<PAGE> 1
As electronically filed with the Securities and Exchange Commission on
March 16, 1999
Registration No. 333- _________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
INGLES MARKETS, INCORPORATED
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0846267
- ------------------------------- -------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
P. O. BOX 6676
ASHEVILLE, NORTH CAROLINA 28816
-------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
INGLES MARKETS, INCORPORATED
----------------------------
INVESTMENT/PROFIT SHARING PLAN
------------------------------
(Full title of the plan)
BRENDA S. TUDOR
INGLES MARKETS, INCORPORATED
P. O. BOX 6676
ASHEVILLE, NORTH CAROLINA 28816
-------------------------------------
(Name and Address of agent for service)
(828) 669-2941
-----------------------------------------------------------
(Telephone number, including area code, of agent for service)
Copy to:
MARY E. MOORE
ALTMAN, KRITZER & LEVICK, P.C.
6400 POWERS FERRY ROAD, SUITE 224
ATLANTA, GEORGIA 30339
(770) 955-3555
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF AMOUNT TO BE MAXIMUM MAXIMUM
SECURITIES TO REGISTERED OFFERING AGGREGATE AMOUNT OF
BE REGISTERED(1)(2) (1)(2) PRICE PER SHARE (3) OFFERING PRICE (3) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common
Stock, $.05 par
value per share 500,000 $12.00 $6,000,000 $1,668
========================================================================================================================
</TABLE>
(1) The shares of Class A Common Stock, par value $.05 per share (the "Class A
Common Stock"), of Ingles Markets, Incorporated ("Registrant") being registered
consist of shares to be acquired in open market purchases under the Ingles
Markets, Incorporated Investment/Profit Sharing Plan (the "Plan").
(2) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended (the "Securities Act") this Registration Statement also covers an
indeterminate amount of interests to be offered or sold pursuant to the employee
benefit plan described herein.
<PAGE> 2
(3) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rules 457(c) and 457(h) of the Securities Act. The
price per share and aggregate offering price are based upon the average of the
high and low prices of Registrant's Class A Common Stock on March 9, 1999, as
reported on the Nasdaq National Market.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information specified in Part I of Form
S-8 will be sent or given to participating employees as specified by Rule
428(b)(1) of the Securities Act. These documents and the documents incorporated
by reference into this Registration Statement pursuant to Item 3 of Part II of
this Registration Statement, taken together, constitute a prospectus that meets
the requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The undersigned registrant (the "Company" or "Registrant") hereby
incorporates by reference into this registration statement the following
documents filed by the Company with the Securities and Exchange Commission (File
No. 0-14706) pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
1. The Company's Annual Report on Form 10-K for the fiscal year
ended September 26, 1998;
2. The Company's Form 10-Q for the quarter ended December 26,
1998;
3. The Company's Current Report on Form 8-K filed on November 13,
1998;
4. The Company's Quarterly Report on Form 10-Q/A, filed with the
Securities and Exchange Commission on February 4, 1999,
amending its Quarterly Report on Form 10-Q for the quarter
ended December 27, 1997;
5. All other reports filed by the Registrant pursuant to Sections
13(a) or 15(d) of the Exchange Act since the end of the fiscal
year covered by the annual report referred to in (1) above;
and
6. The Company's Registration Statement on Form 8-A effective
September 22, 1987, filed pursuant to section 12 of the
Exchange Act, which contains a description of the Class A
Common Stock, including any amendment or report filed for the
purpose of updating such description.
All documents filed subsequent to the date of this registration statement by the
undersigned Registrant or the Plan pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act prior to the filing of a post-effective amendment
hereto which indicates that all shares of Class A Common Stock offered hereby
have been sold or which deregisters any shares of such Class A Common Stock
2
<PAGE> 3
then remaining unsold, shall also be deemed to be incorporated by reference in
this registration statement and to be a part hereof from their respective dates
of filing.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
The Company's By-laws provide, subject to the requirements set forth
therein, that with respect to any person who was or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in right of the Company), the Company shall indemnify such person by
reason of the fact that he is or was a director or an officer, and may indemnify
such person by reason of the fact that he is or was an employee or agent of the
Company or is or was serving at its request as a director, officer, employee or
agent in another corporation, partnership, joint venture, trust or other
enterprise or as a trustee or administrator under an employee benefit plan, in
either case against any liability or litigation expenses (including reasonable
attorney's fees) incurred by such person in connection with such action, suit or
proceeding to the extent and upon the terms and conditions provided by law
(excluding any such expenses that any such person may incur that were at the
time taken known or believed by them to be clearly in conflict with the best
interests of the Company or, with respect to any criminal action or proceeding,
unlawful). In addition, the Company's Articles of Incorporation provide, subject
to the requirements set forth therein, that no director shall have personal
liability arising out of an action, whether by or in right of the Company or
otherwise, for monetary damages for breach of his duties as a director;
provided, however, that such limitation on liability shall not affect a
director's liability for (i) acts or omissions not made in good faith that were
at the time taken known or believed by him to be in conflict with the best
interests of the Company, (ii) unlawful distributions or (iii) transactions from
which he derived an improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Commission requires disclosure that,
in the opinion of the Commission, such indemnification is against public policy
as expressed in the Securities Act and therefore is, in the opinion of the
Commission, unenforceable.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
4.1 - Form of Articles of Incorporation of the Company.(1)
4.2 - Form of By-laws of the Company.(2)
4.3 - Ingles Markets, Incorporated Investment/Profit Sharing Plan
as amended through June 30, 1995, along with first, second
and third amendments thereto.*
4.4 - Investment/Profit Sharing Trust "C" for Ingles Markets,
Incorporated, effective April 1, 1999.
3
<PAGE> 4
23 - Consent of Ernst & Young LLP.
24 - Power of Attorney (included on signature page of this
registration statement).
- -------------------
(1) Incorporated by reference to Exhibit No. 3.1 to the Registrant's
Registration Statement on Form S-1 (File No. 33-23919), previously
filed with the Securities and Exchange Commission.
(2) Incorporated by reference to Exhibit No. 3.2 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 24, 1988 (File
No. 0-14706), previously filed with the Securities and Exchange
Commission.
* Management contract or compensatory plan or arrangement.
UNDERTAKING PURSUANT TO ITEM 8(b). The Registrant undertakes to have the Plan
and all amendments to the Plan submitted to the Internal Revenue Service in a
timely manner and to make all changes required by the Internal Revenue Service
in order to maintain the qualification of the Plan under Section 401 of the
Code.
Item 9. Undertakings
(a) Rule 415 Offerings. The undersigned Registrant hereby
undertakes:
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in
the registration statement.
provided, however, that paragraphs (a) (1) (i) and (a) (1) (ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
4
<PAGE> 5
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by
Reference. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Filing of Registration Statement on Form S-8. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
[SIGNATURES ON FOLLOWING PAGE]
5
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Asheville, State of North Carolina, on March 16,
1999.
INGLES MARKETS, INCORPORATED
By: /s/ Robert P. Ingle
----------------------------------
Robert P. Ingle
Chairman of the Board and
Chief Executive Officer
Each person whose signature appears below constitutes and appoints
Robert P. Ingle and Brenda S. Tudor, and each of them, his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments to this registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and to
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as he or she might
or would do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Robert P. Ingle Chairman of the Board, Chief March 16, 1999
- ---------------------------- Executive Officer and Director
Robert P. Ingle
/s/ Vaughn C. Fisher President, Chief Operating March 16, 1999
- ---------------------------- Officer and Director
Vaughn C. Fisher
/s/ Brenda S. Tudor Vice President-Finance, Chief March 16, 1999
- ---------------------------- Financial Officer and Director
Brenda S. Tudor
/s/ David L. Keathley Secretary/Controller March 16, 1999
- ----------------------------
David L. Keathley
/s/ Anthony S. Federico Vice President-Non-Foods March 16, 1999
- ---------------------------- and Director
Anthony S. Federico
/s/ Robert P. Ingle, II Vice President-Operations March 16, 1999
- ---------------------------- and Director
Robert P. Ingle, II
/s/ Ralph H. Gardner Director March 16, 1999
- ----------------------------
Ralph H. Gardner
</TABLE>
6
<PAGE> 7
THE PLAN. Pursuant to the requirements of the Securities Act, the Plan has duly
caused this Registration Statement on Form S-8 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Asheville, State of North
Carolina, on this 16th day of March, 1999.
INGLES MARKETS, INCORPORATED
INVESTMENT /PROFIT SHARING PLAN
By: Ingles Markets, Incorporated
Plan Administrator
By: /s/ Robert P. Ingle
--------------------------------------
Robert P. Ingle
Chairman and Chief Executive Officer
7
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBITS PAGE NUMBER
- -------- -----------
<S> <C> <C>
4.1 - Form of Articles of Incorporation of
the Company.(1)
4.2 - Form of By-laws of the Company.(2)
4.3 - Ingles Markets, Incorporated Investment/Profit Sharing
Plan as amended through June 30, 1995, along with first,
second and third amendments thereto.* 9
4.4 - Investment/Profit Sharing Trust "C" for Ingles Markets,
Incorporated, effective April 1, 1999. 87
23 - Consent of Ernst & Young LLP. 120
24 - Power of Attorney (included on signature page of
this registration statement)
</TABLE>
- ---------------
(1) Incorporated by reference to Exhibit No. 3.1 to the Registrant's
Registration Statement on Form S-1 (File No. 33-23919), previously
filed with the Securities and Exchange Commission.
(2) Incorporated by reference to Exhibit No. 3.2 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 24, 1988 (File
No. 0-14706), previously filed with the Securities and Exchange
Commission.
* Management contract or compensatory plan or arrangement.
8
<PAGE> 1
EXHIBIT 4.3
RESTATEMENT AND AMENDMENT BY THE ENTIRETY
OF THE INGLES MARKETS, INCORPORATED
INVESTMENT/PROFIT SHARING PLAN
EFFECTIVE SEPTEMBER 26, 1993
(AS AMENDED THROUGH JUNE 30, 1995)
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
- ------- ----- ----
<S> <C> <C>
I. DEFINITION OF TERMS
1.1 Accrued Benefit 2
1.2 Act 2
1.3 Active Participant 2
1.4 Adjustment Factor 2
1.5 Affiliated Employer 2
1.6 Age 2
1.7 Alternate Payee 2
1.8 Annual Additions 2
1.9 Annuity Starting Date 3
1.10 Beneficiary 3
1.11 Board 3
1.12 Code 3
1.13 Committee 3
1.14 Compensation 3
1.15 Contract 4
1.16 Coverage Percentage 4
1.17 Determination Date 5
1.18 Discretionary Employer Contributions 5
1.19 Discretionary Employer Contribution 5
Account
1.20 Domestic Relations Order 5
1.21 Early Retirement Date 5
1.22 Effective Date 5
1.23 Effective Date of Restatement 5
1.24 Elective Deferrals 5
1.25 Eligibility Date 5
1.26 Employee 5
1.27 Employer 6
1.28 Employer Contribution Account 6
1.29 Employment Commencement Date 6
1.30 Entry Date 6
1.31 Failsafe Contributions 6
1.32 Failsafe Matching Contributions 6
1.33 Family Member 6
1.34 Five Percent Owner 6
1.35 Forfeitures 6
1.36 Fund 6
1.37 Highly Compensated Employee 6
</TABLE>
-i-
<PAGE> 3
INDEX
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
------- ----- ----
<S> <C> <C>
1.38 Hour of Service 7
1.39 Inactive Participant 7
1.40 Includible Employees 7
1.41 Key Participant 8
1.42 Limitation Year 8
1.43 Matching Employer Contributions 8
1.44 Matching Employer Contribution Account 8
1.45 Minimum Contribution 8
1.46 Non-Highly Compensated Employee 9
1.47 Non-Key Participant 9
1.48 Normal Retirement Date 9
1.49 One-Year Break in Service 9
1.50 Paid Service 9
1.51 Participant 9
1.52 Participant's Contribution Account 9
1.53 Plan 9
1.54 Plan Administrator 9
1.55 Plan Year 9
1.56 Portfolio Investments 9
1.57 Qualified Deferral Account 10
1.58 Qualified Domestic Relations Order 10
1.59 Qualified Joint and Survivor Annuity 10
1.60 Qualified Nonelective Contributions 10
1.61 Qualified Preretirement Survivor Annuity 10
1.62 Qualifying Employer Securities 10
1.63 Regulations 11
1.64 Required Beginning Date 11
1.65 Retired Participant 12
1.66 Retirement Date 12
1.67 Salary Reductions 12
1.68 Segregated Accounts 12
1.69 Suspense Account 12
1.70 Terminated Participant 12
1.71 Top-Heavy Plan 12
1.72 Trust Agreement or Trust 12
1.73 Trustees 12
1.74 Valuation Date 12
1.75 Very Top-Heavy Plan 12
1.76 Year of Service 12
</TABLE>
-ii-
<PAGE> 4
INDEX
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
- ------- ----- ----
<S> <C> <C>
II. PARTICIPATION
2.1 Employees Eligible to Participate 14
2.2 Credited Hours of Service for Performance of Duties 14
2.3 Credited Hours of Service for Which No Duties Are 14
Performed
2.4 Notice to Employees 16
2.5 Commencement of Participation 16
2.6 Termination of Employment 16
2.7 Termination of Participation 16
2.8 Reparticipation 17
2.9 Inactive Status 17
2.10 Provisions Relating to Leased Employees 17
III. CONTRIBUTIONS TO THE TRUST
3.1 Qualified Elective Deferral Contributions 18
3.2 Matching Employer Contributions 20
3.3 Discretionary Employer Contributions 24
3.4 No Voluntary Employee Contributions 25
3.5 General Rules Regarding Contributions 25
3.6 Rollovers from Individual Retirement
Accounts or Plans 26
3.7 Portability 26
IV. ALLOCATION
4.1 Separate Accounts 28
4.2 Employer Contributions 28
4.3 Certification of Allocations 28
4.4 Income and Loss 28
4.5 Appreciation and Depreciation 28
4.6 Forfeitures 28
4.7 Employer Contribution Account
After Reparticipation 28
4.8 Maximum Annual Additions 29
A. Limitations Applicable to this Plan 29
B. Limitations Where Participant
Participates in Another Defined
Contribution Plan 30
</TABLE>
-iii-
<PAGE> 5
INDEX
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
- ------- ----- ----
<S> <C> <C>
C. Limitations Where Participant
Participates in a Defined Benefit
Plan 30
4.9 Discretionary Investments of Contributions 32
4.10 Qualifying Employer Securities 33
V. DISTRIBUTION OF BENEFITS
5.1 Employer Contribution Account 34
A. Distribution on Termination Prior to
Retirement 34
1. Distribution 34
2. Nonforfeitable Vested Interest 34
3. Forfeitures 36
4. Prior Service of Nonvested
Participants Upon
Reparticipation 36
5. Prior Service of Vested
Participants 36
6. Subsequent Service of
Terminated Participants 36
B. Distribution on Retirement at
Retirement Date 36
C. Distribution on Retirement After
Retirement Date 37
D. Distribution on Death 37
E. Distribution on Disability 38
F. Qualified Joint and Survivor Annuity 38
G. Qualified Preretirement Survivor
Annuity 40
H. Participant Consent to Distributions 41
I. Distributions After Earliest Retirement
Age Pursuant to Qualified
Domestic Relations Order 42
J. Distributions of Excess Deferrals 42
K. Distributions of Excess Contributions 43
L. Distributions of Excess Aggregate
Contributions 44
</TABLE>
-iv-
<PAGE> 6
INDEX
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
- ------- ----- ----
<S> <C> <C>
M. Distribution Upon Plan Termination 45
N. Distribution Upon Sale of Assets 45
O. Hardship Withdrawals from Qualified
Deferral Account 45
P. Election of Later Benefit
Commencement Date 46
Q. Withdrawals from Employer
Contribution Account 47
5.2 Method of Distribution 47
5.3 Participant's Contribution Account 50
5.4 Segregated Accounts 50
5.5 Location of Terminated Participant or
Beneficiary Unknown 50
VI. AMENDMENT OF PLAN
6.1 Right to Amend 51
6.2 Limitations upon Right to Amend 51
6.3 Amendment Binding on All Participating
Employers 51
VII. TOP-HEAVY PLANS
7.1 Top-Heavy Plan 52
7.2 Top-Heavy Group of Plans 52
7.3 Rules for Determining Top-Heavy
Plan Status 52
7.4 Very Top-Heavy Plan 53
7.5 Alternate Vesting Schedule 53
VIII. TERMINATION OF PLAN
8.1 Right to Terminate 54
8.2 Adoption of Plan by Successor 54
8.3 Multiple Participating Employers 54
8.4 Allocation on Termination of Plan or
Permanent Discontinuance of
Contributions 54
8.5 Manner of Distribution 54
8.6 Merger or Consolidation of Plan or
Transfer of Plan Assets 55
</TABLE>
-v-
<PAGE> 7
INDEX
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
- ------- ----- ----
<S> <C> <C>
IX. ADMINISTRATION
9.1 Appointment of Committee 56
9.2 Notification to Participants 56
A. Plan Summary and Forms 56
B. Account Balances 56
C. Notification Prior to Termination
Date 56
D. Claims Procedure 56
9.3 Records and Reports 56
9.4 Other Committee Powers and Duties 57
9.5 Committee Procedures 57
9.6 Authorization of Benefit Payments 57
9.7 Benefit Checks 57
X. GUARANTEES AND LIABILITIES
10.1 Nonguarantee of Employment 58
10.2 Rights to Fund Assets 58
10.3 No Diversion of Funds 58
10.4 Nonalienation of Benefits 58
10.5 Domestic Relations Order 59
10.6 Loans 60
10.7 Allocation of Responsibility Among
Employer, Committee and Trustees for
Plan and Trust Administration 61
10.8 Bonding 61
10.9 Guarantees to Participants 62
XI. MISCELLANEOUS
11.1 Governing Laws 63
11.2 Corporate Action 63
11.3 Alternative Acts 63
11.4 Interpretation 63
11.5 Gender and Tense 63
11.6 Title Headings 63
</TABLE>
-vi-
<PAGE> 8
RESTATEMENT AND AMENDMENT BY THE ENTIRETY
OF THE INGLES MARKETS, INCORPORATED
INVESTMENT/PROFIT SHARING PLAN
THIS IS A RESTATEMENT AND AMENDMENT BY THE ENTIRETY of the Profit Sharing
Plan for the employees of INGLES MARKETS, INCORPORATED, a North Carolina
corporation and MILKCO, Inc., a North Carolina corporation (hereinafter
collectively referred to as the "Employer").
W I T N E S S E T H:
WHEREAS, the Employer desires to have restated and amended by the entirety
said Profit Sharing Plan dated September 25, 1972, as last restated and amended
by the entirety on September 18, 1990, to meet the requirements of the Internal
Revenue Code, as amended by the Employee Retirement Income Security Act of 1974,
and to fully comply with the requirements of said Act, and also to expand, as
well as add, certain provisions to said Profit Sharing Plan; and
WHEREAS, the Employer has approved the creation of this Restatement and
Amendment by the Entirety of the Profit Sharing Plan and has authorized
execution by its officers of a separate Trust Agreement for the management of
the assets of this Plan;
WHEREAS, the Plan shall hereafter be known as the INGLES MARKETS,
INCORPORATED INVESTMENT/PROFIT SHARING PLAN.
NOW, THEREFORE, in accordance with the terms of the Profit Sharing Plan,
said Plan is hereby restated and amended in its entirety to read as follows:
<PAGE> 9
ARTICLE I
DEFINITION OF TERMS
The following words and terms, as used in this Plan, shall have the
meanings set forth below, unless a different meaning is clearly required by the
context:
1.1 "Accrued Benefit": The Employer Contribution Account and the
Participant's Contribution Account attributable to a Participant.
1.2 "Act": The Employee Retirement Income Security Act of 1974, as amended
from time to time.
1.3 "Active Participant": With respect to any Plan Year, a Participant who
(i) is in the employ of the Employer on the last day of the quarter of
the Plan Year or on the last day of the Plan Year, as the case may be,
or (ii) retires after his Normal Retirement Date, dies or becomes
disabled in such quarter or Plan Year, as the case may be, or (iii) for
purposes of Section 3.3A only, is treated as an Active Participant
pursuant to Section 3.3A5.
1.4 "Adjustment Factor": The cost of living adjustment factor prescribed by
the Secretary of the Treasury under Section 415(d) of the Code for
years beginning after December 31, 1987, as applied to such items and
in such manner as the Secretary shall provide.
1.5 "Affiliated Employer": The Employer and any corporation which is a
member of a controlled group of corporations (as defined in Section
414(b) of the Code) which includes the Employer; any trade or business
(whether or not incorporated) which is under common control (as defined
in Section 414(c) of the Code) with the Employer; any organization
(whether or not incorporated) which is a member of an affiliated
service group (as defined in Section 414(m) of the Code) which includes
the Employer; and any other entity required to be aggregated with the
Employer pursuant to Regulations under Section 414(o) of the Code.
1.6 "Age": The age of an Employee on his last birthday.
1.7 "Alternate Payee": Any spouse, former spouse, child or other dependent
of a Participant who is recognized by a Qualified 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. Such spouse,
former spouse, child or other dependent shall be considered a
Beneficiary hereunder.
1.8 "Annual Additions": The amount allocated to a Participant's account
during the Limitation Year that constitutes:
(i) Employer contributions,
(ii) Employee contributions,
(iii) Forfeitures, and
(iv) Amounts described in Sections
415(1)(1), 419(e) and 419A(d)(2) of the
Code.
For purposes of applying the limitations of Code Section 415 with
respect to a Participant's Annual Additions for all defined
contribution plans, all amounts allocated to a Participant under such
plans and all of the Participant's Employee contributions to such plans
shall be aggregated.
For purposes of this Section, the following shall also apply:
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A. Employer contributions shall not be deemed credited to a
Participant's account for a particular Plan Year unless the
contributions are actually made to the Plan no later than
thirty (30) days after the end of the period described in Code
Section 404(a)(6) applicable to the taxable year with or
within which the particular Plan Year ends. If, however,
contributions are made by an Employer exempt from Federal
income tax under Code Section 501(a), the contributions must
be made to the Plan no later than the 15th day of the sixth
calendar month following the close of the taxable year (or
fiscal year, if no taxable year) with or within which the
particular Limitation Year ends.
B. If, in a particular Plan Year, Employer contributions are
allocated to a Participant's account because of an erroneous
forfeiture in a prior Plan Year or because of an erroneous
failure to allocate amounts in a prior Plan Year, the
allocation will not be considered an Annual Addition with
respect to the Participant for that particular Plan Year, but
will be considered an Annual Addition for the Plan Year to
which it relates.
C. Annual Additions shall not include any amounts repaid to the
Plan pursuant to Section 4.7A by a Terminated Participant who
reparticipates in the Plan or any amounts restored to such
Participant's accounts pursuant to Section 4.7A.
1.9 "Annuity Starting Date": The first day of the first period for which an
amount is payable as an annuity, or in the case of a benefit not
payable in the form of an annuity, the first day on which all events
(including Participant consents) have occurred which entitle the
Participant to such benefit. In the case of an Annuity Starting Date
occurring on or after a Participant's Normal Retirement Date, such
Annuity Starting Date will also apply to any additional allocations to
such Participant's accounts thereafter. In the case of an Annuity
Starting Date occurring prior to a Participant's Normal Retirement
Date, such Annuity Starting Date will not apply to any additional
allocations to such Participant's accounts thereafter.
1.10 "Beneficiary": Any person or persons designated as provided in ARTICLE
V to receive benefits under this Plan in the event of the death of a
Participant, Retired Participant, Terminated Participant or Alternate
Payee.
1.11 "Board": The Board of Directors of the Employer.
1.12 "Code": The Internal Revenue Code of 1986, as amended.
1.13 "Committee": The Administrative Committee appointed by the Employer and
acting in accordance with the terms hereof.
1.14 "Compensation": Compensation paid by the Employer to the Participant
during the Plan Year which is required to be reported as wages on the
Participant's Form W-2, plus compensation paid during the Plan Year
which is not currently includible in the Participant's gross income by
reason of the application of Sections 125, 402(a)(8) [402(e)(3) after
December 31, 1992], 404(h)(1)(B) or 403(b) of the Code, but exclusive
of compensation paid prior to a Participant's Entry Date in the first
Plan Year in which the Participant participates in the Plan. For Plan
Years beginning on or after January 1, 1989, Compensation in any Plan
Year shall be limited to $200,000 multiplied by the Adjustment Factor.
For purposes of the limit on Compensation, the Compensation of an
Employee who is a Five Percent Owner or who is one of the ten Highly
Compensated Employees with the greatest Compensation for a Plan Year
shall include all Compensation for such Plan Year paid to such
Employee's spouse and lineal descendants who have not attained age 19
before the end of such Plan Year. If, as a result the $200,000, (as
adjusted) limit is exceeded, then the $200,000 (as adjusted) limitation
shall be prorated among the affected individuals in proportion to each
such individual's
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<PAGE> 11
Compensation as determined under this Section prior to the application
of such $200,000 limitation.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual
compensation of each Employee taken into account under the Plan shall
not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with Section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not
exceeding 12 months, over which compensation is determined
(determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period,
and the denominator of which is 12. For Plan Years beginning on or
after January 1, 1994, any reference in this Plan to the limitation
under Section 401(a)(17) of the Code shall mean the OBRA '93 annual
compensation limit set forth in this provision. If compensation for any
prior determination period is taken into account in determining an
employee's benefits accruing in the current Plan Year, the compensation
for that prior determination period is subject to the OBRA '93 annual
compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day
of the first Plan Year beginning on or after January 1, 1994, the OBRA
'93 annual compensation limit is $150,000.
For purposes of the limit on Compensation, the Compensation of an
Employee who is a Five Percent Owner or who is one of the ten Highly
Compensated Employees with the greatest Compensation for a Plan Year
shall include all Compensation for such Plan Year paid to such
Employee's spouse and lineal descendants who have not attained age 19
before the end of such Plan Year. If, as a result the $150,000 (as
adjusted) limitation is exceeded, then (except for purposes of
determining Compensation in excess of the Integration Level) the
$150,000 (as adjusted) limitation shall be prorated among the affected
individuals in proportion to each such individual's Compensation as
determined under this Section prior to the application of such $150,000
limitation. For purposes of Sections 1.47 and 3.3A1, Compensation shall
include pay or salary paid prior to a Participant's Entry Date in the
first Plan Year in which the Participant participates in the Plan.
If the exclusion of compensation paid prior to a Participant's Entry
Date in the first Plan Year in which the Participant participates in
the Plan causes the Plan to fail to meet the requirements of Code
Sections 401(a)(4), 401(a)(26) or 410(b), then for the purposes of
allocating all contributions under the Plan, Compensation shall not
exclude such compensation paid prior to a Participant's Entry Date in
the first Plan Year in which the Participant participates in the Plan
to the extent necessary to comply with the requirements of Code
Sections 401(a)(4), 401(a)(26) and 410(b).
For purposes of this Section, the rules of Code Section 414(q) will
apply.
1.15 "Contract": An annuity contract issued for the benefit of a
Participant, unless otherwise stated. Any such contract shall be
non-transferable, shall be issued by a legal reserve life insurance
company which is authorized to do business within the State of North
Carolina and may contain such provisions for death and other benefits
as the Committee may determine to be in accordance with the terms of
the Plan.
1.16 "Coverage Percentage": For any Plan Year, a percentage equal to (i) the
percentage equal to the number of Includible Employees who are
Non-Highly Compensated Employees and who "benefit" under the Plan for
all or a portion of such Plan Year divided by the number of Includible
Employees who are Non-Highly Compensated Employees, divided by (ii) the
percentage equal to the number of Includible Employees who are Highly
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<PAGE> 12
Compensated Employees and who "benefit" under the Plan for all or a
portion of such Plan Year divided by the number of Includible Employees
who are Highly Compensated Employees.
1.17 "Determination Date": With respect to any Plan Year (i) the last day of
the preceding Plan Year, or (ii) in the case of the first Plan Year of
the Plan, the last day of such first Plan Year.
1.18 "Discretionary Employer Contributions": Those contributions made to the
Fund by the Employer pursuant to Section 3.3 hereof.
1.19 "Discretionary Employer Contribution Account": That account of each
Participant containing Discretionary Employer Contributions allocated
to such Participant under Section 3.3 and all adjustments thereto
pursuant to Sections 4.4 and 4.5.
