SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended February 3, 1996
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 0-10506
BIG B, INC.
(Exact Name of Registrant as Specified in its Charter)
Alabama 63-06325521
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2600 Morgan Road, S.E., Birmingham, Alabama 35023
(Address of Principal Executive Offices) (Zip Code)
205/424-3421
(Registrant's Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
NONE
Securities Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK
$.001 Par Value
Indicate by check mark whether Big B, Inc. (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, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
Big B, Inc. as of April 26, 1996, was approximately $171,905,968.50.
As of April 1, 1996, the number of shares of Big B, Inc. Common Stock
outstanding was 18,572,647.
DOCUMENTS INCORPORATED BY REFERENCE
(2) Part III incorporates by reference portions of the
Big B, Inc. Annual Proxy Statement for the fiscal year ended February 3,
1996 (to be filed with the Commission on or about April 27, 1996). <PAGE>
<PAGE>
TABLE OF CONTENTS
Item Page
---- ----
Part I 1 Business. 1
2 Properties. 7
3 Legal Proceedings. 8
4 Submission of Matters to a Vote of Security
Holders. 8
Part II 5 Market for Registrant's Common Equity and
Related Stockholder Matters. 8
6 Selected Financial Data. 10
7 Management's Discussion and Analysis of
Financial Condition and Results of Operations.11
8 Financial Statements and Supplementary Data. 14
9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. 14
Part III 10 Directors and Executive Officers of
the Registrant. 14
11 Executive Compensation. 14
12 Security Ownership of Certain Beneficial
Owners and Management. 14
13 Certain Relationships and Related
Transactions. 15
Part IV 14 Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. 15
Index to Consolidated Financial Statements 16
<PAGE>
<PAGE> 1
PART I
ITEM 1. BUSINESS.
General
The Company operates a chain of 384 stores throughout a five state area in
the southeastern United States. The Company operates its drug stores under
the names "Big B Drugs" and "Drugs for Less". Also, the Company operates
five home healthcare stores under the name "Big B Home Health Care Center."
The Company is one of the largest drug store chains in this five state area
with 170 stores in Alabama, 161 in Georgia, 23 in Florida, 23 in Tennessee
and seven in Mississippi. All of the Company's stores are within a 400
mile radius of its distribution center in Birmingham, Alabama. In addition
to prescription drugs and services, the Company's drug stores offer a broad
range of health and beauty aids, cosmetics, greeting cards, convenience
foods, photo processing services and other general merchandise. The
Company intends to continue to concentrate its future growth in this five
state area to take advantage of the available economies of scale in
advertising, distribution and supervision and the competitive advantage for
the Company in marketing to third-party payment plans.
The Drug Store Industry
In recent years, the drug store industry has undergone several significant
changes, including: (i) the increase in third-party payment plans for
prescription drugs, (ii) the consolidation within the drug store industry,
(iii) the aging of the United States population and (iv) the increase in
competition from non-traditional retailers of prescription and over-the-
counter drugs.
During the last several years, a growing percentage of prescription drug
sales throughout the industry has been accounted for by sales to customers
who are covered by third-party payment plans. According to IMS America, in
1995, third-party payment plan sales represented approximately 58.3% of
total prescription drug sales in the United States. In a typical third-
party payment plan, the drug store company has a contract with a third-
party payor, such as an insurance company, HMO, PPO, other managed care
provider, government agency or private employer, which agrees to pay for
part or all of a customer's eligible prescription purchases. Although
third-party payment plans often provide a high volume of prescription
sales, such sales typically generate lower gross margins than other
prescription sales due principally to the highly competitive nature of this
business and recent efforts by third-party payment plans to contain costs.
The Company believes larger drug store chains, such as the Company, are
better able to service the growing third-party payment plan segment than
independent drug stores and smaller chains as a result of the larger
chains' more sophisticated technology systems, larger number of stores and
greater penetration within their markets.
As a result of the economies of scale from which larger drug store chains
benefit as well as the third-party payment plan trend, the number of
independent drug stores and smaller drug store chains has decreased as a
result of acquisitions by larger drug store chains. This trend is expected
to continue because larger chains are better positioned to handle the
increased third-party payment plan sales, purchase inventory on more
advantageous terms and achieve other economies of scale with respect to
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<PAGE> 2
their marketing, advertising, distribution and other expenditures. The
Company believes that independent drug stores and smaller drug store chains
may provide significant acquisition opportunities for larger drug store
chains, such as the Company.
Strong demographic trends have also contributed to changes in the drug
store industry, as a significant portion of the United States population
ages. This trend has had, and is expected to continue to have, a marked
effect on the pharmacy business in the United States because consumer
prescription and over-the-counter drug usage generally increases with age.
The group of persons over age 40 is a rapidly growing segment of the U.S.
population. According to industry sources, in 1994, this segment
represented approximately 39% of the population, although it consumed
approximately 58% of all prescriptions sold in the United States. This
segment is projected to increase to 43% of the population by the year 2000.
The average per person prescription usage in the United States is
approximately 7.4 prescriptions per year, which increases to approximately
6.7 and 16.5 prescriptions filled per year for persons ages 20-64 and 65
and over, respectively.
Drug store chains and independent drug stores represent approximately 39%
and 27%, respectively, of the U.S. retail pharmacy market, including mass
merchandisers, food stores, staff model HMOs, clinics, mail order
companies, independent pharmacies and chain pharmacies. In response to a
number of factors, including the aging of the United States population,
mass merchandisers (including discounters and deep discounters),
supermarkets, combination food and drug stores, mail order distributors,
hospitals, HMOs and other managed care providers have entered the pharmacy
industry. Supermarkets, including food and drug stores, and mass
merchandisers each represent approximately 11% of the retail pharmacy
market in the United States.
Business Strategy
Factors in the Company's business strategy which have been key in the
growth of the Company's operations are:
New Stores and Acquisitions. The Company seeks to achieve and maintain a
leading market share in those markets in which it operates by continually
acquiring and establishing stores at strategic locations in those markets.
This expansion is accomplished through new store openings and through the
acquisition of existing chain drug stores and independent drug store
operations. The Company presently plans to limit its expansion to markets
which can be served by its existing Birmingham distribution center, which
the Company believes can serve up to 600 stores. The Company believes that
there is ample opportunity for additional expansion in the southeastern
United States and that it will benefit from the economies of scale
associated with expansion in its present market area.
Focus on Pharmacy Operations. The Company intends to continue to place
special emphasis on its pharmacy operations through computer technology to
provide better information and service to customers in the stores, through
the continued development of marketing strategies to increase the customer
base for the Company's stores, including prescription programs tailored to
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<PAGE> 3
individual employer groups and health maintenance organizations, and
through the development of new markets for pharmacy sales outside of the
Company's stores, such as the Company's mail order prescription drug
program.
Customer Satisfaction. The Company emphasizes customer service and
convenience in its store operations. The Company's merchandising strategy
is to offer brand name merchandise under a value pricing policy, with
prices generally at or below those of other conventional drug stores.
Pharmacy Products and Services
The primary focus of the Company's business is its pharmacy operations,
which offer both brand name and generic prescription drugs. The Company
strives continually to improve these operations in an effort to build
customer loyalty and increase customer traffic in its stores. The Company
believes that its prescription drug business will continue to represent a
significant portion of its sales and profits due to the demographic trend
towards an aging population, the continued development of new
pharmaceutical products and changing trends in the delivery of healthcare.
The Company is actively seeking to increase its participation in third-
party pay reimbursement programs. These programs generally involve a
contract between the Company and a third-party payor, such as a private
employer, an insurance company, or a health maintenance organization, which
agrees to pay part or all of a customer's eligible prescription purchases.
While these third-party pay contracts often provide an increase in the
volume of prescription sales, these sales typically generate lower gross
margins than other sales due to the highly competitive nature of pricing
for this business. In fiscal 1996, third-party pay reimbursement programs
represented approximately 66% of the Company's prescription business,
compared to approximately 25% for fiscal 1992.
The Company has also initiated other prescription services and programs in
an effort to increase the Company's prescription drug sales. In addition,
the Company operates a mail order prescription drug program, which has
grown from approximately $100,000 in prescription drug sales in fiscal
1993, to $1.8 million in fiscal 1996. The Company believes there are
significant opportunities for increasing prescription drug sales through
these services.
The Company also believes that its computerized pharmacy inventory and
customer account records system is significant to the success of its
pharmacy operations. This system maintains on-line pharmacy inventory
records and calculates the prices of all prescriptions filled. The system
also maintains current customer information, including medical history and
other information furnished by the customer and a list of all prescription
medicine purchased by the customer from the Company. Each time a new
prescription is filled by the Company, the patient information is updated
and the prescription is analyzed in an attempt to assure its compatibility
with other medication prescribed for the customer. In addition, the system
supplies information concerning drug purchases to customers for income tax
purposes, prepares prescriptions labels and receipts, and expedites the
collection of amounts due the Company under third-party pay reimbursement
programs.
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<PAGE> 4
General Merchandise
The typical Big B drug store emphasizes brand name merchandise and offers a
broad range of nonprescription medications and general merchandise at
competitive prices that are generally at or below those of other
conventional drug stores. Major year-round product lines include health
and beauty aids, cosmetics, books and magazines, tobacco products,
convenience foods, greeting cards, toys, small electrical appliances,
electronics, photo processing services and household items. Big B drug
stores also feature seasonal merchandise such as Christmas items, holiday
greeting cards, special candies, beach and pool supplies and other seasonal
products. The Company continually revises and updates the product mix in
its stores in line with customer needs and retail trends.
In addition to brand name merchandise, the Company has a private label
merchandise program which includes health and beauty aids, household
products and nonprescription drugs. The Company's private label
merchandise program offers quality merchandise at prices substantially
lower than comparable brand name merchandise. At the present time, the
Company's private label program does not represent a material portion of
the Company's nonprescription sales.
Advertising
The Company promotes the sale of its merchandise primarily through a
combination of newspaper advertising and full color inserts. The Company
also uses direct mail circulars, television advertising and radio
advertising. The Company's concentration of stores within its markets
enables it to achieve economies of scale in advertising and marketing
expenditures and also enables the Company to negotiate favorable rates for
advertising time and print production. The Company believes that its
current level of advertising expenditures is appropriate to support its
existing marketing strategies.
Expansion
The Company's growth strategy is to expand, principally in its present
market area in the southeastern United States, through new store openings
and acquisitions of existing chain drug stores. The Company believes that
significant opportunities remain in this region. The Company will focus
its expansion within a 400 mile radius of its Birmingham distribution
center and will seek to achieve a dominant position in its markets before
expanding into new areas. The Company believes that its distribution
center of 440,000 square feet is capable of serving up to 600 stores.
Acquisitions
The Company continually seeks to identify appropriate acquisition
candidates in its markets. In addition, the Company periodically acquires
the pharmacy inventory and customer prescription files of independent drug
stores that complement the Company's existing stores.
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<PAGE> 5
Store Development
The following table sets forth, for the periods indicated, certain
information concerning the Company's drug stores:
<TABLE>
<CAPTION>
Fiscal Years Ended
1/29/94 1/28/95 2/3/96
------- ------- ------
<S> <C> <C> <C>
Stores open, beginning of period 304 354 367
Stores added 55 16 23
Stores closed (5) (3) 6
Stores open, end of period 354 367 384
=== === ===
</TABLE>
Purchasing, Distribution and Management Information System
The Company centrally purchases most of its merchandise, including
prescription drugs, directly from manufacturers, allowing it to take
advantage of promotional and volume discount programs that certain
manufacturers offer to retailers. During fiscal 1996, approximately 66% of
the merchandise purchased by the Company for its drug stores was received
at the Company's distribution center for redistribution to its drug stores.
The balance of store merchandise is shipped directly to the Company's drug
stores from manufacturers and distributors at prices negotiated at the
corporate level. The Company does not have any long-term contracts with
suppliers and believes it has numerous alternative sources of supply for
the merchandise sold in its stores. The Company has implemented electronic
data interchange ("EDI") with certain of its major suppliers. The
implementation of EDI allows for the paperless ordering of products with
immediate confirmation from the vendor on price, delivery terms and amount
of goods ordered, and should allow the Company to reduce lead time on
orders and improve cash flow by reducing the amount of inventory required
to be kept on hand.
Store orders are processed by computer and assembled at the distribution
center for delivery to stores through a fleet of trailers and trucks leased
by the Company. The distribution center utilizes state-of-the-art computer
and conveyor systems to monitor the amount and location of inventory within
the distribution center and to handle the movement of items from the
receiving dock to the racks to the loading dock for delivery to the stores.
The distribution center's computer system also assists in planning and
monitoring the utilization of distribution center personnel. The Company's
stores typically receive deliveries from the distribution center weekly.
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<PAGE> 6
The Company has installed point of sale scanning equipment in all of its
drug stores. This equipment connects in-store computer systems to the
distribution center computer system for inventory reporting purposes and
facilitates automated direct store ordering of inventory.
Store Operations
The Company's Big B stores are generally located in strip shopping centers
or are freestanding and generally range in size from 7,000 to 12,000 square
feet, with an average size of approximately 9,000 square feet. The typical
Big B drug store is open every day of the year, except Christmas, generally
from 8:00 A.M. until 9:00 P.M. (10:00 A.M. until 7:00 P.M. on Sundays).
Stores at selected locations are open until midnight or on a twenty-four
hour basis, depending upon local market needs. Big B drug stores generally
are operated on a self-service basis for non-pharmacy items, with customer
assistance available when required. The pharmacy departments are staffed
by registered pharmacists.
Store operations are the responsibility of the Vice President - Store
Operations, who supervises the Company's two regional managers and fifteen
district managers. Each district manager is responsible for the drug
stores in his district and regularly visits those stores to assure quality
of merchandise presentation, appropriate staffing and adherence to the
Company's operating policies. In an effort to increase employee
productivity, improve employee retention, and enhance customer service, the
Company utilizes an incentive compensation plan with established goals for
each level of employees, including store clerks, under which bonuses are
based on these goals. The management staff of a typical drug store
includes a manager, an assistant manager and two pharmacists, whose
incentive compensation is based upon the profitability of the store.
Drugs for Less
The Company operates 23 deep discount drug stores under the name "Drugs for
Less." Each store contains a pharmacy and emphasizes higher turnover
merchandise such as health and beauty aids, cosmetics, tobacco products,
photo processing services, stationery, household items, greeting cards,
snacks and candies. The Company attempts to achieve higher sales volume in
its Drugs for Less stores by offering its products at prices competitive
with other deep discount operations. The Drugs for Less stores range in
size from approximately 10,000 to 29,000 square feet, with an average size
of approximately 20,000 square feet, and are generally located on major
traffic arteries in the Company's larger metropolitan markets.
Home Health Care
The Company operates six home health care stores under the name "Big B Home
Health Care Center." These stores offer home health care products for sale
or rent, including oxygen concentrators, wheelchairs, hospital beds, other
convalescent equipment and accessories, and diabetic supplies. Each store
is staffed by trained technicians offering services ranging from home
delivery and set-up of equipment to completion of necessary forms for
insurance and Medicare claims. Many of the products sold by the home
health care stores can be purchased at the Company's drug stores, and all
of these products can be ordered by catalog through the drug stores.
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<PAGE> 7
Regulation
The Company's pharmacists and pharmacies are required to be licensed by the
appropriate state boards of pharmacy. The Company's drug stores and its
distribution center are also registered with the Federal Drug Enforcement
Administration. Certain of the stores sell beer and wine and are subject
to various state and local licensing requirements. By virtue of these
licenses and registration requirements, the Company is obligated to observe
certain rules and regulations, and a violation of such rules and
regulations could result in a suspension or revocation of the licenses or
registrations. Under the Omnibus Budget Reconciliation Act of 1990, the
Company's pharmacists are required to offer counseling, without additional
charge, to customers covered by Medicare about the medication, dosage,
delivery system, common side effects and other information deemed
significant by such pharmacists. This prospective drug review program was
enacted to insure that prescriptions for covered drugs are appropriate,
medically necessary and not likely to cause adverse medical results.
Competition
The Company's business is highly competitive. In each of its markets, the
Company competes directly with a number of national, regional and local
drug store chains, independent drug stores, deep discount drug stores,
supermarkets, combination food and drug stores, discount department stores,
mass merchandisers and other retail stores and mail order operations.
Certain of these competitors have financial resources that are
substantially greater than those of the Company. Competition among drug
stores generally takes the form of price competition, store location,
product selection and customer service. The home health care center stores
compete with certain chain operations and independent single unit stores.
Employees
As of March 1, 1996, the Company employed approximately 6,300 persons. The
Company believes that its relationship with its employees is good.
ITEM 2. PROPERTIES.
The Company owns the furniture and fixtures in each of its stores.
However, with the exception of three store owned by the Company, the
Company leases the land and buildings for all of its stores under standard
commercial leases with terms of typically between 15 to 20 years and
renewal provisions for additional terms. The leases provide for the
payment of either a fixed rental or a fixed rental plus a percentage of
gross sales in excess of a specified amount. Certain of the leases also
provide for the payment by the Company of increases in real estate taxes
and insurance premiums. Big B is continuing to make lease payments under
leases for certain store locations at which the Company's drug stores have
been closed. No single lease is material to the Company's operations.
The Company's distribution facility and executive offices are located in a
single 440,000 square foot facility on a 30-acre site in Birmingham,
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Alabama. The Company leases the facility from The Industrial Development
Board of the City of Bessemer, pursuant to a lease entered into in
connection with the issuance of industrial revenue bonds. The Company has
guaranteed to the bondholders the payment of the principal and interest on
the bonds. The lease has a primary term of 30 years, and Big B is entitled
to renew the lease for an additional 10-year term. Upon the expiration of
the lease term, Big B has the right to purchase the entire property for a
nominal consideration. Big B utilizes approximately 26,000 square feet of
the facility as its corporate headquarters and the remainder as its primary
warehouse facility and distribution center.
ITEM 3. LEGAL PROCEEDINGS.
There are no material, pending legal proceedings, other than ordinary,
routine litigation incidental to the business, to which Big B is a party or
of which any of its property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Big B, Inc. did not submit any matters to a vote of its security holders
during the fourth quarter of its fiscal year ended February 3, 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is traded in the over-the-counter market and is
quoted on the NASDAQ National Market System under the symbol BIGB. The
following table sets forth, for the fiscal periods indicated, the reported
high and low sale prices, as reported by National Quotation Bureau, Inc.
<TABLE>
<CAPTION>
Fiscal 1995 High Low
<S> <C> <C>
Quarter ended May 7, 1994...... $12-1/2 $ 9-7/8
Quarter ended July 30, 1994.... 12-1/8 10-5/8
Quarter ended October 22, 1994.. 12-1/8 10-3/8
Quarter ended January 28, 1995.. 14-1/2 11-1/2
</TABLE>
<TABLE>
<CAPTION>
Fiscal 1996 High Low
<S> <C> <C>
Quarter ended May 8, 1995....... $15-1/4 $13
Quarter ended July 29, 1995...... 15-1/8 13-7/8
Quarter ended October 26, 1995... 16-1/8 14-5/8
Quarter ended February 3, 1996... 15 7-1/2
</TABLE>
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On April 1, 1996, the closing sale price for the Company's Common Stock was
$10-3/8 per share. As of April 1, 1996, there were 2,234 holders of record
of the Company's Common Stock.
The following table sets forth the dividends paid by Big B, Inc. to its
shareholders during the last two fiscal years. Big B, Inc. intends to
continue its policy of paying quarterly cash dividends. Future dividends
will be dependent, however, upon the Company's earnings, financial
requirements and other relevant factors.
<TABLE>
<CAPTION>
For Fiscal Year Ended: January 29, 1995 February 3, 1996
<S> <C> <C>
First Quarter $.04 $.04
Second Quarter $.04 $.05
Third Quarter $.04 $.05
Fourth Quarter $.04 $.05
</TABLE>
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<PAGE> 10
ITEM 6. SELECTED FINANCIAL DATA.
BIG B, INC.
SELECTED FINANCIAL DATA
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
February 3, January 28, January 29, January 30, February 1,
1996 1995 1994 1993 1992
__________ ___________ ___________ ___________ ___________
(53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales $737,146 $668,205 $595,712 $502,712 $487,890
Net income 2,624 15,097 11,752 9,205 6,542
Net income per share:
Primary 0.15 0.97 0.76 0.60 0.43
Fully diluted 0.15 0.89 0.72 0.60 0.43
________ ________ _______ _______ _______
Weighted average number
of common shares and
equivalents outstanding:
Primary 17,815,609 15,561,205 15,471,402 15,375,766 15,293,706
Fully diluted 21,124,671 18,921,613 18,301,980 15,375,766 15,293,706
========== ========== ========== ========== ==========
DIVIDENDS PER SHARE $0.19 $0.15 $0.12 $0.10 $0.06
========== ========== ========== ========== ==========
BALANCE SHEET DATA:
Working capital $146,004 $120,670 $107,165 $ 85,277 $ 61,210
Total assets 298,836 273,492 233,100 181,915 179,774
Long-term debt
and capitalized
lease obligations 73,171 74,268 63,476 40,618 31,854
========== ========== ========== ========== ========
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Operating Results
Net Sales--Net sales for the 53-week fiscal year 1996
increased 10.3% to a record $737.1 million from $668.2 million in
the 52-week fiscal year 1995. The increase in net sales for the
year resulted primarily from sales increases in existing stores.
Comparable store sales increased 5.5% during the year ended
February 3, 1996. Management believes that net sales will
continue to be positively impacted by the use of point-of-sale
data, product mix improvements, acquisitions of independent
pharmacies in order to consolidate their pharmacy files into
existing store locations and by the addition of new stores. The
Company operated 384 stores at February 3, 1996, compared to 367
stores operated at January 28, 1995.
Prescription drug sales have grown as a percentage of net
sales, increasing to 50.7% in fiscal 1996 from 49.1% in fiscal
1995 and 46.7% in fiscal 1994. This increase is a result of
increased participation by the Company in third-party payment
plans, the demographic trend toward an aging population and the
continued development of new pharmaceutical products.
Third-party prescription sales represented 66%, 56%, and 48% of
the Company's prescription sales in fiscal 1996, 1995, and 1994,
respectively. Third-party payors typically negotiate lower
prescription prices than those on non third-party prescriptions.
The result has been significantly decreased gross profit margins
on the Company's prescription sales, especially impacting fiscal
1996.
Management expects third-party pharmacy sales as a
percentage of total pharmacy sales to continue to increase in the
foreseeable future and pharmacy margins to further decline as a
result. Management anticipates that further declines in pharmacy
margins, as a result of increased third-party sales, will be at a
level which will not significantly impact net income and will be
substantially offset by the additional sales volume and gross
profit dollars generated from the increased third-party sales,
improved purchasing arrangements for pharmaceutical products,
continued contract negotiations with third-party payors, the
marketing of value-added pharmacy services, and the use of
point-of-sale data to improve gross margins for non-pharmacy
sales.
Net sales increased 12.2% to $668.2 million in fiscal 1995
from $595.7 million in fiscal 1994. The increase in net sales in
fiscal 1995 was the result of an increase in comparable store
sales of 7.1% and sales of new stores opened. The Company
operated 354 stores at January 29, 1994, compared to 367 stores
operated at January 28, 1995.
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<PAGE> 12
Store Cost and Expense--Cost of products sold, including
warehouse expense, as a percentage of net sales increased to
70.7% in fiscal 1996 from 69.0% in fiscal 1995 and 69.3% in
fiscal 1994. As discussed above, the increase in cost of
products sold as a percentage of net sales in fiscal 1996
resulted primarily from the continued increase in third-party
prescription sales with lower gross profit margins than non
third-party prescription sales. The LIFO charge was $1.5 million
in fiscal 1996 compared to $3 million and $1.4 million in fiscal
1995 and 1994, respectively. The decrease in cost of products
sold as a percentage of net sales in fiscal 1995 was primarily
from improved distribution center efficiencies.Store operating,
selling, and administrative expenses as a percentage of net sales
increased to 26.2% in fiscal 1996 from 24.9% in fiscal 1995 and
25.4% in fiscal 1994. The increase as a percentage of net sales
in fiscal 1996 was the result of certain nonrecurring fourth
quarter adjustments aggregating $8.6 million. Among these fourth
quarter adjustments, the Company utilized data from the newly
installed point-of-sale system to establish reserves for store
fixtures which will become obsolete as store layouts are altered
to better meet customer needs. The Company also obtained an
actuarially-based estimate of its self-insured workers'
compensation reserve requirement and recorded a $1.7 million
adjustment to increase its workers' compensation reserve to the
actuarially determined amount as a change in accounting estimate.
Depreciation and amortization as a percentage of net sales
increased slightly in fiscal 1996 to 1.8% from 1.7% in fiscal
years 1995 and 1.6% in fiscal 1994. The slight increase in both
fiscal years was primarily due to the completion of a pharmacy
computer system in fiscal 1996 at a cost of approximately $10
million and the completion of an enhanced point-of-sale system at
a cost of approximately $9 million in fiscal 1995.
Gain--Loss on Sale and Disposition of Property--Net gain on
the disposal of property was $.4 million in fiscal 1996 as
compared to losses of $1.2 million and $.3 million in fiscal
years 1995 and 1994. The net gain in fiscal 1996 was primarily
due to the sale of the fixtures and related assets of the
Company's nursing home service. The loss in fiscal year 1995 was
due to the disposal of old register systems upon the installation
of a new point-of-sale system for all the Company's stores. The
loss in fiscal 1994 was due to normal replacement of assets in
the course of business.
Interest Expense--Interest expense during the periods arises
from $40.3 million in 6-1/2% convertible subordinated debentures
which were issued in a public offering in fiscal 1994, a
revolving credit facility, and a bank line of credit. Interest
expense increased to $5.1 million in fiscal 1996 from $4.4
million in fiscal 1995. This increase was due primarily to
higher short-term borrowings and generally higher interest rates
during the periods.
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<PAGE> 13
Provision for Income Taxes--The Company's effective tax rate
increased to 44% in fiscal 1996. It was 37% in fiscal 1995 and
36% in fiscal 1994. The fiscal 1996 increase is due to the level
of permanent differences on a lower pretax base and is
illustrated in Note 9 in the accompanying consolidated financial
statements.
Liquidity and Capital Resources
The Company's capital requirements relate primarily to
opening and stocking new stores, acquiring stores, and
refurbishing existing stores. Capital is also required to
support inventory for the Company's existing stores.
Historically, the Company has been able to lease its store
locations and has financed its expansion and operations from
internally generated cash flows, the net proceeds of securities
offerings, and borrowed funds. Currently, the Company owns the
land and buildings of only three of its drug stores.
In recent years, net cash has been provided by operating
activities; $13.8 million and $1.1 million in fiscal 1995 and
1994, respectively. However, in fiscal 1996 operations required
$13.9 million in cash primarily representative of increases in
inventories and accounts receivable.
Net cash used in investing activities was $21 million, $22.6
million, and $19.5 million in fiscal 1996, 1995, and 1994,
respectively. These amounts primarily reflect capital
expenditures for the pharmacy computer system, point-of-sale
system, new stores as well as continued improvements to existing
stores and the Company's distribution center. In fiscal 1994,
$16.5 million of the $19.5 million represented a net cash payment
for the Treasury acquisition.
In fiscal 1996, net cash provided by financing activities
was $31.3 million and consisted of a first quarter public
offering of 2.9 million shares of stock which provided $38.6
million of cash offset by dividend payments of $3.4 million and
retirement of debt totaling $3.9 million. In fiscal 1995, net
cash provided by financing activities was $12.4 million and
consisted of $15.6 million in net borrowings under line of credit
agreements, $.3 million in proceeds from the issuance of
long-term debt, offset by $2.3 million of dividends paid, and
$1.2 million in principal payments on long-term debt and capital
lease obligations. In fiscal 1994, net cash provided by
financing activities was $17.8 million and consisted of a $40.3
million 6-1/2% convertible subordinated debenture offering,
offset by $19.1 million of net line of credit repayments, $1.8
million of dividends paid, and $1.6 million in principal payments
on long-term debt and capital lease obligations.
- 13 - <PAGE>
<PAGE> 14
The Company plans to open 25 to 30 new stores in both fiscal
1997 and fiscal 1998 at an anticipated aggregate capital outlay
of $10 million to $12 million in each fiscal year. Most of the
new stores will be Big B Drugs stores. The cost of fixtures,
equipment and inventory to open a new drug store is approximately
$400,000 for a Big B Drugs store and approximately $1.1 million
for a Drugs for Less store. The Company believes that internally
generated funds and borrowings on its line of credit and
revolving credit facility will be adequate to fund the capital
requirements noted above.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's Consolidated Balance Sheets as of January 28, 1995, and February
3, 1996 and its Consolidated Statements of Operations, Cash Flows and
Shareholders' Investment for the fiscal years ended January 29, 1994,
January 28, 1995, and February 3, 1996, together with a report of Arthur
Andersen LLP, independent public accountants, are included elsewhere herein.
Reference is made to the "Index to Consolidated Financial Statements."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information set forth under the captions "NOMINEES" and "OFFICERS,"
appearing in the Big B, Inc. Annual Proxy Statement for the fiscal year
ended February 3, 1996, is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information set forth under the captions "BOARD OF DIRECTORS" and
"COMPENSATION TO EXECUTIVE OFFICERS," appearing in the Big B, Inc. Annual
Proxy Statement for the fiscal year ended February 3, 1996, is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information set forth under the captions "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT" and "NOMINEES", appearing in the Big B,
Inc. Annual Proxy Statement for the fiscal year ended February 3, 1996, is
incorporated herein by reference.
- 14 - <PAGE>
<PAGE> 15
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information set forth under the caption "INTEREST OF OFFICERS,
DIRECTORS AND OTHERS IN CERTAIN TRANSACTIONS" appearing in the Big B, Inc.
Annual Proxy Statement for the fiscal year ended February 3, 1996, is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) and (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
The financial statements and schedules listed in the accompanying index to the
consolidated financial statements on page 18 are filed as part of this Annual
Report on Form 10-K.
(a)(3) EXHIBITS
The exhibits listed on the accompanying Index of Exhibits are filed as a part
of this Annual Report.
Big B agrees to furnish to the Securities and Exchange Commission, upon
request, a copy of each instrument defining the rights of holders of Big
B's long-term debt.
BIG B WILL FURNISH TO EACH SHAREHOLDER, UPON WRITTEN REQUEST, COPIES OF THE
EXHIBITS REFERRED TO ABOVE AT A COST OF TEN CENTS PER PAGE. REQUESTS
SHOULD BE ADDRESSED TO: JAMES A. BRUNO, CORPORATE SECRETARY, BIG B, INC.,
POST OFFICE BOX 10168, BIRMINGHAM, ALABAMA 35202.
(b) No Form 8-K was filed by Big B, Inc. during the last quarter of the
fiscal year ended February 3, 1996.
(c) Exhibits. See Item 14(a)(3) above and the separate Exhibit Index
attached hereto.
(d) Financial Statement Schedules. See Item 14(a)(2) above.
- 15 - <PAGE>
<PAGE> 16
BIG B, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
[AND FINANCIAL STATEMENT SCHEDULE]
<TABLE>
<CAPTION>
Page
----
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Public Accountants. . . . . . . . . . . . . . . .17
Balance Sheets as of January 28, 1995, and February 3, 1996 . . . . . .18
Statements of Operations for Fiscal Years Ended January 29, 1994,
January 28, 1995, and February 3, 1996 . . . . . . . . . . . . . . .20
Statements of Shareholders' Investment for Fiscal Years Ended
January 29, 1994, January 28, 1995, and February 3, 1996 . . . . . .21
Statements of Cash Flows for Fiscal Years Ended January 29, 1994,
January 28, 1995, and February 3, 1996.. . . . . . . . . . . . . . .22
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . .25
SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULE:
Schedule II - Valuation and Qualifying Accounts . . . . . . . . . . . .40
</TABLE>
- 16 - <PAGE>
<PAGE> 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Big B, Inc.:
We have audited the accompanying consolidated balance sheets of Big B,
Inc. (an Alabama corporation) and subsidiaries as of February 3, 1996 and
January 28, 1995 and the related consolidated statements of operations,
shareholders' investment, and cash flows for each of the three fiscal years
in the period ended February 3, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these 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 overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Big B, Inc. and
subsidiaries as of February 3, 1996 and January 28, 1995 and the results of
their operations and their cash flows for each of the three fiscal years in
the period ended February 3, 1996 in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The following Schedule II
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic consolidated
financial statements. This information has been subjected to auditing
procedures applied in our audits of the basic consolidated financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
March 11, 1996
- 17 - <PAGE>
<PAGE> 18
BIG B, INC.
CONSOLIDATED BALANCE SHEETS
FEBRUARY 3, 1996 AND JANUARY 28, 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary cash investments $ 491,000 $ 4,076,000
Accounts receivable, net 22,659,000 20,317,000
Inventories 179,400,000 169,473,000
Prepaid expenses and other 6,330,000 3,750,000
Refundable income taxes 3,037,000 0
Deferred income taxes, net 2,539,000 2,146,000
------------ ------------
Total current assets 214,456,000 199,762,000
------------ ------------
PROPERTY AND EQUIPMENT:
Land 1,332,000 958,000
Buildings 10,131,000 9,114,000
Store fixtures and equipment 86,636,000 81,393,000
Warehouse and office equipment 12,873,000 12,692,000
Leaseholds and leasehold improvements 11,644,000 11,345,000
------------ ------------
122,616,000 115,502,000
Less accumulated depreciation
and amortization (47,847,000) (49,774,000)
------------ ------------
74,769,000 65,728,000
Investment in property under
capital leases, net 1,456,000 1,316,000
------------ ------------
76,225,000 67,044,000
------------ ------------
OTHER ASSETS 8,155,000 6,686,000
------------ ------------
$298,836,000 $273,492,000
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
- 18 - <PAGE>
<PAGE> 19
BIG B, INC.
CONSOLIDATED BALANCE SHEETS
FEBRUARY 3, 1996 AND JANUARY 28, 1995
(CONTINUED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Current maturities of long-term debt and
capitalized lease obligations $ 1,057,000 $ 1,028,000
Notes payable to banks 4,700,000 7,000,000
Accounts payable 49,525,000 56,071,000
Accrued payroll and related expenses 6,646,000 7,220,000
Other accrued expenses 6,524,000 6,327,000
Accrued income taxes 0 1,446,000
------------ ------------
Total current liabilities 68,452,000 79,092,000
------------ ------------
NONCURRENT LIABILITIES:
Long-term debt 71,772,000 72,986,000
Capitalized lease obligations 1,399,000 1,282,000
Deferred income taxes, net 5,169,000 6,653,000
Deferred compensation 1,780,000 1,205,000
Other 5,016,000 5,541,000
------------ ------------
85,136,000 87,667,000
------------ ------------
COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 4, 6, 7, and 8)
SHAREHOLDERS' INVESTMENT:
Common stock, $.001 par value; 100,000,000 shares
authorized, 18,572,341 shares issued and
outstanding in 1996; and 40,000,000 shares
authorized, 15,586,575 shares issued and
outstanding in 1995 19,000 16,000
Paid-in capital 74,626,000 35,327,000
Retained earnings 70,603,000 71,390,000
------------ ------------
Total shareholders' investment 145,248,000 106,733,000
------------ ------------
$298,836,000 $273,492,000
============ ============
The accompanying notes are an integral part of these consolidated balance
sheets.
- 19 - <PAGE>
<PAGE> 20
BIG B, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995, AND JANUARY 29, 1994
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
(53 Weeks) (52 Weeks) (52 Weeks)
<S> <C> <C> <C>
NET SALES $737,146,000 $668,205,000 $595,712,000
------------ ------------ ------------
Cost and expenses:
Cost of products sold, including warehouse
expense 521,186,000 460,925,000 412,560,000
Store operating, selling, and
administrative expenses 193,330,000 166,670,000 151,072,000
Depreciation and amortization 13,294,000 11,209,000 9,632,000
(Gain) loss on sale and
disposition of property, net (417,000) 1,214,000 257,000
Interest expense 5,077,000 4,435,000 3,909,000
Interest income (48,000) (23,000) (152,000)
------------ ------------ ------------
732,422,000 644,430,000 577,278,000
------------ ------------ ------------
Income before income taxes 4,724,000 23,775,000 18,434,000
------------ ------------ ------------
PROVISION FOR INCOME TAXES 2,100,000 8,678,000 6,682,000
------------ ------------ ------------
Net income $2,624,000 $15,097,000 $11,752,000
============ ============ ============
NET INCOME PER COMMON SHARE:
Primary $0.15 $0.97 $0.76
Fully diluted 0.15 0.89 0.72
============ ============ ============
AVERAGE COMMON SHARES AND
EQUIVALENTS OUTSTANDING:
Primary 17,815,609 15,561,205 15,471,402
Fully diluted 21,124,671 18,921,613 18,301,980
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
- 20 - <PAGE>
<PAGE> 21
BIG B, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
FOR THE FISCAL YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995,
AND JANUARY 29, 1994
<TABLE>
<CAPTION>
Common Stock
----------------------
Number Paid-In Retained
of Shares Amount Capital Earnings
---------- --------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, January 30, 1993 7,708,410 $ 77,000 $33,739,000 $48,654,000
Net income 0 0 0 11,752,000
Cash dividends ($.12 per share) 0 0 0 (1,779,000)
Exercise of stock options 33,061 1,000 266,000 0
Common stock issued to 401(k)
profit sharing plan 20,000 0 395,000 0
Issuance of shares in
connection with a
two-for-one stock split 7,742,326 78,000 (78,000) 0
Effect of recapitalization 0 (140,000) 140,000 0
---------- --------- ----------- -----------
BALANCE, January 29, 1994 15,503,797 16,000 34,462,000 58,627,000
Net income 0 0 0 15,097,000
Cash dividends ($.15 per share) 0 0 0 (2,334,000)
Exercise of stock options 27,778 0 267,000 0
Common stock issued to 401(k)
profit sharing plan 55,000 0 598,000 0
---------- --------- ----------- -----------
BALANCE, January 28, 1995 15,586,575 16,000 35,327,000 71,390,000
Net income 0 0 0 2,624,000
Cash dividends ($.19 per share) 0 0 0 (3,411,000)
Exercise of stock options 53,891 0 688,000 0
Common stock issued in
public offering 2,905,750 3,000 38,244,000 0
Common stock issued for
business acquired 25,232 0 354,000 0
Common stock issued
for compensation 893 0 13,000 0
--------- --------- ----------- -----------
BALANCE, February 3, 1996 18,572,341 $ 19,000 $74,626,000 $70,603,000
---------- --------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
- 21 - <PAGE>
<PAGE> 22
BIG B, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995,
AND JANUARY 29, 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
(53 Weeks) (52 Weeks) (52 Weeks)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,624,000 $15,097,000 $11,752,000
----------- ----------- -----------
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 13,294,000 11,209,000 9,632,000
Provision (credit) for deferred
income taxes (1,877,000) 1,047,000 (532,000)
Provision for losses on
receivables 10,307,000 8,713,000 6,211,000
Provision to value inventories
at LIFO cost 1,454,000 303,000 1,449,000
(Gain) loss on sale and
disposition of property, net (417,000) 1,214,000 257,000
Provision for nonqualified stock
options 58,000 433,000 345,000
Provision for deferred compensation 575,000 126,000 193,000
Recognition of deferred gains (52,000) (52,000) (41,000)
Changes in assets and liabilities:
Increase in accounts
receivable (12,649,000) (10,698,000) (12,201,000)
(Increase) decrease
in refundable income taxes (3,037,000) 0 441,000
Increase in inventories (11,381,000) (23,281,000) (33,322,000)
Increase in other assets (4,562,000) (796,000) (4,187,000)
Increase (decrease)
in accounts payable (6,546,000) 7,707,000 15,612,000
Increase
(decrease)
in accrued income taxes (1,446,000) 146,000 1,300,000
Increase (decrease) in other
liabilities (220,000) 2,659,000 4,196,000
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
- 22 - <PAGE>
<PAGE> 23
BIG B, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995,
AND JANUARY 29, 1994
(CONTINUED)
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
(53 Weeks) (52 Weeks) (52 Weeks)
<S> <C> <C> <C>
Total adjustments (16,499,000) (1,270,000) (10,647,000)
----------- ----------- -----------
Net cash provided by
(used in) operating
activities (13,875,000) 13,827,000 1,105,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (21,896,000) (22,685,000) (20,098,000)
Proceeds from sale of property 877,000 109,000 580,000
----------- ----------- -----------
Net cash used in investing
activities (21,019,000) (22,576,000) (19,518,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance
of long-term debt 0 375,000 40,250,000
Net (repayments) borrowings under
line of credit agreements (2,745,000) 15,600,000 (19,058,000)
Principal payments under long-term debt
and capital lease obligations (1,149,000) (1,235,000) (1,608,000)
Proceeds from issuances
of common stock 38,614,000 0 4,000
Dividends paid (3,411,000) (2,334,000) (1,779,000)
----------- ----------- -----------
Net cash provided by
financing activities 31,309,000 12,406,000 17,809,000
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
- 23 - <PAGE>
<PAGE> 24
BIG B, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995,
AND JANUARY 29, 1994
(CONTINUED)
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
(53 Weeks) (52 Weeks) (52 Weeks)
<S> <C> <C> <C>
NET INCREASE (DECREASE) IN CASH
AND TEMPORARY CASH INVESTMENTS (3,585,000) 3,657,000 (604,000)
CASH AND TEMPORARY CASH INVESTMENTS
AT BEGINNING OF YEAR 4,076,000 419,000 1,023,000
----------- ----------- -----------
CASH AND TEMPORARY CASH
INVESTMENTS AT END OF YEAR $ 491,000 $ 4,076,000 $ 419,000
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $5,126,000 $ 4,903,000 $3,094,000
Income taxes, net of
refunds received 8,460,000 7,485,000 5,473,000
========== ========== ==========
SUPPLEMENTAL DISCLOSURES
OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Noncash consideration of stock
issued under stock
option plans $ 688,000 $ 267,000 $ 263,000
Stock issued to benefit plans 0 598,000 395,000
Capital lease transactions 526,000 777,000 380,000
========== ========== =========
</TABLE>
The accompanying notes are an integral part of these consolidatedstatements.
- 24 - <PAGE>
<PAGE> 25
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Basis of Presentation
Big B, Inc. and subsidiaries (the "Company") operates a chain of 384
retail drug stores and stores that sell and rent medical equipment for home
use throughout the states of Alabama and Georgia and in certain markets in
Florida, Tennessee, and Mississippi. Though the Company s primary business
focus is the sale of prescription drugs, their stores also offer pharmacy
related products and services, health and beauty aids, and other products.
The Company's fiscal year ends on the Saturday closest to January 31 of
each year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.The consolidated financial statements of the Company include its
accounts and the accounts of its subsidiaries, all of which are wholly
owned. All significant intercompany balances and transactions have been
eliminated in consolidation.
Accounts Receivable
Accounts receivable are stated net of an allowance for uncollectible
accounts of $1,946,000 and $975,000 as of February 3, 1996 and January 28,
1995, respectively. A majority of the Company's accounts receivable are
due from third party providers (various insurance companies and
governmental agencies) under third party payment plans. As is industry
practice, these receivables are uncollateralized.
Inventories
Substantially all inventories are valued at last-in, first-out cost,
which is not in excess of market. Under the first-in, first-out cost
method of accounting, inventories would have been $23,534,000 and
$22,080,000 higher than reported at February 3, 1996 and January 28, 1995,
respectively.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided
on a straight-line basis over the estimated service lives of depreciable
assets (40 years for buildings, 10 years for store fixtures and equipment,
and 3 to 10 years for other equipment) or, in the case of leaseholds and
leasehold improvements, 10 to 15 years or over the lives of the respective
leases, if shorter. Properties included in the financial statements under
capital leases are amortized over the related lease terms. Maintenance and
repairs are charged to expense as incurred; expenditures for renewals and
- 25 - <PAGE>
<PAGE> 26
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
betterments are capitalized. When assets are retired or otherwise disposed
of, the property accounts are relieved of costs and accumulated
depreciation and any resulting gain or loss is credited or charged to
income.
Other Assets
The Company s other assets consist of the following:
Cash surrender value of officers life insurance ($1,957,000 and
$1,778,000 at February 3, 1996 and January 28, 1995, respectively).
Pharmacy files ($5,589,000 and $4,076,000 net of accumulated
amortization at February 3, 1996 and January 28, 1995, respectively) are
being amortized on a straight-line basis over their estimated useful lives
of seven to fifteen years.
Goodwill ($602,000 and $639,000 net of accumulated amortization
at February 3, 1996 and January 28, 1995, respectively) and "pharmacist
work force in place" ($7,000 and $193,000 net of accumulated amortization
at February 3, 1996 and January 28, 1995, respectively) resulting from
acquisitions of drug stores are being amortized on a straight-line basis
over forty and seven years, respectively.
The Company continually reviews the intangible values attributed to
pharmacy files, goodwill, and "pharmacist work force in place" to assess
recoverability from future operations using undiscounted cash flows
consistent with Statement of Financial Accounting Standards ("SFAS")
No. 121," Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of," which the Company adopted in fiscal
1996. Impairments are recognized in results of operations when permanent
impairment in value occurs. Accumulated amortization on the above
intangibles is $1,598,000 and $1,375,000 at February 3, 1996 and
January 28, 1995, respectively.
Self-Insurance Accruals
The Company is partially self-insured with respect to general
liability, workers' compensation, and health and dental programs.
Stop-loss insurance coverage is maintained in amounts determined to be
adequate by management. Prior to the fiscal year ended February 3, 1996,
the Company utilized case estimates of probable liabilities prepared by
experienced third parties using all available claims data as to the extent
of losses and related costs to estimate required balance sheet reserves for
such claims. During the fourth quarter of the fiscal year ended
February 3, 1996, the Company began using actuarial estimation techniques
to evaluate their accruals for such claims and recorded an adjustment as a
change in accounting estimate to increase these self-insurance reserves by
approximately $1,700,000. Management considers the accrued liabilities for
unsettled claims to be adequate; however, there is no assurance that the
amounts accrued will not vary from the ultimate amounts incurred upon final
disposition of all outstanding claims. As a result, periodic adjustments
to the reserves will be made as events occur which indicate changes are
necessary. In the opinion of management, these periodic adjustments will
- 26 - <PAGE>
<PAGE> 27
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
not be material to the Company's financial condition or results of
operations, based on current information.
Advertising Costs
Costs incurred for producing and communicating advertising are
expensed when incurred.
Income Taxes
Deferred income taxes reflect the impact of "temporary differences"
between the amounts of assets and liabilities for financial reporting
purposes and such amounts as measured by the tax laws and regulations.
Income taxes were provided in fiscal 1996 and 1995 using the asset and
liability method prescribed by SFAS No. 109, "Accounting for Income Taxes,"
which the Company adopted in fiscal 1994.
Net Income Per Common Share
Primary net income per common share was computed by dividing net
income by the weighted average number of primary shares of common stock and
equivalents outstanding during the periods. Outstanding stock options are
common stock equivalents but were excluded from the primary net income
per common share computations as their effect was not material. Fully
diluted net income per common share was determined on the assumption that
all convertible subordinated debentures were converted and all stock
options outstanding were exercised. Conversion was assumed during the
portion of each period that the debentures and the options were
outstanding. For the debentures, net income was adjusted for interest, net
of income tax effects; for the stock options, outstanding shares were
decreased by the number of shares that could have been purchased with the
proceeds from the exercise, using the end of the period market price.
For fiscal 1996, fully diluted net income per common share is
considered to be the same as primary net income per common share, since the
effect of certain potentially dilutive securities would be antidilutive.
Shareholders' Investment Transactions
On September 7, 1993, the Company's Board of Directors declared a
two-for-one stock split in the form of a 100% stock dividend which was
distributed on October 1, 1993 to holders of record on September 17, 1993.
The par value of the additional 7,742,326 shares of common stock issued in
connection with the stock split was credited to common stock and a like
amount charged to paid-in capital. All references in the financial
statements to average common shares and equivalents outstanding and related
prices, net income per common share, dividend amounts per share, and stock
option plan data have been restated to reflect the stock split.
In November 1993, the Company's shareholders approved a Plan of
Recapitalization (the "Recapitalization"). The Recapitalization became
effective November 17, 1993. On the effective date, the number of shares
- 27 - <PAGE>
<PAGE> 28
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
authorized increased from 20,000,000 shares to 40,000,000 shares and par
value was decreased from $.01 per share to $.001 per share. The
Recapitalization authorized the designation of the outstanding shares of
$.01 par value common stock as $.001 par value common stock until replaced
by new $.001 par value common stock through the ordinary course of
reissuance through sales and other transfers. The decrease in par value of
the outstanding shares on the effective date was charged to common stock
and a like amount credited to paid-in capital. In March 1995, the
Company s shareholders approved an amendment to the Recapitalization
increasing the number of shares authorized from 40,000,000 shares to
100,000,000 shares.
In April 1995, the Company sold in a public offering 2,905,750 shares
of its common stock which generated net proceeds of approximately
$38,247,000
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments to be temporary cash investments.
Fair Value of Financial Instruments
The Company has evaluated fair values of its financial instruments
based on the current interest rate environment and current pricing of debt
instruments with comparable terms and has addressed the fair value of debt
in the debt disclosure (see Note 2). The carrying values of other
financial instruments are considered to approximate their fair values
because of the short maturities of those instruments.
Accounting for Stock-Based Compensation
During 1995, SFAS No. 123, "Accounting for Stock Based Compensation,"
was issued. The new standard allows companies to continue to record
compensation cost under Accounting Principles Board Opinion ("APB") No. 25
or to record compensation cost based on the fair value of stock based
awards. Management has decided to continue using its current accounting
policy under APB No. 25; and as a result, adoption of SFAS No. 123 will not
affect the financial condition or results of operations of the Company.
SFAS No. 123 does, however, require certain pro forma disclosures
reflecting what compensation cost would have been if the fair value based
method of recording compensation expense for stock based compensation had
been adopted. SFAS No. 123 will be adopted by the Company in fiscal 1997.
Prior Year Reclassifications
Certain prior year amounts have been reclassified to conform to the
current year presentation.
- 28 - <PAGE>
<PAGE> 29
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. DEBT
Long-term debt consists of the following at February 3, 1996 and
January 28, 1995:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Convertible Subordinated Debentures,
interest at 6.5%, principal due on
March 15, 2003, interest payable
semiannually on each March 15
and September 15 $40,250,000 $40,250,000
Notes payable to commercial banks:
Revolving Credit Facility, interest
at variable rates (ranging from
5.3% to 5.5% at February 3, 1996)
payable monthly, principal due
September 1997, collateralized
by accounts receivable and
inventories 21,255,000 21,700,000
Term loan, interest at 7.3%,
payable monthly, principal
due April 1999, collateralized
by certain property and
equipment 242,000 311,000
Industrial Development Revenue
Bonds, Series B, interest at
variable rates (5.5% at
February 3, 1996), principal due
on May 1, 2005, interest payable
quarterly, secured by a letter
of credit 8,000,000 8,000,000
Industrial Development Revenue
Bonds, Series A, interest at
variable rates (3.4% at
February 3, 1996), due in
quarterly installments of
$175,000 plus interest through
December 1, 1999, secured by a
letter of credit 2,800,000 3,500,000
----------- -----------
72,547,000 73,761,000
Less current maturities (775,000) (775,000)
----------- ------------
$71,772,000 $72,986,000
=========== ============
</TABLE>
- 29 - <PAGE>
<PAGE> 30
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In March 1993, the Company issued unsecured convertible subordinated
debentures (the "Debentures"); net proceeds were $39,043,000. Proceeds of
the issuance were used to reduce existing debt, to fund the acquisition of
certain assets of certain Thrift Drug Company ("Treasury Drug") stores, to
fund the cost of conversion of the Treasury Drug stores to the "Big B"
format, and to fund the enhancement of the Company's point of sale system.
The Debentures are convertible into common stock at any time prior to
redemption or final maturity, initially at the conversion price of $12.20
per share.
The revolving credit facility consists of a $50,000,000 revolving line
of credit supported by a commercial paper program. During fiscal 1996, the
Company borrowed $33,000,000 and repaid $33,445,000 under the revolving
credit facility.
The revolving credit facility and both industrial development revenue
bond agreements contain restrictive covenants which require the Company to
maintain certain financial ratios and minimum levels of tangible net worth;
limit capital expenditures, other investments, dividends, stock repurchases
and additional debt; and other covenants generally common to such
agreements. The Company was in compliance with all such covenants at
February 3, 1996.
The net book value of land, building, and equipment subject to the
industrial development revenue bond agreements is approximately $9,163,000
and $10,090,000 at February 3, 1996 and January 28, 1995, respectively.
Long-term debt maturing in each of the next five fiscal years and
thereafter is as follows: $775,000 in 1997, $22,030,000 in 1998, $775,000
in 1999, $734,000 in 2000; none in 2001, and $48,233,000 thereafter.
The Company has a $15,000,000 unsecured bank line of credit which
expires in June 1996 (subject to renewal), of which $4,700,000 was
outstanding at February 3, 1996. The variable interest rate on the line of
credit was 6.3% at year-end. The maximum and average amounts of borrowings
outstanding under this line of credit during fiscal 1996 were $20,400,000
and $7,357,000, respectively. The weighted average interest rate on these
borrowings during fiscal 1996 was 6.3%.
The estimated fair value of the Company's debt at February 3, 1996 was
$72,355,000.
3. CAPITALIZED AND OPERATING LEASES
The Company has a number of leases for store properties, warehouses
and delivery equipment. See Note 7 regarding store leases with related
parties. The initial terms of the real property leases will expire within
the next 20 years; however, most of the leases have options providing for
additional lease terms from five to 25 years at terms substantially the
same as the initial terms. It is expected that the real property leases
will be renewed upon expiration. The leases for the delivery equipment are
- 30 - <PAGE>
<PAGE> 31
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
from six to ten years, and it is expected that most will be replaced by
leases on similar equipment. The Company also rents various items of
machinery and equipment on a monthly basis.
In addition to fixed minimum rentals, many of the Company's leases
require contingent rental payments. Contingent rentals for real property
leases are on a percentage of sales basis. Contingent rentals for delivery
equipment are based on the number of miles driven.
As required by the provisions of SFAS No. 13, the Company has included
in its financial statements those leases which meet the criteria for
capitalization. An analysis of the property under capital leases and the
related capitalized lease obligations included in the February 3, 1996 and
January 28, 1995 consolidated balance sheets follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Property under capital leases:
Real property $ 630,000 $ 630,000
Delivery equipment 1,935,000 1,646,000
___________ ___________
2,565,000 2,276,000
Less accumulated amortization (1,109,000) (960,000)
___________ ___________
$1,456,000 $1,316,000
=========== ===========
Capitalized lease obligations
(interest at 9% to 13.5% on real
property and 2.4% to 17.4% on
delivery equipment at February 3,
1996):
Current $ 282,000 $ 253,000
Noncurrent 1,399,000 1,282,000
___________ ___________
$ 1,681,000 $ 1,535,000
=========== ===========
</TABLE>
- 31 - <PAGE>
<PAGE> 32
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a schedule of future minimum lease payments required
under capital leases, together with the present value of the lease
payments, and operating leases having initial or remaining noncancelable
lease terms in excess of one year at February 3, 1996:
<TABLE>
<CAPTION>
Operating Capital
Leases Leases
------------ ----------
<S> <C> <C>
Fiscal year ending in:
1997 $ 22,003,000 $ 673,000
1998 20,954,000 648,000
1999 19,400,000 583,000
2000 16,495,000 397,000
2001 14,722,000 276,000
Subsequent 63,285,000 847,000
------------ ----------
Total future minimum lease
payments $156,859,000 $3,424,000
============
Less estimated executory costs
included in total minimum lease
payments 1,003,000
----------
Net minimum lease payments 2,421,000
Less amount representing interest 740,000
----------
Present value of net future minimum lease payments $1,681,000
==========
</TABLE>
- 32 - <PAGE>
<PAGE> 33
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Contingent rentals for the preceding capital leases and rental expense
for the operating leases are as follows:
<TABLE>
<CAPTION>
Fiscal Years Ended
-------------------------------------
1996 1995 1994
---------- ----------- ----------
<S> <C> <C> <C>
Contingent rentals on
capital leases:
Real property $ 29,000 $ 22,000 $ 19,000
Delivery equipment 2,262,000 1,059,000 774,000
__________ ___________ __________
$2,291,000 $ 1,081,000 $ 793,000
========== =========== ==========
Rental expense for
operating leases:
Real property:
Minimum rentals $23,742,000 $22,258,000 $20,241,000
Contingent rentals 1,134,000 896,000 806,000
___________ ___________ ___________
$24,876,000 $23,154,000 $21,047,000
</TABLE>
4. EMPLOYEE BENEFIT PLANS
The Company sponsors a defined contribution pension plan known as the
Big B, Inc. 401(k) Profit Sharing Plan. The Plan covers substantially all
employees that meet certain service and age requirements who are not
members of a collective bargaining unit. The Company makes both an annual
profit sharing contribution and an annual 401(k) matching contribution up
to specified levels as approved, each at the discretion of the Board of
Directors.
