on file. The investment Fund
specified as of the Effective Date is set forth in Appendix
A, and may be changed from time to time by the
Administrator, in writing, without the necessity of amending
this Plan and Trust.
7.5 Timing
A Participant shall make his or her initial investment
election upon becoming a Participant and may change his or
her investment election at any time in accordance with the
procedures established by the Administrator and Trustee.
Investment elections received by the Trustee by the Sweep
Date shall be effective on the following Trade Date.
7.6 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a
Participant's Account for Investment Fund election changes
in excess of a specified number per year as determined by
the Administrator.
8 VESTING
8.1 Fully Vested Contribution Accounts
A Participant shall be fully vested in all Accounts at all
times.
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<PAGE>
9 PARTICIPANT LOANS
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the terms
and conditions set forth in this Section.
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and
with such advance notice as prescribed by the Administrator.
All loans shall be evidenced by a promissory note, secured
only by the portion of the Participant's Account from which
the loan is made, and the Plan shall have a lien on this
portion of his or her Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in
order to take out a loan under the Plan.
9.4 Loan Approval
The Administrator, or the Trustee, if otherwise authorized
by the Administrator and agreed to by the Trustee, is
responsible for determining that a loan request conforms to
the requirements described in this Section and granting such
request.
9.5 Loan Funding Limits, Account Sources and Funding Order
The loan amount must meet all of the following limits as
determined as of the Sweep Date the loan is processed and
shall be funded from the Participant's Accounts as follows:
(a) Plan Minimum Limit. The minimum amount for any loan is
$1,000.
(b) Plan Maximum Limit, Account Sources and Funding Order.
Subject to the legal limit described in (c) below, the
maximum a Participant may borrow, including the
outstanding balance of existing Plan loans, is 100% of
the following of the Participant's Accounts which are
fully vested in the priority order as follows:
Employee Pre-Tax Account
Employer Account
Prior Company Account
Rollover Account
Prior After-Tax Account
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<PAGE>
(c) Legal Maximum Limit. The maximum a Participant may
borrow, including the outstanding balance of existing
Plan loans, is 50% of his or her vested Account
balance, not to exceed $50,000. However, the $50,000
maximum is reduced by the Participant's highest
outstanding loan balance during the 12 month period
ending on the day before the Sweep Date as of which the
loan is made. For purposes of this paragraph, the
qualified plans of all Related Companies shall be
treated as though they are part of this Plan to the
extent it would decrease the maximum loan amount.
9.6 Maximum Number of Loans
A Participant may have a maximum of two loans outstanding at
any given time.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets
of his or her own Account. The available assets shall be
determined first by Account type and then within each
Account used for funding a loan, amounts shall first be
taken from the Sweep Account and then taken by Investment
Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund as of the
Trade Date on which the loan is processed.
The loan shall be funded on the Settlement Date following
the Trade Date as of which the loan is processed. The
Trustee shall make payment to the Participant as soon
thereafter as administratively feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a
fixed reasonable rate of interest, determined from time to
time by the Administrator, which provides the Plan with a
return commensurate with the prevailing interest rate
charged by persons in the business of lending money for
loans which would be made under similar circumstances. As
of the Effective Date, the interest rate is determined as
set forth in Appendix C, and may be changed from time to
time by the Administrator, in writing, without the necessity
of amending this Plan and Trust.
9.9 Loan Payment
Substantially level amortization shall be required of each
loan with payments made at least monthly, generally through
payroll deduction. Loans may be prepaid in full or in part
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<PAGE>
at any time. The Participant may choose the loan repayment
period, not to exceed five years.
9.10 Loan Payment Hierarchy
Loan principal payments shall be credited to the
Participant's Accounts in the inverse of the order used to
fund the loan. Loan interest shall be credited to the
Participant's Accounts in direct proportion to the principal
payment. Loan payments are credited to the Investment Funds
based upon the Participant's current investment election for
new Contributions.
9.11 Repayment Suspension
The Administrator may agree to a suspension of loan payments
for up to 12 months for a Participant who is on a Leave of
Absence without pay. During the suspension period interest
shall continue to accrue on the outstanding loan balance.
At the expiration of the suspension period all outstanding
loan payments and accrued interest thereon shall be due
unless otherwise agreed upon by the Administrator.
9.12 Loan Default
A loan is treated as a default if scheduled loan payments
are more than 90 days late. A Participant shall then have
30 days from the time he or she receives written notice of
the default and a demand for past due amounts to cure the
default before it becomes final.
In the event of default, the Administrator may direct the
Trustee to report the outstanding principal balance of the
loan and accrued interest thereon as a taxable distribution.
As soon as a Plan withdrawal or distribution to such
Participant would otherwise be permitted, the Administrator
may instruct the Trustee to execute upon its security
interest in the Participant's Account by distributing the
note to the Participant.
9.13 Call Feature
The Administrator shall have the right to call any
Participant loan once a Participant's employment with all
Related Companies has terminated or if the Plan is
terminated.
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10 IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee
are permitted pursuant to the terms and conditions set forth
in this Section and as required by law as set forth in
Section 11. Except to the extent as required by law as set
forth in Section 11, in-service withdrawals under the Plan
are limited to those in-service withdrawals described in
Sections 10.7 through 10.11.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for an in-service withdrawal in
such manner and with such advance notice as prescribed by
the Administrator. The Participant shall be provided the
notice prescribed by Code section 402(f).
If an in-service withdrawal is one to which Code sections
401(a)(11) and 417 do not apply, such in-service withdrawal
may commence less than 30 days after the aforementioned
notice is provided, if:
(a) the Participant is clearly informed that he or she has
the right to a period of at least 30 days after receipt
of such notice to consider his or her option to elect
or not elect a Direct Rollover for all or a portion, if
any, of his or her in-service withdrawal which shall
constitute an Eligible Rollover Distribution; and
(b) the Participant after receiving such notice,
affirmatively elects a Direct Rollover for all or a
portion, if any, of his or her in-service withdrawal
which shall constitute an Eligible Rollover
Distribution or alternatively elects to have all or a
portion made payable directly to him or her, thereby
not electing a Direct Rollover for all or a portion
thereof.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in
order to make an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee, if otherwise authorized
by the Administrator and agreed to by the Trustee, is
responsible for determining that an in-service withdrawal
request conforms to the requirements described in this
Section and granting such request.
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<PAGE>
10.5 Minimum Amount, Payment Form and Medium
There is no minimum amount for any type of withdrawal.
The form of payment for an in-service withdrawal shall be a
single lump sum and payment shall be made in cash. With
regard to the portion of a withdrawal representing an
Eligible Rollover Distribution, a Participant may elect a
Direct Rollover for all or a portion of such amount.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made
solely from the assets of his or her own Account and shall
be based on the Account values as of the Trade Date the in-
service withdrawal is processed. The available assets shall
be determined first by Account type and then within each
Account used for funding an in-service withdrawal, amounts
shall first be taken from the Sweep Account and then taken
by Investment Fund in direct proportion to the market value
of the Participant's interest in each Investment Fund (which
excludes his or her Loan Account balance) as of the Trade
Date on which the in-service withdrawal is processed.
The in-service withdrawal shall be funded on the Settlement
Date following the Trade Date as of which the in-service
withdrawal is processed. The Trustee shall make payment as
soon thereafter as administratively feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may
request the withdrawal of up to the amount necessary to
satisfy a financial need including amounts necessary to
pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the
withdrawal. Only requests for withdrawals (1) on
account of a Participant's "Deemed Financial Need", and
(2) which are "Deemed Necessary" to satisfy the
financial need shall be approved.
(b) "Deemed Financial Need". An immediate and heavy
financial need relating to:
(1) the payment of unreimbursable medical expenses
described under Code section 213(d) incurred (or
to be incurred) by the Employee, his or her spouse
or dependents;
(2) the purchase (excluding mortgage payments) of the
Employee's principal residence;
23 11/17/95
<PAGE>
(3) the payment of unreimbursable tuition, related
educational fees and room and board for up to the
next 12 months of post-secondary education for the
Employee, his or her spouse or dependents;
(4) the payment of amounts necessary for the Employee
to prevent losing his or her principal residence
through eviction or foreclosure on the mortgage;
or
(5) any other circumstance specifically permitted
under Code section 401(k)(2)(B)(i)(IV).
(c) "Deemed Necessary". A withdrawal is "deemed necessary"
to satisfy the financial need only if the withdrawal
amount does not exceed the financial need and all of
these conditions are met:
(1) the Employee has obtained all possible withdrawals
(other than hardship withdrawals) and nontaxable
loans available from this Plan and all other plans
maintained by Related Companies;
(2) the Administrator shall suspend the Employee from
making any contributions to this Plan and all
other qualified and nonqualified plans of deferred
compensation and all stock option or stock
purchase plans maintained by Related Companies for
12 months from the date the withdrawal payment is
made; and
(3) the Administrator shall reduce the Contribution
Dollar Limit for the Employee with regard to this
Plan and all other plans maintained by Related
Companies, for the calendar year next following
the calendar year of the withdrawal by the amount
of the Employee's Employee Pre-Tax Contributions
for the calendar year of the withdrawal.
(d) Account Sources and Funding Order. All available
amounts must first be withdrawn from a Participant's
Prior After-Tax Account. The remaining withdrawal
amount shall come from the following of the
Participant's fully vested Accounts, in the priority
order as follows:
Rollover Account
Employer Account
Prior Company Account
Employee Pre-Tax Account
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<PAGE>
The amount that may be withdrawn from a Participant's
Employee Pre-Tax Account shall not include any earnings
credited to his or her Employee Pre-Tax Account after
the start of the first Plan Year beginning after
December 31,1988.
(e) Permitted Frequency. There is no restriction on the
number of Hardship withdrawals permitted to a
Participant.
