<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- -------------------------------------------------------------------------------
FORM 10-K
(Mark One)
(x) Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (FEE REQUIRED)
For the fiscal year ended January 28, 1995
or
( ) Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (NO FEE REQUIRED)
For the transition period from to .
----- -----
Commission file number 1-3381
The Pep Boys - Manny, Moe & Jack
----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0962915
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
3111 West Allegheny Avenue, Philadelphia, PA 19132
-------------------------------------------- ------------
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code 215-229-9000
------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ----------------------------- -----------------------------------------
Common Stock, $1.00 par value New York Stock Exchange
4% Convertible Subordinated
Notes due September 1, 1999 New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ( )
As of the close of business on April 7, 1995, the aggregate market value of the
voting stock held by nonaffiliates of the registrant was not less than
$1,649,063,360.
As of April 7, 1995 there were 61,554,346 shares of the registrant's common
stock outstanding.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
PART III Portions of the registrant's definitive proxy statement,
which will be filed with the commission pursuant to
Regulation 14A not later than 120 days after the end of the
Company's fiscal year, for the Company's Annual Meeting of
Shareholders presently scheduled to be held on May 31,
1995.
<PAGE>
This Annual Report on Form 10-K for the year ended January 28, 1995, at
the time of filing with the Securities and Exchange Commission, modifies and
supersedes all prior documents filed pursuant to Sections 13, 14 and 15(d) of
the Securities Exchange Act of 1934 for purposes of any offers or sales of any
securities on or after the date of such filing, pursuant to any Registration
Statement or Prospectus filed pursuant to the Securities Act of 1933 which
incorporates by reference this Annual Report.
<PAGE>
PART I
ITEM I BUSINESS
GENERAL
The Company is engaged principally in the retail sale of automotive parts and
accessories, automotive maintenance and service and the installation of parts
sold by it through its chain of 435 Pep Boys stores (as of January 28, 1995),
having an aggregate of 4,166 service bays. The Company operates approximately
8,900,000 gross square feet of retail space for an average of approximately
20,500 gross square feet per store.
<PAGE>
<TABLE>
The following table indicates by state the number of stores of the Company in operation at the end of fiscal 1991, 1992, 1993 and
1994 and the number of stores opened and closed by the Company during each of the last three fiscal years:
NUMBER OF STORES AT END OF FISCAL YEARS 1991 THROUGH 1994
<CAPTION>
1992 1993 1994
1991 -------------------------- -------------------------- --------------------------
State YEAR END Opened Closed Year End Opened Closed Year End Opened Closed Year End
- -------------------- -------- ------ ------ -------- ------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alabama - 1 - 1 - - 1 - - 1
Arizona 25 - 1 24 - - 24 - - 24
Arkansas - - - - 1 - 1 - - 1
California 94 4 6 92 8 7* 93 11* 2 102
Colorado - - - - - - - 5 - 5
Delaware 5 - - 5 - - 5 - - 5
Florida 20 7 - 27 6 - 33 1 - 34
Georgia 20 - - 20 - - 20 - - 20
Illinois - - - - 3 - 3 10 - 13
Indiana - - - - 1 - 1 - - 1
Kansas - - - - 1 - 1 1 - 2
Kentucky - - - - 1 - 1 2 - 3
Louisiana 7 2 - 9 3 - 12 - - 12
Maryland 14 1 - 15 1 - 16 - - 16
Massachusetts - - - - 2 - 2 1 - 3
Michigan - - - - - - - 1 - 1
Missouri - - - - 1 - 1 - - 1
Nevada 8 - - 8 - - 8 - - 8
New Hampshire - - - - - - - 1 - 1
New Jersey 13 - - 13 1 - 14 2 1 15
New Mexico 8 - - 8 - - 8 - - 8
New York - 7 - 7 2 - 9 2 - 11
North Carolina 11 - - 11 - - 11 - - 11
Ohio - - - - - - - 9 - 9
Oklahoma 6 - - 6 - - 6 - - 6
Pennsylvania 30 1 1 30 2 1 31 3 - 34
Rhode Island - - - - 1 - 1 - - 1
South Carolina 5 1 - 6 - - 6 - - 6
Tennessee 7 - - 7 - - 7 - - 7
Texas 47 2 - 49 3 - 52 3 - 55
Utah 5 1 - 6 - - 6 - - 6
Virginia 12 2 1 13 - - 13 - - 13
--- --- --- --- --- --- --- --- --- ---
Total 337 29 9 357 37 8 386 52 3 435
=== === === === === === === === === ===
<FN>
* Included in this number is the Company's Santa Monica store which was temporarily closed in fiscal 1993 and re-opened in fiscal
1994.
/TABLE
<PAGE>
NEW STORES AND EXPANSION STRATEGY
The most important factors considered by the Company when deciding to
open new stores are the population density of the target area and the
automotive traffic count at the site of the proposed store. The most
important factors considered by the Company when deciding whether to close a
store are profitability and whether the store is outmoded by virtue of store
size, location and surroundings, number of service bays, number of other
stores within the same market area and the cost/benefit of establishing a
replacement store rather than expanding or otherwise upgrading an older
store.
The Company introduced a new supplemental store format in fiscal 1994,
which operates under the name Pep Boys - "PARTS USA". These new format
stores will generally be between approximately 10,000 - 13,000 square feet
and stock approximately 22,000 stock-keeping-units but will not carry tires or
have service bays. The Company believes the utilization of this secondary format
will enable it to grow at a faster rate and achieve greater economies of scale
by providing more retail outlets as well as increase its market penetration
and share.
The Company currently plans to open as many as 50 new automotive
"SUPERCENTERS" with service bays and 25 of its new format "PARTS USA" stores
in fiscal 1995. Included in this expansion will be the Company's initial
entry into Puerto Rico - its first units outside of the continental United
States. If the Company opens stores in all 75 locations, it anticipates
spending approximately $160,000,000 in addition to the $8,755,000 it had
already spent as of January 28, 1995 in connection with certain of these
locations. Funds required to finance this expansion are expected to come
primarily from operating activities with the remainder provided by unused
lines of credit or from accessing traditional lending sources which may
include the public capital markets.
During fiscal 1994 the Company opened 51 new stores which includes its
first "PARTS USA" store. All 50 of the automotive "SUPERCENTERS" opened
during fiscal 1994 were in the "warehouse" format, which was introduced in
fiscal 1991. The Company had 121 warehouse format stores as of January 28,
1995. In addition to lower capital costs and a shorter construction
schedule, the warehouse format stores provide a more convenient shopping
environment to customers. During 1994 the Company introduced the first of
its new prototype "SUPERCENTER". This new prototype features a number of
enhancements to the current warehouse format including a parts counter that
runs along the center aisle of the store. The Company believes this new
format further enhances customer service by positioning its store staff
closer to shoppers in the general merchandise area of the store. The Company
anticipates that all the automotive "SUPERCENTERS" to be opened in fiscal
1995 will be in this new prototype format and will consist of approximately
22,000 gross square feet, including approximately 12 service bays with
computerized diagnostic equipment.
The Company's ability to meet its expansion goals will depend, in large
measure, upon the availability of suitable sites, prevailing economic
conditions, its success in completing negotiations to purchase or lease
properties, and its ability to obtain governmental approvals and meet
construction deadlines.
<PAGE>
MERCHANDISING
Each Pep Boys' automotive "SUPERCENTER" carries the same basic product
line, with variations based on the number and type of cars registered in the
different markets. A full complement of a store's inventory currently
includes approximately 25,000 items. The Company's automotive product line
includes: tires; batteries; new and rebuilt parts for domestic and imported
cars, including suspension parts, ignition parts, mufflers, engines and
engine parts, oil and air filters, belts, hoses, air conditioning parts, and
brake parts; chemicals, including oil, antifreeze, polishes, additives,
cleansers and paints; mobile electronics, including sound systems, alarms
and cellular telephones; car accessories, including seat covers, floor mats,
gauges, mirrors and booster cables; and a large selection of truck and van
accessories.
In addition to offering a wide variety of high quality, branded
products, the Company sells an array of high quality products under the Pep
Boys and various other private label names. The Company sells oil,
transmission fluid, chemicals, and paints under the Pep Boys name. The
Company sells antifreeze under the name PURE AS GOLD(R). The Company sells
starters and alternators under the names "True Blue" and PRO-START(R), water
pumps under the names "True Blue" and PRO-COOL(tm) and batteries under the
name PROSTART(R). Brakes are sold under the names SHUR GRIP(R) and
PROSTOP(tm) and tires under the names CORNELL(R) and FUTURA(R). The Company
also sells shock absorbers under the name "ProRyder", and trunk and
hatchback lift supports under the name PROLIFT(tm). All products sold by
the Company under the Pep Boys and various other private label names
accounted for approximately 22% of the Company's merchandise sales in fiscal
1994. The remaining merchandise is sold under the brand names of others.
Except for revenues from maintaining or repairing automobiles and installing
products, which accounted for approximately 12.8%, 13.3% and 13.9% of the
Company's total revenues in fiscal years 1992, 1993 and 1994 respectively,
no class of products or services accounted for as much as 10% of the
Company's total revenues.
The Company has a point-of-sale system in all of its stores which
gathers sales and gross profit data by stock-keeping-unit from each store on
a daily basis. This information is then used by the Company to help
formulate its pricing, marketing and merchandising strategies.
The Company has an electronic work order system in all of its service
centers. This system creates a service history for each vehicle, provides
customers with a comprehensive, professional sales document and will enable
the Company to establish a service customer database.
The Company uses an "Everyday Low Price" (EDLP) strategy in
establishing its selling prices. Management believes that EDLP provides
better value to its customers on a day-to-day basis, helps level customer
demand and allows more efficient management of inventories.
The Company uses various forms of advertising to promote its category
dominant product offering, its state-of-the-art automotive service and
repair capabilities and its commitment to customer service and satisfaction.
The Company's advertising vehicles include, but are not limited to,
multipage catalogs, television and radio commercials and in-store
promotions. A large portion of the gross cost of the advertising directed
by the Company is customarily borne by the suppliers of the products
advertised.
In fiscal 1994, approximately 72% of the Company's total revenues were
cash transactions (including personal checks), and the remainder were credit
and charge card sales.
The Company does not experience significant seasonal fluctuation in the
generation of its revenues.
<PAGE>
STORE OPERATIONS AND MANAGEMENT
All Pep Boys' stores are open seven days a week. Each store with
service bays has a manager, a service manager, a parts manager and two or
more assistant managers. A store manager's average length of service with
the Company is approximately eight years.
The Company has service bays in 427 of its 435 locations. Each service
department can perform a variety of services which include: engine tune-ups,
wheel alignments, state inspections, air conditioning service; the repair
and installation of parts and accessories including brake parts, suspension
parts, exhaust systems, front end parts, ignition parts, belts, hoses,
clutches, filters, radios, alarms, sun roofs, cruise controls, and various
other merchandise sold in Pep Boys' stores; installation and balancing of
tires, and oil and lubrication services.
The Company coordinates the operation and merchandising of each store
through a network of district and regional managers. The regional managers
report to one of three Vice Presidents - Store Operations who report to the
Company's Senior Vice President - Store Operations who reports to the
Company's Executive Vice President. Supervision and control over the
individual stores are facilitated by means of the Company's computer system,
operational handbooks and regular visits to the individual stores by the
district operations managers and loss prevention personnel.
All of the Company's advertising, accounting, management information
systems, purchasing and most administrative functions are conducted at its
corporate headquarters in Philadelphia, Pennsylvania. Certain
administrative functions for the Company's western, southwestern, and
southeastern operations are performed at various regional offices of the
Company. See "Properties."
INVENTORY CONTROL AND DISTRIBUTION
Almost all of the Company's merchandise is distributed to its stores
from its warehouses by Company-owned or leased trucks. Target levels of
inventory for each product have been established for each of the Company's
warehouses and stores and are based upon prior shipment history, sales
trends and seasonal demand. Inventory on hand is compared to the target
levels on a weekly basis at each warehouse. If the inventory on hand at a
warehouse is below the target levels, the Company's buyers order merchandise
from its suppliers.
Each Pep Boys store has an automatic inventory replenishment system
that automatically orders additional inventory when a store's inventory on
hand falls below the target level. In addition, the Company's centralized
buying system installed in fiscal 1992, coupled with a new warehousing
system which is currently operating in four of its five main distribution
facilities, has greatly enhanced the Company's ability to control its
inventory. The Company plans to install the new warehousing system in its
remaining distribution center in fiscal 1995.
SUPPLIERS
During fiscal 1994, the Company's ten largest suppliers accounted for
approximately 32% of the merchandise purchased by the Company. No single
supplier accounted for more than 5% of the Company's purchases. The Company
has no long-term contracts for the purchase of merchandise. Management
believes that the relationships the Company has established with its
suppliers are generally good.
In the past, the Company has not experienced difficulty in obtaining
satisfactory sources of supply and believes that adequate alternative
sources of supply exist, at substantially similar cost, for virtually all
types of merchandise sold in its stores.
<PAGE>
COMPETITION
The business of the Company is generally highly competitive. The
Company encounters competition from nationwide and regional chains and from
local independent merchants. Some of the Company's competitors are general,
full range, discount or traditional department stores which carry automotive
parts and accessories and/or have automotive service centers, and others,
similar to the Company, are specialized automotive service retailers.
Certain of its competitors are larger in terms of sales volume and/or store
size, have access to greater capital and management resources and have been
operating longer in particular geographic areas than the Company.
Although the Company's competition varies by geographical area, the
Company believes that it generally has a favorable competitive position in
terms of depth and breadth of product line, price, quality of personnel and
customer service.
In addition, the Company believes that its operation of service bays in
its "SUPERCENTERS'" automotive service centers positively differentiates it
from most of its competitors. The Company believes that the warranty
policies in connection with the higher priced items it sells, such as tires,
batteries, brake linings and other major automotive parts and accessories,
are comparable or superior to those of its competitors.
EMPLOYEES
At January 28, 1995, the Company employed 15,874 persons as follows:
<TABLE>
<CAPTION>
Full-time Part-time Total
Description Numbers % Numbers % Numbers %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Store Sales 5,005 42.4 3,069 75.4 8,074 50.9
Store Service 5,115 43.3 815 20.0 5,930 37.3
Store Regional Management 79 .7 - - 79 .5
------ ----- ----- ----- ------ -----
STORE TOTAL 10,199 86.4 3,884 95.4 14,083 88.7
Warehouses 805 6.8 166 4.1 971 6.1
Offices 800 6.8 20 .5 820 5.2
------ ----- ----- ----- ------ -----
TOTAL EMPLOYEES 11,804 100.0 4,070 100.0 15,874 100.0
====== ===== ===== ===== ====== =====
</TABLE>
Of the 805 full-time warehouse employees referred to above, 164
employees at the Company's New Jersey warehouse facilities are members of a
union. The Company believes employee relations are generally good. At the end
of fiscal 1993, the Company employed approximately 10,509 full-time and 4,386
part-time employees, and at the end of fiscal 1992, the Company employed
approximately 9,300 full-time and 4,100 part-time employees.
<PAGE>
ITEM 2 PROPERTIES
The Company's headquarters in Philadelphia, Pennsylvania, which also
serves as an administrative regional office for its eastern operations,
occupies approximately 263,000 square feet of a five-story structure owned by
the Company with approximately 300,000 square feet of floor space. The Company
occupies approximately 30,000 square feet of a 60,000 square foot three-story
structure which the Company owns located in Los Angeles, California which
serves as an administrative regional office for its western operations. The
Company leases approximately 4,000 square feet of office space in each of
Decatur, Georgia and Richardson, Texas which serve as administrative regional
offices for its southeastern and southwestern operations, respectively.
Of the 435 store locations operated by the Company at January 28, 1995,
298 are owned and 137 are leased. Of the 137 leased store locations, 56 are
fully leased and 81 are ground leases only.
<PAGE>
The following table sets forth certain information regarding the owned and
leased warehouse space utilized by the Company at January 28, 1995.
<TABLE>
<CAPTION>
Warehouse Products Square Owned or Stores States
Location Warehoused Footage Leased Serviced Serviced
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Los Angeles, CA All except 216,000 Owned 105 AZ, CA, NV
tires
Los Angeles, CA Tires 73,000 Leased 105 AZ, CA, NV
Los Angeles, CA All except 137,000 Leased 105 AZ, CA, NV
tires
Phoenix, AZ All except 100,000 Owned 54 AZ, CO, NM,
tires and NV, TX, UT
chemicals
Phoenix, AZ Tires and 57,000 Leased 54 AZ, CO, NM,
chemicals NV, TX, UT
Phoenix, AZ Tires and 42,000 Leased 54 AZ, CO, NM,
chemicals NV, TX, UT
Bridgeport, NJ All except 195,000 Owned 95 DE, MA, MD,
tires MI, NH, NJ,
NY, OH, PA,
RI, VA
Bridgeport, NJ Tires and 273,000 Leased 95 DE, MA, MD,
chemicals MI, NH, NJ,
NY, OH, PA,
RI, VA
Atlanta, GA All 392,000 Owned 110 AL, FL, GA,
IL, IN, KY,
NC, OH, SC,
TN, VA
Mesquite, TX All 244,000 Owned 71 AR, KS, LA,
MO, OK, TX
---------
Total 1,729,000
</TABLE>
The Company anticipates that its existing current and leased warehouse
space will accommodate inventory necessary to support store expansion and any
increase in stock-keeping-units during fiscal 1995.
The Company is subject to federal, state and local provisions relating to
the protection of the environment, including provisions with respect to the
disposal of oil at its store locations. Estimated capital expenditures
relating to compliance with such environmental provisions are not
material.
<PAGE>
ITEM 3 LEGAL PROCEEDINGS
The Company is involved in a number of lawsuits arising in the ordinary
course of business. Management is of the opinion that such lawsuits will not
result in any material liability to the Company.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended January 28, 1995.
ITEM A EXECUTIVE OFFICERS OF THE COMPANY
The following table indicates the names, ages, years with the Company and
positions (together with the year of election to such positions) of the
executive officers of the Company:
Years with Position with the Company and
Name Age Company Year of Election to Position
- --------------------- ---- ---------- -----------------------------
Mitchell G. Leibovitz 49 16 Chairman of the Board since
March 1994; Chief Executive
Officer since March 1990;
President since 1986
Wendel H. Province 47 5 Executive Vice President
since November 1994; Chief
Operating Officer since
March 1993.
Michael J. Holden 43 15 Senior Vice President & Chief
Financial Officer since March
1987; Treasurer since 1984
Frederick A. Stampone 39 13 Senior Vice President since
March 1987; Chief
Administrative Officer since
March 1993; Secretary since
December 1988
Mark L. Page 38 19 Senior Vice President - Store
Operations since March 1993
Messrs. Leibovitz, Province, Holden and Stampone have been executive officers
of the Company for more than the past five years. Mr. Page has been an
executive officer of the Company for less than the past five years. Mr. Page
was a regional manager for the Company from February 1987 until February 1991
when he was elected Vice President - Western Store Operations. On March 14,
1993 Mr. Page became Senior Vice President - Store Operations. Each of the
officers serves at the pleasure of the Board of Directors of the Company. There
are no arrangements or understandings pursuant to which any officer was elected
to office.
<PAGE>
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The common stock of The Pep Boys - Manny, Moe & Jack is listed on the New
York Stock Exchange under the symbol "PBY". There were 3,843 registered
shareholders as of January 28, 1995. The following table sets forth for the
periods listed the high and low sale prices and the cash dividends paid on the
Company's common stock.
<TABLE>
MARKET PRICE PER SHARE
<CAPTION>
Market Price Per Share Cash Dividends
Fiscal year ended January 28, 1995 High Low Per Share
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter $31 $26 $.0425
Second Quarter 33 3/4 29 1/4 .0425
Third Quarter 36 29 1/8 .0425
Fourth Quarter 36 7/8 28 1/2 .0425
Fiscal year ended January 29, 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter $26 1/2 $20 3/4 $.0375
Second Quarter 23 7/8 20 1/2 .0375
Third Quarter 24 7/8 20 3/4 .0375
Fourth Quarter 27 1/2 23 1/4 .0375
</TABLE>
It is the present intention of the Company's Board of Directors to continue to
pay regular quarterly cash dividends; however, the declaration and payment of
future dividends will be determined by the Board of Directors in its sole
discretion and will depend upon the earnings, financial condition and capital
needs of the Company and other factors which the Board of Directors deems
relevant.<PAGE>
<TABLE>
ITEM 6 SELECTED FINANCIAL DATA
The following tables sets forth the selected financial data for the Company and should be read in conjunction with the Consolidated
Financial Statements and Notes thereto included elsewhere herein.
SELECTED FINANCIAL DATA (UNAUDITED)
(dollar amounts in thousands, except per share amounts)
<CAPTION>
Year ended Jan. 28, 1995 Jan. 29, 1994 Jan. 30, 1993 Feb. 1, 1992 Feb. 2, 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA
Merchandise sales $1,211,536 $1,076,543 $1,008,191 $ 873,381 $ 774,502
Service revenue 195,449 164,590 147,403 128,127 110,172
Total revenues 1,406,985 1,241,133 1,155,594 1,001,508 884,674
Gross profit from merchandise sales 364,378 307,861 272,412 240,199 217,052
Gross profit from service revenue 32,417 27,457 24,528 19,726 17,854
Total gross profit 396,795 335,318 296,940 259,925 234,906
Selling, general and
administrative expenses 247,872 214,710 194,160 176,275 157,468
Operating profit 148,923 120,608 102,780 83,650 77,438
Nonoperating income 3,490 3,601 3,015 1,933 1,601
Interest expense 25,931 19,701 20,180 25,071 20,262
Earnings before income taxes
and cumulative effect of change
in accounting principle 126,482 104,508 85,615 60,512 58,777
Earnings before cumulative effect
of change in accounting principle 80,008 65,512 54,579 38,872 37,530
Cumulative effect of change in
accounting principle (4,300) - - - -
Net earnings 75,708 65,512 54,579 38,872 37,530
BALANCE SHEET DATA
Working capital $ 121,858 $ 92,518 $ 104,622 $ 81,935 $ 91,801
Current ratio 1.42 to 1 1.37 to 1 1.47 to 1 1.46 to 1 1.55 to 1
Merchandise inventories $ 366,843 $ 305,872 $ 295,179 $ 230,894 $ 234,688
Property and equipment-net 861,910 723,452 628,918 588,593 556,990
Total assets 1,291,019 1,078,518 967,813 856,925 819,421
Long-term debt (including convertible
subordinated notes) 380,787 253,000 209,347 279,250 285,868
Stockholders' equity 586,253 547,759 509,763 378,514 344,603
DATA PER COMMON SHARE
Earnings before cumulative effect
of change in accounting principle $ 1.32 $ 1.06 $ .90 $ .69 $ .67
Cumulative effect of change in
accounting principle (.07) - - - -
Net earnings 1.25 1.06 .90 .69 .67
Cash dividends .17 .15 .1375 .1275 .1175
Stockholders' equity 9.53 8.97 8.40 6.79 6.20
Common share price range: high-low 36 7/8-26 27 1/2-20 1/2 27 3/8-17 1/8 19 1/2-10 3/8 17 1/4-8 3/8
OTHER STATISTICS
Return on average
stockholders' equity 13.4% 12.4% 12.3% 10.8% 11.4%
Common shares outstanding 61,501,679 61,060,055 60,669,102 55,773,813 55,606,116
Capital expenditures $ 185,072 $ 135,165 $ 78,025 $ 65,801 $ 105,826
Number of retail outlets 435 386 357 337 313
<FN>
/TABLE
<PAGE>
<TABLE>
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents for the periods indicated certain items in the consolidated statements of earnings as a percentage of
total revenues (except as otherwise provided) and the percentage change in dollar amounts of such items compared to the indicated
prior period.
<CAPTION>
Percentage of Total Revenues Percentage Change
-------------------------------------------- -------------------------------
Jan. 28, 1995 Jan. 29, 1994 Jan. 30, 1993 Fiscal 1994 vs. Fiscal 1993 vs.
Year ended (Fiscal 1994) (Fiscal 1993) (Fiscal 1992) Fiscal 1993 Fiscal 1992
- --------------------------------------- ------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Merchandise Sales...................... 86.1% 86.7% 87.2% 12.5% 6.8%
Service Revenue(1)..................... 13.9 13.3 12.8 18.7 11.7
------------- ------------- ------------ ----------- -----------
Total Revenues 100.0 100.0 100.0 13.4 7.4
Costs of Merchandise Sales(2).......... 69.9(3) 71.4(3) 73.0(3) 10.2 4.5
Costs of Service Revenue(2)............ 83.4(3) 83.3(3) 83.4(3) 18.9 11.6
------------- ------------- ------------ ----------- -----------
Total Costs of Revenues................ 71.8 73.0 74.3 11.5 5.5
Gross Profit from Merchandise Sales.... 30.1(3) 28.6(3) 27.0(3) 18.4 13.0
Gross Profit from Service Revenue...... 16.6(3) 16.7(3) 16.6(3) 18.1 11.9
------------- ------------- ------------ ----------- -----------
Total Gross Profit..................... 28.2 27.0 25.7 18.3 12.9
Selling, General and
Administrative Expenses.............. 17.6 17.3 16.8 15.4 10.6
------------- ------------- ------------ ----------- -----------
Operating Profit....................... 10.6 9.7 8.9 23.5 17.3
Nonoperating Income.................... .2 .3 .3 (3.1) 19.4
Interest Expense....................... 1.8 1.6 1.8 31.6 (2.4)
------------- ------------- ------------ ----------- -----------
Earnings Before Income Taxes and
Cumulative Effect of Change in
Accounting Principle................. 9.0 8.4 7.4 21.0 22.1
Income Taxes........................... 36.7(4) 37.3(4) 36.3(4) 19.2 25.6
------------- ------------- ------------ ----------- -----------
Earnings Before Cumulative Effect of
Change in Accounting Principle....... 5.7 5.3 4.7 22.1 20.0
Cumulative Effect of Change in
Accounting Principle................. (.3) - - - -
------------- ------------- ------------ ----------- -----------
Net Earnings 5.4 5.3 4.7 15.6 20.0
============= ============= ============ =========== ===========
<FN>
(1) Service revenue consists of the labor charge for installing merchandise or maintaining or repairing vehicles, excluding the
sale of any installed parts or materials.
(2) Costs of merchandise sales include the cost of products sold, buying, warehousing and store occupancy costs. Costs of
service revenue include service center payroll and related employee benefits and service center occupancy costs. Occupancy
costs include utilities, rents, real estate and property taxes, repairs and maintenance and depreciation and amortization
expenses.
(3) As a percentage of related sales or revenue, as applicable.
(4) As a percentage of earnings before income taxes and cumulative effect of change in accounting principle.
/TABLE
<PAGE>
FISCAL 1994 vs. FISCAL 1993
Total revenues for fiscal 1994 increased 13% over fiscal 1993 due to a
higher store count (435 at January 28, 1995 compared with 386 at January 29,
1994) coupled with a 5% increase in comparable store revenues (revenues
generated by stores in operation during the same months of each period).
Comparable store merchandise sales increased 5% while comparable store service
revenue increased 8% over fiscal 1993.
The increase in gross profit from merchandise sales, as a percentage of
merchandise sales, was due primarily to significantly higher merchandise
margins and a slight decrease in store occupancy costs.
The small decrease in gross profit from service revenue, as a percentage
of service revenue, was due primarily to an increase in service payroll costs
offset, in part, by a decrease in service employee benefits costs.
The increase in selling, general and administrative expenses, as a
percentage of total revenues, was due primarily to an increase in store
expenses offset, in part, by a decrease in employee benefits costs.
The 32% increase in interest expense was due to higher debt levels
incurred to fund the Company's store expansion program coupled with higher
interest rates.
The 22% increase in earnings before the cumulative effect of a change in
accounting principle in fiscal 1994, as compared with fiscal 1993, was due to
increases in comparable store revenues and gross profit from merchandise sales,
as a percentage of merchandise sales, offset, in part, by increases in selling,
general and administrative expenses and interest expense, as a percentage of
total revenues.
FISCAL 1993 vs. FISCAL 1992
Total revenues for fiscal 1993 increased 7% over fiscal 1992 due to a
higher store count (386 at January 29, 1994 compared with 357 at January 30,
1993) coupled with a 1% increase in comparable store revenues. Comparable
store merchandise sales remained constant while comparable store service
revenue increased 3% over fiscal 1992.
The increase in gross profit from merchandise sales, as a percentage of
merchandise sales, was due primarily to significantly higher merchandise
margins offset, in part, by increases in store occupancy costs and warehousing
costs.
The small increase in gross profit from service revenue, as a percentage
of service revenue, was due primarily to a decrease in service employee
benefits costs offset, in part, by an increase in service payroll and occupancy
costs.
The increase in selling, general and administrative expenses, as a
percentage of total revenues, was due primarily to an increase in store
expenses.
The 2% decrease in interest expense was due to lower interest rates
offset, in part, by higher debt levels incurred to fund the Company's store
expansion program.
The increase in income taxes, as a percentage of earnings before income
taxes and cumulative effect of change in accounting principle, was due
primarily to a 1% increase in the federal statutory tax rate from 34% to 35%.
The 20% increase in net earnings in fiscal 1993, as compared with fiscal
1992, was due to a substantial increase in gross profit from merchandise sales,
as a percentage of merchandise sales, offset, in part, by an increase in
selling, general and administrative expenses, as a percentage of total
revenues.
<PAGE>
EFFECTS OF INFLATION
The Company uses the LIFO method of inventory valuation. Thus, the cost
of merchandise sold approximates current cost. Although the Company
cannot accurately determine the precise effect of inflation on its operations,
it does not believe inflation has had a material effect on revenues or results
of operations during fiscal 1994, fiscal 1993 or fiscal 1992.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements arise principally from the need to finance
the acquisition, construction and equipping of new stores and to purchase
inventory. The Company opened 51 stores in fiscal 1994, 37 stores in fiscal
1993 and 29 stores in fiscal 1992. In fiscal 1994, with increased levels of
capital expenditures, coupled with cash utilized to acquire shares of the
Company's common stock for its benefits trust, the Company increased its debt
by $182,859,000. In fiscal 1993, with increased levels of capital expenditures
coupled with cash utilized to acquire treasury stock which was subsequently
transferred to its benefits trust, the Company increased its debt by
$77,525,000. In fiscal 1992, with substantial cash flows from operating
activities and the conversion of substantially all its $75,000,000 convertible
subordinated notes, the Company reduced its debt by $72,639,000.
<TABLE>
The following table indicates the Company's principal cash requirements
for the past three years.
<CAPTION>
(dollar amounts Fiscal Fiscal Fiscal
in thousands) 1994 1993 1992 Total
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash Requirements
Capital expenditures $185,072 $135,165 $ 78,025 $398,262
Net inventory additions(1) 87,248 26,487 24,001 137,736
- ----------------------------------------------------------------------------
Total $272,320 $161,652 $102,026 $535,998
- ----------------------------------------------------------------------------
Net cash provided by
operating activities
(excluding net
inventory additions) $124,474 $111,595 $100,415 $336,484
--------------------------------------------------------------------------
1 Net inventory additions include the increase in inventory less the net
change in checks outstanding and accounts payable.
</TABLE>
Inventories have increased in the past three years as the Company added a
net of 98 stores while stock-keeping-units per store rose during the period
from approximately 22,000 to approximately 25,000, many of which were higher
cost hard parts.
The Company currently plans to open approximately 75 stores in fiscal
1995. Management estimates that the cost to open 75 stores, coupled with
capital expenditures in existing stores, warehouses and offices during fiscal
1995 will be approximately $200,000,000. Funds required to finance the store
expansion are expected to come from operating activities with the remainder
provided by unused lines of credit, which totalled $96,800,000 at January 28,
1995, or from accessing traditional lending sources which may include the
public capital markets.
The Company's working capital increased to $121,858,000 at January 28,
1995 from $92,518,000 at January 29, 1994. The Company's long-term debt
increased, as a percentage of its total capitalization, to 39% at January 28,
1995 from 32% at January 29, 1994.
<PAGE>
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
The Pep Boys - Manny, Moe & Jack
Philadelphia, Pennsylvania
We have audited the accompanying consolidated balance sheets of
The Pep Boys - Manny, Moe & Jack and subsidiaries as of January 28, 1995
and January 29, 1994, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the three years in the
period ended January 28, 1995. Our audits also included the financial
statement schedule listed in the index at Item 14. These financial
statements and the financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of The Pep Boys - Manny, Moe & Jack
and subsidiaries at January 28, 1995 and January 29, 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended January 28, 1995 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
As discussed in Note A to the consolidated financial statements, in 1994 the
Company changed its method of accounting for postemployment benefits to conform
with Statement of Financial Accounting Standards No. 112.
