FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7603
HANNAFORD BROS. CO.
(Exact name of Registrant as specified in its charter)
Maine 01-0085930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
145 Pleasant Hill Road, Scarborough, Maine 04074
(Address of principal executive offices; Zip Code)
Registrant's telephone number, including area code: (207) 883-2911
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 .
As of July 25, 1997, there were 42,273,814 outstanding shares of
Common Stock, $.75 par value, the only authorized class of common stock
of the Registrant.
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INDEX
PART I - FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements
Consolidated Balance Sheets, June 28, 1997 and
December 28, 1996 3-4
Consolidated Statements of Earnings, Three Months
Ended June 28, 1997 and June 29, 1996 5
Consolidated Statements of Earnings, Six Months
Ended June 28, 1997 and June 29, 1996 6
Consolidated Statements of Cash Flows, Six Months
Ended June 28, 1997 and June 29, 1996 7-8
Notes and Schedules to Consolidated Financial
Statements 9-11
Item 2. Management's Discussion and Analysis of
Second Quarter 1997 Results 12-18
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 19-20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
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HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
(UNAUDITED)
June 28, December 28,
1997 1996
Current assets:
Cash and cash items $ 41,207 $ 42,505
Accounts receivable, net 13,911 17,384
Inventories 176,122 191,658
Prepaid expenses 7,258 5,834
Deferred income taxes 5,246 4,589
Total current assets 243,744 261,970
Property, plant and equipment, net 765,852 723,176
Leased property under capital leases, net 62,300 59,918
Other assets:
Goodwill, net 92,888 95,654
Deferred charges, net 32,309 26,332
Computer software costs, net 16,154 13,658
Miscellaneous assets 2,107 3,019
Total other assets 143,458 138,663
$1,215,354 $1,183,727
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands except share amounts)
(UNAUDITED)
June 28, December 28,
1997 1996
Current liabilities:
Current maturities of long-term debt $ 12,070 $ 14,213
Obligations under capital leases 1,916 1,775
Accounts payable 178,049 177,895
Accrued payroll 23,561 22,554
Other accrued expenses 21,493 21,205
Income taxes 2,214 2,532
Total current liabilities 239,303 240,174
Deferred income tax liabilities 23,061 23,757
Other liabilities 44,061 47,917
Long-term debt 238,571 227,525
Obligations under capital leases 78,736 75,198
Shareholders' equity:
Class A Serial Preferred stock, no par,
authorized 2,000,000 shares - -
Class B Serial Preferred stock,
par value $.01 per share,
authorized 28,000,000 shares - -
Common stock, par value $.75 per share:
Authorized 110,000,000 shares;
June 28, 1997: Issued, 42,338,316
shares, outstanding 42,330,463 shares.
December 28, 1996: Issued, 42,338,316
Shares, outstanding 42,280,695 shares. 31,754 31,754
Additional paid-in capital 116,216 119,399
Preferred stock purchase rights 423 423
Retained earnings 443,502 419,459
591,895 571,035
Less common stock in treasury
(June 28, 1997: 7,853 shares at cost.
December 28, 1996: 57,621 shares
at cost.) 273 1,879
Total shareholders' equity 591,622 569,156
$1,215,354 $1,183,727
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share data)
(UNAUDITED)
THREE MONTHS ENDED
June 28, June 29,
1997 1996
Sales and other revenues $775,687 $729,081
Cost of sales 581,072 552,736
Gross margin 194,615 176,345
Selling, general and administrative
expenses 155,243 138,819
Operating profit 39,372 37,526
Interest expense, net 7,110 5,251
Earnings before income taxes 32,262 32,275
Income taxes 12,384 12,766
Net earnings $ 19,878 $ 19,509
Per share of common stock:
Net earnings $ .47 $ .46
Cash dividends $ .135 $ .120
Weighted average number of common shares
outstanding 42,303 42,314
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share data)
(UNAUDITED)
SIX MONTHS ENDED
June 28, June 29,
1997 1996
Sales and other revenues $1,535,610 $1,419,606
Cost of sales 1,155,345 1,075,425
Gross margin 380,265 344,181
Selling, general and administrative
expenses 309,117 276,882
Operating profit 71,148 67,299
Interest expense, net 13,585 10,719
Earnings before income taxes 57,563 56,580
Income taxes 22,095 22,397
Net earnings $ 35,468 $ 34,183
Per share of common stock:
Net earnings $ .84 $ .81
Cash dividends $ .27 $ .24
Weighted average number of common shares
outstanding 42,287 42,309
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(UNAUDITED)
SIX MONTHS ENDED
June 28, June 29,
1997 1996
Cash flows from operating activities:
Net income $ 35,468 $ 34,183
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 44,284 36,551
(Increase) decrease in inventories 15,535 (2,423)
(Increase) decrease in receivables
and prepayments 2,062 (1,667)
Increase (decrease) in accounts payable
and accrued expenses (2,348) 14,221
Increase (decrease) in income taxes payable (317) 3,726
Increase (decrease) in deferred taxes (1,353) 887
Other operating activities 41 135
Net cash provided by operating
activities 93,372 85,613
Cash flows from investing activities:
Acquisition of property, plant and
equipment (82,331) (88,067)
Sale of property, plant and
equipment, net 1,097 2,863
Increase in deferred charges (4,601) (4,454)
Increase in computer software costs (3,863) (3,057)
Net cash used in investing activities (89,698) (92,715)
Cash flows from financing activities:
Principal payments under capital
lease obligations (871) (685)
Proceeds from issuance of long-term debt 24,100 75,000
Payments of long-term debt (15,197) (17,230)
Issuance of common stock 6,325 6,240
Purchase of treasury stock (7,903) (8,729)
Dividends paid (11,426) (10,152)
Net cash provided by (used in)
financing activities (4,972) 44,444
Net Increase in cash and cash items (1,298) 37,342
Cash and cash items at beginning of period 42,505 7,017
Cash and cash items at end of period $ 41,207 $ 44,359
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash flow information
(In thousands)
(UNAUDITED)
SIX MONTHS ENDED
June 28, June 29,
Cash paid during the first six months for: 1997 1996
Interest (net of amount capitalized,
$1,264 in 1997 and $1,291 in 1996) $13,465 $10,584
Income taxes $18,152 $16,542
Supplemental disclosure of non-cash investing and financing activity
Capital lease obligations of $4,550,000 were incurred during the
six-month period ended June 28, 1997 when the Company entered into
real estate leases.
Disclosure of accounting policy
For the purposes of the Consolidated Statements of Cash Flows, the
Company considers all highly liquid debt instruments with
maturities of three months or less when purchased to be cash items.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. In the
opinion of management, the amounts shown reflect all adjustments
necessary to present fairly the financial position and results of
operations for the periods presented. All such adjustments are of a
normal recurring nature. The year-end consolidated balance sheet was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
Earnings per share of common stock have been determined by dividing
net earnings by the weighted average number of shares of common stock
outstanding. The assumed exercise of existing employee stock options
has been excluded since it does not result in any material dilution.
It is suggested that the financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's latest annual report.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
2. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
(In thousands)
(Unaudited)
June 28, December 28,
1997 1996
Land and improvements $ 122,098 $ 117,218
Buildings 274,533 252,228
Furniture, fixtures & equipment 437,407 404,725
Leasehold interests & improvements 260,270 245,490
Construction in progress 32,530 31,850
1,126,838 1,051,511
Less accumulated depreciation and
amortization 360,986 328,335
$ 765,852 $ 723,176
3. LEASED PROPERTY
Leased property under capital leases consists of the following:
(in thousands)
(Unaudited)
June 28, December 28,
1997 1996
Real property $87,597 $83,047
Less accumulated amortization 25,297 23,129
$62,300 $59,918
4. LONG-TERM DEBT
In February 1997, the Company received the proceeds of a $20 million
senior uncollateralized debt financing. The term of the debt is
12 years with an average life of 10 years and an interest rate of
7.4%.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
5. ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128 -
Earnings per Share. This Statement is effective for financial
statements issued for periods ending after December 15, 1997 with
earlier application not permitted. The Statement requires dual
presentation of basic and diluted earnings per share on the income
statement. The Company's basic earnings per share for fiscal 1997
will be calculated similar to its currently disclosed earnings per
share. Diluted earnings per share will not be materially different
from basic earnings per share.
In June 1997, the FASB issued SFAS No. 130 - Reporting Comprehensive
Income, which requires the separate reporting of all changes to
shareholders' equity, and SFAS No. 131 - Disclosures about Segments
of an Enterprise and Related Information, which revises existing
guidelines about the level of financial disclosure of a Company's
operations. Both Statements are effective for financial statements
issued after December 15, 1997. The Company has not determined the
impact of the new standards, but does not expect them to have a
material impact to existing financial reporting.
6. COMMON STOCK
In May 1997, the shareholders of the Company approved an amendment to
the Hannaford Bros. Co. Employee Stock Purchase Plan. This amendment
increased the total authorized shares by an additional 750,000
thereby permitting continued use of the Plan during 1997 and future
years.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1997
RESULTS
RESULTS OF OPERATIONS
SALES
Sales and other revenues rose 8.2% for the first half of 1997, to
$1,535.6 million, an increase of $116.0 million over the first half of
1996. Sales from supermarkets that were open in both periods
presented ("same store sales") increased $14.7 million or 1.1%.
Additional supermarket sales of $94.6 million resulted from the net
impact of new, expanded and closed stores. Other sales and revenues,
which include wholesale, trucking, home delivery, real estate and
miscellaneous retail operations, increased $6.7 million.
In the second quarter of 1997, sales and revenues were $775.7
million, an increase of $46.6 million or 6.4% over those reported for
the same period of 1996. Same store sales decreased $5.3 million
or 0.8%. Sales and other revenues from the Easter holiday occurred
in the first quarter this year and the second quarter last year.
Adjusting for estimated Easter sales, same store sales increased 0.4%
in the quarter. Additional supermarket sales of $48.7 million
resulted from the net impact of new, expanded and closed stores.
Other sales and revenues increased $3.2 million.
Same store sales were up 1.1% this year as compared to 3.3% in the
first half of 1996 and 3.2% for the full year 1996. The Company
attributes a portion of this decline to a very low inflation rate in
food prices and a decrease in the availability of food stamps in most
of the states where it operates. The 1997 increase continues
positive comparative store sales results that started in late 1993.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1997 RESULTS
GROSS MARGIN
During the first six months of 1997, gross margins increased to 24.8%
of sales and other revenues in comparison to 24.2% for the comparable
1996 period. For the second quarter of 1997, gross margin was 25.1%
versus 24.2% for the second quarter of 1996. The 1997 increases are
the result of improved selling margins in certain of the Company's
marketing territories coupled with better operations in the Southeast,
including the Company's new distribution center which began product
delivery in November 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased to 20.1% of
sales and other revenues in the first half of 1997 as compared to
19.5% in the first half of 1996. For the second quarter of 1997,
selling, general and administrative expenses were 20.0% of sales and
other revenues up from 19.0% for the second quarter of 1996, but down
from the 20.2% reported in the first quarter of 1997. The second
quarter increase is composed of rising payroll costs to meet a higher
level of service orientation within the Company's supermarkets,
increased advertising costs and higher depreciation charges. These
increases reflect the continuing costs of establishing the Company's
position in the Southeast and testing of a home shopping service.
INTEREST EXPENSE, NET
Net interest expense expressed as a percentage of sales and other
revenues was 0.9% in the first half of 1997 versus 0.8% in the first
half of 1996. For the second quarter of 1997, net interest expense
was 0.9% of sales and other revenues up from 0.7% for the second
quarter of 1996. Net interest expense in the first half of 1997 was
$13.6 million, an increase of 26.7% from the 1996 first half net
interest expense of $10.7 million. These increases are primarily the
result of an increase in average debt levels coupled with a decrease
in invested cash which is reflected as a decrease in interest income.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1997 RESULTS
INCOME TAXES
The effective income tax rate decreased in both the first half and
second quarter of 1997 to 38.4% from 39.6% in the corresponding
periods of 1996. This lower rate is the result of a reduction in the
Company's overall state income tax rate. Assuming there are no
federal or state income tax rate changes, the Company expects the
effective tax rate for fiscal 1997 to be in the 38% to 39% range.
NET EARNINGS AND EARNINGS PER COMMON SHARE
Net earnings increased 3.8% in the first half of 1997 to $35.5 million
or 2.3% of sales and other revenues, an increase of $1.3 million from
1996 first half earnings of $34.2 million or 2.4% of sales and other
revenues. Second quarter 1997 net earnings were $19.9 million or 2.6%
of sales and other revenues as compared to $19.5 million or 2.7% of
sales and other revenues in the second quarter of 1996. Expressed as
a percentage of sales, net earnings decreased in the first half and
second quarter of 1997 as increased selling, general and
administrative expenses and interest expense were only partially
offset by increased margins and a reduction in the Company's income
tax provision.
Net earnings per common share in the first half of 1997 were $0.84 as
compared to $0.81 in the first half of 1996, an increase of 3.7%. Net
earnings per common share in the second quarter of 1997 were $0.47 as
compared to $0.46 in the second quarter of 1996.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1997 RESULTS
CAPITAL RESOURCES AND LIQUIDITY
GENERAL
The current ratio (FIFO basis) on June 28, 1997 was 1.09 while working
capital (FIFO basis) was $22.0 million, or 1.8% of total assets.
The Company values the majority of its inventories using the
LIFO method. The current cost of inventories exceeded the LIFO
valuation by approximately $17.5 million on June 28, 1997 and $17.1
million on December 28, 1996. The Company's liquidity position is
stronger than indicated by stated working capital and current ratios
because of available unused lines of revolving credit of $71.7 million
and available unused lines of short-term credit of $35.0 million on
June 28, 1997. Cash and cash items decreased $1.3 million to $41.2
million from $42.5 million at December 28, 1996. This decrease is
primarily the result of cash used in investing and financing
activities offset by cash provided by operating activities.
CASH FLOWS FROM OPERATING ACTIVITIES
Cash provided by operating activities was $93.4 million in the first
half of 1997, an increase of $7.8 million over the $85.6 million
provided in the first half of 1996. This increase is attributable
to a decrease in inventories coupled with higher depreciation and
amortization partially offset by a decrease in accounts payable and
accrued expenses.
CASH FLOWS FROM INVESTING ACTIVITIES
Cash used in investing activities decreased $3.0 million during the
first half of 1997 to $89.7 million from $92.7 million in the
first half of 1996. This decrease is the result of slightly lower
capital expenditures during the current period. Total capital
expenditures totaled $95.3 million in the first half of 1997 and were
composed of $82.3 million in additions to property, plant and
equipment, $8.5 million in deferred charges and computer software
costs, and $4.5 million in non-cash capital lease additions. These
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1997 RESULTS
first half capital expenditures are primarily composed of costs
incurred in meeting the Company's 1997 capital program. The Company
expects to spend in excess of $175 million on new, relocated and
expanded stores to open in 1997 and 1998, and improvements necessary
to maintain current facilities and systems.
During the first half of 1997, the Company opened nine supermarkets
including four new stores, three relocations and two expansions. In
January 1997, the Company opened an expanded supermarket in
Chelmsford, Massachusetts, with approximately 35,000 square feet of
retail selling space. In January, the Company also opened a new store
in Shallotte, North Carolina, with approximately 35,000 square feet of
retail selling space. This new supermarket replaced a smaller,
outdated facility. In February 1997, the Company opened a new
supermarket in Danville, Virginia with approximately 41,000 square
feet of retail selling space. Also in February, the Company opened an
expanded supermarket as well as a new store in Wilmington, North
Carolina, with approximately 41,000 square feet of retail selling
space. The new supermarket replaced a smaller, outdated facility. In
March 1997, the Company opened a new supermarket in Richmond,
Virginia, with approximately 46,000 square feet of retail selling
space which replaced a smaller, outdated facility. Also in March, the
Company opened a new supermarket in Charlotte, North Carolina, with
approximately 41,000 square feet of retail selling space. In April
1997, the Company opened two new supermarkets in Virginia Beach,
Virginia, one with approximately 40,000 square feet of retail selling
space and one with approximately 35,000 square feet of retail selling
space.
During the second half, the Company expects to open ten supermarkets
including five new stores in the Southeast and one new store, two
relocations and two expansions in the Northeast. This program is
subject to continuing change and review as conditions warrant. Net
square footage of retail selling space is expected to increase by
approximately 11% in 1997. Construction will also start on a number
of stores to be opened in 1998. The 1997 capital program is being
financed by internally generated funds, long-term debt, leases and
lines of credit.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1997 RESULTS
CASH FLOWS FROM FINANCING ACTIVITIES
Cash used in financing activities was $5.0 million in the first
half of 1997 as compared to $44.4 million of cash provided by
financing activities in the first half of 1996. This decrease is
principally the result of reduced proceeds from the issuance of long-
term debt. During the first half of 1997, the Company utilized its
debt proceeds to repay $10.3 million on its revolving lines of credit.
Subsequent to this repayment, the Company received $4.1 million of
proceeds from borrowings on its revolving lines of credit. The
Company purchased 227,644 shares of common stock during the first half
of 1997 at a cost of $7.9 million. This repurchased stock was used to
fund the Company's stock based benefit plans with the balance being
held in treasury. This amount was offset by proceeds of $6.3 million
received during the first half of 1997 from the issuance of 277,412
shares of treasury stock. The Company paid $11.4 million in dividends
to common shareholders in the first half of 1997. These dividend
amounts represent 32.2% of net earnings available to common
shareholders.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF SECOND QUARTER 1997 RESULTS
FORWARD-LOOKING INFORMATION
From time to time, information provided by the Company or statements made
by its associates may contain forward-looking statements, as defined in
the Private Securities Litigation Reform Act of 1995. Examples of such
statements in this report include those concerning the Company's expected
future tax rates, construction schedules and capital expenditures. The
Company cautions investors that there can be no assurance that actual
results or business conditions will not differ materially from those
projected or suggested in such forward-looking statements as a result of
various factors and risks including, but not limited to the following:
(1) Hannaford's future operating results are dependent on its ability to
achieve increased sales and to control expenses. Factors such as lower
than expected inflation, product cost fluctuations particularly in
perishable categories, changes in product mix or the use of promotional
items, both of which may affect pricing strategy, continued or increased
competitive pressures from existing competitors and new entrants,
including price cutting strategies, and deterioration in general or
regional economic conditions are all factors which could adversely affect
sales projections. Other components of operating results could be
adversely affected by state or federal legislation or regulation that
increases costs, increases in interest rates or the Company's cost of
borrowing, increases in labor rates due to low unemployment or other
factors, unanticipated costs related to the opening of new stores or the
inability to control various expense categories.
(2) Hannaford's future growth is dependent on its ability to expand its
retail square footage. Increases in interest rates or the Company's cost
of capital, the unavailability of funds for capital expenditures and the
inability to develop new stores or convert existing stores as rapidly as
planned are all risks to our projected future expansion.
(3) Adverse determinations with respect to pending or future litigation
or other material claims against Hannaford could affect actual results.
Furthermore, the market price of Hannaford common stock could be subject
to fluctuations in response to quarter to quarter variations in operating
results, changes in analysts' earnings estimates, market conditions in
the retail sector, especially in the supermarket industry, as well as
general economic conditions and other factors external to Hannaford.
<PAGE>
PART II - OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on May 12, 1997.
(b) Not applicable.
(c) The following issues were voted upon by shareholders. All
matters were approved as indicated:
1. ELECTION OF FOUR CLASS I DIRECTORS TO SERVE UNTIL THE ANNUAL
MEETING OF SHAREHOLDERS IN 2000.
WITHHOLD
AUTHORITY BROKER
FOR FOR TOTAL NON-VOTES
Bruce G. Allbright 35,137,080 284,172 35,421,252 0
William T. End 35,158,137 263,115 35,421,252 0
James W. Gogan 35,156,300 264,952 35,421,252 0
Claudine B. Malone 35,138,293 282,959 35,421,252 0
2. ELECTION OF ONE CLASS III DIRECTOR TO SERVE UNTIL THE ANNUAL
MEETING OF SHAREHOLDERS IN 1999.
WITHHOLD
AUTHORITY BROKER
FOR FOR TOTAL NON-VOTES
Robert J. Murray 35,140,389 280,863 35,421,252 0
3. RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
JANUARY 3, 1998.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
TOTAL 35,107,076 47,175 267,001 0
<PAGE>
4. TO AUTHORIZE AN ADDITIONAL 750,000 SHARES OF COMMON STOCK FOR THE
EMPLOYEE STOCK PURCHASE PLAN.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
TOTAL 34,836,833 435,594 148,825 0
(d) Not applicable
Item 5: Other Information
A limited review was made of the results of the three-month and
six-month periods ended June 28, 1997, by Coopers & Lybrand.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation SK
10.1 Fourth Amendment to the Hannaford Bros. Co. Employee
Retirement Plan, effective January 1, 1997.
10.2 Amended and Restated Hannaford Bros. Co. Supplemental
Executive Retirement Plan, effective January 1, 1998.
10.3 First Amendment to the Hannaford Southeast Savings and
Investment Plan, effective July 1, 1995
10.4 Second Amendment to the Hannaford Southeast Savings and
Investment Plan, effective July 1, 1997
10.5 Hannaford Bros. Co. Nonqualified Savings and Investment
Plan, effective January 1, 1998
10.6 Amended and Restated Hannaford Bros. Co. Savings and
Investment Plan, effective generally January 1, 1998
15 Letter of Coopers & Lybrand L.L.P. furnished pursuant to
Regulation SX.
23 Letter of Coopers & Lybrand L.L.P. regarding incorporation
by reference to certain forms S-8 of the Registrant.
27 Financial Data Schedule
(b) There were no reports filed on Form 8-K during the second
quarter.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
HANNAFORD BROS. CO.
Date August 6, 1997 s/Blythe J. McGarvie
Blythe J. McGarvie
Senior Vice President
(Chief Financial Officer)
Date August 6, 1997 s/Charles H. Crockett
Charles H. Crockett
Assistant Secretary
Exhibit 10.1
FOURTH AMENDMENT TO THE
HANNAFORD BROS. CO. EMPLOYEES' RETIREMENT PLAN
The Hannaford Bros. Co. Employees' Retirement Plan (the "Plan") was
last amended and restated effective generally January 1, 1993. The Plan
was thereafter amended on three occasions and is hereby further amended in
the following respects:
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. Article XXVI is hereby amended by adding a new Section 26.17 to
read as follows:
"26.7 EARLY RETIREMENT INCENTIVE PROGRAM FOR WAREHOUSE
PARTICIPANTS. A Warehouse Participant who meets the requirements of
subsection (a) shall receive the benefit enhancement described in
subsection (b).
(a) To receive the benefit enhancement described in
subsection (b) a Participant must -
(i) have attained age fifty-five (55) and completed
ten (10) or more Years of Benefit Service on or before
March 31, 1997; and
(ii) have elected by March 31, 1997, to retire on or
after February 13, 1997, and or or before March 31, 1997.
(b) A Participant who meets the requirements of sub-
section (a) shall receive an additional two (2) years of age or
an additional two (2) Years of Benefit Service, or a combination
of additional years of age and Years of Benefit Service not
exceeding two (2), whichever will produce the greatest Accrued
Benefit under Section 4.01."
3. This Amendment shall be effective generally as of January 1, 1997.
Exhibit 10.2
HANNAFORD BROS. CO.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
EFFECTIVE JANUARY 1, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
ARTICLE II ELIGILITY FOR BENEFITS 2
2.1 RETIREMENT DATES 2
2.2 VESTING REQUIREMENT 3
ARTICLE III PLAN BENEFITS 3
3.1 CASH BALANCE FORMULA 3
3.2 RETIREMENT BENEFIT 5
3.3 PRE-RETIREMENT DEATH BENEFIT 5
3.4 POST-RETIREMENT DEATH BENEFIT 5
3.5 PAYMENT OF BENEFITS 5
3.6 CHANGE IN CONTROL EVENT 5
ARTICLE IV ADMINISTRATION 7
4.1 ADMINISTRATIVE COMMITTEE 7
4.2 ACTION BY COMMITTEE 7
4.3 DELEGATION 7
4.4 CLAIMS PROCEDURE 7
4.5 INDEMNIFICATION 8
ARTICLE V MISCELLANEOUS 9
5.1 AMENDMENT AND TERMINATION OF PLAN 9
5.2 EMPLOYEE STATUS 9
5.3 ENFORCEMENT 9
5.4 FUNDING 9
5.5 ASSIGNMENT 9
5.6 TAXES 9
5.7 PLAN DOCUMENTS 10
<PAGE>
PREAMBLE
The primary objective of the Hannaford Bros. Co. Supplemental
Executive Retirement Plan, as amended and restated herein, is to provide a
competitive level of retirement income in order to attract and retain
selected executives. The plan is designed to provide a benefit which, when
added to other retirement income of an executive, will meet this objective.
Participation in the plan shall be limited to employees of Hannaford Bros.
Co. and its subsidiaries who are selected by the Board of Directors.
ARTICLE I
DEFINITIONS
1.1 "Basic Plan" shall mean the Hannaford Bros. Co. Employees'
Retirement Plan, as amended.
1.2 "Beneficiary" shall mean the person or persons designated by a
Participant to receive any benefits payable under the Basic Plan following
the death of the Participant.
1.3 "Board" or "Board of Directors" shall mean the Board of
Directors of Hannaford Bros. Co.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.5 "Committee" shall mean the members of the Human Resources
Committee of the Board of Directors who are not employees of the Company or
one of its subsidiaries.
1.6 "Company" shall mean Hannaford Bros. Co. and any successor to
all or a major portion of its assets or business which assumes the
obligations of Hannaford Bros. Co. under the Plan.
1.7 "Compensation" shall mean a Participant's compensation as
defined in the Basic Plan, without regard to those provisions in the Basic
Plan incorporating the limit on the amount of compensation which may be
taken into account under Section 401(a)(17) of the Code and including any
amounts of basic compensation deferred under a nonqualified deferred
compensation plan sponsored by the Company.
1.8 "Effective Date" of this amendment and restatement shall mean
January 1, 1998.
<PAGE>
1.9 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
1.10 "Life Annuity" shall mean a series of equal monthly payments,
beginning on the Participant's Retirement Date and ending with the monthly
payment immediately preceding the Participant's death.
1.11 "Participant" shall mean an officer of the Company or one of
its subsidiaries, and any other employee of the Company or one of its
subsidiaries who is designated by the Committee, who is a member of a
select group of management or highly compensated employees.
1.12 "Plan" shall mean the Hannaford Bros. Co. Supplemental
Executive Retirement Plan as set forth herein and hereafter amended.
1.13 "Retirement" shall mean the termination of a Participant's
employment with the Company or one of its subsidiaries and the commencement
of benefit payments under the Plan.
1.14 "Retirement Date" shall mean one of the dates specified in
Article II.
ARTICLE II
ELIGIBILITY FOR BENEFITS
2.1 RETIREMENT DATES. A Participant is eligible to retire from
the Company or one of its subsidiaries and receive a benefit under this
Plan beginning on one of the following dates:
(a) "Normal Retirement Date", which is the first day of the
month coinciding with or next following the Participant's normal
retirement date under the Basic Plan.
(b) "Early Retirement Date", which is the first day of any
month coinciding with or following the date the Participant reaches
age fifty-five (55) and prior to the Participant's Normal
Retirement Date.
(c) "Deferred Retirement Date", which is the first day of the
month coinciding with or next following the date the Participant
terminates employment with the Company or one of its subsidiaries,
provided such termination of employment occurs after the
Participant's Normal Retirement Date.
<PAGE>
2.2 VESTING REQUIREMENT. No benefits are payable under this Plan,
other than a pre-retirement death benefit, unless the Participant is vested
under the Basic Plan.
ARTICLE III
PLAN BENEFITS
3.1 CASH BALANCE FORMULA. Effective January 1, 1998, the benefits
payable to or in respect of Participants shall be determined as follows:
(a) CASH BALANCE ACCOUNT. Solely for purposes of determining
the amount of retirement or death benefits payable under the Plan,
each Participant's benefit shall be expressed as an account ("Cash
Balance Account" or "Account"). Each Cash Balance Account shall be
adjusted in accordance with subsection (b) to reflect Contribution
Credits and in accordance with subsection (c) to reflect Interest
Credits. No separate account shall be established or maintained
under this Plan, and no Participant shall have a claim to any
specific assets of the Company or any of its subsidiaries.
The opening Account balance of a Participant who is an Employee
on December 31, 1997, shall equal the present value of the
Participant's December 31, 1997, annual benefit under this Plan,
assuming, in the case of a Participant who has attained age sixty-
five (65), that January 1, 1998, is the Participant's Retirement
Date. The December 31, 1997, annual benefit of a Participant who
has not attained age sixty-five (65) shall equal the actuarial
equivalent value, as of such date, of the benefit such Participant
would receive if the Participant terminated employment on December
31, 1997, survived to age sixty-five (65), and commenced receiving
benefits on the first day of the month coinciding with or next
following the Participant's sixty-fifth (65th) birthday. Present
value shall be based on the interest rate and mortality table used
to establish the January 1, 1998, opening account balances of
participants in the Basic Plan. Actuarial equivalence shall be
determined in accordance with the provisions of the Basic Plan.
The opening Account balance of a Participant who is an
Employee on January 1, 1998, shall be increased in accordance with
the following table, based on the Participant's age on December 31,
1997:
<PAGE>
AGE INCREASE AGE INCREASE
65 and over 0% 44 66%
64 6% 43 60%
63 12% 42 54%
62 18% 41 48%
61 24% 40 42%
60 30% 39 36%
59 36% 38 30%
58 42% 37 24%
57 48% 36 18%
56 54% 35 12%
55 60% 34 6%
54 66% 33 and under 0%
45-53 72%
The Account balance of a Participant who does not have a
nonforfeitable right to his or her accrued benefit under the Basic
Plan and who terminates employment after December 31, 1997, shall
be restored upon his or her reemployment by the Company or one of
its subsidiaries, with Interest Credits from his or her termination
of employment date, unless the number of his or her consecutive
breaks in service as of his or her reemployment commencement date
equals or exceeds five (5), as determined in accordance with the
Basic Plan.
(b) CONTRIBUTION CREDIT. At the end of each month beginning
with the month in which participation commences, the Cash Balance
Account of each Participant shall be credited with an amount equal
to three percent (3%) of the excess of the Participant's
Compensation for such month over the Participant's compensation for
such month under the Basic Plan ("Contribution Credit"). The Cash
Balance Account of a Participant whose service with the Company or
one of its subsidiaries is terminated on account of a nonwork-
related disability for which he or she receives Social Security
disability income benefits shall be credited with Contribution
Credits for the period during which such disability income benefits
continue, based upon the excess of the Participant's monthly rate
of Compensation over the his or her monthly rate of compensation
under the Basic Plan immediately preceding commencement of his or
her disability.
