<PAGE> 1
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended April 30, 1995
Commission File Number 0-12788
CASEY'S GENERAL STORES, INC.
(Exact name of registrant as specified in its charter)
IOWA 42-0935283
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE CONVENIENCE BLVD., ANKENY, IOWA
(Address of principal executive offices)
50021
(Zip Code)
(515) 965-6100
(Registrant's telephone number, including area code)
Securities Registered Pursuant To Section 12(b) Of The Act:
NONE
Securities Registered Pursuant To Section 12(g) Of The Act:
COMMON STOCK
(Title of Class)
COMMON SHARE PURCHASE RIGHTS
(Title of Class)
<PAGE> 2
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
At the close of business on July 19, 1995, the Company had 26,075,156
shares of Common Stock, no par value, issued and outstanding. The aggregate
market value of the 20,960,695 shares of Common Stock stock held by
non-affiliates of the Company on that date was $385,152,770, based on a last
reported sales price of $18-3/8 per share on said date.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents, as set forth herein, are
incorporated by reference into the listed Parts and Items of this report on
Form 10-K:
1. Annual Report for fiscal year ended April 30, 1995 (Items 5, 6, 7
and 8 of Part II and Item 14(a) of Part IV).
2. Proxy Statement to be filed with the Securities and Exchange
Commission in connection with the Annual Meeting of Shareholders to be held on
September 15, 1995 (Item 2 of Part I and Items 10, 11, 12 and 13 of Part III).
<PAGE> 3
PART I
ITEM 1. BUSINESS
The Company
Casey's General Stores, Inc. ("Casey's") and its two wholly-owned
subsidiaries, Casey's Marketing Company (the "Marketing Company") and Casey's
Services Company (the "Services Company") (Casey's, together with the Marketing
Company and the Services Company, shall be referred to herein as the
"Company"), operate convenience stores under the name "Casey's General Store"
in nine Midwestern states, primarily Iowa, Missouri and Illinois. The stores
carry a broad selection of food (including freshly prepared foods such as
pizza, donuts and sandwiches), beverages, tobacco products, health and beauty
aids, automotive products and other non-food items. In addition, all stores
offer gasoline for sale on a self-service basis. On April 30, 1995, there were
a total of 927 Casey's General Stores in operation, of which 741 were operated
by the Company ("Company Stores") and 186 stores were operated by franchisees
("Franchised Stores"). There were 60 Company Stores and 3 Franchised Stores
newly opened in fiscal 1995. The Company operates a central warehouse, the
Casey's Distribution Center, adjacent to its Corporate Headquarters facility in
Ankeny, Iowa through which it supplies grocery and general merchandise items to
Company and Franchised Stores. The Company also operates a commissary in
Creston, Iowa where it prepares sandwiches for sale through Company and
Franchised Stores.
Approximately 74% of all Casey's General Stores are located in areas
with populations of fewer than 5,000 persons, while approximately 6% of all
stores are located in communities with populations exceeding 20,000 persons.
The Company competes on the basis of price, as well as on the basis of
traditional features of convenience store operations such as location, extended
hours and quality of service.
Casey's, with executive offices at One Convenience Blvd., Ankeny, Iowa
50021-8045 (telephone 515/965-6100) was incorporated in Iowa in 1967. The
Marketing Company and the Services Company also operate from the Corporate
Headquarters facilities, and were incorporated in Iowa in March 1995.
General
Casey's General Stores seek to meet the needs of residents of small
towns by combining features of both general store and convenience store
operations. Smaller communities
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often are not served by national-chain convenience stores. The Company has
been successful in operating Casey's General Stores in small towns by offering,
at competitive prices, a broader selection of products than a typical
convenience store.
In each of the past two fiscal years, the Company derived
approximately 94% of its gross profits from retail sales by Company Stores. It
also derives income from continuing monthly royalties based on sales by
Franchised Stores, wholesale sales to Franchised Stores, sign and facade rental
fees and the provision of certain maintenance, transportation and construction
services to the Company's franchisees. Sales at Casey's General Stores
historically have been strongest during the Company's first and second quarters
and relatively weaker during its fourth quarter. In the warmer months of the
year (which comprise the Company's first two fiscal quarters), customers tend
to purchase greater quantities of gasoline and certain convenience items such
as beer, soft drinks and ice. Due to the continuing emphasis on higher-margin,
freshly prepared food items, however, Casey's net sales and net income (with
the exception of the fourth quarter) have become somewhat less seasonal in
recent years.
The following table shows the number of Company Stores and Franchised
Stores in each state on April 30, 1995:
<TABLE>
<CAPTION>
COMPANY FRANCHISED
STATE STORES STORES TOTAL
----- ------ ------ -----
<S> <C> <C> <C>
Iowa . . . . . . . 219 89 308
Illinois . . . . . 176 32 208
Indiana . . . . . . 1 0 1
Kansas . . . . . . 69 5 74
Minnesota . . . . . 37 16 53
Missouri . . . . . 184 33 217
Nebraska . . . . . 36 9 45
South Dakota . . . 19 0 19
Wisconsin . . . . . 0 2 2
--- --- ---
Total . . . 741 (80%) 186 (20%) 927 (100%)
</TABLE>
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The Company has operational responsibility for all Company Stores.
Franchised Stores generally follow the same operating policies as Company
Stores and are subject to Company supervision pursuant to its franchise
agreements. Franchised Stores and Company Stores offer substantially the same
products and conform to the same basic store design.
The following table shows the number of Company and Franchised Stores
opened, Franchised Stores converted to Company Stores and total stores in
operation during each of the last five fiscal years:
<TABLE>
<CAPTION>
STORES IN
FISCAL YEAR NEW OPERATION AT
ENDED STORES CONVERTED END OF
APRIL 30, OPENED STORES PERIOD
- ----------- ------ --------- ------------
<S> <C> <C> <C>
1991
Company . . . 14 3 579 (1)
Franchised . . 4 (3) 202 (1)
-- ---
Total . . 18 781
1992
Company . . . 23 2 597 (2)
Franchised . . 3 (2) 202 (2)
-- ---
Total . . 26 799
1993
Company . . . 36 10 639 (3)
Franchised . . 1 (10) 187 (3)
-- ---
Total . . 37 826
1994
Company . . . 56 1 687 (4)
Franchised . . 4 (1) 189 (4)
-- ---
Total . . 60 876
1995
Company . . . 60 0 741 (5)
Franchised . . 3 (0) 186 (5)
-- ---
Total . . 63 927
</TABLE>
______________
(1) Four Company Stores and two Franchised Stores were closed in 1991.
(2) Seven Company Stores and one Franchised Store were closed in 1992.
(3) Four Company Stores and six Franchised Stores were closed in 1993.
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(4) Nine Company Stores and one Franchised Store were closed in 1994.
(5) Six Company Stores and six Franchised Stores were closed in 1995.
Eleven Company Stores were opened in May and June 1995 and 39 Company
Stores and one Franchised Store were under construction at June 30, 1995. On
June 30, 1995, the Company had purchased or had the right to purchase 56
additional store sites. All but two of the 96 stores under construction or
planned for construction on such sites will be Company Stores. Management
anticipates opening approximately 65 new Company Stores during fiscal 1996,
substantially all of which will be located in Iowa, Illinois and Minnesota.
Seven such stores are expected to be located in Indiana, continuing the
Company's 1994 expansion of its market area into that state.
The Company intends to continue to increase the number of Company
Stores, and the proportion of Company Stores relative to Franchised Stores,
because of the greater profitability of Company Stores and the Company's
greater operating control over such stores. The Company anticipates it will
increase the number of Company Stores through construction of new stores and
the acquisition of existing Franchised Stores. During fiscal 1993, 1994 and
1995, the Company converted 10, 1 and 0 stores, respectively, from Franchised
Stores to Company Stores.
Management believes that its current market area presents substantial
opportunities for continued growth, and the Company intends to concentrate its
expansion efforts in this area before pursuing expansion in other geographic
markets. In the opinion of management, the Casey's Distribution Center in
Ankeny, Iowa can adequately supply the general merchandise requirements of
1,000 to 1,500 stores located within a 500-mile radius of the Casey's
Distribution Center, which would include the additional store sites being
planned for Indiana.
In its expansion, the Company intends to follow its traditional store
site selection criteria and to locate most new stores in small towns.
Management believes that satisfaction of such criteria will provide
opportunities for a better return on investment than could be realized from the
opening of stores in larger communities.
Corporate Subsidiaries
The Marketing Company and the Services Company were organized as Iowa
corporations in March 1995, and both are wholly-owned subsidaries of Casey's.
Certain Casey's employees became employees of the Marketing Company or the
Services
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Company on May 1, 1995, and both of those subsidiaries assumed certain
responsibilities and functions formerly held by Casey's on that date.
Casey's now operates Company Stores in the States of Illinois, Kansas,
Minnesota, Nebraska and South Dakota. Casey's also holds the rights to the
Casey's trademark and trade name, and serves as franchisor in connection with
the operation of Franchised Stores. Effective May 1, 1995, the Marketing
Company assumed responsibility for the operation of Company Stores in the
States of Iowa, Indiana and Missouri. The Marketing Company also has
responsibility for all Company wholesale operations, including the operation of
the Casey's Distribution Center. The Services Company provides a variety of
construction and transportation services for all Company Stores. Both the
Marketing Company and Services Company personnel utilize the Corporate
Headquarters facility for their base of operations.
Store Operations
Products Offered
Each Casey's General Store typically carries over 2,500 food and
non-food items. The products offered are those normally found in a
supermarket, except that the stores do not sell produce or fresh meats, and
selection is generally limited to one or two well-known brands of each item
stocked. Most staple foodstuffs carried are of nationally advertised brands.
Stores sell regional brands of dairy and bakery products, and approximately 93%
of the stores offer beer. The non-food items carried include tobacco products,
health and beauty aids, school supplies, housewares, pet supplies, photo
supplies, ammunition and automotive products.
All of the Casey's General Stores offer gasoline or gasohol for sale
on a self-service basis. Stores in Iowa, Illinois and Nebraska sell primarily
gasohol and are therefore able to avail themselves of a tax incentive for such
sales provided in those states. The gasoline and gasohol offered by the stores
generally are sold under the Casey's name, although some Franchised Stores sell
gasoline under a major oil company brand name.
It is management's policy to experiment with additions to the
Company's product line, especially products with higher gross profit margins.
As a result of this policy, the Company has added various prepared food items
to its product line over the years. In 1980, the Company initiated the
installation of "snack centers" which now are in approximately 99% of the
stores. The snack centers sell sandwiches, fountain drinks, and
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other items that have gross profit margins higher than those of general staple
goods. The Company also has introduced the sale of donuts prepared on store
premises, available in approximately 99% of the stores as of April 30, 1995, as
well as cinnamon rolls and cookies, and is installing donut-making facilities
in all newly constructed stores.
Since 1986, the Company has operated a commissary at which it prepares
sandwiches for sale in Casey's General Stores. Management expects the
commissary to produce approximately 2 million sandwiches during fiscal 1996,
for delivery to both Company and Franchised Stores through the Casey's
Distribution Center.
The Company began marketing made-from-scratch pizza in 1984, expanding
its availability to 877 (95%) stores as of April 30, 1995. Management believes
pizza is the Company's most popular prepared food product, although the Company
continues to expand its prepared food product line, which now includes ham and
cheese, beef, and hot and mild sausage and tenderloin sandwiches, pizza bread,
garlic bread, breakfast croissants, quarter-pound hamburgers and cheeseburgers.
In addition, Casey's Crispy Fried Chicken was available for take-out at 38 (4%)
stores as of April 30, 1995.
The pizza and other prepared food products are made on store premises
with ingredients delivered from the Casey's Distribution Center. Pizza
generally is available in three sizes with ten different toppings and is sold
for take-out between the hours of 4:00 P.M. and 11:00 P.M. In addition, at
selected store locations a luncheon menu consisting of pizza-by-the-slice,
sandwiches, pizza bread, and garlic bread is available.
An important part of the Company's marketing strategy is to increase
sales volume by pricing competitively on price-sensitive items. On less
price-sensitive items, it is the Company's policy to maintain, or in the case
of Franchised Stores to recommend, a Company-wide pricing structure in each
store that is generally comparable to that of other convenience, gasoline or
grocery stores located in the area and competing for the same customers.
Management attributes the Company's ability to offer competitive
prices to a number of factors, including the Company's central distribution
system, its purchasing practices which avoid dependence upon jobbers and
vendors by relying on a few large wholesale companies and its success in
minimizing land, construction and equipment costs.
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Management's decision to add snack center items, freshly prepared
donuts and pizza to the Company's product selection reflects its strategy to
promote high profit margin products that are compatible with convenience store
operations. Although retail sales of non-gasoline items during the last three
fiscal years have generated approximately 42% of the Company's retail sales,
such sales resulted in approximately 76% of the Company's gross profits from
retail sales. Gross profit margins for prepared foods items, which have
averaged approximately 53% during the last three fiscal years, are
significantly higher than the gross profit margin for retail sales of gasoline,
which has averaged approximately 9% during such period.
Store Design
Casey's General Stores are free-standing and, with a few exceptions to
accommodate local conditions, conform to standard construction specifications.
During the fiscal year ended April 30, 1995, the aggregate investment in the
land, building, equipment and initial inventory for a typical Company Store
averaged approximately $650,000. The standard building designed by the Company
is a pre-engineered steel frame building mounted on a concrete slab. The
current store design measures 36 feet by 66 feet, with approximately 1,300
square feet devoted to sales area, 500 square feet to kitchen space and 575
square feet to storage. Store lots have sufficient frontage and depth to
permit adequate drive-in parking facilities on one or more sides of each store.
Each store typically includes two islands of gasoline dispensers and storage
tanks having a capacity of 20,000 to 30,000 gallons of gasoline. The
merchandising display in each store follows a standard layout designed to
encourage a flow of customer traffic through all sections of the store. All
stores are air conditioned and have modern refrigeration facilities. The store
locations feature the Company's bright red and yellow pylon sign and facade,
both of which display the name and service mark of the Company.
All Casey's General Stores remain open at least 16 hours per day,
seven days a week. Most store locations are open from 6:00 a.m. to 11:00 p.m.,
although hours of operation may be adjusted on a store-by-store basis to
accommodate customer traffic patterns. The Company requires that all stores
maintain a bright, clean store interior and provide prompt check-out service.
It is the Company's policy not to permit the installation of electronic games
or sale of adult magazines on store premises.
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Store Locations
The Company traditionally has located its stores in small towns not
served by national-chain convenience stores. Approximately 74% of all stores
operate in areas with populations of fewer than 5,000 persons, while
approximately 6% of all stores are located in communities with populations
exceeding 20,000 persons. Management believes that a Casey's General Store
provides a service not otherwise available in small towns, and that a
convenience store in an area with limited population can be profitable if it
stresses sales volume and competitive prices. The Company's store site
selection criteria emphasize the population of the immediate area and daily
highway traffic volume. Management believes that, if there is no competing
store, a Casey's General Store may operate profitably at a highway location in
a community with a population of as few as 500 persons.
Gasoline Operations
Gasoline sales are an important part of the Company's sales and
earnings. Approximately 54% of Casey's net sales for the year ended April 30,
1995 were derived from the retail sale of gasoline. The following table
summarizes gasoline sales by Company Stores for the three fiscal years ended
April 30, 1995:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Number of
Gallons Sold 336,192,288 375,962,172 429,629,280
Total Retail
Gasoline Sales $351,361,731 $377,807,750 $455,310,780
Percentage of 52.2% 51.7% 53.6%
Net Sales
Gross Profit 8.2% 10.1% 9.4%
Percentage
Average Retail
Price per Gallon $1.05 $1.00 $1.06
Average Gross Profit
Margin per Gallon 8.55(cents) 10.12(cents) 9.91(cents)
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Average Number of
Gallons Sold per
Company Store * 540,999 570,253 596,684
</TABLE>
______________
* Includes only those stores that had been in operation for at least one
full year before commencement of the periods indicated.
Retail prices of gasoline increased during the year ended April 30,
1995. The total number of gallons sold by the Company during this period also
increased, primarily as the result of the increased number of Company Stores in
operation and the Company's efforts to price its retail gasoline competitively
in the market area served by the particular store. See "BUSINESS--Store
Operations--Competition" and "LEGAL PROCEEDINGS" herein. As a result of these
conditions, total retail gasoline sales by the Company increased during the
period, as did the percentage of such sales to the Company's total net sales.
Retail gasoline profit margins have a substantial impact on the
Company's net income. Profit margins on gasoline sales can be adversely
affected by factors beyond the control of the Company, including over-supply in
the retail gasoline market, uncertainty or volitility in the wholesale gasoline
market (such as that experienced during 1991 as a result of the Persian Gulf
crisis) and price competition from other gasoline marketers. Any substantial
decrease in profit margins on gasoline sales or number of gallons sold could
have a material adverse effect on the Company's earnings.
The Company purchases its gasoline from independent national and
regional petroleum distributors. Although in recent years the Company's
suppliers have not experienced any difficulties in obtaining sufficient amounts
of gasoline to meet the Company's needs, unanticipated national and
international events could result in a reduction of gasoline supplies available
for distribution to the Company. A substantial curtailment in gasoline
supplied to the Company could adversely affect the Company by reducing gasoline
sales. Further, management believes that a significant amount of the Company's
business results from the patronage of customers primarily desiring to purchase
gasoline and, accordingly, reduced gasoline supplies could adversely affect the
sale of non-gasoline items. These factors could have a material adverse impact
upon the Company's earnings and operations.
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Distribution and Wholesale Arrangements
The Marketing Company supplies all Company Stores and over 90% of the
Franchised Stores with groceries, food (including sandwiches prepared at the
Company's commissary), health and beauty aids and general merchandise from the
Casey's Distribution Center. The stores place orders for merchandise through a
telecommunications link-up to the computer at the Company's headquarters in
Ankeny, and weekly shipments are made from the Casey's Distribution Center by
40 Company-owned delivery trucks. The Marketing Company charges Franchised
Stores processing and shipping fees for each order filled by the Casey's
Distribution Center. The efficient service area of the Casey's Distribution
Center is approximately 500 miles, which encompasses all of the Company's
existing and proposed stores.
The Marketing Company's only wholesale sales are to Franchised Stores,
to which it sells groceries, prepared sandwiches, ingredients and supplies for
donuts, sandwiches and pizza, health and beauty aids, general merchandise and
gasoline. Although the Company derives income from this activity, it makes
such sales, particularly gasoline sales, at narrow profit margins in order to
promote the competitiveness and increase the sales to Franchised Stores.
In fiscal 1995, the Company purchased directly from manufacturers
approximately 90% of the food and non-food items sold from the Casey's
Distribution Center. The Company has not entered into contracts with any of
the suppliers of products sold by Casey's General Stores. Management believes
that the absence of such contracts is customary in the industry for purchasers
such as the Company and enables the Company to respond flexibly to changing
market conditions.
Franchise Operations
Casey's has franchised Casey's General Stores since 1970. In addition
to generating income for Casey's, franchising historically enabled Casey's to
obtain desirable store locations from persons who have preferred to become
franchisees rather than to sell or lease their locations to Casey's.
Franchising also enabled Casey's to expand its system of stores at a faster
rate, thereby achieving operating efficiencies in its warehouse and
distribution system as well as greater identification in its market area. As
the Company has grown and strengthened its financial resources, the advantages
of franchising have decreased in importance and management currently expects to
grant new franchises only to existing franchisees operating in states other
than Iowa on a limited basis. See "BUSINESS - Government Regulation" herein.
From April 30, 1983 to April 30,
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1995, the percentage of Company Stores increased from 44% to 80%. From
inception to April 30, 1995, the Company had converted 135 Franchised Stores to
Company Stores by leasing or purchasing such stores.
All franchisees pay Casey's a royalty fee equal to 3% of gross
receipts derived from total store sales excluding gasoline, subject to a
minimum monthly royalty of $300. Casey's currently assesses a royalty fee of
$.018 per gallon on gasoline sales, although it has discretion to increase this
amount to 3% of retail gasoline sales. In addition, franchisees pay Casey's a
sign and facade rental fee. The franchise agreements do not authorize Casey's
to establish the prices to be charged by franchisees. Further, except with
respect to certain supplies and items provided in connection with the opening
of each store, each franchisee has unlimited authority to purchase supplies and
inventory from any supplier, provided the products meet the Company's quality
standards. Franchise agreements typically contain a non-competition clause
that restricts the franchisee's ability to operate a convenience-style store in
that area for a period of two or three years following termination of the
agreement. See "BUSINESS - Government Regulation" herein for a discussion of
recent legislation in Iowa concerning franchise agreements.
Personnel
On April 30, 1995, the Company had 3,252 full-time employees and 4,783
part-time employees. The Company has not experienced any work stoppages.
There are no collective bargaining agreements between the Company and any of
its employees.
The Company's supervisory personnel are responsible for monitoring and
assisting all stores, including Franchised Stores. Centralized control of
store operations is primarily maintained by the Chief Operating Officer of the
Company, who is assisted by the Vice President of Store Operations. Reporting
directly to the Vice President of Store Operations are four regional operations
managers. Reporting directly to the regional managers are 16 district
managers, each with responsibility over approximately equal numbers of stores.
Each district manager is generally in charge of seven supervisors. Each of the
113 supervisors in turn is responsible for the operations of approximately
eight individual stores.
The majority of store managers and store personnel live in the
community in which their Casey's store is located. Training of store managers
and store personnel is conducted through the Store Operations Training
Department overseen by the Director of
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Store Operations Training. The Company operates a central training facility at
its Headquarters facility in Ankeny and provides continuing guidance and
training in the areas of merchandising, advertising and promotion,
administration, record keeping, accounting, inventory control and other general
operating and management procedures.
As an incentive to the Company's employees and those of franchisees,
management stresses an internal promotion philosophy. Most district managers
and store supervisors previously worked as store managers. At the senior
management level, one of the Company's executive officers has been employed by
the Company for more than nineteen years, one has been employed for more than
twenty-three years and one has been employed for more than twenty-seven years.
In addition to its four executive officers, the Company currently has
Vice Presidents of Store Operations, Property Management, Transportation, Food
Service and Marketing. The Company also has 33 other employees with managerial
responsibilities in the areas of store operations, gasoline marketing, real
estate development, construction, equipment maintenance, merchandising,
advertising, Distribution Center operations, payroll, accounting and data
processing. The Company believes that such employees are capable of carrying
out their responsibilities without substantial supervision by the executive
officers.
Competition
The Company's business is highly competitive. Food, including
prepared foods, and non-food items similar or identical to those sold by the
Company are generally available from various competitors in the communities
served by Casey's General Stores. Management believes that its stores located
in small towns compete principally with local convenience stores, grocery
stores and similar retail outlets and, to a lesser extent, with prepared food
outlets or restaurants and expanded gasoline stations offering a more limited
selection of grocery and food items for sale. Stores located in more heavily
populated communities may compete with local and national grocery and drug
store chains, expanded gasoline stations, supermarkets, discount food stores
and traditional convenience stores. Convenience store chains competing in the
larger towns served by Casey's General Stores include 7-Eleven, Kwik Shops, and
regional chains. Some of the Company's competitors have greater financial and
other resources than the Company.
Gasoline sales, in particular, are intensely competitive. The Company
competes with both independent and national brand
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<PAGE> 15
gasoline stations, some of which may have access to more favorable arrangements
for gasoline supply than do the Company or the firms that supply its stores.
Management believes that the most direct competition for gasoline sales comes
from other self-service installations in the vicinity of individual store
locations, some of whom regularly offer non-cash discounts on self-service
gasoline purchases such as a "free" car wash or "mini-service." Company Stores
generally do not offer such discounts. In addition, management believes that
Company Stores compete for gasoline customers who regularly travel outside of
their relatively smaller community for shopping or employment purposes, and who
therefore are able to purchase gasoline while in nearby larger communities
where retail gasoline prices generally are lower. For this reason, the Company
attempts to offer gasoline for sale at prices comparable to those prevailing in
nearby larger communities. See "LEGAL PROCEEDINGS" herein.
The Company believes that the competitiveness of Casey's General
Stores is based on price (particularly in the case of gasoline sales) as well
as on a combination of store location, extended hours, a wide selection of name
brand products, self-service gasoline facilities and prompt check-out service.
The Company also believes it is important to its business to maintain a bright,
clean store and to offer quality products for sale.
Service Marks
The name "Casey's General Store" and the service mark consisting of
the Casey's design logo (with the words "Casey's General Store") are registered
service marks of Casey's under federal law. Management believes that these
service marks are of material importance in promoting and advertising the
Company's business.
Government Regulation
The United States Environmental Protection Agency and several states,
including Iowa, have established requirements for owners and operators of
underground gasoline storage tanks ("USTs") with regard to (i) maintenance of
leak detection, corrosion protection and overfill/spill protection systems,
(ii) upgrade of existing tanks, (iii) actions required in the event of a
detected leak, (iv) prevention of leakage through tank closings and (v)
required gasoline inventory recordkeeping. Since 1984, new Company Stores have
been equipped with non-corroding fiberglass USTs, including some with
double-wall construction, over-fill protection and electronic tank monitoring,
and the Company has an active inspection and renovation program with respect to
its older USTs. The Company
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currently has 1,566 USTs of which 1,166 are fiberglass and 400 are steel.
Management believes that its existing gasoline procedures and planned capital
expenditures will continue to keep the Company in substantial compliance with
all current federal and state UST regulations.
Several of the states in which the Company does business have trust
fund programs with provisions for sharing or reimbursing corrective action or
remediation costs incurred by UST owners, including the Company. These
programs, other than the State of Iowa's, generally are in the early stages of
operation and the extent of available coverage or reimbursement under such
programs for costs incurred by the Company is not fully known at this time. In
each of the years ended April 30, 1994 and 1995, the Company spent
approximately $1,814,000 and $2,137,000, respectively, for assessments and
remediation. Substantially all of these expenditures have been submitted for
reimbursement from state-sponsored trust fund programs, and, as of June 30,
1995, approximately $3,800,000 has been received from such programs. The
Company has accrued a liability at April 30, 1995, of approximately $3,300,000
for estimated expenses related to anticipated corrective actions or remediation
efforts, including relevant legal and consulting costs. Management believes
the Company has no material joint and several environmental liability with
other parties.
Management of the Company currently estimates that aggregate capital
expenditures for electronic monitoring, cathodic protection and overfill/spill
protection will approximate $1,000,000 in fiscal 1996 through December 23,
1998, in order to comply with the existing UST regulations. Additional
regulations, or amendments to the existing UST regulations, could result in
future revisions to such estimated expenditures.
The Federal Trade Commission and some states have adopted laws
regulating franchise operations. Existing laws generally require certain
disclosures and/or registration in connection with the sale of the franchises,
and regulate certain aspects of the relationship with franchisees, such as
rights of termination, renewal and transfer. Management believes that the
Company is duly registered in all states where its present operations require
such registration. Management does not believe that the existing state
registration and disclosure requirements, or the federal disclosure
requirements, have a material effect on the Company's operations.
During the 1992 legislative session, the Iowa General Assembly enacted
legislation relating to franchise agreements and their enforcement and
establishing certain duties and
- 14 -
<PAGE> 17
limitations on franchisors. The legislation, which became effective July 1,
1992, applies to all new or existing franchises that are operated in the State
of Iowa, including those of Casey's. The legislation contains, among other
things, provisions regarding the transfer of franchises, the termination or
nonrenewal of franchises, and the encroachment on existing franchises. Several
such provisions conflict with those contained in existing franchise agreements
entered into by Casey's with respect to stores located in the State of Iowa.
As a result, several provisions of Casey's existing franchise agreements may
not be enforceable under the legislation.
On May 14, 1993, in an unrelated proceeding brought by other
franchisors operating in Iowa, the United States District Court for the
Southern District of Iowa ruled that certain provisions of the legislation
(those which make the legislation applicable to franchises existing before its
effective date and those provisions governing the transfer of franchises,
encroachment, termination, and non-renewal) substantially impair, in violation
of the United States and Iowa Constitutions, the franchisor-plaintiffs'
contractual rights under their license agreements with certain Iowa
franchisees. The Court made no ruling on the constitutionality of the
legislation as applied to franchise agreements entered into or renewed after
the effective date of the legislation. The Company understands that the
Court's ruling has been affirmed by the Eighth Circuit Court of Appeals.
Management does not expect Casey's to enter into new franchise agreements in
Iowa under the current legislation, and does not expect the legislation to have
a material effect on the Company's business.
ITEM 2. PROPERTIES
The Company owns and has consolidated its Corporate Headquarters and
Distribution Center operations on a 36-acre site in Ankeny, Iowa. This
facility consists of approximately 255,000 square feet, including a central
Corporate Headquarters office building, expanded Distribution Center and
vehicle service/maintenance center. The facility was completed in February
1990 and placed in full service at that time.
The Company owns an approximately 10,000 square-foot building on an
eight-acre site in Creston, Iowa that it utilizes as a sandwich commissary
center for the preparation of sandwiches sold in Casey's General Stores.
On April 30, 1995, Casey's owned the land at 611 locations and the
buildings at 629 locations, and leased the land at 130 locations and the
buildings at 112 locations. Most of the leases provide for the payment of a
fixed rent, plus property
- 15 -
<PAGE> 18
taxes and insurance and maintenance costs. Generally, the leases are for terms
of 10 to 20 years, with options to renew for additional periods or options to
purchase the leased premises at the end of the lease period.
The Company leases approximately 16,800 square feet of office and
warehouse space at 1299 N.E. Broadway Avenue, Des Moines, Iowa, which was used
as its principal offices and corporate headquarters until the new Corporate
Headquarters facility became available in February 1990. Additional
information concerning the Company's lease of such space is set forth under the
caption "Other Information Relating to Directors and Executive Officers -
Certain Transactions" in the Company's definitive Proxy Statement to be filed
with the Commission pursuant to Regulation 14A within 120 days after April 30,
1995 and to be used in connection with the Company's Annual Meeting of
shareholders on September 15, 1995.
ITEM 3. LEGAL PROCEEDINGS
The Company is the sole defendant in a class action lawsuit brought by
five Iowa retail gasoline dealers and a trade association representing
independent distributors and retailers of gasoline products within the State of
Iowa, acting on behalf of a class of such dealers. The Amended and Substituted
Complaint - Class Action (the "Bathke Complaint"), filed in the United States
District Court for the Southern District of Iowa (Gilbert Bathke, et. al. v.
Casey's General Stores, Inc., Civil No. 4-90-CV-80658), alleged that by
selling gasoline at "very low prices which are supported by higher prices
charged for the same petroleum products in other markets," the Company violated
federal anti-trust laws (specifically, Section 2(a) of the Robinson-Patman Act
and Section 2 of the Sherman Act) and State of Iowa unfair price discrimination
laws. The Bathke Complaint sought as relief a permanent injunction enjoining
such practices, unspecified monetary damages (to be trebled as provided by law)
and attorneys' fees.
Following the completion of formal discovery activities, the District
Court granted the Company's motion for summary judgment seeking the dismissal
of all counts of the Bathke Complaint in an Order entered on October 14, 1994.
The District Court dismissed the federal antitrust claims with prejudice and
dismissed the State unfair price discrimination claim without prejudice,
concluding that there was an "insuffucient basis in economic reality and
substantive federal law for the plaintiffs' theories."
Plaintiffs have appealed the dismissal of the Bathke Complaint to the
Eighth Circuit Court of Appeals in St. Louis,
- 16 -
<PAGE> 19
Missouri. Briefs have been filed with that Court and oral argument on the
appeal was held on May 15, 1995. A decision is currently not expected until
late 1995. Management does not believe that the Company is liable to
plaintiffs for the conduct complained of and intends to contest the matter
vigorously.
The Company from time to time is a party to other legal proceedings
arising from the conduct of its business operations, including proceedings
relating to personal injury and employment claims, disputes under franchise
agreements and claims by state and federal regulatory authorities relating to
the sale of products pursuant to state or federal licenses or permits.
