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UNITED STATES
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 December 31, 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 0-14938
STANLEY FURNITURE COMPANY, INC.
(Exact name of Registrant as specified in its Charter)
Delaware 54-1272589
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Route 57, Stanleytown, Virginia 24168
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (540) 627-2000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.02 per share
(Title of Class)
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 (Section 229.405 of this chapter) 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.[ ]
Aggregate market value of the voting stock held by non-affiliates of the
registrant based on the closing price on January 26, 1996: $15,337,245
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock as of January 26, 1996:
Common Stock, par value $.02 per share 4,726,578
(Class of Common Stock) Number of Shares
Documents incorporated by reference: Portions of the Registrant's Proxy
Statement for its Annual Meeting of Shareholders scheduled for April 25, 1996
are incorporated by reference into Part III.
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TABLE OF CONTENTS
Part I Page
Item 1 Business............................. 3
Item 2 Properties........................... 8
Item 3 Legal Proceedings.................... 8
Item 4 Submission of Matters to a Vote
of Security Holders................ 8
Part II
Item 5 Market for Registrant's Common Equity
and Related Stockholder Matters.... 11
Item 6 Selected Financial Data.............. 12
Item 7 Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 14
Item 8 Financial Statements and
Supplementary Data................. 17
Item 9 Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure............... 17
Part III
Items 10 through 13.............................. 17
Part IV
Item 14 Exhibits, Financial Statement
Schedule and Reports on Form 8-K... 17
Signatures....................................... 23
Index to Financial Statements and Schedule....... F-1
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Stanley Furniture Company, Inc.
PART I
Item 1. Business
General
Stanley Furniture Company, Inc. ("Stanley" or the "Company")
is a leading designer and manufacturer of furniture exclusively
targeted at the upper-medium price range of the residential market.
The Company is ranked among the top 25 furniture manufacturers in
North America, based on sales, according to Furniture Today, a
trade publication. During 1994, the Company expanded it's product
line offerings to include upholstered furniture. See "Products and
Styles".
The original predecessor of the Company was founded in 1924.
The Company was incorporated in Delaware in 1984 and was acquired
by Stanley Holding Corporation, a Delaware corporation, in a
leveraged buy out in January 1989.
In November 1992, the Company completed a comprehensive
financial restructuring. As a result, the Company was the sole
surviving corporation and the only outstanding class of the
Company's capital stock was common stock.
In July 1993, the Company completed a public offering of
1,725,000 shares of its common stock at $8.50 per share. The net
proceeds of $13.1 million were used to reduce debt. Approximately
61% of the Company's common stock was owned by the ML - Lee
Acquisition Fund, L.P., certain affiliates of the Thomas H. Lee
Company, and management after the public offering.
In connection with the financial restructuring, the Company
closed its Waynesboro, Virginia facility in 1992 to eliminate
excess capacity, and initiated the sale of the Norman's of
Salisbury fabric division ("Norman's"). In June 1994, the Company
ceased operations at Norman's.
Strategy
The Company's marketing strategy is to penetrate all available
distribution channels compatible with its price niche and to be a
single-source provider by offering a broad range of product lines
and styles. Product lines include bedroom, dining room, youth,
occasional and upholstered furniture. The Company's product
styling mix reflects current consumer preferences and covers all
major design categories within its price niche. The Company's
operating strategy is to provide superior quality, quick delivery,
style and value. The Company believes its strategy of penetrating
all available distribution channels compatible with its price niche
provides it with flexibility to adapt to market changes.
The Company believes its operating strategy provides its
customers with a competitive advantage. In order to respond to
demand for shorter lead times and improved quality, the Company's
manufacturing process focuses on producing smaller, more frequent
and cost effective production runs. As a result, the Company
achieved its goal of shipping customer orders within three weeks on
average during 1995, with average finished goods inventory turns of
5.2 times. In addition, management believes this operating
strategy has helped to improve product quality. Quick delivery and
high quality reduce the retailer's inventory investment while
minimizing the retailer's re-delivery costs and price markdowns.
The Company uses the marketing theme, "We Just Look Expensive,"
because it believes that the design, quality, and style of its
furniture compare favorably with more premium-priced products.
Products and Style
The Company's broad range of product lines and styles provide
retailers a single source for the purchase of upper-medium priced
furniture. The range of product lines and number of designs for
wood products currently marketed by the Company is set forth in the
following table.
Number of Designs
Bedroom 32
Dining room 28
Youth bedroom 19
Occasional:
Living room tables 24
Wall systems 13
Home Office 3
The Company's product styling mix reflects current consumer
preferences and covers all major design categories within its
upper-medium price niche including European traditional,
contemporary, transitional, 18th century, country and nostalgia
designs.
Upholstered furniture products were initially introduced in
the Fall of 1994, and consist mainly of stationary sofas, sleepers,
love seats and chairs. The Company expanded its upholstered
products in 1995 and now offers a variety of frame and fabric
selections.
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Marketing and Sales
The Company has developed a diverse and extensive nationwide
customer base which the Company believes provides it with
flexibility to adapt to market changes. The Company sells its
furniture products through approximately 60 independent sales
representatives to independent furniture retailers; national
accounts such as Sears and J.C. Penney; national and regional chain
stores such as Homestead House, Huffman-Koos, Robb & Stucky, R C
Willey and Rhodes; and major department stores such as Federated
Department Stores. Products are also distributed internationally
with approximately 7% of the Company's sales from international
customers. The Company currently has approximately 3,600 active
customers.
In marketing its products to independent retailers, the
Company utilizes a promotional incentive sales program, the
"Stanley Preferred Retailer". This program is designed to
encourage the independent retailer to commit retail floor space to
the Company's products. The program is designed to be flexible and
is adapted into the marketing plans of retailers by accommodating
geographic, style and promotional preferences. To participate, a
retailer must commit a specified amount of floor space to the
Company's products and achieve a specified sales volume.
The general marketing practice followed in the furniture
industry is to exhibit products at international and regional
furniture markets. In the Spring and Fall of each year, an eight-
day furniture market is held in High Point, North Carolina, which
is regarded by the industry as the international market, attracting
buyers from the United States and abroad. The Company maintains
showroom space at the High Point market and in the San Francisco
regional market.
No single customer accounted for more than 10% of the
Company's sales in 1995. No material part of the Company's
business is dependent upon a single customer, the loss of which
would have a material effect on the business of the Company. The
loss of several of the Company's major customers could have a
material impact on the business of the Company. There are no
significant seasonal aspects to the Company's business.
Product Design and Development
The Company's marketing personnel begin the design process by
identifying marketing needs to be fulfilled and conceptualizing
product ideas, generally consisting of a group of related furniture
pieces. A variety of sketches are produced, usually by Company
designers, from which prototype furniture pieces are prepared in
consultation with marketing personnel, selected dealers and sales
representatives. The Company's engineering department then
processes the prototype in preparation for actual full-scale
production. Consistent with industry practice, the Company designs
and develops new product groups each year, replacing discontinued
items or collections.
Manufacturing
The Company's manufacturing operations complement its
marketing strategy by emphasizing superior quality and quick
delivery. The Company's manufacturing process produces smaller,
more frequent and cost effective runs by identifying and
eliminating manufacturing bottlenecks and waste, employing
statistical process control, establishing cellular manufacturing
and improving relationships with suppliers. In addition, a key
element of the Company's manufacturing process is to involve all
Company personnel, from hourly associates to management, in the
improvement of the manufacturing process by encouraging and
responding to suggested methods to improve quality and to reduce
manufacturing lead times.
The Company operates manufacturing facilities in North
Carolina and Virginia consisting of an aggregate of approximately
3 million square feet. The Company considers its present equipment
to be generally modern, adequate and well maintained.
Raw Materials
The principal materials used by the Company in manufacturing
its products include lumber, veneers, plywood, particle board,
hardware, glue, finishing materials, glass products, laminates,
fabrics, metals; and frames, filling and cushioning materials for
upholstered products. The Company uses a variety of species of
lumber, including cherry, oak, ash, poplar, pine, maple, and
mahogany. The Company's five largest suppliers accounted for
approximately 22% of its purchases in 1995. The Company believes
that its sources of supply for these materials are adequate and
that it is not dependent on any one supplier. The furniture
industry has experienced increased prices for lumber during the
past several years, which is the most significant raw material used
by the Company, although there was a moderation in lumber price
increases during 1995. While the industry has historically
increased prices to reflect such increased costs, there can be no
assurance that, if raw material prices increase, market and
competitive pressures will permit the Company or its competitors to
increase the prices for their products.
Backlog
The Company schedules production of its various groups based
upon actual or anticipated orders. The Company, and the furniture
industry, generally honor cancellation of orders prior to shipment,
although cancellations generally decrease as demand increases. The
Company's backlog of unshipped orders was $21.5 million, $17.4
million, and $26.6 million at December 31, 1995, 1994 and 1993,
respectively. The Company's manufacturing process is intended to
reduce backlog and to fill orders through manufacturing rather than
inventory. Therefore, management believes that the size of its
backlog is not necessarily indicative of its operations.
Competition
The furniture market is highly competitive and includes a
large number of foreign and domestic manufacturers. The markets in
which the Company competes include a large number of relatively
small manufacturers; however, certain competitors of the Company
have greater sales volumes and greater financial resources than the
Company. While competition occurs principally in the areas of
style, quality, service, design and price, the Company believes
that its operating strategy, its long-standing relationships with
its customers, its consistent support of existing product lines
over time and its management experience are competitive advantages.
Associates
At December 31, 1995, the Company employed approximately 2,700
associates. None of the Company's associates are represented by a
labor union. The Company considers its relations with its
associates to be good.
Patents and Trademarks
The trade names of the Company represent many years of
continued business, and the Company believes such names are well
recognized and associated with quality in the furniture industry.
The Company owns a number of patents, trademarks, and licenses,
none of which are considered to be material to the Company.
Environmental Regulation
The Company is regulated under several federal, state and
local environmental laws and regulations concerning air emissions,
water discharges and management of solid and hazardous waste.
Management believes that the Company is in material compliance with
applicable federal, state and local environmental regulations.
Compliance with these regulations has not in the past had any
material effect on the Company's earnings, capital expenditures or
competitive position; however, the effect of such compliance in the
future cannot be determined.
Regulations issued in December 1995 under the Clean Air Act
Amendments of 1990 may require the Company to reformulate certain
furniture finishes or institute process changes to reduce emissions
of hazardous volatile organic compounds. The furniture industry
and its suppliers are attempting to develop water-based and other
forms of compliant finishing materials to replace commonly-used
organic-based finishes which are a major source of regulated
emissions. The Company cannot at this time estimate the impact of
these new standards on the Company's operations and future capital
expenditure requirements, or the cost of compliance.
Item 2. Properties
Set forth below is certain information with respect to the
Company's principal properties. The Company believes that all
these properties are well maintained and in good condition. The
Company believes its manufacturing facilities are being efficiently
utilized and that it could increase production at its facilities if
required by customer demand. Each facility is focused on specific
product lines to optimize efficiency. The Company estimates that
its facilities are presently operating at approximately 85% of
capacity, principally on a one-shift basis. All Company plants are
equipped with automatic sprinkler systems and modern fire
protection equipment, which management believes are adequate. All
facilities set forth below are active and operational, except as
noted.
Approximate Owned Lease
Facility Size or Expiration
Location Primary Use (Square Feet) Leased Date
Stanleytown, VA Manufacturing 1,660,000 Owned(1)
Corporate
Headquarters 61,000
West End, NC Manufacturing 470,000 Owned(1)
West End, NC Lumber Yard Leased May 31, 2007
Lexington, NC Manufacturing 635,000 Owned
Robbinsville, NC Manufacturing 540,000 Owned
Salisbury, NC Idle 109,000 Leased(2) April 30, 2000
(1) These facilities were leased through June 1995 at which time the Company
purchased these facilities. See Note 2 of the Notes to Financial
Statements.
(2) This facility was subleased through August 1995 and is currently idle.
This was the principal facility of Norman's. The Company has the right
to purchase the property at any time at its fair market value.
The Company also leases and maintains approximately 60,000
square feet (8,000 square feet is subleased) of showroom space in
High Point, North Carolina and 7,000 square feet of showroom space
in San Francisco, California.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
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Executive Officers of the Registrant
The executive officers of the Company are:
Name Age Position
Albert L. Prillaman 50 Chairman, President,
Chief Executive Officer
and Director
C. William Cubberley, Jr. 55 Senior Vice President-
Sales and Marketing
Douglas I. Payne 38 Vice President of Finance,
Treasurer and Secretary
Bobby I. Hodges 58 Senior Vice President-
Manufacturing
William A. Sibbick 39 Vice President-Product
Development and
Merchandising
Joe G. Bost 49 Vice President-Upholstery
Albert L. Prillaman has been a Director of the Company since
March 1986, President and Chief Executive Officer of the Company
since December 1985 and Chairman of the Board of Directors since
September 1988. Prior thereto, Mr. Prillaman had served as a Vice
President of the Company and President of the Stanley Furniture
division of the Company's predecessor since 1983, and in various
executive and other capacities with predecessors of the Stanley
Furniture division of the Company since 1969.
C. William Cubberley, Jr. has been Senior Vice President-Sales
and Marketing of the Company since April 1995. He has been a Vice
President of the Company since December 1990 and Senior Vice
President-Sales and Marketing of the Stanley Furniture division
since October 1988. Mr. Cubberley was Senior Vice President-Sales
of the Stanley Furniture division from January 1986 to
October 1988, when he became Senior Vice President - Sales and
Marketing of the Stanley Furniture division.
Douglas I. Payne has been Vice President of Finance and
Treasurer of the Company since September 1993, was Vice President-
Treasurer of the Company from December 1989 to September 1993, was
Treasurer of the Company from June 1986 to December 1989 and was
Assistant Treasurer of the Company from August 1985 to June 1986.
Mr. Payne has been Secretary of the Company since September 1988.
<PAGE>
Bobby I. Hodges has been Senior Vice President-Manufacturing
of the Company since April 1995. He has been a Vice President
since June 1993. He was Senior Vice President-Manufacturing of the
Stanley Furniture division from January 1986 until June 1993. He
was Vice President-Manufacturing of the Stanley Furniture division
from December 1983 until January 1986. Prior to that time, Mr.
Hodges was employed by the Company in various positions related to
manufacturing management.
William A. Sibbick has been Vice President-Product Development
and Merchandising since April 1995. He was Vice President -
Product Development from June 1993 until April 1995. He was Vice
President-Senior Product Manager of the Stanley Furniture division
from January 1992 until June 1993. Prior to that time, he had been
Vice President-Product Manager since his employment in March 1989.
Joe G. Bost has been Vice President-Upholstery since April
1995. He was President of Norman's of Salisbury since his
employment in January 1993 until April 1995. Prior to joining
the Company, Mr. Bost was Senior Vice-President of Sales, Marketing,
Administration and Manufacturing of Hickorycraft, Inc., a manufacturer of
upholstery and occasional tables, a position he held since 1987.
<PAGE>
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholders Matters
The Company's common stock is traded on the National
Association of Securities Dealers Automated Quotation (NASDAQ)
National Market under the symbol STLY. The table below sets forth
the high and low sales prices per share as reported by the NASDAQ
National Market.
High Low
1995
First Quarter.......................... 9 1/2 7
Second Quarter......................... 8 3/8 7
Third Quarter.......................... 8 3/4 7
Fourth Quarter......................... 9 7 3/4
1994
First Quarter.......................... 16 13
Second Quarter......................... 15 11
Third Quarter.......................... 12 1/2 9
Fourth Quarter......................... 10 3/4 9 3/4
The quotations reflect interdealer prices, without retail
mark-up, mark-down or commissions and may not necessarily represent
actual transactions. As of January 26, 1996, there were
approximately 1,500 beneficial shareholders. The Company has not
paid any cash dividends and is prohibited from doing so under its
bank credit facility.
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Item 6. Selected Financial Data
The selected financial data for the five years in the period
ended December 31, 1995 are derived from the Company's financial
statements, which have been audited by Coopers & Lybrand L.L.P.
The selected financial data should be read in conjunction with the
Financial Statements including the Notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of
Operations contained elsewhere herein.
Stanley Furniture Company, Inc.
Selected Financial Data
(In thousands, except per share data)
<TABLE>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Operating Results:
Net sales...................... $174,179 $184,342 $167,091 $166,501 $144,169
Cost of sales:
From products sold........... 137,621 148,453 134,972 132,984 121,027
Business interruption
insurance (1).............. (5,036)
Gross profit............. 36,558 35,889 37,155 33,517 23,142
Selling, general and admin-
istrative expenses........... 26,454 26,483 25,976 25,117 22,877
Unusual items, net(2).......... (136)
Restructuring charge
(credit)(3).................. (2,078) 14,051
Operating income (loss).... 10,240 9,406 11,179 10,478 (13,786)
Other expense, net............. 433 444 1,346 686 1,252
Gain on insurance settlement (4) (2,379) (2,186)
Interest expense............... 3,534 2,969 3,048 7,058 8,581
Income (loss) from continu-
ing operations before
income taxes............... 6,273 8,372 8,971 2,734 (23,619)
Income tax provision (benefit). 2,384 3,256 3,691 1,053 (9,088)
Income (loss) from continu-
ing operations(5).......... $ 3,889 $ 5,116 $ 5,280 $ 1,681 $(14,531)
Income from continuing
operations per common share(5)$ .82 $ 1.08 $ 1.39 $ .56
Weighted average number of
shares (6) (7)............... 4,727 4,725 3,792 2,996
Financial Position:
Inventories.................... $ 40,167 $ 39,905 $ 37,684 $ 33,343 $ 34,355
Working capital................ 42,422 42,912 40,833 34,650 25,396
Total assets................... 134,551 124,519 124,859 114,302 113,724
Long-term debt................. 40,417 33,395 32,022 46,543 41,221
Subordinated notes payable to
majority stockholder (6)..... 20,000
Mandatorily redeemable pre-
ferred stock (6)............. 12,662
Preferred stock (6)............ 15,023
Common stockholders' equity
(6) (7) (8).................. 54,739 50,830 47,204 29,959 (18,748)
</TABLE>
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Selected Financial Data (continued)
(1) In 1993, the Company recorded $5.0 million of business interruption
insurance replacing the gross profit on lost sales due to the fire which
occurred in February 1993 at its Stanleytown, Virginia facility. See Note 8
of the Notes to Financial Statements.
(2) In 1995, the Company recognized a pretax credit of $1.1 million after
it was released from a lease obligation at its previously closed Waynesboro,
Virginia manufacturing facility. Also included is a pretax charge for a
severance accrual. See Note 4 of the Notes to Financial Statements.
(3) In 1991, the Company recorded pretax charges of $14.1 million in
anticipation of the closing of the Waynesboro, Virginia facility to eliminate
excess capacity and the transfer of certain product lines to other
manufacturing facilities. Operating income for 1992 includes a restructuring
credit of $2.1 million from lower than anticipated costs of closing the
Waynesboro facility.
(4) In 1994, the Company recorded a pretax gain of $2.4 million as part of
the final insurance settlement. Also, in 1993 a $2.2 million pretax gain was
recorded since proceeds exceeded the book value of leasehold improvements and
equipment destroyed in the fire. See Note 8 of the Notes to Financial
Statements.
(5) Income from continuing operations before insurance related gains was
$3.7 million (77 cents per share) in 1994 and $4.3 million (90 cents per
share) on a proforma basis in 1993.
(6) In 1992, the Company completed a financial restructuring which resulted
in the exchange of certain long-term debt and preferred stock for common
stock.
(7) In July 1993, the Company completed a public offering of 1,725,000
shares of common stock at $8.50 per share. The net proceeds of $13.1 million
were used to reduce debt.
(8) No dividends have been paid on common stock during any of the years
presented.
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion should be read in conjunction with
the Selected Financial Data and the Financial Statements and Notes
thereto contained elsewhere herein.
Results of Operations
1995 Compared to 1994
Net sales decreased $10.2 million, or 5.5%, from 1994 levels
due principally to lower unit volume, partially offset by the
additional volume from the upholstered products and higher average
selling prices.
Gross profit margin increased to 21.0% from 19.5% in 1994.
The higher gross profit margin was due principally to increased
prices, a moderation in lumber cost increases, a more favorable
product mix and the favorable impact from the purchase of the
previously leased manufacturing facilities discussed in Note 2 of
the Notes to Financial Statements. The increase in gross profit
was slightly offset by an increased overhead absorption rate
resulting from lower output levels in 1995.
Selling, general and administrative expenses were
approximately the same for both years. However, as a percentage of
net sales these expenses increased to 15.2% in 1995 from 14.4% in
1994. The higher percentage was due principally to lower net sales
and increased selling cost associated with new products.
During the second quarter of 1995, the Company was released
from a lease obligation at its previously closed Waynesboro,
Virginia manufacturing facility. Accordingly, the Company
recognized a pretax credit of $1.1 million related to the reversal
of an accrual set up in 1991 for the closing of the facility.
Unusual items also included a pretax charge for severance resulting
from the resignation of the Company's Chief Operating Officer.
As a result of the above, operating income increased to $10.2
million, or 5.9%, of net sales from $9.4 million, or 5.1%, of net
sales in 1994. The Company estimates that upholstery operations
reduced operating income by approximately $1.0 million for both
1995 and 1994.
Interest expense for 1995 increased due principally to higher
debt levels, resulting from the purchase of two previously leased
manufacturing facilities in June 1995 and also due to slightly
higher interest rates.
<PAGE>
The Company's effective tax rate in 1995 decreased to 38.0%
from 38.9% in 1994. The lower tax rate in 1995 is principally due
to an increase in non-taxable income and increased benefits from
export sales.
1994 Compared to 1993
Net sales increased $17.3 million, or 10.3%, from 1993 levels
due principally to higher average selling prices and higher unit
volume. Lower unit volume in the 1993 period was due principally
to the disruption in production caused by the 1993 fire at the
Stanleytown, Virginia facility.
Gross profit margin decreased to 19.5% from 22.2% in 1993.
The higher gross profit percentage for 1993 was due principally to
the recognition of $5.0 million of business interruption insurance
without the related sales revenue. This $5.0 million represented
the estimated settlement proceeds for gross profits lost and other
direct costs related to lost sales from the Stanleytown fire.
Selling, general and administrative expenses as a percentage
of net sales was 14.4% and 15.5% for 1994 and 1993, respectively.
The lower percentage was due principally to an increase in net
sales and containment of cost.
As a result of the above, operating income for 1994 decreased
to $9.4 million, or 5.1%, of net sales from $11.2 million, or 6.7%,
of net sales in 1993. Operating income was reduced by upholstery
startup costs of approximately $1.0 million, in 1994.
In 1994, the Company reached a final insurance settlement on
the 1993 fire and recorded a pretax gain of $2.4 million.
Interest expense approximated the 1993 period due principally
to lower average debt levels, which was offset by higher interest
rates.
The Company's effective income tax rate decreased to 38.9%
from 41.1% in 1993. The higher 1993 rate was due principally to
the effect of the 1% federal statutory rate increase on the prior
years' deferred tax balances.
Financial Condition, Liquidity and Capital Resources
During August 1995, the Company amended its $25.0 million
revolving credit facility which extended its maturity date to
August 1998. The interest rate under the facility was reduced to
prime (8.5% on December 31, 1995) or, at the Company's option,
equal to reserve adjusted LIBOR plus 1.0% per annum. In June 1995,
the Company issued a $10.0 million 7.57% senior note due 2005 in a
private placement of debt and the proceeds were used to purchase
two previously leased manufacturing facilities. In February 1994,
the Company completed the private placement of $30.0 million of
7.28% senior notes due 2004. The proceeds from the senior notes
were used to repay an existing term note and a portion of the
revolving credit facility.
Long-term debt outstanding at December 31, 1995 was $40.4
million. Aggregate maturities of long-term debt for the next five
years are as follows: 1996 - $650,000; 1997 - $878,000; 1998 -
$6.0 million; 1999 - $5.1 million; 2000 - $5.2 million. As of
December 31, 1995, approximately $21.9 million of additional
borrowings were available under the revolving credit facility. The
Company believes that its financial resources are adequate to
support its capital needs and debt service requirements.
During 1995, cash generated from operations of $6.6 million
was used to reduce borrowings under the revolving credit facility
and to fund capital expenditures in the normal course of business.
The increase in cash generated from operations was due principally
to lower tax payments of $1.0 million compared to $4.5 million in
1994. Tax payments were higher in 1994 principally due to the
timing of installment payments for 1993, resulting from the
utilization of net operating losses carried forward from 1992.
Also, refunds attributed to 1994 reduced tax payments for 1995.
Cash generated from operations, also increased as a result of less
cash paid to suppliers and employees due to reduced production
levels. During 1994, cash provided by operations of $4.1 million
and net borrowings of $1.2 million were used to fund capital
expenditures. Cash generated from operations in 1993 of $6.5
million was used to fund capital expenditures and to reduce
borrowings under the senior credit facility.
Operating cash flows in both 1994 and 1993 include proceeds of
$4.6 and $23.2 million, respectively, received from insurance in
connection with the fire. Cash paid to suppliers in 1994 and 1993
included costs of $2.7 million and $25.2 million, respectively,
incurred in connection with the fire. Excluding the effect of the
fire, cash was required in the 1994 period to support higher
accounts receivable requirements reflecting higher sales levels,
higher payments to suppliers and employees as a result of higher
production levels and higher tax payments as discussed above.
These higher payments in the 1994 period were partially offset by
lower interest payments due principally to lower debt levels.
Excluding the cash flow impact from the fire, cash provided by
operating activities improved $12.1 million in 1993 principally
from higher customer receipts, lower payments for the restructuring
program and lower interest payments.
Net cash used by investing activities was $14.7 million in
1995 compared to $5.2 million and $4.3 million in 1994 and 1993,
respectively. As noted above, proceeds of $10.0 million from the
senior note and additional borrowings from the revolving credit
facility were used to purchase $10.5 million of previously leased
manufacturing facilities. Expenditures in the 1994 period include
the purchase of equipment and other capital expenditures for the
new upholstery operation of approximately $727,000. Except for
fire related expenditures in 1993, which were reimbursed by
insurance, and the manufacturing facilities purchased in 1995,
expenditures in each year were primarily for plant and equipment,
and other assets in the normal course of business.
Net cash provided by financing activities was $8.1 million in
1995 compared to net cash provided by financing activities of $1.2
million in 1994 and cash used by financing activities of $2.7
million in 1993. Cash provided by financing activities in the 1994
period was used to fund capital expenditures. In 1993, cash
provided by the public offering ($13.1 million) and from operations
enabled the Company to redeem $3.1 million of outstanding senior
subordinated debentures and to reduce borrowings under the senior
credit facility by $12.8 million.
Discontinued Operations
Beginning in 1991, the Norman's of Salisbury fabric division
("Norman's") was reflected as a discontinued operation. In 1994,
the Company ceased operations at Norman's and liquidated the
division resulting in a $2.8 million ($4.5 million pretax)
additional loss provision.
Item 8. Financial Statements and Supplementary Data
The financial statements and schedule listed in Items 14(a)(1)
and (a)(2) hereof are incorporated herein by reference and are
filed as part of this report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
In accordance with general instruction G(3) of Form 10-K, the
information called for by items 10, 11, 12, and 13 of Part III is
incorporated by reference to the registrant's definitive Proxy
Statement for its Annual Meeting of Shareholders scheduled for
April 25, 1996, except for information concerning the executive
officers of the registrant which is included in Part I of this
report under the caption "Executive Officers of the Registrant."
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on
Form 8-K
(a) Documents filed as a part of this Report:
<PAGE>
(1) The following financial statements are included in this
report on Form 10-K:
Report of Independent Accountants
Balance Sheets - as of December 31, 1995 and 1994
Statements of Income - for each of the three years in the
period ended December 31, 1995
Statements of Changes in Stockholders' Equity for each of the
three years in the period ended December 31, 1995
Statements of Cash Flows - for each of the three years in the
period ended December 31, 1995
Notes to Financial Statements
(2) Financial Statement Schedule:
Schedule II - Valuation of Qualifying Accounts - for each
of the three years in the period ended December 31, 1995
(b) The following reports on Form 8-K were filed by the Registrant
during the last quarter of the period covered by this report:
None.
(c) Exhibits:
2.1 Agreement and Plan of Merger dated as of July 24, 1992 by
and among the Registrant, Stanley Holding Corporation,
Stanley Acquisition Corporation, the ML-Lee Acquisition
Fund (Retirement Accounts) II, L.P., and the persons
listed on Schedules I and II thereto (incorporated by
reference to Exhibit 2.1 to the Registrant's Registration
Statement on Form S-4 No. 33-50050).
3.1 The Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-1, No. 33-
7300).
3.2 The By-laws of the Registrant (incorporated by reference
to Exhibit 3.2 to the Registrant's Registration Statement
on Form S-1, No. 33-7300).
3.3 Amendment adopted March 21, 1988 to the By-laws of the
Registrant (incorporated by reference to Exhibit 3.3 to
the Registrant's Form 10-K (Commission File No. 0-14938)
for the year ended December 31, 1987).
<PAGE>
3.4 Amendments adopted February 8, 1993 to the By-laws of the
Registrant (incorporated by reference to Exhibit 3.4 to
the Registrant's Registration Statement on Form S-1 No.
33-57432).
3.5 Certificate of Stock Designation dated May 1, 1991 of the
Registrant as modified by an Amendment to Certificate of
Designation dated May 31, 1991 (incorporated by reference
to Exhibit 3.6 to the Registrant's Form 10-K for the year
ended December 31, 1991).
3.6 Certificate of Merger dated as of November 9, 1992
(incorporated by reference to Exhibit 3.6 to the
Registrant's Statement on Form S-1 No. 33-57432).
3.7 Certificate of Amendment dated June 30, 1993.
(incorporated by reference to Exhibit 3.7 to the
Registrant's Form 10-K for the year ended December 31,
1994).
4.1 The Certificate of Incorporation and By-laws of the
Registrant as currently in effect incorporated by
reference as Exhibits 3.1 through 3.7 (incorporated by
reference to Exhibit 4.2 to the Registrant's Registration
Statement on Form S-1 No. 33-57432).
4.2 Registration Rights Agreement dated as of November 9,
1992 by and among the Registrant, ML-Lee Acquisition Fund,
L.P., ML - Lee Acquisition Fund II, L.P., ML-Lee
Acquisition Fund (Retirement Accounts) II, L.P., Lee
Stockholders (as defined therein) and Management
Stockholders (as defined therein) (incorporated by
reference to Exhibit 4.3 to the Registrant's Statement on
Form S-1 No. 33-57432).
4.3 Form of Indenture (including the Form of the Debenture)
(incorporated by reference to Exhibit 4 to the
Registrant's Registration Statement on Form S-1, No. 33-
12746).
4.4 First Supplemental Indenture dated as of January 17, 1989
(incorporated by reference to Exhibit 4.2 to the
Registrant's Form 10-K for the year ended December 31,
1988).
4.5 Second Supplemental Indenture dated as of November 9,
1992 (incorporated by reference to Exhibit 4.5 to the
Registrant's Form 10-K for the year ended December 31,
1993).
<PAGE>
4.6 Note Agreement dated February 15, 1994 between the
Registrant and the Prudential Insurance Company of
America. (incorporated by reference to Exhibit 4.6 to the
Registrant's Form 10-K for the year ended December 31,
1993).
Pursuant to Regulation S-K, Item 601(b)(4)(iii), instruments
evidencing long term debt less than 10% of the Registrant's total
assets have been omitted and will be furnished to the Securities
and Exchange Commission upon request.
10.1 Employment Agreement made as of January 1, 1991 between
Albert L. Prillaman and the Company (incorporated by
reference to Exhibit 10.1 to the Registrant's Form 10-K
for the year ended December 31, 1991).(2)
10.2 Lease dated February 23, 1987 between SIC Corporation and
Southern Furniture Exposition Building, Inc. d/b/a
Southern Furniture Market Center (incorporated by
reference to Exhibit 10.10 to the Registrant's Form 10-K
for the year ended December 31, 1987).
10.3 Lease dated June 30, 1987 between A. Allan McDonald,
Virginia Cary McDonald, C. R. McDonald, Dorothy V.
McDonald, and Lillian S. McDonald, as lessor, and SIC, as
lessee (incorporated by reference to Exhibit 10.14 to the
Registrant's Form 10-K for the year ended December 31,
1987).
10.4 The Stanley Retirement Plan, as restated effective
January 1, 1989, adopted April 20, 1995.(1)(2)
10.5 Amendment No. 1, the Stanley Retirement Plan, effective
December 31, 1995, adopted December 15, 1995.(1)(2)
10.6 Supplemental Retirement Plan of Stanley Furniture
Company, Inc. as restated effective January 1, 1993.
(incorporated by reference to Exhibit 10.8 to the
Registrant's Form 10-K for the year ended December 31,
1993).(2)
10.7 First Amendment to Supplemental Retirement Plan of
Stanley Furniture Company, Inc., effective December 31,
1995, adopted December 15, 1995.(1)(2)
(1) Filed herewith
(2) Management contract or compensatory plan
<PAGE>
10.8 Stanley Interiors Corporation Deferred Compensation
Capital Enhancement Plan effective January 1, 1986
(incorporated by reference to Exhibit 10.12 to the
Registrant's Registration Statement on Form S-1, No. 33-
7300).(2)
10.9 Stanley 401(k) Retirement Savings Plan, as amended and restated
effective January 1, 1996.(1)(2)
10.10 Management Agreement with Thomas H. Lee Company entered
into September 29, 1988 by and among the Registrant, as
successor to Interiors Acquisition Corporation, Stanley
Holding Corporation, Stanley Acquisition Corporation and
Thomas H. Lee Company (incorporated by reference to
Exhibit (c)(9) to the Registrant's Rule 13e-3
Transaction Statement filed October 14, 1988).
10.11 Employment Agreement made as of January 1, 1991 between
William Cubberley, Jr. and the Registrant (incorporated by
reference to Exhibit 10.42 to the Registrant's Form 10-K
for the year ended December 31, 1991).(2)
10.12 Split Dollar Insurance Agreement dated as of March 21,
1991 between Albert L. Prillaman and the Registrant
(incorporated by reference to Exhibit 10.43 to the
Registrant's Form 10-K for the year ended December 31,
1991).(2)
10.13 Second Amended and Restated Revolving Credit Facility and
Term Loan Agreement dated February 15, 1994 (the "Second
Amended and Restated Credit Facility") between the
Registrant, National Canada Finance Corp., and the
National Bank of Canada.
10.14 First Amendment to Second Amended and Restated Credit
Facility dated as of August 21, 1995.(1)
10.15 1992 Stock Option Plan (incorporated by reference to
Registrant's Registration Statement on Form S-8, No. 33-
58396).(2)
10.16 1994 Stock Option Plan. (incorporated by reference to
Exhibit 10.18 to the Registrant's Form 10-K for the year
ended December 31, 1994).(2)
(1) Filed herewith
(2) Management contract or compensatory plan
<PAGE>
10.17 1994 Executive Loan Plan. (incorporated by reference to
Exhibit 10.19 to the Registrant's Form 10-K for the year
ended December 31, 1994).(2)
10.18 Loan and Stock Purchase Agreement dated as of December 2,
1994 by Albert L. Prillaman. (incorporated by reference to
Exhibit 10.20 to the Registrant's Form 10-K for the year
ended December 31, 1994).(2)
11 Schedule of Computation of Earnings Per Share.(1)
21 Listing of Subsidiaries:
Charter Stanley Foreign Sales Corporation, a United
States Virgin Islands Corporation.
23 Consent of Coopers & Lybrand L.L.P.(1)
27 Financial Data Schedule.(1)
(1) Filed herewith
(2) Management contract or compensatory plan
<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.
STANLEY FURNITURE COMPANY, INC.
February 14, 1996 By: /s/ Albert L. Prillaman
Albert L. Prillaman
President, Chief Executive
Officer, and Chairman of the
Board
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 Title Date
/s/ Albert L. Prillaman President, Chief February 14, 1996
(Albert L. Prillaman) Executive Officer,
Chairman of the
Board, and Director
(Principal Executive
Officer)
/s/ Douglas I. Payne Vice President of February 14, 1996
(Douglas I. Payne) Finance, Treasurer
and Secretary
(Principal Financial
and Accounting
Officer)
/s/ David V. Harkins Director February 14, 1996
(David V. Harkins)
/s/ C. Hunter Boll Director February 14, 1996
(C. Hunter Boll)
/s/ Edward J. Mack Director February 14, 1996
(Edward J. Mack)
<PAGE>
STANLEY FURNITURE COMPANY, INC.