(c) INTEREST CREDIT. Interest shall be credited monthly on
the beginning Account balance of each Participant ("Interest
Credit") less any distributions at the same rate that interest is
credited for such period on the account balances of participants
under the Basic Plan.
<PAGE>
3.2 RETIREMENT BENEFIT. On his or her Retirement Date a
Participant shall be entitled to a benefit under this Plan equal to the
value of the Participant's Cash Balance Account.
3.3 PRE-RETIREMENT DEATH BENEFIT. If the Participant dies prior
to the date payment of his or her benefit commences under this Plan, the
Participant's Cash Balance Account shall be paid to the surviving spouse or
Beneficiary entitled to receive any death benefit payable with respect to
the Participant under the Basic Plan. In the absence of such surviving
spouse or designated beneficiary, the Account shall be paid to the
Participant's estate.
3.4 POST-RETIREMENT DEATH BENEFIT. If the Participant dies after
payment of his or her benefit commences under this Plan, a death benefit
shall be payable to his or her surviving spouse or Beneficiary, as the case
may be, only to the extent that such death benefit is provided under the
form of benefit payment in effect under Section 3.5.
3.5 PAYMENT OF BENEFITS. A Participant's Cash Balance Account
shall be distributed in cash in the form of a lump sum, determined in
accordance with the provisions of the Basic Plan, or annual installments
over a period not exceeding ten (10) years. Payment shall be made or
commence to the Participant as soon as practicable following termination of
employment and not later than the last business day of the calendar month
following the month in which the Participant terminates employment or
January 31 of the calendar year following the calendar year for which the
Participant terminates employment. Each Participant shall elect the form
and time of payment at least twenty-four (24) months before payment shall
be made. For purposes of this Plan, a termination of employment occurs on
the date a Participant ceases to be employed by the Company or one of its
subsidiaries and is no longer employed by any of them.
Death benefits shall be paid in a cash lump sum as soon as
practicable following a Participant's death and not later than the last
business day of the calendar month following the month in which the
Participant dies.
3.6 CHANGE IN CONTROL EVENT.
(a) Upon the termination of a Participant's employment with
the Company following the occurrence of a Change in Control Event,
the benefits payable with respect to the Participant shall be
determined in accordance with the applicable provisions of this
Article III and any employment continuity agreement then in effect
between the Participant and the Company.
(b) Each of the following events shall constitute a Change in
Control Event for purposes of this Section:
<PAGE>
(i) Any person acquires beneficial ownership of Company
securities and is or thereby becomes a beneficial owner of
securities entitling such person to exercise twenty-seven
percent (27%) or more of the combined voting power of the
Company's then outstanding stock.
"Beneficial ownership" shall be determined in accordance
with Regulation 13D under the Securities Exchange Act of 1934,
or any similar successor regulation or rule; and the term
"person" shall include any natural person, corporation,
partnership, trust or association, or any group or combination
thereof, whose ownership of Company securities would be
required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(ii) Within any twenty-five (25) month period, individuals
who were Outside Directors at the beginning of such period,
together with any other Outside Directors first elected as
directors of the Company pursuant to nominations approved or
ratified by at least two-thirds (2/3) of the Outside Directors in
office immediately prior to such respective elections, cease to
constitute a majority of the Board of Directors.
"Outside Director" as of a given date shall mean a member of
the Company's Board who has been a director of the Company
throughout the six (6) months prior to such date and who has not
been an employee of the Company at any time during such six (6)
month period.
(iii) The Company ceases to be a reporting company pursuant
to Section 13(a) of the Securities Exchange Act of 1934 or any
similar successor provision.
(iv) The Company's stockholders approve:
(A) any consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation or
pursuant to which shares of Company common stock would be
converted into cash, securities or other property, other than
a merger or consolidation of the Company in which the holders
of the Company's common stock immediately prior to the merger
or consolidation have substantially the same proportionate
ownership and voting control of the surviving corporation
immediately after the merger or consolidation; or
(B) any sale, lease, exchange, liquidation or other
transfer (in one transaction or a series of transactions) of
all or substantially all of the assets of the Company.
<PAGE>
Notwithstanding subparagraphs (A) and (B) above, the term
"Change in Control Event" shall not include a consolidation,
merger, or other reorganization if upon consummation of such
transaction all of the outstanding voting stock of the Company
is owned, directly or indirectly, by a holding company, and
the holders of the Company's common stock immediately prior to
the transaction have substantially the same proportionate
ownership and voting control of the holding company.
ARTICLE IV
ADMINISTRATION
4.1 ADMINISTRATIVE COMMITTEE. The Committee shall have complete
discretionary authority to control and manage the operation and
administration of the Plan and to construe Plan provisions. Subject to the
provisions of the Plan, the Committee from time to time may establish rules
for the administration and interpretation of the Plan. The final
determination of the Committee as to any disputed questions shall be
conclusive. All actions, decisions and interpretations of the Committee in
administering the Plan shall be made in a uniform and nondiscriminatory
manner.
4.2 ACTION BY COMMITTEE. A majority of the Committee shall
constitute a quorum, and an action of the majority present at any meeting
shall be deemed the action of the Committee. Any member of the Committee
may participate in a meeting of the Committee through conference telephone
or similar communications equipment by means of which all individuals
participating in the meeting can hear each other. Any action of the
Committee may be taken without a meeting if all members of the Committee
sign written consents setting forth the action taken or to be taken, at any
time before or after the intended effective date of such action.
4.3 DELEGATION. The Committee may authorize one or more of its
members to execute or deliver any instrument, make any payment or perform
any other act which the Plan authorizes or requires the Committee to do.
The Committee may employ counsel and other agents, may delegate ministerial
duties to such agents or to employees of the Company and may procure such
clerical, accounting, actuarial, consulting and other services as it may
require in carrying out the provisions of the Plan.
4.4 CLAIMS PROCEDURE. If an application for a benefit ("claim")
is denied by the Committee, the Committee shall give written notice of such
denial to the applicant, by certified or registered mail, within 90 days
after the claim was filed with the Committee; provided, however, that such
90-day period may be extended to 180 days by the Committee if it determines
<PAGE>
that special circumstances exist which require an extension of the time
required for processing the claim. Such denial shall set forth:
(a) the specific reason or reasons for the denial;
(b) the specific Plan provisions on which the denial is
based;
(c) any additional material or information necessary for the
applicant to perfect the claim and an explanation of why such
material or information is necessary; and
(d) an explanation of the Plan's claim review procedure.
Following receipt of such denial, the applicant or his or her duly
authorized representative may:
(a) request a review of the denial by filing a written
application for review with the Committee within 60 days after
receipt by the applicant of such denial;
(b) review documents pertinent to the claim at such
reasonable time and location as shall be mutually agreeable to the
applicant and the Committee; and
(c) submit issues and comments in writing to the Committee
relating to its review of the claim.
The Committee shall, after consideration of the application for
review, render a decision and shall give written notice thereof to the
applicant, by certified or registered mail, within 60 days after receipt by
the Committee of the application for review; provided, however, that such
60-day period may be extended to 120 days by the Committee if it determines
that special circumstances exist which require an extension of the time
required for processing the application for review. Such notice shall
include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
4.5 INDEMNIFICATION. The Company shall indemnify and hold
harmless each member of the Committee against all expenses and liabilities
arising out of his or her acts or omissions with respect to the Plan,
provided such member would be entitled to indemnification pursuant to the
bylaws of the Company.
<PAGE>
ARTICLE V
MISCELLANEOUS
5.1 AMENDMENT AND TERMINATION OF PLAN. The Board may at any
time, in its sole discretion, terminate this Plan or amend the Plan in
whole or in part. No such termination or amendment shall have the effect
of retroactively reducing any benefit, based on a Participant's service
with the Company and its subsidiaries and Compensation as of the date of
such termination or amendment, or restricting any right of a Participant,
retired Participant, surviving spouse, or other person or estate entitled
to benefits hereunder.
5.2 EMPLOYEE STATUS. Nothing contained herein will confer upon
any Participant the right to be retained in the employ of the Company or
any of its subsidiaries or any other right not expressly provided for
herein, nor will the existence of this Plan impair the right of the Company
or any of its subsidiaries to discharge or otherwise deal with a
Participant.
5.3 ENFORCEMENT. Except as hereinafter provided, the Company
shall indemnify any Participant or other person having a right to receive
payments from the Company in accordance with the terms of the Plan for all
court costs and reasonable attorneys' fees, including counsel's out of
pocket expenses for actuarial or accounting services, incurred in
connection with bringing a civil action in state or federal court to
recover benefits due or clarify rights to future benefits under the terms
of the Plan. The Company shall not be required to indemnify any person for
such costs and fees if a state or federal court finds that the action is
frivolous or if the plaintiff voluntarily dismisses the action.
5.4 FUNDING. This Plan is unfunded for purposes of the Code and
Title I of ERISA and is not intended to meet the requirements of Section
401(a) of the Code. The Plan constitutes the Company's mere promise to pay
benefits in the future, and a Participant hereunder shall have no greater
rights than a general, unsecured creditor of the Company.
5.5 ASSIGNMENT. To the maximum extent permitted by law, no
benefit under this Plan shall be assignable or subject in any manner to
alienation, sale, transfer, assignment, claims of creditors, pledge,
attachment or encumbrance of any kind.
5.6 TAXES. Any and all taxes that may be due and owing with
respect to any payment under the Plan shall be the sole responsibility of
the persons to whom and for whose benefit such payment is made; provided,
however, that the Company shall withhold from any amount payable under the
Plan all amounts that are required by law to be withheld.
<PAGE>
5.7 PLAN DOCUMENTS. Each Participant shall receive a copy of
this Plan and the Committee will make available for inspection by the
Participant a copy of any rules and regulations adopted by the Committee in
administering the Plan.
5.8 GOVERNING LAW. This Plan is established under and will be
construed according to the laws of the State of Maine, except to the extent
such laws may be preempted by ERISA.
IN WITNESS WHEREOF, Hannaford Bros. Co. has caused this document
to be executed by its duly authorized officer on this day
of ,1997.
HANNAFORD BROS. CO.
By:_________________________________
Its
Exhibit 10.3
FIRST AMENDMENT TO THE
HANNAFORD SOUTHEAST SAVINGS AND INVESTMENT PLAN
The Hannaford Southeast Savings and Investment Plan, formerly the Boney
Wilson & Sons, Inc. Retirement Savings Plan (the "Plan"), was last amended
and restated effective generally July 1, 1995. The Plan is hereby further
amended in the following respects.
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. Section 3.1 is hereby amended to read as follows:
"3.1 DATE OF PARTICIPATION. Each Employee who is a Participant on
the Effective Date shall continue to participate in the Plan in
accordance with its terms. Each Employee who is in the employ of an
Employer on the Effective Date and who meets the requirements of Section
3.2 on or before June 30, 1995, shall be eligible to participate in the
Plan as of the Effective Date. Except as hereinafter provided, each
other Employee who thereafter meets the requirements of Section 3.2
shall be eligible to participate in the Plan as of the first day of the
second (or any subsequent) calendar month following the calendar month
in which he or she meets such requirements, provided he or she is still
in the employ of an Employer on such date. Effective November 1, 1995,
each Employee who first becomes an Employee before November 1, 1995,
and who was previously employed by Farm Fresh, Inc. immediately prior to
becoming an Employee shall be eligible to participate in the Plan as of
the later of November 1, 1995, or the first day of the second (or any
subsequent) calendar month following the calendar month in which he or
she meets the requirements of Section 3.2, provided he or she is still
in the employ of an Employer on such date. For purposes of determining
whether such Employee has completed a Year of Participation Service, his
or her service with Farm Fresh, Inc. shall be taken into account."
3. Section 8.4 is hereby amended by adding a new paragraph at the end
thereof to read as follows:
"Notwithstanding the foregoing provisions of this Section to the
contrary, the portion of the Discretionary Contribution for the 1995
Plan Year designated by the Administrative Committee as "adjustment
amount" shall be allocated as of September 30, 1995, to the Accounts of
those Participants whose June 30, 1995, Account balances included an
investment in the 1994 Guaranteed Interest Account maturing on December
31, 1998, under Group Annuity Contract #4-07124, issued by The Principal
Financial Group ("GIA"). Such allocation shall be in proportion to each
such Participant's investment in the GIA and shall reflect the market
value adjustment charged to the Participant's Account as a result of
termination of the GIA prior to December 31, 1998. For purposes of this
paragraph, the term "Participant" shall include any Former Participant
whose June 30, 1995, Account balance included an investment in the GIA."
4. Except as otherwise provided herein, this Amendment shall be
effective July 1, 1995.
Exhibit 10.4
SECOND AMENDMENT
TO THE
HANNAFORD SOUTHEAST SAVINGS AND INVESTMENT PLAN
The Hannaford Southeast Savings and Investment Plan (the "Plan"), was
last amended and restated effective generally July 1, 1995, and has been
further amended by a First Amendment effective generally July 1, 1995. The
Plan is hereby further amended in the following respects.
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. Section 11.4 is hereby deleted, and existing Sections 11.5 through
11.8 are hereby redesignated as Sections 11.4 through 11.7.
3. Section 11.4 (as redesignated herein) is hereby amended to read as
follows:
"11.4 INVESTMENT OF CONTRIBUTIONS. Each Participant may direct that
contributions made on his or her behalf shall be invested in any one or
more of the Investment Funds, provided the percentage of contributions to
be invested in any Investment Fund must be one percent (1%), or any
multiple thereof. An investment direction shall be made by such written,
telephonic or electronic means as shall be prescribed by the
Administrative Committee.
A Participant's investment direction, if received by the
Administrative Committee prior to the date he or she commences
participation, shall be effective as of said date. If a Participant
does not make an investment direction or an investment direction is
not received by the Administrative Committee before he or she
commences participation, the contributions on behalf of such
Participant shall be invested in the fund which presents the least
risk of loss as determined by the Trustee. An investment direction
received by the Administrative Committee after the date a Participant
commences participation shall be effective as of the first business
day of the month following receipt by the Administrative Committee or
as soon as practicable thereafter. A deemed investment direction
pursuant to Section 3.4(a) shall be effective as of the date of the
affected individual's change in employment status; provided, however,
that a deemed investment direction with respect to an individual
described in Section 3.4(a)(iii) shall be effective as soon as
practicable after his or her change in employment status.
Once each month, a Participant may modify an investment direction
to have future contributions on his or her behalf invested in the
Investment Funds in proportions other than those previously elected,
but in multiples of one percent (1%). An election modifying a
<PAGE>
previous investment direction shall be made by such written,
telephonic or electronic means as shall be prescribed by the
Administrative Committee and shall be effective as of the first
business day of the month following receipt by the Administrative
Committee or as soon as practicable thereafter."
4. Section 11.5 (as redesignated herein) is hereby amended to read as
follows:
"11.5 REINVESTMENT OF ACCOUNT. Once each month, a Participant,
Former Participant, surviving spouse or Beneficiary may elect to reinvest
all or a portion of the balance of his or her Account in any one or more
of the Investment Funds, provided the portion invested in any Investment
Fund must be one percent (1%), or any multiple thereof, of such balance.
An election to reinvest all or a portion of an Account balance shall be
made by such written, telephonic or electronic means as shall be
prescribed by the Administrative Committee and shall be effective as of
the first business day of the month following receipt by the
Administrative Committee or as soon as practicable thereafter."
5. This Amendment shall be effective July 1, 1997.
Exhibit 10.5
HANNAFORD BROS. CO.
NONQUALIFIED SAVINGS AND INVESTMENT PLAN
Effective January 1, 1998
<PAGE>
PREAMBLE
The purpose of the Plan is to provide employees with retirement benefits
that would have been available under the Company's Savings and Investment
Plan, but for the limitations on contributions and benefits under the Code.
Participation in the Plan shall be limited to a select group of management
or highly compensated employees within the meaning of ERISA. The Plan
shall be effective January 1, 1998.
ARTICLE I
DEFINITIONS
1.1 "Board" or "Board of Directors" shall mean the Board of Directors of
the Company.
1.2 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.3 "Committee" shall mean the committee appointed by the Human
Resources Committee of the Board to administer the Savings and Investment
Plan.
1.4 "Company" shall mean Hannaford Bros. Co.
1.5 "Compensation" shall mean a Participant's compensation as defined in
Article II of the Savings and Investment Plan, except that Compensation
shall be determined without regard to the limit on the amount of
compensation that may be taken into account under Code Section 401(a)(17)
and shall include amounts deferred under this Plan.
1.6 "Deferred Compensation Account" shall mean a bookkeeping account
established in accordance with Section 2.3.
1.7 "Disability" shall have the meaning given such term in the Savings
and Investment Plan.
1.8 "Effective Date" shall mean January 1, 1998.
1.9 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.10 "Normal Retirement Age" shall have the meaning given such term in
the Savings and Investment Plan.
<PAGE>
1.11 "Participant" shall mean an employee of the Company or one of its
subsidiaries who is a member of a select group of management employees, who
is (or was in the preceding Plan Year) a "highly compensated employee"
within the meaning of Code Section 414(q) and who is a participant in the
Savings and Investment Plan.
1.12 "Plan" shall mean the Hannaford Bros. Co. Nonqualified Savings and
Investment Plan as set forth herein and as hereafter amended.
1.13 "Plan Year" shall have the meaning given such term in the Savings
and Investment Plan.
1.14 "Savings and Investment Plan" shall mean the Hannaford Bros. Co.
Savings and Investment Plan, as amended.
1.15 "Year of Vesting Service" shall have the meaning given such term in
the Savings and Investment Plan.
ARTICLE II
DEFERRED COMPENSATION
2.1 DEFERRAL ELECTION. A Participant may elect to defer for any Plan
Year under this Plan the amount of Compensation, if any, that would have
been deferred as elective contributions in accordance with the
Participant's initial deferral election for such Plan Year under the
Savings and Investment Plan, but for the limit on compensation under Code
Section 401(a)(17), the nondiscrimination requirements of Code Section
401(k), the limit on elective deferrals under Code Section 402(g), and the
limit on annual additions under Code Section 415.
Once each Plan Year a Participant may elect to defer Compensation payable
for services to be performed after the date of the deferral election. An
election to defer shall be made by executing and delivering to the
Committee a deferred compensation agreement in the form, attached hereto as
EXHIBIT A, prescribed by the Committee. An election to defer Compensation
shall continue in effect until the Participant terminates the election or
ceases to be a Participant.
A deferral election may not be modified within a Plan Year. A
Participant may make a new deferral election on or before December 31 of
any year to increase or decrease the amount of Compensation to be deferred
during the following Plan Year and succeeding Plan Years. A Participant
may terminate a deferral election at any time by providing to the Committee
such written, telephonic or electronic notice of termination as the
Committee may prescribe. Such notice shall specify the effective date, and
deferrals shall cease as soon as practicable thereafter. Such notice shall
not be effective with regard to amounts previously deferred. If a
<PAGE>
Participant ceases to be a member of a select group of management or highly
compensated employees, within the meaning of ERISA, his or her deferral
election shall terminate, provided that the loss of such status shall not
cause amounts previously deferred to become payable.
A deferral election may not be made with respect to this Plan for any
Plan Year unless the Participant makes a deferral election for such year
under the Savings and Investment Plan. Termination or modification of a
Participant's deferral election under the Savings and Investment Plan for
any Plan Year shall terminate the Participant's deferral election for such
year under this Plan. Any such termination under this Plan shall not be
effective with respect to amounts previously deferred. All amounts
deferred in accordance with this section shall be fully vested and
nonforfeitable.
2.2 MATCHING CONTRIBUTION. The Company shall make a matching
contribution under this Plan on behalf of each Participant who defers
Compensation hereunder with respect to any Plan Year for which a matching
contribution is in effect under the Savings and Investment Plan. The
amount of such contribution shall equal the matching contribution that
would have been made pursuant to the formula for matching contributions
then in effect under the Savings and Investment Plan (without regard to the
nondiscrimination requirements of Code Section 401(m) and the limit on
annual additions under Code Section 415) if the Compensation deferred
hereunder had been an elective contribution to such plan.
Matching contributions on behalf of a Participant shall be fully vested
and nonforfeitable upon the Participant's completion of five (5) Years of
Vesting Service, attainment of Normal Retirement Age, Disability or death.
If a Participant terminates employment for any reason other than Disability
or death, prior to completing five (5) Years of Vesting Service or
attaining Normal Retirement Age, such contributions shall be forfeited as
of the date employment terminates.
2.3 ACCOUNT. The Company shall establish a Deferred Compensation
Account for each Participant who defers Compensation under the Plan and
shall adjust such account as follows:
(a) At the end of each calendar month, credit the account with the
amount deferred for such month and any related matching contribution; and
(b) As of the first day of each calendar month:
(1) Debit the account by the amount, if any, paid to the
Participant or his or her beneficiary during the preceding calendar
month in accordance with the terms hereof; and
<PAGE>
(2) Credit the account with interest on the balance as of the
first day of the preceding month, at a rate equal to the average rate
of return for the Standard & Poors 500 Stock Index for the twenty
(20) year period ending with the prior calendar year.
The Committee shall provide each Participant with an account statement at
least annually.
2.4 INVESTMENT OF ACCOUNT. The Company shall be under no obligation to
make any particular investment pursuant to the Plan.
ARTICLE III
DISTRIBUTIONS
3.1 FORM AND TIME. The vested portion of a Participant's Deferred
Compensation Account shall be distributed in cash in the form of a lump
sum. Unless distribution is made prior to termination of employment,
payment shall be made to the Participant as soon as practicable following
termination of employment and not later than the last business day of the
calendar month following the month in which the Participant terminates
employment, or January 31 of the calendar year following the calendar year
in which the Participant terminates employment. Each Participant shall
elect the time of payment in each deferred compensation agreement he or she
executes pursuant to Section 2.1, and such election shall apply to all
amounts deferred pursuant to such agreement and to any related matching
contributions. A Participant may elect to receive a distribution as of
January 31 of any calendar year prior to termination of employment,
provided that such date is at least twelve (12) months after the date
amounts are first deferred under the deferred compensation agreement. For
purposes of this Plan, a termination of employment occurs on the date a
Participant ceases to be employed by the Company or one of its subsidiaries
and is no longer employed by any of them.
In the event of a Participant's death, his or her Deferred Compensation
Account shall be paid to the surviving spouse or designated beneficiary
entitled to receive any death benefit payable with respect to the
Participant under the Savings and Investment Plan. In the absence of such
surviving spouse or designated beneficiary, the account shall be paid to
the Participant's estate. Death benefits shall be paid in a cash lump sum
as soon as practicable following a Participant's death and not later than
the last business day of the calendar month following the month in which
the Participant dies.
Except as provided in Section 3.2, distribution shall be made under this
Plan only on account of a Participant's retirement, death, Disability, or
other termination of service, and no loans to Participants shall be
permitted.
<PAGE>
3.2 ACCELERATION BY COMMITTEE. In the event a Participant suffers a
severe financial hardship as a result of an unforeseeable emergency, the
Committee may, in its discretion, accelerate payment of the Participant's
Deferred Compensation Account to the extent necessary to eliminate such
hardship. An "unforeseeable emergency" means a sudden and unexpected
illness, accident, loss of property due to casualty, or other similar
extraordinary and unforeseeable circumstance arising as a result of events
beyond the control of the Participant.
ARTICLE IV
ADMINISTRATION
4.1 ADMINISTRATIVE COMMITTEE. The Committee shall have complete
discretionary authority to control and manage the operation and
administration of the Plan and to construe Plan provisions. Subject to the
provisions of the Plan, the Committee from time to time may establish rules
for the administration and interpretation of the Plan. The final
determination of the Committee as to any disputed questions shall be
conclusive. All actions, decisions and interpretations of the Committee in
administering the Plan shall be made in a uniform and nondiscriminatory
manner.
4.2 ACTION BY COMMITTEE. A majority of the Committee shall constitute a
quorum, and an action of the majority present at any meeting shall be
deemed the action of the Committee. Any member of the Committee may
participate in a meeting of the Committee through conference telephone or
similar communications equipment by means of which all individuals
participating in the meeting can hear each other. Any action of the
Committee may be taken without a meeting if all members of the Committee
sign written consents setting forth the action taken or to be taken, at any
time before or after the intended effective date of such action.
4.3 DELEGATION. The Committee may authorize one or more of its members
to execute or deliver any instrument, make any payment or perform any other
act which the Plan authorizes or requires the Committee to do. The
Committee may employ counsel and other agents, may delegate ministerial
duties to such agents or to employees of the Company and may procure such
clerical, accounting, actuarial, consulting and other services as it may
require in carrying out the provisions of the Plan.
4.4 Claims Procedure. If an application for a benefit ("claim") is
denied by the Committee, the Committee shall give written notice of such
denial to the applicant, by certified or registered mail, within 90 days
after the claim was filed with the Committee; provided, however, that such
90-day period may be extended to 180 days by the Committee if it determines
that special circumstances exist which require an extension of the time
required for processing the claim. Such denial shall set forth:
<PAGE>
(a) the specific reason or reasons for the denial;
(b) the specific Plan provisions on which the denial is based;
(c) any additional material or information necessary for the
applicant to perfect the claim and an explanation of why such material or
information is necessary; and
(d) an explanation of the Plan's claim review procedure.
Following receipt of such denial, the applicant or his or her duly
authorized representative may:
(a) request a review of the denial by filing a written application
for review with the Committee within 60 days after receipt by the
applicant of such denial;
(b) review documents pertinent to the claim at such reasonable time
and location as shall be mutually agreeable to the applicant and the
Committee; and
(c) submit issues and comments in writing to the Committee relating
to its review of the claim.
The Committee shall, after consideration of the application for review,
render a decision and shall give written notice thereof to the applicant,
by certified or registered mail, within 60 days after receipt by the
Committee of the application for review; provided, however, that such 60
day period may be extended to 120 days by the Committee if it determines
that special circumstances exist which require an extension of the time
required for processing the application for review. Such notice shall
include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
4.5 INDEMNIFICATION. The Company shall indemnify and hold harmless each
member of the Committee against all expenses and liabilities arising out of
his or her acts or omissions with respect to the Plan, provided such member
would be entitled to indemnification pursuant to the bylaws of the Company.
ARTICLE V
MISCELLANEOUS
5.1 AMENDMENT AND TERMINATION OF PLAN. The Company, through the Human
Resources Committee of the Board, may at any time, in its sole discretion,
terminate this Plan or amend the Plan in whole or in part. No such
termination or amendment shall affect the right of any Participant or his
or her surviving spouse or designated beneficiary to receive a benefit
under the terms of this Plan on the date immediately preceding such
termination or amendment.
<PAGE>
5.2 EMPLOYEE STATUS. Nothing contained herein shall confer upon any
Participant the right to be retained in the service of the Company or any
other right not expressly provided for herein, nor shall the existence of
this Plan impair the right of the Company to discharge or otherwise deal
with a Participant.
5.3 FUNDING. This Plan is unfunded for purposes of the Code and Title I
of ERISA and is not intended to meet the requirements of Code Section
401(a). The Plan constitutes the Company's mere promise to pay benefits in
the future, and a Participant hereunder shall have no greater rights than a
general, unsecured creditor of the Company.
5.4 ASSIGNMENT. To the maximum extent permitted by law, no benefit
under this Plan shall be assignable or subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, claims of
creditors, attachment, or encumbrance of any kind.
5.5 TAXES. Any and all taxes that may be due and owing with respect to
any payment under the Plan shall be the sole responsibility of the persons
to whom and for whose benefit such payment is made; provided, however, that
the Company shall withhold from any amount payable under the Plan all
amounts that are required by law to be withheld.
5.6 PLAN DOCUMENTS. Each Participant shall receive a copy of this Plan
and the Committee shall make available for inspection by the Participant a
copy of any rules and regulations adopted by the Committee in administering
the Plan.
5.7 GOVERNING LAW. This Plan is established under and shall be
construed according to the laws of the State of Maine, except to the extent
such laws may be preempted by ERISA.
IN WITNESS WHEREOF, Hannaford Bros. Co. has caused this document to be
executed by its duly authorized officer on this day of
, 1997.
HANNAFORD BROS. CO.