The Company has an unfunded deferred compensation agreement with its
key officers whereby they or their beneficiaries will be provided specific
amounts of annual retirement income for a period of ten years following
retirement. The Company is accruing the present value of such retirement
benefits from the date of the agreement to the normal retirement date.
Assuming retirement at the normal retirement date, the obligation under
this agreement (approximately $10,760,000 in total for all officers
covered) would be paid over the ten year period following the date of the
officer's retirement.
The Company's union employees are covered under a multiemployer
defined benefit pension plan administered by the union. The Company is
obligated under this plan to make monthly payments of specified amounts for
each union employee as provided in the labor contract.
- 33 - <PAGE>
<PAGE> 34
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company has an incentive plan covering store management personnel,
pharmacists and other key employees. The incentive is paid annually based
on achievement of established profit goals.
In fiscal 1996, the Company entered into employment continuity
agreements with certain key employees which provide for benefits to be paid
to these employees in the event employment with the Company is terminated
in connection with a change in control. Compensation which might be become
payable under these agreements has not been accrued in the consolidated
financial statements as a change in control has not occurred at February 3,
1996.
The expenses applicable to the above plans are as follows:
<TABLE>
<CAPTION>
401(k)
Profit Deferred
Sharing Compensation Union Incentive
Plan Plan Plan Plan
---------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Fiscal years ended:
1996 $2,533,000 $575,000 $7,000 $1,841,000
1995 2,200,000 126,000 9,000 2,397,000
1994 1,800,000 193,000 9,000 2,772,000
========== =========== ======== ==========
</TABLE>
5. STOCK OPTIONS
The Big B, Inc. Employee Stock Option Plan (the "Plan") authorizes the
granting of stock options for the purchase of up to 1,000,000 shares of
common stock. As of February 3, 1996, a total of 733,897 shares of the
Company's authorized and unissued common stock were reserved for future
grants under the Plan and options for 119,000 shares were outstanding at
that date. Options may be granted to officers or key employees at prices
determined by the Board of Directors.
Options granted prior to fiscal 1989 were granted at a price not less
than market value on the date of the grant (incentive) and became
exercisable cumulatively at a rate of 25% each year beginning one year
after the date of grant, and expire ten years from the date of grant.
Options granted in fiscal 1992, 1994, and 1996 were granted at a price
less than market value on the date of grant (nonqualified). Options
granted in fiscal 1992 became exercisable upon issuance and expired
March 13, 1993. Options granted in fiscal 1994 became exercisable 50% each
in February 1994 and February 1995 with all options expiring in May 1995.
Options granted in fiscal 1996 become exercisable 50% each in January 1996
and January 1997 with all options expiring in January 1998.
- 34 - <PAGE>
<PAGE> 35
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Compensation expense of $58,000, $433,000, and $345,000 was accrued in
fiscal 1996, 1995, and 1994, respectively, and related to the difference in
the estimated market value of the stock and the nonqualified option
exercise price, including the related tax bonus. Upon exercise of stock
options, the excess of the proceeds and accruals over par value is credited
to paid-in capital.
The Company received 22,409 shares, 14,122 shares, and 19,451 shares
of stock in lieu of cash for a portion of the exercise price of options
exercised in fiscal years 1996, 1995, and 1994, respectively. These shares
were immediately reissued upon the exercise of other options.
Information with respect to stock options is summarized as follows:
<TABLE>
<CAPTION>
Grant Date
---------------------------------------------
Incentive Nonqualified
---------------- --------------------------
November April March May March
1983 1986 1991 1993 1995
-------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Market price at
date of grant $5.07 $7.10 $4.69 $9.38 $14.75
======= ======= ======= ====== ======
Average exercise
price per share* $5.07 $7.10 $2.50 $5.00 $10.00
------ ------ ------- ------ -------
Shares under
options outstanding:
Balance, January
30, 1993 12,950 36,000 11,687 0 0
Granted 0 0 0 48,600 0
Effect of
two for one
stock split 11,675 32,000 0 48,6000 0
Exercised (23,825) (17,000) (11,687) 0 0
Canceled (800) 0 0 0 0
Balance, January
29, 1994 0 51,000 0 97,200 0
Exercised 0 (12,000) 0 (29,900) 0
Canceled 0 0 0 (1,500) 0
Balance, January
28, 1995 0 39,000 0 65,800 0
Granted 0 0 0 0 98,000
Exercised 0 (11,000) 0 (65,300) 0
Canceled 0 0 0 (500) (7,000)
Balance, February
3, 1996 0 28,000 0 0 91,000
======== ======= ======= ======= ======
</TABLE>
- 35 - <PAGE>
<PAGE> 36
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
*Exercise price per share for incentive options equals market price at
grant date, except for 14,000 shares in the April 1986 grant having a per
share exercise price of $7.80 (110% of market price at grant date).
6. STOCK REDEMPTION AGREEMENT
The Company has agreements with two major shareholders/officers under
which the Company will, if requested, purchase (at fair market value, as
defined) up to a specified maximum amount of the Company's common stock
held by them upon their death. The Company's commitment at February 3,
1996, under these agreements is $1,500,000. The Company carries insurance
on the lives of the individuals to provide funds with which to meet this
commitment.
7. RELATED PARTY TRANSACTIONS
The Company leases six stores from certain family members of certain
officers and directors of the Company. Future minimum lease payments under
these net operating leases with noncancelable terms in excess of one year
aggregate $1,545,000. Minimum lease payments were $284,000 in fiscal 1996,
$266,000 in fiscal 1995, and $257,000 in fiscal 1994. No excess rentals
were paid in fiscal 1996, 1995, or 1994. In addition, at February 3, 1996,
the Company is contingently liable for future minimum lease payments of
$1,194,000 on stores sold to a related party in a prior year.
8. LITIGATION
Pending legal proceedings not covered by insurance or other indemnity
are substantially limited to litigation incidental to the business in which
the Company is engaged. In the opinion of management, after consultation
with counsel, the ultimate resolution of these matters will not have a
material effect on the financial statements of the Company.
- 36 - <PAGE>
<PAGE> 37
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. INCOME TAXES
Details of federal and state income tax provisions (credits) are as
follows:
<TABLE>
<CAPTION>
Fiscal Years Ended
--------------------------------------
1996 1995 1994
----------- ---------- -----------
<S> <C> <C> <C>
Federal:
Current $ 3,637,000 $6,590,000 $6,581,000
Deferred* (1,717,000) 904,000 (495,000)
State:
Current 340,000 1,041,000 633,000
Deferred* (160,000) 143,000 (37,000)
----------- ---------- ----------
Total $ 2,100,000 $8,678,000 $6,682,000
___________ __________ __________
*Deferred taxes:
Depreciation and
amortization $ (1,000) $1,229,000 $ 604,000
Accrued liabilities (314,000) (51,000) (164,000)
Reserves for doubtful
accounts (361,000) 5,000 2,000
Deferred compensation (214,000) (46,000) (81,000)
Deferred revenue (714,000) (64,000) (283,000)
Inventory 374,000 0 (9,000)
Other, net (647,000) (26,000) (601,000)
----------- ---------- ----------
$(1,877,000) $1,047,000 $ (532,000)
=========== ========== ==========
</TABLE>
- 37 - <PAGE>
<PAGE> 38
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the statutory federal income tax rate to the Company's
effective tax rate is as follows:
<TABLE>
<CAPTION>
Fiscal Years Ended
--------------------------------------------------
1996 1995 1994
---------------- ---------------- ----------------
Amount Percent Amount Percent Amount Percent
------ -------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Statutory Rate $1,653,000 35% $8,321,000 35% $6,452,000 35%
Increase
(decrease)
resulting
from:
Effect of
state taxes,
net of
benefit 148,000 3 752,000 3 387,000 2
Intangibles
amortization 78,000 1 88,000 1 78,000 1
Officer life
insurance
expense 79,000 2 0 0 0 0
Other, net 142,000 3 (483,000) (2) (235,000) (2)
---------- --- ---------- --- ---------- ---
$2,100,000 44% $8,678,000 37% $6,682,000 36%
========== === ========== === ========= ===
</TABLE>
- 38 - <PAGE>
<PAGE> 39
BIG B, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial statement and income tax purposes, as determined under enacted
tax laws and rates. The financial effect of changes in tax laws or rates
is accounted for in the period of enactment. Significant components of the
Company's current and noncurrent deferred tax assets and liabilities, net
as of February 3, 1996 and January 28, 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
----------------------- ---------------------
Current Noncurrent Current Noncurrent
--------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Depreciation and
amortization $ 0 $ 7,423,000 $ 0 $ 7,424,000
Other 0 0 0 98,000
--------- ------------ ---------- -----------
Deferred tax
liabilities 0 7,423,000 0 7,522,000
--------- ------------ ---------- -----------
Accrued
liabilities 1,724,000 0 1,410,000 0
Reserves for
doubtful
accounts 723,000 0 362,000 0
Deferred
compensation 0 662,000 0 448,000
Deferred revenue 0 933,000 0 219,000
Inventory 0 0 374,000 0
Other 92,000 659,000 0 202,000
--------- ------------ ---------- -----------
2,539,000 2,254,000 2,146,000 869,000
Less valuation
allowance 0 0 0 0
--------- ------------ ---------- -----------
Deferred tax
assets 2,539,000 2,254,000 2,146,000 869,000
Deferred tax
assets
(liabilities),
--------- ------------ ---------- -----------
net $2,539,000 $(5,169,000) $2,146,000 $(6,653,000)
========== =========== ========= ============
</TABLE>
- 39 - <PAGE>
<PAGE> 40
BIG B, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Charged to Write-Offs Balance at
Beginning Costs and Net of End of
of Period Expenses Recoveries Period
_________ _________ __________ __________
<S> <C> <C> <C> <C>
ALLOWANCE
FOR DOUBTFUL
ACCOUNTS:
Fiscal year
ended January
29, 1994 $1,019,000 $ 6,211,000 $6,243,000 $ 987,000
Fiscal year
ended January
28, 1995 987,000 8,713,000 8,725,000 975,000
Fiscal year
ended February
3, 1996 975,000 10,307,000 9,336,000 1,946,000
</TABLE>
- 40 -<PAGE>
<PAGE> 41
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Big B, Inc. has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BIG B, INC.
By: /s/ Arthur M. Jones, Sr.
Arthur M. Jones, Sr.,
President
DATED: May 2, 1996
By: /s/ Michael J. Tortorice
Michael J. Tortorice,
Principal Financial and Accounting
Officer
DATED: May 2, 1996
- 41 - <PAGE>
<PAGE> 42
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of Big
B, Inc. and in the capacities and on the dates indicated.
DATE SIGNATURE
May 2, 1996 /s/ Anthony J. Bruno
Anthony J. Bruno, Chairman of the Board
of Directors and Chief Executive Officer
(Principal Executive Officer)
May 2, 1996 /s/ Arthur M. Jones, Sr.
Arthur M. Jones, Sr., President, Chief
Operating Officer and Director
May 2, 1996 /s/ Michael J. Tortorice
Michael J. Tortorice, Vice President-
and Treasurer (Principal Financial Officer)
May 2, 1996 /s/ Vincent J.Bruno
Vincent J.Bruno, Senior Vice President-
Purchasing and Advertising and Director
May 2, 1996 /s/ James A. Bruno
James A. Bruno, Executive Vice President,
Secretary and Director
May 2, 1996 /s/ Richard Cohn
Richard Cohn, Director
May 2, 1996 /s/ Charles A. McCallum
Charles A. McCallum, D.M.D., M.D., Director
May 2, 1996 /s/ Susan W. Matlock
Susan W. Matlock, Director
- 42 - <PAGE>
<PAGE> 43
INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page Number
3(a) Certificate of Incorporation of the Company, as amended,
incorporated by reference (pursuant to the provisions of
Rule 12(b)-32) to Exhibit No. 3(a) to the Form 10-K
Annual Report of the Company dated March 21, 1995.
3(b) By-Laws of the Company, as amended, incorporated by
reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 3(b) to the Form 10-K Annual Report of
the Company dated March 21, 1995.
4(a) Specimen of Common Stock Certificate of the Company,
incorporated by reference (pursuant to the provisions
of Rule 12(b)-32) to Exhibit No. 4(a) to the Form 10-K
Annual Report of the Company dated March 21, 1995.
4(b) Form of First Mortgage Industrial Revenue Bond (Big B
Project), Series 1984, dated December 20, 1984,
incorporated by reference (pursuant to the provisions of
Rule 12(b)-32) to Exhibit No. 4(b) to the Form 10-K
Annual Report of the Company dated April 29, 1985.
4(c) Specimen of The Industrial Development Board of the City
of Bessemer Taxable Adjustable Mode Industrial
Development Revenue Bond (Big B, Inc. Project), Series
1990, dated May 17, 1990, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit
No. 4(c) to the Form 10-K Annual Report of the Company
dated April 15, 1992.
10(a) Restated Redemption Agreement dated May 18, 1983,
between the Company and Anthony Bruno, incorporated
by reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(b) to the Form 10-K Annual Report of
the Company dated April 26, 1984, and amendment dated
January 2, 1985, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(b)
to the Form 10-K Annual Report of the Company dated
April 29, 1985.
10(b) Lease Agreement dated April 12, 1983, between the
Company and Joseph S. Bruno and Theresa L. Bruno
(jointly), covering the Talladega, Alabama, drug store
premises, incorporated by reference (pursuant to the
provisions of Rule 12(b)-32) to Exhibit No. 10(f) to the
Form 10-K Annual Report of the Company dated April 26,
1984.
- 43 - <PAGE>
<PAGE> 44
10(c) Lease Agreement dated April 12, 1983, between the
Company and Joseph S. Bruno and Theresa L. Bruno
(jointly), covering the Pensacola, Florida, drug store
premises, incorporated by reference (pursuant to the
provisions of Rule 12(b)-32) to Exhibit No. 10(g) to the
Form 10-K Annual Report of the Company dated April 26,
1984.
10(d) Lease Agreement dated August 11, 1983, between the
Company and Joseph S. Bruno and Theresa L. Bruno
(jointly), covering the Birmingham (Cahaba Heights),
Alabama, drug store premises, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit
No. 10(h) to the Form 10-K Annual Report of the
Company dated April 26, 1984.
10(e) Lease Agreement dated August 11, 1983, between the
Company and Joseph S. Bruno and Theresa L. Bruno
(jointly), covering the Gadsden, Alabama, drug store
premises, incorporated by reference (pursuant to the
provisions of Rule 12(b)-32) to Exhibit No. 10(i) to the
Form 10-K Annual Report of the Company dated April
26, 1984.
10(f) Redemption Agreement dated January 2, 1985, between
the Company and Vincent J. Bruno, incorporated by
reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(m) to the Form 10-K Annual Report
of the Company dated April 29, 1985.
10(g) Split Dollar Insurance Agreement dated March 8, 1985,
between the Company and Marianne Bruno and Donna
Marie Paulin, as Trustees of the Anthony Bruno Family
Trust dated February 5, 1981, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit
No. 10(n) to the Form 10-K Annual Report of the
Company dated April 29, 1985.
10(h) Split Dollar Insurance Agreement dated March 8, 1985,
between the Company and Arthur M. Jones, Sr., incor-
porated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(o) to the Form 10-K Annual
Report of the Company dated April 29, 1985.
10(i) Split Dollar Insurance Agreement dated March 8, 1985,
between the Company and Bobby Little, incorporated by
reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(p) to the Form 10-K Annual Report
of the Company dated April 29, 1985.
10(j) Split Dollar Insurance Agreement dated April 25, 1985,
between the Company and Anthony J. Bruno and Lee
John Bruno, as Trustees of the Vincent J. Bruno Family
Trust dated June 30, 1983, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit
- 44 - <PAGE>
<PAGE> 45
No. 10(q) to the Form 10-K Annual Report of the
Company dated April 29, 1985.
10(k) Split Dollar Insurance Agreement dated August 23, 1988,
between the Company and S. Steven Taylor, incorporated
by reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(o) to the Form 10-K Annual Report of
the Company dated April 25, 1989.
10(l) Split Dollar Insurance Agreement dated August 23, 1988,
between the Company and Eugene A. Beckmann, incorporated
by reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(p) to the Form 10-K Annual Report of
the Company dated April 25, 1989.
10(m) Split Dollar Insurance Agreement dated August 23, 1988,
between the Company and Michael J. Tortorice, incor-
porated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(q) to the Form 10-K Annual
Report of the Company dated April 25, 1989.
10(n) Split Dollar Insurance Agreement dated August 23, 1988,
between the Company and James A. Bruno, incorporated
by reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(r) to the Form 10-K Annual Report of
the Company dated April 25, 1989.
10(o) Collateral Assignment, dated March 8, 1985, of the policy
to the Company by Marianne Bruno and Donna Marie
Paulin, as Trustees of the Anthony Bruno Family Trust
dated February 5, 1981, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit
No. 10(r) to the Form 10-K Annual Report of the Company
dated April 29, 1985.
10(p) Collateral Assignment, dated March 8, 1985, of the policy
to the Company by Arthur M. Jones, Sr., incorporated
by reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(s) to the Form 10-K Annual Report of
the Company dated April 29, 1985.
10(q) Collateral Assignment, dated March 8, 1985, of the policy
to the Company by Bobby Little, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit
No. 10(t) to the Form 10-K Annual Report of the Company
dated April 29, 1985.
10(r) Collateral Assignment, dated April 25, 1985, of the policy
to the Company by John Bruno, as Trustee of the Vincent
J. Bruno Family Trust dated June 30, 1983, incorporated
by reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(u) to the Form 10-K Annual Report of the
Company dated April 29, 1985.
- 45 - <PAGE>
<PAGE> 46
10(s) Collateral Assignment, dated August 23, 1988, of the
policy to the Company by S. Steven Taylor, incorporated
by reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(w) to the Form 10-K Annual Report of
the Company dated April 25, 1989.
10(t) Collateral Assignment, dated August 23, 1988, of the
policy to the Company by Eugene A. Beckmann, incorporated
by reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(x) to the Form 10-K Annual Report of the
Company dated April 25, 1989.
10(u) Collateral Assignment, dated August 23, 1988, of the
policy to the Company by Michael J. Tortorice, incorporated
by reference (pursuant to the provisions of Rule 12(b)-32) to
Exhibit No. 10(y) to the Form 10-K Annual Report of the
Company dated April 25, 1989.
10(v) Collateral Assignment, dated August 23, 1988, of the policy
to the Company by James A. Bruno, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit No.
10(z) to the Form 10-K Annual Report of the Company
dated April 25, 1989.
10(w) Lease Agreement between The Industrial Development
Board of the City of Bessemer and Big B, Inc., dated as of
December 1, 1984, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(v) to the
Form 10-K Annual Report of the Company dated April 29, 1985.
10(x) Lease Agreement dated October 31, 1987, between the
Company and Joseph S. Bruno and Theresa L. Bruno
(jointly) covering the Clanton, Alabama, drug store premises,
incorporated by reference (pursuant to the provisions of
Rule 12(b)-32) to Exhibit No. 10(w) to the Form 10-K
Annual Report of the Company dated April 29, 1988.
10(y) Sublease Agreement dated as of March 9, 1988, between
Piggly Wiggly Southern, Inc., a Georgia Corporation, and
The Reed Drug Company, a Georgia Corporation, incor-
porated by reference (pursuant to the provisions of Rule
12(b)-32) to Exhibit No. 10(gg) to the Form 10-K Annual
Report of the Company dated April 25, 1989.
10(z) Supplemental Mortgage and Trust Indenture between the
Industrial Development Board of the City of Bessemer and
First Alabama Bank, dated as of May 1, 1990, incorporated
by reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(gg) to the Form 10-K Annual Report of
the Company dated April 30, 1991.
- 46 - <PAGE>
<PAGE> 47
10(aa) Amended Lease Agreement between The Industrial Develop-
ment Board of the City of Bessemer and Big B, Inc., dated
as of May 1, 1990, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(hh) to
the Form 10-K Annual Report of the Company dated April
30, 1991.
10(bb) Second Amended and Restated Big B, Inc. Employee Stock
Option Plan incorporated by reference (pursuant to the
provisions of Rule 12(b)-32) to Exhibit No. 10(ii) to the
Form 10-K Annual Report of the Company dated April 30,
1991.
10(cc) Indenture of Trust between The Industrial Development
Board of the City of Bessemer and First-Citizens Bank &
Trust Company, dated as of May 1, 1990, incorporated by
reference (pursuant to the provisions of Rule 12(b)-32)
to Exhibit No. 10(kk) to the Form 10-K Annual Report of
the Company dated April 15, 1992.
10(dd) Bond Guaranty Agreement between the Company and First-
Citizens Bank & Trust Company dated as of May 1, 1990,
incorporated by reference (pursuant to the provisions of
Rule 12(b)-32) to Exhibit No. 10(ll) to the Form 10-K
Annual Report of the Company dated April 15, 1992.
10(ee) Plan Merger Agreement, dated effective as of August 1,
1990, merging the Big B, Inc. Profit Sharing Retirement
Plan and Trust into the Big B, Inc. Capital Accumulation
Plan and Trust, incorporated by reference (pursuant to the
provisions of Rule 12(b)-32) to Exhibit No. 10(mm) to the
Form 10-K Annual Report of the Company dated April 15,
1992.
10(ff) Amendment to Second Amended and Restated Big B, Inc.
Employee Stock Option Plan adopted by the Board of
Directors on March 14, 1991, and the Shareholders on
May 28, 1991, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(nn) to
the Form 10-K Annual Report of the Company dated April
15, 1992.
10(gg) Lease Agreement dated September 23, 1981, between the
Company and Nancy M. Bruno (sister-in-law of Anthony J.
Bruno), covering the Hoover, Alabama, drug store premises,
incorporated by reference (pursuant to the provisions of
Rule 12(b)-32) to Exhibit No. 10(oo) to the Form 10-K
Annual Report of the Company dated April 15, 1992.
10(hh) Extension and Amendment to Lease Agreement, dated August
19, 1991, between the Company and Nancy M. Bruno
(sister-in-law of Anthony J. Bruno), covering the
Hoover, Alabama, drug store premises, incorporated
by reference (pursuant to the provisions of Rule
- 47 - <PAGE>
<PAGE> 48
12(b)-32) to Exhibit No. 10(pp) to the Form 10-K Annual
Report of the Company dated April 15, 1992.
10(ii) Letter of Credit and Reimbursement Agreement between Big B,
Inc., and NationsBank of Georgia, National Association,
dated as of August 1, 1992, incorporated by reference
(pursuant to the provisions of Rule 12(b)-32) to Exhibit
No. 10(qq) to the Form 10-K Annual Report of the Company
dated April 29, 1993.
10(jj) Lease Agreement dated September 1, 1992, between The
Industrial Development Board of the City of Bessemer and
Big B, Inc., incorporated by reference (pursuant to the
provisions of Rule 12(b)-32) to Exhibit No. 10(aaa) to the
Form 10-K Annual Report of the Company dated April 29, 1993.
10(kk) Second Amendment to Credit Agreement and First Amend-
ment to Promissory Note by and among Big B, Inc., The
First National Bank of Chicago, as depositary, and Nations
Bank of Georgia, National Association, dated as of February 8,
1993, incorporated by reference (pursuant to the provisions of
Rule 12(b)-32) to Exhibit No. 10(bbb) to the Form 10-K Annual
Report of the Company dated April 29, 1993.
10(ll) Second Amendment to Second Amended and Restated Big B, Inc.
Employee Stock Option Plan, incorporated by reference (pursuant to
the provisions of Rule 12(b)-32) to Exhibit No. 10(ccc) to the
Form 10-K Annual Report of the Company dated April 27, 1994.
10(mm) Big B, Inc. Profit Sharing 401(k) Retirement Plan, as amended
and restated for the Tax Reform Act of 1986, dated November 1,
1994, with amendments thereto dated April 10, 1995.
10(nn) 1995 Employment and Deferred Compensation Agreement dated
November 14, 1995, by and between Big B, Inc. and Anthony
J. Bruno.
10(oo) 1995 Employment and Deferred Compensation Agreement dated
November 14, 1995, by and between Big B, Inc. and Arthur
M. Jones, Sr.
10(pp) 1995 Employment and Deferred Compensation Agreement dated
November 14, 1995, by and between Big B, Inc. and Vincent
J. Bruno.
10(qq) 1995 Employment and Deferred Compensation Agreement dated
November 14, 1995, by and between Big B, Inc. and Bobby
W. Little.
10(rr) 1995 Employment and Deferred Compensation Agreement dated
November 14, 1995, by and between Big B, Inc. and James
A. Bruno.
- 47 - <PAGE>
<PAGE> 48
10(ss) 1995 Employment and Deferred Compensation Agreement dated
November 14, 1995, by and between Big B, Inc. and Eugene
A. Beckmann.
10(tt) 1995 Employment and Deferred Compensation Agreement dated
November 14, 1995, by and between Big B, Inc. and S. Steven
Taylor.
10(uu) 1995 Employment and Deferred Compensation Agreement dated
November 14, 1995, by and between Big B, Inc. and Michael
J. Tortorice.
10(vv) 1995 Employment and Deferred Compensation Agreement dated
November 14, 1995, by and between Big B, Inc. and Paul Bruno.
10(ww) Employment Continuity Agreement dated November 14, 1995,
by and between Big B, Inc. and Anthony J. Bruno.
10(xx) Employment Continuity Agreement dated November 14, 1995,
by and between Big B, Inc. and Arthur M. Jones, Sr.
10(yy) Employment Continuity Agreement dated November 14, 1995,
by and between Big B, Inc. and Vincent J. Bruno.
10(zz) Employment Continuity Agreement dated November 14, 1995,
by and between Big B, Inc. and Bobby W. Little.
10(aaa) Employment Continuity Agreement dated November 14, 1995,
by and between Big B, Inc. and James A. Bruno.
10(bbb) Employment Continuity Agreement dated November 14, 1995,
by and between Big B, Inc. and Eugene A. Beckmann.
10(ccc) Employment Continuity Agreement dated November 14, 1995,
by and between Big B, Inc. and S. Steven Taylor.
10(ddd) Employment Continuity Agreement dated November 14, 1995,
by and between Big B, Inc. and Michael J. Tortorice.
10(eee) Employment Continuity Agreement dated November 14, 1995,
by and between Big B, Inc. and Paul Bruno.
11 Statement re Computation of Per Share Earnings
18 Letter re Change in Accounting Principles
23(a) Consent of independent public accountants to the incor-
poration (by reference to this Form 10-K Annual Report)
of report with respect to the Company's certified financial
statements for the fiscal year ended February 3, 1996, into
the Company's previously filed Registration Statement No.
2-83230.
27 Financial Data Schedule (for SEC use only).
- 49 -
STATE OF ALABAMA
JEFFERSON COUNTY
TAX REFORM ACT OF 1986
AMENDMENT AND RESTATEMENT OF THE
BIG B, INC.
PROFIT SHARING 401(k) RETIREMENT PLAN
(formerly Big B, Inc. Capital Accumulation Plan)
BIG B, INC., a corporation organized and existing under
the laws of the State of Alabama, with its principal place of
business in Bessemer, Alabama (hereinafter called the
"Employer"), hereby adopts and publishes on this the ____ day of
____________, 19__ this Amended and Restated Profit Sharing
401(k) Retirement Plan for the exclusive benefit of such of its
Employees who may become Participants and their Beneficiaries as
set forth in this document, pursuant to Section 401(a) of the
Internal Revenue Code, as follows:
W I T N E S S E T H:
WHEREAS, Employer, effective on February 1, 1986,
established a Capital Accumulation Plan and Trust, which were
approved by the Internal Revenue Service as to their
qualification; and
WHEREAS, the Tax Reform Act of 1986, the Omnibus Budget
Reconciliation Act of 1986, the Omnibus Budget Reconciliation Act
of 1987, the Technical and Miscellaneous Revenue Act of 1988 and
the Omnibus Budget Reconciliation Act of 1989, have required
substantial changes in the terms and provisions of the Big B,
Inc. Capital Accumulation Plan; and
WHEREAS, said Big B, Inc. Capital Accumulation Plan
provides that the Employer reserves the right at any time and
from time to time, by action of its Board of Directors, to amend
in whole or in part any and all provisions of said Plan; and
WHEREAS, the Board of Directors of the Employer
specifically approved and adopted, by resolution, the Big B, Inc.
Profit Sharing 401(k) Retirement Plan, as hereinafter restated,
which together with the Trust Agreement amends and restates the
Big B, Inc. Capital Accumulation Plan and Trust Agreement in
their entirety; and
NOW, THEREFORE, in consideration of the above premises
and the mutual covenants herein contained, Employer amends said
Plan as of the dates hereof and causes the terms and provisions
of the original Plan and amendments thereto to be modified and
amended as set forth herein:
ARTICLE I
PURPOSE
1.1 The purpose of the Plan is to provide a
regular method whereby Employer will make contributions to a
Trust Fund, to be received, held and disbursed pursuant to the
terms of a Trust Agreement dated the 1st day of November, 1994
(hereinafter for brevity referred to as the "Trust Agreement")
and to provide financial security for its employees upon their
retirement or disability and for their beneficiaries in the event
of death. It is intended that this Plan qualify as a profit
sharing plan for purposes of Section 401(a) of the Code. It is
also intended that the Plan provide a method for employees to
contribute a portion of their compensation pursuant to a written
salary reduction agreement and that the Plan qualify as a cash or
deferred Plan pursuant to Section 401(k) of the Code. The Trust
Fund will be devoted to the exclusive benefit of the
participating employees and their beneficiaries, and in no event
will any part of the corpus or trust income revert to Employer or
be used for or devoted to any other purpose.
ARTICLE II
NAME AND EFFECTIVE DATE
2.1 The name of this Plan shall be the Big B,
Inc. Profit Sharing 401(k) Retirement Plan.
2.2 The Effective Date of the Plan is February 1,
1986.
2.3 Effective dates of amended and restated
provisions of this plan are as follows:
(a) Unless specifically stated otherwise in
the Plan or Code, the effective date of all other sections as
amended and restated shall be February 1, 1989.
(b) Limitation Years beginning after
December 31, 1991: The deletion of the use of accrued
compensation, if applicable.
(c) Plan Years beginning after December 31,
1987: Section 8.3 regarding contributions/allocations continuing
for participants who have reached Normal Retirement Age and who
continue employment (Code Section 411(b)(2)).
(d) Plan Years beginning after December 31,
1986:
(i) Sections regarding Actual
Contribution Percentage shall be effective for contributions
after December 31, 1986.
(ii) Code Section 415 limitations of
Sections 7.4 and 7.5.
(e) Years beginning after December 31, 1985:
The deletion of provisions requiring contributions from profits
is effective for Plan Years beginning after December 31, 1985.
(f) Plan Years beginning after December 31,
1984:
(i) The definition of Annuity
Starting Date and all Sections of Article VIII relating to Pre-
Retirement Survivor and Qualified Joint and Survivor Annuities,
except as otherwise provided in Article VIII.
(ii) Provisions in Section 9.2
incorporating IRC 411(a)(7)(C) cash-out distributions.
(iii) Section 10.2(f) regarding top-
heavy determination as required by Code Section 416(g)(4)(E).
(g) Loan provisions of Article XIII shall be
effective as of the separately stated effective dates set forth
in IRC Sections 72(p) and 417(a) and Labor Reg. 2550.408b-1.
2.4 The contributing date shall be as of the
Anniversary Date of the Plan.
ARTICLE III
DEFINITIONS
When used herein, the following words and phrases shall
have the following meanings, unless the context clearly indicates
otherwise.
3.1 "Accrued Benefit" shall mean the sum, as of
the last Valuation Date, of balances in all accounts maintained
for a Participant, including any Contracts held by the Trust on a
Participant's life.
3.2 "Actual Contribution Percentage" shall mean
the average of ratios (expressed as a percentage to the nearest
one-hundredth of one percent) of Employees in the group for a
Plan Year, calculated separately for each Employee in such group
as follows:
(a) The numerator of such ratio is the sum
of Employer Matching Contributions and Qualified Employer
Matching Contributions (to the extent not taken into account for
purposes of the Actual Deferral test).
(b) The denominator of such ratio is the
Compensation (as defined in Section 414(s) of the Code) of each
Employee in the group for the portion of such Plan Year that the
Employee was a Participant in the Plan.
(c) At the Employer's election, the
numerator may include Qualified Discretionary Employer
Contributions and Elective Deferrals, provided the Actual
Deferral Percentage test is met before the Elective Deferrals are
used in the Actual Contribution Percentage test and continues to
be met following the exclusion of such Elective Deferrals that
are used in the Actual Contribution Percentage test.
(d) The numerator shall not include Employer
Matching Contributions that are forfeited either to correct
Excess Aggregate Contributions or because the contributions to
which they relate are Excess Deferrals, Excess Contributions, or
Excess Aggregate Contributions.
(e) The ratio shall be zero for a
Participant for whom no Employer Matching Contributions,
Qualified Employer Matching Contributions or Elective Deferrals
are made.
3.3 "Actual Deferral Percentage" shall mean the
average of ratios (expressed as a percentage to the nearest one-
hundredth of one percent) of Employees in the group for a Plan
Year, calculated separately for each Employee in the group as
follows:
(a) The numerator of such ratio is the sum
of the following Employer contributions actually paid over to the
Trust on behalf of each Employee in the group for the Plan Year:
(i) Elective Deferrals made pursuant
to the Participant's deferral election (including Excess Elective
Deferrals of Highly Compensated Employees, excluding Excess
Elective Deferrals of non-highly Compensated Employees that arise
solely from Elective Deferrals made under the Plan or plans of
the Employer, and excluding Elective Deferrals that are taken
into account in the Actual Contribution Percentage), and
(ii) At the election of the Employer,
Qualified Discretionary Employer Contributions and Qualified
Employer Matching Contributions of each Employee in the group.
(b) The denominator of such ratio is the
Compensation (as defined in Section 414(s) of the Code) of each
Employee in the group for the portion of such Plan Year that the
Employee was a Participant in the Plan.
(c) The ratio shall be zero for an Employee
who would be a Participant but for the failure to make Elective
Deferrals.
3.4 "Affiliated Service Group" shall mean:
(a) a group of service Organizations
consisting of the Employer and one or more of the following:
(i) Any service Organization which --
(A) is a shareholder or partner
of the Employer, and
(B) regularly performs services
for the Employer or is regularly associated with the Employer in
performing services for third persons, and
(ii) Any other Organization if
(A) a significant portion of the
business of such Organization is the performance of services for
the Employer, for Organizations described in subparagraph (a)(i)
hereinabove, or for both, which is of a type historically
performed in such service field by employees, and
(B) ten percent (10%) or more of
the interests in such Organization is held by persons who are
highly compensated employees (within the meaning of Section
414(q) of the Code) of the Employer or an Organization described
in subparagraph (a)(i) hereinabove; or
(b) a group of Organizations consisting of:
(i) an Organization the principal
business of which is performing, on a regular and continuing
basis, management functions for the Employer or any Organization
which is a "Related Organization" to the Employer; and
(ii) the Employer and the Related
Organization for which said services are performed.
(iii) for purposes of this Section,
"Related Organization" shall mean:
(A) any Organization which would
be a member of the Controlled Group pursuant to Section 1563(a)
of the Code, except that for purposes of Section 415 of the Code,
the phrase "more than 50%" shall be substituted for the phrase
"at least 80%" each place it appears in Section 1563(a) of the
Code; or
(B) the relationship of the
Employer and the Organization would result in a disallowance of
losses under Sections 267 or 707(b) of the Code.
(c) For purposes of this Section, after
December 31, 1984, the term "Organization" shall mean a
corporation, partnership, or other Organization and, in
determining ownership pursuant to subsection (a) hereinabove, the
principles of Section 318(a) of the Code shall apply.
3.5 "Age" shall mean attained age.
3.6 "Allocation Date" shall mean the last day of
each quarter or month of the Plan Year, or other such date
selected by the Administrator.
3.7 "Anniversary Date" shall mean the last day of
the Plan Year.
3.8 "Annual Addition Suspense Account" shall mean
the account maintained in the Plan to record reductions in the
annual addition as required by Section 7.4 hereof.
3.9 "Annuity Starting Date" shall mean the first
day of the first period for which an amount is paid as an annuity
or, in the case of a benefit not payable in the form of an
annuity, the first day on which all events have occurred which
entitle the Participant to such benefit.
3.10 "Beneficiary" shall mean, subject to the
distribution provisions of Article VIII, the person or persons
selected in writing by the Participant to receive the benefits
under the Plan in the event of the Participant's death. Wherever
the rights of a Participant are stated or limited herein, his
Beneficiary shall be deemed bound thereby. If any Participant
shall fail to designate a Beneficiary, or if there is no
designated Beneficiary surviving at the Participant's death, the
Administrator shall be empowered to designate a Beneficiary or
Beneficiaries on his behalf, but only from among the following,
in the order named: (1) spouse, (2) children, in equal shares,
(3) parents, in equal shares or survivor, (4) brothers and
sisters, per stirpes, and (5) estate of the Participant. In the
event any of the above shall be under the age of majority, the
Administrator shall pay the share of such minor to his or her
parents or legally appointed guardian, as custodian under the
Alabama Uniform Transfers to Minors Act.
3.11 "Board" shall mean the Board of Directors of
the Employer.
3.12 "Break In Service" shall mean a Plan Year
during which a Participant has not completed more than five
hundred (500) Hours of Service.
3.13 "Code" shall mean the Internal Revenue Code
of 1986, as amended.
3.14 "Compensation" shall mean:
(a) Except as provided hereinbelow, a
Participant's compensation which would be included on his Federal
W-2 Form for the Plan Year for which the contribution is made,
excluding contributions to any Qualified Plan or any non-
qualified deferred compensation plan.
(b) Compensation shall include Employer
contributions made pursuant to a salary reduction agreement which
are not includible in the gross income of the Employee under
Sections 125, 402(a)(8), 402(h) or 403(b) of the Code.
(c) Provided, however, in all events, for
any Plan Year, Compensation, as defined above, shall not include
amounts in excess of Two Hundred Thousand Dollars ($200,000).
The sum of Two Hundred Thousand Dollars ($200,000) shall be
adjusted for increases in the cost of living pursuant to Section
401(a)(17) of the Code and the regulations thereunder. The
adjusted dollar limitation shall be effective January 1 of a
calendar year and applies with respect to Limitation Years
beginning with or within such calendar year. In determining the
Compensation of a Participant for purposes of this limitation,
the rules of Code Section 414(q)(6) shall apply, except that the
term "family" shall include only the spouse of the Participant
and any lineal descendants of the Participant who have not
attained age 19 before the close of the year. If, as a result of
the application of such rules, the adjusted $200,000 limitation
is exceeded, then (except for purposes of determining the portion
of compensation up to the integration level if the Plan provides
for permitted disparity) the limitation shall be prorated among
the affected Participants in proportion to each Participant's
Compensation as determined prior to the application of this
limitation.
(d) In addition to other applicable
limitations set forth in the Plan, and notwithstanding any other
provision of the Plan to the contrary, for Plan Years beginning
on or after January 1, 1994, the Annual Compensation of each
Employee taken into account under the Plan shall not exceed the
OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with Section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, over which compensation is determined
(determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA
93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
(e) For Plan Years beginning on or after
January 1, 1994, any reference in this Plan to the limitation
under Section 401(a)(17) of the Code shall mean the OBRA '93
annual compensation limit set forth in this provision.
(f) If compensation for any prior
determination period is taken into account in determining an
Employee's benefits accruing in the current Plan Year, the
compensation for the prior determination period is subject to the
OBRA '93 annual compensation limit in effect for that prior
determination period. For this purpose, for determination
periods beginning before the first day of the first Plan Year
beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
(g) In the case of an Employee who becomes
eligible to participate in the Plan on August 1 of a Plan Year,
Compensation with respect to such Plan Year shall be counted from
the date the Employee becomes eligible.
3.15 "Contract"shall mean any ordinary or term
life insurance contract secured from any life insurance company
authorized to do business in the State of Alabama, which has been
obtained for the purpose of providing benefits under this Plan.
3.16 "Controlled Group" shall mean any group of
corporations which, together with the Employer, are members of a
Controlled Group within the meaning of Section 1563(a) of the
Code, determined without regard to Section 1563(a)(4) or
(e)(3)(c) or would be a part of such a group if Section 1563(a)
applied to partnerships or proprietorships.
3.17 "Disability" shall mean, for all purposes
under this Plan, a condition under which a Participant is deemed
to be totally and permanently disabled, if, supported by medical
evidence, he will be totally unable, due to physical or mental
disability, ever to discharge or to resume full duties of the
same general nature as those which he performed immediately prior
to such disability provided that: (a) such disability did not
arise while engaged in or as a result of having engaged in a
wrongful, illegal or criminal act, or an act contrary to the best
interest of Employer; or (b) such disability did not result from
habitual drunkenness or addiction to narcotics or self-inflicted
injury while sane or insane.
3.18 "Discretionary Employer Contribution" shall
mean a contribution made by the Employer pursuant to Section
6.1(a).
3.19 "Discretionary Employer Contribution Account"
shall mean the account maintained for a Participant to record his
share of Discretionary Employer Contributions and forfeitures,
and adjustments relating thereto.
3.20 "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
3.21 "Early Retirement Age" shall mean the date
Participant attains age fifty-five (55) or older, or completes
fifteen (15) Years of Credited Service with the Employer,
whichever is later.
3.22 "Elective Deferrals" shall mean any Employer
contributions made to the Plan at the election of the
Participant, in lieu of cash compensation, and shall include
contributions made pursuant to a salary reduction agreement or
other deferral mechanism. With respect to any taxable year, a
Participant's Elective Deferral is the sum of Employer
contributions made on behalf of such Participant pursuant to an
election to defer under any qualified CODA as described in
Section 401(k) of the Code, any simplified employee pension cash
or deferred arrangement as described in Section 402(h)(1)(B), any
eligible deferred compensation plan under Section 457, any plan
as described under Section 501(c)(18), and any Employer
contributions made on behalf of a participant for the purchase of
an annuity contract under Section 403(b) pursuant to a salary
reduction agreement. Elective Deferrals shall not include any
deferrals properly distributed as excess annual additions.
3.23 "Elective Deferral Account" shall mean the
account maintained for a Participant to record his Elective
Deferrals with adjustments relating thereto.
3.24 "Eligibility Computation Period" shall mean
the period of twelve (12) consecutive months beginning with an
Employee's Employment Commencement Date, and thereafter, shall
mean the next succeeding Plan Year which includes the first
anniversary of the Participant's Employment Commencement Date.
An Employee who is credited with 1000 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 initial Eligibility Computation Period will be
credited with two Years of Service.
3.25 "Eligibility Date" shall mean the February 1,
May 1, August 1, or November 1 of each Plan Year.
3.26 "Employee" shall mean any person employed by
Employer maintaining the Plan or any other employer required to
be aggregated with such Employer under Sections 414(b), (c), (m)
or (o) of the Code. For purposes of determining whether or not
the Plan meets the requirements of Section 10.2 hereof, the term
Employee shall also include the Beneficiary of an Employee. The
term Employee shall also include leased employees within the
meaning of Section 414(n) or 414(o) of the Code.
3.27 "Employer" shall mean Big B, Inc., a
corporation having its principal office at Bessemer, Alabama, or
any successor thereto by merger, purchase, or otherwise, and any
participating employer which adopts the Plan.
3.28 "Employer Matching Contribution" shall mean a
contribution made by the Employer on behalf of a Participant on
account of an Elective Deferral made pursuant to Section 6.2(a).
3.29 "Employer Matching Contribution Account"
shall mean the account maintained for a Participant to record
Employer Matching Contributions (and adjustments thereto) made on
his behalf.
3.30 "Employment Commencement Date" shall mean the
date on which an Employee first performed an Hour of Service for
the Employer. In the case of a re-hired Employee, "Employment
Commencement Date" shall mean the date on which the Employee
first performed an Hour of Service after being re-hired.
3.31 "Family Member" shall mean a person described
in Section 414(q)(6)(B) of the Code.
3.32 "Five-Percent Owner" shall mean any person
who is defined as a Five-Percent Owner in Section 416(i)(1)(B) of
the Code and the Regulations promulgated thereunder, which are
hereby incorporated by reference as if fully set out herein.
3.33 "Highly Compensated Employee" shall mean a
highly compensated active employee and/or highly compensated
former employee as follows:
(a) A highly compensated active employee
includes any Employee who performs service for the Employer
during the determination year and who, during the look-back year:
(i) received compensation from the Employer in excess of $75,000
(as adjusted pursuant to Section 415(d) of the Code); (ii)
received compensation from the Employer in excess of $50,000 (as
adjusted pursuant to section 415(d) of the Code) and was member
of the top-paid group for such year; or (iii) was an officer of
the Employer and received compensation during such year that is
greater than 50% of the dollar limitation in effect under Section
415(b)(1)(A) of the Code. The term highly compensated employee
also includes; (i) Employees who are both described in the
preceding sentence if the term "determination year" is
substituted for the term "look-back year" and if the Employee is
one of the 100 Employees who received the most compensation from
the Employer during the determination year; and (ii) Employees
who are 5% owners at any time during the look-back year or
determination year.
(b) If no officer has satisfied the
compensation requirement of (iii) above during either a
determination year or look-back year, the highest paid officer
for such year shall be treated as a highly compensated employee.
(c) For this purpose, the determination year
shall be the Plan Year. The look-back year shall be the 12-month
period immediately preceding the determination year. The top-
paid group shall consist of the top 20% of active employees,
ranked on the basis of compensation paid during such year.
Compensation shall mean compensation within the meaning of Code
Section 415(c)(3).
(d) A highly compensated former Employee
includes any Employee who separated from service (or was deemed
to have separated) prior to the determination year, performs no
service for the Employer during the determination year, and was a
highly compensated active Employee for either the separation year
or any determination year ending on or after the Employee's 55th
birthday.
(e) If an Employee is, during a
determination year or look-back year, a family member of either a
5% owner who is an active or former Employee or a highly
compensated Employee who is one of the 10 most highly compensated
Employees ranked on the basis of compensation paid by the
Employer during such year, then the family member and the 5%
owner or top-ten highly compensated Employee shall be aggregated.
In such case, the family member and 5% owner or top-ten highly
compensated Employee shall be treated as a single Employee
receiving compensation and Plan contributions or benefits equal
to the sum of such compensation and contributions or benefits of
the family member and 5% owner or top-ten highly compensated
Employee. For purposes of this Section, family member includes
the spouse, lineal ascendants and descendants of the Employee or
former Employee and the spouses of such lineal ascendants and
descendants.
(f) The determination of who is a highly
compensated Employee, including the determinations of the number
and identity of Employee in the top-paid group, the top 100
Employees, the number of Employees treated as officers and the
compensation that is considered, will be made in accordance with
Section 414(q) of the Code and the regulations thereunder.
3.34 "Hour of Service" shall mean:
(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 or periods 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); 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 under both paragraph (a) or paragraph (b), as the
case may be, and under this paragraph (c). These hours shall be
credited to the Employees 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.
(d) The provisions of Sections 2530.200(b)-
2(b) and 2530.200(b)-2(c) of the regulations of the Labor
Department (relating to determining Hours of Service for reasons
other than the performance of duties and crediting of Hours of
Service to computation periods) are hereby incorporated by
reference as if fully set out herein.
(e) An Employee who is not paid on an hourly
basis and whose hours are not counted and recorded shall be
credited with ten (10) Hours of Service for each day during the
Plan Year for which he actually performs services for any portion
of that day. An Employee shall also be credited with ten (10)
Hours of Service for any day during the Plan Year for which no
services are performed if the Employee would be entitled to be
credited with at least one (1) Hour of Service for that day under
Paragraph (b) or (c) hereinabove.
(f) For Plan Years beginning after December
31, 1984, solely for purposes of determining whether a Break In
Service (as defined in Section 3.12 has occurred in a computation
period, for participation and vesting purposes, a Participant 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 Participant but for such absence, or
in any case in which such hours cannot be determined, eight (8)
Hours of Service per day of absence. For purposes of this
paragraph, an absence from work for maternity or paternity
reasons means an absence: (1) by reason of the pregnancy of the
Participant, (2) by reason of a birth of a child of the
Participant, (3) by reason of the placement of a child with the
Participant in connection with the adoption of such child by such
Participant or (4) for purposes of caring for such child for a
period beginning immediately following such birth or placement.
The Hours of Service credited under this Section shall be
credited: (1) in the computation period in which the absence
begins if the crediting is necessary to prevent a Break In
Service in that period, or (2) in all other cases, in the
following computation period. No credit will be given under this
Section, however, unless the Participant furnishes to the Plan
Administrator such timely information as the Administrator may
reasonably require to establish that the absence from work is for
reasons qualifying for the maternity/paternity provisions set
forth above, and the number of days for which there was such an
absence.
(g) Hours of service will be credited for
employment with other members of an affiliated service group
(under Section 414(m)), a controlled group of corporations (under
Section 414(b)), or a group of trades or businesses under common
control (under Section 414(c)) of which the adopting employer is
a member, and any other entity required to be aggregated with the
employer pursuant to Section 414(o) and the regulations
thereunder.
(h) Hours of service will also be credited
for any individual considered an employee for purposes of this
Plan under Section 414(n) or Section 414(o) and the regulations
thereunder.
3.35 "Inactive Participant" shall mean a
Participant who has separated from service with the Employer.
3.36 "Key-Employee" shall mean any person who is
defined as a Key-Employee in Section 416(i)(1) of the Code, and
the Regulations promulgated thereunder, which are hereby
incorporated by reference as if fully set out herein. For
purposes of determining whether the Plan is a Top-Heavy Plan as
defined in Section 10.2 hereof, the term Key-Employee shall also
include the Beneficiary of a Key-Employee. The term "non-key
employee" means any Employee who is not a Key Employee and shall
also include Employees who are former Key-Employees.
3.37 "Limitation Year" shall mean the Plan Year.
3.38 "Named Fiduciary" shall be the Employer or
such other party, individual or otherwise, appointed by the
Board.
3.39 "Nonhighly Compensated Participants" shall
mean a participant who is an Employee who is neither a Highly
Compensated Employee nor a Family Member.
3.40 "Normal Retirement Age" shall mean the
attainment of age sixty-five (65) by a Participant.
3.41 "Participant" shall mean any Employee who
meets (or has met in prior plan years) the participation and
eligibility requirements set out in the Plan, provided that such
Employee's nonforfeitable benefits have not been fully
distributed.
3.42 "Participating Employer" shall mean any
corporation, partnership, professional corporation or
professional association which has adopted the Plan pursuant to
ARTICLE XV of the Plan.
3.43 "Permissive Aggregation Group" shall mean all
plans in the Required Aggregation Group and any other Qualified
Plans maintained by the Employer or by any member of the
Controlled Group or Affiliated Service Group, but only if such
group of plans would satisfy, in the aggregate, the requirements
of Sections 401(a)(4) and 410 of the Code and contributions or
benefits in the other Qualified Plan are comparable to
contributions or benefits of plans in the Required Aggregation
Group. The Plan Administrator shall determine which plan or
plans shall be taken into account in determining the Permissive
Aggregation Group.
3.44 "Plan" shall mean Big B, Inc. Profit Sharing
401(k) Retirement Plan, as set forth by this document and all
amendments thereto.
3.45 "Plan Administrator" (hereinafter sometimes
for brevity referred to as "Administrator") shall be Big B, Inc.,
or such other party, individual or otherwise, appointed by the
Board.
3.46 "Plan Year" shall mean the period of twelve
(12) consecutive months beginning on the first day of February
and ending on the last day of January, both dates inclusive.
3.47 "Pre-Retirement Survivor Annuity" shall mean
an annuity payable to a surviving spouse of a Participant which
shall be equal to the amount which would be payable as a survivor
annuity under the Qualified Joint and Survivor Annuity Provisions
of the Plan if:
(a) in the case of a Participant who dies
after the Earliest Retirement Date, such Participant had retired
with an immediate Qualified Joint and Survivor Annuity on the day
before the Participant's death; or
(b) in the case of a Participant who dies on
or before the earliest retirement age, such Participant had: (a)
terminated employment on the date of his death, (b) survived to
the earliest retirement age, (c) retired with an immediate
Qualified Joint and Survivor Annuity at the earliest retirement
age, and (d) died on the day after the day on which said
Participant would have attained the earliest retirement age.
(c) Earliest retirement age shall mean the
latest of:(i) the earliest date, under the Plan, on which a
Participant may elect (without regard to any requirement that
approval of early retirement be obtained) to receive retirement
benefits (other than disability benefits); (ii) the first day of
the 120th month beginning before the participant reaches normal
retirement age, or (iii) the date on which the participant begins
participation.
(d) For purposes of determining the amount
of the Pre-Retirement Survivor Annuity, any security interest
held by the Plan by reason of an outstanding loan to the
Participant shall be taken into account.
3.48 "Qualified Discretionary Employer
Contribution" shall mean a Discretionary Employer Contribution
which is subject to the distribution and nonforfeitability
requirements under Code Section 401(k) when made.
3.49 "Qualified Employer Matching Contribution"
shall mean an Employer Matching Contribution that is subject to
the distribution and nonforfeitability requirements under Code
Section 401(k) when made.
3.50 "Qualified Joint and Survivor Annuity" shall
mean an immediate annuity for the life of the Participant with a
survivor annuity for the life of his spouse which is the
actuarial equivalent of one-half (1/2) of the Participant's
Vested Accrued Benefit.
3.51 "Qualified Plan" shall mean any plan which is
qualified under Section 401(a) of the Code.
3.52 "Required Aggregation Group" shall mean:
(a) Each Qualified Plan of the Employer or
any member of the Controlled Group or the Affiliated Service
Group in which at least one (1) Key-Employee participates; and
(b) Any other Qualified Plan of the Employer
or any member of the Controlled Group or the Affiliated Service
Group which enables a Plan described in Subsection (a)
hereinabove to meet the requirements of Sections 401(a)(4) and
410 of the Code.
3.53 "Rollover Account" shall mean the account
maintained by the Employer to record transfers to the Trust Fund
pursuant to ARTICLE XII of the Plan. Each Rollover Account shall
be designated as one of the following:
(a) Unrelated Post-TEFRA Rollover Account
shall mean the account maintained to record a transfer to the
Trust Fund which is accepted after December 31, 1983, and which
is initiated by the Employee and made to this Plan from a plan
which is not maintained by the Employer or any member of the
Controlled Group or the Affiliated Service Group.
(b) Unrelated Pre-TEFRA Rollover Account
shall mean the account maintained to record a transfer to the
Trust Fund which is accepted before January 1, 1984 and which is
initiated by the Employee and made to this Plan from a plan which
is not maintained by the Employer or any member of the Controlled
Group or the Affiliated Service Group.
(c) Related Rollover Account shall mean the
account maintained to record a transfer to the Trust Fund which
is either: (1) not initiated by the Employee; or (2) made to
this Plan from a plan which is maintained by either the Employer
or any member of the Controlled Group or the Affiliated Service
Group.
(d) Rollover Account - Self-Employed shall
mean the account maintained for each Participant to record assets
or funds transferred to the Trust Fund from another Qualified
Plan in which the Participant was an employee as defined in
Section 401(c)(1) of the Code.