ANNUAL REPORT ON FORM 10-K
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
FOR THE YEAR ENDED DECEMBER 31, 1995
Financial Statements Page
Report of Independent Accountants......................... F- 2
Balance Sheets as of December 31, 1995 and 1994........... F- 3
Statements of Income for each of the three years
in the period ended December 31, 1995................... F- 4
Statements of Changes in Stockholders' Equity for each
of the three years in the period ended
December 31, 1995...................................... F- 5
Statements of Cash Flows for each of the three years
in the period ended December 31, 1995................... F- 6
Notes to Financial Statements............................. F- 7
Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts for
each of the three years in the period ended
December 31, 1995....................................... S- 1
F-1
<PAGE>
To The Board of Directors and Shareholders Of
Stanley Furniture Company, Inc.
We have audited the financial statements and financial statement
schedule of Stanley Furniture Company, Inc. listed in the index on
page F-1. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and 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, the financial statements referred to above present
fairly, in all material respects, the financial position of Stanley
Furniture Company, Inc. as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles. In addition, in our
opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the information
required to be included therein.
As discussed in Note 7 of the Notes to Financial Statements,
effective as of the beginning of 1993, the Company changed its
method of accounting for postretirement benefits other than
pensions to conform with Statement of Financial Accounting
Standards No. 106.
Richmond, Virginia
January 26, 1996
F-2
<PAGE>
STANLEY FURNITURE COMPANY, INC.
BALANCE SHEETS
(In thousands, except share data)
December 31,
<TABLE>
1995 1994
<S> <C> <C>
ASSETS
Current assets:
Cash............................................. $ 298 $ 301
Accounts receivable, less allowances of
$1,157 and $933................................ 22,732 23,760
Inventories:
Finished goods................................. 22,391 20,893
Work-in-process................................ 5,368 5,957
Raw materials.................................. 12,408 13,055
40,167 39,905
Prepaid expenses and other
current assets................................. 435 1,446
Deferred income taxes............................ 2,420 2,003
Total current assets........................... 66,052 67,415
Property, plant and equipment, at cost............. 78,399 64,827
Less accumulated depreciation.................... 24,168 20,049
54,231 44,778
Goodwill, less accumulated amortization
of $2,352 and $2,016............................. 11,088 11,424
Other assets....................................... 3,180 902
$134,551 $124,519
LIABILITIES
Current liabilities:
Current maturities of long-term debt............. $ 650
Accounts payable................................. 13,637 $ 14,659
Accrued salaries, wages and benefits............. 6,619 7,119
Other accrued expenses........................... 2,724 2,725
Total current liabilities...................... 23,630 24,503
Long-term debt, exclusive of current maturities.... 40,417 33,395
Deferred income taxes.............................. 12,180 11,541
Other long-term liabilities........................ 3,585 4,250
Total liabilities................................ 79,812 73,689
STOCKHOLDERS' EQUITY
Common stock, $.02 par value, 10,000,000
shares authorized, 4,726,578 and
4,726,550 shares issued and outstanding.......... 94 94
Capital in excess of par value..................... 64,547 64,527
Deficit............................................ (9,902) (13,791)
Total stockholders' equity....................... 54,739 50,830
$134,551 $124,519
</TABLE>
The accompanying notes are an integral part
of the financial statements.
F-3
<PAGE>
STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF INCOME
(In thousands, except per share data)
<TABLE>
For the Years Ended
December 31,
1995 1994 1993
<S> <C> <C> <C>
Net sales........................... $174,179 $184,342 $167,091
Cost of sales:
From products sold................ 137,621 148,453 134,972
Business interruption insurance... (5,036)
137,621 148,453 129,936
Gross profit.................... 36,558 35,889 37,155
Selling, general and administrative
expenses.......................... 26,454 26,483 25,976
Unusual items, net.................. (136)
Operating income ................. 10,240 9,406 11,179
Gain on insurance settlement........ (2,379) (2,186)
Other expense, net.................. 433 444 1,346
Interest expense.................... 3,534 2,969 3,048
Income from continuing operations
before income taxes............. 6,273 8,372 8,971
Income taxes........................ 2,384 3,256 3,691
Income from continuing operations... 3,889 5,116 5,280
Discontinued operations, including
provision for operating losses
of $1,721, net of income taxes.... (2,758)
Net income ..................... $ 3,889 $ 2,358 $ 5,280
Earnings (loss) per common share:
Continuing operations............. $ .82 $ 1.08 $ 1.39
Discontinued operations........... (.58)
Net income...................... $ .82 $ .50 $ 1.39
Weighted average number of shares... 4,727 4,725 3,792
</TABLE>
The accompanying notes are an integral part
of the financial statements.
F-4
<PAGE>
STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For each of the three years in the period ended December 31, 1995
(In thousands)
<TABLE>
Adjust-
Capital ment for
in Minimum
Common Stock Excess of Pension
Shares Amount Par Value Liability Deficit
<S> <C> <C> <C> <C> <C>
Balance at December 31,
1992................. 2,997 $60 $51,328 $ -0- $(21,429)
Public offering........ 1,725 34 13,053
Adjustment for minimum
pension liability.... (1,122)
Net income............. 5,280
Balance at December 31,
1993............... 4,722 94 64,381 (1,122) (16,149)
Exercise of stock
options.............. 5 66
Adjustment for minimum
pension liability.... 1,122
Compensation expense
related to executive
loan plan............ 80
Net income............. 2,358
Balance at December 31,
1994............... 4,727 94 64,527 -0- (13,791)
Compensation expense
related to executive
loan plan, net....... 20
Net income............. 3,889
Balance at December 31,
1995............... 4,727 $94 $64,547 $ -0- $ (9,902)
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-5
<PAGE>
STANLEY FURNITURE COMPANY, INC.
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
For the Years Ended
December 31,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers...............$175,189 $183,458 $166,706
Cash paid to suppliers and employees.......(164,022) (176,194) (179,218)
Interest paid.............................. (3,535) (2,464) (3,529)
Income taxes paid, net..................... (1,033) (4,463) (321)
Proceeds received on insurance coverage.... 4,625 23,196
Operating activities of discontinued
operations............................... (867) (285)
Net cash provided by operating
activities............................. 6,599 4,095 6,549
Cash flows from investing activities:
Capital expenditures....................... (14,225) (4,968) (6,392)
Proceeds received on insurance coverage.... 2,679
Purchase of other assets................... (467) (650) (591)
Proceeds from sale of assets............... 25 108 91
Investing activities of discontinued
operations............................... 357 ( 47)
Net cash used by investing activities.... (14,667) (5,153) (4,260)
Cash flows from financing activities:
Proceeds from issuance of common stock..... 13,087
Issuance of senior notes................... 10,000 30,000
Redemption of senior subordinated
debentures............................... (3,093)
Repayment of term note..................... (16,569) (2,616)
Repayment of revolving credit
facility, net............................ (2,320) (12,685) (10,229)
Proceeds from insurance policy loans....... 385 345 292
Other, net................................. 68 (179)
Net cash provided (used) by financing
activities............................. 8,065 1,159 (2,738)
Net (decrease) increase in cash.............. (3) 101 (449)
Cash at beginning of year.................... 301 200 649
Cash at end of year........................$ 298 $ 301 $ 200
</TABLE>
The accompanying notes are an integral part
of the financial statements.
F-6
<PAGE>
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Organization and Basis of Presentation
Stanley Furniture Company, Inc. (the "Company") is a leading
designer and manufacturer of furniture exclusively targeted at the
upper-medium price range of the residential market.
The Company operates predominantly in one business segment.
Substantially all revenues result from the sale of home
furnishings, primarily residential furniture products.
Substantially all of the Company's trade accounts receivable are
due from retailers in this market, which consist of a large number
of entities with a broad geographical dispersion.
Inventories
Inventories are valued at the lower of cost or market. Cost
for all inventories is determined using the first-in, first-out
(FIFO) method.
Property, Plant and Equipment
Depreciation of property, plant and equipment is computed
using the straight-line method based upon the estimated useful
lives of the assets and amounted to $4.5 million, $4.0 million and
$3.7 million for 1995, 1994 and 1993, respectively. Depreciable
lives are as follows:
Years
Buildings................................. 40 to 50
Machinery and equipment................... 5 to 12
Leasehold improvements.................... 3 to 20
Furniture, fixtures and office equipment.. 3 to 10
Gains and losses related to dispositions and retirements are
included in income. Maintenance and repairs are charged to income
as incurred; renewals and betterments are capitalized.
Capitalized Software Cost
The Company amortizes certain purchased computer software
costs using the straight-line method over the economic lives of the
related products not to exceed five years. Unamortized cost at
December 31, 1995 and 1994 was $473,000 and $39,000, respectively.
F-7
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. Summary of Significant Accounting Policies (continued)
Goodwill and Long-lived Assets
Goodwill is being amortized on a straight-line basis over 40
years. The Company continually evaluates the existence of
impairment of long-lived assets, including goodwill, on the basis
of whether it is fully recoverable from projected, undiscounted net
cash flows.
Income Taxes
Deferred income taxes are determined based on the difference
between the financial statement and income tax bases of assets and
liabilities using enacted tax rates in effect in the years in which
the differences are expected to reverse. Deferred tax expense
represents the change in the deferred tax asset/liability balance.
Income tax credits are reported as a reduction of federal income
tax expense in the year in which the credits are generated.
Fair Value of Financial Instruments
The fair value of the Company's long-term debt is estimated
using discounted cash flow analysis based on the incremental
borrowing rates currently available to the Company for loans with
similar terms and maturities, and at December 31, 1995, the fair
value approximated the carrying amount. The fair value of trade
receivables, trade payables and letters of credit approximate the
carrying amount because of the short maturity of these instruments.
Pension Plans
The Company's funding policy is to contribute to all qualified
plans annually an amount equal to the normal cost and a portion of
the unfunded liability but not to exceed the maximum amount that
can be deducted for federal income tax purposes.
Earnings Per Common Share
Earnings per common share are based upon the weighted average
number of shares outstanding. All share and per share data have
been restated to reflect the one-for-two reverse stock split,
effective July 1993.
F-8
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. Summary of Significant Accounting Policies (continued)
Supplementary earnings per common share are presented below.
Income from continuing operations for the 1994 and 1993 periods
reflect a non-recurring gain from insurance proceeds. The 1993
period reflects the effect of proforma adjustments for the 1993
public offering. It is assumed that the transaction took effect at
the beginning of the year. The 1995 and 1994 per share information
is included for comparison purposes.
1995 1994 1993
Continuing operations:
Before non-recurring gain........... $ .82 $ .77 $ .90
Non-recurring gain on insurance..... .31 .29
As reported....................... .82 1.08 1.19
Discontinued operations............... (.58)
Net income.......................... $ .82 $ .50 $ 1.19
2. Property, Plant and Equipment at December 31
(in thousands)
1995 1994
Land and buildings.................... $33,594 $17,853
Machinery and equipment............... 43,127 41,059
Leasehold improvements................ 153 3,986
Furniture, fixtures and office
equipment........................... 1,387 1,289
Construction in progress.............. 138 640
$78,399 $64,827
In June 1995, the Company purchased the manufacturing
facilities at its Stanleytown, Virginia and West End, North
Carolina locations, which it previously leased. The total purchase
price was $10.5 million for both facilities. As a result of the
purchase, the Company also reclassified related leasehold
improvements with a net book value of $3.3 million to land and
buildings.
3. Long-Term Debt at December 31
(in thousands)
1995 1994
7.28% Senior notes due March 15, 2004......... $30,000 $30,000
7.57% Senior note due June 30, 2005........... 10,000
Revolving credit facility..................... 914 3,234
7% Convertible subordinated debentures
due April 1, 2012........................... 153 161
Total..................................... 41,067 33,395
Less current maturities....................... 650
$40,417 $33,395
F-9
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. Long-term debt at December 31 (continued)
During August 1995, the Company amended its $25.0 million
revolving credit facility which extended its maturity date to
August 1998. The interest rate under the facility was reduced to
prime (8.5% on December 31, 1995) or, at the Company's option,
equal to reserve adjusted LIBOR plus 1.0% per annum. As of
December 31, 1995, approximately $21.9 million of additional
borrowings were available under the revolving credit facility. In
June 1995, the Company issued a $10.0 million 7.57% senior note due
2005 in a private placement of debt and the proceeds were used to
purchase two plant facilities, as discussed in Note 2. In February
1994, the Company completed the private placement of $30.0 million
of 7.28% senior notes due in 2004. The proceeds were used to repay
a term note and a portion of the revolving credit facility.
The Company utilizes letters of credit to collateralize
certain insurance policies and inventory purchases. Outstanding
letters of credit at December 31, 1995 and 1994 were $2.2 million
and $1.8 million, respectively.
The above loan agreements require the Company to maintain
certain financial covenants and prohibit the Company from paying
dividends and acquiring or retiring it's common stock.
Aggregate maturities of long-term debt for the next five years
are as follows: 1996 - $650,000; 1997 - $878,000; 1998 - $6.0
million; 1999 - $5.1 million; 2000 - $5.2 million.
4. Unusual Items
During the second quarter of 1995, the Company was released
from a lease obligation at its previously closed Waynesboro,
Virginia manufacturing facility. Accordingly, the Company
recognized a pretax credit of $1.1 million related to the reversal
of an accrual set up in 1991 for the closing of the facility.
Unusual items also included a pretax charge for severance resulting
from the resignation of the Company's Chief Operating Officer.
F-10
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. Income Taxes
The provision for income taxes on income from continuing
operations consists of (in thousands):
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Current:
Federal......................... $1,750 $2,314 $1,123
State........................... 412 669 245
Total current................. 2,162 2,983 1,368
Deferred:
Federal......................... 156 214 1,940
State........................... 66 59 383
Total deferred.............. 222 273 2,323
Income taxes................ $2,384 $3,256 $3,691
</TABLE>
A reconciliation of the difference between the federal
statutory income tax rate and the effective income tax rate on
income from continuing operations at December 31 follows:
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Federal statutory rate.......... 35.0% 35.0% 35.0%
State taxes, net of federal
benefit....................... 5.0 5.0 4.6
Goodwill........................ 1.9 1.4 1.3
Life insurance.................. (1.5) (0.9) (0.7)
Tax savings from foreign sales
corporation................... (0.8) (0.4) (0.4)
Federal tax rate change......... 2.8
Tax credits..................... (0.2) (0.8) (1.3)
Other, net...................... (1.4) (0.4) (0.2)
Effective income tax rate..... 38.0% 38.9% 41.1%
</TABLE>
F-11
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. Income Taxes (continued)
The income tax effects of temporary differences that comprise
deferred tax assets and liabilities at December 31 follow (in
thousands):
<TABLE>
1995 1994
<S> <C> <C>
Current deferred tax assets (liabilities):
Accounts receivable........................ $ 379 $ 360
Inventory.................................. (432) (439)
Employee benefits.......................... 1,834 1,305
Other accrued expenses..................... 639 777
Net current deferred tax asset........... $2,420 $2,003
Noncurrent deferred tax (assets) liabilities:
Inventory.................................. $ 500 $ 966
Property, plant and equipment.............. 11,552 11,302
Employee benefits.......................... 215 (785)
Restructuring costs........................ (95) (183)
Other...................................... 8 241
Net noncurrent deferred tax liability.... $12,180 $11,541
</TABLE>
At December 31, 1994, the Company had alternative minimum tax
credit carryforwards of $519,000 which were utilized in 1995. The
Company's federal income tax returns have been examined and closed
by the Internal Revenue Service through 1992.
6. Stock Options and Loan Plan
In December 1994, the Company adopted the Stanley Furniture
Company, Inc. 1994 Stock Option Plan (the "1994 Plan"). The 1994
Plan and the Company's 1992 Stock Option Plan provide for the
granting of stock options for up to an aggregate of 700,000 shares
of common stock to certain key employees. Options granted may be
either nonqualified or qualified stock options and the exercise
price may not be less than 100% of the fair market value of the
Company's common stock on the date the options are granted.
Granted options vest 20% annually.
F-12
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. Stock Options and Loan Plan (continued)
At December 31, 1995 and 1994, options to purchase 229,023 and
182,297 shares, respectively, were exercisable and 16,935 were
available for grant at December 31, 1995. Activity for the two
years ended December 31, 1995 follows:
Number Option price
of shares per share
Outstanding at December 31, 1993... 668,317 $ 8.50 to $12.86
Exercised.......................... (5,112) 8.50 to 12.86
Cancelled.......................... (602,834) 12.86
Granted............................ 609,629 10.00
Outstanding at December 31, 1994. 670,000 8.50 to 10.00
Lapsed............................. (5,327) 8.50 to 10.00
Cancelled.......................... (156,720) 8.50 to 10.00
Granted............................ 170,000 8.75
Outstanding at December 31, 1995. 677,953 $ 8.50 to $10.00
During 1994, the Company established the Executive Loan Plan.
Under the Executive Loan Plan, the Company has entered into a
contractual agreement to issue 50,000 shares of common stock to the
Chief Executive Officer at $10 per share (the market price per
share on the date of the agreement) in exchange for a non-recourse
7.6% note receivable payable in five annual installments with the
balance due January 2, 1999. The Company has also agreed to
forgive interest plus one half of the contractual purchase price
over the next five years, if the Chief Executive Officer remains
employed by the Company. The contractual agreement under the
Executive Loan Plan with the former Chief Operating Officer was
cancelled in July 1995. Accordingly, net compensation expense
including interest and income taxes was $98,000 and $160,000 for
1995 and 1994, respectively.
7. Employee Benefit Plans
Pension Plans
The Company maintains a non-contributory defined benefit
pension plan (the "Stanley Retirement Plan"), covering
substantially all employees. The benefits provided by the plan are
based on an employee's years of service and average compensation.
Plan assets are invested principally in fixed income and equity
instruments. The Company also maintains a supplemental retirement
plan covering certain key employees (the "Supplemental Plan").
F-13
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. Employee Benefit Plans (continued)
A Supplemental Plan participant who retires under any provision of
the Stanley Retirement Plan will receive a supplemental retirement
allowance equal to the excess, if any, of an eligible employee's
benefit under the Stanley Retirement Plan in effect on January 1,
1987, over his benefit actually received at retirement. The
Supplemental Plan is unfunded and benefit payments are made
directly from Company assets.
Effective December 31, 1995, the Company amended both the
Stanley Retirement Plan and the Supplemental Plan to cease future
benefit accruals under the plans. Accordingly, the Company
recognized a pretax loss on curtailment of $31,000. The following
table sets forth the plans' financial status at December 31 (in
thousands):
<TABLE>
1995 1994
Stanley Supple- Stanley Supple-
Retirement mental Retirement mental
Plan Plan Plan Plan
<S> <C> <C> <C> <C>
Accumulated benefit obligation:
Vested........................ $(14,641) $(897) $(10,603) $ (483)
Nonvested..................... (1,127) (97) (737) (70)
Accumulated benefit obligation.. $(15,768) $(994) $(11,340) $ (553)
Projected benefit obligation.... $(15,768) $(994) $(13,209) $(1,016)
Plan assets at fair value....... 15,842 12,012
Plan assets more than
(less than) projected benefit
obligation.................... 74 (994) (1,197) (1,016)
Unrecognized (gain) loss........ 3,206 2,400 (284)
Prior service cost.............. (112) 659
Prepaid (accrued) pension
costs....................... $ 3,280 $(994) $ 1,091 $ (641)
</TABLE>
Components of net periodic pension cost follow (in thousands):
1995 1994 1993
Service cost.................... $ 774 $ 904 $ 799
Interest cost................... 1,256 1,315 1,333
Actual return on assets......... (1,320) (109) (382)
Net amortization and deferral... 965 (589) (444)
Loss on curtailment............. 31
$1,706 $1,521 $1,306
F-14
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. Employee Benefit Plans (continued)
The assumptions used as of December 31 to determine the plans'
funded status, pension cost and loss on curtailment were:
1995 1994 1993
Discount rate for funded status..... 7.67% 9.00% 7.75%
Discount rate for pension cost...... 9.00% 7.75% 8.25%
Salary progression.................. 5.00% 5.00% 4.00%
Return on assets.................... 7.75% 8.00% 8.25%
A reduction in the discount rate of 0.25% would create an
additional minimum pension liability of $3.9 million and would
result in a charge to stockholders' equity of $2.3 million, net of
deferred taxes.
401(k) Plan
The Company also maintains the Stanley 401(k) Retirement
Savings Plan ("401(k) Plan") for all of its eligible employees.
Through December 31, 1995, the plan allowed for contributions by
employees up to 20% of their salaries and also permitted discre-
tionary contributions by the Company, although no discretionary
contributions have been made to the plan by the Company. In
connection with the curtailment of benefits in the Stanley
Retirement Plan and Supplemental Plan, the Company amended its
401(k) Plan and expects to begin making discretionary matching and
profit sharing contributions in 1996.
Postretirement Benefits Other Than Pensions
The Company provides certain health care benefits to eligible
retired employees between the ages of 55 and 65 and provides
certain life insurance benefits to eligible retired employees from
age 55 until death. Substantially all of the Company's employees
are eligible for these benefits after attaining specified years of
service and age provisions. Employees who elect benefits at
retirement contribute to the cost of coverage. The plan is
unfunded. Prior to 1993, the Company expensed the cost of these
benefits when paid. Effective January 1, 1993, the Company adopted
SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions." Accordingly, the expected cost of retiree
benefits, other than pensions, are charged to expense during the
years the employees render service.
F-15
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. Employee Benefit Plans (continued)
The Company elected to recognize the January 1, 1993,
obligation of $8.1 million through charges to earnings over 20
years. On March 3, 1993, the Company also adopted plan design
changes which reduced the January 1, 1993, obligation to $2.9
million. The following table sets forth the plan's financial
status at December 31 (in thousands):
1995 1994
Retirees.................................... $(4,875) $(4,769)
Fully eligible active plan participants..... (232) (333)
Other active plan participants.............. (714) (634)
Total accumulated postretirement
benefit obligation...................... (5,821) (5,736)
Unrecognized net loss....................... 2,752 2,927
Unrecognized transition obligation.......... 2,272 2,406
Net accrued postretirement benefit cost... $ (797) $ (403)
Components of net periodic postretirement benefit cost were
(in thousands):
1995 1994 1993
Service cost................................ $ 93 $ 74 $ 72
Interest cost............................... 510 242 239
Amortization of transition obligation,
after reduction for plan design changes... 134 359 146
Amortization and deferral................... 182 21
$ 919 $ 696 $457
The weighted average discount rates used in determining the
actuarial present value of the projected benefit obligation were
7.67%, 9.00% and 7.75% for 1995, 1994 and 1993, respectively. The
rate of increase in future health care benefit cost used in
determining the obligation for 1995 was 12% gradually decreasing to
6% beginning in 2002; for 1994 was 15% gradually decreasing to 7%
beginning in 2005; and, for 1993 was 17% gradually decreasing to
5.75% beginning in 2007.
Increasing the assumed health care cost trend rate by one
percentage point in each future year would increase the accumulated
postretirement benefit obligation at December 31, 1995 by $307,000
and the aggregate of the service cost and interest cost components
of net periodic postretirement benefit cost for 1995 by $31,000.
F-16
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. Employee Benefit Plans (continued)
Deferred Compensation
The Company has a deferred compensation plan which permits
certain management employees to defer portions of their
compensation. The employees earn a fixed rate of interest on the
deferred amounts. The plan is funded through the purchase of whole
life insurance contracts on the employees, and the Company borrows
against the cash surrender value of these policies to fund any
benefit payments. The accrued liabilities relating to this plan of
$1.4 million and $1.3 million at December 31, 1995 and 1994,
respectively, are included in accrued salaries, wages and benefits
and other long-term liabilities. The cash surrender value, net of
policy loans, is included in other assets.
8. Insurance Claim Accounting
In February 1993, a fire at the Stanleytown, Virginia facility
damaged approximately 12% of the Company's total manufacturing
facilities. The Company's insurance coverage provided for the
complete replacement of the damaged building (which was
leased), equipment and inventory, and reimbursement for business
interruption losses.
The Company recorded business interruption insurance in 1993
based on estimated profits attributed to lost sales since the fire.
The amount recognized represents the estimated gross profit that
would have been realized on lost sales. Accordingly, $5.0 million
of estimated income from business interruption insurance is
included in gross profit in 1993. Also, a $2.2 million pretax gain
was recorded in 1993 since proceeds from insurance exceeded the
book value of leasehold improvements and equipment destroyed in the
fire. In 1994, the Company reached a final insurance settlement
and recorded a gain of $2.4 million.
9. Discontinued Operations
Beginning in 1991, Norman's was reflected as a discontinued
operation. In 1994, the Company ceased operations at Norman's and
liquidated the division resulting in a $2.8 million ($4.5 million
pretax) additional loss provision. Net sales applicable to
Norman's were $4.1 million and $12.1 million for 1994 and 1993,
respectively.
F-17
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. Leases
The Company leased a substantial portion of its facilities
under operating leases through June 1995, at which time the Company
purchased these facilities, as described in Note 2. Rental
expenses charged to operations were $1.4 million, $1.9 million and
$2.0 million in 1995, 1994 and 1993, respectively. The Company
continues to lease two showrooms and certain other equipment.
Future minimum lease payments, net of subleases, are approximately
as follows: 1996 - $769,000; 1997 - $801,000; 1998 -$534,000; 1999
- -$354,000; and thereafter - $12,000.
11. Related Party Transactions
Approximately 58% of the Company's common stock is owned by
the ML-Lee Acquisition Fund, L.P. (the "Majority Stockholder") and
certain affiliates of the Thomas H. Lee Company. The Company has
entered into a management agreement with an affiliate of its
Majority Stockholder. Fees paid pursuant to this agreement
amounted to $250,000 annually in 1995, 1994 and 1993.
12. Supplemental Cash Flow Information
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Net income......................... $ 3,889 $ 2,358 $ 5,280
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization.. 4,919 4,421 4,808
Other, net..................... 118 249 295
Loss on disposal of fabric
division..................... 2,758
Changes in assets and
liabilities:
Accounts receivable.......... 1,028 (1,011) (289)
Inventories.................. (262) (2,221) (4,147)
Prepaid expenses and other
current assets............. (1,030) (892) 374
Insurance claim receivable... 2,029 (4,152)
Operating assets of
discontinued operations.... (867) (285)
Accounts payable............. (1,022) (922) 2,082
Accrued salaries, wages and
benefits................... (500) 585 (589)
Other accrued expenses....... 137 (632) (34)
Deferred income taxes........ 222 189 2,038
Other assets................... 25 22 57
Other long-term liabilities.... (925) (1,971) 1,111
Net cash provided by
operating activities....... $ 6,599 $ 4,095 $ 6,549
</TABLE>
F-18
<PAGE>
STANLEY FURNITURE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
13. Quarterly Results of Operations (Unaudited)
The Company's unaudited quarterly results of operations were
as follows (in thousands, except per share data):
<TABLE>
Fiscal 1995 Quarters
First Second Third Fourth
<S> <C> <C> <C> <C>
Net sales.............. $44,989 $38,163 $44,706 $46,321
Gross profit........... 9,101 8,050 9,095 10,312
Net income............. 794 719 998 1,378
Net income
per share............ .17 .15 .21 .29
Fiscal 1994 Quarters
Net sales.............. $44,737 $44,101 $43,845 $51,659
Gross profit........... 8,677 8,544 8,865 9,803
Income from continuing
operations.......... 2,386 (a) 957 863 910
Net income (loss)...... (372)(b) 957 863 910
Income from continuing
operations per share. .49 (a) .20 .18 .19
Net income (loss)
per share............ (.08)(b) .20 .18 .19
(a) In the first quarter of 1994, the Company reached a final insurance
settlement
and recorded a gain of $1.5 million ($2.4 million pretax) or 31 cents per
share.
(b) In the first quarter of 1994, the Company decided to cease operations at
Norman's and recorded a loss from discontinued operations of $2.8 million
($4.5
million pretax) or 58 cents per share.
F-19
<PAGE>
STANLEY FURNITURE COMPANY, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For each of the Three Years in the Period Ended December 31, 1995
(In thousands)
</TABLE>
<TABLE>
Column A Column B Column C Column D Column E
Charged
Balance at (Credited) Balance
Beginning to Costs & at End of
Descriptions of Period Expenses Deductions Period
<S> <C> <C> <C> <C>
1995
Doubtful receivables... $528 $302 $230(a) $ 600
Discounts, returns,
and allowances....... 405 152(b) 557
$933 $454 $230 $1,157
1994
Doubtful receivables... $472 $195 $139(a) $528
Discounts, returns,
and allowances....... 355 50 (b) 405
$827 $245 $139 $933
1993
Doubtful receivables... $400 $526 $454(a) $472
Discounts, returns,
and allowances....... 463 (108)(b) 355
$863 $418 $454 $827
</TABLE>
(a) Uncollectible receivables written off, net of recoveries.
(b) Represents net increase (decrease) in required reserve.
S-1
<PAGE>
THE STANLEY RETIREMENT PLAN
Effective Date
November 28, 1979
As Amended and Restated
January 1, 1989
Adopted
April 20, 1995
INTRODUCTION
On November 28, 1979, Stanley Interiors Corporation acquired, among
other assets, substantially all of the assets of the Stanley Furniture
Company Division of The Mead Corporation. In connection with the
acquisition, Stanley Interiors Corporation adopted, effective November 28,
1979, the provisions of the Stanley Retirement Plan insofar as they applied
to employees of the Stanley Furniture Company Division who were participants
in the Stanley Retirement Plan and who became employees of Stanley Interiors
Corporation, with the intention of continuing the Stanley Retirement Plan for
such employees. Effective November 9, 1992, Stanley Interiors Corporation
became known as Stanley Furniture Company, Inc.
The Stanley Retirement Plan was subsequently amended from time to time
with the most recent amendment and restatement being effective January 1,
1985.
Effective December 31, 1993, Stanley Furniture Company, Inc. intends to
merge the assets and liabilities of the Pension Plan of R. W. Norman Division
of Stanley Interiors Corporation (the "Norman Plan") into the Stanley
Retirement Plan, with the participants of the Norman Plan becoming
participants of the Stanley Retirement Plan as of January 1, 1994.
The amended and restated Stanley Retirement Plan herein contained
constitutes an amendment, effective January 1, 1989, unless otherwise
indicated, to the earlier plan provisions, rather than a replacement of such
plan. The plan provisions as in effect immediately prior to this January 1,
1989 amendment and restatement, modified by Section 6.04 and Section 10.02 of
this amended and restated Plan, shall remain in effect for those Participants
who are not actively employed by the participating Employers at any time
after such date. The assets held under the Fund established pursuant to the
Stanley Retirement Plan shall continue to be held pursuant to the Stanley
Retirement Plan, as herein amended, as well as the assets merged into the
Fund from the Norman Plan.
The purpose of this Plan is to provide retirement security for eligible
Employees. It is intended that this Plan, together with the Fund established
to carry out the funding of the Plan, meet all the requirements of the
Internal Revenue Code of 1986 ("IRC"), as amended, and the Plan shall be
interpreted, wherever possible, to comply with the terms of the IRC
and all formal regulations and rulings issued under the IRC.
This Plan is amended and maintained under the condition that it shall
continue to be approved and qualified by the Internal Revenue Service under
IRC Section 401(a) and that the Trust hereunder continues to be exempt under
IRC Section 501(a), or under any comparable Sections of any future
legislation which amends, supplements or supersedes such Sections.
Effective January 1, 1989, unless otherwise indicated, the Stanley
Retirement Plan as amended and restated has the terms and provisions
hereinafter set forth.<PAGE>
<PAGE>
ARTICLE I
DEFINITIONS
As used herein, unless otherwise required by the context, the following
words and phrases shall have the meanings indicated:
1.01 Accrued Benefit means:
1.01(a) For any Participant, who was not a participant in the Norman
Plan as of December 31, 1993, as of any date, the monthly retirement benefit
determined in accordance with Section 3.01 with Final Average Compensation,
Covered Compensation and Credited Service as of such date.
Notwithstanding any other contrary provision of the Plan,
effective January 4, 1989, in calculating the accrued benefit (including the
right to any optional benefit provided under the Plan) of any Participant,
such Participant shall accrue no additional benefit under the Plan on or
after January 4, 1989 to the extent that such additional benefit accrual
exceeds the benefit which would otherwise accrue in accordance with the
terms of the Plan as subsequently amended to comply with those qualification
requirements described in Income Tax Regulations Section
1.401(b)-1(b)(2)(ii).
This provision shall be effective until the last day of the
first Plan Year commencing in 1994 and shall be effective for such period if
and only if the subsequent Tax Reform Act of 1986 amendment is made on or
before the last day of the first Plan Year commencing in 1994.
In addition, the benefit accrued by any Participant during the
1989-1993 Plan Years shall in no event exceed the benefit accrual provided
during such Plan Years with respect to such Participant under the terms of
the Plan as subsequently amended to comply with the Tax Reform Act of 1986.
However, such Participant's accrued benefit shall not be less than what the
Participant had accrued as of the last day of the last Plan Year beginning
before January 1, 1989.
1.01(b) For any Participant who was a participant in the Norman Plan
as of December 31, 1993, and who is credited with an Hour of Service on or
after January 1, 1994, as of any subsequent date, the monthly retirement
benefit determined as the sum of (i) and (ii) below:
(i) The accrued benefit as of December 31, 1993, earned by
the Participant under the provisions of the Norman Plan in effect on December
31, 1993; and
(ii) The accrued benefit determined in accordance with Section
3.01 of this Plan for periods commencing on and after January 1, 1994, with
Final Average Compensation, Covered Compensation and Credited Service as of
such date.
1.02 Actuarial Equivalent means a benefit of equivalent value when computed
on the basis of the factors denoted in the Appendix to this Plan.
<PAGE>
1.03 Administrative Committee means the Administrative Committee provided
for in Article VIII.
1.04 Affiliate means an organization which is a member of the same
controlled group of organizations [as defined in IRC Sections 414(b), (c),
(m) and (o)] as the Employer but which is not a participating Employer.
1.05 Annuity Starting Date means:
1.05(a) the first day of the first period for which an amount is
payable as an annuity, or
1.05(b) in the case of a benefit not payable in the form of an
annuity, the first day on which all events have occurred which entitle the
Participant to such benefit, or
1.05(c) the first day of the first period for which a benefit is to be
received by reason of Total and Permanent Disability.
1.06 Approved Absence means the absence of an Employee (a) authorized or
approved by his Employer, (b) while in the employ of an Affiliate pursuant to
transfer from an Employer, (c) during layoff or furlough while recall rights
continue (as determined in accordance with the normal practices of his
Employer), (d) who returns to employment within twelve (12) months of his
termination of service, or (e) who is on a Maternity or Paternity Absence.
Absence of an Employee due to service with the armed services of the
United States shall be deemed to be an Approved Absence expiring concurrently
with (i) reemployment or (ii) the expiration of any reemployment right
provided by law, whichever occurs earlier.
1.07 Beneficiary means any person designated by a Participant or otherwise
entitled to receive such benefits as may become payable under the provisions
of the Plan after the death of such Participant.
The designation of a Beneficiary shall be made on forms provided by
the Administrative Committee, and such forms shall be maintained in files
held by the Administrative Committee. A Participant may from time to time
change the Beneficiary by written notice to the Administrative Committee and,
upon such change, the rights of all previously designated Beneficiaries to
receive any benefits under the Plan shall cease. If, at the date of death of
the Participant, there is no valid and current Beneficiary designation on
file with the Administrative Committee, then any death benefits which would
have been payable to the Beneficiary shall be payable to the Participant's
surviving Spouse, if any; if none, to the Participant's children who survive
him, equally; or if none survive, then to the Participant's estate. The
interpretation of the Administrative Committee with respect to any
Beneficiary designation, subject to applicable law, shall be binding and
conclusive upon all parties and no person who claims to be a Beneficiary, or
any other person, shall have the right to question any action of the
Administrative Committee, which in the judgment of the Administrative
Committee fulfills the intent of the Participant who filed such designation.
