SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 29, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No 0-631
ROSE'S STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-0382475
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
218 S. Garnett Street
Henderson, NC 27536
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (919) 430-2600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of Each Class on which registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
Voting Common Stock, No Par Value
Non-Voting Class B Stock, No Par Value
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
(continued on following page)
<PAGE>
(continued from previous page)
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will
not be contained, to the best of
Registrant's knowledge, in definitive proxy or
information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( X )
As of April 22, 1994, 8,262,420 Voting Common
shares and 10,495,586 Non-Voting Class
B shares were outstanding, and the aggregate market
value of the Voting Common shares
(based upon the quoted closing price of these shares
on that date) of Rose's Stores, Inc.
held by nonaffiliates was approximately $2,397,477.
The purpose of this amendment is to submit in electronic format
the Exhibits that were filed under Form SE and TH to complete the
electronic data base.
In addition, this amendment includes an additional exhibit for
original filing, Exhibit 10.5, and all exhibits following have
been renumbered.
<PAGE>
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
Independent Auditors' Report
Consolidated Statements of Operations for the years
ended January 29, 1994; January 30, 1993 and
January 25, 1992
Consolidated Balance Sheets - January 29, 1994 and
January 30, 1993
Consolidated Statements of Stockholders' Equity for the
years ended January 29, 1994; January 30, 1993 and
January 25, 1992
Consolidated Statements of Cash Flows for the years ended
January 29, 1994; January 30, 1993 and January 25, 1992
Notes to the Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
Independent Auditors' Report
Schedule X - Supplementary Income Statement Information
All other schedules are omitted because they are not applicable
or not required, or because the required information is included
in the financial statements or notes thereto.
3. EXHIBITS
Exhibit
No. Page
10.1 The Registrant's Equity Compensation Plan Incorporated
(incorporated by reference to the identified by reference
exhibit under the Registrant's Quarterly
Report on Form 10-Q for its fiscal quarter
ended October 26, 1991)
10.2 First Amendment to Equity Compensation Plan Incorporated
(incorporated by reference to the identified by reference
exhibit under the Registrant's Annual Report
on Form 10-K for its fiscal year ended January 30,
1993)
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10.3 Second Amendment to Equity Compensation Plan Incorporated
(incorporated by reference to the identified by reference
exhibit under the Registrant's Annual Report
on Form 10-K for its fiscal year ended January 30,
1993)
10.4 The Registrant's Variable Investment Plan
(the "Plan"), as amended and restated
effective January 1, 1989.
10.5 The Registrant's First Amendment to the
Variable Investment Plan (the "Plan").
10.6 The Registrant's Employment Agreement with Incorporated
George L. Jones (incorporated by reference by reference
to Exhibit 19 to Registrant's Quarterly
Report on Form 10-Q for the Quarter Ended
October 26, 1991 dated December 9, 1991).
10.7 Loan Agreement dated September 20, 1993 Incorporated
between the Registrant and General by reference
Electric Capital Corporation
(Incorporated by reference to Exhibit 10.1
to the Registrant's Current Report on
Form 10-K dated September 20, 1993).
10.8 The Registrant's Severance Program, as
adopted effective March 24, 1994 pursuant
to order of the Bankruptcy Court presiding
over the Registrant's proceeding under chapter
11 of Title 11 of the United States Code (the
"Court")
10.9 The Registrant's obligations with respect to
the compensation of its officers and directors
as specified in the following orders of the Court:
(a) Order Authorizing Compensation of Senior
Vice Presidents (dated November 18, 1993)
(b) Order Authorizing Compensation of
Executive Vice Presidents (dated November
18, 1993)
(c) Order Authorizing Compensation of Vice
Presidents and Treasurer (dated November
18, 1993)
(d) Order Authorizing Compensation of George
L. Jones (dated November 18, 1993)
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(e) Order Continuing Compensation of Chairman
of the Board of Directors Pending Hearing
(dated November 18, 1993)
(f) Order Authorizing Payment of Compensation
to Directors (dated November 18, 1993)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Rose's Stores, Inc. has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
ROSE'S STORES, INC.
By:
George L. Jones, President and
Chief Executive Officer
By:
R. Edward Anderson, Executive Vice President,
Chief Financial Officer
Date: April 26, 1994
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 on the dates indicated:
Sam Ayoub, Director George M. Harvin, Director
John T. Church, Director George L. Jones, Director
L. H. Harvin, III, Director James H. Maynard, Director
EXHIBIT 10.4
ROSE'S STORES, INC.
VARIABLE INVESTMENT PLAN
TABLE OF CONTENTS
Rose's Stores, Inc.
Variable Investment Plan
Page
Preamble 2
ARTICLE I Definitions 2
1.1. Account Balance 2
1.2. Act 2
1.3. Adjustment Date 2
1.4. Adjustment Factor 2
1.5. Advisory Committee 2
1.6. Affiliated Company 2
1.7. Age 2
1.8. Agent for Service of Legal Process 2
1.9. Anniversary Date 2
1.10. Annual Addition 3
1.11. Associate 3
1.12. Beneficiary 4
1.13. Board of Directors 4
1.14. Break in Service 4
1.15. C.E.O. 4
1.16. Code 4
1.17. Commencement Date 4
1.18. Company 4
1.19. Company Contribution Account 4
1.20. Company Contributions 5
1.21. Company Securities 5
1.22. Compensation 5
1.23. Contribution Participant 6
1.24. Deferral 6
1.25. Deferred Income Account 6
1.26. Defined Contribution Dollar
Limitation 6
1.27. Disability 6
1.28. Discretionary Contributions 6
1.29. Early Retirement 6
1.30. Effective Date 7
1.31. Entry Date 7
1.32. ERISA 7
1.33. Family Member 7
1.34. Fiduciaries 7
1.35. Forfeitures 7
1.36. Highly Compensated Associate 7
1.37. Hour of Service 7
1.38. Inactive Participant 8
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1.39. Increment or Decrement 8
1.40. Investment Fund 8
1.41. Limitation Suspense Account 8
1.42. Limitation Year 9
1.43. Matching Contribution 9
1.44. Named Fiduciary 9
1.45. Participant 9
1.46. Plan 9
1.47. Plan Rules 9
1.48. Plan Year 9
1.49. Profit Sharing Contribution 9
1.50. Retirement 10
1.51. Taxable Year 10
1.52. Trust 10
1.53. Trust Fund 10
1.54. Trustee 10
1.55. Valuation Date 10
1.56. Voluntary Contributions 10
1.57. Year of Service 10
ARTICLE II Administration of the Plan 12
2.1. Advisory Committee 12
2.2. Authority 12
2.3. Advisory Committee Procedure 13
2.4. Forms 13
2.5. Funding 13
2.6. Successor Fiduciary 13
2.7. Delegation of Services 14
2.8. Signature Authority 14
2.9. Fiduciary Notice Requirements 14
2.10. Reliance 14
2.11. Duties of the Advisory Committee 15
2.12. Powers of the Advisory Committee 16
2.13. Limitations on Powers of
the Advisory Committee 16
2.14. Investment Funds 16
2.15. Investment in Insurance 18
2.16. Delegation of Investment
Responsibility 20
2.17. Special Accounting Rules
for the Company Stock Fund 20
2.18. Valuation of Company Securities 21
2.19. Voting of Company Securities 22
2.20. Withdrawals 23
2.21. Limitations of the Securities
Exchange Act of 1934 24
ARTICLE III Eligibility and Participation 25
3.1. Eligibility 25
3.2. Authorized Leave of Absence 25
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3.3. Maternity or Paternity Leave 26
3.4. Status During Leave of Absence 26
3.5. Voluntary Participation 27
3.6. Determination as to Eligibility 27
3.7. Leased Associates 27
3.8. Years of Service for Eligibility
Purposes 27
3.9. Participation Upon Return to
Eligible Class 28
ARTICLE IV Company and Associate Contributions 29
4.1. Plan Contributions 29
4.2. Tax Deferred Contributions 29
4.3. Fail-Safe Contributions 30
4.4. Matching Contributions 30
4.5. Profit Sharing Contributions 31
4.6. Rollovers of Retirement Benefits 31
4.7. Trustee-to-Trustee Transfers 32
4.8. Payment of Contributions 33
4.9. Form of Contribution 33
4.10. Exclusive Benefit of Associates 33
ARTICLE V Allocations and Limitations on Allocations 35
5.1. Establishment of Accounts 35
5.2. Account Allocations 36
5.3. No Interest in Specific Assets 37
5.4. Forfeitures 38
5.5. Maximum Company Contributions 38
5.6. Determination of Maximum Annual
Addition 39
5.7. Rules Relating to Company Which
Maintains One or More Qualified
Defined Contribution Plans In
Addition to this Plan 40
5.8. Aggregation With Defined Benefit
Plan 42
5.9. Excess Annual Additions 44
5.10. Limitations on Tax Deferred
Contributions 45
5.11. Special Rules for Tax Deferred
Contributions 48
5.12. Excess Tax Deferred Contributions 49
5.13. Limitations on Aggregate
Contributions 50
5.14. Special Rules for Aggregate
Contributions 53
5.15. Excess Aggregate Contributions 54
5.16. Excess Tax Deferred Contributions 55
5.17. Deduction of Legal Expenses 56
iii
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ARTICLE VI Trust Fund Valuation 57
6.1. Valuation of Trust Fund 57
6.2. Unallocated Contributions 58
6.3. Special Rule for Variable Account
Balances 58
6.4. Special Rule for Earmarked
Investments 58
6.5. Interim Crediting of Increment or
Decrement 58
ARTICLE VII Benefits 59
7.1. Retirement 59
7.2. Severance Benefits 59
7.3. Rehired Participants 60
7.4. Death 62
7.5. Payment of Benefits 63
7.6. Limitation on the Distribution of
Benefits 64
7.7. Commencement of Distribution of
Benefits 64
7.8. Restriction on Methods of
Distribution 64
7.9. Procedure for the Payment of
Benefits 65
ARTICLE VIII Powers, Duties and Responsibilities of
Trustee 67
8.1. Trust 67
8.2. Trust Fund 67
8.3. Powers of Trustee 67
8.4. Exercise of Powers 60
8.5. Accounting 70
8.6. Removal, Resignation, and
Appointment of Successor Trustee 70
8.7. Payment of Compensation, Expenses,
and Taxes 71
8.8. Limitations on Responsibility 71
8.9. Non-Corporate Trustee 71
8.10. Merger of Trustee 71
ARTICLE IX Fiduciary Responsibilities 73
9.1. Allocation of Responsibility Among
Fiduciaries for Plan and Trust
Administration 73
9.2. Fiduciary 74
9.3. Reliance on Other Fiduciaries 74
9.4. No Responsibility for Others 74
9.5. Bond 74
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9.6. Fiduciary Responsibility 74
9.7 Indemnification 75
ARTICLE X Amendment, Termination, Merger,
Consolidation or Transfer of Assets 76
10.1. Amendment of Plan and Trust 76
10.2. Limitation on Amendment 76
10.3. Election of Prior Vesting 77
10.4. Discontinuance of Contributions
and Termination of Plan and Trust 77
10.5. Merger, Consolidation or Transfer 79
10.6. De Facto Termination 79
10.7. Succession of Power 79
10.8. Continuation of Payment 79
ARTICLE XI Withdrawals and Loans 81
11.1. In-Service Withdrawals 81
11.2. Withdrawals on Account of Plan
Termination or Sale of Assets 82
11.3. Loans to Participants 83
11.4. Loans on or after October 18, 1989 85
ARTICLE XII Miscellaneous Provisions 89
12.1. No Guaranty of Employment 89
12.2. Limitation of Rights 89
12.3. Provision of Benefits 89
12.4. Headings 89
12.5. Governing Law 89
12.6. Alienation of Benefits 89
12.7. Severability 90
12.8. Claims 90
12.9. Number and Gender 91
ARTICLE XIII Top-Heavy Rules 92
13.1. Effect of Article XIII on Plan 92
13.2. Definitions 92
13.3. Minimum Contribution 96
13.4. Adjustments to Aggregate Limit 97
13.5. Vesting Requirements 97
ARTICLE XIV Qualified Domestic Relations Orders 99
14.1. Notice 99
14.2. Requirements of Qualified
Domestic Relations Order 99
14.3. Segregated Account 100
14.4. Limitations on Benefits and
Distributions 100
v
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STATE OF NORTH CAROLINA
ROSE'S STORES, INC.
