NOTE: THIS TABLE OF CONTENTS IS NOT PART OF THE CINERGY
CORP. UNION EMPLOYEES' PENSION PLAN; INSTEAD, THIS TABLE OF
CONTENTS IS MERELY FOR CONVENIENCE OF REFERENCE
TABLE OF CONTENTS
PAGE
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE 2 EFFECTIVE DATE OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 3 ELIGIBILITY AND PARTICIPATION. . . . . . . . . . . . . . . . . . . . . 30
3.1 Date of Participation. . . . . . . . . . . . . . . . . . . . . . . . . 30
3.2 Leased Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.3 Transfers of Employment. . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 Transfers of Participants and Plan Assets to and from the Cinergy
Corp. Non-Union Employees' Pension Plan and Cinergy Corp. Union
Employees' Retirement Income Plan. . . . . . . . . . . . . . . . . . . 32
ARTICLE 4 AMOUNT OF LIFE-ONLY PENSION. . . . . . . . . . . . . . . . . . . . . . 33
4.1 Normal Retirement Pension Formula. . . . . . . . . . . . . . . . . . . 33
4.2 Normal Retirement Benefits for Pre-1998 Participants . . . . . . . . . 34
4.3 General Method of Computing Accrued Benefit Under the Plan's Pre-1998
Formulas for Normal Retirement . . . . . . . . . . . . . . . . . . . . 37
4.4 General Method of Computing Annual Pension for Retirement at
Early Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . . 38
4.5 General Method of Computing Annual Pension for a Terminated Vested
Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.6 Maximum Pension. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 5 SEVERANCE FROM SERVICE-VESTING . . . . . . . . . . . . . . . . . . . . 49
5.1 Vesting Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.2 Severance from Service before Vesting. . . . . . . . . . . . . . . . . 50
5.3 Severance from Service after Vesting . . . . . . . . . . . . . . . . . 50
ARTICLE 6 SPOUSE'S BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.1 Determination of Spouse's Benefit. . . . . . . . . . . . . . . . . . . 50
6.2 Method of Payment of Spouse's Benefit. . . . . . . . . . . . . . . . . 53
Exhibit 10-uu
ARTICLE 7 FORMS OF PENSION . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.1 Normal Forms of Pension. . . . . . . . . . . . . . . . . . . . . . . . 53
7.2 Optional Forms of Retirement Income. . . . . . . . . . . . . . . . . . 55
ARTICLE 8 PAYMENT OF PENSION . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.1 Timing of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.2 Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.3 Small Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.4 Facility of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.5 Benefits for Late Retirees, Reemployed Retirees and Reemployed
Terminated Vested Participants . . . . . . . . . . . . . . . . . . . . 67
8.6 Required Payment of Benefits . . . . . . . . . . . . . . . . . . . . . 69
8.7 Direct Rollovers of Eligible Distributions . . . . . . . . . . . . . . 73
ARTICLE 9 RETIREE MEDICAL/DENTAL BENEFITS. . . . . . . . . . . . . . . . . . . . 74
9.1 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.2 Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.3 Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.4 Impossibility of Diversion Prior To Satisfaction of All Liabilities. . 75
9.5 Reversion Upon Satisfaction of All Liabilities . . . . . . . . . . . . 75
9.6 Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.7 Employer Contributions To The Medical/Dental Benefits Account. . . . . 75
9.8 Medical/Dental Benefits. . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE 10 NONALIENATION OF BENEFITS. . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE 11 ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
11.1 Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
11.2 Removal and Replacement of Committee Members . . . . . . . . . . . . . 77
11.3 Qualification and Resignation. . . . . . . . . . . . . . . . . . . . . 77
11.4 Chairperson, Services, and Counsel . . . . . . . . . . . . . . . . . . 77
11.5 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.7 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . 78
11.8 Notice to Trustee of Changes in Membership . . . . . . . . . . . . . . 78
11.9 Correction of Defects. . . . . . . . . . . . . . . . . . . . . . . . . 79
11.10 Reliance Upon Legal Counsel. . . . . . . . . . . . . . . . . . . . . . 79
11.11 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.12 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.13 Powers and Duties of Committee . . . . . . . . . . . . . . . . . . . . 80
11.14 Matters Specifically Excluded from Jurisdiction. . . . . . . . . . . . 81
Exhibit 10-uu
ii
ARTICLE 12 BENEFIT CLAIMS PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 13 FUNDING POLICY AND METHOD. . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE 14 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
14.1 No Enlargement of Employee Benefits. . . . . . . . . . . . . . . . . . 83
14.2 Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
14.3 Qualified Military Service . . . . . . . . . . . . . . . . . . . . . . 84
14.4 Notice of Address. . . . . . . . . . . . . . . . . . . . . . . . . . . 84
14.5 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
14.6 No Individual Liability. . . . . . . . . . . . . . . . . . . . . . . . 85
14.7 Participant's Statement of Agreement . . . . . . . . . . . . . . . . . 85
14.8 No Diversion of Assets . . . . . . . . . . . . . . . . . . . . . . . . 85
14.9 Governing Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
14.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
14.11 Interpretation and Regulation of Plan. . . . . . . . . . . . . . . . . 86
14.12 Communications by Participants . . . . . . . . . . . . . . . . . . . . 86
14.13 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
14.14 Accrued Benefit Not to be Decreased by Amendment . . . . . . . . . . . 87
ARTICLE 15 TRUSTS AND INSURANCE CONTRACTS . . . . . . . . . . . . . . . . . . . . 87
15.1 Trusts and Insurance Contracts . . . . . . . . . . . . . . . . . . . . 87
15.2 Irrevocability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
15.3 Sufficiency of Pension Fund. . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE 16 CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE 17 APPROVAL UNDER INTERNAL REVENUE CODE . . . . . . . . . . . . . . . . . 89
ARTICLE 18 AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 89
18.1 Right to Amend or Terminate. . . . . . . . . . . . . . . . . . . . . . 89
18.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . 90
18.3 Merger and Consolidation of Plan . . . . . . . . . . . . . . . . . . . 92
18.4 Post-Change in Control Merger, Consolidation, or Transfer of
Pension Plan Assets or Liabilities . . . . . . . . . . . . . . . . . . 93
18.5 General Protection of Benefits in the Event of a Change in
Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
18.6 Post-Change in Control Surplus Reversion . . . . . . . . . . . . . . . 94
ARTICLE 19 AUTHORIZED TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . 95
Exhibit 10-uu
iii
ARTICLE 20 PARTICIPATION BY OTHER EMPLOYERS . . . . . . . . . . . . . . . . . . . 95
20.1 Adoption of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
20.2 Withdrawal from Participation. . . . . . . . . . . . . . . . . . . . . 95
20.3 Cinergy as Agent for Employers . . . . . . . . . . . . . . . . . . . . 96
ARTICLE 21 CONTINUANCE BY A SUCCESSOR . . . . . . . . . . . . . . . . . . . . . . 97
Exhibit 10-uu
iv
ADOPTED PURSUANT TO RESOLUTIONS OF THE CINERGY
CORP. BOARD OF DIRECTORS DATED DECEMBER 18, 1997
CINERGY CORP. UNION
EMPLOYEES' PENSION PLAN
(As Amended and Restated Effective January 1, 1998)
INTRODUCTION
Effective March 1, 1941, PSI Energy, Inc. (formerly named Public Service
Company of Indiana, Inc.) ("PSI") adopted a pension plan for the exclusive
benefit of its eligible employees. Prior to May 1, 1970, the pension plan,
as amended from time to time, was embodied in Group Annuity Contract No.
34GAC between PSI and John Hancock Mutual Life Insurance Co. Effective May
1, 1970, the pension plan was amended and restated in a document entitled
"Public Service Company of Indiana, Inc. Pension Plan" (the "Plan").
This Plan is maintained for the exclusive benefit of the Eligible Employees.
The purpose of the Plan is to provide retirement income for Eligible
Employees. The Plan is designed to satisfy the requirements of Code
subsection 401(a) and the applicable requirements of ERISA. The Plan has
been restated on several occasions in order to comply with applicable legal
requirements and to make other changes. This document is a continuation and
complete restatement of the Plan, effective January 1, 1998. Effective
January 1, 1998, the Plan is renamed the Cinergy Corp. Union Employees'
Pension Plan. Also, effective as of December 31, 1997, the assets and
liabilities attributable to exempt employees and non-exempt employees who
were participants in the Plan as of that date were spun off from the Plan and
transferred to the Cinergy Corp. Non-Union Employees' Pension Plan.
Exhibit 10-uu
ARTICLE 1
DEFINITIONS
As used in this document, the following words and phrases, when capitalized,
will have the meanings set forth below, unless a different meaning is plainly
required by the context.
1.1 "Absence from Service" means, with respect to each Employee, his absence
from service (with or without pay) with his Employer for any reason other
than a quit, resignation, discharge, retirement, or death, including, but
without limitation because of enumeration, vacation, holiday, sickness,
disability, leave of absence (unless otherwise required by applicable
law), or other layoff. If an Employee is totally disabled and qualifies
for benefits under Cinergy's Long-Term Disability Plan, the expiration of
his Absence from Service will not occur until the later of (a) the date
he no longer qualifies for benefits under Cinergy's Long-Term Disability
Plan, or (b) his Normal Retirement Date, Early Retirement Date, or Actual
Separation Date, whichever is applicable.
1.2 "Accrued Vacation Pay" means, with respect to an Employee, the
compensation received at his Severance from Service for unused accrued
vacation pursuant to the Employer's applicable policy.
1.3 "Active Participant" means a Participant for whom benefits are being
accrued under the Plan on the applicable date.
1.4 "Actual Separation Date" means:
(a) with respect to a Participant who either (1) retires on or after
his Normal Retirement Date, or (2) who retires on an Early
Retirement Date, the first day of the calendar month coincident
with or following the date of the Participant's Severance from
Service; or
2 Exhibit 10-uu
(b) with respect to a Participant who incurs a Severance from Service
before he reaches age 50 and who is entitled to benefits
determined under the provisions of Section 5.3 (Severance from
Service after Vesting), the date of the Participant's Severance
from Service.
1.5 "Actuarial Equivalent" means a benefit having the same actuarially
determined value as the benefit that the Actuarial Equivalent replaces.
The determination of an Actuarial Equivalent will be based on the
following actuarial assumptions, except as provided in Subsection (c) or
(d) below:
(a) MORTALITY:
Participants in accordance with the UP-1984 Table, with no rating
of ages;
Spouses and Contingent Annuitants in accordance with the UP-1984
Table, with ages rated down three years;
(b) INTEREST:
7-1/2% per annum, compounded annually.
(c) With respect to any lump sum payment that may be payable under the
Plan during a Plan Year, the Actuarial Equivalent will be
calculated using the mortality table as prescribed from time to
time by the Secretary of the Treasury (currently the 1983 Group
Annuity Mortality Table with a 50/50 mix of males and females) and
an interest rate equal to the annual rate of interest on 30 year
Treasury securities as specified by the Commissioner of Internal
Revenue for the second full calendar month preceding the first day
of the Plan Year.
(d) In the case of a Participant who had an accrued benefit under the
Plan as of December 31, 1997, and who has a Severance from Service
Date after December 31, 1997, no benefit determination will
produce an amount that is less
3 Exhibit 10-uu
than that which would have been produced utilizing both the
actuarial assumptions specified in the Plan as in effect on
December 31, 1997, and the annual pension accrued as of December
31, 1997, determined under the provisions of the Plan as then in
effect.
1.6 "Additional Separation Date" means, with respect to a Participant who has
an Initial Separation Date and who is later reemployed by an Employer,
the first day of the calendar month coincident with or following the
Participant's next Severance from Service Date. However, if the
Participant has multiple Severance from Service Dates after his Initial
Separation Date, then he will have an Additional Separation Date for each
Severance from Service, which will be the first day of the calendar month
coincident with or following the Participant's applicable Severance from
Service Date.
1.7 "Affiliate" means any employer that together with the Employer is under
common control or a member of an affiliated service group as determined
under Code subsections 414(b), (c), (m), and (o). In determining whether
an employer is a member of a controlled group for purposes of Section 4.6
(Maximum Pension), the rules of Code subsections 414(b) and (c) will be
applied as modified by Code subsection 415(h).
1.8 "Annual Addition" means, with respect to a Participant for a Plan Year,
the following amounts credited to a Participant's accounts in any
Qualified Defined Contribution Plan maintained by the Employer or an
Affiliate for the Plan Year: employer contributions, employee
contributions (other than rollover contributions); forfeitures; amounts
allocated, after March 31, 1984, to an individual medical account, as
defined in Code paragraph 415(l)(2), that is part of a pension or annuity
plan maintained by the Employer or an Affiliate; and amounts derived from
contributions paid or accrued after March 31, 1984, that are attributable
to post-retirement medical benefits, allocated to the separate account of
a Key Employee, under a welfare benefit fund, as defined in Code
subsection 419(e), maintained by the Employer or an Affiliate.
1.9 "Annual Pension" means, with respect to a Participant, the amount of the
Participant's pension, expressed as an annual benefit for the
Participant's lifetime.
4 Exhibit 10-uu
1.10 "Annual Primary Social Security Amount" means, with respect to a
Participant, the annual amount available under the provisions of Title II
of the Social Security Act as in effect on December 31, 1989
(December 31, 1988, for a Highly Compensated Participant), determined
without regard to any increases in benefit levels, wage base increases,
or changes in the types of benefits that take effect after that date, but
including any recomputation in benefits due solely to the Participant's
"wages" and "remuneration," as defined in the Social Security Act, in
calendar year 1989 or 1988, whichever is applicable.
1.11 "Annual Performance Cash Award" means, with respect to an Employee, the
cash award received by the Employee under the provisions of an Employer's
annual bonus or incentive pay plan or program, including, but without
limitation because of enumeration, the Union Employees' Incentive Plan,
or any successor Plan.
1.12 "Annuity Starting Date" means, with respect to a Participant, the first
day of the first period for which a Plan benefit is paid as an annuity
or, in the case of a benefit not payable in the form of an annuity, the
first day on which all events have occurred that entitle the Participant
to the benefit.
1.13 "Base Wage" means, with respect to an Employee, the hourly or weekly base
rate of pay received as remuneration for services performed for the
relevant period, exclusive of any allowances, premiums, bonuses,
overtime, or other forms or types of compensation, multiplied by his
hours worked during the applicable period.
1.14 "Beneficiary" means, with respect to each Participant, the person or
persons who are to receive benefits under the Plan after the
Participant's death.
1.15 "Board of Directors" means the duly constituted board of directors of
Cinergy on the applicable date.
5 Exhibit 10-uu
1.16 "Break in Service" means, with respect to an Employee, a Period of
Severance of at least 12 consecutive months.
1.17 "Change in Control" means any of the following events have occurred:
(a) Any "person" or "group" (within the meaning of subsection 13(d)
and paragraph 14(d)(2) of the Securities Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act), directly or indirectly, of securities of
Cinergy (not including in the securities beneficially owned by
such person or group any securities acquired directly from Cinergy
or an Affiliate) representing 50% or more of the combined voting
power of Cinergy's then outstanding securities, excluding any
person or group who becomes such a beneficial owner in connection
with a transaction described in Paragraph (1) of Subsection (b)
below;
(b) There is consummated a merger or consolidation of Cinergy or any
direct or indirect subsidiary of Cinergy with any other
corporation, other than (1) a merger or consolidation that would
result in the voting securities of Cinergy outstanding immediately
prior to the merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at least
50% of the combined voting power of the securities of Cinergy or
such surviving entity or any parent thereof outstanding
immediately after the merger or consolidation, or (2) a merger or
consolidation effected to implement a recapitalization of Cinergy
(or similar transaction) in which no person is or becomes the
beneficial owner, directly or indirectly, of securities of Cinergy
(not including in the securities beneficially owned by such person
any securities acquired directly from Cinergy or its Affiliates
other than in connection with the acquisition by Cinergy or its
Affiliates of a business) representing 25% or more of the combined
voting power of Cinergy's then outstanding securities;
6 Exhibit 10-uu
(c) During any period of two consecutive years, individuals who at the
beginning of that period constitute the Board of Directors and any
new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
context, including but not limited to a consent solicitation,
relating to the election of directors of Cinergy) whose
appointment or election by the Board of Directors or nomination
for election by Cinergy's shareholders was approved or recommended
by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of that
period or whose appointment, election or nomination for election
was previously so approved or recommended cease for any reason to
constitute a majority of the Board of Directors; or
(d) The shareholders of Cinergy approve a plan of complete liquidation
or dissolution of Cinergy or there is consummated an agreement for
the sale or disposition by Cinergy of all or substantially all of
Cinergy's assets, other than a sale or disposition by Cinergy of
all or substantially all of Cinergy's assets to an entity, at
least 60% of the combined voting power of the voting securities of
which are owned by shareholders of Cinergy in substantially the
same proportions as their ownership of Cinergy immediately prior
to such sale.
1.18 "Cinergy" means Cinergy Corp., a Delaware corporation, and any
corporation that succeeds to its business and adopts the Plan.
1.19 "Claimant" means a person submitting a claim for benefits under the Plan.
1.20 "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and interpretive rulings and regulations.
1.21 "Committee" means the benefits committee established pursuant to
Article 11 (Administration) to serve as Plan administrator.
7 Exhibit 10-uu
1.22 "Contingent Annuitant" means, with respect to any Participant electing a
contingent pension option under Section 7.2 (Optional Forms of Retirement
Income), the person designated by the Participant to receive a contingent
pension after the Participant's death.
1.23 "Covered Compensation" means, with respect to a Participant, the average
(without indexing) of the annual Social Security taxable wage bases under
the Social Security Act for each year during the 35 calendar years ending
with the last day of the calendar year in which the Participant reaches
his Social Security Retirement Age.
1.24 "Defined Benefit Plan Fraction" means, with respect to an individual
participating in one or more Qualified Defined Benefit Plans for any
calendar year, the fraction, the numerator of which is the individual's
Projected Annual Benefit under the Qualified Defined Benefit Plans
(determined as of the end of the calendar year), and the denominator of
which is the lesser of: (a) the product of 1.25 multiplied by the dollar
limitation in effect under Code subparagraph 415(b)(1)(A) for that
calendar year, or (b) the product of 1.4 multiplied by the amount that
may be taken into account under Code subparagraph 415(b)(1)(B) with
respect to the individual under the Qualified Defined Benefit Plans for
the calendar year.
1.25 "Defined Contribution Plan Fraction" means, with respect to an individual
participating in one or more Qualified Defined Contribution Plans for any
calendar year, the fraction, the numerator of which is the sum of the
Annual Additions with respect to the Participant (determined as of the
close of the calendar year), and the denominator of which is the lesser
of the following amounts (determined for that calendar year and for each
prior calendar year of service with the Employer): (a) the product
of 1.25 multiplied by the dollar limitation in effect under Code
subparagraph 415(c)(1)(A) for the calendar year (determined without
regard to Code paragraph 415(c)(6)), or (b) the product of 1.4 multiplied
by the amount that may be taken into account under Code
subparagraph 415(c)(1)(B) with respect to that individual under all
Qualified Defined Contribution Plans for the calendar year.
