<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1996
REGISTRATION NO. 333-11349
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
UNITED NATURAL FOODS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
DELAWARE 5141 05-0376157
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
---------------
260 LAKE ROAD, DAYVILLE, CONNECTICUT 06241
(860) 779-2800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
NORMAN A. CLOUTIER
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
UNITED NATURAL FOODS, INC.
260 LAKE ROAD
DAYVILLE, CONNECTICUT 06241
(860) 779-2800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
PAUL V. ROGERS, ESQ. LAURA C. HODGES TAYLOR, P.C.
HALE AND DORR GOODWIN, PROCTER & HOAR LLP
60 STATE STREET EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109 BOSTON, MASSACHUSETTS 02109
(617) 526-6000 (617) 570-1000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date hereof.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
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- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Amendment No. 2 to the Registrant's Registration Statement on Form S-1
(File No. 333-11349) is being filed solely for the purpose of filing the final
exhibits to the Registration Statement.
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1 Form of Underwriting Agreement.
3.1* Certificate of Incorporation of the Registrant, as amended.
3.2* Amended and Restated Certificate of Incorporation of the Registrant,
to be filed upon closing of this offering.
3.3* By-Laws of the Registrant.
3.4 Amended and Restated By-Laws of the Registrant, to be effective upon
the closing of this offering.
4* Specimen Certificate for shares of Common Stock, $.01 par value, of
the Registrant.
5 Opinion of Hale and Dorr with respect to the validity of the
securities being offered.
10.1* Employee Stock Ownership Plan, as amended.
10.2* Employee Stock Ownership Trust, as amended.
10.3* ESOT Loan Agreement among Norman A. Cloutier, Steven H. Townsend,
Daniel V. Atwood, Theodore Cloutier and the Employee Stock Ownership
Plan and Trust, dated November 1, 1988, as amended.
10.4* Stock Pledge Agreement between the Employee Stock Ownership Trust and
Steven H. Townsend, Trustee for Norman A. Cloutier, Steven H.
Townsend, Daniel V. Atwood and Theodore Cloutier, dated November 1,
1988, as amended.
10.5* Trust Agreement between Norman A. Cloutier, Steven H. Townsend, Daniel
V. Atwood, Theodore Cloutier and Steven H. Townsend as Trustee, dated
November 1, 1988.
10.6* Guaranty Agreement between the Registrant and Steven H. Townsend as
Trustee for Norman A. Cloutier, Steven H. Townsend, Daniel V. Atwood
and Theodore Cloutier, dated November 1, 1988.
10.7* 1996 Stock Option Plan.
10.8* Stock Acquisition Agreement and Plan of Merger among the Registrant,
MPW Acquisition Corporation, Michael S. Funk and Judith A. Funk,
individually and as trustees of the Funk Family 1992 Revocable Living
Trust, and Mountain People's Warehouse Incorporated ("Mountain
People's"), dated December 8, 1995.
10.9* Asset Purchase Agreement between the Registrant and PREM MARK, Inc.,
d/b/a Rainbow Natural Foods Distributing ("Rainbow"), dated July 27,
1995.
10.10* Stock Purchase Agreement, dated May 22, 1995, between Mountain
People's and Nutrasource, Inc. ("Nutrasource")
10.11* Note and Warrant Purchase Agreement between the Registrant and
Triumph--Connecticut Limited Partnership ("Triumph"), dated November
17, 1993.
10.12* Senior Note, dated November 17, 1993, between the Registrant and
Triumph.
10.13* Registration Rights Agreement between the Registrant and Triumph,
dated November 17, 1993.
10.14* Employment Agreement between the Registrant, Mountain People's and
Michael S. Funk, dated February 20, 1996.
10.15* Non-competition Agreement between the Registrant and Norman A.
Cloutier, dated November 16, 1993.
10.16* Amended and Restated Loan and Security Agreement among the Registrant,
Mountain People's, Natural Retail Group, Inc., Rainbow, Nutrasource,
Inc. and Fleet Capital Corporation, dated February 20, 1996.
10.17* Purchase and Sale Agreement between the Registrant and O.M. Killingly
Investment Company, dated March 31, 1995.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.18* Real Estate Term Note between the Registrant and Shawmut Capital
Corporation (now Fleet Capital Corporation), dated September 8, 1995.
10.19* Distribution Agreement between Mountain People's Wine Distributing,
Inc., and Mountain People's, dated August 23, 1994.
10.20* Secured Promissory Note between Michael S. Funk and Mountain People's,
dated November 28, 1995.
10.21* Lease, dated January 21, 1992, between Panattoni-Catlin Joint Venture
and Souza Revocable Trust and Mountain People's, as amended.
10.22* Lease, dated July 29, 1995, between Prem Mark, Inc. and the
Registrant.
10.23* Lease, dated July 12, 1990, between the Registrant and Sylvan and
Stanford Makover Joint Venture, as amended.
10.24* Lease, dated August 23, 1989, between the Registrant and Bradley Spear
and Seattle First National Bank, co-executors of the estate of A.H.
Spear.
10.25* 1996 Employee Stock Purchase Plan.
10.26 Amended and Restated Employee Stock Ownership Plan.
11* Computation of Earnings Per Share.
21* Subsidiaries of the Registrant.
23.1 Consent of Hale and Dorr (included in Exhibit 5).
23.2* Consent of KPMG Peat Marwick LLP.
23.3* Consent of Arthur Andersen LLP.
24* Power of Attorney (included on page II-6).
27* Financial Data Schedule.
99* Consent of Thomas B. Simone.
</TABLE>
- --------
* Previously filed.
(B) FINANCIAL STATEMENT SCHEDULES
Schedule II--Valuation and Qualifying Accounts
All other schedules have been omitted because they are not required or
because the required information is given in the Consolidated Financial
Statements or Notes thereto.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 2 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Dayville, State of Connecticut, on this 30th day of October, 1996.
UNITED NATURAL FOODS, INC.
By /s/ Norman A. Cloutier
-----------------------------------
NORMAN A. CLOUTIER
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 2 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Norman A. Cloutier Chairman of the
- ------------------------------------- Board and Chief October 30,
NORMAN A. CLOUTIER Executive Officer 1996
(Principal
Executive Officer)
*
- ------------------------------------- Vice Chairman of the
MICHAEL S. FUNK Board and President October 30,
1996
* Chief Financial
- ------------------------------------- Officer, Treasurer October 30,
STEVEN H. TOWNSEND and Director 1996
(Principal
Financial and
Accounting Officer)
*
- ------------------------------------- Director
DANIEL V. ATWOOD October 30,
1996
* Director
- ------------------------------------- October 30,
ANDREA R. HENDRICKS 1996
* Director
- ------------------------------------- October 30,
KEVIN T. MICHEL 1996
* Director
- ------------------------------------- October 30,
RICHARD J. WILLIAMS 1996
*By: /s/ Norman A. Cloutier
----------------------------------
NORMAN A. CLOUTIER
ATTORNEY-IN-FACT
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
1 Form of Underwriting Agreement.
3.1* Certificate of Incorporation of the Registrant, as amended.
3.2* Amended and Restated Certificate of Incorporation of the
Registrant, to be filed upon closing of this offering.
3.3* By-Laws of the Registrant.
3.4 Amended and Restated By-Laws of the Registrant, to be effective
upon the closing of this offering.
4* Specimen Certificate for shares of Common Stock, $.01 par
value, of the Registrant.
5 Opinion of Hale and Dorr with respect to the validity of the
securities being offered.
10.1* Employee Stock Ownership Plan, as amended.
10.2* Employee Stock Ownership Trust, as amended.
10.3* ESOT Loan Agreement among Norman A. Cloutier, Steven H.
Townsend, Daniel V. Atwood, Theodore Cloutier and the Employee
Stock Ownership Plan and Trust, dated November 1, 1988, as
amended.
10.4* Stock Pledge Agreement between the Employee Stock Ownership
Trust and Steven H. Townsend, Trustee for Norman A. Cloutier,
Steven H. Townsend, Daniel V. Atwood and Theodore Cloutier,
dated November 1, 1988, as amended.
10.5* Trust Agreement between Norman A. Cloutier, Steven H. Townsend,
Daniel V. Atwood, Theodore Cloutier and Steven H. Townsend as
Trustee, dated November 1, 1988.
10.6* Guaranty Agreement between the Registrant and Steven H.
Townsend as Trustee for Norman A. Cloutier, Steven H. Townsend,
Daniel V. Atwood and Theodore Cloutier, dated November 1, 1988.
10.7* 1996 Stock Option Plan.
10.8* Stock Acquisition Agreement and Plan of Merger among the
Registrant, MPW Acquisition Corporation, Michael S. Funk and
Judith A. Funk, individually and as trustees of the Funk Family
1992 Revocable Living Trust, and Mountain People's Warehouse
Incorporated ("Mountain People's"), dated December 8, 1995.
10.9* Asset Purchase Agreement between the Registrant and PREM MARK,
Inc., d/b/a Rainbow Natural Foods Distributing ("Rainbow"),
dated July 27, 1995.
10.10* Stock Purchase Agreement, dated May 22, 1995, between Mountain
People's and Nutrasource, Inc. ("Nutrasource")
10.11* Note and Warrant Purchase Agreement between the Registrant and
Triumph--Connecticut Limited Partnership ("Triumph"), dated
November 17, 1993.
10.12* Senior Note, dated November 17, 1993, between the Registrant
and Triumph.
10.13* Registration Rights Agreement between the Registrant and
Triumph, dated November 17, 1993.
10.14* Employment Agreement between the Registrant, Mountain People's
and Michael S. Funk, dated February 20, 1996.
10.15* Non-competition Agreement between the Registrant and Norman A.
Cloutier, dated November 16, 1993.
10.16* Amended and Restated Loan and Security Agreement among the
Registrant, Mountain People's, Natural Retail Group, Inc.,
Rainbow, Nutrasource, Inc. and Fleet Capital Corporation, dated
February 20, 1996.
10.17* Purchase and Sale Agreement between the Registrant and O.M.
Killingly Investment Company, dated March 31, 1995.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
10.18* Real Estate Term Note between the Registrant and Shawmut
Capital Corporation (now Fleet Capital Corporation), dated
September 8, 1995.
10.19* Distribution Agreement between Mountain People's Wine
Distributing, Inc., and Mountain People's, dated August 23,
1994.
10.20* Secured Promissory Note between Michael S. Funk and Mountain
People's, dated November 28, 1995.
10.21* Lease, dated January 21, 1992, between Panattoni-Catlin Joint
Venture and Souza Revocable Trust and Mountain People's, as
amended.
10.22* Lease, dated July 29, 1995, between Prem Mark, Inc. and the
Registrant.
10.23* Lease, dated July 12, 1990, between the Registrant and Sylvan
and Stanford Makover Joint Venture, as amended.
10.24* Lease, dated August 23, 1989, between the Registrant and
Bradley Spear and Seattle First National Bank, co-executors of
the estate of A.H. Spear.
10.25* 1996 Employee Stock Purchase Plan.
10.26 Amended and Restated Employee Stock Ownership Plan.
11* Computation of Earnings Per Share.
21* Subsidiaries of the Registrant.
23.1 Consent of Hale and Dorr (included in Exhibit 5).
23.2* Consent of KPMG Peat Marwick LLP.
23.3* Consent of Arthur Andersen LLP.
24* Power of Attorney (included on page II-6).
27* Financial Data Schedule.
99* Consent of Thomas B. Simone.
</TABLE>
- --------
* Previously filed.
<PAGE>
Exhibit 1
2,900,000 Shares
UNITED NATURAL FOODS, INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
_________, 1996
SMITH BARNEY INC.
OPPENHEIMER & CO., INC.
ROBERTSON, STEPHENS & COMPANY LLC
As Representatives of the Several Underwriters
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
United Natural Foods, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell an aggregate of 2,900,000 shares of its common stock,
$.01 par value per share, to the several Underwriters named in Schedule II
hereto (the "Underwriters"). The Company's common stock, $.01 par value, is
hereinafter referred to as the "Common Stock" and the 2,900,000 shares of Common
Stock to be issued and sold to the Underwriters by the Company are hereinafter
referred to as the "Firm Shares." The persons named in Schedule I hereto (the
"Selling Stockholders") severally propose to sell to the Underwriters, upon the
terms and conditions set forth in Section 2 hereof, up to an additional 435,000
shares (the "Additional Shares") of Common Stock. The Company and the Selling
Stockholders are hereinafter sometimes referred to as the "Sellers." The Firm
Shares and the Additional Shares are hereinafter collectively referred to as the
"Shares."
The Company and the Selling Stockholders wish to confirm as follows their
respective agreements with you (the "Representatives") and the other several
Underwriters on whose behalf you are acting, in connection with the several
purchases of the Shares by the Underwriters.
1. Registration Statement and Prospectus. The Company has prepared and
-------------------------------------
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission
<PAGE>
thereunder (collectively, the "Act"), a registration statement on Form S-1 under
the Act (the "registration statement"), including a prospectus subject to
completion relating to the Shares. The term "Registration Statement" as used in
this Agreement means the registration statement (including all financial
schedules and exhibits), as amended at the time it becomes effective, or, if the
registration statement became effective prior to the execution of this
Agreement, as supplemented or amended prior to the execution of this Agreement,
together with any registration statement relating to the offering of the Shares
filed by the Company pursuant to Rule 462(b) of the Act. If it is contemplated,
at the time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed and must be declared effective before the
offering of the Shares may commence, the term "Registration Statement" as used
in this Agreement means the registration statement as amended by said post-
effective amendment. The term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement, or, if the
prospectus included in the Registration Statement omits information in reliance
on Rule 430A under the Act and such information is included in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form included
in the Registration Statement as supplemented by the addition of the Rule 430A
information contained in the prospectus filed with the Commission pursuant to
Rule 424(b). The term "Prepricing Prospectus" as used in this Agreement means
the prospectus subject to completion in the form included in the registration
statement at the time of the initial filing of the registration statement with
the Commission, and as such prospectus shall have been amended from time to time
prior to the date of the Prospectus.
2. Agreements to Sell and Purchase. The Company hereby agrees, subject to
-------------------------------
all the terms and conditions set forth herein, to issue and sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of $_____ per Share (the
"purchase price per share"), the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule II hereto (or such number of Firm Shares
increased as set forth in Section 12 hereof).
The Selling Stockholders listed in Schedule I hereto also agree, severally
and not jointly, subject to all the terms and conditions set forth herein, to
sell to the Underwriters, and, upon the basis of the representations, warranties
and agreements of the Company and the Selling Stockholders herein contained and
subject to all the terms and conditions set forth herein, the Underwriters shall
have the right to purchase from the Selling Stockholders listed in Schedule I
hereto, at the purchase price per share, pursuant to an option (the "over-
allotment option") which may be exercised at any time, but not more than one
time, prior to 9:00 P.M., New York City time, on the 30th day after the date of
the Prospectus, up to an aggregate of 435,000 Additional Shares from the Selling
Stockholders listed in Schedule I hereto (the maximum number of Additional
Shares which each of them agrees to sell upon the exercise by the Underwriters
of the over-allotment option is set forth opposite their respective names in
Schedule I). Additional Shares may be purchased only for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. The
number of Additional Shares which the Underwriters
2
<PAGE>
elect to purchase upon any exercise of the over-allotment option shall be
provided, first, by Triumph - Connecticut Limited Partnership, up to the maximum
number of Additional Shares which it has agreed to sell, as indicated on
Schedule I, and, second, by the Funk Family 1992 Revocable Living Trust, up to
the maximum number of Additional Shares which it has agreed to sell, as
indicated on Schedule I. Upon any exercise of the over-allotment option, each
Underwriter, severally and not jointly, agrees to purchase from each Selling
Stockholder who has agreed to sell Additional Shares the number of Additional
Shares (subject to such adjustments as you may determine in order to avoid
fractional shares) which bears the same proportion to the number of Additional
Shares to be sold by each Selling Stockholder who has agreed to sell Additional
Shares as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule II hereto (or such number of Firm Shares increased as
set forth in Section 12 hereof) bears to the aggregate number of Firm Shares to
be sold by the Company.
Certificates in transferable form for the Shares (including any Additional
Shares) which each of the Selling Stockholders agrees to sell pursuant to this
Agreement or, in the case of Shares (including any Additional Shares) issuable
pursuant to the exercise of a warrant held by a Selling Stockholder (such
Selling Stockholder being referred to herein as a "Warrantholder"), the original
warrant for the purchase of such Shares has been placed in custody with the
Company (the "Custodian") for delivery under this Agreement pursuant to a
Custody Agreement and Power of Attorney (the "Custody Agreement") executed by
each of the Selling Stockholders appointing Norman A. Cloutier and Steven H.
Townsend as agents and attorneys-in-fact (the "Attorneys-in-Fact"). The parties
hereto acknowledge that, pursuant to the terms of the Custody Agreement, the
exercise price relating to any such warrants deposited with the Custodian will
be paid by deduction from amounts delivered at the Closing Date in repayment of
certain indebtedness owed to the Warrantholder by the Company. Each Selling
Stockholder severally agrees that (i) the Shares represented by the
certificates, or issuable pursuant to the exercise of the warrant, and the
warrant, held in custody pursuant to the Custody Agreement are subject to the
interests of the Underwriters, the Company and each other Selling Stockholder,
(ii) the arrangements made by the Selling Stockholders for such custody are,
except as specifically provided in the Custody Agreement, irrevocable, and (iii)
the obligations of the Selling Stockholders hereunder and under the Custody
Agreement shall not be terminated by any act of such Selling Stockholder or by
operation of law, whether by the death or incapacity of any Selling Stockholder
or the occurrence of any other event. If any Selling Stockholder shall die or
be incapacitated or if any other event shall occur before the delivery of the
Shares hereunder, certificates for the Shares of such Selling Stockholder, or
the original warrant for the Shares to be sold by any Warrantholder shall be
delivered to the Underwriters by the Attorneys-in-Fact in accordance with the
terms and conditions of this Agreement and the Custody Agreement as if such
death or incapacity or other event had not occurred, regardless of whether or
not the Attorneys-in-Fact or any Underwriter shall have received notice of such
death, incapacity or other event. Each Attorney-in-Fact is authorized, on
behalf of each of the Selling Stockholders, to execute this Agreement and any
other documents necessary or desirable in connection with the sale of the Shares
to be sold hereunder by such Selling Stockholder, to make delivery of the
certificates or original warrant for such Shares, to receive the proceeds of the
sale of such Shares, to pay to the Company the exercise price of any such
warrants by surrender of the applicable
3
<PAGE>
amount of notes owed to the Warrantholder, to give receipts for such proceeds,
to pay therefrom any expenses to be borne by such Selling Stockholder in
connection with the sale and public offering of such Shares, to distribute the
balance thereof to such Selling Stockholder, and to take such other action as
may be necessary or desirable in connection with the transactions contemplated
by this Agreement. Each Attorney-in-Fact agrees to perform his duties under the
Custody Agreement.
3. Terms of Public Offering. The Sellers have been advised by you that
------------------------
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the Under-
-------------------------------------------
writers of and payment for the Firm Shares shall be made at the office of Hale
and Dorr, 60 State Street, Boston, Massachusetts 02109, at 10:00 A.M., Boston
time, on ___________, 1996 (the "Closing Date"). The place of closing for the
Firm Shares and the Closing Date may be varied by agreement among you, the
Company and the Attorneys-in-Fact.
Delivery to the Underwriters of and payment for any Additional Shares to be
purchased by the Underwriters shall be made at the aforementioned office of Hale
and Dorr at such time on such date (the "Option Closing Date"), which may be the
same as the Closing Date but shall in no event be earlier than the Closing Date
nor earlier than two nor later than ten business days after the giving of the
notice hereinafter referred to, as shall be specified in a written notice from
you on behalf of the Underwriters to the Company and the Attorneys-in-Fact of
the Underwriters' determination to purchase a number, specified in such notice,
of Additional Shares. The place of closing for any Additional Shares and the
Option Closing Date for such Shares may be varied by agreement among you, the
Company and the Attorneys-in-Fact.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor in immediately available funds.
5. Agreements of the Company. The Company agrees with the several
-------------------------
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause the Registration
4
<PAGE>
Statement or such post-effective amendment to become effective as soon as
possible and will advise you promptly and, if requested by you, will confirm
such advice in writing, when the Registration Statement or such post-effective
amendment has become effective.
(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's financial condition, business, properties,
net worth or results of operations, or of the happening of any event, which
makes any statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
(as then amended or supplemented) in order to state a material fact required by
the Act or the regulations thereunder to be stated therein or necessary in order
to make the statements therein not misleading, or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) to comply with the
Act or any other law. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will
make reasonable efforts to obtain the withdrawal of such order at the earliest
possible time.
(c) The Company will furnish to you, without charge, four signed
copies of the registration statement as originally filed with the Commission and
of each amendment thereto, including financial statements and all exhibits
thereto, and will also furnish to you, without charge, such number of conformed
copies of the registration statement as originally filed and of each amendment
thereto, but without exhibits, as you may reasonably request.
(d) The Company will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which you
shall not previously have been advised or to which you shall reasonably object
after being so advised or (ii) so long as, in the opinion of counsel for the
Underwriters, a Prospectus is required to be delivered in connection with sales
by any Underwriter or dealer, file any information, documents or reports
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), without delivering a copy of such information, documents or reports to
you, as Representatives of the Underwriters, prior to or concurrently with such
filing.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
reasonably requested, copies of each form of the Prepricing Prospectus. The
Company consents to the use, in accordance with the provisions of the Act and
with the securities or Blue Sky laws of the jurisdictions in which the Shares
are offered by the several Underwriters and by dealers, prior to the date of the
Prospectus, of each Prepricing Prospectus so furnished by the Company.
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(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the Act to be delivered
in connection with sales by any Underwriter or dealer, the Company will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
you may reasonably request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the several Underwriters and by all dealers to
whom Shares may be sold, both in connection with the offering and sale of the
Shares and for such period of time thereafter as the Prospectus is required by
the Act to be delivered in connection with sales by any Underwriter or dealer.
If during such period of time any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriters is required to be set
forth in the Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with the Act or any other law,
the Company will forthwith prepare and, subject to the provisions of paragraph
(d) above, file with the Commission an appropriate supplement or amendment
thereto, and will expeditiously furnish to the Underwriters and dealers a
reasonable number of copies thereof. In the event that the Company and you, as
Representatives of the several Underwriters, agree that the Prospectus should be
amended or supplemented, the Company, if requested by you, will promptly issue a
press release announcing or disclosing the matters to be covered by the proposed
amendment or supplement.
(g) The Company will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Shares, in any jurisdiction where it is not now so
subject.
(h) The Company will make generally available to its security holders
a consolidated earnings statement, which need not be audited, covering a twelve-
month period commencing after the effective date of the Registration Statement
and ending not later than 15 months thereafter, as soon as practicable after the
end of such period, which consolidated earnings statement shall satisfy the
provisions of Section ll(a) of the Act.
(i) During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders or filed with the Commission, and (ii) from time to time
such other information concerning the Company as you may reasonably request.
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(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 12 hereof or by notice given by you terminating this
Agreement pursuant to Section 12 or Section 13 hereof) or if this Agreement
shall be terminated by the Underwriters because of any failure or refusal on the
part of the Company or the Selling Stockholders to comply with the terms or
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the Representatives for all reasonable out-of-pocket expenses (including
reasonable fees and expenses of counsel for the Underwriters) incurred by you in
connection herewith.
(k) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectus.
(l) If Rule 430A of the Act is employed, the Company will timely file
the Prospectus pursuant to Rule 424(b) under the Act and will advise you of the
time and manner of such filing.
(m) Except as provided in this Agreement, the Company will not sell,
contract to sell or otherwise dispose of any Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or grant any
options or warrants to purchase Common Stock, for a period of 180 days after
the date of the Prospectus, without the prior written consent of Smith Barney
Inc.; provided, however, that the Company may, without such consent, (i) issue
shares of Common Stock upon the exercise of options issued or issuable pursuant
to its 1996 Stock Option Plan and 1996 Employee Stock Purchase Plan
(collectively, the "Stock Plans"), (ii) grant options and offer to sell shares
of Common Stock to its employees and directors pursuant to the Stock Plans,
(iii) issue shares of Common Stock to its employees in accordance with the
provisions of the Company's Employee Stock Ownership Plan (the "ESOP") and (iv)
issue shares of Common Stock pursuant to outstanding warrants to purchase Common
Stock.
(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current officers and directors and each of its stockholders.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have the Common Stock
listed, subject to notice of issuance, on the Nasdaq National Market,
concurrently with the effectiveness of the Registration Statement.
6. Agreements of the Selling Stockholders. Each of the Selling Stock-
--------------------------------------
holders severally and not jointly agrees with the several Underwriters as
follows:
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(a) Such Selling Stockholder will cooperate to the extent necessary
to cause the Registration Statement or any post-effective amendment thereto to
become effective at the earliest possible time.
(b) Such Selling Stockholder will pay all Federal and other taxes, if
any, on the transfer or sale of the Shares being sold by the Selling Stockholder
to the Underwriters.
(c) Such Selling Stockholder will do or perform all things reasonably
required to be done or performed by the Selling Stockholder prior to the Closing
Date or any Option Closing Date, as the case may be, to satisfy all conditions
precedent to the delivery of the Shares pursuant to this Agreement.
(d) Such Selling Stockholder has executed or will execute a "lock-up"
letter as provided in Section 5(n) above and will not sell, contract to sell or
otherwise dispose of any Common Stock, except for the sale of Shares to the
Underwriters pursuant to this Agreement and except for the exercise of options
or warrants exercisable for the purchase of Common Stock and the sale of Common
Stock to the Company pursuant to the terms of such warrant, prior to the
expiration of 180 days after the date of the Prospectus, without the prior
written consent of Smith Barney Inc. Notwithstanding the foregoing, each such
Selling Stockholder may transfer any or all of such Selling Stockholder's shares
(i) by gift, will or intestacy, (ii) to such Selling Stockholder's affiliates,
as such term is defined in Rule 405 promulgated under the Act, or (iii) in the
event such Selling Stockholder is an individual, to his or her immediate family
or to a trust the beneficiaries of which are exclusively the undersigned and/or
a member or members of his or her immediate family; provided, however, that in
any such case it shall be a condition to the transfer that the transferee
execute an agreement stating that the transferee is receiving and holding the
shares subject to the provisions of the lock-up letter and there shall be no
further transfer of such shares except in accordance with the lock-up letter.
(e) Except as stated in this Agreement and in the Prepricing
Prospectus and the Prospectus, such Selling Stockholder will not take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(f) Such Selling Stockholder will advise you promptly, and if
requested by you, will confirm such advice in writing, within the period of time
referred to in Section 5(f) hereof, of any change in information relating to
such Selling Stockholder that suggests that any statement made in the
Registration Statement or the Prospectus (as then amended or supplemented, if
amended or supplemented) with respect to such information is or may be untrue in
any material respect or that the Registration Statement or Prospectus (as then
amended or supplemented, if amended or supplemented) omits or may omit to state
a material fact or a fact necessary to be stated therein in order to make the
statements therein not misleading in any material respect, or of the necessity
to amend or supplement the Prospectus (as then amended or supplemented, if
amended or supplemented) in order to comply with the Act or any other law.
8
<PAGE>
7. Representations and Warranties of the Company. The Company represents
---------------------------------------------
and warrants to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement thereto,
or filed pursuant to Rule 424 under the Act, complied when so filed in all
material respects with the provisions of the Act. The Commission has not issued
any order preventing or suspending the use of any Prepricing Prospectus.
(b) The Registration Statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the prospectus and any supplement
or amendment thereto when filed with the Commission under Rule 424(b) under the
Act, complied or will comply in all material respects with the provisions of the
Act and did not or will not at any such times contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, except that this
representation and warranty does not apply to statements in or omissions from
the Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by or on behalf
of any Underwriter through you expressly for use therein.
(c) All the outstanding shares of Common Stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights; the Shares to be issued and sold
by the Company and the Selling Stockholders which are not currently outstanding
have been duly authorized and, when issued and delivered to the Underwriters
against payment therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights; and the capital stock of the Company conforms to the description thereof
in the Registration Statement and the Prospectus.
(d) The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus, and is
duly registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on the
financial condition, business, properties, net worth or results of operations of
the Company and the Subsidiaries (as hereinafter defined) taken as a whole.
(e) All the Company's subsidiaries (collectively, the "Subsidiaries")
are listed in an exhibit to the Registration Statement. Each Subsidiary is a
corporation duly organized, validly existing and in good standing in the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus, and is duly registered and
qualified
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<PAGE>
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the financial condition,
business, properties, net worth or results of operations of such Subsidiary; all
of the outstanding shares of capital stock of each of the Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable, and are
owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity or other encumbrance.
(f) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties is subject, that are required to be described
in the Registration Statement or the Prospectus but are not described as
required, and there are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement that
are not described or filed as required by the Act.
(g) Neither the Company nor any of the Subsidiaries is in violation
of its certificate or articles of incorporation or by-laws, or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation (including requirements of the U.S. Food and
Drug Administration) applicable to the Company or any of the Subsidiaries or of
any decree of any court or governmental agency or body applicable to the Company
or any of the Subsidiaries, except where such violation does not have a material
adverse effect on the financial condition, business, properties, net worth or
results of operations of the Company and the Subsidiaries taken as a whole (a
"Material Adverse Effect"). Neither the Company nor any of its Subsidiaries is
in default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any agreement, indenture, lease or other instrument to which the Company or
any of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, except where such default does not have a
Material Adverse Effect.
