UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1994 Commission file number 1-5039
WEIS MARKETS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 24-0755415
(State or other jurisdiction of (IRS Employee Identification No.)
incorporation or organization)
1000 South Second Street, Sunbury, PA 17801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 717-286-4571
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common stock, no par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
The aggregate market value of Common Stock held by non-affiliates of the
Registrant is approximately $763,176,000.
Shares of common stock outstanding as of February 10, 1995 - 43,433,659.
The index to Exhibits is located in Part IV, Item 14(c).
DOCUMENTS INCORPORATED BY REFERENCE
Selected portions of the 1994 Weis Markets, Inc. Annual Report to Shareholders
are incorporated by reference in Part II and Part IV of this Form 10-K.
Selected portions of the Weis Markets, Inc. definitive proxy statement dated
March 10, 1995 are incorporated by reference in Part III of this Form 10-K.
WEIS MARKETS, INC.
PART I
Item 1. Business:
(a) Weis Markets, Inc. is a Pennsylvania business corporation formed in 1924.
The Company is engaged principally in the retail sale of food. There was
no material change in the nature of the company's business during fiscal 1994.
(b) The principal business activity which the company has been engaged in for
the last five fiscal years is the retail sale of food.
(c)(1)(i) The company operates 125 retail food markets in Pennsylvania, 15
in Maryland, 1 in New Jersey, 3 in New York, 4 in Virginia, and 1 in West
Virginia. The stores trade under the name Weis Markets, except for 19
Pennsylvania stores which trade as Mr. Z's Food Mart, 5 Pennsylvania stores
which trade as King's Supermarkets, 2 Pennsylvania stores which trade as
Erb's, 5 Pennsylvania stores which trade as Scot's Lo Cost, and 1
Pennsylvania store which trades as Big Top Market. During the past fiscal
year, 2 new stores were opened and 6 more stores were acquired in the August
acquisition of King's Supermarkets, Inc. The company also owns and operates
Weis Food Service, a restaurant and institutional supplier. On December 26,
1993, the Company purchased an 80% interest in SuperPetz, Inc. The investment
was used to acquire 2 pet supply stores located in Dayton, Ohio. On August 6,
1994, SuperPetz acquired five pet supply stores in Georgia and South Carolina
from Pet Owners Warehouse, Inc. SuperPetz opened 7 additional stores during the
year and as of December 31, 1994, operated 6 stores in Ohio, 2 stores in
Pennsylvania, 5 stores in South Carolina and 1 store in Georgia. The company
supplies its retail food stores from distribution centers in Sunbury,
Northumberland, and Milton, Pennsylvania. The percentage of net sales
contributed by each class of similar products for each of the five fiscal years
ended December 31, 1994 was:
Grocery Meat Produce Other
1990 62.73 14.99 11.21 11.07
1991 61.27 14.49 10.95 13.29
1992 60.81 14.15 10.78 14.26
1993 60.74 14.80 11.06 13.40
1994 59.76 14.41 11.06 14.77
(c)(1)(vi) The Company has its own distribution center with warehouses
located within a 15 mile radius of its corporate offices in Sunbury,
Pennsylvania. The Company is required to use a significant amount of working
capital to provide for the required amount of inventory to meet demand for
its products through efficient use of buying power and effective utilization
of space in the warehouse facilities.
(c)(1)(x) The business of the company is highly competitive, and, in the
areas served by it, the company competes based on price and service with
national retail food chains, local chains and many independent food stores.
The following list includes, but is not limited to, the competitors of the
Company: Acme Markets, Inc., BiLo, Giant Foods of Carlisle, Giant Foods of
Landover, Festival Foods, Shop Rite, Super Rite, Giant Eagle, Riverside
Markets, Super Valu, Aldi, Insalaco, Walmart, K-Mart, Sam's and A&P. On the
basis of sales volume, the company believes it is the leading food retailer in
the majority of the areas in which it operates.
(c)(1)(xiii) The company has approximately 16,500 employees.
Item 2. Properties:
The company owns and operates 68 of its retail food stores and leases and
operates 81 stores under operating leases for varying periods of time up to
the year 2014. SuperPetz, leases all 14 of it's retail store locations.
The company owns all of its trade fixtures and equipment in its stores and
several parcels of vacant land which are available as locations for possible
future stores or other expansion.
The company owns and operates two warehouses in Sunbury, Pennsylvania
totaling approximately 551,000 square feet: one in Milton, Pennsylvania of
approximately 1,016,000 square feet, and two in Northumberland, Pennsylvania
totaling approximately 121,000 square feet. Weis Markets also operates an
ice cream plant, meat processing plant and milk processing plant at its
Sunbury location.
Item 3. Legal Proceedings:
Neither the company nor any subsidiary is presently a party to, nor is any of
their property subject to, any material pending legal proceedings, other than
routine litigation incidental to the business.
Item 4. Submission of Matters to a Vote of Security Holders:
There were no matters submitted to a vote of security holders during the
fourth quarter of 1994.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters:
"Stock Prices and Dividend Information by Quarter" on page 16 and "Stock
Traded" on the inside back cover of the 1994 Weis Markets, Inc. Annual Report
to Shareholders are incorporated herein by reference.
The approximate number of shareholders on December 31, 1994 is determined by
the Company's transfer agent.
Item 6. Selected Financial Data:
"Five-Year Review of Operations" on page 16 of the 1994 Weis Markets, Inc.
Annual Report to Shareholders is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations:
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on page 7 of the 1994 Weis Markets, Inc. Annual Report to
Shareholders is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data:
The following information in the 1994 Weis Markets, Inc. Annual Report to
Shareholders is incorporated herein by reference: The consolidated financial
statements on pages 8 to 10, the notes to consolidated financial statements
on pages 11 to 15 and the independent auditors' report on page 15.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure:
None.
PART III
Item 10. Directors and Executive Officers of the Registrant:
"Election of Directors" on pages 4 and 5 of the Weis Markets, Inc. definitive
proxy statement dated March 10, 1995 is incorporated herein by reference.
Item 11. Executive Compensation:
"Board Compensation Committee Report on Executive Compensation," "Summary
Compensation Table," "Option/SAR Grants in Last Fiscal Year," "Aggregated
Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values,"
"Retirement Plans," "Pension Plan Table," "Shareholder Return Performance,"
"Comparative Five-Year Total Returns," "Comparative Ten-Year Income
Percentages," and "Approval of 1995 Stock Option Plan," on pages 6 to 11 of the
Weis Markets, Inc. definitive proxy statement dated March 10, 1995 is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management:
"Outstanding Voting Securities and Voting Rights" on page 3 of the Weis
Markets, Inc. definitive proxy statement dated March 10, 1995 is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions:
"Compensation of Directors", "Compensation Committee Interlocks and Insider
Participation", "Board Compensation Committee Report on Executive Compensation,"
"Summary Compensation Table," "Option/SAR Grants in Last Fiscal Year,"
"Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values," "Retirement Plans," "Pension Plan Table," "Shareholder Return
Performance," "Comparative Five-Year Total Returns," "Comparative Ten-Year
Income Percentages," and "Approval of 1995 Stock Option Plan," on pages 6 to 11
of the Weis Markets, Inc. definitive proxy statement dated March 10, 1995 is
incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
The following information is incorporated herein by reference from the 1994
Weis Markets, Inc. Annual Report to Shareholders: the consolidated financial
statements on pages 8 to 10, the notes to consolidated financial statements
on pages 11 to 15 and the independent auditors' report on page 15.
(a) The financial statement schedules are omitted for the reason that they
are either not applicable or not required or because the information required
is contained in the financial statements or notes thereto.
(b) There were no reports on Form 8-K filed during the quarter ended December
31, 1994.
(c) A listing of exhibits filed or incorporated by reference is as follows:
Exhibit No.
3-A Articles of Incorporation
3-B By-Laws
10-A Supplemental Employee Retirement Plan
10-B Profit Sharing Plan
10-C Stock Bonus Plan
10-D Company Appreciation Plan
10-E Stock Option Plan
10-F Supplemental Employee Retirement Plan
10-G Executive Employment Contracts
13 Annual Report to Shareholders for the Fiscal Year ended
December 31, 1994
21 Subsidiaries of the Registrant
23 Consent of Independent Auditors
Exhibits 3-A and 3-B have been filed as exhibits under Part IV, Item 14(c) in
Form 10-K for the fiscal year ended December 27, 1980 and are incorporated
herein by reference.
The foregoing exhibits are available upon request from the Secretary of the
Company at a fee of $10.00 per copy.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
WEIS MARKETS, INC.
(Registrant)
Date
Robert F. Weis
Chairman of the Board of Directors,
and Treasurer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date
Robert F. Weis
(Principal Financial Officer)
Chairman of the Board of Directors,
and Treasurer and Director
Date
Norman S. Rich
(Principal Executive Officer)
President and Director
Date
William R. Mills
Vice President Finance and Secretary
EXHIBIT 10-A
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR
WEIS MARKETS, INC.
The purposes of the Supplemental Executive Retirement Plan for Weis Markets,
Inc. ("Plan") are to permit select members of management and highly compensated
employees to defer current compensation which cannot be redirected into the
Company's 401(k) Plan, and to further supplement retirement benefits payable
under the qualified retirement plans of the Company. This Plan is designed
to provide retirement benefits and salary deferral opportunities because of
the limitations imposed by the Internal Revenue Code and the Regulations
implemented by the Internal Revenue Service.
TABLE OF CONTENTS
Page
ARTICLE I TITLE AND EFFECTIVE DATE . . . . . . . . . . 2
ARTICLE II DEFINITIONS AND CONSTRUCTION
OF THE PLAN DOCUMENT . . . . . . . . . . 3
ARTICLE III ELIGIBILITY . . . . . . . . . . . . . . . . 5
ARTICLE IV DEFERRAL OF COMPENSATION . . . . . . . . . . 6
ARTICLE V PARTICIPANT BOOKKEEPING ACCOUNTS . . . . . 7
ARTICLE VI DISTRIBUTION . . . . . . . . . . . . . . . 9
ARTICLE VII BENEFICIARY . . . . . . . . . . . . . . . . . 11
ARTICLE VIII ADMINISTRATION OF THE PLAN . . . . . . . . . 12
ARTICLE IX CLAIMS PROCEDURE . . . . . . . . . . . . . . 13
ARTICLE X NATURE OF COMPANY'S OBLIGATION . . . . . . . 14
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . 15
ARTICLE I
TITLE AND EFFECTIVE DATE
Section 1.01 Title. This Plan shall be known as the Supplemental Executive
Retirement Plan for Weis Markets, Inc.
Section 1.02 Effective Date. The effective date of this Plan shall be
January 1, 1994.
ARTICLE II
DEFINITIONS AND CONSTRUCTION OF THE PLAN DOCUMENT
As used herein, the following words and phrases shall have the meanings
specified below unless a different meaning is clearly required by the context:
Section 2.01 "Account" means the account established as a bookkeeping record
for each Participant pursuant to Article V.
Section 2.02 "Beneficiary" means the person or persons or the estate of a
Participant entitled to receive any benefits under this Plan.
Section 2.03 "Board of Directors" means the Board of Directors of Weis
Markets, Inc.
Section 2.04 "Committee" means the Executive Compensation Committee of the
Board of Directors.
Section 2.05 "Company" means Weis Markets, Inc. its successors, any
subsidiary of affiliated organizations authorized by the Board of Directors
or the Committee to participate in this Plan with respect to their
Participants, and any organization into which or with which the Company may
merge or consolidate or to which all or substantially all of its assets may
be transferred.
Section 2.06 "Compensation" means remuneration from the Company reportable
on IRS Form W-2, together with any salary reduction contributions under this
Plan, the 401(k) Plan or any cafeteria plan under Section 125 of the Internal
Revenue Code, but excluding any sick pay.
Section 2.07 "Deferral Agreement" means the written form submitted to the
Committee that indicates whether the Participant wishes to defer a portion of
his Compensation and indicates the portion of Compensation to be deferred.
No Deferral Agreement shall be effective until acknowledged by the Company.
Section 2.08 "Deferred Compensation" means the portion of a Participant's
Compensation that has been deferred pursuant to the Plan.
Section 2.09 "ESOP" means the Weis Markets, Inc. Stock Bonus Plan as it may
be amended from time to time, and any successor plan.
Section 2.10 "Election Date" means (a) 30 days after notice of adoption of
the Plan for Executives who are eligible to participate at the time the Plan
is adopted; or (b) 30 days after a newly eligible Executive is notified of
his right to participate in the Plan; or (c) December 15 of any calendar year
if (a) and (b) above do not apply.
Section 2.11 "Executive" means any member of management of the Company.
Section 2.12 "401(k) Plan" means the Weis Markets, Inc. Retirement Savings
Plan, as it may be amended from time to time, and any successor plan.
Section 2.13 "Participant" means an Executive who is participating in the Plan.
Section 2.14 "Plan" means the Supplemental Executive Retirement Plan for
Weis Markets, Inc. described in this instrument, as it may be amended from
time to time.
Section 2.15 "Profit Sharing Plan" means the Weis Markets, Inc. Profit
Sharing Plan, as it may be amended from time to time, and any successor plan.
Section 2.16 "Retirement" means a Participant's termination of employment
with the Company and its subsidiaries after attaining age 65.
Section 2.17 "Subaccounts A and B" mean the subdivisions of each
Participant's Account created pursuant to Article V.
Section 2.18 "Termination of Service" or similar expression means the
termination of the Participant's employment as an employee of the Company
and its subsidiaries, other than Retirement or by reason of death or disability.
Section 2.19 Titles. Titles of the Articles of this Plan are included for
ease of reference only and are not to be used for the purpose of construing
any portion or provision of this Plan document.
Section 2.20 Gender and Number. Wherever the context so requires, masculine
pronouns include the feminine and singular words shall include the plural.
ARTICLE III
ELIGIBILITY
Section 3.01 Selection. Eligibility for participation in this Plan shall be
determined by a two step process. First, the Executive Compensation Committee
of the Board of Directors shall make a recommendation of potential Participants
to the Board of Directors. This list may be based upon recommendations from
the Executive Committee of Weis Markets, Inc. Second, the Board of Directors
shall consider the recommendation of the Executive Compensation Committee and
make the final determination based upon a majority vote.
Section 3.02 Participation. An Executive, after having been selected for
participation by the Board of Directors, shall continue to participate until
his employment with the Company terminates, or such earlier date as of which
the Committee suspends his participation.
ARTICLE IV
DEFERRAL OF COMPENSATION
Section 4.01 Salary Deferral. Each Participant may have a percentage of
his Compensation deferred in accordance with the terms and conditions of
this Plan. The percentage of Compensation to be deferred under this section
shall not exceed 15% of Compensation with the amount deferred into the
401(k) Plan first deducted from the deferral amount under this Plan.
Section 4.02 Deferral Agreement. A Participant desiring to have a
percentage of his Compensation deferred under the Plan must submit a written
Deferral Agreement to the Committee on or before the applicable Election
Date. A valid Deferral Agreement filed by the applicable Election Date as
provided in Section 2.09 (a) or (b) shall cause Compensation not yet earned
to be deferred starting in the calendar year in which such Agreement is made.
Deferral Agreements entered into under the conditions of Section 2.08(c) shall
cause Compensation to be deferred beginning January 1 of the next calendar year.
Section 4.03 No Deferral Without Agreement. A Participant who has not
submitted a valid Deferral Agreement to the Committee before the relevant
Election Date may not defer any Compensation for the applicable calendar
year under this Plan.
Section 4.04 Duration of Deferral Agreement. Deferral Agreements remain in
effect until revoked or modified by the filing of a new Deferral Agreement.
Section 4.05 Revocation or Modification of Deferral. Future deferrals of
Compensation may be stopped, reduced or increased at any time by filing a
new Deferral Agreement. Such modification shall be effective as soon as
feasible for the Company. Notwithstanding the foregoing, no Deferral
Agreement filed after incentive compensation is earned shall affect the
amount of deferral from such incentive compensation.
ARTICLE V
PARTICIPANT BOOKKEEPING ACCOUNTS
Section 5.01 Maintenance of Account. The Company shall maintain on its
books a supplemental retirement account for each Participant. Each Account
shall be divided into Subaccounts A and B, to which amounts shall be credited
as follows:
(a) Deferred Compensation Credits. As of each date elective deferrals
are contributed for a Participant to the 401(k) Plan, or would be contributed
but for the Internal Revenue Code limitations thereon, the Participant's
Deferred Compensation shall be credited to his Subaccount A.
(b) Profit-Sharing Credits. As of each date the Company makes a
contribution under the Profit-Sharing Plan, the Participant's Subaccount B
shall be credited with the amount, if any, that would have been allocated to
the Participant's Profit Sharing Plan account if
(i) he had not been excluded from participation
in the Profit Sharing Plan,
(ii) the Company had increased its Profit Sharing
Plan contributed by the amount of the
Participant's allocation, and
(iii) the Internal Revenue Code provisions
limiting his Profit Sharing Plan allocation
did not apply.
(c) ESOP Credits. As of each date the Company makes a contribution to
the ESOP, the Participant's Subaccount B shall be credited with the amount,
if any, that would have been allocated to the Participant's ESOP account if
(i) he had not been excluded from participation
in the ESOP,
(ii) the Company had increased its ESOP
contribution by the amount of the
Participant's allocation, and
(iii) the Internal Revenue Code provisions
limiting his ESOP allocation did not apply.
(d) Discretionary Credits. The Committee may at any time credit
additional amounts to the Account(s) of one or more Participants, in its sole
discretion.
Section 5.02 Hypothetical Investment Results for Subaccount A. Each amount
credited to a Participant's Subaccount A shall be adjusted in the same manner
as if such amount had been invested for the Participant in the 401(k) Plan.
These amounts shall be credited to Subaccount A at the same intervals as
amounts invested in the 401(k) Plan.
Section 5.03 Hypothetical Investment Results for Subaccount B. Each amount
credited to a Participant's Subaccount B shall be adjusted periodically in
the same manner as if such amount had been invested for the Participant in
the Profit Sharing Plan. Amounts credited to Subaccount B shall be adjusted
at the same intervals as amounts invested in the Profit-Sharing Plan.
Section 5.04 Conclusion of Company Contributions. A Participant who
terminates service prior to Retirement shall not receive credits to
Subaccount B from the Company for the year of termination.
ARTICLE VI
DISTRIBUTION
Section 6.01 Distribution of Account Balance. Distribution of the value of
a Participant's Subaccount A balance shall be made according to the terms of
the Participant's Deferral Agreement and this Plan. Distribution of the
vested portion of the Participant's Subaccount B balance shall be made
according to the terms of the Participant's Deferral Agreement in the event
of the Participant's Retirement or disability. In the event of Participant's
Termination of Service, he shall not receive credits to Subaccount B for the
year of termination.
Section 6.01.1 Termination of Service. In the event of Termination of
Service, the Participant shall receive the value of Subaccount A and the
vested portion of Subaccount B as soon as administratively possible upon the
occurrence of one of the following events, whichever is sooner:
(a) After five years from the end of the Plan year following the Termination of
Service; or
(b) After the end of the Plan year in which the Participant reaches the age of
65.
Section 6.02 Vested Rights. Each Participant shall have a vested right
(a) to the value of his Subaccount A; and
(b) to the value of his Subaccount B to the extent his Profit-Sharing Plan
account is vested (or would have been vested if he had not been excluded
from the Profit-Sharing Plan).
Section 6.03 Change of Control. All participants shall be vested fully in
their Account values in the event of a change of a control of the Company.
For purposes of this Plan, change of control means
(a) acquisition of the beneficial ownership of at least 51% of the voting
securities of Weis Markets, Inc. by any individual or other person or
group of persons who have agreed to act together for the purpose of
acquiring, holding, voting or disposing of such securities; or
(b) any merger or consolidation of Weis Markets, Inc., or transfer of all or
substantially all of its assets to a buyer, in which stockholders of Weis
Markets, Inc. before such merger, consolidation or transfer do not own
more than 51% of the outstanding voting power of the surviving entity
following such transaction.
Section 6.04 Forfeiture for Cause. Notwithstanding Sections 6.01, 6.01.1
and 6.02, a Participant whose employment is terminated for cause or who
engages in competition with the Company shall be subject to forfeiture as
set forth below. For purposes of this Section, cause means willful
misconduct relating to the business of the Company and competition means
competition in the capacity of proprietor, employee, officer, director,
independent contractor or owner of more than 5% of the equity interest in an
enterprise, with any business in which the Company is engaged, unless
specifically authorized by the Board of Directors.
Section 6.04.1 Forfeiture of Subaccount A. A Participant subject to
forfeiture as set forth in Section 6.04 shall be entitled to the lesser of
(i) the Deferred Compensation for the Participant; or (ii) the value of the
Participant's Subaccount A.
Section 6.04.2 Forfeiture of Subaccount B. A Participant subject to
forfeiture as set forth in Section 6.04 shall forfeit all of Subaccount B.
Section 6.05 Withholding for Taxes. The Company shall be entitled to
withhold any and all taxes of any nature required by any government to be
withheld with respect to amounts credited or distributed under the Plan.
ARTICLE VII
BENEFICIARY
Section 7.01 Beneficiary Designation. Each Participant shall designate a
Beneficiary to receive benefits under the Plan in the event of his death by
completing a Beneficiary designation form furnished by the Committee. A
Participant may change his Beneficiary designation by submitting to the
Committee another Beneficiary designation form. However, no change of
Beneficiary shall be effective until acknowledged in writing by the Company.
Section 7.02 Proper Beneficiary. If no designated Beneficiary survives the
Participant, the value of the Participant's Account shall be paid to the
Participant's surviving spouse, or if none, to the Participant's issue per
stirpes, or if none, to the Participant's estate. If the Company has any
doubt as to the proper Beneficiary to receive payments hereunder, the
Company shall have the right to withhold such payments until the matter is
finally adjudicated. However, any payment made by the Company, in good faith
and in accordance with this Plan, shall fully discharge the Company from all
further obligations with respect to that payment.
Section 7.03 Minor or Incompetent Beneficiary. In making any payments to
or for the benefit of any minor or incompetent Beneficiary, the Committee,
in its sole and absolute discretion, may cause distribution to be made to a
legal or natural guardian or relative of a minor or incompetent. Or, it may
make a payment to any adult with whom the minor or incompetent temporarily
or permanently resides. The receipt by a guardian, relative or other
person shall be a complete discharge to the Company with respect to the payment.
Neither the Committee nor the Company shall have any responsibility to see to
the proper application of any payment so made.
ARTICLE VIII
ADMINISTRATION OF THE PLAN
Section 8.01 Committee. The Plan shall be administered by the Committee.
The Committee may delegate to one more individuals its powers or
responsibilities under the Plan. All resolutions or other actions taken by
the Committee shall be voted by a majority of those present, or in writing by
all the members at the time in office in the event they act without a meeting.
Section 8.02 Finality of Determination. Subject to the terms of the Plan
the Committee shall, from time to time, establish rules, forms and procedures
for the administration of the Plan. Except as herein otherwise expressly
provided, the Committee shall have the exclusive right and discretion to
interpret the Plan and to decide any and all matters arising thereunder or
in connection with the administration of the Plan. The decisions, actions
and records of the Committee shall be conclusive and binding upon the Company
and all persons having or claiming to have any right or interest in or under
the Plan.
Section 8.03 Certificates and Reports. The members of the Committee and the
officers and directors of the Company shall be entitled to rely on all
certificates and reports made by any duly appointed accountants, and on all
opinions given by any duly appointed legal counsel, which legal counsel may
be counsel for the Company.
Section 8.04 Indemnification and Exculpation. The Company shall indemnify
and save harmless each member of the Committee against any and all expenses
and liabilities relating to the Plan, unless arising out of his willful
misconduct. Expenses against which a member of the Committee shall be
indemnified hereunder shall include, without limitation, the amount of any
settlement or judgment, costs, counsel fees, and related charges reasonably
incurred in connection with a claim asserted, or a proceeding brought or
settlement thereof. The foregoing right of indemnification shall be in
addition to any rights to which any such member of the Committee may be
entitled.
Section 8.05 Expenses. The expenses of administering the Plan shall be
borne by the Company.
ARTICLE IX
CLAIMS PROCEDURE
Section 9.01 Written Claim. The value of a Participant's Account shall be
paid in accordance with the provisions of this Plan and any applicable
Deferral Agreement. The Participant or Beneficiary shall make a written
request for benefits under this Plan. This written claim shall be mailed or
delivered to the Committee.
Section 9.02 Denied Claim. If the claim is denied in full or in part, the
Committee shall provide a written notice within ninety (90) days setting
forth the specific reasons for denial, the Plan provisions on which it is
based, any additional material or information that is necessary, and
explanation of the steps to be taken if a review of the denial is desired.
Section 9.03 Review Procedure. If the claim is denied and a review is
desired, the Participant (or Beneficiary) shall notify the Committee in
writing within sixty (60) days after receipt of the written notice of
denial (a claim shall be deemed denied if the Committee does not take any
action within the aforesaid ninety (90) day period). In requesting a review,
the Participant (or Beneficiary) may review the Plan document and other
pertinent documents, may submit any written issues and comments, may request
an extension of time for such written submission of issues and comments, and
may request that a hearing be held, but the decision to hold a hearing shall be
within the sole discretion of the Committee.
Section 9.04 Committee Review. The decision on the review of the denied
claim shall be rendered by the Committee within sixty (60) days after the
receipt of the request for review (if a hearing is not held) or within sixty
(60) days after the hearing if one is held. The decision shall be written
and shall state the specific reasons for the decision, including reference
to specific provisions of this Plan, on which the decision is based.
ARTICLE X
NATURE OF COMPANY'S OBLIGATION
Section 10.01 Company's Obligation. The Company's obligations under this
Plan shall be unfunded.
Section 10.02 Creditor Status. Any assets which the Company may acquire or
set aside to help cover its financial liabilities are and must remain general
assets of the Company subject to the claims of its creditors. Neither the
Company nor this Plan gives the Participant any beneficial ownership interest
in any asset of the Company. All rights of ownership in any such assets are
and remain in the Company and Participants and their Beneficiaries shall have
only the rights of general creditors of the Company.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Written Notice. Any notice which shall or be or may be given
under the Plan or a Deferral Agreement shall be in writing and shall be
mailed by United States mail, postage prepaid. If notice is to be given to
the Committee, such notice shall be addressed to 1000 South Second Street,
Sunbury, Pennsylvania 17801, and marked for the attention of the Executive
Compensation Committee, or if notice to a Participant, addressed to the
address shown on the Participant's Deferral Agreement.
Section 11.02 Change of Address. Any Participant or the Committee may, from
time to time, change the address to which notices shall be mailed by the other
by giving written notice of a new address.
Section 11.03 Amendment and Termination. The Company retains the sole and
unilateral right to terminate, amend, modify, or supplement this Plan, in
whole or in part at any time. This right includes the right to make
retroactive amendments. However, no exercise of this right shall reduce the
Account of any Participant or his Beneficiary.
Section 11.04 Nontransferability. Except insofar as prohibited by
applicable law, no sale, transfer, alienation, assignment, pledge,
collateralization or attachment of any benefits under this Plan shall be
valid or recognized by the Company. Neither the Participant, his spouse,
or designated Beneficiary shall have any power to hypothecate, mortgage,
commute, modify or otherwise encumber in advance of any of the benefits
payable hereunder, nor shall any of said benefits be subject to seizure for
the payment of any debts, judgments, alimony or maintenance, owed by the
Participant or his Beneficiary, or be tranferable by operation of law in the
event of bankruptcy, insolvency or otherwise. Notwithstanding the foregoing,
the Company shall pay benefits in accordance with a qualified domestic
relations order as defined in the Employee Retirement Income Security Act of
1974, and benefits payable under the Plan may be applied by the Company to
discharge obligations of the Participant, his Beneficiary or estate to the
Company.
Section 11.05 Acceleration of Payment. The Company reserves the right to
accelerate the payment of any benefits payable under this Plan at any time
without the consent of the Participant, his estate, his Beneficiary or any
other person claiming through the Participant.
Section 11.06 Applicable Law. This Plan shall be governed by the laws of
the United States, and to the extent permitted thereby by the laws of the
Commonwealth of Pennsylvania. Any dispute or interpretation of the Plan
shall be litigated in the Court of Common Pleas of Northumberland County,
Pennsylvania.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by
its duly authorized officers on this ______ day of ________________, 1994,
effective as of January 1, 1994.
ATTEST: WEIS MARKETS, INC.
________________________________ BY:________________________________
Its:______________________________
EXHIBIT 10-B
WEIS MARKETS, INC. PROFIT SHARING PLAN
ARTICLE I DEFINITIONS A2
1.1 References A2
1.2 Compensation A2
1.3 Dates A3
1.4 Employee A4
1.5 Employer A6
1.6 Fiduciaries A6
1.7 Participant/Beneficiary A6
1.8 Participant Accounts A7
1.9 Plan A7
1.10 Service A7
1.11 Trust A9
ARTICLE II PARTICIPATION A10
2.1 Eligibility Service A10
2.2 Plan Participation A10
2.3 Termination of Participation A11
2.4 Re-Participation (Break In Service Rules) A11
ARTICLE III ALLOCATIONS TO PARTICIPANT ACCOUNTS A12
3.1 General Provisions A12
3.2 Allocation of Profit Sharing Contributions
and Forfeitures A13
3.3 Employee Nondeductible Contribution Account A13
3.4 Rollover/Transfer Account A14
3.5 Allocation of Investment Results A14
ARTICLE IV PAYMENT OF PARTICIPANT ACCOUNTS A16
4.1 Vesting Service Rules A16
4.2 Vesting of Participant Accounts A17
4.3 Payment of Participant Accounts A20
4.4 In-Service Payments A22
4.5 Distributions under Domestic Relations Orders A22
ARTICLE V ADDITIONAL QUALIFICATION RULES B1
5.1 Limitations on Allocations under
Code Section 415 B1
5.2 Control of Trades or Businesses by Owner-
Employee B5
5.3 Joint and Survivor Annuity Requirements B6
5.4 Distribution Requirements B11
5.5 Top Heavy Provisions B16
5.6 Deductible Volunary Employee Contributions B20
ARTICLE VI ADMINISTRATION OF THE PLAN B21
6.1 Fiduciary Responsibility B21
6.2 Plan Administrator B22
6.3 Claims Procedure B23
6.4 Trust Fund B24
ARTICLE VII AMENDMENT AND TERMINATION OF PLAN B25
7.1 Right to Discontinue and Amend B25
7.2 Amendments B25
7.3 Protection of Benefits in Case of Plan Merger B26
7.4 Termination of Plan B26
ARTICLE VIII MISCELLANEOUS PROVISIONS B27
8.1 Exclusive Benefit - Non-Reversion B27
8.2 Inalienability of Benefits B27
8.3 Employer-Employee Relationship B27
8.4 Binding Agreement B27
8.5 Separability B28
8.6 Construction B28
8.7 Copies of Plan B28
8.8 Interpretation B28
Weis Markets, Inc. Profit Sharing Plan
ORIGINALLY EFFECTIVE
December 31, 1952
AS AMENDED AND RESTATED EFFECTIVE
January 1, 1989
WEIS MARKETS, INC. PROFIT SHARING PLAN
ORIGINALLY EFFECTIVE
DECEMBER 31, 1952
AS AMENDED AND RESTATED EFFECTIVE
JANUARY 1, 1989
Weis Markets, Inc. Profit Sharing Plan
This amended and restated plan, executed on the date indicated at the
end hereof, is made effective as of JanuaryE1, 1989, except as provided
otherwise in Section 1.3(c), by Weis Markets, Inc., a Corporation, with its
principal office located in Sunbury, PA.
W I T N E S S E T H :
WHEREAS, effective December 31, 1952, the employer established the plan for
its employees and desires to continue to maintain a permanent qualified plan
in order to provide its employees and their beneficiaries with financial
security in the event of retirement, disability or death; and
WHEREAS, it is desired to amend said plan;
NOW THEREFORE, the premises considered, the original plan is hereby replaced
by this amended and restated plan, and the following are the provisions of
the qualified plan of the employer as restated herein; provided, however,
that each employee who was previously a participant shall remain a
participant, and no employee who was a participant in the plan before the
date of amendment shall receive a benefit under this amended plan which is
less than the benefit he was then entitled to receive under the plan as of the
day prior to the amendment.
ARTICLE I DEFINITIONS
Section 1.1 References
(a) Code means the Internal Revenue Code of 1986, as it may be amended
from time to time.
(b) ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
Section 1.2 Compensation
(a) Compensation means, except as provided in paragraph (b) hereof, any
earnings reportable as W-2 wages for Federal income tax withholding purposes
and earned income, plus elective contributions, for the plan year.
Elective contributions are amounts excludable from the employee's gross
income and contributed by the employer, at the employeeOs election to:
(1) A cafeteria plan (excludable under Code Section 125);
(2) A Code Section 401(k) arrangement (excludable under Code Section 402(a)
(8));
(3) A simplified employee pension (excludable under Code Section 402(h)); or
(4) A tax sheltered annuity (excludable under Code Section 403(b)).
"Earned Income" means net earnings from self-employment in the trade or
business with respect to which the employer has established the plan,
provided that personal services of the individual are a material income
producing factor. Net earnings shall be determined without regard to items
excluded from gross income and the deductions allocable to those items. Net
earnings shall be determined after the deduction allowed to the self-employed
individual for all contributions made by the employer to a qualified plan and,
for plan years beginning after December 31, 1989, the deduction allowed to the
self-employed under Code Section 164(f) for self-employment taxes.
Any reference in this plan to compensation shall be a reference to the
definition in this Section 1.2, unless the plan reference specifies a
modification to this definition. The plan administrator shall take into
account only compensation actually paid by the employer for the relevant
period. A compensation payment includes compensation by the employer through
another person under the common paymaster provisions in Code Sections 3121
and 3306. Compensation from a related employer which is not a participating
employer under this Plan shall be excluded.
(b) Exclusions From Compensation - Notwithstanding the provisions of
paragraph 1.2(a), the following types of remuneration shall be excluded from
the participant's compensation:
Compensation in excess of $22,000 for Pharmacists
(c) Limitations on Compensation -
(1) Compensation Dollar Limitation - For any plan year beginning after
December 31, 1993, the plan administrator shall take into account only the
first $150,000 (or beginning January 1, 1995, such larger amount as the
Commissioner of Internal Revenue may prescribe) of any participant's
compensation for determining all benefits provided under the plan. For any
plan year beginning after December 31, 1988 but before January 1, 1994, the
plan administrator shall take into account only the first $200,000 (or for plan
years beginning after December 31, 1989 but before January 1, 1994, such larger
amount as the Commissioner of Internal Revenue may prescribe) of any
participant's compensation for determining all benefits provided under the
plan. The compensation dollar limitation for a plan year shall be the
limitation amount in effect on January 1 of the calendar year in which the
plan year begins. For any plan year beginning before January 1, 1989, the
$200,000 limitation (but not the family aggregation requirement described in
the next paragraph) applies only if the plan is top-heavy for such plan year
or operates as a deemed top-heavy plan for such plan year. If the plan should
determine compensation on a period of time that contains fewer than 12
calendar months (such as for a short plan year), the annual compensation
dollar limitation shall be an amount equal to the compensation dollar
limitation for the plan year multiplied by the ratio obtained by dividing
the number of full months in the period by 12.
(2) The compensation dollar limitation applies to the combined
compensation of the employee and of any family member aggregated with the
employee under Code Section 414(q)(6) who is either (A) the employee's spouse,
or (B) the employee's lineal descendant under the age of 19. If, for a plan
year, the combined compensation of the employee and such family members who
are participants entitled to an allocation for that plan year exceeds the
compensation dollar limitation, compensation for each such participant, for
purposes of the contribution and allocation provisions of Article III, means his
adjusted compensation.
Adjusted compensation is the amount which bears the same ratio to the
compensation dollar limitation as the affected participant's compensation
(without regard to the compensation dollar limitation) bears to the combined
compensation of all the affected participants in the family unit. If the
plan uses permitted disparity, the plan administrator first shall determine
the integration level of each affected family member participant using actual
compensation. The total of the affected participants' compensations equal to
or less than the applicable integration levels may not exceed the compensation
dollar limitation. The combined excess compensation of the affected
participants in the family unit may not exceed the compensation dollar
limitation minus the amount. If the combined excess compensation exceeds
this limitation, the plan administrator will prorate the limitation on the
excess compensation among the affected participants in the family unit in
proportion to each such individual's actual compensation minus his
integration level.
(d) Compensation for Nondiscrimination Test - For purposes of determining
whether the plan discriminates in favor of highly compensated employees,
compensation means compensation as defined in this Section 1.2(a), except
that the employer will not give effect to any exclusion from compensation
specified in Section 1.2(b). Notwithstanding the above, the employer may
elect to exclude from this nondiscrimination definition of compensation any
items of compensation excludable under Code Section 414(s) and the applicable
Treasury regulations, provided such adjusted definition conforms to the
nondiscrimination requirements of those regulations.
Section 1.3 Dates
(a) Accounting Date means the date(s) on which investment results are
allocated to participantsO accounts, including the allocation date and any
interim accounting date(s) noted below:
No interim investment allocation dates.
(b) Allocation Date means the last day of each plan year which is the
date on which any contributions and forfeitures are allocated to participants'
accounts.
(c) The Effective Date of the plan is December 31, 1952.
The effective date of this amendment and restatement is January 1, 1989;
provided, however that the plan provisions required to comply with the Tax
Reform Act of 1986 (TRA '86), the Omnibus Budget Reconciliation Act of 1986
(OBRA '86), the Omnibus Budget Reconciliation Act of 1987 (OBRA '87), and the
Technical and Miscellaneous Revenue Act of 1988 (TAMRA) shall generally be
effective on the first day of the plan year beginning after December 31, 1988,
except as specified otherwise in this plan or in TRA '86, OBRA '86, OBRA '87 or
TAMRA. The plan provisions required to comply with the 1989 Revenue
Reconciliation Act shall generally be effective on the first day of the plan
year beginning after December 31, 1989, except as specified otherwise in this
plan or in said Act.
Notwithstanding anything herein to the contrary, the provisions noted
below shall become effective on the alternate effective date indicated. If
the alternate effective date is subsequent to the effective date of this
amendment, the prior provisions of the plan shall continue in effect until
such alternate effective date.
Reference Alternate Effective Date
Section 3.2(c) Allocation of Forfeitures January 1, 1992
Section 4.2(b) Cashout Distributions January 1, 1994
Section 4.2(c) Forfeitures January 1, 1992
Section 4.3(d) Eligible Rollover Distribution January 1, 1993
(d) Plan Entry Date means the participation date(s) specified in Article
II.
(e) Plan Year means the 12-consecutive month period beginning on January 1
and ending on December 31.
(f) Limitation Year (for purposes of limitations on benefits and
contributions under Code Section 415) means the plan year.
Section 1.4 Employee
(a) (1) Employee means any person employed by the employer, including an
owner-employee or other self-employed individual (as defined in paragraph (3)).
The term employee shall include any employee of the employer maintaining the
plan or of any other employer required to be aggregated with such employer
under Code Sections 414(b), (c), (m) or (o). The term employee shall also
include any leased employee deemed to be an employee of any employer as
provided in Code Sections 414(n) or (o) and as defined in paragraph (2).
