<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 [fee required]
For the fiscal year ended February 3, 1995
/ / Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [no fee required]
For the transition period from ___________ to ___________
Commission file number 1-7623
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GENOVESE DRUG STORES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 11-1556812
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
80 Marcus Drive, Melville, New York 11747
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 420-1900
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- - ---------------------------------- ------------------------
Class A Common Stock, $1 par value American Stock Exchange
Securities registered pursuant to section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
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 the
registrant as of March 15, 1995 was $67,849,000
The number of shares outstanding of the registrant's two classes of common
stock as of March 15, 1995 was: Class A - 4,927,576; Class B - 5,154,044
Documents incorporated by reference: Portions of registrant's definitive proxy
statement to be filed pursuant to Regulation 14A of the Securities Act of 1934
are incorporated by reference into Part III.
<PAGE> 2
PART I
Item 1. Business
General
Genovese Drug Stores, Inc. (the "registrant"), organized in 1924, operates a
chain of retail drug and general merchandise stores under the "Genovese" name,
which as of February 3, 1995 totalled 107 stores in number. Its primary
trading area covers Long Island and parts of New York City. Stores are also
located in southeastern New York and in the states of New Jersey and
Connecticut. During fiscal 1995, four stores were opened on Long Island, two
in Queens and two in Brooklyn. One store was closed in Nassau County and two
in Connecticut. As of February 3, 1995 the registrant also operated three
"deep discount" drug stores on Long Island. Two of the deep discount stores
will be converted to the Genovese super drug store format in fiscal 1996.
During fiscal 1995, the registrant embarked on a program of acquiring
independent drug stores within its marketing area. As of February 3, 1995, the
registrant had purchased the pharmacy files and inventory of seven independent
drug stores, in some cases employing the pharmacist owner/managers.
The registrant opened its first arts & crafts store in August 1994. During
fiscal 1995, the registrant also established a new division called Prescription
Managed Care Services. This division is dedicated to expanding its penetration
in the area of prescription managed care services. In addition, the registrant
operates a mail order prescription service, one professional photo retail
store, a photo processing facility for developing and printing film for its
store customers and a division for servicing nursing homes with prescriptions
and related medical supplies, which was sold in March 1995.
Operations
These stores, many of which are located in suburban areas, operate primarily on
a self-service, cash and carry basis, and as distinguished from the typical
neighborhood drug store, service a relatively large trading area and offer a
much broader selection of merchandise. The registrant's headquarters is
located in Melville, New York.
The registrant operates a distribution center in Bohemia, New York, which is
shipping approximately seventy percent of its store requirements. Merchandise
is also purchased directly from manufacturers and other suppliers and is
drop-shipped directly to each store. The registrant's business, except
pharmacy, is seasonal and sales are normally greater during the fourth fiscal
quarter of the year than during any of the first three fiscal quarters.
Merchandising
The registrant's stores contain a prescription drug department staffed by
registered pharmacists and have a full line of prescription medicine. Besides
proprietary drugs, cosmetics and toiletries, the merchandise carried includes
housewares, hardware and small appliances, toys, books, paper goods, greeting
cards, film, tobacco products and sick room needs. Approximately forty stores
offer on-site photofinishing services through the use of a One-Hour Photo Lab.
The merchandising policy of the registrant is to maximize sales volume by
offering a broad line of nationally advertised products at relatively low
retail prices, in many cases below the manufacturer's suggested retail price.
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The registrant also sells private label products in the vitamin and health and
beauty aid areas. It is the policy of the registrant to replace or return the
purchase price of any item, exclusive of prescription drugs, which proves
unsatisfactory to a customer.
The registrant advertises throughout the year to stimulate customer interest,
with particular emphasis on seasonal merchandise. Advertising is conducted
principally through newspapers, mail, advertising circulars, radio and
television.
Trademarks and Service Marks
The Genovese trademark is considered to be of material importance to the
business of the registrant. The registrant holds the rights to certain other
trademarks and service marks which the registrant also believes in the
aggregate to be essential to the conduct of its business in the areas in which
its stores are located.
Information as to Industry Segments and Product Lines
Operation of retail drug stores is the registrant's only significant industry
segment. During its last five fiscal years, the only class of similar products
sold by the registrant which contributed 10% or more to total sales and
revenues was prescription drugs, which accounted for approximately the
following percentages of total sales:
<TABLE>
<S> <C>
1995 35.4%
1994 34.4%
1993 33.2%
1992 31.9%
1991 30.0%
</TABLE>
Competition
The business of the registrant is highly competitive. The registrant competes
with a wide variety of retailers including drug stores, supermarkets,
department stores and variety stores. Its competitors range from small
independent stores to large regional and national chains, some of which have
far greater resources than those of the registrant. The registrant believes
that its ability to maintain its competitive position depends upon identifying
and obtaining desirable locations for its stores, merchandising its products
successfully, pricing its merchandise competitively and providing quality
services.
Environmental Control
Compliance with federal, state and local provisions which have been enacted or
adopted regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, have had no material
effect upon the capital expenditures, earnings and competitive position of the
Registrant.
Employees
The registrant has approximately 4,000 full time and part time employees, of
whom approximately 3,625 are involved directly in store operations.
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Item 2. Properties
The registrant's corporate headquarters are located in Melville, New York,
where it owns a modern one-story brick building containing approximately 78,000
square feet of floor space. Both the registrant's mail-order prescription
division and its division which services nursing homes with prescriptions and
related medical supplies utilize a portion of this space. In addition, a
portion of this space is devoted to the processing of returned merchandise.
The outstanding balance of the mortgage on the Melville building as of February
3, 1995 was $825,000. The registrant owns a distribution center located in
Bohemia, New York, which consists of approximately 265,000 square feet. The
outstanding balance of the mortgage on the Bohemia building as of February 3,
1995 was $3,598,000. During fiscal 1994, the registrant purchased a building
with approximately 7,300 square feet of total floor space in Brooklyn, New York
from which it operates a drug store opened in fiscal 1995. The registrant also
owns a building in Huntington, New York from which it operates a store with
approximately 25,000 square feet of total floor space. The registrant also
rents 25,000 square feet of public warehouse space for storing seasonal goods.
The 110 drug stores, the one arts & crafts store and the one professional photo
retail store operated by the registrant are located in the following areas:
Suffolk County (33), Nassau County (24), New York City (40), southeastern New
York State (4), New Jersey (4) and Connecticut (7). These stores range in
selling area from approximately 3,000 square feet to 22,000 square feet,
generally averaging about 10,300 square feet of floor space per store. Nearly
all are maintained under leases providing for terms which, in general, range
from 15 to 20 years, presently expiring at various dates from 1995 through
2015.
The photo processing plant operated by the registrant, which contains
approximately 10,000 square feet of space, is located in Glen Cove, New York,
and has a lease which expires in 2005.
The fixtures and equipment contained in these operating facilities are owned or
leased by the registrant. Registrant considers its facilities to be adequate
for its present operations and are in good condition and well maintained.
Item 3. Legal Proceedings
In the prior three fiscal years the registrant was named as the defendant in
seven personal injury cases seeking an aggregate of $349 million in damages as
a result of the registrant's sale of products containing contaminated
L-Tryptophan products manufactured in Japan by the large multinational
pharmaceutical company Showa Denko K.K. ("SDKK") and distributed to the
registrant and others in the United States by SDKK's U.S. subsidiary Showa
Denko America, Inc. ("SDA"). In December 1992, the registrant executed
Indemnification and Guarantee Agreements with SDA and SDKK, respectively, which
contain hold harmless provisions satisfactory to the registrant that it has
been relieved of liability under these lawsuits. As a result of the foregoing,
it is management's opinion that none of these cases will result in a settlement
or verdict which will have a material effect on the registrant's financial
position or results of operations.
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There are various other routine lawsuits and claims pending against the
registrant. In the opinion of registrant's management, none of these actions
will have a material adverse effect on the financial position or results of
operations of the registrant.
Item 4. Submission of Matters to a Vote of Security Holders
There were no submissions of matters to a vote of stockholders to report during
the fourth quarter of the registrant's fiscal year ended February 3, 1995.
Item 4A. Executive Officers of the Registrant
The information under this Item is furnished pursuant to Instruction 3 to Item
401(b) of Regulation S-K.
The following table sets forth the name, age, current position and principal
occupation and employment during the past five years of the registrant's
executive officers.
<TABLE>
<CAPTION>
Positions and offices held
Name of Officer with the Registrant during
Executive Officer Age Since the past five years
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<S> <C> <C> <C>
Leonard Genovese * 60 1961 Chairman of the Board of
Directors and President
Herbert J. Kett 62 1967 Vice Chairman and Director
Allan Patrick 48 1980 Executive Vice President
and Director
Jerome Stengel 58 1973 Vice President and Treasurer
and Chief Financial Officer
Donald W. Gross * 69 1979 Vice President and Secretary
Susan Crickmore 40 1993 Vice President (Prior to June
1993 held the position of Human
Resources Manager at Loral
Microwave--Narda West, a defense
concern. Prior to that, was
Personnel Director at Payless
Drug Stores Northwest, a large
drug store chain).
</TABLE>
* Leonard Genovese and Donald W. Gross are brothers-in-law.
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<PAGE> 6
<TABLE>
<CAPTION>
Positions and offices held
Name of Officer with the Registrant during
Executive Officer Age Since the past five years
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<S> <C> <C> <C>
Thomas Esposito 62 1991 Vice President (Prior to
February 1991 held the
position of Supervising
Pharmacist).
Dominick Lettieri 52 1982 Vice President
Irwin Livon 58 1991 Vice President (Prior to
August 1991 held the position
of Vice President--Director
of General Merchandise
Division at Sweet Life Foods
in Suffield, Connecticut, a
food wholesaler).
Stephen H. Poolner 53 1993 Vice President (Prior to
June 1993 held the position
of Manager, Pharmacy Sales
and Services at The Stop &
Shop Supermarket Co.).
David C. Reynolds 51 1990 Vice President (Prior to
September 1990 held the
positions of General Manager
and Director of Merchandising
of the Photofinishing
Division).
Gene L. Wexler 39 1994 Vice President and General
Counsel (Prior to January 1994
was General Counsel at COS
Computer Systems Inc., a
computer leasing concern.
Prior to that was a
corporate associate at the
law firm of Skadden, Arps,
Slate, Meagher & Flom).
</TABLE>
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<PAGE> 7
PART II
Item 5. Market for the Registrant's Common Stock and Related
Shareholder Matters
The Class A common stock of Genovese Drug Stores, Inc. is traded on the
American Stock Exchange (ticker symbol GDX.A). The registrant's Class B common
stock is not traded on any market and is restricted with respect to transfer
(see Note 5 of the Notes to Financial Statements).
Quarterly cash dividends aggregating $.22 per share and $.20 per share per
fiscal year (after restatement for the 10 percent stock dividends distributed
in fiscal 1995 and 1994) were paid for both Class A and Class B shares during
the years ended February 3, 1995 and January 28, 1994, respectively. The
registrant has certain loan agreements which contain covenants effectively
restricting the payment of cash dividends (see Note 2 of the Notes to Financial
Statements).
High and low stock prices for the last two fiscal years were:
<TABLE>
<CAPTION>
Fiscal 1995 Fiscal 1994
Fiscal ----------- -----------
Quarter High Low High Low
------- ---- --- ---- ---
<S> <C> <C> <C> <C>
First $ 12 5/8 $ 9 5/8 $ 8 3/8 $ 7
Second 12 1/4 10 1/4 9 1/2 7 7/8
Third 11 1/2 9 1/4 9 3/8 8
Fourth 12 9 11 3/4 8 5/8
</TABLE>
The common stock prices, where appropriate, have been adjusted to reflect
the 10 percent stock dividends distributed in fiscal 1994 and 1995.
<TABLE>
<CAPTION>
Approximate Number of
Record Stockholders
Title of Class (as of February 3, 1995)
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<S> <C>
Common Stock:
Class A, Par Value $1.00 per share, one vote per share 1,849 *
Class B, Par Value $1.00 per share, ten votes per share 144
</TABLE>
* Since a portion of the Class A Common Stock is held in "street" name or
nominee name, the registrant is unable to determine the exact number
of beneficial holders.
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Item 6. Selected Financial Data
The following is a summary of operations of Genovese Drug Stores, Inc. for the
five years ended February 3, 1995.
<TABLE>
<CAPTION>
YEAR ENDED
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February 3, January 28, January 29, January 31, February 1,
1995 1994 1993 1992 1991
-------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales $569,975,000 $489,141,000 $463,106,000 $447,159,000 $432,005,000
Net income $ 9,212,000 $ 8,306,000 $ 7,261,000 $ 6,658,000 $ 5,512,000
Net income per common
share (a) (b) $ .92 $ .83 $ .73 $ .67 $ .56
Total assets $182,778,000 $155,444,000 $130,808,000 $132,166,000 $124,291,000
Working capital $ 35,839,000 $ 44,295,000 $ 39,190,000 $ 39,221,000 $ 36,051,000
Long-term liabilities $ 34,314,000 $ 36,247,000 $ 29,134,000 $ 32,433,000 $ 30,406,000
Stockholders' equity $ 64,508,000 $ 57,480,000 $ 51,205,000 $ 45,599,000 $ 39,935,000
Cash dividends per
common share (b) $ .22 $ .20 $ .19 $ .18 $ .16
</TABLE>
(a) Stock options granted are not included as their dilutive effect was
not material during the periods presented.
(b) Adjusted, where appropriate, to reflect the effect of the 10 percent
stock dividends distributed in fiscal 1992, fiscal 1993, fiscal 1994
and fiscal 1995.
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<PAGE> 9
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The registrant achieved record sales and net income in fiscal 1995. Sales
reached record levels for the thirty-second consecutive year. Net income
increased 10.9% to $9.2 million or $.92 per share, compared to $8.3 million or
$.83 per share in fiscal 1994 and $7.3 million or $.73 in fiscal 1993. The
increase in net income for the past two years has resulted from increased sales
and stringent cost reduction programs.
Net sales for fiscal 1995 (53 weeks) were $570.0 million, reflecting an
increase of 16.5% over 1994 (52 weeks) compared to increases of 5.6% in 1994
and 3.6% in 1993 (52 weeks). Adjusting the current year's sales to a 52 week
basis; sales increased 14.3% for fiscal 1995 compared to fiscal 1994. Sales
increases resulted primarily from the 53 weeks this year compared to 52 weeks
in fiscal 1994 and 1993, from the fourteen stores opened over the past two
years and from sales gains from the maturing of existing stores. Based on 52
weeks, sales in comparable stores (those open at the end of the fiscal year and
for the entire previous fiscal year) were up 8.8% in 1995, 2.6% in 1994 and .9%
in 1993. Non-comparable stores accounted for 6.6% of the total sales gains in
1995, 2.6% in 1994 and 2.7% in 1993.
Prescription sales continued to increase at a higher rate than other sales, due
in part to growth in the number of third-party providers the registrant has
contracted with as well as price increases. Prescription sales increased 19.9%
in 1995, 9.5% in 1994 and 7.6% in 1993. Prescription sales, as a percent of
sales, were 35.4% for 1995 compared to 34.4% and 33.2% for 1994 and 1993,
respectively.
During fiscal 1995, third party prescription sales were approximately 62% of
total prescription sales, as compared with 54% and 48% in 1994 and 1993,
respectively. The registrant expects third party prescription activity to
continue to increase, which may lead to a decline in gross profit margins, as
gross margins on these transactions are typically lower than those on other
prescription sales.
Cost of merchandise sold, expressed as a percentage of sales, was 69.9% in 1995
compared to 69.7% in 1994 and 70.3% in 1993. Gross margins were influenced by
many variables including sales mix and competition. Prescription margins
decreased due to the continued impact of competitive pressures. Reductions in
third party provider reimbursement rates had the effect of reducing pharmacy
gross profit margins.
The registrant uses the last-in, first-out ("LIFO") method of inventory
valuation, which states cost of merchandise sold at the most recent costs. The
income related to the calculation of the LIFO reserve included as a reduction
in the cost of merchandise sold was $943,000 in fiscal 1995 and $400,000 in
1994. In fiscal 1993, the LIFO charge aggregated $595,000. The favorable
change for fiscal 1995 versus 1994 and 1994 versus 1993 is primarily the
results of lower effective inflation rates and reduction in acquisition costs
in certain lines of merchandise.
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<PAGE> 10
Selling, general and administrative expenses were 26.8% of sales in fiscal
1995, 26.9% in 1994 and 26.4% in 1993. The costs directly associated with the
opening of fourteen new stores during the past two years caused increases in
this ratio. The expense ratio for fiscal 1995 decreased slightly as compared
to fiscal 1994 as a result of the registrant's cost controls.
Interest expense increased to $2.6 million for fiscal 1995 versus $1.6 million
and $2.0 million in 1994 and 1993, respectively. Higher interest costs were
due to the higher debt levels and rising interest rates in 1995 compared with
borrowings and interest rates during 1994. On average, debt levels and
interest rates were lower during 1994 versus 1993.
The effective tax rate was 44.9% in fiscal 1995 and 45.0% in fiscal 1994 and
1993. The slight decrease in the effective tax rate in fiscal 1995 from 1994
and 1993 was the result of lower state income tax rates.
Liquidity and Capital Resources
Cash provided by operating activities was $17.5 million in fiscal 1995 compared
to $8.0 million in fiscal 1994. Cash provided by operating activities was used
primarily to fund capital expenditures of $20.6 million, and to pay $2.3
million in cash dividends to stockholders.
The registrant made capital expenditures of $20.6 million in fiscal 1995, $14.5
million in 1994 and $8.5 million in 1993. These expenditures relate primarily
to improvements in new and existing store locations, distribution center and
headquarters facilities, additions of store equipment and fixtures,
installation of new point-of-sale scanning systems and computer systems
improvements. The registrant anticipates capital expenditures of approximately
$18 million in fiscal 1996 primarily related to its plan to open ten stores and
complete major renovations to nine existing stores.
Working capital decreased to $35.8 million at February 3, 1995, an $8.5 million
decrease compared to the end of fiscal 1994. The decrease in working capital
was primarily the result of additional borrowings made on a short term basis.
The current ratio at February 3, 1995 was 1.5 to 1.0 compared to 1.8 to 1.0 at
January 28, 1994.
The registrant maintains a revolving term loan agreement as well as short-term
lines of credit with two banks which allow for aggregate borrowings of $60.0
million. The registrant had unused lines of credit of $9.8 million and $20.9
million at March 31, 1995 and February 3, 1995, respectively. See Note 2 of
Notes to Financial Statements for a further explanation of these agreements.
Based on all of the above, management believes that its operations and capital
resources will provide sufficient cash to meet its liquidity needs and to
finance planned growth.
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<PAGE> 11
Impact of Inflation
Although inflation has slowed in recent years, it is still a factor in our
economy and the registrant continues to seek ways to mitigate its impact. To
the extent permitted by competition, the registrant passes increased costs on
to its customers by increasing sales prices over time. Sales reported in the
registrant's financial statements have increased, in an indeterminable amount,
in the last two years due to increases in selling prices and sales volume.
The registrant uses the LIFO method of accounting for its inventories. Under
this method, the cost of products sold reported in the financial statements
approximates current costs and thus provides a closer matching of revenue and
expenses in periods of increasing costs.
Item 8. Financial Statements and Supplementary Data
The response to this Item is submitted in a separate section of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There was no change of accountants for the registrant within the twenty-four
months prior to the date of the most recent financial statements, nor any
disagreement on any matter of accounting principles or practices of financial
disclosure.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to members of the Board of Directors of the registrant
is contained in the Proxy Statement for the Annual Meeting of Shareholders
(the "1995 Proxy Statement") to be held on June 12, 1995, under the heading
"Election of Directors", and is incorporated herein by reference. Information
regarding the executive officers of the registrant is included as Item 4A of
Part I as permitted by Instruction 3 to Item 401(b) of Regulation S-K. The
information required by Item 405 of Regulation S-K is incorporated by reference
from the 1995 Proxy Statement.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference from the
1995 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is incorporated by reference from the
1995 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by reference from the
1995 Proxy Statement.
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<PAGE> 12
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) and (2) - The response to this portion of Item 14 is submitted as a
separate section of this report.
(3) Listing of Exhibits
3.1 Certificate of Incorporation, as amended (Exhibit 3.1 of Annual
Report on Form 10-K for the year ended January 31, 1992)
3.2 By-Laws, as amended (Exhibit 3.2 of Annual Report on Form 10-K
for the year ended January 31, 1992)
10.1 1984 Employee Stock Option and Stock Appreciation Rights Plan
(filed August 2, 1994 on Form S-8 Registration Statement
No. 33-54857)
10.2 1987 Executive Bonus and Stock Plan, as amended through June 13,
1994.
10.3 Registrant's Retirement Income Plan, as amended and restated
effective as of January 1, 1989.
10.4 Registrant's Employee Stock Ownership Plan and Trust, as amended
and restated effective January 1, 1989.
10.5 Registrant's Retirement and Savings Plan, effective January 1,
1994.
10.6 Split Dollar Insurance Plan between Registrant and Leonard
Genovese, dated October 13, 1994.
11 Computation of Net Income Per Common Share
23 Consents of Independent Auditors
(b) No reports on Form 8-K were filed for the thirteen weeks ended
February 3, 1995.
(c) Exhibits - The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedules - The response to this portion of Item
14 is submitted as a separate section of this report.
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<PAGE> 13
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GENOVESE DRUG STORES, INC.
(Registrant)
Date: May 1, 1995 By: /s/ Jerome Stengel
---------------------------
Jerome Stengel
Vice President & Treasurer
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
By: /s/ Leonard Genovese April 26, 1995
----------------------------------------------- --------------------
Leonard Genovese, Chairman of the Board Date
and President
(Principal Executive Officer)
By: /s/ Jerome Stengel April 26, 1995
----------------------------------------------- --------------------
Jerome Stengel, Vice President & Treasurer Date
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Edward T. Kelly April 26, 1995
----------------------------------------------- --------------------
Edward T. Kelly, Controller Date
(Principal Accounting Officer)
By: /s/ Abraham Allen April 26, 1995
----------------------------------------------- --------------------
Abraham Allen, Director Date
By: /s/ Thomas Cooney April 26, 1995
----------------------------------------------- --------------------
Thomas Cooney, Director Date
By: /s/ Charles Hayward April 26, 1995
----------------------------------------------- --------------------
Charles Hayward, Director Date
By: /s/ Herbert J. Kett April 26, 1995
----------------------------------------------- --------------------
Herbert J. Kett, Director and Date
Vice Chairman
By: /s/ William J. McKenna April 26, 1995
----------------------------------------------- --------------------
William J. McKenna, Director Date
By: /s/ Thomas J. Moran April 26, 1995
----------------------------------------------- --------------------
Thomas J. Moran, Director Date
By: /s/ Allan Patrick April 26, 1995
----------------------------------------------- --------------------
Allan Patrick, Director and Executive Date
Vice President
By: /s/ Frances Wangberg April 26, 1995
----------------------------------------------- --------------------
Frances Wangberg, Director Date
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<PAGE> 14
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
GENOVESE DRUG STORES, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Balance Sheets, February 3, 1995 and
January 28, 1994 2
Statements of Income for the Years Ended
February 3, 1995, January 28, 1994 and
January 29, 1993 3
Statements of Stockholders' Equity for the Years
Ended February 3, 1995, January 28, 1994 and
January 29, 1993 4
Statements of Cash Flows for the Years Ended
February 3, 1995, January 28, 1994 and
January 29, 1993 6
Notes to Financial Statements 7
</TABLE>
<PAGE> 15
INDEPENDENT AUDITORS' REPORT
Genovese Drug Stores, Inc.:
We have audited the accompanying financial statements of Genovese Drug Stores,
Inc., listed in the foregoing table of contents. 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, such financial statements present fairly, in all material
respects, the financial position of the Company at February 3, 1995 and January
28, 1994, and the results of its operations and its cash flows for each of the
three fiscal years in the period ended February 3, 1995 in conformity with
generally accepted accounting principles.
Jericho, New York
March 6, 1995
<PAGE> 16
GENOVESE DRUG STORES, INC.
BALANCE SHEETS
FEBRUARY 3, 1995 AND JANUARY 28, 1994 (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS 1995 1994
- - ------ ---- ----
Notes
-----
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 2,229 $ 1,012
Receivables 13,966 14,761
Merchandise inventory 92,969 80,679
Prepaid expenses and other 4,650 3,155
-------- --------
Total current assets 113,814 99,607
-------- --------
PROPERTY AND EQUIPMENT - at cost: 2
Land 2,220 2,220
Buildings 14,182 13,195
Leasehold improvements, furniture,
fixtures and equipment 101,102 81,750
-------- --------
Total property and equipment 117,504 97,165
Less - accumulated depreciation
and amortization 52,503 44,581
-------- --------
Property and equipment, net 65,001 52,584
-------- --------
DEFERRED CHARGES AND OTHER ASSETS 3,963 3,253
-------- --------
TOTAL $182,778 $155,444
======== ========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
1995 1994
---- ----
Notes
-----
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable to banks 2 $ 11,100 $ 2,300
Accounts payable - trade 46,094 40,208
Accrued expenses 13,103 8,526
Current portion of long-term debt 2 847 777
Income taxes payable 3 4,938 2,443
Deferred income taxes 3 1,893 1,058
-------- --------
Total current liabilities 77,975 55,312
-------- --------
LONG-TERM LIABILITIES 2 34,314 36,247
-------- --------
DEFERRED INCOME TAXES 3 5,981 6,405
-------- --------
COMMITMENTS AND CONTINGENT LIABILITIES 4
STOCKHOLDERS' EQUITY: 5
Common stock:
Class A, entitled to one vote per share,
12,000,000 shares authorized, 5,013,449
shares and 4,347,640 shares issued
for 1995 and 1994, respectively 5,013 4,348
Class B, entitled to ten votes per share,
12,000,000 shares authorized, 5,161,519
shares and 4,821,917 shares issued for
1995 and 1994 respectively 5,161 4,822
Capital in excess of par value 45,443 36,341
Retained earnings 2 9,885 12,285
-------- --------
65,502 57,796
Less common stock in treasury at cost:
Class A, 89,347 shares and 30,545 shares
for 1995 and 1994, respectively 971 293
Class B, 3,001 shares for 1995 and 1994 23 23
-------- --------
Total stockholders' equity 64,508 57,480
-------- --------
TOTAL $182,778 $155,444
======== ========
</TABLE>
See notes to financial statements.
- 2 -
<PAGE> 17
GENOVESE DRUG STORES, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED FEBRUARY 3, 1995, JANUARY 28, 1994 AND
JANUARY 29, 1993
(DOLLARS IN THOUSANDS, EXCEPT PER COMMON SHARE AMOUNTS)
<TABLE>
<CAPTION>
Notes 1995 1994 1993
----- ---- ---- ----
<S> <C> <C> <C> <C>
SALES $569,975 $489,141 $463,106
-------- -------- --------
COST AND EXPENSES:
Cost of merchandise sold 398,135 340,712 325,645
Selling, general
and administrative 6 152,493 131,745 122,216
-------- -------- --------
550,628 472,457 447,861
-------- -------- --------
OPERATING PROFIT 19,347 16,684 15,245
INTEREST EXPENSE 2 2,635 1,583 2,044
-------- -------- --------
INCOME BEFORE INCOME TAXES 16,712 15,101 13,201
INCOME TAXES 3 7,500 6,795 5,940
-------- -------- --------
NET INCOME $ 9,212 $ 8,306 $ 7,261
======== ======== ========
NET INCOME PER COMMON SHARE 1 $.92 $.83 $.73
==== ==== ====
</TABLE>
See notes to financial statements.
- 3 -
<PAGE> 18
GENOVESE DRUG STORES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED FEBRUARY 3, 1995, JANUARY 28, 1994 AND JANUARY 29, 1993
(DOLLARS IN THOUSANDS, EXCEPT PER COMMON SHARE AMOUNTS)
<TABLE>
<CAPTION>
Common Stock Issued Par Capital
Value $1.00 Per Share in Excess
Class A Class B of Par Value
---------- ---------- ------------
<S> <C> <C> <C>
BALANCE, JANUARY 31, 1992 (3,328,585 Class A shares and 4,204,321 Class B
shares issued; and 17,259 Class A and 2,729 Class B shares in treasury) $3,329 $4,204 $20,204
Cash dividends, $.24 per common share - - -
Shares issued pursuant to a 10 percent stock dividend (338,503 Class A shares and
414,252 Class B Shares; 1,045 Class A shares and 272 Class B shares in treasury) 339 414 6,869
Stock options exercised (3,198 Class A shares) 3 - (2)
Shares issued pursuant to the Executive Bonus and Stock Plan (17,768 Class A shares) 18 - 116
Treasury stock issued pursuant to the Executive Bonus and Stock Plan (6,799 Class A shares) - - 22
Exchange of shares (72,267 Class B shares for 72,267 Class A shares) 72 (72) -
Net income - - -
------ ------ -------
BALANCE, JANUARY 29, 1993 (3,760,321 Class A shares and 4,546,306 Class B
shares issued; and 11,505 Class A shares and 3,001 Class B shares in treasury) 3,761 4,546 27,209
Cash dividends, $.24 per common share - - -
Shares issued pursuant to a 10 percent stock dividend (391,608 Class A shares and
438,027 Class B shares) 392 438 8,919
Stock options exercised (2,968 Class A shares) 3 - 9
Shares issued pursuant to the Executive Bonus and Stock Plan (30,327 Class A shares) 30 - 204
Treasury stock purchased (19,040 Class A shares) - - -
Exchange of shares (162,416 Class B shares for 162,416 Class A shares) 162 (162) -
Net income - - -
------ ------ ------
BALANCE, JANUARY 28, 1994 (4,347,640 Class A shares and 4,821,917 Class B
shares issued; and 30,545 Class A shares and 3,001 Class B shares in treasury) $4,348 $4,822 $36,341
====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Treasury Stock at Cost
Retained ----------------------
Earnings Class A Class B
-------- ------- -------
<S> <C> <C> <C>
BALANCE, JANUARY 31, 1992 (3,328,585 Class A shares and 4,204,321 Class B
shares issued; and 17,259 Class A and 2,729 Class B shares in treasury) $18,000 $115 $23
Cash dividends, $.24 per common share (1,859) - -
Shares issued pursuant to a 10 percent stock dividend (338,503 Class A shares and
414,252 Class B Shares; 1,045 Class A shares and 272 Class B shares in treasury) (7,622) - -
Stock options exercised (3,198 Class A shares) - - -
Shares issued pursuant to the Executive Bonus and Stock Plan (17,768 Class A shares) - - -
Treasury stock issued pursuant to the Executive Bonus and Stock Plan (6,799 Class A shares) - (47) -
Exchange of shares (72,267 Class B shares for 72,267 Class A shares) - - -
Net income 7,261 -
BALANCE, JANUARY 29, 1993 (3,760,321 Class A shares and 4,546,306 Class B
shares issued; and 11,505 Class A shares and 3,001 Class B shares in treasury) 15,780 68 23
Cash dividends, $.24 per common share (2,052) - -
Shares issued pursuant to a 10 percent stock dividend (391,608 Class A shares and
438,027 Class B shares) (9,749) - -
Stock options exercised (2,968 Class A shares) - - -
Shares issued pursuant to the Executive Bonus and Stock Plan (30,327 Class A shares) - - -
Treasury stock purchased (19,040 Class A shares) - 225 -
Exchange of shares (162,416 Class B shares for 162,416 Class A shares) - - -
Net income 8,306 - -
-------
BALANCE, JANUARY 28, 1994 (4,347,640 Class A shares and 4,821,917 Class B
shares issued; and 30,545 Class A shares and 3,001 Class B shares in treasury) $12,285 $293 $23
======= ==== ===
</TABLE>
(Continued)
- 4 -
<PAGE> 19
GENOVESE DRUG STORES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED FEBRUARY 3, 1995, JANUARY 28, 1994 AND JANUARY 29, 1993
(DOLLARS IN THOUSANDS, EXCEPT PER COMMON SHARE AMOUNTS)
<TABLE>
<CAPTION>
Common Stock Issued Par Capital
Value $1.00 Per Share in Excess
Class A Class B of Par Value
------- ------- ------------
<S> <C> <C> <C>
BALANCE, JANUARY 28, 1994 (4,347,640 Class A shares and 4,821,917 Class B
shares issued; and 30,545 Class A shares and 3,001 Class B shares in treasury) $4,348 $4,822 $36,341
Cash dividends, $.24 per common share - - -
Shares issued pursuant to a 10 percent stock dividend (443,907 Class A shares and
468,809 Class B shares) 444 469 8,442
Stock options exercised (51,821 Class A shares) 52 - 385
Shares issued pursuant to the Executive Bonus and Stock Plan (39,874 Class A shares) 39 - 243
Treasury stock purchased (68,802 Class A shares) - - -
Treasury stock contributed to the Employee Stock Ownership Plan
(10,000 Class A shares) - - 32
Exchange of shares (130,207 Class B shares for 130,207 Class A shares) 130 (130) -
Net income - - -
------ ------ -------
BALANCE, FEBRUARY 3, 1995 (5,013,449 Class A shares and 5,161,519
Class B shares issued; and 89,347 Class A shares and 3,001 Class B shares
in treasury) $5,013 $5,161 $45,443
====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Treasury Stock at Cost
Retained ----------------------
Earnings Class A Class B
-------- ------- -------
<S> <C> <C> <C>
BALANCE, JANUARY 28, 1994 (4,347,640 Class A shares and 4,821,917 Class B
shares issued; and 30,545 Class A shares and 3,001 Class B shares in treasury) $12,285 $293 $23
Cash dividends, $.24 per common share (2,257) - -
Shares issued pursuant to a 10 percent stock dividend (443,907 Class A shares and
468,809 Class B shares) (9,355) - -
Stock options exercised (51,821 Class A shares) - - -
Shares issued pursuant to the Executive Bonus and Stock Plan (39,874 Class A shares) - - -
Treasury stock purchased (68,802 Class A shares) - 776 -
Treasury stock contributed to the Employee Stock Ownership Plan
(10,000 Class A shares) - (98) -
Exchange of shares (130,207 Class B shares for 130,207 Class A shares) - - -
Net income 9,212 - -
------- ---- ---
BALANCE, FEBRUARY 3, 1995 (5,013,449 Class A shares and 5,161,519
Class B shares issued; and 89,347 Class A shares and 3,001 Class B shares
in treasury) $ 9,885 $971 $23
======= ==== ===
</TABLE>
See notes to financial statements.
- 5 -
<PAGE> 20
GENOVESE DRUG STORES, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED FEBRUARY 3, 1995, JANUARY 28, 1994 AND
JANUARY 29, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,212 $ 8,306 $ 7,261
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization 8,769 7,263 6,333
Provision for LIFO inventory valuation (943) (400) 595
Provision for other noncash expenses - net 639 (222) 663
Changes in certain assets and liabilities:
Receivables 795 (2,944) (997)
Merchandise inventory (11,347) (12,490) 4,825
Prepaid expenses and other (1,495) 211 (212)
Deferred charges and other assets (1,355) (1,477) (781)
Accounts payable - trade 5,886 9,818 (505)
Accrued expenses and other long term liabilities 4,810 (603) (727)
Income taxes payable 2,495 519 1,210
-------- -------- --------
Net cash provided by operating activities 17,466 7,981 17,665
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (20,585) (14,510) (8,455)
Disposal of property and equipment 44 31 104
-------- -------- --------
Net cash used for investing activities (20,541) (14,479) (8,351)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term notes
payable to banks 8,800 2,300 (4,100)
Proceeds - debt agreements 19,242 25,000 28,000
Repayments - debt agreements (21,338) (18,217) (31,323)
Issuance of common stock under the Employee
Stock Option and Appreciation Rights Plan 83 12 1
Payment of cash dividends (2,257) (2,052) (1,859)
Purchase of treasury stock (238) (225) -
-------- -------- --------
Net cash provided by (used for)
financing activities 4,292 6,818 (9,281)
-------- -------- --------
NET INCREASE IN CASH 1,217 320 33
CASH AT BEGINNING OF YEAR 1,012 692 659
-------- -------- --------
CASH AT END OF YEAR $ 2,229 $ 1,012 $ 692
======== ======== ========
SUPPLEMENTAL DATA:
Interest paid $ 2,608 $ 1,668 $ 2,076
======== ======== ========
Income taxes paid $ 4,494 $ 6,721 $ 3,933
======== ======== ========
</TABLE>
See notes to financial statements.
- 6 -
<PAGE> 21
GENOVESE DRUG STORES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 3, 1995, JANUARY 28, 1994 AND
JANUARY 29, 1993
- - --------------------------------------------------------------------------------
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Genovese Drug Stores, Inc. (the "Company") is primarily engaged in the
operation of a chain of super drug stores all of which are located in
the New York, New Jersey and Connecticut tri-state region. The
accounting policies relative to the Company are as follows:
a. Receivables - A majority of the Company's receivables are due
from third-party providers (various insurance companies and
governmental agencies). As is industry practice, these
receivables are uncollateralized. As of February 3, 1995,
approximately 14 percent of receivables are due from one major
carrier in connection with a contract negotiated with the Company.
The activity in the allowance for doubtful accounts consisted of
the following (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balance, beginning of the year $340 $334 $355
Provision - 25 -
Write-offs (41) (19) (21)
---- ---- ----
Balance, end of the year $299 $340 $334
==== ==== ====
</TABLE>
b. Merchandise Inventory - Merchandise inventory is valued at the
lower of cost, determined on the last-in, first-out ("lifo")
method, or market. If the inventory at February 3, 1995 and
January 28, 1994 had been valued at year-end replacement costs,
its value would have increased $19,448,000 and $20,391,000,
respectively. As a result of liquidations in the lifo reserve,
net income increased in fiscal 1995 and 1994 by approximately
$520,000 and $220,000, respectively.
c. Depreciation and Amortization - Depreciation and amortization are
determined by the straight-line method based on the estimated
useful lives of the related items, such lives ranging from 3 to
35 years.
d. Deferred Charges - Deferred charges are being amortized over the
useful lives of the related assets, such lives ranging from 5 to
20 years.
e. Income Taxes - Deferred income taxes result from the recognition
of income and expense in different periods for tax return and
financial reporting purposes.
f. Net Income Per Common Share - Net income per common share is
based on the average number of shares outstanding during the
years, after retroactive restatement for the 10 percent stock
dividends distributed in each of fiscal 1995, 1994 and 1993. The
weighted average number of shares, as adjusted, used in computing
net income per common share was 10,054,000 in 1995, 10,045,000 in
1994 and 10,009,000 in
-7-
<PAGE> 22
1993. The dilutive effect of outstanding common stock options was
not material during the periods presented.
g. Fiscal Year - The fiscal year ended February 3, 1995 is a 53 week
year as opposed to fiscal years 1994 and 1993 which are 52 week
years. The Company's fiscal year ends on the Friday closest to
January 31.
h. Reclassification - Certain amounts in the 1994 and 1993 financial
statements have been reclassified to conform with the 1995
presentation.
2. LONG-TERM LIABILITIES AND NOTES PAYABLE TO BANKS
Long-term liabilities consist of the following (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revolving term loan agreements with banks, with interest payable monthly
at the banks' prime lending rate or seventy-five basis points over the
London Interbank Offered Rate (6.19%
to 9.00% at February 3, 1995). $28,000 $30,000
1985 Industrial Development Revenue Bond, payable in equal monthly
installments through January 2001, with interest payable at 72% of the
prime lending rate (6.48% at
February 3, 1995). 3,598 4,257
1982 Industrial Development Revenue Bond, payable in equal monthly
installments through August 2002, with interest payable at 65% of the
prime lending rate (5.85% at
February 3, 1995). 825 943
Capital leases 681 -
------- -------
Aggregate debt 33,104 35,200
Less - current maturities 847 777
------- -------
Long-term debt 32,257 34,423
Other long-term liabilities 2,057 1,824
------- -------
Total long-term liabilities $34,314 $36,247
======= =======
</TABLE>
The Company maintains a revolving term loan agreement with two banks
under which the banks are committed to lend up to $28,000,000 to the
Company. As part of these agreements, the Company pays a commitment fee
of .375 percent of the unused portion of the commitment. Borrowings under
these agreements will bear interest at the banks' prime lending rate
(9.00 percent at February 3, 1995) or seventy-five basis points over the
London Interbank Offered Rate.
-8-
<PAGE> 23
On February 5, 1996, the banks' commitment to lend to the Company will be
reduced to $26,000,000. This facility expires on September 30, 1996.
Capital Leases - The obligations relative to capital leases at February
3, 1995 relates to computer equipment and is payable in equal monthly
installments through July, 1999.
In addition, the Company maintains a short-term line of credit with two
banks under which the banks will lend up to $32,000,000 to the Company,
with interest at the banks' prime lending rate or seventy-five basis
points over the London Interbank Offered Rate. As of February 3, 1995,
the Company had unused short-term lines of credit of $20,900,000.
Information on short-term borrowings and interest rates follows (dollars
in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Maximum amount outstanding $24,650 $6,450 $24,500
Average daily short-term borrowings $13,848 $1,673 $ 9,031
Weighted average daily interest rate 6.0% 4.4% 5.1%
</TABLE>
The loan agreements contain certain covenants which include (i) the
maintenance of certain amounts of working capital and net worth and of
certain working capital and net worth ratios and other financial ratios,
(ii) limitations on capital expenditures, lease commitments, long-term
and short-term debt, (iii) certain limitations on the payment of
dividends and (iv) restrictions on the sale, transfer or lease of assets
and limitations on corporate reorganizations. The Company has received
waivers from the debt holders as to noncompliance with certain of the
aforementioned covenants.
The 1985 Industrial Development Revenue Bond is secured by land and
building, with an aggregate carrying value of $8,020,000, which were
purchased substantially with the bond proceeds. The 1982 Industrial
Development Revenue Bond is secured by land, building and equipment, with
an aggregate carrying value of $2,864,000, which were purchased
substantially with the bond proceeds.
Other long-term liabilities consist of (i) retirement benefits payable to
certain executives, (ii) an accrual for the noncurrent portion of rental
payments and (iii) an accrual for insurance.
Interest expense aggregated approximately $2,635,000, $1,583,000 and
$2,044,000 in 1995, 1994 and 1993, respectively.
The aggregate debt maturities subsequent to February 3, 1995 are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
Fiscal Year Total
----------- -----
<S> <C>
1996 $ 847
1997 28,858
1998 871
1999 884
2000 806
Thereafter 838
-------
Total $33,104
=======
</TABLE>
-9-
<PAGE> 24
3. INCOME TAXES
The provision (benefit) for income taxes consist of the following
(dollars in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $4,723 $4,918 $3,697
State and local 2,366 2,333 1,425
Deferred 411 (456) 818
------ ------ ------
Total $7,500 $6,795 $5,940
====== ====== ======
</TABLE>
The components of the deferred tax provision (benefit) consist of the
following (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Excess of tax over book depreciation $ 172 $ 479 $ 447
Inventory 794 (982) (162)
Accrued expenses not currently deductible (612) (40) (10)
Other, net 57 87 543
----- ----- -----
$ 411 $(456) $ 818
===== ===== =====
</TABLE>
The components of the deferred tax liability at February 3, 1995 and
January 28, 1994 are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Excess of tax over book depreciation $ 6,275 $6,103
Inventory 2,214 1,420
Accrued expenses not currently deductible (1,016) (404)
Other - net 401 344
------- ------
$ 7,874 $7,463
======= ======
</TABLE>
The Company's effective income tax rate differs from the Federal
statutory rate. The reasons for this difference are as follows (dollars
in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ---------------- ----------------
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Federal statutory rate $5,849 35.0 $5,134 34.0 $4,488 34.0
Increases due to:
State and local taxes - net of
Federal income tax benefits 1,554 9.3 1,480 9.8 1,290 9.8
Other - net 97 .6 181 1.2 162 1.2
------ ---- ------ ---- ------ ----
Effective rate $7,500 44.9 $6,795 45.0 $5,940 45.0
====== ==== ====== ==== ====== ====
</TABLE>
4. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is required to make rental payments under noncancelable
operating leases covering retail stores and certain equipment.
Substantially all real estate leases include
-10-
<PAGE> 25
renewal options of five to twenty years and require additional rentals
based on a percentage of sales and increases in real estate taxes. Rent
expense for retail stores and equipment was $23,377,000 in 1995,
$20,435,000 in 1994 and $19,310,000 in 1993. The contingent portion of
rent expense amounted to $902,000, $695,000 and $650,000 in 1995, 1994
and 1993, respectively.
Minimum rental commitments at February 3, 1995 under all noncancelable
operating leases are as follows (dollars in thousands):
<TABLE>
<CAPTION>
Fiscal Year Total
----------- -----
<S> <C>
1996 $ 17,827
1997 18,398
1998 18,344
1999 17,365
2000 16,264
2001-2005 63,981
2006-2010 35,287
2011-2015 12,908
2016 145
--------
Total $200,519
========
</TABLE>
The minimum rental commitments above do not include contingent amounts
due of approximately $1,631,000 if the purchasers of stores sold by the
Company in fiscal 1986 and 1991 were to default on the lease obligations
assumed.
The Company has been named as a defendant in various claims and lawsuits
incidental to the Company's business. Management of the Company, based
upon discussions with legal counsel, believes that the ultimate
resolution of such claims and lawsuits will not result in any material
adverse effect on the Company's financial position or results of
operations.
5. COMMON STOCK
During fiscal 1993, the stockholders of the Company ratified an amendment
to the Company's Certificate of Incorporation which reduced the number of
authorized Class A common stock from 20,000,000 shares to 12,000,000
shares and reduced the number of authorized Class B common stock from
30,000,000 shares to 12,000,000 shares. The par value of both classes of
common stock is $1.00 per share. The Class A common stock entitles the
holders to one vote per share. The Class B common stock entitles the
holders to ten votes per share. The Class B common stock is restrictive
with respect to transfer. Upon the sale or change in beneficial ownership
of a share of Class B common stock, the purchaser or new beneficial owner
shall only be entitled to receive Class A common stock, except in certain
instances.
Neither class will have preference over the other with regard to
dividends or upon liquidation.
During fiscal 1995, 1994 and 1993, the Company's Board of Directors
declared and effected 10 percent stock dividends. Common share amounts
and per common share amounts have been retroactively adjusted to reflect
the effect of the above-mentioned 10 percent stock dividends where
appropriate.
-11-
<PAGE> 26
As of February 3, 1995, under the Company's 1984 Employee Stock Option
and Appreciation Rights Plan (the "Option Plan"), 594,006 shares of Class
A common stock were reserved for issuance under options to be granted for
periods of up to ten years at an exercise price not less than the fair
market value of the shares at the date of grant. The Company makes no
charge to income in connection with the Option Plan, but does record the
tax benefit of the difference between the option price and the market
value at the date of exercise in capital in excess of par value
($100,000, $10,000 and $1,000 in 1995, 1994 and 1993, respectively).
Additional information regarding the Option Plan follows (amounts have
been restated to reflect the 10 percent stock dividends distributed in
fiscal 1995, 1994 and 1993):
<TABLE>
<CAPTION>
Number Exercise
of Shares Price Range
--------- -----------
<S> <C> <C>
Outstanding options for shares of
Class A common stock-January 31, 1992 82,854 $ 4.35 - $ 7.14
Granted 200,183 7.61 - 10.02
Exercised (16,609) 4.35 - 6.49
Canceled and expired (8,023) 4.35 - 9.11
------- ----------------
Outstanding options for shares of
Class A common stock-January 29, 1993 258,405 4.35 - 10.02
Exercised (9,735) 4.79 - 6.49
Canceled and expired (19,965) 7.61 - 9.11
------- ----------------
Outstanding options for shares of
Class A common stock-January 28, 1994 228,705 4.35 - 10.02
Granted 137,500 11.82 - 11.93
Exercised (52,215) 4.35 - 6.49
Canceled & expired (7,260) 11.82
------- ----------------
Outstanding options for shares of
Class A common stock-February 3, 1995 306,730 $ 6.49 - $11.93
======= ================
Exercisable at February 3, 1995 306,730
=======
</TABLE>
6. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses are comprised of the
following for 1995, 1994 and 1993 (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Store operating expenses $132,635 $113,880 $106,904
Distribution center expenses 11,011 8,074 7,579
General, administrative and
other expenses 8,847 9,791 7,733
-------- -------- --------
$152,493 $131,745 $122,216
======== ======== ========
</TABLE>
7. PENSION PLAN
In an earlier year, the Company elected to freeze the accumulation of
retirement benefits in the Retirement Income Pension Plan (the "Plan") as
of December 31, 1988. The adoption of this amendment has resulted in the
freezing of the maximum benefits available to employees covered by the
Plan as of December 31, 1988.
<PAGE> 27
Net pension expense for 1995, 1994 and 1993 was $78,000, $69,000 and
$24,000, respectively.
The components of net pension expense for 1995, 1994 and 1993 are
summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Interest cost on projected
benefit obligations $ 204 $ 196 $ 171
Expected return on plan assets (177) (180) (184)
Other - net 51 53 37
------ ------ ------
Net pension expense $ 78 $ 69 $ 24
====== ====== ======
</TABLE>
The funded status of the plan and the amounts included in the
accompanying balance sheets as of February 3, 1995 and January 28, 1994
are as follows (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Assets and obligation:
Actuarial present value of the
projected benefit obligation -
Vested employees $ (2,491) $ (2,754)
-------- --------
Projected benefit obligations (2,491) (2,754)
Plan assets at fair value 2,125 2,213
Items not yet recognized in earnings:
Unrecognized net obligations at
transition date, net of
accumulated amortization of
$867 and $828 in 1995
and 1994, respectively 359 398
Unrecognized net loss
subsequent to transition date 428 519
-------- ---------
Prepaid pension expense included in
the accompanying balance sheets $ 421 $ 376
======== =========
</TABLE>
Plan assets are invested primarily in bank pooled equity funds, bank
fixed income funds, the Company's Class A common stock and a money market
account.