(h) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby (A) requires any consent,
approval, authorization or other order of or registration or filing with, any
court, regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required for the registration of the Shares
under the Act and the Exchange Act, compliance with the securities or Blue Sky
laws of various jurisdictions and clearance of the public offering of the Shares
by the Underwriters with the rules and regulations of the National Association
of Securities Dealers, Inc. (the "NASD") or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the certificate
or articles of incorporation or bylaws, or other organizational documents, of
the Company or any of the Subsidiaries or (B) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, any agreement,
indenture, lease or other instrument to
10
<PAGE>
which the Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties may be bound, or violates or will violate
any statute, law, regulation or filing applicable to the Company or any of the
Subsidiaries or any judgment, injunction, order or decree applicable to the
Company or any of the Subsidiaries or any of their respective properties, or
will result in the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(i) The accountants, KPMG Peat Marwick LLP and Arthur Andersen LLP,
who have certified or shall certify the financial statements included in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto) are independent public accountants as required by the Act.
(j) The financial statements, together with related schedules and
notes, included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly the consolidated financial
position, results of operations and changes in financial position of the Company
and the Subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial and
statistical information and data included in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) are accurately presented
and prepared on a basis consistent with such financial statements and the books
and records of the Company and the Subsidiaries.
(k) The execution and delivery of, and the performance by the Company
of its obligations under, this Agreement have been duly and validly authorized
by the Company, and this Agreement has been duly executed and delivered by the
Company and constitutes the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity and contribution hereunder may be limited by federal or state
securities laws or principles of public policy and subject to the qualification
that the enforceability of the Company's obligations hereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles.
(l) Except as disclosed in or contemplated by the Registration
Statement and the Prospectus (or any amendment or supplement thereto),
subsequent to the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto), neither the Company nor any of the Subsidiaries has incurred any
liability or obligation, direct or contingent, or entered into any transaction,
not in the ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock (except for issuances of Common Stock, if any, pursuant to the ESOP or
through the exercise of employee stock options described in the
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<PAGE>
Prospectus), or material increase in the short-term debt or long-term debt, of
the Company or any of the Subsidiaries, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the financial condition, business, net
worth or results of operations of the Company and the Subsidiaries taken as a
whole.
(m) Each of the Company and the Subsidiaries has good and valid title
to all property (real and personal) described in the Prospectus as being owned
by it, free and clear of all material liens, claims, security interests or other
encumbrances except such as are described in the Registration Statement, and the
Prospectus or in a document filed as an exhibit to the Registration Statement
and all the property described in the Prospectus as being held under lease by
each of the Company and the Subsidiaries is held by it under valid, subsisting
and enforceable leases.
(n) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the Shares,
will not distribute any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, the Prepricing
Prospectus, the Prospectus or other materials, if any, permitted by the Act.
(o) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and to
conduct its business in the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus, except where the failure
to have any such permit would not, singly or in the aggregate, have a Material
Adverse Effect; the Company and each of the Subsidiaries has fulfilled and
performed all its obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other impairment of the rights of the
holder of any such permit, subject in each case to such qualification as may be
set forth in the Prospectus, except where the failure to fulfill or perform such
obligations or the revocation, termination or impairment of such rights would
not, singly or in the aggregate, have a Material Adverse Effect; and, except as
described in the Prospectus, none of such permits contains any restriction that
is materially burdensome to the Company or any of the Subsidiaries.
(p) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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<PAGE>
(q) To the Company's knowledge, neither the Company nor any of its
Subsidiaries nor any employee or agent of the Company or any Subsidiary has made
any payment of funds of the Company or any Subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the Prospectus.
(r) The Company and each of the Subsidiaries have filed all tax
returns required to be filed, which returns are complete and correct in all
material respects, and neither the Company nor any Subsidiary is in default in
the payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto, except for the assessments contested in good
faith for which adequate reserves have been provided to the extent required by
generally accepted accounting principles.
(s) No holder of any security of the Company has any right to require
registration of shares of Common Stock or any other security of the Company
because of the filing of the registration statement or consummation of the
transactions contemplated by this Agreement, other than those rights which have
been waived or satisfied.
(t) The Company and the Subsidiaries own or possess adequate licenses
or other rights to use all patents, trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the Prospectus as being owned
by them or any of them or necessary for the conduct of their respective
businesses, and the Company is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company and the Subsidiaries
with respect to the foregoing, which claim or challenge would have a Material
Adverse Effect.
(u) The Company is not now, and after sale of the Shares to be sold
by it hereunder and application of the net proceeds from such sale as described
in the Prospectus under the caption "Use of Proceeds" will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(v) To the extent applicable, the Company has complied with all
provisions of Florida Statutes, ' 517.075, relating to issuers doing business
with Cuba.
8. Representations and Warranties of the Selling Stockholders. Each
----------------------------------------------------------
Selling Stockholder severally and not jointly represents and warrants to each
Underwriter that:
(a) Such Selling Stockholder, other than a Warrantholder, now has, and
on any Option Closing Date such Selling Stockholder, including each
Warrantholder, will have, good and valid title to the Shares to be sold by such
Selling Stockholder, free and clear of any lien, claim, security interest or
other encumbrance, including, without limitation, any restriction on transfer.
Such Warrantholder now has good and valid title to the warrant exercisable for
the Shares to be sold by such Warrantholder, free and clear of any lien, claim,
security interest or other encumbrance, including, without limitation, any
restriction on transfer.
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(b) Such Selling Stockholder now has, and on any Option Closing Date
will have, full legal right, power and authorization to sell, assign transfer
and deliver such Shares in the manner provided in this Agreement, and upon
delivery of and payment for such Shares hereunder, the several Underwriters will
acquire good and valid title to such Shares free and clear of any lien, claim,
security interest, or other encumbrance, assuming that such Underwriters are
bona fide purchasers within the meaning of the Uniform Commercial Code.
(c) This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by or on behalf of such Selling Stockholder
and are the valid and binding agreements of such Selling Stockholder enforceable
against such Selling Stockholder in accordance with their terms, except as
rights to indemnity and contribution hereunder which may be limited by federal
or state securities laws or principles of public policy and subject to the
qualification that the enforceability of such Selling Stockholder's obligations
hereunder and thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles.
(d) Neither the execution and delivery of this Agreement or the
Custody Agreement by or on behalf of such Selling Stockholder nor the
consummation of the transactions herein or therein contemplated by or on behalf
of such Selling Stockholder requires any consent, approval, authorization or
order of, or filing or registration with, any court, regulatory body,
administrative agency or other governmental body, agency or official (except
such as may be required under the Act, under the Exchange Act, under state
securities or Blue Sky laws governing the purchase and distribution of the
Shares or under the rules and regulations of the NASD), or conflicts or will
conflict with or constitutes or will constitute a breach of, or default under,
or violates or will violate, any material agreement, indenture or other
instrument to which such Selling Stockholder is a party or by which such Selling
Stockholder is or may be bound or to which any of such Selling Stockholder's
property or assets is subject, or any statute, law, rule or regulation
applicable to such Selling Stockholder or to any property or assets of such
Selling Stockholder or any ruling, judgment, injunction, order or decree
applicable to such Selling Stockholder or any property or assets of such Selling
Stockholder.
(e) Such parts of the Registration Statement and the Prospectus,
insofar as they relate to such Selling Stockholder, and specifically consisting
of the information contained under the captions "CERTAIN TRANSACTIONS" and
"PRINCIPAL AND SELLING STOCKHOLDERS," do not and will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(f) Without having undertaken to determine independently the accuracy
or completeness of the information contained in the Registration Statement
(except insofar as it relates to such Selling Stockholder), such Selling
Stockholder does not have any knowledge or any reason to believe that the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
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(g) The representations and warranties of such Selling Stockholder in
the Custody Agreement are, and on the Closing Date and any Option Closing Date
will be, true and correct.
(h) Such Selling Stockholder has not taken, directly or indirectly,
any action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares, except for the lock-up arrangements described
in the Prospectus.
9. Indemnification and Contribution.
--------------------------------
(a) The Company and each Selling Stockholder, jointly and severally,
agree to indemnify and hold harmless each of you and each other Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or in
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information furnished in
writing to the Company by or on behalf of any Underwriter through you expressly
for use in connection therewith; provided, however, that (i) the indemnification
contained in this paragraph (a) with respect to any Prepricing Prospectus shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by such Underwriter to
any person if a copy of the Prospectus shall not have been delivered or sent to
such person within the time required by the Act and the regulations thereunder,
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Prepricing Prospectus was
corrected in the Prospectus, provided that the Company has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending and (ii) the liability of a Selling
Stockholder pursuant to this paragraph (a) shall not exceed the lesser of (A)
the proceeds (net of the applicable underwriting discount) received by such
Selling Stockholder for the Shares sold to the Underwriters pursuant to this
Agreement or (B) such Selling Stockholder's pro rata share of the total losses,
claims, damages, liabilities or expenses incurred by the Underwriters pursuant
to this Agreement based upon the number of Shares sold by such Selling
Stockholder to the Underwriters as a percentage of the total number of Shares
sold to the Underwriters. The foregoing indemnity agreement shall be in addition
to any liability which the Company or any Selling Stockholder may otherwise
have. No Selling Stockholder shall be required to provide indemnification
hereunder until the Underwriter or controlling person seeking indemnification
shall have first made written demand for payment on the Company with respect to
any such loss,
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claim, damage, liability or expense and the Company shall have either rejected
such demand or failed to make such requested payment within sixty (60) days
after receipt thereof. In the event the Company rejects any such demand or
fails to make any such requested payment, the Underwriter or controlling person
seeking indemnification agrees to concurrently make demand for indemnification
against all Selling Stockholders; provided that such Underwriter or controlling
person shall have sole discretion as to whether to take any further action
against a Selling Stockholder and no failure by an Underwriter or controlling
person to take further action against a Selling Stockholder shall prejudice such
Underwriter's or controlling person's rights with respect to other Selling
Stockholders.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company or any Selling Stockholder, such
Underwriter or such controlling person shall promptly notify the parties against
whom indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have failed
to assume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both such
Underwriter or such controlling person and the indemnifying parties and such
Underwriter or such controlling person shall have been advised by its counsel in
writing that representation of such indemnified party and any indemnifying party
by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the indemnifying party shall not have the right to assume the defense
of such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the indemnifying parties
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by Smith Barney Inc., and that all such fees and expenses shall be
reimbursed as they are incurred. The indemnifying parties shall not be liable
for any settlement of any such action, suit or proceeding effected without their
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying parties agree to indemnify and hold harmless any Underwriter, to
the extent provided in the preceding paragraph, and any such controlling person
from and against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.
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(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who signed the
Registration Statement, each Selling Stockholder, and any person who controls
the Company and the Selling Stockholders within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act to the same extent as the foregoing
indemnity from the Company and the Selling Stockholders to each Underwriter,
provided, however, that each Underwriter will be liable in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission has been made in the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with information
furnished in writing by or on behalf of such Underwriter through you expressly
for use in the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Company, any of its directors, any such
officer, any Selling Stockholder, or any such controlling person based on the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against any Underwriter pursuant to this paragraph (c), such Underwriter shall
have the rights and duties given to the Company by paragraph (b) above (except
that if the Company shall have assumed the defense thereof such Underwriter
shall not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Underwriter's expense), and the Company, its directors, any
such officer, the Selling Stockholder, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which any
Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other hand from the offering of the Shares, or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Stockholders on
the one hand and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus; provided that, in the
event that the Underwriters shall have purchased any Additional Shares
hereunder, any determination of the relative benefits received by the Company,
the Selling Stockholders or the Underwriters from the offering of the Shares
shall include the net proceeds (before deducting
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expenses) received by the Company and the Selling Stockholders, and the
underwriting discounts and commissions received by the Underwriters, from the
sale of such Additional Shares, in each case computed on the basis of the
respective amounts set forth in the notes to the table on the cover page of the
Prospectus. The relative fault of the Company and the Selling Stockholders on
the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Selling Stockholders on
the one hand or by the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. Notwithstanding the provisions of this subsection
(d), no Selling Stockholder shall be required to contribute any amount in excess
of the product of the number of Shares sold by such Selling Stockholder and the
initial public offering price of the Shares as set forth in the Prospectus.
(e) The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
9 were determined by a pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price of the Shares underwritten by it and distributed to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to the respective numbers of Firm Shares set
forth opposite their names in Schedule II hereto (or such numbers of Firm Shares
increased as set forth in Section 12 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 9 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 9 and
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the representations and warranties of the Company and the Selling Stockholders
set forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or the Selling Stockholders or any person controlling the Company, (ii) accep-
tance of any Shares and payment therefor hereunder, and (iii) any termination
of this Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 9.
10. Conditions of Underwriters' Obligations. The several obligations of
---------------------------------------
the Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Registration Statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the registration statement or the prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the financial condition, business, properties, net
worth, or results of operations of the Company and the Subsidiaries, taken as a
whole, not contemplated by the Prospectus, which in your opinion, as
Representatives of the several Underwriters, would materially adversely affect
the market for the Shares, or (ii) any event or development relating to or
involving the Company or any officer or director of the Company or any Selling
Stockholder which makes any material statement made in the Prospectus untrue or
which, in the opinion of the Company and its counsel or the Underwriters and
their counsel, requires the making of any addition to or change in the
Prospectus in order to state a material fact required by the Act or any other
law to be stated therein or necessary in order to make the statements therein
not misleading, if amending or supplementing the Prospectus to reflect such
event or development would, in your opinion, as Representatives of the several
Underwriters, materially adversely affect the market for the Shares.
(c) You shall have received on the Closing Date, with respect to
subparagraphs (i) through (xii) below, an opinion of Hale and Dorr, counsel for
the Company, and you shall have received on the Option Closing Date, if any,
with respect to subparagraphs (xiii) through (xvi) below, an opinion of
respective counsel for the Selling Stockholders, dated the Closing Date
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or the Option Closing Date, as the case may be, and addressed to you, as
Representatives of the several Underwriters, to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing in corporate good standing under the laws of the State of Delaware
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto);
(ii) The authorized and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus (except for issuances subsequent to the date of the Prospectus
of Common Stock, if any, pursuant to the ESOP or through the exercise of
employee stock options described in the Prospectus); and statements
regarding the authorized capital stock of the Company contained in the
Prospectus under the caption "Description of Capital Stock," insofar as
such statements constitute matters of law or legal conclusions or
constitute a summary of the terms of the Company's Certificate of
Incorporation relating to such capital stock, have been reviewed by such
counsel and are correct in all material respects;
(iii) All the shares of capital stock of the Company outstanding
prior to the issuance of the Shares to be issued and sold by the Company
hereunder, have been duly authorized and validly issued, and are fully paid
and nonassessable;
(iv) The Shares to be issued and sold to the Underwriters by
the Company hereunder have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with
the terms hereof, will be validly issued, fully paid and nonassessable and,
to such counsel's knowledge, free of any preemptive or similar rights that
entitle or will entitle any person to acquire any Shares upon the issuance
thereof by the Company;
(v) The form of certificates for the Shares, assuming they are
in the form filed with the Commission, conforms to the requirements of the
Delaware General Corporation Law;
(vi) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the
knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose are pending before or contemplated by the Commission; and any
required filing of the Prospectus pursuant to Rule 424(b) has been made in
accordance with Rule 424(b);
(vii) The Company has corporate power and authority to enter
into this Agreement and to issue, sell and deliver the Shares to be sold by
it to the Underwriters as
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provided herein, and this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) Neither the offer, sale or delivery of the Shares, the
execution or delivery of this Agreement, compliance by the Company with the
provisions hereof, nor consummation by the Company of the transactions
contemplated hereby conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate of
incorporation or bylaws of the Company or any agreement, indenture, lease
or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties is
bound that is an exhibit to the Registration Statement or will result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company, nor will any such action result in any
violation of any existing law, regulation, ruling (assuming compliance with
all applicable state securities and Blue Sky laws) known to such counsel
and applicable to the Company or its properties, or any judgment,
injunction, order or decree known to such counsel and specifically naming
the Company or any of its properties;
(ix) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency, or official is required on the
part of the Company (except as have been obtained under the Act and the
Exchange Act, such as may be required under state securities or Blue Sky
laws governing the purchase and distribution of the Shares or such as may
be required by the NASD) for the issuance and sale of the Shares to the
Underwriters as contemplated by this Agreement;
(x) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and
the notes thereto, the schedules and other financial and statistical data
and the information relating to the Underwriters or the method of
distribution of the Shares by the Underwriters included therein, as to
which such counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act;
(xi) To the knowledge of such counsel, (A) other than as
described or contemplated in the Prospectus (or any supplement thereto),
there are no legal or governmental proceedings pending against the Company
or any of the Subsidiaries, or to which the Company or any of the
Subsidiaries, or any of their property, is subject, which are required to
be described in the Registration Statement or Prospectus (or any amendment
or supplement thereto) and (B) there are no agreements, contracts,
indentures, leases or other instruments, that are required to be described
in the Registration Statement or the Prospectus (or any amendment or
supplement thereto) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required, as the case may be;
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(xii) The statements under the captions "Risk Factors--Shares
Eligible for Future Sale; Registration Rights," "Risk Factors--Antitakeover
Provisions," "Description of Capital Stock" and "Shares Eligible for Future
Sale" and in paragraph 5 under the caption "Underwriting" in the
Registration Statement and Prospectus, insofar as such statements
constitute matters of law or legal conclusions, have been reviewed by such
counsel and are correct in all material respects;
(xiii) To the knowledge of such counsel, this Agreement and the
Custody Agreement have each been duly executed and delivered by or on
behalf of each of the Selling Stockholders. To the knowledge of such
counsel, the Custody Agreement is a valid and binding agreement of each
Selling Stockholder enforceable against each Selling Stockholder in
accordance with its terms;
(xiv) To the knowledge of such counsel, each Selling Stockholder
has full legal right, power and authorization to sell, assign, transfer and
deliver to the Shares which such Selling Stockholder has agreed to sell
pursuant to this Agreement;
(xv) To the knowledge of such counsel, the execution and delivery
of this Agreement and the Custody Agreement by or on behalf of the Selling
Stockholders and the consummation of the transactions contemplated hereby
and thereby will not conflict with, violate, result in a breach of or
constitute a default under the terms or provisions of any agreement,
indenture, mortgage or other instrument to which any Selling Stockholder is
a party or by which any of them or any of their assets or property is
bound, or any law, rule, or regulation applicable to any Selling
Stockholder or to any of the property or assets of any Selling Stockholder
or any court order or decree applicable to the Selling Stockholder or any
property or assets of the Selling Stockholder, except for such approvals as
may be required under the federal or state securities laws, or the
securities laws of any applicable jurisdiction, or under the rules and
regulations of the NASD; and
(xvi) Upon delivery of the Shares pursuant to this Agreement and
payment therefor as contemplated herein, with all necessary endorsements,
and assuming the Underwriters (a) have possession of the Shares; (b) are
acquiring the Shares in good faith without notice of any adverse claim; and
(c) have not been a party to any fraud or illegality affecting the Shares,
the Underwriters will acquire all the rights in the Shares that the Selling
Stockholder has or has actual authority to convey, and the Underwriters'
interests in the Shares will be free of any adverse claim, except as may be
asserted by a person claiming by, through or under the Underwriters.
In connection with the preparation of the Registration Statement and the
Prospectus, Hale and Dorr has participated in conferences with officers and
representatives of the Company, counsel for the Underwriters and the independent
accountants of the Company, at which conferences such counsel made inquiries of
such persons and others and discussed the contents of the Registration Statement
and the Prospectus. While the limitations inherent in the independent
verification of factual matters and the character of determinations involved in
the registration process are such that such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus, subject to
the foregoing and based on such participation, inquiries and discussions, no
facts have come to the attention of such counsel that has caused it
22
<PAGE>
to believe that the Registration Statement (as amended by any post-effective
amendment filed prior to the Closing Date or the Option Closing Date, as the
case may be) at the time the Registration Statement (or such post-effective
amendment) became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, as of its
date, and as of the Closing Date or the Option Closing Date, as the case may be,
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto, the schedules and other financial and
statistical data and the information relating to the Underwriters or the method
of distribution of the Shares by the Underwriters included in the Registration
Statement or the Prospectus).
In rendering their opinion as aforesaid, counsel may rely upon an opinion
or opinions, each dated the Closing Date, of other counsel retained by them or
the Company as to laws of any jurisdiction other than the United States, The
Commonwealth of Massachusetts or the General Corporation Law statute of the
State of Delaware, provided that (1) each such counsel is acceptable to the
Representatives, (2) such reliance is expressly authorized by each opinion so
relied upon and a copy of each such opinion is delivered to the Representatives
and is, in form and substance satisfactory to them and their counsel, and (3)
counsel shall state in their opinion that they believe that they and the
Underwriters are justified in relying thereon.
(d) You shall have received on the Closing Date, an opinion of
Cameron & Mittleman, counsel for the Company, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, to the effect
that:
(i) Each of the Subsidiaries is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of its
organization, with full corporate power and authority to own, lease, and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto). The Company and each of the Subsidiaries is duly qualified to
conduct its business and in corporate good standing in each jurisdiction or
place where the nature of its properties or the conduct of its business
requires such qualification, except where the failure so to qualify does
not have a material adverse effect on the financial condition, business,
properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole. The Company and each of the Subsidiaries has
full corporate power and authority, and, to the knowledge of such counsel,
all necessary governmental authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental
regulatory officials and bodies (except where the failure so to have any
such authorizations, approvals, orders, licenses, certificates, franchises
or permits, individually or in the aggregate, would not have a material
adverse effect on the business, properties, operations or financial
condition of the Company and the Subsidiaries taken as a whole), to own
their respective properties
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and to conduct their respective businesses as now being conducted, as
described in the Prospectus;
(ii) All the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are owned by the Company directly, or indirectly
through one of the other Subsidiaries. Except as disclosed in the
Prospectus or set forth on Schedule III hereto, the Company owns of record,
directly or indirectly, all the outstanding shares of capital stock of each
of the Subsidiaries free and clear of any lien, adverse claim, security
interest, equity, or other encumbrance;
(iii) Other than as described or contemplated in the Prospectus
(or any supplement thereto), to the knowledge of such counsel, there are no
legal or governmental proceedings pending or threatened against the Company
or any of the Subsidiaries, or to which the Company or any of the
Subsidiaries, or any of their property, is subject, which are required to
be described in the Registration Statement or Prospectus (or any amendment
or supplement thereto);
(iv) To the knowledge of such counsel, there are no agreements,
contracts, indentures, leases or other instruments, that are required to be
described in the Registration Statement or the Prospectus (or any amendment
or supplement thereto) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required, as the case may be;
(v) To the knowledge of such counsel, the Company or one of its
Subsidiaries has proprietary rights in all patents, trademarks, trademark
registrations, service marks, service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets and rights described in the
Prospectus as being owned by them or any of them or necessary for the
conduct of their respective businesses, and such counsel is not aware of
any claim to the contrary or any challenge by any other person to the
rights of the Company and the Subsidiaries with respect to the foregoing
except as set forth on Schedule III hereto;
(vi) To the knowledge of such counsel, neither the Company nor
any of the Subsidiaries is in material violation of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company
or any of the Subsidiaries or of any decree of any court or governmental
agency or body having jurisdiction over the Company or any of the
Subsidiaries;
(vii) Except as described in the Prospectus, there are no
outstanding options, warrants or other rights calling for the issuance of,
and such counsel does not know of any commitment, plan or arrangement to
issue, any shares of capital stock of the Company or any security
convertible into or exchangeable or exercisable for capital stock of the
Company;
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(viii) Except as described in the Prospectus, there is no holder
of any security of the Company or any other person who has the right,
contractual or otherwise, to cause the Company to sell or otherwise issue
to them, or to permit them to underwrite the sale of, the Shares or the
right to have any Common Stock or other securities of the Company included
in the registration statement or the right, as a result of the filing of
the registration statement, to require registration under the Act of any
shares of Common Stock or other securities of the Company;
(ix) To the knowledge of such counsel, neither the Company nor
any of the Subsidiaries is in violation of its respective certificate or
articles of incorporation or bylaws or is in default in the performance of
any material obligation, agreement or condition contained in any bond,
debenture, note or other evidence of indebtedness, except as may be
disclosed in the Prospectus; and
(x) Neither the offer, sale or delivery of the Shares, the
execution or delivery of this Agreement, compliance by the Company with the
provisions hereof, nor consummation by the Company of the transactions
contemplated hereby conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate of
incorporation or bylaws of the Company or any of the Subsidiaries or any
agreement, indenture, lease or other instrument to which the Company or any
of its Subsidiaries is a party or by which any of them or any of their
respective properties is bound that is an exhibit to the Registration
Statement or will result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any of its
Subsidiaries, nor will any such action result in the violation of any
existing law, regulation, ruling (assuming compliance with all applicable
federal and state securities and Blue Sky laws) known to such counsel and
applicable to the Company, the Subsidiaries or any of their respective
properties, or any judgment, injunction, order or decree known to such
counsel and applicable to the Company, the Subsidiaries or any of their
respective properties.
(e) You shall have received on the Closing Date an opinion of
Goodwin, Procter & Hoar LLP, counsel for the Underwriters, dated the Closing
Date and addressed to you, as Representatives of the several Underwriters, with
respect to the matters referred to in clauses (iv) (with the exception of those
matters addressed following the word "nonassessable"), (vi), (vii) (with the
exception of those matters addressed prior to the words "this Agreement has been
duly authorized"), (xi) and the paragraph following clause (xvii) of the
foregoing paragraph (c) and such other related matters as you may request.
(f) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date from KPMG Peat Marwick LLP, independent certified public
accountants, substantially in the forms heretofore approved by you.
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(g) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company (except for
issuances subsequent to the date of the Prospectus of Common Stock, if any,
pursuant to the ESOP or through the exercise of employee stock options described
in the Prospectus) nor any material increase in the short-term or long-term debt
of the Company (other than in the ordinary course of business) from that set
forth or contemplated in the Registration Statement or the Prospectus (or any
amendment or supplement thereto); (iii) there shall not have been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus (or any amendment or supplement thereto), except as may
otherwise be stated in the Registration Statement and Prospectus (or any
amendment or supplement thereto), any material adverse change in the financial
condition, business, properties, net worth or results of operations of the
Company and the Subsidiaries taken as a whole; (iv) the Company and the
Subsidiaries shall not have any liabilities or obligations, direct or contingent
(whether or not in the ordinary course of business), that are material to the
Company and the Subsidiaries, taken as a whole, other than those reflected in or
contemplated by the Registration Statement or the Prospectus (or any amendment
or supplement thereto); and (v) all the representations and warranties of the
Company contained in this Agreement shall be true and correct on and as of the
date hereof and on and as of the Closing Date as if made on and as of the
Closing Date, and you shall have received a certificate, dated the Closing Date
and signed by the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to you), to the effect set
forth in this Section 10(g) and in Section 10(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(i) All the representations and warranties of the Selling
Stockholders contained in this Agreement shall be true and correct on and as of
the date hereof and on and as of the Option Closing Date as if made on and as of
the Option Closing Date, and you shall have received a certificate, dated the
Option Closing Date and signed by or on behalf of the Selling Stockholders to
the effect set forth in this Section 10(i) and in Section 10(j) hereof.
(j) The Selling Stockholders shall not have failed at or prior to the
Option Closing Date to have performed or complied with any of their agreements
herein contained and required to be performed or complied with by them hereunder
at or prior to the Option Closing Date.
(k) The Shares shall have been listed or approved for listing upon
notice of issuance on the Nasdaq National Market.
(l) The Sellers shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably requested.
26
<PAGE>
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and your counsel.
Any certificate or document signed by any officer of the Company or any
Attorney-in-Fact or any Selling Stockholder and delivered to you, as
Representatives of the Underwriters, or to counsel for the Underwriters, shall
be deemed a representation and warranty by the Company, or the particular
Selling Stockholder, as the case may be, to each Underwriter as to the
statements made therein to the extent provided in the appointment of the
Attorney-in-Fact.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 10, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (i) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c), (d) and
(e) shall be revised to reflect the sale of Additional Shares.
11. Expenses. The Company agrees to pay the following costs and
--------
expenses and all other costs and expenses incident to the performance by the
Sellers of their obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Prepricing Prospectus, the Prospectus, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this Agreement,
the preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Shares; (v) the registration of the Shares under the Exchange Act and the
listing of the Shares on the Nasdaq National Market; (vi) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the several states as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction, and delivery of the
preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (vii) the filing fees in connection with any filings required to
be made with the National Association of Securities Dealers, Inc.; (viii) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers of
the Shares; and (ix) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company and the Selling Stockholders. Any transfer taxes imposed on the
issuance or sale of the Shares to the several Underwriters will be paid by the
Sellers pro rata.