(2) Leased Employee means an individual (who otherwise is not an employee
of the employer) who, pursuant to a leasing agreement between the employer and
any other person, has performed services for the employer (or for the employer
and any persons related to the employer within the meaning of Code Section
144(a)(3)) on a substantially full time basis for at least one year and who
performs services historically performed by employees in the employer's
business field. If a leased employee is treated as an employee by reason of this
Section 1.4(a)(2), compensation from the leasing organization which is
attributable to services performed for the employer shall be considered as
compensation under the plan. Contributions or benefits provided a leased
employee by the leasing organization which are attributable to services
performed for the employer shall be treated as provided by the employer.
Safe harbor plan exception - The plan shall not treat a leased employee
as an employee if the leasing organization covers the employee in a safe
harbor plan and, prior to application of this safe harbor plan exception,
20% or less of the employer's employees (other than highly compensated
employees) are leased employees. A safe harbor plan is a money purchase
pension plan providing immediate participation, full and immediate vesting,
and a nonintegrated contribution formula equal to at least 10% of the employee's
compensation without regard to employment by the leasing organization on a
specified date. The safe harbor plan must determine the 10% contribution on
the basis of compensation as defined in Code Section 415(c)(3) plus elective
contributions.
(3) Owner-Employee /Self Employed Individual - Owner-employee means a
self-employed individual who is a sole proprietor, (if the employer is a sole
proprietorship) or who is a partner (if the employer is a partnership) owning
more than 10 percent of either the capital or profits interest of the
partnership. Self-employed individual means an individual who has earned
income for the taxable year from the trade or business for which the plan is
established, or who would have had earned income but for the fact that the trade
or business had no net profits for the taxable year.
(b) Highly Compensated Employee means an employee who, during the plan
year or during the preceding 12-month period:
(1) is a more than 5% owner of the employer (applying the constructive
ownership rules of Code Section 318, and applying the principles of Code
Section 318, for an unincorporated entity);
(2) has compensation in excess of $75,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year);
(3) has compensation in excess of $50,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year) and is part of the
top-paid 20% group of employees (based on compensation for the relevant
year); or
(4) has compensation in excess of 50% of the dollar amount prescribed in
Code Section 415(b)(1)(A) (relating to defined benefit plans) and is an
officer of the employer.
If the employee satisfies the definition in clause (2), (3) or (4) in the
plan year but did not satisfy clause (2), (3) or (4) during the preceding
12-month period and does not satisfy clause (1) in either period, then the
employee is a highly compensated employee only if he is one of the 100 most
highly compensated employees for the plan year. The number of officers taken
into account under clause (4) shall not exceed the greater of 3 or 10% of the
total number (after application of the Code Section 414(q) exclusions) of
employees, but no more than 50 officers. If no employee satisfies the
compensation requirement in clause (4) for the relevant year, the highest
paid officer will be treated as satisfying clause (4) for that year.
The term highly compensated employee also includes any former employee
who separated from service (or has a deemed separation from service, as
determined under Treasury regulations) prior to the plan year, performs no
service for the employer during the plan year, and was a highly compensated
employee either for the separation year or any plan year ending on or after
his 55th birthday. If the former employee's separation from service occurred
before January 1, 1987, he is a highly compensated employee only if he satisfied
clause (1) of this Section 1.4(b) or received compensation in excess of
$50,000 during the year of his separation from service (or the prior year),
or during any year ending after his 54th birthday.
For purposes of determining who is a highly compensated employee under
this Section 1.4(b), compensation means compensation as defined in Section 1.2,
except that any exclusions from compensation specified in Section 1.2 (b)
shall not apply. The plan administrator shall make the determination of who
is a highly compensated employee, including the determinations of the number
and identity of the top paid 20% group, the top 100 paid employees, the
number of officers includible in clause (4) and the relevant compensation,
consistent with Code Section 414(q) and regulations issued under that Code
Section. The employer may make a calendar year election to determine the
highly compensated employees for the plan year, as prescribed by Treasury
regulations. A calendar year election must apply to all plans and arrangements
of the employer.
For purposes of applying any nondiscrimination test required under the
plan or Code, in a manner consistent with applicable Treasury regulations,
the plan administrator will treat a highly compensated employee and all family
members (a spouse, a lineal ascendant or descendant, or a spouse of a lineal
ascendant or descendant) as a single highly compensated employee, but only if
the highly compensated employee is a more than 5% owner or is one of the 10
highly compensated employees with the greatest compensation for the plan year.
This aggregation rule applies to a family member even if that family member is a
highly compensated employee without family aggregation.
Section 1.5 Employer
Employer means Weis Markets, Inc. or any successor entity by merger,
purchase, consolidation, or otherwise; or an organization affiliated with
the employer which may assume the obligations of this plan with respect to
its employees by becoming a party to this plan. Another employer whether or
not it is affiliated with the sponsor employer may adopt this plan to cover
its employees by filing with the sponsor employer a written resolution
adopting the plan, upon which the sponsor employer shall indicate its
acceptance of such employer as an employer under the plan. Each such employer
shall be deemed to be the employer only as to persons who are on its payroll.
Section 1.6 Fiduciaries
(a) Named Fiduciary means the person or persons having fiduciary
responsibility for the management and control of plan assets.
(b) Plan Administrator means the person or persons appointed by the
named fiduciary to administer the plan.
(c) Trustee means the trustee named in the trust agreement executed
pursuant to this plan, or any duly appointed successor trustee.
(d) Investment Manager means a person or corporation other than the
trustee appointed for the investment of plan assets.
Section 1.7 Participant/Beneficiary
(a) Participant means an eligible employee of the employer who becomes
a member of the plan pursuant to the provisions of Article II, or a former
employee who has an accrued benefit under the plan.
(b) Beneficiary means a person designated by a participant who is or
may become entitled to a benefit under the plan. A beneficiary who becomes
entitled to a benefit under the plan remains a beneficiary under the plan
until the trustee has fully distributed his benefit to him. A beneficiary's
right to (and the plan administrator's, or a trustee's duty to provide to the
beneficiary) information or data concerning the plan shall not arise until he
first becomes entitled to receive a benefit under the plan.
Section 1.8 Participant Accounts
(a) Profit Sharing Account means the balance of the separate account
derived from profit sharing employer contributions, including forfeitures
(if any). (See Section 3.2.)
(b) Employee Nondeductible Contribution Account means the balance of the
separate account derived from the participantOs non-deductible employee
contributions, if any, which were made before the effective date of this
amendment and restatement. (See Section 3.3.)
(c) Rollover/Transfer Account means the balance of the separate account
derived from rollover contributions and/or transfer contributions. (See
Section 3.4.)
(d) Accrued Benefit means the total of the participantOs account
balance(s) as of the accounting date falling on or before the day on which
the accrued benefit is being determined.
Section 1.9 Plan
Plan means Weis Markets, Inc. Profit Sharing Plan as set forth herein
and as it may be amended from time to time.
Section 1.10 Service
(a) Service means any period of time the employee is in the employ of
the employer, including any period the employee is on an unpaid leave of
absence authorized by the employer under a uniform, nondiscriminatory policy
applicable to all employees. Separation from service means that the employee
no longer has an employment relationship with the employer.
(b) (1) Hour of Service means:
(A) Each hour for which an employee is paid, or entitled to payment, for
the performance of duties for the employer. These hours shall be credited to
the employee for the computation period in which the duties are performed; and
(B) Each hour for which an employee is paid, or entitled to payment, by
the employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence. No more
than 501 hours of service shall be credited under this paragraph for any
single continuous period (whether or not such period occurs in a single
computation period). An hour of service shall not be credited to an employee
under this paragraph if the employee is paid, or entitled to payment, under a
plan maintained solely for the purpose of complying with applicable worker's
compensation or unemployment compensation or disability insurance laws.
Hours under this paragraph shall be calculated and credited pursuant to
Section 2530.200b-2 of the Department of Labor Regulations which are
incorporated herein by this reference; and
(C) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the employer. The same hours of service
shall not be credited both under paragraph (A) or paragraph (B), as the case
may be, and under this paragraph (C). These hours shall 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.
Hours of service shall be determined on the basis of actual hours for
which an employee is paid or entitled to payment. The above provisions shall
be construed so as to resolve any ambiguities in favor of crediting employees
with hours of service.
(2) Solely for purposes of determining whether a break in service for
participation and vesting purposes has occurred in a computation period, an
individual who is absent from work for maternity or paternity reasons shall
receive credit for the hours of service which would otherwise have been
credited to such individual but for such absence, or in any case in which
such hours cannot be determined, 8 hours of service per day of such absence.
For purposes of this paragraph, an absence from work for maternity or paternity
reasons means an absence (A) by reason of the pregnancy of the individual, (B)
by reason of a birth of a child of the individual, (C) by reason of the
placement of a child with the individual in connection with the adoption of
such child by such individual, or (D) for purposes of caring for such child
for a period beginning immediately following such birth or placement. The
hours of service credited under this paragraph shall be credited: (A) in
the computation period in which the absence begins if the crediting is
necessary to prevent a break in service in that period, or (B) in all other
cases, in the following computation period.
(3) Hours of service shall be credited for employment with other members
of an affiliated service group (under Code Section 414(m)), a controlled
group of corporations (under Code Section 414(b)), or a group of trades or
businesses under common control (under Code Section 414(c)), of which the
adopting employer is a member. Hours of service shall also be credited for any
leased employee who is considered an employee for purposes of this plan under
Code Section 414(n) or Code Section 414(o).
(c) (1) Year of Service means a 12-consecutive month computation
period during which the employee completes the required number of hours of
service with the employer as specified in Sections 2.1 or 4.1.
(2) Predecessor Service - If the employer maintains the plan of a
predecessor employer, service with such predecessor employer shall be treated
as service for the employer. If the employer does not maintain the plan of a
predecessor employer, then service as an employee of a predecessor employer
shall not be considered as service under the plan, except as noted below:
- - No credit for predecessor service.
Service as an employee of a predecessor employer shall be considered as
service for the employer hereunder for the purposes of applying the
limitations on benefits and allocations under Code Section 415.
(d) Break in Service (or One Year Break in Service) means a 12-
consecutive month computation period during which a participant or former
participant does not complete the specified number of hours of service with
the employer as set forth in Sections 2.1(b) and 4.1(b).
Section 1.11 Trust
(a) Trust means the qualified trust created under the employer's plan.
(b) Trust Fund means all property held or acquired by the plan.
ARTICLE II PARTICIPATION
Section 2.1 Eligibility Service
(a) Eligibility Year of Service means an eligibility computation
period during which the employee completes at least 1,000 hours of service
with the employer.
(b) One Year Break in Service means for the purposes of this Article II
an eligibility computation period during which the participant or former
participant does not complete more than 500 hours of service with the employer.
(c) Eligibility Computation Period - The initial eligibility computation
period shall be the 12-consecutive month period beginning with the day on
which the employee first performs an hour of service with the employer
(employment commencement date).
Succeeding eligibility computation periods shall coincide with the plan
year, beginning with the first plan year which commences prior to the first
anniversary of the employee's employment commencement date regardless of
whether the employee is credited with the required number of hours of
service during the initial eligibility computation period. An employee who
is credited with the required number of hours of service in both the initial
eligibility computation period and the first plan year which commences prior
to the first anniversary of the employee's employment commencement date shall
be credited with two years of service for purposes of eligibility to
participate.
Section 2.2 Plan Participation
(a) Eligibility
(1) Age/service requirements - An employee who is a member of the eligible
class of employees shall be eligible for plan participation after he has
satisfied the following participation requirement:
Completion of 1 year of service.
(2) Eligible class of employees - All employees of the employer shall
be eligible to be covered under the plan if employed in the following
categories:
Salaried Employee Store Manager
Foreman Meat Manager
Accounting Clerk Produce Manager
Department Assistant Grocery Manager
Head Pharmacist
Assistant Head Pharmacist
(3) Effective January 1, 1994 highly compensated employees as defined
in Section 1.4(b) shall not be eligible to participate in the plan.
(b) Entry Date - An eligible employee shall participate in the plan on the
earlier of the June 30 or December 31 entry date coinciding with or
immediately following the date on which he has met the age and service
requirements. If an employee who is not a member of the eligible class of
employees becomes a member of the eligible class, such employee shall
participate immediately, if he has satisfied the age and service requirements
and would have otherwise previously become a participant.
Section 2.3 Termination of Participation
A participant shall continue to be an active participant of the plan so
long as he is a member of the eligible class of employees and he does not
incur a one-year break in service due to termination of employment. He shall
become an inactive participant when he incurs a one-year break in service due
to termination of employment, or at the end of the plan year during which he
ceases to be a member of the eligible class of employees. He shall cease
participation completely upon the later of his receipt of a total distribution
of his nonforfeitable account balance under the plan of the forfeiture of the
nonvested portion of the account balance.
Section 2.4 Re-Participation (Break In Service Rules)
(a) Vested Participant - A former participant who had a nonforfeitable
right to all or a portion of his account balance derived from employer
contributions at the time of his termination from service shall become a
participant immediately upon returning to the employ of the employer, if he
is a member of the eligible class of employees.
(b) Nonvested Participant - In the case of a former participant who did
not have any nonforfeitable right to his account balance derived from
employer contributions at the time of his termination from service, years of
service before a period of consecutive one-year breaks in service shall not
be taken into account in computing service if the number of consecutive one-
year breaks in service in such period equals or exceeds the greater of 5 or
the aggregate number of years of service before such breaks in service. Such
aggregate number of years of service shall not include any years of service
disregarded under the preceding sentence by reason of prior breaks in service.
If such former participant's years of service before termination from
service are disregarded pursuant to the preceding paragraph, he shall be
considered a new employee for eligibility purposes. If such former
participant's years of service before termination from service may not be
disregarded pursuant to the preceding paragraph, he shall participate
immediately upon returning to the employ of the employer, if he is a member
of the eligible class of employees.
(c) Return to Eligible Class - If a participant becomes an inactive
participant, because he is no longer a member of the eligible class of
employees, but does not incur a break in service; such inactive participant
shall become an active participant immediately upon returning to the eligible
class of employees. If such participant incurs a break in service,
eligibility shall be determined under the re-participation rules in
paragraphs (a) and (b) above.
ARTICLE III ALLOCATIONS TO PARTICIPANT ACCOUNTS
Section 3.1 General Provisions
(a) Maintenance of Participant Accounts - The plan administrator shall
maintain one or more separate accounts covering each participant under the
plan. Such account(s) shall be increased by contributions, reallocation of
forfeitures (if any), investment income, and market value appreciation of
the fund. It shall be decreased by market value depreciation of the fund,
forfeiture of nonvested amounts, benefit payments, withdrawals and expenses.
(b) Amount and Payment of Employer Contribution
(1) Amount of Contribution - For each plan year, the employer contribution
to the plan shall be the amount which is determined under the provisions of
this Article; provided, however, that the employer may not make a contribution
to the plan for any plan year to the extent the contribution would exceed the
participants' maximum permissible amounts under Code Section 415. Further,
the employer contribution shall not exceed the maximum amount deductible
under Code Section 404.
The employer contributes to this plan on the conditions that its
contribution is not due to a mistake of fact and that the Internal Revenue
Service will not disallow the deduction for its contribution. The trustee,
upon written request from the employer, shall return to the employer the
amount of the employer's contribution made due to a mistake of fact or the
amount of the employer's contribution disallowed as a deduction under Code
Section 404. The trustee shall not return any portion of the employer's
contribution under the provisions of this paragraph more than one year after
the earlier of: (A) The date on which the employer made the contribution
as a deduction, and then, only to the extent of the disallowance. The trustee
will not increase the amount of the employer contribution returnable under this
Section for any earnings attributable to the contribution, but the trustee will
decrease the employer contribution returnable for any losses attributable to it.
The trustee may require the employer to furnish whatever evidence it deems
necessary to confirm that the amount the employer has requested be returned is
properly returnable under ERISA.
(2) Payment of Contribution - The employer shall make its contribution
to the plan within the time prescribed by the Code or applicable Treasury
regulations. Subject to the consent of the trustee, the employer may make
its contribution in property rather than in cash, provided the contribution
of property is not a prohibited transaction under the Code or ERISA.
(c) Limitations and Conditions - Notwithstanding the allocation procedures
set forth in this Article, the allocations to participantsO accounts shall be
limited or modified to the extent required to comply with the provisions of
Article V (limitations on allocations under Code Section 415, related
employer provisions under Code Section 414 and top heavy provisions under
Code Section 416).
In any limitation year in which the allocation to one or more
participants' accounts would be in excess of the limitations on allocations
under Section 5.1, the annual additions under this plan will be reduced to
the extent necessary to comply with such limitations first. If any further
reduction is required, the annual additions or benefits under any other plan
which the employer also sponsors will then be reduced with respect to such
participants.
Section 3.2 Allocation of Profit Sharing Contributions and Forfeitures
(a) Amount of Contribution - The employer shall determine, in its sole
discretion, the amount of profit sharing employer contribution to be made to
the plan each year; provided, however, that the employer shall contribute
such amount as may be required for restoration of a forfeited amount under
Section 4.2.
(b) Conditions for Allocations - An active participant shall be eligible
for an allocation of the employer profit sharing contribution and forfeitures
as of an allocation date, provided that he satisfies the following conditions:
(1) He completed at least 1,000 hours of service during the current
plan year , except that the hours of service requirement shall not apply with
respect to any minimum top heavy allocation as provided in Section 5.5.
AND
(2) He is employed by the employer in an eligible class of employees or
on an approved leave of absence on the last day of the plan year.
AND
(3) On or after JanuaryE1, 1994 he is not a Highly Compensated Employee.
Notwithstanding the above conditions for allocation of contributions, if the
plan would otherwise fail to satisfy the participation test or coverage test
of Code Section 410 or the nondiscrimination requirements of Code Section
401(a)(4), the plan administrator shall amend the plan in a nondiscriminatory
manner to provide for the participation of additional employees and/or to
cause additional active participants to be eligible for an allocation.
(c) (1) Allocation Formula -
The employer profit sharing contribution and forfeitures for the plan year
shall be allocated to the account of each eligible participant in the ratio
that each participant's number of credited points bears to the credited
points of all participants. A participant shall be credited with one point
for each full $100.00 of compensation for the plan year, plus 11/2 points
for each year of service.
(2) Top-Heavy Plan Years
In any year in which this plan is top-heavy (as defined in Section 5.5(e)(2))
when aggregated with the Weis Markets, Inc. Retirement Savings Plan and Weis
Markets, Inc. Stock Bonus Plan which the employer also sponsors, the top-heavy
minimum benefit requirement shall be met under such other sponsored plan.
(3) Compensation - For purposes of the allocation of the employer profit
sharing contribution, compensation means compensation for the entire year.
Section 3.3 Employee Nondeductible Contribution Account
A participant may not make any nondeductible contributions to the plan after
the effective date of this amendment and restatement; however, if any
participant has previously made nondeductible contributions, an Employee
Nondeductible Contribution Account shall be maintained for the participant
with respect to such prior contributions and the Account shall be
nonforfeitable. Employee contributions for plan years beginning after
December 31, 1986, together with any matching contributions as defined in
Code Section 401(m), will be limited so as to meet the nondiscrimination test
of section 401(m).
Section 3.4 Rollover/Transfer Account
(a) Rollover Contributions - A participant may contribute to the plan
any amounts which he previously received either as a lump sum distribution
(as defined in Code Section 402(e)(4)) or within one taxable year as a
distribution from another qualified plan on account of termination of that
plan provided that:
(1) He transferred such distribution to an Individual Retirement Account
or Annuity within sixty (60) days after receipt, or
(2) He transferred such distribution to this plan within sixty (60) days
after receipt.
Before accepting a rollover contribution, the trustee may require an employee
to furnish satisfactory evidence that the proposed transfer is in fact a
rollover contribution which the Code permits an employee to make to a
qualified plan.
(b) Transfer Contributions - With the consent of the plan administrator,
the participant may have funds transferred directly to this plan from another
qualified plan. Consent shall not be given if the optional forms of payment
to which the funds are subject under the prior plan are not properly
disclosed by the prior plan or cannot be accommodated by this plan and trust.
(c) Contributions Before Plan Entry Date - An employee, (who is in the
eligible class of employees) prior to satisfying the planOs eligibility
conditions, may make a rollover or transfer contribution to the plan to the
same extent and in the same manner as a participant. If an employee makes a
rollover or transfer contribution to the plan before satisfying the plan's
eligibility conditions, the plan administrator and trustee will treat the
employee as a participant for all purposes of the plan, except the employee
is not a participant for purposes of sharing in employer contributions or
forfeitures under the plan until he actually becomes a participant in the
plan. If the employee has a separation from service prior to becoming a
participant, the trustee will distribute his rollover or transfer
contribution account to him.
(d) Distribution - The rollover/transfer account shall be subject to
distribution in the same manner as the profit sharing account. Withdrawals
may be made from a rollover/transfer account under Section 4.4 if this plan
permits any in-service withdrawals. To the extent that a distribution is
attributable to a direct transfer from another qualified plan, the Joint and
Survivor Requirements of Section 5.3 shall be met as if the distribution were
being made from such prior plan.
Section 3.5 Allocation of Investment Results
(a) General Allocation Procedures
Investment income and market value appreciation or depreciation shall be
allocated and credited to the accounts of participants who have accrued
benefits in proportion to their account balances on each accounting date.
For this purpose, each account balance shall be equal to the average balance
for the period commencing on the day following the prior accounting date and
ending on the current accounting date.
(b) Participant Investment Election
A participant who has reached age 55 and is 100% vested may elect to have
50% or 100% of his account transferred to a separate interest bearing fund
which is not subject to market value fluctuation (money market fund or
similar investment and to have the investment results allocated to his
account based upon earnings and losses on such separate interest bearing
fund. The participant may make such investment election at any time after
he reaches age 55 and is 100% vested in his account by filing a written election
with the plan administrator within 30 days after the first day of the plan year
as of which such election is to be effective. The participant may change
this election annually and such election is irrevocable until the first day
of the plan year following the plan year as of which such election is to be
effective.
Participants who terminate employment with account balances in excess of
$5,000 may make the same investment election as above at the time of
termination. However, this one-time election is irrevocable until age 55.
At that time, the participant may change this election annually as above.
ARTICLE IV PAYMENT OF PARTICIPANT ACCOUNTS
Section 4.1 Vesting Service Rules
(a) Vesting Year of Service means a vesting computation period during which
the employee completes at least 1,000 hours of service with the employer.
All of an employee's years of service with the employer shall be counted to
determine the nonforfeitable percentage in the employee's account balance
derived from employer contributions, except:
(1) Years of service disregarded under the break in service rules in
paragraph (d) below. (Post-ERISA break in service rules)
(2) Years of service before the effective date of ERISA if such service
would have been disregarded under the break in service rules of the prior
plan in effect from time to time before such date. For this purpose, break
in service rules are rules which result in the loss of prior vesting or
benefit accruals, or which deny an employee eligibility to participate, by
reason of separation or failure to complete a required period of service
within a specified period of time. (Pre-ERISA break in service rules)
(b) One Year Break in Service means for the purposes of this Article IV a
vesting computation period during which the participant or former participant
does not complete more than 500 hours of service with the employer.
(c) Vesting Computation Period means the 12-consecutive month period
coinciding with the plan year.
(d) Break in Service Rules
(1) Vested Participant - A former participant who had a nonforfeitable right
to all or a portion of his account balance derived from employer
contributions at the time of his termination from service shall retain
credit for all vesting years of service prior to a break in service.
(2) Nonvested Participant - In the case of a former participant who did not
have any nonforfeitable right to his account balance derived from employer
contributions at the time of his termination from service, years of service
before a period of consecutive one year breaks in service shall not be taken
into account in computing service if the number of consecutive one year
breaks in service in such period equals or exceeds the greater of 5 or the
aggregate number of years of service before such breaks in service. Such
aggregate number of years shall not include any years of service disregarded
under the preceding sentence by reason of prior breaks in service.
(3) Vesting for Pre-Break and Post-Break Accounts - In the case of a
participant who has 5 or more consecutive one-year breaks in service, all
years of service after such breaks in service shall be disregarded for the
purpose of vesting the employer-derived account balance that accrued before
such breaks in service. Whether or not such participantOs pre-break service
counts in vesting the post-break employer-derived account balance shall be
determined according to the rules set forth in sub-paragraphs (1) and (2) above.
Separate accounts shall be maintained for the participant's pre-break and post-
break employer-derived account balance. Both accounts shall share in the
investment earnings and losses of the fund.
Section 4.2 Vesting of Participant Accounts
(a) Determination of Vesting
(1) Normal Retirement - A participant's right to his account balance(s) shall
be 100% vested and nonforfeitable upon the attainment of 65, the normal
retirement age. If the employer enforces a mandatory retirement age, the
normal retirement age shall be the lesser of the mandatory age or the age
specified herein.
(2) Late Retirement - If a participant remains employed after his normal
retirement age, his account balance(s) shall remain 100% vested and
nonforfeitable. Such participant shall continue to receive allocations to
his account as he did before his normal retirement age.
(3) Early Retirement - In the case of a participant who has attained age
60 and completed 5 years of service before his normal retirement age, the
participant's right to his account balance(s) shall be 100% vested and
nonforfeitable. Such participant may retire before his normal retirement
age without the consent of the employer and receive payment of benefits from
the plan. If a participant separates from service before satisfying the age
requirement for early retirement, but has satisfied the service requirement, the
participant shall be entitled to elect an early retirement benefit upon
satisfaction of such age requirement.
(4) Disability - If a participant separates from service due to disability,
such participantOs right to his account balance(s) as of his date of
disability shall be 100% vested and nonforfeitable. Disability means
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months. The permanence and degree of
such impairment shall be supported by medical evidence. Notwithstanding such
definition, a participant who is eligible for Social Security disability
benefits shall automatically satisfy the definition of disability.
Disability shall be determined by the plan administrator after consultation
with a physician chosen by the administrator. In the administration of this
section, all employees shall be treated in a uniform manner in similar
circumstances.
(5) (A) Death - In the event of the death of a participant who has an accrued
benefit under the plan, (whether or not he is an active participant), 100% of
the participantOs account balance(s) as of the date of death shall be paid to
his surviving spouse; except that, if there is no surviving spouse, or if the
surviving spouse has already consented in a manner which is (or conforms to) a
qualified election under the joint and survivor annuity provisions of Code
Section 417(a) and regulations issued pursuant thereto and as set forth in
Section 5.3, then such balance shall be paid to the participant's designated
beneficiary.
(B) Beneficiary Designation - Subject to the spousal consent requirements of
Section 5.3, the participant shall have the right to designate his
beneficiaries, including a contingent death beneficiary, and shall have the
right at any time to change such beneficiaries. The designation shall be
made in writing on a form signed by the participant and supplied by and filed
with the plan administrator. If the participant fails to designate a
beneficiary, or if the designated person or persons predecease the participant,
"beneficiary" shall mean the spouse, children, parents, brothers and sisters, or
estate of the participant, in the order listed.
(6) Termination From Service - If a participant separates from the service
of the employer other than by retirement, disability or death, his vested
interest in his account(s) shall be equal to the account balance multiplied
by the vesting percentage determined below:
(A) Profit Sharing Account - The vesting percentage applicable to the
participant's profit sharing account shall be determined based on his
vesting years of service as follows -
Years of Service Vesting Percentage
0-2 Years 0%
3 20%
4 40%
5 60%
6 80%
7 or More Years 100%
(B) Transition Rule - Notwithstanding the above vesting schedule, the vesting
provisions of the plan before the effective date of this amendment shall
continue to apply to participants who participated in the plan before July
31, 1993, if such prior vesting provisions are more favorable to particular
participants than the vesting provisions set forth herein.
(C) Employee Nondeductible Contribution Account - The participant's employee
nondeductible contribution account shall always be 100% vested and
nonforfeitable.
(D) Rollover/Transfer Account - The participantOs rollover/transfer account
shall always be 100% vested and nonforfeitable.
(b) Cashout Distributions and Restoration
(1) Cashout Distribution - If an employee terminates service and the value
of his vested account balance(s) derived from employer and employee
contributions is not greater than $3,500, the employee shall receive a
distribution of the value of the entire vested portion of such account
balance(s) and the nonvested portion will be treated as a forfeiture.
For purposes of this section, if the value of an employee's vested account
balance is zero, he shall be deemed to have received a distribution of such
vested account balance. An employee's vested account balance shall not
include accumulated deductible employee contributions within the meaning of Code
Section 72(o)(5)(B) for plan years beginning prior to January 1, 1989.
If an employee terminates service and the value of his vested account
balance(s) exceeds $3,500, he may elect to receive the value of his vested
account balance after such termination as provided in Section 4.3; however,
the nonvested portion shall be treated as a forfeiture. If the employee
elects to have distributed less than the entire vested portion of the
account balance derived from employer contributions, the part of the
nonvested portion that will be treated as a forfeiture is the total nonvested
portion multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to employer contributions and the denominator of which
is the total value of the vested employer derived account balance.
(2) Restoration of Account - If an employee receives a cashout distribution
pursuant to this section and resumes employment covered under this plan
before he incurs 5 consecutive one-year breaks in service, his employer-
derived account balance shall be restored to the amount on the date of
distribution, if he repays to the plan the full amount of the distribution
attributable to employer contributions before the earlier of 5 years after
the first date on which he is subsequently re-employed by the employer,
If an employee is deemed to receive a distribution pursuant to this Section
4.2(b), and he resumes employment covered under this plan before he incurs 5
consecutive one-year breaks in service, upon the reemployment of such
employee, his employer-derived account balance will be restored to the
amount on the date of such deemed distribution.
(c) (1) Forfeitures - If a participant terminates employment before his
account balance derived from employer contributions is fully vested, the
nonvested portion of his account shall be forfeited on the earlier of:
(A) The last day of the vesting computation period in which the participant
first incurs 5 consecutive one-year breaks in service, or
(B) The date the participant receives his entire vested accrued benefit.
If a participant returns to employment with the employer, and if the
forfeited amount is restored pursuant to subparagraph (b), then any amount
required to restore such forfeitures shall be deducted from forfeitures
occurring in the plan year of restoration. If forfeitures are insufficient
for the restoration, the employer may make a contribution to the plan for
such plan year to satisfy the restoration. However, by the end of the plan
year following the plan year of restoration, sufficient forfeitures or
employer contributions shall be credited to the account to satisfy the
restoration.
(2) Disposition of Forfeitures - Forfeitures of profit sharing accounts shall
be reallocated among the eligible active participants at the end of the plan
year in which such forfeitures occur in accordance with the allocation
procedures set forth in Section 3.2.
(d) Withdrawal of Employee Contributions - No forfeitures shall occur solely
as a result of an employee's withdrawal of employee contributions.
(e) Unclaimed Benefits
(1) Forfeiture - The plan does not require the trustee or the plan
administrator to search for, or to ascertain the whereabouts of, any
participant or beneficiary. At the time the participant's or beneficiary's
benefit becomes distributable under the plan, the plan administrator, by
certified or registered mail addressed to his last known address of record,
shall notify any participant or beneficiary that he is entitled to a
distribution under this plan. If the participant or beneficiary fails to
claim his distributive share or make his whereabouts known in writing to the
plan administrator within twelve months from the date of mailing of the
notice, the plan administrator shall treat the participant's or beneficiary's
unclaimed payable accrued benefit as forfeited and shall reallocate such
forfeiture in accordance with paragraph (c)(2). A forfeiture under this
paragraph shall occur at the end of the notice period or, if later, the
earliest date applicable Treasury regulations would permit the forfeiture.
These forfeiture provisions apply solely to the participant's or
beneficiary's accrued benefit derived from employer contributions.
(2) Restoration - If a participant or beneficiary who has incurred a
forfeiture of his accrued benefit under the provisions of this subsection
makes a claim, at any time, for his forfeited accrued benefit, the plan
administrator shall restore the participant's or beneficiary's forfeited
accrued benefit to the same dollar amount as the dollar amount of the accrued
benefit forfeited, unadjusted for any gains or losses occurring after the date
of the forfeiture. The plan administrator shall make the restoration during the
plan year in which the participant or beneficiary makes the claim from
forfeitures occurring in that plan year. If forfeitures are insufficient for
the restoration, the employer shall make a contribution to the plan to satisfy
the restoration. The plan administrator shall direct the trustee to distribute
the participant's or beneficiary's restored accrued benefit to him not later
than 60 days after the close of the plan year in which the plan administrator
restores the forfeited accrued benefit.
Section 4.3 Payment of Participant Accounts
(a) Time of Payment
(1) Commencement of Benefits - Unless the participant elects otherwise,
distribution of benefits shall begin no later than the 60th day after the
latest of the close of the plan year in which:
(A) The participant attains age 65 (or the plan's normal retirement age,
if earlier);
(B) Occurs the 10th anniversary of the year in which the participant
commenced participation in the plan; or
(C) the participant terminates service with the employer, (i.e. late
retirement).
Notwithstanding the foregoing, the failure of a participant (and spouse
where the spouse's consent is required) to consent to a distribution while a
benefit is immediately distributable, within the meaning of Section 5.3(c),
shall be deemed to be an election to defer commencement of payment of any
benefit sufficient to satisfy this section.
(2) Payment Upon Retirement, Disability, or Death - Subject to the provisions
set forth in subparagraph (1), in the Joint and Survivor Requirements of
Section 5.3 and in the Distribution Requirements of Section 5.4, if the
participant terminates employment due to retirement, disability or death, his
account(s) shall be paid as soon as administratively possible after the
occurrence of the event creating the right to a distribution.
(3) Payment Upon Other Termination of Employment - Subject to the provisions
set forth in subparagraph (1), in the Joint and Survivor Requirements of
Section 5.3 and in the Distribution Requirements of Section 5.4, if the
participant terminates employment other than by retirement, disability or
death, his account(s) shall be paid as soon as administratively possible
after the end of the plan year in which severance of employment occurs.
However, if the vested account(s) exceeds $5,000, no distribution shall be made
until the participant meets the early retirement requirements.
(b) Optional Forms of Payment - A participant or beneficiary may elect to
receive distribution of his account(s) in one of the optional forms of
payment outlined below, provided that such distribution complies with the
Distribution Requirements of Section 5.4 and the Joint and Survivor
Requirements of Section 5.3. However, the Joint and Survivor Requirements
other than the provisions of Section 5.3(c) and (f) shall not apply to a
distribution unless a life annuity of any type is elected by the participant or
this plan is, with respect to the participant, a direct or indirect transferee
of a defined benefit plan, money purchase pension plan (including a target
benefit plan), or a stock bonus or profit sharing plan which would otherwise
have provided for a qualified joint and survivor life annuity as the normal
form of payment to the participant. The participant or beneficiary shall
file a written request for benefits with the plan administrator before
payments will commence. Optional forms of payment include:
(1) A lump sum payment - If the vested account is no more than $3,500,
benefits shall automatically be paid in a lump sum.
A lump sum benefit payment may be made in cash from the fund or by
distribution of assets in kind, provided that the participant or beneficiary
agrees to such distribution in kind and the trustee determines a current fair
market value of the assets to be distributed.
(2) Installment payments over a period of years which meets the Distribution
Requirements of Section 5.4. Installment payments may be made in cash from
the fund or by distribution of an annuity term certain contract.
If installment payments are made from the fund, the plan administrator shall
direct the trustee to segregate all or any part of the participantOs accrued
benefit in a separate account. The trustee will invest such participant's
segregated account in federally insured interest bearing savings account(s)
or time deposit(s) (or a combination of both), or in other fixed income
investments. A segregated account remains a part of the trust, but it alone
shares in any income it earns, and it alone bears any expense or loss it incurs.
(c) General Payment Provisions
(1) All distributions due to be made under this plan shall be made on the
basis of the amount to the credit of the participant as of the accounting
date coincident with or preceding the occurrence of the event calling for a
distribution.
If a distributable event occurs after an allocation date and before
allocations have been made to the account of the participant, the
distribution shall also include the amounts allocable to the account as of
such allocation date.
(2) If any person entitled to receive benefits hereunder is physically or
mentally incapable of receiving or acknowledging receipt thereof, and if a
legal representative has been appointed for him, the plan administrator may
direct the benefit payment to be made to such legal representative.
(3) Any annuity contract distributed herefrom shall be nontransferrable.
The terms of any such annuity contract purchased and distributed by the plan
shall comply with the requirements of this plan. The ownership of the
annuity contract shall reside with the participant. Any dividend, refund or
recovery on an annuity contract shall be credited to the participant or
beneficiary for whom the annuity contract was purchased.
(4) Each optional form of benefit provided under the plan shall be made
available to all participants on a nondiscriminatory basis. The plan may
not retroactively reduce or eliminate optional forms of benefits and any
other Code Section 411(d)(6) protected benefits. Any reduction or
elimination of optional forms of benefits shall apply only to benefits
accrued after the effective date of such change.
(d) Eligible Rollover Distributions
Effective for distributions made on or after January 1, 1993, notwithstanding
the optional forms of payment listed in Section 4.3(b), 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.
(1) Eligible Rollover Distribution - 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) Eligible Retirement Plan - An eligible retirement plan is an individual
retirement account described in Code Section 408(a), an individual retirement
annuity described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section 401(a), that
accepts the 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) Distributee - 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) Direct Rollover - A direct rollover is a payment by the plan to the
eligible retirement plan specified by the distributee.
Section 4.4 In-Service Payments
(a) Withdrawals - A participant may withdraw amounts from his account(s)
before his separation from service only under the circumstances and only to
the extent provided below.
No payments shall be made before separation from service.
(b) Participant Loans - No participant loans shall be permitted under the plan.
Section 4.5 Distributions under Domestic Relations Orders
Nothing contained in this plan prevents the trustee, in accordance with the
direction of the plan administrator, from complying with the provisions of a
qualified domestic relations order (as defined in Code Section 414(p)).
A distribution will not be made to an alternate payee until the participant
attains (or would have attained) his earliest retirement age. For this
purpose, earliest retirement age means the earlier of: (1) the date on
which the participant is entitled to a distribution under this plan; or (2)
the later of the date the participant attains age 50 or the earliest date on
which the participant could begin receiving benefits under this plan if the
participant separated from service.
Nothing in this Section gives a participant a right to receive distribution
at a time otherwise not permitted under the plan nor does it permit the
alternate payee to receive a form of payment not otherwise permitted under
the plan.
The plan administrator shall establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the plan administrator promptly will notify the
participant and any alternate payee named in the order, in writing, of the
receipt of the order and the plan's procedures for determining the qualified
status of the order. Within a reasonable period of time after receiving the
domestic relations order, the plan administrator shall determine the qualified
status of the order and shall notify the participant and each alternate payee,
in writing, of its determination. The plan administrator shall provide notice
under this paragraph by mailing to the individual's address specified in the
domestic relations order, or in a manner consistent with Department of Labor
regulations.
If any portion of the participant's nonforfeitable accrued benefit is
payable during the period the plan administrator is making its determination
of the qualified status of the domestic relations order, the plan
administrator shall make a separate accounting of the amounts payable. If
the plan administrator determines the order is a qualified domestic relations
order within 18 months of the date amounts first are payable following
receipt of the order, it shall direct the trustee to distribute the payable
amounts in accordance with the order. If the plan administrator does not make
its determination of the qualified status of the order within the 18-month
determination period, it shall direct the trustee to distribute the payable
amounts in the manner the plan would distribute if the order did not exist
and will apply the order prospectively if it later determines the order is a
qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the qualified
domestic relations order, the plan administrator may direct the trustee to
invest any partitioned amount in a segregated subaccount or separate account
and to invest the account in Federally insured, interest-bearing savings
account(s) or time deposit(s) (or a combination of both), or in other fixed
income investments. A segregated subaccount remains a part of the trust, but
it alone shares in any income it earns, and it alone bears any expense or loss
it incurs. The trustee will make any payments or distributions under this
section by separate benefit checks or other separate distribution to the
alternate payee(s).