Significant assumptions used in determining net periodic pension expense
and related prepaid pension expense were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate 8.7% 7.5% 9.0%
Rate of compensation increase - - -
Expected long-term rate of return on assets 8.0% 7.5% 9.0%
</TABLE>
- 13 -
<PAGE> 28
Unrecognized net obligations at transition date are being amortized over
33.57 years and unrecognized gains and losses subsequent to transition
date are being amortized over 17 years.
8. EMPLOYEE STOCK OWNERSHIP PLAN
The Company has an Employee Stock Ownership Plan (the "ESOP"), a defined
contribution plan, for the benefit of all employees meeting certain
minimum service requirements. Contributions to the ESOP are determined
annually and are made at the discretion of the Company's Board of
Directors. The ESOP's investments consists primarily of Class A common
stock of the Company. The Company provided for a contribution of
$130,000 in 1995, $200,000 in 1994 and $199,000 in 1993. At February 3,
1995, the ESOP held approximately 329,000 shares of the Company's Class A
common stock.
9. INCENTIVE COMPENSATION PLAN
The 1987 Executive Bonus and Stock Plan (the "Executive Plan") allows the
Compensation Committee of the Board of Directors of the Company to grant
to certain executives of the Company awards based upon the achievement of
certain targeted performance levels. Fifty percent of such awards shall
be paid in cash and the balance shall be paid in Class A common stock of
the Company over a five year period at the rate of twenty percent per
year, assuming the continued employment of such executives. The Company
has reserved 241,577 shares of Class A common stock to be awarded under
the Executive Plan. In 1995, the Company awarded $378,000 in cash and
36,997 shares of Class A common stock of which $378,000 in cash and 7,399
shares of Class A common stock (20 percent of the total award) were
issuable at February 3, 1995. The remaining 29,598 shares of Class A
common stock will be issuable in four equal installments over the next
four years. As of February 3, 1995, 25,863 shares of Class A common
stock from the fiscal 1994 award will be issuable in three equal
installments to certain executives over the next three years, 15,326
shares of Class A common stock from the fiscal 1993 award will be
issuable in equal installments to certain executives in the next two
years and 7,883 shares of Class A common stock from fiscal 1992 award
will be issuable in the next year. The Company records the compensation
expense related to the 29,598, 25,863, 15,326 and 7,883 undistributed
shares of Class A common stock as such shares are vested in by the
executives.
10. RETIREMENT AND SAVINGS PLAN
During fiscal 1991, the Company adopted the Genovese Retirement and
Savings Plan (the "Savings Plan"), a contributory savings plan under
Section 401(k) of the Internal Revenue Code, for the benefit of all
employees meeting certain minimum service requirements. The Company's
contribution under the Savings Plan, which amounts to 50 percent of the
employees' contribution up to a maximum of two percent of the employees'
compensation, was $352,000 in 1995, $343,000 in 1994 and $286,000 in
1993.
11. UNAUDITED QUARTERLY FINANCIAL DATA
Summarized quarterly financial data for the years ended February 3, 1995
and January 28,
- 14 -
<PAGE> 29
1994 follows (dollars in thousands, except per common share amounts):
<TABLE>
<CAPTION>
Sixteen Weeks Twelve Weeks Twelve Weeks Thirteen Weeks Fiscal Year
Ended Ended Ended Ended Ended
May 20, August 12, November 4, February 3, February 3,
1994 1994 1994 1995 1995
------------- ------------ ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Sales $159,456 $125,381 $126,728 $158,410 $569,975
======== ======== ======== ======== ========
Gross Profit $ 46,494 $ 36,897 $ 39,073 $ 49,376 $171,840
======== ======== ======== ======== ========
Net Income $ 1,698 $ 1,438 $ 1,982 $ 4,094 $ 9,212
======== ======== ======== ======== ========
Net Income
Per Common
Share (a) $.17 $.14 $.20 $.41 $.92
==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Sixteen Weeks Twelve Weeks Twelve Weeks Twelve Weeks Fiscal Year
Ended Ended Ended Ended Ended
May 21, August 13, November 5, January 28, January 28,
1993 1993 1993 1994 1994
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Sales $142,642 $111,433 $108,838 $126,228 $489,141
======== ======== ======== ======== ========
Gross Profit 41,613 $ 33,034 $ 33,699 $ 40,083 $148,429
======== ======== ======== ======== ========
Net Income $ 1,482 $ 1,382 $ 1,911 $ 3,531 $ 8,306
======== ======== ======== ======== ========
Net Income
Per Common
Share (a) $.15 $.14 $.19 $.35 $.83
==== ==== ==== ==== ====
</TABLE>
(a) Adjusted, where appropriate, to reflect the effect of the 10 percent
stock dividends distributed in both fiscal 1995 and 1994.
12. SUBSEQUENT EVENT
On March 3, 1995, the Company sold the assets of its Genrex Nursing Home
Pharmacy division to a third party for gross proceeds of approximately
$3,700,000 subject to certain provisions for reduction of the purchase
price based upon the future performance of the sold division.
- 15 -
<PAGE> 30
Index to Exhibits
<TABLE>
<S> <C> <C>
3.1 Certificate of Incorporation , as amended (Exhibit 3.1
of Annual Report on Form 10-K for the year ended
January 31, 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . **
3.2 By-Laws, as amended (Exhibit 3.2 of Annual Report on Form
10-K for the year ended January 31, 1992) . . . . . . . . . . . . . . **
10.1 1984 Employee Stock Option and Stock Appreciation Rights Plan
(filed August 2, 1994 on Form S-8 Registration Statement
No. 33-54857) . . . . . . . . . . . . . . . . . . . . . . . . . . . . **
10.2 1987 Executive Bonus and Stock Plan, as amended through June
13, 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.3 Registrant's Retirement Income Plan, as amended and restated
effective as of January 1, 1989 . . . . . . . . . . . . . . . . . . .
10.4 Registrant's Employee Stock Ownership Plan and Trust, as
amended and restated effective as of January 1, 1989. . . . . . . . .
10.5 Registrant's Retirement and Savings Plan, effective
January 1, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.6 Split Dollar Insurance Plan between Registrant and Leonard
Genovese, dated October 13, 1994. . . . . . . . . . . . . . . . . . .
11 Computation of Net Income Per Common Share. . . . . . . . . . . . . .
23 Consents of Independent Auditors. . . . . . . . . . . . . . . . . . .
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
**Previously filed
<PAGE> 1
EXHIBIT 10.2
As Amended through June 13, 1994
GENOVESE DRUG STORES, INC.
1987 EXECUTIVE BONUS
& STOCK PLAN
Section 1. STATEMENT OF POLICY. The Board of Directors of Genovese
Drug Stores, Inc. believes that it would be in the best interests of the Company
to adopt the Executive Bonus and Stock Plan in order to encourage long-term
growth and profitability of the Company while encouraging continued employment
with the Company by giving executives a proprietary interest in the Company.
Section 2. DEFINITIONS. When used in this Plan, unless the context
otherwise requires:
(a) AWARD. "Award" shall mean the amount of cash and shares
granted to a participant under this Plan.
(b) BOARD OF DIRECTORS. "Board of Directors" shall mean the Board
of Directors of the Company as constituted from time to time.
(c) COMMITTEE. "Committee" shall mean the Compensation Committee
of the Board of Directors of the Company as constituted from
time to time.
(d) COMPANY. "Company" shall mean Genovese Drug Stores, Inc., a
Delaware Corporation.
(e) FISCAL YEAR OR YEAR. "Fiscal Year or Year" shall mean the
Company's fiscal year.
(f) PARTICIPANT. "Participant" shall mean an employee selected by
the Committee in its sole discretion who is eligible to
receive awards under the Plan.
(g) PLAN. "Plan" shall mean the 1987 Executive Bonus & Stock Plan.
(h) SHARES OR STOCK. "Shares" or "Stock" shall mean the Class A
common stock of the Company.
(i) TARGETED PERFORMANCE CRITERION LEVEL. "Targeted Performance
Criteria Level" shall mean the performance level for the
succeeding fiscal year as approved by the Committee or the
Board of Directors.
Section 3. ADMINISTRATION.
(a) The Plan shall be administered by the Compensation Committee of
the Board of Directors, which shall consist of at least three outside members
of the Board not eligible for
<PAGE> 2
awards under this Plan. All vacancies on this Committee shall be filled by the
Board. The Chairman of the Committee shall be designated by the Board of
Directors.
(b) Subject to the provisions of the Plan, the Committee shall have
the authority to construe and interpret the Plan, to define the terms used
therein, to prescribe, and rescind rules and regulations related to the Plan, to
approve and determine leaves of absence which may be granted to participants
without constituting a termination of their employment for the purposes of this
Plan and to make all other determinations necessary or advisable for the
administration of the Plan. All determinations and interpretations made by the
Committee shall be binding and conclusive on all participants in the Plan and on
their legal representatives and beneficiaries.
Section 4. MEETINGS.
(a) Meetings of the Committee may be called by the Board of Directors
or the Chairman of the Committee or may be called by a written request of any
two (2) members of the Committee, and provided that the meetings may be held at
any time without notice if all members of the Committee are present, or if any
time before or after the meeting those not present waive notice of the meeting
in writing. When practicable, at least one (1) day's notice of the meeting
shall be given in person or by telephone, letter, telegram or telex.
(b) At meetings of the Committee, the presence of a majority of the
Committee at the time of such meeting shall be necessary to constitute a
quorum. Any act of a majority present at a meeting where there is a quorum
shall constitute an act of the Committee. Action may be taken by the Committee
without a meeting if a written consent thereto is signed by all members of the
Committee and such written consent is filed with the minutes of the proceedings
of the Committee. Members of the Committee may participate in meetings of the
Committee by means of a conference, telephone or similar communications
equipment by which all persons participating in the meeting can hear each other
and such participation in a meeting shall constitute presence in person at such
meeting.
Section 5. SHARES AVAILABLE. The Committee may, but shall not be
required to, grant in accordance with the Plan not more than 150,000 shares,
which may be either treasury shares or authorized but unissued shares of Class
A Common stock.
Section 6. TIME FOR GRANTING AWARD. Awards may be granted by the
Committee under this Plan up to and including January 20, 1997.
Section 7. PERSONS ELIGIBLE. Persons eligible to receive awards
under this Plan shall be such executives at the Company as the Committee in its
sole and absolute discretion may select.
Section 8. AWARDS PROCEDURE. The Committee or the Board of Directors
at the close of the current fiscal year shall approve for the ensuing fiscal
year a Targeted Performance Criterion Level as presented to it by management.
The Committee or the Board of Directors shall in its sole and absolute
discretion have the right to accept, reject,
<PAGE> 3
modify or alter any Targeted Performance Criterion Level presented to it by
management.
(a) The Committee shall determine the amount granted to each
participant.
(b) Within a reasonable time after the award date, the Company
shall pay the participant in cash fifty (50%) of the amount
awarded to the participant.
(c) The balance of the amount awarded to the participant shall be
paid in shares of the Company's Class A Common Stock. The
number of shares shall be determined by dividing (i) the
balance of the amount awarded to the participant, by (ii) the
closing market price of such shares on the first business day
of the fiscal year with respect to which such amount was
awarded to the participant. Twenty percent (20%) of the number
of shares awarded the participant shall be paid within a
reasonable time after the award date. The balance of the
shares shall be paid to the participant in the subsequent four
fiscal years at a rate of twenty percent (20%) per year.
(d) In the event of the death, permanent disability or retirement
of a participant, the unpaid balance shall immediately vest
and be due the participant or his beneficiary.
(e) In the event of a change in control, being defined as a change
of twenty-five percent (25%) or more of the voting power of
the Company's stock, the Committee may at its sole and
absolute discretion accelerate the pay-out dates with respect
to the stock, and authorize the immediate payment of all stock
due to a participant.
Section 9. FORFEITURES. Upon termination of employment with the
Company due to any other reason other than death, disability or retirement all
stock granted but not received shall be forfeited by the Participant. Any
stock forfeited hereunder shall revert to the Plan and shall be available for
further awards under the Plan.
Section 10. CHANGES IN CAPITALIZATION. In the event of any stock
dividend, stock split, reclassification or other changes in the stock, the
Committee shall make such adjustments as it deems equitable to accomplish the
purpose of the Plan. The Committee's determination as to any adjustment shall
be final and conclusive.
Section 11. AMENDMENTS.
(a) Amendments by the Board of Directors or the Committee.
After the initial approval of this Plan by the Shareholders of the
Company, the Board of Directors or the Committee shall have the right to extend
the length of this Plan, amend or modify the Plan from time to time or to
terminate this Plan entirely.
(b) Amendments requiring shareholder approval.
<PAGE> 4
Notwithstanding the provision of Section 11 hereof, any amendments to
the Plan which change the number of shares available under this Plan, as set
forth in Section 5 hereof, or change the ratio of cash awards to stock awards,
Section 7 hereof, shall not be effective unless approved by a vote of the
majority of votes entitled to vote thereon.
Section 12. EFFECTIVENESS OF THE PLAN. The effectiveness of the Plan
is subject to approval of the stockholders of the Company within one (1) year
from January 20, 1987, except that the Plan shall be effective on and after
January 20, 1987, to permit the granting of awards hereunder during said one
(1) year period. In the event that this Plan is not approved by the Company as
aforesaid, any stock awards granted but not received shall be deemed void of no
force and effect.
Section 13. WITHHOLDING TAXES. To the extent that the Company is
required to withhold federal, state, or local taxes in connection with any
payment made to or benefit realized by a participant or other person under the
Plan, and the amounts available to the Company for the withholding are
insufficient, it shall be a condition to the receipt of any such payment or the
realization of any such benefit that the participant or such other person make
arrangements satisfactory to the Company for payment of the balance of any
taxes required to be withheld. At the discretion of the Committee, any such
arrangements may include relinquishment of a portion of any such payment or
benefit. The Company and any participant or such other person may also make
similar arrangements with respect to the payment of any taxes with respect to
which withholding is not required.
<PAGE> 1
EXHIBIT 10.3
GENOVESE DRUG STORES, INC.
RETIREMENT INCOME PLAN
AS AMENDED AND RESTATED
EFFECTIVE AS OF JANUARY 1, 1989
<PAGE> 2
GENOVESE DRUG STORES, INC.
RETIREMENT INCOME PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
- - ------- ----
<S> <C> <C>
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
II Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
III Retirement and other Termination
of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
IV Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
V Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
VI Maximum Amount of Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . 26
VII Designation of Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
VIII Funding and Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
IX Administration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
X Termination of Employer Participation . . . . . . . . . . . . . . . . . . . . . . 38
XI Amendment or Termination of the
Plan and Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
XII Top Heavy Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
XIII Special Limitations Imposed by
Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
XIV General Limitations and Provisions . . . . . . . . . . . . . . . . . . . . . . . . 54
EXHIBIT I - List of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
<PAGE> 3
GENOVESE DRUG STORES, INC.
RETIREMENT INCOME PLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1989
PREAMBLE
Genovese Drug Stores, Inc. (the "Company") established the Genovese
Drug Stores, Inc. Retirement Income Plan (the "Plan") effective March 1, 1972,
to provide retirement benefits and certain other benefits to eligible employees
of the Company and participating affiliated companies. The Plan was originally
established under a group annuity contract. Subsequently, the assets of the
Plan were transferred to a trust (the "Trust").
The Plan and Trust, as established, have been amended from time to
time thereafter. Effective as of December 31, 1988, the Plan was amended to
cease all future benefit accruals, to freeze existing benefit accruals at the
level then in effect, and to prohibit additional employees from participating
in the Plan.
The Plan, as set forth herein, constitutes an amendment and
restatement of the Plan effective as of January 1, 1989, except as certain
other effective dates may be specified herein with respect to specific
provisions or as may be required under applicable law. The Plan, as so amended
and restated, is intended to reflect all changes required to be incorporated in
the Plan as of the end of the remedial amendment period specified in Code
Section 401(b) as it applies to the Tax Reform Act of 1986 and certain other
specified legislation enacted subsequent thereto, as well as all other changes
adopted by the Company prior to the actual adoption of this amendment and
restatement. This amendment and restatement is further intended to reflect,
ratify and confirm the administrative practices of the Employers and the
Committee in operating the Plan in accordance with the
1
<PAGE> 4
purposes of applicable law during the period with respect to which retroactive
effect is given pursuant to the remedial amendment period referred to in the
preceding sentence. Notwithstanding the foregoing, nothing in this amendment
and restatement shall be deemed inconsistent with any action taken by the
Committee or the Company at any time on or after January 1, 1989, but prior to
the adoption of this amendment and restatement, which was taken in accordance
with the terms of the Plan as then in effect or in a good faith attempt to
administer the Plan in accordance with applicable law.
The Plan, as so amended and restated, is intended to continue to
qualify as a pension plan which meets the qualification and tax exemption
requirements of Sections 401(a) and 501(a) of the Internal Revenue Code of
1986, as amended, and any other provisions of applicable law.
Unless otherwise expressly provided herein, or as may be required by
applicable law, the rights of any person whose employment terminated or who
retired before the effective date of this amendment and restatement, or the
effective date of any particular provision, as provided above, shall be
determined solely under the terms of the Plan as in effect on the date of his
termination of employment or retirement, unless such person is thereafter
reemployed and again becomes a Participant.
2
<PAGE> 5
ARTICLE I
DEFINITIONS
When used herein the following terms shall have the following meanings:
1.1 "ACCRUED BENEFIT" means as of any date, the amount used to
provide the Participant's Retirement Benefit, as specified in Article IV.
1.2 "ACTUARIAL EQUIVALENT" means, unless otherwise specified in
the Plan, a benefit of equivalent value, determined by using a 6% annual
interest rate and the 1971 Group Annuity UP84 Mortality Table, projected to
1975 and set back two years for males and females; provided, however, that the
interest rate used to determine whether the Actuarial Equivalent of a
Participant's Retirement Benefit payable at age 65 in the form of a Straight
Life Annuity exceeds $3,500 shall not be greater than:
(i) the applicable interest rate, if the amount (using
such rate) is $25,000 or less; or
(ii) 120% of the applicable interest rate, if the amount
exceeds $25,000 (as determined under (i) above).
The "applicable interest rate" shall mean the interest rate or rates which
would be used by the PBGC as of the first day of the month in which a
distribution commences, for purposes of determining the present value of
Participants' benefits under the Plan if the Plan had terminated on the date
distribution commences with insufficient assets to provide benefits guaranteed
by the PBGC on that date.
3
<PAGE> 6
1.3 "ACTUARY" means the enrolled actuary (within the meaning of
ERISA) engaged by the Committee.
1.4 "AFFILIATE" means any corporation which is included in a
controlled group of corporations (within the meaning of Code Section 414(b))
which includes the Company, any trade or business (whether or not incorporated)
which is under common control with the Company (within the meaning of Code
Section 414(c)), any organization included in the same affiliated service group
(within the meaning of Code Section 414(m)) as the Company and any other entity
required to be aggregated with the Company pursuant to Code Section 414(o);
except that for purposes of applying the provisions of Articles VI and XII with
respect to the limitations on benefits, Code Section 415(h) shall apply.
1.5 "APPLICABLE LAW", whether capitalized or not, means the Code,
ERISA and any other law which governs the Plan, and any regulations, rulings,
or other administrative or judicial clarifications thereunder.
1.6 "BENEFICIARY" means any person or entity validly designated by
a Participant pursuant to Article VII to receive the amount, if any, payable
under the Plan upon his death.
1.7 "BOARD" means the Board of Directors of the Company or a duly
authorized committee thereof.
1.8 "BREAK IN SERVICE" means a Plan Year during which an
individual has not completed more than 500 Hours of Service, as determined by
the Committee in accordance with applicable law. Solely for purposes of
determining whether a Break in Service has occurred on or after January 1,
1985, an individual shall be credited with the Hours of Service which such
individual would have completed but for a maternity or paternity absence, as
determined by the Committee in accordance with this Section and applicable law;
provided, however, that the total Hours of
4
<PAGE> 7
Service so credited shall not exceed 501 hours and that the individual timely
provide the Committee with such information as it shall require. Hours of
Service credited for a maternity or paternity absence shall be credited
entirely (i) in the Plan Year in which the absence began if such Hours of
Service are necessary to prevent a Break in Service in such Plan Year, or (ii)
in the following Plan Year. For purposes of this Section, maternity or
paternity absence shall mean an absence from work by reason of the individual's
pregnancy, the birth of the individual's child or the placement of a child with
the individual in connection with adoption of the child by such individual, or
for purposes of caring for a child for the period immediately following such
birth or placement.
1.9 "CODE" means the Internal Revenue Code of 1986, as now in
effect or as hereafter amended. All citations to sections of the Code are to
such sections as they may from time to time be amended or renumbered.
1.10 "COMMITTEE" means the Administrative Committee provided for in
Article IX. For purposes of ERISA, the members of the Committee shall be the
named fiduciaries of the Plan with respect to the matters for which they are
hereby made responsible under the Plan, and the Committee shall be the
administrator of the Plan.
1.11 "COMPANY" means Genovese Drug Stores, Inc., or any successor
thereto.
1.12 "DEFERRED RETIREMENT DATE" means the Participant's date of
Retirement after his Normal Retirement Date, as provided in Section 3.2.
5
<PAGE> 8
1.13 "DISABILITY" means the Participant's inability to perform his
customary duties with the Employer as would constitute disability for receiving
disability benefits under any long term disability plan maintained by the
Employer, as determined by the Committee in accordance with procedures
uniformly applicable to all Participants.
1.14 "EARLY RETIREMENT DATE" means the Participant's date of
Retirement prior to his Normal Retirement Date, as provided in Section 3.4.
1.15 "EFFECTIVE DATE" of the amended and restated Plan means
January 1, 1989.
1.16 "EMPLOYEE" means any employee of the Employer, excluding any
individual who (i) is a nonresident alien, (ii) is included in a unit of
employees covered by a collective bargaining agreement which does not provide
for his participation in the Plan, (iii) is an employee of an Affiliate which
is not an Employer, (iv) is a Leased Employee, (v) serves only as a director of
the Board, or (vi) renders service as an independent contractor or as an
employee of an independent contractor.
1.17 "EMPLOYER" means the Company or any Affiliate which, with the
consent of the Board, adopts the Plan and Trust by appropriate action and makes
participation under the Plan available to its Employees in the manner and to
the extent permitted by the Board. Any Employer which adopts the Plan shall be
deemed thereby to appoint the Company, the Committee and the Trustee its
exclusive agents to exercise on its behalf all of the power and authority
conferred by the Plan or by the Trust and shall make its allocable
contributions to the Plan. The authority of the Company, the Committee and the
Trustee to act as such agents shall continue until the Plan is terminated as to
such Employer and the relevant Trust assets have been distributed by the
Trustee as provided in Article X.
6
<PAGE> 9
1.18 "EMPLOYMENT COMMENCEMENT DATE" means the date on which an
individual first performs an Hour of Service for the Employer or any Affiliate.
1.19 "ERISA" means the Employee Retirement Income Security Act of
1974, as now in effect or as hereafter amended.
1.20 "FORMER PARTICIPANT" means a Participant who has terminated
his employment, whether or not he has received a distribution of his Retirement
Benefit.
1.21 "HOUR OF SERVICE" means each hour for which an individual is
directly or indirectly paid or entitled to payment by the Employer or any
Affiliate for the performance of Service (or is treated as performing Service
under Section 1.33) including any back pay irrespective of mitigation of any
damages.
1.22 "IRS" means the United States Internal Revenue Service.
1.23 "LEASED EMPLOYEE" means any person (other than an employee of
the Employer) who pursuant to an agreement between the Employer and any other
person (the "leasing organization") has performed services for the Employer (or
for the Employer and any Affiliate) on a substantially full-time basis for a
period of at least one year, and such services are of a type historically
performed by employees in the business field of the Employer. Benefits
provided for a Leased Employee by the leasing organization which are
attributable to services performed for the Employer shall be treated as if
provided by the Employer.
1.24 "NORMAL RETIREMENT AGE" means the date the Employer attains
age 65.
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1.25 "NORMAL RETIREMENT DATE" means the first day of the month
coincident with or next following the Participant's Normal Retirement Age.
1.26 "PARTICIPANT" means any Employee who participates in the Plan
in accordance with Article II.
1.27 "PBGC" means the Pension Benefit Guaranty Corporation.
1.28 "PLAN" means the Genovese Drug Stores, Inc. Retirement Income
Plan, as the same may be amended from time to time.
1.29 "PLAN YEAR" means a twelve consecutive month period commencing
on January 1st.
1.30 "REEMPLOYMENT COMMENCEMENT DATE" means the first date that an
Employee is credited with an Hour of Service following a Break in Service.
1.31 "RETIREMENT" means, as applicable, a Participant's Normal,
Early or Deferred Retirement.
1.32 "RETIREMENT BENEFIT" means a benefit payable upon retirement
or other termination of employment, as provided in Article III.
1.33 "SERVICE" means employment (whether or not as an Employee)
with the Employer or with any Affiliate. To the extent and for the purpose
determined by the Committee, under rules uniformly applicable to all Employees
similarly situated and in accordance with applicable law (including Department
of Labor Regulations Sections 2530.200b-2(b) and (c)), periods of Service shall
include (i) periods of vacation, (ii) periods of absence authorized by the
Employer for sickness, temporary disability or
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personal reasons and (iii) if and to the extent required by the Military
Selective Service Act as amended, or any other Federal law, service in the
Armed Forces of the United States.
1.34 "SPOUSE" OR "SURVIVING SPOUSE" means the individual to whom a
Participant or Former Participant is legally married (as determined by the
Committee) on the earliest of (i) the date on which payment of benefits
commence under the Plan or (ii) the date of the Participant's death.
1.35 "TERMINATION OF EMPLOYMENT", or words of similar import, means
the termination of an Employee's employment with an Employer or Affiliate under
circumstances where he is no longer employed by an Employer or Affiliate.
Transfer of employment from one Employer or Affiliate to another Employer or
Affiliate shall not constitute a termination of employment.
1.36 "TRUST" OR "TRUST FUND" means the trust established by the
Company as a part of the Plan.
1.37 "TRUST AGREEMENT" means the agreement entered into between the
Company and the Trustee to carry out the purposes of the Plan, as the same may
be amended from time to time.
1.38 "TRUSTEE" means the trustee or trustees of the Trust.
1.39 "YEAR OF SERVICE" means, except as provided herein, a Plan
Year beginning on or after January 1, 1976 during which an individual completes
at least 1,000 Hours of Service, as determined by the Committee in accordance
with applicable law. In addition to Years of Service credited in accordance
with the preceding sentence, a Participant shall be credited with a Year of
Service (or fraction thereof) for each Year of Service (or fraction thereof)
credited to him under the terms of the Plan as in effect on December 31, 1975.
Notwithstanding the foregoing
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Years of Service shall not be recognized under the Plan after January 1, 1989,
to the extent that they were disregarded in accordance with the break in
service rules under the Plan as in effect before such date.
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ARTICLE II
PARTICIPATION
2.1 ELIGIBILITY TO PARTICIPATE.
(a) Each Employee who was a Participant of the Plan on
December 31, 1988 shall continue to be a Participant. No one shall be
permitted to become a Participant under this Plan on or after January 1, 1989.
2.2 BREAK IN SERVICE. If a Participant who has no vested right to
his Retirement Benefit incurs a Break in Service and if the number of his
consecutive Breaks in Service equals or exceeds the greater of 5 or the
aggregate number of his Years of Service prior to such Break in Service
(excluding any Years of Service previously disregarded under the Break in
Service provisions of the Plan) then, in the event that he again becomes an
Employee, his Years of Service prior to such Break in Service shall be
disregarded and his rights under the Plan shall be determined accordingly. In
all other cases following a Break in Service, if the Former Participant again
becomes an Employee, his Years of Service prior to such Break in Service shall
be counted if the Participant completes a Year of Service following his Break
in Service.
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ARTICLE III
RETIREMENT AND OTHER TERMINATION OF EMPLOYMENT
3.1 NORMAL RETIREMENT.
(a) A Participant may retire on his Normal Retirement
Date. Notwithstanding any provision herein to the contrary, a Participant
shall be 100% vested in his Retirement Benefit upon attaining his Normal
Retirement Age.
(b) A Participant who retires on his Normal Retirement
Date shall be entitled to receive a Retirement Benefit, commencing on his
Normal Retirement Date and payable in accordance with Article V, equal to his
Accrued Benefit. In no event shall a Participant's Retirement Benefit
commencing on his Normal Retirement Date be less than the largest Retirement
Benefit the Participant could have received if he had retired on any date which
could have been his Early Retirement Date and elected to have his Retirement
Benefit commence immediately.
3.2 DEFERRED RETIREMENT.
(a) The Deferred Retirement Date of a Participant who
remains employed beyond his Normal Retirement Date shall be the date on which
he terminates his employment.
(b) Subject to Section 5.5, a Participant who retires on
a Deferred Retirement Date shall be entitled to receive a Retirement Benefit
commencing on the first day of the month following his Deferred Retirement Date
and payable in accordance with Article V, equal to the Actuarial Equivalent of
the Retirement Benefit that would have been payable to him at his Normal
Retirement Date if he had retired in accordance with Section 3.1. In no event
shall a Participant's Retirement Benefit commencing on his Deferred Retirement
Date be less than the largest Retirement Benefit the Participant could have
received, if he had retired on any date which could have been his
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Early or Normal Retirement Date and elected to have his Retirement Benefit
commence immediately.
3.3 DISABILITY BEFORE RETIREMENT.
(a) A Participant who incurs a Disability before his
Early Retirement Date and is receiving payments under a long-term disability
program maintained by the Employer shall continue to be credited with Years of
Service during such Disability (in the same manner as if he had continued in
full time employment with the Employer) until the earlier of (i) the date such
long- term disability payments cease, or (ii) his Normal Retirement Date.
(b) If a Participant reaches his Normal Retirement Date
while on Disability, or recovers from his Disability prior to his Normal
Retirement Date, and does not return to the employ of an Employer or Affiliate
immediately upon his recovery, he shall be treated under the Plan as if he had
terminated employment or retired as of the earlier of his Normal Retirement
Date or the date of such recovery, and his right to benefits, if any, shall be
determined under the provisions of this Article III, taking into account for
purposes of the Service requirement in Section 3.5(a) the Service credited to
him during the period of his Disability, as provided in (a) above.
(c) The Committee shall establish such procedures as it
deems necessary to evaluate the continued Disability of any Participant, and
the cooperation of a Participant with such procedures, including the supplying
of any medical information and the submission to medical examination, shall be
a condition to the treatment afforded to such Participant under this Section
3.3.
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3.4 EARLY RETIREMENT.
(a) A Participant who attains age 55 may retire on an
Early Retirement Date which is the first day of any month prior to his Normal
Retirement Date.
(b) A Participant who retires on an Early Retirement Date
shall be entitled to receive a Retirement Benefit, commencing on his Normal
Retirement Date and payable in accordance with Article V, equal to his Accrued
Benefit. In no event shall such Retirement Benefit be less than the largest
Retirement Benefit the Participant could have received if he had retired on any
earlier date which could have been his Early Retirement Date and elected to
have his Retirement Benefit commence immediately.
(c) A Participant who retires on an Early Retirement Date
may elect, in accordance with procedures established by the Committee, to begin
receiving payment of his Retirement Benefit on the first day of any month on or
after his Early Retirement Date, but not later than his Normal Retirement Date.
The amount of such Retirement Benefit shall be equal to the Retirement Benefit
that would be payable at Normal Retirement Date in accordance with Section
3.4(b) above, reduced by 6/10 of 1% for each of the first 60 months, and 3/10
of 1% for each of the next 60 months, that commencement of such Retirement
Benefit precedes the Participant's Normal Retirement Date. Such an election
may be revoked in accordance with procedures established by the Committee.
3.5 OTHER TERMINATION OF EMPLOYMENT.
(a) A Former Participant whose termination of employment
occurs prior to his Early Retirement Date, but after completing at least 5
Years of Service, shall receive a Retirement Benefit, commencing on his Normal
Retirement Date (unless he makes an election under (b) below) and payable in
accordance with Article V, equal to his Accrued Benefit.
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(b) A Former Participant described in (a) above may
elect, in accordance with procedures established by the Committee, to have his
Retirement Benefit commence on the first day of any month following his
attainment of age 55, but prior to his Normal Retirement Date. Such Benefit
shall be equal to the Retirement Benefit that would have been payable at Normal
Retirement Date, reduced in the same manner as provided in Section 3.4(c) to
reflect commencement prior to Normal Retirement Date.
3.6 REQUIRED CONSENT. Notwithstanding any other provision of the
Plan to the contrary, to the extent required by applicable law, if the
Actuarial Equivalent of the Retirement Benefit of a Participant who retires
prior to his Normal Retirement Date is in excess of $3,500, no benefit shall be
paid prior to the Participant's Normal Retirement Date without his written
consent and, if the Participant is married on the date payment would otherwise
commence, the written consent of his Spouse.
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ARTICLE IV
ACCRUED BENEFIT
4.1 ACCRUED BENEFIT. Effective as of December 31, 1988, the Plan
was amended to cease all future benefit accruals and to freeze the benefit
levels earned by Participants up to that date. The Accrued Benefit of a
Participant as of any date of determination on or after January 1, 1989 is,
therefore, equal to the annual amount of retirement income payable at Normal
Retirement Date in the form of a Straight Life Annuity (as described in Section
5.2(a)(i)), which would have been determined under the terms of the Plan as in
effect in December 31, 1988, if the Participant had terminated his employment
on that date. The annual amount so determined is specified for each affected
Participant in Exhibit I attached to and made a part of this Plan.
4.2 NO FUTURE ACCRUALS. A Participant's Accrued Benefit shall not
increase for any reason on and after January 1, 1989, including, but not
limited to, increases in Compensation from the Employer or continued Service
with the Employer.
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ARTICLE V
METHOD OF PAYMENT
5.1 NORMAL FORM OF BENEFITS.
(a) Unmarried Participant. The Retirement Benefit to
which an unmarried Participant is entitled under the Plan shall, except as
otherwise provided in this Article V, be payable in the form of a Straight Life
Annuity as defined in Section 5.2(a)(i).
(b) Married Participant. The Retirement Benefit to which
a married Participant is entitled under the Plan shall, except as otherwise
provided in this Article V, be payable in the form of a Qualified Joint and
Survivor Annuity which is the Actuarial Equivalent of the Retirement Benefit
payable to an unmarried Participant in accordance with Section 5.1(a). A
"Qualified Joint and Survivor Annuity" means an annuity for the life of the
Participant, ending with the payment due for the month in which the Participant
dies, and, if the Participant dies leaving a Surviving Spouse, an annuity for
the life of such Surviving Spouse equal to 50% of the annuity payable for the
life of the Participant, commencing on the first day of the month following the
date of the Participant's death and ending with the payment due for the month
in which such Surviving Spouse dies. A married Participant may elect, in
accordance with Section 5.4, to have his Retirement Benefit paid in one of the
forms provided in Section 5.2, in lieu of the Qualified Joint and Survivor
Annuity.
5.2 OPTIONAL FORMS OF BENEFIT.
(a) Subject to Sections 5.6 and 5.7, in lieu of the form
of Retirement Benefit described in Section 5.1, a Participant may elect to
receive his Retirement Benefit in any of the optional forms of benefit
described below; provided, however, that the Retirement Benefit under such
optional forms shall be
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the Actuarial Equivalent of the Retirement Benefit payable to an unmarried
Participant in accordance with Section 5.1(a).
(I) STRAIGHT LIFE ANNUITY. An annuity
for the Participant's life, payable in 12 equal monthly
installments per year, ending with the payment due for the
month in which the Participant dies.
(II) JOINT AND SURVIVOR ANNUITY. An
adjusted annuity for the Participant's life, payable in 12
equal monthly installments per year, and, after his death, a
survivor annuity equal to 50%, 66 2/3% or 100%, as the
Participant elects, of such adjusted annuity payable to his
Beneficiary for life.
(III) CERTAIN AND LIFE ANNUITY. An
annuity for the Participant's life, payable in 12 equal
monthly installments per year, with a guarantee that if the
Participant dies before receiving 120, monthly payments, the
Beneficiary shall continue to receive monthly payments until
the total number of monthly payments made to the Participant
and his Beneficiary equals 120.
(b) If the Beneficiary under any of the optional forms
described above is not the Participant's Spouse, such optional form shall only
be permitted if the Actuarial Equivalent of the benefits allocated to such
Beneficiary is less than 50% of the Actuarial Equivalent of the Straight Life
Annuity which the Participant could otherwise have received.
(c) If a Participant elects to receive his Retirement
Benefit in the form of a Joint and Survivor Annuity and his joint annuitant
dies before the Participant's benefit
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payments have commenced, then the Participant's election under this Section 5.2
shall be null and void and the Participant shall be entitled to receive the
benefit he would have received if no election had been made under this Section
5.2.
(d) If a Participant elects to receive his Retirement
Benefit in the form of a Joint and Survivor Annuity and dies before payment of
his benefit has commenced, then his joint annuitant shall not be entitled to
receive any benefit under the Joint and Survivor Annuity; provided, however,
that if the Participant dies while in active service after his Normal
Retirement Date without leaving a Surviving Spouse, payment of his benefit
under the Joint and Survivor Annuity shall be deemed to have commenced on the
date of his death.
5.3 PRERETIREMENT SURVIVOR ANNUITY.
(a) Subject to Section 5.6, a Preretirement Survivor
Annuity shall be paid to the Surviving Spouse of a Participant or Former
Participant who dies after earning a nonforfeitable right to his Accrued
Benefit in accordance with Article III, but before payment of his Retirement
Benefit has commenced. A "Preretirement Survivor Annuity" means a life annuity
to the Participant's Surviving Spouse, if any, payable in 12 equal monthly
installments per year, equal to 50% of the reduced annuity which would have
been payable for the life of the Participant under Section 5.1(b), and payable
in 12 equal monthly installments per year.
(b) In the case of a Participant or Former Participant
who dies on or after the first date which could have been his Early Retirement
Date but before payment of his Retirement Benefit has commenced, the
Preretirement Survivor Annuity shall be based on the Qualified Joint and
Survivor Annuity which would have been payable if the Participant had retired
on the day before his date of death and payments under the Qualified Joint and
Survivor Annuity had commenced on the
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first day of the month coincident with or following the date of his death.
(c) In the case of a Participant or Former Participant
who dies before the first date which could have been his Early Retirement Date,
the Preretirement Survivor Annuity shall be based on the Qualified Joint and
Survivor Annuity which would have been payable if the Participant had
terminated employment on the day before his date of death (or in the case of a
Former Participant, the date of his termination of employment), survived until
the first date which would have been his Early Retirement Date, immediately
began receiving payments under the Qualified Joint and Survivor Annuity and
died on the day following such Early Retirement Date.
(d) Payment of a Preretirement Survivor Annuity shall
commence on the first day of the month following the later of (i) the first
month in which the Participant could have retired on an Early Retirement Date
or (ii) the month in which the Participant dies; provided, however, to the
extent required by applicable law, it shall not commence to be paid prior to
the date which was or would have been the Participant's Normal Retirement Date
(had the Participant lived) without the written consent of the Participant's
Surviving Spouse. In the absence of consent, payment of the Preretirement
Survivor Annuity shall not be made until the earlier of (i) the first day of
the month following receipt of the required consent by the Committee or (ii)
the date which would have been the Participant's Normal Retirement Date.
5.4 WAIVER OF QUALIFIED JOINT AND SURVIVOR ANNUITY. The Committee
shall furnish or cause to be furnished to each married Participant, an
explanation of the Qualified Joint and Survivor Annuity not less than 30 days
and not more than 90 days prior to the Participant's annuity starting date
under procedures established by the Committee in accordance with applicable
law.
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A Participant or Former Participant may, with the written consent of his Spouse
(unless the Committee makes a written determination in accordance with
applicable law that no such consent is required), elect in writing to receive
his Retirement Benefit in one of the optional forms described in Section 5.2 in
lieu of a Qualified Joint and Survivor Annuity or revoke such election at any
time and any number of times within the 90-day period ending on his annuity
starting date. Such an election or revocation shall be made under procedures
established by the Committee in accordance with applicable law. For purposes
of this Section 5.4, a Participant's "annuity starting date" means (i) the
first day of the first period for which an amount is payable as an annuity or
(ii) in the case of a benefit not payable as an annuity, the first day on which
all events have occurred which entitle the Participant to such benefit.
5.5 LIMITATIONS ON DISTRIBUTIONS.
(a) Notwithstanding any other provision of the Plan and
subject to Section 14.5, unless otherwise provided by law any benefit payable
to a Participant shall commence (in accordance with Code Section 401(a)(9)) no
later than the April 1st of the calendar year following the calendar year in
which such Participant attains age 70 1/2 (the "required beginning date"). If
not paid in a single sum payment, such benefits shall be paid, in accordance
with applicable law, (i) over the life of the Participant, (ii) over the life
of the Participant and a designated Beneficiary, (iii) over a period not
extending beyond the life expectancy of the Participant, or (iv) over a period
not extending beyond the joint life expectancies of the Participant and a
designated Beneficiary. The minimum distribution required for the
Participant's first distribution calendar year must be made on or before the
Participant's required beginning date. The minimum distribution for each other
calendar year, including the minimum distribution for the year in which the
Participant's required beginning date occurs, must be made on or before
December 31st of the distribution calendar
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year. Life expectancies for purposes of this Section 5.5 shall be recalculated
annually in accordance with applicable law.
(b) If distribution of a Participant's benefit has
commenced prior to a Participant's death, and such Participant dies before his
entire benefit is distributed to him, distribution of the remaining portion of
the Participant's benefit to his Beneficiary shall be made at least as rapidly
as under the method of distribution in effect as of the date of the
Participant's death.
(c) If a Participant dies before distribution of his
benefit has commenced, distributions to his Beneficiary shall be made on or
before December 31st of the calendar year which contains the fifth anniversary
of the date of such Participant's death; provided, however, at the
Beneficiary's irrevocable election, duly filed with the Committee before the
applicable commencement date set forth in the following sentence, any
distribution to a Beneficiary may be made over a period not extending beyond
the life expectancy of the Beneficiary. Such distribution shall commence no
later than the December 31st of the calendar year immediately following the
calendar year in which the Participant dies or, in the event such Beneficiary
is the Participant's Surviving Spouse, on or before December 31st of the
calendar year in which such Participant would have attained age 70 1/2, if
later (or, in either case, on any later date prescribed by applicable law). If
such Participant's Surviving Spouse dies after the Participant, but before
distributions to such Surviving Spouse commence, this subsection (c) shall be
applied to require payment of any further benefits as if such Surviving Spouse
were the Participant.
(d) Pursuant to applicable law, any benefit paid to a
child shall be treated as if paid to a Participant's Surviving Spouse if such
amount will become payable to such
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<PAGE> 25
Surviving Spouse on the child's attaining majority, or other designated event
permitted by applicable law.
(e) Notwithstanding the foregoing and subject to Plan
Section 14.5, unless the Participant elects a later date, payment of benefits
under the Plan shall commence no later than the 60th day after the latest of
the last day of the Plan Year in which the Participant (i) attains his Normal
Retirement Date, (ii) attains his 10th anniversary of Plan participation or
(iii) terminates his employment.
5.6 CASH OUTS. Notwithstanding any other provisions of the Plan
and in accordance with applicable law, payment of any vested Retirement Benefit
with an Actuarial Equivalent value of $3,500 or less shall be made immediately
in a single sum payment in full settlement of the Plan's liability therefor;
provided, however, that no such single sum payment shall be made after benefits
have commenced without the consent of the Participant and, if the Participant
is married at the time such payment would otherwise commence, the consent of
his Spouse or, if the Participant has died, his Surviving Spouse. For purposes
of this Section 5.6, if the Actuarial Equivalent of a Participant's vested
Retirement Benefit is zero, such Participant shall be deemed to have received a
distribution of his vested Accrued Benefit.
5.7 REEMPLOYMENT FOLLOWING RETIREMENT. Except as may be otherwise
required in Section 5.7 and notwithstanding any other provisions of this
Article V, if a Former Participant whose Retirement Benefit is in pay status
again becomes an Employee, payment of his Retirement Benefit shall, to the
extent permitted by applicable law, be suspended until his subsequent
termination of employment or Retirement, at which time his Retirement Benefit
shall be recomputed on the basis of his Service and other factors both before
and after his reemployment, but shall be reduced by the Actuarial Equivalent of
any benefit paid prior to his
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reemployment; provided; however, that his Retirement Benefit shall in no event
be less than the Retirement Benefit payable prior to his reemployment. To the
extent that the application of this Section 5.7 constitutes a suspension of
benefits, such suspension shall be in accordance with ERISA, the Code and
applicable law.
5.8 DIRECT ROLLOVER. This Section 5.8 applies to distributions
made on or after January 1, 1993. Solely to the extent required under
applicable law and regulations, and notwithstanding any provision of the Plan
to the contrary that would otherwise limit a Distributee's election under this
Section 5.8, a Distributee may elect, at the time and in the manner prescribed
by the Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a
Direct Rollover.
For purposes of this Section 5.8, the following terms shall have the
following meanings:
(i) Eligible Rollover Distribution: Solely to the extent
required under applicable law and regulations, an Eligible Rollover
Distribution is any distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated beneficiary,
or for a specified period of ten years or more; any distribution to the extent
such distribution is required under 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).
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(ii) Eligible Retirement Plan: An Eligible Retirement Plan
is an individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the Distributee's
Eligible Rollover Distribution. However, in the case of an Eligible Rollover
Distribution to a surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
(iii) Distributee: A Distributee includes 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.
(iv) Direct Rollover: A Direct Rollover is a payment by the
Plan to the Eligible Retirement Plan specified by the Distributee.
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ARTICLE VI
MAXIMUM AMOUNT OF RETIREMENT BENEFIT
6.1 APPLICABLE BENEFITS. The provisions of this Article VI shall
govern the benefits to which it is applicable notwithstanding any other
provision of the Plan. The benefits to which this Article VI is applicable are
(i) any annuity payable to a Participant for life as part of a Qualified Joint
and Survivor Annuity or as part of a Joint and Survivor Annuity elected by the
Participant under Section 5.2 and having the effect of a qualified joint and
survivor annuity within the meaning of Code Section 401(a)(11) (excluding in
either case any survivor annuity payable to a Surviving Spouse thereunder),
(ii) any Straight Life Annuity payable to a Participant under Section 5.1 or
elected by a Participant under Section 5.2, (iii) any other optional form of
benefit payment elected by a Participant (including both the annuity payable to
the Participant and any other annuity or benefit payable thereunder), and any
Children's Pension payable in accordance with Section 5.5.
6.2 LIMITATIONS ON BENEFITS. The benefits to which this Article
VI is applicable may not exceed the limitations set forth in Code Section 415,
which are incorporated by reference herein. For these purposes, the
"limitation year" means the Plan Year. If a Participant also participates in
any defined contribution plan (as defined in Code Sections 414(i) and 415(k))
maintained by the Employer or any Affiliate, in the event that in any Plan Year
the sum of the Participant's defined benefit fraction (as defined in Code
Section 415(e)(2)) and the Participant's defined contribution fraction (as
defined in Code Section 415(e)(3)) would otherwise exceed 1.0, then the benefit
payable under this Plan shall be reduced so that the sum of such fractions in
respect of that Participant will not exceed 1.0. If the above reduction does
not ensure that the limitation set forth in this Section 6.2 is not exceeded,
then the annual additions
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(as defined in Code Section 415(c)(2)) to any defined contribution plan
maintained by the Employer or any Affiliate in which the Participant
participates, shall be reduced in accordance with the provisions of that plan,
but only to the extent necessary to ensure that such limitation is not
exceeded. If a Participant also participates in another defined benefit plan
(as defined in Code Sections 414(j) and 415(k)) maintained by the Employer or
any Affiliate, in the event that in any Plan Year such Participant's aggregated
accrued benefit under such plans exceeds the applicable limits under Code
Section 415, the benefit payable under such other plan shall be reduced to the
extent necessary to comply with such limits.
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ARTICLE VII
DESIGNATION OF BENEFICIARIES
7.1 BENEFICIARY DESIGNATION. Each Participant shall file with the
Committee a written designation of one or more persons as the Beneficiary who
shall be entitled to receive the amount, if any, payable under the Plan upon
his death. Subject to the requirements of Article V, a Participant may from
time to time revoke or change his Beneficiary designation without the consent
of any prior Beneficiary by filing a new designation with the Committee.
Notwithstanding the foregoing, if the Participant is married, his Spouse must
consent in writing to the designation of a Beneficiary other than the
Participant's Spouse (unless the Committee makes a written determination in
accordance with applicable law that no such consent is required). The last
such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to the Participant's death,
and in no event shall it be effective as of a date prior to such receipt.
7.2 LACK OF DESIGNATED BENEFICIARY. If no valid Beneficiary
designation is in effect at the time of a Participant's death, or if no validly
designated Beneficiary survives the Participant or if each surviving validly
designated Beneficiary is legally impaired or prohibited from taking, then the
Participant's Beneficiary shall be his Surviving Spouse, if any, or if the
Participant has no Surviving Spouse, then his estate. If the Committee is in
doubt as to the right of any person to receive such amount, it may direct the
Trustee to retain such amount, without liability for any interest thereon,
until the rights thereto are determined, or the Committee may direct the
Trustee to pay such amount into any court of appropriate jurisdiction and such
payment shall be a complete discharge of the liability of the Plan and the
Trust therefor.
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<PAGE> 31
ARTICLE VIII
FUNDING AND CONTRIBUTIONS
8.1 CONTRIBUTIONS. Subject to the provisions of Articles X and
XI, the Employer shall contribute to the Trust during each Plan Year in
accordance with Code Section 412(m), the amounts recommended by the Actuary to
the Committee as necessary to maintain the Plan on a sound actuarial basis, in
accordance with ERISA and the Code. The Committee shall arrange for the
establishment and maintenance by the Actuary, or in accordance with his
recommendations, of such funding accounts as are required by ERISA.
