1
Exhibit 10.6
THE PACIFIC GAS AND ELECTRIC COMPANY
SAVINGS FUND PLAN
FOR NON-UNION EMPLOYEES
This is the controlling and definitive statement of the Pacific Gas
and Electric Company Savings Fund Plan for Non-Union EMPLOYEES1/ in effect on
and after April 1, 1995. The PLAN, which covers ELIGIBLE EMPLOYEES of the
COMPANY and other EMPLOYERS, is a further revision of the one originally placed
in effect by the COMPANY as of April 1, 1959. It has since been amended from
time to time. The PLAN as amended may be further amended retroactively in
order to meet applicable rules and regulations of the Internal Revenue Service,
the United States Department of Labor and all other applicable rules and
regulations.
The PLAN is maintained for the exclusive benefit of participants or
their BENEFICIARIES, and contributions or benefits under the PLAN do not
discriminate in favor of HIGHLY COMPENSATED EMPLOYEES.
ELIGIBILITY AND PARTICIPATION
1. Eligibility
A non-union EMPLOYEE becomes an ELIGIBLE EMPLOYEE upon completion of
one year of SERVICE. Once eligibility occurs it continues as long as
the EMPLOYEE remains a non-union EMPLOYEE and SERVICE continues.
2. Participation
To become a participant, an ELIGIBLE EMPLOYEE must provide NOTICE to
the PLAN ADMINISTRATOR of the ELIGIBLE EMPLOYEE'S election to
participate and to be bound by the terms of the PLAN. Through such
NOTICE, the ELIGIBLE EMPLOYEE shall:
(a) authorize the EMPLOYER to reduce his COVERED COMPENSATION by a
stated percentage and to contribute such amount to the PLAN as
a Section 401(k) CONTRIBUTION; and/or
(b) elect to make NON-Section 401(k) CONTRIBUTIONS, if any, to the
PLAN; and
(c) instruct the PLAN ADMINISTRATOR as to the manner in which
EMPLOYEE contributions and matching EMPLOYER CONTRIBUTIONS are
to be invested.
CONTRIBUTIONS
3. EMPLOYEE Contributions
To become a contributing participant, an ELIGIBLE EMPLOYEE must make
Section 401(k) CONTRIBUTIONS, NON-Section 401(k) CONTRIBUTIONS, or a
combination of both to the PLAN through payroll deduction.
__________________________________
1/ Words in all capitals are defined in Section 30.
-1-
2
All contributions withheld by the EMPLOYER from COVERED COMPENSATION
are paid over to the TRUSTEE, unconditionally credited to the
participant's account and invested in accordance with the
participant's instructions.
(a) Section 401(k) CONTRIBUTIONS. A Section 401(k) CONTRIBUTION
is an election to defer the receipt of a specified whole
percentage of COVERED COMPENSATION which would otherwise be
currently payable to a participant. The EMPLOYER shall reduce
the participant's COVERED COMPENSATION by an amount equal to
the percentage of the Section 401(k) CONTRIBUTION elected by
the participant. Under current law, Section 401(k)
CONTRIBUTIONS deferred by a participant under the PLAN are not
subject to federal or state income tax until actually
withdrawn or distributed from the PLAN.
(b) FLEXDOLLARS. By giving NOTICE, a participant in the COMPANY'S
Flex Plan may elect to have any unused FLEXDOLLARS contributed
to this PLAN. Any FLEXDOLLARS contributed to this PLAN shall
be deemed Section 401(k) CONTRIBUTIONS and shall be subject to
all restrictions and limitations applicable to Section 401(k)
CONTRIBUTIONS. FLEXDOLLAR contributions shall not be eligible
for matching EMPLOYER CONTRIBUTIONS as described in Section 4.
(c) NON-Section 401(k) CONTRIBUTIONS. NON-Section 401(k)
CONTRIBUTIONS differ from Section 401(k) CONTRIBUTIONS in that
a participant has already paid taxes on the amounts
contributed to the PLAN. All EMPLOYEE Contributions made to
the PLAN as it existed prior to October 1, 1984, are
considered to be NON-Section 401(k) CONTRIBUTIONS and are so
recorded in the accounts maintained by the PLAN ADMINISTRATOR.
NON-Section 401(k) CONTRIBUTIONS must be made in whole
percentages of COVERED COMPENSATION, and the sum of all
Section 401(k) CONTRIBUTIONS and NON-Section 401(k)
CONTRIBUTIONS made by a participant may not exceed 15 percent
of the participant's COVERED COMPENSATION.
(d) CHANGING CONTRIBUTIONS. By giving NOTICE to the PLAN
ADMINISTRATOR, a participant may direct the PLAN ADMINISTRATOR
to cease or resume making contributions, or to change the rate
of contributions. Any such change shall become effective
within 30 days of receipt by the PLAN ADMINISTRATOR of such
NOTICE.
4. Employer Contributions
(a) Each and every time that participants make Section 401(k) or
non-Section 401(K) CONTRIBUTIONS to the PLAN eligible for
matching EMPLOYER CONTRIBUTIONS, the COMPANY shall make a
matching EMPLOYER CONTRIBUTION to the PLAN in cash or in whole
shares of COMPANY STOCK, or partly in both. Matching EMPLOYER
CONTRIBUTIONS shall be limited to an amount equal to three-
quarters of the aggregate participant contributions eligible
for matching EMPLOYER CONTRIBUTIONS under the provisions of
Subsection 4(a)(1). The COMPANY shall charge to each EMPLOYER
its appropriate share of matching EMPLOYER CONTRIBUTIONS.
(1) Section 401(k) and NON-Section 401(k) CONTRIBUTIONS
Eligible for Matching EMPLOYER CONTRIBUTIONS.
Although a participant may elect to defer up to 15
percent of COVERED COMPENSATION to the PLAN, the
maximum amount of a
-2-
3
participant's contributions eligible for matching
EMPLOYER CONTRIBUTIONS shall be one of the following
percentages of COVERED COMPENSATION:
(i) up to 3 percent, with at least one but less
than three years of SERVICE; or
(ii) up to 6 percent, with at least three years of
SERVICE.
(iii) for a participant who is absent from work and
receiving temporary compensation under any
state Worker's Compensation Law or under the
COMPANY'S LONG TERM DISABILITY PLAN, the
larger of:
a) the maximum percentage calculated
under (i) or (ii), whichever is
applicable; or
b) the dollar amount which was eligible
for matching EMPLOYER CONTRIBUTIONS
immediately before the participant's
absence began.
(b) Investment of EMPLOYER CONTRIBUTIONS. All EMPLOYER
CONTRIBUTIONS made to the PLAN shall be invested by the
TRUSTEE in accordance with a participant's INVESTMENT FUND
directions.
5. Limitations
(a) Average Deferral Percentage Limitation. In any PLAN YEAR, the
average rate of Section 401(k) CONTRIBUTIONS as a percentage
of compensation for all participating HIGHLY COMPENSATED
ELIGIBLE EMPLOYEES shall not exceed the larger of:
(1) the average rate of Section 401(k) CONTRIBUTIONS as a
percentage of compensation for all other
participating ELIGIBLE EMPLOYEES multiplied by 1.25
percent; or
(2) the lesser of:
(i) the average rate of Section 401(k)
CONTRIBUTIONS as a percentage of compensation
for all other participating ELIGIBLE
EMPLOYEES multiplied by 2; or
(ii) the average rate of Section 401(k)
CONTRIBUTIONS as a percentage of compensation
for all other participating ELIGIBLE
EMPLOYEES plus 2 percentage points, or such
lesser amount as the Secretary of the
Treasury may prescribe in order to prevent
the multiple use of this alternative
limitation with respect to any HIGHLY
COMPENSATED participant.
The average rate of Section 401(k) CONTRIBUTIONS for a PLAN
YEAR for a designated group of ELIGIBLE EMPLOYEES shall be the
average of the ratios, calculated separately for each
participating ELIGIBLE EMPLOYEE in the group, of the amount of
Section 401(k) CONTRIBUTIONS made by each EMPLOYEE for the
PLAN YEAR, to the EMPLOYEE'S compensation for such PLAN YEAR.
As used in this subsection, compensation shall mean
compensation paid by an EMPLOYER to the participant during the
PLAN YEAR which is required to be reported as wages on the
participant's form W-2 and shall also include compensation
-3-
4
which is not currently includable in the participant's gross
income by reason of the application of CODE Sections 125 and
402(e)(3).
For purposes of this subsection, the ratio of the amount of
Section 401(k) CONTRIBUTIONS to a participant's compensation
for any participant who is HIGHLY COMPENSATED for the PLAN
YEAR and who is eligible to have elective deferrals or
qualified employer deferral contributions allocated to his
account under two or more plans or arrangements described in
Section 401(k) of the CODE that are maintained by an employer
or affiliated employer shall be determined as if all such
Section 401(k) CONTRIBUTIONS, elective deferrals and qualified
employer deferral contributions were made under a single
arrangement.
For purposes of determining the ratio of the amount of Section
401(k) CONTRIBUTIONS to a participant's compensation for a
participant who is HIGHLY COMPENSATED by reason of being one
of the ten highest-paid EMPLOYEES or a 5 percent owner of the
controlled group of corporations, as defined in Section 414 of
the CODE, the Section 401(k) CONTRIBUTIONS and compensation of
such participant shall include the Section 401(k)
CONTRIBUTIONS and compensation of the participant's family
members, as defined in Section 414 of the CODE, and such
family members shall be disregarded in determining the average
rate of Section 401(k) CONTRIBUTIONS for non-HIGHLY
COMPENSATED participants.