By:
Its
Exhibit 10.6
HANNAFORD BROS. CO. SAVINGS AND INVESTMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE GENERALLY JANUARY 1, 1998)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Purpose . . . . . . . . . . . . . . . 1
ARTICLE II Definitions . . . . . . . . . . . . . 1
ARTICLE III Participation . . . . . . . . . . . . 15
3.1 Date of Participation . . . . . . . . 15
3.2 Participation Requirements. . . . . . 16
3.3 Reemployed Eligible Employee. . . . . 16
3.4 Change of Employment Status . . . . . 16
ARTICLE IV Contributions and Direct Transfers. . 16
4.1 Employer Contributions. . . . . . . . 16
4.2 Timing of Employer Contributions . . 17
4.3 Form of Contributions . . . . . . . . 17
4.4 Maximum Contributions . . . . . . . . 18
4.5 Return of Contributions . . . . . . . 18
4.6 Nonforfeitable Contributions. . . . . 18
4.7 Special Rules For Matching Contributions 18
4.8 USERRA Make-up Contributions. . . . . 20
4.9 Rollover Contributions. . . . . . . . 22
4.10 Direct Transfers. . . . . . . . . . . 22
ARTICLE V Deferral Elections. . . . . . . . . . 23
5.1 Timing and Method . . . . . . . . . . 23
5.2 Amendment or Termination by Participant 24
5.3 Limitations on Actual Deferral Percentage 24
5.4 Restrictions and Adjustments 26
ARTICLE VI Excess Deferrals . . . . . . . . . . 27
6.1 Limitation on Elective Contributions. 27
6.2 Distribution of Excess Deferral . . . 27
6.3 Notice by Participant . . . . . . . . 27
ARTICLE VII Limitation on Annual Additions. . . . 28
7.1 Limitation For Defined Contribution Plans 28
7.2 Limitation For Defined Contribution Plan
and Defined Benefit Plan . . . . . 29
<PAGE>
7.3 Combining and Aggregating Plans . . . 30
7.4 Reduction of Excess Annual Additions. 31
7.5 Definition of Compensation. . . . . . 32
7.6 Certain Contributions Treated as
Annual Additions . . . . . . . . . 32
ARTICLE VIII Accounts and Valuation. . . . . . . . 33
8.1 Participant Accounts. . . . . . . . . 33
8.2 Adjustments . . . . . . . . . . . . . 33
8.3 Allocation of Elective Contributions
and Matching Contributions. . . . . 35
8.4 Allocation of Discretionary Contributions 35
8.5 Eligible Employees Entitled to Share
in Discretionary Contributions. . . 35
8.6 Allocation of Rollover Contributions
and Asset Transfers . . . . . . . . 36
8.7 Reports to Participants . . . . . . . 36
ARTICLE IX Distribution, Loans and Withdrawals . 36
9.1 Retirement. . . . . . . . . . . . . . 36
9.2 Disability. . . . . . . . . . . . . . 36
9.3 Termination of Employment . . . . . . 36
9.4 Forfeitures . . . . . . . . . . . . . 37
9.5 Distributions to Participants . . . . 38
9.6 Required Distributions to Participants 40
9.7 Minimum Amounts to be Distributed to
Participants . . . . . . . . . . . 41
9.8 Distributions to Surviving Spouses
and Beneficiaries. . . . . . . . . 41
9.9 Distribution to Alternate Payee . . . 42
9.10 Distributions to Minors and
Incompetent Persons. . . . . . . . 42
9.11 Loans . . . . . . . . . . . . . . . . 43
9.12 Hardship Withdrawals. . . . . . . . . 45
9.13 Form of Distribution. . . . . . . . . 47
9.14 Direct Rollovers. . . . . . . . . . . 47
ARTICLE X Top Heavy Provisions. . . . . . . . . 49
10.1 Top Heavy Requirements. . . . . . . . 49
10.2 Minimum Vesting Requirements. . . . . 50
10.3 Minimum Contribution Requirement. . . 50
10.4 Modified Limitation on Allocations. . 51
10.5 Present Value Factors . . . . . . . . 51
10.6 Benefit Accrual . . . . . . . . . . . 51
<PAGE>
ARTICLE XI Trust Fund Investments . . . . . . . 52
11.1 Duties . . . . . . . . . . . . . . . 52
11.2 Investment Funds. . . . . . . . . . . 52
11.3 Company Stock Fund. . . . . . . . . . 52
11.4 Investment of Contributions . . . . . 53
11.5 Reinvestment of Account . . . . . . . 53
11.6 Loan Fund . . . . . . . . . . . . . . 54
11.7 Voting Rights . . . . . . . . . . . . 54
ARTICLE XII Finance Committee. . . . . . . . . . . 54
12.1 Duties . . . . . . . . . . . . . . . . 54
12.2 Delegation of Ministerial Duties . . . 55
12.3 Compensation and Reimbursement of Expenses 55
12.4 Reliance on Reports. . . . . . . . . . 55
12.5 Multiple Signatures. . . . . . . . . . 55
ARTICLE XIII Administrative Committee . . . . . . . 56
13.1 Appointment of Administrative Committee 56
13.2 Resignation and Removal. . . . . . . . 56
13.3 Powers and Duties. . . . . . . . . . . 56
13.4 Reporting and Disclosure . . . . . . . 57
13.5 Delegation of Ministerial Duties . . . 57
13.6 Payment of Plan Expenses . . . . . . . 57
13.7 Compensation and Reimbursement of Expenses 57
13.8 Uniformity of Rules and Regulations. . 58
13.9 Reliance on Reports. . . . . . . . . . 58
13.10 Multiple Signatures. . . . . . . . . . 58
13.11 Confidentiality of Particpant Decisions
Relating to Company Stock . . . . . 58
ARTICLE XIV Claims Procedure . . . . . . . . . . . 58
14.1 Filing a Claim For Benefits. . . . . . 58
14.2 Denial of Claim. . . . . . . . . . . . 59
14.3 Appeal of Denied Claim . . . . . . . . 59
14.4 Decision on Appeal . . . . . . . . . . 59
ARTICLE XV Amendment and Termination. . . . . . . 60
15.1 Amendment. . . . . . . . . . . . . . . 60
15.2 Accounts Not to be Decreased by Amendment 60
15.3 Termination. . . . . . . . . . . . . . 60
15.4 Notice of Amendment or Termination . . 61
<PAGE>
ARTICLE XVI Nonalienability of Benefits; Qualified
Domestic Relations Orders . . . . . 61
16.1 Nonalienability of Benefits. . . . . . 61
16.2 Qualified Domestic Relations Orders. . 61
16.3 Notice . . . . . . . . . . . . . . . . 61
16.4 Representative . . . . . . . . . . . . 62
16.5 Separate Account . . . . . . . . . . . 62
16.6 Determination by Administrative Committee 62
16.7 Definitions . . . . . . . . . . . . . 63
ARTICLE XVII Delegation of Authority by Subsidiaries 65
17.1 Delegation of Authority by Subsidiaries 65
ARTICLE XVIII Mergers . . . . . . . . . . . . . . . . 65
18.1 Merger or Consolidation of Plan . . . . 65
18.2 Merger With Hannaford Southeast
Savings and Investment Plan. . . . . 65
ARTICLE XIX Miscellaneous . . . . . . . . . . . . . 66
19.1 Fiduciary Responsibility. . . . . . . . 66
19.2 Prohibited Transactions . . . . . . . . 67
19.3 Exclusive Benefit . . . . . . . . . . . 68
19.4 Service with Predecessor Employer . . . 68
19.5 Employment. . . . . . . . . . . . . . . 68
19.6 Gender. . . . . . . . . . . . . . . . . 68
19.7 Governing Law . . . . . . . . . . . . . 68
19.8 Article and Section Headings and
Table of Contents. . . . . . . . . . 68
<PAGE>
HANNAFORD BROS. CO. SAVINGS AND INVESTMENT PLAN
ARTICLE I
PURPOSE
The Hannaford Northeast Savings and Investment Plan, originally adopted
effective April 1, 1985, is hereby renamed the Hannaford Bros. Co. Savings
and Investment Plan and hereby amended and restated effective generally
January 1, 1998.
The purpose of this Plan is to encourage Eligible Employees of the
Company and its subsidiaries to provide for their financial security
through regular savings. The Plan is intended to comply with the
requirements of Section 401(a) and 401(k) of the Code and shall be
interpreted to comply with the applicable provisions of the Code and ERISA,
as well as the regulations and rulings issued thereunder.
ARTICLE II
DEFINITIONS
The following terms, when used herein, shall have the following meanings
unless the context clearly indicates otherwise:
2.1 "Account" shall mean the account established and maintained by the
Administrative Committee for each Participant which shall reflect the
Participant's share of the Trust Fund; provided such Account shall, in
accordance with Section 8.1, reflect separately the Participant's (a)
Elective Contributions, (b) Matching Contributions, (c) Discretionary
Contributions, (d) Rollover Contributions, and (e) any direct transfer of
plan assets made on behalf of an Employee in accordance with Section 4.10
or 18.2.
2.2 "Actual Deferral Percentage" for any Plan Year shall mean, except as
otherwise provided in Section 2.41, the average of the ratios, calculated
separately for each Eligible Employee, of the amount of Elective
Contributions made on behalf of such Employee for such year to such
Employee's compensation for such year (whether or not the Employee was a
Participant for the entire Plan Year). For purposes of this Section,
"compensation" shall mean compensation as defined in Section 7.5 and, for
Plan Years beginning before January 1, 1998, may, at the election of the
Company, include amounts excludable from gross income under Sections 125,
402(e)(3) and 402(h)(1)(B) of the Code. For Plan Years beginning on or
after January 1, 1998, the Company may elect not to include such amounts.
2.3 "Administrative Committee" shall mean the Committee appointed in
accordance with Section 13.1.
<PAGE>
2.4 "Annual Addition" shall mean the sum of the Employer Contributions,
employee contributions and forfeitures allocated to the Account of a
Participant for a Limitation Year and the amounts described in Section 7.6.
2.5 "Beneficiary" shall mean the person or persons designated by a
Participant as provided in Section 9.8 to receive any benefits payable
under the Plan following the death of the Participant.
2.6 "Board of Directors" shall mean the Board of Directors of the Company
or any corporation with or into which it may be merged or consolidated.
2.7 "Break in Service", shall have the meaning set forth in subsection
(a) or (b) below, whichever is applicable:
(a) In the case of an hourly Employee, other than an Employee who is
employed as a driver, the term "Break in Service" shall mean a Plan Year
in which such Employee is not credited with more than four hundred and
thirty-five (435) Hours of Service on account of any one or more of the
following:
(i) discharge from employment;
(ii) voluntary termination of employment;
(iii) effective December 12, 1994, failure to return to the employ of
an Employer or a Related Employer prior to the expiration of the period
entitling such Employee to reemployment rights under the Uniformed
Services Employment and Reemployment Rights Act of 1994 after a period
of qualified military service (as defined in Section 4.8);
(iv) failure to return to the employ of an Employer or a Related
Employer upon the expiration of any period of absence due to sickness,
accident or disability for which such Employee is entitled to receive
benefits under any welfare plan sponsored by an Employer or a Related
Employer; or
(v) failure to return to the employ of an Employer or a Related
Employer when recalled following a temporary period of layoff for a
period not to exceed twelve (12) months.
(b) In the case of a salaried or salaried nonexempt Employee or an
Employee who is employed as a driver, the term "Break in Service" shall
mean a Plan Year in which such Employee is not credited with more than
five hundred (500) Hours of Service on account of any one or more of the
following:
(I) discharge from employment;
(ii) voluntary termination of employment;
<PAGE>
(iii) effective December 12, 1994, failure to return to the employ of
an Employer or a Related Employer prior to the expiration of the period
entitling such Employee to reemployment rights under the Uniformed
Services Employment and Reemployment Rights Act of 1994 after a period
of qualified military service (as defined in Section 4.8);
(iv) failure to return to the employ of an Employer or a Related
Employer upon the expiration of any period of absence due to sickness,
accident or disability for which such Employee is entitled to receive
benefits under any welfare plan sponsored by an Employer or a Related
Employer; or
(v) failure to return to the employ of an Employer or a Related
Employer when recalled following a temporary period of layoff for a
period not to exceed twelve (12) months.
2.8 "Code" shall mean the Internal Revenue Code of 1986, as from time to
time amended.
2.9 "Company" shall mean Hannaford Bros. Co., a Maine corporation or any
corporation with or into which it may be merged or consolidated.
2.10 "Company Stock" shall mean shares of common stock of the Company.
2.11 "Compensation" shall mean the basic compensation paid, before any
reduction pursuant to a Deferral Election or a benefit election under an
Employer's Code Section 125 plan, by an Employer to an Employee for
services rendered while a Participant, including compensation for incentive
hours and excluding reimbursements or other expense allowances, fringe
benefits (cash and noncash), moving expenses, deferred compensation,
welfare benefits, unguaranteed overtime pay, bonuses, and other irregular
payments.
Notwithstanding the foregoing to the contrary, effective January 1, 1994,
the annual Compensation of any Employee in excess of One Hundred Fifty
Thousand Dollars ($150,000.00) (or such higher amount as the Secretary of
the Treasury may prescribe) shall not be taken into account under the Plan.
In the event Compensation is determined based on a period which contains
fewer than twelve (12) calendar months, the annual Compensation limit shall
be an amount equal to the annual Compensation limit for the calendar year
in which the period begins multiplied by a fraction, the numerator of which
is the number of full calendar months in the period and the denominator of
which is twelve (12). If Compensation for a prior Plan Year is taken into
account for any Plan Year, such Compensation shall be subject to the annual
Compensation limit in effect for such prior Plan Year.
The average percentage of total compensation (as defined in Treasury
Regulation Section 1.414(s)-1(d)(3)(ii) included in the Compensation of
<PAGE>
Highly Compensated Employees as a group shall not exceed by more than a de
minimis amount the average percentage of total compensation included in the
Compensation of Non-Highly Compensated Employees as a group. This
determination shall be made in accordance with the provisions of Regulation
Section 1.414(s)-1(d)(3), which is incorporated herein by reference.
2.12 "Contract Employee" shall mean an Employee who is employed as a
warehouse employee and whose employment is governed by a collective
bargaining agreement.
2.13 "Deferral Election" shall mean an election made by an Eligible
Employee in accordance with Section 5.1 or 4.8.
2.14 "Determination Date" shall mean, with respect to any Plan Year, the
last day of the preceding year or, in the case of the first Plan Year of
the Plan, the last day of such Plan Year.
2.15 "Disabled" or "Disability" shall mean a Participant's incapacity to
engage in any substantial gainful activity by reason of any medically
determined physical or mental impairment which can reasonably be expected
to result in death or be of long-continued and indefinite duration as
certified by a licensed physician approved by the Company.
2.16 "Discretionary Contribution" shall mean a contribution made by an
Employer in accordance with Section 4.1(c).
2.17 "Effective Date" of this amendment and restatement shall mean,
except as provided otherwise herein, January 1, 1998.
2.18 "Elective Contribution" shall mean a contribution made by an
Employer on behalf of a Participant pursuant to a Deferral Election, as
provided in Section 4.1(a).
2.19 "Eligibility Computation Period" shall mean the initial twelve (12)
consecutive month period beginning with the date on which the Employee
first performs an Hour of Service and thereafter each Plan Year commencing
with the Plan Year which includes the first anniversary of his or her
Employment Commencement Date.
In the case of an hourly Employee, other than an Employee who is employed
as a driver, if such Employee is credited with eight hundred seventy (870)
Hours of Service in both his or her initial Eligibility Computation Period
and in the Plan Year which includes the first anniversary of his or her
Employment Commencement Date, he or she shall be credited with two (2)
Years of Participation Service.
In the case of a salaried or salaried nonexempt Employee, or an Employee
who is employed as a driver, if such Employee is credited with one thousand
(1,000) Hours of Service in both his or her initial Eligibility Computation
<PAGE>
Period and the Plan Year which includes the first anniversary of his or her
Employment Commencement Date, such Employee shall be credited with two (2)
Years of Participation Service.
In measuring completion of a Year of Participation Service upon
reemployment of an Employee after he or she has incurred a Break in
Service, the term "Eligibility Computation Period" shall mean the twelve
(12) consecutive month period beginning on the Employee's Reemployment
Commencement Date and, where necessary, Plan Years beginning with the Plan
Year which includes the first anniversary of the Employee's Reemployment
Commencement Date.
2.20 "Eligible Employee" shall mean an Employee who is eligible to
participate in the Plan as provided in Section 3.1.
2.21 "Employee" shall mean any individual who is employed by an Employer,
excluding Leased Employees.
2.22 "Employer" shall mean the Company and, effective January 1, 1997,
any subsidiary of the Company that adopts the Plan with the consent of the
Human Resources Committee of the Board of Directors. If an Employer is a
member of a group of employers which constitutes a controlled group of
corporations (as defined in Section 414(b) of the Code), which constitutes
trades or businesses (whether or not incorporated) which are under common
control (as defined in Section 414(c) of the Code), or which constitutes an
affiliated service group (as defined in Section 414(m) of the Code and
modified in Section 414(o) of the Code), all such employers shall be
considered a single employer as required by Sections 414(b), 414(c), 414(m)
and 414(o) of the Code. For purposes of applying the limitations of
Article VII, the Section 414(b) definition of a controlled group of
corporations and the Section 414(c) definition of trades or businesses
under common control shall be modified as provided in Section 415(h) of the
Code.
2.23 "Employer Contribution" shall mean any Elective Contribution,
Matching Contribution, Discretionary Contribution or such additional
contribution as may be required under Section 9.4 made by an Employer in
accordance with the terms of the Plan.
2.24 "Employment Commencement Date" shall mean the date on which an
Employee first performs an Hour of Service for an Employer or a Related
Employer.
2.25 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as it may be amended from time to time, and any regulations issued
pursuant thereto as such Act or such regulations affect this Plan.
2.26 "Excess Deferral" shall mean Elective Contributions in excess of the
limitation of Section 6.1.
<PAGE>
2.27 "Excess Elective Contributions" shall mean for any Plan Year the
excess of
(a) the aggregate amount of Employer Contributions taken into account
under Section 5.3 that are paid to the Trust on behalf of Highly
Compensated Eligible Employees for such year, over
(b) the maximum amount of such contributions permitted under
Section 5.3.
2.28 "Excess Matching Contributions" shall mean for any Plan Year the
excess of
(a) the aggregate amount of Employer Contributions taken into account
under Section 4.7(a) that are paid to the Trust on behalf of Highly
Compensated Eligible Employees for such year, over
(b) the maximum amount of such contributions permitted under
Section 4.7(a).
2.29 "Finance Committee" shall mean the Finance Committee of the Board of
Directors.
2.30 "Five Percent Owner" shall mean any person who owns (or is
considered as owning within the meaning of Section 318 of the Code) more
than five percent (5%) of the outstanding stock of an Employer or stock
possessing more than five percent (5%) of the total combined voting power
of all stock of an Employer.
2.31 "Former Participant" shall mean any individual who ceases to be
employed by an Employer or a Related Employer and is no longer employed by
any of them, and who has not received full distribution of his or her
Account.
2.32 "Highly Compensated Eligible Employee" shall mean an Employee who is
eligible to participate in the Plan as provided in Section 3.1 and who is a
Highly Compensated Employee.
2.33 "Highly Compensated Employee" shall mean any Employee who:
(a) was a Five Percent Owner at any time during the Plan Year or the
preceding Plan Year; or
(b) had compensation from an Employer for the preceding Plan Year in
excess of Eighty Thousand Dollars ($80,000.00) or such higher amount in
effect under Section 414(q) of the Code and was in the Top-Paid Group for
such year.
<PAGE>
A former Employee shall be treated as a Highly Compensated Employee if he
or she was a Highly Compensated Employee when such Employee separated from
service or at any time after attaining age fifty-five (55). For purposes
of this Section, "compensation" shall have the meaning given such term
under Section 415(c)(3) of the Code (but, for Plan Years beginning before
January 1, 1998, without regard to the exclusions provided under Sections
125, 402(e)(3) and 402(h)(1)(B) of the Code).
The dollar amount in subsection (b) of this Section shall be increased at
the same time and in the same manner as the dollar limitation under Section
415(b)(1)(A) of the Code, except that the base period shall be the calendar
quarter ending September 30, 1996.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the Top-Paid
Group, shall be made in accordance with Section 414(q) of the Code and the
regulations thereunder.
The provisions set forth in this Section shall be effective for Plan
Years beginning after December 31, 1996; provided, however, in determining
whether an Employee is a Highly Compensated Employee for the Plan Year
beginning January 1, 1997, such provisions shall be treated as having been
in effect for the Plan Year beginning January 1, 1996.
2.34 "Hour of Service" shall have the meaning set forth in subsection (a)
or (b) below, whichever is applicable:
(a) In the case of an hourly Employee, other than an Employee who is
employed as a driver, the term "Hour of Service" shall mean:
(i) each hour for which such Employee is paid, or entitled to
payment, for the performance of duties for an Employer. Such hours
shall be credited to the computation period in which such duties are
performed.
(ii) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer, provided the
same hours shall not be credited under both subsection (a)(i) and this
subsection (a)(ii). These hours shall be credited to the Employee for
the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award,
agreement or payment is made.
(b) In the case of a salaried or salaried nonexempt Employee or an
Employee who is employed as a driver, the term "Hour of Service" shall
mean:
<PAGE>
(i) each hour for which such an Employee is paid, or entitled to
payment, for the performance of duties for an Employer. Such hours
shall be credited to the computation period in which such duties are
performed.
(ii) each hour for which such an Employee is paid, or entitled to
payment, directly or indirectly, by an Employer on account of a period
of time during which no duties were 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. Notwithstanding the preceding sentence,
(aa) no more than five hundred and one (501) Hours of Service shall
be credited under this subsection (b)(ii) to an Employee on account
of any single continuous period during which he or she performs no
duties (whether or not such period occurs in a single computation
period),
(bb) Hours of Service shall not be credited if payment is made or
due under a plan maintained solely for the purpose of complying with
applicable workers' compensation, unemployment compensation or
disability insurance laws; and
(cc) Hours of Service shall not be credited if payment is made
solely to reimburse an Employee for medical or medically related
expenses incurred by such Employee.
(iii) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer. The same hours
shall not be credited both under subsection (b)(i) or (b)(ii) and under
this subsection (b)(iii). These hours shall be credited to the
Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the
award, agreement or payment is made.
In the case of any salaried or salaried nonexempt Employee, such
Employee shall be credited with forty-five (45) Hours of Service for each
week such Employee is required to be credited with at least one (1) Hour
of Service in accordance with subsections (b)(i), (b)(ii) or (b)(iii) of
this Section.
Hours of Service shall be credited with respect to employment with other
members of an affiliated service group (as defined in Section 414(m) of the
Code), a controlled group of corporations (as defined under Section 414(b)
of the Code) or a group of trades or businesses under common control (as
defined under Section 414(c) of the Code) of which an Employer is a member,
and any other entity required to be aggregated with an Employer pursuant to
Section 414(o) of the Code. Hours of Service shall also be credited with
<PAGE>
respect to any individual who is treated as an Employee under Section
414(n) or Section 414(o) of the Code. Hours of Service shall be credited
under this subsection only to the extent required under Section 414(b),
(c), (m), (n), (o) (or other applicable sections) of the Code and the
regulations thereunder.
The number of Hours of Service to be credited to each Employee shall be
determined in accordance with the provisions of 29 C.F.R. Sections
2530.200b-2(b), 2(c) and 2530.200b-3(e)(4) which are incorporated herein by
reference.
Each Employee who is absent from work for any period (I) by reason of the
pregnancy of the Employee, (ii) by reason of the birth of a child of the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of the child by the Employee, or (iv) for
purposes of caring for such child for a period beginning immediately
following such birth or placement shall, solely for purposes of determining
whether such Employee has incurred a Break in Service, be credited with the
Hours of Service which would normally have been credited to such Employee
but for such absence or, if such Hours of Service cannot be determined,
eight (8) Hours of Service for each day of such absence; provided the total
number of Hours of Service credited in accordance with this paragraph on
account of such absence shall not exceed five hundred and one (501). The
Hours of Service described in this paragraph shall be credited in the
computation period in which the absence begins, if the Employee would be
prevented from incurring a Break in Service in such period solely because
the Employee is credited with such Hours of Service or, in all other cases,
in the immediately following computation period.
2.35 "Investment Fund" shall mean an investment fund described in Section
11.2.
2.36 "Investment Manager" shall mean any fiduciary, other than the
Trustee or a named fiduciary (as defined in Section 402(a)(2) of ERISA):
(a) who is appointed by the Finance Committee to manage, acquire, or
dispose of all or any portion of the Trust Fund;
(b) who is (i) registered as an investment adviser under the
Investment Advisers Act of 1940; (ii) is a bank, as defined in said Act;
or (iii) is an insurance company qualified to manage, acquire or dispose
of all or any portion of the Trust Fund under the laws of more than one
State; and
(c) who has acknowledged, in writing, that he or she is a fiduciary
with respect to the Plan."
<PAGE>
2.37 "Key Employee" shall mean any Employee or former Employee (and the
Beneficiary of such Employee) who at any time during the Plan Year or the
four (4) preceding Plan Years is:
(a) an officer of an Employer having annual compensation (as defined
in Section 7.5) from an Employer greater than fifty percent (50%) of the
amount in effect under Section 415(b)(1)(A) of the Code for any Plan Year
(but in no event shall more than fifty (50) Employees or, if less, the
greater of three (3) or ten percent (10%) of all Employees be treated as
Key Employees by reason of being officers);
(b) A person owning (or considered as owning within the meaning of
Section 318 of the Code) more than a one-half percent (1/2%) interest, as
well as one of the ten (10) largest interests in an Employer, and having
annual compensation (within the meaning of Section 7.5) from such
Employer of more than the limitation in effect under Section 415(c)(1)(A)
of the Code for any Plan Year;
(c) a Five Percent Owner; or
(d) a person who has annual compensation (as defined in Section 7.5)
from an Employer of more than One Hundred and Fifty Thousand Dollars
($150,000.00) and who would be described in (c) above if one percent (1%)
was substituted for five percent (5%).
The determination of who is a Key Employee shall be made in accordance
with Section 416(i)(1) of the Code and the regulations thereunder, the
provisions of which are incorporated herein by reference. For purposes of
determining annual compensa tion under this Section, amounts excluded from
gross income under Sections 125, 402(e)(3), 402(h)(1)(B) and 403(b) of the
Code shall be taken into account.
2.38 "Leased Employee" shall mean any person who is not an Employee but
who provides services to an Employer if:
(a) such services are provided pursuant to an agreement between the
Employer and any leasing organization;
(b) such person has performed services for the Employer (or for the
Employer and any related person determined in accordance with Section
414(n)(6) of the Code) on a substantially full-time basis for a period of
at least one (l) year; and
(c) such services are performed under the primary direction or control
by the Employer.
<PAGE>
2.39 "Limitation Year" shall mean a calendar year (or any other twelve
(12) consecutive month period adopted for all qualified plans of an
Employer pursuant to a written resolution adopted by such Employer). If
the Limitation Year is amended to a different twelve (12) consecutive month
period, the new Limitation Year must begin on a date within the Limitation
Year in which the amendment is made.
2.40 "Matching Contribution" shall mean a contribution made by an
Employer in accordance with Section 4.1(b) on behalf of a Participant who
has made a Deferral Election.
2.41 "Matching Contribution Percentage" shall mean for any Plan Year the
average of the ratios, calculated separately for each Eligible Employee, of
the amount of Matching Contributions made on behalf of such Employee for
such year and, at the election of the Company, the amount of Elective
Contributions made on behalf of such Employee for such year to such
Employee's compensation for such year. For purposes of this Section,
"compensation" shall mean compensation as defined in Section 7.5 and, for
Plan Years beginning before January 1, 1998, may, at the election of the
Company, include amounts excludable from gross income under Sections 125,
402(e)(3) and 402(h)(1)(B) of the Code. For Plan Years beginning on or
after January 1, 1998, the Company may elect not to include such amounts.
Notwithstanding the foregoing provisions of this Section or Section 2.2 to
the contrary, no Elective Contributions may be taken into account in
calculating the Matching Contribution Percentage for any Eligible Employee
unless the requirement of Section 5.3(a) is satisfied both with and without
the exclusion of such Elective Contributions in calculating the Employee's
Actual Deferral Percentage.
2.42 "Named Fiduciary" or "Named Fiduciaries" shall mean, with respect to
the operation and administration of the Plan, the Administrative Committee,
and with respect to the management of the Trust Fund, the Finance Committee
and the Trustee.
2.43 "Non-Key Employee" shall mean any Employee who is not a Key
Employee.
2.44 "Normal Retirement Age" shall mean age sixty-five (65).
2.45 "Participant" shall mean an Eligible Employee who elects to
participate in the Plan in accordance with Section 5.1 or 4.8, or who has
made a Rollover Contribution or on whose behalf a direct transfer has been
made in accordance with Section 4.10 or 18.2, and each other Eligible
Employee on whose behalf an Employer makes a Discretionary Contribution.
<PAGE>
2.46 "Permissive Aggregation Group" shall mean each plan of an Employer
which is included in a Required Aggregation Group and any other plan or
plans of such Employer which, when considered as a group with the Required
Aggregation Group, continues to satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
2.47 "Plan" shall mean the Hannaford Bros. Co. Savings and Investment
Plan.
2.48 "Plan Year" shall mean the twelve (12) consecutive month period
ending December 31.
2.49 "Reemployment Commencement Date" shall mean the first day for which
an Employee is entitled to be credited with an Hour of Service after the
first Eligibility Computation Period in which the Employee incurs a Break
in Service following an Eligibility Computation Period in which the
Employee is credited with more than the number of Hours of Service
determined in accordance with subsection (a) or (b) below, whichever is
applicable:
(a) In the case of an hourly Employee, other than an Employee who is
employed as a driver, four hundred and thirty-five (435) Hours of
Service; and
(b) In the case of a salaried or salaried Nonexempt Employee or an
Employee who is employed as a driver, five hundred (500) Hours of
Service.
In the case of an Employee who is credited with no Hours of Service in an
Eligibility Computation Period beginning after the Employee's Reemployment
Commencement Date, the Employee shall be treated as having a new
Reemployment Commencement Date as of the first day for which the Employee
is entitled to be credited with an Hour of Service after such Eligibility
Computation Period.
2.50 "Related Employer" shall mean the Company or any subsidiary thereof.
2.51 "Required Aggregation Group" shall mean each plan of an Employer in
which a Key Employee is a participant and each other plan of such Employer
which enables any plan of the Employer in which a Key Employee is a
participant to meet the requirements of Sections 401(a)(4) or 410 of the
Code.
2.52 "Rollover Contribution" shall mean a contribution made by an
Employee in accordance with Section 4.9.
2.53 "Top Heavy" shall mean that as of the Determination Date:
<PAGE>
(a) The Top Heavy Ratio for the Plan exceeds sixty percent (60%), if
the Plan is not included in a Required Aggregation Group;
(b) The Top Heavy Ratio for the Required Aggregation Group which
includes the Plan exceeds sixty percent (60%), if the Plan is included in
a Required Aggregation Group, but is not included in a Permissive
Aggregation Group; or
(c) The Top Heavy Ratio for the Permissive Aggregation Group which
includes the Plan exceeds sixty percent (60%), if the Plan is included in
a Permissive Aggregation Group.
2.54 "Top Heavy Ratio" shall mean:
(a) If the Plan is not included in a Required Aggregation Group, a
fraction, the numerator of which is the sum of the Account balances of
Key Employees under the Plan and the denominator of which is the sum of
the Account balances of all Participants under the Plan; or
(b) If the Plan is included in a Required Aggregation Group or a
Permissive Aggregation Group, a fraction, the numerator of which is the
sum of the account balances of Key Employees under all defined
contribution plans included in such group and the present value of the
accrued benefits of Key Employees under all defined benefit plans
included in such group and the denominator of which is the sum of the
account balances of all participants under all defined contribution plans
included in such group and the present value of the accrued benefits of
all participants under all defined benefit plans included in such group.
The account balances, as well as the present value of accrued benefits,
shall be determined, as of the Valuation Date coinciding with the
Determination Date, in accordance with the provisions of Section 416(g) of
the Code and the regulations thereunder which are incorporated herein by
reference. In determining the Top Heavy Ratio for any Plan Year, if an
individual is a Non-Key Employee with respect to the Plan or with respect
to any other plan which is included in the same Required Aggregation Group
or Permissive Aggregation Group as the Plan, but was a Key Employee with
respect to the Plan or such other plan for any prior plan year, any account
balance or accrued benefit for such individual shall not be taken into
account. In addition, any account balance or accrued benefit of any
individual who has not performed services for an Employer at any time
during the five (5) year period ending on the Determination Date shall not
be taken into account; provided, however, if such individual subsequently
performs services for an Employer, his or her account balance or accrued
benefit shall be taken into account, as required by regulations, in a
subsequent Plan Year.