Management does not believe that the potential liability of the Company with
respect to such other proceedings pending as of the date of this Form 10-Q is
material in the aggregate.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information required in response to this Item is incorporated
herein by reference from the section entitled "Common Stock Data" set forth on
page 24 of the Company's Annual Report to shareholders for the year ended April
30, 1995.
The cash dividends declared by the Company (adjusted to give effect to
the two-for-one stock split distributed on February 15, 1994) during the
periods indicated have been as follows:
<TABLE>
<CAPTION>
Cash Dividend
Calendar 1993 Declared
------------- -------------
<S> <C>
First Quarter $.015
Second Quarter .01875
Third Quarter .01875
Fourth Quarter .01875
-------
$.07125
</TABLE>
- 17 -
<PAGE> 20
<TABLE>
<CAPTION>
Calendar 1994
-------------
<S> <C>
First Quarter $.01875
Second Quarter .02
Third Quarter .02
Fourth Quarter .02
-------
$.07875
<CAPTION>
Calendar 1995
-------------
<S> <C>
First Quarter $.02
Second Quarter .02
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The information required in response to this Item is incorporated
herein by reference from the section entitled "Selected Financial Data" set
forth on page 23 of the Company's Annual Report to shareholders for the year
ended April 30, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required in response to this Item is incorporated
herein by reference from pages 18 through 22 of the Company's Annual Report to
shareholders for the year ended April 30, 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required in response to this Item is incorporated
herein by reference from pages 8 through 17 and page 24 of the Company's Annual
Report to shareholders for the year ended April 30, 1995.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
That portion of the Company's definitive Proxy Statement appearing
under the caption "Election of Directors", to be filed with the Commission
pursuant to Regulation 14A within 120 days after April 30, 1995 and to be used
in connection with the Company's Annual Meeting of shareholders to be held on
September 15, 1995, is hereby incorporated by reference.
- 18 -
<PAGE> 21
ITEM 11. EXECUTIVE COMPENSATION
That portion of the Company's definitive Proxy Statement appearing
under the caption "Executive Compensation", to be filed with the Commission
pursuant to Regulation 14A within 120 days after April 30, 1995 and to be used
in connection with the Company's Annual Meeting of shareholders to be held on
September 15, 1995, is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
That portion of the Company's definitive Proxy Statement appearing
under the captions "Shares Outstanding" and "Voting Procedures", to be filed
with the Commission pursuant to Regulation 14A within 120 days after April 30,
1995 and to be used in connection with the Company's Annual Meeting of
shareholders to be held on September 15, 1995, is hereby incorporated by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
That portion of the Company's definitive Proxy Statement appearing
under the caption "Other Information Relating to Directors and Executive
Officers", to be filed with the Commission pursuant to Regulation 14A within
120 days after April 30, 1995 and to be used in connection with the Company's
Annual Meeting of shareholders to be held on September 15, 1995, is hereby
incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) DOCUMENTS FILED
The documents listed below are filed as a part of this Report on Form
10-K and are incorporated herein by reference:
(1) The following financial statements, shown on pages 8 through
17 of the Company's Annual Report to shareholders for the year
ended April 30, 1995:
- 19 -
<PAGE> 22
Balance Sheets, April 30, 1995 and 1994
Statements of Income, Three Years Ended April 30, 1995
Statements of Shareholders' Equity, Three Years
Ended April 30, 1995
Statements of Cash Flows,
Three Years Ended April 30, 1995
Notes to Financial Statements
Independent Auditors' Report
(2) The exhibits set forth in Item 14(c) of this report. The
management contracts or compensatory plans or arrangements
required to be filed as an exhibit to this Form 10-K pursuant
to Item 14(c) consist of the following:
<TABLE>
<CAPTION>
Exhibit Number Document
-------------- --------
<S> <C>
10.4(b) Sixth Amended and Restated
Casey's General Stores, Inc.
Employees' Stock Ownership
Plan and Trust Agreement
10.19 Casey's General Stores, Inc.
1991 Incentive Stock Option
Plan (j) and amendment
thereto (o)
10.21 Employment Agreement with
Donald F. Lamberti (l)
10.22 Employment Agreement with
Ronald M. Lamb (l)
10.23 Employment Agreement with
Douglas K. Shull (l)
10.24 Employment Agreement with
John G. Harmon (t)
</TABLE>
____________________
(j) Incorporated by reference from the Registration Statement on Form S-8
(33-42907) filed September 23, 1991.
- 20 -
<PAGE> 23
(l) Incorporated by reference from the Quarterly Report on Form 10-Q for the
fiscal quarter ended January 31, 1992.
(o) Incorporated by reference from the Quarterly Report on Form 10-Q for the
fiscal quarter ended January 31, 1994.
(t) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1994.
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the fiscal quarter
ended April 30, 1995.
(c) EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Document
------ --------
<S> <C>
3.1 Restated and Amended Articles of Incorporation (a) and Amendments thereto (b), (d), (f)
3.2 Amended and Restated By-Laws (h)
4.2 Rights Agreement between Casey's General
Stores, Inc. and United Missouri Bank of Kansas City, N.A., as Rights Agent, relating to Common Share Purchase
Rights (e) and amendments thereto (i), (p), (q)
4.3 Note Agreement between Casey's General Stores, Inc. and Principal Mutual Life Insurance Company and Nippon Life
Insurance Company of America (n)
9 Voting Trust Agreement (a) and Amendment thereto (d)
10.4(b) The Sixth Amended and Restated Casey's General Stores, Inc. Employees' Stock Ownership Plan and Trust Agreement
10.6 Lease Agreement between Casey's General Stores, Inc. and Broadway Distributing Company (a)
10.8 Form of Franchise Agreement (a)
10.9 Form of Store Lease Agreement (a)
10.10 Form of Equipment Lease Agreement (a)
10.16 Secured Promissory Note dated November 30, 1989 given to Principal Mutual Life Insurance Company (f)
10.18 Commercial Note with Norwest Bank Iowa, N.A. (k)
10.19 Casey's General Stores, Inc. 1991 Incentive Stock Option Plan (j) and amendment thereto (o)
</TABLE>
- 21 -
<PAGE> 24
<TABLE>
<S> <C>
10.21 Employment Agreement with Donald F. Lamberti (l)
10.22 Employment Agreement with Ronald M. Lamb (l)
10.23 Employment Agreement with Douglas K. Shull (l)
10.24 Employment Agreement with John G. Harmon (t)
10.25 Term Loan Agreement and Current Note with Norwest Bank Iowa, N.A. (m)
10.26 Loan Agreement and Commercial Note with Peoples Trust and Savings Bank (m)
10.27 Non-Employee Director Stock Option Plan (s)
10.28 Term Note with UMB Bank, n.a. (r)
11 Statement regarding computation of earnings per share
13 Financial Statements from 1995 Annual Report
21 Subsidiaries of Casey's General Stores, Inc.
23.1 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule (for SEC use only)
</TABLE>
__________________________________
(a) Incorporated herein by reference from the Registration Statement on Form
S-1 (2-82651) filed August 31, 1983.
(b) Incorporated herein by reference from the Annual Report on Form 10-K for
the fiscal year ended April 30, 1986 (0-12788).
(c) Reserved.
(d) Incorporated herein by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended January 31, 1988 (0-12788).
(e) Incorporated herein by reference from the Registration Statement on
Form 8-A filed June 19, 1989 (0-12788).
(f) Incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended October 31, 1989.
(g) Incorporated by reference from the Annual Report on Form 10-K for
the fiscal year ended April 30, 1989.
(h) Incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended July 31, 1989.
(i) Incorporated by reference from the Form 8 (Amendment No. 1 to the
Registration Statement on Form 8-A filed June 19, 1989) filed September
10, 1990.
- 22 -
<PAGE> 25
(j) Incorporated by reference from the Registration Statement on Form S-8
(33-42907) filed September 23, 1991.
(k) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1991.
(l) Incorporated by reference from the Quarterly Report on Form 10-Q for the
fiscal quarter ended January 31, 1992.
(m) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1992.
(n) Incorporated by reference from the Current Report on Form 8-K filed
February 18, 1993.
(o) Incorporated by reference from the Quarterly Report on Form 10-Q for the
fiscal quarter ended January 31, 1994.
(p) Incorporated by reference from the Form 8-A/A (Amendment No. 3 to the
Registration Statement on Form 8-A filed June 19, 1989) filed March 30,
1994.
(q) Incorporated by reference from the Form 8-A12G/A (Amendment No. 2 to the
Registration Statement on Form 8-A filed June 19, 1989) filed July 29,
1994.
(r) Incorporated by reference from the Quarterly Report on Form 10-Q for the
fiscal quarter ended January 31, 1995.
(s) Incorporated by reference from the Quarterly Report on Form 10-Q for the
fiscal quarter ended July 31, 1994.
(t) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1994.
- 23 -
<PAGE> 26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CASEY'S GENERAL STORES, INC.
(Registrant)
Date: July 20, 1995 By /s/ Donald F. Lamberti
--------------------------
Donald F. Lamberti,
Chief Executive Officer
and Chairman of the Board
(Principal Executive Officer)
- 24 -
<PAGE> 27
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Date: July 20, 1995 By /s/ Donald F. Lamberti
--------------------------------------
Donald F. Lamberti
Chief Executive Officer,
Chairman of the Board
(Principal Executive Officer)
Date: July 20, 1995 By /s/ Ronald M. Lamb
---------------------------------------
Ronald M. Lamb
President and Chief Operating Officer,
Director
Date: July 24, 1995 By /s/ Douglas K. Shull
---------------------------------------
Douglas K. Shull
Treasurer, Director
(Principal Financial Officer and
Principal Accounting Officer)
Date: July 20, 1995 By /s/ John G. Harmon
---------------------------
John G. Harmon
Secretary, Director
Date: July 21, 1995 By /s/ George A. Doerner
---------------------------
George A. Doerner
Director
Date: July 26, 1995 By /s/ Kenneth H. Haynie
---------------------------
Kenneth H. Haynie
Director
Date: July 21, 1995 By /s/ John R. Fitzgibbon
---------------------------
John R. Fitzgibbon
Director
Date: July 26, 1995 By /s/ Jack P. Taylor
---------------------------
Jack P. Taylor
Director
</TABLE>
- 25 -
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C>
10.4(b) Sixth Amended and Restated
Casey's General Stores, Inc.
Employees' Stock Ownership Plan
and Trust Agreement
11 Statement regarding computation
of earnings per share
13 Financial Statements from
1995 Annual Report to shareholders
21 Subsidiaries of Casey's General
Stores, Inc.
23.1 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule (for SEC use only)
</TABLE>
<PAGE> 1
Exhibit 10.4(b)
THE SIXTH AMENDED AND RESTATED
CASEY'S GENERAL STORES, INC. EMPLOYEES'
STOCK OWNERSHIP PLAN AND TRUST AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - DEFINITIONS
1.01 Account . . . . . . . . . . . . . . . . . . . . I-1
1.02 Accounting Date . . . . . . . . . . . . . . . . I-1
1.03 Accrued Benefit . . . . . . . . . . . . . . . . I-1
1.04 Act . . . . . . . . . . . . . . . . . . . . . . I-1
1.05 Advisory Committee . . . . . . . . . . . . . . I-1
1.06 Beneficiary . . . . . . . . . . . . . . . . . . I-1
1.07 Break in Service . . . . . . . . . . . . . . . I-1
1.08 Code . . . . . . . . . . . . . . . . . . . . . I-1
1.09 Company . . . . . . . . . . . . . . . . . . . . I-1
1.10 Compensation . . . . . . . . . . . . . . . . . I-2
1.11 Disability . . . . . . . . . . . . . . . . . . I-4
1.12 Disqualified Person . . . . . . . . . . . . . . I-5
1.13 Effective Date . . . . . . . . . . . . . . . . I-5
1.14 Employee . . . . . . . . . . . . . . . . . . . I-5
1.15 Employer Securities . . . . . . . . . . . . . . I-5
1.16 Employment Commencement Date . . . . . . . . . I-5
1.17 Exempt Loan . . . . . . . . . . . . . . . . . . I-5
1.18 Highly Compensated Employee . . . . . . . . . . I-5
1.19 Hour of Service . . . . . . . . . . . . . . . . I-7
1.20 Leveraged Employer Securities . . . . . . . . . I-8
1.21 Named Fiduciary . . . . . . . . . . . . . . . . I-9
1.22 Nonforfeitable . . . . . . . . . . . . . . . . I-9
1.23 Normal Retirement Age . . . . . . . . . . . . . I-9
1.24 Participant . . . . . . . . . . . . . . . . . . I-9
1.25 Plan . . . . . . . . . . . . . . . . . . . . . I-9
1.26 Plan Administrator . . . . . . . . . . . . . . I-9
1.27 Plan Entry Date . . . . . . . . . . . . . . . . I-9
1.28 Plan Year . . . . . . . . . . . . . . . . . . I-9
1.29 Service . . . . . . . . . . . . . . . . . . . . I-9
1.30 Taxable Wage Base . . . . . . . . . . . . . . . I-9
1.31 Trust . . . . . . . . . . . . . . . . . . . . . I-10
1.32 Trust Fund . . . . . . . . . . . . . . . . . . I-10
1.33 Trustee . . . . . . . . . . . . . . . . . . . . I-10
1.34 Determination of Top Heavy Status . . . . . . . I-10
1.35 Related Employers . . . . . . . . . . . . . . I-12
1.36 Service for Predecessor Employer . . . . . . . I-13
1.37 Leased Employees . . . . . . . . . . . . . . . I-13
1.38 Plan Maintained by More Than One Employer . . . I-14
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE II - STATEMENT OF TRUST . . . . . . . . . . . . II-1
ARTICLE III - PARTICIPATION
3.01 Eligibility . . . . . . . . . . . . . . . . . . III-1
3.02 Year of Service - Participation . . . . . . . . III-1
3.03 Break in Service - Participation . . . . . . . III-1
3.04 Participation Upon Re-Employment . . . . . . . III-1
3.05 Designation of Participants . . . . . . . . . . III-1
ARTICLE IV - COMPANY CONTRIBUTIONS
4.01 Amount . . . . . . . . . . . . . . . . . . . . IV-1
4.02 Determination of Contribution . . . . . . . . . IV-1
4.03 Time of Payment . . . . . . . . . . . . . . . . IV-1
4.04 Allocation of Company Contributions and
Participant Forfeitures . . . . . . . . . . . IV-2
4.05 Forfeiture Allocation . . . . . . . . . . . . IV-3
4.06 Accrual of Benefit . . . . . . . . . . . . . . IV-3
4.07 Limitations on Allocations to Participant's
Account . . . . . . . . . . . . . . . . . . . IV-4
4.08 Definitions - Article IV. . . . . . . . . . . . IV-5
ARTICLE V - PARTICIPANT CONTRIBUTIONS
5.01 Participant Voluntary Contributions . . . . . . V-1
5.01 Participant Rollover Contributions . . . . . . V-1
ARTICLE VI - TERMINATION OF SERVICE - PARTICIPANT
VESTING
6.01 Normal Retirement Age . . . . . . . . . . . . VI-1
6.02 Participant Disability . . . . . . . . . . . . VI-1
6.03 Vesting Schedule . . . . . . . . . . . . . . . VI-1
6.04 Cash-out Distributions to Partially-Vested
Participants/Restoration of Forfeited
Accrued Benefit . . . . . . . . . . . . . . VI-2
6.05 Segregated Account for Repaid Amount . . . . . VI-4
6.06 Year of Service - Vesting . . . . . . . . . . VI-4
6.07 Break in Service - Vesting . . . . . . . . . . VI-4
6.08 Included Years of Service - Vesting . . . . . VI-4
6.09 Forfeiture Occurs . . . . . . . . . . . . . . VI-5
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VII - TIME AND METHOD OF PAYMENT OF BENEFITS
7.01 Time of Payment of Accrued Benefit . . . . . . VII-1
7.02 Method of Payment of Accrued Benefit . . . . . VII-3
7.03 Benefit Payment Elections . . . . . . . . . . VII-3
7.04 Annuity Distributions to Participants . . . . VII-5
7.05 Special Distribution and Payment
Requirements . . . . . . . . . . . . . . . . VII-5
7.06 Direct Rollover of Eligible Rollover
Distribution . . . . . . . . . . . . . . . . VII-6
7.07 Distributions Under Domestic
Relations Orders . . . . . . . . . . . . . . VII-7
ARTICLE VIII - COMPANY ADMINISTRATIVE PROVISIONS
8.01 Information to Committee . . . . . . . . . . . VIII-1
8.02 No Liability . . . . . . . . . . . . . . . . . VIII-1
8.03 Indemnity of Plan Committee . . . . . . . . . VIII-1
8.04 Company Direction of Investment . . . . . . . VIII-1
8.05 Amendment to Vesting Schedule . . . . . . . . VIII-2
ARTICLE IX - PARTICIPANT ADMINISTRATIVE PROVISIONS
9.01 Beneficiary Designation. . . . . . . . . . . . IX-1
9.02 No Beneficiary Designation . . . . . . . . . . IX-1
9.03 Personal Data to Committee . . . . . . . . . . IX-2
9.04 Address for Notification . . . . . . . . . . . IX-2
9.05 Assignment or Alienation . . . . . . . . . . . IX-2
9.06 Notice of Change of Terms. . . . . . . . . . . IX-2
9.07 Litigation Against the Trust . . . . . . . . . IX-2
9.08 Information Available. . . . . . . . . . . . . IX-3
9.09 Appeal Procedure for Denial of Benefits. . . . IX-3
9.10 Participant Direction of Investment. . . . . . IX-4
ARTICLE X - ADVISORY COMMITTEE - DUTIES WITH RESPECT
TO PARTICIPANTS' ACCOUNTS
10.01 Members' Compensation, Expenses . . . . . . . X-1
10.02 Term . . . . . . . . . . . . . . . . . . . . . X-1
10.03 Powers . . . . . . . . . . . . . . . . . . . . X-1
10.04 General. . . . . . . . . . . . . . . . . . . . X-1
10.05 Funding Policy . . . . . . . . . . . . . . . . X-2
10.06 Manner of Action . . . . . . . . . . . . . . . X-2
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
10.07 Authorized Representative . . . . . . . . . . . X-2
10.08 Interested Member . . . . . . . . . . . . . . . X-2
10.09 Individual Accounts . . . . . . . . . . . . . . X-2
10.10 Value of Participant's Accrued Benefit . . . . X-3
10.11 Allocation to Participant's Accounts . . . . . X-3
10.12 Individual Statement . . . . . . . . . . . . . X-5
10.13 Account Charged . . . . . . . . . . . . . . . . X-5
10.14 Unclaimed Account Procedure . . . . . . . . . . X-5
ARTICLE XI - TRUSTEE, POWERS AND DUTIES
11.01 Acceptance . . . . . . . . . . . . . . . . . . XI-1
11.02 Receipt of Contributions . . . . . . . . . . . XI-1
11.03 Full Investment Powers . . . . . . . . . . . . XI-1
11.04 Records and Statements . . . . . . . . . . . . XI-6
11.05 Fees and Expenses From Fund . . . . . . . . . . XI-6
11.06 Parties to Litigation . . . . . . . . . . . . . XI-6
11.07 Professional Agents . . . . . . . . . . . . . . XI-6
11.08 Distribution of Trust Fund . . . . . . . . . . XI-6
11.09 Distribution Directions . . . . . . . . . . . . XI-7
11.10 Third Party . . . . . . . . . . . . . . . . . . XI-8
11.11 Resignation . . . . . . . . . . . . . . . . . . XI-8
11.12 Removal . . . . . . . . . . . . . . . . . . . . XI-8
11.13 Interim Duties and Successor Trustee . . . . . XI-9
11.14 Valuation of Trust . . . . . . . . . . . . . . XI-9
11.15 Limitation on Liability - If Investment
Manager Appointed . . . . . . . . . . . . . . XI-9
11.16 Participant Voting Rights - Employer
Securities . . . . . . . . . . . . . . . . . XI-9
ARTICLE XII - PROVISIONS RELATING TO INSURANCE
AND INSURANCE COMPANY
12.01 Insurance Benefit . . . . . . . . . . . . . . . XII-1
12.02 Limitation on Life Insurance Protection . . . . XII-1
12.03 Definitions . . . . . . . . . . . . . . . . . . XII-3
12.04 Dividend Plan . . . . . . . . . . . . . . . . . XII-3
12.05 Insurance Company Not a Party to Agreement . . XII-3
12.06 Insurance Company Not Responsible
for Trustee's Actions . . . . . . . . . . . . XII-4
12.07 Insurance Company Reliance on
Trustee's Signature . . . . . . . . . . . . . XII-4
12.08 Acquittance . . . . . . . . . . . . . . . . . . XII-4
12.09 Duties of Insurance Company . . . . . . . . . . XII-4
</TABLE>
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<PAGE> 6
<TABLE>
<S> <C>
ARTICLE XIII - MISCELLANEOUS
13.01 Evidence . . . . . . . . . . . . . . . . . . . XIII-1
13.02 No Responsibility for Company Action . . . . . XIII-1
13.03 Fiduciaries Not Insurers . . . . . . . . . . . XIII-1
13.04 Waiver of Notice . . . . . . . . . . . . . . . XIII-1
13.05 Successors . . . . . . . . . . . . . . . . . . XIII-1
13.06 Word Usage . . . . . . . . . . . . . . . . . . XIII-1
13.07 State Law . . . . . . . . . . . . . . . . . . . XIII-2
13.08 Employment Not Guaranteed . . . . . . . . . . . XIII-2
ARTICLE XIV - EXCLUSIVE BENEFIT, AMENDMENT,
TERMINATION
14.01 Exclusive Benefit . . . . . . . . . . . . . . XIV-1
14.02 Amendment by Company . . . . . . . . . . . . . XIV-1
14.03 Discontinuance . . . . . . . . . . . . . . . . XIV-2
14.04 Full Vesting on Termination . . . . . . . . . . XIV-2
14.05 Merger/Direct Transfer . . . . . . . . . . . . XIV-3
14.06 Termination . . . . . . . . . . . . . . . . . . XIV-4
</TABLE>
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<PAGE> 7
SIXTH AMENDED AND RESTATED
CASEY'S GENERAL STORES, INC. EMPLOYEES'
STOCK OWNERSHIP PLAN AND TRUST AGREEMENT
______________________
THIS AGREEMENT is made and entered into this 27th day of April, 1995,
by and between CASEY'S GENERAL STORES, INC., an Iowa corporation with its
principal place of business in Des Moines, Iowa, hereinafter referred to as
"Company," and UMB Bank, N.A., having a principal office at Kansas City,
Missouri, as Trustee, hereinafter referred to as "Trustee."
W I T N E S S E T H:
CASEY'S GENERAL STORES, INC. hereby amends, restates and continues,
within this Trust Agreement, this Sixth Amended and Restated Casey's General
Stores, Inc. Employees' Stock Ownership Plan and Trust, intended to conform to
and qualify under Section 401 and Section 501 of the Internal Revenue Code of
1986, as amended, for the purpose of providing retirement benefits for Eligible
Employees and to promote in its employees the strongest interest in the
successful operation of the business, loyalty to the Company and increased
efficiency in their work, with the assurance that they will share in the
prosperity of the enterprise, on the following terms and conditions. This Plan
is an amended plan, in restated form, with the original plan being last amended
and restated on the 26th day of July, 1989, and is intended to be an Employee
Stock Ownership Plan designed to invest primarily in securities of the Company
in accordance with Section 4975 of the Internal Revenue Code of 1986, as
amended.
<PAGE> 8
ARTICLE I
DEFINITIONS
1.01. "Account" means the separate account(s) which the Advisory
Committee or the Trustee shall maintain for a Participant under the Plan.
1.02. "Accounting Date" means the last day of the Plan Year. Unless
otherwise specified in the Plan, the Advisory Committee will make all Plan
allocations for a particular Plan Year as of the Accounting Date of that Plan
Year.
1.03. "Accrued Benefit" means the amount standing in a Participant's
Account(s) as of any date derived from Company contributions, Participant
forfeitures and gains or losses, if any, under this Plan.
1.04. "Act" means the "Employee Retirement Income Security Act of
1974" and any amendment thereto.
1.05. "Advisory Committee" means the Company's Advisory Committee as
from time to time constituted in accordance with Section 3.01 hereof.
1.06. "Beneficiary" (or "Beneficiaries") means a person designated
by a Participant who is or may become entitled to a benefit under this Plan. A
Beneficiary who becomes entitled to a benefit under this Plan remains a
Beneficiary under this Plan until the Trustee has fully distributed his or her
benefit to him or her. The Beneficiary's right to (and the Plan
Administrator's or the Advisory Committee's duty to provide to the Beneficiary)
information or data concerning the Plan does not arise until he or she first
becomes entitled to receive a benefit under this Plan.
1.07. "Break in Service" means a Plan Year in which an Employee
fails to complete more than five hundred (500) Hours of Service.
1.08. "Code" means the Internal Revenue Code of 1986, as amended.
1.09. "Company" means Casey's General Stores, Inc., an Iowa
corporation located in Des Moines, Iowa, or any corporation with or into which
said corporation may be merged or consolidated or to which its assets may be
sold, and any affiliated corporation whose Board of Directors, with the written
consent of Casey's General Stores, Inc., has adopted this Plan; provided,
however, that any such corporation elects in writing to adopt this Plan and to
be
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<PAGE> 9
bound by the provisions contained herein. For purposes of determining a Year
of Service, an Hour of Service and a Break In Service, and for any other
purpose required by the Act or the Code, the term "Company" shall include, in
addition to the aforesaid corporation, any and all corporations which are part
of an affiliated group of corporations (as defined in the Code) which includes
the aforenamed corporations; and for these purposes, except as provided herein,
the Plan shall treat all employees of all corporations which are members of a
controlled group of corporations (as defined in Code Section 414(b)), all
employees of all trades or businesses (whether or not incorporated) which are
under common control (as defined in Code Section 414(c)) and all employees of
an affiliated service group (as defined in Code Section 414(m)) as employed by
a single employer. Otherwise, "Company" shall refer only to (and, where
applicable, require action by) those particular affiliated corporations whose
Boards of Directors have adopted this Plan.
1.10. "Compensation" means the Participant's wages, salaries, fees
for professional service and other amounts received for personal services
actually rendered in the course of employment with the Company maintaining the
plan (including, but not limited to, commissions paid salesmen, compensation
for services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), but only to the extent includible in gross income.
Compensation excludes elective contributions made by the Company on the
Employee's behalf. "Elective contributions" are amounts excludible from the
Employee's gross income under Code Section Section 125, 402(a)(8), 402(h) or
403(b), and contributed by the Company, at the Employee's election, to a Code
Section 401(k) arrangement, a Simplified Employee Pension Plan, a cafeteria
plan or a tax-sheltered annuity. The term "Compensation" does not include:
(a) Employer contributions to a plan of deferred compensation to
the extent the contributions are not included in the gross
income of the Employee for the taxable year in which
contributed, on behalf of an Employee to a Simplified Employee
Pension Plan to the extent such contributions are excludible
from the Employee's gross income, and any distributions from a
plan of deferred compensation, regardless of whether such
amounts are includible in the gross income of the Employee
when distributed.
(b) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by an
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture.
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<PAGE> 10
(c) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option.
(d) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent
that the premiums are not includible in the gross income of
the Employee), or contributions made by a Company (whether or
not under a salary reduction agreement) towards the purchase
of an annuity contract described in Code Section 403(b)
(whether or not the contributions are excludible from the
gross income of the Employee).
Any reference in this Plan to Compensation is a reference to the
definition in this Section 1.10, unless the Plan reference specifies a
modification to this definition. The Advisory Committee will take into account
only Compensation actually paid for the relevant period.
For any Plan Year beginning after December 31, 1988, the Advisory
Committee must take into account only the first $200,000 (or beginning January
1, 1990, such larger amount as the Commissioner of Internal Revenue may
prescribe) of any Participant's Compensation. The $200,000 Compensation
limitation applies to the combined Compensation of the Employee and of any
family member aggregated with the Employee under Section 1.06 and who is either
(i) the Employee's spouse; or (ii) the Employee's lineal descendant under the
age of 19. If the $200,000 (or adjusted) Compensation limitation applies to
the combined Compensation of the Employee and one or more family members, the
Advisory Committee will apply the contribution and allocation provisions of
Article IV by prorating the $200,000 (or adjusted) limitation among the
affected Participants in proportion to each such Participant's Compensation
determined prior to application of this limitation. For any Plan Year
beginning prior to January 1, 1989, this $200,000 limitation (but not the
family aggregation requirement) applies only if the Plan is top heavy (as
determined under Section 1.33) for such Plan Year.
In addition to other applicable limitations set forth in this Plan,
and notwithstanding any other provision of this Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of each
Employee taken into account under this Plan shall not exceed the Omnibus Budget
Reconciliation Act of 1993 ("OBRA '93") annual Compensation limit. The OBRA
'93 annual Compensation limit is $150,000, as adjusted by the Commissioner of
the Internal Revenue Service for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in
effect for a calendar year
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<PAGE> 11
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
Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
Compensation limit is $150,000.00.
NONDISCRIMINATION. For purposes of determining whether the Plan
discriminates in favor of Highly Compensated Employees, Compensation means
Compensation as defined in this Section 1.10 except any exclusions from
Compensation other than the exclusions described in paragraphs (a), (b), (c)
and (d), unless the Company elects to use an alternate nondiscriminatory
definition, in accordance with the requirements of Code Section 414(s) and the
regulations issued under that Code section. The Company may elect to include
all elective contributions made by the Company on behalf of the Employees. The
Company's election to include elective contributions must be consistent and
uniform with respect to Employees and all plans of the Company for any
particular Plan Year. The Company may make this election to include elective
contributions for nondiscrimination testing purposes, irrespective of whether
this Section 1.10 includes elective contributions in the general Compensation
definition applicable to the Plan.
1.11. "Disability" means the Participant, because of a physical or
mental disability, will be unable to perform the duties of his or her customary
position of employment (or is unable to engage in any substantial gainful
activity) for an indefinite period which the Advisory Committee considers will
be of long continued duration. A Participant also is disabled if he or she
incurs the permanent loss or loss of use of a member or function of the body,
or is permanently disfigured, and incurs a Separation from Service. The Plan
considers a Participant disabled on the date the Advisory Committee determines
the Participant satisfies the definition of disability. The Advisory Committee
may require a Participant to submit to a physical examination in order to
confirm the disability. The Advisory
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<PAGE> 12
Committee will apply the provisions of this Section 1.11 in a
nondiscriminatory, consistent and uniform manner.
1.12. "Disqualified Person" has the same meaning ascribed to that
term under Code Section 4975(e)(2).
1.13. "Effective Date" of this Plan, as restated during the 1994
Plan Year, is generally May 1, 1994, except for the retroactive effective dates
required by the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act
of 1986, the Omnibus Budget Reconciliation Act of 1987, the Technical and
Miscellaneous Revenue Act of 1988, the Omnibus Budget Reconciliation Act of
1989 or any final Regulations published and effective since the most recent
effective date of this Plan. Further, to the extent the Plan was operated
according to an effective date earlier than is required by law, then such date
shall be the Effective Date.
1.14. "Employee" means any employee of the Company.
1.15. "Employer Securities" means any securities issued by the
Company, or by a corporation which is a member of the same controlled group of
corporations, which satisfy the definition of "qualifying employer securities"
in Code Section 4975(e)(8).
1.16. "Employment Commencement Date" means the date on which an
Employee first performs an Hour of Service for the Company.
1.17. "Exempt Loan" means a loan made to this Plan by a Disqualified
Person, or a loan to this Plan which a Disqualified Person guarantees, provided
the loan satisfies the requirements of Treas. Reg. Section 54.4975-7(b).