The determination and treatment of Section 401(k)
CONTRIBUTIONS of any participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(b) Average Contribution Percentage Limitation. In any PLAN YEAR,
the average rate of NON-Section 401(k) CONTRIBUTIONS and
EMPLOYER CONTRIBUTIONS as a percentage of compensation for all
participating HIGHLY COMPENSATED ELIGIBLE EMPLOYEES shall not
exceed the larger of:
(1) the average rate of NON-Section 401(k) CONTRIBUTIONS
and EMPLOYER CONTRIBUTIONS as a percentage of
compensation for all other participating ELIGIBLE
EMPLOYEES multiplied by 1.25; or
(2) the lesser of:
(i) the average rate of NON-Section 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS as a
percentage of compensation for all other
participating ELIGIBLE EMPLOYEES multiplied
by 2; or
(ii) the average rate of NON-Section 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS for
all other participating ELIGIBLE EMPLOYEES
plus 2 percentage points, or such lesser
amount as the Secretary of the Treasury may
prescribe in order to prevent the multiple
use of this alternative limitation with
respect to any HIGHLY COMPENSATED
participant.
The average rate of NON-Section 401(k) CONTRIBUTIONS and
EMPLOYER CONTRIBUTIONS for a PLAN YEAR for a designated group
of ELIGIBLE EMPLOYEES shall be the average of the ratios,
calculated separately for each participating ELIGIBLE EM-
-4-
5
PLOYEE in the group, of the amount of NON-Section 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS made by and on behalf
of each EMPLOYEE for the PLAN YEAR, to the EMPLOYEE'S
compensation for such PLAN YEAR. As used in this subsection,
compensation shall mean compensation paid by an EMPLOYER to
the participant during the PLAN YEAR which is required to be
reported as wages on the participant's form W-2 and shall also
include compensation which is not currently includable in the
participant's gross income by reason of the application of
CODE Sections 125 and 402(e)(3).
For purposes of this subsection, the ratio of the amount of
NON-Section 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS to
a participant's compensation for any participant who is HIGHLY
COMPENSATED for the PLAN YEAR and who is eligible to have
elective deferrals or qualified employer deferral
contributions allocated to his account under two or more plans
or arrangements described in Section 401(k) of the CODE that
are maintained by an employer or affiliated employer shall be
determined as if all such NON-Section 401(k) CONTRIBUTIONS and
EMPLOYER CONTRIBUTIONS, elective deferrals and qualified
employer deferral contributions were made under a single
arrangement.
For purposes of determining the ratio of the amount of
NON-Section 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS to
a participant's compensation for a participant who is HIGHLY
COMPENSATED by reason of being one of the ten highest-paid
EMPLOYEES or a 5 percent owner of the controlled group of
corporations, as defined in Section 414 of the CODE, the NON-
Section 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS and
compensation of such participant shall include the NON-
Section 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS and
compensation of the participant's family members, as defined
in Section 414 of the CODE, and such family members shall be
disregarded in determining the average rate of NON-Section
401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS for non-HIGHLY
COMPENSATED participants.
The determination and treatment of NON-Section 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS of any participant
shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
(c) In the event that the EMPLOYEE BENEFIT ADMINISTRATIVE
COMMITTEE, in its sole and absolute discretion, determines
that the rate of Section 401(k) CONTRIBUTIONS, and/or the rate
of NON-Section 401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS
will exceed either or both of the maximum limitations
contained in subsections 5(a) and 5(b), the EMPLOYEE BENEFIT
ADMINISTRATIVE COMMITTEE shall instruct the PLAN ADMINISTRATOR
to reduce the rate of contributions made by HIGHLY COMPENSATED
participants so that the limitations will be met.
The PLAN ADMINISTRATOR shall first determine the maximum
average rate of contributions which can be made by the HIGHLY
COMPENSATED participants. The contributions made by HIGHLY
COMPENSATED participants shall then be reduced, on a
prospective basis, until the limitations are met. Any
necessary reduction shall be made by first reducing the
highest rate of Section 401(k) CONTRIBUTIONS or NON-Section
401(k) CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS as may be
appropriate, currently authorized by participants, with such
rate to
-5-
6
be reduced in one percent increments until the maximum
permissible average rate of contributions is met.
Notwithstanding any other provision of the PLAN, if, as of the
end of a PLAN YEAR, the PLAN fails to meet either or both of
the tests described in subsections 5(a) or 5(b), the PLAN
ADMINISTRATOR shall, on or before December 31 of the following
PLAN YEAR distribute to each HIGHLY COMPENSATED participant,
beginning with the participant having the higher ratio, such
excess portion of the participant's Section 401(k)
CONTRIBUTIONS, and/or NON-Section 401(k) CONTRIBUTIONS and
EMPLOYER CONTRIBUTIONS (and any income allocable to such
portion), until the PLAN satisfies both of the tests. If
there is a loss allocable to such excess amount, the amount of
the distribution shall in no event be less than the lesser of
the (i) participant's account or (ii) the participant's
Section 401(k) CONTRIBUTIONS, or NON-Section 401(k)
CONTRIBUTIONS and EMPLOYER CONTRIBUTIONS, as appropriate, for
the PLAN YEAR.
For the PLAN YEARS 1987, 1988, 1989, 1990 and 1991 only, the
PLAN ADMINISTRATOR may elect to make qualified non-elective
employer contributions within the meaning of Section
401(m)(4)(c) of the CODE, on behalf of such non-HIGHLY
COMPENSATED participants who are EMPLOYEES of Pacific Service
Employees Association as will cause the PLAN to meet the
appropriate limits set forth in subsections 5(a) and 5(b).
For purposes of PLAN withdrawals qualified non-elective
employer contributions shall be treated as Section 401(k)
CONTRIBUTIONS.
For purposes of determining whether the PLAN meets either or
both of the limits set forth in subsections 5(a) and 5(b), the
PLAN ADMINISTRATOR may elect to make the look-back year
calculation as provided in Regulation 1.414(q)-ITA-14(b)(1)
for any determination year on the basis of the calendar year
ending with the applicable determination year.
(d) Annual Section 401(k) Limitation. Effective as of January 1,
1987, no participant shall be permitted to make Section 401(k)
CONTRIBUTIONS to the PLAN during any PLAN YEAR in excess of
$7,000, multiplied by the adjustment factor prescribed by the
Secretary of the Treasury under Section 415(d) of the CODE for
years beginning after December 31, 1987, as applied to
elective deferrals. A participant who is unable to make
Section 401(k) CONTRIBUTIONS which would have been eligible
for matching EMPLOYER CONTRIBUTIONS because of the limitation
contained in this subsection 5(d), shall be entitled to make
NON-Section 401(k) CONTRIBUTIONS in an amount equal to the
amount of Section 401(k) CONTRIBUTIONS that could have been
made but for the subsection 5(d) limitation. Such NON-Section
401(k) CONTRIBUTIONS shall be eligible for matching EMPLOYER
CONTRIBUTIONS as though they were Section 401(k)
CONTRIBUTIONS, subject to the limitations contained in Section
5.
(e) Section 415 Limitation. Anything herein to the contrary
notwithstanding, in no event shall the annual additions to a
participant's accounts in a YEAR exceed the lesser of (1) 25
percent of the participant's compensation (as defined in
subparagraph 5(e)(1), below) for the YEAR or (2) $30,000, or,
if greater, one-fourth of the defined benefit dollar
limitation set forth Section 415(b)(1) of the CODE as in
effect for the PLAN YEAR. For purposes of applying the
limitations of Section 415 of the CODE, the annual additions
-6-
7
which must be kept within the limits set forth above, shall
mean the sum credited to a participant's account for any PLAN
YEAR of (i) EMPLOYER CONTRIBUTIONS and Section 401(k)
CONTRIBUTIONS, (ii) NON-Section 401(k) CONTRIBUTIONS, and
(iii) any amounts allocated to an individual medical account,
as defined in Sections 415(l)(2) and 419A(d)(2) of the CODE.
The compensation limitation percentage referred to above shall
not apply to (i) any contribution for medical benefits, as
defined in Section 419A(f)(2) of the CODE, after a
participant's separation from SERVICE which is otherwise
treated as an annual addition, or (ii) any amount which is
otherwise treated as an annual addition under Section
415(l)(1) of the CODE.
(1) Solely for purposes of applying the Section 415
limitations, compensation shall include all of a
participant's wages, salaries, fees for professional
service, and other amounts received for personal
services actually rendered in the course of
employment with an EMPLOYER (including, but not
limited to, commissions paid to salesmen,
compensation for services on the basis of a
percentage of profits, commissions on insurance
premiums, tips, and bonuses). For purposes of
applying the Section 415 limitations, compensation
shall not include any of the following:
a) Contributions made by an EMPLOYER to a plan
of deferred compensation to the extent that,
before the application of the Section 415
limitations to that plan, the contributions
are not includable in the gross income of the
participant for the taxable year in which
contributed. Any distributions from a plan
of deferred compensation are not considered
as compensation for Section 415 purposes,
regardless of whether such amounts are
includable in the gross income of the
EMPLOYEE when distributed. However, any
amounts received by a participant pursuant to
an unfunded, nonqualified plan may be
considered as compensation for Section 415
purposes in the year such income is
includable in the gross income of the
EMPLOYEE.
b) Amounts realized from the exercise of a
nonqualified stock option, or when restricted
stock (or property) held by a participant
either becomes freely transferable or is no
longer subject to a substantial risk of
forfeiture.
c) Amounts realized from the sale, exchange, or
other disposition of stock acquired under a
qualified stock option.
d) Other amounts which receive special tax
benefits such as premiums for group term life
insurance (but only to the extent that the
premiums are not includable in the gross
income of the participant).
In the event that the annual additions to a
participant's accounts would exceed the
Section 415 Limitations, the PLAN
ADMINISTRATOR shall first reduce the
participant's NON-Section 401(k)
-7-
8
CONTRIBUTIONS until the Section 415
limitations are met.
(f) If a participant of this PLAN is also a participant in the
COMPANY'S RETIREMENT PLAN, Section 415 of the CODE imposes a
combined benefit limitation. Contributions to this PLAN will
nevertheless be permitted to the maximum extent permitted by
Section 415 of the CODE and the terms of the PLAN. If the
combined maximum benefit permitted would be exceeded, the
benefit from the COMPANY'S RETIREMENT PLAN shall be reduced so
that the limitation will be met. The combined maximum benefit
for a participant shall be determined pursuant to the
provisions of Section 415(e) of the CODE.