<PAGE>
2.55 "Top-Paid Group" shall mean for any Plan Year the group of Employees
consisting of the top twenty percent (20%) of Employees based on
compensation (as defined for purposes of Section 2.33) received from an
Employer during such year. For purposes of determining the number of
Employees in the Top-Paid Group, the following Employees shall be excluded:
(a) Employees who have not completed six (6) months of service;
(b) Employees who normally work less than seventeen and one-half
(17 1/2) hours per week;
(c) Employees who normally work less than six (6) months during any
year;
(d) Employees who have not attained age twenty-one (21);
(e) Employees who are nonresident aliens and who receive no earned
income (within the meaning of Section 911(d)(2) of the Code) from an
Employer that constitutes income from sources within the United States
(within the meaning of Section 861(a) (3) of the Code).
The Company may elect to apply subsections (a), (b), (c) or (d) of this
Section by substituting a shorter period of service, a smaller number of
hours or months, or a lower age than that specified in each subsection.
2.56 "Trust" shall mean the Hannaford Bros. Co. Savings and Investment
Trust, as amended from time to time.
2.57 "Trustee" shall mean the person or persons appointed by the Finance
Committee to serve as trustee(s) of the Trust.
2.58 "Trust Fund" shall mean the property held in the Trust for the
benefit of the Participants and their Beneficiaries.
2.59 "USERRA" shall mean the Uniformed Services Employment and
Reemployment Rights Act of 1994, 38 U.S.C. Section 4301 et seq., as in
effect on December 12, 1994 (without regard to any subsequent amendment).
2.60 "Valuation Date" shall mean, effective January 1, 1998, any
business day; provided, however, when such term is used in the context of
Article X, such term shall mean the last day of each Plan Year.
2.61 "Vesting Computation Period" shall mean a Plan Year. If the Plan
Year is changed, the Vesting Computation Period shall be deemed to include
a corresponding twelve (12) consecutive month period. The new Vesting
Computation Period shall commence within the prior Vesting Computation
Period so that the new period overlaps the prior period. Each hourly
Employee, other than an Employee who is employed as a driver, shall be
credited with one (1) Year of Vesting Service if he or she is credited with
<PAGE>
at least eight hundred and seventy (870) Hours of Service in only the prior
Vesting Computation Period; one (1) Year of Vesting Service if he or she is
credited with at least eight hundred and seventy (870) Hours of Service in
only the new Vesting Computation Period; and two (2) Years of Vesting
Service if he or she is credited with at least eight hundred and seventy
(870) Hours of Service in each of the two (2) overlapping Vesting
Computation Periods. Each salaried or salaried nonexempt Employee, and
each Employee who is employed as a driver, shall be credited with one (1)
Year of Vesting Service if he or she is credited with at least one thousand
(1,000) Hours of Service in only the prior Vesting Computation Period; one
(1) Year of Vesting Service if he or she is credited with at least one
thousand (1,000) Hours of Service in only the new Vesting Computation
Period; and two (2) Years of Vesting Service if he or she is credited with
at least one thousand (1,000) Hours of Service in each of the two (2)
overlapping Vesting Computation Periods.
2.62 "Year of Participation Service" shall have the meaning set forth in
subsection (a) or (b) below, whichever is applicable:
(a) In the case of an hourly Employee, other than an Employee who is
employed as a driver, an Eligibility Computation Period during which such
Employee has completed eight hundred and seventy (870) or more Hours of
Service.
(b) In the case of a salaried or salaried nonexempt Employee, or an
Employee who is employed as a driver, an Eligibility Computation Period
during which such Employee has completed one thousand (1,000) or more
Hours of Service.
2.63 "Year of Vesting Service" shall have the meaning set forth in
subsection (a) or (b) below, whichever is applicable:
(a) In the case of an hourly Employee, other than an Employee who is
employed as a driver, a Vesting Computation Period during which such
Employee has completed eight hundred and seventy (870) or more Hours of
Service.
(b) In the case of a salaried or salaried nonexempt Employee, or an
Employee who is employed as a driver, a Vesting Computation Period during
which such Employee has completed one thousand (1,000) or more Hours of
Service.
For purposes of determining the number of a Participant's Years of Vesting
Service, all service with an Employer or Related Employer shall be taken
into account; provided, however, in the case of a Participant who is first
employed by the Company or one of its subsidiaries in its Southeast
Division, service prior to March 1, 1993, shall be disregarded.
<PAGE>
In the case of a Participant who incurs a Break in Service or period of
consecutive Breaks in Service, such Participant shall be credited with his
or her Years of Vesting Service prior to such Break in Service in
accordance with subsection (c) or (d) below, whichever is applicable:
(c) a Participant who had a nonforfeitable right to all of his or her
Account when he or she incurred the Break in Service shall receive credit
for all Years of Vesting Service prior to his or her Break in Service
upon completing a Year of Vesting Service thereafter.
(d) a Participant who did not have a nonforfeitable right to all of
his or her Account when he or she incurred the Break in Service shall
receive credit for Years of Vesting Service prior to his or her Break in
Service if he or she completes a Year of Vesting Service thereafter and
the number of his or her consecutive Breaks in Service is less than five
(5).
ARTICLE III
PARTICIPATION
3.1 DATE OF PARTICIPATION. Except as hereinafter provided, each Employee
who is in the employ of an Employer on the Effective Date and who meets the
requirements of Section 3.2 on or before November 30, 1997, shall be
eligible to participate in the Plan as of the Effective Date. Each other
Employee who thereafter meets the requirements of Section 3.2 shall be
eligible to participate in the Plan as of the first day of the second (or
any subsequent) month following the month in which he or she meets such
requirements, provided he or she is still in the employ of an Employer on
such date. Notwithstanding the foregoing provisions to the contrary, each
Employee who was a participant in the Hannaford Southeast Savings and
Investment Plan as of December 31, 1997, shall be eligible to participate
in the Plan as of the Effective Date, provided he or she is still in the
employ of an Employer on the Effective Date.
3.2 PARTICIPATION REQUIREMENTS. Each Employee who has attained age
twenty-one (21) and completed one (1) Year of Participation Service shall
be eligible to participate in the Plan.
3.3 REEMPLOYED ELIGIBLE EMPLOYEE. An Eligible Employee who is reemployed
by an Employer shall again be eligible to participate in the Plan as of the
date he or she completes one (1) Hour of Service.
3.4 CHANGE OF EMPLOYMENT STATUS.
(a) An Employee whose employment status changes by reason of being
transferred from the employ of a Related Employer that has not adopted
the Plan to the employ of an Employer shall be eligible to participate in
<PAGE>
the Plan as of the later of the first day of the second month following
the date his or her of employment status changes or the first day of the
second month following the month in which he or she meets the
requirements of Section 3.2.
(b) A Participant whose employment status changes by reason of being
transferred to the employ of a Related Employer that has not adopted the
Plan shall nevertheless continue to participate in the Plan, but without
the right to make a Deferral Election or share in an allocation of
Employer Contributions occurring after the date his or her employment
status changes, until the date he or she ceases to be employed by the
Company and any other Related Employer.
ARTICLE IV
CONTRIBUTIONS AND DIRECT TRANSFERS
4.1 EMPLOYER CONTRIBUTIONS. For each Plan Year, each Employer shall
contribute to the Plan:
(a) The Elective Contributions to be made in accordance with
Section 5.1 or 4.8 on behalf of each Participant in its employ during
such year; and
(b) The Matching Contributions, if any, to be made on behalf of each
Participant in its employ during such year who has made a Deferral
Election for such year at the rate determined in accordance with
subparagraph (i) or (ii) below, whichever is applicable; provided,
however, no Matching Contribution may be made with respect to any Excess
Deferral or Excess Elective Contribution or any Elective Contribution
which is returned to the Participant pursuant to Section 7.4(b):
(i) In the case of a Participant, other than a Contract Employee:
(aa) $1.00 for each dollar of Elective Contributions made on his or
her behalf, up to 1% of his or her Compensation;
(bb) $0.50 for each dollar of Elective Contributions made on his or
her behalf in excess of 1% and not exceeding 5% of his or her
Compensation; and
(cc) $0.25 for each dollar of Elective Contributions made on his or
her behalf in excess of 5% and not exceeding 9% of his or her
Compensation; and
(ii) In the case of a Participant who is a Contract Employee:
(aa) $1.00 for each dollar of Elective Contributions made on his or
her behalf up to 1% of his or her Compensation; and
<PAGE>
(bb) $0.25 for each dollar of Elective Contributions made on his or
her behalf in excess of 1% and not exceeding 4% of his or her
Compensation; and
(c) the Discretionary Contributions, if any, in such amount as may be
determined by the Human Resources Committee of the Board of Directors.
4.2 TIMING OF EMPLOYER CONTRIBUTIONS. Elective Contributions shall be
paid to the Trust as of the earliest date on which such contributions can
reasonably be segregated from the general assets of the Participant's
Employer; provided in no event shall the date determined pursuant to this
provision occur later than the fifteenth (15th) business day of the month
in which such contributions would otherwise have been payable to the
Participant in cash (the "maximum time period"), unless an Employer extends
the maximum time period as provided in 29 C.F.R. Section 2510.3-102(d).
Matching Contributions and Discretionary Contributions, if any, with
respect to any Plan Year shall be paid to the Trust at such time or times
as may be determined by the Company, but not later than the date prescribed
by law for filing its federal income tax return for its taxable year which
ends with or within such Plan Year, including extensions which have been
granted for filing such return.
4.3 FORM OF CONTRIBUTIONS. Elective Contributions shall be made in cash.
Matching Contributions and Discretionary Contributions may, at the election
of the Human Resources Committee of the Board of Directors, be made in cash
or in Company Stock, or any combination thereof; provided any contribution
in the form of Company Stock shall be valued at its fair market value as of
the date of contribution.
4.4 MAXIMUM CONTRIBUTIONS. In no event shall the contributions made by
an Employer for any Plan Year exceed the maximum amount which such Employer
is permitted to deduct for federal income tax purposes or cause the Annual
Addition for any Participant to exceed the amount permitted under the Plan.
4.5 RETURN OF CONTRIBUTIONS. Contributions by each Employer are
conditioned upon the initial qualification of the Plan under Section 401(a)
of the Code and upon their deductibility under Section 404 of the Code.
Upon the request of any Employer, any contributions attributable to such
Employer (a) which are made by reason of a mistake of fact, (b) which are
conditioned upon the initial qualification of the Plan, or (c) for which a
deduction is disallowed shall be returned to the Employer within one (1)
year of the mistaken payment of the contribution, denial of qualification
(provided the application for qualification is made by the time prescribed
by law for filing such Employer's federal income tax return for its taxable
year in which the Plan is adopted, or such later date as the Secretary of
the Treasury may prescribe), or disallowance of the deduction. In the
event of a denial of qualification, the amount contributed for the period
during which the Plan was not qualified may be returned. In the event of a
<PAGE>
mistake of fact or a disallowance of deduction, the amount which may be
returned to such Employer is the excess of the amount contributed over the
amount that would have been contributed had there not occurred a mistake of
fact or an error in determining the deduction. Earnings attributable to
any excess contribution shall not be returned, and losses attributable
thereto shall reduce the amount which may be returned.
The portion of any contribution returned to an Employer in accordance
with this Section that represents Elective Contributions shall be paid
promptly by such Employer to the Participants on whose behalf such
contributions were made.
4.6 NONFORFEITABLE CONTRIBUTIONS. Each Participant shall have a fully
vested and nonforfeitable interest in his or her Elective Contributions
Account at all times. Each Participant shall have a vested and
nonforfeitable interest in his or her Matching Contributions Account and
Discretionary Contributions Account as provided in Section 9.3.
A reemployed Employee's period of qualified military service (as defined
in Section 4.8) shall be taken into account as required by law for purposes
of determining the nonforfeitability of contributions made on behalf of
such individual under the Plan.
4.7 SPECIAL RULES FOR MATCHING CONTRIBUTIONS.
(a) The Matching Contribution Percentage for Highly Compensated
Eligible Employees for any Plan Year commencing after December 31, 1996,
shall not exceed the greater of:
(i) the Matching Contribution Percentage for all other Eligible
Employees for the preceding Plan Year multiplied by 1.25; or
(ii) the lesser of the Matching Contribution Percentage for all other
Eligible Employees for the preceding Plan Year multiplied by 2, or the
Matching Contribution Percentage for such Eligible Employees for the
preceding Plan Year plus two percent (2%).
Notwithstanding the foregoing provisions to the contrary, with respect
to the Plan Year commencing January 1, 1997, the Company may elect,
pursuant to IRS Notice 97-2, to apply this subsection (a) by substituting
the phrase "such Plan Year" for the phrase "the preceding Plan Year."
(b) For purposes of this Section, if two or more qualified plans
maintained by the Employer are treated as one plan to meet the
requirements of Section 401(a)(4), Section 410(b) or Section 401(m) of
the Code, such plans shall be treated as a single plan. If a Highly
Compensated Eligible Employee participates in any other qualified plan
maintained by the Employer to which Matching Contributions are made, all
<PAGE>
such contributions for Plan Years ending with or within the same calendar
year shall be aggregated for purposes of this Section. If a Highly
Compensated Eligible Employee participates in two or more cash or
deferred arrangements that have different plan years, all cash or
deferred arrangements with Plan Years ending with or within the same
calendar year shall be treated as a single arrangement. Plans may be
aggregated in order to satisfy Section 401(m) of the Code only if they
have the same plan year.
(c) Notwithstanding any other provision of this Section to the
contrary, the limitation prescribed in subsection (a) above shall not
apply to Contract Employees, and Contract Employees shall be excluded for
purposes of applying such limitation to other Employees.
(d) To the extent Elective Contributions are taken into account under
this Section, any Elective Contributions returned to a Participant
pursuant to Section 7.4(b) shall be disregarded.
(e) Any Matching Contribution which is attributable to an Excess
Deferral or Excess Elective Contribution shall be forfeited and shall be
disregarded for purposes of subsection (a) of this Section. Forfeitures
shall be used to reduce Employer Contributions.
(f) For purposes of this Section, Matching Contributions shall be
treated as made for a Plan Year to which they relate if such
contributions are made no later than the end of the twelve (12) month
period beginning on the day after the close of the Plan Year. Each
Employer shall maintain records sufficient to demonstrate satisfaction of
this Section and the amount of any Elective Contributions taken into
account under this Section. The determination and treatment of the
individual Matching Contribution Percentage of any Eligible Employee
shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(g) In the event that the Matching Contribution Percentage of the
Highly Compensated Eligible Employees for any Plan Year exceeds the
limitation of subsection (a) above, the Administrative Committee shall,
within two and one-half (2 1/2) months after the end of such year,
distribute the Excess Matching Contributions to the extent nonforfeitable
(plus any income and minus any loss allocable thereto) to such Highly
Compensated Eligible Employees on the basis of the amount of Employer
Contributions made on behalf of each such Employee and taken into account
under Section 2.41 and shall designate such distribution as a
distribution of Excess Matching Contributions (plus any income and minus
any loss allocable thereto). To the extent the Excess Matching
Contributions are forfeitable, they shall be forfeited in accordance with
<PAGE>
the provisions of Section 9.4; provided, however, that forfeitures of
Excess Matching Contributions may not be allocated to the accounts of
Participants whose Matching Contributions are reduced pursuant to this
subsection (g).
(h) Excess Matching Contributions shall be adjusted for any income or
loss up to the date of distribution (or forfeiture). The income or loss
allocable to Excess Matching Contributions shall be determined by the
same manner in which income or loss is allocated to Participants'
Accounts under Article VIII.
(i) The amount of any Highly Compensated Eligible Employee's Excess
Matching Contributions shall be determined by reducing contributions on
behalf of all such Employees in the order of their respective amounts of
Employer Contributions taken into account under Section 2.41, beginning
with the highest such amount. The determination of the amount of Excess
Matching Contributions with respect to the Plan shall be made after first
determining the amount of Excess Deferrals under Article VI and then
determining the amount of Excess Elective Contributions under
Section 5.3.
4.8 USERRA MAKE-UP CONTRIBUTIONS. The provisions of this Section shall
be effective December 12, 1994. In addition to any Elective Contributions
made in accordance with Section 5.1, an Eligible Employee who is reemployed
by his or her Employer following a period of qualified military service may
elect to have such Employer make Elective Contributions on his or her
behalf in accordance with this Section; provided, such Elective
Contributions do not exceed the maximum amount of Elective Contributions
that such Employer would have been permitted to make on behalf of such
Eligible Employee in accordance with the limitations of Articles VI and VII
of the Plan and Sections 402(g), 404(a) and 415 of the Code during such
Employee's period of qualified military service if such Employee:
(a) had continued to be employed by such Employer during such period;
and
(b) received Compensation from such Employer equal to:
(i) the Compensation the Employee would have received during such
period if the Employee were not in qualified military service, based on
the rate of pay the Employee would have received from such Employer but
for the absence; or
(ii) if the Compensation the Employee would have received during such
period is not reasonably certain, the Employee's average Compensation
from the Employer during the twelve (12) month period immediately
preceding the period of qualified military service (or, the period of
employment immediately preceding the period of qualified military
service, if shorter).
<PAGE>
Elective Contributions made in accordance with this Section shall be net
of any Elective Contributions actually made during an Employee's period of
qualified military service. Any Elective Contributions on behalf of an
Eligible Employee pursuant to this Section 4.8 shall be made during the
period which begins on the date of reemployment of such Employee with his
or her Employer and the duration of which is equal to the lesser of (i)
three (3) times the period of qualified military service and (ii) five (5)
years.
An Employer shall make Matching Contributions with respect to any
additional Elective Contributions made in accordance with this Section
which would have been required had such Elective Contributions actually
been made during the period of qualified military service; provided such
Matching Contributions do not exceed the maximum amount of Matching
Contributions that such Employer would have been permitted to make on
behalf of such Eligible Employee in accordance with the limitations of
Article VII of the Plan and Sections 404(a) and 415 of the Code during such
Employee's period of qualified military service.
Any Elective Contributions or Matching Contributions made by an Employer
on behalf of an Eligible Employee pursuant to this Section 4.8 shall not be
subject to any otherwise applicable limitation contained in Section 402(g),
404(a), or 415 of the Code and shall not be taken into account in applying
such limitations to other contributions or benefits under the Plan or any
other plan maintained by such Employer with respect to the year in which
such contributions are made. Any such Elective Contributions and Matching
Contributions shall not be taken into account, either for the Plan Year in
which they are made or for the Plan Year to which they relate, for purposes
of Sections 4.7, 5.3, or Article X of the Plan and for purposes of Sections
401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12), 401(m), 410(b),
or 416 of the Code.
No provision of this Section 4.8 shall be construed to require any
crediting of earnings to a Participant's Account with respect to any
Employer Contribution before such Employer Contribution is actually made or
any allocation of any forfeiture with respect to a period of qualified
military service.
For purposes of this Section, "qualified military service" shall mean
service entitling an individual to reemployment rights under USERRA,
provided such individual is reemployed or initiates reemployment with an
Employer within the period prescribed by USERRA.
An election by an Eligible Employee to have his or her Employer make
additional Elective Contributions on his or her behalf pursuant to this
Section 4.8 shall be made by such written, telephonic or electronic means
as shall be prescribed by the Administrative Committee.
<PAGE>
4.9 ROLLOVER CONTRIBUTIONS. An Employee who has received an eligible
rollover distribution (as defined in Section 402(c)(4) of the Code) from an
employee's trust described in Section 401(a) of the Code which is exempt
from tax under Section 501(a) of the Code may transfer all or any portion
of such distribution to the Trust, provided the transfer is made to the
Trust not later than the sixtieth (60th) day following the day on which the
Employee received such distribution. In addition, an Employee who receives
a distribution from an individual retirement account (within the meaning of
Section 408(a) of the Code), which account is attributable solely to a
rollover contribution (as defined in Section 402(c)(5) of the Code) from an
employee's trust described in Section 401(a) of the Code which is exempt
from tax under Section 501(a) of the Code, may transfer the entire amount
distributed to the Trust, provided the transfer is made to the Trust not
later than the sixtieth (60th) day following the day on which the Employee
received such distribution. Notwithstanding the foregoing to the contrary,
an Employee who has received an eligible rollover distribution (as
hereinabove defined) solely by reason of the death of his or her spouse or
a distribution from an individual retirement account (as hereinabove
defined), which account is attributable solely to a rollover contribution
(as hereinabove defined) from an employee's trust described in Section
401(a) of the Code which is exempt from tax under Section 501(a) of the
Code of amounts received by reason of the death of his or her spouse, may
not transfer any portion of such distribution to the Trust.
A Rollover Contribution shall be credited to a Rollover Contributions
Account on behalf of the contributing Employee, and such Employee shall
have a fully vested and nonforfeitable interest in his or her Rollover
Contributions Account. The Rollover Contributions Account of a Participant
shall be administered, invested and distributed in the same manner and at
the same time as his or her Elective Contributions Account.
4.10 DIRECT TRANSFERS. The Administrative Committee may direct the
Trustee to transfer the assets credited to the Account of a Participant or
Former Participant to another employer's retirement plan, provided
immediately prior to the transfer, the transferee plan contains a provision
permitting such transfer and is qualified under Section 401(a) of the Code
and the related trust is exempt under Section 501(a) of the Code.
The assets of another profit sharing plan may, with the prior consent of
the Administrative Committee, be directly transferred to the Trust,
provided immediately prior to the transfer, the transferor plan contains a
provision permitting such transfer and is qualified under Section 401(a) of
the Code and the related trust is exempt under Section 501(a) of the Code.
Upon receipt, the Administrative Committee shall credit the Account of each
Employee who participated in the transferor plan with the portion of the
transferred assets standing to the credit of such Employee under the
transferor plan immediately prior to such transfer, provided such amount
shall be separately accounted for in accordance with Section 8.1. With
respect to a Participant who has an outstanding loan balance under the
<PAGE>
transferor plan at the time of the transfer, the promissory note evidencing
such loan shall be transferred to this Plan and the outstanding loan
balance shall be treated in accordance with the provisions of Section 9.11
as an outstanding loan balance under this Plan.
Except as hereinafter provided or as otherwise provided in Article IX or
XVIII, each elective, matching or other type of contribution comprising the
Transfer Account of any Employee shall be administered, invested and
distributed in accordance with the provisions of this Plan applicable to
such type of contribution. Each type of contribution comprising the
Transfer Account which was not fully vested under the transferor plan as of
the date of the transfer shall remain subject to the vesting schedule set
forth in the transferor plan. Each type of contribution comprising the
Transfer Account which was fully vested under the transferor plan as of the
date of the transfer shall remain fully vested under this Plan.
Notwithstanding the foregoing provisions of this Section to the contrary,
this Plan shall not accept any direct or indirect transfers from a plan
(other than the Hannaford Southeast Savings and Investment Plan) which is
subject to Section 401(a)(11) of the Code.
ARTICLE V
DEFERRAL ELECTIONS
5.1 TIMING AND METHOD. Any Eligible Employee may participate in the Plan
by electing to defer part of his or her Compensation each payroll period,
provided that an Eligible Employee may not defer less than one percent (1%)
nor more than fifteen percent (15%) of his or her Compensation each Plan
Year. The amount deferred shall be contributed to the Plan by the Employer
on behalf of the electing Eligible Employee. A Deferral Election shall be
made by such written, telephonic or electronic means as shall be prescribed
by the Administrative Committee.
A Deferral Election received by the Administrative Committee on or before
the fifteenth (15th) day of any month shall be effective on the later of
(i) the first day of the first payroll period in the month following the
month in which such election was received by the Administrative Committee;
or (ii) the first day of the first payroll period in the month specified in
said election. A Deferral Election received by the Administrative
Committee after the fifteenth (15th) day of any month shall be effective on
the later of (i) the first day of the first payroll period in the second
month following the month in which such election was received by the
Administrative Committee; or (ii) the first day of the first payroll period
in the month specified in said election. A deemed Deferral Election
pursuant to Section 18.2 shall be effective January 1, 1998. A Deferral
Election shall remain in effect until amended or terminated in accordance
with Section 5.2.
<PAGE>
If a Participant terminates a Deferral Election in accordance with
Section 5.2, such Participant may subsequently make another Deferral
Election, provided such election shall not become effective until the first
day of the first payroll period beginning on or after the earlier of the
first day of the Plan Year or the first day of the seventh month of the
Plan Year following receipt of such election by the Administrative
Committee, provided such election is received at least fifteen (15) days in
advance of the date such election is to effective.
5.2 AMENDMENT OR TERMINATION BY PARTICIPANT. A Participant may amend his
or her Deferral Election to increase or decrease the deferral percentage
within the limits of Section 5.1 or may terminate his or her Deferral
Election by such written, telephonic or electronic means as shall be
prescribed by the Administrative Committee. Except as provided in Section
9.11, an amendment shall become effective on the first day of the first
payroll period beginning on or after the earlier of the first day of the
Plan Year or the first day of the seventh month of the Plan Year following
receipt of such amendment by the Administrative Committee, provided such
election is received at least fifteen (15) days in advance of the date such
election is to become effective. A termination shall become effective on
the first day of the first payroll that begins at least ten (10) days after
the date such termination is received by the Administrative Committee.
5.3 LIMITATIONS ON ACTUAL DEFERRAL PERCENTAGE. In the event a Highly
Compensated Employee participates in two or more cash or deferred
arrangements (under Section 401(k) of the Code) that have different plan
years, for purposes of this Section, all such arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
For purposes of this Section, this Plan and any other Code Section 401(k)
plan maintained by an Employer shall be treated as a single plan if such
plans are treated as one plan for purposes of Section 401(a)(4) or 410(b)
of the Code or if a Highly Compensated Eligible Employee participates in
such other plan. Plans may be aggregated to satisfy Section 401(k) of the
Code only if such plans have the same plan year.
(a) The Actual Deferral Percentage for Highly Compensated Eligible
Employees for any Plan Year commencing after December 31, 1996, shall not
exceed the greater of:
(i) the Actual Deferral Percentage for all other Eligible Employees
for the preceding Plan Year multiplied by 1.25; or
(ii) the lesser of the Actual Deferral Percentage for all other
Eligible Employees for the preceding Plan Year multiplied by 2, or the
Actual Deferral Percentage for such Eligible Employees for the
preceding Plan Year plus two percent (2%).
<PAGE>
(b) The sum of the Actual Deferral Percentage for Highly Compensated
Eligible Employees and the Matching Contribution Percentage for Highly
Compensated Eligible Employees for any Plan Year commencing after
December 31, 1996, shall not exceed the greater of:
(i) the sum of (1) the greater of the Actual Deferral Percentage for
all other Eligible Employees for the preceding Plan Year multiplied by
1.25, or the Matching Contribution Percentage for all other Eligible
Employees for the preceding Plan Year multiplied by 1.25, and (2) the
lesser of the Actual Deferral Percentage for all other Eligible
Employees for the preceding Plan Year plus 2, or the Matching
Contribution Percentage for all other Eligible Employees for the
preceding Plan Year plus 2, provided that in no event shall such
percentage plus 2 exceed such percentage multiplied by 2.
(ii) the sum of (1) the lesser of the Actual Deferral Percentage for
all other Eligible Employees for the preceding Plan Year multiplied by
1.25 or the Matching Contribution Percentage for all other Eligible
Employees for the preceding Plan Year multiplied by 1.25, and (2) the
greater of the Actual Deferral Percentage for all other Eligible
Employees for the preceding Plan Year plus 2 or the Matching
Contribution Percentage for all other Eligible Employees for the
preceding Plan Year plus 2, provided that in no event shall such
percentage plus 2 exceed such percentage multiplied by 2.
(c) Notwithstanding the foregoing provisions of this Section to the
contrary, the limitations prescribed in subsections (a) and (b) above and
the provisions of Section 5.4 shall apply separately to Contract
Employees and all other Employees.
Subsection (b) of this Section shall not apply if the respective Actual
Deferral Percentage and Matching Contribution Percentage of the Highly
Compensated Eligible Employees for any Plan Year commencing after December
31, 1996, does not exceed the respective Actual Deferral Percentage and
Matching Contribution Percentage of all other Eligible Employees for the
preceding Plan Year multiplied by 1.25.
Notwithstanding the foregoing provisions of this Section to the contrary,
with respect to the Plan Year commencing January 1, 1997, the Company may
elect, pursuant to IRS Notice 97-2, to apply subsections (a) and (b) of
this Section by substituting the phrase "such Plan Year" for the phrase
"the preceding Plan Year" in said subsections and in the paragraph
immediately following subsection (b).
For purposes of this Section, Elective Contributions and Matching
Contributions must be made before the last day of the twelve (12) month
period immediately following the Plan Year to which such contributions
relate. Any Elective Contributions returned to a Participant pursuant to
Section 7.4(b) shall be disregarded.
<PAGE>
Each Employer shall maintain records sufficient to demonstrate compliance
with this Section and the amount of any Matching Contributions used to
satisfy this Section. The determination and treatment of the contributions
on behalf of any Participant that are taken into account for purposes of
this Section shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
5.4 RESTRICTIONS AND ADJUSTMENTS. The Administrative Committee may
restrict the deferral percentages elected by Participants if the
Administrative Committee determines such restriction is necessary to comply
with Section 4.4, Section 5.3, Article VI, or Article VII.
In the event that the Actual Deferral Percentage of the Highly
Compensated Eligible Employees for any Plan Year exceeds the limitations
prescribed in Section 5.3(a), the Administrative Committee shall, within
two and one-half (2 1/2) months after the end of such year, distribute the
Excess Elective Contributions (plus any income and minus any loss allocable
thereto) to such Highly Compensated Eligible Employees on the basis of the
amount of Employer Contributions made on behalf of each such Employee and
taken into account under Section 2.2 and shall designate such distribution
as a distribution of Excess Elective Contributions (plus any income and
minus any loss allocable thereto).
The amount of any Highly Compensated Eligible Employee's Excess Elective
Contributions shall be determined by reducing contributions on behalf of
such Employees in the order of their respective amounts of Employer
Contributions taken into account under Section 2.2, beginning with the
highest such amount. The amount of Excess Elective Contributions with
respect to a Highly Compensated Eligible Employee for any Plan Year shall
be reduced by the amount of Excess Deferrals previously distributed to such
Employee under Article VI for the calendar year ending with or within the
Plan Year; provided, however, that notwithstanding the distribution of an
Excess Deferral in accordance with Section 6.2 to a Highly Compensated
Eligible Employee, such distributed amount shall be taken into account
under Section 5.3.
Excess Elective Contributions shall be adjusted for any income or loss up
to the date of distribution. The income or loss allocable to Excess
Elective Contributions shall be determined by the same manner in which
income or loss is allocated to Participants' Accounts under Article VIII of
the Plan.