Deloitte & Touche LLP
Philadelphia, Pennsylvania
March 20, 1995
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS The Pep Boys - Manny, Moe & Jack and Subsidiaries
(dollar amounts in thousands, except per share amounts)
<CAPTION>
January 28, January 29,
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash ......................................................... $ 11,748 $ 12,050
Accounts receivable, less allowance for uncollectible
accounts of $126 and $50..................................... 3,804 1,525
Merchandise inventories....................................... 366,843 305,872
Deferred income taxes......................................... 12,000 9,100
Other......................................................... 16,914 13,161
---------- ----------
Total Current Assets....................................... 411,309 341,708
Property and Equipment - at cost:
Land.......................................................... 215,623 183,601
Building and improvements..................................... 592,748 500,467
Furniture, fixtures and equipment............................. 283,317 229,730
Construction in progress...................................... 13,287 9,364
---------- ----------
1,104,975 923,162
Less accumulated depreciation and amortization................ 243,065 199,710
---------- ----------
Total Property and Equipment............................... 861,910 723,452
Other.............................................................. 17,800 13,358
---------- ----------
Total Assets $1,291,019 $1,078,518
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Checks outstanding............................................ $ 8,422 $ 22,193
Accounts payable.............................................. 91,742 104,248
Accrued expenses.............................................. 72,318 59,574
Short-term borrowings......................................... 97,200 54,500
Income taxes payable.......................................... - 1,278
Current maturities of long-term debt.......................... 19,769 7,397
---------- ----------
Total Current Liabilities.................................. 289,451 249,190
Long-Term Debt, less current maturities............................ 294,537 253,000
Deferred Income Taxes.............................................. 34,528 28,569
Convertible Subordinated Notes..................................... 86,250 -
Commitments
Stockholders' Equity:
Common Stock, par value $1 per share:
Authorized 500,000,000 shares;
Issued and outstanding 61,501,679 and 61,060,055............ 61,502 61,060
Additional paid-in capital.................................... 130,732 122,977
Retained earnings............................................. 454,288 388,653
---------- ----------
646,522 572,690
Less:
Treasury Stock - 948,200 shares, at cost...................... - 24,931
Cost of shares in benefits trust - 2,232,500 shares, at cost.. 60,269 -
---------- ----------
Total Stockholders' Equity................................. 586,253 547,759
---------- ----------
Total Liabilities and Stockholders' Equity $1,291,019 $1,078,518
========== ==========
<FN>
See notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS The Pep Boys - Manny, Moe & Jack and Subsidiaries
(dollar amounts in thousands, except per share amounts)
<CAPTION>
January 28, January 29, January 30,
Year ended 1995 1994 1993
- ------------------------------------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Merchandise Sales..................................... $1,211,536 $1,076,543 $1,008,191
Service Revenue....................................... 195,449 164,590 147,403
---------- ---------- ----------
Total Revenues........................................ 1,406,985 1,241,133 1,155,594
---------- ---------- ----------
Costs of Merchandise Sales............................ 847,158 768,682 735,779
Costs of Service Revenue.............................. 163,032 137,133 122,875
---------- ---------- ----------
Total Costs of Revenues............................... 1,010,190 905,815 858,654
---------- ---------- ----------
Gross Profit from Merchandise Sales................... 364,378 307,861 272,412
Gross Profit from Service Revenue..................... 32,417 27,457 24,528
---------- ---------- ----------
Total Gross Profit.................................... 396,795 335,318 296,940
Selling, General and Administrative Expenses.......... 247,872 214,710 194,160
---------- ---------- ----------
Operating Profit...................................... 148,923 120,608 102,780
Nonoperating Income................................... 3,490 3,601 3,015
Interest Expense...................................... 25,931 19,701 20,180
---------- ---------- ----------
Earnings Before Income Taxes and Cumulative Effect
of Change in Accounting Principle................... 126,482 104,508 85,615
Income Taxes.......................................... 46,474 38,996 31,036
---------- ---------- ----------
Earnings before Cumulative Effect of Change in
Accounting Principle................................ 80,008 65,512 54,579
Cumulative Effect of Change in Accounting Principle.. (4,300) - -
---------- ---------- ----------
Net Earnings $ 75,708 $ 65,512 $ 54,579
========== ========== ==========
Earnings per Share Before Cumulative Effect of Change
in Accounting Principle............................. $ 1.32 $ 1.06 $ .90
Cumulative Effect of Change in Accounting Principle... (.07) - -
---------- ---------- ----------
Net Earnings per Share $ 1.25 $ 1.06 $ .90
========== ========== ==========
<FN>
See notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY The Pep Boys - Manny, Moe & Jack and Subsidiaries
(dollar amounts in thousands, except per share amounts)
<CAPTION>
Common Stock
-------------------- Additional Retained Treasury Benefits Total Stock-
Shares Amount Paid-in Capital Earnings Stock Trust holders' Equity
---------- ------- --------------- --------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, February 1, 1992.................. 55,773,813 $55,774 $ 36,885 $285,855 $ - $ - $378,514
Net earnings............................... 54,579 54,579
Cash dividends ($.1375 per share).......... (8,173) (8,173)
Conversion of 6% convertible subordinated
notes into equity........................ 4,162,776 4,163 71,211 75,374
Exercise of stock options and related
tax benefits............................. 720,699 720 8,761 9,481
Dividend reinvestment plan................. 11,814 12 267 279
Acquisitions and transfers of 107,700
shares to employees' savings plan........ (291) (291)
---------- ------- --------------- -------- -------- -------- ---------------
Balance, January 30, 1993.................. 60,669,102 60,669 116,833 332,261 - - 509,763
Net earnings............................... 65,512 65,512
Cash dividends ($.15 per share)............ (9,120) (9,120)
Exercise of stock options and related
tax benefits............................. 377,569 378 5,744 6,122
Dividend reinvestment plan................. 13,384 13 291 304
Acquisitions and transfers of 80,000
shares to employees' savings plan........ 109 109
Acquisition of 948,200 shares of
treasury stock............................ (24,931) (24,931)
---------- ------- --------------- -------- --------- -------- ---------------
Balance, January 29, 1994.................. 61,060,055 61,060 122,977 388,653 (24,931) - 547,759
Net earnings............................... 75,708 75,708
Cash dividends ($.17 per share)............ (10,073) (10,073)
Exercise of stock options and related
tax benefits............................. 427,543 428 7,568 7,996
Dividend reinvestment plan................. 14,081 14 421 435
Acquisitions and transfers of 75,000
shares to employees' savings plan........ (122) 807 685
Acquisitions and transfers of 2,232,500
shares of treasury stock to benefits
trust.................................... (112) 24,124 (60,269) (36,257)
---------- ------- --------------- -------- --------- ---------- ---------------
Balance, January 28, 1995.................. 61,501,679 $61,502 $130,732 $454,288 $ - $(60,269) $586,253
========== ======= =============== ======== ========= ========== ===============
<FN>
See notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS The Pep Boys - Manny, Moe & Jack and Subsidiaries
(dollar amounts in thousands)
<CAPTION>
January 28, January 29, January 30,
Year ended 1995 1994 1993
- -------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings............................................................ $75,708 $ 65,512 $ 54,579
Adjustments to Reconcile Net Earnings to Net Cash
Provided by Operating Activities:
Depreciation and amortization........................................... 44,402 39,125 36,674
Cumulative effect of accounting change.................................. 4,300 - -
Increase (decrease)in deferred income taxes............................. 5,611 680 (2,266)
(Gain)loss from sales of assets......................................... (1,406) (297) 266
Increase in accounts receivable and other............................... (7,854) (2,023) (2,865)
Increase in merchandise inventories................................... (60,971) (10,693) (64,285)
(Decrease) increase in checks outstanding and accounts payable.......... (26,277) (15,794) 40,284
Increase in accrued expenses............................................ 6,683 8,325 9,256
(Decrease) increase in income taxes payable............................. (2,970) 273 4,771
----------- ----------- -----------
Total Adjustments................................................. (38,482) 19,596 21,835
----------- ----------- -----------
Net Cash Provided by Operating Activities................................. 37,226 85,108 76,414
----------- ----------- -----------
Cash Flows from Investing Activities:
Capital expenditures.................................................... (183,872) (135,165) (78,025)
Proceeds from sales of assets........................................... 3,437 1,494 738
Other, net.............................................................. 116 68 (1,993)
Net sales and maturities of marketable securities....................... - - 3,286
----------- ----------- -----------
Net Cash Used in Investing Activities..................................... (180,319) (133,603) (75,994)
----------- ----------- -----------
Cash Flows from Financing Activities:
Net borrowings under line of credit agreements.......................... 117,700 44,500 18,301
Reduction of long-term debt............................................. (22,291) (41,975) (16,177)
Net proceeds from issuance of notes..................................... 85,387 73,892 -
Acquisitions of treasury stock.......................................... (36,257) (24,931) -
Dividends paid.......................................................... (10,073) (9,120) (8,173)
Proceeds from exercise of stock options................................. 7,996 6,122 6,252
Proceeds from dividend reinvestment plan................................ 435 304 279
(Loss) gain on stock purchased for employees' savings plan.............. (106) 109 (291)
----------- ----------- -----------
Net Cash Provided by Financing Activities................................. 142,791 48,901 191
----------- ----------- -----------
Net (Decrease) Increase in Cash........................................... (302) 406 611
Cash at Beginning of Year................................................. 12,050 11,644 11,033
----------- ----------- -----------
Cash at End of Year....................................................... $11,748 $ 12,050 $ 11,644
=========== =========== ===========
....................................................................................................................................
Supplemental Disclosure of Cash Flow Information:
Income taxes paid....................................................... $46,384 $38,043 $28,531
Interest paid, net of amounts capitalized............................... 23,959 19,110 18,915
....................................................................................................................................
Supplemental Disclosure of Noncash Financing Activities:
Mortgage note assumed in property acquisition........................... $ 1,200 $ - $ -
Conversion of 6% convertible subordinated notes into equity............. - - 74,763
....................................................................................................................................
<FN>
See notes to consolidated financial statements
</TABLE>
<PAGE>
THE PEP BOYS- MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended January 28, 1995, January 29, 1994 and January 30, 1993
(dollar amounts in thousands, except per share amounts)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS The Pep Boys-Manny, Moe & Jack and Subsidiaries (the "Company") is
engaged principally in the retail sale of automotive parts and accessories,
automotive maintenance and service and the installation of parts through a
chain of 435 stores at January 28, 1995.
FISCAL YEAR END The Company's fiscal year ends on the Saturday nearest to
January 31. Fiscal years 1994, 1993 and 1992 each comprised 52 weeks.
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated.
MERCHANDISE INVENTORIES Merchandise inventories are valued at the lower of
cost (last-in, first-out method) or market. If the first-in, first-out method
of valuing inventories had been used, inventories would have been approximately
$15,319 and $15,452 higher at January 28, 1995 and January 29, 1994,
respectively.
PROPERTY AND EQUIPMENT Property and equipment are recorded at cost.
Depreciation and amortization are computed using the straight-line method over
the following estimated useful lives: building and improvements, 5 1/2 to 40
years; furniture, fixtures and equipment, 3 to 10 years.
CAPITALIZED INTEREST Interest on borrowed funds is capitalized in connection
with the construction of certain long-term assets. Capitalized interest
amounted to $1,850, $1,254 and $852 in fiscal years 1994, 1993 and 1992,
respectively.
SERVICE REVENUE Service revenue consists of the labor charge for installing
merchandise or maintaining or repairing vehicles, excluding the sale of any
installed parts or materials.
COSTS OF REVENUES Costs of merchandise sales include the cost of products
sold, buying, warehousing and store occupancy costs. Costs of service revenue
include service center payroll and related employee benefits and service center
occupancy costs. Occupancy costs include utilities, rents, real estate and
property taxes, repairs and maintenance and depreciation and amortization
expenses.
PENSION EXPENSE Annual pension expense is actuarially computed using the
"projected unit credit method" which attributes an equal portion of total
projected benefits to each year of employee service.
INCOME TAXES The Company uses the liability method of accounting for income
taxes in accordance with SFAS No. 109, "Accounting for Income Taxes." Under
the liability method, deferred income taxes are determined based upon enacted
tax laws and rates applied to the differences between the financial statement
and tax basis of assets and liabilities. The adoption of SFAS No. 109 on
February 2, 1992 did not have any effect on the Company's financial position or
results of operations.
<PAGE>
POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS Effective February 2, 1992 the
Company adopted SFAS No. 106, "Accounting for Postretirement Benefits Other
than Pensions." As a result of adopting this standard, the Company recognized
an expense of $12 in fiscal year 1992, which is the full impact of SFAS No. 106
on the Company's financial position and results of operations.
Effective January 30, 1994 the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." This statement establishes accrual
accounting standards for employer-provided benefits which cover former or
inactive employees after employment, but before retirement. As a result of
adopting this standard, the Company recognized a charge to earnings of $4,300,
net of income tax benefit of $2,552.
RECLASSIFICATIONS Certain reclassifications have been made to the prior years'
consolidated financial statements to conform to the current year's
presentation.
<PAGE>
NOTE B - DEBT
SHORT-TERM BORROWINGS The Company had short-term borrowings of $97,200 at
January 28, 1995 and $54,500 at January 29, 1994. The Company had short-term
lines of credit with several banks totalling $194,000 at January 28, 1995 and
$119,000 at January 29, 1994. The interest rates on these lines are negotiated
based upon market conditions. The weighted average interest rate on borrowings
from these lines was 4.7% during 1994 and 3.4% during 1993. The weighted
average interest rate on borrowings from these lines was 5.9% at January 28,
1995 and 3.4% at January 29, 1994. The average and maximum month end balances
on these borrowings were $78,488 and $97,200 in 1994 and $30,435 and $54,500 in
1993.
LONG-TERM DEBT
...............................................................................
Jan. 28, Jan. 29,
1995 1994
-------- --------
8 7/8% notes due April 15, 1996 .................... $110,650 $125,000
Indebtedness to banks under revolving
credit loan agreement dated
June 16, 1989 (a)................................ 100,000 35,000
6 5/8% notes due May 15, 2003 ...................... 75,000 75,000
9.3% senior notes (b)............................... 16,071 23,214
Other revolving lines of credit (c)................. 10,000 -
Mortgage notes payable at annual
interest rates ranging from 4.2%
to 7.5% (d)..................................... 2,585 2,183
-------- --------
314,306 260,397
Less current maturities.......................... 19,769 7,397
-------- --------
Total long-term debt................................ $294,537 $253,000
======== ========
.............................................................................
(a) The Company has a revolving credit agreement with seven major banks
providing for borrowings of up to $100,000. Funds may be drawn and repaid
anytime prior to June 30, 1995, at which time the total commitment, or any
portion thereof, may be converted, at the Company's election, into term
loans payable at 6.3% of the term commitment amount each quarter for the
next four years. At the Company's option, the interest rate on any loan
may be based on the prime rate, a "CD-based" rate, a "LIBOR-based" rate or
a negotiated rate based upon market conditions. The weighted average
interest rate was 6.1% at January 28, 1995 and 3.3% at January 29, 1994.
(b) Annual maturities for the 9.3% senior notes are as follows: $7,143 due in
each of 1995 and 1996 with the remaining balance of $1,785 due in 1997.
(c) The Company entered into a revolving credit agreement with a bank which
permits the Company to borrow an aggregate of $10,000. Upon the bank's
demand, this line is due and payable in 13 months. The interest rate on
this line, at the Company's election, is based on the prime rate, a "CD-
based" rate, a "LIBOR-based" rate or a negotiable rate based upon market
conditions. The weighted average interest rate was 6.2% at January 28,
1995.
(d) The weighted average interest rate on the mortgage notes payable was 6.9%
at January 28, 1995 and 5.3% at January 29, 1994. These notes, which
mature at various times through August 2016, are collateralized by land and
building with an aggregate carrying value of approximately $7,839 at
January 28, 1995.
<PAGE>
CONVERTIBLE SUBORDINATED NOTES On August 24, 1994 the Company sold $86,250 of
4% convertible subordinated notes. These notes are convertible by the holders
into the common stock of the Company anytime on or before September 1, 1999
(the maturity date) at a conversion price of $41 per share subject to
adjustment in certain events. The notes are redeemable, in whole or in part,
at the option of the Company at any time on or after September 15, 1997, at a
redemption price of 101% of the principal amount and at par on or after
September 1, 1998.
Several of the Company's debt agreements require the maintenance of certain
financial ratios and covenants. Approximately $116,409 of the Company's net
worth was not restricted by these covenants at fiscal year end. The Company is
in compliance with all debt covenants at January 28, 1995.
The annual maturities of all long-term debt for the next five years are $19,769
in 1995, $153,959 in 1996, $26,932 in 1997, $25,157 in 1998 and $98,920 in
1999. Any compensating balance requirements related to all revolving credit
agreements and debt were satisfied by balances available from normal business
operations.
The Company was contingently liable for outstanding letters of credit in the
amount of approximately $28,904 at January 28, 1995.
NOTE C - LEASE COMMITMENTS
The Company leases certain property and equipment under operating leases
which contain renewal and escalation clauses. Aggregate minimum rental
commitments for leases having noncancellable lease terms of more than one year
are approximately: 1995 - $16,811; 1996 - $15,827; 1997 - $15,015; 1998 -
$14,027; 1999 - $13,673; thereafter - $185,984. The present value of the
aggregate minimum rental commitments for operating leases, discounted at 10% is
approximately $124,626. Rental expenses incurred for operating leases in 1994,
1993 and 1992 were $18,474, $16,786 and $14,094, respectively.
NOTE D - STOCKHOLDERS' EQUITY
RIGHTS AGREEMENT On December 31, 1987, the Company distributed as a dividend
one common share purchase right on each of its common shares. The rights will
not be exercisable or transferable apart from the Company's common stock until
a person or group, as defined in the rights agreement, (dated December 17, 1987
and as amended on June 6, 1989), without the proper consent of the Company's
Board of Directors, acquires 20% or more, or makes an offer to acquire 30% or
more of the Company's outstanding stock, exclusive of stock holdings as of
December 17, 1987. When exercisable, the rights entitle the holder to purchase
one share of the Company's common stock for $55. Under certain circumstances,
including the acquisition of 20% of the Company's stock by a person or group,
the rights entitle the holder to purchase common stock of the Company or common
stock of an acquiring company having a market value of twice the exercise price
of the right. The rights do not have voting power and are subject to
redemption by the Company's Board of Directors for $.02 per right anytime
before a 20% position has been acquired and for 15 days thereafter, at which
time the rights become nonredeemable. The rights expire on December 31, 1997.
BENEFITS TRUST On April 29, 1994 the Company established a flexible employee
benefits trust with the intention of purchasing up to $75,000 worth of the
Company's common shares. The repurchased shares will be held in the trust and
will be used to fund the Company's existing benefit plan obligations including
healthcare programs, savings and retirement plans and other benefit
obligations. The trust will allocate or sell the repurchased shares over the
next 15 years to fund these benefit programs. As shares are released from the
trust, the Company will charge or credit additional paid-in capital for the
difference between the fair value of shares released and the original cost of
the shares to the trust. For financial reporting purposes the trust is
consolidated with the accounts of the Company. All dividend and interest
transactions between the trust and the Company are eliminated. As of January
28, 1995, the Company has repurchased 2,232,500 shares of its common stock at a
cost of $60,269,000 which is shown as "Cost of shares in benefits trust" on the
Company's consolidated balance sheets. <PAGE>
NOTE E - PENSION AND SAVINGS PLANS
The Company has a pension plan covering substantially all of its full-time
employees hired on or before February 1, 1992. Normal retirement age is 65.
Pension benefits are based on salary and years of service. The Company's
policy is to fund amounts as are necessary on an actuarial basis to provide
assets sufficient to meet the benefits to be paid to plan members in accordance
with the requirements of ERISA.
The actuarial computations using the "projected unit credit method" assumed
a discount rate on benefit obligations of 7.8% in 1994 and 8% in 1993 and 1992,
and an expected long-term rate of return on plan assets of 8.5%. The
assumption for annual salary increases over the average remaining service lives
of employees under the plan was 4% in 1994 and 1993, and 6.5% in 1992.
Variances between actual experience and assumptions for costs and returns on
assets are amortized over the remaining service lives of employees under the
plan.
Pension expense includes the following:
.............................................................................
Jan. 28, Jan. 29, Jan. 30,
1995 1994 1993
-------- -------- -------
Normal service costs................ $1,516 $ 1,478 $ 1,733
Interest cost on projected
benefit obligation................ 1,413 1,250 1,291
Actual return on plan assets........ (1,706) (1,361) (1,474)
Net amortization of transition
asset and unrecognized net loss... (214) (257) (256)
Prior service cost.................. 19 23 23
Asset gain (loss) deferred.......... 56 (217) -
-------- -------- --------
Total pension expense............... $1,084 $ 916 $ 1,317
======== ======== ========
.............................................................................
Pension plan assets are stated at fair market value and are composed primarily
of guaranteed investment contracts, group annuity contracts and money market
funds, all with major insurance companies and banking institutions, and
investments in the Company's common stock.
The following table sets forth the reconciliation of the plan's funded status
as of December 31 of each year. The actuarial present value of benefit
obligation assumed a discount rate of 8.5% at December 31, 1994 and 7.8% at
December 31, 1993.
.............................................................................
Dec. 31, Dec. 31,
1994 1993
---------- ----------
Actuarial present value of benefit
obligation:
Vested benefit obligation....................... $(13,885) $(14,218)
---------- ----------
Accumulated benefit obligation.................. $(14,840) $(15,506)
---------- ----------
Projected benefit obligation for
service rendered to date..................... $(17,912) $(18,918)
Plan assets at fair value....................... 20,625 19,637
---------- ----------
Assets in excess of projected
benefit obligation........................... 2,713 719
Unrecognized net asset (at date of transition).. (1,500) (1,714)
Unrecognized net gain from past
experience different from previous
assumption................................... (4,454) (1,204)
Unrecognized prior service cost................. 85 127
---------- ----------
Accrued pension expense
as of January 28, 1995 and
January 29, 1994, respectively............... $ (3,156) $ (2,072)
========== ==========
.............................................................................
<PAGE>
The Company has a 401(k) savings plan which covers all full-time employees who
are at least 21 years of age with one or more years of service. The Company
contributes the lesser of 50% of the first 6% of a participant's contributions
or 3% of the participant's compensation. The Company's savings plan
contribution expense was $2,563 in 1994, $2,277 in 1993, and $1,980 in 1992.
NOTE F - INCOME TAXES
The provision for income taxes includes the following:
.............................................................................
Jan. 28, Jan. 29, Jan. 30,
Year ended 1995 1994 1993
- -------------------------------- --------- --------- ---------
Current:
Federal...................... $39,210 $34,234 $29,739
State........................ 4,205 3,587 3,563
Deferred:
Federal...................... 2,865 2,527 (1,946)
State........................ 194 (1,352) (320)
--------- --------- ---------
$46,474 $38,996 $31,036
========= ========= =========
.............................................................................
A reconciliation of the statutory federal income tax rate to the effective
rate of the provision for income taxes follows:
.............................................................................
Jan. 28, Jan. 29, Jan. 30,
Year ended 1995 1994 1993
- -------------------------------- --------- --------- ---------
Statutory tax rate.............. 35.0% 35.0% 34.0%
State income taxes,
net of federal
tax benefits................. 2.3 2.3 2.5
Other, net...................... (0.6) - (0.2)
--------- --------- ---------
36.7% 37.3% 36.3%
========= ========= =========
.............................................................................
Deferred income taxes relate to the following temporary differences:
.............................................................................
Jan. 28, Jan. 29, Jan. 30,
Year ended 1995 1994 1993
- -------------------------------- --------- --------- ---------
Depreciation.................... $4,594 $ 2,293 $ 1,124
Inventories..................... 257 (2,244) (1,504)
Vacation accrual................ (259) (189) (216)
Pension accrual................. (406) (344) (1,178)
Casualty gain................... 1,289 544 -
Insurance....................... (2,459) 680 -
All other....................... 43 435 (492)
--------- --------- ---------
$3,059 $ 1,175 $(2,266)
========= ========= =========
.............................................................................
<PAGE>
The following are components of the net deferred tax accounts as of January
28, 1995:
...............................................................................
Federal State Total
------- ------ -------
Deferred tax assets:
Current....................... $16,288 $1,103 $17,391
Long-term..................... 12,995 882 13,877
Deferred tax liabilities:
Current....................... 5,049 342 5,391
Long-term..................... 45,333 3,072 48,405
.............................................................................
The following are components of the net deferred tax accounts as of January
29, 1994:
..............................................................................
Federal State Total
------- ------ -------
Deferred tax assets:
Current....................... $11,887 $ 807 $12,694
Long-term..................... 11,212 758 11,970
Deferred tax liabilities:
Current....................... 3,366 228 3,594
Long-term..................... 37,966 2,573 40,539
.............................................................................
Items that gave rise to significant portions of the deferred tax accounts
are as follows:
.............................................................................
Jan. 28, Jan. 29,
Year ended 1995 1994
- -------------------------- --------- --------
Deferred tax assets:
Inventories................. $6,421 $ 6,678
Vacation accrual............ 2,423 2,164
Other....................... 3,156 258
--------- --------
$12,000 $ 9,100
========= ========
Deferred tax liabilities:
Depreciation................ $32,628 $28,034
Other....................... 1,900 535
--------- --------
$34,528 $28,569
========= ========
..............................................................................
NOTE G --- NET EARNINGS PER SHARE
Net earnings per share is computed by dividing net earnings by the weighted
average number of common shares outstanding after reduction for treasury shares
and shares held in benefits trust and assuming exercise of dilutive stock
options computed by the treasury stock method using the average market price
during the period. Primary and fully diluted earnings per share are
essentially the same.
The weighted average number of shares and share equivalents used in
computing net earnings per share were: 60,565,000 in 1994, 61,891,000 in 1993
and 60,636,000 in 1992.
<PAGE>
NOTE H - STOCK OPTIONS AND AWARDS
Options to purchase the Company's common stock have been granted to key
employees and certain members of the Board of Directors. The option prices are
at least 100% of the fair market value of the common stock on the grant date.
Under the terms of the Company's Incentive Stock Option Plan adopted in
1982, options to purchase up to 3,600,000 shares of the Company's common stock
were authorized. Options granted prior to 1988 are exercisable from the date
of grant. Options granted in 1988 and thereafter are exercisable on the second
anniversary of the grant date. All options under this plan cannot be exercised
more than ten years from the grant date. As of May 21, 1990, no additional
options will be granted under this plan.
Under the terms of the Company's Nonqualified Stock Option Plans, adopted in
1984 and 1985, options to purchase up to 3,300,000 shares of the Company's
common stock were authorized. The options became exercisable over a five-year
period with one-fifth exercisable on the grant date and one-fifth on each
anniversary date for the four years following the grant date. Options granted
cannot be exercised more than ten and one-half years after the grant date. As
of May 21, 1990, no additional options will be granted under these plans.
On May 21, 1990, the stockholders approved the 1990 Stock Incentive Plan
which authorized the issuance of restricted stock and/or options to purchase up
to 1,000,000 shares of the Company's common stock. An additional 1,500,000
shares were authorized by stockholders on June 1, 1993. Under this plan, both
incentive and nonqualified stock options may be granted to eligible
participants. Incentive stock options are exercisable on the second
anniversary of the grant date and nonqualified options become exercisable over
a five-year period with one-fifth exercisable on the grant date and one-fifth
on each anniversary date for the four years following the grant date. Options
cannot be exercised more than ten years after the grant date. As of January
28, 1995, 644,439 shares remain available for grant.
The Company has reserved sufficient shares of common stock to meet its stock
option plans' obligations.
............................................................................
Stock option transactions are summarized as follows:
.............................................................................
Incentive Nonqualified
Fiscal 1993 Stock Options Stock Options
- -----------------------------------------------------------------------------
Outstanding--beginning of
year 830,041 2,776,390
Granted 234,100 322,585
Exercised (178,111) (191,750)
Canceled (73,050) (6,500)
------------- -------------
Outstanding--end of year 812,980 2,900,725
Exercisable--end of year 456,930 2,397,911
Price range of options exercised $3.97 to $14.98 $10.94 to $16.19
Price range of options
outstanding end of year $3.97 to $26.25 $3.97 to $23.13
.............................................................................
.............................................................................
Fiscal 1994
- -----------------------------------------------------------------------------
Outstanding--beginning of
year................................ 812,980 2,900,725
Granted................................ 272,050 197,301
Exercised.............................. (209,215) (216,587)
Canceled............................... (87,600) (6,875)
------------- -------------
Outstanding--end of year............... 788,215 2,874,564
Exercisable--end of year............... 399,215 2,445,716
Price range of options exercised.......$3.97 to $21.81 $3.97 to $27.94
Price range of options
outstanding end of year..............$6.19 to $34.88 $5.91 to $32.69
.............................................................................
<PAGE>
NOTE I - FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of the Company's financial instruments are as
follows:
January 28, 1995 January 29, 1994
---------------------- ---------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
---------- ---------- -------- ----------
Assets:
Cash..................... $ 11,748 $ 11,748 $ 12,050 $ 12,050
Accounts receivable...... 3,804 3,804 1,525 1,525
Liabilities:
Checks outstanding....... $ 8,422 $ 8,422 $ 22,193 $ 22,193
Accounts payable......... 91,742 91,742 104,248 104,248
Short-term borrowings.... 97,200 97,200 54,500 54,500
Long-term debt including
current maturities...... 314,306 309,228 260,397 275,430
Convertible Subordinated
Notes................... 86,250 83,231 - -
...............................................................................
CASH, ACCOUNTS RECEIVABLE, CHECKS OUTSTANDING, ACCOUNTS PAYABLE AND SHORT-TERM
BORROWINGS The carrying amounts approximate fair value because of the short
maturity of these items.
LONG-TERM DEBT INCLUDING CURRENT MATURITIES AND CONVERTIBLE SUBORDINATED NOTES
Interest rates that are currently available to the Company for issuance of debt
with similar terms and remaining maturities are used to estimate fair value for
debt issues that are not quoted on an exchange.
The fair value estimates presented herein are based on pertinent information
available to management as of January 28, 1995 and January 29, 1994. Although
management is not aware of any factors that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since those dates, and
current estimates of fair value may differ significantly from amounts presented
herein.
<PAGE>
<TABLE>
QUARTERLY FINANCIAL DATA (UNAUDITED) The Pep Boys - Manny, Moe & Jack and Subsidiaries
(dollar amounts in thousands, except per share amounts)
<CAPTION>
....................................................................................................................................
Net Cash Market Price
Year ended Total Gross Operating Net Earnings Dividends Per Share
Jan. 28, 1995 Revenues Profit Profit Earnings Per Share Per Share High Low
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1st Quarter $337,700 $90,527 $32,601 $17,557 (1) $.29 (1) $.0425 31 26
2nd Quarter 370,395 102,885 42,448 23,518 .39 .0425 33 3/4 29 1/4
3rd Quarter 363,229 100,195 38,311 20,640 .34 .0425 36 29 1/8
4th Quarter 335,661 103,188 35,563 18,293 .30 .0425 36 7/8 28 1/2
- ------------------------------------------------------------------------------------------------------------------------------------
....................................................................................................................................
Net Cash Market Price
Year ended Total Gross Operating Net Earnings Dividends Per Share
Jan. 29, 1994 Revenues Profit Profit Earnings Per Share Per Share High Low
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1st Quarter $299,147 $74,789 $25,093 $13,442 $.22 $.0375 26 1/2 20 3/4
2nd Quarter 329,146 87,752 34,226 19,102 .31 .0375 23 7/8 20 1/2
3rd Quarter 316,015 84,492 31,954 17,443 .28 .0375 24 7/8 20 3/4
4th Quarter 296,825 88,285 29,335 15,525 .25 .0375 27 1/2 23 1/4
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>1 Does not include a $4,300 ($.07 per share) charge from a cumulative effect of an accounting change for postemployment
benefits.
Under the Company's present accounting system, actual gross profit from merchandise sales can be determined only at the time of
physical inventory, which is taken at the end of the fiscal year. Gross profit from merchandise sales for the first, second and
third quarters is estimated by the Company based upon recent historical gross profit experience and other appropriate factors. Any
variation between estimated and actual gross profit from merchandise sales for the first three quarters is reflected in the fourth
quarter's results.
</TABLE>
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The material contained in the registrant's definitive proxy statement,
which will be filed pursuant to Regulation 14A not later than 120 days after
the end of the Company's fiscal year, (the "Proxy Statement") under the caption
"Election of Directors" is hereby incorporated herein by reference. The
information regarding executive officers called for by Item 401 of Regulation
S-K is included in Part I as Item A, in accordance with General Instruction
G(3) to Form 10-K.
ITEM 11 EXECUTIVE COMPENSATION
The material in the Proxy Statement under the caption "Executive
Compensation" other than the material under the caption "Executive Compensation
- - Report of Compensation Committee of the Board of Directors on Executive
Compensation" and "Executive Compensation - Performance Graph" is hereby
incorporated herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The material in the Proxy Statement under the caption "Share Ownership of
Certain Beneficial Owners and Management" is hereby incorporated herein by
reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The material in the Proxy Statement under the caption "Executive
Compensation - Certain Relationships and Related Transactions" is hereby
incorporated herein by reference.
<PAGE>
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a).
1. The following consolidated financial statements
of The Pep Boys - Manny, Moe & Jack are included
in Item 8.
Consolidated Balance Sheets - January 28, 1995
and January 29, 1994
Consolidated Statements of Earnings - Years
ended January 28, 1995, January 29, 1994 and
January 30, 1993
Consolidated Statements of Stockholders' Equity -
Years ended January 28, 1995, January 29, 1994
and January 30, 1993
Consolidated Statements of Cash Flows - Years
ended January 28, 1995, January 29, 1994
and January 30, 1993
Notes to Consolidated Financial Statements
2. The following consolidated financial statement
schedule of The Pep Boys - Manny, Moe & Jack
is included.
Schedule II Valuation and Qualifying
Accounts and Reserves
All other schedules have been omitted because they are not applicable or
not required or the required information is included in the consolidated
financial statements or notes thereto.
3. Exhibits
(3.1) Articles of Incorporation, Incorporated by reference from
as amended the Company's Form 10-K for the
fiscal year ended January 30,
1988.
(3.2) By-Laws, as amended Incorporated by reference from
the Registration Statement on
Form S-3 (File No. 33-39225).
(4.1) Indenture dated as of March 22, Incorporated by reference from
1991 between the Company and the Registration Statement on
Bank America Trust Company of Form S-3 (File No. 33-39225).
New York as Trustee, including
Form of Debt Security
(4.2) Indenture, dated as of August Incorporated by reference from the
31, 1994, between the Company Registration Statement on Form S-3
and First Fidelity Bank, (File No. 33-55115) filed August,
National Association as Trustee, 17, 1994.
including Form of Debenture
<PAGE>
(10.1) Medical Reimbursement Plan of Incorporated by reference from
the Company the Company's Form 10-K for the
fiscal year ended January 31,
1982.
(10.2)* 1982 Incentive Stock Option Plan Incorporated by reference from
of the Company the Company's Form 10-K for the
fiscal year ended January 31,
1982.
(10.3)* 1984 Non-Qualified Stock Option Incorporated by reference from
Plan the Company's Form 10-K for the
fiscal year ended February 2,
1985.
(10.4)* 1985 Non-Qualified Stock Option Incorporated by reference from
Plan the Company's Form 10-K for the
fiscal year ended February 2,
1985.
(10.5) Rights Agreement dated as of Incorporated by reference from
December 17, 1987 between the the Company's Form 8-K dated
Company and the Philadelphia December 17, 1987.
National Bank
(10.6)* Directors' Deferred Compensation Incorporated by reference from
Plan, as amended the Company's Form 10-K for the
fiscal year ended January 30,
1988.
(10.7)* Form of Employment Agreement, as Incorporated by reference from
amended, dated as of December 12, the Company's Form 10-K for the
1989 fiscal year ended February 3,
1990.
(10.8) Loan Agreement dated as of Incorporated by reference from
June 28, 1988 related to 9.33% the Company's Form 10-K for the
Senior Notes due May 30, 1998 fiscal year ended January 28,
1989.
(10.9)* Amendment No. 1 to the 1985 Incorporated by reference from
Non-Qualified Stock Option Plan the Company's Form 10-K for the
fiscal year ended January 28,
1989.
(10.10)* Amendment No. 1 to the 1982 Incorporated by reference from
Incentive Stock Option Plan the Company's Form 10-K for the
fiscal year ended January 28,
1989.
(10.11) Amendment dated June 6, 1989 Incorporated by reference from
to Rights Agreement dated as of the Company's Report on Form 8
December 17, 1987 between the filed July 6, 1989.
Company and the Philadelphia
National Bank
(10.12) Dividend Reinvestment and Stock Incorporated by reference from
Purchase Plan dated January 4, the Registration Statement on
1990 Form S-3 (File No. 33-32857)
filed January 5, 1990.