(f) Suspension from Further Contributions. Upon making a
Hardship withdrawal, a Participant may not make
additional Employee Pre-Tax Contributions (or
additional contributions to all other qualified and
nonqualified plans of deferred compensation and all
stock option or stock purchase plans maintained by
Related Companies) for a period of 12 months from the
date the withdrawal payment is made.
10.8 Prior After-Tax Account Withdrawals
(a) Requirements. A Participant who is an Employee may
withdraw from the Accounts listed in paragraph (b)
below.
(b) Account Sources and Funding Order. The withdrawal
amount shall come from a Participant's Prior After-Tax
Account.
(c) Permitted Frequency. The maximum number of Prior
After-Tax Account withdrawals permitted to a
Participant in any 12-month period is one.
(d) Suspension from Further Contributions. An Prior After-
Tax Account withdrawal shall not affect a Participant's
ability to make or be eligible to receive further
Contributions.
10.9 Rollover Account Withdrawals
(a) Requirements. A Participant who is an Employee may
withdraw from the Accounts listed in paragraph (b)
below.
(b) Account Sources and Funding Order. The withdrawal
amount shall come from a Participant's Rollover
Account.
(c) Permitted Frequency. The maximum number of Rollover
Account withdrawals permitted to a Participant in any
12-month period is one.
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<PAGE>
(d) Suspension from Further Contributions. A Rollover
Account withdrawal shall not affect a Participant's
ability to make or be eligible to receive further
Contributions.
10.10 Over Age 59 1/2 Withdrawals
(a) Requirements. A Participant who is an Employee and
over age 59 1/2 may withdraw from the Accounts listed
in paragraph (b) below.
(b) Account Sources and Funding Order. The withdrawal
amount shall come from the following of the
Participant's fully vested Accounts, in the priority
order as follows, except that the Participant may
instead choose to have amounts taken from his or her
Prior After-Tax Account first:
Rollover Account
Employee Pre-Tax Account
Employer Account
Prior Company Account
Prior After-Tax Account
(c) Permitted Frequency. The maximum number of Over Age 59
1/2 withdrawals permitted to a Participant in any 12-
month period is one.
(d) Suspension from Further Contributions. An Over Age 59
1/2 withdrawal shall not affect a Participant's ability
to make or be eligible to receive further
Contributions.
10.11 Prior Company Account Plus Withdrawals
(a) Requirements. A Participant who is an Employee may
withdraw from the Accounts listed in paragraph (b)
below.
(b) Account Sources and Funding Order. The withdrawal
amount shall come from the following of the
Participant's fully vested Accounts, in the priority
order as follows, except that the Participant may
instead choose to have amounts taken from his or her
Prior After-Tax Account first:
Rollover Account
Prior Company Account
Prior After-Tax Account
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<PAGE>
(c) Permitted Frequency. The maximum number of Prior
Company Plus Account withdrawals permitted to a
Participant in any 12-month period is one.
(d) Suspension from Further Contributions. A Prior Company
Account Plus withdrawal shall not affect a
Participant's ability to make or be eligible to receive
further Contributions.
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his
or her death, shall be provided with information regarding
all optional times and forms of distribution available, to
include the notices prescribed by Code section 402(f) and
Code section 411(a)(11). Subject to the other requirements
of this Section, a Participant, or his or her Beneficiary in
the case of his or her death, may elect, in such manner and
with such advance notice as prescribed by the Administrator,
to have his or her vested Account balance paid to him or her
beginning upon any Settlement Date following the
Participant's termination of employment with all Related
Companies or, if earlier, at the time required by law as set
forth in Section 11.6.
If a distribution is one to which Code sections 401(a)(11)
and 417 do not apply, such distribution may commence less
than 30 days after the aforementioned notices are provided,
if:
(a) the Participant is clearly informed that he or she has
the right to a period of at least 30 days after receipt
of such notices to consider the decision as to whether
to elect a distribution and if so to elect a particular
form of distribution and to elect or not elect a Direct
Rollover for all or a portion, if any, of his or her
distribution which shall constitute an Eligible
Rollover Distribution; and
(b) the Participant after receiving such notices,
affirmatively elects a distribution and a Direct
Rollover for all or a portion, if any, of his or her
distribution which shall constitute an Eligible
Rollover Distribution or alternatively elects to have
all or a portion made payable directly to him or her,
thereby not electing a Direct Rollover for all or a
portion thereof.
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<PAGE>
11.2 Spousal Consent
A Participant is not required to obtain Spousal Consent in
order to receive a distribution under the Plan.
11.3 Payment Form and Medium
Except to the extent otherwise provided by Section 11.4, a
Participant may elect to be paid in any of these forms:
(a) a single lump sum,
(b) a portion paid in a lump sum, and the remainder paid
later, or
(c) periodic installments over a period not to exceed the
life expectancy of the Participant and his or her
Beneficiary.
Distributions shall be made in cash, except to the extent a
distribution consists of a loan call as described in Section
9. Alternatively, a Participant may elect that a lump sum
payment be made in the form of whole shares of Company Stock
and cash in lieu of fractional shares to the extent invested
in the Company Stock Fund. With regard to the portion of a
distribution representing an Eligible Rollover Distribution,
a Distributee may elect a Direct Rollover for all or a
portion of such amount.
11.4 Distribution of Small Amounts
If after a Participant's employment with all Related
Companies ends, the Participant's vested Account balance is
$3,500 or less, and if at the time of any prior in-service
withdrawal or distribution the Participant's vested Account
balance did not exceed $3,500, the Participant's benefit
shall be paid as a single lump sum as soon as
administratively feasible in accordance with procedures
prescribed by the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from
the assets of his or her own Accounts and shall be based on
the Account values as of the Trade Date the distribution is
processed. The available assets shall be determined first
by Account type and then within each Account used for
funding a distribution, amounts shall first be taken from
the Sweep Account and then taken by Investment Fund in
direct proportion to the market value of the Participant's
interest in each Investment Fund as of the Trade Date on
which the distribution is processed.
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<PAGE>
The distribution shall be funded on the Settlement Date
following the Trade Date as of which the distribution is
processed. The Trustee shall make payment as soon
thereafter as administratively feasible.
11.6 Latest Commencement Permitted
In addition to any other Plan requirements and unless a
Participant elects otherwise, his or her benefit payments
shall begin not later than 60 days after the end of the Plan
Year in which he or she attains his or her Normal Retirement
Date or retires, whichever is later. However, if the amount
of the payment or the location of the Participant (after a
reasonable search) cannot be ascertained by that deadline,
payment shall be made no later than 60 days after the
earliest date on which such amount or location is
ascertained but in no event later than as described below.
A Participant's failure to elect in such manner as
prescribed by the Administrator to have his or her vested
Account balance paid to him or her, shall be deemed an
election by the Participant to defer his or her
distribution.
Benefit payments shall begin by the April 1 immediately
following the end of the calendar year in which the
Participant attains age 70 1/2, whether or not he or she is
an Employee.
If benefit payments cannot begin at the time required
because the location of the Participant cannot be
ascertained (after a reasonable search), the Administrator
may, at any time thereafter, treat such person's Account as
forfeited subject to the provisions of Section 18.5.
11.7 Payment Within Life Expectancy
The Participant's payment election must be consistent with
the requirement of Code section 401(a)(9) that all payments
are to be completed within a period not to exceed the lives
or the joint and last survivor life expectancy of the
Participant and his or her Beneficiary. The life
expectancies of a Participant and his or her Beneficiary, if
such Beneficiary is his or her spouse, may be recomputed
annually.
11.8 Incidental Benefit Rule
The Participant's payment election must be consistent with
the requirement that, if the Participant's spouse is not his
or her sole primary Beneficiary, the minimum annual
distribution for each calendar year, beginning with the year
in which he or she attains age 70 1/2, shall not be less
29 11/17/95
<PAGE>
than the quotient obtained by dividing (a) the Participant's
vested Account balance as of the last Trade Date of the
preceding year by (b) the applicable divisor as determined
under the incidental benefit requirements of Code section
401(a)(9).
11.9 Payment to Beneficiary
Payment to a Beneficiary must either: (1) be completed by
the end of the calendar year that contains the fifth
anniversary of the Participant's death or (2) begin by the
end of the calendar year that contains the first anniversary
of the Participant's death and be completed within the
period of the Beneficiary's life or life expectancy, except
that:
(a) If the Participant dies after the April 1 immediately
following the end of the calendar year in which he or
she attains age 70 1/2, payment to his or her
Beneficiary must be made at least as rapidly as
provided in the Participant's distribution election;
(b) If the surviving spouse is the Beneficiary, payments
need not begin until the end of the calendar year in
which the Participant would have attained age 70 1/2
and must be completed within the spouse's life or life
expectancy; and
(c) If the Participant and the surviving spouse who is the
Beneficiary die (1) before the April immediately
following the end of the calendar year in which the
Participant would have attained age 70 1/2 and (2)
before payments have begun to the spouse, the spouse
shall be treated as the Participant in applying these
rules.
11.10 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the
Participant's remaining Plan interest at the time of his or
her death. The designation may be changed at any time.
However, a Participant's spouse shall be the sole primary
Beneficiary unless the designation includes Spousal Consent
for another Beneficiary. If no proper designation is in
effect at the time of a Participant's death or if the
Beneficiary does not survive the Participant, the
Beneficiary shall be, in the order listed, the:
(a) Participant's surviving spouse,
30 11/17/95
<PAGE>
(b) Participant's children, in equal shares, (or if a child
does not survive the Participant, and that child leaves
issue, the issue shall be entitled to that child's
share, by right of representation) or
(c) Participant's estate.