1.18. "Highly Compensated Employee" means an Employee who, during
the Plan Year or during the preceding 12-month period:
(a) is a more than 5% owner of the Company (applying the
constructive ownership rules of Code Section 318, and
applying the principles of Code Section 318, for an
unincorporated entity);
(b) has Compensation in excess of $75,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year);
(c) has Compensation in excess of $50,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year) and is
part of the top-paid 20% group of employees (based on
Compensation for the relevant year);
I-5
<PAGE> 13
(d) has Compensation in excess of 50% of the dollar amount
prescribed in Code Section 415(b)(1)(A) (relating to defined
benefit plans) and is an officer of the Company.
If the Employee satisfies the definition in clause (b), (c) or (d) in
the Plan Year but not during the preceding 12-month period and does not satisfy
clause (a) in either period, the Employee is a Highly Compensated Employee only
if he or she is one of the 100 most highly compensated Employees for the Plan
Year. The number of officers taken into account under clause (d) will not
exceed the greater of 3 or 10% of the total number (after application of the
Code Section 414(q) exclusions) of Employees, but no more than 50 officers.
If no Employee satisfies the Compensation requirement in clause (d) for the
relevant year, the Advisory Committee will treat the highest paid officer as
satisfying clause (d) for that year.
For purpose of this Section 1.18, "Compensation" means Compensation as
defined in Section 1.10, except any exclusions from Compensation other than the
exclusions described in paragraphs (a), (b), (c) or (d) of Section 1.10, and
Compensation must include: (i) elective deferrals under a Code Section 401(k)
arrangement or under a Simplified Employee Pension maintained by the Company;
and (ii) amounts paid by the Company which are not currently includible in the
Employee's gross income because of Code Section Section 125 (cafeteria plans)
or 403(b) (tax-sheltered annuities).
The Advisory Committee must make the determination of who is a Highly
Compensated Employee, including the determinations of the number and identity
of the top paid 20% group, the top 100 paid Employees, the number of officers
includible in clause (d) and the relevant Compensation, consistent with Code
Section 414(q) and regulations issued under that Code section. The Employer
may make a calendar year election to determine the Highly Compensated Employees
for the Plan Year, as prescribed by Treasury regulations. A calendar year
election must apply to all plans and arrangements of the Company. For purposes
of applying any nondiscrimination test required under the Plan or under the
Code, in a manner consistent with applicable Treasury regulations, the Advisory
Committee will not treat as a separate Employee a family member (a spouse,
lineal ascendant or descendant, or a spouse of a lineal ascendant or
descendant) of a Highly Compensated Employee described in clause (a) of this
Section, or a family member of one of the ten Highly Compensated Employees with
the greatest Compensation for the Plan Year, but will treat the Highly
Compensated Employee and all family members as a single Highly Compensated
Employee. This aggregation rule applies to a family member even if that family
member is a Highly Compensated Employee without family aggregation.
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<PAGE> 14
The term "Highly Compensated Employee" also includes any former
Employee who separated from Service (or has a deemed Separation from Service,
as determined under Treasury regulations) prior to the Plan Year, performs no
Service for the Company during the Plan Year, and was a Highly Compensated
Employee either for the separation year or any Plan Year ending on or after his
or her 55th birthday. If the former Employee's Separation from Service
occurred prior to January 1, 1987, he or she is a Highly Compensated Employee
only if he or she satisfied clause (a) of this Section 1.18 or received
Compensation in excess of $50,000 during: (1) the year of his or her
Separation from Service (or the prior year); or (2) any year ending after his
or her 54th birthday.
1.19. "Hour of Service" means:
(a) Each Hour of Service for which the Company, either directly or
indirectly, pays an Employee, or for which the Employee is
entitled to payment, for the performance of duties. The
Advisory Committee credits Hours of Service under this
paragraph (a) to the Employee for the computation period in
which the Employee performs the duties, irrespective of when
paid;
(b) Each Hour of Service for back pay, irrespective of mitigation
of damages, to which the Company has agreed or for which the
Employee has received an award. The Advisory Committee
credits Hours of Service under this paragraph (b) to the
Employee for the computation period(s) to which the award or
the agreement pertains rather than the computation period in
which the award, agreement or payment is made; and
(c) Each Hour of Service for which the Company, either directly or
indirectly, pays an Employee, or for which the Employee is
entitled to payment (irrespective of whether the employment
relationship is terminated), for reasons other than for the
performance of duties during a computation period, such as
leave of absence, vacation, holiday, sick leave, illness,
incapacity (including disability), lay off, jury duty or
military duty. The Advisory Committee will credit no more
than five hundred one (501) Hours of Service under this
paragraph (c) to an Employee on account of any single
continuous period during which the Employee does not perform
any duties (whether or not such period occurs during a single
computation period. The Advisory Committee credits Hours of
Service under this paragraph (c) in accordance with the rules
of paragraphs (b) and (c) of Labor Reg. Section 2530.200b-2,
which the Plan, by this reference,
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<PAGE> 15
specifically incorporates in full within this paragraph (c).
The Advisory Committee will not credit an Hour of Service under more
than one (1) of the above paragraphs. A computation period for purposes of
this Section 1.19 is the Plan Year, Year of Service period, Break in Service
period or other period, as determined under the Plan provision for which the
Advisory Committee is measuring an Employee's Hours of Service. The Advisory
Committee will resolve any ambiguity with respect to the crediting of an Hour
of Service in favor of the Employee.
The Company will credit every Employee with Hours of Service on the
basis of the "actual" method. For purposes of this Plan, "actual" method means
the determination of Hours of Service from records of hours worked and hours
for which the Company makes payment or for which payment is due from the
Company. Alternatively, an Employee who is compensated on a salaried basis may
be credited with forty-five (45) Hours of Service for each week (or part
thereof) in which he or she received Compensation during the Plan Year.
Solely for purposes of determining whether the Employee incurs a Break
in Service under any provision of this Plan, the Advisory Committee will credit
Hours of Service during an Employee's unpaid absence period due to maternity or
paternity leave. The Advisory committee considers an Employee on maternity or
paternity leave if the Employee's absence is due to the Employee's pregnancy,
the birth of the Employee's child, the placement with the Employee of an
adopted child, or the care of the Employee's child immediately following the
child's birth or placement. The Advisory Committee credits Hours of Service
under this paragraph on the basis of the number of Hours of Service the
Employee would receive if he or she were paid during the absence period or, if
the Advisory Committee cannot determine the number of Hours of Service the
Employee would receive, on the basis of eight (8) hours per day during the
absence period. The Advisory Committee will credit only the number of Hours of
Service (up to 501 Hours of Service) necessary to prevent an Employee's Break
in Service. The Advisory Committee credits all Hours of Service described in
this paragraph to the computation period in which the absence period begins or,
if the Employee does not need these Hours of Service to prevent a Break in
Service in the computation period in which is absence period begins, the
Advisory Committee credits these Hours of Service to the immediately following
computation period.
1.20. "Leveraged Employer Securities" means Employer Securities
acquired by the Trust with the proceeds of an Exempt Loan and which satisfy the
definition of "qualifying employer securities" in Code Section 4975(e)(8).
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<PAGE> 16
1.21. "Named Fiduciary" means (except as otherwise used in Section
11.16) the Advisory Committee for purposes of Section 402 of the Act.
Individuals on the Committee shall have the authority to control and manage the
Plan operations and administration.
1.22. "Nonforfeitable" means a Participant's or Beneficiary's
unconditional claim, legally enforceable against this Plan, to the
Participant's Accrued Benefit.
1.23. "Normal Retirement Age" means the sixty-second (62nd) birthday
of any Participant hereunder.
1.24. "Participant" means an Employee who is eligible to be and
becomes a Participant in accordance with the provisions of Section 3.01. An
Employee who becomes a Participant shall remain a Participant under this Plan
until the Trustee has fully distributed his or her Nonforfeitable Accrued
Benefit to him or her or to his or her Beneficiary.
1.25. "Plan" means the retirement plan established and continued by
the Company in the form of this Agreement, designated as the "Sixth Amended and
Restated Casey's General Stores, Inc. Employees' Stock Ownership Plan and
Trust. The Company has designed this Plan to invest primarily in Employer
Securities.
1.26. "Plan Administrator" means the Advisory Committee. In addition
to other duties, the Plan Administrator shall have full responsibility for
compliance with the reporting and disclosure rules under the Act as respects
this Plan. The Plan Administrator is hereby designated as the agent for
service of legal process.
1.27. "Plan Entry Date" means the restated Effective Date and every
May 1 and November 1 after the restated Effective Date.
1.28. "Plan Year" means the fiscal year of the Plan, a twelve (12)
consecutive month period ending every April 30.
1.29. "Service" means any period of time the Employee is in the
employ of the Company, including any period the Employee is on an unpaid leave
of absence authorized by the Company under a uniform, nondiscriminatory policy
applicable to all Employees. "Separation from Service" means a separation from
Service with the Company maintaining this Plan.
1.30. "Taxable Wage Base" shall mean the maximum amount of earnings
which is considered to be wages for the year under Code Section 3121(a)(1).
The Taxable Wage Base for any Plan Year shall be the amount that is currently
in effect on the last day of the Plan Year.
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<PAGE> 17
1.31. "Trust" shall mean the separate Trust created under the Plan.
1.32. "Trust Fund" shall mean all property every kind held or
acquired by the Trustee under this Plan and Trust, other than incidental
benefit insurance contracts, if any. This Plan creates a single Trust for all
companies participating under this Plan. However, the Trustee will maintain
separate records of account in order to properly reflect each Participant's
Annual Benefit derived from each participating company.
1.33. "Trustee" shall mean UMB Bank, N.A., Kansas City, Missouri,
chosen by the Company's Board of Directors to act as Trustee hereunder, or any
successor Trustee(s) chosen by the Company's Board of Directors to act
hereunder and who in writing accepts the position of Trustee.
1.34. DETERMINATION OF TOP HEAVY STATUS. If this Plan is the only
qualified plan maintained by the Company, the Plan is top heavy for a Plan Year
if the top heavy ratio as of the Determination Date exceeds 60%. The top heavy
ratio is a fraction, the numerator of which is the sum of the present value of
Accrued Benefits of all Key Employees as of the Determination Date and the
denominator of which is a similar sum determined for all Employees. The
Advisory Committee must include in the top heavy ratio, as a part of the
present value of Accrued Benefits, any contribution not made as of the
Determination Date but includible under Code Section 416 and the applicable
Treasury regulations, and distributions made within the Determination Period.
The Advisory Committee must calculate the top heavy ratio by disregarding the
Accrued Benefit (and distributions, if any, of the Accrued Benefit) of any
Non-Key Employee who was formerly a Key Employee, and by disregarding the
Accrued Benefit (including distributions, if any, of the Accrued Benefit) of
any individual who has not received credit for at least one Hour of Service
with the Company during the Determination Period. The Advisory Committee must
calculate the top heavy ratio, including the extent to which it must take into
account distributions, rollovers and transfers, in accordance with Code Section
416 and the regulations under that Code section.
If the Company maintains other qualified plans (including a simplified
employee pension plan), or maintained another such plan which now is
terminated, this Plan is top heavy only if it is part of the Required
Aggregation Group, and the top heavy ratio for the Required Aggregation Group
and for the Permissive Aggregation Group, if any, each exceeds 60%. The
Advisory Committee will calculate the top heavy ratio in the same manner as
required by the first paragraph of this Section 1.34, taking into account all
plans within the Aggregation Group. To the extent the Advisory
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<PAGE> 18
Committee must take into account distributions to a Participant, the Advisory
Committee must include distributions from a terminated plan which would have
been part of the Required Aggregation Group if it were in existence on the
Determination Date. The Advisory Committee will calculate the present value of
Accrued Benefit under defined benefit plans or simplified employee pension
plans included within the group in accordance with the terms of those plans,
Code Section 416 and the regulations under that Code section. If a
Participant in a defined benefit plan is a Non-Key Employee, the Advisory
Committee will determine his Accrued Benefit under the accrual method, if any,
which is applicable uniformly to all defined benefit plans maintained by the
Company or, if there is no uniform method, in accordance with the slowest
accrual rate permitted under the fractional rule accrual method described in
Code Section 411(b)(1)(C). To calculate the present value of benefits from a
defined benefit plan, the Advisory Committee will use the actuarial assumptions
(interest and mortality only) prescribed by the defined benefit plan(s) to
value benefits for top heavy purposes. If any aggregated plan does not have a
valuation date coinciding with the Determination Date, the Advisory Committee
must value the Accrued Benefits in the aggregated plan as of the most recent
valuation date falling within the twelve-month period ending on the
Determination Date, except as Code Section 416 and applicable Treasury
regulations require for the first and second plan year of a defined benefit
plan. The Advisory Committee will calculate the top heavy ratio with reference
to the Determination Dates that fall within the same calendar year.
DEFINITIONS. For purposes of applying the provisions of this Section
1.34:
(a) "Key Employee" means, as of any Determination Date, any
Employee or former Employee (or Beneficiary of such Employee)
who, for any Plan Year in the Determination Period: (i) has
Compensation in excess of 50% of the dollar amount prescribed
in Code Section 415(b)(1)(A) (relating to defined benefit
plans) and is an officer of the Company, (ii) has Compensation
in excess of the dollar amount prescribed in Code Section
415(c)(1)(A) (relating to defined contribution plans) and is
one of the Employees owning the ten largest interests in the
Company, (iii) is a more than 5% owner of the Company; or (iv)
is a more than 1% owner of the Company and has Compensation of
more than $150,000. The constructive ownership rules of Code
Section 318 (or the principles of that section, in the case
of an unincorporated Company,) will apply to determine
ownership in the Company. The number of officers taken into
account under clause (i) will not exceed the greater of 3 or
10% of the total number (after application of the
I-11
<PAGE> 19
Code Section 414(q)(8) exclusions) of Employees, but no more
than 50 officers. The Advisory Committee will make the
determination of who is a Key Employee in accordance with Code
Section 416(i)(1) and the regulations under that Code
section.
(b) "Non-Key Employee" is an employee who does not meet the
definition of Key Employee.
(c) "Compensation" means Compensation as determined under Section
1.18 (relating to the Highly Compensated Employee definition).
(d) "Required Aggregation Group" means: (1) each qualified plan of
the Company in which at least one Key Employee participates at
any time during the Determination Period; and (2) any other
qualified plan of the Company which enables a plan described
in clause (1) to meet the requirements of Code Section
401(a)(4) or Code Section 410.
(e) "Permissive Aggregation Group" is the Required Aggregation
Group plus any other qualified plan maintained by the Company,
but only if such group would satisfy in the aggregate the
requirements of Code Section 401(a)(4) and Code Section 410.
The Advisory Committee will determine the Permissive
Aggregation Group.
(f) "Company" means the Company that adopts this Plan and any
related employers described in Section 1.35.
(g) "Determination Date" for any Plan Year is the Accounting Date
of the preceding Plan Year or, in the case of the first Plan
Year of the Plan, the Accounting Date of that Plan Year. The
"Determination Period" is the 5 year period ending on the
Determination Date.
1.35. RELATED EMPLOYERS. A related group is a controlled group of
corporations (as defined in Code Section 414(b)), trades or businesses
(whether or not incorporated) which are under common control (as defined in
Code Section 414(c)) or an affiliated service group (as defined in Code
Section 414(m) or in Code Section 414(o)). If the Company is a member of a
related group, the term "Company" includes the related group members for
purposes of crediting Hours of Service, determining Years of Service and Breaks
in Service under Articles III and VI, applying the limitations on allocations
in Part 2 of Article IV, applying the top heavy rules and the minimum
allocation requirements of Article IV, the definitions of Employee, Highly
Compensated Employee and Compensation, and for any other purpose required by
the applicable Code section or by a Plan provision. However, only a Company
described in Section 1.09
I-12
<PAGE> 20
may contribute to the Plan and only an Employee employed by a Company described
in Section 1.09 is eligible to participate in this Plan.
1.36. SERVICE FOR PREDECESSOR EMPLOYER. If the Company maintains
the plan of a predecessor employer, the Plan treats service of the Employee
with the predecessor employer as service with the Company.
1.37. LEASED EMPLOYEES. The Plan treats a Leased Employee as an
Employee of the Company. A Leased Employee is an individual (who otherwise is
not an Employee of the Employer) who, pursuant to a leasing agreement between
the Employer and any other person, has performed services for the Company (or
for the Company and any persons related to the Company within the meaning of
Code Section 144(a)(3)) on a substantially full time basis for at least one
year and who performs services historically performed by employees in the
Company's business field. If a Leased Employee is treated as an Employee by
reason of this Section 1.37, "Compensation" includes Compensation from the
leasing organization which is attributable to services performed for the
Company.
(a) SAFE HARBOR PLAN EXCEPTION. The Plan does not treat a Leased
Employee as an Employee if the leasing organization covers the
employee in a safe harbor plan and, prior to application of
this safe harbor plan exception, 20 percent or less of the
Company's Employees (other than Highly Compensated Employees)
are Leased Employees. A safe harbor plan is a money purchase
pension plan providing immediate participation, full and
immediate vesting, and a nonintegrated contribution formula
equal to at least 10 percent of the employee's compensation
without regard to employment by the leasing organization on a
specified date. The safe harbor plan must determine the 10
percent contribution on the basis of compensation as defined
in Code Section 415(c)(3) plus elective contributions (as
defined in Section ___).
(b) OTHER REQUIREMENTS. The Advisory Committee must apply this
Section ____ in a manner consistent with Code Section Section
414(n) and 414(o) and the regulations issued under those Code
sections. [The Advisory Committee will reduce a Leased
Employee's allocation of Employer contributions under this
Plan by the Leased Employee's service provided to the
Employer.]
1.38 PLAN MAINTAINED BY MORE THAN ONE EMPLOYER.
(a) TREATMENT OF EMPLOYERS. If more than one employer maintains
this Plan, then for purposes of determining
I-13
<PAGE> 21
Service and Hours of Service, the Advisory Committee will
treat all Companies maintaining this Plan as a single
employer.
(b) PLAN ALLOCATIONS. The Advisory Committee must allocate all
Company contributions and forfeitures to each Participant in
the Plan, in accordance with Article IV, without regard to
which contributing Company employs the Participant. A
Participant's Compensation includes Compensation from all
participating Companies irrespective of which Companies are
contributing to the Plan.
I-14
<PAGE> 22
ARTICLE II
STATEMENT OF TRUST
The Company adopted the Amended and Restated Casey's General Stores,
Inc. Employees' Profit Sharing Trust, effective as of May 1, 1966, and later
adopted the Amended and Restated Casey's General Stores, Inc. Employee's Profit
Sharing and Stock Ownership Plan and Trust, effective as of May 1, 1981. On
November 25, 1985, the Company continued and restated the Plan as the Fourth
Amended and Restated Casey's General Stores, Inc. Employees' Profit Sharing and
Stock Ownership Plan and Trust, effective as of May 1, 1985; and on July 26,
1989, the Company last continued and restated the Plan as the Fifth Amended and
Restated Casey's General Stores, Inc. Employees' Profit Sharing and Stock
Ownership Plan and Trust effective as of May 1, 1989.
As of the Effective Date of this continued Plan, the Company does
hereby adopt this Plan and Trust with the Trustee, under the name THE SIXTH
AMENDED AND RESTATED CASEY'S GENERAL STORES, INC. EMPLOYEES' STOCK OWNERSHIP
PLAN AND TRUST AGREEMENT, as set forth herein, in substitution for, and in
amendment of, the Company's existing Plan dated as of July 26, 1989. The
provisions of this Plan, as a restated Plan, apply solely to an Employee whose
employment with the Company terminates on or after May 1, 1994. If an
Employee's employment with the Company terminated prior to May 1, 1994, that
Employee shall be entitled to benefits under the Plan as the Plan existed on
the date of the Employee's termination of employment.
All funds and property contributed to the Trustee hereunder shall be
held and administered by the Trustee, in trust, in accordance with the terms
and conditions set forth in this Agreement. This Plan and Trust are intended
to meet the requirements of Section 401(a) of the Code and of the Act and are
designed to invest primarily in Employer Securities.
The Trustee hereby agrees to hold the Trust Fund and any and all
monies or property transferred, assigned, set over and conveyed to the Trustee
or which the Trustee may receive from earnings upon the Trust Fund by reason of
enhancement in value of the Trust Fund, for the uses and purposes and subject
to the terms and conditions of the Trust as stated herein.
II-1
<PAGE> 23
ARTICLE III
PARTICIPATION
3.01. ELIGIBILITY. Each Employee becomes a Participant in the Plan on
the Plan Entry Date (if employed on that date) coincident with or immediately
following the later of the date on which he completes one (1) Year of Service
or attains age twenty-one (21). Each Employee who was a Participant in the
Plan on the day before the Effective Date of this restated Plan continues as a
Participant in the Plan.
3.02. YEAR OF SERVICE - PARTICIPATION. For purposes of an Employee's
participation in the Plan, the Plan takes into account all of an Employee's
Years of Service with the Company except as provided in Section 3.03. "Year of
Service" means a twelve (12) consecutive month period during which the Employee
completes not less than one thousand (1,000) hours of Hours of Service,
measuring the beginning of the first twelve (12) month period from the
Employment Commencement Date. If the Employee does not complete one thousand
(1,000) Hours of Service during the twelve (12) month period commencing with
the Employee's Employment Commencement Date, the Plan shall measure succeeding
twelve (12) consecutive month periods from each anniversary of the Employee's
Employment Commencement Date.
3.03. BREAK IN SERVICE - PARTICIPATION. For purposes of
participation in this Plan, the Plan does not apply any Break in Service rule.
3.04. PARTICIPATION UPON RE-EMPLOYMENT.
(a) A Participant whose employment terminates shall re-enter the Plan
as a Participant on the date of his or her reemployment.
(b) An Employee who satisfies the eligibility conditions but who
terminates employment prior to becoming a Participant becomes a
Participant in the Plan on the later of the Plan Entry Date on which
he or she would have entered the Plan had he or she not terminated
employment or the date of his or her re-employment.
(c) Any Employee who terminates employment prior to satisfying the
Plan's eligibility conditions becomes a Participant in accordance with
the provisions of Section 3.01.
3.05. DESIGNATION OF PARTICIPANTS. All determinations by the
Advisory Committee of who shall be Participants and all determinations
as to when any Employee shall cease to be a
III-1
<PAGE> 24
Participant or an Employee shall be solely in the discretion of the Advisory
Committee within these rules, and the Trustee shall recognize as Participants
all Employees whose names are furnished to the Trustee.
III-2
<PAGE> 25
ARTICLE IV
COMPANY CONTRIBUTIONS
PART 1. AMOUNT OF COMPANY CONTRIBUTIONS AND PLAN ALLOCATIONS: SECTIONS 4.01
THROUGH 4.06.
4.01. AMOUNT. For each Plan Year, the Company will contribute to the
Trust an amount which the Company may from time to time deem advisable.
Although the Company may contribute to this Plan irrespective of whether it has
net profits, the Company intends the Plan to be a stock bonus plan for all
purposes of the Code. The Company may not make a contribution to the Trust for
any Plan Year to the extent the contribution would exceed the Participants'
"Maximum Permissible Amounts" under Section 4.09.
The Trustee, upon written request from the Company, must return to the
Company the amount of the Company's contribution made by the Company by mistake
of fact or the amount of the Company's contribution disallowed as a deduction
under Code Section 404. The Trustee will not return any portion of the
Company's contribution under the provisions of this paragraph more than one (1)
year after:
(a) The Company made the contribution by mistake of fact; or
(b) The disallowance of the contribution as a deduction, and then,
only to the extent of the disallowance.
The Trustee will not increase the amount of the Company contribution returnable
under this Section 5.01 for any earnings attributable to the contribution, but
the Trustee shall decrease the Company contribution returnable for any losses
attributable to it. The Trustee may require the Company to furnish it whatever
evidence the Trustee deems necessary to enable the Trustee to confirm the
amount the Company has requested be returned is properly returnable under the
Act.
The Company may make its contribution in cash or in Employer
Securities as the Company from time to time may determine. The Company may
make its contribution of Employer Securities at fair market value determined at
the time of contribution.
4.02. DETERMINATION OF CONTRIBUTION. The Company, from its records,
shall determine the amount of any contributions to be made by it to the Trust
under the terms of this Plan.
4.03. TIME OF PAYMENT. The Company may pay its contribution for each
Plan Year in one (1) or more installments without interest. The Company must,
however, make its contribution to the
IV-1
<PAGE> 26
Trustee within the time prescribed (including extensions) by the Code or
applicable Treasury regulations.
4.04. CONTRIBUTION ALLOCATION.
(A) METHOD OF ALLOCATION. Subject to Section 4.04(B) and any
restoration allocation required under Section 6.04, the Advisory Committee will
allocate and credit each annual Company contribution (and Participant
forfeitures, if any), in accordance with this Section 4.04(A), to the Account
of each Participant who satisfies the conditions of Section 4.06 in the same
ratio that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.
To determine a Participant's contribution allocation under this
Section 4.04(A), Compensation means the general definition of Compensation
described in Section 1.10, but excluding reimbursement or other expense
allowances, fringe benefits (cash and non cash), moving expenses, deferred
compensation and welfare benefits, and including elective contributions (as
defined in Section 1.10).
(B) TOP HEAVY MINIMUM ALLOCATION.
(1) MINIMUM ALLOCATION. If the Plan is top heavy in any Plan Year:
(a) Each Non-Key Employee (as defined in Section 1.34) who is a
Participant and is employed by the Company on the last day of the Plan
Year will receive a top heavy minimum allocation for that Plan Year,
irrespective of whether he or she satisfies the Hours of Service
condition under Section 4.06; and
(b) The top heavy minimum allocation is the lesser of 3% of the
Non-Key Employee's Compensation for the Plan Year or the highest
contribution rate for the Plan Year made on behalf of any Key Employee
(as defined in Section 1.34). However, if a defined benefit plan
maintained by the Company which benefits a Key Employee depends on
this Plan to satisfy the antidiscrimination rules of Code Section
401(a)(4) or the coverage rules of Code Section 410 (or another plan
benefiting the Key Employee so depends on such defined benefit plan),
the top heavy minimum allocation is 3% of the Non-Key Employee's
Compensation regardless of the contribution rate for the Key
Employees.
For purposes of clause (b), "Compensation" means Compensation as
defined in Section 1.10, disregarding elective contributions and any exclusions
from Compensation, other than the exclusions
IV-2
<PAGE> 27
described in paragraphs (a), (b), (c) and (d) of Section 1.10 and disregarding
the requirements of Section 4.06. For purposes of this Section 4.04(B), a
Participant's contribution rate is the sum of Company contributions (not
including Company contributions to Social Security) and forfeitures allocated
to the Participant's Account for the Plan Year divided by his or her
Compensation for the entire Plan Year. However, for Plan Years beginning after
December 31, 1988, a Non-Key Employee's contribution rate does not include any
elective contributions under a Code Section 401(k) arrangement nor any Company
matching contributions subject to the nondiscrimination requirements of Code
Section 401(k) or of Code Section 401(m). To determine a Participant's
contribution rate, the Advisory Committee must treat all qualified top heavy
defined contribution plans maintained by the Company as a single plan.
(2) METHOD OF COMPLIANCE. The Plan will satisfy the top heavy
minimum allocation in accordance with this Section 4.04(B)(2). The Advisory
Committee first will allocate the Company contributions (and Participant
forfeitures, if any) for the Plan Year in accordance with the allocation
formula under Section 4.04(A). The Company then will contribute an additional
amount for the Account of any Participant who is entitled under this Section
4.04(B) to a top heavy minimum allocation and whose contribution rate for the
Plan Year is less than the top heavy minimum allocation. The additional amount
is the amount necessary to increase the Participant's contribution rate to the
top heavy minimum allocation. The Advisory Committee will allocate the
additional contribution to the Account of the Participant on whose behalf the
Company makes the contribution.
4.05. FORFEITURE ALLOCATION. The amount of a Participant's Accrued
Benefit forfeited under the Plan is a Participant forfeiture. Subject to any
restoration allocation required under Sections 6.04 or 10.14, the Advisory
Committee will allocate the forfeiture in accordance with Section 4.04, as a
Company contribution for the Plan Year in which the forfeiture occurs, as if
the Participant forfeiture were an additional Company contribution for that
Plan Year. The Advisory Committee will continue to hold the undistributed,
non-vested portion of a terminated Participant's Accrued Benefit in his or her
Account solely for his or her benefit until a forfeiture occurs at the time
specified in Section 6.09. Except as provided under Section 6.04, a
Participant will not share in the allocation of a forfeiture of any portion of
his or her Accrued Benefit.
4.06. ACCRUAL OF BENEFIT. The Advisory Committee will determine the
accrual of benefit (Company contributions and Participant forfeitures) on the
basis of the Plan Year.
IV-3
<PAGE> 28
COMPENSATION TAKEN INTO ACCOUNT. In allocating a Company contribution
to a Participant's Account, the Advisory Committee, except for purposes of
determining the top heavy minimum contribution under Section 4.04(B), will take
into account only the Compensation determined for the portion of the Plan Year
in which the Employee actually is a Participant.
HOURS OF SERVICE REQUIREMENT. Subject to the top heavy minimum
allocation requirement of Section 4.04(B), the Advisory Committee will not
allocate any portion of a Company contribution for a Plan Year to any
Participant's Account if the Participant does not complete a minimum of 1,000
Hours of Service during the Plan Year.
EMPLOYMENT REQUIREMENT. A Participant who, during a particular Plan
Year, completes the Hours of Service requirement under this Section 4.06 will
not share in the allocation of Company contributions and Participant
forfeitures, if any, for that Plan Year unless he or she is employed by the
Company on the Accounting Date of that Plan Year.
PART 2. LIMITATIONS ON ALLOCATIONS: SECTIONS 4.07 AND 4.08
4.07. LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. The
amount of Annual Additions which the Advisory Committee may allocate under this
Plan on a Participant's behalf for a Limitation Year may not exceed the Maximum
Permissible Amount. If the amount the Company otherwise would contribute to
the Participant's Account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the Company will reduce the
amount of its contribution so the Annual Additions for the Limitation Year will
equal the Maximum Permissible Amount. If an allocation of Company
contributions, pursuant to Section 4.04 would result in an Excess Amount (other
than an Excess Amount resulting from the circumstances described in Section
4.07(B)) to the Participant's Account, the Advisory Committee will reallocate
the Excess Amount to the remaining Participants who are eligible for an
allocation of Company contributions for the Plan Year in which the Limitation
Year ends. The Advisory Committee will make this reallocation on the basis of
the allocation method under the Plan as if the Participant whose Account
otherwise would receive the Excess Amount is not eligible for an allocation of
Company contributions.
(A) ESTIMATION OF COMPENSATION. Prior to the determination of the
Participant's actual Compensation for a Limitation Year, the Advisory Committee
may determine the Maximum Permissible Amount on the basis of the Participant's
estimated annual Compensation for such Limitation year. The Advisory Committee
must make this determination on a reasonable and uniform basis for all
IV-4
<PAGE> 29
Participants similarly situated. The Advisory Committee must reduce any
Company contributions (including any allocation of forfeitures) based on
estimated annual Compensation by any Excess Amount carried over from prior
years. As soon as is administratively feasible after the end of the Limitation
year, the Advisory Committee will determine the Maximum Permissible Amount for
such Limitation Year on the basis of the Participant's actual Compensation for
such Limitation Year.
(B) DISPOSITION OF EXCESS AMOUNT. If, pursuant to Section 4.07(A), or because
of the allocation of forfeitures, there is an Excess Amount with respect to a
Participant for a Limitation Year, the Advisory Committee will dispose of such
Excess Amount as follows:
(a) If the Plan covers the Participant at the end of the Limitation
Year, then the Advisory Committee will use the Excess Amount(s) to
reduce future Company contributions (including any allocation of
forfeitures) under the Plan for the next Limitation Year and for each
succeeding Limitation Year, as is necessary, for the Participant.