COUNTY OF VANCE VARIABLE INVESTMENT PLAN
THIS AGREEMENT, made and entered into as of the 29
day of December, 1992, and except where specifically stated
otherwise, effective the 1st day of January, 1989, by and between
Rose's Stores, Inc., a corporation organized and existing under
the laws of the State of Delaware, with offices in the State of
North Carolina (hereinafter referred to as the "Company"), and
Central Carolina Bank and Trust Company, as Trustee0;
W I T N E S S E T H:
WHEREAS, the Company has previously established and
adopted the Rose's Stores, Inc. Variable Investment Plan,
effective October 25, 1984, as last amended and restated
generally effective January 1, 1987; and
WHEREAS, it has become necessary to amend and restate
the Plan to bring it into compliance with the Tax Reform Act of
1986, and other recent law changes, including the Omnibus Budget
Reconciliation Act of 1986, the Omnibus Budget Reconciliation Act
of 1987, the Technical and Miscellaneous Revenue Act of 1988, and
the Omnibus Budget Reconciliation Act of 1989, which amendment
and restatement shall be effective January 1, 1989, except where
otherwise stated;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained, the Company and Trustee
hereby agree that the Rose's Stores, Inc. Variable Investment
Plan (hereinafter referred to as the "Plan") shall read as
follows:
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ARTICLE I
Definitions
When used herein, the following words shall have the
following meaning unless the context clearly indicates otherwise:
1.1. "Account Balance" shall mean the balance of a
Participant's Company Contribution Account, Deferred Income
Account, Rollover Account, and Transfer Account, and except when
the context clearly indicates otherwise, "Account" shall mean the
above specific accounts.
1.2. "Act" shall mean the Tax Reform Act of 1986.
1.3. "Adjustment Date" shall mean the 31st day of
December of each year.
1.4. "Adjustment Factor" shall mean the cost of
living adjustment factor prescribed by the Secretary of the
Treasury under (Section Mark) 415(d) of the Code, for calendar years beginning
after December 31, 1987, as applied to such items and in such
manner as the Secretary shall provide.
1.5. "Advisory Committee" shall mean the committee
appointed by the Board of Directors of the Company to be the
named fiduciary with authority to control and manage the
operation and the administration of the Plan.
1.6. "Affiliated Company" shall mean the Company and
any corporation which is a member of a controlled group of
corporations (as defined in (Section Mark) 414(b) of the Code, as modified by
(Section Mark) 415(h) of the Code) which includes the Company; any trade or
business (whether or not incorporated) which is under common
control (as defined in (Section Mark) 414(c) of the Code, as modified by
(Section Mark) 415(h) of the Code) with the Company; any organization (whether
or not incorporated) which is a member of an affiliated service
group (as defined in (Section Mark) 414(m) of the Code) which includes the
Company; and any other entity required to be aggregated with the
Company pursuant to regulations under (Section Mark) 414(o) of the Code.
1.7. "Age" shall mean the number of full years that
have elapsed between the date of birth, and the date as of which
the age is being determined.
1.8. "Agent for Service of Legal Process" shall be
Byron G. Creech, or such other person as shall be so designated
by the Advisory Committee.
1.9. "Anniversary Date" shall mean the first day of
each Plan Year following the Effective Date of the Plan, which is
the 1st day of January in each year.
2
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1.10. "Annual Addition" shall mean the amount during
the Limitation Year that constitutes:
(a) Company Contributions and Tax Deferred
Contributions allocated to a Participant's Account;
(b) Voluntary Contributions (not currently allowed)
allocated to a Participant's Account;
(c) Forfeitures allocated to a Participant's Account;
(d) Amounts allocated after March 31, 1984, to an
individual medical account, as defined in (Section Mark) 415(l)(2) of the
Code, which is part of a defined benefit pension or annuity
plan maintained by the Company; and
(e) Amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such
date, which are attributable to post-retirement medical
benefits allocated to the separate account of a Key
Associate (as the term Key Employee is defined in
(Section Mark) 419A(d)(3) of the Code), under a welfare benefit plan (as
defined in (Section Mark) 419(e) of the Code) maintained by the Company.
1.11. "Associate" shall mean any person receiving
remuneration for personal services rendered to the Company, or of
any other company required to be aggregated with the Company
under (Section Mark)(Section Mark) 414(b), (c), (m) or (o) of the
Code (or who would be receiving remuneration except for
an authorized Leave of Absence) excluding independent
contractors, persons employed on a retainer or fee
basis, those persons covered by a bona fide collective
bargaining agreement between Associate representatives and the
Company, and a Director (unless the Director is otherwise
employed by the Company). The term "Associate" shall also
include any "leased employee" within the meaning of
(Section Mark)(Section Mark) 414(n) or (o)
of the Code. Notwithstanding the foregoing, a leased
employee shall not be considered an Associate if: (i) such
employee is covered by a money purchase pension plan providing:
(1) a nonintegrated employer contribution rate of at least ten
percent (10%) of compensation, as defined in (Section Mark) 415(c)(3) of the
Code, but including amounts contributed pursuant to a salary
reduction agreement which are excludible from the employee's
gross income under (Section Mark)(Section Mark) 125, 402(a)(8),
402(h) or 403(b) of the Code, (2) immediate participation,
and (3) full and immediate vesting; and (ii) leased
employees do not constitute more than twenty
percent (20%) of the recipient's nonhighly compensated
workforce. A leased employee shall constitute an Associate only
for minimum coverage and participation testing purposes, and in
no event will be eligible for participation in the Plan. The
term "Associate" corresponds to the term "employee" as used in
the Code and ERISA.
3
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1.12. "Beneficiary" shall mean, subject to the
limitations of Paragraph 7.4, and in accordance with the
procedures prescribed by the Advisory Committee, such person or
persons or legal entity as may be legally entitled or designated
by a Participant to receive benefits hereunder upon the death of
the Participant. The word "person" as used in this Paragraph may
include the Participant's estate, executor, administrator, or
testamentary or inter vivos trust, if properly designated by the
Participant.
1.13. "Board of Directors" shall mean the Board of
Directors of Rose's Stores, Inc.
1.14. "Break in Service" shall mean a twelve (12)
consecutive month period during which a Participant completes
five hundred (500) or fewer Hours of Service with the Company
(excluding, however, any period covered by an Authorized Leave of
Absence); and except as stated below, the computation of any
twelve (12) consecutive month period for purposes of vesting,
Breaks in Service, determining the timing of benefit payments,
and forfeitures shall be made with reference to the Plan Year of
the Company.
1.15. "C.E.O." shall mean the chief executive officer
of the Company.
1.16. "Code" shall mean the Internal Revenue Code of
1986, and any amendments thereto.
1.17. "Commencement Date" shall mean the date on which
an Associate first performs an Hour of Service for the Company;
provided, however, if an Associate shall have incurred a Break in
Service, as defined in Paragraph 1.14, his or her Commencement
Date shall be the date on which he or she first performs an Hour
of Service following his or her return after such Break in
Service.
1.18. "Company" shall mean Rose's Stores, Inc., any
corporation or entity with or into which Rose's Stores, Inc. may
be merged or consolidated, or to which its assets may be sold,
and any entity which may be or become an Affiliated Company. The
inclusion of an entity within or the removal of any organization
from the meaning of the word "Company," except as provided
otherwise in this Plan, shall be effected only by action of its
Board of Directors, or its successors, as the case may be.
1.19. "Company Contribution Account" shall mean the
Account of a Participant to which Discretionary Contributions
made pursuant to Paragraph 5.1, and the Increment or Decrement
thereon is credited.
4
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1.20. "Company Contributions" shall mean Discretionary
Contributions made to the Plan during or on account of the Plan
Year, by the Company, on behalf of the Participants.
1.21. "Company Securities" shall mean Non-Voting Class
B Stock of Rose's Stores, Inc., which constitute "employer
securities" as defined in (Section Mark) 409(l) of the Code.
1.22. "Compensation" shall mean compensation paid by
the Company to the Participant during the Plan Year which is
required to be reported as wages on the Participant's Form W-2,
and shall also include the amount of any salary reduction elected
by a Participant pursuant to a plan maintained by the Company
which is qualified under (Section Mark) 401(k) or 125 of the Code, but shall
exclude any income imputed to a Participant (including but not
limited to income imputed by reason of personal use of an
automobile owned by the Company and the Code (Section Mark) 79 cost for group
term insurance), and shall further exclude severance pay and pay
in lieu of vacations. For Plan Years beginning on or after
January 1, 1989, the maximum amount of Compensation that may be
taken into account pursuant to (Section Mark) 401(a)(17) of the Code, is
limited to $200,000, which limit shall be adjusted, pursuant to
(Section Mark) 415(d) of the Code, beginning in 1990, to reflect post-1986
cost-of-living increases measured by the Consumer Price Index,
except that the dollar increase in effect on January 1 of any
calendar year is effective for years beginning in such calendar
year and the first adjustment to the $200,000 limitation is
effected on January 1, 1990. If the Plan determines Compensation
on a period of time that contains fewer than twelve (12) calendar
months, then the annual Compensation limit is an amount equal to
the annual Compensation limit for the calendar year in which the
Compensation period begins, multiplied by the ratio obtained by
dividing the number of full months in the period by twelve (12).
In determining the Compensation of a Participant for
purposes of this limitation, the rules of (Section Mark) 414(q)(6) of the Code
shall apply, except in applying such rules, the term "family"
shall include only the spouse of the Participant and any lineal
descendants of the Participant 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 $200,000 limitation is
exceeded, then the limitation shall be prorated among the
affected individuals in proportion to each such individual's
Compensation as determined under this Paragraph 1.22 prior to the
application of this limitation.
If Compensation for any prior Plan Year is taken into
account in determining an Associate's contributions or benefits
for the current year, the Compensation for such prior year is
subject to the applicable annual Compensation limit in effect for
that prior year. For this purpose, for years beginning before
5
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January 1, 1990, the applicable annual Compensation limit is
$200,000.
1.23. "Contribution Participant" shall mean a
Participant who is an Associate on the last day of the Plan Year,
and who is entitled to an allocation of Company Contributions for
the Plan Year.
1.24. "Deferral" shall mean the salary reduction
arrangements between each Participant and the Company pursuant to
which an amount is contributed to the Plan by the Company in lieu
of being paid to a Participant as salary or wages, which is
referred to as a "Tax Deferred Contribution", and which is
credited to the Participant's Deferred Income Account, and is
fully vested at all times.
1.25. "Deferred Income Account" shall mean the Account
of a Participant to which Tax Deferred Contributions made
pursuant to the Participant's Deferral election under Paragraph
4.2 and the Increments or Decrements thereon are credited.
1.26. "Defined Contribution Dollar Limitation" shall
mean $30,000, or, if greater, one-fourth (1/4) of the defined
benefit dollar limitation set forth in (Section Mark) 415(b)(1) of the Code,
which is in effect for the Limitation Year.
1.27. "Disability" shall mean total and permanent
physical, nervous or mental condition of a Participant to perform
his or her usual duties for the Company, or the duties of such
other position or job that the Company makes available to the
Participant, and for which the Participant is qualified by reason
of training, education or experience; and such incapacity shall
be deemed to exist when determined by the Advisory Committee upon
the basis of the certificate of a qualified physician approved by
the Advisory Committee, and such other evidence as the Advisory
Committee deems acceptable; and the decision of the Advisory
Committee shall be final and conclusive for all purposes of the
Plan. Disability shall be effective as of the Adjustment Date
coinciding with or following the determination of disability.
1.28. "Discretionary Contributions" shall mean
contributions made to the Plan by the Company during or on
account of the Plan Year, on behalf of the Participants, which
shall include Matching Contributions and Profit Sharing
Contributions.
1.29. "Early Retirement" shall mean, effective for
Plan Years beginning on or after January 1, 1991, the Adjustment
Date coinciding with or immediately following the Participant's
attainment of age fifty-five (55), provided that the Participant
has completed seven (7) Years of Service with the Company, and
further provided the Participant notifies the Advisory Committee
6
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in writing at least sixty (60) days prior to the Adjustment Date
upon which Early Retirement shall be effective. Each Participant
who terminates employment after satisfying the service
requirement for Early Retirement and who thereafter reaches the
age requirement contained herein shall be entitled to receive his
benefits under the Plan.
1.30. "Effective Date" shall mean the date the Plan
was originally adopted, or effective. The Effective Date of
this amendment and restatement shall mean the 1st day of January,
1989, except where specifically stated otherwise.
1.31. "Entry Date" shall mean the January 1, or July 1
coinciding with or following the date the Associate meets the
eligibility requirements under the Plan.
1.32. "ERISA" shall mean Public Law No. 93-406, the
Employee Retirement Income Security Act of 1974, and all
amendments thereto.
1.33. "Family Member" shall mean an individual
described in (Section Mark) 414(q) of the Code, and defined in subparagraph
5.10(b)(v) and 5.13(b)(v).
1.34. "Fiduciaries" shall mean the Company, C.E.O.,
Advisory Committee, and Trustee, but only with respect to the
respective specific responsibilities of each for the Plan and
Trust , all as described in Article X.
1.35. "Forfeitures" shall mean the sum of the
non-vested portion of the Account Balances of all Participants
who terminate employment prior to becoming fully vested,
resulting in a provisional forfeiture pursuant to the provisions
of the Plan.
1.36. "Highly Compensated Associate" shall mean a
highly compensated employee described in (Section Mark) 414(q) of the Code,
and defined in subparagraphs 5.10(b)(iv) and 5.13(b)(iv).