1.20 "Domestic Relations Order": Any judgment, decree or order (including
approval of a property settlement agreement) which (i) relates to the
provision of child support, alimony payments or marital property rights
to a spouse, child or other dependent of a Participant and is made
pursuant to a state domestic relations law (including a community
property law); (ii) clearly specifies the name and last known mailing
address of the Participant and each Alternate Payee covered by the
order; the amount or percentage of the Participant's benefits to be
paid by the Plan to each Alternate Payee; the number of payments or
period to which such order applies; and each plan to which such order
applies; and (iii) does not require this Plan to provide any type or
form of benefit, or any option not otherwise provided under this Plan;
does not require this Plan to provide increased benefits (determined on
the basis of actuarial value); and (iv) does not require the payment of
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.
1.21 "Early Retirement Date": The date which is the later of the date on
which the Participant: (i) completes ten (10) Years of Service with the
Employer, or (ii) attains age sixty (60). For purposes of this Plan, a
Terminated Participant who has completed ten (10) Years of Service with
the Employer and has attained age sixty (60) shall be entitled to the
same rights under the Plan as a Participant who has attained his Early
Retirement Date.
1.22 "Effective Date": September 25, 1972.
1.23 "Effective Date of Restatement": September 26, 1993.
1.24 "Elective Deferrals": Contributions made to the Plan during the Plan
Year by the Employer, at the election of the Participant, in lieu of
cash compensation. Elective Deferrals shall include contributions made
pursuant to a salary reduction agreement. For purposes of Section 3.2,
Elective Deferrals shall not include any amounts which are "Excess
Contributions" as defined in Section 5.1K.
1.25 "Eligibility Date": The first day of each Plan Year and the 182nd day
of each Plan Year.
1.26 "Employee": Any person who is either: (i) employed by the Employer in a
capacity other than solely as a Director or other independent
contractor, or (ii) a leased employee within the meaning of Code
Sections 414(n) or 414(o). Notwithstanding the foregoing, if such
leased employees constitute less than twenty (20%) percent of the
Employer's nonhighly compensated work force within the meaning of
Section 414(n)(5)(C)(ii) of the Code, the term "Employee" shall not
include those leased employees covered by a plan described in Section
414(n)(5)(B) of the Code.
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1.27 "Employer": INGLES MARKETS, INCORPORATED and MILKCO, INC., or any
successors by merger, consolidation, purchase or otherwise, and any
other corporation, association or business organization that assumes
the obligations of this Plan.
For purposes of determining and crediting an Employee with Hours of
Service, Paid Service, Years of Service and One-Year Breaks in Service,
and for purposes of determining whether the Plan is a Top-Heavy Plan,
the Employer shall also include all trades or businesses, whether or
not incorporated, which are under common control, within the meaning of
Code Sections 414(b), (c) or (m) and the Regulations adopted
thereunder, with any Employer hereunder.
1.28 "Employer Contribution Account": The Qualified Deferral Account, the
Matching Employer Contribution Account and the Discretionary Employer
Contribution Account attributable to each Participant.
1.29 "Employment Commencement Date": The first date on which an Employee is
credited with an Hour of Service in accordance with Section 2.2 or 2.3
of the Plan.
1.30 "Entry Date": The date, beginning with the Effective Date, on which any
Employee becomes eligible to participate in the Plan as set forth in
Section 2.1.
1.31 "Failsafe Contributions": Those contributions made to the Fund by the
Employer pursuant to Section 3.1B.
1.32 "Failsafe Matching Contributions": Those contributions made to the Fund
by the Employer pursuant to Section 3.2B.
1.33 "Family Member": An individual described in Section 414(q)(6)(B) of the
Code.
1.34 "Five Percent Owner": If the Employer is a corporation, any person who
owns (or is considered as owning within the meaning of Code Section
318) more than five (5%) percent of the outstanding stock of the
corporation or stock possessing more than five (5%) percent of the
total combined voting power of all stock of the corporation, or if the
Employer is not a corporation, any person who owns more than five (5%)
percent of the capital or profits interest in the Employer.
1.35 "Forfeitures": The nonvested portion of the Employer Contribution
Accounts of a Terminated Participant as of the last day of a Plan Year
in which occurs the earlier of (i) the later of the day on which he has
received or is deemed to have received a distribution of his entire
vested interest in the Plan or the day on which he shall have incurred
a One-Year Break in Service, or (ii) the day on which he shall have
incurred five consecutive One-Year Breaks in Service.
1.36 "Fund": The trust funds established pursuant to the INGLES MARKETS,
INCORPORATED INVESTMENT/PROFIT SHARING TRUST "A" (the "A" Fund) and the
INGLES MARKETS, INCORPORATED INVESTMENT/PROFIT SHARING TRUST "B" (the
"B" Fund), to receive and invest contributions made under this Plan and
from which benefits are paid.
1.37 "Highly Compensated Employee": Highly compensated active employees and
highly compensated former employees.
A highly compensated active employee includes any Employee who performs
service for the Employer during the determination year and who, during
the look-back year: (i) received Compensation from the Employer in
excess of $75,000 (as adjusted pursuant to Section 415(d) of the Code);
(ii) received compensation from the employer in excess of $50,000
(multiplied by the Adjustment Factor) and was a member of the top-paid
group for such year; or (iii) was an officer of the Employer and
received Compensation during
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<PAGE> 14
such year that is greater than 50% of the dollar limitation in effect
under Code Section 415(b)(1)(A). The term Highly Compensated Employee
also includes: (i) employees who are both described in the preceding
sentence if the term "determination year" is substituted for the term
"look-back year" and the Employee is one of the 100 Employees who
received the most Compensation from the Employer during the
determination year; and (ii) Employees who are Five Percent Owners at
any time during the look-back year or determination year.
If no officer has satisfied the compensation requirement of (iii) above
during either a determination year or look-back year, the highest paid
officer for such year shall be treated as a Highly Compensated
Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding
the determination year.
A highly compensated former employee includes any employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Employer during the
determination year, and was a highly compensated active employee for
either the separation year or any determination year ending on or after
the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a
Family Member of either a Five Percent Owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10 most
highly compensated employees ranked on the basis of Compensation paid
by the Employer during such year, then the Family Member and the Five
Percent Owner or top-ten highly compensated employee shall be
aggregated. In such case, the Family Member and Five Percent Owner or
top-ten highly compensated employee shall be treated as a single
Employee receiving Compensation and Plan contributions or benefits
equal to the sum of such Compensation and contributions or benefits of
the Family Member and Five Percent Owner or top-ten highly compensated
employee. For purposes of this Section, Family Member includes the
spouse, lineal ascendants and descendants of the employee or former
employee and the spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the
top-paid group, the top 100 employees, the number of employees treated
as officers and the compensation that is considered, will be made in
accordance with Code Section 414(q) and the Regulations thereunder.
1.38 "Hour of Service": The period of Paid Service credited to an Employee
under Sections 2.2 and 2.3.
1.39 "Inactive Participant": A Participant who is not an Active Participant.
1.40 "Includible Employees": All Employees of the Employer who performed any
services for the Employer during the Plan Year other than:
(i) Employees who are not eligible to participate in the
Plan under Section 2.1.
(ii) Terminated Participants.
(iii) Employees who are non-resident aliens and who do not
receive earned income within the meaning of Code
Section 911(d)(2) from the Employer that constitutes
income from sources within the United States within
the meaning of Code Section 861(a)(3).
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<PAGE> 15
(iv) Employees that are engaged in a separate line of
business under Code Section 414(r) for purposes of
Code Section 410(b).
1.41 "Key Participant": An Employee who at any time during the Plan Year or
any of the four preceding Plan Years is or was:
(i) an officer of the Employer having an annual
compensation greater than 50% of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan
Year; or
(ii) one of the ten employees having annual compensation
from the Employer of more than the limitation in
effect under Code Section 415(c)(1)(A) and owning
both (a) more than a one-half of one (0.5%) percent
interest and (b) the largest interests in the
Employer; or
(iii) a Five Percent Owner; or
(iv) a One Percent Owner who receives compensation of more
than $150,000 from the Employer during such Plan
Year.
For purposes of (i) above, no more than the lesser of: (a) fifty (50)
Employees, or (b) the greater of three (3) or ten (10%) percent of all
Employees shall be treated as officers. The Employees treated as
officers under (i) above shall be comprised of the individual officers,
selected from the group of all individuals who were officers in the
current Plan Year or any one of the four preceding Plan Years, who had
the largest annual compensation in that five year period.
For purposes of (ii) above, if two (2) or more employees own the same
interest in the Employer, the employee having greater annual
compensation from the Employer shall be treated as having a larger
interest.
For purposes of (iv) above, the term "One Percent Owner" means any
person who would be described in Section 1.34 if "one (1%) percent"
were substituted for "five (5%) percent" each place it appears in such
Section.
For purposes of this Section, in determining ownership of the Employer,
the constructive ownership rules of Code Section 318 as modified by
Code Section 416(i)(1)(B)(iii) shall apply.
For purposes of this Section, the term "Employee" shall include
Employees, former Employees, and the beneficiaries of Employees and
former Employees and the term "annual compensation" shall mean
compensation as defined in Code Section 415(c)(3), but including
amounts contributed by the Employer pursuant to a salary reduction
agreement which are excludible from the Employee's gross income under
Code Sections 125, 402(a)(8) [401(e)(3) after December 31, 1992],
402(h) or 403(b).
1.42 "Limitation Year": The Plan Year.
1.43 "Matching Employer Contributions": Those contributions made to the Fund
by the Employer pursuant to Section 3.2A.
1.44 "Matching Employer Contribution Account": That account of each
Participant containing the Matching Employer Contributions and Failsafe
Matching Contributions allocated to such Participant and all
adjustments thereto pursuant to Sections 4.4 through 4.7.
1.45 "Minimum Contribution": In Plan Years in which the Plan is a Top-Heavy
Plan, an amount equal to a percentage of the total Compensation of any
Inactive Participant who is
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<PAGE> 16
employed on the last day of the Plan Year or any Active Participant,
which percentage is equal to the lesser of:
(i) three (3%) percent, or
(ii) the highest amount obtained by dividing (A) the
Employer contributions allocated to any Key
Participant for such Plan Year under this Plan or any
other plan maintained by the Employer, by (B) the
Compensation of such Key Participant for such Plan
Year.
In any Plan Year during which the Plan is a Top-Heavy Plan and in which
the Defined Contribution Fraction (as defined in Section 4.8) plus the
Defined Benefit Fraction (as defined in Section 4.8) for any
Participant exceeds 1.0 using 1.0 in place of 1.25 in the denominator
of each such fraction, "four (4%) percent" shall be substituted for
"three (3%) percent" in (i) above.
1.46 "Non-Highly Compensated Employee": An Employee of the Employer who is
neither a Highly Compensated Employee nor a Family Member of a Highly
Compensated Employee.
1.47 "Non-Kev Participant": A Participant who is not a Key Participant.
1.48 "Normal Retirement Date": Attainment by the Participant of age
sixty-five (65).
1.49 "One-Year Break in Service": With regard to eligibility for
participation requirements, a One-Year Break in Service means: (i) the
expiration of the twelve (12) consecutive month period, beginning with
an Employee's Employment Commencement Date, during which such Employee
is credited with not more than 500 Hours of Service, or (ii) the
expiration of any Plan Year which includes an anniversary of an
Employee's Employment Commencement Date, during which such Employee is
credited with not more than 500 Hours of Service.
With regard to the nonforfeitable interest of a Participant and for all
other purposes of the Plan, a One-Year Break in Service means a Plan
Year during which an Employee is credited with not more than 500 Hours
of Service.
1.50 "Paid Service": A period of time for which an Employee is paid or is
entitled to payment by the Employer. Also, a period of time for which
an Employee is not originally paid or entitled to payment but for which
back pay for such Employee, irrespective of mitigation of damages, is
awarded or agreed to by the Employer.
1.51 "Participant": Any Employee who is eligible to be and becomes a
Participant as provided in ARTICLE II hereof, not including a Retired
Participant or a Terminated Participant.
1.52 "Participant's Contribution Account": That portion of the Fund
attributable to repayments of distributions pursuant to Section 4.7A
hereof.
1.53 "Plan": This entire instrument, and all amendments thereto, which shall
be known as the "INGLES MARKETS, INCORPORATED INVESTMENT/PROFIT SHARING
PLAN."
1.54 "Plan Administrator": INGLES MARKETS, INCORPORATED.
1.55 "Plan Year": The fifty-two (52)/fifty-three (53) week period ending on
the last Saturday in September of each year.
1.56 "Portfolio Investments": The kinds of investments or pooled investment
accounts offered by the Trustees or any investment manager serving
under the Trust in which all or a portion of the Fund may be investing.
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1.57 "Qualified Deferral Account": That account of each Participant
containing Elective Deferrals made by him pursuant to Section 3.1A and
any Failsafe Contributions allocated to him pursuant to Section 3.1B,
and all adjustments thereto pursuant to Sections 4.4 and 4.5.
1.58 "Qualified Domestic Relations Order": A Domestic Relations Order which
is determined to be qualified pursuant to the terms of Section 10.5
hereof and which 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 to a Participant under this
Plan.
1.59 "Qualified Joint and Survivor Annuity": For a married Participant, an
annuity based on the Participant's Accrued Benefit for the life of the
Participant with a survivor annuity for the life of his or her spouse
which is equal to fifty (50%) percent of the amount of the annuity
payable during the joint lives of the Participant and his or her
spouse. For an unmarried Participant, an annuity for the life of the
Participant. A Qualified Joint and Survivor Annuity is an annuity that
commences immediately. Any rollovers shall be included in determining
the amount of a Participant's Accrued Benefit.
1.60 "Qualified Nonelective Contributions": To the extent elected by the
Committee, contributions made by the Employer and allocated to
Participants' accounts that the Participant may not elect to receive in
cash until distributed from the Plan; that are 100% vested and
nonforfeitable when made; that satisfy the requirements of Section
401(a)(4) of the Code; and that are not distributable under the terms
of the Plan to Participants or their Beneficiaries earlier than the
earlier of:
(i) separation from service, retirement, death or
disability of the Participant;
(ii) attainment of age 59-1/2 by the Participant;
(iii) termination of the Plan without establishment or
maintenance of a successor plan (other than an
employee stock ownership plan as defined in Code
Section 4975(e)(7)); or
(iv) the event specified in Section 5.1M of the Plan.
1.61 "Qualified Preretirement Survivor Annuity": An annuity for the life of
the surviving spouse of a Participant the actuarial equivalent of which
is equal to fifty (50%) percent of the vested nonforfeitable portion of
the Accrued Benefit of the Participant as of the earlier of: (i) the
date of his death, or (ii) the date of his separation from service from
the Employer.
1.62 "Qualifying Employer Securities": An employer security as defined in
Section 407(d)(1) of the Act which is (a) stock issued by the Employer
or (b) a bond, debenture, note, certificate or other evidence of
indebtedness (hereinafter referred to as "obligation") if both:
(a) such obligation is acquired:
(1) on the market, either (i) at the price of the
obligation prevailing on a national securities
exchange which is registered with the Securities and
Exchange Commission, or (ii) if the obligation is not
traded on such a national securities exchange, at a
price not less favorable to the Plan than the
offering price for the obligation as established by
current bid and asked prices quoted by persons
independent of the Employer; or
(2) from an underwriter, at a price (i) not in excess of
the public offering price for the obligation as set
forth in a prospectus or offering circular filed with
the Securities and Exchange Commission, and (ii) at
which a substantial
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<PAGE> 18
portion of the same issue is acquired by persons
independent of the Employer; or
(3) directly from the Employer at a price not less
favorable to the Plan than the price paid currently
for a substantial portion of the same issue by
persons independent of the Employer; and
(b) immediately following acquisition of such obligation:
(1) not more than twenty-five (25%) percent of the
aggregate amount of obligations issued in such issue
and outstanding at the time of acquisition is held by
the Plan; and
(2) at least fifty (50%) percent of the aggregate amount
referred to in subparagraph (1) is held by persons
independent of the Employer, and
(3) not more than twenty-five (25%) percent of the assets
of the Plan is invested in obligations of the
Employer or an affiliate of the Employer.
1.63 "Regulations": The Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, as amended.
1.64 "Required Beginning Date":
A. General Rule. Except as provided in Paragraph B below and in
Section 5.2F5, the Required Beginning Date for any Participant
is April 1 of the calendar year following the calendar year in
which such Participant attains age 70-1/2.
B. Transitional Rules.
1. For a Participant who attains age 70-1/2 before
January 1, 1988, and who is not a Five Percent Owner
(as defined in subparagraph 4 below), the Required
Beginning Date is April 1 of the calendar year
following the later of (i) the calendar year in which
the Participant attains age 70-1/2, or (ii) the
calendar year in which the Participant retires.
2. For a Participant who attains age 70-1/2 before
January 1, 1988 and who, during any Plan Year
beginning after December 31, 1979, is a Five Percent
Owner (as defined in subparagraph 4 below), the
Required Beginning Date is April 1 of the calendar
year following the later of (i) the calendar year in
which the Participant attains age 70-1/2, or (ii) the
earlier of (a) the calendar year with or within which
ends the Plan Year in which the Participant becomes a
Five Percent Owner, or (b) the calendar year in which
the Participant retires. Notwithstanding anything
herein to the contrary, a Participant's Required
Beginning Date shall in no event be earlier than
December 31, 1987.
3. For a Participant who (i) is not a Five Percent
Owner, (ii) attains age 70-1/2 during 1988, and (iii)
has not retired as of January 1, 1989, the Required
Beginning Date is April 1, 1990.
4. A Participant is treated as a Five Percent Owner for
purposes of this Section 1.64, if such Participant is
a Five Percent Owner as defined in Section 1.34 at
any time during the Plan Year ending with or within
the calendar year in which such Participant attains
age 66-1/2, or any subsequent Plan Year. Once a
Participant is described in this subparagraph
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4, distributions must continue to such Participant
even if such Participant ceases to own more than five
percent of the Employer in a subsequent year.
1.65 "Retired Participant": A person who shall have been a Participant but
who upon retirement shall have become entitled to benefits as
hereinafter provided.
1.66 "Retirement Date": A Participant's Early Retirement Date or Normal
Retirement Date.
1.67 "Salary Reductions": Elective Deferrals.
1.68 "Segregated Accounts": Those accounts of the Participants which may be
set aside and held by the Trustees as a result of a distribution in a
form other than lump sum.
1.69 "Suspense Account": That account containing the contributions made to
the Plan for the current fiscal year, plus the net income or
appreciation and minus the net loss or depreciation of the Plan prior
to allocation to Participants.
1.70 "Terminated Participant": As provided in Section 2.7, a person who
shall have been a Participant but (i) who shall have incurred a
One-Year Break in Service other than by retirement, and (ii) whose
employment with the Employer is terminated.
1.71 "Top-Heavy Plan": This Plan shall be a Top-Heavy Plan only in Plan
Years during which it is either a Top-Heavy Plan or part of a Top-Heavy
Group of Plans determined under ARTICLE VII.
1.72 "Trust Agreement or Trust": The Trust Agreements for the Fund and all
amendments thereto, which constitutes a part of this Plan, known as the
"INGLES MARKETS, INCORPORATED INVESTMENT/PROFIT SHARING TRUST "A" and
"INGLES MARKETS, INCORPORATED INVESTMENT/PROFIT SHARING TRUST "B"."
1.73 "Trustees": The Trustee or Trustees appointed by the Employer to
administer Fund "A" and Fund "B" in accordance with the terms of the
Trust Agreement.
1.74 "Valuation Date": The date and frequency for valuation of the Fund by
the Trustees, as specified by the Committee from time to time, said
Valuation to take place not less frequently than annually.
1.75 "Very Top-Heavy Plan": This Plan shall be a Very Top-Heavy Plan only in
Plan Years (i) during which it is a Very Top-Heavy Plan determined
under Section 7.4, or (ii) during which it is a Top-Heavy Plan and in
which the sum of the Defined Contribution Fraction (as defined in
Section 4.8) plus the Defined Benefit Fraction (as defined in Section
4.8) for each Key Participant does not exceed 1.0 using 1.0 in place of
1.25 in the denominator of each such fraction.
1.76 "Year of Service": With regard to eligibility requirements to
participate, a Year of Service means: (i) the expiration of the twelve
(12) consecutive month period, beginning with an Employee's Employment
Commencement Date, during which such Employee is credited with at least
one thousand (1,000) Hours of Service, or (ii) the expiration of a Plan
Year which includes an anniversary of an Employee's Employment
Commencement Date, during which such Employee is credited with at least
1,000 Hours of Service. For purposes of Section 2.1, Years of Service
before any period of consecutive One-Year Breaks in Service shall not
be taken into account in computing the Employee's Years of Service, if
the number of consecutive One-Year Breaks in Service within such period
equals or exceeds the greater of: (i) five (5), or (ii) the aggregate
number of such Years of Service prior to such break. If any Years of
Service are not required to be taken into account by reason of a period
of One-Year Breaks in Service to which this subparagraph
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applies, such Years of Service shall not be taken into account in
applying this subparagraph to a subsequent period of One-Year Breaks in
Service.
With regard to the nonforfeitable interest of a Participant and for all
other purposes of the Plan, a Year of Service means a Plan Year,
inclusive of Plan Years prior to the Effective Date, during which the
Participant is credited with at least one thousand (1,000) Hours of
Service.
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ARTICLE II
PARTICIPATION
2.1 "Employees Eligible to Participate". Every Employee who was a
Participant in the Plan prior to the execution date of the Restatement of the
Plan and whose participation in the Plan has not terminated prior thereto shall
continue as a Participant. Every other present or future Employee shall become a
Participant on the first Eligibility Date on which he is an Employee and that
coincides with or follows the date on which the Employee has completed one (1)
Year of Service with the Employer. If an Employee's employment is terminated
prior to the first Eligibility Date that coincides with or follows the date on
which the Employee has completed one (1) Year of Service with the Employer and
such Employee is rehired after that date, but prior to incurring a One-Year
Break in Service, then such Employee shall become a Participant on the date of
his rehire.
2.2 Credited Hours of Service for Performance of Duties. There
shall be credited one (1) Hour of Service for each hour or portion of an hour of
Paid Service for the performance of duties for the Employer; provided, however,
no more than one (1) Hour of Service shall be credited for any one (1) hour or
portion of an hour of performance of duties for the Employer.
Hours of Service shall be credited to an Employee, in accordance with this
Section 2.2, to the twelve (12) month period used to determine a Year of Service
or a One-Year Break in Service, as the case may be, in which such duties are
performed. Notwithstanding anything to the contrary in the preceding sentence,
the Committee may adopt a method of crediting Hours of Service, which is and
must be consistently applied with respect to all Employees within the same job
classification, as reasonably defined, so that all Hours of Service for the
performance of duties in any period of thirty-one (31) days or less which begins
in one such twelve (12) month period, used to determine a Year of Service or a
One-Year Break in Service, and ends in the next such twelve (12) month period
shall be credited either to the first or the second such twelve (12) month
period rather than being credited in part to each of the two twelve (12) month
periods in which such duties were actually performed.
All Employees under similar circumstances shall be treated alike in the
determination of crediting Hours of Service. The provisions of this Section 2.2
shall be construed so as to resolve any ambiguities in favor of crediting an
Employee with Hours of Service.
2.3 Credited Hours of Service for Which No Duties Are Performed.
There shall be credited one (1) Hour of Service for each hour or portion of an
hour of Paid Service (up to the number of hours regularly scheduled for the
performance of duties, or if there is no regular work schedule for an Employee,
up to eight (8) hours per day and forty (40) hours per week) for a period of
time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or leave of
absence; provided however:
(i) an Employee shall not be credited with more than 501
Hours of Service on account of any single continuous
period during which the Employee performs no duties
irrespective of the length of such continuous period;
(ii) an Employee shall not be credited for any hour for
which payment is made or due under a plan maintained
solely for the purpose of complying with applicable
workmen's compensation, or unemployment compensation
or disability insurance laws; and
(iii) an Employee shall not be credited for any hour for
which payment is made solely to reimburse the
Employee for medical or medically related expenses
incurred by the Employee or for any hour during any
absence for which the Employee receives disability
payments from an insurance company.
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<PAGE> 22
For purposes of this Section 2.3, a payment shall be deemed to be made by or due
from the Employer regardless of whether such payment is made or due from the
Employer directly, or indirectly through, among others, a trust fund, or
insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer or other entity are
for the benefit of particular Employees or are on behalf of a group of Employees
in the aggregate.
In calculating the number of Hours of Service to be credited an Employee, if the
payment made or due, or the back pay award or agreement is calculated on the
basis of units of time, such as hours, days, weeks or months, the number of
Hours of Service to be credited shall be: (i) the number of regularly scheduled
working hours included in the units of time on the basis of which the payment or
back pay award or agreement is calculated; or (ii) if there is no regular work
schedule for an Employee, the number of hours based upon an eight (8) hour work
day and a forty (40) hour work week included in the units of time on the basis
of which the payment or back pay award or agreement is calculated.
In calculating the number of Hours of Service to be credited an Employee, whose
compensation is based on an hourly rate, if the payment made or due, or the back
pay award or agreement is not then calculated on the basis of units of time, the
number of Hours of Service to be credited shall be equal to the amount of the
payment or back pay award or agreement, divided by the Employee's most recent
hourly rate of compensation before the period during which no duties are
performed.
In calculating the number of Hours of Service to be credited an Employee whose
compensation is determined on the basis of a fixed rate for specified periods of
time (other than hours), such as days, weeks or months, if the payment made or
due, or the back pay award or agreement is not calculated on the basis of units
of time, then the number of Hours of Service to be credited shall be equal to:
(i) the amount of the payment or back pay award or
agreement for the period of time during which no
duties were performed; multiplied by
(ii) the number of hours regularly scheduled for the
performance of duties during such period of time; or
if there is no regular work schedule for such
Employee, the number of hours in which duties would
be performed in such period, based upon an eight (8)
hour work day and a forty (40) hour work week;
divided by
(iii) the most recent rate of compensation for such period
of time.
In calculating the number of Hours of Service to be credited an Employee whose
compensation is not determined on the basis of a fixed rate for a specified
period of time, if the payment made or due, or the back pay award or agreement
is not calculated on the basis of units of time, then the number of Hours of
Service to be credited shall be equal to the amount of the payment or back pay
award or agreement divided by the Employee's hourly rate of compensation, which
shall be equal to the lowest hourly rate of compensation paid to Employees in
the same job classification, as reasonably defined, as that of the Employee or,
if no Employees in the same job classification, as reasonably defined, have an
hourly rate, the minimum wage as established from time to time under Section
6(a)(1) of the Fair Labor Standards Act of 1938, as amended.
Hours of Service shall be credited to an Employee in accordance with this
Section 2.3 on account of a payment that is calculated on the basis of units of
time, such as hours, days, weeks or months, to the twelve (12) month period used
to determine a Year of Service or a One-Year Break in Service, as the case may
be, in which the period during which no duties are performed occurs, beginning
with the first unit of time to which the payment relates.
Hours of Service shall be credited to an Employee in accordance with this
Section 2.3 by reason of a payment that is not calculated on the basis of units
of time to the twelve (12) month period
15
<PAGE> 23
used to determine a Year of Service or a One-Year Break in Service, as the case
may be, in which the period during which no duties are performed occurs, or if
the period during which no duties are performed extends beyond one such twelve
(12) month period, such Hours of Service shall be allocated between not more
than the first two such twelve (12) month periods on any reasonable basis which
is consistently applied with respect to all Employees within the same job
classifications, as reasonably defined.
Hours of Service shall be credited to an Employee in accordance with this
Section 2.3 on account of an award or agreement for back pay to the twelve (12)
month period or periods used to determine a Year of Service or a One-Year Break
in Service, as the case may be, to which such award or agreement pertains rather
than to the twelve (12) month period or periods in which the award, agreement or
payment is made.
Notwithstanding anything to the contrary in the preceding three (3) paragraphs
of this Section 2.3, the Administrative Committee may adopt a method of
crediting Hours of Service which is and must be consistently applied with
respect to all Employees within the same job classification, as reasonably
defined, so that all Hours of Service for which no duties were performed in any
period of thirty-one (31) days or less which begins in one such twelve (12)
month period and ends in the next such twelve (12) month period shall be
credited either to the first or the second such twelve (12) month period.
All Employees under similar circumstances shall be treated alike in the
determination of crediting Hours of Service. The provisions of this Section 2.3
shall be construed so as to resolve any ambiguities in favor of crediting an
Employee with Hours of Service.