(b) If the Plan does not cover the Participant at the end of the
Limitation Year, then the Advisory Committee will hold the Excess
Amount unallocated in a suspense account. The Advisory Committee will
apply the suspense account to reduce Company Contributions (including
allocation of forfeitures) for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation Year if necessary.
(c) The Advisory Committee will not distribute any Excess Amount(s)
to Participants or to former Participants.
(C) DEFINED BENEFIT PLAN LIMITATION. The Employer does not maintain and never
has maintained a defined benefit plan covering any Participant in this Plan.
Accordingly, no special defined benefit plan limitation applies under this
Plan.
4.08. DEFINITIONS - ARTICLE IV. For purposes of Article IV, the
following terms shall mean:
(a) "Annual Addition" means the sum of the following amounts
allocated on behalf of a Participant for a Limitation year, of (i) all
Company contributions and (ii) all forfeitures. Except to the extent
provided in Treasury regulations, Annual Additions include excess
contributions described in Code Section 401(k), excess aggregate
contributions described in Code Section 401(m) and excess deferrals
described in Code Section 402(g), irrespective of whether the Plan
distributes or forfeits such excess amounts. Annual Additions also
include Excess Amounts
IV-5
<PAGE> 30
reapplied to reduce Company contributions under Section 4.07. Annual
Additions also include amounts allocated to an individual medical
account (as defined in Code Section 415(1)(2) included as part of a
defined benefit plan maintained by the Company. Furthermore, Annual
Additions include contributions paid or accrued after December 31,
l985, for taxable years ending after December 31, l985, attributable
to post-retirement medical benefits allocated to the separate account
of a key employee (as defined in Code Section 419(A)(d)(3)) under a
welfare benefit fund (Code Section 419(e)) maintained by the Company,
but only for purposes of the dollar limitation applicable to the
Maximum Permissible Amount.
"Annual Additions" do not include any Company contributions applied by
the Advisory Committee (not later than the due date, including
extensions, for filing the Company's Federal income tax return for
that Plan Year) to pay interest on an Exempt Loan, and any Leveraged
Employer Securities the Advisory Committee allocates as forfeitures;
provided, however, the provisions of this sentence do not apply in a
Plan Year for which the Advisory Committee allocates more than
one-third (1/3) of the Company contributions applied to pay principal
and interest on an Exempt Loan to Restricted Participants. The
Advisory Committee may reallocate the Company Contributions in
accordance with Section 4.04 to the Accounts of Non-Restricted
Participants to the extent necessary in order to satisfy this special
limitation. For purposes of this Section 4.09, "Restricted
Participants" shall mean Participants who are Highly Compensated
Employees within the meaning of Code Section 414(q).
(b) "Compensation" means, for purposes of applying the limitations of
Part 2 of this Article IV, Compensation as defined in Section 1.10,
disregarding elective contributions and any exclusions from
Compensation, other than the exclusions described in paragraphs (a),
(b), (c) and (d) of Section 1.10.
(c) "Maximum Permissible Amount" - The lesser of (i) $30,000 (or, if
greater, one-fourth (1/4) of the defined benefit dollar limitation
under Code Section 415(b)(1)(A)), or (ii) twenty-five percent (25%)
of the Participant's Compensation for the Limitation Year. The dollar
amount of clause (i) will increase by the lesser of (1) 100% of the
dollar amount in effect for the Plan Year; or (2) the amount of the
Employer Securities allocated to the Participant's Employer Securities
Account as a Company contribution for the Plan Year. The immediately
preceding sentence does not apply for any Plan Year for which the
Advisory Committee allocates more than one-third of the Company
contribution to Restricted
IV-6
<PAGE> 31
Participants. If there is a short Limitation Year because of a change
in the Limitation Year, the Advisory Committee will multiply the
$30,000 (or adjusted) limitation by the following fraction:
Number of Months in the short Limitation Year
12.
(d) "Company" means the Company that adopts this Plan and any related
employers described in Section 1.35. Solely for purposes of applying
the limitations of Part 2 of this Article IV, the Advisory Committee
will determine related employers described in Section 1.34 by
modifying Code Section Section 414(b) and (c) in accordance with Code
Section 415(h).
(e) "Excess Amount" means the excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(f) "Limitation Year" means the Plan Year. If the Company amends the
Limitation Year to a different 12 consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year for
which the Company makes the amendment, creating a short Limitation
Year.
(g) "Defined contribution plan" means a retirement plan which provides
for an individual account for each participant and for benefits based
solely on the amount contributed to the participant's account, and any
income, expenses, gains and losses, and any forfeitures of accounts of
other participants which the plan may allocate to such participant's
account. The Advisory Committee must treat all defined contribution
plans (whether or not terminated) maintained by the Company as a
single plan. For purposes of the limitations of Part 2 of this
Article IV, the Advisory Committee will treat employee contributions
made to a defined benefit plan maintained by the Company as a separate
defined contribution plan. The Advisory Committee will also treat as
a defined contribution plan an individual medical account (as defined
in Code Section 415(1)(2)) included as part of a defined benefit plan
maintained by the Company and, for taxable years ending after December
31, 1985, a welfare benefit fund under Code Section 419(e) maintained
by the Company to the extent there are post-retirement medical
benefits allocated to the separate account of a key employee (as
defined in Code Section 419A(d)(3)).
(h) "Defined benefit plan" means a retirement plan which does not
provide for individual accounts for Company contributions. The
Advisory Committee must treat all defined benefit plans
IV-7
<PAGE> 32
(whether or not terminated) maintained by the Company as a single plan.
IV-8
<PAGE> 33
ARTICLE V
PARTICIPANT CONTRIBUTIONS
5.01. PARTICIPANT VOLUNTARY CONTRIBUTIONS. The Plan does not permit
nor require Participant voluntary contributions.
5.02. PARTICIPANT ROLLOVER CONTRIBUTIONS. The Plan does not permit
Participant rollover contributions.
V-1
<PAGE> 34
ARTICLE VI
TERMINATION OF SERVICE - PARTICIPANT VESTING
6.01. NORMAL RETIREMENT AGE. A Participant's Normal Retirement Age is
sixty-two (62) years of age. A Participant who remains in the employ of the
Company after attaining Normal Retirement Age will continue to participate in
Company contributions. A Participant's Accrued Benefit derived from Company
contributions is 100% Nonforfeitable upon and after his or her attaining Normal
Retirement Age (if employed by the Company on or after that date). Upon
termination of a Participant's employment for any reason after attaining Normal
Retirement Age, the Advisory Committee shall direct the Trustee to commence
payment of the Participant's Accrued Benefit to him) or to his Beneficiary if
the Participant is deceased), in accordance with the provisions of Article VII.
6.02. PARTICIPANT DISABILITY OR DEATH. If a Participant's employment
with the Company terminates as a result of death or Disability, the
Participant's Accrued Benefit derived from Company contributions will be 100%
Nonforfeitable.
6.03. VESTING SCHEDULE. (a) Vesting in Account-Generally. Except as
provided in Sections 6.01 and 6.02, for each Year of Service (unless this Plan
is top heavy in the Plan Year) a Participant's Nonforfeitable percentage of his
or her Accrued Benefit (forfeiting the balance, if any) derived from Company
contributions equals the percentage in the following vesting schedule:
<TABLE>
<CAPTION>
Completed Percent of
Years of Service Nonforfeitable
With the Company Accrued Benefit
---------------- ---------------
<S> <C>
Less than 5 . . . . . . . . . . . . . None
5 or more . . . . . . . . . . . . . 100%
</TABLE>
(b) Vesting in Account in Top Heavy Years. For any Plan Year for
which the Plan is a top heavy Plan (as defined in Article XIV), the Advisory
Committee shall calculate a Participant's Nonforfeitable percentage of his or
her Accrued Benefit under the following schedule:
<TABLE>
<CAPTION>
Completed Percent of
Years of Service Nonforfeitable
With the Company Accrued Benefit
---------------- ---------------
<S> <C>
Less than 2 . . . . . . . . . . . . None
2 . . . . . . . . . . . . . . . . . 20%
</TABLE>
VI-1
<PAGE> 35
<TABLE>
<S> <C>
3 . . . . . . . . . . . . . . . . . 40%
4 . . . . . . . . . . . . . . . . . 60%
5 or more . . . . . . . . . . . . . 100%
</TABLE>
The Advisory Committee shall apply the top heavy schedule to
Participants who earn at least one (1) Hour of Service after the top heavy
schedule becomes effective. A shift between vesting schedules under this
Section 6.03 is an amendment to the vesting schedule, and the Advisory
Committee shall apply the rules of Section 8.05 accordingly. A shift to a new
vesting schedule under this Section 6.03 is effective on the first day of the
Plan Year for which the top heavy status of the Plan changes.
6.04. CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED
PARTICIPANTS/RESTORATION OF FORFEITED ACCRUED BENEFIT. If, pursuant to Article
VII, a partially-vested Participant receives a cash-out distribution before he
or she incurs a Forfeiture Break in Service (as defined in Section 6.08), the
cash-out distribution will result in an immediate forfeiture of the non-vested
portion of the Participant's Accrued Benefit derived from Company
contributions. See Section 6.09. A partially-vested Participant is a
Participant whose Nonforfeitable Percentage determined under Section 6.03 is
less than 100%. If the value of a Participant's vested Accrued Benefit is
zero, the Participant shall be deemed to have received a distribution of such
Participant's vested Accrued Benefit. A cash-out distribution is a
distribution of the entire present value of the Participant's Nonforfeitable
Accrued Benefit.
(A) Restoration and Conditions Upon Restoration. A
partially-vested Participant who is re-employed by the Company after
receiving a cash-out distribution of the Nonforfeitable percentage of
his or her Accrued Benefit may repay the Trustee the amount of the
cash-out distribution attributable to Company contributions unless the
Participant no longer has a right to restoration under the
requirements of this Section 6.04. If a partially-vested Participant
makes the cash-out distribution repayment, the Advisory Committee,
subject to the conditions of this paragraph (A), must restore his or
her Accrued Benefit attributable to Company contributions to the same
dollar amount as the dollar amount of his or her Accrued Benefit on
the Accounting Date, or other evaluation date, immediately preceding
the date of the cash-out distribution, unadjusted for any gains or
losses occurring subsequent to that Accounting Date, or other
valuation date. Restoration of the Participant's Accrued Benefit
shall include restoration of all Code Section 411(d)(6) protected
benefits with respect to that restored Accrued Benefit, in accordance
with applicable Treasury regulations. The Advisory Committee shall
not restore a re-employed Participant's Accrued Benefit under this
paragraph if:
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<PAGE> 36
(1) five (5) years have elapsed since the Participant's
first re-employment date following the cash-out
distribution; or
(2) the Participant incurred a Forfeiture Break in
Service (as defined in Section 6.08). This condition
also applies if the Participant makes repayment
within the Plan Year in which he or she incurs the
Forfeiture Break in Service and that Forfeiture Break
in Service would result in a complete forfeiture of
the amount the Advisory Committee otherwise would
restore.
(B) Time and Method of Restoration. If neither of the two (2)
conditions preventing restoration of the Participant's Accrued Benefit
applies, the Advisory Committee will restore the Participant's Accrued
Benefit as of the Plan Year Accounting Date coincident with or
immediately following the repayment. To restore the Participant's
Accrued Benefit, the Advisory Committee, to the extent necessary, will
allocate to the Participant's Account:
(i) first, the amount, if any, of Participant forfeitures
the Advisory Committee would otherwise allocate under Section
4.05;
(ii) second, the amount, if any, of the Trust Fund net
income or gain for the Plan Year; and
(iii) Third, the Company contribution for the Plan Year to
the extent made under a discretionary formula.
To the extent the amount(s) described in clauses (1), (2) and (3) are
insufficient to enable the Advisory Committee to make the required
restoration, the Company must contribute, without regard to any
requirement or condition of Section 4.01, the additional amount as is
necessary to enable the Advisory Committee to make the required
restoration. If, for a particular Plan Year, the Advisory Committee
must restore the Accrued Benefit of more than one (1) re-employed
Participant, then the Advisory Committee will make the restoration
allocation(s) to each such Participant's Account in the same
proportion that a Participant's restored amount for the Plan Year
bears to the restored amount for the Plan Year of all re-employed
Participants. The Advisory Committee shall not take into account the
allocation(s) under this Section 6.04 in applying the limitation on
allocations under Article IV.
(C) 0% Vested Participant. The deemed cash-out rule applies to a
0% vested Participant. A 0% vested Participant is a
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<PAGE> 37
Participant whose Accrued Benefit derived from Company contributions
is entirely forfeitable at the time of his or her Separation from
Service. Under the deemed cash-out rule, the Advisory Committee will
treat the 0% vested Participant as having received a cash-out
distribution on the date of the Participant's Separation from Service
or, if the Participant's Account is entitled to an allocation of
Company contributions for the Plan Year in which he or she separates
from Service, on the last day of that Plan Year. For purposes of
applying the restoration provisions of this Section 6.04, the Advisory
Committee will treat the 0% vested Participant as repaying his or her
cash-out "distribution" on the first date of his or her re-employment
with the Company.
6.05. SEGREGATED ACCOUNT FOR REPAID AMOUNT. Until the Advisory
Committee restores the Participant's Accrued Benefit, the Trustee will invest
the cash-out amount the Participant has repaid in a segregated Account
maintained solely for that Participant. The Trustee must invest the amount in
the Participant's segregated Account in Federally insured interest bearing
savings account(s) or time deposit(s) (or a combination of both), or in other
fixed income investments. Until commingled with the balance of the Trust Fund
on the date the Advisory Committee restores the Participant's Accrued Benefit,
the Participant's segregated Account remains a part of the Trust, but it alone
shares in any income it earns and it alone bears any expense or loss it incurs.
Unless the repayment qualifies as a rollover contribution, the Advisory
Committee will direct the Trustee to repay to the Participant as soon as is
administratively practicable the full amount of the Participant's segregated
account if the Advisory Committee determines one (1) or more of the conditions
of the second paragraph of this Section 6.05 prevents restoration as of the
applicable Accounting Date, notwithstanding the Participant's repayment. The
Advisory Committee will direct the Trustee to co-mingle the Participant's
segregated account with the balance of the Trust Fund as of the second
Accounting Date immediately following the date of the Participant's repayment.
6.06. YEAR OF SERVICE - VESTING. For purposes of vesting under
Section 6.03, Year of Service means any Plan Year during which the Employee
completes not less than one thousand (1,000) Hours of Service with the Company.
6.07. BREAK IN SERVICE - VESTING. For purposes of this Article VI, a
Participant incurs a Break in Service if during any Plan Year he or she does
not complete more than five hundred (500) Hours of Service with the Company.
6.08. INCLUDED YEARS OF SERVICE - VESTING. For purposes of
determining "Years of Service" under Section 6.06, the Plan takes
VI-4
<PAGE> 38
into account all Years of Service an Employee completes with the Company,
except:
(a) any Year of Service after the Participant first incurs a
Forfeiture Break in Service. The Participant incurs a Forfeiture
Break in Service when he or she incurs five (5) consecutive Breaks in
Service (a one (1) year Break in Service for Plan Years beginning
prior to January 1, 1985). This exception shall apply for the sole
purpose of determining a Participant's Nonforfeitable percentage of
his or her Accrued Benefit derived from Company contributions which
accrued for his or her benefit prior to the Forfeiture Break in
Service; and
(b) any Year of Service before the Plan Year in which the
Participant attained the age of eighteen (18).
6.09. FORFEITURE OCCURS. A Participant's forfeiture, if any, of his
or her Accrued Benefit derived from Company contributions occurs under the Plan
on the earlier of:
(a) The last day of the Plan Year in which the Participant first
incurs a Forfeiture Break in Service; or
(b) The date the Participant receives a cash out distribution.
(c) Notwithstanding anything in this Plan to the contrary, as of
the date on which the Company shall discharge any Employee for theft,
embezzlement, obtaining funds or property under false pretenses or for
any similar action, or the Company shall discharge any Employee for
assisting a competitor without permission, interfering with the
Company's relationship with a customer or any similar action, or if
any Employee who has terminated his or her Service with the Company
violates any noncompetition provision under an agreement with the
Company. However, this Section 6.09(c) shall not apply: (i) if the
Employee has at least five (5) Years of Service for purposes of
Section 6.03 through Section 6.08; (ii) to the extent the Employee's
Accrued Benefit is nonforfeitable by reason of Section 6.03(b) prior
to the effective date of his or her termination; (iii) if the Employee
has attained Normal Retirement Age; (iv) to the extent the Employee's
Accrued Benefit is Nonforfeitable as of the Effective Date; and (v) if
the Employee has five or more Years of Service as of the Effective
Date and elects to apply Section 6.03(b) in determining the
Nonforfeitable portion of his or her Accrued Benefit.
VI-5
<PAGE> 39
The Advisory Committee determines the percentage of Participant's
Accrued Benefit forfeiture, if any, under this Section 6.09 solely by reference
to the vesting schedule of Section 6.03. A Participant will not forfeit any
portion of his or her Accrued Benefit for any other reason or cause except as
expressly provided by this Section 6.09 or as provided by Section 10.14.
VI-6
<PAGE> 40
ARTICLE VII
TIME AND METHOD OF PAYMENT OF BENEFITS
7.01. TIME OF PAYMENT OF ACCRUED BENEFIT. Unless, pursuant to
Section 7.03, the Participant or the Beneficiary elects in writing to a
different time of payment, the Advisory Committee will direct the Trustee to
make distribution of a Participant's Nonforfeitable Accrued Benefit in
accordance with this Section 7.01. A Participant must consent, in writing, to
any distribution required if the present value of the Participant's
Nonforfeitable Accrued Benefit, at the time of the distribution to the
Participant, exceeds $3,500 and the Participant has not attained Normal
Retirement Age. For all purposes of this Article VII, the term "distribution
date" means, unless otherwise specified within the Plan, the 60th day of the
Plan Year or as soon as administratively practicable following an Accounting
Date. For purposes of the consent requirements under this Article VII, if the
present value of the Participant's Nonforfeitable Accrued Benefit, at the time
of any distribution, exceeds $3,500, the Advisory Committee shall treat that
present value as exceeding $3,500 for purposes of all subsequent Plan
distributions to the Participant.
(A) Separation from Service for a Reason Other Than Death.
(1) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT NOT EXCEEDING
$3,500. If the Participant's Separation from Service is for
any reason other than death, the Advisory Committee will
direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit in a lump sum on the
distribution date of the Plan Year beginning after the
Participant's separation from Service with the Company, but in
no event later than the 60th day following the close of the
Plan Year in which the Participant attains Normal Retirement
Age. If the Participant has attained Normal Retirement Age
when he or she separates from Service with the Company, the
distribution under this paragraph will occur no later than the
60th day following the close of the Plan Year in which the
Participant's Separation from Service occurs.
(2) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS $3,500.
If the Participant's Separation from Service is for any reason
other than death, the Advisory Committee will direct the
Trustee to distribute the Participant's Nonforfeitable Accrued
Benefit in a form and at the time elected by the Participant,
pursuant to Section 7.03. In the absence of an election by
the Participant, the Advisory Committee will direct the
Trustee to distribute
VII-1
<PAGE> 41
the Participant's Nonforfeitable Accrued Benefit in a lump sum
on the 60th day following the close of the Plan Year in which
the latest of the following events occurs: (a) the
Participant attains Normal Retirement Age; (b) the Participant
attains age 62; or (c) the Participant separates from Service.
(3) DISABILITY. If the Participant terminates employment because
of disability, the Advisory Committee will direct the Trustee
to pay the Participant's Nonforfeitable Accrued Benefit in
lump sum, on the distribution date after the close of the Plan
Year in which the Participant terminates employment because of
disability, subject to the notice and consent requirements of
this Article VII and to the applicable mandatory commencement
dates described in paragraph (1) or in paragraph (2).
(B) Required Beginning Date. If any distribution commencement date
described under Paragraph (A), either by Plan provision or by
Participant election or nonelection, is later than the Participant's
Required Beginning Date, the Advisory Committee instead must direct
the Trustee to make distribution on the Participant's Required
Beginning Date. A Participant's Required Beginning Date is the April
1 following the close of the calendar year in which the Participant
attains age seventy and one-half (70 1/2). However, if the
Participant, prior to incurring a Separation from Service, attained
age 70 1/2 by January 1, 1988, and, for the five Plan Year period
ending in the calendar year in which he or she attained age 70 1/2 and
for all subsequent years, the Participant was not a more than 5% owner
(as defined in Section 1.18(a)), the Required Beginning Date is the
April 1 following the close of the calendar year in which the
Participant separates from Service or, if earlier, the April 1
following the close of the calendar year in which the Participant
becomes a more than 5% owner. Furthermore, if a Participant who was
not a more than 5% owner attained age 70 1/2 during 1988 and did not
incur a Separation from Service prior to January 1, 1989, his or her
Required Beginning Date is April 1, 1990. A mandatory distribution at
the Participant's Required Beginning Date will be in lump sum.
(C) Death of the Participant. The Advisory Committee will direct
the Trustee, in accordance with this Section 7.01(C), to distribute to
the Participant's Beneficiary the Participant's Nonforfeitable Accrued
Benefit remaining in the Trust at the time of the Participant's death
all in accordance with this Article VII.
VII-2
<PAGE> 42
(1) DECEASED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT DOES NOT
EXCEED $3,500. The Advisory Committee must direct the Trustee
to pay the deceased Participant's Nonforfeitable Accrued
Benefit in a single lump sum, as soon as administratively
practicable following the Participant's death or, if later,
the date on which the Advisory Committee receives notification
of or otherwise confirms the Participant's death.
(2) DECEASED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS
$3,500. The Advisory Committee will direct the Trustee to pay
the deceased Participant's Nonforfeitable Accrued Benefit at
the time elected by the Participant or, if applicable, by the
Beneficiary, as permitted under this Article VII. In the
absence of an election, the Advisory Committee will direct the
Trustee to distribute the Participant's undistributed
Nonforfeitable Accrued Benefit in a lump sum on the first
distribution date following the close of the Plan Year in
which the Participant's death occurs or, if later, the first
distribution date following the date the Advisory Committee
receives notification of or otherwise confirms the
Participant's death.
If the death benefit is payable to the Participant's surviving
spouse in full, the surviving spouse may elect distribution at
any time this Article VII would permit a Participant to
receive distribution.
7.02. METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee
shall direct the Trustee to distribute a Participant's Nonforfeitable Accrued
Benefit by payment in a lump sum. Notwithstanding, any provision of this Plan
to the contrary, all distributions shall be determined and made in accordance
with Section 401(a)(9) of the Code and the proposed Regulations under Section
401(a)(9) of the Code.
7.03. BENEFIT PAYMENT ELECTIONS. Not earlier than 90 days before nor
later than 30 days before the Participant's distribution date, the Plan
Administrator must provide a benefit notice to a Participant who is eligible to
make a benefit payment election. The benefit notice must explain the
Participant's right to defer distribution until he or she attains Normal
Retirement Age.
If a Participant or Beneficiary makes a benefit payment election, the
Advisory Committee will direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit in accordance with that election. Any election
is subject to the requirements of Section 7.02. Upon the Participant's or
VII-3
<PAGE> 43
Beneficiary's request, the Advisory Committee shall furnish the Participant or
Beneficiary an appropriate form for the making of the election. The
Participant or Beneficiary shall make an election by filing the election form
with the Advisory Committee at any time before the Trustee otherwise would
commence to pay a Participant's Accrued Benefit in accordance with the
requirements of this Article VII.
(A) PARTICIPANT ELECTIONS AFTER TERMINATION OF EMPLOYMENT. If the
present value of a Participant's Nonforfeitable Accrued Benefit
exceeds $3,500, he or she may elect to have the Trustee make
distribution as of any distribution date, but not earlier than the
first distribution date in the Plan Year beginning after the
Participant's Separation from Service with the Company. The
Participant may reconsider an election at any time and elect to
receive distribution on any distribution date, but not earlier than
the date described in the first sentence of this Paragraph (A). A
Participant who has separated from Service may elect distribution as
of any distribution date following his or her attainment of Normal
Retirement Age irrespective of the restrictions otherwise applicable
under this Section 7.03(A). If the Participant is partially vested in
his or her Accrued Benefit, an election to distribute prior to the
Participant's incurring a Forfeiture Break in Service (as defined in
Section 6.08), must be in the form of a cash-out distribution (as
defined in Article VI). A Participant may not receive a cash-out
distribution if, prior to the time the Trustee actually makes the
cash-out distribution, the Participant returns to employment with the
Company.
(B) PARTICIPANT ELECTIONS PRIOR TO TERMINATION OF EMPLOYMENT. After
a Participant attains Normal Retirement Age, the Participant, unless
he or she retires, has a continuing election to receive all of his or
her Accrued Benefit. A Participant must make an election under this
Section 7.03(B) on a form prescribed by the Advisory Committee at any
time during the Plan Year for which the Participant's election is to
be effective. The Trustee must make a distribution to a Participant
in accordance with the election under this Section 7.03(B) within the
90 day period (or as soon as administratively practicable) after the
Participant files the written election with the Trustee. The Trustee
will distribute the Participant's Accrued Benefit not distributed
pursuant to the Participant's elections in accordance with the other
distribution provisions of this Plan.
(C) DEATH BENEFIT ELECTIONS. If the present value of the deceased
Participant's Nonforfeitable Accrued Benefit exceeds $3,500, the
Participant's Beneficiary may elect to have the
VII-4
<PAGE> 44
Trustee distribute the Participant's Nonforfeitable Accrued Benefit
within a period permitted under Section 7.02. The Beneficiary's
election is subject to any restrictions designated in writing by the
Participant and not revoked as of his or her date of death.
(D) TRANSITIONAL ELECTIONS. Notwithstanding the provisions of
Sections 7.01 and 7.02, if the Participant or Beneficiary signed a
written distribution designation prior to January 1, 1984, the
Advisory Committee must distribute the Participant's Nonforfeitable
Accrued Benefit in accordance with that designation, subject, however,
to the requirements, if applicable, of Sections 7.05 and 7.06. This
Section 7.03(D) does not apply to a pre-1984 distribution designation
and the Advisory Committee will not comply with that designation, if
any of the following applies: (1) the method of distribution would
have disqualified the Plan under Code Section 401(a)(9) as in effect
on December 31, 1983; (2) the Participant did not have an Accrued
Benefit as of December 31, 1983; (3) the distribution designation does
not specify the timing and form of the distribution and the death
Beneficiaries in order of priority; (4) the substitution of a
Beneficiary modifies the payment period of the distribution; or (5)
the Participant or Beneficiary modifies or revokes the distribution
designation. In the event of a revocation, the Plan must distribute,
no later than December 31 of the calendar year following the year of
revocation, the amount which the Participant would have received under
Section 7.02(A) if the election had not been in effect or, if the
Beneficiary revokes the election, the amount which the Beneficiary
would have received under Section 7.02(B) if the election had not been
in effect. The Advisory Committee will apply this Section 7.03(D) to
rollovers and transfers in accordance with Part J of the Code Section
401(a)(9) regulations.
7.04. ANNUITY DISTRIBUTIONS TO PARTICIPANTS. The joint and survivor
annuity requirements of the Code do not apply to this Plan. The Plan does not
provide any annuity distributions to Participants. A transfer agreement
described in Section 16.05 may not permit a plan which is subject to the
provisions of Code Section 417 to transfer assets to this Plan.
7.05. SPECIAL DISTRIBUTION AND PAYMENT REQUIREMENTS. Unless the
Participant elects in writing to have the Trustee apply other distribution
provisions of the Plan, or unless other distribution provisions of the Plan
require earlier distribution of the Participant's Accrued Benefit, the Trustee
must distribute the portion of the Participant's Accrued Benefit attributable
to Employer Securities (the "Eligible Portion") no later than the time
prescribed by this Section 7.05, irrespective of any other
VII-5
<PAGE> 45
provision of the Plan. The distribution provisions of this Section 7.05 are
subject to the consent requirements of Articles VI and VII of the Plan.
(a) If the Participant separates from Service by reason of the
attainment of Normal Retirement Age, death or disability, the Advisory
Committee will direct the Trustee to commence distribution of the
Eligible Portion not later than one year after the close of the Plan
Year in which that event occurs.
(b) If the Participant separates from Service for any reason other
than by reason of the attainment of Normal Retirement Age, death or
disability, the Advisory Committee will direct the Trustee to commence
distribution of the Eligible Portion not later than one year after the
close of the Plan Year in which the Participant separates from
Service. If the Participant resumes employment with the Company on or
before the last day of the fifth Plan Year following the Plan Year of
his or her separation from Service, the distribution provisions of
this paragraph (b) do not apply.
For purposes of this Section 7.05, Employer Securities do not include
any Employer Securities acquired with the proceeds of an Exempt Loan until the
close of the Plan Year in which the borrower repays the Exempt Loan in full.
7.06. DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS. This
Section 7.06 applies to distributions on or after January 1, 1993.
Notwithstanding any provision of this Plan to the contrary that would otherwise
limit a distributee's election under this Section, a distributee may elect, at
the time and in the manner prescribed by the Advisory Committee, to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
If a distribution is one to which section 401(a)(11) and 417 of the
Code do not apply, such distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the Income Tax Regulations is
given, provided that:
(a) The Advisory Committee 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
(b) the Participant, after receiving the notice affirmatively
elects a distribution.
Definitions: For purposes of this Section 7.06:
VII-6
<PAGE> 46
(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:
(1) 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;
(2) any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and
(3) the portion of any distribution that is not
includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with
respect to employer securities).
(2) Eligible Retirement Plan. An eligible retirement plan is an
individual retirement account described in Section 408(a) of
the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code or a qualified trust described in
Section 401(a) of the Code that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account
or individual retirement annuity.
(3) Distributee. A distributee includes an Employee or former
Employee and, 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 with regard to
the interest of the spouse or former spouse.
(4) Direct Rollover. A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
7.07. DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing
contained in this Plan prevents the Trustee, in accordance with the direction
of the Advisory Committee, from complying with the provisions of a qualified
domestic relations order (as defined in Code Section 414(p)). This Plan
specifically permits distribution to an alternate payee under a qualified
domestic relations order at
VII-7
<PAGE> 47
any time, irrespective of whether the Participant has attained his or her
earliest retirement age (as defined under Code Section 414(p)) under the Plan.
A distribution to an alternate payee prior to the Participant's attainment of
earliest retirement age is available only if: (1) the order specifies
distribution at that time or permits an agreement between the Plan and the
alternate payee to authorize an earlier distribution; and (2) if the present
value of the alternate payee's benefits under the Plan exceeds $3,500, and if
the order requires, the alternate payee consents to any distribution occurring
prior to the Participant's attainment of earliest retirement age. Nothing in
this Section 7.07 permits a Participant a right to receive distribution at a
time otherwise not permitted under the Plan nor does it permit the alternate
payee to receive a form of payment not permitted under the Plan.
The Plan Administrator must establish reasonable procedures to
determine the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the Plan Administrator promptly will notify the
Participant and any alternate payee named in the order, in writing, of the
receipt of the order and Plan's procedures for determining the qualified status
of the order. Within a reasonable period of time after receiving the domestic
relations order, the Plan Administrator must determine the qualified status of
the order and must notify the Participant and each alternate payee, in writing,
of its determination. The Plan Administrator must provide notice under this
paragraph by mailing to the individual's address specified in the domestic
relations order, or in a manner consistent with Department of Labor
regulations.