27
<PAGE>
12. Effective Date of Agreement. This Agreement shall become effective:
---------------------------
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
Registration Statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the Registration Statement or such post-effective amendment
has been released by the Commission. Until such time as this Agreement shall
have become effective, it may be terminated by the Company, by notifying you, or
by you, as Representatives of the several Underwriters, by notifying the Company
and the Selling Stockholders.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing Date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than one-
tenth of the aggregate number of Shares which the Underwriters are obligated to
purchase on the Closing Date, each non-defaulting Underwriter shall be
obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule II hereto bears to the aggregate number of
Firm Shares set forth opposite the names of all non-defaulting Underwriters or
in such other proportion as you may specify in accordance with Section 20 of the
Master Agreement Among Underwriters of Smith Barney Inc., to purchase the Shares
which such defaulting Underwriter or Underwriters are obligated, but fail or
refuse, to purchase. If any one or more of the Underwriters shall fail or
refuse to purchase Shares which it or they are obligated to purchase on the
Closing Date and the aggregate number of Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Shares which
the Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any such default of any such Underwriter under this Agreement. The
term "Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule II hereto who, with your approval
and the approval of the Company, purchases Shares which a defaulting Underwriter
is obligated, but fails or refuses, to purchase.
Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
13. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company or any Selling Stockholder, by notice to the Company,
if prior to the Closing Date or any Option Closing Date
28
<PAGE>
(if different from the Closing Date and then only as to the Additional Shares),
as the case may be, (i) trading in securities generally on the New York Stock
Exchange, American Stock Exchange or the Nasdaq National Market shall have been
suspended or materially limited, (ii) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or state
authorities, or (iii) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or material
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in your
reasonable judgment, impracticable or inadvisable to commence or continue the
offering of the Shares at the offering price to the public set forth on the
cover page of the Prospectus or to enforce contracts for the resale of the
Shares by the Underwriters. Notice of such termination may be given to the
Company by telegram, telecopy or telephone and shall be subsequently confirmed
by letter.
14. Information Furnished by the Underwriters. The statements set forth
-----------------------------------------
in the last paragraph on the cover page, the stabilization legend on the inside
cover page, and the statements in the first and third paragraphs under the
caption "Underwriting" in any Prepricing Prospectus and in the Prospectus,
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 7(b) and 9 hereof.
15. Termination of Selling Stockholders' Obligations. Notwithstanding any
------------------------------------------------
other provision of this Agreement, this Agreement shall terminate as to any
Selling Stockholder, and such Selling Stockholder shall have no further
obligations hereunder, if the over-allotment option granted under Section 2
hereof is not exercised in accordance with such Section in respect of such
Selling Stockholder's Additional Shares. Any such termination shall be without
liability of the Selling Stockholders to the Underwriters and without liability
of the Underwriters to the Selling Stockholders; provided, however, that in the
event of any such termination, the Selling Stockholders, severally and not
jointly, agree to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Selling
Stockholders under this Agreement, including any costs and expenses payable by
the Selling Stockholders pursuant to Section 11 hereof.
16. Miscellaneous. Except as otherwise provided in Sections 5, 12 and 13
-------------
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 260 Lake Road, Dayville, Connecticut 06241, Attention: Norman A.
Cloutier, Chairman of the Board; or (ii) if to the Selling Stockholders, in care
of the Custodian at the Company's office address set forth above; or (iii) if to
you, as Representatives of the several Underwriters, care of Smith Barney Inc.,
388 Greenwich Street, New York, New York 10013, Attention: Manager, Investment
Banking Division.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company, its directors and officers, and the other controlling
persons referred to in Section 9 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
29
<PAGE>
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Shares in his
status as such purchaser.
17. Applicable Law; Counterparts. This Agreement shall be governed by and
----------------------------
construed in accordance with the laws of The Commonwealth of Massachusetts
applicable to contracts made and to be performed within The Commonwealth of
Massachusetts.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
30
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
UNITED NATURAL FOODS, INC.
By
-----------------------------------
Chairman of the Board
Each of the Selling Stockholders
named in Schedule I hereto
By
-----------------------------------
Attorney-in-Fact
By
-----------------------------------
Attorney-in-Fact
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule II
hereto.
SMITH BARNEY INC.
OPPENHEIMER & CO., INC.
ROBERTSON, STEPHENS & COMPANY LLC
As Representatives of the Several Underwriters
By SMITH BARNEY INC.
By
--------------------------------------
Managing Director
31
<PAGE>
SCHEDULE I
UNITED NATURAL FOODS, INC.
Number of
Selling Stockholders Additional Shares
-------------------- -----------------
Funk Family 1992 Revocable Living Trust 60,000
Triumph-Connecticut Limited Partnership 375,000
-------
Total . . . . . 435,000
=======
32
<PAGE>
SCHEDULE II
UNITED NATURAL FOODS, INC.
Number of
Underwriter Firm Shares
- ----------- -----------
Smith Barney Inc....................
Oppenheimer & Co., Inc..............
Robertson, Stephens & Company LLC...
---------
Total....... 2,900,000
=========
33
<PAGE>
Exhibit 3.4
AMENDED AND RESTATED
BY-LAWS
OF
UNITED NATURAL FOODS, INC.
<PAGE>
AMENDED AND RESTATED BY-LAWS
TABLE OF CONTENTS
Page
ARTICLE 1 - Stockholders............................... 1
Section 1.1 Place of Meetings...................... 1
Section 1.2 Annual Meeting......................... 1
Section 1.3 Special Meetings....................... 1
Section 1.4 Notice of Meetings..................... 1
Section 1.5 Voting List............................ 2
Section 1.6 Quorum................................. 2
Section 1.7 Adjournments........................... 2
Section 1.8 Voting and Proxies..................... 2
Section 1.9 Action at Meeting...................... 3
Section 1.10 Nomination of Directors................ 3
Section 1.11 Notice of Business at Annual Meetings.. 4
Section 1.12 Action without Meeting................ 5
Section 1.13 Organization.......................... 5
ARTICLE 2 - Directors.................................. 5
Section 2.1 General Powers......................... 5
Section 2.2 Number; Election and Qualification..... 5
Section 2.3 Classes of Directors................... 6
Section 2.4 Terms of Office........................ 6
Section 2.5 Allocation of Directors Among Classes
in the Event of Increases or
Decreases in the Number of Directors... 6
Section 2.6 Vacancies.............................. 7
Section 2.7 Resignation............................ 7
Section 2.8 Regular Meetings....................... 7
Section 2.9 Special Meetings....................... 7
Section 2.10 Notice of Special Meetings............. 7
Section 2.11 Meetings by Telephone Conference
Calls.................................. 8
Section 2.12 Quorum................................. 8
Section 2.13 Action at Meeting...................... 8
Section 2.14 Action by Consent...................... 8
Section 2.15 Removal................................ 8
Section 2.16 Committees............................. 8
Section 2.17 Compensation of Directors.............. 9
-i-
<PAGE>
Page
----
ARTICLE 3 - Officers................................... 9
Section 3.1 Enumeration............................ 9
Section 3.2 Election............................... 9
Section 3.3 Qualification.......................... 9
Section 3.4 Tenure................................. 10
Section 3.5 Resignation and Removal................ 10
Section 3.6 Vacancies.............................. 10
Section 3.7 Chairman of the Board and Vice
Chairman of the Board.................. 10
Section 3.8 Chief Executive Officer and
President.............................. 10
Section 3.9 Vice Presidents........................ 11
Section 3.10 Secretary and Assistant Secretaries.... 11
Section 3.11 Treasurer and Assistant Treasurers..... 11
Section 3.12 Salaries............................... 12
ARTICLE 4 - Capital Stock.............................. 12
Section 4.1 Issuance of Stock...................... 12
Section 4.2 Certificates of Stock.................. 12
Section 4.3 Transfers.............................. 13
Section 4.4 Lost, Stolen or Destroyed
Certificates........................... 13
Section 4.5 Record Date............................ 13
ARTICLE 5 - General Provisions......................... 14
Section 5.1 Fiscal Year............................ 14
Section 5.2 Corporate Seal......................... 14
Section 5.3 Waiver of Notice....................... 14
Section 5.4 Voting of Securities................... 14
Section 5.5 Evidence of Authority.................. 14
Section 5.6 Certificate of Incorporation........... 15
Section 5.7 Transactions with Interested Parties... 15
Section 5.8 Severability........................... 15
Section 5.9 Pronouns............................... 15
ARTICLE 6 - Nominating Committee....................... 16
Section 6.1 Appointment; Authority................. 16
Section 6.2 Nominations Prior to a
Termination Event...................... 16
Section 6.3 Nominations After a
Termination Event...................... 17
Section 6.4 Tenure and Qualifications.............. 17
Section 6.5 Meetings............................... 17
-ii-
<PAGE>
Page
----
Section 6.6 Quorum................................. 17
Section 6.7 Vacancies.............................. 17
Section 6.8 Resignations and Removal............... 18
Section 6.9 Procedure.............................. 18
ARTICLE 7 - Amendments................................. 18
Section 7.1 By the Board of Directors.............. 18
Section 7.2 By the Stockholders.................... 18
Section 7.3 Certain Provisions...................... 18
-iii-
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF
UNITED NATURAL FOODS, INC.
ARTICLE 1 - Stockholders
1.1 Place of Meetings. All meetings of stockholders shall be held
-----------------
at such place within or without the State of Delaware as may be designated
from time to time by the Board of Directors or the Chief Executive Officer
(or, if there is no Chief Executive Officer, the President) or, if not so
designated, at the registered office of the corporation.
1.2 Annual Meeting. The annual meeting of stockholders for the
--------------
election of directors and for the transaction of such other business as may
properly be brought before the meeting shall be held within six months after
the end of each fiscal year of the corporation on a date to be fixed by the
Board of Directors or the Chief Executive Officer (or, if there is no Chief
Executive Officer, the President) (which date shall not be a legal holiday in
the place where the meeting is to be held) at the time and place to be fixed
by the Board of Directors or the Chief Executive Officer (or, if there is no
Chief Executive Officer, the President) and stated in the notice of the
meeting. If no annual meeting is held in accordance with the foregoing
provisions, the Board of Directors shall cause the meeting to be held as soon
thereafter as convenient. If no annual meeting is held in accordance with the
foregoing provisions, a special meeting may be held in lieu of the annual
meeting, and any action taken at that special meeting shall have the same
effect as if it had been taken at the annual meeting, and in such case all
references in these By-Laws to the annual meeting of the stockholders shall be
deemed to refer to such special meeting.
1.3 Special Meetings. Special meetings of stockholders may be
----------------
called at any time by the Chairman of the Board of Directors, the Chief
Executive Officer (or, if there is no Chief Executive Officer, the President)
or the Board of Directors. Business transacted at any special meeting of
stockholders shall be limited to matters relating to the purpose or purposes
stated in the notice of meeting.
1.4 Notice of Meetings. Except as otherwise provided by law,
------------------
written notice of each meeting of stockholders, whether annual or special,
shall be given not less than 10 nor more than
-1-
<PAGE>
60 days before the date of the meeting to each stockholder entitled to vote at
such meeting. The notices of all meetings shall state the place, date and hour
of the meeting. The notice of a special meeting shall state, in addition, the
purpose or purposes for which the meeting is called. If mailed, notice is given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation.
1.5 Voting List. The officer who has charge of the stock ledger of
-----------
the corporation shall prepare, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting, at a place within the city
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time of the meeting, and
may be inspected by any stockholder who is present.
1.6 Quorum. Except as otherwise provided by law, the Certificate of
------
Incorporation or these By-Laws, the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote
at the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business.
1.7 Adjournments. Any meeting of stockholders may be adjourned to
------------
any other time and to any other place at which a meeting of stockholders may
be held under these By-Laws by the stockholders present or represented at the
meeting and entitled to vote, although less than a quorum, or, if no
stockholder is present, by any officer entitled to preside at or to act as
Secretary of such meeting. It shall not be necessary to notify any stock-
holder of any adjournment of less than 30 days if the time and place of the
adjourned meeting are announced at the meeting at which adjournment is taken,
unless after the adjournment a new record date is fixed for the adjourned
meeting. At the adjourned meeting, the corporation may transact any business
which might have been transacted at the original meeting.
1.8 Voting and Proxies. Each stockholder shall have one vote for
------------------
each share of stock entitled to vote held of record by such stockholder and a
proportionate vote for each fractional share so held, unless otherwise
provided by the General Corporation Law of the State of Delaware, the
Certificate of
-2-
<PAGE>
Incorporation or these By-Laws. Each stockholder of record entitled to vote at a
meeting of stockholders may vote in person or may authorize another person or
persons to vote or act for him by written proxy executed by the stockholder or
his authorized agent and delivered to the Secretary of the corporation. No such
proxy shall be voted or acted upon after three years from the date of its
execution, unless the proxy expressly provides for a longer period.
1.9 Action at Meeting. When a quorum is present at any meeting, the
-----------------
holders of a majority of the stock present or represented and voting on a
matter (or if there are two or more classes of stock entitled to vote as
separate classes, then in the case of each such class, the holders of a
majority of the stock of that class present or represented and voting on a
matter) shall decide any matter to be voted upon by the stockholders at such
meeting, except when a different vote is required by express provision of law,
the Certificate of Incorporation or these By-Laws. Any election by
stockholders shall be determined by a plurality of the votes cast by the
stockholders entitled to vote at the election.
1.10 Nomination of Directors. Only persons who are nominated in
-----------------------
accordance with the following procedures shall be eligible for election as
directors. Nomination for election to the Board of Directors of the
corporation at a meeting of stockholders may be made by the Board of Directors
or by any stockholder of the corporation entitled to vote for the election of
directors at such meeting who complies with the notice procedures set forth in
this Section 1.10. Such nominations, other than those made by or on behalf of
the Board of Directors, shall be made by notice in writing delivered or mailed
by first class United States mail, postage prepaid, to the Secretary, and
received not less than 60 days nor more than 90 days prior to such meeting;
provided, however, that if less than 70 days' notice or prior public
disclosure of the date of the meeting is given to stockholders, such
nomination shall have been mailed or delivered to the Secretary not later than
the close of business on the 10th day following the date on which the notice
of the meeting was mailed or such public disclosure was made, whichever occurs
first. Such notice shall set forth (a) as to each proposed nominee (i) the
name, age, business address and, if known, residence address of each such
nominee, (ii) the principal occupation or employment of each such nominee,
(iii) the number of shares of stock of the corporation which are beneficially
owned by each such nominee, and (iv) any other information concerning the
nominee that must be disclosed as to nominees in proxy solicitations pursuant
to Regulation 14A under the Securities Exchange Act of 1934, as amended
(including such person's written consent to be named as a
-3-
<PAGE>
nominee and to serve as a director if elected); and (b) as to the stockholder
giving the notice (i) the name and address, as they appear on the corporation's
books, of such stockholder and (ii) the class and number of shares of the
corporation which are beneficially owned by such stockholder. The corporation
may require any proposed nominee to furnish such other information as may
reasonably be required by the corporation to determine the eligibility of such
proposed nominee to serve as a director of the corporation.
The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
1.11 Notice of Business at Annual Meetings. At an annual meeting of
-------------------------------------
the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,
(b) otherwise properly brought before the meeting by or at the direction of
the Board of Directors, or (c) otherwise properly brought before an annual
meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, if such business relates to the election of
directors of the corporation, the procedures in Section 1.10 must be complied
with. If such business relates to any other matter, the stockholder must have
given timely notice thereof in writing to the Secretary. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than 60 days nor more
than 90 days prior to the meeting; provided, however, that in the event that
less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the 10th
day following the date on which such notice of the date of the meeting was
mailed or such public disclosure was made, whichever occurs first. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (b) the
name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (c) the class and number of shares of the
corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding
anything in these
-4-
<PAGE>
By-Laws to the contrary, no business shall be conducted at any annual meeting
except in accordance with the procedures set forth in this Section 1.11 and
except that any stockholder proposal which complies with Rule 14a-8 of the proxy
rules (or any successor provision) promulgated under the Securities Exchange Act
of 1934, as amended, and is to be included in the corporation's proxy statement
for an annual meeting of stockholders shall be deemed to comply with the
requirements of this Section 1.11.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 1.11, and if he
should so determine, the chairman shall so declare to the meeting that any
such business not properly brought before the meeting shall not be transacted.
1.12 Action without Meeting. Stockholders may not take any action by
----------------------
written consent in lieu of a meeting.
1.13 Organization. The Chairman of the Board, or in his absence the
------------
Vice Chairman of the Board designated by the Chairman of the Board, or the
Chief Executive Officer (or, if there is no Chief Executive Officer, the
President), in the order named, shall call meetings of the stockholders to
order, and shall act as chairman of such meeting; provided, however, that the
Board of Directors may appoint any stockholder to act as chairman of any
meeting in the absence of the Chairman of the Board. The Secretary of the
corporation shall act as secretary at all meetings of the stockholders; but in
the absence of the Secretary at any meeting of the stockholders, the presiding
officer may appoint any person to act as secretary of the meeting.
ARTICLE 2 - Directors
2.1 General Powers. The business and affairs of the corporation
--------------
shall be managed by or under the direction of a Board of Directors, who may
exercise all of the powers of the corporation except as otherwise provided by
law, the Certificate of Incorporation or these By-Laws. In the event of a
vacancy in the Board of Directors, the remaining directors, except as
otherwise provided by law, may exercise the powers of the full Board until the
vacancy is filled.
2.2 Number; Election and Qualification. The number of directors
----------------------------------
which shall constitute the whole Board of Directors shall be determined by
resolution of the Board of Directors, but
-5-
<PAGE>
in no event shall be less than three. The number of directors may be decreased
at any time and from time to time by a majority of the directors then in office,
but only to eliminate vacancies existing by reason of the death, resignation,
removal or expiration of the term of one or more directors. The directors shall
be elected at the annual meeting of stockholders by such stockholders as have
the right to vote on such election. Directors need not be stockholders of the
corporation.
2.3 Classes of Directors. The Board of Directors shall be and is
--------------------
divided into three classes: Class I, Class II and Class III. No one class
shall have more than one director more than any other class. If a fraction is
contained in the quotient arrived at by dividing the designated number of
directors by three, then, if such fraction is one-third, the extra director
shall be a member of Class I, and if such fraction is two-thirds, one of the
extra directors shall be a member of Class I and one of the extra directors
shall be a member of Class II, unless otherwise provided from time to time by
resolution adopted by the Board of Directors.
2.4 Terms of Office. Each director shall serve for a term ending on
---------------
the date of the third annual meeting following the annual meeting at which
such director was elected; provided, that each initial director in Class I
shall serve for a term ending on the date of the annual meeting of
stockholders in 1997; each initial director in Class II shall serve for a term
ending on the date of the annual meeting of stockholders in 1998; and each
initial director in Class III shall serve for a term ending on the date of the
annual meeting of stockholders in 1999; and provided further, that the term of
each director shall be subject to the election and qualification of his
successor and to his earlier death, resignation or removal.
2.5 Allocation of Directors Among Classes in the Event of Increases
---------------------------------------------------------------
or Decreases in the Number of Directors. In the event of any increase or
- ---------------------------------------
decrease in the authorized number of directors, (i) each director then serving
as such shall nevertheless continue as a director of the class of which he is
a member and (ii) the newly created or eliminated directorships resulting from
such increase or decrease shall be apportioned by the Board of Directors among
the three classes of directors so as to ensure that no one class has more than
one director more than any other class. To the extent possible, consistent
with the foregoing rule, any newly created directorships shall be added to
those classes whose terms of office are to expire at the latest dates
following such allocation, and any newly eliminated directorships shall be
subtracted from those classes whose terms of offices are
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to expire at the earliest dates following such allocation, unless otherwise
provided from time to time by resolution adopted by the Board of Directors.
2.6 Vacancies. Any vacancy in the Board of Directors, however
---------
occurring, including a vacancy resulting from an enlargement of the Board,
shall be filled only by vote of a majority of the directors then in office,
although less than a quorum, or by a sole remaining director. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office, and a director chosen to fill a position resulting from
an increase in the number of directors shall hold office until the next
election of the class for which such director shall have been chosen, subject
to the election and qualification of his successor and to his earlier death,
resignation or removal.
2.7 Resignation. Any director may resign by delivering his written
-----------
resignation to the corporation at its principal office or to the Chief
Executive Officer (or, if there is no Chief Executive Officer, the President)
or Secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some
other event.
2.8 Regular Meetings. Regular meetings of the Board of Directors
----------------
may be held without notice at such time and place, either within or without
the State of Delaware, as shall be determined from time to time by the Board
of Directors; provided that any director who is absent when such a
determination is made shall be given notice of the determination. A regular
meeting of the Board of Directors may be held without notice immediately after
and at the same place as the annual meeting of stockholders.
2.9 Special Meetings. Special meetings of the Board of Directors
may be held at any time and place, within or without the State of Delaware,
designated in a call by the Chairman of the Board, the Chief Executive Officer
(or, if there is no Chief Executive Officer, the President), two or more
directors, or by one director in the event that there is only a single
director in office.
2.10 Notice of Special Meetings. Notice of any special meeting of
--------------------------
directors shall be given to each director by the Secretary or by the officer
or one of the directors calling the meeting. Notice shall be duly given to
each director (i) by giving notice to such director in person or by telephone
at least 24 hours in advance of the meeting, (ii) by sending a telegram,
telecopy, or telex, or delivering written notice by hand, to his last known
business or home address at least 24 hours in advance
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of the meeting, or (iii) by mailing written notice to his last known business or
home address at least 72 hours in advance of the meeting. A notice or waiver of
notice of a meeting of the Board of Directors need not specify the purposes of
the meeting.
2.11 Meetings by Telephone Conference Calls. Directors or any
--------------------------------------
members of any committee designated by the directors may participate in a
meeting of the Board of Directors or such committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation by such
means shall constitute presence in person at such meeting.
2.12 Quorum. A majority of the total number of the whole Board of
------
Directors shall constitute a quorum at all meetings of the Board of Directors.
In the event one or more of the directors shall be disqualified to vote at any
meeting, then the required quorum shall be reduced by one for each such
director so disqualified; provided, however, that in no case shall less than
one-third (1/3) of the number so fixed constitute a quorum. In the absence of
a quorum at any such meeting, a majority of the directors present may adjourn
the meeting from time to time without further notice other than announcement
at the meeting, until a quorum shall be present.
2.13 Action at Meeting. At any meeting of the Board of Directors at
-----------------
which a quorum is present, the vote of a majority of those present shall be
sufficient to take any action, unless a different vote is specified by law,
the Certificate of Incorporation or these By-Laws.
2.14 Action by Consent. Any action required or permitted to be taken
-----------------
at any meeting of the Board of Directors or of any committee of the Board of
Directors may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent to the action in writing, and the
written consents are filed with the minutes of proceedings of the Board or
committee.
2.15 Removal. Directors of the corporation may be removed only for
-------
cause by the affirmative vote of the holders of two-thirds of the shares of
the capital stock of the corporation issued and outstanding and entitled to
vote.
2.16 Committees. The Board of Directors may, by resolution passed by
----------
a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation,
including the Nominating Committee provided for in Article 6 of these By-Laws.
The Board may
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designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members of the committee present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board of Directors and subject to the
provisions of the General Corporation Law of the State of Delaware, shall have
and may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation and may authorize the
seal of the corporation to be affixed to all papers which may require it. Each
such committee shall keep minutes and make such reports as the Board of
Directors may from time to time request. Except as the Board of Directors may
otherwise determine, any committee may make rules for the conduct of its
business, but unless otherwise provided by the directors or in such rules, its
business shall be conducted as nearly as possible in the same manner as is
provided in these By-Laws for the Board of Directors.
2.17 Compensation of Directors. Directors may be paid such
-------------------------
compensation for their services and such reimbursement for expenses of
attendance at meetings as the Board of Directors may from time to time
determine. No such payment shall preclude any director from serving the
corporation or any of its parent or subsidiary corporations in any other
capacity and receiving compensation for such service.
ARTICLE 3 - Officers
--------------------
3.1 Enumeration. The officers of the corporation shall consist of a
-----------
President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, including a Chairman of the
Board, a Vice Chairman of the Board, a Chief Executive Officer and one or more
Vice Presidents, Assistant Treasurers, and Assistant Secretaries. The Board
of Directors may appoint such other officers as it may deem appropriate.
3.2 Election. The President, Treasurer and Secretary shall be
--------
elected annually by the Board of Directors at its first meeting following the
annual meeting of stockholders. Other officers may be appointed by the Board
of Directors at such meeting or at any other meeting.
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3.3 Qualification. No officer need be a stockholder. Any two or more
-------------
offices may be held by the same person.
3.4 Tenure. Except as otherwise provided by law, by the Certificate
------
of Incorporation or by these By-Laws, each officer shall hold office until his
successor is elected and qualified, unless a different term is specified in
the vote choosing or appointing him, or until his earlier death, resignation
or removal.
3.5 Resignation and Removal. Any officer may resign by delivering
-----------------------
his written resignation to the corporation at its principal office or to the
Chief Executive Officer (or, if there is no Chief Executive Officer, the
President) or Secretary. Such resignation shall be effective upon receipt
unless it is specified to be effective at some other time or upon the
happening of some other event.
Any officer may be removed at any time, with or without cause, by vote
of a majority of the entire number of directors then in office.
Except as the Board of Directors may otherwise determine, no officer who
resigns or is removed shall have any right to any compensation as an officer
for any period following his resignation or removal, or any right to damages
on account of such removal, whether his compensation be by the month or by the
year or otherwise, unless such compensation is expressly provided in a duly
authorized written agreement with the corporation.
3.6 Vacancies. The Board of Directors may fill any vacancy
---------
occurring in any office for any reason and may, in its discretion, leave
unfilled for such period as it may determine any offices other than those of
President, Treasurer and Secretary. Each such successor shall hold office for
the unexpired term of his predecessor and until his successor is elected and
qualified, or until his earlier death, resignation or removal.
3.7 Chairman of the Board and Vice Chairman of the Board. The Board
----------------------------------------------------
of Directors may appoint a Chairman of the Board. If the Board of Directors
appoints a Chairman of the Board, he shall perform such duties and possess
such powers as are assigned to him by the Board of Directors. If the Board of
Directors appoints a Vice Chairman of the Board, he shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board and shall perform such other duties and
possess such other powers as may from time to time be vested in him by the
Board of Directors.
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<PAGE>
3.8 Chief Executive Officer and President. The Chief Executive Officer
-------------------------------------
or, if there is no Chief Executive Officer, the President, shall, subject to the
direction of the Board of Directors, have general charge and supervision of the
business of the corporation. Unless the Board of Directors has designated the
Chairman of the Board or another officer as Chief Executive Officer, the
President shall be the Chief Executive Officer of the corporation. The Chief
Executive Officer and President shall perform such other duties and have such
other powers that the Board of Directors may from time to time prescribe.
3.9 Vice Presidents. Any Vice President shall perform such duties
---------------
and possess such powers as the Board of Directors or the President may from
time to time prescribe. In the event of the absence, inability or refusal to
act of the Chief Executive Officer (or, if there is no Chief Executive
Officer, the President), the Vice President (or if there shall be more than
one, the Vice Presidents in the order determined by the Board of Directors)
shall perform the duties of the Chief Executive Officer (or, if there is no
Chief Executive Officer, the President) and when so performing shall have all
the powers of and be subject to all the restrictions upon the President. The
Board of Directors may assign to any Vice President the title of Executive
Vice President, Senior Vice President or any other title selected by the Board
of Directors.
3.10 Secretary and Assistant Secretaries. The Secretary shall perform
-----------------------------------
such duties and shall have such powers as the Board of Directors or the Chief
Executive Officer (or, if there is no Chief Executive Officer, the President)
may from time to time prescribe. In addition, the Secretary shall perform such
duties and have such powers as are incident to the office of the secretary,
including without limitation the duty and power to give notices of all meetings
of stockholders and special meetings of the Board of Directors, to attend all
meetings of stockholders and the Board of Directors and keep a record of the
proceedings, to maintain a stock ledger and prepare lists of stockholders and
their addresses as required, to be custodian of corporate records and the
corporate seal and to affix and attest to the same on documents.
Any Assistant Secretary shall perform such duties and possess such
powers as the Board of Directors, the Chief Executive Officer (or, if there is
no Chief Executive Officer, the President) or the Secretary may from time to
time prescribe. In the event of the absence, inability or refusal to act of
the Secretary, the Assistant Secretary (or if there shall be more than one,
the Assistant Secretaries in the order determined by the Board of Directors)
shall perform the duties and exercise the powers of the Secretary.
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In the absence of the Secretary or any Assistant Secretary at any meeting
of stockholders or directors, the person presiding at the meeting shall
designate a temporary secretary to keep a record of the meeting.
3.11 Treasurer and Assistant Treasurers. The Treasurer shall perform
----------------------------------
such duties and shall have such powers as may from time to time be assigned to
him by the Board of Directors or the Chief Executive Officer (or, if there is
no Chief Executive Officer, the President). In addition, the Treasurer shall
perform such duties and have such powers as are incident to the office of
treasurer, including without limitation the duty and power to keep and be
responsible for all funds and securities of the corporation, to deposit funds
of the corporation in depositories selected in accordance with these By-Laws,
to disburse such funds as ordered by the Board of Directors, to make proper
accounts of such funds, and to render as required by the Board of Directors
statements of all such transactions and of the financial condition of the
corporation.