In the event that the sum of the Actual Deferral Percentage for Highly
Compensated Eligible Employees and the Matching Contribution Percentage for
Highly Compensated Eligible Employees for any Plan Year exceeds the
limitations prescribed in Section 5.3(b), the Administrative Committee
shall, within two and one-half (2 1/2) months after the end of such year,
reduce the Matching Contribution Percentage for Highly Compensated
Employees in the manner prescribed in subsection (g) through (i) of Section
4.7.
<PAGE>
ARTICLE VI
EXCESS DEFERRALS
6.1 LIMITATION ON ELECTIVE CONTRIBUTIONS. Effective January 1, 1997, the
Elective Contributions that may be allocated to a Participant's Account for
any calendar year shall not exceed Nine Thousand Five Hundred Dollars
($9,500.00), reduced by the amount of any employer contributions for such
year on behalf of such Participant pursuant to an election to defer
compensation under any qualified cash or deferred arrangement within the
meaning of Section 401(k) of the Code, any simplified employee pension or
cash arrangement within the meaning of Section 402(h)(1)(B) of the Code,
any eligible deferred compensation plan under Section 457 of the Code, any
plan within the meaning of Section 501(c)(18) of the Code, any salary
reduction agreement for the purchase of an annuity contract under Section
403(b) of the Code, and any elective employer contribution under Section
408(p)(2)(A)(i) of the Code.
For purposes of this Section, any Elective Contributions returned to a
Participant pursuant to Section 7.4(b) shall be disregarded. The dollar
limitation of this Section shall be automatically adjusted to reflect any
cost of living adjustment made under Section 402(g)(5) of the Code.
6.2 DISTRIBUTION OF EXCESS DEFERRAL. In the event that the limitation of
Section 6.1 is exceeded with respect to any Participant for any calendar
year, not later than April 15 of the following calendar year, the
Administrative Committee shall distribute the Excess Deferral (plus any
income and minus any loss allocable thereto) to such Participant and
designate such distribution as a distribution of an Excess Deferral (plus
any income and minus any loss allocable thereto), provided that the
Administrative Committee has received the notice prescribed in Section 6.3.
Excess Deferrals shall be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess Deferrals shall be
determined by the same manner in which income or loss is allocated to the
Participants' Accounts under Article VIII of the Plan.
The amount of Excess Deferral with respect to a Participant for any
calendar year shall be reduced by the amount of any Excess Elective
Contributions previously distributed to such Participant for the Plan Year
beginning with or within the calendar year.
6.3 NOTICE BY PARTICIPANT. It shall be the responsibility of the
Participant to notify the Administrative Committee of any Excess Deferral
for a calendar year. Such notice shall be made by such written, telephonic
or electronic means as shall be prescribed by the Administrative Committee;
shall specify the amount of the Excess Deferral; shall state that if the
Excess Deferral is not distributed, such excess shall be includable in the
Participant's gross income under Section 402(g) of the Code; and shall be
<PAGE>
submitted to the Administrative Committee not later than March 1 of the
following calendar year. A Participant shall be deemed to have notified
the Administrative Committee of an Excess Deferral to the extent such
Participant has an Excess Deferral for a calendar year, taking into account
only Elective Contributions under the Plan and any other plans of his or
her Employer subject to Section 402(g) of the Code.
ARTICLE VII
LIMITATION ON ANNUAL ADDITIONS
7.1 LIMITATION FOR DEFINED CONTRIBUTION PLANS. The Annual Additions
which may be allocated to the Account of a Participant for a Limitation
Year shall not exceed the lesser of:
(a) Thirty Thousand Dollars ($30,000.00) (or, if greater, one-fourth
(1/4) of the dollar limitation in effect under Section 415(b)(1)(A) of
the Code); or
(b) Twenty-five percent (25%) of the Participant's compensation (as
defined in Section 7.5) for the Limitation Year,
reduced by the sum of (i) the annual additions allocated within such
Limitation Year to the accounts of such Participant under all other
qualified defined contribution plans maintained by an Employer and (ii) the
contributions on behalf of such Participant to 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) which, as
hereinafter provided, are treated as annual additions to a defined
contribution plan. The dollar limitation of this Section shall be
automatically adjusted to reflect any cost of living adjustment made under
Section 415(d) of the Code.
If an Annual Addition allocated to a Participant's Account for a
Limitation Year when added to the sum of (i) the Annual Additions
previously allocated within such year to the Participant's Account, (ii)
the annual additions previously allocated within such year to the
Participant's accounts under all other qualified defined contribution plans
maintained by an Employer and (iii) the aforesaid contributions to 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)
exceeds the limitation set forth in this Section, such excess shall be
reduced as hereinafter provided in this Article.
If the allocation of an Annual Addition to a Participant's Account
coincides with the allocation of an annual addition to such Participant's
account or accounts under one or more other qualified defined contribution
plans maintained by an Employer and/or the allocation of a contribution on
<PAGE>
behalf of such Participant to one or more welfare benefit funds (as defined
in Section 419(e) of the Code) or individual medical benefit accounts (as
defined in Section 415(l)(2) of the Code) which, as hereinafter provided,
are treated as an annual addition to a defined contribution plan and such
allocations exceed the limitation set forth in this Section, the excess
attributable to this Plan, which shall be reduced as hereinafter provided
in this Article, shall be equal to the product determined by multiplying
the total excess by a fraction, the numerator of which is the Annual
Additions previously allocated to the Participant's Account within such
Limitation Year and the denominator of which is the sum of the Annual
Additions previously allocated to the Participant's Account within such
Limitation Year and the annual additions previously allocated to the
Participant's accounts under such other plans within such Limitation Year.
The limitation set forth in this Section may be applied on the basis of
reasonable estimates of compensation for the Limitation Year, provided such
estimates are uniformly determined for all Participants. As soon as
practicable after the end of each Limitation Year, the limitation shall be
applied on the basis of actual compensation.
Notwithstanding the foregoing, the compensation limitations of Section
7.1(b) 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(h)(1) or Section
419A(d)(2) of the Code.
7.2 LIMITATION FOR DEFINED CONTRIBUTION PLAN AND DEFINED BENEFIT PLAN.
If a Participant also participates or has participated in a qualified
defined benefit plan maintained by an Employer, then in addition to the
limitation set forth in the preceding Section, the sum of the fractions
determined under subsections (a) and (b) below for any Limitation Year
shall not exceed 1.0.
(a) A fraction, the numerator of which is the sum of the Participant's
projected annual benefits under all qualified defined benefit plans
(whether or not terminated) maintained by the Employer and the
denominator of which is the lesser of (i) the dollar limitation in
effect under Section 415(b)(1)(A) of the Code for such year multiplied by
1.25, or (ii) the amount which may be taken into account under Section
415(b)(1)(B) of the Code with respect to the Participant for such year
multiplied by 1.4.
For purposes of this subsection (a), "projected annual benefits" shall
mean the annual retirement benefit (adjusted to an actuarially equivalent
straight life annuity, if such benefit is expressed in a form other than
a straight life annuity, or qualified joint and survivor annuity) to
which the Participant would be entitled under the terms of the plan,
assuming:
<PAGE>
(i) the Participant will continue employment until normal retirement
age under the plan (or current age, if later); and
(ii) 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.
Notwithstanding the foregoing, if the Participant participated as of
the first day of the first Limitation Year beginning after December 31,
1986, in one or more qualified defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of this
fraction shall not be less than one hundred twenty-five percent (125%) of
the sum of the annual benefits which the Participant accrued under such
plans 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
qualified 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.
(b) A fraction, the numerator of which is the sum of the annual
additions to the Participant's accounts under all qualified defined
contribution plans (whether or not terminated) maintained by an Employer
for the current and all prior Limitation Years (including the annual
additions attributable to the Participant's nondeductible voluntary
contributions under all qualified defined benefit plans, whether or not
terminated, maintained by an Employer) and the contributions on behalf of
the Participant 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) maintained by an Employer
which, as hereinafter provided, are treated as annual additions to a
defined contribution plan and the denominator of which is the sum of the
lesser of the following amounts determined for the current Limitation
Year and all prior Limitation Years in which the Participant performed
service for the Employer (regardless of whether a defined contribution
plan was maintained by the Employer): (i) the dollar limitation in
effect under Section 415(c)(1)(A) of the Code for such year multiplied by
1.25, or (ii) thirty-five percent (35%) of the Participant's compensation
for such year.
If an 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
qualified defined contribution plans maintained by the Employer which
were in existence on May 6, 1986, the numerator of this fraction shall be
adjusted if the sum of the fractions under this Section would otherwise
exceed 1.0 under the terms of this Plan. Under the adjustment, an amount
equal to the product of (i) the excess of the sum of said fractions over
1.0 multiplied by (ii) the denominator of this fraction, shall be
<PAGE>
permanently subtracted from the numerator of this fraction. The
adjustment shall be calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before
January 1, 1987, and disregarding any changes in the terms and conditions
of the Plan made after May 5, 1986, but using the Section 415 limitation
applicable to the first Limitation Year beginning on or after January 1,
1987.
The Annual Addition for any Limitation Year beginning before
January 1, 1987, shall not be recomputed to treat all employee
contributions as Annual Additions.
If the sum of said fractions for any Limitation Year exceeds 1.0, the
Annual Additions allocated to the Participant's Account for such
Limitation Year shall be reduced, as hereinafter provided in this
Article, until the sum of the fractions does not exceed 1.0 or the rate
of accrual of the Participant's accrued benefit under the defined benefit
plan shall be reduced until the sum of the fractions does not exceed 1.0.
7.3 COMBINING AND AGGREGATING PLANS. For purposes of applying the
limitations described in this Article:
(a) All qualified defined benefit plans (without regard to whether a
plan has been terminated) ever maintained by an Employer shall be treated
as one defined benefit plan; and
(b) All qualified defined contribution plans (without regard to
whether a plan has been terminated) ever maintained by an Employer shall
be treated as one defined contribution plan.
7.4 REDUCTION OF EXCESS ANNUAL ADDITIONS. If, as a result of a
reasonable error in estimating a Participant's annual compensation (as
defined in Section 7.5), a reasonable error in determining the amount of
elective deferrals (within the meaning of Section 402(g)(3) of the Code)
that may be made with respect to any Participant under the limitations of
Section 415 of the Code, or under other limited facts and circumstances
that the Commissioner of the Internal Revenue Service finds justify the
availability of the rules set forth below, the Annual Additions allocated
to the Account of any Participant would cause the limitations set forth in
the preceding Sections of this Article for any Limitation Year to be
exceeded, the following rules shall apply to the extent necessary to reduce
such excess, and the excess amounts shall not be deemed Annual Additions in
such Limitation Year:
(a) Any nondeductible voluntary employee contributions (and the
earnings thereon) to the extent they would reduce the excess amount,
shall be returned to the Participant;
<PAGE>
(b) Any Elective Contributions (and, effective for Limitation Years
beginning after December 31, 1995, the earnings thereon) to the extent
they would reduce the excess amount, shall be returned to the
Participant;
(c) If after the application of subsections (a) and (b) an excess
amount still exists and the Participant is covered by the Plan at the end
of the Limitation Year, the excess amount allocated to the Participant's
Account for such year shall be used to reduce Employer Contributions for
the next Limitation Year and for each succeeding Limitation Year, if
necessary, for such Participant;
(d) If after the application of subsections (a) and (b) an excess
amount still exists and the Participant is not covered by the Plan at the
end of the Limitation Year, the excess amount allocated to the
Participant's Account for such Limitation Year shall be held unallocated
in a suspense account. The suspense account shall be applied to reduce
Employer Contributions for all remaining Participants in the next
Limitation Year and each succeeding Limitation Year, if necessary.
If a suspense account is in existence at any time during a Limitation
Year pursuant to subsection (d) of this Section, it shall not participate
in the allocation of the Investment Funds' income, expenses, 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
Contributions or employee contributions may be made to the Plan for that
Limitation Year. For purposes of subsections (c) and (d) excess amounts
may not be distributed to Participants or Former Participants.
7.5 Definition of Compensation. Except as hereinafter provided, for
purposes of applying the limitations of this Article, the term
"compensation" shall mean, with respect to a Limitation Year, the total
compensation paid by an Employer to an Employee for services rendered while
an Employee that constitutes wages as defined in Section 3401(a) of the
Code and all other payments by an Employer to an Employee for services
rendered while an Employee for which an Employer is required to furnish the
Employee a written statement under Sections 6041(d), 6051(a)(3) and 6052 of
the Code without regard to any rules that limit the remuneration included
in wages based on the nature or location of the employment or services
performed. Notwithstanding the foregoing to the contrary, effective
January 1, 1998, "compensation" shall include any elective deferrals within
the meaning of Section 402(g)(3) of the Code and any amount which is
contributed or deferred by an Employer at the election of an Employee and
which is not includable in the gross income of the Employee by reason of
Section 125 or 457 of the Code.
<PAGE>
For purposes of applying the limitations of this Article, "compensation"
for a Limitation Year shall mean the compensation actually paid or
includable in gross income during such Limitation Year. Notwithstanding
the preceding sentence "compensation" with respect to a Participant who is
permanently and totally disabled (within the meaning of Section 22(e)(3) of
the Code) shall mean the compensation such Participant would have received
for the Limitation Year if he or she had been paid at the rate in effect
immediately before becoming permanently and totally disabled; provided,
such imputed compensation may be taken into account only if the Participant
is not a Highly Compensated Employee and contributions made on behalf of
such Participant are nonforfeitable when made.
Notwithstanding the foregoing to the contrary, for purposes of Sections
2.2, 2.41 and 10.3(b), effective January 1, 1994, the annual "compensation"
of any Employee in excess of One Hundred Fifty Thousand Dollars
($150,000.00) (or such higher amount as the Secretary of the Treasury may
prescribe) shall not be taken into account. In the event "compensation" is
determined based on a period of time which contains fewer than twelve (12)
calendar months, the annual compensation limit shall be an amount equal to
the annual compensation limit for the Limitation Year in which the period
begins multiplied by a fraction, the numerator of which is the number of
full calendar months in the period and the denominator of which is twelve
(12). If "compensation" for a prior Limitation Year is taken into account
for any Limitation Year, such compensation shall be subject to the annual
compensation limit in effect for such prior Limitation Year.
7.6 CERTAIN CONTRIBUTIONS TREATED AS ANNUAL ADDITIONS. For purposes of
this Article:
(a) Excess Matching Contributions and Excess Elective Contributions
shall be treated as Annual Additions;
(b) Amounts derived from contributions which are paid or accrued in
taxable years ending after December 31, 1985, and 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, shall be treated as annual additions to a
defined contribution plan; and
(c) Contributions 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 defined benefit plan maintained by the Employer shall
be treated as annual additions to a defined contribution plan.
<PAGE>
ARTICLE VIII
ACCOUNTS AND VALUATION
8.1 PARTICIPANT ACCOUNTS. The Administrative Committee shall establish
and maintain a separate Account for each Participant which shall separately
reflect:
(a) The Participant's Elective Contributions and the income, expenses,
gains and losses of the Trust Fund attributable thereto (such portion of
a Participant's Account shall be referred to as his or her "Elective
Contributions Account");
(b) The Participant's Matching Contributions, if any, and the income,
expenses, gains and losses of the Trust Fund attributable thereto (such
portion of a Participant's Account shall be referred to as his or her
"Matching Contributions Account");
(c) the Participant's share of Discretionary Contributions, if any,
and the income, expenses, gains and losses of the Trust Fund attributable
thereto (such portion of a Participant's Account shall be referred to as
his or her "Discretionary Contributions Account");
(d) The Participant's Rollover Contributions and the income, expenses,
gains and losses of the Trust Fund attributable thereto (such portion of
a Participant's Account shall be referred to as his or her "Rollover
Contributions Account"); and
(e) The assets transferred from another qualified plan on behalf of
the Participant in accordance with Section 4.10 or Article XVIII and the
income, expenses, gains and losses of the Trust Fund attributable thereto
(such portion of a Participant's Account shall be referred to as his or
her "Transfer Account").
8.2 ADJUSTMENTS. The Administrative Committee shall adjust the
Participants' Accounts as of each Valuation Date as follows:
(a) First, determine the net fair market value of each Investment Fund
as of the close of business on such date or, if that date is not a
business day, as of the close of business on the last preceding business
day.
(b) Second, allocate the income, expenses, gains and losses of each
Investment Fund among the Accounts in proportion to the Account balances
(to the extent invested in such fund) as of the preceding Valuation Date,
increased by one-half (1/2) of the sum of the contributions and periodic
loan repayments invested on behalf of the Participant in such fund since
the preceding Valuation Date and by that portion of any lump sum loan
repayment invested in such fund since the preceding Valuation Date.
<PAGE>
(c) Third, reduce the separate Account of each Participant to reflect
distributions, loans and withdrawals made from such Account since the
preceding Valuation Date.
(d) Fourth, credit each Participant's Account with the contributions
made on his or her behalf, the assets transferred from another qualified
plan in accordance with Section 4.10 or Article XVIII, and the
Participant's loan repayments since the preceding Valuation Date.
(e) Fifth, adjust each Participant's Account to reflect transfers
among the Investment Funds.
(f) Notwithstanding the foregoing provisions of this Section to the
contrary, the Administrative Committee may debit in a uniform and
nondiscriminatory manner the Account of any Participant or Former
Participant as of any Valuation Date in the amount of any reasonable
expense attributable to such Participant's or Former Participant's
exercise of control over his or her Account since the preceding Valuation
Date. The Administrative Committee shall establish, in writing,
reasonable procedures to inform Participants and Former Participants that
such expenses may be charged to their Accounts pursuant to this
Section 8.2(f), to inform each Participant or Former Participant at least
annually of the actual expenses incurred with respect to his or her
Account, and to otherwise carry out this subsection. A Participant's or
Former Participant's "exercise of control over his or her Account" shall
include but not be limited to the following:
(i) a request for a loan pursuant to Section 9.11;
(ii) a request for a hardship withdrawal distribution pursuant to
Section 9.12; and
(iii) an investment direction pursuant to Section 11.4 or
Section 11.5.
8.3 ALLOCATION OF ELECTIVE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS. Any
Elective Contributions and Matching Contributions made on behalf of a
Participant for payroll periods ending in any month shall be allocated to
the Participant's Account as of the Valuation Date coinciding with or next
following the end of such month; provided that any Matching Contributions
shall be allocated based on such Participant's Elective Contributions
(excluding Excess Elective Contributions) as the Human Resources Committee
of the Board of Directors may determine.
8.4 ALLOCATION OF DISCRETIONARY CONTRIBUTIONS. As of the last Valuation
Date of each Plan Year, the Trustee shall allocate the Discretionary
Contribution, if any, for such Plan Year to the separate Accounts of the
Eligible Employees entitled to share therein in proportion to their
<PAGE>
respective amounts of compensation for such Plan Year. For purposes of
this Section, "compensation" shall have the meaning given such term in
Section 2.11, except that it shall include compensation paid for services
rendered while an Eligible Employee; provided, however, compensation paid
for services rendered while a Contract Employee shall not be taken into
account.
8.5 ELIGIBLE EMPLOYEES ENTITLED TO SHARE IN DISCRETIONARY CONTRIBUTIONS.
An Eligible Employee shall be entitled to share in the Discretionary
Contribution for a Plan Year (i) if, in the case of an hourly Employee,
other than an Employee who is employed as a driver, he or she is credited
with at least eight hundred and seventy (870) or more Hours of Service
during such Plan Year, or, in the case of a salaried or salaried nonexempt
Employee, or an Employee who is employed as a driver, he or she is credited
with at least one thousand (1,000) Hours of Service during such Plan Year,
remains in the employ of an Employer on the last business day of such Plan
Year, and is not a Contract Employee on such date, or (ii) if he or she
dies, retires after having attained Normal Retirement Age or retires on
account of Disability during such Plan Year; provided at the time of such
retirement or death he or she is not a Contract Employee.
In the event application of the preceding sentence would cause the Plan
to fail to satisfy the requirements of Section 410(b) of the Code for any
Plan Year, the following provisions shall apply:
(a) An Eligible Employee shall be entitled to share in the
Discretionary Contribution for a Plan Year (i) if, in the case of an
hourly Employee, other than an Employee who is employed as a driver, he
or she is credited with more than four hundred and thirty-five (435)
Hours of Service during such Plan Year, or, in the case of a salaried or
salaried nonexempt Employee, or an Employee who is employed as a driver,
he or she is credited with more than five hundred (500) Hours of Service
during such Plan Year, remains in the employ of an Employer on the last
business day of such Plan Year, and is not a Contract Employee on such
date, or (ii) if he or she dies, retires after having attained Normal
Retirement Age or retires on account of Disability during such Plan Year;
provided at the time of such retirement or death he or she is not a
Contract Employee.
(b) If after applying subsection (a) above the Plan would fail to
satisfy the requirements of Section 410(b) of the Code, an Eligible
Employee shall be entitled to share in the Discretionary Contribution for
a Plan Year if he or she remains in the employ of an Employer on the last
business day of such Plan Year and is not a Contract Employee on such
date, without regard to the number of Hours of Service credited during
such year, or if he or she dies, retires after having attained Normal
Retirement Age or retires on account of Disability during such Plan Year;
provided at the time of such retirement or death he or she is not a
Contract Employee.
<PAGE>
(c) If after applying subsections (a) and (b) of this Section the Plan
would fail to satisfy the requirements of Section 410(b) of the Code, an
Eligible Employee shall be entitled to share in the Discretionary
Contribution for a Plan Year (i) if, in the case of an hourly Employee,
other than an Employee who is employed as a driver, he or she is
credited with more than four hundred and thirty-five (435) Hours of
Service during such Plan Year, or, in the case of a salaried or salaried
nonexempt Employee, or an Employee who is employed as a driver, he or she
is credited with more than five hundred (500) Hours of Service during
such Plan Year, and is not a Contract Employee, regardless of whether he
or she remains in the employ of an Employer on the last business day of
such year; or (ii) if he or she dies, retires after having attained
Normal Retirement Age or retires on account of Disability during such
Plan Year; provided at the time of such retirement or death he or she is
not a Contract Employee.
8.6 ALLOCATION OF ROLLOVER CONTRIBUTIONS AND ASSET TRANSFERS. Any
Rollover Contribution and any direct transfer of plan assets in accordance
with Section 4.10 or Article XVIII made on behalf of an Employee shall be
allocated to his or her Account as of the Valuation Date coinciding with or
next following the date such contribution or transfer is received by the
Trustee.
8.7 REPORTS TO PARTICIPANTS. The Administrative Committee shall, at
least annually, determine each Participant's share of the Trust Fund and
furnish each Participant with a statement summarizing his or her Account.
ARTICLE IX
DISTRIBUTION, LOANS AND WITHDRAWALS
9.1 RETIREMENT. When a Participant attains Normal Retirement Age, he or
she shall have a fully vested and nonforfeitable right to his or her
Account. Following retirement, such Participant shall receive distribution
of his or her Account in such manner and at such time as hereinafter
provided.
9.2 DISABILITY. If a Participant retires on account of a Disability,
such Participant shall have a fully vested and nonforfeitable right to his
or her Account. Such Participant shall receive distribution of his or her
Account in such manner and at such time as hereinafter provided.
9.3 TERMINATION OF EMPLOYMENT. If a Participant ceases to be employed by
an Employer or a Related Employer and is no longer employed by any of them
prior to attaining Normal Retirement Age for any reason other than
Disability or death, such Participant shall receive distribution of the
vested portion of his or her Account in such manner and at such time as
hereinafter provided. The vested portion of such Participant's Account
shall be equal to the sum of the following:
<PAGE>
(a) Such Participant's Elective Contributions Account, Rollover
Contributions Account, and the portion of his or her Transfer Account
that was fully vested and nonforfeitable as of the date of transfer;
(b) Such Participant's vested percentage of his or her Matching
Contributions Account and Discretionary Contributions Account determined
in accordance with the following schedule:
NUMBER OF PARTICIPANT'S
YEARS OF VESTING SERVICE VESTED PERCENTAGE
Less than 5 0%
5 or more 100%
; and
(c) Such Participant's vested percentage of his or her Transfer
Account determined in accordance with Section 4.10.
Notwithstanding the foregoing provisions of this Section to the contrary,
each Participant shall have a full vested and nonforfeitable right to his
or her Account balance as of December 31, 1997 (plus the earnings thereon),
except for the portion of such Account balance, if any, which is
attributable to a Transfer Account balance. The vested percentage of such
Transfer Account balance shall be determined in accordance with subsection
(c) above.
Notwithstanding the foregoing provisions of this Section to the contrary,
each Participant who is a Contract Employee and each other Participant who
has completed at least three (3) Years of Vesting Service as of December
31, 1997, shall have a fully vested and nonforfeitable right to his or her
Account at all times.
9.4 FORFEITURES. If a Participant is not vested in any portion of his or
her Matching Contributions Account, Discretionary Contributions Account,
and matching contributions and discretionary contributions sub-accounts
under his or her Transfer Account at the time he or she ceases to be
employed by an Employer or a Related Employer and is no longer employed by
any of them, the balance of such accounts and sub-accounts shall be
forfeited as of the date he or she ceases to be employed by an Employer or
a Related Employer and is no longer employed by any of them. If such
Participant is reemployed by an Employer or any Related Employer prior to
incurring five (5) consecutive Breaks in Service, the balance of his or her
Matching Contributions Account, Discretionary Contributions Account and
matching contributions and discretionary contributions sub-accounts under
his or her Transfer Account as of the Valuation Date coinciding with or
next following the date he or she ceased to be employed shall be restored.
<PAGE>
Restoration shall be made by the end of the Plan Year following the Plan
Year in which the Participant is reemployed by an Employer or any Related
Employer. Restoration shall first be made out of forfeitures and to the
extent forfeitures are insufficient, then out of Employer Contributions.
The amounts forfeited by Participants in any Plan Year shall be used to
make restoration in accordance with this Section and, to the extent
forfeitures exceed the amounts required to make restoration, to reduce
Employer Contributions. The amount, if any, by which forfeitures occurring
during a Plan Year exceed the sum of the amounts required to make
restoration and the amount required to be contributed by an Employer for
such Plan Year shall be credited to an excess forfeiture account, which
shall be adjusted for the income, expenses, gains and losses attributable
thereto in the same manner provided for adjustment of Accounts. On the
Valuation Date coinciding with the last day of the next succeeding Plan
Year, the excess forfeiture account shall be closed and treated as a
forfeiture occurring in such Plan Year. This procedure shall be repeated
for each Plan Year in which forfeitures occurring during such year exceed
the sum of the amount required to make restoration and the amount required
to be contributed by an Employer for such year, subject, however, to such
modification as may be required by the Section governing termination of the
Plan.
9.5 DISTRIBUTIONS TO PARTICIPANTS. Effective January 1, 1998, and except
as hereinafter provided, the vested portion of each Participant's Account
shall be distributed in a lump sum. Subject to the provisions of
subsections (c), (d), (e), (f) and (g) below, a Participant may elect to
receive distribution of the vested portion of his or her Account as of any
Valuation Date which occurs:
(a) after the date he or she ceases to be employed by an Employer or a
Related Employer and is no longer employed by any of them;
(b) after any of the following events:
(i) the termination of the Plan by the Participant's Employer,
without the establishment or maintenance of another defined
contribution plan (other than an employee stock ownership plan as
defined in Section 4975(e)(7) of the Code);
(ii) the sale or other disposition by an Employer to an unrelated
corporation of substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code) used by such Employer in a trade or
business of the Employer, if the Participant continues employment with
the corporation acquiring such assets; or
<PAGE>
(iii) the sale or other disposition by an Employer of such Employer's
interest in a subsidiary (within the meaning of Section 409(d)(3) of
the Code), to an unrelated entity if the Participant continues
employment with such subsidiary.
The Participant's Account shall be valued as of the first Valuation Date
following receipt of such election by the Administrative Committee or the
Valuation Date specified in said election, if later, and distribution shall
be made in a lump sum as soon as practicable thereafter. An election
pursuant to this Section 9.5 shall be made by such written, telephonic or
electronic means as may be prescribed by the Administrative Committee.
(c) Notwithstanding the foregoing provisions of this Section to the
contrary, if the value of the vested portion of a Participant's Account
does not exceed Three Thousand Five Hundred Dollars ($3,500.00) as of the
Valuation Date following the date he or she ceases to be employed by an
Employer or a Related Employer and is no longer employed by any of them
(and did not exceed Three Thousand Five Hundred Dollars ($3,500.00) as of
the date of any prior distribution), his or her Account shall be
distributed in a lump sum as soon as practicable after such Valuation
Date.
(d) Notwithstanding the foregoing provisions of this Section to the
contrary, distribution to a Participant shall be made not later than the
sixtieth (60th) day after the later of the close of the Plan Year in
which the Participant attains the Normal Retirement Age or in which the
Participant ceases to be employed by an Employer or a Related Employer
and is no longer employed by any of them.
(e) Notwithstanding the foregoing provisions of this Section to the
contrary, a Participant may elect to receive or commence receiving
distribution of the vested portion of his or her Transfer Account
balance, if any, which was allocated to such Participant's account under
the Hannaford Southeast Savings and Investment Plan as of June 30, 1995,
at such time and in such manner as provided in Exhibit A to this Plan;
provided, however, this subsection (e) shall not apply if such vested
portion does not exceed Three Thousand Five Hundred Dollars ($3,500.00)
as of such date (and did not exceed Three Thousand Five Hundred Dollars
($3,500.00) as of the date of any prior distribution).
(f) Notwithstanding the foregoing provisions of this Section to the
contrary, effective January 1, 1997:
(i) distribution of the Account of a Participant who is not a Five
Percent Owner shall be made not later than April 1 of the calendar year
following the later of the calendar year in which the Participant
attains age seventy and one-half (70 1/2) or the calendar year in which
the Participant retires; and
<PAGE>
(ii) distribution of the Account of a Participant who is a Five
Percent Owner shall be made or commence not later than April 1 of
the calendar year following the calendar year in which the Participant
attains age seventy and one-half (70 1/2).
For purposes of this subsection (f), a Five Percent Owner shall mean a
Participant who is a Five Percent Owner with respect to the Plan Year
ending with or within the calendar year in which such Participant attains
age seventy and one-half (70 1/2).
(g) Notwithstanding the foregoing provisions of this Section to the
contrary, a Participant may elect to receive or commence receiving the
vested portion of his or her Account balance which was allocated to his
or her Account under the Plan as of May 12, 1997, (or, in the case of a
Participant who participated in the Hannaford Southeast Savings and
Investment Plan, the vested portion of the balance of his or her Transfer
Account created pursuant to Section 18.2 of the Plan as of January 1,
1998), as of April 1 of the calendar year following the calendar year in
which he or she has attained age seventy and one-half (70 1/2). An
election pursuant to this subsection (g) shall be made at such time and
in such manner as provided in Section 9.6.