8 Exhibit 10-uu
1.26 "Dependent" means any individual who is eligible for coverage under the
Medical/Dental Plan as the "spouse" or "dependent" of an Eligible
Retiree.
1.27 "Direct Rollover" means a payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
1.28 "Disability Date" means, with respect to a Participant, the date the
Participant is first determined to be totally disabled under Cinergy's
Long Term Disability Plan, as amended from time to time. With respect to
a Participant who participated in the Plan prior to January 1, 1998,
"Disability Date" means the date prior to January 1, 1998, that the
Participant is first determined to be totally disabled by reason of a
particular disability under PSI's Long Term Disability Plan, as amended
from time to time.
1.29 "Distributee" means an Employee or former Employee. In addition, the
Employee's or former Employee's surviving Spouse, and the Employee's or
former Employee's Spouse who is the alternate payee under a Qualified
Domestic Relations Order are Distributees with regard to the interest of
the Spouse or former Spouse.
1.30 "Early Retirement Date" means, with respect to each Participant who has
satisfied the Vesting Requirement, and whose Severance from Service
occurs on or after his 50th birthday but prior to his Normal Retirement
Date, the first day of the calendar month coincident with or following
his Severance from Service.
1.31 "Earnings" means, with respect to any Employee for any period of
reference, the sum of the Employee's: (a) Base Wage, (b) Overtime Pay,
(c) Shift Premiums, (d) Holiday Premiums, (e) Accrued Vacation Pay, (f)
Sabbatical Vacation Pay, (g) Service Watch Payments, and (h) Annual
Performance Cash Awards. "Earnings" does not include (a) reimbursements
or other expense allowances, (b) fringe benefits (cash and noncash) other
than those named in the preceding sentence, (c) moving and relocation
expenses, (d) deferred compensation, (e) welfare benefits, (f) Long-Term
Performance Awards, (g) other forms of compensation or remuneration that
are not specifically named in the
9 Exhibit 10-uu
preceding sentence, or (h) any payments received by an Employee from any
Affiliate that is not an Employer.
Notwithstanding the foregoing provisions of this Section, an Employee's
Earnings taken into account for any Plan Year will not exceed $150,000,
as adjusted pursuant to Code paragraph 401(a)(17).
1.32 "Eligible Employee" means an Employee other than a Leased Employee whose
pay is customarily computed on an hourly, weekly, or bi-weekly basis;
whose employment is subject to FLSA overtime and recordkeeping
provisions; and who is assigned to an employment position that is
governed by a collective bargaining agreement to which the Employer is a
party and which provides for participation in this Plan.
1.33 "Eligible Individual" means an Eligible Retiree or a Dependent.
1.34 "Eligible Retiree" means an individual who:
(a) is a Retired Participant who is also eligible to participate in
the Medical/Dental Plan, and
(b) is not a Key Employee at any time during the current Plan Year and
has not been a Key Employee at any time during any previous Plan
Year for which contributions were made for that individual's
benefit to the Medical/Dental Benefits Account.
1.35 "Eligible Retirement Plan" means an individual retirement account
described in Code subsection 408(a), an individual retirement annuity
described in Code subsection 408(b), an annuity plan described in Code
subsection 403(a), or a qualified trust described in Code
subsection 401(a), that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution
to a surviving Spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
10 Exhibit 10-uu
1.36 "Eligible Rollover Distribution" means any distribution of all or a
portion of the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include: any 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 the
Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's Beneficiary, or for a specified period
of ten years or more; any distribution to the extent that the
distribution is required under Code paragraph 401(a)(9); and the portion
of any distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
1.37 "Employee" means any person who is employed by an Employer, other than as
an employee classified by his Employer as a summer laborer or summer
employee, and who receives compensation that the Employer initially
reports on a federal wage and tax statement (Form W-2). For purposes of
crediting Service for vesting and, except as otherwise provided, for
purposes of the rules set out in Section 4.6 (Maximum Pension), the term
"Employee" includes a Leased Employee.
1.38 "Employer" means Cinergy and any Affiliate that, with the consent of the
Board of Directors, elects to participate in the Plan pursuant to
Section 20.1 (Adoption of Plan) and any successor corporation or other
organization or entity that adopts the Plan pursuant to Article 21
(Continuance by a Successor). If any Affiliate withdraws from
participation in the Plan pursuant to Section 20.2 (Withdrawal from
Participation), that Affiliate will cease to be an Employer.
1.39 "Employment Commencement Date" means, with respect to each Employee, the
date as of which the Employee is first entitled to be credited with an
Hour of Service.
1.40 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and interpretive rulings and regulations.
11 Exhibit 10-uu
1.41 "FLSA" means the Fair Labor Standards Act of 1938, as amended from time
to time, and interpretive rulings and regulations.
1.42 "Group Annuity Contract" means Group Annuity Contract No. 9599GAC issued
by John Hancock Mutual Life Insurance Company, as amended or replaced
from time to time.
1.43 "Highest Average Earnings" means a Participant's highest average annual
Earnings for any three consecutive calendar years out of his last ten
years of Participation. However, if the Participant completes fewer than
three years of Participation, his Highest Average Earnings will mean his
average annual Earnings for his total years of Participation. If a
Participant is totally disabled and qualifies for benefits under
Cinergy's Long Term Disability Plan until his Normal Retirement Date,
Early Retirement Date, or Actual Separation Date, whichever is
applicable, his Severance from Service Date will be deemed for purposes
of this section to be his Disability Date.
For purposes of this Section, if a Participant's Severance from Service
Date is other than December 31, the following periods will be treated as
a period of three consecutive calendar years:
(a) His months of Participation in the calendar year that includes his
Severance from Service Date; plus
(b) The two (or fewer) full calendar years of Participation prior to
his Severance from Service Date; plus
(c) From the calendar year immediately preceding the period described
in Subsection (b), the lesser of (1) the Participant's months of
Participation in that year, or (2) the number of months equal to
12 minus the number of months included pursuant to Subsection (a).
A Participant's Earnings will be deemed to have been earned
ratably throughout the period described in this Subsection (c).
12 Exhibit 10-uu
1.44 "Highly Compensated Participant" means a highly compensated active
Employee and a highly compensated former Employee. A highly compensated
active Employee includes any Employee who performs service for the
Employer during the Plan Year and who (a) is a 5% owner for that Plan
Year or was a 5% owner for the prior Plan Year; or (b) for the preceding
Plan Year received compensation from the Employer in excess of $80,000
(as adjusted pursuant to Code subsection 415(d)). The Employer does not
elect to require that a highly compensated active Employee must be a
member of the Employer's top-paid group for the preceding Plan Year.
A highly compensated former Employee includes any Employee who terminated
employment (or was deemed to have terminated employment) prior to the
Plan Year, performs no service for the Employer during the Plan Year, and
was a highly compensated active Employee for either the Plan Year during
which he terminated employment or any Plan Year ending on or after the
Employee's 55th birthday.
The determination of who is a Highly Compensated Participant, including
the determination of the number and identity of Employees in the top-paid
group and the compensation that is considered, will be made in accordance
with Code subsection 414(q).
1.45 "Holiday Premiums" means, with respect to an Employee, the compensation
received as a premium for services performed for the relevant period for
working on a holiday recognized by the Employer pursuant to its
applicable policy.
1.46 "Hour of Service" means, with respect to any Employee, any of the
following:
(a) each hour for which he is paid, or entitled to payment, by an
Employer for the performance of duties for that Employer;
(b) each other hour for which back pay, irrespective of mitigation of
damages, has been either awarded to him or agreed to be paid to
him by an Employer;
13 Exhibit 10-uu
(c) each other hour for which he is absent from his normal period of
employment with his Employer due to an approved military leave,
maternity leave, paternity leave, adoption leave, worker's
compensation leave, personal leave of six consecutive months or
less, or sick leave of six consecutive months or less, or a total
disability that qualifies him for benefits under Cinergy's
Long-Term Disability Plan; and
(d) each other hour for which he is paid, or entitled to payment, by
an Employer for a period of time during which he does not perform
any duties for that Employer (irrespective of whether or not his
employment relationship with that Employer has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, witness duty, military duty, or leave of
absence.
In computing an Hour of Service, the Plan may use the equivalencies set
forth in paragraph (e) of 29 C.F.R. Section 2530.200b-3. However, if
different equivalencies are used for different classifications of
Employees, then those classifications must be reasonable and consistently
applied. Each Hour of Service will be credited to the Employee for the
appropriate computation period in accordance with the provisions of
paragraphs (b) and (c) of 29 C.F.R. Section 2530.200b-2, and each Hour of
Service, when aggregated for a particular computation period, will
constitute the Hours of Service credited to the Employee for that
computation period. However, no Employee will be credited under
Subsection (d) either with more than 501 Hours of Service on account of
any single continuous period during which the Employee performs no duties
for an Employer irrespective of whether or not that period occurs in a
single computation period, or with an hour for which the Employee is
paid, or entitled to payment, by an Employer if that payment is made
solely for the purposes of either reimbursing the Employee for medical or
medically related expenses incurred by the Employee or complying with
applicable worker's compensation, unemployment compensation, or
disability insurance laws. However, the crediting of Hours of Service
for back pay awarded or agreed to with
14 Exhibit 10-uu
respect to periods described in Subsection (d) of this Section will be
subject to the same limitations set forth in the immediately preceding
sentence with respect to Subsection (d).
1.47 "Initial Separation Date" means, with respect to a Participant who is
entitled to benefits under the provisions of Section 5.1 (Vesting
Requirement), Section 5.2 (Severance from Service before Vesting), or
Section 5.3 (Severance from Service after Vesting), the first day of the
calendar month coincident with or following the Participant's initial
Severance from Service Date.
1.48 "Insurance Company" means any insurance company holding any part of the
Pension Fund.
1.49 "Key Employee" means an Employee or former Employee of an Employer who,
at any time during the determination period, is:
(a) an officer of an Employer having annual Section 415 Compensation
from his Employer greater than 50 percent of the amount in effect
under Code subparagraph 415(b)(1)(A) for any Plan Year;
(b) one of the ten Employees having annual Section 415 Compensation
from his Employer of more than the limitation in effect under Code
subparagraph 415(c)(1)(A) and owning (or considered as owning
within the meaning of Code section 318) the largest interests in
the Employer.
(c) the owner (or considered as the owner within the meaning of Code
section 318) either of more than five percent of the outstanding
stock of Cinergy, or stock possessing more than five percent of
the total combined voting power of all stock of Cinergy; or
(d) the recipient of at least $150,000 in annual Section 415
Compensation from the Employer and who owns (or is considered as
owning within the meaning of Code
15 Exhibit 10-uu
section 318) either more than one percent of the outstanding stock
of Cinergy or stock possessing more than one percent of the total
combined voting power of all stock of Cinergy.
However, no more than 50 Employees of an Employer will be deemed to be
officers for any particular Plan Year. Also, the term Key Employee
includes the beneficiaries of a Key Employee. For purposes of
Subsection (b) above, if two Employees have the same interest in the
Employer, the Employee having greater annual Earnings from his Employer
will be treated as having a larger interest. The determination of who is
a Key Employee will be made in accordance with Code paragraph 416(i)(1).
1.50 "Leased Employee" means any person who performs services for another
person, the "recipient," but who is not an employee of the recipient, if
(a) the services are provided pursuant to an agreement between the
recipient and any other person, (b) the person has performed the services
for the recipient (or for the recipient and related persons) on a
substantially full-time basis for a period of at least one year, and
(c) the services are performed under the primary direction and control of
the recipient. A Leased Employee will not be considered an employee of
the recipient if:
(a) that employee is covered by a money purchase pension plan
providing:
(1) a non-integrated employer contribution rate of at least
10 percent of compensation, as defined in Code
paragraph 415(c)(3), which includes amounts contributed
pursuant to a salary reduction agreement that are
excludable from the Employee's gross income under Code
section 125, Code paragraph 402(a)(8), or Code
subsections 402(h) or 403(b);
(2) immediate participation;
(3) full and immediate vesting; and
16 Exhibit 10-uu
(b) leased employees do not constitute more than 20 percent of the
recipient's non-highly compensated work force.
1.51 "Long-Term Performance Awards" means, with respect to an Employee, the
cash or stock-based award received by the Employee pursuant to the
provisions of an Employer's long-term bonus or incentive pay plan or
program, including, but without limitation because of enumeration, the
Cinergy 1996 Long-Term Incentive Compensation Plan.
1.52 "Medical/Dental Benefits" means the benefits specified and payable under
Section 9.8 (Medical/Dental Benefits) from the Medical/Dental Benefits
Account.
1.53 "Medical/Dental Benefits Account" means the separate account established
pursuant to Article 9 (Retiree Medical/Dental Benefits) for contributions
to fund benefits payable under Article 9 (Retiree Medical/Dental
Benefits).
1.54 "Medical/Dental Plan" means any plan or program that is established by
the Employer to provide medical or dental insurance coverage or medical
or dental expense reimbursements to Eligible Individuals.
1.55 "Nine Months of Elapsed Time Service" means, with respect to a
Participant who participated in the Plan as of December 31, 1997, the
nine consecutive month period commencing on his Employment Commencement
Date, provided that the Employee does not in that period incur a
Severance from Service that is part of a Break in Service; or, the nine
consecutive month period commencing on the Employee's Reemployment
Commencement Date (or successive Reemployment Commencement Dates),
provided that the Employee does not in that period incur a Severance from
Service that is part of a Break in Service. If the Employee does not
incur a Severance from Service during the applicable nine consecutive
month period, then the Employee will be deemed to have completed Nine
Months of Elapsed Time Service as of the last day of the nine consecutive
month period.
17 Exhibit 10-uu
1.56 "Nonforfeitable" means, with respect to a Participant's claim for
benefits under the Plan, that the claim is unconditional, legally
enforceable, and not subject to divestment except in accordance with the
Plan's specific provisions, including, but without limitation because of
enumeration, the provisions of Section 15.3 (Sufficiency of Pension
Fund).
1.57 "Normal Retirement Date" means, with respect to each Participant, the
first day of the calendar month coincident with or following his
65th birthday.
1.58 "Option Effective Date" means a Participant's Actual Separation Date,
unless further extended with respect to a Participant making a timely
election during the applicable election period, in which case the Option
Effective Date will be the first day of the calendar month coincident
with or following the last day of the applicable election period,
provided he has timely elected the option on or before that date.
1.59 "Overtime Pay" means, with respect to an Employee, the compensation
received as remuneration consistent with the requirements of the FLSA, or
for services performed for the relevant period for hours worked beyond
the Employee's regularly scheduled work hours pursuant to the Employer's
applicable policy.
1.60 "Participant" means any Eligible Employee who has met the eligibility
requirements set forth in Article 3 (Eligibility and Participation) and
for whom benefits are to be provided under the Plan.
1.61 "Participation" means, with respect to an Eligible Employee, the period
of time during which he is treated as a Participant in the Plan, the
length of which will be determined as follows:
(a) Notwithstanding any other provision of this Plan to the contrary,
an Eligible Employee who accrued Pre-1998 Years of Participation
under the Plan will be credited with his Pre-1998 Years of
Participation.
18 Exhibit 10-uu
(b) An Eligible Employee will be credited with Participation for the
period of time beginning with the later of (1) January 1, 1998, or
(2) his Employment Commencement Date and ending on his Severance
from Service Date.
(c) An Eligible Employee will be credited with Participation for any
Period of Credited Severance during which he is a Participant or
former Participant.
(d) In determining an Eligible Employee's total Participation for
purposes of the Plan, all periods of service that are credited to
the Eligible Employee under Subsections (a) through (c) above will
be aggregated. In no event will an Employee be credited more than
once for the same period of Participation. For purposes of
determining an Eligible Employee's total Participation, the
Eligible Employee will be credited with one month of Participation
for each calendar month in which he is a Participant in the Plan
and is credited with at least one Hour of Service. An Eligible
Employee will be credited with one year of Participation for each
12 months of Participation with which he is credited pursuant to
the preceding sentence.
(e) Notwithstanding Subsection (d), if an Eligible Employee is a
Reemployed Retiree or a Reemployed Terminated Vested Participant,
and his Pre-1998 Years of Participation were subject to a maximum
under the pension formula applicable to the Eligible Employee at
the time he incurred a Severance from Service, that Eligible
Employee's total Participation when he again incurs a Severance
from Service under the Plan will not exceed the sum of his maximum
pre-1998 Years of Participation and the Eligible Employee's years
of Participation during his period of reemployment.
1.62 "Participation Commencement Date" means, with respect to an Employee who
was a participant in the Plan prior to January 1, 1989, the date the
Employee became a Participant under the Plan's terms as they existed
prior to January 1, 1990, and with respect to an Employee who was not a
Participant in the Plan prior to January 1, 1989, the
19 Exhibit 10-uu
later of (a) January 1, 1989, or (b) the first day of the calendar month
coincident with or following the date the Employee first completes Nine
Months of Elapsed Time Service and has attained his 21st birthday;
provided that on the later date he is classified by his Employer as an
Employee. If an Employee has completed Nine Months of Elapsed Time
Service and has attained his 21st birthday, but is not classified by his
Employer as an Employee on the later date, his Participation Commencement
Date will be the first day of the calendar month coincident with or
following the first day after the later date on which he is classified by
his Employer as an Employee.
1.63 "Pension Fund" or "Fund" means the fund established in consequence of and
for the purposes of the Plan to provide the benefits under the Plan,
including all funds held in all trusts and group annuity contracts that
are being used as funding media for the Plan.
1.64 "Period of Credited Severance" means, with respect to each Eligible
Employee who has incurred a Severance from Service, and who, within
12 Months of his Severance from Service Date, performs an Hour of
Service, the Period of Severance commencing on the Eligible Employee's
Severance from Service Date and ending on the date thereafter upon which
he first performs an Hour of Service. In the case of an Eligible
Employee who has incurred a Severance from Service that occurs during an
Absence from Service by reason of a maternity or paternity absence as
defined in Subsection 1.88(b), the period between the first and second
anniversaries of the first day of absence will not be a Period of
Credited Severance.
1.65 "Period of Severance" means, with respect to each Eligible Employee, the
period of time commencing on his Severance from Service Date and ending
on the date thereafter upon which he first performs an Hour of Service.
1.66 "Plan" means the pension plan known as the "Cinergy Corp. Union
Employees' Pension Plan," as amended, from time to time. As effective
January 1, 1998, this document sets forth the Plan.
1.67 "Plan Year" means the calendar year.
20 Exhibit 10-uu
1.68 "Pre-1998 Covered Compensation" means, with respect to a Participant who
participated in the Plan as of December 31, 1997, the average (without
indexing) of the annual Social Security taxable wage bases under the
Social Security Act for each year during the 35 calendar years ending
with the last day of the calendar year in which the Participant attains
his Social Security Retirement Age, but no later than December 31, 1997.