Solely for purposes of determining whether an Employee has incurred a One-Year
Break in Service, in the case of any Employee absent from work due to: (i)
pregnancy of such Employee, (ii) birth of a child of the Employee, (iii)
adoption of a child by the Employee, or (iv) child care immediately after the
birth or adoption of a child, the Plan shall treat the following as Hours of
Service: (a) the Hours of Service which otherwise normally would have been
credited to such Employee during such absence, or (b) in any case in which the
Plan is unable to determine such number of hours, eight (8) Hours of Service per
day during such absence; provided, however, that the total number of Hours of
Service to be credited for this purpose due to any such pregnancy, birth or
adoption shall not exceed 501 Hours of Service. The hours described in the two
immediately preceding sentences shall be credited as Hours of Service (1) only
in the year the absence from work begins if an Employee would be prevented from
incurring a One-Year Break in Service in such year by reason of crediting of
such Hours of Service, or (2) in any other case, to the immediately following
year. For purposes of this paragraph, the term "year" shall mean the computation
period defined in the definition of "One-Year Break in Service."
2.4 Notice to Employees. The Employer shall furnish to the
Committee the names of all Employees who become eligible as Participants. The
Committee shall notify every eligible Employee of the Employer, in writing, of
the existence of this Plan and of the basic provisions hereof in the form of a
Summary Plan Description.
2.5 Commencement of Participation. An Employee shall be deemed to
commence participation in the Plan on his Entry Date.
2.6 Termination of Employment. If a Participant's employment is
terminated, he shall remain a Participant until he shall have incurred a
One-Year Break in Service.
2.7 Termination of Participation. A Participant's participation in
the Plan shall terminate as of the last day of the Plan Year in which occurs the
later of (i) the date he shall have incurred a One-Year Break in Service, or
(ii) the date his employment with the Employer is terminated; provided that the
Participant is not performing services as an Employee of Employer on the last
day of such Plan Year.
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<PAGE> 24
2.8 Reparticipation. If a Participant's employment with the
Employer is terminated resulting in such Participant incurring one or more
One-Year Breaks in Service, then such Terminated Participant shall be entitled
to reparticipate in the Plan as of the date of his rehire. Notwithstanding
anything to the contrary in the Plan, if such Participant is not credited with
more than 500 Hours of Service in the Plan Year in which he was rehired, he
shall not incur a One-Year Break in Service for such Plan Year for purposes of
termination of participation in the Plan; instead, for such Plan Year he shall
be an Inactive Participant and shall be treated as if he had been credited with
501 Hours of Service.
2.9 Inactive Status. The Employer Contribution Account of any
Inactive Participant shall be placed on Inactive Status. In such case: (i)
service by such Participant during such Plan Year in which he shall not be
credited with at least 1,000 Hours of Service shall not be considered as a Year
of Service for the purposes of determining, in accordance with Section 5.1A2,
the Participant's vested interest in his Employer Contribution Account, and (ii)
his accounts shall continue to receive income or loss and appreciation or
depreciation allocations in accordance with Sections 4.4 and 4.5. In the event
such Participant shall become an Active Participant in a subsequent Plan Year,
his Employer Contribution Account shall revert to active status with full rights
and privileges under this Plan restored.
2.10 Provisions Relating to Leased Employees.
A. Safe-Harbor. Notwithstanding any other provisions of
the Plan, for purposes of determining the number or identity of Highly
Compensated Employees or for purposes of the requirements of Section 414(n)(3)
of the Code, the Employees of the Employer shall include leased employees as
defined in Paragraph C below.
B. Participation and Accrual. A leased employee within
the meaning of Section 414(n)(2) of the Code shall become a Participant in, and
accrue benefits under, this Plan based on service as a leased employee only as
provided in provisions of the Plan other than this Section.
C. Leased Employees. Leased employees shall mean any
person (other than an employee of the recipient) who pursuant to an agreement
between the recipient and any other person ("leasing organization") has
performed services for the recipient (or for the recipient and related persons
determined in accordance with Code Section 414(n)(6)) on a substantially full
time basis for a period of at least one year, and such services are of a type
historically performed by employees in the business field of the recipient
employer. Contributions or benefits provided a leased employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer.
A leased employee shall not be considered an employee of the recipient if: (i)
such employee is covered by a money purchase pension plan providing: (1) an
Unintegrated employer contribution rate of at least 10% of compensation, as
defined in Code Section 415(c)(3), but including amounts contributed pursuant to
a salary reduction agreement which are excludable from the employee's gross
income under Code Sections 125, 402(a)(8)[402(e)(3) after December 31, 1992],
402(h) or 403(b), (2) immediate participation, and (3) full and immediate
vesting; and (ii) leased employees do not constitute more than 20% of the
recipient's nonhighly compensated workforce.
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<PAGE> 25
ARTICLE III
CONTRIBUTIONS TO THE TRUST
3.1 Qualified Elective Deferral Contributions.
A. Salary Reductions. Effective February 2, 1994, the
Employer shall contribute to the Qualified Deferral Account of each Participant
any amount (from 1% to 10%, in 1% increments) by which such Participant elects
to reduce his Compensation from the Employer for the Plan Year. Such election
shall be made in writing pursuant to such rules of uniform application as the
Committee may adopt. The Employer will specify a reasonable period at least once
each calendar year during which a Participant may elect to terminate such
election or modify the amount or frequency of his Elective Deferrals.
1. Maximum Amount of Elective Deferrals. No
Employee shall be permitted to have Elective Deferrals made under this
Plan during any calendar year in excess of $7,000 multiplied by the
Adjustment Factor applicable in such year.
2. Average Actual Deferral Percentage. In each
Plan Year, the Plan must meet the test in either (a) or (b) below (the
"average deferral percentage test").
(a) The Average Actual Deferral
Percentage for Eligible Employees who are Highly Compensated
Employees for the Plan Year shall not exceed the Average
Actual Deferral Percentage for Eligible Employees who are
Non-Highly Compensated Employees for the Plan Year multiplied
by 1.25; or
(b) The Average Actual Deferral
Percentage for Eligible Employees who are Highly Compensated
Employees for the Plan Year shall not exceed the Average
Actual Deferral Percentage for Eligible Employees who are
Non-Highly Compensated Employees for the Plan Year multiplied
by 2, provided that the Average Actual Deferral Percentage for
Eligible Employees who are Highly Compensated Employees does
not exceed the Average Actual Deferral Percentage for Eligible
Employees who are Non-Highly Compensated Employees by more
than two (2) percentage points.
The Employer shall maintain records
sufficient to demonstrate satisfaction of the average deferral
percentage test and the amount and type of all contributions
used in such test.
3. Definitions. For purposes of this Section
3.1 and Section 5.1K of the Plan, the following definitions shall be
used:
(a) "Actual Deferral Percentage" shall
mean the ratio (expressed as a percentage to the nearest
one-hundredth of one percent), of Salary Reductions and
Qualified Nonelective Contributions allocated to the accounts
of an Eligible Employee for the Plan Year to such Eligible
Employee's Compensation for such Plan Year.
(b) "Average Actual Deferral
Percentage" shall mean the average (expressed as a percentage
to the nearest one-hundredth of one percent) of the Actual
Deferral Percentages of the Eligible Employees in a group.
(c) "Eligible Employee" shall mean any
Employee of the Employer who is directly or indirectly
eligible under the terms of the Plan to make Elective
Deferrals or to have Qualified Nonelective Contributions
allocated to his
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<PAGE> 26
account for the Plan Year. An Employee shall not fail to be
treated as an Eligible Employee merely because of the
suspension provided in paragraph 6 below.
4. Time of Contribution. Elective Deferrals
shall be paid to the Trust no later than the end of the twelve (12)
month period immediately following the Plan Year to which the Elective
Deferrals relate.
5. Relation to Compensation. For purposes of
this Section 3.1, Elective Deferrals shall be taken into account only
if such Elective Deferral either (i) would have been received by the
Participant in the Plan Year but for the Participant's election to make
a Salary Reduction, or (ii) is attributable to services performed by
the Participant in the Plan Year and, but for the Participant's
election to make a Salary Reduction, would have been received by the
Participant within two and one-half (2-1/2) months after the end of
such Plan Year.
6. Suspension. A Participant's Salary
Reductions shall be suspended for a period not less than twelve (12)
months following receipt by the Participant of any withdrawal on
account of hardship as provided in Section 5.10 hereof and the amount
of any such Participant's Salary Reductions in his taxable year
immediately following the taxable year of receipt of such withdrawal
shall not exceed the applicable limit under Code Section 402(g) for
such next taxable year less the amount of such Participant's Salary
Reductions for the taxable year of the hardship withdrawal.
7. Special Rules.
(a) If any Eligible Employee who is a
Highly Compensated Employee for the Plan Year is eligible to
have Elective Deferrals allocated to his account under two or
more plans or arrangements described in Section 401(k) of the
Code that are maintained by the Employer or an Affiliated
Employer which end with or within the same calendar year;
then, for purposes of this Paragraph 3.1A, the Actual Deferral
Percentage for such Employee shall be determined as if all
such Elective Deferrals and Qualified Nonelective
Contributions allocated to such Employee under such plans were
made under a single arrangement. For Plan Years beginning
after December 31, 1989, plans may be aggregated in order to
satisfy Code Section 401(k) only if they have the same plan
year.
(b) In the event this Plan satisfies
the requirements of Section 410(b) of the Code only if
aggregated with one or more other plans with the same plan
year, or if one or more other plans satisfy the requirements
of Section 410(b) of the Code only if aggregated with this
Plan, then this Paragraph 3.1A shall be applied by determining
the Actual Deferral Percentage of Eligible Employees as if all
such plans were a single plan.
(c) If any Highly Compensated Employee
of the Employer or any Affiliated Employer is eligible under
both a plan or arrangement described in Section 401(k) of the
Code and a plan subject to the requirements of Section 401(m)
of the Code, then the sum of (1) the Average Actual Deferral
Percentage, after the application of Sections 5.1J and 5.1K,
for the Highly Compensated Employees, plus (2) the Average
Contribution Percentage as determined in Section 3.2A2 after
the application of Section 5.1L for the Highly Compensated
Employees shall not exceed the sum of (i) plus (ii) below or
such other limitation as the Internal Revenue Service may
impose with regard to the multiple use of the alternative
limitation.
(i) 125 percent of the greater
of (x) the Average Actual Deferral Percentage of the
group of Eligible Employees who are Non-Highly
Compensated Employees for the Plan Year, or (y) the
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Average Contribution Percentage of the group of
Eligible Employees who are Non-Highly Compensated
Employees for the Plan Year.
(ii) Two (2) plus the lesser of
(x) or (y) above. In no event, however, shall this
amount exceed 200 percent of the lesser of (x) or (y)
above.
(d) For purposes of this Section 3.1,
if an Eligible Employee is a Highly Compensated Employee and
is either a Five Percent Owner or one of the ten most highly
compensated employees of the Employer, then such Highly
Compensated Employee and his Family Members shall be treated
as a single Highly Compensated Employee and the Actual
Deferral Percentage of such Highly Compensated Employee family
group shall be the Actual Deferral Percentage determined by
combining the Elective Deferrals, Qualified Nonelective
Contributions and Compensation of all Family Members who are
Eligible Employees.
The Elective Deferrals and Qualified
Nonelective Contributions of such Family Members shall be
disregarded in determining the Average Deferral Percentage for
all Eligible Employees who are Non-Highly Compensated
Employees.
(e) The determination and treatment of
the Elective Deferrals, Qualified Nonelective Contributions
and Average Deferral Percentage of any Eligible Employee shall
satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
B. Failsafe Contributions. If the Plan would otherwise
fail to comply with the average deferral percentage test in Section 3.1A2 for a
Plan Year, the Employer may make a Failsafe Contribution for such Plan Year. The
Employer shall make such Failsafe Contribution in the amount which would cause
the Plan to comply with the average deferral percentage test for such Plan Year.
The Failsafe Contribution for any Plan Year shall be allocated, in equal amounts
without regard to Compensation, within the Plan Year to the Non-Highly
Compensated Employees who are Active Participants for such Plan Year. The
Failsafe Contribution for any Plan Year will be allocated to the Qualified
Deferral Account for each such Participant. All Failsafe Contributions shall be
Qualified Nonelective Contributions.
C. Special 1994 Contribution. For each Eligible Employee
on February 2, 1993 who is a Non-Highly Compensated Employee, the Employer shall
make a one-time Qualified Nonelective Contribution to the Plan equal to $5.00.
Such contribution shall be allocated to the Qualified Deferral Account for each
such Eligible Employee.
3.2 Matching Employer Contributions.
A. Effective February 2, 1994, subject to the rights of
the Employer under ARTICLES VI and VIII, the Employer shall decide the amount of
Matching Employer Contributions to be made to the Fund for a Plan Year and shall
make such contributions as follows:
1. Allocation. The Matching Employer
Contributions for a Plan Year shall be allocated within the Plan Year
with respect to each quarter of the Plan Year to the Matching Employer
Contribution Account of each Active Participant in the proportion that
the Elective Deferrals of each Active Participant pursuant to Section
3.1A for that quarter of the Plan Year bear to the total Elective
Deferrals of all Active Participants pursuant to Section 3.1A for that
quarter of the Plan Year.
2. Contribution Percentage. In each Plan Year,
the Plan must meet the test in either (a) or (b) below (the "average
contribution percentage test").
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(a) The Average Contribution Percentage
for Eligible Employees who are Highly Compensated Employees
for the Plan Year shall not exceed the Average Contribution
Percentage for Eligible Employees who are Non-Highly
Compensated Employees for the Plan Year multiplied by 1.25; or
(b) The Average Contribution Percentage
for Eligible Employees who are Highly Compensated Employees
for the Plan Year shall not exceed the Average Contribution
Percentage for Eligible Employees who are Non-Highly
Compensated Employees for the Plan Year multiplied by 2,
provided that the Average Contribution Percentage for Eligible
Employees who are Highly Compensated Employees does not exceed
the Average Contribution Percentage for Eligible Employees who
are Non-Highly Compensated Employees by more than two (2)
percentage points.
The Employer shall maintain records
sufficient to demonstrate satisfaction of the average
contribution percentage test and the amount and type of all
contributions used in such test.
3. Definitions. For purposes of this Section
3.2A and Sections 3.1A and 5.1L of the Plan, the following definitions
shall apply:
(a) "Average Contribution Percentage"
shall mean the average (expressed as a percentage to the
nearest one-hundredth of one percent) of the Contribution
Percentages of the Eligible Employees in a group.
(b) "Contribution Percentage" shall
mean the ratio (expressed as a percentage to the nearest
one-hundredth of one percent), of the sum of the Matching
Employer Contributions and Failsafe Matching Contributions
under the Plan allocated to the accounts of an Eligible
Employee for the Plan Year to such Eligible Employee's
Compensation for the Plan Year.
(c) "Eligible Employee" shall mean any
Employee of the Employer who is directly or indirectly
eligible under the terms of the Plan to have Matching Employer
Contributions allocated to his account for the Plan Year. An
Employee shall not fail to be treated as an Eligible Employee
merely because of the suspension period in Section 3.1A6.
4. Matching Employer Contributions Taken Into
Account for a Plan Year. A Matching Employer Contribution is taken into
account under this Paragraph for a Plan Year only if such contribution
is allocated to the Employee's account as of any date within such Plan
Year, is actually paid to the Trust no later than the end of the
twelve-month period beginning on the day after the close of such Plan
Year and is made on behalf of an Employee on account of such Employee's
Elective Deferrals for the Plan Year.
5. Special Rules.
(a) For purposes of this Section 3.2A,
the Contribution Percentage for any Eligible Employee who is a
Highly Compensated Employee for the Plan Year and who is
eligible to have Matching Employer Contributions allocated to
his account under two or more plans described in Section
401(a) of the Code or arrangements described in Section 401(m)
of the Code that are maintained by the Employer or an
Affiliated Employer shall be determined as if all such
contributions were made under a single plan. For Plan Years
beginning after December 31, 1989, plans may be aggregated in
order to satisfy Code Section 401(m) only if they have the
same plan year.
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(b) In the event this Plan satisfies
the requirements of Section 410(b) of the Code only if
aggregated with one or more other plans with the same plan
year, or if one or more other plans satisfy the requirements
of Section 410(b) of the Code only if aggregated with this
Plan, then this Paragraph A shall be applied by determining
the Contribution Percentages of Eligible Employees as if all
such plans were a single plan.
(c) For purposes of this Paragraph, if
an Eligible Employee is a Highly Compensated Employee and
either a Five Percent Owner or one of the ten most highly
compensated employees of the Employer, then such Highly
Compensated Employee together with his Family Members shall be
the Contribution Percentage determined by combining the
Eligible Employee's Matching Employer Contributions and
Compensation with the Matching Employer Contributions and
Compensation of all his Family Members who are Eligible
Employees.
The Matching Employer Contributions and
Compensation of such Family Members shall be disregarded in
determining the Contribution Percentage for all Eligible
Employees who are Non-Highly Compensated Employees.
(d) For purposes of this Section 3.2A,
all or part of the Qualified Nonelective Contributions and
Elective Deferrals made with respect to Eligible Employees may
be treated as Matching Employer Contributions provided that
each of the following (to the extent applicable) is satisfied:
(i) The nonelective
contributions, including those Qualified Nonelective
Contributions treated as Matching Employer
Contributions for purposes of Section 3.2A, satisfy
the requirements of Code Section 401(a)(4).
(ii) The nonelective
contributions, excluding those Qualified Nonelective
Contributions treated as Matching Employer
Contributions for purposes of Section 3.2A and those
Qualified Nonelective Contributions treated as
Elective Deferrals for purposes of Section 3.1A,
satisfy the requirements of Code Section 401(a)(4).
(iii) The Elective Deferrals,
including those treated as Matching Employer
Contributions for purposes of this Section 3.2A,
satisfy the requirements of Section 3.1A.
(iv) The Elective Deferrals,
excluding those Elective Deferrals treated as
Matching Employer Contributions for purposes of this
Section 3.2A, satisfy the requirements of Section
3.1A.
(v) Except as provided in (i)
and (iii) above, the Qualified Nonelective
Contributions and the Elective Deferrals treated as
Matching Employer Contributions for purposes of this
Section 3.2A are not taken into account in
determining whether any other contributions or
benefits satisfy Code Section 401(a)(4) or Section
3.1A hereof.
(vi) Qualified Nonelective
Contributions may not be treated as Matching Employer
Contributions if the effect is to increase the
difference between the Actual Contribution Percentage
for the group of Highly Compensated Employees and the
Actual Contribution Percentage for the group of all
other Eligible Employees.
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<PAGE> 30
(e) The determination and treatment of
the Contribution Percentage of any Eligible Employee shall
satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
B. Failsafe Matching Contributions. If the Plan would
otherwise fail to comply with the average contribution percentage test in
Section 3.2A2 for a Plan Year, the Employer may make a Failsafe Matching
Contribution for such Plan Year. The Employer shall make such Failsafe Matching
Contributions in the amount which would cause the Plan to comply with the
average contribution percentage test for such Plan Year. The Failsafe Matching
Contribution for any Plan Year shall be allocated, in equal amounts, within the
Plan Year to the Non-Highly Compensated Employees who are Active Participants
for such Plan Year. The Failsafe Matching Contribution for any Plan Year will be
allocated to the Matching Employer Contribution Account for each such
Participant.
C. Coverage Percentage.
1. If the Plan's Coverage Percentage as
determined under this Section 3.2 for any Plan Year is less than
seventy (70%) percent, then for purposes of this Section 3.2, the
Participants who are Non-Highly Compensated Employees in each of the
following groups of Participants, in the order of priority listed
below, shall be considered to be Active Participants for such Plan Year
to the extent such group's inclusion as Active Participants is required
to result in a Coverage Percentage of at least seventy (70%) percent.
For example, if, after the application of this paragraph to the group
of Participants who are Non-Highly Compensated Employees listed in (i)
below, the Plan's Coverage Percentage for a Plan Year is at least
seventy (70%) percent, this paragraph shall not be applied to the group
of Participants listed in (ii) below for such Plan Year.
(i) Inactive Participants who are
employed on the last day of the Plan Year and who are credited
with less than 1,000 Hours of Service with the Employer during
the Plan Year.
(ii) Inactive Participants who are not
employed on the last day of the Plan Year and who are credited
with at least 1,000 Hours of Service with the Employer during
the Plan Year.
(iii) Any other Inactive Participants.
2. For purposes of determining the Plan's
Coverage Percentage for purposes of this Section 3.2, an Employee shall
be considered to "benefit" under the Plan for any Plan Year in which
such Employee is directly or indirectly eligible to make Elective
Deferrals for such Plan Year or receives an allocation of any Failsafe
Matching Contribution made under Section 3.2B for such Plan Year.
3. For purposes of determining the Plan's
Coverage Percentage, all Family Members of a Highly Compensated
Employee who is either a Five Percent Owner or one of Employer's ten
most highly compensated employees shall be considered to be a single
Highly Compensated Employee. In such case, if such Highly Compensated
Employee or any such Family Member is directly or indirectly eligible
to make Elective Deferrals or receives an allocation under Section
3.2B, then the deemed single Highly Compensated Employee shall be
considered to benefit under the Plan for purposes of this Section 3.2.
Only if no member of the deemed single Highly Compensated Employee is
directly or indirectly eligible to make Elective Deferrals or receives
an allocation under Section 3.2B will the deemed single Highly
Compensated Employee be treated as not benefiting under the Plan for
purposes of this Section 3.2.
4. For the Plan Year beginning in 1989, all
Participants who would have been Active Participants if (i) they were
employed on the last day of the Plan Year, or (ii) they had been
credited with at least 1,000 Hours of Service shall be considered to
23
<PAGE> 31
benefit under the Plan for such Plan Year for purposes of determining
the Plan's Coverage Percentage for purposes of this Section 3.2.
5. Notwithstanding anything to the contrary in
this Section 3.2, the Plan shall not be required to have a Coverage
Percentage under this Section 3.2 of at least seventy percent (70%) if
for such purposes the Plan meets the average benefit percentage test
described in Code Section 410(b)(2) and the Regulations thereunder.
3.3 Discretionary Employer Contributions.
A. Subject to the rights of the Employer under ARTICLES
VI and VIII, the Employer shall decide the amount of Discretionary Employer
Contributions to be made to the Fund for its respective Employees for each Plan
Year and such Discretionary Employer Contributions shall be allocated as
follows:
1. Discretionary Employer Contributions for
such Plan Year shall be allocated to the Discretionary Employer
Contribution Account of each Active Participant in proportion to the
ratio which his Compensation for the Plan Year bears to the total
Compensation for that Plan Year paid to all such Active Participants.
2. Each Plan Year, the Employer shall
contribute to the Plan the amount by which (i) the nonvested portion of
the Employer Contribution Accounts (determined as of his last
termination of participation in the Plan) of any Terminated Participant
who reparticipates in the Plan prior to incurring five consecutive
One-Year Breaks in Service, exceeds (ii) the Forfeitures allocable
pursuant to Section 4.6A for such Plan Year. Such contributions shall
be allocated to restore the nonvested portion of the Employer
Contribution Accounts of such Terminated Participant.
3. All Discretionary Employer Contributions
allocated to a Participant under this Section 3.3 shall be allocated to
such Participant's Discretionary Employer Contribution Account. Until
so allocated, Discretionary Employer Contributions shall be held in the
Suspense Account.
4. Except as otherwise provided in subparagraph
6 below, only those Active Participants who are employed by the
Employer on the last day of the Plan Year shall be considered to be
Active Participants for such Plan Year for purposes of this Section
3.3.
5. If the Plan's Coverage Percentage as
determined under this Section 3.3 for any Plan Year is less than
seventy (70%) percent, then for purposes of this Section 3.3, the
Participants in each of the following groups of Participants, in the
order of priority listed below, shall be considered to be Active
Participants for such Plan Year to the extent such group's inclusion as
Active Participants is required to result in a Coverage Percentage of
at least seventy (70%) percent. For example, if, after the application
of this paragraph to the group of Participants listed in (i) below, the
Plan's Coverage Percentage for a Plan Year is at least seventy (70%)
percent, this paragraph shall not be applied to the groups of
Participants listed in (ii) and (iii) below for such Plan Year.
(i) Inactive Participants who are
employed on the last day of the Plan Year and who are credited
with less than 1,000 Hours of Service with the Employer during
the Plan Year.
(ii) Inactive Participants who are not
employed on the last day of the Plan Year and who are credited
with at least 1,000 Hours of Service with the Employer during
the Plan Year.
(iii) Any other Inactive Participants.
24
<PAGE> 32
For purposes of determining the Plan's
Coverage Percentage for purposes of this Section 3.3, an
Employee shall be considered to "benefit" under the Plan for
any Plan Year in which such Employee receives an allocation
under this Section 3.3 for such Plan Year.
For purposes of determining the Plan's
Coverage Percentage, all Family Members of a Highly
Compensated Employee who is either a Five Percent Owner or one
of Employer's ten most highly compensated employees shall be
considered to be a single Highly Compensated Employee. In such
case, if such Highly Compensated Employee or any such Family
Member receives an allocation under Section 3.3, then the
deemed single Highly Compensated Employee shall be considered
to receive an allocation under Section 3.3. Only if no member
of the deemed single Highly Compensated Employee receives an
allocation under Section 3.3 will the deemed single Highly
Compensated Employee be treated as not receiving an allocation
under Section 3.3.
For the Plan Year beginning in 1989, all
Participants who would have been Active Participants if (i)
they were employed on the last day of the Plan Year or, (ii)
if they had been credited with at least 1,000 Hours of Service
shall be considered to be entitled to receive an allocation of
Employer contributions for such Plan Year under Section 3.3
for purposes of determining the Plan's Coverage Percentage.
Notwithstanding anything herein to the
contrary in this Section 3.3, the Plan shall not be required
to have a Coverage Percentage under this Section 3.3 of at
least seventy percent (70%) if for such purposes the Plan
meets the average benefit percentage test described in Code
Section 410(b)(2) and the Regulations thereunder.
3.4 No Voluntary Employee Contributions. Contributions from
Participants, other than Elective Deferrals, are neither required nor permitted.
3.5 General Rules Regarding Contributions:
A. Limitations. Employer contributions pursuant to
Sections 3.1, 3.2 and 3.3 shall be subject to the following limitations and
restrictions:
1. In no event shall the contribution for any
year under this Plan, together with any contributions paid pursuant to
a pension plan for the benefit of the Employees of the Employer, exceed
the maximum amount deductible by the Employer under Code Section
404(a)(7).
2. The Employer shall, notwithstanding any
other provisions of the Plan, make all contributions to the Plan
without regard to current or accumulated earnings and profits for the
taxable year or years ending with or within such Plan Year.
Notwithstanding the foregoing, the Plan shall be considered to be a
profit sharing plan for purposes of Sections 401(a), 402, 412 and 417
of the Code.
3. The payment of all contributions by the
Employer to the Plan shall be conditioned upon the initial
qualification of the Plan and the deductibility of such contributions
under the applicable provisions of the Code.
4. If the Plan is a Top-Heavy Plan for the Plan
Year, there shall be allocated to the Discretionary Employer
Contribution Account of each Inactive Participant who is employed on
the last day of the Plan Year and each Active Participant Discretionary
Employer Contributions equal to but not in excess of (i) the Minimum
Contribution for such Inactive or Active Participant, reduced by (ii)
any Employer
25
<PAGE> 33
contribution, other than Elective Deferrals, allocated to such Inactive
or Active Participant under this Plan or any other plan or plans of
Employer for such Plan Year.
B. Time of Contributions. The contributions to be made
under the Plan may be paid to the Trustees on any date or dates which the
Employer may select, provided that the total contributions for each Plan Year
must be made on or before the final date on which contributions can be made and
still be deductible by the Employer for purposes of the Federal Income Tax.
C. Method of Payment. Payments on account of the
contributions due from the Employer for any year may be made in cash or in kind
or in investments authorized under the Trust Agreement, including Qualifying
Employer Securities, provided that such payments shall not constitute prohibited
transactions under Code Section 4975.
D. Allocations. Contributions made by the Employer shall
be allocated to the Participants as provided in Section 4.2.
E. Amount of Participating Employer Contributions. Each
Employer shall determine the amount, if any, of the contributions to be made by
it to the Fund under the terms of this Plan.
F. Multiple Participating Employers. Each participating
Employer shall make the contributions for its own Employees to the extent
provided herein. Any failure of any Employer to live up to any of its
obligations under the Plan shall have no effect on the remaining Employer or
Employers. The rights of each Participant in the Plan to the benefits shall be
based upon the service accrued with and compensation paid him by the particular
Employer by which he is employed; provided, however, that transfer of employment
from one Employer to another, both being parties to the Plan, shall not be
considered as an interruption of service under the Plan, and in such event the
Committee shall make appropriate and equitable adjustments in the accounts in
order that thereafter such transferring Employee will be considered, insofar as
concerns his rights to benefits under the Plan, as a Participant Employee of the
Employer to which he is transferred. The Plan shall comply with Code Sections
401(a), 410, 411, 415 and 416 for all Employers required to be aggregated
pursuant to Code Sections 414(b), (c), (m) or (o).