8.2 ACTUARIAL VALUATION. The Committee shall adopt and may change
from time to time, in accordance with the provisions of ERISA and the Code,
such actuarial assumptions and methods as are recommended by the Actuary for
purposes of actuarial valuations of the Plan. The Actuary shall make an annual
actuarial valuation of the Plan and shall estimate the contributions required
under Section 8.1 on the basis thereof. At least once in each three-year
period the Actuary shall make an actuarial study of the mortality, service and
compensation experience of the Participants of the Plan and the investment
experience of the Plan, including such calculations as may be necessary to
determine whether the Plan is adequately funded, and shall report the results
of its study to the Committee. Prior to termination of the Plan, forfeitures
of benefits arising from termination of employment, death or any other reason
under the Plan shall not be applied to increase the benefits that any
Participant would otherwise be entitled to receive under the Plan, but may be
anticipated in estimating costs under the Plan and shall be applied to reduce
the Employer's contributions under the Plan.
29
<PAGE> 32
8.3 TRUSTEE. All monies, securities or other property received as
contributions under the Plan shall be delivered to the Trustee under the Trust,
to be managed, invested, reinvested and distributed in accordance with the
Plan, the Trust and any agreement with an insurance company or other financial
institution constituting a part of the Plan and Trust and the investment
guidelines, if any, prescribed by the Committee and communicated to the
Trustee.
8.4 PLAN EXPENSES. The expenses of administering the Plan,
including (i) the fees and expenses of any employee and of the Trustee for the
performance of their duties under the Trust, (ii) the expenses incurred by the
members of the Committee in the performance of their duties under the Plan
(including reasonable compensation for any legal counsel, certified public
accountants, actuary and any agents and cost of services rendered in respect of
the Plan) and (iii) all other proper charges and disbursements of the Trustee
or the members of the Committee (including settlements of claims or legal
actions approved by counsel to the Plan) are to be paid out of the Trust unless
the Employer pays such expenses directly in such proportions as shall be
determined by the Committee. In estimating costs under the Plan,
administrative costs may be anticipated.
8.5 EXCLUSIVE BENEFIT RULE. Prior to the satisfaction of all
liabilities with respect to Participants and their Beneficiaries, the assets of
the Trust shall not inure to the benefit of any Employer and shall be held for
the exclusive purpose of providing benefits to Participants and/or their
Beneficiaries and for defraying the reasonable expenses of administering the
Plan. Notwithstanding the foregoing, (i) any portion of an Employer's
contribution which is made by virtue of a mistake of a fact shall be returned
to the Employer within one year after the payment of the contribution; and (ii)
each Employer's contribution is conditioned upon the deductibility of the
contribution for federal income tax purposes under Code
30
<PAGE> 33
Section 404 and, to the extent any such contribution is disallowed as a
deduction, such contribution (to the extent disallowed) shall be returned to
the Employer within one year of the disallowance.
31
<PAGE> 34
ARTICLE IX
ADMINISTRATION OF THE PLAN
9.1 THE COMMITTEE.
(a) The Plan shall be administered by a Committee which
shall have general responsibility for the administration and interpretation of
the Plan (including, but not limited to, complying with applicable reporting
and disclosure requirements, establishing and maintaining Plan records, issuing
instructions to the Trustee regarding the benefits that are to be paid from the
Trust Fund to Participants and Beneficiaries and adopting amendments to the
Plan as described in Section 11.1) and may exercise such other rights and
powers as may be specifically granted to it herein or by the Board. The
Committee shall engage the Actuary and such certified public accountants, who
may be accountants for the Company, as it shall require or may deem advisable
for purposes of the Plan.
(b) The Committee shall periodically review the
investment performance and methods of the Trustee and any other funding agency,
including any insurance company, under the Plan and may appoint and remove or
change the Trustee and any such funding agency. The Committee shall have the
power to appoint or remove one or more investment managers and to delegate to
such manager authority and discretion to manage (including the power to acquire
and dispose of) the assets of the Plan, provided that (i) each manager with
such authority and discretion shall be either a bank, an insurance company or a
registered investment adviser under the Investment Advisers Act of 1940 and
shall acknowledge in writing that it is a fiduciary with respect to the Plan
and (ii) the Committee shall periodically review the investment performance and
methods of each manager with such authority and discretion. The Committee
shall determine any requirements and objectives of the Plan (including any
interest rate or other actuarial assumptions) which may be pertinent to
32
<PAGE> 35
the investment of Plan assets and shall establish investment standards and
policies incorporating such requirements and objectives and communicate the
same to the Trustee (or other funding agencies under the Plan). If annuities
are to be purchased under the Plan, the Committee shall determine what
contracts should be made available to terminated Participants or purchased by
the Trust.
9.2 COMPOSITION OF THE COMMITTEE. The Committee shall consist of
three or more members (any of whom may be a Trustee), each of whom shall be
appointed by, shall remain in office at the will of, and may be removed, with
or without cause, by the Board. Any member of the Committee may resign at any
time. No member of the Committee shall be entitled to act on or decide any
matter relating solely to himself or any of his rights or benefits under the
Plan. The members of the Committee shall not receive any special compensation
for serving in their capacities as members of the Committee but shall be
reimbursed for any reasonable expenses incurred in connection therewith.
Except as otherwise required by ERISA, no bond or other security need be
required by the Committee or any member thereof in any jurisdiction. Any
person may serve on the Committee and any member of the Committee, any
sub-committee or agent to whom the Committee delegates any authority, and any
other person or group of persons, may serve in more than one fiduciary capacity
(including service both as a trustee and administrator) with respect to the
Plan.
9.3 INDEMNITY. To the maximum extent permitted by law, no member
of the Committee shall be personally liable by reason of any contract or other
instrument executed by him or on his behalf in his capacity as a member of such
Committee nor for any mistake of judgment made in good faith, and the Company
shall indemnify and hold harmless, directly from its own assets (including the
proceeds of any insurance policy the premiums of which are paid from the
Company's own assets), each member of the
33
<PAGE> 36
Committee and each other officer, employee, or director of the Company to whom
any duty or power relating to the administration or interpretation of the Plan
or to the management and control of the assets of the Plan may be delegated or
allocated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the
Company) arising out of any act or omission to act in connection with the Plan
unless arising out of such person's own fraud or bad faith.
9.4 SERVICES TO THE PLAN. The Committee may arrange for the
engagement of such legal counsel, who may be counsel for the Company, and make
use of such agents and clerical or other personnel as they each shall require
or may deem advisable for purposes of the Plan. The Committee may rely upon
the written opinion of such counsel and the Actuary and accountants engaged by
the Committee and may delegate to any such agent or to any sub-committee or
member of the Committee its authority to perform any act hereunder, including
without limitation those matters involving the exercise of discretion, provided
that such delegation shall be subject to revocation at any time at the
discretion of the Committee. The Committee shall report to the Board, at such
times as shall be specified by the Board, with regard to the matters for which
it is responsible under the Plan.
9.5 ACTION OF THE COMMITTEE. The Committee shall elect or
designate its own Chairman, establish its own procedures and the time and place
for its meetings, and provide for the keeping of minutes of all meetings. A
majority of the members of a Committee shall constitute a quorum for the
transaction of business at a meeting of the Committee. Any action of the
Committee may be taken upon the affirmative vote of a majority of the members
of the Committee at a meeting or, at the direction of its Chairman, without a
meeting by mail, telegraph or telephone, provided that all of the members of
the Committee are informed by
34
<PAGE> 37
mail or telegraph of their right to vote on the proposal and of the outcome of
the vote thereon.
9.6 COMMITTEE RECORDS. The Committee shall appoint an individual
who shall cause to be kept full and accurate accounts of receipts and
disbursements of the Plan, and shall cause to be deposited all funds of the
Plan to the name and credit of the Plan, in such depositories as may be
designated by the Committee. Such individual shall cause to be disbursed the
monies and funds of the Plan when so authorized by the Committee and shall
generally perform such other duties as may be assigned to him from time to time
by the Committee. All demands for money of the Plan shall be signed by such
officer or officers or such other person or persons as the Committee may from
time to time designate in writing.
9.7 CLAIMS PROCEDURE.
(a) All claims for benefits under the Plan shall be
submitted to, and within a reasonable period of time, decided in writing by the
Committee. Written notice of the decision on each such claim shall be
furnished reasonably promptly to the claimant. If the claim is wholly or
partially denied, written notice of the denial shall be furnished within 90
days after receipt of the claim; provided, however, that, if special
circumstances require an extension of time for processing the claim, an
additional 90 days from the end of the initial period shall be allowed for
processing the claim, in which event the claimant shall be furnished with a
written notice of the extension prior to the termination of the initial 90-day
period indicating the special circumstances requiring an extension. Such
written notice shall set forth an explanation of the specific findings and
conclusions on which such denial is based.
(b) A claimant may review all pertinent documents and may
request a review by the Committee of such a decision denying the claim. Such a
request shall be made in writing and
35
<PAGE> 38
filed with the Committee within 60 days after delivery to the claimant of
written notice of the decision. Such written request for review shall contain
all additional information which the claimant wishes the Committee to consider.
The Committee may hold any hearing or conduct any independent investigation
which it deems necessary to render its decision, and the decision on review
shall be made as soon as possible after the Committee's receipt of the request
for review. Written notice of the decision on review shall be furnished to the
claimant within 60 days after receipt by the Committee of a request for review,
unless special circumstances require an extension of time for processing, in
which event an additional 60 days shall be allowed for review and the claimant
shall be so notified in writing. Such notice of denial shall include specific
reasons for such decision. For all purposes under the Plan, such decisions on
claims (where no review is requested) and decisions on review (where review is
requested) shall be final, binding and conclusive on all interested persons as
to any matter of fact or interpretation relating to the Plan.
9.8 COMMUNICATIONS. Any notice, election, application,
instruction, designation or other form of communication required to be given or
submitted by any Participant, other Employee or Beneficiary shall be in such
form as is prescribed from time to time by the Committee, sent by first class
mail or delivered in person, and shall be deemed to be duly given only upon
actual receipt thereof by the Committee. Any notice, statement, report and
other communication from the Employer or the Committee to any Participant,
other Employee or Beneficiary required or permitted by the Plan shall be deemed
to have been duly given when delivered to such person or mailed by first class
mail to such person at his address last appearing on the records of the
Employer or the Committee. Each person entitled to receive a payment under the
Plan shall file in accordance herewith his complete mailing address and each
change therein. A check or communication mailed to any person at his
36
<PAGE> 39
address on file with the Employer or the Committee shall be deemed to have been
received by such person for all purposes of the Plan, and no employee or agent
of the Employer or member of the Committee shall be obliged to search for or
ascertain the location of any such person except as required by ERISA. If the
Committee is in doubt as to whether payments are being received by the person
entitled thereto, it may, be registered mail addressed to such person at his
address last known to the Committee notify such person that all future payments
will be withheld until such person submits to the Committee his proper mailing
address and such other information as the Committee may reasonably request.
9.9 INFORMATION FROM PARTICIPANT. Each Participant shall file
with the Committee such pertinent information concerning himself and his
Beneficiary, and each Beneficiary shall file with the Committee such
information concerning himself, as the Committee may specify, and in such
manner and form as the Committee may specify or provide, and no Participant or
Beneficiary shall have the right or be entitled to any benefits or further
benefits under the Plan unless such information is filed by him or on his
behalf.
37
<PAGE> 40
ARTICLE X
TERMINATION OF EMPLOYER PARTICIPATION
10.1 RIGHT OF TERMINATION. Any Employer may terminate its
participation in the Plan by giving the Committee prior written notice
specifying a termination date which shall be the last day of a month at least
60 days subsequent to the date such notice is received by the Committee. The
Committee may terminate any Employer's participation in the Plan, as of any
termination date specified by the Committee, for the failure of the Employer to
make proper contributions or to comply with any other provision of the Plan and
shall terminate an Employer's participation upon complete and final
discontinuance of the Employer's contributions.
10.2 RIGHTS OF PARTICIPANTS ON TERMINATION. To the maximum extent
permitted by ERISA, the rights of Participants no longer employed by the
Employer and Former Participants and their Beneficiaries and Surviving Spouses
shall be unaffected by a termination of the Plan as to any Employer. Subject
to the provisions of Section 11.3, the benefits provided under the Plan with
respect to each Participant in service with such Employer as of the termination
date will be paid or forfeited in accordance with the Plan as if such
termination had not occurred, except that the Committee may direct the Trustee
to segregate such portion of the assets of the Trust (the "Distributable
Reserve") as the Actuary shall determine to be properly allocable in accordance
with ERISA to the active employees of such Employer and direct the Trustee to
apply the Distributable Reserve for the benefit of the Participants employed by
the Employer as of the termination date in such manner as the Committee shall
determine including, without limitation, payment to such Participants in lump
cash sums or the purchase of immediate or deferred annuities, a transfer to a
successor employee benefit plan which is qualified under Code Section 401(a),
or any combination
38
<PAGE> 41
thereof; provided, however, that in the event of any transfer of assets to a
successor employee benefit plan, the provisions of Section 11.7 will apply.
Any such payments or transfers of the Distributable Reserve shall constitute a
complete discharge of all liabilities under the Plan with respect to such
Employer's participation in the plan and any Participant then employed by such
Employer. To the maximum extent permitted by ERISA, the termination of the
Plan as to any Employer shall not in any way affect any other Employer's
participation in the Plan.
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<PAGE> 42
ARTICLE XI
AMENDMENT OR TERMINATION
OF THE PLAN AND TRUST
11.1 RIGHT OF AMENDMENT OR TERMINATION.
(a) Subject to (b) and (c) below, the Board reserves the
right at any time to amend, suspend or terminate the Plan, any contributions
thereunder, the Trust or any contract issued by an insurance carrier forming a
part of the Plan, in whole or in part and for any reason and without the
consent of any Employer, Participant, Beneficiary or Surviving Spouse;
provided, however, that the Committee may adopt amendments which do not
materially affect the cost of the Plan and which may be necessary or
appropriate to facilitate the administration, management or interpretation of
the Plan or to conform the Plan thereto, to qualify or maintain the Plan and
Trust as a plan and trust meeting the requirements of Code Sections 401(a) and
501(a) or any other provision of applicable law (including ERISA), and may
exercise such additional powers and authority as may be granted by the Board
from time to time. Each Employer by its adoption of the Plan shall be deemed
to have delegated this authority to the Board and the Committee.
(b) No amendment or modification shall be made which
would retroactively impair any rights to any benefit under the Plan which any
Participant, Beneficiary or Surviving Spouse would otherwise have had at the
date of such amendment by reason of the contributions theretofore made, except
to such extent as may be necessary or appropriate to qualify or maintain the
Plan and Trust as a plan and trust meeting the requirements of Code Sections
401(a) and 501(a) or any other provision of applicable law (including ERISA),
or make it possible for any part of the funds of the Plan (other than such part
as is required to pay taxes, if any, and administrative expenses as provided in
Section
40
<PAGE> 43
8.4) to be used for or diverted to any purposes other than for the exclusive
benefit of Participants and their Beneficiaries and Surviving Spouses prior to
the satisfaction of all liabilities with respect thereto.
(c) Any amendment, modification, suspension or
termination of any provisions of the Plan may be made retroactively if
necessary or appropriate to qualify or maintain the Plan and Trust as a plan
and trust meeting the requirements of Code Sections 401(a) and 501(a) or any
other provision of applicable law (including ERISA).
11.2 NOTICE. Notice of any amendment, modification, suspension or
termination of the Plan shall be given by the Board or the Committee, whichever
adopts the amendment, to the other and to the Trustee and all Employers and,
where and to the extent required by law, to Participants and other interested
parties.
11.3 PLAN TERMINATION.
(a) Upon termination of the Plan, no amount shall
thereafter be payable under the Plan to or in respect of any Participant except
as provided in this Article XI, and to the maximum extent permitted by ERISA,
transfers or distributions of the assets of the Plan as provided in this
Article XI shall constitute a complete discharge of all liabilities under the
Plan. The Committee shall remain in existence and all of the provisions of the
Plan which in the opinion of the Committee are necessary for the execution of
the Plan and the distribution or transfer of the assets of the Plan shall
remain in force. All determinations and notifications referred to in this
Article XI shall be in form and substance satisfactory to counsel for the Plan.
(b) If the termination of the Plan does not constitute a
plan termination for purposes of Title IV of ERISA, the assets of the Plan
shall be applied for the benefit of
41
<PAGE> 44
Participants, Former Participants, Beneficiaries and Surviving Spouses in such
manner as the Committee shall determine; provided, however, that in the event
of any transfer of assets to a successor employee benefit plan the provisions
of Section 11.7 will apply.
11.4 DISTRIBUTION ON TERMINATION.
(a) If the termination of the Plan constitutes a plan
termination for purposes of Title IV of ERISA, then the rights of all
Participants to their Retirement Benefits accrued to the date of such
termination shall thereupon be nonforfeitable, but only to the extent that such
Retirement Benefits have then been funded by contributions made prior to such
termination and that funds are available to provide such Retirement Benefits
upon the allocations hereinafter provided in this Section 11.4.
(b) Upon the lapse of the period within which the PBGC
may object, and assuming no such objection has occurred, the assets of the Plan
which remain after reservation of an amount sufficient to pay all expenses of
final administration shall be allocated, to the extent sufficient, in the
following order of priority:
(i) To provide for the benefits payable under
Article V to or in respect of Participants who retired or
died, who could have retired, or who, having terminated
employment, either began receiving payments of such benefits
or could have begun receiving such payments if they had not
elected to defer commencement of such payments, at least three
years prior to the termination date, determined in each case
on the basis of the provisions of the Plan at any time during
the five-year period ending on the termination date when such
benefits were or would have been the
42
<PAGE> 45
lowest and without regard to any increases in such benefits
which accrued less then three years prior to the termination
date; then
(ii) To provide all other benefits under the Plan
which are guaranteed by the PBGC under Title IV of ERISA, or
which would be guaranteed if ERISA Sections 4022(b)(5) and
4022(b)(6) were not applicable, but which have not been
allocated under (i) above; then
(iii) To provide all other benefits which had
become nonforfeitable under the Plan prior to the termination
date but which have not been allocated under (i) or (ii)
above; then
(iv) To provide all other benefits which had
accrued under the Plan prior to the termination date but which
have not been allocated under (i), (ii) or (iii) above; then
(v) Any surplus assets of the Plan remaining
after the payment of all expenses of final administration and
after the satisfaction of all liabilities accrued to the
termination date with respect to Participants, Former
Participants and their Beneficiaries and Surviving Spouses
shall, upon receipt of the IRS approval therefor, revert to
the Company, provided, that subject to and in accordance with
Section 4980(d) of the Code, the Board of Directors may direct
that 25 percent of the maximum amount which the Employer could
otherwise receive as an employer reversion pursuant to this
clause less the amount equal to the present value of aggregate
increase in the accrued benefits under the Plan of any
43
<PAGE> 46
Participant, former Participant, Surviving Spouse or
Beneficiary pursuant to a Plan amendment adopted during the
60-day period ending on the date of termination of the Plan
and taking effect immediately on the termination date (in
accordance with Section 4980(d)(2)(B)(ii) of the Code), be
directly transferred to a qualified replacement plan as
defined in Section 4980(d) of the Code, prior to any amount
reverting to the Employer.
(c) The foregoing allocations shall be made by the
Committee in accordance with the determination of the Actuary pursuant to
applicable law. If the balance remaining for allocation under any of the
foregoing provisions is insufficient to provide in full the allocations under
such provision, allocations to individuals under such provision shall be
reduced pro rata (except that, under (iii) only, such balance shall first be
allocated to provide the benefits described therein determined on the basis of
the provisions of the Plan which were in effect at the beginning of the 5-year
period ending on the termination date and then, if the balance remaining for
allocation is sufficient, to provide the benefits described therein which
result from each successive amendment to the Plan during such 5-year period
until the first such amendment as to which such balance is insufficient before
reducing such allocation pro rata) and no allocations shall be made under
subsequent provisions. The assets of the Plan allocated in accordance with
(i), (ii), (iii) and (iv) above shall be distributed in such manner as the
Committee shall determine, including without limitation, lump sum cash
payments, cash installments, the purchase of immediate or deferred annuities or
any combination of the foregoing as the PBGC and the IRS may approve.
44
<PAGE> 47
11.5 INSUFFICIENT ASSETS. Notwithstanding the provisions of
Section 11.4, if the PBGC notifies the Committee that it is unable to determine
whether the assets of the Plan are sufficient (or that such assets are
insufficient) to discharge when due all obligations thereunder with respect to
benefits which are guaranteed by the PBGC under Title IV of ERISA, the assets
of the Plan shall be allocated and distributed only as a court having competent
jurisdiction of the Plan or Trust or a trustee appointed by such court shall
direct or permit.
11.6 PARTIAL TERMINATION. In the event that a partial termination
(within the meaning of ERISA) of the Plan has occurred then (i) the rights of
all Participants affected thereby to their Accrued Benefits accrued to the date
of such partial termination shall thereupon be nonforfeitable, but only to the
extent that such Accrued Benefits have then been funded by such portion of the
assets of the Trust as are determined to be properly allocable to such
Participants and that such portion of assets is available to provide such
Retirement Benefits upon the allocations provided in Section 11.4, and (ii) the
provisions of the Plan which, in the opinion of the Committee, are necessary
for the execution of the Plan and the allocation and distribution of the assets
of the Plan shall apply. If a partial termination of the Plan has occurred as
to any Employer, then to the maximum extent permitted by ERISA, only the
Employer as to which the partial termination of the Plan has occurred shall be
liable to the PBGC for any insufficiency of assets.
11.7 SUCCESSOR PLAN. No transfer of the Plan's assets and
liabilities to a successor employee benefit plan (whether by merger or
consolidation with such successor plan or otherwise) shall be made unless each
Participant would, if either the Plan or such successor plan then terminated,
receive a benefit immediately after such transfer which (after taking account
of any distributions or payments to them as part of the same
45
<PAGE> 48
transaction) is equal to or greater than the benefit he would have been
entitled to receive immediately before such transfer if the Plan had then been
terminated. The Committee may also request appropriate indemnification from
the employer or employers maintaining such successor plan before making such a
transfer.
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<PAGE> 49
ARTICLE XII
TOP HEAVY PROVISIONS
12.1 TOP HEAVY PLAN.
(a) The Plan will be considered a Top Heavy Plan for any
Plan Year if it is determined to be a Top Heavy Plan as of the last day of the
preceding Plan Year. For purposes of determining whether the Plan is a Top
Heavy Plan, uniform actuarial assumptions which reflect reasonable mortality
experience and a reasonable interest rate shall be used. The present value of
a Participant's Accrued Benefit shall be determined as of the last valuation
date used for computing Plan costs for minimum funding purposes which occurs
within the Plan Year in which the determination is being made (the "Valuation
Date"), and shall include amounts distributed to or on behalf of the
Participant within the four preceding Plan Years.
(b) Notwithstanding any other provisions in the Plan, the
provisions of this Article XII shall apply and supersede all other provisions
in the Plan during each Plan Year with respect to which the Plan is determined
to be a Top Heavy Plan.
12.2 DEFINITIONS. For purposes of this Article XII and as
otherwise used in the Plan, the following terms shall have the meanings set
forth below:
(a) "REQUIRED AGGREGATION GROUP" means (i) the group
composed of each qualified plan maintained by the Employer or any Affiliate in
which at least one Key Employee participates or participated in the Plan Year
containing the Determination Date or any of the four preceding Plan Years,
regardless of whether the plan has been terminated, and (ii) any other
qualified plan maintained by the Employer or any Affiliate which
47
<PAGE> 50
enables a plan described in clause (i) during the period tested to meet the
requirements of Code Section 401(a)(4) or 410.
(b) "PERMISSIVE AGGREGATION GROUP" means Required
Aggregation Group plus any other qualified plan or plans maintained by the
Employer or any Affiliate which, when considered as a group, would continue to
satisfy the requirements of Code Sections 401(a)(4) and 410.
(c) "KEY EMPLOYEE" means any employee or former employee
(and the beneficiaries of such employee) of the Employer who at any time during
the Plan Year containing the Determination Date and the four preceding Plan
Years was (i) an officer of the Employer whose annual compensation from the
Employer exceeds 50% of the dollar limitation in effect under Code Section
415(b)(l)(A), (ii) an owner (or considered an owner under Code Section 318) of
one of the 10 largest interests in the Employer and whose annual compensation
from the Employer exceeds 100% of the dollar limitation in effect under Code
Section 415(c)(l)(A), (iii) a 5% owner of the Employer, or (iv) a 1% owner of
the Employer whose annual compensation from the Employer is more than $150,000.
For the purpose of determining who are Key Employees, "annual compensation"
means compensation as defined in Code Section 415(c)(3), but including amounts
contributed by the Employer pursuant to a salary reduction agreement which are
excludable from the employer's gross income under Code Sections 125, 402(e)(3),
402(h) or 403(b).
(d) "TOP HEAVY PLAN" shall mean a "Top Heavy Plan" as
defined in Section 416(g) of the Code and the regulations thereunder. Solely
for the purpose of determining if the Plan, or any other plan included in a
Required Aggregation Group or Permissive Aggregation Group of which the Plan is
a part, is Top Heavy, the Accrued Benefit of a Member, other than a key
employee, shall be determined under (a) the method, if any, that uniformly
applies for accrual purposes under all plans
48
<PAGE> 51
maintained by the Company or an Affiliate, 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 rate of Section 411(b)(l)(C) of the Code.
12.3 EFFECT OF TOP HEAVY STATUS ON VESTING.
(a) If the Plan is a Top Heavy Plan with respect to any
Plan Year, the nonforfeitable percentage of the Accrued Benefit of each
Participant who is credited with at least one Hour of Service on or after the
date the Plan becomes Top Heavy shall not be less than the amount determined in
accordance with the following vesting schedule:
<TABLE>
<CAPTION>
Years of Nonforfeitable
Vesting Service Interest
--------------- --------
<S> <C>
Less than 3 years 0%
3 years or more 100%
</TABLE>
(b) In the event the vesting provided the Section 3.5 is
amended, or changed on account of the Plan becoming or ceasing to be a Top
Heavy Plan, any Participant who has completed at least three Years of Vesting
Service may irrevocably elect to have the amount of his nonforfeitable right to
his Retirement Benefit computed under the Plan without regard to such amendment
or change in accordance with procedures established by the Committee. The
election period shall begin on the date such amendment is adopted or the date
such change is effective, and shall end no earlier than the latest of the
following dates:
(i) The date which is 60 days after the
day such amendment is adopted; or
(ii) The date which is 60 days after the
day such amendment or change becomes effective; or
49
<PAGE> 52
(iii) The date which is 60 days after the
day the Participant is given written notice of such amendment
or change by the Committee.
12.4 EFFECT OF TOP HEAVY STATUS ON ACCRUED BENEFIT.
(a) Subject to the provisions of Section 12.5, if the
Plan is a Top Heavy Plan at any point in time, the Accrued Benefit for each
Participant who has completed a one-year Period of Service and who is a non-Key
Employee shall not, at such point, be less than such Participant's average
compensation, multiplied by the lesser of (i) 2% multiplied by the
Participant's Years of Service or (ii) 20%. For purposes of the preceding
sentence, a Participant's Years of Service shall not include any Years of
Service credited with respect to a Plan Year during which the Plan was not a
Top Heavy Plan.
(b) For purposes of this Section 12.4, "average
compensation" shall mean the average of a Participant's compensation for the
period of five consecutive years (or his actual number of consecutive years if
less than five) during which the Participant had the greatest aggregate
compensation.
(c) For each Plan Year that the Plan is a Top-Heavy Plan,
1.0 shall be substituted for 1.25 as the multiplicand of the dollar limitation
in determining the denominator of the defined benefit plan fraction and of the
defined contribution plan fraction for purposes of Code Section 415(e).
(d) If, after substituting 90% for 60% wherever the
latter appears in Code Section 416(g), the Plan is determined not to be a Top
Heavy Plan, the provisions of (c) above shall not be applicable if the Accrued
Benefit for each Participant who is a non-Key Employee is determined in
accordance with (a) above, substituting "3%" for "2%" in (a) above and
increasing "20%" in (a) above by 1% for each Plan Year described in the last
sentence therein, but not beyond "30%".
50
<PAGE> 53
12.5 NONDUPLICATION OF BENEFITS. The Committee shall, to the
maximum extent permitted by the Code and in accordance with the Regulations,
abate the minimum benefit provisions of Section 12.4 by first taking into
account the contributions made under any other plans maintained by the Employer
which are qualified under Code Section 401(a) to prevent duplication of minimum
benefits.
51
<PAGE> 54
ARTICLE XIII
SPECIAL LIMITATIONS IMPOSED BY GOVERNMENT REGULATIONS
13.1 APPLICATION. In order to qualify the Plan and the Trust as a
qualified plan and trust under the Code the benefits to be provided to certain
Participants will be subject to the limitations set forth in this Article XIII.
13.2 RESTRICTION OF BENEFITS.
(a) In the event of the termination of the Plan, the
benefits of any highly compensated employee (and any highly compensated former
employee), as defined in Section 414(q) of the Code and the regulations
thereunder, shall be limited to a benefit that is nondiscriminatory under
Section 401(a)(4) of the Code.
(b) The annual payments to a Restricted Employee (as
defined below) may not exceed an amount equal to the payments that would be
made on behalf of such Restricted Employee under a single life annuity that is
the Actuarial Equivalent of the sum of the Restricted Employee's Accrued
Benefit and his other benefits under the Plan. However, the restriction
described in the foregoing sentence shall not apply if:
(i) after payment to a Restricted
Employee of all Benefits (as defined below), the value of the
assets of the Plan equals or exceeds 110% of the value of
current liabilities (as defined in Section 412(l)(7) of the
Code) under the Plan; or
(ii) the value of the Benefits for a
Restricted Employee is less than 1% of the value of current
liabilities (as defined in Section 412(l)(7) of the Code)
under the Plan; or
52
<PAGE> 55
(iii) the value of the Benefits for
Restricted Employee does not exceed $3,500.
(c) For purposes of this Section 13.2, a "Restricted
Employee" means a Participant who is a highly compensated employee or highly
compensated former employee of the Employer (as defined in Section 414(q) of
the Code and the regulations thereunder). In any year, the total number of
individuals who are subject to the restrictions described in this Section 13.2
shall be limited to a group of not less than 25 highly compensated employees
and highly compensated former employees and the employees included in the group
shall be determined on the basis of such employees with the greatest
compensation.
(d) For purposes of this Section 13.2, the "Benefits"
includes loans in excess of the amounts set forth in Section 72(p)(2)(A) of the
Code, any periodic income, any withdrawal values payable to a living Employee,
and any death benefits not provided for by insurance on the Restricted
Employee's life.
13.3 For periods prior to January 1, 1994, the provisions of Treas.
Reg. Sec. 1.401-4(c) shall apply in lieu of the provisions of Section 13.2.
53
<PAGE> 56
ARTICLE XIV
GENERAL LIMITATIONS AND PROVISIONS
14.1 RIGHTS OF EMPLOYER. Nothing contained in the Plan shall give
any employee the right to be retained in the employment of the Company,
Employer or any Affiliate or affect the right of any such employer to dismiss
any employee. The adoption and maintenance of the Plan shall not constitute a
contract between an Employer and any employee or consideration for, or an
inducement to or condition of, the employment of any employee.
14.2 TRUST AS SOURCE OF BENEFITS. Any and all rights or benefits
accruing to any persons under the Plan shall be subject to the terms of the
Trust Agreement which the Company shall enter into with the Trustee. The Trust
shall be the sole source of benefits under the Plan and, except as otherwise
required by ERISA, the Employer and the Committee assume no liability or
responsibility for payment of such benefits, and each Participant, Surviving
Spouse, Beneficiary or other person who shall claim the right to any payment
under the Plan shall be entitled to look only to the Trust for such payment and
shall not have any right, claim or demand therefor against the Employer, or the
Committee or any member thereof or any employee or director of the Employer.
14.3 INCOMPETENT PAYEE. If the Committee shall find that any
person to whom any amount is payable under the Plan is found by a court of
competent jurisdiction unable to care for his affairs because of illness or
accident, or is a minor, or has died, then any payment due him or his estate
(unless a prior claim therefor has been made by a duly appointed legal
representative) may, if the Committee so elects, be paid to his Spouse, a
child, a relative, an institution maintaining or having custody of such person,
or any other person deemed by the
54
<PAGE> 57
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Plan and the Trust therefor.
14.4 NONALIENATION OF BENEFITS. Except insofar as may otherwise be
required by law or pursuant to the terms of a Qualified Domestic Relations
Order, no amount payable at any time under the Plan and the Trust shall be
subject in any manner to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind
nor in any manner be subject to the debts or liabilities of any person and any
attempt to so alienate or subject any such amount, whether presently or
thereafter payable, shall be void. If any person shall attempt to, or shall,
alienate, sell, transfer, assign, pledge, attach, charge or otherwise encumber
any amount payable under the Plan and Trust, or any part thereof, or if by
reason of his bankruptcy or other event happening at any such time such amount
would be made subject to his debts or liabilities or would otherwise not be
enjoyed by him, then the Committee may, in accordance with procedures applied
in a uniform and nondiscriminatory manner, direct that such amount be withheld
and that the same or any part thereof be paid or applied to or for the benefit
of such person, his Spouse, children or other dependents, or any of them, in
such manner and proportion as the Committee may deem proper. For purposes of
the Plan, a "Qualified Domestic Relations Order" means any judgement, decree,
or order (including approval of a property settlement agreement) which has been
determined by the Committee in accordance with procedures established under the
Plan, to constitute a qualified domestic relations order within the meaning of
Code Section 414(p)(l).
55
<PAGE> 58
14.5 LOST PAYEE. If the Committee cannot ascertain the whereabouts
of any person to whom a payment is due under the Plan, including an alternate
payee under a Qualified Domestic Relations Order as provided in Section 14.4,
and if, after 3 years from the date such payment is due, a notice of such
payment due is mailed to the last known address of such person, as shown on the
records of the Committee or the Employer, and within 3 months after such
mailing such person has not made written claim therefor, the Committee, if it
so elects, after receiving advice from counsel to the Plan, may direct that
such payment and all remaining payments otherwise due to such person be
cancelled on the records of the Plan and the amount thereof applied to reduce
the contributions of the Employer, and upon such cancellation, the Plan and the
Trust shall have no further liability therefor, except that, in the event such
person later notifies the Committee of his whereabouts and requests the payment
or payments due to him under the Plan, the amount so applied shall be paid to
him as provided in Article V.
14.6 INSURANCE CONTRACTS. If the payment of any benefit under the
Plan is provided for by a contract with an insurance company, the payment of
such benefit shall be subject to all the provisions of such contract.
14.7 CREDIT FOR PRIOR SERVICE. Upon such terms and conditions as
the Committee may approve, and subject to any required IRS approval, benefits
may be provided under the Plan to a Participant with respect to any period of
his prior employment by any organization, and such benefits (and any Service
credited with respect to such period of employment) may be provided for, in
whole or in part, by funds transferred, directly or indirectly (including a
rollover from an individual retirement account or an individual retirement
annuity as described in Code Section 408) to the Trust from a defined benefit
plan of such organization which qualified under Code Section 401(a).
56
<PAGE> 59
14.8 GENDER. Whenever used in the Plan, the masculine gender
includes the feminine.
14.9 CAPTIONS. The captions preceding the Sections of the Plan
have been inserted solely as a matter of convenience and in no way define or
limit the scope or intent of any provisions of the Plan.
14.10 GOVERNING LAW. The Plan and all rights thereunder shall be
governed by and construed in accordance with ERISA and the laws of the State of
New York.
IN WITNESS WHEREOF, this amended and restated Plan has been executed
this 31st day of October, 1994.
GENOVESE DRUG STORES, INC.
ATTEST: BY:
/s/ Gene Wexler
------------------------------
/s/ Alison L. Dowling TITLE: Vice President -
- - ---------------------------- General Counsel
57
<PAGE> 60
EXHIBIT I
ACCRUED BENEFITS AS OF JANUARY 1, 1989
<TABLE>
<CAPTION>
Annual Amount
Of
Name Social Security No. Accrued Benefit
- - ---- ------------------- ---------------
<S> <C> <C>
</TABLE>
58
<PAGE> 1
EXHIBIT 10.4
GENOVESE DRUG STORES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1989
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Preamble............................................... 1
ARTICLE I - DEFINITIONS
- - -----------------------
1.1 - Account......................................... 3
1.2 - Applicable Law.................................. 3
1.3 - Beneficiary..................................... 3
1.4 - Board........................................... 3
1.5 - Break in Service................................ 3
1.6 - Cash Account.................................... 3
1.7 - Code............................................ 3
1.8 - Committee....................................... 4
1.9 - Company......................................... 4
1.10 - Company Stock................................... 4
1.11 - Compensation.................................... 4
1.12 - Disability...................................... 4
1.13 - Eligible Employee............................... 5
1.14 - Employee........................................ 5
1.15 - Employer........................................ 5
1.16 - Employer Contributions.......................... 5
1.17 - Employment Commencement Date.................... 5
1.18 - Entry Date...................................... 5
1.19 - ERISA........................................... 6
1.20 - Highly Compensated Employee..................... 6
1.21 - Hour of Service................................. 7
1.22 - Military Service................................ 7
1.23 - Normal Retirement Date.......................... 8
1.24 - Participant..................................... 8
1.25 - Permitted Leave................................. 8
1.26 - Plan............................................ 8
1.27 - Plan Administrator.............................. 8
1.28 - Plan Year....................................... 9
1.29 - Qualified Domestic Relations Order.............. 9
1.30 - Reemployment Commencement Date.................. 9
1.31 - Related Company................................. 9
1.32 - Service......................................... 9
1.33 - Stock Account................................... 9
1.34 - Termination of Employment....................... 9
1.35 - Trust Agreement................................. 10
1.36 - Trust Fund or Fund.............................. 10
1.37 - Trustee......................................... 10
1.38 - Valuation Date.................................. 10
1.39 - Vested Account.................................. 10
1.40 - Year of Service................................. 10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE II - PARTICIPATION
- - --------------------------
2.1 - Eligibility Requirements........................ 11
2.2 - Termination of Participation.................... 11
2.3 - Interruption in Service......................... 12
ARTICLE III - SERVICE
- - ---------------------
3.1 - Year of Service................................. 13
3.2 - Break in Service................................ 13
3.5 - Restoration of Eligibility and Service.......... 14
ARTICLE IV - CONTRIBUTIONS
- - --------------------------
4.1 - Pre-Tax Contributions........................... 15
4.2 - Return of Contributions to Employer............. 15
4.3 - Forfeitures..................................... 16
4.4 - Limitations on Benefits......................... 17
ARTICLE VI - ACCOUNTS OF PARTICIPANTS - INVESTMENTS
- - ---------------------------------------------------
5.1 - Separate Accounting............................. 19
5.2 - Investment of Accounts.......................... 20
5.3 - Valuation of Funds.............................. 21
5.4 - Notice to Participants.......................... 21
ARTICLE VI - BENEFITS
- - ---------------------
6.1 - Distribution Upon Termination of Employment..... 22
6.2 - Distribution Upon Death......................... 23
6.3 - Vested Account.................................. 23
6.4 - Statutory Payment Date.......................... 24
6.5 - Transferred Employees........................... 25
6.6 - Direct Rollover................................. 26
ARTICLE VII - DESIGNATION OF BENEFICIARIES
- - ------------------------------------------
7.1 - Beneficiary Designation......................... 28
7.2 - Lack of Designated Beneficiary.................. 28
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VIII - MANAGEMENT OF TRUST FUND
- - ---------------------------------------
8.1 - Use of Trust Fund................................ 30
8.2 - Trustee.......................................... 30
8.3 - Investments...................................... 30
8.4 - Payment of Expenses.............................. 30
ARTICLE IX - ADMINISTRATION OF THE PLAN
- - ---------------------------------------
9.1 - The Committee.................................... 31
9.2 - Composition of the Committee..................... 32
9.3 - Indemnity........................................ 32
9.4 - Services to the Plan............................. 33
9.5 - Action of the Committee.......................... 33
9.6 - Committee Records................................ 34
9.7 - Claims Procedures................................ 34
9.8 - Communications................................... 35
9.9 - Information from Participant..................... 36
ARTICLE X - TERMINATION OF EMPLOYER PARTICIPATION
- - -------------------------------------------------
10.1 - Right to Termination............................ 37
10.2 - Rights of Participants on Termination........... 37
ARTICLE XI - AMENDMENT OR TERMINATION OF THE PLAN AND TRUST
- - -----------------------------------------------------------
11.1 - Right of Amendment or Termination............... 39
11.2 - Notice.......................................... 40
11.3 - Plan Termination................................ 40
11.4 - Successor Plan.................................. 41
ARTICLE XII - TOP HEAVY PROVISIONS
- - ----------------------------------
12.1 - Top Heavy Plan.................................. 42
12.2 - Special Definitions............................. 43
12.3 - Minimum Contributions........................... 46
12.4 - Other Plans..................................... 47
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE XIII - GENERAL LIMITATIONS AND PROVISIONS
- - -------------------------------------------------
13.1 - Rights of Employer.............................. 48
13.2 - Trust as Source of Benefits..................... 48
13.3 - Incompetent Payee............................... 48
13.4 - Nonalienation of Benefits....................... 49
13.5 - Lost Payee...................................... 50
13.6 - Insurance Contracts............................. 50
13.7 - Gender.......................................... 50
13.8 - Captions........................................ 51
13.9 - Governing Law................................... 51
</TABLE>
iv
<PAGE> 6
GENOVESE DRUG STORES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
As Amended and Restated Effective January 1, 1989
PREAMBLE
Genovese Drug Stores, Inc. (the "Company") established the Genovese Drug
Stores, Inc. Employee Stock Ownership Plan (the "Plan") and its related trust
(the "Trust") effective January 31, 1976 in order to allow eligible employee to
share in the ownership of the Company and to provide for the accumulation of
retirement benefits through the continued growth and success of the Company.
The Plan and the Trust have been amended from time to time thereafter.
Effective January 1, 1989, the Plan is being amended and restated in its
entirety, as set forth herein. The provisions of this amended and restated
Plan shall be effective with respect to the operation and administration of the
Plan on and after January 1, 1989, except as specifically provided herein or as
and to the extent they reflect a requirement of applicable law which took
effect on a different date, in which case such provision shall be deemed to be
effective as of the applicable date. The Plan, as so amended and restated, is
intended to reflect all changes required to be incorporated in the Plan as of
the end of the remedial amendment period specified in Code Section 401(b) as it
applies to the Tax Reform Act of 1986 and certain other specified legislation
enacted subsequent thereto, as well as all other changes adopted by the Company
prior to the actual adoption of this amendment and restatement. This amendment
and restatement is further intended to reflect, ratify and confirm the
administrative practices of the Employers and the Committee
1
<PAGE> 7
in operating the Plan in accordance with the purposes of applicable law during
the period with respect to which retroactive effect is given pursuant to the
remedial amendment period referred to in the preceding sentence.
The Plan, as so amended and restated, is intended to qualify as a stock bonus
trust which meets the qualification and tax exemption requirements of Sections
401(a) and 501(a) of the Internal Revenue Code of 1986, as amended, and any
other provisions of applicable law.
Unless otherwise expressly provided herein, or as may be required by applicable
law, the rights of any person whose employment terminated or who retired prior
to the effective date of this amendment and restatement, or the effective date
of any particular provision, as provided above, shall be determined solely
under the terms of the Plan as in effect on the date of his termination of
employment or retirement, unless such person is thereafter reemployed and again
becomes a Participant.
2
<PAGE> 8
ARTICLE I
DEFINITIONS
The words and phrases used herein shall have the following meanings unless a
different meaning is plainly required by the context:
1.1 "ACCOUNT" means the account established and maintained under
the Plan on behalf of a Participant pursuant to Section 5.1, (including, as
applicable, his Stock Account and his Cash Account).
1.2 "APPLICABLE LAW" References to applicable law, whether or not
capitalized, shall mean the Code, ERISA and any other law which governs the
operation of this Plan, and any regulations, rulings or other administrative or
judicial clarifications thereunder.
1.3 "BENEFICIARY" means the person or persons entitled to receive
a distribution under the Plan in the event of the Participant's death, as
provided in Article VII.
1.4 "BOARD" means the Board of Directors of the Company.
1.5 "BREAK IN SERVICE" means the period described in Section 3.2.
1.6 "CASH ACCOUNT" means the portion of a Participant's Account
which reflects his interest in the portion of the Trust Fund which is not
invested in Company Stock.
1.7 "CODE" means the Internal Revenue Code of 1986, as it now
exists and as it may from time to time be amended. Any reference to a section
of the Code shall include that section and any predecessor or successor
citation, if applicable.
3
<PAGE> 9
1.8 "COMMITTEE" means the Administrative Committee referred to
in Article IX hereof.
1.9 "COMPANY" means Genovese Drug Stores, Inc., or any
successor thereto which adopts the Plan as its own.
1.10 "COMPANY STOCK" means the common stock of the Company.
1.11 "COMPENSATION" means an Employee's total cash remuneration
for services rendered to an Employer as determined under Income Tax Regulations
Section 1.415-2(d), including overtime compensation and any contributions made
by the Employer on the Participant's behalf for such Plan Year which are
excluded from the Participant's income by reason of Code Section 125 or 401(k),
but excluding bonuses, tips, commissions to other than salesmen, reimbursements
or other expense allowances, fringe benefits (cash and noncash), moving
expenses, welfare benefits and contributions to any pension or profit sharing
plan or any other forms of deferred compensation where payment is made after the
Employee ceases to render employment services to an Employer. Compensation for
any Plan Year shall exclude any portion of a Participant's annual Compensation
which is in excess of the applicable dollar limit under Code Section 401(a)(17)
for such Plan Year ($200,000, as adjusted under said Section, for Plan Years
ending before January 1, 1994, and $150,000, as adjusted under said Section, for
Plan Years beginning on and after January 1, 1994). Remuneration paid to an
Employee pursuant to a collective bargaining agreement shall be excluded unless
the agreement provides for coverage of such Employee under this Plan.
1.12 "DISABILITY" means a physical or mental condition which totally
and permanently prevents a Participant from engaging in any substantial gainful
activity and is expected to last for at least 12 months or result in death, and
which qualifies the Participant for disability benefits under the
4
<PAGE> 10
Federal Social Security Act; provided however, that no Participant shall be
deemed to suffer from a Disability if his disability was contracted, suffered
or incurred while he was engaged in a criminal enterprise or as a result of a
self-inflicted injury.
1.13 "ELIGIBLE EMPLOYEE" means any Employee of an Employer,
excluding any employees (i) included in a unit of employees covered by a
collective bargaining agreement under which retirement benefits have been the
subject of good faith bargaining, but which does not provide for his
participation in the Plan or (ii) employed in a job category, plant, location or
other identifiable unit of an Employer which is not covered by the Plan.
1.14 "EMPLOYEE" means any person employed by an Employer or a
Related Company. Any person who performs services for an Employer or Related
Company solely as a consultant or any other type of independent contractor shall
not be considered to be employed by such Employer or Related Company.
1.15 "EMPLOYER" means the Company, and any Related Company which is
authorized by the Company to participate in this Plan and adopts the Plan for
some or all of its employees, and any successor thereto.
1.16 "EMPLOYER CONTRIBUTIONS" means the contributions made by an
Employer pursuant to Article IV.
1.17 "EMPLOYMENT COMMENCEMENT DATE" means the first day on which an
Employee completes an Hour of Service.
1.18 "ENTRY DATE" means each June 30 and December 31.
5
<PAGE> 11
1.19 "ERISA" means the Employee Retirement Income Security Act of
1974, as it now exists and as it may be amended from time to time.
1.20 "HIGHLY COMPENSATED EMPLOYEE" means, for any Plan Year,
(a) any Employee who, at any time during the current or preceding
Plan Year, was a 5% owner of the Employer or a Related Company (as defined in
Code Section 416(i));
(b) any Employee who, during the preceding Plan Year:
(1) received more than $75,000 (adjusted at the same time and
in the same manner as under Code Section 415(d)) in annual Compensation from an
Employer or a Related Company,
(2) received more than $50,000 (adjusted at the same time and
in the same manner as under Code Section 415(d)) in annual Compensation from an
Employer or a Related Company and was among the highest paid 20% of all
Employees for such Plan Year, or
(3) was an officer of an Employer or a Related Company and
received annual Compensation greater than 50% of the applicable dollar
limitation of Code Section 415(b)(l)(A) for such Plan Year; and
(c) Any Employee who is not described in (b) above for the
preceding Plan Year, but who is described in (b)(1), (b)(2) or (b)(3) for the
current Plan Year and is among the highest paid 100 Employees for the current
Plan Year.
Any Employee who is the spouse or lineal ascendant or descendant (or spouse of
either) of a 5% owner of the Employer or a Related Company (as defined in Code
Section 416(i)(1)) or an Employee who
6
<PAGE> 12
is a Highly Compensated Employee and is in the group consisting of the 10 most
Highly Compensated Employees shall not be considered a separate Employee, and
any Compensation paid to such Employee (and any applicable contribution or
benefit on behalf of such Employee) shall be treated as if it were paid to (or
on behalf of) the 5% owner or Highly Compensated Employee. For purposes of this
definition, "Compensation" shall mean Compensation as defined in Code Section
415(c)(3), determined without regard to Code Sections 125, 402(e)(3) and 402(h).
Also for purposes of this definition, no more than 50 Employees or, if lesser,
the greater of three Employees or 10% of all Employees shall be treated as
officers; provided, however, that if no officer has Compensation in excess of
the dollar amount described in paragraph (b)(3) above in any Plan Year, the
officer with the highest Compensation shall be treated as described in paragraph
(b)(3).
1.21 "HOUR OF SERVICE" means an hour for which an individual is
directly or indirectly paid or entitled to payment by an Employer or Related
Company for the performance of services (or would be so paid or entitled to
payment but for an absence for Military Service), or for a period 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. For the
purposes of determining the Hours of Service credited to an individual, the
provisions of Department of Labor Regulations Sections 2530.200-2(b) and (c) are
incorporated by reference.
1.22 "MILITARY SERVICE" means a leave of absence from active
employment of an Employer or a Related Company during which the Employee is in
the armed forces of the United States of America under circumstances which
entitle him to reemployment and other related rights under any applicable
federal law, provided the Employee reenters the employ of an Employer or a
Related
7
<PAGE> 13
Company within the period during which his reemployment rights are protected by
such law, without any intervening employment elsewhere. In the event a person
in Military Service fails to return to the employ of an Employer or a Related
Company, as provided herein, he shall be considered as having terminated his
employment as of the commencement of such Military Service.