12 ADP AND ACP TESTS
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12
(where a definition is contained in both Sections 1 and 12,
for purposes of Section 12 the Section 12 definition shall
be controlling):
(a) "ACP" or "Average Contribution Percentage". The
Average Percentage calculated using Contributions
allocated to Participants as of a date within the Plan
Year.
(b) "ACP Test". The determination of whether the ACP is in
compliance with the Basic or Alternative Limitation for
a Plan Year (as defined in Section 12.2).
(c) "ADP" or "Average Deferral Percentage". The Average
Percentage calculated using Deferrals allocated to
Participants as of a date within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is in
compliance with the Basic or Alternative Limitation for
a Plan Year (as defined in Section 12.2).
(e) "Average Percentage". The average of the calculated
percentages for Participants within the specified
group. The calculated percentage refers to either the
"Deferrals" or "Contributions" (as defined in this
Section) made on each Participant's behalf for the Plan
Year, divided by his or her Compensation for the
portion of the Plan Year in which he or she was an
Eligible Employee while a Participant. (Employee Pre-
Tax Contributions to this Plan or comparable
contributions to plans of Related Companies which shall
be refunded solely because they exceed the Contribution
Dollar Limit are included in the percentage for the HCE
Group but not for the NHCE Group.)
(f) "Contributions" shall include Employer Contributions.
In addition, Contributions may include Employee Pre-Tax
Contributions, but only to the extent that (1) the
Employer elects to use them, (2) they are not used or
counted in the ADP Test and (3) they otherwise satisfy
31 11/17/95
<PAGE>
the requirements as prescribed under Code section
401(m) permitting treatment as Contributions for
purposes of the ACP Test.
(g) "Deferrals" shall include Employee Pre-Tax
Contributions.
(h) "Family Member". An Employee who is, at any time
during the Plan Year or Lookback Year, a spouse, lineal
ascendant or descendant, or spouse of a lineal
ascendant or descendant of (1) an active or former
Employee who at any time during the Plan Year or
Lookback Year is a more than 5% Owner (within the
meaning of Code section 414(q)(3)), or (2) an HCE who
is among the 10 Employees with the highest Compensation
for such Year.
(i) "HCE" or "Highly Compensated Employee". With respect
to each Employer and its Related Companies, an Employee
during the Plan Year or Lookback Year who (in
accordance with Code section 414(q)):
(1) Was a more than 5% Owner at any time during the
Lookback Year or Plan Year;
(2) Received Compensation during the Lookback Year (or
in the Plan Year if among the 100 Employees with
the highest Compensation for such Year) in excess
of (i) $75,000 (as adjusted for such Year pursuant
to Code sections 414(q)(1) and 415(d)), or (ii)
$50,000 (as adjusted for such Year pursuant to
Code sections 414(q)(1) and 415(d)) in the case of
a member of the "top-paid group" (within the
meaning of Code section 414(q)(4)) for such Year),
provided, however, that if the conditions of Code
section 414(q)(12)(B)(ii) are met, the Company may
elect for any Plan Year to apply clause (i) by
substituting $50,000 for $75,000 and not to apply
clause (ii);
(3) Was an officer of a Related Company and received
Compensation during the Lookback Year (or in the
Plan Year if among the 100 Employees with the
highest Compensation for such Year) that is
greater than 50% of the dollar limitation in
effect under Code section 415(b)(1 )(A) and (d)
for such Year (or if no officer has Compensation
in excess of the threshold, the officer with the
highest Compensation), provided that the number of
officers shall be limited to 50 Employees (or, if
less, the greater of three Employees or 10% of the
Employees); or
32 11/17/95
<PAGE>
(4) Was a Family Member at any time during the
Lookback Year or Plan Year, in which case the
Deferrals, Contributions and Compensation of the
HCE and his or her Family Members shall be
aggregated and they shall be treated as a single
HCE.
A former Employee shall be treated as an HCE if (1)
such former Employee was an HCE when he separated from
service, or (2) such former Employee was an HCE in
service at any time after attaining age 55.
The determination of who is an HCE, including the
determinations of the number and identity of Employees
in the top-paid group, the top 100 Employees and the
number of Employees treated as officers shall be made
in accordance with Code section 414(q).
(j) "HCE Group" and "NHCE Group". With respect to each
Employer and its Related Companies, the respective
group of HCEs and NHCEs who are eligible to have
amounts contributed on their behalf for the Plan Year,
including Employees who would be eligible but for their
election not to participate or to contribute, or
because their Pay is greater than zero but does not
exceed a stated minimum.
(1) If the Related Companies maintain two or more
plans which are subject to the ADP or ACP Test and
are considered as one plan for purposes of Code
sections 401(a)(4) or 410(b), all such plans shall
be aggregated and treated as one plan for purposes
of meeting the ADP and ACP Tests, provided that
the plans may only be aggregated if they have the
same Plan Year.
(2) If an HCE, who is one of the top 10 paid Employees
or a more than 5% Owner, has any Family Members,
the Deferrals, Contributions and Compensation of
such HCE and his or her Family Members shall be
combined and treated as a single HCE. Such
amounts for all other Family Members shall be
removed from the NHCE Group percentage calculation
and be combined with the HCE's.
(3) If an HCE is covered by more than one cash or
deferred arrangement, or more than one arrangement
permitting employee or matching contributions,
maintained by the Related Companies, all such
plans shall be aggregated and treated as one plan
(other than those plans that may not be
permissively aggregated) for purposes of
33 11/17/95
<PAGE>
calculating the separate percentage for the HCE
which is used in the determination of the Average
Percentage.
(k) "Lookback Year". Pursuant to Code section 414(q), the
Company elects as the Lookback Year the current
calendar year (ending with the Plan Year).
(l) "Multiple Use Test". The test described in Section
12.4 which a Plan must meet where the Alternative
Limitation (described in Section 12.2(b)) is used to
meet both the ADP and ACP Tests.
(m) "NHCE" or "Non-Highly Compensated Employee". An
Employee who is not an HCE.
12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group must
meet either the Basic or Alternative Limitation when
compared to the respective ADP and ACP for the NHCE Group,
defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage may
not exceed 1.25 times the NHCE Group Average
percentage.
(b) Alternative Limitation. The HCE Group Average
Percentage is limited by reference to the NHCE Group
Average Percentage as follows:
If the NHCE Group Then the Maximum HCE
Average Percentage is: Group Average Percentage is:
---------------------- ---------------------------
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a
maximum percentage to be used in place of the calculated
percentage for all HCEs that would reduce the ADP and/or ACP
for the HCE group by a sufficient amount to meet the ADP and
ACP Tests. ADP and/or ACP corrections shall be made in
accordance with the leveling method as described below.
(a) ADP Correction. The HCE with the highest Deferral
percentage shall have his or her Deferral percentage
reduced to the lesser of the extent required to meet
34 11/17/95
<PAGE>
the ADP Test or to cause his or her Deferral percentage
to equal that of the HCE with the next highest Deferral
percentage. The process shall be repeated until the
ADP Test is met.
To the extent an HCE's Deferrals were determined to be
reduced as described in the paragraph above, Employee
Pre-Tax Contributions shall, by the end of the next
Plan Year, be refunded to the HCE in an amount equal to
the actual Deferrals minus the product of the maximum
percentage and the HCE's Compensation, except that such
amount to be refunded shall be reduced by Employee Pre-
Tax Contributions previously refunded because they
exceeded the Contribution Dollar Limit. The excess
amounts shall first be taken from unmatched Employee
Pre-Tax Contributions and then from matched Employee
Pre-Tax Contributions. Any Employer Contributions
attributable to refunded excess Employee Pre-Tax
Contributions as described in this Section shall be
forfeited and used to reduce Contributions made by an
Employer as soon as administratively feasible.
(b) ACP Correction. The HCE with the highest Contribution
percentage shall have his or her Contribution
percentage reduced to the lesser of the extent required
to meet the ACP Test or to cause his or her
Contribution percentage to equal that of the HCE with
the next highest Contribution percentage. The process
shall be repeated until the ACP Test is met.
To the extent an HCE's Contributions were determined to
be reduced as described in the paragraph above,
Employer Contributions shall, by the end of the next
Plan Year, be refunded to the HCE in an amount equal to
the actual Contributions minus the product of the
maximum percentage and the HCE's Compensation.
(c) Investment Fund Sources. Once the amount of excess
Deferrals and/or Contributions is determined amounts
shall first be taken from the Sweep Account and then
taken by Investment Fund in direct proportion to the
market value of the Participant's interest in each
Investment Fund (which excludes his or her Loan Account
balance) as of the Trade Date on which the correction
is processed.
(d) Family Member Correction. To the extent any reduction
is necessary with respect to an HCE and his or her
Family Members that have been combined and treated for
testing purposes as a single Employee, the excess
Deferrals and Contributions from the ADP and/or ACP
Test shall be prorated among each such Participant in
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<PAGE>
direct proportion to his or her Deferrals or
Contributions included in each Test.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is
used to meet both the ADP and ACP Tests, the ADP and ACP for
the HCE Group must also comply with the requirements of Code
section 401(m)(9). Such Code section requires that the sum
of the ADP and ACP for the HCE Group (as determined after
any corrections needed to meet the ADP and ACP Tests have
been made) not exceed the sum (which produces the most
favorable result) of:
(a) the Basic Limitation (defined in Section 12.2) applied
to either the ADP or ACP for the NHCE Group, and
(b) the Alternative Limitation applied to the other NHCE
Group percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator
shall determine a maximum percentage to be used in place of
the calculated percentage for all HCEs that would reduce
either or both the ADP or ACP for the HCE Group by a
sufficient amount to meet the multiple use limit. Any
excess shall be handled in the same manner that the
distribution of excess Deferrals or Contributions are
handled.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a
Participant in accordance with Section 12.3 or 12.5 shall be
adjusted for investment gain or loss. Refunds shall not
include investment gain or loss for the period between the
end of the applicable Plan Year and the date of
distribution.