<PAGE>
If a Beneficiary designated by a Participant is not the Participant's
Spouse, then the Spouse's consent shall be required with respect to such
alternate Beneficiary for such designation to become effective and must be
limited to a benefit for a specfic alternate Beneficiary (or form of
benefits). Such consent shall be witnessed by a representative of
the Administrative Committee or a notary public. Any change in the
designation of an alternate Beneficiary shall also require the consent of the
Spouse for such change to become effective. The Administrative Committee may
accept an election other than that provided hereunder without the consent of
the Spouse if there is no Spouse, the Spouse cannot be located, or such other
circumstances as may be prescribed by regulations. Any spousal consent shall
only be applicable to the Spouse granting such consent.
1.08 Board means the board of directors of the Corporation.
1.09 Compensation means the amounts paid by an Employer to an Employee,
amounts paid by an Affiliate to a former Employee of an Employer now employed
by an Employer and amounts paid by an Affiliate to a current Employee prior
to his transfer to an Employer, for services, including amounts which the
Employee could have elected to receive as cash in the current year as taxable
income (a) prior to having such amount contributed to a plan which is
maintained pursuant to IRC Section 401(k) and/or (b) in lieu of a non-taxable
benefit under the Stanley Furniture Company, Inc. Flexible Benefit
Plan which is maintained pursuant to IRC Section 125, but excluding gifts,
credits, awards, payments under any incentive or bonus plan, except as
otherwise determined by the Administrative Committee, and any special payment
authorized by the Board.
For any Participant who was a participant in the Norman Plan as of
December 31, 1993, Compensation for any period prior to January 1, 1994,
shall be determined under the provisions of the Norman Plan.
Effective January 1, 1989, in no event shall Compensation as
hereinbefore determined exceed two hundred thousand dollars ($200,000) (or
such other legislated amount or such other adjusted amount as determined by
the Secretary of Treasury) pursuant to IRC Section 401(a)(17), provided that
the increase determined as of January 1 of a calendar year by the Secretary
of Treasury shall be effective for Plan Years beginning in such calendar year
and retroactive to prior years. In determining the Compensation of an
Employee for purposes of this limit, the rules of IRC Section 414(q)(6) shall
apply, except in applying such rules, the term "family" shall include only
the spouse of the Employee and any lineal descendants of the Employee who
have not attained age nineteen (19) before the close of the year. If, as a
result of the application of such rules, the adjusted dollar limit is
exceeded, then the limitation shall be prorated among the affected
individuals in proportion to each such individual's Compensation as
determined under this Section prior to the application of the limit.
Effective January 1, 1994, the two hundred thousand dollar ($200,000)
limit contained above will be one hundred fifty thousand dollars ($150,000),
except that increases shall not apply to prior years.
Compensation of an Employee who is at any time simultaneously in the
employ of more than one Employer shall be the sum of such earnings received
by the Employee from
all such Employers.
1.10 Compensation and Benefits Committee means the Stanley Furniture
Compensation and Benefits Committee provided for in Article VIII.
1.11 Contributions means the payments as provided herein by the Employer to
the Fund.
1.12 Corporation means Stanley Furniture Company, Inc. (formerly known as
Stanley Interiors Corporation), a Delaware corporation, or any successor
thereto. The Corporation is the sponsor, the named Fiduciary and the
administrator of the Plan for purposes of ERISA as it relates to the
employees of each Employer.
1.13 Covered Compensation means, effective January 1, 1994, for any
Participant, the unindexed average, of the Taxable Wage Bases in effect for
each calendar year during the thirty-five (35) year period ending with the
last day of the calendar year in which the Participant attains (or will
attain) Social Security Retirement Age. In determining a Participant's
Covered Compensation for a Plan Year, the Taxable Wage Base for all
calendar years beginning after the first day of the Plan Year is assumed to
be the same as the Taxable Wage Base in effect as of the first day of the
Plan Year in which the determination is made. A Participant's Covered
Compensation for any Plan Year after the thirty-five (35) year period
described herein shall be the Participant's Covered Compensation for the Plan
Year during which the thirty-five (35) years period ends. A Participant's
Covered Compensation for a Plan Year before the thirty-five (35) year period
described herein shall be the Taxable Wage Base in effect as of the first day
of the Plan Year. A Participant's Covered Compensation shall be adjusted
automaticall each Plan Year to reflect changes in the Taxable Wage Base.
For purposes of determining the amount of a Participant's Covered
Compensation under this Section 1.13, the Plan shall use tables published by
the Internal Revenue Service for rounding the actual amounts of Covered
Compensation for different years of birth.
1.14 Credited Service means the period of time determined in accordance
with Sections 1.14(a) and 1.14(b), subject to Sections 1.14(c), 1.14(d),
1.14(e), 1.14(f), 1.14(g) and 1.14(h) below.
1.14(a) For Periods Prior to January 1, 1993 - Credited Service shall be
the total number of years and completed months of Past Service and Future
Service through December 31, 1992.
(i) Past Service shall be the continuous employment of a
Participant prior to the Effective Date of the Plan, less any period of
Service required for eligibility applicable to the Participant. No Past
Service shall be credited to any Employee who voluntarily failed to
participate (or waived his participation) in this Plan or a Pre-existing
Plan.
(ii) Future Service for periods commencing on January 1, 1976,
through December 31, 1992, shall be the continuous employment of an Employee
after he becomes eligible for participation in the Plan.
1.14(b) For Periods Commencing on and After January 1, 1993 - For
periods commencing on and after January 1, 1993, Credited Service shall be
the total number of Plan Years in which an Employee completes one thousand
(1,000) or more Hours of Service, after the date on which he becomes eligible
for participation in the Plan.
Credited Service shall not include any period of service with the
Employer or an Affiliate which occurred on or after June 1, 1988, during
which neither the Plan nor a Pre-existing Plan was maintained.
1.14(c) For purposes of this Plan, Credited Service shall be
preserved during an Employee's Approved Absence, but no Credited Service
shall be granted for any complete calendar year which occurs after the
applicable Effective Date and during which an Employee was on an Approved
Absence and received no Compensation; provided however, that an Employee will
receive Credited Service while on Approved Absence due to service in the
armed forces of the United States. An Employee who transfers employment to
that of an Affiliate shall have his Credited Service preserved only to the
extent that it does not result in any duplicate coverage, as determined by
the Administrative Committee.
1.14(d) For periods prior to January 1, 1993, upon the reemployment
by an Employer or Affiliate of a Participant who terminated employment
without any vested benefit, the Participant shall receive Credited Service
(a) for continuous employment prior to his termination, if the period of his
break in employment is equal to or less than the greater of five (5) years or
the period of employment prior to the break (provided that the Participant
completes one (1) year of Service after a one (1) year or longer break
in employment), or (b) for the period of the break in employment, if the
Participant is reemployed within the twelve (12) month period subsequent to
the date of his termination of employment.
1.14(e) For periods commencing on and after January 1, 1993, upon
reemployment by an Employer or an Affiliate of a Participant who terminated
employment without any vested benefit, the Participant shall receive Credited
Service in accordance with Sections 1.14(a) and (b) for continuous employment
prior to his termination, if the number of his One Year Breaks in Service,
when added to the period of his break in employment prior to January 1, 1993,
if applicable, are equal to or less than the greater of five (5) years or the
period of employment prior to the break (provided that the Participant
completes one (1) Year of Service after incurring one (1) or more One Year
Breaks in Service).
Upon the reemployment of a Participant who had terminated with a
deferred vested benefit, the Participant shall receive Credited Service for
any year in which he had Compensation.
1.14(f) Special Rule for Former Employees of the Raleigh Road
Furniture Corporation - For Participants who were employees the Raleigh Road
Furniture Corporation on December 31, 1986, Credited Service shall include
service with such company after December 31, 1985, for purposes of
determining benefit accruals only.
1.14(g) Special Rule for Former Participants in the Norman Plan - For
Participants who participated in the Norman Plan, Credited Service for
purposes of determining the Participant's Accrued Benefit shall include all
years of Credited Service credited prior to January 1, 1994, under the Norman
Plan. Past Credited Service for Employees not participating in the Norman
Plan shall be determined commencing on the date the Employer became a member
of the Corporation's controlled group of corporations.
1.14(h) Any Employee who was excluded from participation in the Plan
for periods prior to January 1, 1988, because he had attained age sixty (60)
at his initial employment date and who completes an Hour of Service on or
after January 1, 1988, shall receive Credited Service in accordance with the
provisions of this Section 1.14.
1.15 Defined Benefit Plan means a plan established and qualified under IRC
Section 401 or 403, except to the extent it is, or is treated as, a Defined
Contribution Plan.
1.16 Defined Contribution Plan means a plan established and qualified under
IRC Section 401 or 403 which provides for an individual account for each
participant therein and for benefits based solely on the amount contributed
to each participant's account and any income and expenses or gains or losses
(both realized and unrealized) which may be allocated to such accounts.
1.17 Delayed Retirement Date means the first day of any month coinciding
with or next following the actual date the Participant severs his employment
with the Employer after his Normal Retirement Date.
1.18 Disability Retirement Date means the first day of any month prior to
a Participant's Normal Retirement Date which coincides with or next follows
a determination by the Administrative Committee that the Participant is
Totally and Permanently Disabled.
1.19 Early Retirement Date means the first day of any month prior to a
Participant's Normal Retirement Date; provided, that the Participant has
attained age fifty-five (55) and completed at least ten (10) years of Service
with any Employers subject to this Plan. A Participant may elect early
retirement by providing written notice to the Administrative Committee at
least thirty (30) days in advance.
1.20 Effective Date means January 1, 1976, or such later date as of which
an Employer shall have adopted the Plan for its Employees. The Effective
Date of this amendment and restatement shall be January 1, 1989.
1.21 Employee means any person employed by the Employer, as determined
under the Employer's normal practices, but excluding:
1.21(a) any person earning service for benefits under another
Company-sponsored retirement plan and is a member of a collective bargaining
unit;
1.21(b) any former Employee of an Employer who has been transferred
to the employment of an Affiliate, unless the transferred person waives his
rights to future service benefits under the Plan;
1.21(c) any person who is on Approved Absence and who was such an
employee immediately prior to such Approved Absence;
1.21(d) any person who is considered a leased employee within the
definition of IRC Section 414(n); and
1.21(e) any person who is employed as an Outlet Store Sales Clerk.
A leased employee is any person other than an employee of the Employer
who pursuant to an agreement between the Employer and any other person
(leasing organization) has performed services for the Employer or for the
Employer and related persons, determined in accordance with IRC Section
414(n)(6), on a substantially full time basis for a period of at least one
(1) year, and such services are of a type historically performed by employees
in the business field of the Employer. Contributions or benefits provided a
leased employee by the leasing organization which are attributable to
services performed for the Employer shall be treated as provided by the
Employer.
1.22 Employer means, collectively or individually as the context may
indicate, the Corporation and any other organization which (a) is a member of
the same controlled group of organizations as the Corporation as determined
pursuant to IRC Sections 414(b), (c), (m) and (o), (b) the Compensation and
Benefits Committee shall have authorized to adopt the Plan, and (c) by taking
appropriate action shall have adopted the Plan and become signatory to the
Trust Agreement; or any successor to one or more of such entities.
1.23 ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.24 Fiduciary means the Corporation, Employer, Trustee, Administrative
Committee, Compensation and Benefits Committee, Investment Policy Committee
and any individual, corporation, firm or other entity which assumes in
accordance with Article VIII responsibilities of the Corporation, Employer,
Trustee, Administrative Committee, Compensation and Benefits Committee, or
Investment Policy Committee respecting management of the Plan or the
disposition of its assets.
1.25 Final Average Compensation means the average annual Compensation of a
Participant from January 1, 1987, through the date of his retirement from
continuous employment with an Employer or Affiliate. For Participants who
participated in the Norman Plan, Final Average Compensation means the average
annual Compensation ofsuch Participant from January 1, 1992, through the date
of his retirement from continuous employment with an Employer or Affiliate.
If a Participant retires with less than five (5)years of such annual
Compensation, Compensation for years immediately prior to January 1, 1987,
shall be considered to the extent necessary to bring the Participant's total
years of Compensation used in the average calculation to five (5). Effective
January 1, 1993, and notwithstanding anything contained herein to the
contrary, if a Participant's Compensation in the year of his retirement or
termination would increase such average but for the fact that a full year of
employment had not been completed, such Compensation shall be included in the
average.
1.26 Fund means the trust fund created in accordance with Article VII.
1.27 Highly Compensated Employee means:
1.27(a) Any employee who during the Plan Year or preceding twelve
(12) month period meets one of the following criteria --
(i) was at any time a Five Percent (5%) Owner of the Employer or
Affiliate;
(ii) received maximum Compensation from the Employer or Affiliate
in excess of seventy-five thousand dollars ($75,000) (or such larger amount
as may be determined by the Secretary of the Treasury);
(iii) received Maximum Compensation from the Employer or Affiliate
in excess of fifty thousand dollars ($50,000) (or such larger amount as may
be determined by the Secretary of the Treasury) and was in the top-paid group
consisting of the top twenty percent (20%) of the employees (considering all
employees of the Employer or Affiliate) when ranked on the basis of Maximum
Compensation during such Plan Year; or
(iv) was at any time an officer and received Maximum Compensation
greater than fifty percent (50%) of the amount in effect under IRC Section
415(b)(1)(A) for such Plan Year. If, for any Plan Year, no officer of the
Employer or Affiliate is identified pursuant to this Section, the highest
paid employee of the Employer or Affiliate for such Plan Year shall be
treated as Highly Compensated Employee. No more than fifty (50) employees
or, if lesser, the greater of three (3) employees or ten percent (10%) of
employees, shall be treated as officers.
An employee shall be considered a Highly Compensated Employee for
purposes of Section 1.27(a)(i) if he was a Five Percent (5%) Owner of the
Employer or Affiliate in the Plan Year of determination or the preceding Plan
Year. An employee shall not be considered a Highly Compensated Employee for
purposes of Sections 1.27(a)(ii), 1.27(a)(iii) and 1.27(a)(iv) if he was a
Highly Compensated Employee in the current Plan Year but was not a Highly
Compensated Employee in the preceding Plan Year unless such employee is a
member of the group consisting of the one hundred (100) employees paid the
greatest Maximum Compensation by the Employer or an Affiliate during the Plan
Year for which such determination is being made.
If an employee is a Family Member of another employee who is (i) a
Five Percent (5%) Owner of the Employer or Affiliate, or (ii) one (1) of the
top ten (10) highest paid employees of the Employer or Affiliate in the
current or preceding Plan Year, the Maximum Compensation paid to and
Contributions made on behalf of such Family Member shall be deemed to have
been made on behalf of such employee. In calculating the Maximum
Compensation paid to such Family Member, the Maximum Compensation of the
Employee, the Employee's spouse and any lineal descendants under the age of
nineteen (19) shall be limited to two hundred thousand dollars ($200,000), as
adjusted by the Secretary of Treasury.
Any former employee shall be treated as a Highly Compensated Employee
if such employee was a Highly Compensated Employee (1) when he terminated
employment, or (ii) in any year following attainment of age fifty-five (55).
In addition, an employee who works only on a de minimis amount of service may
be considered a Highly Compensated Employee.
1.27(b) The following employees shall be excluded for purposes of
determining who is in the top-paid group under Section 1.27(a)(iii):
(i) employees who have not completed six (6) months of service;
(ii) employees who normally work less than seventeen and one-half
(17 1/2) hours per week;
(iii) employees who normally work not more than six (6) months
during any year;
(iv) employees who have not attained age twenty-one (21);
(v) except to the extent provided in regulations, employees who
are included in a collective bargaining agreement between employee
representatives and an Employer or Affiliate; and
(vi) Employees who are nonresident aliens and who receive no
earned income, within the meaning of the IRC Section 911(d)(2), from an
Employer or Affiliate which constitutes income from sources within the United
States, within the meaning of IRC Section 861(a)(3).
1.27(c) For purposes of this Section, the following definitions shall
apply:
(i) The term "Family Member" as used herein shall mean with
respect to any employee, such employee's spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or descendants.
(ii) The term "Five Percent (5%) Owner" shall have the same meaning
as specified in IRC Section 416(i).
1.27(d) The determination of Maximum Compensation for purposes of
determining who is a Highly Compensated Employee shall be made without regard
to IRC Sections 125, 402(a)(8), and 402(h)(1)(B), and in the case of
contributions by the Employer made pursuant to a salary reduction agreement,
without regard to IRC Section 403(b).
1.28 Hours of Service means the sum of:
1.28(a) Each hour for which an employee is paid, or entitled to
payment, for the performance of duties for the Employer during the applicable
computation period.
1.28(b) Each hour for which an employee is paid, or entitled to
payment, 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 (including
disability), layoff, jury duty or leave of absence. However, the
determination of hours under this Section 1.28(b) shall be subject to the
following restrictions:
(i) No more than five hundred one (501) hours shall be credited
to an employee during any single continuous period during which the employee
performs no duties (whether or not such period occurs in a single computation
period).
(ii) No hours shall be credited to an employee if payment is made
or due under a plan maintained solely for the purpose of complying with
applicable workers' compensation, unemployment compensation or disability
insurance laws.
(iii) Hours shall not be credited for a payment which solely
reimburses an employee for medical or medically related expenses incurred by
the employee.
1.28(c) Each hour for which an employee is paid, or entitled to
payment, by the Employer on account of an Approved Absence during which no
duties are performed and any other periods in which an employee was not paid
or entitled to payment and presumably would have performed services for the
Employer but for the fact that the employee was on an Approved Absence.
1.28(d) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer provided that the
same hours shall not be credited both under Sections 1.28(a), 1.28(b), or
1.28(c) and 1.28(d) hereunder.
Hours of Service shall not include any period during which the
employee was employed by a predecessor of the Employer, unless the
predecessor's organization maintained the Plan or a predecessor plan, or
credit for such period of employment otherwise is granted under the Plan.
Hours of Service under Sections 1.28(a), 1.28(c) and 1.28(d) shall be
determined from the Employer records. Hours of Service under Section 1.28(b)
shall be determined in accordance with Department of Labor Regulations
2530.200b-2. Hours of Service hereunder shall be credited to the appropriate
computation period in accordance with Department of Labor Regulation
2530.200b-2(c).
Notwithstanding anything herein to the contrary, nothing in this
Section 1.28 shall be construed to alter, amend, modify, invalidate, impair
or supersede any law of the United States or any rule or regulation issued
under any such law.
1.29 Investment Policy Committee means the Retirement Plan Investment
Policy Committee provided for in Article VIII.
1.30 IRC means the Internal Revenue Code of 1986, as amended from time to
time. Any reference to any section of the IRC shall be deemed to include any
applicable regulations and rulings pertaining to such section and also shall
be deemed a reference to comparable provisions of future laws.
1.31 Limitation Year means the twelve (12) month period commencing on
January 1 and ending on December 31.
1.32 Maternity or Paternity Absence means an absence from work for any
period by reason of (i) pregnancy of the Employee, (ii) birth of a child to
the Employee, (iii) placement of a child with the Employee in connection with
the adoption of such child, or (iv) absence for purposes of caring for such
child for a period immediately following such birth or placement.
1.33 Non-Highly Compensated Employee means any Employee who is not a Highly
Compensated Employee.
1.34 Normal Retirement Age means the later of (a) the date on which a
Participant attains the age of sixty-five (65) or (b) the fifth (5th)
anniversary of the date the Participant commenced participation in the Plan.
1.35 Normal Retirement Date means the first day of the month coinciding
with or next following the date on which the Participant attains his Normal
Retirement Age.
1.36 Norman Plan means the Pension Plan of R. W. Norman Division of Stanley
Interiors Corporation.
1.37 One Year Break in Service means, for periods commencing on and after
January 1, 1993, a Plan Year during which a terminated Employee has not
completed more than five hundred (500) Hours of Service. The number of
Hours of Service shall be determined in accordance with Section 1.28, except
that a One Year Break in Service shall not be deemed to have occurred if the
failure to complete more than five hundred (500) Hours of Service is due
solely to an Approved Absence.
For periods commencing on or after January 1, 1985, and to the extent
not already credited, Hours of Service shall be credited solely for purposes
of determining whether a One Year Break in Service has occurred with respect
to an Employee who is absent from work regardless of whether the Employee is
paid for such absence for an Approved Absence due to Maternity or Paternity
Absence. Hours of Service to be credited for such purpose shall be:
(i) the Hours of Service which otherwise normally would have been
credited to such Employee but for such absence; or
(ii) in any case in which the Administrative Committee is unable to
determine the hours in (i) above, eight (8) Hours of Service per normal work
day of absence.
The total number of hours treated as Hours of Service by reason of any
Maternity or Paternity Absence shall not exceed five hundred one (501) hours.
The hours in items (i) and (ii) above shall be treated as Hours of Service
hereunder:
(iii) only in the Plan Year in which the Maternity or Paternity
Absence from work begins, if an Employee would be prevented from incurring a
One Year Break in Service in such Plan Year solely because the period of
Maternity or Paternity Absence is treated as Hours of Service; or
(iv) in any other case, in the immediately following Plan Year.
Further, the Administrative Committee may request that the Employee
furnish any information the Administrative Committee may require to establish
that the absence is for the reasons hereinbefore provided and the number of
days for which there was such an absence. If such information is not
submitted in a timely manner, no Hours of Service shall be credited under
this Section.
For periods commencing on or after August 5, 1993, and to the extent
not already credited, Hours of Service shall be credited solely for purposes
of determining whether a One Year Break in Service has occurred with respect
to an Employee who is absent from work, regardless of whether the Employee is
paid for such absence, under the provisions of the Family and Medical Leave
Act of 1993.
1.38 Participant means any Employee who becomes a Participant as provided
in Article II.
1.39 Plan means the Stanley Retirement Plan, as contained herein or as duly
amended.
1.40 Plan Year means each twelve (12) month period beginning on January 1
and ending on December 31.
1.41 Pre-existing Plan means any retirement plan of the Stanley Furniture
Company Division (formerly a division of The Mead Corporation and, as of
November 28, 1979, a division of the Corporation) in effect immediately prior
to the Effective Date as to any group or unit of employees.
1.42 Service means the period of time determined in accordance with
Sections 1.42(a) and 1.42(b), subject to Sections 1.42(c), 1.42(d), 1.42(e),
1.42(f), 1.42(g) and 1.42(h) below.
1.42(a) For Periods through December 31, 1992 - Service includes all
service performed as a full-time employee after the attainment of age
seventeen (17), including time on Approved Absence. For a full-time
employee, Service commences on the initial date of employment of an Employee,
or if later, his seventeenth birthday and shall cease upon termination of
employment. For part-time or seasonal employees, Service commences on
the first day of the first period of twelve (12) consecutive months in which
the Employee (a) accumulates one thousand (1,000) or more Hours of Service
and (b) has attained seventeen (17) or more years of age on the first day of
such twelve (12) month period. Thereafter, the part-time or seasonal
employee shall be treated as a full-time employee.
1.42(b) For Periods Commencing on and After January 1, 1993 - Service
includes all service performed as a full-time employee after the attainment
of age seventeen (17) including time on Approved Absence. Service commences
on the first day of the Plan Year in which the employee (a) accumulates 1,000
or more Hours of Service and (b) has attained seventeen (17) ore more years
of age as of the first day of such Plan Year.
1.42(c) Any Employee who was excluded from participation in the Plan
for periods prior to January 1, 1988, because he had attained age sixty (60)
at his initial date of employment and who completes an Hour of Service on or
after January 1, 1988, shall receive Service in accordance with the
provisions of this Section 1.42 for such period of employment.
1.42(d) Service, for former employees of United Globe Company,
Burlington Industries, Inc., and United Furniture Company who were hired by
the Raleigh Road Furniture Corporation prior to April 1, 1986, and who were
employees of such corporation on December 31, 1986, shall include service
with all such corporations for purposes of vesting, eligibility to
participate, and eligibility for early retirement. Service for all other
former employees of the Raleigh Road Furniture Corporation who were employed
by such corporation on December 31, 1986, shall include all service with such
corporation for purposes of vesting, eligibility to participate, and
eligibility for early retirement.
1.42(e) Service, for Employees who were participants in the Norman
Plan as of December 31, 1993, shall include service with such division for
purposes of vesting, eligibility to participate, and eligibility for early
retirement.
For purposes of determining vesting in accordance with Section 5.01:
1.42(f) Periods of paid or unpaid leave taken pursuant to the Family
and Medical Leave Act of 1993 shall be included;
1.42(g) Periods of employment with an Affiliate which would have
constituted Service had the Employee been employed by the Employer shall be
included as if such periods had been performed for the Employer; and
1.42(h) Periods of employment with the Employer other than as an
Employee which would have constituted Service had the Employee been employed
as an Employee shall be included as if such periods had been performed as an
Employee.
1.43 Social Security Retirement Age means the retirement age under Section
216(l) of the Social Security Act, except that such Section shall be applied
without regard to the age increase factor and as if the early retirement age
under Section 216(l)(2) of such Act were sixty-two (62).
1.44 Spouse means the person to whom the Participant is legally married.
1.45 Surviving Spouse means, as of any date, the person to whom the
Participant has been legally married throughout the one (1) year period
immediately preceding such date.
1.46 Taxable Wage Base means the contribution and benefit base under
Section 230 of the Social Security Act in effect as of the beginning of each
Plan Year.
1.47 Total and Permanent Disability or Total and Permanently Disabled means
disability resulting from a demonstrable injury or disease which will
permanently, continuously and wholly prevent an Employee who is a Participant
from engaging in any occupatio or performing any work for remuneration or
profit; provided, that this term shall not include any injury or disease
which (i) was contracted, suffered or incurred while the Participant
engaged in, or resulted from his having engaged in, a criminal enterprise,
(ii) was intentionally self-inflicted, (iii) arose out of service in the
armed forces of any country, or (iv) arose as a result of employment with or
while working for an Affiliate (other than an Employer). In determining
whether or not a Participant is Totally and Permanently Disabled, the
Administrative Committee may require the Participant to submit to a
physical examination at any reasonable time or times by one (1) or more
physicians approved by the Administrative Committee. Refusal by a
Participant to submit to any physical examination shall be deemed to
constitute recovery from disability for purposes of the Plan.
1.48 Trust Agreement means the agreement entered into between the Employer
and the Trustee pursuant to Article VII.
1.49 Trustee means such individual, individuals or financial institution,
or a combination of them as shall be designated in the Trust Agreement to
hold in trust the assets of the Plan and shall include any successor Trustee
to the Trustee initially designated thereunder.
1.50 Year of Service means, for periods through December 31, 1992, any
consecutive period of twelve (12) months of service. Commencing January 1,
1993, Year of Service means, for any Employee, a stated twelve (12)
consecutive month period during which the Employee completed one thousand
(1,000) or more Hours of Service, including time on Approved Absence. For
Employees who were participants in the Norman Plan, Years of Service prior to
January 1, 1994, shall be determined in accordance with the provisions of
the Norman Plan.
If an Employee is simultaneously in the employ of more than one
Employer or is transferred from the employment of one Employer to the
employment of another Employer, the number of Hours of Service completed
during any twelve (12) consecutive month period shall be the sum of the
number of Hours of Service completed for each Employer during such period.
For purposes of determining eligibility in Article II:
1.50(a) Periods of paid or unpaid leave taken pursuant to the
Family and Medical Leave Act of 1993 shall be included;
1.50(b) Periods of employment with an Affiliate which would have
constituted a Year of Service had the Employee been employed by the Employer
shall be included as if such periods had been performed for the Employer; and
1.50(c) Periods of employment with the Employer other than as an
Employee which would have constituted a Year of Service had the Employee been
employed as an Employee shall be included as if such periods had been
performed as an Employee.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.01 Eligibility - Each person who was a Participant on December 31, 1988,
shall continue as a Participant after such date, subject to the provisions
hereinafter contained.
For periods through December 31, 1992, each person (a) who becomes an
Employee and (b) who completes at least one (1) year of Service on or after
the later of (i) January 1, 1989, or (ii) the Effective Date shall be
eligible to become a Participant, and shall continue to be eligible so long
as he meets such requirements.
Effective for periods commencing on and after January 1, 1993, each
person (c) who becomes an Employee, (d) who has attained age seventeen (17)
and (e) who has completed at least one (1) Year of Service subsequent to the
date on which he completes his first Hour of Service shall automatically be
eligible to become a Participant upon the completion of the above
requirements and shall continue to be eligible so long as he meets such
requirements. Upon the completion of the first twelve (12) month period, the
twelve (12) month period for determining the Year of Service shall be based
on Plan Years starting with the Plan Year in which occurs the first
anniversary of the date on which an Employee completed the applicable first
Hour of Service.
Any employee who was previously excluded from participation because he
had attained age sixty (60) at his initial date of employment and who
completes an Hour of Service on or after January 1, 1988, shall be eligible
to become a Participant as of January 1, 1988, provided he has otherwise met
the requirements for participation. If such an Employee is not eligible for
participation as of January 1, 1988, because he does not otherwise meet the
requirements for participation, he shall be eligible for participation
following his satisfaction of the eligibility requirements.
2.02 Eligibility on Reemployment - If an Employee ceases to be a
Participant due to his termination of employment and later is reemployed, he
once again shall become a Participant on his reemployment date.
2.03 Eligibility for Participation - Each Employee, who has been included
in a Pre- existing Plan immediately before the applicable Effective Date,
shall be eligible to be included in this Plan as of such date, and shall
automatically be included in this Plan as a Participant as of such date
(subject to the provisions of Section 2.04), unless within thirty
(30) days after such Effective Date (or such other period as shall be
determined by the Administrative Committee) he shall notify his Employer that
he elects not to be included. Any employee who notifies his Employer shall
thereafter be eligible to enter this Plan only to the extent that he meets
the eligibility requirements in Section 2.01.
Notwithstanding the preceding, any managerial Employee who, because of
special
arrangements outside of the terms of any retirement plan, shall be deemed by
the
Compensation and Benefits Committee to be ineligible for inclusion in this
Plan, shall be
excluded from participation in the Plan.
An Employee of an Employer who was transferred from an Affiliate shall
be
ineligible for participation in the Plan if he continues to accrue credited
service under the
terms of any other qualified retirement plan maintained by the Affiliate.
2.04 Conditions to Participation - Participation in this Plan by any
eligible employee shall
be contingent upon receipt by his Employer of such consents, proofs of birth,
elections,
beneficiary designations, and other information as shall be prescribed by the
Administrative Committee. For this purpose, any such consents, proofs of
birth, elections,
beneficiary designations, or other documents or information, previously
furnished by an
Employee in connection with a Pre-existing Plan, shall be accepted by the
Administrative
Committee for purposes of this Plan, if, in its judgment, they are sufficient
and proper,
and the rights of the Employee are not impaired in any way. Each eligible
Employee shall
have thirty (30) days, or such additional time as may be determined to be
appropriate,
from his date of eligibility in which to elect not to become a Participant.
2.05 Reemployment of Retired Participants - If a Participant is reemployed
as an
Employee after the commencement of a retirement benefit due to retirement at
his Early
Retirement Date or the commencement of a benefit in accordance with the
provisions of
Section 5.02 but prior to the attainment of his Normal Retirement Age, his
retirement
benefit shall be discontinued. The Participant's rights to future benefits
under the Plan
shall be subject to redetermination upon any subsequent termination of
employment or
retirement under the Plan in accordance with the Plan provisions then in
effect. Any
benefits thereafter payable shall be adjusted to reflect the Actuarial
Equivalent value of
the retirement benefits received by the Participant in the period during
which he was in
receipt of a retirement benefit. Notwithstanding the preceding, the monthly
retirement
benefit thereafter payable shall not be less than the monthly retirement
benefit payable
immediately before his latest reemployment plus the Actuarial Equivalent of
any monthly
retirement benefit suspended while the Participant is not employed in service
as described
in Department of Labor Regulations 2530.203-3(c)(1).
Notwithstanding the preceding, if a Participant is reemployed as an
Employee after
the commencement of his monthly retirement benefit due to retirement at his
Early
Retirement Date or the commencement of a benefit in accordance with the
provisions of
Section 5.02 and such Participant is scheduled to work less than one thousand
(1,000) Hours
of Service during any Plan Year, he shall continue to receive the monthly
retirement
benefit payment determined and paid in every respect as if he were no longer
employed by
the Employer. Any such Participant shall be entitled to an additional
monthly retirement
benefit upon his subsequent termination of employment based on any accrual
earned
during his period of reemployment as indicated in the Appendix.
If a Participant is reemployed as an Employee after the commencement
of his monthly
retirement benefit under any of the provisions of the Plan and after
attainment of his
Normal Retirement Age, he shall continue to receive the monthly retirement
benefit
payment determined and paid in every respect as if he were no longer employed
by the
Employer. Any such Participant shall be entitled to an additional monthly
retirement
benefit upon his subsequent termination of employment based on any accrual
earned
during his period of reemployment after his Normal Retirement Age as
indicated in the
Appendix.
2.06 Change in Employment Status - A Participant who ceases to be an
Employee as
defined in Section 1.21 due to a change in employment status while remaining
an employee
of the Employer shall cease to accrue Credited Service as of the date of such
change in
employment status, but he shall continue to earn Service and become a limited
Participant
until such time as he again becomes an Employee as defined in Section 1.21.
If the limited
Participant does not again become an Employee as defined in Section 1.21
prior to his
termination of employment, the amount, if any, of the benefits to which he is
entitled
shall be determined based on his Credited Service as of the date of his
change in
employment status and Service as of the date of his termination of employment
including
Service earned while a limited Participant.
If an employee of the Employer becomes an Employee as defined in
Section 1.21 due
to a change in employment status with the Employer, he shall become eligible
for
participation as of the date of his change in employment status provided he
satisfies the
requirements of Article II as if he had been an Employee during such prior
period of
employment. If such an Employee becomes a Participant, he shall receive
Credited Service
only from the date of such change in employment status and Service from his
date of
employment in accordance with the provisions of Section 1.42.
ARTICLE III
RETIREMENT BENEFITS
3.01 Normal Retirement Benefit - Upon retirement at his Normal Retirement
Date, a
Participant shall receive a monthly retirement benefit which shall commence
on his
retirement date and shall be paid in accordance with Article IV. The amount
of such
monthly retirement benefit shall be equal to the benefit determined under the
applicable
Section 3.01(a), 3.01(b) or 3.01(c) below:
3.01(a) Normal Retirement Prior to January 1, 1994 - The amount of
the Participant's
monthly retirement benefit shall be equal to one-twelfth (1/12) of the sum of
(i) and (ii)
following:
(i) Seventy-five one-hundredths of one percent (.75%) of the
Participant's Final
Average Compensation multiplied by his Credited Service up to a maximum of
thirty-
seven (37) years; and,
(ii) One-half of one percent (.50%) of the Participant's Final
Average
Compensation in excess of his Covered Compensation multiplied by his Credited
Service
up to a maximum of thirty-five (35) years.
3.01(b) Normal Retirement On and After January 1, 1994 - The amount
of the
Participant's monthly retirement benefit shall be equal to the larger of (i),
(ii) and (iii), if
applicable, as follows:
(i) One-twelfth (1/12) of the sum of (A) and (B) following:
(A) Seventy-five one-hundredths of one percent (.75%) of the
Participant's Final
Average Compensation multiplied by his Credited Service; and
(B) One-half of one percent (.50%) of the Participant's Final
Average Compensation
in excess of his Covered Compensation multiplied by his Credited Service up
to a
maximum of thirty-five (35) years;
(ii) For Participants under the Plan as of December 31, 1993, the
Participant's
Accrued Benefit determined in accordance with the provisions of Sections
1.09, 1.14 and
3.01 as in effect on December 31, 1993; and
(iii) For any Participant whose Compensation exceeds the
limitations imposed by
IRC Section 401(a)(17), the sum of (A) and (B) following:
(A) For Participants in the Plan as of December 31, 1993, the
Participant's Accrued
Benefit determined in accordance with the provisions of Sections 1.09, 1.14
and 3.01 as in
effect on December 31, 1993; and
(B) Seventy-five one-hundredths of one percent (.75%) of the
Participant's Final
Average Compensation multiplied by his Credited Service on and after January
1, 1994,
plus one-half of one percent (.50%) of the Participant's Final Average
Compensation in
excess of his Covered Compensation multiplied by his Credited Service
effective on and
after January 1, 1994, up to a maximum of thirty-five (35) years less the
Participant's
Credited Service as of December 31, 1993;
provided, however, that Final Average Compensation will be
determined from
January 1, 1994 through the date of the Participant's termination or
retirement. In the
event the years of Final Average Compensation do not equal five (5), years
prior to
January 1, 1994 will be used to bring the number of years up to five (5).