1.23 "NORMAL RETIREMENT DATE" means the first day of the month
coinciding with or next following the Participant's 65th birthday.
1.24 "PARTICIPANT" means an Eligible Employee who participates in
the Plan, as provided in Section 2. The term "Participant" shall include former
Employees whose accounts have not yet been fully distributed.
1.25 "PERMITTED LEAVE" means any leave of absence approved by an
Employer or Related Company, provided that upon termination of such leave of
absence the Employee promptly returns to the employ of an Employer or Related
Company, without employment (other than Military Service) elsewhere in the
meantime, except with the consent of the Employer. In the granting of any such
leave, each Employer or Related Company shall act in a uniform and
nondiscriminatory manner with respect to all Employees similarly situated. In
the event a person on a Permitted Leave fails to return to the employ of an
Employer or Related Company, as provided herein, he shall be considered to have
terminated his employment as of the commencement of the Permitted Leave.
1.26 "PLAN" means the Genovese Drug Stores, Inc. Employee Stock
Ownership Plan, as set forth herein, and as it may from time to time hereafter
be amended.
1.27 "PLAN ADMINISTRATOR" means the Committee.
8
<PAGE> 14
1.28 "PLAN YEAR" means the calendar year.
1.29 "QUALIFIED DOMESTIC RELATIONS ORDER" means a domestic relations
order which constitutes a qualified domestic relations order within the meaning
of Code Section 414(p).
1.30 "REEMPLOYMENT COMMENCEMENT DATE" means the first date that an
Employee is credited with an Hour of Service following a Break in Service.
1.31 "RELATED COMPANY" means any business which is included in a
controlled group of corporations (within the meaning of Section 414(b) of the
Code), which includes the Company, any trade or business (whether or not
incorporated) which is under common control with the Company (within the meaning
of Section 414(c) of the Code), any organization included in the same affiliated
service group (within the meaning of Section 414(m) of the Code) as the Company
and any other entity required to be aggregated with the Company pursuant to
regulations under Section 414(o) of the Code; except that for purposes of
applying the limitations of Section 4.4, Section 415(h) of the Code shall apply.
1.32 "SERVICE" means employment with an Employer or Related Firm.
1.33 "STOCK ACCOUNT" means the portion of a Participant's Account
which reflects his interest in the portion of the Trust Fund which is invested
in Company Stock, expressed in full shares and fractional shares.
1.34 "TERMINATION OF EMPLOYMENT" or words of similar import means
the termination of an Employee's employment with an Employer or a Related
Company under circumstances where he is no longer employed by an Employer or
Related Company. Transfer of employment from an Employer or Related Company to
another
9
<PAGE> 15
Employer or Related Company shall not constitute a termination of employment.
1.35 "TRUST AGREEMENT" means the agreement of trust between the
Company and the Trustee pursuant to which the assets of the Plan are held.
1.36 "TRUST FUND" OR "FUND" means the Trust established pursuant to
the Trust Agreement to hold all of the assets of the Plan.
1.37 "TRUSTEE" means the Trustee or Trustees named in the Trust
Agreement and any additional or successor Trustee or Trustees from time to time
acting as Trustee of the Trust Fund as provided in Section 8.2. "Trustee"
shall be deemed to refer to the plural as well as the singular, except where
the context otherwise requires.
1.38 "VALUATION DATE" means the last day of each Plan Year.
1.39 "VESTED ACCOUNT" means that portion of a Participant's
Account which, on the particular date of determination, is vested under the
provisions of Section 6.3.
1.40 "YEAR OF SERVICE" means the period described in Section 3.1.
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<PAGE> 16
ARTICLE II
PARTICIPATION
2.1 ELIGIBILITY REQUIREMENTS.
(a) Participants Prior to January 1, 1989 - Each person who was a
"Participant" of the Plan on December 31, 1988, and continues as an Eligible
Employee thereafter shall continue as a Participant hereunder as of January 1,
1989.
(b) Participation After January 1, 1989 - Each person not
described in (a) above, shall become a Participant as of the first Entry Date
after January 1, 1989 on which:
(i) he has completed a at least one Year of Service,
(ii) he is at least age 21, and
(iii) he is then an Eligible Employee
(c) Application - An Eligible Employee who becomes a Participant
in accordance with this Section 2.1 shall file with the Committee such
application materials as the Committee deems appropriate, including beneficiary
designations.
2.2 TERMINATION OF PARTICIPATION.
A Participant shall not be entitled to receive contributions in accordance with
Article IV on or after the date of termination of employment, death or
Disability or during any period in which he is not an Eligible Employee.
However, a Participant shall continue to be a Participant for all other relevant
purposes of the Plan until such time as his Account is fully distributed to him
or forfeited in accordance with the terms of the Plan.
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2.3 INTERRUPTION IN SERVICE.
(a) Break in Service - If a Participant terminates employment and
incurs a Break in Service before becoming vested in any Employer Contributions
pursuant to Section 6.3, and if the number of consecutive one-year Breaks in
Service constituting such Break in Service exceeds the greater of five (5) years
or his Year of Service prior to such Break in Service (excluding any Years of
Service previously disregarded under the Break in Service provisions of the
Plan), then, in the event he returns to Service, he shall be treated as a new
Employee for all purposes of the Plan. In all other cases of a termination of
employment accompanied by a Break in Service he shall be eligible to participate
in the Plan as of the Entry Date coincident with or immediately following the
date he again becomes an Eligible Employee.
(b) No Break in Service - If a Participant terminates employment
and does not incur a Break in Service, he shall be eligible to resume full
participation in the Plan immediately upon his return to employment as an
Eligible Employee.
(c) No Termination of Employment - If a Participant ceases to be
an Eligible Employee but does not terminate employment, his participation in the
Plan shall be subject to the provisions of Section 2.2 during the period in
which he is not an Eligible Employee and he shall be eligible to resume full
participation in the Plan immediately upon resuming the status of an Eligible
Employee.
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ARTICLE III
SERVICE
3.1 YEAR OF SERVICE.
An individual shall be credited with a Year of Service for each Plan Year during
which he completes at least 500 Hours of Service; provided that for purposes of
satisfying the eligibility requirements of Section 2.1, a Participant shall have
completed a Year of Service only if he completes at least 1,000 Hours of Service
in a 12 consecutive month period beginning on his Employment Commencement Date
(or Reemployment Commencement Date, if applicable), or on the first day of any
Plan Year thereafter.
3.2 BREAK IN SERVICE:
An individual shall incur a Break in Service in any Plan Year in which he has
not completed at least 500 Hours of Service. Effective with respect to absence
commencing on or after January 1, 1985, and solely for purposes of determining
whether a Break in Service has occurred, an individual shall be credited with
the Hours of Service which such individual would have completed but for a
maternity or paternity absence, as determined by the Committee in accordance
with applicable law and the provisions of this Section, provided, however, that
the total Hours of Service so credited shall not exceed 501 Hours and the
individual timely provide the Committee with such information as it shall
require. Hours of Service credited for a maternity or paternity absence shall
be credited entirely (i) in the Plan Year in which the absence began if such
Hours of Service are necessary to prevent a Break in Service in such Plan Year,
or (ii) in the following Plan Year. For purposes of this Section, an absence
from work for maternity or paternity reasons means an absence from employment
which commences and continues (a) by reason of the pregnancy of the individual,
(b) by reason of the birth of a child of the individual, (c) by reason of the
placement of a
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<PAGE> 19
child with the individual in connection with the adoption of such child by the
individual, or (d), for purposes of caring for such child for a period
beginning immediately following such birth or placement.
3.3 RESTORATION OF ELIGIBILITY AND SERVICE:
(a) In General - Except as otherwise provided in (b) below, if an
Employee incurs a Break in Service and subsequently has a Reemployment
Commencement Date, his Years of Service prior to the Break in Service shall be
restored as soon as he has completed a Year of Service, such restoration to be
effective as of his Reemployment Commencement Date. However, Service rendered
after at least five consecutive one year Breaks in Service will not be counted
in determining a Participant's vested interest under Section 6.3 in the portion
of his Account attributable to Employer Contributions made with respect to
periods prior to such Break in Service.
(b) Exception - Years of Service prior to a Break in Service shall
not be restored upon an Employee's Reemployment Commencement Date if the
Employee had no vested interest in Employer Contributions under Section 6.3 at
the time of the Break in Service, and if the number of consecutive one year
Breaks in Service (as determined under Section 3.2 hereof) equals or exceeds the
greater of (i) five, or (ii) the number of Years of Service prior to such Break
in Service.
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ARTICLE IV
CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTION.
(a) Subject to the limitations of Section 4.4, an Employer may,
in its sole discretion and in such amounts as it may determine, make a
contribution on behalf of its Participants for any Plan Year.
(b) Time and Manner of Employer Contributions - Employer
Contributions made in accordance with (a) above for any Plan Year shall be made
no later than the latest date as of which such contributions must be made in
order to be treated as made on account of such Plan Year under applicable law.
(c) Allocation of Employer Contributions - Employer Contributions
made by an Employer with respect to any Plan Year shall be allocated among (i)
those Participants employed by such Employer on the last day of the Plan Year
who have completed at least 500 Hours of Service during such Plan Year and (ii)
those Participants who have terminated employment during the Plan Year due to
death or Disability or after reaching their Normal Retirement Date. Any
Employer Contribution for any Plan Year shall be allocated to the Employer
Accounts of eligible Participants in the proportion that each such
Participant's Compensation for such Plan Year bears to the total Compensation
of all such Participants for such Plan Year.
4.2 RETURN OF CONTRIBUTIONS TO EMPLOYER.
Except as otherwise provided in this Section 4.2 all contributions made by an
Employer shall be irrevocable and shall be transferred to the Trustee and held
as provided in Article VIII, to be used in accordance with the provisions of
this Plan in providing the benefits and paying the expenses
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<PAGE> 21
hereof. Notwithstanding the preceding provisions of this Article IV, to the
extent permitted by applicable law, contributions shall be returned to an
Employer under the following circumstances:
(a) Mistake - If and to the extent that any contribution was made
by a mistake of fact, the Committee may direct the Trustee to return the
contribution to the Employer at any time within one year after the payment of
such contribution.
(b) Nondeductibility - All contributions made by an Employer are
expressly conditioned on their deductibility under Code Section 404. If and to
the extent that the Internal Revenue Service determines that a contribution is
not deductible under Code Section 404, the Committee may direct the Trustee to
return the contribution to the Employer at any time within one year after the
date of disallowance.
(c) Adjustments - Any contribution returned pursuant to (a) or (b)
above shall be adjusted to reflect only its proportionate share of the Trust
Fund's loss, if any.
(d) Limitation on Rights - Notwithstanding any provision of this
Plan to the contrary, the right or claim of any Participant or Beneficiary to
any asset of the Trust or to any benefit under the Plan shall be subject to and
limited by the provisions of this Section 4.2.
4.3 FORFEITURES.
(a) Determination of Forfeitures - If a Participant who has
terminated employment incurs a Break in Service before he has become 100% vested
in Employer Contributions pursuant to Section 6.3, the nonvested portion of his
Account shall be forfeited as of the last day of the Plan Year as of which he
incurs a Break in Service. In the event of a distribution of the
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<PAGE> 22
Participant's Vested Account prior to the date of forfeiture, the nonvested
portion of his Account shall continue to be revalued in accordance with Section
6.3 up to and including the date of forfeiture and shall then be reallocated in
accordance with (b) below.
(b) Reallocation of Forfeitures - The total amount of forfeitures
determined in accordance with (a) above with respect to any Plan Year shall be
allocated in accordance with Section 4.1(c) in the same manner as if such
forfeitures were an Employer Contribution made for such Plan Year.
(c) Return to Employment and Restoration of Forfeitures - If a
Participant incurs forfeitures in accordance with (a) above and returns to the
employ of an Employer or Related Company before he incurs 5 consecutive one year
Breaks in Service, the amount forfeited from his Account shall be restored to
such Account upon such return to employment in accordance with the provisions of
this Section 4.3(c). Any such restoration shall be made from current
forfeitures, and, to the extent necessary from amounts contributed directly by
the Employer. No restoration of forfeitures shall occur with respect to a
Participant who returns to employment after incurring at least 5 consecutive one
year Breaks in Service.
4.4 LIMITATIONS ON BENEFITS.
Annual additions to a Participant's Account in respect of any Plan Year may not
exceed the limitations set forth in Code Section 415, which are incorporated
herein by reference. For these purposes, "Annual Additions" shall have the
meaning set forth in Code Section 415(c)(2), as modified elsewhere in the Code
and in any regulations thereunder, and the limitation year shall mean the Plan
Year unless any other 12-consecutive month period is designated pursuant to a
written resolution adopted by the Company. If a Participant also participates
in any defined
17
<PAGE> 23
benefit Plan (as defined in Code Section 414(j) and 415(k)) maintained by the
Company or any Related Company, in the event that in any Plan Year the sum of
the Participant's Defined Benefit Fraction (as defined in Code Section
415(e)(2)) and the Participant's Defined Contribution Fraction (as defined in
Code Section 415(e)(3)) exceeds 1.0, the benefit under such defined benefit plan
or plans shall be reduced in accordance with the provisions of that plan or
plans, so that the sum of such fractions in respect of the Participant will not
exceed 1.0. If this reduction does not ensure that the limitation set forth in
this Section 4.4 is not exceeded, then the Annual Addition to any defined
contribution plan other than the Plan, shall be reduced in accordance with the
provisions of that plan but only to the extent necessary to ensure that such
limitation is not exceeded, and then, if necessary, the Annual Addition under
this Plan shall be reduced.
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ARTICLE V
ACCOUNTS OF PARTICIPANTS - INVESTMENTS
5.1 SEPARATE ACCOUNTING.
(a) Accounts - The Committee shall establish and maintain in
respect of each Participant an Account showing his interest under the Plan and
in the Trust (including separate accounts showing his respective interests in
the portion of the Fund invested in Company Stock and the portion of the Fund
invested in other than Company Stock) and all other relevant data pertaining
thereto. The establishment and maintenance of, or allocations and credits to
the Account of any Participant shall not vest in any Participant any right,
title or interest in and to any Plan assets or benefits except at the time or
times and upon the terms and conditions and to the extent expressly set forth in
the Plan and in accordance with the terms of the Trust.
(b) Value of Accounts - The value of any Account as of any date of
determination shall be equal to:
(a) the aggregate amount credited to such Account as of the
Valuation Date coinciding with or next preceding such date of determination,
after all allocations as of such Valuation Date have been made, plus
(b) any amounts contributed to or otherwise to be credited
to such Account since such Valuation Date, less
(c) any amounts distributed from or otherwise to be charged
to such Account since such Valuation Date.
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<PAGE> 25
5.2 INVESTMENT REQUIREMENTS.
(a) Employer Contributions shall be invested by the Trustee
primarily in Company Stock in accordance with directions from the Committee.
The Trustee may also invest Employer Contributions in such other prudent
investments as the Committee deems to be desirable for the Trust, including
investments in savings and other fixed income accounts, including those
maintained by the Trustee, provided such deposits bear a reasonable rate of
interest, and investments in common, pooled, and collective investment funds,
including those maintained by the Trustee, in which event such assets shall be
subject to all the provisions of the declarations of trust of such common,
pooled, or collective investment funds, as amended from time to time, and the
declarations establishing such funds shall constitute a part hereof and shall be
incorporated by reference herein as though fully set forth herein, or Employer
Contributions may be held temporarily in cash. All purchases of Company Stock
by the Trustee shall be made only as directed by the Committee and only at
prices which do not exceed the fair market value of Company Stock, as determined
in good faith by the Committee. The Committee may direct the Trustee to invest
and hold up to one hundred percent (100%) of the Company Contributions in
Company Stock.
(b) Voting of Company Stock - Effective as of the date of
execution of this amended and restated Plan, all shares of Company Stock held by
the Trustee at any time shall be voted by the Trustee in its sole and absolute
discretion and in accordance with applicable law. The voting of Company Stock
at any time prior to such date shall be governed by the terms of the Plan as
then in effect.
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<PAGE> 26
5.3 VALUATION OF FUNDS.
The Fund shall be revalued at fair market value by the Trustee as of each
Valuation Date. On the basis of the valuations as of each Valuation Date, the
Accounts shall be adjusted to reflect the effect of income, collected and
accrued, realized and unrealized profits and losses, expenses and all other
transactions during the applicable period.
5.4 NOTICE TO PARTICIPANTS.
Within a reasonable time after each Valuation Date, the Committee shall notify
each Participant or Beneficiary of the balance in such Participant's Accounts
as of such Valuation Date.
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ARTICLE VI
BENEFITS
6.1 DISTRIBUTION UPON TERMINATION OF EMPLOYMENT.
(a) Entitlement - Subject to Section 6.3, a Participant who
terminates his employment for any reason other than death shall be entitled to
receive a distribution of the value of his Vested Account as of the Valuation
Date coinciding with or immediately following his termination of employment.
(b) Under $3,500 - If at the time he is entitled to a distribution
the value of a Participant's Vested Account does not exceed (or at the time of
any prior distribution did not exceed) $3,500, distribution shall be made to the
Participant as soon as practicable in a single sum cash payment.
(c) $3,500 or More - If at the time he is entitled to a
distribution the value of a Participant's Vested Account exceeds (or at the time
of any prior distribution exceeded) $3,500, the Participant may elect, in
accordance with procedures established by the Committee, to receive distribution
of his Account in the manner provided in Section 6.1(d) as soon as practicable,
or to defer such distribution to any Valuation Date occurring on or after his
termination of employment, but no later than the Valuation Date coinciding with
or immediately following his Normal Retirement Date.
(d) Medium of Payment - A Participant may elect to have the
distribution to which he is entitled in accordance with Section 6.1(c) paid to
him in cash or in shares of Company Stock, subject to the following:
(i) the portion of a Participant's Account which is
attributable to his Cash Account shall be paid to him
in cash;
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<PAGE> 28
(ii) the portion of a Participant's Account which is
attributable to his Stock Account shall be paid to
him in cash if the number of full shares of Company
Stock to be distributed is less than 100 shares; and
(iii) Fractional shares of Company Stock shall be
distributed in cash.
(e) Forfeiture - If a Participant terminates employment before
becoming 100% vested in his Account in accordance with Section 6.3, the portion
of his Account in which he has no vested rights shall be forfeited in accordance
with Section 4.3.
6.2 DISTRIBUTION UPON DEATH.
If a Participant dies while employed by the Company or a Related Company or
before a distribution to which he is entitled in accordance with Section 6.1 has
commenced, the value of his entire Account (or the distribution awaiting
commencement in accordance with Section 6.1) as of the Valuation Date coinciding
with or immediately following his death shall be distributed to his Beneficiary
in a single sum payment as soon as practicable following such Valuation Date,
subject to the provisions of Section 6.1(d).
6.3 VESTED ACCOUNT. A Participant shall become 100% vested in his
Account if he terminates employment (i) with at least seven (7) Years of
Service, (ii) on or after his Normal Retirement Date, or (iii) as a result of
death or Disability. If a Participant terminates employment prior to becoming
100% vested, he shall be vested in a percentage of his Account determined from
the following schedule:
23
<PAGE> 29
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
less than 3 0%
at least 3 20%
at least 4 40%
at least 5 60%
at least 6 80%
7 or more 100%
</TABLE>
6.4 STATUTORY PAYMENT DATE.
(a) Notwithstanding any other provision of the Plan, and unless
otherwise provided by law, distribution of any amount payable to a Participant
shall commence, in accordance with Code Section 401(a)(9) and any regulations
thereunder, no later than the April 1st of the calendar year following the
calendar year in which such Participant attains age 70 1/2; provided, however,
if a Participant attained age 70 1/2 prior to January 1, 1988, any benefit
payable to such Participant shall commence no later than April 1st of the
calendar year following the later of the calendar year in which the Participant
attained age 70 1/2 or the calendar year in which the Participant terminates
employment (the appropriate April 1st being the "required beginning date" and
the calendar year in which it occurs being the "first distribution calendar
year"). If not made in a single sum payment, such amount shall be paid, in
accordance with applicable regulations, (i) over the life of the Participant,
(ii) over the life of the Participant and a designated Beneficiary, (iii) over a
period certain not extending beyond the life expectancy of the Participant, or
(iv) over a period certain not extending beyond the joint life expectancies of
the Participant and a designated Beneficiary. The minimum distribution required
for the Participant's first distribution calendar year must be made on or before
the Participant's required beginning date. The minimum distribution for each
other calendar year, including the minimum distribution for the year in which
the Participant's required
24
<PAGE> 30
beginning date occurs, must be made on or before December 31st of the
applicable calendar year.
(b) If distribution to the Participant has commenced prior to the
Participant's death, and such Participant dies before his entire Account is
distributed to him, distribution of the remaining portion of his Account payable
to the Participant's Beneficiary shall be made at least as rapidly as possible
under the method of distribution in effect on the date of the Participant's
death.
(c) If a Participant dies before distribution of his Account has
commenced, distribution of his Account shall be completed on or before December
31st of the calendar year in which occurs the 5th anniversary of the
Participant's date of death. If such Participant's Beneficiary is his surviving
spouse and such surviving spouse dies after the Participant but before
distribution to such surviving spouse commences, this subsection (c) shall be
applied to require payment of any further amount as if such surviving spouse
were the Participant.
(d) Notwithstanding the foregoing, unless the Participant elects
a later date, distribution to the Participant shall commence no later than 60
days after the close of the Plan Year in which occurs the latest of his Normal
Retirement Date, his 10th anniversary of Plan participation or his termination
of employment.
6.5 TRANSFERRED EMPLOYEES.
If a Participant ceases to be an Employee by reason of a transfer or employment
to a class of employees of an Employer not eligible for participation or to a
Related Company which is not an Employer then, except as hereinafter provided,
such Participant's Account shall be held for distribution until such time as
such Participant's employment terminates.
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<PAGE> 31
6.6 DIRECT ROLLOVER.
This Section 6.6 applies to distributions made on or after January 1, 1993.
Solely to the extent required under applicable law and regulations, and
notwithstanding any provision of the Plan to the contrary that would otherwise
limit a Distributee's election under this Section 6.6, a Distributee may elect,
at the time and in the manner prescribed by the Committee, to have any portion
of an Eligible Rollover Distribution paid directly to an Eligible Retirement
Plan specified by the Distributee in a Direct Rollover.
For purposes of this Section 6.6, the following terms shall have the following
meanings:
(i) Eligible Rollover Distribution: Solely to the extent required
under applicable law and regulations, an Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is
required under 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).
(ii) Eligible Retirement Plan: An Eligible Retirement Plan is an
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section
26
<PAGE> 32
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 a surviving spouse, an
Eligible Retirement Plan is an individual retirement account or individual
retirement annuity.
(iii) Distributee: A Distributee includes 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 are
Distributees with regard to the interest of the spouse or former spouse.
(iv) Direct Rollover: A Direct Rollover is a payment by the Plan
to the Eligible Retirement Plan specified by the Distributee.
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<PAGE> 33
ARTICLE VII
DESIGNATION OF BENEFICIARIES
7.1 BENEFICIARY DESIGNATION.
Each Participant shall file with the Committee a written designation of one or
more persons as the Beneficiary who shall be entitled to receive the amount, if
any, payable under the Plan upon his death. A Participant may from time to
time revoke or change his Beneficiary designation without the consent of any
prior Beneficiary by filing a new designation with the Committee.
Notwithstanding the foregoing, if the Participant is married, his spouse must
consent in writing to the designation of a Beneficiary other than the
Participant's spouse (unless the Committee makes a written determination in
accordance with the Code and applicable law that no such consent is required).
The last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Committee prior to the Participant's death,
and in no event shall it be effective as of a date prior to such receipt.
7.2 LACK OF DESIGNATED BENEFICIARY.
If no valid Beneficiary designation is in effect at the time of a Participant's
death, or if no validly designated Beneficiary survives the Participant or if
each surviving validly designated Beneficiary is legally impaired or prohibited
from taking, then the Participant's Beneficiary shall be his surviving spouse,
if any, or if the Participant has no surviving spouse, then his surviving
children, if any, in equal shares or if none, then his estate. If the
Committee is in doubt as to the right of any person to receive such amount, it
may direct the Trustee to
28
<PAGE> 34
retain such amount, without liability for any interest thereon, until the
rights thereto are determined, or the Committee may direct the Trustee to pay
such amount into any court of appropriate jurisdiction and such payment shall
be a complete discharge of the liability of the Plan and the Trust therefor.
29
<PAGE> 35
ARTICLE VIII
MANAGEMENT OF TRUST FUND
8.1 USE OF TRUST FUND.
The Trust Fund shall be used to provide the benefits and pay the expenses of
this Plan and of the Trust Fund and, except as otherwise provided in Section
4.2, no part of the corpus or income shall be used for or diverted to purposes
other than for the exclusive benefit of Participants and their Beneficiaries and
the payment of expenses of this Plan.
8.2 TRUSTEE.
The Trust Fund shall be held in trust by a Trustee appointed from time to time
by the Board with such powers and duties in the Trustee as shall be provided in
the Trust Agreement between the Trustee and the Company. Subject to the
provisions of the Trust Agreement, the Trustee shall be the named fiduciary with
respect to the control or management of the assets of the Plan.
8.3 INVESTMENTS.
The investment of the Trust Fund shall be in accordance with Article VI and with
the provisions of the Trust Agreement between the Trustee and the Company.
8.4 PAYMENT OF EXPENSES.
The administrative and other expenses of the Plan shall be paid out of the Trust
Fund unless paid by the Employers.
30
<PAGE> 36
ARTICLE IX
ADMINISTRATION OF THE PLAN
9.1 THE COMMITTEE.
(a) The Plan shall be administered by a Committee which shall
have general responsibility for the administration and interpretation of the
Plan (including, but not limited to, complying with applicable reporting and
disclosure requirements, establishing and maintaining Plan records, issuing
instructions to the Trustee regarding the benefits that are to be paid from the
Trust Fund to Participants and Beneficiaries and adopting amendments to the
Plan as described in Section 11.1) and may exercise such other rights and
powers as may be specifically granted to it herein or by the Board.
(b) The Committee shall periodically review the investment
performance and methods of the Trustee and any other funding agency, including
any insurance company, under the Plan and may appoint and remove or change the
Trustee and any such funding agency. The Committee shall have the power to
appoint or remove one or more investment managers and to delegate to such
manager authority and discretion to manage (including the power to acquire and
dispose of) the assets of the Plan, provided that (i) each manager with such
authority and discretion shall be either a bank, an insurance company or a
registered investment adviser under the Investment Advisers Act of 1940 and
shall acknowledge in writing that it is a fiduciary with respect to the Plan and
(ii) the Committee shall periodically review the investment performance and
methods of each manager with such authority and discretion. The Committee shall
determine any requirements and objectives of the Plan which may be pertinent to
the investment of Plan assets and shall establish investment standards and
policies incorporating such requirements and objectives and communicate the same
to the Trustee (or other
31
<PAGE> 37
funding agencies under the Plan). If annuities are to be purchased under the
Plan, the Committee shall determine what contracts should be made available to
terminated Participants or purchased by the Trust.
9.2 COMPOSITION OF THE COMMITTEE.
The Committee shall consist of three or more members (any of whom may be a
Trustee), each of whom shall be appointed by, shall remain in office at the will
of, and may be removed, with or without cause, by the Board. Any member of the
Committee may resign at any time. No member of the Committee shall be entitled
to act on or decide any matter relating solely to himself or any of his rights
or benefits under the Plan. The members of the Committee shall not receive any
special compensation for serving in their capacities as members of the Committee
but shall be reimbursed for any reasonable expenses incurred in connection
therewith. Except as otherwise required by ERISA, no bond or other security
need be required by the Committee or any member thereof in any jurisdiction. Any
person may serve on the Committee and any member of the Committee, any
sub-committee or agent to whom the Committee delegates any authority, and any
other person or group of persons, may serve in more than one fiduciary capacity
(including service both as a trustee and administrator) with respect to the
Plan.
9.3 INDEMNITY.
To the maximum extent permitted by law, no member of the Committee shall be
personally liable by reason of any contract or other instrument executed by him
or on his behalf in his capacity as a member of such Committee nor for any
mistake of judgment made in good faith, and the Company shall indemnify and
hold harmless, directly from its own assets (including the proceeds of any
insurance policy the premiums of which are paid from the Company's own assets),
each member of the Committee and each
32
<PAGE> 38
other officer, employee, or director of the Company to whom any duty or power
relating to the administration or interpretation of the Plan or to the
management and control of the assets of the Plan may be delegated or allocated,
against any cost or expense (including counsel fees) or liability (including
any sum paid in settlement of a claim with the approval of the Company) arising
out of any act or omission to act in connection with the Plan unless arising
out of such person's own fraud or bad faith.
9.4 SERVICES TO THE PLAN.
The Committee may arrange for the engagement of such legal counsel, who may be
counsel for the Company, and make use of such agents, professional and clerical
or other personnel as they each shall require or may deem advisable for purposes
of the Plan. The Committee may rely upon the written opinion of such counsel
and any actuary and accountants engaged by the Committee and may delegate to any
such agent or to any sub-committee or member of the Committee its authority to
perform any act hereunder, including without limitation those matters involving
the exercise of discretion, provided that such delegation shall be subject to
revocation at any time at the discretion of the Committee. The Committee shall
report to the Board, at such times as shall be specified by the Board, with
regard to the matters for which it is responsible under the Plan.
9.5 ACTION OF THE COMMITTEE.
The Committee shall elect or designate its own Chairman, establish its own
procedures and the time and place for its meetings, and provide for the keeping
of minutes of all meetings. A majority of the members of a Committee shall
constitute a quorum for the transaction of business at a meeting of the
Committee. Any action of the Committee may be taken upon the affirmative vote
of a majority of the members of the Committee at a meeting or, at the direction
of its Chairman, without a meeting
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by mail, telegraph or telephone, provided that all of the members of the
Committee are informed by mail or telegraph of their right to vote on the
proposal and of the outcome of the vote thereon.
9.6 COMMITTEE RECORDS.
The Committee shall appoint an individual who shall cause to be kept full and
accurate accounts of receipts and disbursements of the Plan, and shall cause to
be deposited all funds of the Plan to the name and credit of the Plan, in such
depositories as may be designated by the Committee. Such individual shall
cause to be disbursed the monies and funds of the Plan when so authorized by
the Committee and shall generally perform such other duties as may be assigned
to him from time to time by the Committee. All demands for money of the Plan
shall be signed by such officer or officers or such other person or persons as
the Committee may from time to time designate in writing.
9.7 CLAIMS PROCEDURE.
(a) All claims for benefits under the Plan shall be submitted to,
and within a reasonable period of time, decided in writing by the Committee.
Written notice of the decision on each such claim shall be furnished reasonably
promptly to the claimant. If the claim is wholly or partially denied, written
notice of the denial shall be furnished within 90 days after receipt of the
claim; provided, however, that, if special circumstances require an extension of
time for processing the claim, an additional 90 days from the end of the initial
period shall be allowed for processing the claim, in which event the claimant
shall be furnished with a written notice of the extension prior to the
termination of the initial 90-day period indicating the special circumstances
requiring an extension. Such written notice shall set forth an explanation of
the specific findings and conclusions on which such denial is based.
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(b) A claimant may review all pertinent documents and may
request a review by the Committee of such a decision denying the claim. Such a
request shall be made in writing and filed with the Committee within 60 days
after delivery to the claimant of written notice of the decision. Such written
request for review shall contain all additional information which the claimant
wishes the Committee to consider. The Committee may hold any hearing or conduct
any independent investigation which it deems necessary to render its decision,
and the decision on review shall be made as soon as possible after the
Committee's receipt of the request for review. Written notice of the decision
on review shall be furnished to the claimant within 60 days after receipt by the
Committee of a request for review, unless special circumstances require an
extension of time for processing, in which event an additional 60 days shall be
allowed for review and the claimant shall be so notified in writing. Such
notice of denial shall include specific reasons for such decision. For all
purposes under the Plan, such decisions on claims (where no review is requested)
and decisions on review (where review is requested) shall be final, binding and
conclusive on all interested persons as to any matter of fact or interpretation
relating to the Plan.
9.8 COMMUNICATIONS.
Any notice, election, application, instruction, designation or other form of
communication required to be given or submitted by any Participant, other
Employee or Beneficiary shall be in such form as is prescribed from time to time
by the Committee, sent by first class mail or delivered in person or by such
other suitable means, and shall be deemed to be duly given only upon actual
receipt thereof by the Committee. Any notice, statement, report and other
communication from the Employer or the Committee to any Participant, other
Employee or Beneficiary required or permitted by the Plan shall be deemed to
have been duly given when delivered to such person or mailed by first class mail
to such
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person at his address last appearing on the records of the Employer or the
Committee. Each person entitled to receive a payment under the Plan shall file
in accordance herewith his complete mailing address and each change therein. A
check or communication mailed to any person at his address on file with the
Employer or the Committee shall be deemed to have been received by such person
for all purposes of the Plan, and no employee or agent of the Employer or member
of the Committee shall be obliged to search for or ascertain the location of any
such person except as required by ERISA. If the Committee is in doubt as to
whether payments are being received by the person entitled thereto, it may, by
registered mail addressed to such person at his address last known to the
Committee, notify such person that all future payments will be withheld until
such person submits to the Committee his proper mailing address and such other
information as the Committee may reasonably request.
9.9 INFORMATION FROM PARTICIPANT.
Each Participant shall file with the Committee such pertinent information
concerning himself and his Beneficiary, and each Beneficiary shall file with the
Committee such information concerning himself, as the Committee may specify, and
in such manner and form as the Committee may specify or provide, and no
Participant or Beneficiary shall have the right or be entitled to any benefits
or further benefits under the Plan unless such information is filed by him or on
his behalf.
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ARTICLE X
TERMINATION OF EMPLOYER PARTICIPATION
10.1 RIGHT OF TERMINATION.
Any Employer may terminate its participation in the Plan by giving the Committee
prior written notice specifying a termination date which shall be the last day
of a month at least 60 days subsequent to the date such notice is received by
the Committee. The Committee may terminate any Employer's participation in the
Plan, as of any termination date specified by the Committee.
10.2 RIGHTS OF PARTICIPANTS ON TERMINATION.
To the maximum extent permitted by ERISA, the rights of Participants no longer
employed by the Employer and former Participants and their Beneficiaries and
surviving spouses shall be unaffected by a termination of the Plan as to any
Employer. Subject to the provisions of Section 11.3, the benefits provided
under the Plan with respect to each Participant in service with such Employer
as of the termination date will be paid or forfeited in accordance with the
Plan as if such termination had not occurred, except that the Committee may
direct the Trustee to segregate such portion of the assets of the Trust (the
"Distributable Reserve") as shall be properly allocable in accordance with
ERISA to the active employees of such Employer and direct the Trustee to apply
the Distributable
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Reserve for the benefit of the Participants employed by the Employer as of the
termination date in such manner as the Committee shall determine including,
without limitation, a transfer to a successor employee benefit plan which is
qualified under Code Section 401(a); provided, however, that in the event of any
transfer of assets to a successor employee benefit plan, the provisions of
Section 11.4 will apply. Any such payments or transfers of the Distributable
Reserve shall constitute a complete discharge of all liabilities under the Plan
with respect to such Employer's participation in the Plan and any Participant
then employed by such Employer. To the maximum extent permitted by ERISA, the
termination of the Plan as to any Employer shall not in any way affect any other
Employer's participation in the Plan.
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ARTICLE XI
AMENDMENT OR TERMINATION
OF THE PLAN AND TRUST
11.1 RIGHT OF AMENDMENT OR TERMINATION.
(a) Subject to (b) and (c) below, the Board reserves the right
at any time to amend, suspend or terminate the Plan, any contributions
thereunder, the Trust or any contract issued by an insurance carrier forming a
part of the Plan, in whole or in part and for any reason and without the consent
of any Employer, Participant, Beneficiary or surviving spouse; provided,
however, that the Committee may adopt amendments which do not materially affect
the cost of the Plan and which may be necessary or appropriate to facilitate the
administration, management or interpretation of the Plan or to conform the Plan
thereto, to qualify or maintain the Plan and Trust as a plan and trust meeting
the requirements of Code Sections 401(a) and 501(a) or any other provision of
applicable law (including ERISA), and may exercise such additional powers and
authority as may be granted by the Board from time to time. Each Employer by
its adoption of the Plan shall be deemed to have delegated this authority to the
Board and the Committee.
(b) No amendment or modification shall be made which would
retroactively impair any rights to any benefit under the Plan which any
Participant, Beneficiary or surviving spouse would otherwise have had at the
date of such amendment by reason of the contributions theretofore made, except
to such extent as may be necessary or appropriate to qualify or maintain the
Plan and Trust as a plan and trust meeting the requirements of Code Sections
401(a) and 501(a) or any other provision of applicable law (including ERISA), or
make it possible for any part of the
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funds of the Plan (other than such part as is required to pay taxes, if any,
and administrative expenses as provided in Section 8.4) to be used for or
diverted to any purposes other than for the exclusive benefit of Participants
and their Beneficiaries and surviving spouses prior to the satisfaction of all
liabilities with respect thereto.
(c) Any amendment, modification, suspension or termination of
any provisions of the Plan may be made retroactively if necessary or
appropriate to qualify or maintain the Plan and Trust as a plan and trust
meeting the requirements of Code Sections 401(a) and 501(a) or any other
provision of applicable law.
11.2 NOTICE.
Notice of any amendment, modification, suspension or termination of the Plan
shall be given by the Board or the Committee, whichever adopts the amendment,
to the other and to the Trustee and all Employers and, where and to the extent
required by law, to Participants and other interested parties.
11.3 PLAN TERMINATION.
(a) Upon termination of the Plan, no amount shall thereafter
be payable under the Plan to or in respect of any Participant except as
provided in this Article XI, and to the maximum extent permitted by ERISA,
transfers or distributions of the assets of the Plan as provided in this
Article XI shall constitute a complete discharge of all liabilities under the
Plan. The Committee shall remain in existence and all of the provisions of the
Plan which in the opinion of the Committee are necessary for the execution of
the Plan and the distribution or transfer of the assets of the Plan shall
remain in force. All determinations and notifications referred to in this
Article XI
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shall be in form and substance satisfactory to counsel for the Plan.
(b) Upon the termination of the Plan the Account of each
Participant shall be determined promptly and, if not already fully vested,
shall become fully vested and nonforfeitable. Distribution to the Participants
thereafter shall be made in one of the manners and on the appropriate date or
dates described in Article VI. In the sole discretion of the Committee, a
Participant's Account may be distributed to the Participant in any manner
described in Article VI on any date prior to the date or dates which otherwise
would be applicable under the preceding sentence. Until fully distributed,
each Account shall continue to be revalued in accordance with the provisions of
Article V.
11.4 SUCCESSOR PLAN.
No transfer of the Plan's assets and liabilities to a successor employee
benefit plan (whether by merger or consolidation with such successor plan or
otherwise) shall be made unless each Participant would, if either the Plan or
such successor plan then terminated, receive a benefit immediately after such
transfer which (after taking account of any distributions or payments to them
as part of the same transaction) is equal to or greater than the benefit he
would have been entitled to receive immediately before such transfer if the
Plan had then been terminated. The Committee may also request appropriate
indemnification from the employer or employers maintaining such successor plan
before making such a transfer.
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ARTICLE XII
TOP HEAVY PROVISIONS
12.1 TOP HEAVY PLAN.
(a) Notwithstanding any other provisions of the Plan, the
provisions of this Article XII shall apply and supersede all other provisions
of the Plan during each Plan Year with respect to which the Plan is determined
to be a Top Heavy Plan.
(b) The Plan will be considered a Top Heavy Plan for any Plan
Year if it is determined to be a Top Heavy Plan as of the last day of the
preceding Plan Year or, with respect to the first Plan Year, the last day of
such Plan Year (the "Determination Date").
(c) For any Plan Year, the Plan will be a Top Heavy Plan if
any of the following conditions exist:
(i) The Plan is not part of a Required Aggregation Group
or Permissive Aggregation Group and the Top Heavy Ratio for the Plan exceeds
60%.
(ii) The Plan is part of a Required Aggregation Group but
not part of a Permissive Aggregation Group and the Top Heavy Ratio for the
Required Aggregation Group exceeds 60%.
(iii) The Plan is part of a Required Aggregation Group and a
Permissive Aggregation Group and the Top Heavy Ratio for the Permissive
Aggregation Group exceeds 60%.
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12.2 SPECIAL DEFINITIONS.
For purposes of this Article XII and as otherwise used in the Plan, the
following terms shall have the meanings set forth below:
(A) "VALUATION DATE" means the Determination Date.
Participants' Accounts shall be valued on the Valuation Date for purposes of
determining the Top Heavy Ratio.
(B) "REQUIRED AGGREGATION GROUP" means (i) the group composed
of each qualified plan maintained by the Employer or any Related Company in
which at least one Key Employee participates or participated in the Plan Year
containing the Determination Date or any of the four preceding Plan Years,
regardless of whether the plan has been terminated, and (ii) any other
qualified plan maintained by the Employer or any Related Company which enables
a plan described in clause (i) during the period tested to meet the
requirements of Code Section 401(a)(4) or 410.
(C) "PERMISSIVE AGGREGATION GROUP" means the Required
Aggregation Group plus any other qualified plan or plans maintained by the
Employer or any Related Company which, when considered as a group, would
continue to satisfy the requirements of Code Sections 401(a)(4) and 410 with
such other plans being taken into account.
(D) "KEY EMPLOYEE" means any employee or former employee (and
the Beneficiaries of such employee) of the Employer who at any time during the
Plan Year containing the Determination Date and the 4 preceding Plan Years was
(i) an officer of the Employer whose annual compensation from the Employer
exceeds 50% of the dollar limitation in effect under Code Section 415(b)(l)(A)
for the calendar year in which the Plan Year ends, (ii) an owner (or considered
an owner under Code Section 318) of one of the 10 largest interests in the
Employer and whose annual
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compensation from the Employer exceeds 100% of the dollar limitation in effect
under Code Section 415(c)(l)(A), (iii) a 5% owner of the Employer, or (iv) a 1%
owner of the Employer whose annual compensation from the Employer exceeds
$150,000. For the purpose of determining who are Key Employees, "annual
compensation" means compensation as defined in Code Section 415(c)(3), but
including amounts contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee's gross income under Code
Sections 125, 402(e)(3), 402(h) or 403(b).
(E) "TOP HEAVY RATIO"
(i) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee Pension Plan) and the
Employer has not maintained any defined benefit plan which during the 5-year
period ending on the Determination Date has or has had accrued benefits, the Top
Heavy Ratio for this Plan, or for the Required or Permissive Aggregation Group,
as appropriate, is a fraction, the numerator of which is the sum of the Account
balances of all Key Employees as of the Determination Date (including any part
of any Account balance distributed in the 5-year period ending on the
Determination Date) and the denominator of which is the sum of all Account
balances (including any part of any Account balance distributed in the 5-year
period ending on the Determination Date), both computed in accordance with Code
Section 416 and the regulations thereunder. Both the numerator and denominator
of the Top Heavy Ratio shall be increased to reflect any contribution not
actually made as of the Determination Date, but which is required to be taken
into account on that date under Code Section 416 and the regulations thereunder.
(ii) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee Pension Plan) and the
Employer maintains or has maintained one or more
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defined benefit plans which, during the 5-year period ending on the
Determination Date, has or has had any accrued benefits, the Top Heavy Ratio
for any Required or Permissive Aggregation Group, as appropriate, is a
fraction, the numerator of which is the sum of Account balances under the
aggregated defined contribution plans for all Key Employees, determined in
accordance with (i) above, and the present value of accrued benefits under the
aggregated defined benefit plans for all Key Employees as of the Determination
Date, and the denominator or which is the sum of the Account balances under the
aggregated defined contribution plans for all Participants, determined in
accordance with (i) above, and the present value of accrued benefits under the
defined benefit plans for all Participants as of the Determination Date, all
determined in accordance with Code Section 416 and the regulations thereunder.
The accrued benefits under a defined benefit plan in both the numerator and
denominator of the Top Heavy Ratio shall be increased for any distribution of
an accrued benefit made in the 5-year period ending on the Determination Date.
(iii) For purposes of (i) and (ii) above, the value of
Account balances and the present value of accrued benefits will be determined
as of the most recent Valuation Date that falls within or ends with the
12-month period ending on the Determination Date, except as provided in Code
Section 416 and the regulations thereunder for the first and second plan years
of a defined benefit plan. The Account balances and accrued benefits of a
Participant who is not a Key Employee but who was a Key Employee in a prior
year, or who has not been credited with at least one Hour of Service with any
Employer at any time during the 5- year period ending on the Determination Date
will be disregarded.
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(iv) The calculations of the Top Heavy Ratio, and the extent
to which distributions, rollovers and transfers are taken into account will be
made in accordance with Code Section 416 and the regulations thereunder. When
aggregating plans, the value of Account balances and accrued benefits will be
calculated with reference to the Determination Dates that all within the same
calendar year.
(v) The accrued benefit of a Participant other than a Key
Employee shall be determined under the method, if any, that uniformly applies
for accrual purposes under all defined benefit plans maintained by the
Employer, or if there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the fractional rule of
Code Section 411(b)(l)(C).
(F) "SUPER TOP HEAVY PLAN" means a Top Heavy Plan which would
continue to be a Top Heavy Plan if 90% were substituted for 60% each place it
appears in the definition of Top Heavy Plan.
12.3 MINIMUM CONTRIBUTIONS.
(a) Except as otherwise provided below, the Employer
Contributions allocated on behalf of any non-key Employee shall not be less
than the lesser of 3% of such Participant's Compensation or, if the Employer
has no defined benefit plan which designates this Plan to satisfy Code Section
401(a), the largest percentage of Employer Contributions, as a percentage of
the Key Employee's Compensation, allocated on behalf of any Key Employee for
that year. For purposes of this Section 12.3, "Compensation" means
compensation as defined in Section 1.415-2(d) of the Income Tax Regulations.
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12.4 OTHER PLANS.
The Committee shall, to the maximum extent permitted by the Code and in
accordance with the regulations thereunder, apply the provisions of this Article
XII by taking into account the benefits payable and the contribution made under
all other defined contribution plans and defined benefit plans maintained by the
Company or any Related Company which are qualified under Code Section 401(a) to
prevent inappropriate omissions or required duplications or minimum benefits or
contributions.
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ARTICLE XIII
GENERAL LIMITATIONS AND PROVISIONS
13.1 RIGHTS OF EMPLOYER.
Nothing contained in the Plan shall give any employee the right to be retained
in the employment of the Company, Employer or any Related Company or affect the
right of any such employer to dismiss any employee. The adoption and
maintenance of the Plan shall not constitute a contract between an Employer and
any employee or consideration for, or an inducement to or condition of, the
employment of any employee.
13.2 TRUST AS SOURCE OF BENEFITS.
Any and all rights or benefits accruing to any persons under the Plan shall be
subject to the terms of the Trust Agreement which the Company shall enter into
with the Trustee. The Trust shall be the sole source of benefits under the
Plan and, except as otherwise required by ERISA, the Employer and the Committee
assume no liability or responsibility for payment of such benefits, and each
Participant, Surviving Spouse, Beneficiary or other person who shall claim the
right to any payment under the Plan shall be entitled to look only to the Trust
for such payment and shall not have any right, claim or demand therefor against
the Employer, or the Committee or any member thereof or any employee or
director of the Employer.
13.3 INCOMPETENT PAYEE.
If the Committee shall find that any person to whom any amount is payable under
the Plan is found by a court of competent jurisdiction to be unable to care for
his affairs because of illness or accident, or is a minor, or has died, then
any payment due him or his estate (unless a prior claim therefor has been
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made by a duly appointed legal representative) may, if the Committee so elects,
be paid to his Spouse, a child, a relative, an institution maintaining or having
custody of such person, or any other person deemed by the Committee to be a
proper recipient on behalf of such person otherwise entitled to payment. Any
such payment shall be a complete discharge of the liability of the Plan and the
Trust therefor.
13.4 NONALIENATION OF BENEFITS.
Except insofar as may otherwise be required by law or pursuant to the terms of a
Qualified Domestic Relations Order, no amount payable at any time under the Plan
and the Trust shall be subject in any manner to alienation by anticipation,
sale, transfer, assignment, bankruptcy, pledge, attachment, charge or
encumbrance of any kind nor in any manner be subject to the debts or liabilities
of any person and any attempt to so alienate or subject any such amount, whether
presently or thereafter payable, shall be void. If any person shall attempt to,
or shall, alienate, sell, transfer, assign, pledge, attach, charge or otherwise
encumber any amount payable under the Plan and Trust, or any part thereof, or if
by reason of his bankruptcy or other event happening at any such time such
amount would be made subject to his debts or liabilities or would otherwise not
be enjoyed by him, then the Committee may, in accordance with procedures applied
in a uniform and nondiscriminatory manner, direct that such amount be withheld
and that the same or any part thereof be paid or applied to or for the benefit
of such person, his Spouse, children or other dependents, or any of them, in
such manner and proportion as the Committee may deem proper. For purposes of
the Plan, a "Qualified Domestic Relations Order" means any judgement, decree, or
order (including approval of a property settlement agreement) which has been
determined by the Committee in accordance with procedures established under the
Plan, to constitute a qualified domestic relations order within the meaning of
Code Section 414(p)(l).
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13.5 LOST PAYEE.
If the Committee cannot ascertain the whereabouts of any person to whom a
payment is due under the Plan, including an alternate payee under a Qualified
Domestic Relations Order, as provided in Section 13.4, and if, after 3 years
from the date such payment is due, a notice of such payment due is mailed to the
last known address of such person, as shown on the records of the Committee or
the Employer, and within 3 months after such mailing such person has not made
written claim therefor, the Committee, if it so elects, after receiving advice
from counsel to the Plan, may direct that such payment and all remaining
payments otherwise due to such person be cancelled on the records of the Plan
and the amount thereof applied to reduce the contributions of the Employer, and
upon such cancellation, the Plan and the Trust shall have no further liability
therefor, except that, in the event such person later notifies the Committee of
his whereabouts and requests the payment or payments due to him under the Plan,
the amount so applied shall be paid to him as provided in Article VI.