1.69 "Pre-1998 Highest Average Earnings" means, with respect to a Participant
who participated in the Plan as of December 31, 1997, the Participant's
highest average annual Earnings for any three consecutive calendar years
out of the Participant's 10 or fewer Pre-1998 Years of Participation.
However, if the Participant completes fewer than three Pre-1998 Years of
Participation, his Pre-1998 Highest Average Earnings will mean his
average annual Earnings for his total Pre-1998 Years of Participation.
If Earnings for any Plan Year beginning before January 1, 1994 are taken
into account in determining a Participant's Pre-1998 Highest Average
Earnings, the Earnings for that Plan Year will be subject to the
limitation of Code paragraph 401(a)(17) that was in effect for that Plan
Year and the Participant's Nonforfeitable Annual Pension will not be less
than the Participant's accrued benefit under the Plan as of December 31,
1993.
1.70 "Pre-1998 Normal Retirement Date" means, with respect to each Participant
who participated in the Plan as of December 31, 1997, the first day of
the calendar month coincident with or following (a) his 65th birthday, or
(b) the fifth anniversary date of his employment, whichever is later.
1.71 "Pre-1998 Years of Participation" means, with respect to each Participant
who participated in the Plan as of December 31, 1997, the sum of the
following whole and fractional years:
(a) with respect to the period prior to January 1, 1976, the number of
years (to the last completed 1/12th year) of his "participating
service" (as defined in the Plan as in effect on December 31,
1975, except that the last sentence of Section 1.6 of the Plan
will not apply) as of January 1, 1976; plus
21 Exhibit 10-uu
(b) with respect to each Plan Year of his participation in the Plan on
or after January 1, 1976, and before January 1, 1998 (excluding
the Plan Years in which his Participation Commencement Date and
his Reemployment Commencement Date, if applicable, occur, to the
extent one or both of those dates are on or after January 1,
1976), one Pre-1998 Year of Participation if he completes at least
2,000 Hours of Service during that Plan Year; otherwise, a
fraction of a Pre-1998 Year of Participation, the numerator of
which is the number of Hours of Service which he completes during
a Plan Year and the denominator of which is 2,000; provided,
however, that if he completes less than 1,000 Hours of Service
during a Plan Year, no portion of a Pre-1998 Year of Participation
will be granted; plus
(c) with respect to the Plan Years during which his Participation
Commencement Date and/or his Reemployment Commencement Date, if
applicable, occur, to the extent one or both of the dates occur on
or after January 1, 1976, and before January 1, 1998, either one
Pre-1998 Year of Participation, or, if the month and day of his
Participation Commencement Date or Reemployment Commencement Date
within the Plan Year is after January 1, a fraction thereof, the
numerator of which is the number of complete calendar months in
that Plan Year during which he is a Participant and the
denominator of which is 12. However, if the number of Hours of
Service that he completes as a Participant during the respective
Plan Year is less than the product of 166-2/3 multiplied by the
number of complete calendar months during which he is a
Participant in the Plan Year, then the Pre-1998 Year of
Participation, or fraction thereof, as otherwise determined
pursuant to this Paragraph (c), will be multiplied by the ratio of
the number of Hours of Service that he completes as a Participant
during the Plan Year to 166-2/3 multiplied by the number of
complete calendar months during which he is a Participant in the
Plan Year. If the number of Hours of Service that he completes as
a Participant during the Plan Year is less than the product
of 83-1/3 multiplied by the number of complete calendar months
during which he is a Participant in the Plan Year, no portion of a
Pre-1998 Year of Participation will be granted.
22 Exhibit 10-uu
With respect to any Plan Year wholly or partially included in a calendar
year used to calculate the Participant's Pre-1998 Highest Average
Earnings, if the Participant fails to complete at least 2,000 Hours of
Service during that Plan Year, then, in lieu of any fraction of a
Pre-1998 Year of Participation as otherwise determined under either
Paragraph (b) or Paragraph (c), the Participant will be granted a
fraction of Pre-1998 Year of Participation: the numerator of which is
equal to the sum of the number of Hours of Service which the Participant
completes as a Participant during those calendar months of the Plan Year
that are not included in that calendar year, and the greater of (A) the
number of Hours of Service that the Participant completes during those
calendar months of the Plan Year that are included in such calendar year
or (B) the product of 166-2/3 multiplied by the number of calendar months
of the Plan Year that are included in the calendar year; and the
denominator of which is 2,000. A Participant's Pre-1998 Years of
Participation will be adjusted, if necessary, pursuant to Section 4.5
(Special Adjustments) or Section 4.8 (Benefits Adjustment for
Participants Covered by Certain Programs) of the Plan as in effect on
December 31, 1997.
1.72 "Projected Annual Benefit" means, with respect to any Participant
participating in a Qualified Defined Benefit Plan maintained by an
Employer or an Affiliate, the annual straight life annuity benefit to
which the Participant would be entitled under that Qualified Defined
Benefit Plan based upon the following assumptions:
(a) the Participant will continue as an employee of an Employer until
reaching the Participant's normal retirement age under the plan
(or the Participant's current age if that is later);
(b) the Participant's compensation used to determine benefits under
the plan for the calendar year under consideration will remain the
same until the date the Participant attains the age described in
Paragraph (a); and
23 Exhibit 10-uu
(c) all other relevant factors used to determine benefits under the
plan for the calendar year under consideration will remain
constant for all future calendar years.
1.73 "PSI" means PSI Energy, Inc., an Indiana corporation, and any related
company that had adopted the Plan as of December 31, 1997.
1.74 "Qualified Defined Benefit Plan" means any qualified defined benefit plan
as defined in Code subsections 414(j) and 415(k).
1.75 "Qualified Defined Contribution Plan" means any qualified defined
contribution plan as defined in Code subsections 414(i) and 415(k).
1.76 "Qualified Domestic Relations Order" means a qualified domestic relations
order as defined in Code subsection 414(p).
1.77 "Reduced Primary Social Security Benefit" means the reduced amount of
primary federal old age insurance benefit estimated by the Committee that
is, or would be, payable or estimated to become payable to a Participant
at his earliest eligibility date. The estimate is based on the Social
Security Act as in effect at the Participant's Option Effective Date. If
a Participant supplies documentation from the Social Security
Administration of his or her actual Reduced Primary Social Security
Benefit at least 60 days before his or her Option Effective Date, that
amount will be used in lieu of the estimate referred to above. A Reduced
Primary Social Security Benefit calculated using actual documentation
will not be recalculated.
1.78 "Reemployed Retiree" means a Participant, other than a Terminated Vested
Participant, who is reemployed by an Employer after his Initial
Separation Date or an Additional Separation Date.
24 Exhibit 10-uu
1.79 "Reemployed Terminated Vested Participant" means a Terminated Vested
Participant who is reemployed by an Employer after his Initial Separation
Date or an Additional Separation Date.
1.80 "Reemployment Commencement Date" means, with respect to an Eligible
Employee who incurs a Severance from Service and is later reemployed by
an Employer, the date upon which the Eligible Employee first performs an
Hour of Service after his reemployment.
1.81 "Retired Participant" means a former Participant, other than a Terminated
Vested Participant, while alive on and after his Actual Separation Date.
1.82 "Sabbatical Vacation Pay" means, with respect to an Employee, the
compensation received as remuneration for the weeks of accrued vacation
accumulated pursuant to the Employer's applicable policy for the purpose
of taking an extended vacation beyond the number of weeks of vacation to
which the Employee would normally be entitled.
1.83 "Section 415 Compensation" means an Eligible Employee's earned income,
wages, salaries, and fees for professional services, and other amounts
received for personal services actually rendered in the course of
employment with the Employer (including, but not limited to, commissions
paid salesmen, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips and bonuses) and, except
as provided in the following sentence, excluding the following:
(a) Employer contributions to a plan of deferred compensation that are
not included in the Employee's gross income for the taxable year in which
contributed or any distributions from a plan of deferred compensation;
(b) amounts realized from the exercise of a nonqualified stock option, or
when restricted stock (or property) held by the Employee either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture; and (c) amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified stock option.
Notwithstanding the foregoing, Section 415 Compensation will include any
elective deferral as defined in Code paragraph 402(g)(3) and amounts
contributed by an
25 Exhibit 10-uu
Employer pursuant to a salary reduction agreement that are excludable
from the Employee's gross income under Code section 125 or 457.
1.84 "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and interpretive rulings and regulations.
1.85 "Service" means, with respect to an Eligible Employee, the period of time
during which the employment relationship exists between the Eligible
Employee and the Employer, the length of which is determined as follows:
(a) Notwithstanding any other provision of the Plan to the contrary,
any Eligible Employee who accrued "years of service" (as defined
in the Plan as of December 31, 1997) under the Plan will be
credited with Service for the "years of service" credited to him
under the Plan before January 1, 1998.
(b) An Eligible Employee will be credited with Service for the period
of time beginning with his Employment Commencement Date and ending
on his Severance from Service Date.
(c) An Eligible Employee will be credited with Service for each Period
of Credited Severance.
(d) An Eligible Employee will be credited with Service for any period
of Service with an Affiliate after he has reached age 18, which
will be determined as if he had been employed by the Employer
during that period.
(e) In determining an Eligible Employee's total Service for purposes
of the Plan, all periods of Service that are credited to the
Employee under Subsections (a) through (d) above will be
aggregated. In no event will an Employee receive credit more than
once for the same period of Service. For purposes of determining
an Eligible Employee's total Service, the Eligible Employee will
be credited with one month
26 Exhibit 10-uu
of Service for each calendar month in which he is credited with at
least one Hour of Service. An Eligible Employee will be credited
with one year of Service for each 12 months of Service with which
he is credited pursuant to the preceding sentence.
1.86 "Service Watch Payments" mean, with respect to an Employee, the
compensation received as a premium for serving on stand-by duty for the
relevant period pursuant to the Employer's applicable policy.
1.87 "Severance from Service" means, with respect to an Employee:
(a) the date of termination of his employment relationship with his
Employer by reason of a quit, resignation, discharge, retirement,
death, or layoff of the Employee for an indefinite period of time
made without any expectation on the part of the Employer at the
time of layoff to recall the Employee, for employment with the
Employer as an Employee within 12 months from the date of the
commencement of the layoff; or
(b) the first anniversary of the first date of the Employee's Absence
from Service, or, if later, the expiration of an Absence from
Service. Notwithstanding the preceding sentence, if an Employee
has an Absence from Service of more than one year by reason of a
maternity or paternity absence, the Employee's Severance from
Service occurs on the second anniversary of that absence. For
purposes of this Subsection, an Absence from Service for maternity
or paternity reasons means an absence (1) by reason of the
pregnancy of the individual, (2) by reason of the birth of a child
of that individual, (3) by reason of the placement of a child with
the individual in connection with the adoption of the child by
that individual, or (4) for purposes of caring for the child for a
period beginning immediately following its birth or placement.
27 Exhibit 10-uu
For purposes of this Subsection, the term "Employer" includes all
Affiliates, and an Employee or former Employee will not be treated as
having incurred a Severance from Service until the employment
relationship between the Employee and all Employers and Affiliates is
terminated.
1.88 "Severance from Service Date" means, with respect to each Employee, the
date of his Severance from Service.
1.89 "Shift Premiums" mean, with respect to an Employee, the compensation
received as a premium for services performed for the relevant period for
working a shift other than the Employer's regular day shift pursuant to
the Employer's applicable policy.
1.90 "Social Security Act" means the federal Social Security Act, 42 U.S.C.
Section 301, ET SEQ., as amended from time to time, and interpretive
rulings and regulations.
1.91 "Social Security Retirement Age" means respectively (a) age 65 for a
Participant born before January 1, 1938; (b) age 66 for a Participant
born after December 31, 1937, but before January 1, 1955; and (c) age 67
for a Participant born after December 31, 1954.
1.92 "Spouse" means, with respect to any Participant, the Participant's
lawfully married spouse, if any, on the applicable date. The Plan will
not recognize common law marriages or similar arrangements unless
required to do so by federal law. A former Spouse will also be
considered a Spouse to the extent provided under a Qualified Domestic
Relations Order.
1.93 "Terminated Vested Participant" means a Participant who is entitled to
benefits under the provisions of Section 5.3 (Severance from Service
After Vesting).
1.94 "Trust Fund" means the trust established by the Employer to fund the
Plan.
28 Exhibit 10-uu
1.95 "Trustee" means the person or entity designated by Cinergy to act as
trustee of any trust forming a part of the Pension Fund.
1.96 "Vesting Requirement" means, with respect to each Participant, the
requirements for the vesting of his accrued benefits under the Plan.
The uses of singular and masculine words are for practical purposes only and
will be deemed to include the plural and feminine, respectively, unless the
context plainly indicates a distinction. Certain other definitions, as
required, appear in the following Articles of the Plan.
ARTICLE 2
EFFECTIVE DATE OF PLAN
The original effective date of this Plan was March 1, 1941. The effective
date of this Plan restatement is, unless otherwise specified, January 1,
1998, as to Cinergy, and will be effective with respect to any other Employer
as of the date that Employer elects to participate in the Plan pursuant to
Section 20.1 (Adoption of Plan).
This restatement applies only to Eligible Employees who are credited with at
least one Hour of Service on or after January 1, 1998. This Plan will not
affect the rights of former Eligible Employees (and their Beneficiaries) who
retired, died, or otherwise terminated their employment with an Employer
prior to January 1, 1998. The rights, if any, of those former Eligible
Employees (and their Beneficiaries), and the amounts of their benefits, if
any, will continue to be governed by the provisions of the Plan in effect
prior to January 1, 1998.
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.1 DATE OF PARTICIPATION
Each Employee who is an Eligible Employee on January 1, 1998, and who was
participating in the Plan as of December 31, 1997, will continue to be a
Participant as of
29 Exhibit 10-uu
January 1, 1998. Each other Eligible Employee will automatically become a
Participant on the latest of January 1, 1998, his Employment Commencement
Date, or the date he reaches age 18. An Eligible Employee who becomes a
Participant, subsequently incurs a Severance from Service, and is later
reemployed by an Employer will again become a Participant on his
Reemployment Commencement Date.
3.2 LEASED EMPLOYEES
A Leased Employee will be excluded from participation in the Plan.
However, if a Leased Employee is subsequently employed by an Employer as
an Eligible Employee, his time as a Leased Employee of an Employer will
be considered for purposes of determining eligibility under this Article
and vesting under Article 5 (Severance from Service -- Vesting).
3.3 TRANSFERS OF EMPLOYMENT
If a Participant is transferred from one Employer to another or from an
Employer to an Affiliate, he will continue to participate in the Plan
until an event occurs that would have terminated his participation had he
continued in the service of an Employer, except that payments received by
a Participant from any Affiliate that is not an Employer will not be
treated as Earnings for purposes of determining the amount of retirement
benefits to which the Participant will be entitled. Any period of
employment with an Affiliate that is not an Employer will be taken into
account for purposes of determining when a Participant has satisfied the
Vesting Requirement.
If a Participant is transferred from an Employer to an Affiliate that has
not elected to participate in the Plan pursuant to Section 20.1 (Adoption
of Plan), the Participant's accrued benefit under the Plan as of the date
of the transfer will be preserved. The Participant's service after the
transfer will not be considered in determining the Participant's years of
Participation, but will be considered in determining the Participant's
years of Service.
30 Exhibit 10-uu
3.4 TRANSFERS OF PARTICIPANTS AND PLAN ASSETS TO AND FROM THE CINERGY CORP.
NON-UNION EMPLOYEES' PENSION PLAN AND CINERGY CORP. UNION EMPLOYEES'
RETIREMENT INCOME PLAN
(a) If a Participant in the Plan remains an Employee but becomes
ineligible to participate in the Plan, he will become a
participant in the Cinergy Corp. Non-Union Employees' Pension Plan
or the Cinergy Corp. Union Employees' Retirement Income Plan, if
he is an "eligible employee" as defined in either of those plans,
as of the first day of the month during which his change in
Employee status becomes effective.
(b) If a Participant in the Cinergy Corp. Non-Union Employees' Pension
Plan or the Cinergy Corp. Union Employees' Retirement Income Plan
remains an Employee but becomes ineligible to participate in his
current plan, he will become a Participant in the Plan, if he is
an Eligible Employee, as of the first day of the month during
which his change in Employee status becomes effective.
(c) A transfer of assets between the Plan and the Cinergy Corp.
Non-Union Employees' Pension Plan or the Cinergy Corp. Union
Employees' Retirement Income Plan will follow the requirements of
Code subsection 414(1). The value of the benefits to be
transferred will be based upon the Plan's actuarial valuation
assumptions at the time of the transfer. The actual transfer of
assets will occur as soon as administratively practicable after
the change in the Participant's Employee status.
(d) A Participant who has earned years and/or partial years of
"participation" under the Cinergy Corp. Non-Union Employees'
Pension Plan or the Cinergy Corp. Union Employees' Retirement
Income Plan and who then becomes a Participant in this Plan, will
be credited under this Plan with his total years of
"participation" earned under the Cinergy Corp. Non-Union
Employees' Pension Plan or the Cinergy Corp. Union Employees'
Retirement Income Plan, as if they were earned
31 Exhibit 10-uu
under this Plan. A Participant will not be credited with more
years of Participation than he would have earned if the total of
all his years of Participation under the Plan and all his years of
"participation" under the Cinergy Corp. Non-Union Employees'
Pension Plan and the Cinergy Corp. Union Employees' Retirement
Income Plan had been earned solely as a Participant of this Plan.
The benefit paid to a Participant under this Plan will never be
less than the benefit the Participant earned in the Cinergy Corp.
Non-Union Employees' Pension Plan and/or the Cinergy Corp. Union
Employees' Retirement Income Plan prior to his change in Employee
status.
ARTICLE 4
AMOUNT OF LIFE-ONLY PENSION
4.1 NORMAL RETIREMENT PENSION FORMULA
Except as otherwise expressly provided in this Article, a Participant who
retires on or after his Normal Retirement Date will be entitled to a
Nonforfeitable Annual Pension under this Plan equal to the sum of (a)
plus (b), where (a) is equal to:
(1) 1.1 percent of the Participant's Highest Average Earnings
plus
(2) 0.5 percent of the amount by which his Highest Average
Earnings exceed his applicable Covered Compensation,
multiplied by the number of his years of Participation not
in excess of 35;
and (b) is equal to 1.4 percent of the Participant's Highest Average
Earnings, multiplied by the number of his years of Participation in
excess of 35.
4.2 NORMAL RETIREMENT BENEFITS FOR PRE-1998 PARTICIPANTS
32 Exhibit 10-uu
The normal retirement Nonforfeitable Annual Pension of a Participant who
was a Participant in the Plan as of December 31, 1997, will be the
greater of (a) or (b), where (a) is the Participant's Annual Pension
calculated under Section 4.1 (Normal Retirement Pension Formula) and
(b) is the Participant's annual accrued benefit calculated under the Plan
as of December 31, 1997. The applicable formulas used to calculate a
Participant's annual accrued benefit under the Plan as in effect on
December 31, 1997, are as follows:
(a) NORMAL RETIREMENT PENSION FORMULA 1
The Annual Pension computed under Pension Formula 1 equals
(1) 1.1 percent of the Participant's Pre-1998 Highest Average
Earnings, plus (2) 0.5 percent of the amount by which his Pre-1998
Highest Average Earnings exceed his applicable Pre-1998 Covered
Compensation, multiplied by the number of his Pre-1998 Years of
Participation, up to a maximum of 35.