3.01(c) Normal Retirement Benefit for Participants of the Norman Plan
- - For any
Participant who was a participant in the Norman Plan as of December 31, 1993,
who is
credited with an Hour of Service on or after January 1, 1994 and who
subsequently retires
under the provisions of this Plan, the amount of such Participant's monthly
retirement
benefit shall be equal to the sum of (i) and (ii) following:
(i) The accrued benefit as of December 31, 1993, earned by the
Participant under
the provisions of the Norman Plan in effect on December 31, 1993; and
(ii) The sum of (A) and (B) following:
(A) Seventy-five one-hundredths of one percent (.75%) of the
Participant's Final
Average Compensation multiplied by his Credited Service on and after January
1, 1994;
and
(B) One-half of one percent (.50%) of the Participant's Final Average
Compensation in
excess of his Covered Compensation multiplied by his Credited Service
effective on and
after January 1, 1994, up to a maximum of thirty-five (35) years less the
Participant's
Credited Service as of December 31, 1993;
provided, however, that Final Average Compensation will be
determined from
January 1, 1994 through the date of the Participant's termination or
retirement. In the
event the years of Final Average Compensation do not equal five (5), years
prior to
January 1, 1994 will be used to bring the number of years up to five (5).
3.02 Delayed Retirement Benefit - Upon retirement at his Delayed Retirement
Date, a
Participant shall receive a monthly retirement benefit which shall commence
on the date
of his retirement and shall be paid in accordance with Article IV. The
amount of the
monthly retirement benefit shall be the larger of Section 3.02(a) and Section
3.02(b)
following:
3.02(a) For periods through December 31, 1993, a monthly retirement
benefit
determined in the same manner as for retirement at his Normal Retirement Date
with
Final Average Compensation and Credited Service up to a maximum of
thirty-seven (37)
years computed as of his Delayed Retirement Date and Covered Compensation
computed
as of the earlier of his Delayed Retirement Date or his Social Security
Retirement Age.
For periods commencing on and after January 1, 1994, a monthly retirement
benefit
determined in the same manner as for retirement at his Normal Retirement Date
with
Final Average and Credited Service computed as of his Delayed Retirement Date
and
Covered Compensation computed as of the earlier of his Delayed Retirement
Date or his
Social Security Retirement Age.
3.02(b) A monthly retirement benefit determined in the same manner as
for
retirement at his Normal Retirement Date with Final Average Compensation,
Credited
Service and Covered Compensation computed as of the earlier of his Normal
Retirement
Date or his Social Security Retirement Age and the benefit shall be increased
so that such
monthly retirement benefit shall be the Actuarial Equivalent, as of his
Delayed
Retirement Date, of the monthly retirement benefit that would have been
payable had he
retired on his Normal Retirement Date.
3.03 Early Retirement Benefit - Upon retirement at his Early Retirement
Date, a
Participant shall receive a monthly retirement benefit which shall commence
on his
Normal Retirement Date and shall be paid in accordance with Article IV. The
amount of
the monthly retirement benefit shall be the Participant's Accrued Benefit as
of his Early
Retirement Date.
Notwithstanding anything contained herein to the contrary, a
Participant who retires
at an Early Retirement Date shall have the right to elect, in writing, to
receive his
retirement benefit commencing as of his Early Retirement Date or on the first
day of any
month thereafter which precedes his Normal Retirement Date. If the
Participant makes
the election to receive his retirement benefit at an earlier commencement
date, the amount
of monthly retirement benefit payable at such earlier commencement date shall
be the
Participant's Accrued Benefit as of his Early Retirement Date reduced by the
Actuarial
Equivalent factors for early retirement to reflect the period by which the
benefit
commencement date precedes what otherwise would be the Participant's Normal
Retirement Date.
3.04 Disability Retirement Benefit - Upon retirement at his Disability
Retirement Date, a
Participant shall receive a monthly retirement benefit which shall commence
on his
Normal Retirement Date, if he is then living, and shall be paid in accordance
with Article
IV. The amount of the monthly retirement benefit shall be the Participant's
Accrued
Benefit as of his Disability Retirement Date.
Notwithstanding anything contained herein to the contrary, a Totally
and
Permanently Disabled Participant shall have the right to elect, in writing,
to receive his
retirement benefit commencing as of his Disability Retirement Date or on the
first day of
any month thereafter which precedes his Normal Retirement Date. If the
Totally and
Permanently Disabled Participant makes the election to receive his retirement
benefit at
an earlier commencement date, the amount of monthly retirement benefit
payable at such
earlier commencement date shall be the Participant's Accrued Benefit as of
his Disability
Retirement Date.
If a Totally and Permanently Disabled Participant in receipt of or
eligible for a
monthly retirement benefit in accordance with this Section 3.04 recovers to
the extent that
he is no longer Totally and Permanently Disabled, he no longer shall be
entitled to a
disability retirement benefit hereunder. If the Totally and Permanently
Disabled
Participant had elected to commence his monthly disability retirement
benefit, his
disability retirement benefit shall then cease.
A Participant may elect not to receive the disability retirement
benefit provided
under this Section 3.04 and shall also be ineligible to receive any form of
early retirement
benefit under Section 3.03. If a Participant who has made such an election
is determined
by the Administrative Committee to be Totally and Permanently Disabled, he
shall be
treated for purposes of the Plan as though he were on an Approved Absence.
Upon
attaining his Normal Retirement Date, he shall be eligible to receive a
normal retirement
benefit in accordance with the provisions of Section 3.01.
The election to waive a disability retirement benefit shall be made in
writing to the
Administrative Committee prior to the Participant's commencing any form of
retirement
income benefit, and may be revoked in writing to the Administrative Committee
at any
time prior to the date the Participant would otherwise be eligible to
commence a
retirement benefit under this Plan, but no such election or revocation shall
have any
retroactive effect. In the event of such revocation, the amount of such
Participant's
disability retirement benefit shall be determined as his Accrued Benefit as
of the date he
was determined to be Totally and Permanently Disabled and the Participant
shall again be
eligible to commence a retirement benefit under Section 3.03 of this Plan.
In no event shall the disability benefit provided under this Section
be payable prior to
the Participant's attainment of his Normal Retirement Date for any period in
which wages
or salary are payable to him from any source.
The amount of disability benefit under this Section 3.04 shall be
inclusive of and, in
no event, less than the Actuarial Equivalent of any disability benefit which
shall have
accrued to the credit of the Participant with respect to service under any
Pre-existing
Plans prior to becoming included in this Plan.
3.05 Pre-1970 Minimum Retirement Income - Any employee who was a
Participant in the
pre-existing Employee's Retirement Plan of Stanley Furniture Company at its
Stanleytown
or Ferrum, Virginia plants on March 31, 1970, shall be eligible for a minimum
retirement
benefit upon his retirement or termination with a vested benefit. Such
benefit shall be
equal to the sum of Sections 3.05(a) and 3.05(b) below:
3.05(a) Years Prior to April 1, 1970 - An annual amount determined
under the
provisions of the pre-existing Employee's Retirement Plan of Stanley
Furniture Company
as in effect on March 31, 1970, as follows:
(i) One-half of one percent (.50%) multiplied by the
Participant's Final Average
Earnings on January 1, 1976, multiplied by his years of Credited Service
(with
proportionate allowance for completed months); plus
(ii) An additional one percent (1%) of Final Average Earnings on
January 1, 1976,
in excess of four thousand eight hundred dollars ($4,800) multiplied by his
years of
Credited Service (with proportionate allowance for completed months);
(iii) The total of (i) and (ii) shall be multiplied by a fraction,
the numerator of
which is the Participant's Service prior to April 1, 1970, and the
denominator of which is
his total Service at his date of retirement or termination of service;
3.05(b) Years Subsequent to March 31, 1970 - The Participant's
retirement income
determined under Section 3.01, 3.02, 3.03, or 3.04 of the Plan (whichever is
applicable),
multiplied by a fraction, the numerator of which is the Participant's Service
after March
31, 1970, and the denominator of which is his total Service at his date of
retirement or
termination of employment.
3.06 Relationship to Retirement Income Under Pre-existing Plan - The
amount of
retirement income determined in Section 3.01 shall be inclusive of and, in no
event, less
than the Actuarial Equivalent of any retirement benefit, profit sharing
balance or other
vested cash interest of a Participant which shall have accrued to the credit
of the
Participant under any Pre-existing Plan with respect to service prior to
becoming a
Participant in this Plan.
3.07 Withdrawal of Contributions - A Participant who has made contributions
in
accordance with the provisions of this or a Pre-existing Plan may withdraw
his
contributions at the time of the termination of his employment or at such
other times as
may be permitted by the Administrative Committee on a uniform and
nondiscriminatory
basis.
3.07(a) As of any applicable date, the Accrued Benefit of a
Participant derived from
Employer Contributions shall be the excess, if any, of the total Accrued
Benefit of the
Participant as of such date over the Accrued Benefit derived from
contributions made by
the Participant under the Plan as of such date; and
3.07(b) The Accrued Benefit of a Participant derived from
contributions made by the
Participant as of such date shall be an annual benefit, in the form of a
single life annuity
(without ancillary benefits) commencing at his Normal Retirement Date, equal
to the
amount of the Participant's accumulated contributions (as determined under
Treasury
Regulations 1.411(c)-1(c)(3)) multiplied by the appropriate conversion factor
determined
under Treasury Regulations 1.411(c)-1(c)(2).
3.08 Special Rules for Certain Employees Participating in the Stanley
Retirement Plan
for Waynesboro Hourly Employees - Effective January 1, 1983, the Stanley
Retirement
Plan for Waynesboro Hourly Employees (the "Waynesboro Plan") was merged into
this Plan.
In connection with that merger, the following special rules shall apply:
3.08(a) Except as provided in Section 3.08(c), the benefits of any
individual who was
a participant in the Waynesboro Plan and whose employment terminated for any
reason
before January 1, 1983, shall be determined under the provisions of the
Waynesboro Plan
as in effect at the time of such termination of employment;
3.08(b) In no event shall the benefit payable to any Participant in
this Plan who was a
participant in the Waynesboro Plan be less than the benefit that would have
been payable
to such Participant under the Waynesboro Plan had that plan remained in
effect and the
merger not taken place; and
3.08(c) In the case of any participant in the Waynesboro Plan whose
employment
terminated by reason of normal retirement, early retirement or disability
retirement after
May 4, 1981, and before benefits were payable to such participant, his
benefit shall be
recalculated as though the terms and conditions of this Plan as in effect on
January 1,
1983, were applicable to such participant at the time of such termination of
employment
and, in the event such recalculated benefit exceeds the benefit otherwise
payable to such
participant, he or she shall be entitled to receive such higher benefit
commencing as of
January 1, 1983.
ARTICLE IV
NORMAL AND OPTIONAL METHODS OF RETIREMENT BENEFIT PAYMENTS
4.01 Normal Form of Payment - The normal form of payment shall be a monthly
retirement benefit commencing on the date specified in Section 3.01, 3.02,
3.03, 3.04 or
Section 5.02 and shall continue to be paid to the Participant on the first
day of each month
thereafter during his lifetime.
4.02 Available Options - No less than thirty (30) days and no more than
ninety (90) days
prior to the Annuity Starting Date, each Participant and his Spouse shall be
given a
written notice to the effect that benefits thereafter payable shall be in the
form specified
in Section 4.04 unless the Participant, with the written consent of his
Spouse, elects to the
contrary during the ninety (90) day period prior to the Annuity Starting
Date. The notice
shall describe, in a manner intended to be understood by the Participant and
his Spouse,
(a) the terms and conditions of the joint and survivor annuity specified in
Section 4.04
which shall include a general explanation of the financial effect of the
election or absence
of election, (b) the rights of the Participant's Spouse, (c) the relative
values of the various
optional forms of payment available under the Plan, and (d) the right to make
and the
effect of a revocation of a previous election to waive the joint and survivor
annuity
specified in Section 4.04.
If a Participant or his Spouse requests additional information, as
permitted under the
terms of the notice, commencement of benefits for any purpose hereunder shall
not begin
until at least ninety (90) days following the receipt of such additional
information.
In accordance with the preceding provisions of this Section 4.02, each
Participant,
with the written consent of his Spouse, shall have the right to elect to have
his retirement
benefit paid under any one of the options hereinafter set forth in this
Section 4.02 in lieu
of the applicable retirement benefit otherwise provided for in Section 4.01.
The amount of
any optional retirement benefit shall be the Actuarial Equivalent of the
amount of
retirement benefit that otherwise would have been payable to him as provided
for in
Section 4.01.
A Participant who desires to have his retirement benefit paid under
one of the
optional forms provided in this Section 4.02 shall make such an election by
written request
to the Administrative Committee on forms provided by the Administrative
Committee. An
election by a Participant to receive his retirement benefit under any of the
optional
methods of payment as provided in this Section 4.02 and the spousal consent
to such
optional form of payment may be revoked by such Participant in writing to the
Administrative Committee at any time prior to his Annuity Starting Date.
After
retirement benefit payments have commenced, no future elections or
revocations of an
optional form will be permitted under any circumstances.
4.02(a) JOINT AND SURVIVOR OPTION
A Participant may elect to receive a decreased retirement benefit
during his lifetime
and have fifty percent (50%) of such decreased retirement benefit continue
after his death
to his designated Beneficiary, during the lifetime of the Beneficiary. If
the designated
Beneficiary is not living at the death of the Participant, no additional
benefits shall be
payable on behalf of the Participant.
4.02(b) JOINT AND MINOR SURVIVOR OPTION
A Participant may elect to receive a decreased retirement benefit
during his lifetime
and have fifty percent (50%) of such decreased retirement benefit continue
after his death
to a Beneficiary who is a minor lineal descendant until such person attains
age twenty-one
(21) if such event occurs after the death of the retired Participant.
4.02(c) LUMP SUM OPTION
A Participant who is eligible to retire pursuant to Section 3.01,
3.02, 3.03 or 3.04 may
elect to receive his retirement benefit in a lump sum. Effective January 1,
1994, such
Participant may elect to receive the portion of his benefit attributable to
his Accrued
Benefit as of December 31, 1993, in a lump sum. The remaining portion of his
Accrued
Benefit attributable to periods commencing on and after January 1, 1994,
shall be paid in
accordance with Section 4.01, or if elected by the Participant, pursuant to
the provisions of
Section 4.02, in one of the optional forms specified in Section 4.02(a) or
(b).
Notwithstanding the preceding, a Participant who retires pursuant to Section
3.01, 3.02,
3.03 or 3.04 during the 1994 calendar year may elect to receive his
retirement benefit in a
lump sum.
4.02(d) OPTIONAL FORMS OF PAYMENT FOR NORMAN PLAN PARTICIPANTS
In lieu of the payment options available under this Plan, a
Participant in the Norman
Plan as of December 31, 1993, may elect to have the portion of his Accrued
Benefit
attributable to Section 3.01(c)(i) distributed to him in one of the optional
forms of
payment available under the Norman Plan as in effect on December 31, 1993.
The amount
of Accrued Benefit determined under Section 3.01(c)(ii) shall be distributed
in accordance
with the provisions of this Plan as in effect on the later of January 1,
1994, or the date of
distribution.
4.03 Maximum Option Payable - If a Participant elects an optional form of
payment, and
the designated Beneficiary is not the Spouse of the Participant, the option
elected shall be
restricted so that the minimum distribution incidental benefit requirements
of IRC Section
401(a)(9) and Treasury Regulations 1.401(a)(9)-2 are met.
4.04 Automatic Option - Unless a married Participant, with the consent of
his Spouse, has
elected an optional form of payment under Section 4.02 and has not revoked
the election,
or has elected to be excluded from the effects of this automatic option, it
automatically
shall be assumed that the married Participant elected the Joint and Survivor
Option of
Section 4.02(a) with fifty percent (50%) of his benefit amount payable after
his death to
his Beneficiary and with his Spouse on the effective date of this option
designated as his
Beneficiary. This automatic option shall become effective and benefits
adjusted
accordingly as of the date benefit payments commence.
It is specifically provided that the Spouse of the Participant shall
consent in writing
to any form of payment other than that provided under this Section 4.04
during the ninety
(90) day period prior to the Annuity Starting Date. The Spouse's written
consent shall be
witnessed by a representative of the Administrative Committee or a notary
public. The
Administrative Committee may accept a Participant's election without the
consent of his
Spouse if there is no Spouse, the Spouse cannot be located, or under such
other
circumstances as may be prescribed by regulations. Any spousal consent shall
apply only
to the Spouse granting such written consent.
4.05 Lump Sum Payments - Notwithstanding any other provisions of this Plan,
if (a) the
Actuarial Equivalent of a terminated or retiring Participant's vested Accrued
Benefit
payable at Normal Retirement Date as calculated at the date of distribution
does not
exceed three thousand five hundred dollars ($3,500) (including any previous
distributions
made to the Participant) or such other amount as may be prescribed by the
Secretary of
Treasury or (b) the Participant and his Spouse agree, in writing, if the
Actuarial
Equivalent of his vested Accrued Benefit as of December 31, 1993, payable at
his Normal
Retirement Date, is in excess of three thousand five hundred dollars ($3,500)
(including
any previous distributions made to the Participant), the Administrative
Committee shall
direct that such amount be paid in a lump sum to such terminated or retiring
Participant.
If the Actuarial Equivalent of a Participant's vested Accrued Benefit at the
time of any
distribution exceeds three thousand five hundred dollars ($3,500) (including
any previous
distributions made to the Participant), then the Actuarial Equivalent of the
vested
Accrued Benefit at any subsequent time shall be deemed to exceed three
thousand five
hundred dollars ($3,500). For purposes of this Section 4.05, the date of
distribution shall
be deemed to be the date of termination of employment, provided that any
disparity
between such dates is due to reasonable administrative delay. No other
benefits of any
type shall be payable to such former Participant or his Spouse, Surviving
Spouse or
Beneficiaries.
If a terminated or retiring Participant who received a distribution
under this Section
4.05 is reemployed and again becomes a Participant, his Credited Service
shall include all
periods of employment prior to his reemployment date, and his subsequent
benefit shall be
reduced by the Accrued Benefit attributable to the Participant's prior
distribution.
4.06 Consent Prior to Distribution from the Plan - Notwithstanding anything
contained in
the Plan to the contrary, the written consent of the Participant and his
Spouse (or where
either the Participant or the Spouse has died, the survivor) shall be
required prior to any
distribution of any portion of the Accrued Benefit if the present value of
the
nonforfeitable Accrued Benefit exceeds three thousand five hundred dollars
($3,500)
(including any previous distributions made to the Participant) and any such
distribution is
made prior to the later of the date the Participant attains (or would have
attained) his
Normal Retirement Age or age sixty-two (62). For purposes of this Section
4.06, if the
present value of the vested Accrued Benefit at the time of any distribution
under the Plan
exceeds three thousand five hundred dollars ($3,500) (including any previous
distributions
made to the Participant), then the present value of the vested Accrued
Benefit at any
subsequent time will be deemed to exceed three thousand five hundred dollars
($3,500).
No less than thirty (30) days and no more than ninety (90) days prior
to the Annuity
Starting Date, the Administrative Committee shall provide written notice to
the
Participant and his Spouse of the right to defer any distribution under the
Plan until the
later of the date the Participant attains (or would have attained) his Normal
Retirement
Age or age sixty-two (62). The notice shall include a general description of
the material
features and optional forms of payment available under the Plan and shall be
provided in
the same manner as provided in Section 4.02. The Participant and his Spouse
must consent
in writing to such distribution in the ninety (90) day period prior to the
Annuity Starting
Date.
Notwithstanding the preceding, the Participant's consent only shall be
required for
distribution of the benefit in the form of the qualified joint and survivor
annuity under
Section 4.04 prior to the later of the date he attains his Normal Retirement
Age or age
sixty-two (62). The consent of the Participant and his Spouse shall not be
required to the
extent that a distribution from the Plan is required to satisfy IRC Section
401(a)(9) or 415.
4.07 No Reduction of Accrued Benefits - Notwithstanding anything contained
herein to
the contrary, the following provisions shall apply to the Plan.
4.07(a) In no event shall any amendment to the Plan decrease a
Participant's Accrued
Benefit or eliminate an optional form of payment.
4.07(b) In no event shall a Participant's Accrued Benefit be reduced
on account of
any increase in his age or Credited Service; provided, that this provision
shall not apply to
benefits under the Plan commencing before entitlement to benefits payable
under Title II
of the Social Security Act, which benefits under the Plan (i) do not exceed
such Social
Security benefits, and (ii) terminate when such Social Security benefits
commence.
4.07(c) If the provisions of IRC Section 416 and regulations issued
thereunder apply
to the Plan, in no event shall a Participant's Accrued Benefit or benefit
payable at his
Normal Retirement Date be lower than the minimum benefit required under IRC
Section
416.
4.07(d) The benefit of a Participant, Spouse, Surviving Spouse or
Beneficiary who is
receiving benefits under the Plan, or a Participant who is terminated from
employment
and has a nonforfeitable right to benefits, shall not be decreased due to any
increase in the
benefit levels payable under Title II of the Social Security Act or any
increase in the wage
base under Title II if the increase takes place after the earlier of the date
of first receipt
of such benefits or the date of separation, as the case may be.
4.08 Direct Rollovers - Commencing on and after January 1, 1993, and
notwithstanding
any provisions of the Plan to the contrary that would otherwise limit a
Distributee's
election under Section 4.02, a Distributee may elect, at the time and in the
manner
prescribed by the Committee, to have any portion of an Eligible Rollover
Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a
Direct Rollover.
For purposes of this Section 4.08, the following definitions shall
apply:
4.08(a) Eligible Rollover Distribution - Any distribution of all or
any portion of the
balance to the credit of the Distributee, except that an Eligible
Distribution does not
include:
(i) 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 (10) years or more;
(ii) Any distribution to the extent such distribution is required
under IRC Section
401(a)(9); and
(iii) The portion of any distribution that is not includible in
gross income
(determined without regard to the exclusion for net unrealized appreciation
with respect
to employer securities).
4.08(b) Eligible Retirement Plan - An individual retirement account
described in IRC
Section 408(a), an individual retirement annuity described in IRC Section
408(b), an
annuity plan described in IRC Section 403(a), or a qualified trust described
in IRC Section
401(a) 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 only.
4.08(c) Distributee - A Distributee includes an Employee or former
Employee. In
addition, the Employee's or former Employee's surviving Spouse and the
Employee's or
former Employee's Spouse or former Spouse who is an alternate payee under a
qualified
domestic relations order, as defined in IRC Section 414(p), are Distributees
with regard to
the interest of the spouse or Former Spouse.
4.08(d) Direct Rollover - A payment by the Plan to the Eligible
Retirement Plan
specified by the Distributee.
ARTICLE V
BENEFITS ON TERMINATION OF EMPLOYMENT
5.01 Vesting of Benefits - All rights to all benefits under the Plan will
cease upon a
Participant's termination of employment with the Employer or Affiliate prior
to
retirement, other than by death, except as otherwise provided in this Article
V and in
Section 6.05.
If a Participant's employment with the Employer or Affiliate is
terminated prior to
retirement, other than by death, but after the Participant has completed at
least five (5)
years of Service, he shall receive a monthly retirement benefit commencing on
his Normal
Retirement Date, if he is then alive, payable in accordance with Section
5.02. The amount
of the benefit shall be equal to the Participant's Accrued Benefit as of his
date of
termination of employment with Compensation for purposes of computing his
Final
Average Compensation determined based on the IRC Section 401(a)(17)
compensation limit
as in effect on his date of termination of employment. Notwithstanding
anything
contained herein to the contrary, in all events a Participant shall be one
hundred percent
(100%) vested upon the attainment of his Normal Retirement Age.
No amendments to the Plan made subsequent to termination of employment
of any
Participant shall affect the amount of retirement benefit to which such
Participant is
entitled except as otherwise specifically provided herein.
If a Participant who is entitled to a deferred retirement benefit
under the provisions
of this Section 5.01 later is reemployed as an Employee prior to the
commencement of such
retirement benefit, his rights to any such retirement benefit shall thereupon
be suspended.
Such Participant's rights to benefits under the Plan shall be subject to
redetermination at
any subsequent termination of employment or retirement under the Plan in
accordance
with the provisions of the Plan then in effect.
5.02 Payment of Deferred Vested Benefit - A terminated Participant who is
entitled to a
deferred vested benefit in accordance with the provisions of Section 5.01
shall be entitled
to receive his benefit commencing as of his Normal Retirement Date, if he is
then alive,
paid in accordance with Article IV.
Notwithstanding the preceding, a terminated Participant who has
completed at least
ten (10) years of Service at his date of termination of employment may elect
in writing to
have his otherwise deferred monthly retirement benefit commence on the first
day of the
month coinciding with or next following his attainment of age fifty-five (55)
or on the
first day of any month thereafter which precedes his Normal Retirement Date.
If a
terminated Participant makes an election to receive his retirement benefit at
an earlier
commencement date, the amount of the monthly retirement benefit payable at
such earlier
commencement date shall be equal to the amount of monthly retirement benefit
otherwise
deferred to his Normal Retirement Date reduced by the Actuarial Equivalent
factors to
reflect the period by which the benefit commencement date precedes what
otherwise
would be the Participant's Normal Retirement Date.
A Participant who has no vested interest in his Accrued Benefit shall
be deemed to be
paid his entire interest in the Plan upon his termination of employment and
shall forfeit
the nonvested portion of his Accrued Benefit as of such date. However, if
the Participant
is reemployed and again becomes a Participant prior to incurring five (5)
consecutive One
Year Breaks in Service or, in the case of Service determined under the
provisions of
Section 1.42(a), five (5) consecutive monthly periods resulting from his
termination of
employment for which he did not receive credit for Service during such
period, such
forfeited portion of the Accrued Benefit shall be reinstated.
5.03 Vested Deferred Retirement Income - A Vested Participant whose
employment
terminates for any reason other than death or retirement, may (a) elect to
leave his
contributions (if any) in the Fund and receive a retirement income amount
determined on
the basis of his Credited Service up to the date of his termination of
employment,
commencing at his Normal Retirement Date, or (ii) elect to receive a refund
of his
personal contributions and receive a deferred annuity in an actuarially
reduced amount as
determined under regulations issued by the Secretary of Labor from time to
time.
5.04 Pre-existing Plan Accounts - If a terminated Participant has an
account under any
Pre-existing Plan, his right of withdrawal of that account, if any, shall be
governed by the
terms of the Pre-existing Plan.
ARTICLE VI
BENEFITS ON DEATH
6.01 Death After Eligibility for Early Retirement - If an active
Participant dies after
attaining age fifty-five (55) and completing at least ten (10) years of
Service, or a
Participant who retired at his Early Retirement Date dies prior to the
commencement of
his early retirement benefit, a death benefit shall be payable to his
Surviving Spouse. The
death benefit shall be determined assuming that the Participant had retired
and elected to
have his early retirement benefit paid under the Joint and Survivor Option of
Section
4.02(a) with fifty percent (50%) of his benefit payable after his death to
his Surviving
Spouse as his designated Beneficiary.
The amount of the death benefit payable to the Surviving Spouse shall
be equal to the
Participant's Accrued Benefit as of his date of death reduced by the
Actuarial Equivalent
factors for early retirement for the period by which the benefit commencement
date
precedes what otherwise would be the Participant's Normal Retirement Date and
the
payment of the benefit under the fifty percent (50%) Joint and Survivor
Option of Section
4.02(a).
The Surviving Spouse may elect in writing to have the death benefit
commence on the
first day of the month coinciding with or next following the Participant's
date of death or
on the first day of any month thereafter which precedes what otherwise would
be the
Participant's Normal Retirement Date. If the Surviving Spouse does not make
such
election, the benefit shall commence on what otherwise would be the
Participant's Normal
Retirement Date. Such benefit shall continue on the first day of each month
thereafter
for the Surviving Spouse's lifetime.
Notwithstanding the preceding, if the Actuarial Equivalent of the
benefit payable to
the Surviving Spouse under this Section 6.01 does not exceed three thousand
five hundred
dollars ($3,500), the Administrative Committee shall direct payment of the
benefit in a
lump sum to the Surviving Spouse. No lump sum distribution shall be made
hereunder
after the first day of the first period for which an amount is received as an
annuity by the
Surviving Spouse unless the Surviving Spouse consents in writing to a lump
sum payment.
6.02 Death After Eligibility for Normal Retirement - If an active
Participant dies after
attaining his Normal Retirement Age or if a Participant who has retired at
his Normal
Retirement Date or Delayed Retirement Date dies prior to the commencement of
his
normal or delayed retirement benefit, a death benefit shall be payable to his
Surviving
Spouse. The death benefit shall be determined assuming that the Participant
had retired
and elected to have his benefit paid under the Joint and Survivor Option of
Section 4.02(a)
with fifty percent (50%) of his benefit payable after his death to his
Surviving Spouse as
his designated Beneficiary.
The amount of the death benefit payable to the Surviving Spouse shall
be equal to the
benefit the Participant would have been entitled to under the applicable
provisions of
Section 3.01 or 3.02 as of the Participant's date of death, reduced by the
Actuarial
Equivalent factors for the payment of the benefit under the fifty percent
(50%) Joint and
Survivor Option of Section 4.02(a).
The benefit payable to the Surviving Spouse shall commence on the
first day of the
month coinciding with or next following the Participant's date of death and
shall continue
on the first day of each month thereafter for the Surviving Spouse's
lifetime.
Notwithstanding the preceding, if the Actuarial Equivalent of the
benefit payable to
the Surviving Spouse under this Section 6.02 does not exceed three thousand
five hundred
dollars ($3,500), the Administrative Committee shall direct payment of the
benefit in a
lump sum to the Surviving Spouse. No lump sum distribution shall be made
hereunder
after the first day of the first period for which an amount is received as an
annuity by the
Surviving Spouse unless the Surviving Spouse consents in writing to a lump
sum payment.
6.03 Death After Eligibility for Disability Retirement - If a Totally and
Permanently
Disabled Participant who has retired at his Disability Retirement Date dies
prior to the
commencement of his disability retirement benefit, a death benefit shall be
payable to his
Surviving Spouse. The death benefit shall be determined assuming that the
Totally and
Permanently Disabled Participant had elected to have his disability
retirement benefit
paid under the Joint and Survivor Option of Section 4.02(a) with fifty
percent (50%) of his
benefit payable after his death to his Surviving Spouse as his designated
Beneficiary.
The amount of the death benefit payable to the Surviving Spouse shall
be equal to the
Participant's Accrued Benefit as of his Disability Retirement Date reduced by
the
Actuarial Equivalent factors for the payment of the benefit under the fifty
percent (50%)
Joint and Survivor Option of Section 4.02(a).
The Surviving Spouse may elect in writing to have the death benefit
commence on the
first day of the month coinciding with or next following the Participant's
death or on the
first day of any month thereafter which precedes what otherwise would be the
Participant's Normal Retirement Date. If the Surviving Spouse does not make
such an
election, the benefit shall commence on what otherwise would be the
Participant's Normal
Retirement Date. Such benefit shall continue on the first day of each month
thereafter
for the Spouse's lifetime.
Notwithstanding the preceding, if the Actuarial Equivalent of the
benefit payable to
the Surviving Spouse under this Section 6.03 does not exceed three thousand
five hundred
dollars ($3,500), the Administrative Committee shall direct payment of the
benefit in a
lump sum to the Surviving Spouse. No lump sum distribution shall be made
hereunder
after the first day of the first period for which an amount is received as an
annuity by the
Surviving Spouse unless the Surviving Spouse consents in writing to a lump
sum payment.
6.04 Death of a Vested Participant - If an active Participant who has
satisfied the
requirements for full vesting pursuant to Section 5.01 or if a terminated
Participant who
had satisfied the requirements for full vesting pursuant to Section 5.01 at
his date of
termination of employment dies before he is otherwise eligible to commence a
retirement
benefit under the provisions of the Plan, a death benefit shall be payable to
his Surviving
Spouse. The death benefit shall be determined assuming that the Participant
had elected
to have his deferred vested retirement benefit paid under the Joint and
Survivor Option of
Section 4.02(a) with fifty percent (50%) of his benefit payable after his
death to his
Surviving Spouse as his designated Beneficiary.
The amount of the benefit payable to the Surviving Spouse and the
commencement
date shall be determined in accordance with the following provisions.
6.04(a) If the Participant had completed ten (10) years of Service at
his date of death
or the date of his termination of employment, the death benefit payable to
his Surviving
Spouse shall be equal to the Participant's vested Accrued Benefit as of the
date of his
death or the date of his termination of employment. The amount so determined
shall be
reduced by the Actuarial Equivalent factors for early retirement to reflect
the period by
which the benefit commencement date precedes what otherwise would be the
Participant's
Normal Retirement Date and the payment of the benefit under the fifty percent
(50%)
Joint and Survivor Option of Section 4.02(a).
The Surviving Spouse may elect in writing to have the death benefit
commence on the
first day of the month coinciding with or next following the later of the
date of the
Participant's death or the date the Participant would have attained the age
of fifty-five
(55) or on the first day of any month thereafter which precedes what
otherwise would be
the Participant's Normal Retirement Date. If the Surviving Spouse does not
make such an
election, the benefit shall commence on what otherwise would be the
Participant's Normal
Retirement Date. Such benefit shall continue on the first day of each month
thereafter
for the Surviving Spouse's lifetime.
6.04(b) If the Participant had not completed ten (10) years of
Service at his date of
death or the date of his termination of employment, the death benefit payable
to the
Participant's Surviving Spouse shall commence on what otherwise would be the
Participant's Normal Retirement Date and continue on the first day of each
month
thereafter for the Surviving Spouse's lifetime. Such benefit shall be equal
to the
Participant's vested Accrued Benefit as of the date of his death or the date
of his
termination of employment and the amount so determined shall be reduced by
the
Actuarial Equivalent factors for payment of the benefit under the fifty
percent (50%)
Joint and Survivor Option of Section 4.02(a).
Notwithstanding the preceding, if the Actuarial Equivalent of the
benefit payable to
the Surviving Spouse under this Section 6.04 does not exceed three thousand
five hundred
dollars ($3,500), the Administrative Committee shall direct payment of the
benefit in a
lump sum to the Surviving Spouse. No lump sum distribution shall be made
hereunder
after the first day of the first period for which an amount is received as an
annuity by the
Surviving Spouse unless the Surviving Spouse consents in writing to a lump
sum payment.
6.05 Death Subsequent to Retirement - Upon the death of a retired or
Totally and
Permanently Disabled Participant who is receiving benefits under the Plan,
his Spouse,
Surviving Spouse or Beneficiary shall be entitled to any benefits due under
the basic or
elected alternate form of payment of his monthly retirement benefit. If the
period of
guaranteed payments is exhausted at the death of a retired Participant, no
death benefit
shall be payable.
ARTICLE VII
FUNDING
7.01 Contributions by the Employer - The entire cost of benefits under the
Plan shall be
borne by the Employer through the Fund. Any Contributions, if any, held on
behalf of a
Participant resulting from his participation in a prior Plan or Pre-existing
Plan shall also
be held in the Fund. The Employer intends to make its Contributions in such
actuarially
determined amounts as shall be sufficient to provide the benefits of the Plan
and meet the
minimum funding standards as required by law. The Contributions of the
Employer shall
be paid at such times, in such amounts and in such manner as the Compensation
and
Benefits Committee shall determine. Funds released through terminations of
employment
shall be applied to reduce the Employer's future Contributions.
7.02 Trust Fund - On behalf of all Employers, the Corporation shall enter
into an
agreement with the Trustee designated by the Compensation and Benefits
Committee
whereunder the Trustee will receive, invest and administer as a trust fund
all
Contributions made under this Plan in accordance with the Trust Agreement.
The
provisions of such Trust Agreement are incorporated by reference as a part of
the Plan,
and the rights of all persons hereunder are subject to the terms of the Trust
Agreement.
The Trust Agreement specifically provides, among other things, for the
investment and
reinvestment of the Fund and the income thereof, management of the Fund,
responsibilities and immunities of the Trustee, removal of the Trustee and
appointment of
a successor, accounting by the Trustee and disbursement of the Fund.
7.03 Funding Standard Account - The Corporation (which shall be the plan
administrator
for all Employers in regard to this appointment) shall engage, on behalf of
all Participants,
an actuary, an insurance company or an actuarial firm which maintains on its
staff at
least one (1) person who is recognized by the Secretaries of Labor and
Treasury as an
enrolled actuary. In addition to performing actuarial valuations and
providing actuarial
statements as necessary for the annual reports required by the Secretary of
Labor, such
actuary shall maintain a funding standard account in accordance with rules
and
regulations as from time to time shall be set forth by the Secretary of
Treasury or his
delegate. The status of such funding standard account shall be reported on
an annual basis
to the Administrative Committee and such government agencies as may be
required.