13.6 INSURANCE CONTRACTS.
If the payment of any benefit under the Plan is provided for by a contract with
an insurance company, the payment of such benefit shall be subject to all the
provisions of such contract.
13.7 GENDER.
Whenever used in the Plan, the masculine gender includes the feminine.
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13.8 CAPTIONS.
The captions preceding the Sections of the Plan have been inserted solely as a
matter of convenience and in no way define or limit the scope or intent of any
provisions of the Plan.
13.9 GOVERNING LAW.
The Plan and all rights thereunder shall be governed by and construed in
accordance with ERISA and the laws of the State of New York.
In WITNESS WHEREOF the Company has caused this amended and restated Plan to be
executed this 31st day of Ocrober, 1994.
GENOVESE DRUG STORES, INC.
ATTEST: BY: /s/ Gene Wexler
---------------------------
/s/ Alison L. Dowling TITLE: Vice President -
- - --------------------------- General Counsel
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<PAGE> 1
EXHIBIT 10.5
DREYFUS PROTOTYPE
BASIC PLAN DOCUMENT NO. 01
DREYFUS PROTOTYPE DEFINED CONTRIBUTION PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 "Actual Deferral Percentage" . . . . . . . . . . . . . . . . . . . 1
1.4 "Adoption Agreement" . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 "Affiliated Employer" . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 "Anniversary Date" . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 "Annuity Starting Date" . . . . . . . . . . . . . . . . . . . . . . 1
1.8 "Average Actual Deferral Percentage" . . . . . . . . . . . . . . . 1
1.9 "Average Contribution Percentage" . . . . . . . . . . . . . . . . . 2
1.10 "Beneficiary" or "Beneficiaries" . . . . . . . . . . . . . . . . . 2
1.11 "Board of Directors" . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "CODA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 "Committee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 "Compensation" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.16 "Contribution Percentage" . . . . . . . . . . . . . . . . . . . . . 4
1.17 "Contribution Percentage Amounts" . . . . . . . . . . . . . . . . . 4
1.18 "Early Retirement Age" . . . . . . . . . . . . . . . . . . . . . . 4
1.19 "Earned Income" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 "Easy Retirement Plan" . . . . . . . . . . . . . . . . . . . . . . 4
1.21 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 "Elective Deferrals" . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 "Eligible Employee" . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 "Eligibility Year(s) of Service" . . . . . . . . . . . . . . . . . 5
1.25 "Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.26 "Employer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.27 "Employment Commencement Date" . . . . . . . . . . . . . . . . . . 7
1.28 "Entry Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.29 "Excess Aggregate Contributions" . . . . . . . . . . . . . . . . . 7
1.30 "Excess Contributions" . . . . . . . . . . . . . . . . . . . . . . 7
1.31 "Excess Elective Deferrals" . . . . . . . . . . . . . . . . . . . . 7
1.32 "Family Member" . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.33 "Fund" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.34 "Highly Compensated Employee" . . . . . . . . . . . . . . . . . . . 7
1.35 "Hour of Service" . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.36 "Integration Level" . . . . . . . . . . . . . . . . . . . . . . . . 10
1.37 "Matching Contribution" . . . . . . . . . . . . . . . . . . . . . . 10
1.38 "Net Profits" . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
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1.39 "Non-Highly Compensated Employee" . . . . . . . . . . . . . . . . . 10
1.40 "Normal Retirement Age" . . . . . . . . . . . . . . . . . . . . . . 10
1.41 "Owner-Employee" . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.42 "Participant" . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.43 "Participating Employer" . . . . . . . . . . . . . . . . . . . . . 12
1.44 "Period of Severance" . . . . . . . . . . . . . . . . . . . . . . . 12
1.45 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.46 "Plan Year" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.47 "Prototype Plan" . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.48 "Qualified Matching Contributions" . . . . . . . . . . . . . . . . 12
1.49 "Qualified Nonelective Contributions" . . . . . . . . . . . . . . . 12
1.50 "ReEmployment Commencement Date" . . . . . . . . . . . . . . . . . 12
1.51 "Regular Account" . . . . . . . . . . . . . . . . . . . . . . . . 13
1.52 "S-Corporation" . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.53 "Self-Employed Individual" . . . . . . . . . . . . . . . . . . . . 13
1.54 "Service" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.55 "Service Break" . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.56 "Severance from Service Date" . . . . . . . . . . . . . . . . . . . 14
1.57 Shareholder-Employee" . . . . . . . . . . . . . . . . . . . . . . . 14
1.58 "Sponsor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.59 "Taxable Wage Base" . . . . . . . . . . . . . . . . . . . . . . . . 15
1.60 "Thrift Contributions" . . . . . . . . . . . . . . . . . . . . . . 15
1.61 "Total and Permanent Disability" . . . . . . . . . . . . . . . . . 15
1.62 "Trustee" or "Custodian" . . . . . . . . . . . . . . . . . . . . . 15
1.63 "Trust Agreement" or "Custodial Agreement" . . . . . . . . . . . . 15
1.64 "Valuation Date" . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.65 "Voluntary Contributions" . . . . . . . . . . . . . . . . . . . . . 16
PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1 Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Excluded Employees . . . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Change in Employment Status . . . . . . . . . . . . . . . . . . . . 17
2.5 Limitations on Participation of Owner-Employees . . . . . . . . . . 17
CONTRIBUTIONS AND CREDITS TO MONEY PURCHASE PLANS . . . . . . . . . . . . . . . . . 18
3.1 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3 Credit to Participants . . . . . . . . . . . . . . . . . . . . . . 19
CONTRIBUTIONS AND CREDITS TO PROFIT SHARING PLANS . . . . . . . . . . . . . . . . . 21
4.1 Limits on Employer Contributions . . . . . . . . . . . . . . . . . 21
4.2 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.3 Employer Discretionary Contributions . . . . . . . . . . . . . . . 22
4.4 401(k) Cash or Deferred Arrangements ("CODA")/Thrift
</TABLE>
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Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Maximum Amount of Elective Deferrals . . . . . . . . . . . . . . . 28
4.6 Average Actual Deferral Percentage Tests . . . . . . . . . . . . . 29
4.7 Average Contribution Percentage Tests . . . . . . . . . . . . . . . 34
4.8 Non-Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . 38
4.9 Distribution on Account of Financial Hardship . . . . . . . . . . . 39
4.10 Special Distribution Rules . . . . . . . . . . . . . . . . . . . . 42
CONTRIBUTIONS AND CREDITS TO TARGET BENEFIT PLANS . . . . . . . . . . . . . . . . . 42
CONTRIBUTION AND ALLOCATION LIMITS . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.1 Timing of Contributions . . . . . . . . . . . . . . . . . . . . . . 43
6.2 Deductibility of Contributions . . . . . . . . . . . . . . . . . . 43
6.3 Return of Employer Contributions . . . . . . . . . . . . . . . . . 43
6.4 Limitation on Allocations . . . . . . . . . . . . . . . . . . . . . 44
6.5 Separate Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.6 Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.7 Segregation of Former Participant's Account . . . . . . . . . . . . 54
VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.1 Vested Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.2 Vesting of a Participant . . . . . . . . . . . . . . . . . . . . . 55
7.3 Amendment of Vesting Provisions . . . . . . . . . . . . . . . . . . 55
7.4 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
BENEFITS ON RETIREMENT AND SEPARATION FROM SERVICE . . . . . . . . . . . . . . . . . 57
8.1 Commencement of Benefits . . . . . . . . . . . . . . . . . . . . . 57
8.2 Automatic Annuity Requirements . . . . . . . . . . . . . . . . . . 60
8.3 Profit Sharing Plans: Exception from Automatic Annuity
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.4 Transitional Rules Applicable to Joint and Survivor Annuities . . . 64
8.5 Required Payment of Benefits . . . . . . . . . . . . . . . . . . . 66
8.6 Available Forms of Distribution . . . . . . . . . . . . . . . . . . 73
8.7 Certain Distributions . . . . . . . . . . . . . . . . . . . . . . . 73
8.8 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.1 Payment to Beneficiary . . . . . . . . . . . . . . . . . . . . . . 74
9.2 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . 74
PARTICIPANT CONTRIBUTIONS; ROLLOVERS . . . . . . . . . . . . . . . . . . . . . . . . 75
10.1 Voluntary Contributions . . . . . . . . . . . . . . . . . . . . . . 75
10.2 Voluntary Tax-Deductible Contributions . . . . . . . . . . . . . . 75
10.3 Transfers From Other Trusts . . . . . . . . . . . . . . . . . . . . 76
INSURANCE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
11.1 Policy Procurement . . . . . . . . . . . . . . . . . . . . . . . . 77
11.2 Rules and Regulations . . . . . . . . . . . . . . . . . . . . . . . 77
11.3 Transfer of Policies . . . . . . . . . . . . . . . . . . . . . . . 78
</TABLE>
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11.4 Payment Upon Death . . . . . . . . . . . . . . . . . . . . . . . . 79
11.5 Plan Provisions Control . . . . . . . . . . . . . . . . . . . . . . 79
LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
12.1 Loans to Participants . . . . . . . . . . . . . . . . . . . . . . . 79
12.2 Provisions to be Applied in a Uniform and Nondiscriminatory
Manner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.3 Satisfaction of Loan . . . . . . . . . . . . . . . . . . . . . . . 81
12.4 Loans to Owner-Employees or Shareholder-Employees . . . . . . . . . 81
TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
13.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
13.2 Vesting Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 85
13.3 Minimum Allocation . . . . . . . . . . . . . . . . . . . . . . . . 86
13.4 Adjustment to Defined Benefit Fraction and Defined Contribution
Fraction under section 6.4. . . . . . . . . . . . . . . . . . . . . 87
THE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
14.1 Creation of a Committee . . . . . . . . . . . . . . . . . . . . . . 87
14.2 Committee Action . . . . . . . . . . . . . . . . . . . . . . . . . 87
14.3 Authorized Signatory . . . . . . . . . . . . . . . . . . . . . . . 88
14.4 Powers and Duties . . . . . . . . . . . . . . . . . . . . . . . . . 88
14.5 Nondiscrimination . . . . . . . . . . . . . . . . . . . . . . . . . 88
14.6 Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . 88
14.7 Reliance on Professional Advice . . . . . . . . . . . . . . . . . . 88
14.8 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . 88
14.9 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . 89
14.10 Payment Certification to Trustee . . . . . . . . . . . . . . . . . 89
14.11 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . 89
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
15.1 No Right of Continued Employment . . . . . . . . . . . . . . . . . 90
15.2 Nonalienation of Interest . . . . . . . . . . . . . . . . . . . . . 90
15.3 Incompetence of Participants and Beneficiaries . . . . . . . . . . 90
15.4 Unclaimed Benefits . . . . . . . . . . . . . . . . . . . . . . . . 91
15.5 Separate Employer Trusts Maintained . . . . . . . . . . . . . . . . 91
15.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
15.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
15.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . 91
15.9 Titles and Headings . . . . . . . . . . . . . . . . . . . . . . . . 92
15.10 Failure of Employer's Plan to Qualify . . . . . . . . . . . . . . . 92
15.11 Exclusive Benefit . . . . . . . . . . . . . . . . . . . . . . . . . 92
15.12 Action by Employer . . . . . . . . . . . . . . . . . . . . . . . . 92
AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
16.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
16.2 Termination and Partial Termination . . . . . . . . . . . . . . . . 93
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16.3 Plan Merger and Consolidation or Transfer of Plan Assets . . . . . 94
16.4 Amended and Restated Plans . . . . . . . . . . . . . . . . . . . . 94
16.5 Participating Employers . . . . . . . . . . . . . . . . . . . . . . 95
PAIRED PLAN PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
17.1 Compliance With Section 415(e) of the Code . . . . . . . . . . . . 96
17.2 Adjustment of Combined Plan Fractions Under Section 415 of the
Code for Top-Heavy Ratio in Excess of Ninety Percent (90%) . . . . 96
17.3 Top-Heavy Minimum Benefits and Contributions . . . . . . . . . . . 96
17.4 Integration of Paired Plans . . . . . . . . . . . . . . . . . . . . 97
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DREYFUS PROTOTYPE DEFINED CONTRIBUTION PLAN
BASIC PLAN DOCUMENT NO. 01
ARTICLE I.
DEFINITIONS
1.1 "Account" shall mean any one of the accounts maintained by the
Committee for each Participant in accordance with Section 6.5.
1.2 "Act" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
1.3 "Actual Deferral Percentage" shall mean the ratio (expressed as a
percentage) of Elective Deferrals (including Excess Elective
Deferrals), Qualified Matching Contributions, and Qualified
Nonelective Contributions paid over to the Fund on behalf of an
Eligible Participant for the Plan Year to the Eligible Participant's
Compensation for the Plan Year. The Actual Deferral Percentage of an
Eligible Participant who does not make an Elective Deferral, and who
does not receive an allocation of a Qualified Matching Contribution or
a Qualified Nonelective Contribution, is zero.
1.4 "Adoption Agreement" shall mean the document executed by the adopting
Employer which contains all the options which may be selected and
which incorporates this Prototype Plan by reference.
1.5 "Affiliated Employer" shall mean any corporation which is a member of
a controlled group of corporations (as defined in section 414(b) of
the Code) which includes the Employer; any trade or business (whether
or not incorporated) which is under common control (as defined in
section 414(c) of the Code) with the Employer; any organization
(whether or not incorporated) which is a member of an affiliated
service group (as defined in section 414(m) of the Code) which
includes the Employer; and any other entity required to be aggregated
with the Employer pursuant to regulations under section 414(o) of the
Code.
1.6 "Anniversary Date" unless otherwise defined in the Adoption Agreement,
shall mean the first day of the Plan Year. If the initial Plan Year
is less than a 12 month period, the Anniversary Date shall mean the
first day of the 12 consecutive month period designated as the Plan
Year in the Adoption Agreement.
1.7 "Annuity Starting Date" shall mean the first day of the first period
for which an amount is paid as an annuity or any other form.
1.8 "Average Actual Deferral Percentage" shall mean the average (expressed
as a percentage)
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<PAGE> 8
of the Actual Deferral Percentages of the Eligible Participants in a
group.
1.9 "Average Contribution Percentage" shall mean the average (expressed as
a percentage) of the Contribution Percentages of the Eligible
Participants in a group.
1.10 "Beneficiary" or "Beneficiaries" shall mean one or more persons
designated as such by a Participant to receive his interest in the
Fund in the event of the death of the Participant.
1.11 "Board of Directors" shall mean the Board of Directors of the Employer
if the Employer is an incorporated business entity.
1.12 "CODA" shall mean a cash or deferred arrangement qualified under
section 401(k) of the Code.
1.13 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.14 "Committee" shall mean the person or persons appointed by the Employer
to administer the Plan in accordance with Article XIV. If the Plan is
an Easy Retirement Plan or if no such Committee is appointed by the
Employer, the Employer shall act as the Committee.
1.15 "Compensation", unless otherwise specified in the Adoption Agreement,
shall mean, in the case of an Employee other than a Self-Employed
Individual, his wages as defined in section 3401(a) of the Code and
all other payments of compensation to the Employee by the Employer (in
the course of the Employer's trade or business) for which the Employer
is required to furnish the Employee a written statement under sections
6041(d) and 6051(a)(3) of the Code, determined without regard to any
rules under section 3401(a) of the Code that limit the remuneration
included in wages based on the nature or location of the employment or
the services performed, which are actually paid during the applicable
period. In the case of a Self-Employed Individual, Compensation shall
mean his Earned Income. Unless otherwise specified in the Adoption
Agreement, the applicable period shall be the Plan Year. If elected
by the employer in the Adoption Agreement, Compensation shall also
include Employer contributions made pursuant to a salary reduction
agreement with an Employee which are not currently includible in the
gross income of the Employee by reason of the application of sections
125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code. Compensation
shall include Excess Contributions which are recharacterized in
accordance with Section 4.6(d) to the extent that Elective Deferrals
are included in Compensation.
Solely for purposes of determining Actual Deferral Percentages and
Contribution Percentages, Compensation, if the Plan is a
non-standardized plan, shall be determined
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<PAGE> 9
without regard to any exclusions which may be elected in the Adoption
Agreement. Solely for purposes of determining Actual Deferral
Percentages and Contribution Percentages, the applicable period for
determining the amount of an Employee's Compensation shall be limited
to the period during which the Employee was an Eligible Participant.
For Plan Years beginning on or after January 1, 1989, annual
Compensation shall not include amounts in excess of $200,000, as
adjusted by the Secretary of the Treasury at the same time and in the
same manner as under section 415(d) of the Code except that the dollar
increases in effect on January 1 of any calendar year is effective for
Plan Years beginning in such calendar year and the first adjustment to
the $200,000 limitation is effective on January 1, 1990.
For Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Participant taken into account for determining
all benefits provided under the Plan for any Plan Year shall not
exceed $150,000, as adjusted for increases in the cost-of-living in
accordance with section 401(a)(17)(B) of the Code. The cost-of-living
adjustment in effect for a calendar year applies to the applicable
period beginning in such calendar year.
If an applicable period consists of fewer than 12 months, the annual
Compensation limit is an amount equal to the otherwise applicable
annual Compensation limit multiplied by a fraction, the numerator of
which is the number of months in the short applicable period, and the
denominator of which is 12.
In determining Compensation for purposes of the annual Compensation
limit, the family member rules of Section 414(q)(6) of the Code shall
apply except that in applying such rules, the term "family" shall
include only the Employee's spouse and any lineal descendants who have
not attained age 19 before the close of the Plan Year. If, as a
result of the application of such family member rule the annual
compensation limit is exceeded, then (except for purposes of
determining the portion of Compensation up to the Integration Level if
this Plan is integrated with Social Security), the annual
compensation limit shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined under
this Section prior to the application of such limitation.
If Compensation for any prior applicable period is taken into account
in determining a Participant's allocations for the current Plan Year,
the Compensation for such prior applicable period is subject to the
applicable annual Compensation limit in effect for that prior period.
For this purpose, in determining allocations in Plan Years beginning
on or after January 1, 1989, the annual Compensation limit in effect
for applicable periods beginning before that date is $200,000. In
addition, in determining allocations in Plan
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<PAGE> 10
Years beginning on or after January 1, 1994, the annual Compensation
limit in effect for applicable periods beginning before that date is
$150,000.
1.16 "Contribution Percentage" shall mean the ratio (expressed as a
percentage) of an Eligible Participant's Contribution Percentage
Amounts to the Eligible Participant's Compensation for the Plan Year.
1.17 "Contribution Percentage Amounts" shall mean the sum of the Thrift
Contributions (including amounts recharacterized in accordance with
Section 4.6(d)), Voluntary Contributions and Matching Contributions
under the Plan on behalf of an Eligible Participant for the Plan Year.
Such Contribution Percentage Amounts shall not include Matching
Contributions that are forfeited either to correct Excess Aggregate
Contributions or because the contributions to which they relate are
Excess Elective Deferrals, Excess Contributions, or Excess Aggregate
Contributions. Such Contribution Percentage Amounts shall include
forfeitures of Excess Aggregate Contributions or Matching
Contributions allocated to the Eligible Participant's Employer
Matching Contribution Account, which shall be taken into account in
the year in which such forfeiture is allocated.
1.18 "Early Retirement Age" shall mean the date a Participant satisfies the
age and service requirements for early retirement, if any, specified
in the Adoption Agreement. Upon reaching his Early Retirement Age, a
Participant's right to his account balance shall be nonforfeitable,
notwithstanding the Plan's vesting schedule. If a Participant
separates from service before satisfying the age requirement for early
retirement, but has satisfied the service requirement, the Participant
will be entitled to elect to receive an early retirement benefit upon
satisfaction of such age requirement.
1.19 "Earned Income" shall mean the annual net earnings from
self-employment in the trade or business with respect to which the
Plan is established, provided that personal services of the individual
are a material income-producing factor. Net earnings will be
determined without regard to items not included in gross income and
the deductions allocable to such items. Net earnings are reduced by
contributions by the Employer to a qualified plan to the extent
deductible under section 404 of the Code. Net earnings shall be
determined with regard to the deduction allowed to the Employer by
section 164(f) of the Code for taxable years beginning after December
31, 1989.
1.20 "Easy Retirement Plan" shall mean a Plan established under Dreyfus
Easy Standardized/Paired Prototype Money Purchase Retirement Plan No.
01005, Dreyfus Easy Standardized/Paired Prototype Profit Sharing
Retirement Plan No. 01006, or Dreyfus Standardized/Paired Prototype
Defined Benefit Plan No. 02001.
1.21 "Effective Date" shall mean the date specified in the Adoption
Agreement.
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<PAGE> 11
1.22 "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 Deferrals are the sum of all Employer
contributions made on behalf of such Participant pursuant to an
election to defer under any CODA, 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 an Excess Amount pursuant to Section 6.4(d).
1.23 "Eligible Employee" shall mean each Employee who is not excluded from
eligibility to participate in the Plan under the Adoption Agreement.
If the Plan is an Easy Retirement Plan, Eligible Employee shall mean
each Employee who is not (i) included in a unit of Employees covered
by a collective bargaining agreement between the Employer and employee
representatives, if retirement benefits were the subject of good faith
bargaining, or (ii) a nonresident alien who received no income from
the Employer which constitutes income from sources within the United
States. For purposes of the preceding sentence, "employee
representatives" does not include any organization more than half of
whose members are Employees who are owners, officers, or executives of
the Employer.
1.24 "Eligibility Year(s) of Service" shall mean the twelve (12)
consecutive month period commencing on an Employee's Employment
Commencement Date and anniversaries thereof, during which the Employee
worked at least one thousand (1,000) Hours of Service (or such lesser
number of Hours of Service specified in the Adoption Agreement).
In the case of an Employee in the maritime industry whose compensation
is determined based on days of service, 125 days of service shall be
treated as 1,000 Hours of Service (or such lesser number of Hours of
Service as specified in the Adoption Agreement). For purposes of the
preceding sentence "maritime industry" shall mean that industry in
which Employees perform duties on board commercial, exploratory,
service or other vessels moving on the high seas, inland waterways,
Great Lakes, coastal zones, harbors and noncontiguous areas, or on
offshore ports, platforms or other similar sites.
In the case of a Participant, who does not have any nonforfeitable
right to the account balance derived from Employer contributions,
Eligibility Year(s) of Service before a period of consecutive one (1)
year Service Breaks will not be taken into account in computing
Eligibility Years of Service, if the number of consecutive one (1)
year Service Breaks in such period equals or exceeds the greater of
five (5) or the aggregate number
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of Eligibility Years of Service before such break. Such aggregate
number of Eligibility Years of Service will not include any
Eligibility Year of Service disregarded under the preceding sentence
by reason of prior Service Breaks.
Notwithstanding the above, if the Adoption Agreement provides for full
and immediate vesting upon completion of the eligibility requirements
and an Employee has incurred a one (1) year Service Break before
satisfying the Plan's eligibility requirements, all Eligibility
Year(s) of Service before such Service Break will not be taken into
account.
If the elapsed time method of crediting service is specified in the
Adoption Agreement, an Employee shall receive credit for Service,
except for credit which may be disregarded under this Section or
Section 2.3, for the aggregate of all time periods commencing on his
Employment Commencement Date or Re-Employment Commencement Date and
ending on his Severance from Service Date. An Employee shall also
receive credit for any Period of Severance of less than twelve (12)
months. Fractional periods of a year shall be expressed in terms of
days.
1.25 "Employee" shall mean an Owner-Employee, a Self-Employed Individual, a
Shareholder-Employee and any other person employed by the Employer or
any Affiliated Employer.
A "leased employee" shall also be treated as an Employee. The term
"leased employee" means any person (other than an employee of the
recipient employer) who pursuant to an agreement between the recipient
employer and any other person ("leasing organization") has performed
services for the recipient employer (or for the recipient employer and
related persons determined in accordance with section 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least one
year, and such services are of a type historically performed by
employees in the business field of the recipient employer.
Contributions or benefits provided a leased employee by the leasing
organization which are attributable to services performed for the
recipient employer shall be treated as provided by the recipient
employer.
Notwithstanding the preceding paragraph, a leased employee shall not
be considered an employee of the recipient employer if: (i) such
employee is covered by a money purchase pension plan providing (1) a
nonintegrated employer contribution rate of at least ten percent (10%)
of compensation, as defined in section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction agreement
which are excludable from the employee's gross income under section
125, section 402(a)(8), section 402(h) or section 403(b) of the Code,
(2) immediate participation, and (3) full and immediate vesting; and
(ii) leased employees do not constitute more than twenty percent (20%)
of the recipient employer's non-highly compensated workforce.
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1.26 "Employer" shall mean the corporation, partnership, proprietorship or
other business entity which shall adopt the Plan or any successor
thereof.
1.27 "Employment Commencement Date" shall mean the first date with respect
to which an Employee performs an Hour of Service.
1.28 "Entry Date", unless otherwise specified in the Adoption Agreement,
shall mean the first day of the Plan Year and the first day of the
seventh month of the Plan Year. The initial Entry Date shall not
precede the original effective date of the Plan.
1.29 "Excess Aggregate Contributions" shall mean, with respect to any Plan
Year, the excess of the aggregate Contribution Percentage Amounts
taken into account in computing the numerator of the Contribution
Percentage, actually made on behalf of Highly Compensated Employees
for such Plan Year, over the maximum Contribution Percentage Amounts
permitted by the Average Contribution Percentage tests of Section 4.7
(determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution Percentages,
beginning with the highest of such percentages).
1.30 "Excess Contributions" shall mean, with respect to any Plan Year, the
excess of the aggregate amount of Elective Deferrals, Qualified
Nonelective Contributions, and Qualified Matching Contributions
actually taken into account in computing the Actual Deferral
Percentage of Highly Compensated Employees for such Plan Year, over
the maximum amount of such contributions permitted under the Average
Actual Deferral Percentage tests of Section 4.6 (determined by
reducing contributions made on behalf of Highly Compensated Employees
in order of their Actual Deferral Percentages, beginning with the
highest of such percentages).
1.31 "Excess Elective Deferrals" shall mean a Participant's Elective
Deferrals for a taxable year in excess of the adjusted dollar
limitation of section 402(g) of the Code.
1.32 "Family Member" shall, with respect to a five percent (5%) owner or
top ten Highly Compensated Employee described in section 414(q)(6)(A)
of the Code, include the spouse and lineal ascendants and descendants
of an Employee or former Employee and the spouses of such lineal
ascendants and descendants. The determination of who is a Family
Member will be made in accordance with section 414(q) of the Code.
1.33 "Fund" shall mean all property received by the Trustee or Custodian
for purposes of the Plan, investments thereof and earnings thereon,
less payments made by the Trustee to carry out the Plan.
1.34 "Highly Compensated Employee" shall include highly compensated active
employees and
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<PAGE> 14
highly compensated former employees.
A highly compensated active employee includes any Employee who
performs services for the Employer or any Affiliated Employer during
the determination year and who, during the look-back year: (i)
received Compensation from the Employer or any Affiliated Employer in
excess of $75,000 (as adjusted pursuant to section 415(d) of the
Code); (ii) received Compensation from the Employer or any Affiliated
Employer in excess of $50,000 (as adjusted pursuant to section 415(d)
of the Code) and was a member of the top-paid group for such year; or
(iii) was an officer of the Employer or any Affiliated Employer and
received Compensation during such year that is greater than fifty
percent (50%) of the dollar limitation in effect under section
415(b)(1)(A) of the Code. The term Highly Compensated Employee also
includes: (i) an Employee who is described in the preceding sentence
if the term "determination year" is substituted for the term
"look-back year" and the Employee is one of the 100 most highly
compensated Employees of the Employer or any Affiliated Employer
during the Plan Year; and (ii) an Employee who is a five percent (5%)
owner of the Employer or any Affiliated Employer at any time during
the look-back year or determination year.
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.
For this purpose, the determination year shall be the Plan Year, and
the look-back year shall be the twelve (12) month period immediately
preceding the determination year unless the Employer has elected to
use the calendar year ending with or within the determination year as
the look-back year for purposes of its employee benefit plans. If the
Employer has so elected to use such calendar year as the look-back
year for its employee benefit plans, the determination year shall be
the "lag period," if any, by which the applicable determination year
extends beyond such calendar year.
A highly compensated former employee includes any Employee who
terminated employment (or was deemed to have terminated) prior to the
determination year, performs no service for the Employer or any
Affiliated 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.
If an Employee is, during a determination year or look-back year, a
Family Member of either a five percent (5%) owner who is an active or
former Employee or a Highly Compensated Employee who is one of the 10
most Highly Compensated Employees of the Employer or any Affiliated
Employer during such year, then the Family Member and the five percent
(5%) owner or top-10 Highly Compensated Employee shall be
8
<PAGE> 15
aggregated. The Family Member and five percent (5%) owner or top-10
Highly Compensated Employee shall be treated as a single Employee
receiving Compensation and Plan contributions equal to the sum of
Compensation and contributions of the Family Member and five percent
(5%) owner or top-10 Highly Compensated Employee.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identify of employees in 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.
1.35 "Hour of Service" shall mean:
(a) Each hour for which an Employee is compensated by the
Employer, or is entitled to be so compensated, for services
rendered by him to the Employer. These hours will be credited
to the Employee for the computation period in which the duties
are performed; and
(b) Each hour for which an Employee is compensated by the
Employer, or is entitled to be so compensated, on account of a
period of time during which no services are rendered by him to
the Employer (regardless of whether the Employee shall have
ceased to be an Employee) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military
duty or leave of absence. No more than five hundred and one
(501) Hours of Service shall be credited pursuant to this
subparagraph (b) on account of any single continuous period
during which an Employee renders no services to the Employer
(whether or not such period occurs in a single computation
period). Hours under this paragraph will be calculated and
credited pursuant to section 2530.200b-2 of the Department of
Labor Regulations which are incorporated herein by this
reference; and
(c) Each hour for which back pay, without regard to mitigation of
damages, has been awarded or agreed to by the Employer. The
same Hours of Service shall not be credited both under
subparagraph (a) or subparagraph (b), whichever shall be
applicable, and also under this subparagraph (c). The hours
will be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than
the computation period in which the award, agreement or
payment is made.
Hours of Service will be credited for employment with an
Affiliated Employer. Hours of Service will also be credited
for employment with a predecessor employer if the Employer
maintains the plan of such predecessor or the Employer so
elects in the Adoption Agreement.
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<PAGE> 16
Hours of Service will also be credited for any individual
considered an Employee under sections 414(n) or 414(o) of the
Code or the regulations thereunder.
Solely for purposes of determining whether a Service Break, as
defined in Section 1.54, for participation and vesting
purposes has occurred in a computation period, an individual
who is absent from work for maternity or paternity reasons
shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such
absence, or in any case in which such hours cannot be
determined, eight (8) Hours of Service per day of such
absence. For purposes of this paragraph, an absence from work
for maternity or paternity reasons means an absence (1) by
reason of the pregnancy of the individual, (2) by reason of a
birth of a child of the individual, (3) by reason of the
placement of the child with the individual in connection with
the adoption of such child by such individual, 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 paragraph shall be credited (1) in
the computation period in which the absence begins if the
crediting is necessary to prevent a Service Break in that
period, (2) in all other cases, in the following computation
period.
Hours of Service shall be credited on the basis of actual
hours worked unless another method has been specified in the
Adoption Agreement. Hours of Service shall not be counted if
the elapsed time method is specified in the Adoption
Agreement, except to determine an Employee's Employment
Commencement Date or Re-Employment Commencement Date.
1.36 "Integration Level" shall mean the Taxable Wage Base or such lesser
amount elected by the Employer in the Adoption Agreement.
1.37 "Matching Contribution" shall mean Employer contributions made to this
Plan or any other defined contribution plan by reason of Thrift
Contributions or Elective Deferrals under this Plan.
1.38 "Net Profits" shall mean current and accumulated earnings of the
Employer before Federal and State taxes and contributions to this and
any other qualified plan.
1.39 "Non-Highly Compensated Employee" shall mean an Employee of the
Employer who is neither a Highly Compensated Employee nor a Family
Member.
1.40 "Normal Retirement Age" shall mean the age specified in the Adoption
Agreement. Upon reaching his Normal Retirement Age, the Participant's
right to his retirement benefit shall be nonforfeitable,
notwithstanding the Plan's vesting schedule. In the event the
Employer imposes a mandatory normal retirement age, the Normal
Retirement Age
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<PAGE> 17
may not exceed such mandatory normal retirement age.
Notwithstanding any other provision of this Plan, the Employer, in
accordance with the provisions of the Age Discrimination in Employment
Act, shall have no right to compel a Participant to retire, except as
otherwise provided herein, if in the calendar year or the preceding
calendar year, the Employer has twenty (20) or more employees for each
work day in each of twenty (20) or more calendar weeks. The Employer
may retire a Participant who for the two (2) year period prior to
retirement is employed in a bona fide executive or high policy-making
position if (1) he has attained age sixty-five (65); (2) he has
attained his Normal Retirement Date; and (3) his annual retirement
benefit from the pension, profit sharing, savings or deferred
compensation plans maintained by the Employer equals, in the
aggregate, at least forty-four thousand dollars ($44,000). This
Section shall be deemed to be automatically amended to reflect any
subsequent Federal legislation or regulations.
1.41 "Owner-Employee" shall mean a sole proprietor or a partner who owns
more than ten percent (10%) of either the capital interest or profits
interest of a partnership.
1.42 "Participant" shall mean an Eligible Employee who enters the Plan
pursuant to Section 2.1 of the Plan.
(a) "Active Participant" shall mean a Participant who is credited
with one thousand (1,000) or more Hours of Service (or such
lesser number of Hours of Service specified in the Adoption
Agreement) in the Plan Year. Unless otherwise specified in
the Adoption Agreement, it is not necessary that the
Participant be employed on the last day of the Plan Year in
order to be deemed an Active Participant and share in the
Employer contribution, if any. If the elapsed time method of
crediting service is specified in the Adoption Agreement,
Active Participant shall include all Participants, unless
otherwise specified in the Adoption Agreement.
Notwithstanding the foregoing paragraph, if the Plan is a
standardized plan, "Active Participant" shall mean, for each
Plan Year beginning on or after January 1, 1990, each
Participant other than a Participant who is not employed on
the last day of the Plan Year and is credited with more than
500 Hours of Service in the Plan Year. If the elapsed time
method of crediting service is specified in the Adoption
Agreement, "Active Participant" shall mean all Participants.
If the elapsed time method of crediting Hours of Service is
specified in the Adoption Agreement, Active Participant shall
mean a Participant who is credited with three (3) consecutive
calendar months of service.
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<PAGE> 18
(b) "Eligible Participant" shall mean an Employee who is eligible
under the terms of the Plan to make Thrift Contributions,
Elective Deferrals or Elective Deferrals and Thrift
Contributions, combined ("Combined Contributions") made on his
behalf.
1.43 "Participating Employer" shall mean any Affiliated Employer which has
adopted the Plan in accordance with Section 16.5.
1.44 "Period of Severance" shall mean a continuous period of time during
which the Employee is not employed by the Employer. Such period
begins on the Employee's Severance from Service Date and ends on the
Employee's Re-Employment Commencement Date.
1.45 "Plan" shall mean this Prototype Plan, the Trust Agreement or
Custodial Agreement and the Adoption Agreement of the adopting
Employer, as from time to time amended.
1.46 "Plan Year" shall mean the calendar year, unless another twelve (12)
consecutive month period is specified in the Adoption Agreement.
1.47 "Prototype Plan" shall mean the basic plan document described herein.
1.48 "Qualified Matching Contributions" shall mean Employer contributions
to the Plan which are allocated to Participants' accounts by reason of
Elective Deferrals, which are at all times subject to the distribution
and nonforfeitability requirements of section 401(k) of the Code.
1.49 "Qualified Nonelective Contributions" shall mean Employer
contributions (other than Matching Contributions or Qualified Matching
Contributions) which are allocated to Eligible Participants' accounts,
which such Participants may not elect to receive in cash until
distributed from the Plan and, which are at all times subject to the
distribution and nonforfeitability requirements of section 401(k) of
the Code.
1.50 "ReEmployment Commencement Date" shall mean the first day on which the
Employee is credited with an Hour of Service for the performance of
duties after the first eligibility computation period in which the
Employee incurs a one (1) year Service Break.
In the case of any Participant who has a one (1) year Service Break,
Eligibility Year(s) of Service before such break will not be taken
into account until the Employee has completed one (1) Eligibility Year
of Service after returning to employment. Such Eligibility Year of
Service shall be measured by the twelve (12) consecutive month period
beginning on the Employee's Reemployment Commencement Date and, if
necessary, subsequent twelve (12) consecutive month periods beginning
on anniversaries
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<PAGE> 19
of the Re-Employment Commencement Date.
If a former Participant completes an Eligibility Year of Service in
accordance with this provision, such Participant's participation will
be reinstated as of the Re-Employment Commencement Date.
1.51 "Regular Account" shall mean the account to which Employer
contributions are credited with respect to the Dreyfus prototype money
purchase and target benefit plans (Plan Numbers 01001, 01004, and
01005).
1.52 "S-Corporation" shall mean an Employer who has made an election for
its taxable year of reference under section 1362(a) of the Code, or
any other applicable section pertaining thereto.
1.53 "Self-Employed Individual" shall mean an individual who has Earned
Income for the taxable year from the unincorporated trade, or business
or partnership with respect to which the Plan is established; also, an
individual who would have had Earned Income but for the fact such
trade, business or partnership had no net profits for the taxable
year.
1.54 "Service" shall mean any twelve (12) consecutive month period
identical to the Plan Year during which the Employee completes at
least one thousand (1,000) or more Hours of Service (or such lesser
number of Hours of Service specified in the Adoption Agreement).
Periods of time to be excluded, if any, shall be stipulated in the
Adoption Agreement.
In the case of Employees in the Maritime Industry, 125 days of service
shall be treated as 1,000 Hours of Service (or such lesser number of
hours of Service as specified in the Adoption Agreement).
Service will be credited in accordance with the rules set forth above
for any employment, for any period of time, for any Affiliated
Employer. Service will also be credited for any individual required
to be considered an Employee, for purposes of this Plan under section
414(n) or (o) of the Code, of the Employer or any Affiliated Employer.
If the elapsed time method of crediting service is specified in the
Adoption Agreement, an Employee shall receive credit for Service,
except for Service which may be disregarded under Sections 7.2(b), for
the aggregate of all time periods commencing on his Employment
Commencement Date or Re-Employment Commencement Date and ending on his
Severance from Service Date. An Employee shall also receive credit,
for vesting purposes, for any Period of Severance of less than twelve
(12) consecutive months. An Employee will receive a year of Service
for vesting purposes for each twelve (12) months of Service.
Fractional periods of a year shall be expressed in terms
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<PAGE> 20
of days.
1.55 "Service Break" shall mean:
(a) For purposes of calculating Eligibility Years of Service, any
twelve (12) consecutive month period commencing on an
Employee's Employment Commencement Date or anniversaries
thereof during which the Employee is credited with five
hundred (500) Hours of Service or less. In the case of
Employees in the Maritime Industry, 62 days of service or
less.
(b) For purposes of calculating years of Service, any Plan Year
during which the Employee is credited with five hundred (500)
Hours of Service or less, where such Service Break shall be
measured from the first day of such Plan Year. In the case of
Employees in the Maritime Industry, 62 days of service or
less.
(c) If the elapsed time method of crediting service is specified
in the Adoption Agreement, a Service Break shall mean a Period
of Severance of at least twelve (12) consecutive months;
provided, however, that in the case of an Employee absent for
maternity or paternity reasons (as defined in Section 1.35),
the Period of Severance shall not commence for this purpose
until the twenty-four (24) month anniversary of the first date
of such absence.
(d) A Service Break shall not be deemed to have occurred as a
result of absence due to service in the armed forces of the
United States, provided the Employee makes application for
resumption of work with the Employer following discharge,
within the time specified by then applicable laws.
1.56 "Severance from Service Date" shall mean the earlier of
(a) the date on which an Employee quits, retires, is discharged or
dies; or
(b) the twelve (12) month anniversary of the date an Employee is
first absent (with or without pay) for reason other than quit,
retirement, discharge or death (such as vacation, holiday,
sickness, disability, leave of absence or layoff).
1.57 Shareholder-Employee" shall mean a Participant who owns (or is
considered as owning) more than five percent (5%) of the outstanding
stock of an S-Corporation on any day during the taxable year of
reference of such S-Corporation. In determining the percent of a
Participant's ownership of the outstanding stock, the family
attribution rules of section 318(a)(1) of the Code, or any other
applicable section of the Code pertaining thereto shall apply.
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1.58 "Sponsor" shall mean The Dreyfus Corporation.
1.59 "Taxable Wage Base" shall mean, except for purposes of Article V, the
contribution and benefit base in effect under Section 230 of the
Social Security Act at the beginning of the Plan Year.
1.60 "Thrift Contributions" shall mean contributions made by a Participant
which are included in the Participant's gross income in the year in
which made.
1.61 "Total and Permanent Disability" shall mean the inability to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. The permanence
and degree of such impairment shall be supported by medical evidence
satisfactory to the Committee.
1.62 "Trustee" or "Custodian" shall mean the individual or individuals, or
institution appointed in the Adoption Agreement by the Employer to act
in accordance with the provisions of the Trust Agreement or Custodial
Agreement.
If the contributions will be made to a Custodian, references herein to
the "Trustee" shall be deemed to refer to the "Custodian" and the term
"Trust Fund" shall be deemed to refer to the "Custodial Account."
1.63 "Trust Agreement" or "Custodial Agreement" shall mean:
(a) for "Trust Agreement" shall mean the agreement between the
Employer and the Trustee if the Plan is established under
Dreyfus Standardized/Paired Prototype Money Purchase Plan No.
01001, Dreyfus Nonstandardized Prototype Profit Sharing Plan
No. 01002, Dreyfus Standardized/Paired Prototype Profit
Sharing Plan No. 01003, or Dreyfus Standardized/Paired
Prototype Target Benefit Pension Plan No. 01004.
(b) for "Custodial Agreement" shall mean the agreement between the
Employer and the Custodian under which the Plan is funded if
the Plan is established under Dreyfus Easy Standardized/Paired
Prototype Money Purchase Retirement Plan No. 01005 or Dreyfus
Easy Standardized/Paired Prototype Profit Sharing Retirement
Plan No. 01006. Such Plans are hereinafter referred to as
"Easy Retirement Plans."
1.64 "Valuation Date" shall mean the last day of the Plan Year and such
other dates as may be determined by the Committee.
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1.65 "Voluntary Contributions" shall mean contributions previously made by
a Participant which were included in the Participant's gross income in
the year in which made.
ARTICLE II.
PARTICIPATION
2.1 Membership
Each Eligible Employee shall become a Participant on the Effective
Date or the Entry Date coincident with or next following the
completion of the age and service requirements set forth in the
Adoption Agreement.
2.2 Excluded Employees
The Adoption Agreement may exclude Employees from participation in the
Plan based upon minimum age and service requirements or the inclusion
of such Employees in certain ineligible classifications.
In the event an Employee who is not a member of the eligible class of
Employees becomes a member of the eligible class, such Employee will
participate immediately if such Employee has satisfied the minimum age
and service requirements and would otherwise have previously become a
Participant.
In the event a Participant is no longer a member of an eligible class
of Employees and becomes ineligible to participate, but has not
incurred a Service Break, such Employee will participate immediately
upon returning to an eligible class of Employees. If such Participant
incurs a Service Break, eligibility to participate will be determined
under the rules of Section 1.24 of the Plan.
2.3 Reemployment
(a) A former Participant will become a Participant immediately
upon returning to the employ of the Employer if such former
Participant had a nonforfeitable right to all or a portion of
the account balance derived from Employer contributions at the
time of termination from service.
(b) A former Participant who did not have a nonforfeitable right
to any portion of the account balance derived from Employer
contributions at the time of termination from service will be
considered a new Employee, for eligibility purposes, if the
number of consecutive one (1) year Service Breaks equal or
exceed the greater
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<PAGE> 23
of five (5) or the aggregate number of years of Service before
such Service Breaks. If such former Participant's years of
Service before termination from service may not be disregarded
pursuant to the preceding sentence, such former Participant
shall participate immediately upon reemployment.
(c) Any former Employee who was never a Participant and is
reemployed as an Employee will be eligible to participate
subject to the provisions of Section 2.1.
2.4 Change in Employment Status
In the event that a Participant who was credited with a year of
Service for the preceding Plan Year, at the request of the Employer,
enters directly into the employ of any other business entity, such
Participant shall be deemed to be an Active Participant. If such
Participant returns to the employ of the Employer or becomes eligible
for benefits pursuant to Articles VIII or IX, without interruption of
employment with the Employer or other business entity, he shall be
deemed not to have had a Service Break for such period. However, if
such Participant does not immediately return to the employ of the
Employer upon his termination of employment with such other business
entity or upon recall by the Employer, he shall be deemed to have
terminated his employment for all purposes of the Plan as of the
Anniversary Date following the date of transfer.
2.5 Limitations on Participation of Owner-Employees
Notwithstanding the above, Plans which allow Owner-Employees to
participate must satisfy the following additional requirements:
(a) If this Plan provides contributions or benefits for one or
more Owner-Employees who control both the business for which
this Plan is established and one or more other trades or
businesses, this Plan and the plan established for other
trades or businesses must, when looked at as a single plan,
satisfy sections 401(a) and (d) of the Code for the Employees
of this and all other trades or businesses.
(b) If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or
businesses the employees of the other trades or businesses
must be included in a plan which satisfies sections 401(a) and
(d) of the Code and which provides contributions and benefits
not less favorable than provided for Owner-Employees under
this Plan.
(c) If an individual is covered as an Owner-Employee under the
plans of two or more trades or businesses which are not
controlled and the individual controls a trade or business,
then the contributions or benefits of the employees under the
plan of the trades or businesses which are controlled must be
as favorable as those
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<PAGE> 24
provided for him under the most favorable plan of the trade or
business which is not controlled.
For purposes of the preceding paragraphs, an Owner-Employee,
or two or more Owner-Employees, will be considered to control
a trade or business if the Owner-Employee, or two or more
Owner-Employees together:
(1) own the entire interest in an unincorporated trade or
business, or
(2) in the case of a partnership, own more than fifty
percent (50%) of either the capital interest or the
profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or
two or more Owner-Employees shall be treated as owning any
interest in a partnership which is owned, directly or
indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
ARTICLE III.
CONTRIBUTIONS AND CREDITS TO MONEY PURCHASE PLANS
(The provisions of this Article shall apply
only with respect to Money Purchase Plans)
3.1 Employer Contributions
For each Plan Year the Employer's contribution to the Fund shall be
determined in accordance with the Adoption Agreement. Such contribution
shall not exceed an amount equal to twenty-five percent (25%) of each
Participant's Compensation.
3.2 Forfeitures
Unless otherwise specified in the Adoption Agreement, any forfeitures
which occur will reduce Employer contributions for the next Plan Year.
If the Adoption Agreement specifies that forfeitures are to be
allocated to the Accounts of other Participants, the Plan shall
continue to be designed to qualify as a money purchase pension plan
for purposes of sections 401(a), 402, 412 and 417 of the Code.
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<PAGE> 25
3.3 Credit to Participants
(a) If the Plan is not integrated with Social Security, the
Employer's contribution (as specified in the Adoption
Agreement) for any Plan Year (and any forfeitures, if
forfeitures are allocated to Active Participants in accordance
with Section 3.2) shall be allocated to the Regular Account of
each Active Participant in the ratio in which each Active
Participant's Compensation for the Plan Year bears to that of
all Active Participants for such Plan Year.
(b) If the Plan is integrated with Social Security:
(i) Subject to the overall permitted disparity limits, if
under Article XIII, the Plan is Top-Heavy for the
Plan Year and the minimum Top-Heavy contribution is
made under the Plan, then Employer Discretionary
Contributions plus forfeitures shall be allocated to
the Account of each Participant who either completes
more than 500 Hours of Service during the Plan Year
or is employed on the last day of the Plan Year as
follows:
Step One: Contributions and forfeitures will
be allocated to each Participant's
Account in the ratio that each
Participant's total Compensation
bears to all Participants' total
Compensation, but not in excess of
3% of each Participant's
Compensation.
Step Two: Any contributions and forfeitures
remaining after the allocation in
Step One will be allocated to each
Participant's Account in the ratio
that each Participant's Compensation
for the Plan Year in excess of the
integration level bears to the
excess compensation of all
Participants, but not in excess of
3% of each Participant's
Compensation. For purposes of this
Step Two, in the case of any
Participant who has exceeded the
Cumulative Permitted Disparity Limit
described below, such Participant's
total Compensation for the Plan Year
will be taken into account.
Step Three: Any contributions and forfeitures
remaining after the allocation in
Step Two will be allocated to each
Participant's Account in the ratio
that the sum of each Participant's
total Compensation and Compensation
in excess of the Integration Level
bears to the sum of all
Participants' total Compensation and
Compensation in
19
<PAGE> 26
excess of the Integration Level;
however, the allocation cannot
exceed the product of (a) the
Permitted Disparity Percentage
specified in the Adoption Agreement
multiplied by (b) each Participant's
total Compensation and Compensation
in excess of the Integration Level.
For purposes of this Step Three, in
the case of any Participant who has
exceeded the Cumulative Permitted
Disparity Limit described below, two
times such Participant's total
Compensation for the Plan Year will
be taken into account.
Step Four: Any remaining Employer contributions
or forfeitures will be allocated to
each Participant's Account in the
ratio that each Participants's total
Compensation for the Plan Year bears
to all Participants' total
Compensation for that year.
The Integration Level shall be equal to the Taxable Wage Base
or such lesser amount elected by the Employer in the Adoption
Agreement.