(b) NORMAL RETIREMENT PENSION FORMULA 2
The Annual Pension computed under Pension Formula 2 equals the excess of:
(1) 1-2/3 percent of the Participant's Pre-1998 Highest Average
Earnings, multiplied by the number of his Pre-1998 Years of
Participation not in excess of 30; over
(2) 1-2/3 percent of the Participant's Annual Primary Social
Security Amount that he is expected to be entitled to
receive either at his Pre-1998 Normal Retirement Date or at
his Disability Date if his disability continues to his
Pre-1998 Normal Retirement Date, in any event multiplied by
the number of his Pre-1998 Years of Participation not in
excess of 30.
(c) PSI NORMAL RETIREMENT PENSION FORMULA 3
33 Exhibit 10-uu
The Annual Pension computed under Pension Formula 3 equals the
excess of:
(1) 2 percent of the Participant's Pre-1998 Highest Average
Earnings, multiplied by the number of his Pre-1998 Years of
Participation not in excess of 25, over
(2) 2 percent of the Participant's Annual Primary Social
Security Amount that he is expected to be entitled to
receive either upon the attainment of age 62 on the
assumption that he receives no "wages" or "remuneration,"
as defined in the Social Security Act, between December 31,
1989 (December 31, 1988, for a Highly Compensated
Participant), and his attainment of age 62, or if he is
still employed by his Employer on or after his attainment
of age 62, as of the earlier of December 31, 1989
(December 31, 1988, for a Highly Compensated Participant),
or his Pre-1998 Normal Retirement Date, or at his
Disability Date if his disability continues up until the
date otherwise determined under this Paragraph (2), in any
event multiplied by the number of his Pre-1998 Years of
Participation not in excess of 25.
(d) TERMINATED VESTED PENSION FORMULA 5
The Annual Pension computed under Pension Formula 5 equals the
excess of:
(1) 2 percent of the Participant's Pre-1998 Highest Average
Earnings, multiplied by the number of his Pre-1998 Years of
Participation not in excess of 25, over
(2) a fraction, the numerator of which is his actual Pre-1998
Years of Participation and the denominator of which is the
Pre-1998 Years of Participation he would have accumulated
at his Pre-1998 Normal Retirement Date if during each year
after December 31, 1989
34 Exhibit 10-uu
(December 31, 1988, for a Highly Compensated Participant)
he had completed at least 2,000 Hours of Service, of 50
percent of the Participant's Annual Primary Social Security
Amount that he is entitled to receive upon the attainment
of age 60 on the assumption that his rate of Earnings as of
December 31, 1989 (December 31, 1988, for a Highly
Compensated Participant), had continued unchanged until age
60.
(e) TERMINATED VESTED PENSION FORMULA 6
The Annual Pension computed under Pension Formula 6 equals the
excess of:
(1) 1-2/3 percent of the Participant's Pre-1998 Highest Average
Earnings, multiplied by the number of his Pre-1998 Years of
Participation not in excess of 30; over
(2) a fraction, the numerator of which is his actual Pre-1998
Years of Participation and the denominator of which is the
Years of Participation he would have accumulated at his
Pre-1998 Normal Retirement Date if during each year after
December 31, 1989 (December 31, 1988, for a Highly
Compensated Participant) he had completed at least
2,000 Hours of Service, of 50 percent of the Participant's
Annual Primary Social Security Amount that he is entitled
to receive upon the attainment of age 60 on the assumption
that his rate of Earnings as of December 31, 1989
(December 31, 1988, for a Highly Compensated Participant),
had continued unchanged until age 60.
4.3 GENERAL METHOD OF COMPUTING ACCRUED BENEFIT UNDER THE PLAN'S PRE-1998
FORMULAS FOR NORMAL RETIREMENT
(a) Subject to the following provisions of this Section, the amount of
the accrued benefit under the Plan as of December 31, 1997, of a
Participant who was a
35 Exhibit 10-uu
Participant in the Plan as of December 31, 1997, will be computed
under Pension Formula 1 in Subsection 4.2(a) (Normal Retirement
Benefits for Pre-1998 Participants).
(b) Notwithstanding any other provisions of this Section, the accrued
benefit under the Plan as of December 31, 1997, of a Participant
who became a Participant in the Plan prior to May 1, 1970, will
not be less than the amount computed under Pension Formula 3 in
Subsection 4.2(c) (Normal Retirement Benefits for Pre-1998
Participants) as of the following date:
(1) December 31, 1989, with respect to an Employee who is not a
Highly Compensated Participant; or
(2) December 31, 1988, with respect to a Highly Compensated
Participant.
(c) Notwithstanding any other provisions of this Section, the accrued
benefit under the Plan as of December 31, 1997, of a Participant
who became a Participant in the Plan on or after May 1, 1970, will
not be less than the amount computed under Pension Formula 2 in
Subsection 4.2(b) (Normal Retirement Benefits for Pre-1998
Participants) as of the following date:
(1) December 31, 1989, with respect to an Employee who is not a
Highly Compensated Participant; or
(2) December 31, 1988, with respect to a Highly Compensated
Participant.
4.4 GENERAL METHOD OF COMPUTING ANNUAL PENSION FOR RETIREMENT AT EARLY
RETIREMENT DATE
(a) Subject to the following provisions of this Section, a Participant
who retires on an Early Retirement Date, will be entitled to a
Nonforfeitable Annual Pension computed under Section 4.1 (Normal
Retirement Pension Formula). The benefits will begin on the
Employee's Normal Retirement Date, or, if the Employee so
36 Exhibit 10-uu
elects, at an earlier date on or after his Early Retirement Date.
If the Employee elects to have the benefit begin before his 62nd
birthday, the amount of the Employee's Nonforfeitable Annual
Pension will be multiplied by the appropriate early payment factor
as obtained from the following table:
37
EARLY EARLY EARLY
PAYMENT PAYMENT PAYMENT
PERIOD EARLY PERIOD EARLY PERIOD EARLY
------ PAYMENT ------ PAYMENT ------ PAYMENT
YR. MO. FACTOR YR. MO. FACTOR YR. MO. FACTOR
--- --- ------ --- --- ------ --- --- ------
0 0 1.0000 4 0 0.7333 8 0 0.5667
0 1 0.9944 4 1 0.7278 8 1 0.5639
0 2 0.9889 4 2 0.7222 8 2 0.5611
0 3 0.9833 4 3 0.7167 8 3 0.5584
0 4 0.9778 4 4 0.7111 8 4 0.5556
0 5 0.9722 4 5 0.7056 8 5 0.5528
0 6 0.9667 4 6 0.7000 8 6 0.5500
0 7 0.9611 4 7 0.6944 8 7 0.5473
0 8 0.9556 4 8 0.6889 8 8 0.5445
0 9 0.9500 4 9 0.6833 8 9 0.5417
0 10 0.9444 4 10 0.6778 8 10 0.5389
0 11 0.9389 4 11 0.6722 8 11 0.5361
1 0 0.9333 5 0 0.6667 9 0 0.5334
1 1 0.9278 5 1 0.6639 9 1 0.5300
1 2 0.9222 5 2 0.6611 9 2 0.5265
1 3 0.9167 5 3 0.6584 9 3 0.5231
1 4 0.9111 5 4 0.6556 9 4 0.5196
1 5 0.9056 5 5 0.6528 9 5 0.5162
1 6 0.9000 5 6 0.6500 9 6 0.5127
1 7 0.8944 5 7 0.6473 9 7 0.5093
1 8 0.8889 5 8 0.6445 9 8 0.5059
1 9 0.8833 5 9 0.6417 9 9 0.5024
1 10 0.8778 5 10 0.6389 9 10 0.4990
1 11 0.8722 5 11 0.6361 9 11 0.4955
2 0 0.8667 6 0 0.6334 10 0 0.4921
2 1 0.8611 6 1 0.6306 10 1 0.4889
2 2 0.8556 6 2 0.6278 10 2 0.4858
2 3 0.8500 6 3 0.6250 10 3 0.4826
2 4 0.8444 6 4 0.6223 10 4 0.4795
2 5 0.8389 6 5 0.6195 10 5 0.4763
2 6 0.8333 6 6 0.6167 10 6 0.4732
2 7 0.8278 6 7 0.6139 10 7 0.4700
2 8 0.8222 6 8 0.6111 10 8 0.4668
2 9 0.8167 6 9 0.6084 10 9 0.4637
2 10 0.8111 6 10 0.6056 10 10 0.4605
2 11 0.8056 6 11 0.6028 10 11 0.4574
3 0 0.8000 7 0 0.6000 11 0 0.4542
3 1 0.7944 7 1 0.5973 11 1 0.4513
3 2 0.7889 7 2 0.5945 11 2 0.4485
3 3 0.7833 7 3 0.5917 11 3 0.4456
3 4 0.7778 7 4 0.5889 11 4 0.4427
3 5 0.7722 7 5 0.5861 11 5 0.4398
3 6 0.7667 7 6 0.5834 11 6 0.4370
3 7 0.7611 7 7 0.5806 11 7 0.4341
3 8 0.7556 7 8 0.5778 11 8 0.4312
3 9 0.7500 7 9 0.5750 11 9 0.4283
3 10 0.7444 7 10 0.5723 11 10 0.4255
3 11 0.7389 7 11 0.5695 11 11 0.4226
12 0 0.4197
38
In using the above table, the order of required steps is as
follows:
(1) determine the Participant's "early payment period," which
is the number of whole calendar months by which the actual
commencement of his pension payments precedes the first day
of the calendar month coincident with or following his
62nd birthday;
(2) use the early payment period as determined in Step (1) to
identify the applicable early payment factor; and
(3) multiply the applicable early payment factor times the
amount of the Participant's Annual Pension determined under
Section 4.1 (Normal Retirement Pension Formula).
(b) Notwithstanding any other provision of this Section except
Subsection (d), the early retirement Nonforfeitable Annual Pension
payable to a Participant who (1) was a Participant in the Plan as
of December 31, 1997, and (2) became a Participant in the Plan
prior to May 1, 1970, will be computed under Section 4.2 (Normal
Retirement Benefits for Pre-1998 Participants) and Section 4.3
(General Method of Computing Accrued Benefit Under the Plan's
Pre-1998 Formulas for Normal Retirement) and will be reduced by
multiplying the amount of the Participant's Nonforfeitable Annual
Pension by the early payment factor described in Subsection (a);
provided, however, that his early retirement Nonforfeitable Annual
Pension will not be less than the product of:
(A) the amount computed under Pension Formula 3 in
Subsection 4.2(c) (Normal Retirement Benefits for Pre-1998
Participants) as of the following date:
(i) December 31, 1989, with respect to an Employee who
is not a Highly Compensated Participant; or
39
(ii) December 31, 1988, with respect to a Highly
Compensated Participant; and
(B) the early payment factor determined as described in
Subsection (a), except that the early payment period will
be the number of whole calendar months by which the
commencement of the Participant's pension payments precedes
the first day of the calendar month coincident with or
following his 60th birthday.
(c) Notwithstanding any other provision of this Section except
Subsection (d), the early retirement Nonforfeitable Annual Pension
payable to a Participant who (1) was a Participant in the Plan as
of December 31, 1997, and (2) became a Participant in the Plan on
or after May 1, 1970, will be computed under Section 4.2 (Normal
Retirement Benefits for Pre-1998 Participants) and Section 4.3
(General Method of Computing Accrued Benefit Under the Plan's
Pre-1998 Formulas for Normal Retirement) and will be reduced by
multiplying the amount of the Participant's Nonforfeitable Annual
Pension by the early payment factor described in Subsection (a);
provided, however, that his early retirement Nonforfeitable Annual
Pension will not be less than the product of:
(1) the amount computed under Pension Formula 2 in
Subsection 4.2(b) (Normal Retirement Benefits for Pre-1998
Participants) as of the following date:
(A) December 31, 1989, with respect to an Employee who
is not a Highly Compensated Participant; or
(B) December 31, 1988, with respect to a Highly
Compensated Participant; and
(2) the early payment factor determined as described in
Subsection (a).
40
(d) If, as of his applicable Severance from Service Date, a
Participant has reached age 55, and the sum of his age (in whole
years) attained as of that date and the number of his years of
Service (in whole years) accumulated as of that date equals or
exceeds 85, he will receive a Nonforfeitable Annual Pension
computed under the appropriate early retirement Annual Pension
formula described in this Section, but the amount of the
Participant's pension will not be multiplied by the early payment
factor that otherwise would be applicable.
(e) A Participant who is eligible to terminate employment voluntarily
under the Redeployment Status Opportunity provisions of the
Severance Opportunity Plan for Union Employees of Cinergy Corp.,
as amended from time to time, is eligible to receive a
Nonforfeitable Annual Pension computed under the appropriate early
retirement Annual Pension formula described in this Section, but
the amount of the Participant's pension will not be multiplied by
the early payment factor that otherwise would be applicable,
provided that: (1) as of his applicable Severance from Service
Date, the Participant has reached age 50, but not yet reached age
55, (2) he elects under Article 8 (Payment of Pension) to defer
receipt of his pension to at least age 55, and (3) the sum of his
age (in whole years) attained as of the date that the receipt of
the pension under the Plan begins pursuant to Paragraph (2) and
his years of Service (in whole years) accumulated as of his
Severance from Service Date equals or exceeds 85.
4.5 GENERAL METHOD OF COMPUTING ANNUAL PENSION FOR A TERMINATED VESTED
PARTICIPANT
(a) Subject to the following provisions of this Section, the amount of
Nonforfeitable Annual Pension payable to a former Participant who
is described in Section 5.3 (Severance from Service After
Vesting), and whose Actual Separation Date
41
occurred on or before his Normal Retirement Date, will be computed
under Section 4.1 (Normal Retirement Pension Formula). The
benefits will begin on the Employee's Normal Retirement Date or,
if the Employee so elects, at an earlier date on or after his
Early Retirement Date. If the Employee elects to have the benefits
begin before his Normal Retirement Date, the amount of the
Employee's Nonforfeitable Annual Pension will be reduced by five
percent for each calendar year (or .4166 percent for each calendar
month) by which the commencement of his pension payments precedes
his Normal Retirement Date.
(b) Notwithstanding any other provision of this Section, the
terminated vested Nonforfeitable Annual Pension payable to a
Participant who was a Participant in the Plan as of December 31,
1997, will be the greater of the amounts calculated under (a) and
(b) of Section 4.2 (Normal Retirement Benefits for Pre-1998
Participants in the Plan), after those amounts are reduced for
early payment as follows:
(1) The Participant's Annual Pension calculated under
Section 4.1 (Normal Retirement Pension Formula) is reduced
as described in Subsection (a).
(2) If the Participant elects to have his benefit begin before
his Normal Retirement Date, the Participant's annual
accrued benefit under the Plan as of December 31, 1997, is
reduced by multiplying that annual accrued benefit by the
appropriate early payment factor as obtained from the table
in Subsection 4.4(a) (General Method of Computing Annual
Pension for Retirement at Early Retirement Date).
(c) Notwithstanding any other provisions of this Section, the
terminated vested Nonforfeitable Annual Pension payable to a
Participant who (1) was a Participant in the Plan as of
December 31, 1997, and (2) became a Participant in the Plan prior
to May 1, 1970, will not be less than the product of:
42
(A) The amount computed under Pension Formula 5 in
Subsection 4.2(d) (Normal Retirement Benefits for Pre-1998
Participants) as of the following date:
(i) December 31, 1989, with respect to an Employee who
is not a Highly Compensated Participant; or
(ii) December 31, 1988, with respect to a Highly
Compensated Participant; and
(B) If the Participant elects to have his benefit begin before
his Normal Retirement Date, the early payment factor as
obtained from the table in Subsection 4.4(a) (General
Method of Computing Annual Pension for Retirement at Early
Retirement Date), except that the early payment period will
be the number of whole calendar months by which the
commencement of the Participant's pension payments precedes
the first day of the calendar month coincident or following
his 60th birthday.
(d) Notwithstanding any other provisions of this Section, the
terminated vested Nonforfeitable Annual Pension payable to a
Participant who (1) was a Participant in the Plan as of
December 31, 1997, and (2) became a Participant in the Plan on or
after May 1, 1970, will not be less than the product of:
(1) The amount computed under Pension Formula 6 in
Subsection 4.2(e) (Normal Retirement Benefits for Pre-1998
Participants) as of the following date:
(A) December 31, 1989, with respect to an Employee who
is not a Highly Compensated Participant; or
43
(B) December 31, 1988, with respect to a Highly
Compensated Participant; and
(2) If the Participant elects to have his benefit begin before
his Normal Retirement Date, the early payment factor
determined as obtained from the table in Subsection 4.4(a)
(General Method of Computing Annual Pension for Retirement
at Early Retirement Date).
4.6 MAXIMUM PENSION
(a) Each Participant whose Annual Pension as otherwise determined
pursuant to the provisions of this Article and as modified by the
applicable provisions of Section 7.1 (Normal Forms of Pensions)
exceeds $1,000 multiplied by the Employee's years of Service with
the Employer (not exceeding ten), or who has ever participated in
a Qualified Defined Contribution Plan, will in no event be
entitled to an Annual Pension (as determined on a Plan Year basis)
that exceeds the lesser of:
(1) $90,000 (as adjusted for increases in the limitation
pursuant to Code subsection 415(d)); or
(2) 100 percent of his highest average annual Section 415
Compensation from his Employer for any three consecutive
years of Service; provided, that if he has fewer than three
years of Service, then 100 percent of his highest average
annual Section 415 Compensation from his Employer for his
total years of Service will be construed as the limiting
amount.
However, if a Participant has fewer than ten years of Participation at
his Normal Retirement Date or Early Retirement Date, whichever is
applicable, then the dollar limitation of Paragraph (1) will be
multiplied by a fraction, the numerator of which is the number of the
Participant's years of Participation (including fractional years of
44
Participation) and the denominator of which is ten. However, the maximum
benefit will never be reduced to less than 1/10th of the applicable
limitation.
(b) If any benefit under the plan begins before the Participant's
Social Security Retirement Age, but on or after the Participant
reaches age 62, the determination as to whether the $90,000 limit
set forth in Subsection (a) has been satisfied will be made, in
accordance with regulations prescribed by the Secretary, by
reducing the limitation of Subsection (a). The reduction under
the preceding sentence will be made in the manner as the Secretary
may prescribe that is consistent with the reduction for old-age
insurance benefits commencing before the Social Security
Retirement Age under the Social Security Act. If any benefit
under the Plan begins before the Participant reaches age 62, the
determination as to whether the $90,000 limit set forth in
Subsection (a) has been satisfied will be made, in accordance with
regulations prescribed by the Secretary, by reducing the
limitation of Subsection (a) so that the limitation (as reduced)
equals an Annual Pension (beginning when the retirement income
benefit begins) that is actuarially equivalent to the reduced
$90,000 Annual Pension beginning at age 62 as determined under
this Subsection.