Notwithstanding the foregoing provisions of this subsection (g) to the
contrary, in the event it shall be subsequently determined by statute,
Treasury regulation or ruling of the Internal Revenue Service that this
subsection (g) is not required to qualify the Plan under the Code, then
this subsection (g) shall be of no effect (as of the earliest date
permitted under the statute, regulation or ruling) without the necessity
of further amendment of the Plan.
9.6 REQUIRED DISTRIBUTIONS TO PARTICIPANTS. Each Participant who is
required to receive a distribution pursuant to Section 9.5(f)(ii) and who
continues in the employ of an Employer or a Related Employer, and each
Participant to whom Section 9.5(g) may apply, may elect, in lieu of
receiving a lump sum distribution of his or her Account, to receive annual
installments of the minimum amount determined in accordance with Section
9.7. Such annual installments shall be paid over a period not to exceed
the life expectancy of the Participant or the joint life and last survivor
expectancy of the Participant and his or her spouse; provided, such
distribution must be made over a period such that the present value of the
payments to be made to the Participant must be greater than fifty percent
(50%) of the present value of the payments to be made to the Participant
and the Participant's spouse determined as of the date the Participant
ceases to be employed by an Employer or a Related Employer and is no longer
employed by any of them. The first two installments under this Section may
be paid in the calendar year following the calendar year in which the
Participant attains age seventy and one-half (70 1/2); thereafter, one
installment shall be paid in each calendar year.
<PAGE>
For purposes of this Section and Section 9.7, in the case of a
Participant to whom Section 9.5(g) applies, the term "Account" shall mean
the vested portion of such Participant's Account balance which was
allocated to his or her Account under the Plan as of May 12, 1997 (or, in
the case of a Participant who participated in the Hannaford Southeast
Savings and Investment Plan, the vested portion of the balance of his or
her Transfer Account created pursuant to Section 18.2 of the Plan as of
January 1, 1998).
An election shall be made by such written, electronic or telephonic means
as may be prescribed by the Administrative Committee and must be delivered
to the Administrative Committee at least fifteen (15) days in advance of
the date distribution is required to commence pursuant to Section
9.5(f)(ii).
9.7 MINIMUM AMOUNTS TO BE DISTRIBUTED TO PARTICIPANTS. The amount to be
distributed each year to a Participant pursuant to Section 9.5(f)(ii) or
9.5(g), beginning in the calendar year following the calendar year in which
he or she attains age seventy and one-half (70 1/2), shall not be less than
the quotient obtained by dividing the Participant's Account balance at the
beginning of such year by the life expectancy of the Participant (or the
joint life and last survivor expectancy of the Participant and his or her
spouse) determined as of the beginning of such year and reduced by one (1)
for each year thereafter.
Notwithstanding the above, if the Participant (or his or her spouse, in
the event the Participant dies before distribution of his or her Account is
made or commences) so elects prior to the time distribution must commence
pursuant to Section 9.5(f)(ii) or 9.8 (or prior to the time distribution
may commence pursuant to Section 9.5(g)), the life expectancy of the
Participant, the life expectancy of the spouse or the joint life and last
survivor expectancy of the Participant and his or her spouse shall be
recalculated pursuant to the regulations under Section 401(a)(9) of the
Code. Such election shall be irrevocable. In the absence of such
election, life expectancy shall not be recalculated. The life expectancy
of a nonspouse Beneficiary may not be recalculated.
Distribution shall be made in accordance with the regulations under
Section 401(a)(9) of the Code, including Regulation 1.401(a)(9)-2, which
shall override any distribution options in the Plan inconsistent therewith.
9.8 DISTRIBUTIONS TO SURVIVING SPOUSES AND BENEFICIARIES. Upon the death
of a Participant, the balance of the Participant's Account shall be
distributed to his or her surviving spouse or, if the Participant is not
survived by a spouse or the Participant's surviving spouse consents, to the
Participant's designated Beneficiary. To be effective, the consent of the
Participant's surviving spouse must be in writing, must acknowledge the
effect thereof and must be witnessed by a notary public. A Participant's
Account shall be valued as of the Valuation Date next following the date of
<PAGE>
his or her death and shall be distributed to his or her surviving spouse or
Beneficiary in a lump sum as soon as practicable thereafter, but not later
than sixty (60) days after the close of the Plan Year in which the
Participant's death occurs.
Subject to the preceding provisions of this Section, each Participant
from time to time, by completing and signing a form furnished by the
Administrative Committee, may designate any person or persons (who may be
designated concurrently, contingently or successively) to receive any
benefits payable upon his or her death. Each beneficiary designation shall
revoke all prior designations by the Participant and shall be effective
only when filed in writing with the Administrative Committee during the
Participant's lifetime. If a Participant fails to designate a Beneficiary,
distribution shall be made to his or her surviving spouse, but if the
Participant is not survived by a spouse, to such of the Participant's issue
who survive him or her, such issue to take per stirpes, but if the
Participant is not survived by a spouse or any issue, then to the
Participant's estate. If a designated Beneficiary does not survive the
Participant and no successor Beneficiary has been designated, distribution
shall be made to the Participant's estate.
Notwithstanding the foregoing provisions of this Section to the contrary,
a surviving spouse or Beneficiary may elect to receive or begin receiving
distribution of the portion of the Participant's Transfer Account balance,
if any, which was allocated to such Participant's account under the
Hannaford Southeast Savings and Investment Plan as of June 30, 1995, at
such time and in such manner as provided in Exhibit A to this Plan;
provided, however, this paragraph shall not apply if such portion does not
exceed Three Thousand Five Hundred Dollars ($3,500.00) as of such date (and
did not exceed Three Thousand Five Hundred Dollars ($3,500.00) as of the
date of any prior distribution).
9.9 DISTRIBUTION TO ALTERNATE PAYEE. In the event that all or a portion
of a Participant's Account is immediately distributable to an alternate
payee, pursuant to a qualified domestic relations order, the Administrative
Committee shall distribute the amount payable to such alternate payee in a
lump sum as soon as practicable after determining that such order is
qualified in accordance with Article XVI. Except as otherwise provided in
the domestic relations order, such distribution shall be made as of the
Valuation Date following the date that it is determined that the order is
qualified. If the amount to be distributed in accordance with this Section
exceeds Three Thousand Five Hundred Dollars ($3,500.00), no distribution
shall be made without the written consent of the alternate payee.
In the event that all or a portion of a Participant's Account is payable
to an alternate payee pursuant to a qualified domestic relations order, but
is not immediately distributable under such order, the Administrative
Committee shall direct the Trustee to establish a separate account within
the meaning of Section 16.5(b) on behalf of the alternate payee as soon as
<PAGE>
practicable after determining that such order is qualified in accordance
with Article XVI. The Administrative Committee shall distribute the amount
payable from such account to such alternate payee in a lump sum at such
time as is provided by the terms of such order. Distribution of a separate
account pursuant to this Section 9.9 may be made prior to the Participant's
"earliest retirement age" as defined in Section 16.7.
9.10 DISTRIBUTIONS TO MINORS AND INCOMPETENT PERSONS. If any person to
whom benefits shall be distributed under the Plan shall be a minor, or if
the Administrative Committee shall determine that such person is
incompetent by reason of mental or physical disability, the Administrative
Committee may direct the Trustee to distribute such benefits in one or more
of the following ways to be determined by the Administrative Committee:
(a) directly to such minor or incompetent person; or
(b) to a legal or natural guardian or other relative of such minor, or
to the legal guardian or conservator of such incompetent person or to any
adult person with whom such incompetent person temporarily or permanently
resides.
The receipt by such minor, incompetent person, guardian, conservator,
relative or other person shall be a complete discharge of the Trustee, the
Administrative Committee, and the Trust Fund, and the Trustee and
Administrative Committee shall be without any responsibility to see to the
application of any such distributions.
9.11 LOANS. The Administrative Committee may direct the Trustee to make
a loan or loans from the vested portion of a Participant's Account to a
Participant or Beneficiary who is a "party in interest" as defined in
Section 3(14) of ERISA, subject to the following:
(a) An application for a loan shall be made to the Administrative
Committee on or before the tenth (10th) day of the month in which the
loan is to be made. The application shall contain such information as
the Administrative Committee may reasonably request.
(b) A loan for any month shall be made by the last business day of
such month, and the amount of such loan shall be determined with
reference to the fair market value of the Participant's Account as of the
most recent Valuation Date preceding the date the loan is to be made for
which valuation data has been received by the Administrative Committee.
(c) No loan shall be made in an amount less than Five Hundred Dollars
($500.00). A Participant requesting a loan may amend his or her Deferral
Election to decrease the amount being deferred, on such form and in such
manner as the Administrative Committee shall prescribe. Such amendment
<PAGE>
shall be submitted to the Administrative Committee with the Participant's
loan application and shall be effective as of the first day of the first
payroll period with respect to which the first loan payment is due.
(d) Any loan made on or after January 1, 1987, when added to the
balance of all other outstanding loans with respect to a Participant's
Account from the Plan, shall not exceed the lesser of--
(i) Fifty Thousand Dollars ($50,000.00), reduced by the excess,
if any, of--
(aa) the Participant's highest outstanding loan balance under the
Plan for the one (1) year period ending on the day before such loan
is made, over
(bb) the Participant's loan balance under the Plan on the day such
loan is made, or
(ii) Fifty percent (50%) of the Participant's vested interest in his
or her Account.
The total of the unpaid balances of all loans (including accrued but
unpaid interest) made with respect to a Participant's Account under the
Plan and all other qualified retirement plans maintained by his or her
Employer shall not exceed the maximum amount which may be loaned in
accordance with the limitations of Section 72(p) of the Code.
(e) Each loan shall be evidenced by a promissory note bearing a
reasonable rate of interest as determined by the Administrative Committee
taking into consideration interest rates currently being charged by
commercial lenders for loans made under similar circumstances, and shall
be adequately secured in such manner as the Administrative Committee may
determine. Collateral for a loan may consist of an assignment of not
more than fifty percent (50%) of a Participant's vested interest in his
or her Account. In the event of default on a loan, the Administrative
Committee shall, after giving the Participant or Beneficiary written
notice of the default and an opportunity to cure the default, in
accordance with the terms and conditions of such loan, foreclose upon the
collateral to the extent necessary to satisfy the Participant's
obligation. If the collateral for such loan is the Participant's vested
interest in his or her Account, such foreclosure may not occur prior to
the Participant's termination of employment.
(f) Each loan shall be made for such term and, subject to
subsection (e) above, upon such terms and conditions as the
Administrative Committee shall determine; provided that substantially
level amortization, with payments not less frequently than quarterly,
shall be required over the term of such loan (except with respect to any
<PAGE>
period, not to exceed one (1) year, that the Participant is on a leave of
absence, as provided in the written administrative procedures established
pursuant to Section 9.11(l)), and further provided that the term shall
not exceed five (5) years.
(g) Each loan shall be treated and accounted for as an investment of a
Participant's Account. The Trustee shall establish a loan fund to which
it shall transfer the amount of each loan from the other Investment Funds
in which the Participant's Account is invested in proportion to the
amounts invested in such funds as of the date such loan is made. Amounts
of principal and interest paid on any loan shall be transferred from the
loan fund to the Investment Funds in accordance with the Participant's
investment election in effect at the time of payment. Upon payment in
full of a loan, a Participant may amend his or her Deferral Election to
increase the amount being deferred, or in the case of a Participant who
has terminated his or her Deferral Election, make a new election, on such
form and in such manner as the Administrative Committee shall prescribe.
Such amendment or new election shall become effective in accordance with
the effective date provisions of Section 5.1.
(h) For purposes of this Section 9.11, the Rollover Contributions
Account of any Participant shall be deemed part of his or her Elective
Contributions Account.
(i) No distribution (other than a deemed distribution under
Section 72(p) of the Code) shall be made to any Participant or Former
Participant or to a Beneficiary of any Participant until all unpaid loans
with respect to the Participant's Account, including accrued interest
thereon, have been paid in full. Notwithstanding the preceding sentence
to the contrary, in the event a Participant or Beneficiary receives or
commences to receive distribution of his or her Account pursuant to
Section 9.5 or 9.8, and at the time of such distribution there remains
outstanding any unpaid loans with respect to his or her Account, then
(i) the Account of the Participant or Beneficiary shall be reduced
prior to any such distribution by the amount of the principal and
accrued interest outstanding on such loan;
(ii) the loan shall be deemed to be paid in full as of the date the
distribution is made or commences; and
(iii) such Participant or Beneficiary shall be treated as receiving or
commencing to receive a distribution of his or her entire Account.
<PAGE>
(j) The Administrative Committee shall suspend the obligation to repay
any loan made to a Participant pursuant to this Section 9.11 for any
period during which such Participant is performing service in the
"uniformed services" (as defined in USERRA), whether or not such service
is "qualified military service" within the meaning of Section 4.8, and
such suspension shall not be taken into account for purposes of Sections
72(p), 401(a), or 4975(d)(1) of the Code.
(k) The Administrative Committee shall follow a uniform and
nondiscriminatory policy in making loans to assure that loans are
available to all Participants and Beneficiaries who are "parties in
interest" on a reasonably equivalent basis as required under 29 C.F.R.
Section 2550.408b-1 and to further assure that the Plan meets the
requirements of Section 401(a)(4) of the Code.
(l) The Administrative Committee shall establish, in writing,
administrative procedures to carry out the provisions of this
Section 9.11.
9.12 HARDSHIP WITHDRAWALS. The Administrative Committee may direct the
Trustee to make a hardship withdrawal distribution to a Participant or
Former Participant from his or her Elective Contributions Account subject
to the following:
(a) Each request for a hardship withdrawal must be by written
application filed with the Administrative Committee at least ten (10)
days prior to the date such withdrawal is to be made. The application
shall specify the reason for such withdrawal and shall include such other
information and documentation as the Administrative Committee may
request.
(b) A hardship withdrawal shall be made only in cash and may not
exceed the sum of the Elective Contributions (and income allocable
thereto as of December 31, 1988) allocated to the Participant's Account.
(c) A hardship withdrawal shall be permitted only if the distribution
is on account of an immediate and heavy financial need of the Participant
and is necessary to satisfy such financial need.
(i) A financial need may qualify as immediate and heavy without
regard to whether such need was foreseeable or voluntarily incurred by
the Participant. The following shall be deemed immediate and heavy
financial needs:
(aa) Payment of medical expenses described in Section 213(d) of the
Code previously incurred by the Participant, his or her spouse or
dependent (within the meaning of Section 152 of the Code) or payment
necessary for such persons to obtain medical care described in
Section 213(d) of the Code;
<PAGE>
(bb) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence of the Participant;
(cc) Payment of tuition, related educational fees and room and
board expenses for the next twelve (12) months of post-secondary
education for the Participant, his or her spouse or dependent
(within the meaning of Section 152 of the Code); and
(dd) Payment to prevent eviction of the Participant from his or her
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
The above list of deemed immediate and heavy financial needs shall not be
exclusive, and other needs may qualify as immediate and heavy financial
needs.
(ii) A distribution shall be treated as necessary to satisfy an
immediate and heavy financial need of the Participant only to the
extent the amount of such distribution is not reasonably available to
the Participant from other resources. The Administrative Committee may
reasonably rely on the Participant's representations that the need
cannot be relieved by insurance, by reasonable liquidation of the
Participant's assets, by termination of the Participant's Deferral
Election or by other distributions or loans from the Plan or from
commercial lenders. A Participant's resources shall be deemed to
include those assets of his or her spouse and minor children that are
reasonably available to the Participant.
(iii) The amount of an immediate and heavy financial need may include
any amounts necessary to pay any federal, state or local income taxes
or penalties reasonably anticipated to result from the distribution.
(d) Withdrawals shall be charged against the Investment Funds in which
the withdrawing Participant's Account is invested in proportion to the
amounts invested in such funds as of the date such withdrawal is made.
(e) A request for a hardship distribution shall be treated as a claim
for benefits under Article XIV. A hardship withdrawal shall be made as
soon as practicable following approval of the request by the
Administrative Committee.
(f) The Administrative Committee may from time to time establish rules
governing withdrawals, including withdrawal minimums and the extent to
which withdrawals shall be limited because of Plan loans. Such rules
shall be applied on a uniform and nondiscriminatory basis.
9.13 FORM OF DISTRIBUTION. Distribution of a Participant's Account shall
be made in cash. However, a Participant may elect that distribution of
that portion of his or her Account which is invested in the Company Stock
<PAGE>
Fund be distributed in whole shares of Company Stock. Such election shall
be made by such written, telephonic or electronic means, and at such time,
as shall be prescribed by the Administrative Committee.
9.14 DIRECT ROLLOVERS.
(a) A Participant who is entitled to receive an eligible rollover
distribution may elect to have such distribution (or a portion thereof
not less than Five Hundred Dollars ($500.00)) made directly to an
eligible retirement plan ("direct rollover election").
An alternate payee who is entitled to receive an eligible rollover
distribution pursuant to a qualified domestic relations order under
Article XVI and who is the spouse or a former spouse of a Participant may
make a direct rollover election as if such alternate payee were the
Participant.
A surviving spouse who is entitled to receive an eligible rollover
distribution by reason of the Participant's death may make a direct
rollover election; provided that such election is restricted to an
eligible retirement plan that is an individual retirement account
described in Section 408(a) of the Code or an individual retirement
annuity described in Section 408(b) of the Code.
(b) No earlier than ninety (90) days and no later than thirty (30)
days before an eligible rollover distribution is to be made, the
Administrative Committee shall provide the Participant, alternate payee,
or surviving spouse, as the case may be, with a written explanation of -
(i) the rules under which he or she may make a direct rollover
election;
(ii) the legal requirement that federal income tax be withheld from
the distribution if he or she does not elect a direct rollover;
(iii) the rules under which the amount that he or she actually
receives will not be subject to federal income tax if such amount is
transferred ("rolled over") within sixty (60) days after being received
pursuant to Section 402(c) of the Code;
(iv) the rules, if applicable, for receiving special income tax
averaging, or capital gain treatment, under Section 402(d) of the
Code; and
(v) the Plan provisions under which a direct rollover election with
respect to one payment in a series of periodic payments will apply to
all subsequent payments until such election is changed.
<PAGE>
Notwithstanding the foregoing to the contrary, if an eligible rollover
distribution is one of a series of periodic payments, the explanation
required by this subsection shall be provided annually as long as such
payments continue.
(c) A direct rollover election shall be made in such manner and at
such time as the Administrative Committee shall prescribe, and shall
include:
(i) the name of the eligible retirement plan;
(ii) a statement that such plan is an eligible retirement plan; and
(iii) any other information necessary to permit a direct rollover by
the means selected by the Administrative Committee.
An election to make a direct rollover with respect to one payment in a
series of periodic payments shall apply to all subsequent payments in the
series until such election is changed; such change with respect to
subsequent payments may be made at any time.
(d) Notwithstanding subsection (b) to the contrary, if an individual
after receiving the written explanation required by subsection (b),
affirmatively elects to make or not make a direct rollover, an eligible
rollover distribution may be made less than thirty (30) days after the
date such written explanation was given, provided the Administrative
Committee has informed such individual, in writing, of his or her right
to a period of at least thirty (30) days to make such election.
(e) As used in this Section, the following terms shall have the
following meanings:
(i) "Eligible Retirement Plan" shall mean
(aa) an individual retirement account, described in Section 408(a)
of the Code;
(bb) an individual retirement annuity described in Section 408(b)
of the Code (other than an endowment contract);
(cc) a trust described in Section 401(a) of the Code which is
exempt from tax under Section 501(a) of the Code and which is part
of a defined contribution plan described in Section 414(i) of the
Code that permits rollover contributions; or
(dd) an annuity plan described in Section 403(a) of the Code.
(ii) "Eligible Rollover Distribution" shall mean a distribution from
the Plan of Two Hundred Dollars ($200.00) or more, excluding the
following:
<PAGE>
(aa) a required distribution pursuant to Section 9.7;
(bb) a return of Elective Contributions pursuant to Section 7.4;
and
(cc) a corrective distribution pursuant to Section 4.7, 5.4 or 6.2.
ARTICLE X
TOP HEAVY PROVISIONS
10.1 TOP HEAVY REQUIREMENTS. Notwithstanding any provision of this Plan
to the contrary, if the Plan is or becomes Top Heavy, then the provisions
of this Article shall become applicable and supersede any conflicting
provisions of this Plan.
10.2 MINIMUM VESTING REQUIREMENTS. Except as hereinafter provided, each
Participant shall continue to have a fully vested and nonforfeitable
interest in his or her Account. The vested percentage of each Participant
in the portion of his or her Matching Contributions Account and
Discretionary Contributions Account which was allocated after December 31,
1997, and the portion of his or her Transfer Account which was not fully
vested under the transferor plan as of the date of the transfer shall be
determined in accordance with the following schedule:
NUMBER OF PARTICIPANT'S
YEARS OF VESTING SERVICE VESTED PERCENTAGE
Less than 3 0%
3 or more 100%
Notwithstanding the foregoing provisions of this Section to the contrary,
each Participant who is a Contract Employee and each other Participant who
has completed at least three (3) Years of Vesting Service as of December
31, 1997, shall continue to have a fully vested and nonforfeitable interest
in his or her Account.
10.3 MINIMUM CONTRIBUTION REQUIREMENT. Except as hereinafter provided,
for each Plan Year in which the Plan is Top Heavy, each Employer shall
contribute, on behalf of each Eligible Employee who is a Non-Key Employee
and who has not separated from its employ by the end of the Plan Year, an
amount equal to the lesser of:
(a) three percent (3%) of such Eligible Employee's compensation (as
defined in Section 7.5); or
<PAGE>
(b) the percentage of such Eligible Employee's compensation (as
defined in Section 7.5) which is equal to the largest percentage
determined by dividing the Employer Contributions allocated to the
Account of each Key Employee by such Key Employee's compensation (as so
defined).
The preceding sentence shall be applied by substituting four percent (4%)
for three percent (3%) for each Plan Year in which:
(i) the Plan is included in a Required Aggregation Group or a
Permissive Aggregation Group which includes a qualified defined benefit
plan and the Top Heavy Ratio does not exceed ninety percent (90%); and
(ii) the limitation set forth in Section 7.2 would be exceeded
if 1.0 is substituted for 1.25 wherever 1.25 appears in said
limitation.
The minimum contribution shall be made on behalf of each Eligible
Employee who is a Non-Key Employee and who remains in the service of the
Employer on the last day of the Plan Year, regardless of the number of
Hours of Service such Eligible Employee is credited with during such Plan
Year.
Notwithstanding any provision of this Section to the contrary, for each
Plan Year in which the Plan is Top Heavy, an Eligible Employee who is a
Non-Key Employee and who is also covered by a qualified defined benefit
plan maintained by his or her Employer, shall accrue a minimum benefit (as
required by Section 416(c)(1) of the Code) and a minimum contribution shall
not be made on behalf of such Eligible Employee under this Plan. The
preceding sentence shall be applied by substituting "three percent (3%)"
for "two percent (2%)" in Section 416(c)(1)(B)(i) of the Code and by
increasing (but not by more than ten percentage points) the percentage
provided in Section 416(c)(1)(B)(ii) of the Code for each Plan Year in
which:
(i) the Plan is included in a Required Aggregation Group or a
Permissive Aggregation Group which includes a qualified defined benefit
plan and the Top Heavy Ratio does not exceed ninety percent (90%); and
(ii) the limitation set forth in Section 7.2 would be exceeded if 1.0
is substituted for 1.25 wherever 1.25 appears in said limitation.
For purposes of satisfying the minimum contribution requirement of this
Section, Elective Contributions and Matching Contributions shall not be
taken into account.
<PAGE>
10.4 MODIFIED LIMITATION ON ALLOCATIONS. The limitation of Section 7.2
shall be applied by substituting 1.0 for 1.25 whenever 1.25 appears in said
limitation for each Plan Year in which the Plan is included in a Required
Aggregation Group or a Permissive Aggregation Group which includes a
qualified defined benefit plan and the Top Heavy Ratio exceeds ninety
percent (90%).
10.5 PRESENT VALUE FACTORS. For purposes of determining the Top Heavy
Ratio, the present value of accrued benefits under all defined benefit
plans included in a Required Aggregation Group or a Permissive Aggregation
Group shall be based on the following factors:
Interest: Six and one-half percent (6.5%) per annum
Mortality: 1971 Group Annuity Mortality Table, using male rates
for all individuals
10.6 BENEFIT ACCRUAL. For purposes of determining the Top Heavy Ratio,
the accrued benefit of any Non-Key Employee under all defined benefit plans
included in a Required Aggregation Group or a Permissive Aggregation Group
shall be determined under the method used for accrual purposes for all such
plans of an Employer or, if no method is prescribed, as if such benefit
accrued no more rapidly than the slowest rate permitted under Section
411(b)(1)(C) of the Code.
ARTICLE XI
TRUST FUND INVESTMENTS
11.1 DUTIES. The Trustee shall receive and hold all contributions made
by an Employer together with such other assets as may be transferred to it
in accordance with the provisions of the Plan. In addition, the Trustee
shall make distributions as directed by the Administrative Committee in
accordance with the provisions of Article IX.
11.2 INVESTMENT FUNDS. The Trustee shall establish a Company Stock Fund
and one or more other Investments Funds as the Finance Committee may from
time to time direct. The Finance Committee shall direct that each
Investment Fund, other than the Company Stock Fund, shall be invested:
(a) at the discretion of the Trustee in accordance with such
investment guidelines and objectives as may be established by the Finance
Committee for such Investment Fund; or
(b) at the discretion of a duly appointed Investment Manager in
accordance with such investment guidelines and objectives as may be
established by the Finance Committee; or
<PAGE>
(c) in such investments as the Finance Committee may specify for
such Investment Fund.
The Finance Committee may from time to time change its direction with
respect to any Investment Fund and may, at any time, eliminate any
Investment Fund. Whenever an Investment Fund is eliminated, the Trustee
shall promptly liquidate the assets of such Investment Fund and reinvest
the proceeds thereof in accordance with the direction of the Finance
Committee.
The Trustee shall transfer to each Investment Fund such portion of the
assets of the Trust as the Administrative Committee may from time to time
direct in accordance with the terms of the Plan. All interest, dividends
and other income received with respect to, and any proceeds realized from
the sale or other disposition of, assets held in any Investment Fund shall
be credited to and reinvested in such Investment Fund, and all expenses
properly attributable to any Investment Fund shall be paid therefrom unless
paid by the Employers.
11.3 COMPANY STOCK FUND. The Trustee shall establish a Company Stock
Fund which shall be invested primarily in shares of Company Stock. The
Trustee shall, as soon as practicable, apply amounts allocated to the
Company Stock Fund to purchase Company Stock on the open market or in
private transactions, from the Company or otherwise, at current market
value. Pending investment in Company Stock, the Trustee shall invest
amounts allocated to and dividends or other amounts received by the Company
Stock Fund in short-term cash equivalents including, but not limited to,
short-term debt obligations issued or guaranteed by the United States
government, money market funds and savings accounts. Notwithstanding the
provisions of this Section 11.3 to the contrary, the Trustee shall be under
no duty or obligation to invest any assets of the Trust in shares of
Company Stock unless (I) such shares constitute "qualifying employer
securities" within the meaning of Section 407 of ERISA and (ii) such
investment is not prohibited by Section 404, 406 or 407 of ERISA.
11.4 INVESTMENT OF CONTRIBUTIONS. Effective July 1, 1997, each
Participant may direct that contributions made on his or her behalf shall
be invested in any one or more of the Investment Funds, provided the
percentage of contributions to be invested in any Investment Fund must be
one percent (1%), or any multiple thereof. An investment direction shall
be made by such written, telephonic or electronic means as shall be
prescribed by the Administrative Committee.
A Participant's investment direction, if received by the Administrative
Committee prior to the date he or she commences participation, shall be
effective as of said date. If a Participant does not make an investment
direction or an investment direction is not received by the Administrative
Committee before he or she commences participation, the contributions on
<PAGE>
behalf of such Participant shall be invested in the fund which presents the
least risk of loss as determined by the Trustee. An investment direction
received by the Administrative Committee after the date a Participant
commences participation shall be effective as of the first business day of
the month following receipt by the Administrative Committee or as soon as
practicable thereafter. A deemed investment direction pursuant to Section
3.4(a) of the January 1, 1993 amendment and restatement of this Plan (as
amended by the Third Amendment thereto) shall be effective as of the date
of the affected individual's change in employment status. Notwithstanding
the foregoing to the contrary, effective January 1, 1998, an investment
direction received by the Administrative Committee after the date a
Participant commences participation shall be effective as soon as
practicable following receipt by the Administrative Committee. A deemed
investment direction pursuant to Section 18.2 shall be effective January 1,
1998.
Once each month, a Participant may modify an investment direction to have
future contributions on his or her behalf invested in the Investment Funds
in proportions other than those previously elected, but in multiples of one
percent (1%). An election modifying a previous investment direction shall
be made by such written, telephonic or electronic means as shall be
prescribed by the Administrative Committee and shall be effective as of the
first business day of the month following receipt by the Administrative
Committee or as soon as practicable thereafter. Notwithstanding the
foregoing to the contrary, effective January 1, 1998, a Participant may
modify at any time an investment direction to have future contributions on
his or her behalf invested in the Investment Funds in proportions other
than those previously elected, but in multiples of one percent (1%). An
election modifying a previous investment direction shall be made by such
written, telephonic or electronic means as shall be prescribed by the
Administrative Committee and shall be effective as soon as practicable
following receipt by the Administrative Committee.
11.5 REINVESTMENT OF ACCOUNT. Effective July 1, 1997, once each month, a
Participant, Former Participant, surviving spouse or Beneficiary may elect
to reinvest all or a portion of the balance of his or her Account in any
one or more of the Investment Funds, provided the portion invested in any
Investment Fund must be one percent (1%), or any multiple thereof, of such
balance. An election to reinvest all or a portion of an Account balance
shall be made by such written, telephonic or electronic means as shall be
prescribed by the Administrative Committee and shall be effective as of the
first business day of the month following receipt by the Administrative
Committee or as soon as practicable thereafter.
Notwithstanding the foregoing to the contrary, effective January 1, 1998,
a Participant, Former Participant, surviving spouse or Beneficiary may
elect at any time to reinvest all or a portion of the balance of his or
her Account in any one or more of the Investment Funds, provided the
<PAGE>
portion invested in any Investment Fund must be one percent (1%), or any
multiple thereof, of such balance. An election to reinvest all or a
portion of an Account balance shall be made by such written, telephonic or
electronic means as shall be prescribed by the Administrative Committee and
shall be effective as soon as practicable following receipt by the
Administrative Committee.