At the election of the PLAN ADMINISTRATOR, special
transitional rules may apply for both the defined benefit
fraction and the defined contribution fraction for EMPLOYEES
who were participants as of December 31, 1982.
(g) Top Heavy Provisions. In the event that the PLAN is or
becomes "Top Heavy", as that term is defined in Section 416(g)
of the CODE, the provision contained in Special Provision A
shall supersede any conflicting provision of the PLAN.
(h) For purposes of determining all benefits under the PLAN, for
PLAN YEARS beginning after 1988 and before 1994, the maximum
compensation of each EMPLOYEE that may be taken into account
each PLAN YEAR shall not exceed $200,000 (as adjusted by the
Secretary of the Treasury under Section 401(a)(17) of the
CODE. For purposes of determining all benefits under the
PLAN, for PLAN YEARS beginning after 1993, the maximum
compensation of each EMPLOYEE that may be taken into account
each PLAN YEAR shall not exceed $150,000 (as adjusted by the
Secretary of the Treasury under Section 401(a)(17) of the
CODE). In determining the compensation of a HIGHLY
COMPENSATED EMPLOYEE for purposes of this limitation, the
rules of Section 414(q)(6) of the CODE shall apply, except
that the term "family" shall include only the spouse of the
EMPLOYEE and any lineal descendants of the EMPLOYEE who have
not attained age 19 before the close of the YEAR. If the
aggregate compensation of family members exceeds the
applicable compensation limit of compensation as limited by
Section 401(a)(17) of the CODE, then the amount of compen-
sation considered under the PLAN for each family member is
proportionately reduced so that the total equals the
applicable compensation limitation under Section 401(a)(17) of
the CODE.
SELECTION OF INVESTMENT FUNDS
6. (a) Section 401(k) CONTRIBUTIONS, NON-Section 401(k)
CONTRIBUTIONS, and EMPLOYER CONTRIBUTIONS. By giving NOTICE,
a participant shall instruct the PLAN ADMINISTRATOR to invest
his Section 401(k) CONTRIBUTIONS, NON-Section 401(k)
CONTRIBUTIONS, and EMPLOYER CONTRIBUTIONS in one or more
INVESTMENT FUNDS. The minimum amount which can be invested in
any single INVESTMENT FUND shall be one percent of a
participant's current contributions to the PLAN. A
participant may elect to invest more than the minimum amount
in any INVESTMENT FUND, provided that any such increase must
be in increments of one percent.
-8-
9
(b) CHANGE OF INVESTMENT FUND ALLOCATIONS. By giving NOTICE to
the PLAN ADMINISTRATOR, a participant may (1) change the
percentage levels of future contributions which are to be
allocated to any INVESTMENT FUND or FUNDS or, (2) change the
INVESTMENT FUNDS in which his future contributions are to be
invested. Each election regarding investment of future
contributions shall be effective with the next deposit of
contributions.
THE INVESTMENT FUNDS
7. Company Stock Fund
This FUND is invested primarily in Common Stock of the COMPANY, with a
small portion invested in cash or cash equivalents. The FUND also
holds COMPANY STOCK and the earnings thereon attributable to EMPLOYER
CONTRIBUTIONS and participant contributions made to the Basic Fund of
the PLAN as it existed prior to April 1, 1983, as well as all COMPANY
STOCK which has been transferred to this PLAN from the TRASOP and
PAYSOP Plan. All cash dividends received by the TRUSTEE on COMPANY
STOCK are reinvested in the FUND.
(a) Investment Generally. Whenever the TRUSTEE invests cash in
COMPANY STOCK, the EMPLOYEE BENEFIT FINANCE COMMITTEE shall
direct the TRUSTEE to purchase the COMPANY STOCK either (i) at
a public sale on a recognized stock exchange, (ii) directly
from the COMPANY at a price equal to that day's closing price
for COMPANY STOCK on the New York Stock Exchange, or (iii)
from a private source at a price no higher than the price that
would have been payable under (i).
(b) Voting of COMPANY STOCK. Each and every time shareholders who
are not participants in the PLAN are entitled to vote COMPANY
STOCK, participants shall have an absolute right to vote
COMPANY STOCK. Whenever participants are given the
opportunity to vote COMPANY STOCK, the TRUSTEE shall inform
each participant of all relevant material received by the
TRUSTEE with a written request for confidential voting
instructions. The TRUSTEE is required to vote the COMPANY
STOCK credited to a participant's account as the participant
directs. If the participant does not give such instructions
within the required time, the TRUSTEE may not vote any COMPANY
STOCK credited to a participant's account.
(c) Cost of UNITS. The cost of a UNIT shall be the current value
of a UNIT as determined by the TRUSTEE as of the valuation
date immediately preceding the date that the TRUSTEE invests
contributions in the COMPANY STOCK FUND.
(d) Value of UNITS. The value of a UNIT is the value of the
COMPANY STOCK held in the FUND at the closing price on the New
York Stock Exchange plus the cash held in the FUND, as
determined by the TRUSTEE each BUSINESS DAY, less any fees or
other expenses which are charged to the FUND which shall
reduce the earnings of that fund, divided by the number of
UNITS. Each payment into the COMPANY STOCK FUND of
contributions shall increase, and each payment out of the
COMPANY STOCK FUND shall decrease, the number of UNITS by a
number equal to the amount of the payment divided by the last
UNIT value determination immediately preceding the date of
payment.
-9-
10
8. United States Bond Fund
This FUND was maintained for the purpose of investing EMPLOYEE
contributions in United States BONDS. This FUND also holds all BONDS
attributable to participant contributions made to the Basic Fund of
the PLAN as it existed prior to April 1, 1983. Income from BONDS is
reflected in the greater redemption values of the BONDS. BONDS held
in this FUND cannot be transferred to another INVESTMENT FUND under
the transfer provisions of Section 14.
Effective July 1, 1991, the U.S. BOND FUND no longer accepts EMPLOYEE
contributions. BONDS purchased to date with EMPLOYEE contributions
will continue to be held in the PLAN until a distribution is requested
by the EMPLOYEE in accordance with current PLAN provisions.
9. Diversified Equity Fund (DEF)
This FUND is maintained for the purpose of investing in a diversified
portfolio consisting principally of common stock and securities
convertible into common stock. However, at no time shall the DEF be
invested in securities issued or guaranteed by the COMPANY or any of
its subsidiaries, except to the extent that any such securities are
held in a commingled account invested in by the DEF INVESTMENT
MANAGER. The DEF INVESTMENT MANAGER directs the day-to-day investment
of the FUND. Contributions to this FUND are paid over to the TRUSTEE
and invested in accordance with instructions received from the DEF
INVESTMENT MANAGER. A participant's account is credited with the
number of DEF UNITS purchased with contributions allocated to his
account. All Diversified Investment Fund Units attributable to
participant contributions made to the PLAN as it existed prior to
April 1, 1983 are held in this FUND under the new designation of DEF
UNITS.
(a) Cost of DEF UNITS. The cost of a DEF UNIT shall be the
current value of a UNIT as determined by the DEF INVESTMENT
MANAGER as of the valuation date immediately preceding the
date that the TRUSTEE invests contributions in the DEF.
(b) Value of DEF UNITS. The value of a DEF UNIT is the value of
the FUND assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the FUND), divided by the number of DEF UNITS.
Each payment into the FUND of contributions shall increase,
and each payment out of the FUND shall decrease, the number of
FUND UNITS by a number equal to the amount of the payment
divided by the last UNIT value determination immediately
preceding the date of the payment.
10. Utility Stock Fund (USF)
This FUND is maintained for the purpose of investing in an index fund
consisting of common stocks of publicly traded electric utility
companies that are members of the Edison Electric Institute. However,
at no time shall the FUND be invested in securities issued or
guaranteed by the COMPANY or any of its subsidiaries, except to the
extent that any such securities are held in a commingled account
invested in by the USF INVESTMENT MANAGER. The FUND seeks to provide
investment results that correspond to the price and yield performance
of common stocks of selected utilities engaged in the generation,
transmission, or distribution of electric energy, as represented by an
index comprising the common stocks of companies that are members of
the Edison Electric Institute. Stocks in the FUND's portfolio are
generally held in the
-10-
11
same proportions that each stock has within the index. Seeking to
duplicate the index as closely as possible, the portfolio is monitored
and adjusted by computer; no attempt is made to manage the portfolio
in the traditional sense using economic, financial, and market
analyses.
Contributions to the USF are paid to the TRUSTEE and invested in
accordance with the instructions from the USF INVESTMENT MANAGER. A
participant's account is credited with the number of USF UNITS
purchased with contributions allocated to his account.
(a) Cost of USF UNITS. The cost of a USF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of the
valuation date immediately preceding the date that the TRUSTEE
invests contributions in the USF.
(b) Value of USF UNITS. The value of a USF UNIT is the value of
the assets, as determined each BUSINESS DAY by the TRUSTEE,
less any liabilities (other than interests of participants in
the USF), divided by the number of USF UNITS. Each payment
into the USF of contributions shall increase, and each payment
out of the USF shall decrease the number of USF UNITS by a
number equal to the amount of the payment divided by the last
UNIT value determination immediately preceding the date of
payment.
11. Guaranteed Income Fund (GIF)
This FUND is designed to provide participants with a stable and
consistent rate of return. The FUND is made up of investment
contracts with a diversified group of insurance companies, banks, and
other financial institutions which provide for credited interest rates
and terms that are negotiated at the time of purchase.
Contributions made to the GIF are invested in a portfolio of
investment contracts. The GIF INVESTMENT MANAGER directs the
day-to-day investment of the FUND. The blended interest earned on all
contracts held in the portfolio is posted daily to the participant's
account.
(a) COST OF GIF UNITS. The cost of a GIF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of the
valuation date immediately preceding the date that the TRUSTEE
invests contributions in the GIF.
(b) VALUE OF GIF UNITS. The value of a GIF UNIT is the value of
the GIF assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the GIF), divided by the number of GIF UNITS.