The Assistant Treasurers shall perform such duties and possess such
powers as the Board of Directors, the Chief Executive Officer (or, if there is
no Chief Executive Officer, the President) or the Treasurer may from time to
time prescribe. In the event of the absence, inability or refusal to act of
the Treasurer, the Assistant Treasurer (or if there shall be more than one,
the Assistant Treasurers in the order determined by the Board of Directors)
shall perform the duties and exercise the powers of the Treasurer.
3.12 Salaries. Officers of the corporation shall be entitled to such
--------
salaries, compensation or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.
ARTICLE 4 - Capital Stock
-------------------------
4.1 Issuance of Stock. Unless otherwise voted by the stockholders
-----------------
and subject to the provisions of the Certificate of Incorporation, the whole
or any part of any unissued balance of the authorized capital stock of the
corporation or the whole or any part of any unissued balance of the authorized
capital stock of the corporation held in its treasury may be issued, sold,
transferred or otherwise disposed of by vote of the Board of Directors in such
manner, for such consideration and on such terms as the Board of Directors may
determine.
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4.2 Certificates of Stock. Every holder of stock of the corporation
---------------------
shall be entitled to have a certificate, in such form as may be prescribed by
law and by the Board of Directors, certifying the number and class of shares
owned by him in the corporation. Each such certificate shall be signed by, or in
the name of the corporation by, the Chairman or Vice Chairman, if any, of the
Board of Directors, or the Chief Executive Officer (or, if there is no Chief
Executive Officer, the President) or a Vice President, and the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation. Any or all of the signatures on the certificate may be a facsimile.
Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the
By-Laws, applicable securities laws or any agreement among any number of
stockholders or among such holders and the corporation shall have
conspicuously noted on the face or back of the certificate either the full
text of the restriction or a statement of the existence of such restriction.
4.3 Transfers. Except as otherwise established by rules and
---------
regulations adopted by the Board of Directors, and subject to applicable law,
shares of stock may be transferred on the books of the corporation by the
surrender to the corporation or its transfer agent of the certificate
representing such shares properly endorsed or accompanied by a written
assignment or power of attorney properly executed, and with such proof of
authority or the authenticity of signature as the corporation or its transfer
agent may reasonably require. Except as may be otherwise required by law, by
the Certificate of Incorporation or by these By-Laws, the corporation shall be
entitled to treat the record holder of stock as shown on its books as the
owner of such stock for all purposes, including the payment of dividends and
the right to vote with respect to such stock, regardless of any transfer,
pledge or other disposition of such stock until the shares have been
transferred on the books of the corporation in accordance with the
requirements of these By-Laws.
4.4 Lost, Stolen or Destroyed Certificates. The corporation may
--------------------------------------
issue a new certificate of stock in place of any previously issued certificate
alleged to have been lost, stolen, or destroyed, upon such terms and
conditions as the Board of Directors may prescribe, including the presentation
of reasonable evidence of such loss, theft or destruction and the giving of
such indemnity as the Board of Directors may require for the protection of the
corporation or any transfer agent or registrar.
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<PAGE>
4.5 Record Date. The Board of Directors may fix in advance a date as a
-----------
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders, or entitled to receive payment of any
dividend or other distribution or allotment of any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other
lawful action. Such record date shall not be more than 60 nor less than 10
days before the date of such meeting, nor more than 60 days prior to any other
action to which such record date relates.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day before the day on which notice is given, or, if
notice is waived, at the close of business on the day before the day on which
the meeting is held. The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
ARTICLE 5 - General Provisions
------------------------------
5.1 Fiscal Year. The fiscal year of the corporation shall be
-----------
determined by resolution of the Board of Directors.
5.2 Corporate Seal. The corporate seal shall be in such form as
--------------
shall be approved by the Board of Directors.
5.3 Waiver of Notice. Whenever any notice whatsoever is required to
----------------
be given by law, by the Certificate of Incorporation or by these By-Laws, a
waiver of such notice either in writing signed by the person entitled to such
notice or such person's duly authorized attorney, or by telegraph, cable or
any other available method, whether before, at or after the time stated in
such waiver, or the appearance of such person or persons at such meeting in
person or by proxy, shall be deemed equivalent to such notice.
5.4 Voting of Securities. Except as the directors may otherwise
--------------------
designate, the Chief Executive Officer (or, if there is no Chief Executive
Officer, the President) or Treasurer may waive
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notice of, and act as, or appoint any person or persons to act as, proxy or
attorney-in-fact for this corporation (with or without power of substitution)
at, any meeting of stockholders or shareholders of any other corporation or
organization, the securities of which may be held by this corporation.
5.5 Evidence of Authority. A certificate by the Secretary, or an
---------------------
Assistant Secretary, or a temporary Secretary, as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall as to all persons who rely on the certificate in good faith
be conclusive evidence of such action.
5.6 Certificate of Incorporation. All references in these By-Laws
----------------------------
to the Certificate of Incorporation shall be deemed to refer to the
Certificate of Incorporation of the corporation, as amended and in effect from
time to time.
5.7 Transactions with Interested Parties. No contract or
------------------------------------
transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of the directors or
officers are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the Board of Directors
or a committee of the Board of Directors which authorizes the contract or
transaction or solely because his or their votes are counted for such purpose,
if:
(1) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum;
(2) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee of the Board of Directors, or the stockholders.
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Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
5.8 Severability. Any determination that any provision of these
------------
By-Laws is for any reason inapplicable, illegal or ineffective shall not
affect or invalidate any other provision of these By-Laws.
5.9 Pronouns. All pronouns used in these By-Laws shall be deemed to
--------
refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
ARTICLE 6 - Nominating Committee
--------------------------------
6.1 Appointment; Authority. The Chairman and Vice Chairman of the
----------------------
Board of Directors shall constitute a Nominating Committee. The Nominating
Committee shall have the powers and shall follow the procedures set forth in
this Article 6 until such time as the Board of Directors takes action as set
forth in Section 6.4. The designation of such committee and the delegation
thereto of authority shall not operate to relieve the Board of Directors, or
any member thereof, of any responsibility imposed by law. The Nominating
Committee shall have the authority to nominate persons to serve as directors
and stand for election at the annual meeting of stockholders. Nothing set
forth in this Article 6 shall prevent any stockholder, at the annual meeting
of stockholders, from nominating persons, other than those nominated by the
Nominating Committee, to serve as directors in accordance with Section 1.10
hereof.
6.2 Nominations Prior to a Termination Event. Prior to the
----------------------------------------
occurrence of a Termination Event (as defined below), each member of the
Nominating Committee shall have sole power and authority independent of the
other, to nominate three (3) persons (one of whom may be himself) for election
as director, comprising a total of three (3) directors for each Nominating
Committee member, it being the intent that, with the three (3) classes of
directors, each member of the Nominating Committee will have the right, at all
times prior to the occurrence of a Termination Event, to nominate a total of
three (3) directors including himself, and that such nominees shall constitute
the nominees of the full Board of Directors. As such, each member of the
Nominating Committee shall have the right to nominate one person in each class
of the Board of Directors (as set forth in Section 2.3), which, depending on
the class, may include himself. For the nomination and election of directors
in any class other than those above
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provided, and otherwise than any director that the Corporation is contractually
obligated to a third-party to nominate and elect, the members of the Nominating
Committee shall jointly nominate persons who are acceptable to both members
("Joint Nominees"). If unable to agree on Joint Nominees, then each member shall
nominate one (1) person and the full Board of Directors by majority vote shall
vote from among such two (2) nominees. In the event of a vacancy on the board,
if one member of the Nominating Committee had the sole authority to nominate the
person who vacated that seat, that Nominating Committee member shall have sole
power and authority to nominate a person to fill such vacancy. Otherwise the
members shall nominate a Joint Nominee and if unable to so agree, then each
member shall nominate one (1) person and the full Board of Directors by majority
vote shall vote from among such two (2) nominees. A "Termination Event" shall
mean the earliest to occur of (i) the day after the first annual meeting of
stockholders of the corporation held after the corporation's initial public
offering or (ii) the date on which either the Chairman or Vice Chairman
beneficially owns less than fifteen percent (15%) of the corporation's
outstanding Common Stock.
6.3 Nominations After a Termination Event. After the occurrence of
-------------------------------------
a Termination Event, the members of the Nominating Committee shall jointly
nominate persons who are acceptable to both members ("Joint Nominees"). If
unable to agree on Joint Nominees, then each member shall nominate one (1)
person and the full Board of Directors by majority vote shall vote from among
such two (2) nominees and any other persons nominated by members of the Board
of Directors. In the event of a vacancy on the Board, the members shall
nominate a Joint Nominee and if unable to so agree, then each member shall
nominate one (1) person and the full Board of Directors by majority vote shall
vote from among such two (2) nominees and any other persons nominated by
members of the Board of Directors.
6.4 Tenure and Qualifications. Each member of the Nominating
-------------------------
Committee shall so serve as a member as long as that member holds the office
of Chairman or Vice Chairman of the Board of Directors. The Nominating
Committee shall continue to act until such time as the Board of Directors
terminates the duties of the Committee, which right of termination is so
reserved by the Board of Directors and which action may only be taken by the
affirmative vote of such number of the members of the Board of Directors as
shall equal a majority of the Board of Directors plus one (1).
6.5 Meetings. Meetings of the Nominating Committee may be held
--------
without notice at such times and places as the Nominating Committee may fix
from time to time by resolution or mutual
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agreement. The notice of any meeting of the Nominating Committee need not state
the business proposed to be transacted at the meeting.
6.6 Quorum. Both of the members of the Nominating Committee shall
------
constitute a quorum for the transaction of business at any meeting thereof,
and action of the Nominating Committee shall be authorized by the affirmative
vote of both of the members present at a meeting.
6.7 Vacancies. Any vacancy in the Nominating Committee shall be
---------
filled by vote of a majority of the remaining members of the Board of
Directors.
6.8 Resignations and Removal. Any member of the Nominating
------------------------
Committee may be removed at any time with and not without cause by the Board
of Directors acting in accordance with the voting requirements of Section 6.3.
Any member of the Nominating Committee may resign from the Nominating
Committee at any time by giving written notice to the Chief Executive Officer
(or, if there is no Chief Executive Officer, the President) or Secretary of
the corporation, and unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
6.9 Procedure. The Nominating Committee by agreement of its two (2)
---------
members may fix its own rules of procedure which shall not be inconsistent
with these By-Laws. It shall keep regular minutes of its proceedings and
report the same to the Board of Directors for its information at the meeting
thereof held next after the proceedings shall have been taken.
ARTICLE 7 - Amendments
----------------------
7.1 By the Board of Directors. These By-Laws may be altered,
-------------------------
amended or repealed or new by-laws may be adopted by the affirmative vote of a
majority of the directors present at any regular or special meeting of the
Board of Directors at which a quorum is present.
7.2 By the Stockholders. Except as otherwise provided in Section
-------------------
7.3, these By-Laws may be altered, amended or repealed or new by-laws may be
adopted by the affirmative vote of the holders of a majority of the shares of
the capital stock of the corporation issued and outstanding and entitled to
vote at any
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regular or special meeting of stockholders, provided notice of such alteration,
amendment, repeal or adoption of new by-laws shall have been stated in the
notice of such regular or special meeting.
7.3 Certain Provisions. Notwithstanding any other provision of law,
------------------
the Certificate of Incorporation or these By-Laws, and notwithstanding the
fact that a lesser percentage may be specified by law, the affirmative vote of
the holders of at least sixty-seven percent (67%) of the shares of the capital
stock of the corporation issued and outstanding and entitled to vote shall be
required to amend or repeal, or to adopt any provision inconsistent with
Section 1.3, Section 1.10, Section 1.11, Section 1.12, Section 1.13, Article 2
or Article 7 of these By-Laws.
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Exhibit 5
October 30, 1996
United Natural Foods, Inc.
260 Lake Road
Dayville, CT 06241
Re: Registration Statement on Form S-1 (File No. 333-11349)
-------------------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you in connection with a Registration
Statement on Form S-1 (File No. 333-11349) (the "Registration Statement")
filed with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration of an aggregate of 3,335,000 shares of Common Stock, $.01 par
value per share (the "Common Stock"), of United Natural Foods, Inc., a
Delaware corporation (the "Company"), of which (i) 2,900,000 shares of Common
Stock will be issued and sold by the Company to the Underwriters (as defined
below), and (ii) up to 435,000 shares subject to an over-allotment option
granted by certain stockholders of the Company (the "Selling Stockholders") to
the Underwriters (collectively, the "Shares").
The Shares are to be sold by the Company and the Selling Stockholders
pursuant to an underwriting agreement (the "Underwriting Agreement") to be
entered into by and among the Company, the Selling Stockholders, and Smith
Barney Inc., Oppenheimer & Co., Inc. and Robertson, Stephens & Company LLC, as
representatives of the several underwriters named in the Underwriting
Agreement (the "Underwriters"), the form of which has been filed as Exhibit 1
to the Registration Statement.
<PAGE>
We are acting as counsel for the Company in connection with the sale by the
Company and the Selling Stockholders of the Shares. We have examined signed
copies of the Registration Statement as filed with the Commission. We have also
examined and relied upon the Underwriting Agreement, minutes of meetings of the
stockholders and Board of Directors of the Company as provided to us by the
Company, stock record books of the Company as provided to us by the Company, the
Certificate of Incorporation and Bylaws of the Company, each as restated and/or
amended to date, a warrant to purchase shares of Common Stock, dated November
17, 1993, issued by the Company to Triumph-Connecticut Limited Partnership (the
"Warrant"), and such other documents as we have deemed necessary for purposes of
rendering the opinions hereinafter set forth.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents
submitted to us as copies, the authenticity of the originals of such latter
documents and the legal competence of all signatories to such documents.
We assume that the appropriate action will be taken, prior to the offer
and sale of the Shares in accordance with the Underwriting Agreement, to
register and qualify the Shares for sale under all applicable state securities
or "blue sky" laws.
We express no opinion herein as to the laws of any state or jurisdiction
other than the laws of the Commonwealth of Massachusetts, the Delaware General
Corporation Law statute and the federal laws of the United States of America.
Based upon and subject to the foregoing, we are of the opinion that (i)
the Shares to be issued and sold by the Company have been duly authorized and,
when issued and paid for in accordance with the terms and conditions of the
Underwriting Agreement, will be validly issued, fully paid and nonassessable,
and (ii) the Shares to be sold by the Selling Stockholders have been duly
authorized and either (a) are validly issued, fully paid and nonassessable or
(b) when issued and paid for in accordance with the terms and conditions of
the Warrant, will be validly issued, fully paid and nonassessable.
It is understood that this opinion is to be used only in connection with
the offer and sale of the Shares while the Registration Statement is in
effect.
Please note that we are opining only as to matters expressly set forth
herein, and no opinion should be inferred as to any other matters.
<PAGE>
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement in accordance with the requirements
of Item 601(b)(5) of Regulation S-K under the Securities Act and to the use of
our name therein and in the related Prospectus under the caption "Legal
Matters." In giving such consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Commission.
Very truly yours,
HALE AND DORR
<PAGE>
EXHIBIT 10.26
UNITED NATURAL FOODS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
AND ALL SUPPORTING FORMS HAVE BEEN PRODUCED FOR
PEABODY & BROWN
Copyright 1995 Corbel
All Rights Reserved
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY AND ADMINISTRATION
<TABLE>
<C> <S> <C>
2.1 TOP HEAVY PLAN REQUIREMENTS........................................ 17
2.2 DETERMINATION OF TOP HEAVY STATUS.................................. 17
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER........................ 21
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY............................ 21
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES...................... 22
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR............................. 22
2.7 RECORDS AND REPORTS................................................ 24
2.8 APPOINTMENT OF ADVISERS............................................ 24
2.9 INFORMATION FROM EMPLOYER.......................................... 24
2.10 PAYMENT OF EXPENSES................................................ 24
2.11 MAJORITY ACTIONS................................................... 24
2.12 CLAIMS PROCEDURE................................................... 25
2.13 CLAIMS REVIEW PROCEDURE............................................ 25
</TABLE>
ARTICLE III
ELIGIBILITY
<TABLE>
<C> <S> <C>
3.1 CONDITIONS OF ELIGIBILITY.......................................... 26
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
3.2 EFFECTIVE DATE OF PARTICIPATION.................................... 26
3.3 DETERMINATION OF ELIGIBILITY....................................... 26
3.4 TERMINATION OF ELIGIBILITY......................................... 27
3.5 OMISSION OF ELIGIBLE EMPLOYEE...................................... 27
3.6 INCLUSION OF INELIGIBLE EMPLOYEE................................... 27
3.7 ELECTION NOT TO PARTICIPATE........................................ 28
</TABLE>
ARTICLE IV
CONTRIBUTION AND ALLOCATION
<TABLE>
<C> <S> <C>
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION.................... 28
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION......................... 28
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND
EARNINGS........................................................... 28
4.4 MAXIMUM ANNUAL ADDITIONS........................................... 34
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS.......................... 39
4.6 DIRECTED INVESTMENT ACCOUNT........................................ 40
</TABLE>
ARTICLE V
FUNDING AND INVESTMENT POLICY
<TABLE>
<C> <S> <C>
5.1 INVESTMENT POLICY.................................................. 41
5.2 APPLICATION OF CASH................................................ 42
5.3 LOANS TO THE TRUST................................................. 42
</TABLE>
<PAGE>
ARTICLE VI
VALUATIONS
<TABLE>
<C> <S> <C>
6.1 VALUATION OF THE TRUST FUND........................................ 43
6.2 METHOD OF VALUATION................................................ 44
</TABLE>
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
<TABLE>
<C> <S> <C>
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT.......................... 44
7.2 DETERMINATION OF BENEFITS UPON DEATH............................... 44
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY................... 46
7.4 DETERMINATION OF BENEFITS UPON TERMINATION......................... 46
7.5 DISTRIBUTION OF BENEFITS........................................... 50
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED............................... 53
7.7 DISTRIBUTION FOR MINOR BENEFICIARY................................. 54
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN..................... 55
7.9 PUT OPTION......................................................... 55
7.10 NONTERMINABLE PROTECTIONS AND RIGHTS............................... 57
7.11 IN-SERVICE TRANSFERS............................................... 57
7.12 ADVANCE DISTRIBUTION FOR HARDSHIP.................................. 57
7.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION.................... 58
</TABLE>
ARTICLE VIII
TRUSTEE
<TABLE>
<C> <S> <C>
8.1 BASIC RESPONSIBILITIES OF TRUSTEE.................................. 58
8.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE........................ 59
8.3 OTHER POWERS OF THE TRUSTEE........................................ 60
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
8.4 VOTING COMPANY STOCK............................................... 62
8.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS........................... 63
8.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES...................... 64
8.7 ANNUAL REPORT OF THE TRUSTEE....................................... 64
8.8 AUDIT.............................................................. 65
8.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE..................... 66
8.10 TRANSFER OF INTEREST............................................... 67
8.11 DIRECT ROLLOVER.................................................... 67
</TABLE>
ARTICLE IX
AMENDMENT, TERMINATION AND MERGERS
<TABLE>
<C> <S> <C>
9.1 AMENDMENT.......................................................... 68
9.2 TERMINATION........................................................ 69
9.3 MERGER OR CONSOLIDATION............................................ 69
</TABLE>
ARTICLE X
MISCELLANEOUS
<TABLE>
<C> <S> <C>
10.1 PARTICIPANT'S RIGHTS............................................... 70
10.2 ALIENATION......................................................... 70
10.3 CONSTRUCTION OF PLAN............................................... 71
10.4 GENDER AND NUMBER.................................................. 71
10.5 LEGAL ACTION....................................................... 71
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS............................. 71
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
10.7 BONDING............................................................ 72
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE......................... 72
10.9 INSURER'S PROTECTIVE CLAUSE........................................ 72
10.10 RECEIPT AND RELEASE FOR PAYMENTS................................... 72
10.11 ACTION BY THE EMPLOYER............................................. 73
10.12 NAMED FIDUCIARIES AND ALLOCATION OF
RESPONSIBILITY..................................................... 73
10.13 HEADINGS........................................................... 73
10.14 APPROVAL BY INTERNAL REVENUE SERVICE............................... 74
10.15 UNIFORMITY......................................................... 74
10.16 SECURITIES AND EXCHANGE COMMISSION APPROVAL........................ 74
</TABLE>
ARTICLE XI
PARTICIPATING EMPLOYERS
<TABLE>
<C> <S> <C>
11.1 ADOPTION BY OTHER EMPLOYERS........................................ 75
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS............................ 75
11.3 DESIGNATION OF AGENT............................................... 76
11.4 EMPLOYEE TRANSFERS................................................. 76
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION.............................. 76
11.6 AMENDMENT.......................................................... 77
11.7 DISCONTINUANCE OF PARTICIPATION.................................... 77
11.8 ADMINISTRATOR'S AUTHORITY.......................................... 77
</TABLE>
<PAGE>
UNITED NATURAL FOODS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
THIS AGREEMENT, hereby made and entered into this __________ day of
_________________________ 19__, by and between United Natural Foods, Inc.
(herein referred to as the "Employer") and Robert G. Huckins (herein referred to
as the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer heretofore established an Employee Stock
Ownership Plan and Trust effective November 1, 1988 (hereinafter called the
"Effective Date"), known as Cornucopia Natural Foods, Inc. Employee Stock
Ownership Plan and which Plan as of July 25, 1996 shall hereinafter be known as
United Natural Foods, Inc. Employee Stock Ownership Plan (herein referred to as
the "Plan") in recognition of the contribution made to its successful operation
by its employees and for the exclusive benefit of its eligible employees; and
WHEREAS, under the terms of the Plan, the Employer has the ability to
amend the Plan, provided the Trustee joins in such amendment if the provisions
of the Plan affecting the Trustee are amended; and
WHEREAS, contributions to the Plan will be made by the Employer and
such contributions made to the trust will be invested primarily in the capital
stock of the Employer;
NOW, THEREFORE, effective August 1, 1996, except as otherwise provided,
the Employer and the Trustee in accordance with the provisions of the Plan
pertaining to amendments thereof, hereby amend the Plan in its entirety and
restate the Plan to provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.2 "Administrator" means the person or entity designated by the
Employer pursuant to Section 2.4 to administer the Plan on behalf of the
Employer.
1
<PAGE>
1.3 "Affiliated Employer" means any corporation which is a member
of a controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.4 "Aggregate Account" means, with respect to each Participant,
the value of all accounts maintained on behalf of a Participant, whether
attributable to Employer or Employee contributions, subject to the provisions of
Section 2.2.
1.5 "Anniversary Date" means the last day of the Plan Year.
1.6 "Beneficiary" means the person to whom the share of a deceased
Participant's total account is payable, subject to the restrictions of
Sections 7.2 and 7.5.
1.7 "Code" means the Internal Revenue Code of 1986, as amended or
replaced from time to time.
1.8 "Company Stock" means common stock issued by the Employer (or
by a corporation which is a member of the controlled group of corporations of
which the Employer is a member) which is readily tradeable on an established
securities market. If there is no common stock which meets the foregoing
requirement, the term "Company Stock" means common stock issued by the Employer
(or by a corporation which is a member of the same controlled group) having a
combination of voting power and dividend rights equal to or in excess of: (A)
that class of common stock of the Employer (or of any other such corporation)
having the greatest voting power, and (B) that class of common stock of the
Employer (or of any other such corporation) having the greatest dividend rights.
Noncallable preferred stock shall be deemed to be "Company Stock" if such stock
is convertible at any time into stock which constitutes "Company Stock"
hereunder and if such conversion is at a conversion price which (as of the date
of the acquisition by the Trust) is reasonable. For purposes of the preceding
sentence, pursuant to Regulations, preferred stock shall be treated as
noncallable if after the call there will be a reasonable opportunity for a
conversion which meets the requirements of the preceding sentence.
1.9 "Company Stock Account" means the account of a Participant
which is credited with the shares of Company Stock purchased and paid for by the
Trust Fund or contributed to the Trust Fund.
1.10 "Compensation" with respect to any Participant means such
Participant's wages for the Plan Year within the meaning of Code
Section 3401(a) (for
2
<PAGE>
the purposes of income tax withholding at the source) but determined without
regard to any rules that limit the remuneration included in wages based on the
nature or location of the employment or the services performed (such as the
exception for agricultural labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of Compensation shall
be made by:
(a) excluding (even if includible in gross income)
reimbursements or other expense allowances, fringe benefits
(cash or noncash), moving expenses, deferred compensation, and
welfare benefits.
(b) including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and which are
not includible in the gross income of the Participant under Code
Sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or 457, and
Employee contributions described in Code Section 414(h)(2) that
are treated as Employer contributions.
For a Participant's initial year of participation, Compensation shall
be recognized as of such Employee's effective date of participation pursuant to
Section 3.3.
Compensation in excess of $200,000 shall be disregarded. Such amount
shall be adjusted at the same time and in such manner as permitted under Code
Section 415(d), except that the dollar increase in effect on January 1 of any
calendar year shall be effective for the Plan Year beginning with or within such
calendar year and the first adjustment to the $200,000 limitation shall be
effective on January 1, 1990. For any short Plan Year the Compensation limit
shall be an amount equal to the Compensation limit for the calendar year in
which the Plan Year begins multiplied by the ratio obtained by dividing the
number of full months in the short Plan Year by twelve (12). In applying this
limitation, the family group of a Highly Compensated Participant who is subject
to the Family Member aggregation rules of Code Section 414(q)(6) because such
Participant is either a "five percent owner" of the Employer or one of the ten
(10) Highly Compensated Employees paid the greatest "415 Compensation" during
the year, shall be treated as a single Participant, except that for this purpose
Family Members shall include only the affected Participant's spouse and any
lineal descendants who have not attained age nineteen (19) before the close of
the year. If, as a result of the application of such rules the adjusted $200,000
limitation is exceeded, then the limitation shall be prorated among the affected
Family Members in proportion to each such Family Member's Compensation prior to
the application of this limitation, or the limitation shall be adjusted in
accordance with any other method permitted by Regulation.
3
<PAGE>
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation of each Employee
taken into account under the Plan shall not exceed the OBRA `93 annual
compensation limit. The OBRA `93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Code Section 401(a)(17)(B). The cost of living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the OBRA `93
annual compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Code Section 401(a)(17) shall mean the OBRA
`93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current Plan Year,
the Compensation for that prior determination period is subject to the OBRA `93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA `93 annual
compensation limit is $150,000.
If, as a result of such rules, the maximum "annual addition" limit of
Section 4.4(a) would be exceeded for one or more of the affected Family Members,
the prorated Compensation of all affected Family Members shall be adjusted to
avoid or reduce any excess. The prorated Compensation of any affected Family
Member whose allocation would exceed the limit shall be adjusted downward to the
level needed to provide an allocation equal to such limit. The prorated
Compensation of affected Family Members not affected by such limit shall then be
adjusted upward on a pro rata basis not to exceed each such affected Family
Member's Compensation as determined prior to application of the Family Member
rule. The resulting allocation shall not exceed such individual's maximum
"annual addition" limit. If, after these adjustments, an "excess amount" still
results, such "excess amount" shall be disposed of in the manner described in
Section 4.5(a) pro rata among all affected Family Members.
For purposes of this Section, if the Plan is a plan described in Code
Section 413(c) or 414(f) (a plan maintained by more than one Employer), the
$200,000 limitation applies separately with respect to the Compensation of any
Participant from each Employer maintaining the Plan.
4
<PAGE>
If, in connection with the adoption of this amendment and restatement,
the definition of Compensation has been modified, then, for Plan Years prior to
the Plan Year which includes the adoption date of this amendment and
restatement, Compensation means compensation determined pursuant to the Plan
then in effect.
For Plan Years beginning prior to January 1, 1989, the $200,000 limit
(without regard to Family Member aggregation) shall apply only for Top Heavy
Plan Years and shall not be adjusted.
1.11 "Contract" or "Policy" means any life insurance policy,
retirement income or annuity policy, or annuity contract (group or individual)
issued pursuant to the terms of the Plan.
1.12 "Current Obligations" means Trust obligations arising from
extension(s) of credit to the Trust and payable in cash in the Plan Year for
which an Employer contribution is made. With respect to the estates of decedents
who died prior to July 13, 1989, Trust obligations shall include the liability
for payment of taxes imposed by Code Section 2001, which liability is incurred
pursuant to Code Section 2210(b).
1.13 "Early Retirement Date." This Plan does not provide for a
retirement date prior to Normal Retirement Date.
1.14 "Eligible Employee" means any Employee.
Employees who are Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall not be eligible to participate in this Plan.
Employees whose employment is governed by the terms of a collective
bargaining agreement between Employee representatives (within the meaning of
Code Section 7701(a)(46)) and the Employer under which retirement benefits were
the subject of good faith bargaining between the parties will not be eligible to
participate in this Plan unless such agreement expressly provides for coverage
in this Plan or two percent or more of the Employees of the Employer who are
covered pursuant to that agreement are professionals as defined in Regulation
1.410(b)-9.
Employees of Affiliated Employers shall not be eligible to participate
in this Plan unless such Affiliated Employers have specifically adopted this
Plan in writing.
1.15 "Employee" means any person who is employed by the Employer or
Affiliated Employer, but excludes any person who is an independent contractor.
Employee shall include Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and such Leased Employees do not constitute
more than 20% of the recipient' s non-highly compensated work force.