<PAGE>
(10.13) Credit Agreement dated as of Incorporated by reference from
June 16, 1989 between the the Company's Form 10-K for the
Company and the Chase Manhattan fiscal year ended February 3,
Bank (Agent) 1990.
(10.14)* Executive Supplemental Pension Incorporated by reference from
Plan amended and restated the Company's Form 10-K for the
effective January 1, 1988 fiscal year ended February 3,
1990.
(10.15)* 1990 Stock Incentive Plan Incorporated by reference from
the Company's Form 10-Q for the
quarter ended November 3, 1990.
(10.16)* Amendment No. 1 to 1990 Stock Incorporated by reference from
Incentive Plan the Company's Form 10-K for the
fiscal year ended February 1,
1992.
(10.17)* The Pep Boys - Manny, Moe & Incorporated by reference from
Jack Trust Agreement for the the Company's Form 10-K for the
Executive Supplemental Pension fiscal year ended February 1,
Plan and Certain Contingent 1992.
Compensation Arrangements,
dated as of February 13, 1992
(10.18)* Amendment to the Executive Incorporated by reference from
Supplemental Pension Plan the Company's Form 10-K for the
(amended and restated effective fiscal year ended February 1,
January 1, 1988), dated as of 1992.
February 13, 1992
(10.19)* Consulting and Retirement Incorporated by reference from
Agreement by and between the the Company's Form 10-K for the
Company and Benjamin Strauss, fiscal year ended February 1,
dated as of February 2, 1992 1992.
(10.20)* Amendment No. 2 to the 1982 Incorporated by reference from
Incentive Stock Option Plan the Company's Form 10-Q for the
quarter ended October 31, 1992.
(10.21)* Amendment No. 3 to the Non- Incorporated by reference from
Qualified Stock Option Plan the Company's Form 10-Q for the
quarter ended October 31, 1992.
<PAGE>
(10.22)* Amendment No. 2 to the 1990 Incorporated by reference from
Stock Incentive Plan the Company's Form 10-Q for the
quarter ended October 31, 1992.
(10.23)* President's Merit Award Program Incorporated by reference from
of the Company, as amended, the Company's Form 10-K for the
dated as of April 1, 1992 year ended January 30, 1993.
(10.24) Flexible Employee Benefits Trust Incorporated by reference from the
Company's Form 8-K dated May 6,
1994
(10.25)* The Pep Boys- Manny, Moe & Jack
Pension Plan, as amended, dated
December 28, 1994
(10.26)* The Pep Boys Savings Plan, as
amended, dated December 28, 1994
(10.27)* Executive Incentive Bonus Plan
of the Company, as amended and
restated as of March 30, 1994.
(11) Computation of Earnings per Share
(12) Computation of Ratio of Earnings
to Fixed Charges
(21) Subsidiaries of the Company
(23) Independent Auditors' Consent
(27) Financial Data Schedules
(b) No Form 8-K was filed for the fourth quarter of the year ended
January 28, 1995.
*Management contract or compensatory plan or arrangement.
<PAGE>
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.
THE PEP BOYS - MANNY, MOE & JACK
(Registrant)
Dated: April 27, 1995 by: /s/Michael J. Holden
--------------------------
Michael J. Holden
Senior Vice President and
Chief Financial Officer and
Treasurer
<PAGE>
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.
SIGNATURE CAPACITY DATE
/s/Mitchell G. Leibovitz Chairman of the Board, President April 24, 1995
- ------------------------ and Chief Executive Officer ----------------
Mitchell G. Leibovitz (Principal Executive Officer)
/s/Michael J. Holden Senior Vice President - Chief April 27, 1995
- ------------------------ Financial Officer & Treasurer ----------------
Michael J. Holden (Principal Financial and
Accounting Officer)
/s/Lennox K. Black Director April 24, 1995
- ------------------------ ----------------
Lennox K. Black
/s/Pemberton Hutchinson Director April 24, 1995
- ------------------------ ----------------
Pemberton Hutchinson
/s/Bernard J. Korman Director April 24, 1995
- ------------------------ ----------------
Bernard J. Korman
/s/J. Richard Leaman, Jr. Director April 25, 1995
- ------------------------ ----------------
J. Richard Leaman, Jr.
/s/Malcolmn D. Pryor Director April 25, 1995
- ------------------------ ----------------
Malcolmn D. Pryor
/s/Lester Rosenfeld Director April 24, 1995
- ------------------------ ----------------
Lester Rosenfeld
/s/Benjamin Strauss Director April 25, 1995
- ------------------------ ----------------
Benjamin Strauss
/s/Myles H. Tanenbaum Director April 25, 1995
- ------------------------ ----------------
Myles H. Tanenbaum
/s/David V. Wachs Director April 25, 1995
- ------------------------ ----------------
David V. Wachs
<PAGE>
FINANCIAL STATEMENT SCHEDULES FURNISHED PURSUANT TO THE REQUIREMENTS OF FORM
10-K
<PAGE>
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
<CAPTION>
(in thousands)
- ----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ----------------------------------------------------------------------------------------------------------------------------------
Additions Additions
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Descriptions Period Expenses Accounts Deductions-* Period
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Year Ended January 28, 1995 $50 $114 $ - $38 $126
- ----------------------------------------------------------------------------------------------------------------------------------
Year Ended January 29, 1994 $85 $4 $ - $39 $50
- ----------------------------------------------------------------------------------------------------------------------------------
Year Ended January 30, 1993 $246 $41 $ - $202 $85
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
*Uncollectible accounts written off.
/TABLE
<PAGE>
INDEX TO EXHIBITS
(10.25) The Pep Boys- Manny, Moe & Jack Pension Plan
(10.26) The Pep Boys Savings Plan
(10.27) Executive Incentive Bonus Plan
(11) Computation of Earnings per Share
(12) Computation of Ratio of Earnings to Fixed Charges
(21) Subsidiaries of the Company
(23) Independent Auditors' Consent
(27) Financial Data Schedules
THE PEP BOYS - MANNY, MOE & JACK
PENSION PLAN
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
INTRODUCTION 1
DEFINITIONS 3
2.1 Definitions 3
2.2 Construction 18
PARTICIPATION AND SERVICE 19
3.1 Eligibility to Participate 19
3.2 Cessation of Participation 19
3.3 Changes in Status and Transfers to Affiliates 20
3.4 Reemployment 21
PLAN BENEFITS 22
4.1 Normal Retirement 22
4.2 Deferred Retirement 23
4.3 Early Retirement 24
4.4 Disability Benefit 24
4.5 Termination Benefit 24
4.6 Form of Payments 25
4.7 Death Prior to the Annuity Starting Date 29
4.8 Form of Pension Payments 30
4.9 Restrictions and Limitations on Distributions 30
4.10 Restrictions on Death Distributions 31
4.11 Cash-Out of Small Benefits 32
4.12 Rollovers from the Plan 33
4.13 Payment to an Alternate Payee 33
VESTING 34
5.1 Vesting Schedule 34
5.2 Forfeitures 34
5.3 Reemployment 34
<PAGE>
FUNDING 36
6.1 Contributions by Employer 36
6.2 Insurance 36
6.3 Investment Policies 36
AMENDMENT AND TERMINATION 38
7.1 Amendments Generally 38
7.2 Amendments to Vesting Schedule 38
7.3 Termination, Discontinuance of Contributions or
Curtailment 39
7.4 Distributions on Termination 39
7.5 Action by Company 39
ADMINISTRATION 40
8.1 Duties and Responsibilities of Fiduciaries;
Allocation of Responsibility Among Fiduciaries for
Plan and Fund Administration 40
8.2 Allocation of Duties and Responsibilities 41
8.3 Expenses 41
8.4 Claims Procedure 41
8.5 Records and Reports 43
8.6 Other Powers and Duties 44
8.7 Rules and Decisions 45
8.8 Authorization of Benefit Payments 45
8.9 Application and Forms for Benefits 45
8.10 Facility of Payment 45
8.11 Indemnification 46
8.12 Resignation or Removal of the Administrative Committee
46
LIMITATIONS ON CONTRIBUTIONS AND BENEFITS 48
9.1 Determination by Internal Revenue Service 48
9.2 Conditional Contributions 48
9.3 Twenty-Five HCE Limitation 48
9.4 General Limitation on Benefits 49
9.5 Suspension of Benefits on Reemployment 49
MERGER, TRANSFER OR CONSOLIDATION OF PLANS 52
10.1 Plan Assets 52
<PAGE>
MISCELLANEOUS 53
11.1 Mandatory Commencement of Benefits 53
11.2 Nonguarantee of Employment 53
11.3 Rights to Fund Assets 53
11.4 Nonalienation of Benefits 54
11.5 Inability to Locate Payee 54
11.6 Applicable Law 54
DETERMINATION OF TOP-HEAVY STATUS 55
12.1 General 55
12.2 Top-Heavy Plan 55
12.3 Super Top-Heavy Plan 56
12.4 Cumulative Accrued Benefits and Cumulative Accounts 56
12.5 Definitions 56
12.6 Minimum Annual Retirement Benefit 57
12.7 Vesting 58
12.8 Defined Benefit and Defined Contribution Plans 59
ERISA TRANSITION PROVISIONS 60
13.1 Scope and Purpose 60
13.2 Calculation of Benefit 60
13.3 Form of Payment of Normal, Late, Early and Disability
Benefit 60
13.4 Payment of Vested Benefits 62
13.5 Death Benefits 63
13.6 Transfer of Benefit 64
13.7 Actuarial Equivalency 66
<PAGE>
THE PEP BOYS - MANNY, MOE & JACK PENSION PLAN
INTRODUCTION
THE PEP BOYS - MANNY, MOE & JACK Pension Plan (the "Plan") is
established and maintained in accordance with the terms of this
instrument. The assets of this Plan are held by the Trustee in
accordance with the terms of the Trust Agreement, which is
considered to be an integral part of this Plan. Except as
provided herein or in the Trust Agreement, the Trustee has the
exclusive authority to manage and control the assets of this
Plan. Except as otherwise noted herein, this amended and
restated version of the Plan applies to those Participants who
are credited with an Hour of Service with the Employer on or
after January 1, 1989.
The Plan is further amended effective January 1, 1989 to
comply with the Tax Reform Act of 1986, as amended, ("TRA 86")
except for those provisions that became effective in years prior
to 1989 as described below, or as specifically noted in the Plan.
(1) Titles XI and XVIII of TRA '86;
(2) Subtitle C of Title IX of OBRA '86;
(3) Optional Form of Benefit Regulations;
(4) Temporary regulations under section 414(q) and (s);
(5) Proposed regulations under sections 401(a)(9);
(6) Notice 87-20, regarding amendments to sections
411(a)(11)(B) and 417(e)(3) of the Code made by section
1139 of TRA '86; and
(7) Notice 87-21, regarding changes to section 415 of the Code
made by TRA '86;
The rights of those individuals (or their beneficiaries) who
terminated employment prior to January 1, 1989, in and to their
benefits payable from the Plan, are governed by the terms and
conditions of the Plan in effect prior to such date.
<PAGE>
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. When used in this Plan, the following
initially capitalized words and phrases shall have the meanings
indicated herein:
ACCRUED ANNUAL PENSION means as of any applicable date, the
pension determined in accordance with the provisions of Section
4.1 that the Participant would be entitled to receive commencing
on his Normal Retirement Date based on his Compensation and Years
of Credited Service through the applicable date. An Accrued
Annual Pension to which a Former Participant is entitled shall
not be increased or decreased by reason of any amendments to the
Plan adopted on or after the date he ceased to be a Participant
or the date of his Termination.
ACTUARIAL EQUIVALENT(CE) OR ACTUARIALLY EQUIVALENT means a
benefit of equivalent current value to the benefit which would
otherwise have been provided on the basis of the following
assumptions and determined as of the applicable Annuity Starting
Date:
For lump sum distributions, the UP-1984 Table of Mortality and
the immediate or deferred interest rate, as applicable, used by
the Pension Benefit Guaranty Corporation (in effect on January 1
of the Plan Year in which the distribution occurs) for valuing
benefits in pay status for plans terminating at the same time,
shall be used. The Actuarial Equivalent value of a lump sum
distribution that is payable to a Former Participant prior to
Early Retirement Date, shall be the Actuarial Equivalent value of
the benefit determined as of Normal Retirement Date (using the
applicable PBGC rate). For conversions under Section 4.6(b), for
optional forms paid according to Section 4.6(e), early retirement
under Section 4.3, conversions with respect to annuity payments
made pursuant to qualified domestic relations orders and
adjustments under Section 9.4, the UP-1984 Table of Mortality at
7 1/2 percent interest, shall be used. For purposes of establishing
present value for Top-Heavy determinations, interest at 7 1/2% shall
be used and the UP-1984 Table of Mortality.
ACTUARY means an enrolled actuary qualifying as such in
accordance with Title III of ERISA or any firm or entity
employing such enrolled actuaries.
ADMINISTRATIVE COMMITTEE means the individual or group of
individuals appointed to manage the administration of this Plan.
AFFILIATE means any employer which has not adopted this Plan
and is not a Participating Employer, but which is included as a
member with the Employer in a controlled group of corporations,
or which is a trade or business (whether or not incorporated)
included with the Employer in a brother-sister group or combined
group of trades or businesses under common control or which is a
member of an affiliated service group in which the Employer is a
member, determined in each instance in accordance with the
appropriate sections of the Code.
ANNUITY STARTING DATE means the first day on which benefits
are payable as an annuity or in the case of benefits not payable
as an annuity, the first day on which all events have occurred
which entitle the Participant or Former Participant to the
benefits.
BENEFICIARY means the individual or entity designated to
receive any death benefits payable under the Plan.
Anything herein to the contrary notwithstanding, in the case
of a married Participant or Former Participant, no Beneficiary
designation which designates a Beneficiary other than the
Participant's Spouse shall be effective unless such designation
constitutes a valid waiver of the qualified joint and survivor
annuity. In the event that the Participant failed to designate a
Beneficiary or is predeceased by all designated primary and
contingent Beneficiaries, death benefits under this Plan shall be
payable to the following classes of recipients, each class to
take to the exclusion of all subsequent classes, and all members
of each class to share equally:
(1) Surviving Spouse;
(2) lineal descendants (including adopted children and
step-children), by right of representation;
(3) surviving parents;
(4) surviving brothers and sisters;
(5) Participant's estate.
BOARD OF DIRECTORS means the board of directors of the
Company.
BREAK IN SERVICE OR ONE-YEAR BREAK IN SERVICE means a Plan
Year during which an individual is not credited with more than
500 Hours of Service. An Eligible Employee will not be deemed to
have incurred a Break in Service if he is absent from employment
by reason of (1) pregnancy of the Eligible Employee, (2) birth of
a child of the Eligible Employee, (3) placement of a child in
connection with the adoption of the child by an individual, or
(4) caring for the child during the period immediately following
the birth or placement for adoption. During the period of
absence the Eligible Employee shall be credited with the number
of hours that would be generally credited but for such absence or
if the general number of work hours is unknown, eight Hours of
Service for each normal workday during the leave (whether or not
approved). These hours shall be credited to the Plan Year in
which the leave of absence commences if crediting of such hours
is required to prevent the occurrence of a Break in Service in
such computation period, and in other cases in the immediately
following Plan Year. No more than 501 Hours of Service shall be
credited under this paragraph for any single continuous period
(whether or not such period occurs in a single computation
period).
CODE OR IRC means the Internal Revenue Code of 1986, as
amended, and includes any regulations issued thereunder.
COMPANY means the PEP BOYS - MANNY, MOE & JACK, a Pennsylvania
corporation.
COMPENSATION means, effective with respect to any Participant
who is credited with an Hour of Service on or after January 1,
1993, for any Plan Year, total income reported to the Participant
as wages for the Employee on Box 1 of Form W-2 (Box 10 prior to
1993) less any expense reimbursements and taxable fringe
benefits, including any amounts that the Participant has
authorized the Employer to make on his behalf to a 401(k) plan as
elective deferrals or to a cafeteria plan under Section 125 of
the Code.
Effective January 1, 1989, with respect to Participants who
Terminated employment on or after that date, Compensation shall
be limited to the amount permitted under the applicable
limitation of Section 401(a)(17) of the Code, as amended, in
effect for any Plan Year (adjusted each year to reflect such
higher amount as may be permitted each year under the Code).
Notwithstanding the foregoing, in applying the limits imposed by
Section 401(a)(17) for Plan Years beginning on or after January
1, 1989 and ending on or before January 1, 1994, with respect to
Participants who Terminated employment on or after January 1,
1989, Compensation up to $235,840 may be taken into account for
each Plan Year. Effective January 1, 1994, Compensation shall be
limited to $150,000 (adjusted each year to reflect such higher
amount as may be permitted each year under the Code).
In determining the Compensation of a Participant who is a five
percent owner or Highly Compensated Employee in the group
consisting of the ten Highly Compensated Employees paid the
greatest Compensation during the Plan Year, (the "limited
individuals"), then with respect to any individuals in such
Participant's family,
(i) such individual shall not be considered to be a separate
Participant, and
(ii) any Compensation paid to such individual (and any
applicable contribution or benefit on behalf of such
individual) shall be treated as if it were paid (or on
behalf of) to the five percent owner or Highly
Compensated Employee.
The term "family" shall include only the Spouse of the
Participant and any lineal descendants of the Participant who
might have not attained age 19 before the last day of the Plan
Year.
The term "family unit" shall include the limited individuals
and family.
The maximum amount of Compensation permitted to be taken into
account under Section 401(a)(17) of the Code for any Plan Year,
shall be allocated among the members of the family unit in
proportion to each member's Compensation for the Plan Year.
DIRECT ROLLOVER means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
DISABILITY means a medically determinable physical or mental
impairment of a permanent nature which prevents a Participant
from performing his customary employment duties without
endangering his health.
DISTRIBUTEE means a Participant or Former Participant. In
addition, the Participant's or Former Participant's Spouse or
former Spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the
Code, are Distributees with regard to the interest of the Spouse
or former Spouse.
EARLY RETIREMENT AGE means the date on which a Participant has
attained age 55 and completed five Years of Credited Service.
EARLY RETIREMENT DATE means the first day of any month
following attainment of his Early Retirement Age.
EFFECTIVE DATE of this amended and restated Plan means January
1, 1989, except as otherwise provided in the Plan. The original
effective date of the Plan is December 15, 1942.
ELIGIBLE EMPLOYEE means any individual employed by the
Employer. Eligible Employee shall not include any individual who
qualifies as a Leased Employee and any individual whose terms and
conditions of employment are covered by a collective bargaining
agreement that does not provide for participation in the Plan.
Notwithstanding the foregoing, (i) any individual initially
hired or rehired by the Employer or an Affiliate on or after
February 2, 1992, shall not be deemed to be an Eligible Employee
and shall not be eligible to participate or resume participation
in the Plan; and (ii) any individual whose employment status as
of February 1, 1992, is covered by a collective bargaining
agreement that does not provide for participation in the Plan and
whose employment status changes on or after February 2, 1992 so
that he (A) is no longer covered by a collective bargaining
agreement that does not provide for participation in the Plan,
and (B) would otherwise be eligible to participate in the Plan,
shall not be deemed to be an Eligible Employee and shall not be
eligible to participate in the Plan.
ELIGIBLE RETIREMENT PLAN means: (i) an individual retirement
account described in Section 408(a) of the Code; (ii) an
individual retirement annuity described in Section 408(b) of the
Code; (iii) an annuity plan described in Section 403(a) of the
Code; or (iv) 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.
<PAGE>
ELIGIBLE ROLLOVER DISTRIBUTION means any distribution of all
or any portion of the balance to the credit of the Distributee,
but does not include: any distribution that is one of a series
of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of
the Distributee and the Distributee's designated Beneficiary, or
for a specified period of ten years or more; any distribution to
the extent such distribution is required under Section 401(a)(9)
of the Code; and the portion of any distribution that is not
includable in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities) and any other distribution that does not
qualify as an Eligible Rollover Distribution, as defined in
Section 401(a)(31)(C) of the Code.
EMPLOYEE means any individual employed in a common law
employment arrangement with the Employer. A Leased Employee
shall be deemed to be an Employee.
EMPLOYER means the Company and any Participating Employer,
which with the approval of the Board of Directors, has adopted
this Plan.
ENTRY DATE means January 1 and July 1 of each Plan Year.
ERISA means the Employee Retirement Income Security Act of
1974, as amended, and includes any regulations issued thereunder.
FINAL AVERAGE COMPENSATION means the average monthly
Compensation for the five consecutive Plan Years, out of the last
ten Plan Years that a Participant completes, coincident with or
prior to the date of determination (or actual period of
employment if shorter than five years) in which a Participant was
employed by the Employer for which such average is the highest.
FORMER PARTICIPANT means any Eligible Employee, who was a
Participant in the Plan and with respect to whom a benefit
remains payable from the Plan.
FUND means the trust or account consisting of the assets of
the Plan.
HIGHLY COMPENSATED EMPLOYEE means:
(a) employees who were five percent owners, as defined in
section 416(i)(1)(iii) of the Code, at any time during the
determination year or the look-back year;
(b) Employees with Compensation greater than $75,000 (as
adjusted at the same time and in the same manner as
Section 415(d) of the Code) during the look-back year;
(c) Employees with Compensation greater than $50,000 (as
adjusted at the same time and in the same manner as
Section 415(d) of the Code) during the look-back year and
who are in the top-paid group for the look-back year;
(d) Employees who are officers during the look-back year and
who have compensation in the look-back year greater than
150% of the contribution limit in Section 415(c) of the
Code; and
(e) Employees who are both described in paragraph (b), (c), or
(d) above when these paragraphs are modified to substitute
the determination year for the look-back year and one of
the 100 Employees who receive the highest compensation
from the Employer during the determination year.
(1) The top-paid group shall consist of the top 20% of
active Employees, ranked on the basis of compensation received
from the Employer during the year excluding Employees with less
than 6 months of service, part-time Employees (less than 17 1/2
hours per week or less than 6 months a year), Employees who are
not yet age 21 and nonresident aliens. These Employees shall not
be excluded for purposes of identifying the particular Employees
in the top-paid group. If the Plan being tested covers only non-
collective bargaining Employees, and collective bargaining
Employees constitute 90 percent or more of the Employer's
Employees, then such collective bargaining Employees shall be
excluded both from the total number of active Employees and the
identification of particular Employees in the top-paid group.
The top-paid group shall not include Employees who perform no
service during the year.
(2) For purposes of determining whether an Employee is
highly compensated, the determination year is the Plan Year for
which the determination is being made. The look-back year shall
be the preceding Plan Year. Notwithstanding the foregoing, the
Administrative Committee shall have the authority to make the
look-back year be the calendar year ending with or within the
current Plan Year of determination. If the Administrative
Committee makes this election, it shall be deemed to apply to all
plans of the Employer and Affiliates.
(3) The number of officers shall be limited to the lesser
of (a) 50, or (b) the greater of 3 or 10 percent of all
Employees. If the Employer does not have at least one officer
whose compensation is in excess of 150% of the limit in Section
415(c) of the Code, then the highest paid officer of the Employer
shall be treated as a Highly Compensated Employee.
(4) For purposes of defining Highly Compensated Employee,
compensation means any permissible definition of compensation as
defined in Section 415(c)(3) of the Code, including elective
contributions. The dollar limits are those for the calendar year
in which the determination or look-back year begins.
(5) The Plan shall take into account Employees of all
employers aggregated under Sections 414(b), (c), (m) and (o) of
the Code, in determining who is highly compensated. Also, for
this purpose, the term "Employee" shall include Leased Employees.
HOURS OF SERVICE means:
(a) PERFORMANCE OF DUTIES. The actual hours for which an
Eligible Employee is paid or entitled to be paid for the
performance of duties by the Employer;
(b) NONWORKING PAID TIME. Each hour for which an Eligible
Employee is paid or entitled to be paid by the Employer on
account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity,
disability, layoff, jury duty, military duty or leave of absence;
provided, however, no more than 501 Hours of Service shall be
credited to an Eligible Employee on account of any single
continuous period during which he performed no duties; and
provided further that no credit shall be given for payments made
or due under a plan maintained solely for the purpose of
complying with applicable workers' or unemployment compensation
or for payments which solely reimburse an Eligible Employee for
medical or medically related expenses incurred by the Eligible
Employee;
(c) BACK PAY. Each hour for which pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Employer; provided, however, Hours of Service credited under
paragraphs (a) and (b) above shall not be recredited by operation
of this paragraph;
(d) EQUIVALENCIES. The Administrative Committee shall
have the authority to adopt any of the following equivalency
methods for counting Hours of Service that are permissible under
regulations issued by the Department of Labor: (1) Working Time;
(2) Periods of Employment or (3) Earnings.
The adoption of any equivalency method for counting Hours of
Service shall be evidenced by a certified resolution of the
Administrative Committee, which shall be attached to and made
part of the Plan. Such resolution shall indicate the date from
which such equivalency shall be effective.
(e) MISCELLANEOUS. Unless the Administrative Committee
directs otherwise the methods of determining Hours of Service
when payments are made for other than the performance of duties
and of crediting such Hours of Service to Plan Years set forth in
Regulations Sec. 2530.200b-2(b) and (c) promulgated by the Secretary
of Labor, shall be used hereunder and are incorporated by
reference into the Plan.
Participants on military leaves of absence who are not
directly or indirectly compensated or entitled to be compensated
by the Employer while on such leave shall be credited with Hours
of Service as required by Section 9 of the Military Selective
Service Act.
Notwithstanding any other provision of this Plan to the
contrary, an Eligible Employee shall not be credited with Hours
of Service more than once with respect to the same period of
time.
INVESTMENT MANAGER means an investment adviser, bank or
insurance company which meets the requirements of Section 3(38)
of ERISA.
LEASED EMPLOYEE means any person who is not an Employee of the
Employer and who provides services to the Employer if:
(a) such services are provided pursuant to an agreement
between the Employer and any leasing organization;
(b) such person has performed such services for the
Employer (or for the Employer and Affiliates) on a substantially
full-time basis for a period of at least one year; and
(c) such services are of a type historically performed in
the business field of the Employer by Employees.
Notwithstanding the foregoing, a person shall not be deemed to
be a Leased Employee if he is covered by a plan maintained by the
leasing organization and Leased Employees (as determined without
regard to this paragraph) do not comprise more than 20% of the
Employer's nonhighly compensated workforce. Such plan must be a
money purchase pension plan providing for nonintegrated employer
contributions of ten percent of compensation and also providing
for immediate participation and vesting.
LIMITATION YEAR means the Plan Year.
NORMAL ANNUAL PENSION means the lifetime annual pension
determined in accordance with the provisions of Section 4.1.
NORMAL RETIREMENT AGE means the Participant's 65th birthday.
NORMAL RETIREMENT DATE means the first day of the month
coincident with or next following Normal Retirement Age.
PARTICIPANT means an Eligible Employee participating in the
Plan in accordance with the provisions of Article III.
PARTICIPATING EMPLOYER means any direct or indirect subsidiary
of the Company or any other entity designated by the Board of
Directors, which has adopted this Plan with the approval of the
Company. Participating Employers shall be limited to those
direct or indirect subsidiaries of the Company that would be
Affiliates except for the fact that they have adopted the Plan.
PLAN means THE PEP BOYS - MANNY, MOE & JACK Pension Plan, as
herein set forth and as it may be amended hereafter. This Plan
also includes the PEP BOYS - MANNY, MOE & JACK of California
Pension Plan, the assets and liabilities of which were merged
with and into this Plan, effective as of December 31, 1987.
PLAN YEAR means the period from January 1 through December 31
of each year.
SPOUSE (SURVIVING SPOUSE) means the spouse or surviving spouse
of the Participant or Former Participant; provided that a former
spouse will be treated as the spouse or surviving spouse to the
extent provided under a qualified domestic relations order as
described in Section 414(p) of the Code.
TERMINATED (OR TERMINATION) means a termination of employment
with the Employer or with an Affiliate for any reason other than
a transfer of employment from the Employer to an Affiliate or
from an Affiliate to another Affiliate.
TRUST AGREEMENT means the agreements forming a part of the
Plan pursuant to which the assets of the Plan are held and
managed by the Trustee.
TRUSTEE means the trustee or trustees named in the Trust
Agreement, or any successor thereto.
YEARS OF CREDITED SERVICE means the periods of employment
taken into account in determining a Participant's Accrued Annual
Pension or Normal Annual Pension under this Plan. A Participant
shall be credited with a Year of Credited Service for each Plan
Year in which he has completed 1,000 Hours of Service with the
Employer.
A Participant shall be credited with a partial Year of
Credited Service, to the completed month, for the portion of a
Plan Year during which he was not a Participant for the entire
Plan Year, provided that the number of Hours completed by the
Participant during such portion of a Plan Year equal or exceed
the product of (i) 83.33 and (ii) the number of full months the
Participant was actually a Plan Participant in such Plan Year.
A Participant who was employed by the Employer between
December 15, 1978 and December 31, 1978, shall be credited with
.04167 of a Year of Credited Service for such period.
A Participant shall not earn Years of Credited Service prior
to the Entry Date on which he first became a Participant except
that any Participant who was employed on December 14, 1976, shall
earn Years of Credited Service for his pre-participation
eligibility waiting period to the extent that such service would
have been credited as Years of Credited Service, if the
eligibility requirements in effect on December 15, 1976 had been
in effect when such Participant's employment commenced with the
Employer.
YEAR OF SERVICE means:
(a) when applied to eligibility provisions, (i) the
12-month period commencing on an individual's date of employment
with the Employer in which he is credited with 1,000 or more
Hours of Service, and (ii) thereafter, the Plan Year which
includes the first anniversary of the Eligible Employee's initial
date of employment and successive anniversaries of such Plan
Year, in which he is credited with 1,000 or more Hours of
Service; and (b) when applied to vesting provisions, each Plan
Year in which an Eligible Employee is credited with 1,000 Hours
of Service.
An Employee who was credited with 1,000 Hours of Service
in the 12 consecutive month period beginning (i) December 15,
1977 and ending on December 14, 1978; and (ii) beginning January
1, 1978 and ending December 31, 1978, shall earn a Year of
Service for such additional time periods.
Years of Service completed prior to December 15, 1976
shall be disregarded if such service would have been disregarded
under the break in service rules then in effect.
For purposes of determining an Eligible Employee's
eligibility to participate in the Plan pursuant to Section 3.1
and vesting pursuant to Section 5.1, Years of Service shall
include an Eligible Employee's Years of Service (i) as a Leased
Employee of the Employer or an Affiliate (after the employer
became an Affiliate) and not described in Section 414(n)(5) or
(ii) as an Employee of the Employer or an Affiliate (after the
employer became an Affiliate) covered by the terms of a
collective bargaining agreement that does not provide for
participation in this Plan, (iii) while a common law Employee of
the Employer who is not deemed to be an Eligible Employee or as a
common law Employee of an Affiliate, or (iv) while an Employee of
a predecessor organization of the Employer in any case where the
Employer maintains the plan of such predecessor organization.
2.2 CONSTRUCTION. The masculine gender, where appearing in
this Plan, shall be deemed to include the feminine gender, unless
the context clearly indicates to the contrary. Titles of
sections are inserted for convenience and shall not affect the
meaning or construction of the Plan.<PAGE>
ARTICLE III
PARTICIPATION AND SERVICE
3.1 ELIGIBILITY TO PARTICIPATE. Each Eligible Employee who
was a Participant in the Plan on December 31, 1988 shall continue
as a Participant on January 1, 1989 if he is still employed on
that date. Each other Eligible Employee shall commence
participation in the Plan on the Entry Date coincident with or
next following attainment of age 21 and completion of one Year of
Service.
Any individual hired or rehired by the Employer or an
Affiliate on or after February 2, 1992, shall not be eligible to
commence or resume participation in the Plan. Notwithstanding
any provision of this Plan to the contrary, any individual whose
employment status as of February 1, 1992, is covered by the terms
of a collective bargaining agreement that does not provide for
participation in the Plan and whose employment status changes on
or after February 2, 1992 so that he is no longer covered by a
collective bargaining agreement that does not provide for
participation in the Plan, shall not be eligible to participate
in the Plan.
3.2 CESSATION OF PARTICIPATION. An Eligible Employee shall
cease to be a Participant upon the earliest of: (a) the date on
which he retires under the retirement provisions of the Plan; (b)
the date on which he ceases to satisfy the eligibility
requirements of Section 3.1; or (iii) the date on which his
employment Terminates for any reason including death, or
Disability.
3.3 CHANGES IN STATUS AND TRANSFERS TO AFFILIATES.
(a) An Employee who transfers from an Affiliate to the
Employer and becomes an Eligible Employee or an Employee of the
Employer who becomes an Eligible Employee shall be eligible to
participate in the Plan on the date as of which he has satisfied
the eligibility requirements of Section 3.1. He shall commence
participation in the Plan on the later of his transfer or change
in status or the Entry Date next following the date he has
satisfied the eligibility requirements of Section 3.1.
(b) A Participant's status as such under the Plan shall be
changed, as provided below, upon and after the occurrence of:
(1) In the case of a Participant whose employment was not
covered by a collective bargaining agreement at the time the
Participant became such, the date as of which the Participant's
employment becomes covered by a collective bargaining agreement
that excludes such individual from participation in this Plan;
(2) The date as of which a Participant becomes a Leased
Employee; or
(3) The date as of which a Participant is transferred to
or hired by an Affiliate.
(c) The Participant's status under the Plan upon and after the
occurrence of one of the above events shall be modified as
follows:
(1) The Participant's Accrued Annual Pension shall not be
increased or decreased thereafter by reason of the Participant's
continued employment with the Employer or with an Affiliate or by
reason of any increases or decreases in Compensation after such
date; and
(2) The Participant will remain eligible for the benefits
provided by Article IV, if at the time his employment with the
Employer or an Affiliate ceases, he has satisfied the age,
service and other requirements of this Plan for such benefits.
(3) The Participant will continue to be credited with
additional Years of Service if he continues to be employed by the
Employer or an Affiliate except as otherwise provided for under
the Plan.
3.4 REEMPLOYMENT. A Participant who Terminated employment
with the Employer and is reemployed by the Employer shall again
be eligible to become a Participant on the date he again performs
an Hour of Service for the Employer. A former Eligible Employee
who is reemployed by the Employer prior to incurring five
consecutive one year Breaks in Service, shall become eligible to
become a Participant on the Entry Date he has satisfied the age
and service requirements of Section 3.1 or the date he is
reemployed by the Employer, if later. A former Eligible Employee
who is reemployed after incurring five consecutive one year
Breaks in Service shall be treated as a new Eligible Employee and
must meet the requirements of Section 3.1 for purposes of
eligibility to participate.
<PAGE>
ARTICLE IV
PLAN BENEFITS
4.1 NORMAL RETIREMENT. A Participant may retire on his Normal
Retirement Date.