Each payment into the GIF of contributions shall increase, and
payments out of the GIF shall decrease, the number of GIF
UNITS by a number equal to the amount of the payment divided
by the last UNIT value determination immediately preceding the
date of payment.
12. Bond Index Fund (BIF)
The BIF is maintained for the purpose of investing in a diversified
portfolio consisting principally of marketable fixed-income
securities. At no time shall the BIF be invested in securities issued
or guaranteed by the COMPANY or any of its subsidiaries, except to the
extent that any such securities are held in a commingled account
invested in by the BIF INVESTMENT MANAGER. The
-11-
12
BIF INVESTMENT MANAGER directs the day-to-day investment of the BIF.
Contributions to the BIF are paid over to the TRUSTEE and invested in
accordance with instructions received from the BIF INVESTMENT MANAGER.
A participant's account is credited with the number of BIF UNITS
purchased with contributions allocated to his account.
(a) Cost of BIF UNITS. The cost of a BIF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of the
valuation date immediately preceding the date that the TRUSTEE
invests contributions in the FUND.
(b) Value of BIF UNITS. The value of a BIF UNIT is the value of
the BIF assets, as determined each BUSINESS DAY by the
TRUSTEE, less any liabilities (other than the interests of
participants in the BIF), divided by the number of BIF UNITS.
Each payment into the BIF of contributions shall increase, and
each payment out of the BIF shall decrease, the number of BIF
UNITS by a number equal to the amount of the payment divided
by the last UNIT value determination immediately preceding the
date of payment.
13. Stock and Bond Fund (SBF)
The SBF is maintained for the purpose of investing in a diversified
portfolio consisting principally of U.S. equities and U.S. fixed
income investments. At no time shall the SBF be invested in
securities issued or guaranteed by the COMPANY or any of its
subsidiaries, except to the extent that any such securities are held
in a commingled account invested in by the SBF INVESTMENT MANAGER.
The SBF INVESTMENT MANAGER directs the day-to-day investment of the
SBF.
Contributions to the SBF are paid over to the TRUSTEE and invested in
accordance with instructions from the SBF INVESTMENT MANAGER. A
participant's account is credited with the number of SBF UNITS
purchased with contributions allocated to his account.
(a) Cost of SBF UNITS. The cost of an SBF UNIT shall be the
current value of a UNIT as determined by the TRUSTEE as of the
valuation date immediately preceding the date that the TRUSTEE
invests contributions in the SBF.
(b) Value of SBF UNITS. The value of an SBF UNIT is the value of
the assets, as determined each BUSINESS DAY by the TRUSTEE,
less any liabilities (other than the interests of participants
in the SBF), divided by the number of SBF UNITS. Each payment
into the SBF of contributions shall increase, and each payment
out of the SBF shall decrease, the number of SBF UNITS by a
number equal to the amount of the payment divided by the last
UNIT value determination immediately preceding the date of
payment.
14. Transfer of Investment Fund Balances
(a) By giving NOTICE to the PLAN ADMINISTRATOR, a participant may
elect to transfer any portion of the contributions held in his
account, plus the earnings thereon, from any INVESTMENT FUND
to another INVESTMENT FUND or FUNDS. A transfer shall be
effective and shall be valued on the day it is made, if such
day is a BUSINESS DAY, and the participant provides NOTICE of
such transfer prior to the closing time
-12-
13
of the New York Stock Exchange. All other transfers shall be
effective and valued as of the next BUSINESS DAY.
Upon receipt of a transfer NOTICE, the TRUSTEE shall value the
UNITS to be transferred from the FUND and convert the UNITS to
cash. The FUND account of the participant shall be debited
with the number of UNITS transferred from that FUND and the
TRUSTEE shall purchase with the cash proceeds realized from
the converted UNITS, UNITS in the appropriate FUND or FUNDS,
as designated by the participant. The cost of the UNITS
purchased shall be the value of the FUND UNITS as determined
on the date of transfer, and the number of UNITS purchased
shall be credited to the appropriate INVESTMENT FUND account
of the participant.
(b) COMPANY STOCK FUND -- Overall Limitation. Anything herein to
the contrary notwithstanding, if, as of any single month, the
TRUSTEE is required, as a result of the transfer provisions of
this Section 14, to sell on the open market more than one
percent of the number of outstanding shares of COMPANY STOCK,
then the TRUSTEE shall immediately so advise the EMPLOYEE
BENEFIT FINANCE COMMITTEE. The EMPLOYEE BENEFIT FINANCE
COMMITTEE may, in its sole discretion, limit, prorate, or
temporarily suspend further sales of COMPANY STOCK by the PLAN
or take whatever steps necessary to ensure an orderly market
in COMPANY STOCK. The percentage limitation set forth in this
subsection shall be applied to the excess of shares sold on
the open market less shares purchased to meet Section 14
requirements for the applicable period.
PARTICIPANT'S INTEREST IN THE PLAN
15. Participant Accounts
The PLAN ADMINISTRATOR maintains a separate account for each PLAN
participant which records the participant's interest in each of the
INVESTMENT FUNDS, together with EMPLOYER CONTRIBUTIONS made on his
behalf. Each account is charged with participant transfers and
withdrawals and credited with its appropriate share of FUND income.
The account maintained by the PLAN ADMINISTRATOR for each participant
also records separately the participant's Section 401(k) CONTRIBUTIONS
and NON-Section 401(k) CONTRIBUTIONS, the UNITS purchased therewith,
and the earnings thereon. All Basic Contributions and Supplemental
Contributions made to the PLAN as it existed prior to October 1, 1984,
are recorded as NON-Section 401(k) CONTRIBUTIONS on the records
maintained by the PLAN ADMINISTRATOR.
Whenever UNITS attributable to a participant's Section 401(k)
CONTRIBUTIONS are transferred to another FUND OR FUNDS, the resulting
UNITS are also recorded as attributable to Section 401(k)
CONTRIBUTIONS. Similarly, UNITS attributable to NON-Section 401(k)
CONTRIBUTIONS which are transferred to another FUND or FUNDS are also
recorded as NON-Section 401(k) CONTRIBUTIONS. A participant is at all
times fully vested in his own contributions and all EMPLOYER
CONTRIBUTIONS credited to his account, together with income
attributable thereto.
16. Account Statements
As soon as practicable after the end of each CALENDAR QUARTER, all
participants will receive from the ADMINISTRATOR a statement of their
interest in the PLAN.
-13-
14
PLAN WITHDRAWALS
17. Withdrawal During Service
Except as provided in this Section, withdrawals of any part of a
participant's interest in the PLAN are not permitted as long as
SERVICE continues. A participant may never replace in the TRUST FUND
any UNITS or cash which have been withdrawn. By submitting a
withdrawal Form, a participant may make withdrawals as provided below.
(a) Section 401(k) CONTRIBUTIONS.
(1) A participant may withdraw all or part of the UNITS,
including income thereon and including additional
UNITS attributable thereto, bought with the
participant's Section 401(k) CONTRIBUTIONS upon the
occurrence of any of the following events:
(a) the participant is disabled and is receiving
benefits under the LONG TERM DISABILITY PLAN;
or
(b) the participant has attained age 59 1/2.
(2) A participant may withdraw an amount equal to his
Section 401(k) CONTRIBUTIONS, as well as any income
and UNITS attributable to income accrued thereon
prior to January 1, 1989, upon receipt of
satisfactory proof by the PLAN ADMINISTRATOR that the
withdrawal is required to meet immediate and heavy
financial needs of the participant which constitute a
valid hardship as defined under the CODE and
regulations issued by the Secretary of the Treasury.
A request for a withdrawal for one of the following
reasons will be deemed to be on account of a valid
hardship:
(a) To cover medical expenses (as defined in
Section 213(d) of the CODE) of the
participant, the participant's spouse or
dependents (as defined in Section 152 of the
CODE);
(b) The purchase of a participant's principal
place of residence, but not including
mortgage payments;
(c) To meet tuition payments for the next
semester or quarter of post-secondary
education for the participant, his spouse,
children or dependents; or
(d) To prevent the eviction of the participant
from his principal place of residence, or to
prevent a foreclosure of the mortgage on the
participant's principal place of residence.
A request for a withdrawal under this subsection
17(a)(2) will not be deemed to be for immediate and
heavy financial needs unless the participant
represents that the need cannot be met from the
following resources:
(a) through reimbursement or compensation by
insurance or otherwise,
-14-
15
(b) by reasonable liquidation of the
participant's resources,
(c) by cessation of contributions to the PLAN, or
(d) by other distributions, withdrawals or
nontaxable loans from any plans maintained by
an EMPLOYER, or by borrowing from commercial
sources on reasonable commercial terms.
For purposes of this Subsection 17(a)(2), a
participant's resources shall be deemed to include
any assets of his spouse and minor children that are
reasonably available to the participant. In
addition, withdrawals under Subsection 17(a)(2) may
not exceed the amount actually required to meet the
participant's immediate financial needs.
(3) A participant who withdraws UNITS under Subsection
17(a) will automatically be suspended from the PLAN
and will not be permitted to resume making
contributions to the PLAN for six months following
the date upon which the withdrawal Form is processed
by the PLAN ADMINISTRATOR. After suspension ends,
contributions may be resumed by giving NOTICE to the
PLAN ADMINISTRATOR.
(b) NON-Section 401(k) CONTRIBUTIONS. A participant may at any
time elect to withdraw all or any part of the UNITS including
income thereon and including additional UNITS attributable
thereto, bought with the participant's NON-Section 401(k)
CONTRIBUTIONS to the PLAN. Such an election will not cause
suspension from the PLAN.
(c) EMPLOYER CONTRIBUTIONS.
(1) A participant may withdraw all or any part of the
UNITS, including the income attributable thereto,
bought with EMPLOYER CONTRIBUTIONS which were made to
the PLAN at anytime prior to the second YEAR
preceding the current YEAR. For example, UNITS,
including the income attributable thereto, purchased
with EMPLOYER CONTRIBUTIONS made in 1981 and prior
years may be withdrawn in 1984 or anytime thereafter.
Such an election will not cause suspension from the
PLAN.