1.37. "Hour of Service" shall mean:
(a) Each hour for which an Associate is directly or
indirectly paid, or entitled to payment from the Company for
the performance of duties, including each hour (to the
extent not included pursuant to the foregoing provisions of
this sentence) for which back pay (irrespective of
mitigation of damages) has been either awarded or agreed to
by the Company; and
(b) Each hour for which an Associate is paid, either
directly or indirectly, or entitled to payment, by the
Company even though no duties are performed (irrespective of
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whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of
absence (including maternity or paternity leave). No more
than 501 Hours of Service shall be credited under this
subparagraph 1.37(b) for any single continuous period during
which no duties are performed (whether or not such period
occurs in a single Plan Year). Hours of Service shall be
calculated and credited pursuant to subparagraphs (b) and
(c) in accordance with (Section Mark) 2530.200b-2 of the Department of
Labor Regulations, which are incorporated herein by
reference. Notwithstanding the above, no Hours of Service
shall be credited to an Associate if attributable to
payments made or due under a plan maintained solely for the
purpose of complying with applicable workers' compensation,
unemployment compensation or disability insurance laws or to
a payment which solely reimburses the Associate for medical
or medically-related expenses incurred by the Associate; and
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Company. The same Hours of Service shall not be credited
both under subparagraph 1.37(a) or 1.37(b), as the case may
be, and under this subparagraph 1.37(c). Hours credited
under this subparagraph 1.37(c) shall be credited to the
Associate for the time as of which the award or agreement
pertains rather than the time the award, agreement or
payment is made; and
(d) Each Hour of Service completed with a predecessor
company, provided the Company maintains the qualified plan
of a predecessor company.
1.38. "Inactive Participant" shall mean a former
Associate on whose behalf an Account is maintained under the
Plan.
1.39. "Increment or Decrement" shall mean the net gain
or loss, net of expenses, incurred by the Trust Fund or Account
determined by the Trustee as of the Valuation Date and allocated
in accordance with Paragraph 5.2.
1.40. "Investment Fund" shall mean the investment
alternatives within the Trust Fund, selected by the Advisory
Committee and maintained by the Trustee among which the
Participants are allowed to direct the investment of their
Accounts.
1.41. "Limitation Suspense Account" shall mean the
separate account maintained for the purposes of holding excess
Annual Additions as provided in subparagraphs 5.9(a) and (b),
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which shall not share in any Increment or Decrement of the Trust
Fund.
1.42. "Limitation Year" shall mean the twelve month
period beginning on the first day of December and ending on the
last day of November, during which the limitation on Plan
contributions and allocations is determined. All qualified plans
maintained by the Company must use the same Limitation Year. If
the Limitation Year is amended to a different twelve (12)
consecutive month period, the new Limitation Year must begin on a
date within the Limitation Year in which the amendment is made.
1.43. "Matching Contribution" shall mean contributions
to the Plan made by the Company in its discretion for the Plan
Year, and allocated to a Participant's Company Contribution
Account by reason of the Participant's Tax Deferred
Contributions.
1.44. "Named Fiduciary" shall mean the Advisory
Committee, which shall be in charge of the operation and
administration of the Plan.
1.58. "Normal Retirement" shall mean the termination
of employment of a Participant after the attainment of age sixty
(60), provided that to facilitate the training of replacements,
such Participant shall give the Department of Human Resources of
the Company 90 days advance notice in writing of the date on
which he or she wishes to retire. The Normal Retirement of a
Participant shall be effective as of the Adjustment Date of the
Plan Year in which the Participant satisfies the above
requirements. The Normal Retirement Age upon which a
Participant's Account Balance shall become 100% vested shall be
age sixty (60).
1.45. "Participant" shall mean any Associate who shall
have acquired either a forfeitable or nonforfeitable interest in
the Trust Fund pursuant to the provisions of the Plan.
1.46. "Plan" shall mean the Rose's Stores, Inc.
Variable Investment Plan, as set forth in and by this plan and
trust document and all subsequent amendments thereto.
1.47. "Plan Rules" shall mean rules adopted by the
Advisory Committee for the administration, interpretation or
application of the Plan.
1.48. "Plan Year" shall mean the twelve-month period
beginning on the first day of January and ending on the last day
of December of each year.
1.49. "Profit Sharing Contribution" shall mean any
contribution made to the Plan on account of the Plan Year, by the
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Company, in its discretion, on behalf of the Participants,
without regard to current or accumulated earnings or profits.
1.50. "Retirement" shall mean the Participant's
termination of employment on account of (a) Normal Retirement;
(b) Early Retirement; or (c) Disability. If a Participant shall
remain an Associate after becoming eligible for Retirement, the
Associate shall continue to be treated in all respects as a
Participant until his or her actual retirement. No retirement
benefits shall be payable to a Participant until his or her
termination of Associate status.
1.51. "Taxable Year" shall mean, except as provided
below, the twelve-month period adopted by the Company for its tax
purposes, which is the twelve-month period ending on the last
Saturday in January. If, at any time, the term "Company" shall
include more than one separate entity and all such separate
entities shall not have the same fiscal year, then such fiscal
year of each separate entity shall be the "Taxable Year" for each
such separate entity.
1.52. "Trust" as used herein shall mean the legal
entity resulting from this agreement between the Company and the
Trustee by which the Tax Deferred Contributions, Discretionary
Contributions, Transfers and Rollovers as defined in Article IV,
shall be received, held, invested, and disbursed to or for the
benefit of Participants or Beneficiaries. The Company and
Trustee may establish more than one Trust.
1.53. "Trust Fund" shall mean all funds received by
the Trustee, together with Increments or Decrements thereon.
1.54. "Trustee" shall mean Central Carolina Bank and
Trust Company, or such other person, persons, corporation, or
association, designated by the Company to serve as trustee
pursuant to Article VIII hereunder.
1.55. "Valuation Date" shall mean, effective April 1,
1992, the last business day of each month of the Plan Year on
which Accounts are valued. Prior to April 1, 1992, Valuation
Date was the last business day of each quarter of the Plan Year.
1.56. "Voluntary Contributions" shall mean voluntary
after-tax contributions made to the Plan by a Participant during
the Plan Year. No Voluntary Contributions may be made to this
Plan.
1.57. "Year of Service" shall mean any Plan Year
during which the Associate has completed at least one thousand
(1,000) Hours of Service with the Company. Years of Service
completed by any Associate with any corporation, partnership, or
proprietorship which is a member of a controlled group of
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corporations within the meaning of (Section Mark) 1563(a) of the Code,
determined without regard to (Section Mark)(Section Mark) 1563(a)(4)
and 1563(e)(3)(C) of the Code, or is a member of an
Affiliated Service Group with the Company, shall be
recognized as Years of Service with the Company.
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ARTICLE II
Administration of the Plan
2.1. Advisory Committee. The Advisory Committee
shall be the "Plan Administrator" (as that term is defined in
(Section Mark) 3(16)(A) of ERISA and (Section Mark) 414(g)
of the Code) in charge of the operation and the
administration of the Plan and shall also be
the "Named Fiduciary" (as that term is defined in ERISA). The
Advisory Committee shall have the power to delegate specific
fiduciary responsibilities (other than the fiduciary
responsibilities of the Trustee relating to the control of the
assets of the Plan). The delegation of fiduciary
responsibilities may be to Associates, or to other individuals,
all of whom shall serve at the pleasure of the Company; and, any
individuals who are Associates shall serve without compensation.
A delegation of duties shall be accomplished by a written
instrument executed by the Advisory Committee specifying
responsibilities delegated and the fiduciary responsibilities
allocated to such delegate. The allocation of such
responsibilities shall be effective upon the date specified in
the delegation, subject to written acceptance by the delegate.
Any delegation of responsibilities shall provide for reports no
less often than annually by such delegate to the Advisory
Committee. Such reports shall contain information necessary
fully to inform the Advisory Committee of the status and
operation of the Plan and of the delegate's discharge of
responsibilities delegated. Any person to whom fiduciary duties
have been delegated may resign by delivering a written
resignation to the Advisory Committee; however, the resignation
shall not relieve such person from any breach of fiduciary duty
that arose prior to the resignation or because of the
resignation. Vacancies created by resignation, death or other
cause may be filled by the Advisory Committee or the assigned
responsibilities may be reabsorbed by or redelegated by the
Advisory Committee. All usual and reasonable expenses of the
Advisory Committee shall be paid by the Trustee from the Trust
Fund to the extent not paid by the Company.
2.2. Authority. The Advisory Committee, as Plan
Administrator, shall administer the Plan in accordance with its
terms and shall have full power to exercise its discretion in
determining all questions arising in connection with the
administration, interpretation, and application of the Plan,
including adopting such Plan Rules as it deems necessary,
desirable or appropriate. The Advisory Committee shall interpret
and construe the provisions of the Plan, decide any disputes
which may arise with regard to the rights of Associates,
Participants, their legal representatives, or Beneficiaries under
the terms of this Plan, and, in general, direct the
administration of this Plan. The decision of the Advisory
Committee for matters within its jurisdiction shall be final,
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<PAGE>
binding, and conclusive upon the Company, Associates,
Participants, Beneficiaries, and every other person or party
interested or concerned. All rules and decisions of the Advisory
Committee shall be uniformly and consistently applied to all
Participants in similar circumstances.
2.3. Advisory Committee Procedure. The Advisory
Committee may act at a meeting or in writing without a meeting.
The Advisory Committee shall elect one of its members as
Chairman, appoint a Secretary, who may or may not be an Advisory
Committee member and advise the Trustee of such actions in
writing. The Secretary shall keep a record of all meetings and
forward all necessary communications to the Company, or the
Trustee. The Advisory Committee may adopt such by-laws and
regulations as it deems desirable for the conduct of its affairs.
All decisions of the Advisory Committee shall be made by the vote
of the majority including actions in writing, or by
telecommunications confirmed in writing.
A member of the Advisory Committee shall not vote or
act upon any matter which relates to such person as a Participant
or to any other matter in which the member has an interest which
may affect such member's best judgment as a fiduciary. If a
matter arises affecting one of the members of the Advisory
Committee and the other members of the Advisory Committee are
unable to agree as to the disposition of such matter, the Board
of Directors shall appoint a substitute member of the Advisory
Committee in the place of the affected member for the sole
purpose of passing upon and deciding the particular matter.
2.4. Forms. The Advisory Committee may prescribe
such forms as may be necessary or desirable under this Plan for
its efficient administration, including, but not limited to
application for benefits, designation of Beneficiaries, request
for Early, Normal or Disability Retirement, and investment
elections. The Advisory Committee may also prescribe how such
forms shall be executed, witnessed and/or approved, and to whom
and within what time they must be delivered to be effective,
except to the extent otherwise specifically provided by the Plan.
2.5. Funding. The Advisory Committee shall be
charged with the responsibility for the operation of the Plan,
including the authority and responsibility for establishing and
implementing a funding method and policy consistent with the
needs of the Plan and the requirements of ERISA. The funding
policy shall include the short and long term estimated cash
requirements needed for payment of benefits under the terms of
the Plan. The funding method and policy so established shall be
in writing, and a copy thereof shall be delivered to the Trustee.
2.6. Successor Fiduciary. Upon the death,
resignation, or inability to serve of any person to whom the
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Advisory Committee has delegated fiduciary duties, a successor
Fiduciary shall be appointed within thirty (30) days. If the
Advisory Committee shall cease to exist, or be dissolved,
voluntarily or involuntarily, or have a receiver or trustee in
bankruptcy appointed, a successor Fiduciary shall be appointed
within thirty (30) days by the then remaining persons (if any),
to whom fiduciary duties have been delegated, and, if there are
no remaining persons to whom fiduciary duties have been
delegated, or because of the inability, failure, or refusal of
the then remaining fiduciaries to make such appointment, a
successor Fiduciary shall be selected by a majority of the
Participants of the Plan who are Associates at the time of the
occurrence of the foregoing events.
2.7. Delegation of Services. The Advisory Committee
and those persons to whom it has delegated fiduciary duties may
employ such counsel and agents and obtain such clerical and other
services (including accounting, legal counsel, and investment
managers and advisors) as may be required in carrying out the
provisions of the Plan. Reasonable expenses for services of
individuals, who are not Associates, with respect to services
rendered on behalf of the Plan, shall be paid by the Trustee from
the Trust, to the extent not paid by the Company.
2.8. Signature Authority. If the Advisory Committee
shall delegate specific fiduciary responsibilities, it may
designate and authorize one or more of the persons being so
delegated to sign documents; and shall further notify the Trustee
of such action and the name or names of the person or persons so
designated. The Trustee shall thereafter accept and rely upon
any document executed by such person or persons as representing
action by the Advisory Committee until the Advisory Committee
shall deliver the Trustee a written revocation of such
designation.
2.9. Fiduciary Notice Requirements. The Advisory
Committee and those persons to whom it has delegated fiduciary
duties shall notify the Trustee of any action taken with respect
to the Plan, and when required to do so, shall notify any other
interested party. The Advisory Committee and those persons to
whom it has delegated fiduciary duties shall maintain all books
of account, records, and other data as shall be necessary to
properly administer the Plan and satisfy the disclosure and
reporting requirements of ERISA and the Code. The Advisory
Committee shall ensure that the Plan is in compliance with the
various regulatory requirements set forth in ERISA, the Code and
the regulations thereunder.