Each Participant who retires on his Normal Retirement Date,
and who has not received benefits, under other provisions of the
Plan, shall be entitled to receive the greater of a Normal Annual
Pension or an Accrued Annual Pension determined as of any
previous date on which the Participant was eligible for early
retirement pursuant to Section 4.3. Any Former Participant whose
rights and interests in the Plan are vested, and who has not
received benefits under other provisions of the Plan, shall be
entitled to receive an Accrued Annual Pension commencing on his
Normal Retirement Date and continuing during his lifetime.
The Plan may suspend the benefits of a Participant who
continues in the service of the Employer after Normal Retirement
Date, provided that if such Participant is an Eligible Employee,
such Eligible Employee receives payment from the Employer for 80
Hours of Service during a calendar month. Any Participant whose
Normal Annual Pension is suspended shall be notified in writing
by personal delivery or first class mail during the first month
or payroll period for which payment of benefits is suspended.
The Normal Annual Pension payable to each Participant or
Former Participant shall be equal to .008 of the Participant's
Final Average Compensation, multiplied by his Years of Credited
Service, multiplied by 12.
Notwithstanding the foregoing, in no event shall (i) a
Participant's monthly benefit hereunder exceed $1,666.67; nor
(ii) a Participant's monthly benefit hereunder be less than his
Accrued Annual Pension as of December 31, 1988, (with Final
Average Compensation and Years of Credited Service determined as
of such date) without the limitations on Compensation that became
effective on January 1, 1989.
In addition, the monthly benefit payable to any Participant
who is employed by the Employer on or after January 1, 1994 shall
not be less than his Accrued Annual Pension determined as of
December 31, 1993, (with Final Average Compensation and Years of
Credited Service determined as of such date) based on the
limitations on Compensation that were in effect under Section
401(a)(17) of the Code prior to January 1, 1994.
A Participant or Former Participant to whom Article XIII of
the Plan relates, shall receive the greater of the benefit
described in this Section 4.1 or the benefit set forth in Section
13.2.
<PAGE>
4.2 DEFERRED RETIREMENT. A Participant who continues in
employment beyond his Normal Retirement Date may retire on the
first day of any succeeding calendar month that coincides with or
next follows the month in which his actual retirement occurs. A
Participant's deferred retirement benefit shall be determined
either under (a) or (b), whichever produces the greater benefit:
(a) by continuing to apply the formula set forth in
Section 4.1 to his Compensation and Years of Credited Service
after his Normal Retirement Date; or
(b) by using the increased Actuarial Equivalent of the
Participant's benefit which he had accrued under the terms of the
Plan as of his Normal Retirement Date.
4.3 EARLY RETIREMENT. By written notice delivered to the
Administrative Committee before the date his pension is to
commence, effective January 1, 1989, a Participant who has
attained Early Retirement Date and whose employment Terminates on
or after January 1, 1989, may elect to receive an early
retirement pension after Termination. In such event he shall be
entitled to either:
(a) A deferred pension commencing at his Normal Retirement
Date equal to the Accrued Annual Pension determined on the basis
of his Compensation and Years of Credited Service to the date of
his early retirement hereunder; or
(b) A pension commencing as of the first day of any month
coincident with or next following his Early Retirement Date which
is equal to the Actuarial Equivalent of the benefit calculated
under Section 4.1 payable at the Participant's Normal Retirement
Date.
4.4 DISABILITY BENEFIT. A Participant who becomes Disabled
shall be eligible to receive a pension commencing at his Normal
Retirement Date in an amount equal to his Accrued Annual Pension,
determined as of his Disability Date. In lieu of the foregoing,
a Participant may elect to receive his Accrued Annual Pension as
of the first day of any month following his Disability, which
shall be the Actuarial Equivalent of the Participant's benefit
payable at his Normal Retirement Date.
4.5 TERMINATION BENEFIT. A Participant who Terminates his
employment with a vested interest in his Accrued Annual Pension
shall be eligible to receive his benefit in accordance with
Section 4.1 or Section 4.3, as applicable. A Former Participant
who Terminated employment on or after January 1, 1989 who met the
service requirement for early retirement when he Terminated
employment, may elect to receive an early retirement pension as
of the first day of any month coincident with or next following
attainment of age 55.
4.6 FORM OF PAYMENTS.
(a) SINGLE PARTICIPANTS. If a Participant or Former
Participant is single on the Annuity Starting Date, the normal
form of payment, unless elected otherwise within the 90 day
period ending on the Annuity Starting Date, shall be a single
life annuity with payments guaranteed for 120 months.
(b) MARRIED PARTICIPANTS. If a Participant or Former
Participant is married on the Annuity Starting Date, the normal
form of payment, unless elected otherwise, within the 90 day
period ending on the Annuity Starting Date, and with the consent
of the Participant's or Former Participant's Spouse, pursuant to
subsection (d), shall be a qualified joint and survivor annuity,
which shall be the Actuarial Equivalent of the normal form for
single Participants described in Section 4.6(a), as applicable,
payable for life to the Participant or Former Participant and
thereafter, for the life of the Participant's or Former
Participant's Surviving Spouse in an amount equal to 50% of the
amount that was payable to the Participant or Former Participant.
(c) NOTICE AND INFORMATION TO PARTICIPANTS. The
Administrative Committee shall furnish each Participant or Former
Participant with the following information regarding benefits
payable under the Plan in written nontechnical language:
(1) A general description or explanation of the
automatic post-retirement Spouse's benefit described in Section
4.6(b) and single life annuity benefit with payments guaranteed
for 120 months described in Section 4.6(a) and notification of
the Participant's or Former Participant's right to waive the
right to receive his benefits in a qualified joint and survivor
annuity or single life annuity with payments guaranteed for 120
months and the right to make or revoke a previous election to
waive the qualified joint and survivor annuity or single life
annuity with payments guaranteed for 120 months.
(2) A general explanation of the relative financial
effect on a Participant's or Former Participant's benefits of any
of the foregoing elections.
(3) Notification of the availability, upon written
request of a Participant or Former Participant of an explanation
of the financial effect of any of the foregoing elections upon
the requesting Participant's or Former Participant's benefits
under the Plan and notification that each Participant or Former
Participant may make only one such request.
(4) A general explanation of the rights of a
Participant's or Former Participant's Spouse.
The Administrative Committee shall provide a Participant
or Former Participant with the information described in this
Section no later than 30 days and no earlier than 90 days prior
to each Participant's or Former Participant's Annuity Starting
Date.
(d) ELECTION AND REVOCATION OF SPOUSE'S ANNUITIES. A
Participant or Former Participant who is entitled to receive his
benefits or Spouse's benefits in the form described in Section
4.6(a) or (b) may elect to receive such benefits in any other
form permitted by the Plan by giving written notification to the
Administrative Committee during the election period of his intent
to receive his benefits in such other form. Such election period
shall be the 90 day period ending on the Annuity Starting Date.
Any election to waive the qualified joint and survivor annuity
under Section 4.6(b) shall not take effect unless the Spouse of
the Participant or Former Participant consents in writing to such
election and the Spouse's consent acknowledges the effect of such
election and is witnessed by a notary public or a representative
of the Administrative Committee. The requirements with respect
to spousal consent may be waived if it is established to the
satisfaction of the Administrative Committee that the consent may
not be obtained because there is no Spouse or because the Spouse
cannot be located or because of such other circumstances as may
be prescribed by regulation. Any consent necessary under this
provision will be irrevocable and valid only with respect to the
Spouse who signs the consent.
Any election made under this Section may be revoked by the
Participant or Former Participant during the specified election
period. Such revocation shall be effected by written
notification to the Administrative Committee. Following such
revocation, another election under this Section may be made at
any time during the specified election period. A revocation of a
prior waiver may be made at any time by a Participant or Former
Participant without the consent of the Spouse before the Annuity
Starting Date.
Any actual or constructive election under this paragraph (d)
having the effect of providing a Spouse's benefit shall
automatically be revoked if the electing person ceases to have a
Spouse during the election period. However, if the electing
person subsequently remarries, the spousal consent requirements
will automatically be reinstated at that time.
(e) OPTIONAL FORMS. In lieu of the normal form of benefit
set forth in Sections 4.6(a) and (b), a Participant or Former
Participant may elect one of the optional forms of payment
described below. All optional forms of payment shall be the
Actuarial Equivalent of the normal form for single Participants
set forth in Section 4.1, determined as of the Annuity Starting
Date.
(1) LIFE ANNUITY OPTION Guaranteed for 120 months. A
Participant or Former Participant may elect to have his pension
paid in the form of a straight life annuity with payments
guaranteed for 120 months. Under such annuity, payments will be
made monthly during the Participant's or Former Participant's
lifetime in an amount equal to the Participant's or Former
Participant's Normal Annual Pension or Accrued Annual Pension.
If the Participant or Former Participant should die before
receiving 120 months of payments, the remaining payments shall be
payable to a Beneficiary designated by such Participant or Former
Participant.
(2) LIFE ANNUITY OPTION. A Participant or Former
Participant may elect to have his pension paid in the form of a
straight life annuity. Under such annuity, payments will be made
monthly during the Participant's or Former Participant's lifetime
in an amount equal to the Participant's or Former Participant's
Normal Annual Pension or Accrued Annual Pension.
(3) ADDITIONAL OPTIONS. A Participant or Former
Participant to whom the provisions of Article XIII apply may
elect to have his Normal Annual Pension or Accrued Annual Pension
paid in the forms set forth therein.
Any election of an optional form of payment may be revoked by
the Participant or Former Participant prior to the first day on
which such optional form is scheduled to be paid.
If the Surviving Spouse or other joint annuitant, whichever is
applicable, dies before the first day on which an optional form
is scheduled to be paid, the optional form is replaced by the
normal form that would have been paid absent the election of an
optional form.
Any election of an optional form of benefit provided shall
provide that any death benefit payable hereunder shall comply
with the incidental death benefit requirements of Section
401(a)(9)(G) of the Code and regulations thereunder.
4.7 DEATH PRIOR TO THE ANNUITY STARTING DATE. If a
Participant or Former Participant dies prior to the Annuity
Starting Date, a death benefit may be payable under the
circumstances described below.
(a) On the death of a vested Participant or Former
Participant who has reached his Early Retirement Date, his Spouse
shall, if his Spouse has survived him and they have been married
through the one-year period ending on the date of death, be
entitled to receive immediately a monthly benefit equal to one-
half (1/2) of the Participant's Accrued Annual Pension or Normal
Annual Pension determined as of the date of his death, payable as
a qualified joint and 50% survivor annuity set forth in Section
4.6(b) and reduced for early payment, as applicable, in
accordance with Section 4.3.
(b) On the death of a vested Participant or Former
Participant who has not reached his Early Retirement Date, but
who is entitled to a vested interest in his Accrued Annual
Pension, his Spouse shall, if his Spouse has survived him and
they have been married through the one-year period ending on the
date of death, be entitled to receive a monthly benefit, payable
on the Participant's earliest retirement date under the Plan,
equal to one-half (1/2) of the Participant's Accrued Annual
Pension determined as of the date of his death, payable as a
qualified joint and 50% survivor annuity set forth in Section
4.6(b) and reduced for early payment, as applicable, in
accordance with Section 4.3.
(c) A Participant's or Former Participant's Surviving
Spouse shall have the right to elect to defer payment of the
Spouse's survivor benefit until the date the Participant would
have reached his Normal Retirement Date, had he lived.
4.8 FORM OF PENSION PAYMENTS. Payments shall be paid monthly
as of the first of the month, except that the Administrative
Committee shall direct that payments which would otherwise be
less than $20 per month be made quarterly, semi-annually or
annually.
4.9 RESTRICTIONS AND LIMITATIONS ON DISTRIBUTIONS.
Distribution of benefits to a Participant or Former Participant
must commence no later than April l of the calendar year
following the calendar year in which the Participant or Former
Participant attains age 70 1/2; provided, however, that distribution
to a Participant or Former Participant who attained age 70 1/2
before January 1, 1988 and is not a five percent owner as defined
in Section 416(i) of the Code (with respect to the Plan Year
ending in the calendar year in which the Participant or Former
Participant attains age 66 1/2 or any succeeding Plan Year) must
commence no later than April 1 of the calendar year following the
later of the calendar year in which the Participant or Former
Participant attains age 70 1/2 or the calendar year in which the
Participant or Former Participant retires.
To the extent a Participant continues to accrue additional
benefits, his Accrued Annual Pension shall be redetermined
annually to include such additional accruals, but shall not be
offset by the Actuarial Equivalent value of any payments
previously made. The Annuity Starting Date of such Participant
shall be deemed to occur at the date the first payment required
by this Section is due to be paid. Any additional accruals after
benefits commence hereunder shall be paid in accordance with the
election made by the Participant pursuant to Section 4.6.
4.10 RESTRICTIONS ON DEATH DISTRIBUTIONS. Distributions
pursuant to the death of a Participant or Former Participant
shall be distributed no later than December 31 of the calendar
year in which occurs the fifth anniversary of the Participant's
or Former Participant's death. However, if such distribution had
already commenced in the form of payments over a period permitted
by Section 4.5, the remaining benefits may be distributed over
such period.
The first sentence of the preceding paragraph shall not apply
if either condition of (a) or (b) as set forth below are
satisfied:
(a) If the Participant's or Former Participant's
designated Beneficiary is the Surviving Spouse of such
Participant or Former Participant, such distribution shall not be
required to begin prior to the later of (i) December 31 of the
calendar year following the calendar year in which the
Participant or Former Participant died, or (ii) December 31 of
the calendar year in which the Participant or Former Participant
would have attained age 70 1/2, and at such time may be distributed
over the life of such Spouse (if the Surviving Spouse dies prior
to commencement of distributions to such Spouse, then this
subsection (a) shall be applied as if the Surviving Spouse were
the Participant or Former Participant);
(b) If the Participant's or Former Participant's
distribution, or any portion thereof, is payable to a designated
Beneficiary, such distribution or portion thereof may be
distributed in accordance with regulations over the life of such
designated Beneficiary if such distribution or portion thereof
begins not later than December 31 of the calendar year in which
occurs the first anniversary of the Participant's or Former
Participant's death. For purposes of subsections (a) and (b),
life expectancy shall be calculated in accordance with the
provisions of Section 72 of the Code.
Any amount payable to a child pursuant to the death of a
Participant or Former Participant shall be treated as if it were
payable to the Participant's or Former Participant's Surviving
Spouse if such amount would become payable to the Surviving
Spouse upon such child reaching majority (or other designated
event permitted by regulations).
4.11 CASH-OUT OF SMALL BENEFITS.
(a) Notwithstanding any other provision of this Article
IV, the Actuarial Equivalent value of (i) a qualified joint and
survivor annuity payable to a Participant or Former Participant
who meets the requirements of Section 4.6(b) and who is fully
vested or (ii) a single life annuity with payments guaranteed for
120 months payable to a Participant or Former Participant who
shall be distributed to the Participant or Former Participant no
later than the end of the second Plan Year after his retirement
or termination if such Actuarial Equivalent value of his entire
Accrued Annual Pension or Normal Annual Pension is $3,500 or
less. A Participant who has a zero vested interest in his
Accrued Annual Pension shall be deemed to have received a
distribution of his Accrued Annual Pension immediately upon his
Termination of employment.
(b) Notwithstanding any other provision of this Article
IV, the Actuarial Equivalent value of the Spouse's death benefit
payable to the Spouse of a Participant or Former Participant
pursuant to Section 4.7 shall be distributed to such Spouse as
soon as practicable following the Participant's or Former
Participant's death if such Actuarial Equivalent value is $3,500
or less.
(c) In the event a Former Participant who received a
distribution pursuant to subsection (a), is reemployed, his prior
Years of Credited Service attributable to the distribution shall
be restored hereunder, but the Participant's subsequent Accrued
Annual Pension or Normal Annual Pension under the Plan shall be
adjusted to offset the subsequent benefit by the Actuarial
Equivalent of the amount of Accrued Annual Pension attributable
to the distribution.
4.12 ROLLOVERS FROM THE PLAN. Notwithstanding any provision
of the Plan to the contrary, effective January 1, 1993, a
Distributee may elect, at the time and in the manner prescribed
by the Administrative 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.
4.13 PAYMENTS TO AN ALTERNATE PAYEE. Payments to an Alternate
Payee pursuant to a qualified domestic relations order under
Section 414(p) of the Code shall not be made prior to the date
that the Participant or Former Participant has reached or would
have reached his earliest retirement date under the Plan, except
for any small payments provided under Section 4.11. <PAGE>
ARTICLE V
VESTING
5.1 VESTING SCHEDULE. A Participant's right to a Normal
Annual Pension or an Accrued Annual Pension shall be fully vested
and nonforfeitable if he is living and employed by the Employer
or an Affiliate on his Normal Retirement Age. Prior thereto, the
rights and interests of a Participant or Former Participant in
and to his Accrued Annual Pension under the Plan shall become
fully vested and nonforfeitable in accordance with the following
schedule:
Years of ServiceVested PercentageForfeited Percentage
less than 5 years 0% 100%
5 years of more 100% 0%
5.2 FORFEITURES. Notwithstanding Section 5.1, and except as
otherwise provided under the Plan, a Participant's or Former
Participant's rights and interests in the Plan, shall be
forfeited, if prior to full vesting under Section 5.1, he dies
before Normal Retirement Date or actual retirement date,
whichever is later. All forfeitures shall occur immediately upon
Termination of employment and shall not be used to increase the
benefits of any Participant.
5.3 REEMPLOYMENT.
(a)Upon the reemployment of a Participant who was vested
when he Terminated employment, his Years of Service and Years of
Credited Service shall be reinstated as of his date of
reemployment.
(b)Upon the reemployment of a Participant or Employee who
was not vested when he Terminated employment, his Years of
Service and Years of Credited Service shall be reinstated as of
his date of reemployment unless the number of his consecutive
One-Year Breaks in Service equals or exceeds the greater of five
years or the number of his Years of Service with which he was
credited prior to such consecutive One-Year Breaks in Service.
<PAGE>
ARTICLE VI
FUNDING
6.1 CONTRIBUTIONS BY EMPLOYER. The Employer shall contribute
to the Fund on account of each Plan Year an aggregate amount, in
cash or other property, determined pursuant to a funding method
and actuarial assumptions, which shall be selected by the
Administrative Committee, and which shall be, in the opinion of
an Actuary who shall be appointed by the Administrative
Committee, designed to fund the Plan's benefits on a sound
actuarial basis. Such amount shall also be sufficient to satisfy
the Plan's "minimum funding standard" within the meaning of the
Code for that Plan Year. The Employer's contribution for each
Plan Year shall be made no later than the time permitted under
the Code and regulations promulgated by the Secretary of the
Treasury.
6.2 INSURANCE. The Employer may enter into a contract or
contracts with an insurance company, qualified to perform
services under the laws of more than one state, which shall
become part of this Plan, for purposes of providing the benefits
and funding the Plan.
6.3 INVESTMENT POLICIES. The investment policies of the Plan
shall be established and may be changed at any time by the
Administrative Committee, which shall thereupon communicate such
policies to any persons having authority to manage the Plan's
assets. The Investment Manager shall have the authority to
invest in any collective investment fund maintained exclusively
for the investment of assets of exempt, qualified employee
benefit trusts. The assets so invested shall be subject to all
the provisions of the instrument establishing such collective
investment fund, as amended from time to time, which is hereby
incorporated herein by reference and deemed to be an integral
part of the Plan and corresponding Trust.
The Administrative Committee, whose membership is to be
determined by the Board, is the named fiduciary to act on behalf
of the Company in the management and control of the Plan assets
and to establish and carry out a funding policy consistent with
the Plan objectives and with the requirements of any applicable
law. The Administrative Committee shall carry out the Company's
responsibility and authority:
(a)To appoint as such term is defined in Section 3(38) of
ERISA, one or more persons to serve as Investment Manager with
respect to all or part of the Plan assets, including assets
maintained under separate accounts of an insurance company;
(b)To allocate the responsibilities and authority being
carried out by the Administrative Committee among the members of
the Administrative Committee.
(c)To take any action appropriate to assure that the Plan
assets are invested for the exclusive purpose of providing
benefits to Participant and their Beneficiaries in accordance
with the Plan and defraying reasonable expenses of administering
the Plan, subject to the requirements of any applicable law.
(d)To establish any rules it deems necessary. The
Administrative Committee including each member and former member
to whom duties and responsibilities have been allocated, shall be
indemnified and held harmless by the Employer with respect to any
breach of alleged responsibilities performed or to be performed
hereunder.
<PAGE>
ARTICLE VII
AMENDMENT AND TERMINATION
7.1 AMENDMENTS GENERALLY. The Company, by action of the Board
of Directors or to the extent indicated under Section 8.2, by the
Administrative Committee, reserves the right to make from time to
time any amendment or amendments to this Plan or Trust Agreement
that do not cause any part of the Fund to be used for, or
diverted to, any purpose other than the exclusive benefit of
Participants or Former Participants.
Except as may be permitted by ERISA or the Code, no amendment
to the Plan shall decrease a Participant's or Former
Participant's accrued benefits or eliminate an optional form of
benefit as those terms are defined in the Code.
7.2 AMENDMETNS TO VESTING SCHEDULE. Any future amendment to
the Plan which alters the vesting schedule set forth in Section
5.1 or which affects a Participant's nonforfeitable percentage in
and to his rights and interests in benefits provided by Employer
contributions shall be deemed to include the following terms:
(a)The vested percentage of a Participant applicable to
his Accrued Annual Pension under the Plan determined as of the
later of the date such amendment is adopted or the date such
amendment becomes effective shall not be reduced unless the
amendment is for purposes of conforming the Plan to requirements
of the Code, or any other applicable law; and
(b)A Participant with at least three Years of Service on
the later of the adoption or effective date of any amendment to
the Plan may elect to have his nonforfeitable interest computed
under the Plan without regard to such amendment. Such election
must be made within 60 days from the later of date on which the
amendment was adopted, the amendment was effective or the
Participant was issued written notice of such amendment by the
Administrative Committee.
7.3 TERMINATION, DISCONTINUANCE OF CONTRIBUTIONS OR
CURTAILMENT. Subject to the provisions of Title IV of ERISA, the
Plan may be terminated or curtailed, or the Employer's obligation
to contribute to the Fund may be discontinued, in whole or in
part, at any time without the consent of any other person by
action of the Board of Directors.
7.4 DISTRIBUTIONS ON TERMINATION. In the event that the Plan
is completely or partially terminated, the rights of all
affected, actively employed Participants to their Accrued Annual
Pensions to the date of such termination shall become fully
vested and nonforfeitable only to the extent funded. The assets
of the Plan available to provide benefits shall be allocated
among the persons who are entitled or who may become entitled to
benefits under the Plan, subject to and in the manner prescribed
by the applicable provisions of Title IV of ERISA. Any other
provision of the Plan to the contrary notwithstanding, if there
remain any assets of the Plan after all liabilities of the Plan
to Participants or Former Participants and their Beneficiaries
have been satisfied or provided for, such residual assets shall
thereupon be distributed to the Employer subject to and in
accordance with Title IV of ERISA.
7.5 ACTION BY COMPANY. Any action by the Company under the
Plan shall be by a duly adopted resolution of the Board of
Directors or by any person or persons duly authorized by a duly
adopted resolution of that Board to take such action. <PAGE>
ARTICLE VIII
ADMINISTRATION
8.1 DUTIES AND RESPONSIBILITIES OF FIDUCIARIES; ALLOCATION OF
RESPONSIBILITY AMONG FIDUCIARIES FOR PLAN AND TRUST
ADMINISTRATION. A Fiduciary shall have only those specific
powers, duties, responsibilities and obligations as are
specifically given him under this Plan or the Trust. In general,
the Employer, shall have the sole responsibility for making the
contributions provided for under Section 6.1. The Board of
Directors shall have the sole authority to appoint and remove the
Trustee and the Administrative Committee and to amend or
terminate, in whole or in part, this Plan or the Trust. The
Administrative Committee shall have the sole responsibility for
the administration of this Plan, which responsibility is
specifically described in this Plan and the Trust. The
Administrative Committee also shall have the right to appoint and
remove any Investment Manager which may be provided for under the
Trust and to designate investment and funding policies under
which the Trustee and any Investment Manager shall act, which
provisions are described in Section 6.3. Except as provided in
the Trust agreement and within the scope of any funding and
investment policies designated by the Administrative Committee
the Trustee shall have the sole responsibility for the
administration of the Trust and the management of the assets held
under the Trust. It is intended that each Fiduciary shall be
responsible for the proper exercise of his own powers, duties,
responsibilities and obligations under this Plan and the Trust
and generally shall not be responsible for any act or failure to
act of another Fiduciary. A Fiduciary may serve in more than one
fiduciary capacity with respect to the Plan (including service
both as Trustee and as a member of the Administrative Committee).
8.2 ALLOCATION OF DUTIES AND RESPONSIBILITIES. The
Administrative Committee shall be appointed by the Board of
Directors and shall have the sole responsibility for actual
administration of the Plan, as delegated by the Board of
Directors. The Administrative Committee may also adopt
amendments to the Plan, which upon advice of counsel, it deems
necessary or advisable to comply with ERISA or the Code, or any
other applicable law, or to facilitate the administration of the
Plan. The Administrative Committee may designate persons other
than their members to carry out any of its duties and
responsibilities. Any duties and responsibilities thus allocated
must be described in the written instrument. If any person other
than an Eligible Employee of the Employer is so designated, such
person must acknowledge in writing his acceptance of the duties
and responsibilities thus allocated to him. All such instruments
shall be attached to, and shall be made a part of, the Plan.
8.3 ADMINISTRATION AND INTERPRETATION. Subject to the
limitations of the Plan, the Administrative Committee shall have
complete authority and control regarding the administration and
interpretation of the Plan and the transaction of its business,
and shall, from time to time, establish such rules as may be
necessary or advisable in connection therewith. To the extent
permitted by law, all acts and determinations of the
Administrative Committee, as to any disputed question or
otherwise, shall be binding and conclusive upon Participants,
retired Participants, Employees, Spouses, Beneficiaries and all
other persons dealing with the Plan. The Administrative
Committee may deem its records conclusively to be correct as to
the matters reflected therein with respect to information
furnished by an Employee. All actions, decisions and
interpretations of the Administrative Committee in administering
the Plan shall be performed in a uniform and nondiscriminatory
manner.
8.4 EXPENSES. The Employer shall pay all expenses authorized
and incurred by the Administrative Committee in the
administration of the Plan except to the extent such expenses are
paid from the Trust.
8.5 CLAIMS PROCEDURE:
(a)FILING OF CLAIM. Any Participant, Former Participant
or Beneficiary under the Plan ("Claimant"), may file a written
claim for a Plan benefit with the Administrative Committee or
with a person named by the Administrative Committee to receive
claims under the Plan.
(b)NOTIFICATION ON DENIAL OF CLAIM. In the event of a
denial or limitation of any benefit or payment due to or
requested by any Claimant, he shall be given a written
notification containing specific reasons for the denial or
limitation of his benefit. The written notification shall
contain specific reference to the pertinent Plan provisions on
which the denial or limitation of benefits is based. In
addition, it shall contain a description of any additional
material or information necessary for the Claimant to perfect a
claim and an explanation of why such material or information is
necessary. Further, the notification shall provide appropriate
information as to the steps to be taken if the Claimant wishes to
submit his claim for review. This written notification shall be
given to a Claimant within 90 days after receipt of his claim by
the Administrative Committee unless special circumstances require
an extension of time to process the claim. If such an extension
of time for processing is required, written notice of the
extension shall be furnished to the Claimant prior to the
termination of said 90-day period and such notice shall indicate
the special circumstances which make the postponement
appropriate. Such extension shall not extend to a date later
than 120 days after receipt of the request for review of a claim.
(c)RIGHT OF REVIEW. In the event of a denial or
limitation of benefits, the Claimant or his duly authorized
representative shall be permitted to review pertinent documents
and to submit to the Administrative Committee issues and comments
in writing. In addition, the Claimant or his duly authorized
representative may make a written request for a full and fair
review of his claim and its denial by the Administrative
Committee provided, however, that such written request must be
received by the Administrative Committee (or his delegate to
receive such requests) within sixty days after receipt by the
Claimant of written notification of the denial or limitation of
the claim. The sixty day requirement may be waived by the
Administrative Committee in appropriate cases.
(d)DECISION ON REVIEW.
(i)A decision shall be rendered by the Administrative
Committee within 60 days after the receipt of the request for
review, provided that where special circumstances require an
extension of time for processing the decision, it may be
postponed on written notice to the Claimant (prior to the
expiration of the initial 60 day period), for an additional 60
days, but in no event shall the decision be rendered more than
120 days after the receipt of such request for review.
(ii)Notwithstanding subparagraph (i), if the
Administrative Committee specifies a regularly scheduled time at
least quarterly to review such appeals, a Claimant's request for
review will be acted upon at the specified time immediately
following the receipt of the Claimant's request unless such
request is filed within 30 days preceding such time. In such
instance, the decision shall be made no later than the date of
the second specified time following the Administrative
Committee's receipt of such request. If special circumstances
(such as a need to hold a hearing) require a further extension of
time for processing a request, a decision shall be rendered not
later than the third specified time of the Administrative
Committee following the receipt of such request for review and
written notice of the extension shall be furnished to the
Claimant prior to the commencement of the extension.
(iii)Any decision by the Administrative Committee shall be
furnished to the Claimant in writing and in a manner calculated
to be understood by the Claimant and shall set forth the specific
reason(s) for the decision and the specific Plan provision(s) on
which the decision is based.
8.6 RECORDS AND REPORTS. The Administrative Committee shall
exercise such authority and responsibility as it deems
appropriate in order to comply with ERISA and governmental
regulations issued thereunder relating to records of
Participants' account balances and the percentage of such account
balances which are nonforfeitable under the Plan; notifications
to Participants; and annual reports and registration with the
Internal Revenue Service.
8.7OTHER POWERS AND DUTIES. The Administrative Committee
shall have such duties and powers as may be necessary to
discharge its duties hereunder, including, but not by way of
limitation, the following:
(a)to construe and interpret the Plan, decide all
questions of eligibility and determine the amount, manner and
time of payment of any benefits hereunder;
(b)to prescribe procedures to be followed by Participants,
Former Participants or Beneficiaries filing applications for
benefits;
(c)to prepare and distribute information explaining the
Plan;
(d)to receive from the Employer and from Participants,
Former Participants and Beneficiaries such information as shall
be necessary for the proper administration of the Plan;
(e)to furnish the Employer, upon request, such annual
reports with respect to the administration of the Plan as are
reasonable and appropriate;
(f)to receive, review and keep on file (as it deems
convenient or proper) reports of the financial condition, and of
the receipts and disbursements, of the Trust Fund from the
Trustees;
(g)to appoint or employ advisors including legal and
actuarial counsel to render advice with regard to any
responsibility of the Administrative Committee under the Plan or
to assist in the administration of the Plan; and
(h)to determine the status of qualified domestic relations
orders under Section 414(p) of the Code.
The Administrative Committee shall have no power to add to,
subtract from or modify any of the terms of the Plan, or to
change or add to any benefits provided by the Plan, or to waive
or fail to apply any requirements of eligibility for a benefit
under the Plan.
8.8 RULES AND DECISIONS. The Administrative Committee may
adopt such rules as it deems necessary, desirable, or
appropriate. All rules and decisions of the Administrative
Committee shall be applied uniformly and consistently to all
Participants in similar circumstances. When making a
determination or calculation, the Administrative Committee shall
be entitled to rely upon information furnished by a Participant,
Former Participant or Beneficiary, the Employer, the legal
counsel of the Employer, or the Trustee.
8.9 AUTHORIZATION OF BENEFIT PAYMENTS. The Administrative
Committee shall issue proper directions to the Trustee concerning
all benefits which are to be paid from the Trust Fund pursuant to
the provisions of the Plan.
8.10APPLICATION AND FORMS FOR BENEFITS. The
Administrative Committee may require a Participant, Former
Participant or Beneficiary to complete and file with it an
application for a benefit, and to furnish all pertinent
information requested by it. The Administrative Committee may
rely upon all such information so furnished to it, including the
Participant's, Former Participant's or Beneficiary's current
mailing address.
8.11FACILITY OF PAYMENT. Whenever, in the Administrative
Committee's opinion, a person entitled to receive any payment of
a benefit or installment thereof hereunder is under a legal
disability or is incapacitated in any way so as to be unable to
manage his financial affairs, the Administrative Committee may
direct the Trustee to make payments to such person or to his
legal representative or to a relative or friend of such person
for his benefit, or he may direct the Trustee to apply the
payment for the benefit of such person in such manner as it
considers advisable.
8.12INDEMNIFICATION. The Employer shall indemnify each
individual who is an officer, director or Employee of the
Employer and who may be called upon or designated to perform
fiduciary duties or to exercise fiduciary authority or
responsibility with respect to the Plan and shall save and hold
him harmless from any and all claims, damages, and other
liabilities, including without limitation all expenses (including
attorneys' fees and costs), judgments, fines and amounts paid in
settlement and actually and reasonably incurred by him in
connection with any action, suit or proceeding, resulting from
his alleged or actual breach of such duties, authority or
responsibility, whether by negligence, gross negligence or
misconduct, to the maximum extent permitted by law, provided,
however, that this indemnification shall not apply with respect
to any actual breach of such duties, authority or responsibility,
if the individual concerned did not act in good faith and in the
manner he reasonably believed to be in (or not opposed to) the
best interest of the Employer, or, with respect to any criminal
action or proceeding, had reasonable cause to believe his conduct
was unlawful.
8.12RESIGNATION OR REMOVAL OF THE ADMINISTRATIVE COMMITTEE.
An Administrative Committee member may resign at any time by
giving ten days' written notice to the Employer and the Trustee.
The Board of Directors may remove any member of the
Administrative Committee by giving written notice to him and the
Trustee. Any such resignation or removal shall take effect at a
date specified on such notice, or upon delivery to the
Administrative Committee if no date is specified.
<PAGE>
ARTICLE IX
LIMITATIONS ON CONTRIBUTIONS AND BENEFITS
9.1 DETERMINATION BY INTERNAL REVENUE SERVICE. Contributions
to the Trust Fund are conditioned specifically upon the initial
qualification of the Plan under the Code and if the Plan does not
so initially qualify, such contribution or part thereof shall be
returned to the Employer within one year after such denial of
initial qualification.
9.2 CONDITIONAL CONTRIBUTIONS. To the extent permitted under
ERISA and the Code, all contributions to the Plan are subject to
the following conditions:
(a)All contributions made to the Plan by the Employer
shall be conditioned upon the deductibility of such contributions
under the Code. To the extent that any such deduction is
disallowed by the Internal Revenue Service, the Employer by
action of the Administrative Committee shall have the right to
demand and receive the return of the related contribution to the
extent disallowed within one year after the disallowance of said
deduction.