(2) UNITS, including the income attributable thereto,
bought with EMPLOYER CONTRIBUTIONS which would not be
withdrawable under Subsection 17(c)(1), shall
nonetheless be withdrawable upon the occurrence of
any of the following events:
(a) the participant is disabled and is receiving
benefits under the LONG TERM DISABILITY PLAN;
(b) the participant attains 59-1/2; or
(c) the participant has requested and is entitled
to receive a hardship distribution which
meets the requirements of Subsection 17(a)(2)
but only if all amounts distributable under
Subsection 17(a) have been exhausted.
-15-
16
Anything herein to the contrary notwithstanding, if
as of any single month, the TRUSTEE is required as a
result of the withdrawal provisions of this
Subsection 17(c), to sell on the open market more
than one percent of the outstanding shares of COMPANY
STOCK, then the TRUSTEE shall immediately so advise
the EMPLOYEE BENEFIT FINANCE COMMITTEE. The EMPLOYEE
BENEFIT FINANCE COMMITTEE may, in its sole
discretion, limit, prorate, or temporarily suspend
further sales of COMPANY STOCK by the PLAN or take
whatever steps necessary to ensure an orderly market
in COMPANY STOCK.
A participant shall submit the appropriate Form to the SAVINGS
FUND PLAN directing the PLAN ADMINISTRATOR as to the amount of
the withdrawal. Distribution will be made as soon as
practicable after receipt of the withdrawal Form. Upon each
withdrawal, the UNITS credited to the appropriate FUND or
FUNDS will be reduced by the number of UNITS withdrawn.
Withdrawals from the BOND FUND can only be made in United
States BONDS. Withdrawals from the COMPANY STOCK FUND may be
made in cash or whole shares of stock at the election of the
participant. Withdrawals of DEF, USF, BIF, SBF, or GIF UNITS
will be made in cash at the then current value of the UNITS;
or, at the election of the participant, the UNITS will be
transferred to the COMPANY STOCK FUND pursuant to Section 14
and distribution will be made in whole shares of COMPANY
STOCK.
(d) Ordering of Withdrawals. Whenever the PLAN
ADMINISTRATOR is required to make a distribution
under this Section 17 or Section 18, the PLAN
ADMINISTRATOR shall first withdraw UNITS and earnings
thereon attributable to a participant's NON-Section
401(k) CONTRIBUTIONS made prior to 1987, followed by
UNITS and earnings thereon attributable to NON-
Section 401(k) CONTRIBUTIONS made after 1986,
followed by UNITS withdrawable under Subsection
17(c)(1) followed by UNITS withdrawable under
Subsection 17(c)(2), but only if available for
withdrawal under that subsection, followed by UNITS
and earnings thereon attributable to a participant's
Section 401(k) CONTRIBUTIONS, but only to the extent
that such UNITS can be withdrawn by the participant
under Subsection 17(a).
18. Termination of Participation
Participation in the PLAN ends as of the date that a participant
ceases to be an ELIGIBLE EMPLOYEE. Although a former participant may
elect to have an account balance held in the PLAN under Section 19
after participation ends, a former participant may not contribute to
the PLAN, except that contributions to the PLAN will be accepted with
respect to retroactive wage payments. A former participant who has an
account balance in the PLAN may make withdrawals from the account
balance, and transfer from one or more FUNDS to another FUND or FUNDS
pursuant to the terms of the PLAN.
Upon the death of a participant, the PLAN ADMINISTRATOR shall
distribute the participant's account balance to the participant's
BENEFICIARY within a reasonable time but not later than 60 days after
receipt of a completed withdrawal form or 180 days after the PLAN
ADMINISTRATOR receives NOTICE of the participant's death. If the
BENEFICIARY does not complete a withdrawal form within the time
periods set forth above, the distribution shall be in cash and paid
directly to the BENEFICIARY.
-16-
17
19. Distribution of Plan Benefits
(a) Upon termination of participation, a distribution shall be
made of the balances allocated to a participant's accounts if
the value of the participant's account is $3,500 or less.
Such distribution shall be made no later than the 60th day
following the close of the PLAN YEAR in which participation
terminates, unless the participant elects to receive
distribution at an earlier date. If the value of a
participant's account exceeds $3,500, distribution will be
made upon receipt by the PLAN ADMINISTRATOR of the written
distribution request of the participant. Distribution will
therefore be made within 60 days of the receipt of such
distribution request. Any provision of the PLAN
notwithstanding, if participation continues beyond the end of
the YEAR in which the participant attains age 70-1/2,
distribution of the participant's entire interest in the PLAN
shall be made no later than April 1 of the YEAR following the
YEAR in which the participant attains age 70-1/2.
All distributions due under the PLAN shall be payable only out
of the PLAN's assets as directed by the ADMINISTRATOR. Unless
a cash distribution is requested the TRUSTEE will distribute a
certificate for the whole shares of COMPANY STOCK, the United
States BONDS, and the TRUSTEE'S check for the then current
value of all other UNITS credited to the participant's
account, plus any uninvested cash. Alternatively, at the
direction of the participant, FUND UNITS other than U.S.
SAVINGS BONDS UNITS may be transferred to the COMPANY STOCK
FUND pursuant to Section 14 and distribution will be made in
whole shares of COMPANY STOCK.
If a participant elects a cash distribution, upon receipt of
the appropriate Form requesting such distribution, the TRUSTEE
will distribute the then current value of the INVESTMENT FUND
UNITS and uninvested cash. Until the TRUSTEE converts
INVESTMENT FUND UNITS to cash, all UNITS shall continue to
share in investment gains and losses. Distributions from the
BOND FUND can only be made in United States BONDS.
(b) Any provision of the PLAN notwithstanding:
Unless the participant otherwise elects, distribution to such
participant shall be made (or shall commence) not later than
the 60th day after the close of the PLAN YEAR in which occurs
the latest of the following events:
(1) The participant attains age 65;
(2) The participant attains the 10th anniversary of the
date on which he or she became a participant under
the PLAN; or
(3) The participant's termination of employment with the
EMPLOYER.
(c) Distributions hereunder will be made in accordance with
Section 401(a)(9) of the CODE and the regulations thereunder,
including Treasury regulation Section 1.401(a)(9)-2, which are
incorporated by reference herein.
-17-
18
20. Direct Rollovers
Notwithstanding any provision of the PLAN to the contrary that would
otherwise limit a participant's election under this section, effective
January 1, 1993, a participant or BENEFICIARY who is a surviving
spouse may elect, at the time and in the manner prescribed by the PLAN
ADMINISTRATOR, to have any portion of an eligible rollover
distribution, as defined below, paid directly to an eligible
retirement plan, as defined below, specified by the participant or
BENEFICIARY who is a surviving spouse in a direct rollover. Any
taxable portion of an eligible rollover distribution that is not
transferred directly to an eligible retirement plan will be subject to
mandatory federal income tax withholding.
(a) An eligible rollover distribution shall mean any distribution
of all or any portion of the balance to the credit of the
participant, 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
participant or the joint lives (joint life expectancies) of
the participant and his or her designated BENEFICIARY, or for
a specified period of 10 years or more; any distribution to
the extent such distribution is required under Section
401(a)(9) of the CODE; 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).
(b) An eligible retirement plan shall mean an individual
retirement account described in Section 408(a) of the CODE, an
individual retirement annuity described in Section 408(b) of
the CODE, an annuity plan described in Section 403(a) of the
CODE, or a qualified trust described in Section 401(a) of the
CODE, that accepts the participant's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual
retirement annuity.
ADMINISTRATIVE PROVISIONS
21. Company's Powers and Duties
The COMPANY, acting through its BOARD OF DIRECTORS or Executive
Committee, reserves to itself the exclusive power to amend, suspend or
terminate the PLAN as provided below and to appoint and remove from
time to time:
(a) The individuals comprising the EMPLOYEE BENEFIT FINANCE
COMMITTEE;
(b) The individuals comprising the EMPLOYEE BENEFIT ADMINISTRATIVE
COMMITTEE; and
(c) The EMPLOYERS whose EMPLOYEES may participate in the PLAN.
All powers and duties not reserved to the COMPANY are delegated to the
EMPLOYEE BENEFIT FINANCE COMMITTEE and to the EMPLOYEE BENEFIT
ADMINISTRATIVE COMMITTEE. Action of either committee shall be by vote
of a majority of the members of the committee at a meeting, or in
writing without a meeting and evidenced by the signature of any member
who is so authorized by the committee. The COMPANY
-18-
19
indemnifies each member of each committee against any personal
liability or expense arising out of any action or inaction of the
committee or of any member of the committee or of such individual,
except that due to his own willful misconduct.
22. Funding and Investment Provisions
The EMPLOYEE BENEFIT FINANCE COMMITTEE appointed by the COMPANY'S
BOARD OF DIRECTORS to serve at its pleasure has the express powers and
duties described in this section.
(a) Appointments. The EMPLOYEE BENEFIT FINANCE COMMITTEE has the
sole power and duty from time to time to appoint and remove
the TRUSTEE, the INVESTMENT MANAGER, actuaries, accountants
and such other advisors and consultants as may be needed for
the proper financial administration and investment of the
assets of the PLAN. Supplementing such appointments, the
EMPLOYEE BENEFIT FINANCE COMMITTEE may enter into appropriate
agreements with each TRUSTEE, INVESTMENT MANAGER or other
advisors appointed under this paragraph and delegate to them
appropriate powers and duties. The EMPLOYEE BENEFIT FINANCE
COMMITTEE may appoint and delegate to one or more individuals
the power and duty to handle the day-to-day financial
administration of the PLAN. Such individuals need not be
members of the committee and shall serve at the pleasure of
the committee.
(b) Investment Policy. The funding policy is set forth in
Sections 3 and 4. The EMPLOYEE BENEFIT FINANCE COMMITTEE has
the sole power and duty to establish the investment policy and
to review and revise it from time to time as the committee
shall determine in its sole discretion. A copy of the current
investment policy will be available for participants' review
in the ADMINISTRATOR'S office. Any revision of the investment
policy shall not be an amendment of the PLAN.