3.54 "Taxable Wage Base" shall mean the
contribution and benefit base under Section 230 of the Social
Security Act in effect as of the beginning of the Plan Year.
3.55 "Taxable Year" shall mean the Plan Year.
3.56 "Top-Heavy Plan" shall mean the Plan for any
Plan Year in which it is determined to be top-heavy under Section
10.2 hereof.
3.57 "Trust Agreement" shall mean the Big B, Inc.
Profit Sharing 401(k) Retirement Trust Agreement executed by the
Employer and the Trustee contemporaneously with the execution of
this Plan, and as it may subsequently be amended from time to
time.
3.58 "Trustee" shall mean the individuals or duly
authorized corporate trustee selected by the Board to perform the
duties of Trustee as set out in the Trust Agreement.
3.59 "Trust Fund" shall mean all funds and
property received by the Trustee, including Contracts, if any,
together with all income, profits or other increments thereon.
3.60 "Valuation Date" shall mean any business day
on which the U.S. financial markets are open.
3.61 "Vested" shall mean the portion of the
Participant's Accrued Benefit which is nonforfeitable; fully
Vested shall mean totally nonforfeitable.
3.62 "Vesting Computation Period" shall mean the
Plan Year.
3.63 "Year of Credited Service" shall mean each
Vesting Computation Period during which an Employee has completed
not less than one thousand (1,000) Hours of Service with the
Employer or with any member of the Controlled Group or Affiliated
Service Group.
3.64 "Year of Service" shall mean each Eligibility
Computation Period during which an Employee has completed not
less than one thousand (1,000) Hours of Service with the
Employer.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.1 Powers of the Administrator. The
Administrator is empowered to administer the Plan in accordance
with its terms and shall have all powers and authority necessary
to carry out the provisions of the Plan. The Administrator shall
perform the following functions:
(a) Construe and interpret the provisions of
the Plan, and all parts thereof, including the interpretation of
any ambiguity, the supplying of any language which is omitted and
the reconciling of any inconsistency so that the Plan is given a
reasonable interpretation and construction in light of what was
intended in establishing the Plan;
(b) To determine all questions with respect
to the individual rights of the Participants and their
Beneficiaries under the Plan, including, but not limited to, all
issues with respect to a Participant's eligibility for
participation and eligibility for benefits, a Participant's
Compensation, a Participant's eligibility for disability benefits
and retirement benefits;
(c) To decide and resolve any disputes which
may arise relative to the rights of Employees, current and
former, and their Beneficiaries, under the terms of the Plan,
except to the extent that the claims procedure set forth in
Section 18.2 shall authorize any other person or party to
determine or review claims of Participants or Beneficiaries.
(d) To provide the Trustee with such
directions and instructions as may be necessary to carry out the
terms of the Plan.
(e) To maintain all Plan records and
relevant data, including Employee data relating to Hours of
Service, other than those required to be maintained by the
Trustee.
(f) If all or any part of a Participant's
Compensation received from the Employer is determined to be
unreasonable in amount by the Internal Revenue Service, the
Administrator shall be empowered and authorized to adjust the
Employer's contribution, which is based on the unreasonable
Compensation, in any manner permitted by Revenue Ruling 67-341,
and subsequent rulings, regulations and laws pertaining thereto;
or, in the alternative, the Administrator shall be empowered and
authorized to reallocate the contribution among other
Participants in any manner permitted by Revenue Ruling 67-341,
and subsequent rulings, regulations and laws pertaining thereto.
(g) To make allocations of contributions,
earnings, losses and forfeitures among Participants, from year to
year.
(h) To provide appropriate parties,
including government agencies, with such returns, reports,
schedules, descriptions and individual statements as are required
by law within the times prescribed by law; and to furnish to the
Employer, upon request, copies of any or all such materials, and
further, to make copies of such instruments, reports and
descriptions as are required by law available for examination by
Participants and such of their Beneficiaries who are or may be
entitled to benefits under the Plan in such places and in such
manner as required by law.
(i) To ascertain from the Employer the
eligible Employees who shall become Participants in the Plan and
the Participants who have terminated employment.
(j) To communicate with each eligible
Employee and inform him of the existence of the Plan and its
pertinent provisions and to make certain that such additional
disclosure requirements which may be imposed by the Department of
Labor or the Department of Treasury are carried out.
(k) To give necessary instructions and
directions to the Trustee to assure the payment of benefits to
any Participant or his Beneficiary, at such time as the
Participant or Beneficiary may become entitled thereto.
(l) To give appropriate instructions and
directions to the Trustee where any Participant terminates his
participation under the Plan or ceases to be entitled to
benefits.
(m) To make certain that all benefits are
paid to a Participant or his Beneficiary in accordance with the
terms and provisions of this Plan.
(n) To determine whether a Disability (as
defined in Article III) exists. The Administrator may require as
a condition precedent to the receipt of any benefits hereunder,
that the Employee submit to examination by one or more duly
licensed and practicing physicians. The Administrator shall have
the right from time to time to have medical examinations made by
a duly licensed physician or physicians to determine whether such
disability is continuing, and the degree thereof, and to
ascertain from the Participant by warranties or otherwise the
extent to which he has had his earning power restored and upon
such findings to discontinue the payments being made. If the
disabled Participant refuses to submit to such physical
examination or to give any other information requested, the
Administrator shall have the power to suspend or withhold payment
of any benefit until the Participant does so submit or comply.
The Administrator shall have the right to accept evidence for the
purpose of determining whether the Participant is still eligible
to receive any disability payments and to act upon such evidence.
(o) To determine whether premium payments
for Contracts purchased on the life of a Participant comply with
the restrictions set forth in ARTICLE XI.
(p) To hire persons to provide necessary
services to the Plan.
(q) To issue directions to the Trustee to
pay any fees, taxes, charges or other costs incidental to the
operation and management of the Plan.
(r) To comply with all disclosure
requirements imposed by state or federal law.
4.2 Employer as Administrator. If the
Administrator is the Employer, then the Administrator shall only
act by and through the Board in accordance with the authority of
the Board as provided under the Articles and by-laws of the
Employer. In such event, the action of the Administrator shall
be deemed to be the action of the entire Board, and not the
action of any individual member thereof. Any documents, reports,
forms or returns, which are to be executed by the Administrator,
shall be executed by a member of the Board who is so authorized,
and the execution thereof shall be deemed to be made on behalf of
the entire Board and not by that individual Board member.
4.3 Administrative Records. The records of the
Administrator and of all its proceedings and acts shall be made a
part of the records and minutes of the Board.
4.4 Bonding of the Administrator. Bonding shall
be made in accordance with Act Section 412 of ERISA.
4.5 Non-Discriminatory Administration. Wherever
under the provisions of this Plan discretion is granted to the
Administrator, which shall affect the benefits, rights and
privileges of Participants or their Beneficiaries under this
Plan, such discretion shall be exercised uniformly so that all
Participants or Beneficiaries similarly situated shall be
similarly treated.
4.6 Terminated Participant Statement. The
Administrator shall furnish to each Participant who during a Plan
Year has separated from the service of the Employer, or who is
entitled to a deferred vested benefit under the Plan as of the
end of such Plan Year, and with respect to whom retirement
benefits were not paid under the Plan during such Plan Year, an
individual statement setting forth the following: (a) the name
of the Plan; (b) the name and address of the Plan Administrator;
(c) the nature, amount and form of the deferred vested benefit to
which such Participant is entitled; and (d) such additional
information as the Secretary of the Treasury or his delegate may
require. Such statement shall be furnished by the Administrator
within such period after the end of a Plan Year as prescribed by
the Secretary of the Treasury in Regulations.
4.7 Delegation by Administrator. The
Administrator may delegate to the Trustee or any other agent,
advisor or consultant any of its functions, particularly those
set forth in ARTICLE VII hereinbelow.
ARTICLE V
PARTICIPATION OF EMPLOYEES
5.1 Requirements.
(a) Each Employee who was a Participant in
the Plan on January 31, 1989 shall continue to participate in
accordance with the provisions of this amended and restated Plan.
(b) Each Employee who was not a Participant
on January 31, 1989 shall participate under the terms of this
Plan commencing with the Eligibility Date next following the date
on which he completes one (1) Year of Service or attains age
twenty-one (21), whichever is later, provided, however, that
union Employees who are eligible to participate in a union-
sponsored or co-sponsored Qualified Plan shall be excluded from
participation in this Plan. For purposes of meeting the
requirements of this Section, a Year of Service shall include
service with any member of the Controlled Group or Affiliated
Service Group.
(c) For purposes of determining eligibility
under this Section 5.1, all Years of Service with the Employer
shall be taken into account, except that in the case of an
Employee who has a Break In Service, Years of Service before such
Break shall not be required to be taken into account until he has
completed a Year of Service after his return.
5.2 Re-Hired Employees. An Inactive Participant
(who is not Vested in his Accrued Benefit derived from Employer
Contributions) who incurs a Break In Service and who is later re-
hired by the Employer must satisfy the eligibility requirements
set forth in Section 5.1 if the number of consecutive 1-year
Breaks In Service equals or exceeds the greater of five (5) or
the aggregate number of Years of Service before such period. If
such Inactive Participant need not satisfy the eligibility
requirements of Section 5.1, he shall participate immediately
upon reemployment.
5.3 Participation Agreement. Within ninety (90)
days after becoming eligible to participate in the Plan, each
Participant may be required to execute a written statement, on a
form or forms to be furnished by the Administrator, wherein he
shall evidence (a) his designation of a Beneficiary or
Beneficiaries to receive the death benefit provided under the
Plan; (b) the portion of Compensation to be contributed to the
Plan as Elective Deferrals; and (c) investment directions with
respect to his Elective Deferral contributions to the Plan.
ARTICLE VI
CONTRIBUTIONS
6.1 Employer Contributions: Types and Amounts.
(a) Discretionary Employer Contributions.
From time to time during the continuance of this Plan, the
Employer may make Discretionary Employer Contributions, in cash
or in kind, to the Trust Fund in an amount determined by the
Board, on or before the date prescribed in the Code for the
filing of the Employer's Federal Income Tax Return, including
extensions thereof, for the Taxable Year of the Employer for
which the contribution is made.
(b) Employer Matching Contributions.
Subject to the Actual Contribution Percentage limitations
hereinbelow, the Employer may make Employer Matching
Contributions in an amount determined by the Board. Such
contribution shall be paid in cash or in kind to the Trust Fund
on or before the date prescribed in the Code for the filing of
the Employer's Federal Income Tax Return, including extensions
thereof, for the Taxable Year of the Employer for which the
contribution is made.
(c) Elective Deferrals as Employer
Contributions. Contributions made pursuant to Section 6.2
hereinbelow, unless otherwise specifically provided in the Code
or Treasury regulations, are treated as a contribution of the
Employer for Sections 401(a), 401(k), 404, 411, 415, 416 and 417
of the Code.
6.2 Elective Deferrals: Amounts and Procedures.
Elective Deferrals shall be accumulated through payroll
deductions and shall be paid to the Trustee with reasonable
promptness but not later than the end of the month immediately
following such payroll deduction. Elective Deferrals shall be
made as follows:
(a) Except as provided in (b) hereinbelow,
each Participant may elect to defer a portion of his Compensation
in any amount up to ten percent (10%) by directing the Employer
in a written salary reduction agreement to withhold such
contribution through payroll deduction.
(b) Elective Deferrals shall not be made on
behalf of Participants whose status changes from non-union to
union.
(c) The Employer and Administrator shall
adopt procedures necessary to implement all arrangements for the
election and payment of Elective Deferrals. Elections to
commence, modify or terminate such Elective Deferrals may be made
by the Participant semi-annually on February 1 and August 1 of
each Plan Year. Participant elections described in this
subparagraph must be made before the Compensation to be deferred
becomes currently available to the Employee and may not be
applied retroactively.
6.3 Elective Deferral Dollar Limitations.
(a) No Participant shall be permitted to
make Elective Deferrals during any taxable year of the
Participant, in excess of Seven Thousand Dollars ($7,000). The
sum of Seven Thousand Dollars ($7,000) shall be adjusted for
increases in the cost of living pursuant to Code Section 402(g)
and the regulations thereunder.
(b) "Excess Elective Deferrals" shall mean
those Elective Deferrals that are includible in a Participant's
gross income under Code Section 402(g) to the extent such
Participant's Elective Deferrals for a taxable year exceed the
dollar limitation under such Code Section.
(c) In the event the limitation set forth in
this paragraph is exceeded, one of the following actions shall be
taken:
(i) Distribution After Taxable Year.
By March 1 of the year following the close of his taxable year,
the Participant must notify the Plan Administrator in writing of
the excess and the amount of the excess to be allocated to the
Plan. The Participant is deemed to have notified the Plan of
excess deferrals to the extent such Participant has excess
deferrals for the taxable year calculated by taking into account
only elective deferrals under the Plan and other plans of the
Employer. Under such circumstances, the Employer may notify the
Plan on behalf of the Participant. Notwithstanding any other
provision of the Plan, and provided notification has been given
in accordance with this subparagraph, the excess amount (adjusted
for gains/losses) shall be distributed to the Participant no
later than April 15 following the close of the Participant's
taxable year in which the excess deferral occurred.
(ii) Distribution During Taxable Year.
A Participant may receive a corrective distribution of excess
deferrals during the same taxable year in which the excess
deferral occurred, provided the Participant and the Plan
designate the distribution as an excess deferral, and the
correcting distribution is made after the date on which the Plan
received the excess deferral.
(iii) Retention in Plan. Elective
Deferrals which are not distributed on or before April 15
following the close of the Participant's taxable year shall
remain in the Plan until such time that distributions are
otherwise allowed in accordance with the terms and provisions of
ARTICLE VIII hereinbelow.
(d) Determination of income or loss: Excess
Elective Deferrals shall be adjusted for any income or loss for
the taxable year of the Participant. The Plan shall compute the
income or loss allocable to Excess Elective Deferrals in the same
manner specified in Section 7.1(b) hereinbelow for allocating
income to Participant's accounts.
(e) In the event any of the foregoing
provisions of this Section are not in conformity with regulations
of the Department of the Treasury that are, from time to time
promulgated, the non-conforming provision or provisions may be
amended retroactively to insure conformity.
6.4 Prospective Elimination of Nondeductible
Employee Contributions.
(a) This Plan will not accept nondeductible
employee contributions for Plan Years beginning after January 31,
1994. For Plan Years beginning after December 31, 1986, and
before February 1, 1994, non-deductible Employee contributions
will be limited so as to meet the nondiscrimination test of Code
Section 401(m) and shall also be subject to the limitations of
Section 7.4.
(b) A separate account will be maintained by
the Trustee for the nondeductible Employee contributions of each
Participant.
(c) Employee contributions and earnings
thereon will be nonforfeitable at all times.
6.5 Actual Deferral Percentage Limitations.
(a) The Plan shall meet and does incorporate
by reference the Actual Deferral Percentage test set forth in
Code Section 401(k)(3) and the regulations thereunder.
(b) Corrective Measures. In the event the
Actual Deferral Percentage for Highly Compensated Employees does
not satisfy the test set forth in subparagraph (a) hereinabove,
the Administrator shall utilize the following corrective measure
with respect to the Elective Deferrals that exceed those
permitted under such tests (hereinafter referred to as "Excess
Contributions"):
(i) Distributions. Excess
Contributions (adjusted for any income or loss) that are
specifically designated as such by the Employer may be
distributed to the appropriate Highly Compensated Employees
within two and one-half (2 1/2) months after the close of the
Plan Year for which such Excess Contributions were made. The
amount of Excess Contributions for a Highly Compensated Employee
is determined by reducing the contribution ratios of the Highly
Compensated Employees who have the highest ratios to the maximum
acceptable level. Distributions under this subparagraph will be
made on the basis of the respective portions of such amounts that
are attributable to each Highly Compensated Employee. The
following additional provisions apply to distributions under this
subparagraph (b)(i):
(A) Distributions may be postponed
but not later than the close of the Plan Year following the Plan
Year for which such Excess Contributions were made.
Distributions that are postponed pursuant to the preceding
sentence shall cause the Employer to be subject to the excise tax
imposed by Code Section 4979.
(B) Excess Contributions shall be
distributed from a Participant's Elective Deferral Account in
proportion to his Elective Deferrals for the Plan Year.
(C) Determination of income or
loss: Excess Contributions shall be adjusted for any income or
loss for the Plan Year. The Plan shall compute the income or
loss allocable to Excess Contributions in the same manner
specified in Section 7.1(b) hereinbelow for allocating income to
Participant's accounts.
(D) If, pursuant to Section 6.3
above, Excess Elective Deferrals have been distributed for the
Employee's taxable year ending with or within the Plan Year, the
Plan shall offset such distribution from the amount of such
Employee's Excess Contributions to be distributed for such Plan
Year. The amount of Excess Elective Deferrals that may be
distributed by the Plan for a taxable year of the Employee must
be reduced by the amount of Excess Contributions previously
distributed for the Plan Year beginning with or within that
taxable year.
(E) Excess Contributions of
Participants who are subject to the family aggregation rules
shall be allocated among the family members in proportion to the
Elective Deferrals (and amounts treated as Elected Deferrals) of
each family member that is combined to determine the combined
ADP.
(ii) Additional Contributions. Within
twelve (12) months after the end of the Plan Year, the Employer
may make a Qualified Employer Matching Contribution or a
Qualified Discretionary Employer Contribution on behalf of Non-
Highly Compensated Employees in an amount sufficient to satisfy
the test set forth in subparagraph (a) hereinabove. Such
contribution shall be allocated to the Qualified Discretionary
Employer Contribution Account or Qualified Matching Employer
Contribution Account of each Non-Highly Compensated Employee on
the same basis on which such Employer contributions are made.
Additional contributions under this subparagraph shall meet the
additional requirements of Section 1.401(k)-1(b)(5) of the
proposed regulations, which are incorporated herein by reference.
(c) If a Highly Compensated Employee
participates in two or more cash or deferred arrangements that
have different Plan Years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as
a single arrangement.
(d) For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy Section
401(k) of the Code only if such plans have the same Plan Year.
(e) The Employer shall maintain records
sufficient to demonstrate satisfaction of the Actual Deferral
Percentage test.
6.6 Actual Contribution Percentage.
(a) The Plan shall meet and does incorporate
by reference the Actual Contribution Percentage test set forth in
Code Section 401(m)(2) and the regulations thereunder.
(b) Corrective Measures. In the event the
Actual Contribution Percentage for Highly Compensated Employees
does not satisfy the test set forth in subparagraph (a)
hereinabove, the Administrator shall utilize the following
corrective measure with respect to the contributions that exceed
those permitted under such tests (hereinafter referred to as
"Excess Aggregate Contributions"):
(i) Additional Contributions. Within
twelve (12) months after the end of the Plan Year, the Employer
may make a Qualified Discretionary Employer Contribution or a
Qualified Employer Matching Contribution on behalf of Non-Highly
Compensated Employees in an amount sufficient to satisfy the test
set forth in subparagraph (a) hereinabove. Such contribution
shall be allocated to the Qualified Discretionary Employer
Contribution Account or Qualified Employer Matching Contribution
of each Non-Highly Compensated Employee on the same basis on
which such Employer contributions are made. Additional
contributions under this subparagraph shall meet the additional
requirements of Section 1.401(m)-1(b)(5) of the proposed
regulations, which are incorporated herein by reference.
(ii) Distributions and Forfeitures.
Excess Aggregate Contributions (adjusted for any income or loss)
that are specifically designated as such by the Employer may be
forfeited, if forfeitable, or may be distributed to the
appropriate Highly Compensated Employees within two and one-half
(2 1/2) months after the close of the Plan Year for which such
Excess Aggregate Contributions were made. The amount of Excess
Aggregate Contributions for a Highly Compensated Employee is
determined by reducing the contribution ratios of the Highly
Compensated Employees who have the highest ratios to the maximum
acceptable level. Excess Aggregate Contributions of Participants
who are subject to the family member aggregation rules shall be
allocated among the family members in proportion to the
contributions of each family member that is combined to determine
the combined Actual Contribution Percentage. Distributions under
this subparagraph will be made on the basis of the respective
portions of such amounts that are attributable to each Highly
Compensated Employee.
(iii) Amounts shall be forfeited or
distributed, as applicable, on a pro rata basis from the
Participant's Employer Matching Contribution Account and
Qualified Employer Matching Contribution Account (and if
applicable, the Participant's Qualified Discretionary Employer
Contribution Account and Elective Deferral Account, or both).
Amounts forfeited by Highly Compensated Employees under this
Section shall be allocated or applied in accordance with Section
9.3, provided that no forfeitures arising under this Section
shall be allocated to the Account of any Highly Compensated
Employee.
(iv) Distributions and forfeitures
under this Section may be postponed but not later than the close
of the Plan Year following the Plan Year for which such Excess
Contributions were made. Distributions and/or forfeitures that
are postponed pursuant to the preceding sentence shall cause the
Employer to be subject to the excise tax imposed by Code Section
4979.
(v) Determination of income or loss:
Excess Aggregate Contributions shall be adjusted for any income
or loss for the Plan Year. The Plan shall compute the income or
loss allocable to Excess Aggregate Contributions in the same
manner specified in Section 7.1(b) hereinbelow for allocating
income to Participant's accounts.
(c) If a Highly Compensated Employee
participates in two or more cash or deferred arrangements that
have different Plan Years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as
a single arrangement. Notwithstanding the foregoing, certain
plans shall be treated as separate if mandatorily disaggregated
under regulations under Section 401(m) of the Code.
(d) For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy Section
401(m) of the Code only if such plans have the same Plan Year.
(e) The Employer shall maintain records
sufficient to demonstrate satisfaction of the Average
Contribution Percentage test.
6.7 Aggregate Limit for Multiple Use of
Alternative Limitation.
(a) This Section 6.7 applies if the Plan
relies on the following alternative limitations to satisfy the
Actual Deferral Percentage and Actual Contribution Percentage
tests, respectively:
(i) The Actual Deferral Percentage
for Highly Compensated Employees for the Plan Year shall not be
more than two hundred percent (200%) of the Actual Deferral
Percentage for all Nonhighly Compensated Employees, provided the
difference between such percentages is not more than two (2)
percentage points.
(ii) The Actual Contribution
Percentage for Highly Compensated Employees for the Plan Year
shall not be more than two hundred percent (200%) of the Actual
Contribution Percentage for all Nonhighly Compensated Employees,
provided the difference between such percentages is not more than
two (2) percentage points.
(b) If subparagraph (a) above applies, the
sum of the Actual Deferral Percentage and Actual Contribution
Percentage for Highly Compensated Employees is subject to the
aggregate limit. For purposes of this Section, the aggregate
limit is the greater of:
(i) The sum of:
(A) 125 percent of the greater of
(1) the Actual Deferral Percentage of the group of Non-Highly
Compensated Employees eligible under the arrangement subject to
Code Section 401(k) for the Plan Year, or (2) the Actual
Contribution Percentage of the group of Non-Highly Compensated
Employees eligible under this Plan which is subject to Code
Section 401(m) for the Plan Year, and
(B) Two plus the lesser of (1) or
(2) above (provided that in no event shall this amount exceed 200
percent of the lesser of (1) or (2) above); or
(ii) The limit in subparagraph (b)(i)
above modified by substituting the word "lesser" for "greater"
each time it appears in (b)(i)(A) and by substituting the word
"greater" for "lesser" each time it appears in (b)(i)(B).
(c) If the aggregate limit set forth in this
Section 6.7 is exceeded, the Employer shall utilize one or more
of the following corrective measures:
(i) The Administrator shall reduce
the Actual Deferral Percentage of all Highly-Compensated
Employees in the Plan to the extent that the combined Actual
Deferral Percentage and Actual Contribution Percentage does not
exceed the aggregate limit described in this Section 6.7. The
amount of the reduction for a Highly Compensated Employee is
determined by reducing the contribution ratios of the Highly
Compensated Employees who have the highest ratios to the maximum
acceptable level. Such amount shall be treated as an Excess
Contribution.
(ii) The Administrator shall reduce
the Actual Contribution Percentage of all Highly-Compensated
Employees in the Plan to the extent that the combined Actual
Deferral Percentage and Actual Contribution Percentage does not
exceed the aggregate limit described in this Section 6.7. The
amount of the reduction for a Highly Compensated Employee is
determined by reducing the contribution ratios of the Highly
Compensated Employees who have the highest ratios to the maximum
acceptable level. Such amount shall be treated as an Excess
Aggregate Contribution.
(iii) The Employer shall make
additional Qualified Discretionary Employer Contributions in
accordance with Section 6.5(b)(ii) hereinabove. Such Qualified
Discretionary Employer Contributions shall be on behalf of Non-
Highly Compensated Employees to the extent that the combined
Actual Deferral Percentage and Actual Contribution Percentage
does not exceed the aggregate limit described in this Section
6.7.
6.8 Additional Contribution to Restore Cashed-Out
Benefits. In the event a Participant who has received a
distribution of his Vested Accrued Benefit under Section 9.2
hereinbelow, and who is subsequently reemployed by the Employer,
repays the amount of such distribution as required by Section
9.2, the Employer shall, as of the next succeeding Anniversary
Date, make a contribution to such Participant's Employer
Contribution Account in an amount equal to the part of his
Employer Contribution Account which was forfeited.
6.9 Omission of Eligible Employee. If, in any
Plan Year, any Employee who should be included as a Participant
in the Plan is erroneously omitted and discovery of such omission
is not made until after a contribution by the Employer for the
year has been made, the Employer shall make an additional
contribution so that the omitted Employee receives a total amount
which the said Employee would have received had he not been
omitted. Such contribution shall be made regardless of whether
or not it is deductible in whole or in part in any taxable year
under applicable provisions of the Code.
6.10 Inclusion of Ineligible Employee. If, in
any Plan Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of
such incorrect inclusion is not made until after a contribution
for the year has been made, the Employer shall not be entitled to
recover the contribution made with respect to the ineligible
person regardless of whether or not a deduction is allowable with
respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall
constitute a forfeiture for the Plan Year in which the discovery
is made.
ARTICLE VII
ALLOCATIONS AND ADJUSTMENTS TO ACCOUNTS
7.1 Procedure. The balance in each Participant's
Accounts shall be determined as of the first day of each Plan
Year. After such balance has been determined, adjustments and
allocations shall be made to each account by the Administrator,
as of each Allocation Date or Anniversary Date, as the case may
be, according to the following procedure:
(a) Withdrawals since the immediately
preceding Allocation Date shall be subtracted from the Account(s)
from which funds have been withdrawn.
(b) Premiums paid on Contracts shall be
subtracted from Accounts pursuant to ARTICLE XI.
(c) The earnings, losses, increases, or
decreases of each of the investment accounts of the Participants
established pursuant to ARTICLE XIV shall be allocated since the
last Valuation Date within each investment account to each active
and Inactive Participant's account(s) after the adjustments
required in subparagraphs (a) and (b) above.
(d) Amounts in the Trust Fund not invested
pursuant ARTICLE XIV shall not share in the increases or
decreases in the fair market value of the assets held in the
investment accounts of the Participants. The Administrator shall
determine the fair market value of the assets held in the Trust
Fund which are not invested pursuant to ARTICLE XIV since the
last Allocation Date. The Administrator shall allocate increases
or decreases, as the case may be, to the respective Accounts of
each Participant, including former Participants who have
terminated employment, but who have a balance in an Account as of
such Allocation Date. Such allocation shall be in the proportion
that the balance of each Participant's respective Accounts as of
the immediately preceding Allocation Date bears to the Accounts
of all Participants.
(e) As of each Anniversary Date, and as soon
as administratively possible following such date, Employer
Matching Contributions made pursuant to Section 6.1(b)
hereinabove for the period ending on such Anniversary Date shall
be allocated to each Participant's Employer Matching Contribution
Account, subject to the limitations of Section 7.2, in proportion
to the ratio which each such Participant's Elective Deferrals for
such period bears to the total Elective Deferrals of all such
Participants for such period.
(f) As of each Allocation Date and as soon
as administratively possible following such date, Elective
Deferrals made pursuant to Sections 6.1 and 6.2 hereinabove
during the period ending on such Allocation Date shall be
allocated to each Participant's Elective Deferral Account(s) in
an amount equal to such Elective Deferrals.
(g) If a Participant has forfeited all or
part of his Accrued Benefit, pursuant to ARTICLE IX, his
account(s) which included the part forfeited shall be reduced by
the amount of such forfeiture.
(h) As of each Anniversary Date and
subsequent to the allocation provided for in this Section 7.1 (a)
through (h) hereinabove, Discretionary Employer Contributions for
the Plan Year and the total forfeitures for such year shall be
allocated to the Discretionary Employer Contribution Account of
each Participant who is to share in such allocation, as provided
in Section 7.2, as follows:
(i) If the Plan is Top Heavy for a Plan
Year, then the allocation for that Plan Year shall be:
(A) To the extent of 3% of the
Compensation of each Participant, in proportion to the ratio
which each such Participant's Compensation for the Plan Year
bears to the total Compensation of all such Participants;
(B) The balance, if any, to the
Discretionary Employer Contribution Account of each Participant
to the extent of 3% of the amount by which the Compensation of
each Participant exceeds twenty percent (20%) of the Taxable Wage
Base for the year for which the contribution is made (hereinafter
referred to as "excess Compensation") in proportion to the ratio
which each such Participant's excess Compensation for such Plan
Year bears to the total excess Compensation of all such
Participants; and
(C) Any balance of the amount not
allocated in (A) or (B) hereinabove shall be allocated to the
extent of 2.7% of the sum of each Participant's total
Compensation and excess Compensation in proportion to the ratio
that the sum of each Participant's Compensation and each
Participant's excess Compensation bears to the sum of total
Compensation and total excess Compensation.
(D) Any balance remaining after
allocations have been made under this subparagraph (i) hereof
shall be allocated to the Discretionary Employer Contribution
Account of each Participant in proportion to the ratio which each
such Participant's total Compensation for such year bears to the
total Compensation of all such Participants for such year.
(ii) If the Plan is not Top Heavy for
a Plan Year, then the allocation for that Plan Year shall be:
(A) Discretionary Employer
Contributions shall be allocated to the extent of 5.7% of the sum
of: (1) each Participant's total Compensation and (2) the amount
by which the Compensation of each Participant exceeds twenty
percent (20%) of the Taxable Wage Base for the year for which the
contribution is made (hereinafter referred to as "excess
Compensation") in proportion to the ratio that the sum of each
Participant's Compensation and each Participant's excess
Compensation bears to the sum of total Compensation and total
excess Compensation.
(B) Any balance remaining after
allocations have been made under subparagraph (ii) hereof shall
be allocated to the Discretionary Employer Contribution Account
of each Participant in proportion to the ratio which each such
Participant's total Compensation for such year bears to the total
Compensation of all such Participants for such year.
Notwithstanding anything herein to the contrary, the excess
contribution percentage hereinabove shall adjust automatically to
the percentage rate of tax under Code Section 3111(a) (at the
beginning of the Plan Year) which is attributable to the old age
insurance portion of the OASDI provisions of the Social Security
Act, if greater than 5.7%, provided the excess contribution
percentage does not exceed the base contribution percentage by
more than the excess allowance.
7.1 Accrual of Contributions.
(a) Except as provided in Section 7.2(b) and
7.2(c) hereof, a Participant shall share in Discretionary
Employer and Employer Matching Contributions (and forfeitures)
only if he has completed one thousand (1,000) Hours of Service
with the Employer during the Plan Year for which the contribution
is made and is employed by the Employer on the Anniversary Date
of such Plan Year, provided such Participant is not eligible to
participate in a union-sponsored Qualified Plan on the last day
of the Plan Year.
(b) A contribution shall be allocated to a
retired, deceased or disabled Participant, for the year in which
he attains his Normal Retirement Age (or, if he continues to be
employed by the Employer, the year in which he separates from
service after attainment of Normal Retirement Age), dies or
becomes disabled, without regard to the requirements that he
complete one thousand (1,000) Hours of Service and be employed on
the Anniversary Date of the Plan Year for which the contribution
is made.
(c) In the event the Plan is determined to
be a Top-Heavy Plan as defined in Section 10.2 for any Plan Year,
a contribution of up to three percent (3%) of a Participant's
Compensation (for the year for which the contribution is made)
shall be allocated to a Participant for such Plan Year even
though such Participant fails to complete One Thousand (1,000)
Hours of Service during such Plan Year, provided such Participant
is employed on the Anniversary Date of such Plan Year.
(d) Notwithstanding anything herein to the
contrary, for Plan Years beginning after December 31, 1989, if
this is a Plan that would otherwise fail to meet the requirements
of Code Sections 401(a)(26), 410(b)(1) or 410(b)(2)(A)(i) and the
Regulations thereunder because Employer contributions have not
been allocated to a sufficient number or percentage of
Participants for a Plan Year, then the group of Participants
eligible to share in the Employer's contributions and forfeitures
for the Plan Year shall be expanded to include the minimum number
of Participants who would not otherwise be eligible as are
necessary to satisfy the applicable test specified above. The
specific Participants who shall become eligible under the terms
of this paragraph shall be determined in the following order
until such applicable test is satisfied:
(i) Those who are actively employed
on the last day of the Plan Year and, when compared to similarly
situated Participants, have completed the greatest number of
Hours of Service in the Plan Year.
(ii) Those who are not actively
employed on the last day of the Plan Year and, when compared to
similarly situated Participants, have completed the greatest
number of Hours of Service in the Plan Year before terminating
employment.
(iii) Nothing in this Section shall
permit the reduction of a Participant's accrued benefit.
Therefore, any amounts that have previously been allocated to
Participants may not be reallocated to satisfy these
requirements. In such event, the Employer shall make an
additional contribution equal to the amount such affected
Participants would have received had they been included in the
allocations, even if it exceeds the amount which would be
deductible under Code Section 404. Any adjustment to the
allocations pursuant to this paragraph shall be considered a
retroactive amendment adopted by the last day of the Plan Year.
7.3 Accounts. The Administrator shall maintain
for each Participant a Discretionary (and Qualified
Discretionary, if applicable) Employer Contribution Account, an
Employer Matching (and Qualified Employer Matching, if
applicable) Contribution Account and an Elective Deferral
Account. Each account shall consist of contributions and
forfeitures allocable to such Participant and the earnings,
losses, expenses, and increases or decreases in the fair market
value of the Trust Fund attributable to the account.
7.4 Limitations on Annual Additions.
(a) Limitations. The maximum annual
addition that may be contributed or allocated to a Participant's
Employer and Employee Contribution Accounts in the Plan or any
Qualified Plan of members of the Controlled Group or Affiliated
Service Group shall not exceed, for any Taxable Year of the Plan,
the lesser of (1) $30,000 (or, if greater, 1/4 of the dollar
limitation under Section 415(b)(1)(A) of the Code) or (2) twenty-
five percent (25%) of a Participant's "Section 415 Compensation."
Any adjustments to the sum of $30,000 above shall be effective
commencing the first day of the Plan Year for which the
adjustment applies. The compensation limitation referred to
above shall not apply to any contribution for medical benefits
(within the meaning of Section 419A(f)(2) of the Code) after
separation from service which is otherwise treated as an annual
addition under Section 415(l)(1) or 419A(d)(2) of the Code.
(b) Annual Additions. For purposes of this
Section, the term "annual addition" shall mean the sum for any
such Taxable Year of (1) Discretionary Employer Contributions,
(2) Qualified Discretionary Employer Contributions, (3) Employer
Matching Contributions, (4) Qualified Employer Matching
Contributions, (5) Elective Deferrals, (6) a Participant's non-
deductible employee contributions, if any, (7) forfeitures, if
any, (8) any amount attributable to post-retirement medical
benefits allocated to an account established pursuant to Section
419A(d) of the Code, and (9) any amounts described in Section
415(l)(1) of the Code.
(c) Contributions do not fail to be annual
additions merely because they are excess deferrals, excess
contributions or excess aggregate contributions or merely because
excess contributions or excess aggregate contributions are
corrected through distribution or recharacterization. Excess
deferrals that are distributed in accordance with Section 6.3
hereinabove are not annual additions.
(d) (i) Notwithstanding anything herein to
the contrary, "Section 415 Compensation" shall include wages,
salaries, fees for professional services, amounts received
(without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of employment
with the Employer, amounts described in Code Sections 104(a)(3),
105(a) and 105(h) received through accident or health insurance
to the extent such amounts are included in the gross income of
the Employee (and amounts paid under a self-insured medical
expense reimbursement plan), moving expenses paid or reimbursed
by the Employer to the extent not deductible by the Employee
under Section 217 of the Code, the value of non-qualified stock
options to the extent includable in gross income, and the value
of property transferred, in accordance with Code Section 83(b),
in connection with the performance of services which an Employee
elects to include in gross income.
(ii) Compensation for purposes of this
Section shall exclude amounts contributed to a deferred
compensation plan which are not includible in the Employee's
gross income for the taxable year in which contributed,
contributions to a simplified employee pension plan to the extent
deductible, any distribution from a deferred compensation plan,
amounts realized from the exercise of a non-qualified stock
option or when restricted stock or property held by the Employee
becomes freely transferable, amounts realized from disposition of
stock acquired under a qualified stock option, premiums for group
term life insurance, or contributions toward the purchase of a
qualified annuity contract. For Limitation Years beginning after
December 31, 1988, "Section 415 Compensation" shall be limited to
$200,000, as adjusted in the same manner permitted under Code
Section 415(d).
(iii) For Limitation Years beginning
after December 31, 1991, for purposes of applying the limitations
of this Section, Compensation for a Limitation Year is the
Compensation actually paid or includible in gross income during
such Limitation year.
(e) If the Employer maintains one or more
defined contribution plans, as defined in Section 414(i) of the
Code, the amount of the annual additions allocable under this
Plan shall not exceed the maximum amount provided for in Section
7.4(a), reduced by the sum of any allocations of annual additions
made to the Participant's Accounts under any such other Plan.
(f) For purposes of this Section, a
Participant's "Section 415 Compensation" shall include any
amounts earned by such Participant from the Employer or from any
member of the Controlled Group or Affiliated Service Group which
maintains a plan which is qualified under Section 401(a) of the
Code.
(g) If, as a result of the allocation of
forfeitures, a reasonable error in estimating a Participant's
"Section 415 Compensation," a reasonable error in determining the
amount of elective deferrals (within the meaning of Code Section
402(g)(3)) that may be made with respect to any individual under
limits of Section 415, or under other limited facts and
circumstances which the Commissioner may determine, the annual
additions exceed the maximum limitation, the excess amount will
be reduced in the following order of priority:
(i) Any Elective Deferrals and
nondeductible Employee Contributions, to the extent they would
reduce the excess amount, will be returned to the Participant.
Such amounts shall be disregarded for purposes of Code Section
402(g), the actual deferral percentage test of Code Section
401(k)(3), and the actual contribution percentage test of Code
Section 401(m).
(ii) If an excess amount remains, and
the Participant is covered by the Plan at the end of the
Limitation Year, the excess amount in the Participant's account
shall be used to reduce Employer Contributions (including any
allocation of forfeitures) for such Participant in the next
Limitation Year, and each succeeding Limitation Year if
necessary. If the Participant is not covered by the Plan at the
end of a Limitation Year, the excess amount shall be held
unallocated in a suspense account. The suspense account shall be
applied to reduce future Employer Contributions for all remaining
Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary.
(iii) If a suspense account is in
existence at any time during a Limitation Year pursuant to this
Section, 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.
(iv) In the event the Plan is
terminated, the Annual Addition Suspense Account shall be
returned to the Employer to the extent it may not then be
allocated to any Participant's Account.
(v) In the event Employer has another
Qualified Plan in addition to the Plan, a Participant's Employer
Contribution Account in the other plan may first be reduced in
accordance with said plan.
7.5 Contribution and Benefit Limits for Multiple
Plans. If an Employee is a Participant in this Plan and in a
defined benefit pension plan, as defined in Section 414(j) of the
Code, maintained by the Employer, the sum of such Participant's
"defined contribution plan fraction" and his "defined benefit
plan fraction" shall not exceed 1.0. In the event the sum of
such fraction exceeds 1.0, the Administrator shall prescribe the
manner in which the annual additions under this Plan and the
annual benefits provided by the defined benefit plan shall be
reduced in order that neither plan shall be disqualified.
(a) For purposes of this Section, and except
as provided in subsections (d) and (e) of this Section, "defined
contribution plan fraction" shall mean the fraction a/b where (a)
is equal to the aggregate annual additions to all defined
contribution plans maintained by the Employer (whether or not
terminated), determined as of each Anniversary Date, and (b) is
equal to the sum of the lesser of the following amounts
determined for such Limitation Year and for each prior year of
service with the Employer:
(i) the product of 1.25, multiplied by
$30,000 (or, if greater, 1/4 of the dollar limitation under
Section 415(b)(1)(A) of the Code), or
(ii) the product of:
(A) 1.4, multiplied by
(B) twenty-five percent (25%) of
such Participant's "Section 415 Compensation" for such Limitation
Year.
(b) "Defined benefit plan fraction" shall
mean the fraction a/b where (a) is equal to the benefit payable
under all defined benefit plans maintained by the Employer
(whether or not terminated), and (b) is equal to the lesser of:
(i) the product of 1.25, multiplied
by the dollar limitation in effect under Section 415(b)(1)(A) of
the Code or
(ii) the product of:
(A) 1.4, multiplied by
(B) one hundred percent (100%)
of the Participant's average "Section 415 Compensation" for his
high three (3) Limitation Years.
(c) In determining the defined contribution
fraction in subsection (a) hereinabove with respect to Limitation
Years beginning before January 1, 1976:
(i) the aggregate amount taken into
account for purposes of determining the numerator (a), may not
exceed the aggregate amount taken into account for purposes of
determining the denominator (b); and
(ii) the amount taken into account
under subsection (a)(i) hereinabove for any Limitation Year in
determining the annual additions attributable to employee
contributions in excess of six percent (6%) is an amount equal
to:
(A) the excess of the aggregate
amount of employee contributions for all Limitation Years
beginning before January 1, 1976, during which the employee was
an active Participant in the Plan, over ten percent (10%) of the
employee's aggregate Compensation for all such Limitation Years,
multiplied by:
(B) a fraction, the numerator of
which is 1 and the denominator of which is the number of
Limitation Years beginning before January 1, 1976, during which
the employee was an active Participant in the Plan.
(d) For Plans in existence on or before July
1, 1982, at the election of the Plan Administrator, in applying
the provisions of subsection (a) of this Section hereinabove with
respect to any Limitation Year ending after December 31, 1982,
the amount taken into account in determining the denominator,
(b), of the defined benefit plan fraction with respect to each
Participant for all Limitation Years ending before January 1,
1983, shall be an amount equal to the product of:
(i) the amount determined as the
denominator under subsection (a)(i) and (ii) for the Limitation
Year ending in 1982, multiplied by:
(ii) the "transition fraction". For
purposes of this section, the term "transition fraction" shall
mean a fraction--
(A) the numerator of which is
the lesser of (1) $51,875, or (2) 1.4 multiplied by twenty-five
percent (25%) of the Compensation of the Participant for the
Limitation Year ending in 1981, and
(B) the denominator of which is
the lesser of (1) $41,500, or (2) twenty-five percent (25%) of
the compensation of the Participant for the Limitation Year
ending in 1981.
(e) Notwithstanding anything in this Section
to the contrary, and, except as provided in subsection (f) of
this Section, for any Plan Year in which the Plan is determined
to be a Top-Heavy Plan, this section shall be applied by:
(i) substituting the number "1.0" for
the number "1.25" wherever it appears herein, except that such
substitution shall not have the effect of reducing any benefit
accrued under a defined benefit plan prior to the first day of
the Plan Year in which this subsection (e) becomes applicable;
and
(ii) substituting the figure $41,500
for the figure $51,875 in determining the transition fraction of
subsection (d)(ii).
(f) The requirement of subsection (e)(i)
hereinabove shall not apply to the Plan if
(i) "Ninety percent (90%)" is
substituted for "sixty percent (60%)" in Section 10.2 hereof, and
the Plan, if after taking into account this modification, would
not be a Top-Heavy Plan as determined thereunder; and
(ii) The Plan provides a contribution
not less than 7 1/2% with respect to any Participant who is also
a Participant in the paired defined benefit plan and a
contribution of not less than 4% for any Participant who is not a
Participant in the paired defined benefit plan.
(g) Transition Rules. If the Plan satisfied
the applicable requirements of Section 415 of the Code for its
last Plan Year beginning before January 1, 1987, an amount shall
be subtracted from the numerator of the defined contribution
fraction (not exceeding the numerator) as prescribed by the
Secretary of the Treasury so that the sum of the defined benefit
plan fraction and defined contribution plan fraction computed
under Section 415(e)(1) of the Code does not exceed 1.0 for such
Plan year. The Annual Addition for any Plan Year beginning
before January 1, 1987 shall not be recomputed for purposes of
Section 415(e) of the Code.
(h) Permitted Disparity for Multiple Plans.
All defined contribution excess plans maintained (or ever
maintained) by the Employer are treated as a single defined
contribution excess plan subject to one defined contribution
maximum excess allowance. If the maximum disparity permitted is
less than 5.7% due to an integration level less than the Taxable
Wage Base, the sum of the two defined contribution plans'
disparities shall not exceed such adjusted rate. The maximum
excess allowance in this Profit Sharing Plan shall be reduced in
the event this paragraph becomes applicable.
ARTICLE VIII
BENEFITS
8.1 Participant's Rights and General Rules.
Notwithstanding anything in this Plan to the contrary, a
Participant shall not have a right to receive his Accrued Benefit
or any of the assets held in the Trust Fund except in accordance
with the terms and provisions of ARTICLE VIII. The Accrued
Benefit and assets of a Participant reflected in his Elective
Deferral Account, Qualified Discretionary Employer Contribution
Account and Qualified Employer Matching Contribution Account
shall not be distributed to a Participant or Beneficiary before
one of the following events:
(a) The Employee's retirement, death,
Disability or separation from service.
(b) The termination of the Plan without the
establishment of a successor plan as described in Section 18.3 of
the Plan and as limited by such Section. Distributions due to
the occurrence of this event shall be made in a lump sum.
(c) The disposition by the Employer to an
unrelated corporation of substantially all of the assets (within
the meaning of Section 409(d)(2) of the Code) used in a trade or
business of the Employer if the Employer continues to maintain
the Plan after the disposition, but only with respect to
Employees who continue employment with the corporation acquiring
such assets. Distributions due to the occurrence of this event
shall be made in a lump sum.
(d) The disposition by the Employer to an
unrelated entity of the Employer's interest in a subsidiary
(within the meaning of Section 409(d)(3) of the Code) if the
Employer continues to maintain the Plan, but only with respect to
Employees who continue employment with such subsidiary.
Distributions due to the occurrence of this event shall be made
in a lump sum.
(e) The Participant's hardship as described
and in accordance with Section 8.15 of the Plan.
8.2 Retirement Benefits.
(a) Normal Retirement Benefit. A
Participant who attains his Normal Retirement Age shall have a
normal retirement benefit equal to his Accrued Benefit. Subject
to the provisions of Section 8.3 hereinbelow, payment of his
normal retirement benefit shall commence as soon as
administratively possible after the next following Allocation
Date.
(b) Early Retirement. A Participant who
attains his Early Retirement Age shall have a benefit equal to
his Accrued Benefit, which is Vested only to the extent provided
in ARTICLE IX. Upon termination of employment due to the
attainment of his Early Retirement Age, payment of such
Participant's Vested Accrued Benefit shall commence as soon as
administratively possible after the next following Allocation
Date.
8.3 Deferred Retirement Benefits. If a
Participant continues to be employed by the Employer after he has
attained his Normal Retirement Age, such participant shall
continue to share in the allocation of contributions and
forfeitures in accordance with ARTICLE VII, and payment of such
Participant's normal retirement benefit shall be deferred until
actual termination of employment. Payment shall commence as soon
as administratively possible after the next following Allocation
Date. In no event shall benefit payments be delayed beyond a
Participant's required beginning date set forth in this ARTICLE,
nor is this Section intended to provide any Participant with a
right to continue in the employ of Employer.
8.4 Disability Benefit. A Participant who, while
an Employee, incurs a total and permanent Disability prior to his
Normal Retirement Age shall have a benefit equal to his Accrued
Benefit. Upon termination of employment due to such Disability,
payment of such benefit shall commence as soon as
administratively possible after the next following Allocation
Date.
8.5 Death Benefit. A Participant who dies shall
have a benefit equal to his Accrued Benefit. Payment of such
benefit shall commence as soon as administratively possible after
the next following Allocation Date.
(a) Unless otherwise elected as provided
below, the Beneficiary of a Participant's death benefit shall be
the Participant's spouse. The Participant may designate a
Beneficiary other than his spouse if:
(i) the Participant and his spouse
validly waive the spouse's right to be the Participant's
Beneficiary and the spouse consents to the designated alternative
beneficiary. Such waiver and consent must be in writing and
signed by both the Participant and the Participant's spouse and
witnessed by a Plan representative or notary public; or
(ii) the Participant has no spouse and
can establish such fact to the satisfaction of a Plan
representative; or
(iii) the spouse cannot be located and
he Participant can establish such fact to the satisfaction of a
Plan representative.
(b) Any consent by a spouse (or the
establishment that the consent of the spouse may not be obtained)
under subparagraph (a) above shall be effective only with respect
to such spouse. Additionally, a Participant may revoke a prior
waiver without the consent of the spouse at any time prior to the
commencement of benefits. The number of revocations shall not be
limited.
8.6 Benefit Upon Other Termination of Employment.
A Participant who terminates employment, whether voluntarily or
involuntarily, for any reason other than attainment of Normal
Retirement Age, Disability, death or deferred retirement, shall
be entitled to his Vested Accrued Benefit in accordance with
Article IX hereof. Payment of such Vested Accrued Benefit shall
be in accordance with this Article and shall commence as soon as
administratively possible after the next following Allocation
Date.
8.7 Methods of Distribution. Except as provided
in Section 8.9, distributions made in the event of termination of
employment for any reason shall be made under one of the
following options as elected by the Participant:
(a) In one lump sum.
(b) In periodic payments of substantially
equal amounts for a specified number of years, not in excess of
fifteen (15). Such periodic payments shall be made not less
frequently than annually, provided that the present value of the
retirement benefit projected to be made to the Participant is
more than fifty percent (50%) of the present value of the total
payments projected to be made to the Participant and the
Participant's Beneficiary. If this option is selected, the
amount of the Accrued Benefit shall be segregated and placed in a
Segregated Investment Account in the name of the Trustee in trust
for said Participant. Interest on the Segregated Investment
Account shall be distributed at least annually to the
Participant, or to his Beneficiary or Beneficiaries.
8.8 General Consent Rules.
(a) The Administrator will distribute the
present value of a Participant's Vested Accrued Benefit without
the consent of the Participant if such value does not exceed
Three Thousand Five Hundred Dollars ($3,500.00). If such value
exceeds $3,500 (or has ever exceeded $3,500 at the time of any
prior distribution), and such benefit is immediately
distributable, such benefit may not be distributed without the
consent of the Participant. Any written consent required under
this Section shall be obtained at least 30 but not more than 90
days prior to the Participant's Annuity Starting Date. A
Participant's Vested Accrued Benefit is considered immediately
distributable if any part of the benefit could be distributed to
the Participant (or surviving spouse) before the Participant
attains (or would have attained if not deceased) the later of his
Normal Retirement Age or age 62. If a Participant fails to
consent to a distribution while it is immediately distributable,
the distribution shall commence upon the later of the
Participant's attainment of his Normal Retirement Age or age 62.
(b) If a distribution is one to which
Sections 401(a)(11) and 417 of the Code do not apply, such
distribution may commence less than 30 days after the notice
required under Section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(i) The Plan Administrator clearly
informs the Participant that the Participant has a right to a
period of at least 30 days after receiving the notice to consider
the decision of whether or not to elect a distribution (and, if
applicable, a particular distribution option), and
(ii) The Participant, after receiving
the notice, affirmatively elects a distribution.
8.9 Distributions to which Qualified Joint and
Survivor and Pre-Retirement Survivor Annuities Apply.
Notwithstanding anything herein to the contrary, with respect to
any Participant, if the Plan is a direct or indirect transferee,
after December 31, 1984, of any defined benefit plan or defined
contribution plan subject to the funding standards of Section 412
of the Code, then, the Qualified Joint and Survivor Annuity and
Pre-Retirement Survivor Annuity provisions of Sections 8.10 and
8.11, respectively, shall apply only with respect to the separate
accounts of such Participant to which such funds have been
transferred, provided the Participant did not voluntarily elect
to have such funds transferred in accordance with Section 11.4.
8.10 Qualified Joint and Survivor Annuity.
(a) In the event the provisions of Section
8.9 apply to a Participant, each such Participant who is
entitled to receive payment of his Vested Accrued Benefit for any
reason other than death shall receive payment of his Vested
Accrued Benefit as follows:
(i) In the case of a Participant who
has been married throughout the twelve-month period ending with
his Annuity Starting Date, benefits shall be payable in the form
of a Qualified Joint and Survivor Annuity, which shall be the
actuarial equivalent of a Participant's Vested Accrued Benefit
and in all events shall be at least as valuable as any other
optional form of benefit payable under the Plan at the same time,
unless a Participant and his spouse duly elect to waive the
Qualified Joint and Survivor Annuity pursuant to this Article.
Such election shall be made by the Participant in writing during
the ninety (90) day period ending on the Annuity Starting Date.
Notwithstanding the provisions of this Subparagraph (i), however,
if a Participant marries within the twelve-month period ending on
his Annuity Starting Date, and the Participant and spouse in such
marriage remain married to each other for at least one (1) year,
such Participant and spouse shall be treated as having been
married throughout the twelve-month period ending on the
Participant's Annuity Starting Date. If the Participant and
spouse do not remain married for one year, the Plan shall treat
the Participant as having not been married on the Annuity
Starting Date. In such event, any survivor benefit rights of the
spouse shall be forfeited, and the Participant shall not be
entitled to a retroactive correction of the amount paid to such
Participant.
(ii) In the case of a Participant to
whom subsection (i) does not apply, benefits shall be payable in
the form of a life annuity unless a Participant duly elects to
waive the life annuity and selects an optional form from Section
8.7.
(b) The Participant may elect to have the
annuity described in this Section distributed upon attainment of
the earliest date on which, under the Plan, the Participant could
elect to receive retirement benefits.
(c) The Administrator shall provide the
Participant within a reasonable period of time before the Annuity
Starting Date (and consistent with Treasury regulations), 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 the Participant's spouse concerning the Qualified Joint
and Survivor Annuity, and (iv) the right of the Participant to
revoke such an election, and the effect of a revocation.
8.11 Qualified Pre-Retirement Survivor Annuity.
In the event the provisions of Section 8.9 apply to a
Participant, if such Participant who has been married throughout
the twelve-month period ending on the date of his death dies
prior to the Annuity Starting Date, the benefits to which a
Participant is entitled under this Article shall be paid to his
surviving spouse in the form of a Pre-Retirement Survivor Annuity
unless an optional form of benefit has been selected in
accordance with Sections 8.12 and 8.13 hereinbelow. The
surviving spouse may elect to have such annuity distributed
within a reasonable time after the Participant's death.
8.12 Pre-Retirement Survivor Annuity Election and
Notice.
(a) Election. An election to waive the Pre-
Retirement Survivor Annuity must be made by the Participant, in
writing, and consented to by the spouse in accordance with
Section 8.13 hereinbelow. Such election must be made during the
period which begins on the first day of the Plan Year in which
the Participant attains age thirty-five (35) and ends on the date
of the Participant's death. In the event a Vested Participant
terminates employment prior to the beginning of the Plan Year in
which he attains age thirty-five (35), the election period shall
begin on the date of his separation from service.
(b) Notice. The Administrator shall provide
each Participant, within the applicable period, a written
explanation of: (i) the terms and conditions of a Pre-Retirement
Survivor Annuity, (ii) the Participant's right to make and the
effect of an election to waive the Pre-Retirement Survivor
Annuity form of benefit, (iii) the rights of the Participant's
spouse concerning the Pre-Retirement Survivor Annuity, and (iv)
the right of the Participant to revoke such an election, and the
effect of a revocation.