(ii) Subject to the overall permitted disparity limits, if
the Plan is not Top Heavy for the Plan Year, Employer
Discretionary Contributions plus forfeitures shall be
allocated to the Account of each Participant who
either completes more than 500 Hours of Service
during the Plan Year or is employed on the last day
of the Plan Year as follows:
Step One: Contributions and forfeitures will
be allocated to each Participant's
Account in the ratio that the sum of
each Participant's total
Compensation and Compensation in
excess of the Integration Level
bears to the sum of all
Participants' total Compensation and
Compensation in excess of the
Integration Level; however, the
allocation cannot exceed the product
of (a) the Permitted Disparity
Percentage specified in the Adoption
Agreement multiplied by (b) each
Participant's total Compensation and
Compensation in excess of the
Integration Level. For purposes of
this Step One, in the case of any
Participant who has exceeded the
Cumulative Permitted Disparity Limit
described below, two times such
Participant's total Compensation for
the Plan Year will be taken into
account.
Step Two: Any remaining Employer contributions
or forfeitures will be allocated to
each Participant's Account in the
ratio that each Participants' total
Compensation for the Plan Year
20
<PAGE> 27
bears to all Participants' total
Compensation for that year.
The Integration Level shall be equal to the Taxable Wage Base
or such lesser amount elected by the Employer in the Adoption
Agreement.
Overall Permitted Disparity Limit
Annual Overall Permitted Disparity Limit: Notwithstanding
section 4.3(b)(i) and (ii) above, for any Play Year this Plan
benefits any Participant who benefits under another qualified
plan or simplified employee pension, as defined in section
408(k) of the Code, maintained by the Employer that provides
for permitted disparity (or imputes disparity), Employer
contributions and forfeitures will be allocated to the Account
of each Participant who either completes more than 500 Hours
of Service during the Plan Year or is employed on the last day
of the Plan Year in the ratio that such Participant's total
Compensation bears to the total Compensation of all
Participants.
Cumulative Permitted Disparity Limit: Effective for Plan
Years beginning on or after January 1, 1995, the Cumulative
Permitted Disparity Limit for a Participant is 35 total
cumulative permitted disparity years. Total cumulative
permitted years means the number of years credited to the
Participant for allocation or accrual purposes under this
Plan, any other qualified plan or simplified employer pension
plan (whether or not terminated) ever maintained by the
Employer. For purposes of determining the Participant's
cumulative permitted disparity limit, all years ending in the
same calendar year are treated as the same year. If the
Participant has not benefited under a defined benefit or
target benefit plan for any year beginning on or after January
1, 1994, the Participant has no cumulative disparity limit.
ARTICLE IV.
CONTRIBUTIONS AND CREDITS TO PROFIT SHARING PLANS
(The provisions of this Article shall apply only
with respect to Profit Sharing Plans)
4.1 Limits on Employer Contributions
Employer contributions for each Plan Year (including, if applicable,
Elective Deferrals) shall be determined in accordance with the
Adoption Agreement, but shall not exceed the maximum amount which
shall constitute an allowable deduction under section 404(a) of
21
<PAGE> 28
the Code. Unless otherwise specified in the Adoption Agreement,
Employer contributions may only be made out of Net Profits. If the
Adoption Agreement provides that one or more Employer contributions
may be made without regard to Net Profits, the Plan shall continue to
be designed to qualify as a profit sharing plan for purposes of the
Code.
4.2 Forfeitures
Unless otherwise specified in the Adoption Agreement, forfeitures, if
any, will be allocated to Participants' Accounts in the following
manner: Forfeitures of Employer Discretionary Contributions will be
allocated in the same manner as are such contributions. Forfeitures
of Matching Contributions will be allocated to the Matching
Contribution Account in the same manner as are such contributions.
Forfeitures of Matching Contributions that are forfeited to the extent
they relate to Excess Elective Deferrals, Excess Contributions or
Excess Aggregate Contributions will be allocated to the Matching
Contribution Account in the same manner as are such Matching
Contributions, except no such forfeitures shall be allocated to any
Highly Compensated Employee.
4.3 Employer Discretionary Contributions
The following provisions shall apply if the Employer has elected in
the Adoption Agreement to make Employer Discretionary Contributions.
(a) If the Plan is not integrated with Social Security, the
Employer Discretionary Contribution for any Plan Year (and any
forfeitures, if forfeitures are reallocated to Active
Participants in accordance with Section 4.2) shall be
allocated to the Employer Discretionary Contribution Account
established for each Active Participant in the ratio in which
each Active Participant's Compensation for the Plan Year bears
to that of all Active Participants for such Plan Year.
(b) If the Plan is integrated with Social Security:
(i) Subject to the overall permitted disparity limits,if
under Article XIII, the Plan is Top-Heavy for the
Plan Year and the minimum Top-Heavy contribution is
made under the Plan, then Employer Discretionary
Contributions plus forfeitures shall be allocated to
the Account of each Participant who either completes
more than 500 Hours of Service during the Plan Year
or is employed on the last day of the Plan Year as
follows:
Step One: Contributions and forfeitures will
be allocated to each Participant's
Account in the ratio that each
Participant's total Compensation
bears to all Participants' total
Compensation, but not in excess of
3% of each Participant's
Compensation.
22
<PAGE> 29
Step Two: Any contributions and forfeitures
remaining after the allocation in
Step One will be allocated to each
Participant's Account in the ratio
that each Participant's Compensation
for the Plan Year in excess of the
integration level bears to the
excess compensation of all
Participants, but not in excess of
3% of each Participant's
Compensation. For purposes of this
Step Two, in the case of any
Participant who has exceeded the
Cumulative Permitted Disparity Limit
described below, such Participant's
total Compensation for the Plan Year
will be taken into account.
Step Three: Any contributions and forfeitures
remaining after the allocation in
Step Two will be allocated to each
Participant's Account in the ratio
that the sum of each Participant's
total Compensation and Compensation
in excess of the Integration Level
bears to the sum of all
Participants' total Compensation and
Compensation in excess of the
Integration Level; however, the
allocation cannot exceed the product
of (a) the Permitted Disparity
Percentage specified in the Adoption
Agreement multiplied by (b) each
Participant's total Compensation and
Compensation in excess of the
Integration Level. For purposes of
this Step Three, in the case of any
Participant who has exceeded the
Cumulative Permitted Disparity Limit
described below, two times such
Participant's total Compensation for
the Plan Year will be taken into
account.
Step Four: Any remaining Employer contributions
or forfeitures will be allocated to
each Participant's Account in the
ratio that each Participants's total
Compensation for the Plan Year bears
to all Participants' total
Compensation for that year.
The Integration Level shall be equal to the Taxable Wage Base
or such lesser amount elected by the Employer in the Adoption
Agreement.
(ii) Subject to the overall permitted disparity limits,if
the Plan is not Top- Heavy for the Plan Year,
Employer Discretionary Contributions plus forfeitures
shall be allocated to the Account of each Participant
who either completes more than 500 Hours of Service
during the Plan Year or is employed on the last day
of the Plan Year as follows:
23
<PAGE> 30
Step One: Contributions and forfeitures will
be allocated to each Participant's
Account in the ratio that the sum of
each Participant's total
Compensation and Compensation in
excess of the Integration Level
bears to the sum of all
Participants' total Compensation and
Compensation in excess of the
Integration Level; however, the
allocation cannot exceed the product
of (a) the Permitted Disparity
Percentage specified in the Adoption
Agreement multiplied by (b) each
Participant's total Compensation and
Compensation in excess of the
Integration Level. For purposes of
this Step One, in the case of any
Participant who has exceeded the
Cumulative Permitted Disparity Limit
described below, two times such
Participant's total Compensation for
the Plan Year will be taken into
account.
Step Two: Any remaining Employer contributions
or forfeitures will be allocated to
each Participant's Account in the
ratio that each Participant's total
Compensation for the Plan Year bears
to all Participants' total
Compensation for that year.
The Integration Level shall be equal to the Taxable Wage Base
or such lesser amount elected by the Employer in the Adoption
Agreement.
Overall Permitted Disparity Limits
Annual Overall Permitted Disparity Limit: Notwithstanding
section 4.3(b)(i) and (ii) above, for any Plan Year this Plan
benefits any Participant who benefits under another qualified
plan or simplified employee pension, as defined in section
408(k) of the Code, maintained by the Employer that provides
for permitted disparity (or imputes disparity), Employer
contributions and forfeitures will be allocated to the Account
of each Participant who either completes more than 500 Hours
of Service during the Plan Year or who is employed on the last
day of the Plan Year in the ratio that such Participant's
total Compensation bears to the total Compensation of all
Participants.
Cumulative Permitted Disparity Limit: Effective for Plan
Years beginning on or after January 1, 1995, the Cumulative
Permitted Disparity Limit for a Participant is 35 total
cumulative permitted disparity years. Total cumulative
permitted years means the number of years credited to the
Participant for allocation or accrual purposes under this
Plan, any other qualified plan or simplified employer pension
plan (whether or not terminated) ever maintained by the
Employer. For purposes of determining the Participant's
cumulative permitted disparity limit, all years
24
<PAGE> 31
ending in the same calendar year are treated as the same year.
If the Participant has not benefited under a defined benefit
or target benefit plan for any year beginning on or after
January 1, 1994, the Participant has no cumulative disparity
limit.
4.4 401(k) Cash or Deferred Arrangements ("CODA")/Thrift Contributions
(1) Elective Deferrals
If elected in the Adoption Agreement, the Employer may make
contributions under a CODA.
(a) Allocation of Deferrals. The Employer shall
contribute and allocate to each Participant's
Elective Deferral Account an amount equal to the
amount of a Participant's Elective Deferrals.
(1) Elective Deferrals Pursuant to a Salary
Reduction Agreement. To the extent provided
in the Adoption Agreement, a Participant may
elect to have Elective Deferrals made under
this Plan. Elective Deferrals shall include
both single-sum and continuing contributions
made pursuant to a salary reduction
agreement.
(i) Commencement of Elective Deferrals.
A Participant shall be afforded a
reasonable period at least once each
calendar year, as specified in the
Adoption Agreement, to elect to
commence Elective Deferrals. Such
election shall become effective as
soon as administratively feasible,
but not before the time specified in
the Adoption Agreement.
(ii) Modification and Termination of
Elective Deferrals. A Participant's
election to commence Elective
Deferrals shall remain in effect
until modified or terminated. A
Participant shall be afforded a
reasonable period at least once each
calendar year, as specified in the
Adoption Agreement, to modify the
amount or frequency of his or her
Elective Deferrals. A Participant
may terminate his or her election to
make Elective Deferrals at any time.
(2) Cash bonuses. If permitted in the Adoption
Agreement, a Participant may also base
Elective Deferrals on cash bonuses that, at
the Participant's election, may be
contributed to the CODA or received by the
Participant in cash. A Participant shall be
afforded
25
<PAGE> 32
a reasonable period at least once a year to
elect to defer such amounts to the CODA.
Such election shall become effective as soon
as administratively feasible, but not before
the time specified in the Adoption Agreement.
(3) Elective Deferrals shall be contributed and
allocated to the Fund as soon as practicable
(but in no event later than 90 days)
following the close of the applicable pay
period.
(2) Thrift Contributions
Starting for Plan Year(s) beginning January 1, 1987,
if permitted under the Adoption Agreement,
Participants may make Thrift Contributions which
shall be allocated to a Thrift Account for each such
Participant.
(a) A Participant shall always be one hundred
percent (100%) vested in his Thrift Account.
(b) Unless specified otherwise in the Adoption
Agreement, Thrift Contributions shall take
effect on the Anniversary Date coincident
with or next following the Participant's
election to make Thrift Contributions.
Elections to change the amount of the Thrift
Contribution shall take effect on the Change
Date specified in the Adoption Agreement
which is coincident with or next following
the date the Participant's election is
received by the Committee. Notwithstanding
this provision, a Participant's revocation of
an election to make Thrift Contributions
shall take effect as soon as administratively
feasible.
(c) Thrift Contributions shall be made to the
Fund as soon as practicable (but in no event
later than 90 days) following the close of
the applicable pay period.
(d) Notwithstanding any other provisions of this
Section 4.4(2), distributions or withdrawals
from a Participant's Thrift Account shall be
made in accordance with the rules applicable
to Voluntary Contributions under Section 10.1
However, if the Employer has elected to make
Matching Contributions with respect to Thrift
Contributions, any Participant who withdraws
any amount from his Thrift Account, shall be
precluded from making Thrift Contributions
until the next permitted Change Date
specified in the Adoption Agreement which is
at least six (6) months after the date
26
<PAGE> 33
of withdrawal.
(e) Thrift Contributions shall be subject to the
Contribution Percentage tests and the rules
applicable to Excess Aggregate Contributions
set forth in Section 4.7.
(3) Matching Contributions
(a) If elected by the Employer in the Adoption
Agreement, the Employer will make Matching
Contributions to the Plan. The amount of
such Matching Contributions shall be
calculated by reference to each eligible
Participant's Elective Deferrals or Thrift
Contributions or Combined Contributions as
specified by the Employer in the Adoption
Agreement.
(b) Separate Account. Matching Contributions
shall be allocated to each eligible
Participant's Employer Matching Contribution
Account.
(c) Vesting. Matching Contributions will be
vested in accordance with the Employer's
election in the Adoption Agreement and the
terms of this plan. Notwithstanding anything
in the Plan to the contrary, Matching
Contributions shall be forfeited to the
extent they relate to Excess Elective
Deferrals, Excess Contributions or Excess
Aggregate Contributions, and shall not be
taken into account for purposes of Section
4.7(a).
(d) Forfeitures. Forfeitures of Matching
Contributions other than Excess Aggregate
Contributions shall be made in accordance
with the forfeiture provisions pursuant to
Section 4.2 of the Plan.
(e) Matching Contributions shall be subject to
the Contribution Percentage tests and the
rules applicable to Excess Aggregate
Contributions set forth in Section 4.7.
(4) Qualified Matching Contributions
(a) If elected by the Employer in the Adoption
Agreement, the Employer will make Qualified
Matching Contributions to the CODA. The
amount of such Qualified Matching
Contributions shall be calculated by
reference to each eligible Participant's
Elective Deferrals or the Elective Deferral
portion of Combined
27
<PAGE> 34
Contributions, as specified in the Adoption
Agreement.
(b) Separate Account. Qualified Matching
Contributions shall be allocated to each
Participant's Qualified Nonelective
Contribution Account.
(c) Vesting. Qualified Matching Contributions
shall be fully vested and nonforfeitable at
all times.
(d) Distributions. Qualified Matching
Contributions and income allocable thereto
shall be distributable only in accordance
with Section 4.10.
(5) Qualified Nonelective Contributions
(a) The Employer may elect to make Qualified
Nonelective Contributions under the Plan on
behalf of Employees as provided in the
Adoption Agreement.
The Qualified Nonelective Contributions will
be allocated to each eligible Participant's
Qualified Nonelective Contribution Account in
the ratio in which each eligible
Participant's Compensation for the Plan Year
bears to the total Compensation of all
eligible Participants for such Plan Year.
(b) Separate Account. Qualified Nonelective
Contributions shall be allocated to each
Eligible Participant's Qualified Nonelective
Contribution Account.
(c) Vesting. Qualified Nonelective Contributions
shall be fully vested and nonforfeitable at
all times.
(d) Distributions. Qualified Nonelective
Contributions and income allocable thereto
shall be distributable only in accordance
with Section 4.10.
4.5 Maximum Amount of Elective Deferrals
(a) General Rule. A Participant's Elective Deferrals are subject
to any limitations imposed in the Adoption Agreement and any
further limitations under the Plan. No Participant shall be
permitted to have Elective Deferrals made under this Plan or
any other CODA maintained by the Employer or an Affiliated
Employer,
28
<PAGE> 35
during any calendar year beginning after 1986, in excess of
the adjusted dollar limitation of section 402(g) of the Code.
Other dollar limitations may apply under section 402(g) of the
Code to the extent that a Participant makes Elective Deferrals
to arrangements other than CODAs (see also sections
402(h)(1)(B), 403(b), 457, and 501(c)(18) of the Code).
(b) Distribution of Excess Elective Deferrals. A Participant may
allocate to the Plan any Excess Deferrals made during a
calendar year by notifying the Committee on or before the date
specified in the Adoption Agreement of the amount of the
Excess Elective Deferrals to be assigned to the Plan. A
Participant shall be deemed to notify the Committee of any
Excess Elective Deferrals that arise by taking into account
only those Elective Deferrals made to this Plan and any other
plans of the Employer. Notwithstanding any other provision of
the Plan, Excess Elective Deferrals, plus any income and minus
any loss allocable thereto, shall be distributed no later than
April 15 to Participants to whose accounts Excess Elective
Deferrals were allocated for the preceding year and who claim
Excess Elective Deferrals for such taxable year no later than
the date specified in the Adoption Agreement.
(c) Determination of Income or Loss. Excess Elective Deferrals
shall be adjusted for income or loss for the taxable year.
Unless indicated otherwise by the Committee, the income or
loss allocable to Excess Elective Deferrals is the income or
loss allocable to the Participant's Elective Deferral Account
for the taxable year multiplied by a fraction, the numerator
of which is such Participant's Excess Elective Deferrals for
the year and the denominator is the Participant's account
balance attributable to Elective Deferrals without regard to
any income or loss occurring during such taxable year. If
the Committee selects another method in order to compute the
income or loss, the method selected must not violate the
requirements of Code section 401(a)(4) and must be used
consistently for all Plan participants and for all corrective
distributions under the Plan for the taxable year.
4.6 Average Actual Deferral Percentage Tests
(a) General Rule. The Average Actual Deferral Percentage for
Eligible Participants who are Highly Compensated Employees for
each Plan Year beginning on or after January 1, 1987 and the
Average Actual Deferral Percentage for Eligible Participants
who are Non-Highly Compensated Employees for the same Plan
Year must satisfy one of the following tests:
(1) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the
29
<PAGE> 36
Average Actual Deferral Percentage for Eligible
Participants who are Non-Highly Compensated Employees
for the Plan Year multiplied by 1.25;
or
(2) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the Average Actual
Deferral Percentage for Eligible Participants who are
Non-Highly Compensated Employees for the Plan Year
multiplied by 2.0, provided that the Average Actual
Deferral Percentage for Eligible Participants who are
Highly Compensated Employees does not exceed the
Average Actual Deferral Percentage for Eligible
Participants who are Non-Highly Compensated Employees
by more than two (2) percentage points.
(b) Special Rules.
(1) The Actual Deferral Percentage for
any Participant who is a Highly
Compensated Employee for the Plan
Year and who is eligible to have
Elective Deferrals (and, if
applicable, Qualified Nonelective
Contributions or Qualified Matching
Contributions, or both) allocated
for his account under two or more
CODAs, that are maintained by the
Employer, shall be determined as if
such Elective Deferrals (and, if
applicable, such Qualified
Nonelective Contributions and
Qualified Matching Contributions, or
both) were made under a single
arrangement. If a Highly
Compensated Employee participates in
two or more CODAs that have
different Plan Years, all CODAs
ending with or within the same
calendar year shall be treated as a
single arrangement.
(2) In the event that this Plan
satisfies the requirements of
sections 401(a)(4), 401(k) or 410(b)
of the Code only if aggregated with
one or more other plans, or if one
or more other plans satisfy the
requirements of such sections of the
Code only if aggregated with this
Plan, then this Section shall be
applied by determining the Actual
Deferral Percentage of Eligible
Participants as if all such plans
were a single plan. For Plan Years
beginning after December 31, 1989,
plans may be aggregated in order to
satisfy
30
<PAGE> 37
section 401(k) of the Code only if
they have the same Plan Year.
(3) For purposes of the Average Actual
Deferral Percentage of an Eligible
Participant who is a 5 percent owner
or one of the 10 most highly-paid
Highly Compensated Employees, the
Elective Deferrals (and, if
applicable, Qualified Nonelective
Contributions or Qualified Matching
Contributions, or both) and
Compensation of such Participant
shall include the Elective Deferrals
(and, if applicable, Qualified
Nonelective Contributions and
Qualified Matching Contributions or
both), and Compensation for the Plan
Year of Family Members. Family
Members, with respect to Highly
Compensated Employees, shall be
disregarded as separate employees in
determining the Actual Deferral
Percentage both for Eligible
Participants who are Non-Highly
Compensated Employees and for
Eligible Participants who are Highly
Compensated Employees.
(4) Notwithstanding anything in this
Plan to the contrary, Qualified
Nonelective Contributions and
Qualified Matching Contributions
used to meet the Average Actual
Deferral Percentage tests may be
made at any time before the last day
of the twelve (12) month period
immediately following the Plan Year
to which the contributions relate.
(5) The determination and treatment of
the Elective Deferrals, Qualified
Nonelective Contributions, Qualified
Matching Contributions and the
Actual Deferral Percentage of any
Eligible Participant shall satisfy
such other requirements as may be
prescribed by the Secretary of the
Treasury.
(6) The Employer shall maintain adequate
records to demonstrate compliance
with the Average Actual Deferral
Percentage tests, including the
extent to which Qualified
Nonelective and Qualified Matching
Contributions are taken into
account.
(c) Distribution of Excess Contributions.
Notwithstanding any other provision of the
Plan except Section 4.6(d) below, Excess
Contributions, plus any income and minus any
loss allocable
31
<PAGE> 38
thereto, shall be distributed no later than
the last day of each Plan Year to
Participants to whose accounts Excess
Contributions were allocated for the
preceding Plan Year. The amount of Excess
Contributions to be distributed shall be
reduced by the amount of any Excess
Contributions recharacterized in accordance
with Section 4.6(d) below. Distributions of
Excess Contributions shall be made to Highly
Compensated Employees on the basis of the
respective portions of the Excess
Contributions attributable to each Highly
Compensated Employee. Excess Contributions
shall be allocated to Participants who are
subject to the family member aggregation
rules of section 414(q)(6) of the Code in the
manner prescribed by the regulations. [If
such excess amounts are not distributed or
recharacterized (in accordance with Section
4.6(d) below) within 2 1/2 months after the
last day of the Plan Year in which such
excess amounts arose, then section 4979 of
the Code imposes a ten percent (10%) excise
tax on the Employer maintaining the Plan with
respect to such amounts.] Excess
Contributions of Participants who are subject
to the Family Member aggregation rules
described in Section 4.6(b)(3) shall be
allocated among the Family Members in
proportion to the Elective Deferrals (and
amounts treated as Elective Deferrals) of
each Family Member that is combined to
determine the combined Actual Deferral
Percentage.
(1) Determination of Income or Loss.
Excess Contributions shall be
adjusted for income or loss for the
Plan Year. Unless indicated
otherwise by the Committee, the
income or loss allocable to Excess
Contributions is the income or loss
allocable to the Participant's
Elective Deferrals (and, if
applicable, Qualified Nonelective
Contributions or Qualified Matching
Contributions or both) for the Plan
Year multiplied by a fraction, the
numerator of which is such
Participant's Excess Contributions
for the year and the denominator is
the Participant's account balance
attributable to Elective Deferrals
(and, if applicable, Qualified
Nonelective Contributions or
Qualified Matching Contributions or
both) without regard to any income
or loss occurring during such Plan
Year. If the Committee selects
another method in order to compute
the income or loss, the method
selected must not violate the
requirements of Code section
401(a)(4) and must be used
consistently for all Plan
participants and for all corrective
distributions under the
32
<PAGE> 39
Plan for the Plan Year.
(2) Accounting for Excess Contributions.
Excess Contributions shall be
distributed first from the
Participant's account balance
attributable to Elective Deferrals
and (to the extent used in the
Average Actual Deferral Percentage
tests) Qualified Matching
Contributions in proportion to the
Participant's Elective Deferrals and
Qualified Matching Contributions for
the Plan Year. Excess Contributions
shall be distributed from the
Participant's Qualified Nonelective
Contribution Account only to the
extent that such Excess
Contributions exceed the
Participant's account balance
attributable to Elective Deferrals
and Qualified Matching
Contributions.
(d) Recharacterization of Excess Contributions.
If the Plan provides for Thrift Contributions
by Participants and if permitted in the
Adoption Agreement, each Participant to whom
Excess Contributions are allocable may elect,
in lieu of distribution under Section 4.6(c)
above, that all or a portion of such Excess
Contributions be recharacterized as Thrift
Contributions no later than the later of (i)
2 1/2 months after the last day of the Plan
Year in which such excess amounts arose or
(ii) October 24, 1988. Recharacterization is
deemed to occur no earlier than the date the
last Highly Compensated Employee is informed
in writing of the amount recharacterized and
the consequences thereof.
In no event may the amount of Excess
Contributions recharacterized for any Plan
Year exceed the amount of Elective Deferrals
for such Plan Year. Excess Contributions may
not be recharacterized as Thrift
Contributions to the extent that, in
combination with the Thrift Contributions
actually made for the Plan Year, they exceed
the maximum amount of Thrift Contributions
permitted under the Plan (prior to the
application of the Contribution Percentage
tests of Section 4.7).
Recharacterized Excess Contributions shall be
treated as Thrift Contributions for purposes
of the Contribution Percentage tests of
Section 4.7.
However, no matching Employer contribution
shall be made with respect to Recharacterized
Contributions. In addition,
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<PAGE> 40
recharacterized Excess Contributions shall be
reported to the Internal Revenue Service and
the Participant as employee contributions in
accordance with such rules as the Internal
Revenue Service may prescribe and shall be
accounted for as Voluntary Contributions for
purposes of sections 72 and 6047 of the Code.
Recharacterized Excess Contributions will be
taxable to the Participant for the
Participant's taxable year in which the
Participant would have received them in cash.
Recharacterized Excess Contributions will be
taxable to the Participant for the
Participant's taxable year in which the
Participant would have received them in cash.
Recharacterized Excess Contributions shall
remain non-forfeitable and shall continue to
be treated for all other purposes, including
the limitations on distributions of section
401(k), the deduction limitations of section
404 of the Code, the contribution limitations
of section 415 of the Code and the top heavy
rules of section 416 of the Code, as Elective
Deferrals, except that Recharacterized Excess
Contributions which relate to Plan Years
beginning before January 1, 1989 shall be
treated as employee contributions for
purposes of section 401(k)(2) of the Code.
Recharacterized Excess Contributions shall be
allocated to the Participant's Elective
Deferral Account.
4.7 Average Contribution Percentage Tests
(a) General Rule. The Average Contribution Percentage for
Eligible Participants who are Highly Compensated Employees for
each Plan Year beginning on or after January 1, 1987 and the
Average Contribution Percentage for Eligible Participants who
are Non-Highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(1) The Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the Average
Contribution Percentage for Eligible Participants who
are Non-highly Compensated Employees for the Plan
Year multiplied by 1.25; or
(2) The Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the Average
Contribution Percentage for Eligible Participants who
are Non-highly Compensated Employees for the Plan
Year multiplied by two (2), provided that the Average
Contribution Percentage for Eligible Participants who
are Highly Compensated Employees does not exceed the
34
<PAGE> 41
Average Contribution Percentage for Eligible
Participants who are Non-highly Compensated Employees
by more than two (2) percentage points.
(b) Multiple Use Test.
(1) Effective for Plan Years beginning on or after
January 1, 1989, if one or more Highly Compensated
Employees participate in both a CODA and a plan
subject to the Average Contribution Percentage tests
maintained by the Employer and the sum of the Average
Actual Deferral Percentage and Average Contribution
Percentage of those Highly Compensated Employees
subject to either or both tests exceeds the
"Aggregate Limit" (as defined in (2) below), then the
Average Contribution Percentage of those Highly
Compensated Employees who also participate in a CODA
will be reduced (beginning with such Highly
Compensated Employee whose Contribution Percentage is
the highest) so that the limit is not exceeded. The
amount by which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced shall be
treated as an Excess Aggregate Contribution. The
Average Actual Deferral Percentage and Average
Contribution Percentage of the Highly Compensated
Employees are determined after any corrections
required to meet the Average Actual Deferral
Percentage and Average Contribution Percentage tests.
Notwithstanding the foregoing, the Multiple Use
limitations of Section 4.7 (b) do not apply if the
Average Actual Deferral Percentage of Eligible
Participants who are Highly Compensated Employees
does not exceed 1.25 multiplied by the Average Actual
Deferral Percentage of all other Eligible
Participants and the Average Contribution Percentage
of Eligible Participants who are Highly Compensated
Employees does not exceed 1.25 multiplied by the
Average Contribution Percentage of all other Eligible
Participants.
(2) For this purpose, "Aggregate Limit" shall mean the
greater of the limit produced by (A) or (B) below:
(A) the sum of (i) one hundred twenty-five
percent (125%) of the greater of the Average
Actual Deferral Percentage of the Non-Highly
Compensated Employees eligible to participate
in the CODA for the Plan Year or the Average
Contribution Percentage of the Non-Highly
Compensated Employees eligible to participate
under the Plan subject to section 401(m) of
the Code for the Plan Year beginning with or
within the Plan Year of the CODA, and (ii)
two (2) plus the lesser of such Average
Actual Deferral Percentage or Average
Contribution Percentage (however, this
35
<PAGE> 42
amount shall not exceed two hundred percent
(200%) of the lesser such Average Actual
Deferral Percentage or Average Contribution
Percentage).
(B) the sum of (i) one hundred twenty-five
percent (125%) of the lesser of the Average
Actual Deferral Percentage of the Non-Highly
Compensated Employees eligible to participate
in the CODA for the Plan Year or the Average
Contribution Percentage of the Non-Highly
Compensated Employees eligible to participate
under the Plan subject section 401(m) of the
Code for the Plan Year beginning with or
within the Plan Year of the CODA, and (ii)
two (2) plus the greater of such Average
Actual Deferral Percentage or Average
Contribution Percentage (however, this
amount shall not exceed two hundred percent
(200%) of the greater of such Average Actual
Deferral Percentage or Average Contribution
Percentage).
(c) Special Rules.
(1) For purposes of this Section 4.7, the Contribution
Percentage for any Participant who is a Highly
Compensated Employee and who is eligible to have
Contribution Percentage Amounts allocated to his
account under two or more Plans described in section
401(a) of the Code, or CODAs, that are maintained by
the Employer or an Affiliated Employer, shall be
determined as if the total of such Contribution
Percentage Amounts was made under each Plan. If a
Highly Compensated Employee participates in two or
more CODAs that have different Plan Years, all CODAs
ending with or within the same calendar year shall be
treated as a single arrangement.
(2) In the event that this Plan satisfies the
requirements of sections 401(a)(4), 401(m) or 410(b)
of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if
aggregated with this Plan, then this Section shall be
applied by determining the Contribution Percentages
of Participants as if all such plans were a single
plan. For Plan Years beginning after December 31,
1989, plans may be aggregated in order to satisfy
section 401(m) of the Code only if they have the same
Plan Year.
(3) For purposes of determining the Contribution
Percentage of an Eligible Participant who is a
5-percent owner or one of the 10 most highly-paid
Highly Compensated Employees, the Contribution
Percentage Amounts
36
<PAGE> 43
and Compensation of such Participant shall include
the Contribution Percentage Amounts and Compensation
for the Plan Year of Family Members. Family Members,
with respect to Highly Compensated Employees, shall
be disregarded as separate employees in determining
the Average Contribution Percentage both for Eligible
Participants who are Non-Highly Compensated Employees
and for Eligible Participants who are Highly
Compensated Employees.
(4) For purposes of the Contribution Percentage tests,
Voluntary Contributions and Thrift Contributions are
considered to have been made in the Plan Year in
which contributed to the Fund. Notwithstanding
anything in this Plan to the contrary, Matching
Contributions will be considered made for a Plan Year
if allocated to such year and made no later than the
end of the twelve (12) month period beginning on the
day after the close of the Plan Year.
(5) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such
other requirements as may be prescribed by the
Secretary of the Treasury.
(6) The Employer shall maintain adequate records to
demonstrate compliance with the Average Contribution
Percentage tests.
(d) Distribution of Excess Aggregate Contributions.
Notwithstanding any other provision of this Plan, Excess
Aggregate Contributions, plus any income and minus any loss
allocable thereto, shall be forfeited, if forfeitable, or if
not forfeitable, distributed no later than the last day of
each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan
Year. [If such excess amounts are distributed more than 2 1/2
months after the last day of the Plan Year in which such
excess amounts arose, then section 4979 of the Code imposes a
ten percent (10%) excise tax on the Employer maintaining the
Plan with respect to such amounts]. Excess Aggregate
Contributions of Participants who are subject to the Family
Member aggregation rules described in Section 4.7(c)(3) shall
be allocated among the Family Members in proportion to the
Thrift Contributions, Voluntary Contributions, and Matching
Contributions (or amounts treated as Matching Contributions)
of each Family Member that is combined to determine the
combined Actual Contribution Percentage.
(1) Determination of Income or Loss. The Excess
Aggregate Contributions shall be adjusted for income
or loss for the Plan Year. Unless indicated
otherwise by the Committee, the income or loss
allocable to Excess
37
<PAGE> 44
Aggregate Contributions is the income or loss
allocable to the Participant's Voluntary Contribution
Account, Thrift Account and Employer Matching
Contribution Account for the Plan Year multiplied by
a fraction, the numerator of which is such
Participant's Excess Aggregate Contributions for the
year and the denominator is the Participant's account
balance(s) attributable to Contribution Percentage
Amounts without regard to any income or loss
occurring during such Plan Year. If the Committee
selects another method in order to compute the income
or loss, the method selected must not violate the
requirements of Code section 401(a)(4) and must be
used consistently for all Plan participants and for
all corrective distributions under the Plan for the
Plan Year.
(2) Treatment of Forfeitures. Forfeitures of Excess
Aggregate Contributions shall be allocated to
Participants' Accounts or applied to reduce Employer
contributions, as elected by the Employer in the
Adoption Agreement, under Section 4.2. If
forfeitures are reallocated to the accounts of
Participants under Section 4.2, forfeitures of Excess
Aggregate Contributions shall be allocated in the
same manner as Matching Contributions, except that no
such forfeitures shall be allocated to any Highly
Compensated Employee.
(3) The determination of the Excess Aggregate
Contributions shall be made after first determining
the Excess Elective Deferrals pursuant to Section
4.5, and then determining the Excess Contributions
pursuant to Section 4.6.
4.8 Non-Hardship Withdrawals
(a) If Employer Discretionary Contributions are not integrated
with Social Security and a Participant's Employer
Discretionary Contributions and Matching Contribution Accounts
are 100% vested at the time of distribution, and if permitted
by the Adoption Agreement, a Participant may make withdrawals
from his Employer Discretionary Contributions and Matching
Contribution Accounts, for any reason, after attainment of age
fifty-nine and one-half (59 1/2).
(b) If permitted by the Adoption Agreement, a Participant may make
withdrawals from his Elective Deferral Account or Qualified
Nonelective Contribution Account, for any reason, after
attainment of age fifty-nine and one-half (59 1/2).
(c) A withdrawal under (a) or (b) above may be made at such time
as the Committee shall designate, but not more than quarterly
during a Plan Year provided that no single withdrawal shall be
less than five hundred dollars ($500) and a withdrawal
38
<PAGE> 45
by a Participant prior to his separation from service may
never exceed the smaller of the actual amount contributed to
the account or the adjusted value of the account.
(d) If the Plan is subject to the Automatic Annuity Rules of
Section 8.2, the written consent of the Participant's spouse
(consistent with the requirements for a Qualified Election
under Section 8.2) must be obtained with respect to any
withdrawal.
4.9 Distribution on Account of Financial Hardship
(a) If elected by the Employer in the Adoption Agreement,
distributions may be made from a Participant's Elective
Deferral, Qualified Nonelective Contribution Account, vested
portion of the Participant's Employer Discretionary
Contribution Account, or the vested portion of the Employer
Matching Contribution Account on account of financial hardship
if the distribution is necessary in light of the immediate and
heavy financial needs of the Participant.
Effective for Plan Years beginning on or after January 1,
1989, distributions on account of financial hardship with
respect to Elective Deferrals shall be limited to the amount
of the Participant's Elective Deferrals and income allocable
to such contributions credited to the Participant's Elective
Deferral Account as of the end of the last Plan Year ending
before July 1, 1989; neither the income allocable to Elective
Deferrals credited to a Participant's Elective Deferral
Account after the end of the last Plan Year ending before July
1, 1989 nor a Participant's Qualified Non-elective
Contribution Account shall be available for such
distributions.
(b) A distribution on account of financial hardship shall not
exceed the amount required to meet the immediate financial
need created by the hardship. With respect to the Elective
Deferral Account, and the Qualified Nonelective Contribution
Account, the determination of the existence of financial
hardship, and the amount required to meet the immediate
financial need created by the hardship shall be made by the
Committee, in accordance with the criteria specified in (c)
below.
With respect to the Employer Discretionary Contribution
Account and the Employer Matching Contribution Account, the
determination of the existence of financial hardship, and the
amount required to meet the immediate financial need created
by the hardship shall be made by the Committee, in accordance
with the criteria specified in (d) below.
If the Plan is subject to the Automatic Annuity Rules of
Section 8.2, the written
39
<PAGE> 46
consent of the Participant's spouse (consistent with the
requirements for a Qualified Election under Section 8.2) must
be obtained with respect to any withdrawal on account of
financial hardship.
The Committee shall establish written procedures specifying
the requirements for distributions on account of hardship,
including the forms to be submitted. Distributions of amounts
under this Section shall be made as soon as administratively
feasible.
(c) (1) Immediate and Heavy Financial Need. Hardship
distributions will be allowed only on account of:
(i) Expenses for medical care (described in
section 213(d) of the Code) incurred by the
Employee, the Employee's spouse, or any
dependents of the Employee (as defined in
section 152 of the Code) or necessary for
these persons to obtain such care;
(ii) Purchase (excluding mortgage payments) of a
principal residence for the Employee;
(iii) Payment of tuition and related educational
fees for the next 12 months of post-secondary
education for the Employee, the Employee's
spouse, children or dependents;
(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; or
(v) Such other financial need which the
Commissioner of Internal Revenue, through the
publication of revenue rulings, notices and
other documents of general applicability,
deems to be immediate and heavy.
(2) Distribution Necessary to Satisfy Financial Need. A
distribution shall not be made on account of a
financial need unless all of the following
requirements are satisfied:
(i) The distribution is not in excess of the
amount of the immediate and heavy financial
need (including amounts necessary to pay any
federal, state or local income taxes or
penalties reasonably anticipated to result
from the distribution) of the Employee;
40
<PAGE> 47
(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) Elective contributions and employee
contributions under this Plan and all other
qualified and nonqualified deferred
compensation plans maintained by the Employer
(other than mandatory contributions to a
defined benefit plan) shall be suspended for
at least twelve (12) months after receipt of
the hardship distribution. For this purpose,
the phrase "qualified and nonqualified
deferred compensation plans" includes stock
option, stock purchase and similar plans, and
cash or deferred arrangements under a
cafeteria plan, within the meaning of Section
125 of the Code. It does not include health
or welfare benefit plans; and
(iv) The Plan, and all other plans maintained by
the Employer, provide that 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) of the Code for such next
taxable year less the amount of such
Employee's elective contributions for the
taxable year of the hardship distribution.
An Employee shall not fail to be treated as
an Eligible Participant for purposes of the
Actual Deferral Percentage tests of Section
4.6 merely because his Elective Deferrals are
suspended in accordance with this provision.
(d) Immediate and Heavy Financial Need. The determination of
whether an immediate and heavy financial need exists shall be
made by the Committee in a uniform and nondiscriminatory
manner. The criteria may include the events described in
Section 4.9(c) of this plan.
(e) If a distribution is made pursuant to this Section when the
Participant has a nonforfeitable right to less than 100
percent of his Account balance derived from contributions made
by the Employer and the Participant may increase the
nonforfeitable percentage in the account:
(1) A separate account will be established for the
Participant's interest in the Plan as of the time of
the distribution, and
(2) At any relevant time the Participant's nonforfeitable
portion of the
41
<PAGE> 48
separate account will be equal to an amount ("X")
determined by the formula:
X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the nonforfeitable
percentage at the relevant time, D is the amount of the distribution
and R is the ratio of the Account balance AB at the relevant time to
the Account balance after distribution.
4.10 Special Distribution Rules
Except as provided in the Adoption Agreement, Elective
Deferrals, Qualified Nonelective Contributions, Qualified
Matching Contributions and income allocable thereto are not
distributable to the Participant, or the Participant's
Beneficiary, in accordance with the Participant's or
Beneficiary's election, earlier than upon separation from
service, death, or Total and Permanent Disability.
Distribution (if elected in the Adoption Agreement) upon
termination of the Plan without the establishment or
maintenance of a successor plan, the Employer's sale of
substantially all of the assets of a trade or business or the
sale of the Employer's interest in a subsidiary may only be
made, after March 31, 1988, in a lump sum distribution within
the meaning of section 401(k)(10)(B) of the Code.
Unless the Plan is a Profit Sharing Plan exempt from the
Automatic Annuity rules of Section 8.2 pursuant to Section
8.3, all distributions that may be made pursuant to one or
more of the foregoing distributable events are subject to the
spousal and Participant consent requirements contained in
sections 401(a)(11) and 417 of the Code.
ARTICLE V.
CONTRIBUTIONS AND CREDITS TO TARGET BENEFIT PLANS
[All provisions regarding target benefit plan
contributions are in the Adoption Agreement
for Dreyfus Standardized Prototype Target
Benefit Plan No. 01004].
42
<PAGE> 49
ARTICLE VI.
CONTRIBUTION AND ALLOCATION LIMITS
6.1 Timing of Contributions
Contributions under Sections 3.1, 4.1, 4.4(3), 4.4(4), 4.4(5) and 5.1
shall be made no later than the time prescribed by law (including any
extensions thereof) for filing the Employer's federal income tax
return for the Plan Year for which they are made.
6.2 Deductibility of Contributions
All contributions made by an Employer shall be conditioned upon their
deductibility by the Employer for income tax purposes; provided,
however, that no contributions shall be returned to an Employer except
as provided in Section 6.3.
6.3 Return of Employer Contributions
Notwithstanding any other provision of this Plan, contributions made
by an Employer may be returned to such Employer if:
(a) the contribution was made by reason of a mistake of fact and
is returned to the Employer within one year of the mistaken
contribution, or
(b) the contribution was conditioned upon its deductibility by the
Employer for income tax purposes, the deduction was disallowed
and the contribution is returned to the Employer within one
year after the disallowance of the deduction, or
(c) the contribution was conditioned upon initial qualification of
the Plan, the Plan was submitted to the Internal Revenue
Service for a determination as to its initial qualification
within the time prescribed by law for filing the Employer's
return for the taxable year in which the Plan was adopted or
such later date as the Secretary of the Treasury may
prescribe, the Plan received an adverse determination, and the
contribution is returned to the Employer within one year after
the date of the adverse determination.
Employer contributions may be returned even if such contributions have
been allocated to a Participant's Account which is fully or partially
nonforfeitable and it is necessary to adjust said Account to reflect
the return of the Employer contributions. The amount which may be
returned to the Employer is the excess of the amount contributed over
the amount that would have been contributed had there not occurred the
circumstances causing the excess. Earnings attributable to the excess
contribution may not be returned
43
<PAGE> 50
to the Employer, but losses thereto shall reduce the amount to be so
returned. Furthermore, if the withdrawal of the amount attributable
to the excess contribution would cause the balance of the individual
Account of any Participant to be reduced to less than the balance
which would have been in the Account had the excess amount not been
contributed, then the amount to be returned to the Employer shall be
limited to avoid such reduction.
6.4 Limitation on Allocations:
(a) If the Participant does not participate in, and has never
participated in another qualified plan or a welfare benefit
fund, as defined in section 419(e) of the Code, maintained by
the Employer, or an individual medical benefit account, as
defined in section 415(l)(2) of the Code, maintained by the
Employer, or a simplified employee pension, as defined in
section 408(k) of the Code, maintained by the Employer which
provides an Annual Addition, the amount of Annual Additions
which may be credited to the Participant's Accounts for any
Limitation Year will not exceed the lesser of the Maximum
Permissible Amount or any other limitation contained in this
Plan. If the Employer contribution that would otherwise be
contributed or allocated to the Participant's Accounts would
cause the Annual Additions for the Limitation Year to exceed
the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the
Limitation Year will equal the Maximum Permissible Amount.
(b) Prior to the determination of the Participant's actual
Compensation for a Limitation Year, the Maximum Permissible
Amount may be determined on the basis of the Participant's
estimated annual compensation for such Limitation Year. Such
estimated annual compensation shall be determined on a
reasonable basis and shall be uniformly determined for all
Participants similarly situated.
(c) As soon as administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such
Limitation Year shall be determined on the basis of the
Participant's actual Compensation for such Limitation Year.
(d) If, pursuant to Subsection (c) above or as a result of the
allocation of forfeitures, there is an Excess Amount with
respect to a Participant for a Limitation Year, such Excess
Amount shall be disposed of as follows:
(1) First, any deferrals made pursuant to a salary
reduction agreement or other deferral mechanism and
Thrift/Voluntary Employee contributions, to the
extent that the return would reduce the Excess
Amount, shall be returned to the Participant.
44
<PAGE> 51
(2) Unless otherwise specified in the Adoption Agreement,
if after the application of paragraph (1) an Excess
Amount still exists, and the Participant is covered
by the Plan at the end of the Limitation Year, the
Excess Amount in the Participant's Accounts will 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.
(3) If after the application of paragraph (1) an Excess
Amount still exists, and the Participant is not
covered by the Plan at the end of the Limitation
Year, the Excess Amount will be held unallocated in a
suspense account. The suspense account will be
applied to reduce future Employer contributions
(including allocation of any forfeitures) for all
remaining Participants in the next Limitation Year,
and each succeeding Limitation Year if necessary;
(4) If a suspense account is in existence at any time
during the 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.
(e) Subsections (e), (f), (g), (h), (i) and (j) apply if, in
addition to this Plan, the Participant is covered under
another qualified master or prototype defined contribution
plan maintained by the Employer or a welfare benefit fund, as
defined in section 419(e) of the Code, maintained by the
Employer or an individual medical benefit account, as defined
in section 415(l)(2) of the Code, maintained by the Employer,
or a simplified employee pension maintained by the Employer
which provides an Annual Addition, during any Limitation Year.
The Annual Additions which may be credited to a Participant's
Accounts under this Plan for any such Limitation Year will not
exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to a Participant's account under the other
qualified master or prototype defined contribution plans,
welfare benefit funds, individual medical accounts, and
simplified employee pensions for the same Limitation Year. If
the Annual Additions with respect to the Participant under
other qualified master or prototype defined contribution
plans, welfare benefit funds, individual medical accounts,
and simplified employee pensions maintained by the Employer
are less than the Maximum Permissible Amount and the Employer
contribution that would otherwise be contributed or allocated
to the
45
<PAGE> 52
Participant's Accounts under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation,
the amount contributed or allocated will be reduced so that
the Annual Additions under such plans and welfare benefit
funds for the Limitation Year will equal the Maximum
Permissible Amount. If the Annual Additions with respect to
the Participant under such other qualified master or prototype
defined contribution plans, and welfare benefit funds,
individual medical accounts, and simplified employee pensions
in the aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or allocated
to the Participant's Accounts under this Plan for the
Limitation Year.
(f) Prior to determining the Participant's actual Compensation for
the Limitation Year, the Employer may determine the Maximum
Permissible Amount based on the Participant's estimated annual
compensation in the manner described in Subsection (b).
(g) As soon as administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such
Limitation Year shall be determined on the basis of the
Participant's actual Compensation for such Limitation Year.
(h) If pursuant to Subsection (g) above or as a result of the
allocation of forfeitures, a Participant's Annual Additions
under this Plan and all such other plans result in an Excess
Amount for a Limitation Year, the Excess Amount will be deemed
to consist of the Annual Additions last allocated, except that
Annual Additions attributable to a simplified employee pension
will be deemed to have been allocated first, followed by
Annual Additions to a welfare benefit fund or individual
medical account, regardless of the actual allocation date.
(i) If an Excess Amount was allocated to a Participant on an
allocation date of this Plan which coincides with an
allocation date of another plan, the Excess Amount attributed
to this Plan will be the product of:
(1) the total Excess Amount allocated as of such date,
times,
(2) the ratio of (A) the Annual Additions allocated to
the Participant for the Limitation Year as of such
date under this Plan, to (B) the total Annual
Additions allocated to the Participant for the
Limitation Year as of such date under this Plan and
all other qualified Master and Prototype defined
contribution plans.
(j) Any Excess Amounts attributed to this Plan shall be disposed
of as provided in Subsection (d).
46
<PAGE> 53
(k) If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a
Master or Prototype plan, Annual Additions which may be
credited to the Participant's Accounts under this Plan for any
Limitation Year will be limited in accordance with Subsections
(e), (f), (g), (h), (i) and (j) as though the other plan were
a Master or Prototype plan unless the Employer provides other
limitations in the Adoption Agreement.
(l) If the Employer maintains, or at any time maintained, a
qualified defined benefit plan (other than the Sponsor's
paired plan number 02001, covering any Participant in this
Plan, the sum of the Participant's Defined Benefit Fraction
and Defined Contribution Fraction will not exceed one (1.0) in
any Limitation Year. Unless the Employer elects otherwise in
the Adoption Agreement, this limitation will be met by
freezing or reducing the rate of benefit accrual under the
qualified defined benefit plan.
(m) For purposes of this Section 6.4, the following definitions
shall apply:
(1) "Annual Additions" shall mean the sum of the
following credited to a Participant's account for the
Limitation Year:
(A) All Employer contributions,
(B) All forfeitures, and
(C) All Employee contributions.
All excess deferrals as described in section 402(g)
of the Code, all excess contributions as defined in
section 401(k)(8)(B) of the Code, (including amounts
recharacterized), and all excess aggregate
contributions as defined in section 401(m)(6)(B) of
the Code, regardless of whether such amounts are
distributed or forfeited, shall continue to be
treated as Annual Additions.
For purposes of the above, amounts reapplied to
reduce Employer contributions under Subsections (d)
and (j) shall also be included as Annual Additions.
Amounts allocated, after March 31, 1984, to an
individual medical benefit account, as defined in
section 415(l)(2) of the Code, which is part of a
pension or annuity plan maintained by the Employer,
are treated as Annual Additions to a defined
contribution plan. Also, amounts derived from
contributions paid or accrued after December 31,
1985, in taxable
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<PAGE> 54
years ending after such date, which are attributable
to post-retirement medical benefits allocated to the
separate account of a Key Employee, as defined in
section 419A(d)(3) of the Code, under a welfare
benefit fund, as defined in section 419(e) of the
Code, maintained by the Employer, are treated as
Annual Additions to a defined contribution plan, and
allocations under a simplified employee pension.