23. Administration
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE, appointed by the
COMPANY'S BOARD OF DIRECTORS to serve at its pleasure, is the
ADMINISTRATOR of the PLAN and is responsible for the overall
administration of the PLAN. The ADMINISTRATOR has the sole power and
duty to establish, and from time to time revise, such rules and
regulations as may be necessary to administer the PLAN in a
nondiscriminatory manner for the exclusive benefit of participants and
all other persons entitled to benefits under the PLAN.
The ADMINISTRATOR shall also maintain such records and make such
computations, interpretations and decisions as may be necessary or
desirable for the proper administration of the PLAN. The
ADMINISTRATOR shall maintain for participants' inspection copies of
the PLAN, TRUST AGREEMENT, investment policy, each agreement with an
INVESTMENT MANAGER, the latest annual report, PLAN description and
summary description and any amendments or changes in any of these
documents. On written request, participants may obtain from the
ADMINISTRATOR a copy of any of these documents at a cost established
by the ADMINISTRATOR from time to time.
The ADMINISTRATOR may appoint and delegate to one or more individuals
the power and duty to handle the day-to-day administration of the
PLAN. Such individuals need not be members of the committee and shall
serve at the pleasure of the committee.
-19-
20
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall serve as the final
review committee under the PLAN, to determine conclusively for all
parties any and all questions arising from the administration of the
PLAN and shall have sole and complete discretionary authority and
control to manage the operation and administration of the PLAN,
including, but not limited to, the determination of all questions
relating to eligibility for participation and benefits, interpretation
of all PLAN provisions, determination of the amount and kind of
benefits payable to any participant or BENEFICIARY, and construction
of disputed or doubtful terms. Such decisions shall be conclusive and
binding on all parties and not subject to further review.
24. Claims and Appeals Procedure
If a claim is denied in whole or in part, the ADMINISTRATOR shall
furnish to the claimant a written notice setting forth:
(a) Specific reason(s) for the denial,
(b) The PLAN provision(s) on which the denial is based,
(c) A description of any material or information, if any,
necessary for the claimant to perfect the claim, and an
explanation of why such material or information is necessary,
and
(d) Information concerning the steps to be taken if claimant
wishes to submit a claim for review.
The above information shall be furnished to the claimant within 90
days after the claim is received by the ADMINISTRATOR.
If a claimant is not satisfied with the written NOTICE described in
the preceding paragraph, such claimant may request a full and fair
review by so notifying the ADMINISTRATOR in writing within 90 days
after receiving such notice. If a review is requested the claimant
shall also be entitled, upon written request, to review pertinent
documents and to submit issues and comments in writing. The EMPLOYEE
BENEFIT ADMINISTRATIVE COMMITTEE shall furnish the claimant with a
written final decision within 60 days after receipt of the request for
review.
25. Qualified Domestic Relations Orders
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall apply the
provisions of this section with regard to a Domestic Relations Order
(as defined below) to the extent not inconsistent with Section 414(p)
of the CODE.
The EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE shall establish
procedures, consistent with Section 414(p) of the CODE, to determine
the qualified status of any Domestic Relations Order, to administer
distributions under any Qualified Domestic Relations Order (as defined
below), and to provide to the Participant and the Alternate Payee(s)
(as defined below) all notices required under Section 414(p) of the
CODE with respect to any Domestic Relations Order.
Within a reasonable period of time after the receipt of a Domestic
Relations Order (or any modification thereof), the EMPLOYEE BENEFIT
ADMINISTRATIVE COMMITTEE shall determine whether such order is a
Qualified Domestic Relations Order.
For purposes of this section:
-20-
21
(a) Alternate Payee shall mean any spouse, former spouse, child,
or other dependent of a participant who is recognized by a
Domestic Relations Order as having a right to receive all, or
a portion of, the benefits payable under the PLAN with respect
to such Participant.
(b) Domestic Relations Order shall mean any judgment, decree, or
order (including approval of a property settlement agreement)
which:
(1) relates to the provision of child support, alimony
payments, or marital property rights to a spouse,
former spouse, child, or other dependent of a
participant; and
(2) is made pursuant to a state domestic relations law
(including a community property law).
(c) Qualified Domestic Relations Order shall mean a Domestic
Relations Order which meets the requirements of Section
414(p)(1) of the CODE.
26. Lost Participant or Beneficiary
If, after three years, the ADMINISTRATOR cannot locate a participant
or BENEFICIARY who is entitled to a distribution from an account, the
UNITS, cash or COMPANY stock in the account shall be applied to reduce
the amount of future EMPLOYER CONTRIBUTIONS payable to the PLAN. A
participant or BENEFICIARY who is entitled to a distribution from an
account which has previously been applied to reduce EMPLOYER
CONTRIBUTIONS under this Section 24 shall, upon filing a written
claim, have the account reinstated in full and upon such reinstatement
shall receive a distribution of the balance in the reinstated account,
with interest at the prevailing legal rate accrued from the date his
account was applied to reduce EMPLOYER CONTRIBUTIONS.
27. Benefits Are Not Assignable
Except as may be required by law, a participant's interest in the PLAN
and that of a participant's BENEFICIARY or spouse shall not be subject
in any manner to assignment, anticipation, alienation, sale, transfer,
pledge, encumbrance or charge, whether voluntary or involuntary, and
any attempt to so assign, anticipate, sell, transfer, pledge, encumber
or charge the same shall be void.
28. Facility of Payment
If the ADMINISTRATOR determines that any individual entitled to any
payment under the PLAN is physically or mentally incompetent and no
guardian or conservator has been appointed to receive such payment,
the ADMINISTRATOR may cause all payments thereafter becoming due to
such individual to be applied for and on behalf of and for the benefit
of such individual. Payments made pursuant to this provision shall
completely discharge the EMPLOYER, the ADMINISTRATOR, the TRUSTEE and
all fiduciaries of all further responsibility with respect to such
individual.
29. Future of the Plan
If participation in the PLAN is ended because a substantial portion of
an EMPLOYER'S property is sold or otherwise disposed of or because an
EMPLOYER withdraws from the PLAN, a participant's
-21-
22
interest is determined in accordance with the provisions of the next
paragraphs as if the PLAN itself has been terminated.
The COMPANY hopes and expects to continue this PLAN indefinitely, but
because future conditions cannot be foreseen, its BOARD OF DIRECTORS
necessarily reserves the right to amend or terminate the PLAN at any
time. However, no amendment, merger or consolidation of the PLAN may
be made which would reduce the right that any individual may then have
with respect to the PLAN'S assets then being held under the PLAN or
permit any funds to revert to an EMPLOYER or to be used for any
purpose except for the exclusive benefit of participants, spouses and
BENEFICIARIES.
If the PLAN is terminated, all contributions to the PLAN shall cease
but the PLAN shall continue to operate in all other respects until all
of the TRUST assets have been distributed in accordance with the
provisions of the PLAN in effect on the date of its termination. In
the event of a merger or consolidation with, or transfer of assets or
liabilities to any other plan, if such other plan is then terminated,
participant shall receive a benefit immediately after such merger,
consolidation, or transfer which is equal to or greater than the
benefit which participant would have received had the PLAN terminated
immediately prior to such merger, consolidation, or transfer.
30. Definitions
-----------
Administrator: Employee Benefit Administrative Committee,
------------- 201 Mission Street,
l9th Floor, Mail Code P19A,
P.O. Box 770000, San Francisco,
California 94177
BIF: The Bond Index Fund.
---
Beneficiary: The person or persons entitled to receive any distribution due under
----------- the Plan in the event of a participant's death. For a married
participant, the participant's spouse shall automatically be the
Beneficiary unless the participant, with the written consent of his
spouse, elects to designate another person or persons to be
Beneficiary. The consent of the spouse shall be in writing, shall
acknowledge the effect of the consent, and shall be witnessed by a
notary public or Plan representative. A participant designates a
Beneficiary on a Designation of Beneficiary Form available from the
Plan Administrator. In the event an unmarried participant does not
designate a Beneficiary, the participant's estate shall be deemed
to be the Beneficiary.
Board of Director: The Board of Directors of Pacific Gas and Electric Company.
-----------------
Bond Fund: A fund invested in United States Savings Bonds. (See Section 8)
---------
-22-
23
Bond Index Fund: A fund invested in marketable fixed-income securities. (See Section 12)
---------------
Bonds: Series "EE" Savings Bonds issued by the United States Treasury. If
----- the issuance of Series "EE" Bonds is discontinued, Bonds will refer
to any other Bond issued by the United States Treasury which the
Employee Benefit Finance Committee selects for purchase under the
Plan.
Business Day: Any day that the New York Stock Exchange is open for business.
------------
Calendar Quarter: The three month period commencing on January 1, April 1, July 1 or
---------------- October 1.
Code: The Internal Revenue Code of 1986, as amended from time to time.
----
Company: Pacific Gas and Electric Company.
-------
Company Stock: The common stock issued by Company.
-------------
Company Stock Fund: A fund invested in the common stock issued by the Company. (See
------------------ Section 7)
Covered Compensation: Earnings from an Employer, including straight-time pay for hours
-------------------- worked, shift and nuclear premiums at the straight-time rate,
straight-time pay for temporary upgrades, vacation pay (including
vacation pay upon retirement), inclement weather pay, sick leave
pay, holiday pay, differential pay for military training, pay for
other time off with permission carrying full pay, temporary
compensation under any state Worker's Compensation Law, payments
under the Long Term Disability Plan, or supplemental benefits for
industrial injury. Covered Compensation shall not include pay or
shift and nuclear premiums for more than 40 hours per week,
overtime bonuses, vacation or holiday pay requests other special
fees or allowances, per diem allowances, payments, other than
temporary compensation, made under any Workers' Compensation Law,
voluntary wage benefit or state disability plans, or any other
benefit plan. For Plan Years beginning after 1988 and before 1994,
the maximum Covered Compensation of each Employee that may be taken
into account each Plan Year shall not exceed $200,000 (as adjusted
by the Secretary of the Treasury under Sec-
-23-
24
tion 401(a)(17) of the Code. For Plan Years beginning after 1993,
the maximum Covered Compensation of each Employee that may be taken
into account each Plan Year shall not exceed $150,000 (as adjusted
by the Secretary of the Treasury under Section 401(a)(17) of the
Code). In determining the Covered Compensation of a Highly
Compensated Employee for purposes of this limitation, the rules of
Section 414(q)(6) of the Code shall apply, except that the term
"family" shall include only the spouse of the Employee and any
lineal descendants of the Employee who have not attained age 19
before the close of the Year. If the aggregate Covered Compensation
of family members exceeds the applicable compensation limit as
limited by Section 401(a)(17) of the Code, then the amount of
Covered Compensation considered under the Plan for each family
member is proportionately reduced so that the total equals the
applicable compensation limitation under Section 401(a)(17) of the
Code.