(b)If the Employer makes a contribution, or any part
thereof, by mistake of fact, such contribution or part thereof
shall be returned to the Employer within one year after such
contribution is made.
9.3 TWENTY-FIVE HCE LIMITATION. Effective for Plan Years
commencing on or after January 1, 1991, the annual payments made
by the Plan to any individual who is one of the twenty-five (25)
highest-paid Highly Compensated Employees, for any Plan Year,
shall not exceed the limitations set forth in Treas. Reg. Section
1.401(a)(4)-5.
9.4 GENERAL LIMITATION ON BENEFITS. In addition to the
limitations possibly applicable by reason of Section 9.3, and any
other provision of the Plan to the contrary notwithstanding, the
annual benefit payable to any Participant or Former Participant
shall not exceed the limitations imposed by Section 415 of the
Code. The provisions of Section 415 of the Code are incorporated
into this Plan by reference. If a Participant's participation in
other plans maintained by the Employer or an Affiliate would
result in a violation of the limitations of Section 415 of the
Code, the Participant's benefit under this Plan shall be reduced
to the extent necessary to satisfy Section 415 of the Code.
9.5 SUSPENSION OF BENEFITS ON REEMPLOYMENT.
(a)In the event that any person receiving benefits under
the Plan by reason of retirement is reemployed by the Employer,
the Plan shall suspend the payment of benefits as of the first
day of the month following the first month in which an Eligible
Employee receives payment from the Employer for at least 80 Hours
of Service performed during a calendar month during such person's
reemployment;
(b)Benefits suspended hereunder shall resume as of the
first day of the third month commencing after the earlier of the
day the reemployed person Terminates employment with the Employer
or, if such person is an Eligible Employee, receives payment from
the Employer for any Hours of Service performed for fewer than 80
Hours of Service during a calendar month in such reemployed
status;
(c)Any person whose benefits are suspended under this
Section shall be entitled to receive a pension on subsequent
retirement or Termination that is not less than the pension
received as of the date of suspension hereunder. The person's
resumed pension shall be determined on the basis of the
Participant's Compensation and Years of Credited Service before
the suspension hereunder and Compensation and Years of Credited
Service after his reemployment, reduced however, by the value of
any pension benefits paid to him previously either (i) prior to
his Normal Retirement Date; or (ii) while reemployed by the
Employer under circumstances in which his benefits should have
been suspended under paragraph (a), but were not.
(d)Any Participant whose benefits are suspended pursuant
to the foregoing shall be notified in writing of the suspension
by personal delivery or first class mail during the first
calendar month or payroll period in which benefits are suspended.
(e)The Annuity Starting Date with respect to a Participant
who is reemployed after commencement of his benefits at Normal
Retirement Date, shall be the date his benefits originally
commenced for benefits accrued before and after the suspension.
(f)The Annuity Starting Date with respect to a Participant
who is reemployed after commencement of his benefits at Early
Retirement Date shall be:
(1)the date his benefits originally commenced with respect
to the benefits accrued prior to the suspension; and
(2)with respect to the benefits he accrued after his
reemployment (if any), and the suspension of his original benefit
payments hereunder, the date such subsequent accruals commence to
be paid. The provisions of Section 4.6(d) of the Plan shall
apply to such subsequent accruals as a second Annuity Starting
Date.<PAGE>
ARTICLE X
MERGER, TRANSFER OR CONSOLIDATION OF PLANS
10.1PLAN ASSETS. There shall be no merger or consolidation of
the Plan with, or transfer of assets or liabilities of the Fund
to, any other plan of deferred compensation maintained or to be
established for the benefit of all or some of the Participants of
the Plan, unless each Participant would (if either this Plan or
the other plan then terminated) receive a benefit immediately
after the merger, consolidation or transfer which is equal to or
greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation or transfer (if this
Plan had then terminated), and unless a duly adopted resolution
of the Board of Directors authorizes such merger, consolidation
or transfer of assets.
<PAGE>
ARTICLE XI
MISCELLANEOUS
11.1MANDATORY COMMENCEMENT OF BENEFITS. Notwithstanding any
provision of this Plan to the contrary, payment of benefits under
this Plan shall commence upon the written election of a
Participant or Former Participant not later than sixty days after
the close of the Plan Year in which the latest of the following
events occurs: (a) the Participant attains Normal Retirement
Date; (b) the tenth anniversary of the Plan Year in which the
Participant commenced participation in the Plan; or (c) the
Termination of the Participant's service with the Employer.
11.2NONGUARANTEE OF EMPLOYMENT. Nothing contained in this
Plan shall be construed as a contract of employment between the
Employer and any Eligible Employee, or as a right of any Eligible
Employee to be continued in the employment of the Employer, or as
a limitation of the right of the Employer to discharge any of its
Eligible Employees with or without cause.
11.3RIGHTS TO FUND ASSETS. No Eligible Employee or
Beneficiary shall have any right to, or interest in, any assets
of the Fund upon Termination of his employment or otherwise,
except as provided from time to time under this Plan, and then
only to the extent of the benefits payable under the Plan to such
Eligible Employee out of the assets of the Fund. All payments of
benefits as provided for in this Plan shall be made solely out of
the assets of the Fund.
11.4NONALIENATION OF BENEFITS. Benefits payable under this
Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumber, charge,
garnishment, execution, or levy of any kind, either voluntary or
involuntary, including any such liability which is for alimony or
other payments for the support of a spouse or former spouse, or
for any other relative of the Eligible Employee prior to actually
being received by the person entitled to the benefit under the
terms of the Plan, except as required under a qualified domestic
relations order as defined in Section 414(p) of the Code. Any
attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, charge or otherwise dispose of any right to benefits
payable hereunder, shall be void. The Fund shall not in any
manner be liable for, or subject to, the debts, contracts,
liabilities, engagements or torts of any person entitled to
benefits hereunder.
11.5INABILITY TO LOCATE PAYEE. Each person entitled to
receive benefits under the Plan shall be responsible for
informing the Administrative Committee of his mailing address for
purposes of receiving such benefits. If the Administrative
Committee is unable to locate any person entitled to receive
benefits under the Plan, such benefits shall not be forfeited but
shall be carried as a contingent liability of the Plan and shall
be payable when a proven and legitimate claim therefor has been
submitted to the Administrative Committee.
11.6APPLICABLE LAW. This Plan shall be construed,
interpreted, administered and enforced in accordance with the
laws of the Commonwealth of Pennsylvania, except to the extent
superseded, only when required, by ERISA as in effect from time
to time.
<PAGE>
ARTICLE XII
DETERMINATION OF TOP-HEAVY STATUS
12.1GENERAL. Notwithstanding any other provision of the Plan
to the contrary, for any Plan Year, in which the Plan is a
Top-Heavy Plan or Super Top-Heavy Plan, as defined below, the
provisions of this Article 12 shall apply, but only to the extent
required by Section 416 of the Code and the regulations
thereunder.
12.2TOP-HEAVY PLAN. This Plan shall be Top-Heavy and an
Aggregation Group shall be a Top-Heavy Group if as of the
Determination Date for such Plan Year, the sum of the Cumulative
Accrued Benefits and Cumulative Accounts of Key Eligible
Employees for the Plan Year exceeds 60% of the aggregate of all
the Cumulative Accounts and Cumulative Accrued Benefits. The
Cumulative Accrued Benefits and Cumulative Accounts of those
Participants who have not performed any service for the Employer
during the five year period ending on the Determination Date,
shall be disregarded.
(a)If the Plan is not included in a Required Aggregation
Group with other plans, then it shall be Top-Heavy only if (i)
when considered by itself it is a Top-Heavy Plan and (ii) it is
not included in a Permissive Aggregation Group that is not a
Top-Heavy Group.
(b)If the Plan is included in a Required Aggregation Group
with other plans, it shall be Top-Heavy only if the Required
Aggregation Group, including any permissively aggregated plans,
is Top-Heavy.
12.3SUPER TOP-HEAVY PLAN. This Plan shall be a Super
Top-Heavy Plan if it would be a Top-Heavy Plan under Section
12.2, but substituting 90% for 60%.
12.4CUMULATIVE ACCRUED BENEFITS AND CUMULATIVE ACCOUNTS. The
determination of the Cumulative Accrued Benefits and Cumulative
Accounts under the Plan shall be made in accordance with Section
416 of the Code and the regulations thereunder.
12.5DEFINITIONS.
(a)"Aggregation Group" means either a Required Aggregation
Group or a Permissive Aggregation Group.
(b)"Determination Date" means with respect to any Plan
Year, the last day of the preceding Plan Year or in the case of
the first Plan Year of any plan, the last day of such Plan Year
or such other date as permitted by the Secretary of the Treasury
or his delegate.
(c)"Group Employer" means the Employer that adopts this
Plan and all members of a controlled group of corporations (as
defined in Section 414(b) of the Code), all commonly controlled
trades or businesses (as defined in Section 414(c) of the Code)
or affiliated service groups (as defined in Section 414(m) of the
Code) of which the Employer is a part.
(d)"Key Eligible Employee" means those individuals
described in Section 416(i)(1) of the Code and the regulations
thereunder.
(e)"Non-Key Eligible Employee" means those Eligible
Employees who are not Key Eligible Employees and includes a
former Key Eligible Employee.
(f)"Permissive Aggregation Group" means a Required
Aggregation Group plus any other plans selected by the Company
provided that all such plans when considered together satisfy the
requirements of Section 401(a)(4) and 410 of the Code.
(g)"Required Aggregation Group" means each plan of the
Employer in which a Key Eligible Employee participates (in the
Plan Year containing the Determination Date or any of the four
preceding Plan Years) and each other plan which enables any plan
in which a Key Eligible Employee participates during the period
tested to meet the requirements of Section 401(a)(4) or 410 of
the Code. All employers aggregated under Section 414(b), (c) or
(m) of the Code are considered a single employer. The Required
Aggregation Group shall include any terminated plan that covered
a Key Eligible Employee and was maintained within the five year
period ending on the Determination Date.
(h)"Valuation Date" means the annual date on which Plan
assets must be valued for purposes of determining the Plan's
assets and liabilities and the value of account balances
maintained under any defined contribution plan of the Employer.
The valuation date for purposes of the preceding sentence shall
be the same valuation date for computing Plan costs for minimum
funding.
12.6MINIMUM ANNUAL RETIREMENT BENEFIT.
(a)Each Participant who is a Non-Key Eligible Employee
will receive the greater of his Accrued Annual Pension as defined
in Section 2.1 or a Minimum Annual Retirement Benefit (expressed
as a life annuity commencing at Normal Retirement Date) equal to
two percent of the Participant's average compensation (as
determined under any permissible definitions under Section 415 of
the Code and the regulations thereunder) for the five consecutive
years for which the Participant had the highest aggregate
compensation multiplied by the Participant's Years of Credited
Service with the Employer, up to a maximum of 20%.
(b)For purposes of this Section 12.6, Years of Credited
Service shall not include service if the Plan were not a
Top-Heavy Plan for any Plan Year ending in such period of Years
of Credited Service or Years of Credited Service completed in a
Plan Year commencing before January 1, 1984. For purposes of
this Section 12.6, compensation in years prior to January 1, 1984
and compensation in years after the close of the last Plan Year
in which the Plan is Top-Heavy shall be disregarded.
(c)A Minimum Annual Retirement Benefit shall not be
provided under this Section 12.6 to the extent that the
Participant is covered under any other plan or plans of the Group
Employer and the Group Employer has provided that the minimum
benefit requirements applicable to this Plan will be met by the
other plan or plans.
(d)A Participant who is a Non-Key Eligible Employee shall
not fail to accrue a Minimum Annual Retirement Benefit because of
(i) his level of Compensation or (ii) a failure to make mandatory
Eligible Employee contributions.
12.7VESTING. A Participant who is credited with one Hour of
Service in any Plan Year during which the Plan is Top-Heavy or
Super Top-Heavy shall have a nonforfeitable interest in that
portion of his Normal Annual Pension, Accrued Annual Pension or
Minimum Annual Retirement Benefit attributable to participation
during the Plan Year in which the Plan is Top-Heavy or Super
Top-Heavy and all prior Plan Years in accordance with the
following schedule:
Years of Service Nonforfeitable Percentage
less than 2 years 0
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
If the Plan ceases to be Top-Heavy in any Plan Year, the vesting
provisions of Section 5.1 determined without regard to this
Section 12.7, shall apply with respect to subsequent Plan Years,
subject to Section 7.2(b).
12.8 DEFINED BENEFIT AND DEFINED CONTRIBUTION PLANS. For
each Plan Year in which the Plan is Super Top-Heavy or for each
Plan Year in which the Plan is Top-Heavy and the additional
minimum benefits or contributions required by Section 416(h) of
the Code are not provided, the dollar limitations in the
denominator of the defined benefit plan fraction and defined
contribution plan fraction as defined in Section 415(e) of the
Code shall be multiplied by 100 percent rather than 125 percent.
If the application of the provisions of this Section 12.8 would
cause any Participant to exceed 1.0 for any Limitation Year as
set forth in Section 9.4, then the application of this Section
12.8 shall be suspended as to such Participant until such time as
he no longer exceeds 1.0. During the period of such suspension,
there shall be no accruals for such Participant under this Plan
and no Group Employer contributions, forfeitures or voluntary
nondeductible contributions allocated to such Participant under
any defined contribution plan of the Group Employer.<PAGE>
ARTICLE XIII
ERISA TRANSITION PROVISIONS
13.1 SCOPE AND PURPOSE. The provisions of this Article XIII
shall apply only to those Participants or Former Participants who
were Participants on December 14, 1976 and Employees on December
15, 1976. The purpose of this Article XIII is to preserve for
those Participants or Former Participants certain of the
provisions of the Plan as in effect before December 15, 1976.
13.2 CALCULATION OF BENEFIT. With respect to a Participant
or Former Participant covered by this Section 13.2, the
Participant's or Former Participant's monthly benefit at his
Normal Retirement Date under the Plan shall be the greater of (i)
the Participant's or Former Participant's benefit calculated
under Section 4.1 or (ii) one-twelfth of the product of (A) and
(B), but not in excess of $625, where (A) equals 45% of the
Participant's or Former Participant's "Basic Salary" on December
15, 1975 and (B) equals a fraction, the numerator of which is the
Participant's or Former Participant's total number of "Years of
Participation" at December 14, 1976 and the denominator of which
is the total number of "Years of Participation" with which he
would have been credited if he separated from service on the
"Anniversary Date" nearest his 65th birthday, all as defined
under the terms of the Plan as in effect on December 14, 1976.
Such amount is set forth in Schedule A, Column 1.
13.3 FORM OF PAYMENT OF NORMAL, LATE, EARLY AND DISABILITY
BENEFIT. In addition to the forms of settlement provided under
Section 4.6(e), a Participant or Former Participant covered under
this Article XIII, shall be entitled to elect in writing on forms
provided by the Administrative Committee payment of the "value of
the accrued benefit" (as determined under Section 13.7) to which
he is entitled under Schedule A, Column 2, increased by interest
at the rate of 5% per annum from December 14, 1976 to the date of
determination, counting only completed months, in a lump sum upon
Normal, Late, Early or Disability Retirement in accordance with
the provisions of Sections 4.1, 4.2, 4.3 or 4.4. In the event a
Participant or Former Participant elects payment of some or all
of the amount of the "value of the accrued benefit" to which he
is entitled under Schedule A, Column 2, increased by interest as
described in the preceding sentence, in a lump sum, the
"actuarial value" (as determined under Section 13.7) of the
benefit to which he is otherwise entitled under Article IV shall
be reduced by the amount of such payment and the "remaining
value", if any, will be paid in a form provided by Section 4.6(e)
of the Plan. However, any Participant or Former Participant
covered under this Article XIII, the value of whose benefit under
Schedule A, Column 2, without increase, is $20,000 or more,
alternatively may elect in writing, on forms provided by the
Administrative Committee, payment of the value of the entire
benefit to which he is entitled under the Plan in an "actuarially
equivalent" (as determined under Section 13.6) lump sum upon
Normal, Late, Early or Disability Retirement in accordance with
the provisions of Section 4.6.
Notwithstanding the foregoing, effective January 1, 1989,
any Participant covered under this Section 13, who is a Highly
Compensated Employee, determined as of any date, and the value of
whose benefit under Schedule A, Column 2, without increase, is
$20,000 or more, alternatively may elect in writing, on forms
provided by the Administrative Committee payment of (i) the value
of the benefit which he had accrued as of December 31, 1988 under
the Plan in an actuarially equivalent lump sum (as determined
under Section 13.7) upon Normal, Late, Early or Disability
Retirement in accordance with the provisions of Section 4.1, 4.2,
4.3 or 4.4; and (ii) the remainder of his Accrued Annual Pension,
which he had accrued after December 31, 1988, paid to him in one
of the forms provided for under Section 4.6 of the Plan.
13.4 PAYMENT OF VESTED BENEFITS. Any Participant or Former
Participant covered under this Article XIII who terminates
employment with the Employer and all Affiliates with a
nonforfeitable benefit under Section 5.1 may elect in writing on
forms provided by the Administrative Committee to receive the
value of his benefit under Schedule A, Column 2, increased by
interest at the rate of 5% per annum from December 14, 1976 to
the date of determination, counting only completed months, in a
lump sum. The "remaining value" of his benefit, if any, shall be
paid in accordance with Section 4.6(e). Any such Participant or
Former Participant, the value of whose accrued benefit under
Schedule A, Column 2, without increase, is $20,000 or more,
alternatively may elect in writing, on forms provided by the
Administrative Committee, payment of the value of the entire
benefit to which he is entitled under the Plan in an "actuarially
equivalent" lump sum. If a Participant or Former Participant who
receives a distribution hereunder returns to service covered by
the Plan, his prior service shall be restored for purposes of
benefit accrual if he contributes to the Trust Fund in cash the
amount of the distribution he received, together with interest
thereon at the rate set forth in Section 411(c)(2)(C) of the Code
per annum, compounded annually, before suffering five consecutive
Breaks in Service or five years following the date he is
reemployed by the Employer, if earlier. If the Participant or
Former Participant does not make such a contribution as provided
above, his Accrued Annual Pension upon subsequent termination of
service shall be based on accruals arising from and after his
return to service under the terms of the Plan plus any "remaining
value" of his benefit at the date of his previous termination of
service not paid hereunder upon his previous termination of
service.
Notwithstanding the foregoing, effective January 1, 1989,
any Participant covered under this Section 13, who is a Highly
Compensated Employee, determined as of any date, and the value of
whose benefit under Schedule A, Column 2, without increase, is
$20,000 or more, alternatively may elect in writing, on forms
provided by the Administrative Committee, payment of (i) the
value of the benefit which he had accrued as of December 31, 1988
under the Plan in an actuarial equivalent lump sum (as determined
under Section 13.7) upon his Termination of employment in
accordance with the provisions of Section 4.5; and (ii) the
remainder of his Accrued Annual Pension, which he had accrued
after December 31, 1988, paid to him in one of the forms provided
for under Section 4.6 of the Plan.
13.5 DEATH BENEFITS. The Beneficiary of any Participant or
Former Participant covered under this Article XIII who attained
his Normal Retirement Date, as defined under the terms of the
Plan as in effect on December 14, 1976, on or before December 14,
1976, and dies on or after December 15, 1976, but prior to the
earlier of the date (i) benefit payments to him commence or (ii)
an annuity contract is purchased to provide his retirement
benefit, shall be entitled to receive a death benefit equal to
the "actuarial value" at the time of death of such Participant's
or Former Participant's accrued benefit under Schedule A, Column
2. The benefit will be paid in the mode of distribution
designated by the Participant or Former Participant in writing;
provided, however, if the Participant's or Former Participant's
designated Beneficiary should die on or before the commencement
of distribution of benefits or the Participant or Former
Participant fails to designate the mode of distribution, the mode
of distribution shall be determined by the Administrative
Committee after consultation with the Participant's or Former
Participant's Beneficiary. Notwithstanding the foregoing, if the
Participant or Former Participant is married, the Participant's
or Former Participant's Spouse shall be the Beneficiary unless
the Spouse waives the right to be the Beneficiary in writing
witnessed by a notary public or a member of the Administrative
Committee in accordance with the rules established by the
Administrative Committee.
Notwithstanding the foregoing, effective January 1, 1989,
any Participant covered under this Section 13, who is a Highly
Compensated Employee, determined as of any date, and the value of
whose benefit under Schedule A, Column 2, without increase, is
$20,000 or more, alternatively may elect in writing, on forms
provided by the Administrative Committee, payment of (i) the
value of the benefit which he had accrued as of December 31, 1988
under the Plan in an actuarial equivalent lump sum (as determined
under Section 13.7) upon his death paid to his Beneficiary; and
(ii) the remainder of his Accrued Annual Pension, which he had
accrued after December 31, 1988, paid to his Beneficiary in the
form provided for under Section 4.7 of the Plan.
13.6 TRANSFER OF BENEFIT.
(i) Any Participant or Former Participant (A) who
has reached his Normal Retirement Date on or before December 15,
1976, (B) whose benefit is calculated under the Plan as effective
prior to December 15, 1976 and (C) whose benefit payments have
not started prior to October 9, 1979, shall be entitled to elect
irrevocably in writing as hereinafter provided that the
Administrative Committee transfer the amount of his accrued
benefit to be held as a separate bookkeeping account under the
terms of the Trust Agreement. The election may be made effective
as of the January 1st or July 1st next following the delivery of
a written request to the Administrative Committee at least 30
days before such date.
(ii) In addition to the forms of settlement
provided under Section 4.6, a Participant or Former Participant
covered under this Section 13.5, shall be entitled to elect in
writing on forms provided by the Administrative Committee one of
the following settlement options:
(A) approximately equal monthly, quarterly
or annual installments as elected by the Participant or Former
Participant over a period not exceeding the life expectancy of
the Participant or Former Participant or the joint life
expectancy of the Participant or Former Participant and his
designated Beneficiary with the remainder of such installments,
if any, after the Participant's or Former Participant's death
payable to his designated beneficiary or Beneficiaries; or
(B) a lump sum; or
(C) any combination of the above.
Notwithstanding the foregoing, the Participant or
Former Participant must elect under this Section 13.5(ii) or
4.6(e) a method of settlement under which the present value of
the installments to be paid to the Participant or Former
Participant over his projected life span is more than 50% of the
present value of the installments payable to both the Participant
or Former Participant and his Beneficiary or Beneficiaries.
(iii) The Beneficiary of any Participant or
Former Participant eligible to make the election under Section
13.6(i) who is to receive death benefits under Section 13.5, may
subject to the approval of the Administrative Committee, request
that the value of the death benefit be held as a separate
bookkeeping account under the terms of the Trust Agreement, with
distribution to be made in the mode provided for under Section
13.5.
13.7 ACTUARIAL EQUIVALENCY. With respect to Article XIII,
when referring to amounts developed under Article IV, "actuarial
value", "remaining value", "actuarial equivalent" and "value of
the accrued benefit" shall be determined using GAM71 Male
mortality table and interest at the rate of 5.5% per annum.
However, the value so determined for any Participant or Former
Participant to whom this Article XIII applies shall not be less
than the actuarial value of the accrued benefit for that
Participant or Former Participant as of July 31, 1983, determined
using the GAM71 Male and Female (as appropriate) mortality table
and interest at the rate of 5.5% per annum. When referring to
amounts developed from Schedule A, Column 2, the amount of
accrued benefits and actuarial equivalents shall be determined as
described, using interest at the rate of 5% per annum.
THE PEP BOYS
SAVINGS PLAN<PAGE>
THE PEP BOYS
SAVINGS PLAN
TABLE OF CONTENTS
I: INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II: DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . . . . . . 2
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Construction. . . . . . . . . . . . . . . . . . . . . . . . . 19
III: PARTICIPATION AND SERVICE . . . . . . . . . . . . . . . . . . . . 20
3.1 Eligibility to Participate. . . . . . . . . . . . . . . . . . 20
3.2 Commencement of Participation . . . . . . . . . . . . . . . . 20
3.3 Cessation of Participation. . . . . . . . . . . . . . . . . . 20
3.4 Special Rules for Eligibility Purposes. . . . . . . . . . . . 20
3.5 Participation and Service upon Reemployment . . . . . . . . . 21
3.6 Transfers to Affiliates and Change in Status. . . . . . . . . 21
3.7 Transfers From Affiliates and Change in Status. . . . . . . . 22
IV: EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Employer Contributions. . . . . . . . . . . . . . . . . . . . 23
4.2 Time and Manner of Contribution . . . . . . . . . . . . . . . 27
4.3 Conditions on Employer Contributions. . . . . . . . . . . . . 27
4.4 Limitations on Pre-Tax Contributions. . . . . . . . . . . . . 28
4.5 Income Attributable to Excess Contributions . . . . . . . . . 31
4.6 Limitations on Matching Contributions . . . . . . . . . . . . 32
4.7 Income Attributable to Excess Aggregate Contributions . . . . 35
4.8 Requirements for Qualified Non-Elective Contributions and
Qualified Matching Contributions. . . . . . . . . . . . . . . .35
4.9 Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.10 Rollovers from the Plan . . . . . . . . . . . . . . . . . . . 36
V: ALLOCATIONS TO PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . 37
5.1 Individual Accounts . . . . . . . . . . . . . . . . . . . . . 37
5.2 Account Adjustments . . . . . . . . . . . . . . . . . . . . . 37
5.3 Maximum Annual Additions. . . . . . . . . . . . . . . . . . . 39
5.4 Defined Contribution and Defined Benefit Plans. . . . . . . . 41
5.5 No Rights Created by Allocation . . . . . . . . . . . . . . . 41
VI: PAYMENT OF BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . 42
6.1 Normal Retirement or Termination. . . . . . . . . . . . . . . 42
6.2 Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.3 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.4 Time of Payment of Benefits . . . . . . . . . . . . . . . . . 42
6.5 Mode of Payment of Benefits . . . . . . . . . . . . . . . . . 46
6.6 Designation of Beneficiary. . . . . . . . . . . . . . . . . . 46
6.7 Information Required from Beneficiary . . . . . . . . . . . . 47
6.86.8In-Service Withdrawals . . . . . . . . . . . . . . . . . . . 48
6.9 Loans to Participants . . . . . . . . . . . . . . . . . . . . .51
VII: TRUST FUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.1 Exclusive Benefit of Employees and Beneficiaries. . . . . . . 55
7.2 Investment Directions by Participants . . . . . . . . . . . . 55
7.3 Investment of Matching Contributions. . . . . . . . . . . . . .56
VIII: ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.1 Duties and Responsibilities of Fiduciaries; Allocation of
Responsibility Among Fiduciaries for Plan and Trust
Administration. . . . . . . . . . . . . . . . . . . . . . . . 58
8.2 Allocation of Duties and Responsibilities . . . . . . . . . . 59
8.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.4 Claims Procedure. . . . . . . . . . . . . . . . . . . . . . . 59
8.5 Records and Reports . . . . . . . . . . . . . . . . . . . . . 61
8.6 Other Powers and Duties . . . . . . . . . . . . . . . . . . . 62
8.7 Rules and Decisions . . . . . . . . . . . . . . . . . . . . . 63
8.8 Authorization of Benefit Payments . . . . . . . . . . . . . . 63
8.9 Application and Forms for Benefits. . . . . . . . . . . . . . 63
8.10 Facility of Payment . . . . . . . . . . . . . . . . . . . . . 63
8.11 Investment Policies . . . . . . . . . . . . . . . . . . . . . 64
8.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . .65
8.13 Resignation or Removal of the Committee . . . . . . . . . . . .66
IX: MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.1 Nonguarantee of Employment. . . . . . . . . . . . . . . . . . 67
9.2 Rights to Trust Assets. . . . . . . . . . . . . . . . . . . . 67
9.3 Nonalienation of Benefits . . . . . . . . . . . . . . . . . . 67
9.4 Discontinuance of Employer Contributions. . . . . . . . . . . 68
X: AMENDMENTS AND ACTION BY EMPLOYER . . . . . . . . . . . . . . . . . 69
10.1 Amendments Generally. . . . . . . . . . . . . . . . . . . . . 69
10.2 Amendments to Vesting Schedule. . . . . . . . . . . . . . . . 69
10.3 Action by Company . . . . . . . . . . . . . . . . . . . . . . 70
XI: SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS . . . . . . 71
11.1 Successor Employer. . . . . . . . . . . . . . . . . . . . . . 71
11.2 Plan Assets . . . . . . . . . . . . . . . . . . . . . . . . . 71
XII: PLAN TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . 72
12.1 Right to Terminate. . . . . . . . . . . . . . . . . . . . . . 72
12.2 Liquidation of the Trust Fund . . . . . . . . . . . . . . . . 72
12.3 Manner of Distribution. . . . . . . . . . . . . . . . . . . . 72
XIII: DETERMINATION OF TOP-HEAVY STATUS. . . . . . . . . . . . . . . . 73
13.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
13.2 Top-Heavy Plan. . . . . . . . . . . . . . . . . . . . . . . . 73
13.3 Super Top-Heavy Plan. . . . . . . . . . . . . . . . . . . . . 73
13.4 Cumulative Accrued Benefits and Cumulative Accounts . . . . . 74
13.5 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.6 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
13.7 Minimum Contributions . . . . . . . . . . . . . . . . . . . . 75
13.8 Defined Benefit and Defined Contribution Plan Fractions . . . 76
APPENDIX A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
<PAGE>
SAVINGS PLAN
I: INTRODUCTION
The Pep Boys Savings Plan was established by The Pep Boys - Manny,
Moe & Jack, a Pennsylvania corporation, effective September 1, 1987, for the
benefit of certain of its salaried and hourly employees and certain of its
Affiliates, and their beneficiaries. It is to be maintained according to the
terms of this instrument. The Committee has the authority to manage the
administration of this Plan. The assets of this Plan are held in trust by
the Trustee in accordance with the terms of the Trust Agreement, which is
considered to be an integral part of this Plan. Except as may be provided in
the Trust Agreement, the Trustee has the exclusive authority to manage and
control the assets of this Plan.
The Plan is intended to be a discretionary contribution plan as
defined in Section 401(a)(17) of the Code.
The Plan is hereby amended effective January 1, 1989 to reflect
various provisions of the Tax Reform Act of 1986, as amended, and other
legislation (or such earlier date as required by law). The effective date of
any other changes to the Plan shall be as noted herein.<PAGE>
II: DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. The following words and phrases, when used in
this Plan, shall have the following meanings:
ACCOUNTS means a Participant's Pre-Tax Contribution Account,
Matching Contribution Account, Discretionary QNEC Account and Rollover
Account.
AFFILIATE means any employer which has not adopted this Plan and is
not a Participating Employer, but which is included as a member with the
Employer in a controlled group of corporations, or which is a trade or
business (whether or not incorporated) included with the Employer in a
brother-sister group or combined group of trades or businesses under common
control or which is a member of an affiliated service group in which the
Employer is a member, determined in each instance in accordance with the
appropriate Sections of the Code.
ANNUAL ADDITIONS means, with respect to each Limitation Year,
commencing after December 31, 1988, the total of the Employer contributions
and forfeitures allocated to a Participant's Accounts pursuant to the
provisions of this Plan, plus the total of any Participant contributions for
such Limitation Year, plus amounts described in sections 415(l)(1) and
419A(d)(2) of the Code, if any. The Annual Additions for any Limitation Year
beginning before January 1, 1987 shall include the total of Employer
contributions and forfeitures allocated to a Participant's Accounts plus the
lesser of one-half of the Participant's Contributions or the amount of the
Participant's contributions in excess of six percent of his Compensation for
such Limitation Year. Annual Additions also shall include any additions to
the account of a Participant under any other qualified defined contribution
plan maintained by the Employer or an Affiliate.
For purposes of determining Annual Additions, Compensation for any
Limitation Year shall mean the Compensation paid to a Participant by the
Employer and any Affiliate and shall include a Participant's earned income,
wages, salaries, and fees for professional services and other amounts
received for personal services actually rendered in the course of employment
with the Employer or Affiliate (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), and excluding
the following:
(1) Employer or Affiliate contributions to a plan of deferred
compensation which are not includable in the Employee's gross income for the
taxable year in which contributed, or Employer or Affiliate contributions
which are deductible by the Employee, or any distribution from a plan of
deferred compensation;
(2) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
(3) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(4) Other amounts which receive special tax benefits or
contributions made by the Employer or an Affiliate (whether or not under a
salary reduction agreement) towards the purchase of an annuity described in
Section 403(b) of the Code (whether or not the amounts are actually
excludable from the gross income of the Employee).
BENEFICIARY means a person or persons (natural or otherwise)
designated by a Participant in accordance with the provisions of Section 6.6
to receive any death benefit which shall be payable under this Plan.
BOARD OF DIRECTORS means the Board of Directors of The Pep Boys -
Manny, Moe & Jack.
CALENDAR QUARTER means the three consecutive month periods
beginning each January 1, April 1, July 1 and October 1.
CODE means the Internal Revenue Code of 1986, as it may be amended,
and includes any regulations issued thereunder.
COMMITTEE means the individuals appointed under Section 8.1 to
administer the Plan.
COMPANY means The Pep Boys - Manny, Moe & Jack, a corporation
organized and existing under the laws of Pennsylvania, or its predecessor
company, its successor or successors which elect to continue this Plan.
COMPANY STOCK means the Company's Common Stock, par value of $1.00
per share.
COMPENSATION means the total of all remuneration paid during a Plan
Year to a Participant by the Employer for personal services, including
overtime pay, bonuses and commissions, as reported to a Participant on Box 1
of Form W-2 (Box 10 prior to 1993) and unless specifically excluded
hereunder, Pre-Tax Contributions, if any, authorized by a Participant under
this Plan, but excluding reimbursement for business, travel or entertainment
expenses incurred by the Participant and not reported to the Internal Revenue
Service as wages and excluding the amount of any fringe benefits reported to
the Internal Revenue Service as wages. A Participant's Compensation for any
Plan Year beginning prior to January 1, 1994, in excess of $200,000 (as
adjusted each Plan Year by the Secretary) shall not be taken into account for
any purposes under the Plan, as required under Section 401(a)(17) of the
Code. Effective January 1, 1994, Compensation for any Plan Year shall not
exceed $150,000 (such amount to be indexed each year by the Secretary). For
purposes of the preceding two sentences, a Participant who has Compensation
in excess of $200,000 or $150,000, respectively (in each case as adjusted by
the Secretary) may continue to participate under the terms of the Plan and
have such excess compensation taken into account as long as the aggregate
amount of Compensation taken into account under the terms of the Plan for any
Plan Year does not exceed $200,000 or $150,000 (in each case as adjusted by
the Secretary) as applicable.