(2) Unless specified otherwise in the Adoption Agreement, for
purposes of this Section, Compensation shall have the same
meaning as described in Section 1.15 of the Plan. One of the
following definitions of Compensation may be elected by the
employer in the Adoption Agreement.
(1) Information required to be reported under
section 6041, 6051, and 6052, (Wages, Tips
and Other Compensation Box on Form W-2).
Compensation defined as wages as defined in
section 3401(a) and all other payments of
compensation to an employee by the employer
(in the course of the employer's trade or
business) for which the employer is required
to furnish the employee a written statement
under section 6041(d) and 6051(a)(3) of the
Code. Compensation must be determined
without regard to any rules under section
3401(a) that limit the remuneration included
in wages based on the nature or location of
the employment or the services performed
(such as the exception for agricultural labor
in section 3401(a)(2)).
(2) Section 3401(a) wages. Compensation is
defined as wages within the meaning of
section 3401(a) for the purposes of income
tax withholding at the source but determined
without regard to any rules that limit the
remuneration included in wages based on the
nature or location of the employment or the
services performed (such as the exception for
agricultural labor in section 3401(a)(2).
(3) 415 safe-harbor compensation. Compensation
is defined as wages, salaries, and fees for
professional services and other amounts
received (without regard to whether or not an
amount is paid in cash) for personal services
actually rendered int he course of employment
with the employer maintaining the plan to the
extent that the amounts are includable in
gross income (including, but not limited to,
commissions paid salesmen, compensation for
services on the basis of percentage of
profits, commissions on insurance premiums,
tips, bonuses, fringe benefits, and
reimbursements or other expense allowances
under a nonaccountable plan (as
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<PAGE> 55
described in 1.62-2(c)), and excluding the
following:
(a) Employer contributions to a plan of
deferred compensation which are not
includable in the employee's gross
income for the taxable year in which
contributed, or employer
contributions under a simplified
employee pension plan to the extent
such contributions are deductible by
the employee, or any distributions
from a plan of deferred
compensation;
(b) Amounts realized from the exercise
of a non-qualified stock option, or
when restricted stock (or property)
held by the employee either becomes
freely transferable or is no longer
subject to a substantial risk of
forfeiture;
(c) Amounts realized from the sale,
exchange or other disposition of
stock acquired under a qualified
stock option; and
(d) Other amounts which received special
tax benefits, or contributions made
by the employer (whether or not
under a salary reduction agreement)
towards the purchase of an annuity
contract described in section 403(b)
of the Code (whether or not the
contributions are actually
excludable from the gross income of
the employee).
For any self-employed individual compensation
will mean earned income.
For limitation years beginning after December 31,
1991, for purposes of applying the limitations of
this article, compensation for a limitation year is
the compensation actually paid or made available
during such limitation year.
Notwithstanding the preceding sentence, compensation
for a participant in a defined contribution plan who
is permanently and totally disabled (as defined in
section 22(e)(3) of the Internal Revenue Code) is the
compensation such participant would have received for
the limitation year if the participant had been paid
at the rate of compensation paid immediately before
becoming permanently and totally disabled; such
imputed compensation for the disabled participant may
be taken into account only if the participant is not
a highly compensated employee (as
49
<PAGE> 56
defined in section 414(q) of the Code) and
contributions made on behalf of such participant are
nonforfeitable when made.
(3) "Defined Benefit Fraction" shall mean a
fraction, the numerator of which is the sum
of the Participant's Projected Annual
Benefits under all the defined benefit plans
(whether or not terminated) maintained by the
Employer, and the denominator of which is the
lesser of one hundred twenty-five percent
(125%) of the dollar limitation determined
for the Limitation Year under sections 415(b)
and (d) of the Code or one hundred forty
percent (140%) of the Highest Average
Compensation (which shall mean the average
compensation for the three consecutive years
of Service with the Employer that produces
the highest average), including any
adjustments under section 415(b) of the Code.
A year of Service with the Employer is the
twelve (12) consecutive month period defined
in Section 1.54 of the Plan.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first
Limitation Year beginning after December 31, 1986, in
one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than
one hundred twenty five percent (125%) of the sum of
the annual benefits under such plans which the
Participant had accrued as of the close of the last
Limitation Year beginning before January 1, 1987,
disregarding any changes in the terms and conditions
of the Plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the
requirements of section 415 of the Code for all
Limitation Years beginning before January 1, 1987.
(4) "Defined Contribution Fraction" shall mean a
fraction, the numerator of which is the sum of the
Annual Additions to the Participant's Account under
all the defined contribution plans (whether or not
terminated) maintained by the Employer for the
current and all prior Limitation Years (including the
Annual Additions attributable to the Participant's
nondeductible Voluntary Contributions to all defined
benefit plans, whether or not terminated, maintained
by the Employer and the Annual Additions attributable
to all welfare benefit funds, as defined in section
419(e) of the Code, and individual medical benefit
accounts as defined in section 415(l)(2) of the Code,
and simplified employee pensions, maintained by the
Employer) and the denominator of which is the sum of
the Maximum Aggregate Amounts for the current and all
prior Limitation
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<PAGE> 57
Years of Service with the Employer (regardless of
whether a defined contribution plan was maintained by
the Employer). The Maximum Aggregate Amount in any
Limitation Year is the lesser of one hundred
twenty-five percent (125%) of the dollar limitation
in effect under section 415(c)(1)(A) of the Code or
thirty-five percent (35%) of the Participant's
Compensation for such year.
If the Employee was a Participant as of the end of
the first day of the first Limitation Year beginning
after December 31, 1986, in one or more defined
contribution plans maintained by the Employer which
were in existence on May 6, 1986, the numerator of
this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would
otherwise exceed one (1.0) under the terms of this
Plan. Under the adjustment, an amount equal to the
product of (A) the excess of the sum of the fractions
over one (1.0) times (B) the denominator of this
fraction, will be permanently subtracted from the
numerator of this fraction. The adjustment is
calculated as of the end of the last Limitation Year
beginning before January 1, 1987, and disregarding
any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the section 415
limitation applicable to the first Limitation Year
beginning on or after January 1, 1987.
The Annual Additions for any Limitation Year
beginning before January 1, 1987 shall not be
recomputed to treat all Employee contributions as
Annual Additions.
(5) "Employer" shall mean the Employer that adopts this
Plan and all members of a controlled group of
corporations (as defined in section 414(b) of the
Code and as modified by section 415(h) of the Code)
which includes the Employer; any trade or business
(whether or not incorporated) which is under common
control (as defined in section 414(c) and as modified
by section 415(h) of the Code) with the Employer; any
organization (whether or not incorporated) which is a
member of an affiliated service group (as defined in
section 414(m)); and any other entity required to be
aggregated with the Employer under Section 414(o) of
the Code.
(6) "Excess Amount" shall mean the excess of the
Participant's Annual Additions for the Limitation
Year over the Maximum Permissible Amount.
(7) "Limitation Year" shall mean the calendar year,
unless another twelve
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<PAGE> 58
(12) consecutive month period is elected in the
Adoption Agreement. All qualified plans maintained
by the Employer must use the same Limitation Year.
If the Limitation Year is changed by amendment, the
new Limitation Year must begin on a date within the
Limitation Year in which the amendment is made.
(8) "Master or Prototype Plan" shall mean a plan the form
of which is the subject of a favorable opinion letter
from the Internal Revenue Service.
(9) "Maximum Permissible Amount" shall mean the lesser of:
(A) thirty-thousand dollars ($30,000) (or, if
greater, one-fourth (1/4th) of the defined
benefit dollar limitation set forth in
section 415(b)(1) of the Code as in effect
for the Limitation Year), or
(B) twenty-five percent (25%) of the
Participant's Compensation for the Limitation
Year.
The compensation limitation referred to in paragraph
(B) above shall not apply to any contribution for
medical benefits (within the meaning of section 401(h)
or section 419A(f)(2) of the Code) which is otherwise
treated as an Annual Addition under section 415(l)(1)
or 419A(d)(2) of the Code.
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different
twelve (12) consecutive month period, the Maximum
Permissible Amount will not exceed the defined
contribution dollar limitation set forth in paragraph
(A) above multiplied by the following fraction:
Number of Months in the Short Limitation Year
---------------------------------------------
12
(10) "Projected Annual Benefit" shall mean the annual
retirement benefit (adjusted to an actuarial
equivalent straight life annuity if such benefit is
expressed in a form other than a straight life
annuity or Qualified Joint and Survivor Annuity) to
which the Participant would be entitled under the
terms of the Plan assuming:
(A) The Participant will continue employment
until the Normal Retirement Date under the
Plan (or current date, if later) and
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<PAGE> 59
(B) the Participant's Compensation for the
current Limitation Year and all other
relevant factors used to determine benefits
under the Plan will remain constant for all
future Limitation Years.
6.5 Separate Accounts
The Committee shall maintain the following separate Accounts, as are
applicable, with respect to each Participant:
(a) a Regular Account (as described in Article III),
(b) an Elective Deferral Account (as described in Article IV),
(c) a Qualified Nonelective Contribution Account (as described in
Article IV),
(d) a Thrift Account (as described in Article IV),
(e) a Matching Contribution Account (as described in Article IV),
(f) a Voluntary Account (as described in Article X),
(g) a Voluntary Tax-Deductible Account (as described in Article X),
(h) a Rollover Account (as described in Article X),
(i) an Employer Discretionary Contribution Account (as described
in Article IV), and
(j) a Transfer Account (as described in Article X).
Each such Account shall be credited with the applicable contributions,
forfeitures, earnings losses, expenses, and distributions. The
maintenance of separate Accounts is only for accounting purposes and a
segregation of the Trust Fund to each Account shall not be required.
6.6 Valuation
(a) Except as otherwise provided in subsection (b) below, or as
directed by the Committee subject to approval by the Trustee,
the assets of the Trust Fund shall be valued at their current
fair market value as of each Valuation Date, and the earnings
and losses of the Trust Fund since the immediately preceding
Valuation Date shall be allocated to the separate Accounts of
all Participants and former Participants under the Plan in the
ratio that the fair market value of each such
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<PAGE> 60
Account as of the immediately preceding Valuation Date,
reduced by any distributions or withdrawals therefrom since
such preceding Valuation Date, bears to the total fair market
value of all separate Accounts as of the immediately preceding
Valuation Date, reduced by any distributions or withdrawals
therefrom since such preceding Valuation Date; provided,
however, that if Participant-directed investments have been
elected in the Adoption Agreement, the earnings and losses of
each separate Account shall be allocated solely to such
Account.
Notwithstanding any other provision of the Plan, the Committee
may, in its sole discretion, on any date other than the last
day of the Plan Year, determine the value of an Account. If
such a determination is made, the date of such determination
shall be considered to be a Valuation Date.
(b) If the plan is an Easy Retirement Plan, the dividends, capital
gain distributions, and other earnings or losses received on
any share or unit of a regulated investment company or
collective investment fund, or on any other investment, that
is specifically credited to a Participant's separate Accounts
under the Plan and/or held under the Custodial Agreement shall
be allocated to such separate Accounts and, in the absence of
investment directions to the contrary, immediately reinvested,
to the extent practicable, in additional shares or units of
such regulated investment company or collective investment
fund, or in such other investments.
6.7 Segregation of Former Participant's Account
The Committee may segregate any portion of a former Participant's
account balance which is retained in the Fund after his death or
separation from service in an interest-bearing account and debited or
credited only with income and charges attributable directly.
ARTICLE VII.
VESTING
7.1 Vested Interest
Each Participant shall at all times have a fully vested interest in
his Elective Deferral Account, Qualified Nonelective Account,
Voluntary Account, Voluntary Tax-Deductible Account and Thrift
Account. Each Participant's Regular Account, Employer Discretionary
Contribution Account, and Employer Matching Contribution Account shall
54
<PAGE> 61
vest in accordance with the vesting schedule elected in the Adoption
Agreement.
If a Participant is not already fully vested in his Regular Account,
Employer Discretionary Contribution Account, and Employer Matching
Contributions Account, he shall become so upon reaching Normal
Retirement Age or Early Retirement Age, or upon his death or Total and
Permanent Disability.
7.2 Vesting of a Participant
Except in the case of Plans subject to full and immediate vesting, a
Participant's vested amount shall be calculated by multiplying his
Regular Account balance, Employer Discretionary Contribution Account
balance, and Employer Matching Contribution Account balance, if any,
as determined on the Valuation Date following his termination of
employment by his vested interest as determined under Section 7.1.
In order to determine the vested interest of a Participant after a
Service Break, the following rules shall apply:
(a) Subject to (b) below, a former Participant who had a
nonforfeitable right to all or a portion of the account
balance derived from Employer contributions at the time of the
Participant's termination will receive credit for all years of
Service prior to a Service Break if the Participant completes
a year of Service after returning to the employ of the
Employer.
(b) In the case of a Participant who have five (5) or more
consecutive one (1) year Service Breaks, all Service after
such Service Breaks will be disregarded for the purpose of
vesting the Employer-derived account balance that accrued
before such Service Breaks. Such Participants' pre-Service
Break Service will count in vesting the post-Service Break
Employer-derived account balance only if (1) such Participant
has any nonforfeitable interest in the account balance
attributable to Employer contributions at the time of
separation from service, or (2) upon returning to service the
number of consecutive one (1) year Service Breaks is less than
the number of years of Service. Separate accounts will be
maintained for the Participant's pre-Service Break and
post-Service Break Employer-derived account balance. Both
accounts will share in the earnings and losses of the Fund.
7.3 Amendment of Vesting Provisions
No amendment to the vesting provisions pursuant to Section 7.1 shall
deprive a Participant of his nonforfeitable rights to benefits accrued
to the date of the amendment. Further, if the vesting provisions of
the Plan are amended, or the Plan is amended in any way that directly
or indirectly affects computation of a Participant's nonforfeitable
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<PAGE> 62
percentage or if the Plan is deemed amended by an automatic change to
or from a top-heavy vesting schedule, each Participant with at least
three (3) years of Service may elect, within a reasonable period after
the adoption of the amendment, to have his nonforfeitable percentage
computed under the Plan without regard to such amendment. For
Participants who do not have at least one Hour of Service in any Plan
Year beginning on or after January 1, 1989, the preceding sentence
shall be applied by substituting "five (5) years of Service" for
"three (3) years of Service." The period during which the election
may be made shall commence with the date the amendment is adopted and
shall end on the later of (1) sixty (60) days after the amendment is
adopted; (2) sixty (60) days after the amendment becomes effective; or
(3) sixty (60) days after the Participant is issued written notice of
the amendment by the Employer or Committee.
7.4 Forfeitures
(a) If a Participant terminates employment with the Employer and
the value of the Participant's vested account balance derived
from Employer and Employee contributions (other than
accumulated deductible employee contributions) is not greater
than $3,500, the Employee shall receive a distribution of the
value of the entire vested portion of such account balance,
and the nonvested portion will be treated as a forfeiture.
For purposes of this Section 7.4, if the value of a
Participant's vested account balance is zero, the Participant
shall be deemed to have received a distribution of such vested
account balance. A Participant's vested account balance shall
not include Voluntary Tax-Deductible Contributions for Plan
Years beginning before January 1, 1989.
(b) If a Participant terminates employment with the Employer, and
elects (with his or her spouse's consent) in accordance with
Article VIII to receive the value of his or her vested account
balance, the nonvested portion will be treated as a
forfeiture. If the Participant elects to have distributed
less than the entire vested portion of the account balance
derived from Employer contributions, the part of the nonvested
portion that will be treated as a forfeiture is the total
nonvested portion multiplied by a fraction, the numerator of
which is the amount of the distribution attributable to
Employer contributions and the denominator of which is the
total value of the vested Employer derived account balance.
(c) If a Participant terminates employment with the Employer but
does not receive a distribution described in (a) or (b) above,
the non-vested portion of his account balance will be treated
as a forfeiture upon the occurrence of a Service Break of five
(5) consecutive years.
(d) If a Participant who receives a distribution pursuant to this
Section 7.4 resumes employment, the Participant's
Employer-derived account balance will be restored
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<PAGE> 63
to the amount on the date of distribution if the Participant
repays to the Plan the full amount of the distribution
attributable to Employer contributions before the earlier of
(i) five (5) years after the Participant's Re-Employment
Commencement Date or (ii) the date the Participant incurs five
(5) consecutive one (1) year Service Breaks following the date
of distribution. If a Participant is deemed to receive a
distribution pursuant to this Section, and the Participant
resumes employment covered under this Plan before the date the
Participant incurs five (5) consecutive one year Service
Breaks, upon the reemployment of such Participant, the
Employer-derived account balance of the Participant will be
restored to the amount on the date of such deemed
distribution.
ARTICLE VIII.
BENEFITS ON RETIREMENT AND SEPARATION FROM SERVICE
8.1 Commencement of Benefits
(a) Any Participant who terminates employment with the Employer
for any reason (including Total and Permanent Disability as
defined in Section 1.61 of the Plan) shall be entitled to
receive the value of the vested portion of his Accounts
(determined as of the Valuation Date coincident with or
immediately subsequent to his termination with employment) as
soon as administratively feasible after the date of his
termination of employment. If the value of the Employee's
vested account balance derived from Employer and Employee
contributions (excluding, for Plan Years beginning before
January 1, 1989, accumulated Voluntary Tax-Deductible
Contributions) is greater than (or at the time of any prior
distribution was greater than) $3,500, then no such amount
shall be distributed prior to Normal Retirement Age (or age
sixty-two (62), if later) unless the Participant consents to
the distribution. If the Plan is subject to the Automatic
Annuity rules of Section 8.2, then the consent of the
Participant's spouse shall also be required to a distribution
in any form other than a Qualified Joint and Survivor Annuity
(as defined in Section 8.2).
In the case of the Dreyfus Easy Retirement Plans (Plan Numbers
01005, and 01006), Participants who attain the Plan's Normal
Retirement Age shall be entitled to receive the value of the
vested portion of their Accounts. With respect to the Dreyfus
standardized and non-standardized prototype profit-sharing
plans (Plan Numbers 01002 and 01003) if permitted under the
Adoption Agreement, Participants who attain the Plan's Normal
Retirement Age shall be entitled to receive the value of the
vested portion of their Accounts.
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The Committee shall provide the Participant with a written
explanation of the material features and relative values of
the optional forms of benefit available under the Plan. Such
notice shall also notify the Participant of the right to defer
distribution until a future date specified by the Participant
(not permitted in the case of the Dreyfus Easy Retirement
Plans -- Plan Numbers 01005 and 01006) or until Normal
Retirement Age (or age sixty-two (62), if later), and if the
Plan is subject to the Automatic Annuity Rules of Section 8.2,
shall be provided during the period beginning ninety (90) days
before and ending thirty (30) days before the Annuity Starting
Date.
(b) If the value of the Participant's vested account balance
derived from Employer and Employee contributions (excluding,
for Plan Years beginning before January 1, 1989, accumulated
Voluntary Tax-Deductible Contributions) is not greater than
$3,500, the Employee shall receive a distribution of the value
of the entire vested portion of such account balance.
However, no such distribution shall be made after the Annuity
Starting Date unless the Participant and his or her spouse (or
the Participant's surviving spouse) consent in writing to such
distribution.
(c) Unless the Participant elects otherwise, distribution of
benefits shall commence no later than the sixtieth (60th) day
after the close of the Plan Year in which the latest of the
following events occurs:
(i) the Participant reaches his Normal Retirement Age (or
age sixty-five (65), if earlier),
(ii) the tenth (10th) anniversary of the year in which the
Participant commenced participation in the Plan, or
(iii) the Participant terminates employment with the
Employer.
The failure of a Participant or surviving spouse to consent to
a distribution shall be deemed to be an election to defer
commencement of benefit distributions sufficient to satisfy
this Section.
(d) Neither the consent of the Participant nor the Participant's
spouse shall be required to the extent a distribution is
necessary to satisfy section 401(a)(9) or section 415 of the
Code.
(e) This Article applies to distribution made on or after January
1, 1993. Notwithstanding any provision of the plan to the
contrary that would otherwise limit a distributee's election
under this Article, a distributee may elect, at the time and
in the manner prescribed by the Committee, to have any portion
of an
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<PAGE> 65
eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct
rollover.
Definitions:
(i) Eligible rollover distribution: An eligible
rollover distribution is any distribution of
all or any portion of the balance to the
credit of the distributee, except that an
eligible rollover distribution does not
include: any distribution that is one of a
series of substantially equal periodic
payments (not less frequently than annually)
made for the life (or life expectancy) of the
distributee or the joint lives (or joint life
expectancies) of the distributee and the
distributee's designated beneficiary, or for
a specified period of ten years or more; any
distribution to the extent such distribution
is required under 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).
(ii) Eligible retirement plan: An eligible
retirement plan is an individual retirement
account described in section 408(a) of the
Code, an individual retirement annuity
described in section 408(b) of the Code, an
annuity plan described in section 402(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.
(iii) Distributee: A distributee includes an
Employee or former Employee. In addition,
the Employee's or former Employee's surviving
spouse and the Employee's or former
Employee's spouse or former spouse who is the
alternate payee under a qualified domestic
relations order as defined in section 414(p)
of the Code, are distributees with regard to
the interest of the spouse or former spouse.
(iv) Direct rollover: A direct rollover is a
payment by the Plan to the eligible
retirement plan specified by the distributee.
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8.2 Automatic Annuity Requirements
The provisions of Section 8.2 through 8.4 shall take precedence over
any conflicting provisions in this Plan.
(a) Applicability of Automatic Annuity Requirements.
Except as provided in Section 8.3 with respect to certain
Profit Sharing Plans, the provisions of this Section shall
apply to any Participant who is credited with at least one (1)
Hour of Service with the Employer on or after August 23, 1984,
and such other Participants as provided in Section 8.4.
Qualified Joint and Survivor Annuity. Unless an optional form
of benefit is selected pursuant to a Qualified Election within
the ninety (90) day period ending on the Annuity Starting
Date, a married Participant's Vested Account Balance shall be
paid in the form of a Qualified Joint and Survivor Annuity and
an unmarried Participant's Vested Account Balance will be paid
in the form of a life annuity. The Participant may elect to
have such annuity distributed upon attainment of the Earliest
Retirement Age.
Qualified Pre-Retirement Survivor Annuity. Unless an optional
form of benefit has been selected within the Election Period
pursuant to a Qualified Election, if a Participant dies before
the Annuity Starting Date then the Participant's Vested
Account Balance shall be paid in the form of a Qualified
Pre-Retirement Survivor Annuity. The Surviving Spouse may
elect to elect to have such annuity distributed within a
reasonable period after the Participant's death.
Definitions. For purposes of this Section 8.2, the following
words shall have the following meanings:
(i) "Earliest Retirement Age" shall mean the earliest
date on which, under the Plan, the Participant could
elect to receive retirement benefits.
(ii) "Election Period" shall mean 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. If a
Participant separates from service prior to the first
day of the Plan Year in which age thirty-five (35) is
attained, with respect to benefits accrued prior to
separation, the Election Period shall begin on the
date of separation.
A Participant who will not yet attain age thirty-five
(35) as of the end of any current Plan Year may make
a special Qualified Election to waive the
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Qualified Pre-Retirement Survivor Annuity for the
period beginning on the date of such election and
ending on the first day of the plan year in which the
Participant will attain age thirty-five (35). Such
election shall not be valid unless the Participant
receives a written explanation of the Qualified
Pre-Retirement Survivor Annuity in such terms as are
comparable to the explanation required under Section
8.2(b). Qualified Pre-Retirement Survivor Annuity
coverage will be automatically reinstated as of the
first day of the Plan Year in which the Participant
attains age thirty-five (35). Any new waiver on or
after such date shall be subject to the full
requirements of this Section 8.2.
(iii) "Qualified Election" shall mean a Participant's
waiver of a Qualified Joint and Survivor Annuity or a
Qualified Pre-Retirement Survivor Annuity. Any such
waiver must be consented to in writing by the
Participant's Spouse. The Spouse's consent must:
designate a specific Beneficiary (including any class
of Beneficiaries or any contingent Beneficiaries,
which may not be changed without spousal consent) or
expressly permits designations by the Participant
without any further spousal consent; acknowledge the
effect of the election; and be witnessed by a member
of the Committee or a Notary Public. Additionally, a
Participant's waiver of the Qualified Joint and
Survivor Annuity shall not be effective unless the
election designates a form of benefit payment which
may not be changed without spousal consent (or the
Spouse expressly permits designations by the
Participant without any further spousal consent).
Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of a
member of the Committee that there is no Spouse or
the Spouse cannot be located, a waiver will be deemed
a Qualified Election. Any spousal consent (or deemed
spousal consent) obtained under this provision will
be valid only with respect to such Spouse. A consent
that permits designations by the Participant without
further consent by such Spouse must acknowledge that
the Spouse has the right to limit consent to a
specific Beneficiary and, where applicable, a
specific form of benefit, and that the Spouse
voluntarily elects to relinquish either or both of
such rights. A revocation of a prior waiver may be
made by a Participant without the consent of the
Spouse at any time before the commencement of
benefits. The number of revocations shall not be
limited. No consent obtained under this provision
shall be valid unless the Participant has received
notice as provided in paragraph (b) below.
(iv) "Qualified Joint and Survivor Annuity" shall mean an
immediate annuity for the life of the Participant
with a survivor annuity for the life of the Spouse
which is fifty percent (50%) of the amount of the
annuity which
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is payable during the joint lives of the Participant
and the Spouse and which is the amount of benefit
which can be purchased with the Participant's Vested
Account Balance.
(v) "Qualified Pre-Retirement Survivor Annuity" shall
mean an annuity for the life of the Participant's
surviving spouse purchased with the Participant's
Vested Account Balance.
(vi) "Spouse (Surviving Spouse)" shall mean the Spouse or
Surviving Spouse of the Participant, provided that
former spouse will be treated as the Spouse or
Surviving Spouse to the extent provided under a
qualified domestic relations order as described in
section 414(p) of the Code.
(vii) "Vested Account Balance" shall mean the aggregate
value of the Participant's vested account balance
derived from employer and employee contributions
(including rollovers), whether vested before or upon
death, including the proceeds of insurance contracts,
if any, on the Participant's life. The provisions of
this Section 8.2 shall apply to a Participant who is
vested in amounts attributable to employer
contributions, employee contributions (or both) at
the time of death or distribution.
(b) Notice Requirements
Qualified Joint and Survivor Annuity. In the case of a
Qualified Joint and Survivor Annuity as described above, the
Committee shall provide each Participant within the period
beginning ninety (90) days before and ending thirty (30) days
before the Annuity Starting Date a written explanation of:
(i) the terms and conditions of a Qualified Joint and Survivor
Annuity; (ii) the Participant's right to make and the effect
of an election to waive the Qualified Joint and Survivor
Annuity form of benefit; (iii) the rights of a Participant's
Spouse; (iv) the right to make, and the effect of, a
revocation of a previous election to waive the Qualified Joint
and Survivor Annuity; and (v) the right, if any, to defer the
commencement of benefits.
Qualified Pre-Retirement Survivor Annuity. In the case of a
Qualified Pre-Retirement Survivor Annuity as described above,
the Committee shall provide each Participant with a written
explanation of the Qualified Pre-Retirement Survivor Annuity
in such terms and in such manner as would be comparable to the
explanation provided for meeting the requirements applicable
to explaining a Qualified Joint and Survivor Annuity within
whichever of the following periods ends last:
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(i) The period beginning on the first day of the Plan
Year in which the Participant attains age thirty-two
(32) and ending with the close of the Plan Year
preceding the Plan Year in which the Participant
attains age thirty-five (35).
(ii) A reasonable period ending after a Participant enters
the Plan.
(iii) A reasonable period ending after Section 8.3 ceases
to apply to a Profit Sharing Plan.
(iv) A reasonable period after Section 8.2 first applies
to a Participant.
Notwithstanding the foregoing, notice must be provided within
a reasonable period ending after termination of employment in
the case of a Participant who terminates employment before
attaining age 35.
For purposes of applying the preceding paragraph, a reasonable
period ending after the enumerated events described in (ii),
(iii), and (iv) is the end of the two-year period beginning
one year prior to the date the applicable event occurs, and
ending one year after that date. In the case of a Participant
who terminates employment before the Plan Year in which age
thirty-five (35) is attained, notice shall be provided within
the two-year period beginning one year prior to termination
and ending one year after termination. If such a Participant
thereafter returns to employment with the Employer, the
applicable period for such Participant shall be redetermined.
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 in given,
provided that:
(1) 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
(2) the participant, after receiving the
notice,affirmatively elects a distribution.
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8.3 Profit Sharing Plans: Exception from Automatic Annuity Requirements
Unless otherwise specified in the Adoption Agreement, the provisions
of Sections 8.2 and 8.4 shall be inoperative in the case of a Profit
Sharing Plan if the following two (2) conditions are met: (1) the
Participant cannot or does not elect payments in the form of a life
annuity, and (2) on the death of the Participant, the Participant's
Vested Account Balance (as defined in Section 8.2) will be paid to the
Participant's Surviving Spouse (as defined in Section 8.2), but if
there is no Surviving Spouse, or, if the Surviving Spouse has already
consented in a manner conforming to a Qualified Election to a waiver
of a Qualified Pre-Retirement Survivor Annuity (under Section 8.2),
then to the Participant's Beneficiary.
However, the foregoing shall not be operative with respect to a
Participant if it is determined that this Profit Sharing Plan is a
direct or indirect transferee of a defined benefit plan, money
purchase pension plan (including a target benefit plan), stock bonus,
or profit-sharing plan which is subject to the survivor annuity
requirements of sections 401(a)(11) and 417 of the Code.
8.4 Transitional Rules Applicable to Joint and Survivor Annuities
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed
by Section 8.2 must be give the opportunity to elect to have
Section 8.2 apply if such Participant is credited with at
least one (1) Hour of Service under this Plan or a predecessor
plan in a Plan Year beginning on or after January 1, 1976, and
such Participant had at least ten (10) years of Service when
he or she terminated employment.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one (1) Hour of Service
under this Plan or a predecessor Plan on or after September 2,
1974, and who is not otherwise credited with any Service in a
Plan Year beginning on or after January 1, 1976, must be given
the opportunity to have his or her benefits paid in the manner
set forth in paragraph (d) below.
(c) The respective opportunities to elect (as described in
paragraphs (a) and (b) above) must be afforded to the
appropriate Participants during the period commencing on
August 23, 1984, and ending on the date benefits would
otherwise commence to said Participants.
(d) Any Participant who has elected pursuant to paragraph (b)
above and any Participant who does not elect under paragraph
(a) above or who meets the requirements of paragraph (a)
except that such Participant does not have at least
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ten (10) Years of Service when he or she terminates
employment, shall have his or her benefits distributed in
accordance with all of the following requirements if benefits
would have been payable in the form of a life annuity:
(1) Qualified Joint and Survivor Annuity. If benefits in
the form of a life annuity become payable to a
married Participant who:
(i) Begins to receive payments under the Plan on
or after his Normal Retirement Age; or
(ii) Dies on or after his Normal Retirement Age
while still working for the Employer; or
(iii) Begins to receive payments on or after the
Qualified Early Retirement Age; or
(iv) Separates from service on or after attaining
his Normal Retirement Age (or the Qualified
Early Retirement Age) and after satisfying
the eligibility requirements for the payment
of benefits under the Plan and thereafter
dies before beginning to receive such
benefits;
then such benefits shall be received under this Plan
in the form of a Qualified Joint and Survivor
Annuity, unless the Participant, with the consent of
his or her Spouse, has elected otherwise during the
election period which shall begin at least six (6)
months before the Participant attains the Qualified
Early Retirement Age (or the date the Participant
begins participation in the Plan, if later) and end
not more than ninety (90) days before the
commencement of benefits. Any election hereunder
shall be in writing and may be changed by the
Participant, with the consent of his or her Spouse,
at any time during the election period.
(2) Election of Early Survivor Annuity. A Participant
who is employed after attaining the Qualified Early
Retirement Age will be given the opportunity to
elect, during the election period, to have a survivor
annuity payable on death. If the Participant elects
the survivor annuity, payments under such annuity
must not be less than the payments which would have
been made to the Spouse under the Qualified Joint and
Survivor Annuity if the Participant had retired on
the day before his or her death. Any election under
this provision will be in writing and may be changed
by the Participant with the consent of his or her
Spouse at any time. The election period begins on
the later of (1) the ninetieth (90) day before the
Participant attains the Qualified Early Retirement
Age, or (2) the date on
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which participation begins, and ends on the date the
Participant terminates employment.
Notwithstanding the availability of the elections set
forth above, in the event a Participant dies after
attaining the Qualified Early Retirement Age while
still employed by the Employer, but before reaching
the Normal Retirement Date, the Participant's account
balance as of the date of death shall be paid to the
Participant's Spouse. If the Participant is not
married, such benefit shall be paid to the
Participant's designated Beneficiary or, if none, to
the Participant's estate.
(3) Definitions. For purpose of this Section 8.4, the
following words shall have the following meanings:
(i) "Qualified Joint and Survivor Annuity" shall
mean an annuity for the life of the
Participant with a survivor annuity for the
life of his Spouse as described in Section
8.2.
(ii) "Qualified Early Retirement Age" shall mean
the latest of:
(A) the earliest date, under the Plan,
on which the Participant may elect
to receive retirement benefits;
(B) the first day of the one hundred
twentieth (120th) month beginning
before the Participant reaches his
Normal Retirement Age; or
(C) the date on which the Participant
begins participation.
8.5 Required Payment of Benefits
(a) General Rule. Except as otherwise provided in Section 8.2,
the requirements of this Section shall apply to any
distribution of a Participant's account balance and will 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.
All distributions required under this Section 8.5 shall be
determined and made in accordance with the Income Tax
Regulations under section 401(a)(9) of the Code, including the
minimum distribution incidental benefit requirement of section
1.401(a)(9)-2 of the regulations.
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(b) Limits on Distribution Periods. Distributions, if not made in
a single-sum, may only be made over one of the following
periods (or a combination thereof): (1) the life of the
Participant; (2) the life of the Participant and a Designated
Beneficiary; (3) a period certain not extending beyond the
life expectancy of the Participant; or (4) a period certain
not extending beyond the joint and last survivor expectancy of
the Participant and a Designated Beneficiary.
Any annuity contract purchased and distributed to a
Participant or his Beneficiary shall comply with the
requirements of this Plan, and shall be made and endorsed as
nontransferable.
(c) Minimum Amounts to be Distributed. If the Participant's
entire interest is to be distributed in other than a single
sum, the following minimum distribution rules shall apply on
or after the Required Beginning Date:
(i) If a Participant's benefit is to be distributed over
(1) a period not extending beyond the life expectancy
of the Participant or the joint life and last
survivor expectancy of the Participant and the
Participant's Designated Beneficiary or (2) a period
not extending beyond the life expectancy of the
Designated Beneficiary, the amount required to be
distributed for each calendar year, beginning with
distributions for the first distribution calendar
year, must at least equal the quotient obtained by
dividing the Participant's benefit by the applicable
life expectancy.
(ii) For calendar years beginning before January 1, 1989,
if the Participant's spouse is not the designated
Beneficiary, the method of distribution selected must
assure that at least fifty percent (50%) of the
present value of the amount available for
distribution is paid within the life expectancy of
the Participant.
(iii) For calendar years beginning after December 31, 1988,
the amount to be distributed each year, beginning
with distributions for the first distribution
calendar year shall not be less than the quotient
obtained by dividing the Participant's benefit by the
lesser of (1) the applicable life expectancy or (2)
if the Participant's spouse is not the Designated
Beneficiary, the applicable divisor determined from
the table set forth in Q&A-4 of section 1.401
(a)(9)-2 of the Income Tax Regulations.
Distributions after the death of the Participant
shall be distributed using the applicable life
expectancy in paragraph (c)(i) above as the relevant
divisor without regard to section 1.401 (a)(9)-2 of
the regulations.
(iv) The minimum distribution required for the
Participant's first distribution
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calendar year must be made on or before the
Participant's Required Beginning Date. The minimum
distribution for other calendar years, including the
minimum distribution for the distribution calendar
year in which the Employee's Required Beginning Date
occurs, must be made on or before December 31 of that
distribution calendar year.
(d) Commencement of Death Benefits. Upon the death of the
Participant, the following distribution provisions shall take
effect:
(i) If the Participant dies after distribution of his or
her interest has commenced, the remaining portion of
such interest will continue to be distributed at
least as rapidly as under the method of distribution
being used prior to the Participant's death. Upon
the death of the Participant's Beneficiary, any
undistributed interest shall be paid to the legal
representatives of such Beneficiary's estate.
(ii) If the Participant dies before distribution of his or
her interest commences, the Participant's entire
interest will be distributed by December 31 of the
calendar year in which falls the fifth anniversary of
the Participant's death except to the extent that an
election is made to receive distributions in
accordance with (1) or (2) below:
(1) If any portion of the Participant's interest
is payable to a Designated Beneficiary,
distributions may be made in substantially
equal installments over the life or over a
period certain not greater than the life
expectancy of the Designated Beneficiary
commencing on or before December 31 of the
calendar year immediately following the
calendar year in which the Participant died.
(2) If the Designated Beneficiary is the
Participant's surviving spouse, the date
distributions are required to begin in
accordance with (1) above shall not be
earlier than the later of (A) December 31 of
the calendar year immediately following the
calendar year in which the Participant died
and (B) December 31 of the calendar year in
which the Participant would have attained age
seventy and one-half (70 1/2).
If the Participant has not made an election pursuant to this
Section 8.5(d)(ii) by the time of his or her death, the
Participant's Designated Beneficiary must elect the method of
distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would be required to
begin under this Section, or (2) December 31 of the calendar
year which contains the fifth
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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.
(iii) For purposes of Section 8.5(d)(ii) above, if the
surviving spouse dies after the Participant, but
before payments to such spouse begin, the provisions
of Section 8.5(d)(ii), with the exception of
subparagraph (2) thereof, shall be applied as if the
surviving spouse were the Participant.
(iv) For purposes of this Section 8.5(d), any amount paid
to a child of the Participant will be treated as if
it had been paid to the Surviving Spouse if the
amount becomes payable to the Surviving Spouse when
the child reaches the age of majority.
(v) For purposes of this Section 8.5(d), distribution of
a Participant's interest is considered to begin on
the Participant's Required Beginning Date (or, if
Section 8.5(d)(iii) above is applicable, the date
distribution is required to begin to the surviving
spouse pursuant to Section 8.5(d)(ii) above). If
distribution in the form of an annuity irrevocably
commences to the Participant before the Required
Beginning Date, the date distribution is considered
to begin is the date distribution actually commences.
(e) Definitions. For purposes of this Section 8.5, the following
terms shall have the following meanings:
(i) Designated Beneficiary. The individual who is
designated as the Beneficiary under the Plan in
accordance with section 401(a)(9) of the Code and the
regulations thereunder.
(ii) Distribution calendar year. A calendar year for
which a minimum distribution is required. For
distributions beginning before the Participant's
death, the first distribution calendar year is the
calendar year immediately preceding the calendar year
which contains the Participant's Required Beginning
Date. For distributions beginning after the
Participant's death, the first distribution calendar
year is the calendar year in which distributions are
required to begin pursuant to Section 8.5(d) above.
(iii) Life expectancy. The life expectancy (or joint and
last survivor expectancy) calculated using the
attained age of the Participant (or
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Designated Beneficiary) as of the Participant's (or
Designated Beneficiary's) birthday in the applicable
calendar year. The applicable calendar year shall be
the first distribution calendar year. If annuity
payments commerce before the required beginning date,
the applicable calendar year is the year such
payments commence. Life expectancy and joint and
last survivor expectancy are computed by use of the
expected return multiples in Tables V and VI of
section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or
spouse, in the case of distributions described in
Section 8.5(d)(ii)(2) above) by the time
distributions are required to begin, life
expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant
(or spouse) and shall apply to all subsequent years.
The life expectancy of a nonspouse Beneficiary may
not be recalculated.
(iv) Participant's benefit.
(A) The account balance as of the last valuation
date in the calendar year immediately
preceding the distribution calendar year
(valuation calendar year) increased by the
amount of any contributions or forfeitures
allocated to the account balance as of dates
in the valuation calendar year after the
valuation date and decreased by distributions
made in the valuation calendar year after the
valuation date.
(B) Exception for second distribution calendar
year. For purposes of paragraph (A) above,
if any portion of the minimum distribution
for the first distribution calendar year is
made in the second distribution calendar year
on or before the Required Beginning Date, the
amount of the minimum distribution made in
the second distribution calendar year shall
be treated as if it had been made in the
immediately preceding distribution calendar
year.
(v) Required Beginning Date.
(A) General rule. The Required Beginning Date of
a Participant is the first day of April of
the calendar year following the calendar year
in which the Participant attains age seventy
and one-half (70 1/2).
(B) Transitional rules. The Required Beginning
Date of a Participant who attains age seventy
and one-half (70 1/2) before January 1,
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1988, shall be determined in accordance with
(1) or (2) below:
(1) Non-Five percent owners. The
Required Beginning Date of a
Participant who is not a five
percent (5%) owner is the first day
of April of the calendar year
following the calendar year in which
the later of retirement or
attainment of age of seventy and
one-half (70 1/2) occurs.
(2) Five percent 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 first day of April
following the later of:
(i) the calendar year in which the
Participant attains age
seventy and one-half (70 1/2),
or
(ii) the earlier of the calendar
year with or within which ends
the plan year in which the
Participant becomes a five
percent (5%) owner, or the
calendar year in which the
Participant retires.
The Required Beginning Date of a
Participant who is not a five percent
(5%) owner who attains age seventy
and one-half (70 1/2) during 1988 and
who has not retired as of January 1,
1989, is April 1, 1990.
(C) Five percent owner. A Participant is treated
as a five percent (5%) owner for purposes of
this Section if such Participant is a five
percent (5%) owner as defined in section
416(i) of the Code but without regard to
whether the Plan is top-heavy) at any time
during the Plan Year ending with or within
the calendar year in which such owner attains
age sixty-six and one-half (66 1/2) or any
subsequent Plan Year.
(D) Once distributions have begun to a five
percent (5%) owner under this Section, they
must continue to be distributed, even if the
Participant ceases to be a five percent (5%)
owner in a subsequent year.
(f) Transitional Rule. Notwithstanding the other requirements of
this Section and subject to the requirements of Section 8.2,
distribution on behalf of any Employee, including a five
percent (5%) owner, may be made in accordance
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with all of the following requirements (regardless of when
such distribution commences):
(i) The distribution by the trust is one which would not
have disqualified such trust under section 401(a)(9)
of the Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of
distribution designated by the Employee whose
interest in the trust is being distributed or, if the
Employee is deceased, by a Beneficiary of such
Employee.
(iii) Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before
January 1, 1984.
(iv) The Employee had accrued a benefit under the Plan as
of December 31, 1983.
(v) The method of distribution designated by the Employee
or the Beneficiary specifies the time at which
distribution will commence, the period over which
distributions will be made, and in the case of any
distribution upon the Employee's death, the
Beneficiaries of the Employee listed in order of
priority.
A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required
information described above with respect to the distributions to be
made upon the death of the Employee.
For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee, or the Beneficiary,
to who such distribution is being made, will be presumed to have
designated the method of distribution under which the distribution is
being made if the method of distribution was specified in writing and
the distribution satisfies the requirements in Subsections (i) through
(v) above.
If a designation is revoked, any subsequent distribution must satisfy
the requirements of section 401(a)(9) of the Code and the regulations
thereunder. If a designation is revoked subsequent to the date
distributions are required to begin, the trust must distribute by the
end of the calendar year following the calendar year in which the
revocation occurs the total amount not yet distributed which would
have been required to have been distributed to satisfy section
401(a)(9) of the Code and the regulations thereunder, but for the
election under section 242(b)(2) of Pub. L. No. 97-248. For calendar
years beginning after December 31, 1988, such distributions must meet
the minimum distribution incidental benefit requirements in section
1.401(a)(9)-2 of the Income Tax Regulations.
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Any changes in the designation will be considered to be a revocation
of the designation. However, the mere substitution or addition of
another Beneficiary (one not named in the designation) under the
designation will not be considered to be a revocation of the
designation, so long as such substitution or addition does not alter
the period over which distributions are to be made under the
designation, directly or indirectly (for example, by altering the
relevant measuring life). The rules of Q&A J-2 and J-3 of Income Tax
Regulations section 1.401(a)(9)-1 shall apply to rollovers and
transfers from one plan to another.
8.6 Available Forms of Distribution
(a) If pursuant to Section 8.3, the Plan is a Profit Sharing Plan
exempt from the Automatic Annuity Rules of Section 8.2, the
normal form of distribution shall be a lump sum distribution.
Unless specified otherwise in the Adoption Agreement, in lieu
of the lump sum distribution, a Participant or Beneficiary may
elect to receive installment payments payable monthly,
quarterly, semi-annually or annually.
(b) If the Plan is subject to the Automatic Annuity Rules of
Section 8.2, the normal form of distribution shall be the
applicable form of Automatic Annuity under Section 8.2. In
lieu of the Automatic Annuity, a Participant or Beneficiary
may elect a lump sum distribution or such other available
forms of distribution as are set forth below or as are
specified in the Adoption Agreement. Any such election by a
Participant must be accompanied by the written consent of his
spouse (consistent with the requirements for a Qualified
Election under Section 8.2).
The available forms of distribution shall be:
(i) a joint and 100% survivor annuity contract purchased
from an insurance company selected by the Committee.
(ii) a single life annuity contract purchased from an
insurance company selected by the Committee.
(iii) a single life annuity contract, with 10 years
guaranteed, purchased from an insurance company
selected by the Committee.
(iv) installments payable monthly, quarterly, semi-annually
or annually.
8.7 Certain Distributions
In the event a distribution of an account balance made to or on behalf
of a Participant
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prior to the attainment of age fifty-nine and one-half (59 1/2) would
be subject to the ten percent (10%) penalty tax set forth in section
72(t) or 72(m)(5) of the Code, the Participant may, within sixty (60)
days of the distribution date, request that the distribution be
transferred to another qualified retirement plan or an Individual
Retirement Account as a rollover contribution if the distribution
satisfies the requirements of section 402(a)(5) of the Code.
8.8 Forfeitures
Any balance in the Regular Account, Employer Discretionary
Contribution Account or in the Employer Matching Contribution Account,
if any, of a Participant who is separated from service, to which he is
not entitled under the foregoing provisions, shall be forfeited and
applied as provided in Sections 3.2 and 4.2 of this Plan, and Section
X(E) of the Dreyfus Standardized/Paired Prototype Target Benefit Plan
and Trust Adoption Agreement.
ARTICLE IX.
DEATH BENEFITS
9.1 Payment to Beneficiary
(a) Subject to the provisions of Article VIII, upon the death of a
Participant, such Participant's account balance shall be paid
to his designated Beneficiary or if no such Beneficiary is
designated or survives the Participant, to the legal
representative of such Participant's estate. Such payment
shall commence as soon as practicable after the Participant's
death and after the Trustee is given such documentation as may
be required under the provisions of the Trust Agreement or
Custodial Agreement.
(b) Subject to the provisions of the Custodial Agreement if the
Plan is an Easy Retirement Plan, the Committee may prescribe
the manner in which a Beneficiary is to be designated in
writing and the Custodial Agreement, may prescribe the manner
in which such designations shall be filed. Notwithstanding the
foregoing, any designation (or change of designation) of a
Beneficiary must be consented to by the Participant's Spouse
pursuant to a Qualified Election under Section 8.2, if such
Beneficiary is not the Participant's Spouse.
9.2 Method of Payment
Subject to the provisions of Article VIII, death benefits may be paid
in any mode of
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benefit payment provided for in this Plan as elected by the
Participant or Beneficiary, except in the event of the death of the
Participant after payments have commenced under an annuity contract,
by the Beneficiary.
ARTICLE X.
PARTICIPANT CONTRIBUTIONS; ROLLOVERS
10.1 Voluntary Contributions
(a) Effective for Plan Years beginning January 1, 1987,
non-deductible Voluntary Contributions shall not be permitted
under this Plan. A separate Account shall be maintained for
Voluntary Contributions made prior to such time. Such Account
shall be nonforfeitable at all times.
(b) A Participant may make withdrawals from the Voluntary Account
at such time as the Committee shall designate, but not more
than quarterly during a Plan Year provided that no single
withdrawal shall be less than the total amount available for
withdrawal under the other limitations of this Section 10.1 or
five hundred dollars ($500), whichever is less.
Notwithstanding the preceding sentence, if the Plan is an Easy
Retirement Plan, a Participant may make such a withdrawal at
any time.
(c) If the Plan is subject to the Automatic Annuity rules of
Section 8.2, the written consent of the Participant's spouse
(consistent with the requirements for a Qualified Election
under Section 8.2) must be obtained with respect to any
withdrawal.
(d) No forfeitures of amounts allocated to Participants from
Employer contributions and earnings thereon, shall occur
solely as a result of a Participant's withdrawal of voluntary
contributions.
(e) Voluntary Contributions for Plan years beginning after
December 31, 1986 shall be subject to the Contribution
Percentage tests and the rules applicable to Excess Aggregate
Contributions set forth in Section 4.7.
10.2 Voluntary Tax-Deductible Contributions
(a) Voluntary Tax-Deductible Contributions (within the meaning of
section 72(o)(5)(A) of the Code) shall not be permitted under
this Plan for taxable years beginning after December 31, 1986.
A separate Voluntary Tax-Deductible
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Account shall be established for such contributions made for
taxable years beginning on or before December 31, 1986. Such
Account shall be nonforfeitable at all times. However, no part
of the Voluntary Tax-Deductible Account will be used to
purchase life insurance or available for loans under Article
XII.
(b) The Participant may withdraw any part of the Voluntary
Tax-Deductible Account by making written application to the
Committee. If the Plan is subject to the Automatic Annuity
Rules of Section 8.2, the written consent of the Participant's
Spouse (consistent with the requirements of a Qualified
Election under Section 8.2) must be obtained to any withdrawal
made after the first day of the first Plan Year beginning on
or after January 1, 1989.