ARTICLE V ADDITIONAL QUALIFICATION RULES
Section 5.1 Limitations on Allocations under Code Section 415
(a) Single Plan Limitations
(1) If the participant does not participate in, and has never participated
in another qualified plan maintained by the employer or a welfare benefit
fund, as defined in Code Section 419(e) maintained by the employer, or an
individual medical account, as defined in Code Section 415(l)(2), maintained
by the employer, which provides an annual addition as defined in Section
5.1(d)(1), the amount of annual additions which may be credited to the
participant's account for any limitation year will not exceed the lesser of the
maximum permissible amount or any other limitation contained in this plan. If
the employer contribution that would otherwise be contributed or allocated
to the participant's account would cause the annual additions for the
limitation year to exceed the maximum permissible amount, the amount
contributed or allocated will be reduced so that the annual additions for the
limitation year will equal the maximum permissible amount.
(2) Prior to determining the participant's actual compensation for the
limitation year, the employer may determine the maximum permissible amount
for a participant on the basis of a reasonable estimation of the
participant's compensation for the limitation year, uniformly determined for
all participants similarly situated.
(3) As soon as is administratively feasible after the end of the limitation
year, the maximum permissible amount for the limitation year will be
determined on the basis of the participant's actual compensation for the
limitation year.
(4) If pursuant to Section 5.1(a)(3) or as a result of the allocation of
forfeitures, there is an excess amount the excess will be disposed of as
follows:
(A) Any nondeductible voluntary employee contributions, to the extent they
would reduce the excess amount, will be returned to the participant;
(B) If after the application of paragraph (A) an excess amount still exists,
the excess amount in the participant's account shall be reallocated to the
remaining participants who are eligible for an allocation of employer
contribution for the plan year in which the limitation year ends, but only
to the extent that such reallocation will not exceed the maximum permissible
amount of each such remaining participant.
(C) If after the application of paragraph (B) an excess amount still exists,
the excess amount will be held unallocated in a suspense account. The
suspense account will be applied to reduce future employer contributions for
all participants in the next limitation year, and each succeeding limitation
year if necessary.
(D) If a suspense account is in existence at any time during a limitation
year pursuant to this Section 5.1(a)(4), it will not participate in the
allocation of the trust's investment gains and losses. If a suspense
account is in existence at any time during a particular limitation year, all
amounts in the suspense account must be allocated and reallocated to
participants' accounts before any employer or any employee contributions may
be made to the plan for that limitation year. Excess amounts may not be
distributed to participants or former participants.
(b) Combined Limitations - Other Defined Contribution Plan
(1) This Subsection applies if, in addition to this plan, the participant is
covered under another qualified defined contribution plan maintained by the
employer, a welfare benefit fund, as defined in Code Section 419(e)
maintained by the employer, or an individual medical account, as defined in
Code Section 415(l)(2), maintained by the employer, which provides an annual
addition as defined in Section 5.1(d)(1), during any limitation year. The
annual additions which may be credited to a participant's account under this
plan for any such limitation year will not exceed the maximum permissible
amount reduced by the annual additions credited to a participant's account
under the other plans and welfare benefit funds for the same limitation year.
If the annual additions with respect to the participant under other defined
contribution plans and welfare benefit funds maintained by the employer are less
than the maximum permissible amount and the employer contribution that would
otherwise be contributed or allocated will be reduced so that the annual
additions under all such plans and funds for the limitation year will equal the
maximum permissible amount. If the annual additions with respect to the
participant under such other defined contribution plans and welfare benefit
funds in the aggregate are equal to or greater than the maximum permissible
amount, no amount will be contributed or allocated to the participant's
account under this plan for the limitation year.
(2) Prior to determining the participant's actual compensation for the
limitation year, the employer may determine the maximum permissible amount
for a participant in the manner described in Section 5.1(a)(2).
(3) As soon as is administratively feasible after the end of the limitation
year, the maximum permissible amount for the limitation year will be
determined on the basis of the participant's actual compensation for the
limitation year.
(4) If, pursuant to Section 5.1(b)(3) or as a result of the allocation of
forfeitures, a participant's annual additions under this plan and such other
plans would result in an excess amount for a limitation year, the excess
amount will be deemed to consist of the annual additions last allocated,
except that annual additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(5) If an excess amount was allocated to a participant on an allocation date
of this plan which coincides with an allocation date of another plan, the
excess amount will be disposed of in the manner provided in Section 3.1(c).
(6) Any excess amount attributed to this plan will be disposed of in the
manner described in Section 5.1(a)(4).
(c) Combined Limitations - Other Defined Benefit Plan
If the employer maintains, or at any time maintained, a qualified defined
benefit plan covering any participant in this plan, the sum of the
participant's defined benefit plan fraction and defined contribution plan
fraction will not exceed 1.0 in any limitation year. Any excess amounts
shall be disposed of in the manner provided in Section 3.1(c). Any excess
amount attributed to this plan will be disposed of in the manner described
in Section 5.1(a)(4).
(d) Definitions (Code Section 415 Limitations)
(1) Annual Additions - The sum of the following amounts credited to a
participant's account for the limitation year:
(A) employer contributions,
(B) employee contributions,
(C) forfeitures, and
(D) amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Code Section 415(l)(2), which is part of a pension
or annuity plan maintained by the employer are treated as annual additions
to a defined contribution plan. Also 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 419(e),
maintained by the employer are treated as annual additions to a defined
contribution plan.
For this purpose, any excess amount applied under Section 5.1(a)(4) or
(b)(6) in the limitation year to increase the accounts of participants who
did not have an excess amount or to reduce employer contributions will be
considered annual additions for such limitation year.
(2) Compensation - A participant's earned income and any earnings reportable
as W-2 wages for Federal income tax withholding purposes, as described in
Section 1.2(a).
For limitation years beginning after December 31, 1991, for purposes of
applying the limitations of this Section 5.1, compensation for a limitation
year is the compensation actually paid or includible in gross income during
such limitation year.
Notwithstanding the preceding sentence, compensation for a participant in a
defined contribution plan who is permanently and totally disabled (as defined
in Code Section 22(e)(3)) is the compensation such participant would have
received for the limitation year if the participant had been paid at the
rate of compensation paid immediately before becoming permanently and totally
disabled; such imputed compensation for the disabled participant may be taken
into account only if the participant is not a highly compensated employee (as
defined in Code Section 414(q) and contributions made on behalf of such
participant are nonforfeitable when made.
(3) Defined Benefit Fraction - 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, 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.
(4) Defined Contribution Dollar Limitation - $30,000 or if greater, one-
fourth of the defined benefit dollar limitation set forth in Code Section
415(b)(1) as in effect on January 1 of each calendar year with respect to
the limitation year ending with or within such calendar year.
(5) Defined Contribution Fraction - 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(1)(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.
(6) Employer - For purposes of this Section 5.1, employer shall mean the
employer that adopts this plan, and all members of a controlled group of
corporations (as defined in Code Section 414(b) as modified by Section
415(h)), all commonly controlled trades or businesses (as defined in Code
Section 414(c) as modified by Section 415(h)) or affiliated service groups
(as defined in Code Section 414(m)) of which the adopting employer is a part,
and any other entity required to be aggregated with the employer pursuant to
regulations under Code Section 414(o).
(7) Excess Amount - The excess of the participant's annual additions for the
limitation year over the maximum permissible amount.
(8) Highest Average Compensation - The average compensation for the three
consecutive years of service with the employer that produces the highest
average. A year of service with the employer is the 12-consecutive month
period coinciding with the plan year.
(9) Limitation Year - A calendar year, or the 12-consecutive month period
coinciding with the plan year, unless the employer adopts another 12-
consecutive month period by means of a written resolution. All qualified
plans maintained by the employer must use the same limitation year. If the
limitation year is amended to a different 12-consecutive month period, the
new limitation year must begin on a date within the limitation year in which
the amendment is made.
(10) Maximum Permissible Amount - The maximum annual addition that may be
contributed or allocated to a participant's account under the plan for any
limitation year shall not exceed the lesser of:
(A) the defined contribution dollar limitation as defined in Subsection (d)
(4), or
(B) 25 percent of the participant's compensation for the limitation year.
The compensation limitation referred to in (B) shall not apply to any
contribution for medical benefits (within the meaning of Code Section 401(h)
or Code Section 419A(f)(2)) which is otherwise treated as an annual addition
under Code Section 415(l)(1) or 419A(d)(2).
If a short limitation year is created because of an amendment changing the
limitation year to a different 12-consecutive month period, the maximum
permissible amount will not exceed the defined contribution dollar limitation
multiplied by the following fraction:
Number of months in the short limitation year
12
(11) Projected Annual Benefit - The annual retirement benefit (adjusted to
an actuarially equivalent straight life annuity if such benefit is expressed
in a form other than a straight life annuity or qualified joint and survivor
annuity) to which the participant would be entitled under the terms of the
plan assuming:
(A) the participant will continue employment until normal retirement age
under the plan (or current age, if later), and
(B) the participant's compensation for the current limitation year and all
other relevant factors used to determine benefits under the plan will remain
constant for all future limitation years.
Section 5.2 Control of Trades or Businesses by Owner-Employee
If this plan provides contributions or benefits for one or more owner-
employees who control both the business for which this plan is established
and one or more other trades or businesses, this plan and the plan
established for other trades or businesses must, when looked at as a single
plan, satisfy Code Sections 401(a) and (d) for the employees of this and all
other trades or businesses.
If the plan provides contributions or benefits for one or more owner-
employees who control one or more other trades or businesses, the employees
of the other trades or businesses must be included in a plan which satisfies
Code Sections 401(a) and (d) and which provides contributions and benefits
not less favorable than those provided for owner-employees under this plan.
If an individual is covered as an owner-employee under the plans of two or
more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable plan
of the trade or business which is not controlled.
For purposes of the preceding paragraphs, an owner-employee, or two or more
owner-employees, will be considered to control a trade or business if the
owner-employee, or two or more owner-employees together:
(1) own the entire interest in an unincorporated trade or business, or
(2) in the case of a partnership, own more than 50 percent of either the
capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an owner-employee, or two or more
owner-employees, shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such owner-
employee, or such two or more owner-employees, are considered to control
within the meaning of the preceding sentence.
Section 5.3 Joint and Survivor Annuity Requirements
The provisions of this Section 5.3 shall apply to any participant who is
credited with at least one hour of service with the employer on or after
August 23, 1984, and such other participants as provided in Paragraph (g).
However, with respect to any participant meeting the conditions of Section
5.3(f), only Section 5.3(c) and (f) shall apply.
(a) Qualified Joint and Survivor Annuity - Unless an optional form of
benefit is selected pursuant to a qualified election within the 90-day
period ending on the annuity starting date, a married participant's vested
account balance will be paid in the form of a qualified joint and survivor
annuity and an unmarried participant's vested account balance will be paid
in the form of a life annuity with a ten year guaranteed period. The
participant may elect to have such annuity distributed upon attainment of
the earliest retirement age under the plan.
(b) Qualified Preretirement Survivor Annuity - Unless an optional form of
benefit has been selected within the election period pursuant to a qualified
election, if a participant dies before the annuity starting date, the
participant's vested account balance shall be applied toward the purchase
of an annuity for the life of the surviving spouse. The surviving spouse
may elect to have such annuity distributed within a reasonable period after
the participant's death.
(c) Restrictions on Immediate Distributions - If the value of a participant's
vested account balance derived from employer and employee contributions
exceeds (or at the time of any prior distribution exceeded) $3,500, and the
account balance is immediately distributable, the participant and the
participant's spouse (or where either the participant or the spouse has died,
the survivor) must consent to any distribution of such account balance. The
consent of the participant and the participant's spouse shall be obtained in
writing within the 90-day period ending on the annuity starting date. The
annuity starting date is the first day of the first period for which an amount
is paid as an annuity or any other form. The plan administrator shall notify
the participant and the participant's spouse of the right to defer any
distribution until the participant's account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the plan in a manner that would satisfy the
notice requirements of Code Section 417(a)(3), and shall be provided no less
than 30 days and no more than 90 days prior to the annuity starting date.
Notwithstanding the foregoing, only the participant need consent to the
commencement of a distribution in the form of a qualified joint and survivor
annuity while the account balance is immediately distributable. Furthermore,
if payment in the form of a qualified joint and survivor annuity is not
required with respect to the participant pursuant to Paragraph (f) of this
Subsection 5.3, only the participant need consent to the distribution of an
account balance that is immediately distributable. Neither the consent of the
participant nor the participant's spouse shall be required to the extent that a
a distribution is required to satisfy Code Section 401(a)(9) or Section 415.
In addition, upon termination of this plan if the plan does not offer an
annuity option (purchased from a commercial provider) and if the employer or
any entity within the same controlled group as the employer does not maintain
another defined contribution plan (other than an employee stock ownership plan
as defined in Code Section 4975(e)(7)), the participant's account balance may,
without the participant's consent, be distributed to the participant. However,
if any entity within the same controlled group as the employer maintains
another defined contribution plan (other than an employee stock ownership
plan as defined in Code Section 4975(e)(7)), the participant's account
balance will be transferred, without the participant's consent, to the other
plan if the participant does not consent to an immediate distribution.
An account balance is immediately distributable if any part of the account
balance could be distributed to the participant (or surviving spouse) before
the participant attains (or would have attained if not deceased) the later of
normal retirement age or age 62.
(d) Definitions (Code Section 417 Requirements)
(1) Election Period - The period which begins on the first day of the plan
year in which the participant attains age 35 and ends on the date of the
participant's death. If a participant separates from service prior to the
first day of the plan year in which age 35 is attained, with respect to the
account balance as of the date of separation, the election period shall begin
on the date of separation.
(2) Pre-age 35 Waiver - A participant who will not yet attain age 35 as of the
end of any current plan year may make a special qualified election to waive
the qualified preretirement survivor annuity for the period beginning on the
date of such election and ending on the first day of the plan year in which
the participant will attain age 35. Such election shall not be valid unless
the participant receives a written explanation of the qualified preretirement
survivor annuity in such terms as are comparable to the explanation required
under Paragraph (e)(1). Qualified preretirement survivor annuity coverage
will be automatically reinstated as of the first day of the plan year in
which the participant attains age 35. Any new waiver on or after such date
shall be subject to the full requirements of this Subsection 5.3.
(3) Earliest Retirement Age - The earliest date on which, under the plan, the
participant could elect to receive retirement benefits.
(4) Qualified Election - A waiver of a qualified joint and survivor annuity
or a qualified preretirement survivor annuity. Any waiver of a qualified
joint and survivor annuity or a qualified preretirement survivor annuity shall
not be effective unless: (a) the participant's spouse consents in writing to
the election; (b) the election designates a specific beneficiary, including any
class of beneficiaries or any contingent beneficiaries, which may not be
changed without spousal consent (or the spouse expressly permits designations
by the participant without any further spousal consent); (c) the spouse's
consent acknowledges the effect of the election; and (d) the spouse's consent
is witnessed by a plan representative or notary public. Additionally, a
participant's waiver of the qualified joint and survivor annuity shall not be
effective unless the election designates a form of benefit payment which may
not be changed without spousal consent (or the spouse expressly permits
designations by the participant without any further spousal consent). If it
is established to the satisfaction of a plan representative that there is no
spouse or that the spouse cannot be located, a waiver will be deemed a
qualified election.
Any consent by a spouse obtained under this provision (or establishment that
the consent of a spouse may not be obtained) shall be effective only with
respect to such spouse. A consent that permits designations be the participant
without any requirement of further consent by such spouse must acknowledge that
the spouse has the right to limit consent to a specific beneficiary, and a
specific form of benefit where applicable, and that the spouse voluntarily
elects to relinquish either or both of such rights. A revocation of a prior
waiver may be made by a participant without the consent of the spouse at any
time before the commencement of benefits. The number of revocations shall not
be limited. No consent obtained under this provision shall be valid unless the
participant has received notice as provided in Paragraph (e).
(5) Qualified Joint and Survivor Annuity - An immediate annuity for the life
of the participant with a survivor annuity for the life of the spouse which is
not less than 50 percent and not more than 100 percent of the amount of the
annuity which is payable during the joint lives of the participant and the
spouse and which is the amount of benefit which can be purchased with the
participant's vested account balance. The percentage of the survivor annuity
under the plan shall be 50% (unless a different percentage is elected by the
participant).
(6) Spouse (Surviving Spouse) - The spouse or surviving spouse of the
participant, provided that a former spouse will be treated as the spouse or
surviving spouse and a current spouse will not be treated as the spouse or
surviving spouse to the extent provided under a qualified domestic relations
order as described in Code Section 414(p).
(7) Annuity Starting Date - The first day of the first period for which an
amount is paid as an annuity or any other form.
(8) Vested Account Balance - The aggregate value of the participant's vested
account balances derived from employer and employee contributions (including
rollovers), whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the participant's life. The provisions of
this Subsection 5.3 shall apply to a participant who is vested in amounts
attributable to employer contributions, employee contributions (or both) at
the time of death or distribution.
(e) Notice Requirements
(1) In the case of a qualified joint and survivor annuity, the plan
administrator shall no less than 30 days and no more than 90 days prior to
the annuity starting date provide each participant a written explanation of:
(i) the terms and conditions of a qualified joint and survivor annuity; (ii)
the participant's right to make and the effect of an election to waive the
qualified joint and survivor annuity form of benefit; (iii) the rights of a
participant's spouse; and (iv) the right to make, and the effect of, a
revocation of a previous election to waive the qualified joint and survivor
annuity.
(2) In the case of a qualified preretirement survivor annuity as described
in Paragraph (b) of this Subsection, the plan administrator shall provide
each participant within the applicable period for such participant a written
explanation of the qualified preretirement survivor annuity in such terms and
in such manner as would be comparable to the explanation provided for meeting
the requirements of Paragraph (e)(1) applicable to a qualified joint and
survivor annuity.
The applicable period for a participant is whichever of the following
periods ends last: (i) the period beginning with the first day of the
plan year in which the participant attains age 32 and ending with the close
of the plan year preceding the plan year in which the participant attains age
35; (ii) a reasonable period ending after the individual becomes a
participant; (iii) a reasonable period ending after Paragraph (e)(3) ceases
to apply to the participant; (iv) a reasonable period ending after this
Subsection 5.3 first applies to the participant. Notwithstanding the
foregoing, notice must be provided within a reasonable period ending after
separation from service in the case of a participant who separates from
service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the enumerated events described in (ii), (iii) and (iv) is the end of
the two-year period beginning one year prior to the date the applicable event
occurs, and ending one year after that date. In the case of a participant who
separates from service before the plan year in which he attains age 35,
notice shall be provided within the two-year period beginning one year prior
to separation and ending one year after separation. If such a participant
thereafter returns to employment with the employer, the applicable period for
such participant shall be redetermined.
(3) Notwithstanding the other requirements of this Paragraph (e), the
respective notices prescribed by this Paragraph need not be given to a
participant if (1) the plan "fully subsidizes" the costs of a qualified
joint and survivor annuity or qualified preretirement survivor annuity, and
(2) the plan does not allow the participant to waive the qualified joint and
survivor annuity or qualified preretirement survivor annuity and does not
allow a married participant to designate a nonspouse beneficiary. For purposes
of this Subparagraph (e)(3), a plan fully subsidizes the costs of a benefit if
no increase in cost, or decrease in benefits to the participant may result
from the participant's failure to elect another benefit.
(f) Safe Harbor Rules
This Paragraph (f) shall apply to a participant in a profit-sharing plan,
and to any distribution, made on or after the first day of the first plan
year beginning after DecemberE31, 1988, from or under a separate account
attributable solely to accumulated deductible employee contributions, as
defined in Code Section 72(o)(5)(B), and maintained on behalf of a
participant in a money purchase pension plan, (including a target benefit
plan) if the following conditions are satisfied: (1) the participant does
not or cannot elect payments in the form of a life annuity; and (2) on the
death of the participant, participant's vested account balance will be paid
to the participant's surviving spouse, but if there is no surviving spouse,
or if the surviving spouse has consented in a manner conforming to a
qualified election, then to the participant's designated beneficiary. The
surviving spouse may elect to have distribution of the vested account balance
commence within the 90-day period following the date of the participant's
death. The account balance shall be adjusted for gains or losses occurring
after the participant's death in accordance with the provisions of the plan
governing the adjustment of account balances for other types of distributions.
This Paragraph (f) shall not be operative with respect to a participant in a
profit-sharing plan if the plan is a direct or indirect transferee of a
defined benefit plan, money purchase plan, target benefit plan, stock bonus
plan, or profit-sharing plan which is subject to the survivor annuity
requirements of Code Section 401(a)(11) and section 417. If this Paragraph (f)
is operative, then the provisions of this Subsection 5.3, other than Paragraph
(g) shall be inoperative.
(1) The participant may waive the spousal death benefit described in this
Paragraph (f) at any time provided that no such waiver shall be effective
unless it satisfies the conditions of Paragraph (d)(4) (other than the
notification requirement referred to therein) that would apply to the
participant's waiver of the qualified preretirement survivor annuity.
(2) For purposes of this Paragraph (f), vested account balance shall mean,
in the case of a money purchase pension plan or a target benefit plan, the
participant's separate account balance attributable solely to accumulated
deductible employee contributions within the meaning of Code Section 72(o)(5)
(B). In the case of a profit-sharing plan, vested account balance shall have
the same meaning as provided in Paragraph (d)(8).
(g) Transitional Rules
(1) Any living participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by the previous
Paragraphs of this Subsection 5.3 must be given the opportunity to elect to
have the prior Paragraphs of this Subsection apply if such participant is
credited with at least one hour of service under this plan or a predecessor
plan in a plan year beginning on or after January 1, 1976, and such
participant had at least 10 years of vesting service when he or she separated
from service.
(2) Any living participant not receiving benefits on August 23, 1984, who was
credited with at least one hour of service under this plan or a predecessor
plan on or after September 2, 1974, and who is not otherwise credited with
any service in a plan year beginning on or after January 1, 1976, must be
given the opportunity to have his or her benefits paid in accordance with
Subparagraph (4).
(3) The respective opportunities to elect (as described in Subparagraphs (1)
and (2)) must be afforded to the appropriate participants during the period
commencing on August 23, 1984, and ending on the date benefits would
otherwise commence to said participants.
(4) Any participant who has elected pursuant to Subparagraph (2) and any
participant who does not elect under Subparagraph (1) or who meets the
requirements of Subparagraph (1) except that such participant does not have
at least 10 years of vesting service when he or she separates from service,
shall have his or her benefits distributed in accordance with all of the
following requirements if benefits would have been payable in the form of a
life annuity:
(A) Automatic joint and survivor annuity. If benefits in the form of a life
annuity become payable to a married participant who:
(i) begins to receive payments under the plan on or after normal retirement
age; or
(ii) dies on or after normal retirement age while still working for the
employer; or
(iii) begins to receive payments on or after the qualified early retirement
age; or
(iv) separates from service on or after attaining normal retirement age (or
the qualified early retirement age) and after satisfying the eligibility
requirements for the payment of benefits under the plan and thereafter dies
before beginning to receive such benefits;
then such benefits will be received under this plan in the form of a
qualified joint and survivor annuity, unless the participant has elected
otherwise during the election period. The election period must begin at
least 6 months before the participant attains qualified early retirement
age and end not more than 90 days before the commencement of benefits. Any
election hereunder will be in writing and may be changed by the participant
at any time.
(B) Election of early survivor annuity. A participant who is employed after
attaining the qualified early retirement age will be given the opportunity to
elect, during the election period, to have a survivor annuity payable on
death. If the participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have been made to the
spouse under the qualified joint and survivor annuity if the participant had
retired on the day before his or her death. Any election under this
provision will be in writing and may be changed by the participant at any
time. The election period begins on the later of (1) the 90th day before
the participant attains the qualified early retirement age, or (2) the date
on which participation begins, and ends on the date the participant
terminates employment.
(C) For purposes of this Subparagraph (4) qualified early retirement age is
the latest of:
(i) the earliest date, under the plan, on which the participant may elect
to receive retirement benefits,
(ii) the first day of the 120th month beginning before the participant
reaches normal retirement age, or
(iii) the date the participant begins participation.
Further, for purposes of this Subparagraph (4), a qualified joint and
survivor annuity is an annuity for the life of the participant with an
survivor annuity for the life of the spouse as described in Paragraph (d)(4).
(h) Loans
If required under Section 4.4(b)(1)(A) of the plan, a participant must
obtain the consent of his spouse, if any, to use his account balance(s) as
security for a loan. Spousal consent shall be obtained no earlier than the
beginning of the 90-day period that ends on the date on which the loan is to
be so secured. The consent must be in writing, must acknowledge the effect
of the loan, and must be witnessed by a plan representative or notary public.
Such consent shall thereafter be binding with respect to the consenting
spouse or any subsequent spouse with respect to that loan. A new consent shall
be required if the account balance(s) is used for renegotiation, extension,
renewal, or other revision of the loan.
Once a valid spousal consent has been obtained in compliance with this
provision, then, notwithstanding any other provision of this plan, the
portion of the participant's vested account balance(s) used as a security
interest held by the plan by reason of a loan outstanding to the participant
shall be taken into account for purposes of determining the amount of the
account balance(s) payable at the time of death or distribution, but only if
the reduction is used as repayment of the loan. If less than 100% of the
participant's vested account balance(s) (determined without regard to the
preceding sentence) is payable to the surviving spouse, then the account
balance(s) shall be adjusted by first reducing the vested account balance(s)
by the amount of the security used as repayment of the loan, and then
determining the benefit payable to the surviving spouse.
Section 5.4 Distribution Requirements
Subject to Subsection 5.3 Joint and Survivor Annuity Requirements, the
requirements of this Subsection 5.4 shall apply to any distribution of a
participant's interest and will take precedence over any inconsistent
provisions of this plan. Unless otherwise specified, the provisions of
this Subsection apply to calendar years beginning after December 31, 1984.
All distributions required under this Subsection shall be determined and
made in accordance with the proposed regulations under Code Section 401(a)
(9), including the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the Proposed Regulations.
(a) Required Beginning Date - The entire interest of a participant must be
distributed or begin to be distributed no later than the participant's
required beginning date.
(b) Limits on Distribution Periods - As of the first distribution calendar
year, distributions, if not made in a single sum, may only be made over one
of the following periods (or a combination thereof):
(1) the life of the participant,
(2) the life of the participant and a designated beneficiary,
(3) a period certain not extending beyond the life expectancy of the
participant, or
(4) a period certain not extending beyond the joint and last survivor
expectancy of the participant and a designated beneficiary.
(c) Determination of Amount to Be Distributed Each Year - If the
participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the required
beginning date.
(1) Individual Account -
(A) If a participant's benefit is to be distributed over (1) a period not
extending beyond the life expectancy of the participant or the joint life
and last survivor expectancy of the participant and the participant's
designated beneficiary or (2) a period not extending beyond the life
expectancy of the designated beneficiary, the amount required to be
distributed for each calendar year, beginning with distributions for the
first distribution calendar year, must at least equal the quotient obtained
by dividing the participant's benefit by the applicable life expectancy.
(B) For calendar years beginning before January 1, 1989, if the participant's
spouse is not the designated beneficiary, the method of distribution selected
must assure that at least 50% of the present value of the amount available for
distribution is paid within the life expectancy of the participant.
(C) For calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with distributions for the first
distribution calendar year shall not be less than the quotient obtained by
dividing the participant's benefit by the lesser of (1) the applicable life
expectancy or (2) if the participant's spouse is not the designated
beneficiary, the applicable divisor determined from the table set forth in
Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Regulations. Distributions after
the death of the participant shall be distributed using the applicable life
expectancy in Paragraph (c)(1)(A) above as the relevant divisor without
regard to Proposed Regulation Section 1.401(a)(9)-2.
(D) The minimum distribution required for the participant's first
distribution calendar year must be made on or before the participant's
required beginning date. The minimum distribution for other calendar years,
including the minimum distribution for the distribution calendar year in
which the employee's required beginning date occurs, must be made on or
before December 31 of that distribution calendar year.
(2) Other Forms - If the participant's benefit is distributed in the form of
an annuity purchased from an insurance company, distributions thereunder
shall be made in accordance with the requirements of Code Section 401(a)(9)
and the proposed regulations thereunder.
(d) Death Distribution Provisions
(1) Distribution beginning before death. If the participant dies after
distribution of his or her interest has begun, the remaining portion of
such interest will continue to be distributed at least as rapidly as under
the method of distribution being used prior to the participant's death.
(2) Distribution beginning after death. If the participant dies before
distribution of his or her interest begins, distribution of the participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the participant's death except to the
extent that an election is made to receive distributions in accordance with
(A) or (B) below:
(A) If any portion of the participant's interest is payable to a designated
beneficiary, distributions may be made over the life or over a period certain
not greater than the life expectancy of the designated beneficiary commencing
on or before DecemberE31 of the calendar year immediately following the
calendar year in which the participant died;
(B) If the designated beneficiary is the participant's surviving spouse,
the date distributions are required to begin in accordance with (A) above
shall not be earlier than the later of (i) December 31 of the calendar year
immediately following the calendar year in which the participant died and
(ii) December 31 of the calendar year in which the participant would have
attained age 70 1/2.
If the participant has not made an election pursuant to this Paragraph (d)(2)
by the time of his or her death, the participant's designated beneficiary
must elect the method of distribution no later than the earlier of (1)
December 31 of the calendar year in which distributions would be required to
begin under this Paragraph, or (2) December 31 of the calendar year which
contains the fifth anniversary of the date of death of the participant. If
the participant has no designated beneficiary, or if the designated beneficiary
does not elect a method of distribution, distribution of the participant's
entire interest must be completed by December 31 of the calendar year
containing the fifth anniversary of the participant's death.
(3) For purposes of Paragraph (d)(2) above, if the surviving spouse dies
after the participant, but before payments to such spouse begin, the
provisions of Paragraph (d)(2) with the exception of paragraph (B) therein,
shall be applied as if the surviving spouse were the participant.
(4) For purposes of this Paragraph (d), any amount paid to a child of the
participant will be treated as if it had been paid to the surviving spouse
if the amount becomes payable to the surviving spouse when the child reaches
the age of majority.
(5) For the purposes of this Paragraph (d), distribution of a participant's
interest is considered to begin on the participant's required beginning date
(or, if Subparagraph (3) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to Subparagraph (2)
above). If distribution in the form of an annuity irrevocably commences to
the participant before the required beginning date, the date distribution is
considered to begin is the date distribution actually commences.
(e) Definitions (Code Section 401(a)(9) Requirements)
(1) Applicable Life Expectancy - The life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the participant
(or designated beneficiary) as of the participant's (or designated
beneficiary's) birthday in the applicable calendar year reduced by one for
each calendar year which has elapsed since the date life expectancy was
first calculated. If life expectancy is being recalculated, the applicable
life expectancy shall be the life expectancy as so recalculated. The
applicable calendar year shall be the first distribution calendar year, and
if life expectancy is being recalculated such succeeding calendar year.
(2) Designated Beneficiary - The individual who is designated as the
beneficiary under the plan in accordance with Code Section 401(a)(9) and
the proposed regulations thereunder.
(3) Distribution Calendar Year - A calendar year for which a minimum
distribution is required. For distributions beginning before the
participant's death, the first distribution calendar year is the calendar
year immediately preceding the calendar year which contains the participant's
required beginning date. For distributions beginning after the participant's
death, the first distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Paragraph (d) above.
(4) Life Expectancy - Life expectancy and joint and last survivor expectancy
are computed by use of the expected return multiples in Tables V and VI of
Section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the participant (or spouse, in the case of
distributions described in Paragraph (d)(2)(B) above) by the time
distributions are required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the participant (or
spouse) and shall apply to all subsequent years. The life expectancy of a
nonspouse beneficiary may not be recalculated.
(5) Participant's Benefit -
(A) The account balance as of the last valuation date in the calendar year
immediately preceding the distribution calendar year (valuation calendar
year) increased by the amount of any contributions or forfeitures allocated
to the account balance as of dates in the valuation calendar year after the
valuation date and decreased by distributions made in the valuation calendar
year after the valuation date.
(B) Exception for second distribution calendar year. For purposes of
Subparagraph (5)(A) above, if any portion of the minimum distribution for
the first distribution calendar year is made in the second distribution
calendar year on or before the required beginning date, the amount of the
minimum distribution made in the second distribution calendar year shall be
treated as if it had been made in the immediately preceding distribution
calendar year.
(6) Required Beginning Date - The required beginning date of a participant is
the first day of April of the calendar year following the calendar year in
which the participant attains age 70 1/2.
(A) Transitional rules. The required beginning date of a participant who
attains age 70 1/2 before January 1, 1988, shall be determined in accordance
with (i) or (ii) below.
(i) Non-5-percent owners. The required beginning date of a participant who
is not a 5-percent owner is the first day of April of the calendar year
following the calendar year in which the later of retirement or attainment
of age 70 1/2 occurs.
(ii) 5-percent owners. The required beginning date of a participant who is
a 5-percent owner during any year beginning after December 31, 1979, is the
first day of April following the later of :
a. the calendar year in which the participant attains age 70E1/2, or
b. the earlier of the calendar year with or within which ends the plan year
in which the participant becomes a 5-percent owner, or the calendar year in
which the participant retires.
The required beginning date of a participant who is not a 5-percent owner
who attains age 70 1/2 during 1988 and who has not retired as of January 1,
1989, is April 1, 1990.
(B) 5-percent owner. A participant is treated as a 5-percent owner for
purposes of this Paragraph (e) if such participant is a 5-percent owner as
defined in Code Section 416(i) (determined in accordance with Section 416
but without regard to whether the plan is top-heavy) at any time during the
plan year ending with or within the calendar year in which such owner attains
age 66 1/2 or any subsequent plan year.
(C) Once distributions have begun to a 5-percent owner under this Paragraph,
they must continue to be distributed, even if the participant ceases to be a
5-percent owner in a subsequent year.
(f) Transitional Rule
(1) Notwithstanding the other requirements of this Section 5.4 and subject to
the requirements of Section 5.3, Joint and Survivor Annuity Requirements,
distribution on behalf of any employee, including a 5-percent owner, may be
made in accordance with all of the following requirements (regardless of when
such distribution commences).
(A) The distribution by the trust is one which would not have disqualified
such trust under Code Section 401(a)(9) as in effect prior to amendment by
the Deficit Reduction Act of 1984.
(B) The distribution is in accordance with a method of distribution
designated by the employee whose interest in the trust is being distributed
or, if the employee is deceased, by a beneficiary of such employee.
(C) Such designation was in writing, was signed by the employee or the
beneficiary, and was made before January 1, 1984.
(D) The employee had accrued a benefit under the plan as of December 31, 1983.
(E) The method of distribution designated by the employee or the beneficiary
specifies the time at which distribution will commence, the period over which
distributions will be made, and in the case of any distribution upon the
employee's death, the beneficiaries of the employee listed in order of priority.
A distribution upon death will not be covered by this transitional rule unless
the information in the designation contains the required information described
above with respect to the distributions to be made upon the death of the
employee.
(2) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the employee, or the beneficiary, to
whom such distribution is being made, will be presumed to have designated
the method of distribution under which the distribution is being made if the
method of distribution was specified in writing and the distribution
satisfies the requirements in this Paragraph.
(3) If a designation is revoked, any subsequent distribution must satisfy
the requirements of Code Section 401(a)(9) and the proposed regulations
thereunder. If a designation is revoked subsequent to the date distributions
are required to begin, the trust must distribute by the end of the calendar
year following the calendar year in which the revocation occurs the total
amount not yet distributed which would have been required to have been
distributed to satisfy Code Section 401(a)(9) and the proposed regulations
thereunder, but for the Code Section 242(b)(2) election. For calendar years
beginning after December 31, 1988, such distributions must meet the minimum
distribution incidental benefit requirements in Section 1.401(a)(9)-2 of the
Proposed Regulations. Any changes in the designation will be considered to
be a revocation of the designation. However, the mere substitution or
addition of another beneficiary (one not named in the designation) under the
substitution or addition does not alter the period over which distributions
are to be made under the designation, directly or indirectly (for example, by
altering the relevant measuring life). In the case in which an amount is
transferred or rolled over from one plan to another plan, the rules in
Proposed Regulation Section 1.401(a)(9)-1 Q&A J-2 and Q&A J-3 shall apply.
Section 5.5 Top Heavy Provisions
(a) Application of Provisions - If the plan is or becomes top-heavy in any
plan year beginning after December 31, 1983, the provisions of Subsection
5.5 will supersede any conflicting provisions in the plan.
(b) Minimum Allocation
(1) Except as otherwise provided in (3) and (4) below, the employer
contributions and forfeitures allocated on behalf of any participant who is
not a key employee shall not be less than the lesser of three percent of such
participant's compensation or in the case where the employer has no defined
benefit plan which designates this plan to satisfy Code Section 401, the
largest percentage of employer contributions and forfeitures, as a percentage
of the first $200,000 of the key employee's compensation, allocated on behalf
of any key employee for that year. This minimum allocation shall be made
even though, under other plan provisions, the participant would not otherwise
be entitled to receive an allocation, or would have received a lesser allocation
for the year because of (i) the participant's failure to complete 1,000 hours
of service (or any equivalent provided in the plan), or (ii) the participant's
failure to make mandatory employee contributions to the plan, or (iii)
compensation less than a stated amount.
(2) For purposes of computing the minimum allocation, compensation shall
mean compensation as defined in Section 1.2 (a) of the plan.
(3) The provision in (1) above shall not apply to any participant who was
not employed by the employer on the last day of the plan year.
(4) The provision in (1) above shall not apply to any participant to the
extent the participant is covered under any other plan or plans of the
employer and the employer has provided in Section 3.2 that the minimum
allocation or benefit requirement applicable to top-heavy plans will be met
in the other plan or plans. If this plan is intended to meet the minimum
allocation or benefit requirement applicable to another plan or plans, the
employer shall so provide in Section 3.2.
(5) The minimum allocation required (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited under Code
Section 411(a)(3)(B) or 411(a)(3)(D).
(c) Adjustments in Code Section 415 Limits - If the plan is top-heavy, the
defined benefit fraction and the defined contribution fraction shall be
computed by applying a factor of 1.0 (instead of 1.25) to the applicable
dollar limits under Code Section 415(b)(1)(A) and 415(C)(1)(A) for such year,
unless the plan meets both the following conditions:
(1) Such plan would not be a top-heavy plan if "90%" were substituted for
"60%" in the top-heavy tests; and
(2) The minimum employer contribution percentage under paragraph (b) is 4
percent instead of 3 percent.
However, the reduced Code Section 415 factor of 1.0 shall not apply under a
top-heavy plan with respect to any individual so long as there are no
employer contributions, forfeitures, or voluntary non-deductible
contributions allocated to such individual.
(d) Minimum Vesting Schedules - For any plan year in which this plan is
top-heavy, the following minimum vesting schedule shall automatically apply
to the plan, If this schedule is more liberal than the schedule provided in
Section 4.2(a)(6)(A).
Years of Service Vesting Percentage
0-1 Year 0%
2 20%
3 40%
4 60%
5 80%
6 or More Years 100%
The minimum vesting schedule shall apply to all benefits within the meaning
of Code Section 411(a)(7) except those attributable to employee
contributions, including benefits accrued before the effective date of
Code Section 416 and benefits accrued before the plan became top-heavy.
Further, no decrease in a participant's nonforfeitable percentage may occur
in the event the plan's status as top-heavy changes for any plan year, and
the provisions of Section 7.2(d) shall apply. However, this Section does not
apply to the account balances of any employee who does not have an hour of
service after the plan has initially become top-heavy and such employee's
account balance attributable to employer contributions and forfeitures will
be determined without regard to this Section.