5
<PAGE>
1.16 "Employer" means United Natural Foods, Inc. and any
Participating Employer (as defined in Section 11.1) which shall adopt this Plan;
any successor which shall maintain this Plan; and any predecessor which has
maintained this Plan. The Employer is a corporation with principal offices in
the State of Connecticut.
1.17 "ESOP" means an employee stock ownership plan that meets the
requirements of Code Section 4975(e)(7) and Regulation 54.4975-11.
1.18 "Exempt Loan" means a loan made to the Plan by a disqualified
person or a loan to the Plan which is guaranteed by a disqualified person and
which satisfies the requirements of Section 2550.408b-3 of the Department of
Labor Regulations, Section 54.4975-7(b) of the Treasury Regulations and Section
5.3 hereof.
1.19 "Family Member" means, with respect to an affected Participant,
such Participant's spouse and such Participant's lineal descendants and
ascendants and their spouses, all as described in Code Section 414(q)(6)(B).
1.20 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan, including, but
not limited to, the Trustee, the Employer and its representative body, and the
Administrator.
1.21 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on November 1st of each year and ending the following October 31st
except, however, for the short Fiscal Year commencing on November 1, 1995, and
ending on July 31, 1996. Thereafter, the Fiscal Year shall commence on August
1st of each year and end the following July 31st.
1.22 "Forfeiture" means that portion of a Participant's Account that
is not Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a
Terminated Participant's Account, or
(b) the last day of the Plan Year in which the
Participant incurs five (5) consecutive 1-Year Breaks in
Service.
Effective, however, as of July 31, 1996, a forfeiture will
occur when a Participant incurs a 1-Year Break in Service.
6
<PAGE>
Furthermore, effective from and after July 31, 1996, in the case of a
Terminated Participant whose Vested benefit is zero, such Terminated Participant
shall be deemed to have received a distribution of his Vested benefit upon his
termination of employment. Restoration of such amounts shall occur pursuant to
Section 7.4(g)(2). In addition, the term Forfeiture shall also include amounts
deemed to be Forfeitures pursuant to any other provision of this Plan.
1.23 "Former Participant" means a person who has been a Participant,
but who has ceased to be a Participant for any reason.
1.24 "415 Compensation" with respect to any Participant means such
Participant's wages for the Plan Year within the meaning of Code Section 3401(a)
(for the purposes of income tax withholding at the source) but determined
without regard to any rules that limit the remuneration included in wages based
on the nature or location of the employment or the services performed (such as
the exception for agricultural labor in Code Section 3401(a)(2)).
If, in connection with the adoption of this amendment and restatement,
the definition of "415 Compensation" has been modified, then, for Plan Years
prior to the Plan Year which includes the adoption date of this amendment and
restatement, "415 Compensation" means compensation determined pursuant to the
Plan then in effect.
1.25 "Highly Compensated Employee" means an Employee described in
Code Section 414(q) and the Regulations thereunder, and generally means an
Employee who performed services for the Employer during the "determination year"
and is in one or more of the following groups:
(a) Employees who at any time during the "determination
year" or "look-back year" were "five percent owners" as defined
in Section 1.30(c).
(b) Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $75,000.
(c) Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $50,000 and were
in the Top Paid Group of Employees for the Plan Year.
(d) Employees who during the "look-back year" were
officers of the Employer (as that term is defined within the
meaning of the Regulations under Code Section 416) and received
"415 Compensation" during the "look-back year" from the Employer
greater than 50 percent of the limit in effect under Code
Section 4l5(b)(l)(A) for any such Plan
7
<PAGE>
Year. The number of officers shall be limited to the lesser of
(i) 50 employees; or (ii) the greater of 3 employees or 10
percent of all employees. For the purpose of determining the
number of officers, Employees described in Section 1.50(a), (b),
(c) and (d) shall be excluded, but such Employees shall still be
considered for the purpose of identifying the particular
Employees who are officers. If the Employer does not have at
least one officer whose annual "415 Compensation" is in excess
of 50 percent of the Code Section 415(b)(1)(A) limit, then the
highest paid officer of the Employer will be treated as a Highly
Compensated Employee.
(e) Employees who are in the group consisting of the 100
Employees paid the greatest "415 Compensation" during the
"determination year" and are also described in (b), (c) or (d)
above when these paragraphs are modified to substitute
"determination year" for "look-back year."
The "look-back year" shall be the calendar year ending with or within
the Plan Year for which testing is being performed, and the "determination year"
(if applicable) shall be the period of time, if any, which extends beyond the
"look-back year" and ends on the last day of the Plan Year for which testing is
being performed (the "lag period"). If the "lag period" is less than twelve
months long, the dollar threshold amounts specified in (b), (c) and (d) above
shall be prorated based upon the number of months in the "lag period."
For purposes of this Section, the determination of "415 Compensation"
shall be made by including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457, and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions. Additionally, the
dollar threshold amounts specified in (b) and (c) above shall be adjusted at
such time and in such manner as is provided in Regulations. In the case of such
an adjustment, the dollar limits which shall be applied are those for the
calendar year in which the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into account as
a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered in any qualified
8
<PAGE>
plan maintained by the Employer. The exclusion of Leased Employees for this
purpose shall be applied on a uniform and consistent basis for all of the
Employer's retirement plans. Highly Compensated Former Employees shall be
treated as Highly Compensated Employees without regard to whether they performed
services during the "determination year."
1.26 "Highly Compensated Former Employee" means a former Employee
who had a separation year prior to the "determination year" and was a Highly
Compensated Employee in the year of separation from service or in any
"determination year" after attaining age 55. Notwithstanding the foregoing, an
Employee who separated from service prior to 1987 will be treated as a Highly
Compensated Former Employee only if during the separation year (or year
preceding the separation year) or any year after the Employee attains age 55 (or
the last year ending before the Employee's 55th birthday), the Employee either
received "415 Compensation" in excess of $50,000 or was a "five percent owner."
For purposes of this Section, "determination year," "415 Compensation" and "five
percent owner" shall be determined in accordance with Section 1.25. Highly
Compensated Former Employees shall be treated as Highly Compensated Employees.
The method set forth in this Section for determining who is a "Highly
Compensated Former Employee" shall be applied on a uniform and consistent basis
for all purposes for which the Code Section 414(q) definition is applicable.
1.27 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.28 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period; (2) each
hour for which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holidays, sickness, jury duty, disability, lay-off, military duty
or leave of absence) during the applicable computation period; (3) each hour for
which back pay is awarded or agreed to by the Employer without regard to
mitigation of damages. These hours will be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made.
The same Hours of Service shall not be credited both under (1) or (2), as the
case may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no
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duties are performed is not required to be credited to the Employee if such
payment is made or due under a plan maintained solely for the purpose of
complying with applicable worker's compensation, or unemployment compensation or
disability insurance laws; and (iii) Hours of Service are not required to be
credited for a payment which solely reimburses an Employee for medical or
medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by or
due from the Employer regardless of whether such payment is made by or due from
the Employer directly, or indirectly through, among others, a trust fund, or
insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
An Hour of Service must be counted for the purpose of determining a Year
of Service, a year of participation for purposes of accrued benefits, a 1-Year
Break in Service, and employment commencement date (or reemployment commencement
date). In addition, Hours of Service will be credited for employment with other
Affiliated Employers, except as otherwise provided herein. The provisions of
Department of Labor regulations 2530.200b-2(b) and (c) are incorporated herein
by reference.
1.29 "Investment Manager" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.30 "Key Employee" means an Employee as defined in Code Section
416(i) and the Regulations thereunder. Generally, any Employee or former
Employee (as well as each of his Beneficiaries) is considered a Key Employee if
he, at any time during the Plan Year that contains the "Determination Date" or
any of the preceding four (4) Plan Years, has been included in one of the
following categories:
(a) an officer of the Employer (as that term is defined
within the meaning of the Regulations under Code Section 416)
having annual "415 Compensation" greater than 50 percent of the
amount in effect under Code Section 415(b)(1)(A) for any such
Plan Year.
(b) one of the ten employees having annual "415
Compensation" from the Employer for a Plan Year greater than the
dollar limitation in effect under Code Section 415(c)(1)(A) for
the calendar year in which such Plan Year ends and owning (or
considered
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as owning within the meaning of Code Section 318) both more than
one-half percent interest and the largest interests in the
Employer.
(c) a "five percent owner" of the Employer. "Five
percent owner" means any person who owns (or is considered as
owning within the meaning of Code Section 318) more than five
percent (5%) of the outstanding stock of the Employer or stock
possessing more than five percent (5%) of the total combined
voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than five
percent (5%) of the capital or profits interest in the Employer.
In determining percentage ownership hereunder, employers that
would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an
annual "415 Compensation" from the Employer of more than
$150,000. "One percent owner" means any person who owns (or is
considered as owning within the meaning of Code Section 318)
more than one percent (1%) of the outstanding stock of the
Employer or stock possessing more than one percent (1%) of the
total combined voting power of all stock of the Employer or, in
the case of an unincorporated business, any person who owns more
than one percent (1%) of the capital or profits interest in the
Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code Sections
414(b), (c), (m) and (o) shall be treated as separate employers.
However, in determining whether an individual has "415
Compensation" of more than $150,000, "415 Compensation" from
each employer required to be aggregated under Code Sections
414(b), (c), (m) and (o) shall be taken into account.
For purposes of this Section, the determination of "415 Compensation"
shall be made by including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(l)(B), 403(b) or 457, and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
1.31 "Late Retirement Date" means the first day of the month
coinciding with or next following a Participant's actual Retirement Date after
having reached his Normal Retirement Date.
1.32 "Leased Employee" means any person (other than an Employee of
the recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient
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<PAGE>
and related persons determined in accordance with Code Section 414(n)(6)) on a
substantially full time basis for a period of at least one year, and such
services are of a type historically performed by employees in the business field
of the recipient employer. Contributions or benefits provided a Leased Employee
by the leasing organization which are attributable to services performed for the
recipient employer shall be treated as provided by the recipient employer. A
Leased Employee shall not be considered an Employee of the recipient:
(a) if such employee is covered by a money purchase
pension plan providing:
(1) a non-integrated employer contribution rate of at
least 10% of compensation, as defined in Code Section
4l5(c)(3), but including amounts which are contributed by
the Employer pursuant to a salary reduction agreement and
which are not includible in the gross income of the
Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457, and Employee contributions
described in Code Section 414(h)(2) that are treated as
Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20%
of the recipient's non-highly compensated work force.
1.33 "Non-Highly Compensated Participant" means any Participant who
is neither a Highly Compensated Employee nor a Family Member.
1.34 "Non-Key Employee" means any Employee or former Employee (and
his Beneficiaries) who is not a Key Employee.
1.35 "Normal Retirement Age" means the Participant's 65th birthday,
or his 5th anniversary of joining the Plan, if later. A Participant shall become
fully Vested in his Participant's Account upon attaining his Normal Retirement
Age.
1.36 "Normal Retirement Date" means the first day of the month
coinciding with or next following the Participant's Normal Retirement Age.
1.37 "1-Year Break in Service" means the applicable computation
period during which an Employee has not completed more than 500 Hours of Service
(reduced proportionately based on the number of full months in any short Plan
Year)
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with the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence." Years of Service and 1-Year Breaks in Service shall be
measured on the same computation period.
"Authorized leave of absence" means an unpaid, temporary cessation from
active employment with the Employer pursuant to an established nondiscriminatory
policy, whether occasioned by illness, military service, or any other reason.
A "maternity or paternity leave of absence" means, for Plan Years
beginning after December 31, 1984, an absence from work for any period by reason
of the Employee's pregnancy, birth of the Employee's child, placement of a child
with the Employee in connection with the adoption of such child, or any absence
for the purpose of caring for such child for a period immediately following such
birth or placement. For this purpose, Hours of Service shall be credited for the
computation period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee from incurring a 1-Year Break in
Service, or, in any other case, in the immediately following computation period.
The Hours of Service credited for a "maternity or paternity leave of absence"
shall be those which would normally have been credited but for such absence, or
in any case in which the Administrator is unable to determine such hours
normally credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a "maternity or paternity leave of absence"
shall not exceed 501 or a prorated amount pursuant to this Section.
1.38 "Other Investments Account" means the account of a Participant
which is credited with his share of the net gain (or loss) of the Plan,
Forfeitures and Employer contributions in other than Company Stock and which is
debited with payments made to pay for Company Stock.
1.39 "Participant" means any Eligible Employee who participates in
the Plan as provided in Sections 3.2 and 3.3, and has not for any reason become
ineligible to participate further in the Plan.
1.40 "Participant's Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting from the Employer's contributions.
1.41 "Plan" means this instrument, including all amendments thereto.
1.42 "Plan Year" means the Plan's accounting year of twelve (12)
months commencing on November 1st of each year and ending the following October
31st except, however, for the short Plan Year commencing on November 1, 1995,
and ending on July 31, 1996. Thereafter, the Plan Year shall commence on August
1st of
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each year and end the following July 31st. The Plan Year change is effective as
of July 25, 1996.
1.43 "Regulation" means the Income Tax Regulations as promulgated by
the Secretary of the Treasury or his delegate, and as amended from time to time.
1.44 "Retired Participant" means a person who has been a Participant,
but who has become entitled to retirement benefits under the Plan.
1.45 "Retirement Date" means the date as of which a Participant
retires for reasons other than Total and Permanent Disability, whether such
retirement occurs on a Participant' s Normal Retirement Date or Late Retirement
Date (see Section 7.1).
1.46 "Super Top Heavy Plan" means a plan described in Section 2.2(b).
1.47 "Terminated Participant" means a person who has been a
Participant, but whose employment has been terminated other than by death, Total
and Permanent Disability or retirement.
1.48 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.49 "Top Heavy Plan Year" means a Plan Year during which the Plan is
a Top Heavy Plan.
1.50 "Top Paid Group" means the top 20 percent of Employees who
performed services for the Employer during the applicable year, ranked according
to the amount of "415 Compensation" (determined for this purpose in accordance
with Section 1.25) received from the Employer during such year. All Affiliated
Employers shall be taken into account as a single employer, and Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall be considered
Employees unless such Leased Employees are covered by a plan described in Code
Section 414(n)(5) and are not covered in any qualified plan maintained by the
Employer. Employees who are non-resident aliens and who received no earned
income (within the meaning of Code Section 911 (d)(2)) from the Employer
constituting United States source income within the meaning of Code Section
861(a)(3) shall not be treated as Employees. Additionally, for the purpose of
determining the number of active Employees in any year, the following additional
Employees shall also be excluded; however, such Employees shall still be
considered for the purpose of identifying the particular Employees in the Top
Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours
per week;
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<PAGE>
(c) Employees who normally work less than six (6) months
during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the Employer are
covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer, and the
Plan covers only Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both the total
number of active Employees as well as from the identification of particular
Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be applied on a
uniform and consistent basis for all purposes for which the Code Section 414(q)
definition is applicable.
1.51 "Total and Permanent Disability" means a condition which the
Employer in its sole discretion determines has incapacitated the Participant
from satisfactorily performing his usual services for the Employer and is
expected to continue to so incapacitate the Participant during the foreseeable
future. The disability of a Participant shall be determined by a licensed
physician chosen by the Administrator. The determination shall be applied
uniformly to all Participants.
1.52 "Trustee" means the person or entity named as trustee herein or
in any separate trust forming a part of this Plan, and any successors.
1.53 "Trust Fund" means the assets of the Plan and Trust as the same
shall exist from time to time.
1.54 "Unallocated Company Stock Suspense Account" means an account
containing Company Stock acquired with the proceeds of an Exempt Loan and which
has not been released from such account and allocated to the Participants'
Company Stock Accounts.
1.55 "Vested" means the nonforfeitable portion of any account
maintained on behalf of a Participant.
1.56 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least 1000
Hours of Service.
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For purposes of eligibility for participation, the initial computation
period shall begin with the date on which the Employee first performs an Hour of
Service. The participation computation period beginning after a 1-Year Break in
Service shall be measured from the date on which an Employee again performs an
Hour of Service. The participation computation period shall shift to the Plan
Year which includes the anniversary of the date on which the Employee first
performed an Hour of Service. An Employee who is credited with the required
Hours of Service in both the initial computation period (or the computation
period beginning after a 1-Year Break in Service) and the Plan Year which
includes the anniversary of the date on which the Employee first performed an
Hour of Service, shall be credited with two (2) Years of Service for purposes of
eligibility to participate.
An Employee whose initial eligibility computation period includes
November 1, 1995 and who fails to complete 1,000 or more Hours of Service in
said initial period, shall be credited with a Year of Service if the Employee
completes 1,000 or more Hours of Service during the twelve consecutive month
period from November 1, 1995 through October 31, 1996 as if such period were a
Plan Year.
For vesting purposes, the computation period shall be the Plan Year,
including periods prior to the Effective Date of the Plan.
An Employee with 1,000 or more Hours of Service for the twelve
consecutive month period from November 1, 1995 through October 31, 1996, shall
be credited with a full Year of Vesting Service in addition to any service
required to be credited for Vesting purposes for the Plan Year beginning August
1, 1996.
For all other purposes, the computation period shall be the Plan Year.
Notwithstanding the foregoing, for any short Plan Year, the
determination of whether an Employee has completed a Year of Service shall be
made in accordance with Department of Labor regulation 2530.203-2(c). However,
in determining whether an Employee has completed a Year of Service for benefit
accrual purposes in the short Plan Year, the number of the Hours of Service
required shall be proportionately reduced based on the number of full months in
the short Plan Year.
Years of Service with an Affiliated Employer shall be recognized while
the Affiliated Employer is a Participating Employer, except as provided in
Article III.
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ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special vesting
requirements of Code Section 416(b) pursuant to Section 7.4 of the Plan and the
special minimum allocation requirements of Code Section 416(c) pursuant to
Section 4.3 of the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan
Year in which, as of the Determination Date, (1) the Present
Value of Accrued Benefits of Key Employees and (2) the sum of
the Aggregate Accounts of Key Employees under this Plan and all
plans of an Aggregation Group, exceeds sixty percent (60%) of
the Present Value of Accrued Benefits and the Aggregate Accounts
of all Key and Non-Key Employees under this Plan and all plans
of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year,
but such Participant was a Key Employee for any prior Plan Year,
such Participant's Present Value of Accrued Benefit and/or
Aggregate Account balance shall not be taken into account for
purposes of determining whether this Plan is a Top Heavy or
Super Top Heavy Plan (or whether any Aggregation Group which
includes this Plan is a Top Heavy Group). In addition, if a
Participant or Former Participant has not performed any services
for any Employer maintaining the Plan at any time during the
five year period ending on the Determination Date, any accrued
benefit for such Participant or Former Participant shall not be
taken into account for the purposes of determining whether this
Plan is a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any
Plan Year in which, as of the Determination Date, (1) the
Present Value of Accrued Benefits of Key Employees and (2) the
sum of the Aggregate Accounts of Key Employees under this Plan
and all plans of an Aggregation Group, exceeds ninety percent
(90%) of the Present Value of Accrued Benefits and the Aggregate
Accounts of all Key and Non-Key Employees under this Plan and
all plans of an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account
as of the Determination Date is the sum of:
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(1) his Participant's Account balance as of the most recent
valuation occurring within a twelve (12) month period ending
on the Determination Date;
(2) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the amount of
any contributions actually made after the valuation date but
due on or before the Determination Date, except for the
first Plan Year when such adjustment shall also reflect the
amount of any contributions made after the Determination
Date that are allocated as of a date in that first Plan
Year.
(3) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4)
preceding Plan Years. However, in the case of distributions
made after the valuation date and prior to the Determination
Date, such distributions are not included as distributions
for top heavy purposes to the extent that such distributions
are already included in the Participant's Aggregate Account
balance as of the valuation date. Notwithstanding anything
herein to the contrary, all distributions, including
distributions made prior to January 1, 1984, and
distributions under a terminated plan which if it had not
been terminated would have been required to be included in
an Aggregation Group, will be counted. Further,
distributions from the Plan (including the cash value of
life insurance policies) of a Participant's account balance
because of death shall be treated as a distribution for the
purposes of this paragraph.
(4) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax deductible
qualified voluntary employee contributions shall not be
considered to be a part of the Participant's Aggregate
Account balance.
(5) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the Employee and
made from a plan maintained by one employer to a plan
maintained by another employer), if this Plan provides the
rollovers or plan-to-plan transfers, it shall always
consider such rollovers or plan-to-plan transfers as a
distribution for the purposes of this Section. If this Plan
is the plan accepting such rollovers or plan-to-plan
transfers, it shall not consider such
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<PAGE>
rollovers or plan-to-plan transfers as part of the
Participant' s Aggregate Account balance.
(6) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee or made
to a plan maintained by the same employer), if this Plan
provides the rollover or plan-to-plan transfer, it shall not
be counted as a distribution for purposes of this Section.
If this Plan is the plan accepting such rollover or plan-to-
plan transfer, it shall consider such rollover or plan-to-
plan transfer as part of the Participant' s Aggregate
Account balance, irrespective of the date on which such
rollover or plan-to-plan transfer is accepted.
(7) For the purposes of determining whether two employers
are to be treated as the same employer in (5) and (6) above,
all employers aggregated under Code Section 414(b), (c), (m)
and (o) are treated as the same employer.
(d) "Aggregation Group" means either a Required Aggregation
Group or a Permissive Aggregation Group as hereinafter
determined.
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each plan of the Employer in
which a Key Employee is a participant in the Plan Year
containing the Determination Date or any of the four
preceding Plan Years, and each other plan of the Employer
which enables any plan in which a Key Employee participates
to meet the requirements of Code Sections 401(a)(4) or 410,
will be required to be aggregated. Such group shall be known
as a Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in
the group will be considered a Top Heavy Plan if the
Required Aggregation Group is a Top Heavy Group. No plan in
the Required Aggregation Group will be considered a Top
Heavy Plan if the Required Aggregation Group is not a Top
Heavy Group.
(2) Permissive Aggregation Group: The Employer may also
include any other plan not required to be included in the
Required Aggregation Group, provided the resulting group,
taken as a whole, would continue to satisfy the provisions
of Code
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<PAGE>
Sections 401(a)(4) and 410. Such group shall be
known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan
that is part of the Required Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation
Group is a Top Heavy Group. No plan in the Permissive
Aggregation Group will be considered a Top Heavy Plan if the
Permissive Aggregation Group is not a Top Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall
be aggregated in order to determine whether such plans are
Top Heavy Plans.
(4) An Aggregation Group shall include any terminated plan
of the Employer if it was maintained within the last five
(5) years ending on the Determination Date.
(e) "Determination Date" means (a) the last day of the
preceding Plan Year, or (b) in the case of the first Plan Year,
the last day of such Plan Year.
(f) Present Value of Accrued Benefit: In the case of a
defined benefit plan, the Present Value of Accrued Benefit for a
Participant other than a Key Employee, shall be as determined
using the single accrual method used for all plans of the
Employer and Affiliated Employers, or if no such single method
exists, using a method which results in benefits accruing not
more rapidly than the slowest accrual rate permitted under Code
Section 41 l(b)(1)(C). The determination of the Present Value of
Accrued Benefit shall be determined as of the most recent
valuation date that falls within or ends with the 12-month
period ending on the Determination Date except as provided in
Code Section 416 and the Regulations thereunder for the first
and second plan years of a defined benefit plan.
(g) "Top Heavy Group" means an Aggregation Group in
which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees
under all defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
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<PAGE>
exceeds sixty percent (60%) of a similar sum determined for
all Participants.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and remove
the Trustee and the Administrator from time to time as it deems
necessary for the proper administration of the Plan to assure
that the Plan is being operated for the exclusive benefit of the
Participants and their Beneficiaries in accordance with the
terms of the Plan, the Code, and the Act.
(b) The Employer shall establish a "funding policy and
method," i.e., it shall determine whether the Plan has a short
run need for liquidity (e.g., to pay benefits) or whether
liquidity is a long run goal and investment growth (and
stability of same) is a more current need, or shall appoint a
qualified person to do so. The Employer or its delegate shall
communicate such needs and goals to the Trustee, who shall
coordinate such Plan needs with its investment policy. The
communication of such a "funding policy and method" shall not,
however, constitute a directive to the Trustee as to investment
of the Trust Funds. Such "funding policy and method" shall be
consistent with the objectives of this Plan and with the
requirements of Title I of the Act.
(c) The Employer shall periodically review the performance of
any Fiduciary or other person to whom duties have been delegated
or allocated by it under the provisions of this Plan or pursuant
to procedures established hereunder. This requirement may be
satisfied by formal periodic review by the Employer or by a
qualified person specifically designated by the Employer,
through day-to-day conduct and evaluation, or through other
appropriate ways.
(d) The Employer will furnish Plan Fiduciaries and
Participants with notices and information statements when voting
rights must be exercised pursuant to Section 8.4.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any person,
including, but not limited to, the Employees of the Employer, shall be eligible
to serve as an Administrator. Any person so appointed shall signify his
acceptance by filing written acceptance with the Employer. An Administrator may
resign by delivering his written resignation to the Employer or be removed by
the Employer by
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<PAGE>
delivery of written notice of removal, to take effect at a date specified
therein, or upon delivery to the Administrator if no date is specified.
The Employer, upon the resignation or removal of an Administrator, shall
promptly designate in writing a successor to this position. If the Employer does
not appoint an Administrator, the Employer will function as the Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator. In the event that no such delegation
is made by the Employer, the Administrators may allocate the responsibilities
among themselves, in which event the Administrators shall notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator until such time as the
Employer or the Administrators file with the Trustee a written revocation of
such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the
Plan for the exclusive benefit of the Participants and their Beneficiaries,
subject to the specific terms of the Plan. The Administrator shall administer
the Plan in accordance with its terms and shall have the power and discretion to
construe the terms of the Plan and to determine all questions arising in
connection with the administration, interpretation, and application of the Plan.
Any such determination by the Administrator shall be conclusive and binding upon
all persons. The Administrator may establish procedures, correct any defect,
supply any information, or reconcile any inconsistency in such manner and to
such extent as shall be deemed necessary or advisable to carry out the purpose
of the Plan; provided, however, that any procedure, discretionary act,
interpretation or construction shall be done in a nondiscriminatory manner based
upon uniform principles consistently applied and shall be consistent with the
intent that the Plan shall continue to be deemed a qualified plan under the
terms of Code Section 401(a), and shall comply with the terms of the Act and all
regulations issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish his duties under this Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to
the eligibility of Employees to participate or remain a
Participant hereunder and to receive benefits under the Plan;
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<PAGE>
(b) to compute, certify, and direct the Trustee with respect
to the amount and the kind of benefits to which any Participant
shall be entitled hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the
Trust;
(d) to maintain all necessary records for the administration
of the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan as are consistent
with the terms hereof;
(f) to determine the size and type of any Contract to be
purchased from any insurer, and to designate the insurer from
which such Contract shall be purchased;
(g) to compute and certify to the Employer and to the
Trustee from time to time the sums of money necessary or
desirable to be contributed to the Plan;
(h) to consult with the Employer and the Trustee regarding
the short and long-term liquidity needs of the Plan in order
that the Trustee can exercise any investment discretion in a
manner designed to accomplish specific objectives;
(i) to establish and communicate to Participants a procedure
for allowing each Participant to direct the Trustee as to the
distribution of his Company Stock Account pursuant to Section
4.6;
(j) to establish and communicate to Participants a procedure
and method to insure that each Participant will vote Company
Stock allocated to such Participant's Company Stock Account
pursuant to Section 8.4;
(k) to enter into a written agreement with regard to the
payment of federal estate tax pursuant to Code Section 2210(b);
(l) to assist any Participant regarding his rights,
benefits, or elections available under the Plan.
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2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall
keep all other books of account, records, and other data that may be necessary
for proper administration of the Plan and shall be responsible for supplying all
information and reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the Administrator,
may appoint counsel, specialists, advisers, and other persons as the
Administrator or the Trustee deems necessary or desirable in connection with the
administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the Employer shall
supply full and timely information to the Administrator on all matters relating
to the Compensation of all Participants, their Hours of Service, their Years of
Service, their retirement, death, disability, or termination of employment, and
such other pertinent facts as the Administrator may require; and the
Administrator shall advise the Trustee of such of the foregoing facts as may be
pertinent to the Trustee's duties under the Plan. The Administrator may rely
upon such information as is supplied by the Employer and shall have no duty or
responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund unless
paid by the Employer. Such expenses shall include any expenses incident to the
functioning of the Administrator, including, but not limited to, fees of
accountants, counsel, and other specialists and their agents, and other costs of
administering the Plan. Until paid, the expenses shall constitute a liability of
the Trust Fund.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.5, if there shall be more than
one Administrator, they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.
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2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within 90 days after the application is filed. In the event the
claim is denied, the reasons for the denial shall be specifically set forth in
the notice in language calculated to be understood by the claimant, pertinent
provisions of the Plan shall be cited, and, where appropriate, an explanation as
to how the claimant can perfect the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims review
procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section 2.12
shall be entitled to request the Administrator to give further consideration to
his claim by filing with the Administrator (on a form which may be obtained from
the Administrator) a request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes his claim should be
allowed, shall be filed with the Administrator no later than 60 days after
receipt of the written notification provided for in Section 2.12. The
Administrator shall then conduct a hearing within the next 60 days, at which the
claimant may be represented by an attorney or any other representative of his
choosing and at which the claimant shall have an opportunity to submit written
and oral evidence and arguments in support of his claim. At the hearing (or
prior thereto upon 5 business days' written notice to the Administrator) the
claimant or his representative shall have an opportunity to review all documents
in the possession of the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within 60 days of receipt of the appeal (unless there
has been an extension of 60 days due to special circumstances, provided the
delay and the special circumstances occasioning it are communicated to the
claimant within the 60-day period). Such communication shall be written in a
manner calculated to be understood by the claimant and shall include specific
reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based.