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the
Plan meets the ADP Test, the ACP Test and the Multiple Use
Test, and that the Contribution Dollar Limit is not
exceeded. In carrying out its responsibilities, the
Administrator shall have sole discretion to limit or reduce
Deferrals or Contributions at any time. The Administrator
shall maintain records which are sufficient to demonstrate
that the ADP Test, the ACP Test and the Multiple Use Test,
have been met for each Plan Year for at least as long as the
Employer's corresponding tax year is open to audit.
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<PAGE>
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs,
and the performance of the ADP Test, the ACP Test and
Multiple Use Test, and any corrective action resulting
therefrom, shall be made separately with regard to the
Employees of each Employer (and its Related Companies)
that is not a Related Company with the other
Employer(s).
(b) Collective Bargaining Units: The performance of the ADP
Test, and if applicable, the ACP Test and Multiple Use
Test, and any corrective action resulting therefrom,
shall be applied separately to Employees who are
eligible to participate in the Plan as a result of a
collective bargaining agreement.
In addition, separate testing may be applied, at the
discretion of the Administrator and to the extent permitted
under Treasury regulations, to any group of Employees for
whom separate testing is permissible.
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
13.1 "Annual Addition" Defined
The sum of all amounts allocated to the Participant's
Account for a Plan Year. Amounts include contributions
(except for rollovers or transfers from another qualified
plan), forfeitures and, if the Participant is a Key Employee
(pursuant to Section 14) for the applicable or any prior
Plan Year, medical benefits provided pursuant to Code
section 419A(d)(1). For purposes of this Section 13.1,
"Account" also includes a Participant's account in all other
defined contribution plans currently or previously
maintained by any Related Company. The Plan Year refers to
the year to which the allocation pertains, regardless of
when it was allocated. The Plan Year shall be the Code
section 415 limitation year.
13.2 Maximum Annual Addition
The Annual Addition to a Participant's accounts under this
Plan and any other defined contribution plan maintained by
any Related Company for any Plan Year shall not exceed the
lesser of (1) 25% of his or her Taxable Income or (2)
$30,000 (as adjusted for the cost of living pursuant to Code
section 415(d)).
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<PAGE>
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any
additional Contributions would produce an excess Annual
Addition for such year, Contributions to be made for the
remainder of the Plan Year shall be limited to the amount
needed for each affected Participant to receive the maximum
Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a
Participant's Account (resulting from forfeitures,
allocations, reasonable error in determining Participant
compensation or the amount of elective contributions, or
other facts and circumstances acceptable to the Internal
Revenue Service) the excess amount (adjusted to reflect
investment gains) shall first be returned to the Participant
to the extent of his or her Employee Pre-Tax Contributions
(however to the extent Employee Pre-Tax Contributions were
matched, the applicable Employer Contributions shall be
forfeited in proportion to the returned matched Employee
Pre-Tax Contributions) and the remaining excess, if any,
shall be forfeited by the Participant and used to reduce
Contributions made by an Employer as soon as
administratively feasible.
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess
Annual Addition, received allocations to more than one
defined contribution plan, the excess shall be corrected by
reducing the Annual Addition to this Plan only after all
possible reductions have been made to the other defined
contribution plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the
"projected annual benefit" and the denominator is the
greater of 125% of the "protected current accrued benefit"
or the normal limit which is the lesser of (1) 125% of the
maximum dollar limitation provided under Code section
415(b)(1)(A) for the Plan Year or (2) 140% of the amount
which may be taken into account under Code section
415(b)(1)(B) for the Plan Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit
provided by the Plan determined pursuant to Code
section 415(e)(2)(A), and
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<PAGE>
(b) "protected current accrued benefit" in a defined
benefit plan in existence (1) on July 1, 1982, shall be
the accrued annual benefit provided for under Public
Law 97-248, section 235(g)(4), as amended, or (2) on
May 6, 1986, shall be the accrued annual benefit
provided for under Public Law 99-514, section
1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the
Participant's Annual Addition for each Plan Year to date and
the denominator is the sum of the "annual amounts" for each
year in which the Participant has performed service with a
Related Company. The "annual amount" for any Plan Year is
the lesser of (1)125% of the Code section 415(c)(1)(A)
dollar limitation (determined without regard to subsection
(c)(6)) in effect for the Plan Year and (2)140% of the Code
section 415(c)(1)(B) amount in effect for the Plan Year,
where:
(a) each Annual Addition is determined pursuant to the Code
section 415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-
248, section 235(g)(3), as amended, or Public Law 99-
514, section 1106(i)(4).
13.8 Combined Plan Limits and Correction
If a Participant has also participated in a defined benefit
plan maintained by a Related Company, the sum of the Defined
Benefit Fraction and the Defined Contribution Fraction for
any Plan Year may not exceed 1.0. If the combined fraction
exceeds 1.0 for any Plan Year, the Participant's benefit
under any defined benefit plan (to the extent it has not
been distributed or used to purchase an annuity contract)
shall be limited so that the combined fraction does not
exceed 1.0 before any defined contribution, limits shall be
enforced.
14 TOP HEAVY RULES
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the
following meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each
qualified plan of an Employer (and its Related
Companies) (1) in which a Key Employee is a participant
or was a participant during the determination period
39 11/17/95
<PAGE>
(regardless of whether such plan has terminated), or
(2) which enables another plan in the group to meet the
requirements of Code sections 401(a)(4) or 410(b). The
Employer may also treat any other qualified plan as
part of the group if the group would continue to meet
the requirements of Code sections 401(a)(4) and 410(b)
with such plan being taken into account.
(b) "Determination Date". The last Trade Date of the
preceding Plan Year or, in the case of the Plan's first
year, the last Trade Date of the first Plan Year.
(c) "Key Employee". A current or former Employee (or his
or her Beneficiary) who at any time during the five
year period ending on the Determination Date was:
(1) an officer of a Related Company whose Compensation
(i) exceeds 50% of the amount in effect under Code
section 415(b)(1)(A) and (ii) places him within
the following highest paid group of officers:
Number of Employees Number of
not Excluded Under Code Highest Paid
Section 414(g)(8) Officers Included
----------------------- -----------------
Less than 30 3
30 to 500 10% of the number of
Employees not excluded
under Code section
414(q)(8)
More than 500 50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation exceeds
$150,000, or
(4) a more than 0.5% Owner who is among the 10
Employees owning the largest interest in a Related
Company and whose Compensation exceeds the amount
in effect under Code section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date
of (1) an Employee's Account, (2) the present value of
his or her other accrued benefits provided by all
qualified plans within the Aggregation Group, and (3)
the aggregate distributions made within the five year
period ending on such date. Plan Benefits shall
exclude Rollover Contributions and plan to plan
transfers made after December 31, 1983 which are both
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employee initiated and from a plan maintained by a non-
related employer.
(e) "Top Heavy". The Plan's status when the Plan Benefits
of Key Employees account for more than 60% of the Plan
Benefits of all Employees who have performed services
at any time during the five year period ending on the
Determination Date. The Plan Benefits of Employees who
were, but are no longer, Key Employees (because they
have not been an officer or Owner during the five year
period), are excluded in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year
in which the Plan is Top Heavy, the Employer shall not
allow any contributions (other than a Rollover
Contribution from a plan maintained by a non-related
employer) to be made by or on behalf of any Key
Employee unless the Employer makes a contribution
(other than contributions made by an Employer in
accordance with a Participant's salary deferral
election or contributions made by an Employer based
upon the amount contributed by a Participant) on behalf
of all Participants who were Eligible Employees as of
the last day of the Plan Year in an amount equal to at
least 3% of each such Participant's Taxable Income.
The Administrator shall remove any such contributions
(including applicable investment gain or loss) credited
to a Key Employee's Account in violation of the
foregoing rule and return them to the Employer or
Employee to the extent permitted by the Limited Return
of Contributions paragraph of Section 18.
(b) Overriding Minimum Benefit. Notwithstanding,
contributions shall be permitted on behalf of Key
Employees if the Employer also maintains a defined
benefit plan which automatically provides a benefit
which satisfies the Code section 416(c)(1) minimum
benefit requirements, including the adjustment provided
in Code section 416(h)(2)(A), if applicable. If this
Plan is part of an aggregation group in which a Key
Employee is receiving a benefit and no minimum is
provided in any other plan, a minimum contribution of
at least 3% of Taxable Income shall be provided to the
Participants specified in the preceding paragraph. In
addition, the Employer may offset a defined benefit
minimum by contributions (other than contributions made
by an, Employer in accordance with a Participant's
salary deferral election or contributions made by an
Employer based upon the amount contributed by a
Participant) made to this Plan.
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14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100%
shall be substituted for 125% in determining the Defined
Benefit Fraction and the Defined Contribution Fraction.
15 PLAN ADMINISTRATION
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator, the
Committee and/or the Trustee, as applicable, whose specific
duties are delineated in this Plan and Trust. Fiduciary
duties or responsibilities may be delegated by the Company,
Administrator or the Committee in writing in accordance with
ERISA section 405. Plan fiduciaries shall include any other
person to whom fiduciary duties or responsibility is
delegated with respect to the Plan. Any person or group may
serve in more than one fiduciary capacity with respect to
the Plan. To the extent permitted under ERISA section 405,
no fiduciary shall be liable for a breach by another
fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with this
Plan and Trust to the extent they are consistent with
ERISA;
(b) use that degree of care, skill, prudence and diligence
that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of
an enterprise of a like character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying
reasonable expenses of administering the Plan;
(d) diversify Plan investments, to the extent such
fiduciary is responsible for directing the investment
of Plan assets, so as to minimize the risk of large
losses, unless under the circumstances it is clearly
prudent not to do so; and
(e) treat similarly situated Participants and Beneficiaries
in a uniform and nondiscriminatory manner.