(e) Definitions (Code Section 416 Requirements)
(1) Key Employee - Any employee or former employee (and the beneficiaries of
such employee) who at any time during the determination period was an officer
of the employer if such individual's annual compensation exceeds 50 percent
of the dollar limitation under Code Section 415(b)(1)(A), an owner (or
considered an owner under Code Section 318) of one of the ten largest
interests in the employer if such individual's compensation exceeds 100
percent of the dollar limitation under Code Section 415(c)(1)(A), a 5-percent
owner of the employer, or a 1-percent owner of the employer who has an annual
compensation of more than $150,000. Annual compensation means compensation
as defined in Code Section 415(c)(3), but including amounts contributed by
the employer pursuant to a salary reduction agreement which are excludable
from the employee's gross income under Code Section 125, Section 402(a)(8),
Section 402(h) or Section 403(b). The determination period is the plan year
containing the determination date and the four (4) preceding plan years.
The determination of who is a key employee will be made in accordance with
Code Section 416(i)(1) and the regulations thereunder.
(2) Top-Heavy Plan - For any plan year beginning after December 31, 1983,
this plan is top-heavy if any of the following conditions exists:
(A) If the top-heavy ratio for this plan exceeds 60 percent and this plan is
not part of any required aggregation group or permissive aggregation group of
plans.
(B) If this plan is a part of a required aggregation group of plans but not
part of a permissive aggregation group and the top-heavy ratio for the group
of plans exceeds 60 percent.
(C) If this plan is a part of a required aggregation group and part of a
permissive aggregation group of plans and the top-heavy ratio for the
permissive aggregation group exceeds 60 percent.
(3) Top-Heavy Ratio -
(A) If the employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the employer has not
maintained any defined benefit plan which during the 5-year period ending on
the determination date(s) has or has had accrued benefits, the top-heavy
ratio for this plan alone or for the required or permissive aggregation
group as appropriate is a fraction, the numerator of which is the sum of the
account balances of all key employees as of the determination date(s)
(including any part of any account balance distributed in the 5-year period
ending on the determination date(s)), and the denominator of which is the
sum of all account balances (including any part of any account balance
distributed in the 5-year period ending on the determination date(s)),
both computed in accordance with Code Section 416 and the regulations
thereunder. Both the numerator and denominator of the top-heavy ratio are
increased to reflect any contribution not actually made as of the
determination date, but which is required to be taken into account on that
date under Code Section 416 and the regulations thereunder.
(B) If the employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the employer maintains
or has maintained one or more defined benefit plans which during the 5-year
period ending on the determination date(s) has or has had any accrued
benefits, the top-heavy ratio for any required or permissive aggregation
group as appropriate is a fraction, the numerator of which is the sum of
account balances under the aggregated defined contribution plan or plans for
all key employees, determined in accordance with (A) above, and the present
value of accrued benefits under the aggregated defined benefit plan or plans
for all key employees as of the determination date(s), and the denominator of
which is the sum of the account balances under the aggregated defined
contribution plan or plans for all participants, determined in accordance
with (A) above, and the present value of accrued benefits under the defined
benefit plan or plans for all participants as of the determination date(s),
all determined in accordance with Code Section 416 and the regulations
thereunder. The accrued benefits under a defined benefit plan in both the
numerator and denominator of the top-heavy ratio are increased for any
distribution of an accrued benefit made in the five-year period ending on the
determination date.
(C) For purposes of (A) and (B) above the value of account balances and the
present value of accrued benefits will 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. The account balances and accrued benefits of a participant
(1) who is not a key employee but who was a key employee in a prior year, or
(2) who has not been credited with at least one hour of service with any
employer maintaining the plan at any time during the 5-year period ending on
the determination date will be disregarded. The calculation of the top-heavy
ratio, and the extent to which distributions, rollovers, and transfer are taken
into account will be made in accordance with Code Section 416 and the
regulations thereunder. Deductible employee contributions will not be taken
into account for purposes of computing the top-heavy ratio. When aggregating
plans the value of account balances and accrued benefits will be calculated
with reference to the determination dates that fall within the same
calendar year.
The accrued benefit of a participant other than a key employee shall be
determined under (1) the method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained by the employer, or (2)
if there is no such method, as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under the fractional rule of Code Section
411(b)(1)(C).
(4) Permissive Aggregation Group - The required aggregation group of plans
plus any other plan or plans of the employer which, when considered as a
group with the required aggregation group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(5) Required Aggregation Group - (1) Each qualified plan of the employer in
which at least one key employee participates or participated at any time
during the determination period (regardless of whether the plan has
terminated), and (2) any other qualified plan of the employer which enables
a plan described in (1) to meet the requirements of Code Sections 401(a)(4)
or 410.
(6) Determination Date - For any plan year subsequent to the first plan year,
the last day of the preceding plan year. For the first plan year of the
plan, the last day of that year.
(7) Valuation Date - The allocation date as defined in Section 1.3(b), which
shall be the date as of which account balances or accrued benefits are valued
for purposes of calculating the top-heavy ratio.
(8) Present Value - Present value shall be based only on the interest and
mortality rates specified in the employerOs defined benefit plan.
(9) Non-Key Employee - Any employee who is not a key employee. Non-key
employees include employees who are former key employees.
Section 5.6 Deductible Voluntary Employee Contributions
The plan administrator will not accept deductible employee contributions
which are made for a taxable year beginning after December 31, 1986.
Contributions made prior to that date will be maintained in a separate
account which will be nonforfeitable at all times. The account will share
in the gains and losses of the trust in the same manner as described in
Section 3.5 of the plan. No part of the deductible voluntary contribution
account will be used to purchase life insurance. Subject to Section 5.3, Joint
and Survivor Requirements (if applicable), the participant may withdraw any
part of the deductible voluntary contribution account by making a written
application to the plan adminstrator.
ARTICLE VI ADMINISTRATION OF THE PLAN
Section 6.1 Fiduciary Responsibility
(a) Fiduciary Standards - A fiduciary shall discharge his duties with
respect to a plan solely in the interest of the participants and
beneficiaries and -
For the exclusive purpose of providing benefits to participants and their
beneficiaries and defraying reasonable expenses of administering the plan;
With the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character
and with like aims;
By diversifying the investments of the plan so as to minimize the risk of
large losses, unless under the circumstances it is clearly prudent not to
do so; and
In accordance with the documents and instruments governing the plan insofar
as such documents and instruments are consistent with the provisions of ERISA.
(b) Allocation of Fiduciary Responsibility
(1) It is intended to allocate to each fiduciary, either named or otherwise,
the individual responsibility for the prudent execution of the functions
assigned to him. None of the allocated responsibilities or any other
responsibilities shall be shared by two or more fiduciaries unless
specifically provided for in the plan.
(2) When one fiduciary is required to follow the directions of another
fiduciary, the two fiduciaries shall not be deemed to share such
responsibility. Instead, the responsibility of the fiduciary giving the
directions shall be deemed to be his sole responsibility and the
responsibility of the fiduciary receiving directions shall be to follow
those directions insofar as such instructions on their face are proper
under applicable law.
(3) Any person or group of persons may serve in more than one fiduciary
capacity with respect to this plan.
(4) A fiduciary under this plan may employ one or more persons, including
independent accountants, attorneys and actuaries to render advice with regard
to any responsibility such fiduciary has under the plan.
(c) Indemnification by Employer - Unless resulting from the gross negligence,
willful misconduct or lack of good faith on the part of a fiduciary who is an
officer or employee of the employer, the employer shall indemnify and save
harmless such fiduciary from, against, for and in respect of any and all
damages, losses, obligations, liabilities, liens, deficiencies, costs and
expenses, including without limitation, reasonable attorney's fees and other
costs and expenses incident to any suit, action, investigation, claim or
proceedings suffered in connection with his acting as a fiduciary under the
plan.
(d) Named Fiduciary - The person or persons named by the employer as having
fiduciary responsibility for the management and control of plan assets shall
be known as the "named fiduciary" hereunder. Such responsibility shall
include the appointment of the plan administrator (Section 6.2(a)), the
trustee (Section 6.4(a)) and the investment manager (Section 6.4(b)), and
the deciding of benefit appeals (Section 6.3).
Section 6.2 Plan Administrator
(a) Appointment of Plan Administrator
The named fiduciary shall appoint a plan administrator who may be an
individual or an administrative committee consisting of no more than five
members. Vacancies occurring upon resignation or removal of a plan
administrator or a committee member shall be filled promptly by the named
fiduciary. Any administrator may resign at any time by giving notice of
his resignation to the named fiduciary, and any administrator may be removed
at any time by the named fiduciary. The named fiduciary shall review at regular
intervals the performance of the administrator(s). After the named fiduciary
has appointed the administrator and has received a written notice of
acceptance, the fiduciary responsibility for administration of the plan
shall be the responsibility of the plan administrator or administrative
committee.
(b) Duties and Powers of Plan Administrator
The plan administrator shall have the following duties and discretionary
powers and such other duties and discretionary powers as relate to the
administration of the plan:
(1) To determine in a non-discriminatory manner all questions relating to
the eligibility of employees to become participants.
(2) To determine in a non-discriminatory manner eligibility for benefits and
to determine and certify the amount and kind of benefits payable to
participants.
(3) To authorize all disbursements from the fund.
(4) To appoint or employ any independent person to perform necessary plan
functions and to assist in the fulfillment of administrative responsibilities
as he deems advisable, including legal and actuarial counsel.
(5) When appropriate, to select an insurance company and annuity contracts
which, in his opinion, will best carry out the purposes of the plan.
(6) To construe and interpret any ambiguities in the plan and to make,
publish, interpret, alter, amend or revoke rules for the regulation of the
plan which are consistent with the terms of the plan and with ERISA.
(7) To prepare and distribute, in such manner as determined to be
appropriate, information explaining the plan.
(c) Allocation of Fiduciary Responsibility Within Administrative Committee
If the plan administrator is an administrative committee, the committee shall
choose from its members a chairman and a secretary. The committee may
allocate responsibility for those duties and powers listed in Section 6.2(b)
(1) and (2) (except determination of qualification for disability retirement)
and other purely ministerial duties to one or more members of the committee.
The committee shall review at regular intervals the performance of any
committee member to whom fiduciary responsibility has been allocated and shall
re-evaluate such allocation of responsibility. After the committee has made
such allocations of responsibilities and has received written notice of
acceptance, the fiduciary responsibilities for such administrative duties
and powers shall then be considered as the responsibilities of such committee
member(s).
(d) Miscellaneous Provisions
(1) Administrative Committee Actions - The actions of such committee shall
be determined by the vote or other affirmative expression of a majority of
its members. Either the chairman or the secretary may execute any
certificate or other written direction on behalf of the committee. A member
of the committee who is a participant shall not vote on any question relating
specifically to himself. If the remaining members of the committee, by
majority vote thereof, are unable to come to a determination of any such
question, the named fiduciary shall appoint a substitute member who shall act
as a member of the committee for the special vote.
(2) Expenses - The plan administrator shall serve without compensation for
service as such. All reasonable expenses of the plan administrator shall be
paid by the employer or from the fund.
(3) Examination of Records - The plan administrator shall make available to
any participant for examination during business hours such of the plan
records as pertain only to the participant involved.
(4) Information to the Plan Administrator - To enable the plan administrator
to perform the administrative functions, the employer shall supply full and
timely information to the plan administrator on all participants as the plan
administrator may require.
Section 6.3 Claims Procedure
(a) Notification - The plan administrator shall notify each participant in
writing of his determination of benefits. If the plan administrator denies
any benefit, such written denial shall include:
- - The specific reasons for denial;
- - Reference to provisions on which the denial is based;
- - A description of and reason for any additional information needed to
process the claim; and
- - An explanation of the claims procedure.
(b) Appeal - The participant or his duly authorized representative may:
- - Request a review of the participant's case in writing to the named fiduciary;
- - Review pertinent documents;
- - Submit issues and comments in writing.
The written request for review must be submitted no later than 60 days after
receiving written notification of denial of benefits.
(c) Review - The named fiduciary must render a decision no later than 60 days
after receiving the written request for review, unless circumstances make it
impossible to do so; but in no event shall the decision be rendered later
than 120 days after the request for review is received.
Section 6.4 Trust Fund
(a) Appointment of Trustee
The named fiduciary shall appoint a trustee for the proper care and custody
of all funds, securities and other properties in the trust, and for
investment of plan assets (or for execution of such orders as it receives
from an investment manager appointed for investment of plan assets). The
duties and powers of the trustee shall be set forth in a trust agreement
executed by the employer, which is incorporated herein by reference. The
named fiduciary shall review at regular intervals the performance of the trustee
and shall re-evaluate the appointment of such trustee. After the named
fiduciary has appointed the trustee and has received a written notice of
acceptance of its responsibility, the fiduciary responsibility with respect
to the proper care and custody of plan assets shall be considered as the
responsibility of the trustee. Unless otherwise allocated to an investment
manager, the fiduciary responsibility with respect to investment of plan
assets shall likewise be considered as the responsibility of the trustee.
(b) Appointment of Investment Manager
The named fiduciary may appoint an investment manager who is other than the
trustee, which investment manager may be a bank or an investment advisor
registered with the Securities and Exchange Commission under the Investment
Advisors Act of 1940. Such investment manager, if appointed, shall have
sole discretion in the investment of plan assets, subject to the funding
policy. The named fiduciary shall review at regular intervals no less
frequently than annually, the performance of such investment manager and
shall re-evaluate the appointment of such investment manager. After the
named fiduciary has appointed an investment manager and has received a
written notice of acceptance of its responsibility, the fiduciary
responsibility with respect to investment of plan assets shall be considered
as the responsibility of the investment manager.
(c) Funding Policy
The named fiduciary shall determine and communicate in writing to the
fiduciary responsible for investment of plan assets the funding policy for
the plan. The funding policy shall set forth the plan's short-range and
long-range financial needs, so that said fiduciary may coordinate the
investment of plan assets with the plan's financial needs.
(d) Valuation of the Fund
The fund shall be valued by the trustee on the anniversary date of each year
and as of any interim allocation date determined by the plan administrator.
The valuation shall be made on the basis of the current fair market value of
all property in the fund.
ARTICLE VII AMENDMENT AND TERMINATION OF PLAN
Section 7.1 Right to Discontinue and Amend
It is the expectation of the employer that it will continue this plan
indefinitely and make the payments of its contributions hereunder, but the
continuance of the plan is not assumed as a contractual obligation of the
employer and the right is reserved by the employer, at any time, to reduce,
suspend or discontinue its contributions hereunder.
Section 7.2 Amendments
Except as herein limited, the employer shall have the right to amend this
plan at any time to any extent that it may deem advisable. Such amendment
shall be stated in writing and executed by the employer.
The employer's right to amend the plan shall be limited as follows:
(a) No amendment shall increase the duties or liabilities of the plan
administrator, the trustee, or other fiduciary without their respective
written consent.
(b) No amendments shall have the effect of vesting in the employer any
interest in or control over any contracts issued pursuant hereto or any
other property in the fund.
(c) No amendment to the plan shall be effective to the extent that it has the
effect of decreasing a participant's accrued benefit. Notwithstanding the
preceding sentence, a participant's account balance may be reduced to the
extent permitted under Code Section 412(c)(8). For purposes of this
paragraph, a plan amendment which has the effect of decreasing a participant's
account balance or eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment shall be treated as
reducing an accrued benefit. Furthermore, if the vesting schedule of a plan
is amended, in the case of an employee who is a participant as of the later
of the date such amendment is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of such employee's
right to his employer-derived accrued benefit will not be less than his
percentage computed under the plan without regard to such amendment.
(d) No amendment to the vesting schedule adopted by the employer hereunder
shall deprive a participant of his vested portion of his employer contribution
account to the date of such amendment. If the plan's vesting schedule is
amended, or the plan is amended in any way that directly or indirectly
affects the computation of the participant's nonforfeitable percentage or if
the plan is deemed amended by an automatic change to or from a top-heavy
vesting schedule, each participant with at least 3 years of service with the
employer may elect, within a reasonable period after the adoption of the
amendment or change, to have the nonforfeitable percentage computed under the
plan without regard to such amendment or change. For participants who do not
have at least one hour of service in any plan year beginning after December
31, 1988, "5 years of service" shall be substituted for "3 years of service"
in the preceding sentence. The period during which the election may be
made shall commence with the date the amendment is adopted or deemed to be
made and shall end on the latest of:
(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the participant is issued written notice of the amendment
by the employer or plan administrator.
Section 7.3 Protection of Benefits in Case of Plan Merger
In the event of a merger or consolidation with, or transfer of assets to any
other plan, each participant will receive a benefit immediately after such
merger, consolidation or transfer (if the plan then terminated) which is at
least equal to the benefit the participant was entitled to immediately before
such merger, consolidation or transfer (if the plan had terminated).
Section 7.4 Termination of Plan
(a) When Plan Terminates - This plan shall terminate upon the happening of
any of the following events: legal adjudication of the employer as bankrupt;
a general assignment by the employer to or for the benefit of its creditors;
the legal dissolution of the employer; or termination of the plan by the
employer.
(b) Allocation of Assets - Upon termination, partial termination or complete
discontinuance of employer contributions, the account balance of each
affected participant who is an active participant or who is not an active
participant but has neither received a complete distribution of his vested
accrued benefit nor incurred five one-year breaks in service shall be 100%
vested and nonforfeitable. The amount of the fund assets shall be allocated
to each participant, subject to provisions for expenses of administration of
the liquidation, in the ratio that such participant's account bears to all
accounts. If a participant under this plan has terminated his employment at
any time after the anniversary date of the year in which the employer made
his final contribution to the plan, and if any portion of the account of such
terminated participant was forfeited and reallocated to the remaining
participants, such forfeiture shall be reversed and the forfeited amount
shall be credited to the account of such terminated participant.
ARTICLE VIII MISCELLANEOUS PROVISIONS
Section 8.1 Exclusive Benefit - Non-Reversion
The plan is created for the exclusive benefit of the employees of the
employer and shall be interpreted in a manner consistent with its being a
qualified plan as defined in Section 401(a) of the Internal Revenue Code and
with ERISA. The corpus or income of the trust may not be diverted to or used
for other than the exclusive benefit of the participants or their
beneficiaries (except for defraying reasonable expenses of administering
the plan).
Notwithstanding the above, a contribution paid by the employer to the trust
may be repaid to the employer under the following circumstances:
(a) Any contribution made by the employer because of a mistake of fact must
be returned to the employer within one year of the contribution.
(b) In the event the deduction of a contribution made by the employer is
disallowed under Code Section 404, such contribution (to the extent
disallowed) must be returned to the employer within one year of the
disallowance of the deduction.
(c) If the Commissioner of Internal Revenue determines that the plan is not
initially qualified under the Internal Revenue Code, any contribution made
incident to that initial qualification by the employer must be returned to
the employer within one year after the date the initial qualification is
denied, but only if the application for the qualification is made by the
time prescribed by law for filing the employer's return for the taxable year
in which the plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
Section 8.2 Inalienability of Benefits
No benefit or interest available hereunder including any annuity contract
distributed herefrom shall be subject to assignment or alienation, either
voluntarily or involuntarily. The preceding sentence shall also apply to
the creation, assignment, or recognition of a right to any benefit payable
with respect to a participant pursuant to a domestic relations order, unless
such order is determined to be a qualified domestic relations order as
defined in Code Section 414(p), or any domestic relations order entered
before January 1, 1985. A loan made to a participant and secured by his
nonforfeitable account balance under Section 4.4(b) will not be treated as an
assignment or alienation and such securing account balance shall be subject
to attachment by the plan in the event of default.
Section 8.3 Employer-Employee Relationship
This plan is not to be construed as creating or changing any contract of
employment between the employer and its employees, and the employer retains
the right to deal with its employees in the same manner as though this plan
had not been created.
Section 8.4 Binding Agreement
This plan shall be binding on the heirs, executors, administrators,
successors and assigns as such terms may be applicable to any or all parties
hereto, and on any participants, present or future.
Section 8.5 Separability
If any provision of this plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision hereof
and this plan shall be construed and enforced as if such provision had not
been included.
Section 8.6 Construction
The plan shall be construed in accordance with the laws of the state in which
the employer was incorporated (or is domiciled in the case of an
unincorporated employer) and with ERISA.
Section 8.7 Copies of Plan
This plan may be executed in any number of counterparts, each of which shall
be deemed as an original, and said counterparts shall constitute but one and
the same instrument which may be sufficiently evidenced by any one counterpart.
Section 8.8 Interpretation
Wherever appropriate, words used in this plan in the singular may include the
plural or the plural may be read as singular, and the masculine may include
the feminine.
IN WITNESS WHEREOF, the Employer has caused this Plan to be executed this
day of , 19 .
EMPLOYER:
WEIS MARKETS, INC.
By:
Title:
EXHIBIT 10-C
WEIS MARKETS, INC. STOCK BONUS PLAN
ARTICLE I DEFINITIONS A2
1.1 References A2
1.2 Compensation A2
1.3 Dates A4
1.4 Employee A4
1.5 Employer A6
1.6 Fiduciaries A6
1.7 Participant/Beneficiary A7
1.8 Participant Accounts A7
1.9 Plan A7
1.10 Service A7
1.11 Trust A9
1.12 Stock Bonus Plan Specific Definitions A9
ARTICLE II PARTICIPATION A10
2.1 Eligibility Service A10
2.2 Plan Participation A10
2.3 Termination of Participation A11
2.4 Re-Participation (Break In Service Rules) A11
ARTICLE III ALLOCATIONS TO PARTICIPANT ACCOUNTS A12
3.1 General Provisions A12
3.2 Allocation of Contributions and Forfeitures A13
3.3 Employee Nondeductible Contribution Account A14
3.4 Rollover/Transfer Account A14
3.5 Allocation of Investment Results A14
ARTICLE IV PAYMENT OF PARTICIPANT ACCOUNTS A16
4.1 Vesting Service Rules A16
4.2 Vesting of Participant Accounts A17
4.3 Payment of Participant Accounts A20
4.4 Form of Distribution A22
4.5 In-Service Payments A23
4.6 Distributions under Domestic Relations Orders A23
WEIS MARKETS, INC. STOCK BONUS PLAN
ORIGINALLY EFFECTIVE
January 1, 1978
AS AMENDED AND RESTATED EFFECTIVE
January 1, 1989
WEIS MARKETS, INC. STOCK BONUS PLAN
This amended and restated plan, executed on the date indicated at the end
hereof, is made effective as of January 1, 1989, except as provided otherwise
in Section 1.3(c), by Weis Markets, Inc., a Corporation, with its principal
office located in Sunbury, Pennsylvania.
W I T N E S S E T H :
WHEREAS, effective January 1, 1978, the employer established the employee
stock ownership plan for its employees; and,
WHEREAS, effective January 1, 1988, the employer amended the plan to a stock
bonus plan and desires to continue to maintain a permanent qualified plan in
order to enable its employees to share in the growth and prosperity of the
Corporation and to provide its employees and their beneficiaries with
financial security in the event of retirement, disability or death; and
WHEREAS, it is desired to amend said plan;
NOW THEREFORE, the premises considered, the original plan and the prior
restatements and amendments are hereby replaced by this amended and restated
plan, and the following are the provisions of the qualified plan of the
employer as restated herein; provided, however, that each employee who was
previously a participant shall remain a participant, and no employee who was
a participant in the plan before the date of amendment shall receive a
benefit under this amended plan which is less than the benefit he was then
entitled to receive under the plan as of the day prior to the amendment.
ARTICLE I DEFINITIONS
Section 1.1 References
(a) Code means the Internal Revenue Code of 1986, as it may be amended from
time to time.
(b) ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Section 1.2 Compensation
(a) Compensation means, except as provided in paragraph (b) hereof, any
earnings reportable as W-2 wages for Federal income tax withholding purposes
and earned income plus elective contributions for the plan year.
Elective contributions are amounts excludable from the employee's gross
income and contributed by the employer, at the employee's election to:
(1) A cafeteria plan (excludable under Code Section 125);
(2) A Code Section 401(k) arrangement (excludable under Code Section 402(e)(3));
(3) A simplified employee pension (excludable under Code Section 402(h)); or
(4) A tax sheltered annuity (excludable under Code Section 403(b)).
"Earned Income" means net earnings from self-employment in the trade or
business with respect to which the employer has established the plan,
provided that personal services of the individual are a material income
producing factor. Net earnings shall be determined without regard to items
excluded from gross income and the deductions allocable to those items. Net
earnings shall be determined after the deduction allowed to the self-employed
individual for all contributions made by the employer to a qualified plan and,
for plan years beginning after December 31, 1989, the deduction allowed to the
self-employeed under Code Section 164(f) for self-employment taxes.
Any reference in this plan to compensation shall be a reference to the
definition in this Section 1.2, unless the plan reference specifies a
modification to this definition. The plan administrator shall take into
account only compensation actually paid by the employer for the relevant
period. A compensation payment includes compensation by the employer through
another person under the common paymaster provisions in Code Sections 3121
and 3306. Compensation from a related employer which is not a participating
employer under this plan shall be excluded.
(b) Exclusions From Compensation - Notwithstanding the provisions of
paragraph 1.2(a), the following types of remuneration shall be excluded from
the participantOs compensation:
Compensation received during the current plan year which was considered
deferred compensation in a prior plan year.
Contributions to or benefits from this plan.
Compensation in excess of $100,000 shall be excluded for purposes of
determining allocations (Section 3.2(c)(3)).
(c) Limitations on Compensation -
(1) Compensation Dollar Limitation - For any plan year beginning after
December 31, 1993, the plan administrator shall take into account only the
first $150,000 (or beginning January 1, 1995, such larger amount as the
Commissioner of Internal Revenue may prescribe) of any participant's
compensation for determining all benefits provided under the plan. For any
plan year beginning after December 31, 1988, but before January 1, 1994, the
plan administrator shall take into account only the first $200,000 (or for
plan years beginning after December 31, 1989 but before January 1, 1994, such
larger amount as the Commissioner of Internal Revenue may prescribe) of any
participant's compensation for determining all benefits provided under the
plan. The compensation dollar limitation for a plan year shall be the
limitation amount in effect on January 1 of the calendar year in which the
plan year begins. For any plan year beginning before January 1, 1989, the
$200,000 limitation (but not the family aggregation requirement described in
the next paragraph) applies only if the plan is top heavy for such plan year
or operates as deemed top heavy plan for such plan year. If the plan should
determine compensation on a period of time that contains fewer than 12
calendar months (such as for a short plan year), the annual compensation
dollar limitation shall be an amount equal to the compensation dollar
limitation for the plan year multiplied by the ratio obtained by dividing the
number of full months in the period by 12.
(2) Application of Compensation Limitation to Certain Family Members - The
compensation dollar limitation applies to the combined compensation of the
employee and of any family member aggregated with the employee under Code
Section 414(q)(6) who is either (A) the employee's spouse, or (B) the
employee's lineal descendant under the age of 19. If, for a plan year, the
combined compensation of the employee and such family members who are
participants entitled to an allocation for that plan year exceeds the com
allocation provisions of Article III, means his adjusted compensation.
Adjusted compensation is the amount which bears the same ratio to the
compensation dollar limitation as the affected participant's compensation
(without regard to the compensation dollar limitation) bears to the combined
compensation of all the affected participants in the family unit. If the plan
uses permitted disparity, the plan administrator first shall determine the
integration level of each affected family member participant using actual
compensation. The total of the affected participants' compensatation. The
combined excess compensation of the affected participants in the
family unit may not exceed the compensation dollar limitation minus the
amount determined under the preceding sentence. If the combined excess
compensation exceeds this limitation, the plan administrator will prorate the
limitation on the excess compensation among the affected participants in the
family unit in proportion to each such individual's actual compensation
minus his integration level.
(d) Compensation for Nondiscrimination Test - For purposes of determining
whether the plan discriminates in favor of highly compensated employees,
compensation means compensation as defined in this Section 1.2(a), except
that the employer will not give effect to any exclusion from compensation
specified in Section 1.2(b). Notwithstanding the above, the employer may
elect to exclude from this nondiscrimination definition of compensation any
items of compensation excludable under Code Section 414(s) and the applicable
Treasury regulations, provided such adjusted definition confirms to the
nondiescrimination requirements of those regulations.
Section 1.3 Dates
(a) Accounting Date means the date(s) on which investment results are
allocated to participantsO accounts, including the allocation date and any
interim accounting date(s) noted below:
No interim investment allocation dates.
(b) Allocation Date means the last day of each plan year which is the date
on which any contributions and forfeitures are allocated to participants'
accounts.
(c) The Effective Date of the plan is January 1, 1978.
The effective date of this amendment and restatement is January 1, 1989;
provided, however that the plan provisions required to comply with the Tax
Reform Act of 1986 (TRA '86), the Omnibus Budget Reconciliation Act of 1986
(OBRA '86), the Omnibus Budget Reconciliation Act of 1987 (OBRA '87), and the
Technical and Miscellaneous Revenue Act of 1988 (TAMRA) shall generally be
effective on the first day of the plan year beginning after December 31, 1988,
except as specified otherwise in this plan or in TRA '86, OBRA '86, OBRA'87 or
TAMRA. The plan provisions required to comply with the 1989 Revenue
Reconciliation Act shall generally be effective on the first day of the plan
year beginning after December 31, 1989, except as specified otherwise in this
plan or in said Act.
The plan provisions required to comply with the Unemployment Compensation
Amendments of 1992 shall be effective on JanuaryE1, 1993. The plan
provisions required to comply with the Omnibus Budget Reconciliation Act of
1993 shall generally be effective on the first day of the plan year beginning
after DecemberE31, 1993, except as specified otherwise in this plan or in said
Act.
Notwithstanding anything herein to the contrary, the provisions noted below
shall become effective on the alternate effective date indicated. If the
alternate effective date is subsequent to the effective date of this amendment,
the prior provisions of the plan shall continue in effect until such
alternate effective date.
Reference Alternate Effective Date
Section 3.2(c)(1) Allocation of Forfeitures January 1, 1992
Section 3.2(c)(2) Top-Heavy Plan Years January 1, 1994
Section 4.2(b) Cashout Distributions January 1, 1992
Section 4.3(b)(2) Eligible Rollover Distribution January 1, 1993
(d) Plan Entry Date means the participation date(s) specified in Article II.
(e) Plan Year means the 12-consecutive month period beginning on January 1
and ending on December 31.
(f) Limitation Year (for purposes of limitations on benefits and
contributions under Code Section 415) means the plan year.
Section 1.4 Employee
(a) (1) Employee means any person employed by the employer, including an
owner-employee or other self-employed individual (as defined in paragraph
(3)). The term employee shall include any employee of the employer
maintaining the plan or of any other employer required to be aggregated with
such employer under Code Sections 414(b), (c), (m) or (o). The term employee
shall also include any leased employee deemed to be an employee of any employer
as provided in Code Sections 414(n) or (o) and as defined in paragraph (2).
(2) Leased Employee means an individual (who otherwise is not an employee of
the employer) who, pursuant to a leasing agreement between the employer and
any other person, has performed services for the employer (or for the
employer and any persons related to the employer within the meaning of Code
Section 144(a)(3)) on a substantially full time basis for at least one year
and who performs services historically performed by employees in the employer's
business field. If a leased employee is treated as an employee by reason of this
Section 1.4(a)(2), compensation from the leasing organization which is
attributable to services performed for the employer shall be considered as
compensation under the plan. Contributions or benefits provided a leased
employee by the leasing organization which are attributable to services
performed for the employer shall be treated as provided by the employer.
Safe harbor plan exception - The plan shall not treat a leased employee as
an employee if the leasing organization covers the employee in a safe harbor
plan and, prior to application of this safe harbor plan exception, 20% or
less of the employer's employees (other than highly compensated employees)
are leased employees. A safe harbor plan is a money purchase pension plan
providing immediate participation, full and immediate vesting, and a
nonintegrated contribution formula equal to at least 10% of the employee's
compensation without regard to employment by the leasing organization on a
specified date. The safe harbor plan must determine the 10% contribution on
the basis of compensation as defined in Code Section 415(c)(3) plus elective
contributions.
(3) Owner-Employee /Self Employed Individual - Owner-employee means a self-
employed individual who is a sole proprietor, (if the employer is a sole
proprietorship) or who is a partner (if the employer is a partnership) owning
more than 10 percent of either the capital or profits interest of the
partnership. Self-employed individual means an individual who has earned
income for the taxable year from the trade or business for which the plan is
established, or who would have had earned income but for the fact that the
trade or business had no net profits for the taxable year.
(b) Highly Compensated Employee means an employee who, during the plan year
or during the preceding 12-month period:
(1) is a more than 5% owner of the employer (applying the constructive
ownership rules of Code Section 318, and applying the principles of Code
Section 318, for an unincorporated entity);
(2) has compensation in excess of $75,000 (as adjusted by the Commissioner
of Internal Revenue for the relevant year);
(3) has compensation in excess of $50,000 (as adjusted by the Commissioner
of Internal Revenue for the relevant year) and is part of the top-paid 20%
group of employees (based on compensation for the relevant year); or
(4) has compensation in excess of 50% of the dollar amount prescribed in
Code Section 415(b)(1)(A) (relating to defined benefit plans) and is an
officer of the employer.
If the employee satisfies the definition in clause (2), (3) or (4) in the
plan year but did not satisfy clause (2), (3) or (4) during the preceding 12-
month period and does not satisfy clause (1) in either period, then the
employee is a highly compensated employee only if he is one of the 100 most
highly compensated employees for the plan year. The number of officers taken
into account under clause (4) shall not exceed the greater of 3 or 10% of the
total number (after application of the Code Section 414(q) exclusions) of
requirement in clause (4) for the relevant year, the highest paid officer
will be treated as satisfying clause (4) for that year.
The term highly compensated employee also includes any former employee who
separated from service (or has a deemed separation from service, as
determined under Treasury regulations) prior to the plan year, performs no
service for the employer during the plan year, and was a highly compensated
employee either for the separation year or any plan year ending on or after
his 55th birthday. If the former employee's separation from service occurred
before January 1, 1987, he is a highly compensated employee only if he
satisfied clause (1) of this Section 1.4(b) or received compensation in excess
of $50,000 during the year of his separation from service (or the prior year),
or during any year ending after his 54th birthday.
For purposes of determining who is a highly compensated employee under this
Section 1.4(b), compensation means compensation as defined in Section 1.2,
except that any exclusions from compensation specified in Section 1.2 (b)
shall not apply. The plan administrator shall make the determination of
who is a highly compensated employee, including the determinations of the
number and identity of the top paid 20% group, the top 100 paid employees,
the number of officers includible in clause (4) and the relevant compensation,
consistent with Code Section 414(q) and regulations issued under that Code
Section. The employer may make a calendar year election to determine the
highly compensated employees for the plan year, as prescribed by Treasury
regulations. A calendar year election must apply to all plans and
arrangements of the employer.
For purposes of applying any nondiscrimination test required under the plan
or Code, in a manner consistent with applicable Treasury regulations, the
plan administrator will treat a highly compensated employee and all family
members (a spouse, a lineal ascendant or descendant, or a spouse of a lineal
ascendant or descendant) as a single highly compensated employee, but only if
the highly compensated employee is a more than 5% owner or is one of the 10
highly compensated employees with the greatest compensation for the plan year.
This aggregation rule applies to a family member even if that family member is
a highly compensated employee without family aggregation.
Section 1.5 Employer
Employer means Weis Markets, Inc., or any successor entity by merger,
purchase, consolidation, or otherwise; or an organization affiliated with
the employer which may assume the obligations of this plan with respect to
its employees by becoming a party to this plan. Another employer whether or
not it is affiliated with the sponsor employer may adopt this plan to cover
its employees by filing with the sponsor employer a written resolution
adopting the plan, upon which the sponsor employer shall indicate its acceptance
of such employer as an employer under the Plan. Each such employer shall be
deemed to be the employer only as to persons who are on its payroll.
Section 1.6 Fiduciaries
(a) Named Fiduciary means the person or persons having fiduciary
responsibility for the management and control of plan assets.
(b) Plan Administrator means the person or persons appointed by the named
fiduciary to administer the plan.
(c) Trustee means the trustee named in the trust agreement executed pursuant
to this plan, or any duly appointed successor trustee.
(d) Investment Manager means a person or corporation other than the trustee
appointed for the investment of plan assets.
Section 1.7 Participant/Beneficiary
(a) Participant means an eligible employee of the employer who becomes a
member of the plan pursuant to the provisions of Article II, or a former
employee who has an accrued benefit under the plan.
(b) Beneficiary means a person designated by a participant who is or may
become entitled to a benefit under the plan. A beneficiary who becomes
entitled to a benefit under the plan remains a beneficiary under the plan
until the trustee has fully distributed his benefit to him. A beneficiary's
right to (and the plan administrator's, or a trustee's duty to provide to the
beneficiary) information or data concerning the plan shall not arise until he
first becomes entitled to receive a benefit under the plan.
Section 1.8 Participant Accounts
(a) Employer Contribution Account means the balance of the separate account
derived from profit sharing employer contributions, including forfeitures (if
any). (See Section 3.2.)
(b) Employee Nondeductible Contribution Account means the balance of the
separate account derived from the participantOs non-deductible employee
contributions, if any, which were made before the effective date of this
amendment and restatement. (See Section 3.3.)
(c) Rollover/Transfer Account means the balance of the separate account
derived from rollover contributions and/or transfer contributions. (See
Section 3.4.)
(d) Accrued Benefit means the total of the participant's account balance(s)
as of the accounting date falling on or before the day on which the accrued
benefit is being determined.
Section 1.9 Plan
Plan means Weis Markets, Inc. Stock Bonus Plan as set forth herein and as it
may be amended from time to time.
Section 1.10 Service
(a) Service means any period of time the employee is in the employ of the
employer, including any period the employee is on an unpaid leave of absence
authorized by the employer under a uniform, nondiscriminatory policy
applicable to all employees. Separation from service means that the
employee no longer has an employment relationship with the employer.
(b) (1) Hour of Service means:
(A) Each hour for which an employee is paid, or entitled to payment, for the
performance of duties for the employer. These hours shall be credited to the
employee for the computation period in which the duties are performed; and
(B) Each hour for which an employee is paid, or entitled to payment, by the
employer on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence. No more than 501 hours of service
shall be credited under this paragraph for any single continuous period
(whether or not such period occurs in a single computation period). An hour of
service shall not be credited to an employee under this paragraph if the
employee is paid, or entitled to payment, under a plan maintained solely for the
purpose of complying with applicable worker's compensation or unemployment
compensation or disability insurance laws. Hours under this paragraph shall
be calculated and credited pursuant to Section 2530.200b-2 of the Department
of Labor Regulations which are incorporated herein by reference; and
(C) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the employer. The same hours of service shall
not be credited both under paragraph (A) or paragraph (B), as the case may
be, and under this paragraph (C). These hours shall 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.
Hours of service shall be determined on the basis of actual hours for which
an employee is paid or entitled to payment. The above provisions shall be
construed so as to resolve any ambiguities in favor of crediting employees
with hours of service.
(2) Solely for purposes of determining whether a break in service for
participation and vesting purposes has occurred in a computation period, an
individual who is absent from work for maternity or paternity reasons shall
receive credit for the hours of service which would otherwise have been
credited to such individual but for such absence, or in any case in which
such hours cannot be determined, 8 hours of service per day of such absence.