(c) If any benefit under the Plan begins after the Participant's
Social Security Retirement Age, the determination as to whether
the $90,000 limitation set forth in Subsection (a) has been
satisfied will be made, in accordance with regulations prescribed
by the Secretary, by increasing, if necessary, the limitation of
Subsection (a) so that the limitation (as increased) equals an
Annual Pension (beginning when the retirement income benefit
begins) that is actuarially equivalent to a $90,000 Annual Pension
beginning at the Social Security Retirement Age.
(d) In general, the maximum annual benefit means a benefit payable
annually in the form of a single life annuity (without ancillary
benefits). If a Participant's pension under the Plan is payable
in any form other than a single life annuity, the
45
determination as to whether the limitations of this Section have
been satisfied will be made by adjusting the benefit so that it is
the actuarial equivalent of a single life annuity. For purposes of
this Section, any ancillary benefit not directly related to
retirement income benefits, and that portion of any joint and
survivor annuity that constitutes a Qualified Joint and Survivor
Annuity under Subsection 7.1(b) (Normal Forms of Pension), will
not be taken into account.
(e) For benefits commencing in Plan Years beginning on or after
January 1, 1995, and except as provided in this Plan, the
adjustments to the limitations under Subsections (b), (c), and (d)
will be calculated as described in this Subsection. For purposes
of adjusting the limit for an Annual Pension commencing prior to
age 62 under Subsection (b), the $90,000 limitation will be equal
to the lesser of the equivalent $90,000 limitation that is
computed using the interest rate and mortality table (or other
tabular factor) specified in the Plan for equivalence for early
retirement benefits, and the equivalent $90,000 limitation that is
computed using a 5 percent interest rate assumption and the
mortality table prescribed from time to time by the Secretary for
this purpose. For purposes of adjusting any form of optional
benefit to a straight life annuity under Subsection (d), the
actuarially equivalent life annuity will be equal to the greater
of the annuity benefit that is computed using the interest rate
and mortality table (or other tabular factor) specified in the
Plan for adjusting benefits in the same form, and the annuity
benefit that is computed using a 5 percent interest rate
assumption and the mortality table prescribed from time to time by
the Secretary for this purpose. For purposes of adjusting for any
form of benefit subject to Code paragraph 417(e)(3), an interest
rate assumption equal to the annual rate of interest on 30 year
Treasury securities for November of the preceding Plan Year, as
specified by the Commissioner of Internal Revenue, will be
substituted for the 5 percent interest rate assumption set forth
in the preceding sentences. For purposes of adjusting the limit
under Subsection (c), the $90,000 limitation for an Annual Pension
beginning after Social Security Retirement Age will be the lesser
of the equivalent $90,000 limitation that is computed using the
interest rate and mortality table (or
46
other tabular factor) specified in the Plan for equivalence of
delayed retirement benefits, and the eqivalent $90,000 limitation
that is computed using a 5 percent interest rate assumption and
the mortality table prescribed from time to time by the Secretary
for this purpose. Notwithstanding the preceding provisions of this
Subsection, this Subsection will not apply to the accrued benefit
of any Participant under the Plan as of December 31, 1997, after
applying Code section 415 as in effect on December 7, 1994, for
each possible Annuity Starting Date and each optional form of
benefit under the Plan.
(f) Notwithstanding the foregoing, the maximum annual benefit payable
under this Section will not be less than the actuarial equivalent
of the Participant's single life annuity, accrued under the Plan,
as of December 31, 1997, determined by using the Plan's actuarial
assumptions as in effect on December 31, 1997.
(g) If for any particular Plan Year, a Participant is also
participating in one or more Qualified Defined Contribution Plans
maintained by his Employer, then the sum of the Participant's
aggregate Defined Benefit Plan Fraction and the Participant's
aggregate Defined Contribution Plan Fraction will not exceed 1.0.
If the sum exceeds 1.0, then the Employer will reduce the
Participant's benefits in this Plan so that the sum equals 1.0.
The Participant's maximum Annual Pension will be determined under
the provisions of this Article without regard to the $10,000
minimum amount referred to in the first paragraph of this Section.
This Subsection will be repealed, effective January 1, 2000, for
any Participant who is credited with at least one Hour of Service
on or after January 1, 2000.
ARTICLE 5
SEVERANCE FROM SERVICE-VESTING
5.1 VESTING REQUIREMENT
47
A Participant will satisfy the Vesting Requirement under the Plan upon
his completion of five years of Service and then will have a
Nonforfeitable right to his accrued benefit under the Plan. A
Participant who is an Employee on his Normal Retirement Date will be
deemed to satisfy the Vesting Requirement as of that date if he has not
already satisfied the Vesting Requirement under the Plan.
Notwithstanding the preceding provisions of this Subsection, the
Nonforfeitable percentage of each Participant's right to his accrued
benefit derived from Employer contributions, because of a change to the
vesting schedule, will be not less than the Participant's vested
percentage, computed under the Plan as of the date immediately prior to
the change, without regard to the change. Moreover, each Participant
whose Nonforfeitable percentage of his accrued benefit derived from
Employer contributions is determined under an amended vesting schedule,
and who has completed at least three years of Service as of the date of
the amendment may elect, within a reasonable period after the adoption of
the amended vesting schedule, to have the Nonforfeitable percentage of
his accrued benefit derived from Employer contributions determined
without regard to the amendment if his Nonforfeitable percentage under
the Plan as amended is, at any time, less than the percentage determined
without regard to the amendment.
5.2 SEVERANCE FROM SERVICE BEFORE VESTING
If a Participant incurs a Severance from Service before he has satisfied
the Vesting Requirement and is not reemployed by an Employer, he will
have no further interest in, or right to, any benefits under the Plan,
except as otherwise provided in Section 14.2 (Reemployment). If upon a
Severance from Service, a Participant is zero percent vested in his
benefits under the Plan, the vested portion of his Plan benefits will be
deemed distributed to him as of his Severance from Service Date.
5.3 SEVERANCE FROM SERVICE AFTER VESTING
48
If a Participant incurs a Severance from Service before his
50th birthday, but after satisfying the Vesting Requirement, he will be
entitled to receive a pension commencing on his 50th birthday, if he is
then living, or the Participant may elect to begin receiving his benefit
at any time on or after his Early Retirement Date. Subject to the
provisions of Section 4.6 (Maximum Pension) and Article 7 (Forms of
Pension), the amount of Nonforfeitable Annual Pension payable will be
determined pursuant to the provisions of Section 4.5 (General Method of
Computing Annual Pension for a Terminated Vested Participant).
ARTICLE 6
SPOUSE'S BENEFIT
6.1 DETERMINATION OF SPOUSE'S BENEFIT
Upon the death of either (a) an Active Participant who has satisfied the
Vesting Requirement (an "Eligible Active Participant"), or (b) a former
Participant who has satisfied the Vesting Requirement, whose employment
with his Employer terminated before the Participant reached age 50, and
whose pension under the Plan had not yet begun on the date of his death
(an "Eligible Former Participant"), the Participant's Spouse on the date
of his death, if living on the date of the first installment payable, as
set forth below, will be entitled to receive a pension under the Plan as
a Spouse's Benefit. The annual amount of the Spouse's Benefit will be
determined as follows:
(a) If, at the date of his death, the Participant was either an
Eligible Active Participant or an Eligible Former Participant who
had reached age 50, the Spouse's benefit will equal 100 percent of
the Annual Pension that the Participant would have received,
commencing on the first day of the calendar month coincident with
or following the date of his death, if (1) he had retired as of
the first day of the calendar month coincident with or following
his death, thus establishing an Early Retirement Date, (2) the
amount of Annual Pension commencing on the Early Retirement Date
had been determined pursuant to the applicable provisions of
49
Section 4.4 (General Method of Computing Annual Pension for
Retirement at Early Retirement Date), and (3) his pension had been
payable under the single-life option applicable to him pursuant to
Subsection 7.1(a) (Normal Forms of Pension). However, subject to
Subsection (b), if the Participant's Spouse is more than
eight years younger than the Participant, the Spouse will receive
the actuarial equivalent of the benefit payable to a Spouse
exactly eight years younger than the Participant, calculated by
multiplying the Annual Pension that the Participant would have
received times the appropriate early payment factor under
Subsection 4.4(a) (General Method of Computing Annual Pension for
Retirement at Early Retirement Date) and then multiplying the
resulting product by the appropriate Spouse's benefit factor as
obtained from the following table:
Participant's Age Participant's Age at Death
Less Spouse's Age (in years) 50-59 60 or older
---------------------------- ----- -----------
8 or less 1.00 1.00
9 .91 .90
10 .82 .81
11 .75 .72
12 .68 .65
13 .62 .59
14 .56 .54
15 .51 .49
16 .47 .44
17 .43 .40
18 .39 .36
19 .36 .33
20 .33 .30
21 .30 .28
22 .28 .26
50
23 .26 .24
24 .24 .22
25 .22 .20
(b) If, at the date of his death, the Participant was either an
Eligible Active Participant or an Eligible Former Participant who,
in either case, had not reached age 50, the Spouse's benefit will
equal 100 percent of the Annual Pension that the Participant would
have received commencing on the first day of the calendar month
coincident with or following his 50th birthday, if (1) his
Severance from Service Date, in the case of an Eligible Active
Participant, had been the date of his death, (2) the amount of
Annual Pension (including the appropriate early payment reduction
factor) had been determined pursuant to the applicable provisions
of Section 4.5 (General Method of Computing Annual Pension for
Terminated Vested Participant), (3) he had survived and elected to
begin receiving pension payments on the first day of the calendar
month coincident with or following his 50th birthday, and (4) his
pension had been payable under the 100 percent option applicable
to him pursuant to Subsection 7.1(b) (Normal Forms of Pension).
6.2 METHOD OF PAYMENT OF SPOUSE'S BENEFIT
A Spouse's benefit will be payable in equal monthly installments, each
equal to 1/12th of the Annual Pension as determined pursuant to this
Article. If at the date of his death the Eligible Active Participant or
Eligible Former Participant had reached age 50, the first monthly
installment of the Spouse's benefit will be payable to the Participant's
Spouse on the first day of the calendar month coincident with or
following the date of the Participant's death, if his Spouse is then
living, unless the Spouse elects to defer payment until the date the
Participant would have reached age 62. If at the date of his death the
Participant had not reached age 50, the first monthly installment will be
payable to the Participant's Spouse on the first day of the calendar
month coincident with or following the date the Participant would have
reached age 50, had he survived until that date, if his
51
Spouse is then living, unless the Spouse elects to defer payment until
the date the Participant would have reached age 65. In either event,
subsequent monthly installments will be payable on the first day of each
month and will cease upon the payment of the installment due on the first
day of the calendar month in which the Spouse dies.
ARTICLE 7
FORMS OF PENSION
7.1 NORMAL FORMS OF PENSION
(a) UNMARRIED PARTICIPANTS
The normal form of pension payable under the Plan to a Participant
who is not married on his Annuity Starting Date and who does not
otherwise elect an optional form of pension under Section 7.2
(Optional Forms of Retirement Income), will be a single-life
income payable in equal monthly installments throughout the
Participant's lifetime, ceasing with the installment due on the
first day of the calendar month in which his death occurs. Each
monthly installment will equal 1/12th of the Annual Pension as
determined pursuant to Article 4 (Amount of Life-Only Pension), or
Article 5 (Severance from Service-Vesting), whichever is
applicable to the Participant.
(b) MARRIED PARTICIPANTS
The normal form of pension payable under the Plan to a Participant
who is married on his Annuity Starting Date and who does not
otherwise elect an optional form of pension under Section 7.2
(Optional Forms of Retirement Income) is a "Qualified Joint and
Survivor Annuity," which will be paid as follows:
(1) To the Participant:
52
A reduced pension based on the 100 percent option in equal
monthly installments payable on his Annuity Starting Date
and on the first day of each calendar month thereafter.
The reduced amount payable to the Participant will be the
Actuarial Equivalent of the amount that would otherwise be
paid to the Participant if he were unmarried. Payments
will cease with the installment due on the first day of the
calendar month in which the Participant dies.
(2) To his Spouse:
A pension payable in equal monthly installments, each
monthly installment being equal to 100 percent of the
monthly installment paid to the Participant. The first
installment will be payable on the first day of the
calendar month following the Participant's death, if the
Spouse is then living; subsequent installments are payable
on the first day of each calendar month, ceasing with the
installment due on the first day of the calendar month in
which the Spouse dies. If the Participant's Spouse
predeceases the Participant after reduced pension payments
under this Subsection have begun, payments will be made to
the Participant after the Spouse's death in the form of an
unreduced single life annuity pursuant to Subsection (a) as
of the first day of the month after the Participant
notifies the Committee of the Spouse's death.
If a Participant who is entitled to benefits under the
provisions of Section 4.4 (General Method of Computing
Annual Pension for Retirement at Early Retirement Date)
dies after his Actual Separation Date, but prior to the
commencement of pension payments, and if the Participant's
Actual Separation Date is on or after his 50th birthday,
under the normal form of pension applicable to him, his
Spouse will be entitled to receive, commencing on the first
day of the calendar month following
53
the Participant's death, if the Spouse is then living, a
monthly pension, with each monthly installment equal to the
amount that would have been payable to the Spouse following
the Participant's death pursuant to his election, or if no
election is made, then pursuant to the provisions of this
Paragraph (b)(2), if the Participant had begun receiving
pension benefits on the first day of the calendar month in
which the Participant died.
7.2 OPTIONAL FORMS OF RETIREMENT INCOME
Subject to the following conditions, a Participant, by making a request
to the Committee or its designee within the election period specified in
this Section, may elect to receive, in lieu of the normal form of pension
applicable to him under Section 7.1 (Normal Forms of Pension), one of the
optional forms of pension specified under this Section (the "Contingent
Pension Option"). Each election must be made by the Participant in a
manner prescribed by the Committee or its designee. The election of the
Contingent Pension Option will take effect at a specified date, referred
to as the "Option Effective Date." The amount of pension payable under
any optional form will be the Actuarial Equivalent of the pension to
which the Participant would otherwise be entitled under the Plan.
At least 30 days but no more than 90 days before a Participant's Annuity
Starting Date, the Committee or its designee will provide the Participant
whose normal form of pension applicable to him is described in
Subsection 7.1(a) (Normal Forms of Pension) with a written explanation of
(a) the terms and conditions of the normal form of pension benefits
applicable to him under Subsection 7.1(a) (Normal Forms of Pension);
(b) the Participant's ability to elect to receive, in lieu of the normal
form of pension applicable to him under Subsection 7.1(a) (Normal Forms
of Pension), an optional form of pension under this Section; (c) the
relative financial effect of the election on his pension benefits;
(d) the availability of additional information describing the particular
financial effect of the election upon his pension benefit; and (e) the
procedures the Participants must follow to obtain the additional
information.
54
The Committee or its designee will provide each Participant whose normal
form of pension is a Qualified Joint and Survivor Annuity, at least
30 days but no more than 90 days before the Participant's Annuity
Starting Date, a written explanation of (a) the terms and conditions of
the Qualified Joint and Survivor Annuity, (b) the Participant's right to
make and the effect of an election to waive a Qualified Joint and
Survivor Annuity, (c) the rights of a Participant's Spouse with respect
to the selection of benefit forms, and (d) the right to make and the
effect of a revocation of a previous election to waive the Qualified
Joint and Survivor Annuity. A Participant may elect to waive any
requirement that the Applicable Election Period extend at least 30 days
after the Committee provides the Participant with the written
explanations described in this Section, if the distribution begins more
than seven days after the applicable written explanation is provided. If
the Participant is married, the Participant's Spouse must consent to the
waiver in writing before a notary public or a Plan representative.
To be effective, an election to waive the Qualified Joint and Survivor
Annuity must be made in writing during the 90 day period ending on the
Annuity Starting Date and, if the Participant is married, it must be
consented to by the Participant's Spouse. The election must designate a
Beneficiary (or a form of benefits) that may not be changed (except back
to a Qualified Joint and Survivor Annuity) without the Spouse's consent,
unless the Spouse's original consent expressly permits designations by
the Participant without any requirements of further consent by the
Spouse. The Spouse's consent must be given in writing during the 90 day
period ending on the Annuity Starting Date, must acknowledge the effect
of the election and the consent, and must be witnessed by a Plan
representative or notary public. If the Participant establishes to the
satisfaction of a Plan representative that the Spouse's written consent
cannot be obtained because there is no Spouse or the Spouse cannot be
located, the Spouse's consent will be deemed to have been given. If a
Participant is legally separated from his Spouse or has been abandoned by
his Spouse (within the meaning of local law) and the Participant has a
court order to such effect, the Spouse's consent will not be required
unless a Qualified Domestic Relations Order provides otherwise. Any
Spousal consent will be valid only with respect
55
to the Spouse who signs the consent, or in the event of a deemed consent,
the designated Spouse. If a Participant's Spouse is legally incompetent
to give consent, the Spouse's legal guardian (even if the guardian is the
Participant) may give consent. A Participant may revoke a prior effective
election at any time prior to the receipt of benefits.
(a) SINGLE-LIFE OPTION
A married Participant whose normal form of pension is a Qualified
Joint and Survivor Annuity may elect, in lieu of all payments
otherwise payable, a single-life pension that provides payments to
the Participant in equal monthly installments throughout his
lifetime, ceasing with the installment due on the first day of the
calendar month in which the Participant dies. Each monthly
installment will be equal to 1/12th of the Annual Pension as
determined pursuant to Article 4 (Amount of Life-Only Pension),
Article 5 (Severance from Service-Vesting) or Article 6 (Spouse's
Benefit), whichever is applicable.
(b) CONTINGENT PENSION OPTION
A Participant may elect, in lieu of all payments otherwise payable
on and after the Option Effective Date, the Contingent Pension
Option providing payments as follows:
(1) To the Participant:
A reduced pension beginning on the Option Effective Date,
with subsequent monthly payments payable on the first day
of each subsequent calendar month throughout his remaining
lifetime, terminating with the payment due on the first day
of the calendar month in which he dies. The reduced amount
payable to the Participant will be determined in accordance
with the Participant's choice of the 100 percent, 66 2/3
percent, or 50 percent option and will be the Actuarial
Equivalent of the amount
56
that would otherwise be paid to the Participant under the
single-life annuity option applicable to him pursuant to
Subsection 7.2(a) (Optional Forms of Retirement Income). An
option cannot be elected, modified, or rescinded after the
Option Effective Date.