DEF: The Diversified Equity Fund.
---
Diversified Equity Fund: A fund invested in a diversified portfolio of securities. (See
----------------------- Section 9)
Eligible Employee: One entitled to become a contributing participant, provided, however,
----------------- however, a "leased employee," as defined in Section 414(n)(2) of the
Code shall not be entitled to become an Eligible Employee.
Employee: An Employee of an Employer who is not represented by a union.
--------
Employee Benefit The Employee Benefit Administrative Committee referred to in
Administrative Committee: Section 23.
------------------------
Employee Benefit Finance The Employee Benefit Finance Committee referred to in Section 22.
Committee:
---------
Employer: Pacific Gas and Electric Company, Pacific Service Employees
-------- Association, and any other company, association, or credit union
designated by the Board of Directors as eligible to participate in
this Plan as an Employer.
Employer Contributions: Any contributions to the Plan by Company.
----------------------
-24-
25
FlexDollars: Amounts which a participant elects pursuant to the Company's Flex
----------- Plan to contribute as Section 401(k) Contributions. Rules governing
FlexDollars are contained in the Company's Flex Plan; rules
governing the treatment of FlexDollars under this Plan are contained
in Subsection 3(b).
Fund: The Company Stock Fund, the U.S. Bond Fund, the Diversified Equity
---- Fund, the Guaranteed Income Fund, the Bond Index Fund, the Stock and
Bond Fund, and the Utility Stock Fund, or any of them.
GIF: The Guaranteed Income Fund.
---
Guaranteed Income Fund: A fund invested in fixed rate, fixed term contracts. (See Section
---------------------- 11)
Highly Compensated: Whether an Eligible Employee is Highly Compensated shall be
------------------ determined using the simplified method under Code Section 414(q)(12)
as described in applicable Treasury regulations or other guidance
issued by the Internal Revenue Service.
Investment Fund: The Company Stock Fund, the U.S. Bond Fund, the Diversified Equity
--------------- Fund, the Guaranteed Income Fund, the Bond Index Fund, the Stock and
Bond Fund, and the Utility Stock Fund, or any of them.
Investment Manager: 1. Diversified Equity Fund.
------------------ J. P. Morgan, 522 Fifth Avenue, New York, NY 10036, or such
other firm or individual as may be selected from time to time
by the Employee Benefit Finance Committee.
2. Guaranteed Income Fund.
PRIMCO Capital Management, Inc., 101 South Fifth Street,
Louisville, Kentucky 40202, or such other firm or individual
as may be selected from time to time by the Employee Benefit
Finance Committee.
3. Bond Index Fund.
The Vanguard Group, Vanguard Financial Center, Valley Forge,
Pennsylvania 19482, or such other firm or individual as may
be selected from time to time by the Employee Benefit Finance
Committee.
4. Stock and Bond Fund.
Columbia Trust Company, 1301 S.W. Fifth Avenue, P.O. Box
1350, Portland, Oregon 97207, or such other firm or
-25-
26
individual as may be selected from time to time by the
Employee Benefit Finance Committee.
5. Utility Stock Fund.
Wells Fargo Nikko Investment Advisors, 45 Fremont Street, San
Francisco, California 94105, or such other firm or individual
as may be selected from time to time by the Employee Benefit
Finance Committee.
Long Term Disability Plan: Part B of the Group Life Insurance and Long Term Disability Plan of
------------------------- Pacific Gas and Electric Company as amended January 1, 1991.
Non-Section 401(k) Contributions: Employee contributions to the Plan as described in Subsection 3(c)
-------------------------------- and all Employee Contributions made prior to October 1, 1984.
Non-Section 401(k) Contributions are made with after-tax dollars.
Notice: Any method of communication, whether electronic, telephonic, written
------ or other, provided that the Plan Administrator has communicated in
writing to participants any such method and its format as
appropriate and acceptable.
Plan: This Company's Savings Fund Plan for Non-Union Employees, as
---- amended, revised and set forth herein.
Retirement Plan: The Company's Retirement Plan as revised from time to time.
---------------
SBF: The Stock and Bond Fund.
---
Savings Fund Plan Office: 201 Mission Street, l9th Floor
------------------------ Mail Code P19A
P.O. Box 770000
San Francisco, CA 94177
Section 401(k) Contribution: Amounts deferred from a Participant's Covered Compensation as
--------------------------- described in Subsection 3(a). Section 401(k) Contributions
are made with pre-tax dollars.
Service: The period of time commencing with the first day of employment or
------- reemployment for an Employer and ending on participant's Severance
from Service Date. If an Employee with less than one year of
Service is rehired after a period of severance which extends for
12 months or more, the Employee shall be treated as a new Employee
for all purposes, and
-26-
27
the Service and compensation before the Severance from Service Date
shall not be recognized for any purpose of the Plan. Participants
who have a period of severance after they have completed at least
one year of Service and who are later rehired, immediately become
Eligible Employees entitled to contribute in accordance with their
total years of Service.
Service shall also include all years of Service with:
(a) Any corporation which is a member of the same controlled
group of corporations as the Company or of any other
Employer (within the meaning of Section 414(b) of the Code);
(b) Any trade or business under the common control of the
Company or of any other Employer (within the meaning of
Section 414(c) of the Code);
(c) Any service organization which is a member of the same
affiliated service group as the Company or of any other
Employer (within the meaning of Section 414(m) of the Code).
Severance From Service A. The date on which an Employee quits, retires, is discharged
Date: or dies; or
----
B. The first anniversary of the first date of a period in
which a participant remains absent from work for an
Employer for any reason other than resignation, retirement,
discharge, or death.
C. For the purpose of determining the Severance from Service
Date, the following periods shall not be considered as
absences from work for an Employer:
(1) Absence on a leave of absence authorized by an
Employer.
(2) Absence because of illness or injury as long as the
participant is entitled to receive sick leave pay
or is entitled to receive benefits
-27-
28
under the provisions of the Voluntary Wage Benefit
Plan, a state disability plan, the Long Term
Disability Plan, or a Workers' Compensation Law.
(3) Absence for military service or service in the
Merchant Marines so long as reemployment rights are
protected by law.
(4) Absence caused by layoff for lack of work of less
than 12 continuous months for a Participant who has
less than five years of service, or 24 continuous
months for a Participant who has five or more years
of service.
Stock and Bond Fund: A fund invested in U.S. equities and U.S. fixed-income investments.
------------------- (See Section 13)
Trust: The Trust into which all contributions are deposited and from which
----- all distributions are made.
Trustee: State Street Bank and Trust Company, 225 Franklin Street, Boston,
------- Massachusetts 02101, or such other bank or trust company selected by
the Employee Benefit Finance Committee which agrees to act as
Trustee or successor Trustee of the Trust pursuant to the Trust
Agreement.
Trust Agreement: The agreement between the Company and the Trustee.
---------------
Unit: A measurement of participant's interest in the Investment Funds.
---- For purposes of the Bond Fund, a unit shall be a United States Bond.
USF: The Utility Stock Fund.
---
Utility Stock Fund: An index fund invested in common stocks of companies engaged in the
------------------ generation, transmission or distribution of electric energy (See
Section 10).
Year: The calendar year beginning January 1 and ending December 31.
---
-28-
29
SPECIAL PROVISION A
TOP HEAVY PROVISIONS
(a) General Rule
For any PLAN YEAR for which this PLAN is a "top-heavy plan" as defined
in subsection (g) below, any other provisions of this PLAN to the contrary
notwithstanding, this PLAN shall be subject to the following provisions:
(1) The minimum contribution provisions of subsection (b).
(2) The limitation on contribution set by subsection (d).
(b) Minimum Contribution Provisions
Each participant who (i) is a non-key EMPLOYEE (as defined in
subsection (i) below) and (ii) is employed on the last day of the PLAN YEAR,
even if such individual is excluded from the PLAN for failing to make mandatory
contributions to the PLAN, shall be entitled to have contributions allocated to
his account of not less than three percent (the "minimum contribution
percentage") of the participant's compensation (within the meaning of Section
415 of the CODE). In determining the minimum contribution percentage to be
allocated to an EMPLOYEE'S account, a participant's Section 401(k)
CONTRIBUTIONS shall be considered as EMPLOYER CONTRIBUTIONS.
The minimum contribution percentage set forth above shall be reduced
for any PLAN YEAR in which the percentage at which contributions are made (or
required to be made) under the PLAN for the PLAN YEAR for the key EMPLOYEE for
whom such percentage is the highest for such PLAN YEAR is less than three
percent. For this purpose, the percentage with respect to a key EMPLOYEE (as
defined in subsection (g) below) shall be determined by dividing the
contributions (including forfeitures) made for such key EMPLOYEES by so much of
his total compensation for the PLAN YEAR.
Contributions taken into account under the immediately preceding
sentence shall include contributions under this PLAN and under all other
defined contribution plans required to be included in an aggregation group (as
defined in subsection (f)(2) below) but shall not include any plan required to
be included in such aggregation group if such plan enables a defined
contribution plan required to be included in such group to meet the
requirements of the CODE prohibiting discrimination as to contributions or
benefits in favor of EMPLOYEES who are officers, shareholders or the
highly-compensated or prescribing the minimum participation standards.