11.6 LOAN FUND. Participant loans and payments of principal and interest
shall be credited to and charged against the loan fund established by the
Trustee in accordance with Section 9.11(g).
11.7 VOTING RIGHTS. Stock held in the Company Stock Fund shall be voted
by the Trustee.
ARTICLE XII
FINANCE COMMITTEE
12.1 DUTIES. The Finance Committee shall be a Named Fiduciary within the
meaning of Section 402(a)(2) of ERISA and shall have the following powers
and duties:
(a) to appoint and remove the Trustee and establish the terms of the
Trust agreement;
(b) to direct the Trustee to establish one or more Investment Funds
and to change or eliminate any Investment Fund other than the Company
Stock Fund;
(c) to appoint one or more Investment Managers to direct the
investment of the assets of the Trust or such portion thereof as may be
designated by the Finance Committee; to remove any Investment Manager;
and to establish investment guidelines and objectives which shall be
binding on such Investment Managers;
(d) to limit the investment of one or more Investment Funds to such
shares of stock, bonds, mortgages, notes, mutual fund shares, deposit
administration, investment or group annuity contracts issued by a legal
reserve life insurance company or other property of any kind, real or
personal, as the Finance Committee may deem appropriate;
(e) to establish investment guidelines and objectives which shall be
binding on the Trustee;
(f) to employ or retain counsel, accountants and other consultants,
including professional investment advisers, as it deems to be in the best
interests of the Plan;
<PAGE>
(g) to direct the Trustee to employ and transfer all of the assets of
the Trust or such portion thereof as the Finance Committee may designate
to one or more custodians selected by it; and
(h) to approve and accept accounts rendered by the Trustee.
A majority of the Finance Committee shall constitute a quorum, and an
action of the majority present at any meeting shall be deemed the action of
the Finance Committee. Any member of the Finance Committee may participate
in a meeting of the Finance Committee through conference telephone or
similar communications equipment by means of which all individuals
participating in the meeting can hear each other. Any action of the
Finance Committee may be taken without a meeting if all members of the
Finance Committee sign written consents setting forth the action taken or
to be taken, at any time before or after the intended effective date of
such action.
12.2 DELEGATION OF MINISTERIAL DUTIES. The Finance Committee may, by a
writing signed by a majority of its members, delegate to any member or
members of the Committee or to any Employee or Employees, severally or
jointly, the authority to perform any ministerial act in connection with
the administration of the Plan.
12.3 COMPENSATION AND REIMBURSEMENT OF EXPENSES. The members of the
Finance Committee shall be entitled to reasonable compensation for services
rendered and to reimbursement of expenses properly and actually incurred,
in the performance of their duties on behalf of the Plan, but no person so
serving who already receives compensation from an Employer or any Related
Employer for services rendered as an employee shall receive compensation
for such services, except for reimbursement of expenses properly and
actually incurred and not otherwise reimbursed.
12.4 RELIANCE ON REPORTS. The Finance Committee shall be entitled to
rely upon all certificates and reports made by any agent, attorney,
accountant, actuary or other consultant, including any investment adviser,
employed to assist in the performance of its duties.
12.5 MULTIPLE SIGNATURES. A majority of the members of the Finance
Committee or any one member authorized by such Committee shall have
authority to execute all documents, reports or other memoranda necessary or
appropriate to carry out the actions and decisions of the Finance
Committee. The Trustee, any investment manager or any other interested
party may rely upon any document, report or other memorandum so executed as
evidence of the Finance Committee action or decision indicated thereby.
<PAGE>
ARTICLE XIII
ADMINISTRATIVE COMMITTEE
13.1 APPOINTMENT OF ADMINISTRATIVE COMMITTEE. The Human Resources
Committee of the Board of Directors shall appoint an Administrative
Committee of not less than four (4) individuals who shall have authority to
control and manage the administration of the Plan. A majority of the
Administrative Committee shall constitute a quorum, and an action of the
majority at any meeting shall be deemed the action of the Administrative
Committee. Any member of the Administrative Committee may participate in a
meeting through conference telephone or similar communications equipment by
means of which all individuals participating can hear each other. Any
action of the Administrative Committee may be taken without a meeting if
all members of the Administrative Committee sign written consents setting
forth the action taken or to be taken, at any time before or after the
intended effective date of such action.
13.2 RESIGNATION AND REMOVAL. Any person appointed to serve as a member
of the Administrative Committee shall serve at the pleasure of the Human
Resources Committee of the Board of Directors and may be removed by
delivery of written notice of removal, which shall take effect at the date
specified therein. Any member of the Administrative Committee may resign
at any time by delivering to the Human Resources Committee a written notice
of resignation, which shall take effect at a date specified therein. The
Human Resources Committee, as soon as practicable following delivery of a
written notice of removal or receipt of a written notice of resignation of
any member of the Administrative Committee, shall consider the appointment
of a successor.
13.3 POWERS AND DUTIES. The Administrative Committee shall be a Named
Fiduciary within the meaning of Section 402(a)(1) of ERISA with the
following powers and complete discretionary authority to control and manage
the operation and administration of the Plan:
(a) To determine all questions concerning the eligibility of Employees
to participate in and receive benefits under the Plan;
(b) To compute the amount of benefits payable to any Participant or
Beneficiary;
(c) To authorize and direct the Trustee with respect to the payment of
benefits;
(d) To furnish the Trustee with such information, statements and
reports as will enable the Trustee to comply with the reporting and
disclosure requirements under ERISA and the Code;
(e) To interpret the provisions of the Plan and to make rules and
regulations for the administration of the Plan;
<PAGE>
(f) To maintain all the necessary records for the administration of
the Plan;
(g) To employ or retain counsel, accountants, actuaries or such other
consultants as may be required to assist in administering the Plan;
(h) To act as agent for service of legal process; and
(i) To give written notice to all interested parties (as defined in
the regulations prescribed under Section 7476(b)(1) of the Code), in the
form and manner, and at such time as prescribed by such regulations, of
an application for an advance determination with respect to the initial
qualification of the Plan or to the effect of an amendment or termination
of the Plan.
The Administrative Committee shall have no power or authority over the
investment of the assets of the Trust and nothing in this Section 13.3
shall be construed as granting such power and authority. Except as
otherwise provided, the Trustee shall have exclusive authority and
discretion to manage and control the investment of the Trust Fund.
13.4 REPORTING AND DISCLOSURE. The Administrative Committee shall
furnish to each Participant and to each other person who is receiving
benefits under the Plan, and shall file with the Secretary of Labor and the
Secretary of Treasury, all reports, disclosures and notifications as are
required under the Code.
13.5 DELEGATION OF MINISTERIAL DUTIES. The Administrative Committee may
delegate to any member or members of the Committee or to any other person
or persons, severally or jointly, the authority to perform any ministerial
act in connection with the administration of the Plan.
13.6 PAYMENT OF PLAN EXPENSES. Notwithstanding any provision of the Plan
or Trust to the contrary, payment of any reasonable expenses of
administering the Plan, as determined by the Administrative Committee,
shall be made from the Trust Fund, unless paid by an Employer. If such
expenses are incurred as a result of services provided to the Plan or Trust
by a party in interest (as defined in Section 3(14) of ERISA), no payment
shall be made from the Trust Fund unless such payment (a) satisfies the
applicable requirements of Section 408 of ERISA and the regulations
thereunder; or (b) is otherwise exempt from the applicable prohibited
transaction rules of the Code and ERISA.
13.7 COMPENSATION AND REIMBURSEMENT OF EXPENSES. The members of the
Administrative Committee shall be entitled to reasonable compensation for
services rendered and to reimbursement of expenses properly and actually
incurred, in the performance of their duties on behalf of the Plan, but no
person so serving who already receives compensation from an Employer or any
<PAGE>
Related Employer for services rendered as an Employee shall receive
compensation from the Plan, except reimbursement of expenses properly and
actually incurred and not otherwise reimbursed.
13.8 UNIFORMITY OF RULES AND REGULATIONS. In the administration of the
Plan and the interpretation and application of its provisions, the
Administrative Committee shall exercise its powers and authority in a
nondiscriminatory manner, and shall apply uniform administrative rules and
regulations in order to assure substantially the same treatment to
Participants in similar circumstances.
13.9 RELIANCE ON REPORTS. The Administrative Committee shall be entitled
to rely upon all certificates and reports made by any counsel, accountant,
actuary or other consultant employed or retained to assist in administering
the Plan.
13.10 MULTIPLE SIGNATURES. A majority of the members of the
Administrative Committee or any one member authorized by such Committee
shall have authority to execute all documents, reports or other memoranda
necessary or appropriate to carry out the actions and decisions of the
Administrative Committee. The Trustee or any other interested party may
rely upon any document, report or other memorandum so executed as evidence
of the Administrative Committee action or decision indicated thereby.
13.11 CONFIDENTIALITY OF PARTICIPANT DECISIONS RELATING TO COMPANY STOCK.
The Administrative Committee shall establish procedures designed to
safeguard the confidentiality of information relating to the purchase,
holding and sale of Company Stock, and the exercise of voting, tender and
similar rights with respect thereto, by Participants, Former Participants,
surviving spouses and Beneficiaries. The Administrative Committee shall be
responsible for ensuring that such procedures meet the applicable
requirements of ERISA Reg. Section 2550.404c-1(d)(2). In the event the
Administrative Committee determines that a particular situation involves a
potential for undue Employer or Related Employer influence upon
Participants, Former Participants, surviving spouses and Beneficiaries
within the meaning of ERISA Reg. Section 2550.404c-1(d)(2), the
Administrative Committee shall promptly appoint an independent fiduciary to
perform the role of the Administrative Committee and carry out activities
with respect to such situation. Such independent fiduciary shall not be a
person affiliated with an Employer within the meaning of ERISA Reg. Section
2550.404c-1(e)(3).
<PAGE>
ARTICLE XIV
CLAIMS PROCEDURE
14.1 FILING A CLAIM FOR BENEFITS. A Plan Participant or other person
entitled to benefits under the Plan may make a claim for Plan benefits by
filing a written request with the Administrative Committee upon a form to
be furnished to it for such purpose.
14.2 DENIAL OF CLAIM. If a claim is wholly or partially denied, the
Administrative Committee shall furnish the claimant with written notice
setting forth in a manner calculated to be understood by the claimant:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent Plan provisions on which the
denial is based;
(c) A description of any additional material or information necessary
for the claimant to perfect his or her claim and an explanation why such
material or information is necessary; and
(d) Appropriate information as to the steps to be taken if the
claimant wishes to submit his or her claim for review.
Such notice shall be furnished to the claimant within ninety (90) days
after receipt of his or her claim, unless special circumstances require an
extension of time for processing such claim. If an extension of time for
processing is required, the Administrative Committee shall, prior to the
termination of the initial ninety (90) day period, furnish the claimant
with written notice indicating the special circumstances requiring an
extension and the date by which the Committee expects to render its
decision. In no event shall an extension exceed a period of ninety (90)
days from the end of the initial ninety (90) day period.
14.3 APPEAL OF DENIED CLAIM. A claimant may request the Administrative
Committee to review a denied claim. Such request shall be in writing and
must be delivered to the Administrative Committee within sixty (60) days
after receipt by the claimant of written notification of denial of claim.
A claimant or his or her duly authorized representative may:
(a) Review pertinent documents, and
(b) Submit issues and comments in writing.
14.4 DECISION ON APPEAL. The Administrative Committee shall notify the
claimant of its decision on review not later than sixty (60) days after
receipt of a request for review, unless special circumstances require an
extension of time for processing, in which case a decision shall be
rendered as soon as possible but not later than one hundred twenty (120)
<PAGE>
days after receipt of a request for review. If an extension of time for
review is required because of special circumstances, written notice of the
extension must be furnished to the claimant prior to the commencement of
the extension. The Administrative Committee's decision on review shall be
in writing and shall include specific reasons for the decision, as well as
specific references to the pertinent Plan provisions on which the decision
is based.
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 Amendment. The Company, through the Human Resources Committee of
its Board of Directors, reserves the right to amend the Plan from time to
time, provided that no amendment shall, except as otherwise provided in
this Plan or authorized by law, permit any part of the Trust Fund to revert
to an Employer or Related Employer or permit any part of the Trust Fund to
be used for, or diverted to, purposes other than the exclusive benefit of
the Participants, their surviving spouses and Beneficiaries. Each such
amendment shall be effective with respect to a subsidiary of the Company
that has adopted the Plan without further action by the subsidiary.
If the vesting schedule in effect under the Plan is amended, each
Participant who has completed at least three (3) Years of Vesting Service
may elect to have the vested percentage of his or her Account determined
without regard to such amendment. The Administrative Committee shall
promptly give each such Participant written notice of the adoption of such
amendment and the availability of the election to have the vested
percentage of his or her Account determined without regard to such
amendment. An election by a Participant shall be in writing and shall be
effective if filed with the Administrative Committee at any time during the
period beginning with the date such amendment is adopted and ending on the
later of (I) the date which is sixty (60) days after the day such amendment
is adopted, (ii) the date which is sixty (60) days after the day such
amendment becomes effective, or (iii) the date which is sixty (60) days
after the day the Participant receives written notice of such amendment.
An election once made shall be irrevocable. For purposes of this Section,
a Participant shall be considered to have completed three (3) Years of
Vesting Service if the Participant has completed three (3) years of Vesting
Service prior to the expiration of the period in which an election could be
made.
15.2 ACCOUNTS NOT TO BE DECREASED BY AMENDMENT. No Amendment shall,
except to the extent permitted under Section 412(c)(8) of the Code,
decrease a Participant's Account balance or, except to the extent permitted
by regulations, eliminate an optional form of benefit. In addition, no
amendment shall have the effect of decreasing a Participant's vested
interest determined without regard to such amendment as of the later of the
date such amendment is adopted or the date it becomes effective.
<PAGE>
15.3 TERMINATION. The Company, through the Human Resources Committee of
its Board of Directors, may terminate the Plan at any time in its entirety
or with respect to any Employer or any division by written notice delivered
to the Trustee. The Plan shall terminate with respect to any Employer on
the earliest of the following dates:
(a) The date the Employer is judicially declared bankrupt or
insolvent;
(b) The date the Employer permanently discontinues contributions under
the Plan;
(c) The date the Employer is merged or consolidated with another
corporation and the Employer is not the surviving corporation or
substantially all its assets are sold, unless the surviving or purchasing
corporation makes provision to continue the Plan with the consent of the
Company; or
(d) The date the Employer withdraws from the Plan.
If an Employer permanently discontinues contributions or the Plan is
otherwise completely or partially terminated for any other reason, each
affected Participant shall have a fully vested and nonforfeitable interest
in his or her Account. Subject to the applicable consent requirements of
Section 411(a)(11) of the Code and the regulations thereunder, the
Administrative Committee shall direct the Trustee to make distributions
pursuant to the applicable provisions of Article IX as soon as practicable
following such event.
15.4 NOTICE OF AMENDMENT OR TERMINATION. In the case of an application
for an advance determination as to whether a Plan amendment or termination
affects the continuing qualification of the Plan, the Administrative
Committee shall furnish each interested party (as defined by the
regulations prescribed under Section 7476(b)(1) of the Code) with written
notice, in the form and manner, and at such time as prescribed by such
regulations, of the adoption of any amendment or Plan termination.
ARTICLE XVI
NONALIENABILITY OF BENEFITS; QUALIFIED DOMESTIC RELATIONS ORDERS
16.1 NONALIENABILITY OF BENEFITS. Except as expressly provided below,
the benefits provided under the Plan shall not be subject to alienation,
assignment, garnishment, attachment, execution (other than the collection
by the United States on a judgment resulting from an unpaid tax assessment)
or levy of any kind (other than a federal tax levy made pursuant to Section
6331 of the Code), and any attempt to cause such benefits to be so
subjected will not be recognized.
<PAGE>
16.2 QUALIFIED DOMESTIC RELATIONS ORDERS. The provisions of Section 16.1
shall apply to the creation, assignment or recognition of a right to any
benefit payable with respect to a Participant, including the creation,
assignment or recognition of any right, pursuant to a domestic relations
order, except that said provisions shall not apply if the order is
determined to be a qualified domestic relations order.
16.3 NOTICE. Upon the receipt of any domestic relations order by the
Plan, the Administrative Committee shall promptly notify, in writing, the
Participant and any alternate payee named in the domestic relations order
(at the address included in the domestic relations order) of the receipt of
such order and the Plan's procedures for determining the qualified status
of such domestic relations order.
16.4 REPRESENTATIVE. Any alternate payee named in a domestic relations
order received by the Plan shall have the right to designate, by notice in
writing to the Administrative Committee, a representative for the receipt
of copies of notices that are sent to the alternate payee with respect to
such domestic relations order.
16.5 SEPARATE ACCOUNT.
(a) During any period in which the issue of whether a domestic
relations order is a qualified domestic relations order is being
determined (by the Administrative Committee, by a court of competent
jurisdiction, or otherwise), the Administrative Committee shall direct
the Trustee to separately account for the amounts, if any, which would
have been payable to any alternate payee during such period if the order
had been determined to be a qualified domestic relations order.
(b) In the event an alternate payee does not receive an immediate
distribution pursuant to a domestic relations order which is determined
by the Administrative Committee or by a court of competent jurisdiction
to be a qualified domestic relations order, the Administrative Committee
shall direct the Trustee to establish a separate account in the Plan in
the name of the alternate payee as soon as practicable following such
determination. An alternate payee shall have the same rights and
protections as a Participant with respect to such account and shall be
entitled to receive distribution of such account in accordance with
Section 9.5.
16.6 DETERMINATION BY ADMINISTRATIVE COMMITTEE.
(a) Within ninety (90) days after receipt of a domestic relations
order, the Administrative Committee shall determine whether such order is
a qualified domestic relations order and shall notify, in writing, the
Participant and each alternate payee named in such order of such
determination.
<PAGE>
(b) If the Administrative Committee shall determine that the domestic
relations order is a qualified domestic relations order and such order
provides that the benefits required to be paid thereunder are immediately
distributable, the Administrative Committee shall direct the Trustee to
pay to each alternate payee named in such order, the benefits required to
be paid thereunder, including any amounts segregated in accordance with
subsection (a) of Section 16.5 (plus any interest thereon). If the
Administrative Committee shall determine that the domestic relations
order is a qualified domestic relations order and such order does not
provide that the benefits required to be paid thereunder are immediately
distributable, the Administrative Committee shall direct the Trustee to
establish a separate account in accordance with Section 16.5(b).
(c) If the Administrative Committee shall determine that the domestic
relations order is not a qualified domestic relations order, the notice
required by the first paragraph of this Section shall include a statement
of the specific reason or reasons for the Administrative Committee's
determination and the Administrative Committee shall direct the Trustee
to continue to segregate, in accordance with Section 16.5(a), during the
eighteen (18) month period beginning with the date on which the first
payment would be required to be made under such domestic relations order,
any amounts which would have been payable to any alternate payee during
such eighteen (18) month period if the order had been determined to be a
qualified domestic relations order, unless such order shall sooner be
determined, by the Administrative Committee or a court of competent
jurisdiction, to be a qualified domestic relations order, in which event
the Administrative Committee shall direct the Trustee to make payment of
any such segregated amount (plus any interest thereon) to each alternate
payee named in the order or to establish a separate account in the name
of each alternate payee named in the order in accordance with the second
paragraph of this Section. If neither the Administrative Committee nor a
court of competent jurisdiction shall determine within said period of
eighteen (18) months that such domestic relations order is a qualified
domestic relations order; then, upon expiration of said period, the
Administrative Committee shall direct the Trustee to pay any such
segregated amount (plus any interest thereon) to the person or persons
who would have been entitled to such amounts if there had been no order.
16.7 DEFINITIONS. As used in this Article, the following terms shall
have the meanings hereinafter set forth:
(a) "Alternate payee" shall mean any spouse, former spouse, child or
other dependent of a Participant who is recognized by a domestic
relations order as having a right to receive all, or a portion of, the
benefits payable under the Plan with respect to such Participant.
<PAGE>
(b) "Domestic relations order" shall mean any judgment, decree or
order (including approval of a property settlement agreement) which
relates to the provision of child support, alimony payments or marital
property rights of a spouse, former spouse, child or other dependent of
a Participant, and is made pursuant to a state domestic relations law
(including a community property law).
(c) "Earliest retirement age" shall mean the earlier of:
(i) the date on which the Participant is entitled to a distribution
under the Plan, or
(ii) the later of the date the Participant attains age fifty (50), or
the earliest date on which the Participant could begin receiving
payments under the Plan if he or she separated from service.
(d) "Qualified domestic relations order" shall mean a domestic
relations order which:
(i) creates or recognizes the existence of an alternate payee's
right to, or assigns to an alternate payee the right to, receive all
or a portion of the benefits payable with respect to a Participant
under the Plan; and
(ii) clearly specifies:
(aa) the name and the last known mailing address (if any) of the
Participant and the name and mailing address of each alternate payee
covered by the order;
(bb) the amount or percentage of the Participant's benefits to be
paid by the Plan to each such alternate payee, or the manner in
which such amount or percentage is to be determined;
(cc) the number of payments or period to which such order
applies; and
(dd) each plan to which such order applies; and
(iii) does not require the Plan to:
(aa) provide any type or form of benefits, or any option, not
otherwise provided under the Plan;
(bb) provide increased benefits (determined on the basis of
actuarial value); or
<PAGE>
(cc) pay benefits to an alternate payee which are required to be
paid to another alternate payee under another order previously
determined to be a qualified domestic relations order.
In the case of any payment to an alternate payee before a Participant has
separated from service, a domestic relations order shall not be treated as
failing to meet the requirements of clause (aa) of subparagraph (iii)
solely because such order requires that payment of benefits be made to an
alternate payee:
(i) on or after the date on which the Participant attains (or would
have attained) the earliest retirement age;
(ii) as if the Participant has retired on the date on which such
payment is to begin under such order; and
(iii) in any form in which such benefits may be paid under the Plan
to the Participant (other than in the form of a joint and survivor
annuity with respect to the alternate payee and his or her subsequent
spouse).
ARTICLE XVII
DELEGATION OF AUTHORITY BY SUBSIDIARIES
17.1 DELEGATION OF AUTHORITY BY SUBSIDIARIES. Each subsidiary of the
Company that adopts the Plan hereby irrevocably grants to the Company, its
Board of Directors, the Finance Committee and the Administrative Committee
exclusive authority to exercise all the powers conferred on them by the
terms of the Plan, including the power vested in the Human Resources
Committee of the Board of Directors to amend or terminate the Plan, and
each adopting subsidiary irrevocably appoints the Company, its Board of
Directors, the Finance Committee and the Administrative Committee as its
agents for such purposes. In addition, each subsidiary of the Company that
adopts the Plan shall automatically become a party to the Trust without
further action on its part.
ARTICLE XVIII
MERGERS
18.1 MERGER OR CONSOLIDATION OF PLAN. In case of any merger or
consolidation of the Plan with, or transfer of assets and liabilities of
the Plan to, any other plan qualified under Section 401(a) and Section
501(a) of the Code, provision must be made so that each Participant would,
if the Plan then terminated, receive a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than the
benefit he would have been entitled to receive immediately before the
merger, consolidation or transfer if the Plan had then terminated.
<PAGE>
18.2 MERGER WITH HANNAFORD SOUTHEAST SAVINGS AND INVESTMENT PLAN.
Effective January 1, 1998, the Plan shall be merged with the Hannaford
Southeast Savings and Investment Plan (the "Southeast Plan"). The
provisions of this Section shall be applicable to such merger and shall
supersede any conflicting provisions of this Plan.
(a) The assets of the Southeast Plan shall be directly transferred to
the Plan as of January 1, 1998. Upon receipt, the Administrative
Committee shall direct the Trustee to establish and maintain an account
on behalf of each participant and former participant under the Southeast
Plan and shall direct the Trustee to credit such account with the portion
of the transferred assets standing to the credit of such participant or
former participant under the Southeast Plan immediately prior to such
transfer, provided such amount shall be separately accounted for in
accordance with Section 8.1. With respect to a participant in the
Southeast Plan who has an outstanding loan balance under such plan at the
time of the transfer, the promissory note evidencing such loan shall be
transferred to this Plan and the outstanding loan balance shall be
treated in accordance with the provisions of Section 9.11 as an
outstanding loan balance under this Plan.
(b) Each elective, matching or other type of contribution comprising
the Transfer Account created pursuant to subsection (a) above shall be
administered, invested and distributed in accordance with the provisions
of this Plan applicable to such type of contribution.
(c) The deferral election and investment direction of a participant
(and former participant, in the case of an investment direction) in
effect under the Southeast Plan as of December 31, 1997, shall be deemed
a Deferral Election under Section 5.1 and an investment direction under
Section 11.4 of this Plan.
(d) Notwithstanding the foregoing provisions of this Plan to the
contrary, a participant or former participant in the Southeast Plan may
elect to have the vested portion of the Transfer Account created pursuant
to Section 18.2(a) of this Plan, if any, which was allocated to his or
her account balance under the Southeast Plan as of June 30, 1995,
distributed at such time and in such manner as provided in Exhibit A to
this Plan; provided, however, this subsection (d) shall not apply if such
vested portion does not exceed Three Thousand Five Hundred Dollars
($3,500.00) as of such date (and did not exceed Three Thousand Five
Hundred Dollars ($3,500.00) as of the date of any prior distribution).
<PAGE>
ARTICLE XIX
MISCELLANEOUS
19.1 FIDUCIARY RESPONSIBILITY.
(a) ALLOCATION OF RESPONSIBILITY. All fiduciaries with respect to the
Plan and Trust shall be required to meet the prudence, diversification
and other fiduciary responsibilities of applicable law to the extent such
requirements and responsibilities apply to them, provided each fiduciary
shall be responsible for carrying out only the requirements,
responsibilities and duties placed upon such fiduciary by provisions of
the Plan and Trust. In particular:
(i) An Investment Manager shall have full investment responsibility
with respect to the assets of the Trust for which it has the power of
investment direction. Except as otherwise provided by law, the other
fiduciaries, including but not limited to, the Trustee and the Finance
Committee, shall have no duty or responsibility with respect to the
investment of such assets as long as they are subject to the investment
direction of such Investment Manager.
(ii) The Trustee shall have full investment responsibility with
respect to the assets of the Trust which are not invested pursuant to
the direction of the Finance Committee and are not subject to the
investment direction of an Investment Manager. Except as otherwise
provided by law, the other fiduciaries shall have no duty or
responsibility with respect to the investment of such assets.
(iii) The Trustee shall have no duty or responsibility with respect
to investment of assets of the Trust so long as they are invested at
the direction of the Finance Committee or a duly appointed Investment
Manager.
(iv) The Administrative Committee shall have no duty or
responsibility with respect to the investment of the assets of the
Trust.
(v) The fiduciaries, including but not limited to, the Trustee, the
Finance Committee, the Administrative Committee and any Investment
Manager shall have no responsibility for the investment elections made
by Participants, Former Participants, surviving spouses or
Beneficiaries, or for the exercise of voting, tender or similar rights
by Participants, Former Participants, surviving spouses or
Beneficiaries except as otherwise provided by applicable law.
(b) FIDUCIARY DUTIES. Each fiduciary shall exercise the powers
granted to it and shall discharge its duties under the Plan solely in the
interest of the Participants, their surviving spouses and Beneficiaries
and:
<PAGE>
(i) for the exclusive purpose of
(aa) providing benefits to Participants, their surviving Spouses
and Beneficiaries, and
(bb) defraying reasonable expenses of administering the Plan;
(ii) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; and
(iii) by diversifying the investments of the Plan so as to minimize
the risk of large losses, unless under the circumstances it is clearly
prudent not to do so.
19.2 PROHIBITED TRANSACTIONS. Neither the Trustee, nor the Finance
Committee, nor any Investment Manager, nor any Participant or Former
Participant who directs the investment of his or her Account shall engage
in a transaction which the Trustee, Finance Committee, Investment Manager,
Participant or Former Participant knows or should know is prohibited by
Section 406 or 407(a) of ERISA or by Section 4975 of the Code, unless an
appropriate exemption or exemptions have been granted by the Department of
Labor under Section 408 of ERISA and the Department of the Treasury under
Section 4975(c)(2) of the Code.
19.3 EXCLUSIVE BENEFIT. Except as otherwise provided in the Plan or
authorized by the Code, in no event shall any part of the Trust Fund be
used for, or diverted to, purposes other than for the exclusive benefit of
the Participants, their surviving spouses and Beneficiaries.
19.4 SERVICE WITH PREDECESOR EMPLOYER. Service with a predecessor
employer shall, to the extent required by the Code and regulations, be
treated as service with an Employer or Related Employer.
19.5 EMPLOYMENT. Participation in the Plan shall not give any
Participant the right to be retained in the employ of the Employer or any
other right not specified herein.
19.6 GENDER. When necessary to the meaning hereof, and except when
otherwise indicated by the context, either the masculine or the neuter
pronoun shall be deemed to include the masculine, the feminine and the
neuter.
19.7 GOVERNING LAW. This Plan shall be governed and construed by the
laws of the United States of America. To the extent that the laws of the
United States of America shall not be held to have preempted local law, the
Plan shall be administered under the laws of the State of Maine.
<PAGE>
19.8 ARTICLE AND SECTION HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings and Table of Contents are inserted for convenience of
reference and shall not be considered in the construction of the Plan.
IN WITNESS WHEREOF, Hannaford Bros. Co. has caused this document to be
executed by its duly authorized officer on this day of
, 1997.
HANNAFORD BROS. CO.
By:___________________________
Its
<PAGE>
EXHIBIT A
SECTION 5.04 - WHEN BENEFITS START.
Benefits under the Plan begin when a Member retires, dies or ceases to be
an Employee, whichever applies, as provided in the preceding sections of
this article. Benefits which begin before Normal Retirement Date for a
Member who became Totally Disabled when he was an Employee shall be deemed
to begin because he is Totally Disabled. The start of benefits is subject
to the qualified election procedures of Article VI.
Unless otherwise elected, benefits shall begin before the sixtieth day
following the close of the Plan Year in which the latest date below occurs:
(a) The date the Member attains the earlier of (i) age 65 or (ii) the
later of Normal Retirement Age or age 62.
(b) The tenth anniversary of the Member's Entry Date.
(c) The date the Member ceases to be an Employee.
Notwithstanding the foregoing, the failure of a Member and spouse to
consent to a distribution while a benefit is immediately distributable,
within the meaning of Section 6.03, shall be deemed to be an election to
defer commencement of payment of any benefit sufficient to satisfy this
section.