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15.3 Company is ERISA Plan Administrator
The Company is the plan administrator, within the meaning of
ERISA section 3(16), which is responsible for compliance
with all reporting and disclosure requirements, except those
that are explicitly the responsibility of the Trustee under
applicable law. The Administrator and/or Committee shall
have any necessary authority to carry out such functions
through the actions of the Administrator, duly appointed
officers of the Company, and/or the Committee.
15.4 Administrator Duties
The Administrator shall have the discretionary authority to
construe this Plan and Trust, other than the provisions
which relate to the Trustee, and to do all things necessary
or convenient to effect the intent and purposes thereof,
whether or not such powers are specifically set forth in
this Plan and Trust. Actions taken in good faith by the
Administrator shall be conclusive and binding on all
interested parties, and shall be given the maximum possible
deference allowed by law. ln addition to the duties listed
elsewhere in this Plan and Trust, the Administrator's
authority shall include, but not be limited to, the
discretionary authority to:
(a) determine who is eligible to participate, if a
contribution qualifies as a rollover contribution, the
allocation of Contributions, and the eligibility for
loans, withdrawals and distributions;
(b) provide each Participant with a summary plan
description no later than 90 days after he or she has
become a Participant (or such other period permitted
under ERISA section 104(b)(1)), as well as informing
each Participant of any material modification to the
Plan in a timely manner;
(c) make a copy of the following documents available to
Participants during normal work hours: this Plan and
Trust (including subsequent amendments), all annual and
interim reports of the Trustee related to the entire
Plan, the latest annual report and the summary plan
description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased
Participant's interest based upon such proof and
evidence as it deems necessary;
(e) establish and review at least annually a funding policy
bearing in mind both the short-run and long-run needs
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and goals of the Plan and to the extent Participants
may direct their own investments, the funding policy
shall focus on which Investment Funds are available for
Participants to use; and
(f) adjudicate claims pursuant to the claims procedure
described in Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors
(including attorneys, accountants, actuaries, consultants,
record keepers, investment counsel and administrative
assistants) as it considers necessary to assist it in the
performance of its duties. The Administrator shall also
comply with the bonding requirements of ERISA section 412.
15.6 Delegation of Administrator Duties
The, Company, as Administrator of the Plan, has appointed a
Committee to administer the Plan on its behalf. The Company
shall provide the Trustee with the names and specimen
signatures of any persons authorized to serve as Committee
members and act as or on its behalf. Any Committee member
appointed by the Company shall serve at the pleasure of the
Company, but may resign by written notice to the Company.
Committee members shall serve without compensation from the
Plan for such services. Except to the extent that the
Company otherwise provides, any delegation of duties to a
Committee shall carry with it the full discretionary
authority of the Administrator to complete such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the Company
to the Committee may be done by a majority of its
members. The majority may be expressed by a vote at a
meeting or in writing without a meeting, and a majority
action shall be equivalent to an action of all
Committee members.
(b) Meetings. The Committee shall hold meetings upon such
notice, place and times as it determines necessary to
conduct its functions properly.
(c) Reliance by Trustee. The Committee may authorize one
or more of its members to execute documents on its
behalf and may authorize one or more of its members or
other individuals who are not members to give written
direction to the Trustee in the performance of its
duties. The Committee shall provide such authorization
in writing to the Trustee with the name and specimen
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signatures of any person authorized to act on its
behalf. The Trustee shall accept such direction and
rely upon it until notified in writing that the
Committee has revoked the authorization to give such
direction. The Trustee shall not be deemed to be on
notice of any change in the membership of the
Committee, parties authorized to direct the Trustee in
the performance of its duties, or the duties delegated
to and by the Committee until notified in writing.
16 MANAGEMENT OF INVESTMENTS
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in
accordance with those provisions of this Plan and Trust
which relate to the Trustee, for use in providing Plan
benefits and paying Plan fees and expenses not paid directly
by the Employer. Plan benefits shall be drawn solely from
the Trust and paid by the Trustee as directed by the
Administrator. Notwithstanding, the Administrator may
appoint, with the approval of the Trustee, another trustee
to hold and administer Plan assets which do not meet the
requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted the authority to select
the Investment Funds offered to Participants for investment
of Trust assets and to direct the Trustee to comply with the
investment instructions of Participants. The number and
composition of Investment Funds may be changed from time to
time, without the necessity of amending this Plan and Trust.
The Trustee may establish reasonable limits on the number of
Investment Funds as well as the acceptable assets for any
such Investment Fund. Each of the Investment Funds may be
comprised of any of the following:
(a) shares of a registered investment company, whether or
not the Trustee or any of its affiliates is an advisor
to, or other service provider to, such company;
(b) collective investment funds maintained by the Trustee,
or any other fiduciary to the Plan, which are available
for investment by trusts which are qualified under Code
sections 401(a) and 501(a);
(c) individual equity and fixed income securities which are
readily tradeable on the open market;
(d) guaranteed investment contracts issued by a bank or
insurance company;
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(e) interest bearing deposits of the Trustee; and
(f) Company Stock.
Any Investment Fund assets invested in a collective
investment fund, shall be subject to all the provisions of
the instruments establishing and governing such fund. These
instruments, including any subsequent amendments, are
incorporated herein by reference.
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment
manager of each Investment Fund to maintain sufficient
deposit or money market type assets in each Investment Fund
to handle the Fund's liquidity and disbursement needs. Each
Participant's and Beneficiary's Sweep Account, which is used
to hold assets pending investment or disbursement, shall
consist of interest bearing deposits of the Trustee.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in
the Investment Funds as soon as practicable after such
instructions are received from the Administrator,
Participants, or Beneficiaries. Such instructions shall
remain in effect until changed by the Administrator,
Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment
Company Shares
The Administrator shall be entitled to vote proxies or
exercise any shareholder rights relating to shares held on
behalf of the Plan in a registered investment company.
Notwithstanding, the authority to vote proxies and exercise
shareholder rights related to such shares held in a Custom
Fund is vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the
Trustee, an investment manager for any Investment Fund
established by the Trustee solely for Participants of this
Plan, and subject to Section 16.7, any other plan of a
Related Company (a "Custom Fund"). The investment manager
may be the Administrator, Trustee or an investment manager
pursuant to ERISA section 3(38). The Administrator shall
advise the Trustee in writing of the appointment of an
investment manager and shall cause the investment manager to
acknowledge to the Trustee in writing that the investment
manager is a fiduciary to the Plan.
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A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the
Trustee, shall be established for a Custom Fund. If a
Custom Fund consists solely of collective investment
funds or shares of a registered investment company (and
sufficient deposit or money market type assets to
handle the Fund's liquidity and disbursement needs),
its underlying instruments shall constitute the
guidelines.
(b) Authority of Investment Manager. The investment
manager of a Custom Fund shall have the authority to
vote or execute proxies, exercise shareholder rights,
manage, acquire, and dispose of Trust assets.
Notwithstanding, the authority to vote proxies and
exercise shareholder rights related to shares of
Company Stock held in a Custom Fund is vested as
provided otherwise in Section 16.
(c) Custody and Trade Settlement. Unless otherwise agreed
to by the Trustee, the Trustee shall maintain custody
of all Custom Fund assets and be responsible for the
settlement of all Custom Fund trades. For purposes of
this section, shares of a collective investment fund,
shares of a registered investment company and
guaranteed investment contracts issued by a bank or
insurance company, shall be regarded as the Custom Fund
assets instead of the underlying assets of such
instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the
Administrator nor the Trustee shall be obligated to
invest or otherwise manage any Custom Fund assets for
which the Trustee or Administrator is not the
investment manager nor shall the Administrator or
Trustee be liable for acts or omissions with regard to
the investment of such assets except to the extent
required by ERISA.
16.7 Master Custom Fund
The Trustee may establish, at the direction of the Company,
a single Custom Fund (the "Master Custom Fund"), for the
benefit of this Plan and any other plan of a Related Company
for which the Trustee acts as trustee pursuant to a plan and
trust document that contains a provision substantially
identical to this Section 16.7. The assets of this Plan, to
the extent invested in the Master Custom Fund, shall consist
only of that percentage of the assets of the Master Custom
Fund represented by the shares held by this Plan.
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16.8 Authority to Segregate Assets
The Company may direct the Trustee to split an Investment
Fund into two or more funds in the event any assets in the
Fund are illiquid or the value is not readily determinable.
In the event of such segregation, the Company shall give
instructions to the Trustee on what value to use for the
split-off assets, and the Trustee shall not be responsible
for confirming such value.
16.9 Maximum Permitted Investment in Company Stock
If the Company provides for a Company Stock Fund, the Fund
shall be comprised of Company Stock and sufficient deposit
or money market type assets to handle the Fund's liquidity
and disbursement needs. The Fund may be as large as
necessary to comply with Participants' and Beneficiaries'
investment elections.
16.10 Participants Have Right to Vote and Tender Company
Stock
Each Participant or Beneficiary shall be entitled to
instruct the Trustee as to the voting or tendering of any
full or partial shares of Company Stock held on his or her
behalf in the Company Stock Fund. Prior to such voting or
tendering of Company Stock, each Participant or Beneficiary
shall receive a copy of the proxy solicitation or other
material relating to such vote or tender decision and a form
for the Participant or Beneficiary to complete which
confidentially instructs the Trustee to vote or tender such
shares in the manner indicated by the Participant or
Beneficiary. Upon receipt of such instructions, the Trustee
shall act with respect to such shares as instructed. The
Administrator shall instruct the Trustee with respect to how
to vote or tender any shares for which instructions are not
received from Participants or Beneficiaries.