3.6 Rollovers from Individual Retirement Accounts or Plan.
Pursuant to such rules of uniform application as the Committee may adopt, and
without regard to any dollar limitation under Section 4.8 or elsewhere in the
Plan, a Participant may transfer to the Trustees any amounts theretofore
received by such Participant from a Code Section 401(a) qualified plan, if
within sixty (60) days after receipt by such Participant, such amounts were
either (i) transferred to this Plan, or (ii) placed in a Code Section 408(a)
qualified Individual Retirement Account ("IRA") that contains no assets other
than those attributable to employer contributions under a Code Section 401(a)
qualified plan(s) in which such Participant was previously covered.
Notwithstanding anything to the contrary in ARTICLE V, a Participant's
"rollover" funds from another Plan or from an IRA to this Plan shall at all
times be 100% vested and nonforfeitable. For record keeping purposes under this
Plan, rollover funds shall be accounted for and distributed as a part of the
respective Participant's Employer Contribution Account; but until such time as
the respective Participant's Employer Contribution Account is 100% vested, such
rollover funds shall be accounted for as a subaccount of the Participant's
Employer Contribution Account. Any interest transferred to this Plan shall not
include employee contributions other than accumulated deductible employee
contributions within the meaning of Code Section 72(o)(5).
3.7 Portability. If (i) a Participant was covered under another
pension or profit sharing plan qualified under Code Section 401(a), (ii) such
Participant had a nonforfeitable interest in a portion of the assets of such
other plan, and (iii) the trustees of such other plan are authorized to
distribute to this Plan such Participant's nonforfeitable interest in such other
plan, then the Trustees of this Plan shall be authorized to accept, without
regard to any dollar limitation under Section 4.8 or elsewhere in this Plan, the
Participant's nonforfeitable interest under such other plan from the trustees of
such other plan upon the following terms and conditions:
26
<PAGE> 34
A. Such interest transferred to this Plan shall be
reflected, for record keeping purposes, in a separate account in this Plan; and
B. Such interest transferred to this Plan shall be
nonforfeitable and 100% vested and shall not reduce in any way any obligations
of the Employer under this Plan.
If a Participant shall be entitled to receive benefits under
this Plan pursuant to any provision of ARTICLE V, and the Participant
subsequently becomes a participant in another pension or profit sharing plan
qualified under Code Section 401(a), then the Committee, upon request from such
Participant, shall direct the Trustees to transfer the Participant's
nonforfeitable interest under this Plan directly to the trustees of the other
plan in which he has become a participant upon the terms and conditions set
forth in A and B above, if the trustees of such other plan are authorized to
receive such interest.
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<PAGE> 35
ARTICLE IV
ALLOCATION
4.1 Separate Accounts. The Committee shall establish and maintain
for each Participant until his termination of participation a "Qualified
Deferral Account," a "Matching Employer Contribution Account" and a
"Discretionary Employer Contribution Account", and, when applicable, a
"Participant's Contribution Account" (sometimes collectively called "accounts"
and individually called "account"). Each such account shall be credited or
debited to the extent required by the following Sections of this ARTICLE IV.
Notwithstanding the foregoing, all contributions paid to the Trustees, and the
income therefrom, without distinction between principal and income, shall be
held and administered, except as otherwise provided in Section 4.9, as a single
Fund and the Trustees shall not be required to invest separately any share of
any Participant in the Fund.
4.2 Employer Contributions. The contributions paid or accrued by
the Employer for any Plan Year, irrespective of when actually paid to the
Trustees, shall be allocated within the Plan Year among the Employer
Contribution Accounts of the Participants for such Plan Year in the amounts
determined in accordance with Sections 3.1, 3.2 and 3.3 of the Plan. Until so
allocated, Employer contributions shall be held in the Suspense Account.
4.3 Certification of Allocations. Following each Valuation Date,
the Committee shall certify to the Trustees the names of the Participants and
the amount so allocable to the accounts of each of them, and the Trustees shall
maintain records of the amount allocated to each Participant and all
transactions with respect to the accounts of each Participant.
4.4 Income and Loss. As of any Valuation Date, the Committee shall
direct the Trustees to adjust each of the Participant's accounts for the amount
of net income or net losses earned or incurred by the investments of such
Participant's accounts since the last Valuation Date. Until allocated, the net
income or net loss shall be held in the Suspense Account.
4.5 Appreciation and Depreciation. The accounts of each
Participant shall be adjusted as of each Valuation Date for any net appreciation
or net depreciation in the value of the investments of such Participant's
accounts since the last Valuation Date. Assets of the Fund shall always be
valued at their fair market value.
4.6 Forfeitures. As of the end of each Plan Year, Forfeitures
arising pursuant to Section 5.1A3 during such Plan Year shall be allocated as
follows:
A. First, to restore the nonvested portion of the
Employer Contribution Accounts (determined as of the date of his last
termination of participation in the Plan) of any Terminated Participant who (i)
reparticipates in the Plan prior to incurring five consecutive One-Year Breaks
in Service, and (ii) repays to the Fund, pursuant to Section 4.7A, the amount of
any distribution previously received upon termination.
B. The balance of such Forfeitures shall be applied at
the Employer's election, to reduce the Matching Employer Contribution, the
Discretionary Employer Contribution, or both.
4.7 Employer Contribution Account After Reparticipation.
A. If: (i) any Terminated Participant is rehired by the
Employer before incurring five (5) consecutive One-Year Breaks in Service, (ii)
the Terminated Participant received a distribution under Section 5.1A1, (iii)
the nonvested portion of such Terminated Participant's Employer Contribution
Account was forfeited pursuant to Section 5.1A3, and (iv) the Participant repays
to the Fund the amount previously distributed to him under Section 5.1A1 within
the time period provided below, then the Participant's Contribution Account of
such Participant shall be credited with the amount repaid and such Participant's
Employer
28
<PAGE> 36
Contribution Account shall be credited with the amount previously forfeited.
Such repayment must be made before the earlier of (a) five (5) years after the
date the Terminated Participant is rehired, or (b) the date the Terminated
Participant incurs five (5) consecutive One-Year Breaks in Service, but in no
event later than the date the Plan is terminated pursuant to Section 8.1.
B. If a Terminated Participant was deemed to have
received a distribution pursuant to Section 5.lAl and is rehired by the Employer
before incurring five (5) consecutive One Year Breaks in Service, then such
Participant's Employer Contribution Account shall be credited as of the date of
rehire with the amount previously forfeited.
C. Notwithstanding the foregoing, the nonvested portion
of a Terminated Participant's Employer Contribution Account which was forfeited
pursuant to Section 5.1A3 shall be restored by Forfeitures or Employer
contributions as provided in Section 4.6A or 3.1A4 without requirement of
repayment as described above if the Terminated Participant is rehired prior to
incurring five (5) consecutive One-Year Breaks in Service and if such Terminated
Participant had been a Participant in the Plan prior to February 2, 1994.
D. Should any Terminated Participant reparticipate in
the Plan at any time after he has incurred five (5) consecutive One-Year Breaks
in Service prior to full vesting, his new Employer Contribution Accounts shall
not be credited with any portion of any amount previously forfeited pursuant to
5.1A3.
4.8 Maximum Annual Additions.
A. Limitations Applicable to this Plan.
1. General Rule. The maximum Annual Additions
that may be contributed or allocated to a Participant's account under
the Plan for any Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar
Limitation, or
(b) 25% of the Participant's
"compensation" (as defined below for
the purposes of this Section 4.8)
for the Limitation Year.
2. Special Rules. The compensation limitation
referred to in Section 4.8Al(b) shall not apply to:
(a) any contribution for medical
benefits (within the meaning of
Section 419A(f)(2) of the Code)
after separation from service which
is otherwise treated as an Annual
Addition, or
(b) any amount otherwise treated as an
Annual Addition under Section
415(1)(1) of the Code.
3. Definitions. For purposes of this Section
4.8, the "Defined Contribution Dollar Limitation" shall mean $30,000
or, if greater, one-fourth of the defined benefit dollar limitation set
forth in Section 415(b)(1) of the Code as in effect for the Limitation
Year and "compensation" shall mean compensation as defined in Section
415(c)(3) of the Code.
29
<PAGE> 37
4. Excess Allocations. If, as a result of the
allocation of Forfeitures, a reasonable error in estimating a
Participant's annual Compensation or under other limited facts and
circumstances which the Commissioner of the Internal Revenue Service
finds justify the availability of the rules set forth in this
Paragraph, the Annual Additions under the terms of the Plan for a
particular Participant would cause the limitations of Code Section 415
applicable to that Participant for the Plan Year to be exceeded, then
the excess amounts in the Participant's account must be held
unallocated in the Code Section 415 suspense account for the Plan Year
and allocated and reallocated in the next Plan Year (and succeeding
Plan Years, as necessary) to all of the Participants in the Plan in
accordance with Section 4.2 of the Plan as if such excess amounts
constituted a portion of the Employer contribution for such subsequent
Plan Year; provided, however, that such excess amounts shall be subject
to the limitations of this Section 4.8 and shall be allocated before
the allocation of any Discretionary Employer Contributions and Matching
Employer Contributions that would constitute Annual Additions for such
subsequent Plan Year. For purposes of this subparagraph, excess amounts
may not be distributed to Participants or Retired or Terminated
Participants.
B. Limitations Where Participant Participates in Another
Defined Contribution Plan. The total Annual Additions for any Participant under
this Plan shall be further reduced or limited to the extent necessary to prevent
disqualification of the Plan under any provisions of the Code that impose
limitations on contributions when a Participant is a member of more than one
qualified defined contribution plan of an Employer. If any reductions are
required to be made in the contributions allocated to any Participant in defined
contribution plans maintained by the Employer, such reductions shall first be
made under this Plan prior to adjustments under any pension plan maintained by
the Employer.
C. Limitation Where Participant Participates in a
Defined Benefit Plan.
1. For any Participant in this Plan who is also
covered by any defined benefit plan maintained or sponsored by the
Employer (the "DBP"), the sum of the Defined Benefit Fraction and the
Defined Contribution Fraction, as defined below, shall not exceed 1.0.
(a) Defined Benefit Fraction
Numerator: Projected actual benefit of the
Participant under the DBP (whether or not
terminated) assuming no increase in
compensation.
_________ over _________
Denominator: The lesser of (i) 1.25
multiplied by the maximum permissible dollar
amount of annual benefit under a DBP for the
Plan Year; or (ii) 1.4 multiplied by the
Participant's average compensation averaged
over his highest three (3) consecutive years
including any adjustments made under Code
Section 415(b).
PLUS
(b) Defined Contribution Fraction
Numerator: Sum of Annual Additions to such
Participant's accounts under this Plan and
any other defined contribution plan (whether
or not terminated) maintained by the
Employer (including the Annual Additions
attributable to the Participant's
nondeductible employee contributions to all
defined benefit plans, whether or not
terminated, maintained by the Employer, and
the Annual Additions attributable to all
welfare benefit funds, as defined in Code
Section
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<PAGE> 38
419(e), and individual medical accounts, as
defined in Code Section 415(1)(2).
________ over ________
Denominator: The sum of the lesser of the
following amounts for each Plan Year during
which the Participant performed any service
for the Employer: (i) 1.25 multiplied by the
maximum permissible dollar amount of annual
additions to a defined contribution plan for
such Plan Year; or (ii) 1.4 multiplied by
25% of the Participant's compensation for
such Plan Year.
For purposes of determining a Participant's Defined
Benefit Fraction, if a Participant has less than ten (10) Years of Service with
Employer, the denominator of the Defined Benefit Fraction shall be multiplied by
a fraction. The numerator of such fraction shall be the Participant's Years of
Service or part thereof with the Employer; provided, however, that the numerator
shall not be less than one (l). The denominator of such fraction shall be ten
(10).
Notwithstanding the above, if the Participant was a
Participant as of the first date of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of the Defined
Benefit Fraction will not be less than 125: of the sum of the annual benefits
under such plans which the Participant had accrued as of the close of the last
Limitation Year beginning before January 1, 1987, disregarding any changes in
the terms and conditions of the Plan after May 5, 1986. The preceding sentence
applies only if the defined benefit plans individually and in the aggregate
satisfied the requirements of Code Section 415 for all Limitation Years
beginning before January 1, 1987.
If the Employee was a Participant as of the end of
the first day of the first limitation year beginning after December 31, 1986, in
one or more defined contribution plans maintained by the employer which were in
existence on May 6, 1986, the numerator of the Defined Contribution Fraction
will be adjusted if the sum of the Defined Contribution Fraction and the Defined
Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under
the adjustment, an amount equal to the product of (1) the excess of the sum of
the Fractions over 1.0 times (2) the denominator of the Defined Contribution
Fraction, will be permanently subtracted from the numerator of the Defined
Contribution Fraction. The adjustment is calculated using the Defined Benefit
and Defined Contribution Fractions as they would be computed as of the end of
the last Limitation Year beginning before January 1, 1987, and disregarding any
changes in the terms and conditions of the plan made after May 5, 1986, but
using the Code Section 415 limitation applicable to the first Limitation Year
beginning on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning
before January 1, 1987, shall not be recomputed to treat all Employee
contributions as Annual Additions.
For purposes of determining a Participant's Defined
Contribution Fraction for any Plan Year in or after which there has been a
termination of or discontinuance of contributions to all DCP's covering such
Participant, the Defined Contribution Fraction shall be projected to such
Participant's Normal Retirement Date on the assumption that there will be no
further Annual Additions allocated to such Participant.
2. At the election of the Committee, for the Plan Year
ending in 1983 and each subsequent Plan Year, the Denominator of the Defined
Contribution Fraction shall be determined by substituting the following amount
for the portion of such Denominator attributable to all Plan Years ending before
January 1, 1983:
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<PAGE> 39
(a) The sum of the maximum permissible amount of
annual additions to the Participant's
account for all Plan Years ending on or
before January 1, 1983;
MULTIPLIED BY
(b) A fraction, (i) the numerator of which is
the lesser of (A) $51,875, or (B) 35% of the
Participant's compensation for the Plan Year
ending in 1981; and (ii) the denominator of
which is the lesser of (A) $41,500; or (B)
25% of the Participant's compensation for
the Plan Year ending in 1981.
3. The multiplier of 1.25 in the denominator of the
Defined Benefit Fraction and in the denominator of the Defined Contribution
Fraction shall be decreased to 1.0 and the numerator of the fraction in
Paragraph 4.8C2(b) shall be reduced to $41,500 for any Plan Year during which
the Plan is a Very Top-Heavy Plan. Notwithstanding the foregoing sentence, if
this Plan was not a Very Top-Heavy Plan in a prior Plan Year and thereafter
becomes a Very Top-Heavy Plan, a Participant's Accrued Benefit under this Plan
or any other Employer plan as of the end of such prior Plan Year shall not be
decreased on account of the reduction in maximum benefits otherwise provided in
this Paragraph.
4. If reductions must be made to the rate of benefit
accrual for such Participant under the DBP or to the allocations for such
Participant under this Plan to prevent disqualification of this Plan under Code
Section 415(e), such reductions shall first be made under this Plan prior to any
adjustments being made under the DBP.
5. Special Rules for Plans Subject to Overall
Limitations Under Code Section 415(e). For purposes of this Section 4.8:
(a) The Annual Addition for any
Limitation Year beginning before January 1, 1987, shall not be
recomputed to treat all Employee contributions as an Annual
Addition.
(b) If the Plan satisfied the
applicable requirements of Section 415 of the Code as in
effect for all Limitation Years beginning before January l,
1987, an amount shall be subtracted from the numerator of the
Defined Contribution Fraction (not exceeding such numerator)
as prescribed by the Secretary of the Treasury so that the sum
of the Defined Benefit Fraction and Defined Contribution
Fraction computed under Section 415(e)(1) of the Code does not
exceed l.0 for such Limitation Year.
(c) Pursuant to regulations prescribed
by the Secretary of the Treasury, the Numerator of a
Participant's Defined Contribution Fraction shall be reduced
so that the sum of the Defined Benefit Fraction and the
Defined Contribution Fraction for such Participant for the
Plan Years beginning in 1982 and 1983 shall not exceed 1.0.
4.9 Discretionary Investments of Contributions. Each Participant,
while in the employ of the Employer, shall have the right, exercisable pursuant
to such uniform administrative procedures as the Committee may adopt, to direct
the Trustee of the "A" Fund to invest his respective accounts in Portfolio
Investments selected by him or in such other investments selected by him
provided that such investments are (i) permitted under the Trust Agreement, (ii)
are not debt-financed transactions described in Section 514 of the Code, (iii)
are not commodity future accounts or similar investments, and (iv) are
administratively feasible. Each Participant, while in the employ of the
Employer, shall have the right, exercisable pursuant to such uniform
administrative procedures as the Committee may adopt, to direct the Trustee of
the "B" Fund to invest up to 10% per year of his respective accounts in
Portfolio Investments selected by him or in such other investments selected by
him provided that such investments are (i) permitted under
32
<PAGE> 40
the Trust Agreement, (ii) are not debt-financed transactions described in
Section 514 of the Code, (iii) are not commodity future accounts or similar
investments, and (iv) are administratively feasible. To the extent the Trustees
do not receive individual investment directions, they shall invest all accounts
in Portfolio Investments selected in the sole and absolute discretion of the
Trustees. Any extraordinary administrative expenses such as storage fees,
handling costs and appraisal costs incurred in connection with or as a result of
any Participant's exercise of individual investment discretion pursuant to this
Section shall be charged against the respective accounts of such Participants.
Any ordinary administrative expenses such as commissions and brokerage fees
incurred in connection with or as a result of any Participant's exercise of
individual investment discretion pursuant to this Section shall also be charged
against the respective accounts of such Participant. As of each Valuation Date,
all accounts invested as directed by the Participant in accordance with this
Section shall be adjusted for the net income or net loss and net appreciation or
net depreciation attributable to the respective directed investments.
4.10 Qualifying Employer Securities. The Trustees are authorized to
acquire and hold shares of Class B Common Stock of Ingles Markets, Incorporated
and to acquire and hold other Qualifying Employer Securities as contemplated
under the provisions of the Plan, without regard to the diversification
requirement of the Act.
33
<PAGE> 41
ARTICLE V
DISTRIBUTION OF BENEFITS
5.1 Employer Contribution Account. The amounts credited or debited
to Employer Contribution Accounts shall include only amounts theretofore
allocated by the Committee from the Suspense Account. The net credit to an
account shall be reduced by amounts distributed in accordance with the
provisions of this ARTICLE V.
A. Distribution on Termination Prior to Retirement.
1. Distribution. If a Participant's employment
with the Employer is terminated, except at normal retirement age, death
or disability as provided in Section 5.1E, the nonforfeitable portion
of such Participant's Employer Contribution Account shall be
distributed in accordance with Section 5.2. Except as provided in
Section 5.1H4, the Participant shall designate the time of the
distribution. Distribution shall be commenced not earlier than the
quarter of the Plan Year following the date the Participant's
employment is terminated. In no event shall distribution begin later
than April 1 following the calendar year in which the Participant
attains age 70-1/2. If the nonforfeitable portion of such Participant's
Employer Contribution Account is equal to zero, the Participant shall
be deemed to have received a distribution of such nonforfeitable
portion of his Employer Contribution Account on the date such
Participant terminates employment.
2. Nonforfeitable Vested Interest.
(a) Qualified Deferral Accounts and
Participant's Contribution Account. Every Participant shall
always have a 100% nonforfeitable vested interest in his
Qualified Deferral Account and his Participant Contribution
Account.
(b) Matching Employer Contribution
Account and Discretionary Employer Contribution Account. Every
Participant who first became a Participant in the Plan prior
to October 1, 1989 shall have a nonforfeitable vested interest
in his Discretionary Employer Contribution Account equal to
the percentage thereof as shown in detail below for the number
of Years of Service with the Employer as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Years of Service Vested-Nonforfeitable Nonvested-Forfeitable
Percentage Percentage
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than 1 0% 100%
1 10% 90%
2 20% 80%
3 30% 70%
4 40% 60%
5 60% 40%
</TABLE>
34
<PAGE> 42
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Years of Service Vested-Nonforfeitable Nonvested-Forfeitable
Percentage Percentage
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
6 80% 20%
7 or more 100% 0%
- ------------------------------------------------------------------------------------------------------
</TABLE>
Every Participant who first becomes a Participant in the Plan on or
after October 1, 1989 shall have a nonforfeitable vested interest in
his Matching Employer Contribution Account and Discretionary Employer
Contribution Account equal to the percentage thereof as shown in detail
below for the number of Years of Service with the Employer as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Years of Service Vested-Nonforfeitable Nonvested-Forfeitable
Percentage Percentage
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than 3 0% 100%
3 20% 80%
4 40% 60%
5 60% 40%
6 80% 20%
7 or more 100% 0%
- ------------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding anything to the contrary in the above vesting schedule,
the nonforfeitable vested interest of the Matching Employer
Contribution Account and Discretionary Employer Contribution Account of
any Participant as of the date of the adoption of the Restatement of
the Plan shall not be less than the nonforfeitable vested percentage
computed in accordance with the Plan in effect immediately prior to the
Effective Date of Restatement of the Plan. In addition, notwithstanding
anything to the contrary in the above vesting schedule, any Participant
with three (3) or more Years of Service with the Employer as of sixty
(60) days after the date he is notified of the adoption of the
Restatement of the Plan shall be permitted to elect in writing within
sixty (60) days of the date he is notified of the adoption of the
Restatement of the Plan to have his nonforfeitable vested interest
computed in accordance with the Plan in effect immediately prior to the
Effective Date of Restatement of Plan.
A Participant shall automatically have a 100% vested and nonforfeitable
interest in his Matching Employer Contribution Account and
Discretionary Employer Contribution Account if he attains his Normal
Retirement Date while in the employ of the Employer.
Notwithstanding anything in this Section 5.1A2 to the contrary, if a
Participant or Terminated Participant receives a distribution from his
Matching Employer Contribution Account and Discretionary Employer
Contribution Account, then separate accounts shall be established for
the Participant as of the date of such distribution and the vested
interest of such Participant or Terminated Participant in such separate
Matching Employer Contribution Account and Discretionary Employer
Contribution Account at all times prior to the Participant incurring
five (5) consecutive One-Year Breaks in Service or the date he is 100%
vested (whichever is earlier), shall be determined pursuant to the
following formula:
35
<PAGE> 43
X = P (AB + [R x D]) - (R x D),
where X is the vested interest at the relevant time (the time at which
the vested percentage in the Matching Employer Contribution Account and
the Discretionary Employer Contribution Account cannot increase); P is
the vested percentage at the relevant time; AB is the Matching Employer
Contribution Account balance plus the Discretionary Employer
Contribution Account balance at the relevant time; D is the amount of
the distribution; and R is the ratio of the Matching Employer
Contribution Account balance plus the Discretionary Employer
Contribution Account balance at the relevant time over such account
balance after the distribution.
3. Forfeitures. If any Terminated Participant
shall incur a One-Year Break in Service prior to the time when the
Matching Employer Contribution Account and the Discretionary Employer
Contribution Account established for his benefit is 100%
nonforfeitable, the portions of his Matching Employer Contribution
Account and Discretionary Employer Contribution Account which are
forfeitable shall be treated as a Forfeiture pursuant to Section 4.6 as
of the last day of the Plan Year in which occurs the earlier of (i) the
later of the date which he shall have received a distribution or is
deemed to have received a distribution of his entire interest in the
Plan pursuant to Section 5.1A1 or the date on which he shall have
incurred a One-Year Break in Service or (ii) the date on which he shall
have incurred five (5) consecutive One Year Breaks in Service.
4. Prior Service of Nonvested Participants Upon
Reparticipation. For purposes of Section 5.1A, in the case of a
Participant who does not have any vested interest in his Matching
Employer Contribution Account or his Discretionary Employer
Contribution Account, Years of Service before any period of consecutive
One-Year Breaks in Service shall not be taken into account in computing
the number of Years of Service if the number of consecutive One-Year
Breaks in Service within such period equals or exceeds the greater of:
(i) five (5), or (ii) the aggregate number of such Years of Service
prior to such break. If any Years of Service are not required to be
taken into account by reason of a period of One-Year Breaks in Service
to which this subparagraph applies, such Years of Service shall not be
taken into account in applying this subparagraph to a subsequent period
of One-Year Breaks in Service.
5. Prior Service of Vested Participants. Upon
reparticipation any Participant who has any vested interest in the Plan
shall be credited with all Years of Service, regardless of any One-Year
Break in Service, only after he has completed one (1) Year of Service
following the date of his rehire.
6. Subsequent Service of Terminated
Participants. Years of Service completed by a Participant after such
Participant has incurred five (5) consecutive One-Year Breaks in
Service shall not be taken into account for purposes of determining the
nonforfeitable vested interest of a Participant as of the last day of
the Plan Year in which the fifth (5th) consecutive One-Year Break in
Service occurred.
B. Distribution on Retirement at Retirement Date. Any
Participant shall be entitled to retire from service at any time upon attaining
his Retirement Date.
1. If a Participant retires on or after his
Retirement Date, the amount standing to his credit on such Retirement
Date shall be 100% nonforfeitable. Such amount shall be distributed
pursuant to the Qualified Joint and Survivor Annuity form of benefit if
required under Section 5.1F, commencing no later than sixty (60) days
after the close of the Plan Year in which the Participant retires,
otherwise, such amount shall be distributed in accordance with Section
5.2.
2. Each Participant's election with respect to
the manner of distribution of his benefits at Retirement Date may be
made at any time within 90 days before his benefit commencement date.
36
<PAGE> 44
C. Distribution on Retirement After Retirement Date. If
a Participant continues in the employ of the Employer after his Retirement Date,
he shall be treated in all respects as any other Participant until his actual
retirement. The amount standing to the credit of such Participant at the time of
his actual retirement shall be 100% nonforfeitable and shall become
distributable to such retiring Participant commencing no later than his Required
Beginning Date. Distribution shall be made pursuant to the Qualified Joint and
Survivor Annuity form of benefit if required under Section 5.1F, otherwise, such
distribution shall be made in accordance with Section 5.2.
D. Distribution on Death.
1. If a Participant dies before his Annuity
Starting Date and the Participant has a surviving spouse, a Qualified
Preretirement Survivor Annuity shall be provided to the surviving
spouse of such Participant if required under Section 5.1G. Upon the
death of a Participant, all of the Accrued Benefit credited to such
Participant, reduced by the amount necessary to fund the Qualified
Preretirement Survivor Annuity, if applicable, shall be distributable
in accordance with Section 5.2B to his designated Beneficiary;
provided, however, that if a Participant has not designated a
Beneficiary or if no Beneficiary survives the Participant, then
distribution shall be made in a lump sum to the executor or
administrator of the Participant's estate.
2. If a Retired or Terminated Participant dies
after his Annuity Starting Date, his remaining Accrued Benefit shall be
distributed to his designated Beneficiary, or if no Beneficiary has
been designated or survives such Participant, then to the executor or
administrator of the Participant's estate.
3. The timing of the payment of death benefits
other than the Qualified Preretirement Survivor Annuity shall be in
accordance with the following:
(a) Except as provided in subparagraph
(c) or (f) below, if a Retired or Terminated Participant dies
after distribution of his interest has begun, then his
remaining Accrued Benefit must be distributed at least as
rapidly as under the method of distribution being used as of
the date of the Participant's death.
(b) Except as provided in subparagraph
(f) below, if a Participant dies prior to the commencement of
distributions, the entire interest of the deceased Participant
in the Plan must be distributed by December 31 of the calendar
year which contains the fifth anniversary of the date of the
Participant's death unless an election is made (pursuant to
subparagraph (e) below) to receive distributions in accordance
with subparagraph (c) or (d) below.
(c) If a deceased Participant's
interest in the Plan is payable to or for the benefit of a
designated Beneficiary, such interest may be distributed (in
accordance with the Regulations) over the life of such
designated Beneficiary or over a period not extending beyond
the life expectancy of such Beneficiary, commencing not later
than December 31 of the calendar year immediately following
the calendar year of the Participant's death.
(d) If the designated Beneficiary
referred to in subparagraph (c) above is the Participant's
surviving spouse, the date by which the distributions are
required to begin in accordance with subparagraph (c) above
shall not be before the later of (i) December 31 of the
calendar year in which the Participant would have attained age
70-1/2, or (ii) December 31 of the calendar year immediately
following the calendar year of the Participant's death. If the
surviving spouse dies before the distributions to such spouse
begin, this paragraph D3, with the exception of this
subparagraph (d), shall apply as if the surviving spouse were
the deceased Participant.