Contributions taken into account under this subsection (b) shall not
include any contributions under the Social Security Act or any other Federal or
State law.
(c) Limitations on Contributions
In the event that the EMPLOYER also maintains a defined benefit PLAN
providing benefits on behalf of participants in this PLAN, one of the two
following provisions shall apply:
(1) If for the PLAN YEAR this PLAN would not be a "top-heavy PLAN"
as defined in subsection (a)(2) above if "90 percent" were
substituted for "60 percent," then subsection (b) shall
-29-
30
apply for such PLAN YEAR as if amended so that "four percent"
were substituted for "three percent".
(2) If for the PLAN YEAR this PLAN would continue to be a
"top-heavy PLAN" as defined in subsection (f) below if "90
percent" were substituted for "60 percent," then the
denominator of both the defined contribution PLAN fraction and
the defined benefit PLAN fraction shall be calculated as set
forth in Section 415 (e) of the CODE for the limitation year
ending in such PLAN YEAR by substituting "1.0" for "1.25" in
each place such figure appears, except with respect to any
individual for whom there are no EMPLOYER CONTRIBUTIONS
allocated or any accruals for such individual under the
defined benefit PLAN. Furthermore, the transitional rule set
forth in Section 415 (e) of the CODE shall be applied by
substituting "$41,500" for "$51,875".
(d) Coordination with Other Plans
In the event that another defined contribution or defined benefit plan
maintained by the EMPLOYER provides contributions or benefits on behalf of
participants in this PLAN, such other plan shall be treated as a part of this
PLAN pursuant to applicable principles (such as Rev. Rul. 81-202 or any
successor ruling or regulations) in determining whether this PLAN satisfies the
requirements of subsection (b), (c) and (d). Such determination shall be made
upon the advice of counsel by the EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE.
(e) Top-Heavy Plan Definition
This PLAN shall be a "top-heavy plan" for any PLAN YEAR if, as of the
determination date (as defined in subsection (f)(1) below), the aggregate of
the accounts under the PLAN and any required aggregation group or permissive
aggregation group of plans for participants (including former participants) who
are key EMPLOYEES (as defined in subsection (g) below but not including
accounts of individuals excluded under section 416(g)(4)(E) of the CODE)
exceeds 60 percent of the present value of the aggregate of the accounts for
all participants, excluding former key EMPLOYEES, or if this PLAN is required
to be in an aggregate group (as defined in subsection (f)(3) below) which for
such PLAN YEAR is a top-heavy group (as defined in subsection (f)(4) below).
(1) "Determination date" means for any PLAN YEAR the last day of
the immediately preceding PLAN YEAR.
(2) "Valuation date" means the last day of each PLAN YEAR.
(3) "Aggregation group" means the group of plans, if any, that
includes both the group of plans that are required to be
aggregated and the group of plans that are permitted to be
aggregated.
(A) The group of plans that are required to be aggregated
(the "required aggregation group") includes
(i) Each plan of the EMPLOYER (as defined in
subsection (i) below) in which a key EMPLOYEE
is a participant, including collectively-
bargained plans, and
(ii) Each other plan, including collectively-
bargained plans of the EMPLOYER (as defined
in subsection (i) below) which enables a
plan in which a key EMPLOYEE is a
participant to meet
-30-
31
the requirements of the CODE prohibiting
discrimination as to contributions or
benefits in favor of EMPLOYEES who are
officers, shareholders or the highly-
compensated or prescribing the minimum
participation standards.
(B) The group of plans that are permitted to be
aggregated (the "permissive aggregation group")
includes the required aggregation group plus one or
more plans of the EMPLOYER (as defined in subsection
(i) below) that is not part of the required
aggregation group and that the EMPLOYEE BENEFIT
ADMINISTRATIVE COMMITTEE certifies as constituting a
plan within the permissive aggregation group. Such
plan or plans may be added to the permissive
aggregation group only if, after the addition, the
aggregation group as a whole continues not to
discriminate as to contributions or benefits in favor
of officers, shareholders or the highly-compensated
and to meet the minimum participation standards under
the CODE.
(4) "Top-heavy group" means the aggregation group, if as of the
applicable determination date, the sum of the present value of
the cumulative accrued benefits for key EMPLOYEES under all
defined benefit plans included in the aggregation group plus
the aggregate of the accounts of key EMPLOYEES under all
defined contribution plans included in the aggregation group
exceeds 60% of the sum of the present value of the cumulative
accrued benefits for all EMPLOYEES, excluding former key
EMPLOYEES, under all such defined benefit plans plus the
aggregate accounts for all EMPLOYEES, excluding former key
EMPLOYEES, under such defined contribution plans. If the
aggregation group that is a top-heavy group is a required
aggregation group, each plan in the group will be top heavy.
If the aggregation group that is a top-heavy group is a
permissive aggregation group, only those plans that are part
of the required aggregation group will be treated as
top-heavy. If the aggregation group is not a top-heavy
group, no plan within such group will be top-heavy.
(5) In determining whether this PLAN constitutes a "top-heavy
plan," the EMPLOYEE BENEFIT ADMINISTRATIVE COMMITTEE (or its
agent) shall make the following adjustments in connection
therewith:
(A) When more than one plan is aggregated, the EMPLOYEE
BENEFIT ADMINISTRATIVE COMMITTEE shall determine
separately for each plan as of each plan's
determination date the present value of the accrued
benefits or account balance. The results shall then
be aggregated separately by adding the results of
each plan as of the determination dates for such
plans that fall with the same calendar year.
(B) In determining the present value of the cumulative
accrued benefit or the amount of the account of any
EMPLOYEE, such present value or account shall include
the amount in dollar value of the aggregate
distributions made to such EMPLOYEE under the
applicable plan during the five-year period ending on
the determination date, unless reflected in the value
of the accrued benefit or account balance as of the
most recent valuation date. Such amounts shall
include distribu-
-31-
32
tions to EMPLOYEES which represented the entire
amount credited to their accounts under the
applicable plan.
(C) Further, in making such determination, in any case
where an individual is a "non-key EMPLOYEE" as
defined in subsection (h) below, with respect to an
applicable plan, but was a key EMPLOYEE with respect
to such plan for any prior PLAN YEAR, any accrued
benefit and any account of such EMPLOYEE shall be
altogether disregarded. For this purpose, to the
extent that a key EMPLOYEE is deemed to be a key
EMPLOYEE if he or she met the definition of key
EMPLOYEE within any of the four preceding PLAN YEARS,
this provision shall apply following the end of such
period of time.
(f) Key EMPLOYEE
The term "key EMPLOYEE" means any EMPLOYEE or former EMPLOYEE under
this PLAN who, at any time during the PLAN YEAR containing the determination
date or during any of the four preceding PLAN YEARS, is or was one of the
following:
(1) An officer of the EMPLOYER having an annual compensation
greater than 50 percent of the amount in effect under Section
415(b)(1)(A) of the CODE for such PLAN YEAR. Whether an
individual is an officer shall be determined by the EMPLOYEE
BENEFIT ADMINISTRATIVE COMMITTEE on the basis of all the facts
and circumstances, such as an individual's authority, duties
and term of office, not on the mere fact that the individual
has the title of officer. For any such PLAN YEAR, these shall
be treated as officers no more than the lesser of:
(A) 50 EMPLOYEES, or
(B) the greater of three EMPLOYEES or 10 percent of the
EMPLOYEES.
For this purpose, if there are more than 50 officers, the 50
highest-paid officers shall be the key EMPLOYEES.
(2) One of the ten EMPLOYEES owning (or considered as owning,
within the meaning of the constructive ownership rules of the
CODE) the largest interests in the EMPLOYER (as defined in
subsection (i)). An EMPLOYEE who has some ownership interest
is considered to be one of the top ten owners unless at least
ten other EMPLOYEES own a greater interest than that EMPLOYEE.
However, an EMPLOYEE will not be considered a top ten owner
for a PLAN YEAR if the EMPLOYEE earns an amount equal to or
less than the maximum dollar limitation on contributions and
other annual additions to a participant's account in a defined
contribution PLAN under the CODE as in effect for the calendar
year in which the determination date falls.
(3) Any person who owns (or is considered as owning within the
meaning of the constructive ownership rules of the CODE) more
than five percent of the outstanding stock of the EMPLOYER or
stock possessing more than five percent of the combined total
voting power of all stock of the EMPLOYER.
(4) A one percent owner of the EMPLOYER having an annual
compensation from the EMPLOYER of more than $150,000, and who
owns more than one percent of the outstanding stock of the EM-
-32-
33
PLOYER or stock possessing more than one percent of the
combined total voting power of all stock of the EMPLOYER. For
purposes of this subsection, compensation means all items
includable as compensation for purposes of applying the
limitations on contributions and other annual additions to a
participant's account in a defined contribution plan and the
maximum benefit payable under a defined benefit plan under the
CODE.
For purposes of parts (1), (2), (3) and (4) of this
definition, a BENEFICIARY of a key EMPLOYEE shall be treated
as a key EMPLOYEE. For purposes of parts (3) and (4), each
EMPLOYER is treated separately (without regard to the
definition in subsection (i)) in determining ownership
percentages; but, in determining the amount of compensation,
the definition of EMPLOYER in subsection (i) is taken into
account.
(g) Non-key EMPLOYEE
The term "non-key EMPLOYEE" means any EMPLOYEE (and any beneficiary or
an EMPLOYEE) who is not a key EMPLOYEE.
(h) Employer
The term "employer" as defined in Section 30 of this PLAN.
-33-
34
-------------------------
I, Leslie H. Everett, do hereby certify that I am the Corporate
Secretary of the PACIFIC GAS AND ELECTRIC COMPANY, a corporation organized and
existing under the laws of the State of California, and that the above and
foregoing is a full, true and correct copy of the Pacific Gas and Electric
Company SAVINGS FUND PLAN FOR NON-UNION EMPLOYEES as the same exists at the
date of this certification.
WITNESS my hand and the seal of the said corporation hereunto affixed
this day of .
Leslie H. Everett
Corporate Secretary of
PACIFIC GAS AND ELECTRIC COMPANY
-34-