16.11 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining the
applicability (and, if applicable, complying with) the
requirements of the Securities Act of 1933, as amended, the
California Corporate Securities Law of 1968, as amended, and
any other applicable blue sky law. The Administrator shall
also specify what restrictive legend or transfer
restriction, if any, is required to be set forth on the
certificates for the securities and the procedure to be
followed by the Trustee to effectuate a resale of such
securities.
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17 TRUST ADMINISTRATION
17.1 Trustee to Construe Trust
The Trustee has the authority to do all things necessary or
convenient to the administration of the Trust, whether or
not such powers are specifically set forth in this Plan and
Trust. Actions taken in good faith by the Trustee shall be
conclusive and binding on all interested parties, and shall
be given the maximum possible deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth
in this Plan and Trust, the Trustee shall have all the
power, authority, rights and privileges of an absolute owner
of the Trust assets and, not in limitation but in
amplification of the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell,
tender, exchange, dispose of, encumber, hypothecate,
pledge, mortgage, lease, grant options respecting,
repair, alter, insure, or distribute any and all
property in the Trust;
(b) borrow money, participate in reorganizations, pay calls
and assessments, vote or execute proxies, exercise
subscription or conversion privileges, exercise options
and register any securities in the Trust in the name of
the nominee, in federal book entry form or in any other
form as shall permit title thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate,
adjust, settle, enforce or foreclose, by judicial
proceedings or otherwise, or defend against the same,
any obligations or claims in favor of or against the
Trust; and
(d) lend, through a collective investment fund, any
securities held in such collective investment fund to
brokers, dealers or other borrowers and to permit such
securities to be transferred into the name and custody
and be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of
any Trust assets outside the jurisdiction of the United
States, except as authorized by ERISA section 404(b).
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17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and withhold
federal (and, if applicable, state) income taxes with
regard to any Eligible Rollover Distribution that is
not paid as a Direct Rollover in accordance with the
Participant's withholding election or as required by
law if no election is made or the election is less than
the amount required by law. With regard to any taxable
distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and withhold
federal (and, if applicable, state) income taxes in
accordance with the Participant's withholding election
or as required by law if no election is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay
from the Investment Fund any taxes or assessments
imposed by any taxing or governmental authority on such
Fund or its income, including related interest and
penalties.
17.5 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable
period) following the close of the Plan Year, the
Trustee shall provide the Administrator with an annual
accounting of Trust assets and information to assist
the Administrator in meeting ERISA's annual reporting
and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records
and provide sufficient reporting to allow the
Administrator to properly monitor the Trust's assets
and activity.
(c) Administrator Approval. Approval of any Trustee
accounting shall automatically occur 90 days after such
accounting has been received by the Administrator,
unless the Administrator files a written objection with
the Trustee within such time period. Such approval
shall be final as to all matters and transactions
stated or shown therein and binding upon the
Administrator.
17.6 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is
not readily tradeable and listed on a national securities
exchange registered under the Securities Exchange Act of
1934, as amended, the Trustee may engage a qualified
independent appraiser to determine the fair market value of
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such property, and the appraisal fees shall be paid from the
Investment Fund containing the asset.
17.7 Legal Counsel
The Trustee may consult with legal counsel of its choice,
including counsel for the Employer or counsel of the
Trustee, upon any question or matter arising under this Plan
and Trust. When relied upon by the Trustee, the opinion of
such counsel shall be evidence that the Trustee has acted in
good faith.
17.8 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such
as may be mutually agreed upon by the Company and the
Trustee. Trustee fees and all reasonable expenses of
counsel and advisors retained by the Trustee shall be paid
in accordance with Section 6.
17.9 Trustee Duties and Limitations
The Trustee's duties, unless otherwise agreed to by the
Trustee, shall be confined to construing the terms of the
Plan and Trust as they relate to the Trustee, receiving
funds on behalf of and making payments from the Trust,
safeguarding and valuing Trust assets, investing and
reinvesting Trust assets in the Investment Funds as directed
by the Administrator, Participants or Beneficiaries and
those duties as described in this Section 17.
The Trustee shall have no duty or authority to ascertain
whether Contributions are in compliance with the Plan, to
enforce collection or to compute or verify the accuracy or
adequacy of any amount to be paid to it by the Employer.
The Trustee shall not be liable for the proper application
of any part of the Trust with respect to any disbursement
made at the direction of the Administrator.
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any
Employee. The Employer expressly reserves the right to
discharge an Employee at any time, with or without cause,
without regard to the effect such discharge would have upon
the Employee's interest in the Plan.
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18.2 Limited Return of Contributions
Except as provided in this paragraph, (1) Plan assets shall
not revert to the Employer nor be diverted for any purpose
other than the exclusive benefit of Participants or their
Beneficiaries; and (2) a Participant's vested interest shall
not be subject to divestment. As provided in ERISA section
403(c)(2), the actual amount of a Contribution made by the
Employer (or the current value of the Contribution if a net
loss has occurred) may revert to the Employer if:
(a) such Contribution is made by reason of a mistake of
fact; or
(b) such Contribution is not deductible under Code section
404 (such Contributions are hereby conditioned upon
such deductibility) in the taxable year of the Employer
for which the Contribution is made.
The reversion to the Employer must be made (if at all)
within one year of the mistaken payment of the Contribution
or the date of disallowance of deduction, as the case may
be. A Participant shall have no rights under the Plan with
respect to any such reversion.
18.3 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not
otherwise required by law, no benefit provided by the Plan
may be anticipated, assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit
with respect to a Participant pursuant to a QDRO, or
(b) to use a Participant's vested Account balance as
security for a loan from the Plan which is permitted
pursuant to Code section 4975.
18.4 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the
Administrator reasonably believes that any payee is legally
incapable of giving a valid receipt and discharge for any
payment due him or her, the Administrator shall have the
payment of the benefit, or any part thereof, made to the
person (or persons or institution) whom it reasonably
believes is caring for or supporting the payee, unless it
has received due notice of claim therefor from a duly
appointed guardian or conservator of the payee. Any payment
shall to the extent thereof, be a complete discharge of any
liability under the Plan to the payee.
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18.5 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to
payment of a Plan benefit after a reasonable search, the
Administrator may at any time thereafter treat such person's
Account as forfeited and use such amount to reduce
Contributions made by an Employer as soon as
administratively feasible. If such person subsequently
presents the Administrator with a valid claim for the
benefit, such person shall be paid the amount treated as
forfeited, plus the interest that would have been earned in
the Sweep Account to the date of determination. The
Administrator shall pay the amount through an additional
amount contributed by the Employer.
18.6 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees
with the Administrator's determination of his or her
right to Plan benefits must submit a written claim and
exhaust this claim procedure before legal recourse of
any type is sought. The claim must include the
important issues the interested party believes support
the claim. The Administrator, pursuant to the
authority provided in this Plan, shall either approve
or deny the claim.
(b) Process for Denying a Claim. The Administrator's
partial or complete denial of an initial claim must
include an understandable, written response covering
(1) the specific reasons why the claim is being denied
(with reference to the pertinent Plan provisions) and
(2) the steps necessary to perfect the claim and obtain
a final review.
(c) Appeal of Denial and Final Review. The interested
party may make a written appeal of the Administrator's
initial decision, and the Administrator shall respond
in the same manner and form as prescribed for denying a
claim initially.
(d) Time Frame. The initial claim, its review, appeal and
final review shall be made in a timely fashion, subject
to the following time table:
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Days to Respond
Action From Last Action
------ ----------------
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the
maximum response time for its initial and final review
if it provides an explanation within the normal period
of why an extension is needed and when its decision
shall be forthcoming.
18.7 Construction
Headings are included for reading convenience. The text
shall control if any ambiguity or inconsistency exists
between the headings and the text. The singular and plural
shall be interchanged wherever appropriate. References to
Participant shall include Beneficiary when appropriate and
even if not otherwise already expressly stated.
18.8 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and
administered under ERISA and other applicable federal laws
and, where not otherwise preempted, by the laws of the State
of California with respect to issues affecting the Trustee's
responsibilities and by the laws of the State of
Massachusetts with respect to all other matters. If any
provision of this Plan and Trust shall become invalid or
unenforceable, that fact shall not affect the validity or
enforceability of any other provision of this Plan and
Trust. All provisions of this Plan and Trust shall be so
construed as to render them valid and enforceable in
accordance with their intent.
18.9 Indemnification by Employer
The Employers hereby agree to indemnify the Administrator,
the Committee and the Trustee against any and all
liabilities resulting from any action or inaction,
(including a Plan termination in which the Company fails to
apply for a favorable determination from the Internal
Revenue Service with respect to the qualification of the
Plan upon its termination), in relation to the Plan or Trust
(1) including (without limitation) expenses reasonably
incurred in the defense of any claim relating to the Plan or
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its assets, and amounts paid in any settlement relating to
the Plan or its assets, but (2) excluding liability
resulting from actions or inactions made in bad faith, or
resulting from the negligence or willful misconduct of the
Trustee. The Company shall have the right, but not the
obligation, to conduct the defense of any action to which
this Section applies. The Plan fiduciaries are not entitled
to indemnity from the Plan assets relating to any such
action.