37
<PAGE> 45
(e) The Participant may elect the
timing of distribution to be made under this Section 5.1D. If
the Participant has not made such an election under this
Section 5.1D by the time of his death, then the Beneficiary
shall have the right to make such election. The Beneficiary's
right to make such an election shall expire in the case of a
distribution in a lump sum, on December 31 of the calendar
year which contains the fifth anniversary of the date of the
Participant's death and in the case of a distribution other
than in a lump sum, on December 31 of the calendar year
immediately following the calendar year of the Participant's
death. If the Participant has not made an election pursuant to
this Section 5.1D3 by the time of his death or if the
Participant's Beneficiary does not elect the time of
distribution by the time required above, then in the case of
distribution in a lump sum, distribution of the Participant's
entire interest shall be made as of the December 31 referred
to in subparagraph (b) above or in the case of distribution
other than in a lump sum, distribution of the Participant's
interest shall commence to be paid as of the December 31
referred to in subparagraph (c) above.
(f) Subparagraphs (a), (b) and (c)
above shall not apply (i) if the Participant has elected a
longer payout period prior to January 1, 1984, which is
otherwise permitted under the prior Plan of which this is a
restatement and such Participant's spouse has consented to
such distribution in accordance with Section 5.1F3, and (ii)
to the extent the Qualified Preretirement Survivor Annuity
form of benefit is required and not waived in accordance with
Section 5.1G. If the Qualified Preretirement Survivor Annuity
form of benefit is required and not waived in accordance with
Section 5.1G, then the payment of benefits pursuant to the
Qualified Preretirement Survivor Annuity shall commence, at
the direction of the surviving spouse of the deceased
Participant, as soon as practicable after the Participant's
death.
4. The Committee may require such proper proof
of death and such evidence of the right of any person to receive
payment of the account of a deceased Participant, as the Committee may
deem desirable. The Committee's determination of death and of the right
of any person to receive payment shall be conclusive; subject, however,
to the adjudication of any claim of any such person pursuant to Section
9.2D.
5. To the extent provided in any Qualified
Domestic Relations Order, the former spouse of a Participant shall be
treated as a surviving spouse of such Participant for purposes of the
Qualified Joint and Survivor Annuity and the Qualified Preretirement
Survivor Annuity provided in Sections 5.1F and 5.1G.
6. If a Participant's designated Beneficiary is
his spouse, then in the event the Participant and such spouse are
divorced after the date of such Participant's last designation of
beneficiary form, the Participant's designation of such spouse as his
designated Beneficiary shall be automatically revoked upon such
divorce.
E. Distribution on Disability. If, prior to his Normal
Retirement Date, a Participant shall be certified as disabled by the Social
Security Administration and is incapable of performing his duties, and if his
employment is terminated, the Committee shall direct the Trustees to pay to such
Participant all of the Employer Contribution Account credited to him as of the
last Valuation Date, provided that in no event shall such disability include a
condition resulting from self-inflicted injury, or injury incurred while
committing an illegal act. The method of distribution shall be in accordance
with Section 5.2. Any election under Section 5.2 must be made by the Participant
or his legal representative within a reasonable time after notice from the
Committee that the Participant's employment is terminated due to such disability
(said notice to include reference to the right of the Participant to elect the
manner of distribution).
F. Qualified Joint and Survivor Annuity.
1. The payment of benefits to any Participant
who does not die prior to his Annuity Starting Date shall be made in
the form of a Qualified Joint and Survivor
38
<PAGE> 46
Annuity unless, as hereinafter provided, the Participant or, if the
Participant is married, the Participant and his spouse, have elected in
writing to waive the Qualified Joint and Survivor Annuity form of
payment during the "applicable election period." The applicable
election period is the ninety (90) day period which ends on the
Participant's Annuity Starting Date. Each Participant shall receive,
within a reasonable period of time before his Annuity Starting Date, a
written explanation of: (i) the terms and conditions of the Qualified
Joint and Survivor Annuity, (ii) the Participant's right to make, and
the effect of, an election to waive the Qualified Joint and Survivor
Annuity form of benefit, (iii) the requirement that the Participant's
spouse consent to such a waiver, (iv) the right to make, and the effect
of, a revocation of an election to waive the Qualified Joint and
Survivor Annuity, and (v) a general description of the eligibility
conditions and other material features of the optional forms of
benefits available under the Plan and sufficient additional information
to explain the relative values of such optional forms of benefits.
2. The election to waive the Qualified Joint
and Survivor Annuity shall not take effect unless: (i) the
Participant's spouse consents in writing to such election, such
election and such consent acknowledge the specific non-spouse
beneficiary (if any) and the form of benefits that requires the waiver,
and such consent acknowledges the effect of such election and is
witnessed by a Plan representative or notary public, or (ii) the
Participant shall establish to the satisfaction of a Plan
representative that such consent may not be obtained because (1) there
is no spouse, (2) the spouse cannot be located, or (3) such other
circumstances prescribed by applicable Regulations.
3. Any election made pursuant to this Paragraph
F may be revoked by the Participant (but not his spouse) in writing at
any time during the applicable election period and after such
revocation, a new election pursuant to this Paragraph F may be made in
writing during such applicable election period. Each subsequent change
in beneficiary or form of benefits shall require the consent of the
Participant's spouse, as provided in subparagraph 2 immediately above,
unless the prior consent of a Participant's spouse is a general consent
which expressly permits such a change in designations by the
Participant without the further consent of the spouse. No general
consent is valid unless the general consent acknowledges that the
spouse has the right to limit consent to a specific beneficiary and a
specific optional form of benefit, where applicable, and that the
spouse voluntarily elects to relinquish both of such rights.
Notwithstanding the previous sentence, a spouse may execute a general
consent that is limited to certain beneficiaries or forms of benefit
payment (i.e., a "limited general consent"). A general consent,
including a limited general consent, is not effective unless it is made
during the applicable election period.
4. Except for payment in the form of (i) a
Qualified Joint and Survivor Annuity, or (ii) a lump sum distribution
in an amount not to exceed $3,500 as provided in Section 5.1F5, no
distribution will be allowed under the Plan to a Participant unless the
Participant and his spouse (if required) execute a waiver of the
Qualified Joint and Survivor Annuity as provided in this Paragraph F.
5. The Qualified Joint and Survivor Annuity
provisions of this Section 5.1F shall not apply to the distribution in
a lump sum of a Participant's account balance if the nonforfeitable
portion of such account balance does not exceed $3,500 and if the
distribution occurs on or before the Participant's Annuity Starting
Date.
6. For purposes of this Section 5.1F, to the
extent provided in any Qualified Domestic Relations Order, the former
spouse of a Participant shall be treated as a surviving spouse of such
Participant and any spouse of such Participant shall not be treated as
a spouse of such Participant (unless and until the former spouse dies
prior to the Participant's Annuity Starting Date).
7. The Qualified Joint and Survivor Annuity
shall not apply to the spouse of an Alternate Payee.
39
<PAGE> 47
G. Qualified Preretirement Survivor Annuity.
1. A Qualified Preretirement Survivor Annuity
shall be provided automatically to the surviving spouse of a vested
Participant who dies before his Annuity Starting Date. Such Qualified
Preretirement Survivor Annuity shall be commenced within a reasonable
period after the Participant's death. For purposes of this Section, a
vested Participant is any Participant who has a nonforfeitable right to
any portion of his Accrued Benefit. Each Participant may elect at any
time during the "applicable election period" to waive the Qualified
Preretirement Survivor Annuity. The applicable election period is the
period which ends on the date of the Participant's death. Each
Participant (other than a nonvested Participant not then employed by
the Employer) shall receive, within the information period for such
Participant, a written explanation with respect to a Qualified
Preretirement Survivor Annuity comparable to that required for a
Qualified Joint and Survivor Annuity under Section 5.lFl. The
information period for such Participant is whichever of the following
periods ends last:
(a) the period beginning with the first
day of the Plan Year in which the Participant attains age 32
and ending with the close of the Plan Year preceding the Plan
Year in which the Participant attains age 35, or
(b) a one-year period after the
individual becomes a Participant, or
(c) within a reasonable time after a
Participant marries.
However, with respect to a Participant who separates from service
before age 35, the information period is the period beginning one year
before and ending one year after such separation.
2. The election to waive the Qualified
Preretirement Survivor Annuity shall not take effect unless: (i) the
Participant's spouse consents in writing to such election, such
election and such consent acknowledges the specific non-spouse
beneficiary (if any) and the form of benefits that requires the waiver
and such consent acknowledges the effect of such election and is
witnessed by a Plan representative or notary public, or (ii) the
Participant shall establish to the satisfaction of a Plan
representative that such consent may not be obtained because (1) there
is no spouse, (2) the spouse cannot be located, or (3) such other
circumstances prescribed by applicable Regulations. Unless a
Participant specifies otherwise, his surviving spouse shall have the
right to elect within ninety (90) days after the Participant's death to
receive the amount necessary to fund the Qualified Preretirement
Survivor Annuity in any form selected that is allowable under the terms
of the Plan.
3. Any election made pursuant to this Paragraph
G may be revoked by the Participant (but not his spouse) in writing at
any time during the applicable election period and after such
revocation, a new election pursuant to this Paragraph G may be made in
writing during such applicable election period. Each subsequent change
in beneficiary or form of benefits shall require the consent of the
Participant's spouse, as provided in subparagraph 2 immediately above,
unless the prior consent of a Participant's spouse is a general consent
which expressly permits such a change in designations by the
Participant without the further consent of the spouse. No general
consent is valid unless the general consent acknowledges that the
spouse has the right to limit consent to a specific beneficiary and a
specific optional form of benefit, where applicable, and that the
spouse voluntarily elects to relinquish both of such rights.
Notwithstanding the previous sentence, a spouse may execute a general
consent that is limited to certain beneficiaries or forms of benefit
payment (i.e., a "limited general consent"). A general consent,
including a limited general consent, is not effective unless it is made
during the applicable election period.
40
<PAGE> 48
4. Any election made pursuant to this Paragraph
G (with a spouse's consent) to waive the Qualified Preretirement
Survivor Annuity prior to the first day of the Plan Year in which a
Participant attains age thirty-five (35) shall be effective only if the
Participant receives a written explanation of the Qualified
Preretirement Survivor Annuity. Any such election shall become invalid
upon the first day of the Plan Year in which the Participant's 35th
birthday occurs.
5. For purposes of this Section 5.1G, to the
extent provided in any Qualified Domestic Relations Order, the former
spouse of a Participant shall be treated as a surviving spouse of such
Participant and any spouse of such Participant shall not be treated as
a spouse of such Participant (unless and until the former spouse dies
prior to the Participant's Annuity Starting Date).
6. The Qualified Preretirement Survivor Annuity
shall not apply to the spouse of an Alternate Payee.
H. Participant Consent to Distributions.
1. Except as otherwise provided in this Section
5.1H, Participant consent is required in writing for any distribution
while it is immediately distributable (i.e., prior to the later of the
time a Participant has attained his Normal Retirement Date or age 62).
Such written consent must be given not more than 90 days prior to the
Participant's Annuity Starting Date. Once a distribution is no longer
immediately distributable, a Participant's benefit may be distributed
in the form of a Qualified Joint and Survivor Annuity without his
consent.
2. No consent is valid unless the Participant
has received a general description and explanation of his rights under
this Paragraph H and the material features and the relative values of
the optional forms of benefit available under the Plan. Such
explanation shall be provided to the Participant no less than 30 and no
more than 90 days prior to the Participant's Annuity Starting Date. In
addition, so long as a benefit is immediately distributable, a
Participant must be informed of his right, if any, to defer receipt of
the distribution. Consent is not valid if a significant detriment is
imposed under the Plan on any Participant who does not consent to a
distribution.
3. Written consent of the Participant to the
distribution must not be made before the Participant receives the
notice of his rights under this Paragraph H and must not be made more
than 90 days before his Annuity Starting Date.
4. Consent of the Participant is not required
if the Participant's nonforfeitable account balance is not greater than
$3,500, in which event, the Participant's account balance shall be
distributed to him as a single sum not earlier than the quarter of the
Plan Year following the date of the Participant's termination of
employment. If a Participant's nonforfeitable account balance at the
time of distribution exceeds $3,500, then his account balance at any
subsequent time shall be deemed to exceed $3,500.
5. The Participant's consent is not required
after the death of the Participant.
6. The Participant's consent is not required
for payments to an Alternate Payee, except to the extent provided in
the Qualified Domestic Relations Order.
7. The Participant's consent is not required to
the extent that a distribution is required to satisfy the requirements
of Code Section 401(a)(9) or 415.
8. The failure of a Participant to consent is
deemed to be an election to defer commencement of payment of the
benefit for purposes of Code Section 401(a)(14) and Regulation
1.401(a)-14.
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9. The requirements of this Paragraph H apply
before, on and after a plan termination. If the Employer or any entity
within the same controlled group as the Employer maintains another
defined contribution plan, other than an employee stock ownership plan
(as defined in Code Section 4975(e)(7)), then the Participant's account
balance may be transferred without the Participant's consent to the
other plan if the Participant does not consent to an immediate
distribution from the terminating plan.
10. No consent of the Participant or spouse is
needed for distribution of a Qualified Joint and Survivor Annuity or
Qualified Preretirement Survivor Annuity after the benefit is no longer
immediately distributable [after the Participant attains (or would have
attained if not dead) the later of Normal Retirement Date or age 62].
No consent of the spouse is needed for distribution of a Qualified
Joint and Survivor Annuity at any time. After the Participant's death,
a benefit may be paid to a nonspouse beneficiary without the
beneficiary's consent. A distribution cannot be made at any time in a
form other than a Qualified Joint and Survivor Annuity unless such
Qualified Joint and Survivor Annuity has been waived by the Participant
and the spouse has consented to such waiver.
I. Distributions After Earliest Retirement Age Pursuant
to Qualified Domestic Relations Order. An Alternate Payee's interest in a
Participant's benefit under the Plan shall be distributed in accordance with
Section 5.2B. The Alternate Payee shall designate the time of distribution.
Distribution to the Alternate Payee shall be commenced not earlier than the
quarter of the Plan Year following the date of the Alternate Payee's election to
commence distribution. A Domestic Relations Order shall not be treated as
requiring the Plan to provide any type or form of benefit, or any option, not
otherwise provided under the Plan, solely because such order requires that
payment of benefits be made to an Alternate Payee: (i) at the time of
distribution designated by the Alternate Payee, (ii) as if the Participant had
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 Section 5.2B of the
Plan to the Participant (other than in the form of a Qualified Joint and
Survivor Annuity with respect to the Alternate Payee and his subsequent spouse).
J. Distribution of Excess Deferrals.
1. In General. Notwithstanding any other
provision of the Plan, Excess Deferral Amounts plus any income and
minus any loss allocable thereto shall be distributed no later than
April 15 to Participants who claim such Excess Deferral Amounts for the
preceding calendar year. The Employer shall be subject to a 10% excise
tax pursuant to Code Section 4979 with respect to any Excess Deferral
Amounts distributed more than 2-1/2 months after the last day of the
Plan Year in which such Excess Deferral Amounts arose.
2. Definitions. For purposes of this Paragraph,
"Excess Deferral Amount" shall mean the amount of Elective Deferrals
for a calendar year that the Participant allocates to this Plan
pursuant to the claim procedure set forth in subparagraph 3 below.
3. Claims. The Participant's claim shall be in
writing; shall be submitted to the Plan Administrator no later than
March 1; shall specify the Participant's Excess Deferral Amount for the
preceding calendar year; and shall be accompanied by the Participant's
written statement that if such amounts are not distributed, such Excess
Deferral Amount, when added to amounts deferred under other plans or
arrangements described in Sections 401(k), 408(k) or 403(b) of the
Code, will exceed the limit imposed on the Participant by Section
402(g) of the Code for the year in which the deferral occurred.
4. Determination of Income or Loss. The Excess
Deferral Amount shall be adjusted for income or loss for the Plan Year.
The income or loss allocable to the Excess Deferral Amount for a Plan
Year shall be determined by multiplying the income or
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<PAGE> 50
loss allocable to the Participant's Excess Deferrals for the Plan Year
by a fraction, the numerator of which is the Excess Deferral Amount on
behalf of the Participant for the preceding Plan Year and the
denominator of which is the Participant's account balance attributable
to Excess Deferrals on the last day of the preceding Plan Year.
5. Excess Deferral Amounts. Excess Deferral
Amounts shall be considered Elective Deferrals for the purposes of the
average deferral percentage test in Section 3.1A2. However, Excess
Deferral Amounts made by Non-Highly Compensated Employees shall not be
counted as Elective Deferrals for the purposes of the average deferral
percentage test in Section 3.1A2 to the extent they are made under
other plans of the same Employer.
K. Distribution of Excess Contributions.
1. In General. Notwithstanding any other
provision of the Plan, Excess Contributions plus any income and minus
any loss allocable thereto shall be distributed no later than the last
day of each Plan Year to Participants on whose behalf such Excess
Contributions were made for the preceding Plan Year. Any distribution
of the Excess Contributions for any Plan Year shall be made to Highly
Compensated Employees on the basis of the respective portions of the
Excess Contributions attributable to each of such Highly Compensated
Employees. The Employer shall be subject to a 10% excise tax pursuant
to Code Section 4979 with respect to any Excess Contributions
distributed more than 2-1/2 months after the last day of the Plan Year
in which such Excess Contributions arose.
2. Excess Contributions. For purposes of this
Paragraph, "Excess Contributions" shall mean with respect to any Plan
Year, the excess of:
(a) the aggregate amount of Elective
Deferrals and Qualified Nonelective Contributions actually
paid over to the Trust on behalf of Highly Compensated
Employees for such Plan Year, over
(b) the maximum amount of such
contributions permitted under the limitations of Section 3.1A2
(determined by reducing Elective Deferrals and Qualified
Nonelective Deferrals made on behalf of Highly Compensated
Employees in order of the Actual Deferral Percentages
beginning with the highest of such percentages).
3. Determination of Income or Loss. The Excess
Contributions shall be adjusted for income or loss for the Plan Year
and for the period between the end of the Plan Year and the date of
distribution. The income or loss allocable to Excess Contributions for
a Plan Year shall be determined by multiplying the income or loss
allocable to the Participant's Salary Reductions for the Plan Year by a
fraction, the numerator of which is the Excess Contributions on behalf
of the Participant for the preceding Plan Year and the denominator of
which is the Participant's account balance attributable to Salary
Reductions on the last day of the preceding Plan Year. The income or
loss allocable to Excess Contributions for the period between the end
of the Plan Year and the date of distribution shall equal ten (10%)
percent of the income or loss allocable to the Excess Contributions for
such Plan Year multiplied by the number of calendar months between the
end of such Plan Year and the date of distribution. A distribution on
or before the fifteenth day of a month will be treated as having been
made on the last day of the preceding month and a distribution after
the fifteenth day of the month shall be treated as having been made on
the first day of the next month.
4. Reduction for Excess Deferrals Distributed.
The Excess Contributions which would otherwise be distributed to the
Participant shall be reduced, in accordance with the Regulations, by
the amount of Excess Deferrals distributed to the Participant.
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<PAGE> 51
5. Family Aggregation. In the event the
Deferral Percentage for a Highly Compensated Employee is calculated
under Section 3.1A7(d), distribution of Excess Contributions to such
Highly Compensated Employee shall be in accordance with Regulation
1.401(k) l(f)(5)(ii).
6. Accounting for Excess Contributions. Amounts
distributed under this Paragraph shall first be treated as
distributions from the Participant's Elective Deferrals and shall be
treated as distributed from the Participant's Qualified Nonelective
Contributions only to the extent such Excess Contributions exceed the
amount of Elective Deferrals in the Participant's Qualified Deferral
Account.
L. Distribution of Excess Aggregate Contributions.
1. In General. Excess Aggregate Contributions
plus any income and minus any loss allocable thereto, shall be
distributed no later than the last day of each Plan Year to
Participants to whose accounts Matching Employer Contributions were
allocated for the preceding Plan Year. Any distribution of the Excess
Aggregate Contributions for any Plan Year shall be made to Highly
Compensated Employees on the basis of the respective portions of such
amounts attributable to each of such Employees (determined by reducing
contributions made on behalf of Highly Compensated Employees in order
of their Contribution Percentages beginning with the highest of such
percentages). Forfeitures of Excess Aggregate Contributions may not be
allocated to Participants whose contributions are reduced under this
Paragraph.
2. Excess Aggregate Contributions. For purposes
of this Section 5.1L, "Excess Aggregate Contributions" shall mean with
respect to any Plan Year, the excess of:
(a) the aggregate amount of Matching
Employer Contributions actually made on behalf of Highly
Compensated Employees for such Plan Year, over
(b) the maximum amount of such
contributions permitted under the limitations of Section 3.2A2
(determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages).
3. Determination of Income or Loss. The Excess
Aggregate Contributions shall be adjusted for income or loss for the
Plan Year and for the period between the end of the Plan Year and the
date of distribution. The income or loss allocable to Excess Aggregate
Contributions for a Plan Year shall be determined by multiplying the
income or loss allocable to the Matching Employer Contributions for the
Plan Year by a fraction, the numerator of which the Excess Aggregate
Contributions on behalf of the Participant for the preceding Plan Year
and the denominator of which is the Participant's account balance
attributable to Matching Employer Contributions on the last day of the
preceding Plan Year. The income or loss allocable to Excess Aggregate
Contributions for the period between the end of the Plan Year and the
date of distribution shall equal ten (10%) percent of the income or
loss allocable to the Excess Aggregate Contributions for such Plan Year
multiplied by the number of calendar months between the end of such
Plan Year and the date of distribution. A distribution on or before the
fifteenth day of a month will be treated as having been made on the
last day of the preceding month and a distribution after the fifteenth
day of the month shall be treated as having been made on the first day
of the next month.
4. Family Aggregation. In the event the
Contribution Percentage for a Highly Compensated Employee is calculated
under Section 3.2A7(c), distribution of Excess Aggregate Contributions
to such Highly Compensated Employee shall be in accordance with
Regulation 1.401(m)-l(e)(2)(iii).
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<PAGE> 52
5. Accounting for Excess Aggregate
Contributions. Excess Aggregate Contributions shall be distributed to a
Participant from the Matching Employer Contribution Account of such
Participant.
6. Excess Deferrals and Excess Contributions.
The determination of the Excess Aggregate Contributions shall be made
after first determining the Excess Deferral Amount, and then
determining the Excess Contributions.
M. Distributions Upon Plan Termination. All Elective
Deferrals, Qualified Nonelective Contributions and income or loss attributable
thereto shall be distributed to Participants or their Beneficiaries as soon as
administratively feasible after the termination of the Plan, provided that
neither the Employer nor an Affiliated Employer maintains or establishes a
successor plan, in which event all such Elective Deferrals, Qualified
Nonelective Contributions and income or loss attributable thereto shall be
transferred to such successor plan.
N. Distributions Upon Sale of Assets. All Elective
Deferrals, Qualified Nonelective Contributions and income or loss attributable
thereto shall be distributed to Participants as soon as administratively
feasible after the disposition, to an entity that is not an Affiliated Employer,
of substantially all of the assets used by the Employer in the trade or business
in which the Participant is employed; provided that (i) the Employer continues
to maintain this Plan after such disposition, (ii) the Participant continues
employment with the corporation acquiring such assets, and (iii) the Participant
receives such amounts in a lump sum distribution.
O. Hardship Withdrawals from Qualified Deferral Account.
A Participant may withdraw from his Qualified Deferral Account an amount not to
exceed the total of all of such Participant's Elective Deferrals under the Plan
by submitting his written request to the Committee subject to the following
provisions: (i) the withdrawal request must be for immediate and heavy financial
need; (ii) the amount withdrawn may not exceed the amount necessary to satisfy
such financial need; and (iii) the maximum amount which may be withdrawn is the
balance in the Participant's Qualified Deferral Account.
1. The determination of whether a Participant
has an immediate and heavy financial need is to be made on the basis of
all relevant facts and circumstances.
2. A request for withdrawal will be deemed to
be made on account of an immediate and heavy financial need of the
Participant only if the withdrawal is on account of:
(a) Medical expenses described in Code
Section 213(d) incurred by the Participant or his spouse or
dependents (as defined in Code Section 152); or
(b) Purchase (excluding mortgage
payments) of a principal residence for the Participant; or
(c) Payment of tuition for the next
year of post-secondary education and related educational fees
for the Participant or his spouse, children or dependents; or
(d) The need to prevent the eviction of
the Participant from his principal residence or foreclosure on
the mortgage of the Participant's principal residence.
3. A withdrawal will not be treated as
necessary to satisfy an immediate and heavy financial need of a
Participant to the extent the amount of the withdrawal is in excess of
the amount required to relieve the financial need or to the extent such
need may be satisfied from other resources that are reasonably
available to the Participant; provided, however, that the amount of the
immediate and heavy financial
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<PAGE> 53
need of a Participant shall include any amounts necessary to pay any
federal, state or local taxes or penalties reasonably anticipated to
result from a plan distribution. A withdrawal may be treated as
necessary to satisfy a financial need if the Employer reasonably relies
upon the Participant's representation that the need cannot be relieved:
(a) through reimbursement or
compensation by insurance or otherwise,
(b) by reasonable liquidation of the
Participant's assets, but only to the extent such liquidation
would not itself cause an immediate and heavy financial need,
(c) by cessation of Elective Deferrals
under the Plan, or
(d) by other distributions or
nontaxable (at the time of the loan) loans from plans
maintained by the Employer or by any other employer, or by
borrowing from commercial sources on reasonable commercial
terms.
For purposes of this subparagraph 3, the
Participant's resources shall be deemed to include those
assets of his spouse and minor children that are reasonably
available to the Participant.
4. A withdrawal will be deemed to be necessary
to satisfy an immediate and heavy financial need of a Participant if
all of the following requirements are satisfied:
(a) The withdrawal is not in excess of
the amount of the immediate and heavy financial need of the
Participant,
(b) The Participant has obtained all
distributions, other than hardship withdrawals, and all
nontaxable loans currently available under all plans
maintained by the Employer,
(c) The Plan, and all other plans
maintained by the Employer, provide that the Participant's
Elective Deferrals and employee contributions will be
suspended for at least 12 months after receipt of the hardship
withdrawal, and
(d) The Plan, and all other plans
maintained by the Employer, provide that the Participant may
not make Elective Deferrals for the Participant's taxable year
immediately following the taxable year of the hardship
withdrawal in excess of the applicable limit under Code
Section 402(g) for such next taxable year less the amount of
such Participant's Elective Deferrals for the taxable year of
the hardship withdrawal.
5. Any withdrawal approved by the Committee
shall be paid to the Participant as soon as practicable after such
approval.
6. In order to make any withdrawal under this
Paragraph, a married Participant's spouse must consent to such
withdrawal distribution in writing and such consent must be witnessed
by a Plan representative or notary public.
P. Election of Later Benefit Commencement Date. The
payment of the applicable benefits to any Participant, Retired Participant or
Terminated Participant may, at the election of such Participant, commence at a
later date than that otherwise provided for herein, provided that such election
is made under Code Section 401(a)(9) prior to January 1, 1984, and does not
violate the incidental death benefit requirements of the Act.
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Q. Withdrawals from Employer Contribution Account.
1. A Participant who has attained the age of
70-1/2 may at any time thereafter withdraw any portion or all of his
Employer Contribution Account.
2. A Participant shall notify the Committee on
a form provided by the Committee of his election to make a withdrawal
under this Section. Any election shall be effective as of the date
specified in the notice, and the Committee shall direct the Trustee to
pay to the electing Participant the amount requested as soon as
practicable. In order to make any withdrawal under this Paragraph, a
married Participant's spouse shall consent to such withdrawal
distribution by executing a waiver consent election form after due
notice of information is received by such spouse in the same manner as
provided in Section 5.1F for spousal waivers prescribed therein.
5.2 Method of Distribution.
A. Except to the extent otherwise provided in Section
5.1F, the requirements of this Section 5.2 shall apply to any distribution of a
Participant's interest and will take precedence over any inconsistent provisions
of this Plan.
B. All amounts distributable to a Participant under this
ARTICLE V shall be distributed in the form of a Qualified Joint and Survivor
Annuity if required under Section 5.1F. If a Participant's benefit is not
required to be distributed in the form of a Qualified Joint and Survivor
Annuity, or if all or a portion of a Participant's benefit is required to be
distributed to an Alternate Payee, then benefits shall, subject to Section
5.1H4, be paid in a single lump sum or, at the election of the Participant or
Alternate Payee, as the case may be, in one or a combination of the following
optional forms selected by the Participant or Alternate Payee:
1. in installments over a period of years; or
2. a joint and survivor annuity with or
without a term certain; provided, however, that a joint and survivor
annuity optional form of benefit shall not be available as a method of
distribution with respect to the Alternate Payee and her subsequent
spouse.