(c) Applicable Period. For purposes of
subsection (b) hereinabove, the "applicable period" shall mean,
with respect to the Participant, whichever of the following
period 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
the survivor benefits become applicable to a Participant.
In the case of a Participant who separates from service before
attaining age 35, "applicable period" means the period beginning
one year before the separation from service and ending one year
after such separation.
(d) For purposes of applying paragraph (c),
a reasonable period ending after the enumerated events described
in subparagraphs (c)(ii)(iii) is the end of the one-year period
beginning with the date the applicable event occurs. The
applicable period for such events begins one year prior to the
occurrence of the enumerated events.
(e) Pre-Age 35 Election. In the case of a
Participant who has not yet attained age 35 as of the end of any
current Plan Year, such Participant may (provided he has been
given a written explanation comparable to that required in
subparagraph (b) above) elect to waive the Qualified Pre-
Retirement Survivor Annuity for the period beginning on the date
of such election and end on the first day of the Plan Year in
which the Participant attains age 35, at which time the Qualified
Pre-Retirement Survivor Annuity coverage is automatically
reinstated and any new waiver shall be subject to the
requirements of this Article.
8.13 Waiver of Annuity and Spousal Consent.
(a) A waiver of a Qualified Joint and
Survivor Annuity (described in Section 8.10) or a Qualified Pre-
Retirement Survivor Annuity (described in Sections 8.11 and 8.12)
shall not be effective unless:
(i) the Participant's spouse consents
in writing to the election;
(ii) 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 consent);
(iii) the spouse's consent acknowledges
the effect of the election; and
(iv) the spouse's consent is witnessed
by a Plan representative or notary public.
(b) In addition to the requirements in (a)
above, 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).
(c) The Participant's waiver will be deemed
a qualified election if it is established to the satisfaction of
the Administrator that the required consent cannot be obtained
because there is no spouse or the spouse cannot be located, or
other circumstances that may be prescribed by Treasury
Regulations.
(d) Any consent by a spouse obtained under
this Section 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 in writing by a Participant without the consent of
the spouse at any time before commencement of benefits. The
number of such revocations shall not be limited. However, any
new election must comply with the requirements of this Section.
A former spouse's waiver shall not be binding on a new spouse.
8.14 Conditions for Annuity Contracts. The terms
of any annuity contract purchased and distributed by the Plan
to a Participant or spouse shall comply with the requirements of
this Article. 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 Section 401(a)(9) of the Code and the proposed
regulations thereunder. Furthermore, any annuity contract
distributed herefrom must be nontransferable.
8.15 Pre-Termination Distributions (Hardship
Withdrawals). Subject to the limitations and requirements of
this Section, the Administrator may, upon the request of a
Participant, make a lump sum distribution to the Participant from
his Elective Deferral Accounts (excluding earnings from such
Account effective January 1, 1989) as of the Anniversary Date
coinciding with or immediately preceding the date a request is
made hereunder, for the purposes set forth below, subject to the
following:
(a) Any distribution under this Section must
be on account of an immediate and heavy financial need. A
distribution will be deemed to be made on account of an immediate
and heavy financial need of the employee if the distribution is
on account of:
(i) Medical expenses described in IRC
Section 213(d) incurred by the Employee, the Employee's spouse,
or any dependents of the Employee (as defined in Section 152) or
necessary for these persons to obtain medical care described in
Section 213(d);
(ii) Purchase (excluding mortgage
payments) of a principal residence for the Employee;
(iii) Payment of tuition for the next
12 months of post-secondary education for the Employee, his or
her spouse, children, or dependents; or
(iv) The need to prevent the eviction
of the Employee from his principal residence or foreclosure on
the mortgage of the Employee's principal residence.
(b) Once the distribution is determined to
be for an immediate and heavy financial need, it must be
determined that the distribution is necessary to satisfy the
need. A distribution is deemed to be necessary to satisfy an
immediate and heavy financial need of an Employee if all of the
following requirements are satisfied:
(i) The distribution is not in excess
of the amount of the immediate and heavy financial need of the
Employee. The amount may include any amounts necessary to pay
any federal, state, or local income taxes or penalties reasonably
anticipated to result from the distribution.
(ii) The Employee has obtained all
distributions, other than hardship distributions, and all
nontaxable loans currently available under all plans maintained
by the Employer;
(iii) The Employee's elective
contributions and employee contributions under the Plan, and all
other plans maintained by the Employer, will be suspended for at
least 12 months after receipt of the hardship distribution;
(iv) For this Plan, and all other
plans maintained by the Employer, the Employee may not make
elective contributions for the Employee's taxable year
immediately following the taxable year of the hardship
distribution in excess of the applicable limit under Section
402(g) for such next taxable year less the amount of such
employee's elective contributions for the taxable year of the
hardship distribution.
(v) The Employee is prohibited, under
the terms of the Plan or an otherwise legally enforceable
agreement, from making elective contributions and employee
contributions to the Plan and all other plans maintained by the
Employer for at least 12 months after receipt of the hardship
distribution. For this purpose, the phrase "all other plans
maintained by the Employer" means all qualified and nonqualified
plans of deferred compensation maintained by the Employer. The
phrase includes a stock option, stock purchase, or similar plan,
or a cash or deferred arrangement that is part of a cafeteria
plan within the meaning of Section 125. However, it does not
include the mandatory employee contribution portion of a defined
benefit plan. It also does not include a health or welfare
benefit plan, including one that is part of a cafeteria plan
within the meaning of Section 125.
(c) Each request for a distribution must be
made by written application to the Administrator supported by
such evidence as the Administrator may require.
(d) If a Participant's termination of
employment occurs after a request is approved in accordance with
this Section but prior to distribution of the full amount
approved, the approval of his request shall be automatically void
and the benefits he or his Beneficiary are entitled to receive
under the Plan shall be distributed in accordance with the
preceding provisions of this Article.
(e) A request for a distribution pursuant to
this Section shall be approved or denied by written instrument
given by the Administrator to the Participant within sixty (60)
days after the date the written request is given to the
Administrator by the Participant. In the event that such request
is approved, the distribution shall be made within thirty (30)
days after notice of approval is given by the Administrator to
the Participant.
8.16 Statutory Commencement of Benefits.
(a) Payment of a Participant's Accrued
Benefit must commence not later than the sixtieth (60th) day
after the close of a Plan Year in which the latest of the
following events occurs:
(i) The attainment by the Participant
of his Normal Retirement Age; or
(ii) The tenth (10th) anniversary of
the date on which the Participant commenced participation in the
Plan.
(iii) Termination of employment by the
Participant.
(b) If a Participant has terminated
employment before satisfying the age requirement for attaining
his Early Retirement Date, but has satisfied the service
requirement necessary for an Early Retirement Benefit, such
Participant shall be entitled to elect an Early Retirement
Benefit upon satisfaction of such age requirement.
8.17 General Rules for Required Distributions.
(a) Except as otherwise provided in the
Qualified Joint and Survivor Annuity provisions and the Pre-
Retirement Survivor Annuity provisions in this Article, the
requirements of this Section and Sections 8.18 and 8.19 following
shall apply to any distribution of a Participant's interest and
shall take precedence over any inconsistent provisions of the
Plan. Unless otherwise specified, the provisions of this Section
shall apply to calendar years beginning after December 31, 1984.
(b) All distributions required under this
Article shall be determined and made in accordance with the
Income Tax Regulations under IRC 401(a)(9), including the minimum
distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the Regulations.
(c) Distributions shall be made in a form
under which the present value of the retirement benefit projected
to be made to the Participant, while living, is more than fifty
percent (50%) of the present value of the total payments
projected to be made to the Participant and the Participant's
Beneficiary.
(d) Notwithstanding the requirements of this
Section, a Participant who duly and properly made an Election of
the Time and Distribution of Retirement Plan Benefits as provided
for in Section 242(b)(2) of the Tax Equity and Fiscal
Responsibility Act of 1982 may receive his distribution in
accordance with such election, provided: (1) the distribution is
one which would not have disqualified the trust under Section
401(a)(9) of the Code as in effect on December 31, 1983, (2) the
election was in writing and signed by the Participant or
Beneficiary prior to January 1, 1984, (3) the Participant had
accrued a benefit under the Plan as of December 31, 1983, (4) the
election satisfies IRC 401(a)(11) and 417.
8.18 Required Beginning Date.
(a) General Rule. For Plan Years beginning
after December 31, 1987, payment of the Accrued Benefit of a
Participant must commence not later than the April 1 of the
calendar year following the calendar year in which the
Participant attains age 70-1/2.
(b) 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-Five Percent (5%) Owners.
The required beginning date of a Participant who is not a five
percent (5%) owner is the April 1 of the calendar year following
the calendar year in which the later of retirement or attainment
of age 70-1/2 occurs.
(ii) Five Percent (5%) Owners. The
required beginning date of a Participant who is a five percent
(5%) owner during any year beginning after December 31, 1979, is
the April 1 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% owner, or the calendar year in which the
Participant retires.
(iii) The required beginning date of a
Participant who is not a 5% owner who attains age 70-1/2 during
1988 and who has not retired as of January 1, 1989, is April 1,
1990.
(iv) Once distributions have begun to
a 5% owner under this Section, they must continue to be
distributed, even if the Participant ceases to be a 5% owner in a
subsequent year.
8.19 Statutory Distributions Upon Death.
(a) If a Participant dies prior to the
Annuity Starting Date, the nonforfeitable portion of the
Participant's Accrued Benefit shall be distributed in its
entirety prior to the 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 (i) or (ii) below:
(i) If any portion of the
Participant's Vested Accrued Benefit is payable to (or for the
benefit of) a specifically designated Beneficiary, distributions
may be made over the life of such Beneficiary (or over a period
not extending beyond the life expectancy of such Beneficiary),
commencing on or before the December 31 immediately following the
calendar year in which the Participant died (or such later date
as may be prescribed by regulations);
(ii) If the Beneficiary is the
Participant's spouse, distributions must commence on or before
the later of (1) the December 31 immediately following the
calendar year in which the Participant died and (2) December 31
of the calendar year in which the deceased Participant would have
attained age seventy and one-half (70-1/2). If the surviving
spouse dies before the distribution begins, then the requirements
of this Section shall apply as if the spouse were the
Participant.
(b) If the Participant has not made an
election pursuant to Subparagraph (a) above by the time of his
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 Section, 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.
(c) For purposes of this Section, the life
expectancy of the Participant and his spouse (other than in the
case of a life annuity) may be re-determined, but not more
frequently than annually. In addition, under regulations
prescribed by the Secretary, for purposes of this Section, any
amount paid to a child of the Participant shall be treated as if
it had been paid to the surviving spouse, if such amount will
become payable to the surviving spouse upon such child reaching
majority (or other designated event permitted under regulations).
(d) Upon the death of a former Participant
who was receiving payments from the Trustee at the time of his
death, payments may continue in accordance with the option
selected, or may be made to the Beneficiary under any other
option which provides for payments which are at least as rapid as
under the method of distribution as of the date of the
Participant's death.
8.20 Location of Participants and Beneficiaries.
(a) It is the duty of Participants who have
terminated employment, or Beneficiaries of Participants, to keep
the Administrator informed as to their correct address. If a
Participant or Beneficiary fails to inform the Administrator in
writing of a change of address and if the Administrator is unable
to locate such Participant or Beneficiary by reasonable means,
the Administrator shall notify the Participant or Beneficiary of
available benefits by registered mail at the last address noted
on the records of the Administrator. If the delivery of the
notice by registered mail is refused or returned with address
unknown, any benefits due such Participant or Beneficiary shall
be segregated into a default fund chosen by the Administrator for
the benefit of the Participant or Beneficiary. The segregated
account shall not share in the earnings and losses in the fair
market value of the assets held in the Trust Fund. The
Administrator shall determine earnings and losses in the fair
market value of the assets held in the segregated account and
shall allocate such earnings and losses to the segregated
account. Such benefit shall remain in the segregated account
until distributed in accordance with the Lost or Unclaimed
Property Laws of the state in which the Plan Sponsor is
domiciled.
(b) If the Plan has terminated and the
Administrator is unable to locate a Participant or Beneficiary
using the means described in (a) above, the Administrator shall
establish a savings account for the benefit of the Participant or
Beneficiary at a federally insured banking institution within the
geographic vicinity in which the Employer is located. Any
benefits due such Participant or Beneficiary shall be deposited
in said savings account at the same time distributions are
otherwise allowed under the Plan termination procedures. Such
benefit shall remain in the savings account until distributed in
accordance with the Lost or Unclaimed Property Laws of the state
where the account is maintained.
8.21 Payments for the Benefit of Incompetents.
If the Administrator receives evidence that (a) a Participant or
Beneficiary entitled to receive any payment under the Plan is a
minor or is otherwise physically or mentally incompetent to
receive such payment and to give a valid release therefor, and
(b) another person or institution is then maintaining or has
custody of such person, and no guardian, committee or other
representative of the estate of such person has been duly
appointed by a court of competent jurisdiction, payment may be
made to such other person or institution, and the release of such
other person or institution shall be valid in a complete
discharge for the payment.
ARTICLE IX
VESTING
9.1 Requirements.
(a) A Participant's Accrued Benefit derived
from Employer contributions shall be fully Vested upon the
earlier of: (1) attainment of Normal Retirement Age, (2) the
later of age 65 or the 5th anniversary of the time the
Participant commenced participation in the Plan, (3) total and
permanent disability of such Participant, or (4) death of the
Participant.
(b) In the event the employment of a
Participant is terminated, whether voluntarily or involuntarily,
with or without cause on his part, prior to his Normal Retirement
Age, for any reason other than death or permanent and total
disability, a Participant shall have a Vested interest in his
Accrued Benefit derived from Discretionary Employer Contributions
and Employer Matching Contributions in accordance with the
following schedule:
Years of Credited Service Vested Percentage
Less than 5 0%
5 100%
(c) The Accrued Benefit derived from
Elective Deferrals, Qualified Discretionary Employer
Contributions and Qualified Employer Matching Contributions shall
be fully Vested at all times.
(d) Notwithstanding the provisions of this
Section, Employer Matching Contributions and Qualified Employer
Matching Contributions (if accrued) shall be forfeited if the
contributions to which they relate are treated as Excess
Deferrals, Excess Contributions or Excess Aggregate
Contributions.
(e) A Participant's Vested percentage in his
Accrued Benefit, derived from Employer contributions, as of the
later of the adoption date or Effective Date of this Amendment,
shall not be reduced by this or any Amendment to the Plan.
(f) Notwithstanding the provisions of
subsection (b) hereinabove, for any Plan Year in which the Plan
is a Top-Heavy Plan, a Participant's Vested Percentage in his
accrued Benefit derived from Employer contributions shall not be
less than the percentage determined in accordance with the
following table:
Years of Credited Service Vested Percentage
less than 3 0%
3 100%
(g) If a Top-Heavy Plan ceases to be a Top-
Heavy Plan, a change in vesting schedules shall be treated as an
amendment to the vesting schedule and the provisions of Section
17.2 of the Plan shall apply.
9.2 Cash-Out; Buy-Back.
(a) If a Participant terminates
participation in the Plan and thereafter is re-employed and again
becomes eligible to participate in the Plan, the following Years
of Credited Service shall be disregarded for purposes of
determining the Accrued Benefit of such Participant; but shall be
taken into account for purposes of such Participant's eligibility
and vesting upon re-employment:
(i) Years of Credited Service with
respect to which he has received a distribution of the present
value of his Vested Accrued Benefit if such distribution does not
exceed $3,500 (or any lesser sum as may be established by
regulations promulgated by the Secretary of the Treasury as the
maximum amount that may be paid out in such event without the
Participant's consent); or
(ii) Years of Credited Service with
respect to which he has received a distribution of his Vested
Accrued Benefit attributable to such Years of Credited Service,
which he elected to receive.
(b) A Participant who has received a
distribution of his Vested Accrued Benefit, as described
hereinabove in subparagraph (a) of this Section, may repay the
amount of such distribution to the Trust Fund, provided
(i) such Participant is subsequently
re-employed by Employer; and
(ii) repayment is made before the
earlier of 5 years after the first date on which the Participant
is subsequently re-employed, or the close of the period in which
the Employee incurs five (5) consecutive 1-year Breaks In Service
following the date of distribution.
(c) Upon such repayment, he shall be
credited on the vesting schedule with all Years of Credited
Service prior to his Break In Service, and the Employer shall
make a contribution to his Employer Contribution Account as
required by Section 6.8. Immediately after such repayment, his
Accrued Benefit shall, in no event, be less than his Accrued
Benefit immediately prior to termination of employment.
9.3 Forfeitures. Notwithstanding the provisions
of Section 9.2 hereinabove, upon termination of employment, the
portion of a Participant's Accrued Benefit derived from Employer
Contributions which is not Vested shall be forfeited upon the
earlier of a cash-out distribution to the Participant, or the
incurrence of five (5) consecutive Breaks-In-Service.
Forfeitures of Discretionary Employer Contributions and Employer
Matching Contributions shall be allocated as of the end of the
Plan Year in which such forfeitable event occurs according to
Section 7.1(h).
9.4 Computation of Years of Credited Service.
For purposes of computing Years of Credited Service under the
Plan to determine the Vested percentage under Section 9.1, all of
an Employee's Years of Credited Service shall be taken into
account, except that the following Years of Credited Service
shall be excluded:
(a) In the case of any Participant who has a
Break In Service, Years of Credited Service before such Break
shall not be required to be taken into account until he has
completed one (1) Year of Credited Service after his return.
(b) In the case of a Participant who has 5
or more consecutive 1-year Breaks In Service, the Participant's
pre-break service will count in vesting of his employer-derived
Accrued Benefit only if either:
(i) such Participant has any Vested
interest in his or her employer-derived Accrued Benefit at the
time of separation from service; or
(ii) upon returning to service the
number of consecutive 1-year Breaks In Service is less than the
number of Years of Credited Service.
(c) In the case of a Participant who has 5
consecutive 1-year Breaks In Service, all Years of Credited
Service after such Breaks In Service will be disregarded for the
purpose of vesting the employer-derived Accrued Benefit that
accrued before such Breaks, but both pre-break and post-break
service will count for the purposes of vesting the employer-
derived Accrued Benefit that accrues after such Breaks. Separate
accounts will be maintained for the Participant's pre-break and
post-break employer-derived Accrued Benefit pursuant to Section
7.3 hereof. Both accounts will share in the earnings and losses
of the Trust Fund.
(d) In the case of a Participant who does
not have 5 consecutive 1-year Breaks In Service, both the pre-
break and post-break service will count in vesting both the pre-
break and post-break employer-derived Accrued Benefit.
9.5 Hours of Service Requirement. A Participant
who has more than five hundred (500) Hours of Service but less
than one thousand (1,000) Hours of Service in any Plan Year and
who has not separated from the service of Employer shall not
advance on the vesting schedule.
ARTICLE X
TOP-HEAVY PLAN
10.1 Top-Heavy Requirements. For any Plan Year
in which the Plan is determined to be a Top-Heavy Plan as
determined in accordance with Section 10.2 hereof:
(a) Special vesting requirements of Section
416(b) of the Code as set forth in Section 9.1(f) of the Plan
shall apply.
(b) The allocable share of the Employer
contribution for each Participant who is a non-key employee shall
not be less than the lesser of: (i) three percent (3%) of such
Participant's Compensation, or (ii) the largest percentage of the
Employer contribution made (or required to be made), including
salary deferrals, for any Key Employee for such Plan Year. For
purposes of this subparagraph, Compensation shall mean a
Participant's compensation which would be included on his Federal
W-2 Form for the Plan Year for which the contribution is made.
10.2 Top-Heavy Determination.
(a) The Plan shall be considered a Top-Heavy
Plan and shall be subject to the additional requirements of
Section 10.1 hereinabove, with respect to any Plan Year, if, as
of the Anniversary Date of the preceding Plan Year or in the case
of the first Plan Year, the Anniversary Date of such Plan Year
(hereinafter referred to as the "Determination Date") either:
(i) the Sum of the Value of the
Aggregate Accounts of Key-Employees exceeds sixty percent (60%)
of a similar sum determined for all Employees, excluding former
Key-Employees, (the "60% Test"); or
(ii) the Plan is part of a Required
Aggregation Group, and the sum of the Present Value of Accrued
Benefits and the Value of the Aggregate Accounts of Key-Employees
in all Plans in such Group exceeds sixty percent (60%) of a
similar sum determined for all Employees, excluding former Key-
Employees.
(b) For purposes of this Section 10.2, the
Aggregate Account of an Employee as of the Determination Date is
the sum of:
(i) a Participant's Accounts holding
contributions made by the Employer pursuant to Section 6.1
hereinabove as of the Determination Date adjusted for any
contributions due as of the Determination Date, and further
adjusted by including any Plan distributions made within the Plan
Year that includes the Determination Date or within the preceding
four (4) Plan Years; and
(ii) a Participant's non-deductible
Employee Contribution Account, if any; and
(iii) a Participant's Unrelated Pre-
TEFRA Rollover Account; and
(iv) a Participant's Related Rollover
Account.
(v) a Participant's Rollover Account
- - Self-Employed, if any.
(vi) The aggregate of any Plan
distributions made within the Plan Year that includes the
Determination Date or within the preceding four (4) Plan Years
from a Qualified Plan of the Employer which has been terminated,
which, if it had not been terminated, would have been required to
be included in a Required Aggregation Group.
(c) For purposes of this Section, Present
Value of Accrued Benefits shall be determined, in the case of a
defined benefit pension plan, under the provisions of such a plan
or plans.
(d) Notwithstanding the provisions of
subsection (a) hereinabove, the Plan shall not be a Top-Heavy
Plan, if the Administrator elects to treat the Plan as part of a
Permissive Aggregation Group, and the Permissive Aggregation
Group is not determined to be Top-Heavy using the criteria of the
"60% Test" hereinabove.
(e) Only those plans in which the
Determination Dates fall within the same calendar year shall be
included in a Required or a Permissive Aggregation Group in order
to determine whether the Plan is a Top-Heavy Plan.
(f) For Plan Years beginning after December
31, 1984, if a Participant or former Participant (a Participant
who no longer shares in contributions or forfeitures and/or no
longer accrues a benefit for a Plan Year) has not performed any
services for the Employer maintaining the Plan at any time during
the five year period ending on the Determination Date, the
Aggregate Account and/or Present Value of Accrued Benefit for
such Participant shall not be taken into account for purposes of
subsection (a) hereinabove.
(g) For Plan Years beginning after December
31, 1986, solely for the purpose of determining if the Plan, or
any other plan included in a required or permissive aggregation
group of which this Plan is a part, is top-heavy (within the
meaning of Section 416(g) of the Code) the Accrued Benefit of an
Employee other than a key employee (within the meaning of Section
416(i)(1) of the Code) shall be determined under (a) the method,
if any, that uniformly applies for accrual purposes under all
plans maintained by the Affiliated Employers, or (b) if there is
no such method, as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under the fractional accrual
rate of Section 411(b)(1)(C) of the Code.
ARTICLE XI
CONTRACTS
11.1 Purchase. The Administrator may, in its
sole discretion exercised in a uniform and non-discriminatory
manner, permit portions of the Trust Fund, as hereinafter
limited, to be used to purchase and pay premiums on Contracts on
the lives of Participants. Each Contract shall be purchased and
premiums paid thereon, in accordance with uniform policies
established by the Administrator and providing for treatment of
Participants in similar circumstances in a similar fashion,
except those Participants declared uninsurable at standard rates
by an insurance company, for whom no insurance need be purchased.
The Administrator may direct the Trustee to apply for and
purchase from the insurance company one of the following types of
Contracts upon the Participant's life as the Administrator may
select:
(a) An ordinary life insurance policy; or
(b) A term life insurance policy.
The aggregate life insurance premiums paid for any Participant
shall not be more than forty-nine percent (49%) of the aggregate
of the Employer's contributions allocated to his Employer
Contribution Account at any particular time, provided, however,
that in the event a term life insurance policy is purchased, the
aggregate life insurance premiums paid for any Participant shall
not be more than twenty-five percent (25%) of the Employer's
contributions allocated to the Employer Contribution Account of
the Participant at any particular time.
11.2 Ownership. The Trustee shall be the sole
owner and Beneficiary of all Contracts purchased hereunder, and
it shall be so designated in each Contract and application
therefor.
11.3 Insurance Company Restrictions. If a
Contract is purchased, the insurance company shall not be a party
to this Plan or Trust Agreement and shall not be required to see
that any act of the Trustee has been authorized by the Plan or
Trust Agreement or otherwise. The insurance company shall not be
required to see that any Participant for whom the Trustee may
apply for a Contract is entitled to have a Contract issued, and
shall not be liable to make any inquiry regarding the amount,
form or any provisions of the Contract for which the Trustee may
apply. The insurance company may conclusively assume that all of
the provisions of any application executed by the Trustee or any
amendment or supplement to such application, are correct and in
conformity with the Trust Agreement. After a Contract has been
issued, the insurance company shall not be required to make any
inquiry regarding the right of the Trustee to exercise any right
with respect to such Contract. The insurance company shall be
discharged from all liability in connection with any amount paid
according to the terms of the Contract as issued upon the
application of the Trustee, or as the Contract may be changed by
the Trustee, and if the Trustee, in accordance with the right
reserved to it in any Contract, shall exercise any right whereby
payments would be made to the Trustee, the insurance company
shall have no duty of inquiry regarding the disposition by the
Trustee of any amounts paid by the insurance company to the
Trustee. No insurance company which may issue any Contract upon
the application of the Trustee shall be required to take or
permit any action contrary to the provisions of such Contract; or
be bound to allow any benefit or privilege to any person
interested in any Contract it has issued which is not provided in
such Contract.
11.4 Conflict of Terms. In the event of any
conflict between the terms of this Plan and the terms of any
Contract purchased hereunder, the Plan provisions shall control.
11.5 Participant's Rights. All benefits, rights,
privileges and options under each Contract on the life of a
Participant, and all dividends payable or refunds made by any
insurance company on such policies, shall be exercised and dealt
with for the sole benefit of such Participant or his
Beneficiaries as directed by the Administrator. Any dividends or
credits earned on Contracts will be allocated to the
Participant's account derived from Employer contributions for
whose benefit the Contract is held.
11.6 Premium Payment. Payments to the insurance
company with respect to any Contract on the life of a Participant
shall constitute an investment of the funds credited to a
Participant's Elective Deferral Account, and the Elective
Deferral Account of such Participant shall be reduced by any such
payments. If there is still a balance owed on the premium, the
Discretionary Employer Contribution and Employer Matching
Contribution shall be reduced until no such balance remains.
While premiums paid on Contracts shall reduce the account of a
Participant on whom the Contract has been issued, for purposes of
determining benefits under the Plan, the cash value of any such
Contract will be added to such Participant's Accrued Benefit.
11.7 Time of Purchase. Notwithstanding any
provision of this Plan to the contrary, in the event Contracts
are purchased on the life of a Participant, such Contracts shall
be purchased within a reasonable time after the annual
contribution is made by the Employer to the Trust Fund and
allocated by the Administrator among the Participants. In the
event a Participant dies before an initial Contract or any
additional Contracts are purchased and issued, no provision of
this Plan shall be construed as giving to any Participant, or his
Beneficiary, any legal or equitable right against the Employer,
or any officer or Employee thereof, or the Trustee or any
insurance company.
11.8 Minimum Purchase Requirements. A Contract
shall not be purchased on the life of a Participant unless the
face amount of such Contract is at least Five Thousand Dollars
($5,000). Additional Contracts of insurance shall not be
purchased on the life of any Participant unless the face amount
of such Contract is at least Two Thousand Dollars ($2,000).
11.9 Disposition of Contracts Upon Distribution of
Accrued Benefit. If the Participant's Vested Accrued Benefit is
to be distributed in a lump sum, and there is a Contract on the
life of such Participant, the following options shall be
available to the Participant:
(a) The Participant may direct the Trustee
to lapse the Contract, in which case the cash surrender value
shall be included as part of the Accrued Benefit.
(b) The Participant may elect to receive the
Contract as part of the distribution of his Accrued Benefit by
giving written notice thereof to the Trustee.
(c) Subject to the limitations of Prohibited
Transaction Exemption 92-6, the Participant may elect to purchase
the Contract from the Trustee by tendering a check payable to the
Trustee in an amount which is at least equal to the amount
necessary to put the Plan in the same cash position as it would
have been in had it retained the Contract, surrendered it, and
made any distribution owing to the Participant of his Vested
interest under the Plan.
11.10 Other Disposition of Contracts From Plan.
Subject to the limitations of Prohibited Transaction Exemption
92-6, the Plan may sell an individual life insurance or annuity
contract to (1) a Participant under the Plan; (2) a relative of a
Participant under the Plan; (3) the Employer; or (4) another
plan, if --
(a) Such Participant is the insured under
the Contract;
(b) Such relative is a "relative" as defined
in Section 3(15) of ERISA (or is a "member of the family" as
defined in Section 4975(e)(6) of the Code), or is a brother or
sister of the insured (or a spouse of such brother or sister),
and is the beneficiary under the Contract.
(c) The Contract would, but for the sale, be
surrendered by the Plan;
(d) The insured Participant is first
informed of the proposed sale and is given the opportunity to
purchase such Contract from the Plan, and delivers a written
document to the Plan stating the he elects not to purchase the
policy and consents to the sale by the Plan of the Contract to a
relative, Employer or other plan.
(e) The amount received by the Plan as
consideration for the sale is at least equal to the amount
necessary to put the Plan in the same cash position as it would
have been in had it retained the Contract, surrendered it, and
made any distribution owing to the Participant of his Vested
interest under the Plan.
ARTICLE XII
ROLLOVER CONTRIBUTIONS
12.1 Direct Rollovers by Employees. This Section
12.1 applies to distributions made on or after January 1, 1993.
Notwithstanding any provisions of the Plan to the contrary that
would otherwise limit a Distributee's election under this
Section, a Distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a direct
rollover.
12.2 Definitions. For purposes of this ARTICLE
XII, the following definitions shall apply:
(a) "Eligible Rollover Distribution" shall
mean 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
Section 401(a)(9) of the Code; 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).
(b) "Eligible Retirement Plan" shall mean an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section
403(a) of the Code, or a qualified trust described in Section
401(a) of the Code, 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" shall mean an Employee or
former Employee. In addition, 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 Section
414(p) of the Code, are Distributees with regard to the interest
of the spouse or former spouse.
(d) "Direct Rollover" shall mean a payment
by the Plan to the Eligible Retirement Plan specified by the
Distributee.
12.3 Rollovers Other Than Direct Rollover. An
Employee may transfer to the Plan all or any portion of the
proceeds received from another Qualified Plan (the "Other Plan"),
including a plan in which the Employee was an employee within the
meaning of Section 401(c)(1) of the Code, in accordance with
procedures established by the Administrator, provided the
transfer occurs on or before the sixtieth (60th) day following
receipt of the distribution by the Employee from the Other Plan,
and, if the proceeds received from the Other Plan were received
by the Employee as a partial distribution, such distribution must
qualify under Section 402(a)(5)(D) of the Code, or, provided the
transfer is directly made from an Individual Retirement Account
(as defined in Section 408(a) of the Code) which held only the
proceeds from such Other Plan and which were transferred to the
Individual Retirement Account on or before the 60th day following
receipt of the distribution by the Employee from the Other Plan.
12.4 Direct Rollovers From Other Plan. If an
Employee is entitled to an Eligible Rollover Distribution of his
accrued benefit in another Qualified Plan (the "Other Plan")
maintained by the Employer or by the Employee's former employer,
the Employee may effect a Direct Rollover of such accrued benefit
(or any portion thereof) to the Plan.
12.5 Procedures and Information. The
Administrator shall develop such procedures and may require such
other information from an Employee desiring to make (or to have
made) such rollover or transfer as described in this Article as
it deems necessary or desirable to determine that the proposed
transfer will meet the requirements of this Article and of the
Code.
12.6 Allocations to Rollover Account. Upon
approval by the Administrator, the amount transferred shall be
deposited in the Trust Fund and shall be allocated to the
Employee's Rollover Account.
12.7 Vesting of Rollover Account. An Employee's
Rollover Account shall be fully Vested at all times.
12.8 Distributions of Rollover Account. When a
Participant terminates his employment with the Employer upon
retirement, death or disability, or when the Plan is terminated,
the total amount in his Rollover Account shall be distributed to
him in accordance with ARTICLE VIII.
12.9 Eligible Employees. An Employee shall be
eligible to make or direct the transfers permitted in this
ARTICLE even though he is not eligible to participate in the Plan
as required by ARTICLE V.
12.10 Investment of Rollover Account. A
Participant must direct the investment of his Rollover Account in
accordance with ARTICLE XIV hereinbelow.
ARTICLE XIII
LOANS TO PARTICIPANTS
13.1 Requirements. The Plan Administrator is
authorized to establish and administer the loan program set forth
in this Article and to direct the Trustee to make loans to
Participants and Beneficiaries, provided the loan or loans are
made according to a uniform and non-discriminatory policy adopted
by the Administrator and in accordance with all of the following
requirements:
(a) Loans are available to all Participants
and Beneficiaries on a reasonably equivalent basis, provided that
loans shall not be made available to highly compensated employees
(as defined in Section 414(q) of the Code) in an amount greater
than the amount made available to other Employees, and further
provided that no loans shall be made to any owner-employee (as
defined in Section 4975(d) of the Code).
(b) The Participant shall request from the
Administrator a loan application form, such form to be completed
by the Participant and returned to the Administrator.
(c) The total amount of the loan (when added
to the outstanding balance of all other loans to the Participant
from such Plan) may not exceed the lesser of:
(A) $50,000, reduced by the excess
of -- (I) the Participant's highest loan(s) balance during the
12-month period ending on the day before the new loan is made,
OVER (II) such Participant's outstanding balance of loans on the
date the new loan is made.
OR
(B) one-half (1/2) of the present
value of the Participant's non-forfeitable accrued benefits in
the Plan.
(d) The loan shall be evidenced by a
promissory note which provides for a reasonable rate of interest.
The rate of interest shall be that charged under similar facts
and circumstances by a local major lending institution, such
institution to be selected by the Administrator and utilized
consistently for purposes of determining Participant loan
interest rates.
(e) All loans shall be secured by collateral
which, in the sole judgment of the Trustee, is satisfactory. Up
to fifty percent (50%) of a Participant's Vested Accrued Benefit,
on the date of the loan, may serve as adequate security for a
loan or loans. If Section 401(a)(11) of the Code applies to the
Participant's account used as security, the spouse of the
Participant (if any) must consent in writing during the ninety
(90) day period ending on the date on which the loan is to be so
secured. A new consent shall be required if the account balance
is used for renegotiation, extension, renewal, or other revision
of the loan.
(f) The period of repayment shall be
determined by the mutual agreement of the Trustee and
Participant, but in no event shall the total period of repayment
exceed five (5) years, unless such loan is used to acquire any
dwelling unit which, within a reasonable time after acquisition,
is to be used (determined at the time the loan is made) as a
principal residence of the Participant.
(g) Substantially level payments (not less
frequently than quarterly) are required over the term of the
loan.
(h) If any Participant desires to prepay any
payments of the principal, such prepayments shall be applied
either to eliminate the next maturing payments under the Note or
such prepayments shall be applied on the Note in the inverse
order of maturity, as the Trustee shall determine, on a non-
discriminatory basis. Interest shall be adjusted at the time the
note is fully paid.
(i) Loans will be effective as of the
Allocation Date immediately following receipt of the loan
application.
13.2 Default. In the event a Participant should
default in the repayment of any part of the interest or principal
which may be due thereon, the Administrator may deduct the amount
due and payable from his Accrued Benefit at such time as the
Participant may become entitled to the Accrued Benefit, and any
other security which is pledged shall be sold as soon as
practical after default by the Trustee at private or public sale.
The proceeds of such sale shall be applied first to pay the
expenses of conducting the sale, including reasonable attorney's
fees, and then to pay such sums due from the Participant to the
Trust Fund under the loan arrangement, which such payment to
apply first to accrued interest and then to principal. The
Participant shall remain liable for any deficiency and any
surplus remaining shall be paid to the Participant.
13.3 Loans as Investments of the Trust Fund. All
loans shall be considered investments of the individual
participant's account and any interest thereon shall be
considered interest earned by the individual participant's
account to be allocated pursuant to the provisions of Section 7.1
hereinabove.
ARTICLE XIV
PARTICIPANT-DIRECTED INVESTMENTS
14.1 Each Participant shall have the right to
direct the investments of his Elective Deferral Account and
Rollover Account, provided he does so under such terms,
conditions, and administrative rules as the Administrator shall
from time to time determine. The Administrator shall establish
one or more separate and distinct investment options from which
the Participant shall choose.
14.2 A Participant may elect to change the
investment vehicles (and/or the percentages to be allocated
thereto) in which (i) his current Elective Deferral Account
balance and future earnings thereon are to be invested; and, (ii)
future contributions and earnings thereon are to be invested.
(a) Upon the Administrator's or Trustees
receipt of a Participant's request for a change in the investment
of his current Elective Deferral Account balance and future
earnings thereon, the funds shall be invested in accordance with
such election immediately following the Administrator's receipt
of the election, provided the request is in the form set forth in
Section 14.1 of this Article.
(b) Upon the Administrator's or Trustees
receipt of the Participant's request for a change in the
investment of his future contributions and earnings thereon, the
funds shall be invested in accordance with such election
immediately following the Administrator's receipt of the
election, provided the request is in the form set forth in
Section 14.1 of this Article.
(c) A Participant's current account balance
and any future contributions thereto shall continue to be
invested in accordance with the Participant's most recent
election until the effective date of the Participant's investment
election change, if any.
14.3 In the event that a Participant does not
make an initial election to direct investments or in the event
the Participant has terminated employment, all amounts held in
the Participant's Elective Deferral Account shall be invested in
such a way as the Administrator shall from time to time determine
as described in Section 14.1 hereinabove.
14.4 The Administrator shall provide each
Participant with information relating to investment procedures
and investment vehicles offered at the time the Participant is
first eligible to participate in the plan. The Administrator may
establish such rules as it deems necessary to administer and
implement provisions of this Article XIV.
14.5 A Participant shall exercise his rights
under this Article in a manner set forth by the Administrator.
The Administrator shall transmit the Participant's direction to
the trustee in such form as the trustee may require.
ARTICLE XV
ADOPTION OF PLAN BY PARTICIPATING EMPLOYERS
15.1 Right of Participating Employers to
Participate.
(a) A corporation, partnership or
proprietorship (hereinafter referred to as a "Participating
Employer"), may adopt and participate in the Plan if such
corporation, partnership or proprietorship is controlled by a
stockholder of Employer, and the Plan Administrator approves such
adoption and participation. Control shall be determined under
the provisions of Section 1563(a) of the Code, except as limited
by Section 415(h).
(b) Adoption of the Plan by a Participating
Employer shall be evidenced by written action of the
Participating Employer either in the form of a written resolution
of such Board or a separate agreement executed by a duly
authorized officer of such Participating Employer (or in the case
of a partnership or proprietorship written authorization of a
general partner or the proprietor) wherein it is agreed that the
Participating Employer adopts the Plan and agrees to be bound by
all the terms and provisions of the Plan. In addition, such
Participating Employer shall give written notice of such adoption
to the Administrator of the Plan.
(c) Approval of the adoption of the Plan by
a Participating Employer shall be evidenced by written action of
the Administrator and Named Fiduciary wherein they approve
adoption of the Plan by the Participating Employer.
15.2 Participant Accounts. A Participant who is
employed or has been employed by Employer and/or Participating
Employer shall have a separate Employer Contribution Account for
Employer and each Participating Employer to which shall be
allocated contributions and forfeitures from Employer and each
Participating Employer together with earnings and losses thereon.
15.3 Administrative Powers of Plan Administrator.
The administrative powers and control of the Administrator shall
not be diminished under the Plan by reason of the participation
of any Participating Employer in the Plan and such administrative
powers and controls specifically granted herein to the
Administrator shall apply only to the Administrator. The right
to amend the Plan shall apply only to the Named Fiduciary.
15.4 Creation of Trust. A Participating Employer
shall be required to appoint the Trustee which has been appointed
by the Named Fiduciary to serve as Trustee of any funds
contributed for its Employees and shall authorize the Named
Fiduciary to appoint such successor or co-Trustees as it deems
necessary and advisable. A Participating Employer shall also be
required to make contributions on behalf of its Employees to such
Trustee to hold, invest and maintain pursuant to the terms and
provisions of the Trust Agreement entered into between the
Trustee and Employer.
15.5 Transfer of Employment.
(a) For purposes of determining a Year of
Credited Service, a Break in Service and an Hour of Service, the
transfer of a Participant between Employer and any Participating
Employer shall not be deemed a termination of employment.
(b) For purposes of determining
participation in the Plan, all service with Employer and with
each Participating Employer shall be taken into account.
(c) For purposes of determining an
Employee's Years of Credited Service under the Plan, all Years of
Credited Service with Employer and each Participating Employer
shall be taken into account.
15.6 Withdrawal of Participating Employers.
(a) A Participating Employer may withdraw
from the Plan by giving written notice of such withdrawal to the
Administrator. Such notice shall contain: (1) the effective
date of withdrawal; (2) a statement whether the withdrawal
constitutes a termination of the Plan as to its Employees; and
(3) the disposition to be made of assets held by the Trustee for
the Employees of such Participating Employer.
(b) Employer may require a Participating
Employer to withdraw from the Plan by giving sixty (60) days
written notice thereof to the Administrator and to the President
of such Participating Employer (or in the case of a partnership
or proprietorship to a general partner or the proprietor). Such
notice shall contain: (1) the effective date of withdrawal, and
(2) the date the Trustee will release assets held by it for the
Employees of such Participating Employer. Upon receipt of such
notice, the Participating Employer shall, within thirty (30) days
thereafter, notify the Administrator, in writing, (1) whether it
intends to create its own plan, intends to terminate the Plan for
its Employees, or intends to adopt the plan of another company;
and (2) the name and address of the trustee or other party who is
to receive the assets held by the Trustee for the Employees of
the Participating Employer.
(c) Upon the withdrawal of a Participating
Employer from the Plan, either under subsection (a) or (b)
hereinabove, the Administrator shall give written notification to
the Trustee of such withdrawal and shall direct the Trustee to
transfer and pay over the assets held by the Trustee for the
Employees of the Participating Employer to a successor Trustee or
another party or to the Employees. For purposes of this Section,
if the Employees of the withdrawing Participating Employer cease
participation in the Plan as a result of the withdrawal, the
employment of such Employees shall be considered terminated.
Distribution of the vested account balance of each such Employee
shall be made in the same manner and at the same time as provided
in Section 8.7. The non-vested account balance of each such
Employee shall be forfeited in accordance with the provisions of
Section 9.3.
(d) If the Participating Employer, which is
required to withdraw under subsection (b) hereinabove, does not
cooperate or fully comply with the terms of subsection (b), then
the Administrator may direct the Trustee to distribute to each
Employee of the Participating Employer his Accrued Benefit in the
same manner and at the same time as provided in Section 8.7.
Upon such distribution, the duties, obligations and
responsibilities of the Administrator and Trustee to the
Employees of the Participating Employer shall terminate.
(e) Upon withdrawal by such Participating
Employer, all administration and control which the Employer and
the Administrator had heretofore exercised with respect to such
Participating Employer shall cease and all administration and
controls shall be the responsibility of such withdrawing
Participating Employer or the Administrator appointed by it. The
Named Fiduciary and the Administrator shall be relieved of any
further liability therefor.
15.7 Internal Revenue Service Approval of Plan
for a Participating Employer. Promptly upon becoming a
Participating Employer, such Participating Employer may make
initial application to the Internal Revenue Service for approval
of the Plan as it pertains to such Participating Employer. In
the event the Internal Revenue Service issues an adverse letter
with respect to such application and determines that the Plan as
it pertains to such Participating Employer fails to qualify under
Section 401 of the Code, then the adoption of the Plan by the
Participating Employer shall become null and void, ab initio.
Upon a failure to obtain initial qualification of the Plan, any
contributions made by the Participating Employer to the Trustee
shall be returned to the Participating Employer, to the extent
allowed under Section 18.6. If application is not made to the
Internal Revenue Service, then, at a minimum the Participating
Employer shall notify the Internal Revenue Service that its
Employees are participating in the Plan.
15.8 Joint Venture Restriction. Neither the
adoption of this Plan by a Participating Employer nor the act
performed by it in relation to this Plan shall ever create a
joint venture or partnership between Employer and any
Participating Employer.
15.9 Commingled Assets. Notwithstanding anything
to the contrary, it is the intention of the Employer and the
Participating Employer that the Trust Fund shall be available to
pay benefits to all of the employees who are participating in the
Plan and their beneficiaries.
ARTICLE XVI
FIDUCIARY RESPONSIBILITIES
16.1 Allocation of Responsibilities Among
Fiduciaries.
(a) Trustee: The Trustee shall have
exclusive responsibility for the control and management of the
Trust Fund as provided in the Trust Agreement and specifically,
but not in limitation of its general authority, investment and
reinvestment of the Trust Fund.
(b) Administrator: The Administrator shall
have responsibility and authority to control the operation and
administration of the Plan as specifically set forth in ARTICLE
IV of the Plan.
(c) The Employer:
(i) The Employer shall have the
authority and responsibility for (i) the design of the Plan,
including the right to amend the Plan; (ii) the qualification
under applicable law of the Plan, any amendments to the Plan, and
any document relating to the Plan; (iii) the funding of the Plan;
(iv) the designation of the Named Fiduciary; (v) review of
disallowed claims of Participants; (vi) appointment of an
Investment Manager; and (vii) the exercise of all fiduciary
functions provided in the Plan or in the Trust Agreement or
necessary to the operation of the Plan except such functions as
are assigned to other fiduciaries pursuant to the Plan or Trust
Agreement, including the authority to allocate or delegate
fiduciary responsibilities which do not involve the management
and control of the Trust Fund.
(ii) Any authority assigned or
reserved to the Employer under the Plan and Trust Agreement shall
be exercised by resolution of the Employer's Board and shall
become effective, with respect to the Trustee, upon written
notice to the Trustee signed by the President, Treasurer or
Secretary of the Employer advising the Trustee of such exercise.
(iii) The Employer as Named Fiduciary
shall allocate and delegate fiduciary responsibilities by giving
written notice thereof to the Plan Administrator and the Trustee
of the responsibilities to be allocated and the person or persons
to whom the responsibilities are to be allocated. In
implementing the procedure for the allocation and delegation of
fiduciary responsibilities, the Employer shall discharge its
duties with respect to such allocation and delegation with the
care, 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 like character with like aims; and it shall
discharge its duties solely in the interest of the Participants
and their Beneficiaries. The Employer shall make a formal
periodic review of the performance of any fiduciary to whom it
allocates or delegates fiduciary responsibilities and of any
person which it employs to render advice in regard to any
fiduciary responsibility which it has under the Plan and Trust
Agreement.
16.2 No Joint Fiduciary Responsibilities.
(a) It is intended under the Plan and Trust
Agreement, that the Plan Administrator, Named Fiduciary, Employer
and Trustee, shall be responsible for the proper exercise of
their respective powers, duties, responsibilities and obligations
and they shall not be responsible for any act or failure to act
of each other.
(b) This ARTICLE is intended to allocate to
each fiduciary individual responsibility for the prudent
execution of the functions assigned to him, and none of such
responsibilities or any other responsibility shall be shared by
two or more of such fiduciaries unless such sharing shall be
provided by a specific provision of the Plan or Trust Agreement.
Whenever one fiduciary is required by the Plan or Trust Agreement
to follow the directions of another fiduciary, the two
fiduciaries shall not be deemed to have been assigned a shared
responsibility, but the responsibility of the fiduciary giving
the directions shall be deemed his sole responsibility, and the
responsibility of the fiduciary receiving those directions shall
be to follow them insofar as such instructions are on their face
proper under applicable law. Each fiduciary, other than the
Trustee, may rely upon any direction, information or action with
respect to the investment and reinvestment of the Trust Fund as
being proper under the Plan and Trust Agreement and they are not
required by the terms of the Plan and Trust Agreement to inquire
into the propriety of any investment or reinvestment of the Trust
Fund. Nothing in the Plan or Trust Agreement shall be deemed to
enlarge the responsibilities or liabilities of any fiduciary with
respect to the Plan and Trust Agreement beyond those imposed by
ERISA.
16.3 Advisor to Named Fiduciary. The Named
Fiduciary may employ one or more persons to render advice
concerning any responsibility of the Named Fiduciary under the
Plan or Trust Agreement, and all other fiduciaries may rely on
such advice, any written opinions or certificates without further
investigation.
ARTICLE XVII
AMENDMENT AND TERMINATION
17.1 Amendments. The Employer shall have the
right at any time and from time to time, to amend, in whole or in
part, any or all of the provisions of this Plan, so long as such
amendment or amendments in no way reduce the value of a
Participant's Accrued Benefit or eliminate an optional form of
distribution. In addition, no such amendment shall affect the
terms of payment or the value of any Contract already issued as
payment or the value of any Contract already issued as computed
to the date of such amendment; no such amendment shall authorize
or permit any part of the Trust Fund to be used for or diverted
to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries. Any amendment shall become
effective upon delivery of a written instrument executed by order
of the Board to the Plan Administrator and Trustee. The
provisions of this Section shall be deemed a procedure for
amending the Plan and for identifying the persons who have
authority to amend the Plan and is intended to satisfy the
requirements of Section 402(b)(3) of ERISA.
17.2 Election of Pre-Amendment Vesting Schedule.
In the event the Plan is amended to change or modify Section 9.l,
or in the event the vesting schedule changes pursuant to Section
9.1(g) hereof, a Participant with at least three (3) Years of
Credited Service, as defined for purposes of ARTICLE IX, as of
the date the amendment is adopted or as of the amendment's
effective date, may elect to be subject to the pre-amendment
vesting schedule. If a Participant fails to make such an
election, then such Participant shall be subject to the new
vesting schedule. The election of the pre-amendment vesting
schedule shall be made by giving written notice to the Plan
Administrator during the election period. The election period
shall begin on the date such amendment is adopted and shall end
no earlier than the latest of the following dates:
(a) The date which is sixty (60) days after
the date the amendment is adopted;
(b) The date which is sixty (60) days after
the date the Plan amendment becomes effective; or
(c) The date which is sixty (60) days after
the date the Participant is issued written notice of the
amendment by the Employer or Administrator.
Such election shall be made only by an individual who is a
Participant at the time such election is made and such election
shall be irrevocable. Such amendment shall not reduce the Vested
percentage of a Participant's Accrued Benefit as of the later of
the date on which such amendment is adopted or the effective date
of such amendment.
17.3 Termination.
(a) General. The Employer shall have the
right at any time to terminate this Plan, by delivering to the
Trustee written notice of such termination. This Plan shall also
terminate in the event the Employer is legally adjudicated as
bankrupt, or makes a general assignment for the benefit of
creditors, or is dissolved, except a dissolution in connection
with the reorganization of the Employer. Upon any such
termination or upon a partial termination, or upon a complete
discontinuance of contributions to the Trust Fund, the rights of
all affected Participants or their Beneficiaries to benefits
accrued to the date of such termination, partial termination or
discontinuance, shall be fully Vested in accordance with the
terms and provisions of the Plan. At such time that the Trust is
liquidated and distributions are to be made, the Trustee may
distribute a Participant's accrued benefit without the
Participant's consent, provided: (1) the Plan does not offer an
annuity option, purchased from a commercial provider, and (2) 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 defined in Code
Section 4975(e)(7). If another such plan is maintained, the
Participant's accrued benefit may be transferred without consent
to the other plan if the Participant does not consent to an
immediate distribution from the terminating plan.
(b) Distribution Limitation for Elective
Deferrals. A distribution of a Participant's Elective Deferrals
may not be made under subparagraph (a) above if the Employer
establishes or maintains a "successor plan." For purposes of
this rule, a successor plan is any other defined contribution
plan maintained by the Employer. However, if fewer than two
percent of the Employees who are eligible under the Plan at the
time of its termination are or were eligible under another
defined contribution plan at any time during the 24-month period
beginning 12 months before the time of the termination, the other
plan is not a successor plan. The term "defined contribution
plan" means a plan that is a defined contribution plan as defined
in Code Section 414(i), but does not include an employee stock
ownership plan as defined in section 4975(e) or 409 or a
simplified employee pension as defined in Section 408(k) of the
Code. A plan is a successor plan only if it exists at the time
the Plan is terminated or within the period ending 12 months
after distribution of all assets from the Plan.
ARTICLE XVIII
MISCELLANEOUS
18.1 Participant's Rights; Acquittance. Neither
the establishment of the Plan hereby created, nor any
modification thereof, nor the creation of any fund or account,
nor the issuance of any Contract, nor the payment of any
benefits, shall be construed as giving to any Participant or
other person any legal or equitable right against the Employer,
or any officer or employee thereof, or the Trustee, or any
insurance company, except as provided herein or in the terms of
any such Contract. Under no circumstances shall the terms of
employment of any Participant be modified or in any way affected
hereby.
Nothing contained in this Plan shall be construed to
add directly or indirectly to the rights of the Employees against
the Employer. The action of the Employer in creating this Plan
or any other action contemplated by either the Employer or its
Employees, shall not be construed to constitute or evidence any
contractual relationship between the Employer and any Employee,
or as a right of any Employee to continue in the employment of
the Employer, or as a limitation of the right of the Employer to
discharge any of its Employees, with or without cause. The
Employer shall have the absolute right to deal with any Employee
who may be a Participant hereunder at any time as if the Plan had
never been created. Nothing herein contained shall be construed
as placing any obligation whatever upon the Employer to see that
any distribution to a Participant is made at any time from the
Trust Fund herein created, and the Employer shall not be liable
to any person whatever in respect to payments from the Trust
Fund.
18.2 Claims Procedure
(a) Claims for benefits under the Plan may
be filed with the Administrator on forms supplied by the
Administrator. The Administrator, within sixty (60) days after
receipt of a duly and properly filed claim, shall render a
written decision on the claim. If the claim shall be denied,
either in whole or in part, the decision shall include the reason
or reasons for the denial; the reference to the Plan provision or
provisions which are the basis for the denial; a description of
any additional material or information necessary for the claimant
to effect the claim; an explanation why the information or
material is necessary; and an explanation of the Plan claim
review procedure.
(b) Within sixty (60) days after receiving
notification from the Administrator denying, in whole or in part,
the claim, the claimant may file with the Named Fiduciary: (a) a
written notice of request for review of the Administrator's
decision, (b) a written notice of request for review of any
pertinent documents, and (c) a written notice of request to
submit issues and comments in writing. Within sixty (60) days
after receipt of the request for review, the Named Fiduciary
shall render a written decision on the claim containing specific
reasons for the decision and specific reference to the pertinent
Plan provisions on which the decision is based, all in a manner
calculated to be understood by the claimant.
18.3 Board Authorization. Whenever the Employer,
under the terms of this Plan, is permitted or required to do or
perform any act or matter or thing, it shall be done and
performed by any officer thereunto duly authorized by the Board.
18.4 ERISA Preemption. This Plan shall be
administered in the United States of America, and its validity,
construction and all rights hereunder shall be governed by the
laws of the United States under ERISA. To the extent the ERISA
shall not be held to have preempted local law, the Plan shall be
administered and construed under and governed by the laws of the
State of Alabama.
18.5 Indemnification By Employer. The Employer
does hereby indemnify and hold harmless any person, corporation,
professional corporation, professional association or
partnership, that is deemed to be a fiduciary under the terms and
provisions of ERISA and the regulations promulgated thereunder
from and against any and all losses, claims, damages, expense
(including court costs and attorney's fees) and liabilities
arising from his or its duties and responsibilities in connection
with the Plan and Trust Agreement unless the same is determined
to be due to criminal acts or acts involving fraud or wanton
conduct, provided that this indemnification by Employer provided
in this Section does not extend to corporate trustees or to
Investment Advisors appointed under ARTICLE IX of the Trust
Agreement, who are being compensated for services rendered to the
Employer or for their responsibilities under the Trust Agreement
and Plan.