2.10. Reliance. The Advisory Committee shall be
entitled to rely conclusively upon, and shall be fully protected
in any actions taken by it in good faith, and in reliance upon
any opinions or reports which shall be furnished to it by any
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accountant, actuary, counsel, or other specialist. The Advisory
Committee shall accept and rely upon information furnished it by
the Company or obtained from the Company's books and records,
either directly or from the Company, C.E.O., or furnished it by a
Participant or Beneficiary, or the Trustee, and such information
shall be presumed by the Advisory Committee to be correct. The
Advisory Committee shall not incur any liability for its action
or failure to act, unless such liability arises from its own
gross negligence or willful misconduct. The Advisory Committee
shall indemnify each person to whom it has delegated fiduciary
duties against all claims, losses, damages, expenses, and
liabilities arising from any action or failure to act, except
when the same is judicially determined to be due to the gross
negligence or willful misconduct of such person.
2.11. Duties of the Advisory Committee. The Advisory
Committee shall have the responsibility for the operation and
administration of the Plan, and in addition to those duties
specifically enumerated elsewhere herein, shall have the
following specific duties:
(a) The Advisory Committee shall receive, review and
keep on file (as it deems convenient or proper) reports of
the financial condition, and of the receipts and
disbursements of the Trust Fund from the Trustee, and shall
furnish to the Company such reports as it may request. The
Advisory Committee shall file the reports required by ERISA
and maintain records to comply with governmental regulations
issued thereunder relating to records of Participants'
service, account balances and the percentage of such account
balances which are nonforfeitable under the Plan;
notifications to Participants; annual registration with the
Internal Revenue Service; and annual reports to the
Department of Labor.
(b) The Advisory Committee shall communicate to each
Associate a Summary of the Plan and of any subsequent
amendments thereto in the manner and within the time
prescribed by applicable law and regulations thereunder. A
copy of the Plan as well as all other documents required to
be made available to Participants or Beneficiary pursuant to
ERISA, shall be made available to each Participant or
Beneficiary hereunder by having the appropriate copies
available at the principal office of the Company during
business hours.
(c) The Advisory Committee shall provide the Trustee
with all information and instructions necessary for the
Trustee to carry out its administrative functions under this
Plan including all directions to the Trustee concerning all
benefits which are to be paid from the Trust Fund pursuant
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<PAGE>
to the provisions of the Plan, and warrants that all such
directions are in accordance with the Plan.
(d) The Advisory Committee shall have the duty to
correct errors of omission or commission in the
administration of the Plan as promptly as possible after
discovery.
2.12. Powers of the Advisory Committee. The Advisory
Committee shall have all powers necessary or desirable to
discharge all of its responsibilities and duties hereunder,
including, but not limited to, the following:
(a) The Advisory Committee shall have the power to
select and change Investment Funds, including insurance,
among which Participants are allowed to direct the
investment of their Accounts.
(b) The Advisory Committee shall have the power to
correct errors of omission or commission in the
administration of the Plan in such manner as, in its sole
discretion, seems most equitable and practical, including
specifically the power to correct errors in Participants'
Accounts occurring in one Plan Year but discovered later by
debiting or crediting Additions of the Plan Year in which
the error is discovered and corrected.
(c) The Advisory Committee shall review the investment
performance of the various Investment Funds at least
annually.
2.13. Limitations on Powers of the Advisory Committee.
Anything else herein to the contrary notwithstanding, the
Advisory Committee shall not have the power to:
(a) Add to, subtract from or modify any of the terms
of this Plan.
(b) Terminate this Plan.
(c) Add to any Benefits provided by this Plan, or
waive or fail to apply any requirements for eligibility to
Benefits under this Plan.
(d) Appoint or remove the Trustee.
2.14. Investment Funds. For investment purposes, the
assets of the Trust Fund (other than earmarked investments
described in Paragraph 6.8) shall be divided in accordance with
the Advisory Committee's instructions among the following
separate Investment Funds, which may be changed from
time-to-time:
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(a) the Company Stock Fund, which shall be invested in
Company Securities;
(b) the Guaranteed Income Fund, which shall be
invested, directly or indirectly, in fixed income
investments;
(c) the Diversified Equity Fund, which shall be
invested, by means of a mutual fund, in a diversified
portfolio of common stock; and
(d) such other Investment Fund as the Advisory
Committee shall designate from time to time, in its
discretion.
Subject to the limitations effective January 1, 1992
discussed herein with respect to those Participants subject to
the restrictions of Section 16(b) of the Securities Exchange Act
of 1934, when an Associate becomes a Participant, the Advisory
Committee shall give the Participant the right to specify how his
or her Account shall be invested in each of the Investment Funds.
Effective January 1, 1992, the Advisory Committee shall be
specifically authorized to establish procedures for the
individual direction of the investment of a Participant's Account
so as to comply with Section 404(c) of ERISA, and the regulations
promulgated thereunder, such that when a Participant exercises
his investment authority, the fiduciaries of the Plan shall not
be liable for such exercise of control and the Participant shall
not be deemed a fiduciary by reason of such exercise of control.
Nothing hereinabove shall mandate compliance, as to all or any
portion of the Plan, with any discretionary provision of Section
404(c) of ERISA, and the regulations promulgated thereunder,
especially to the extent compliance is inconsistent with the
purposes of the Plan, and in particular with the investment in
the Company Stock Fund, as well as earmarked investments
designated pursuant to Paragraph 6.4. Each Participant may elect
to invest in the Investment Funds in twenty-five percent (25%)
increments the portion of his or her Account which is not
invested in earmarked investments as defined in Paragraph 6.4.
As of every Valuation Date, the Advisory Committee shall give all
Participants the opportunity to elect to change how future
amounts credited to their Accounts are invested or to change how
amounts previously credited to their Accounts are invested.
Investment directions shall be made in writing in the manner
specified by the Advisory Committee and in accordance with
applicable Plan Rules. In the absence of a proper election under
this Article, the affected portion of a Participant's Account
shall be invested in the fund specified by the Advisory Committee
and all distributions shall be charged first to the portion of
the Participant's Account invested in that fund and then to the
balance of his or her Account.
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An Investment Fund shall be credited with all
Increments and Decrements thereon. Each fund shall be separately
valued, and the Increments and Decrements on an investment fund
shall be credited among the Accounts in proportion to their
interests in the Investment Fund. Consistent with the
requirements of ERISA, the Advisory Committee may establish
procedures for charging expenses incurred in the maintenance of
an Investment Fund against Accounts invested in such Investment
Fund; and may establish procedures for charging a Participant's
Account for the reasonable expenses of consummating the
investment instructions of the Participant. Such procedures
shall provide for the communication to Participants that such
charges shall be made and further provide for the periodic
communication to Participants of the actual expenses charged to
Accounts.
With respect to intra-plan transfers between the
Company Stock Fund and another fund of the Plan on behalf of a
Participant who is subject to the restrictions of Section 16(b)
of the Securities Exchange Act of 1934, effective January 1,
1992, subject to approval by the Internal Revenue Service, such
transaction may be made only pursuant to (i) an election made on
a quarterly date specified in Rule 16b-3(e)(3) at least six
months after the date of the Participant's previous intra-plan
transfer election relating to the Company Stock Fund, if any,
which election shall be effective as of the first date, following
the election, that a change would be effective for Plan
Participants, or (ii) an irrevocable election made by the
Participant at least six months in advance of the effective date
of the transaction.
2.15. Investment in Insurance. Effective for Plan
Years beginning on or after January 1, 1992, investments in
insurance shall no longer be allowed. However, if any
Participant has previously invested his or her Account in
insurance policies permitted under the Plan, such investment may
continue to be maintained under the Plan. Any provisions under
this Plan relating to investment in insurance policies shall be
applicable only with respect to such investments made prior to
January 1, 1992. Any such investment in insurance also shall be
subject to the following limitations:
(a) Subject to the limitations contained herein, a
Participant may elect to invest his or her Account in
individual or group insurance policies covering the
Participant or his or her spouse or children, and in
individual or group annuity contracts issued by one or more
insurance companies. A Participant may not invest his or
her Account in term life insurance contracts. Only ordinary
life insurance contracts and universal life insurance
contracts offered to Plan Participants by the Advisory
Committee may be purchased. Individual policies shall be
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<PAGE>
considered an earmarked investment of the Participant's
Account and premiums on such policies shall be charged to
such Account. The insurance contract must provide that
proceeds will be payable to the Trustee; however, the
Trustee shall be required to pay over all the proceeds of
the contract to the Participant's Beneficiary in accordance
with Article VII.
(b) Subject to all other distribution requirements in
Article VII, the Participant may request that the Advisory
Committee direct the Trustee to distribute such policies or
contracts intact to the Participant. Any policies or
contracts distributed must be nontransferable.
Alternatively, the Advisory Committee, at the election of a
Participant, may convert into cash the entire value of any
individual policies or contracts purchased for a
Participant's Account and credit such amount to the
Participant's Account.
(c) Not more than twenty five percent (25%) of the
aggregate amount of Company Contributions made on behalf on
any Participant may be used to pay premiums on ordinary or
universal life insurance contracts on the life of such
Participant, his or her spouse and children, provided
however, subject to the approval of the Advisory Committee
that an insurance contract meets the requirements of
Treasury Regulation Section 1.401-1(b)(1)(i), as interpreted
by the Internal Revenue Service, that insurance benefits
provided pursuant to the Plan be "incidental," the Plan
limitation on the aggregate amount of Company Contributions
which may be used to pay premiums on such an insurance
contract shall be increased from twenty-five percent (25%)
to not in excess of fifty percent (50%) of the aggregate
amount of Company Contributions made on behalf of the
Participant.
(d) Any dividends which become payable on any
contracts shall be used to provide additional benefits for
the Participant or shall be credited to the Participant's
Account, as determined by the Advisory Committee.
(e) A Participant may not borrow amounts from insurers
issuing such policies or on the collateral of such policies;
however, the Advisory Committee in its sole discretion may
direct the Trustee to borrow against the policies to fund
loans under Paragraph 11.3.
(f) The modes of settlement of any life insurance
contract distributed to a Participant must be limited to
those provided under Article VII.
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(g) In the case of any conflict between the provisions
of the Plan and the Trust Agreement and the terms of any
insurance contract, the provisions of the Plan and the Trust
Agreement shall control.
2.16. Delegation of Investment Responsibility. If an
insurance contract is purchased with assets of the Trust Fund and
assets of the insurer are or may be considered assets of the
Trust, such insurer shall be the investment manager (within the
meaning of (Section Mark) 3(38) of ERISA) with respect to such assets.
Similarly, if assets of the Trust are invested in a collective,
common or group trust (other than one trusteed by the Trustee)
and the assets of such other trust are or may be considered
assets of this Trust, the entity or person with investment
management responsibility with respect to such other trust shall
be a "named fiduciary" with respect to the investment management
of such other trust or if the person or entity qualifies under
(Section Mark) 3(38) of ERISA, such person or entity shall be the investment
manager of such trust. In either case, however, such persons or
entities shall exercise their investment management
responsibilities with respect to such assets in accordance with
the terms of the insurance contract or collective, common or
group trust and without any notice to the Trustee. The insurance
contract or collective, common or group trust itself shall,
nevertheless, be an asset of the Trust. Any decisions concerning
the purchase, retention, modification or termination of the
contract or other trust shall be made by the person with
investment responsibilities with respect to the contract or other
trust.
2.17. Special Accounting Rules for the Company Stock
Fund. The Company Stock Fund at the election of the Advisory
Committee may be maintained either as a pooled investment fund in
its entirety or only as to amounts that are not invested in
Company Securities as described below:
(a) Each Account invested in the Fund shall consist of
a cash portion (the "Cash Account") and its Company
Securities portion (the "Stock Account"). Unallocated
Company Contributions being held in the Fund shall be
credited to separate unallocated Cash and Stock Accounts.
(b) The Cash Account shall be invested in short-term
debt instruments, or other assets, pending investment in
Company Securities. The Increment or Decrement on the Cash
Account shall be credited in accordance with this Article as
if the Cash Accounts collectively constituted a separate
pooled investment fund, but the Increment or Decrement need
not be credited on the Valuation Date, and may instead be
credited on such other dates specified by the Advisory
Committee.
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(c) Stock Accounts shall be credited with a specific
number of shares of Company Securities rather than with an
undivided interest in a pool of Company Securities.
Accordingly, the unit accounting procedures set forth in
this Article shall not apply to Stock Accounts. Each Stock
Account, at any relevant time, shall be worth the fair
market value on that date of the shares of Company
Securities credited to it.
(d) Cash Accounts shall be invested in Company
Securities from time to time and Company Securities so
acquired shall be allocated among Stock Accounts in
proportion to the amount withdrawn from the corresponding
Cash Accounts.