In maintaining the funding standard account, the actuary may rely upon
any
certification or other information relating to employee data, Fund assets and
Contribution
amounts and dates made as provided or caused to be provided to the actuary by
the
Employer, Trustee, independent qualified public accountant or any Fiduciary
to the
extent such reliance is so stated by the actuary in his certification or
report.
7.04 Separate Accounts - The Administrative Committee shall maintain, or
cause to be
maintained, a separate account for each Employer participating in the Plan
showing the
value of its Contributions to, the value of any funds of a Pre-existing Plan
covering its
employees included in, its share of earnings or losses in, and payments
allocable to its
Employees from, the Fund and each separate part of the Fund.
ARTICLE VIII
FIDUCIARIES AND ADMINISTRATION OF THE PLAN
8.01 General - Each Fiduciary who is delegated specific duties or
responsibilities under
the Plan or any Fiduciary who assumes such a position with the Plan shall
discharge his
duties solely in the interest of Participants, Spouses, Surviving Spouses and
Beneficiaries
and for the purpose of providing such benefits as stipulated herein to such
Participants,
Spouses, Surviving Spouses and Beneficiaries. In carrying out such duties
and
responsibilities, each Fiduciary shall act with the care, skill, prudence and
diligence under
the circumstances then prevailing that a prudent man acting in a like
capacity and
familiar with such matters would use in exercising such authority or duties.
A Fiduciary may serve in more than one Fiduciary capacity and may
employ one or
more persons to render advice with regard to his Fiduciary responsibilities.
If a Fiduciary
is serving as such without compensation, all expenses reasonably incurred by
such
Fiduciary shall be reimbursed by the Employer or, at the Corporation's
direction, from the
Fund.
A Fiduciary may delegate any of his responsibilities for the operation
and
administration of the Plan. In limitation of this right, a Fiduciary may not
delegate any
responsibilities as contained herein relating to the management or control of
the Fund
except through the employment of an investment manager as provided in Section
8.03 and
in the Trust Agreement.
8.02 Employer Responsibilities - The Employer established and maintains the
Plan for the
benefit of its Employees and of necessity retains control of the operation
and
administration of the Plan. In accordance with specific provisions of the
Plan, the
Employer has, as herein indicated, delegated certain of these rights and
obligations to the
Corporation, Trustee, Administrative Committee, Compensation and Benefits
Committee
and Investment Policy Committee and these parties shall be responsible solely
for these
delegated rights and obligations.
The Corporation shall cause an annual actuarial valuation of the Plan
to be made,
which will indicate the amount of Contributions necessary to comply with the
minimum
funding standards as may be required by law which report shall be reviewed by
the
Administrative Committee.
The Employer shall indemnify each member of the Board, Administrative
Committee,
Compensation and Benefits Committee, Investment Policy Committee, Trustee and
any
other person to whom any fiduciary responsibility with respect to the Plan is
delegated,
from and against any and all liabilities, costs and expenses incurred by such
persons as a
result of any act or omission to act in connection with the performance of
their fiduciary
duties, responsibilities and obligations under the Plan and ERISA, except for
liabilities
and claims arising from such Fiduciary's willful misconduct or gross
negligence. For this
purpose, the Employer may obtain, pay for and keep current a policy or
policies of
insurance; however, such insurance shall not release the Employer of
liability under this
provision.
The Employer shall supply such full and timely information for all
matters relating to
the Plan as the Administrative Committee, Compensation and Benefits
Committee,
Investment Policy Committee, Trustee, actuary and accountant, if any, engaged
on behalf
of the Plan by the Corporation may require for the effective discharge of
their respective
duties.
8.03 Trustee - The Trustee, in accordance with the Trust Agreement, shall
have exclusive
authority and discretion to manage and control the Fund, except that the
Investment
Policy Committee (who shall be the named Fiduciary for all Employers in
regard to this
appointment) may direct the Trustee or in its discretion may employ at any
time and from
time to time an investment manager [as defined in ERISA Section 3(38)] to
direct the
Trustee with respect to all or a designated portion of the assets comprising
the Fund.
8.04 Administrative Committee - The Compensation and Benefits Committee
shall appoint
an Administrative Committee which shall consist of not less than three (3)
persons to hold
office during the pleasure of the Compensation and Benefits Committee.
Members of the
Administrative Committee may participate in the benefits under the Plan
provided they
are otherwise eligible to do so. No compensation shall be paid from the Fund
to members
of the Administrative Committee for service on such Administrative Committee.
In accordance with the provisions hereof, the Administrative Committee
has been
delegated certain administrative functions relating to the Plan with the duty
and
discretionary authority necessary to enable it properly to carry out such
duties. The
Administrative Committee shall have no power in any way to modify, alter, add
to or
subtract from any provisions of the Plan. The Administrative Committee shall
have the
duty and discretionary authority to carry out the following duties:
8.04(a) To establish and enforce such rules, regulations and
procedures as it shall
deem necessary or proper for the efficient administration of the Plan;
8.04(b) To interpret the Plan, including the supplying of any
omissions in accordance
with the intent of the Plan, its interpretation thereof in good faith to be
final and
conclusive upon all persons;
8.04(c) To decide all questions concerning the Plan and the
eligibility of any
Employee to become a Participant;
8.04(d) To compute the amount of benefits which shall be payable to
any Participant,
retired Participant, or Beneficiary in accordance with the provisions of the
Plan, and to
determine the person or persons to whom such benefits shall be paid;
8.04(e) To authorize or deny the payment of benefits;
8.04(f) To supervise and direct work of Corporation Personnel and
Plan
Representatives, in the administration of the Plan including without
limitation the
following duties:
(i) To prepare and file all reports with Government agencies;
(ii) To prepare and distribute booklets, announcements, reports
and descriptions of
the Plan to Employees, as shall be required by law;
(iii) To maintain all records relating to the Plan and Fund;
(iv) To establish and administer at a local level a uniform claims
procedure;
(v) To perform such other duties as shall be necessary to
administer the Plan.
8.04(g) To review and approve the employment of all accountants,
actuaries,
consultants and attorneys as shall be deemed necessary from time to time, and
to receive
and evaluate their reports;
8.04(h) To review bonding and insurance requirements; and
8.04(i) To delegate in its discretion its powers and duties to
administer the
Plan to personnel of the Corporation; provided, however, that the
discretion vested in
the Administrative Committee shall in all cases be exercised in a manner
which is, so far
as may be practicable, consistent and uniform as to all Employees similarly
situated.
8.05 Compensation and Benefits Committee - The Compensation and Benefits
Committee
shall be designated from time to time by the Board and shall consist of not
less than three
(3) members. Members of the Compensation and Benefits Committee may
participate in
the benefits under the Plan provided they are otherwise eligible to do so.
Except as
otherwise provided by the Board, no member of the Compensation and Benefits
Committee
shall receive any compensation from the Fund for his services on such
Compensation and
Benefits Committee.
In accordance with the provisions hereof, the Compensation and
Benefits Committee
has been delegated certain administrative functions and duties relating to
the Plan with
the duty and discretionary authority necessary to enable it properly to carry
out such
duties. The Compensation and Benefits Committee shall have the duty and
discretionary
authority to carry out the following duties:
8.05(a) To terminate the Plan and/or Trust Agreement or discontinue
contributions;
8.05(b) To amend or modify the Plan or Trust Agreement in whole or in
part;
8.05(c) To appoint Trustees and other Fiduciaries and designate
members of the
Administrative Committee;
8.05(d) To determine the amount of contributions necessary to fund
the Plan on an
actuarially sound basis and to collect and pay all contributions to the Fund
in a timely
manner;
8.05(e) To delegate to employees of the Corporation or to the
Administrative
Committee such additional powers and duties as it shall consider necessary or
desirable in
the operation of the Plan and Fund;
8.05(f) To review periodically all aspects of the administration of
the Plan.
8.06 Investment Policy Committee - A Retirement Plan Investment Policy
Committee of
not less than three (3) persons shall be designated annually by the
Compensation and
Benefits Committee to review the investment of assets in the Fund. Members
of the
Investment Policy Committee may participate in the benefits under the Plan
provided they
are otherwise eligible to do so. Except as otherwise provided by the
Compensation and
Benefits Committee, no member of the Investment Policy Committee shall
receive any
compensation from the Retirement Fund for his services as such.
In accordance with the provisions hereof, the Investment Policy
Committee has been
delegated certain administrative functions and duties relating to the Plan
with the duty
and discretionary authority necessary to enable it properly to carry out such
duties. The
Investment Policy Committee shall have the duty and discretionary authority
to carry out
the following duties:
8.06(a) To develop investment policies and procedures, implement
investment
programs and monitor designated Trustee and investment manager activities;
8.06(b) To employ and discharge investment managers and to recommend
the selection
and/or termination of Trustee or insurance companies;
8.06(c) To receive and evaluate monthly, quarterly and annual reports
of the Trustee
and investment managers;
8.06(d) To review investments made by the Trustee and investment
managers and
other investments held by the Plan;
8.06(e) To direct the flow of funds between trusts and allocate the
amount of assets to
be managed by each Trustee and investment manager;
8.06(f) To report investment performance to the Compensation and
Benefits
Committee at least once each quarter.
8.07 Claims for Benefits - All claims for benefits under the Plan shall be
submitted to the
Administrative Committee through a local Plan representative as appropriate,
who shall
have the responsibility for determining the eligibility of any Participant,
Spouse,
Surviving Spouse or Beneficiary for benefits. All claims for benefits shall
be made in
writing and shall set forth the facts which such Participant, Spouse,
Surviving Spouse or
Beneficiary (the "applicant") believes to be sufficient to entitle him to the
benefit claimed.
The Administrative Committee shall adopt forms for the submission of all
claims for
benefits, and all claims for benefits shall be filed on such forms. The
Administrative
Committee shall provide applicants with all such forms.
The Administrative Committee and the Plan representative shall follow
the following
procedure in processing claims:
8.07(a) Advise the applicant of all his rights under the Plan and
assist him in the
preparation of the claim;
8.07(b) If filed through a Plan representative, the Plan
representative shall forward
the executed claim within thirty (30) days of receipt of the initial
application to the
Administrative Committee for its consideration;
8.07(c) The Administrative Committee shall meet monthly to consider
and take action
on all claims received since it last met;
8.07(d) Upon approval of a claim by the Administrative Committee, a
member of the
Administrative Committee shall take prompt action to commence payment of
benefits to
the applicant in accordance with the provisions of the Plan.
The Administrative Committee shall approve, deny and investigate all
questionable
claims. Upon request, the Administrative Committee shall afford any
applicant the right
of a hearing with respect to any finding of fact or determination related to
any claim for
benefits under the Plan. If any claim for benefits is denied, the applicant
shall be notified
of such decision in accordance with the provisions of Section 8.08.
8.08 Claims Procedures - The applicant shall be notified in writing of any
adverse
decision with respect to his claim within ninety (90) days after its
submission. The notice
shall be written in a manner calculated to be understood by the applicant and
shall
include:
8.08(a) The specific reason or reasons for the denial;
8.08(b) Specific references to the pertinent Plan provisions on which
the denial is
based;
8.08(c) A description of any additional material or information
necessary for the
applicant to perfect the claim and an explanation why such material or
information is
necessary; and
8.08(d) An explanation of the Plan's claim review procedures.
If special circumstances require an extension of time for processing
the initial claim,
a written notice of the extension and the reason therefor shall be furnished
to the
applicant before the end of the initial ninety (90) day period. In no event
shall such
extension exceed ninety (90) days.
If a claim for benefits is denied by the Administrative Committee or
the applicant has
no response to such claim within ninety (90) days of its submission (in which
case the
claim for benefits shall be deemed denied), the applicant or his duly
authorized
representative, at the applicant's sole expense, may appeal the denial to a
panel of three (3)
persons designated by the Compensation and Benefits Committee within sixty
(60) days of
the receipt of written notice of the denial or sixty (60) days from the date
such claim is
deemed denied. The appeal shall be filed in writing with the Administrative
Committee.
In pursuing such appeal, the applicant or his duly authorized representative:
8.08(e) May request in writing that the Administrative Committee
review the denial;
8.08(f) May review pertinent documents; and
8.08(g) May submit issues and comments in writing.
The decision on review shall be made within sixty (60) days of receipt
of the request
for review, unless special circumstances require an extension of time for
processing, in
which case a decision shall be rendered as soon as possible but not later
than one hundred
twenty (120) days after receipt of the request for review. If such an
extension of time is
required, written notice of the extension shall be furnished to the applicant
before the end
of the original sixty (60) day period. The decision on review shall be made
in writing,
shall be written in a manner calculated to be understood by the applicant,
and shall
include specific references to the provisions of the Plan on which the denial
is based.
The applicant shall be entitled to appear before the panel in person
to present his
claim and the panel shall have the authority to obtain such additional
evidence as it deems
appropriate under the circumstances to enable it to render a decision.
The decision of the hearing panel shall be rendered in writing to the
applicant within
seven (7) days of the completion of the hearing and shall be binding upon the
Employer
and the applicant to the extent permitted by law.
8.09 Records - All acts and determinations of the Administrative Committee,
Compensation and Benefits Committee and Investment Policy Committee shall be
duly
recorded, and all such records and other documents as may be necessary in
exercising its
duties under the Plan shall be preserved in the custody of the Administrative
Committee,
Compensation and Benefits Committee and Investment Policy Committee. Such
records
and documents at all times shall be open for inspection to, and for the
purpose of making
copies by, any person designated by the Corporation. The Administrative
Committee,
Compensation and Benefits Committee and Investment Policy Committee shall
provide
such timely information, resulting from the application of its
responsibilities under the
Plan, as needed by the Trustee, actuary and accountant, if any, engaged on
behalf of the
Plan for the effective discharge of their respective duties.
8.10 Missing Persons - The Administrative Committee shall make a reasonable
effort to
locate all persons entitled to benefits under the Plan; however,
notwithstanding any
provision in the Plan to the contrary, if after a period of five (5) years
from the date such
benefit is due, any such person entitled to benefits has not been located,
his rights under
the Plan shall stand suspended. Before this provision becomes operative, the
Administrative Committee shall send a certified letter to such person at his
last known
address advising him that his interest or benefits under the Plan shall be
suspended. Any
such suspended amounts shall be held by the Trustee for a period of three (3)
additional
years (or a total of eight (8) years from the time the benefits first become
payable);
provided, that if a person subsequently makes a valid claim with respect to
such suspended
benefits, his right to benefits shall be reinstated.
<PAGE>
ARTICLE IX
MAXIMUM BENEFITS AND REQUIRED
DISTRIBUTION OF BENEFITS
9.01 Maximum Retirement Benefit - Anything herein to the contrary
notwithstanding,
effective for Plan Years commencing on and after January 1, 1987, the
following
provisions shall be applicable:
9.01(a) The monthly retirement benefit payable in the form of a
straight life annuity
from the Plan on behalf of a Participant, when combined with any benefits
from any
other qualified Defined Benefit Plan maintained by the Employer or Affiliate,
shall not
exceed the amount provided in the following paragraphs of this Section 9.01,
as may be
modified by Section 9.02. If the normal form of payment determined under
Section 4.01 is
other than a straight life annuity or a qualified joint and survivor annuity,
the amount
determined hereunder shall be reduced on an Actuarial Equivalent basis to
reflect such
other payment form, with the exception that the interest assumption shall in
no event be
less than five percent (5%).
If a Participant has completed ten (10) or more years of participation
in the Plan, the
maximum monthly benefit payable in accordance with this Section 9.01 shall be
the
smaller of Section 9.01(a)(i) and Section 9.01(a)(ii) following:
(i) Seven thousand five hundred dollars ($7,500), or such greater
amount
determined by the Secretary of Treasury as of January 1 of each calendar
year. Such
amount shall be the maximum monthly amount pursuant to this Section
9.01(a)(i) for that
calendar year and shall apply to the Limitation Year ending with or within
that calendar
year.
(ii) The average monthly compensation the Participant received
from the Employer
during the three (3) consecutive calendar years which would produce the
highest such
average. For purposes of this Section 9.01(a)(ii), "compensation" shall mean
a Participant's
earned income, wages, salaries, fees for professional services and other
amounts received
for personal services actually rendered in the course of employment with an
Employer
maintaining the Plan (including, but not limited to, commissions paid
salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance
premiums, tips, bonuses, fringe benefits, reimbursements and expense
allowances) and
excluding the following:
(A) Employer contributions to a plan of deferred compensation to the
extent such
contributions are not included in the gross income of the Employee for the
taxable year in
which contributed, or on behalf of an Employee to a simplified employee
pension plan to
the extent such contributions are deductible under IRC Section 404(h), and
any
distributions from a plan of deferred compensation whether or not includible
in the gross
income of the Employee when distributed.
(B) Amounts realized from the exercise of a non-qualified stock
option, or when
restricted stock (or property) held by an employee becomes freely
transferable or is no
longer subject to a substantial risk of forfeiture;
(C) Amounts realized from the sale, exchange or other disposition of
stock acquired
under a qualified stock option; and
(D) Other amounts which receive special tax benefits, or
contributions made by an
Employer (whether or not under a salary reduction agreement) towards the
purchase of an
IRC Section 403(b) annuity contract (whether or not the contributions are
excludable from
gross income of the Employee).
Compensation for any Limitation Year is the compensation actually paid
or includible
in gross income during the year.
9.01(b) If the payment of a benefit begins before a Participant
attains his Social
Security Retirement Age, the amount set forth in Section 9.01(a)(i) shall be
reduced to the
Actuarial Equivalent of such amount; provided that in no event shall the
interest
assumption be less than five percent (5%).
The adjustments provided for in this section shall be made in a manner
consistent
with the reduction for old age insurance benefits commencing before the
Social Security
Retirement Age under the Social Security Act until age sixty-two (62) is
reached.
9.01(c) If the payment of a benefit begins after a Participant
attains his Social
Security Retirement Age, the amount set forth in Section 9.01(a)(i) shall be
increased to the
Actuarial Equivalent of such amount; provided that in no event shall the
interest
assumption be greater than five percent (5%).
9.01(d) Notwithstanding the preceding provisions of this Section
9.01, the benefits
payable with respect to a Participant under this Plan shall be deemed not to
exceed the
limitations of this Section 9.01 if:
(i) The retirement benefits payable with respect to such
Participant under this
Plan and under all other Defined Benefit Plans to which the Employer
contributes do not
exceed ten thousand dollars ($10,000) for the applicable Plan Year and for
any prior Plan
Year; and
(ii) The Employer has not at any time maintained a Defined
Contribution Plan in
which the Participant participated.
9.01(e) If a Participant has completed less than ten (10) years of
participation in the
Plan, the maximum monthly benefit payable in accordance with Section
9.01(a)(i) shall be
the amount determined under Section 9.01(a)(i) multiplied by a fraction the
numerator of
which is the number of years (or part thereof) of participation in the Plan
and the
denominator of which is ten (10). If a Participant has completed less than
ten (10) years of
Service, the maximum benefit payable in accordance with Section 9.01(a)(ii)
and the ten
thousand dollar ($10,000) limit of Section 9.01(d) shall be the amounts
determined under
such sections multiplied by a fraction the numerator of which is the number
of years (or
part thereof) of Service and the denominator of which is ten (10). However,
in no event
shall the provisions of this Section 9.01(e) reduce the limits of Sections
9.01(a) and 9.01(d)
to an amount less than one-tenth (1/10th) of such limits without the
application of this
Section 9.01(e). To the extent provided in regulations, this Section shall
be applied
separately with respect to each change in the benefit structure of the Plan.
9.01(f) If a Participant is covered by one or more Defined Benefit
Plans maintained
by the Employer, all such plans shall be aggregated in determining whether
the maximum
benefit limitations hereunder have been met. Further, the maximum retirement
benefit as
noted above may be decreased as determined necessary by the Employer to
ensure that all
plans will remain qualified under the IRC. Any such adjustment by the
Employer shall be
communicated in writing to the Committee and the actuary employed on behalf
of the
Plan.
9.01(g) If (i) an Employee is a Participant in this Plan as of the
first day of the first
Plan Year commencing on or after January 1, 1987, (ii) the Plan was in
existence on May 6,
1986, and (iii) the requirements of IRC Section 415 have been met for all
Plan Years, then
to the extent such Participant's "current accrued benefit" exceeds the
limitations otherwise
provided in this Section 9.01, the limitations determined pursuant to Section
9.01(a)(i) for
said Participant shall be equal to his "current accrued benefit" for purposes
of this Section
9.01 and the following Section 9.02.
For purposes of this Section 9.01(g), "current accrued benefit" means
a Participant's
Accrued Benefit as of the last day of the Plan Year prior to the Plan Year to
which this
Section 9.01 applies when expressed as an annual benefit within the meaning
of IRC
Section 415(b)(2) excluding any change in the terms and conditions of the
Plan or cost-of-
living adjustments occurring on and after May 5, 1986.
9.01(h) In the case of a governmental plan within the meaning of IRC
Section 414(d),
or a plan maintained by a not-for-profit organization (other than a
governmental unit), the
following rules shall apply:
(i) The reference to Social Security Retirement Age in Section
9.01(b) shall be
replaced with "age sixty-two (62)" wherever it appears.
(ii) The following sentence shall be added to the end of
Section 9.01(b): "The
reduction under this Section 9.01(b) shall not reduce the limitation under
Section 9.01(a)(i)
below (A) seventy-five thousand dollars ($75,000) if the benefit begins at or
after
attainment of age fifty-five (55), or (B) if the benefit begins before the
attainment of age
fifty-five (55), the Actuarial Equivalent of the seventy-five thousand dollar
($75,000)
limitation for age fifty-five (55)".
(iii) The reference to Social Security Retirement Age in Section
9.01(c) shall be
replaced with "age sixty-five (65)" wherever it appears.
9.02 Multiple Plan Participation - If an Employee is a Participant in one
or more Defined
Benefit Plans and one or more Defined Contribution Plans maintained by the
Employer,
the sum of his Defined Benefit Plan Fraction and his Defined Contribution
Plan Fraction
shall not exceed 1.0 during any Limitation Year.
If the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan
Fraction exceeds 1.0 for any Limitation Year, the Employer shall adjust or
freeze the rate
of benefit accrual for purposes of a Defined Benefit Plan or the amount of
"Annual
Additions" [as defined in IRC Section 415(c)(2)] to a Defined Contribution
Plan on behalf
of the Participant so that the sum of such fractions shall not exceed 1.0.
For purposes of maximum Annual Additions to Defined Contribution Plans
and
maximum annual benefits payable from Defined Benefit Plans, all Defined
Contribution
Plans and all Defined Benefit Plans respectively, whether or not terminated,
shall be
combined and treated as one plan.
For purposes of this Section 9.02, the term, "Defined Benefit Plan
Fraction" shall mean
a fraction the numerator of which is the Participant's projected annual
benefit (as defined
in the Defined Benefit Plan) determined as of the close of the Limitation
Year, and the
denominator of which is the lesser of:
9.02(a) The product of 1.25 multiplied by the dollar limitation in
effect in Section
9.01(a)(i) for such Limitation Year; or
9.02(b) The product of 1.4 multiplied by the amount which may be
taken into account
in Section 9.01(a)(ii) with respect to each individual under the Plan for
such Limitation
Year.
The term "Defined Contribution Plan Fraction" shall mean a fraction
the numerator
of which is the sum of all of the Annual Additions to the Participant's
individual account
under the Defined Contribution Plan as of the close of the Limitation Year,
and the
denominator of which is the sum of the lesser of the following amounts
determined for
such Limitation Year, and for each prior Limitation Year of employment with
the
Employer:
9.02(c) The product of 1.25 multiplied by the dollar limitation in
effect pursuant to
IRC Section 415(c)(1)(A) for such year determined without regard to IRC
Section 415(c)(6);
or
9.02(d) The product of 1.4 multiplied by an amount determined
pursuant to IRC
Section 415(c)(1)(B) with respect to each individual under the Plan for such
Limitation
Year.
The limitation on aggregate benefits from a Defined Benefit Plan and
a Defined
Contribution Plan contained in ERISA Section 2004 shall be complied with by
a reduction
(if necessary) in the Participant's benefits under the Defined Benefit Plan
before a
reduction of any such Defined Contribution Plan.
9.03 Required Distribution of Benefits - Unless the Participant otherwise
elects under the
provisions of the Plan, any payment of benefits to the Participant shall
begin not later
than sixty (60) days after the close of the Plan Year in which occurs the
latest of:
9.03(a) The date on which the Participant attains his Normal
Retirement Age;
9.03(b) The tenth (10th) anniversary of the date the Employee becomes
a Participant;
and
9.03(c) The date the Participant terminates his service with the
Employer.
Notwithstanding anything contained herein to the contrary, the entire
interest of each
Participant shall begin to be distributed not later than April 1 of the
calendar year
following the calendar year in which the Participant attains age seventy and
one-half
(70.5) in accordance with IRC Section 401(a)(9) and the regulations issued
thereunder,
inclusive of the minimum distribution incidental benefit requirements of
Section
1.401(a)(9)-2 of the regulations. The spousal benefit requirements under the
Plan shall be
construed and enforced according to the requirements of IRC Sections
401(a)(11) and 417
and ERISA Section 205.
Distributions commencing prior to the death of a Participant may be
made only over
one of the following periods: (a) the life of the Participant, or the joint
lives of the
Participant and his designated Beneficiary, or (b) a period certain not
extending beyond
the life expectancy of the Participant or the joint life expectancy of the
Participant and
his designated Beneficiary.
If the distribution of a Participant's interest has begun and the
Participant dies
before his entire interest has been distributed to him, the remaining portion
of his interest
shall be distributed at least as rapidly as under the method of distribution
in effect at his
date of death.
If a Participant dies prior to the commencement of his benefit, the
distribution of his
entire interest shall be made in accordance with the following.
9.03(d) If the designated Beneficiary is the Spouse of the
Participant, the Beneficiary
may elect to commence the benefit within a reasonable period of time after
the
Participant's death but in no event may such election be made later than (i)
the December
31 of the calendar year immediately following the calendar year in which the
Participant
died or (ii) the December 31 of the calendar year in which the Participant
would have
attained age seventy and one-half (70 1/2). The benefit may be paid over the
life or over a
period certain not extending beyond the life expectancy of the designated
Beneficiary. If
the Spouse dies before the distribution begins, then the five (5) year
distribution
requirement of Section 9.03(f) shall apply as if the Beneficiary were the
Participant.
9.03(e) If the benefit is paid to a designated Beneficiary, as
defined in IRC Section
401(a)(9)(E) inclusive of Section 1.401(a)(9)-1 D-1 and D-2 of the
regulations, other than
the Participant's Spouse, the distribution shall commence no later than
December 31 of the
calendar year immediately following the calendar year in which the
Participant died. The
benefit may be paid over the life or over a period certain not extending
beyond the life
expectancy of the designated Beneficiary.
9.03(f) If there is no designated Beneficiary, as defined in IRC
Section 401(a)(9)
inclusive of Section 1.401(a)(9)-1 D-1 and D-2 of the regulations, at the
death of the
Participant, the distribution of the Participant's entire interest shall be
completed by
December 31 of the calendar year containing the fifth (5th) anniversary of
the
Participant's death.
The benefit payable under the provisions of this Plan may not be paid
in any form
which would violate the required distribution requirements of this Section
9.03.
Life expectancies shall be computed by the use of the expected return
multiples in
Tables V and VI of Section 1.72-9 of the regulations under IRC Section 72.
The life
expectancy of the Participant and Spouse, if applicable, shall be
recalculated annually,
unless the Participant elects otherwise.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
10.01 Amendment of the Plan - The Compensation and Benefits Committee shall
have the
right at any time by its action to modify, alter or amend the Plan in whole
or in part;
provided, that the duties, powers and liability of the Trustee shall not be
increased
without its written consent; the amount of benefits which at the time of any
such
modification, alteration or amendment have accrued for any Participant,
Spouse,
Surviving Spouse or Beneficiary hereunder shall not be affected adversely
thereby; and no
such amendment shall have the effect of causing a reversion to the Employer
of any part
of the principal or income of the Fund.
No amendment to the Plan shall decrease a Participant's vested Accrued
Benefit or
eliminate an optional form of distribution. If the Plan's vesting schedule
is amended or
the Plan is amended in any way that directly or indirectly affects the
computation of a
Participant's vested benefit or the Plan is deemed amended by an automatic
change to or
from a Top Heavy Plan vesting schedule, each Participant with at least three
(3) Years of
Service may elect within a reasonable period after the adoption of the
amendment or
change, to have his vested percentage computed under the Plan without regard
to such
amendment or change. The period during which the election may be made shall
commence
with the date the amendment is adopted or deemed to be made and shall end on
the latest
of sixty (60) days after (a) the amendment is adopted, (b) the amendment is
effective or (c)
the Participant is issued written notice of the amendment by the Employer,
Administrative
Committee or Compensation and Benefits Committee.
10.02 Termination of the Plan - The Employer expects to continue the Plan
indefinitely,
but continuance is not assumed as a contractual obligation, and each Employer
reserves the
right at any time by action of the Compensation and Benefits Committee to
terminate the
Plan as applicable to itself. If the Employer terminates or partially
terminates the Plan, or
it is otherwise terminated or partially terminated, the rights of the
Participants affected
thereby to benefits then accrued shall be nonforfeitable, and the Trustee
shall continue to
administer the Fund as instructed by the Compensation and Benefits Committee
in
accordance with the provisions hereof. Notwithstanding the above, no
Participant shall
have any recourse toward the satisfaction of his Accrued Benefit other than
from assets of
the Plan or the Pension Benefit Guaranty Corporation (PBGC) if a PBGC
liability is
present.
If the Plan is terminated as provided in this Article X, the
Compensation and Benefits
Committee shall determine the equitable share of the Fund with respect to any
Employer
for whom the Plan has terminated. The administration of that portion of the
Fund
applicable to any Employer for which the Plan has not been terminated shall
be
unaffected, and any references hereinafter contained in this Article X to the
Fund shall
refer only to that portion applicable to the Employer for whom the Plan has
terminated.
The Compensation and Benefits Committee shall allocate and administer
the Fund to
provide benefits for Participants on the date of termination and any Spouses,
Surviving
Spouses or Beneficiaries then receiving benefits in accordance with Article
IV. Such
allocation of the Fund shall be made in the order of precedence and amounts
indicated in
ERISA Section 4044 according to principles set forth in such Section and such
other
portions of ERISA as it incorporates by reference. For the purpose of making
such
allocation, any regulations issued pursuant to such Section shall be deemed
part of such
Section.
The allocation of that portion of the Fund computed above shall be
based on the
method of payment of monthly retirement benefits or death benefits as
specified in the
Plan. If Fund assets on or after the date of termination are insufficient to
fund all
benefits within any class, the benefits of all higher order of precedence
shall be funded,
the benefits of all lower order of precedence shall be unfunded, and the
assets remaining
shall be allocated among members of that class on the basis of their
respective actuarial
reserves, subject to the provisions of ERISA Section 4044.
If upon termination of its participation in the Plan, an Employer
fails to pay or
reimburse the Trustee, actuary, accountant or attorney for the outstanding
charges or
expenses incurred hereunder, the Trustee is empowered to satisfy such claims
by lien upon
that portion of the Fund attributable to such Employer prior to making any
allocation to
Participants, vested terminated Participants, retired Participants, Totally
and Permanently
Disabled Participants, Spouses, Surviving Spouses and Beneficiaries of the
Plan in
accordance with this Article X.
The application of the Fund on the foregoing basis shall be calculated
by the actuary
and certified to the Trustee by the Compensation and Benefits Committee as of
the date on
which the Plan terminated. Subject to the restrictions of ERISA, when the
calculations are
completed, the interest of each Participant, vested terminated Participant,
retired
Participant, Totally and Permanently Disabled Participant, Spouse, Surviving
Spouse and
Beneficiary shall continue to be held in the Fund pursuant to the terms of
this Article X,
or at the direction of the Compensation and Benefits Committee, the
appropriate portion
of the Fund shall be liquidated, and each of their interests shall be
distributed to them in
the form of annuity contracts, annuity payments or installments. Any funds
remaining
after the satisfaction of all liabilities to such Participants, vested
terminated Participants,
retired Participants, Totally and Permanently Disabled Participants, Spouses,
Surviving
Spouses and Beneficiaries under this Plan due to erroneous actuarial
computation or
assumptions shall be returned to the appropriate Employer.
10.03 Twenty-five (25) Highest Paid Limitation - Effective for Plan Years
Beginning
before January 1, 1994 - If the Plan is terminated or a lump sum distribution
is made to a
Participant who is one of the Twenty-five (25) Highest Paid Employees at any
time before
the Expiration Date, the following rules shall apply:
10.03(a) Upon the occurrence of either of the above conditions, the
Basic Benefit and
any Additional Benefit which may be provided from Contributions by the
Employer for
any of its Twenty-five (25) Highest Paid Employees shall not be greater than
the amount
of benefits which can be provided by the larger of the following amounts
prior to the
satisfaction of all Plan liabilities relating to other Plan Participants to
whom this Section
10.03 does not apply:
(i) Twenty thousand dollars ($20,000).
(ii) Twenty percent (20%) of the first fifty thousand dollars
($50,000) of the
Employee's average annual compensation for the preceding five (5) years
multiplied by the
number of years since the Revision Date, as hereinafter defined.
(iii) With respect to a Substantial Owner, the dollar amount which
equals the
Actuarial Equivalent of the benefit guaranteed for such Participant under
ERISA Section
4022, or if the Plan has not terminated, the Actuarial Equivalent of the
benefit that would
be guaranteed if the Plan terminated on the date the benefit commences,
determined in
accordance with regulations of the Pension Benefit Guaranty Corporation
(PBGC), and
with respect to Participants other than Substantial Owners, the dollar amount
which equals
the Actuarial Equivalent of the maximum benefit described in ERISA Section
4022(b)(3)(B) (determined on the date the Plan terminates or on the date
benefits are
distributed, as if the Plan terminated, whichever is earlier and determined
in accordance
with PBGC regulations) without regard to any other limitation in ERISA
Section 4022.
10.03(b) The provisions of Section 10.03(a) shall not restrict the
current payment of
full retirement benefits called for by the Plan for any retired Employee
while the Plan is
in full effect. If any funds are realized by operation of the restrictions
set forth in
Section 10.03(a), they shall be used to reduce subsequent Contributions by
the Employer, or
if the Employer has ceased its Contributions, they shall be used for the
benefit of
Employees other than those restricted by Section 10.03(a) on a basis which
shall not result
in substantial discrimination in favor of the more highly-compensated
Employees, subject
to any reversion of assets on Plan termination pursuant to Section 10.02.
10.03(c) For purposes of this Section 10.03, the following
definitions shall apply:
(i) Additional Benefits - the benefits provided by the Plan
which are over and
above those which would have been provided by the provisions of the Plan in
effect prior
to the applicable Revision Date had the Plan been continued without change;
(ii) Basic Benefit - the benefit initially provided by the Plan
less any Additional
Benefits;
(iii) Expiration Date - the tenth (10th) anniversary of any
Revision Date;
(iv) Revision Date - the effective date of adoption of the Plan
by the Employer or
the effective date of any amendment to the Plan which increases the benefits;
(v) Substantial Owner - a Participant defined in ERISA Section
4022(b)(5); and
(vi) Twenty-five (25) Highest Paid Employees - the twenty-five
(25) highest paid
Employees of the Employer as of the applicable Revision Date, excluding, any
Employee
whose anticipated annual benefits are not expected to exceed fifteen hundred
dollars
($1,500).