18.6 Exclusive Benefit Rule. The Trust Fund
shall never inure to the benefit of any Employer and shall be
held for the exclusive purpose of providing benefits to
Participants in the Plan and their Beneficiaries and for any
reasonable expenses of administering the Plan, except that:
(a) Contributions made by the Employer under
a mistake of fact shall be returned to the Employer within one
(1) calendar year of the payment of such contribution.
(b) If a contribution is conditioned upon
the deductibility of such contribution under Section 404 of the
Internal Revenue Code of 1986, as amended, then, to the extent
the deduction is disallowed, the contribution shall be returned
to the Employer within one (1) calendar year after the
disallowance of the deduction.
18.7 Employer Reversion Upon Initial
Disqualification. Notwithstanding any contrary provisions
contained in any portion of this Plan, in the event the
Commissioner of Internal Revenue determines that the Plan is not
initially qualified under the 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.
18.8 Merger or Consolidation. In the case of any
merger or consolidation with, or transfer of assets or
liabilities to, any other plan, each Participant shall, if the
Plan is terminated, receive a benefit immediately after the
merger, consolidation, or transfer which is equal to or greater
than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer, if the
Plan had been terminated.
18.9 Non-Alienation Provision.
(a) Except as may be provided in this
Section, neither the Trust nor any of the assets, nor any
interest herein shall be subject to any conveyance, transfer,
assignment, sequestration, garnishment, attachment, levy,
encumbrance, or other judicial process or order of any kind to
satisfy the claims of creditors, and the Trustee shall not give
any effect to such conveyance, transfer, assignment,
sequestration, garnishment, attachment, levy, encumbrance, or
other judicial process or order. The interests of Participants
and their Beneficiaries under the Plan and Trust shall not be
subject to the claims of any creditors and shall not be liable
for their debts, contracts or torts. Participants and their
Beneficiaries shall not in any way convey, transfer, assign,
sequester, garnish, attach, levy, or otherwise encumber their
interests in the Plan in law or in equity, and any such
conveyance, transfer, assignment, sequestration, garnishment,
attachment, levy, or encumbrance shall be void.
(b) The provisions of subparagraph (a) above
do not apply to Qualified Domestic Relations Order (QDRO) as
defined in Section 414(p) of the Code, or any domestic relations
order entered before January 1, 1985.
(c) If any Employee's participation in the
Plan terminates at a time when he owes money to the Trust as a
result of loans made to him pursuant to ARTICLE XIII, the
Administrator shall direct payment to the Trust from the vested
portion of his Account Balance, and, if necessary, the
Administrator may direct payment from other collateral on any
amount so owing.
18.10 Delegation of Responsibilities by Named
Fiduciary. The Named Fiduciary may designate any other person or
persons, including the Trustee, to perform and carry out the
responsibilities and duties herein imposed on the Administrator,
and the Named Fiduciary may revoke any such delegation of
responsibility. Any action of such person or persons in the
exercise of such delegated responsibility shall have the same
force and effect for all purposes as if such action had been
taken by the Administrator.
18.11 Trust. The Employer and the Trustee have
entered into a Trust Agreement which provides for the holding of
funds necessary to fund the benefits set forth in this Plan. The
Trust Fund shall be received, held and disbursed in accordance
with the provisions of the Trust Agreement and the Plan. No part
of the Trust Fund shall be used for or diverted to purposes other
than for the exclusive benefit of the Participants, former
Participants and their Beneficiaries.
18.12 Non-Contractual Obligation of Employer.
Although it is the intention of the Employer that this Plan
continue from year to year and contributions be made regularly,
continuation of the Plan is entirely voluntary and the payments
thereunder are not assumed as a contractual obligation of the
Employer.
18.13 Basis for Payments From the Plan. The
basis for making payments from the Plan is contained in ARTICLE
VIII which are intended to satisfy the requirements of ERISA.
18.14 Funding Policy. ARTICLE VI shall be deemed
the procedure for establishing and carrying out the funding
policy and method of this Plan. The Named Fiduciary shall be
authorized to adopt such additional procedures and methods as
necessary, which shall be communicated in writing to the
Administrator and Trustee. Such funding policy and method shall
be consistent with the objectives of this Plan and with the
requirements of Title I of ERISA. In addition, the provisions of
ARTICLE VI shall be deemed the basis on which payments are made
to this Plan.
THE EMPLOYER has caused this Plan to be executed by its
duly authorized officer and duly attested, and its corporate seal
to be hereunto affixed, on this, the 1st day of November, 1994.
BIG B, INC.
/s/ Arthur M. Jones, Sr.
President
Attest:
/s/ James A. Bruno (EMPLOYER) Secretary
[CORPORATE SEAL]
TABLE OF CONTENTS
TAX REFORM ACT OF 1986
AMENDMENT AND RESTATEMENT OF THE
BIG B, INC.
PROFIT SHARING 401(k) RETIREMENT PLAN
(formerly Big B, Inc. Capital Accumulation Plan)
ARTICLE I PURPOSE 2
ARTICLE II NAME AND EFFECTIVE DATE 2
ARTICLE III DEFINITIONS 3
ARTICLE IV ADMINISTRATION OF THE PLAN 17
4.1 Powers of the Administrator 19
4.2 Employer as Administrator 19
4.3 Administrative Records 19
4.4 Bonding of the Administrator 19
4.5 Non-Discriminatory Administration 19
4.6 Terminated Participant Statement 20
4.7 Delegation by Administrator 20
ARTICLE V PARTICIPATION OF EMPLOYEES 20
5.1 Requirements 20
5.2 Rehired Employees 20
5.3 Participation Agreement 21
ARTICLE VI CONTRIBUTIONS 21
6.1 Employer Contributions: Types and Amounts 21
6.2 Elective Deferrals: Amounts and Procedures 21
6.3 Elective Deferral Dollar Limitations 22
6.5 Actual Deferral Percentage Limitations 22
6.6 Actual Contribution Percentage 24
6.7 Aggregate Limit for Multiple Use of
Alternative Limitation 25
6.8 Additional Contribution to Restore
Cashed-Out Benefits 27
6.9 Omission of Eligible Employee 29
6.10 Inclusion of Ineligible Employee 29
ARTICLE VII ALLOCATIONS AND ADJUSTMENTS TO ACCOUNTS 29
7.1 Procedure 29
7.2 Accrual of Contributions 32
7.3 Accounts 33
7.4 Limitations on Annual Additions 33
7.5 Contribution and Benefit Limits for
Multiple Plans 36
ARTICLE VIII BENEFITS 39
8.1 Participant's Rights and General Rules 39
8.2 Retirement Benefits 40
8.3 Deferred Retirement Benefits 40
8.4 Disability Benefit 40
8.5 Death Benefit 40
8.6 Benefit Upon Other Termination of Employment 41
8.7 Methods of Distribution 41
8.8 General Consent Rules 41
8.9 Distributions to which Qualified Joint and
Survivor and Pre-Retirement Survivor
Annuities Apply 42
8.10 Qualified Joint and Survivor Annuity 42
8.11 Qualified Pre-Retirement Survivor
Annuity 43
8.12 Pre-Retirement Survivor Annuity Election
and Notice 44
8.13 Waiver of Annuity and Spousal Consent 45
8.14 Conditions for Annuity Contracts 46
8.15 Pre-Termination Distributions (Hardship
Withdrawals) 46
8.16 Statutory Commencement of Benefits 48
8.17 General Rules for Required Distributions 48
8.18 Required Beginning Date 49
8.19 Statutory Distributions Upon Death 50
8.20 Location of Participants and Beneficiaries 52
8.21 Payments for the Benefit of Incompetents 52
ARTICLE IX VESTING 52
9.1 Requirements 52
9.2 Cash-Out; Buy-Back 53
9.3 Forfeitures 54
9.4 Computation of Years of Credited Service 54
9.5 Hours of Service Requirement 55
ARTICLE X TOP-HEAVY PLAN 55
10.1 Top-Heavy Requirements 55
10.2 Top-Heavy Determination 55
ARTICLE XI CONTRACTS 57
11.1 Purchase 57
11.2 Ownership 58
11.3 Insurance Company Restrictions 58
11.4 Conflict of Terms 58
11.5 Participant's Rights 58
11.6 Premium Payment 59
11.7 Time of Purchase 59
11.8 Minimum Purchase Requirements 59
11.9 Disposition of Contracts Upon Distribution
of Accrued Benefit 59
11.10 Other Disposition of Contracts From Plan 60
ARTICLE XII ROLLOVER CONTRIBUTIONS 60
12.1 Direct Rollovers by Employees 60
12.2 Definitions 61
12.3 Rollovers Other Than Direct Rollover 62
12.4 Direct Rollovers From Other Plan 62
12.5 Procedures and Information 62
12.6 Allocations to Rollover Account 62
12.7 Vesting of Rollover Account 62
12.8 Distributions of Rollover Account 62
12.9 Eligible Employees 62
12.10 Investment of Rollover Account 62
ARTICLE XIII LOANS TO PARTICIPANTS 62
13.1 Requirements 62
13.2 Default 64
13.3 Loans as Investments of the Trust Fund 64
ARTICLE XIV PARTICIPANT-DIRECTED INVESTMENTS 64
ARTICLE XV ADOPTION OF PLAN BY PARTICIPATING EMPLOYERS 66
15.1 Right of Participating Employers to
Participate 66
15.2 Participant Accounts 66
15.3 Administrative Powers of Plan
Administrator 66
15.4 Creation of Trust 66
15.5 Transfer of Employment 67
15.6 Withdrawal of Participating Employers 67
15.7 Internal Revenue Service Approval of
Plan for a Participating Employer 68
15.8 Joint Venture Restriction 68
15.9 Commingled Assets 68
ARTICLE XVI FIDUCIARY RESPONSIBILITIES 69
16.1 Allocation of Responsibilities
Among Fiduciaries 69
16.2 No Joint Fiduciary Responsibilities 70
16.3 Advisor to Named Fiduciary 70
ARTICLE XVII AMENDMENT AND TERMINATION 71
17.1 Amendments 71
17.2 Election of Pre-Amendment Vesting
Schedule 71
17.3 Termination 72
ARTICLE XVIII MISCELLANEOUS 72
18.1 Participant's Rights; Acquittance 72
18.2 Claims Procedure 73
18.3 Board Authorization 74
18.4 ERISA Preemption 74
18.5 Indemnification By Employer 74
18.6 Exclusive Benefit Rule 74
18.7 Employer Reversion Upon Initial
Disqualification 74
18.8 Merger or Consolidation 75
18.9 Non-Alienation Provision 75
18.10 Delegation of Responsibilities by
Named Fiduciary 75
18.11 Trust 76
18.12 Non-Contractual Obligation of Employer 76
18.13 Basis for Payments From the Plan 76
18.14 Funding Policy 76
STATE OF ALABAMA
JEFFERSON COUNTY
FIRST AMENDMENT
BIG B, INC.
PROFIT SHARING 401(k) RETIREMENT PLAN
BIG B, INC., a corporation organized and existing under
the laws of the State of Alabama, (hereinafter called the
"Employer"), hereby adopts and publishes on this the _____ day of
_______________, 199__ this Amendment to the Big B, Inc. Profit
Sharing 401(k) Retirement Plan, as follows:
WHEREAS, said Plan was amended and restated on November
1, 1994 in order to comply with the requirements of the Tax
Reform Act of 1986; and
WHEREAS, said Plan provides that Employer reserves the
right at any time and from time to time, by action of its Board
to amend in whole or in part, any and all provisions of the Plan;
and
WHEREAS, Employer desires to amend said Plan in the
following respects; and
WHEREAS, by written unanimous consent of the Board of
Directors of the Corporation, said Board did specifically approve
and adopt by resolution the amendment hereinafter set forth;
NOW, THEREFORE, in consideration of the premises
hereinabove set forth, Employer hereby amends said Plan, as
follows:
FIRST: There shall be added to Section 3.53 the
following new subparagraph:
(e) Old Pension Plan Rollover Account shall mean
the account maintained to record that portion of a Participant's
Accrued Benefit which was transferred to this Plan from the Big
B, Inc. Defined Benefit Pension Plan.
SECOND: Section 14.1 of said Plan shall be deleted in
its entirety and there shall be substituted in lieu thereof the
following:
14.1 Each Participant shall have the right to direct
the investments of his Elective Deferral Account and all Rollover
Accounts except the Old Pension Plan Rollover Account, provided
he does so under such terms, conditions, and administrative rules
as the Administrator shall from time to time determine. The
Administrator shall establish one or more separate and distinct
investment options from which the Participant shall choose.
THIRD: This Amendment shall be effective commencing
February 1, 1994, and for each year thereafter until further
amended.
FOURTH: In all other respects, said Plan is hereby
ratified, confirmed and approved.
The Employer has caused this Amendment to be executed
by its duly authorized officer and duly attested, and its
corporate seal to be hereunto affixed on the day and year first
above written.
BIG B, INC.
/s/ Arthur M Jones, Sr.,
President
ATTEST: (EMPLOYER)
/s/ James A.Bruno,
Secretary
(CORPORATE SEAL)
STATE OF ALABAMA
JEFFERSON COUNTY
SECOND AMENDMENT
BIG B, INC.
PROFIT SHARING 401(k) RETIREMENT PLAN
BIG B, INC., a corporation organized and existing under
the laws of the State of Alabama, (hereinafter called the
"Employer"), hereby adopts and publishes on this the _____ day of
_______________, 199__ this Amendment to the Big B, Inc. Profit
Sharing 401(k) Retirement Plan, as follows:
WHEREAS, said Plan was amended and restated on November
1, 1994 in order to comply with the requirements of the Tax
Reform Act of 1986; and
WHEREAS, said Plan provides that Employer reserves the
right at any time and from time to time, by action of its Board
to amend in whole or in part, any and all provisions of the Plan;
and
WHEREAS, Employer desires to amend said Plan in the
following respects; and
WHEREAS, by written unanimous consent of the Board of
Directors of the Corporation, said Board did specifically approve
and adopt by resolution the amendment hereinafter set forth;
NOW, THEREFORE, in consideration of the premises
hereinabove set forth, Employer hereby amends said Plan, as
follows:
FIRST: Section 3.64 shall be deleted in its entirety
and there shall be substituted in lieu thereof the following:
3.64 "Year of Service" shall mean each Eligibility
Computation Period during which an Employee has completed not
less than one thousand (1,000) Hours of Service with the Employer
or with employers of which all of the stock or substantially all
of the assets have been acquired by the Employer, provided the
acquisition is reflected on Exhibit A attached hereto.
SECOND: There shall be added to ARTICLE V the
following new section:
5.4 Leave of Absence. A Participant's employment is
not considered terminated for purposes of the Plan while he is on
leave of absence with the consent of the Employer, provided that
he returns to the employ of the Employer at the expiration of
such leave. Leaves of absence shall mean leaves granted by the
Employer, in accordance with established rules uniformly applied
to all Employees, for reasons of health or public service, for
reasons set forth under the Family and Medical Leave Act of 1993,
or for reasons determined by the Employer to be in its best
interests. The taking of leave under this Section 5.4 shall not
result in the loss of any benefit accrued under the Plan prior to
the date on which the leave commenced. A Participant's
employment shall also not be deemed to have terminated while he
is a member of the Armed Forces of the United States, provided
that he returns to the employment of the Employer within ninety
(90) days (or such longer period as may be prescribed by law)
from the date he first became entitled to his discharge.
Participants who do not return to the employ of the Employer
within sixty (60) days following the end of the leave of absence,
or within the required time in case of service with the Armed
Forces, shall be deemed to have terminated their employment as of
the date when their leaves of absence began, unless such failure
to return was the result of Normal Retirement, deferred
retirement, Disability or death. The provisions of this Section
shall be effective January 1, 1993.
THIRD: This Amendment shall be effective commencing
February 1, 1994, and for each year thereafter until further
amended.
FOURTH: In all other respects, said Plan is hereby
ratified, confirmed and approved.
The Employer has caused this Amendment to be executed
by its duly authorized officer and duly attested, and its
corporate seal to be hereunto affixed on the day and year first
above written.
BIG B, INC.
/s/ Arthur M Jones, Sr.,
President
ATTEST: (EMPLOYER)
/s/ James A.Bruno,
Secretary
(CORPORATE SEAL)
STATE OF ALABAMA)
)
JEFFERSON COUNTY)
1995 EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT made this 14th day of November, 1995, by and
between BIG B, INC., an Alabama corporation (the "Employer"), and
ARTHUR M. JONES, SR., of Birmingham, Alabama (the "Employee"), as
follows:
W I T N E S S E T H:
WHEREAS, the Employer is engaged in the business or owning
and operating drugstores throughout the Southeastern United
States, and its business operations are of such complexity and
magnitude as to require it to employ and retain executive
management of the highest possible caliber at all times; and
WHEREAS, the Employee now serves and has served as one of
its executive officers of the Employer, faithfully, loyally and
to the fullest extent of Employee's time and capabilities; and
WHEREAS, in consideration of the past services by the
Employee and the future services expected of Employee, the
Employer desires to provide to the Employee certain deferred
compensatory benefits to be available to Employee at the time of
retirement from the employment of the Employer or in the event of
disability prior to retirement, or to be available to Employee's
family in the event of Employee's death; and
WHEREAS, the Employer and the Employee desire to reduce to
writing the terms of the employment arrangement between them and
the terms the above-described deferred compensation arrangement;
NOW, THEREFORE, in consideration of the above and below
stated mutual premises, the parties hereto agree as follows:
1. Employment. The Employee shall continue in the
employ of the Employer, from year to year, unless and until said
employment is terminated by the Employer or the Employee on
thirty (30) days written notice by either to the other. The
annual compensation of the Employee shall be in such amounts as
shall be mutually agreed from year to year by and between the
Employer and the Employee, and shall include fixed annual salary
and any bonus granted to Employee by the Employer under the
Company's Bonus Compensation Program, whether paid in cash or
other consideration.
2. Retirement.
(a) Upon the Employee reaching the age of sixty-five
(65) years or satisfying the requirements of Section 2(b) hereof,
Employee may at anytime thereafter retire from the active and
daily service of the Employer by notifying the Employer of
Employee's intent to retire. Commencing at the later of the
Employee reaching the age of sixty-five (65) years or the date of
such retirement, the Employer shall: (i) if the Employee is 100%
vested in his or her retirement benefits as described in Section
2(b) hereof, pay to the Employee, each month, during the
succeeding one hundred twenty (120) months, an amount equal to
4.2% of the Employee's "Average Annual Compensation," as defined
in Paragraph 3 hereof, at the time of Employee's retirement (the
"Maximum Benefit") or (ii) if the Employee is less than 100%
vested in said retirement benefits under Section 2(b), pay to the
Employee, each month, during the succeeding 120 months, an amount
equal to the product of the Maximum Benefit multiplied by the
Vested Percentage, as defined in Section 2(b). The first payment
shall be made on the first business day of the first calendar
month following the month in which the Employee becomes eligible
to begin receiving payments hereunder. Each succeeding payment
thereafter shall be due and payable on the first business day of
each succeeding calendar month and shall continue as long as
Employee shall live and shall not be in violation of any of the
terms of this Agreement.
(b) The Employee may retire from the active and
daily service of the Employer by notifying the Employer of
Employee's intent to retire, at any time that the Employee has
been employed by Employer for at least sixty (60) months. If an
Employee, who is under age sixty-five (65) and who has been
employed by the Employer for less than three hundred (300)
months, elects to retire under this provision, Employee's "Vested
Percentage" for the purposes of this Agreement shall be
determined by dividing 300 into the number of months he has been
employed by Employer at the time he notified Employer of
Employee's intent to retire. An Employee who retires after he
reaches the age of 65 shall be deemed to be 100% vested in the
retirement benefits hereunder.
3. Average Annual Compensation. The "Average Annual
Compensation" of the Employee at the time of retirement shall be
deemed to be the average yearly "Total Compensation," as defined
below, received by the Employee from the Employer or any of its
wholly owned subsidiaries during the past three (3) fiscal years
of the Company prior to the year in which Employee's retirement
occurs, beginning with the fiscal year ending most recently prior
to the date of Employee's retirement and including the next two
(2) preceding years. The Total Compensation of an Employee shall
be an amount equal to annual base salary for such year and
Employee's earned bonus for the year under the Company's Bonus
Compensation Program (irrespective of whether the bonus for one
year is paid during the fiscal year or after the end of the
year).
4. Disability. In the event of the "disability", as
defined in Section 8 hereof, of the Employee while still in the
employ of the Employer (even if the Employee is not otherwise
eligible to retire at that time), the Employee shall, beginning
at the time of the Employee's disability, be entitled to receive
the payments described in Section 2 from the Employer. The date
of such disability shall be deemed to be the date at which
retirement occurs for the purposes of computing the amount of
such payments under Section 2 and the time at which payments are
to commence under the last sentence of Section 2 (a).
5. Payments in the Event of Death.
(a) In the event the Employee dies, while still in
the employ of the Employer, prior to retirement or disability
(even if the Employee is not otherwise eligible to retire at that
time), the spouse (if the Employee is married at the time of
death) or heirs of the Employee (if the Employee is not married
at the time of Employee's death) shall, beginning at the time of
the Employee's death, be entitled to receive the payments
described in Section 2 above in accordance with the priorities of
section (c) of this Section 5. The date of such death shall be
deemed to be the time at which retirement occurs for the purposes
of computing the amount of payments due under Section 2 and the
time at which payments are to commence under the last sentence of
Section 2(a).
(b) In the event the Employee, after retirement
from the Employer or after the date of disability, and while then
receiving payments under Section 2 hereof, should die, prior to
having received all payments due the Employee under Section 2,
the Employer shall make any remaining payments due under Section
2 to the spouse (if the Employee is married at the time of death)
or personal representatives of the deceased Employee (if the
Employee is not married at the time of death) in accordance with
the priorities of subsection (c) of this Section 5.
(c) Any payments due to the spouse or heirs of a
deceased Employee under subsections (a) or (b) of this Section 5
shall be paid in the following manner and in the following
priority as set forth in this subsection (c). If the Employee is
married at the time of the Employee's death, all payments shall
be made to the Employee's spouse, as due, for so long as said
spouse continues to live. If the Employee is not married at the
time of death, any said remaining payments shall be paid to the
heirs of Employee, as that term is defined in Section 6 hereof.
If the Employee's spouse becomes entitled to receive payments
under this provision but dies prior to having received all
payments due, any remaining payments due at the time of said
spouse's death shall be paid to the heirs of the Employee, as
that term is defined in Section 6 hereof. Under no circumstances
shall the Employer be required to make more than 120 monthly
payments in the aggregate to the Employee, the spouse of
Employee, or the Employee's heirs under this Agreement.
6. Definition of Heirs of Employee. The term "heirs" of
the employee, as used in Section 5(c), above, shall mean those
persons entitled to inherit the assets of the Employee under the
laws of intestacy of the State of Alabama if the Employee had
died intestate and had not been survived by any spouse.
7. Health Insurance Plan. The Employee (and the spouse
of Employee after the Employee's death) shall be entitled to
continued participation in the Company's health insurance plan
(if Employee was participating at the time of the Employee's
retirement, disability or death) during the remainder of his life
and her life, after Employee's retirement under Sections 2, 4 or
5 hereof. The portion of the premium for the insurance coverage
to be paid by the Employer shall be based on the percentage of
the premium being paid by Employer at the time of Employee's
retirement, disability or death, multiplied by the Employee's
Vested Percentage. The Employee shall pay the balance of the
premium cost. If Employer is self-insured, premium cost shall be
based on COBRA rates applicable.
8. Definition of Disability. "Disability" shall, for
the purposes of this Agreement, mean such total, permanent
disability as will prevent and prohibit the Employee from
continuing to perform substantially all of the duties as were
being performed by Employee prior to becoming disabled and which
has at that date continued uninterrupted for a period of six (6)
continuous months. In the event there shall be any dispute or
disagreement as to whether the disability of the Employee has
occurred, such a matter shall be determined by the Board of
Directors of the Employer in its sole discretion which
determination shall be conclusive and binding upon the Employee.
9. Employment Continuity Agreement. The occurrence of
any event which entitles the Employee to receive compensation
under Section 3 of the Employment Continuity Agreement between
the Employer and the Employee shall be deemed to be a
"retirement" of the Employee at the date he becomes so entitled,
entitling him to the compensation provided under Section 2 of
this Agreement and the other rights and benefits provided under
this Agreement. In the event the Employee becomes entitled to
receive the benefits under this Agreement pursuant to this
Section 9, the Employee shall have the right to elect to receive
Employee's benefits under Section 2 hereof in one lump sum
payment in an amount equal to the present value of his future
payment hereunder, computed using an interest rate of seven
percent (7%) per annum. The election to receive said lump sum
payment shall be made by written notice from Employee to
Employer, given within sixty (60) days of the occurrence of the
event giving rise to Employee's right to receive compensation
under Section 3 of the Employee's Employment Continuity
Agreement, and shall, once made, be binding on Employee, the
Employee's spouse and heirs, as herein defined, at all times
thereafter. Said lump-sum payment shall be made by Employer to
Employee within ten (10) days after receipt by Employer of the
written notice from Employee given pursuant to the preceding
sentence.
10. Exclusivity of Services. The Employee expressly
agrees, as a condition of this Agreement, that during the term of
this Agreement and of any renewal hereof, and during the further
period for which monthly payments to the Employee are provided
herein upon his retirement, Employee will not, directly or
indirectly, render any services of an advisory nature or
otherwise to, or become employed by, or participate or engage in,
directly or indirectly, any business competitive with the
business of the Employer without the prior written consent of the
Employer, which written consent may be withheld without cause;
provided, however, in the event the Employee's retirement is
deemed to have occurred pursuant to Section 9 hereof, the
Employee shall not be restricted after said retirement by the
provisions of this Section 10. However, nothing herein shall
prohibit the Employee from owning stock or other securities of a
competitor which are relatively insubstantial to the total
outstanding stock of such competitor (i.e. less than 2%), and so
long as Employee, in fact, does not have the power to control or
direct the management or policies of such competitor, and does
not serve as a director or officer of, and is not otherwise
associated with, any competitor except as consented to by the
Employer.
11. Personal Agreement. The Employee hereby agrees on
behalf of Employee, and of Employee's executors and
administrators, heirs, legatees, distributes, and any other
person or persons, claiming any benefits under him by virtue of
this Agreement, that this Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee or any executor,
administrator, heir, legatee, distributee or other person
claiming under the Employee by virtue of this Agreement and shall
not be subject to execution, attachment, or a similar process.
Any attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Agreement or of such rights, interests
and benefits contrary to the foregoing provisions, or the levy of
any attachment or a similar process thereupon, shall be null and
void and without effect.
12. Successors Bound. This Agreement shall be binding
upon and inure to the benefit of any successor of the Employer
and any such successor shall be deemed substituted for the
Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
13. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama. Any disputes by
the parties hereto concerning this Agreement shall be settled in
accordance with the Rules of the American Arbitration
Association, which determination shall be binding upon the
parties conclusively.
14. Amendment and Waiver. The Agreement may be amended
only in writing, by the parties hereto, and no condition or
provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
15. Funding. This Agreement shall not be construed to
create or require the Company to create a trust or to otherwise
act to fund the amounts payable hereunder.
16. Arbitration. In recognition of the mutual benefits
of arbitration, the parties hereby agree that arbitration as
provided for herein shall be the exclusive remedy for resolving
any claim or dispute arising under this Agreement, and hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and any
related judicial proceeding, shall be initiated and shall proceed
pursuant to the then prevailing rules of the American Arbitration
Association (the "Association") for labor and employment
contracts. To initiate arbitration hereunder demand shall be
given in writing to the Association and the other party no later
than one year after the claim arises. Any claim for which such
demand is not made within one year after the claim arises shall
be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall be
before a single arbitrator, and an award in such arbitration may
include only damages which the arbitrator determines to be due
under express provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including without
limitation, consequential and exemplary damages. Any award in
arbitration shall be subject to enforcement and appeal pursuant
to the Act.
17. Legal Fees. In the event it becomes necessary for
either party to file a lawsuit for the purpose of enforcing the
terms of this Agreement, the cost of litigation, including,
without limitation, reasonable attorneys' fees, of the party
prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Replaces Prior Agreements. This Agreement shall
replace and supersede the Employment and Deferred Compensation
Agreement heretofore entered into between the Employee and the
Employer and shall be deemed a successor thereof.
IN WITNESS WHEREOF, the parties have hereunto executed this
Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
STATE OF ALABAMA)
JEFFERSON COUNTY)
1995 EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT made this 14th day of November, 1995, by and
between BIG B, INC., an Alabama corporation (the "Employer"), and
ARTHUR M. JONES, SR., of Birmingham, Alabama (the "Employee"), as
follows:
W I T N E S S E T H:
WHEREAS, the Employer is engaged in the business or owning
and operating drugstores throughout the Southeastern United
States, and its business operations are of such complexity and
magnitude as to require it to employ and retain executive
management of the highest possible caliber at all times; and
WHEREAS, the Employee now serves and has served as one of
its executive officers of the Employer, faithfully, loyally and
to the fullest extent of Employee's time and capabilities; and
WHEREAS, in consideration of the past services by the
Employee and the future services expected of Employee, the
Employer desires to provide to the Employee certain deferred
compensatory benefits to be available to Employee at the time of
retirement from the employment of the Employer or in the event of
disability prior to retirement, or to be available to Employee's
family in the event of Employee's death; and
WHEREAS, the Employer and the Employee desire to reduce to
writing the terms of the employment arrangement between them and
the terms the above-described deferred compensation arrangement;
NOW, THEREFORE, in consideration of the above and below
stated mutual premises, the parties hereto agree as follows:
1. Employment. The Employee shall continue in the
employ of the Employer, from year to year, unless and until said
employment is terminated by the Employer or the Employee on
thirty (30) days written notice by either to the other. The
annual compensation of the Employee shall be in such amounts as
shall be mutually agreed from year to year by and between the
Employer and the Employee, and shall include fixed annual salary
and any bonus granted to Employee by the Employer under the
Company's Bonus Compensation Program, whether paid in cash or
other consideration.
(a) Upon the Employee reaching the age of sixty-five
(65) years or satisfying the requirements of Section 2(b) hereof,
Employee may at anytime thereafter retire from the active and
daily service of the Employer by notifying the Employer of
Employee's intent to retire. Commencing at the later of the
Employee reaching the age of sixty-five (65) years or the date of
such retirement, the Employer shall: (i) if the Employee is 100%
vested in his or her retirement benefits as described in Section
2(b) hereof, pay to the Employee, each month, during the
succeeding one hundred twenty (120) months, an amount equal to
4.2% of the Employee's "Average Annual Compensation," as defined
in Paragraph 3 hereof, at the time of Employee's retirement (the
"Maximum Benefit") or (ii) if the Employee is less than 100%
vested in said retirement benefits under Section 2(b), pay to the
Employee, each month, during the succeeding 120 months, an amount
equal to the product of the Maximum Benefit multiplied by the
Vested Percentage, as defined in Section 2(b). The first payment
shall be made on the first business day of the first calendar
month following the month in which the Employee becomes eligible
to begin receiving payments hereunder. Each succeeding payment
thereafter shall be due and payable on the first business day of
each succeeding calendar month and shall continue as long as
Employee shall live and shall not be in violation of any of the
terms of this Agreement.
(b) The Employee may retire from the active and
daily service of the Employer by notifying the Employer of
Employee's intent to retire, at any time that the Employee has
been employed by Employer for at least sixty (60) months. If an
Employee, who is under age sixty-five (65) and who has been
employed by the Employer for less than three hundred (300)
months, elects to retire under this provision, Employee's "Vested
Percentage" for the purposes of this Agreement shall be
determined by dividing 300 into the number of months he has been
employed by Employer at the time he notified Employer of
Employee's intent to retire. An Employee who retires after he
reaches the age of 65 shall be deemed to be 100% vested in the
retirement benefits hereunder.
3. Average Annual Compensation. The "Average Annual
Compensation" of the Employee at the time of retirement shall be
deemed to be the average yearly "Total Compensation," as defined
below, received by the Employee from the Employer or any of its
wholly owned subsidiaries during the past three (3) fiscal years
of the Company prior to the year in which Employee's retirement
occurs, beginning with the fiscal year ending most recently prior
to the date of Employee's retirement and including the next two
(2) preceding years. The Total Compensation of an Employee shall
be an amount equal to annual base salary for such year and
Employee's earned bonus for the year under the Company's Bonus
Compensation Program (irrespective of whether the bonus for one
year is paid during the fiscal year or after the end of the year).
4. Disability. In the event of the "disability", as
defined in Section 8 hereof, of the Employee while still in the
employ of the Employer (even if the Employee is not otherwise
eligible to retire at that time), the Employee shall, beginning
at the time of the Employee's disability, be entitled to receive
the payments described in Section 2 from the Employer. The date
of such disability shall be deemed to be the date at which
retirement occurs for the purposes of computing the amount of
such payments under Section 2 and the time at which payments are
to commence under the last sentence of Section 2 (a).
5. Payments in the Event of Death.
(a) In the event the Employee dies, while still in
the employ of the Employer, prior to retirement or disability
(even if the Employee is not otherwise eligible to retire at that
time), the spouse (if the Employee is married at the time of
death) or heirs of the Employee (if the Employee is not married
at the time of Employee's death) shall, beginning at the time of
the Employee's death, be entitled to receive the payments
described in Section 2 above in accordance with the priorities of
section (c) of this Section 5. The date of such death shall be
deemed to be the time at which retirement occurs for the purposes
of computing the amount of payments due under Section 2 and the
time at which payments are to commence under the last sentence of
Section 2(a).
(b) In the event the Employee, after retirement
from the Employer or after the date of disability, and while then
receiving payments under Section 2 hereof, should die, prior to
having received all payments due the Employee under Section 2,
the Employer shall make any remaining payments due under Section
2 to the spouse (if the Employee is married at the time of death)
or personal representatives of the deceased Employee (if the
Employee is not married at the time of death) in accordance with
the priorities of subsection (c) of this Section 5.
(c) Any payments due to the spouse or heirs of a
deceased Employee under subsections (a) or (b) of this Section 5
shall be paid in the following manner and in the following
priority as set forth in this subsection (c). If the Employee is
married at the time of the Employee's death, all payments shall
be made to the Employee's spouse, as due, for so long as said
spouse continues to live. If the Employee is not married at the
time of death, any said remaining payments shall be paid to the
heirs of Employee, as that term is defined in Section 6 hereof.
If the Employee's spouse becomes entitled to receive payments
under this provision but dies prior to having received all
payments due, any remaining payments due at the time of said
spouse's death shall be paid to the heirs of the Employee, as
that term is defined in Section 6 hereof. Under no circumstances
shall the Employer be required to make more than 120 monthly payments
in the aggregate to the Employee, or the Employee's heirs
under this Agreement.
6. Definition of Heirs of Employee. The term "heirs" of
the employee, as used in Section 5(c), above, shall mean those
persons entitled to inherit the assets of the Employee under the
laws of intestacy of the State of Alabama if the Employee had
died intestate and had not been survived by any spouse.
7. Health Insurance Plan. The Employee (and the spouse
of Employee after the Employee's death) shall be entitled to
continued participation in the Company's health insurance plan
(if Employee was participating at the time of the Employee's
retirement, disability or death) during the remainder of his life
and her life, after Employee's retirement under Sections 2, 4 or
5 hereof. The portion of the premium for the insurance coverage
to be paid by the Employer shall be based on the percentage of
the premium being paid by Employer at the time of Employee's
retirement, disability or death, multiplied by the Employee's
Vested Percentage. The Employee shall pay the balance of the
premium cost. If Employer is self-insured, premium cost shall be
based on COBRA rates applicable.
8. Definition of Disability. "Disability" shall, for
the purposes of this Agreement, mean such total, permanent
disability as will prevent and prohibit the Employee from
continuing to perform substantially all of the duties as were
being performed by Employee prior to becoming disabled and which
has at that date continued uninterrupted for a period of six (6)
continuous months. In the event there shall be any dispute or
disagreement as to whether the disability of the Employee has
occurred, such a matter shall be determined by the Board of
Directors of the Employer in its sole discretion which
determination shall be conclusive and binding upon the Employee.
9. Employment Continuity Agreement. The occurrence of
any event which entitles the Employee to receive compensation
under Section 3 of the Employment Continuity Agreement between
the Employer and the Employee shall be deemed to be a
"retirement" of the Employee at the date he becomes so entitled,
entitling him to the compensation provided under Section 2 of
this Agreement and the other rights and benefits provided under
this Agreement. In the event the Employee becomes entitled to
receive the benefits under this Agreement pursuant to this
Section 9, the Employee shall have the right to elect to receive
Employee's benefits under Section 2 hereof in one lump sum
payment in an amount equal to the present value of his future
payment hereunder, computed using an interest rate of seven
percent (7%) per annum. The election to receive said lump sum
payment shall be made by written notice from Employee to
Employer, given within sixty (60) days of the occurrence of the
event giving rise to Employee's right to receive compensation
under Section 3 of the Employee's Employment Continuity
Agreement, and shall, once made, be binding on Employee, the Employee's
spouse and heirs, as herein defined, at all times thereafter.
Said lump-sum payment shall be made by Employer to
Employee within ten (10) days after receipt by Employer of the
written notice from Employee given pursuant to the preceding
sentence.
10. Exclusivity of Services. The Employee expressly
agrees, as a condition of this Agreement, that during the term of
this Agreement and of any renewal hereof, and during the further
period for which monthly payments to the Employee are provided
herein upon his retirement, Employee will not, directly or
indirectly, render any services of an advisory nature or
otherwise to, or become employed by, or participate or engage in,
directly or indirectly, any business competitive with the
business of the Employer without the prior written consent of the
Employer, which written consent may be withheld without cause;
provided, however, in the event the Employee's retirement is
deemed to have occurred pursuant to Section 9 hereof, the
Employee shall not be restricted after said retirement by the
provisions of this Section 10. However, nothing herein shall
prohibit the Employee from owning stock or other securities of a
competitor which are relatively insubstantial to the total
outstanding stock of such competitor (i.e. less than 2%), and so
long as Employee, in fact, does not have the power to control or
direct the management or policies of such competitor, and does
not serve as a director or officer of, and is not otherwise
associated with, any competitor except as consented to by the
Employer.
11. Personal Agreement. The Employee hereby agrees on
behalf of Employee, and of Employee's executors and
administrators, heirs, legatees, distributes, and any other
person or persons, claiming any benefits under him by virtue of
this Agreement, that this Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee or any executor,
administrator, heir, legatee, distributee or other person
claiming under the Employee by virtue of this Agreement and shall
not be subject to execution, attachment, or a similar process.
Any attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Agreement or of such rights, interests
and benefits contrary to the foregoing provisions, or the levy of
any attachment or a similar process thereupon, shall be null and
void and without effect.
12. Successors Bound. This Agreement shall be binding
upon and inure to the benefit of any successor of the Employer
and any such successor shall be deemed substituted for the
Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
13. Alabama Law. This Agreement shall be construed according
to the laws of the State of Alabama. Any disputes by
the parties hereto concerning this Agreement shall be settled in
accordance with the Rules of the American Arbitration
Association, which determination shall be binding upon the
parties conclusively.
14. Amendment and Waiver. The Agreement may be amended
only in writing, by the parties hereto, and no condition or
provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
15. Funding. This Agreement shall not be construed to
create or require the Company to create a trust or to otherwise
act to fund the amounts payable hereunder.
16. Arbitration. In recognition of the mutual benefits
of arbitration, the parties hereby agree that arbitration as
provided for herein shall be the exclusive remedy for resolving
any claim or dispute arising under this Agreement, and hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and any
related judicial proceeding, shall be initiated and shall proceed
pursuant to the then prevailing rules of the American Arbitration
Association (the "Association") for labor and employment
contracts. To initiate arbitration hereunder demand shall be
given in writing to the Association and the other party no later
than one year after the claim arises. Any claim for which such
demand is not made within one year after the claim arises shall
be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall be
before a single arbitrator, and an award in such arbitration may
include only damages which the arbitrator determines to be due
under express provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including without
limitation, consequential and exemplary damages. Any award in
arbitration shall be subject to enforcement and appeal pursuant
to the Act.
17. Legal Fees. In the event it becomes necessary for
either party to file a lawsuit for the purpose of enforcing the
terms of this Agreement, the cost of litigation, including,
without limitation, reasonable attorneys' fees, of the party
prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Replaces Prior Agreements. This Agreement shall replace
and supersede the Employment and Deferred Compensation
Agreement heretofore entered into between the Employee and the
Employer and shall be deemed a successor thereof.
IN WITNESS WHEREOF, the parties have hereunto executed this
Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
STATE OF ALABAMA )
)
JEFFERSON COUNTY )
1995 EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT made this 14th day of November, 1995, by
and between BIG B, INC., an Alabama corporation (the "Employer"),
and VINCENT J. BRUNO of Birmingham, Alabama (the "Employee"), as
follows:
W I T N E S S E T H:
WHEREAS, the Employer is engaged in the business or
owning and operating drugstores throughout the Southeastern
United States, and its business operations are of such complexity
and magnitude as to require it to employ and retain executive
management of the highest possible caliber at all times; and
WHEREAS, the Employee now serves and has served as one
of its executive officers of the Employer, faithfully, loyally
and to the fullest extent of Employee's time and capabilities;
and
WHEREAS, in consideration of the past services by the
Employee and the future services expected of Employee, the
Employer desires to provide to the Employee certain deferred
compensatory benefits to be available to Employee at the time of
retirement from the employment of the Employer or in the event of
disability prior to retirement, or to be available to Employee's
family in the event of Employee's death; and
WHEREAS, the Employer and the Employee desire to reduce
to writing the terms of the employment arrangement between them
and the terms the above-described deferred compensation
arrangement;
NOW, THEREFORE, in consideration of the above and below
stated mutual premises, the parties hereto agree as follows:
1. Employment. The Employee shall continue in the
employ of the Employer, from year to year, unless and until said
employment is terminated by the Employer or the Employee on
thirty (30) days written notice by either to the other. The
annual compensation of the Employee shall be in such amounts as
shall be mutually agreed from year to year by and between the
Employer and the Employee, and shall include fixed annual salary
and any bonus granted to Employee by the Employer under the
Company's Bonus Compensation Program, whether paid in cash or
other consideration.
2. Retirement.
(a) Upon the Employee reaching the age of
sixty-five (65) years or satisfying the requirements of Section
2(b) hereof, Employee may at anytime thereafter retire from the
active and daily service of the Employer by notifying the
Employer of Employee's intent to retire. Commencing at the later
of the Employee reaching the age of sixty-five (65) years or the
date of such retirement, the Employer shall: (i) if the Employee
is 100% vested in his or her retirement benefits as described in
Section 2(b) hereof, pay to the Employee, each month, during the
succeeding one hundred twenty (120) months, an amount equal to
4.2% of the Employee's "Average Annual Compensation," as defined
in Paragraph 3 hereof, at the time of Employee's retirement (the
"Maximum Benefit") or (ii) if the Employee is less than 100%
vested in said retirement benefits under Section 2(b), pay to the
Employee, each month, during the succeeding 120 months, an amount
equal to the product of the Maximum Benefit multiplied by the
Vested Percentage, as defined in Section 2(b). The first payment
shall be made on the first business day of the first calendar
month following the month in which the Employee becomes eligible
to begin receiving payments hereunder. Each succeeding payment
thereafter shall be due and payable on the first business day of
each succeeding calendar month and shall continue as long as
Employee shall live and shall not be in violation of any of the
terms of this Agreement.
(b) The Employee may retire from the active
and daily service of the Employer by notifying the Employer of
Employee's intent to retire, at any time that the Employee has
been employed by Employer for at least sixty (60) months. If an
Employee, who is under age sixty-five (65) and who has been
employed by the Employer for less than three hundred (300)
months, elects to retire under this provision, Employee's "Vested
Percentage" for the purposes of this Agreement shall be
determined by dividing 300 into the number of months he has been
employed by Employer at the time he notified Employer of
Employee's intent to retire. An Employee who retires after he
reaches the age of 65 shall be deemed to be 100% vested in the
retirement benefits hereunder.
3. Average Annual Compensation. The "Average Annual
Compensation" of the Employee at the time of retirement shall be
deemed to be the average yearly "Total Compensation," as defined
below, received by the Employee from the Employer or any of its
wholly owned subsidiaries during the past three (3) fiscal years
of the Company prior to the year in which Employee's retirement
occurs, beginning with the fiscal year ending most recently prior
to the date of Employee's retirement and including the next two
(2) preceding years. The Total Compensation of an Employee shall
be an amount equal to annual base salary for such year and
Employee's earned bonus for the year under the Company's Bonus
Compensation Program (irrespective of whether the bonus for one
year is paid during the fiscal year or after the end of the
year).
4. Disability. In the event of the "disability", as
defined in Section 8 hereof, of the Employee while still in the
employ of the Employer (even if the Employee is not otherwise
eligible to retire at that time), the Employee shall, beginning
at the time of the Employee's disability, be entitled to receive
the payments described in Section 2 from the Employer. The date
of such disability shall be deemed to be the date at which
retirement occurs for the purposes of computing the amount of
such payments under Section 2 and the time at which payments are
to commence under the last sentence of Section 2 (a).
5. Payments in the Event of Death.
(a) In the event the Employee dies, while still in
the employ of the Employer, prior to retirement or disability
(even if the Employee is not otherwise eligible to retire at that
time), the spouse (if the Employee is married at the time of
death) or heirs of the Employee (if the Employee is not married
at the time of Employee's death) shall, beginning at the time of
the Employee's death, be entitled to receive the payments
described in Section 2 above in accordance with the priorities of
section (c) of this Section 5. The date of such death shall be
deemed to be the time at which retirement occurs for the purposes
of computing the amount of payments due under Section 2 and the
time at which payments are to commence under the last sentence of
Section 2(a).
(b) In the event the Employee, after retirement
from the Employer or after the date of disability, and while then
receiving payments under Section 2 hereof, should die, prior to
having received all payments due the Employee under Section 2,
the Employer shall make any remaining payments due under Section
2 to the spouse (if the Employee is married at the time of death)
or personal representatives of the deceased Employee (if the
Employee is not married at the time of death) in accordance with
the priorities of subsection (c) of this Section 5.
(c) Any payments due to the spouse or heirs of a
deceased Employee under subsections (a) or (b) of this Section 5
shall be paid in the following manner and in the following
priority as set forth in this subsection (c). If the Employee is
married at the time of the Employee's death, all payments shall
be made to the Employee's spouse, as due, for so long as said
spouse continues to live. If the Employee is not married at the
time of death, any said remaining payments shall be paid to the
heirs of Employee, as that term is defined in Section 6 hereof.
If the Employee's spouse becomes entitled to receive payments
under this provision but dies prior to having received all
payments due, any remaining payments due at the time of said
spouse's death shall be paid to the heirs of the Employee, as
that term is defined in Section 6 hereof. Under no circumstances
shall the Employer be required to make more than 120 monthly
payments in the aggregate to the Employee, the spouse of
Employee, or the Employee's heirs under this Agreement.
6. Definition of Heirs of Employee. The term "heirs" of
the employee, as used in Section 5(c), above, shall mean those
persons entitled to inherit the assets of the Employee under the
laws of intestacy of the State of Alabama if the Employee had
died intestate and had not been survived by any spouse.
7. Health Insurance Plan. The Employee (and the spouse
of Employee after the Employee's death) shall be entitled to
continued participation in the Company's health insurance plan
(if Employee was participating at the time of the Employee's
retirement, disability or death) during the remainder of his life
and her life, after Employee's retirement under Sections 2, 4 or
5 hereof. The portion of the premium for the insurance coverage
to be paid by the Employer shall be based on the percentage of
the premium being paid by Employer at the time of Employee's
retirement, disability or death, multiplied by the Employee's
Vested Percentage. The Employee shall pay the balance of the
premium cost. If Employer is self-insured, premium cost shall be
based on COBRA rates applicable.
8. Definition of Disability. "Disability" shall, for
the purposes of this Agreement, mean such total, permanent
disability as will prevent and prohibit the Employee from
continuing to perform substantially all of the duties as were
being performed by Employee prior to becoming disabled and which
has at that date continued uninterrupted for a period of six (6)
continuous months. In the event there shall be any dispute or
disagreement as to whether the disability of the Employee has
occurred, such a matter shall be determined by the Board of
Directors of the Employer in its sole discretion which
determination shall be conclusive and binding upon the Employee.
9. Employment Continuity Agreement. The occurrence of
any event which entitles the Employee to receive compensation
under Section 3 of the Employment Continuity Agreement between
the Employer and the Employee shall be deemed to be a
"retirement" of the Employee at the date he becomes so entitled,
entitling him to the compensation provided under Section 2 of
this Agreement and the other rights and benefits provided under
this Agreement. In the event the Employee becomes entitled to
receive the benefits under this Agreement pursuant to this
Section 9, the Employee shall have the right to elect to receive
Employee's benefits under Section 2 hereof in one lump sum
payment in an amount equal to the present value of his future
payment hereunder, computed using an interest rate of seven
percent (7%) per annum. The election to receive said lump sum
payment shall be made by written notice from Employee to
Employer, given within sixty (60) days of the occurrence of the
event giving rise to Employee's right to receive compensation
under Section 3 of the Employee's Employment Continuity
Agreement, and shall, once made, be binding on Employee, the
Employee's spouse and heirs, as herein defined, at all times
thereafter. Said lump-sum payment shall be made by Employer to
Employee within ten (10) days after receipt by Employer of the
written notice from Employee given pursuant to the preceding
sentence.
10. Exclusivity of Services. The Employee expressly
agrees, as a condition of this Agreement, that during the term of
this Agreement and of any renewal hereof, and during the further
period for which monthly payments to the Employee are provided
herein upon his retirement, Employee will not, directly or
indirectly, render any services of an advisory nature or
otherwise to, or become employed by, or participate or engage in,
directly or indirectly, any business competitive with the
business of the Employer without the prior written consent of the
Employer, which written consent may be withheld without cause;
provided, however, in the event the Employee's retirement is
deemed to have occurred pursuant to Section 9 hereof, the
Employee shall not be restricted after said retirement by the
provisions of this Section 10. However, nothing herein shall
prohibit the Employee from owning stock or other securities of a
competitor which are relatively insubstantial to the total
outstanding stock of such competitor (i.e. less than 2%), and so
long as Employee, in fact, does not have the power to control or
direct the management or policies of such competitor, and does
not serve as a director or officer of, and is not otherwise
associated with, any competitor except as consented to by the
Employer.
11. Personal Agreement. The Employee hereby agrees on
behalf of Employee, and of Employee's executors and
administrators, heirs, legatees, distributes, and any other
person or persons, claiming any benefits under him by virtue of
this Agreement, that this Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee or any executor,
administrator, heir, legatee, distributee or other person
claiming under the Employee by virtue of this Agreement and shall
not be subject to execution, attachment, or a similar process.
Any attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Agreement or of such rights, interests
and benefits contrary to the foregoing provisions, or the levy of
any attachment or a similar process thereupon, shall be null and
void and without effect.
12. Successors Bound. This Agreement shall be binding
upon and inure to the benefit of any successor of the Employer
and any such successor shall be deemed substituted for the
Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
13. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama. Any disputes by
the parties hereto concerning this Agreement shall be settled in
accordance with the Rules of the American Arbitration
Association, which determination shall be binding upon the
parties conclusively.
14. Amendment and Waiver. The Agreement may be amended
only in writing, by the parties hereto, and no condition or
provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
15. Funding. This Agreement shall not be construed to
create or require the Company to create a trust or to otherwise
act to fund the amounts payable hereunder.
16. Arbitration. In recognition of the mutual benefits
of arbitration, the parties hereby agree that arbitration as
provided for herein shall be the exclusive remedy for resolving
any claim or dispute arising under this Agreement, and hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and any
related judicial proceeding, shall be initiated and shall proceed
pursuant to the then prevailing rules of the American Arbitration
Association (the "Association") for labor and employment
contracts. To initiate arbitration hereunder demand shall be
given in writing to the Association and the other party no later
than one year after the claim arises. Any claim for which such
demand is not made within one year after the claim arises shall
be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall be
before a single arbitrator, and an award in such arbitration may
include only damages which the arbitrator determines to be due
under express provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including without
limitation, consequential and exemplary damages. Any award in
arbitration shall be subject to enforcement and appeal pursuant
to the Act.
17. Legal Fees. In the event it becomes necessary for
either party to file a lawsuit for the purpose of enforcing the
terms of this Agreement, the cost of litigation, including,
without limitation, reasonable attorneys' fees, of the party
prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Replaces Prior Agreements. This Agreement shall
replace and supersede the Employment and Deferred Compensation
Agreement heretofore entered into between the Employee and the
Employer and shall be deemed a successor thereof.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
STATE OF ALABAMA )
)
JEFFERSON COUNTY )
1995 EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT made this 14th day of November, 1995, by
and between BIG B, INC., an Alabama corporation (the "Employer"),
and BOBBY W. LITTLE of Birmingham, Alabama (the "Employee"), as
follows:
W I T N E S S E T H:
WHEREAS, the Employer is engaged in the business or
owning and operating drugstores throughout the Southeastern
United States, and its business operations are of such complexity
and magnitude as to require it to employ and retain executive
management of the highest possible caliber at all times; and
WHEREAS, the Employee now serves and has served as one
of its executive officers of the Employer, faithfully, loyally
and to the fullest extent of Employee's time and capabilities;
and
WHEREAS, in consideration of the past services by the
Employee and the future services expected of Employee, the
Employer desires to provide to the Employee certain deferred
compensatory benefits to be available to Employee at the time of
retirement from the employment of the Employer or in the event of
disability prior to retirement, or to be available to Employee's
family in the event of Employee's death; and
WHEREAS, the Employer and the Employee desire to reduce
to writing the terms of the employment arrangement between them
and the terms the above-described deferred compensation
arrangement;
NOW, THEREFORE, in consideration of the above and below
stated mutual premises, the parties hereto agree as follows:
1. Employment. The Employee shall continue in the
employ of the Employer, from year to year, unless and until said
employment is terminated by the Employer or the Employee on
thirty (30) days written notice by either to the other. The
annual compensation of the Employee shall be in such amounts as
shall be mutually agreed from year to year by and between the
Employer and the Employee, and shall include fixed annual salary
and any bonus granted to Employee by the Employer under the
Company's Bonus Compensation Program, whether paid in cash or
other consideration.
2. Retirement.
(a) Upon the Employee reaching the age of
sixty-five (65) years or satisfying the requirements of Section
2(b) hereof, Employee may at anytime thereafter retire from the
active and daily service of the Employer by notifying the
Employer of Employee's intent to retire. Commencing at the later
of the Employee reaching the age of sixty-five (65) years or the
date of such retirement, the Employer shall: (i) if the Employee
is 100% vested in his or her retirement benefits as described in
Section 2(b) hereof, pay to the Employee, each month, during the
succeeding one hundred twenty (120) months, an amount equal to
4.2% of the Employee's "Average Annual Compensation," as defined
in Paragraph 3 hereof, at the time of Employee's retirement (the
"Maximum Benefit") or (ii) if the Employee is less than 100%
vested in said retirement benefits under Section 2(b), pay to the
Employee, each month, during the succeeding 120 months, an amount
equal to the product of the Maximum Benefit multiplied by the
Vested Percentage, as defined in Section 2(b). The first payment
shall be made on the first business day of the first calendar
month following the month in which the Employee becomes eligible
to begin receiving payments hereunder. Each succeeding payment
thereafter shall be due and payable on the first business day of
each succeeding calendar month and shall continue as long as
Employee shall live and shall not be in violation of any of the
terms of this Agreement.
(b) The Employee may retire from the active
and daily service of the Employer by notifying the Employer of
Employee's intent to retire, at any time that the Employee has
been employed by Employer for at least sixty (60) months. If an
Employee, who is under age sixty-five (65) and who has been
employed by the Employer for less than three hundred (300)
months, elects to retire under this provision, Employee's "Vested
Percentage" for the purposes of this Agreement shall be
determined by dividing 300 into the number of months he has been
employed by Employer at the time he notified Employer of
Employee's intent to retire. An Employee who retires after he
reaches the age of 65 shall be deemed to be 100% vested in the
retirement benefits hereunder.