A Participant or his designated beneficiary may, at
the time of his retirement, death, disability or termination of employment,
elect to be paid out in the form of Company Stock, provided that the value of
the Participant's account balance which he desires to convert to Company stock
equals or exceeds the market price of 100 shares of such Company Stock.
If a Participant fails to select a method of distribution,
benefits shall be paid in accordance with Sections 5.1F and 5.1H4.
C. If the amount standing to the credit of the
Participant is to be paid to the Participant other than in a lump sum payment,
payments shall be made accordingly and the entire amount distributable to such
Participant shall be placed in a Segregated Account or invested in an annuity,
as the case may be.
D. In addition to the net credit in a Participant's
account, the Participant may have an interest in a Contract. Whenever
distribution is required to be made other than in a lump sum, then in order to
accomplish a distribution in equal annual installments, or a distribution over
the remaining life of a Participant, or a distribution under any other approved
plan of life and annual payments, all or part of the amount standing to the
credit of a Participant may be used to convert any ordinary life policy into an
annuity contract, and after such conversion, the insurance company shall be
instructed to make payment of the cash value to the Participant by utilizing a
mode of settlement which will result in the required annual or life or
combination distribution.
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E. Whenever distribution is required to be made of a
Participant's vested interest in any Contract for any reason other than the
death of the Participant, then, notwithstanding anything herein to the contrary,
the Participant shall elect either to cause the Contract to be conveyed and
assigned to him, or cause the conversion of such Contract; and thereupon, the
Committee shall provide the Trustees with directions for surrender, conversion,
endorsement, assignment or splitting of such Contract, in whole or in part. All
Contracts which may be used to effect distribution either over a period of
years, or over life, or under a plan involving the combination of life and
annual payments, shall be irrevocably assigned to or issued in the name of the
Participant and shall contain such provisions as may be required to make the
distributions under such Contract consistent with Sections 5.1F, 5.1G and 5.1H.
F. All distributions required under this ARTICLE V shall
be determined and made in accordance with Code Section 401(a)(9), including the
minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2 of
the Regulations as hereinafter provided:
1. If a Participant's benefit is to be
distributed in a form other than an annuity, the amount required to be
distributed for each calendar year, beginning with distributions for
the first distribution calendar year, must at least equal the quotient
obtained by dividing the Participant's benefit by the applicable life
expectancy. For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the designated beneficiary, the method of
distribution selected must assure that at least 50% of the present
value of the amount available for distribution is paid within the life
expectancy of the Participant.
2. If the Participant's benefit is to be
distributed in the form of an annuity, the amount to be distributed
each calendar year, beginning with distributions for the first
distribution calendar year shall not be less than the quotient obtained
by dividing the participant's benefit by the lesser of (a) the
applicable life expectancy or (b) if the participant's spouse is not
the designated beneficiary, the applicable divisor determined from the
table set forth in Q&A-4 of section 1.401(a)(9)-2 of the Regulations.
Distributions after the death of the Participant shall be distributed
using the applicable life expectancy in subparagraph 1 above as the
relevant divisor without regard to section 1.401(a)(9)-2 of the
Regulations.
3. The minimum distribution required for the
Participant's first distribution calendar year must be made on or
before the Participant's Required Beginning Date. The minimum
distribution for other calendar years, including the minimum
distribution for the distribution calendar year in which the
Participant's Required Beginning Date occurs, must be made on or before
December 31 of that distribution calendar year.
4. For purposes of this Section 5.2F:
(a) The life expectancy of a
Participant shall be recalculated annually. The life
expectancy of the Participant's spouse or of any non-spouse
Beneficiary shall not be recalculated.
(b) Life expectancy and joint and last
survivor expectancy shall be computed using the expected
return multiples in Tables V and VI of Section 1.72-9 of the
Regulations.
(c) The term "Designated Beneficiary"
means (i) the spouse of a Participant in case of a Qualified
Joint and Survivor Annuity if the Participant and his spouse
shall have been married throughout the one year period ending
on his Required Beginning Date, or otherwise (ii) any
individual designated as a Beneficiary by the Employee in
accordance with Code Section 401(a)(9) and the Regulations
thereunder.
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(d) Pursuant to the Regulations, any
amount paid to a child shall be treated as if it had been paid
to the surviving spouse if such amount will become payable to
the surviving spouse upon such child reaching majority (or
other designated event permitted under the Regulations).
(e) The term "applicable life
expectancy" means the life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the
Participant (or Designated Beneficiary) as of the
Participant's (or Designated Beneficiary's) birthday in the
applicable calendar year reduced by one for each calendar year
which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the
applicable life expectancy shall be the life expectancy as so
recalculated. The applicable calendar year shall be the first
distribution calendar year, and if life expectancy is being
recalculated the succeeding calendar year in which the
recalculation is being made. If distribution is in the form of
an immediate annuity purchased after the Participant's death
with the Participant's remaining interest, the applicable
calendar year is the year of purchase.
(f) The term "distribution calendar
year" means a calendar year for which a minimum distribution
is required. For distributions beginning before the
Participant's death, the first distribution calendar year is
the calendar year immediately preceding the calendar year
which contains the Participant's Required Beginning Date. For
distributions beginning after the Participant's death, the
first distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Section 5.1D.
5. Notwithstanding anything herein to the
contrary, if a Participant's Required Beginning Date is on or before
April 1, 1987 and such Participant is alive on December 31, 1987, the
Participant's first distribution calendar year, the amount of the
minimum distribution required for distribution calendar years 1985,
1986 and 1987, and the date when such minimum distribution must be made
shall be determined in accordance with Q&A I-2 and I-3 of Section
1.401(a)(9)-1 of the Regulations.
G. Eligible Rollover Distributions.
1. This Paragraph G applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a Distributee's election under this Paragraph G. a
Distributee may elect, at the time and in the manner prescribed by the plan
administrator, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a direct
rollover.
2. Definitions.
(a) "Eligible Rollover Distribution": An
Eligible Rollover Distribution is any distribution of all or any
portion of the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include: any distribution that
is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under Section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(b) "Eligible Retirement Plan": An Eligible
Retirement Plan is an individual retirement account described in
Section 408(a) of the Code, an individual retirement annuity described
in Section 408(b) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section 401(a) of
the Code,
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<PAGE> 57
that accepts the Distributee's Eligible Rollover Distribution. However,
in the case of an Eligible Rollover Distribution to the surviving
spouse, an Eligible Retirement Plan is an individual retirement account
or individual retirement annuity.
(c) "Distributee": A Distributee includes an
Employee or former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the Code, are
Distributees with regard to the interest of the spouse or former
spouse.
(d) "Direct Rollover": A Direct Rollover is a
payment by the Plan to the Eligible Retirement Plan specified by the
Distributee.
H. Waiver of 30-Day Notice. If a distribution is one to
which Sections 401(a)(11) and 417 of the Internal Revenue Code do not apply,
such distribution may commence less than 30 days after the notice required under
Section 1.411(a)-ll(c) of the Income Tax Regulations is given, provided that:
(1) the Plan Administrator clearly informs the
Participant that the Participant has a right to a period of at least 30
days after receiving the notice to consider the decision of whether or
not to elect a distribution (and, if applicable, a particular
distribution option), and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
5.3 Participant's Contribution Account. Every Participant
shall always have a 100% vested nonforfeitable interest in his Participant's
Contribution Account. The balance in the Participant's Contribution Account
shall be distributed to the Participant, his Beneficiary, legal representative
or relative as set forth in Sections 5.1 and 5.2 when the Participant's
employment with the Employer is terminated or by reason of retirement,
disability, death or any other event resulting in a distribution to the
Participant hereunder.
5.4 Segregated Accounts. If distribution of benefits is
not made in one lump sum upon retirement, death or termination of participation
in the Plan, the Committee shall direct the Trustees to segregate the entire
amount distributable to the Participant into a Segregated Account or to invest
such Segregated Account as a part of the general assets of the Fund. The option
selected by the Committee shall apply in all future instances in which
distribution is not to be made in one lump sum. If not invested in the Fund
generally, such Segregated Account shall be invested in government bonds,
savings certificates or accounts or other similar investments. The net income or
net loss of each Segregated Account for each Plan Year and the net appreciation
or net depreciation of each Segregated Account for each Plan Year shall be
reflected on the credit balance of that Segregated Account as of the Valuation
Date and as of the date of any final distribution from such Segregated Account.
Any net income and any net appreciation so allocated to the Segregated Account
of a Participant shall be paid to such Participant at the time and in the manner
provided for herein.
5.5 Location of Terminated Participant or Beneficiary
Unknown. Notwithstanding anything to the contrary in the Plan, if the Committee
shall not be able to locate a Terminated Participant or his Beneficiary
hereunder by sending a letter by registered mail, return receipt requested, to
the Social Security Administration for forwarding to such Terminated Participant
or his Beneficiary, then such Terminated Participant or his Beneficiary shall
forfeit such Participant's Accrued Benefit. Such forfeiture shall be effective
as of the later of (i) the last day of the Plan Year in which occurs the second
anniversary of the date such letter was mailed to the Social Security
Administration, or (ii) the last day of the Plan Year in which the Participant
has incurred his fifth consecutive One-Year Break in Service. Such forfeitures
shall be allocated to the Employer Contribution Accounts of the Active
Participants for such Plan Year in the proportion that each Active Participant's
Compensation for the Plan Year bears to the total Compensation of all Active
Participants for such Plan Year. If, in a subsequent Plan Year, the Committee
shall locate such Participant or his Beneficiary, then any amounts so forfeited
shall be restored by Employer contributions to the accounts of such Participant
from which they were forfeited.
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<PAGE> 58
ARTICLE VI
AMENDMENT OF PLAN
6.1 Right to Amend. To provide for contingencies which may require
the clarification, modification or amendment of the Plan, the Employer reserves
the right to amend any of the provisions of this Plan at any time.
6.2 Limitations upon Right to Amend. Notwithstanding the
foregoing, the Employer shall not have the right to amend the Plan in any way
which will:
A. Diminish any right or benefit under the Plan which
shall have the effect of depriving any Active, Inactive, Retired or Terminated
Participant or his Beneficiary of any Accrued Benefit;
B. Divert the Fund to purposes other than for the
exclusive benefit of Participants and their Beneficiaries;
C. Alter the basic purpose of the Plan;
D. Give the Employer any rights to assets contributed to
the Fund or in any assets of the Fund; or
E. Alter the duties or liabilities of the Plan
Administrator or the Committee without their prior written consent.
6.3 Amendment Binding on All Participating Employers. Any
amendment made to this Plan by Ingles Markets, Incorporated shall be binding
upon all Employers participating hereunder. This Section 6.3 may be changed at
any time by any Employer with respect to that Employer only by giving notice to
all Employers that such Employer has a right to amend the Plan with respect to
such Employer without affecting Plan provisions in effect for other Employers.
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<PAGE> 59
ARTICLE VII
TOP-HEAVY PLANS
7.1. Top-Heavy Plan. This Plan will be a Top-Heavy Plan for a Plan
Year if the Employer has not maintained any other qualified retirement plan or
simplified employee pension plan and the value of the accounts of Key
Participants under the Plan exceeds 6070 of the value of the accounts of all
Participants or Beneficiaries under the Plan, determined in accordance with the
rules of Section 7.3 hereof.
7.2 Top-Heavy Group of Plans. This Plan will be a Top-Heavy Plan
for a Plan Year if the sum of (i) the value of accounts of Key Participants
under this Plan, (ii) the value of the accounts of Key Participants under any
other qualified defined contribution plan maintained by the Employer, (iii) the
present value of accrued benefits of Key Participants under any qualified
defined benefit plan maintained by the Employer, plus (iv) the aggregate
Employer contributions on behalf of Key Participants to any simplified employee
pension plan maintained by the Employer exceeds 60% of a similar sum computed
with respect to all Participants and Beneficiaries under such plans. Each plan
of the Employer in which a Key Participant participates and each other plan of
the Employer which enables this Plan to meet the requirements of Code Section
401(a) or 410 is required to be aggregated with this Plan for purposes of
determining whether this Plan is a Top-Heavy Plan. The Employer may treat any
plan not required to be aggregated as being part of the group of plans
maintained by the Employer if such group would, taking such plan into account,
continue to meet the requirements of Code Sections 401(a)(4) and 410.
7.3 Rules for Determining Top-Heavy Plan Status. The following
rules shall apply for purposes of determining whether this Plan is a Top-Heavy
Plan for a Plan Year:
A. If Section 7.1 applies, the value of accrued benefits
and accounts shall be determined as of the Determination Date. If Section 7.2
applies, the value of accrued benefits and accounts shall be determined for each
plan that is a part of the Top-Heavy group of plans as of the Determination Date
for each such plan that occurs in the same calendar year as the Determination
Date for this Plan.
B. The value of accrued benefits for any qualified
defined benefit pension plan maintained by the Employer that is a part of the
Top-Heavy group of plans shall be determined as of the most recent valuation
date for cost determination within the twelve (12) month period preceding the
Determination Date for any such plan.
C. The value of accrued benefits and accounts shall
include the amount of all distributions made to a Participant during the five
(5) year period ending on the Determination Date. The preceding sentence shall
also apply to distributions under a terminated plan which, if it had not been
terminated, would have been required to be aggregated with this Plan for
purposes of determining whether this Plan is a Top-Heavy Plan.
D. The present value of a Participant's accrued benefit
and accounts shall be determined without regard to any rollover contribution to
the Plan (or direct transfer from another qualified trust), if such rollover or
transfer was both (i) initiated by the Participant, and (ii) made from a plan
maintained by an employer that is not an Employer hereunder.
E. The value of a Participant's accrued benefit and
accounts shall be determined without regard to such Participant's contributions
that are deductible by such Participant under Code Section 219, and the earnings
thereon.
F. The value of a Participant's accrued benefit and
accounts for a Plan Year shall not be counted for any purpose if he is not a Key
Participant for such Plan Year but he was a Key Participant for a prior Plan
Year.
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<PAGE> 60
G. For purposes of this Article, the present value of
accrued benefits under any defined benefit plan shall be determined by using the
same assumptions used in determining actuarial equivalence under such defined
benefit plan.
H. The value of accrued benefits and accounts shall be
determined without regard to the accrued benefit or account of any person who
has not performed any services for the Employer at any time during the five (5)
year period ending on the Determination Date.
I. The accrued benefit of any Employee (other than a Key
Employee) shall be determined:
(i) under the method which is used for accrual
purposes for all plans of the Employer, or
(ii) if there is no method described in clause
(i), as if such benefit accrued not more
rapidly than the slowest accrual rate
permitted under Code Section 411(b)(1)(C).
7.4 Very Top-Heavy Plan. This Plan will be a Very Top-Heavy Plan
for a Plan Year if it would be considered a Top-Heavy Plan under Section 7.1 or
7.2 if "90%" were substituted for "60%" in Sections 7.1 and 7.2.
7.5 Alternate Vesting Schedule. In Top-Heavy Plan Years the
following vesting schedule will apply instead of that contained in ARTICLE V:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Years of Service Vested-Nonforfeitable Nonvested-Forfeitable
Percentage Percentage
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than 2 0% 100%
2 20% 80%
3 40% 60%
4 60% 40%
5 80% 20%
6 or more 100% 0%
- ------------------------------------------------------------------------------------------------------
</TABLE>
The above schedule applies only to Top-Heavy Plan Years. If
the Plan subsequently returns to non-Top-Heavy status, the Participant's vested
interest will again be determined under ARTICLE V; provided, however, that a
Participant's vested percentage may not be reduced from any level attained in
any prior Plan Year.
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<PAGE> 61
ARTICLE VIII
TERMINATION OF PLAN
8.1 Right to Terminate. It is the present intention of the
Employer to maintain the Plan throughout its corporate existence. Nevertheless,
the Employer reserves the right, at any time, to terminate the Plan or to
temporarily suspend contributions for a fixed or indeterminate period of time
upon giving to the Committee notice in writing of its intention so to do. In the
event of the termination of this Plan, the liability or any obligation of the
Employer hereunder shall cease.
8.2 Adoption of Plan by Successor. In the event of the merger or
consolidation of the Employer, or the transfer of the assets of the Employer to
another corporation, association, or business organization, the Plan may be
adopted by the surviving corporation, association, or other business
organization which employs a substantial number of the Participants of the Plan.
Such adoption of the Plan shall be expressed in an agreement between such
surviving or other corporation, association, or business organization and the
Committee under which such other corporation, association, or business
organization adopts the Plan with respect to the Participants employed by it.
If, pursuant to the terms hereof, the Plan is adopted by any other corporation,
association, or business organization, such other corporation, association, or
business organization shall be deemed to succeed to the position of the Employer
under the Plan. Any Participants under the Plan who do not become Employees of
such other corporation, association, or business organization shall have the
rights provided in this Plan for Employees whose employment is terminated after
their Employer Contribution Account becomes 100% nonforfeitable.
8.3 Multiple Participating Employers. If there is more than one
participating Employer, upon termination of the Plan with respect to all, or any
one or more of the participating Employers, the Committee shall determine in an
equitable manner from its accounts for each participating Employer (taking into
account the relative contributions and increments to the Fund and the
disbursements therefrom in respect to each of the participating Employers) the
proportionate share of the value of the assets of the Fund attributable to the
participating Employer or Employers for whom the Plan is then being terminated,
after providing for a reserve to cover the expense incident to such termination.
Allocation and distribution of such proportionate share or shares of the value
of the assets of the Fund attributable to each of the participating Employers
for which the Plan is then being terminated shall then be made to the
participants of such terminating Employer or Employers, pursuant to the
directions of the Committee as specified in the Plan. The Plan shall continue in
full force and effect with respect to the participating Employer or Employers,
if any, for which the Plan is not then being terminated.
8.4 Allocation on Termination of Plan or Permanent Discontinuance
of Contributions. On the partial or complete termination of the Plan, or upon
permanent discontinuance of contributions by the Employer, the accounts of all
affected Participants who are employed by the Employer on the date of such
termination or discontinuance of contributions shall thereupon become
nonforfeitable. As of the date of partial or complete termination or upon
permanent discontinuance of contributions by the Employer, which shall be deemed
to occur no later than the last day of the Plan Year for which a substantial
contribution was made under the Plan, all assets in the Suspense Account shall
be allocated to the accounts of the Participants in accordance with the
provisions of Sections 4.4 and 4.5 except that:
A. The term "Valuation Date" shall be considered to be
the last day of the month preceding such termination; and
B. Employer contributions in the Suspense Account shall
be allocated in accordance with the provisions of Section 4.2 as of such
Valuation Date based on Compensation during the Plan Year through the Valuation
Date.
8.5 Manner of Distribution. To the extent no discrimination in
value results, after termination of the Plan any distribution may be made in
accordance with ARTICLE V hereof, in whole or in part, in cash, in securities or
other assets in kind, or in nontransferable annuity
54
<PAGE> 62
contracts, provided that any insurance policies which may then comprise part of
the Fund assets, other than key man insurance, shall be distributed to the
respective insureds. The Plan shall continue until the Fund has been entirely
transferred, paid over and distributed pursuant to the directions of the Plan
Administrator. In the event the Committee shall not be able to locate a
Terminated Participant or his Beneficiary pursuant to Section 5.4, the Accrued
Benefit of such Participant shall be paid into an escrow account in the name of
the Employer. In the event of the dissolution, merger or consolidation of the
Employer, the members of the last Board of Directors of the Employer shall
thereafter have all of the rights and powers exercisable by the Employer
hereunder, and any certificate, instrument or direction signed by such person or
persons shall have the same effect as if signed by the Employer.
8.6 Merger or Consolidation of Plan or Transfer of Plan Assets. In
the event of any merger or consolidation of the Plan, or transfer in whole or in
part of the assets and liabilities of the Fund to another trust fund held under
any other plan of deferred compensation maintained or to be established for the
benefit of all or some of the Participants of this Plan, the assets of the Fund
applicable to such Participants shall be transferred to the other trust fund
only if:
A. Each Participant would (if either this Plan or the
other 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 this Plan had then terminated); and
B. Not less than 30 days prior to such merger,
consolidation or transfer, the Employer shall file, if applicable, an actuarial
statement of valuation in accordance with Code Section 6058(b) to the effect
that the requirements of paragraph A will be complied with upon such merger,
consolidation or transfer; and
C. Resolutions of the Board of Directors of the Employer
and any new or successor employer are adopted that authorize such transfer of
assets of the affected Participants; and, in the case of the new or successor
employer of the affected Participants, its resolution shall include an
assumption of liabilities with respect to such Participants' inclusion in the
new employer's plan; and
D. Such other plan and trust are qualified under Code
Sections 401(a) and 501(a).
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<PAGE> 63
ARTICLE IX
ADMINISTRATION
9.1 Appointment of Committee. The Plan shall be administered by
the Committee. The Committee, consisting of at least two persons, shall be
appointed by and serve at the pleasure of the Board of Directors of the Employer
to assist in the administration of the Plan. All usual and reasonable expenses
of the Committee may be paid in whole or in part by the Employer and any
expenses not so paid shall be paid by the Trustees out of the principal or
income of the Fund. No member of the Committee who is an Employee shall receive
compensation with respect to his services for the Committee.
9.2 Notification to Participants. The Committee shall be
responsible for certain requirements placed upon the Employer by the Act,
including the following:
A. Plan Summary and Forms. The Committee shall furnish
to each Participant and to each Beneficiary receiving benefits under the Plan, a
summary of the Plan and the periodic revisions of the summary, within the time
limits specified in the Act. The Committee's responsibility shall include
notifying Participants of amendments to the Plan and of applications to be filed
with the Internal Revenue Service when determination letters are requested with
respect to the qualification of the Plan. The Committee shall also furnish to
each Participant, and to each Beneficiary receiving benefits under the Plan, a
summary of the annual report filed with the Department of Labor, and shall
advise individuals of the procedures to be followed and the charges levied for
complete copies of forms filed with the Department of Labor and instruments
under which the Plan is established and operates.
B. Account Balances. Within a reasonable time after the
close of each Plan Year, the Committee shall furnish each Participant and
Beneficiary with a summary of the annual report prepared with respect to the
Fund together with an individual report disclosing the amounts in such
Participant's accounts, and the Participant's vested percentage of his Employer
Contribution Account.
C. Notification Prior to Termination Date. Within a
reasonable period, subject to Treasury and/or Labor Department Regulations which
may be issued under the Act, before the date a Participant is entitled to
receive benefits under the Plan, the Committee shall supply the Participant with
a written explanation of the nature, form and amount of the benefit to which he
is entitled. Reference to the methods of payment that are available under the
Plan shall be included in the written explanation; and upon the request of the
Participant, the Committee shall furnish him with a written explanation of the
features of and amounts applicable to such Participant's accounts under any such
option.
D. Claims Procedure. The Committee shall make a
determination as to the right of any person to a benefit, and shall afford any
person dissatisfied with such determination the right to a hearing thereon. Any
denial by the Committee of the claim for benefits under the Plan by a
Participant or Beneficiary shall be stated in writing by the Committee and
delivered or mailed to the Participant or Beneficiary and such notice shall set
forth the specific reasons for the denial, written to the best of the
Committee's ability in a manner that may be understood without legal or
actuarial counsel. In addition, the Committee shall afford a reasonable
opportunity to any Participant whose claim for benefits has been denied for a
full and fair review by the Employer of the decision denying the claim pursuant
to Labor Department Regulations.
9.3 Records and Reports. The Employer shall delegate to the
Committee such responsibilities as it deems appropriate in order to comply with
Treasury and/or Labor Department Regulations issued under the Act relating to
records of Participants' service, Participants' account balances and the
nonforfeitable percentage of such accounts, annual registration with the
Internal Revenue Service and annual reports to the Department of Labor.
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<PAGE> 64
9.4 Other Committee Powers and Duties. Subject to the provisions
of Treasury and/or Labor Department Regulations under the Act, the Committee
shall have such other duties and powers as may be necessary to discharge its
duties hereunder, including, but not limited to, the following:
A. To receive from the Employer and from Participants
such information as shall be necessary for the proper administration of the
Plan;
B. To furnish the Employer, upon request, such annual
reports with respect to the administration of the Plan as are reasonable and
appropriate;
C. To receive and review reports of the financial
condition and of the receipts and disbursements of the Fund from the Trustees;
D. To appoint or employ individuals to assist in the
administration of the Plan and any other agents it deems advisable, including
legal and actuarial counsel.
The Committee shall have no power to add to, subtract
from or modify any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of
eligibility for benefits under the Plan. However, in reviewing claims, the
Employer has the discretion to accept or deny claims for benefits based on its
good faith interpretation of the terms of the Plan.
9.5 Committee Procedures. The Committee may act at a meeting or in
writing without a meeting. The Committee shall elect one of its members as
chairman and another as secretary and advise the Trustees of such election in
writing. The secretary shall keep a record of all meetings and forward all
necessary communications to the Trustees. The Committee may adopt such bylaws
and regulations as it deems desirable for the conduct of its affairs. All
decisions of the Committee shall be made by majority vote. The Committee may
adopt such rules as it deems necessary or desirable, subject to the provisions
of Treasury and/or Labor Department Regulations under the Act. All rules and
decisions of the Committee shall be uniformly and consistently applied to all
persons in similar circumstances. The Committee shall be entitled to rely upon
information furnished by the Employer and the legal or actuarial counsel of the
Employer.
9.6 Authorization of Benefit Payments. The Committee shall issue
directions to the Trustees concerning all benefits which are to be paid from the
Fund pursuant to the provisions of the Plan. The Committee shall keep on file,
in such manner as it may deem convenient or proper, all reports from the
Trustees.
9.7 Benefit Checks. If, in the Committee's judgment, any person to
whom benefits are payable is unable to care for his affairs because of illness,
accident or other incapacity, the Committee may authorize his benefits to be
paid to any person who, or institution which, in the Committee's judgment, is
responsible for caring for the person entitled to such benefit. If an amount
becomes distributable to a minor or a person under legal disability, the
Committee may direct that such distribution may be made to such person without
the intervention of any legal guardian or conservator, or to a relative of such
person for the benefit of such person, or to the legal guardian or conservator
of such person. Any such distribution shall constitute a full discharge with
respect to the Committee as well as the Trustees, and the Committee and the
Trustees shall not be required to see to the application of any distribution so
made.
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<PAGE> 65
ARTICLE X
GUARANTEES AND LIABILITIES
10.1 Nonguarantee of Employment. Nothing contained in this Plan
shall be construed as a contract of employment between the Employer and any
Employee, or as a right of any Employee to be continued in the employment of the
Employer or as a limitation of the right of the Employer to discharge any of its
Employees with or without cause.
10.2 Rights to Fund Assets. No Participant, Retired Participant,
Terminated Participant or Beneficiary shall have any right to, or interest in,
any part of the Fund upon termination of employment or otherwise, except as
specifically provided herein. All benefits provided by the Plan shall be paid
solely out of the assets of the Fund.
10.3 No Diversion of Funds. The Fund shall be maintained for the
exclusive benefit of Participants, Retired Participants, Terminated Participants
and their Beneficiaries, and it shall be impossible for any part of the Fund to
be used for or diverted to any purpose other than the exclusive benefit of such
persons, except to the extent that:
A. Such portion of the Fund may be applied to pay
expenses of the Committee and the Trustees as provided herein and in the Trust;
and
B. If a contribution, which is made by reason of a
mistake of fact or in accordance with Section 3.1A, is attributable to a good
faith mistake of fact or a good faith mistake in determining the deductibility
of the contribution, then the net excess contribution (as hereinafter defined)
shall be returned to the Employer if it is returned within one year of the
mistaken payment of the contribution or the disallowance of the deduction, as
the case may be. The "excess contribution" shall equal the excess of such
contribution over the amount that would have been contributed had there not
occurred a mistake of fact or mistake in determining the deductibility of the
contribution. The "net excess contribution" shall equal the excess contribution
reduced by: (a) any losses attributable to such excess contribution and (b) the
amount necessary to prevent the balance of the individual account of any
participant from being reduced below the balance that would have been in the
account had the mistaken amount not been contributed. Earnings attributable to
the excess contribution shall not be returned to the Employer.
C. Upon the termination of the Plan, excess Annual
Additions being held in the Code Section 415 suspense account in accordance with
the provisions of Section 4.8A shall be returned to the Employer. Except as so
provided in paragraphs B and C above, it shall be impossible for any part of the
Fund to revert to or inure to the benefit of the Employer.
10.4 Plaintiff denies the allegations contained in Paragraph
Nonalienation of Benefits.