Notwithstanding any provision in this Plan to the contrary, for
purposes of determining Pre-Tax Contributions and Matching Contributions for
a Participant, Compensation shall include such individual's Compensation
beginning with the first payroll period following satisfaction of the service
requirements of Section 3.1; or the date the Participant elects to authorize
Pre-Tax Contributions to the Plan, if later.
In determining the Compensation of an Eligible Participant who is
a five percent owner or Highly Compensated Eligible Participant in the group
consisting of the ten Highly Compensated Employees paid the greatest
Compensation during the Plan Year, (the "limited individuals"), then with
respect to any individuals in such Eligible Participant's family,
(i) such individual shall not be considered to be a separate
Eligible Participant, and
(ii) any Compensation paid to such individual (and any
applicable contribution or benefit on behalf of such individual) shall be
treated as if it were paid to (or on behalf of) the five percent owner or
Highly Compensated Eligible Participant.
The term "family" shall include only the spouse of the Eligible
Participant and any lineal descendants of the Eligible Participant who have
not attained age 19 before the last day of the Plan Year.
The term "family unit" shall include the limited individuals and
family.
The $200,000 limitation and $150,000 limitation, as adjusted above,
shall be allocated among the members of the family unit in proportion to each
member's Compensation for the Plan Year.
For purposes of Sections 4.4 and 4.6, Compensation shall mean any
definition of compensation permissible under Section 414(s) of the Code and
regulations thereunder for such period as is determined by the Committee in
its sole discretion.
DIRECT ROLLOVER means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
DISABILITY means a medically determinable physical or mental
impairment of a permanent nature which prevents a Participant from performing
his customary employment duties without endangering his health and which
would qualify the Participant for a Disability retirement benefit from the
Company's Pension Plan.
DISCRETIONARY QNECs means the discretionary qualified nonelective
contributions made by the Employer on a Participant's behalf pursuant to
Section 4.1(d).
DISCRETIONARY QNEC ACCOUNT means the account maintained for a
Participant to record his share of Discretionary QNECs under Section
5.2(b)(iii) and adjustments relating thereto.
DISTRIBUTEE means a Participant or Former Participant. In
addition, the Participant's or Former Participant's Spouse or former Spouse
who is the alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Code, are Distributees with regard to the
interest of the Spouse or former Spouse.
EARLY RETIREMENT DATE means separation from service with the
Employer and any Affiliate on or after attainment of age 55 and completion of
five years of credited service, as defined in the Company's Pension Plan.
EFFECTIVE DATE means September 1, 1987, which is the date on which
the provisions of this Plan became effective.
ELIGIBLE EMPLOYEE means an individual who is employed by the
Employer, and with respect to whom the Employer is required to withhold taxes
from remuneration paid to him by the Employer for personal services rendered
to the Employer, including any officer or director who shall so qualify.
A Leased Employee shall not be deemed to be an Eligible Employee.
Any Employee whose terms of employment are covered by a collective bargaining
agreement that does not provide for participation in the Plan, shall not be
deemed to be an Eligible Employee. The Eligible Employees of Participating
Employers, if any, are set forth in Exhibit A, attached hereto.
ELIGIBLE PARTICIPANT means as of each Entry Date, for purposes of
Sections 4.4 and 4.5, each Eligible Employee who has met the requirements for
participation in the Plan regardless of whether he has authorized the
Employer to make Pre-Tax Contributions on his behalf to the Plan. For
purposes of Section 4.6 and 4.7, Eligible Participant means each Eligible
Employee who has met the requirements for participation in the Plan
regardless of whether he has authorized the Employer to make Pre-Tax
Contributions on his behalf to the Plan and who is otherwise eligible to
receive a Matching Contribution in accordance with Section 4.1(c).
ELIGIBLE RETIREMENT PLAN means: (i) an individual retirement
account described in Section 408(a) of the Code; (ii) an individual
retirement annuity described in Section 408(b) of the Code; (iii) an annuity
plan described in Section 403(a) of the Code; or (iv) 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.
ELIGIBLE ROLLOVER Distribution means any distribution of all or any
portion of the balance to the credit of the Distributee, but does not
include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more; any distribution
to the extent such distribution is required under Section 401(a)(9) of the
Code; and the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities) and any other distribution
that does not qualify as an Eligible Rollover Distribution as defined in
Section 401(a)(31)(C) of the Code.
An Eligible Rollover Distribution shall include an unpaid loan that
is offset against a Participant's total Account balance when he receives a
distribution at Termination of employment in accordance with Section 6.9(h)
of the Plan.
EMPLOYEE means any individual employed by the Employer as a common
law employee. A Leased Employee shall be deemed to be an Employee.
EMPLOYER means the Company and any Participating Employer, which
with the approval of the Board of Directors, has adopted this Plan. The
Participating Employers are listed on Appendix A.
ENTRY DATE means the first day of each Calendar Quarter. Prior to
January 1, 1993, the Entry Date was January 1 and July 1 of each Plan Year.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
EXCESS AGGREGATE CONTRIBUTIONS means with respect to each Plan
Year, the amount determined for Highly Compensated Eligible Participants
under the procedure set forth in Proposed Treas. Reg. 1.401(m)-1(e)(2) or
any successor thereto.
EXCESS CONTRIBUTIONS means with respect to each Plan Year, the
amount determined for Highly Compensated Eligible Participants under the
procedure set forth in Treas. Reg. 1.401(k)-1(f)(2) or any successor
thereto.
FAMILY MEMBER means the spouse and lineal ascendants or descendants
(and their spouses) of a Highly Compensated Eligible Participant.
FIDUCIARY means the Employer, the Board of Directors, the Committee
or the Trustee, but only with respect to the specific responsibilities of
each with respect to Plan and Trust administration.
FORMER PARTICIPANT means any former Employee who has credits in his
Accounts as of the close of any Plan Year.
HIGHLY COMPENSATED ELIGIBLE PARTICIPANT means those Eligible
Participants who are Highly Compensated Employees.
HIGHLY COMPENSATED EMPLOYEE means:
(a) Employees who were five percent owners, as defined in
Section 416(i)(1)(iii) of the Code, at any time during the determination year
or the look-back year;
(b) Employees with compensation greater than $75,000 (as
adjusted at the same time and in the same manner as Section 415(d) of the
Code) during the look-back year;
(c) Employees with compensation greater than $50,000 (as
adjusted at the same time and in the same manner as Section 415(d) of the
Code) during the look-back year and who are in the top-paid group for the
look-back year;
(d) Employees who are officers during the look-back year and
who have compensation in the look-back year greater than 150% of the
contribution limit in Section 415(c) of the Code;
(e) Employees who are both described in paragraph (b), (c),
or (d) above when these paragraphs are modified to substitute the
determination year for the look-back year and one of the 100 Employees who
receive the highest compensation from the Employer during the determination
year.
(1) The top-paid group shall consist of the top 20% of
active Employees, ranked on the basis of compensation received from the
Employer during the year excluding Employees with less than 6 months of
service, part-time Employees (less than 17-1/2 hours per week or less than 6
months a year) Employees who are not yet age 21, and nonresident aliens.
These Employees shall not be excluded for purposes of identifying the
particular Employees in the top-paid group. If the Plan being tested covers
only non-collective bargaining Employees, and collective bargaining Employees
constitute 90 percent or more of the Employer's Employees, then such
collective bargaining Employees shall be excluded both from the total number
of active Employees and the identification of particular Employees in the
top-paid group. The top-paid group shall not include Employees who perform
no service during the year.
(2) For purposes of determining whether an Employee is
highly compensated, the determination year is the Plan Year for which the
determination is being made. The look-back year is the twelve month period
preceding the determination year. The Committee shall have the authority to
change the look-back year to be the calendar year ending with or within the
current Plan Year. If the Committee makes this election, it shall apply to
all plans of the Employer and Affiliates.
(3) Also, for this purpose, the term "Employee" shall
include Leased Employees unless such Employees are covered under a safe-
harbor plan of the leasing organization and not covered under a qualified
plan of the employer.
(4) The number of officers shall be limited to the
lesser of (a) 50, or (b) the greater of 3 individuals or 10 percent of all
Employees. If the Employer does not have at least one officer whose
compensation is in excess of 150% of the limit in Section 415(c) of the Code,
then the highest paid officer of the Employer shall be treated as a Highly
Compensated Employee.
(5) For purposes of defining Highly Compensated
Employees, compensation means compensation as defined in Section 415(c)(3) of
the Code, including elective contributions. The dollar limits are those for
the calendar year in which the determination or look-back year begins.
(6) The Plan shall take into account employees of all
employers aggregated under Sections 414(b), (c), (m) and (o) of the Code, in
determining who is highly compensated.
Notwithstanding the foregoing, the Employer, by action of the
Committee, may elect for any Plan Year, to define Highly Compensated Employee
by substituting $50,000 for $75,000 in Section 414(q)(1)(B) of the Code and
by disregarding Section 414(q)(1)(C) of the Code.
HOURS OF SERVICE means:
(a) PERFORMANCE OF DUTIES. The actual hours for which an
Employee is paid or entitled to be paid for the performance of duties by the
Employer;
(b) NONWORKING PAID TIME. Each hour for which an Employee is
paid or entitled to be paid by the Employer on account of a period of time
during which no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness, incapacity,
disability, layoff, jury duty, military duty or leave of absence; provided,
however, no more than 501 Hours of Service shall be credited to an Employee
on account of any single continuous period during which he performed no
duties; and provided further that no credit shall be given for payments made
or due under a plan maintained solely for the purpose of complying with
applicable workmen's or unemployment compensation or disability insurance
laws or for payments which solely reimburse an Employee for medical or
medically related expenses incurred by the Employee; and
(c) MATERNITY AND PATERNITY LEAVE. Solely for purposes of
determining whether a One-Year Break in Service has occurred for vesting
purposes, each Hour for which an Employee is absent from employment by reason
of (1) pregnancy of the Employee, (2) birth of a child of the Employee, (3)
placement of a child in connection with the adoption of the child by an
individual or (4) caring for the child during the period immediately
following the birth or placement for adoption. During the period of absence,
the Employee shall be credited with the number of Hours that would be
generally credited but for such absence or if the general number of work
hours is unknown, eight Hours of Service for each normal workday during the
leave (whether or not approved). These Hours shall be credited to the
computation period in which the leave or absence commences if crediting of
such Hours is required to prevent the occurrence of a One-Year Break in
Service in such computation period, and in other cases in the immediately
following computation period. The computation period shall be the Plan Year.
No more than 501 Hours of Service shall be credited under this paragraph for
any single continuous period (whether or not such period occurs in a single
computation period). Hours of Service credited under this subsection (c)
shall not be credited for purposes of sharing in Employer contributions
pursuant to Section 5.2(b);
(d) BACK PAY. Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer;
provided, however, Hours of Service credited under paragraphs (a), (b) and
(c) above shall not be recredited by operation of this paragraph;
(e) EQUIVALENCIES. With respect to full-time Employees only,
the Committee has adopted the following equivalency method for counting Hours
of Service that are permissible under regulations issued by the Department of
Labor: (1) 45 Hours of Service for each week in which an Employee is
credited with at least one Hour of Service. Actual Hours shall be counted
for those Employees who are not employed on a full time basis.
The adoption of any equivalency method for counting Hours of
Service shall be evidenced by a certified resolution of the Committee, which
shall be attached to and made part of the Plan. Such resolution shall
indicate the date from which such equivalency shall be effective; and
(f) MISCELLANEOUS. Unless the Committee directs otherwise,
the methods of determining Hours of Service when payments are made for other
than the performance of duties and of crediting such Hours of Service to Plan
Years set forth in Regulations 2530.200b-2(b) and (c) promulgated by the
Secretary of Labor shall be used hereunder and are incorporated by reference
into the Plan.
Participants on military leaves of absence who are not directly or
indirectly compensated or entitled to be compensated by the Employer while on
such leave shall be credited with Hours of Service as required by Section 9
of the Military Selective Service
Act.
Notwithstanding any other provision of this Plan to the contrary,
an Employee shall not be credited with Hours of Service more than once with
respect to the same period of time.
INCOME means the net gain or loss of the Trust Fund from
investments, as reflected by interest payments, dividends, realized and
unrealized gains and losses on securities, other investment transactions and
expenses paid from the Trust Fund. In determining the Income of the Trust
Fund for any period, assets shall be valued on the basis of their fair market
value.
INVESTMENT MANAGER means an investment adviser, bank or insurance
company, meeting the requirements of Section 3(38) of ERISA appointed by the
Company to manage the Plan's assets in accordance with the Trust Agreement.
LEASED EMPLOYEE means any person who is not a common law employee
of the Employer and who provides services to the Employer if:
(a) such services are provided pursuant to an agreement
between the Employer and any leasing organization;
(b) such person has performed such services for the Employer
(or for the Employer and Affiliates) on a substantially full-time basis for
a period of at least one year; and
(c) such services are of a type historically performed in the
business field of the Employer by Employees.
Notwithstanding the foregoing, a person shall not be deemed to be
a Leased Employee if he is covered by a plan maintained by the leasing
organization and Leased Employees (as determined without regard to this
paragraph) do not comprise more than 20% of the Employer's nonhighly
compensated workforce. Such plan must be a tax-qualified money purchase
pension plan providing for nonintegrated employer contributions of ten
percent of compensation and also providing for immediate participation and
vesting.
LIMITATION YEAR means the Plan Year.
MATCHING CONTRIBUTIONS means the contributions made by the Employer
pursuant to Section 4.1(c).
MATCHING CONTRIBUTION ACCOUNT means the account maintained for a
Participant to record his share of Matching Contributions under Section
5.2(b)(ii) and adjustments relating thereto.
NORMAL REGIREMENT DATE means the date on which a Participant
attains age 65.
ONE-YEAR BREAK IN SERVICE OR BREAK IN SERVICE means a Plan Year
after the Effective Date during which an Employee has not completed more than
500 Hours of Service with the Employer due to a Termination of employment.
PARTICIPANT means an Eligible Employee participating in the Plan in
accordance with the provisions of Section 3.2.
PARTICIPATING EMPLOYER means any direct or indirect subsidiary of
the Company or any other entity designated by the Board of Directors, which
has adopted this Plan with the approval of the Employer.
PLAN means the Pep Boys Savings Plan, as amended from time to time.
PLAN YEAR means the 12 consecutive month period commencing January
1 and ending December 31; provided that the first Plan Year shall be a short
Plan Year from September 1, 1987 through December 31, 1987.
PRE-TAX CONTRIBUTIONS means the contributions made by the Employer
on a Participant's behalf pursuant to Section 4.1(a).
PRE-TAX CONTRIBUTION ACCOUNT means the account maintained for a
Participant to record his share of Pre-Tax Contributions under Section
5.2(b)(i) and adjustments relating thereto.
RETIREMENT means Termination of employment with the Employer at or
after Normal Retirement Date.
ROLLOVER ACCOUNT means the account maintained for a Participant to
record the amount of contributions he has rolled over to the Plan pursuant to
Section 4.9 and adjustments relating thereto.
SPOUSE (SURVIVING SPOUSE) means the spouse or surviving spouse of
the Participant or Former Participant; provided that a former spouse will be
treated as the spouse or surviving spouse to the extent provided under a
qualified domestic relations order as described in section 414(p) of the
Code.
TERMINATED OR TERMINATION means a termination of employment with
the Employer or with an Affiliate for any reason other than a transfer of
employment from the Employer to an Affiliate or from an Affiliate to another
Affiliate.
TRUST (OR TRUST FUND) means the fund known as the "Pep Boys Savings
Plan Trust," maintained by the Trustee in accordance with the terms of the
Trust Agreement, as amended from time to time, which constitutes a part of
this Plan.
TRUSTEE or TRUSTEES means any corporation or individuals appointed
by the Board of Directors of the Company to administer the Trust.
VALUATION DATE means, effective July 1, 1993, the last business day
of each month. Prior to July 1, 1993, Valuation Date means the last business
day of each Calendar Quarter or more frequently as the Trustee shall
determine.
YEAR OF ELIGIBILITY SERVICE means a 12 consecutive month period
beginning on the later of (i) the date employment commences; or (ii) the date
the collective bargaining agreement that covers the Eligible Employee, if
applicable, provides for participation in the Plan; (the "initial eligibility
computation period") in which an Eligible Employee is credited with at least
1,000 Hours of Service. If an Eligible Employee is not credited with 1,000
Hours of Service in the initial eligibility computation period, then the
eligibility computation period shall be the Plan Year, beginning with the
Plan Year that includes the first anniversary of the Eligible Employee's
initial eligibility computation period.
2.2 CONSTRUCTION. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, unless the context
clearly indicates to the contrary. <PAGE>
III: PARTICIPATION AND SERVICE
3.1 ELIGIBILITY TO PARTICIPATE. Any Eligible Employee who was
employed by the Employer on December 31, 1988 shall continue as a Participant
as of January 1, 1989. Each other Eligible Employee shall be eligible to
become a Participant as of the date on which he attains age 21 and is
credited with a Year of Eligibility Service.
3.2 COMMENCEMENT OF PARTICIPATION. Each Eligible Employee who has
satisfied the requirements of Section 3.1 shall commence participation in the
Plan on the Entry Date coincident with or next following the date he
satisfies such requirement.
Each Eligible Employee who is eligible for participation in the
Plan shall become a Participant by filing the appropriate forms with the
Committee, and shall supply such information as is reasonably necessary for
the administration of this Plan.
3.3 CESSATION OF PARTICIPATION. An Eligible Employee shall cease
to be a Participant upon the earliest of: (i) the date on which he retires
under the Retirement provisions of the Plan; (ii) the date on which his
employment with the Employer terminates for any reason, including death or
Disability; or (iii) the date on which he ceases to be an Eligible Employee.
3.4 SPEICAL RULES FOR ELIGIBILITY PURPOSES. For purposes of
determining an Employee's eligibility to participate in the Plan, Hours of
Service shall include an Employee's Hours of Service (i) with an Affiliate
after it became an Affiliate hereunder; or (ii) or while an Employee, but not
an Eligible Employee, of the Employer or an Affiliate, after it became an
Affiliate hereunder.
3.5 PARTICIPATION AND SERVICE UPON REEMPLOYMENT. Upon the
reemployment of any person after the Effective Date who had previously been
employed by the Employer on or after the Effective Date, the following rules
shall apply in determining his participation in the Plan and his Years of
Service under Section 3.4.
If the reemployed Employee was not a Participant in the Plan during
his prior period of employment, he must meet the requirements of Section 3.1
for participation in the Plan as if he were a new Employee. Any Years of
Eligibility Service in which he was credited with 1,000 Hours of Service
during his prior period of employment shall be reinstated upon his
reemployment. If the reemployed Employee was a Participant during his prior
period of employment, he shall resume participation in the Plan as soon as
administratively practicable following his reemployment by the Employer.
3.6 TRANSFERS TO AFFILIATES AND CHANGE IN STATUS. A Participant's
status as such under the Plan shall be modified upon and after the date as of
which a Participant (i) is transferred to an Affiliate; (ii) becomes a Leased
Employee; (iii) becomes an Employee whose terms of employment are covered by
a collective bargaining agreement that does not provide for participation in
this Plan; or (iv) ceases for any other reason to be an Eligible Employee
while still employed by the Employer.
The Participant shall share in Employer contributions only to the
extent of his Compensation up to the time such transfer or change in status
occurs and shall not thereafter, unless he later is transferred back to the
Employer or again becomes an Eligible Employee and becomes eligible under the
terms of the Plan to share in such allocations. He, however, shall share in
Income allocations pursuant to Section 5.2(a).
3.7 TRANSFERS FROM AFFILIATES AND CHANGE IN STATUS. Any Employee
who transfers to the Employer from an Affiliate or who becomes an Eligible
Employee eligible for participation in the Plan, shall be eligible to
participate in the Plan on the later of the first Entry Date coincident with
or next following his satisfaction of the eligibility requirements of Section
3.1 or the first Entry Date coincident with or next following his change in
status.
The Participant shall share in Employer contributions only to the
extent of his Compensation after such transfer or change in status occurs if
he becomes an Eligible Employee and becomes eligible under the terms of the
Plan to share in such allocations.<PAGE>
IV: EMPLOYER CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS.
(a) PRE-TAX CONTRIBUTIONS.
(i) Subject to the limitations of Sections 4.4 and 5.3,
each Participant shall have the option to authorize the Employer, in writing
and in accordance with procedures established by the Committee, to contribute
to the Plan for a Plan Year on his behalf, an amount equal to any whole
percentage of his Compensation from one percent (1%) up to twelve percent
(12%) (as determined without regard to this Section 4.1(a)) for such Plan
Year. Such authorization shall be in the form of an election by the
Participant to have his Compensation reduced by payroll withholding. Payroll
deduction shall commence as soon as practicable following the Entry Date on
which an Eligible Employee becomes a Participant or elects to make Pre-Tax
Contributions to the Plan. Such withheld amounts are to be transmitted by
the Employer to the Trustee as of the earliest date on which such amounts can
reasonably be segregated from the Employer's general assets. The amount of
such contributions, together with contributions under Sections 4.1(c) and
(d), shall not exceed the maximum amount allowable as a deduction under the
Code for the Plan Year.
(ii) Notwithstanding the foregoing, the Participant
shall be prohibited from authorizing any Pre-Tax Contributions to be made on
his behalf under this Plan and elective contributions under any other plan,
in excess of the applicable limit under Section 402(g) of the Code in effect
for the Plan Year to which such Pre-Tax Contributions relate. In the event
a Participant has made excess deferrals under the Plan (or, if not, has
determined that excess deferrals will be considered to exist under this
Plan), then not later than the first day of April following the close of the
Participant's taxable year, the Participant may notify the Plan of the amount
of the excess deferrals hereunder. The Participant shall be deemed to have
notified the Plan of excess deferrals to the extent he has excess deferrals
for the taxable year calculated by taking into account only elective
deferrals under the Plan and other plans of the Employer or Affiliate. The
Employer may notify the Plan on behalf of the Participant under these
circumstances.
Not later than the first April 15 following the close of the
taxable year, the Plan shall distribute to the Participant the amount
designated above, including any Income allocated thereto. The Income
attributable to a Participant's excess deferral pursuant to this Section
4.1(a)(ii) for the Plan Year during which such excess deferral arose shall be
determined in accordance with Treas. Reg. 1.402(g)-1(e)(5)(ii). Unless
provided for by the Committee, any Income attributable to a Participant's
excess deferrals for the period between the end of the Plan Year and the date
of distribution shall be disregarded. Excess deferrals to be distributed for
a Plan Year shall be reduced by Excess Contributions previously distributed
for the Plan Year beginning in such taxable year as set forth in Section 4.4.
A Participant who has excess deferrals for a taxable year may
receive a corrective distribution of excess deferrals during the same year.
This corrective distribution shall be made only if:
(A) The Participant designates the distribution as
an excess deferral. The Participant shall be deemed to have designated the
distribution to the extent the Participant has excess deferrals for the
taxable year calculated by taking into account only elective deferrals under
the Plan and other plans of the Employer and Affiliate. The Employer may
make the designation on behalf of the individual under these circumstances.
(B) The correcting distribution is made after the
date on which the Plan received the excess deferral.
(C) The Plan designates the distribution as a
distribution of excess deferrals.
The term "excess deferrals" means the excess of an individual's
elective deferrals for any taxable year, as defined in 1.402(g)-1(b), over
the applicable limit under Section 402(g)(1) for the taxable year.
Notwithstanding the foregoing, the Committee may further limit a
Participant's right to make Pre-Tax Contributions to the Plan if in the sole
judgment and discretion of the Committee, such limits are necessary to ensure
the Plan's compliance with the requirements of Sections 401(k) and (m) of the
Code.
(b) CHANGE IN AMOUNT OF PRE-TAX CONTRIBUTIONS. Effective as
of any Entry Date, upon written notice to the Committee to be effective as of
the full payroll period following the processing of such notice, each
Participant shall have the option to change the amount of Pre-Tax
Contributions he has authorized the Employer to contribute to the Plan on his
behalf pursuant to Section 4.1(a) in accordance with rules established
therefore by the Committee. Notwithstanding the foregoing, a Participant may
authorize the Employer to cease making Pre-Tax Contributions on his behalf at
any time, effective as of the next full payroll period following the
processing of written notice to the Committee. A Participant who has ceased
making Pre-Tax Contributions may again authorize Pre-Tax Contributions to be
made to the Plan on his behalf as of any Entry Date upon written notice to
the Committee, to be effective as of the next full payroll following the
processing of such notice. Prior to January 1, 1993, all changes to Pre-Tax
Contribution elections (other than a voluntary suspension of Pre-Tax
Contributions) were effective as of any January 1 or July 1.
(c) MATCHING CONTRIBUTIONS. Subject to the limitations of Sections 4.4 and
5.3, the Employer shall contribute for each Plan Year, an amount, if any, to
be determined by the Board of Directors. Unless and until changed by the
Board of Directors, such amount shall be as follows:
The lesser of (i) 50% of the Participant's Pre-Tax Contributions
for each Calendar Quarter in which he contributed; and (ii) three percent
(3%) of the Participant's Compensation for the Calendar Quarter. In order to
share in the allocation of the Employer's Matching Contribution, a
Participant must be employed by the Employer on the last day of the Plan Year
or have Terminated employment during the Plan Year due to Normal Retirement,
Early Retirement or Disability prior to the last day of the Plan Year. The
Matching Contribution shall be made once each Plan Year, but based on the
Pre-Tax Contributions that are made in each Calendar Quarter by those
Participants eligible to share in the allocation of the Matching
Contribution.
The amount of such contributions shall not exceed the maximum
amount allowable as a deduction under the Code for such Plan Year and shall
be subject to the limitations of Section 5.3.
(d) DISCRETIONARY QNECs. Subject to the limitations of
Sections 4.4 and 5.3, the Employer shall contribute for each Plan Year an
amount, if any, as determined by the Board of Directors on behalf of some or
all Participants who are not Highly Compensated Eligible Participants. The
amount of such contribution, together with contributions under Sections
4.1(a) and (c), shall not exceed the maximum amount allowable as a deduction
under the Code for such Plan Year. It is intended that this contribution
shall constitute a qualified nonelective contribution within the meaning of
Treas. Reg. 1.401(k)-1(g)(13)(ii) or any successor thereto.
4.2 TIME AND MANNER OF CONTRIBUTION. All Employer contributions
shall be paid directly to the Trustee, and except as provided in Section
4.1(a), a contribution for any Plan Year shall be made not later than the
date prescribed by law for filing the Employer's federal income tax return,
including extensions, for such Plan Year.
4.3 CONDITIONS ON EMPLOYER CONTRIBUTIONS. To the extent permitted
or required by ERISA and the Code, contributions under this Plan are subject
to the following conditions:
(a) If the Employer makes a contribution, or any part
thereof, by mistake of fact, such contribution or part thereof shall be
returned to the Employer within one year after such contribution is made;
(b) Contributions to the Trust Fund are specifically
conditioned on the qualification of the Plan under the Code; in the event the
Plan is determined to be disqualified, contributions made in respect of any
period subsequent to the effective date of such disqualification shall be
returned to the Employer within one year after the effective date of
disqualification;
(c) Contributions to the Plan are specifically conditioned
upon their deductibility under the Code; to the extent a deduction is
disallowed for any such contribution, such amount shall be returned to the
Employer within one year after the disallowance of the deduction; and
(d) The amount of any Employer contribution shall be subject
to the limitations prescribed in Section 5.3.
4.4 LIMITATIONS ON PRE-TAX CONTRIBUTIONS. The amount of Pre-Tax
Contributions made in each Plan Year on behalf of all Eligible Participants
under the Plan shall comply with either (i), (ii) and (iii), if applicable,
below.
(i) The average deferral percentage for the Highly
Compensated Eligible Participants shall not exceed the average deferral
percentage for all other Eligible Participants multiplied by 125%; or
(ii) The average deferral percentage for Highly Compensated
Eligible Participants shall not be greater than the average deferral
percentage of all other Eligible Participants multiplied by 200% and the
excess of the average deferral percentage for Highly Compensated Eligible
Participants over all other Eligible Participants shall not exceed two
percentage points.
Compliance with (i) and (ii) above, shall be determined in
accordance with the rules set forth in Section 401(k)(3) of the Code, Treas.
Reg. 1.401(k)-1(b), or any successors thereto.
(iii) Notwithstanding the foregoing, if this Section 4.4
and Section 4.6 are both satisfied by use of the limitation set forth in
subsection (ii) above, the average deferral percentages for the Highly
Compensated Eligible Participants and the average contribution percentages
for the Highly Compensated Eligible Participants, as defined in Section 4.6,
also must satisfy the aggregate limit test set forth in Treas. Reg.
1.401(m)-2(b)(3).
If the Committee determines, in its sole discretion, with respect
to any Plan Year, that the Plan will (or may) fail (i), (ii) or (iii) above,
the Committee shall take any action, that it deems appropriate, including
imposing limitations on Pre-Tax Contributions made by Highly Compensated
Eligible Participants, for the Plan to satisfy (i), (ii) or (iii) above.
If the amount of Pre-Tax Contributions authorized by Highly
Compensated Eligible Participants in a Plan Year would not comply with either
(i), (ii) or (iii) above, then by the last day of the following Plan Year,
the Excess Contributions for such Plan Year (including any Income
attributable to such contributions as determined by the Committee) shall be
distributed to Highly Compensated Eligible Participants on the basis of the
respective portions of such Excess Contributions attributable to each such
Highly Compensated Eligible Participant in accordance with Treas. Reg.
1.401(k)-1(f)(4).
If Excess Contributions are distributed to Highly Compensated
Eligible Participants, the amount of excess of each Highly Compensated
Eligible Participant is the amount by which his Pre-Tax Contributions must be
reduced for the Participant's deferral percentage to equal the highest
permitted actual deferral percentage under the Plan. To calculate the
highest permitted actual deferral percentage under the Plan, the actual
deferral percentage of the Highly Compensated Eligible Participant with the
highest deferral percentage is reduced by the amount required to cause the
Participant's actual deferral percentage to equal the percentage of the
Highly Compensated Eligible Participant with the next highest actual deferral
percentage. If a lesser reduction would enable the arrangement to satisfy
the actual deferral percentage test, only such lesser reduction need be made.
This process shall be repeated until the requirements set forth above are
met. The highest deferral percentage remaining under the Plan after leveling
is the highest permitted actual deferral percentage. In no event shall the
amount of Excess Contributions to be distributed for a Plan Year with respect
to any Highly Compensated Eligible Participant exceed the amount of Pre-Tax
Contributions made on behalf of the Highly Compensated Eligible Participant
for the Plan Year.
The Compensation and Pre-Tax Contributions of Highly Compensated
Eligible Participants who are either five percent owners or among the ten
most Highly Compensated Employees includes the Compensation and Pre-Tax
Contributions of their Family Members. When family aggregation shall be
required, the family group shall be treated as one Highly Compensated
Eligible Participant and the actual contribution percentage for the group
shall be determined by combining the Pre-Tax Contributions, amounts treated
as Pre-Tax Contributions and Compensation of all the eligible Family Members.
If an Employee is required to be aggregated as a Family Member of more than
one family group in the Plan, then all Participants who are Family Members of
those family groups that include that Employee, are aggregated as one family
group.
The amount of Excess Contributions for a Highly Compensated
Eligible Participant shall be determined by reducing the contribution
percentage of the Highly Compensated Eligible Participants who have the
highest percentages to the maximum acceptable level. The amount of Excess
Contributions to be reduced shall be reduced by excess deferrals, as defined
in Section 4.1(a)(ii), previously distributed for the taxable year ending in
the same Plan Year.
If the Highly Compensated Eligible Participant's deferral
percentage was required to be determined by combining the Compensation and
Pre-Tax Contributions of all Family Members who are Participants, the Highly
Compensated Eligible Participant's percentage shall be reduced as set forth
above. Excess Contributions shall be allocated among the eligible Family
Members in proportion to the Pre-Tax Contributions of each such Family Member
that were combined above.
Alternatively, the Committee may take such other actions as may be
permissible under the Code to ensure the Plan's compliance with the
requirements of Section 401(k) of the Code, including, without limitation the
allocation of the Employer's Discretionary QNEC to some or all Eligible
Participants who are not Highly Compensated Eligible Participants in
accordance with Section 4.1(d).
4.5 INCOME ATTRIBUTABLE TO EXCESS CONTRIBUTIONS. The Income
attributable to a Participant's Excess Contributions pursuant to Section 4.4
for the Plan Year during which such Excess Contributions arose shall be
determined in accordance with Treas. Reg. 1.401(k)-1(f)(4)(ii).
Unless provided for by the Committee, any gain or loss on a
Participant's Excess Contributions for the period between the end of the Plan
Year and the date of distribution shall be disregarded.
4.6 LIMITATIONS ON MATCHING CONTRIBUTIONS. The amount of Matching
Contributions made in each Plan Year on behalf of all Eligible Participants
under the Plan shall comply with either (i), (ii) and (iii), if applicable,
below.
(i) The average contribution percentage for the Highly
Compensated Eligible Participants shall not exceed the average contribution
percentage for all other Eligible Participants multiplied by 125%; or
(ii) The average contribution percentage for Highly
Compensated Eligible Participants shall not be greater than the average
contribution percentage of all other Eligible Participants multiplied by 200%
and the excess of the average contribution percentage for Highly Compensated
Eligible Participants over all other Eligible Participants shall not exceed
two percentage points.
Compliance with (i) and (ii) above, shall be determined in
accordance with the rules set forth in Section 401(m)(2) of the Code and
Treas. Reg. 1.401(m)-1(b), or any successors thereto.
(iii) Notwithstanding the foregoing, if this Section 4.6
and Section 4.4 are both satisfied by use of the limitation set forth in
subsection (ii) above, the average contribution percentages for the Highly
Compensated Eligible Participants and the average deferral percentages for
the Highly Compensated Eligible Participants, as defined in Section 4.4, also
must satisfy the aggregate limit test set forth in Treas. Reg.
1.401(m)-2(b)(3).
If the Committee determines, in its sole discretion, with respect
to any Plan Year, that the Plan will (or may) fail (i), (ii) or (iii) above,
the Committee shall take any action that it deems appropriate, for the Plan
to satisfy (i), (ii) or (iii) above.
If the amount of Matching Contributions made on behalf of Highly
Compensated Eligible Participants in a Plan Year would not comply with either
(i), (ii) or (iii) above, then by the last day of the following Plan Year,
the Committee may determine that the Excess Aggregate Contributions for such
Plan Year (including any Income attributable to such contributions, as
determined by the Committee) shall be distributed to Highly Compensated
Eligible Participants or forfeited on the basis of the respective portions of
such Excess Aggregate Contributions attributable to each such Highly
Compensated Eligible Participant in accordance with Treas. Reg.
1.401(m)-1(e).
If Excess Aggregate Contributions are distributed or forfeited for
Highly Compensated Eligible Participants, the amount of excess of each Highly
Compensated Eligible Participant is the amount by which his Matching
Contributions must be reduced for the Participant's contribution percentage
to equal the highest permitted actual contribution percentage under the Plan.