For purposes of this paragraph, an absence from work for maternity or paternity
reasons means an absence (A) by reason of the pregnancy of the individual, (B)
by reason of a birth of a child of the individual, (C) by reason of the
placement of a child with the individual in connection with the adoption of
such child by such individual, or (D) for purposes of caring for such child
for a period beginning immediately following such birth or placement. The
hours of service credited under this paragraph shall be credited: (A) in the
computation period in which the absence begins if the crediting is necessary
to prevent a break in service in that period, or (B) in all other cases, in
the following computation period.
(3) Hours of service shall be credited for employment with other members of
an affiliated service group (under Code Section 414(m)), a controlled group
of corporations (under Code Section 414(b)), or a group of trades or
businesses under common control (under Code Section 414(c)), of which the
adopting employer is a member. Hours of service shall also be credited for
any leased employee who is considered an employee for purposes of this plan
under Code Section 414(n) or Code Section 414(o).
(c) (1) Year of Service means a 12-consecutive month computation period
during which the employee completes the required number of hours of service
with the employer as specified in Sections 2.1 or 4.1.
(2) Predecessor Service - If the employer maintains the plan of a predecessor
employer, service with such predecessor employer shall be treated as service
for the employer. If the employer does not maintain the plan of a
predecessor employer, then service as an employee of a predecessor employer
shall not be considered as service under the plan, except as noted below:
Service as an employee of a predecessor employer shall be considered as
service for the employer hereunder for the purposes of applying the
limitations on benefits and allocations under Code Section 415.
(d) Break in Service (or One Year Break in Service) means a 12-consecutive
month computation period during which a participant or former participant
does not complete the specified number of hours of service with the employer
as set forth in Sections 2.1(b) and 4.1(b).
Section 1.11 Trust
(a) Trust means the qualified trust created under the employer's plan.
(b) Trust Fund means all property held or acquired by the plan.
Section 1.12 Stock Bonus Plan Specific Definitions
(a) Stock Bonus Plan means a stock bonus plan as defined in Regulation
SectionE1.401-1(b)(1)(iii) that meets the requirements of ERISA Section
407(d)(3).
(b) 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 tradable 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 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 Code 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.
ts the requirements of the preceding sentence.
(c) Investment Accounts - For investment purposes, a participant's accounts
may be placed in three accounts as described herein.
(1) Company Stock Account means the investment 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.
(2) Other Investment Account means the investment account of a participant
which is credited with his share of the net gain (or loss) of the plan,
forfeitures, employer contributions in other than company stock and which
is debited with payments made to pay for company stock.
ARTICLE II PARTICIPATION
Section 2.1 Eligibility Service
(a) Eligibility Year of Service means an eligibility computation period
during which the employee completes at least 1,000 hours of service with
the employer.
(b) One Year Break in Service means for the purposes of this Article II an
eligibility computation period during which the participant or former
participant does not complete more than 500 hours of service with the
employer.
(c) Eligibility Computation Period - The initial eligibility computation
period shall be the 12-consecutive month period beginning with the day on
which the employee first performs an hour of service with the employer
(employment commencement date).
Succeeding eligibility computation periods shall coincide with the plan year,
beginning with the first plan year which commences prior to the first
anniversary of the employee's employment commencement date regardless of
whether the employee is credited with the required number of hours of
service during the initial eligibility computation period. An employee who
is credited with the required number of hours of service in both the initial
eligibility computation period and the first plan year which commences prior
to the first anniversary of the employee's employment commencement date
shall be credited with two years of service for purposes of eligibility to
participate.
Section 2.2 Plan Participation
(a) Eligibility
(1) Age/service requirements - An employee who is a member of the eligible
class of employees shall be eligible for plan participation after he has
satisfied the following participation requirement:
Completion of 2 years of service.
(2) Eligible class of employees - All employees of the employer shall be
eligible to be covered under the plan except for employees in the following
categories:
Employees compensated on an hourly basis who are not employed in a
clerical capacity.
Commission salesmen.
Employees who are employed as pharmacists or grocery managers.
Employees included in a unit of employees covered by a collective
bargaining agreement between the employer and employee representatives
if retirement benefits were the subject of good faith bargaining and if
less than two percent of the employees of the employer who are covered
pursuant to that agreement are professionals as defined in Regulation
SectionE1.410(b)-9(g). For this purpose, the term "employee
representatives" does not include any organization more than half of
whose members are employees who are owners, officers or executives of the
employer.
Employees of an affiliated employer which has not adopted this plan.
(3) Effective January 1, 1994, no highly compensated employee shall be
permitted to participate in the plan.
(b) Entry Date - An eligible employee shall participate in the plan on the
earlier of the January 1 (the first day of the plan year) or July 1 (the
first day of the seventh month of the plan year) entry date coinciding with
or immediately following the date on which he has met the age and service
requirements. If an employee who is not a member of the eligible class of
employees becomes a member of the eligible class, such employee shall
participate immediately, if he has satisfied the age and service requirements
and would have otherwise previously become a participant.
Section 2.3 Termination of Participation
A participant shall continue to be an active participant of the plan so long
as he is a member of the eligible class of employees and he does not incur a
one-year break in service due to termination of employment. He shall become
an inactive participant when he incurs a one-year break in service due to
termination of employment, or at the end of the plan year during which he
ceases to be a member of the eligible class of employees. He shall cease
participation completely upon the later of his receipt of a total distribution
of his nonforfeitable account balance under the plan or the forfeiture of the
nonvested portion of the account balance.
Section 2.4 Re-Participation (Break In Service Rules)
(a) Vested Participant - A former participant who had a nonforfeitable right
to all or a portion of his account balance derived from employer
contributions at the time of his termination from service shall become a
participant immediately upon returning to the employ of the employer, if he
is a member of the eligible class of employees.
(b) Nonvested Participant - In the case of a former participant who did not
have any nonforfeitable right to his account balance derived from employer
contributions at the time of his termination from service, years of service
before a period of consecutive one-year breaks in service shall not be taken
into account in computing service if the number of consecutive one-year
breaks in service in such period equals or exceeds the greater of 5 or the
aggregate number of years of service before such breaks in service. Such
aggregate number of years of service shall not include any years of service
disregarded under the preceding sentence by reason of prior breaks in service.
If such former participant's years of service before termination from service
are disregarded pursuant to the preceding paragraph, he shall be considered
a new employee for eligibility purposes. If such former participantOs years
of service before termination from service may not be disregarded pursuant to
the preceding paragraph, he shall participate immediately upon returning to
the employ of the employer, if he is a member of the eligible class of
employees.
(c) Return to Eligible Class - If a participant becomes an inactive
participant, because he is no longer a member of the eligible class of
employees, but does not incur a break in service; such inactive participant
shall become an active participant immediately upon returning to the eligible
class of employees. If such participant incurs a break in service,
eligibility shall be determined under the re-participation rules in
paragraphs (a) and (b) above.
ARTICLE III ALLOCATIONS TO PARTICIPANT ACCOUNTS
Section 3.1 General Provisions
(a) Maintenance of Participant Accounts - The plan administrator shall
maintain one or more separate accounts covering each participant under the
plan. Such account(s) shall be increased by contributions, reallocation of
forfeitures (if any), investment income, and market value appreciation of the
fund. It shall be decreased by market value depreciation of the fund,
forfeiture of nonvested amounts, benefit payments, withdrawals and expenses.
(b) Amount and Payment of Employer Contribution
(1) Amount of Contribution - For each plan year, the employer contribution
to the plan shall be the amount which is determined under the provisions of
this Article; provided, however, that the employer may not make a
contribution to the plan for any plan year to the extent the contribution
would exceed fifteen percent of the aggregate participant compensation (as
defined in Code Section 415(c)(3)) for the plan year. Further, the employer
contribution shall not exceed the maximum amount deductible under Code
Section 404.
The employer contributes to this plan on the conditions that its contribution
is not due to a mistake of fact and that the Internal Revenue Service will not
disallow the deduction for its contribution. The trustee, upon written
request from the employer, shall return to the employer the amount of the
employer's contribution made due to a mistake of fact or the amount of the
employer's contribution disallowed as a deduction under Code Section 404.
The trustee shall not return any portion of the employer's contribution under
the provisions of this paragraph more than one year after the earlier of:
(A) The date on which the employer made the contribution due to a
mistake of fact; or (B) The time of disallowance of the contribution as a
deduction, and then, only to the extent of the disallowance. The trustee
will not increase the amount of the employer contribution returnable under
this Section for any earnings attributable to the contribution, but the
trustee will decrease the employer contribution returnable for any losses
attributable to it. The trustee may require the employer to furnish whatever
evidence it deems necessary to confirm that the amount the employer has
requested be returned is properly returnable under ERISA.
(2) Payment of Contribution - The employer shall make its contribution to the
plan in cash or company stock within the time prescribed by the Code or
applicable Treasury regulations. Subject to the consent of the trustee, the
employer may make its contribution in other property, provided the contribution
of such property is not a prohibited transaction under the Code or ERISA.
Company stock and other property will be valued at their then fair market
value.
(c) Limitations and Conditions - Notwithstanding the allocation procedures
set forth in this Article, the allocations to participantsO accounts shall
be limited or modified to the extent required to comply with the provisions
of Article V (limitations on allocations under Code Section 415, related
employer provisions under Code Section 414 and top heavy provisions under
Code Section 416).
In any limitation year in which the allocation to one or more participants'
accounts would be in excess of the limitations on allocations under Section
5.1, the annual additions under this plan will be reduced to the extent
necessary to comply with such limitations first. If any further reduction
is required, the benefits under any other plan which the employer also
sponsors will then be reduced with respect to such participants.
(d) Recapture of Tax Credit - If any portion of the tax credit taken by the
employer for a fiscal year prior to 1984 is subject to reduction or
recapture, then such portion will remain in the trust fund and will be
treated as a deductible contribution to a plan qualified under Code Section
401.
Section 3.2 Allocation of Contributions and Forfeitures
(a) Amount of Contribution - The employer shall determine, in its sole
discretion, the amount of employer contribution to be made to the plan each
year; provided, however, that the employer shall contribute such amount as
may be required for restoration of a forfeited amount under Section 4.2.
(b) Conditions for Allocations - An active participant shall be eligible for
an allocation of the employer contribution and forfeitures as of an
allocation date, provided that he satisfies the following conditions:
(1) He completed at least 1,000 hours of service during the current plan
year, except that the hours of service requirement shall not apply with
respect to any minimum top heavy allocation as provided in Section 5.5.
AND
(2) He is employed by the employer in an eligible classification on the last
day of the plan year.
(3) He is not a highly compensated employee (effective January 1, 1994).
Notwithstanding the above conditions for allocation of contributions, if the
plan would otherwise fail to satisfy the participation test or coverage test
of Code Section 410 or the nondiscrimination requirements of Code Section
401(a)(4), the plan administrator shall amend the plan in a nondiscriminatory
manner to provide for the participation of additional employees and/or to
cause additional active participants to be eligible for an allocation.
(c) (1) Allocation Formula -
The employer contribution and forfeitures for the plan year shall be
allocated to the account of each eligible participant in the ratio that
such participantOs compensation bears to the compensation of all participants.
(2) Top-Heavy Plan Years
In any year in which this plan is top-heavy (as defined in Section 5.5(e)(2))
when aggregated with the Weis Markets, Inc. Profit Sharing Plan and the Weis
Market, Inc. Retirement Savings Plan which the employer also sponsors, the
top-heavy minimum benefit requirement shall be met under this plan.
If a participant only participates in this plan, his account will receive an
allocation that is not less than an amount equal to 3.0% of such
participant's compensation or the largest percentage of employer contribution
and forfeitures allocated under the plans on behalf of any key employee for
that year, whichever is less.
(3) Compensation - For purposes of the allocation of the employer
contribution, compensation means compensation as defined in Section 1.2 for
the entire year, but excluding compensation in excess of $100,000.
Section 3.3 Employee Nondeductible Contribution Account
A participant may not make any nondeductible contributions to the plan after
the effective date of this amendment and restatement; however, if any
participant has previously made nondeductible contributions, an Employee
Nondeductible Contribution Account shall be maintained for the participant
with respect to such prior contributions and the Account shall be
nonforfeitable. Employee contributions for plan years beginning after
December 31, 1986, together with any matching contributions as defined in
Code Section 401(m), will be limited so as to meet the nondiscrimination test
of section 401(m).
Section 3.4 Rollover/Transfer Account
Rollover and direct transfer contributions by participants are not
permitted under this plan.
Section 3.5 Allocation of Investment Results
(a) Company Stock Account - The company stock account of each participant
shall be credited as of each allocation 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.
Stock dividends on company stock held in his company stock account shall be
credited to his company stock account when paid.
Promptly upon receipt of any cash contribution pursuant to Section 3.2,
the trustee shall apply such contribution to the purchase, in one or more
transactions, of the maximum number of whole shares obtainable at then
prevailing prices, including any brokerage commissions and other reasonable
expenses incurred in connection with such purchases. Such purchases may be
made on any securities exchange where the company stock is traded, in the
over-the-counter market, or in public or private negotiated transactions, and
may be on such terms as to price, delivery and otherwise as the trustee may
determine to be in the best interest of the participants. The trustee shall
complete such purchases as soon as practical after receipt of each such
contribution, having due regard for any applicable requirements of law
affecting the timing or manner of such purchases.
Any cash balance of any contribution received pursuant to Section 3.2,
which shall remain after the maximum number of whole shares shall have been
purchased pursuant to this Section 3.5(a), shall be held by the trustee to
be invested with the next such contribution or dividends received by the
trust.
(b) Other Investments Account - As of each allocation date, prior to the
allocation of employer contributions 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 other investments account
bears to the total of all participants' other investment accounts as of such
date. For this purpose, each account balance shall be equal to the average
balance for the period commencing on the day following the prior accounting
date and ending on the current accounting date. Earnings or losses include
the increase (or decrease) in the fair market value of assets of the trust
fund (other than company stock in the participant's company stock accounts)
since the preceding allocation date.
(c) Dividends - Any cash dividends declared by the employer and applicable
to shares held in the company stock account of a participant shall be
converted to shares by the trustee in one or more transactions as soon as
is practical, having due regard for any applicable requirements of law
affecting the time or manner of such purchases. Dividends shall be
converted to the maximum number of whole shares which can be purchased at
prevailing prices, including any brokerage charges and other reasonable
expenses incurred in connection with such purchases, and such purchases may
be made on any securities exchange where company stock is traded, or in
negotiated transactions, and may be on such terms as to price, delivery and
otherwise as the trustee may determine to be in the best interest of the
participants.
Notwithstanding the preceding paragraph, pursuant to the instructions of the
employer, the trustee shall become a participant in the employer's Dividend
Reinvestment and Stock Purchase Plan and all dividends will be reinvested
pursuant to the provisions of that plan, to the maximum extent permitted.
Any cash balance of any dividend received by the trustee which shall remain
after the maximum number of whole shares shall have been purchased pursuant
to the preceding paragraphs, shall be held by the trustee in the
participant's other investment account to be invested with the next
employer contribution or dividend received by the trustee.
ARTICLE IV PAYMENT OF PARTICIPANT ACCOUNTS
Section 4.1 Vesting Service Rules
(a) Vesting Year of Service means a vesting computation period during which
the employee completes at least 1,000 hours of service with the employer.
All of an employee's years of service with the employer shall be counted to
determine the nonforfeitable percentage in the employee's account balance
derived from employer contributions, except:
(1) Years of service disregarded under the break in service rules in
paragraph (d) below. (Post-ERISA break in service rules)
(2) Years of service before the effective date of ERISA if such service
would have been disregarded under the break in service rules of the prior
plan in effect from time to time before such date. For this purpose, break
in service rules are rules which result in the loss of prior vesting or
benefit accruals, or which deny an employee eligibility to participate, by
reason of separation or failure to complete a required period of service
within a specified period of time. (Pre-ERISA break in service rules)
(b) One Year Break in Service means for the purposes of this Article IV a
vesting computation period during which the participant or former participant
does not complete more than 500 hours of service with the employer.
(c) Vesting Computation Period means the 12-consecutive month period
coinciding with the plan year.
(d) Break in Service Rules
(1) Vested Participant - A former participant who had a nonforfeitable
right to all or a portion of his account balance derived from employer
contributions at the time of his termination from service shall retain
credit for all vesting years of service prior to a break in service.
(2) Nonvested Participant - In the case of a former participant who did not
have any nonforfeitable right to his account balance derived from employer
contributions at the time of his termination from service, years of service
before a period of consecutive one year breaks in service shall not be taken
into account in computing service if the number of consecutive one year
breaks in service in such period equals or exceeds the greater of 5 or the
aggregate number of years of service before such breaks in service. Such
aggregate number of years of service shall not include any years of service
disregarded under the preceding sentence by reason of prior breaks in service.
(3) Vesting for Pre-Break and Post-Break Accounts - In the case of a
participant who has 5 or more consecutive one-year breaks in service, all
years of service after such breaks in service shall be disregarded for the
purpose of vesting the employer-derived account balance that accrued before
such breaks in service. Whether or not such participantOs pre-break service
counts in vesting the post-break employer-derived account balance shall be
determined according to the rules set forth in sub-paragraphs (1) and (2)
above. Separate accounts shall be maintained for the participant's pre-break
and post-break employer-derived account balance. Both accounts shall share
in the investment earnings and losses of the fund.
Section 4.2 Vesting of Participant Accounts
(a) Determination of Vesting
(1) Normal Retirement - A participant's right to his account balance(s)
shall be 100% vested and nonforfeitable upon the attainment of 65, the
normal retirement age. If the employer enforces a mandatory retirement age,
the normal retirement age shall be the lesser of the mandatory age or the
age specified herein.
(2) Late Retirement - If a participant remains employed after his normal
retirement age, his account balance(s) shall remain 100% vested and
nonforfeitable. Such participant shall continue to receive allocations to
his account as he did before his normal retirement age.
(3) Early Retirement - Not applicable.
(4) Disability - If a participant separates from service due to disability,
such participantOs right to his account balance(s) as of his date of
disability shall be 100% vested and nonforfeitable. Disability means
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months. The permanence and degree of
such impairment shall be supported by medical evidence. Notwithstanding
such definition, a participant who is eligible for Social Security disability
benefits shall automatically satisfy the definition of disability. Disability
shall be determined by the plan administrator after consultation with a
physician chosen by the administrator. In the administration of this section,
all employees shall be treated in a uniform manner in similar circumstances.
(5) (A) Death - In the event of the death of a participant who has an accrued
benefit under the plan, (whether or not he is an active participant), 100% of
the participantOs account balance(s) as of the date of death shall be paid to
his surviving spouse; except that, if there is no surviving spouse, or if the
surviving spouse has already consented in a manner which is (or conforms to)
a qualified election under the joint and survivor annuity provisions of Code
Section 417(a) and regulations issued pursuant thereto and as set forth in
Section 5.3, then such balance shall be paid to the participant's designated
beneficiary.
(B) Beneficiary Designation - Subject to the spousal consent requirements of
Section 5.3, the participant shall have the right to designate his
beneficiaries, including a contingent death beneficiary, and shall have the
right at any time to change such beneficiaries. The designation shall be
made in writing on a form signed by the participant and supplied by and
filed with the plan administrator. If the participant fails to designate a
beneficiary, or if the designated person or persons predecease the participant,
"beneficiary" shall mean the spouse, children (per stirpes), parents, brothers
and sisters, or estate of the participant, in the order listed.
(6) Termination From Service
(A) On or before the anniversary date coinciding with or subsequent to the
termination of a participant's employment for any reason other than
retirement, disability or death, the administrator may direct the trustee
to segregate the amount of the vested portion of such participant's account
and invest such segregated account in federally insured interest bearing
savings account(s) or time deposit(s) (or a combination of both), or in
other fixed income investments. In the event the vested portion of a
participant's account is not segregated, the amount shall remain in a
separate account for the participant and share in allocations pursuant to
Section 3.5 until such time as a distribution is made to the participant.
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 any
other investment allocable to the participant 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.
(B) If a participant separates from the service of the employer other than
by retirement, disability or death, his vested interest in his account(s)
shall be equal to the account balance multiplied by the vesting percentage
determined below:
(i) Employer Contribution Account - The vesting percentage applicable to the
participant's employer contribution account shall be determined based on his
vesting years of service as follows -
100% immediate vesting on the date of participation in the plan.
(ii) Employee Nondeductible Contribution Account - The participant's
employee nondeductible contribution account shall always be 100% vested and
nonforfeitable.
(b) Cashout Distributions and Restoration
(1) Cashout Distribution - If an employee terminates service and the value of
his vested account balance(s) derived from employer and employee
contributions is not greater than $3,500, the employee shall receive a
distribution of the value of the entire vested portion of such account
balance(s) and the nonvested portion will be treated as a forfeiture.
For purposes of this section, if the value of an employee's vested account
balance is zero, he shall be deemed to have received a distribution of such
vested account balance. An employee's vested account balance shall not include
accumulated deductible employee contributions within the meaning of Code
Section 72(o)(5)(B) for plan years beginning prior to January 1, 1989.
If an employee terminates service and the value of his vested account
balance(s) exceeds $3,500, he may elect to receive the value of his vested
account balance after such termination as provided in Section 4.3; however,
the nonvested portion shall be treated as a forfeiture. If the employee
elects to have distributed less than the entire vested portion of the
account balance derived from employer contributions, the part of the
nonvested portion that will be treated as a forfeiture is the total
nonvested portion multiplied by a fraction, the numerator of which is the
amount of the distribution attributable to employer contributions and the
denominator of which is the total value of the vested employer derived account
balance.
(2) Restoration of Account - If an employee receives a cashout distribution
pursuant to this section and resumes employment covered under this plan
before he incurs 5 consecutive one-year breaks in service, his employer-
derived account balance shall be restored to the amount on the date of
distribution, if he repays to the plan the full amount of the distribution
attributable to employer contributions before the earlier of 5 years after
the first date on which he is subsequently re-employed by the employer, or the
date he incurs 5 consecutive one-year breaks in service following the date of
the distribution. If an employee is deemed to receive a distribution pursuant
to this Section 4.2(b), and he resumes employment covered unto this plan before
he incurs 5 consecutive one-year breaks in service, upon the reemployment of
such employee, his employer-derived account balance will be restored to the
amount on the date of such deemed distribution.
(c) (1) Forfeitures - If a participant terminates employment before his
account balance derived from employer contributions is fully vested, the
nonvested portion of his account shall be forfeited on the earlier of:
(A) The last day of the vesting computation period in which the participant
first incurs 5 consecutive one-year breaks in service, or
(B) The date the participant receives his entire vested accrued benefit.
If a participant returns to employment with the employer, and if the
forfeited amount is restored pursuant to subparagraph (b), then any amount
required to restore such forfeitures shall be deducted from forfeitures
occurring in the plan year of restoration. If forfeitures are insufficient
for the restoration, the employer may make a contribution to the plan for
such plan year to satisfy the restoration. However, by the end of the plan
year following the plan year of restoration, sufficient forfeitures or
shall be credited to the account to satisfy the restoration.
(2) Disposition of Forfeitures - Forfeitures of employer contribution
accounts shall be reallocated among the eligible active participants at
the end of the plan year in which such forfeitures occur in accordance
with the allocation procedures set forth in Section 3.2.
(d) Withdrawal of Employee Contributions - No forfeitures shall occur solely
as a result of an employee's withdrawal of employee contributions.
(e) Unclaimed Benefits
(1) Forfeiture - The plan does not require the trustee or the plan
administrator to search for, or to ascertain the whereabouts of, any
participant or beneficiary. At the time the participant's or beneficiary's
benefit becomes distributable under the plan, the plan administrator, by
certified or registered mail addressed to his last known address of record,
shall notify any participant or beneficiary that he is entitled to a
distribution under this plan. If the participant or beneficiary fails to
claim his distributive share or make his whereabouts known in writing to the
plan administrator within twelve months from the date of mailing of the
notice, the plan administrator shall treat the participant's or beneficiary's
unclaimed payable accrued benefit as forfeited and shall reallocate such
forfeiture in accordance with paragraph (c)(2). A forfeiture under this
paragraph shall occur at the end of the notice period or, if later, the
earliest date applicable Treasury regulations would permit the forfeiture.
These forfeiture provisions apply solely to the participant's or beneficiary's
accrued benefit derived from employer contributions.
(2) Restoration - If a participant or beneficiary who has incurred a
forfeiture of his accrued benefit under the provisions of this subsection
makes a claim, at any time, for his forfeited accrued benefit, the plan
administrator shall restore the participant's or beneficiary's forfeited
accrued benefit to the same dollar amount as the dollar amount of the
accrued benefit forfeited, unadjusted for any gains or losses occurring
after the date of the forfeiture. The plan administrator shall make the
restoration during the plan year in which the participant or beneficiary
makes the claim from forfeitures occurring in that plan year. If forfeitures
are insufficient for the restoration, the employer shall make a contribution
to the plan to satisfy the restoration. The plan administrator shall direct
the trustee to distribute the participant's or beneficiary's restored accrued
benefit to him not later than 60 days after the close of the plan year in which
the plan administrator restores the forfeited accrued benefit.
Section 4.3 Payment of Participant Accounts
(a) Time of Payment
(1) Commencement of Benefits - Unless the participant elects otherwise,
distribution of benefits shall begin no later than the 60th day after the
latest of the close of the plan year in which:
(A) The participant attains age 65 (or the planOs normal retirement age,
if earlier);
(B) Occurs the 10th anniversary of the year in which the participant
commenced participation in the plan; or
(C) the participant terminates service with the employer, (i.e. late
retirement).
Notwithstanding the foregoing, the failure of a participant (and spouse
where the spouse's consent is required) to consent to a distribution while
a benefit is immediately distributable, within the meaning of Section 5.3(c),
shall be deemed to be an election to defer commencement of payment of any
benefit sufficient to satisfy this section.
(2) Payment Upon Retirement, Disability, or Death - Subject to the provisions
set forth in subparagraph (1), in the Joint and Survivor Requirements of
Section 5.3 and in the Distribution Requirements of Section 5.4, if the
participant terminates employment due to retirement, disability or death,
his account(s) shall be paid as soon as administratively possible after the
occurrence of the event creating the right to a distribution.
(3) Payment Upon Other Termination of Employment - Subject to the provisions
set forth in subparagraph (1), in the Joint and Survivor Requirements of
Section 5.3 and in the Distribution Requirements of Section 5.4, if the
participant terminates employment other than by retirement, disability or
death, his account(s) shall be paid as soon as administratively possible
after the end of the plan year in which severance occurs. However, if the
vested account exceeds $3,500, no distribution shall be made until the
participant attains age 60.
(b) Distribution of Benefits
(1) The administrator, pursuant to the written 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 of
the following methods:
(A) One lump-sum payment;
(B) 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 (3) below.
(2) On or after January 1, 1993, any payment meeting the requirements of an
eligible rollover distribution may be paid directly in a direct rollover at
the election of the distributee, at the time and in the manner provided by
the plan administrator, to an eligible retirement plan specified by the
distributee.
(A) Eligible Rollover Distribution - 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); 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) and dividends paid on employer securities as described
in Code Section 404(k).
(B) Eligible Retirement Plan - An eligible retirement plan is an individual
retirement account described in Code Section 408(a), an individual retirement
annuity described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section 401(a), that
accepts the 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.
(C) Distributee - 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.
(D) Direct Rollover - A direct rollover is a payment by the plan to the
eligible retirement plan specified by the distributee.
(3) Unless the participant elects in writing a longer distribution period,
distributions to a participant or his beneficiary attributable to company
stock shall be in substantially equal monthly, quarterly, semiannual, or
annual installments over a period not longer than five years. In the case
of a participant with an account balance attributable to company stock in
excess of $500,000, the five year period shall be extended one additional
year (but not more than five additional years) for each $100,000 or fraction
thereof by which such balance exceeds $500,000. The dollar limits shall be
adjusted at the same time and in the same manner as provided in Code Section
415(d).
(4) If installment payments are to be made from the fund in cash, the plan
administrator shall direct the trustee to segregate all or any part of the
participant's accrued benefit in a separate account. The trustee will
invest such participant's segregated account in federally insured interest
bearing savings account(s) or time deposit(s) (or a combination of both),
or in other fixed income investments. A segregated account remains a part
of the trust, but it alone shares in any income it earns, and it alone bears
any expense or loss it incurs.
(5) Distribution must comply with the Distribution Requirements of Section
5.4 and the Joint and Survivor Requirements of Section 5.3. However, only
the provisions of Section 5.3(c) and (f) of the Joint and Survivor
Requirements are applicable to a distribution under this plan as in force
since its inception.
(6) Notwithstanding the above, if the vested employer contribution is no
more than $3,500, the benefit shall automatically be paid in a lump sum.
(c) General Payment Provisions
(1) Any part of a participant's benefit which is retained in the plan
after the allocation date on which his participation ends will continue to
be treated as a company stock account, other investment account, or directed
investment account subject to Section 4.2(a)(6)(A). No further employer
contributions or forfeitures will be credited. However, the company stock
account shall continue to be credited with any dividends declared applicable
to the company stock remaining in such account until the entire account has
been distributed to the participant.
(2) All distributions due to be made under this plan shall be made on the
basis of the amount to the credit of the participant as of the accounting
date coincident with or preceding the occurrence of the event calling for a
distribution.
If a distributable event occurs after an allocation date and before
allocations have been made to the account of the participant, the
distribution shall also include the amounts allocable to the account as of
such allocation date.
(3) If any person entitled to receive benefits hereunder is physically or
mentally incapable of receiving or acknowledging receipt thereof, and if a
legal representative has been appointed for him, the plan administrator may
direct the benefit payment to be made to such legal representative.
(4) 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 the
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.
(5) Each optional form of benefit provided under the plan shall be made
available to all participants on a nondiscriminatory basis. The plan may
not retroactively reduce or eliminate optional forms of benefits and any
other Code Section 411(d)(6) protected benefits, except as provided in
Regulation section 1.411(d)-4, Q&A-2(d). Any reduction or elimination of
optional forms of benefits shall apply only to benefits accrued after the
effective date of such change.
Section 4.4 Form of Distribution
(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 (other than company stock reinvested pursuant to
Section 3.5(c)) 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. If the
company stock consists of more than one class, the participant will receive
substantially the same proportion of each such class. 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 trustee shall hold such balance until company stock is
acquired and then make such distribution, subject to Sections 4.3(a)(1),
5.3 and 5.4.
For the purpose of determining the value of a fractional unit, the value
shall be based on the closing price per share as reported on the New York
Stock Exchange consolidated tape on the last trading of the month immediately
preceding the month in which such distribution is made.
(c) The trustee shall make distribution from the trust only on instructions
from the administrator.
(d) Put Option - Shares of company stock are currently publicly traded
securities. In the event the securities cease to be publicly traded or
become subject to certain restrictions so that the securities are not
freely tradable, then the employer will honor a put option for such
securities. In that event, employer's obligation to purchase distributed
company stock shall be as described in Section 5.7(e).
(e) Right of First Refusal - In the event the securities are not publicly
traded, any company stock distributed to a participant or his beneficiary
shall be subject to a right of first refusal for the purchase of such
securities in favor of the employer and the trust fund in accordance with
Section 5.7(d).
Section 4.5 In-Service Payments
(a) Withdrawals - A participant may withdraw amounts from his account(s)
before his separation from service only under the circumstances and only to
the extent provided below.
No payments other than cash dividends on shares of company stock paid
pursuant to Section 3.5(a) and distributions pursuant to an election under
Section 3.5(c) shall be made before separation from service.
(b) Participant Loans - No participant loans shall be permitted under the plan.
Section 4.6 Distributions under Domestic Relations Orders
Nothing contained in this plan prevents the trustee, in accordance with the
direction of the plan administrator, from complying with the provisions of a
qualified domestic relations order (as defined in Code Section 414(p)).
A distribution will not be made to an alternate payee until the participant
attains (or would have attained) his earliest retirement age. For this
purpose, earliest retirement age means the earlier of: (1) the date on
which the participant is entitled to a distribution under this plan; or
(2) the later of the date the participant attains age 50 or the earliest
date on which the participant could begin receiving benefits under this
plan if the participant separated from service.
Nothing in this Section gives a participant a right to receive distribution
at a time otherwise not permitted under the plan nor does it permit the
alternate payee to receive a form of payment not otherwise permitted under
the plan.
The plan administrator shall establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the plan administrator promptly will notify the
participant and any alternate payee named in the order, in writing, of the
receipt of the order and the plan's procedures for determining the qualified
status of the order. Within a reasonable period of time after receiving the
domestic relations order, the plan administrator shall determine the qualified
status of the order and shall notify the participant and each alternate payee,
in writing, of its determination. The plan administrator shall provide notice
under this paragraph by mailing to the individual's address specified in the
domestic relations order, or in a manner consistent with Department of Labor
regulations.
If any portion of the participant's nonforfeitable accrued benefit is payable
during the period the plan administrator is making its determination of the
qualified status of the domestic relations order, the plan administrator
shall make a separate accounting of the amounts payable. If the plan
administrator determines the order is a qualified domestic relations order
within 18 months of the date amounts first are payable following receipt of
the order, it shall direct the trustee to distribute the payable amounts in
accordance with the order. If the plan administrator does not make its
determination of the qualified status of the order within the 18-month
determination period, it shall direct the trustee to distribute the payable
amounts in the manner the plan would distribute if the order did not exist
and will apply the order prospectively if it later determines the order is a
qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the qualified
domestic relations order, the plan administrator may direct the trustee to
invest any partitioned amount in a segregated subaccount or separate account
and to invest the account in Federally insured, interest-bearing savings
account(s) or time deposit(s) (or a combination of both), or in other fixed
income investments. A segregated subaccount remains a part of the trust, but
it alone shares in any income it earns, and it alone bears any expense or loss
it incurs. The trustee will make any payments or distributions under this
section by separate benefit checks or other separate distribution to the
alternate payee(s).
ARTICLE V ADDITIONAL QUALIFICATION RULES B1
5.1 Limitations on Allocations under Code Section 415 B1
5.2 Control of Trades or Businesses by Owner-Employee B5
5.3 Joint and Survivor Annuity Requirements B6
5.4 Distribution Requirements B11
5.5 Top Heavy Provisions B16
5.6 Deductible Voluntary Employee Contributions B19
5.7 Stock Bonus Plan Distribution Options B20
ARTICLE VI ADMINISTRATION OF THE PLAN B23
6.1 Fiduciary Responsibility B23
6.2 Plan Administrator B24
6.3 Claims Procedure B25
6.4 Trust Fund B26
6.5 Investment Policy B26
6.6 Transactions Involving Company Stock B27
6.7 Valuation of the Trust Fund B28
6.8 Voting Company Stock B29
ARTICLE VII AMENDMENT AND TERMINATION OF PLAN B30
7.1 Right to Discontinue and Amend B30
7.2 Amendments B30
7.3 Protection of Benefits in Case of Plan Merger B31
7.4 Termination of Plan B31
ARTICLE VIII MISCELLANEOUS PROVISIONS B32
8.1 Exclusive Benefit - Non-Reversion B32
8.2 Inalienability of Benefits B32
8.3 Employer-Employee Relationship B32
8.4 Binding Agreement B32
8.5 Separability B33
8.6 Construction B33
8.7 Copies of Plan B33
8.8 Interpretation B33
ARTICLE V ADDITIONAL QUALIFICATION RULES
Section 5.1 Limitations on Allocations under Code Section 415
(a) Single Plan Limitations
(1) If the participant does not participate in, and has never participated in
another qualified plan maintained by the employer or a welfare benefit fund,
as defined in Code Section 419(e) maintained by the employer, or an individual
medical account, as defined in Code Section 415(l)(2), maintained by the
employer, which provides an annual addition as defined in Section 5.1(d)(1),
the amount of annual additions which may be credited to the participant's
account for any limitation year will not exceed the lesser of the maximum
permissible amount or any other limitation contained in this plan. If the
employer contribution that would otherwise be contributed or allocated to the
participant's account would cause the annual additions for the limitation year
to exceed the maximum permissible amount, the amount contributed or allocated
will be reduced so that the annual additions for the limitation year will equal
the maximum permissible amount.
(2) Prior to determining the participant's actual compensation for the
limitation year, the employer may determine the maximum permissible amount
for a participant on the basis of a reasonable estimation of the participant's
compensation for the limitation year, uniformly determined for all
participants similarly situated.
(3) As soon as is administratively feasible after the end of the limitation
year, the maximum permissible amount for the limitation year will be
determined on the basis of the participant's actual compensation for the
limitation year.
(4) If pursuant to Section 5.1(a)(3) or as a result of the allocation of
forfeitures, there is an excess amount the excess will be disposed of as
follows:
(A) Any nondeductible voluntary employee contributions, to the extent they
would reduce the excess amount, will be returned to the participant;
(B) If after the application of paragraph (A) an excess amount still exists,
the excess amount in the participant's account shall be reallocated to the
remaining participants who are eligible for an allocation of employer
contribution for the plan year in which the limitation year ends, but only
to the extent that such reallocation will not exceed the maximum permissible
amount of each such remaining participant.
(C) If after the application of paragraph (B) an excess amount still exists,
the excess amount will be held unallocated in a suspense account. The
suspense account will be applied to reduce future employer contributions
for all participants in the next limitation year, and each succeeding
limitation year if necessary.
(D) If a suspense account is in existence at any time during a limitation
year pursuant to this Section 5.1(a)(4), it will not participate in the
allocation of the trust's investment gains and losses. If a suspense
account is in existence at any time during a particular limitation year, all
amounts in the suspense account must be allocated and reallocated to
participants' accounts before any employer or any employee contributions
may be made to the plan for that limitation year. Excess amounts may not be
distributed to participants or former participants.
(b) Combined Limitations - Other Defined Contribution Plan
(1) This Subsection applies if, in addition to this plan, the participant is
covered under another qualified defined contribution plan maintained by the
employer, a welfare benefit fund, as defined in Code Section 419(e)
maintained by the employer, or an individual medical account, as defined in
Code Section 415(l)(2), maintained by the employer, which provides an annual
addition as defined in Section 5.1(d)(1), during any limitation year. The
annual additions which may be credited to a participant's account under this
plan for any such limitation year will not exceed the maximum permissible
amount reduced by the annual additions credited to a participant's account under
the other plans and welfare benefit funds for the same limitation year. If the
annual additions with respect to the participant under other defined
contribution plans and welfare benefit funds maintained by the employer are
less than the maximum permissible amount and the employer contribution that
would otherwise be contributed or allocated to the participant's account under
this plan would cause the annual additions for the limitation year to exceed
this limitation, the amount contributed or allocated will be reduced so that
the annual additions under all such plans and funds for the limitation year
will equal the maximum permissible amount. If the annual additions with
respect to the participant under such other defined contribution plans and
welfare benefit funds in the aggregate are equal to or greater than the
maximum permissible amount, no amount will be contributed or allocated to
the participant's account under this plan for the limitation year.
(2) Prior to determining the participant's actual compensation for the
limitation year, the employer may determine the maximum permissible amount
for a participant in the manner described in Section 5.1(a)(2).
(3) As soon as is administratively feasible after the end of the limitation
year, the maximum permissible amount for the limitation year will be
determined on the basis of the participant's actual compensation for the
limitation year.
(4) If, pursuant to Section 5.1(b)(3) or as a result of the allocation of
forfeitures, a participant's annual additions under this plan and such other
plans would result in an excess amount for a limitation year, the excess
amount will be deemed to consist of the annual additions last allocated,
except that annual additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(5) If an excess amount was allocated to a participant on an allocation date
of this plan which coincides with an allocation date of another plan, the
excess amount will be disposed of in the manner provided in Section 3.1(c).
(6) Any excess amount attributed to this plan will be disposed of in the
manner described in Section 5.1(a)(4).