If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during the period the Plan Administrator is making its determination of
the qualified status of the domestic relations order, the Advisory Committee
must make a separate accounting of the amounts payable. If the Plan
Administrator determines the order is a qualified domestic relations order
within eighteen (18) months of the date amounts first are payable following
receipt of the order, the Advisory Committee will direct the Trustee to
distribute the payable amounts in accordance with the order. If the Plan
Administrator does not make its determination of the qualified status of the
order within the eighteen (18) month determination period, the Advisory
Committee will direct the Trustee to distribute the payable amounts in the
manner the Plan would distribute if the order did not exist and shall apply the
order prospectively if the Plan Administrator later determines the order is a
qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, the Advisory Committee may
VII-8
<PAGE> 48
direct the Trustee to invest any partitioned amount in a segregated subaccount
or separate account and to invest the account in Federally insured,
interest-bearing savings accounts or time deposits (or a combination of both),
or in other fixed income investments. A segregated subaccount remains a part
of the Trust, but it alone shares in any income it earns, and it alone bears
any expense or loss it incurs. The Trustee will make any payments or
distributions required under this Section 7.07 by separate benefit checks or
other separate distribution to the alternate payees.
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<PAGE> 49
ARTICLE VIII
COMPANY ADMINISTRATIVE PROVISIONS
8.01. INFORMATION TO COMMITTEE. The Company must supply current
information to the Advisory Committee as to the name, date of birth, date of
employment, annual compensation, leaves of absence, Years of Service and date
of termination of employment of each Employee who is, or who will be eligible
to become, a Participant under the Plan, together with any other information
which the Advisory Committee considers necessary. The Company's records as to
the current information the Company furnishes to the Advisory Committee are
conclusive as to all persons.
8.02. NO LIABILITY. The Company assumes no obligation or
responsibility or any of its Employees, Participants or Beneficiaries for any
act of, or failure to act, on the part of its Advisory Committee, the Trustee
or the Plan Administrator.
8.03. INDEMNITY OF COMMITTEE. The Company indemnifies and saves
harmless the Plan Administrator and the members of the Advisory Committee, and
each of them, from and against any and all loss resulting from liability to
which the Plan Administrator and the Advisory Committee, or the members of the
Advisory Committee, may be subjected by reason of any act or conduct (except
willful misconduct or gross negligence) in their official capacities in the
administration of this Trust or Plan or both, including all expenses reasonably
incurred in their defense, in case the Company fails to provide such defense.
The indemnification provisions of this Section 8.03 do not relieve the Plan
Administrator or any Advisory Committee member from any liability it may have
under the Act for breach of a fiduciary duty. Furthermore, the Plan
Administrator and the Advisory Committee members and the Company may execute a
letter agreement further delineating the indemnification agreement of this
Section 8.03, provided the letter agreement must be consistent with and must
not violate the Act. The indemnification provisions of this Section 8.03
extend to the Trustee solely to the extent provided by a letter agreement
executed by the Trustee and the Company.
8.04. COMPANY DIRECTION OF INVESTMENT. The Company has the right to
direct the Trustee with respect to the investment and re-investment of assets
comprising the Trust Fund only if the Trustee consents in writing to permit
such direction. If the Trustee consents to Company direction of investment,
the Trustee and the Company must execute a letter agreement as a part of this
Plan containing such conditions, limitations and other provisions they deem
appropriate before the Trustee will follow any Company direction as respects
the investment or re-investment of any part of the Trust Fund.
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8.05. AMENDMENT TO VESTING SCHEDULE. Though the Company reserves
the right to amend the vesting schedule at any time, the Advisory Committee
will not apply the amended vesting schedule to reduce the Nonforfeitable
percentage of any Participant's Accrued Benefit derived from Company
contributions (determined as of the later of the date the Company adopts the
amendment, or the date the amendment becomes effective) to a percentage less
than the Nonforfeitable percentage computed under the Plan without regard to
the amendment.
If the Company makes a permissible amendment to the vesting schedule,
each Participant having at least three (3) Years of Service with the Company
may elect to have the percentage of his or her Nonforfeitable Accrued Benefit
computed under the Plan without regard to the amendment. For Plan Years
beginning prior to January 1, 1989, the election described in the preceding
sentence applies only to Participants having at least five (5) Years of Service
with the Company. The Participant must file the election with the Plan
Administrator within sixty (60) days of the latest of (a) the Company's
adoption of the amendment; (b) the effective date of the amendment; or (c) his
or her receipt of a copy of the amendment. The Plan Administrator, as soon as
practicable, must forward a true copy of any amendment to the vesting schedule
to each affected Participant, together with an explanation of the effect of the
amendment, the appropriate form upon which the Participant may make an election
to remain under the vesting schedule provided under the Plan prior to the
amendment and notice of the time within which the Participant must make an
election to remain under the prior vesting schedule. For purposes of this
Section 8.05, an amendment to the vesting schedule includes any Plan amendment
which directly or indirectly affects the computation of the nonforfeitable
percentage of an Employee's rights to his or her Company derived Accrued
Benefit.
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ARTICLE IX
PARTICIPANT ADMINISTRATIVE PROVISIONS
9.01. BENEFICIARY DESIGNATION. Any Participant may from time to
time designate, in writing, any person or persons, contingently or
successively, to whom the Trustee shall pay his or her Accrued Benefit
(including any life insurance proceeds payable to the Participant's Account) on
event of the Participant's death and the Participant may designate the time of
payment. The Advisory Committee shall prescribe the form for the written
designation of Beneficiary and, upon the Participant's filing the form with the
Advisory Committee, the form effectively revokes all designations filed prior
to that date by the same Participant.
A married Participant's Beneficiary designation is not valid unless
the Participant's spouse consents, in writing, to the Beneficiary designation.
The spouse's consent must acknowledge the effect of that consent and a notary
public or the Plan Administrator (or its representative) must witness that
consent. The spousal consent requirements of this paragraph do not apply if:
(1) the Participant and his or her spouse are not married throughout the one
year period ending on the date of the Participant's death; (2) the
Participant's spouse is the Participant's sole primary beneficiary; (3) the
Plan Administrator is not able to locate the Participant's spouse; (4) the
Participant is legally separated or has been abandoned (within the meaning of
State law) and the Participant has a court order to that effect; or (5) other
circumstances exist under which the Secretary of the Treasury will excuse the
consent requirement. If the Participant's spouse is legally incompetent to
give consent, the spouse's legal guardian (even if the guardian is the
Participant) may give consent.
9.02. NO BENEFICIARY DESIGNATION. If a Participant fails to name a
Beneficiary in accordance with Section 9.01, or if the Beneficiary named
predeceases the Participant or dies before complete distribution of the
Participant's Accrued Benefit as prescribed by the Participant's Beneficiary
form, then the Trustee will pay the Participant's Accrued Benefit in accordance
with Section 7.02 in the following order of priority to:
(a) the Participant's surviving spouse;
(b) the Participant's surviving children, including adopted children,
in equal shares;
(c) the Participant's surviving parents, in equal shares; or
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(d) the legal representative of the estate of the last to die of the
Participant and his or her Beneficiary.
The Advisory Committee will direct the Trustee as to the method and to
whom the Trustee will make payment under this Section 9.02.
9.03. PERSONAL DATA TO COMMITTEE. Each Participant and each
Beneficiary of a deceased Participant must furnish to the Advisory Committee
such evidence, data or information as the Advisory Committee considers
necessary or desirable for the purpose of administering the Plan. The
provisions of this Plan are effective for the benefit of each Participant upon
the condition precedent that each Participant will furnish promptly full, true
and complete evidence, data and information when requested by the Advisory
Committee, provided the Advisory Committee advises each Participant of the
effect of his or her failure to comply with its request.
9.04. ADDRESS FOR NOTIFICATION. Each Participant and each
Beneficiary of a deceased Participant shall file with the Advisory Committee
from time to time, in writing, his or her post office address and any change of
post office address. Any communication, statement or notice addressed to a
Participant, or Beneficiary, at his or her last post office address filed with
the Advisory Committee, or as shown on the records of the Company, binds the
Participant, or Beneficiary, for all purposes of this Plan.
9.05. ASSIGNMENT OR ALIENATION. Subject to Code Section 414(p)
relating to qualified domestic relations orders, neither a Participant nor a
Beneficiary may anticipate, assign or alienate (either at law or in equity) any
benefit provided under the Plan, and the Trustee will not recognize any such
anticipation, assignment or alienation. Furthermore, a benefit under the Plan
is not subject to attachment, garnishment, levy, execution or other legal or
equitable process.
9.06. NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the
time prescribed by the Act and the applicable regulations, must furnish all
Participants and Beneficiaries a summary description of any material amendment
to the Plan or notice of discontinuance of the Plan and all other information
required by the Act to be furnished without charge.
9.07. LITIGATION AGAINST THE TRUST. A court of competent
jurisdiction may authorize any appropriate equitable relief to redress
violations of the Act or to enforce any provisions of the Act or the terms of
the Plan. A fiduciary may receive reimbursement of expenses properly and
actually incurred in the performance of its duties with the Plan.
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9.08. INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan description, latest annual report,
any bargaining agreement, this Plan and Trust, contract or any other instrument
under which the Plan was established or is operated. The Plan Administrator
will maintain all of the items listed in this Section 9.08 in its office, or in
such other place or places as it may designate from time to time in order to
comply with the regulations issued under the Act, for examination during
reasonable business hours. Upon the written consent of a Participant or
Beneficiary the Plan Administrator will furnish him or her with a copy of any
item listed in this Section 9.08. The Plan Administrator may make a reasonable
charge to the requesting person for the copy so furnished.
9.09. APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Plan
Administrator shall provide adequate notice in writing to any Participant or to
any Beneficiary ("Claimant") whose claim for benefits under the Plan the
Advisory Committee has denied. The Plan Administrator's notice to the Claimant
must set forth:
(a) the specific reason for the denial;
(b) specific references to pertinent Plan provisions on which the
Advisory Committee based its denial;
(c) a description of any additional material and information needed
for the Claimant to perfect his or her claim and an explanation of why
the material or information is needed; and
(d) that any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Advisory Committee within
seventy-five (75) days after receipt of the Plan Administrator's
notice of denial of benefits. The Plan Administrator's notice must
further advise the Claimant that his or her failure to appeal the
action to the Advisory Committee in writing within the seventy-five
(75) day period will render the Advisory Committee's determination
final, binding and conclusive.
If the Claimant should appeal to the Advisory Committee, the Claimant,
or his or her duly authorized representative, may submit, in writing, whatever
issues and comments he or she feels are pertinent. The Claimant, or his or her
duly authorized representative, may review pertinent Plan documents. The
Advisory Committee will re-examine all facts related to the appeal and make a
final determination as to whether the denial of benefits is justified under the
circumstances. The Advisory Committee will advise the Claimant of its decision
within sixty (60) days of the Claimant's written request for review, unless
special circumstances (such as a hearing) would make the rendering of a
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decision within the sixty (60) day limit unfeasible, but in no event may the
Advisory Committee render a decision respecting a denial for a claim for
benefits later than one hundred twenty (120) days after its receipt of a
request for review.
The Plan Administrator's notice of denial of benefits must identify
the name of each member of the Advisory Committee and the name and address of
the Advisory Committee member to whom the Claimant may forward his or her
appeal.
9.10. PARTICIPANT DIRECTION OF INVESTMENT. Except as provided in this
Section 9.10, a Participant does not have the right to direct the Trustee with
respect to the investment of re-investment of the assets comprising the
Participant's individual Account. Each Qualified Participant may direct the
Trustee as to the investment of 25% of the value of the Participant's Accrued
Benefit attributable to Employer Securities (the "Eligible Accrued Benefit")
within 90 days after the Accounting Date of each Plan Year (to the extent a
direction amount exceeds the amount to which a prior direction under this
Section 9.10 applies) during the Participant's Qualified Election Period. For
the last Plan Year in the Participant's Qualified Election Period, the Trustee
will substitute "50%" for "25%" in the immediately preceding sentence. The
Qualified Participant must make his or her direction to the Trustee in writing,
the direction may be effective no later than 180 days after the close of the
Plan Year to which the direction applies, and the direction must specify which,
if any, of the investment options the Participant selects.
A Qualified Participant may choose one of the following investment
options:
(a) The distribution of the portion of his or her Eligible Accrued
Benefit covered by the election. The Trustee will make the
distribution within 90 days after the last day of the period during
which the Qualified Participant may make the election. The provisions
of this Plan applicable to a distribution of Employer Securities apply
to this investment option.
(b) The direct transfer of the portion of his or her Eligible
Accrued Benefit covered by the election to another qualified plan of
the Company which accepts such transfers, but only if the transferee
plan permits employee-directed investment and does not invest in
Employer Securities to a substantial degree. The Trustee will make
the direct transfer no later than 90 days after the last day of the
period during which the Qualified Participant may make the election.
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For purposes of this Section 9.10, the following definitions apply:
(i) "Qualified Participant" means a Participant who has attained
age 55 and who has completed at least 10 years of participation in the
Plan. A "year of participation" means a Plan Year in which the
Participant was eligible for an allocation of Company contributions,
irrespective of whether the Company actually contributed to the Plan
for that Plan Year.
(ii) "Qualified Election Period" means the 6 Plan Year period
beginning with the Plan Year in which the Participant first becomes a
Qualified Participant.
A Participant's right under this Section 9.10 to direct the investment
of his or her Account applies solely to Employer Securities acquired by the
Plan after December 31, 1986.
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ARTICLE X
ADVISORY COMMITTEE - DUTIES WITH RESPECT
TO PARTICIPANTS' ACCOUNTS
10.01. MEMBERS' COMPENSATION, EXPENSES. The Company must appoint
an Advisory Committee to administer the Plan, the members of which may or may
not be Participants in the Plan. The members of the Advisory Committee will
serve without compensation for services as such, but the Company will pay all
expenses of the Advisory Committee, including the expense for any bond required
under the Act.
10.02. TERM. Each member of the Advisory Committee serves until his
or her successor is appointed.
10.03. POWERS. In case of a vacancy in the membership of the
Advisory Committee, the remaining members of the Advisory Committee may
exercise any and all of the powers, authority, duties and discretion conferred
upon the Advisory Committee pending the filling of the vacancy.
10.04. GENERAL. The Advisory Committee has the following powers and
duties:
(a) To select a Secretary, who need not be a member of the Advisory
Committee;
(b) To determine the rights of eligibility of an Employee to
participate in the Plan, the value of a Participant's Accrued Benefit
and the Nonforfeitable percentage of each Participant's Accrued
Benefit;
(c) To adopt rules of procedure and regulations necessary for the
proper and efficient administration of the Plan provided the rules are
not inconsistent with the terms of this Agreement;
(d) To enforce the terms of the Plan and the rules and regulations it
adopts;
(e) To direct the Trustee as respects the crediting and distribution
of the Trust;
(f) To review and render decisions respecting a claim for (or denial
of a claim for) a benefit under the Plan;
(g) To furnish the Company with information which the Company may
require for tax or other purposes;
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(h) To engage the service of agents whom it may deem advisable to
assist it with the performance of its duties;
(i) To engage the services of an Investment Manager or managers (as
defined in Act Section 3(38)), each of whom shall have full power and
authority to manage, acquire or dispose (or direct the Trustee with
respect to acquisition or disposition) of any Plan asset under its
control;
The Advisory Committee must exercise all of its powers, duties and
discretion under the Plan in a uniform and nondiscriminatory manner.
10.05. FUNDING POLICY. The Advisory Committee will review, not less
often than annually, all pertinent Employee information and Plan data in order
to establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Advisory Committee must
communicate periodically, as it deems appropriate, to the Trustee and to any
Plan Investment Manager the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.
10.06. MANNER OF ACTION. The decision of a majority of the members
appointed and qualified controls.
10.07. AUTHORIZED REPRESENTATIVE. The Advisory Committee may
authorize any one (1) of its members, or its Secretary, to sign on its behalf
any notices, directions, applications, certificates, consents, approvals,
waivers, letters or other documents. The Advisory Committee must evidence this
authority by an instrument signed by all members and filed with the Trustee.
10.08. INTERESTED MEMBER. No member of the Advisory Committee may
decide or determine any matter concerning the distribution, nature or method of
settlement of his or her own benefits under the Plan, except in exercising an
election available to that member in his or her capacity as a Participant.
10.09. INDIVIDUAL ACCOUNTS. The Advisory Committee will maintain,
or direct the Trustee to maintain, a separate Account, or multiple separate
Accounts, in the name of each Participant to reflect the Participant's Accrued
Benefit under the Plan. The Advisory Committee must maintain for a Participant
one Account designated as the "Employer Securities Account" to reflect a
Participant's interest in Employer Securities held by the Trust and another
Account designated as the "General Investments Account" to reflect the
Participant's interest in the Trust Fund attributable to assets other than
Employer Securities. If a Participant re-enters the Plan subsequent to his or
her having a
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Forfeiture Break in Service (as defined in Section 6.08), the Advisory
Committee, or the Trustee, must maintain a separate Account for the
Participant's pre-Forfeiture Break in Service Accrued Benefit and a separate
Account for his or her post-Forfeiture Break in Service Accrued Benefit unless
the Participant's entire Accrued Benefit under the Plan is 100% Nonforfeitable.
The Advisory Committee will make its allocations, or request the
Trustee to make its allocations, to the Accounts of the Participants in
accordance with the provisions of Section 10.11. The Advisory Committee may
direct the Trustee to maintain a temporary segregated investment Account in the
name of a Participant to prevent a distortion of income, gain or loss
allocations under Section 10.11. The Advisory Committee must maintain records
of its activities.
10.10. VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
Participant's Accrued Benefit consists of that proportion of the net worth (at
fair market value) of the Company's Trust Fund which the net credit balance in
his or her Account (exclusive of the cash value of incidental benefit insurance
contracts) bears to the total net credit balance in the Accounts (exclusive of
the cash value of the incidental benefit insurance contracts) of all
Participants plus the cash surrender value of any incidental benefit insurance
contracts held by the Trustee on the Participant's life. The value of a
Participant's Accrued Benefit is its value as of the most recent valuation date
(as defined in Section 10.11).
10.11. ALLOCATIONS TO PARTICIPANT'S ACCOUNTS. A "valuation date"
under this Plan is each Accounting Date and each interim valuation date
determined under Section 11.14. As of each valuation date the Advisory
Committee must adjust the General Investment Accounts to reflect net income,
gain or loss since the last valuation date. The valuation period is the period
beginning the day after the last valuation date and ending on the current
valuation date.
[A] EMPLOYER SECURITIES ACCOUNT. As of the Accounting Date of each
Plan Year, the Advisory Committee first will reduce Employer
Securities Accounts for any forfeitures arising under Section 6.09 and
then will credit the Employer Securities Account maintained for each
Participant with the Participant's allocable share of Employer
Securities (including fractional shares) purchased and paid for by the
Trust or contributed in kind to the Trust, with any forfeitures of
Employer Securities and with any stock dividends on Employer
Securities allocated to his or her Employer Securities Account. The
Advisory Committee will allocate Employer Securities acquired with an
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Exempt Loan under Section 11.03[B] in accordance with that Section.
Except as otherwise specifically provided in Section 11.03[B], the
Advisory Committee will base allocations to the Participant's Accounts
on dollar values expressed as shares of Employer Securities or on the
basis of actual shares where there is a single class of Employer
Securities. In making a forfeiture reduction under this Section
10.11, the Advisory Committee, to the extent possible, first must
forfeit from a Participant's General Investments Account before making
a forfeiture from his or her Employer Securities Account.
[B] GENERAL INVESTMENTS ACCOUNT.
TRUST FUND ACCOUNTS. The allocation provisions of this
paragraph apply to all Participant General Investment Accounts other
than segregated investment Accounts. The Advisory Committee first
will adjust the Participant General Investment Accounts, as those
Accounts stood at the beginning of the current valuation period, by
reducing the Accounts for any forfeitures arising under Section 6.09
or under Section 10.14, for amounts charged during the valuation
period to any Accounts in accordance with Section 10.13 (relating to
distributions) and Section 12.01 (relating to insurance premiums), for
the cash value of incidental benefit insurance contracts and for the
amount of any General Investment Account which the Trustee has fully
distributed since the immediately preceding valuation date. The
Advisory Committee then, subject to the restoration allocation
requirements of Section 6.04 or of Section 10.14, will allocate the
net income, gain or loss pro rata to the adjusted Participant General
Investment Accounts. The allocable net income, gain or loss is the
net income (or net loss), including the increase or decrease in the
fair market value of assets, since the last valuation date. In making
its allocation under this Section 10.11[B], the Advisory Committee
will exclude Employer Securities allocated to Employer Securities
Accounts, stock dividends on allocated Employer Securities and
interest paid by the Trust on an Exempt Loan. The Advisory Committee
will include as income (available for payment on an Exempt Loan) any
cash dividends on Employer Securities except cash dividends which the
Advisory Committee has directed the Trustee to distribute in
accordance with Section 11.08.
SEGREGATED INVESTMENT ACCOUNTS. A segregated investment
Account receives all income it earns and bears all expense or loss it
incurs. As of the valuation date, the Advisory Committee must reduce
a segregated Account for any forfeiture arising under Section 6.09
after the Advisory Committee has made all other allocations, changes
or adjustments to the Account for the Plan Year.
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ADDITIONAL RULES. An Excess Amount or suspense account
described in Part 2 of Article IV does not share in the allocation of
net income, gain or loss described in this Section 10.11[B]. This
Section 10.11[B] applies solely to the allocation of net income, gain
or loss of the Trust. The Advisory Committee will allocate the
Company contributions and Participant forfeitures, if any, in
accordance with Article IV.
10.12. INDIVIDUAL STATEMENT. As soon as practicable after the
Accounting Date of each Plan Year but within the time prescribed by the Act and
the regulations under the Act, the Plan Administrator will deliver to each
Participant (and to each Beneficiary) a statement reflecting the condition of
his or her Accrued Benefit in the Trust as of that date and such other
information the Act requires be furnished the Participant or Beneficiary. No
Participant, except a member of the Advisory Committee, has the right to
inspect the records reflecting the Account of any other Participant.
10.13. ACCOUNT CHARGED. The Advisory Committee will charge all
distributions made to a Participant or to his or her Beneficiary from his or
her Account against the Account of the Participant when made.
10.14. UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require
either the Trustee or the Advisory Committee to search for, or ascertain the
whereabouts of, any Participant or Beneficiary. At the time the Participant's
or Beneficiary's benefit becomes distributable under Article VII, the Advisory
Committee, by certified or registered mail addressed to his or her last known
address of record with the Advisory Committee or the Company, must notify any
Participant, or Beneficiary, that he or she is entitled to a distribution under
this Plan. The notice must quote the provisions of this Section 10.14 and
otherwise must comply with the notice requirements of Article VII. If the
Participant, or Beneficiary, fails to claim his or her distributive share or
make his or her whereabouts known in writing to the Advisory Committee within
six (6) months from the date of mailing of the notice, the Advisory Committee
will treat the Participant's or Beneficiary's unclaimed payable Accrued Benefit
as forfeited and will reallocate the unclaimed payable Accrued Benefit in
accordance with Section 4.05. Where the benefit is distributable to the
Participant, the forfeiture under this paragraph occurs as of the last day of
the notice period, if the Participant's Nonforfeitable Accrued Benefit does not
exceed $3,500, or as of the first day the benefit is distributable without the
Participant's consent, if the present value of the Participant's Nonforfeitable
Accrued Benefit exceeds $3,500. Where the benefit is distributable to a
Beneficiary, the
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forfeiture occurs on the date the notice period ends except, if the Beneficiary
is the Participant's spouse and the Nonforfeitable Accrued Benefit payable to
the spouse exceeds $3,500, the forfeiture occurs as of the first day the
benefit is distributable without the spouse's consent. Pending forfeiture, the
Advisory Committee, following the expiration of the notice period, may direct
the Trustee to segregate the Nonforfeitable Accrued Benefit in a segregated
Account and to invest that segregated Account in Federally insured interest
bearing savings accounts or time deposits (or in a combination of both), or in
other fixed income investments.
If a Participant or Beneficiary who has incurred a forfeiture of his or her
Accrued Benefit under the provisions of the first paragraph of this Section
10.14 makes a claim, at any time, for his or her forfeited Accrued Benefit, the
Advisory Committee must restore the Participant's or Beneficiary's forfeited
Accrued Benefit to the same dollar amount as the dollar amount of the Accrued
Benefit forfeited, unadjusted for any gains or losses occurring subsequent to
the date of the forfeiture. The Advisory Committee will make the restoration
during the Plan Year in which the Participant or Beneficiary makes the claim
first from the amount, if any, of Participant forfeitures the Advisory
Committee otherwise would allocate for the Plan Year, then from the amount, if
any, of the Trust Fund net income or gain for the Plan Year and then from the
amount, or additional amount, the Company shall contribute to enable the
Advisory Committee to make the required restoration. The Advisory Committee
will direct the Trustee to distribute the Participant's or Beneficiary's
restored Accrued Benefit to him or her not later than sixty (60) days after the
close of the Plan year in which the Advisory Committee restores the forfeited
Accrued Benefit. The forfeiture provisions of this Section 10.14 shall apply
solely to the Participant's or to the Beneficiary's Accrued Benefit derived
from Company contributions.
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ARTICLE XI
TRUSTEE, POWERS AND DUTIES
11.01. ACCEPTANCE. The Trustee accepts the Trust created under the
Plan and agrees to perform the obligations imposed. The Trustee shall provide
bond for the faithful performance of its duties under the Trust to the extent
required by the Act.
11.02. RECEIPT OF CONTRIBUTIONS. The Trustee is accountable to the
Company for the funds contributed to it by the Company, but does not have any
duty to see that the contributions received comply with the provisions of the
Plan. The Trustee is not obliged to collect any contributions from the
Company, nor is obliged to see that funds deposited with it are deposited
according to the provisions of the Plan.
11.03. FULL INVESTMENT POWERS.
[A] TRUSTEE POWERS. The Trustee has full discretion and authority
with regard to the investment of the Trust Fund, except with respect
to a Plan asset under the control or direction of a properly appointed
Investment Manager or with respect to a Plan asset subject to Company,
Participant or Advisory Committee direction of investment. The
Trustee must coordinate its investment policy with Plan financial
needs as communicated to it by the Advisory Committee. The Trustee is
authorized and empowered, but not by way of limitation, with the
following powers, rights and duties:
(a) to invest the Trust Fund primarily in Employer Securities
("primarily" meaning the authority to hold and to acquire not
more than 100% of the Trust Fund in Employer Securities) and
to invest any part or all of the Trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, put and
call options, traded on a national exchange, United States
retirement plan bonds, corporate bonds, debentures,
convertible debentures, commercial paper, U.S. Treasury Bills,
U.S. Treasury Notes and other direct or indirect obligations
of the United States Government or its agencies, improved or
unimproved real estate situated in the United States, limited
partnerships, insurance contracts of any type, mortgages,
notes or other property of any kind, real or personal, and to
buy or sell options on common stock on a nationally recognized
exchange with or without holding the underlying common stock,
and to make any other investments the Trustee deems
appropriate, as a prudent person would do under like
circumstances with due regard for the purposes of this Plan.
Any investment made or
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retained by the Trustee in good faith is proper but must be of
a kind (with the exception of Employer Securities)
constituting a diversification considered by law suitable for
trust investments.
(b) to retain in cash so much of the Trust Fund as it may deem
advisable to satisfy liquidity needs of the Plan and to
deposit any cash held in the Trust Fund in a bank account at
reasonable interest. If the Trustee is a bank or similar
financial institution supervised by the United States or by a
state, this paragraph (b) includes specific authority to
invest in any type of deposit of the Trustee (or of a bank
related to the Trustee within the meaning of Code Section
414(b)) at a reasonable rate of interest or in a common trust
fund (the provisions of which govern the investment of such
assets and which the Plan incorporates by this reference) as
described in Code Section 584 which the Trustee (or its
affiliate as defined in Code Section 1504) maintains
exclusively for the collective investment of money contributed
by the bank in its capacity as Trustee and which conforms to
the rules of the Comptroller of the Currency;
(c) to manage, sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure,
lease for any term even though commencing in the future or
extending beyond the term of the Trust, and otherwise deal
with all property, real or personal, in such manner, for such
considerations and on such terms and conditions as the Trustee
decides;
(d) to credit and distribute the Trust as directed by the Advisory
Committee. The Trustee is not obliged to inquire as to
whether any payee or distributee is entitled to any payment or
whether the distribution is proper or within the terms of the
Plan, or as to the manner of making any payment or
distribution. The Trustee is accountable only to the Advisory
Committee for any payment or distribution made by it in good
faith on the order or direction of the Advisory Committee;
(e) to issues notes or other obligations or otherwise borrow
money, to assume indebtedness, extend mortgages and encumber
by mortgage or pledge;
(f) to compromise, contest, contest, arbitrate or abandon
claims and demands, in its discretion;
(g) to vote, subject to Section 11.16, all voting stock held by
the Trust Fund;
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(h) to lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize
interests in oil, gas and other minerals; and to enter into
operating agreements and to execute division and transfer
orders;
(i) to hold any securities or other property in the name of the
Trustee or its nominee, with depositories or agent
depositories, or in another form as it may deem best, with or
without disclosing the trust relationship;
(j) to perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management,
investment and distribution of the Trust;
(k) to retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make
payment or delivery of the funds or property until final
adjudication is made by a court of competent jurisdiction;
(l) to file all tax returns required of the Trustee;
(m) to furnish to the Company, the Plan Administrator and the
Advisory Committee an annual statement of account showing the
condition of the Trust Fund and all investment, receipts,
disbursements and other transactions effected by the Trustee
during the Plan Year covered by the statement and also stating
the assets of the Trust held at the end of the Plan Year,
which accounts shall be conclusive on all persons, including
the Company, the Plan Administrator and the Advisory
Committee, except as to any act or transaction concerning
which the Company, the Plan Administrator or the Advisory
Committee files with the Trustee written exceptions or
objections within ninety (90) days after the receipt of the
accounts, or for which the Act authorizes a longer period
within which to object; and
(n) to begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that
the Trustee is not obliged or required to do so unless
indemnified to its satisfaction. The Trustee will allocate
any insurance proceeds received from the purchase of insurance
contracts under paragraph (a) to Participants' Accounts in the
same manner as the allocation under Section 4.04 of the
Company contribution for the Plan Year in which the death of
the insured Participant occurs.
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[B] EXEMPT LOAN. This Section 11.03[B] specifically authorizes
the Trustee to enter into an Exempt Loan transaction. The following
terms and conditions will apply to any Exempt Loan:
(1) The Trustee will use the proceeds of the loan within a
reasonable time after receipt only for any or all of the
following purposes: (i) to acquire Employer Securities, (ii)
to repay such loan, or (iii) to repay a prior Exempt Loan.
Except as provided under Article XIII, no Employer Security
acquired with the proceeds of an Exempt Loan may be subject to
a put, call or other option, or buy-sell or similar
arrangement while held by and when distributed from this Plan,
whether or not this Plan is then an employee stock ownership
plan.
(2) The interest rate of the loan may not be more than a
reasonable rate of interest.
(3) Any collateral the Trustee pledges to the creditor must
consist only of the assets purchased by the borrowed funds and
those assets the Trust used as collateral on the prior Exempt
Loan repaid with the proceeds of the current Exempt Loan.
(4) The creditor may have no recourse against the Trust under
the loan except with respect to such collateral given for the
loan, contributions (other than contributions of Employer
Securities) that the Company makes to the Trust to meet its
obligations under the loan, and earnings attributable to such
collateral and the investment of such contributions. The
payment made with respect to an Exempt Loan by the Plan during
a Plan Year must not exceed an amount equal to the sum of such
contributions and earnings received during or prior to the
year less such payments in prior years. The Advisory
Committee and the Trustee must account separately for such
contributions and earnings in the books of account of the Plan
until the Trust repays the loan.
(5) In the event of default upon the loan, the value of Plan
assets transferred in satisfaction of the loan must not exceed
the amount of the default, and if the lender is a Disqualified
Person, the loan must provide for transfer of Plan assets upon
default only upon and to the extent of the failure of the Plan
to meet the payment schedule of the loan.