(e) Cash dividends on Company Securities shall be
allocated to Cash Accounts in proportion to the shares held
in the corresponding Stock Accounts.
(f) Stock dividends on Company Securities shall be
credited to Stock Accounts in proportion to the shares of
Company Securities in such Accounts.
(g) If any rights, warrants or options are issued with
respect to Company Securities, the fiduciary managing the
Company Stock Fund shall exercise any or all of the rights,
warrants or options received on Company Securities in a
Stock Account for such Account using such cash as may be
available in the corresponding Cash Account. Company
Securities so acquired shall be credited to the Stock
Account. Alternatively, the fiduciary may sell any such
rights, warrants or options for the benefit of the Cash
Account corresponding to the Stock Account.
(h) A Participant shall have no right to request,
direct or demand that the Trust exercise on his or her
behalf rights to purchase shares of Company Securities or
other securities of the Company.
2.18. Valuation of Company Securities.
(a) To the extent that a Participant's Account is
invested in the Company Stock Fund and that Fund is being
administered under the special rules set forth in Paragraph
2.16, the Account shall include the Company Securities
credited to its Stock Account within the Fund at the time in
question. The Stock Account shall be worth the fair market
value of the Company Securities credited to it. To the
extent that Company Securities in a Stock Account are to be
distributed or withdrawn in cash, their value shall be
determined based on the mean trading price based on the
average of the quoted closing prices of the Company
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Securities credited to the Account on the twenty (20)
consecutive trading days immediately preceding the date of
valuation provided the security is in fact traded for at
least ten (10) days of such twenty (20) day period. For
purposes of fixing the valuation of Company Securities which
are neither traded on a national securities exchange nor
quoted on any system sponsored by a national securities
association for at least ten (10) of the twenty (20)
consecutive trading days preceding the date of valuation,
the contribution shall be valued at its fair market value as
determined in good faith and in accordance with Treasury
Regulations. For purposes of a distribution, the valuation
shall be made by the Trustee as of the Valuation Date on
which the distribution is effective, or as of such other
date specified by the Advisory Committee under a reasonable
method consistently applied. For purposes of determining
the value of Company Securities contributed in kind, the
value shall be as determined above.
(b) If the special rules of Paragraph 2.16 do not
apply and an in-kind distribution of Company Securities is
to be made, the amount to be distributed shall be determined
by dividing the value of the Participant's Account in the
Company Stock Fund, by the mean trading price of the Company
Securities to be distributed as determined under
subparagraph (a) above.
(c) For purposes of informing Participants of the
Plan's basis in Company Securities distributed in kind, the
Trustee shall keep records of the Plan's basis in Company
Securities in accordance with Treasury Regulation (Section Mark)
1.402(a)-1(b)(2).
2.19. Voting of Company Securities. Company
Securities contributed to the Plan are non-voting except when the
Company's certificate of incorporation is to be amended in a
manner affecting the capitalization of the Company. When such an
amendment is to be voted on, Company Securities in the Company
Stock Fund shall be voted by the Trustee in accordance with the
following procedure:
(a) As soon as practicable following the record date
for voting at any meeting of the shareholders of Company
Securities, the Advisory Committee shall furnish each
Participant with an appropriate form whereby he or she may
instruct the Trustee as to the manner in which the Trustee
is to vote the number of full shares (if any) of Company
Securities in his or her Account as of the end of the last
Plan Year quarter preceding the record date. If the
management of the Company is soliciting proxies in
connection with any such meeting, a copy of management's
proxy soliciting materials shall be furnished to the
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Participant at the same time. The Trustee shall vote shares
in the manner instructed by the Participant.
(b) If instructions are not received from a
Participant by the tenth day prior to the date of the
meeting, the Trustee shall vote the Participant's shares in
whatever manner the Trustee deems appropriate, or may give
its proxy thereon as so solicited. The Trustee in like
manner shall exercise the voting rights of all shares of
Company Securities in the Company Stock Fund's unallocated
Stock Account as of the end of the last Plan Year quarter,
together with all fractional shares of Company Securities
credited to Participants' Accounts.
(c) Special voting rules shall apply if an acquisition
offer is made for Company Securities. An "acquisition
offer" shall be an offer subject to (Section Mark) 14(d) of the
Securities Exchange Act of 1934 made by any person or group
to acquire all or part of the outstanding Company
Securities, including Company Securities held in the Plan.
Upon an acquisition offer, each Participant shall be
entitled to direct the Trustee (on a form to be prescribed
by the Advisory Committee) to tender all or part of the
shares of Company Securities in his or her Account as of the
end of the last Plan Year quarter preceding the date the
acquisition offer was made. If the Trustee receives such an
instruction by a deadline determined by the Trustee and
communicated to Participants, the Trustee shall tender the
Participant's Company Securities in accordance with his or
her instructions. Any Company Securities as to which the
Trustee does not receive instructions before the deadline
shall not be tendered by the Trustee. The Trustee shall
obtain and distribute to each Participant all appropriate
materials pertaining to the acquisition offer, including the
statement of the position of the Company with respect to the
offer issued pursuant to Regulation 14e-2 of the Securities
Exchange Act of 1934, as soon as practicable after such
materials are issued. (If the Company fails to issue such a
statement within five (5) business days after the
commencement of the offer, the Trustee shall distribute the
acquisition offer materials to each Participant without the
Company statement but shall distribute the Company statement
separately, as soon as practicable after it is issued.)
2.20. Withdrawals. Effective January 1, 1992, subject
to approval by the Internal Revenue Service, notwithstanding
anything herein to the contrary, with respect to withdrawals of
Company Securities from the Company Stock Fund (including an
intra-plan transfer between the Company Stock Fund and another
fund of the Plan), by Participants subject to the restrictions of
Section 16(b) of the Securities Exchange Act of 1934, such
Participants must thereafter cease further purchases in the
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Company Stock Fund for six months; provided, however, that
extraordinary distributions of all of the Company Securities held
by the Plan and the distributions in connection with death,
retirement, disability, termination of employment, or a qualified
domestic relations order as defined by the Code or ERISA, or the
rules thereunder, shall not be subject to the above provision
restricting distributions. Any Participant who is subject to the
restrictions of Section 16(b) of the Securities Exchange Act of
1934 who ceases participation in the Company Stock Fund may not
participate again for at least six months.
2.21. Limitations of the Securities Exchange Act of
1934. Notwithstanding any contrary provision herein, effective
January 1, 1992, subject to approval by the Internal Revenue
Service, the Plan shall be interpreted consistent with the
limitations imposed on insiders by the Securities Exchange Act of
1934, as amended, and the Advisory Committee is authorized to
establish such rules and procedures, including imposing
limitations on insiders, as it determines are necessary to comply
with the requirements of the Securities Exchange Act of 1934, as
amended.
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ARTICLE III
Eligibility and Participation
3.1. Eligibility. An Associate shall be eligible to
participate in the Plan as of the first Entry Date coinciding
with or following the date on which the person attains twenty-one
(21) years of age and completes one thousand (1,000) Hours of
Service during a twelve (12) consecutive month period commencing
on the day he or she first performs an Hour of Service for the
Company. Each successive twelve (12) month period shall begin on
the Anniversary Date following the date the Associate first
completes an Hour of Service. For eligibility purposes only, an
Associate shall not be credited with a Year of Service until the
end of the twelve (12) consecutive month period in which the
Associate first completes one thousand (1,000) Hours of Service.
No one shall become a Participant prior to the original adoption
date of the Plan. A rehired Associate whose prior Employment
terminated after he or she met all eligibility requirements shall
become a Participant on the first Entry Date following or
coinciding with the date he or she regains his or her status as
an Associate.
3.2. Authorized Leave of Absence. For purposes of
determining the period of employment of any Participant, a
Participant shall be deemed to be actively employed with the
Company during periods covered by an Authorized Leave of Absence,
with or without pay. No more than 501 Hours of Service shall be
credited on behalf of a Participant during an Authorized Leave of
Absence except if otherwise provided by law. Absence from work
for the following reasons shall constitute an Authorized Leave of
Absence:
(a) Illness or accident;
(b) A leave of absence authorized by the Company,
under the Company's standard personnel practices (as from
time to time amended), provided that the terms thereof shall
be applied uniformly to all Participants similarly situated,
and, provided, further, that the Participant returns to
service after the end of the Authorized Leave of Absence.
(c) During a period of national emergency or as
required by the Selective Service Act of 1948 or a
subsequent act of like intent or purpose requiring service
with the armed forces, the government of the United States,
the Coast Guard, or Public Health Service, provided the
Associate returns to the service of the Company within
ninety (90) days after completion of service as described
above, or such longer period during which the Associate's
employment rights are protected by law.
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Notwithstanding any of the above provisions, an
Associate who is not a Participant of the Plan at the time
such Authorized Leave of Absence commences, shall not become
eligible to participate in the Plan until he or she returns
to active employment with the Company.
3.3. Maternity or Paternity Leave. During a
maternity or paternity leave of absence, no more than 501 Hours
of Service shall be credited on behalf of a Participant, and
shall be credited solely to prevent a Break in Service. With
regard to a maternity or paternity leave of absence, the
following special provisions shall apply:
(a) An Associate shall be deemed to be on a maternity
or paternity leave of absence if he or she is absent from
work for any period because of the Associate's pregnancy,
the birth of a child of the Associate, or the placement of a
child with the Associate in connection with the adoption of
the child by the Associate, or for purposes of caring for
the child for the period immediately following the child's
birth or placement.
(b) An Associate shall be credited with the number of
Hours of Service which would otherwise normally have been
credited to him or her but for such absence, or, if such
Hours of Service cannot be determined, the Associate will be
credited with eight (8) Hours of Service per day for the
duration of the absence; provided, however, the total number
of Hours of Service credited to the Associate by reason of
such pregnancy, birth or placement shall not exceed 501
hours.
(c) Hours of Service credited as a result of maternity
or paternity leave shall be credited in the computation
period in which the absence from work begins, if solely
because such Hours of Service are credited, the Associate
would be prevented from incurring a Break in Service in such
period; and in all other cases, such Hours of Service shall
be credited in the immediately following computation period.
(d) No credit will be given for a maternity or
paternity leave of absence unless the Associate furnishes
the Advisory Committee whatever timely information it may
require to establish that the absence from work is for one
of the reasons described in subparagraph (a) above, as well
as whatever timely information is necessary to establish the
number of days of the absence.
3.4. Status During Leave of Absence. If a
Participant is on an Authorized Leave of Absence, he or she shall
continue to remain a Participant; however, no Company
Contributions or provisional forfeitures shall be allocated to
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the credit of the Participant's Account, except upon the basis of
such Compensation as the Participant may receive from the Company
during the Authorized Leave of Absence. If the Participant does
not return to the employ of the Company on or prior to the
expiration of the Authorized Leave of Absence, it shall be
conclusively presumed that his or her employment was terminated
as of the date of the expiration of such Authorized Leave of
Absence. If, however, the death of such Participant occurs prior
to the expiration of such Authorized Leave of Absence, the
Participant shall be entitled to the death benefit provided in
Paragraph 7.4.
3.5. Voluntary Participation. Notwithstanding the
positive statements as to eligibility herein made, participation
in the Plan shall be entirely voluntary on the part of each
Associate. The voluntary acceptance of the right to become a
Participant shall be evidenced conclusively by the signature of
the Associate on an application to become a Participant. If an
eligible Associate fails or refuses for any reason to participate
in the Plan, the Associate shall not thereby acquire, obtain, or
be vested with any rights to retirement pay, death benefits,
disability benefits, or severance pay from the Company, either
directly or indirectly, that may otherwise be provided by the
terms of the Plan.
3.6. Determination as to Eligibility. Any question
as to the eligibility of any Associate hereunder shall be
determined by the Advisory Committee in accordance with the terms
hereof, and such determination shall be final and conclusive for
all purposes. The Advisory Committee shall determine the
eligibility of Participants in accordance with the provisions of
this Plan and from the books and records of the Company, or from
such other information or evidence as it may deem sufficient, and
shall provide notice to each Associate when he or she has become
eligible to participate hereunder.
3.7. Leased Employees. Notwithstanding any other
provisions of the Plan, for purposes of determining the number or
identity of Highly Compensated Associates, and for purposes of
the requirements of (Section Mark) 414(n)(3) of the Code, the Associates of
the Company shall include individuals defined as Associates in
Paragraph 1.11 of the Plan. A "leased employee" within the
meaning of (Section Mark) 414(n)(2) of the Code, shall not become a
Participant of the Plan.
3.8. Years of Service for Eligibility Purposes.
(a) In the case of a Participant who does not have any
nonforfeitable right to the Account Balance derived from
Company Contributions, Years of Service before a period of
consecutive Breaks in Service will not be taken into account
in computing Years of Service for eligibility if the number
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of consecutive one-year Breaks in Service in such period
equals or exceeds the greater of five (5) or the aggregate
number of Years of Service. Such aggregate number of Years
of Service will not include any Years of Service disregarded
under the preceding sentence by reason of prior Breaks in
Service.