To calculate the highest permitted actual contribution percentage under the
Plan, the actual contribution percentage of the Highly Compensated Eligible
Participant with the highest contribution percentage is reduced by the amount
required to cause the Participant's actual contribution percentage to equal
the percentage of the Highly Compensated Eligible Participant with the next
highest actual contribution percentage. If a lesser reduction would enable
the arrangement to satisfy the actual contribution percentage test, only such
lesser reduction need be made. This process shall be repeated until the
requirements set forth above are met. The highest contribution percentage
remaining under the Plan after leveling is the highest permitted actual
contribution percentage. In no event shall the amount of Excess Aggregate
Contributions to be distributed or forfeited for a Plan Year with respect to
any Highly Compensated Eligible Participant exceed the amount of Matching
Contributions made on behalf of the Highly Compensated Eligible Participant
for the Plan Year.
The Compensation and Matching Contributions of Highly Compensated
Eligible Participants who are either five percent owners or among the ten
most Highly Compensated Employees includes the Compensation and Matching
Contributions of their Family Members. When family aggregation shall be
required, the family group shall be treated as one Highly Compensated
Eligible Participant and the actual contribution percentage for the group
shall be determined by combining the Matching Contributions, amounts treated
as Matching Contributions and Compensation of all the eligible Family
Members. If an Employee is required to be aggregated as a Family Member of
more than one family group in the Plan, then all Participants who are Family
Members of those family groups that include that Employee, are aggregated as
one family group.
The amount of Excess Aggregate Contributions for a Highly
Compensated Eligible Participant shall be determined by reducing the
contribution percentage of the Highly Compensated Eligible Participants who
have the highest percentages to the maximum acceptable level.
If the Highly Compensated Eligible Participant's contribution
percentage was required to be determined by combining the Compensation and
Matching Contributions of all Family Members who are Participants, the Highly
Compensated Eligible Participant's percentage shall be reduced as set forth
above. Excess Aggregate Contributions shall be allocated among the eligible
Family Members in proportion to the Matching Contributions of each such
Family Member that were combined above.
Alternatively, the Committee may take such other actions as may be
permissible under the Code to ensure the Plan's compliance with the
requirements of Section 401(m) of the Code, including, without limitation the
allocation of the Employer's Discretionary QNEC to some or all Eligible
Participants who are not Highly Compensated Eligible Participants in
accordance with Section 4.1(d).
4.7 INCOME ATTRIBUTABLE TO EXCESS AGGREGATE CONTRIBUTIONS. The
Income attributable to a Participant's Excess Aggregate Contributions
pursuant to Section 4.6 for the Plan Year during which such Excess Aggregate
Contributions arose shall be determined in accordance with Treas. Reg.
1.401(m)-1(e)(3)(ii).
Unless provided for by the Committee, any gain or loss on a
Participant's Excess Aggregate Contributions for the period between the end
of the Plan Year and the date of distribution shall be disregarded.
4.8 REQUIREMENTS FOR QUALIFIED NON-ELECTIVE CONTRIBUTIONS AND
QUALIFIED MATCHING CONTRIBUTIONS. Any contributions that are designated as
qualified non-elective contributions or as qualified matching contributions
shall meet the requirements of Treas. Reg. Sections 1.401(k)-1(b)(5) and
1.401(m)-1(b)(5). In addition, qualified non-elective contributions and
qualified matching contributions shall be fully vested at all times. Such
contributions shall be distributed from the Plan only in accordance with the
events enumerated in the Plan provided however, that in no event shall such
amounts be available for hardship withdrawal.
4.9 ROLLOVERS. A Participant or an Eligible Employee, with the
prior discretionary approval of the Committee, may transfer, or have
transferred to the Trust any property which has been distributed to him
whether such amount is (i) transferred directly from the Trust of another
plan that is qualified under Section 401(a) of the Code, as an eligible
rollover distribution to this Plan; (ii) transferred by the Participant after
his receipt of such amount from a plan qualified under Section 401(a) of the
Code; or (iii) transferred from a "conduit" Individual Retirement Account
established by the Participant upon his receipt of such amount from a plan
qualified under Section 401(a) of the Code; provided, however, that such
amount qualifies as a rollover amount as defined by the Code at the time of
the transfer.
The amount of cash or the fair market value of any other property
transferred to the Trust pursuant to this Section 4.9 shall be credited to
the Participant's Rollover Account as of the Valuation Date next following
such transfer to the Trust and shall be nonforfeitable at all times.
4.10 ROLLOVERS FROM THE PLAN. Notwithstanding any provision of the
Plan to the contrary, effective January 1, 1993, a Distributee may elect, at
the time and in the manner prescribed by the Committee, to have any portion
of an Eligible Rollover Distribution paid directly to an Eligible Retirement
Plan, specified by the Distributee, in a Direct Rollover. Each Eligible
Rollover Distribution shall be made payable to the Eligible Retirement Plan
and delivered to the Distributee or paid directly to the Eligible Retirement
Plan.
4.11 IN WRITING REQUIREMENT. Unless otherwise required by law, a
requirement that a transaction under the Plan be "in writing" may, at the
discretion of the Committee, be effected through an interactive telephone
system or by other types of electronic communications. <PAGE>
V: ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
5.1 INDIVIDUAL ACCOUNTS. The Committee shall create and maintain
adequate records to disclose the interest in the Trust of each Participant,
Former Participant and Beneficiary. Such records shall be in the form of
individual Accounts and credits, and charges shall be made to such Accounts
in the manner herein described. While such Accounts shall distinguish
between Matching Contributions and adjustments thereto and Pre-Tax
Contributions and adjustments thereto and Discretionary QNECS and adjustments
thereto, there shall be one Account maintained for each Participant
reflecting the Matching Contributions, Pre-Tax Contributions and
Discretionary QNECs made to the Plan by or on behalf of each Participant.
There also shall be maintained one Account for each Participant reflecting
his Rollover Account, if any. The maintenance of individual Accounts is for
accounting purposes only, and a segregation of the assets of the Trust Fund
with respect to each Account shall not be required.
5.2 ACCOUNT ADJUSTMENTS. The Accounts of Participants, Former
Participants and Beneficiaries shall be adjusted in accordance with the
following:
(a) INCOME. The Income of the Trust Fund shall be allocated
as of each Valuation Date to the Accounts of Participants, Former
Participants and Beneficiaries who have unpaid balances in their Accounts on
a Valuation Date in proportion to the balances in such Accounts immediately
after the next preceding Valuation Date, but after (i) first reducing each
such Account by 100% of any distributions, loans or withdrawals from such
Accounts during the interim period; and (ii) increased by fifty percent (50%)
of Pre-Tax Contributions, rollover contributions and loan repayments that are
made after the last Valuation Date and during the month that includes the
subsequent Valuation Date.
For purposes of this subsection, to the extent that the Participant
has directed the management of his Account(s) pursuant to Section 7.2, or
taken a loan from his Account(s) pursuant to Section 6.9, then, to such
extent, the Income with respect to his
Accounts shall be separately determined by reference to such investments.
Otherwise, all valuations hereunder shall be based on the fair market value
of the assets in the Trust Fund on the Valuation Date.
(b) EMPLOYER CONTRIBUTIONS. The Employer's contribution for
each Plan Year shall be allocated among the Pre-Tax Contribution Accounts and
Matching Contribution Accounts of those eligible Participants as set forth
below:
(i) PRE-TAX CONTRIBUTIONS. The Employer's Pre-Tax
Contribution for the Plan Year made pursuant to Section 4.1(a) shall be
credited directly to the Pre-Tax Contribution Account of each Participant who
authorized a Pre-Tax Contribution.
(ii) MATCHING CONTRIBUTIONS. The Employer's Matching
Contribution for the Plan Year made pursuant to Section 4.1(c) shall be
allocated to the Matching Contribution Accounts of those Participants
described in Section 4.1(c).
(iii) DUSCRETUIBART QNECs. The Employer's
Discretionary QNEC for the Plan Year made pursuant to Section 4.1(d), shall
be credited directly to the Discretionary QNEC Accounts of some or all
Eligible Participants who are not Highly Compensated Eligible Participants as
of the last day of the Plan Year and who are designated to receive an
allocation of such contribution.
(c) DEEMED DATE OF ALLOCATION. All credits or deductions
made under this Article to Participants' Accounts shall be deemed to have
been made no later than the last day of the Plan Year though actually
determined thereafter.
5.3 MAXIMUM ANNUAL ADDITIONS. The maximum Annual Additions that
may be contributed or allocated to a Participant's Accounts under the Plan
for any Limitation Year shall not exceed the lesser of:
(i) the defined contribution dollar limitation, or
(ii) 25 percent of the Participant's compensation, within the
meaning of Section 415(c)(3) of the Code, for the Limitation Year.
The compensation limitation referred to shall not apply to:
(i) Any contribution for medical benefits (within the meaning
of Section 419A(f)(2) of the Code) after separation from service which is
otherwise treated as Annual Additions, or
(ii) Any amount otherwise treated as Annual Additions under
Section 415(l)(1) of the Code.
The defined contribution dollar limitation shall mean $30,000 or,
if greater, one-fourth of the defined benefit dollar limitation set forth in
Section 415(b)(1) of the Code as in effect for the Limitation Year.
If the total Annual Additions on behalf of a Participant for a
Limitation Year would exceed the limitations described herein as a result of
a reasonable error in determining the amount of Pre-Tax Contributions that a
Participant may make to comply with this Section 5.3, or as a result of a
reasonable error in estimating a Participant's Compensation for purposes of
this Section, such excess Pre-Tax Contributions may be distributed to the
Participant to the extent that such distribution would reduce the excess
Annual Additions as permitted under Section 415 of the Code. If Pre-Tax
Contributions are distributed, then such amounts shall be disregarded under
Section 4.4, 4.5, 4.6 and 4.7 and for purposes of the limitations of Section
402(g) of the Code.
If the total Annual Additions on behalf of a Participant for a
Limitation Year would exceed the limitations described herein as a result of
the allocation of forfeitures, a reasonable error in estimating a
Participant's annual compensation, the excess amounts in the Participant's
Accounts shall be allocated and reallocated to other Participants in the
Plan. However, if the allocation or reallocation of the excess amounts
pursuant to the provisions of the Plan causes the limitations of Section 415
to be exceeded with respect to a Participant for the Limitation Year, then
these amounts shall be held unallocated in a suspense account. If a suspense
account is in existence at any time during a particular Limitation Year,
other than the Limitation Year described in the preceding sentence, all
amounts in the suspense account must be allocated and reallocated to
Participants' Accounts (subject to the limitations of Section 415) before any
Employer contributions which would constitute Annual Additions may be made to
the Plan for that Limitation Year.
5.4 DEFINED CONTRIBUTION AND DEFINED BENEFIT PLANS.
Notwithstanding any other provision of the Plan to the contrary, the total
Annual Additions on behalf of a Participant for any Limitation Year shall not
cause the sum of that Participant's defined contribution plan fraction and
defined benefit plan fraction (as those terms are defined in Section 415 of
the Code and regulations thereunder) to exceed 1.0. If the sum of such
fractions would exceed l.0 for any Limitation Year, the excess amount will be
eliminated first by making appropriate adjustments under any defined benefit
plan maintained by the Employer and then under this Plan.
5.5 NO RIGHTS CREATED BY ALLOCATION. Any allocation made and
credited to the Account of a Participant, Former Participant or Beneficiary
under this Article shall not cause such Participant, Former Participant or
Beneficiary to have any right, title or interest in or to any assets of the
Trust Fund except at the time or times, and under the terms and conditions,
expressly provided in this Plan. <PAGE>
VI: PAYMENT OF BENEFITS
6.1 NORMAL RETIREMENT OR TERMINATION. If a Participant's
employment is Terminated by reason of his Normal Retirement or Termination,
then such Participant shall be entitled to receive the entire amount credited
to his Accounts in the manner and at the time provided in Sections 6.4 and
6.5.
6.2 DEATH. In the event that the Termination of employment of a
Participant is caused by his death, or in the event that a Participant or
Former Participant who is entitled to receive distributions pursuant to
Section 6.1 dies prior to receiving the full amount of such distributions,
the entire amount credited to his Accounts shall be paid to his Beneficiary
in the manner and at the time provided in Sections 6.4 and 6.5.
6.3 VESTING. A Participant shall be fully vested at all times in
his Accounts.
6.4 TIME OF PAYMENT OF BENEFITS.
(a) A distribution to a Participant of his Accounts on
account of Retirement pursuant to Section 6.1 on or after Normal Retirement
Date shall be made as soon as practicable following the Valuation Date
coincident with or next following such Retirement after receipt by the
Committee of the applicable forms.
(b) Distribution of a Participant's or Former Participant's
Accounts, payable on account of the death of a Participant or Former
Participant pursuant to Section 6.2, shall be distributed as follows:
(1) In the case of a Participant's death prior to
commencement of his benefits in a single lump sum payment, as soon as
practicable following such death, but no later than December 31 of the year
in which occurs the fifth anniversary of the Participant's or Former
Participant's death, (but no earlier than the Valuation Date coincident with
or next following his date of death).
(2) Notwithstanding subsection (1) above, in the case of
a Participant's or Former Participant's death prior to commencement of his
benefits, if such Participant's Beneficiary is his Spouse, then such
distribution shall not be required to begin prior to the date on which the
Participant or Former Participant would have attained age 70-1/2, had he
lived. At such time, distribution must be made in the form provided for in
Section 6.5. Prior to the date on which the Participant or Former
Participant would have attained age 70-1/2, the Spouse may elect to receive
the Participant's or Former Participant's Accounts, upon written notice to
the Committee in a lump sum.
(3) Any amount payable to a child pursuant to the death
of a Participant or Former Participant shall be treated as if it were payable
to the Participant's or Former Participant's Spouse if such amount would
become payable to the Spouse upon such child reaching majority (or other
designated event permitted by regulations).
(c) Subject to subsection (e) of this Section 6.4, a
distribution to a Participant of his Accounts, payable on account of other
Termination of employment pursuant to Section 6.3, shall be made as soon as
practicable following the Valuation Date coincident with or next following
such Termination after receipt by the Committee of the applicable forms. In
the case of a distribution of a Participant's Accounts that does not exceed
$3,500, if the Participant fails to complete all forms or applications needed
to properly process the distribution pursuant to rules set by the Committee,
then the distribution shall be automatically made as soon as administratively
feasible after the next Valuation Date that is coincident with or next
follows the date that is 90 days following the event giving rise to the
distribution. If the Participant's Accounts exceed $3,500, distribution of
benefits shall not commence unless the Participant consents to such
distribution in writing.
(d) If the vested percentage of a Participant's Accounts
exceed $3,500 (determined at the time of any distribution) a distribution
from a Participant's Accounts may not be made prior to a Participant's Normal
Retirement Date (other than as a result of death) without obtaining the
Participant's consent, at such time and in such manner as may be required by
the Code and applicable regulations thereunder, to such distribution being
made prior to his Normal Retirement Date. If the Former Participant does not
consent to such distribution, benefits shall remain in the Trust Fund and
shall continue to receive Income allocations pursuant to Section 5.2(a) and
shall not be distributed to the Participant (or his Beneficiary) until his
attainment of age 70-1/2 or the Valuation Date coincident with or next
following his death, if sooner. Prior to the date on which the Former
Participant attains age 70-1/2, the Former Participant may elect to receive
all of his Accounts upon written notice to the Committee in a single lump
sum.
(e) Notwithstanding any other provision of this Plan to the
contrary, unless the Participant or Former Participant elects otherwise,
payment of benefits under this Plan shall commence not later than sixty (60)
days after the close of the Plan Year in which the latest of the following
events occurs: (a) the Participant or Former Participant attains age 65; (b)
the tenth (10th) anniversary of the Plan Year in which the Participant or
Former Participant commenced participation in the Plan; or (c) the
Termination of the Participant's service with the Employer.
(f) Distribution to a Participant who continues to be
employed by the Employer following his attainment of age 70-1/2 of his
Accounts must commence no later than April 1 of the calendar year following
the calendar year in which the Participant or Former Participant attains age
70-1/2. The foregoing shall not apply to any Participant who (i) has
attained age 70-1/2 before January 1, 1988 and (ii) is not a five percent
(5%) owner of the Employer, as defined in Section 416(i)(B) of the Code at
any time during the Plan Year ending with or within the calendar year in
which he attains age 66-1/2 and any subsequent Plan Year.
(g) Distribution to an alternate payee of a Participant or
Former Participant, pursuant to a qualified domestic relations order
("QDRO"), as defined in Section 414(p) of the Code, shall be made as soon as
practicable following the finalization of the QDRO, or such later date as the
QDRO may authorize.
(h) Effective September 1, 1994, the value of Company Stock
or the value of other investment funds shall be determined as of a date that
is as close as administratively feasible to the date on which payment is
made. Payments shall be made as soon as practicable following the Valuation
Date coincident with or next following the distributable event if the
necessary paperwork is returned. Prior to September 1, 1994, the Account
value for distribution was determined as of the end of the preceding Calendar
Quarter coincident with or next following the distributable event.
6.5 MODE OF PAYMENT OF BENEFITS. Any amount to which a
Participant, Former Participant or Beneficiary shall become entitled to
hereunder shall be distributed to him in a lump sum.
All distributions pursuant to this Section shall be made in cash,
securities or other property as the Committee in its sole and absolute
discretion may determine, to the extent permitted by the Code and regulations
thereunder.
All distributions shall be made in a lump sum.
All distributions shall satisfy the incidental death limitations of
Section 401(a)(9)(G) of the Code, including the minimum distribution
incidental benefit requirement and the pre-retirement incidental benefit
requirement as set forth in Treas. Reg. Section 1.401-1(b)(ii).
6.6 DESIGNATION OF BENEFICIARY. Each Participant or Former
Participant (or beneficiary thereof) from time to time may designate any
person or persons (who may be designated contingently or successively and who
may be an entity other than a natural person) as his Beneficiary or
Beneficiaries to whom his Plan benefits are to be paid if he dies before
receipt of all such benefits. Each Beneficiary designation shall be made on
a form prescribed by the Committee and will be effective only when filed with
it during the Participant's or Former Participant's lifetime. Each
Beneficiary designation filed with the Committee will cancel all Beneficiary
designations previously filed with it by that Participant or Former
Participant. The revocation of a Beneficiary designation, no matter how
effected, shall not require the consent of any designated Beneficiary.
If any Participant or Former Participant fails to designate a
Beneficiary in the manner provided above, or if the Beneficiary designated
dies before such Participant's or Former Participant's death or before
complete distribution of the Participant's or Former Participant's benefits,
such Participant's or Former Participant's benefits shall be paid in the
following order of priority: first, to the Participant's or Former
Participant's surviving spouse, if any; second, to the Participant's or
Former Participant's surviving children, if any, in equal shares; third, to
the estate of the last to die of such Participant or Former Participant and
his Beneficiary or Beneficiaries.
Notwithstanding the foregoing, the surviving spouse of a
Participant or Former Participant shall be deemed to be the Participant's or
Former Participant's designated Beneficiary, and shall be entitled to receive
any distribution on account of the Participant's or Former Participant's
death in a lump sum, unless the Participant or Former Participant designates
a Beneficiary other than the surviving spouse and such surviving spouse
consents irrevocably in writing to the designation of such alternate
Beneficiary and the Spouse's consent acknowledges the effect of such
designation and is witnessed by a notary public or a member of the Committee.
The requirements of this paragraph may be waived if it is established to the
satisfaction of the Committee that the consent may not be obtained because
there is no Spouse or because the Spouse cannot be located or because of such
other circumstances as may be prescribed by regulation.
6.7 INFORMATION REQUIRED FROM BENEFICIARY. If at, after or during
the time when a benefit is payable to any Beneficiary, the Committee upon
request of the Trustee or at its own instance, delivers by registered or
certified mail to the Beneficiary at the Beneficiary's last known address a
written demand for his then address, or for satisfactory evidence of his
continued life, or both, and, if the Beneficiary fails to furnish the
information to the Committee within three years from the mailing of the
demand, then the Committee shall distribute to the party next entitled
thereto under Section 6.7 above as if the Beneficiary were then deceased.
6.8 IN-SERVICE WITHDRAWALS.
(a) NON-HARDSHIP
(1) A Participant may elect to withdraw an amount equal
to all or any part of his interest in his Rollover Account, including
earnings, for any reason.
(2) Upon attainment of age 59-1/2, a Participant may
elect to withdraw all or any portion of his interest in his Pre-Tax
Contribution Account.
(b) HARDSHIP. On account of financial hardship, as defined
below, a Participant may make a withdrawal from his Pre-Tax Contribution
Account attributable to all of his Pre-Tax Contributions (as of the last
completed valuation) and Interest allocated as of December 31, 1988 to his
Pre-Tax Contribution Account.
(c) PROCEDURES
(1) The amount available for withdrawal shall be based
on the most recently completed monthly valuation and shall be withdrawn on a
prorata basis from the investment funds in which the underlying contributions
are invested. (Prior to September 1, 1994 the amount available for
withdrawal was determined as of the last completed quarterly valuation).
The amount charged against a Participant's Pre-Tax Contribution
Account and/or Rollover Account shall be based on the value of Company Stock
or value of other investment funds determined as of a date as close as
administratively feasible to the date of payment (prior to September 1, 1994,
as of the end of the preceding Calendar Quarter).
(2) The existence of a financial hardship and the amount
necessary to meet such hardship, shall be determined by the Committee in
accordance with the rules set forth below. Notwithstanding the foregoing, a
hardship withdrawal by a Participant hereunder may not include any amounts
attributable to "qualified non-elective" and "qualified matching"
contributions as defined under Section 401(k) of the Code.
An immediate and heavy financial need shall be limited to a need
for funds for any of the following purposes:
(A) medical expenses described in Section 213(d) of
the Code and incurred by the Participant, his Spouse, or any of the
Participant's dependents (as defined in Section 152 of the Code), or expenses
necessary for these individuals to obtain medical care described in Section
213(d) of the Code, as long as such expenses are ineligible for reimbursement
under any health care plans;
(B) costs directly related to the purchase
(excluding mortgage payments) of a principal residence of the Participant;
(C) the payment of tuition and related educational
fees for the next twelve-months of post-secondary education for the
Participant, his Spouse, children or dependents (as defined in Section 152 of
the Code); or
(D) payments necessary to prevent the eviction of
the Participant from his principal residence or foreclosure on the mortgage
of the Participant's principal residence.
(3) If the following criteria are met, the Participant
will be deemed to have a financial need for a hardship withdrawal to be made:
(A) the distribution is not in excess of the amount
of the immediate and heavy financial need of the Participant; and
(B) the Participant has obtained all distributions,
other than hardship distributions, and all nontaxable loans currently
available under all plans maintained by the Employer or any Affiliate.
(4) Following payment of any hardship distribution to a
Participant hereunder, such Participant may not make Pre-Tax Contributions
(and the Participant shall be precluded from making any employee
contributions to all other plans maintained by the Employer as defined in
Treas. Reg. Section 1.401(k)-1(d)(2)(iv)(B)(4)), during the twelve calendar
months immediately following the effective date of such hardship withdrawal.
A Participant may reenroll in the Plan as of the next Entry Date following
the suspension period. In addition, the Participant may not make any Pre-Tax
Contributions to the Plan for the Participant's taxable year immediately
following the taxable year of the hardship withdrawal, in excess of the
applicable limit under Section 402(g) of the Code for such next taxable year
less the amount of such Participant's Pre-Tax Contributions for the taxable
year of the hardship distribution. A similar suspension shall apply if any
Participant receives a hardship withdrawal under any other tax-qualified plan
maintained by the Employer or any Affiliate in respect of which such a
suspension penalty applies. Suspension of a Participant's eligibility to
make Pre-Tax Contributions under this Plan shall have no effect on the
Participant's right to receive Matching Contributions with respect to Pre-Tax
Contributions made before or after the suspension period.
6.9 LOANS TO PARTICIPANTS. The Committee may direct the Trustee
to lend a Participant an amount not in excess of the lesser of (i) 50% of his
vested Accounts, determined as of the most recently completed monthly
valuation (prior to September 1, 1994, as of the last completed quarterly
valuation) ; or (ii) $50,000 (reduced by the excess, if any, of the highest
outstanding balances of all other loans from the Plan during the one-year
period ending on the day before the loan was made over the outstanding
balance of loans from the plan on the date on which such loan was made).
Notwithstanding the foregoing, a Participant may have only one loan
outstanding at any time. Subject to the rules of the Committee set forth
below, the Trustee, upon application by a Participant, may make a loan to
such Participant for any reason. In addition to such rules as the Committee
may adopt, all loans shall comply with the following terms and conditions:
(a) An application by a Participant for a loan from the Plan
shall be made in writing to the Committee (on a form prescribed by it) whose
action thereon shall be final.
(b) The period of repayment for any loan shall be arrived at
by mutual agreement between the Committee and the borrower, but such period
in no event shall exceed five years. Repayment of interest and principal
shall commence at the discretion of the Committee, but in no event later than
the first day of the third month commencing after the loan was received by
the Participant. Repayment of interest and principal shall be according to
a substantially level amortization schedule of payments. Payment of interest
and principal shall be by payroll deduction. After 26 bi-weekly repayments
are made, a Participant may elect to prepay the remaining balance of his loan
in one lump sum payment.
(c) Each loan shall be made against collateral being the
assignment of the borrower's right, title and interest in and to the Trust
Fund to the extent of the borrowed amount supported by the borrower's
collateral promissory note for the amount of the loan, including interest,
payable to the order of the Trustee.
(d) Each loan shall bear an interest rate determined in the
discretion of the Committee, which rate shall be intended to be commensurate
with current fixed rates charged by institutions in the business of lending
money for similar types of loans.
(e) The minimum amount available for any loan is $500.00.
(f) The procedure to be followed by a Participant in applying
for a loan shall be determined by the Committee and documented by a duly
approved resolution of the Committee. Such resolution shall be attached to
and shall be deemed to be a part of the Plan.
(g) Notwithstanding anything herein to the contrary, the
Committee may direct the Trustee to lend a Former Participant who is a "party
in interest" as that term is defined in Section 3(14) of ERISA, an amount not
to exceed the amount set forth in the first paragraph of this Section 6.9,
but only to the extent required by ERISA. If the Committee directs the
Trustee to make a loan to a Former Participant, the rules set forth in
Section 6.9 shall apply to such loan, provided, however, that repayment of
such loan shall not be by payroll deduction. Repayment shall be made by the
Former Participant by check, payable to the Trustee, based on a monthly
repayment schedule established by the Committee when the Former Participant
makes application for the loan.
(h) In the event of (i) default on the loan or (ii) the
Participant's Termination of employment prior to repayment of the entire loan
balance, the Participant shall have the option to repay the remaining loan
balance in full as soon as the necessary paperwork shall be processed. If
the loan is not repaid, the Participant shall have the option to continue to
repay the loan as a Former Participant in accordance with the rules and
procedures determined by the Committee. If repayment is not made or in the
event of default, and a Participant does not elect to repay his loan in full,
there shall be distributed to the Participant upon his Termination of
employment the sum of (i) the value of the Participant's Accounts, without
regard to the amount of any outstanding loan (including any accrued interest
thereon) plus (ii) the Participant's promissory note. Default means a
Participant's failure to repay the loan when due in accordance with the
procedures outlined in subsection (b) hereof. Effective January 1, 1995, a
Participant who Terminates employment shall not be permitted to continue loan
repayments after such Termination.
(i) Loans shall be processed from a Participant's Accounts in
the following order on a prorata basis from the funds in which invested:
(1) Rollover Account;
(2) Pre-Tax Contribution Account;
(3) Matching Contribution Account.
(j) The amount charged against a Participant's Pre-Tax
Contribution Account, Rollover Account or Matching Contribution Account shall
be based on the value of Company Stock or value of other investment funds
determined as of a date as close as administratively feasible to the date the
loan is paid to the Participant. (Prior to September 1, 1994, as of the end
of the month in which the Participant applied for the loan.)
(k) Repayments shall be in reverse order to the order set
forth in subsection (i) and invested according to a Participant's current
investment elections.<PAGE>
VII: TRUST FUND
7.1 EXCLUSIVE BENEFIT OF EMPLOYEES AND BENEFICIARIES. All
contributions under this Plan shall be paid to the Trustee and deposited in
the Trust Fund. All assets of the Trust Fund, including investment Income,
shall be retained for the exclusive benefit of Participants, Former
Participants and Beneficiaries and shall be used to pay benefits to such
persons or to pay administrative expenses of the Plan and Trust Fund to the
extent not paid by the Employer. Except as provided in Section 4.3, 5.3 or
12.2, the assets of the Trust Fund shall not revert to or inure to the
benefit of the Employer.
7.2 INVESTMENT DIRECTIONS BY PARTICIPANTS. A Participant may
direct the investment of amounts held under his Pre-Tax Contribution Account
and Rollover Account in multiples of ten percent (10%) subject to the
approval of the Committee and in accordance with the terms, conditions and
procedures established by the Committee. Notwithstanding Sections 5.2(a) and
8.4, all earnings and expenses, including commissions and transfer taxes,
realized or incurred in connection with any investments pursuant to a
Participant's directions shall be credited or charged to the Participant's
account for which the investment is made. If a Participant exercises his
option to direct the investment of his Pre-Tax Contribution Account and
Rollover Account, then to the extent permitted by ERISA no person who is
otherwise a fiduciary under the Plan shall be liable under ERISA for any
loss, or by reason of any breach which results from such Participant's
exercise of such option. The funds available for this purpose shall include
the Company Stock fund and at least three other additional funds. A
Participant may elect to change the investment (both future and existing
contributions) of his Accounts effective as of the first day of any Calendar
Quarter following written notification to the Committee (using the value of
Accounts determined as of the last business day of the immediately preceding
Calendar Quarter). (Prior to January 1, 1993, investment changes were as of
any semi-annual Valuation Date.)
7.3 INVESTMENT OF MATCHING CONTRIBUTIONS.
(a) The Trustee shall invest one-half of the Matching
Contributions allocated to each Participant's Matching Contribution Account
in the Company Stock fund and one-half in that fund which, in the opinion of
the Committee, provides the highest degree of protection for principal and a
reasonable rate of return consistent with the objective of preservation of
principal. Effective January 1, 1993, all Matching Contributions shall be
invested in Company Stock.
(b) All dividends or other distributions with respect to the
Company Stock fund shall be applied to purchase additional Company Stock.
(c) The Trustee may acquire Company Stock from any source,
including the public market, in private transactions, or, if the Company
agrees, from the Company (from either treasury shares or authorized but
unissued shares). If the Trustee purchases Common Stock from the Company,
the purchase price shall be the mean between the highest and lowest quoted
selling prices of the Common Stock on the New York Stock Exchange on the date
of purchase, except as provided at subsection (e).
(d) A Participant who has satisfied the age requirement for
an Early Retirement Date may irrevocably elect in writing on a form provided
by the Committee that all future Matching Contributions allocable to him
after the Valuation Date following timely delivery of his election be
invested in the investment category established by the Committee, which in
the opinion of the Committee, provides the highest degree of protection for
principal and a reasonable rate of return consistent with the objective of
preservation of principal. In that case, the portion of the Participant's
Matching Contribution Account invested in Company Stock shall be liquidated
in four installments, each equal to one-fourth of the number of shares of
Company Stock allocated to his Matching Contribution Account, as of four
semi-annual Valuation Dates next following the Participant's election. The
proceeds shall be deposited in the investment category designed to protect
principal. A Participant may not subsequently transfer Matching
Contributions back into the Company Stock fund.
(e) To the extent the Matching Contribution must be invested
in Company Stock, the Company shall make the contribution in Company Stock
rather than cash. Each share of Company Stock contributed shall be valued
for purposes of determining the number of shares to be contributed at the
average of the mean between the highest and lowest quoted selling prices of
the Common Stock on the New York Stock Exchange for each day in the last ten
business days of December of the Plan Year for which the contribution is
made.<PAGE>
VIII: ADMINISTRATION
8.1 DUTIES AND RESPONSIBILITIES OF FIDUCIARIES; ALLOCATION OF
RESPONSIBILITY AMONG FIDUCIARIES FOR PLAN AND TRUST ADMINISTRATION. A
Fiduciary shall have only those specific powers, duties, responsibilities and
obligations as are specifically given him under this Plan or the Trust. In
general, the Employer, shall have the sole responsibility for making the
contributions provided for under Section 6.1. The Board of Directors shall
have the sole authority to appoint and remove the Trustee and the Committee
and to amend or terminate, in whole or in part, this Plan or the Trust. The
Committee shall have the sole responsibility for the administration of this
Plan, which responsibility is specifically described in this Plan and the
Trust. The Committee also shall have the right to appoint and remove any
Investment Manager which may be provided for under the Trust and to designate
investment and funding policies under which the Trustee and any Investment
Manager shall act, which provisions are described in Section 8.10. Except as
provided in the Trust agreement and within the scope of any funding and
investment policies designated by the Committee the Trustee shall have the
sole responsibility for the administration of the Trust and the management of
the assets held under the Trust. It is intended that each Fiduciary shall be
responsible for the proper exercise of his own powers, duties,
responsibilities and obligations under this Plan and the Trust and generally
shall not be responsible for any act or failure to act of another Fiduciary.
A Fiduciary may serve in more than one fiduciary capacity with respect to the
Plan (including service both as Trustee and as a member of the Committee).
8.2 ALLOCATION OF DUTIES AND RESPONSIBILITIES. The Committee
shall be appointed by the Board of Directors and shall have the sole
responsibility for actual administration of the Plan, as delegated by the
Board of Directors. The Committee may also adopt amendments to the Plan,
which upon advice of counsel, it deems necessary or advisable to comply with
ERISA or the Code, or any other applicable law, or to facilitate the
administration of the Plan. The Committee may designate persons other than
their members to carry out any of its duties and responsibilities. Any
duties and responsibilities thus allocated must be described in the written
instrument. If any person other than an Eligible Employee of the Employer is
so designated, such person must acknowledge in writing his acceptance of the
duties and responsibilities thus allocated to him. All such instruments
shall be attached to, and shall be made a part of, the Plan.
8.3 ADMINISTRATION AND INTERPRETATION. Subject to the limitations
of the Plan, the Committee shall have complete authority and control
regarding the administration and interpretation of the Plan and the
transaction of its business, and shall, from time to time, establish such
rules as may be necessary or advisable in connection therewith. To the
extent permitted by law, all acts and determinations of the Committee, as to
any disputed question or otherwise, shall be binding and conclusive upon
Participants, Former Participants, Employees, Spouses, Beneficiaries and all
other persons dealing with the Plan. The Committee may deem its records
conclusively to be correct as to the matters reflected therein with respect
to information furnished by an Employee. All actions, decisions and
interpretations of the Committee in administering the Plan shall be performed
in a uniform and nondiscriminatory manner.