10.03(d) If during the first ten (10) years after a Revision Date,
any benefit is to be
distributed in a lump sum (the amount of which represents the lump sum
Actuarial
Equivalent of the retirement benefit to which the Participant otherwise would
be entitled
to receive as the normal form of pension) to a Participant to whom this
Section 10.03
applies, prior to the payment of such lump sum, the Participant shall enter
into an
agreement with the Employer. This agreement shall be in accordance with
requirements
prescribed by the Administrative Committee and/or Compensation and Benefits
Committee, Revenue Ruling 92-76 and any rulings or regulations amendatory
thereof,
including provisions that the Participant (or in the event of his death, his
estate) will
repay to the Fund a sum, as determined by the actuary, equal to the Actuarial
Equivalent
of the amounts by which the Participant's monthly retirement benefit under
the Plan
would have been decreased during his then remaining lifetime in accordance
with this
Section 10.03, and secure such obligation to repay if the limitations
contained in this
Section 10.03 become effective. The agreement shall require the Participant,
promptly
after the distribution to him of the lump sum payment under the Plan, to
deposit as
security with a depository satisfactory to the Employer and the
Administrative Committee
or Compensation and Benefits Committee real or personal property with a fair
market
value, as determined by the depository, as of the date of deposit equal to at
least one
hundred twenty-five percent (125%) of the amount that would be repayable had
the Plan
terminated on the date of distribution of such lump sum. If the fair market
value, as
determined by the depository, of such property falls below one hundred ten
percent (110%)
of the amount that would have been repayable to the Fund, the Participant
shall deposit
with the depository additional properties so as to render the total fair
market value, as
determined by the depository, of the security deposited equal to one hundred
twenty-five
percent (125%) of the amount which would have been repayable as determined by
the
actuary. If the conditions of this Section 10.03(d) are met for the ten (10)
year period
following such Revision Date, and the Plan is not terminated, the property
deposited as
security in the Fund shall be redelivered to the Participant.
10.03(e) The provisions of this Section 10.03 shall apply to former
or retired
Participants as well as to Participants in active service.
10.03(f) If it is determined by statute, court decision in which the
Internal Revenue
Service acquiesces, ruling by the Internal Revenue Service or otherwise that
the provisions
of this Section 10.03 no longer are necessary to qualify the Plan under the
IRC, this
Section 10.03 shall be ineffective without amendment to the Plan.
10.04 Restriction on Benefits for Top Twenty-five (25) Highly Compensated
Employees -
Effective for Plan Years Commencing on and After January 1, 1994 - The
benefit of any
active or former Highly Compensated Employee shall be limited to a benefit
that is
nondiscriminatory under IRC Regulation 1.401(a)(4)-5(b).
Benefits distributed to any of the twenty-five (25) active or former
most Highly
Compensated Employees shall be restricted so that the annual payments are no
greater than
an amount equal to the payment that would be made on behalf of such Highly
Compensated Employee under a single life annuity that is the Actuarial
Equivalent of the
sum of such Highly Compensated Employee's Accrued Benefit and any other
benefits
under the Plan.
The preceding paragraph shall not apply if: (a) after payment of the
benefit to such
Highly Compensated Employee, the value of Plan assets equals or exceeds one
hundred ten
percent (110%) of the value of current liabilities as defined in IRC Section
412(l)(7), (b)
the value of the benefits for such Highly Compensated Employee is less than
one percent
(1%) of the value of current liabilities, or (c) the value of the benefits
payable to such
Highly Compensated Employee does not exceed three thousand five hundred
dollars
($3,500) or such other amount as may be designated in IRC Section
411(a)(11)(A).
For purposes of this Section 10.04, "benefit" includes any loan in
excess of the amount
set forth in IRC Section 72(p)(2)(A), any periodic income, any withdrawal
value payable to
a living employee or former employee, and any death benefit not provided for
by
insurance on the life of the employee or the former employee.
Notwithstanding the preceding, distributions of amounts in excess of
the limits
provided under IRC Regulation 1.401(a)(4)-5(b)(3)(i) are permitted, provided
that an
agreement between the Highly Compensated Employee and the Employer has been
established to secure repayment to the Fund of any amount necessary for the
distribution
of assets upon the termination of the Plan to satisfy IRC Section 401(a)(4).
During any Plan Year, the amount that may be required to be repaid to
the Fund is
the Restricted Amount. For purposes of this Section 10.04, the Restricted
Amount is the
excess of the Accumulated Amount of distributions made to the Highly
Compensated
Employee over the Accumulated Amount of the Highly Compensated Employee's
nonrestricted limit. The nonrestricted limit is equal to the payments that
could have been
distributed to the Highly Compensated Employee, commencing when distribution
commenced, had the Highly Compensated Employee received payments in the form
described in IRC Regulations 1.401(a)(4)-5(b)(3)(i)(A) and (B). For purposes
of this Section
10.04, Accumulated Amount is the amount of a payment increased by a
reasonable amount
of interest from the date the payment was made (or would have been made)
until the date
of the determination of the Restricted Amount.
In order to secure the repayment obligation of the Restricted Amount,
prior to the
payment of such distribution, the Highly Compensated Employee shall enter
into an
agreement with the Employer. The agreement shall require the Highly
Compensated
Employee, promptly upon such distribution, to deposit in escrow as security
with an
acceptable depository having a fair market value equal to at least one
hundred twenty-five
(125%) of the Restricted Amount. The obligation of the Highly Compensated
Employee
under the repayment agreement alternatively can be secured or collateralized
by posting a
bond equal to at least one hundred percent (100%) of the Restricted Amount.
For this
purpose, the bond must be furnished by an insurance company, bonding company
or other
surety approved by the U.S. Treasury Department as an acceptable surety for
federal
bonds. A Highly Compensated Employee's obligation under the repayment
agreement can
be secured by a bank letter of credit in an amount equal to at least one
hundred percent
(100%) of the Restricted Amount.
Amounts in the escrow account exceeding one hundred twenty-five
percent (125%) of
the Restricted Amount may be withdrawn for the Highly Compensated Employee.
Similar
rules apply to the release of any liability in excess of one hundred percent
(100%) of the
Restricted Amount where the repayment obligation has been secured by a bond
or a letter
of credit. If the fair market value of the property in the escrow account
falls below one
hundred ten percent (110%) of the Restricted Amount, the Highly Compensated
Employee
shall deposit additional property so as to render the fair market value of
the property held
by the depository equal to one hundred twenty-five percent (125%) of the
Restricted
Amount. The Highly Compensated Employee has the right to receive any income
from the
property placed in escrow, subject to the obligation to maintain the value of
the property
as described.
A depository may not redeliver to a Highly Compensated Employee any
property held
under such an agreement, other than amounts in excess of one hundred
twenty-five
percent (125%) of the Restricted Amount, and a surety or bank may not release
any
liability on a bond or letter of credit unless the Administrative Committee
and/or the
Compensation and Benefits Committee certifies to the depository, surety or
bank that the
Highly Compensated Employee (or his estate) is no longer obligated to repay
any amount
under the agreement. The Administrative Committee and/or the Compensation
and
Benefits Committee will make such a certification if at any time after the
distribution
commences, any of the provisions of this Section 10.04(a), (b) or (c) are
met, or if the Plan
has terminated and the benefit received by the Highly Compensated Employee is
nondiscriminatory. Such a certification by the Administrative Committee
and/or the
Compensation and Benefits Committee terminates the agreement between the
Highly
Compensated Employee and the Employer.
ARTICLE XI
PROVISIONS RELATIVE TO EMPLOYERS INCLUDED IN PLAN
11.01 Method of Participation - Any organization which is a member of the
same
controlled group of organizations as the Corporation, as determined pursuant
to IRC
Sections 414(b), (c), (m) and (o), with the approval of the Compensation and
Benefits
Committee, may become a party to the Plan, by adopting the Plan as a
retirement plan for
its Employees. Any organization which becomes a party to the Plan promptly
shall deliver
to the Trustee provided for in Article VII a certified copy of the
resolutions or other
documents evidencing its adoption of the Plan and a written instrument
showing the
Compensation and Benefits Committee's approval of the organization becoming
a party to
the Plan.
11.02 Withdrawal from Participation - Any one or more of the Employers
included in the
Plan may withdraw from the Plan at any time by giving six (6) months advance
notice in
writing of its or their intention to withdraw to the Compensation and
Benefits Committee
(unless a shorter notice is agreed to by the Compensation and Benefits
Committee).
Upon receipt of notice of any such withdrawal, the Compensation and
Benefits
Committee shall certify to the Trustee the equitable share of such
withdrawing Employer
in the Fund (to be determined by the actuary employed on behalf of the Plan
by the
Corporation). The Trustee thereupon shall set aside from the Fund then held
by it such
securities and other property as it, in its sole discretion, shall deem to be
equal in value to
such equitable share. If the Plan is to be terminated with respect to such
Employer, the
amount set aside shall be dealt with in accordance with the provisions of
Section 10.02. If
the Plan is not to be terminated with respect to such Employer, the Trustee
shall turn over
such amount to the trustee designated by such Employer, and such securities
and other
property thereafter shall be held and invested as a separate retirement trust
of such
Employer, and shall be used and applied according to the terms of a new
agreement and
declaration of trust between the withdrawn Employer and the trustee.
Neither the segregation of the Fund assets upon the withdrawal of an
Employer nor
the execution of a new agreement and declaration of trust pursuant to any of
the
provisions of this Section 11.02 shall operate to permit any part of the
corpus or income of
the Fund to be used for or diverted to purposes other than for the exclusive
benefit of
Participants, Spouses, Surviving Spouses and Beneficiaries, except as
otherwise may be
provided in Sections 10.02, 13.08 and 13.10.
ARTICLE XII
TOP HEAVY PLAN PROVISIONS
12.01 General - Notwithstanding anything contained herein to the contrary,
if the Plan,
when combined with all other plans required to be aggregated pursuant to IRC
Section
416(g), is deemed to be a Top Heavy Plan for any Plan Year, the following
conditions shall
become operative.
12.02 Minimum Benefits - For the first Plan Year commencing on or after
January 1,
1984, that the Plan is deemed a Top Heavy Plan, and any Plan Year thereafter
in which
the Plan is a Top Heavy Plan, a minimum annual Accrued Benefit applicable to
all Non-
Key Employees who are Participants equal to the lesser of two percent (2%) of
Top Heavy
Compensation multiplied by the Participant's number of years of Top Heavy
Service or
twenty percent (20%) of his Top Heavy Compensation shall be provided.
12.03 Definitions -
12.03(a) Determination Date means the last day of the preceding Plan
Year. For the
first Plan Year that a Plan is in effect, Determination Date means the last
day of such
Plan Year
12.03(b) Key Employee means any employee, former employee or
beneficiary of a
former employee in a plan of the Employer or Affiliate who at any time during
the Plan
Year or any of the four (4) preceding Plan Years is:
(i) An officer of the Employer or Affiliate having annual
compensation greater
than fifty percent (50%) of the amount in effect under IRC Section
415(b)(1)(A) for any
such Plan Year;
(ii) One (1) of the ten (10) employees having annual compensation
from the
Employer or Affiliate of more than the limitation in effect under IRC Section
415(c)(1)(A)
and owning (or considered as owning within the meaning of IRC Section 318)
more than a
one-half percent (1/2%) interest and the largest interest in the Employer or
Affiliate;
(iii) A five percent (5%) owner of the Employer or Affiliate; or
(iv) A one percent (1%) owner of the Employer or Affiliate having
annual
compensation from the Employer or Affiliate of more than one hundred fifty
thousand
dollars ($150,000).
For purposes of Section 12.03(b)(i), no more than fifty (50) employees
[or, if lesser, the
greater of three (3) or ten percent (10%) of employees] shall be treated as
officers.
Further, for purposes of determining the number of officers taken into
account under
Section 12.03(b)(i), employees described in IRC Section 414(q)(8) shall be
excluded.
With respect to Section 12.03(b)(ii), if two (2) Employees have the
same ownership
interest in the Employer or Affiliate, the Employee having the greater annual
compensation from the Employer or Affiliate shall be treated as having a
larger interest.
For purposes of this Section 12.03, "compensation" shall have the same
meaning as in
IRC Section 414(q)(7).
12.03(c) Non-Key Employee means an employee, former employee or
beneficiary of a
former employee who is not a Key Employee.
12.03(d) Top Heavy Plan means on or after January 1, 1984, any plan
under which as
of any Determination Date the present value of the cumulative accrued
benefits for Key
Employees exceed sixty percent (60%) of the present value of the cumulative
accrued
benefits for all Employees.
For purposes of this definition:
(i) If the plan is a Defined Benefit Plan, the present value of
cumulative accrued
benefits shall be the lump sum present value of a participant's accrued
benefit under the
Plan calculated on the basis of interest and mortality set forth in the plan
as of the Top
Heaving Valuation Date plus contributions due under the plan as of the
Determination
Date. If the plan is a Defined Contribution Plan, the present value of
cumulative accrued
benefits shall be deemed to be the market value of all Employee accounts
under the plan as
of the Top Heavy Valuation Date plus contributions made to the plan as of the
Determination Date. Notwithstanding the preceding, for purposes of
determining the
present value of the cumulative accrued benefits, distributions made within
a five (5) year
period ending on the Determination Date shall be included. The account
balances and
accrued benefits of a Non-Key Employee who was previously a Key Employee
shall be
excluded from these computations.
(ii) Each plan of the Employer required to be included in an
"aggregation group"
shall be treated as a Top Heavy Plan if such group is a top heavy group.
(iii) The term "aggregation group" means
(A) each plan of the Employer or Affiliate that is currently
effective or which has
terminated within the five (5) year period ending on the Determination Date
in which a
Key Employee is a Participant during the Plan Year containing the year of
determination
or any of the four (4) preceding Plan Years;
(B) each other plan of the Employer or Affiliate which enables any
plan in (A) to
meet the requirements of IRC Section 401(a)(4) or 410.
A permissive aggregation group consists of plans of the Employer or
Affiliate that are
required to be aggregated, plus one (1) or more plans of the Employer or
Affiliate that are
not part of a required aggregation group but satisfy the requirements of IRC
Sections
401(a)(4) and 410 when considered together with the required aggregation
group.
(iv) If any individual has not performed any service for the
Employer or Affiliate
at any time during the five (5) year period ending on the Determination Date,
any accrued
benefit for such individual shall not be taken into account in the testing
procedure herein
described.
12.03(e) Top Heavy Compensation means a Participant's average annual
Full
Compensation during that period of five (5) consecutive Testing Years for
which his
aggregate Full Compensation was the greatest. If he has fewer than five (5)
consecutive
Testing Years, his Top Heavy Compensation shall mean his average annual Full
Compensation during that period containing the largest number of consecutive
Testing
Years; provided, that if there is more than one such period, Top Heavy
Compensation shall
be calculated on the basis of such period for which such average is the
greatest.
12.03(f) Testing Year means a Plan Year which (i) constitutes a year
of Service for
such Participant, and (ii) begins prior to the end of the last Plan Year for
which the Plan
was a Top Heavy Plan. Except to the extent excluded under the preceding
sentence, Plan
Years beginning before 1984 shall be Testing Years.
12.03(g) Full Compensation means, for any Employee for any Plan Year,
his
compensation [as such term is defined in Section 9.01(a)(ii)] from the
Employer or
Affiliate for such Plan Year, except that Full Compensation for any Plan Year
shall not
exceed two hundred thousand dollars ($200,000) or such greater amount as may
be
determined by the Secretary of Treasury pursuant to IRC Section 401(a)(17).
12.03(h) Top Heavy Service means a year of Credited Service in which
the Plan is
deemed to be a Top Heavy Plan with the exception that Credited Service prior
to January
1, 1984, shall be excluded.
12.03(i) Top Heavy Valuation Date means the most recent valuation
date that falls
within or ends with the twelve (12) month period ending on the Determination
Date. If
the plan is a Defined Benefit Plan, the valuation date must be the same
valuation date
used for computing plans costs for minimum funding regardless of whether a
valuation is
performed that year.
These definitions shall be interpreted consistent with IRC Section 416
and rules and
regulations issued thereunder. Further, such law and regulations shall be
controlling in all
determinations under these definitions, inclusive of any provisions and
requirements
stated thereunder but hereinabove absent.
12.04 Multiple Plan Participation - If the Plan is deemed to be a Top Heavy
Plan for the
Plan Year, then the multiplier of 1.25 in Sections 9.02(a) and 9.02(c) shall
be reduced to 1.0
unless:
12.04(a) All plans required to be aggregated and any other plans
which may be
permissively aggregated pursuant to IRC Section 416(g) are ninety percent
(90%) or less top
heavy; and
12.04(b) The minimum accrued benefit referenced in IRC Section
416(c)(1) and
Section 12.02 is modified by substituting three percent (3%) for two percent
(2%) and
increasing twenty percent (20%) by one (1) percentage point for each year of
Top Heavy
Service (but not by more than ten (10) percentage points).
12.05 No Duplication of Minimum Benefit - These Top Heavy Plan provisions
shall not
require that the entire defined benefit minimum benefit and defined
contribution
minimum contribution be provided. To the extent that there is a Defined
Benefit Plan
accrued benefit, it shall be controlling. To the extent that there is an
Employer
contribution to a Defined Contribution Plan, then there shall be a
determination as to
whether the Defined Contribution Plan amount is comparable to the difference
between
the Defined Benefit Plan minimum benefit and the minimum Defined Benefit Plan
accrued benefit required under IRC Section 416. If the Defined Contribution
Plan amount
is not comparable, then the difference shall be provided in the Defined
Benefit Plan.
12.06 Actuarial Assumptions - For purposes of determining whether a Defined
Benefit
Plan is a Top Heavy Plan, calculations shall be based on the Actuarial
Equivalent factors
with such determination made as of the Top Heavy Valuation Date. If more
than one (1)
plan is being used for Top Heavy Plan testing, the same actuarial assumptions
shall be used
for all such plans. Further, pursuant to Internal Revenue Service Regulation
1.416-1, T-26
and T-27, proportional subsidies shall be ignored, and non-proportional
subsidies shall be
considered.
12.07 Vesting - If the vesting schedule provided in Section 5.01 is less
liberal than the
vesting schedule hereinafter provided, then the following vesting schedule
shall apply for
each Participant with an Hour of Service after the Plan becomes a Top Heavy
Plan. This
schedule shall remain in effect in all future Plan Years.
Vested
Years of Vesting Service Percentage
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years or more 100%
<PAGE>
ARTICLE XIII
MISCELLANEOUS
13.01 Governing Law - The Plan shall be construed, regulated and
administered
according to the laws of the Commonwealth of Virginia except in those areas
preempted
by the laws of the United States of America.
13.02 Construction - The headings and subheadings in the Plan have been
inserted for
convenience of reference only and shall not affect the construction of the
provisions
hereof. In any necessary construction, the masculine shall include the
feminine and the
singular the plural, and vice versa.
13.03 No Employment Contract - This Plan shall not be deemed to constitute
a contract
between the Employer and any Participant or to be a consideration or
inducement for the
employment of any Participant or employee. No Participant shall acquire any
right to be
retained in the Employer's employ by virtue of the Plan, nor upon his
dismissal or
voluntary termination of employment, shall he have any right or interest in
and to the
Fund other than as specifically provided herein. Except to the extent
required by law, the
Employer shall not be liable for the payment of any benefit provided for
herein; all
benefits hereunder shall be payable only from the Fund and only to the extent
that the
Fund is sufficient therefor.
13.04 Receipt Prior to Payment - The Trustee, Administrative Committee or
Employer,
jointly or severally, may, but need not, require a written receipt as a
condition precedent
to any payment called for by the Plan to be made to a Participant, Spouse,
Surviving
Spouse, Beneficiary, or to their heirs, successors, executors and legal
representatives.
13.05 Payments to Minors and Incompetents - If any Participant, Spouse,
Surviving Spouse
or Beneficiary is a minor or in the judgment of the Administrative Committee
is
physically or mentally incapable of personally receiving and giving a valid
receipt for any
payment due him under the Plan, the Committee may make such payment or any
part
thereof to or for the benefit of such Participant, Spouse, Surviving Spouse
or Beneficiary,
or directly to or for the benefit of any person determined by the Committee
to have
incurred expense or assumed responsibility for the expenses of such
Participant,
Spouse, Surviving Spouse or Beneficiary.
13.06 Non-alienability of Benefits - Except as provided in IRC Section
401(a)(13)(B)
related to qualified domestic relations orders as defined in IRC Section
414(p), no benefits
or other amounts payable under the Plan shall be subject in any manner to
anticipation,
sale, transfer, assignment, pledge, encumbrance, charge or alienation.
Notwithstanding
anything contained herein to the contrary, if a benefit is being paid or is
to be paid
pursuant to a Domestic Relations Order entered into prior to January 1, 1985,
such order
shall be considered to be a Qualified Domestic Relations Order. If the
Administrative
Committee determines that any person entitled to any payments under the Plan
has become
insolvent or bankrupt or has attempted to anticipate, sell, transfer, assign,
pledge,
encumber, charge or otherwise in any manner alienate any benefit or other
amount
payable to him under the Plan, or that there is any danger of any levy or
attachment or
other court process or encumbrance on the part of any creditor of such person
entitled to
payments under the Plan against any benefit or other amounts payable to such
person, the
Administrative Committee, at any time, in its discretion, may direct the
Trustee to
withhold any or all payments to such person under the Plan and apply the same
for the
benefit of such person in such manner and proportion as the Administrative
Committee
may deem proper. Notwithstanding anything contained herein to the contrary,
with
respect to a debt due by the Participant to the Employer, a Participant,
Spouse, Surviving
Spouse or Beneficiary in pay status may assign or alienate rights to future
benefit
payments provided that any such assignment or alienation (a) is voluntary and
revocable,
(b) does not exceed ten percent (10%) of any benefit payment, and (c) is
neither for the
purpose, nor has the effect, of defraying Plan administrative costs. The
Employer also
shall file a written acknowledgement with the Committee within ninety (90)
days of the
assignment that the Employer has no enforceable right in, or to, any part of
a benefit
payment under the Plan except as may be assigned under this Section.
Notwithstanding anything contained herein to the contrary, upon the
receipt by the
Plan of a Domestic Relations Order, the following provisions of this Section
13.06 shall
become effective.
13.06(a) Determination of Qualified Domestic Relations Order - Upon
receipt by the
Plan of a Domestic Relations Order, the Administrative Committee shall
promptly notify
the Participant and any Alternate Payee of such receipt and the Plan's
procedures for
determining if such order is a Qualified Domestic Relations Order. Within a
reasonable
time thereafter in accordance with reasonable procedures established by the
Administrative Committee, the Administrative Committee shall determine
whether such
order is a Qualified Domestic Relations Order and notify the Participant and
Alternate
Payee of such determination. During the period of time in which the
Administrative
Committee is making the determination of whether the Domestic Relations Order
is a
Qualified Domestic Relations Order, the Committee shall segregate in a
separate account
in the Plan or in an escrow account the amount or amounts which would have
been
payable to the Alternate Payee during such period if the order had been
determined to be
a Qualified Domestic Relations Order.
In the case of any payment before a Participant has separated from
service with the
Employer, a Domestic Relations Order shall be a Qualified Domestic Relations
Order
regardless of the fact that such order requires that payment of benefits be
made to an
Alternate Payee:
(i) on or after the date on which the Participant attains or first
would have
attained his Early Retirement Date;
(ii) as if the Participant had retired on the date on which such
payment is to begin
under such order taking into account only the present value of the benefits
actually
accrued and not taking into account the present value of any Employer subsidy
for early
retirement based on the interest rate specified in the Plan or, if no rate is
specified, five
percent (5%); and
(iii) in any form in which such benefits may be paid under the Plan
to the
Participant (other than in the form of a joint and survivor annuity with
respect to the
Alternate Payee and his or her subsequent spouse).
13.06(b) Payment to Alternate Payee - If, within eighteen (18)
months, the Domestic
Relations Order is determined to be a Qualified Domestic Relations Order, the
Administrative Committee shall pay the segregated amounts to the person or
persons
entitled thereto.
If, within eighteen (18) months, it is determined that the order is
not a Qualified
Domestic Relations Order, or the issue as to whether such order is a
Qualified Domestic
Relations Order is not resolved, then the Administrative Committee shall pay
the
segregated amount to the person who would have been entitled to such amounts
as if there
had been no order.
Any determination that an order is a Qualified Domestic Relations
Order which is
made after the close of the eighteen (18) month period shall be applied
prospectively only.
13.06(c) Definitions - For purposes of this Section 13.06, the
following definitions
shall apply:
(i) Alternate Payee means any spouse, child or other dependent
of a Participant
who is recognized by a Domestic Relations Order as having a right to receive
all, or a
portion of, the benefits payable under a Plan with respect to such
Participant.
(ii) Domestic Relations Order - Any judgment, decree or order
(including approval
of a property settlement agreement) which
(A) relates to the provisions of child support, alimony payments, or
marital property
rights to a spouse, child or other dependent of a Participant, and
(B) is made pursuant to a state domestic relations law (including a
community
property law).
(iii) Qualified Domestic Relations Order - A Domestic Relations
Order which
creates or recognizes the existence of an Alternate Payee's right to, or
assigns to an
Alternate Payee the right to, receive all or a portion of the benefits
payable with respect to
a Participant under the Plan; provided that such Domestic Relations Order
clearly
specifies:
(A) the name and last known mailing address (if any) of the
Participant and the
name and mailing address of each Alternate Payee covered by the order;
(B) the amount or percentage of the Participant's benefit to be paid
by the Plan to
each Alternate Payee or the manner in which such amount or percentage is to
be
determined;
(C) the number of payments or period to which such order applies;
and
(D) each plan to which such order applies.
A Domestic Relations Order meets the requirements of this subsection
only if such
order does not require the Plan:
(E) to provide any type or form of benefits, or any optional payment
form, not
otherwise provided under the Plan;
(F) to provide increased benefits (determined on the basis of
Actuarial Equivalent
value); and
(G) to make payment of benefits to an Alternate Payee which are
required to be paid
to another Alternate Payee under another order previously determined to be a
Qualified
Domestic Relations Order.
13.06(d) Establishment of Plan Procedures - For purposes of this
Section 13.06,
reasonable procedures shall be established under the Plan to determine the
qualified status
of Domestic Relations Orders and to administer distributions under Qualified
Domestic
Relations Orders. The procedures established by the Plan shall:
(i) be set forth in writing;
(ii) provide for the notification of each person specified in a
Domestic Relations
Order as entitled to payment of benefits under the Plan (at the address
included in the
Domestic Relations Order) of such procedures promptly upon receipt by the
Plan of the
Domestic Relations Order; and
(iii) permit an Alternate Payee to designate a representative for
receipt of copies of
notices that are sent to the Alternate Payee with respect to a Domestic
Relations Order.
13.07 Effect of Corporate Reorganization - In the event that the
Corporation shall
become a party to any reorganization, merger, consolidation or other
corporate
readjustment, or shall be dissolved or liquidated, and, as a result thereof,
a substantial part
of the Employees of the Corporation shall become the employees of another
corporation,
then this Plan shall not be terminated or discontinued in whole or in part as
to such
Corporation, and such other corporation or corporations shall, in all
respects, be
substituted for such Corporation under this Plan.
In the event that any entity other than the Corporation shall acquire
a majority of the
outstanding voting stock of the Corporation, or all or substantially all of
the assets of the
Corporation, or any plant, division or department thereof as a going concern,
then, the
Corporation, as determined by the Compensation and Benefits Committee, may,
in lieu of
the normal operation of Article V or Section 10.02, cause any part of the
Fund, as
determined by the Administrative Committee upon the advice of the actuary,
which is
allocable to (a) Participants who thereupon become employed, directly or
indirectly, by the
acquirer and (b) the Beneficiaries of such Participants, to be segregated and
deposited in a
separate fund, which shall thereafter be held subject to this Plan and, in
such event, the
acquirer shall be vested with all of the powers vested in the Board with
respect to this Plan
as it relates to the acquirer's employees. In such case, this Plan shall not
be terminated or
discontinued in whole or in part. Alternatively, the Compensation and
Benefits Committee
may terminate this Plan as to such acquired corporation, plant, division or
department, in
which case the allocable part of the Fund shall be segregated as provided
above and
applied as provided in Section 10.02.
In the event that any Employer shall be involved in a merger,
consolidation,
acquisition, reorganization, liquidation, transfer of assets to another plan
or similar
transaction, the Accrued Benefits earned by a Participant prior to the
transaction shall not
be reduced and shall be equal to or greater than the benefit to which he
would have been
entitled to receive on a termination basis before the transaction.
13.08 Mistake of Fact - Notwithstanding anything herein to the contrary,
there shall be
returned to the Employer any Contribution which was made as follows:
13.08(a) By a mistake of fact, as determined by the Internal Revenue
Service or in
such other manner as the Internal Revenue Service may permit;
13.08(b) Prior to the receipt of initial qualification if the Plan
received an adverse
determination with respect to its initial qualification, and the application
for
determination of initial qualification was made by the time prescribed by law
for filing
the Employer's tax return for the taxable year in which the Plan was adopted,
or such later
date as the Secretary of Treasury may prescribe; or
13.08(c) In an amount that exceeded the deductible limits on such
Contribution as set
forth under IRC Section 404, as determined by the Internal Revenue Service or
in such
other manner as the Internal Revenue Service may permit.
The return of any Contribution as hereinbefore provided shall be made
within one (1)
year after the payment of the Contribution, denial of the initial
qualification or
disallowance of the deduction (to the extent disallowed), whichever is
applicable. Any
Contribution returned due to mistake of fact under Section 13.08(a) or
disallowance of a
tax deduction under Section 13.08(c) shall be reduced by its share of the
losses and
expenses of the Fund but shall not be increased by income or gains of the
Fund. Any
Contribution returned to the Employer due to denial of initial qualification
under Section
13.08(b) shall be equal to the entire assets of the Plan attributable to
Contributions by the
Employer.
13.09 Exclusive Benefit - The Employer shall not be entitled to any part of
the corpus or
income of the Fund, and no part thereof shall be used for or diverted to
purposes other
than for the exclusive benefit of Participants, Spouses, Surviving Spouses
and
Beneficiaries hereunder except as provided in Sections 13.08 and 13.10.
13.10 Expenses - The operating expenses of the Plan and Fund shall be paid
by the
Employer or, upon the direction of the Corporation, may be paid from the Fund
to the
extent such expenses are permitted to be charged against the Fund. The
determination of
whether expenses may be charged against the Fund shall be made by the
Corporation.
13.11 Indemnification - The Employer shall indemnify and hold harmless each
person or
persons who may serve on the Administrative Committee, Compensation and
Benefits
Committee or Investment Policy Committee from any and all claims, loss,
damages,
expenses (including attorney's fees) and liability (including any amounts
paid in
settlement) arising from any act or omission of such person or persons,
except when the
same is judicially determined to be due to the gross negligence or willful
misconduct of
such person or persons. No Plan assets may be used for any such
indemnification.
13.12 Small Payments - If the retirement benefit payable to a Participant
at retirement is
less than twenty-five dollars ($25.00) per month, the Participant may elect
in writing that
such benefit payments be made on a quarterly, semi-annual or annual basis.
13.13 Counterparts - The Plan and the Trust Agreement may be executed in
any number
of counterparts, each of which shall constitute but one and the same
instrument and may
be sufficiently evidenced by any one counterpart.
13.14 Effect of Bargaining Agreement - In the event that a bargaining
representative of
any Participant negotiates an agreement for another retirement plan as to
such Participant,
such Participant shall, upon his inclusion in such Plan, be deemed to have
terminated his
service under this Plan.
ARTICLE XIV
CERTAIN TRANSITIONAL RULES
14.01 Background - This Plan was adopted by the Corporation effective
November 28,
1979 as a continuation of the Stanley Retirement Plan for former employees of
the Stanley
Furniture Company Division of The Mead Corporation who became Employees of
the
Corporation upon the acquisition by the Corporation of the assets of the
Stanley Furniture
Division on November 28, 1979. It is the intent of the following
transitional rules to
ensure that this Plan be interpreted as assuring the uninterrupted
continuation of the
provisions of the Stanley Retirement Plan for Employees of the Corporation
who were or
would have been eligible to participate in the Plan before the acquisition,
with no loss of
service credit for purposes of participation, vesting, benefit accrual, or
any other purpose.
Nevertheless, the Corporation reserves the right to amend this Plan as
provided herein so
long as no such amendment adversely affects benefits accrued by such
Employees prior to
November 28, 1979.
14.02 Participation - Notwithstanding any provision of this Plan to the
contrary, each
employee of the Corporation who was a Participant in the Stanley Retirement
Plan
immediately prior to November 28, 1979, shall, as of such date, be a
Participant in this
Plan. For purposes of determining eligibility to participate in this Plan,
Service shall
include all periods of employment which would have been taken into account in
computing Service under the Stanley Retirement Plan as in effect immediately
before
November 28, 1979.
14.03 Vesting - Notwithstanding any provision of this Plan to the contrary,
for purposes
of determining an Employee's vested percentage, Service shall include all
periods of
employment prior to November 28, 1979 which would have been taken into
account in
computing Service for such purpose under the Stanley Retirement Plan as in
effect
immediately before November 28, 1979.
14.04 Benefit Accrual - Notwithstanding any provision of this Plan to the
contrary, the
accrued benefit under this Plan as of November 28, 1979 of each employee of
the
Corporation shall be equal to his accrued benefit determined as of such date
under the
provisions of the Stanley Retirement Plan as then in effect, including all
provisions of the
Plan relating to Pre-existing Plans.
ADOPTION OF THE PLAN
Notwithstanding anything contained herein to the contrary, this Plan
is amended and
maintained under the condition that it shall continue to be approved and
qualified by the
Internal Revenue Service under IRC Section 401(a) and that the Trust
hereunder is exempt
under IRC Section 501(a), or under any comparable Sections of any future
legislation
which amends, supplements or supersedes such Sections.
If the Internal Revenue Service determines that the Plan as amended and
restated
hereby is not qualified, the Corporation may modify the Plan to meet Internal
Revenue
Service requirements.
As evidence of its adoption of the Plan, Stanley Furniture Company, Inc.
has caused
this instrument to be signed by its duly authorized officers and its
corporate seal is
affixed hereto this twentieth day of April, 1995.
ATTEST: STANLEY FURNITURE COMPANY, INC.
By: By:
(Title) APPENDIX
ACTUARIAL EQUIVALENT
FACTORS
Pursuant to the provisions of Section 1.02 of the Plan, the following bases
are hereby
adopted, effective January 1, 1989 (unless indicated otherwise), for the
computation of
Actuarial Equivalents under the Plan.
1. ACTUARIAL EQUIVALENT - GENERAL
(a) Protection of Prior Factors -- For Participants in the Norman
Plan on December
31, 1993, in no event shall the benefit earned as of December 31, 1993, be
less than the
benefit the Participant would have received determined on the basis of the
Actuarial
Equivalent factors under this Plan in effect on December 31, 1993.
2. ELIGIBILITY AND PARTICIPATION -- ARTICLE II
(a) Reemployment of Retired Participants Prior to Attainment of Normal
Retirement
Age - Section 2.05
For the purpose of adjustments in this Section - the same basis used
for Available
Options - Section 4.02.
3. RETIREMENT BENEFITS -- ARTICLE III
(a) Delayed Retirement Benefit - Section 3.02
For the purpose of adjustments in this Section - the same basis used
for Available
Options - Section 4.02.
(b) Early Retirement Benefit - Section 3.03
The reduction factors for commencement of a retirement benefit due to
a
Participant's early retirement are one-twelfth (1/12) of six and two-thirds
percent (6 2/3%)
for each month prior to age sixty (60) and one-twelfth (1/12) of three and
one-third
percent (3 1/3%) for each month after age sixty (60) by which the
Participant's benefit
commencement date precedes his Normal Retirement Date.
Notwithstanding the preceding, for Participants in the Norman Plan on
December 31,
1993, in no event shall the benefit earned as of December 31, 1993 and
payable at an early
retirement date be less than the early retirement benefit the Participant
would have
received determined on the basis of the Actuarial Equivalent reduction
factors for early
retirement under the provisions of the Norman Plan as in effect on December
31, 1993.
(c) Disability Retirement Benefit - Section 3.04
For the purpose of adjustments in this Section - the same basis used
for Available
Options - Section 4.02.
(d) Relationship to Retirement Income under Pre-existing Plans -
Section 3.06
For the purpose of adjustments in this Section - the same basis used
for Available
Options - Section 4.02.
4. NORMAL AND OPTIONAL METHODS OF RETIREMENT BENEFIT PAYMENTS --
ARTICLE IV
(a) Available Options - Section 4.02
Actuarial Equivalent shall mean having an equivalent value computed
using the UP-
84 Mortality Table on a unisex basis adjusted for a forty percent (40%)
female content in
the participating group and an interest rate equal to the rate used by the
Pension Benefit
Guaranty Corporation (PBGC) to value immediate annuities for plans
terminating as of
the first day of the Plan Year that contains the proposed distribution or
benefit
commencement date.