(b) If a Participant's Years of Service are
disregarded pursuant to the preceding subparagraph, such
Participant will be treated as a new Associate for
eligibility purposes. If a Participant's Years of Service
may not be disregarded pursuant to the preceding
subparagraph, such Participant shall continue to participate
in the Plan or, if terminated, shall participate immediately
upon reemployment.
3.9. Participation Upon Return to Eligible Class. In
the event a Participant is no longer a member of an eligible
class of Associates and becomes ineligible to participate but has
not incurred a Break in Service, such Associate will participate
immediately upon returning to an eligible class of Associates.
If such Associate incurs a Break in Service, eligibility will be
determined under the Break in Service rules of the Plan. In the
event an Associate who is not a member of an eligible class of
Associates becomes a member of an eligible class, such Associate
will participate immediately if such Associate has satisfied the
minimum age and service requirements and would have otherwise
previously become a Participant.
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ARTICLE IV
Company and Associate Contributions
4.1. Plan Contributions. For each Taxable Year of
the Company during the continuance of this Plan, the Company
shall contribute to the Trust, the amount of Tax Deferred
Contributions required pursuant to Paragraph 4.2, the amount of
Fail-Safe Contributions required pursuant to Paragraph 4.3, the
amount of Matching Contributions as determined pursuant to
Paragraph 4.4, and any Profit Sharing Contributions as determined
pursuant to Paragraph 4.5.
4.2. Tax Deferred Contributions. Subject to the
limitations established by this Article or Plan Rules, and
further subject to the limitations set forth in Paragraph 11.1(b)
regarding the safe-harbor hardship distribution requirements of
Treasury Regulation Section 1.401(k)-1(d)(2)(iii)(B), each
Participant may elect to make a Deferral from one percent (1%) to
twenty percent (20%) of his or her Compensation (if the Entry
Date of a Participant is July 1 during the Plan Year, his or her
Compensation will be calculated from July 1 to December 31) for
the Plan Year, subject to the limitations of Paragraphs 5.10 and
5.16. The Company shall contribute the Tax Deferred Contribution
of each Participant to the Participant's Deferred Income Account.
If the Plan meets the requirements of Paragraph 5.10, the
Advisory Committee may increase by a uniform percentage the
amount of each Participant's Compensation subject to Deferral.
A Tax Deferred Contribution will not be valid unless a
Tax Deferred Contribution Form is completed and delivered to the
Advisory Committee in a satisfactory manner. Except when
specifically allowed otherwise by the Advisory Committee, Tax
Deferred Contributions will be made by pro rata payroll
deductions, and must be made in whole percentages. A Participant
may change his or her Tax Deferred Contribution percentage twice
a year, at least fifteen (15) days prior to the Entry Date of the
Plan on which the new election will be effective. A Participant
may elect to stop completely Tax Deferred Contributions as of any
payroll period, by giving sufficient notice as shall be
determined by the Advisory Committee. If a Participant elects to
terminate his or her Tax Deferred Contributions, he or she cannot
resume making Tax Deferred Contributions until the Entry Date
next following a lapse of six (6) months. Provided, however, the
Advisory Committee may allow such a Participant to resume making
Tax Deferred Contributions at any time if necessary to meet the
requirements of Paragraph 5.10.
Notwithstanding any provision in the Plan to the
contrary: (a) a Participant shall not be allowed to make Tax
Deferred Contributions to the extent the election will cause the
Plan to exceed the maximum amount allowable as a deduction to the
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Company pursuant to (Section Mark) 404 of the Code; (b)
pursuant to (Section Mark) 402(g) of the Code,
for Plan Years beginning on or after January 1,
1987, a Participant shall not be permitted to make Tax Deferred
Contributions to this Plan during any calendar year in excess of
$7,000 multiplied by the Adjustment Factor as provided by the
Secretary of the Treasury, and any election for such an "Excess
Tax Deferred Contribution" shall be invalid and the directed
deferrals shall not be made.
4.3. Fail-Safe Contributions. If the rate of
Deferrals made by Participants who are Highly Compensated
Associates would be excessive, the C.E.O. in his or her
discretion may direct the Company to make a fully vested
"Fail-Safe" Contribution for Participants, who are not Highly
Compensated Associates, to be allocated among their Deferred
Income Accounts in proportion to their Compensation for the Plan
Year, except as follows:
(a) The Fail-Safe Contribution may be allocated among
specific Participants designated by the Advisory Committee,
so long as such Participants are Non-Highly Compensated
Associates.
(b) The maximum amount allocated under this Paragraph
to any Participant shall be limited so as to preclude the
Participant's Deferral Percentage, from exceeding the
Deferral limits contained in Paragraph 4.2.
(c) As determined by the Advisory Committee, effective
January 1, 1992, the Fail-Safe Contribution may be allocated
beginning with the Nonhighly Compensated Associate who has
the smallest Actual Deferral Percentage and allocating a
contribution until the Actual Deferral Percentage equals
that of the Nonhighly Compensated Associate with the next
lowest Actual Deferral Percentage. The Fail Safe
Contribution, and the allocation thereof, shall be the
minimum amount necessary to satisfy the appropriate test set
forth in Paragraph 5.10. If two or more Nonhighly
Compensated Associates have identical Actual Deferral
Percentages, their Actual Deferral Percentages shall be
increased pro rata until the percentages equal those of the
Nonhighly Compensated Associates with the next smallest
Actual Deferral Percentage (or the test in Paragraph 5.10
is otherwise satisfied).
4.4. Matching Contributions. The C.E.O. in his or
her discretion may direct that the Company make a Matching
Contribution on behalf of Participants who have made Tax Deferred
Contributions for a Plan Year. The Matching Contribution shall
be limited to a specified percentage of the Tax Deferred
Contributions made by a Participant, and may be made in the form
of Company Securities, or cash used to purchase such Company
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Securities. Matching Contributions shall be allocated to the
Matching Contribution Account of Participants as provided in
Paragraph 5.1 and shall vest in accordance with the vesting
schedule set forth in Paragraph 7.2.
4.5. Profit Sharing Contributions. The C.E.O. in his
or her discretion may direct that the Company make a Profit
Sharing Contribution for a Plan Year without regard to current or
accumulated earnings or profits. Notwithstanding the foregoing
the Plan shall continue to be designated a profit sharing plan
for purposes of (Section Mark) 401(a), 402, 412 and 417 of the Code. The
Profit Sharing Contribution shall be allocated to the Profit
Sharing Contribution Accounts of Contribution Participants, based
on the ratio that each Participant's Compensation (if the Entry
Date of a Participant is July 1 during the Plan Year, his or her
Compensation will be calculated from July 1 to December 31) bears
to the aggregate Compensation of all Participants, and shall vest
in accordance with the vesting schedule set forth in Paragraph
7.2.
4.6. Rollovers of Retirement Benefits. If an
Associate receives a lump sum distribution as defined by (Section Mark)
402(e)(4)(A) of the Code, or a qualified total distribution as
defined by (Section Mark) 402(a)(5)(E)(i), the maximum amount of which
constitutes the balance to the credit of the Associate in the
qualified plan reduced by nondeductible employee contributions
(other than accumulated deductible employee contributions within
the meaning of (Section Mark) 72(o)(5) of the Code), and if the distribution
qualifies for tax-free rollover treatment within the meaning of (Section Mark)
402 or 403 of the Code, then the distribution may be rolled over
into this Plan, subject to the approval of the Advisory
Committee, in whole or in part, either directly from such other
qualified plan, or by the Associate individually, or through the
medium of a conduit individual retirement account or individual
retirement annuity, subject to the following requirements and
limitations:
(a) Any rollover of a distribution from a prior
qualified plan into this Plan must occur within sixty (60)
days after the Associate receives the distribution from the
qualified plan.
(b) If a conduit individual retirement account or
individual retirement annuity is used, no amount in the
individual retirement account or individual retirement
annuity may be attributable to a source other than a
qualified total distribution or a lump sum distribution from
a qualified plan.
(c) A rollover to this Plan will not be allowed if the
Associate was a five percent (5%) owner, as defined in
(Section Mark) 416(i)(1)(B) of the Code, at the time of the distribution,
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as defined in (Section Mark) 402(a)(5)(E)(ii) of the Code. An Associate
requesting that a rollover be made to this Plan must furnish
the Advisory Committee sufficient information, including any
information that the Advisory Committee requests, to
determine whether the rollover would violate any provision
of the Code or this Plan.
The Advisory Committee shall establish a fully vested
"Rollover Account" for each Participant electing to make a
rollover contribution, to which shall be credited such rollover
contribution and the Increment or Decrement. If a Rollover
Account is for an Associate who is not otherwise a Participant,
the individual shall be considered a Participant with respect to
his or her Rollover Account, but for no other Plan purpose until
the Associate becomes a Participant. Rollover Accounts shall be
distributed at the same time the Participant is otherwise
entitled to receive a distribution (no in-service distribution of
Rollover Accounts shall be made).
4.7. Trustee-to-Trustee Transfers.
(a) If an Associate is or was previously a participant
of another plan qualified under (Section Mark) 401(a) of the Code,
including another qualified plan of the Company, the Trustee
shall be authorized to accept the balance to the credit of
the Associate in the other qualified plan if transferred by
the trustee of such other plan upon the following
conditions:
(i) the trustee of the other plan is authorized
to distribute the balance to the credit of the
Participant in the other plan; and
(ii) for record-keeping and accounting purposes,
the transferred account of the Participant shall be
separately accounted for; and
(iii) the balance to the credit of the Participant
transferred to this Plan shall not in any way reduce
any obligations of the Company under this Plan; and
(iv) in no event will transfers be accepted which
are in the form a life annuity or are subject to (Section Mark) 412
of the Code.
(b) The Advisory Committee may direct the Trustee to
transfer in a direct trustee-to-trustee transfer the balance
to the credit of a Participant to the trustee of another
qualified plan, if the trustee of the other plan is
authorized to accept such a transfer.
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4.8. Payment of Contributions. Tax Deferred
Contributions made by payroll deduction shall be paid to the
Trustee by the Company by the close of the calendar month
following the month of the Deferral. No Tax Deferred
Contributions shall be paid by the Company to the Trustee later
than thirty (30) days after the last day of the Plan Year.
Company Contributions shall be paid by the Company to the Trustee
for any Plan Year no later than two and one-half (21/2) months
after the Adjustment Date, or such later date as may be
prescribed in regulations under (Section Mark) 412(c)(1) of the Code.
4.9. Form of Contribution. The contribution made by
the Company for each Plan Year which is made on account of a
Participant's Tax Deferred Contribution election shall be made in
cash. The Company's Fail Safe, Matching and/or Profit Sharing
Contributions for each Plan Year shall be paid to the Trust in
cash, Company Securities or other securities of the Company, as
determined pursuant to the provisions of this Plan.
4.10. Exclusive Benefit of Associates. All
contributions made pursuant to the Plan shall be held by the
Trustee in accordance with the terms of this Agreement for the
exclusive benefit of those Associates who are Participants of the
Plan, including former Associates, and their Beneficiaries, and
shall be applied to provide benefits under the Plan and to pay
the expenses of the administration of the Plan and the Trust to
the extent that such expenses are not otherwise paid by the
Company. At no time prior to the satisfaction of all liabilities
with respect to such Associates and their Beneficiaries shall any
part of the Trust Fund (other than such part as may be required
to pay administration expenses and taxes) be used for, or
diverted to, purposes other than for the exclusive benefit of
such Associates and their Beneficiaries. However, without regard
to the provisions of this Paragraph 4.10:
(a) Because all contributions under the Plan are
conditioned on the qualification of the Plan under
(Section Mark)(Section Mark) 401(a) and 401(k)
of the Code and are further conditioned on the
requalification of the Plan as amended, provided the
amendment is submitted to the Internal Revenue Service
within one year of its adoption, if the Plan does not so
qualify or requalify, the Trustee, upon written request of
the Company, shall return to the Company the amount of the
Company Contributions and any Increment or Decrement thereon
within one (1) calendar year after the date that
qualification or requalification of the Plan is denied;
(b) Because all contributions are conditioned upon the
deductibility of the contributions under (Section Mark) 404 of the Code,
then, to the extent a deduction is disallowed, the Trustee,
upon written request of the Company, shall return the
contribution (to the extent disallowed) and any increment
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thereon to the Company within one (1) year after the date
the deduction is disallowed; and
(c) If a contribution or any portion thereof is made
by the Company because of a mistake of fact, the Trustee,
upon written request of the Company, shall return the
contribution to the Company without interest or other
increment. The return of all or the applicable portion of
the contribution shall be made not later than one (1) year
after said contribution is made or after it finally shall be
determined that it was made because of a mistake of fact, as
the case may be. The amount to be returned shall reflect
Trust net losses, if any, following said contribution, and
shall be limited to the extent necessary to avoid a
reduction of the Account Balance of any Participant to an
amount smaller than what the Account Balance would have been
if such contribution (to the extent made by mistake of fact
or otherwise determined to be nondeductible) had not been
made.