(2) To the Contingent Annuitant designated by the Participant
at the time he elects this option:
A contingent pension beginning on the first day of the
calendar month following the calendar month in which the
Participant's death occurs if the Participant dies on or
after the Option Effective Date, and if the Contingent
Annuitant is then living, with subsequent monthly payments
payable on the first day of each subsequent calendar month
throughout the Contingent Annuitant's remaining lifetime,
terminating with the monthly payment due on the first day
of the calendar month in which the Contingent Annuitant
dies. However, if the Participant had elected to defer his
pension payments, the Contingent Annuitant may elect, at
any time prior to the date contingent pension payments
actually begin, to have the payments begin after the
Participant's death on the first day of any calendar month
coincident with or prior to the date the Participant had
elected to start receiving his pension payments.
The monthly amount payable to the Contingent Annuitant will
be a specified percentage of the reduced pension payable
under this option to the Participant, as specified by the
Participant. This percentage will be either 100 percent,
66 2/3 percent, or 50 percent. Notwithstanding the
foregoing, if the Contingent Annuitant is other than the
Participant's Spouse, the Contingent Pension Option may be
elected only if the requirements of 26 C.F.R. Section
1.401(a)(9)-2 are satisfied.
57
An option will not become effective, and payments will be made as
otherwise provided in the Plan as if this option had never been
elected, if: (a) the Participant is not living on the Option
Effective Date, (b) the Participant does not, within 90 days after
his election, and not later than the Option Effective Date,
furnish evidence, satisfactory to the Committee, of the age of his
Contingent Annuitant, or (c) the Participant elects, prior to the
Option Effective Date, to cancel the option. If the Participant's
Contingent Annuitant predeceases the Participant after the
contingent pension payments have begun, the option will be
canceled and no longer effective, and payments will be made to the
Participant in the form of an unreduced single-life annuity
applicable to him pursuant to Subsection 7.2(a) (Optional Forms of
Retirement Income) as of the first day of the month after the
Participant notifies the Committee of the Contingent Annuitant's
death.
(c) LIFE WITH TEN YEAR CERTAIN OPTION
A Participant may, in lieu of all payments otherwise payable on
and after the Option Effective Date, elect the Life with Ten Year
Certain Option providing payments as follows:
(1) To the Participant:
A reduced pension beginning on the Option Effective Date
with subsequent monthly payments payable on the first day
of each calendar month thereafter for ten years or
throughout his remaining lifetime, whichever is longer,
terminating with the payment due on the first day of the
calendar month after the end of ten years or in which the
Participant dies, whichever is applicable.
If the Participant elects the Life with Ten Year Certain
Option, the amount of the Participant's Nonforfeitable
annual pension will be determined by multiplying his Annual
Pension by the appropriate Life with Ten Year Certain
Factor as obtained from the following table:
58
LIFE WITH TEN YEAR CERTAIN FACTORS
----------------------------------
Age Factor Age Factor
--- ------ --- ------
50 .9869 70 .9065
51 .9855 71 .8977
52 .9839 72 .8883
53 .9823 73 .8780
54 .9803 74 .8670
55 .9783 75 .8553
56 .9760 76 .8429
57 .9734 77 .8299
58 .9706 78 .8163
59 .9674 79 .8021
60 .9639 80 .7875
61 .9601 81 .7723
62 .9558 82 .7569
63 .9511 83 .7413
64 .9461 84 .7253
65 .9407 85 .7090
66 .9347 86 .6925
67 .9285 87 .6758
68 .9217 88 .6591
69 .9145 89 .6424
90 .6259
(2) To the Beneficiary designated by the Participant at the
time he elects this option:
59
If the Participant dies prior to the end of ten years from
the date of his initial pension payment, a contingent
pension payable on the first day of the calendar month
following the calendar month in which the Participant dies
if the Participant's death is on or after the Option
Effective Date and if the Beneficiary is then living, with
subsequent monthly payments being payable on the first day
of each calendar month for the balance of ten years from
the date of the Participant's Option Effective Date.
(d) LIFE ANNUITY LEVEL INCOME OPTION
A Participant who retires prior to reaching age 62 may elect, in
lieu of all payments otherwise payable on and after the Option
Effective Date, the Life Annuity Level Income Option, which
provides payments to the Participant that are adjusted for the
months before and after the Participant is eligible to receive
benefits under the Social Security Act at age 62.
The Participant will receive a reduced pension on the Option
Effective Date, with subsequent monthly payments payable on the
first day of each calendar month thereafter for his remaining
lifetime, terminating with the payment due on the first day of the
calendar month in which his death occurs. The reduced pension the
Participant receives will be calculated as follows:
(1) The Participant's Annual Pension will be determined under
Article 4 (Amount of Life-Only Pension), Article 5
(Severance From Service-Vesting), or Article 6 (Spouse's
Benefit), whichever is applicable.
60
(2) The Participant's Reduced Primary Social Security Benefit
will be multiplied by the appropriate Level Income Option
factor from the table in Addendum A to the Plan.
(3) The sum of the amounts determined under Paragraphs (1) and
(2) will equal the Level Income Option benefit payable to
the Participant prior to age 62, which is the first date he
is eligible to begin receiving Social Security Act
benefits.
(4) The Level Income Option benefit payable to the Participant
after he reaches age 62 will equal the amount determined in
Paragraph (3), minus the Participant's Reduced Primary
Social Security Benefit.
(e) 100 PERCENT CONTINGENT ANNUITANT LEVEL INCOME OPTION
A Participant who retires prior to reaching age 62 may, in lieu of
all payments otherwise payable on after the Option Effective Date,
elect the 100 Percent Contingent Annuitant Level Income Option,
which provides payments as follows:
(1) To the Participant:
A reduced pension that is adjusted for the months before
and after the Participant is eligible to receive benefits
under the Social Security Act at age 62. The Participant
will receive a reduced pension on the Option Effective
Date, with subsequent monthly payments payable on the first
day of the calendar month thereafter for his remaining
lifetime, terminating with the payment due on the first day
of the calendar month in which the Participant dies.
The reduced pension the Participant receives under this
option will be calculated as follows:
61
(A) The Participant's Annual Pension will be determined
under Article 4 (Amount of Life-Only Pension),
Article 5 (Severance From Service-Vesting), or
Article 6 (Spouse's Benefit), whichever is
applicable.
(B) The Participant's Annual Pension will be converted
to a reduced pension based on the 100 percent
Contingent Pension Option under Subsection 7.2(b)
(Optional Forms of Retirement Income).
(C) The Participant's Reduced Primary Social Security
Benefit will be multiplied by the appropriate Level
Income Option factor from the table in Addendum A to
the Plan.
(D) The sum of the amounts determined under
Subparagraphs (B) and (C) will equal the Level
Income Option benefit payable to the Participant
prior to age 62, which is the first date he is
eligible to begin receiving Social Security Act
benefits.
(E) The Level Income Option benefit payable to the
Participant after he attains age 62 will equal the
amount determined in Subparagraph (D), minus the
Participant's Reduced Primary Social Security
Benefit.
(2) To the Contingent Annuitant:
A contingent pension beginning on the first day of the
calendar month following the calendar month in which the
Participant dies if the Participant dies on or after the
Option Effective Date, and if the Contingent Annuitant is
then living; with subsequent monthly payments payable on
the first day of each subsequent calendar month throughout
the Contingent Annuitant's remaining lifetime, terminating
with the monthly
62
payment due on the first day of the calendar month in which
the Contingent Annuitant dies. However, if the Participant
had elected to defer his pension payments, the Contingent
Annuitant may elect at any time prior to the date
contingent pension payments actually begin, to have the
payments begin after the Participant's death on the first
day of any calendar month coincident with or prior to the
date the Participant had elected to start receiving
payments.
The monthly amount payable to the Contingent Annuitant will
equal 100 percent of the reduced pension that would have
been payable under this option to the Participant.
An option will not become effective, and payments will be made as
otherwise provided in the Plan as if this option had never been
elected, if: (a) the Participant is not living on the Option
Effective Date, (b) the Participant does not, within 90 days after
his election, but not later than the Option Effective Date,
furnish evidence, satisfactory to the Committee, of the age of his
Contingent Annuitant, or (c) the Participant elects, prior to the
Option Effective Date, to cancel the option. If the Participant's
Contingent Annuitant predeceases the Participant after the
contingent pension payments have begun, the option will be
canceled and no longer effective, and payments will be made to the
Participant in the form of a reduced single-life annuity level
income option applicable to him pursuant to Subsection 7.2(d)
(Optional Forms of Retirement Income) as of the first day of the
month after the Participants notifies the Committee of the
Contingent Annuitant's death. An option cannot be elected,
modified, or rescinded after the Option Effective Date.
ARTICLE 8
PAYMENT OF PENSION
8.1 TIMING OF PAYMENT
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This Section is subject to the provisions of Section 8.6 (Required
Payment of Benefits).
A Participant who ceases to be an Employee as of his Normal Retirement
Date will begin receiving any pension payable to him under the Plan as of
his Normal Retirement Date. A Participant who continues as an Employee
after his Normal Retirement Date will begin receiving the pension payable
to him under the Plan as of the first day of the calendar month
coincident with or following his Severance from Service.
A Participant who ceases to be an Employee as of an Early Retirement Date
will begin receiving his pension at his Normal Retirement Date unless he
elects to begin receiving his pension on either his Early Retirement Date
or the first day of a calendar month between his Early Retirement Date
and his Normal Retirement Date (the "Deferred Pension Payment Date");
provided he has made the required election, in a manner prescribed by the
Committee, prior to the date he wants his pension to begin.
8.2 METHOD OF PAYMENT
Unless specified elsewhere in the Plan, all pension payments under the
Plan will normally be payable in equal monthly installments, with each
monthly installment equal to 1/12th of the annual amount payable.
Pension payments will be (a) made by check to the order of the
Participant, his Spouse, his Beneficiary, or his Contingent Annuitant, as
applicable, and mailed to that person's address as it appears on the
Employer's records, or (b) deposited directly into an account of the
Participant, his Spouse, his Beneficiary, or his Contingent Annuitant, as
applicable, maintained by the recipient at a bank, savings and loan, or
other financial institution, as directed by the recipient.
8.3 SMALL BENEFITS
Notwithstanding the provisions of Sections 6.2 (Method of Payment of
Spouse's Benefit) and 7.2 (Optional Forms of Retirement Income), where
the Actuarial Equivalent present
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value of a Participant's Nonforfeitable pension or Spouse's benefit under
Section 6.1 (Determination of Spouse's Benefit) does not exceed $5,000,
the Committee or its designee will pay the Nonforfeitable pension or
Spouse's benefit (if applicable) in a single-sum cash payment equal to
the Actuarial Equivalent of the pension or Spouse's benefit otherwise
payable.
8.4 FACILITY OF PAYMENT
If any benefit under the Plan is payable to a person whom the Committee
knows is a minor or otherwise under legal incapacity, the Committee or
its designee may have the payment made to the legal guardian of that
person or to the person or organization as a court of competent
jurisdiction may direct. To the extent permitted by law, any payment
under this Section will be a complete discharge of any liability under
the Plan to that person.
8.5 BENEFITS FOR LATE RETIREES, REEMPLOYED RETIREES AND REEMPLOYED TERMINATED
VESTED PARTICIPANTS
(a) LATE RETIREES
A Participant may postpone his retirement and continue his
employment with an Employer after his Normal Retirement Date. If
a Participant continues employment after his Normal Retirement
Date, he will continue to accrue years of Service and years of
Participation during this time period up to the date of his actual
retirement. The Participant's benefit will be calculated under
Article 4 (Amount of Life-Only Pension), Article 5 (Severance From
Service-Vesting), or Article 6 (Spouse's Benefit), whichever is
applicable, as of his Severance from Service Date.
(b) SUSPENSION OF RETIREMENT BENEFIT NOTICE FOR PARTICIPANT WHO
CONTINUES EMPLOYMENT AFTER HIS NORMAL RETIREMENT DATE
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When a Participant continues in employment with an Employer beyond
his Normal Retirement Date, benefits will not begin during that
continued period of employment unless required under Section 8.6
(Required Payment of Benefits). The Participant will be sent a
notification described in Section 2530.203-3(b)(4) of the
Department of Labor regulations, provided that the suspension of
benefits notice is limited to periods of service within the
context of Section 2530.203-3(c) of the Department of Labor
regulations.
(c) REEMPLOYED RETIREES AND REEMPLOYED VESTED TERMINATED PARTICIPANTS
A Reemployed Retiree or Reemployed Vested Terminated Participant
who resumes employment will continue to receive any pension
benefit payments under the Plan to which he is entitled, and will
begin to receive any pension benefit payments under the Plan, as
if he were not reemployed. When a Reemployed Retiree or
Reemployed Terminated Vested Participant again incurs a Severance
from Service, his Annual Pension will, subject to all of the
provisions of the Plan, be recalculated by aggregating his years
of Participation and by considering his Earnings during his period
of reemployment; provided, however, that the Participant's
benefits as recalculated will not be less than the Actuarial
Equivalent of his Annual Pension prior to his reemployment. The
Participant's recalculated Annual Pension will be reduced by the
Actuarial Equivalent of the pension benefits already paid to the
Participant. Any pension benefit payable to a Spouse or
Contingent Annuitant will also be based on the Participant's
pension benefit, as so recalculated and reduced.
(d) QUESTIONS CONCERNING EFFECT ON REEMPLOYMENT
The Plan's benefit claims procedures may be used by an individual
who has questions concerning the effect of reemployment by his
Employer upon his pension benefit payments.
66
(e) ADDITIONAL RULES AND PROCEDURES
The Committee is authorized to develop more fully the provisions
of this Section by establishing, from time to time, various rules
and procedures consistent with ERISA, the Code, and the Plan.
8.6 REQUIRED PAYMENT OF BENEFITS
This Section has been included in the Plan to comply with the
limitations imposed by Code paragraphs 401(a)(9) and 401(a)(14), and
it will not be construed as providing for a form of benefit not
otherwise provided under the Plan. Notwithstanding any provision of
this Plan to the contrary, any distribution under the Plan will be
made in accordance with regulations under Code paragraph 401(a)(9),
including proposed federal income tax regulation 1.401(a)(9)-2, and
will comply with the following rules:
(a) Unless a Participant elects otherwise, the payment of his
benefits under the Plan must begin not later than the 60th day
after the end of the Plan Year in which occurs the latest of:
(1) the Participant's 65th birthday; (2) the 10th anniversary
of the Plan Year in which the Participant began participation
in the Plan; or (3) termination of the Participant's employment
with the Employer.
(b) For purposes of this Article, "required beginning date" means
(1) with respect to a Participant who is not a 5 percent owner
as described in Code section 416 and who did not reach age
70 1/2 before January 1, 1997, April 1 of the calendar year
following the later of (A) the calendar year in which the
Participant reaches age 70 1/2, or (B) the calendar year in
which the Participant retires; or (2) with respect to a
Participant who is a 5 percent owner as described in Code
section 416, or any Participant who reached age 70 1/2 before
January 1, 1997, April 1 of the calendar
67
year following the calendar year in which the Participant
reaches age 70 1/2. The Plan will provide an actuarial increase
to a Participant's interest in the Plan for the period
beginning on the April 1 of the calendar year following the
calendar year in which the Participant reaches age 70 1/2 and
ending on the date on which benefits begin after the
Participant's retirement in an amount sufficient to satisfy
Code paragraph 401(a)(9). The benefits payable to the
Participant at the end of the period described in the preceding
sentence will be no less than the Actuarial Equivalent of the
benefit that would have been payable to the Participant as of
the April 1 of the calendar year following the calendar year in
which the Participant reached 70 1/2.
(c) Notwithstanding any other provision of this Plan, the entire
interest of each Participant will be distributed either: (1)
in a lump sum payment not later than the required beginning
date, or (2) in a series of payments beginning not later than
the required beginning date over the life of the Participant or
over the lives of the Participant and the designated
Beneficiary (or over a period not extending beyond the life
expectancy of the Participant or the life expectancy of the
Participant and a designated Beneficiary). If the
Participant's interest is to be paid in the form of annuity
distributions under the Plan, payments under the annuity will
satisfy the following requirements:
(1) The annuity distributions must be paid in periodic
payments made at intervals not longer than one year.
(2) For purposes of computing the distribution period, life
expectancies or joint and last survivor expectancies will
not be recalculated.
(3) Once payments have begun, the distribution period may not
be lengthened even if that period would be shorter than
the permitted maximum period.
(4) Payments must either be non-increasing or increase only as
follows:
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(A) with any percentage increase in a specified and
generally recognized cost-of-living index;
(B) to the extent of the reduction to the amount of the
Participant's payments to provide for a survivor
benefit upon death, but only if the Beneficiary or
Contingent Annuitant whose life was being used to
determine the distribution period dies and the
payments continue otherwise over the life of the
Participant;
(C) to provide cash refunds of employee contributions
upon the Participant's death; or
(D) because of an increase in benefits under the Plan.
(5) If the annuity is a life annuity (or a life annuity with a
period certain not exceeding 20 years), the amount that
must be distributed on or before the Participant's
required beginning date (or, in the case of
distributions after the death of the Participant, the
date distributions are required to begin after the
Participant's death) will be the payment that is
required for one payment interval. The second payment
need not be made until the end of the next payment
interval even if that payment interval ends in the next
calendar year. Payment intervals are the periods for
which payments are received, e.g., bi-monthly, monthly,
semi-annually or annually. If the annuity is a period
certain annuity without a life contingency (or is a life
annuity with a period exceeding 20 years), periodic
payments for each distribution calendar year will be
combined and treated as an annual amount. The amount
that must be distributed by the Participant's required
beginning date (or, in the case of distributions after
the death of the Participant, the date distributions are
required to begin after the Participant's death) is the
annual amount for the first distribution calendar
69
year. The annual amount for other distribution calendar
years, including the annual amount for the calendar year
in which the Participant's required beginning date (or
the date distributions are required to begin after the
Participant's death) occurs, must be distributed on or
before December 31 of the calendar year for which the
distribution is required.
(d) If (1) the distribution of a Participant's interest has begun in
accordance with Subsection (c), and (2) the Participant dies
before his entire interest has been distributed to him, the
remaining portion of his interest will be distributed at least as
rapidly as under the method of distribution being used under
Subsection (c) as of the date of his death.
(e) Except as provided in Subsection (f), if a Participant dies
before the distribution of his interest has begun in accordance
with Subsection (c), the Participant's entire interest will be
distributed within five years after his death.
(f) For purposes of Subsection (c), any portion of a distribution
that is payable to (or for the benefit of) a designated
Beneficiary will be treated as completely distributed on the
date on which distribution began if:
(1) that portion is to be distributed (in accordance with
regulations prescribed by the Secretary) over the life of
the designated Beneficiary (or over a period not extending
beyond the life expectancy of the Beneficiary), and
(2) distributions begin by the latest of (A) one year after
the date of the Participant's death, (B) any later date
that the Secretary may establish by regulations, or (C)
if the Beneficiary is the Participant's surviving
Spouse, the date on which the Participant would have
attained age 70 1/2.