3. Average Annual Compensation. The "Average Annual
Compensation" of the Employee at the time of retirement shall be
deemed to be the average yearly "Total Compensation," as defined
below, received by the Employee from the Employer or any of its
wholly owned subsidiaries during the past three (3) fiscal years
of the Company prior to the year in which Employee's retirement
occurs, beginning with the fiscal year ending most recently prior
to the date of Employee's retirement and including the next two
(2) preceding years. The Total Compensation of an Employee shall
be an amount equal to annual base salary for such year and
Employee's earned bonus for the year under the Company's Bonus
Compensation Program (irrespective of whether the bonus for one
year is paid during the fiscal year or after the end of the
year).
4. Disability. In the event of the "disability", as
defined in Section 8 hereof, of the Employee while still in the
employ of the Employer (even if the Employee is not otherwise
eligible to retire at that time), the Employee shall, beginning
at the time of the Employee's disability, be entitled to receive
the payments described in Section 2 from the Employer. The date
of such disability shall be deemed to be the date at which
retirement occurs for the purposes of computing the amount of
such payments under Section 2 and the time at which payments are
to commence under the last sentence of Section 2 (a).
5. Payments in the Event of Death.
(a) In the event the Employee dies, while still in
the employ of the Employer, prior to retirement or disability
(even if the Employee is not otherwise eligible to retire at that
time), the spouse (if the Employee is married at the time of
death) or heirs of the Employee (if the Employee is not married
at the time of Employee's death) shall, beginning at the time of
the Employee's death, be entitled to receive the payments
described in Section 2 above in accordance with the priorities of
section (c) of this Section 5. The date of such death shall be
deemed to be the time at which retirement occurs for the purposes
of computing the amount of payments due under Section 2 and the
time at which payments are to commence under the last sentence of
Section 2(a).
(b) In the event the Employee, after retirement
from the Employer or after the date of disability, and while then
receiving payments under Section 2 hereof, should die, prior to
having received all payments due the Employee under Section 2,
the Employer shall make any remaining payments due under Section
2 to the spouse (if the Employee is married at the time of death)
or personal representatives of the deceased Employee (if the
Employee is not married at the time of death) in accordance with
the priorities of subsection (c) of this Section 5.
(c) Any payments due to the spouse or heirs of a
deceased Employee under subsections (a) or (b) of this Section 5
shall be paid in the following manner and in the following
priority as set forth in this subsection (c). If the Employee is
married at the time of the Employee's death, all payments shall
be made to the Employee's spouse, as due, for so long as said
spouse continues to live. If the Employee is not married at the
time of death, any said remaining payments shall be paid to the
heirs of Employee, as that term is defined in Section 6 hereof.
If the Employee's spouse becomes entitled to receive payments
under this provision but dies prior to having received all
payments due, any remaining payments due at the time of said
spouse's death shall be paid to the heirs of the Employee, as
that term is defined in Section 6 hereof. Under no circumstances
shall the Employer be required to make more than 120 monthly
payments in the aggregate to the Employee, the spouse of
Employee, or the Employee's heirs under this Agreement.
6. Definition of Heirs of Employee. The term "heirs" of
the employee, as used in Section 5(c), above, shall mean those
persons entitled to inherit the assets of the Employee under the
laws of intestacy of the State of Alabama if the Employee had
died intestate and had not been survived by any spouse.
7. Health Insurance Plan. The Employee (and the spouse
of Employee after the Employee's death) shall be entitled to
continued participation in the Company's health insurance plan
(if Employee was participating at the time of the Employee's
retirement, disability or death) during the remainder of his life
and her life, after Employee's retirement under Sections 2, 4 or
5 hereof. The portion of the premium for the insurance coverage
to be paid by the Employer shall be based on the percentage of
the premium being paid by Employer at the time of Employee's
retirement, disability or death, multiplied by the Employee's
Vested Percentage. The Employee shall pay the balance of the
premium cost. If Employer is self-insured, premium cost shall be
based on COBRA rates applicable.
8. Definition of Disability. "Disability" shall, for
the purposes of this Agreement, mean such total, permanent
disability as will prevent and prohibit the Employee from
continuing to perform substantially all of the duties as were
being performed by Employee prior to becoming disabled and which
has at that date continued uninterrupted for a period of six (6)
continuous months. In the event there shall be any dispute or
disagreement as to whether the disability of the Employee has
occurred, such a matter shall be determined by the Board of
Directors of the Employer in its sole discretion which
determination shall be conclusive and binding upon the Employee.
9. Employment Continuity Agreement. The occurrence of
any event which entitles the Employee to receive compensation
under Section 3 of the Employment Continuity Agreement between
the Employer and the Employee shall be deemed to be a
"retirement" of the Employee at the date he becomes so entitled,
entitling him to the compensation provided under Section 2 of
this Agreement and the other rights and benefits provided under
this Agreement. In the event the Employee becomes entitled to
receive the benefits under this Agreement pursuant to this
Section 9, the Employee shall have the right to elect to receive
Employee's benefits under Section 2 hereof in one lump sum
payment in an amount equal to the present value of his future
payment hereunder, computed using an interest rate of seven
percent (7%) per annum. The election to receive said lump sum
payment shall be made by written notice from Employee to
Employer, given within sixty (60) days of the occurrence of the
event giving rise to Employee's right to receive compensation
under Section 3 of the Employee's Employment Continuity
Agreement, and shall, once made, be binding on Employee, the
Employee's spouse and heirs, as herein defined, at all times
thereafter. Said lump-sum payment shall be made by Employer to
Employee within ten (10) days after receipt by Employer of the
written notice from Employee given pursuant to the preceding
sentence.
10. Exclusivity of Services. The Employee expressly
agrees, as a condition of this Agreement, that during the term of
this Agreement and of any renewal hereof, and during the further
period for which monthly payments to the Employee are provided
herein upon his retirement, Employee will not, directly or
indirectly, render any services of an advisory nature or
otherwise to, or become employed by, or participate or engage in,
directly or indirectly, any business competitive with the
business of the Employer without the prior written consent of the
Employer, which written consent may be withheld without cause;
provided, however, in the event the Employee's retirement is
deemed to have occurred pursuant to Section 9 hereof, the
Employee shall not be restricted after said retirement by the
provisions of this Section 10. However, nothing herein shall
prohibit the Employee from owning stock or other securities of a
competitor which are relatively insubstantial to the total
outstanding stock of such competitor (i.e. less than 2%), and so
long as Employee, in fact, does not have the power to control or
direct the management or policies of such competitor, and does
not serve as a director or officer of, and is not otherwise
associated with, any competitor except as consented to by the
Employer.
11. Personal Agreement. The Employee hereby agrees on
behalf of Employee, and of Employee's executors and
administrators, heirs, legatees, distributes, and any other
person or persons, claiming any benefits under him by virtue of
this Agreement, that this Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee or any executor,
administrator, heir, legatee, distributee or other person
claiming under the Employee by virtue of this Agreement and shall
not be subject to execution, attachment, or a similar process.
Any attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Agreement or of such rights, interests
and benefits contrary to the foregoing provisions, or the levy of
any attachment or a similar process thereupon, shall be null and
void and without effect.
12. Successors Bound. This Agreement shall be binding
upon and inure to the benefit of any successor of the Employer
and any such successor shall be deemed substituted for the
Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
13. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama. Any disputes by
the parties hereto concerning this Agreement shall be settled in
accordance with the Rules of the American Arbitration
Association, which determination shall be binding upon the
parties conclusively.
14. Amendment and Waiver. The Agreement may be amended
only in writing, by the parties hereto, and no condition or
provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
15. Funding. This Agreement shall not be construed to
create or require the Company to create a trust or to otherwise
act to fund the amounts payable hereunder.
16. Arbitration. In recognition of the mutual benefits
of arbitration, the parties hereby agree that arbitration as
provided for herein shall be the exclusive remedy for resolving
any claim or dispute arising under this Agreement, and hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and any
related judicial proceeding, shall be initiated and shall proceed
pursuant to the then prevailing rules of the American Arbitration
Association (the "Association") for labor and employment
contracts. To initiate arbitration hereunder demand shall be
given in writing to the Association and the other party no later
than one year after the claim arises. Any claim for which such
demand is not made within one year after the claim arises shall
be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall be
before a single arbitrator, and an award in such arbitration may
include only damages which the arbitrator determines to be due
under express provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including without
limitation, consequential and exemplary damages. Any award in
arbitration shall be subject to enforcement and appeal pursuant
to the Act.
17. Legal Fees. In the event it becomes necessary for
either party to file a lawsuit for the purpose of enforcing the
terms of this Agreement, the cost of litigation, including,
without limitation, reasonable attorneys' fees, of the party
prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Replaces Prior Agreements. This Agreement shall
replace and supersede the Employment and Deferred Compensation
Agreement heretofore entered into between the Employee and the
Employer and shall be deemed a successor thereof.
IN WITNESS WHEREOF, the parties have hereunto executed this
Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
STATE OF ALABAMA )
)
JEFFERSON COUNTY )
1995 EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT made this 14th day of November, 1995, by
and between BIG B, INC., an Alabama corporation (the "Employer"),
and JAMES A. BRUNO of Birmingham, Alabama (the "Employee"), as
follows:
W I T N E S S E T H:
WHEREAS, the Employer is engaged in the business or
owning and operating drugstores throughout the Southeastern
United States, and its business operations are of such complexity
and magnitude as to require it to employ and retain executive
management of the highest possible caliber at all times; and
WHEREAS, the Employee now serves and has served as one
of its executive officers of the Employer, faithfully, loyally
and to the fullest extent of Employee's time and capabilities;
and
WHEREAS, in consideration of the past services by the
Employee and the future services expected of Employee, the
Employer desires to provide to the Employee certain deferred
compensatory benefits to be available to Employee at the time of
retirement from the employment of the Employer or in the event of
disability prior to retirement, or to be available to Employee's
family in the event of Employee's death; and
WHEREAS, the Employer and the Employee desire to reduce
to writing the terms of the employment arrangement between them
and the terms the above-described deferred compensation
arrangement;
NOW, THEREFORE, in consideration of the above and below
stated mutual premises, the parties hereto agree as follows:
1. Employment. The Employee shall continue in the
employ of the Employer, from year to year, unless and until said
employment is terminated by the Employer or the Employee on
thirty (30) days written notice by either to the other. The
annual compensation of the Employee shall be in such amounts as
shall be mutually agreed from year to year by and between the
Employer and the Employee, and shall include fixed annual salary
and any bonus granted to Employee by the Employer under the
Company's Bonus Compensation Program, whether paid in cash or
other consideration.
2. Retirement.
(a) Upon the Employee reaching the age of
sixty-five (65) years or satisfying the requirements of Section
2(b) hereof, Employee may at anytime thereafter retire from the
active and daily service of the Employer by notifying the
Employer of Employee's intent to retire. Commencing at the later
of the Employee reaching the age of sixty-five (65) years or the
date of such retirement, the Employer shall: (i) if the Employee
is 100% vested in his or her retirement benefits as described in
Section 2(b) hereof, pay to the Employee, each month, during the
succeeding one hundred twenty (120) months, an amount equal to
4.2% of the Employee's "Average Annual Compensation," as defined
in Paragraph 3 hereof, at the time of Employee's retirement (the
"Maximum Benefit") or (ii) if the Employee is less than 100%
vested in said retirement benefits under Section 2(b), pay to the
Employee, each month, during the succeeding 120 months, an amount
equal to the product of the Maximum Benefit multiplied by the
Vested Percentage, as defined in Section 2(b). The first payment
shall be made on the first business day of the first calendar
month following the month in which the Employee becomes eligible
to begin receiving payments hereunder. Each succeeding payment
thereafter shall be due and payable on the first business day of
each succeeding calendar month and shall continue as long as
Employee shall live and shall not be in violation of any of the
terms of this Agreement.
(b) The Employee may retire from the active
and daily service of the Employer by notifying the Employer of
Employee's intent to retire, at any time that the Employee has
been employed by Employer for at least sixty (60) months. If an
Employee, who is under age sixty-five (65) and who has been
employed by the Employer for less than three hundred (300)
months, elects to retire under this provision, Employee's "Vested
Percentage" for the purposes of this Agreement shall be
determined by dividing 300 into the number of months he has been
employed by Employer at the time he notified Employer of
Employee's intent to retire. An Employee who retires after he
reaches the age of 65 shall be deemed to be 100% vested in the
retirement benefits hereunder.
3. Average Annual Compensation. The "Average Annual
Compensation" of the Employee at the time of retirement shall be
deemed to be the average yearly "Total Compensation," as defined
below, received by the Employee from the Employer or any of its
wholly owned subsidiaries during the past three (3) fiscal years
of the Company prior to the year in which Employee's retirement
occurs, beginning with the fiscal year ending most recently prior
to the date of Employee's retirement and including the next two
(2) preceding years. The Total Compensation of an Employee shall
be an amount equal to annual base salary for such year and
Employee's earned bonus for the year under the Company's Bonus
Compensation Program (irrespective of whether the bonus for one
year is paid during the fiscal year or after the end of the
year).
4. Disability. In the event of the "disability", as
defined in Section 8 hereof, of the Employee while still in the
employ of the Employer (even if the Employee is not otherwise
eligible to retire at that time), the Employee shall, beginning
at the time of the Employee's disability, be entitled to receive
the payments described in Section 2 from the Employer. The date
of such disability shall be deemed to be the date at which
retirement occurs for the purposes of computing the amount of
such payments under Section 2 and the time at which payments are
to commence under the last sentence of Section 2 (a).
5. Payments in the Event of Death.
(a) In the event the Employee dies, while still in
the employ of the Employer, prior to retirement or disability
(even if the Employee is not otherwise eligible to retire at that
time), the spouse (if the Employee is married at the time of
death) or heirs of the Employee (if the Employee is not married
at the time of Employee's death) shall, beginning at the time of
the Employee's death, be entitled to receive the payments
described in Section 2 above in accordance with the priorities of
section (c) of this Section 5. The date of such death shall be
deemed to be the time at which retirement occurs for the purposes
of computing the amount of payments due under Section 2 and the
time at which payments are to commence under the last sentence of
Section 2(a).
(b) In the event the Employee, after retirement
from the Employer or after the date of disability, and while then
receiving payments under Section 2 hereof, should die, prior to
having received all payments due the Employee under Section 2,
the Employer shall make any remaining payments due under Section
2 to the spouse (if the Employee is married at the time of death)
or personal representatives of the deceased Employee (if the
Employee is not married at the time of death) in accordance with
the priorities of subsection (c) of this Section 5.
(c) Any payments due to the spouse or heirs of a
deceased Employee under subsections (a) or (b) of this Section 5
shall be paid in the following manner and in the following
priority as set forth in this subsection (c). If the Employee is
married at the time of the Employee's death, all payments shall
be made to the Employee's spouse, as due, for so long as said
spouse continues to live. If the Employee is not married at the
time of death, any said remaining payments shall be paid to the
heirs of Employee, as that term is defined in Section 6 hereof.
If the Employee's spouse becomes entitled to receive payments
under this provision but dies prior to having received all
payments due, any remaining payments due at the time of said
spouse's death shall be paid to the heirs of the Employee, as
that term is defined in Section 6 hereof. Under no circumstances
shall the Employer be required to make more than 120 monthly
payments in the aggregate to the Employee, the spouse of
Employee, or the Employee's heirs under this Agreement.
6. Definition of Heirs of Employee. The term "heirs" of
the employee, as used in Section 5(c), above, shall mean those
persons entitled to inherit the assets of the Employee under the
laws of intestacy of the State of Alabama if the Employee had
died intestate and had not been survived by any spouse.
7. Health Insurance Plan. The Employee (and the spouse
of Employee after the Employee's death) shall be entitled to
continued participation in the Company's health insurance plan
(if Employee was participating at the time of the Employee's
retirement, disability or death) during the remainder of his life
and her life, after Employee's retirement under Sections 2, 4 or
5 hereof. The portion of the premium for the insurance coverage
to be paid by the Employer shall be based on the percentage of
the premium being paid by Employer at the time of Employee's
retirement, disability or death, multiplied by the Employee's
Vested Percentage. The Employee shall pay the balance of the
premium cost. If Employer is self-insured, premium cost shall be
based on COBRA rates applicable.
8. Definition of Disability. "Disability" shall, for
the purposes of this Agreement, mean such total, permanent
disability as will prevent and prohibit the Employee from
continuing to perform substantially all of the duties as were
being performed by Employee prior to becoming disabled and which
has at that date continued uninterrupted for a period of six (6)
continuous months. In the event there shall be any dispute or
disagreement as to whether the disability of the Employee has
occurred, such a matter shall be determined by the Board of
Directors of the Employer in its sole discretion which
determination shall be conclusive and binding upon the Employee.
9. Employment Continuity Agreement. The occurrence of
any event which entitles the Employee to receive compensation
under Section 3 of the Employment Continuity Agreement between
the Employer and the Employee shall be deemed to be a
"retirement" of the Employee at the date he becomes so entitled,
entitling him to the compensation provided under Section 2 of
this Agreement and the other rights and benefits provided under
this Agreement. In the event the Employee becomes entitled to
receive the benefits under this Agreement pursuant to this
Section 9, the Employee shall have the right to elect to receive
Employee's benefits under Section 2 hereof in one lump sum
payment in an amount equal to the present value of his future
payment hereunder, computed using an interest rate of seven
percent (7%) per annum. The election to receive said lump sum
payment shall be made by written notice from Employee to
Employer, given within sixty (60) days of the occurrence of the
event giving rise to Employee's right to receive compensation
under Section 3 of the Employee's Employment Continuity
Agreement, and shall, once made, be binding on Employee, the
Employee's spouse and heirs, as herein defined, at all times
thereafter. Said lump-sum payment shall be made by Employer to
Employee within ten (10) days after receipt by Employer of the
written notice from Employee given pursuant to the preceding
sentence.
10. Exclusivity of Services. The Employee expressly
agrees, as a condition of this Agreement, that during the term of
this Agreement and of any renewal hereof, and during the further
period for which monthly payments to the Employee are provided
herein upon his retirement, Employee will not, directly or
indirectly, render any services of an advisory nature or
otherwise to, or become employed by, or participate or engage in,
directly or indirectly, any business competitive with the
business of the Employer without the prior written consent of the
Employer, which written consent may be withheld without cause;
provided, however, in the event the Employee's retirement is
deemed to have occurred pursuant to Section 9 hereof, the
Employee shall not be restricted after said retirement by the
provisions of this Section 10. However, nothing herein shall
prohibit the Employee from owning stock or other securities of a
competitor which are relatively insubstantial to the total
outstanding stock of such competitor (i.e. less than 2%), and so
long as Employee, in fact, does not have the power to control or
direct the management or policies of such competitor, and does
not serve as a director or officer of, and is not otherwise
associated with, any competitor except as consented to by the
Employer.
11. Personal Agreement. The Employee hereby agrees on
behalf of Employee, and of Employee's executors and
administrators, heirs, legatees, distributes, and any other
person or persons, claiming any benefits under him by virtue of
this Agreement, that this Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee or any executor,
administrator, heir, legatee, distributee or other person
claiming under the Employee by virtue of this Agreement and shall
not be subject to execution, attachment, or a similar process.
Any attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Agreement or of such rights, interests
and benefits contrary to the foregoing provisions, or the levy of
any attachment or a similar process thereupon, shall be null and
void and without effect.
12. Successors Bound. This Agreement shall be binding
upon and inure to the benefit of any successor of the Employer
and any such successor shall be deemed substituted for the
Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
13. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama. Any disputes by
the parties hereto concerning this Agreement shall be settled in
accordance with the Rules of the American Arbitration
Association, which determination shall be binding upon the
parties conclusively.
14. Amendment and Waiver. The Agreement may be amended
only in writing, by the parties hereto, and no condition or
provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
15. Funding. This Agreement shall not be construed to
create or require the Company to create a trust or to otherwise
act to fund the amounts payable hereunder.
16. Arbitration. In recognition of the mutual benefits
of arbitration, the parties hereby agree that arbitration as
provided for herein shall be the exclusive remedy for resolving
any claim or dispute arising under this Agreement, and hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and any
related judicial proceeding, shall be initiated and shall proceed
pursuant to the then prevailing rules of the American Arbitration
Association (the "Association") for labor and employment
contracts. To initiate arbitration hereunder demand shall be
given in writing to the Association and the other party no later
than one year after the claim arises. Any claim for which such
demand is not made within one year after the claim arises shall
be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall be
before a single arbitrator, and an award in such arbitration may
include only damages which the arbitrator determines to be due
under express provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including without
limitation, consequential and exemplary damages. Any award in
arbitration shall be subject to enforcement and appeal pursuant
to the Act.
17. Legal Fees. In the event it becomes necessary for
either party to file a lawsuit for the purpose of enforcing the
terms of this Agreement, the cost of litigation, including,
without limitation, reasonable attorneys' fees, of the party
prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Replaces Prior Agreements. This Agreement shall
replace and supersede the Employment and Deferred Compensation
Agreement heretofore entered into between the Employee and the
Employer and shall be deemed a successor thereof.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
STATE OF ALABAMA )
)
JEFFERSON COUNTY )
1995 EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT made this 14th day of November, 1995, by
and between BIG B, INC., an Alabama corporation (the "Employer"),
and EUGENE A. BECKMANN of Birmingham, Alabama (the "Employee"),
as follows:
W I T N E S S E T H:
WHEREAS, the Employer is engaged in the business or
owning and operating drugstores throughout the Southeastern
United States, and its business operations are of such complexity
and magnitude as to require it to employ and retain executive
management of the highest possible caliber at all times; and
WHEREAS, the Employee now serves and has served as one
of its executive officers of the Employer, faithfully, loyally
and to the fullest extent of Employee's time and capabilities;
and
WHEREAS, in consideration of the past services by the
Employee and the future services expected of Employee, the
Employer desires to provide to the Employee certain deferred
compensatory benefits to be available to Employee at the time of
retirement from the employment of the Employer or in the event of
disability prior to retirement, or to be available to Employee's
family in the event of Employee's death; and
WHEREAS, the Employer and the Employee desire to reduce
to writing the terms of the employment arrangement between them
and the terms the above-described deferred compensation
arrangement;
NOW, THEREFORE, in consideration of the above and below
stated mutual premises, the parties hereto agree as follows:
1. Employment. The Employee shall continue in the
employ of the Employer, from year to year, unless and until said
employment is terminated by the Employer or the Employee on
thirty (30) days written notice by either to the other. The
annual compensation of the Employee shall be in such amounts as
shall be mutually agreed from year to year by and between the
Employer and the Employee, and shall include fixed annual salary
and any bonus granted to Employee by the Employer under the
Company's Bonus Compensation Program, whether paid in cash or
other consideration.
2. Retirement.
(a) Upon the Employee reaching the age of
sixty-five (65) years or satisfying the requirements of Section
2(b) hereof, Employee may at anytime thereafter retire from the
active and daily service of the Employer by notifying the
Employer of Employee's intent to retire. Commencing at the later
of the Employee reaching the age of sixty-five (65) years or the
date of such retirement, the Employer shall: (i) if the Employee
is 100% vested in his or her retirement benefits as described in
Section 2(b) hereof, pay to the Employee, each month, during the
succeeding one hundred twenty (120) months, an amount equal to
4.2% of the Employee's "Average Annual Compensation," as defined
in Paragraph 3 hereof, at the time of Employee's retirement (the
"Maximum Benefit") or (ii) if the Employee is less than 100%
vested in said retirement benefits under Section 2(b), pay to the
Employee, each month, during the succeeding 120 months, an amount
equal to the product of the Maximum Benefit multiplied by the
Vested Percentage, as defined in Section 2(b). The first payment
shall be made on the first business day of the first calendar
month following the month in which the Employee becomes eligible
to begin receiving payments hereunder. Each succeeding payment
thereafter shall be due and payable on the first business day of
each succeeding calendar month and shall continue as long as
Employee shall live and shall not be in violation of any of the
terms of this Agreement.
(b) The Employee may retire from the active
and daily service of the Employer by notifying the Employer of
Employee's intent to retire, at any time that the Employee has
been employed by Employer for at least sixty (60) months. If an
Employee, who is under age sixty-five (65) and who has been
employed by the Employer for less than three hundred (300)
months, elects to retire under this provision, Employee's "Vested
Percentage" for the purposes of this Agreement shall be
determined by dividing 300 into the number of months he has been
employed by Employer at the time he notified Employer of
Employee's intent to retire. An Employee who retires after he
reaches the age of 65 shall be deemed to be 100% vested in the
retirement benefits hereunder.
3. Average Annual Compensation. The "Average Annual
Compensation" of the Employee at the time of retirement shall be
deemed to be the average yearly "Total Compensation," as defined
below, received by the Employee from the Employer or any of its
wholly owned subsidiaries during the past three (3) fiscal years
of the Company prior to the year in which Employee's retirement
occurs, beginning with the fiscal year ending most recently prior
to the date of Employee's retirement and including the next two
(2) preceding years. The Total Compensation of an Employee shall
be an amount equal to annual base salary for such year and
Employee's earned bonus for the year under the Company's Bonus
Compensation Program (irrespective of whether the bonus for one
year is paid during the fiscal year or after the end of the
year).
4. Disability. In the event of the "disability", as
defined in Section 8 hereof, of the Employee while still in the
employ of the Employer (even if the Employee is not otherwise
eligible to retire at that time), the Employee shall, beginning
at the time of the Employee's disability, be entitled to receive
the payments described in Section 2 from the Employer. The date
of such disability shall be deemed to be the date at which
retirement occurs for the purposes of computing the amount of
such payments under Section 2 and the time at which payments are
to commence under the last sentence of Section 2 (a).
5. Payments in the Event of Death.
(a) In the event the Employee dies, while still in
the employ of the Employer, prior to retirement or disability
(even if the Employee is not otherwise eligible to retire at that
time), the spouse (if the Employee is married at the time of
death) or heirs of the Employee (if the Employee is not married
at the time of Employee's death) shall, beginning at the time of
the Employee's death, be entitled to receive the payments
described in Section 2 above in accordance with the priorities of
section (c) of this Section 5. The date of such death shall be
deemed to be the time at which retirement occurs for the purposes
of computing the amount of payments due under Section 2 and the
time at which payments are to commence under the last sentence of
Section 2(a).
(b) In the event the Employee, after retirement
from the Employer or after the date of disability, and while then
receiving payments under Section 2 hereof, should die, prior to
having received all payments due the Employee under Section 2,
the Employer shall make any remaining payments due under Section
2 to the spouse (if the Employee is married at the time of death)
or personal representatives of the deceased Employee (if the
Employee is not married at the time of death) in accordance with
the priorities of subsection (c) of this Section 5.
(c) Any payments due to the spouse or heirs of a
deceased Employee under subsections (a) or (b) of this Section 5
shall be paid in the following manner and in the following
priority as set forth in this subsection (c). If the Employee is
married at the time of the Employee's death, all payments shall
be made to the Employee's spouse, as due, for so long as said
spouse continues to live. If the Employee is not married at the
time of death, any said remaining payments shall be paid to the
heirs of Employee, as that term is defined in Section 6 hereof.
If the Employee's spouse becomes entitled to receive payments
under this provision but dies prior to having received all
payments due, any remaining payments due at the time of said
spouse's death shall be paid to the heirs of the Employee, as
that term is defined in Section 6 hereof. Under no circumstances
shall the Employer be required to make more than 120 monthly
payments in the aggregate to the Employee, the spouse of
Employee, or the Employee's heirs under this Agreement.
6. Definition of Heirs of Employee. The term "heirs" of
the employee, as used in Section 5(c), above, shall mean those
persons entitled to inherit the assets of the Employee under the
laws of intestacy of the State of Alabama if the Employee had
died intestate and had not been survived by any spouse.
7. Health Insurance Plan. The Employee (and the spouse
of Employee after the Employee's death) shall be entitled to
continued participation in the Company's health insurance plan
(if Employee was participating at the time of the Employee's
retirement, disability or death) during the remainder of his life
and her life, after Employee's retirement under Sections 2, 4 or
5 hereof. The portion of the premium for the insurance coverage
to be paid by the Employer shall be based on the percentage of
the premium being paid by Employer at the time of Employee's
retirement, disability or death, multiplied by the Employee's
Vested Percentage. The Employee shall pay the balance of the
premium cost. If Employer is self-insured, premium cost shall be
based on COBRA rates applicable.
8. Definition of Disability. "Disability" shall, for
the purposes of this Agreement, mean such total, permanent
disability as will prevent and prohibit the Employee from
continuing to perform substantially all of the duties as were
being performed by Employee prior to becoming disabled and which
has at that date continued uninterrupted for a period of six (6)
continuous months. In the event there shall be any dispute or
disagreement as to whether the disability of the Employee has
occurred, such a matter shall be determined by the Board of
Directors of the Employer in its sole discretion which
determination shall be conclusive and binding upon the Employee.
9. Employment Continuity Agreement. The occurrence of
any event which entitles the Employee to receive compensation
under Section 3 of the Employment Continuity Agreement between
the Employer and the Employee shall be deemed to be a
"retirement" of the Employee at the date he becomes so entitled,
entitling him to the compensation provided under Section 2 of
this Agreement and the other rights and benefits provided under
this Agreement. In the event the Employee becomes entitled to
receive the benefits under this Agreement pursuant to this
Section 9, the Employee shall have the right to elect to receive
Employee's benefits under Section 2 hereof in one lump sum
payment in an amount equal to the present value of his future
payment hereunder, computed using an interest rate of seven
percent (7%) per annum. The election to receive said lump sum
payment shall be made by written notice from Employee to
Employer, given within sixty (60) days of the occurrence of the
event giving rise to Employee's right to receive compensation
under Section 3 of the Employee's Employment Continuity
Agreement, and shall, once made, be binding on Employee, the
Employee's spouse and heirs, as herein defined, at all times
thereafter. Said lump-sum payment shall be made by Employer to
Employee within ten (10) days after receipt by Employer of the
written notice from Employee given pursuant to the preceding
sentence.
10. Exclusivity of Services. The Employee expressly
agrees, as a condition of this Agreement, that during the term of
this Agreement and of any renewal hereof, and during the further
period for which monthly payments to the Employee are provided
herein upon his retirement, Employee will not, directly or
indirectly, render any services of an advisory nature or
otherwise to, or become employed by, or participate or engage in,
directly or indirectly, any business competitive with the
business of the Employer without the prior written consent of the
Employer, which written consent may be withheld without cause;
provided, however, in the event the Employee's retirement is
deemed to have occurred pursuant to Section 9 hereof, the
Employee shall not be restricted after said retirement by the
provisions of this Section 10. However, nothing herein shall
prohibit the Employee from owning stock or other securities of a
competitor which are relatively insubstantial to the total
outstanding stock of such competitor (i.e. less than 2%), and so
long as Employee, in fact, does not have the power to control or
direct the management or policies of such competitor, and does
not serve as a director or officer of, and is not otherwise
associated with, any competitor except as consented to by the
Employer.
11. Personal Agreement. The Employee hereby agrees on
behalf of Employee, and of Employee's executors and
administrators, heirs, legatees, distributes, and any other
person or persons, claiming any benefits under him by virtue of
this Agreement, that this Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee or any executor,
administrator, heir, legatee, distributee or other person
claiming under the Employee by virtue of this Agreement and shall
not be subject to execution, attachment, or a similar process.
Any attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Agreement or of such rights, interests
and benefits contrary to the foregoing provisions, or the levy of
any attachment or a similar process thereupon, shall be null and
void and without effect.
12. Successors Bound. This Agreement shall be binding
upon and inure to the benefit of any successor of the Employer
and any such successor shall be deemed substituted for the
Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
13. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama. Any disputes by
the parties hereto concerning this Agreement shall be settled in
accordance with the Rules of the American Arbitration
Association, which determination shall be binding upon the
parties conclusively.
14. Amendment and Waiver. The Agreement may be amended
only in writing, by the parties hereto, and no condition or
provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
15. Funding. This Agreement shall not be construed to
create or require the Company to create a trust or to otherwise
act to fund the amounts payable hereunder.
16. Arbitration. In recognition of the mutual benefits
of arbitration, the parties hereby agree that arbitration as
provided for herein shall be the exclusive remedy for resolving
any claim or dispute arising under this Agreement, and hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and any
related judicial proceeding, shall be initiated and shall proceed
pursuant to the then prevailing rules of the American Arbitration
Association (the "Association") for labor and employment
contracts. To initiate arbitration hereunder demand shall be
given in writing to the Association and the other party no later
than one year after the claim arises. Any claim for which such
demand is not made within one year after the claim arises shall
be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall be
before a single arbitrator, and an award in such arbitration may
include only damages which the arbitrator determines to be due
under express provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including without
limitation, consequential and exemplary damages. Any award in
arbitration shall be subject to enforcement and appeal pursuant
to the Act.
17. Legal Fees. In the event it becomes necessary for
either party to file a lawsuit for the purpose of enforcing the
terms of this Agreement, the cost of litigation, including,
without limitation, reasonable attorneys' fees, of the party
prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Replaces Prior Agreements. This Agreement shall
replace and supersede the Employment and Deferred Compensation
Agreement heretofore entered into between the Employee and the
Employer and shall be deemed a successor thereof.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
_________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
STATE OF ALABAMA )
)
JEFFERSON COUNTY )
1995 EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT made this 14th day of November, 1995, by
and between BIG B, INC., an Alabama corporation (the "Employer"),
and S. STEVEN TAYLOR of Birmingham, Alabama (the "Employee"), as
follows:
W I T N E S S E T H:
WHEREAS, the Employer is engaged in the business or
owning and operating drugstores throughout the Southeastern
United States, and its business operations are of such complexity
and magnitude as to require it to employ and retain executive
management of the highest possible caliber at all times; and
WHEREAS, the Employee now serves and has served as one
of its executive officers of the Employer, faithfully, loyally
and to the fullest extent of Employee's time and capabilities;
and
WHEREAS, in consideration of the past services by the
Employee and the future services expected of Employee, the
Employer desires to provide to the Employee certain deferred
compensatory benefits to be available to Employee at the time of
retirement from the employment of the Employer or in the event of
disability prior to retirement, or to be available to Employee's
family in the event of Employee's death; and
WHEREAS, the Employer and the Employee desire to reduce
to writing the terms of the employment arrangement between them
and the terms the above-described deferred compensation
arrangement;
NOW, THEREFORE, in consideration of the above and below
stated mutual premises, the parties hereto agree as follows:
1. Employment. The Employee shall continue in the
employ of the Employer, from year to year, unless and until said
employment is terminated by the Employer or the Employee on
thirty (30) days written notice by either to the other. The
annual compensation of the Employee shall be in such amounts as
shall be mutually agreed from year to year by and between the
Employer and the Employee, and shall include fixed annual salary
and any bonus granted to Employee by the Employer under the
Company's Bonus Compensation Program, whether paid in cash or
other consideration.
2. Retirement.
(a) Upon the Employee reaching the age of
sixty-five (65) years or satisfying the requirements of Section
2(b) hereof, Employee may at anytime thereafter retire from the
active and daily service of the Employer by notifying the
Employer of Employee's intent to retire. Commencing at the later
of the Employee reaching the age of sixty-five (65) years or the
date of such retirement, the Employer shall: (i) if the Employee
is 100% vested in his or her retirement benefits as described in
Section 2(b) hereof, pay to the Employee, each month, during the
succeeding one hundred twenty (120) months, an amount equal to
4.2% of the Employee's "Average Annual Compensation," as defined
in Paragraph 3 hereof, at the time of Employee's retirement (the
"Maximum Benefit") or (ii) if the Employee is less than 100%
vested in said retirement benefits under Section 2(b), pay to the
Employee, each month, during the succeeding 120 months, an amount
equal to the product of the Maximum Benefit multiplied by the
Vested Percentage, as defined in Section 2(b). The first payment
shall be made on the first business day of the first calendar
month following the month in which the Employee becomes eligible
to begin receiving payments hereunder. Each succeeding payment
thereafter shall be due and payable on the first business day of
each succeeding calendar month and shall continue as long as
Employee shall live and shall not be in violation of any of the
terms of this Agreement.
(b) The Employee may retire from the active
and daily service of the Employer by notifying the Employer of
Employee's intent to retire, at any time that the Employee has
been employed by Employer for at least sixty (60) months. If an
Employee, who is under age sixty-five (65) and who has been
employed by the Employer for less than three hundred (300)
months, elects to retire under this provision, Employee's "Vested
Percentage" for the purposes of this Agreement shall be
determined by dividing 300 into the number of months he has been
employed by Employer at the time he notified Employer of
Employee's intent to retire. An Employee who retires after he
reaches the age of 65 shall be deemed to be 100% vested in the
retirement benefits hereunder.
3. Average Annual Compensation. The "Average Annual
Compensation" of the Employee at the time of retirement shall be
deemed to be the average yearly "Total Compensation," as defined
below, received by the Employee from the Employer or any of its
wholly owned subsidiaries during the past three (3) fiscal years
of the Company prior to the year in which Employee's retirement
occurs, beginning with the fiscal year ending most recently prior
to the date of Employee's retirement and including the next two
(2) preceding years. The Total Compensation of an Employee shall
be an amount equal to annual base salary for such year and
Employee's earned bonus for the year under the Company's Bonus
Compensation Program (irrespective of whether the bonus for one
year is paid during the fiscal year or after the end of the
year).
4. Disability. In the event of the "disability", as
defined in Section 8 hereof, of the Employee while still in the
employ of the Employer (even if the Employee is not otherwise
eligible to retire at that time), the Employee shall, beginning
at the time of the Employee's disability, be entitled to receive
the payments described in Section 2 from the Employer. The date
of such disability shall be deemed to be the date at which
retirement occurs for the purposes of computing the amount of
such payments under Section 2 and the time at which payments are
to commence under the last sentence of Section 2 (a).
5. Payments in the Event of Death.
(a) In the event the Employee dies, while still in
the employ of the Employer, prior to retirement or disability
(even if the Employee is not otherwise eligible to retire at that
time), the spouse (if the Employee is married at the time of
death) or heirs of the Employee (if the Employee is not married
at the time of Employee's death) shall, beginning at the time of
the Employee's death, be entitled to receive the payments
described in Section 2 above in accordance with the priorities of
section (c) of this Section 5. The date of such death shall be
deemed to be the time at which retirement occurs for the purposes
of computing the amount of payments due under Section 2 and the
time at which payments are to commence under the last sentence of
Section 2(a).
(b) In the event the Employee, after retirement
from the Employer or after the date of disability, and while then
receiving payments under Section 2 hereof, should die, prior to
having received all payments due the Employee under Section 2,
the Employer shall make any remaining payments due under Section
2 to the spouse (if the Employee is married at the time of death)
or personal representatives of the deceased Employee (if the
Employee is not married at the time of death) in accordance with
the priorities of subsection (c) of this Section 5.
(c) Any payments due to the spouse or heirs of a
deceased Employee under subsections (a) or (b) of this Section 5
shall be paid in the following manner and in the following
priority as set forth in this subsection (c). If the Employee is
married at the time of the Employee's death, all payments shall
be made to the Employee's spouse, as due, for so long as said
spouse continues to live. If the Employee is not married at the
time of death, any said remaining payments shall be paid to the
heirs of Employee, as that term is defined in Section 6 hereof.
If the Employee's spouse becomes entitled to receive payments
under this provision but dies prior to having received all
payments due, any remaining payments due at the time of said
spouse's death shall be paid to the heirs of the Employee, as
that term is defined in Section 6 hereof. Under no circumstances
shall the Employer be required to make more than 120 monthly
payments in the aggregate to the Employee, the spouse of
Employee, or the Employee's heirs under this Agreement.
6. Definition of Heirs of Employee. The term "heirs" of
the employee, as used in Section 5(c), above, shall mean those
persons entitled to inherit the assets of the Employee under the
laws of intestacy of the State of Alabama if the Employee had
died intestate and had not been survived by any spouse.
7. Health Insurance Plan. The Employee (and the spouse
of Employee after the Employee's death) shall be entitled to
continued participation in the Company's health insurance plan
(if Employee was participating at the time of the Employee's
retirement, disability or death) during the remainder of his life
and her life, after Employee's retirement under Sections 2, 4 or
5 hereof. The portion of the premium for the insurance coverage
to be paid by the Employer shall be based on the percentage of
the premium being paid by Employer at the time of Employee's
retirement, disability or death, multiplied by the Employee's
Vested Percentage. The Employee shall pay the balance of the
premium cost. If Employer is self-insured, premium cost shall be
based on COBRA rates applicable.
8. Definition of Disability. "Disability" shall, for
the purposes of this Agreement, mean such total, permanent
disability as will prevent and prohibit the Employee from
continuing to perform substantially all of the duties as were
being performed by Employee prior to becoming disabled and which
has at that date continued uninterrupted for a period of six (6)
continuous months. In the event there shall be any dispute or
disagreement as to whether the disability of the Employee has
occurred, such a matter shall be determined by the Board of
Directors of the Employer in its sole discretion which
determination shall be conclusive and binding upon the Employee.
9. Employment Continuity Agreement. The occurrence of
any event which entitles the Employee to receive compensation
under Section 3 of the Employment Continuity Agreement between
the Employer and the Employee shall be deemed to be a
"retirement" of the Employee at the date he becomes so entitled,
entitling him to the compensation provided under Section 2 of
this Agreement and the other rights and benefits provided under
this Agreement. In the event the Employee becomes entitled to
receive the benefits under this Agreement pursuant to this
Section 9, the Employee shall have the right to elect to receive
Employee's benefits under Section 2 hereof in one lump sum
payment in an amount equal to the present value of his future
payment hereunder, computed using an interest rate of seven
percent (7%) per annum. The election to receive said lump sum
payment shall be made by written notice from Employee to
Employer, given within sixty (60) days of the occurrence of the
event giving rise to Employee's right to receive compensation
under Section 3 of the Employee's Employment Continuity
Agreement, and shall, once made, be binding on Employee, the
Employee's spouse and heirs, as herein defined, at all times
thereafter. Said lump-sum payment shall be made by Employer to
Employee within ten (10) days after receipt by Employer of the
written notice from Employee given pursuant to the preceding
sentence.
10. Exclusivity of Services. The Employee expressly
agrees, as a condition of this Agreement, that during the term of
this Agreement and of any renewal hereof, and during the further
period for which monthly payments to the Employee are provided
herein upon his retirement, Employee will not, directly or
indirectly, render any services of an advisory nature or
otherwise to, or become employed by, or participate or engage in,
directly or indirectly, any business competitive with the
business of the Employer without the prior written consent of the
Employer, which written consent may be withheld without cause;
provided, however, in the event the Employee's retirement is
deemed to have occurred pursuant to Section 9 hereof, the
Employee shall not be restricted after said retirement by the
provisions of this Section 10. However, nothing herein shall
prohibit the Employee from owning stock or other securities of a
competitor which are relatively insubstantial to the total
outstanding stock of such competitor (i.e. less than 2%), and so
long as Employee, in fact, does not have the power to control or
direct the management or policies of such competitor, and does
not serve as a director or officer of, and is not otherwise
associated with, any competitor except as consented to by the
Employer.
11. Personal Agreement. The Employee hereby agrees on
behalf of Employee, and of Employee's executors and
administrators, heirs, legatees, distributes, and any other
person or persons, claiming any benefits under him by virtue of
this Agreement, that this Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee or any executor,
administrator, heir, legatee, distributee or other person
claiming under the Employee by virtue of this Agreement and shall
not be subject to execution, attachment, or a similar process.
Any attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Agreement or of such rights, interests
and benefits contrary to the foregoing provisions, or the levy of
any attachment or a similar process thereupon, shall be null and
void and without effect.
12. Successors Bound. This Agreement shall be binding
upon and inure to the benefit of any successor of the Employer
and any such successor shall be deemed substituted for the
Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
13. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama. Any disputes by
the parties hereto concerning this Agreement shall be settled in
accordance with the Rules of the American Arbitration
Association, which determination shall be binding upon the
parties conclusively.
14. Amendment and Waiver. The Agreement may be amended
only in writing, by the parties hereto, and no condition or
provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
15. Funding. This Agreement shall not be construed to
create or require the Company to create a trust or to otherwise
act to fund the amounts payable hereunder.
16. Arbitration. In recognition of the mutual benefits
of arbitration, the parties hereby agree that arbitration as
provided for herein shall be the exclusive remedy for resolving
any claim or dispute arising under this Agreement, and hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and any
related judicial proceeding, shall be initiated and shall proceed
pursuant to the then prevailing rules of the American Arbitration
Association (the "Association") for labor and employment
contracts. To initiate arbitration hereunder demand shall be
given in writing to the Association and the other party no later
than one year after the claim arises. Any claim for which such
demand is not made within one year after the claim arises shall
be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall be
before a single arbitrator, and an award in such arbitration may
include only damages which the arbitrator determines to be due
under express provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including without
limitation, consequential and exemplary damages. Any award in
arbitration shall be subject to enforcement and appeal pursuant
to the Act.
17. Legal Fees. In the event it becomes necessary for
either party to file a lawsuit for the purpose of enforcing the
terms of this Agreement, the cost of litigation, including,
without limitation, reasonable attorneys' fees, of the party
prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Replaces Prior Agreements. This Agreement shall
replace and supersede the Employment and Deferred Compensation
Agreement heretofore entered into between the Employee and the
Employer and shall be deemed a successor thereof.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
_________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
STATE OF ALABAMA )
)
JEFFERSON COUNTY )
1995 EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT made this 14th day of November, 1995, by
and between BIG B, INC., an Alabama corporation (the "Employer"),
and MICHAEL J. TORTORICE of Birmingham, Alabama (the "Employee"),
as follows:
W I T N E S S E T H:
WHEREAS, the Employer is engaged in the business or
owning and operating drugstores throughout the Southeastern
United States, and its business operations are of such complexity
and magnitude as to require it to employ and retain executive
management of the highest possible caliber at all times; and
WHEREAS, the Employee now serves and has served as one
of its executive officers of the Employer, faithfully, loyally
and to the fullest extent of Employee's time and capabilities;
and
WHEREAS, in consideration of the past services by the
Employee and the future services expected of Employee, the
Employer desires to provide to the Employee certain deferred
compensatory benefits to be available to Employee at the time of
retirement from the employment of the Employer or in the event of
disability prior to retirement, or to be available to Employee's
family in the event of Employee's death; and
WHEREAS, the Employer and the Employee desire to reduce
to writing the terms of the employment arrangement between them
and the terms the above-described deferred compensation
arrangement;
NOW, THEREFORE, in consideration of the above and below
stated mutual premises, the parties hereto agree as follows:
1. Employment. The Employee shall continue in the
employ of the Employer, from year to year, unless and until said
employment is terminated by the Employer or the Employee on
thirty (30) days written notice by either to the other. The
annual compensation of the Employee shall be in such amounts as
shall be mutually agreed from year to year by and between the
Employer and the Employee, and shall include fixed annual salary
and any bonus granted to Employee by the Employer under the
Company's Bonus Compensation Program, whether paid in cash or
other consideration.
2. Retirement.
(a) Upon the Employee reaching the age of
sixty-five (65) years or satisfying the requirements of Section
2(b) hereof, Employee may at anytime thereafter retire from the
active and daily service of the Employer by notifying the
Employer of Employee's intent to retire. Commencing at the later
of the Employee reaching the age of sixty-five (65) years or the
date of such retirement, the Employer shall: (i) if the Employee
is 100% vested in his or her retirement benefits as described in
Section 2(b) hereof, pay to the Employee, each month, during the
succeeding one hundred twenty (120) months, an amount equal to
4.2% of the Employee's "Average Annual Compensation," as defined
in Paragraph 3 hereof, at the time of Employee's retirement (the
"Maximum Benefit") or (ii) if the Employee is less than 100%
vested in said retirement benefits under Section 2(b), pay to the
Employee, each month, during the succeeding 120 months, an amount
equal to the product of the Maximum Benefit multiplied by the
Vested Percentage, as defined in Section 2(b). The first payment
shall be made on the first business day of the first calendar
month following the month in which the Employee becomes eligible
to begin receiving payments hereunder. Each succeeding payment
thereafter shall be due and payable on the first business day of
each succeeding calendar month and shall continue as long as
Employee shall live and shall not be in violation of any of the
terms of this Agreement.
(b) The Employee may retire from the active
and daily service of the Employer by notifying the Employer of
Employee's intent to retire, at any time that the Employee has
been employed by Employer for at least sixty (60) months. If an
Employee, who is under age sixty-five (65) and who has been
employed by the Employer for less than three hundred (300)
months, elects to retire under this provision, Employee's "Vested
Percentage" for the purposes of this Agreement shall be
determined by dividing 300 into the number of months he has been
employed by Employer at the time he notified Employer of
Employee's intent to retire. An Employee who retires after he
reaches the age of 65 shall be deemed to be 100% vested in the
retirement benefits hereunder.
3. Average Annual Compensation. The "Average Annual
Compensation" of the Employee at the time of retirement shall be
deemed to be the average yearly "Total Compensation," as defined
below, received by the Employee from the Employer or any of its
wholly owned subsidiaries during the past three (3) fiscal years
of the Company prior to the year in which Employee's retirement
occurs, beginning with the fiscal year ending most recently prior
to the date of Employee's retirement and including the next two
(2) preceding years. The Total Compensation of an Employee shall
be an amount equal to annual base salary for such year and
Employee's earned bonus for the year under the Company's Bonus
Compensation Program (irrespective of whether the bonus for one
year is paid during the fiscal year or after the end of the
year).
4. Disability. In the event of the "disability", as
defined in Section 8 hereof, of the Employee while still in the
employ of the Employer (even if the Employee is not otherwise
eligible to retire at that time), the Employee shall, beginning
at the time of the Employee's disability, be entitled to receive
the payments described in Section 2 from the Employer. The date
of such disability shall be deemed to be the date at which
retirement occurs for the purposes of computing the amount of
such payments under Section 2 and the time at which payments are
to commence under the last sentence of Section 2 (a).
5. Payments in the Event of Death.
(a) In the event the Employee dies, while still in
the employ of the Employer, prior to retirement or disability
(even if the Employee is not otherwise eligible to retire at that
time), the spouse (if the Employee is married at the time of
death) or heirs of the Employee (if the Employee is not married
at the time of Employee's death) shall, beginning at the time of
the Employee's death, be entitled to receive the payments
described in Section 2 above in accordance with the priorities of
section (c) of this Section 5. The date of such death shall be
deemed to be the time at which retirement occurs for the purposes
of computing the amount of payments due under Section 2 and the
time at which payments are to commence under the last sentence of
Section 2(a).
(b) In the event the Employee, after retirement
from the Employer or after the date of disability, and while then
receiving payments under Section 2 hereof, should die, prior to
having received all payments due the Employee under Section 2,
the Employer shall make any remaining payments due under Section
2 to the spouse (if the Employee is married at the time of death)
or personal representatives of the deceased Employee (if the
Employee is not married at the time of death) in accordance with
the priorities of subsection (c) of this Section 5.
(c) Any payments due to the spouse or heirs of a
deceased Employee under subsections (a) or (b) of this Section 5
shall be paid in the following manner and in the following
priority as set forth in this subsection (c). If the Employee is
married at the time of the Employee's death, all payments shall
be made to the Employee's spouse, as due, for so long as said
spouse continues to live. If the Employee is not married at the
time of death, any said remaining payments shall be paid to the
heirs of Employee, as that term is defined in Section 6 hereof.
If the Employee's spouse becomes entitled to receive payments
under this provision but dies prior to having received all
payments due, any remaining payments due at the time of said
spouse's death shall be paid to the heirs of the Employee, as
that term is defined in Section 6 hereof. Under no circumstances
shall the Employer be required to make more than 120 monthly
payments in the aggregate to the Employee, the spouse of
Employee, or the Employee's heirs under this Agreement.
6. Definition of Heirs of Employee. The term "heirs" of
the employee, as used in Section 5(c), above, shall mean those
persons entitled to inherit the assets of the Employee under the
laws of intestacy of the State of Alabama if the Employee had
died intestate and had not been survived by any spouse.
7. Health Insurance Plan. The Employee (and the spouse
of Employee after the Employee's death) shall be entitled to
continued participation in the Company's health insurance plan
(if Employee was participating at the time of the Employee's
retirement, disability or death) during the remainder of his life
and her life, after Employee's retirement under Sections 2, 4 or
5 hereof. The portion of the premium for the insurance coverage
to be paid by the Employer shall be based on the percentage of
the premium being paid by Employer at the time of Employee's
retirement, disability or death, multiplied by the Employee's
Vested Percentage. The Employee shall pay the balance of the
premium cost. If Employer is self-insured, premium cost shall be
based on COBRA rates applicable.
8. Definition of Disability. "Disability" shall, for
the purposes of this Agreement, mean such total, permanent
disability as will prevent and prohibit the Employee from
continuing to perform substantially all of the duties as were
being performed by Employee prior to becoming disabled and which
has at that date continued uninterrupted for a period of six (6)
continuous months. In the event there shall be any dispute or
disagreement as to whether the disability of the Employee has
occurred, such a matter shall be determined by the Board of
Directors of the Employer in its sole discretion which
determination shall be conclusive and binding upon the Employee.
9. Employment Continuity Agreement. The occurrence of
any event which entitles the Employee to receive compensation
under Section 3 of the Employment Continuity Agreement between
the Employer and the Employee shall be deemed to be a
"retirement" of the Employee at the date he becomes so entitled,
entitling him to the compensation provided under Section 2 of
this Agreement and the other rights and benefits provided under
this Agreement. In the event the Employee becomes entitled to
receive the benefits under this Agreement pursuant to this
Section 9, the Employee shall have the right to elect to receive
Employee's benefits under Section 2 hereof in one lump sum
payment in an amount equal to the present value of his future
payment hereunder, computed using an interest rate of seven
percent (7%) per annum. The election to receive said lump sum
payment shall be made by written notice from Employee to
Employer, given within sixty (60) days of the occurrence of the
event giving rise to Employee's right to receive compensation
under Section 3 of the Employee's Employment Continuity
Agreement, and shall, once made, be binding on Employee, the
Employee's spouse and heirs, as herein defined, at all times
thereafter. Said lump-sum payment shall be made by Employer to
Employee within ten (10) days after receipt by Employer of the
written notice from Employee given pursuant to the preceding
sentence.
10. Exclusivity of Services. The Employee expressly
agrees, as a condition of this Agreement, that during the term of
this Agreement and of any renewal hereof, and during the further
period for which monthly payments to the Employee are provided
herein upon his retirement, Employee will not, directly or
indirectly, render any services of an advisory nature or
otherwise to, or become employed by, or participate or engage in,
directly or indirectly, any business competitive with the
business of the Employer without the prior written consent of the
Employer, which written consent may be withheld without cause;
provided, however, in the event the Employee's retirement is
deemed to have occurred pursuant to Section 9 hereof, the
Employee shall not be restricted after said retirement by the
provisions of this Section 10. However, nothing herein shall
prohibit the Employee from owning stock or other securities of a
competitor which are relatively insubstantial to the total
outstanding stock of such competitor (i.e. less than 2%), and so
long as Employee, in fact, does not have the power to control or
direct the management or policies of such competitor, and does
not serve as a director or officer of, and is not otherwise
associated with, any competitor except as consented to by the
Employer.
11. Personal Agreement. The Employee hereby agrees on
behalf of Employee, and of Employee's executors and
administrators, heirs, legatees, distributes, and any other
person or persons, claiming any benefits under him by virtue of
this Agreement, that this Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee or any executor,
administrator, heir, legatee, distributee or other person
claiming under the Employee by virtue of this Agreement and shall
not be subject to execution, attachment, or a similar process.
Any attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Agreement or of such rights, interests
and benefits contrary to the foregoing provisions, or the levy of
any attachment or a similar process thereupon, shall be null and
void and without effect.