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ARTICLE V
Allocations and Limitations on Allocations
5.1. Establishment of Accounts. The Advisory
Committee shall establish and maintain for purposes of
administering the Plan separate accounts for the various types of
contributions made to the Plan. The Accounts will be in the name
of each Participant and separate records shall be kept as to all
transactions affecting the respective accounts. The Increment or
Decrement attributable to the contributions and withdrawals
therefrom shall be credited or debited respectively from each
Account. The respective accounts need not be segregated and held
by the Trustee as a separate fund but may be held as a commingled
Trust Fund together with the other funds of the Plan. The
Advisory Committee, in its discretion, may charge any Account for
part or all of its proportionate part, according to its value, of
the expenses incurred in investing the Trust Fund and in the
administration of the Plan. Each Participant's Account shall
consist of his or her Deferred Income Account, Company
Contribution Account, Rollover Account, and Transfer Account, as
follows:
(a) The amount of Tax Deferred Contributions, as
determined pursuant to Paragraph 4.2, and Fail-Safe
Contributions as determined pursuant to Paragraph 4.3, shall
be allocated as of each Valuation Date to the "Deferred
Income Account," and shall be fully vested at all times, and
credited with the Increment or Decrement thereon.
(b) The amount of Discretionary Contributions, as
determined pursuant to Paragraphs 4.4 and 4.5 shall be
allocated as of the Adjustment Date, unless otherwise
provided, to the "Company Contribution Account," and shall
be credited with the Increment or Decrement thereon.
Discretionary Contributions shall be respectively allocated
as follows:
(i) The Matching Contribution for each Plan Year
as determined pursuant to Paragraph 4.4, shall be
allocated only to those Participants who made Tax
Deferred Contributions during the Plan Year and who are
Associates on the Adjustment Date and who completed one
thousand (1,000) Hours of Service during such Plan
Year, or who terminated employment during the Plan Year
on account of death or Retirement. Matching
Contributions shall vest in accordance with the
applicable vesting schedule set forth in Paragraph 7.2.
(ii) The amount of Profit Sharing Contributions as
determined pursuant to Paragraph 4.5, shall be
allocated as of the Adjustment Date to the "Company
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Contribution Account" and shall be credited with
contributions and the Increment or Decrement thereon.
Profit Sharing Contributions shall vest in accordance
with the applicable vesting schedule set forth in
Paragraph 7.2. The Company's Profit Sharing
Contribution for each Plan Year shall be allocated
among the Participants of the Plan who are Associates
on the Adjustment Date and who completed one thousand
(1,000) Hours of Service during such Plan Year, or who
terminated employment during the Plan Year on account
of death or Retirement.
Notwithstanding anything herein to the contrary, for
Plan Years beginning on or after January 1, 1990, if the
Plan fails to meet the requirements of (Section Mark)(Section Mark)
401(a)(26), 410(b)(1) or 410(b)(2)(A)(i) of the Code and the Regulations
thereunder because Discretionary Contributions made in
accordance with Paragraphs 5.1(b)(i) and (ii) above have not
been allocated to a sufficient number or percentage of
Participants for a Plan Year, then each Participant, other
than those Participants who terminate employment during the
Plan Year prior to completion of at least 501 Hours of
Service, shall be entitled to receive an allocation of such
Discretionary Contributions for that Plan Year to the extent
necessary to satisfy the requirements of the Code.
Nothing in this Section shall permit the reduction of a
Participant's Account Balance. Therefore any amounts that
have previously been allocated to Participants may not be
reallocated to satisfy these requirements. In such event,
the Company shall make an additional contribution equal to
the amount such affected Participants would have received
had they been included in the allocations, even if it
exceeds the amount which would be deductible under Code
(Section Mark) 404. Any adjustment to the allocations pursuant to this
Paragraph 5.1(b) shall be considered a retroactive amendment
adopted by the last day of the Plan Year.
(c) The amount of Rollovers made by a Participant, as
determined by Paragraph 4.6, shall be allocated as of the
Adjustment Date to the "Rollover Account." These amounts
shall be fully vested at all times and shall be credited
with the Increment or Decrement thereon.
(d) The amount of Transfers to the Plan as determined
pursuant to Paragraphs 4.7, shall be allocated as of the
Adjustment Date to the "Transfer Account," and shall be
credited with the Increment or Decrement thereon.
5.2. Account Allocations. The Increment or Decrement
for each of the above Accounts shall be allocated in the
following manner:
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(a) The Increment or Decrement of the Investment
Fund shall be determined by the Trustee as of the Valuation
Date as follows: (i) the fair market value of the
Investment Fund on the current Valuation Date, minus (ii)
the fair market value of the Investment Fund on the
preceding Valuation Date, minus (iii) all contributions paid
to the Investment Fund from the preceding valuation Date
to the current Valuation Date, plus (vi) all benefit
payments made from the preceding Valuation Date through the
current Valuation Date.
(b) The Increment or Decrement of the Investment
Fund for the period as so determined shall then be allocated
as of the Valuation Date for such period in the proportion
that each Participant's Account Balance in the Investment
Fund as of the preceding Valuation Date (less any benefit
payments or withdrawals made since such Valuation Date)
bears to the total account balances in the Investment Fund
of all Participants as of the preceding Valuation Date (less
any benefit payments or withdrawals made since such
Valuation Date).
(c) The Trustee shall adjust each Participant's
Account on each Valuation Date to reflect the effect of
contributions and the effect of any income received or
accrued, realized and unrealized profits and losses,
expenses and all other transactions of the preceding period.
These adjustments shall be reflected in a statement prepared
as of the Valuation Date and furnished to each Participant
by the Advisory Committee.
(d) The determination of the Trustee as to the
proportion of any contribution, or net increase or decrease
in the value of an Investment Fund to be allocated among
the Participants shall be conclusive.
(e) An Account shall share in an Investment Fund's
Increment or Decrement only to the extent the Account is
invested in the Investment Fund. If the Company Stock Fund
is accounted for under the special rules set forth in
Paragraph 2.16, only the Cash Accounts within such Fund
shall be revalued under this Paragraph, as more fully
provided in Paragraph 2.16.
5.3. No Interest in Specific Assets. The fact that
an allocation shall be made and credited to the Account of a
Participant shall not vest in such Participant any right, title,
or interest in any specific assets except at the time or times,
and upon the terms and conditions expressly set forth in the
Plan.
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5.4. Forfeitures. Prior to being allocated to the
Accounts of Participants in accordance with Paragraph 4.5, the
amount of provisional forfeitures shall first be used to
reinstate the nonvested Account Balance of Participants who have
returned to employment or have been located after a forfeiture of
their Account and who are entitled to reinstatement of their
Account pursuant to Paragraphs 7.3 or 7.9.
If a Participant is entitled to have his or her
nonvested Account Balance reestablished, then at any given time,
the vested interest in such reestablished account shall be
determined in accordance with the following formula:
X = P [AB + (RxD)] - (RxD)
For purposes of the formula, P is the vested percentage at the
time of the subsequent termination; AB is the total of the
Account Balances at that time; D is the amount of the vested
Account Balance previously distributed; and R is the ratio of the
Account Balance at the time of the subsequent termination to the
Account Balance remaining after the previous distribution.
The amount required to make any reinstatement under
Paragraphs 7.3 or 7.9 shall be provided first from the
provisional forfeitures which occur during the Plan Year in which
such reinstatement is required to be made. If the amount of
reinstatements exceeds this amount, then the reinstatement shall
be provided from among the following sources as the Advisory
Committee shall determine in its discretion, using uniform
principles consistently applied in a nondiscriminatory manner:
(a) The Company Contributions for the Plan Year in
which the reinstatement is required.
(b) The net appreciation of the value of the Trust
Fund for the Plan Year in which the reinstatement is
required.
(c) An additional contribution from the Company.
5.5. Maximum Company Contributions. Notwithstanding
any other provisions of the Plan, no annual contribution of the
Company to the Trust shall exceed the lesser of the following
amounts: (i) the greater of an amount equal to the maximum
deduction allowable to the Company in such Taxable Year for
Federal income tax purposes pursuant to (Section Mark) 404 of the Code or such
maximum amount plus an amount in excess of such deductible amount
if the excess was contributed pursuant to Paragraph 5.1(b); or
(ii) the maximum amount permitted to be contributed pursuant to
the provisions of (Section Mark) 415 of the Code. For purposes of applying
the limitations of (Section Mark) 415 of the Code, if the Company is a member
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of a group of Companies which constitutes an Affiliated Company,
all Companies shall be considered a single Company.
5.6. Determination of Maximum Annual Addition.
(a)The Maximum Annual Additions credited to a
Participant's account for any Limitation Year shall not
exceed the lesser of (i) the Defined Contribution Dollar
Limitation as defined in Paragraph 1.26 of the Plan, or
(ii) twenty-five percent (25%) of the Participant's
compensation as defined by (Section Mark) 415(c)(3) of the Code for such
Limitation Year. The compensation limitation referred to in
(ii) above shall not apply to any contribution for medical
benefits after separation from service, within the meaning
of (Section Mark) 401(h) or 419A(f)(2) of the Code, which is otherwise
treated as an Annual Addition; or any amount treated as an
Annual Addition under (Section Mark) 415(l)(1) or
(Section Mark) 419A(d)(2) of the Code.
(b) For purposes of applying the limitations of this
Paragraph 5.6, "compensation" shall be defined as provided
in Treasury Regulations Section 1.415-2(d) and shall include
(1) the Associate's wages, salaries and fees for
professional services and other amounts received (without
regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of
employment with the Company to the extent that the amounts
are includable in the Associate's gross income (including
but not limited to, commissions paid salesman, compensation
for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements or other expense allowances
under a nonaccountable plan (as described in (Section Mark) 1.62-2(c) of
the Code), and excluding the following: (a) contributions
made by the Company to a plan of deferred compensation to
the extent that, before the application of the (Section Mark) 415 of the
Code limitations to that plan, the contributions are not
includable in the gross income of the Associate for the
taxable year in which contributed; (b) Company contributions
made on behalf of an Associate to a simplified employee
pension plan described in (Section Mark) 408(k) of the Code; (c) any
distributions from a plan of deferred compensation; (2)
amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by the
Associate either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture; (d) amounts
realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and (e) other
amounts which received special tax benefits, or
contributions made by the Company (whether or not under a
salary reduction agreement) towards the purchase of an
annuity contract described in (Section Mark) 402(b) of the Code (whether
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or not the contributions are actually excludable from the
gross income of the Associate).
(c)Prior to the determination of a Participant's
actual Code (Section Mark) 415(c)(3) compensation for a Limitation Year,
the Maximum Annual Addition may be determined on the basis
of the Participant's estimated annual compensation for such
Limitation Year. Such estimated annual compensation shall
be determined on a reasonable basis and shall be uniformly
determined for all Participants similarly situated. Any
Company Contribution (including allocation of forfeitures)
based on estimated annual compensation shall be reduced by
any excess amounts carried over from prior years.
(d)As soon as is administratively feasible after the
end of the Limitation Year, the Maximum Annual Addition for
such Limitation Year shall be determined on the basis of the
Participant's actual Code (Section Mark) 415(c)(3) compensation for such
Limitation Year.
(e) If the Participant does not participate in, and
has never participated in another qualified plan maintained
by the Company or a welfare benefit fund, as defined in (Section Mark)
419(e) of the Code, maintained by the Company, or an
individual medical account, as defined in (Section Mark) 415(l)(2) of the
Code, maintained by the Company, which provides an Annual
Addition as defined in Paragraph 1.10, the amount of Annual
Additions which may be credited to the Participant's Account
for any Limitation Year will not exceed the lesser of the
maximum permissible amount or any other limitation contained
in this Plan. If the Company Contribution that would
otherwise be contributed or allocated to the Participant's
Account would cause the Annual Additions for the Limitation
Year to exceed the maximum permissible amount, the amount
contributed or allocated will be reduced so that the Annual
Additions for the Limitation Year will equal the maximum
permissible amount, as provided in Paragraph 5.9.
5.7. Rules Relating to Company Which Maintains One or
More Qualified Defined Contribution Plans in Addition to this
Plan.
(a) This Paragraph 5.7 applies if, in addition to this
Plan, the Participant is covered under another qualified
defined contribution plan maintained by the Company, a
welfare benefit fund, as defined in (Section Mark) 419(e) of the Code,
maintained by the Company, or an individual medical account,
as defined in (Section Mark) 415(1)(2) of the Code, maintained by the
Company, which provides an Annual Addition as defined in
Paragraph 1.10, during any Limitation Year. The Annual
Additions which may be credited to a Participant's Account
under this Plan for any such Limitation Year will not exceed
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the maximum permissible amount reduced by the Annual
Additions credited to a Participant's Account under the
other plans and welfare benefit funds for the same
Limitation Year. To the extent allowed by the Code, if the
Annual Additions with respect to the Participant under such
other defined contribution plans and welfare benefit funds
in the aggregate when added to the contributions under this
Plan are equal to or greater than the maximum permissible
amount, the Annual Additions with respect to the other plans
and funds shall be first reduced, and only if the Annual
Additions with respect to the other plans and funds cannot
be reduced shall any amount contributed or allocated to the
Participant's Account under this Plan for the Limitation
Year be reduced.