70
(g) If the designated Beneficiary is the Participant's surviving
Spouse, and if the surviving Spouse dies before the
distributions to the Spouse begin, Subsections (c), (e), and
(f) will be applied as if the surviving Spouse were the
Participant.
(h) For purposes of Subsection (f), payment will be calculated by use
of the expected return multiples specified in Tables V and VI
of 26 C.F.R. Section 1.72-9. The life expectancy of a
designated Beneficiary will be calculated at the time payment
first commences without further recalculation.
(i) For purposes of Subsections (c), (d), (e), and (f), if any
amounts payable to a child of the Participant becomes payable
to the Participant's surviving Spouse and the child reaches the
age of majority, that amount will be treated as if it had been
paid to the surviving Spouse.
(j) Unless paid to the surviving Spouse under a Qualified Joint and
Survivor Annuity, the method of distribution selected must assure
that at least 50 percent of the present value of the amount
available for distribution is paid within the Participant's life
expectancy.
(k) If a Participant reaches age 70 1/2 on or after January 1, 1997,
but before January 1, 1999, the Plan will deem the
Participant's "required beginning date" to be April 1 of the
calendar year following the calendar year in which the
Participant reaches age 70 1/2 unless the Participant elects,
with his Spouse's consent, to defer commencement of his Plan
benefits until a date no later than April 1 of the calendar
year following the calendar year in which the Participant
retires.
8.7 DIRECT ROLLOVERS OF ELIGIBLE DISTRIBUTIONS
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this Section, a
Distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover
71
Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover.
ARTICLE 9
RETIREE MEDICAL/DENTAL BENEFITS
9.1 PURPOSE
This Article provides for the payment of certain Medical/Dental Benefits
to Eligible Retirees and to their Dependents under the Plan. The
Medical/Dental Benefits described in this Article are intended to meet
the requirements of Code subsection 401(h) and its interpretive
regulations.
9.2 ELIGIBILITY
Only Eligible Individuals will be eligible to receive Medical/Dental
Benefits (or to have Medical/Dental Benefits paid on their behalf) under
this Article.
9.3 SEPARATE ACCOUNT
A Medical/Dental Benefits Account will be established and maintained
with respect to contributions made to fund the benefits payable under
this Article, which will be kept separate (for recordkeeping purposes
only) from the amounts contributed to the Plan to fund all other
benefits. The funds in the Medical/Dental Benefits Account may be
invested with funds contributed to the Plan to fund other benefits
without identification of which assets of the Plan are allocable to
the Medical/Dental Benefits Account and which are allocable to fund
other benefits. Where the assets are not so allocated, however, the
earnings on the assets will be allocated in a reasonable manner
between the Medical/Dental Benefits Account and the amounts funding
other benefits under the Plan.
9.4 IMPOSSIBILITY OF DIVERSION PRIOR TO SATISFACTION OF ALL LIABILITIES
72
Prior to the satisfaction of all liabilities under this Article to
provide for the payment of Medical/Dental Benefits, no part of the
corpus or income of the Medical/Dental Benefits Account may be (within
the taxable year or thereafter) used for, or diverted to, any purpose
other than providing Medical/Dental Benefits or paying any reasonable
expenses attributable to the administration of the Medical/Dental
Benefits Account.
9.5 REVERSION UPON SATISFACTION OF ALL LIABILITIES
Notwithstanding the provisions of Section 14.8 (No Diversion of
Assets), any amounts that are contributed to fund Medical/Dental
Benefits and that remain in the Medical/Dental Benefits Account upon
the satisfaction of all liabilities arising out of the operation of
this Article are to be returned to Eligible Retirees, in proportion to
their respective total contributions to the Medical/Dental Benefits
Account.
9.6 FORFEITURES
In the event an Eligible Individual's interest in the Medical/Dental
Benefits Account is forfeited prior to termination of the Plan, an
amount equal to the amount of the forfeiture will be applied as soon
as possible to reduce Employer contributions to the Plan to fund the
Medical/Dental Benefits under this Article.
9.7 EMPLOYER CONTRIBUTIONS TO THE MEDICAL/DENTAL BENEFITS ACCOUNT
For each Plan Year, the Employer will contribute to the Medical/Dental
Benefits Account the amount necessary to fund Medical/Dental Benefits,
as determined by the Plan's actuaries, provided that the contributions
mandated by this sentence will be reasonable, and will be reduced (but
not below zero) as required so that the aggregate actual contributions
made to the Medical/Dental Benefits Account will not exceed 25% of the
total aggregate actual contributions (other than any contributions to
fund past service credits) made to the Plan. All contributions to the
Medical/Dental Benefits Account will be paid to the Trustee, who will
hold them in Trust for the payment of Medical/Dental
73
Benefits under this Article. At the time an Employer makes a
contribution to the Plan, it will designate the portion allocable to
the Medical/Dental Benefits Account.
9.8 MEDICAL/DENTAL BENEFITS
The Medical/Dental Benefits under the Plan will be those benefits
payable to or on behalf of Eligible Individuals in accordance with the
terms of a Medical/Dental Plan.
ARTICLE 10
NONALIENATION OF BENEFITS
The Pension Fund will not in any manner be liable for, or subject to, the
debts or liabilities of any Participant, Beneficiary, Contingent Annuitant,
or Spouse, or any other person entitled to any benefit. No payee may assign
any payment due him under the Plan. No pension or other benefits at any time
payable from the Pension Fund will be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, attachment, garnishment,
levy, execution, or other legal or equitable process or encumbrance of any
kind. Any attempt to alienate, sell, transfer, assign, or otherwise encumber
any such benefit, whether presently or thereafter payable, will be void.
However, the payment of benefits under the Plan will be made in accordance
with the applicable requirements of any Qualified Domestic Relations Order
entered by a court of competent jurisdiction or a state administrative
agency. The Committee will establish procedures to determine whether the
domestic relations orders are Qualified Domestic Relations Orders and to
administer distributions under Qualified Domestic Relations Orders.
ARTICLE 11
ADMINISTRATION
11.1 ADMINISTRATOR
74
The Committee will be the administrator of the Plan. The Committee
will consist of the number of members, not fewer than three, that is
specified from time to time by the Board of Directors. All members of
the Committee will be Employees or officers of an Employer. All
members of the Committee will serve without compensation.
11.2 REMOVAL AND REPLACEMENT OF COMMITTEE MEMBERS
The members of the Committee will serve at the pleasure of the Board of
Directors and may be removed by the Board of Directors with or without
cause. Any vacancy among the members will be filled by the Board of
Directors.
11.3 DISQUALIFICATION AND RESIGNATION
On the date when a Committee member is neither an Employee nor an officer
of an Employer, he will be disqualified from membership on the Committee.
A member of the Committee may resign by delivering his written
resignation to any other member of the Committee. A resignation will
become effective on the date specified in the instrument of resignation.
11.4 CHAIRPERSON, SERVICES, AND COUNSEL
The members of the Committee will elect one of their members as
Chairperson and will elect a Secretary, who may be, but need not be, one
of the members of the Committee. Cinergy will provide the Committee, at
Cinergy's expense, with such clerical, accounting, actuarial, and other
services as may be reasonably required by the Committee in carrying out
its responsibilities. The Committee may employ counsel, who may be, but
need not be, counsel to Cinergy.
11.5 MEETINGS
75
The Committee will hold meetings upon such notice, at the places, and at
the times as the Committee may from time to time determine, but no less
often than quarterly.
11.6 QUORUM
A majority of the members of the Committee at the time holding office
will constitute a quorum for the transaction of business. All
resolutions and other action taken by the Committee at any meeting will
be by the vote of the majority of the members of the Committee present at
the meeting.
11.7 ACTION WITHOUT MEETING
Any decision, order, direction, or other action, including orders and
directions to the Trustee or Insurance Company, made in writing signed by
a majority of the members of the Committee at the time holding office
will constitute valid and effective action of the Committee, whether or
not the matter to which that decision, order, direction, or other action
pertains had already been acted upon at a duly called and held meeting of
the Committee.
11.8 NOTICE TO TRUSTEE OF CHANGES IN MEMBERSHIP
The Trustee will not be charged with notice of any change in the
membership of the Committee unless and until it has received a certified
copy of the resolution or vote of the Board of Directors effecting the
change.
11.9 CORRECTION OF DEFECTS
The Committee may correct any defect or supply any omission or reconcile
any error or inconsistency in its previous proceedings, decisions,
orders, directions, or other actions in a manner and to such extent as it
will deem advisable to carry out the purposes of the Plan.
76
11.10 RELIANCE UPON LEGAL COUNSEL
The members of the Committee, and Cinergy, and Cinergy's officers and
directors, will be entitled to rely upon all opinions given by legal
counsel selected by the Committee.
11.11 EXPENSES
In the performance of its duties, the Committee is authorized to incur
reasonable expenses, including counsel fees. All operating expenses of
the Plan, including insurance premiums payable to the Pension Benefit
Guaranty Corporation, fees for professional services, and technical or
clerical assistance, will be paid from the Pension Fund, to the extent
not paid by the Employer. Investment expenses and any federal, state, or
local taxes that may be levied against the Pension Fund will also be paid
from the Pension Fund.
11.12 INDEMNIFICATION
Cinergy agrees to indemnify and hold harmless each member of the
Committee against any cost, expense, or liability (including any sum paid
in settlement of any claim with the approval of the Board of Directors)
arising out of any act or omission to act as a member of the Committee,
except only acts and omissions representing willful misconduct, fraud, or
lack of good faith.
11.13 POWERS AND DUTIES OF COMMITTEE
Subject to the specific limitations stated in this document, the
Committee will have the following powers, duties, and responsibilities:
(a) to carry out the Plan's general administration;
77
(b) to cause to be prepared all forms necessary or appropriate for the
Plan's administration;
(c) to keep appropriate books and records, including minutes of the
Committee's meetings;
(d) to determine, consistent with the provisions of this document, the
manner in which the Pension Fund will be allocated and disbursed;
(e) to give directions to the Trustee or Insurance Company as to the
amounts to be disbursed to Participants and others under the
Plan's provisions;
(f) to determine, with discretionary authority and consistent with the
provisions of this document, all questions of the eligibility,
rights, and status of Participants and others under the Plan;
(g) to exercise all other powers and duties specifically conferred
upon the Committee elsewhere in this document and the Trust
Agreement or Group Annuity Contract;
(h) to exercise all duties and responsibilities imposed by ERISA upon
the Committee as the Plan's administrator;
(i) to interpret, with discretionary authority, the provisions of the
Plan and to resolve, with discretionary authority, all disputed
questions of Plan interpretation and benefit eligibility;
(j) to employ agents to assist it in performing its administrative
duties; and
(k) to allocate and delegate its fiduciary responsibilities in
accordance with ERISA section 405.
78
The Committee will at all times make similar decisions on similar
questions involving similar circumstances. Subject to the provisions of
ERISA and to the provisions of Article 12 (Benefit Claims Procedures)
relating to claims, all decisions of the Committee made in good faith on
all matters within the scope of its authority under the provisions of
this document will be final and binding upon all persons.
11.14 MATTERS SPECIFICALLY EXCLUDED FROM JURISDICTION
Notwithstanding any other provision of this document, the Committee will
have no power, duty, or authority with respect to determination of the
amounts to be contributed by the Employer to the Pension Fund or Trust
Fund.
ARTICLE 12
BENEFIT CLAIMS PROCEDURES
Claims for benefits under the Plan will be made in writing to the Committee or
its designee. If a claim for benefits is wholly or partially denied, the
Committee or its designee will notify the Claimant of the claim's denial within
a reasonable period of time not to exceed 90 days after the claim's receipt,
unless special circumstances require an extension of time for processing, in
which case notification will be rendered as soon as possible, but not later than
180 days after the claim's receipt. If an extension of time for processing is
required, written notice of the extension will be furnished to the Claimant
prior to the termination of the initial 90 day period. The extension notice
will indicate the special circumstances requiring an extension of time and the
date by which the Plan expects to render final notification. The notice of
denial will be written in a manner calculated to be understood by the Claimant
and will set forth (a) the specific reason or reasons for the denial, (b) a
specific reference to the pertinent Plan provisions on which the denial is
based, (c) a description of any additional material or information necessary for
the Claimant to perfect the claim and an explanation of why that material or
information is necessary, and (d) appropriate information as to the steps to be
taken if the Claimant wishes to submit the claim for review. The Committee or
its designee is authorized to develop more fully
79
the Plan's benefit claims procedures by establishing from time to time, various
rules and procedures consistent with ERISA.
Within 60 days after the Claimant's receipt of written notice of the claim's
denial, the Claimant, or his duly authorized representative, may file a written
request with the Committee requesting a full and fair review of the denial of
the Claimant's claim for benefits. In connection with the Claimant's appeal of
the denial of his claim for benefits, the Claimant may review pertinent
documents in the Committee's possession and may submit issues and comments in
writing. The Committee will make a decision on review promptly, but not later
than the date of the Committee meeting that immediately follows the receipt of
the Claimant's request for review, unless the request for review is filed within
30 days before the date of that meeting. In that case, a decision will be made
as soon as possible, but not later than the date of the second Committee meeting
following receipt of the request for review. If special circumstances require a
further extension of time for processing, a decision will be rendered not later
than the third Committee meeting following receipt of the Claimant's request for
review. If an extension of time for review is required because of special
circumstances, written notice of the extension will be sent to the Claimant
before the extension begins. The extension notice will indicate the special
circumstances requiring an extension of time and the date by which the Committee
expects to render the final decision. The decision on review will be in writing
and written in a manner calculated to be understood by the Claimant, will set
forth the specific reason or reasons for the decision, and will contain a
specific reference to the pertinent Plan provisions on which the decision is
based. If the decision on review is not furnished to the Claimant within
60 days of receipt of the request for review, or within 120 days after its
receipt if special circumstances required an extension of time, the claim will
be deemed denied on review.
ARTICLE 13
FUNDING POLICY AND METHOD
Cinergy will establish and carry out a funding policy and method for the Plan
consistent with (a) the Plan's past experience, (b) the Plan's anticipated
experience, (c) the Plan's objectives, (d) the requirements of ERISA, and
(e) the requirements of the Code. Cinergy will
80
(a) communicate the funding policy and method to the Committee, (b) periodically
review the funding policy and method, and (c) document all action taken with
respect to the funding policy and method.
ARTICLE 14
MISCELLANEOUS
14.1 NO ENLARGEMENT OF EMPLOYEE BENEFITS
This Plan is strictly a voluntary undertaking on the part of each
Employer and will not be deemed to constitute a contract between an
Employer and any Employee or to be consideration for, or an inducement
to, or a condition of, the employment of any Employee. Nothing contained
in the Plan will be deemed to give any Employee the right to be retained
in the service of an Employer or to interfere with the right of the
Employer to discharge any Employee at any time. No Employee, prior to
his retirement under conditions of eligibility for pension benefits or
prior to his satisfying the Vesting Requirement will have any right to,
or interest in, any portion of any fund arising from his Employer's
contributions under this Plan or, in any event, other than as
specifically provided in the Plan. No person will have any right to
pension benefits except to the extent provided in the Plan.
14.2 REEMPLOYMENT
If an Eligible Employee incurs a Severance from Service and is later
reemployed by an Employer, his two (or more) periods of employment will,
subject to all of the provisions of the Plan, be aggregated for the
purpose of determining his years of Participation, and his years of
Service.
14.3 QUALIFIED MILITARY SERVICE
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Notwithstanding any provision of this Plan to the contrary,
contributions, benefits, and service credits with respect to qualified
military service will be provided in accordance with Code subsection
414(u).
14.4 NOTICE OF ADDRESS
Each Participant, Retired Participant, Terminated Vested Participant,
Beneficiary, Contingent Annuitant, and Spouse entitled to benefits under
the Plan must submit to the Committee or its designee his post office
address and each change of post office address. Any communication,
statement, or notice addressed to a person at his latest post office
address filed with the Committee or its designee will, upon deposit in
the United States mail with postage prepaid, be binding upon that person
for all purposes of the Plan, and neither the Insurance Company, the
Committee, nor the Trustee will be obliged to search for, or to ascertain
the whereabouts of, any person.
14.5 DATA
Participants, Retired Participants, Terminated Vested Participants,
Beneficiaries, Contingent Annuitants, and Spouses must furnish to the
Committee, the Insurance Company, and the Trustee any documents,
evidence, or information that the Committee, the Insurance Company, or
the Trustee considers necessary or desirable for the purpose of
administering the Plan, or to protect the Committee, the Insurance
Company, or Trustee; and it will be a condition of the Plan that each
person must furnish this information promptly and sign required documents
before any benefits become payable under the Plan.
14.6 NO INDIVIDUAL LIABILITY
It is the express purpose and intention of the Plan that, except as
otherwise required by law, no individual liability whatever will attach
to, or be incurred by, the shareholders, officers, or members of the
board of directors of any Employer, or the Committee, or its
82
members, or any fiduciary designated pursuant to Section 11.13 (Powers
and Duties of Committee), or any representatives appointed by Cinergy
under the Plan, under or by reason of any of the terms or conditions of
the Plan.
14.7 PARTICIPANT'S STATEMENT OF AGREEMENT
Cinergy will have the right, at any time, to require any Participant to
agree in writing to be bound by the Plan's provisions. However, the
absence of an agreement will not relieve any Participant from being
legally bound by the provisions of the Plan.
14.8 NO DIVERSION OF ASSETS
None of the assets of the Pension Fund may be used for, or diverted to,
purposes other than the exclusive benefit of the Participants and their
Beneficiaries. However, nothing in this Section will prohibit the return
to the Employers, in accordance with the provisions of ERISA
subsection 403(c), of a contribution (or a portion of a contribution) by
the Employers to the Pension Fund if the contribution is (a) made by
reason of mistake of fact, (b) conditioned on the initial qualification
of the Plan under Code subsection 401(a), or (c) conditioned upon its
deductibility under Code section 404 and the deduction is not fully
allowed.
14.9 GOVERNING LAWS
The Plan will be construed and administered according to the internal
laws of the State of Ohio to the extent that those laws are not preempted
by federal law.
14.10 SEVERABILITY
If any part of the Plan is adjudged by a court of competent jurisdiction
to be contrary to the laws governing the Plan, then the Plan will, in all
other respects, be and remain legally effective and binding to the full
extent permissible under the law.
83
14.11 INTERPRETATION AND REGULATION OF PLAN
Cinergy, by action of the Committee, reserves the right to interpret and
regulate the Plan, by exercise of discretionary authority, and its
interpretation and regulation will be legally effective and binding on
all parties concerned.
14.12 COMMUNICATIONS BY PARTICIPANTS
All communications by Participants and other concerned parties concerning
the Plan will be in writing and directed to the Committee or its
designee.
14.13 HEADINGS
The headings of Articles, Sections, Subsections, Paragraphs or other
parts of the Plan are for convenience of reference only and do not
define, limit, construe, or otherwise affect the contents of this
document.