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ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed one (1) Year of Service and has
attained age 21 shall be eligible to participate hereunder as of the date he has
satisfied such requirements. However, any Employee who was a Participant in the
Plan prior to the effective date of this amendment and restatement shall
continue to participate in the Plan.
Notwithstanding the foregoing, (i) Employees of Mountain People's
Warehouse Incorporated and NutraSource, Inc. shall be eligible to commence
participation in the Plan on March 1, 1996, (ii) Employees of Natural Retail
Group, Inc. shall be eligible to commence participation in the Plan on November
1, 1994, and (iii) Employees of Rainbow Natural Foods, Inc. and Employees of
Natural Retail Group, Inc. who were employed by SunSplash Market, Inc. on April
30,1995 shall be eligible to commence participation in the Plan on November 1,
1995, if in each case they have met the conditions listed above. Solely for the
purpose of determining eligibility to participate, Employees of Mountain
People's Warehouse Incorporated, NutraSource, Inc. and Rainbow Natural Foods,
Inc. shall be credited with Hours of Service for periods of employment with
their respective Employers prior to the date of their inclusion within the
controlled group of corporations of which United Natural Foods, Inc. is a part
and, in the case of Employees of Natural Retail Group, Inc., credit shall be
given for Hours of Service performed at SunSplash Market, Inc., prior to its
acquisition by Natural Retail Group, Inc.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the
first day of each May and November through 1995, or the first day of May, August
and November, in 1996, or the first day of February, May and August in 1997 or
the first day of each February and August in 1998 and thereafter, following the
date such Employee met the eligibility requirements of Section 3.1, provided
said Employee was still employed as of such date (or if not employed on such
date, as of the date of rehire if a 1-Year Break in Service has not occurred).
Provided, however, that solely with respect to Employees of Mountain People's
Warehouse Incorporated and NutraSource, Inc., March 1, 1996 shall also
constitute an entry date.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer. Such
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determination shall be conclusive and binding upon all persons, as long as the
same is made pursuant to the Plan and the Act. Such determination shall be
subject to review per Section 2.13.
3.4 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a
classification of an Eligible Employee to an ineligible
Employee, such Former Participant shall continue to vest in his
interest in the Plan for each Year of Service completed while a
noneligible Employee, until such time as his Participant's
Account shall be forfeited or distributed pursuant to the terms
of the Plan. Additionally, his interest in the Plan shall
continue to share in the earnings of the Trust Fund.
(b) In the event a Participant is no longer a member of
an eligible class of Employees and becomes ineligible to
participate but has not incurred a 1-Year Break in Service, such
Employee will participate immediately upon returning to an
eligible class of Employees. If such Participant incurs a 1-Year
Break in Service, eligibility will be determined under the break
in service rules of the Plan.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission is
not made until after a contribution by his Employer for the year has been made,
the Employer shall make a subsequent contribution with respect to the omitted
Employee in the amount which the said Employer would have contributed with
respect to him had he not been omitted. Such contribution shall be made
regardless of whether or not it is deductible in whole or in part in any taxable
year under applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such incorrect
inclusion is not made until after a contribution for the year has been made, the
Employer shall not be entitled to recover the contribution made with respect to
the ineligible person regardless of whether or not a deduction is allowable with
respect to such contribution. In such event, the amount contributed with respect
to the ineligible person shall constitute a Forfeiture for the Plan Year in
which the discovery is made.
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3.7 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate must
be communicated to the Employer, in writing, at least thirty (30) days before
the beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For each Plan Year, the Employer shall contribute to
the Plan such amount as shall be determined by the Employer;
provided, however, that the Employer intends to contribute
amounts sufficient to pay all Current Obligations for said year.
(b) Notwithstanding the foregoing, however, the
Employer's contributions for any Plan Year shall not exceed the
maximum amount allowable as a deduction to the Employer under
the provisions of Code Section 404. All contributions by the
Employer shall be made in cash, Company Stock or in such
property as is acceptable to the Trustee.
(c) Except, however, to the extent necessary to provide
the top heavy minimum allocations, the Employer shall make a
contribution even if it exceeds the amount which is deductible
under Code Section 404.
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
Employer contributions will be paid in cash, Company Stock or other
property as the Employer may from time to time determine. Company Stock and
other property will be valued at their then fair market value. The Employer
shall pay to the Trustee its contribution to the Plan for each Plan Year within
the time prescribed by law, including extensions of time, for the filing of the
Employer's federal income tax return for the Fiscal Year.
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an
account in the name of each Participant to which the
Administrator shall credit as of each Anniversary Date all
amounts allocated to each such Participant as set forth herein.
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(b) The Employer shall provide the Administrator with
all information required by the Administrator to make a proper
allocation of the Employer's contributions for each Plan Year.
Within a reasonable period of time after the date of receipt by
the Administrator of such information, the Administrator shall
allocate such contribution to each Participant's Account in the
same proportion that each such Participant's Compensation for
the year bears to the total Compensation of all Participants for
such year.
Only Participants who (i) are actively employed on the last
day of the Plan Year, and (ii) have completed a Year of Service
during the Plan Year or, with respect to the short Plan Year
from November 1, 1995 through July 31, 1996, have completed 400
Hours of Service for Employees of Mountain People's Warehouse
Incorporated and NutraSource, Inc., and 750 Hours of Service for
all other Participants, shall be eligible to share in the
contribution for the year.
(c) The Company Stock Account of each Participant shall
be credited as of each Anniversary Date with Forfeitures of
Company Stock and his allocable share of Company Stock
(including fractional shares) purchased and paid for by the Plan
or contributed in kind by the Employer. Cash dividends on
Company Stock held in his Company Stock Account shall, in the
sole discretion of the Administrator, either be credited to his
Other Investments Account when paid or be used to repay an
Exempt Loan; provided, however, that when cash dividends are
used to repay an Exempt Loan, Company Stock shall be released
from the Unallocated Company Stock Suspense Account and
allocated to the Participant's Company Stock Account pursuant to
Section 4.3(e) and, provided further, that Company Stock
allocated to the Participant's Company Stock Account shall have
a fair market value not less than the amount of cash dividends
which would have been allocated to such Participant's Other
Investments Account for the year.
Company Stock acquired by the Plan with the proceeds of an
Exempt Loan shall only be allocated to each Participant's
Company Stock Account upon release from the Unallocated Company
Stock Suspense Account as provided in Section 4.3(e) herein.
Company Stock acquired with the proceeds of an Exempt Loan shall
be an asset of the Trust Fund and maintained in the Unallocated
Company Stock Suspense Account.
(d) As of each Anniversary Date or other valuation date,
before the current valuation period allocation of Employer
contributions
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and Forfeitures, any earnings or losses (net appreciation or net
depreciation) of the Trust Fund shall be allocated in the same
proportion that each Participant's and Former Participant's
nonsegregated accounts (other than each Participant's Company
Stock Account) bear to the total of all Participants' and Former
Participants' nonsegregated accounts (other than Participants'
Company Stock Accounts) as of such date.
Earnings or losses do not include the interest paid under
any installment contract for the purchase of Company Stock by
the Trust Fund or on any loan used by the Trust Fund to purchase
Company Stock, nor does it include income received by the Trust
Fund with respect to Company Stock acquired with the proceeds of
an Exempt Loan; all income received by the Trust Fund from
Company Stock acquired with the proceeds of an Exempt Loan may,
at the discretion of the Administrator, be used to repay such
loan.
(e) All Company Stock acquired by the Plan with the
proceeds of an Exempt Loan must be added to and maintained in
the Unallocated Company Stock Suspense Account. Such Company
Stock shall be released and withdrawn from that account as if
all Company Stock in that account were encumbered. For each Plan
Year during the duration of the loan, the number of shares of
Company Stock released shall equal the number of encumbered
shares held immediately before release for the current Plan Year
multiplied by a fraction, the numerator of which is the amount
of principal paid for the Plan Year and the denominator of which
is the sum of the numerator plus the principal to be paid for
all future Plan Years. As of each Anniversary Date, the Plan
must consistently allocate to each Participant's Account, in the
same manner as Employer discretionary contributions pursuant to
Section 4.1(a) are allocated, non-monetary units (shares and
fractional shares of Company Stock) representing each
Participant's interest in Company Stock withdrawn from the
Unallocated Company Stock Suspense Account. However, Company
Stock released from the Unallocated Company Stock Suspense
Account with cash dividends pursuant to Section 4.3(c) shall be
allocated to each Participant's Company Stock Account in the
same proportion that each such Participant's number of shares of
Company Stock sharing in such cash dividends bears to the total
number of shares of all Participants' Company Stock sharing in
such cash dividends. Income earned with respect to Company Stock
in the Unallocated Company Stock Suspense Account shall be used,
at the discretion of the Administrator, to repay the Exempt Loan
used to purchase such Company Stock. Company Stock released from
the Unallocated Company Stock Suspense Account with such income,
and
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and any income which is not so used, shall be allocated as of
each Anniversary Date or other valuation date in the same
proportion that each Participant's and Former Participant's
nonsegregated accounts after the allocation of any earnings or
losses pursuant to Section 4.3(d) bear to the total of all
Participants' and Former Participants' nonsegregated accounts
after the allocation of any earnings or losses pursuant to
Section 4.3(d).
(f) As of each Anniversary Date any amounts which became
Forfeitures since the last Anniversary Date shall first be made
available to reinstate previously forfeited account balances of
Former Participants, if any, in accordance with Section
7.4(g)(2). The remaining Forfeitures, if any, shall be allocated
among the Participants' Accounts of Participants otherwise
eligible to share in the allocation of discretionary
contributions in the same proportion that each such
Participant's Compensation for the year bears to the total
Compensation of all such Participants for the year.
Provided, however, that in the event the allocation of
Forfeitures provided herein shall cause the "annual addition"
(as defined in Section 4.4) to any Participant's Account to
exceed the amount allowable by the Code, the excess shall be
reallocated in accordance with Section 4.5.
(g) For any Top Heavy Plan Year, Employees not otherwise
eligible to share in the allocation of contributions and
Forfeitures as provided above, shall receive the minimum
allocation provided for in Section 4.3(i) if eligible pursuant
to the provisions of Section 4.3(k).
(h) Participants who are not actively employed on the
last day of the Plan Year due to Retirement (Normal or Late),
Total and Permanent Disability or death shall share in the
allocation of contributions and Forfeitures for that Plan Year
only if otherwise eligible in accordance with this Section.
(i) Minimum Allocations Required for Top Heavy Plan
Years: Notwithstanding the foregoing, for any Top Heavy Plan
Year, the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Account of each Employee shall be
equal to at least three percent (3%) of such Employee's "415
Compensation" (reduced by contributions and forfeitures, if any,
allocated to each Employee in any defined contribution plan
included with this plan in a Required Aggregation Group).
However, if (1) the sum of the Employer's contributions and
Forfeitures allocated to the Participant's Account of each Key
Employee for such Top Heavy Plan Year is less than three
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percent (3%) of each Key Employee's "415 Compensation" and
(2) this Plan is not required to be included in an Aggregation
Group to enable a defined benefit plan to meet the requirements
of Code Section 401(a)(4) or 410, the sum of the Employer's
contributions and Forfeitures allocated to the Participant's
Account of each Employee shall be equal to the largest
percentage allocated to the Participant's Account of any Key
Employee.
However, no such minimum allocation shall be required in
this Plan for any Employee who participates in another defined
contribution plan subject to Code Section 412 providing such
benefits included with this Plan in a Required Aggregation
Group.
(j) For purposes of the minimum allocations set forth
above, the percentage allocated to the Participant's Account of
any Key Employee shall be equal to the ratio of the sum of the
Employer's contributions and Forfeitures allocated on behalf of
such Key Employee divided by the "415 Compensation" for such Key
Employee.
(k) For any Top Heavy Plan Year, the minimum allocations
set forth above shall be allocated to the Participant' s Account
of all Employees who are Participants and who are employed by
the Employer on the last day of the Plan Year, including
Employees who have (1) failed to complete a Year of Service; and
(2) declined to make mandatory contributions (if required) to
the Plan.
(l) For the purposes of this Section, "415 Compensation"
shall be limited to $200,000. Such amount shall be adjusted at
the same time and in the same manner as permitted under Code
Section 415(d), except that the dollar increase in effect on
January 1 of any calendar year shall be effective for the Plan
Year beginning with or within such calendar year and the first
adjustment to the $200,000 limitation shall be effective on
January 1, 1990. For any short Plan Year the "415 Compensation"
limit shall be an amount equal to the "415 Compensation" limit
for the calendar year in which the Plan Year begins multiplied
by the ratio obtained by dividing the number of full months in
the short Plan Year by twelve (12). However, for Plan Years
beginning prior to January 1, 1989, the $200,000 limit shall
apply only for Top Heavy Plan Years and shall not be adjusted.
In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994,
the annual Compensation of each Employee taken into account
under the Plan shall
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not exceed the OBRA '93 annual compensation limit. The OBRA '93
annual compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance
with Code Section 401(a)(17)(B). The cost of living adjustment
in effect for a calendar year applies to any period, not
exceeding 12 months, over which Compensation is determined
(determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA
'93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Code Section
401(a)(17) shall mean the OBRA '93 annual compensation limit set
forth in this provision.
If Compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in
the current Plan Year, the Compensation for that prior
determination period is subject to the OBRA '93 annual
compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning
before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA '93 annual compensation limit is
$150,000.
(m) Notwithstanding anything to the contrary, for Plan
Years beginning after December 31, 1989, if this is a Plan that
would otherwise fail to meet the requirements of Code Sections
401(a)(26), 410(b)(l) or 410(b)(2)(A)(i) and the Regulations
thereunder because Employer contributions would not be allocated
to a sufficient number or percentage of Participants for a Plan
Year, then the following rules shall apply:
(1) The group of Participants eligible to share in the
Employer's contribution and Forfeitures for the Plan Year
shall be expanded to include the minimum number of
Participants who would not otherwise be eligible as are
necessary to satisfy the applicable test specified above.
The specific Participants who shall become eligible under
the terms of this paragraph shall be those who are actively
employed on the last day of the Plan Year and, when compared
to similarly situated Participants, have completed the
greatest number of Hours of Service in the Plan Year.
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(2) If after application of paragraph (1) above, the
applicable test is still not satisfied, then the group of
Participants eligible to share in the Employer's
contribution and Forfeitures for the Plan Year shall be
further expanded to include the minimum number of
Participants who are not actively employed on the last day
of the Plan Year as are necessary to satisfy the applicable
test. The specific Participants who shall become eligible to
share shall be those Participants, when compared to
similarly situated Participants, who have completed the
greatest number of Hours of Service in the Plan Year before
terminating employment.
(3) Nothing in this Section shall permit the reduction
of a Participant's accrued benefit. Therefore any amounts
that have previously been allocated to Participants may not
be reallocated to satisfy these requirements. In such event,
the Employer shall make an additional contribution equal to
the amount such affected Participants would have received
had they been included in the allocations, even if it
exceeds the amount which would be deductible under Code
Section 404. Any adjustment to the allocations pursuant to
this paragraph shall be considered a retroactive amendment
adopted by the last day of the Plan Year.
(4) Notwithstanding the foregoing, for any Top Heavy
Plan Year beginning after December 31, 1992, if the plan
would fail to satisfy Code Section 410(b) if the coverage
tests were applied by treating those Participants whose only
allocation would otherwise be provided under the top heavy
formula as if they were not currently benefiting under the
Plan, then, for purposes of this Section 4.3(n), such
Participants shall be treated as not benefiting and shall
therefore be eligible to be included in the expanded class
of Participants who will share in the allocation provided
under the Plan's non top heavy formula.
4.4 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual
additions" credited to a Participant's accounts for any
"limitation year" shall equal the lesser of: (1) $30,000 (or, if
greater, one-fourth of the dollar limitation in effect under
Code Section 415(b)(l)(A)) or (2) twenty-five percent (25%) of
the Participant's "415 Compensation" for such "limitation year."
For any short "limitation year," the dollar limitation in (1)
above shall be reduced by a fraction, the numerator of which is
the number of full months in the short "limitation year" and the
denominator of which is twelve (12).
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(b) For "limitation years" beginning prior to July 13,
1989, the dollar amount provided for in paragraph (a)(1) above
shall be increased by the lesser of the dollar amount determined
under paragraph (a)(1) above or the amount of Company Stock
contributed, or purchased with cash contributed. The dollar
amount shall be increased provided no more than one-third of the
Employer's contributions for the year are allocated to Highly
Compensated Participants. In applying this limitation, the
family group of a Highly Compensated Participant who is subject
to the Family Member aggregation rules of Code Section 414(q)(6)
shall be determined pursuant to Regulations.
(c) For purposes of applying the limitations of Code
Section 415, "annual additions" means the sum credited to a
Participant's accounts for any "limitation year" of (1) Employer
contributions, (2) Employee contributions, (3) forfeitures,
(4) amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Code Section 4l5(l)(2) which is
part of a pension or annuity plan maintained by the Employer and
(5) amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee (as defined
in Code Section 419A(d)(3)) under a welfare benefit plan (as
defined in Code Section 419(e)) maintained by the Employer.
Except, however, the "415 Compensation" percentage limitation
referred to in paragraph (a)(2) above shall not apply to:
(1) any contribution for medical benefits (within the meaning of
Code Section 419A(f)(2)) after separation from service which is
otherwise treated as an "annual addition," or (2) any amount
otherwise treated as an "annual addition" under Code Section
415(l)(1).
(d) For purposes of applying the limitations of Code
Section 415, the following are not "annual additions": (1) the
transfer of funds from one qualified plan to another and
(2) provided no more than one-third of the Employer
contributions for the year are allocated to Highly Compensated
Participants, Forfeitures of Company Stock purchased with the
proceeds of an Exempt Loan and Employer contributions applied to
the payment of interest on an Exempt Loan. In addition, the
following are not Employee contributions for the purposes of
Section 4.4(c)(2): (1) rollover contributions (as defined in
Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3));
(2) repayments of loans made to a Participant from the Plan; (3)
repayments of distributions received by an Employee pursuant to
Code Section 411(a)(7)(B) (cash-outs); (4) repayments of
distributions received by an
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Employee pursuant to Code Section 411(a)(3)(D) (mandatory
contributions); and (5) Employee contributions to a simplified
employee pension excludable from gross income under Code Section
408(k)(6).
(e) For purposes of applying the limitations of Code
Section 415, the "limitation year" shall be the Plan Year. The
nine month period from November 1, 1995 through July 31, 1996
shall constitute a separate limitation period, in which the
limitation amount as defined in Section 4.4(a) shall be equal to
$22,500.
(f) The dollar limitation under Code Section
415(b)(1)(A) stated in paragraph (a)(1) above shall be adjusted
annually as provided in Code Section 415(d) pursuant to the
Regulations. The adjusted limitation is effective as of January
1st of each calendar year and is applicable to "limitation
years" ending with or within that calendar year.
(g) For the purpose of this Section, all qualified
defined benefit plans (whether terminated or not) ever
maintained by the Employer shall be treated as one defined
benefit plan, and all qualified defined contribution plans
(whether terminated or not) ever maintained by the Employer
shall be treated as one defined contribution plan.
(h) For the purpose of this Section, if the Employer is
a member of a controlled group of corporations, trades or
businesses under common control (as defined by Code Section
1563(a) or Code Section 414(b) and (c) as modified by Code
Section 415(h)), is a member of an affiliated service group (as
defined by Code Section 414(m)), or is a member of a group of
entities required to be aggregated pursuant to Regulations under
Code Section 414(o), all Employees of such Employers shall be
considered to be employed by a single Employer.
(i) For the purpose of this Section, if this Plan is a
Code Section 413(c) plan, all Employers of a Participant who
maintain this Plan will be considered to be a single Employer.
(j) (1) If a Participant participates in more than one
defined contribution plan maintained by the Employer which
have different Anniversary Dates, the maximum "annual
additions" under this Plan shall equal the maximum "annual
additions" for the "limitation year" minus any "annual
additions" previously credited to such Participant's
accounts during the "limitation year."
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(2) If a Participant participates in both a
defined contribution plan subject to Code Section 412 and a
defined contribution plan not subject to Code Section 412
maintained by the Employer which have the same Anniversary
Date, "annual additions" will be credited to the
Participant's accounts under the defined contribution plan
subject to Code Section 412 prior to crediting "annual
additions" to the Participant's accounts under the defined
contribution plan not subject to Code Section 412.
(3) If a Participant participates in more than
one defined contribution plan not subject to Code Section
412 maintained by the Employer which have the same
Anniversary Date, the maximum "annual additions" under this
Plan shall equal the product of (A) the maximum "annual
additions" for the "limitation year" minus any "annual
additions" previously credited under subparagraphs (1) or
(2) above, multiplied by (B) a fraction (i) the numerator of
which is the "annual additions" which would be credited to
such Participant's accounts under this Plan without regard
to the limitations of Code Section 415 and (ii) the
denominator of which is such "annual additions" for all
plans described in this subparagraph.
(k) If an Employee is (or has been) a Participant in one
or more defined benefit plans and one or more defined
contribution plans maintained by the Employer, the sum of the
defined benefit plan fraction and the defined contribution plan
fraction for any "limitation year" may not exceed 1.0.
(l) The defined benefit plan fraction for any
"limitation year" is a fraction, the numerator of which is the
sum of the Participant's projected annual benefits under all the
defined benefit plans (whether or not terminated) maintained by
the Employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the "limitation
year" under Code Sections 415(b) and (d) or 140 percent of the
highest average compensation, including any adjustments under
Code Section 415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first "limitation year"
beginning after December 31, 1986, in one or more defined
benefit plans maintained by the Employer which were in existence
on May 6, 1986, the denominator of this fraction will not be
less than 125 percent of the sum of the annual benefits under
such plans which the Participant had accrued as of the close of
the last "limitation year" beginning before January 1, 1987,
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disregarding any changes in the terms and conditions of the plan
after May 5, 1986. The preceding sentence applies only if the
defined benefit plans individually and in the aggregate
satisfied the requirements of Code Section 415 for all
"limitation years" beginning before January 1, 1987.
(m) The defined contribution plan fraction for any
"limitation year" is a fraction, the numerator of which is the
sum of the annual additions to the Participant's Account under
all the defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior
"limitation years" (including the annual additions attributable
to the Participant's nondeductible Employee contributions to all
defined benefit plans, whether or not terminated, maintained by
the Employer, and the annual additions attributable to all
welfare benefit funds, as defined in Code Section 419(e), and
individual medical accounts, as defined in Code Section
415(l)(2), maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for the
current and all prior "limitation years" of service with the
Employer (regardless of whether a defined contribution plan was
maintained by the Employer). The maximum aggregate amount in any
"limitation year" is the lesser of 125 percent of the dollar
limitation determined under Code Sections 415(b) and (d) in
effect under Code Section 415(c)(1)(A) or 35 percent of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first
day of the first "limitation year" beginning after December 31,
1986, in one or more defined contribution plans maintained by
the Employer which were in existence on May 6, 1986, the
numerator of this fraction will be adjusted if the sum of this
fraction and the defined benefit fraction would otherwise exceed
1.0 under the terms of this Plan. Under the adjustment, an
amount equal to the product of (1) the excess of the sum of the
fractions over 1.0 times (2) the denominator of this fraction,
will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as
they would be computed as of the end of the last "limitation
year" beginning before January 1, 1987, and disregarding any
changes in the terms and conditions of the Plan made after May
5, 1986, but using the Code Section 415 limitation applicable to
the first "limitation year" beginning on or after January 1,
1987. The annual addition for any "limitation year" beginning
before January 1, 1987 shall not be recomputed to treat all
Employee contributions as annual additions.
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(n) Notwithstanding the foregoing, for any "limitation
year" in which the Plan is a Top Heavy Plan, 100 percent shall
be substituted for 125 percent in Sections 4.4(1) and 4.4(m)
unless the extra minimum allocation is being provided pursuant
to Section 4.3. However, for any "limitation year" in which the
Plan is a Super Top Heavy Plan, 100 percent shall be substituted
for 125 percent in any event.
(o) Notwithstanding anything contained in this Section
to the contrary, the limitations, adjustments and other
requirements prescribed in this Section shall at all times
comply with the provisions of Code Section 415 and the
Regulations thereunder, the terms of which are specifically
incorporated herein by reference.
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of the allocation of Forfeitures, a
reasonable error in estimating a Participant's Compensation, a
reasonable error in determining the amount of elective deferrals
(within the meaning of Code Section 402(g)(3)) that may be made
with respect to any Participant under the limits of Section 4.4
or other facts and circumstances to which Regulation 1.415-
6(b)(6) shall be applicable, the "annual additions" under this
Plan would cause the maximum "annual additions" to be exceeded
for any Participant, the Administrator shall (1) distribute any
elective deferrals (within the meaning of Code Section
402(g)(3)) or return any voluntary Employee contributions
credited for the "limitation year" to the extent that the return
would reduce the "excess amount" in the Participant's accounts
(2) hold any "excess amount" remaining after the return of any
elective deferrals or voluntary Employee contributions in a
"Section 415 suspense account" (3) allocate and reallocate the
"Section 415 suspense account" in the next "limitation year"
(and succeeding "limitation years" if necessary) to all
Participants in the Plan before any Employer or Employee
contributions which would constitute "annual additions" are made
to the Plan for such "limitation year" (4) reduce Employer
contributions to the Plan for such "limitation year" by the
amount of the "Section 415 suspense account" allocated and
reallocated during such "limitation year."
(b) For purposes of this Article, "excess amount" for
any Participant for a "limitation year" shall mean the excess,
if any, of (1) the "annual additions" which would be credited to
his account under the terms of the Plan without regard to the
limitations of Code Section 415 over (2) the maximum "annual
additions" determined pursuant to Section 4.4.
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(c) For purposes of this Section, "Section 415 suspense
account" shall mean an unallocated account equal to the sum of
"excess amounts" for all Participants in the Plan during the
"limitation year." The "Section 415 suspense account" shall not
share in any earnings or losses of the Trust Fund.
(d) The Plan may not distribute "excess amounts," other
than voluntary Employee contributions, to Participants or Former
Participants.
4.6 DIRECTED INVESTMENT ACCOUNT
(a) Each "Qualified Participant" may elect within ninety
(90) days after the close of each Plan Year during the
"Qualified Election Period" to direct the Trustee in writing as
to the distribution in Company Stock of 25 percent of the total
number of shares of Company Stock acquired by or contributed to
the Plan that have ever been allocated to such "Qualified
Participant's" Company Stock Account (reduced by the number of
shares of Company Stock previously distributed in cash and/or
Company Stock pursuant to a prior election). In the case of the
election year in which the Participant can make his last
election, the preceding sentence shall be applied by
substituting "50 percent" for "25 percent." If the "Qualified
Participant" elects to direct the Trustee as to the distribution
of his Company Stock Account, such direction shall be effective
no later than 180 days after the close of the Plan Year to which
such direction applies. Any such distribution of Company Stock
shall be subject to Section 7.9.
Notwithstanding the above, if the fair market value
(determined pursuant to Section 6.1 at the Plan valuation date
immediately preceding the first day on which a "Qualified
Participant" is eligible to make an election) of Company Stock
acquired by or contributed to the Plan and allocated to a
"Qualified Participant's" Company Stock Account is $500 or less,
then such Company Stock shall not be subject to this paragraph.
For purposes of determining whether the fair market value
exceeds $500, Company Stock held in accounts of all employee
stock ownership plans (as defined in Code Section 4975(e)(7))
and tax credit employee stock ownership plans (as defined in
Code Section 409(a)) maintained by the Employer or any
Affiliated Employer shall be considered as held by the Plan.
(b) For the purposes of this Section the following
definitions shall apply:
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(1) "Qualified Participant" means any Participant or
Former Participant who has completed ten (10) Plan Years of
Service as a Participant and has attained age 55.
(2) "Qualified Election Period" means the six (6) Plan
Year period beginning with the later of (i) the first Plan Year
in which the Participant first became a "Qualified Participant,"
or (ii) the first Plan Year beginning after December 31, 1986.
ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY
(a) The Plan is designed to invest primarily in Company
Stock.
(b) With due regard to subparagraph (a) above, the
Administrator may direct the Trustee to invest funds under the
Plan in insurance policies on the life of any "keyman" Employee.
The proceeds of a "keyman" insurance policy may not be used for
the repayment of any indebtedness owed by the Plan which is
secured by Company Stock. In the event any "keyman" insurance is
purchased by the Trustee, the premiums paid thereon during any
Plan Year, net of any policy dividends and increases in cash
surrender values, shall be treated as the cost of the Plan
investment and any death benefit or cash surrender value
received shall be treated as proceeds from an investment of the
Plan.
(c) The Plan may not obligate itself to acquire Company
Stock from a particular holder thereof at an indefinite time
determined upon the happening of an event such as the death of
the holder.