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
19.1 Amendment
The Company reserves the right to amend this Plan and Trust
at any time, to any extent and in any manner it may deem
necessary or appropriate. The Company (and not the Trustee)
shall be responsible for adopting any amendments necessary
to maintain the qualified status of this Plan and Trust
under Code sections 401(a) and 501(a). If the Committee is
acting as the Administrator in accordance with Section 15.6,
it shall have the authority to adopt Plan and Trust
amendments which have no substantial adverse financial
impact upon any Employer or the Plan. All interested
parties shall be bound by any amendment, provided that no
amendment shall:
(a) become effective unless it has been adopted in
accordance with the procedures set forth in Section
19.5;
(b) except to the extent permissible under ERISA and the
Code, make it possible for any portion of the Trust
assets to revert to an Employer or to be used for, or
diverted to, any purpose other than for the exclusive
benefit of Participants and Beneficiaries entitled to
Plan benefits and to defray reasonable expenses of
administering the Plan;
(c) decrease the rights of any Employee to benefits accrued
(including the elimination of optional forms of
benefits) to the date on which the amendment is
adopted, or if later, the date upon which the amendment
becomes effective, except to the extent permitted under
ERISA and the Code; nor
(d) permit an Employee to be paid the balance of his or her
Employee Pre-Tax Account unless the payment would
otherwise be permitted under Code section 401(k).
55 11/17/95
<PAGE>
19.2 Merger
This Plan and Trust may not be merged or consolidated with,
nor may its assets or liabilities be transferred to, another
plan unless each Participant and Beneficiary would, if the
resulting plan were then terminated, receive a benefit just
after the merger, consolidation or transfer which is at
least equal to the benefit which would be received if either
plan had terminated just before such event.
19.3 Divestitures
In the event of a sale by an Employer which is a corporation
of: (1) substantially all of the Employer's assets used in a
trade or business to an unrelated corporation, or (2) a sale
of such Employer's interest in a subsidiary to an unrelated
entity or individual, lump sum distributions shall be
permitted from the Plan, except as provided below, to
Participants with respect to Employees who continue
employment with the corporation acquiring such assets or who
continue employment with such subsidiary, as applicable.
Notwithstanding, distributions shall not be permitted if the
purchaser agrees, in connection with the sale, to be
substituted as the Company as the sponsor of the Plan or to
accept a transfer of the assets and liabilities representing
the Participants' benefits into a plan of the purchaser or a
plan to be established by the purchaser.
19.4 Plan Termination
The Company may, at any time and for any reason, terminate
the Plan in accordance with the procedures set forth in
Section 19.5, or completely discontinue contributions. Upon
either of these events, or in the event of a partial
termination of the Plan within the meaning of Code section
411(d)(3), the Accounts of each affected Employee shall be
fully vested. If no successor plan is established or
maintained, lump sum distributions shall be made in
accordance with the terms of the Plan as in effect at the
time of the Plan's termination or as thereafter amended
provided that a post-termination amendment shall not be
effective to the extent that it violates Section 19.1 unless
it is required in order to maintain the qualified status of
the Plan upon its termination. The Trustee's and Employer's
authority shall continue beyond the Plan's termination date
until all Trust assets have been liquidated and distributed.
56 11/17/95
<PAGE>
19.5 Amendment and Termination Procedures
The following procedural requirements shall govern the
adoption of any amendment or termination (a "Change") of
this Plan and Trust:
(a) The Company may adopt any Change by action of its board
of directors in accordance with its normal procedures.
(b) The Committee, if acting as Administrator in accordance
with Section 15.6, may adopt any amendment within the
scope of its authority provided under Section 19.1 and
in the manner specified in Section 15.7(a).
(c) Any Change must be (1) set forth in writing, and (2)
signed and dated by an executive officer of the Company
or, in the case of an amendment adopted by the
Committee, at least one of its members.
(d) If the effective date of any Change is not specified in
the document setting forth the Change, it shall be
effective as of the date it is signed by the last
person whose signature is required under clause (2)
above, except to the extent that another effective date
is necessary to maintain the qualified status of this
Plan and Trust under Code sections 401(a) and 501(a).
(e) No Change shall become effective until it is accepted
and signed by the Trustee (which acceptance shall not
unreasonably be withheld).
19.6 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate
its Plan participation by action of its board of directors
in accordance with its normal procedures. Written notice of
such action shall be signed and dated by an executive
officer of the Employer and delivered to the Company. If
the effective date of such action is not specified, it shall
be effective on, or as soon as reasonably practicable after,
the date of delivery. Upon the Employer's request, the
Company may instruct the Trustee and Administrator to spin
off all affected Accounts and underlying assets into a
separate qualified plan under which the Employer shall
assume the powers and duties of the Company. Alternatively,
the Company may treat the event as a partial termination
described above or continue to maintain the Accounts under
the Plan.
57 11/17/95
<PAGE>
19.7 Replacement of the Trustee
The Trustee may resign as Trustee under this Plan and Trust
or may be removed by the Company at any time upon at least
90 days written notice (or less if agreed to by both
parties). In such event, the Company shall appoint a
successor trustee by the end of the notice period. The
successor trustee shall then succeed to all the powers and
duties of the Trustee under this Plan and Trust. If no
successor trustee has been named by the end of the notice
period, the Company's chief executive officer shall become
the trustee, or if he or she declines, the Trustee may
petition the court for the appointment of a successor
trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as administratively feasible
after its resignation or removal as Trustee, the
Trustee shall transfer to the successor trustee all
property currently held by the Trust. However, the
Trustee is authorized to reserve such sum of money as
it may deem advisable for payment of its accounts and
expenses in connection with the settlement of its
accounts or other fees or expenses payable by the
Trust. Any balance remaining after payment of such
fees and expenses shall be paid to the successor
trustee.
(b) Final Accounting. The Trustee shall provide a final
accounting to the Administrator within 90 days of the
date Trust assets are transferred to the successor
trustee.
(c) Administrator Approval. Approval of the final
accounting shall automatically occur 90 days after such
accounting has been received by the Administrator,
unless the Administrator files a written objection with
the Trustee within such time period. Such approval
shall be final as to all matters and transactions
stated or shown therein and binding upon the
Administrator.
58 11/17/95
<PAGE>
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered under the Plan as of the Effective
Date include this set of daily valued funds:
Category Funds
-------- -----
Income Stable Value
------
Equity Company Stock
------ S&P 500 Stock
Aim, Constellation
Templeton, Foreign
Combination LifePath
-----------
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the
Stable Value Fund.
Ill. Maximum Percentage Restrictions Applicable to Certain Investment
Funds
As of the Effective Date, there are no maximum percentage
restrictions applicable to any Investment Funds.
59 11/17/95
<PAGE>
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be
as follows:
1) Investment Management Fees: These are paid by Participants in
that management fees reduce the investment return reported and
credited to Participants.
2) Recordkeeping Fees: These are paid by the Employer on a quarterly
basis.
3) Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an
outstanding loan balance for loans entered into on or after April
1, 1995. For loans entered into prior to April 1, 1995, these
are paid by the Employer on a quarterly basis.
4) Investment Fund Election Changes: For each Investment Fund
election change by a Participant, in excess of 10 changes per
year, a $10 fee shall be assessed and billed/collected quarterly
from the Participant's Account.
5) Periodic Installment Payment Fees: A $3.00 per check fee shall be
assessed and billed/collected quarterly from the Participant's
Account.
6) Additional Fees Paid by Employer: All other Plan related fees and
expenses shall be paid by the Employer. To the extent that the
Administrator later elects that any such fees shall be borne by
Participants, estimates of the fees shall be determined and
reconciled, at least annually, and the fees shall be assessed
monthly and billed/collected from Accounts quarterly.
60 11/17/95
<PAGE>
APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant
loans shall be equal to the Trustee's prime rate, plus 1%.
61 11/17/95
<PAGE>
SCHEDULE A - EMPLOYER CONTRIBUTIONS
LOCAL 326 - LAWRENCE EMPLOYEES
(1) Eligibility for Employer Contributions: A Participant who is a
Local 326 - Lawrence Employee is not eligible for Employer
Contributions.
62 11/17/95
<PAGE>
SCHEDULE B - EMPLOYER CONTRIBUTIONS
LOCAL 273 - BROCKTON EMPLOYEES
(1) Eligibility for Employer Contributions. For each period for
which Participant Contributions are made, the Employer shall make
Employer Contributions, as set forth below, on behalf of each
Participant who is a Local 273 - Brockton Employee and who (a) is
not eligible to receive medical insurance coverage upon
retirement or (b) would otherwise be eligible to receive medical
coverage upon retirement but who in accordance with procedures
prescribed by the Administrator made a one-time irrevocable
election to waive his or her right to receive medical insurance
coverage upon his or her retirement.
(2) Amount of Employer Contributions. The Employer Contributions for
each period shall total 100% of each eligible Participant's
Employee Pre-Tax Contributions for the period, provided that no
Employer Contributions shall be made based upon a Participant's
Contributions in excess of 2.5% of his or her Pay, except that
effective March 1, 1997 "50%" and "5%" shall be substituted for
the preceding references to "100%" and "2.5%".
63 11/17/95
<PAGE>
SCHEDULE C - EMPLOYER CONTRIBUTIONS
LOCAL 341 - PORTLAND EMPLOYEES
(1) Eligibility for Employer Contributions. For each period for
which Participant Contributions are made, the Employer shall make
Employer Contributions, as set forth below, on behalf of each
Participant who is a Local 341 - Portland Employee and who (a) is
not eligible to receive medical insurance coverage upon
retirement or (b) would otherwise be eligible to receive medical
coverage upon retirement but who in accordance with procedures
prescribed by the Administrator made a one-time irrevocable
election to waive his or her right to receive medical insurance
coverage upon his or her retirement.
(2) Amount of Employer Contributions. The Employer Contributions for
each period shall total 100% of each eligible Participant's
Employee Pre-Tax Contributions for the period, provided that no
Employer Contributions shall be made based upon a Participant's
Contributions in excess of 2.5% of his or her Pay, except that
effective April 1, 1997 "50%" and "5%" shall be substituted for
the preceding references to "100%" and "2.5%".