12. Successors Bound. This Agreement shall be binding
upon and inure to the benefit of any successor of the Employer
and any such successor shall be deemed substituted for the
Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
13. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama. Any disputes by
the parties hereto concerning this Agreement shall be settled in
accordance with the Rules of the American Arbitration
Association, which determination shall be binding upon the
parties conclusively.
14. Amendment and Waiver. The Agreement may be amended
only in writing, by the parties hereto, and no condition or
provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
15. Funding. This Agreement shall not be construed to
create or require the Company to create a trust or to otherwise
act to fund the amounts payable hereunder.
16. Arbitration. In recognition of the mutual benefits
of arbitration, the parties hereby agree that arbitration as
provided for herein shall be the exclusive remedy for resolving
any claim or dispute arising under this Agreement, and hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and any
related judicial proceeding, shall be initiated and shall proceed
pursuant to the then prevailing rules of the American Arbitration
Association (the "Association") for labor and employment
contracts. To initiate arbitration hereunder demand shall be
given in writing to the Association and the other party no later
than one year after the claim arises. Any claim for which such
demand is not made within one year after the claim arises shall
be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall be
before a single arbitrator, and an award in such arbitration may
include only damages which the arbitrator determines to be due
under express provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including without
limitation, consequential and exemplary damages. Any award in
arbitration shall be subject to enforcement and appeal pursuant
to the Act.
17. Legal Fees. In the event it becomes necessary for
either party to file a lawsuit for the purpose of enforcing the
terms of this Agreement, the cost of litigation, including,
without limitation, reasonable attorneys' fees, of the party
prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Replaces Prior Agreements. This Agreement shall
replace and supersede the Employment and Deferred Compensation
Agreement heretofore entered into between the Employee and the
Employer and shall be deemed a successor thereof.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
STATE OF ALABAMA )
)
JEFFERSON COUNTY )
1995 EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT made this 14th day of November, 1995, by
and between BIG B, INC., an Alabama corporation (the "Employer"),
and PAUL BRUNO of Birmingham, Alabama (the "Employee"), as
follows:
W I T N E S S E T H:
WHEREAS, the Employer is engaged in the business or
owning and operating drugstores throughout the Southeastern
United States, and its business operations are of such complexity
and magnitude as to require it to employ and retain executive
management of the highest possible caliber at all times; and
WHEREAS, the Employee now serves and has served as one
of its executive officers of the Employer, faithfully, loyally
and to the fullest extent of Employee's time and capabilities;
and
WHEREAS, in consideration of the past services by the
Employee and the future services expected of Employee, the
Employer desires to provide to the Employee certain deferred
compensatory benefits to be available to Employee at the time of
retirement from the employment of the Employer or in the event of
disability prior to retirement, or to be available to Employee's
family in the event of Employee's death; and
WHEREAS, the Employer and the Employee desire to reduce
to writing the terms of the employment arrangement between them
and the terms the above-described deferred compensation
arrangement;
NOW, THEREFORE, in consideration of the above and below
stated mutual premises, the parties hereto agree as follows:
1. Employment. The Employee shall continue in the
employ of the Employer, from year to year, unless and until said
employment is terminated by the Employer or the Employee on
thirty (30) days written notice by either to the other. The
annual compensation of the Employee shall be in such amounts as
shall be mutually agreed from year to year by and between the
Employer and the Employee, and shall include fixed annual salary
and any bonus granted to Employee by the Employer under the
Company's Bonus Compensation Program, whether paid in cash or
other consideration.
2. Retirement.
(a) Upon the Employee reaching the age of
sixty-five (65) years or satisfying the requirements of Section
2(b) hereof, Employee may at anytime thereafter retire from the
active and daily service of the Employer by notifying the
Employer of Employee's intent to retire. Commencing at the later
of the Employee reaching the age of sixty-five (65) years or the
date of such retirement, the Employer shall: (i) if the Employee
is 100% vested in his or her retirement benefits as described in
Section 2(b) hereof, pay to the Employee, each month, during the
succeeding one hundred twenty (120) months, an amount equal to
4.2% of the Employee's "Average Annual Compensation," as defined
in Paragraph 3 hereof, at the time of Employee's retirement (the
"Maximum Benefit") or (ii) if the Employee is less than 100%
vested in said retirement benefits under Section 2(b), pay to the
Employee, each month, during the succeeding 120 months, an amount
equal to the product of the Maximum Benefit multiplied by the
Vested Percentage, as defined in Section 2(b). The first payment
shall be made on the first business day of the first calendar
month following the month in which the Employee becomes eligible
to begin receiving payments hereunder. Each succeeding payment
thereafter shall be due and payable on the first business day of
each succeeding calendar month and shall continue as long as
Employee shall live and shall not be in violation of any of the
terms of this Agreement.
(b) The Employee may retire from the active
and daily service of the Employer by notifying the Employer of
Employee's intent to retire, at any time that the Employee has
been employed by Employer for at least sixty (60) months. If an
Employee, who is under age sixty-five (65) and who has been
employed by the Employer for less than three hundred (300)
months, elects to retire under this provision, Employee's "Vested
Percentage" for the purposes of this Agreement shall be
determined by dividing 300 into the number of months he has been
employed by Employer at the time he notified Employer of
Employee's intent to retire. An Employee who retires after he
reaches the age of 65 shall be deemed to be 100% vested in the
retirement benefits hereunder.
3. Average Annual Compensation. The "Average
Annual Compensation" of the Employee at the time of retirement
shall be deemed to be the average yearly "Total Compensation," as
defined below, received by the Employee from the Employer or any
of its wholly owned subsidiaries during the past three (3) fiscal
years of the Company prior to the year in which Employee's
retirement occurs, beginning with the fiscal year ending most
recently prior to the date of Employee's retirement and including
the next two (2) preceding years. The Total Compensation of an
Employee shall be an amount equal to annual base salary for such
year and Employee's earned bonus for the year under the Company's
Bonus Compensation Program (irrespective of whether the bonus for
one year is paid during the fiscal year or after the end of the
year).
4. Disability. In the event of the "disability",
as defined in Section 8 hereof, of the Employee while still in
the employ of the Employer (even if the Employee is not otherwise
eligible to retire at that time), the Employee shall, beginning
at the time of the Employee's disability, be entitled to receive
the payments described in Section 2 from the Employer. The date
of such disability shall be deemed to be the date at which
retirement occurs for the purposes of computing the amount of
such payments under Section 2 and the time at which payments are
to commence under the last sentence of Section 2 (a).
5. Payments in the Event of Death.
(a) In the event the Employee dies, while
still in the employ of the Employer, prior to retirement or
disability (even if the Employee is not otherwise eligible to
retire at that time), the spouse (if the Employee is married at
the time of death) or heirs of the Employee (if the Employee is
not married at the time of Employee's death) shall, beginning at
the time of the Employee's death, be entitled to receive the
payments described in Section 2 above in accordance with the
priorities of section (c) of this Section 5. The date of such
death shall be deemed to be the time at which retirement occurs
for the purposes of computing the amount of payments due under
Section 2 and the time at which payments are to commence under
the last sentence of Section 2(a).
(b) In the event the Employee, after
retirement from the Employer or after the date of disability, and
while then receiving payments under Section 2 hereof, should die,
prior to having received all payments due the Employee under
Section 2, the Employer shall make any remaining payments due
under Section 2 to the spouse (if the Employee is married at the
time of death) or personal representatives of the deceased
Employee (if the Employee is not married at the time of death) in
accordance with the priorities of subsection (c) of this Section
5.
(c) Any payments due to the spouse or heirs of
a deceased Employee under subsections (a) or (b) of this Section
5 shall be paid in the following manner and in the following
priority as set forth in this subsection (c). If the Employee is
married at the time of the Employee's death, all payments shall
be made to the Employee's spouse, as due, for so long as said
spouse continues to live. If the Employee is not married at the
time of death, any said remaining payments shall be paid to the
heirs of Employee, as that term is defined in Section 6 hereof.
If the Employee's spouse becomes entitled to receive payments
under this provision but dies prior to having received all
payments due, any remaining payments due at the time of said
spouse's death shall be paid to the heirs of the Employee, as
that term is defined in Section 6 hereof. Under no circumstances
shall the Employer be required to make more than 120 monthly
payments in the aggregate to the Employee, the spouse of
Employee, or the Employee's heirs under this Agreement.
6. Definition of Heirs of Employee. The term
"heirs" of the employee, as used in Section 5(c), above, shall
mean those persons entitled to inherit the assets of the Employee
under the laws of intestacy of the State of Alabama if the
Employee had died intestate and had not been survived by any
spouse.
7. Health Insurance Plan. The Employee (and the
spouse of Employee after the Employee's death) shall be entitled
to continued participation in the Company's health insurance plan
(if Employee was participating at the time of the Employee's
retirement, disability or death) during the remainder of his life
and her life, after Employee's retirement under Sections 2, 4 or
5 hereof. The portion of the premium for the insurance coverage
to be paid by the Employer shall be based on the percentage of
the premium being paid by Employer at the time of Employee's
retirement, disability or death, multiplied by the Employee's
Vested Percentage. The Employee shall pay the balance of the
premium cost. If Employer is self-insured, premium cost shall be
based on COBRA rates applicable.
8. Definition of Disability. "Disability" shall,
for the purposes of this Agreement, mean such total, permanent
disability as will prevent and prohibit the Employee from
continuing to perform substantially all of the duties as were
being performed by Employee prior to becoming disabled and which
has at that date continued uninterrupted for a period of six (6)
continuous months. In the event there shall be any dispute or
disagreement as to whether the disability of the Employee has
occurred, such a matter shall be determined by the Board of
Directors of the Employer in its sole discretion which
determination shall be conclusive and binding upon the Employee.
9. Employment Continuity Agreement. The occurrence
of any event which entitles the Employee to receive compensation
under Section 3 of the Employment Continuity Agreement between
the Employer and the Employee shall be deemed to be a
"retirement" of the Employee at the date he becomes so entitled,
entitling him to the compensation provided under Section 2 of
this Agreement and the other rights and benefits provided under
this Agreement. In the event the Employee becomes entitled to
receive the benefits under this Agreement pursuant to this
Section 9, the Employee shall have the right to elect to receive
Employee's benefits under Section 2 hereof in one lump sum
payment in an amount equal to the present value of his future
payment hereunder, computed using an interest rate of seven
percent (7%) per annum. The election to receive said lump sum
payment shall be made by written notice from Employee to
Employer, given within sixty (60) days of the occurrence of the
event giving rise to Employee's right to receive compensation
under Section 3 of the Employee's Employment Continuity
Agreement, and shall, once made, be binding on Employee, the
Employee's spouse and heirs, as herein defined, at all times
thereafter. Said lump-sum payment shall be made by Employer to
Employee within ten (10) days after receipt by Employer of the
written notice from Employee given pursuant to the preceding
sentence.
10. Exclusivity of Services. The Employee
expressly agrees, as a condition of this Agreement, that during
the term of this Agreement and of any renewal hereof, and during
the further period for which monthly payments to the Employee are
provided herein upon his retirement, Employee will not, directly
or indirectly, render any services of an advisory nature or
otherwise to, or become employed by, or participate or engage in,
directly or indirectly, any business competitive with the
business of the Employer without the prior written consent of the
Employer, which written consent may be withheld without cause;
provided, however, in the event the Employee's retirement is
deemed to have occurred pursuant to Section 9 hereof, the
Employee shall not be restricted after said retirement by the
provisions of this Section 10. However, nothing herein shall
prohibit the Employee from owning stock or other securities of a
competitor which are relatively insubstantial to the total
outstanding stock of such competitor (i.e. less than 2%), and so
long as Employee, in fact, does not have the power to control or
direct the management or policies of such competitor, and does
not serve as a director or officer of, and is not otherwise
associated with, any competitor except as consented to by the
Employer.
11. Personal Agreement. The Employee hereby agrees
on behalf of Employee, and of Employee's executors and
administrators, heirs, legatees, distributes, and any other
person or persons, claiming any benefits under him by virtue of
this Agreement, that this Agreement and the rights, interests and
benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by the Employee or any executor,
administrator, heir, legatee, distributee or other person
claiming under the Employee by virtue of this Agreement and shall
not be subject to execution, attachment, or a similar process.
Any attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Agreement or of such rights, interests
and benefits contrary to the foregoing provisions, or the levy of
any attachment or a similar process thereupon, shall be null and
void and without effect.
12. Successors Bound. This Agreement shall be
binding upon and inure to the benefit of any successor of the
Employer and any such successor shall be deemed substituted for
the Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
13. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama. Any disputes by
the parties hereto concerning this Agreement shall be settled in
accordance with the Rules of the American Arbitration
Association, which determination shall be binding upon the
parties conclusively.
14. Amendment and Waiver. The Agreement may be
amended only in writing, by the parties hereto, and no condition
or provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
15. Funding. This Agreement shall not be construed
to create or require the Company to create a trust or to
otherwise act to fund the amounts payable hereunder.
16. Arbitration. In recognition of the mutual
benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy
for resolving any claim or dispute arising under this Agreement,
and hereby mutually waive any and all other remedies at law or in
equity for determining any such claim or dispute.
(a) Any arbitration under this Agreement, and
any related judicial proceeding, shall be initiated and shall
proceed pursuant to the then prevailing rules of the American
Arbitration Association (the "Association") for labor and
employment contracts. To initiate arbitration hereunder demand
shall be given in writing to the Association and the other party
no later than one year after the claim arises. Any claim for
which such demand is not made within one year after the claim
arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall
be before a single arbitrator, and an award in such arbitration
may include only damages which the arbitrator determines to be
due under express provisions of this Agreement. The arbitrator
shall have no authority to award any other damages, including
without limitation, consequential and exemplary damages. Any
award in arbitration shall be subject to enforcement and appeal
pursuant to the Act.
17. Legal Fees. In the event it becomes necessary
for either party to file a lawsuit for the purpose of enforcing
the terms of this Agreement, the cost of litigation, including,
without limitation, reasonable attorneys' fees, of the party
prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Replaces Prior Agreements. This Agreement
shall replace and supersede the Employment and Deferred
Compensation Agreement heretofore entered into between the
Employee and the Employer and shall be deemed a successor
thereof.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
EMPLOYMENT CONTINUITY AGREEMENT
This Agreement made as of this 14th day of November,
1995, by and between BIG B, INC., an Alabama corporation with its
principal place of business in Birmingham, Alabama (the
"Company") and ANTHONY J. BRUNO ("Employee"), of Birmingham,
Alabama.
WHEREAS, Employee is employed by the Company as an
executive officer; and
WHEREAS, Employee's creativity, ability to work with
people, experience, knowledge and business skills are extremely
valuable to the Company and its stockholders; and
WHEREAS, in the current business climate an attempted
acquisition of the Company is always a possibility; and
WHEREAS, the Company desires to assure itself of the
continued employment of Employee and the benefit of his
independent judgment in the operation of the Company in the event
that any such attempted acquisition were made, in light of the
disruption resulting from any such attempt; and
WHEREAS, the parties desire to enter into this
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
and undertakings herein contained and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged
by each of the parties, Employee and the Company agree as
follows:
1. Term of the Agreement. This Agreement shall
continue so long as the Employee continues to be employed by the
Company. Notwithstanding the foregoing to the contrary, this
Agreement shall terminate upon retirement by Employee, except as
to rights accrued and obligations arising prior to such date.
2. "Change in Control Event." Each of the
following events shall constitute a "Change in Control Event" for
purposes of this Agreement:
(a) Any person (other than an existing member
of the Board of Directors of the Company) acquires beneficial
ownership of Company securities and is or thereby becomes a
beneficial owner of securities entitling such person to exercise
twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding stock.
For purposes of this Agreement, "beneficial ownership" shall be
determined in accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation or
rule; and the term "person" shall include any natural person,
corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Company securities would
be required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(b) Within any twenty-four (24) month period,
individuals who were Directors at the beginning of such period,
together with any other Directors first elected as directors of
the Company pursuant to nominations approved or ratified by at
least two-thirds (2/3) of the Directors in office immediately
prior to such respective elections, cease to constitute a
majority of the Board of Directors of the Company.
(c) The Company's stockholders approve:
(i) any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Company common stock
would be converted into cash, securities or other property, other
than a merger or consolidation of the Company in which the
holders of the Company's common stock immediately prior to the
merger or consolidation have substantially the same proportionate
ownership and voting control of the surviving corporation
immediately after the merger or consolidation; or
(ii) any sale, lease, exchange,
liquidation or other transfer (in one transaction or a series of
transactions) of all or substantially all of the assets of the
Company.
Notwithstanding subparagraphs (i) and (ii) above, the term
"Change in Control Event" shall not include a consolidation,
merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of the Company is
owned, directly or indirectly, by a holding company, and the
holders of the Company's common stock immediately prior to the
transaction have substantially the same proportionate ownership
and voting control of the holding company.
3. Rights Upon Termination of Employment. If,
within twenty-four (24) months after the occurrence of a Change
in Control Event, the Company terminates Employee's employment
for any reason other than Good Cause as defined in Paragraph 4,
or if Employee voluntarily terminates employment for Good Reason
as defined in Paragraph 5, the Company shall provide Employee
with the following:
(a) Within thirty (30) days of such
termination, a lump sum cash payment in an amount equal to the
sum of:
(i) three hundred percent (300%) of
Employee's annual base salary in effect upon the date of the
Change in Control Event, and
(ii) three hundred percent (300%) of
average of the last three years bonuses earned by Employee
pursuant to the Company's Bonus Compensation Program for the
Company's three fiscal years ending immediately prior to the
Change in Control Event.
(b) The continuation of Employee's
participation and the participation of his dependents (to the
extent and on the same terms of participation he was
participating prior to his termination of employment and on the
same terms of participation as to any cost to Employee) in the
Company's health, life, disability and other employee insurance
and benefit plans, programs and arrangements (excluding the Big
B, Inc. Employees' Profit Sharing Plan) for a period of one
hundred and twenty (120) months after such termination as if he
were still employed during such period; provided, however, if
such participation in such plan, program or arrangement is
specifically prohibited by the terms thereof, the Company shall
provide Employee (and his dependents) with benefits substantially
similar to those which he was entitled to receive under such
plan, program or arrangement immediately prior to his termination
of employment. Additionally, at the end of any period of such
coverage, Employee shall have the right to have assigned to him,
for the cash surrender value thereof, any assignable insurance
owned by the Company on the life of Employee. For purposes of
this Paragraph 3(b), any employee benefit determined with
reference to Employee's compensation or earnings shall be based
on his annual base salary unless otherwise provided under the
terms of the applicable employee benefit plan, program or
arrangement.
(c) Immediately upon such termination (but not
later than three months after such termination), Employee shall
be entitled to exercise in full all options granted to him under
the Company's present or future stock option plan, subject to the
terms thereof, and the Employee shall be entitled to payments to
be made to him under the 1995 Employment and Deferred
Compensation Agreement between Employer and Employee, or any
successor thereto, pursuant to the terms of said Agreement.
4. Termination for Good Cause. Notwithstanding the
provisions of Paragraph 5 hereof, the Company retains the right
to terminate Employee for "Good Cause," in which event he shall
not be entitled to receive any payment or benefits pursuant to
this Agreement. "Good Cause" shall mean:
(a) Employee's conviction, by a court of
competent jurisdiction, of a crime adversely reflecting on his
honesty, trustworthiness, moral turpitude, or fitness to carry
out the responsibilities of his position with the Company in
other respects; or
(b) a willful breach by him of any material
duty or obligations imposed upon him under the terms of his
employment, as those terms existed immediately prior to any
Change in Control Event, and his failure to cure such breach
within thirty (30) days after receiving written notice thereof
from the Company.
5. Definition of Termination by Employee for Good
Reason. For purposes of this Agreement, termination by Employee
of his employment for "Good Reason" shall mean the Employee's
voluntary termination of his employment with Employer for the
reason of:
(a) the assignment of duties to Employee
which:
(i) are materially different from his
duties immediately prior to the Change in Control Event; or
(ii) result in his having significantly
less authority or responsibility than he had prior to the Change
in Control Event; or
(b) Employee's removal from, or any failure to
reelect him to, any position he held immediately prior to the
Change in Control Event with either the Company or any majority-
owned subsidiary; or
(c) a reduction of Employee's annual base
salary in effect on the date of the Change in Control Event or as
the same may be increased from time to time thereafter; or
(d) the relocation of the Company's principal
executive offices to a place outside of the greater metropolitan
Birmingham, Alabama area, or the Company's transferring or
assigning Employee to a place of employment other than its
principal executive offices, except for required business travel
to an extent substantially consistent with his business travel
obligations immediately prior to the Change in Control Event; or
(e) the Company's failure to provide Employee
with substantially the same health, life and other employee
benefit plans, programs and arrangements (specifically excluding
the Company's stock option plan and including its incentive bonus
plan, as the same may be amended in the future), and
substantially the same perquisites of employment, as provided to
him immediately prior to the Change in Control Event or as the
same may be increased thereafter; or
(f) the Company's failure to provide Employee
with substantially the same support staff as provided to him
immediately prior to the Change in Control Event; or
(g) the Company's failure to obtain from any
successor a satisfactory agreement to assume and perform the
terms of this Agreement.
6. Notices. Any and all notices required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been given when deposited in the United States
mails, certified or registered mail, postage prepaid and
addressed as follows:
to Employee at his residence and
to the Company at its principal business office.
7. Applicable Law, Taxes, Binding Agreement,
Severability, Construction. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Alabama.
8. Withholding. Notwithstanding anything to the
contrary herein contained, the Company may withhold from any
amounts payable under this Agreement all federal, state or other
taxes or assessments which may be required by applicable statute
or regulation to be withheld.
9. Successors Bound. This Agreement shall be
binding upon and inure to the benefit of any successor of the
Employer and any such successor shall be deemed substituted for
the Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
10. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama.
11. Limitations on Amounts to be Received.
Notwithstanding anything to the contrary herein contained, if any
amount payable to Employee or for his benefit pursuant to the
terms of this Agreement would not be deductible by the Company by
reason of Section 280G of the Internal Revenue Code, as amended
from time to time, or any regulations promulgated pursuant
thereto, then such amount shall not be paid to the extent that it
would cause the aggregate amount payable by the Company to
Employee or for his benefit pursuant to the terms of this
Agreement to exceed the amount which may be paid without causing
a loss of deduction under said Section 280G.
12. Execution of Further Documents. In the event
Employee receives payments or benefits pursuant to the terms
hereof and the Company's independent counsel deems it necessary
for the Company to receive a release or other acknowledgement,
Employee agrees to execute any such documents, as may be
reasonably required as a condition of his receipt of such payment
or benefits.
13. Amendment and Waiver. The Agreement may be
amended only in writing, by the parties hereto, and no condition
or provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
14. Funding. This Agreement shall not be construed
to create or require the Company to create a trust or to
otherwise act to fund the amounts payable hereunder.
15. Assignment. Except as required by law, the
right to receive payments hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such payments to be so
subject shall not be recognized by the Company.
16. Arbitration. In recognition of the mutual
benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy
for resolving any claim or dispute arising under this Agreement
and shall be binding upon them conclusively, and they hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and
any related judicial proceeding, shall be initiated and shall
proceed pursuant to the then prevailing rules of the American
Arbitration Association (the "Association") for labor and
employment contracts. To initiate arbitration hereunder demand
shall be given in writing to the Association and the other party
no later than one year after the claim arises. Any claim for
which such demand is not made within one year after the claim
arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall
be before a single arbitrator, and an award in such arbitration
may include only damages which the arbitrator determines to be
due under express provisions of this Agreement. The arbitrator
shall have no authority to award any other damages, including
without limitation, consequential and exemplary damages. Any
award in arbitration shall be subject to enforcement and appeal
pursuant to the Act.
17. Legal Fees. In the event it becomes necessary
for either party to file a lawsuit for the purpose of enforcing
the terms of this Agreement, the reasonable legal fees of the
party prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Personal Agreement. The Employee hereby agrees
on behalf of himself, and of his executors and administrators,
heirs, legatees, distributees, and any other person or persons,
claiming any benefits under him by virtue of this Agreement, that
this Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in
any way by the Employee or any executor, administrator, heir,
legatee, distributee or other person claiming under the Employee
by virtue of this Agreement and shall not be subject to
execution, attachment, or a similar process. Any attempted
assignment, transfer, pledge, or hypothecation, or other
disposition of this Agreement or of such rights, interests and
benefits contrary to the foregoing provisions, or the levy of any
attachment or a similar process thereupon, shall be null and void
and without effect.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By:_________________________
Its _____________
(Company)
___________________________(SEAL)
(Employee)
EMPLOYMENT CONTINUITY AGREEMENT
This Agreement made as of this 14th day of November,
1995, by and between BIG B, INC., an Alabama corporation with its
principal place of business in Birmingham, Alabama (the
"Company") and ARTHUR M. JONES, SR., ("Employee"), of Birmingham,
Alabama.
WHEREAS, Employee is employed by the Company as an
executive officer; and
WHEREAS, Employee's creativity, ability to work with
people, experience, knowledge and business skills are extremely
valuable to the Company and its stockholders; and
WHEREAS, in the current business climate an attempted
acquisition of the Company is always a possibility; and
WHEREAS, the Company desires to assure itself of the
continued employment of Employee and the benefit of his
independent judgment in the operation of the Company in the event
that any such attempted acquisition were made, in light of the
disruption resulting from any such attempt; and
WHEREAS, the parties desire to enter into this
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
and undertakings herein contained and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged
by each of the parties, Employee and the Company agree as
follows:
1. Term of the Agreement. This Agreement shall
continue so long as the Employee continues to be employed by the
Company. Notwithstanding the foregoing to the contrary, this
Agreement shall terminate upon retirement by Employee, except as
to rights accrued and obligations arising prior to such date.
2. "Change in Control Event." Each of the
following events shall constitute a "Change in Control Event" for
purposes of this Agreement:
(a) Any person (other than an existing member
of the Board of Directors of the Company) acquires beneficial
ownership of Company securities and is or thereby becomes a
beneficial owner of securities entitling such person to exercise
twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding stock.
For purposes of this Agreement, "beneficial ownership" shall be
determined in accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation or
rule; and the term "person" shall include any natural person,
corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Company securities would
be required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(b) Within any twenty-four (24) month period,
individuals who were Directors at the beginning of such period,
together with any other Directors first elected as directors of
the Company pursuant to nominations approved or ratified by at
least two-thirds (2/3) of the Directors in office immediately
prior to such respective elections, cease to constitute a
majority of the Board of Directors of the Company.
(c) The Company's stockholders approve:
(i) any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Company common stock
would be converted into cash, securities or other property, other
than a merger or consolidation of the Company in which the
holders of the Company's common stock immediately prior to the
merger or consolidation have substantially the same proportionate
ownership and voting control of the surviving corporation
immediately after the merger or consolidation; or
(ii) any sale, lease, exchange,
liquidation or other transfer (in one transaction or a series of
transactions) of all or substantially all of the assets of the
Company.
Notwithstanding subparagraphs (i) and (ii) above, the term
"Change in Control Event" shall not include a consolidation,
merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of the Company is
owned, directly or indirectly, by a holding company, and the
holders of the Company's common stock immediately prior to the
transaction have substantially the same proportionate ownership
and voting control of the holding company.
3. Rights Upon Termination of Employment. If,
within twenty-four (24) months after the occurrence of a Change
in Control Event, the Company terminates Employee's employment
for any reason other than Good Cause as defined in Paragraph 4,
or if Employee voluntarily terminates employment for Good Reason
as defined in Paragraph 5, the Company shall provide Employee
with the following:
(a) Within thirty (30) days of such
termination, a lump sum cash payment in an amount equal to the
sum of:
(i) three hundred percent (300%) of
Employee's annual base salary in effect upon the date of the
Change in Control Event, and
(ii) three hundred percent (300%) of
average of the last three years bonuses earned by Employee
pursuant to the Company's Bonus Compensation Program for the
Company's three fiscal years ending immediately prior to the
Change in Control Event.
(b) The continuation of Employee's
participation and the participation of his dependents (to the
extent and on the same terms of participation he was
participating prior to his termination of employment and on the
same terms of participation as to any cost to Employee) in the
Company's health, life, disability and other employee insurance
and benefit plans, programs and arrangements (excluding the Big
B, Inc. Employees' Profit Sharing Plan) for a period of one
hundred and twenty (120) months after such termination as if he
were still employed during such period; provided, however, if
such participation in such plan, program or arrangement is
specifically prohibited by the terms thereof, the Company shall
provide Employee (and his dependents) with benefits substantially
similar to those which he was entitled to receive under such
plan, program or arrangement immediately prior to his termination
of employment. Additionally, at the end of any period of such
coverage, Employee shall have the right to have assigned to him,
for the cash surrender value thereof, any assignable insurance
owned by the Company on the life of Employee. For purposes of
this Paragraph 3(b), any employee benefit determined with
reference to Employee's compensation or earnings shall be based
on his annual base salary unless otherwise provided under the
terms of the applicable employee benefit plan, program or
arrangement.
(c) Immediately upon such termination (but not
later than three months after such termination), Employee shall
be entitled to exercise in full all options granted to him under
the Company's present or future stock option plan, subject to the
terms thereof, and the Employee shall be entitled to payments to
be made to him under the 1995 Employment and Deferred
Compensation Agreement between Employer and Employee, or any
successor thereto, pursuant to the terms of said Agreement.
4. Termination for Good Cause. Notwithstanding the
provisions of Paragraph 5 hereof, the Company retains the right
to terminate Employee for "Good Cause," in which event he shall
not be entitled to receive any payment or benefits pursuant to
this Agreement. "Good Cause" shall mean:
(a) Employee's conviction, by a court of
competent jurisdiction, of a crime adversely reflecting on his
honesty, trustworthiness, moral turpitude, or fitness to carry
out the responsibilities of his position with the Company in
other respects; or
(b) a willful breach by him of any material
duty or obligations imposed upon him under the terms of his
employment, as those terms existed immediately prior to any
Change in Control Event, and his failure to cure such breach
within thirty (30) days after receiving written notice thereof
from the Company.
5. Definition of Termination by Employee for Good
Reason. For purposes of this Agreement, termination by Employee
of his employment for "Good Reason" shall mean the Employee's
voluntary termination of his employment with Employer for the
reason of:
(a) the assignment of duties to Employee
which:
(i) are materially different from his
duties immediately prior to the Change in Control Event; or
(ii) result in his having significantly
less authority or responsibility than he had prior to the Change
in Control Event; or
(b) Employee's removal from, or any failure to
reelect him to, any position he held immediately prior to the
Change in Control Event with either the Company or any majority-
owned subsidiary; or
(c) a reduction of Employee's annual base
salary in effect on the date of the Change in Control Event or as
the same may be increased from time to time thereafter; or
(d) the relocation of the Company's principal
executive offices to a place outside of the greater metropolitan
Birmingham, Alabama area, or the Company's transferring or
assigning Employee to a place of employment other than its
principal executive offices, except for required business travel
to an extent substantially consistent with his business travel
obligations immediately prior to the Change in Control Event; or
(e) the Company's failure to provide Employee
with substantially the same health, life and other employee
benefit plans, programs and arrangements (specifically excluding
the Company's stock option plan and including its incentive bonus
plan, as the same may be amended in the future), and
substantially the same perquisites of employment, as provided to
him immediately prior to the Change in Control Event or as the
same may be increased thereafter; or
(f) the Company's failure to provide Employee
with substantially the same support staff as provided to him
immediately prior to the Change in Control Event; or
(g) the Company's failure to obtain from any
successor a satisfactory agreement to assume and perform the
terms of this Agreement.
6. Notices. Any and all notices required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been given when deposited in the United States
mails, certified or registered mail, postage prepaid and
addressed as follows:
to Employee at his residence and
to the Company at its principal business office.
7. Applicable Law, Taxes, Binding Agreement,
Severability, Construction. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Alabama.
8. Withholding. Notwithstanding anything to the
contrary herein contained, the Company may withhold from any
amounts payable under this Agreement all federal, state or other
taxes or assessments which may be required by applicable statute
or regulation to be withheld.
9. Successors Bound. This Agreement shall be
binding upon and inure to the benefit of any successor of the
Employer and any such successor shall be deemed substituted for
the Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
10. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama.
11. Limitations on Amounts to be Received.
Notwithstanding anything to the contrary herein contained, if any
amount payable to Employee or for his benefit pursuant to the
terms of this Agreement would not be deductible by the Company by
reason of Section 280G of the Internal Revenue Code, as amended
from time to time, or any regulations promulgated pursuant
thereto, then such amount shall not be paid to the extent that it
would cause the aggregate amount payable by the Company to
Employee or for his benefit pursuant to the terms of this
Agreement to exceed the amount which may be paid without causing
a loss of deduction under said Section 280G.
12. Execution of Further Documents. In the event
Employee receives payments or benefits pursuant to the terms
hereof and the Company's independent counsel deems it necessary
for the Company to receive a release or other acknowledgement,
Employee agrees to execute any such documents, as may be
reasonably required as a condition of his receipt of such payment
or benefits.
13. Amendment and Waiver. The Agreement may be
amended only in writing, by the parties hereto, and no condition
or provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
14. Funding. This Agreement shall not be construed
to create or require the Company to create a trust or to
otherwise act to fund the amounts payable hereunder.
15. Assignment. Except as required by law, the
right to receive payments hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such payments to be so
subject shall not be recognized by the Company.
16. Arbitration. In recognition of the mutual
benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy
for resolving any claim or dispute arising under this Agreement
and shall be binding upon them conclusively, and they hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and
any related judicial proceeding, shall be initiated and shall
proceed pursuant to the then prevailing rules of the American
Arbitration Association (the "Association") for labor and
employment contracts. To initiate arbitration hereunder demand
shall be given in writing to the Association and the other party
no later than one year after the claim arises. Any claim for
which such demand is not made within one year after the claim
arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall
be before a single arbitrator, and an award in such arbitration
may include only damages which the arbitrator determines to be
due under express provisions of this Agreement. The arbitrator
shall have no authority to award any other damages, including
without limitation, consequential and exemplary damages. Any
award in arbitration shall be subject to enforcement and appeal
pursuant to the Act.
17. Legal Fees. In the event it becomes necessary
for either party to file a lawsuit for the purpose of enforcing
the terms of this Agreement, the reasonable legal fees of the
party prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Personal Agreement. The Employee hereby agrees
on behalf of himself, and of his executors and administrators,
heirs, legatees, distributees, and any other person or persons,
claiming any benefits under him by virtue of this Agreement, that
this Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in
any way by the Employee or any executor, administrator, heir,
legatee, distributee or other person claiming under the Employee
by virtue of this Agreement and shall not be subject to
execution, attachment, or a similar process. Any attempted
assignment, transfer, pledge, or hypothecation, or other
disposition of this Agreement or of such rights, interests and
benefits contrary to the foregoing provisions, or the levy of any
attachment or a similar process thereupon, shall be null and void
and without effect.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: ________________________
Its _____________
(Company)
___________________________(SEAL)
(Employee)
EMPLOYMENT CONTINUITY AGREEMENT
This Agreement made as of this 14th day of November,
1995, by and between BIG B, INC., an Alabama corporation with its
principal place of business in Birmingham, Alabama (the
"Company") and VINCENT J. BRUNO ("Employee"), of Birmingham,
Alabama.
WHEREAS, Employee is employed by the Company as an
executive officer; and
WHEREAS, Employee's creativity, ability to work with
people, experience, knowledge and business skills are extremely
valuable to the Company and its stockholders; and
WHEREAS, in the current business climate an attempted
acquisition of the Company is always a possibility; and
WHEREAS, the Company desires to assure itself of the
continued employment of Employee and the benefit of his
independent judgment in the operation of the Company in the event
that any such attempted acquisition were made, in light of the
disruption resulting from any such attempt; and
WHEREAS, the parties desire to enter into this
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
and undertakings herein contained and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged
by each of the parties, Employee and the Company agree as
follows:
1. Term of the Agreement. This Agreement shall
continue so long as the Employee continues to be employed by the
Company. Notwithstanding the foregoing to the contrary, this
Agreement shall terminate upon retirement by Employee, except as
to rights accrued and obligations arising prior to such date.
2. "Change in Control Event." Each of the
following events shall constitute a "Change in Control Event" for
purposes of this Agreement:
(a) Any person (other than an existing member
of the Board of Directors of the Company) acquires
beneficial ownership of Company securities and is or
thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent
(25%) or more of the combined voting power of the
Company's then outstanding stock.
For purposes of this Agreement, "beneficial ownership" shall be
determined in accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation or
rule; and the term "person" shall include any natural person,
corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Company securities would
be required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(b) Within any twenty-four (24) month period,
individuals who were Directors at the beginning of such
period, together with any other Directors first elected
as directors of the Company pursuant to nominations
approved or ratified by at least two-thirds (2/3) of
the Directors in office immediately prior to such
respective elections, cease to constitute a majority of
the Board of Directors of the Company.
(c) The Company's stockholders approve:
(i) any consolidation or merger of the
Company in which the Company is not the continuing
or surviving corporation or pursuant to which
shares of Company common stock would be converted
into cash, securities or other property, other
than a merger or consolidation of the Company in
which the holders of the Company's common stock
immediately prior to the merger or consolidation
have substantially the same proportionate
ownership and voting control of the surviving
corporation immediately after the merger or
consolidation; or
(ii) any sale, lease, exchange,
liquidation or other transfer (in one transaction
or a series of transactions) of all or
substantially all of the assets of the Company.
Notwithstanding subparagraphs (i) and (ii) above, the term
"Change in Control Event" shall not include a consolidation,
merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of the Company is
owned, directly or indirectly, by a holding company, and the
holders of the Company's common stock immediately prior to the
transaction have substantially the same proportionate ownership
and voting control of the holding company.
3. Rights Upon Termination of Employment. If,
within twenty-four (24) months after the occurrence of a Change
in Control Event, the Company terminates Employee's employment
for any reason other than Good Cause as defined in Paragraph 4,
or if Employee voluntarily terminates employment for Good Reason
as defined in Paragraph 5, the Company shall provide Employee
with the following:
(a) Within thirty (30) days of such
termination, a lump sum cash payment in an amount equal
to the sum of:
(i) two hundred percent (200%) of
Employee's annual base salary in effect upon the
date of the Change in Control Event, and
(ii) two hundred percent (200%) of
average of the last three years bonuses earned by
Employee pursuant to the Company's Bonus
Compensation Program for the Company's three
fiscal years ending immediately prior to the
Change in Control Event.
(b) The continuation of Employee's
participation and the participation of his dependents
(to the extent and on the same terms of participation
he was participating prior to his termination of
employment and on the same terms of participation as to
any cost to Employee) in the Company's health, life,
disability and other employee insurance and benefit
plans, programs and arrangements (excluding the Big B,
Inc. Employees' Profit Sharing Plan) for a period of
one hundred and twenty (120) months after such
termination as if he were still employed during such
period; provided, however, if such participation in
such plan, program or arrangement is specifically
prohibited by the terms thereof, the Company shall
provide Employee (and his dependents) with benefits
substantially similar to those which he was entitled to
receive under such plan, program or arrangement
immediately prior to his termination of employment.
Additionally, at the end of any period of such
coverage, Employee shall have the right to have
assigned to him, for the cash surrender value thereof,
any assignable insurance owned by the Company on the
life of Employee. For purposes of this Paragraph 3(b),
any employee benefit determined with reference to
Employee's compensation or earnings shall be based on
his annual base salary unless otherwise provided under
the terms of the applicable employee benefit plan,
program or arrangement.
(c) Immediately upon such termination (but not
later than three months after such termination),
Employee shall be entitled to exercise in full all
options granted to him under the Company's present or
future stock option plan, subject to the terms thereof,
and the Employee shall be entitled to payments to be
made to him under the 1995 Employment and Deferred
Compensation Agreement between Employer and Employee,
or any successor thereto, pursuant to the terms of said
Agreement.
4. Termination for Good Cause. Notwithstanding the
provisions of Paragraph 5 hereof, the Company retains the right
to terminate Employee for "Good Cause," in which event he shall
not be entitled to receive any payment or benefits pursuant to
this Agreement. "Good Cause" shall mean:
(a) Employee's conviction, by a court of
competent jurisdiction, of a crime adversely reflecting
on his honesty, trustworthiness, moral turpitude, or
fitness to carry out the responsibilities of his
position with the Company in other respects; or
(b) a willful breach by him of any material
duty or obligations imposed upon him under the terms of
his employment, as those terms existed immediately
prior to any Change in Control Event, and his failure
to cure such breach within thirty (30) days after
receiving written notice thereof from the Company.
5. Definition of Termination by Employee for Good
Reason. For purposes of this Agreement, termination by Employee
of his employment for "Good Reason" shall mean the Employee's
voluntary termination of his employment with Employer for the
reason of:
(a) the assignment of duties to Employee
which:
(i) are materially different from his
duties immediately prior to the Change in Control
Event; or
(ii) result in his having significantly
less authority or responsibility than he had prior
to the Change in Control Event; or
(b) Employee's removal from, or any failure to
reelect him to, any position he held immediately prior
to the Change in Control Event with either the Company
or any majority-owned subsidiary; or
(c) a reduction of Employee's annual base
salary in effect on the date of the Change in Control
Event or as the same may be increased from time to time
thereafter; or
(d) the relocation of the Company's principal
executive offices to a place outside of the greater
metropolitan Birmingham, Alabama area, or the Company's
transferring or assigning Employee to a place of
employment other than its principal executive offices,
except for required business travel to an extent
substantially consistent with his business travel
obligations immediately prior to the Change in Control
Event; or
(e) the Company's failure to provide Employee
with substantially the same health, life and other
employee benefit plans, programs and arrangements
(specifically excluding the Company's stock option plan
and including its incentive bonus plan, as the same may
be amended in the future), and substantially the same
perquisites of employment, as provided to him
immediately prior to the Change in Control Event or as
the same may be increased thereafter; or
(f) the Company's failure to provide Employee
with substantially the same support staff as provided
to him immediately prior to the Change in Control
Event; or
(g) the Company's failure to obtain from any
successor a satisfactory agreement to assume and
perform the terms of this Agreement.
6. Notices. Any and all notices required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been given when deposited in the United States
mails, certified or registered mail, postage prepaid and
addressed as follows:
to Employee at his residence and
to the Company at its principal business office.
7. Applicable Law, Taxes, Binding Agreement,
Severability, Construction. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Alabama.
8. Withholding. Notwithstanding anything to the
contrary herein contained, the Company may withhold from any
amounts payable under this Agreement all federal, state or other
taxes or assessments which may be required by applicable statute
or regulation to be withheld.
9. Successors Bound. This Agreement shall be
binding upon and inure to the benefit of any successor of the
Employer and any such successor shall be deemed substituted for
the Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
10. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama.
11. Limitations on Amounts to be Received.
Notwithstanding anything to the contrary herein contained, if any
amount payable to Employee or for his benefit pursuant to the
terms of this Agreement would not be deductible by the Company by
reason of Section 280G of the Internal Revenue Code, as amended
from time to time, or any regulations promulgated pursuant
thereto, then such amount shall not be paid to the extent that it
would cause the aggregate amount payable by the Company to
Employee or for his benefit pursuant to the terms of this
Agreement to exceed the amount which may be paid without causing
a loss of deduction under said Section 280G.
12. Execution of Further Documents. In the event
Employee receives payments or benefits pursuant to the terms
hereof and the Company's independent counsel deems it necessary
for the Company to receive a release or other acknowledgement,
Employee agrees to execute any such documents, as may be
reasonably required as a condition of his receipt of such payment
or benefits.
13. Amendment and Waiver. The Agreement may be
amended only in writing, by the parties hereto, and no condition
or provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
14. Funding. This Agreement shall not be construed
to create or require the Company to create a trust or to
otherwise act to fund the amounts payable hereunder.
15. Assignment. Except as required by law, the
right to receive payments hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such payments to be so
subject shall not be recognized by the Company.
16. Arbitration. In recognition of the mutual
benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy
for resolving any claim or dispute arising under this Agreement
and shall be binding upon them conclusively, and they hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and
any related judicial proceeding, shall be initiated and
shall proceed pursuant to the then prevailing rules of
the American Arbitration Association (the
"Association") for labor and employment contracts. To
initiate arbitration hereunder demand shall be given in
writing to the Association and the other party no later
than one year after the claim arises. Any claim for
which such demand is not made within one year after the
claim arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall
be before a single arbitrator, and an award in such
arbitration may include only damages which the
arbitrator determines to be due under express
provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including
without limitation, consequential and exemplary
damages. Any award in arbitration shall be subject to
enforcement and appeal pursuant to the Act.
17. Legal Fees. In the event it becomes necessary
for either party to file a lawsuit for the purpose of enforcing
the terms of this Agreement, the reasonable legal fees of the
party prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Personal Agreement. The Employee hereby agrees
on behalf of himself, and of his executors and administrators,
heirs, legatees, distributees, and any other person or persons,
claiming any benefits under him by virtue of this Agreement, that
this Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in
any way by the Employee or any executor, administrator, heir,
legatee, distributee or other person claiming under the Employee
by virtue of this Agreement and shall not be subject to
execution, attachment, or a similar process. Any attempted
assignment, transfer, pledge, or hypothecation, or other
disposition of this Agreement or of such rights, interests and
benefits contrary to the foregoing provisions, or the levy of any
attachment or a similar process thereupon, shall be null and void
and without effect.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
_________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
EMPLOYMENT CONTINUITY AGREEMENT
This Agreement made as of this 14th day of November,
1995, by and between BIG B, INC., an Alabama corporation with its
principal place of business in Birmingham, Alabama (the
"Company") and BOBBY W. LITTLE ("Employee"), of Birmingham,
Alabama.
WHEREAS, Employee is employed by the Company as an
executive officer; and
WHEREAS, Employee's creativity, ability to work with
people, experience, knowledge and business skills are extremely
valuable to the Company and its stockholders; and
WHEREAS, in the current business climate an attempted
acquisition of the Company is always a possibility; and
WHEREAS, the Company desires to assure itself of the
continued employment of Employee and the benefit of his
independent judgment in the operation of the Company in the event
that any such attempted acquisition were made, in light of the
disruption resulting from any such attempt; and
WHEREAS, the parties desire to enter into this
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
and undertakings herein contained and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged
by each of the parties, Employee and the Company agree as
follows:
1. Term of the Agreement. This Agreement shall
continue so long as the Employee continues to be employed by the
Company. Notwithstanding the foregoing to the contrary, this
Agreement shall terminate upon retirement by Employee, except as
to rights accrued and obligations arising prior to such date.
2. "Change in Control Event." Each of the
following events shall constitute a "Change in Control Event" for
purposes of this Agreement:
(a) Any person (other than an existing member
of the Board of Directors of the Company) acquires
beneficial ownership of Company securities and is or
thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent
(25%) or more of the combined voting power of the
Company's then outstanding stock.
For purposes of this Agreement, "beneficial ownership" shall be
determined in accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation or
rule; and the term "person" shall include any natural person,
corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Company securities would
be required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(b) Within any twenty-four (24) month period,
individuals who were Directors at the beginning of such
period, together with any other Directors first elected
as directors of the Company pursuant to nominations
approved or ratified by at least two-thirds (2/3) of
the Directors in office immediately prior to such
respective elections, cease to constitute a majority of
the Board of Directors of the Company.
(c) The Company's stockholders approve:
(i) any consolidation or merger of the
Company in which the Company is not the continuing
or surviving corporation or pursuant to which
shares of Company common stock would be converted
into cash, securities or other property, other
than a merger or consolidation of the Company in
which the holders of the Company's common stock
immediately prior to the merger or consolidation
have substantially the same proportionate
ownership and voting control of the surviving
corporation immediately after the merger or
consolidation; or
(ii) any sale, lease, exchange,
liquidation or other transfer (in one transaction
or a series of transactions) of all or
substantially all of the assets of the Company.
Notwithstanding subparagraphs (i) and (ii) above, the term
"Change in Control Event" shall not include a consolidation,
merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of the Company is
owned, directly or indirectly, by a holding company, and the
holders of the Company's common stock immediately prior to the
transaction have substantially the same proportionate ownership
and voting control of the holding company.
3. Rights Upon Termination of Employment. If,
within twenty-four (24) months after the occurrence of a Change
in Control Event, the Company terminates Employee's employment
for any reason other than Good Cause as defined in Paragraph 4,
or if Employee voluntarily terminates employment for Good Reason
as defined in Paragraph 5, the Company shall provide Employee
with the following:
(a) Within thirty (30) days of such
termination, a lump sum cash payment in an amount equal
to the sum of:
(i) two hundred percent (200%) of
Employee's annual base salary in effect upon the
date of the Change in Control Event, and
(ii) two hundred percent (200%) of
average of the last three years bonuses earned by
Employee pursuant to the Company's Bonus
Compensation Program for the Company's three
fiscal years ending immediately prior to the
Change in Control Event.
(b) The continuation of Employee's
participation and the participation of his dependents
(to the extent and on the same terms of participation
he was participating prior to his termination of
employment and on the same terms of participation as to
any cost to Employee) in the Company's health, life,
disability and other employee insurance and benefit
plans, programs and arrangements (excluding the Big B,
Inc. Employees' Profit Sharing Plan) for a period of
one hundred and twenty (120) months after such
termination as if he were still employed during such
period; provided, however, if such participation in
such plan, program or arrangement is specifically
prohibited by the terms thereof, the Company shall
provide Employee (and his dependents) with benefits
substantially similar to those which he was entitled to
receive under such plan, program or arrangement
immediately prior to his termination of employment.
Additionally, at the end of any period of such
coverage, Employee shall have the right to have
assigned to him, for the cash surrender value thereof,
any assignable insurance owned by the Company on the
life of Employee. For purposes of this Paragraph 3(b),
any employee benefit determined with reference to
Employee's compensation or earnings shall be based on
his annual base salary unless otherwise provided under
the terms of the applicable employee benefit plan,
program or arrangement.
(c) Immediately upon such termination (but not
later than three months after such termination),
Employee shall be entitled to exercise in full all
options granted to him under the Company's present or
future stock option plan, subject to the terms thereof,
and the Employee shall be entitled to payments to be
made to him under the 1995 Employment and Deferred
Compensation Agreement between Employer and Employee,
or any successor thereto, pursuant to the terms of said
Agreement.
4. Termination for Good Cause. Notwithstanding the
provisions of Paragraph 5 hereof, the Company retains the right
to terminate Employee for "Good Cause," in which event he shall
not be entitled to receive any payment or benefits pursuant to
this Agreement. "Good Cause" shall mean:
(a) Employee's conviction, by a court of
competent jurisdiction, of a crime adversely reflecting
on his honesty, trustworthiness, moral turpitude, or
fitness to carry out the responsibilities of his
position with the Company in other respects; or
(b) a willful breach by him of any material
duty or obligations imposed upon him under the terms of
his employment, as those terms existed immediately
prior to any Change in Control Event, and his failure
to cure such breach within thirty (30) days after
receiving written notice thereof from the Company.
5. Definition of Termination by Employee for Good
Reason. For purposes of this Agreement, termination by Employee
of his employment for "Good Reason" shall mean the Employee's
voluntary termination of his employment with Employer for the
reason of:
(a) the assignment of duties to Employee
which:
(i) are materially different from his
duties immediately prior to the Change in Control
Event; or
(ii) result in his having significantly
less authority or responsibility than he had prior
to the Change in Control Event; or
(b) Employee's removal from, or any failure to
reelect him to, any position he held immediately prior
to the Change in Control Event with either the Company
or any majority-owned subsidiary; or
(c) a reduction of Employee's annual base
salary in effect on the date of the Change in Control
Event or as the same may be increased from time to time
thereafter; or
(d) the relocation of the Company's principal
executive offices to a place outside of the greater
metropolitan Birmingham, Alabama area, or the Company's
transferring or assigning Employee to a place of
employment other than its principal executive offices,
except for required business travel to an extent
substantially consistent with his business travel
obligations immediately prior to the Change in Control
Event; or
(e) the Company's failure to provide Employee
with substantially the same health, life and other
employee benefit plans, programs and arrangements
(specifically excluding the Company's stock option plan
and including its incentive bonus plan, as the same may
be amended in the future), and substantially the same
perquisites of employment, as provided to him
immediately prior to the Change in Control Event or as
the same may be increased thereafter; or
(f) the Company's failure to provide Employee
with substantially the same support staff as provided
to him immediately prior to the Change in Control
Event; or
(g) the Company's failure to obtain from any
successor a satisfactory agreement to assume and
perform the terms of this Agreement.
6. Notices. Any and all notices required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been given when deposited in the United States
mails, certified or registered mail, postage prepaid and
addressed as follows:
to Employee at his residence and
to the Company at its principal business office.
7. Applicable Law, Taxes, Binding Agreement,
Severability, Construction. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Alabama.
8. Withholding. Notwithstanding anything to the
contrary herein contained, the Company may withhold from any
amounts payable under this Agreement all federal, state or other
taxes or assessments which may be required by applicable statute
or regulation to be withheld.
9. Successors Bound. This Agreement shall be
binding upon and inure to the benefit of any successor of the
Employer and any such successor shall be deemed substituted for
the Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
10. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama.
11. Limitations on Amounts to be Received.
Notwithstanding anything to the contrary herein contained, if any
amount payable to Employee or for his benefit pursuant to the
terms of this Agreement would not be deductible by the Company by
reason of Section 280G of the Internal Revenue Code, as amended
from time to time, or any regulations promulgated pursuant
thereto, then such amount shall not be paid to the extent that it
would cause the aggregate amount payable by the Company to
Employee or for his benefit pursuant to the terms of this
Agreement to exceed the amount which may be paid without causing
a loss of deduction under said Section 280G.
12. Execution of Further Documents. In the event
Employee receives payments or benefits pursuant to the terms
hereof and the Company's independent counsel deems it necessary
for the Company to receive a release or other acknowledgement,
Employee agrees to execute any such documents, as may be
reasonably required as a condition of his receipt of such payment
or benefits.
13. Amendment and Waiver. The Agreement may be
amended only in writing, by the parties hereto, and no condition
or provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
14. Funding. This Agreement shall not be construed
to create or require the Company to create a trust or to
otherwise act to fund the amounts payable hereunder.
15. Assignment. Except as required by law, the
right to receive payments hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such payments to be so
subject shall not be recognized by the Company.
16. Arbitration. In recognition of the mutual
benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy
for resolving any claim or dispute arising under this Agreement
and shall be binding upon them conclusively, and they hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and
any related judicial proceeding, shall be initiated and
shall proceed pursuant to the then prevailing rules of
the American Arbitration Association (the
"Association") for labor and employment contracts. To
initiate arbitration hereunder demand shall be given in
writing to the Association and the other party no later
than one year after the claim arises. Any claim for
which such demand is not made within one year after the
claim arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall
be before a single arbitrator, and an award in such
arbitration may include only damages which the
arbitrator determines to be due under express
provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including
without limitation, consequential and exemplary
damages. Any award in arbitration shall be subject to
enforcement and appeal pursuant to the Act.
17. Legal Fees. In the event it becomes necessary
for either party to file a lawsuit for the purpose of enforcing
the terms of this Agreement, the reasonable legal fees of the
party prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Personal Agreement. The Employee hereby agrees
on behalf of himself, and of his executors and administrators,
heirs, legatees, distributees, and any other person or persons,
claiming any benefits under him by virtue of this Agreement, that
this Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in
any way by the Employee or any executor, administrator, heir,
legatee, distributee or other person claiming under the Employee
by virtue of this Agreement and shall not be subject to
execution, attachment, or a similar process. Any attempted
assignment, transfer, pledge, or hypothecation, or other
disposition of this Agreement or of such rights, interests and
benefits contrary to the foregoing provisions, or the levy of any
attachment or a similar process thereupon, shall be null and void
and without effect.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
_________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE) BIG B, INC.
By:
Its _____________
(Company)
___________________________(SEAL)
(Employee)
EMPLOYMENT CONTINUITY AGREEMENT
This Agreement made as of this 14th day of November,
1995, by and between BIG B, INC., an Alabama corporation with its
principal place of business in Birmingham, Alabama (the
"Company") and JAMES A. BRUNO ("Employee"), of Birmingham,
Alabama.