(c) Combined Limitations - Other Defined Benefit Plan
If the employer maintains, or at any time maintained, a qualified defined
benefit plan covering any participant in this plan, the sum of the
participant's defined benefit plan fraction and defined contribution plan
fraction will not exceed 1.0 in any limitation year. Any excess amounts
shall be disposed of in the manner provided in Section 3.1(c). Any excess
amount attributed to this plan will be disposed of in the manner described
in Section 5.1(a)(4).
(d) Definitions (Code Section 415 Limitations)
(1) Annual Additions - The sum of the following amounts credited to a
participant's account for the limitation year:
(A) employer contributions,
(B) employee contributions,
(C) forfeitures, and
(D) amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Code Section 415(l)(2), which is part of a pension or
annuity plan maintained by the employer are treated as annual additions to a
defined contribution plan. Also 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 419(e),
maintained by the employer are treated as annual additions to a defined
contribution plan.
For this purpose, any excess amount applied under Section 5.1(a)(4) or (b)(6)
in the limitation year to increase the accounts of participants who did not
have an excess amount or to reduce employer contributions will be considered
annual additions for such limitation year.
Further, annual additions shall not include proceeds from the sale of company
stock as such proceeds constitute earnings on a plan asset allocable as such.
(2) Compensation - A participant's earned income and any earnings reportable
as W-2 wages for Federal income tax withholding purposes.
For limitation years beginning after December 31, 1991, for purposes of
applying the limitations of this Section 5.1, compensation for a limitation
year is the compensation actually paid or includible in gross income during
such limitation year.
Notwithstanding the preceding sentence, compensation for a participant in a
defined contribution plan who is permanently and totally disabled (as defined
in Code Section 22(e)(3)) is the compensation such participant would have
received for the limitation year if the participant had been paid at the
rate of compensation paid immediately before becoming permanently and totally
disabled; such imputed compensation for the disabled participant may be taken
into account only if the participant is not a highly compensated employee (as
defined in Code Section 414(q) and contributions made on behalf of such
participant are nonforfeitable when made.
(3) Defined Benefit Fraction - 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, 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.
(4) Defined Contribution Dollar Limitation - $30,000 or if greater, one-
fourth of the defined benefit dollar limitation set forth in Code Section
415(b)(1) as in effect on January 1 of each calendar year with respect to
the limitation year ending with or within such calendar year.
(5) Defined Contribution Fraction - 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(1)(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 limimtation 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.
(6) Employer - For purposes of this Section 5.1, employer shall mean the
employer that adopts this plan, and all members of a controlled group of
corporations (as defined in Code Section 414(b) as modified by Section
415(h)), all commonly controlled trades or businesses (as defined in Code
Section 414(c) as modified by Section 415(h)) or affiliated service groups
(as defined in Code Section 414(m)) of which the adopting employer is a part,
and any other entity required to be aggregated with the employer pursuant to
regulations under Code Section 414(o).
(7) Excess Amount - The excess of the participant's annual additions for the
limitation year over the maximum permissible amount.
(8) Highest Average Compensation - The average compensation for the three
consecutive years of service with the employer that produces the highest
average. A year of service with the employer is the 12-consecutive month
period coinciding with the plan year.
(9) Limitation Year - A calendar year, or the 12-consecutive month period
coinciding with the plan year, unless the employer adopts another 12-
consecutive month period by means of a written resolution. All qualified
plans maintained by the employer must use the same limitation year. If the
limitation year is amended to a different 12-consecutive month period, the
new limitation year must begin on a date within the limitation year in which
the amendment is made.
(10) Maximum Permissible Amount - The maximum annual addition that may be
contributed or allocated to a participant's account under the plan for any
limitation year shall not exceed the lesser of:
(A) the defined contribution dollar limitation as defined in Subsection
(d)(4), or
(B) 25 percent of the participant's compensation for the limitation year.
The compensation limitation referred to in (B) shall not apply to any
contribution for medical benefits (within the meaning of Code Section 401(h)
or Code Section 419A(f)(2)) which is otherwise treated as an annual addition
under Code Section 415(l)(1) or 419A(d)(2).
For limitation years beginning prior to July 13, 1989, the dollar limitation
referred to in (A) shall be increased by the lesser of the dollar amount
determined under (A) 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 were allocated to
highly compensated employees.
If a short limitation year is created because of an amendment changing the
limitation year to a different 12-consecutive month period, the maximum
permissible amount will not exceed the defined contribution dollar limitation
multiplied by the following fraction:
Number of months in the short limitation year
12
(11) Projected Annual Benefit - The annual retirement benefit (adjusted to an
actuarially equivalent straight life annuity if such benefit is expressed in
a form other than a straight life annuity or qualified joint and survivor
annuity) to which the participant would be entitled under the terms of the
plan assuming:
(A) the participant will continue employment until normal retirement age
under the plan (or current age, if later), and
(B) the participant's compensation for the current limitation year and all
other relevant factors used to determine benefits under the plan will
remain constant for all future limitation years.
Section 5.2 Control of Trades or Businesses by Owner-Employee
If this plan provides contributions or benefits for one or more owner-
employees who control both the business for which this plan is established
and one or more other trades or businesses, this plan and the plan
established for other trades or businesses must, when looked at as a single
plan, satisfy Code Sections 401(a) and (d) for the employees of this and all
other trades or businesses.
If the plan provides contributions or benefits for one or more owner-
employees who control one or more other trades or businesses, the employees
of the other trades or businesses must be included in a plan which satisfies
Code Sections 401(a) and (d) and which provides contributions and benefits
not less favorable than those provided for owner-employees under this plan.
If an individual is covered as an owner-employee under the plans of two or
more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable plan
of the trade or business which is not controlled.
For purposes of the preceding paragraphs, an owner-employee, or two or more
owner-employees, will be considered to control a trade or business if the
owner-employee, or two or more owner-employees together:
(1) own the entire interest in an unincorporated trade or business, or
(2) in the case of a partnership, own more than 50 percent of either the
capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an owner-employee, or two or more
owner-employees, shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such owner-
employee, or such two or more owner-employees, are considered to control
within the meaning of the preceding sentence.
Section 5.3 Joint and Survivor Annuity Requirements
The provisions of this Section 5.3 shall apply to any participant who is
credited with at least one hour of service with the employer on or after
August 23, 1984, and such other participants as provided in Paragraph (g).
However, with respect to any participant meeting the conditions of Section
5.3(f), only Section 5.3(c) and (f) shall apply.
(a) Qualified Joint and Survivor Annuity - Unless an optional form of
benefit is selected pursuant to a qualified election within the 90-day
period ending on the annuity starting date, a married participant's vested
account balance will be paid in the form of a qualified joint and survivor
annuity and an unmarried participant's vested account balance will be paid
in the form of a life annuity with a ten year guaranteed period. The
participant may elect to have such annuity distributed upon attainment of
the earliest retirement age under the plan.
(b) Qualified Preretirement Survivor Annuity - Unless an optional form of
benefit has been selected within the election period pursuant to a qualified
election, if a participant dies before the annuity starting date, the
participant's vested account balance shall be applied toward the purchase of
an annuity for the life of the surviving spouse. The surviving spouse may
elect to have such annuity distributed within a reasonable period after the
participant's death.
(c) Restrictions on Immediate Distributions - If the value of a participant's
vested account balance derived from employer and employee contributions exceeds
(or at the time of any prior distribution exceeded) $3,500, and the account
balance is immediately distributable, the participant and the participant's
spouse (or where either the participant or the spouse has died, the
survivor) must consent to any distribution of such account balance.
The consent of the participant and the participant's spouse shall be obtained
in writing within the 90-day period ending on the annuity starting date. The
annuity starting date is the first day of the first period for which an amount
is paid as an annuity or any other form. The plan administrator shall notify
the participant and the participant's spouse of the right to defer any
distribution until the participant's account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the plan in a manner that would satisfy the
notice requirements of Code Section 417(a)(3), and shall be provided no less
than 30 days and no more than 90 days prior to the annuity starting date.
Notwithstanding the foregoing, only the participant need consent to the
commencement of a distribution in the form of a qualified joint and survivor
annuity while the account balance is immediately distributable. Furthermore,
if payment in the form of a qualified joint and survivor annuity is not
required with respect to the participant pursuant to Paragraph (f) of this
Subsection 5.3, only the participant need consent to the distribution of an
account balance that is immediately distributable. Neither the consent of the
participant nor the participant's spouse shall be required to the extent that
a distribution is required to satisfy Code Section 401(a)(9) or Section 415. In
addition, upon termination of this plan if the plan does not offer an annuity
option (purchased from a commercial provider) and if the employer or any
entity within the same controlled group as the employer does not maintain
another defined contribution plan (other than an employee stock ownership
plan as defined in Code Section 4975(e)(7)), the participant's account
balance may, without the participant's consent, be distributed to the
participant. However, if any entity within the same controlled group as the
employer maintains another defined contribution plan (other than an employee
stock ownership plan as defined in Code Section 4975(e)(7)), the participant's
account balance will be transferred, without the participant's consent, to the
other plan if the participant does not consent to an immediate distribution.
An account balance is immediately distributable if any part of the account
balance could be distributed to the participant (or surviving spouse) before
the participant attains (or would have attained if not deceased) the later of
normal retirement age or age 62.
(d) Definitions (Code Section 417 Requirements)
(1) Election Period - The period which begins on the first day of the plan
year in which the participant attains age 35 and ends on the date of the
participant's death. If a participant separates from service prior to the
first day of the plan year in which age 35 is attained, with respect to the
account balance as of the date of separation, the election period shall begin
on the date of separation.
(2) Pre-age 35 Waiver - A participant who will not yet attain age 35 as of
the end of any current plan year may make a special qualified election to
waive the qualified preretirement survivor annuity for the period beginning
on the date of such election and ending on the first day of the plan year in
which the participant will attain age 35. Such election shall not be valid
unless the participant receives a written explanation of the qualified
preretirement survivor annuity in such terms as are comparable to the
explanation required under Paragraph (e)(1). Qualified preretirement
survivor annuity coverage will be automatically reinstated as of the first day
of the plan year in which the participant attains age 35. Any new waiver on or
after such date shall be subject to the full requirements of this Subsection
5.3.
(3) Earliest Retirement Age - The earliest date on which, under the plan,
the participant could elect to receive retirement benefits.
(4) Qualified Election - A waiver of a qualified joint and survivor annuity
or a qualified preretirement survivor annuity. Any waiver of a qualified
joint and survivor annuity or a qualified preretirement survivor annuity
shall not be effective unless: (a) the participant's spouse consents in
writing to the election; (b) the election designates a specific beneficiary,
including any class of beneficiaries or any contingent beneficiaries, which
may not be changed without spousal consent (or the spouse expressly permits
designations by the participant without any further spousal consent); (c) the
spouse's consent acknowledges the effect of the election; and (d) the spouse's
consent is witnessed by a plan representative or notary public. Additionally,
a participant's waiver of the qualified joint and survivor annuity shall not
be effective unless the election designates a form of benefit payment which
may not be changed without spousal consent (or the spouse expressly permits
designations by the participant without any further spousal consent). If it
is established to the satisfaction of a plan representative that there is no
spouse or that the spouse cannot be located, a waiver will be deemed a
qualified election.
Any consent by a spouse obtained under this provision (or establishment that
the consent of a spouse may not be obtained) shall be effective only with
respect to such spouse. A consent that permits designations by the
participant without any requirement of further consent by such spouse must
acknowledge that the spouse has the right to limit consent to a specific
beneficiary, and a specific form of benefit where applicable, and that the
spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a participant without the consent
of the spouse at any time before the commencement of benefits. The number
of revocations shall not be limited. No consent obtained under this provision
shall be valid unless the participant was received notice as provided in
Paragraph (e).
(5) Qualified Joint and Survivor Annuity - An immediate annuity for the
life of the participant with a survivor annuity for the life of the spouse
which is not less than 50 percent and not more than 100 percent of the
amount of the annuity which is payable during the joint lives of the
participant and the spouse and which is the amount of benefit which can be
purchased with the participant's vested account balance. The percentage of
the survivor annuity under the plan shall be 50% (unless a different percentage
is elected by the participant).
(6) Spouse (Surviving Spouse) - The spouse or surviving spouse of the
participant, provided that a former spouse will be treated as the spouse or
surviving spouse and a current spouse will not be treated as the spouse or
surviving spouse to the extent provided under a qualified domestic relations
order as described in Code Section 414(p).
(7) Annuity Starting Date - The first day of the first period for which an
amount is paid as an annuity or any other form.
(8) Vested Account Balance - The aggregate value of the participant's
vested account balances derived from employer and employee contributions
(including rollovers), whether vested before or upon death, including the
proceeds of insurance contracts, if any, on the participant's life. The
provisions of this Subsection 5.3 shall apply to a participant who is vested
in amounts attributable to employer contributions, employee contributions
(or both) at the time of death or distribution.
(e) Notice Requirements
(1) In the case of a qualified joint and survivor annuity, the plan
administrator shall no less than 30 days and no more than 90 days prior to
the annuity starting date provide each participant a written explanation of:
(i) the terms and conditions of a qualified joint and survivor annuity; (ii)
the participant's right to make and the effect of an election to waive the
qualified joint and survivor annuity form of benefit; (iii) the rights of a
participant's spouse; and (iv) the right to make, and the effect of, a
revocation of a previous election to waive the qualified joint and survivor
annuity.
(2) In the case of a qualified preretirement survivor annuity as described
in Paragraph (b) of this Subsection, the plan administrator shall provide
each participant within the applicable period for such participant a written
explanation of the qualified preretirement survivor annuity in such terms and
in such manner as would be comparable to the explanation provided for meeting
the requirements of Paragraph (e)(1) applicable to a qualified joint and
survivor annuity.
The applicable period for a participant is whichever of the following periods
ends last: (i) the period beginning with the first day of the plan year in
which the participant attains age 32 and ending with the close of the plan
year preceding the plan year in which the participant attains age 35; (ii) a
reasonable period ending after the individual becomes a participant; (iii) a
reasonable period ending after Paragraph (e)(3) ceases to apply to the
participant; (iv) a reasonable period ending after this Subsection 5.3 first
applies to the participant. Notwithstanding the foregoing, notice must be
provided within a reasonable period ending after separation from service in
the case of a participant who separates from service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the enumerated events described in (ii), (iii) and (iv) is the end of
the two-year period beginning one year prior to the date the applicable event
occurs, and ending one year after that date. In the case of a participant who
separates from service before the plan year in which he attains age 35,
notice shall be provided within the two-year period beginning one year prior
to separation and ending one year after separation. If such a participant
thereafter returns to employment with the employer, the applicable period for
such participant shall be redetermined.
(3) Notwithstanding the other requirements of this Paragraph (e), the
respective notices prescribed by this Paragraph need not be given to a
participant if (1) the plan "fully subsidizes" the costs of a qualified
joint and survivor annuity or qualified preretirement survivor annuity, and
(2) the plan does not allow the participant to waive the qualified joint and
survivor annuity or qualified preretirement survivor annuity and does not
allow a married participant to designate a nonspouse beneficiary. For purposes
of this Subparagraph (e)(3), a plan fully subsidizes the costs of a benefit if
no increase in cost, decrease in benefits to the participant may result from
the participant's failure to elect another benefit.
(f) Safe Harbor Rules
This Paragraph (f) shall apply to a participant in a profit-sharing plan or
stock bonus plan, and to any distribution, made on or after the first day of
the first plan year beginning after December 31, 1988, from or under a
separate account attributable solely to accumulated deductible employee
contributions, as defined in Code Section 72(o)(5)(B), and maintained on
behalf of a participant in a money purchase pension plan, (including a target
benefit plan) if the following conditions are satisfied: (1) the participant
does not or cannot elect payments in the form of a life annuity; and (2) on
the death of a participant, the participant's vested account balance will be
paid to the participant's surviving spouse, but if there is no surviving
spouse, or if the surviving spouse has consented in a manner conforming to a
qualified election, then to the participant's designated beneficiary. The
surviving spouse may elect to have distribution of the vested account
balance commence within the 90-day period following the date of the
participant's death. The account balance shall be adjusted for gains or losses
occurring after the participant's death in accordance with the provisions of
the plan governing the adjustment of account balances for other types of
distributions. This paragraph (f) shall not be operative with respect to a
participant in a profit-sharing plan or stock bonus plan if the plan is a
direct or indirect transferee of a definded benefit plan, money purchase plan,
target benefit plan, stock bonus plan, or profit-sharing plan which is subject
to the survivor annuity requirements of Code Section 401(a)(11) and section 417.
If this Paragraph (f) is operative, then the provisions of this Subsection 5.3,
other than Paragraph (g) shall be inoperative.
(1) The participant may waive the spousal death benefit described in this
Paragraph (f) at any time provided that no such waiver shall be effective
unless it satisfies the conditions of Paragraph (d)(4) (other than the
notification requirement referred to therein) that would apply to the
participant's waiver of the qualified preretirement survivor annuity.
(2) For purposes of this Paragraph (f), vested account balance shall mean,
in the case of a money purchase pension plan or a target benefit plan, the
participant's separate account balance attributable solely to accumulated
deductible employee contributions within the meaning of Code Section 72(o)
(5)(B). In the case of a profit-sharing plan or stock bonus plan, vested
account balance shall have the same meaning as provided in Paragraph (d)(8).
(g) Transitional Rules
(1) Any living participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by the previous
Paragraphs of this Subsection 5.3 must be given the opportunity to elect
to have the prior Paragraphs of this Subsection apply if such participant
is credited with at least one hour of service under this plan or a
predecessor plan in a plan year beginning on or after January 1, 1976,
and such participant had at least 10 years of vesting service when he or
she separated from service.
(2) Any living participant not receiving benefits on August 23, 1984, who
was credited with at least one hour of service under this plan or a
predecessor plan on or after September 2, 1974, and who is not otherwise
credited with any service in a plan year beginning on or after January 1,
1976, must be given the opportunity to have his or her benefits paid in
accordance with Subparagraph (4).
(3) The respective opportunities to elect (as described in Subparagraphs (1)
and (2)) must be afforded to the appropriate participants during the period
commencing on August 23, 1984, and ending on the date benefits would
otherwise commence to said participants.
(4) Any participant who has elected pursuant to Subparagraph (2) and any
participant who does not elect under Subparagraph (1) or who meets the
requirements of Subparagraph (1) except that such participant does not
have at least 10 years of vesting service when he or she separates from
service, shall have his or her benefits distributed in accordance with all
of the following requirements if benefits would have been payable in the
form of a life annuity:
(A) Automatic joint and survivor annuity. If benefits in the form of a
life annuity become payable to a married participant who:
(i) begins to receive payments under the plan on or after normal retirement
age; or
(ii) dies on or after normal retirement age while still working for the
employer; or
(iii) begins to receive payments on or after the qualified early retirement
age; or
(iv) separates from service on or after attaining normal retirement age (or
the qualified early retirement age) and after satisfying the eligibility
requirements for the payment of benefits under the plan and thereafter
dies before beginning to receive such benefits;
then such benefits will be received under this plan in the form of a
qualified joint and survivor annuity, unless the participant has elected
otherwise during the election period. The election period must begin at
least 6 months before the participant attains qualified early retirement
age and end not more than 90 days before the commencement of benefits. Any
election hereunder will be in writing and may be changed by the participant
at any time.
(B) Election of early survivor annuity. A participant who is employed after
attaining the qualified early retirement age will be given the opportunity to
elect, during the election period, to have a survivor annuity payable on
death. If the participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have been made to the
spouse under the qualified joint and survivor annuity if the participant had
retired on the day before his or her death. Any election under this provision
will be in writing and may be changed by the participant at any time. The
election period begins on the later of (1) the 90th day before the
participant attains the qualified early retirement age, or (2) the date on
which participation begins, and ends on the date the participant terminates
employment.
(C) For purposes of this Subparagraph (4) qualified early retirement age is
the latest of:
(i) the earliest date, under the plan, on which the participant may elect to
receive retirement benefits,
(ii) the first day of the 120th month beginning before the participant
reaches normal retirement age, or
(iii) the date the participant begins participation.
Further, for purposes of this Subparagraph (4), a qualified joint and
survivor annuity is an annuity for the life of the participant with an
survivor annuity for the life of the spouse as described in Paragraph (d)(4).
Section 5.4 Distribution Requirements
Subject to Subsection 5.3 Joint and Survivor Annuity Requirements, the
requirements of this Subsection 5.4 shall apply to any distribution of a
participant's interest and will take precedence over any inconsistent
provisions of this plan. Unless otherwise specified, the provisions of
this Subsection apply to calendar years beginning after December 31, 1984.
All distributions required under this Subsection shall be determined and
made in accordance with the proposed regulations under Code Section 401(a)
(9), including the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the Proposed Regulations.
(a) Required Beginning Date - The entire interest of a participant must be
distributed or begin to be distributed no later than the participant's
required beginning date.
(b) Limits on Distribution Periods - As of the first distribution calendar
year, distributions, if not made in a single sum, may only be made over one
of the following periods (or a combination thereof):
(1) the life of the participant,
(2) the life of the participant and a designated beneficiary,
(3) a period certain not extending beyond the life expectancy of the
participant, or
(4) a period certain not extending beyond the joint and last survivor
expectancy of the participant and a designated beneficiary.
(c) Determination of Amount to Be Distributed Each Year - If the
participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the required
beginning date.
(1) Individual Account -
(A) If a participant's benefit is to be distributed over (1) a period not
extending beyond the life expectancy of the participant or the joint life
and last survivor expectancy of the participant and the participant's
designated beneficiary or (2) a period not extending beyond the life
expectancy of the designated beneficiary, the amount required to be
distributed for each calendar year, beginning with distributions for the
first distribution calendar year, must at least equal the quotient obtained
by divid
(B) For calendar years beginning before January 1, 1989, if the participant's
spouse is not the designated beneficiary, the method of distribution selected
must assure that at least 50% of the present value of the amount available
for distribution is paid within the life expectancy of the participant.
(C) For calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with distributions for the first
distribution calendar year shall not be less than the quotient obtained
by dividing the participant's benefit by the lesser of (1) the applicable
life expectancy or (2) if the participant's spouse is not the designated
beneficiary, the applicable divisor determined from the table set forth in
Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Regulations. Distributions
af
(D) The minimum distribution required for the participant's first
distribution calendar year must be made on or before the participant's
required beginning date. The minimum distribution for other calendar years,
including the minimum distribution for the distribution calendar year in
which the employee's required beginning date occurs, must be made on or
before December 31 of that distribution calendar year.
(2) Other Forms - If the participant's benefit is distributed in the form of
an annuity purchased from an insurance company, distributions thereunder
shall be made in accordance with the requirements of Code Section 401(a)(9)
and the proposed regulations thereunder.
(d) Death Distribution Provisions
(1) Distribution beginning before death. If the participant dies after
distribution of his or her interest has begun, the remaining portion of
such interest will continue to be distributed at least as rapidly as under
the method of distribution being used prior to the participant's death.
(2) Distribution beginning after death. If the participant dies before
distribution of his or her interest begins, distribution of the participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the participant's death except to the
extent that an election is made to receive distributions in accordance with
(A) or (B) below:
(A) If any portion of the participant's interest is payable to a designated
beneficiary, distributions may be made over the life or over a period certain
not greater than the life expectancy of the designated beneficiary commencing
on or before December 31 of the calendar year immediately following the
calendar year in which the participant died;
(B) If the designated beneficiary is the participant's surviving spouse, the
date distributions are required to begin in accordance with (A) above shall
not be earlier than the later of (i) December 31 of the calendar year
immediately following the calendar year in which the participant died and
(ii) December 31 of the calendar year in which the participant would have
attained age 70 1/2.
If the participant has not made an election pursuant to this Paragraph (d)(2)
by the time of his or her death, the participant's designated beneficiary
must elect the method of distribution no later than the earlier of (1)
December 31 of the calendar year in which distributions would be required
to begin under this Paragraph, or (2) December 31 of the calendar year
which contains the fifth anniversary of the date of death of the participant.
If the participant has no designated beneficiary, or if the desig
(3) For purposes of Paragraph (d)(2) above, if the surviving spouse dies
after the participant, but before payments to such spouse begin, the
provisions of Paragraph (d)(2) with the exception of paragraph (B) therein,
shall be applied as if the surviving spouse were the participant.
(4) For purposes of this Paragraph (d), any amount paid to a child of the
participant will be treated as if it had been paid to the surviving spouse
if the amount becomes payable to the surviving spouse when the child reaches
the age of majority.
(5) For the purposes of this Paragraph (d), distribution of a participant's
interest is considered to begin on the participant's required beginning date
(or, if Subparagraph (3) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to Subparagraph (2)
above). If distribution in the form of an annuity irrevocably commences to
the participant before the required beginning date, the date distribution is
considered to begin is the date distribution actually commences.
(e) Definitions (Code Section 401(a)(9) Requirements)
(1) Applicable Life Expectancy - The life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the participant
(or designated beneficiary) as of the participant's (or designated
beneficiary's) birthday in the applicable calendar year reduced by one for
each calendar year which has elapsed since the date life expectancy was
first calculated. If life expectancy is being recalculated, the applicable
life expectancy shall be the life expectancy as so recalculated. The appl
(2) Designated Beneficiary - The individual who is designated as the
beneficiary under the plan in accordance with Code Section 401(a)(9) and
the proposed regulations thereunder.
(3) Distribution Calendar Year - A calendar year for which a minimum
distribution is required. For distributions beginning before the
participant's death, the first distribution calendar year is the
calendar year immediately preceding the calendar year which contains
the participant's required beginning date. For distributions beginning
after the participant's death, the first distribution calendar year is
the calendar year in which distributions are required to begin pursuant to
Paragraph (d) above.
(4) Life Expectancy - Life expectancy and joint and last survivor expectancy
are computed by use of the expected return multiples in Tables V and VI of
Section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the participant (or spouse, in the case of
distributions described in Paragraph (d)(2)(B) above) by the time
distributions are required to begin, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the
participant (or spouse) and shall apply to all subsequent years. The
life expectancy of a nonspouse beneficiary may not be recalculated.
(5) Participant's Benefit -
(A) The account balance as of the last valuation date in the calendar year
immediately preceding the distribution calendar year (valuation calendar
year) increased by the amount of any contributions or forfeitures allocated
to the account balance as of dates in the valuation calendar year after the
valuation date and decreased by distributions made in the valuation calendar
year after the valuation date.
(B) Exception for second distribution calendar year. For purposes of
Subparagraph (5)(A) above, if any portion of the minimum distribution for
the first distribution calendar year is made in the second distribution
calendar year on or before the required beginning date, the amount of the
minimum distribution made in the second distribution calendar year shall be
treated as if it had been made in the immediately preceding distribution
calendar year.
(6) Required Beginning Date - The required beginning date of a participant
is the first day of April of the calendar year following the calendar year
in which the participant attains age 70 1/2.
(A) Transitional rules. The required beginning date of a participant who
attains age 70 1/2 before January 1, 1988, shall be determined in accordance
with (i) or (ii) below.
(i) Non-5-percent owners. The required beginning date of a participant
who is not a 5-percent owner is the first day of April of the calendar year
following the calendar year in which the later of retirement or attainment
of age 70 1/2 occurs.
(ii) 5-percent owners. The required beginning date of a participant who is
a 5-percent owner during any year beginning after December 31, 1979, is the
first day of April following the later of :
a. the calendar year in which the participant attains age 70 1/2, or
b. the earlier of the calendar year with or within which ends the plan year
in which the participant becomes a 5-percent owner, or the calendar year in
which the participant retires.
The required beginning date of a participant who is not a 5-percent owner
who attains age 70 1/2 during 1988 and who has not retired as of January 1,
1989, is April 1, 1990.
(B) 5-percent owner. A participant is treated as a 5-percent owner for
purposes of this Paragraph (e) if such participant is a 5-percent owner as
defined in Code Section 416(i) (determined in accordance with Section 416
but without regard to whether the plan is top-heavy) at any time during the
plan year ending with or within the calendar year in which such owner attains
age 66 1/2 or any subsequent plan year.
(C) Once distributions have begun to a 5-percent owner under this Paragraph,
they must continue to be distributed, even if the participant ceases to be a
5-percent owner in a subsequent year.
(f) Transitional Rule
(1) Notwithstanding the other requirements of this Section 5.4 and subject
to the requirements of Section 5.3, Joint and Survivor Annuity Requirements,
distribution on behalf of any employee, including a 5-percent owner, may be
made in accordance with all of the following requirements (regardless of when
such distribution commences).
(A) The distribution by the trust is one which would not have disqualified
such trust under Code Section 401(a)(9) as in effect prior to amendment by
the Deficit Reduction Act of 1984.
(B) The distribution is in accordance with a method of distribution
designated by the employee whose interest in the trust is being distributed
or, if the employee is deceased, by a beneficiary of such employee.
(C) Such designation was in writing, was signed by the employee or the
beneficiary, and was made before January 1, 1984.
(D) The employee had accrued a benefit under the plan as of December 31, 1983.
(E) The method of distribution designated by the employee or the beneficiary
specifies the time at which distribution will commence, the period over which
distributions will be made, and in the case of any distribution upon the
employee's death, the beneficiaries of the employee listed in order of
priority.
A distribution upon death will not be covered by this transitional rule
unless the information in the designation contains the required information
described above with respect to the distributions to be made upon the death
of the employee.
(2) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the employee, or the beneficiary, to
whom such distribution is being made, will be presumed to have designated
the method of distribution under which the distribution is being made if
the method of distribution was specified in writing and the distribution
satisfies the requirements in this Paragraph.
(3) If a designation is revoked, any subsequent distribution must satisfy
the requirements of Code Section 401(a)(9) and the proposed regulations
thereunder. If a designation is revoked subsequent to the date distributions
are required to begin, the trust must distribute by the end of the calendar
year following the calendar year in which the revocation occurs the total
amount not yet distributed which would have been required to have been
distributed to satisfy Code Section 401(a)(9) and the proposed regu
Section 5.5 Top Heavy Provisions
(a) Application of Provisions - If the plan is or becomes top-heavy in
any plan year beginning after December 31, 1983, the provisions of Subsection
5.5 will supersede any conflicting provisions in the plan.
(b) Minimum Allocation
(1) Except as otherwise provided in (3) and (4) below, the employer
contributions and forfeitures allocated on behalf of any participant who
is not a key employee shall not be less than the lesser of three percent
of such participant's compensation or in the case where the employer has
no defined benefit plan which designates this plan to satisfy Code Section
401, the largest percentage of employer contributions and forfeitures, as a
percentage of the key employee's compensation which may be taken into acco
(2) For purposes of computing the minimum allocation, compensation shall
mean compensation as defined in Section 1.2 (a) of the plan.
(3) The provision in (1) above shall not apply to any participant who was
not employed by the employer on the last day of the plan year.
(4) The provision in (1) above shall not apply to any participant to the
extent the participant is covered under any other plan or plans of the
employer and the employer has provided in Section 3.2 that the minimum
allocation or benefit requirement applicable to top-heavy plans will be
met in the other plan or plans. If this plan is intended to meet the
minimum allocation or benefit requirement applicable to another plan or
plans, the employer shall so provide in Section 3.2.
(5) The minimum allocation required (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited under
Code Section 411(a)(3)(B) or 411(a)(3)(D).
(c) Adjustments in Code Section 415 Limits - If the plan is top-heavy, the
defined benefit fraction and the defined contribution fraction shall be
computed by applying a factor of 1.0 (instead of 1.25) to the applicable
dollar limits under Code Section 415(b)(1)(A) and 415(C)(1)(A) for such
year, unless the plan meets both the following conditions:
(1) Such plan would not be a top-heavy plan if "90%" were substituted for
"60%" in the top-heavy tests; and
(2) The minimum employer contribution percentage under paragraph (b) is 4
percent instead of 3 percent.
However, the reduced Code Section 415 factor of 1.0 shall not apply under a
top-heavy plan with respect to any individual so long as there are no
employer contributions, forfeitures, or voluntary non-deductible
contributions allocated to such individual.
(d) Minimum Vesting Schedules - For any plan year in which this plan is
top-heavy, the following minimum vesting schedule shall automatically apply
to the plan, If this schedule is more liberal than the schedule provided in
Section 4.2(a)(5)(B).
Years of Service Vesting Percentage
0-1 Year 0%
2 20%
3 40%
4 60%
5 80%
6 or More Years 100%
The minimum vesting schedule shall apply to all benefits within the meaning
of Code Section 411(a)(7) except those attributable to employee
contributions, including benefits accrued before the effective date of
Code Section 416 and benefits accrued before the plan became top-heavy.
Further, no decrease in a participant's nonforfeitable percentage may occur
in the event the plan's status as top-heavy changes for any plan year, and
the provisions of Section 7.2(d) shall apply. However, this Section does not
itially become top-heavy and such employee's account balance attributable to
employer contributions and forfeitures will be determined without regard to
this Section.
(e) Definitions (Code Section 416 Requirements)
(1) Key Employee - Any employee or former employee (and the beneficiaries of
such employee) who at any time during the determination period was an officer
of the employer if such individual's annual compensation exceeds 50 percent
of the dollar limitation under Code Section 415(b)(1)(A), an owner (or
considered an owner under Code Section 318) of one of the ten largest
interests in the employer if such individual's compensation exceeds 100
percent of the dollar limitation under Code Section 415(c)(1)(A), a
ore than $150,000. Annual compensation means compensation as defined in
Code Section 415(c)(3), but including amounts contributed by the employer
pursuant to a salary reduction agreement which are excludable from the
employee's gross income under Code Section 125, Section 402(a)(8), Section
402(h) or Section 403(b). The determination period is the plan year
containing the determination date and the four (4) preceding plan years.
The determination of who is a key employee will be made in accordance with
Code Section 416(i)(1) and the regulations thereunder.
(2) Top-Heavy Plan - For any plan year beginning after December 31, 1983,
this plan is top-heavy if any of the following conditions exists:
(A) If the top-heavy ratio for this plan exceeds 60 percent and this plan is
not part of any required aggregation group or permissive aggregation group of
plans.
(B) If this plan is a part of a required aggregation group of plans but not
part of a permissive aggregation group and the top-heavy ratio for the group
of plans exceeds 60 percent.
(C) If this plan is a part of a required aggregation group and part of a
permissive aggregation group of plans and the top-heavy ratio for the
permissive aggregation group exceeds 60 percent.
(3) Top-Heavy Ratio -
(A) If the employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the employer has not
maintained any defined benefit plan which during the 5-year period ending on
the determination date(s) has or has had accrued benefits, the top-heavy
ratio for this plan alone or for the required or permissive aggregation
group as appropriate is a fraction, the numerator of which is the sum of
the account balances of all key employees as of the determination date(s)
ate(s)), and the denominator of which is the sum of all account balances
(including any part of any account balance distributed in the 5-year period
ending on the determination date(s)), both computed in accordance with Code
Section 416 and the regulations thereunder. Both the numerator and
denominator of the top-heavy ratio are increased to reflect any contribution
not actually made as of the determination date, but which is required to be
taken into account on that date under Code Section 416 and the reg
(B) If the employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the employer maintains
or has maintained one or more defined benefit plans which during the 5-year
period ending on the determination date(s) has or has had any accrued
benefits, the top-heavy ratio for any required or permissive aggregation
group as appropriate is a fraction, the numerator of which is the sum of
account balances under the aggregated defined contribution plan or plans fo
nder the aggregated defined benefit plan or plans for all key employees as
of the determination date(s), and the denominator of which is the sum of the
account balances under the aggregated defined contribution plan or plans for
all participants, determined in accordance with (A) above, and the present
value of accrued benefits under the defined benefit plan or plans for all
participants as of the determination date(s), all determined in accordance
with Code Section 416 and the regulations thereunder. The
o are increased for any distribution of an accrued benefit made in the five-
year period ending on the determination date.
(C) For purposes of (A) and (B) above the value of account balances and the
present value of accrued benefits will 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. The account balances and accrued benefits of a participant
(1) who is not a key employee but who was a key employee in a prior
e plan at any time during the 5-year period ending on the determination date
will be disregarded. The calculation of the top-heavy ratio, and the extent
to which distributions, rollovers, and transfers are taken into account will
be made in accordance with Code Section 416 and the regulations thereunder.
Deductible employee contributions will not be taken into account for purposes
of computing the top-heavy ratio. When aggregating plans the value of
account balances and accrued benefits will be calculate
The accrued benefit of a participant other than a key employee shall be
determined under (1) the method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained by the employer, or (2)
if there is no such method, as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under the fractional rule of Code Section
411(b)(1)(C).
(4) Permissive Aggregation Group - The required aggregation group of plans
plus any other plan or plans of the employer which, when considered as a
group with the required aggregation group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(5) Required Aggregation Group - (1) Each qualified plan of the employer in
which at least one key employee participates or participated at any time
during the determination period (regardless of whether the plan has
terminated), and (2) any other qualified plan of the employer which enables
a plan described in (1) to meet the requirements of Code Sections 401(a)(4)
or 410.
(6) Determination Date - For any plan year subsequent to the first plan year,
the last day of the preceding plan year. For the first plan year of the plan,
the last day of that year.
(7) Valuation Date - The allocation date as defined in Section 1.3(b), which
shall be the date as of which account balances or accrued benefits are valued
for purposes of calculating the top-heavy ratio.
(8) Present Value - Present value shall be based only on the interest and
mortality rates specified in the employerOs defined benefit plan.
(9) Non-Key Employee - Any employee who is not a key employee. Non-key
employees include employees who are former key employees.
Section 5.6 Deductible Voluntary Employee Contributions
The plan administrator will not accept deductible employee contributions
which are made for a taxable year beginning after December 31, 1986.
Contributions made prior to that date will be maintained in a separate
account which will be nonforfeitable at all times. The account will share
in the gains and losses of the trust in the same manner as described in
Section 3.5 of the plan. No part of the deductible voluntary contribution
account will be used to purchase life insurance. Subject to Section 5.3, Jo
luntary contribution account by making a written application to the plan
administrator.
Section 5.7 Stock Bonus Plan Distribution Options
(a) The employer retains the discretion to implement the provisions of this
Section 5.7.
(b) Right to Receive Stock
The right to receive distributions in the form of shares of company stock
shall be automatically terminated in the event of the sale or other
disposition by the trustee of all shares of company stock held by the trust.
(c) Restricted Stock
(1) 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.
(2) 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 bu
e of the company stock.
(d) Right of First Refusal
(1) If any participant, his beneficiary or any other person to whom shares of
company stock are distributed from the plan (the selling participant) shall,
at any time that the stock is not publicly traded, desire to sell some or all
of such shares (the offered shares) to a third party, the selling participant
shall give written notice of such desire to the employer and the
administrator. The notice shall contain the number of shares offered for
sale, the proposed terms of the sale and the names and address
the right of first refusal for a period of fourteen (14) days from the date
the selling participant gives such written notice to the employer and the
administrator to acquire the offered shares. The fourteen day period shall
run concurrently against the trust fund and the employer. As between the
trust fund and the employer, the trust fund shall have priority to acquire
the shares pursuant to the right of first refusal. The selling price and
terms shall not be less than the greater of the value of the s
(2) If the trust fund and the employer do not exercise their right of first
refusal within the required fourteen day period provided above, the selling
participant shall have the right, at any time following the expiration of
such period, to dispose of the offered shares to the third party; provided,
however, that (i) no disposition shall be made to the third party on terms
more favorable to the third party than those set forth in the written notice
previously given by the selling participant, and (ii) if s
d, the offered shares shall again be subject to the right of first refusal
set forth above.