(6) The Trustee must add and maintain all assets acquired with
the proceeds of an Exempt Loan in a suspense Account
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referred to in this Article XI as the "Exempt Loan Suspense
Account." In withdrawing assets from the Suspense Account,
the Trustee will apply the provisions of Treas. Reg. Sections
54.4975-7(b)(8) and (15) as if all securities in the Exempt
Loan Suspense Account were encumbered. Upon the payment of
any portion of the loan, the Trustee will effect the release
of assets in the Exempt Loan Suspense Account from
encumbrances. For each Plan Year during the duration of the
loan, the number of Employer Securities released must equal
the number of encumbered Employer Securities held immediately
before release for the current Plan Year multiplied by a
fraction. The numerator of the fraction is the amount of
principal and interest paid for the Plan Year. The
denominator of the fraction is the sum of the numerator plus
the principal and interest to be paid for all future Plan
Years. The number of future Plan Years under the loan must be
definitely ascertainable and must be determined without taking
into account any possible extension or renewal periods. If
the interest rate under the loan is variable, the interest to
be paid in future Plan Years must be computed by using the
interest rate applicable as of the end of the Plan Year. If
collateral includes more than one class of Employer
Securities, the number of Employer Securities of each class to
be released for a Plan Year must be determined by applying the
same fraction to each such class. The Advisory Committee will
allocate assets withdrawn from the Exempt Loan Suspense
Account to the Accounts of Participants who otherwise share in
the allocation of the Company's contribution for the Plan Year
for which the Trustee has paid the portion of the loan
resulting in the release of the assets. The Advisory
Committee consistently will make this allocation as of each
Accounting Date on the basis of non-monetary units, taking
into account the relative Compensation of all such
Participants for such Plan Year.
(7) The loan must be for a specific term and may not be
payable at the demand of any person except in the case of
default.
(8) Notwithstanding the fact this Plan ceases to be an
employee stock ownership plan, Employer Securities acquired
with the proceeds of an Exempt Loan will continue after the
Trustee repays the loan to be subject to the provisions of
Treas. Reg Sections 54.4975-7(b)(4), (10), (11) and (12)
relating to put, call or other options and to buy-sell or
similar arrangements, except to the extent these regulations
are inconsistent with Code Section 409(h).
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11.04. RECORDS AND STATEMENTS. The records of the Trustee
pertaining to the Plan must be open to the inspection of the Plan
Administrator, the Advisory Committee and the Company at all reasonable times
and may be audited from time to time by any person or persons as the Company,
Plan Administrator or Advisory Committee may specify in writing. The Trustee
shall furnish the Advisory Committee or the Plan Administrator with whatever
information relating to the Trust Fund the Advisory Committee or Plan
Administrator considers necessary.
11.05. FEES AND EXPENSES FROM FUND. The Trustee will receive
reasonable annual compensation as may be agreed upon from time to time between
the Company and the Trustee. The Trustee will pay all fees and expenses
reasonably incurred by it in its administration of the Plan from the Trust Fund
unless the Company pays the fees and expenses. The Advisory Committee shall
not treat any fee or expense paid, directly or indirectly, by the Company as a
Company contribution, provided the fee or expense relates to the ordinary and
necessary administration of the Fund. No person who is receiving full pay from
the Company shall receive compensation for services as Trustee from the Trust
Fund.
11.06. PARTIES TO LITIGATION. Except as otherwise provided by the
Act, only the Company, the Plan Administrator, the Advisory Committee and the
Trustee are necessary parties to any court proceeding involving the Trustee or
the Trust Fund. No Participant, or Beneficiary, is entitled to any notice of
process unless required by the Act. Any final judgment entered in any
proceeding will be conclusive upon the Company, the Plan Administrator, the
Advisory Committee, the Trustee, Participants and Beneficiaries.
11.07. PROFESSIONAL AGENTS. The Trustee may employ and pay from the
Trust Fund reasonable compensation to agents, attorneys, accountants and other
persons to advise the Trustee as in its opinion may be necessary. The Trustee
may delegate to any agent, attorney, accountant or other person selected by it
any non-Trustee power or duty vested in it by the Plan, and the Trustee may act
or refrain from acting on the advice or opinion of any agent, attorney,
accountant or other person so selected.
11.08. DISTRIBUTION OF TRUST FUND. The Trustee shall make all
distributions of benefits under the Plan in Employer Securities valued at fair
market value at the time of distribution, provided, however:
(a) If a Participant's nonforfeitable Accrued Benefit would
consist of less than 100 shares of Employer Securities based
on the number
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of shares allocated to the Participant's Employer Securities
Account and the number of full shares of Employer Securities
that could be purchased with the balance of the Participant's
General Investment Account as of the valuation date
immediately preceding the date of a distribution to the
Participant, then the Participant or his or her Beneficiary
may elect to receive the Participant's nonforfeitable Accrued
Benefit (i) in shares of Employer Securities or (ii) in cash
in an amount equal to the bid price for such shares on an
over-the-counter market (or the average of the highest and
lowest selling prices quoted on a stock exchange, as the case
may be) on a trading date not more than three (3) business
days preceding the date of distribution; and
(b) the Trustee shall pay in cash any fractional share of Employer
Securities to which a Participant or his or her Beneficiary is
entitled.
Except as provided in paragraph (a) above, in the event the Trustee is to make
a distribution in shares of Employer Securities, the Trustee shall apply any
balance in a Participant's General Investments Account to provide shares of
Employer Securities for distribution at the fair market value as of the
valuation date immediately preceding the distribution.
If the Company's charter or bylaws restrict ownership of substantially
all shares of Employer Securities to Employees and the Trust, as described in
Code Section 409(h)(2), the Trustee will make the distribution of a
Participant's Accrued Benefit entirely in cash.
Notwithstanding the preceding provisions of this Section 11.08, the
Trustee, if directed in writing by the Advisory Committee, will pay, in cash,
any cash dividends on Employer Securities allocated, or allocable to
Participants, Employer Securities Accounts, irrespective of whether a
Participant is fully vested in his or her Employer Securities Account. The
Advisory Committee's direction must state whether the Trustee is to pay the
cash dividend distributions currently, or within the 90 day period following
the close of the Plan Year in which the Company pays the dividends to the
Trust. The Advisory Committee may request the Company to pay dividends on
Employer Securities directly to Participants.
11.09. DISTRIBUTION DIRECTIONS. If no one claims a payment or
distribution made from the Trust, the Trustee shall promptly notify the
Advisory Committee and then dispose of the payment in accordance with the
subsequent direction of the Advisory Committee.
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11.10. THIRD PARTY. No person dealing with the Trustee is obligated
to see to the proper application of any money paid or property delivered to the
Trustee, or to inquire whether the Trustee has acted pursuant to any of the
terms of the Plan. Each person dealing with the Trustee may act upon any
notice, request or representation in writing by the Trustee, or by the
Trustee's duly authorized agent, and is not liable to any person in so acting.
The certificate of the Trustee that it is acting in accordance with the Plan
will be conclusive in favor of any person relying on the certificate. If more
than two persons act as Trustee, the decision of a majority of such persons
controls with respect to any decision regarding the administration or
investment of the Trust Fund.
11.11. RESIGNATION. The Trustee may resign at any time as Trustee
of the Plan by giving thirty (30) days' written notice in advance to the
Company and to the Advisory Committee. If the Company fails to appoint a
successor Trustee within 60 days of its receipt of the Trustee's written notice
of resignation, the Trustee will treat the Company as having appointed itself
as Trustee and as having filed its acceptance of appointment with the former
Trustee.
11.12. REMOVAL. The Company, by giving thirty (30) days' written
notice in advance to the Trustee, may remove any Trustee. In the event of the
resignation or removal of a Trustee, the Company must appoint a successor
Trustee if it intends to continue the Plan. If two or more persons hold the
position of Trustee, in the event of the removal of one such person, during any
period the selection of a replacement is pending, or during any period such
person is unable to serve for any reason, the remaining person or persons will
act as the Trustee.
11.13. INTERIM DUTIES AND SUCCESSOR TRUSTEE. Each successor Trustee
succeeds to the title to the Trust vested in its predecessor by accepting in
writing its appointment as successor Trustee and filing the acceptance with the
former Trustee and the Advisory Committee without the signing or filing of any
further statement. The resigning or removed Trustee, upon receipt of
acceptance in writing of the Trust by the successor Trustee, must execute all
documents and do all acts necessary to vest the title of record in any
successor Trustee. Each successor Trustee has and enjoys all of the powers,
both discretionary and ministerial, conferred under this Agreement upon its
predecessor. A successor Trustee is not personally liable for any act or
failure to act of any predecessor Trustee, except as required under the Act.
With the approval of the Company and the Advisory Committee, a successor
Trustee, with respect to the Plan, may accept the account rendered and the
property delivered to it by a predecessor
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<PAGE> 70
Trustee without incurring any liability or responsibility for so doing.
11.14. VALUATION OF TRUST. The Trustee must value the Trust Fund as
of each Accounting Date to determine the fair market value of each
Participant's Accrued Benefit in the Trust, and the Trustee also must value the
Trust Fund on such other dates as directed by the Advisory Committee. With
respect to activities carried on by the Plan, an independent appraiser meeting
requirements similar to those prescribed by Treasury regulations under Code
Section 170(a)(1) must perform all valuations of Employer Securities which are
not readily tradeable on an established securities market.
11.15. LIMITATION ON LIABILITY - IF INVESTMENT MANAGER APPOINTED.
The Trustee is not liable for the acts or omissions of any Investment Manager
or Managers the Advisory Committee may appoint, nor is the Trustee under any
obligation to invest or otherwise manage any asset of the Plan which is subject
to the management of a properly appointed Investment Manager. The Advisory
Committee, the Trustee and any properly appointed Investment Manager may
execute a letter agreement as a part of this Plan delineating the duties,
responsibilities and liabilities of the Investment Manager with respect to any
part of the Trust Fund under the control of the Investment Manager.
11.16. PARTICIPANT VOTING RIGHTS - EMPLOYER SECURITIES.
[A] Tenders For Employer Securities.
(a) Notwithstanding any other provision of this Plan to the
contrary, if any, but subject to the provisions of
subparagraphs (b), (c), (d), (e) and (f) of this paragraph
[A], in the event an offer shall be received by the Trustee
(including but not limited to a tender offer or exchange offer
within the meaning of the Securities Exchange Act of 1934, as
from time to time amended and in effect) to acquire any shares
of Employer Securities held by the Trustee in the Trust,
whether or not allocated to the Account of any Participant
(hereinafter referred to as an "Offer"), the Trustee shall
have no discretion or authority to sell, exchange or transfer
any of such shares pursuant to such Offer except to the
extent, and only to the extent, that the Trustee is timely
directed to do so in writing (1) with respect to any Employer
Securities held by the Trustee subject to such Offer and
allocated to the Account of any Participant, by each
Participant to whose Account any of such shares are allocated,
as a named fiduciary, within the meaning of Section 403(a)(1)
of the Act (referred to in this Section
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11.16 as "named fiduciary") and (2) with respect to any
Employer Securities held by the Trustee subject to such Offer
and not allocated to the Account of any Participant, by each
Participant who has Employer Securities allocated to his or
her Account, as named fiduciary, with respect to an amount of
such unallocated Employer Securities equal to the total amount
of unallocated Employer Securities, multiplied by a fraction
the numerator of which is the amount of Employer Securities
allocated to the Participant's Account under the Plan and the
denominator of which is the total amount of Employers
Securities allocated to the Accounts of all Participants under
the Plan.
Upon timely receipt of such instructions, the Trustee shall,
subject to the provisions of subparagraphs (c), (d) and (f) of
this paragraph [A], sell, exchange or transfer pursuant to
such Offer, only such shares as to which such instructions
were given. The Trustee shall use its best efforts to
communicate or cause to be communicated to each Participant
the consequences of any failure to provide timely instructions
to the Trustee.
In the event, under the terms of an Offer or otherwise, any
shares of Employer Securities tendered for sale, exchange or
transfer pursuant to such Offer may be withdrawn from such
Offer, the Trustee shall follow such instructions respecting
the withdrawal of such securities from such Offer in the same
manner and the same proportion as shall be timely received by
the Trustee from the Participants as named fiduciaries
entitled under this paragraph to give instructions as to the
sale, exchange or transfer of securities pursuant to such
Offer.
(b) In the event that an Offer for fewer than all of the shares of
Employer Securities held by the Trustee in the Trust shall be
received by the Trustee, each Participant who has been
allocated any of such Employer Securities subject to such
Offer shall be entitled to direct the Trustee as to the
acceptance or rejection of such Offer (as provided by
subparagraph (a) of this paragraph [A]) with respect to the
largest portion of such Employer Securities as may be possible
given the total number or amount of shares of Employer
Securities the Plan may sell, exchange or transfer pursuant to
the Offer based upon the instructions received by the Trustee
from all other Participants who shall timely instruct the
Trustee pursuant to this paragraph to sell, exchange or
transfer such shares pursuant to such Offer, each on a pro
rata
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<PAGE> 72
basis in accordance with the number or amount of such shares
allocated to their respective Employer Securities Accounts.
(c) Notwithstanding the provisions of subparagraphs (a) and (b) of
this paragraph to the contrary, in the event that an Offer for
fewer than 10% of all Employer Securities held by the Trustee
subject to such Offer held by the Trustee in the Trust shall
be received by the Trustee, the Trustee shall determine, in
its sole discretion, whether to sell, exchange or transfer any
Employer Securities pursuant to such Offer, taking into
consideration items set forth in subparagraph (f) of this
paragraph [A]; provided, however, if there are multiple Offers
within any twelve month period (each Offer being for fewer
than 10% of the Employer Securities held by the Trustee), the
Trustee shall be required to solicit directions from
Participants, as named fiduciaries, pursuant to the provisions
of this Section 11.16 with respect to each outstanding Offer
that, after taking into account all Employer Securities sold,
exchanged or transferred in accordance with any other Offer
within the preceding 12 months and all outstanding Offers for
Employer Securities, would result in the sale, exchange or
transfer within such 12-month period, in the aggregate with
all other outstanding Offers, of more than 10% of the Employer
Securities held by the Trustee if all outstanding Offers were
accepted by the Trustee.
(d) In the event an Offer shall be received by the Trustee and
instructions shall be solicited from Participants in the Plan
pursuant to subparagraph (a) of this paragraph [A] regarding
such Offer, and prior to termination of such Offer, another
Offer is received by the Trustee for the Employer Securities
subject to the first Offer, the Trustee shall use its best
efforts under the circumstances to solicit instructions from
the Participants to the Trustee (i) with respect to Employer
Securities tendered for sale, exchange or transfer pursuant to
the first Offer, whether to withdraw such tender, if possible,
and, if withdrawn, whether to tender any Employer Securities
so withdrawn for sale, exchange or transfer pursuant to the
second Offer and (ii) with respect to Employer Securities not
tendered for sale, exchange or transfer pursuant to the first
Offer, whether to tender or not to tender such Employer
Securities for sale, exchange or transfer pursuant to the
second Offer. The Trustee shall follow all such instructions
received in a timely manner from Participants in the same
manner and in the same proportion as provided in subparagraph
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(a) of this paragraph [A]. With respect to any further Offer
for any Employer Securities received by the Trustee and
subject to any earlier Offer (including successive Offers from
one or more existing offerors), the Trustee shall act in the
same manner as described above.
(e) In the event an Offer for any Employer Securities held by the
Trustee in the Trust shall be received by the Trustee and the
Participants shall be entitled to determine to accept, reject
or withdraw an acceptance of such Offer pursuant to
subparagraphs (a) through (d) of this paragraph [A], (i) the
Company and the Trustee shall not interfere in any manner with
the decision of any Participant regarding the action of the
Participant with respect to such Offer (hereinafter referred
to as an "Investment Decision"), and the Trustee shall arrange
for such Investment Decision to be made on a confidential
basis; (ii) the Trustee shall use its best efforts to
communicate or cause to be communicated to all Participants
the provisions of the Plan and Trust Agreement relating to the
right of Participants to direct the Trustee with respect to
Employer Securities subject to such Offer, including
unallocated Employer Securities, and of the obligation of the
Trustee to follow such directions; (iii) the Trustee shall use
its best efforts to distribute or cause to be distributed to
Participants all communications directed generally to the
owners of the Employer Securities to whom such Offer is made
or is available; and (iv) the Trustee shall use its best
efforts to distribute or cause to be distributed to
Participants all communications that the Trustee may receive,
if any, from the persons making the Offer or any other
interested party (including the Company) relating to the
Offer. The Company and the Advisory Committee shall provide
the Trustee with such information and assistance as the
Trustee may reasonably request in connection with any
communications or distributions to Participants. In no event
shall the communications to Participants by the offeror, the
Company or other interested parties or public communications
directed generally to the owners of the Employer Securities
which are the subject of an Offer be deemed to be interference
in the making of an Investment Decision by any Participant;
provided, however, that Act Section 510 shall apply to any
communication which threatens or intimates that actions which
would violate Act Section 510 will or might be taken with
respect to any Participant who does not make an Investment
Decision in accord with the wishes of the Company.
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(f) In the event a court of competent jurisdiction shall issue to
the Plan, the Company or the Trustee an opinion or order,
which shall, in the opinion of counsel to the Company or the
Trustee, invalidate under the Act, in all circumstances or in
any particular circumstances, any provision or provisions of
this paragraph [A] regarding the determination to be made as
to whether or not Employer Securities held by the Trustee
shall be tendered pursuant to an Offer or cause any such
provision or provisions to conflict with the Act, then, upon
notice thereof to the Company or the Trustee, as the case may
be, such invalid or conflicting provisions of this paragraph
[A] shall be given no further force or effect. In such
circumstances the Trustee shall have no discretion to tender
or not to tender Employer Securities held in the Trust unless
required under such order or opinion, but shall follow
instructions received from Participants, to the extent such
instructions have not been invalidated by such order or
opinion. To the extent required to exercise any residual
fiduciary responsibility with respect to such sale, exchange
or transfer, the Trustee shall take into account in exercising
its fiduciary judgment, unless it is clearly imprudent to do
so, directions timely received from Participants, as such
directions are most indicative of what action is in the best
interests of Participants. Further, the Trustee, in addition
to taking into consideration any relevant financial factors
bearing on any such decision, shall take into consideration
any relevant non-financial factors, including, but not limited
to, the continuing job security of Participants as Employees
of the Company or of any of its subsidiaries, conditions of
employment, employment opportunities and other similar
matters, and the prospect of the Participants and prospective
Participants for future benefits under the Plan (including any
subsequent release and allocation of Employer Securities held
in the Exempt Loan Suspense Account required under Section
11.03[B](6).
(g) Notwithstanding anything elsewhere in this Plan or Trust
Agreement to the contrary, any proceeds received by the
Trustee as a result of the sale, exchange or transfer of
Employer Securities pursuant to an Offer shall be reinvested
in Employer Securities by the Trustee, if such securities are
available for purchase and if not, to the extent attributable
to unallocated stock in the Exempt Loan Suspense Account,
shall be used to pay down the Exempt Loan. The balance of the
proceeds, if any, and the proceeds attributable to allocated
Employer
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<PAGE> 75
Securities shall be invested in short-term, fixed income
investments selected by the Trustee and having a maturity of
not more than two years from the time such investment is made
until the Trustee is otherwise directed by the Advisory
Committee or until the Participants to whose accounts such
investments are allocated shall be entitled to make investment
elections with respect to such accounts in accordance with the
Plan.
[B] Voting Employer Securities; Options and Other Rights.
(a) Notwithstanding any other provision of this Plan to the
contrary, if any, the Trustee shall have no discretion or
authority to vote Employer Securities held in the Trust by the
Trustee on any matter presented for a vote by the stockholders
of the Company except in accordance with timely directions
received by the Trustee from Participants who have Employer
Securities allocated to their Accounts under the Plan. Such
directions shall be given by Participants acting in their
capacity as named fiduciaries with respect to both allocated
and unallocated Employer Securities and, upon timely receipt
of such instructions, the Trustee shall vote the Employer
Securities held in the Trust pursuant to the directions of
Participants giving instructions to the Trustee as set forth
below.
(1) Employer Securities in Accounts. Each Participant
who has Employer Securities allocated to his or her
Employer Securities Account shall provide directions
to the Trustee on any matter to be presented for a
vote by the stockholders of the Company with respect
to Employer Securities allocated to the Account of
the Participant under the Plan and the Trustee shall
follow such directions.
With respect to Employer Securities in any Account
for which no instructions were timely received by the
Trustee, the Trustee shall vote such Employer
Securities in accordance with the directions of the
Participants who gave timely instructions to the
Trustee, in the same manner and in the same
proportion to the voting of Participants on such
Employer Securities with respect to which timely
instructions were given.
(2) Employer Securities in the Exempt Loan Suspense
Account and other Unallocated Employer Securities.
Each Participant who has been allocated Employer
Securities to his or her Account shall, as named
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<PAGE> 76
fiduciary, direct the Trustee with respect to the
vote of Employer Securities held by the Trustee in
the Exempt Loan Suspense Account and all other
unallocated Employer Securities, and the Trustee
shall follow the directions of those Participants who
provide timely instructions to the Trustee. Each
Participant who has been allocated Employer
Securities to his or her Account entitled to vote on
any matter presented for a vote by the stockholders
shall separately direct the Trustee with respect to
the vote of a portion of the shares of Employer
Securities that are not allocated to the Account of
any Participant or for which no instructions were
timely received by the Trustee, whether or not
allocated to the Account of any Participant. Such
direction shall be with respect to such number of
votes equal to the total number of votes attributable
to Employer Securities not allocated or with respect
to which no responses were received multiplied by a
fraction the numerator of which is the number of
votes attributable to such Employer Securities
allocated to the Participant's Employer Securities
Account and the denominator of which is the total
number of votes attributable to such Employer
Securities allocated to the Account of all such
Participants who have provided directions to the
Trustee under this subparagraph.
(3) The Trustee shall use its best efforts to communicate
or cause to be communicated to all Participants the
provisions of this Plan and the Trust Agreement
relating to the right of Participants to direct the
Trustee with respect to the voting of Employer
Securities allocated to their Accounts under the Plan
and of Employer Securities not allocated to the
Account of any Participant. The Trustee shall use
its best efforts to distribute or cause to be
distributed to Participants all communications
directed generally to the owners of Employer
Securities entitled to vote, and the Trustee shall
use its best efforts to distribute or cause to be
distributed to Participants all communications that
the Trustee may receive, if any, from any person
soliciting proxies or any other interested party
(including the Company) relating to the matters being
presented for a vote by the stockholders of the
Company. The Company and the Advisory Committee
shall provide the Trustee with such information and
assistance as the Trustee may reasonably request in
connection with any
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communications or distributions to Participants. In
no event shall the communications to Participants
with respect to matters being presented for a vote at
a meeting of the stockholders of the Company by the
Company or other interested parties or public
communications directed generally to the stockholders
of the Company be deemed to be interference in the
making of a decision by any Participant as to the
voting of Employer Securities; provided, however,
that Act Section 510 shall apply to any communication
which threatens or intimates that actions which would
violate Act Section 510 will or might be taken with
respect to any Participant who does not issue
directions to the Trustee in accord with the wishes
of the Company.
(4) In the event a court of competent jurisdiction shall
issue an opinion or order to the Plan, the Company or
the Trustee which shall, in the opinion of counsel to
the Company or the Trustee, invalidate under the Act,
in all circumstances or in any particular
circumstances, any provision or provisions of this
paragraph [B] regarding the manner in which Employer
Securities held in the Trust shall be voted or cause
any such provision or provisions to conflict with the
Act, then, upon notice thereof to the Company or the
Trustee, as the case may be, such invalid or
conflicting provision of this paragraph [B] shall be
given no further force or effect. In such
circumstances the Trustee shall nevertheless have no
discretion to vote Employer Securities held in the
Trust unless required under such order or opinion but
shall follow instructions received from Participants,
to the extent such instructions have not been
invalidated. To the extent required to exercise any
residual fiduciary responsibility with respect to
voting, the Trustee shall take into account in
exercising its fiduciary judgment, unless it is
clearly imprudent to do so, directions timely
received from Participants, as such directions are
most indicative of what is in the best interests of
Participants. Further, the Trustee, in addition to
taking into consideration any relevant financial
factors bearing on any such decision, shall take into
consideration any relevant non-financial factors,
including, but not limited to, the continuing job
security of Participants as Employees of the Company
or any of its subsidiaries, conditions of employment,
employment opportunities
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and other similar matters, and the prospect of the
Participants and prospective Participants for future
benefits under the Plan (including any subsequent
release and allocation of Employer Securities held in
the Exempt Loan Suspense Account).
(b) In the event that any option, right, warrant or similar
property derived from or attributable to the ownership of
Employer Securities shall be granted, distributed or otherwise
issued which is and shall become exercisable, each Participant
shall be entitled, subject to the provisions set forth below,
to direct the Trustee to sell, exercise, distribute (with the
consent of the Advisory Committee) or retain any such option,
right, warrant or similar property. For such purpose there
shall be furnished to each Participant, on a timely and
confidential basis, a form to be returned to the Trustee on
which he or she may set forth his or her direction whether to
sell, exercise, distribute or retain part or all of such
option, right, warrant or similar property. Upon timely
receipt of such form or other appropriate written direction,
the Trustee shall follow such direction to sell, exercise,
distribute or retain part or all of any such options, rights,
warrants or similar property and, if such direction is to
retain the same, the Trustee shall follow any later
appropriate written directions to sell, exercise or distribute
such options, rights, warrants or similar property upon
receipt thereof. If a Participant shall direct the Trustee to
exercise part or all of such options, rights, warrants or
similar property, the Trustee shall accumulate the amount
equal to the consideration necessary to exercise, from among
the following sources: (a) by obtaining appropriate written
direction and authorization from the Participant respecting
one or more of (i) if and to the extent necessary, the
transfer and use, as he or she may designate, of the
uninvested cash, if any, allocated to him or her in his or her
General Investments Account; and (ii) if and to the extent
necessary, the sale of part of his or her options, rights,
warrants or similar property, and use of the proceeds thereof
to exercise the remaining options, rights, warrants or similar
property which he or she has directed to be exercised or (b)
if and to the extent necessary, and to the extent the Trustee
is willing and able, by borrowing an amount equal to the
consideration necessary to exercise, provided that any such
contribution or borrowing is permitted by applicable law and
further provided that such contribution or borrowing will not
adversely affect the continued qualified status of the Plan or
continued exempt status
XI-17
<PAGE> 79
of the Trust under the Code. In the event of any such
borrowing, the Trustee shall make provisions for repayment
thereof. The securities acquired by the Trustee upon such
exercise shall be held in a special account or accounts
established in the Trust at that time. If a Participant shall
direct the Trustee to distribute to him or her any such
options, rights, warrants or similar property, the Trustee,
with the consent of the Advisory Committee, shall distribute
such options, rights, warrants or similar property provided,
as certified by the Advisory Committee, (a) the Participant is
age 65 or more or has five or more years of Service and (b)
such distribution will not adversely affect the continued
qualified status of the Plan or continued exempt status of the
Trust under the Code. If a Participant fails or refuses to
file, with the Advisory Committee, an election not to withhold
any Federal taxes upon such distribution, the Trustee shall be
deemed to be authorized, to the extent necessary, as
instructed by the Advisory Committee, to sell part of such
options, rights, warrants, or similar property and use the
proceeds therefrom to pay all applicable Federal withholding
taxes due in connection with such distribution. Upon any such
distribution, the Trustee shall report the same to the
Advisory Committee to permit compliance with the applicable
reporting provisions of the Code. For all Plan purposes, all
options, rights, warrants or similar property described in
this subparagraph (b) of paragraph [B] hereof, shall be
treated as income added to the appropriate Accounts of
Participants. If, within a reasonable period of time after
the form soliciting direction from a Participant has been
sent, no written direction shall have been received by the
Trustee from him or her, the Trustee shall, in its sole
disrection, sell, exercise or retain and keep unproductive of
income such option, right, warrant or similar property for
which no response has been received from such Participant and
also for options, rights, warrants or similar property derived
from, or attributable to, the ownership of Employer Securities
not yet allocated to any Participant's Employer Securities
Account.
In addition the Trustee shall, in its sole discretion, sell,
exercise or retain and keep unproductive of income such
option, right, warrant or similar property attributable to
unallocated Employer Securities held in the Exempt Loan
Suspense Account or other Account. In the event of a
discretionary decision by the Trustee to exercise, the Trustee
shall be deemed to be authorized to accumulate the amount
equal to the consideration
XI-18
<PAGE> 80
necessary to exercise from any of the sources specified herein
and to hold such acquired securities in the Trust as specified
herein. In connection with any discretionary decisions by the
Trustee to sell, exercise or retain and keep unproductive of
income any such option, right, warrant or similar property,
the Trustee shall consider, in addition to any relevant
financial factors, such as those set forth in paragraph
[B](a)(4) hereof, all as evidenced by the proportion of the
directions received from Participants to either sell, exercise
or retain such options, rights, warrants or similar property,
and shall also consider such other factors as the Trustee may
deem relevant.
XI-19
<PAGE> 81
ARTICLE XII
PROVISIONS RELATING TO INSURANCE AND INSURANCE COMPANY
12.01. INSURANCE BENEFIT. The Company may elect to provide
incidental life insurance benefits for insurable Participants who consent to
life insurance benefits by signing the appropriate insurance company
application form. The Trustee will not purchase any incidental life insurance
benefit for any Participant prior to the Accounting Date as of which the
Advisory Committee first makes an Company contribution allocation to the
Participant's Account.
The Company shall direct the Trustee as to the insurance company and
insurance agent through which the Trustee is to purchase the insurance
contracts, the amount of the coverage and the applicable dividend plan. Each
application for a policy, and the policies themselves, must designate the
Trustee as sole owner, with the right reserved to the Trustee to exercise any
right or option contained in the policies, subject to the terms and provisions
of this Agreement. The Trustee must be the named beneficiary for the Account
of the insured Participant. Proceeds of insurance contracts paid to the
Participant's Account under this Article XII shall be subject to the
distribution requirements of Article VI and of Article VII. The Trustee will
not retain any such proceeds for the benefit of the Trust.
The Trustee will charge the premiums on any incidental benefit
insurance contracts covering the life of a Participant against the Account of
that Participant. The Trustee will hold all incidental benefit insurance
contracts issued under the Plan as assets of the Trust created under the Plan.
Incidental Insurance Benefits . The aggregate of life insurance
premiums paid for the benefit of a Participant, at all times, may not exceed
the value of the Participant's Nonforfeitable Accrued Benefit nor the following
percentages of the aggregate of the Company's contributions allocated to any
Participant's Account: (i) 49% in the case of the purchase of ordinary life
insurance contracts; or (ii) 25% in the case of the purchase of term life
insurance contracts. If the Trustee purchases a combination of ordinary life
insurance contract(s) and term life insurance contract(s), then the sum of
one-half of the premiums paid for the ordinary life insurance contract(s) and
the premiums paid for the term life insurance contract(s) may not exceed 25% of
the Company contributions allocated to any Participant's Account.