(d) The Plan may not obligate itself to acquire Company
Stock under a put option binding upon the Plan. However, at the
time a put option is exercised, the Plan may be given an option
to assume the rights and obligations of the Employer under a put
option binding upon the Employer.
(e) All purchases of Company Stock shall be made at a
price which, in the judgment of the Trustee, does not exceed the
fair market value thereof. All sales of Company Stock shall be
made at a price
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which, in the judgment of the Trustee, is not less than the fair
market value thereof. The valuation rules set forth in Article
VI shall be applicable.
5.2 APPLICATION OF CASH
Employer contributions in cash and other cash received by the Trust Fund
shall first be applied to pay any Current Obligations of the Trust Fund. Any
cash remaining after said payment shall be invested as soon as and to the extent
practicable in Company Stock.
5.3 LOANS TO THE TRUST
(a) The Plan may borrow money for any lawful purpose, at
the direction of the Employer, provided the proceeds of an
Exempt Loan are used within a reasonable time after receipt only
for any or all of the following purposes:
(1) To acquire Company Stock.
(2) To repay such loan.
(3) To repay a prior Exempt Loan.
(b) All loans to the Trust which are made or guaranteed
by a disqualified person must satisfy all requirements
applicable to Exempt Loans including but not limited to the
following:
(1) The loan must be at a reasonable rate of interest;
(2) The amount of interest paid shall not exceed the
amount of each payment which would be treated as interest under
standard loan amortization tables;
(3) Any collateral pledged to the creditor by the Plan
shall consist only of the Company Stock purchased with the
borrowed funds;
(4) Under the terms of the loan, any pledge of Company
Stock shall provide for the release of shares so pledged on a
pro-rata basis pursuant to Section 4.3(e);
(5) Under the terms of the loan, the creditor shall have
no recourse against the Plan except with respect to such
collateral,
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earnings attributable to such collateral, Employer contributions
(other than contributions of Company Stock) that are made to
meet Current Obligations and earnings attributable to such
contributions;
(6) The loan must be for a specific term and may not be
payable at the demand of any person, except in the case of
default;
(7) In the event of default upon an Exempt Loan, the
value of the Trust Fund transferred in satisfaction of the
Exempt Loan shall not exceed the amount of default. If the
lender is a disqualified person, an Exempt Loan shall provide
for a transfer of Trust Funds upon default only upon and to the
extent of the failure of the Plan to meet the payment schedule
of the Exempt Loan;
(8) Exempt Loan payments during a Plan Year must not
exceed an amount equal to: (A) the sum, over all Plan Years, of
all contributions and cash dividends paid by the Employer to the
Plan with respect to such Exempt Loan and earnings on such
Employer contributions and cash dividends, less (B) the sum of
the Exempt Loan payments in all preceding Plan Years. A separate
accounting shall be maintained for such Employer contributions,
cash dividends and earnings until the Exempt Loan is repaid.
(c) For purposes of this Section, the term "disqualified
person" means a person who is a Fiduciary, a person providing services
to the Plan, an Employer any of whose Employees are covered by the
Plan, an employee organization any of whose members are covered by the
Plan, an owner, direct or indirect, of 50% or more of the total
combined voting power of all classes of voting stock or of the total
value of all classes of the stock, or an officer, director, 10% or
more shareholder, or a highly compensated Employee.
ARTICLE VI
VALUATIONS
6.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Anniversary Date,
and at such other date or dates deemed necessary by the Administrator, herein
called "valuation date," to determine the net worth of the assets comprising the
Trust Fund
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as it exists on the "valuation date." In determining such net worth, the Trustee
shall value the assets comprising the Trust Fund at their fair market value as
of the "valuation date" and shall deduct all expenses for which the Trustee has
not yet obtained reimbursement from the Employer or the Trust Fund.
6.2 METHOD OF VALUATION
Valuations must be made in good faith and based on all relevant factors
for determining the fair market value of securities. In the case of a
transaction between a Plan and a disqualified person, value must be determined
as of the date of the transaction. For all other Plan purposes, value must be
determined as of the most recent "valuation date" under the Plan. Company Stock
not readily tradeable on an established securities market shall be valued by an
independent appraiser meeting requirements similar to the requirements of the
Regulations prescribed under Code Section 170(a)(1).
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the Employer and
retire for the purposes hereof on his Normal Retirement Date. However, a
Participant may postpone the termination of his employment with the Employer to
a later date, in which event the participation of such Participant in the Plan,
including the right to receive allocations pursuant to Section 4.3, shall
continue until his Late Retirement Date. Upon a Participant's Retirement Date,
or as soon thereafter as is practicable, the Trustee shall distribute all
amounts credited to such Participant's Account in accordance with Sections 7.5
and 7.6.
7.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement Date
or other termination of his employment, all amounts credited to such
Participant's Account shall become fully Vested. If elected,
distribution of the Participant's Account shall commence not later
than one (1) year after the close of the Plan Year in which such
Participant's death occurs. The Administrator shall direct the
Trustee, in accordance with the provisions of Sections 7.5 and 7.6, to
distribute the value of the deceased Participant's accounts to the
Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator
shall direct the Trustee, in accordance with the provisions of
Sections 7.5 and 7.6, to distribute any remaining Vested amounts
credited to the
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accounts of a deceased Former Participant to such Former Participant's
Beneficiary.
(c) The Administrator may require such proper proof of death
and such evidence of the right of any person to receive payment of the
value of the account of a deceased Participant or Former Participant
as the Administrator may deem desirable. The Administrator's
determination of death and of the right of any person to receive
payment shall be conclusive.
(d) The Beneficiary of the death benefit payable pursuant to
this Section shall be the Participant's spouse. Except, however, the
Participant may designate a Beneficiary other than his spouse if:
(1) the spouse has waived the right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or has been abandoned
(within the meaning of local law) and the Participant has a
court order to such effect (and there is no "qualified domestic
relations order" as defined in Code Section 414(p) which
provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on
a form satisfactory to the Administrator. A Participant may at any
time revoke his designation of a Beneficiary or change his Beneficiary
by filing written notice of such revocation or change with the
Administrator. However, the Participant's spouse must again consent in
writing to any change in Beneficiary unless the original consent
acknowledged that the spouse had the right to limit consent only to a
specific Beneficiary and that the spouse voluntarily elected to
relinquish such right. In the event no valid designation of
Beneficiary exists at the time of the Participant's death, the death
benefit shall be payable to his estate.
(e) Any consent by the Participant's spouse to waive any rights
to the death benefit must be in writing, must acknowledge the effect
of such waiver, and be witnessed by a Plan representative or a notary
public. Further, the spouse's consent must be irrevocable and must
acknowledge the specific nonspouse Beneficiary.
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7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior
to his Retirement Date or other termination of his employment, all amounts
credited to such Participant's Account shall become fully Vested. In the event
of a Participant's Total and Permanent Disability, the Trustee, in accordance
with the provisions of Sections 7.5 and 7.6, shall distribute to such
Participant all amounts credited to such Participant's Account as though he had
retired. If such Participant elects, distribution shall commence not later than
one (1) year after the close of the Plan Year in which Total and Permanent
Disability occurs.
7.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a portion of a Participant's Account is forfeited,
Company Stock allocated to the Participant's Company Stock
Account must be forfeited only after the Participant's Other
Investments Account has been depleted. If interest in more than
one class of Company Stock has been allocated to a Participant's
Account, the Participant must be treated as forfeiting the same
proportion of each such class.
Distribution of the funds due to a Terminated Participant
shall be made on the occurrence of an event which would result
in the distribution had the Terminated Participant remained in
the employ of the Employer (upon the Participant's death, Total
and Permanent Disability or Normal Retirement). However, at the
election of the Participant, the Administrator shall direct the
Trustee to cause the entire Vested portion of the Terminated
Participant's Account to be payable to such Terminated
Participant. Any distribution under this paragraph shall be made
in a manner which is consistent with and satisfies the
provisions of Sections 7.5 and 7.6, including, but not limited
to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder.
If the value of a Terminated Participant's Vested benefit
derived from Employer and Employee contributions does not exceed
$3,500 and has never exceeded $3,500 at the time of any prior
distribution, the Administrator shall direct the Trustee to
cause the entire Vested benefit to be paid to such Participant
in a single lump sum.
When a Participant who has no Vested interest in the Plan
terminates employment and incurs a 1-Year Break in Service, the
former Participant shall be deemed to have received a
distribution of his entire Vested interest on the last day of
the Plan Year in which the former
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Participant incurs a 1-Year Break in Service, and the nonvested
portion shall be treated as a Forfeiture. Nonvested former
Participants whose interests in the Plan were not previously
forfeited shall suffer a forfeiture of their nonvested interests
in the Plan as of July 31, 1996 if they incurred a 1-Year Break
in Service in the Plan Year then ended.
(b) The Vested portion of any Participant's Account
shall be a percentage of the total amount credited to his
Participant's Account determined on the basis of the
Participant's number of Years of Service according to the
following schedule:
Vesting Schedule
Years of Service Percentage
Less than 5 0%
5 100%
(c) Notwithstanding the vesting schedule provided for in
paragraph (b) above, for any Top Heavy Plan Year, the Vested
portion of the Participant's Account of any Participant who has
an Hour of Service after the Plan becomes top heavy shall be a
percentage of the total amount credited to his Participant's
Account determined on the basis of the Participant's number of
Years of Service according to the following schedule:
Vesting Schedule
Years of Service Percentage
Less than 3 0%
3 100%
If in any subsequent Plan Year, the Plan ceases to be a Top
Heavy Plan, the Administrator shall revert to the vesting
schedule in effect before this Plan became a Top Heavy Plan. Any
such reversion shall be treated as a Plan amendment pursuant to
the terms of the Plan.
(d) Notwithstanding the vesting schedule above, the
Vested percentage of a Participant's Account shall not be less
than the Vested percentage attained as of the later of the
effective date or adoption date of this amendment and
restatement.
(e) Notwithstanding the vesting schedule above, upon the
complete discontinuance of the Employer's contributions to the
Plan or upon any full or partial termination of the Plan, all
amounts credited to
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the account of any affected Participant shall become 100% Vested
and shall not thereafter be subject to Forfeiture.
(f) The computation of a Participant's nonforfeitable
percentage of his interest in the Plan shall not be reduced as
the result of any direct or indirect amendment to this Plan. For
this purpose, the Plan shall be treated as having been amended
if the Plan provides for an automatic change in vesting due to a
change in top heavy status. In the event that the Plan is
amended to change or modify any vesting schedule, a Participant
with at least three (3) Years of Service as of the expiration
date of the election period may elect to have his nonforfeitable
percentage computed under the Plan without regard to such
amendment. If a Participant fails to make such election, then
such Participant shall be subject to the new vesting schedule.
The Participant's election period shall commence on the adoption
date of the amendment and shall end 60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of
the amendment from the Employer or Administrator.
(g) (1) If any Former Participant shall be reemployed
by the Employer before a 1-Year Break in Service occurs, he
shall continue to participate in the Plan in the same manner
as if such termination had not occurred.
(2) If any Former Participant shall be reemployed
by the Employer before five (5) consecutive 1-Year Breaks in
Service, and such Former Participant had received, or was
deemed to have received, a distribution of his entire Vested
interest prior to his reemployment, his forfeited account
shall be reinstated only if he repays the full amount
distributed to him before the earlier of five (5) years
after the first date on which the Participant is
subsequently reemployed by the Employer or the close of the
first period of five (5) consecutive 1-Year Breaks in
Service commencing after the distribution, or in the event
of a deemed distribution, upon the reemployment of such
Former Participant. In the event the Former Participant does
repay the full amount distributed to him, or in the event of
a deemed distribution, the undistributed portion of the
Participant's Account must be restored in full, unadjusted
by any gains or losses occurring
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subsequent to the Anniversary Date or other valuation date
coinciding with or preceding his termination. The source for
such reinstatement shall first be any Forfeitures occurring
during the year. If such source is insufficient, then the
Employer shall contribute an amount which is sufficient to
restore any such forfeited Accounts provided, however, that
if a discretionary contribution is made for such year, such
contribution shall first be applied to restore any such
Accounts and the remainder shall be allocated in accordance
with Section 4.3.
(3) If any Former Participant is reemployed after
a 1-Year Break in Service has occurred, Years of Service
shall include Years of Service prior to his 1-Year Break in
Service subject to the following rules:
(i) If a Former Participant has a 1-Year Break in
Service, his pre-break and post-break service shall
be used for computing Years of Service for
eligibility and for vesting purposes only after he
has been employed for one (1) Year of Service
following the date of his reemployment with the
Employer;
(ii) Any Former Participant who under the Plan does
not have a nonforfeitable right to any interest in
the Plan resulting from Employer contributions shall
lose credits otherwise allowable under (i) above if
his consecutive 1-Year Breaks in Service equal or
exceed the greater of (A) five (5) or (B) the
aggregate number of his pre-break Years of Service;
(iii) After five (5) consecutive 1-Year Breaks in
Service, a Former Participant's Vested Account
balance attributable to pre-break service shall not
be increased as a result of post-break service;
(iv) If a Former Participant who has not had his
Years of Service before a 1-Year Break in Service
disregarded pursuant to (ii) above completes one (1)
Year of Service for eligibility purposes following
his reemployment with the Employer, he shall
participate in the Plan retroactively from his date
of reemployment;
(v) If a Former Participant who has not had his
Years of Service before a 1-Year Break in Service
disregarded
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pursuant to (ii) above completes a Year of Service
(a 1-Year Break in Service previously occurred, but
employment had not terminated), he shall participate
in the Plan retroactively from the first day of the
Plan Year during which he completes one (1) Year of
Service.
7.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of the
Participant (or if no election has been made prior to the
Participant's death, by his Beneficiary), shall direct the
Trustee to distribute to a Participant or his Beneficiary any
amount to which he is entitled under the Plan in one or more of
the following methods:
(1) One lump-sum payment;
(2) Payments over a period certain in monthly,
quarterly, semiannual, or annual installments. The period
over which such payment is to be made shall not extend
beyond the earlier of the Participant's life expectancy (or
the life expectancy of the Participant and his designated
Beneficiary) or the limited distribution period provided for
in Section 7.5(b).
(b) Distributions to a Participant or his Beneficiary
shall be in substantially equal annual installments over a
period not longer than five (5) years.
(c) Any distribution to a Participant who has a benefit
which exceeds, or has ever exceeded, $3,500 at the time of any
prior distribution shall require such Participant's consent if
such distribution commences prior to the later of his Normal
Retirement Age or age 62. With regard to this required consent:
(1) The Participant must be informed of his right to
defer receipt of the distribution. If a Participant fails to
consent, it shall be deemed an election to defer the
commencement of payment of any benefit.
However, any election to defer the receipt of benefits shall
not apply with respect to distributions which are required
under Section 7.5(f).
(2) Notice of the rights specified under this paragraph
shall be provided no less than 30 days and no more than 90
days before
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the first day on which all events have occurred which
entitle the Participant to such benefit.
(3) Written consent of the Participant to the
distribution must not be made before the Participant
receives the notice and must not be made more than 90 days
before the first day on which all events have occurred which
entitle the Participant to such benefit.
(4) No consent shall be valid if a significant detriment
is imposed under the Plan on any Participant who does not
consent to the distribution.
If a distribution is one to which Code Sections 401(a)(11)
and 417 do not apply, such distribution may commence less
than 30 days after the notice required under Regulation
1.411(a)-11(c) is given, provided that: (1) the
Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable,
a particular distribution option), and (2) the Participant,
after receiving the notice, affirmatively elects a
distribution.
(d) Notwithstanding anything herein to the contrary, the
Administrator, in his sole discretion, may direct that cash
dividends on shares of Company Stock allocable to Participants'
or Former Participants' Company Stock Accounts be distributed to
such Participants or Former Participants within 90 days after
the close of the Plan Year in which the dividends are paid.
(e) Any part of a Participant's benefit which is
retained in the Plan after the Anniversary Date on which his
participation ends will continue to be treated as a Company
Stock Account or as an Other Investments Account (subject to
Section 7.4(a)) as provided in Article IV. However, neither
account will be credited with any further Employer contributions
or Forfeitures.
(f) Notwithstanding any provision in the Plan to the
contrary, the distribution of a Participant's benefits shall be
made in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the Regulations
thereunder (including Regulation l.401(a)(9)-2), the provisions
of which are incorporated herein by reference:
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(1) A Participant's benefits shall be distributed to him
not later than April 1st of the calendar year following the
later of (i) the calendar year in which the Participant
attains age 70 1/2 or (ii) the calendar year in which the
Participant retires, provided, however, that this clause
(ii) shall not apply in the case of a Participant who is a
"five (5) percent owner" at any time during the five (5)
Plan Year period ending in the calendar year in which he
attains age 70 1/2 or, in the case of a Participant who
becomes a "five (5) percent owner" during any subsequent
Plan Year, clause (ii) shall no longer apply and the
required beginning date shall be the April 1st of the
calendar year following the calendar year in which such
subsequent Plan Year ends. Alternatively, distributions to a
Participant must begin no later than the applicable April
1st as determined under the preceding sentence and must be
made over a period certain measured by the life expectancy
of the Participant (or the life expectancies of the
Participant and his designated Beneficiary) in accordance
with Regulations. Notwithstanding the foregoing, clause (ii)
above shall not apply to any Participant unless the
Participant had attained age 70 1/2 before January 1, 1988
and was not a "five (5) percent owner" at any time during
the Plan Year ending with or within the calendar year in
which the Participant attained age 66 1/2 or any subsequent
Plan Year.
(2) Distributions to a Participant and his Beneficiaries
shall only be made in accordance with the incidental death
benefit requirements of Code Section 401(a)(9)(G) and the
Regulations thereunder.
Additionally, for calendar years beginning before 1989,
distributions may also be made under an alternative method
which provides that the then present value of the payments
to be made over the period of the Participant's life
expectancy exceeds fifty percent (50%) of the then present
value of the total payments to be made to the Participant
and his Beneficiaries.
(g) Notwithstanding any provision in the Plan to the
contrary, distributions upon the death of a Participant shall be
made in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the Regulations
thereunder. If it is determined pursuant to Regulations that the
distribution of a Participant's interest has begun and the
Participant dies before his entire interest has been distributed
to him, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of
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distribution selected pursuant to Section 7.5 as of his date of
death. If a Participant dies before he has begun to receive any
distributions of his interest under the Plan or before
distributions are deemed to have begun pursuant to Regulations,
then his death benefit shall be distributed to his Beneficiaries
by December 31st of the calendar year in which the fifth
anniversary of his date of death occurs.
(h) Except as limited by Sections 7.5 and 7.6, whenever
the Trustee is to make a distribution or to commence a series of
payments on or as of an Anniversary Date, the distribution or
series of payments may be made or begun on such date or as soon
thereafter as is practicable. However, unless a Former
Participant elects in writing to defer the receipt of benefits
(such election may not result in a death benefit that is more
than incidental), the payment of benefits shall begin not later
than the 60th day after the close of the Plan Year in which the
latest of the following events occurs:
(1) the date on which the Participant attains the
earlier of age 65 or the Normal Retirement Age specified
herein;
(2) the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or
(3) the date the Participant terminates his service with
the Employer.
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED
(a) Distribution of a Participant's benefit may be made
in cash or Company Stock or both, provided, however, that if a
Participant or Beneficiary so demands, such benefit shall be
distributed only in the form of Company Stock. Prior to making a
distribution of benefits, the Administrator shall advise the
Participant or his Beneficiary, in writing, of the right to
demand that benefits be distributed solely in Company Stock.
(b) If a Participant or Beneficiary demands that
benefits be distributed solely in Company Stock, distribution of
a Participant's benefit will be made entirely in whole shares or
other units of Company Stock. Any balance in a Participant's
Other Investments Account will be applied to acquire for
distribution the maximum number of whole shares or other units
of Company Stock at the then fair market value. Any fractional
unit value unexpended will be distributed in cash. If Company
Stock is not available for purchase by the Trustee, then the
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Trustee shall hold such balance until Company Stock is acquired
and then make such distribution, subject to Sections 7.5(h) and
7.5(f).
(c) The Trustee will make distribution from the Trust
only on instructions from the Administrator.
(d) Notwithstanding anything contained herein to the
contrary, if the Employer's charter or by-laws restrict
ownership of substantially all shares of Company Stock to
Employees and the Trust Fund, as described in Code Section
409(h)(2), the Administrator shall distribute a Participant's
Account entirely in cash without granting the Participant the
right to demand distribution in shares of Company Stock.
(e) Except as otherwise provided herein, Company Stock
distributed by the Trustee may be restricted as to sale or
transfer by the by-laws or articles of incorporation of the
Employer, provided restrictions are applicable to all Company
Stock of the same class. If a Participant is required to offer
the sale of his Company Stock to the Employer before offering to
sell his Company Stock to a third party, in no event may the
Employer pay a price less than that offered to the distributee
by another potential buyer making a bona fide offer and in no
event shall the Trustee pay a price less than the fair market
value of the Company Stock.
(f) If Company Stock acquired with the proceeds of an
Exempt Loan (described in Section 5.3 hereof) is available for
distribution and consists of more than one class, a Participant
or his Beneficiary must receive substantially the same
proportion of each such class.
7.7 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted
by the laws of the state in which said Beneficiary resides. Such a payment to
the legal guardian, custodian or parent of a minor Beneficiary shall fully
discharge the Trustee, Employer, and Plan from further liability on account
thereof.
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7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to a
Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a Forfeiture
pursuant to the Plan. In the event a Participant or Beneficiary is located
subsequent to his benefit being reallocated, such benefit shall be restored.
7.9 PUT OPTION
(a) If Company Stock which was not acquired with the
proceeds of an Exempt Loan is distributed to a Participant and
such Company Stock is not readily tradeable on an established
securities market, a Participant has a right to require the
Employer to repurchase the Company Stock distributed to such
Participant under a fair valuation formula. Such Stock shall be
subject to the provisions of Section 7.9(c).
(b) Company Stock which is acquired with the proceeds of
an Exempt Loan and which is not publicly traded when
distributed, or if it is subject to a trading limitation when
distributed, must be subject to a put option. For purposes of
this paragraph, a "trading limitation" on Company Stock is a
restriction under any Federal or State securities law or any
regulation thereunder, or an agreement (not prohibited by
Section 7.10) affecting the Company Stock which would make the
Company Stock not as freely tradeable as stock not subject to
such restriction.
(c) The put option must be exercisable only by a
Participant, by the Participant's donees, or by a person
(including an estate or its distributee) to whom the Company
Stock passes by reason of a Participant's death. (Under this
paragraph Participant or Former Participant means a Participant
or Former Participant and the beneficiaries of the Participant
or Former Participant under the Plan.) The put option must
permit a Participant to put the Company Stock to the Employer.
Under no circumstances may the put option bind the Plan.
However, it shall grant the Plan an option to assume the rights
and obligations of the Employer at the time that the put option
is exercised. If it is known at the time a loan is made that
Federal or State law will be violated by the Employer's honoring
such put option, the
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put option must permit the Company Stock to be put, in a manner
consistent with such law, to a third party (e.g., an affiliate
of the Employer or a shareholder other than the Plan) that has
substantial net worth at the time the loan is made and whose net
worth is reasonably expected to remain substantial.
The put option shall commence as of the day following the
date the Company Stock is distributed to the Former Participant
and end 60 days thereafter and if not exercised within such 60-
day period, an additional 60-day option shall commence on the
first day of the fifth month of the Plan Year next following the
date the stock was distributed to the Former Participant (or
such other 60-day period as provided in regulations promulgated
by the Secretary of the Treasury). However, in the case of
Company Stock that is publicly traded without restrictions when
distributed but ceases to be so traded within either of the 60-
day periods described herein after distribution, the Employer
must notify each holder of such Company Stock in writing on or
before the tenth day after the date the Company Stock ceases to
be so traded that for the remainder of the applicable 60-day
period the Company Stock is subject to the put option. The
number of days between the tenth day and the date on which
notice is actually given, if later than the tenth day, must be
added to the duration of the put option. The notice must inform
distributees of the term of the put options that they are to
hold. The terms must satisfy the requirements of this paragraph.
The put option is exercised by the holder notifying the
Employer in writing that the put option is being exercised; the
notice shall state the name and address of the holder and the
number of shares to be sold. The period during which a put
option is exercisable does not include any time when a
distributee is unable to exercise it because the party bound by
the put option is prohibited from honoring it by applicable
Federal or State law. The price at which a put option must be
exercisable is the value of the Company Stock determined in
accordance with Section 6.2. Payment under the put option
involving a "Total Distribution" shall be paid in substantially
equal monthly, quarterly, semiannual or annual installments over
a period certain beginning not later than thirty (30) days after
the exercise of the put option and not extending beyond (5)
years. The deferral of payment is reasonable if adequate
security and a reasonable interest rate on the unpaid amounts
are provided. The amount to be paid under the put option
involving installment distributions must be paid not later than
thirty (30) days after the exercise of the put option. Payment
under a put option must not be restricted by the provisions of a
loan or any other arrangement,
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including the terms of the Employer's articles of incorporation,
unless so required by applicable state law.
For purposes of this Section, "Total Distribution" means a
distribution to a Participant or his Beneficiary within one
taxable year of the entire Vested Participant's Account.
(d) An arrangement involving the Plan that creates a
put option must not provide for the issuance of put options
other than as provided under this Section. (See 5.1(d))
7.10 NONTERMINABLE PROTECTIONS AND RIGHTS
No Company Stock, except as provided in Section 7.9(b), acquired with
the proceeds of a loan described in Section 5.3 hereof may be subject to a put,
call, or other option, or buy-sell or similar arrangement when held by and when
distributed from the Trust Fund, whether or not the Plan is then an ESOP. The
protections and rights granted in this Section are nonterminable, and such
protections and rights shall continue to exist under the terms of this Plan so
long as any Company Stock acquired with the proceeds of a loan described in
Section 5.3 hereof is held by the Trust Fund or by any Participant or other
person for whose benefit such protections and rights have been created, and
neither the repayment of such loan nor the failure of the Plan to be an ESOP,
nor an amendment of the Plan shall cause a termination of said protections and
rights.
7.11 IN-SERVICE TRANSFERS
A Participant who is not a Highly Compensated Employee, who is fully
vested in his ESOP Account(s), and who has at least 10 Years of Service with a
Participating Employer may direct the Trustee to transfer up to 50% of the
balance in his Account(s), in cash, to a defined contribution plan maintained by
such Participant's Employer that is qualified under Section 401(a) of the Code
and accepts such transfers. The Trustee shall sell Company Stock to the extent
required to enable such transfer to be made in cash. A Participant shall not be
eligible to direct an in-service transfer more frequently than once in any five-
year period. This provision shall be effective only at such times as Company
Stock is publicly traded on a nationally recognized securities exchange and the
Employer of such a Participant simultaneously maintain such a defined
contribution plan.
7.12 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) A Participant who is fully vested in his ESOP
Account(s) and who has at least 10 Years of Service with a
Participating Employer shall be eligible for a hardship
distribution of up to 50% of the balance
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in the Participant's Account(s) in the event of a financial
hardship as determined by the Plan Administrator. A financial
hardship for this purpose shall exist if the Participant has an
immediate need for cash, not available from savings, to pay for
extraordinary expenses, which shall include, without limitation,
medical expenses incurred by the Participant or any member of
his family, expenses incurred in the purchase, renovation, or
repair of the Participant's principal residence, payment of rent
or mortgage on the Participant's principal residence, the
purchase of an automobile (new or used) for the Participant or
his spouse, funeral expenses of a member of the Participant's
family, or educational expenses incurred by the Participant or
any member of his family. This provision shall be effective only
at such times as Company Stock is publicly traded on a
nationally recognized securities exchange.
(b) Any distribution made pursuant to this Section
shall be made in a manner which is consistent with and satisfies
the provisions of Sections 7.5 and 7.6, including, but not
limited to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder.
7.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a Participant
in this Plan shall be subject to the rights afforded to any "alternate payee"
under a "qualified domestic relations order." Furthermore, a distribution to an
"alternate payee" shall be permitted if such distribution is authorized by a
"qualified domestic relations order," even if the affected Participant has not
separated from service and has not reached the "earliest retirement age" under
the Plan. For the purposes of this Section, "alternate payee," "qualified
domestic relations order" and "earliest retirement age" shall have the meaning
set forth under Code Section 414(p).
ARTICLE VIII
TRUSTEE
8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of responsibilities:
(a) Consistent with the "funding policy and method"
determined by the Employer, to invest, manage, and control the
Plan assets subject, however, to the direction of an Investment
Manager if the Trustee should appoint such manager as to all or
a portion of the assets of the Plan;
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(b) At the direction of the Administrator, to pay
benefits required under the Plan to be paid to Participants, or,
in the event of their death, to their Beneficiaries;
(c) To maintain records of receipts and disbursements
and furnish to the Employer and/or Administrator for each Plan
Year a written annual report per Section 8.7; and
(d) If there shall be more than one Trustee, they
shall act by a majority of their number, but may authorize one
or more of them to sign papers on their behalf.