10.3 Transfers From Other Trusts
Unless specified otherwise in the Adoption Agreement, the Committee
may, in its discretion, direct the Trustee to accept a rollover
contribution described in sections 401(a)(31), 402(a)(5), 403(a)(4)
or 408(d)(3)(A)(ii) of the Code or a direct transfer of funds from a
qualified retirement plan, provided that, in the opinion of counsel
for the Employer, the transfer will not jeopardize the tax exempt
status of the Plan or create adverse tax consequences to the Employer.
The Committee shall exercise such discretion in a uniform and
nondiscriminatory manner. A transfer or rollover contribution may be
made on behalf of an Employee eligible to participate in the Plan who
has not met the age and service requirements, if any, for
participation. Such an Employee shall become a Participant on the
date the Trustee accepts the rollover contribution or transfer for all
purposes, except that no employer or employee contributions shall be
made by or on behalf of such Employee and such Employee shall not
share in Plan forfeitures until he has completed the age and service
requirements for participation and become a Participant. A rollover
contribution or transfer shall be maintained in a Participant's
Rollover Account and Transfer Account, respectively. Notwithstanding
the preceding sentence, amounts attributable to voluntary deductible
employee contributions shall be maintained in a Participant's
Voluntary Tax-Deductible Account.
A Participant may take withdrawals from the Rollover Account at such
time as the Committee shall designate, but not more than quarterly
during a Plan Year, provided that no single withdrawal shall be less
than the total amount available for withdrawal or five hundred dollars
($500) whichever is less. If the Plan is subject to the Automatic
Annuity Rules of Section 8.2 and the Participant is married, the
request for withdrawal must be consented to in writing by the
Participant's spouse. Notwithstanding the preceding sentence, if the
Plan is an Easy Retirement Plan, a Participant may make such a
withdrawal at any time.
Unless indicated otherwise in the Adoption Agreement, distributions
shall be made from
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the Transfer Account upon meeting the requirements set forth under
Articles VIII and IX of the Plan. If the Plan is subject to the
Automatic Annuity Rules of Section 8.2 and the Participant is married,
the request for distribution must be consented to in writing by the
Participant's spouse.
The written consent of the Participant's spouse (consistent with the
requirements for a Qualified Election under Section 8.2) must be
obtained with respect to any withdrawal.
ARTICLE XI.
INSURANCE POLICIES
11.1 Policy Procurement
The Employer may elect in the Adoption Agreement to have the provisions
of this Article XI apply. If so authorized, the Committee may elect to
provide all Active Participants with the option of having life
insurance or annuity contracts (hereinafter referred to as "policy")
purchased on their behalf from a legal reserve life insurance company.
11.2 Rules and Regulations
The following rules shall be applicable to the acquisition, handling
and disposition of any policy:
(a) The basic options, cash surrender values and other material
features of all policies shall be as nearly uniform as
possible. No endowment policies shall be purchased.
(b) The Trustee shall be designated as the sole owner of any
policy purchased hereunder. However, all benefits, rights,
privileges and options under such policy and any dividends or
credits earned in insurance contracts will be allocated to the
Participant's account balance derived from Employer
contributions for whose benefit the contract is held.
Notwithstanding any other provision of the Plan, in computing
the amount of the vested interest of any Participant, the cash
surrender value of any policy shall be included in the
Participant's account balance. The applicable vested interest
percentage shall be applied to this sum. The product of this
computation shall then constitute the Participant's vested
interest.
(c) Payments made to any insurance company with respect to any
such policy shall constitute an investment of the funds
credited to the account balance of the
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Participant on whose behalf it was purchased and his account
balance derived from Employer contributions shall accordingly
be reduced by any such payments.
(d) If the policy or policies purchased are ordinary life
insurance, the aggregate premiums payable with respect to such
policy or policies may not equal or exceed fifty percent (50%)
of the aggregate Employer contributions and forfeitures
credited to such Participant's account balance, exclusive of
investment earnings. A Participant may upon consultation with
the Committee and with its consent modify or terminate this
election at any time. If the policy purchased is term or
universal life insurance, the phrase "twenty-five percent
(25%)" shall be substituted for the phrase "fifty percent
(50%)." If the policy or policies purchased are ordinary life
insurance and term insurance, the sum of one-half ( 1/2) the
ordinary life premiums and the term premiums may not exceed
twenty-five percent (25%) of the aggregate Employer
contributions and forfeitures credited to such Participant's
account balance, exclusive of investment earnings. For
purposes of these incidental insurance provisions, ordinary
life insurance contracts are contracts with both nondecreasing
death benefits and nonincreasing premiums.
(e) If a Participant is not insurable as a standard risk but may
nevertheless be eligible for insurance coverage at an extra
rating because of excess mortality hazards, the Committee, in
its discretion, may agree or not agree to obtain insurance.
The insurance to be purchased for a substandard life shall not
exceed the face amount that could have been purchased by the
premium that would have been available for the purchase of
insurance had the Participant not been rated a substandard
life. In determining whether or not to purchase insurance,
the Committee shall not discriminate and shall accord uniform
treatment to all of its Participants in a similar situation.
11.3 Transfer of Policies
(a) Upon the Participant's retirement, the Trustee shall, upon
instructions from the Committee, either transfer and deliver
to the Participant any policy held on his behalf (with such
endorsements as the Committee may direct), convert such policy
to an annuity, or surrender such policy, in which case the
cash proceeds thereof shall be included as part of the account
balance of such Participant and distributed accordingly.
(b) The Committee shall offer to a vested Participant any policy
held in his behalf at a price equal to the total cash
surrender value of such policy. If the Participant elects to
purchase such policy, the Trustee shall, upon instructions
from the Committee, transfer ownership of the policy to such
Participant, endorsed so as to vest in the transferee all
right, title and interest thereto, free and clear of the
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Trust. If the Participant declines to purchase such policy,
the Trustee shall, upon instructions from the Committee,
liquidate the policy for its cash surrender value; transfer
the policy to the Participant as a distribution of benefits;
or if the Participant has terminated employment with the
Employer other than by reason of retirement, death or
disability, place the policy on a paid-up basis. The
Committee may direct the Trustee to designate itself, if not
so designated, as Beneficiary under such policy for the period
prior to the date on which it is liquidated.
(c) Subject to the Qualified Joint and Survivor Annuity Rules of
Section 8.2, the contracts on a Participant's life will be
converted to cash or an annuity or distributed to the
Participant upon commencement of benefits.
11.4 Payment Upon Death
Subject to the Qualified Pre-Retirement Survivor Annuity Rules of
Section 8.2, all death benefits payable under any policy held on
behalf of a deceased Participant shall be paid to his Beneficiary.
Such benefits may, as the Committee shall determine, be paid either to
the Trust Fund, in which case the cash proceeds thereof shall be
included as part of vested accountbalance of such Participant and
distributed accordingly, or directly by the insurance company to the
Beneficiary pursuant to the settlement option in effect at the time of
the Participant's death. In the absence of such election, the
benefits may be paid in a lump sum or under any other settlement
option contained in such policy, as determined by the Committee.
11.5 Plan Provisions Control
In the event of any conflict between the terms of this Plan and the
terms of any policy issued hereunder, the Plan provisions shall
control.
ARTICLE XII.
LOANS
12.1 Loans to Participants
If permitted under the Adoption Agreement, the Committee, in its
discretion, may authorize and direct the Trustee to grant loans to
Participants and Beneficiaries in accordance with written rules
established by the Committee. Such loans:
(a) Shall not exceed the lesser of:
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(1) fifty thousand dollars ($50,000) reduced by the
excess, if any, of (i) the highest outstanding
balance of loans from the Plan during the one (1)
year period ending on the day before the date on
which such loan was made, over (ii) the outstanding
balance of loans from the Plan on the date such loan
was made, or
(2) one-half ( 1/2) of the Participant's or Beneficiary's
vested interest under the Plan.
For this purpose, all plans of the Employer and
Affiliated Employers shall be treated as a single
plan.
(b) Shall be evidenced by a promissory note, secured by an
assignment of a portion of the Participant's or Beneficiary's
vested interest in the Plan, other than a Voluntary
Tax-Deductible Account (effective for loans granted or renewed
after October 18, 1989, the portion of a Participant's or
Beneficiary's vested interest which may be used as security
for a loan hereunder shall not exceed fifty percent (50%));
(c) Shall bear a reasonable rate of interest as determined by the
Committee to be a rate of interest commensurate with the
interest rates charged by persons in the business of lending
money for loans which would be made under similar
circumstances; and
(d) Shall require substantially level repayments of principal and
interest (with repayments made not less frequently than
quarterly) over a period not to exceed five (5) years. Any
such loan shall be nonrenewable except that if the loan was
originally granted for a period of less than five (5) years,
then the same may be renewed, in the discretion of the
Committee, for a period of time equal to the difference
between five (5) years and the duration of the original loan.
The five (5) year repayment period shall not apply to any loan
used to acquire any dwelling unit which within a reasonable
period of time is to be used (to be determined at the time the
loan is made) as the principal residence of the Participant.
If the Plan is subject to the Automatic Annuity Rules of Section 8.2,
the written consent of the Participant's spouse (consistent with the
requirements for a Qualified Election under Section 8.2) must be
obtained within the ninety (90) day period ending on the date the
account balance is used as security for the loan. Such consent shall
thereafter be binding with respect to the consenting spouse or any
subsequent spouse. However, a new consent shall be required if the
account balance is used for renegotiation, extension, renewal or other
revision of the loan.
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If Participant-directed investments have been elected in the Adoption
Agreement, loans shall be treated as an investment of one or more of
the borrower's separate Accounts, in accordance with rules established
by the Committee. Repayments of principal and interest shall be
allocated solely to the Account(s) of the borrower from which such
loan was made, and any loss caused by non-payment or default shall be
charged solely to such Account(s). Otherwise, all loans hereunder
shall be treated as an investment of the Fund.
12.2 Provisions to be Applied in a Uniform and Nondiscriminatory Manner
In deciding whether or not to grant any request for a loan hereunder,
the Committee shall be guided by procedures and criteria designed to
assure that the loans shall be made available to all Participants and
Beneficiaries on a reasonably equivalent basis and shall not be
available to Highly Compensated Employees in an amount greater than
the amount made available to other Employees.
12.3 Satisfaction of Loan
In the event of default, foreclosure on the note and attachment of the
security will not occur until a distributable event occurs under the
terms of the Plan.
If spousal consent (consistent with the requirements for a Qualified
Election under Section 8.2) has been obtained, then, notwithstanding
any other provision of the Plan, the portion of the Participant's
vested account balance used as security for a loan shall be taken into
account for purposes of determining the amount of the account balance
payable at the time of death or distribution, but only if the
reduction is used as repayment of the loan. If less than one hundred
percent (100%) of the Participant's vested account balance (determined
without regard to the preceding sentence) is payable to the surviving
spouse, then the account balance shall be adjusted by first reducing
the vested account balance by the amount of the security used as
repayment of the loan, and then determining the benefit payable to the
surviving spouse.
12.4 Loans to Owner-Employees or Shareholder-Employees
No loan shall be granted to an Owner-Employee or Shareholder-Employee
unless an exemption has been obtained for such loan from the Secretary
of Labor under Section 408 of the Act (and such loan is exempt from
the excise tax imposed under Section 4975 of the Code).
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ARTICLE XIII.
TOP-HEAVY PROVISIONS
As specified in the Adoption Agreement, the provisions of this Article XIII
will either (1) always supersede any conflicting provisions in the Plan or (2)
only supersede such conflicting provisions in any Plan Year beginning after
1983, during which the Plan is or becomes Top-Heavy.
13.1 Definitions
For purposes of this Article and Article XVII, the following words
shall have the following meanings:
(a) "Compensation" shall mean Compensation as defined in Article I
as limited by section 401(a)(17) of the Code.
(b) "Determination Date" shall mean (1) the last day of the
preceding Plan Year, or (2) in the case of the first Plan Year
of any Plan, the last day of such Plan Year.
(c) "Employer" shall mean the Employer and all Affiliated
Employers.
(d) "Key Employee" shall mean any Employee or former Employee (and
the Beneficiaries of such Employee) who at any time during the
Plan Year containing the Determination Date and the four (4)
preceding Plan Years was:
(1) An officer of the Employer if such individual's
annual compensation exceeds fifty percent (50%) of
the dollar limitation under section 415(b)(1)(A) of
the Code (provided that the number of employees
treated as officers shall be no more than fifty (50)
or, if fewer, the greater of three (3) employees or
ten percent (10%) of all employees);
(2) An owner (or considered an owner under section 318 of
the Code) of at least a one-half of one percent (.5%)
interest and one of the ten (10) largest interests in
the Employer if such individual's annual compensation
exceeds one hundred percent (100%) of the dollar
limitation under section 415(c)(1)(A) of the Code;
(3) A five percent (5%) owner of the Employer; or
(4) A one percent (1%) owner of the Employer who has an
annual compensation of more than one hundred fifty
thousand dollars ($150,000).
For this purpose, annual compensation means compensation as
defined in section
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415(c)(3) of the Code, but including amounts excludible from
the Employee's gross income by reason of sections 125,
402(a)(8), 402(h) or 403(b) of the Code. The determination of
who is a Key Employee will be made in accordance with section
416(i)(1) of the Code and the regulations thereunder.
(d) "Non-Key Employee" shall mean any Employee who is not a Key
Employee.
(e) "Permissive Aggregation Group" shall mean the Required
Aggregation Group of plans plus any other plan or plans of the
Employer which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements
of sections 401(a)(4) and 410 of the Code.
(f) "Present Value" shall be based on the interest and mortality
table specified in the Employer's qualified defined benefit
plan for Top-Heavy purposes, or if such assumptions are not
specified in the Employer's qualified defined benefit plan,
Present Value shall be based on the assumptions specified in
the Adoption Agreement.
(g) "Required Aggregation Group" shall mean (1) each qualified
plan of the Employer in which at least one Key Employee
participates or participated at any time during the
determination period (regardless of whether the Plan has
terminated), and (2) any other qualified plan of the Employer
which enables a plan described in (1) to meet the requirements
of Sections 401(a)(4) or 410 of the Code.
(h) "Super Top-Heavy Plan": For any Plan Year after 1983, this
Plan is Super Top-Heavy if the Top-Heavy Ratio for the Plan,
the Required Aggregation Group or the Permissive Aggregation
Group, as applicable, exceeds ninety percent (90%).
(i) "Top-Heavy": For any Plan Year beginning after 1983, this
Plan is Top-Heavy if any of the following conditions exist:
(1) If the Top-Heavy Ratio for this Plan exceeds sixty
percent (60%) and this Plan is not part of any
Required Aggregation Group or Permissive Aggregation
Group of plans.
(2) If this Plan is a part of a Required Aggregation
Group of plans, but not part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the
group of plans exceeds sixty percent (60%).
(3) If this Plan is a part of a Required Aggregation
Group and part of a
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Permissive Aggregation Group of plans and the
Top-Heavy Ratio for the Permissive Aggregation Group
exceeds sixty percent (60%).
(j) "Top-Heavy Ratio":
(1) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee
Pension Plan) and the Employer has not maintained any
defined benefit plan which during the five (5) year
period ending on the Determination Date has or has
had accrued benefits, the Top-Heavy Ratio for this
Plan alone or for the Required or Permissive
Aggregation Group as appropriate is a fraction, the
numerator of which is the sum of the account balances
of all Key Employees as of the Determination Date
(including any part of any account balance
distributed in the five (5) year period ending on the
Determination Date, and the denominator of which is
the sum of all account balances (including any part
of any account balance distributed in the five (5)
year period ending on the Determination Date, both
computed in accordance with section 416 of the Code
and the regulations thereunder. Both the numerator
and denominator of the Top-Heavy Ratio are increased
to reflect any contribution not actually made as of
the Determination Date, but which is required to be
taken into account on that date under section 416 of
the Code and the regulations thereunder.
(2) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee
Pension Plan) and the Employer maintains or has
maintained one or more defined benefit plans which
during the five (5) year period ending on the
Determination Date has or has had any accrued
benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group as appropriate is a
fraction, the numerator of which is the sum of
account balances under the aggregated defined
contribution plan or plans for all Key Employees
determined in accordance with (d) above, and the
Present Value of accrued benefits under the
aggregated defined benefit plan or plans for all
employees as of the Determination Date, and the
denominator of which is the sum of the account
balances under the aggregated defined contribution
plan or plans for all participants, determined in
accordance with (j)(1) above, and the Present Value
of accrued benefits under the defined benefit plan or
plans for all Participants as of the Determination
Date, all determined in accordance with section 416
of the Code and the regulations thereunder. The
accrued benefits under a defined benefit plan in both
the numerator and denominator of the Top-Heavy Ratio
are increased for any distribution of an accrued
benefit made in the five (5) year period ending on
the
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Determination Date.
(3) For purposes of (1) and (2) above, the value of
account balances and the Present Value of accrued
benefits will be determined as of the most recent
Valuation Date that falls within or ends with the
twelve (12) month period ending on the Determination
Date, except as provided in section 416 of the Code
and the regulations thereunder for the first and
second Plan years of a defined benefit plan. The
account balances and accrued benefits of a
participant who is not a Key Employee but who was a
Key Employee in a prior year, or has not been
credited with at least one Hour of Service for any
Employer maintaining the Plan at any time during the
five (5) year period ending on the Determination Date
will be disregarded. The calculation of the
Top-Heavy Ratio, and the extent to which
distributions, rollovers, and transfers are taken
into account will be made in accordance with section
416 of the Code and the regulations thereunder.
Deductible Employee contributions will not be taken
into account for purposes of computing the Top-Heavy
Ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with
references to the Determination Date that falls
within the same calendar year.
(4) Solely for the purpose of determining if the Plan, or
any other plan included in a Required 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 a Non-Key Employee shall be
determined under (a) the method, if any, that
uniformly applies for accrual purposes under all
plans maintained by the Employer, 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.
(k) "Valuation Date" shall mean the last day of the Plan Year and
is the day on which account balances and accrued benefits are
valued for purposes of calculating the Top-Heavy Ratio.
13.2 Vesting Schedules
For any Plan Year in which this Plan is Top-Heavy, one of the Top
Heavy minimum vesting schedules as elected by the Employer in the
Adoption Agreement will automatically apply to the Plan. The Top
Heavy Minimum vesting schedule applies to all benefits within the
meaning of section 411(a)(7) of the Code except those attributable to
Employee contributions, including benefits accrued before the
effective date of section 416 of the Code and benefits accrued before
the Plan became Top-Heavy. Further, no reduction in a vested benefit
may occur in the event the Plan's status as Top-Heavy
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<PAGE> 92
changes for any Plan Year. However, this Section does not apply to
the account balance of any Employee who does not have an Hour of
Service after the Plan has initially become Top-Heavy and such
Employee's account balance attributable to Employer contributions and
forfeitures will be determined without regard to this Section.
13.3 Minimum Allocation
(a) Except as otherwise provided in (b), (c) and (d) below, when
the Plan is Top-Heavy the Employer contributions and
forfeitures allocated on behalf of any Participant who is a
Non-Key Employee shall not be less than the lesser of three
percent (3%) of such Participant's Compensation or, if neither
the Employer nor an Affiliated Employer maintains a defined
benefit plan which designates this Plan to satisfy sections
401(a)(4) or 410 of the Code, the largest percentage of
Employer contributions and forfeitures, as a percentage of the
Key Employee's Compensation, as limited by section 401(a)(17)
of the Code allocated on behalf of any Key Employee for that
year. For purposes of determining whether a Plan is
Top-Heavy, Elective Deferrals are considered Employer
contributions. However, neither Elective Deferrals nor
Matching Contributions may be taken into account for purposes
of satisfying the three percent (3%) minimum Top-Heavy
contributions requirements for Plan Years beginning on or
after January 1, 1989.
The Minimum Allocation is determined without regard to a
Social Security contribution. This Minimum Allocation shall
be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation for the
year because of (1) the Participant's failure to complete one
thousand (1,000) Hours of Service (or any equivalent provided
in the Plan), (2) the Participant's failure to make mandatory
employee contributions, or (3) the Participant's Compensation
is less than a stated amount.
(b) The provision in (a) above shall not apply to any Participant
who was not employed by the Employer on the last day of the
Plan Year.
(c) If the Employer maintains a qualified defined benefit plan and
this Plan is Top-Heavy, but is not Super Top-Heavy, each
Participant who is a Non-Key Employee and is not covered by
the defined benefit plan shall receive the Minimum Allocation
under (a) above, except that "four percent (4%) "shall be
substituted for "three percent (3%)".
(d) The provision in (a) above shall not apply with respect to any
Participant covered under any other qualified plan or plans of
the Employer other than a paired plan
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of the Sponsor and the adopting Employer has elected in the
Adoption Agreement that the minimum Top Heavy allocation or
benefit will be met in the other plan or plans.
If the Employer maintains a qualified defined benefit plan,
other than Sponsor's paired defined benefit plan 02001, and
the adopting Employer has elected in the Adoption Agreement to
provide the Top Heavy minimum allocation or benefit under this
Plan, then with respect to participants covered under both
plans, "five percent (5%)" shall be substituted for "three
percent (3%)" in (a) above if the Plan is Super Top Heavy and
"seven and one-half percent (7 1/2%)" shall be substituted for
"three percent (3%)" in (a) above if the Plan is Top Heavy,
but not Super Top Heavy.
(e) The Minimum Allocation required (to the extent nonforfeitable
under section 416(b) of the Code) may not be forfeited under
section 411(a)(3)(B) or 411(a)(3)(D) of the Code.
13.4 Adjustment to Defined Benefit Fraction and Defined Contribution
Fraction under section 6.4.
If the Plan is Super Top-Heavy, then "one-hundred percent (100%)"
shall be substituted for "one hundred twenty-five percent (125%)" in
the denominator of the Defined Benefit Fraction and the Defined
Contribution Fraction under Section 6.4.
ARTICLE XIV.
THE COMMITTEE
14.1 Creation of a Committee
The Employer may appoint a person or persons to act as the Committee
and serve at its pleasure. If no such Committee is appointed, the
Employer shall act as the Committee. The Employer shall notify the
Trustee of the appointment of the original members of the Committee
and of each change in the membership of the Committee. Vacancies in
the Committee shall be filled by the Employer.
14.2 Committee Action
In the event that the Employer appoints such person or persons to act
as the Committee, such Committee shall act by a majority of its
members at a meeting (which can be by telephone) or in writing without
a meeting. A member of the Committee who is also a
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Participant of the Plan shall not vote or act as a member of the
Committee upon any matter relating solely to his rights or benefits
under the Plan.
14.3 Authorized Signatory
Except as otherwise provided in Section 14.10, the Committee may
designate a person or persons who shall be authorized to sign any
document in the name of the Committee. The Trustee shall be fully
protected in relying upon any notice, instruction or certification
from the Committee or executed pursuant to the provisions of this
Section.
14.4 Powers and Duties
The Committee shall have such powers and duties as are necessary for
the proper administration of the Plan, including but not limited to
the power to make decisions with respect to the application and
interpretation of the Plan. The Committee shall be empowered to
establish rules and regulations for the transactions of its business
and for the administration of the Plan. The determinations of the
Committee with respect to the interpretation, application, or
administration of the Plan shall be final, binding, and conclusive
upon each person or party interested or concerned.
14.5 Nondiscrimination
Where provisions of this Plan are at the discretion of the Committee,
all Participants shall be treated in a uniform and nondiscriminatory
manner.
14.6 Records and Reports
The Committee shall maintain such records as may be necessary for
proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as
required by law. Employees may examine records pertaining directing
to them.
14.7 Reliance on Professional Advice
The Committee shall be entitled to rely conclusively on the advice or
opinion of any consultant, accountant, or attorney and such persons
may also act in their respective professional capacities as advisors
to the Employer.
14.8 Payment of Expenses
All expenses of administration may be paid out of the Trust Fund
unless paid by the
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Employer. Such expenses shall include any expenses incident to the
duties of the Committee, including, but not limited to, fees of
consultants, accountants, and attorneys, and other costs of
administering the Plan. Until paid, the expenses shall constitute a
liability of the Trust Fund. However, the Employer may reimburse the
Trust Fund for any administration expense incurred. Any
administration expense paid to the Trust Fund as a reimbursement shall
not be considered an Employer contribution.
14.9 Limitation of Liability
The Committee must discharge its duties solely in the interest of the
Participants and their Beneficiaries. The Committee must carry out its
duties with the care, skill, prudence and diligence under 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 and with like aims. The Committee, however, shall not
be liable for any acts or decisions based on the advice or opinion of
any consultant, accountant or attorney employed by the Committee in
their respective professional capacities as advisors to the Employer,
provided, however, that the Committee did not violate its general
fiduciary duty in selecting or retaining such advisor.
14.10 Payment Certification to Trustee
The Committee shall provide written instruction to the Trustee with
respect to all payments which become due under the terms of the Plan
and shall direct the Trustee to make such payments from the Trust
Fund. All orders, requests and instructions by the Committee to the
Trustee shall be in writing and signed by an authorized member of the
Committee.
The Trustee shall act and shall be fully protected in acting in
accordance with such orders, requests and instructions.
14.11 Claims Procedure
A Participant or Beneficiary ("Claimant") may file a written claim for
benefits with the Committee. If the Committee decides that a Claimant
is not entitled to all or any part of the benefits claimed, it shall
within ninety (90) days of receipt of such claim, inform the Claimant
in writing of its determination; the reasons for its determination,
including specific references to the pertinent Plan provisions; and
the Plan's review procedures. The Claimant or his authorized personal
representative shall be permitted to review pertinent documents and
within sixty (60) days after receipt of the notice of denial of claim
to request to appear personally before it or to submit such further
information or comments to the Committee as will, in the Claimant's
opinion establish his right to such benefits. The Committee will
render its final decision with the specific reason therefore
89
<PAGE> 96
in writing and will transmit it to the claimant by certified mail
within sixty (60) days (or one hundred twenty (120) days, if special
circumstances require an extension of time and the claimant is given
written notice within the initial sixty (60) day period) of any such
appearance. If the final decision is not made within such period, it
will be considered denied. If, upon review of a request for benefits
hereunder, the Committee finds the Participant ineligible for such
benefits, it shall inform the Participant in writing the reason or
reasons for such denial. In the event any Participant or Beneficiary
disagrees with the conclusions of the Committee, the Committee must
reconsider their decision based on the facts and evidence presented to
them by the Participant or Beneficiary. Further, the Committee must
substantiate in writing to any Participant or Beneficiary who
disagrees with the amount of his benefit the method under which the
benefit computations were made.
ARTICLE XV.
GENERAL PROVISIONS
15.1 No Right of Continued Employment
No Employee or Participant shall have any right or claim to any
benefit under the Plan except in accordance with the provisions of the
Plan. The adoption of the Plan shall not be construed as creating any
contract of employment between the Employer and any Employee or
otherwise conferring upon any Employee or other person any legal right
to continuation of employment, nor as limiting or qualifying the right
of the Employer to discharge any Employee without regard to the effect
that such discharge might have upon his rights under the Plan.
15.2 Nonalienation of Interest
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or involuntarily. The
preceding sentence shall not apply to loans made to the Participant
under the Plan, or domestic relations orders which are determined by
the Committee to be qualified domestic relations orders, as defined in
section 414(p) of the Code and section 206(d)(3) of the Act, or were
entered before January 1, 1985. Notwithstanding any provision in the
Plan to the contrary, payments pursuant to a qualified domestic
relations order may be made to an alternate payee prior to the time
that the Plan may make payments to the affected Participant.
15.3 Incompetence of Participants and Beneficiaries
If the Committee deems any person incapable of receiving benefits to
which he is entitled by reason of minority, illness, infirmity, or
other incapacity, it may direct the Trustee
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<PAGE> 97
to make payment directly for the benefit of such person to a legal
representative of such person. Such payment shall, to the extent
thereof, discharge all liability of the Employer, the Committee, the
Trustee and the Fund.
15.4 Unclaimed Benefits
If any benefit hereunder has been payable and unclaimed for four (4)
years since the whereabouts or continued existence of the person
entitled thereto was last known to the Committee, such benefit shall
be placed in a segregated, interest-bearing suspense account with no
further attempts to uncover the whereabouts of the person entitled
thereto. The Committee shall rely upon notification from the
Department of Health, Education and Welfare as to the whereabouts of
such person when he applies for benefits under the Social Security
Act. The four (4) year period may be extended by the Committee
whenever, in its discretion, special circumstances justify such
action. The Committee shall make a reasonable and diligent search for
the Participant before any benefit is segregated. If a benefit is
forfeited because the Participant or Beneficiary cannot be found, such
benefit will be reinstated if a claim is made by the Participant or
Beneficiary.
15.5 Separate Employer Trusts Maintained
Except as provided in Section 16.5, the Plan of each Employer which
adopts this Prototype Plan and corresponding Trust Agreement as part
of its Plan shall be administered separately from those of any other
Employer.
15.6 Governing Law
The Plan shall be administered, construed and enforced to the state
wherein the Trustee maintains its principal place of business, except
to the extent preempted by the Act.
15.7 Severability
Should any provision of the Plan or rules and regulations adopted
thereunder be deemed or held to be unlawful or invalid for any reason,
such fact shall not adversely affect the other provisions unless such
invalidity shall render impossible or impractical the functioning of
the Plan. In such case, the appropriate parties shall immediately
adopt a new provision to take the place of the illegal or invalid
provision.
15.8 Gender and Number
The masculine pronoun wherever used shall include the feminine pronoun
and the singular shall include the plural and the plural shall include
the singular, wherever
91
<PAGE> 98
appropriate to the context.
15.9 Titles and Headings
The titles or headings of the respective Articles and Sections are
inserted merely for convenience and shall be given no legal effect.
15.10 Failure of Employer's Plan to Qualify
The use of this Prototype Plan and corresponding Trust Agreement shall
be available only to the Plans of Employers which meet the
requirements of section 401(a) of the Code. If the Employer's Plan
fails to attain or retain qualification, such Plan will no longer
participate in this Prototype Plan and will be considered an
individually designed plan.
15.11 Exclusive Benefit
Except as provided in Section 6.3, at no time shall any part of the
corpus or income of the Fund be used for or diverted to purposes other
than for the exclusive benefit of the Participants and their
Beneficiaries and defraying reasonable expenses of the Plan.
15.12 Action by Employer
Any action, including the amendment or termination of the Plan as
provided in Sections 16.1 and 16.2 of the Plan, by an Employer which
is a corporation shall be taken by the board of directors of the
corporation or any person or persons duly empowered to exercise the
powers of the corporation with respect to the Plan. In the case of an
Employer which is a partnership, any action, including the amendment
or termination of the Plan as provided in Sections 16.1 and 16.2 of
the Plan, shall be taken by any general partner or the partnership.
In the case of an Employer which is a sole proprietorship, any action,
including the amendment or termination of the Plan as provided in
Sections 16.1 and 16.2 of the Plan, shall be taken by the sole
proprietor.
ARTICLE XVI
AMENDMENT AND TERMINATION
16.1 Amendment
(a) The Employer expressly recognizes the authority of the Sponsor
to amend the Plan and the Trust Agreement or Custodial
Agreement from time to time, and the
92
<PAGE> 99
Employer shall be deemed to have consented to any such
amendment. The Employer shall receive a written instrument
indicating the amendment of the Plan and Trust Agreement and
such amendment shall become effective as of the effective date
of such instrument.
(b) The Employer reserves the right to amend the Plan at any time.
Except for (1) changes to the choice of options in the
Adoption Agreement, (2) amendments stated in the Adoption
Agreement which allow the Plan to satisfy section 415 of the
Code or to avoid duplication of minimums under section 416 of
the Code because of the required aggregation of multiple
plans, or (3) amendments published by the Internal Revenue
Service which specifically provide that their adoption will
not cause the Plan to be treated as individually designed, an
Employer will no longer participate in the Prototype Plan and
will be considered to have an individually designed plan if it
amends the Plan or obtains a waiver of the minimum funding
requirement under Section 412(d) of the Code.
(c) Notwithstanding anything in this Plan to the contrary, no
amendment shall:
(1) Increase the responsibility of the Trustee without
the Trustee's written consent;
(2) Have the effect of decreasing a Participant's account
balance or eliminating an optional form of benefit
with respect to accrued benefits, except to the
extent permitted by section 412(c)(8) of the Code;
(3) In the case of an Employee who is a Participant as of
the later of the date such amendment is adopted or
the date it becomes effective, decrease the
nonforfeitable percentage (determined as of such
date) of such Employee's right to his
Employer-derived account balance below his
non-forfeitable percentage computed under the Plan
without regard to such amendment;
(4) Violate the exclusive benefit rule of Section 15.11.
16.2 Termination and Partial Termination
The adopting Employer may, at any time, by written notice to the
Trustee in such form as is acceptable to the Trustee, terminate the
Plan and discontinue all further contributions hereunder. Upon
termination or partial termination of the Plan or upon complete
discontinuance of contributions to a Profit Sharing Plan, each
affected Employee shall have a one hundred percent (100%) vested and
nonforfeitable interest in his account balance. Upon a termination or
partial termination of the Plan (and subject to the limitations of
section 4.10 in the case of a cash or deferred arrangement qualified
93
<PAGE> 100
under section 401(k) of the Code), each affected Participant's account
balance may be distributed in accordance with the provisions of
Article VIII or, at the option of the Employer and with the Trustee's
consent, shall continue to be held by the Trustee for distribution as
authorized by Articles VIII and IX. Notwithstanding the preceding
sentence, a Profit Sharing Plan which does not offer an annuity form
of benefit (purchased from a commercial provider) may distribute each
affected Participant's account balance immediately in a single sum
without Participant consent, provided that neither the Employer nor
any Affiliated Employer maintains another defined contribution plan,
other than an employee stock ownership plan (as defined in section
4975(e)(7) of the Code). If either the Employer or any Affiliated
Employer maintains another such defined contribution plan, then a
Participant's account balance may be transferred to such plan without
his consent if the Participant does not consent to the single sum
distribution from this Plan.
16.3 Plan Merger and Consolidation or Transfer of Plan Assets
In the event of any merger or consolidation with, or transfer of
assets or liabilities to, any other plan, each Participant of this
Plan would (if the Plan then terminated) receive an amount immediately
after such merger, consolidation or transfer which is equal to or
greater than the amount he would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan
had then terminated).
16.4 Amended and Restated Plans
If this Plan is an amendment and restatement of an existing plan
("Existing Plan"), the following provisions shall apply:
(a) Each Employee who was a participant in the Existing Plan
immediately prior to the Effective Date shall become a
Participant in this Plan on the Effective Date.
(b) The balance of such Employee's accounts under the Existing
Plan attributable to employer or employee contributions shall
be allocated to the corresponding Accounts under this Plan or
accounted for separately.
(c) All years of service credited for vesting service under the
Existing Plan shall be credited as years of Service under this
Plan. The amendment and restatement shall not reduce the
vested interest of a participant in the Existing Plan, and any
change in the vesting schedule shall be subject to the
provisions of Section 7.3.
(d) The amendment and restatement shall not reduce a Participant's
account balance and shall not eliminate any optional form of
benefit.
94
<PAGE> 101
(e) Any beneficiary designation in effect under the Existing Plan
immediately before the amendment and restatement shall be
deemed to be a valid Beneficiary designation under this Plan,
to the extent consistent with Article VIII.
16.5 Participating Employers
(a) With the consent of the Employer and Trustee, and by duly
authorized action, any Affiliated Employer may adopt this Plan
and become a Participating Employer.
(b) Each such Participating Employer shall be bound by the same
Adoption Agreement provisions as those selected by the
Employer, and to use the same Trustee as the Employer. If the
Employer does not make a contribution to the Plan, the
Participating Employer shall be obligated to do so.
(c) The Trustee may, but shall not be required to commingle, hold
and invest as one Trust Fund all contributions made by
Participating Employers, as well as all increments thereof.
(d) With respect to its relations with the Trustee and Committee
for the purposes of this Plan, each Participating Employer
shall be deemed to have irrevocably designated the adopting
Employer as its agent. Amendment of this Plan by the adopting
Employer at any time when there shall be a Participating
Employer hereunder shall only be by the written action of the
adopting Employer, with the consent of the Trustee where such
consent is necessary in accordance with the terms of this
Plan.
(e) A Participating Employer may, at any time, by written notice
to the Employer and Trustee in such form as is acceptable to
the Employer and Trustee, discontinue its participation in the
plan and discontinue all further contributions hereunder. The
Employer shall direct the Trustee to transfer, deliver and
assign Fund assets attributable to the Participants of such
Participating Employer to such successor trustee as shall have
been designated by such Participating Employer, in the event
that it has established a separate plan for its Employees. If
no successor trustee is designated, the Trustee shall retain
such assets for the
Employees of said Participating Employer pursuant to the
provisions of Articles VIII and IX hereof.
95
<PAGE> 102
ARTICLE XVII.
PAIRED PLAN PROVISIONS
The provisions of this Article are applicable only if the Employer adopts a set
of Dreyfus paired plans. Paired plans are a combination of standardized form
plans offered by the Sponsor, so designed that if any single plan or
combination of plans is adopted by an Employer each plan by itself, or the
plans together, will meet the anti-discrimination rules set forth in section
401(a)(4) of the Code, the contribution and benefit limits set forth in section
415 of the Code and the Top-Heavy provisions set forth in section 416 of the
Code.
17.1 Compliance With Section 415(e) of the Code
If the Employer adopts one or two of Sponsor's paired defined
contribution plans and Sponsor's paired defined benefit plan, the
"1.0" aggregate limitation of section 415(e) of the Code on
contributions and benefits will be met by freezing or reducing the
rate of benefit accruals under the paired defined benefit plan.
17.2 Adjustment of Combined Plan Fractions Under Section 415 of the Code
for Top-Heavy Ratio in Excess of Ninety Percent (90%)
In any Plan Year in which the Plan becomes Super Top-Heavy, the
denominators of the Defined Benefit Fraction (as defined in Section
6.4 of the Plan) and the Defined Contribution Fraction (as defined in
Section 6.4 of the Plan) shall be computed using one hundred percent
(100%) of the dollar limitation instead of one hundred twenty-five
percent (125%).
17.3 Top-Heavy Minimum Benefits and Contributions
(a) When the paired plans maintained by the Employer are
Top-Heavy, but are not Super Top-Heavy, each Non-Key Employee
who participates in paired defined contribution plan number
01001, 01003, 01004, 01005 or 01006, but does not participate
in paired defined benefit plan number 02001, will receive the
Minimum Allocation provided for in Section 13.3. Each Non-Key
Employee who participates in two of the paired defined
contribution plans, but not the paired defined benefit plan,
shall receive the minimum Top-Heavy allocation under the
paired defined contribution plan specified in the Adoption
Agreement. Each Non-Key Employee who is a participant in this
Plan and the paired defined benefit plan shall receive the
minimum top-heavy benefit accrual under such plan and shall
not receive any top-heavy minimum contribution under the
paired defined contribution plan or plans.
(b) When the paired plans maintained by the Employer are Super
Top-Heavy, each
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<PAGE> 103
Non-Key Employee who participates in paired defined
contribution plan number 01001, 01003, 01004, 01005 or 01006
but who does not participate in paired defined benefit plan
number 02001, will receive the Minimum Allocation provided for
in Section 13.3. Each Non-Key Employee who participates in
two of the paired defined contribution plans, but not the
defined benefit plan, shall receive the minimum top-heavy
allocation under the paired defined contribution plan
specified in the Adoption Agreement. Each Non-Key Employee
who is a Participant in this Plan and the paired defined
benefit plan shall receive the minimum top heavy benefit
accrual under such plan and shall not receive any top heavy
minimum contribution under the paired defined contribution
plan or plans.
17.4 Integration of Paired Plans
If the Employer adopts paired plans, only one plan may allocate
contributions or determine benefits on an integrated basis.
97
<PAGE> 1
EXHIBIT 10.6
SPLIT DOLLAR INSURANCE PLAN
Sole Ownership System
SUMMARY PLAN DESCRIPTION
Company - Name: GENOVESE DRUG STORES, INC.
- Address: 80 MARCUS DR.
MELVILLE, NY 11747
Name of Plan: Split Dollar Insurance Plan
Name of Insured: GERALDINE & LEONARD GENOVESE
Policy - Insurer: NEW YORK LIFE INSURANCE COMPANY
Policy No.: 44661603 Face Amount: $4,000,000
Name of Owner: GERALD GENOVESE TRUSTEE UNDER
IRREVOCABLE TRUST AUGUST 10, 1992.
Premium Split - Owner: Portion equal to the current term rate for the
Insured's age multiplied by the excess of the
current death benefit over the Company's current
premium Advance.
- Company: The balance.
Proceeds Split - Owner's Beneficiary: The balance.
- Company: An amount equal to the return of its premium
share.
Termination of Plan - First to occur of:
- Surrender of Policy by Owner
- Delivery of written notice by Owner to the Company
Named Fiduciary: Secretary of the Company -
Claims Manager: Secretary of the Company -
Address:
Telephone:
** A COPY OF THE FULL TEXT OF THE PLAN IS ANNEXED HERETO **
<PAGE> 2
THIS PLAN is adopted by agreement between the Company and the Owner:
DEFINITIONS:
A. "Company": GENOVESE DRUG STORES, INC.
B. "Insured": GERALDINE & LEONARD GENOVESE
C. "Insurer": NEW YORK LIFE INSURANCE COMP. #44661603
D. "Owner": GERALD GENOVESE TRUSTEE UNDER
IRREVOCABLE TRUST DATED 08/10/92
E. "Policy": The policy of insurance on the life of the Insured
issued by the Insurer and listed on Exhibit "A" annexed hereto
together with any supplementary contracts issued by the Insurer
in conjunction therewith.
F. "Premium Advance": The Company's Premium Advance shall be an
amount equal to the cumulative total of its share of premiums
paid on the Policy.
RECITALS:
A. The Owner is owner of the Policy, and the Insured is a valuable
employee of the Company. The Company wishes to continue this
employment relationship and, as an inducement thereto, is willing
to assist the Owner in the payment of premiums on the Policy as
an additional form of compensation to Insured as its employee.
B. In exchange for such premium assistance, the Owner is willing to
return to the Company its Premium Advance as provided herein.
C. This Plan is intended to qualify as a life insurance employee
benefit plan as described in Revenue Ruling 64-328.
THEREFORE, for value received, it is agreed:
1. Premium Payments
1.01 - Each annual premium on the policy shall be paid as follows:
(a) The owner shall pay a portion of each premium equal to
the current term rate for the Insured's age multiplied
by the excess of the current death benefit over the
Company's Premium Advance. Here, the "current term rate"
shall mean the lesser of the Insurer's rates for
individual one-year term life insurance available to all
standard risks or the rates specified in Revenue Rulings
64-328 and 66-110.
<PAGE> 3
(b) The Company shall pay all premium amounts not paid by
the Owner.
1.02 - The Owner's premium share the Company's premium share shall
be remitted to the Insurer before expiration of the grace
period (except premiums paid with policy loan).
1.03 - Dividends on the Policy, shall be applied as elected by the
Owner.
1.04 - The Policy may, at the Owner's discretion, provide for the
waiver of premium on the Insured's disability. If it does
so provide, the cost thereof shall be borne by the Owner,
the prior provisions of this Section 1 to the contrary
notwithstanding.
2. Rights of Parties
2.01 - The Owner shall be sole and exclusive owner of the Policy.
This includes all the rights of "Owner" under the terms of
the Policy including, but not limited to, the right to
designate beneficiaries, select settlement and dividend
options, borrow on the security of the Policy, and to
surrender the Policy. All such rights may be exercised by
the Owner without the Company's consent.
2.02 - In exchange for the Company's payment of its premium
contribution under Section 1, the Owner agrees to return
to the Company the amount of its Premium Advance on the
Insured's death. Provided, that nothing herein shall give
the Company any interest in any of the assets of the Owner,
including but not limited to, the Policy.
3. The Owner - The Owner shall have the right to assign any part of all
of the Owner's interest in the Policy and this Plan to any person,
entity or trust by execution of a written assignment delivered to the
Insurer.
4. Termination of Plan
4.01 - This Plan shall terminate on the first to occur of the
following:
(a) Surrender of the Policy by the Owner, who has the sole
and exclusive right of surrender.
(b) Delivery by the Owner of written notice of termination
to the Company.
4.02 - On any termination of the Plan, one of the following actions
shall be taken, the selection to be by the Owner:
(a) Surrender the Policy, in which event the Owner shall
return to the Company an amount equal to the lesser of:
<PAGE> 4
(1) The Company's premium Advance; or
(2) The policy's cash surrender value.
(b) Retain part or all of the Policy, in which event the
Owner shall return to the Company an amount equal to
the Company's Premium Advance.
Provided, that nothing herein shall give the Company any
interest in any of the assets of the owner, including but
not limited to, the Policy.
5. The Insurer - The Insurer shall be bound only by the provisions and
endorsement on the Policy, and any payments made or actions taken by
it in accordance therewith shall fully discharge it from all claims,
suits and demands of all persons whatsoever. It shall in no way be
bound by or be deemed to have notice of the provisions of this Plan.
6. Special Provisions - The following provisions are part of the Plan
and are intended to meet the requirements of the Employee Retirement
Income Security Act of 1974:
6.01 - The named fiduciary: The Secretary of the Company.
6.02 - The funding policy under this Plan is that all premiums on the
Policy be remitted to the Insurer when due.
6.03 - Direct payment by the insurer is the basis of payment of
benefits under this Plan, with those benefits in turn being
based on the payment of premiums as provided in the Plan.
6.04 - For claims procedure purposes, the "Claims Manager" shall be
the Secretary of the Company
(a) If for any reason a claim for benefits under this Plan is
denied by the Company, the Claim Manager shall deliver
to the claimant a written explanation setting forth the
specific reasons for the denial, pertinent references to
the Plan section on which the denial is based, such other
data as may be pertinent and information on the procedures
to be followed by the claimant in obtaining a review of
his claim, all written in a manner calculated to be
understood by the claimant. For the purpose:
(1) The claimant's claim shall be deemed filed when
presented orally or in writing to the Claims Manager.
(2) The Claims Manager's explanation shall be in writing
delivered to the claimant within 90 days of the date
the claim is filed.
(b) The claimant shall have 60 days following his receipt of
the denial of the claim to file with the Claims Manager a
written request for review of the denial. For such review,
the claimant or his representative may submit pertinent
documents and written issues and comments.
<PAGE> 5
(c) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within 60 days receipt
of the claimant's request for review of his claim. The
decision on review shall be written and shall include
specific reasons for the decision written in a manner
calculated to be understood by the claimant, as well as
specific references to the pertinent Plan provisions on
which the decision is based. If a copy of the decision is
not so furnished to the claimant within 60 days, the claim
shall be deemed denied on review.
7. Amendment - This plan may be amended at any time and from time to
time by the mutual written consent of the owner and the Company.
IN WITNESS WHEREOF the parties have signed this Plan this 13th day
of October, 1994.
GENOVESE DRUG STORES, INC.
BY /s/ Gene Wexler
---------------------------------------
Title V.P. General Counsel
---------------------------------
Gerald Genovese
---------------------------------------
GERALD GENOVESE-TRUSTEE
<PAGE> 6
EXHIBIT "A"
LIFE INSURANCE
<TABLE>
<CAPTION>
POLICY NUMBER FACE AMOUNT
- - ------------- -----------
<S> <C>
#44661603 NEW YORK LIFE $4,000,000
</TABLE>
<PAGE> 1
Exhibit 11
COMPUTATION OF NET INCOME PER COMMON SHARE
GENOVESE DRUG STORES, INC.
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------
February 3, January 28, January 29,
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Primary:
Weighted average shares
outstanding (A) 10,053,742 10,045,066 10,009,374
Equivalent shares--dilutive
stock options--based on
Treasury stock method using
average market price (B) (B) (B)
---------- ---------- ----------
10,053,742 10,045,066 10,009,374
---------- ---------- ----------
Net income $9,212,000 $8,306,000 $7,261,000
---------- ---------- ----------
Net income per common share (A) $.92 $.83 $.73
==== ==== ====
</TABLE>
(A) Adjusted, where appropriate, to reflect the effect of the 10 percent
stock dividends distributed in fiscal 1993, fiscal 1994 and fiscal
1995.
(B) The effect of equivalent shares of dilutive stock options is not
significant to net income per common share.
There is no significant difference between primary and fully diluted net income
per common share.
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Genovese Drug Stores, Inc.:
We consent to the incorporation by reference in the Registration Statement on
Form S-8 for the 1984 Employee Stock Option and Appreciation Rights Plan of our
report dated March 6, 1995 appearing in this Annual Report on Form 10-K of
Genovese Drug Stores, Inc. for the year ended February 3, 1995.
Deloitte & Touche LLP
Jericho, New York
April 26, 1995
<PAGE> 2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Genovese Drug Stores, Inc.:
We consent to the incorporation by reference in the Registration Statement on
Form S-8 for the 1987 Executive Bonus and Stock Plan of our report dated March
6, 1995 appearing in this Annual Report on Form 10-K of Genovese Drug Stores,
Inc. for the year ended February 3, 1995.
Deloitte & Touche LLP
Jericho, New York
April 26, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-03-1995
<PERIOD-START> JAN-29-1994
<PERIOD-END> FEB-03-1995
<CASH> 2,229
<SECURITIES> 0
<RECEIVABLES> 13,966
<ALLOWANCES> 0
<INVENTORY> 92,969
<CURRENT-ASSETS> 113,814
<PP&E> 117,504
<DEPRECIATION> 52,503
<TOTAL-ASSETS> 182,778
<CURRENT-LIABILITIES> 77,975
<BONDS> 34,314
<COMMON> 10,174
0
0
<OTHER-SE> 54,334
<TOTAL-LIABILITY-AND-EQUITY> 182,778
<SALES> 569,975
<TOTAL-REVENUES> 569,975
<CGS> 398,135
<TOTAL-COSTS> 398,135
<OTHER-EXPENSES> 152,493
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,635
<INCOME-PRETAX> 16,712
<INCOME-TAX> 7,500
<INCOME-CONTINUING> 9,212
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,212
<EPS-PRIMARY> .92
<EPS-DILUTED> .92
</TABLE>