(b) Lump Sum Payments - Section 4.05
Actuarial Equivalent for lump sum payments shall be based on an
interest rate equal
to the interest rates published by the PBGC to value immediate and deferred
annuities for
plans terminating as of the first day of the Plan Year coinciding with or
immediately
preceding the date of distribution, and on the UP-84 Mortality Table on a
unisex basis
adjusted for a forty percent (40%) female content in the participating group.
Effective January 1, 1995, Actuarial Equivalent for lump sum payments
shall be
based on an interest rate equal to the annual rate of interest on thirty (30)
year Treasury
securities for the month before the first day of the Plan Year coinciding
with or
immediately preceding the date of distribution, and on the 1983 Group Annuity
Mortality
Table using a blend of fifty percent (50%) of the male mortality rate and
fifty percent
(50%) of the female mortality rate.
5. BENEFITS ON TERMINATION OF EMPLOYMENT - ARTICLE V
(a) Payment of Deferred Vested Benefit - Section 5.02
For the purpose of adjustments in this Section - the same basis used
for Early
Retirement Benefit - Section 3.03.
6. BENEFITS ON DEATH - ARTICLE VI
(a) Death After Eligibility for Early Retirement - Section 6.01
For the purpose of adjustments in the second paragraph of this Section
- - the same
reduction factors used for Early Retirement Benefit - Section 3.03, and the
same basis used
for Available Options - Section 4.02.
For the purpose of determining the value in the fourth paragraph of
this Section - the
same basis used for Lump Sum Payments - Section 4.05.
(b) Death After Eligibility for Normal Retirement - Section 6.02
For the purpose of adjustments in the second paragraph of this Section
- - the same
basis used for Available Options - Section 4.02.
For the purpose of determining the value in the fourth paragraph of
this Section - the
same basis used for Lump Sum Payments - Section 4.05.
(c) Death After Eligibility for Disability Retirement - Section 6.03
For the purpose of adjustments in the second paragraph of this Section
- - the same
reduction factors used for Early Retirement Benefit - Section 3.03, and the
same basis used
for Available Options - Section 4.02.
For the purpose of determining the value in the fourth paragraph of
this Section - the
same basis used for Lump Sum Payments - Section 4.05.
(d) Death of a Vested Participant - Section 6.04
For the purpose of adjustments in the first paragraph of Section
6.04(a) - the same
reduction factors used for Early Retirement Benefit - Section 3.03, and the
same basis used
for Available Options - Section 4.02.
For the purpose of adjustments in the first paragraph of Section
6.04(b) - the same
basis used for Available Options - Section 4.02.
For the purpose of determining the value in the third paragraph of
this Section - the
same basis used for Lump Sum Payments - Section 4.05.
7. MAXIMUM BENEFITS AND REQUIRED DISTRIBUTION OF BENEFITS --
ARTICLE IX
For purposes of Section 9.01(a) and the first paragraph of Sections
9.01(b) and 9.01(c),
the mortality basis used shall be the same basis used for Available Options
- - Section 4.02.
The early retirement factors described in Section 9.01(b) shall be the
same reduction
factors used for Early Retirement Benefit - Section 3.03.
For purposes of Section 9.01(h)(ii) - the same basis used for
Available Options -
Section 4.02.
8. AMENDMENT AND TERMINATION OF THE PLAN - ARTICLE X
For purposes of Sections 10.03(a)(iii), 10.03(d) and 10.04 - the same
basis used for
Available Options - Section 4.02.
9. TOP HEAVY PLAN PROVISIONS - ARTICLE XII
For purposes of Section 12.06 - the same basis used for Available
Options - Section
4.02.
10. MISCELLANEOUS - ARTICLE XIII
For the purpose of Section 13.06(c)(F) - the same basis used for
Available Options -
Section 4.02.
<PAGE>
EXCERPTS FROM THE MINUTES
OF
STANLEY FURNITURE COMPANY,
INC.
BOARD OF DIRECTORS MEETING
HELD
ON THE DAY OF
, 1995
RESOLUTION
At a meeting of the Board of Directors of Stanley Furniture Company,
Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"), held on the
day of
, 1995, the following resolution was unanimously
adopted:
WHEREAS, the Board of Directors of the Corporation approved the adoption
of The
Stanley Retirement Plan (hereinafter referred to as the "Plan"), as amended
and restated
effective January 1, 1989; and
WHEREAS, the Corporation reserved the right in Article X of the Plan to
amend said
Plan by action of its Board of Directors; and
WHEREAS, this Board is now desirous of approving a formal amendment to
the Plan in
order to make certain substantive, technical and administrative changes
therein.
NOW, THEREFORE, BE IT RESOLVED that the Plan is hereby amended and
restated in its entirety to the form constituted by the amended and restated
working copy
of the January 1, 1989 draft of the document which incorporates Amendment No.
I and
several other proposed changes, a copy of which is attached to and made a
part of these
minutes, and is hereby approved and adopted effective January 1, 1989.
* * * * * * * * * * * * *
I, ,
Secretary, hereby certify that the foregoing
is a true and exact copy of the Resolution adopted by the Board of Directors
of the
Corporation at a meeting of the said Board held on the day of
,
1995, and entered upon the regular Minute Book of said Corporation and is now
in full
force and effect. I further certify that the Board of Directors of the
Corporation at the
time of adoption of said Resolution had full powers and lawful authority to
adopt said
Resolution.
Attest: STANLEY FURNITURE COMPANY,
INC.
By
Secretary, Board of
Directors
<PAGE>
FIRST AMENDMENT
TO
SUPPLEMENTAL RETIREMENT PLAN
OF
STANLEY FURNITURE COMPANY, INC.
AMENDMENT, made this 15th day of December, 1995 to the
Supplemental Retirement Plan of Stanley Furniture Company, Inc.
(hereinafter called the "Plan").
Pursuant to the provisions of Article VII of the Plan and the
action of the Company's Board of Directors in effectuation thereof,
the Plan is hereby amended by adding Section 7.03 - Freezing of
Benefits effective January 1, 1996:
7.03 Freezing of Benefits:
(a) Effective December 31, 1995 no Participant shall accrue
any additional benefits under the Plan and the benefit pursuant to
Articles II and III shall be determined as of December 31, 1995.
(b) When a Participant retires (or could have retired) under
Article III of the Basic Retirement Plan, the supplemental
retirement benefit, payable in the form as provided in Section 4.01
or 4.02 shall commence under the Plan.
(c) If a Participant dies after December 31, 1995 and before
the termination (as distinguished from the freezing of benefit
accruals) and distribution of benefits under the Basic Retirement
Plan, his surviving spouse shall be entitled to commence receiving
the preretirement benefit computed under Section 3.02 when the
surviving spouse's preretirement benefit would have been payable
under the Basic Retirement Plan.
(d) If a Participant dies after the termination (as
distinguished from the freezing of benefit accruals) and
distributions of benefits under the Basic Retirement Plan, the
provisions of Article III shall not apply.
IN WITNESS WHEREOF, and as evidence of the adoption of this
Amendment, the Company has caused the same to be executed by its
duly authorized officers and its corporate seal to be affixed
hereto as of the day and year first written above.
ATTEST: STANLEY FURNITURE COMPANY, INC.
By
R. Gary Armbrister Albert L. Prillaman
Assistant Secretary Treasurer President, CEO and Chairman
RGA 12/13/95 G1stAmen
<PAGE>
AMENDMENT NO. 1
THE STANLEY RETIREMENT PLAN
WHEREAS, Stanley Furniture Company (hereinafter referred to as the
"Corporation") established The Stanley Retirement Plan
(hereinafter referred to as the "Plan") amended and restated effective
January 1, 1989, as adopted on April 20, 1995; and
WHEREAS, the Corporation reserved the right in Article X of the Plan to amend
said Plan by action of its Board of Directors;
and,
WHEREAS, the Corporation now desires to amend the Plan in order to make
certain substantive, technical and administrative
changes therein and to cease benefit accruals effective December 31, 1995.
NOW, THEREFORE, the Plan is amended, effective December 31, 1995, in the
following respects:
1.Section 1.01 of Article I is amended by the addition of Section 1.01 (c) as
follows:
"Effective as of December 31, 1995, all Accrued Benefits under the Plan shall
cease. Participants shall accrue no additional
benefits under the Plan after such date."
2.Section 2.01 of Article II is amended by the addition of the following
paragraph at the conclusion thereof:
"Effective as of December 31, 1995, Employees, who are not Participants in
the Plan, shall not be eligible to participate in the
Plan after such date."
3.Section 3.01 of Article III is amended by the addition of Section 3.01 (d)
as follows:
Cessation of Benefit Accruals - Notwithstanding the foregoing, effective as
of December 31, 1995, all Accrued Benefits under
the Plan shall cease and participants shall accrue no additional
benefits under the Plan after such date."
4.Section 4.02 (c) of Article IV is amended by the addition of the following
paragraph at the conclusion thereof:
"Commencing January 1, 1996, a Participant who is eligible to retire pursuant
to Sections 3.01, 3.02, 3.03 or 3.04 may elect to
receive his retirement benefit in the form of a lump sum.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Amendment No. I to the
Plan to be executed by its President and
its corporate seal to be affixed by the Assistant Secretary, both duly
authorized, effective as indicated herein, but executed this
15th day of December, 1995.
Attest: (SEAL) STANLEY FURNITURE
COMPANY
By
R. Gary Armbrister Albert L. Prillaman
Assistant Secretary Treasurer President, CEO and
Chairman of the Board
MSWORD\AMENDMEN.1
WPCD0.PRS
STANLEY 401(k)
RETIREMENT SAVINGS PLAN
Stanley Interiors Corporation (the "Company"), a Delaware
corporation, established the Stanley Interiors Associates' Savings
and Protection Plan, effective September 1, 1984, to provide
benefits to those of its Associates and the Associates of its
affiliates who were eligible to participate as provided therein.
Effective December 31, 1986, the Raleigh Road Furniture
Corporation Savings and Protection Plan merged into the plan. The
plan was amended and restated effective January 1, 1987. Effective
November 9, 1992, the Company changed its name and the name of the
plan to "Stanley Furniture Company, Inc." and "Stanley Furniture
Company, Inc. Associates' Savings and Protection Plan,"
respectively.
The plan was amended and restated effective January 1, 1993,
with 2 amendments thereon, to incorporate (1) the provisions of the
Tax Reform Act of 1986 and subsequent legislation in effect after
January 1, 1987 and (2) current administrative procedures.
The Company hereby amends and completely restates the plan
effective January 1, 1996, to effectuate changes in administrative
procedures that include, but are not limited to, (1) a change in
Trustee; (2) the addition of a matching contribution for all
eligible Associates; (3) the provision for a separate benefit
structure with respect to the Company matching contribution for the
benefit of certain Associates ("Transition Group Associates") who
were most affected by the freezing of accruals in The Stanley
Retirement Plan; (4) the addition of a profit sharing feature with
a vesting schedule and forfeiture policy thereon; and (5) a change
in the name of the plan to "Stanley 401(k) Retirement Savings Plan"
(the "Plan"). The amended and restated Plan is effective subject
to receipt of an Internal Revenue Service determination that the
Plan as amended and restated meets all applicable requirements of
Section 401(a) of the Code (as defined in subsection 1(h)), that
employer contributions thereto remain deductible under Section 404
of the Code and that the fund maintained with respect thereto is
tax exempt under Section 501(a) of the Code.1. DEFINITIONS
(a) "ACCOUNT" shall mean on any date of determination the
value of a Participant's share of the Fund.
(i) "SALARY DEFERRAL ACCOUNT" shall mean the portion of the
Participant's Account derived from Participating Company
contributions under subsection 4(a). (ii) "ROLLOVER ACCOUNT"
shall mean the portion of the Participant's Account derived from
amounts transferred to the Fund under subsection 4(h). (iii)
"MATCHING CONTRIBUTION ACCOUNT" shall mean the portion of the
Participant's Account derived from Participating Company matching
contributions under subsection 4(e)(i).
(iv) "AUTOMATIC BASIC CONTRIBUTION ACCOUNT" shall mean the
portion of the Participant's Account derived from Participating
Company automatic basic contributions under subsection 4(e)(ii).
(b) "ADMINISTRATIVE COMMITTEE" or "COMMITTEE" shall mean the
individual or group of individuals designated pursuant to
subsection 2(b) to control and manage the operation and
administration of the Plan to the extent set forth herein.
(c) "ADMINISTRATOR" or "PLAN ADMINISTRATOR" shall mean the
Company.
(d) "ANNUAL ADDITIONS" shall mean the sum for any Limitation
Year of (i) Participating Company contributions, (ii) Associate
contributions (if any), (iii) forfeitures and (iv) amounts
described in Sections 415(l)(1) and 419A(d)(2) of the Code, which
are allocated to the account of a Participant under the terms of a
plan subject to Section 415 of the Code. "Annual Additions" shall
include excess contributions as defined in Section 401(k)(8)(B) of
the Code, excess aggregate contributions as defined in Section
401(m)(6)(B) of the Code and excess deferrals as described in
Section 402(g) of the Code, regardless of whether such amounts are
distributed or forfeited. "Annual Additions" shall not include
rollover contributions made under subsection 4(h).
(e) "ASSOCIATE" shall mean each person employed by a
Participating Company or a Related Entity. The term "Associate"
shall also include a person who is a "leased employee" with respect
to the Company or Related Entity. No person who is a "leased
employee" shall be eligible to participate in this Plan. "Leased
employee" shall mean any person who provides services to the
Company or Related Entity if:
(i) such services are provided pursuant to an agreement
between the Company or Related Entity and any leasing organization;
(ii) such person has performed services for the Company or
Related Entity (or for the Company or Related Entity and any
related person within the meaning of Section 414(n)(6) of the Code)
on a substantially full-time basis for a period of at least 1 year;
and Associates in the business field of the Company or Related Entity.
A leased employee shall be treated as an Associate of the
Company or Related Entity; however, contributions or benefits
provided by the leasing organization which are attributable to
services performed for the Company or Related Entity shall be
treated as provided by the Company or Related Entity. A leased
employee shall not be treated as an Associate if such leased
employee is covered by a money purchase pension plan of the leasing
organization, and the number of leased employees does not
constitute more than 20% of the Company or Related Entity's non-
highly compensated work force as defined by Section 414(n)(5)(C) of
the Code. The money purchase pension plan of the leasing
organization must provide benefits equal to or greater than: (1)
a non-integrated company contribution rate of at least 10% of
compensation, (2) immediate participation, and (3) full and
immediate vesting.
(f) "BOARD OF DIRECTORS" shall mean the Board of Directors of
the Company.
(g) "BREAK IN SERVICE" shall mean a Period of Severance.
(h) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(i) "COMPANY" shall mean Stanley Furniture Company, Inc., a
Delaware corporation. Prior to November 9, 1992, "Company" meant
Stanley Interiors Corporation.
(j) "COMPENSATION" shall mean the total cash remuneration for
services paid to an Associate by a Participating Company in a Plan
Year as reported on Form W-2, plus any amounts allocated to an
Associate's Salary Deferral Account in accordance with his election
authorizing that amounts be withheld from his remuneration and be
credited thereto, but excluding reimbursements or other expense
allowances, fringe benefits (cash and noncash), moving expenses,
and welfare benefits. "Compensation" shall not include other
deferred compensation in connection with any other plan of deferred
compensation maintained by a Participating Company. The foregoing
definition of Compensation is intended to satisfy the requirements
of 1.414(s)-1(c).
For Plan Years beginning on or after January 1, 1994, the
amount of an Associate's Compensation that may be taken into
account under the Plan shall not exceed $150,000, or an adjusted
amount determined pursuant to Sections 401(a)(17) and 415(d) of the
Code. For Plan Years beginning before January 1, 1994, the amount
of an Associate's Compensation that may be taken into account under
the Plan shall not exceed $200,000, or an adjusted amount
determined pursuant to Sections 401(a)(17) and 415(d) of the Code.
In determining the compensation of an Associate for purposes shall apply,
except in applying such rules, the term "family" shall
include only the spouse of the Associate and any lineal descendants
of the Associate who have not attained age 19 before the close of
the year.
(k) "DISABILITY" OR "DISABLED" shall mean Disability
resulting from a demonstrable injury or disease which will
permanently, continuously and wholly prevent an Associate who is a
Participant from engaging in any occupation or performing any work
for remuneration or profit; provided, that this term shall not
include any injury or disease which (i) was contracted, suffered or
incurred while the Participant engaged in, or resulted from his
having engaged in, a criminal enterprise, (ii) was intentionally
self-inflicted, (iii) arose out of service in the armed forces of
any country, or (iv) arose as a result of employment with or while
working for a Related Entity (other than a Participating Company).
In determining whether or not a Participant is Disabled, the
Committee may require the Participant to submit to a physical
examination at any reasonable time or times by 1 or more physicians
approved by the Committee. Refusal by a Participant to submit to
any physical examination shall be deemed to constitute recovery
from Disability for purposes of the Plan.
(l) "EARLY RETIREMENT DATE" shall mean any date after the
date on which a Participant attains age 55, provided he has
completed 10 one-year Periods of Service with a Participating
Company.
(m) "EFFECTIVE DATE" of this amendment and restatement shall
mean January 1, 1996. The original Effective Date of this Plan
shall mean September 1, 1984. The Plan was amended and restated in
1987 and 1993.
(n) "ENTRY DATE" shall mean the first day of each Plan Year
and the first day of the fourth, seventh and tenth months of the
Plan Year.
(o) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(p) "FAMILY MEMBER" as defined in Code Section 414(q)(6)(B)
shall mean the spouse, lineal ascendants and descendants and the
spouses of such lineal ascendants or descendants, of either a 5%
owner of a Participating Company as defined in Section 416(i) of
the Code, or one of the top 10 paid Associates of a Participating
Company.
(q) "FIDUCIARY" shall mean a person who, with respect to the
Plan, (i) exercises any discretionary authority or discretionary
control respecting management of the Plan or exercises any
authority or control with respect to management or disposition of
the Plan's assets, (ii) renders investment advice for a fee or
other compensation, direct or indirect, with respect to any monies
responsibility to do so, or (iii) has any discretionary authority
or discretionary responsibility in the administration of the Plan.
(r) "FUND" shall mean the assets of the Plan. All Investment
Categories shall be part of the Fund.
(s) "HIGHLY COMPENSATED ASSOCIATE" includes active Highly
Compensated Associates and former Highly Compensated Associates.
An active Highly Compensated Associate includes any Associate
who performs services for a Participating Company during the
"determination year" and who, during the "look-back year":
(i) received Compensation from a Participating Company in
excess of $100,000 (as adjusted after the 1996 Plan Year pursuant
to Section 415(d) of the Code);
(ii) received Compensation from a Participating Company in
excess of $66,000 (as adjusted after the 1996 Plan Year pursuant to
Section 415(d) of the Code) and was a Participant of the "top-paid
group" for such year; or (iii) was an officer of a
Participating Company and received Compensation during such year
that is greater than 50% of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code.
The term Highly Compensated Associate also includes:
(iv) Associates who are both described in the preceding
sentence if the term "determination year" is substituted for the
term "look-back year" and the Associate is one of the 100
Associates who received the most Compensation from a Participating
Company during the "determination year;" and (v) Associates
who are 5% owners at any time during the "look-back year" or
"determination year."
For purposes of (ii) above, an Associate is a member of the
"top-paid group" for the "determination year" or "look-back year"
if such Associate is in the group consisting of the top 20% of
Associates when ranked on the basis of Compensation paid during
such year.
If no officer has satisfied the Compensation requirement of
(iii) above during either a "determination year" or "look-back
year," the highest paid officer for such year shall be treated as
a Highly Compensated Associate.
For this purpose, the "determination year" shall be the Plan
Year. The "look-back year" shall be the 12-month period
immediately preceding the determination year. The Company may
elect, however, to make the look-back year calculation for a
determination year on the basis of the calendar year ending with or
within the applicable determination year as provided for in
applicable Regulations. Such election shall apply to all plans of
the Company.
who separated from service (or was deemed to have separated) prior
to the determination year, performs no service for a Participating
Company during the determination year, and was an active Highly
Compensated Associate for either the separation year or any
determination year ending on or after the Associate's 55th
birthday.
If an Associate is, during a determination year or look-back
year, a Family Member of either a 5% owner who is an active or
former Associate or a Highly Compensated Associate who is one of
the 10 most Highly Compensated Associates ranked on the basis of
Compensation paid by a Participating Company during such year, then
the Family Member and the 5% owner or top 10 Highly Compensated
Associate shall be aggregated. In such case, the Family Member and
5% owner or top 10 Highly Compensated Associate shall be treated as
a single Associate receiving Compensation and Plan contributions or
benefits equal to the sum of such Compensation and contributions or
benefits of the Family Member and 5% owner or top 10 Highly
Compensated Associate.
The determination of who is a Highly Compensated Associate,
including the determinations of the number and identity of
Associates in the top-paid group, the top 100 Associates, the
number of Associates treated as officers and the Compensation that
is considered, will be made in accordance with Section 414(q) of
the Code and the regulations thereunder. The determination of
Highly Compensated Associates may be made in accordance with
Revenue Procedure 93-42 (and any subsequent administrative
guidance).
(t) "HOUR OF SERVICE" shall mean each hour (i) for which an
Associate is directly or indirectly paid, or entitled to payment,
by a Participating Company or a Related Entity for the performance
of duties or (ii) for which back pay, irrespective of mitigation of
damages, has been either awarded or agreed to by a Participating
Company or a Related Entity. These hours shall be credited to the
Associate for the period or periods in which the duties were
performed or to which the award or agreement pertains irrespective
of when payment is made. For purposes of this subsection, the
regulations issued by the Secretary of Labor at 29 CFR 2530.200b -
2(b) and (c) are incorporated by reference. Nothing herein shall
be construed as denying an Associate credit for an Hour of Service
if credit is required by separate federal law.
(u) "INVESTMENT CATEGORY" shall mean any separate investment
fund which is made available under the terms of the Plan.
(v) "INVESTMENT MANAGER" shall mean any Fiduciary who:
(i) has the power to manage, acquire, or dispose of any asset
of the Plan; (ii) is:
(A) registered as an investment adviser under the
Investment Advisers Act of 1940;
(B) a bank, as defined in that Act; or
(C) an insurance company qualified to perform services
described in subsection 1(v)(i) above under the laws of more than
1 state; and
(iii) has acknowledged in writing that he is a Fiduciary with
respect to the Plan.
(w) "LIMITATION YEAR" shall mean the consecutive 12-month
period commencing on January 1 and ending on December 31.
(x) "PARTICIPANT" shall mean each Associate of a
Participating Company who satisfies the requirements for
participation under Section 3 hereof or who has an Account held
under the Plan.
(y) "NORMAL RETIREMENT DATE" shall mean the date on which a
Participant attains age 65.
(z) "PARTICIPATING COMPANY" shall mean any Related Entity
with respect to the Company which adopts this Plan pursuant to
Section 16. The term shall also include the Company, unless the
context otherwise requires.
(aa) "PERIOD OF SERVICE" shall mean the period of time
commencing on the date on which an Associate first is credited with
an Hour of Service or, if applicable, the first date following a
Period of Severance on which an Associate is credited with an Hour
of Service, and ending on the next following Severance Date.
Notwithstanding the foregoing, for purposes of eligibility to
participate under Section 3 and calculation of nonforfeitable
rights under subsection 8(d), a Period of Severance of less than 1
year shall be included in a Period of Service. Furthermore, Period
of Service shall include the period of time during which the
Associate is absent from work, up to the first anniversary of the
date on which such absence began, (i) by reason of the Associate's
pregnancy, (ii) by reason of the birth of the Associate's child,
(iii) by reason of the placement of a child with such Associate in
connection with an adoption of such child by the Associate, (iv)
for purposes of caring for a child for a period beginning
immediately following birth or placement, or (v) by reason of jury
or military duty.
(bb) "PERIOD OF SEVERANCE" shall mean the period of time
commencing on an Associate's Severance Date and ending on the date
on which the Associate first again is credited with an Hour of
Service.
(cc) "PLAN" shall mean the Stanley 401(k) Retirement Savings
Plan as set forth herein as of the Effective Date and the same as
may be amended from time to time. Prior to January 1, 1996, the
Plan was entitled, "Stanley Furniture Company, Inc. Associates'
Savings and Protection Plan." Prior to November 9, 1992, the Plan."
(dd) "PLAN YEAR" shall mean the consecutive 12-month period
commencing on January 1 and ending on December 31.
(ee) "RELATED ENTITY" shall mean (i) all corporations which
are members with a Participating Company in a controlled group of
corporations within the meaning of Section 1563(a) of the Code,
determined without regard to Sections 1563(a)(4) and (e)(3)(c) of
the Code, (ii) all trades or businesses (whether or not
incorporated) which are under common control with a Participating
Company as determined by regulations promulgated under Section
414(c) of the Code, (iii) all trades or businesses which are
members of an affiliated service group with a Participating Company
within the meaning of Section 414(m) of the Code and (iv) any other
entity required to be aggregated with a Participating Company in
accordance with regulations under Section 414(o) of the Code;
provided, however, for purposes of Section 5, the definition shall
be modified to substitute the phrase "more than 50%" for the phrase
"at least 80%" each place it appears in Section 1563(a)(1) of the
Code. Furthermore, for purposes of crediting Hours of Service for
eligibility to participate and vesting, Service performed as a
leased employee, within the meaning of Section 414(n) of the Code,
of a Participating Company or a Related Entity shall be treated as
Service performed for a Participating Company or a Related Entity.
An entity is a Related Entity only during those periods in which it
is included in a category described in this subsection. The term
"Related Entity" shall also include the Company's predecessor,
Stanley Interiors Corporation.
(ff) "SERVICE" shall mean the sum of an Associate's Periods of
Service. Service is measured in completed years and days, where
365 days of Service equal 1 year of Service.
(gg) "SEVERANCE DATE" shall mean the earlier of (i) the date
an Associate quits, is discharged, retires or dies or (ii) the
first anniversary of the date an Associate is absent from the
employ of the Company and all Related Entities for any reason other
than an approved leave of absence granted in writing by the Company
according to a uniform rule applied without discrimination provided
the Associate returns to the employ of the Company or a Related
Entity upon completion of the leave. Notwithstanding the
foregoing, an Associate who terminates Service to enter the
military service of the United States shall not suffer a Severance
Date as of such date provided (i) such Associate's rights are
protected by federal law and (ii) such Associate returns to
employment with the Company or a Related Entity within the period
required by law for preservation of his rights. Under such
circumstances, an Associate shall receive credit for Service for
his entire period of absence. If the Associate does not return to
Service within the time prescribed by law, then the date he
terminated employment shall be his Severance Date. In addition,
for purposes of determining whether a Break in Service has occurred
Date until the second anniversary of the date on which such
Associate is absent from work (i) by reason of the Associate's
pregnancy, (ii) by reason of the birth of the Associate's child,
(iii) by reason of the placement of a child with such Associate in
connection with an adoption of such child by the Associate or (iv)
for purposes of caring for a child for a period beginning
immediately following birth or placement.
(hh) "TRANSITION GROUP ASSOCIATE" shall mean an Associate who,
as of December 31, 1995, had completed a 1-year Period of Service
with the Company, had not attained age 65, and whose age, when
added to his Periods of Service, equals or exceeds 75. An
Associate who is a Transition Group Associate on December 31, 1995
shall no longer be classified as a Transition Group Associate upon
the attainment of age 65.
(ii) "TRUST AGREEMENT" shall mean the agreement between the
Company and the Trustee under which the Fund is held.
(jj) "TRUSTEE" shall mean such person, persons or corporate
fiduciary designated pursuant to subsection 6(a) to manage and
control the Fund pursuant to the terms of the Plan and the Trust
Agreement.
(kk) "VALUATION DATE" shall mean the last business day of the
Plan Year and the last business day of the third, sixth and ninth
months in the Plan Year.
2. ADMINISTRATION OF THE PLAN
(a) ERISA REPORTING AND DISCLOSURE BY ADMINISTRATOR. The
Administrator shall file all reports and distribute to Participants
and beneficiaries reports and other information required under
ERISA and the Code.
(b) COMMITTEE. The Company, through its Board of Directors,
shall designate an Administrative Committee which shall have the
authority to control and manage the operation and administration of
the Plan. If the Committee consists of more than 2 members, it
shall act by majority vote. The Committee may (i) delegate all or
a portion of the responsibilities of controlling and managing the
operation and administration of the Plan to 1 or more persons and
(ii) appoint agents, investment advisers, counsel, or other
representatives to render advice with regard to any of its
responsibilities under the Plan. The Board of Directors may
remove, with or without cause, the Committee or any Committee
member. The Committee may remove, with or without cause, any
delegate or adviser designated by it.
(c) MULTIPLE CAPACITIES. Any person may serve in more than
1 fiduciary capacity (including service both as Trustee and
Committee member).
(d) COMMITTEE POWERS. The responsibility to control and
manage the operation and administration of the Plan shall include,
but shall not be limited to, the performance of the following acts:
(i) the filing of all reports required of the Plan;
(ii) the distribution to Participants and beneficiaries of all
reports and other information required of the Plan;
(iii) the keeping of complete records of the administration of
the Plan; (iv) the promulgation of rules and regulations for
the administration of the Plan consistent with the terms and
provisions of the Plan;
(v) the interpretation of the Plan including the
determination of any questions of fact arising under the Plan and
the making of all decisions required by the Plan. The Committee's
interpretation of the Plan and any actions and decisions taken in
good faith by the Committee based on its interpretation shall be
final and conclusive. The Committee may correct any defect, or
supply any omission, or reconcile any inconsistency in the Plan in
such manner and to such extent as shall be expedient to carry the
Plan into effect and shall be the sole judge of such expediency;
and
(vi) the amendment of the Plan and the appointment or removal
of the Trustee, if so directed by the Board of Directors of the
Company.
(e) ALLOCATION OF FIDUCIARY RESPONSIBILITY. The Board of
Directors, the Administrator, the Committee, the Trustee and the
Investment Manager (if any) possess certain specified powers,
Trust Agreement. It is intended under this Plan and the Trust
Agreement that each be responsible solely for the proper exercise
of its own functions and that each not be responsible for any act
or failure to act of another, unless otherwise responsible as a
breach of its fiduciary duty or for breach of duty by another
Fiduciary under ERISA's rules of co-fiduciary responsibility. In
general:
(i) the Board of Directors, by resolution at their meetings
or by written consent or by any other process permitted under
relevant State law, is responsible for appointing and removing the
Committee and the Trustee and for amending or terminating the Plan
and the Trust Agreement; provided, however, that the Board of
Directors may from time to time authorize the Committee to amend
the Plan and Trust Agreement and to appoint or remove a Trustee;
(ii) the Committee is responsible for administering the Plan,
for adopting such rules and regulations as in the opinion of the
Committee are necessary or advisable to implement and administer
the Plan and to transact its business, for discharging the
statutory duties of a plan administrator under ERISA and the Code,
and for providing a procedure for carrying out a funding policy and
method consistent with the objectives of the Plan and the
requirements of Title I of ERISA and the Code;
(iii) the Trustee and the Investment Manager are responsible
for the management and control of the respective portions of the
Fund over which they have control to the extent provided in the
Trust Agreement; and (iv) the Fiduciary appointing an
Investment Manager is responsible for the appointment and retention
of the Investment Manager.
(f) CLAIMS. If, pursuant to the rules, regulations or other
interpretations of the Plan, the Committee denies the claim of a
Participant or beneficiary for benefits under the Plan, the
Committee shall provide written notice, within 90 days after
receipt of the claim, setting forth in a manner calculated to be
understood by the claimant:
(i) the specific reasons for such denial;
(ii) the specific reference to the Plan provisions on which
the denial is based;
(iii) a description of any additional material or information
necessary to perfect the claim and an explanation of why such
material or information is needed; and
(iv) an explanation of the Plan's claim review procedure and
the time limitations of this subsection applicable thereto.
A Participant or beneficiary whose claim for benefits has been
denied may request review by the Committee of the denied claim by
notifying the Committee in writing within 60 days after receipt of
the notification of claim denial. As part of said review
procedure, the claimant or his authorized representative may
review pertinent documents and submit issues and comments to the
Committee in writing. The Committee shall render its decision to
the claimant in writing in a manner calculated to be understood by
for review, unless special circumstances require an extension of
time, in which case decision shall be rendered as soon after the
60-day period as possible, but not later than 120 days after
receipt of the request for review. The decision on review shall
state the specific reasons therefore and the specific Plan
references on which it is based.
(g) FIDUCIARY COMPENSATION. A Committee member, delegate, or
adviser who already receives full-time pay from the Company or a
Related Entity shall serve without compensation for his services as
such, but he shall be reimbursed pursuant to subsection 2(h) for
any reasonable expenses incurred by him in the administration of
the Plan. A Committee member, delegate, or adviser who is not
already receiving full-time pay from the Company may be paid such
reasonable compensation as shall be agreed upon.
(h) PLAN EXPENSES. All expenses of administration of the
Plan may be paid by the Company. If the Company does not pay such
expenses, then appropriate administrative expenses shall be paid
out of the Fund, as determined by the Committee.
(i) FIDUCIARY INSURANCE. If the Committee so directs, the
Plan shall purchase insurance to cover the Plan from liability or
loss occurring by reason of the act or omission of a Fiduciary
provided such insurance permits recourse by the insurer against the
Fiduciary in the case of a breach of duty by such Fiduciary.
(j) INDEMNIFICATION. The Company shall indemnify and hold
harmless to the maximum extent permitted by its by-laws each
Fiduciary who is an Associate or who is an officer or director of
any Participating Company or any Related Entity from any claim,
damage, loss or expense, including litigation expenses and
attorneys' fees, resulting from such person's service as a
Fiduciary of the Plan provided the claim, damage, loss or expense
does not result from the Fiduciary's gross negligence or
intentional misconduct.
3. PARTICIPATION IN THE PLAN
(a) INITIAL ELIGIBILITY. Each and every Associate of a
Participating Company eligible to participate in this Plan on
December 31, 1995 shall continue to be eligible to participate in
this Plan as amended and restated effective January 1, 1996. Each
and every other Associate of a Participating Company not excluded
under subsection 3(b) shall be eligible and shall qualify to
participate in the Plan on the Entry Date next following completion
by such Associate of a 1-year Period of Service, provided he is
then employed by a Participating Company.
(b) INELIGIBLE ASSOCIATES
(i) COLLECTIVE BARGAINING AGREEMENT. No Associate whose
terms and conditions of employment are determined by a collective
bargaining agreement between Associate representatives and a
Participating Company shall be eligible or qualify for
participation unless such collective bargaining agreement provides
to the contrary, in which case such Associate shall be eligible or
shall qualify for participation upon compliance with such
provisions for eligibility or participation as such agreement shall
provide; except that no Associate who has selected, or in the
future selects, a union shall become ineligible during the period
between his selection of the union and the execution of the first
collective bargaining agreement which covers him.
(ii) CERTAIN OUTLET STORE ASSOCIATES. No person employed as
an outlet store clerk shall be eligible to participate in the Plan.
(iii) CERTAIN RELATED ENTITIES. No Associate of a Related
Entity which is not a Participating Company shall be eligible to
participate in the Plan. (iv) NONRESIDENT ALIENS. No
Associate who is a nonresident alien and who receives no earned
income (within the meaning of Section 911(d)(2) of the Code) from
a Participating Company which constitutes income from sources
within the United States (within the meaning of Section 861(a)(3)
of the Code) shall be eligible to participate in the Plan.
(c) COMMENCEMENT OF PARTICIPATION. An Associate who
satisfies all the requirements for eligibility under subsection
3(a) and who is not excluded under subsection 3(b) shall become a
Participant on the earlier of the (i) Entry Date following his
timely election authorizing amounts be withheld from his
Compensation and be credited to his Salary Deferral Account or (ii)
the Entry Date on which he first became eligible to share in
Participating Company contributions for the Plan Year in which the
Entry Date occurs.
(d) TERMINATION AND REQUALIFICATION. An Associate who has
satisfied the applicable service requirement of subsection 3(a) and
who subsequently becomes ineligible for any reason for a period of
less than 5 one-year Periods of Severance shall requalify for
participation on the date on which he is next credited with an Hour
of Service in an eligible job classification. An Associate who has
participation on the date he again satisfies the requirements of
subsection 3(a) hereof.
(e) TERMINATION OF PARTICIPATION. An Associate who becomes
a Participant shall remain a Participant as long as he has an
Account held under the Plan.