A. Except as otherwise provided by law, benefits payable
under this Plan shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution,
or levy of any kind, either voluntary or involuntary, prior to actually being
received by the person entitled to the benefit under the terms of the Plan, and
any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber,
charge or otherwise dispose of any right to benefits payable hereunder shall be
void. The Fund shall not in any manner be liable for, or subject to, the debts,
contracts, liabilities, engagements or torts of any person entitled to benefits
hereunder.
B. The above paragraph shall apply to the creation,
assignment or recognition of a right to any benefit payable to a Participant
according to a Domestic Relations Order; provided, however, in no event shall it
apply to a Qualified Domestic Relations Order.
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<PAGE> 66
10.5 Domestic Relations Orders.
A. If a Plan representative receives any Domestic
Relations Order, then the Committee shall promptly notify the Participant and
each Alternate Payee of the receipt of such order and shall determine the
qualified status of the Domestic Relations Order in accordance with the
following procedure:
1. The Plan Administrator shall refer to the
Domestic Relations Order issued by the state court of jurisdiction to
legal counsel for the Plan to render an opinion as to whether the
Domestic Relations Order is a Qualified Domestic Relations Order.
2. Upon receiving counsel's opinion as to the
status of the Domestic Relations Order, the concerned Participant and
each Alternate Payee, or his designated representative, shall be
furnished a copy of such legal opinion. If it has been determined that
the Domestic Relations Order is a Qualified Domestic Relations Order,
the terms and directions will be promptly communicated to each payee or
his designated representative at the address specified in the Domestic
Relations Order.
3. The Plan Administrator shall, as soon as
practicable, ascertain the dollar amount payable to each Alternate
Payee pursuant to the Domestic Relations Order and thereafter disburse
the amounts payable to each Alternate Payee in accordance with the
terms of the Plan and the Qualified Domestic Relations Order. If there
is to be a delay for any reason in making payments of the amounts due
to an Alternate Payee, the Plan Administrator shall direct that the
amount payable be placed into a separate account within the Fund in the
name of the Alternate Payee, and such Alternate Payee shall have the
right, exercisable pursuant to such uniform administrative procedures
as the Committee may adopt, to direct the Trustee to invest the
Alternate Payee's separate account in Portfolio Investments selected by
the Alternate Payee; provided, however, that if no such investment
direction is received from the Alternate Payee, such separate account
shall be invested proportionately in the same Portfolio Investments as
selected by the Participant for his accounts.
B. During any period in which the issue of whether a
Domestic Relations Order is a Qualified Domestic Relations Order is being
determined (by the Committee, by a court or otherwise), the Committee shall
direct the Trustees to place in a separate account in the Trust in the name of
the Alternate Payee, the amounts which would have been payable to the Alternate
Payee during such period if the order had been determined to be a Qualified
Domestic Relations Order. During such determination period, such separate
account shall remain invested in the same Portfolio Investments as selected by
the Participant with respect to his accounts.
C. If within eighteen (18) months the order (or
modification thereof) is determined to be a Qualified Domestic Relations Order,
the Committee shall direct the Trustees to pay such amounts (adjusted for any
income or loss thereon) to the person(s) entitled thereto in accordance with the
terms of the Plan and the Qualified Domestic Relations Order. If within eighteen
(18) months it is determined the order is not a Qualified Domestic Relations
Order or the issues as to whether such order is a Qualified Domestic Relations
Order are not resolved, the Committee shall direct the Trustees to return the
amounts (adjusted for any income or loss thereon) being held in the name of the
Alternate Payee to the Participant's account.
D. Any order determined to be a Qualified Domestic
Relations Order after the close of the eighteen (18) month period shall be
applied prospectively only.
E. For purposes of Paragraphs C and D above, the
18-month period referred to therein shall begin with the date on which the first
payment would be required to be made under the Domestic Relations Order.
F. In the event the Domestic Relations Order is later
determined not to be a valid Qualified Domestic Relations Order, any amount
being held in an account for the Alternate Payee shall be restored or
distributed to the Participant.
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<PAGE> 67
10.6 Loans. Loans from the Plan may be made to Participants,
Retired Participants or Beneficiaries (hereinafter collectively referred to as
"Borrower" or "Borrowers") in accordance with the following terms and
conditions:
A. Loans shall be made available to all Borrowers on a
reasonably equivalent basis without regard to any individual's race, color,
religion, sex, age or national origin. In making any decision with regard to
making any loan, consideration shall be given only to those factors, such as
creditworthiness and financial need, which would be considered in a normal
commercial setting by an entity in the business of making similar loans. No loan
for less than $500 may be made to any Borrower.
B. Loans shall not be made available to Borrowers who
are Highly Compensated Employees in an amount greater than the amount made
available to other Borrowers. Loans may be obtained only from a Borrower's
Qualified Deferral Account. The maximum amount of a loan to any Borrower, when
added to the outstanding balance of all other loans to such Borrower, shall not
exceed the lesser of: (i) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans during the one year period ending on the day before
the loan is made, over the outstanding balance of loans from the Plan on the
date the loan is made, or (ii) one-half (1/2) of such Borrower's vested
nonforfeitable interest in his Qualified Deferral Account under the Plan. For
purposes of this Paragraph, all loans from all plans maintained by the Employer
or a related employer within the meaning of Code Sections 414(b), (c), (m) or
(o) shall be aggregated.
C. Each loan shall bear interest at a reasonable rate to
be fixed by the Committee. The rate of interest shall provide the Plan with a
return commensurate with the prevailing interest rates being charged by persons
in the business of lending money for loans under similar circumstances. The
Committee shall not discriminate among Borrowers regarding interest rates;
however, loans granted at different times may bear different interest rates if,
in the opinion of the Committee, the difference in interest rates is justified
by a change in general economic conditions.
D. Each loan shall be secured by the assignment of the
Borrower's entire right, title and interest in and to such Borrower's vested
nonforfeitable interest in the Fund, supported by the Borrower's promissory note
for the amount of the loan, including interest, payable to the order of the
Trustees.
E. A Participant must obtain the consent of his or her
spouse, if any, to use his account balance as security for the loan unless the
Participant shall establish to the satisfaction of the Trustees that such
consent may not be obtained because there is no spouse, the spouse cannot be
located or such other circumstances prescribed by the applicable Regulations.
Spousal consent shall be obtained no earlier than the beginning of the 90-day
period that ends on the date on which the loan is to be so secured. The consent
must be in writing, must acknowledge the effect of the loan, and must be
witnessed by a plan representative or notary public. Such consent shall
thereafter be binding with respect to the consenting spouse or any subsequent
spouse with respect to that loan. A new consent shall be required if the
Participant's account balance is used as security for renegotiation, extension,
renewal or other revision of the loan.
If a valid spousal consent has been obtained, then,
notwithstanding any other provision of this Plan, for the purposes of
determining the amount of a Qualified Joint and Survivor Annuity under Section
5.1F or a Qualified Preretirement Survivor Annuity under Section 5.1G, the
Accrued Benefit of a Participant shall be reduced by any security interest held
by the Trustees by reason of a loan outstanding to the Borrower at the time of
death or distribution if the reduction is used as repayment of the loan.
F. Each loan shall require that repayment (principal and
interest) be amortized in level payments, not less frequently than quarterly.
The period of repayment for any loan shall be arrived at by mutual agreement
between the Committee and the Borrower, but in no event shall such period exceed
five (5) years.
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<PAGE> 68
G. An application for a loan by a Borrower shall be made
in writing to the Committee. The application shall specify the purpose of the
loan and the desired amount and repayment period of the loan. The Committee
shall investigate each application for a loan. All loans shall be subject to the
approval of the Committee. Within thirty (30) days after the Committee receives
the application, it shall give consideration to and arrive at a decision upon
said application. Notice of the decision of the Committee shall be furnished to
the Participant within forty-five (45) days after the receipt of the application
by the Committee. The Committee shall provide to every Participant who is denied
a loan written notice setting forth the reason or reasons for denial.
H. Loans shall be permitted for any purpose.
I. Notwithstanding any provision of the Plan which may
be to the contrary, (i) the entire principal balance of any loan from the Plan
and any accrued interest thereon shall become immediately due and payable at
such time as distributions under the Plan are scheduled to commence to a
Borrower, or, at the option of the Trustees, (ii) any distribution to be made to
a Borrower pursuant to ARTICLE V hereof may, without the Borrower's consent or
action, be applied against the outstanding balance of any unpaid loan to such
Borrower.
J. In the event of a default on any loan, the Trustees
shall be authorized to have the Employer withhold the amount in default from the
Borrower's pay and to pay over such amount to the Trustees to be applied against
such loan.
K. The Committee shall be authorized to establish
additional procedures for the implementation of the loan program hereunder.
L. In the event a loan is made to a Borrower,
withdrawals under Section 5.10 shall be limited such that no withdrawals shall
result in the Participant's vested nonforfeitable interest in his Accrued
Benefit under the Plan being less than two (2) multiplied by the total
outstanding balance of loans from this Plan on the date of such withdrawal.
10.7 Allocation of Responsibility Among Employer. Committee and
Trustees for Plan and Trust Administration. The Employer, Committee and Trustees
(hereinafter for purposes of this Section referred to as the "Fiduciaries")
shall have only those specific powers, duties, responsibilities and obligations
as are specifically given them under this Plan or the Trust. In general, the
Employer shall have the sole responsibility for making the contributions
provided for under Section 3.1, reviewing Participant or Beneficiary claims as
provided under Section 9.2D, and shall have the sole authority to appoint and
remove the Trustees, members of the Committee and to amend or terminate, in
whole or in part, this Plan or the Trust. The Committee shall have the sole
responsibility for the administration of this Plan, which responsibility is
specifically described in this Plan and the Trust. The Trustees shall have the
sole responsibility for the administration of the Trust and the management of
the assets held under the Trust, all as specifically provided in the Trust. Each
Fiduciary warrants that any directions given, information furnished, or action
taken by it shall be in accordance with the provisions of this Plan or the
Trust, as the case may be, authorizing or providing for such direction,
information or action. Furthermore, each Fiduciary may rely upon any such
direction, information or action of another Fiduciary as being proper under this
Plan or the Trust, and is not required under this Plan or the Trust to inquire
into the propriety of any such direction, information or action. It is intended
under this Plan and the Trust that each Fiduciary shall be responsible for the
proper exercise of its own powers, duties, responsibilities and obligations
under this Plan and the Trust and shall not be responsible for any act or
failure to act of another Fiduciary. No Fiduciary guarantees the trust Fund in
any manner against investment loss or depreciation in asset value.
10.8 Bonding. All members of the Committee, and every individual
officer or Employee designated by the Employer to direct the Committee and/or
the Trustees with respect to the receipt, handling, disbursement, or other
exercise of the custody or control of the funds or other property held under the
Plan shall be bonded to the extent required by the Act.
61
<PAGE> 69
10.9 Guarantees to Participants. No member of the Committee and no
individual officer or Employee designated by the Employer to direct the
Committee or the Trustees shall (i) fail or refuse to comply with a request to
furnish information to a Participant or Beneficiary that is required to be
furnished under the Plan or pursuant to the Act and that is reasonably within
his control (such information to be delivered or mailed by first class mail to
the last known address of the requesting Participant or Beneficiary within 30
days after receipt of the request) or (ii) restrain, coerce, intimidate, or
attempt to restrain, coerce or intimidate any Participant or Beneficiary for the
purpose of interfering with or preventing the exercise of any right to which he
is or may become entitled under the Plan or pursuant to the Act.
62
<PAGE> 70
ARTICLE XI
MISCELLANEOUS
11.1 Governing Laws. This Plan shall be construed and enforced
under the Act and the laws of the State of North Carolina and all provisions
hereof shall be administered in accordance with the provisions of the Act and
according to the laws of the State of North Carolina, provided that in case of
conflict, the provisions of the Act shall control.
11.2 Corporate Action. Whenever the Employer, under the terms of
this Plan, is permitted or required to do or perform any act, it shall be done
and performed by the Board of Directors of the Employer, or an Executive
Committee thereof, and shall be evidenced by proper resolutions certified by the
Secretary of either the Employer or such Executive Committee.
11.3 Alternative Acts. In the event it becomes impossible for the
Employer or the Committee to perform any act required by this Plan, then the
Employer or the Committee may perform such alternative act which most nearly
carries out the intent and purpose of this Plan.
11.4 Interpretation. This Plan has been executed for the exclusive
benefit of the Participants and their Beneficiaries. So far as possible, this
Plan shall be interpreted and administered in a manner consistent with this
intent and with the intention of the Employer that this Plan shall at all times
fully comply with the requirements of the Act. Neither the Employer nor the
Committee shall exercise any power or right to do or perform any act which is in
conflict with or violates the Act, and/or the Regulations construing the Act
which now exist or may be hereafter adopted by the Treasury and/or Labor
Departments. Any power or right granted under this Plan or retained by the
Employer shall be void to the extent that its exercise or retention shall
violate the Act. The Employer and the Trustees shall make any and all
retroactive amendments to this Plan and the Trust that are required under the
Act or under Treasury and/or Labor Department Regulations in order to establish
and maintain this Plan and the Trust in conformity with the Act as a qualified
retirement plan and trust pursuant to Code Sections 401(a) and 501(a).
11.5 Gender and Tense. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the person, persons or entity may require.
11.6 Title Headings. The headings in this Plan are solely for the
convenience of reference and shall not affect its interpretation.
63
<PAGE> 71
IN WITNESS WHEREOF, this Amendment and Restatement of the
Investment/Profit //Sharing Plan is signed by the Employer on the 2nd day of
February, 1994.
INGLES MARKETS, INCORPORATED
By: /s/ Landy B. Laney, President
-----------------------------------
Landy B. Laney, President
Attest: /s/ Brenda S. Tudor
-------------------------------
Brenda S. Tudor, Secretary
(CORPORATE SEAL)
MILKCO, INC.
By: /s/ Ralph H. Gardner
-----------------------------------
Ralph H. Gardner, President
Attest: /s/ Brenda S. Tudor
-------------------------------
Brenda S. Tudor, Secretary
(CORPORATE SEAL)
<PAGE> 72
FIRST AMENDMENT TO
INGLES MARKETS, INCORPORATED
INVESTMENT/PROFIT SHARING PLAN
THIS FIRST AMENDMENT TO THE INGLES MARKETS, INCORPORATED
INVESTMENT/ PROFIT SHARING PLAN (hereinafter referred to as the "Plan") is made
and entered into by Ingles Markets, Incorporated, a North Carolina corporation
(the "Employer").
W I T N E S S E T H :
WHEREAS, Section 6.1 of the Plan provides for the right of the Employer
to amend the Plan; and
WHEREAS, Section 6.3 of the Plan provides for the right of the Employer
to amend the Plan on behalf of all participating Employers.
NOW, THEREFORE, effective February 2, 1994, Section 4.10 of
the Plan is hereby amended in its entirety to read as follows:
"4.10 Qualifying Employer Securities. The Trustees are
authorized to acquire and hold shares of Class B Common Stock
of Ingles Markets, Incorporated and to acquire and hold other
Qualifying Employer Securities as contemplated under the
provisions of the Plan, without regard to the diversification
requirement of the Act."
<PAGE> 73
AMENDMENT
TO THE
INGLES MARKETS, INCORPORATED
INVESTMENT/PROFIT SHARING PLAN
THIS AMENDMENT TO THE INGLES MARKETS, INCORPORATED
INVESTMENT/PROFIT SHARING PLAN (hereinafter referred to as the "Plan") is made
and entered into by INGLES MARKETS, INCORPORATED, (the "Employer").
W I T N E S S E T H :
WHEREAS, Section 6.1 of the Plan permits the Employer to amend the Plan
from time to time; and
WHEREAS, the Employer now desires to amend the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Effective as of September 1, 1996, Section 1.3 of the Plan is
hereby amended to read in its entirety as follows:
"Active Participant": With respect to any Plan Year, a
Participant who (i) is in the employ of the Employer on the last day of the
quarter of the Plan Year or on the last day of the Plan Year, as the case may
be, or (ii) retires after his Normal Retirement Date, dies or becomes disabled
in such quarter or Plan Year, as the case may be, or (iii) for purposes of
Section 3.3 of the Plan, is treated as an Active Participant pursuant to Section
3.3A4, or (iv) for purposes of Section 3.3A only, is treated as an Active
Participant pursuant to Section 3.3A5."
2. Effective as of September 1, 1996, Section 3.3A4 of the Plan
is hereby amended to read in its entirety as follows:
"4. Except as otherwise provided in subparagraph 5 below, only
those Active Participants who are employed by the Employer on
the last day of the Plan Year and have completed at least
1,000 Hours of Service during the Plan Year shall be
considered to be Active Participants for such Plan Year for
purposes of this Section 3.3."
3. Effective as of September 1, 1996, the first paragraph of Section 3.3A
of the Plan is hereby amended to read in its entirety as follows:
"A. Subject to the rights of the Employer under ARTICLES VI
and VIII, the Employer shall decide the amount of Discretionary
Employer Contributions to be made to the "B" Fund, which contributions
may in the sole discretion of the Employer be made in cash or shares of
Class A Common Stock or Class B
<PAGE> 74
Common Stock of Ingles Markets, Incorporated, for its respective
Employees for each Plan Year and such Discretionary Employer
Contributions shall be allocated as follows:"
4. Effective as of September 1, 1996, Section 4.10 of the Plan is hereby
amended to read in its entirety as follows:
"4.10 Qualifying Employer Securities. The Trustees are
authorized to acquire and hold shares of Class B Common Stock
and Class A Common Stock of Ingles Markets, Incorporated and
to acquire and hold other Qualifying Employer Securities as
contemplated under the provisions of the Plan, without regard
to the diversification requirement of the Act. Such Qualifying
Employer Securities may be acquired:
(1) on the market, either (i) at the price of
the obligation prevailing on a national
securities exchange which is registered with
the Securities and Exchange Commission, or
(ii) if the obligation is not traded on such
a national securities exchange, at a price
not less favorable to the Plan than the
offering price for the obligation as
established by current bid and asked prices
quoted by persons independent of the
Employer; or
(2) from an underwriter, at a price (i) not in
excess of the public offering price for the
obligation as set forth in a prospectus or
offering circular filed with the Securities
and Exchange Commission, and (ii) at which a
substantial portion of the same issue is
acquired by persons independent of the
Employer; or
(3) directly from the Employer at a price not
less favorable to the Plan than the price
paid currently for a substantial portion of
the same issue by persons independent of the
Employer."
5. Effective as of September 1, 1996, the first sentence of
Section 4.9 of the Plan is hereby amended by deleting the words "respective
accounts" on the fourth line thereof and inserting in their place the words
"Qualified Deferral Account , Matching Employer Contribution
<PAGE> 75
Account and Participants Contribution Account;" and by deleting the words "of
his respective accounts" which follow the words "10% per year" on the tenth line
thereof and replacing such words with the words "of his Discretionary Employer
Contribution Account".
IN WITNESS WHEREOF, the Employer has caused this Amendment to be signed
on the 1st day of September, 1996.
INGLES MARKETS, INCORPORATED
By: /s/ Jack R. Ferguson
-----------------------------------
Name, Title
<PAGE> 76
THIRD AMENDMENT TO THE
INGLES MARKETS, INCORPORATED
INVESTMENT/PROFIT SHARING PLAN
THIS THIRD AMENDMENT TO THE INGLES MARKETS, INCORPORATED
INVESTMENT/PROFIT SHARING PLAN (hereinafter referred to as the "Plan"), which
Plan was amended and restated in its entirety effective September 26, 1993, and
was subsequently amended by the First and Second Amendments, is made and
entered into by Ingles Markets, Incorporated (the "Employer").
W I T N E S S E T H:
WHEREAS, Section 6.1 of the Plan permits the Employer to amend the
Plan from time to time and Section 6.3 of the Plan permits the Employer to
amend the Plan on behalf of all participating Employers.
NOW, THEREFORE, the Employer hereby amends the Plan as follows:
1. Section 1.26 of the Plan is hereby amended by adding the
following sentence to the end thereof:
"In addition, any individual employed by the Distribution
Division of the Employer on or after September 27, 1998 shall
not be deemed to be an Employee unless and until the date on
which either (i) the Ingles Distribution Division Savings &
Retirement Plan, formerly known as the Thomas & Howard Company
of Asheville, Inc. Savings & Retirement Plan (the "Thomas &
Howard Plan") is merged with the Plan, or (ii) the Thomas &
Howard Plan is terminated. Finally, any individual who is
included in a unit of employees covered by a collective
bargaining agreement under which retirement benefits were the
subject of good faith bargaining shall not be eligible to
participate in this Plan."
2. Article 1 of the Plan is hereby amended by adding the
following paragraph 1.56A immediately following paragraph 1.56 and immediately
preceding paragraph 1.57:
"`Plan Quarter': The approximate three (3) month period
beginning on the day after the last day of the immediately
prior Plan Quarter and ending on the last Saturday in March,
June, September, and December."
<PAGE> 77
3. Section 1.76 of the Plan, definition of `Year of Service', is
hereby amended by adding the following sentence to the end thereof:
"Additionally, for all Plan purposes, Years of Service shall
include prior service of an Employee with the Thomas & Howard
Company of Asheville, Inc. if such Employee was employed by
Thomas & Howard Company of Asheville, Inc. on September
27,1998."
4. Section 3.1A of the Plan is hereby amended in its entirety to
read as follows:
"A. Salary Reductions. The Employer shall contribute to the
Qualified Deferral Account of each Participant any amount
(from 1% to 15%, in 1% increments) by which such Participant
elects to reduce his Compensation from the Employer for the
Plan Year. Such election shall be made in writing pursuant to
such rules of uniform application as the Committee may adopt.
The Employer will specify a reasonable period at least once
each calendar year during which a Participant may elect to
terminate such election or modify the amount or frequency of
his Elective Deferrals.
5. Section 3.2A.1 of the Plan is hereby amended in its entirety
to read as follows:
"A. Effective February 2, 1994, subject to the rights of the
Employer under ARTICLES VI and VIII, the Employer shall decide
the amount of Matching Employer Contributions to be made to
the Fund for each of the first three calendar quarters and the
end of the Plan Year and shall make such contributions as
follows:
1. Allocation. The Matching Employer
Contributions made for each of the first three calendar
quarters of the Plan Year and the quarter ending on the last
day of the Plan Year shall be allocated within the Plan Year
with respect to each such quarter to the Matching Employer
Contribution Account of each Active Participant in the
proportion that the Elective Deferrals of each Active
Participant pursuant to Section 3.1A for that quarter of the
Plan Year bear to the total Elective Deferrals of all Active
Participants pursuant to Section 3.1A for that quarter of the
Plan Year; provided, however, that for purposes of
determining the allocation of Matching Employer Contributions
pursuant to this Section 3.2A.1, each Active Participant with
Elective Deferrals in excess of five percent (5%) percent of
his Compensation for a Plan Year shall be deemed to have made
Elective Deferrals equal to five percent (5%) of his
Compensation for such Plan Year."
6. Section 4.6 of the Plan is hereby amended by removing the
first paragraph in its entirety and substituting the following in its stead:
"Forfeitures. As of the end of each calendar quarter or the
last day of the plan year, whichever is applicable,
forfeitures arising pursuant to Section 5.1A.3 during such
quarter shall be allocated as follows:"
2
<PAGE> 78
7. Section 4.9 of the Plan is hereby amended by removing the
second sentence in its entirety and substituting the following in its stead:
"Each Participant, while in the employ of the Employer, shall
have the right through September 25, 1999, exercisable
pursuant to such uniform administrative procedures as the
Committee may adopt, to direct the Trustee of the "B" Fund to
invest up to 10% per year of his respective accounts in
Portfolio Investments selected by him. The right to direct
the investment of assets of the "B" Fund into Portfolio
Investments shall terminate as of September 25, 1999."
8. Article 5 of the Plan is amended by substituting the amount
"$5,000" for "$3,500" wherever it appears.
9. Section 5.1A.3 of the Plan is hereby amended in its entirety
to read as follows:
"If any participant terminates employment prior to the time
when the Matching Employer Contribution Account and
Discretionary Employer Contribution Account established for
his benefit is 100% nonforfeitable, the portions of his
Matching Employer Contribution Account and Discretionary
Employer Contribution Account which are forfeitable shall be
treated as a forfeiture pursuant to Section 4.6 as of the last
day of the calendar quarter or the last day of the plan year,
whichever is applicable, in which occurs the earlier of (i)
the date which he shall have received a distribution or is
deemed to have received a distribution of his entire interest
in the Plan pursuant to Section 5.1A.1 or (ii) the date on
which he shall have incurred five (5) consecutive one year
Breaks in Service."
10. The effective date of this Third Amendment to the Plan shall
be September 27, 1998.
11. Except as specifically amended above, the Plan shall remain
unchanged and, as amended herein, shall continue in full force and effect.
IN WITNESS WHEREOF, Ingles Markets, Incorporated has caused this
Third Amendment to the Plan to be executed by its duly authorized officer
effective the 27th day of September, 1998.
EMPLOYER:
INGLES MARKETS, INCORPORATED
By: /s/ Brenda S. Tudor
------------------------------
Brenda S. Tudor
Title: Vice President-Finance and
Chief Financial Officer
3
<PAGE> 1
EXHIBIT 4.4
INVESTMENT/PROFIT SHARING TRUST "C"
FOR
INGLES MARKETS, INCORPORATED
EFFECTIVE APRIL 1, 1999
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
- ------- ----- ----
<S> <C> <C>
I. CONTRIBUTIONS AND BENEFIT PAYMENTS............................... 3
1.1 Fund Assets............................................. 3
1.2 Contributions........................................... 3
1.3 Payment of Funds........................................ 3
1.4 Nonalienation of Benefits............................... 3
1.5 Benefit Checks.......................................... 4
1.6 Benefit Payments to Incompetents........................ 5
II. INVESTMENTS...................................................... 6
2.1 Authorized Investments.................................. 6
2.2 Standard of Care; Diversification....................... 8
2.3 Employer Securities and Real Property................... 9
2.4 Prohibited Transactions................................. 9
2.5 Tax-Exempt Status....................................... 15
2.6 Investment Manager...................................... 15
2.7 Collective Trust Fund................................... 17
2.8 Loans................................................... 17
2.9 Participant Directed Accounts........................... 17
2.10 Trust Investments....................................... 18
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C> <C>
III. ADMINISTRATION.....................................................19
3.1 Expenses..................................................19
3.2 Legal Expenses............................................19
3.3 Accounting Records........................................19
3.4 Removal; Resignation......................................20
3.5 Acts of Employer and Committee............................21
3.6 Liability for Breach by Other Trustee.....................21
3.7 Limitation on Actions Against Trustee.....................21
3.8 Service of Process........................................22
3.9 Bonding...................................................22
3.10 Indemnity.................................................23
IV. LIFE INSURANCE COMPANIES...........................................24
4.1 Reliance by Insurer.......................................24
V. EVIDENCE OF AUTHORITY TO DIRECT TRUSTEE............................25
5.1 Actions by Employer.......................................25
5.2 Instructions by Committee.................................25
5.3 Reliance on Instruments...................................25
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C> <C>
VI. AMENDMENTS; MERGERS................................................26
6.1 Amendment.................................................26
6.2 Fund Merger, Etc..........................................27
6.3 Adoption by Successor Employer............................27
6.4 No Diversion of Funds.....................................27
6.5 Governing Law.............................................28
</TABLE>
4
<PAGE> 5
INGLES MARKETS, INCORPORATED
INVESTMENT/PROFIT SHARING TRUST "C"
THIS TRUST AGREEMENT is made and entered into between INGLES MARKETS,
INCORPORATED, a North Carolina corporation (the"Employer") and ROBERT P. INGLE,
VAUGHN C. FISHER, and BRENDA S. TUDOR, as Trustees (the "Trustees") to be
effective as of April 1, 1999.
WITNESSETH:
WHEREAS, the Employer desires to create the INGLES MARKETS,
INCORPORATED INVESTMENT/PROFIT SHARING TRUST "C" (the "Trust"), to be maintained
along with the INGLES MARKETS, INCORPORATED INVESTMENT/PROFIT SHARING PLAN, as
restated and amended on September 26, 1993 and subsequently amended by the
First, Second and Third Amendments (collectively the "Plan"), each in accordance
with the Employee Retirement Income Security Act of 1974 and the applicable
provisions of the Internal Revenue Code of 1986, as amended; and
WHEREAS, the Employer desires to maintain three separate Trusts, this
Trust to be known as the Ingles Markets, Incorporated Investment/Profit Sharing
Trust "C" under which Robert P. Ingle, Vaughn C. Fisher and Brenda S. Tudor are
trustees, the Ingles Markets,
1
<PAGE> 6
Incorporated Investment/Profit Sharing Trust "A" under which First Union
National Bank of North Carolina (the "Other Trustee") is trustee, and the Ingles
Markets, Incorporated Investment/Profit Sharing Trust "B" under which Robert P.