WHEREAS, Employee is employed by the Company as an
executive officer; and
WHEREAS, Employee's creativity, ability to work with
people, experience, knowledge and business skills are extremely
valuable to the Company and its stockholders; and
WHEREAS, in the current business climate an attempted
acquisition of the Company is always a possibility; and
WHEREAS, the Company desires to assure itself of the
continued employment of Employee and the benefit of his
independent judgment in the operation of the Company in the event
that any such attempted acquisition were made, in light of the
disruption resulting from any such attempt; and
WHEREAS, the parties desire to enter into this
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
and undertakings herein contained and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged
by each of the parties, Employee and the Company agree as
follows:
1. Term of the Agreement. This Agreement shall
continue so long as the Employee continues to be employed by the
Company. Notwithstanding the foregoing to the contrary, this
Agreement shall terminate upon retirement by Employee, except as
to rights accrued and obligations arising prior to such date.
2. "Change in Control Event." Each of the
following events shall constitute a "Change in Control Event" for
purposes of this Agreement:
(a) Any person (other than an existing member of
the Board of Directors of the Company) acquires beneficial
ownership of Company securities and is or thereby becomes a
beneficial owner of securities entitling such person to exercise
twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding stock.
For purposes of this Agreement, "beneficial ownership" shall be
determined in accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation or
rule; and the term "person" shall include any natural person,
corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Company securities would
be required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(b) Within any twenty-four (24) month period,
individuals who were Directors at the beginning of such period,
together with any other Directors first elected as directors of
the Company pursuant to nominations approved or ratified by at
least two-thirds (2/3) of the Directors in office immediately
prior to such respective elections, cease to constitute a
majority of the Board of Directors of the Company.
(c) The Company's stockholders approve:
(i) any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Company common stock
would be converted into cash, securities or other property, other
than a merger or consolidation of the Company in which the
holders of the Company's common stock immediately prior to the
merger or consolidation have substantially the same proportionate
ownership and voting control of the surviving corporation
immediately after the merger or consolidation; or
(ii) any sale, lease, exchange,
liquidation or other transfer (in one transaction or a series of
transactions) of all or substantially all of the assets of the
Company.
Notwithstanding subparagraphs (i) and (ii) above, the term
"Change in Control Event" shall not include a consolidation,
merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of the Company is
owned, directly or indirectly, by a holding company, and the
holders of the Company's common stock immediately prior to the
transaction have substantially the same proportionate ownership
and voting control of the holding company.
3. Rights Upon Termination of Employment. If,
within twenty-four (24) months after the occurrence of a Change
in Control Event, the Company terminates Employee's employment
for any reason other than Good Cause as defined in Paragraph 4,
or if Employee voluntarily terminates employment for Good Reason
as defined in Paragraph 5, the Company shall provide Employee
with the following:
(a) Within thirty (30) days of such
termination, a lump sum cash payment in an amount equal to the
sum of:
(i) three hundred percent (300%) of
Employee's annual base salary in effect upon the date of the
Change in Control Event, and
(ii) three hundred percent (300%) of
average of the last three years bonuses earned by Employee
pursuant to the Company's Bonus Compensation Program for the
Company's three fiscal years ending immediately prior to the
Change in Control Event.
(b) The continuation of Employee's
participation and the participation of his dependents (to the
extent and on the same terms of participation he was
participating prior to his termination of employment and on the
same terms of participation as to any cost to Employee) in the
Company's health, life, disability and other employee insurance
and benefit plans, programs and arrangements (excluding the Big
B, Inc. Employees' Profit Sharing Plan) for a period of one
hundred and twenty (120) months after such termination as if he
were still employed during such period; provided, however, if
such participation in such plan, program or arrangement is
specifically prohibited by the terms thereof, the Company shall
provide Employee (and his dependents) with benefits substantially
similar to those which he was entitled to receive under such
plan, program or arrangement immediately prior to his termination
of employment. Additionally, at the end of any period of such
coverage, Employee shall have the right to have assigned to him,
for the cash surrender value thereof, any assignable insurance
owned by the Company on the life of Employee. For purposes of
this Paragraph 3(b), any employee benefit determined with
reference to Employee's compensation or earnings shall be based
on his annual base salary unless otherwise provided under the
terms of the applicable employee benefit plan, program or
arrangement.
(c) Immediately upon such termination (but not
later than three months after such termination), Employee shall
be entitled to exercise in full all options granted to him under
the Company's present or future stock option plan, subject to the
terms thereof, and the Employee shall be entitled to payments to
be made to him under the 1995 Employment and Deferred
Compensation Agreement between Employer and Employee, or any
successor thereto, pursuant to the terms of said Agreement.
4. Termination for Good Cause. Notwithstanding the
provisions of Paragraph 5 hereof, the Company retains the right
to terminate Employee for "Good Cause," in which event he shall
not be entitled to receive any payment or benefits pursuant to
this Agreement. "Good Cause" shall mean:
(a) Employee's conviction, by a court of
competent jurisdiction, of a crime adversely reflecting on his
honesty, trustworthiness, moral turpitude, or fitness to carry
out the responsibilities of his position with the Company in
other respects; or
(b) a willful breach by him of any material
duty or obligations imposed upon him under the terms of his
employment, as those terms existed immediately prior to any
Change in Control Event, and his failure to cure such breach
within thirty (30) days after receiving written notice thereof
from the Company.
5. Definition of Termination by Employee for Good
Reason. For purposes of this Agreement, termination by Employee
of his employment for "Good Reason" shall mean the Employee's
voluntary termination of his employment with Employer for the
reason of:
(a) the assignment of duties to Employee
which:
(i) are materially different from his
duties immediately prior to the Change in Control Event; or
(ii) result in his having significantly
less authority or responsibility than he had prior to the Change
in Control Event; or
(b) Employee's removal from, or any failure to
reelect him to, any position he held immediately prior to the
Change in Control Event with either the Company or any majority-
owned subsidiary; or
(c) a reduction of Employee's annual base
salary in effect on the date of the Change in Control Event or as
the same may be increased from time to time thereafter; or
(d) the relocation of the Company's principal
executive offices to a place outside of the greater metropolitan
Birmingham, Alabama area, or the Company's transferring or
assigning Employee to a place of employment other than its
principal executive offices, except for required business travel
to an extent substantially consistent with his business travel
obligations immediately prior to the Change in Control Event; or
(e) the Company's failure to provide Employee
with substantially the same health, life and other employee
benefit plans, programs and arrangements (specifically excluding
the Company's stock option plan and including its incentive bonus
plan, as the same may be amended in the future), and
substantially the same perquisites of employment, as provided to
him immediately prior to the Change in Control Event or as the
same may be increased thereafter; or
(f) the Company's failure to provide Employee
with substantially the same support staff as provided to him
immediately prior to the Change in Control Event; or
(g) the Company's failure to obtain from any
successor a satisfactory agreement to assume and perform the
terms of this Agreement.
6. Notices. Any and all notices required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been given when deposited in the United States
mails, certified or registered mail, postage prepaid and
addressed as follows:
to Employee at his residence and
to the Company at its principal business office.
7. Applicable Law, Taxes, Binding Agreement,
Severability, Construction. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Alabama.
8. Withholding. Notwithstanding anything to the
contrary herein contained, the Company may withhold from any
amounts payable under this Agreement all federal, state or other
taxes or assessments which may be required by applicable statute
or regulation to be withheld.
9. Successors Bound. This Agreement shall be
binding upon and inure to the benefit of any successor of the
Employer and any such successor shall be deemed substituted for
the Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
10. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama.
11. Limitations on Amounts to be Received.
Notwithstanding anything to the contrary herein contained, if any
amount payable to Employee or for his benefit pursuant to the
terms of this Agreement would not be deductible by the Company by
reason of Section 280G of the Internal Revenue Code, as amended
from time to time, or any regulations promulgated pursuant
thereto, then such amount shall not be paid to the extent that it
would cause the aggregate amount payable by the Company to
Employee or for his benefit pursuant to the terms of this
Agreement to exceed the amount which may be paid without causing
a loss of deduction under said Section 280G.
12. Execution of Further Documents. In the event
Employee receives payments or benefits pursuant to the terms
hereof and the Company's independent counsel deems it necessary
for the Company to receive a release or other acknowledgement,
Employee agrees to execute any such documents, as may be
reasonably required as a condition of his receipt of such payment
or benefits.
13. Amendment and Waiver. The Agreement may be
amended only in writing, by the parties hereto, and no condition
or provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
14. Funding. This Agreement shall not be construed
to create or require the Company to create a trust or to
otherwise act to fund the amounts payable hereunder.
15. Assignment. Except as required by law, the
right to receive payments hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such payments to be so
subject shall not be recognized by the Company.
16. Arbitration. In recognition of the mutual
benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy
for resolving any claim or dispute arising under this Agreement
and shall be binding upon them conclusively, and they hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and
any related judicial proceeding, shall be initiated and shall
proceed pursuant to the then prevailing rules of the American
Arbitration Association (the "Association") for labor and
employment contracts. To initiate arbitration hereunder demand
shall be given in writing to the Association and the other party
no later than one year after the claim arises. Any claim for
which such demand is not made within one year after the claim
arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall
be before a single arbitrator, and an award in such arbitration
may include only damages which the arbitrator determines to be
due under express provisions of this Agreement. The arbitrator
shall have no authority to award any other damages, including
without limitation, consequential and exemplary damages. Any
award in arbitration shall be subject to enforcement and appeal
pursuant to the Act.
17. Legal Fees. In the event it becomes necessary
for either party to file a lawsuit for the purpose of enforcing
the terms of this Agreement, the reasonable legal fees of the
party prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Personal Agreement. The Employee hereby agrees
on behalf of himself, and of his executors and administrators,
heirs, legatees, distributees, and any other person or persons,
claiming any benefits under him by virtue of this Agreement, that
this Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in
any way by the Employee or any executor, administrator, heir,
legatee, distributee or other person claiming under the Employee
by virtue of this Agreement and shall not be subject to
execution, attachment, or a similar process. Any attempted
assignment, transfer, pledge, or hypothecation, or other
disposition of this Agreement or of such rights, interests and
benefits contrary to the foregoing provisions, or the levy of any
attachment or a similar process thereupon, shall be null and void
and without effect.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By:_____________________
Its _____________
(Company)
___________________________(SEAL)
(Employee)
EMPLOYMENT CONTINUITY AGREEMENT
This Agreement made as of this 14th day of November,
1995, by and between BIG B, INC., an Alabama corporation with its
principal place of business in Birmingham, Alabama (the
"Company") and EUGENE A. BECKMANN ("Employee"), of Birmingham,
Alabama.
WHEREAS, Employee is employed by the Company as an
executive officer; and
WHEREAS, Employee's creativity, ability to work with
people, experience, knowledge and business skills are extremely
valuable to the Company and its stockholders; and
WHEREAS, in the current business climate an attempted
acquisition of the Company is always a possibility; and
WHEREAS, the Company desires to assure itself of the
continued employment of Employee and the benefit of his
independent judgment in the operation of the Company in the event
that any such attempted acquisition were made, in light of the
disruption resulting from any such attempt; and
WHEREAS, the parties desire to enter into this
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
and undertakings herein contained and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged
by each of the parties, Employee and the Company agree as
follows:
1. Term of the Agreement. This Agreement shall
continue so long as the Employee continues to be employed by the
Company. Notwithstanding the foregoing to the contrary, this
Agreement shall terminate upon retirement by Employee, except as
to rights accrued and obligations arising prior to such date.
2. "Change in Control Event." Each of the
following events shall constitute a "Change in Control Event" for
purposes of this Agreement:
(a) Any person (other than an existing member
of the Board of Directors of the Company) acquires
beneficial ownership of Company securities and is or
thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent
(25%) or more of the combined voting power of the
Company's then outstanding stock.
For purposes of this Agreement, "beneficial ownership" shall be
determined in accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation or
rule; and the term "person" shall include any natural person,
corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Company securities would
be required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(b) Within any twenty-four (24) month period,
individuals who were Directors at the beginning of such
period, together with any other Directors first elected
as directors of the Company pursuant to nominations
approved or ratified by at least two-thirds (2/3) of
the Directors in office immediately prior to such
respective elections, cease to constitute a majority of
the Board of Directors of the Company.
(c) The Company's stockholders approve:
(i) any consolidation or merger of the
Company in which the Company is not the continuing
or surviving corporation or pursuant to which
shares of Company common stock would be converted
into cash, securities or other property, other
than a merger or consolidation of the Company in
which the holders of the Company's common stock
immediately prior to the merger or consolidation
have substantially the same proportionate
ownership and voting control of the surviving
corporation immediately after the merger or
consolidation; or
(ii) any sale, lease, exchange,
liquidation or other transfer (in one transaction
or a series of transactions) of all or
substantially all of the assets of the Company.
Notwithstanding subparagraphs (i) and (ii) above, the term
"Change in Control Event" shall not include a consolidation,
merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of the Company is
owned, directly or indirectly, by a holding company, and the
holders of the Company's common stock immediately prior to the
transaction have substantially the same proportionate ownership
and voting control of the holding company.
3. Rights Upon Termination of Employment. If,
within twenty-four (24) months after the occurrence of a Change
in Control Event, the Company terminates Employee's employment
for any reason other than Good Cause as defined in Paragraph 4,
or if Employee voluntarily terminates employment for Good Reason
as defined in Paragraph 5, the Company shall provide Employee
with the following:
(a) Within thirty (30) days of such
termination, a lump sum cash payment in an amount equal
to the sum of:
(i) one hundred percent (100%) of
Employee's annual base salary in effect upon the
date of the Change in Control Event, and
(ii) one hundred percent (100%) of
average of the last three years bonuses earned by
Employee pursuant to the Company's Bonus
Compensation Program for the Company's three
fiscal years ending immediately prior to the
Change in Control Event.
(b) The continuation of Employee's
participation and the participation of his dependents
(to the extent and on the same terms of participation
he was participating prior to his termination of
employment and on the same terms of participation as to
any cost to Employee) in the Company's health, life,
disability and other employee insurance and benefit
plans, programs and arrangements (excluding the Big B,
Inc. Employees' Profit Sharing Plan) for a period of
one hundred and twenty (120) months after such
termination as if he were still employed during such
period; provided, however, if such participation in
such plan, program or arrangement is specifically
prohibited by the terms thereof, the Company shall
provide Employee (and his dependents) with benefits
substantially similar to those which he was entitled to
receive under such plan, program or arrangement
immediately prior to his termination of employment.
Additionally, at the end of any period of such
coverage, Employee shall have the right to have
assigned to him, for the cash surrender value thereof,
any assignable insurance owned by the Company on the
life of Employee. For purposes of this Paragraph 3(b),
any employee benefit determined with reference to
Employee's compensation or earnings shall be based on
his annual base salary unless otherwise provided under
the terms of the applicable employee benefit plan,
program or arrangement.
(c) Immediately upon such termination (but not
later than three months after such termination),
Employee shall be entitled to exercise in full all
options granted to him under the Company's present or
future stock option plan, subject to the terms thereof,
and the Employee shall be entitled to payments to be
made to him under the 1995 Employment and Deferred
Compensation Agreement between Employer and Employee,
or any successor thereto, pursuant to the terms of said
Agreement.
4. Termination for Good Cause. Notwithstanding the
provisions of Paragraph 5 hereof, the Company retains the right
to terminate Employee for "Good Cause," in which event he shall
not be entitled to receive any payment or benefits pursuant to
this Agreement. "Good Cause" shall mean:
(a) Employee's conviction, by a court of
competent jurisdiction, of a crime adversely reflecting
on his honesty, trustworthiness, moral turpitude, or
fitness to carry out the responsibilities of his
position with the Company in other respects; or
(b) a willful breach by him of any material
duty or obligations imposed upon him under the terms of
his employment, as those terms existed immediately
prior to any Change in Control Event, and his failure
to cure such breach within thirty (30) days after
receiving written notice thereof from the Company.
5. Definition of Termination by Employee for Good
Reason. For purposes of this Agreement, termination by Employee
of his employment for "Good Reason" shall mean the Employee's
voluntary termination of his employment with Employer for the
reason of:
(a) the assignment of duties to Employee
which:
(i) are materially different from his
duties immediately prior to the Change in Control
Event; or
(ii) result in his having significantly
less authority or responsibility than he had prior
to the Change in Control Event; or
(b) Employee's removal from, or any failure to
reelect him to, any position he held immediately prior
to the Change in Control Event with either the Company
or any majority-owned subsidiary; or
(c) a reduction of Employee's annual base
salary in effect on the date of the Change in Control
Event or as the same may be increased from time to time
thereafter; or
(d) the relocation of the Company's principal
executive offices to a place outside of the greater
metropolitan Birmingham, Alabama area, or the Company's
transferring or assigning Employee to a place of
employment other than its principal executive offices,
except for required business travel to an extent
substantially consistent with his business travel
obligations immediately prior to the Change in Control
Event; or
(e) the Company's failure to provide Employee
with substantially the same health, life and other
employee benefit plans, programs and arrangements
(specifically excluding the Company's stock option plan
and including its incentive bonus plan, as the same may
be amended in the future), and substantially the same
perquisites of employment, as provided to him
immediately prior to the Change in Control Event or as
the same may be increased thereafter; or
(f) the Company's failure to provide Employee
with substantially the same support staff as provided
to him immediately prior to the Change in Control
Event; or
(g) the Company's failure to obtain from any
successor a satisfactory agreement to assume and
perform the terms of this Agreement.
6. Notices. Any and all notices required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been given when deposited in the United States
mails, certified or registered mail, postage prepaid and
addressed as follows:
to Employee at his residence and
to the Company at its principal business office.
7. Applicable Law, Taxes, Binding Agreement,
Severability, Construction. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Alabama.
8. Withholding. Notwithstanding anything to the
contrary herein contained, the Company may withhold from any
amounts payable under this Agreement all federal, state or other
taxes or assessments which may be required by applicable statute
or regulation to be withheld.
9. Successors Bound. This Agreement shall be
binding upon and inure to the benefit of any successor of the
Employer and any such successor shall be deemed substituted for
the Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
10. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama.
11. Limitations on Amounts to be Received.
Notwithstanding anything to the contrary herein contained, if any
amount payable to Employee or for his benefit pursuant to the
terms of this Agreement would not be deductible by the Company by
reason of Section 280G of the Internal Revenue Code, as amended
from time to time, or any regulations promulgated pursuant
thereto, then such amount shall not be paid to the extent that it
would cause the aggregate amount payable by the Company to
Employee or for his benefit pursuant to the terms of this
Agreement to exceed the amount which may be paid without causing
a loss of deduction under said Section 280G.
12. Execution of Further Documents. In the event
Employee receives payments or benefits pursuant to the terms
hereof and the Company's independent counsel deems it necessary
for the Company to receive a release or other acknowledgement,
Employee agrees to execute any such documents, as may be
reasonably required as a condition of his receipt of such payment
or benefits.
13. Amendment and Waiver. The Agreement may be
amended only in writing, by the parties hereto, and no condition
or provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
14. Funding. This Agreement shall not be construed
to create or require the Company to create a trust or to
otherwise act to fund the amounts payable hereunder.
15. Assignment. Except as required by law, the
right to receive payments hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such payments to be so
subject shall not be recognized by the Company.
16. Arbitration. In recognition of the mutual
benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy
for resolving any claim or dispute arising under this Agreement
and shall be binding upon them conclusively, and they hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and
any related judicial proceeding, shall be initiated and
shall proceed pursuant to the then prevailing rules of
the American Arbitration Association (the
"Association") for labor and employment contracts. To
initiate arbitration hereunder demand shall be given in
writing to the Association and the other party no later
than one year after the claim arises. Any claim for
which such demand is not made within one year after the
claim arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall
be before a single arbitrator, and an award in such
arbitration may include only damages which the
arbitrator determines to be due under express
provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including
without limitation, consequential and exemplary
damages. Any award in arbitration shall be subject to
enforcement and appeal pursuant to the Act.
17. Legal Fees. In the event it becomes necessary
for either party to file a lawsuit for the purpose of enforcing
the terms of this Agreement, the reasonable legal fees of the
party prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Personal Agreement. The Employee hereby agrees
on behalf of himself, and of his executors and administrators,
heirs, legatees, distributees, and any other person or persons,
claiming any benefits under him by virtue of this Agreement, that
this Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in
any way by the Employee or any executor, administrator, heir,
legatee, distributee or other person claiming under the Employee
by virtue of this Agreement and shall not be subject to
execution, attachment, or a similar process. Any attempted
assignment, transfer, pledge, or hypothecation, or other
disposition of this Agreement or of such rights, interests and
benefits contrary to the foregoing provisions, or the levy of any
attachment or a similar process thereupon, shall be null and void
and without effect.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
_________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
EMPLOYMENT CONTINUITY AGREEMENT
This Agreement made as of this 14th day of November,
1995, by and between BIG B, INC., an Alabama corporation with its
principal place of business in Birmingham, Alabama (the
"Company") and S. STEVEN TAYLOR ("Employee"), of Birmingham,
Alabama.
WHEREAS, Employee is employed by the Company as an
executive officer; and
WHEREAS, Employee's creativity, ability to work with
people, experience, knowledge and business skills are extremely
valuable to the Company and its stockholders; and
WHEREAS, in the current business climate an attempted
acquisition of the Company is always a possibility; and
WHEREAS, the Company desires to assure itself of the
continued employment of Employee and the benefit of his
independent judgment in the operation of the Company in the event
that any such attempted acquisition were made, in light of the
disruption resulting from any such attempt; and
WHEREAS, the parties desire to enter into this
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
and undertakings herein contained and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged
by each of the parties, Employee and the Company agree as
follows:
1. Term of the Agreement. This Agreement shall
continue so long as the Employee continues to be employed by the
Company. Notwithstanding the foregoing to the contrary, this
Agreement shall terminate upon retirement by Employee, except as
to rights accrued and obligations arising prior to such date.
2. "Change in Control Event." Each of the
following events shall constitute a "Change in Control Event" for
purposes of this Agreement:
(a) Any person (other than an existing member
of the Board of Directors of the Company) acquires
beneficial ownership of Company securities and is or
thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent
(25%) or more of the combined voting power of the
Company's then outstanding stock.
For purposes of this Agreement, "beneficial ownership" shall be
determined in accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation or
rule; and the term "person" shall include any natural person,
corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Company securities would
be required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(b) Within any twenty-four (24) month period,
individuals who were Directors at the beginning of such
period, together with any other Directors first elected
as directors of the Company pursuant to nominations
approved or ratified by at least two-thirds (2/3) of
the Directors in office immediately prior to such
respective elections, cease to constitute a majority of
the Board of Directors of the Company.
(c) The Company's stockholders approve:
(i) any consolidation or merger of the
Company in which the Company is not the continuing
or surviving corporation or pursuant to which
shares of Company common stock would be converted
into cash, securities or other property, other
than a merger or consolidation of the Company in
which the holders of the Company's common stock
immediately prior to the merger or consolidation
have substantially the same proportionate
ownership and voting control of the surviving
corporation immediately after the merger or
consolidation; or
(ii) any sale, lease, exchange,
liquidation or other transfer (in one transaction
or a series of transactions) of all or
substantially all of the assets of the Company.
Notwithstanding subparagraphs (i) and (ii) above, the term
"Change in Control Event" shall not include a consolidation,
merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of the Company is
owned, directly or indirectly, by a holding company, and the
holders of the Company's common stock immediately prior to the
transaction have substantially the same proportionate ownership
and voting control of the holding company.
3. Rights Upon Termination of Employment. If,
within twenty-four (24) months after the occurrence of a Change
in Control Event, the Company terminates Employee's employment
for any reason other than Good Cause as defined in Paragraph 4,
or if Employee voluntarily terminates employment for Good Reason
as defined in Paragraph 5, the Company shall provide Employee
with the following:
(a) Within thirty (30) days of such
termination, a lump sum cash payment in an amount equal
to the sum of:
(i) one hundred percent (100%) of
Employee's annual base salary in effect upon the
date of the Change in Control Event, and
(ii) one hundred percent (100%) of
average of the last three years bonuses earned by
Employee pursuant to the Company's Bonus
Compensation Program for the Company's three
fiscal years ending immediately prior to the
Change in Control Event.
(b) The continuation of Employee's
participation and the participation of his dependents
(to the extent and on the same terms of participation
he was participating prior to his termination of
employment and on the same terms of participation as to
any cost to Employee) in the Company's health, life,
disability and other employee insurance and benefit
plans, programs and arrangements (excluding the Big B,
Inc. Employees' Profit Sharing Plan) for a period of
one hundred and twenty (120) months after such
termination as if he were still employed during such
period; provided, however, if such participation in
such plan, program or arrangement is specifically
prohibited by the terms thereof, the Company shall
provide Employee (and his dependents) with benefits
substantially similar to those which he was entitled to
receive under such plan, program or arrangement
immediately prior to his termination of employment.
Additionally, at the end of any period of such
coverage, Employee shall have the right to have
assigned to him, for the cash surrender value thereof,
any assignable insurance owned by the Company on the
life of Employee. For purposes of this Paragraph 3(b),
any employee benefit determined with reference to
Employee's compensation or earnings shall be based on
his annual base salary unless otherwise provided under
the terms of the applicable employee benefit plan,
program or arrangement.
(c) Immediately upon such termination (but not
later than three months after such termination),
Employee shall be entitled to exercise in full all
options granted to him under the Company's present or
future stock option plan, subject to the terms thereof,
and the Employee shall be entitled to payments to be
made to him under the 1995 Employment and Deferred
Compensation Agreement between Employer and Employee,
or any successor thereto, pursuant to the terms of said
Agreement.
4. Termination for Good Cause. Notwithstanding the
provisions of Paragraph 5 hereof, the Company retains the right
to terminate Employee for "Good Cause," in which event he shall
not be entitled to receive any payment or benefits pursuant to
this Agreement. "Good Cause" shall mean:
(a) Employee's conviction, by a court of
competent jurisdiction, of a crime adversely reflecting
on his honesty, trustworthiness, moral turpitude, or
fitness to carry out the responsibilities of his
position with the Company in other respects; or
(b) a willful breach by him of any material
duty or obligations imposed upon him under the terms of
his employment, as those terms existed immediately
prior to any Change in Control Event, and his failure
to cure such breach within thirty (30) days after
receiving written notice thereof from the Company.
5. Definition of Termination by Employee for Good
Reason. For purposes of this Agreement, termination by Employee
of his employment for "Good Reason" shall mean the Employee's
voluntary termination of his employment with Employer for the
reason of:
(a) the assignment of duties to Employee
which:
(i) are materially different from his
duties immediately prior to the Change in Control
Event; or
(ii) result in his having significantly
less authority or responsibility than he had prior
to the Change in Control Event; or
(b) Employee's removal from, or any failure to
reelect him to, any position he held immediately prior
to the Change in Control Event with either the Company
or any majority-owned subsidiary; or
(c) a reduction of Employee's annual base
salary in effect on the date of the Change in Control
Event or as the same may be increased from time to time
thereafter; or
(d) the relocation of the Company's principal
executive offices to a place outside of the greater
metropolitan Birmingham, Alabama area, or the Company's
transferring or assigning Employee to a place of
employment other than its principal executive offices,
except for required business travel to an extent
substantially consistent with his business travel
obligations immediately prior to the Change in Control
Event; or
(e) the Company's failure to provide Employee
with substantially the same health, life and other
employee benefit plans, programs and arrangements
(specifically excluding the Company's stock option plan
and including its incentive bonus plan, as the same may
be amended in the future), and substantially the same
perquisites of employment, as provided to him
immediately prior to the Change in Control Event or as
the same may be increased thereafter; or
(f) the Company's failure to provide Employee
with substantially the same support staff as provided
to him immediately prior to the Change in Control
Event; or
(g) the Company's failure to obtain from any
successor a satisfactory agreement to assume and
perform the terms of this Agreement.
6. Notices. Any and all notices required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been given when deposited in the United States
mails, certified or registered mail, postage prepaid and
addressed as follows:
to Employee at his residence and
to the Company at its principal business office.
7. Applicable Law, Taxes, Binding Agreement,
Severability, Construction. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Alabama.
8. Withholding. Notwithstanding anything to the
contrary herein contained, the Company may withhold from any
amounts payable under this Agreement all federal, state or other
taxes or assessments which may be required by applicable statute
or regulation to be withheld.
9. Successors Bound. This Agreement shall be
binding upon and inure to the benefit of any successor of the
Employer and any such successor shall be deemed substituted for
the Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
10. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama.
11. Limitations on Amounts to be Received.
Notwithstanding anything to the contrary herein contained, if any
amount payable to Employee or for his benefit pursuant to the
terms of this Agreement would not be deductible by the Company by
reason of Section 280G of the Internal Revenue Code, as amended
from time to time, or any regulations promulgated pursuant
thereto, then such amount shall not be paid to the extent that it
would cause the aggregate amount payable by the Company to
Employee or for his benefit pursuant to the terms of this
Agreement to exceed the amount which may be paid without causing
a loss of deduction under said Section 280G.
12. Execution of Further Documents. In the event
Employee receives payments or benefits pursuant to the terms
hereof and the Company's independent counsel deems it necessary
for the Company to receive a release or other acknowledgement,
Employee agrees to execute any such documents, as may be
reasonably required as a condition of his receipt of such payment
or benefits.
13. Amendment and Waiver. The Agreement may be
amended only in writing, by the parties hereto, and no condition
or provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
14. Funding. This Agreement shall not be construed
to create or require the Company to create a trust or to
otherwise act to fund the amounts payable hereunder.
15. Assignment. Except as required by law, the
right to receive payments hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such payments to be so
subject shall not be recognized by the Company.
16. Arbitration. In recognition of the mutual
benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy
for resolving any claim or dispute arising under this Agreement
and shall be binding upon them conclusively, and they hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and
any related judicial proceeding, shall be initiated and
shall proceed pursuant to the then prevailing rules of
the American Arbitration Association (the
"Association") for labor and employment contracts. To
initiate arbitration hereunder demand shall be given in
writing to the Association and the other party no later
than one year after the claim arises. Any claim for
which such demand is not made within one year after the
claim arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall
be before a single arbitrator, and an award in such
arbitration may include only damages which the
arbitrator determines to be due under express
provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including
without limitation, consequential and exemplary
damages. Any award in arbitration shall be subject to
enforcement and appeal pursuant to the Act.
17. Legal Fees. In the event it becomes necessary
for either party to file a lawsuit for the purpose of enforcing
the terms of this Agreement, the reasonable legal fees of the
party prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Personal Agreement. The Employee hereby agrees
on behalf of himself, and of his executors and administrators,
heirs, legatees, distributees, and any other person or persons,
claiming any benefits under him by virtue of this Agreement, that
this Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in
any way by the Employee or any executor, administrator, heir,
legatee, distributee or other person claiming under the Employee
by virtue of this Agreement and shall not be subject to
execution, attachment, or a similar process. Any attempted
assignment, transfer, pledge, or hypothecation, or other
disposition of this Agreement or of such rights, interests and
benefits contrary to the foregoing provisions, or the levy of any
attachment or a similar process thereupon, shall be null and void
and without effect.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
_________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
EMPLOYMENT CONTINUITY AGREEMENT
This Agreement made as of this 14th day of November,
1995, by and between BIG B, INC., an Alabama corporation with its
principal place of business in Birmingham, Alabama (the
"Company") and MICHAEL J. TORTORICE ("Employee"), of Birmingham,
Alabama.
WHEREAS, Employee is employed by the Company as an
executive officer; and
WHEREAS, Employee's creativity, ability to work with
people, experience, knowledge and business skills are extremely
valuable to the Company and its stockholders; and
WHEREAS, in the current business climate an attempted
acquisition of the Company is always a possibility; and
WHEREAS, the Company desires to assure itself of the
continued employment of Employee and the benefit of his
independent judgment in the operation of the Company in the event
that any such attempted acquisition were made, in light of the
disruption resulting from any such attempt; and
WHEREAS, the parties desire to enter into this
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
and undertakings herein contained and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged
by each of the parties, Employee and the Company agree as
follows:
1. Term of the Agreement. This Agreement shall
continue so long as the Employee continues to be employed by the
Company. Notwithstanding the foregoing to the contrary, this
Agreement shall terminate upon retirement by Employee, except as
to rights accrued and obligations arising prior to such date.
2. "Change in Control Event." Each of the
following events shall constitute a "Change in Control Event" for
purposes of this Agreement:
(a) Any person (other than an existing member
of the Board of Directors of the Company) acquires
beneficial ownership of Company securities and is or
thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent
(25%) or more of the combined voting power of the
Company's then outstanding stock.
For purposes of this Agreement, "beneficial ownership" shall be
determined in accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation or
rule; and the term "person" shall include any natural person,
corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Company securities would
be required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(b) Within any twenty-four (24) month period,
individuals who were Directors at the beginning of such
period, together with any other Directors first elected
as directors of the Company pursuant to nominations
approved or ratified by at least two-thirds (2/3) of
the Directors in office immediately prior to such
respective elections, cease to constitute a majority of
the Board of Directors of the Company.
(c) The Company's stockholders approve:
(i) any consolidation or merger of the
Company in which the Company is not the continuing
or surviving corporation or pursuant to which
shares of Company common stock would be converted
into cash, securities or other property, other
than a merger or consolidation of the Company in
which the holders of the Company's common stock
immediately prior to the merger or consolidation
have substantially the same proportionate
ownership and voting control of the surviving
corporation immediately after the merger or
consolidation; or
(ii) any sale, lease, exchange,
liquidation or other transfer (in one transaction
or a series of transactions) of all or
substantially all of the assets of the Company.
Notwithstanding subparagraphs (i) and (ii) above, the term
"Change in Control Event" shall not include a consolidation,
merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of the Company is
owned, directly or indirectly, by a holding company, and the
holders of the Company's common stock immediately prior to the
transaction have substantially the same proportionate ownership
and voting control of the holding company.
3. Rights Upon Termination of Employment. If,
within twenty-four (24) months after the occurrence of a Change
in Control Event, the Company terminates Employee's employment
for any reason other than Good Cause as defined in Paragraph 4,
or if Employee voluntarily terminates employment for Good Reason
as defined in Paragraph 5, the Company shall provide Employee
with the following:
(a) Within thirty (30) days of such
termination, a lump sum cash payment in an amount equal
to the sum of:
(i) two hundred percent (200%) of
Employee's annual base salary in effect upon the
date of the Change in Control Event, and
(ii) two hundred percent (200%) of
average of the last three years bonuses earned by
Employee pursuant to the Company's Bonus
Compensation Program for the Company's three
fiscal years ending immediately prior to the
Change in Control Event.
(b) The continuation of Employee's
participation and the participation of his dependents
(to the extent and on the same terms of participation
he was participating prior to his termination of
employment and on the same terms of participation as to
any cost to Employee) in the Company's health, life,
disability and other employee insurance and benefit
plans, programs and arrangements (excluding the Big B,
Inc. Employees' Profit Sharing Plan) for a period of
one hundred and twenty (120) months after such
termination as if he were still employed during such
period; provided, however, if such participation in
such plan, program or arrangement is specifically
prohibited by the terms thereof, the Company shall
provide Employee (and his dependents) with benefits
substantially similar to those which he was entitled to
receive under such plan, program or arrangement
immediately prior to his termination of employment.
Additionally, at the end of any period of such
coverage, Employee shall have the right to have
assigned to him, for the cash surrender value thereof,
any assignable insurance owned by the Company on the
life of Employee. For purposes of this Paragraph 3(b),
any employee benefit determined with reference to
Employee's compensation or earnings shall be based on
his annual base salary unless otherwise provided under
the terms of the applicable employee benefit plan,
program or arrangement.
(c) Immediately upon such termination (but not
later than three months after such termination),
Employee shall be entitled to exercise in full all
options granted to him under the Company's present or
future stock option plan, subject to the terms thereof,
and the Employee shall be entitled to payments to be
made to him under the 1995 Employment and Deferred
Compensation Agreement between Employer and Employee,
or any successor thereto, pursuant to the terms of said
Agreement.
4. Termination for Good Cause. Notwithstanding the
provisions of Paragraph 5 hereof, the Company retains the right
to terminate Employee for "Good Cause," in which event he shall
not be entitled to receive any payment or benefits pursuant to
this Agreement. "Good Cause" shall mean:
(a) Employee's conviction, by a court of
competent jurisdiction, of a crime adversely reflecting
on his honesty, trustworthiness, moral turpitude, or
fitness to carry out the responsibilities of his
position with the Company in other respects; or
(b) a willful breach by him of any material
duty or obligations imposed upon him under the terms of
his employment, as those terms existed immediately
prior to any Change in Control Event, and his failure
to cure such breach within thirty (30) days after
receiving written notice thereof from the Company.
5. Definition of Termination by Employee for Good
Reason. For purposes of this Agreement, termination by Employee
of his employment for "Good Reason" shall mean the Employee's
voluntary termination of his employment with Employer for the
reason of:
(a) the assignment of duties to Employee
which:
(i) are materially different from his
duties immediately prior to the Change in Control
Event; or
(ii) result in his having significantly
less authority or responsibility than he had prior
to the Change in Control Event; or
(b) Employee's removal from, or any failure to
reelect him to, any position he held immediately prior
to the Change in Control Event with either the Company
or any majority-owned subsidiary; or
(c) a reduction of Employee's annual base
salary in effect on the date of the Change in Control
Event or as the same may be increased from time to time
thereafter; or
(d) the relocation of the Company's principal
executive offices to a place outside of the greater
metropolitan Birmingham, Alabama area, or the Company's
transferring or assigning Employee to a place of
employment other than its principal executive offices,
except for required business travel to an extent
substantially consistent with his business travel
obligations immediately prior to the Change in Control
Event; or
(e) the Company's failure to provide Employee
with substantially the same health, life and other
employee benefit plans, programs and arrangements
(specifically excluding the Company's stock option plan
and including its incentive bonus plan, as the same may
be amended in the future), and substantially the same
perquisites of employment, as provided to him
immediately prior to the Change in Control Event or as
the same may be increased thereafter; or
(f) the Company's failure to provide Employee
with substantially the same support staff as provided
to him immediately prior to the Change in Control
Event; or
(g) the Company's failure to obtain from any
successor a satisfactory agreement to assume and
perform the terms of this Agreement.
6. Notices. Any and all notices required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been given when deposited in the United States
mails, certified or registered mail, postage prepaid and
addressed as follows:
to Employee at his residence and
to the Company at its principal business office.
7. Applicable Law, Taxes, Binding Agreement,
Severability, Construction. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Alabama.
8. Withholding. Notwithstanding anything to the
contrary herein contained, the Company may withhold from any
amounts payable under this Agreement all federal, state or other
taxes or assessments which may be required by applicable statute
or regulation to be withheld.
9. Successors Bound. This Agreement shall be
binding upon and inure to the benefit of any successor of the
Employer and any such successor shall be deemed substituted for
the Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
10. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama.
11. Limitations on Amounts to be Received.
Notwithstanding anything to the contrary herein contained, if any
amount payable to Employee or for his benefit pursuant to the
terms of this Agreement would not be deductible by the Company by
reason of Section 280G of the Internal Revenue Code, as amended
from time to time, or any regulations promulgated pursuant
thereto, then such amount shall not be paid to the extent that it
would cause the aggregate amount payable by the Company to
Employee or for his benefit pursuant to the terms of this
Agreement to exceed the amount which may be paid without causing
a loss of deduction under said Section 280G.
12. Execution of Further Documents. In the event
Employee receives payments or benefits pursuant to the terms
hereof and the Company's independent counsel deems it necessary
for the Company to receive a release or other acknowledgement,
Employee agrees to execute any such documents, as may be
reasonably required as a condition of his receipt of such payment
or benefits.
13. Amendment and Waiver. The Agreement may be
amended only in writing, by the parties hereto, and no condition
or provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
14. Funding. This Agreement shall not be construed
to create or require the Company to create a trust or to
otherwise act to fund the amounts payable hereunder.
15. Assignment. Except as required by law, the
right to receive payments hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such payments to be so
subject shall not be recognized by the Company.
16. Arbitration. In recognition of the mutual
benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy
for resolving any claim or dispute arising under this Agreement
and shall be binding upon them conclusively, and they hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and
any related judicial proceeding, shall be initiated and
shall proceed pursuant to the then prevailing rules of
the American Arbitration Association (the
"Association") for labor and employment contracts. To
initiate arbitration hereunder demand shall be given in
writing to the Association and the other party no later
than one year after the claim arises. Any claim for
which such demand is not made within one year after the
claim arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall
be before a single arbitrator, and an award in such
arbitration may include only damages which the
arbitrator determines to be due under express
provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including
without limitation, consequential and exemplary
damages. Any award in arbitration shall be subject to
enforcement and appeal pursuant to the Act.
17. Legal Fees. In the event it becomes necessary
for either party to file a lawsuit for the purpose of enforcing
the terms of this Agreement, the reasonable legal fees of the
party prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Personal Agreement. The Employee hereby agrees
on behalf of himself, and of his executors and administrators,
heirs, legatees, distributees, and any other person or persons,
claiming any benefits under him by virtue of this Agreement, that
this Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in
any way by the Employee or any executor, administrator, heir,
legatee, distributee or other person claiming under the Employee
by virtue of this Agreement and shall not be subject to
execution, attachment, or a similar process. Any attempted
assignment, transfer, pledge, or hypothecation, or other
disposition of this Agreement or of such rights, interests and
benefits contrary to the foregoing provisions, or the levy of any
attachment or a similar process thereupon, shall be null and void
and without effect.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
_________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
EMPLOYMENT CONTINUITY AGREEMENT
This Agreement made as of this 14th day of November,
1995, by and between BIG B, INC., an Alabama corporation with its
principal place of business in Birmingham, Alabama (the
"Company") and PAUL BRUNO ("Employee"), of Birmingham, Alabama.
WHEREAS, Employee is employed by the Company as an
executive officer; and
WHEREAS, Employee's creativity, ability to work with
people, experience, knowledge and business skills are extremely
valuable to the Company and its stockholders; and
WHEREAS, in the current business climate an attempted
acquisition of the Company is always a possibility; and
WHEREAS, the Company desires to assure itself of the
continued employment of Employee and the benefit of his
independent judgment in the operation of the Company in the event
that any such attempted acquisition were made, in light of the
disruption resulting from any such attempt; and
WHEREAS, the parties desire to enter into this
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
and undertakings herein contained and for other good and valuable
consideration, the receipt and adequacy of which is acknowledged
by each of the parties, Employee and the Company agree as
follows:
1. Term of the Agreement. This Agreement shall
continue so long as the Employee continues to be employed by the
Company. Notwithstanding the foregoing to the contrary, this
Agreement shall terminate upon retirement by Employee, except as
to rights accrued and obligations arising prior to such date.
2. "Change in Control Event." Each of the
following events shall constitute a "Change in Control Event" for
purposes of this Agreement:
(a) Any person (other than an existing member
of the Board of Directors of the Company) acquires
beneficial ownership of Company securities and is or
thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent
(25%) or more of the combined voting power of the
Company's then outstanding stock.
For purposes of this Agreement, "beneficial ownership" shall be
determined in accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation or
rule; and the term "person" shall include any natural person,
corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Company securities would
be required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(b) Within any twenty-four (24) month period,
individuals who were Directors at the beginning of such
period, together with any other Directors first elected
as directors of the Company pursuant to nominations
approved or ratified by at least two-thirds (2/3) of
the Directors in office immediately prior to such
respective elections, cease to constitute a majority of
the Board of Directors of the Company.
(c) The Company's stockholders approve:
(i) any consolidation or merger of the
Company in which the Company is not the continuing
or surviving corporation or pursuant to which
shares of Company common stock would be converted
into cash, securities or other property, other
than a merger or consolidation of the Company in
which the holders of the Company's common stock
immediately prior to the merger or consolidation
have substantially the same proportionate
ownership and voting control of the surviving
corporation immediately after the merger or
consolidation; or
(ii) any sale, lease, exchange,
liquidation or other transfer (in one transaction
or a series of transactions) of all or
substantially all of the assets of the Company.
Notwithstanding subparagraphs (i) and (ii) above, the term
"Change in Control Event" shall not include a consolidation,
merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of the Company is
owned, directly or indirectly, by a holding company, and the
holders of the Company's common stock immediately prior to the
transaction have substantially the same proportionate ownership
and voting control of the holding company.
3. Rights Upon Termination of Employment. If,
within twenty-four (24) months after the occurrence of a Change
in Control Event, the Company terminates Employee's employment
for any reason other than Good Cause as defined in Paragraph 4,
or if Employee voluntarily terminates employment for Good Reason
as defined in Paragraph 5, the Company shall provide Employee
with the following:
(a) Within thirty (30) days of such
termination, a lump sum cash payment in an amount equal
to the sum of:
(i) one hundred percent (100%) of
Employee's annual base salary in effect upon the
date of the Change in Control Event, and
(ii) one hundred percent (100%) of
average of the last three years bonuses earned by
Employee pursuant to the Company's Bonus
Compensation Program for the Company's three
fiscal years ending immediately prior to the
Change in Control Event.
(b) The continuation of Employee's
participation and the participation of his dependents
(to the extent and on the same terms of participation
he was participating prior to his termination of
employment and on the same terms of participation as to
any cost to Employee) in the Company's health, life,
disability and other employee insurance and benefit
plans, programs and arrangements (excluding the Big B,
Inc. Employees' Profit Sharing Plan) for a period of
one hundred and twenty (120) months after such
termination as if he were still employed during such
period; provided, however, if such participation in
such plan, program or arrangement is specifically
prohibited by the terms thereof, the Company shall
provide Employee (and his dependents) with benefits
substantially similar to those which he was entitled to
receive under such plan, program or arrangement
immediately prior to his termination of employment.
Additionally, at the end of any period of such
coverage, Employee shall have the right to have
assigned to him, for the cash surrender value thereof,
any assignable insurance owned by the Company on the
life of Employee. For purposes of this Paragraph 3(b),
any employee benefit determined with reference to
Employee's compensation or earnings shall be based on
his annual base salary unless otherwise provided under
the terms of the applicable employee benefit plan,
program or arrangement.
(c) Immediately upon such termination (but not
later than three months after such termination),
Employee shall be entitled to exercise in full all
options granted to him under the Company's present or
future stock option plan, subject to the terms thereof,
and the Employee shall be entitled to payments to be
made to him under the 1995 Employment and Deferred
Compensation Agreement between Employer and Employee,
or any successor thereto, pursuant to the terms of said
Agreement.
4. Termination for Good Cause. Notwithstanding the
provisions of Paragraph 5 hereof, the Company retains the right
to terminate Employee for "Good Cause," in which event he shall
not be entitled to receive any payment or benefits pursuant to
this Agreement. "Good Cause" shall mean:
(a) Employee's conviction, by a court of
competent jurisdiction, of a crime adversely reflecting
on his honesty, trustworthiness, moral turpitude, or
fitness to carry out the responsibilities of his
position with the Company in other respects; or
(b) a willful breach by him of any material
duty or obligations imposed upon him under the terms of
his employment, as those terms existed immediately
prior to any Change in Control Event, and his failure
to cure such breach within thirty (30) days after
receiving written notice thereof from the Company.
5. Definition of Termination by Employee for Good
Reason. For purposes of this Agreement, termination by Employee
of his employment for "Good Reason" shall mean the Employee's
voluntary termination of his employment with Employer for the
reason of:
(a) the assignment of duties to Employee
which:
(i) are materially different from his
duties immediately prior to the Change in Control
Event; or
(ii) result in his having significantly
less authority or responsibility than he had prior
to the Change in Control Event; or
(b) Employee's removal from, or any failure to
reelect him to, any position he held immediately prior
to the Change in Control Event with either the Company
or any majority-owned subsidiary; or
(c) a reduction of Employee's annual base
salary in effect on the date of the Change in Control
Event or as the same may be increased from time to time
thereafter; or
(d) the relocation of the Company's principal
executive offices to a place outside of the greater
metropolitan Birmingham, Alabama area, or the Company's
transferring or assigning Employee to a place of
employment other than its principal executive offices,
except for required business travel to an extent
substantially consistent with his business travel
obligations immediately prior to the Change in Control
Event; or
(e) the Company's failure to provide Employee
with substantially the same health, life and other
employee benefit plans, programs and arrangements
(specifically excluding the Company's stock option plan
and including its incentive bonus plan, as the same may
be amended in the future), and substantially the same
perquisites of employment, as provided to him
immediately prior to the Change in Control Event or as
the same may be increased thereafter; or
(f) the Company's failure to provide Employee
with substantially the same support staff as provided
to him immediately prior to the Change in Control
Event; or
(g) the Company's failure to obtain from any
successor a satisfactory agreement to assume and
perform the terms of this Agreement.
6. Notices. Any and all notices required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been given when deposited in the United States
mails, certified or registered mail, postage prepaid and
addressed as follows:
to Employee at his residence and
to the Company at its principal business office.
7. Applicable Law, Taxes, Binding Agreement,
Severability, Construction. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Alabama.
8. Withholding. Notwithstanding anything to the
contrary herein contained, the Company may withhold from any
amounts payable under this Agreement all federal, state or other
taxes or assessments which may be required by applicable statute
or regulation to be withheld.
9. Successors Bound. This Agreement shall be
binding upon and inure to the benefit of any successor of the
Employer and any such successor shall be deemed substituted for
the Employer under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm,
corporation or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the business of the Employer.
10. Alabama Law. This Agreement shall be construed
according to the laws of the State of Alabama.
11. Limitations on Amounts to be Received.
Notwithstanding anything to the contrary herein contained, if any
amount payable to Employee or for his benefit pursuant to the
terms of this Agreement would not be deductible by the Company by
reason of Section 280G of the Internal Revenue Code, as amended
from time to time, or any regulations promulgated pursuant
thereto, then such amount shall not be paid to the extent that it
would cause the aggregate amount payable by the Company to
Employee or for his benefit pursuant to the terms of this
Agreement to exceed the amount which may be paid without causing
a loss of deduction under said Section 280G.
12. Execution of Further Documents. In the event
Employee receives payments or benefits pursuant to the terms
hereof and the Company's independent counsel deems it necessary
for the Company to receive a release or other acknowledgement,
Employee agrees to execute any such documents, as may be
reasonably required as a condition of his receipt of such payment
or benefits.
13. Amendment and Waiver. The Agreement may be
amended only in writing, by the parties hereto, and no condition
or provision of the Agreement may be waived except in writing.
Waiver by either party at any time of the other party's breach
of, or failure to comply with, any condition or provision of this
Agreement to be performed by such other party shall not be deemed
a waiver of any other provision or condition at the same time or
of any provision or condition at any prior or subsequent time,
unless specifically stated therein.
14. Funding. This Agreement shall not be construed
to create or require the Company to create a trust or to
otherwise act to fund the amounts payable hereunder.
15. Assignment. Except as required by law, the
right to receive payments hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such payments to be so
subject shall not be recognized by the Company.
16. Arbitration. In recognition of the mutual
benefits of arbitration, the parties hereby agree that
arbitration as provided for herein shall be the exclusive remedy
for resolving any claim or dispute arising under this Agreement
and shall be binding upon them conclusively, and they hereby
mutually waive any and all other remedies at law or in equity for
determining any such claim or dispute.
(a) Any arbitration under this Agreement, and
any related judicial proceeding, shall be initiated and
shall proceed pursuant to the then prevailing rules of
the American Arbitration Association (the
"Association") for labor and employment contracts. To
initiate arbitration hereunder demand shall be given in
writing to the Association and the other party no later
than one year after the claim arises. Any claim for
which such demand is not made within one year after the
claim arises shall be barred and discharged absolutely.
(b) Any arbitration under this Agreement shall
be before a single arbitrator, and an award in such
arbitration may include only damages which the
arbitrator determines to be due under express
provisions of this Agreement. The arbitrator shall
have no authority to award any other damages, including
without limitation, consequential and exemplary
damages. Any award in arbitration shall be subject to
enforcement and appeal pursuant to the Act.
17. Legal Fees. In the event it becomes necessary
for either party to file a lawsuit for the purpose of enforcing
the terms of this Agreement, the reasonable legal fees of the
party prevailing in such lawsuit shall be paid by the party not
prevailing.
18. Personal Agreement. The Employee hereby agrees
on behalf of himself, and of his executors and administrators,
heirs, legatees, distributees, and any other person or persons,
claiming any benefits under him by virtue of this Agreement, that
this Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in
any way by the Employee or any executor, administrator, heir,
legatee, distributee or other person claiming under the Employee
by virtue of this Agreement and shall not be subject to
execution, attachment, or a similar process. Any attempted
assignment, transfer, pledge, or hypothecation, or other
disposition of this Agreement or of such rights, interests and
benefits contrary to the foregoing provisions, or the levy of any
attachment or a similar process thereupon, shall be null and void
and without effect.
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement on the day set forth hereinabove.
BIG B, INC.
By: _________________________________
_________________________________
Its _________________
(EMPLOYER)
____________________________________(SEAL)
(EMPLOYEE)
Exhibit 11
BIG B, INC.
STATEMENT OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Fiscal Years Ended
----------- ------------- -----------
1994 1995 1996
___________ ____________ ___________
<S> <C> <C> <C>
Primary
Net income $11,752,000 $ 15,097,000 $ 2,624,000
Weighted average
number of common
shares outstanding(1) 15,471,402 15,561,205 17,815,609
Net income per common
share $ 0.76 $ 0.97 $ 0.15
___________ ____________ ___________
___________ ____________ ___________
Assuming full dilution:
Earnings - net income $11,752,000 $15,097,000 $ 2,624,000
Add after tax interest
expense applicable
to 6 1/2% convertible
subordinated
debentures 1,387,000 1,661,000 1,689,000
___________ ____________ ___________
Net income as adjusted $13,139,000 $16,758,000 $ 4,313,000
=========== ============ ===========
Shares - (1)
Weighted average number
of common shares
outstanding 15,571,402 15,561,205 17,815,609
Assuming conversion of
6 1/2% convertible
subordinated
debentures 2,755,359 3,299,180 3,299,180
Assuming exercise of
options reduced by
the number of shares
which could have been
purchased with the
proceeds from exercise
of such options 75,219 61,288 9,882
=========== ========== ===========
/TABLE
<PAGE>
Exhibit 11
BIG B, INC.
STATEMENT OF PER SHARE EARNINGS
(CONTINUED)
<TABLE>
<CAPTION>
Fiscal Years Ended
----------- ------------- -----------
1994 1995 1996
----------- ------------- -----------
<S> <C> <C> <C>
Weighted average number
of common shares
outstanding as
adjusted 18,301,980 18,921,613 21,124,671
=========== =========== ===========
Net income per common
share assuming full
dilution, excluding
antidilutive effects $ 0.72 $ 0.89 $ 0.15
=========== =========== ===========
</TABLE>
(1) See Note 1 to consolidated financial statements.
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K into the
Company's previously filed Registration Statement, File No. 2-
83230.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
April 29, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF BIG B, INC. FOR THE YEAR ENDED FEBRUARY 3, 1996, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000352720
<NAME> BIG B, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-3-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> FEB-3-1996
<CASH> 491
<SECURITIES> 0
<RECEIVABLES> 24605
<ALLOWANCES> 1946
<INVENTORY> 179400
<CURRENT-ASSETS> 214456
<PP&E> 124072
<DEPRECIATION> 47847
<TOTAL-ASSETS> 298836
<CURRENT-LIABILITIES> 68452
<BONDS> 51292
0
0
<COMMON> 19
<OTHER-SE> 145229
<TOTAL-LIABILITY-AND-EQUITY> 298836
<SALES> 737146
<TOTAL-REVENUES> 737146
<CGS> 521186
<TOTAL-COSTS> 521186
<OTHER-EXPENSES> 12829
<LOSS-PROVISION> 10307
<INTEREST-EXPENSE> 5077
<INCOME-PRETAX> 4724
<INCOME-TAX> 2100
<INCOME-CONTINUING> 2624
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2624
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
EXHIBIT 18
The financial statements in the report do not reflect a
change from last year in any accounting principles or practices or
in the method of applying any such principles or practices.