(3) The closing pursuant to the exercise of the right of first refusal shall
take place at such place agreed upon between the administrator and the
selling participant, but not later than ten (10) days after the employer or
the trust fund shall have notified the selling participant of the exercise of
the right of first refusal. At such closing, the selling participant shall
deliver certificates representing the offered shares duly endorsed in blank
for transfer, or with stock powers attached duly executed
lank with all required transfer tax stamps attached or provided for, and
the employer or the trust fund shall deliver the purchase price, or an
appropriate portion thereof, to the selling participant.
(e) Put Option
(1) If company stock is distributed to a participant and such company stock
is not readily tradable 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 (c).
(2) 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. The put
option must permit a participant (or beneficiary) 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 exerc
er's honoring such put option, the 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 participant (or beneficiary) 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 participant (or
such other 60-day period as provided in Code regulations). However, in the
case of company stock that is publicly traded without restri
buted 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 o
ld. The terms must satisfy the requirements of this paragraph.
The put option is exercised by the holder by 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.
Upon receipt of a written notification from the holder, the employer shall
immediately inform the administrator of such notice. The administrator shall
have 10 days to notify the employer if it wishes the trust fund to assume the
rights and obligations of the employer with respect to the requir
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 6.7(b) as of the
allocation date coincident with or immediately preceding the employer's
receipt of the written notification. The total purchase price shal
fer such payments on a reasonable basis, if it gives written notice to the
holder within the 30 day period. Such deferred payments 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 five (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 pa
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, 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 participant's
entire vested account.
(3) 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. The plan (and the trust fund) must not otherwise 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.
(4) The participant and beneficiary rights and protections created under
this SectionE5.7(e) as they pertain to plan assets acquired with the proceeds
of an exempt loan shall be nonterminable. Therefore, such rights and
protections shall continue even after such exempt loan has been repaid
although this plan ceased to be an employee stock ownership plan effective
JanuaryE1, 1988.
ARTICLE VI ADMINISTRATION OF THE PLAN
Section 6.1 Fiduciary Responsibility
(a) Fiduciary Standards - A fiduciary shall discharge his duties with
respect to a plan solely in the interest of the participants and
beneficiaries and -
For the exclusive purpose of providing benefits to participants and their
beneficiaries and defraying reasonable expenses of administering the plan;
With the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character
and with like aims;
By diversifying the investments of the plan so as to minimize the risk of
large losses, unless under the circumstances it is clearly prudent not to do
so; and
In accordance with the documents and instruments governing the plan insofar
as such documents and instruments are consistent with the provisions of ERISA.
(b) Allocation of Fiduciary Responsibility
(1) It is intended to allocate to each fiduciary, either named or otherwise,
the individual responsibility for the prudent execution of the functions
assigned to him. None of the allocated responsibilities or any other
responsibilities shall be shared by two or more fiduciaries unless
specifically provided for in the plan.
(2) When one fiduciary is required to follow the directions of another
fiduciary, the two fiduciaries shall not be deemed to share such
responsibility. Instead, the responsibility of the fiduciary giving
the directions shall be deemed to be his sole responsibility and the
responsibility of the fiduciary receiving directions shall be to follow
those directions insofar as such instructions on their face are proper
under applicable law.
(3) Any person or group of persons may serve in more than one fiduciary
capacity with respect to this plan.
(4) A fiduciary under this plan may employ one or more persons, including
independent accountants, attorneys and actuaries to render advice with regard
to any responsibility such fiduciary has under the plan.
(c) Indemnification by Employer - Unless resulting from the gross negligence,
willful misconduct or lack of good faith on the part of a fiduciary who is an
officer or employee of the employer, the employer shall indemnify and save
harmless such fiduciary from, against, for and in respect of any and all
damages, losses, obligations, liabilities, liens, deficiencies, costs and
expenses, including without limitation, reasonable attorney's fees and other
costs and expenses incident to any suit, action, investig
(d) Named Fiduciary - The person or persons named by the employer as having
fiduciary responsibility for the management and control of plan assets shall
be known as the "named fiduciary" hereunder. Such responsibility shall
include the appointment of the plan administrator (Section 6.2(a)), the
trustee (Section 6.4(a)) and the investment manager (Section 6.4(b)), and
the deciding of benefit appeals (Section 6.3).
(e) Bonding - Every fiduciary, except a bank or an insurance company, unless
exempted by the ERISA 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, durin
andled 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 ERISA 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
Section 6.2 Plan Administrator
(a) Appointment of Plan Administrator
The named fiduciary shall appoint a plan administrator who may be an
individual or an administrative committee consisting of no more than five
members. Vacancies occurring upon resignation or removal of a plan
administrator or a committee member shall be filled promptly by the named
fiduciary. Any administrator may resign at any time by giving notice of his
resignation to the named fiduciary, and any administrator may be removed at
any time by the named fiduciary. The named fiduciary shall review at regu
istrator(s). After the named fiduciary has appointed the administrator and
has received a written notice of acceptance, the fiduciary responsibility for
administration of the plan shall be the responsibility of the plan
administrator or administrative committee.
(b) Duties and Powers of Plan Administrator
The plan administrator shall have the following duties and discretionary
powers and such other duties and discretionary powers as relate to the
administration of the plan:
(1) To determine in a non-discriminatory manner all questions relating to
the eligibility of employees to become participants.
(2) To determine in a non-discriminatory manner eligibility for benefits and
to determine and certify the amount and kind of benefits payable to
participants.
(3) To authorize all disbursements from the fund.
(4) To appoint or employ any independent person to perform necessary plan
functions and to assist in the fulfillment of administrative responsibilities
as he deems advisable, including legal and actuarial counsel.
(5) When appropriate, to select an insurance company and annuity contracts
which, in his opinion, will best carry out the purposes of the plan.
(6) To construe and interpret any ambiguities in the plan and to make,
publish, interpret, alter, amend or revoke rules for the regulation of the
plan which are consistent with the terms of the plan and with ERISA.
(7) To prepare and distribute, in such manner as determined to be
appropriate, information explaining the plan.
(8) 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 6.8.
(9) To assist any participant regarding his rights, benefits, or elections
available under the plan.
(c) Allocation of Fiduciary Responsibility Within Administrative Committee
If the plan administrator is an administrative committee, the committee
shall choose from its members a chairman and a secretary. The committee
may allocate responsibility for those duties and powers listed in Section
6.2(b)(1) and (2) (except determination of qualification for disability
retirement) and other purely ministerial duties to one or more members of
the committee. The committee shall review at regular intervals the
performance of any committee member to whom fiduciary responsibility has
been a
cations of responsibilities and has received written notice of acceptance,
the fiduciary responsibilities for such administrative duties and powers
shall then be considered as the responsibilities of such committee member(s).
(d) Miscellaneous Provisions
(1) Administrative Committee Actions - The actions of such committee shall be
determined by the vote or other affirmative expression of a majority of its
members. Either the chairman or the secretary may execute any certificate or
other written direction on behalf of the committee. A member of the
committee who is a participant shall not vote on any question relating
specifically to himself. If the remaining members of the committee, by
majority vote thereof, are unable to come to a determination of any
mittee for the special vote.
(2) Expenses - The plan administrator shall serve without compensation for
service as such. All reasonable expenses of the plan administrator shall be
paid by the employer or from the fund.
(3) Examination of Records - The plan administrator shall make available to
any participant for examination during business hours such of the plan
records as pertain only to the participant involved.
(4) Information to the Plan Administrator - To enable the plan administrator
to perform the administrative functions, the employer shall supply full and
timely information to the plan administrator on all participants as the plan
administrator may require.
Section 6.3 Claims Procedure
(a) Notification - The plan administrator shall notify each participant in
writing of his determination of benefits. If the plan administrator denies
any benefit, such written denial shall include:
- The specific reasons for denial;
- Reference to provisions on which the denial is based;
- A description of and reason for any additional information
needed to process the claim; and
- An explanation of the claims procedure.
(b) Appeal - The participant or his duly authorized representative may:
- Request a review of the participant's case in writing to the named fiduciary;
- Review pertinent documents;
- Submit issues and comments in writing.
The written request for review must be submitted no later than 60 days
after receiving written notification of denial of benefits.
(c) Review - The named fiduciary must render a decision no later than
60 days after receiving the written request for review, unless circumstances
make it impossible to do so; but in no event shall the decision be rendered
later than 120 days after the request for review is received.
Section 6.4 Trust Fund
(a) Appointment of Trustee
The named fiduciary shall appoint a trustee for the proper care and custody
of all funds, securities and other properties in the trust, and for
investment of plan assets (or for execution of such orders as it receives
from an investment manager appointed for investment of plan assets). The
duties and powers of the trustee shall be set forth in a trust agreement
executed by the employer, which is incorporated herein by reference. The
named fiduciary shall review at regular intervals the performance of the
he trustee and has received a written notice of acceptance of its
responsibility, the fiduciary responsibility with respect to the proper
care and custody of plan assets shall be considered as the responsibility of
the trustee. Unless otherwise allocated to an investment manager, the
fiduciary responsibility with respect to investment of plan assets shall
likewise be considered as the responsibility of the trustee.
(b) Appointment of Investment Manager
The named fiduciary may appoint an investment manager who is other than the
trustee, which investment manager may be a bank or an investment advisor
registered with the Securities and Exchange Commission under the Investment
Advisors Act of 1940. Such investment manager, if appointed, shall have
sole discretion in the investment of plan assets, subject to the funding
policy. The named fiduciary shall review at regular intervals no less
frequently than annually, the performance of such investment manager a
te the appointment of such investment manager. After the named fiduciary
has appointed an investment manager and has received a written notice of
acceptance of its responsibility, the fiduciary responsibility with respect
to investment of plan assets shall be considered as the responsibility of the
investment manager.
Section 6.5 Investment Policy
(a) The plan is designed to invest primarily in company stock. It is
specifically intended that this stock bonus plan qualify and operate as an
eligible individual account plan as defined in ERISA section 407(d)(3). As s
uch, and without limiting the generality of the foregoing, the trustee is
hereby specifically authorized to:
(1) acquire, hold, sell, and distribute employer stock.
(2) invest in employer stock and not limit its holdings of such stock to ten
percent of trust assets but may invest up to 100% of plan assets in employer
stock without regard to any plan or trust agreement requirement to diversify
investments as permitted under ERISA section 404(a)(2).
(3) acquire or sell employer stock in a transaction with a disqualified
person or a party in interest (as those terms are defined in ERISA and the
Code) provided that no commission is charged and the transaction is for
adequate consideration.
(b) With due regard to subparagraph (a) above, the administrator may also
direct the trustee to invest funds under the plan in other property described
in the Trust Agreement or in life insurance policies to the extent permitted by
subparagraph (c) below, or the trustee may hold such funds in cash or cash
equivalents.
(c) With due regard to subparagraph (a) above, the administrator may also
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
shall be allocated to participants in proportion to their account balances.
The amount of employer contribution to be allocated to participants under
Section 3.2 shall be reduced by the amount of premiums paid on keyman
insurance policies during the plan year. The employer shall contr
No insurance company which may issue such policies shall be deemed to be a
party to this plan.
(d) 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.
(e) 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.
(f) All purchases of company stock shall be made at a price which, in the
judgment of the administrator, does not exceed the fair market value thereof.
All sales of company stock shall be made at a price which, in the judgment of
the administrator, is not less than the fair market value thereof. The
valuation rules set forth in Section 6.7 shall be applicable.
Section 6.6 Transactions Involving Company Stock
(a) This Section 6.6 shall apply to company stock acquired by the plan after
OctoberE22, 1986 in a sale to which Code Section 1042 or, for estates of
decedents who died prior to December 20, 1989, Code Section 2057 applies.
(b) No portion of the trust fund attributable to (or allocable instead of)
such company stock may accrue or be allocated directly or indirectly under
any qualified plan maintained by the employer during the nonallocation
period, for the benefit of:
(1) Any taxpayer who makes an election under Code Section 1042(a) with
respect to company stock or any decedent if the executor of the estate of
the decedent makes a qualified sale to which Code Section 2057 applies;
(2) Any individual who is related to the taxpayer or the decedent (as
defined in Code Section 267(b)); or
(3) Any other person who owns more than 25 percent of
(A) any class of outstanding stock of the employer or affiliated employer
which issued such company stock, or
(B) the total value of any class of outstanding stock of the employer or
affiliated employer.
For the purpose of determining ownership, the attribution rules of Code
Section 318(a) shall be applied with the exception of paragraph (2)(B)(i).
(c) This Section shall not apply to lineal descendants of the taxpayer, if
the aggregate amount allocated to the benefit of all such lineal descendants
during the nonallocation period does not exceed more than five percent of
the company stock (or amounts allocated in their stead) held by the plan
which are attributable to a sale to the plan by any person related to such
descendants (within the meaning of Code Section 267(c)(4)) in a transaction
to which Code Section 1042 or Code Section 2057 is applied.
(d) A person shall be treated as failing to meet the stock ownership
limitation under paragraph (b)(3) above if such person fails the limitation:
(1) at any time during the one year period ending on the date of sale of
company stock to the plan, or
(2) on the date as of which company stock is allocated to participants in
the plan.
(e) For purposes of this Section, nonallocation period, for plan years
beginning after December 31, 1986, means the period beginning on the date
of the sale of the company stock and ending on the date which is ten years
after the date of sale.
Section 6.7 Valuation of the Trust Fund
(a) The administrator shall direct the trustee, as of each allocation 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 as it exists on the valuation date prior to taking into
consideration any contribution to be allocated for that plan year. 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
(b) 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.
An independent appraisal will not in itself be a good faith determination of
value in the case of a transaction between the plan and a disqual
Section 6.8 Voting Company Stock
The trustee shall vote all company stock held by it as part of the plan
assets at such time and in such manner as the administrator shall direct,
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. If the administrator shall fail or refuse
to give the trustee timely instructions as to how to vote any company
This plan is a stock bonus plan holding a registration-type class of
securities; therefore, participants shall not 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
is to be voted.
ARTICLE VII AMENDMENT AND TERMINATION OF PLAN
Section 7.1 Right to Discontinue and Amend
It is the expectation of the employer that it will continue this plan
indefinitely and make the payments of its contributions hereunder, but the
continuance of the plan is not assumed as a contractual obligation of the
employer and the right is reserved by the employer, at any time, to reduce,
suspend or discontinue its contributions hereunder.
Section 7.2 Amendments
Except as herein limited, the employer shall have the right to amend this
plan at any time to any extent that it may deem advisable. Such amendment
shall be stated in writing, shall be authorized by action of the board of
directors, and shall be executed by the person designated in conjunction
with the authorization.
The employer's right to amend the plan shall be limited as follows:
(a) No amendment shall increase the duties or liabilities of the plan
administrator, the trustee, or other fiduciary without their respective
written consent.
(b) No amendments shall have the effect of vesting in the employer any
interest in or control over any contracts issued pursuant hereto or any
other property in the fund.
(c) No amendment to the plan shall be effective to the extent that it has
the effect of decreasing a participant's accrued benefit. Notwithstanding
the preceding sentence, a participant's account balance may be reduced to
the extent permitted under Code Section 412(c)(8). For purposes of this
paragraph, a plan amendment which has the effect of decreasing a
participant's account balance or eliminating an optional form of benefit,
with respect to benefits attributable to service before the amendment shall b
ing an accrued benefit. Furthermore, if the vesting schedule of a plan is
amended, in the case of an employee who is a participant as of the later of
the date such amendment is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of such employee's
right to his employer-derived accrued benefit will not be less than his
percentage computed under the plan without regard to such amendment.
(d) No amendment to the vesting schedule adopted by the employer hereunder
shall deprive a participant of his vested portion of his employer
contribution account to the date of such amendment. If the plan's vesting
schedule is amended, or the plan is amended in any way that directly or
indirectly affects the computation of the participant's nonforfeitable
percentage or if the plan is deemed amended by an automatic change to or
from a top-heavy vesting schedule, each participant with at least 3 years of
ser
(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the participant is issued written notice of the amendment
by the employer or plan administrator.
Section 7.3 Protection of Benefits in Case of Plan Merger
In the event of a merger or consolidation with, or transfer of assets to
any other plan, each participant will receive a benefit immediately after
such merger, consolidation or transfer (if the plan then terminated) which
is at least equal to the benefit the participant was entitled to immediately
before such merger, consolidation or transfer (if the plan had terminated).
Section 7.4 Termination of Plan
(a) When Plan Terminates - This plan shall terminate upon the happening of
any of the following events: legal adjudication of the employer as bankrupt;
a general assignment by the employer to or for the benefit of its creditors;
the legal dissolution of the employer; or termination of the plan by the
employer.
(b) Allocation of Assets - Upon termination, partial termination or complete
discontinuance of employer contributions, the account balance of each
affected participant who is an active participant or who is not an active
participant but has neither received a complete distribution of his vested
accrued benefit nor incurred five one-year breaks in service shall be 100%
vested and nonforfeitable. The amount of the fund assets shall be allocated
to each participant, subject to provisions for expenses of admin
ARTICLE VIII MISCELLANEOUS PROVISIONS
Section 8.1 Exclusive Benefit - Non-Reversion
The plan is created for the exclusive benefit of the employees of the
employer and shall be interpreted in a manner consistent with its being a
qualified plan as defined in Section 401(a) of the Internal Revenue Code and
with ERISA. The corpus or income of the trust may not be diverted to or used
for other than the exclusive benefit of the participants or their
beneficiaries (except for defraying reasonable expenses of administering
the plan).
Notwithstanding the above, a contribution paid by the employer to the trust
may be repaid to the employer under the following circumstances:
(a) Any contribution made by the employer because of a mistake of fact must
be returned to the employer within one year of the contribution.
(b) In the event the deduction of a contribution made by the employer is
disallowed under Code Section 404, such contribution (to the extent
disallowed) must be returned to the employer within one year of the
disallowance of the deduction.
(c) If the Commissioner of Internal Revenue determines that the plan is
not initially qualified under the Internal Revenue Code, any contribution
made incident to that initial qualification by the employer must be returned
to the employer within one year after the date the initial qualification is
denied, but only if the application for the qualification is made by the time
prescribed by law for filing the employer's return for the taxable year in
which the plan is adopted, or such later date as the Secreta
Section 8.2 Inalienability of Benefits
No benefit or interest available hereunder including any annuity contract
distributed herefrom shall be subject to assignment or alienation, either
voluntarily or involuntarily. The preceding sentence shall also apply to
the creation, assignment, or recognition of a right to any benefit payable
with respect to a participant pursuant to a domestic relations order, unless
such order is determined to be a qualified domestic relations order as
defined in Code Section 414(p), or any domestic relations order ent
Section 8.3 Employer-Employee Relationship
This plan is not to be construed as creating or changing any contract of
employment between the employer and its employees, and the employer retains
the right to deal with its employees in the same manner as though this plan
had not been created.
Section 8.4 Binding Agreement
This plan shall be binding on the heirs, executors, administrators,
successors and assigns as such terms may be applicable to any or all
parties hereto, and on any participants, present or future.
Section 8.5 Separability
If any provision of this plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision hereof
and this plan shall be construed and enforced as if such provision had not
been included.
Section 8.6 Construction
The plan shall be construed in accordance with the laws of the state in
which the employer was incorporated (or is domiciled in the case of an
unincorporated employer) and with ERISA.
Section 8.7 Copies of Plan
This plan may be executed in any number of counterparts, each of which
shall be deemed as an original, and said counterparts shall constitute but
one and the same instrument which may be sufficiently evidenced by any one
counterpart.
Section 8.8 Interpretation
Wherever appropriate, words used in this plan in the singular may include
the plural or the plural may be read as singular, and the masculine may
include the feminine.
IN WITNESS WHEREOF, the Employer has caused this Plan to be executed this
day of , 19 .
WEIS MARKETS, INC.
By:
Title:
EXHIBIT 10-D
WEIS MARKETS, INC.
COMPANY APPRECIATION PLAN
1. PURPOSE
The Board of Directors of Weis Markets, Inc. (hereinafter referred to as the
"Company") believes the Company Appreciation Plan will promote continuity of
management and increase incentive and personal interest in the welfare of the
Company by those who are primarily responsible for developing and carrying
out the long range plans of the Company and its subsidiaries and securing
their continued growth and financial success.
2. DEFINITIONS
(a) "Board" shall mean the Board of Directors of Weis Markets, Inc.
(b) "Committee" shall mean the Executive Compensation Committee of the Board
of Directors.
(c) "Company" shall mean Weis Markets, Inc. or any successor thereto.
(d) "Designated Period" shall mean the period commencing as of the date on
which Rights are awarded to a Participant, and ending on the date as of which
such Rights mature as fixed by the Board. The Designated Period may not be
less than twelve (12) months no more than sixty-three (63) months. The
Designated Period may vary as among Participants and as among awards to a
Participant.
(e) "Effective Date" of the Plan shall mean April 1, 1980.
(f) "Market Value" shall mean the value of a share of the Company's common
capital stock as of the close of trading on a particular date, as reported
in the Wall Street Journal or such other source as the Committee believes
adequately reflects the trading in the Company's common stock. "Average
Market Value" shall mean the average of the Market Value of the Company's
common capital stock based on the closing price for all trading days in the
90 calendar day period which ends on the date of reference.
(g) "Participant" shall mean an officer or executive of the Company selected
by the Board to participate in the Plan.
(h) "Plan" shall mean the Weis Markets, Inc. Company Appreciation Plan
described in this instrument , as it may be amended from time to time.
(i) "Rights" shall mean the awards granted to a Participant from time to time
in accordance with the terms of the Plan.
(j) "Retirement" means a Participant's termination of employment with the
Company and its subsidiaries after attaining age 65.
Wherever the context so requires, masculine pronouns include the feminine and
singular words shall include the plural.
3. ADMINISTRATION
(a) The Plan shall be administered by the Committee as it may be constituted
from time to time. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by
a majority of its members. Any decision or determination reduced to writing
and signed by all of the members of the Committee shall be fully effective
as if it had been made by a majority vote at a meeting duly called and held.
(b) Eligibility for participation in this Plan shall be determined by a two
step process. First, the Executive Compensation Committee of the Board of
Directors shall make a recommendation of potential Participants to the Board
of Directors. This list may be based upon recommendations from the Executive
Committee of Weis Markets, Inc. Second, the Board of Directors shall
consider the recommendation of the Executive Compensation Committee and make
the final determination based upon a majority vote.
4. OPERATION
Employees of the Company who are eligible to participate in the Plan and who
have been designated as Plan Participants shall be notified by the Committee
in writing of such Participation, which notification shall outline the
specific terms applicable to the Participant. The general terms of the Plan
applicable to each Participant are as follows:
(a) Plan Participants shall be awarded Rights which mature at the expiration
of the Designated Period or Designated Periods applicable to such Rights. As
of the date of expiration of the Designated Period, or Period, the Participant
shall receive an amount equal to the current value of the Rights.
(b) The current value of the Rights shall be equal to the excess of (1) over
(2) below, but in no event greater than the amount set forth in paragraph (c)
below.
(1) The greater of
(i) the Average Market Value of the Rights awarded the Participant as of the
date of expiration of the Designated Periods applicable to such Rights; and
(ii) the market Value of the Rights awarded the Participant as of the last
trading day of the calendar year preceding the date of expiration of the
Designated Period.
(2) The Market Value of the Rights awarded the Participant as of the initial
effective date of the award.
The Market Value or Average Market Value of all Rights as of a particular
date shall be the Market Value or Average market Value of one Right
multiplied by the number of Rights.
(d) Not withstanding any other provision of the Plan, the current value of any
Rights shall not exceed 100% of the Market Value of the Rights as of the
initial date of the award of such Rights. The current value of Rights, as
determined under (b and (c) above, shall be paid to the Participant in cash
no later than sixty days following the expiration of the applicable
Designated Period.
5. LIMITATION ON RIGHTS
A Participant may receive as many awards of Rights at various times as may be
determined appropriate by the Board, but the total Rights granted under this
Plan to all Participants shall not exceed 100,000.
6. NATURE OF RIGHTS
The Rights shall be used solely as a device for the measurement and
determination of the amount to be paid to Participants as provided in the
Plan. The Rights shall not constitute or be treated as property or as a
trust fund of any kind. All amounts at any time attributable to the Rights
shall be and remain the sole property of the Company and the Participants'
rights here under are limited to the rights to receive cash as herein provided.
7. DILUTION
In the event of a stock split, stock dividend, reclassification,
reorganization, or other capital adjustment of shares of capital stock of
the Company, the number of Rights of a Participant and the number of total
Rights which may be issued under the plan provided by paragraph 5 shall be
adjusted in the same manner as the Company's capital stock reflected by such
Rights would be adjusted.
8. TRANSFERABILITY
Any rights arising under the Plan shall not be transferable otherwise than
by will or the laws of descent and distribution, and may be exercised during
the life of a Participant only by such Participant.
9. TERMINATION OF EMPLOYMENT
The Plan does not confer upon any Participant any right with respect to
continuance of employment by the Company or by a subsidiary of the Company,
nor does it nullify his right, or his employer's right, to terminate his
employment at any time. In the event that the employment of a Participant
by the Company and/or its subsidiaries terminates for any reason other than
due to disability, death, or retirement, any outstanding Rights under the
Plan shall be forfeited. In the event a Participant terminates employment
with the Company and/or its subsidiaries due to death, disability, or
retirement, the Designated Period for such Participant shall be deemed to end,
with appropriate payment subsequently made to the Participant or his named
beneficiary. A Participant shall be deemed to have terminated employment
due to disability if, in the opinion of a physician selected by the Committee,
as a result of a mental or physical condition he is unable to continue to
perform his duties as an employee.
10. WITHHOLDING OF TAX
There shall be deducted from each distribution under the Plan the amount of
any tax required by any governmental authority to be withheld and paid over
by the Company to such governmental authority for the account of the person
entitled to such distribution.
11. TERMINATION AND AMENDMENT OF PLAN
The Board may at any time terminate the Plan, or make such modifications of
the Plan as it shall deem advisable, provided that
(a) no termination or amendment of the Plan may, without the consent of a
Participant, adversely affect the rights of such Participant, and
(b) any amendment requiring an affirmative vote of the holders of a majority
of the shares of the capital stock of the Company shall not be effective
until such affirmative vote is obtained.
EXHIBIT 10-E
1995
STOCK OPTION PLAN
WEIS MARKETS, INC.
1. Definitions.
A. As used in this Plan the following definitions apply to the terms
indicated below:
"Board" means the Board of Directors of Weis Markets, Inc.
"Committee" means the Executive Compensation Committee of the Board of
Directors.
"Company" means Weis Markets, Inc., a Pennsylvania Corporation.
"Eligible employee" means any employee who is at the date of the granting
of an option hereunder an executive or administrative employee of the Company
or of any subsidiary corporation now or hereafter existent, and who at the
time receives regular base compensation from the Company or any subsidiary,
or any combination thereof, at a rate or rates aggregating $8,000 or more
per year. For the purposes of this Plan the Committee shall have the
authority to determine whether or not an employee is an executive or
administrative employee, but these terms shall be limited to employees having
administrative responsibility involving the use of judgment or discretion in
the direction of the activities of other, and any other employees customarily
considered as executive line or staff personnel. The determination of base
compensation may be made by annualizing the regular base compensation rate
in effect with respect to an employee at payroll period last preceding the
date of grant of the option. The term eligible employee shall not include
an individual possessing more than ten (10) percent of the total combined
voting power of all classes of stock of the Company or of its parent or
subsidiary corporation if such entity may exist in the future. Also, the
term eligible employee shall not include a member of the committee.
"Option" means an option for the purchase of Shares under the Plan.
Each Option shall be represented by an Option certificate in such form, not
inconsistent with the Plan, as the Committee may authorize for general use
or for specific cases from time to time.
"Option period" means a period of time expressed in months from the
date of grant of an Option, during which an Option becomes exercisable by
its terms.
"Participant" means any holder of an Option granted under the Plan.
"Plan" means this stock option plan.
"Shares" means shares of the Company's capital stock reserved for the
purposes of the Plan.
B. An Option shall be effectively "granted" under this Plan on the date an
Option shall be effectively "granted" under this Plan following a
recommendation by the Committee to the Board. The Board shall have the
discretion to grant the Option if it wishes. Any recipient of an Option
who serves on the Board shall abstain from any discussion or vote
concerning the grant of any Options.
C. As used herein the masculine includes the feminine and the plural
includes the singular.
II. Shares Subject to the Plan.
There may be issued pursuant to the Plan Options for the Purchase of not
more than 300,000 Shares. In the event of any change in the Shares, as a
result of recapitalization, stock split, combination of shares or stock
dividend (but in the case of a stock dividend only if and to the extent that
all of such stock dividends within one fiscal year shall increase the number of
outstanding shares by more than 5%), appropriate adjustment shall be made
in the total number of Shares to which the Plan relates, and in the number
of Shares subject to outstanding unexercised Options, and with respect to
the purchase price per Share payable upon exercise, so as to prevent undue
appreciation or dilution of the rights conferred by any Option, or of the Shares
reserved for the purposes of the Plan.
III. Allocation of Shares.
The Committee may at any time during the term of this Plan allocate Shares
to any eligible employee under and pursuant to an Option, subject to prior
allocation of Shares under previously granted Options to the same or other
persons. The aggregate number of Shares allocable to any one employee,
pursuant to one or more Options, shall not exceed 5,000 Shares nor shall
Options covering shares with a Fair market value in excess of $100,000
(determined on the date of grant) be granted to any eligible employee
reason other than the termination of the Plan as a whole, any number of
Shares not purchased thereunder shall forthwith become available again for
allocation under new Options in accordance with the Plan.
IV. Plan Term.
Subject to the provisions hereinafter contained relating to amendment or
discontinuance, this Plan shall continue in effect until December 31, 2004;
and no Option may be granted hereunder after such date, which is less than
ten years from the date of the adoption of the Plan and its approval by the
shareholders of the Company. The effective date of the Plan shall be
February 1, 1995.
V. Option Price.
The price at which the Shares may be purchased pursuant to any Option
shall be 100% of the fair market value of the Shares on the date of the grant.
The "fair market value" of Shares on any day shall be determined by the
Committee in any proper manner, including determinations based upon the
quotations for the Company's stock on any national securities exchange on
which it may be listed at the time, or upon the opinions of one or more
brokerage firms.
VI. Option Period.
No Option hereunder shall be exercisable after the expiration of ten (10)
years from the date such Option is granted.
VII. Conditions Relating to Exercise.
A. No Option shall be transferable by the grantee thereof otherwise than
by will or the laws of descent and distribution.
B. All Options granted hereunder shall be exercisable during the lifetime
of the grantee only by him.
C. Subject to the foregoing, any Option granted pursuant to the Plan shall
be exercisable immediately and the Option shall be no longer exercisable
after a period of ten (10) years from the date such Option is granted.
D. Payment for Shares purchased shall be made in full in cash upon exercise.
E. Certificates for Shares purchased shall be issued and delivered at the
time when the Option is exercised and payment therefor is received by the
Company.
F. An Option shall be exercised by delivering to the Company (or, if mailed
to the Company, upon receipt by the Company), at 1000 South Second Street,
Sunbury, Pennsylvania, a written notice signed by the Participant stating
the number of Shares the Participant desires to purchase, enclosing payment
or instructions for delivery against payment for such Shares at the Option
price then in effect provided, that for purposes of determining whether any
options has been timely exercised, no option shall be considered exercised
until the Company actually receives the exercise price.
G. Any person exercising an Option shall comply with all regulations and
requirements of any Governmental authority having jurisdiction over the
issuance or sale of capital stock of the Company, and as a condition to
receiving any Shares shall execute all such instruments as the Company in
its sole discretion may deem necessary or advisable.
H. The Company may stamp, type or print upon any certificate issued
pursuant to exercise of any Option may legend deemed proper by Company, in
its sole judgment and discretion, for the purpose of permitting it to
comply, or to facilitate its compliance, with any and all provisions of
law now or hereafter in force with respect to the issue or transfer of or
reporting with respect to any Shares issued pursuant to an Option.
VIII. Termination of Employment.
In the event of termination of a Participant's employment for any cause
other than death or dismissal for conduct injurious to the Company's
business or interests (as determined by the Board or Committee), the
Participant may exercise any portion of the Option, not theretofore
exercised, which has or under the terms of the Option before the expiration
of three months following the date of termination of his employment plus
such additional portion or portions, if any, as the Participant may be
permitted to exercise with the specific consent of the Committee; provided,
however, that if Participant shall engage in any conduct injurious to the
Company's business or interests in any material way (as determined in the
sole discretion of the Board or Committee), then all rights under the Option
shall forthwith lapse and terminate.
IX. Rights in the Event of Death.
In the case of the death of a Participant, any Option then held by him,
which shall not have lapsed or terminated prior to death, shall continue in
force and shall be exercisable from time to time, to the same extent as
though the decedent had remained alive for the entire period of the Option,
by this executor, administrator, legatees or distributees of his estate
(his "successors"); provided, however, that if his successors shall engage
in any conduct injurious to the business or interests of the Company
ay (as determined in the sole discretion of the Board or Committee), then
all rights under the Option shall forthwith lapse and terminate.
X. Powers of the Committee.
The Plan shall be administered by the Committee, subject to the general
supervision of the Board except in the granting of Options and in the
determination of employees who are eligible to receive Options under the
Plan which will be solely determined by the Committee. The Board is hereby
authorized subject to the provisions of the Plan to prescribe, amend and
rescind rules and regulations of general application relating to the Plan
and to make all other determinations (except as aforesaid) necessary or
advisable for its administration. Any power granted to the Committee (except
as aforesaid), either in this Plan or by the Board, may at any time be
exercised by the Board.
XII. Amendment and Discontinuance.
A. The Board is authorized to make such amendments to the Plan as shall
be necessary to bring it into conformity with any regulation of any
Governmental body having jurisdiction, any may otherwise alter the Plan
subject, however, to prior or subsequent approval by the shareholders of the
Company if the amendment would decrease the Option price or increase the
number of Shares included in the Plan or the number allocable to any one
person, or would involve any factor which in the opinion of counsel for the
icable SEC regulations. The Board may at any time suspend or discontinue
the Plan. No action of the Board or shareholders may increase or may impair
any Option granted under the Plan except as herein provided.
B. In the event of merger or consolidation of the Company into any other
corporation, or in the event of the adoption of a Plan of complete or
partial liquidation by requisite vote of the shareholders of the Company,
the Plan and all outstanding Options shall terminate on the effective date
of such merger or consolidation, or upon a date specified by the Board in
case of a liquidation, by the Company shall make reasonable efforts to induce
any corporate successor or prospective successor to assume all out
able thereunder in light of the securities of the successor issued in the
merger or consolidation.
C. Neither the Company nor any director or officer shall be liable to
any person for anything done or omitted in administration of the Plan or any
Option, but the issuance of stock upon proper and timely exercise of any
Option may be compelled by an order of specific performance by any court of
competent jurisdiction.
_________________________________________
Robert F. Weis, Chairman of the Board of
Directors and Treasurer
EXHIBIT 10-F
August 25, 1995
FROM: Sigfried Weis, President
TO: Norman S. Rich
Dear Mr. Rich:
This is to confirm our understanding regarding your employment with Weis
Markets, inc. (the "Company"). The Company agrees to employ you until
January 1, 2003 to perform such executive duties as may be determined and
assigned to you from time to time by the Board of Directors of the Company.
The Company will expect you during such time to diligently and conscientiously
devote your full time to such employment and to devote your best efforts in
discharging your duties of the Company.
During the term of your employment, for your services, the Company will pay
you a salary at a monthly rate of not less than $15,666.00 per month (less
all amounts required to be withheld and deducted), subject to increase from
time to time at the discretion of the Compensation Committee of the Board of
Directors. In addition, you will be entitled to continue to participate in
the Company's 401(k) Plan, SERP, Incentive Stock Option Plan and Stock
Appreciation Rights program, all other incentive, savings and retirement plans,
practices and programs applicable generally to other peer executives of the
Company and to continue to receive such coverageunder the Company's health,
life, and disability insurance policies as has been provided to you to date
and to participate in any other welfare plans practice or policies and to
receive any other fringe benefits and vacation provided by the Company to
other peer executives of the Company.
If the Company experiences a change of control:
(i) as a result of the consummation of a reorganization, merger or
consolidation involving the Company, or sale or disposition of all or
substantially all of the assets of the Company unless, following such
transaction, all or substantially all of the persons with beneficial
ownership (as defined in Rule 13(d)-3 of the Securities and Exchange Act of
1934, as amended (the "Act") aggregating 50% or more of the Company's
outstanding Common Stock as of the date of this Agreement continue to own
beneficially at least 50% of the successor corporation's outstanding Common
Stock (including a corporation swhich as a result of such transactions owns
all or substantially all of the assets of the Company),
(ii) as a result of the acquisition by any person or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Act) of beneficial ownership
(within the meaning of Rule 13d-3 of the Act) aggregating 50% or more of the
outstanding Common Stock of the Company, or
(iii) in the event that individuals who as of the date hereof constitute the
Board (the "Incumbent Board"), cease to constitute at least a majority of the
Board (provided that a director subsequently elected or nominated for election
contest or other threat to the composition of the then Incumbent Board, shall
be considered a member of the Incumbent Board),
and if, following such change of control (a) your employment is terminated
other than for Cause (defined below), or (b) you are asked to relocate
geographically to a location that is outside of a 60-mile radius from the
present location of the Company, or (c) your responsibilities or status are
substantially diminished from those which you had within the six months prior
to the change of control (excluding for this purpose an isolated,
insubstantial and inadvertent action which is remedied promptly following
notice threof given by you) (such events described in (a), (b) or (c)
hereinafter being referred to as a "Termination"), you may terminate your
employment with the Company.
Following a termination under such circumstances, the Company will continue
to pay you, for the balance of the term of this Agreement, on the same
periodic basis as your salary was paid to you prior to the date of Termination,
an amount (less all amounts required to be withheld and deducted) equal to the
higher of (I) the rate of salary you were receiving from the Company as of
immediately preceding the date of such change of control, or (ii) the rate of
salary you were receiving from the Company as of immediately preceding the date
of such Termination. You will also be entitled to receive such benefits as
you were vested in as of the date of Termination.Subject to the limitations in
the following sentence, the Company will provide you, at no cost to you, with
health coverage comparable to that which you had prior to the change of control,
for the term of the contract, or the first day of the first month in which
you obtain new employment providing health benefits coverag. The Company will
attempt to continue your coverage under its then-existing health insurance
policy to the extent permitted by the insurance company and by law or, if so
permitted, the Company will seek alternative comparable coverage.
In the event that, following such Termination and before January 1, 2003,
you become employed by a third party as an employee, consultant, independent
contractor, agent or otherwise, any amounts owed to you under this Agreement
as periodic payments, shall be reduced by an amount equal to any amounts
received from such third party.
For purposes of this Agreement, the term "Cause" shall mean death, prolonged
disability, conviction of a felony, the commission of an act resulting in
your personal enrichment at the expense of the Company, or other illegal or
gross misconduct that is materially and demonstrably injurious to the Company.
This Agreement may be terminated by the Company at any time for Cause. This
Agreement shall be binding upon and inure to the benefit of both parties and
on all successors and assigns of the Company, shall be governed by the law of
Pennsylvania and may only be amended by a writing signed by both parties.
If this letter correctly describes our understanding, please sign two copies
of this letter and return a copy to my attention.
Sincerely yours,
Sigfried Weis
President
Agreed to and Accepted
Norman S. Rich Date: August 30, 1994
<PAGE>
EXHIBIT 13
WEIS MARKETS, INC.