4. CONTRIBUTIONS
(a) SALARY DEFERRAL CONTRIBUTIONS. Each Associate who
becomes eligible to participate may elect that his Participating
Company contribute on his behalf any percentage of his
Compensation, as he shall elect, subject to the following rules:
(i) AMOUNT. The amount of contribution which may be
specified shall be determined by the Committee and may be changed
from time to time. Until such time that the Committee announces a
different maximum or minimum, a Participant may specify an amount
equal to any percentage of his Compensation, not to exceed 16%
thereof if the Participant is a Transition Group Associate and not
to exceed 18% thereof if the Participant is not a Transition Group
Associate, but in no event less than 1% thereof.
(ii) CHANGE. A Participant may change the specified
percentage prospectively from time to time by making a revised
election; the frequency with which such changes are allowed shall
be specified in rules established by the Committee, which rules
shall permit a change no less often than annually. (iii)
SUSPENSION. A Participant may suspend his election at any time.
(iv) SALARY REDUCTION. A Participant's pay for a Plan Year
shall be reduced by the amount of the contribution that he elects
for such Plan Year. (v) ELECTION. All elections shall be
made at the time, in the manner, and subject to the conditions
specified by the Committee, which shall prescribe uniform and
nondiscriminatory rules for such elections. The Participating
Companies shall pay over to the Fund all contributions made under
this subsection with respect to a Plan Year no later than the date
specified in the relevant ERISA and Code regulations.
Contributions made by Participating Companies under this subsection
shall be allocated to the Salary Deferral Accounts of the
Participants from whose Compensation the contributions were
withheld in an amount equal to the amount withheld. Such
contributions shall be deemed to be Participating Company
contributions made on behalf of Participants to a qualified cash or
deferred arrangement (within the meaning of Section 401(k)(2) of
the Code).
(b) SALARY DEFERRAL CONTRIBUTION LIMITATIONS. Contributions
under subsection 4(a) shall be limited as provided below.
(i) EXCLUSION LIMIT. The maximum amount of contribution
which any Participant may make in any calendar year under
subsection 4(a) is $9,500 (or such increased annual amount after
the 1996 Plan Year resulting from a cost of living adjustment
pursuant to Sections 402(g)(5) and 415(d)(1) of the Code), reduced
by the amount of elective deferrals by such Participant under all
other plans, contracts or arrangements of any Participating Company
or Related Entity. If the contribution under subsection 4(a) for
a Participant for any calendar year exceeds $9,500 (or such
increased annual amount after the 1996 Plan Year resulting from an
adjustment described above), the Committee shall direct the Trustee
allocable thereto, as calculated in accordance with subsection
4(d)(iv)) to the Participant not later than April 15 following the
close of such calendar year. If (A) a Participant participates in
another plan which includes a qualified cash or deferred
arrangement, (B) such Participant contributes in the aggregate more
than the exclusion limit under subsection 4(a) of this Plan and the
corresponding provisions of the other plan and (C) the Participant
notifies the Committee not later than March 1 following the close
of such calendar year of the portion of the excess the Participant
has allocated to this Plan, then the Committee shall direct the
Trustee to distribute to the Participant not later than April 15
following the close of such calendar year the excess amount (plus
any income and minus any loss allocable to such amount) which the
Participant allocated to this Plan.
(ii) DISCRIMINATION TEST LIMITS. The Committee may limit the
maximum amount of contribution for Participants who are Highly
Compensated Associates to the extent it determines that such
limitation is necessary to keep the Plan in compliance with Section
401(a)(4) or Section 401(k)(3) of the Code. Any limitation shall
be effective for all payroll periods following the announcement of
the limitation.
(iii) DISTRIBUTION LIMITATIONS. Amounts attributable to
elective contributions may not be distributed earlier than upon 1
of the following events:
(A) The Associate's retirement, death, Disability or
separation from service;
(B) The termination of the Plan without establishment of a
successor plan;
(C) The Associate's attainment of age 59 1/2 or the
Associate's hardship pursuant to Plan Section 10;
(D) The sale or other disposition by a corporation to an
unrelated corporation which does not maintain the Plan of
substantially all of the assets used in a trade or business, but
only with respect to Associates who continue employment with the
acquiring corporation; or
(E) The sale or other disposition by a corporation of its
interest in a subsidiary to an unrelated entity which does not
maintain the Plan, but only with respect to Associates who continue
employment with the subsidiary.
(c) SALARY DEFERRAL ACCOUNT. The salary deferral
contributions allocated to a Participant, as adjusted for
investment gain or loss and income or expense, constitute such
Participant's Salary Deferral Account. A Participant shall at all
times have a nonforfeitable interest in the Salary Deferral Account
portion of his Account.
(d) COMPLIANCE WITH SALARY DEFERRAL DISCRIMINATION TESTS.
(i) RULE. In no event shall the "average actual deferral
percentage" (as defined below) for Participants who are Highly
Compensated Associates for any Plan Year bear a relationship to the
Highly Compensated Associates which does not satisfy either
subsection (A) or (B) below.
(A) The requirement shall be satisfied for a Plan Year if
the "average actual deferral percentage" for the group of
Participants who are Highly Compensated Associates that are
eligible to make contributions under subsection 4(a) for any
portion of the Plan Year is not more than the "average actual
deferral percentage" of all others who are eligible to make
contributions under subsection 4(a) for any portion of the Plan
Year multiplied by 1.25. (B) The requirement shall be
satisfied for a Plan Year if (1) the excess of the "average actual
deferral percentage" for the Participants who are Highly
Compensated Associates for the Plan Year that are eligible to make
contributions under subsection 4(a) for any portion of the Plan
Year over the "average actual deferral percentage" of all others
who are eligible to make contributions for any portion of the Plan
Year is not more than 2 percentage points and (2) the "average
actual deferral percentage" for Participants who are Highly
Compensated Associates is not more than the "average actual
deferral percentage" of all others eligible to make contributions
under subsection 4(a) for any portion of the Plan Year multiplied
by 2.
(ii) SPECIAL DEFINITION OF PARTICIPANT. For purposes of this
subsection 4(d), the term "Participant" shall mean each Associate
eligible to make contributions under subsection 4(a) at any time
during a Plan Year. Such Participants include:
(A) an Associate who would be a Participant but for the
failure to make required contributions;
(B) an Associate whose right to make elective contributions
has been suspended because of an election (other than certain 1-
time elections) not to participate or a distribution; and
(C) an Associate who cannot make an elective contribution
because of the Code Section 415 limitations.
In the case of an eligible Associate who makes no elective
contributions, the deferral ratio that is to be included in
determining the "actual deferral percentage" is zero.
(iii) REFUND. If the relationship of the "average actual
deferral percentage" does not satisfy subsection 4(d)(i) for any
Plan Year, then the Committee shall direct the Trustee to
distribute the "excess contribution" (as defined below) for such
Plan Year (plus any income and minus any loss allocable thereto as
calculated in accordance with subsection 4(d)(iv)) by the last day
of the following Plan Year to the Highly Compensated Associates on
the basis of the respective portions of the "excess contribution"
attributable to each, as determined under this subsection. If such
excess amounts are distributed more than 2 1/2 months after the
last day of the Plan Year in which such excess amounts arose, a 10%
excise tax will be imposed on the Company or Related Entity
contribution" for any Plan Year is the excess of the aggregate
amount of Participating Company contributions paid over to the Fund
pursuant to subsection 4(a) on behalf of Highly Compensated
Associates for such Plan Year over the maximum amount of such
contributions permitted for Highly Compensated Associates under
subsection 4(d)(i). The portion of the excess contribution
attributable to a Highly Compensated Associate is determined by
reducing contributions made on behalf of Highly Compensated
Associates in order of "actual deferral percentages" for each such
Associate, beginning with the highest of such percentages, until
the excess contribution is eliminated. Excess contributions shall
be allocated to Participants who are subject to the family
aggregation rules of Section 414(q)(6) of the Code by allocating
the excess contributions for the family group among the Family
Members in proportion to the elective contribution of each Family
Member that is combined to determine the "actual deferral
percentage" pursuant to 1.401(k)-1(f)(5)(ii). Any refund made in
accordance with this subsection to a Participant shall be drawn
from his Salary Deferral Account.
The amount of excess contributions to be distributed shall be
reduced by excess deferrals previously distributed pursuant to
subsection 4(b)(i) for the taxable year ending in the same Plan
Year. Furthermore, excess deferrals to be distributed for a
taxable year pursuant to subsection 4(b)(i) will be reduced by
excess contributions previously distributed pursuant to this
subsection 4(d)(iii) hereof for the Plan Year beginning in such
taxable year.
(iv) ALLOCATION OF INCOME. Excess deferrals and excess
contributions shall be adjusted for any income or loss through the
last day of the Plan Year. The income or loss is the income or
loss allocable to the Participant's Salary Deferral Account for the
taxable year multiplied by a fraction, the numerator of which is
such Participant's excess deferrals and excess contributions for
the year and the denominator of which is the Participant's Salary
Deferral Account balance.
(v) ADDITIONAL DEFINITIONS. The "average actual deferral
percentage" for a specific group of Participants for a Plan Year
shall be the average of the "actual deferral percentage" for each
Participant in the group for such Plan Year. The "actual deferral
percentage" for a particular Participant for a Plan Year shall be
the ratio of the amount of Participating Company contributions paid
over to the Fund pursuant to subsection 4(a) for such Participant
to the Participant's "compensation" for such Plan Year excluding
the Participant's "compensation" prior to satisfying the
eligibility requirements of Section 3. For this purpose,
"compensation" means compensation for services performed for a
Participating Company which is currently includable in gross
income, but excluding compensation which is excludable from gross
income pursuant to an election under a qualified cash or deferred
arrangement under Section 401(k) of the Code or a cafeteria plan
under Section 125 of the Code. In no event shall such compensation
(vi) CONTRIBUTIONS CONSIDERED. A Participant's salary deferral
contributions will be taken into account under the actual deferral
percentage test of this subsection 4(d) pursuant to Section
401(k)(3)(A) of the Code for a Plan Year only if they satisfy
subsections (A) and (B) below:
(A) The salary deferral contributions relate to
compensation that either would have been received by the Associate
in the Plan Year (but for the deferral election);
(B) The salary deferral contributions are allocated to the
Associate as of a date within the Plan Year for which subsection
4(d)(i) applies. For this purpose, salary deferral contributions
are considered allocated as of a date within a Plan Year if the
allocation is not contingent on participation or performance of
services after such date and the salary deferral contribution is
actually paid to the trust no later than 12 months after the Plan
Year to which the contribution relates. Notwithstanding the
foregoing, salary deferral contributions that are distributed to a
Participant pursuant to Section 5 hereof shall be disregarded for
purposes of determining a Participant's average actual deferral
percentage for the year in which the excess annual addition arose.
(vii) AGGREGATION OF PLANS. If this Plan satisfies the
requirements of Section 410(b) of the Code only if aggregated with
1 or more other plans, or if 1 or more other plans satisfy the
requirements of Section 401(k), 401(a)(4) or 410(b) of the Code
only if aggregated with this Plan, then subsection 4(d)(i) shall be
applied by determining the "contribution percentages" of
Participants as if all such plans were a single plan. Plans
permissively aggregated pursuant to this subsection must have the
same Plan Year. Notwithstanding the foregoing, certain plans shall
be treated as separate if mandatorily disaggregated under Code
Section 401(k) and corresponding regulations.
(viii) AGGREGATION OF CONTRIBUTIONS. The "contribution
percentage" for any Participant who is a Highly Compensated
Associate for the Plan Year and who is eligible to have salary
deferral contributions allocated to his account under 2 or more
plans described in Section 401(a) of the Code that are maintained
by a Participating Company or Related Entity shall be determined as
if the total of such Participant contributions were made under this
Plan and each other plan. For purposes of this subsection, the
contributions considered are those taken into account for each plan
with a Plan Year ending with or within the same calendar year.
(ix) SPECIAL RULE. For purposes of determining the actual
deferral percentage of a Participant who is a Highly Compensated
Associate, the contributions allocable to such Participant and
compensation of such Participant shall include the contributions
allocable to Family Members and compensation of Family Members.
Family Members, with respect to Highly Compensated Associates,
shall be disregarded as separate Associates in determining the
average actual deferral percentage both for Participants who are
not Highly Compensated Associates and for Participants who are
Highly Compensated Associates.
(i) MATCHING CONTRIBUTIONS. Effective January 1, 1996, the
Participating Companies shall contribute to the Fund as a Matching
Contribution such uniform percentage of the amount contributed with
respect to a Transition Group Associate under subsection 4(a) as
the Company, in its absolute discretion, shall determine. The
Participating Companies shall contribute to the Fund such other
uniform percentage of the amount contributed with respect to any
other Participant under subsection 4(a) as the Company, in its
absolute discretion, shall determine.
Until otherwise announced by the Board of Directors of the
Company, the discretionary Matching Contribution made on behalf of
each Participant shall not exceed (A) 75% of the first 4%
contributed with respect to a Participant under subsection 4(a),
provided said Participant is a Transition Group Associate; or (B)
25% of the first 4% contributed with respect to a Participant under
subsection 4(a), provided said Participant is not a Transition
Group Associate.
Matching Contributions made pursuant to this subsection
4(e)(i) shall be nonforfeitable at all times.
The Participating Companies shall pay over to the Trustee all
contributions under this subsection no later than the due date,
including extensions, for filing the Participating Companies'
federal income tax returns for the taxable year coincident with or
within which the Plan Year with respect to which such contributions
are to be made ended. Such contributions shall be allocated to the
Matching Contribution Accounts of the Participants with respect to
whom they are made.
(ii) AUTOMATIC BASIC CONTRIBUTIONS. In addition, for each
Plan Year, the Participating Companies shall contribute to the Fund
such amounts as the Company, in its absolute discretion, shall
determine to be allocated in accordance with this subsection among
Participants eligible to share therein.
Until otherwise announced by the Board of Directors of the
Company, the discretionary Automatic Basic Contributions made on
behalf of each Associate shall be equal to 1% of such Participant's
Compensation for the Plan Year. For purposes of this paragraph,
"Compensation" includes only that Compensation earned after an
Associate has become a Participant pursuant to Section 3 hereof.
The Participating Companies shall pay over to the Trustee all
contributions no later than the due date, including extensions, for
filing the Participating Companies' federal income tax returns for
the taxable year ended coincident with or next following the last
day of the Plan Year for which such contributions are to be made.
The following Participants shall be entitled to share in the
defer a portion of their Compensation to the Plan pursuant to
subsection 4(a) hereof:
(A) Participants who retired during the Plan Year pursuant
to subsection 8(a);
(B) Participants who died during the Plan Year;
(C) Participants who terminated employment due to
Disability during the Plan Year; and
(D) Participants who were employed by a Participating
Company on the last day of the Plan Year.
(f) COMPANY CONTRIBUTION ACCOUNTS. The Matching
Contributions made to a Participant under subsection 4(e)(i), as
adjusted for investment gain or loss and income or expense,
constitute the Participant's Matching Contribution Account. A
Participant shall have a 100% nonforfeitable interest in his
Matching Contribution Account at all times. The Automatic Basic
Contributions made to a Participant under subsection 4(e)(ii), as
adjusted for investment gain or loss and income or expense,
constitute the Participant's Automatic Basic Contribution Account.
A Participant shall have a nonforfeitable interest in the Automatic
Basic Contribution Account to the extent provided under Section 8.
(g) COMPLIANCE WITH PARTICIPATING COMPANY MATCHING
CONTRIBUTIONS DISCRIMINATION TESTS.
(i) RULE. In no event shall the "average contribution
percentage" (as defined below) for Participants who are Highly
Compensated Associates for any Plan Year bear a relationship to the
"average contribution percentage" for Participants who are not
Highly Compensated Associates which does not satisfy either
subsection (A) or (B) below.
(A) The requirement shall be satisfied for a Plan Year if
the "average contribution percentage" for the group of Participants
who are Highly Compensated Associates that are eligible to make
contributions under subsection 4(a) for any portion of the Plan
Year is not more than the "average contribution percentage" of all
others who are eligible to make contributions under subsection 4(a)
for any portion of the Plan Year multiplied by 1.25.
(B) The requirement shall be satisfied for a Plan Year if
(1) the excess of the "average contribution percentage" for the
Participants who are Highly Compensated Associates for the Plan
Year that are eligible to make contributions under subsection 4(a)
for any portion of the Plan Year over the "average contribution
percentage" of all others who are eligible to make contributions
for any portion of the Plan Year is not more than 2 percentage
points and (2) the "average contribution percentage" for
Participants who are Highly Compensated Associates is not more than
the "average contribution percentage" of all others eligible to
make contributions under subsection 4(a) for any portion of the
Plan Year multiplied by 2.
percentages" does not satisfy subsection 4(g)(i) for any Plan Year,
then the Committee shall direct the Trustee to distribute the
"excess aggregate contribution" (as defined below) for such Plan
Year (plus any income and minus any loss allocable thereto) by the
last day of the following Plan Year to the Highly Compensated
Associates on the basis of the respective portions of the "excess
aggregate contribution" attributable to each, as determined under
this subsection. If such "excess aggregate contributions" are
distributed more than 2 1/2 months after the last day of the Plan
Year in which such excess amounts arose, a 10% excise tax will be
imposed on the employer maintaining the Plan with respect to those
amounts. The "excess aggregate contribution" for any Plan Year is
the excess of the aggregate amount of Participating Company
contributions allocated on a matching basis pursuant to subsection
4(e)(i) on behalf of Highly Compensated Associates for such Plan
Year over the maximum amount of such contributions which could be
allocated to Highly Compensated Associates under subsection
4(g)(i). The portion of the excess aggregate contribution
attributable to a Highly Compensated Associate is determined by
reducing Participating Company contributions allocated to Highly
Compensated Associates in order of "contribution percentages" for
each such Associate, beginning with the highest of such
percentages, until the excess aggregate contribution is eliminated.
Excess aggregate contributions shall be allocated to Participants
who are subject to the family aggregation rules of Section
414(q)(6) of the Code by allocating the excess contributions for
the family group among the Family Members in proportion to the
elective contribution of each Family Member that is combined to
determine the actual deferral ratio pursuant to
1.401(k)-1(f)(5)(ii) of the Code. Any refund made to a Participant
in accordance with this subsection shall be drawn from his Matching
Contribution Account.
Excess aggregate contributions shall be adjusted for any
income or loss through the last day of the Plan Year. The income
or loss allocable to excess aggregate contributions is the income
or loss allocable to the Participant's account balance attributable
to Participating Company contributions pursuant to subsection
4(e)(i) for the Plan Year multiplied by a fraction, the numerator
of which is such Participant's excess aggregate contributions for
the year and the denominator of which is the Participant's account
balance attributable to Participating Company contributions
pursuant to subsection 4(e)(i).
(iii) ADDITIONAL DEFINITIONS. For purposes of this subsection
4(g), the term "Participant" shall mean each Associate eligible to
make contributions under subsection 4(a) at any time during a Plan
Year. Such Participants include:
(A) an Associate who would be a Participant but for the
failure to make required contributions;
(B) an Associate whose right to receive matching
certain 1-time elections not to participate or
a distribution; and
(C) an Associate who cannot receive a matching contribution
because Section 415(c)(1) or Section 415(e) of the Code prevents
the Associate from receiving additional annual additions.
In the case of an eligible Associate who receives no matching
contributions, the contribution ratio that is to be included in
determining the contribution percentage is zero.
The "average contribution percentage" for a specific group of
Participants for a Plan Year shall be the average of the
"contribution percentage" for each Participant in the group for
such Plan Year. The "contribution percentage" for a particular
Participant shall be the ratio of the amount of Participating
Company contributions allocated to a Participant pursuant to
subsection 4(e)(i) for a Plan Year and paid over to the Fund no
later than the end of the 12-month period beginning on the day
after the close of the Plan Year to the Participant's
"compensation" for such Plan Year. For this purpose,
"compensation" means compensation for services performed for a
Participating Company which is currently includable in gross
income, but excluding compensation which is excludable from gross
income pursuant to an election under a qualified cash or deferred
arrangement under Section 401(k) of the Code or a cafeteria plan
under Section 125 of the Code, excluding any amounts earned prior
to satisfying the eligibility requirements of subsection 3(a). In
no event shall such compensation exceed the limitations of Code
Section 401(a)(17), as indexed. (iv) AGGREGATION OF
CONTRIBUTIONS. The contribution percentage for any Participant who
is a Highly Compensated Associate for the Plan Year and who is
eligible to make after tax contributions to any plan subject to
Section 415 of the Code maintained by a Participating Company or a
Related Entity or to have Participating Company matching
contributions within the meaning of Section 401(m)(4)(A) of the
Code allocated to his account under 2 or more plans described in
Section 401(a) of the Code that are maintained by a Participating
Company or a Related Entity shall be determined as if the total of
such Participant contributions and Participating Company
contributions was made under this Plan and each other plan.
(v) AGGREGATION OF PLANS. If this Plan satisfies the
requirements of Section 401(a)(4) or 410(b) of the Code only if
aggregated with 1 or more other plans, or if 1 or more other plans
satisfy the requirements of Section 410(b) of the Code only if
aggregated with this Plan, then subsection 4(g)(i) shall be applied
by determining the contribution percentages of Participants as if
all such plans were a single plan. Notwithstanding the foregoing,
certain plans shall be treated as separate if mandatorily
disaggregated under Code Section 401(m) and corresponding
regulations.
(vi) SPECIAL RULE. For purposes of determining the
contribution percentage of a Participant who is a Highly
Compensated Associate, the contribution allocable to such
Participant pursuant to subsection 4(e)(i) and compensation
of such Members pursuant to subsection 4(e)(i) and compensation of Family
Members. Family Members, with respect to Highly Compensated
Associates, shall be disregarded as separate Associates in
determining the contribution percentage both for Participants who
are not Highly Compensated Associates and for Participants who are
Highly Compensated Associates.
(vii) MULTIPLE USE. If either the actual deferral percentage
or actual contribution percentage of the Highly Compensated
Associates exceeds 1.25 multiplied by the actual deferral
percentage and actual contribution percentage of the Non-highly
Compensated Associates, then the Plan shall test for multiple use.
Such test shall occur when the sum of the actual deferral
percentage and actual contribution percentage pursuant to
subsections 4(d) and 4(g), respectively, of the Highly Compensated
Associates exceeds the "aggregate limit"; in such circumstances the
actual contribution percentage of the Highly Compensated Associates
will be reduced (beginning with such Highly Compensated Associate
whose actual contribution percentage is the highest) so that the
"aggregate limit" is not exceeded. The amount by which each Highly
Compensated Associate's Matching Contribution Account is reduced
shall be treated as an excess aggregate contribution, as the case
may be. The actual deferral percentage and actual contribution
percentage of the Highly Compensated Associates are determined
after any corrections required to meet the actual deferral
percentage and actual contribution percentage tests.
For purposes of this subsection 4(g)(vii), "aggregate limit"
shall mean the sum of (i) 125% of the greater of the actual
deferral percentage of the non-Highly Compensated Associates for
the Plan Year or the actual contribution percentage of non-Highly
Compensated Associates under the plan subject to Code Section
401(m) for the Plan Year beginning with or within the Plan Year of
the cash or deferred arrangement and (ii) the lesser of 200% or 2
plus the lesser of such actual deferral percentage or actual
contribution percentage. "Lesser" is substituted for "greater" in
(i), above, and "greater" is substituted for "lesser" after "2 plus
the" in (ii) if it would result in a larger aggregate limit.
(h) ROLLOVERS. Subject to uniform rules, any Associate as
defined in subsection 1(e) may, subject to the Committee's
approval, transfer to the Plan all or a portion of an eligible
rollover distribution from an eligible retirement plan. Such
rollover contributions, if approved, shall be credited to the
Associate's Rollover Account.
The terms "eligible rollover distribution" and "eligible
retirement plan" shall have the meanings described in 9(b)(iii) of
the Plan, except that, for purposes of this subsection 4(h), an
individual retirement account described in Section 408(a) of the
Code which holds an eligible rollover distribution made to a
surviving spouse shall not be considered an eligible retirement
plan.
such information from an Associate desiring to make such a
transfer, as it deems necessary or desirable to determine that the
proposed transfer will meet the requirements of this Section.
Any Associate who has not met the eligibility requirements of
subsection 3(a) but who has made Rollover Contributions into the
Plan shall be considered a Participant for purposes of Sections 6,
7, 8, 10, 11, 13, 14, 15 and 18 of the Plan.
Notwithstanding anything herein to the contrary, this Plan
shall not accept any direct or indirect transfer from a defined
benefit plan, money purchase plan (including a target benefit
plan), stock bonus or profit sharing plan which would otherwise
have provided for a life annuity form of payment to the
Participant.
(i) ROLLOVER ACCOUNT. Any rollover contribution under
subsection 4(h), as adjusted for investment gain or loss and income
or expense, shall constitute the Participant's Rollover Account.
A Participant shall at all times have a nonforfeitable interest in
the Rollover Account portion of his Account.
(j) FAILSAFE CONTRIBUTIONS. The Participating Companies may
make a special contribution to be allocated among all Associates
who were eligible to participate in the Plan during the Plan Year
and who are not Highly Compensated Associates within the meaning of
Section 401(k)(5) of the Code in proportion to their Compensation.
The amount of the contribution shall not exceed the amount,
determined by the Committee, necessary to satisfy the
discrimination standards of Section 401(k)(3) of the Code. Any
such contribution shall be treated as an addition to the
Participant's Salary Deferral Account and shall be subject to the
vesting and distribution provisions of the Plan pertaining to
elective contributions and the conditions described in 1.401(k) -
1(b)(5).
(k) PAYROLL TAXES. The Participating Companies shall
withhold from the Compensation of the Participants and remit to the
appropriate government agencies such payroll taxes and income tax
withholding as the Company determines is or may be necessary under
applicable statutes or ordinances and the regulations and rulings
thereunder.
5. MAXIMUM CONTRIBUTIONS AND BENEFITS
(a) DEFINED CONTRIBUTION LIMITATION. If the amount allocable
to a Participant from contributions to the Fund in respect of any
Plan Year would cause the Annual Additions allocated to any
Participant under this Plan plus the Annual Additions allocated to
such Participant under any other plan maintained by a Participating
Company or a Related Entity to exceed for any Limitation Year the
lesser of (i) $30,000 (or, if greater, 25% of the dollar limitation
in effect under subsection 415(b)(1)(A) of the Code for such
Limitation Year) or (ii) 25% of such Participant's "compensation"
(as defined in subsection 5(d)) for such Limitation Year, then such
amount allocable to such Participant shall be reduced by the amount
of such excess to determine the actual amount of the contribution
allocable to such Participant in respect of such Plan Year. Excess
Annual Additions shall be administered by and pursuant to the
direction of the Committee through corrective action under any 1 or
a combination of methods permissible under 1.415-6(b)(6), as
amended.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different consecutive 12-month
period, the defined contribution dollar limitation will be prorated
based on the number of months in the short Limitation Year.
(b) COMBINED LIMITATION. In addition to the limitation of
subsection 5(a), if a Participating Company or a Related Entity
maintains or maintained a defined benefit plan and the amount
allocable to a Participant with respect to any Plan Year would
cause the aggregate amount allocated to any Participant under all
defined contribution plans maintained by all Participating
Companies or Related Entities to exceed the maximum allocation as
determined in subsection 5(c), then such amount allocable to such
Participant shall be reduced by the amount of such excess to
determine the actual amount of the contribution allocable to such
Participant for such Plan Year. The excess amount with respect to
any Participant shall be held in accordance with subsection 5(a).
Notwithstanding the foregoing, to the extent administratively
feasible, the combined limitation shall be applied to the
Participant's benefit payable from the defined benefit plan prior
to reduction of the Participant's Annual Additions under this Plan.
(c) COMBINED LIMITATION COMPUTATION -
MAXIMUM ALLOCATION. The maximum allocation is the
amount of Annual Additions which may be allocated to a
Participant's benefit without permitting the sum of the defined
benefit plan fraction (as hereinafter defined) and the defined
contribution plan fraction (as hereinafter defined) to exceed 1.0
for any Limitation Year. The defined benefit plan fraction
applicable to a Participant for any Limitation Year is a fraction,
the numerator of which is the projected annual benefit of the
Participant under the plan determined as of the close of the
Limitation Year and the denominator of which is the lesser of (1)
<PAGE>
FIRST AMENDMENT TO SECOND AMENDED
AND RESTATED REVOLVING CREDIT AGREEMENT
This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING
CREDIT FACILITY dated as of August 21, 1995 (the "First Amendment")
is by and among
STANLEY FURNITURE COMPANY, INC., a Delaware corporation (the
"Borrower");
NATIONAL CANADA FINANCE CORP., a Delaware corporation (the
"Lender"); and
NATIONAL BANK OF CANADA, the owner of all outstanding capital
stock of the Lender ("NBC").
RECITALS
A. The Lender has made a certain credit facility available
to the Borrower pursuant to the terms and conditions contained in
that certain Second Amended and Restated Revolving Credit Agreement
dated as of February 15, 1994 among the Borrower, the Lender and
NBC (the "Loan Agreement").
B. The Borrower has requested that the Lender and NBC make
certain changes to the Loan Agreement.
C. The Lender and NBC have agreed to make these changes to
the Loan Agreement as set forth herein.
NOW, THEREFORE, the Borrower, the Lender and NBC hereby agree
as follows:
A. The Loan Agreement is amended as follows:
1. The definition of "Maturity Date" set forth in
Section 1.01 is deleted in its entirety and replaced with the
following:
""Maturity Date" means August 21, 1998;"
2. Section 2.01(a) is amended by replacing the date
"February 15, 1996" in line sixteen with the date "August 21,
1998".
3. Section 2.01(a) is amended by deleting the phrase
"minus (B) $7,500,000" in the eleventh line.
4. Section 2.01(b) is amended by replacing the amount
"$5,000,000" in line four with the amount "$7,500,000".
5. Section 2.04 is deleted in its entirety and
replaced with the following:
<PAGE>
"2.04 Interest Rates.
(a) Prime Loans. Subject to the provisions of Section
2.04(c) and Section 3.01, each Revolving Credit Loan which is a
Prime Loan shall bear interest at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 360 days)
equal to the Prime Rate. The interest rate on all Prime Loans
outstanding from time to time shall increase or decrease on the
same date which the Prime Rate changes.
(b) Eurodollar Loans. Subject to the provisions of
Section 3.01, each Revolving Credit Loan which is a Eurodollar Loan
shall bear interest at a rate per annum (computed on the basis of
the actual number of days elapsed over a year of 360 days) equal to
the LIBOR Rate plus one percent (1%). The Lender shall determine
the applicable LIBOR Rate on the date when such determination is to
be made in respect of such Interest Period (or as soon thereafter
as practicable), and shall notify the Borrower of the rate so
determined. Such determination shall be conclusive absent manifest
error."
6. Section 3.01 is deleted in its entirety and
replaced with the following:
"3.01 Default Rate. If the Borrower shall default in
the payment when due (subject to applicable grace periods, if any)
of the principal of or interest or fees on any Loan, or in the
payment any other amount becoming due hereunder or under any of the
other Loan Documents, the Borrower shall on demand from time to
time pay interest on any overdue payment of principal or fees or
other amount and, to the extent permitted by law, on overdue
payments of interest, up to the date of actual payment (after as
well as before judgment) at a rate equal to the Prime Rate plus two
percent (2%) per annum or the LIBOR Rate plus three percent (3%)
per annum."
7. Section 3.02 is amended to read as follow:
"3.02 Prepayments. The Borrower shall have the right at
any time and from time to time to repay or prepay any amount
outstanding under the Revolving Credit Note in whole or in part,
without premium; provided, however, that Revolving Credit Loans
that are Eurodollar Loans may be repaid only on the last day of the
then current Interest Period therefore."
8. Section 3.09(a) is amended to read as follows:
"(a) Audit Fees. The Lender will conduct on-site
audits of the Accounts Receivable and Inventory once a year and the
Borrower shall reimburse the Lender $750.00 for the cost of each
audit."
<PAGE>
9. Section 6.01(a) (vi) is deleted in its entirety
and replaced with the following:
"(vi) the Borrower owns no interest in any Persons
other than Persons listed on Exhibit C hereto or pursuant to
investments permitted by Section 8.01(e) hereto.
10. Section 6.01(c) (iii) is deleted in its entirety.
11. Section 8.01(g) is amended by replacing the ratio
of 2.0 to 1.0 in the sixth line with the ratio of 1.9 to 1.0.
12. Section 8.01(h) is amended by replacing the ratio
of .5 to 1.0 in the third line with the ratio of .55 to 1.0.
A. The Borrower represents and warrants that, as of the
date hereof, it is not in default of the terms of the Loan
Agreement, as amended hereby, or any of the other documents
executed between the Borrower and the Lender and/or NBC in
connection therewith.
B. This First Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be
deemed an original.
C. This First Amendment and the Loan Agreement, as amended
hereby, shall be deemed to be contracts made under, and for all
purposes shall be construed in accordance with the laws of the
State of North Carolina.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused
this instrument to be executed under seal as of the day and year
first above written.
STANLEY FURNITURE COMPANY, INC.
ATTEST
By \s\ Albert L. Prillaman By \s\ Douglas I. Payne
Title CEO & President Title Vice President of Finance
(CORPORATE SEAL)
NATIONAL CANADA FINANCE CORP.
By \s\ Charles Collie
Title Vice President & Manager
By \s\ Alex Council
Title Vice President
NATIONAL BANK OF CANADA
By Signature unreadable
Title Vice President
By Signature unreadable
Title Assistant Vice Pesident
<PAGE>
EXHIBIT 11
STANLEY FURNITURE COMPANY, INC.
SCHEDULE OF COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(In thousands, except per share data)
<TABLE>
1994 1993
<S> <C> <C>
Net income (loss) used in calculating
primary and fully diluted earnings
(loss) per common share:
Continuing operations................. $5,116 $5,280
Discontinued operations............... (2,758)
Net income.......................... $2,358 $5,280
Primary earnings (loss) per common
share:
Weighted average shares outstanding.... 4,725 3,792
Add shares issuable assuming excercise
of stock options..................... 19 10
Weighted average number of shares
used in calculating primary
earnings (loss) per common share. 4,744 3,802
Primary earnings (loss) per common
share:
Continuing operations.................. $ 1.08 $ 1.39
Discontinued operations................ (.58)
Primary earnings per common share.... $ .50 $ 1.39
Fully diluted earnings (loss) per
common share:
Weighted average shares outstanding.... 4,725 3,792
Add shares issuable assuming excer-
cise of stock options................ 19 51
Weighted average number of shares
used in calculating fully diluted
earnings (loss) per common share. 4,744 3,843
Fully diluted earnings (loss) per
common share:
Continuing operations................. $ 1.08 $ 1.37
Discontinued operations............... (.58)
Fully diluted earnings per common
share............................. $ .50 $ 1.37
</TABLE>
<PAGE>
EXHIBIT 24
Consent of Independent Accountants
We consent to the incorporation by reference in the registration
statements of Stanley Furniture Company, Inc. on Form S-8 (File No.
33-58396 and 33-67218) of our report dated January 31, 1995, on our
audits of the financial statements and financial statement schedule
of Stanley Furniture Company, Inc. as of December 31, 1994 and
1993, and for each of the three years in the period ended December
31, 1994, which report is included in this Annual Report on Form
10-K. We also consent to reference to our Firm under the caption
"Selected Financial Data."
Coopers & Lybrand L.L.P.
Richmond, Virginia
January 31, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
STANLEY FURNITURE COMPANY, INC.
ARTICLE 5
FINANCIAL DATA SCHEDULE
FOR PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 298
<SECURITIES> 0
<RECEIVABLES> 22,732
<ALLOWANCES> 1,157
<INVENTORY> 40,167
<CURRENT-ASSETS> 66,052
<PP&E> 78,399
<DEPRECIATION> 24,168
<TOTAL-ASSETS> 134,551
<CURRENT-LIABILITIES> 23,630
<BONDS> 0
<COMMON> 94
0
0
<OTHER-SE> 54,739
<TOTAL-LIABILITY-AND-EQUITY> 134,551
<SALES> 174,179
<TOTAL-REVENUES> 174,179
<CGS> 137,621
<TOTAL-COSTS> 137,621
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 300
<INTEREST-EXPENSE> 3,534
<INCOME-PRETAX> 6,273
<INCOME-TAX> 2,384
<INCOME-CONTINUING> 3,889
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,889
<EPS-PRIMARY> .82
<EPS-DILUTED> .82
</TABLE>