Ingle, Vaughn C. Fisher and Brenda S. Tudor are trustees; and
WHEREAS, terms used herein that are defined in said restated Plan
shall, unless the text of this Trust Agreement clearly indicates otherwise, have
the same meaning as in the restated Plan.
NOW, THEREFORE, the Employer and the Trustee do hereby adopt the Ingles
Markets, Incorporated Investment/Profit Sharing Trust "C" Agreement to read as
follows:
2
<PAGE> 7
ARTICLE I
CONTRIBUTIONS AND BENEFIT PAYMENTS
1.1 Fund Assets. The "C" Fund shall consist of all monies and
other assets including Qualifying Employer Securities which have heretofore and
which may hereafter be contributed from time to time by the Employer and the
Participants of the Plan and all income and other property held by the Trustee
from time to time pursuant to the terms hereof.
1.2 Contributions. The Trustee shall be under no duty to require
payment of any contributions to the "C" Fund. However, once contributions are
received, the Trustee shall be responsible for the investment, management and
control of such contributions as a part of the "C" Fund in accordance with the
provisions of this Trust Agreement.
1.3 Payment of Funds. The Trustee or its agent shall make such
payments from the "C" Fund, in cash or in kind, as the Committee appointed to
administer the Plan shall direct in writing. The Committee may also direct the
payment of or reimbursement for expenses of administering the Plan. The
Committee shall issue no direction to the Trustee other than in accordance with
the terms of the Plan. Accordingly, the Trustee shall have no duty to question
the propriety of any direction of the Committee.
1.4 Nonalienation of Benefits. Except for the security interest
the Trustee is required to take in the event a loan is made to a Participant,
Retired Participant or Beneficiary as provided
3
<PAGE> 8
in Section 10.6 of the Plan or as otherwise provided by law, distributions to be
made hereunder shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution,
or levy of any kind, either voluntary or involuntary, prior to actually being
received by the person entitled to the benefit under the terms of the Plan, and
any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber,
charge or otherwise dispose of any right to benefits payable hereunder shall be
void. The "C" Fund shall not in any manner be liable for, or subject to, the
debts, contracts, liabilities, engagements or torts of any person entitled to
benefits hereunder.
The above paragraph shall apply to the creation, assignment or
recognition of a right to any benefit payable to a Participant according to a
Domestic Relations Order; provided, however, in no event shall it apply to a
Qualified Domestic Relations Order.
1.5 Benefit Checks. In the event that any check in payment of a
benefit provided under the Plan has been dispatched by regular U.S. Mail to the
last address of the payee furnished to the Trustee or its agent by the
Committee, and such check is returned unclaimed, the Trustee shall notify the
Committee and shall discontinue further payments to such payee until the Trustee
receives further instructions from the Committee.
4
<PAGE> 9
1.6 Benefit Payments to Incompetents. If the Committee determines
that any person entitled to benefits under the Plan is incompetent by reason of
physical or mental disability or minority and consequently unable to give a
valid and binding receipt, the Committee may direct the Trustee to make payments
thereafter becoming due to such person (so long as such incompetency shall
continue) to any other person for the sole benefit of such incompetent
Participant, Retired Participant, Terminated Participant, or Beneficiary or to
his guardian (if one shall have been legally appointed), without responsibility
on the part of the Committee or the Trustee to see to the further application of
such payments.
5
<PAGE> 10
ARTICLE II
INVESTMENTS
2.1 Authorized Investments. Except as provided in any of the
following Sections of this ARTICLE, the Trustee is authorized and empowered in
its sole discretion, but not by way of limitation:
A. To invest and reinvest the principal and income of
the "C" Fund, without distinction between principal and income, in such stocks,
common trust funds, bonds, commodities, notes, mortgages, or other obligations,
trust and participation certificates, leaseholds, or in such other property, or
interests therein, whether real or personal, as the Trustee deems proper,
provided that the physical indicia of ownership of such investments is situated
within the jurisdiction of the district courts of the United States;
B. To keep any cash from time to time held hereunder in
checking accounts, savings accounts, and certificates of deposit;
C. To sell, exchange, convey, transfer or otherwise
dispose of any property held by it by private contract or at public auction, and
no person dealing with the Trustee shall be bound to see to the application of
the purchase money or property delivered to the Trustee, or to inquire into the
validity, expediency, or propriety of any such sale or other disposition or to
inquire into the terms of the Trust, or to see that such terms are complied
with;
6
<PAGE> 11
D. To vote upon any stocks, bonds, or other securities,
to give general or special proxies or powers of attorney with or without power
of substitution; to exercise any conversion privileges, subscription rights or
other options and to make any payments incidental thereto; to consent to or
otherwise participate in any corporate reorganizations or other changes
affecting corporate securities and to delegate discretionary powers and to pay
any assessments or charges in connection therewith; and generally to exercise
any of the powers of an owner with respect to stocks, bonds, securities, or
other property, whether real or personal, held in the "C" Fund;
E. To make, execute, acknowledge and deliver any and all
documents of transfer and conveyance and any and all other instruments that may
be necessary or appropriate to carry out the powers herein granted;
F. To register any investment held in the "C" Fund in
the name of the "C" Fund or in the name of a nominee and to hold any investment
in bearer form, provided that the books and records of the Trustee shall at all
times show that all such investments are part of the "C" Fund;
G. To purchase and own life insurance and annuity
contracts on the lives of the Participants issued by insurance companies
authorized to do business in the State of North Carolina selected by the
Committee; and to exercise (acting upon the written authorization of the
Committee) all rights of ownership provided in said contracts;
7
<PAGE> 12
H. To borrow money and no person lending to the Trustee
need see the application of the money lent or the propriety of the borrowing;
I. To employ suitable agents or custodians and to employ
counsel who may, but need not, be counsel for the Employer, and the Trustee
shall be fully protected in acting upon the advice of such counsel;
J. To do all acts, whether or not expressly authorized,
which they may deem necessary or proper for the protection of the property held
hereunder.
2.2 Standard of Care: Diversification. The Trustee shall perform
all acts within its authority for the exclusive purposes of providing benefits
to Participants, Retired Participants, Terminated Participants, and their
Beneficiaries and defraying reasonable expenses of administering the Plan and
the Trust, and shall perform such acts with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. Subject to the terms of the
preceding sentence the Trustee shall diversify the investments of the "C" Fund,
so as to minimize the risk of large losses. Notwithstanding anything to the
contrary in this Section 2.2, the Trustee shall not be liable for any loss to a
particular Participant's account which results from (i) the investment and
management of such Participant's account by the Other Trustee, or (ii) such
Participant's exercise of investment control and direction over the Trustee, or
the Employer's exercise of investment control and direction over the Trustee, as
may be permitted under the terms of the Plan and this Trust Agreement.
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2.3 Employer Securities and Real Property. The Trustee may invest
in or hold Qualifying Employer Securities. Except as provided in the preceding
sentence, the Trustee shall not invest any portion of the "C" Fund in stocks,
bonds, notes, debentures or other obligations issued by the Employer, or any
affiliated company, nor purchase or lease any property from or sell or lease any
property to the Employer or an affiliated company without first obtaining a
prior ruling from the Internal Revenue Service that such investment, purchase,
lease, or sale will not destroy the qualified status of the Plan and this Trust
under Code Sections 401(a) and 501(a) respectively. The diversification
requirement of Section 2.2 shall not apply to the portion of the "C" Fund which
is held in Qualifying Employer Securities. Notwithstanding anything contained
herein to the contrary, unless the Secretary of Labor allows, the Trustee shall
not engage in any transaction it knows or should know directly or indirectly
constitutes a transaction prohibited by the Act or prohibited by Section 2.4
below.
2.4 Prohibited Transactions. Except as otherwise specifically set
forth in this or other Sections of this Trust Agreement or in the Plan or as
otherwise allowed by regulations, class exemptions, revenue rulings, releases or
other publications issued by the Treasury or Labor Departments:
A. The Trustee shall not cause the "C" Fund to engage in
a transaction if the Trustee knows or should know that such a transaction
constitutes a direct or indirect:
1. sale or exchange, or leasing of any property
between the "C" Fund and a Party-in-Interest;
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2. lending of money or other extension of
credit between the "C" Fund and a Party-in-Interest;
3. furnishing of goods, services or facilities
between the "C" Fund and a Party-in-Interest;
4. transfer to, or use by or for the benefit of
a Party-in-Interest, of any assets of the "C" Fund;
5. acquisition or retention, on behalf of the
"C" Fund, of any Employer security or Employer real property in
violation of Act Section 407(a).
B. Any person or entity of any kind who has the
power to exercise any discretion or control over the Plan or the "C" Fund shall
not:
1. deal with the income or assets of the "C"
Fund in his or its own interest or for his or its own account, if such
person or entity uses any of his or its discretion or control to cause
the Plan or the "C" Fund to pay a fee for service furnished by such
person or entity, or furnished by another person in which such person
or entity has an interest which may affect his or its best judgment in
exercising such discretion or control;
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2. in his individual or in any other capacity
act in any transaction involving the Plan, this Trust or the assets
hereof on behalf of any person (or represent any person) whose
interests are adverse to the interests of this Trust or its assets, or
the interests of the Plan or the interests of its Participants, Retired
Participants, Terminated Participants or their Beneficiaries; or
3. receive any consideration for his or its own
personal account from any person dealing with the Plan or Trust in
connection with a transaction involving the income or assets of the "C"
Fund.
The provision of services to the Plan without the receipt therefor of
compensation or other consideration (other than reimbursement of direct
expenses properly and actually incurred in the performance of such
services) is not in and of itself prohibited by paragraphs B1 or B3 of
this Section 2.4.
C. A transfer of real or personal property by a
Party-in-Interest shall be considered a sale or exchange if the property is
subject to a mortgage or similar lien which the Trust assumes or if it is
subject to a mortgage or similar lien which a Party-in-Interest placed on the
property within a 10 year period ending on the date of the transfer to the
Trust.
D. Nothing in paragraphs A, B or C of this Section 2.4
shall prohibit:
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1. any Participant, Retired Participant or
Terminated Participant or any of their Beneficiaries from receiving a
benefit under the Plan consistent with the terms of the Plan as applied
to all other Participants, Retired Participants, Terminated
Participants and their Beneficiaries.
2. any Participant from serving as an officer,
Employee, agent or other representative of a Party-in-Interest.
3. the transfer of any portion of the "C" Fund
to the Other Trustee pursuant to directions given by the Committee.
E. If the prohibitions of paragraph B of this Section
2.4 are inapplicable, then notwithstanding anything to the contrary in
paragraphs A and C of this Section 2.4:
1. a contract or reasonable arrangement may be
made with a Party-in-Interest for office space or legal,
accounting or other services necessary for the establishment
or operation of the Plan and Trust, if no more than reasonable
compensation is paid therefor;
2. any person or entity may receive reasonable
compensation for services rendered, or may receive
reimbursement of expenses properly and actually incurred, in
the performance of his or its duties with the Plan or Trust,
except that no person who is receiving full time pay from the
Employer shall
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receive compensation from the Plan or the Trust, except
reimbursement of expenses properly and actually incurred.
F. The term "Party-in-Interest" shall mean the
following:
1. a fiduciary (including any administrator,
officer, Trustee or custodian), counsel or employee of the
Plan;
2. a person or entity providing services to the
Plan;
3. the Employer;
4. an employee organization (i.e. union) any of
whose members are covered by the Plan;
5. the owner (directly or indirectly) of 50% or
more of
(i) the value or the voting power of
the Employer's stock, or
(ii) a trust or unincorporated
enterprise which is an employer or employee
organization described in Sections 2.4F4;
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6. the spouse, parent, grandparent, child or
grandchild of an individual described in Sections 2.4F1, 2 or
5, or spouse of such parent, grandparent, child or grandchild;
7. an association, corporation, partnership,
trust or estate of which (or in which) 50% or more of
(i) the value or voting power of the
stock of such association or corporation,
(ii) the capital or profits interest of
such partnership, or
(iii) the beneficial interest of such
trust or estate
is owned (directly or indirectly) by the persons or entities
described in Sections 2.4F1, 2, 3, 4 or 5;
8. an employee, officer, director or a 10% or
more shareholder of a person or entity described in Sections
2.4F2, 3, 4, 5 or 7, or of the Plan or the "C" Fund;
9. a 10% or more (directly or indirectly in
capital or profits) partner or joint venturer of a person or
entity described in Sections 2.4F2, 3, 4, 5 or 7.
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G. Notwithstanding anything herein to the contrary, the
sale or acquisition of Qualifying Employer Securities by the "C" Fund to or from
a Party-in-Interest shall not be prohibited if:
1. such sale or acquisition is for adequate
consideration (or in the case of an obligation, at a price not
less favorable to the "C" Fund than the price determined under
Act Section 407(e)(l));
2. no commission is charged with respect
thereto; and
3. such sale or acquisition otherwise meets the
requirements of Act Section 408(e).
2.5 Tax-Exempt Status. The Employer intends that the Trust shall
be exempt from Federal Income Taxation under Code Section 501(a) or under any
comparable provision of any future legislation which amends, supplements, or
supersedes said Section, and until advised to the contrary the Trustee may
assume that the Trust is so qualified and is entitled to tax exemption.
2.6 Investment Manager.
A. As used herein, "Investment Manager" means the
individual or entity, other than the Trustee or named fiduciary as defined in
Act Section 401(a)(2), appointed by the
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<PAGE> 20
Committee pursuant to Paragraph B hereof, to manage, acquire or dispose of
assets of the "C" Fund. Any Investment Manager shall be (a) registered as an
investment adviser under the Investment Advisers Act of 1940; (b) a bank, as
defined in the Investment Advisers Act of 1940; or (c) an insurance company
qualified under the laws of more than one state to perform the services
described in the immediately preceding sentence Any Investment Manager so
appointed shall acknowledge in writing that he or it is a fiduciary with respect
to the Plan.
B. The Committee may, but shall not be obligated to,
appoint an Investment Manager to serve in accordance with the terms of the
Trust. The Committee shall have the right at any time or times to remove any
Investment Manager so appointed. If an Investment Manager is appointed the
Committee shall from time to time direct the amount, which may include the
entire "C" Fund, which shall be subject to management by the Investment Manager.
C. The Trustee shall not be liable for the acts or
omissions of any Investment Manager or be under any obligation to invest or
otherwise manage any asset of the "C" Fund which is subject to the management of
the Investment Manager.
D. To the extent the Committee directs that the "C" Fund
shall be subject to the management of an Investment Manager, the Trustee shall
be subject to the proper directions of the Investment Manager. The Investment
Manager is authorized and empowered in its sole discretion, but not by way of
limitation, to make such investments and to do such things as the Trustee may
make or do pursuant to Section 2.1 hereof (with the exception of Section 2.1G),
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subject, however, to the same standard of care, diversification requirement and
prohibitions applicable to the Trustee contained in Sections 2.2, 2.3 and 2.4
hereof.
2.7 Collective Trust Fund. The Trustee or the Investment Manager
may from time to time transfer all or a part of the "C" Fund to any common or
collective trust funds created and maintained by the Trustee, its affiliates, or
the Investment Manager subject to all terms and provisions of the particular
trust fund in which invested, provided that such trust funds contemplate the
commingling for investment purposes of such trust assets with assets of other
trusts qualified under Code Section 401, or the corresponding provisions of any
subsequent law of similar purpose. All of the provisions of the particular trust
funds' declarations of trust as amended from time to time, shall be deemed to be
incorporated herein and be a part hereof at all times when any of the funds of
this Trust are held in any such common or collective trust funds.
2.8 Loans. The Trustee may, if the Committee consents, make loans
to Participants, Retired Participants or Beneficiaries in accordance with
Section 10.6 of the Plan.
2.9 Participant Directed Accounts. The Committee may also adopt
procedures permitting Participants, Retired Participants, Terminated
Participants, Beneficiaries and Alternate Payees to direct the investment by the
Trustee of all amounts allocated to the separate accounts of each Participant,
Retired Participant, Terminated Participant, Beneficiary or Alternate Payee
under the Plan. In making any investment of the assets of the "C" Fund, the
Trustee shall be fully entitled to rely on such directions furnished to it by
the Committee or by Participants, Retired Participants, Terminated Participants,
Beneficiaries and Alternate Payees in
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accordance with the Committee's approved rules and procedures, and shall be
under no duty to make any inquiry or investigation with respect thereto. The
Trustee shall not be liable for or under any obligation with respect to the
investment or management of any asset of the Fund which is subject to the
investment direction of any Participant, Retired Participant, Terminated
Participant, Beneficiary or Alternate Payee.
2.10 Trust Investments. The Employer shall select all investments
and investment vehicles in which assets of the "C" Fund may be invested, and
shall communicate its selections to the Trustee. The Trustee shall invest all
Plan assets in such investment vehicles as are selected by the Employer,
pursuant to the Employer's direction or direction by Participants and others as
set forth in Section 2.9. The Trustee shall not be liable for or under any
obligation with respect to the investment or management of any asset of the Fund
which is subject to the investment direction of the Employer, any Participant,
Retired Participant, Terminated Participant, Beneficiary or Alternate Payee.
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ARTICLE III
ADMINISTRATION
3.1 Expenses. The expenses incurred by the Trustee in the
administration of the "C" Fund, such compensation to the Trustee as may be
agreed upon from time to time between the Employer and the Trustee and all other
proper charges and expenses of the Trustee and of its agents and counsel, shall
be paid from the "C" Fund, to the extent not paid by the Employer or otherwise
provided in Section 3.2. All taxes of any and all kinds whatsoever that may be
levied or assessed under existing or future laws upon the "C" Fund or the income
thereof shall be paid from the "C" Fund.
3.2 Legal Expenses. Legal expenses incurred by the Trustee shall
constitute a proper charge against the "C" Fund except expenses of the Trustee
connected with litigation primarily occasioned by and involving a charge of
negligence or willful misconduct of the Trustee, in which case the expense shall
be a charge against the "C" Fund if it shall be finally determined by such
litigation that no loss occurred by reason of the negligence or willful
misconduct of the Trustee. The Trustee shall be under no duty to engage in
litigation unless it is first indemnified against expense by the Employer or
unless the litigation involved is a question of its own misconduct.
3.3 Accounting Records. The Trustee shall keep accurate and
detailed accounts of all investments, receipts, disbursements and other
transactions hereunder, and all accounts, books
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<PAGE> 24
and records relating thereto shall be open to inspection and audit at all
reasonable times by any person designated by the Employer. Within 60 days
following the end of the Plan Year or the end of such other fiscal period as the
Employer may from time to time designate, and within 60 days following requests
made from time to time by the Committee, the Trustee shall file with the
Employer and the Committee a written accounting setting forth all investments,
receipts, disbursements and other transactions effected by it during the period
from the date of its last such accounting and a list of the assets of the "C"
Fund at the end of such period. Such accounting may be in the form of a monthly
or quarterly accounting which, when taken together, reflects the matters set
forth in the preceding sentence. Before the expiration of six (6) months from
the date of filing any such accounting, the Committee shall file its written
objections, if any, with the Trustee with respect to the propriety of its acts
and transactions shown in such accounting. Nothing herein contained, however,
shall be deemed to deny the Trustee its right to have an accounting of the "C"
Fund judicially settled.
3.4 Removal; Resignation. The Employer may at any time remove any
Trustee acting hereunder. Any Trustee acting hereunder may at any time resign by
mailing a written resignation by registered or certified mail to the Employer,
which resignation shall take effect on the date therein specified, provided same
shall not be less than 30 days from the date of its mailing unless the Employer
shall agree to an earlier date. In any case, the necessity for such 30 days'
notice may be waived by the mutual agreement of the resigning Trustee and the
Employer. Upon such removal or resignation of a Trustee, the Employer shall
appoint a corporation or an individual or individuals to be a successor Trustee
hereunder in the place of any removed or resigning Trustee. Any such successor
Trustee shall have the same powers and duties as those conferred upon the
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<PAGE> 25
removed or resigning Trustee. After receiving notice of removal or of the
effective date of resignation, the removed or resigning Trustee's sole duty
shall be to transfer, pay over, and deliver the "C" Fund to the successor
Trustee. The removed or resigning Trustee shall be authorized, however, to
reserve such reasonable sum of money as it may deem advisable, to provide any
sums chargeable against the "C" Fund for which it may be liable, or for payment
of its fees and expenses in connection with the settlement of its accounting or
otherwise, and any balance of such reserve remaining after the payment of fees
and expenses shall be paid over to the successor Trustee.
3.5 Acts of Employer and Committee. The Trustee shall not be
liable for any act or failure to act by the Employer, the Committee, or the
Other Trustee in the performance of their responsibilities under the terms of
the Plan or the requirements of the Act, or in carrying out any directions of
the Committee in accordance with the Plan.
3.6 Liability for Breach by the Other Trustee. To the extent
permitted under the Act, the Trustee shall not be liable either individually or
as a Trustee for any loss resulting or arising from the acts or omissions on the
part of the Other Trustee.
3.7 Limitation on Actions Against Trustee. No action shall be
commenced with respect to the Trustee's breach of any responsibility, duty or
obligation under the Plan or this Trust Agreement after the earliest of:
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A. 6 years after (i) the last action which constituted a
part of the breach or a violation; or (ii) in the case of an omission, the
latest date on which the Trustee could have cured the breach or violation; or
B. 3 years after the earliest date: (i) on which the
plaintiff had actual knowledge of the breach or violation; or (ii) in which a
report from which he could have reasonably been expected to have obtained
knowledge of such breach or violation was properly filed; or
C. 6 years after the date of the discovery of a breach
or violation in the event of the Trustee's fraud or concealment.
3.8 Service of Process. With respect to any litigation arising as
a result of the terms of this Trust Agreement, service of process on the
Employer or Trustee shall constitute service of process on all necessary parties
of the service of process. The settlement of judgment in any such case in which
the Employer is duly served or cited shall be binding upon all Participants,
Terminated Participants, Retired Participants, and their Beneficiaries, and upon
all persons claiming by, through, or under them.
3.9 Bonding. The Trustee acting hereunder and all other persons
designated by the Employer or the Trustee to receive, handle, disburse, or
otherwise exercise custody or control of funds or other property held in the "C"
Fund shall be bonded in accordance with the provisions of the Act.
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3.10 Indemnity. Unless resulting from the Trustee's gross
negligence, willful misconduct or lack of good faith, the Employer shall
indemnify and hold the Trustee harmless from, against, for and in respect of any
and all damages, losses, obligations, liabilities, liens, deficiencies, costs
and expenses, including without limitation, reasonable attorneys' fees and other
costs and expenses incident to any suit, action, investigation, claim or
proceedings suffered, sustained, incurred or required to be paid by the Trustee.
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ARTICLE IV
LIFE INSURANCE COMPANIES
4.1 Reliance by Insurer. If the Trustee purchases a life insurance
or annuity contract from an insurance company, such insurance company shall not
be deemed a party to this Trust Agreement or the Plan. A certification in
writing by the Trustee as to the occurrence of any event contemplated by this
Trust Agreement or the Plan shall be conclusive evidence thereof and the
insurance company shall be protected in relying upon such certification and
shall incur no liability for so doing. With respect to any action under any such
contract, the insurance company may deal with the Trustee as the sole owner
thereof and need not verify that any action of the Trustee is authorized by this
Trust Agreement or the Plan. Any change made or action taken by an insurance
company upon the direction of the Trustee shall fully discharge the insurance
company for all liability with respect thereto, and it need not see to the
distribution or further application of any monies paid by it to the Trustee or
paid in accordance with the direction of the Trustee.
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ARTICLE V
EVIDENCE OF AUTHORITY TO DIRECT TRUSTEE
5.1 Actions by Employer. Any action by the Employer pursuant to
any of the provisions of this Trust Agreement shall be evidenced by a resolution
of its Board of Directors or an Executive Committee thereof certified over the
signature of its Secretary or Assistant Secretary, or by written instrument
executed by any person authorized by said Board of Directors or Executive
Committee thereof to take such action; and the Trustee shall be fully protected
in acting in accordance with such written instrument or resolution so certified.
5.2 Instructions by Committee. All orders, requests, and
instructions of the Committee to the Trustee shall be in writing, signed by one
of its members or by its Secretary and the Trustee shall act and shall be fully
protected in acting in accordance with such orders, requests, and instructions,
and shall have no duty to see to the application of any funds paid in accordance
therewith. The Secretary or Assistant Secretary of the Employer shall certify to
the Trustee the appointment and termination of office of members of the
Committee and the Trustee shall not be charged with knowledge thereof until it
receives such notice.
5.3 Reliance on Instruments. Evidence required of anyone under
this Trust Agreement may be by certificate, affidavit, endorsements or any other
written instruments which the person acting in reliance thereon reasonably
believes to be pertinent, reliable and genuine, and to have been signed, made or
presented by the proper party or parties.
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<PAGE> 30
ARTICLE VI
AMENDMENTS; MERGERS
6.1 Amendment. The Employer reserves the right at any time and
from time to time by written instrument delivered to the Trustee to alter or
amend this Trust Agreement in whole or in part, provided that no such alteration
or amendment which affects the rights, duties or responsibilities of the Trustee
may be made without the Trustee's written consent, and provided further that no
such amendment shall authorize or permit any part of the corpus or income of the
"C" Fund to be used for or diverted to purposes other than for the exclusive
benefit of Participants, Terminated Participants, and Retired Participants, and
their Beneficiaries, except as otherwise provided in Section 6.4.
Notwithstanding the above provisions of this Section, in order
to comply with the Act, the Employer may make any amendment it determines
necessary or desirable with or without retroactive effect.
Any amendment made to this Trust Agreement shall be binding
upon all Employers participating in the Plan. This Section 6.1 may be changed at
any time by any Employer with respect to that Employer only by giving notice to
all Employers that such Employer has a right to amend the Plan with respect to
such Employer without affecting Plan provisions in effect for other Employers.
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6.2 Fund Merger, Etc. In the event of the merger, consolidation,
or transfer of any portion of the "C" Fund to a trust fund held under any other
plan of deferred compensation or in the event of partial or complete termination
of the Plan all as provided therein, the Trustee shall dispose of the "C" Fund
or a part thereof, as the case may be, in accordance with the written order of
the Committee accompanied by its certification to the Trustee that such
disposition is made in accordance with the terms of the Plan and that the
conditions of Section 6.4 are met with respect to such disposition.
6.3 Adoption by Successor Employer. In the event of the merger or
consolidation involving the Employer or other circumstances whereby a successor
association, corporation or other business organization shall continue to carry
on all or a substantial part of the business of the Employer, and such successor
shall elect to carry on the provisions of the Plan as therein provided, such
successor shall be substituted for the Employer hereunder.
6.4 No Diversion of Funds. The assets of the "C" Fund shall be
maintained for the exclusive benefit of Participants, Retired Participants,
Terminated Participants and their Beneficiaries, and it shall be impossible for
any part of the "C" Fund to be used for or diverted to any purpose other than
the exclusive benefit of such persons, except to the extent that:
A. Such portion of the "C" Fund may be applied to pay
expenses of the Committee and the Trustee as provided in the Plan and this
Trust; and
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<PAGE> 32
B. Any contributions are returned to the Employer in
accordance with Sections 10.3B and C of the Plan.
6.5 Governing Law. This Agreement shall be construed and enforced
under the Act and the laws of the State of North Carolina and all provisions
hereof shall administered in accordance with the provisions of Part 4 of Title I
the Act and according to the laws of the State of North Carolina, provided that
in case of conflict, the provisions of the shall control.
IN WITNESS WHEREOF, the Employer and the Trustee have caused this
Statement of the "C" Trust Agreement to be signed and sealed on the 15th day of
March, 1999.
INGLES MARKETS, INCORPORATED
By: /s/ Brenda S. Tudor
-----------------------------------
Title: Vice President - Finance and
Chief Financial Officer
Attest: /s/ David Keathley
--------------------------------
Title: Secretary
--------------------------------
(CORPORATE SEAL)
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TRUSTEES
/s/ Robert P. Ingle
---------------------------------
Robert P. Ingle, Trustee
/s/ Vaughn C. Fisher
---------------------------------
Vaughn C. Fisher, Trustee
/s/ Brenda S. Tudor
---------------------------------
Brenda S. Tudor, Trustee
29
<PAGE> 1
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 dated March 16, 1999) pertaining to the Ingles Markets,
Incorporated Investment/Profit Sharing Plan of our report dated November 6, 1998
with respect to the consolidated financial statements and schedule of Ingles
Markets, Incorporated included in its Annual Report on Form 10-K for the year
ended September 26, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
March 16, 1999