12.02. LIMITATION ON LIFE INSURANCE PROTECTION. The Trustee will
not continue any life insurance protection for any Participant beyond the later
of his or her termination of
XII-1
<PAGE> 82
employment or his or her attaining Normal Retirement Age, or notification from
the Advisory Committee of his or her termination of employment. If the Trustee
holds any incidental benefit insurance contracts on the life of a Participant
when he or she terminates employment (other than by reason of death), the
Trustee must proceed as follows:
(a) If the entire cash value of the contracts is vested in the
terminating Participant, or if the contracts will have no cash value
at the end of the policy year in which termination of employment
occurs, the Trustee will transfer the contracts to the Participant
endorsed so as to vest in the transferee all right, title and interest
to the contracts, free and clear of the Trust; subject, however, to
restrictions as to surrender or payment of benefits as the issuing
insurance company may permit and as the Advisory Committee directs;
(b) If only part of the cash value of the contracts is vested in the
terminating Participant, the Trustee, to the extent the Participant's
interest in the cash value of the contracts is not vested, may adjust
the Participant's interest in the value of his or her Account
attributable to Trust assets other than incidental benefit insurance
contracts and proceed as in (a), or the Trustee must effect a loan
from the issuing insurance company on the sole security of the
contracts for an amount equal to the difference between the cash value
of the contracts at the end of the policy year in which termination of
employment occurs and the amount of the cash value that is vested in
the terminating Participant, and the Trustee must transfer the
contracts endorsed so as to vest in the transferee all right, title
and interest to the contracts, free and clear of the Trust; subject,
however, to the restrictions as to surrender or payment of benefits as
the issuing insurance company may permit and as the Advisory Committee
directs;
(c) If no part of the cash value of the contracts is vested in the
terminating Participant, the Trustee must surrender the contracts for
cash proceeds as may be available.
In accordance with the written direction of the Advisory Committee,
the Trustee will make any transfer of contracts under this Section 12.02 on the
Participant's distribution date (or as soon as administratively practicable
after that date).
The Trustee may not transfer any contract under this Section 12.02
which contains a method of payment not specifically authorized by Article VII
or which fails to comply with the joint and survivor annuity requirements, if
applicable, of Article VII. In this regard, the Trustee either must convert
such a contract to
XII-2
<PAGE> 83
cash and distribute the cash instead of the contract, or before making the
transfer, require the issuing company to delete the unauthorized method of
payment option from the contract.
12.03. DEFINITIONS. For purposes of this Article XII:
(a) "Policy" means an ordinary life insurance contract or a term life
insurance contract issued by an insurer on the life of a Participant.
(b) "Issuing insurance company" is any life insurance company which
has issued a policy upon application by the Trustee under the terms of
this Agreement.
(c) "Insurance Age" is the age of a person as determined by the
issuing company to accomplish the purposes of the Plan.
(d) "Contract" or "Contracts" means a policy of insurance. In the
event of any conflict between the provisions of this Plan and the
terms of any contract or policy of insurance issued in accordance with
this Article XII, the provisions of the Plan shall control.
(e) "Insurable Participant" means a Participant to whom an insurance
company, upon an application being submitted in accordance with the
Plan, will issue insurance coverage, either as a standard risk or as a
risk in an extra mortality classification.
(f) "Term life insurance contract" includes in addition to a
traditional term life insurance contract, a universal life insurance
contract and any other life insurance contract which is not an
ordinary life insurance contract.
12.04. DIVIDEND PLAN. The dividend plan is premium reduction unless
the Advisory Committee directs the Trustee to the contrary. The Trustee must
use all premiums for a contract to purchase insurance benefits or additional
insurance benefits for the Participant on whose life the insurance company has
issued the contract. Furthermore, the Advisory Committee must arrange, where
possible, that all insurance policies issued on the lives of Participants under
the Plan to have the same premium due date and all ordinary life insurance
contracts to contain guaranteed cash values with as uniform basic options as
are possible to obtain. The term "dividends" includes policy dividends,
refunds of premiums and other credits.
12.05. INSURANCE COMPANY NOT A PARTY TO AGREEMENT. No insurance
company, solely in its capacity as an issuing insurance
XII-3
<PAGE> 84
company, is a party to this Agreement nor is the company responsible for its
validity.
12.06. INSURANCE COMPANY NOT RESPONSIBLE FOR TRUSTEE'S ACTIONS. No
insurance company, solely in its capacity as an issuing insurance company, need
examine the terms of this Agreement nor is responsible for any action taken by
the Trustee.
12.07. INSURANCE COMPANY RELIANCE ON TRUSTEE'S SIGNATURE. For the
purpose of making application to an insurance company and in the exercise of
any right or option contained in any policy, the insurance company may rely
upon the signature of the Trustee and is saved harmless and completely
discharged in acting at the direction and authorization of the Trustee.
12.08. ACQUITTANCE. An insurance company is discharged from all
liability for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee, and is not obliged to see to the distribution or
further application of any monies it so pays.
12.09. DUTIES OF INSURANCE COMPANY. Each insurance company must
keep such records; make such identification of contracts, funds and accounts
within funds; and supply such information as may be necessary for the proper
administration of the Plan under which is it carrying insurance benefits.
XII-4
<PAGE> 85
ARTICLE XIII
MISCELLANEOUS
13.01. EVIDENCE. Anyone required to give evidence under the terms
of the Plan may do so by certificate, affidavit, document or other information
which the person to act in reliance may consider pertinent, reliable and
genuine, and to have been signed, made or presented by the proper party or
parties. Both the Advisory Committee and the Trustee are fully protected in
acting and relying upon any evidence described under the immediately preceding
sentence.
13.02. NO RESPONSIBILITY FOR COMPANY ACTION. Neither the Trustee
nor the Advisory Committee has any obligation nor responsibility with respect
to any action required by the Plan to be taken by the Company, any Participant
or eligible Employee, nor for the failure of any of the above persons to act or
make any payment or contribution, or to otherwise provide any benefit
contemplated under this Plan. Furthermore, the Plan does not require the
Trustee or the Advisory Committee to collect any contribution required under
the Plan, or determine the correctness of the amount of any Company
contribution. Neither the Trustee nor the Advisory Committee need inquire into
or be responsible for any action or failure to act on the part of the others.
Any action required of the Company must be by its Board of Directors or its
designate.
13.03. FIDUCIARIES NOT INSURERS. The Trustee, the Advisory
Committee, the Plan Administrator and the Company in no way guarantee the Trust
Fund from loss or depreciation. The Company does not guarantee the payment of
any money which may be or becomes due to any person from the Trust Fund. The
liability of the Advisory Committee and the Trustee to make any payment from
the Trust Fund at any time and all times is limited to the then available
assets of the Trust.
13.04. WAIVER OF NOTICE. Any person entitled to notice under the
Plan may waive the notice.
13.05. SUCCESSORS. The Plan is binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal representatives, upon
the Company, its successors and assigns, and upon the Trustee, the Advisory
Committee, the Plan Administrator and their successors.
13.06. WORD USAGE. Words used in the masculine also apply to the
feminine where applicable, and wherever the context of the Plan dictates, the
plural includes the singular and the singular includes the plural.
XIII-1
<PAGE> 86
13.07. STATE LAW. The Plan shall be deemed to have been made in
Missouri, and all questions arising with respect to the provisions of this Plan
and any and all performance thereunder, or breach thereof, shall be
interpreted, governed and construed pursuant to the laws of Missouri, except to
the extent Federal statute supersedes Missouri law; and the Trustee and
Participants under the Plan consent that Iowa shall be the forum where any
cause of action arising under the Plan shall be instituted.
13.08. EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan,
or with respect to the establishment of the Trust, or any modification or
amendment to the Plan or Trust, or in the creation of any Account, or the
payment of any benefit, gives any Employee, Employee-Participant or any
Beneficiary any right to continue employment, any legal or equitable right
against the Company, or Employee of the Company, or against the Trustee, or its
agents or employees, or against the Plan Administrator, except as expressly
provided by the Plan, the Trust, the Act or by a separate agreement.
XIII-2
<PAGE> 87
ARTICLE XIV
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
14.01. EXCLUSIVE BENEFIT. Except as provided under Article XIV,
the Company has no beneficial interest in any asset of the Trust, and no part
of any asset in the Trust may ever revert to or be repaid to a Company, either
directly or indirectly; nor prior to the satisfaction of all liabilities with
respect to the Participants and their Beneficiaries under the Plan, may any
part of the corpus or income of the Trust Fund, or any asset of the Trust, be
(at any time) used for, or diverted to, purposes other than the exclusive
benefit of the Participants or their Beneficiaries. However, if the
Commissioner of Internal Revenue, upon the Company's request for initial
approval of this Plan, determines that the Trust created under the Plan is not
a qualified trust exempt from Federal income tax, then (and only then) the
Trustee, upon written notice from the Company, will return the Company's
contributions (and increment attributable to the contributions) to the Company.
The Trustee must make the return of the Company contribution under this Section
15.01 within one (1) year of a final disposition of the Company's request for
initial approval of the Plan. The Plan and Trust shall terminate upon the
Trustee's return of the Company's contributions.
14.02. AMENDMENT BY COMPANY. The Company has the right at any time
and from time to time:
(a) to amend this Agreement in any manner it deems necessary or
advisable in order to qualify (or maintain qualification of) this Plan
and the Trust created under it under the appropriate provisions of the
Code Section 401(a); and
(b) to amend this Agreement in any other manner.
No amendment may authorize or permit any of the Trust Fund (other than
the part which is required to pay taxes and administrative expenses) to be used
or or diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates. No amendment may cause or
permit any portion of the Trust Fund to revert to or become a property of the
Company. The Company also may not make any amendment which affects the rights,
duties or responsibilities of the Trustee, the Plan Administrator or the
Advisory Committee without the written consent of the affected Trustee, the
Plan Administrator or the affected member of the Advisory Committee.
Code Section 411(d)(6) protected benefits. An amendment (including
the adoption of this Plan as a restatement of an existing plan) may not
decrease a Participant's Accrued Benefit, except to the
XIV-1
<PAGE> 88
extent permitted under Code Section 412(c)(8), and may not reduce or eliminate
Code Section 411(d)(6) protected benefits determined immediately prior to the
adoption date (or, if later, the effective date) of the amendment. An
amendment reduces or eliminates Code Section 411(d)(6) protected benefits if
the amendment has the effect of either (1) eliminating or reducing an early
retirement benefit or a retirement-type subsidy (as defined in Treasury
regulations), or (2) except as provided by Treasury regulations, eliminating an
optional form of benefit. The Advisory Committee must disregard an amendment
to the extent application of the amendment would fail to satisfy this
paragraph. If the Advisory Committee must disregard an amendment because the
amendment would violate clause (1) or clause (2), the Advisory Committee must
maintain a schedule of the early retirement option or other optional forms of
benefit the Plan must continue for the affected Participants.
The Company shall make all amendments in writing. Each amendment shall
state the date to which it is either retroactively or prospectively effective.
14.03. DISCONTINUANCE. The Company has the right, at any time, to
suspend or discontinue its contributions under the Plan, and to terminate, at
any time, this Plan and the Trust created under this Agreement. The Plan will
terminate upon the first to occur of the following:
(a) the date terminated by action of the Board of Directors of the
Company;
(b) the date the Company shall be judicially declared bankrupt or
insolvent, unless the proceeding authorized continued maintenance of
the Plan; or
(c) the dissolution, merger, consolidation or reorganization of the
Company or the sale by the Company of all or substantially all of its
assets, unless the successor or purchaser makes provision to continue
the Plan, in which event the successor or purchaser shall substitute
itself as the Company under this Plan.
14.04. FULL VESTING ON TERMINATION. Upon either full or partial
termination of the Plan, or, if applicable, upon the date of complete
discontinuance of Company contributions to the Plan, an affected Participant's
right to his or her Accrued Benefit is One Hundred Percent (100%)
Nonforfeitable, irrespective of the Nonforfeitable percentage which otherwise
would apply under Article VI.
XIV-2
<PAGE> 89
14.05. MERGER/DIRECT TRANSFER. The Trustee may not consent to, or
be a party to, any merger or consolidation with another plan, or to a transfer
of assets or liabilities to another plan, unless immediately after the merger,
consolidation or transfer, the surviving Plan provides each Participant a
benefit equal to or greater than the benefit each Participant would have
received had the Plan terminated immediately before the merger or consolidation
or transfer. The Trustee possesses the specific authority to enter into merger
agreements or direct transfer of assets agreements with the trustees of other
retirement plans described in Code Section 401(a), including an elective
transfer, and to accept the direct transfer of plan assets, or to transfer plan
assets, as a party to any such agreement.
The Trustee may accept a direct transfer of plan assets on behalf of
an Employee prior to the date the Employee satisfies the Plan's eligibility
conditions. If the Trustee accepts such a direct transfer of plan assets, the
Advisory Committee and Trustee must treat the Employee as a Participant for all
purposes of the Plan except the Employee is not a Participant for purposes of
sharing in Company contributions or Participant forfeitures under Article VI
until he or she actually becomes a Participant in the Plan.
The Trustee may not consent to, or be a party to a merger,
consolidation or transfer of assets with a defined benefit plan, except with
respect to an elective transfer. The Trustee will hold, administer and
distribute the transferred assets as a part of the Trust Fund and the Trustee
must maintain a separate Company contribution Account for the benefit of the
Employee on whose behalf the Trustee accepted the transfer in order to reflect
the value of the transferred assets. Unless a transfer of assets to this Plan
is an elective transfer, the Plan will preserve all Code Section 411(d)(6)
protected benefits with respect to those transferred assets, in the manner
described in Section 14.02. A transfer is an elective transfer if: (1) the
transfer satisfies the first paragraph of this Section 14.05; (2) the transfer
is voluntary, under a fully informed election by the Participant; (3) the
Participant has an alternative that retains his or her Code Section 411(d)(6)
protected benefits (including an option to leave his or her benefit in the
transferor plan, if that plan is not terminating); (4) the transfer satisfies
the applicable spousal consent requirements of the Code; (5) the transferor
plan satisfies the joint and survivor notice requirements of the Code, if the
Participant's transferred benefit is subject to those requirements; (6) the
Participant has a right to immediate distribution from the transferor plan, in
lieu of the elective transfer; (7) the transferred benefit is at least the
greater of the single sum distribution provided by the transferor plan for
which the Participant is eligible or the present value of the
XIV-3
<PAGE> 90
Participant's accrued benefit under the transferor plan payable at that plan's
normal retirement age; (8) the Participant has a 100% Nonforfeitable interest
in the transferred benefit; and (9) the transfer otherwise satisfies applicable
Treasury regulations. An elective transfer may occur between qualified plans
of any type.
Distribution restrictions under Code Section 401(k). If the Plan
receives a direct transfer (by merger or otherwise) of elective contributions
(or amounts treated as elective contributions) under a Plan with a Code Section
401(k) arrangement, the distribution restrictions of Code Sections 401(k)(2) and
(10) continue to apply to those transferred elective contributions.
14.06. TERMINATION. Upon termination of the Plan, the distribution
provisions of Article VII remain operative, with the following exceptions:
(1) if the present value of the Participant's Nonforfeitable Accrued
Benefit does not exceed $3,500, the Advisory Committee will direct the
Trustee to distribute the Participant's Nonforfeitable Accrued Benefit
to him or her in lump sum as soon as administratively practicable
after the Plan terminates; and
(2) if the present value of the Participant's Nonforfeitable Accrued
Benefit exceeds $3,500, the Participant or the Beneficiary, in
addition to the distribution events permitted under Article VII, may
elect to have the Trustee commence distribution of his or her
Nonforfeitable Accrued Benefit as soon as administratively practicable
after the Plan terminates.
The Trust shall continue until the Trustee in accordance with the
direction of the Advisory Committee has distributed all of the benefits under
the Plan.
On each Valuation Date, the Advisory Committee will credit any part of
a Participant's Accrued Benefit retained in the Trust with its proportionate
share of the Trust's income, expenses, gains and losses, both realized and
unrealized. Upon termination of the Plan, the amount, if any, in a suspense
account under Article IV will revert to the Company, subject to the conditions
of the Treasury regulations permitting such a revision. A resolution or
amendment to freeze all future benefit accrual but otherwise to continue
maintenance of this Plan, is not a termination for purposes of this Section
14.06.
XIV-4
<PAGE> 91
IN WITNESS WHEREOF, the Company and the Trustee have executed this Plan and
Trust this 27th day of April, 1995.
CASEY'S GENERAL STORES, INC.
By /s/ Ronald M. Lamb
----------------------------
Ronald M. Lamb, President
Attest:
/s/ John G. Harmon
- -------------------------
John G. Harmon, Secretary
UMB BANK, n.a.,
TRUSTEE
By /s/ Mark P. Herman
----------------------------
Title Senior Vice President
STATE OF IOWA )
)SS:
COUNTY OF POLK )
On this 27th day of April, 1995, before me, a Notary Public in and for
the State of Iowa, personally appeared Ronald M. Lamb and John G. Harmon, to
me personally known, who, being by me duly sworn, did say that they are the
President and Secretary, respectively, of Casey's General Stores, Inc., an Iowa
corporation; that the corporation is with corporate seal; that said instrument
was signed on behalf of said corporation by authority of its Board of
Directors; and Ronald M. Lamb and John G. Harmon, as such officers,
acknowledged the execution of said instrument to be the voluntary act and deed
of said corporation by it and by them voluntarily executed.
Given under my hand and seal of office, this 27th day of April, 1995.
/s/ Mary J. Sankey
(SEAL) ----------------------------
MARY J. SANKEY Notary Public in and for the
MY COMMISSION EXPIRES State of Iowa
12-06-96
XIV-5
<PAGE> 92
STATE OF MISSOURI )
)SS:
COUNTY OF JACKSON )
On this 28th day of April, 1995, before me, a Notary Public in and for
the State of Iowa, personally appeared Mark P. Herman, to me personally known,
who, being by me duly sworn, did say that he is a Senior Vice President of UMB
Bank, n.a.; that said instrument was signed on behalf of said Bank by authority
of its Board of Directors; and he, as such officers, acknowledged the execution
of said instrument to be the voluntary act and deed of said corporation by it
and by him voluntarily executed.
Given under my hand and seal of office, this 28th day of April, 1995.
/s/ Peggy Rathbun
----------------------------
Notary Public in and for the
State of Missouri
(SEAL)
PEGGY RATHBUN
Notary Public - State of Missouri
Commissioned in Clay County
My Commission Expires Oct. 8, 1995
XIV-6
<PAGE> 1
Exhibit 11
CASEY'S GENERAL STORES, INC.
------------------------
Computation of Per Share Earnings
Primary earnings per share - The computation of primary earnings per share is
not presented since such computation can be clearly determined from the
material contained in the Financial Statements and notes thereto included in
the Company's Annual Report to Shareholders for the fiscal year ended April 30,
1995.
Fully diluted earnings per share - The following sets forth the computation of
per share earnings on a fully diluted basis:
<TABLE>
<CAPTION>
Year Ended April 30,
--------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net income $22,880,841 $16,564,097 $13,323,156
Interest savings net of
income taxes on assumed
conversion of convertible
debentures --- 1,220,747 1,356,250
----------- ----------- -----------
Earnings applicable to
fully diluted shares $22,880,841 $17,784,844 $14,679,406
----------- ----------- -----------
Average common shares
outstanding 25,930,614 22,571,288 22,162,124
Average common equivalent
shares applicable to
stock options 194,473 125,704 32,446
Average common shares
issuable on assumed
conversion of convertible
debentures --- 3,320,836 3,684,210
----------- ----------- -----------
26,125,087 26,017,828 25,878,780
----------- ----------- -----------
Earnings per share-fully
diluted basis (A) $ .88 $ .68 $ . 57
----------- ----------- -----------
</TABLE>
(A) Fully diluted earnings per share cannot exceed primary earnings per share.
<PAGE> 1
Casey's General Stores, Inc. EXHIBIT 13
Balance Sheets
<TABLE>
<CAPTION>
APRIL 30
-------------------------------------------
1995 1994
--------------- --------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,477,784 $ 3,151,664
Short-term investments 1,300,700 8,720,235
Receivables 3,086,728 2,839,900
Inventories (Note 1) 27,343,033 23,754,256
Prepaid expenses (Note 4) 5,982,324 2,903,208
--------------- --------------
Total current assets 43,190,569 41,369,263
- ---------------------------------------------------------------------------------------------------------------------------
Long-term investments 6,445,934 11,234,304
Other assets 1,030,856 1,259,138
Property and equipment, at cost:
Land 41,082,729 34,778,207
Buildings and leasehold improvements 152,002,492 131,531,440
Machinery and equipment 199,609,874 176,020,053
Leasehold interest in property and equipment (Note 5) 13,452,922 13,979,559
--------------- --------------
406,148,017 356,309,259
Less accumulated depreciation and amortization 111,656,704 91,934,088
--------------- --------------
Net property and equipment 294,491,313 264,375,171
--------------- --------------
$ 345,158,672 $ 318,237,876
===========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks (Note 2) $ 11,350,000 $ 18,500,000
Current maturities of long-term debt (Note 2) 8,498,891 4,850,875
Accounts payable 39,860,843 37,414,028
Accrued expenses: Salaries and wages 2,620,124 2,130,418
Other (Note 8) 13,096,288 12,538,373
Income taxes payable 1,544,909 18,928
--------------- --------------
Total current liabilities 76,971,055 75,452,622
- ---------------------------------------------------------------------------------------------------------------------------
Long-term debt, net of current maturities (Note 2) 59,962,922 61,414,871
Deferred income taxes (Note 4) 27,270,000 21,983,000
Deferred compensation (Note 7) 1,282,655 977,750
--------------- --------------
Total liabilities 165,486,632 159,828,243
Shareholders' equity (Note 3)
Capital stock: Preferred, no par value, none issued - - - - - - - - - - - -
Common, no par value, 25,966,906 and
25,921,020 shares issued and outstanding
at April 30, 1995 and 1994, respectively 61,342,992 60,887,327
Retained earnings 118,329,048 97,522,306
--------------- --------------
Total shareholders' equity 179,672,040 158,409,633
--------------- --------------
$ 345,158,672 $ 318,237,876
Commitments and contingencies (Notes 5, 7 and 8)
===========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 2
Statements
of Income
<TABLE>
<CAPTION>
YEARS ENDED APRIL 30
------------------------------------------------------
1995 1994 1993
--------------- --------------- --------------
<S> <C> <C> <C>
Net sales $ 848,842,757 $ 731,206,162 $ 673,696,856
Franchise revenue 5,269,105 5,120,526 4,897,660
--------------- --------------- --------------
854,111,862 736,326,688 678,594,516
Cost of goods sold 665,924,372 574,143,909 533,534,357
Operating expenses 123,004,153 110,082,785 102,379,142
Depreciation and amortization 22,237,352 18,622,815 15,942,771
Interest, net (Note 2) 5,590,144 6,434,082 5,249,090
--------------- --------------- --------------
816,756,021 709,283,591 657,105,360
Income before income taxes 37,355,841 27,043,097 21,489,156
Provision for income taxes (Note 4) 14,475,000 10,479,000 8,166,000
--------------- --------------- --------------
Net income $ 22,880,841 $ 16,564,097 $ 13,323,156
===========================================================================================================================
Earnings per common and common
equivalent share (Note 3):
Primary $ .88 $ .73 $ .60
Fully diluted $ .88 $ .68 $ .57
===========================================================================================================================
</TABLE>
Statements of
Shareholders' Equity
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK EARNINGS TOTAL
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance April 30, 1992 $ 25,307,756 $ 70,546,633 $ 95,854,389
Net income - - - - - - 13,323,156 13,323,156
Payment of dividends (6 cents per share) - - - - - - (1,329,582) (1,329,582)
Proceeds from exercise of stock options (23,000 shares) 127,937 - - - - - - 127,937
--------------- --------------- ---------------
Balance April 30, 1993 25,435,693 82,540,207 107,975,900
Net income - - - - - - 16,564,097 16,564,097
Payment of dividends (7 1/2 cents per share) - - - - - - (1,581,998) (1,581,998)
Conversion of Convertible Debentures (3,683,064 shares) 34,991,321 - - - - - - 34,991,321
Proceeds from exercise of stock options (61,000 shares) 460,313 - - - - - - 460,313
--------------- --------------- ---------------
Balance April 30, 1994 60,887,327 97,522,306 158,409,633
Net income - - - - - - 22,880,841 22,880,841
Payment of dividends (8 cents per share) - - - - - - (2,074,099) (2,074,099)
Proceeds from exercise of stock options (46,700 shares) 464,619 - - - - - - 464,619
Retirement of shares from Employees' Stock
Ownership Plan and Trust (814 shares) (8,954) - - - - - - (8,954)
--------------- --------------- ---------------
Balance April 30, 1995 $ 61,342,992 $ 118,329,048 $ 179,672,040
======================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 3
Statements of
Cash Flows
<TABLE>
<CAPTION>
Year ended April 30
--------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS: $ 22,880,841 $ 16,564,097 $ 13,323,156
Net income
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 22,237,352 18,622,815 15,942,771
Deferred income taxes 2,000,000 2,100,000 2,650,000
Changes in assets and liabilities:
Receivables (246,828) (692,259) (221,408)
Inventories (3,588,777) 1,974,220 (3,830,179)
Prepaid expenses 207,884 (34,317) (122,438)
Accounts payable 2,446,815 12,271,225 (4,183,073)
Accrued expenses 1,047,621 258,124 7,050,406
Income taxes payable 1,525,981 (307,118) (590,424)
Other, net 1,013,324 1,972,387 305,962
------------ ------------ ------------
Net cash provided by operations 49,524,213 52,729,174 30,324,773
CASH FLOWS FROM INVESTING:
Purchase of property and equipment (52,645,839) (62,879,021) (49,362,394)
Purchase of investments (2,006,930) (7,179,357) (58,706,729)
Sale of investments 14,031,681 17,523,129 35,838,590
------------ ------------ ------------
Net cash used in investing activities (40,621,088) (52,535,249) (72,230,533)
CASH FLOWS FROM FINANCING:
Proceeds from long-term debt 7,500,000 - - - - - - 40,500,000
Payments of long-term debt (5,317,525) (3,791,599) (2,548,216)
Net activity of short-term debt (7,150,000) 5,750,000 5,750,000
Proceeds from exercise of stock options 464,619 460,313 127,937
Payment of cash dividends (2,074,099) (1,581,998) (1,329,582)
------------ ------------ ------------
Net cash (used in) provided by financing activities (6,577,005) 836,716 42,500,139
------------ ------------ ------------
Net increase in cash and cash equivalents 2,326,120 1,030,641 594,379
Cash and cash equivalents at beginning of year 3,151,664 2,121,023 1,526,644
------------ ------------ ------------
Cash and cash equivalents at end of year $ 5,477,784 $ 3,151,664 $ 2,121,023
=====================================================================================================
</TABLE>
Supplemental Disclosures of
Cash Flows Information
<TABLE>
<S> <C> <C> <C>
Cash paid during the year for:
Interest (net of amount capitalized) $ 5,768,870 $ 7,730,310 $ 5,816,158
Income taxes 10,601,473 9,034,500 6,106,424
Noncash investing and financing activities:
Property and equipment acquired through capital
lease obligations and installment purchases 13,592 3,264,221 408,076
Conversion of Convertible Subordinated Debentures - - - - - - 34,991,321 - - - - - -
=====================================================================================================
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 4
Notes to Financial
Statements
1. SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS - Casey's General Stores, Inc. (the Company) operates 927
convenience stores in 9 midwestern states. At April 30, 1995, the Company owned
or leased 741 of these stores with 186 stores being owned or leased by
franchisees. The stores are located primarily in smaller communities, most with
populations of fewer than 5,000.
CASH EQUIVALENTS - Cash equivalents consist of money market funds. The Company
considers all highly liquid investments with original maturities of three
months or less to be cash equivalents.
INVESTMENTS - Investments consist of treasury notes and tax-exempt revenue and
municipal bonds. The investments are stated at cost plus accrued interest,
which approximates market.
The Financial Accounting Standards Board (FASB) has issued Statement 115,
"Accounting for Certain Investments in Debt and Equity Securities." Statement
115, effective for fiscal years beginning after December 15, 1993, expands the
use of fair value accounting for those securities but retains the use of the
amortized cost method for investments in debt securities that the reporting
enterprise has the positive intent and ability to hold to maturity. The Company
adopted Statement 115 May 1, 1994, on a prospective basis. The Company
classifies its short-term and long-term investments as "held-to-maturity"
securities and the financial statement impact was not material.
INVENTORIES - Inventories, which consist of merchandise and gasoline, are
stated at the lower of cost or market, which, as to merchandise in stores, is
determined by the retail method. Cost is determined using the last-in,
first-out (LIFO) method. Such inventory value is approximately $7,487,000 and
$6,887,000 below replacement cost as of April 30, 1995 and 1994, respectively.
DEPRECIATION AND AMORTIZATION - Depreciation of property and equipment and
amortization of capital lease assets are computed principally by the
straight-line method over the following estimated useful lives:
<TABLE>
<S> <C>
Buildings 30-40 Years
Machinery and equipment 5-30 Years
Leasehold interest in property and equipment Lesser of term of lease or life of asset
Leasehold improvements Lesser of term of lease or life of asset
</TABLE>
EARNINGS PER SHARE - Primary earnings per share is determined by dividing net
income by the weighted average number of common shares and common equivalent
shares, consisting of options to purchase common shares, outstanding during the
year. Fully diluted earnings per share, prior to the 1994 conversion of the
Convertible Subordinated Debentures (the Debentures), further assumed that the
Debentures were converted to Common Stock at the beginning of the period and no
interest expense was paid on the Debentures. The weighted average common and
common equivalent shares outstanding on a primary basis were 26,062,287,
22,651,334 and 22,193,462 for 1995, 1994 and 1993, respectively, and on a fully
diluted basis were 26,125,087, 26,017,828 and 25,878,780 for 1995, 1994 and
1993, respectively.
EXCISE TAXES - Excise taxes approximating $151,000,000, $121,000,000 and
$101,000,000 collected from customers on retail gasoline sales are included in
net sales for 1995, 1994 and 1993, respectively.
INCOME TAXES - In February 1992, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Statement 109 required a change from the deferred method of
accounting for income taxes of APB Opinion 11 to the asset and liability method
of accounting for income taxes. Under the asset and liability method of
Statement 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date.
11
<PAGE> 5
Notes to Financial
Statements - continued
Effective May 1, 1993, the Company adopted Statement 109 and the cumulative
effect of that change was not material to the financial statements.
Pursuant to the deferred method under APB Opinion 11, which was applied in 1993
and prior years, deferred income taxes were recognized for income and expense
items that were reported in different years for financial reporting purposes
and income tax purposes using the tax rate applicable for the year of the
calculation. Under the deferred method, deferred taxes were not adjusted for
subsequent changes in tax rates.
2. FAIR VALUE OF FINANCIAL INSTRUMENTS, NOTES PAYABLE TO BANKS AND LONG-TERM
DEBT
The fair value of the Company's financial instruments is summarized below.
CASH AND CASH EQUIVALENTS, INVESTMENTS, RECEIVABLES AND ACCOUNTS PAYABLE - The
carrying amount approximates fair value because of the short maturity of these
instruments or due to the recent purchase of the instruments at current rates
of interest.
NOTES PAYABLE TO BANKS - The carrying amount approximates fair value due to
variable interest rates on these notes.
LONG-TERM DEBT - The fair value of the Company's long-term debt, excluding
capital lease obligations, is estimated based on the quoted market prices for
the issue or on the current rates offered to the Company for debt of the same
or similar issues. The fair value of the Company's long-term debt, excluding
capital lease obligations, was approximately $61,000,000 and $55,000,000,
respectively, at April 30, 1995 and 1994.
Long-term debt, at carrying value, consists of the following:
<TABLE>
<CAPTION>
APRIL 30
-----------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Capitalized lease obligations, discounted at rates of
7.3% to 15.3%, due in various monthly installments
through 2008 (Note 5) $ 8,976,899 $ 10,265,048
Mortgage notes payable due in various monthly installments
through 2004 with interest at 8% to 9.5% 15,641,164 16,719,448
Unsecured notes payable to banks due in various monthly and
quarterly installments through 1998 with variable rates of interest 14,593,750 9,281,250
7.70% Senior Notes due in 40 quarterly installments beginning in
March 1995 29,250,000 30,000,000
-------------- --------------
68,461,813 66,265,746
Less current maturities 8,498,891 4,850,875
-------------- --------------
$ 59,962,922 $ 61,414,871
===========================================================================================================================
</TABLE>
Mortgage notes payable includes an $18,900,000 Secured Promisory Note, Mortgage
and Security Agreement with a balance of $14,922,083 and $15,826,955 at April
30, 1995 and 1994, respectively. The mortgage note has a 15-year term, bears
interest at the rate of 9.42%, is payable in monthly installments and is
secured by property with a depreciated cost of approximately $15,900,000 at
April 30, 1995.