8.4 EXPENSES. The Employer shall pay all expenses authorized and
incurred by the Committee in the administration of the Plan except to the
extent such expenses are paid from the Trust.
8.5 CLAIMS PROCEDURE:
(a) FILING OF CLAIM. Any Participant, Former Participant or
Beneficiary under the Plan ("Claimant"), may file a written claim for a Plan
benefit with the Committee or with a person named by the Committee to receive
claims under the Plan.
(b) NOTIFICATION ON DENIAL OF CLAIM. In the event of a
denial or limitation of any benefit or payment due to or requested by any
Claimant, he shall be given a written notification containing specific
reasons for the denial or limitation of his benefit. The written
notification shall contain specific reference to the pertinent Plan
provisions on which the denial or limitation of benefits is based. In
addition, it shall contain a description of any additional material or
information necessary for the Claimant to perfect a claim and an explanation
of why such material or information is necessary. Further, the notification
shall provide appropriate information as to the steps to be taken if the
Claimant wishes to submit his claim for review. This written notification
shall be given to a Claimant within 90 days after receipt of his claim by the
Committee unless special circumstances require an extension of time to
process the claim. If such an extension of time for processing is required,
written notice of the extension shall be furnished to the Claimant prior to
the termination of said 90-day period and such notice shall indicate the
special circumstances which make the postponement appropriate. Such
extension shall not extend to a date later than 120 days after receipt of the
request for review of a claim.
(c) RIGHT OF REVIEW. In the event of a denial or limitation
of benefits, the Claimant or his duly authorized representative shall be
permitted to review pertinent documents and to submit to the Committee issues
and comments in writing. In addition, the Claimant or his duly authorized
representative may make a written request for a full and fair review of his
claim and its denial by the Committee provided, however, that such written
request must be received by the Committee (or his delegate to receive such
requests) within sixty days after receipt by the Claimant of written
notification of the denial or limitation of the claim. The sixty day
requirement may be waived by the Committee in appropriate cases.
(d) DECISION ON REVIEW.
(i) A decision shall be rendered by the Committee within
60 days after the receipt of the request for review, provided that where
special circumstances require an extension of time for processing the
decision, it may be postponed on written notice to the Claimant (prior to the
expiration of the initial 60 day period), for an additional 60 days, but in
no event shall the decision be rendered more than 120 days after the receipt
of such request for review.
(ii) Notwithstanding subparagraph (i), if the Committee
specifies a regularly scheduled time at least quarterly to review such
appeals, a Claimant's request for review will be acted upon at the specified
time immediately following the receipt of the Claimant's request unless such
request is filed within 30 days preceding such time. In such instance, the
decision shall be made no later than the date of the second specified time
following the Committee's receipt of such request. If special circumstances
(such as a need to hold a hearing) require a further extension of time for
processing a request, a decision shall be rendered not later than the third
specified time of the Committee following the receipt of such request for
review and written notice of the extension shall be furnished to the Claimant
prior to the commencement of the extension.
(iii) Any decision by the Committee shall be
furnished to the Claimant in writing and in a manner calculated to be
understood by the Claimant and shall set forth the specific reason(s) for the
decision and the specific Plan provision(s) on which the decision is based.
8.6 RECORDS AND REPORTS. The Committee shall exercise such
authority and responsibility as it deems appropriate in order to comply with
ERISA and governmental regulations issued thereunder relating to records of
Participants' account balances and the percentage of such account balances
which are nonforfeitable under the Plan; notifications to Participants; and
annual reports and registration with the Internal Revenue Service.
8.7 OTHER POWERS AND DUTIES. The Committee shall have such duties
and powers as may be necessary to discharge its duties hereunder, including,
but not by way of limitation, the following:
(a) to construe and interpret the Plan, decide all questions
of eligibility and determine the amount, manner and time of payment of any
benefits hereunder;
(b) to prescribe procedures to be followed by Participants,
Former Participants or Beneficiaries filing applications for benefits;
(c) to prepare and distribute information explaining the
Plan;
(d) to receive from the Employer and from Participants,
Former Participants and Beneficiaries such information as shall be necessary
for the proper administration of the Plan;
(e) to furnish the Employer, upon request, such annual
reports with respect to the administration of the Plan as are reasonable and
appropriate;
(f) to receive, review and keep on file (as it deems
convenient or proper) reports of the financial condition, and of the receipts
and disbursements, of the Trust Fund from the Trustees;
(g) to appoint or employ advisors including legal counsel to
render advice with regard to any responsibility of the Committee under the
Plan or to assist in the administration of the Plan; and
(h) to determine the status of qualified domestic relations
orders under Section 414(p) of the Code.
The Committee shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of
eligibility for a benefit under the Plan.
8.8 RULES AND DECISIONS. The Committee may adopt such rules as it
deems necessary, desirable, or appropriate. All rules and decisions of the
Committee shall be applied uniformly and consistently to all Participants in
similar circumstances. When making a determination or calculation, the
Committee shall be entitled to rely upon information furnished by a
Participant, Former Participant or Beneficiary, the Employer, the legal
counsel of the Employer, or the Trustee.
8.9 AUTHORIZATION OF BENEFIT PAYMENTS. The Committee shall issue
proper directions to the Trustee concerning all benefits which are to be paid
from the Trust Fund pursuant to the provisions of the Plan.
8.10 APPLICATION AND FORMS FOR BENEFITS. The Committee may require
a Participant, Former Participant or Beneficiary to complete and file with it
an application for a benefit, and to furnish all pertinent information
requested by it. The Committee may rely upon all such information so
furnished to it, including the Participant's, Former Participant's or
Beneficiary's current mailing address.
8.11 FACILITY OF PAYMENT. Whenever, in the Committee's opinion, a
person entitled to receive any payment of a benefit or installment thereof
hereunder is under a legal disability or is incapacitated in any way so as to
be unable to manage his financial affairs, the Committee may direct the
Trustee to make payments to such person or to his legal representative or to
a relative or friend of such person for his benefit, or he may direct the
Trustee to apply the payment for the benefit of such person in such manner as
it considers advisable.
8.12 INVESTMENT POLICIES. The investment policies of the Plan
shall be established and may be changed at any time by the Committee, which
shall thereupon communicate such policies to any persons having authority to
manage the Plan's assets. The Investment Manager shall have the authority to
invest in any collective investment fund maintained exclusively for the
investment of assets of exempt, qualified employee benefit trusts. The
assets so invested shall be subject to all the provisions of the instrument
establishing such collective investment fund, as amended from time to time,
which is hereby incorporated herein by reference and deemed to be an integral
part of the Plan and corresponding Trust.
The Committee, whose membership is to be determined by the Board,
is the named fiduciary to act on behalf of the Company in the management and
control of the Plan assets and to establish and carry out a funding policy
consistent with the Plan objectives and with the requirements of any
applicable law. The Committee shall carry out the Company's responsibility
and authority:
(a) To appoint as such term is defined in Section 3(38) of
ERISA, one or more persons to serve as Investment Manager with respect to all
or part of the Plan assets, including assets maintained under separate
accounts of an insurance company;
(b) To allocate the responsibilities and authority being
carried out by the Committee among the members of the Committee.
(c) To take any action appropriate to assure that the Plan
assets are invested for the exclusive purpose of providing benefits to
Participant and their Beneficiaries in accordance with the Plan and defraying
reasonable expenses of administering the Plan, subject to the requirements of
any applicable law.
(d) To establish any rules it deems necessary. The Committee
including each member and former member to whom duties and responsibilities
have been allocated, may be indemnified and held harmless by the Employer
with respect to any breach of alleged responsibilities performed or to be
performed hereunder.
8.13 INDEMNIFICATION. The Employer shall indemnify each individual
who is an officer, director or Employee of the Employer and who may be called
upon or designated to perform fiduciary duties or to exercise fiduciary
authority or responsibility with respect to the Plan and shall save and hold
him harmless from any and all claims, damages, and other liabilities,
including without limitation all expenses (including attorneys' fees and
costs), judgments, fines and amounts paid in settlement and actually and
reasonably incurred by him in connection with any action, suit or proceeding,
resulting from his alleged or actual breach of such duties, authority or
responsibility, whether by negligence, gross negligence or misconduct, to the
maximum extent permitted by law, provided, however, that this indemnification
shall not apply with respect to any actual breach of such duties, authority
or responsibility, if the individual concerned did not act in good faith and
in the manner he reasonably believed to be in (or not opposed to) the best
interest of the Employer, or, with respect to any criminal action or
proceeding, had reasonable cause to believe his conduct was unlawful.
8.14 RESIGNATION OR REMOVAL OF THE COMMITTEE. An Committee member
may resign at any time by giving ten days' written notice to the Employer and
the Trustee. The Board of Directors may remove any member of the Committee
by giving written notice to him and the Trustee. Any such resignation or
removal shall take effect at a date specified on such notice, or upon
delivery to the Committee if no date is specified.
<PAGE>
IX: MISCELLANEOUS
9.1 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan
shall be construed as a contract of employment between the Employer and any
Employee, or as a right of any Employee to be continued in the employment of
the Employer, or as a limitation of the right of the Employer to discharge
any of its Employees, with or without cause.
9.2 RIGHTS TO TRUST ASSETS. No Employee or Beneficiary shall have
any right to, or interest in, any assets of the Trust Fund upon Termination
of his employment or otherwise, except as provided from time to time under
this Plan, and then only to the extent of the benefits payable under the Plan
to such Employee out of the assets of the Trust Fund. All payments of
benefits as provided for in this Plan shall be made solely out of the assets
of the Trust Fund.
9.3 NONALIENATION OF BENEFITS. Except as may be permitted by law,
and except as may be required or permitted by a qualified domestic relations
order as defined in Section 414(p) of the Code, benefits payable under this
Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or
levy of any kind, either voluntary or involuntary, including any such
liability which is for alimony or other payments for the support of a spouse
or former spouse, or for any other relative of the Employee, prior to
actually being received by the person entitled to the benefit under the terms
of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, charge or otherwise dispose of any right to benefits
payable hereunder shall be void. The Trust Fund shall not in any manner be
liable for, or subject to, the debts, contracts, liabilities, engagements or
torts of any person entitled to benefits hereunder.
9.4 DISCONTINUANCE OF EMPLOYER CONTRIBUTIONS. In the event of
permanent discontinuance of contributions to the Plan by the Employer, the
Accounts of all Participants shall, as of the date of such discontinuance,
shall continue to be fully-vested and nonforfeitable.
<PAGE>
X: AMENDMENTS AND ACTION BY EMPLOYER
10.1 AMENDMENTS GENERALLY. The Company reserves the right to make
from time to time any amendment or amendments to this Plan or Trust which do
not cause any part of the Trust Fund to be used for, or diverted to, any
purpose other than the exclusive benefit of Participants, Former Participants
or their Beneficiaries; provided, however, that the Company may make any
amendment it determines necessary or desirable, with or without retroactive
effect, to comply with ERISA.
No amendment to the Plan shall decrease a Participant's Accounts or
eliminate an optional form of distribution except as may be permitted by the
Code or ERISA.
10.2 AMENDMENTS TO VESTING SCHEDULE. Any amendment to the Plan
which alters the vesting schedule set forth in Section 6.3 shall be deemed to
include the following terms:
(a) The vested percentage of a Participant in that portion of
his Accounts under the Plan derived from Employer contributions made for Plan
Years ending with or within the later of the date such amendment is adopted
or the date such amendment becomes effective shall not be reduced; and
(b) Each Participant having not less than three years of
service at the later of the date such amendment was effective shall be
permitted to elect irrevocably to have his vested percentage computed under
the Plan without regard to such amendment. Such election must be made within
60 days from the later of (i) the date the amendment was adopted, (ii) the
date the amendment became effective, or (iii) the date the Participant is
issued written notice of such amendment by the Committee.
Notwithstanding the preceding sentence, no election need be
provided for any Participant whose nonforfeitable percentage in his Accounts
derived from Employer contributions under the Plan, as amended at any time,
cannot be less than such percentage determined without regard to such
amendment.
10.3 ACTION BY COMPANY. Any action by the Company under this Plan
shall be by a duly adopted resolution of the Board of Directors, or by any
person or persons duly authorized by a duly adopted resolution of that Board
to take such action. Any company that has adopted this Plan with approval of
the Board of Directors shall be deemed, by the continuing participation of
such company in the Plan to accept any action of the Board of Directors.
<PAGE>
XI: SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS
11.1 SUCCESSOR EMPLOYER. In the event of the dissolution, merger,
consolidation or reorganization of the Employer, provision may be made by
which the Plan and Trust will be continued by the successor; and, in that
event, such successor shall be substituted for the Employer under the Plan.
The substitution of the successor shall constitute an assumption of Plan
liabilities by the successor, and the successor shall have all of the powers,
duties and responsibilities of the Employer under the Plan.
11.2 PLAN ASSETS. There shall be no merger or consolidation of the
Plan with, or transfer of assets or liabilities of the Trust Fund to, any
other plan of deferred compensation maintained or to be established for the
benefit of all or some of the Participants of the Plan, unless each
Participant would (if either this Plan or the other plan then terminated)
receive a benefit immediately after the merger, consolidation or transfer
which is equal to or greater than the benefit he would have been entitled to
receive immediately before the merger, consolidation or transfer (if this
Plan had then terminated), and unless a duly adopted resolution of the Board
of Directors of the Company authorizes such merger, consolidation or transfer
of assets.
<PAGE>
XII: PLAN TERMINATION
12.1 RIGHT TO TERMINATE. In accordance with the procedures set
forth herein, the Company may terminate the Plan at any time in whole or in
part. To the extent permitted by section 401(k) of the Code and regulations
thereunder, in the event of the dissolution, merger, consolidation or
reorganization of the Employer, the Plan shall terminate and the Trust Fund
shall be liquidated unless the Plan is continued by a successor to the
Employer in accordance with Section 11.1.
12.2 LIQUIDATION OF THE TRUST FUND. Upon the complete or partial
termination of the Plan, the Accounts of all Participants affected thereby
shall become fully vested and nonforfeitable, to the extent funded, and the
Committee shall direct the Trustee to distribute the assets remaining in the
Trust Fund, after payment of any expenses properly chargeable thereto, to
Participants, Former Participants and Beneficiaries in proportion to their
respective Account balances.
12.3 MANNER OF DISTRIBUTION. To the extent that no discrimination
in value results, any distribution after termination of the Plan may be made,
in whole or in part, in cash, or in securities or other assets in kind, as
the Committee may determine. All non-cash distributions shall be valued at
fair market value at date of distribution.
<PAGE>
XIII: DETERMINATION OF TOP-HEAVY STATUS
13.1 GENERAL. Notwithstanding any other provision of the Plan to
the contrary, for any Plan Year in which the Plan is a Top-Heavy Plan or
Super Top-Heavy Plan, as defined below, the provisions of this Article shall
apply, but only to the extent required by section 416 of the Code and the
regulations thereunder.
13.2 TOP-HEAVY PLAN. This Plan shall be Top-Heavy and an
Aggregation Group shall be a Top-Heavy Group if as of the Determination Date
for such Plan Year the sum of the Cumulative Accrued Benefits and Cumulative
Accounts of Key Employees for the Plan Year exceeds 60% of the aggregate of
all the Cumulative Accounts and Cumulative Accrued Benefits. The Cumulative
Accrued Benefits and Cumulative Accounts of those Participants who have not
performed any service for the Employer during the five year period ending on
the Determination Date, shall be disregarded.
(a) If the Plan is not included in a Required Aggregation
Group with other plans, then it shall be Top-Heavy only if (i) when
considered by itself it is a Top-Heavy Plan and (ii) it is not included in a
Permissive Aggregation Group that is not a Top-Heavy Group.
(b) If the Plan is included in a Required Aggregation Group
with other plans, it shall be Top-Heavy only if the Required Aggregation
Group, including any permissively aggregated plans, is Top-Heavy.
13.3 SUPER TOP-HEAVY PLAN. This Plan shall be a Super Top-Heavy
Plan if it would be a Top-Heavy Plan under Section 13.2, but substituting 90%
for 60%.
13.4 CUMULATIVE ACCRUED BENEFITS AND CUMULATIVE ACCOUNTS. The
determination of the Cumulative Accrued Benefits and Cumulative Accounts
under the Plan shall be made in accordance with section 416 of the Code and
the regulations thereunder. The determination of the Plan's Top-Heavy
status shall relate to the proper Determination Date and Valuation Date.
13.5 DEFINITIONS.
(a) "Aggregation Group" means either a Required Aggregation
Group or a Permissive Aggregation Group.
(b) "Determination Date" means with respect to any Plan Year,
the last day of the preceding Plan Year or in the case of the first Plan Year
of any plan, the last day of such Plan Year or such other date as permitted
by the Secretary of the Treasury or his delegate.
(c) "Employer" means the Company and each Participating
Employer that adopts this Plan and all members of a controlled group of
corporations (as defined in Section 414(b) of the Code), all commonly
controlled trades or businesses (as defined in Section 414(c) of the Code) or
affiliated service groups (as defined in Section 414(m) of the Code) of which
the Company is a part.
(d) "Key Employee" means those individuals described in
Section 416(i)(l) of the Code and the regulations hereunder.
(e) "Non-Key Employee" means those individuals who are not
Key Employees and includes former Key Employees.
(f) "Permissive Aggregation Group" means a Required
Aggregation Group plus any other plans selected by the Company provided that
all such plans when considered together satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
(g) "Required Aggregation Group" means a plan maintained by
the Employer in which a Key Employee is a participant or which enables any
plan in which a Key Employee is a participant to meet the requirements of
Code Section 401(a)(4) or Code Section 410.
(h) "Valuation Date" means the first day of each Plan Year.
13.6 VESTING. For each Plan Year in which the Plan is Top-Heavy or
Super Top-Heavy, the minimum vesting requirements of Code Section 416(b)
shall be satisfied as set forth in Section 6.3.
13.7 MINIMUM CONTRIBUTIONS. For each Plan Year in which the Plan
is Top-Heavy or Super Top-Heavy, minimum Employer contributions for a
Participant who is a Non-Key Employee shall be required to be made on behalf
of each Participant who is employed by the Employer on the last day of the
Plan Year, regardless of his level of Compensation and regardless of the
number of Hours of Service he has completed during such Plan Year. The
amount of the minimum contribution shall be the lesser of the following
percentages of compensation (as defined in Section 2.1 for purposes of Annual
Additions):
(i) Three percent, or
(ii) The highest percentage at which Company
contributions are made under the Plan for the Plan Year on behalf of any Key
Employee.
(A) For purposes of subparagraph (ii), all defined
contribution plans included in a Required Aggregation Group shall be treated
as one plan.
(B) This paragraph (ii) shall not apply if the Plan is
included in a Required Aggregation Group and the Plan enables a defined
benefit plan included in the Required Aggregation Group to meet the
requirements of Section 401(a)(4) or 410 of the Code.
For purposes of the minimum contribution requirement, any Pre-Tax
Contributions made on behalf of a Key Employee shall be counted as Employer
contributions with respect to such Key Employee, but any Pre-Tax
Contributions made on behalf of a Non-Key Employee shall not be counted as
Employer contributions with respect to such Non-Key Employee.
<PAGE>
This Section shall not apply to the extent a Participant other than
a Key Employee is covered by another qualified plan(s) of the Employer and
the Employer has provided that the minimum contribution requirements
applicable to this Plan will be satisfied by the other plan(s).
13.8 DEFINED BENEFIT AND DEFINED CONTRIBUTION PLAN FRACTIONS. For
any Plan Year in which the Plan is Super Top-Heavy, or for any Plan Year in
which the Plan is Top-Heavy and the additional minimum contributions or
benefits required under section 416(h) of the Code are not provided, the
dollar limitations in the denominator of the defined benefit plan fraction
and defined contribution plan fraction as defined in Section 415(e) of the
Code shall be multiplied by 100 percent rather than 125 percent. If the
application of the provisions of this Section 13.8 would cause any
Participant to exceed 1.0 for any Limitation Year, then the application of
this Section 13.8 shall be suspended as to such Participant until such time
as he no longer exceeds 1.0. During the period of such suspension, there
shall be no Employer contributions, forfeitures or voluntary nondeductible
contributions allocated to such Participant under this Plan or under any
other defined contribution plan of the Employer and there shall be no benefit
accruals for such Participant under any defined benefit plan of the Employer.
<PAGE>
APPENDIX A
THE PEP BOYS SAVINGS PLAN
PARTICIPATING EMPLOYERS
The Pep Boys - Manny, Moe & Jack
The Pep Boys - Manny, Moe & Jack of California
THE PEP BOYS - MANNY, MOE & JACK
EXECUTIVE INCENTIVE BONUS PLAN
(as amended and restated as of March 30, 1994)
The Pep Boys - Manny, Moe & Jack, a Pennsylvania corporation (the "Company")
established, effective January 29, 1989, an Executive Incentive Bonus Plan
for the benefit of officers of the Company who are eligible to participate as
provided herein. By action of its Board of Directors on March 31, 1992, the
said plan was amended in numerous respects. By action of its Board of
Directors on March 30, 1944, the said plan was further amended to read in its
entirety as hereinafter set forth, said plan being hereinafter referred to as
the "Plan".
1. Purpose. The Plan is intended to increase the profitability of the
Company by giving the officers of the Company a financial stake in the
growth and profitability of the Company. The Plan has the further
objective of enhancing the Company's executive compensation package,
thus enabling the Company to attract and retain executive officers of
the highest ability. The Plan is intended to supplement, not replace,
any other bonus paid by the Company to its officers and is not intended
to preclude the continuation of such arrangements or the adoption of
additional bonus or incentive plans, programs, or contracts.
2. Definitions.
(a) "Award Period" shall mean a measuring period of one Fiscal Year.
(b) "Board of Directors" shall mean the Board of Directors of the Company.
(c) "Bonus" shall mean a cash payment made by the Company to a Participant
after an Award Period, based on increases in EBIT, all as calculated
and as more fully set forth under paragraph 5 hereof.
(d) "CEO" shall mean the person elected to the office of Chief Executive
Officer of the Company by the Board of Directors.
(e) "Company" shall mean The Pep Boys - Manny, Moe & Jack, a Pennsylvania
corporation.
(f) "Compensation Committee" shall mean the Compensation Committee of the
Board of Directors.
(g) "Covered Employee" shall mean any Participant that the Compensation
Committee reasonably believes may be a "covered employee" within the
meaning of Section 162(m) of the Internal Revenue Code for the
taxable year of the Company in which a Bonus would be deductible.
(h) "EBIT" shall have the meaning set forth in Paragraph 5 hereof.
(i) "Fiscal Year" shall mean the Fiscal Year of the Company which ends on
the Saturday nearest January 31 in each year.
(j) "Participant" shall have the meaning set forth in Paragraph 4 hereof.
(k) "President" shall mean the person elected to the office of President
of the Company by the Board of Directors.
(l) "Salary" shall mean the base salary of an officer of the Company for a
Fiscal Year, including amounts which Participant elects to forego to provide
benefits under a plan which satisfies the provisions of Section 401(k) or
Section 125 of the Internal Revenue Code, exclusive of all bonuses paid or
accrued with respect to that Fiscal Year, whether or not pursuant to a plan
or program.
3. Administration, Amendment and Termination.
(a) The Plan shall be administered by the Compensation Committee acting by
a majority vote of its members. The Compensation Committee shall have
the power and authority to take all actions and make all determinations
which it deems necessary or desirable to effectuate, administer or
interpret the Plan. The Company's adoption and continuation of the Plan
is voluntary. The Compensation Committee shall have the power and
authority to extend, amend, modify or terminate the Plan at any time,
including without limitation, to change Award Periods, to determine the
time or times of paying Bonuses, to establish performance and EBIT
goals, and to establish such other measures as may be necessary to meet
the objectives of the Plan; provided, however, that, with respect to any
Covered Employee, no amendment shall change the Bonus calculation
formula, as set forth in Section 5 herein, so as to increase the amount
of Bonus payable upon attainment of a goal for any Award Period after
the beginning of such Award Period. An action to terminate or to
substantively amend or modify the Plan shall become effective
immediately upon its adoption or on such date as specified by the
Compensation Committee, but not with respect to any Fiscal Year priort
to the Fiscal Year in which the Compensation Committee so acts.
(b) All actions taken and all determinations made by the Compensation
Committee in accordance with the power and authority conferred upon the
Compensation Committee under subsection (a) above shall be final,
binding and conclusive on all parties, including the Company and all
Participants.
4. Participants. Each officer of the Company elected by the Board of
Directors to fill such office shall be entitled to participate in the
Plan for each Fiscal Year or portion thereof in which such person serves
an officer (the "Participants", or individually, "Participant"), unless
excluded from participation by the Compensation Committee or as provided
by paragraph 7 hereof. With respect to a Participant who became an
officer during a Fiscal Year, such Participant shall be paid an amount
equal to the amount which would have been paid if the Participant had
been employed for the entire Award Period, multiplied by a fraction the
numerator of which is the number of days during the Award Period that
the Participant was an officer of the Company and the denominator of
which is the number of days in the Award Period.
5. Calculation of Bonus.
(a) Each Participant shall be entitled to payment from the Company of a Bonus
equal to the applicable percentage of such Participant's Salary, as set
forth in the tables below, for certain percentage increases in EBIT
during an Award Period over EBIT for the fiscal year which precedes the
Award Period. For purposes of the Plan, "EBIT" shall mean the
consolidated earnings before income taxes of the Company, as determined
in accordance with generally accepted accounting principles, and adjusted
for any additions or reductions thereto that the President recommends and
the Compensation Committee approves in order to eliminate the effect of
extraordinary or non-recurring items of income or loss. In determining
EBIT, there shall be included as an expense of the Company all bonuses,
including, without limitation, those Bonuses paid or accrued under this
Plan with respect to the Fiscal Year. For purposes of this Plan, the
column in the table below entitled "EBIT Increase" measures EBIT for the
Fiscal Year with respect to which the Bonus is being calculated, against
EBIT for the immediately preceding Fiscal Year.
Percentage of Salary
for All Participants Percentage of
EBIT Increase Except CEO Salary for CEO
20% 18.75% 30%
21% 19.50% 31%
22% 20.25% 32%
23% 21.00% 33%
24% 21.75% 34%
25% 22.50% 35%
26% 23.25% 36%
27% 24.00% 37%
28% 24.75% 38%
29% 25.50% 39%
30% 26.25% 40%
31% 27.25% 41%
32% 28.25% 42%
33% 29.25% 43%
34% 30.25% 44%
35% 31.25% 45%
36% 32.25% 46%
37% 33.25% 47%
38% 34.25% 48%
39% 35.25% 49%
40% 36.25% 50%
41% or more 37.50% 50%
Except for EBIT increase calculations above 19.5% but less than 20%,
calculations of percentage increases in EBIT shall be rounded to the nearest
whole percentage.
(b) Nothing in this Paragraph 5 shall be used to create any presumption that
Bonuses under the Plan are the exclusive means of providing incentive
compensation for officers, it being expressly understood and agreed that
the Compensation Committee has the authority to recommend to the Board
of Directors payments to the officers, in cash or otherwise, based on
EBIT or otherwise, other than Bonuses under this Plan, to Participants.
6.Payment of Awards. Bonuses shall be paid in cash within fifteen days
after the Company has publicly announced its consolidated earnings
before income taxes for the Fiscal Year with respect to which the Bonus
is payable; provided, however, that, with respect to any Covered
Employee, no Bonus shall be paid unless and until the Compensation
Committee has certified in writing that the EBIT goals as set forth in
Section 5 have been met.
7.Termination of Employment.
(a) Other than as set forth in subparagraph (b) below, a participant may not
receive a Bonus for any Award Period if the Participant's employment by
the Company has terminated, for any reason whatsoever, with or without
cause, prior to the payment of the Bonus with respect to such Award
Period.
(b) If during an Award Period, a participant dies, becomes disabled or
retires on or after his Early Retirement Date (as defined in the
Company's defined benefit pension plan), such Participant (or the
Participant's designated beneficiary) shall be paid an amount equal to
the amount which would have been paid if the Participant had been an
officer for the Award Period, multiplied by a fraction, the numerator
of which is the number of days during the Award Period that the
Participant was an officer of the Company and the denominator of which
is the number of days in the Award Period.
8.Assignments and Alienation of Benefits.
(a) To the maximum extent permitted by law, a Participant's right or
benefits under this Plan shall not be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge, and any
attempt to anticipate, alienate, sell, assign, pledge, encumber or
charge the same shall be void. No right or benefit hereunder shall in
any manner be liable for or subject to the debts, contracts, liabilities
or torts of the person entitled to such benefit.
(b) If any Participant becomes bankrupt or attempts to anticipate, alienate,
sell, assign, pledge, encumber, or charge any rights to a benefit
hereunder, then such right or benefit, in the discretion of the
Compensation Committee, may be terminated. In such event, the Company
may hold or apply the same or any part thereof for the benefit of the
Participant, his or her spouse, children or the dependents, or any of
them, in such manner and portion as the Compensation Committee may deem
proper.
9.Miscellaneous
(a) The establishment of this Plan shall not be construed as granting any
Participant the right to remain in the employ of the Company, nor shall
this Plan be construed as limiting the right of the Company to discharge
a Participant from employment at any time for any reason whatsoever,
with or without cause.
(b) Notwithstanding anything to the contrary herein, no Bonus shall be paid
to any Covered Employee pursuant to the terms hereof unless and until
the material terms of the performance goals as set forth in Section 5
are approved by the majority vote of the Company's shareholders in a
manner which complies with the requirements of Section 162(m) of the
Internal Revenue Code.
(c) The paragraph headings in this Plan are for convenience only; they form
no part of the Plan and shall not affect its interpretation.
(d) This Plan shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania.
THE PEP BOYS - MANNY, MOE & JACK
By:\s\ Mitchell G. Leibovitz
-------------------------------
Chairman of the Board,
Chief Executive Officer & President
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES Exhibit 11 - Computation of Earnings per Share
<CAPTION>
(in thousands, except per share data)
- ----------------------------------------------------------------------------------------------------------------------------------
Fiscal Year 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(a) Earnings before cumulative effect of change
in accounting principle $80,008 $65,512 $54,579 $38,872 $37,530
(b) Cumulative effect of change in accounting principle (4,300) - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
(c) Net earnings $75,708 $65,512 $54,579 $38,872 $37,530
- ----------------------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding
during the year 59,252 60,805 59,297 55,675 55,558
Common shares assumed issued upon exercise
of dilutive stock options, net of assumed
repurchase, at the average market price,
using the treasury stock method (1) 1,313 1,086 1,339 819 551
- ----------------------------------------------------------------------------------------------------------------------------------
(d) Average number of common shares outstanding
during the year 60,565 61,891 60,636 56,494 56,109
- ----------------------------------------------------------------------------------------------------------------------------------
(e) Earnings per share before cumulative effect of
change in accounting principle (a/d) $ 1.32 $ 1.06 $ .90 $ .69 $ .67
- ----------------------------------------------------------------------------------------------------------------------------------
(f) Cumulative effect of change in accounting principle (b/d) (.07) - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
(g) Net earnings per share (c/d) $ 1.25 $ 1.06 $ .90 $ .69 $ .67
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The number of shares assumed issued upon exercise of dilutive stock options is essentially the same for fully diluted earnings
per share.
</TABLE>
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES Exhibit 12 - Statement Regarding Computation of Ratios
Ratios of Earnings to Fixed Charges
<CAPTION> (in thousands, except ratios)
- ------------------------------------------------------------------------------------------------------------------------------------
January 28, January 29, January 30, February 1, February 2,
Fiscal year 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest $25,931 $19,701 $20,180 $25,071 $20,262
Interest factor in rental expense 6,157 5,595 4,698 3,456 3,091
Capitalized interest 1,850 1,254 852 602 1,252
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Fixed charges, as defined $33,938 $26,550 $25,730 $29,129 $24,605
Earnings before income taxes and
cumulative effect of change in
accounting principle $126,482 $104,508 $85,615 $60,512 $58,777
Fixed charges 33,938 26,550 25,730 29,129 24,605
Capitalized interest (1,850) (1,254) (852) (602) (1,252)
- ------------------------------------------------------------------------------------------------------------------------------------
(b) Earnings, as defined $158,570 $129,804 $110,493 $89,039 $82,130
- ------------------------------------------------------------------------------------------------------------------------------------
(c) Ratio of earnings to fixed charges (b/a) 4.7x 4.9x 4.3x 3.1x 3.3x
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SUBSIDIARIES OF THE COMPANY
% OF SHARES
NAME WHERE INCORPORATED OWNED
- ------------------------------- ------------------ -----------
The Pep Boys-Manny, Moe & Jack
Jack of California
1122 W. Washington Blvd.
Los Angeles, CA 90015 California 100%
Pep Boys- Manny, Moe & Jack
of Delaware, Inc.
3111 W. Allegheny Avenue
Philadelphia, PA 19132 Delaware 100%
Pep Boys- Manny, Moe & Jack
of Puerto Rico, Inc.
3111 W. Allegheny Avenue
Philadelphia, PA 19132 Delaware 100%
Colchester Insurance Company
7 Burlington Square
Burlington, VT 05401 Vermont 100%
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Numbers
2-81733, 33-3420, 33-31765, 33-64248 and 33-35592 of The Pep Boys - Manny, Moe &
Jack and subsidiaries on Form S-8 and Registration Statement Numbers
33-32857 , 33-39225 and 33-55115 of The Pep Boys - Manny, Moe & Jack and
subsidiaries on Forms S-3 of our report dated March 20, 1995, appearing in the
Annual Report on Form 10-K of The Pep Boys - Manny, Moe & Jack and subsidiaries
for the year ended January 28, 1995.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
April 26, 1995
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JANUARY 28, 1995 AND THE CONSOLIDATED STATEMENT
OF EARNINGS FOR THE FIFTY-TWO WEEK PERIOD ENDED JANUARY 28, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JAN-28-1995
<CASH> 11,748
<SECURITIES> 0
<RECEIVABLES> 3,930
<ALLOWANCES> 126
<INVENTORY> 366,843
<CURRENT-ASSETS> 411,309
<PP&E> 1,104,975
<DEPRECIATION> 243,065
<TOTAL-ASSETS> 1,291,019
<CURRENT-LIABILITIES> 289,451
<BONDS> 380,787
0
0
<COMMON> 61,502
<OTHER-SE> 524,751
<TOTAL-LIABILITY-AND-EQUITY> 1,291,019
<SALES> 1,211,536
<TOTAL-REVENUES> 1,406,985
<CGS> 847,158
<TOTAL-COSTS> 1,010,190
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,931
<INCOME-PRETAX> 126,482
<INCOME-TAX> 46,474
<INCOME-CONTINUING> 80,008
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (4,300)
<NET-INCOME> 75,708
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.25