14.14 ACCRUED BENEFIT NOT TO BE DECREASED BY AMENDMENT
Notwithstanding any other provisions of the Plan to the contrary, no
accrued benefit of a Participant under the Plan will be decreased by an
amendment to the Plan, other than an amendment described in Code
paragraph 412(c)(8) or ERISA section 4281. For purposes of this
Subsection, an amendment to the Plan that has the effect of:
(a) eliminating or reducing an early retirement benefit or a
retirement-type subsidy (as defined in the regulations under Code
paragraph 411(d)(6)), or
(b) eliminating an optional form of benefit, with respect to benefits
attributable to service before the amendment,
84
will be treated as reducing the accrued benefit of a Participant. In the
case of any retirement-type subsidy, the preceding sentence will apply
only with respect to a Participant who satisfies (either before or after
the amendment) the preamendment conditions for the subsidy.
ARTICLE 15
TRUSTS AND INSURANCE CONTRACTS
15.1 TRUSTS AND INSURANCE CONTRACTS
As part of the Plan, the Employers have established a Pension Fund. The
Pension Fund may consist of a trust, or a fund under a group annuity
contract issued by an Insurance Company, or a combination of each.
Benefits may, however, be provided through other trusts or insurance
contracts as Cinergy, in its sole discretion, may establish or cause to
be established or entered into for the purposes of carrying out the Plan.
Cinergy will determine the form and terms of any trust and will also
determine the terms and provisions of any group annuity contract.
Cinergy may also, in its sole discretion, cause any funds held by any
Insurance Company, or any Trust Fund held by any Trustee, for the purpose
of providing benefits under the Plan, to be transferred to any other
Insurance Company, or qualified Trustee, to be held for the same purpose.
15.2 IRREVOCABILITY
The Employers will have no right, title, or interest in the Pension Fund
or to the contributions made under the Plan, and no part of the Pension
Fund will revert to the Employers, except that upon termination of the
Plan and after satisfaction or provision for the satisfaction of all
fixed and contingent liabilities or obligations to persons entitled to
benefits upon the termination, any balance remaining in the Pension Fund
will be distributed to the Employers. However, nothing in this
Section will prohibit the return, in accordance with the provisions of
ERISA subsection 403(c), to the Employers of a
85
contribution (or a portion of a contribution) by the Employers to the
Pension Fund if the contribution is (a) made by reason of mistake of
fact, (b) conditioned on the initial qualification of the Plan under Code
subsection 401(a), or (c) conditioned upon its deductibility under Code
section 404 and the deduction is not fully allowed.
15.3 SUFFICIENCY OF PENSION FUND
The Employer intends the Plan to be a permanent, as distinguished from a
temporary, program. Except as otherwise provided by the Code or ERISA,
however, the Employer will not be under any liability to make
contributions to the Pension Fund. Benefits under the Plan are to be
paid only from the Pension Fund and only to the extent that the Pension
Fund is sufficient for that purpose. Neither Cinergy, nor any of the
officers, employees, members of the Board of Directors, the Committee, or
representatives of Cinergy guarantees in any manner nor, unless otherwise
required by law, will be liable for the payment of benefits under the
Plan. Except as otherwise provided by ERISA, any person having any claim
under, or in connection with, the Plan must look solely to the Pension
Fund for satisfaction.
ARTICLE 16
CONTRIBUTIONS
No contributions to the Plan by Participants will be required or permitted under
the Plan.
During the continuance of the Plan and for the purpose of providing the benefits
contemplated under the Plan, the Employer intends to deposit, from time to time,
with the Trustee or with the Insurance Company, sums of money, to be held in the
Pension Fund, which, together with the earnings of the Pension Fund, will be
deemed sufficient to provide the benefits of the Plan and to satisfy the minimum
funding standards set forth in ERISA. All contributions by the Employer to the
Pension Fund are expressly conditioned upon deductibility under Code
section 404.
ARTICLE 17
APPROVAL UNDER INTERNAL REVENUE CODE
86
The Plan as set forth in this document is intended to comply with the
requirements of Code subsection 401(a), so that the income of the Pension
Fund may be exempt from federal income taxes and so that contributions of the
Employers under the Plan may be deductible for federal income tax purposes
under Code section 404. Any modification or amendment of the Plan may be
made, retroactive or otherwise, as necessary or appropriate to establish and
maintain its qualified status under the Code, or to otherwise comply with
ERISA.
ARTICLE 18
AMENDMENT AND TERMINATION
18.1 RIGHT TO AMEND OR TERMINATE
Cinergy reserves the right to modify, alter, amend, revoke or terminate
the Plan and/or any Trust Fund or group annuity contract that may be
established or entered into to effectuate and implement the Plan at any
time. The Board of Directors will generally have the authority to adopt
amendments; however, the Committee or the compensation committee of the
Board of Directors may adopt any amendment to ensure the continued
qualification of the Plan and Pension Fund under Code subsections 401(a)
and 501(a), to comply with the provisions of any federal statute or
regulation impacting pension plans, to enhance the delivery of benefits
to Participants and Beneficiaries, to ease Plan administration, or to
respond to the withdrawal of any Employer from the Plan. Notwithstanding
the preceding sentence, no amendment by the Committee or the compensation
committee of the Board of Directors will substantially increase the cost
of the Plan without the Board of Directors' consent.
The Board of Directors, or any person or persons duly authorized by the
Board of Directors, will also have the right, authority, and power to
terminate the Plan and to discontinue or suspend the payment of
contributions to provide benefits under the Plan (except for the
provision of any agreement which has been entered into between an
Employer and a labor union representing Eligible Employees). However, no
action taken
87
pursuant to this Section will operate to enlarge the right of Cinergy
under Section 15.2 (Irrevocability).
18.2 EFFECT OF TERMINATION
If a partial or complete termination of the Plan occurs, all Participants
with respect to whom the Plan is being so terminated will have a
Nonforfeitable right to their benefits accrued under the Plan up to the
date of termination of the Plan to the extent then funded.
Except as otherwise required by ERISA section 4044, Cinergy will direct
the Trustee and/or Insurance Company to segregate the Pension Fund, as
determined by Cinergy to be attributable to the group that is terminating
its participation in the Plan, and to make separate allocations of the
segregated assets among the respective persons having interests in them.
The separate allocations will be made as follows:
(a) First, either:
(1) in the case of the pension of a Retired Participant, a
Terminated Vested Participant, a Spouse, or a Contingent
Annuitant that began at least three years prior to the
termination date of the Plan, that portion of the pension
that is based on the provisions of the Plan as in effect at
any time during the five-year period ending on the
termination date, which would result in the least amount,
or
(2) in the case of the pension of an Active Participant, a
Participant who has incurred a Severance from Service, or
either a Retired Participant or a Terminated Vested
Participant not included in Paragraph (1) of this
Subsection (a) that three years prior to the termination
date of the Plan would have begun had the Participant then
become a Retired Participant, a Terminated Vested
Participant, or the Participant's Spouse or Contingent
Annuitant, that portion of the pension that is based on the
provisions of the
88
Plan that were in effect at any time during the five-year
period ending on the termination date, which would result
in the least amount;
(b) Second, all other pensions under the Plan that are guaranteed by
the Pension Benefit Guaranty Corporation;
(c) Third, all other pensions with respect to both (1) Retired
Participants, Terminated Vested Participants, Spouses, and
Contingent Annuitants and (2) Active Participants and Participants
who have incurred a Severance from Service who, as of the date of
termination of the Plan, have completed the Vesting Requirement of
the Plan; and
(d) All other pensions under the Plan.
If the balance of the Pension Fund allocable to the terminating
group that is remaining after allocations have been made with
respect to all pensions in a preceding class or group is
insufficient to allocate the full Actuarial Equivalent of pensions
to all persons in the class or group for which it is then being
applied, the balance will be allocated to each person in the class
or group in the proportion to which the Actuarial Equivalent of
the pension allocable to him pursuant to the class or group bears
to the total Actuarial Equivalent of the pensions so allocable to
all persons in the class or group. However, if the balance is
sufficient to allocate a portion only of the full Actuarial
Equivalent of the pensions set forth in Subsection (c), then the
amounts of pension otherwise provided will be redetermined based
on the provisions of the Plan as in effect five years prior to the
termination date, or, if applicable, as of the later date as will
provide for the allocation of the full Actuarial Equivalent
thereof.
The amounts so allocated will, subject to the rights of the
Insurance Company under the Group Annuity Contract governing
allocations of small annuities, be purchased under the Group
Annuity Contract or other group annuity contract.
89
Any balance remaining in the Pension Fund that is allocable to the
terminating group, and after all allocations have been made
pursuant to the foregoing provisions of this Subsection, will be
allocated to the Employers.
18.3 MERGER AND CONSOLIDATION OF PLAN
In the case of any merger or consolidation with, or transfer of assets
and liabilities to, any other plan, provisions will be made so that each
Participant in the Plan on the date thereof (if the Plan had then
terminated) would receive a benefit immediately after the merger,
consolidation or transfer that is equal to, or greater than, the benefit
he would have been entitled to receive immediately prior to the merger,
consolidation, or transfer if the Plan had then terminated.
18.4 POST-CHANGE IN CONTROL MERGER, CONSOLIDATION, OR TRANSFER OF PENSION PLAN
ASSETS OR LIABILITIES
Notwithstanding the preceding provisions of this Article or any other
provision of this Plan, in the event of any merger or consolidation of
this Plan with another employee benefit plan or any transfer of assets or
liabilities of this Plan to another plan that is effected within three
years following a Change in Control, (a) the accrued benefit of each
Participant who is actively employed by an Employer as of the effective
date of the merger, consolidation, or transfer of assets or liabilities
and with respect to whom liability for the payment of benefits under the
Plan is being merged or consolidated with or transferred to another plan
will become fully vested; (b) the vested accrued benefit of each
Participant, former Participant, and Beneficiary with respect to whom any
liability for the payment of benefits under the Plan is being merged or
consolidated with or transferred to another plan will be increased in
accordance with Section 18.6 (Post-Change in Control Surplus Reversion)
as if the Plan had terminated immediately prior to any merger,
consolidation, or transfer (and for purposes of calculating the
increase, the accrued benefits of all other Participants, former
Participants and their Beneficiaries will be deemed to have increased in
accordance with Section 18.6 (Post-Change in Control
90
Surplus Reversion)); and (c) prior to consummation of any merger,
consolidation, or transfer, the accrued benefit (as increased, if
applicable) of each Participant, former Participant, and Beneficiary
with respect to whom liability for the payment of benefits under the
Plan is being merged or consolidated with or transferred to another plan
will be satisfied by the purchase of a guaranteed annuity contract from
a financially sound insurance company that represents an irrevocable
commitment to satisfy the accrued benefit (as increased, if applicable)
of the person. Notwithstanding the provisions of Section 18.1 (Right to
Amend or Terminate), the provisions of this Section may not be amended
by an amendment to the Plan effective within three years following a
Change in Control.
18.5 GENERAL PROTECTION OF BENEFITS IN THE EVENT OF A CHANGE IN CONTROL
Notwithstanding any other provisions of this Plan, for a period of three
years following a Change in Control, the provisions of this Plan may not
be amended in any manner that would adversely affect in any way the
computation or amount of or the entitlement to retirement benefits under
the Plan, including, but not limited to, any adverse change in or to
(a) the rate at which benefits accrue or vest, (b) the compensation
recognized under the Plan, or (c) the optional forms of payment available
to a Participant or Beneficiary under the Plan, including the time of
commencement of benefits and any actuarial factors utilized.
Notwithstanding the provisions of Section 18.1 (Right to Amend or
Terminate), the provisions of this Section may not be amended by an
amendment effective within three years following a Change in Control.
18.6 POST-CHANGE IN CONTROL SURPLUS REVERSION
Notwithstanding the preceding provisions of this Article or any other
provision of the Plan, in the event this Plan is terminated within three
years following a Change in Control, the assets of the Plan will be
applied in accordance with the preceding provisions of this Article to
satisfy all liabilities to Participants, former Participants, and their
91
Beneficiaries. If, after satisfaction of the liabilities, there are
assets remaining in the Plan, the balance will be applied on a pro rata
basis based upon final vested benefit to increase the benefits of the
Participants, former Participants, and their Beneficiaries, subject
however, to the applicable legal limitations on benefits payable from tax
qualified plans. Notwithstanding the provisions of Section 18.1 (Right
to Amend or Terminate), the provisions of this Section may not be amended
by an amendment to the Plan effected within three years following a
Change in Control.
ARTICLE 19
AUTHORIZED TRANSACTION
Cinergy will have the right, authority, and power to transfer some or all of the
assets of the Plan, including contributions and earnings, to a pooled investment
fund of an insurance company qualified to do business in one or more states of
the United States, even though that insurance company might otherwise be a
"party in interest," as that term is defined in ERISA; provided, the insurance
company receives not more than reasonable compensation with respect to the
transaction.
ARTICLE 20
PARTICIPATION BY OTHER EMPLOYERS
20.1 ADOPTION OF PLAN
With Cinergy's consent, any Affiliate may become a participating Employer
under the Plan by (a) taking appropriate action to adopt the Plan,
(b) filing with Cinergy a duly certified copy of the Plan as adopted by
the Affiliate, (c) becoming a party to the trust agreement establishing
the Trust Fund, and (d) executing and delivering documents and
92
taking any other action as may be necessary or desirable to put the Plan
into effect with respect to it.
20.2 WITHDRAWAL FROM PARTICIPATION
Any Employer may, with Cinergy's consent, withdraw from participation in
the Plan at any time by filing with Cinergy a duly certified copy of a
resolution of its board of directors to that effect and giving notice of
its intended withdrawal to Cinergy, the Trustee, and Insurance Company
prior to the effective date of withdrawal. If an Employer withdraws from
the Plan, Cinergy will determine the portion of the Pension Fund held by
the Trustee or Insurance Company that is applicable to the Participants
and former Participants of the withdrawing Employer and direct the
Trustee and Insurance Company to segregate its portion in a separate
trust. The separate trust will be held and administered as a part of the
separate plan of the withdrawn Employer. The portion of the Pension Fund
applicable to the Participants and former Participants of a particular
Employer will be the sum of:
(a) the total amount of the accrued benefits applicable to the
Participants and former Participants of the withdrawing Employer,
and
(b) an amount that bears the same ratio to the excess, if any, of:
(1) the total of the Pension Fund over
(2) the total amount of the accrued benefits applicable to the
Participants and former Participants of the withdrawing
Employer bears to the total amount of the accrued benefits
applicable to all Participants and former Participants.
Notwithstanding the preceding sentence, if the total amount of the
present value of the accrued benefits applicable to the Participants and
former Participants of the withdrawing
93
Employer (when combined with the value of any other assets segregated
during that Plan Year) is less than three percent of the total of the
Pension Fund as of at least one day in the Plan Year during which the
withdrawal occurs, the portion of the Pension Fund applicable to the
Participants and former Participants of the withdrawing Employer will be
equal to the present value of those Participants' accrued benefits.
20.3 CINERGY AS AGENT FOR EMPLOYERS
Each Affiliate that becomes a participating Employer pursuant to 20.1
(Adoption of Plan) or Article 22 (Continuance by a Successor) by so doing
will be deemed to have appointed Cinergy its agent to exercise on its
behalf all of the powers and authorities conferred upon Cinergy by the
terms of the Plan, including, but not limited to the power to amend and
terminate the Plan. Cinergy's authority to act as agent will continue
unless and until the portion of the Pension Fund held for the benefit of
Employees of the particular Employer and their Beneficiaries is set aside
in a separate trust as provided in Section 20.2 (Withdrawal from
Participation). Each Employer will, from time to time, upon Cinergy's
request, furnish to Cinergy any data and information as Cinergy requires
in the performance of its duties.
ARTICLE 21
CONTINUANCE BY A SUCCESSOR
If Cinergy or any other Employer is reorganized by way of merger, consolidation,
transfer of assets, or otherwise, so that a corporation, partnership, or person
other than an Employer succeeds to all or substantially all of the Employer's
business, the successor may be substituted for the Employer under the Plan by
adopting the Plan and becoming a party to the trust agreement. Contributions by
the Employer will be automatically suspended from the effective date of any
reorganization until the date upon which the substitution of the successor
corporation for the Employer under the Plan becomes effective. If, within
90 days following the effective date of any reorganization, the successor does
not elect to become a party to the Plan, or if the Employer adopts a plan of
complete liquidation other than in connection with a reorganization,
94
the Plan will be automatically terminated with respect to employees of the
Employer as of the close of business on the 90th day following the effective
date of reorganization or as of the close of business on the date of adoption of
a plan of complete liquidation, as the case may be, and Cinergy will direct the
Trustee to distribute the portion of the Trust Fund applicable to that Employer
in the manner provided in Section 20.2 (Withdrawal from Participation).
Cinergy Corp. has caused this document to be executed by its duly
authorized officers, effective January 1, 1998.
By: _______________________________
Madeleine W. Ludlow
Vice President and Chief
Financial Officer
Dated: _______________________________
APPROVED:
_______________________________
Jerome A. Vennemann
Acting General Counsel
and Assistant Corporate Secretary
Dated: _________________________
95
ADDENDUM A
LEVEL INCOME OPTION -- FACTORS USING UP84 MORTALITY AND 7.5% INTEREST
Age 0/12 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12
--- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- -----
50 0.30410 0.30651 0.30892 0.31133 0.31374 0.31615 0.31856 0.32097 0.32338 0.32579 0.32820 0.33061
51 0.33302 0.33570 0.33837 0.34105 0.34373 0.34641 0.34908 0.35176 0.35444 0.35712 0.35979 0.36247
52 0.36515 0.36813 0.37111 0.37408 0.37706 0.38004 0.38302 0.38600 0.38898 0.39195 0.39493 0.39791
53 0.40089 0.40421 0.40753 0.41085 0.41417 0.41749 0.42080 0.42412 0.42744 0.43076 0.43408 0.43740
54 0.44072 0.44443 0.44814 0.45185 0.45556 0.45927 0.46297 0.46668 0.47039 0.47410 0.47781 0.48152
55 0.48523 0.48938 0.49353 0.49768 0.50184 0.50599 0.51014 0.51429 0.51844 0.52259 0.52675 0.53090
56 0.53505 0.53971 0.54437 0.54903 0.55369 0.55835 0.56301 0.56767 0.57233 0.57699 0.58165 0.58631
57 0.59097 0.59621 0.60146 0.60670 0.61194 0.61719 0.62243 0.62767 0.63292 0.63816 0.64340 0.64865
58 0.65389 0.65980 0.66572 0.67163 0.67755 0.68346 0.68938 0.69529 0.70121 0.70712 0.71304 0.71895
59 0.72487 0.73156 0.73825 0.74494 0.75164 0.75833 0.76502 0.77171 0.77840 0.78509 0.79179 0.79848
60 0.80517 0.81276 0.82035 0.82795 0.83554 0.84313 0.85072 0.85832 0.86591 0.87350 0.88109 0.88869
61 0.89628 0.90492 0.91357 0.92221 0.93085 0.93950 0.94814 0.95678 0.96543 0.97407 0.98271 0.99136
62 1.00000