1994 Annual Report
Weis People Make it Happen
From its humble beginnings as a cash-and-carry store in 1912, Weis Markets
has built a reputation for freshness, bran-name variety, private-label
quality, and unparalleled service. Today, the company operates 149
supermarket stores in 6 states (Pennsylvania, Maryland, New Jersey, New York,
Virginia and West Virginia), 14 pet supply stores in Ohio, Pennsylvania,
Georgia and South Carolina, and offers customers nearly 2,000 private-label
products.
We would like to thank the people who make our success possible -- the 16,500
employees who make up the Weis family. This year's annual report is
dedicated to them, to the people who make it happen.
Highlights
(dollars in thousands, except per share amounts)
For the Fiscal Years Ended December 31, 1994
December 25, 1993, and December 26, 1992 1994 1993 1992
Net sales $ 1,556,663 $ 1,441,090 $ 1,289,195
Income before provision for income taxes
and cumulative effect of change in
accounting principle 117,193 113,654 110,249
Net income 76,249 72,953 72,716
Cash dividends 32,326 30,677 29,907
ShareholdersO equity 762,380 738,115 680,265
Depreciation and amortization 30,607 28,959 26,358
Shares outstanding 43,483,541 43,796,403 43,831,468
Net income per share $ 1.75 $ 1.66 $ 1.65
Cash dividends per share .74 .70 .68
Number of stores 149 141 126
"Management does not stand alone at Weis Markets. It's the warehouse
employee who works the order... the driver who delivers it to the store...
the stock clerk, the meat cutter, the baker, the deli person, the cashier...
each one of us plays an integral part in the business known as Weis Markets.
It's the skill and dedication and caring of everyone working together that
makes Weis Markets the best place for customers to shop."
Norman S. Rich
President
With Appreciation
On January 26, 1995, the Board of Directors announced that Mr. Sigfried Weis,
Co-chairman, will no longer be active in the day-to-day affairs of the Company
and elected him Chairman Emeritus of the Board of Directors.
Sigfried Weis began his career in 1938, when the Company was known as Weis
Pure Food Stores. Under his guidance the Company grew and today is
recognized as one of the leaders in the supermarket industry.
The Board of Directors expresses its deepest gratitude for his fifty-six
years of leadership, loyalty, service, and lifetime devotion to the
Corporation and its shareholders.
To Our Shareholders
We are pleased to report that earnings for Weis Markets for the 53-week
fiscal-year ended December 31, 1994, increased 4.5%, to $76,249,000,
compared to $72,953,000 for the year 1993. Sales increased 8.0% to
$1,556,663,000, compared to $1,441,090,000 last year.
Earnings per share amounted to $1.75, compared to $1.66 in 1993. Depreciation
and amortization increased to $30,607,000 from $28,959,000 the previous year.
Return on equity was 10.2% and shareholders' equity rose to $762,380,000 from
$738,115,000 in 1993.
In spite of increased competition and low inflation, our stores showed a
healthy increase in sales. During the year we acquired six King's supermarkets
in the Reading and Allentown/Bethlehem areas. These stores with strong sales
are easily serviced from our distribution center and make an excellent fit
with our own operations in these areas. Advertising and supervision have
been combined, and we are extremely pleased to have the King's stores as
part of the Weis Markets group.
Including the acquisition of the King's stores, we added 328,941 square feet
of retail space. Two new superstores were opened in Bethlehem and Hershey,
Pennsylvania, averaging about 46,000 square feet. Nine stores were enlarged
or remodeled and total retail space amounts to 45,471,000 square feet. More
than one-half of all stores are new or have been remodeled within the last
five years. At the end of the year, Weis Markets had 149 stores in
Pennsylvania, Maryland, New Jersey, New York, Virginia, and West Virginia,
and Weis Food Service--a restaurant and institutional supplier. No stores were
closed during the year.
We continue to lease space to a growing number of full-service banks in our
supermarkets. These banks represent a growing trend in our industry and
offer many conveniences to our customers.
At the beginning of this year, the Company made an investment in several
large pet supply stores in Ohio called SuperPetz. In August, SuperPetz
acquired five stores called Pet Owners Warehouse located in Georgia and
South Carolina, and in late fall, new stores were opened in York and
Lancaster, Pennsylvania. SuperPetz now operates 14 large pet supply stores
with more locations planned.
In August, Norman Rich, Executive Vice President of the Company, and a 30-
year veteran with Weis Markets, was elected President of the Corporation.
Sigfried Weis and Robert F. Weis were designated as Co-chairmen of the Board
of Directors, and Robert F. Weis retained his position as Treasurer. Mr.
Rich began his career with Weis Markets as director of quality control. He
became Vice President of store operations and then became Executive Vice
President of the Company, a board member and a member of the executive
committee. He has had a long and successful career in the food industry and
will continue the growth policies of the past decades.
Mr. Richard Shulman was elected to the Board of Directors. Mr. Shulman
currently serves as President of Industry Systems Development Corporation
and is also technology editor of Supermarket Business magazine. We are
delighted to have Mr. Shulman on the Board.
In the latter part of January 1995, Mr. Sigfried Weis retired from the Board
and became an emeritus member of the Board of Directors and Chairman
Emeritus. Mr. Weis had 56 years of distinguished service with the company,
33 years of which were as President. We express our gratitude to Sigfried
Weis for his loyalty, service and devotion to the Corporation and its
shareholders.
During the year, Weis Food Service consolidated its distribution operations
into much larger facilities in the Sunbury Distribution Center. The
increased space has allowed the expansion of product selection for the
division's growing number of restaurant and institutional customers. The
division's offices in Northumberland will also be expanded.
In 1995, the design and preliminary construction phase will begin on a
substantial enlargement of the Milton Distribution Center. Frozen food and
refrigerated space will be added, and other capacity studies are currently
underway related to grocery distribution space.
Capital expenditures, including acquisitions for 1994, totaled about
$66,928,000, whereas budgeted figures called for $62,660,500. Over the
next 18 months we expect to spend about $105,000,000--an all-time high--for
new stores and equipment. Approvals and permits still make it difficult to
predict exact timetables.
Five new stores are under construction in Lancaster, Pottstown, Schnecksville
and Millersburg, Pennsylvania, and Frederick, Maryland. Fourteen more are in
the planning or approval stage and should be completed in the next 18 months.
Also, during this period, about 17 markets will be remodeled or enlarged.
Financing for new and remodeled stores will be provided from company funds
and Weis Markets will continue to have no debt.
We are optimistic about prospects for 1995 and feel that our strong store
expansion program together with our new leadership and capable, loyal Weis
Markets' people will provide sales growth and profits during 1995.
Robert F. Weis
Chairman and Treasurer
Norman S. Rich
President
Pride. Skill. Dedication. Accountability. This is what it takes to stay
ahead of the rest and this is what we are committed to. From the produce
selection to the fresh baked goods, from the meat case to the deli
department, from the dairy to the pharmacy, we are all committed to serving
our customers.
At Weis Markets, Mr. Z's, Scot's and King's, through a network of 149 stores,
we offer customers a vast variety of brand-name products, a fresh selection of
locally grown, domestic and international produce, and nearly 2,000 private
label products under the Weis Quality, Weis Choice, Big Top Carnival and the
Way it Was brands. Through SuperPetz, we operate fourteen pet supply stores
in Ohio, Pennsylvania, Georgia and South Carolina. But as a family, we have
only one asset - OUR PEOPLE. Over 16,500 of the them, with one common goal:
total customer satisfaction.
From the butcher whose customers call him by name to the deli employee who
believes the success of each customer's private party rests on the relish
tray, our people are dedicated to winning over customers with every visit,
day in and day out. And in the final analysis, we believe that's what it's
all about.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Sales for the 53-week period ended December 31, 1994 of $1,556,663,000
increased 8.0% over sales of $1,441,090,000 for the 1993 fiscal year.
Sales in 1993 had increased 11.8% compared with fiscal 1992 sales of
$1,289,195,000. The sales increase in the current year was generated from
a combination of increases from the existing store base, two new superstore
openings, several store remodels and enlargements, the acquisition of six
KingOs Supermarkets in August, the growth of SuperPetz, our pet supply forma
.7% for the 53-week year. Excluding the effect of the one
additional week in the current year, identical store sales increased 3.1%.
For the last several years, the Company has experienced increased competitive
activity in a weak economy with little to no price inflation.
Gross profit as a percentage of sales has remained consistent over the last
three years at 25.3% in 1994, 25.5% in 1993 and 25.4% in 1992. Although the
Company has developed a more aggressive retail pricing strategy over this
time period due to higher levels of competitive activity in its markets, the
margins have remained consistent primarily due to suppliers shifting
traditional promotional funding towards reduced product cost. In 1994
earnings were charged $2,042,000 for the LIFO adjustment compared w
Operating, general and administrative expenses as a percentage of sales
increased .2% to 20.2% compared with 20.0% in 1993 and 19.5% in 1992. The
dollar increase in 1994 expenses is primarily a result of the new stores
opened and acquired during the year. The Company also expensed pre-opening
costs of $745,000 associated with the SuperPetz operation.
Interest and dividend income of $21,607,000, at 1.4% of sales in 1994
compared to $21,528,000, at 1.5% of sales in 1993, and $23,783,000, at 1.8%
of sales in 1992. Investment income as a percentage of sales has declined
over the last several years as a result of the decline in market rates. As
the Federal Reserve interest rates increase, investment yields will also
increase, causing the CompanyOs investment income to rise in the future. The
investment portfolio consists of Pennsylvania tax-free state an
Other income is primarily generated from rental income, coupon handling
fees, cardboard salvage and gains on the sales of fixed assets. Other
income increased $3,043,000 in 1994 compared to 1993 primarily from the
increased sales volume. Cardboard salvage rates also increased significantly
during the year, but this additional income was partially offset by rising
paper bag and other related paper supply costs. Other income as a percentage
of sales increased to 1.0% in 1994 compared to .9% in 1993 and 19
The effective tax rate was 34.9% in 1994, 35.8% in 1993, and 35.0% in 1992.
Pennsylvania reduced its income tax rate from 12.25% to 11.99% in 1994 and
has scheduled further reductions for 1995. Corporate federal tax rates
increased from 34% to 35% in 1993, having a negative impact of $928,000 to
the 1993 profits. The Company adopted Statement of Financial Accounting
Standards No. 109, OAccounting for Income Taxes,O as of December 29, 1991,
which resulted in a cumulative effect adjustment of $1,046,000 i
During fiscal 1994, the Company opened two new stores, remodeled nine stores,
and completed the acquisition of KingOs Supermarkets, Inc. which operated six
stores in Pennsylvania. As of its fiscal year-end, Weis Markets, Inc. was
operating 149 retail food stores, 14 SuperPetz pet supply stores and Weis
Food Service, a restaurant and institutional supplier. The company
currently operates stores in Pennsylvania, Maryland, New Jersey, New York,
Virginia and West Virginia. SuperPetz operates stores in Ohio,
Liquidity and Capital Resources
As in prior years, the Company funded its 1994 working capital requirements
through internally generated cash flows from operations. Net cash provided
by operating activities was $119,372,000 compared to $104,103,000 in 1993,
and $83,282,000 in 1992. Working capital has decreased by 1.5% in 1994,
compared to increases of 6.1% in 1993 and 5.9% in 1992. The decrease in
working capital in 1994 was impacted by market value declines in the Company's
investment portfolio relating to rising interest rates. Wit
The Company continues to use its cash for acquisitions, the construction of
new supermarkets, the expansion and remodeling of existing stores, the
securing of sites for future expansion, and the upgrading of the processing
and distribution facilities. Property, equipment and other acquisition
expenditures during fiscal 1994 amounted to $66,928,000 compared to
$64,412,000 in 1993 and $31,985,000 in 1992. Treasury stock purchases
amounted to $8,101,000 in 1994, compared to $1,149,000 in 1993, and $10,044,0
The CompanyOs current development plans will require an investment of
approximately $105,000,000 during the next eighteen months. The Company is
also actively seeking acquisitions and investment opportunities so as to
enhance future performance. In view of the CompanyOs significant liquid
assets, no existing debt financing, and its ability to generate working
capital internally, it is not expected that any type of external financing
will be needed.
Consolidated Balance Sheets
(dollars in thousands)
December 31, 1994
and December 25, 1993 1994 1993
Assets
Current:
Cash $ 4,011 $ 9,066
Marketable securities 453,017 458,112
Accounts receivable, net 24,132 20,378
Inventories 130,019 111,847
Prepaid expenses 4,229 6,380
Deferred income taxes 2,344 ----
Total current assets 617,752 605,783
Property and equipment, net 245,263 225,285
Intangible and other assets, net 29,078 13,422
$892,093 $844,490
Liabilities
Current:
Accounts payable $ 82,529 $ 59,356
Accrued expenses 8,266 6,900
Accrued self-insurance 10,462 7,886
Payable to employee benefit plans 7,957 8,994
Income taxes payable 3,089 1,938
Deferred income taxes ----- 7,525
Total current liabilities 112,303 92,599
Deferred income taxes 17,495 13,776
Minority Interest (85) ----
Shareholders' Equity
Common stock, no par value,
100,800,000 shares authorized,
47,445,929 and 47,438,249
shares issued, respectively 7,380 7,255
Retained earnings 834,995 791,072
Net unrealized gain on marketable securities 4,933 16,740
Minimum pension liability ---- (125)
847,308 814,942
Treasury stock at cost -
3,962,388 and 3,641,846
shares, respectively (84,928) (76,827)
Total shareholders' equity 762,380 738,115
$892,093 $844,490
See accompanying notes to consolidated financial statements.
Consolidated Statements of Income
(dollars in thousands, except per share amounts)
For the Fiscal Years Ended December 31, 1994,
December 25, 1993, and December 26, 1992 1994 1993 1992
Net sales $1,556,663 $1,441,090 $1,289,195
Cost of sales, including warehousing
and distribution expenses 1,162,068 1,073,140 961,847
Gross profit on sales 394,595 367,950 327,348
Operating, general
and administrative expenses 314,593 288,280 251,917
Income from operations 80,002 79,670 75,431
Interest and dividend income 21,607 21,528 23,783
Other income 15,499 12,456 11,035
Minority Interest 85 ---- ----
Income before provision for income
taxes and cumulative effect of
change in accounting principle 117,193 113,654 110,249
Provision for income taxes 40,944 40,701 38,579
Income before cumulative effect
of change in accounting principle 76,249 72,953 71,670
Cumulative effect at December 29,
1991, of change in accounting for
income taxes ---- ---- 1,046
Net income $ 76,249 $ 72,953 $ 72,716
Per share of common stock:
Income before cumulative effect
of change in accounting principle $ 1.75 $ 1.66 $ 1.63
Cumulative effect at December 29,
1991, of change in accounting for
income taxes ---- ---- .02
Net income $ 1.75 $ 1.66 $ 1.65
Cash dividends $ .74 $ .70 $ .68
See accompanying notes to consolidated financial statements.
<TABLE>
Consolidated Statements of Shareholders' Equity
(dollars in thousands)
For the Fiscal Years Ended December 31, 1994
December 25, 1993 and December 26, 1992
<CAPTION>
Net Unrealized
Gain (Loss) Minimum Total
Common Retained on Markateable Pension Treasury Shareholders'
Stock Earnings Securities Liability Stock Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at December 28, 1991 $7,060 705,987 (65,634) 647,413
Shares issued for options 87 87
Treasury stock purchased
(392,207 shares) (10,044) (10,044)
Dividends paid (29,907) (29,907)
Net income 72,716 72,716
Balance at December 26, 1992 7,147 748,796 (75,678) 680,265
Shares issued for options 108 108
Treasury stock purchased
(41,790 shares) (1,149) (1,149)
Dividends paid (30,677) (30,677)
Change in accounting for
marketable securities 16,740 16,740
Minimum pension liability (125) (125)
Net income 72,953 72,953
Balance at December 25, 1993 7,255 791,072 16,740 (125) (76,827) 738,115
Shares issued for options 125 125
Treasury stock purchased
(320,542 shares) (8,101) (8,101)
Dividends paid (32,326) (32,326)
Net unrealized loss
on marketable securities (11,807) (11,807)
Minimum pension liability 125 125
Net income 76,249 76,249
Balance at December 31, 1994 $7,380 834,995 4,933 (84,928) 762,380
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows
(dollars in thousands)
For the Fiscal Years Ended December 31, 1994,
December 25, 1993, and December 26, 1992 1994 1993 1992
Cash flows from operating activities:
Net income $ 76,249 $72,953 $72,716
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 30,607 28,959 26,358
Loss (gain) on disposition of fixed assets (298) (798) 208
Changes in operating assets
and liabilities:
Increase in inventories (18,172) (14,188) (5,316)
(Increase) decrease in accounts
receivable and prepaid expenses (1,603) 3,302 (4,534)
(Increase) decrease in prepaid
income taxes ---- 419 (419)
Increase (decrease) in accounts
payable, other liabilities and
minority interest 28,669 11,652 (471)
Increase (decrease) in income
taxes payable 1,151 1,938 (4,502)
Increase (decrease) in deferred taxes 2,769 (134) (758)
Net cash provided by operating activities 119,372 104,103 83,282
Cash flows from investing activities:
Purchase of property and equipment (49,421) (49,188) (31,985)
Proceeds from the sale of property
and equipment 985 1,928 553
Increase in marketable securities (15,631) (9,448) (11,212)
Increase in intangible and other assets (20,058) (7,909) ----
Net cash used by investing activities (84,125) (64,617) (42,644)
Cash flows from financing activities:
Proceeds from issuance of common stock 125 108 87)
Dividends paid (32,326) (30,677) (29,907)
Purchase of treasury stock (8,101) (1,149) (10,044)
Net cash used by financing activities (40,302) (31,718) (39,864)
Net increase (decrease) in cash (5,055) 7,768 774
Cash at beginning of year 9,066 1,298 524
Cash at end of year $ 4,011 $ 9,066 $ 1,298)
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
(1) Summary of Significant
Accounting Policies
The following is a summary of the significant accounting policies followed
in preparing the Company's consolidated financial statements:
(a) Definition of Fiscal Year
The Company's fiscal year ends on the last Saturday in December. Fiscal
1994, 1993, and 1992 were comprised of 53 weeks, 52 weeks and 52 weeks,
respectively.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries.
(c) Business Segment
The principal business activity reflected in the accompanying consolidated
financial statements is the retail sale of food.
(d) Intangible Assets
Intangible assets are generally amortized over periods ranging from 3 to 40
years. A portion of the excess of cost of investments over net assets
acquired prior to November 1, 1970, ($2,322,000) is not being amortized
because, in the opinion of management, there has been no decrease in value.
(e) Inventories
Inventories are valued at the lower of cost or market, using both the last-
in, first-out (LIFO) and average cost methods.
(f) Marketable Securities
Marketable securities consist of Pennsylvania tax-free state and municipal
bonds, U.S. Treasury securities, equity securities, and other short-term
investments. The Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, OAccounting for Certain Investments in Debt
and Equity SecuritiesO (Statement 115) at December 25, 1993. Under Statement
115, the Company classifies all of its marketable securities as available-for-
sale.
Available-for-sale securities are recorded at fair value. Unrealized holding
gains and losses, net of the related tax effect, are excluded from earnings
and are reported as a separate component of shareholders' equity until
realized. A decline in the market value below cost that is deemed other
than temporary results in a charge to earnings and the establishment of a
new cost basis for the security. Dividend and interest income are recognized
when earned. Realized gains and losses are included in earni
Prior to adopting Statement 115, the Company valued its securities in
accordance with Statement of Financial Accounting Standards No. 12,
OAccounting for Certain Marketable Securities' (Statement 12) and related
interpretations. Marketable debt securities were carried at amortized cost
and marketable equity securities were carried at lower of cost or market.
(g) Property and Equipment
Depreciation is provided on the cost of buildings and improvements and
equipment principally using accelerated methods. Leasehold improvements are
amortized over the terms of the leases or the useful lives of the assets,
whichever is shorter.
Maintenance and repairs are charged to income and renewals and betterments
are capitalized. When assets are retired or otherwise disposed of, the
assets and accumulated depreciation are removed from the respective accounts
and any profit or loss on the disposition is credited or charged to income.
(h) Income Taxes
Under the asset and liability method of the Financial Accounting Standards
BoardOs Statement of Financial Accounting Standards No. 109, OAccounting for
Income TaxesO (Statement 109), deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
Statement 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Effective December 29, 1991, the Company adopted Statement 109 and has
reported the cumulative effect of that change in the method of accounting
for income taxes in the 1992 consolidated statement of income.
(i) Earnings Per Share
The earnings per share computations are based upon the weighted average
number of common shares and common share equivalents outstanding during the
year.
(2) Income Taxes
As discussed in note 1, the Company adopted Statement 109 as of December 29,
1991. The cumulative effect of this change in accounting for income taxes of
$1,046,000 was determined as of December 29, 1991, and was reported
separately in the consolidated statement of income for the year ended
December 26, 1992.
The provision for income tax consists of:
(dollars in thousands) 1994 1993 1992
Currently payable:
Federal $29,248 $29,929 $27,885
State 11,361 10,812 10,453
Deferred 335 (40) 241
$40,944 $40,701 $38,579
The following is a reconciliation between the applicable income tax expense
and the amount of income taxes which would have been provided at the Federal
statutory rate. The statutory rate was 35% in 1994 and 1993, and 34% in
1992. The tax rate change in 1993 had a negative impact of $928,000 to that
year's profits.
(dollars in thousands) 1994 1993 1992
Tax at statutory rate $41,018 $39,779 $37,485
State income taxes, net of
federal income tax benefit 7,293 7,355 6,965
Other - principally tax-exempt
investment income (7,367) (6,433) (5,871)
Actual provision
(effective tax rate 34.9%,
35.8%,and 35.0%,
respectively) $40,944 $40,701 $38,579
Cash paid for income taxes was $39,907,000, $40,530,000, and $43,171,000 in
1994, 1993 and 1992, respectively.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1994, and December 25, 1993, are presented below:
(dollars in thousands) 1994 1993
Gross deferred tax assets:
Accounts receivable, due to
allowance for doubtful accounts $ 309 $ 195
Inventories, due to additional costs
inventoried for tax purposes
pursuant to the Tax Reform Act
of 1986 1,284 1,117
Compensated absences,
principally due to accrual for
accounting purposes 403 369
Employee benefit plans,
principally due to accrual for
accounting purposes 3,249 2,301
General liability insurance,
principally due to accrual for
accounting purposes 1,070 1,074
Other ---- 94
Total gross deferred tax assets 6,315 5,150
Less valuation allowance ---- ----
Total deferred tax assets 6,315 5,150
Gross deferred tax liabilities:
Net unrealized gain on
marketable securities (3,690) (12,609)
Plant and equipment, principally
due to differences in depreciation (17,495) (13,776)
Other (281) (66)
Total gross deferred tax liabilities (21,466) (26,451)
Net deferred tax liability $(15,151) $(21,301)
Reflected on attached consolidated
balance sheets as:
Current deferred asset (liability)
- net $ 2,344 $ (7,525)
Noncurrent deferred liability - net (17,495) (13,776)
Net deferred tax liability $(15,151) $(21,301)
(3) Inventories
Merchandise inventories as of December 31, 1994 and December 25, 1993, were
valued as follows:
(dollars in thousands) 1994 1993
LIFO $110,086 $90,786
Average cost 19,933 21,061
$130,019 $111,847
If all inventories were valued on the average cost method, which
approximates current cost, total inventories would have been $42,437,000 and
$40,395,000 higher than as reported on the above methods as of December 31,
1994, and December 25, 1993, respectively.
Although management believes the use of the LIFO method for valuing certain
inventories (as set forth above) represents the most appropriate matching of
costs and revenues in the Company's circumstances, the following summary of
net income and per share amounts based on the use of the average cost method
for valuing all inventories is presented for comparative purposes.
(dollars in thousands,
except per share amounts) 1994 1993 1992
Net income $77,418 $73,245 $74,060
Net income per share $001.77 $001.67 $001.68
(4) Property and Equipment
Property and equipment as of December 31, 1994, and December 25, 1993,
consisted of:
Useful Life
(dollars in thousands) (in years) 1994 1993
Land $032,557 $028,152
Buildings and improvements 10-60) 177,025 168,414
Equipment 3-12) 293,043 265,494
Leasehold improvements 5-20) 39,811 34,436
Total, at cost 542,436 496,496
Less accumulated
depreciation and amortization 297,173 271,211
$245,263 $225,285
(5) Marketable Securities
As discussed in note 1, the Company adopted Statement 115 as of December 25,
1993. The impact of this change in accounting principle resulted in an
increase in marketable securities as of December 25, 1993 of $29,349,000 and
an increase in shareholdersO equity of $16,740,000, representing the after-
tax impact. Marketable securities as of December 31, 1994, and December 25,
1993, consisted of:
Gross Gross
Unrealized Unrealized
December 31, 1994 Amortized Holding Holding Fair
(dollars in thousands) Cost Gains Losses Value
Available-for-sale:
Pennsylvania state and
municipal bonds $391,331 $ 588 $2,936 $388,983
U.S. Treasury securities 26,643 64 63 26,644
Equity Securities 10,864 10,970 21,834
Other short-term investments 15,556 15,556
$444,394 $11,622 $2,999 $453,017
Gross Gross
Unrealized Unrealized
December 25, 1993 Amortized Holding Holding Fair
(dollars in thousands) Cost Gains Losses Value
Available-for-sale:
Pennsylvania state and
municipal bonds $377,742 $12,997 $29 $390,710
U.S. Treasury securities 31,272 2,418 33,690
Equity securities 12,736 13,963 26,699
Other short-term investments 7,013 7,013
$428,763 $29,378 $29 $458,112
Maturities of investment securities classified as available-for-sale at
December 31, 1994, were as follows:
Amortized Fair
(dollars in thousands) Cost Value
Available-for-sale:
Due within one year $129,584 $129,579
Due after one year through five years 300,765 298,462
Due after five years through ten years 3,181 3,142
Equity securities 10,864 21,834
$444,394 $453,017
(6) Retirement Plans
The Company has a noncontributory defined benefit pension plan and a
contributory 401(k) plan covering substantially all full-time employees, a
noncontributory profit-sharing plan covering eligible employees and a
supplemental retirement plan covering certain officers of the Company. An
eligible employee as defined in the Profit Sharing Plan includes salaried
employees, store management and administrative support personnel. The
Company's policy is to fund pension and profit-sharing cost accrued, but not
s
of the Employee Retirement Income Security Act of 1974, whereas contributions
to the profit-sharing plan and the retirement savings plan 401(k) are made at
the sole discretion of the Company. The Company's supplemental retirement
plan provides for the payment of specific amounts of annual retirement
benefits to the officers or to their beneficiaries over an actuarially
computed normal life expectancy. The actuarial present value of accumulated
benefits amounted to $5,978,000 and $5,408,000 at December 31,
than upon future service and all benefits are fully vested. Retirement plan
costs amounted to:
(dollars in thousands) 1994 1993 1992
Pension plan $ 204 $ 973 $ 361
Pension plan curtailment loss 1,794 ---- ----
Retirement savings plan 401(k) 414 ---- ----
Profit sharing plan 815 815 815
Supplemental retirement plan 570 781 1,092
$3,797 $2,569 $2,268
The net periodic defined benefit pension expense is computed as follows:
(dollars in thousands) 1994 1993 1992
Service cost $0,456 $0,973 $0,785
Interest cost on projected
benefit obligation 1,835 1,766 1,482
Actual return on plan assets (910) (1,202) (2,278)
Net amortization and deferral (1,177) (564) 372
Net pension expense $ 204 $ 973 $ 361)
The funded status of the Company's pension plan at September 30, 1994 and
September 30, 1993, (the measurement dates) is as follows:
(dollars in thousands) 1994 1993
Actuarial present value of benefit
obligations:
Vested benefit obligation $(22,612) $(23,405)
Accumulated benefit obligation $(22,612) $(25,064)
Projected benefit obligation $(22,612) $(25,654)
Plan assets at fair value 23,417 22,972
Plan assets in excess of (less than)
projected benefit obligation 805 (2,682)
Unrecognized prior service cost 2,551
Unrecognized net loss 1,284 3,879
Additional minimum liability adjustment (2,770)
Unrecognized transition asset (2,739) (3,070)
Accrued pension cost $ (650) $ (2,092)
On February 1, 1994, the Board of Directors of the Company voted to freeze
the Pension Plan. Effective March 15, 1994, the Plan was frozen and all
participants became fully vested. The Company recognized a curtailment loss
of $1,794,000 in 1994 as a result of this action.
Plan assets consist primarily of common stocks, bonds, and U.S. government
obligations. The assumed long-term rate of return on pension plan assets was
8.5% and 9.0%, respectively. Pension benefit obligations were determined
using an assumed discount rate of 8.25% and 6.75%, respectively, and an
assumed long-term rate of compensation increase of 5% in 1993.
In accordance with the provisions of Statement of Financial Accounting
Standards No. 87, "Accounting for Pensions," the Company recorded an
additional minimum liability of $2,770,000 at December 25, 1993, representing
the excess of the accumulated benefit obligation over the fair value of plan
assets and accrued pension cost. The additional liability was offset by an
intangible asset to the extent of previously unrecognized prior service cost.
The amount in excess of previously unrecognized prior service
er-tax impact.
The Company has no other post-retirement benefit plans.
(7) Incentive Plans
(a) Stock Option Plan
The Company has an incentive stock option plan for officers and other key
employees under which 455,019 shares of common stock are reserved for
issuance at December 31, 1994. Under the terms of the plan, option prices
are 100% of the Ofair market valueO of the shares on the date granted.
Options granted are immediately exercisable and expire ten years after date
of grant.
Changes during the three years ended December 31, 1994, in options
outstanding under the plan were as follows:
Option Prices Shares
Per Share Under Option
Balance, December 28, 1991 $11.52 to $16.28 22,526
Options issued $25.13 to $26.88 3,250
Exercised $11.52 to $16.28 (7,301)
Balance, December 26, 1992 $16.06 to $26.88 18,475
Options issued $24.25 to $25.63 1,500
Exercised $16.06 to $16.28 (6,725)
Balance, December 25, 1993 $16.06 to $26.88 13,250
Options issued $25.88 to $26.50 10,500
Exercised $16.06 to $16.28 (7,680)
Balance, December 31, 1994 $16.28 to $26.88 16,070
At December 31, 1994, all options were exercisable.
(b) Company Appreciation Plan
Under a Company Appreciation Plan, officers and other employees are awarded
rights equivalent to shares of Company common stock. At the maturity date,
usually one year after the date of award, the value of any appreciation from
the original date of issue is paid in cash to the participants.
During 1994, 1993 and 1992, 24,500, 17,500, and 16,900 rights, respectively,
were awarded under the program. In 1994, 1993 and 1992, $0, $37,000, and
$11,000, respectively, were charged to earnings.
(8) Lease Commitments
At December 31, 1994, the Company leased approximately 61% of its facilities
under operating leases which expire at various dates up to 2014. These
leases generally provide for fixed annual rentals; however, several provide
for minimum annual rentals plus contingent rentals as a percentage of annual
sales and a number of leases require the Company to pay for all or a portion
of insurance, real estate taxes, water and sewer rentals and repairs, the
cost of which is charged to the related expense category ra
r which the Company may extend the lease terms from 5 to 20 years.
Rent expense on all leases consisted of:
(dollars in thousands) 1994 1993 1992
Minimum annual rentals $14,261 $12,025 $9,760
Contingent rentals 219 151 162
$14,480 $12,176 $9,922
The following is a schedule by year of future minimum rental payments
required under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of December 31, 1994.
(dollars in thousands)
1995 $ 15,224
1996 14,130
1997 12,899
1998 11,754
1999 9,854
Thereafter 52,568
$116,429
As of December 31, 1994, the future minimum rentals to be received under
noncancelable leases and subleases were $16,401,000.
(9) Fair Value Information
The carrying amounts for cash, trade receivables and trade payables
approximate fair value because of the short maturities of these instruments.
The fair values of the CompanyOs marketable securities are based on quoted
market prices (See note 5).
(10) Acquisitions
On December 31, 1992, the Company acquired 14 retail grocery stores from IGA
Food Mart, Inc., of Stroudsburg, Pennsylvania. On December 26, 1993, the
Company purchased an 80% interest in SuperPetz, Inc. The investment was
used to acquire two pet supply stores located in Dayton, Ohio. On August 6,
1994 SuperPetz acquired five pet supply stores in Georgia and South Carolina
from Pet Owners Warehouse, Inc. On August 3, 1994, the Company acquired
KingOs Supermarkets, Inc., of Hamburg, Pennsylvania. KingOs o
re accounted for by the purchase method. Goodwill arising from these
transactions, which was not material, is being amortized over a 15 year
period on a straight-line basis.
(11) Summary of Quarterly Results (Unaudited)
Quarterly financial data for 1994 and 1993 is as follows:
Fourteen
(dollars in thousands, Weeks
except per share amounts) Thirteen Weeks Ended Ended
Mar. 26, 94 Jun. 25, 94 Sep. 24, 94 Dec. 31, 94
Net sales $372,626 $368,467 $377,197 $438,373
Gross profit
on sales 92,786 91,079 97,857 112,873
Net income 17,398 17,808 18,733 22,310
Net income
per share .40 .41 .43 .51
Thirteen Weeks Ended
Mar. 27, 93 Jun. 26, 93 Sep. 25, 93 Dec. 25, 93
Net sales $356,579 $357,868 $354,884 $371,759
Gross profit
on sales 89,284 90,236 90,823 97,607
Net income 18,687 17,754 17,044 19,468
Net income per share .43 .41 .39 .44
Independent Auditors' Report
KPMG Peat Marwick LLP
Certified Public Accountants
225 Market Street
Harrisburg, PA 17108-1190
To the Shareholders of Weis Markets, Inc.:
We have audited the accompanying consolidated balance sheets of Weis Markets,
Inc. and subsidiaries as of December 31, 1994 and December 25, 1993 and the
related consolidated statements of income, shareholdersO equity, and cash
flows for each of the years in the three-year period ended December 31, 1994.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the ove
nion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Weis
Markets, Inc. and subsidiaries at December 31, 1994 and December 25, 1993
and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1994 in conformity with
generally accepted accounting principles.
As discussed in notes 1 and 5 to the consolidated financial statements, the
Company changed its method of accounting for investments at December 25, 1993
to adopt the provisions of the Financial Accounting Standards BoardOs
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." As discussed in notes 1 and 2 to
the consolidated financial statements, the Company changed its method of
accounting for income taxes in 1992 to adopt the provisions
KPMG Peat Marwick LLP
January 27, 1995
<TABLE>
Five Year Review of Operations
<CAPTION>
53 Weeks 52 Weeks 52 Weeks 52 Weeks 52 Weeks
(dollars in thousands, Ended Ended Ended Ended Ended
except per share amounts) Dec. 31, 1994 Dec. 25, 1993 Dec. 26, 1992 Dec. 28, 1991 Dec. 29, 1990
<S> <C> <C> <C> <C> <C>
Net sales $1,556,663 $1,441,090 $1,289,195 $1,294,332 $1,271,806
Costs and expenses 1,476,661 1,361,420 1,213,764 1,206,795 1,175,144
Income from operations 80,002 79,670 75,431 87,537 96,662
Other income, net 37,106 33,984 34,818 36,649 35,630
Minority Interest 85
Income before provision for
income taxes and cumulative
effect of change in
accounting principle 117,193 113,654 110,249 124,186 132,292
Provision for income taxes 40,944 40,701 38,579 43,609 45,519
Income before cumulative
effect of change in
accounting principle 76,249 72,953 71,670 80,577 86,773
Cumulative effect of change
in accounting for income
taxes 1,046
Net income 76,249 72,953 72,716 80,577 86,773
Retained earnings, beginning
of year 791,072 748,796 705,987 653,894 594,160
867,321 821,749 778,703 734,471 680,933
Cash dividends 32,326 30,677 29,907 28,484 27,039
Retained earnings,
end of year $ 834,995 $ 791,072 $ 748,796 $ 705,987 $ 653,894
Weighted average
shares outstanding 43,662,031 43,827,168 43,979,088 44,503,124 45,049,461
Cash dividends per share $ .74 $ .70 $ .68 $ .64 $ .60
Net income per share $ 1.75 $ 1.66 $ 1.65 $ 1.81 $ 1.93
Working capital $ 505,449 $ 513,184 $ 483,572 $ 456,454 $ 431,738
Total assets 892,093 844,490 761,528 734,517 693,922
Shareholders' equity 762,380 738,115 680,265 647,413 610,067
Number of stores 149 141 126 124 118
</TABLE>
<TABLE>
Stock Prices and Dividend Information by Quarter
The approximate number of shareholders on December 31, 1994, was 8,800.
<CAPTION>
1994 1993
4th 3rd 2nd 1st 4th 3rd 2nd 1st
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Prices
High 27 26 26 1/4 28 28 5/8 29 7/8 26 5/8 27 7/8
Low 23 7/8 24 1/2 24 1/4 25 3/4 26 1/4 26 5/8 24 7/8 24 7/8
Dividends Per Share .19 .19 .18 .18 .18 .18 .17 .17
</TABLE>
Officers
Robert F. Weis
Chairman
and Treasurer
Norman S. Rich
President
Alan L. Barrick
Vice President
Engineering and Manufacturing
Stephen J. Bowers
Vice President
Weis Food Service
Walter B. Bruce
Vice President
Private Label
Richard L. Kunkle
Vice President
Pharmacy
Robert E. Lutz
Vice President
Grocery Merchandising
William R. Mills
Vice President Finance
and Secretary
* Sigfried Weis served as Co-chairman of the Board of Directors through
January 26, 1995 when he was appointed Chairman Emeritus of the Board of
Directors.
** Robert F. Weis served as Co-chairman of the Board of Directors through
January 26, 1995 when he was appointed Chairman of the Board of Directors
and Treasurer.
Annual Meeting
The annual meeting of the shareholders of the Company will be held at 10 a.m.
on Tuesday, April 4, 1995, at the Corporate offices, 1000 South Second Street,
Sunbury, PA 17801.
Registrar and Transfer Agent
American Stock Transfer & Trust Company, 40 Wall Street, 46th floor, New
York, NY 10005
(718) 921-8210
Auditors
KPMG Peat Marwick LLP
Certified Public Accountants
225 Market Street
Harrisburg, PA 17108-1190
Stock Traded
New York Stock Exchange
EXHIBIT 21
WEIS MARKETS, INC.
SUBSIDIARIES OF THE REGISTRANT
Percent
State of Owned by
Incorporation Registrant
Albany Public Markets, Inc. New York 100%
Dutch Valley Food Company, Inc. Pennsylvania 100%
King's Supermarkets, Inc. Pennsylvania 100%
Martin's Farm Market, Inc. Pennsylvania 100%
Shamrock Wholesale Distributors, Inc. Pennsylvania 100%
SuperPetz, Inc. Pennsylvania 80%
The consolidated financial statements include the accounts of the company
and its subsidiaries.
EXHIBIT 23
Consent of Independent Auditors
The Board of Directors
Weis Markets, Inc.:
We consent to incorporation by reference in the registration statement on
Form S-8 of Weis Markets, Inc. of our report dated January 27, 1995, relating
to the consolidated balance sheets of Weis Markets, Inc. and subsidiaries as
of December 31, 1994 and December 25, 1993 and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1994, which report appears
in the December 31, 1994 Annual Report to Shareholders of Weis Markets, Inc.
and is incorporated herein by reference.
KPMG PEAT MARWICK LLP
Harrisburg, Pennsylvania
March 24, 1995