8.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust
Fund to keep the Trust Fund invested without distinction between
principal and income and in such securities or property, real or
personal, wherever situated, as the Trustee shall deem
advisable, including, but not limited to, stocks, common or
preferred, bonds and other evidences of indebtedness or
ownership, and real estate or any interest therein. The Trustee
shall at all times in making investments of the Trust Fund
consider, among other factors, the short and long-term financial
needs of the Plan on the basis of information furnished by the
Employer. In making such investments, the Trustee shall not be
restricted to securities or other property of the character
expressly authorized by the applicable law for trust
investments; however, the Trustee shall give due regard to (i)
any limitations imposed by the Code or the Act so that at all
times the Plan may qualify as an Employee Stock Ownership Plan
and Trust, and (ii) the investment policies set forth in
Sections 5.1 and 5.2.
(b) The Trustee may employ a bank or trust company
pursuant to the terms of its usual and customary bank agency
agreement, under which the duties of such bank or trust company
shall be of a custodial, clerical and record-keeping nature.
(c) In the event the Trustee invests any part of the
Trust Fund, pursuant to the directions of the Administrator, in
any shares of stock issued by the Employer, and the
Administrator thereafter directs the Trustee to dispose of such
investment, or any part thereof, under circumstances which, in
the opinion of counsel for the Trustee, require registration of
the securities under the Securities Act of 1933 and/or
qualification of the securities under the Blue Sky laws of any
state or states, then the Employer at its own expense, will take
or cause to be
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taken any and all such action as may be necessary or appropriate
to effect such registration and/or qualification.
8.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common law,
statutory authority, including the Act, and other provisions of the Plan, shall
have the following powers and authorities, to be exercised in the Trustee's sole
discretion:
(a) To purchase, or subscribe for, any securities or
other property and to retain the same. In conjunction with the
purchase of securities, margin accounts may be opened and
maintained;
(b) To sell, exchange, convey, transfer, grant options
to purchase, or otherwise dispose of any securities or other
property held by the Trustee, by private contract or at public
auction. No person dealing with the Trustee shall be bound to
see to the application of the purchase money or to inquire into
the validity, expediency, or propriety of any such sale or other
disposition, with or without advertisement;
(c) To vote upon any stocks, bonds, or other
securities; to give general or special proxies or powers of
attorney with or without power of substitution; to exercise any
conversion privileges, subscription rights or other options, and
to make any payments incidental thereto; to oppose, or to
consent to, or otherwise participate in, corporate reorganiza-
tions or other changes affecting corporate securities, and to
delegate discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to exercise any
of the powers of an owner with respect to stocks, bonds,
securities, or other property;
(d) To cause any securities or other property to be
registered in the Trustee's own name or in the name of one or
more of the Trustee's nominees, and to hold any investments in
bearer form, but the books and records of the Trustee shall at
all times show that all such investments are part of the Trust
Fund;
(e) To borrow or raise money for the purposes of the
Plan in such amount, and upon such terms and conditions, as the
Trustee shall deem advisable; and for any sum so borrowed, to
issue a promissory note as Trustee, and to secure the repayment
thereof by pledging all, or any part, of the Trust Fund; and no
person lending money to the Trustee shall be bound to see to the
application of the money lent or to inquire into the validity,
expediency, or propriety of any borrowing;
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(f) To keep such portion of the Trust Fund in cash or
cash balances as the Trustee may, from time to time, deem to be
in the best interests of the Plan, without liability for
interest thereon;
(g) To accept and retain for such time as the Trustee
may deem advisable any securities or other property received or
acquired as Trustee hereunder, whether or not such securities or
other property would normally be purchased as investments
hereunder;
(h) To make, execute, acknowledge, and deliver any and
all documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out
the powers herein granted;
(i) To settle, compromise, or submit to arbitration
any claims, debts, or damages due or owing to or from the Plan,
to commence or defend suits or legal or administrative
proceedings, and to represent the Plan in all suits and legal
and administrative proceedings;
(j) To employ suitable agents and counsel and to pay
their reasonable expenses and compensation, and such agent or
counsel may or may not be agent or counsel for the Employer;
(k) To apply for and procure from responsible
insurance companies, to be selected by the Administrator, as an
investment of the Trust Fund such annuity, or other Contracts
(on the life of any Participant) as the Administrator shall deem
proper; to exercise, at any time or from time to time, whatever
rights and privileges may be granted under such annuity, or
other Contracts; to collect, receive, and settle for the
proceeds of all such annuity or other Contracts as and when
entitled to do so under the provisions thereof;
(l) To invest funds of the Trust in time deposits or
savings accounts bearing a reasonable rate of interest in the
Trustee's bank;
(m) To invest in Treasury Bills and other forms of
United States government obligations;
(n) To invest in shares of investment companies
registered under the Investment Company Act of 1940;
(o) To deposit monies in federally insured savings
accounts or certificates of deposit in banks or savings and loan
associations;
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(p) To vote Company Stock as provided in Section 8.4;
(q) To consent to or otherwise participate in
reorganizations, recapitalizations, consolidations, mergers and
similar transactions with respect to Company Stock or any other
securities and to pay any assessments or charges in connection
therewith;
(r) To deposit such Company Stock (but only if such
deposit does not violate the provisions of Section 8.4 hereof)
or other securities in any voting trust, or with any protective
or like committee, or with a trustee or with depositories
designated thereby;
(s) To sell or exercise any options, subscription
rights and conversion privileges and to make any payments
incidental thereto;
(t) To exercise any of the powers of an owner, with
respect to such Company Stock and other securities or other
property comprising the Trust Fund. The Administrator, with the
Trustee's approval, may authorize the Trustee to act on any
administrative matter or class of matters with respect to which
direction or instruction to the Trustee by the Administrator is
called for hereunder without specific direction or other
instruction from the Administrator;
(u) To sell, purchase and acquire put or call options
if the options are traded on and purchased through a national
securities exchange registered under the Securities Exchange Act
of 1934, as amended, or, if the options are not traded on a
national securities exchange, are guaranteed by a member firm of
the New York Stock Exchange;
(v) To do all such acts and exercise all such rights
and privileges, although not specifically mentioned herein, as
the Trustee may deem necessary to carry out the purposes of the
Plan.
8.4 VOTING COMPANY STOCK
The Trustee shall vote all Company Stock held as part of the Plan
assets. Provided, however, that if any agreement entered into by the Trust
provides for voting of any shares of Company Stock pledged as security for any
obligation of the Plan, then such shares of Company Stock shall be voted in
accordance with such agreement.
Notwithstanding the foregoing, if the Employer has a registration-type
class of securities or, with respect to Company Stock acquired by, or
transferred to, the Plan
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in connection with a securities acquisition loan (as defined in Code Section
133(b)) after July 10, 1989, each Participant or Beneficiary shall be entitled
to direct the Trustee as to the manner in which the Company Stock which is
entitled to vote and which is allocated to the Company Stock Account of such
Participant or Beneficiary is to be voted. The Trustee shall vote unallocated
Company Stock and allocated Company Stock for which no voting instructions are
received in the same proportions as Participants have given directions to the
Trustee to vote their allocated Company Stock. If the Employer does not have a
registration-type class of securities, with respect to Company Stock other than
Company Stock acquired by, or transferred to, the Plan in connection with a
securities acquisition loan (as defined in Code Section 133(b)) after July 10,
1989, each Participant or Beneficiary in the Plan shall be entitled to direct
the Trustee as to the manner in which voting rights on shares of Company Stock
which are allocated to the Company Stock Account of such Participant or
Beneficiary are to be exercised with respect to any corporate matter which
involves the voting of such shares with respect to the approval or disapproval
of any corporate merger or consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets of a trade or
business, or such similar transaction as prescribed in Regulations. For purposes
of this Section the term "registration-type class of securities" means: (A) a
class of securities required to be registered under Section 12 of the Securities
Exchange Act of 1934; and (B) a class of securities which would be required to
be so registered except for the exemption from registration provided in
subsection (g)(2)(H) of such Section 12.
8.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
(a) The Trustee shall make distributions from the
Trust Fund at such times and in such numbers of shares or other
units of Company Stock and amounts of cash to or for the benefit
of the person entitled thereto under the Plan as the
Administrator directs in writing. Any undistributed part of a
Participant's interest in his Accounts shall be retained in the
Trust Fund until the Administrator directs its distribution.
Where distribution is directed in Company Stock, the Trustee
shall cause an appropriate certificate to be issued to the
person entitled thereto and mailed to the address furnished it
by the Administrator. Any portion of a Participant's Account to
be distributed in cash shall be paid by the Trustee mailing its
check to the same person at the same address. If a dispute
arises as to who is entitled to or should receive any benefit or
payment, the Trustee may withhold or cause to be withheld such
payment until the dispute has been resolved.
(b) As directed by the Administrator, the Trustee
shall make payments out of the Trust Fund. Such directions or
instructions need not specify the purpose of the payments so
directed and the Trustee
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shall not be responsible in any way respecting the purpose or
propriety of such payments except as mandated by the Act.
(c) In the event that any distribution or payment
directed by the Administrator shall be mailed by the Trustee to
the person specified in such direction at the latest address of
such person filed with the Administrator, and shall be returned
to the Trustee because such person cannot be located at such
address, the Trustee shall promptly notify the Administrator of
such return. Upon the expiration of sixty (60) days after such
notification, such direction shall become void and unless and
until a further direction by the Administrator is received by
the Trustee with respect to such distribution or payment, the
Trustee shall thereafter continue to administer the Trust as if
such direction had not been made by the Administrator. The
Trustee shall not be obligated to search for or ascertain the
whereabouts of any such person.
8.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as shall from
time to time be agreed upon in writing by the Employer and the Trustee. An
individual serving as Trustee who already receives full-time pay from the
Employer shall not receive compensation from the Plan. In addition, the Trustee
shall be reimbursed for any reasonable expenses, including reasonable counsel
fees incurred by it as Trustee. Such compensation and expenses shall be paid
from the Trust Fund unless paid or advanced by the Employer. All taxes of any
kind and all kinds whatsoever that may be levied or assessed under existing or
future laws upon, or in respect of, the Trust Fund or the income thereof, shall
be paid from the Trust Fund.
8.7 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary
Date or receipt of the Employer's contribution for each Plan Year, the Trustee
shall furnish to the Employer and Administrator a written statement of account
with respect to the Plan Year for which such contribution was made setting
forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund
upon sales or other disposition of the assets;
(c) the increase, or decrease, in the value of the
Trust Fund;
(d) all payments and distributions made from the Trust
Fund; and
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(e) such further information as the Trustee and/or
Administrator deems appropriate. The Employer, forthwith upon
its receipt of each such statement of account, shall acknowledge
receipt thereof in writing and advise the Trustee and/or
Administrator of its approval or disapproval thereof. Failure by
the Employer to disapprove any such statement of account within
thirty (30) days after its receipt thereof shall be deemed an
approval thereof.
The approval by the Employer of any statement of account shall
be binding as to all matters embraced therein as between the
Employer and the Trustee to the same extent as if the account of
the Trustee had been settled by judgment or decree in an action
for a judicial settlement of its account in a court of competent
jurisdiction in which the Trustee, the Employer and all persons
having or claiming an interest in the Plan were parties;
provided, however, that nothing herein contained shall deprive
the Trustee of its right to have its accounts judicially settled
if the Trustee so desires.
8.8 AUDIT
(a) If an audit of the Plan's records shall be
required by the Act and the regulations thereunder for any Plan
Year, the Administrator shall direct the Trustee to engage on
behalf of all Participants an independent qualified public
accountant for that purpose. Such accountant shall, after an
audit of the books and records of the Plan in accordance with
generally accepted auditing standards, within a reasonable
period after the close of the Plan Year, furnish to the
Administrator and the Trustee a report of his audit setting
forth his opinion as to whether any statements, schedules or
lists that are required by Act Section 103 or the Secretary of
Labor to be filed with the Plan's annual report, are presented
fairly in conformity with generally accepted accounting
principles applied consistently. All auditing and accounting
fees shall be an expense of and may, at the election of the
Administrator, be paid from the Trust Fund.
(b) If some or all of the information necessary to
enable the Administrator to comply with Act Section 103 is
maintained by a bank, insurance company, or similar institution,
regulated and supervised and subject to periodic examination by
a state or federal agency, it shall transmit and certify the
accuracy of that information to the Administrator as provided in
Act Section 103(b) within one hundred twenty (120) days after
the end of the Plan Year or by such other date as may be
prescribed under regulations of the Secretary of Labor.
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8.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to
the Employer, at least thirty (30) days before its effective
date, a written notice of his resignation.
(b) The Employer may remove the Trustee by mailing by
registered or certified mail, addressed to such Trustee at his
last known address, at least thirty (30) days before its
effective date, a written notice of his removal.
(c) Upon the death, resignation, incapacity, or removal
of any Trustee, a successor may be appointed by the Employer;
and such successor, upon accepting such appointment in writing
and delivering same to the Employer, shall, without further act,
become vested with all the estate, rights, powers, discretions,
and duties of his predecessor with like respect as if he were
originally named as a Trustee herein. Until such a successor is
appointed, the remaining Trustee or Trustees shall have full
authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors
prior to the death, resignation, incapacity, or removal of a
Trustee. In the event a successor is so designated by the
Employer and accepts such designation, the successor shall,
without further act, become vested with all the estate, rights,
powers, discretions, and duties of his predecessor with the like
effect as if he were originally named as Trustee herein
immediately upon the death, resignation, incapacity, or removal
of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as
such, he shall furnish to the Employer and Administrator a
written statement of account with respect to the portion of the
Plan Year during which he served as Trustee. This statement
shall be either (i) included as part of the annual statement of
account for the Plan Year required under Section 8.7 or (ii) set
forth in a special statement. Any such special statement of
account should be rendered to the Employer no later than the due
date of the annual statement of account for the Plan Year. The
procedures set forth in Section 8.7 for the approval by the
Employer of annual statements of account shall apply to any
special statement of account rendered hereunder and approval by
the Employer of any such special statement in the manner
provided in Section 8.7 shall have the same effect upon the
statement as the Employer's approval of an annual statement of
account. No successor to the Trustee shall have any duty or
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responsibility to investigate the acts or transactions of any
predecessor who has rendered all statements of account required
by Section 8.7 and this subparagraph.
8.10 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the Trustee
at the direction of the Administrator shall transfer the Vested interest, if
any, of such Participant in his account to another trust forming part of a
pension, profit sharing or stock bonus plan maintained by such Participant's new
employer and represented by said employer in writing as meeting the requirements
of Code Section 401(a), provided that the trust to which such transfers are made
permits the transfer to be made.
8.11 DIRECT ROLLOVER
(a) This Section applies to distributions made on or
after January 1, 1993. 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 Plan Administrator, to
have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(b) For purposes of this Section the following definitions
shall apply:
(1) An eligible rollover distribution is any
distribution of all or any 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
designated beneficiary, or for a specified period of ten years
or more; any distribution to the extent such distribution is
required under Code Section 401(a) (9); and the portion of any
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation
with respect to employer securities).
(2) An eligible retirement plan is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity
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plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a), that accepts the distributee'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.
(3) A distributee includes 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 or former
spouse who is the alternate payee under a qualified domestic
relations order, as defined in Code Section 414(p), are
distributees with regard to the interest of the spouse or former
spouse.
(4) A direct rollover is a payment by the plan to the
eligible retirement plan specified by the distributee.
ARTICLE IX
AMENDMENT, TERMINATION AND MERGERS
9.1 AMENDMENT
(a) The Employer shall have the right at any time to
amend the Plan, subject to the limitations of this Section. Any
such amendment shall be adopted by formal action of the
Employer's board of directors and executed by an officer
authorized to act on behalf of the Employer. However, any
amendment which affects the rights, duties or responsibilities
of the Trustee and Administrator may only be made with the
Trustee's and Administrator's written consent. Any such
amendment shall become effective as provided therein upon its
execution. The Trustee shall not be required to execute any such
amendment unless the Trust provisions contained herein are a
part of the Plan and the amendment affects the duties of the
Trustee hereunder.
(b) No amendment to the Plan shall be effective if it
authorizes or permits any part of the Trust Fund (other than
such part as is required to pay taxes and administration
expenses) to be used for or diverted to any purpose other than
for the exclusive benefit of the Participants or their
Beneficiaries or estates; or causes any reduction in the amount
credited to the account of any Participant; or causes or permits
any portion of the Trust Fund to revert to or become property of
the Employer.
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(c) Except as permitted by Regulations, no Plan
amendment or transaction having the effect of a Plan amendment
(such as a merger, plan transfer or similar transaction) shall
be effective to the extent it eliminates or reduces any "Section
411(d)(6) protected benefit" or adds or modifies conditions
relating to "Section 411 (d)(6) protected benefits" the result
of which is a further restriction on such benefit unless such
protected benefits are preserved with respect to benefits
accrued as of the later of the adoption date or effective date
of the amendment. "Section 411 (d)(6) protected benefits" are
benefits described in Code Section 411(d)(6)(A), early
retirement benefits and retirement-type subsidies, and optional
forms of benefit.
In addition, no such amendment shall have the effect of
terminating the protections and rights set forth in Section
7.12, unless such termination shall then be permitted under the
applicable provisions of the Code and Regulations; such a
termination is currently expressly prohibited by Regulation
54.4975-11 (a)(3)(ii).
9.2 TERMINATION
(a) The Employer shall have the right at any time to
terminate the Plan by delivering to the Trustee and
Administrator written notice of such termination. Upon any full
or partial termination, all amounts credited to the affected
Participants' Accounts shall become 100% Vested as provided in
Section 7.4 and shall not thereafter be subject to forfeiture,
and all unallocated amounts shall be allocated to the accounts
of all Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer
shall direct the distribution of the assets of the Trust Fund to
Participants in a manner which is consistent with and satisfies
the provisions of Sections 7.5 and 7.6. Except as permitted by
Regulations, the termination of the Plan shall not result in the
reduction of "Section 411 (d)(6) protected benefits" in
accordance with Section 9.1(c).
9.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or its assets
and/or liabilities may be transferred to any other plan and trust only if the
benefits which would be received by a Participant of this Plan, in the event of
a termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately
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before the transfer, merger or consolidation, and such transfer, merger or
consolidation does not otherwise result in the elimination or reduction of any
"Section 411 (d)(6) protected benefits" in accordance with Section 9.1(c).
ARTICLE X
MISCELLANEOUS
10.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon him as a Participant of this Plan.
10.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit
which shall be payable out of the Trust Fund to any person
(including a Participant or his Beneficiary) shall be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber,
or charge the same shall be void; and no such benefit shall in
any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of any such person, nor shall
it be subject to attachment or legal process for or against such
person, and the same shall not be recognized by the Trustee,
except to such extent as may be required by law.
(b) This provision shall not apply to a "qualified
domestic relations order" defined in Code Section 414(p), and
those other domestic relations orders permitted to be so treated
by the Administrator under the provisions of the Retirement
Equity Act of 1984. The Administrator shall establish a written
procedure to determine the qualified status of domestic
relations orders and to administer distributions under such
qualified orders. Further, to the extent provided under a
"qualified domestic relations order," a former spouse of a
Participant shall be treated as the spouse or surviving spouse
for all purposes under the Plan.
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10.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the Act
and the laws of the State of Connecticut, other than its laws respecting choice
of law, to the extent not preempted by the Act.
10.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter
gender, they shall be construed as though they were also used in another gender
in all cases where they would so apply, and whenever any words are used herein
in the singular or plural form, they shall be construed as though they were also
used in the other form in all cases where they would so apply.
10.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or Plan established hereunder to which the Trustee or the
Administrator may be a party, and such claim, suit, or proceeding is resolved in
favor of the Trustee or Administrator, they shall be entitled to be reimbursed
from the Trust Fund for any and all costs, attorney's fees, and other expenses
pertaining thereto incurred by them for which they shall have become liable.
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically
permitted by law, it shall be impossible by operation of the
Plan or of the Trust, by termination of either, by power of
revocation or amendment, by the happening of any contingency, by
collateral arrangement or by any other means, for any part of
the corpus or income of any trust fund maintained pursuant to
the Plan or any funds contributed thereto to be used for, or
diverted to, purposes other than the exclusive benefit of
Participants, Retired Participants, or their Beneficiaries.
(b) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Act Section
403(c)(2)(A), the Employer may demand repayment of such
excessive contribution at any time within one (1) year following
the time of payment and the Trustees shall return such amount to
the Employer within the one (1) year period. Earnings of the
Plan attributable to the excess contributions may not be
returned to the Employer but any losses attributable thereto
must reduce the amount so returned.
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10.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless exempted
by the Act and regulations thereunder, shall be bonded in an amount not less
than 10% of the amount of the funds such Fiduciary handles; provided, however,
that the minimum bond shall be $1,000 and the maximum bond, $500,000. The amount
of funds handled shall be determined at the beginning of each Plan Year by the
amount of funds handled by such person, group, or class to be covered and their
predecessors, if any, during the preceding Plan Year, or if there is no
preceding Plan Year, then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the Plan against any
loss by reason of acts of fraud or dishonesty by the Fiduciary alone or in
connivance with others. The surety shall be a corporate surety company (as such
term is used in Act Section 412(a)(2)), and the bond shall be in a form approved
by the Secretary of Labor. Notwithstanding anything in the Plan to the contrary,
the cost of such bonds shall be an expense of and may, at the election of the
Administrator, be paid from the Trust Fund or by the Employer.
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their successors, shall be
responsible for the validity of any Contract issued hereunder or for the failure
on the part of the insurer to make payments provided by any such Contract, or
for the action of any person which may delay payment or render a Contract null
and void or unenforceable in whole or in part.
10.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the insurer.
10.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary,
or to any guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of the Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer,
either of whom may require
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such Participant, legal representative, Beneficiary, guardian or committee, as a
condition precedent to such payment, to execute a receipt and release thereof in
such form as shall be determined by the Trustee or Employer.
10.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator and (3) the Trustee. The named Fiduciaries shall have only those
specific powers, duties, responsibilities, and obligations as are specifically
given them under the Plan. In general, the Employer shall have the sole
responsibility for making the contributions provided for under Section 4.1; and
shall have the sole authority to appoint and remove the Trustee and the
Administrator; to formulate the Plan's "funding policy and method"; and to amend
or terminate, in whole or in part, the Plan. The Administrator shall have the
sole responsibility for the administration of the Plan, which responsibility is
specifically described in the Plan. The Trustee shall have the sole
responsibility of management of the assets held under the Trust, except those
assets, the management of which has been assigned to an Investment Manager, who
shall be solely responsible for the management of the assets assigned to it, all
as specifically provided in the Plan. Each named Fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan, authorizing or providing for such
direction, information or action. Furthermore, each named Fiduciary may rely
upon any such direction, information or action of another named Fiduciary as
being proper under the Plan, and is not required under the Plan to inquire into
the propriety of any such direction, information or action. It is intended under
the Plan that each named Fiduciary shall be responsible for the proper exercise
of its own powers, duties, responsibilities and obligations under the Plan. No
named Fiduciary shall guarantee the Trust Fund in any manner against investment
loss or depreciation in asset value. Any person or group may serve in more than
one Fiduciary capacity. In the furtherance of their responsibilities hereunder,
the "named Fiduciaries" shall be empowered to interpret the Plan and Trust and
to resolve ambiguities, inconsistencies and omissions, which findings shall be
binding, final and conclusive.
10.13 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
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10.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
contributions to this Plan are conditioned upon the initial
qualification of the Plan under Code Section 401. If the Plan
receives an adverse determination with respect to its initial
qualification, then the Plan may return such contributions to
the Employer within one year after such determination, provided
the application for the determination is made by the time
prescribed by law for filing the Employer's return for the
taxable year in which the Plan was adopted, or such later date
as the Secretary of the Treasury may prescribe.
(b) Notwithstanding any provisions to the contrary,
except Sections 3.6, 3.7, and 4.1(c), any contribution by the
Employer to the Trust Fund is conditioned upon the deductibility
of the contribution by the Employer under the Code and, to the
extent any such deduction is disallowed, the Employer may,
within one (1) year following the disallowance of the deduction,
demand repayment of such disallowed contribution and the Trustee
shall return such contribution within one (1) year following the
disallowance. Earnings of the Plan attributable to the excess
contribution may not be returned to the Employer, but any losses
attributable thereto must reduce the amount so returned.
10.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner. In the event of any conflict between the
terms of this Plan and any Contract purchased hereunder, the Plan provisions
shall control.
10.16 SECURITIES AND EXCHANGE COMMISSION APPROVAL
The Employer may request an interpretative letter from the Securities
and Exchange Commission stating that the transfers of Company Stock contemplated
hereunder do not involve transactions requiring a registration of such Company
Stock under the Securities Act of 1933. In the event that a favorable
interpretative letter is not obtained, the Employer reserves the right to amend
the Plan and Trust retroactively to their Effective Dates in order to obtain a
favorable interpretative letter or to terminate the Plan.
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ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the consent of the
Employer and Trustee, any other corporation or entity, whether an affiliate or
subsidiary or not, may adopt this Plan and all of the provisions hereof, and
participate herein and be known as a Participating Employer, by a properly
executed document evidencing said intent and will of such Participating
Employer.
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be required
to use the same Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to,
commingle, hold and invest as one Trust Fund all contributions
made by Participating Employers, as well as all increments
thereof. However, the assets of the Plan shall, on an ongoing
basis, be available to pay benefits to all Participants and
Beneficiaries under the Plan without regard to the Employer or
Participating Employer who contributed such assets.
(c) The transfer of any Participant from or to an
Employer participating in this Plan, whether he be an Employee
of the Employer or a Participating Employer, shall not affect
such Participant's rights under the Plan, and all amounts
credited to such Participant's Account as well as his
accumulated service time with the transferor or predecessor, and
his length of participation in the Plan, shall continue to his
credit.
(d) All rights and values forfeited by termination of
employment shall inure only to the benefit of the Participants
of the Employer or Participating Employer by which the
forfeiting Participant was employed, except if the Forfeiture is
for an Employee whose Employer is an Affiliated Employer, then
said Forfeiture shall be allocated to the Participants employed
by the Employer or Participating Employers who are Affiliated
Employers. Should an Employee of one ("First") Employer be
transferred to an associated ("Second") Employer which is an
Affiliated Employer, such transfer shall not cause his account
balance (generated while an Employee of "First" Employer) in any
manner, or by any amount to be forfeited. Such Employee's
Participant Account balance for all purposes of the Plan,
including
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length of service, shall be considered as though he had always
been employed by the "Second" Employer and as such had received
contributions, forfeitures, earnings or losses, and appreciation
or depreciation in value of assets totaling the amount so
transferred.
(e) Any expenses of the Trust which are to be paid by
the Employer or borne by the Trust Fund shall be paid by each
Participating Employer in the same proportion that the total
amount standing to the credit of all Participants employed by
such Employer bears to the total standing to the credit of all
Participants.
11.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a party to this Plan;
provided, however, that with respect to all of its relations with the Trustee
and Administrator for the purpose of this Plan, each Participating Employer
shall be deemed to have designated irrevocably the Employer as its agent. Unless
the context of the Plan clearly indicates the contrary, the word "Employer"
shall be deemed to include each Participating Employer as related to its
adoption of the Plan.
11.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between
Participating Employers, and in the event of any such transfer, the Employee
involved shall carry with him his accumulated service and eligibility. No such
transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Participating Employer from whom the Employee was transferred.
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
Any contribution subject to allocation during each Plan Year shall be
allocated only among those Participants of the Employer or Participating
Employer making the contribution, except if the contribution is made by an
Affiliated Employer, in which event such contribution shall be allocated among
all Participants of all Participating Employers who are Affiliated Employers in
accordance with the provisions of this Plan. On the basis of the information
furnished by the Administrator, the Trustee shall keep separate books and
records concerning the affairs of each Participating Employer hereunder and as
to the accounts and credits of the Employees of each Participating Employer. The
Trustee may, but need not, register Contracts so as to evidence that a
particular Participating Employer is the interested Employer hereunder, but in
the event of an Employee transfer from one Participating Employer to another,
the employing Employer shall immediately notify the Trustee thereof.
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11.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be a
Participating Employer hereunder shall require only the written action of United
Natural Foods, Inc. and the consent of the Trustee where such consent is
necessary in accordance with the terms of this Plan. The consent of other
Participating Employers shall not be required.
11.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue or revoke
its participation in the Plan. At the time of any such discontinuance or
revocation, satisfactory evidence thereof and of any applicable conditions
imposed shall be delivered to the Trustee. The Trustee shall thereafter
transfer, deliver and assign Contracts and other Trust Fund assets allocable to
the Participants of such Participating Employer to such new Trustee as shall
have been designated by such Participating Employer, in the event that it has
established a separate pension plan for its Employees, provided however, that no
such transfer shall be made if the result is the elimination or reduction of any
"Section 411 (d)(6) protected benefits" in accordance with Section 9.1(c). If no
successor is designated, the Trustee shall retain such assets for the Employees
of said Participating Employer pursuant to the provisions of Article VII hereof.
In no such event shall any part of the corpus or income of the Trust as it
relates to such Participating Employer be used for or diverted to purposes other
than for the exclusive benefit of the Employees of such Participating Employer.
11.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary
rules or regulations, binding upon all Participating Employers and all
Participants, to effectuate the purpose of this Article.
IN WITNESS WHEREOF, this Plan has been executed the day and year first
above written.
United Natural Foods, Inc.
By________________________________
EMPLOYER
__________________________________
TRUSTEE
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