12
<PAGE> 6
Various debt agreements contain certain operating and financial covenants.
Aggregate maturities of long-term debt, including capitalized lease
obligations, during the four years commencing May 1, 1996 and thereafter are:
<TABLE>
<CAPTION>
YEAR ENDING APRIL 30
--------------------
<S> <C>
1997 $ 8,682,384
1998 14,009,626
1999 5,586,200
2000 5,358,285
Thereafter 26,326,427
--------------
$ 59,962,922
==============
</TABLE>
Interest expense is net of interest income of $213,480, $1,146,486, and
$709,952 for the years ended April 30, 1995, 1994 and 1993, respectively.
Interest expense in the amount of $559,500, $418,600 and $273,600 was
capitalized during the years ended April 30, 1995, 1994 and 1993, respectively.
At April 30, 1995 and 1994, notes payable to banks consisted of $27,000,000 and
$25,000,000 lines of credit with balances owed of $11,350,000 and $18,500,000,
respectively. Within the notes payable to banks, $6,750,000 on a $15,000,000
line of credit is due on demand and $4,600,000 on a $12,000,000 line of credit
is due December 31, 1995. The weighted average interest rate was 6.87% at April
30, 1995 and 4.48% at April 30, 1994.
3. PREFERRED AND COMMON STOCK
PREFERRED STOCK - The Company has 1,000,000 authorized shares of preferred
stock, none of which have been issued.
COMMON STOCK - The Company has 60,000,000 authorized shares of Common Stock.
COMMON SHARE PURCHASE RIGHTS - On June 14, 1989, the Board of Directors adopted
a Shareholder Rights Plan (Rights Plan). In connection with the adoption of the
Rights Plan, the Board of Directors declared a dividend distribution of one
Common Share Purchase Right for each share of Common Stock held at the close of
business on June 14, 1989. The Rights become exercisable 10 days following a
public announcement that 20% or more of the Company's Common Stock has been
acquired or such an intent to acquire has become apparent. The Rights will
expire on the earlier of June 14, 1999 or redemption by the Company. Certain
terms of the Rights are subject to adjustment to prevent dilution. Further
description and terms of the Rights are set forth in the Rights Agreement
between the Company and UMB Bank, n.a. as Rights Agent.
STOCK OPTION PLAN - Under an incentive stock option plan, options can be
granted to certain officers and key employees to purchase an aggregate of
2,280,000 shares of Common Stock at option prices not less than the fair market
value (110% of fair market value as to holders of 10% or more of the Company's
stock) at the date the options are granted. Options for 946,832 shares were
available for grant at April 30, 1995 and options for 371,300 shares (which
expire in 1997, 1999, 2001 and 2003) were outstanding as follows:
<TABLE>
<CAPTION>
Price Range Aggregate
Shares Per Share Exercise Price
------- ----------------- ----------------
<S> <C> <C> <C>
Outstanding and exercisable at April 30, 1992 306,000 $ 4.81-9.00 $ 2,302,675
Exercised in fiscal 1993 23,000 4.81-7.69 127,937
------- ----------------
Outstanding and exercisable at April 30, 1993 283,000 4.81-9.00 2,174,738
Granted in fiscal 1994 220,000 10.25 2,255,000
Exercised in fiscal 1994 61,000 4.81-7.69 460,313
Cancelled in fiscal 1994 20,000 4.81-10.25 118,925
------- ----------------
Outstanding and exercisable at April 30, 1994 422,000 4.81-10.25 3,850,500
Exercised in fiscal 1995 46,700 4.81-10.25 464,619
Cancelled in fiscal 1995 4,000 10.25 41,000
------- ----------------
Outstanding and exercisable at April 30, 1995 371,300 $ 4.81-10.25 $ 3,344,881
======= ================
</TABLE>
13
<PAGE> 7
Notes to Financial
Statements - continued
4. INCOME TAXES
As discussed in Note 1, the Company adopted Statement 109 as of May 1, 1993.
The financial statements for the year ended April 30, 1993, have not been
restated to apply the provisions of Statement 109. Income tax expense
attributable to income from operations is comprised of the following
components:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
---------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Current tax expense: Federal $10,225,000 $ 7,060,000 $ 4,499,000
State 2,250,000 1,319,000 1,017,000
----------- ----------- -----------
12,475,000 8,379,000 5,516,000
Deferred tax expense 2,000,000 2,100,000 2,650,000
----------- ----------- -----------
Total income tax provision $14,475,000 $10,479,000 $ 8,166,000
==============================================================================
</TABLE>
For the year ended April 30, 1993, deferred income tax expense results from
timing differences in the recognition of revenue and expense for income tax and
financial reporting purposes. The sources of these differences and the tax
effect of each are as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
-------------------
1993
------------
<S> <C>
Excess of tax over book depreciation $ 2,988,000
Amortization of other assets previously
allowed for tax purposes (128,000)
Accrued vacation pay (117,000)
Other (93,000)
------------
$ 2,650,000
==============================================================================
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at April 30, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
APRIL 30
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Deferred tax assets:
Accrued liabilities $ 5,604,000 $ 2,317,000
Alternative minimum tax credit carry forwards 140,000 1,500,000
Other 594,000 383,000
------------ ------------
Total gross deferred tax assets 6,338,000 4,200,000
------------ ------------
Deferred tax liabilities:
Excess of tax over book depreciation (27,909,000) (23,771,000)
Other (95,000) (95,000)
------------ ------------
Total gross deferred liabilities (28,004,000) (23,866,000)
------------ ------------
Net deferred tax liability $(21,666,000) $(19,666,000)
</TABLE>
Current deferred tax asset relates to accrued liabilities and is included with
prepaid expenses. Management believes that further operations will generate
sufficient taxable income to realize the deferred tax assets.
================================================================================
Total reported tax expense applicable to the Company's operations varies from
the tax that would have resulted by applying the statutory U.S. federal income
tax rates to income before income taxes for the following reasons:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
---------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income taxes at the statutory rates 35.0% 35.0% 34.0%
State income taxes, net of federal tax benefit 4.6 4.4 4.5
Other (.9) (.7) (.5)
---- ---- ----
38.7% 38.7% 38.0%
===============================================================================
</TABLE>
14
<PAGE> 8
5. LEASES
The Company leases certain property and equipment used in its operations.
Generally, the leases are for primary terms of from 5 to 20 years with options
either to renew for additional periods or to purchase the premises and
generally call for payment of property taxes, insurance and maintenance by the
lessee.
The following is an analysis of the leased property under capital leases by
major classes:
<TABLE>
<CAPTION>
ASSET BALANCES AT APRIL 30
-----------------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Real estate $ 8,680,845 $ 9,049,491
Equipment 4,772,077 4,930,068
-------------- --------------
13,452,922 13,979,559
Less accumulated amortization 6,029,260 5,033,727
-------------- --------------
$ 7,423,662 $ 8,945,832
======================================================================================
</TABLE>
Future minimum payments under the capital leases and noncancellable operating
leases with initial or remaining terms of one year or more consisted of the
following at April 30, 1995:
<TABLE>
<CAPTION>
YEAR ENDING APRIL 30 CAPITAL LEASES OPERATING LEASES
-------------------- -------------- ----------------
<S> <C> <C>
1996 $ 2,011,027 $ 381,000
1997 1,990,769 373,000
1998 1,926,305 334,000
1999 1,648,416 259,000
2000 1,147,358 231,000
Thereafter 3,747,809 1,158,000
-------------- ------------
Total minimum lease payments 12,471,684 $ 2,736,000
Less amount representing interest 3,494,785 ============
--------------
Present value of net minimum lease payments $ 8,976,899
===========================================================================================================================
</TABLE>
The total rent expense under operating leases was $820,000 in 1995, $898,000 in
1994 and $760,000 in 1993.
6. BENEFIT PLANS
EMPLOYEE STOCK OWNERSHIP PLAN - The Company has an Employees' Stock Ownership
Plan and Trust (Plan) which covers all employees who meet minimum age and
service requirements. Contributions to the Plan can be made by the Company in
either cash or shares of Common Stock. The discretionary contribution is
allocated to participants using a formula based on compensation. Plan expense
was $600,000, $550,000 and $500,000 for the years ended April 30, 1995, 1994
and 1993, respectively.
On April 30, 1995, the Company had 3,252 full-time employees and 4,783
part-time employees, of which approximately 3,300 were participants in the
Plan. As of that same date, the Trustee under the Plan held 2,201,070 shares of
Common Stock in trust for participants in the Plan and may distribute such
shares to eligible participants upon death, disability, retirement or
termination of employment. Shares held by the Plan are treated as outstanding
in the computation of earnings per share.
401(K) PLAN- The Company has a defined contribution 401(k) plan which covers
all employees who meet minimum age and service requirements. Employees may make
voluntary contributions. The Company contributions consist of matching and
discretionary amounts. The Company contributions are allocated based upon
employee contributions and compensation. Expense for the 401(k) plan was
approximately $514,000, $406,000 and $345,000 for the years ended April 30,
1995, 1994 and 1993, respectively.
15
<PAGE> 9
Notes to Financial
Statements - continued
7. COMMITMENTS
In March 1992 the Company entered into five-year employment agreements with
each of two officer-shareholders. The agreements provide that each
officer-shareholder will receive compensation exclusive of bonuses at the rate
of $250,000 per year or such amount as the Company and the officer mutually
shall agree ($350,000 per year for April 30, 1995). These agreements also
provide for certain payments in the case of death or disability of the
officer-shareholder.
Each agreement further provides for the voluntary retirement of the officer at
age 65, or upon reaching 59 years of age and having completed 25 years of
employment with the Company, with an annual retirement benefit equal to 50
percent of his most recent salary. Certain provisions of the employment
agreements provide for the Company to pay upon termination of the
officer-shareholder's employment other than for cause, disability or death, two
to three times the sum of the annual salary and bonus, plus the present value
of 50 percent of his most recent annual salary, if eligible for retirement
benefits, until death, payable in a lump sum upon termination. The Company is
accruing for the deferred compensation over the expected term of employment.
8. CONTINGENCIES
ENVIRONMENTAL COMPLIANCE-The United States Environmental Protection Agency and
several states have adopted laws and regulations relating to underground
storage tanks used for petroleum products. Several states in which the Company
does business have trust fund programs with provisions for sharing or
reimbursing corrective action or remediation costs. Such programs, other than
the state of Iowa, generally are in the early stages of operation and the
extent of the available coverage or reimbursement under such programs for costs
incurred by the Company is not fully known at this time.
Management currently estimates that aggregate capital expenditures for
electronic monitoring, cathodic protection and overfill/spill protection will
approximate $1,000,000 in fiscal 1996 through December 23, 1998, to comply with
existing regulations. The Company has accrued a liability at April 30, 1995 and
1994, respectively, of approximately $3,300,000 and $3,200,000 within other
accrued expenses for estimated expenses related to the corrective action or
remediation efforts, including relevant legal and consulting costs. Management
believes the Company has no material joint and several environmental liability
with other parties. Additional regulations, or amendments to the existing
regulations, could result in future revisions to such estimated expenditures.
LEGAL MATTERS-The Company is a defendant in several lawsuits arising in the
normal course of business, including a class action lawsuit alleging violations
of federal anti-trust laws and unfair price discrimination. In the opinion of
management, the outcome of all such matters is not expected to have a material
effect on the financial position of the Company.
OTHER-At April 30, 1995, the Company is partially self-insured for workman's
compensation claims, in all states except Iowa, Missouri and Kansas. The
Company is also partially self-insured for general liability and auto liability
under an agreement which provides for annual stop-loss limits equal to or
exceeding approximately $1,850,000. Letters of credit approximating $4,200,000
were issued and outstanding at April 30, 1995, on the insurance company's
behalf to facilitate this agreement. The Company is self-insured for Iowa,
Missouri and Kansas workman's compensation claims at April 30, 1995.
Approximately $1,300,000 of investments are in escrow as required by these
states. Additionally, the Company is self-insured for its portion of employee
medical expenses. At April 30, 1995 and 1994, the Company has accrued
$4,500,000 and $4,200,000 respectively, within other accrued expenses for
estimated claims relating to self insurance.
16
<PAGE> 10
Independent
Auditors' Report
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
CASEY'S GENERAL STORES, INC.:
We have audited the accompanying balance sheets of Casey's General Stores, Inc.
as of April 30, 1995 and 1994, and the related statements of income,
shareholders' equity and cash flows for each of the years in the three-year
period ended April 30, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Casey's General Stores, Inc.
as of April 30, 1995 and 1994, and the results of its operations and its cash
flows for each of the years in the three-year period ended April 30, 1995 in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
DES MOINES, IOWA
JUNE 20, 1995
17
<PAGE> 11
Management's Discussion and
Analysis of Financial Condition and
Results of Operations
Casey's derives its revenue from retail sales of food (including freshly
prepared foods such as pizza, donuts and sandwiches), beverages and non-food
products such as health and beauty aids, tobacco products, automotive products
and gasoline by Company Stores and from wholesale sales of certain grocery and
general merchandise items and gasoline to Franchised Stores. The Company also
generates revenues from continuing monthly royalties based on sales by
Franchised Stores, sign and facade rental fees and the provision of certain
maintenance, transportation and construction services to the Company's
franchisees. A typical store is generally not profitable for its first year of
operation due to start-up costs and will usually attain representative levels
of sales and profits during its third year of operation.
The following tables set forth, for the periods indicated, the Company's net
sales and gross profits according to its major revenue categories, and average
sales and earnings information for Company and Franchised Stores:
Company Net Sales and Gross Profits
<TABLE>
<CAPTION>
YEARS ENDED APRIL 30
----------------------------------------------------------------
1995 1994 1993
-------------- -------------- -------------
<S> <C> <C> <C>
NET SALES (1):
RETAIL SALES:
Grocery and general merchandise $ 316,444,290 $ 281,235,753 $ 253,896,883
Gasoline 455,310,780 377,807,750 351,361,731
-------------- -------------- -------------
771,755,070 659,043,503 605,258,614
============== ============== =============
WHOLESALE SALES:
Grocery and general merchandise 39,342,692 37,678,157 35,933,683
Gasoline 25,617,280 24,530,239 23,741,451
-------------- -------------- -------------
64,959,972 62,208,396 59,675,134
============== ============== =============
GROSS PROFITS (2):
RETAIL SALES:
Grocery and general merchandise 128,858,300 109,812,153 103,051,219
Gasoline 42,597,553 38,045,217 28,755,619
-------------- -------------- -------------
171,455,853 147,857,370 131,806,838
============== ============== =============
WHOLESALE SALES:
Grocery and general merchandise 1,621,928 1,282,100 1,464,205
Gasoline 843,679 467,224 541,510
-------------- -------------- -------------
2,465,607 1,749,324 2,005,715
============== ============== =============
</TABLE>
18
<PAGE> 12
Management's Discussion and
Analysis of Financial Condition
and Results of Operations - continued
Individual Store Information (3)
<TABLE>
<CAPTION>
YEARS ENDED APRIL 30
---------------------------------------------------------------
1995 1994 1993
------------ ------------ ----------
<S> <C> <C> <C>
COMPANY STORES:
Average retail sales $ 1,080,553 $ 1,006,420 $ 977,310
Average retail sales of grocery and
general merchandise 448,060 433,256 411,582
Average gross profit on grocery and
general merchandise 169,216 160,476 158,067
Average retail sales of gasoline 632,493 573,165 565,728
Average number of gallons sold 596,684 570,253 540,999
Average gross profit on gasoline 68,093 61,641 45,969
Average operating income (4) 80,556 73,553 61,162
FRANCHISED STORES:
Average franchise revenue (5) 28,487 27,215 25,529
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net sales excludes franchise revenue and charges to franchisees for certain
maintenance, transportation and construction services provided by the Company.
(2) Gross profits represent net sales less costs of goods sold.
(3) Includes only those stores that had been in operation for at least one full
year prior to April 30 of the fiscal year indicated.
(4) Represents retail sales less cost of goods sold, including cost of
merchandise, financing costs and operating expenses attributable to a
particular store, but excluding federal and state income taxes, operating
expenses of the Company not attributable to a particular store, and payments by
the Company to its benefit plans.
(5) Includes a royalty fee equal to 3% of gross receipts derived from store
sales of non-gasoline items, a royalty fee of $.018 per gallon on gasoline
sales and sign and facade rental fees.
19
<PAGE> 13
Management's Discussion and
Analysis of Financial Condition and
Results of Operations - continued
FISCAL 1995 COMPARED TO FISCAL 1994
Net sales for fiscal 1995 increased by $117,637,000 (16.1%) over fiscal 1994.
Retail gasoline sales increased by $77,503,000 (20.5%) as the number of gallons
sold increased by 53,667,000 (14.3%). During fiscal 1995, retail sales of
grocery and general merchandise increased by $35,209,000 (12.5%) due to the net
addition of 54 new Company Stores and a greater number of stores in operation
for at least three years.
Cost of goods sold as a percentage of net sales was 78.5% in both fiscal 1995
and fiscal 1994.
Operating expenses as a percentage of net sales were 14.5% for fiscal 1995
compared to 15.1% for the prior year. The decrease in operating expenses as a
percentage of net sales was caused primarily by increased sales and the
increased number of Company Stores in operation.
Average operating income per Company Store increased by $7,003 (9.5%),
primarily as the result of increases in the average sales of gasoline and
grocery and general merchandise.
Net income increased by $6,316,744 (38.1%). The increase in net income was
attributable primarily to increases in retail sales and an increased number of
stores in operation at least three years.
The FASB has issued Statement 115, "Accounting for Certain Investments in Debt
and Equity Securities." Statement 115, effective for fiscal years beginning
after December 15, 1993, expands the use of fair value accounting for those
securities but retains the use of the amortized cost method for investments in
debt securities that the reporting enterprise has the positive intent and
ability to hold to maturity. The Company adopted Statement 115 May 1, 1994, on
a prospective basis. The Company classifies its short-term and long-term
investments as "held-to-maturity" securities and the financial statement impact
was not material.
FISCAL 1994 COMPARED TO FISCAL 1993
Net sales for fiscal 1994 increased by $57,509,000 (8.5%) over fiscal 1993.
Retail gasoline sales increased by $26,446,000 (7.5%) as the number of gallons
sold increased by 39,770,000 (11.8%). During fiscal 1994, retail sales of
grocery and general merchandise increased by $27,339,000 (10.8%) due to the net
addition of 48 new Company Stores and a greater number of stores in operation
for at least three years.
Cost of goods sold as a percentage of net sales was 78.5% for fiscal 1994
compared to 79.2% for the prior year. This result occurred because the gross
profit margin on retail gasoline sales increased.
Operating expenses as a percentage of net sales were 15.1% for fiscal 1994
compared to 15.2% for the prior year. The decrease in operating expenses as a
percentage of net sales was caused primarily by increased sales and the
increased number of Company Stores in operation.
Average operating income per Company Store increased by $12,391 (20.3%)
primarily as the result of increases in the average sales of gasoline and
grocery and general merchandise.
Net income increased by $3,241,000 (24.3%). The increase in net income was
attributable primarily to increases in retail sales and an increased number of
stores in operation at least three years.
In February 1992, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Statement 109 requires a change from the deferred method of accounting
for income taxes of APB Opinion 11 to the asset and liability method of
accounting for income taxes. Under the asset and liability method of Statement
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
20
<PAGE> 14
Management's Discussion and
Analysis of Financial Condition and
Results of Operations - continued
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under Statement
109, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
Effective May 1, 1993, the Company adopted Statement 109 and the cumulative
effect of that change was not material to the financial statements.
Pursuant to the deferred method under APB Opinion 11, which was applied in 1993
and prior years, deferred income taxes are recognized for income and expense
items that are reported in different years for financial reporting purposes and
income tax purposes using the tax rate applicable for the year of the
calculation. Under the deferred method, deferred taxes are not adjusted for
subsequent changes in tax rates.
LIQUIDITY AND CAPITAL RESOURCES
Due to the nature of the Company's business, most sales are for cash and cash
provided by operations is the Company's primary source of liquidity. The
Company finances its inventory purchases primarily from normal trade credit
aided by the relatively rapid turnover of inventory. This turnover allows the
Company to conduct its operations without large amounts of cash and working
capital. As of April 30, 1995, the Company's ratio of current assets to current
liabilities was .56 to 1. Management believes that the Company's current
$27,000,000 bank lines of credit (aggregate amount), together with cash flow
from operations, will be sufficient to satisfy the working capital needs of its
business.
Net cash provided by operations decreased $3,204,961 (6.1%) during the year
ended April 30, 1995, primarily as a result of increased levels of inventories
and a smaller increase in accounts payable compared to the prior year. Cash
flows used in investing decreased during fiscal 1995, primarily because of the
decreased capital expenditures. During fiscal 1995, the Company expended
approximately $53,000,000 for property and equipment, primarily for the
construction and remodeling of Company Stores. The Company anticipates
expending approximately $50,000,000 in fiscal 1996 for construction,
acquisition and remodeling of Company Stores, primarily from funds generated by
operations, existing cash and short-term investments.
As of April 30, 1995, the Company had long-term debt of $59,963,000, consisting
of $26,250,000 of Senior Notes, $14,498,000 of mortgage notes payable,
$11,469,000 of unsecured notes payable and $7,746,000 of capital lease
obligations.
Interest on the Senior Notes is payable on the 15th day of each month at the
rate of 7.70% per annum. Principal of the Senior Notes matures in forty
quarterly installments beginning March 15, 1995. The Company may prepay the
Senior Notes in whole or in part at any time in an amount of not less than
$1,000,000 or integral multiples of $100,000 in excess thereof at a redemption
price calculated in accordance with the Note Agreement dated as of February 1,
1993 between the Company and the purchasers of the Senior Notes.
To date, the Company has funded capital expenditures primarily from the
proceeds of the sale of Common Stock, issuance of the Debentures and the Senior
Notes, a mortgage note and through funds generated from operations. Future
capital needs required to finance operations, improvements and the anticipated
growth in the number of Company Stores are expected to be met from cash
generated by operations, existing cash, investments and additional long-term
debt or other securities as circumstances may dictate, and are not expected to
adversely affect liquidity.
21
<PAGE> 15
Management's Discussion and
Analysis of Financial Condition and
Results of Operations - continued
LIQUIDITY AND CAPITAL RESOURCES - CONTINUED
ENVIRONMENTAL COMPLIANCE - The United States Environmental Protection Agency
and several states, including Iowa, have established requirements for owners
and operators of underground gasoline storage tanks (USTs) with regard to (i)
maintenance of leak detection, corrosion protection and overfill/spill
protection systems; (ii) upgrade of existing tanks; (iii) actions required in
the event of a detected leak; (iv) prevention of leakage through tank closings;
and (v) required gasoline inventory recordkeeping. Since 1984, new Company
Stores have been equipped with non-corroding fiberglass USTs, including many
with double-wall construction, over-fill protection and electronic tank
monitoring, and the Company has an active inspection and renovation program
with respect to its older USTs. The Company currently has 1,566 USTs of which
1,166 are fiberglass and 400 are steel. Management of the Company believes that
its existing gasoline procedures and planned capital expenditures will continue
to keep the Company in substantial compliance with all current federal and
state UST regulations.
Several of the states in which the Company does business have trust fund
programs with provisions for sharing or reimbursing corrective action or
remediation costs incurred by UST owners, including the Company. These
programs, other than the state of Iowa, generally are in the early stages of
operation and the extent of available coverage or reimbursement under such
programs for costs incurred by the Company is not fully known at this time. In
each of the years ended April 30, 1995 and 1994, the Company spent
approximately $2,137,000 and $1,814,000, respectively, for assessments and
remediation. Substantially all of these expenditures have been submitted for
reimbursement from state-sponsored trust fund programs and as of June 30, 1995,
approximately $3,800,000 has been received from such programs. The Company has
accrued a liability at April 30, 1995, of approximately $3,300,000 for
estimated expenses related to anticipated corrective actions or remediation
efforts, including relevant legal and consulting costs. Management believes the
Company has no material joint and several environmental liability with other
parties.
Management of the Company currently estimates that aggregate capital
expenditures for electronic monitoring, cathodic protection and overfill/spill
protection will approximate $1,000,000 in fiscal 1996 through December 23,
1998, in order to comply with the existing UST regulations. Additional
regulations, or amendments to the existing UST regulations, could result in
future revisions to such estimated expenditures.
SEASONALITY OF SALES- Sales at Casey's General Stores historically have been
strongest during the Company's first and second fiscal quarters and relatively
weaker during its third and fourth quarters. In the warmer months of the year
(which comprise the Company's first two fiscal quarters), customers tend to
purchase greater quantities of gasoline and certain convenience items such as
beer, soft drinks and ice. As a result of management's continuing emphasis on
higher-margin prepared-food items, however, the Company's net sales and net
income have become somewhat less seasonal in recent years.
INFLATION-The Company has generally been able to pass along inflationary
increases in its costs through increased sales prices of products sold, except
in those instances where doing so would have had a material adverse impact on
the Company's ability to compete. Accordingly, management believes that
inflation has not had a material impact upon the operating results of the
Company.
22
<PAGE> 16
Selected
Financial Data
<TABLE>
<CAPTION>
STATEMENT OF INCOME DATA
(amounts in thousands, except per share data) YEARS ENDED APRIL 30
----------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $ 848,843 $ 731,206 $ 673,697 $ 606,585 $ 580,305
Franchise revenue 5,269 5,121 4,898 4,991 4,807
---------- ---------- ---------- ---------- ----------
854,112 736,327 678,595 611,576 585,112
Cost of goods sold 665,925 574,144 533,535 480,357 463,090
Operating expenses 123,004 110,083 102,379 94,209 90,712
Depreciation and amortization 22,237 18,623 15,943 13,704 12,238
Interest, net 5,590 6,434 5,249 4,808 4,678
---------- ---------- ---------- ---------- ----------
Income before income taxes 37,356 27,043 21,489 18,498 14,394
Provision for income taxes 14,475 10,479 8,166 6,984 5,362
---------- ---------- ---------- ---------- ----------
Net income $ 22,881 $ 16,564 $ 13,323 $ 11,514 $ 9,032
===========================================================================================================================
*Per share - primary:
Net income $ .88 $ .73 $ .60 $ .52 $ .40
===========================================================================================================================
*Weighted average number of common
and common equivalent shares
outstanding - primary 26,062 22,651 22,193 22,096 22,374
*Dividends paid per common share $ .08 $ .07125 $ .06 $ .0575 $ .0375
</TABLE>
*All share and per share data have been restated to reflect a two-for-one stock
split effective February 16, 1994.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
(amounts in thousands) AS OF APRIL 30
----------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Current assets $ 43,191 $ 41,369 $ 46,513 $ 33,011 $ 31,646
Total assets 345,159 318,238 280,777 219,476 197,741
Current liabilities 76,971 75,453 55,456 46,593 35,844
Long-term debt 59,963 61,415 98,956 61,433 63,770
Shareholders' equity 179,672 158,410 107,976 95,854 84,813
</TABLE>
23
<PAGE> 17
Quarterly Financial Data
(in thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, 1995 YEAR ENDED APRIL 30, 1994
----------------------------------------------------- ---------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR QUARTER QUARTER QUARTER QUARTER YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 221,256 $223,740 $199,363 $204,484 $848,843 $193,689 $186,965 $172,621 $177,931 $731,206
Gross profit (A) 45,871 49,206 45,868 41,973 182,918 40,169 41,110 40,018 35,765 157,062
Net income $ 6,430 $ 7,535 $ 5,723 $ 3,193 $ 22,881 $ 4,755 $ 5,381 $ 4,047 $ 2,381 $ 16,564
Earnings per common
and common
equivalent share $ .25 $ .29 $ .22 $ .12 $ .88 $ .21 $ .24 $ .18 $ .10 $ .73
Fully diluted earnings
per share $ .25 $ .29 $ .22 $ .12 $ .88 $ .20 $ .22 $ .17 $ .10 $ .68
===================================================== ===================================================
</TABLE>
(A) Before charge for depreciation and amortization.
Common Stock Data
The following table sets forth for the calendar periods indicated the high and
low sale prices per share of Common Stock as reported on the NASDAQ National
Market System through June 30, 1995.
<TABLE>
<CAPTION>
CALENDAR 1993 HIGH LOW
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
First Quarter $ 9 1/8 $ 8 1/8
Second Quarter 9 13/16 7 3/8
Third Quarter 10 3/4 8 1/2
Fourth Quarter 12 5/16 10 1/4
CALENDAR 1994
- -------------------------------------------------------------------------------------------------------
First Quarter 13 7/8 11
Second Quarter 12 5/8 10 1/2
Third Quarter 12 1/4 10 1/2
Fourth Quarter 15 3/8 11 7/8
CALENDAR 1995
- -------------------------------------------------------------------------------------------------------
First Quarter 16 3/8 14 3/8
Second Quarter 18 15 1/4
- -------------------------------------------------------------------------------------------------------
</TABLE>
On July 6, 1995, the last reported sales price of the Company's Common Stock
was $17 7/8 per share. On July 6, 1995, there were 2,599 holders of record of
the Common Stock.
The Company commenced paying cash dividends during fiscal 1991. On June 19,
1995, the Board of Directors declared a 2 1/2 cents per share dividend for
shares held of record on August 1, 1995. The dividend is payable on August 15,
1995. The Company currently intends to pay comparable cash dividends on a
quarterly basis in the future.
24
<PAGE> 1
Exhibit 21
Subsidiaries of Casey's General Stores, Inc.
1. Casey's Marketing Company, an Iowa corporation.
2. Casey's Services Company, an Iowa corporation.
Both of such subsidiaries are wholly-owned by Casey's
General Stores, Inc. and do business under the above
names. Stores operated by Casey's Marketing Company
do business under the name "Casey's General Store."
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Casey's General Stores, Inc.
We consent to incorporation by reference in the Registration Statements (No.
33-19179 and 33-42907) on Form S-8 of Casey's General Stores, Inc. of our
report dated June 20, 1995, relating to the balance sheets of Casey's General
Stores, Inc. as of April 30, 1995 and 1994, and the related statements of
income, shareholders' equity and cash flows for each of the years in the
three-year period ended April 30, 1995, which report appears in or is
incorporated by reference in the April 30, 1995 Annual Report on Form 10-K of
Casey's General Stores, Inc.
KPMG Peat Marwick LLP
Des Moines, Iowa
July 25, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 30, 1995 OF CASEY'S GENERAL
STORES, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-START> MAY-01-1994
<PERIOD-END> APR-30-1995
<CASH> 5,477,784
<SECURITIES> 1,300,700<F1>
<RECEIVABLES> 3,086,728
<ALLOWANCES> 0
<INVENTORY> 27,343,033
<CURRENT-ASSETS> 43,190,569
<PP&E> 406,148,017
<DEPRECIATION> 111,656,704
<TOTAL-ASSETS> 345,158,672
<CURRENT-LIABILITIES> 76,971,055
<BONDS> 59,962,922<F2>
<COMMON> 61,342,992
0
0
<OTHER-SE> 118,329,048<F3>
<TOTAL-LIABILITY-AND-EQUITY> 345,158,672
<SALES> 848,842,757
<TOTAL-REVENUES> 854,111,862
<CGS> 665,924,372
<TOTAL-COSTS> 665,924,372
<OTHER-EXPENSES> 145,241,505
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,590,144
<INCOME-PRETAX> 37,355,841
<INCOME-TAX> 14,475,000
<INCOME-CONTINUING> 22,880,841
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,880,841
<EPS-PRIMARY> .88
<EPS-DILUTED> .88
<FN>
<F1>short-term investments
<F2>long-term debt, net of current maturities
<F3>retained earnings
</FN>
</TABLE>