The Member may elect to have benefits begin after the latest date for
beginning benefits described above, subject to the following provisions of
this section. The Member shall make the election in writing and deliver
the signed election to the Plan Administrator before Normal Retirement Date
or the date he ceases to be an Employee, if later. The election must
describe the form of distribution and the date benefits will begin. The
Member shall not elect a date for beginning benefits or a form of
distribution which would result in a benefit payable when he dies which
would be more than incidental within the meaning of governmental
regulations.
Benefits shall begin by the Member's Required Beginning Date, as defined in
Section 6.02. Distribution of the Vested Account resulting from
Contributions made after the Member's Required Beginning Date shall begin
by the April 1 following the calendar year in which such Contributions were
made.
If a Member receives a taxable distribution (including a withdrawal) of any
part of his Vested Account, he may be subject to a Federal tax penalty.
The tax penalty does not apply if the distribution is:
<PAGE>
(a) made on or after age 59 1/2;
(b) made on account of the Member's death to his Beneficiary or estate;
(c) made on account of being disabled;
(d) part of a series of periodic payments after separation from service
that are substantially equal, at least annual, and based on the life
expectancy of the Member or the Member and his Beneficiary; or
(e) made after separation from service after the attainment of age 55.
In addition, no tax is imposed on amounts received and paid during the
taxable year for medical expenses in an amount not to exceed that deducible
under Code Section 213. Disabled means that a Member is disabled to the
extent he is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or be of long-continued and indefinite
duration. Proof of the existence of the disability will be in such form
and manner as the Secretary of the Treasury may require.
Contributions which are used to compute the Actual Deferral Percentage, as
defined in Section 3.07, (Elective Deferral Contributions, Qualified
Nonelective Contributions, and Qualified Matching Contributions) may be
distributed upon disposition by us of substantially all of the assets used
by us in a trade or business disposition by us of our interest in a
subsidiary if the transferee corporation is not a Controlled Group member,
the Employee continues employment with the transferor corporation and the
transferor corporation continues to maintain the Plan. The distribution
must be a total distribution.
ARTICLE VI DISTRIBUTION OF BENEFITS
The provisions of this article shall apply on or after August 23, 1984, to
any Member who is credited with at least one Hour of Service or one hour of
paid leave on or after that date and to such other Members as provided in
Section 6.05. If the Effective Date of our Plan is before January 1, 1984,
the provisions of the Prior Plan as in effect on the day before the TEFRA
Compliance Date shall apply before August 23, 1984. If the Effective Date
of our Plan is on or after January 1, 1984, and before August 23, 1984, the
provisions of the Plan as originally adopted shall apply before August 23,
1984.
<PAGE>
SECTION 6.01 - AUTOMATIC FORMS OF DISTRIBUTION.
Unless a qualified election of an optional form of benefit has been made
within the election period (see Section 6.03), the automatic form of
benefit payable to or on behalf of a Member is determined as follows:
(a) The automatic form of retirement benefit for a Member who does not die
before his Annuity Starting Date shall be the Qualified Joint and
Survivor Form.
(b) The automatic form of death benefit for a Member who dies before his
Annuity Starting Date shall be:
(1) A Qualified Preretirement Survivor Annuity for a Member who has a
spouse to whom he has been continuously married throughout the
one-year period ending on the date of his death. The spouse may
elect to start receiving the death benefit on any first day of the
month on or after the Member dies and by the date the Member would
have been age 70 1/2. If the spouse dies before benefits start,
the Member's Vested Account, determined as of the date of the
spouse's death, shall be paid to the spouse's Beneficiary.
(2) A single sum payment to the Member's Beneficiary for a Member who
does not have a spouse who is entitled to a Qualified Preretirement
Survivor Annuity.
Before a death benefit will be paid on account of the death of a Member
who does not have a spouse who is entitled to a Qualified Preretirement
Survivor Annuity, it must be established to the satisfaction of a plan
representative that the Member does not have such a spouse.
SECTION 6.02 - OPTIONAL FORMS OF DISTRIBUTION AND DISTRIBUTION
REQUIREMENTS.
(a) For purposes of this section, the following terms are defined:
Applicable Life Expectancy means Life Expectancy (or Joint and Last
Survivor Expectancy) calculated using the attained age of the Member
(or Designated Beneficiary) as of the Member's (or Designated
Beneficiary's) birthday in the applicable calendar year reduced by one
for each calendar year which has elapsed since the date Life Expectancy
was first calculated. If Life Expectancy is being recalculated, the
Applicable Life Expectancy shall be the Life Expectancy so
recalculated. The applicable calendar year shall be the first
Distribution Calendar Year, and if Life Expectancy is being
recalculated such succeeding calendar year.
<PAGE>
Designated Beneficiary means the individual who is designated as the
beneficiary under the Plan in accordance with Code Section 401(a)(9)
and the regulations thereunder.
Distribution Calendar Year means a calendar year for which a minimum
distribution is required. For distributions beginning before the
Member's death, the first Distribution Calendar Year is the calendar
year immediately preceding the calendar year which contains the
Member's Required Beginning Date. For distributions beginning after
the Member's death, the first Distribution Calendar Year is the
calendar year in which distributions are required to begin pursuant to
(e) below.
Joint and Last Survivor Expectancy means joint and last survivor
expectancy 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 Member (or spouse, in the case of
distributions described in (e)(2)(ii) below) by the time distributions
are required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the Member (or
spouse) and shall apply to all subsequent years. The life expectancy
of a nonspouse Beneficiary may not be recalculated.
Life Expectancy means life expectancy 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 Member (or spouse, in the case of
distributions described in (e)(2)(ii) below) by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Member (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse Beneficiary
may not be recalculated.
Member's Benefit means
(1) 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
the dates in the valuation calendar year after the valuation date
and decreased by distributions made in the valuation calendar year
after the valuation date.
(2) For purposes of (1) 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
<PAGE>
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.
Required Beginning Date means, for a Member, the first day of April of the
calendar year following the calendar year in which the Member attains age
70 1/2, unless otherwise provided in (1), (2) or (3) below:
(1) The Required Beginning Date for a Member who attains age 70 1/2
before January 1, 1988, and who is not a 5-percent owner is the
first day of April of the calendar year following the calendar year
in which the later of retirement or attainment of age 70 1/2
occurs.
(2) The Required Beginning Date for a Member who attains age 70 1/2
before January 1, 1988, and who is a 5-percent owner is the first
day of April of the calendar year following the later of
(i) the calendar year in which the Member attains age 70 1/2, or
(ii) the earlier of the calendar year with or within which ends the
Plan Year in which the Member becomes a 5-percent owner, or the
calendar year in which the Member retires.
(3) The Required Beginning Date of a Member who is not a 5-percent
owner and who attains age 70 1/2 during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
A Member is treated as a 5-percent owner for purposes of this section if
such Member is a 5-percent owner as defined in Code Section 416(i)
(determined in accordance with Code Section 416 but without regard to
whether the Plan is top-heavy) at any time during the Plan Year ending with
or within the calendar year in which such owner attains age 66 1/2 or any
subsequent Plan Year.
Once distributions have begun to a 5-percent owner under this section, they
must continue to be distributed, even if the Member ceases to be a
5-percent owner in a subsequent year.
(b) The optional forms of retirement benefit shall be the following: a
straight life annuity; single life annuities with certain periods of
five, ten, or fifteen years; a single life annuity with installment
refund; survivorship life annuities with installment refund and
survivor percentages of 50, 66 2/3, or 100; fixed period annuities for
any period of whole months which is not less than sixty and does not
exceed the Life Expectancy of the Member and the named Beneficiary as
provided in (d) below where the Life Expectancy is not recalculated:
and a series of installments chosen by the Member with a minimum
<PAGE>
payment each year beginning with the year the Member turns age 70 1/2.
The payment for the first year in which a minimum payment is required
will be made by April 1 of the following calendar year. The payment
for the second year and each successive year will be made by December
31 of that year. The minimum payment will be based on a period equal
to the Joint and Last Survivor Expectancy of the Member and the
Member's spouse, if any, as provided in (d) below where the Joint and
Last Survivor Expectancy is recalculated. The balance of the Member's
Vested Account if any, will be payable on the Member's death to his
Beneficiary in a single sum. If not prohibited in Item Y of the
Adoption Agreement - Plus, a single sum payment is also available.
Election of an optional form is subject to the qualified election
provisions of Article VI.
Any annuity contract distributed shall be nontransferable. The terms
of any annuity contract purchased and distributed by the Plan to a
Member or spouse shall comply with the requirements of this Plan.
(c) The optional forms of death benefit are a single sum payment and any
annuity that is an optional form of retirement benefit. However, a
series of installments shall not be available if the Beneficiary is
not the spouse of the deceased Member.
(d) Subject to Section 6.01, joint and survivor annuity requirements, the
requirements of this section shall apply to any distribution of a
Member's interest and will take precedence over any inconsistent
provisions of this Plan. Unless otherwise specified, the provisions
of this section apply to calendar years beginning after December 31,
1984.
All distributions required under this section shall be determined and
made in accordance with the proposed regulations under Code Section
401(a)(9), including the minimum distribution incidental benefit
requirement of section 1.401(a)(9)-2 of the proposed regulations.
The entire interest of a Member must be distributed or begin to be
distributed no later than the Member's Required Beginning Date.
As of the first Distribution Calendar Year, distributions, if not made
in a single sum, may only be made over one of the following periods
(or combination thereof):
(1) the life of the Member,
(2) the life of the Member and a Designated Beneficiary.
<PAGE>
(3) a period certain not extending beyond the Life Expectancy of the
Member, or
(4) a period certain not extending beyond the Joint and Last Survivor
Expectancy of the Member and a Designated Beneficiary.
If the Member's interest is to be distributed in other than a single
sum, the following minimum distribution rules shall apply on or after
the Required Beginning Date:
(5) Individual account:
(i) If a Member's Benefit is to be distributed over
(A) a period not extending beyond the Life Expectancy of the
Member or the Joint Life and Last Survivor Expectancy of the
Member and the Member's Designated Beneficiary or
(B) a period not extending beyond the Lite Expectancy of the
Designated Beneficiary, the amount required to be
distributed for each calendar year beginning with the
distributions for the first Distribution Calendar Year, must
be at least equal to the quotient obtained by dividing the
Member's Benefit by the Applicable Life Expectancy.
(ii) For calendar years beginning before January 1, 1989, if the
Member's spouse is not the Designated Beneficiary, the method
of distribution selected must assure that at least 50% of the
present value of the amount available for distribution is paid
within the Life Expectancy of the Member.
(iii) For calendar year 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 Member's Benefit by the
lesser of
(A) the Applicable Life Expectancy or
(B) if the Member's spouse is not the Designated Beneficiary,
the applicable divisor determined from the table set forth
in Q&A-4 of section 1.401(a)(9)-2 of the proposed
regulations.
Distributions after the death of the Member shall be
distributed using the Applicable Life Expectancy in (5)(i)above
as the relevant divisor without regard to Proposed Regulations
section 1.401(a)(9)-2.
<PAGE>
(iv) The minimum distribution required for the Member's first
Distribution Calendar Year must be made on or before the
Member's Required Beginning Date. The minimum distribution for
the Distribution Calendar Year for other calendar years,
including the minimum distribution for the Distribution
Calendar Year in which the Member's Required Beginning Date
occurs, must be made on or before December 31 of that
Distribution Calendar Year.
(6) Other forms:
(i) If the Member's Benefit is distributed in the form of an annuity
purchased from an insurance company, distributions thereunder
shall be made in accordance with the requirements of Code
Section 401(a)(9) and the proposed regulations thereunder
(e) Death distribution provisions:
(1) Distribution beginning before death. If the Member dies after
distribution of his interest has begun, the remaining portion of
such interest will continue to be distributed at least as rapidly
as under the method of distribution being used prior to the
Member's death.
(2) Distribution beginning after death. If the Member dies before
distribution of his interest begins, distribution of the Member's
entire interest shall be completed by December 31 of the calendar
year containing the fifth anniversary of the Member's death except
to the extent that an election is made to receive distributions in
accordance with (i) or (ii) below.
(i) if any portion Of the Member's interest is payable to a
Designated Beneficiary, distributions may be made over the life
or over a period certain not greater than the Life Expectancy
of the Designated Beneficiary commencing on or before December
31 of the calendar year immediately following the calendar year
in which the Member died;
(ii) if the Designated Beneficiary is the Member's surviving spouse,
the date distributions are required to begin in accordance
with (i) above shall not be earner than the later of
(A) December 31 of the calendar year immediately following the
calendar year in which the Member died and
(B) December 31 of the calendar year in which the Member would
have attained age 70 1/2.
<PAGE>
If the Member has not made an election pursuant to this (e)(2) by the
time of his death, the Member's Designated Beneficiary must elect the
method of distribution no later than the earlier of
(iii) December 31 of the calendar year in which distributions would
be required to begin under this subparagraph, or
(iv) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Member.
If the Member has no Designated Beneficiary, or if the Designated
Beneficiary does not elect a method of distribution, distribution of
the Member's entire interest must be completed by December 31 of the
calendar year containing the fifth anniversary of the Member's death.
(3) For purposes of (e)(2) above, if the surviving spouse dies after the
Member, but before payments to such spouse begin, the provisions of
(e)(2) above, with the exception of (e)(2)(ii) therein, shall be
applied as if the surviving spouse were the Member.
(4) For purposes of this (e), any amount paid to a child of the Member
will be treated as if it had been paid to the surviving spouse if the
amount becomes payable to the surviving spouse when the child reaches
the age of majority.
(5) For purposes of this (e), distribution of a Member's interest is
considered to begin on the Member's Required Beginning Date (or if
(e)(3) above is applicable, the date distribution is required to begin
to the surviving spouse pursuant to (e)(2) above). If distribution in
the form of an annuity irrevocably commences to the Member before the
Required Beginning Date, the date distribution is considered to begin
is the date distribution actually commences.
SECTION 6.03 - ELECTION PROCEDURES.
The Member, Beneficiary, or spouse shall make any election under this
section in writing. The Plan Administrator may require such individual to
complete and sign any necessary documents as to the provisions to be made.
Any election permitted under (a) and (b)below shall be subject to the
qualified election provisions of (c) below.
(a) Retirement Benefits. A Member may elect his Beneficiary or Contingent
Annuitant and may elect to have retirement benefits distributed under
any of the optional forms of retirement benefit described in Section
6.02.
(b) Death Benefits. A Member may elect his Beneficiary and may elect to
have death benefits distributed under any of the optional forms of
death benefit described in Section 6.02.
<PAGE>
If the Member has not elected an optional form of distribution for the
death benefit payable to his Beneficiary, the Beneficiary may, for his
own benefit elect the form of distribution, in like manner as a
Member.
The Member may waive the Qualified Preretirement Survivor Annuity by
naming someone other than his spouse as Beneficiary.
In lieu of the Qualified Preretirement Survivor Annuity described in
Section 6.01, the spouse may, for his own benefit waive the Qualified
Preretirement Survivor Annuity by electing to have the benefit
distributed under any of the optional forms of death benefit described
in Section 6.02.
(c) Qualified Election. The Member, Beneficiary or spouse may make an
election at any time during the election period. The Member,
Beneficiary, or spouse may revoke the election made (or make a
new election) at any time and any number of times during the election
period. An election is effective only if it meets the consent
requirements below.
The election period as to retirement benefits is the 90-day period
ending on the Annuity Starting Date. An election to waive the
Qualified Joint and Survivor Form may not be made before the date he
is provided with the notice of the ability to waive the Qualified
Joint and Survivor Form. If the Member elects the series of
installments, he may elect on any later date to have the balance of
his Vested Account paid under any of the optional forms of retirement
benefit available under the Plan. His election period for this
election is the 90-day period ending on the Annuity Starting Date for
the optional form of retirement benefit elected.
A Member may make an election as to death benefits at any time before
he dies. The spouse's election period begins on the date the Member
dies and ends on the date benefits begin. The Beneficiary's election
period begins on the date the Member dies and ends on the date
benefits begin. An election to waive the Qualified Preretirement
Survivor Annuity may not be made by the Member before the date he is
provided with the notice of the ability to waive the Qualified
Preretirement Survivor Annuity. A Member's election to waive the
Qualified Preretirement Survivor Annuity which is made before the
first day of the Plan Year in which he reaches age 35 shall become
invalid on such date. An election made by a Member after he ceases to
be an Employee will not become invalid on the first day of the Plan
Year in which he reaches age 35 with respect to death benefits from
that part of his Account resulting from Contributions made before he
ceased to be an Employee.
<PAGE>
If the Member's Vested Account has at any time exceeded $3,500, any
benefit which is (1) immediately distributable or (2) payable in a
form other than a Qualified Joint and Survivor Form or a Qualified
Preretirement Survivor Annuity requires the consent of the Member and
the Member's spouse (or where either the Member or the spouse has
died, the survivor). The consent of the Member or spouse to a benefit
which is immediately distributable must not be made before the date
the Member or spouse is provided with the notice of the ability to
defer the distribution. Such consent shall be made in writing. The
consent shall not be made more than 90 days before the Annuity
Starting Date. Spousal consent is not required for a benefit which is
immediately distributable in a Qualified Joint and Survivor Form.
Furthermore, if spousal consent is not required because the Member is
electing an optional form of retirement benefit that is not a life
annuity pursuant to (d) below, only the Member need consent to the
distribution of a benefit payable in a form that is not a life annuity
and which is immediately distributable. Neither the consent of the
Member nor the Member's spouse shall be required to the extent that a
distribution is required to satisfy Code Section 401(a)(9) or Code
Section 415. In addition, upon termination of this Plan if the Plan
does not offer an annuity option (purchased from a commercial
provider), the Member's Account balance may, without the Member's
consent be distributed to the Member or transferred to another defined
contribution plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7)) within the same Controlled Group.
A benefit is immediately distributable if any part of the benefit
could be distributed to the Member (or surviving spouse) before the
Member attains (or would have attained if not deceased) the older of
Normal Retirement Age or age 62. If the Qualified Joint and Survivor
Form is waived, the spouse has the right to limit consent only to a
specific Beneficiary or a specific form of benefit The spouse can
relinquish one or both such rights. Such consent shall be made in
writing. The consent shall not be made more than 90 days before the
Annuity Starting Date. If the Qualified Preretirement Survivor
Annuity is waived, the spouse has the right to limit consent only to a
specific Beneficiary. Such consent shall be in writing. The spouse's
consent shall be witnessed by a plan representative or notary public.
The spouse's consent must acknowledge the effect of the election,
including that the spouse had the right to limit consent only to a
specific Beneficiary or a specific form of benefit, if applicable, and
that the relinquishment of one or both such rights was voluntary.
Unless the consent of the spouse expressly permits designations by the
Member without a requirement of further consent by the spouse, the
spouse's consent must be limited to the form of benefit, if
applicable, and the Beneficiary (including any Contingent Annuitant),
class of Beneficiaries, or contingent Beneficiary named in the
election. Spousal consent is not required. however, if the Member
<PAGE>
establishes to the satisfaction of the plan representative that the
consent of the spouse cannot be obtained because there is no spouse or
the spouse cannot be located. A spouse's consent under this paragraph
shall not be valid with respect to any other spouse. A Member may
revoke a prior election without the consent of the spouse. Any new
election will require a new spousal consent, unless the consent of the
spouse expressly permits such election by the Member without further
consent by the spouse. A spouse's consent may be revoked at any time
within the Member's election period.
Before the first Yearly Date in 1989, the Member's Account which
results from deductible Voluntary Contributions shall not be taken
into account in determining whether the Member's Vested Account has
exceeded $3,500 and an election as to the distribution of a Member's
Vested Account which results from deductible Voluntary Contributions
is not subject to the consent requirements above and may be made any
time before such distribution is to begin.
(d) Special Rule for Profit Sharing Plans. As provided in the preceding
provisions of the Plan, if a Member has a spouse to whom he has been
continuously married throughout the one-year period ending on the date
of the Member's death, the Member's Vested Account, including the
proceeds payable under any Insurance Policy on the Member's life,
shall be paid to such spouse. However, if there is no such spouse or
if the surviving spouse has already consented in a manner conforming
to the qualified election requirements in (c) above, the Vested
Account shall be payable to the Member's Beneficiary in the event of
the Member's death.
The Member may waive the spousal death benefit described above at any
time provided that no such waiver shall be effective unless it
satisfies the conditions of (c) above (other than the notification
requirement referred to therein) that would apply to the Member's
waiver of the Qualified Preretirement Survivor Annuity.
This subsection (d) applies if with respect to the Member, the Plan is
not a direct or indirect transferee after December 31, 1984, of a
defined benefit plan, money purchase plan (including a target plan),
stock bonus or profit sharing plan which is subject to the survivor
annuity requirements of Code Section 401(a)(11) and Code Section 417.
If the above condition is met spousal consent is not required for
electing an optional form of retirement benefit that is not a life
annuity. If the above condition is not met. the consent requirements
of this Article shall be operative.
<PAGE>
SECTION 6.04 - NOTICE REQUIREMENTS.
(a) Optional forms of retirement benefit. The Plan Administrator shall
furnish to the Member and the Member's spouse a written explanation of
the optional forms of retirement benefit in Section 6.02, including
the material features and relative values of these options, in a
manner that would satisfy the notice requirements of Code Section
417(a)(3) and the right of the Member and the Member's spouse to defer
distribution until the benefit is no longer immediately distributable.
The Plan Administrator shall furnish the written explanation by a
method reasonably calculated to reach the attention of the Member and
the Member's spouse no less than 30 days and no more than 90 days
before the Annuity Starting Date.
(b) Qualified Joint and Survivor Form. The Plan Administrator shall
furnish to the Member a written explanation of the following: the
terms and conditions of the Qualified Joint and Survivor Form; the
Member's right to make, and the effect of, an election to waive the
Qualified Joint and Survivor Form; the rights of the Member's spouse;
and the right to revoke an election and the effect of such a
revocation. The Plan Administrator shall furnish the written
explanation by a method reasonably calculated to reach the attention
of the Member no less than 30 days and no more than 90 days before the
Annuity Starting Date.
After the written explanation is given, a Member or spouse may make
written request for additional information. The written explanation
must be personally delivered or mailed (first class mail, postage
prepaid) to the Member or spouse within thirty days from the date of
the written request The Plan Administrator does not need to comply
with more than one such request by a Member or spouse.
The Plan Administrator's explanation shall be written in nontechnical
language and will explain the terms and conditions of the Qualified
Joint and Survivor Form and the financial effect upon the Member's
benefit (in terms of dollars per benefit payment) of electing not to
have benefits distributed in accordance with the Qualified Joint and
Survivor Form.
(c) Qualified Preretirement Survivor Annuity. The Plan Administrator
shall furnish to the Member a written explanation of the following:
the terms and conditions of the Qualified Preretirement Survivor
Annuity; the Member's right to make, and the effect of, an election to
waive the Qualified Preretirement Survivor Annuity; the rights of the
Member's spouse; and the right to revoke an election and the effect of
such a revocation. The Plan Administrator shall furnish the written
<PAGE>
explanation by a method reasonably calculated to reach the attention
of the Member within the applicable period. The applicable period for
a Member is whichever of the following periods ends last:
(1) the period beginning one year before the date the individual
becomes a Member and ending one year after such date; or
(2) the period beginning one year before the date the Member's spouse
is first entitled to a Qualified Preretirement Survivor Annuity and
ending one year after such date.
If such notice is given before the period beginning with the first day
of the Plan Year in which the Member attains age 32 and ending with
the close of the Plan Year preceding the Plan Year in which the Member
attains age 35, an additional notice shall be given within such
period. If a Member ceases to be an Employee before attaining age 35,
an additional notice shall be given within the period beginning one
year before the date he ceases to be an Employee and ending one year
after such date.
After the written explanation is given, a Member or spouse may make
written request for additional information. The written explanation
must be personally delivered or mailed (first class mail, postage
prepaid) to the Member or spouse within thirty days from the date of
the written request. The Plan Administrator does not need to comply
with more than one such request by a Member or spouse.
The Plan Administrator's explanation shall be written in nontechnical
language and will explain the terms and conditions of the Qualified
Preretirement Survivor Annuity and the financial effect upon the
spouse's benefit (in terms of dollars per benefit payment) of electing
not to have benefits distributed in accordance with the Qualified
Preretirement Survivor Annuity.
SECTION 6.05 - TRANSITIONAL RULES.
In modification of the preceding provisions of this Plan, distributions
(including distributions to a five-percent owner of us) may be made in a
form which would not have caused this Plan to be disqualified under Code
Section 401(a)(9) as in effect before the TEFRA Compliance Date. The form
must be elected by the Member or, if the Member has died, by the
Beneficiary. The election must be made in writing and signed before
January 1, 1984. The election will only be applicable if the Member has an
Account as of December 31, 1983. The Member's or Beneficiary's election
must specify when the distribution is to begin, the form of distribution
and the Contingent Annuitant and/ or Beneficiaries listed in the order of
<PAGE>
priority, if applicable. A distribution upon death will not be covered by
this transitional rule unless the election contains the required
information described above with respect to the distributions to be made
when the Member dies. Distributions in the process of payment on January
1, 1984, are deemed to meet the above requirements if the form of
distribution was elected in writing and the form met the requirements of
Code Section 401(a)(9) as in effect before the TEFRA Compliance Date. If
the election under this paragraph is revoked, any subsequent distribution
must meet the requirements of Code Section 401(a)(9) and the proposed
regulations thereunder. If an election is revoked subsequent to the date
distributions are required to begin, the Plan must distribute by the end of
the calendar year following the calendar year in which the revocation
occurs the total amount not yet distributed which would have been required
to have been distributed to satisfy Code Section 401(a)(9) and the proposed
regulations thereunder, but for the Code Section 242(b)(2) election. For
calendar years beginning after December 31, 1988, such distribution must
meet the minimum distribution incidental benefit requirements in section
1.401(a)(9)-2 of the proposed regulations. Any changes in the election
will be considered a revocation of the election. However, the mere
substitution or addition of another Beneficiary (one not named in the
election) under the election will not be considered to be a revocation of
the election, so long as such substitution or addition does not alter the
period over which distributions are to be made under the election, directly
or indirectly (for example, by altering the relevant measuring life). In
the case in which an amount is transferred or rolled over from one plan to
another plan, the rules in Q&A J-2 and Q&A J-3 of section 1.401(a)(9)-1 of
the proposed regulations shall apply. A Member's election of an optional
form of retirement benefit shall be subject to his spouse's consent as
provided in Section 6.03.
A Member, who would not otherwise receive the benefits prescribed by the
previous sections of this article, will be entitled to the following
benefits:
(a) If he is living and not receiving benefits on August 23, 1984, he will
be given the opportunity to elect to have the prior sections of this
article apply, if he is credited with at least one Hour of Service
under this Plan or a predecessor plan in a plan year beginning on or
after January 1, 1976, and he had at least ten Years of Service when
he separated from service.
(b) If he is living and not receiving benefits on August 23, 1984 he will
be given the opportunity to elect to have his benefits paid according
to the following provisions of this section, if he is credited with at
least one Hour of Service under this Plan or a predecessor plan on or
after September 2, 1974, and he is not credited with any service in a
plan year beginning on or after January 1, 1976.
<PAGE>
The respective opportunities to elect (as described in (a) and (b) above)
must be afforded to the appropriate Members during the period beginning on
August 23, 1984, and ending on the date benefits would otherwise begin to
such Member.
Any Member who has elected according to (b) above and any member who does
not elect under (a) above or who meets the requirements of (a) above except
that such Member does not have at least ten Years of Service when he
separated from service, shall have his benefits distributed in accordance
with the following if benefits would have been payable in the form of a
life annuity:
(c) Automatic joint and survivor annuity. If benefits in the form of a
life annuity become payable to a married Member who:
(1) begins to receive payments under the Plan on or after Normal
Retirement Age; or
(2) dies on or after Normal Retirement Age while still working for
us; or
(3) begins to receive payments on or after the qualified early
retirement age; or
(4) separates from service on or after attaining Normal Retirement
Age (or the qualified early retirement age) and after satisfying
the eligibility requirements for the payment of benefits under the
Plan and thereafter dies before beginning to receive such
benefits;
then such benefits will be paid under the Qualified Joint and Survivor
Form, unless the Member has elected otherwise during the election
period. The election period must begin at least six months before
the Member attains qualified early retirement age and end not more
than 90 days before benefits begin. Any election hereunder will be in
writing and may be changed by the Member at any time.
(d) Election of early survivor annuity. A Member who is employed after
attaining the qualified early retirement age will be given the
opportunity to elect, during the election period, to have a Qualified
Preretirement Survivor Annuity payable on death. Any election under
this provision will be in writing and may be changed by the Member at
any time. The election period begins on the later of (1) the 90th day
before the Member attains the qualified early retirement age, or
(2) the Member's Entry Date, and ends on the date the Member
terminates employment.
<PAGE>
(e) For purposes of this paragraph, qualified early retirement age is the
latest of:
(1) the earliest date, under the Plan, on which the Member may elect
to receive retirement benefits,
(2) the first day of the 120th month beginning before the Member
reaches Normal Retirement Age, or
(3) the Member's Entry Date.
Exhibit 15
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Hannaford Bros. Co.:
We have reviewed the accompanying consolidated balance sheet of Hannaford
Bros. Co. and Subsidiaries as of June 28, 1997, and the related
consolidated statements of earnings for the three month and six month
periods ended June 28, 1997 and June 29, 1996. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion. We previously audited and expressed an
unqualified opinion on the Company's consolidated financial statements
for the year ended December 28, 1996 (not presented herein). In our
opinion, the information set forth in the accompanying balance sheet as
of December 28, 1996, is fairly stated in all material respects, in
relation to the statement of financial position from which it has been
derived.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
s/Coopers & Lybrand L.L.P.
Portland, Maine
July 16, 1997
Exhibit 23
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: Hannaford Bros. Co.
Registrations on Form S-8
We are aware that our report dated July 16, 1997, on our review of
interim financial information of Hannaford Bros. Co. and Subsidiaries as
of June 28, 1997 and for the three month and six month periods ended
June 28, 1997 and June 29, 1996, and included in this Form 10-Q is
incorporated by reference in the Company's registration statements on
Form S-8 (Numbers 2-77902, 2-98387, 33-1281, 33-22666, 33-31624, 33-45273,
33-60119, 33-60655 and 33-60691). Pursuant to rule 436(c) under
the Securities Act of 1933, this report should not be considered a part
of the Registration Statements prepared or certified by us within the
meaning of Sections 7 and 11 of that Act.
s/Coopers & Lybrand L.L.P.
Portland, Maine
August 5, 1997
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