64 11/17/95
<PAGE>
SCHEDULE D - EMPLOYER CONTRIBUTIONS
LOCAL 341 - GRANITE STATE EMPLOYEES
(1) Eligibility for Employer Contributions. For each period for
which Participant Contributions are made, the Employer shall make
Employer Contributions, as set forth below, on behalf of each
Participant who is a Local 341 - Granite State Employee and who
(a) is not eligible to receive medical insurance coverage upon
retirement or (b) would otherwise be eligible to receive medical
coverage upon retirement but who in accordance with procedures
prescribed by the Administrator made a one-time irrevocable
election to waive his or her right to receive medical insurance
coverage upon his or her retirement.
(2) Amount of Employer Contributions. The Employer Contributions for
each period shall total 100% of each eligible Participant's
Employee Pre-Tax Contributions for the period, provided that no
Employer Contributions shall be made based upon a Participant's
Contributions in excess of 2.5% of his or her Pay, except that
effective April 1, 1997 "50%" and "5%" shall be substituted for
the preceding references to "100%" and "2.5%".
65 11/17/95
<PAGE>
SCHEDULE D - EMPLOYER CONTRIBUTIONS
LOCAL 12026 - SPRINGFIELD EMPLOYEES
(1) Eligibility for Employer Contributions: A Participant who is a
Local 12026 - Springfield Employee is not eligible for Employer
Contributions.
66 11/17/95
<PAGE>
SCHEDULE E - EMPLOYER CONTRIBUTIONS
LOCAL 486 - SPRINGFIELD EMPLOYEES
(1) Eligibility for Employer Contributions: A Participant who is a
Local 486 - Springfield Employee is not eligible for Employer
Contributions.
67 11/17/95
<PAGE>
SCHEDULE F - EMPLOYER CONTRIBUTIONS
LOCAL 14930 - PORTSMOUTH EMPLOYEES
(1) Eligibility for Employer Contributions: A Participant who is a
Local 14930 - Portsmouth Employee is not eligible for Employer
Contributions.
68 11/17/95
<PAGE>
SCHEDULE G - EMPLOYER CONTRIBUTIONS
LOCAL 8-366 - BROCKTON PROPANE EMPLOYEES
(1) Eligibility for Employer Contributions: A Participant who is a
Local 8-366 - Brockton Propane Employee is not eligible for
Employer Contributions.
69 11/17/95
<PAGE>
SCHEDULE H - EMPLOYER CONTRIBUTIONS
LOCAL 14930 - LEWISTON EMPLOYEES
(1) Eligibility for Employer Contributions: A Participant who is a
Local 14930 - Lewiston Employee is not eligible for Employer
Contributions.
70 11/17/95
<PAGE>
SCHEDULE I - EMPLOYER CONTRIBUTIONS
LOCAL 14930 - SALEM PROPANE EMPLOYEES
(1) Eligibility for Employer Contributions: A Participant who is a
Local 14930 - Salem Propane Employee is not eligible for Employer
Contributions.
71 11/17/95
<PAGE>
AMENDMENT NO. 1
TO THE
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES AND TRUST
WHEREAS, Bay State Gas Company (the "Company"), approved and
adopted the Bay State Gas Company Savings Plan for Operating Employees
(the "Plan") and Trust Agreement (the "Trust") which were originally
effective January 1, 1988 and most recently restated effective April
1, 1995;
WHEREAS, Section 19.1 of the Plan and Trust provides that the
Company reserves the right to amend the Plan and Trust;
NOW THEREFORE RESOLVED, that Section 3 is amended effective April
1, 1995, Section 1 is amended effective January 1, 1996 and Sections
1, 2 and 5 are amended effective July 1, 1996 as follows:
Effective April 1, 1995:
-----------------------
1. Section 3 is amended to restate Subsection 3.1 in its entirety as
follows:
3.1 Employee Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect
to reduce his or her Pay by an amount which does not exceed
the Contribution Dollar Limit, within the limits described
in the Contribution Percentage Limits paragraph of this
Section 3, and have such amount contributed to the Plan by
the Employer as an Employee Pre-Tax Contribution. The
election shall be made as a percentage of Pay in such manner
and with such advance notice as prescribed by the
Administrator. In no event shall an Employee's Employee
Pre-Tax Contributions under the Plan and comparable
contributions to all other plans, contracts or arrangements
of all Related Companies exceed the Contribution Dollar
Limit for the Employee's taxable year beginning in the Plan
Year.
Effective January 1, 1996:
-------------------------
1. Section 1 is amended to restate Subsection 1.48 in its entirety
as follows:
1.48 "Trustee". BZW Barclays Global Investors, National
Association.
1
<PAGE>
AMENDMENT NO. 1
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES AND TRUST
Effective July 1, 1996:
----------------------
1. Section 1 is amended to add a new Subsection 1.36 and to
redesignate each subsequent Subsection as follows:
1.36 "Period of Employment" The period beginning on the date an
Employee first performs an hour of service and ending on the
date his or her employment ends. Employment ends on the
date the Employee quits, retires, is discharged, dies or (if
earlier) the first anniversary of his or her absence for any
other reason. The period of absence starting with the date
an Employee's employment temporarily ends and ending on the
date he or she is subsequently reemployed is (1) included in
his or her Period of Employment if the period of absence
does not exceed one year, and (2) excluded if such period
exceeds one year.
An Employee's service with a predecessor or acquired company
shall only be counted in the determination of his or her
Period of Employment for eligibility and/or vesting purposes
if (1) the Company directs that credit for such service be
granted, or (2) a qualified plan of the predecessor or
acquired company is subsequently maintained by any Employer
or Related Company.
2. Section 2 is amended to restate Subsection 2.1 in its entirety as
follows:
2.1 Eligibility
Each Eligible Employee who is a Participant shall continue
their eligibility to participate.
Each other Eligible Employee shall become a Participant on
the first day of the next month after the date he or she
completes a 12-month eligibility period in which he or she
is credited with at least 1,000 Hours of Service. The
initial eligibility period begins on the date an Employee
first performs an Hour of Service. Subsequent eligibility
periods begin with the start of each Plan Year beginning
after the first Hour of Service is performed.
Notwithstanding, if so provided by the Employee's governing
collective bargaining Agreement, for purposes of Employee
2
<PAGE>
AMENDMENT NO. 1
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES AND TRUST
Pre-Tax Contributions only, such Eligible Employee shall
become a Participant on the later of July 1, 1996 (or such
other date as so provided in the Eligible Employee's
governing collective bargaining agreement) or the first day
of the next month after the date he or she completes a 60
day Period of Employment but in no event later than the date
he or she would have otherwise become a Participant in
accordance with the preceding paragraph. The eligibility
period begins on the date an Employee's Period of Employment
commences.
3. Section 5 is amended to restate Subsection 5.1(a) in its entirety
as follows:
5.1 Employer Contributions
(a) Frequency and Eligibility; For each period for which
Participants' Contributions are made, the Employer
shall make Employer Contributions on behalf of each
Participant who contributed during the period, met the
eligibility requirements of Section 2.1 and who is so
eligible for Employer Contributions under his or her
governing collective bargaining agreement as set forth
in Schedules A though I.
3
<PAGE>
AMENDMENT NO. 1
BAY STATE GAS COMPANY
SAVINGS PLAN FOR OPERATING EMPLOYEES AND TRUST
Date: September 12, 1996 Bay State Gas Company
By: /s/ Jane P. Campagna
------------------------------------
Title: Benefits Manager
The provisions of the above amendment which relate to the Trustee are
hereby approved and executed.
Date: September 20, 1996 BZW Barclays Global Investors
National Association
By: /s/ David Lysen
------------------------------------
Title: Principal
Date: September 20, 1996 BZW Barclays Global Investors,
National Association
By: /s/ Gwyn E. Slack
------------------------------------
Title: Principal
4
EXHIBIT 5
---------
SCHIFF HARDIN & WAITE
7200 Sears Tower, Chicago, Illinois 60606
(312) 258-5500
-----------------------------------------
April 20, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D. C. 20549-1004
Re: NiSource Inc. - Registration Statement on Form S-3
--------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to NiSource Inc., an Indiana
corporation (the "Corporation"), in connection with the Corporation's
filing of a Registration Statement on Form S-3 (the "Registration
Statement") relating to the offer and sale by the Corporation of
14,000 of its common shares, without par value (including associated
preferred share purchase rights) (the "Common Shares"), as more fully
described in the Registration Statement, through the Bay State Gas
Company Savings Plan for Operating Employees (the "Plan").
In this connection, we have examined such documents and have made
such factual and legal investigations as we have deemed necessary or
appropriate for purposes of this opinion.
Based upon the foregoing, we are of the opinion that: (i) the
written provisions of the current Plan documents comply with the
applicable provisions of the Employee Retirement Income Security Act
of 1974; and (ii) the Common Shares have been duly authorized and,
when issued upon payment therefor, as contemplated in the
Registration Statement, will be legally issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement.
Very truly yours,
SCHIFF HARDIN & WAITE
By: /s/ Robert J. Minkus
-------------------------------
Robert J. Minkus
EXHIBIT 23.1
------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our
reports dated February 5, 1999 included in the Annual Report on
Form 10-K for NIPSCO Industries, Inc. for the year ended December 31,
1998; and our report dated February 5, 1999 included in the Current
Report on Form 8-K for NIPSCO Industries, Inc. dated February 8, 1999
and to all references to our Firm included in this Registration Statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 15, 1999
EXHIBIT 23.2
------------
Accountants' Consent
The Board of Directors
Bay State Gas Company:
We consent to the use of our audit reports dated October 27, 1998 on
the consolidated financial statements and schedule of Bay State Gas
Company and subsidiaries as of September 30, 1998 and for each of the
years in the three-year period then ended incorporated herein by
reference to our firm under the heading "Experts" in the prospectus.
Our reports refer to a change in accounting for postretirement benefit
plans during the year ended September 30, 1998.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
April 16, 1999