(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Company may
determine the maximum permissible amount for a Participant
in the manner described in subparagraph 5.6(b).
(c) As soon as is administratively feasible after the
end of the Limitation Year, the maximum permissible amount
for the Limitation Year will be determined on the basis of
the Participant's actual Compensation for the Limitation
Year.
(d) If, pursuant to subparagraph 5.7(c) above, or as a
result of the allocation of forfeitures, a Participant's
Annual Additions under this Plan and such other plans would
result in an excess amount for a Limitation Year, the excess
amount will be deemed to consist of the Annual Additions
last allocated, except that Annual Additions attributable to
a welfare benefit fund or individual medical account will be
deemed to have been allocated first regardless of the actual
date of allocation.
(e) If an excess amount was allocated to a Participant
on an allocation date of this Plan which coincides with an
allocation date of another plan, the excess amount
attributed to this Plan will be the product of,
(i) the total excess amount allocated as of such
date, times
(ii) the ratio of the Annual Additions allocated
to the Participant for the Limitation Year as of such
date under this Plan to the total Annual Additions
allocated to the Participant for the Limitation Year as
of such date under this and all the other qualified
defined contribution plans.
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(f) Any excess amount attributed to this Plan will be
disposed in the manner described in Paragraph 5.9.
5.8. Aggregation With Defined Benefit Plan. The
following limitations shall apply if the Company maintains one or
more qualified defined benefit plans in addition to this Plan:
(a) If the Company shall maintain one or more defined
benefit plans (as defined in (Section Mark) 414(j) of the Code) in
addition to this Plan, then in addition to the limitations
contained in this Article V, the sum of the Defined Benefit
Plan Fraction and the Defined Contribution Plan Fraction on
behalf of each Plan Participant for any Plan Year, computed
as of the close of the Plan Year, shall not exceed 1.0.
(b) Anything in this Paragraph 5.8 to the contrary
notwithstanding, if for any Plan Limitation Year the sum of
the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction, as determined by using the
formulae hereinafter set forth in subparagraph 5.8(d)
shall exceed 1.0, the numerator of the Defined Contribution
Plan Fraction shall be decreased to the extent necessary to
reduce the sum of said fractions to 1.0.
(c) If a Participant's allocation must be reduced by
reason of this Paragraph 5.8, the reduction shall be made
in this Plan and shall be effected in the manner provided
for by Paragraph 5.9.
(d) For purposes of determining the limitations of
subparagraph 5.8(a), the following terms shall have the
meanings hereinafter set forth:
(i) The "Defined Benefit Plan Fraction" is a
fraction, the numerator of which is the Participant's
projected normal retirement benefits under all of the
defined benefit plans (whether or not terminated)
maintained by the Company payable in the form of a
straight life annuity and expressed as an annual
benefit (determined as of the close of the Plan Year),
and the denominator of which is the lesser of:
(A) The product of 1.25 times the dollar
limitation determined for the Limitation Year
under (Section Mark)(Section Mark) 415(b) and (d) of
the Code for such Plan Year, or
(B) The product of 1.4 times 100% of the
Participant's Compensation for the three (3)
consecutive Limitation Years during which he or
she had the greatest compensation from the Company
42
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while an active Participant in the Plan, including
any adjustments under (Section Mark) 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation
Year beginning after December 31, 1986, in one or more
defined benefit plans maintained by the Company which
were in existence on May 6, 1986, the denominator of
this fraction will not be less than one hundred
twenty-five percent (125%) of the sum of the annual
benefits under such plans which the Participant had
accrued as of the close of the last Limitation Year
beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plans after
May 5, 1986. The preceding sentence applies only if
the defined benefit plans individually and in the
aggregate satisfied the requirements of (Section Mark) 415 for all
Limitation Years beginning before January 1, 1987.
(ii) The "Defined Contribution Plan Fraction" is
a fraction, the numerator of which is the sum of the
Annual Additions to the Participant's Account under
all the defined contribution plans (whether or not
terminated) maintained by the Company for the current
and all prior Limitation Years (including the Annual
Additions attributable to the Participant's
nondeductible Associate Contributions to all defined
benefit plans, whether or not terminated, maintained by
the Company, and the Annual Additions attributable to
all welfare benefit funds, as defined in (Section Mark) 419(e) of
the Code, and individual medical accounts, as defined
in (Section Mark) 415(1)(2) of the Code, maintained by the Company),
and the denominator of which is the sum of the maximum
aggregate amounts for the current and all prior
Limitation Years of Service with the Company
(regardless of whether a defined contribution plan was
maintained by the Company). The maximum aggregate
amount in any Limitation Year is the lesser of the
following amounts determined for such Plan Year and for
each prior Year of Service with the Company:
(A) The product of 1.25 times the dollar
limitation in effect under (Section Mark)(Section Mark)
415(b) and (d) of the Code in effect under
(Section Mark) 415(c)(1)(A) of the
Code for such Plan Year, or
(B) Thirty-five percent (35%) of the
Participant's Compensation for such Plan Year.
The Annual Addition for any Limitation Year
beginning before January 1, 1987, shall not be
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recomputed to treat all Associate contributions as
Annual Additions.
If the Associate was a Participant as of the end
of the first day of the first Limitation Year beginning
after December 31, 1986, in one or more defined
contribution plans maintained by the Company which were
in existence on May 6, 1986, the numerator of this
fraction will be adjusted if the sum of this fraction
and the defined benefit fraction would otherwise exceed
1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the
excess of the sum of the fractions over 1.0 times (2)
the denominator of this fraction, will be permanently
subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation
year beginning before January 1, 1987, and disregarding
any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the (Section Mark) 415 limitation
applicable to the first Limitation Year beginning on or
after January 1, 1987.
(e) For purposes of applying the limitations of
subparagraph 5.8(a) all defined benefit plans of the
Company shall be considered as a single plan, and all
defined contribution plans of the Company shall be
considered as a single plan. If the Company maintains more
than one defined benefit plan, (Section Mark) 415(b)(1)(B) of the Code
(which limits the annual benefit to which a Participant is
entitled to 100% of his average compensation for his highest
three years) shall be applied separately with respect to
each such plan; but in applying such limitation to the
aggregate of such defined benefit plans, the highest three
years of compensation taken into account shall be the period
of consecutive Limitation Years (not to exceed three) during
which an individual had the greatest aggregate compensation
from the Company.
5.9. Excess Annual Additions. If, as a result of the
allocation of forfeitures, a reasonable error in estimating the
annual Compensation of a Participant, or a reasonable error in
determining the amount of elective deferrals (within the meaning
of (Section Mark) 402(g)(3) of the Code) that may be made with respect to any
individual within the limits of (Section Mark) 415 of the Code, the Annual
Additions with respect to any Participant for any Plan Year would
exceed the limitations set forth in the preceding paragraphs of
this Article V, the excess amount shall be treated as follows:
(a) First, Tax Deferred Contributions, if any, made
by the Participant which would constitute an Annual Addition
for the Plan Year shall be returned to the Participant.
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(b)Second, any remaining excess shall be reallocated
to the other Participants proportionately on the basis that
Profit Sharing Contributions are allocated to the
Participants under the provisions of subparagraph 5.1(c) to
the extent that such allocations do not cause the Annual
Additions of any other Participant's account to exceed the
limitations of this Article V.
(c) To the extent that such allocation or reallocation
of excess amounts causes the limitations of this Article V
to be exceeded with respect to all Plan Participants for the
Plan Year, then such amounts will be held unallocated in a
Limitation Suspense Account, to be allocated in the next
Plan Year(s) prior to the allocation of any amount that
would constitute an Annual Addition, on the basis that
Profit Sharing Contributions would be allocated pursuant to
subparagraph 5.1(b)(ii) of the Plan.
(d) If a Limitation Suspense Account is in existence
at any time during a Limitation Year pursuant to this
subparagraph 5.9(d), it will not participate in the
allocation of the Trust's investment gains and losses. If a
Limitation Suspense Account is in existence at any time
during a particular Limitation Year, all amounts in the
Limitation Suspense Account must be allocated
and reallocated to Participants' Accounts before any Company
Contributions may be made to the Plan for that Limitation
Year. Excess amounts may not be distributed to Participants
or former Participants. Upon termination of the Plan, any
amount remaining in the Limitation Suspense Account which is
unallocable shall revert to the Company.
(e) Notwithstanding anything in this Paragraph 5.9 to
the contrary, the Advisory Committee may distribute such
excess amounts which are attributable to a Participant's Tax
Deferred Contributions, provided such distribution will
reduce the excess amounts in the Participant's account. Any
amounts so distributed shall be disregarded for purposes of
determining the maximum deferral under (Section Mark) 402(g), as well as
for purposes of the Average Deferral Percentage test, as
described in Paragraph 5.10.
5.10 . Limitations on Tax Deferred Contributions.
(a) Tax Deferred contributions made to the Plan must
satisfy one of the two following tests:
(i) The Average Actual Deferral Percentage for
Eligible Participants who are Highly Compensated
Associates for the Plan Year shall not exceed the
Average Actual Deferral Percentage for Eligible
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Participants who are Nonhighly Compensated Associates
for the Plan Year multiplied by 1.25; or
(ii) The Average Actual Deferral Percentage for
Eligible Participants who are Highly Compensated
Associates for the Plan Year shall not exceed the
Average Actual Deferral Percentage for Eligible
Participants who are Nonhighly Compensated Associates
for the Plan Year multiplied by two (2), provided that
the Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Associates does
not exceed the Average Actual Deferral Percentage for
Eligible Participant who are Nonhighly Compensated
Associates by more than two (2) percentage points, or
such lesser amount as the Secretary of the Treasury
shall prescribe to prevent the multiple use of this
alternative limitation with respect to any Highly
Compensated Associates.
(b) For purposes of this Paragraph 5.10, the
following definitions shall apply:
(i) "Average Actual Deferral Percentage" shall
mean the average (expressed as a percentage
calculated to the nearest one-hundredth of one percent)
of the Actual Deferral Percentages of the Eligible
Participants in a group.
(ii) "Actual Deferral Percentage" shall mean the
ratio (expressed as a percentage calculated to the
nearest one-hundredth of one percent), of the sum of
the Tax Deferred Contributions under the Plan on behalf
of the Eligible Participant for the Plan Year, to the
Eligible Participant's Total Compensation for the Plan
Year; and the determination and treatment of the Actual
Deferred Percentage shall satisfy such other
requirements as may be prescribed by the Secretary of
the Treasury.
(iii) "Eligible Participant" shall mean any
Associate of the Company who is otherwise authorized
under the terms of the Plan to have Tax Deferred
Contributions allocated to his or her Account for the
Plan Year.
(iv) "Highly Compensated Associate" includes
highly compensated active Associates and highly
compensated former Associates.
A highly compensated active Associate includes any
Associate who performs service for the Company during
the determination year and who, during the look-back
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year: (a) received compensation from the Company in
excess of $75,000 (as adjusted pursuant to (Section Mark) 415(d) of
the Code); (b) received compensation from the Company
in excess of $50,000 (as adjusted pursuant to (Section Mark) 415(d)
of the Code) and was a member of the top-paid group for
such year; or (c) was an officer of the Company and
received compensation during such year that is greater
than fifty percent (50%) of the dollar limitation in
effect under (Section Mark) 415(b)(1)(A) of the Code. The term
"Highly Compensated Associate" also includes:
(a) 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 one hundred (100) Associates
who received the most compensation from the Company
during the determination year; and (b) Associates who
are five percent (5%) owners at any time during the
look-back year or determination year.
If no officer has satisfied the compensation
requirement of (c) 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 twelve (12) month period immediately preceding the
determination year.
A highly compensated former Associate includes any
Associate who separated from service (or was deemed to
have separated) prior to the determination year,
performs no service for the Company during the
determination year, and was a highly compensated active
Associate for either the separation year or any
determination year ending on or after the Associate's
fifty-fifth (55th) birthday.
If an Associate is, during a determination year or
look-back year, a Family Member as defined in Paragraph
1.29, of either a five percent (5%) owner who is an
active or former Associate or a Highly Compensated
Associate who is one of the ten (10) most Highly
Compensated Associates ranked on the basis of
compensation paid by the Company during such year, then
the Family Member and the five percent (5%) owner or
top-ten Highly Compensated Associate shall be
aggregated. In such case, the Family Member and five
percent (5%) owner or top-ten 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 five
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percent (5%) owner or top-ten 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 one hundred (100) Associates, the number of
Associates treated as officers and the compensation
that is considered, will be made in accordance with (Section Mark)
414(q) of the Code and the regulations thereunder.
(v) "Family Member" shall mean an Associate of
the Company who is a spouse, lineal ascendant or
descendant, or a spouse of a lineal ascendant or
descendant of a Highly Compensated Associate who is a
five percent (5%) owner of the Company, or one of the
top ten (10) Highly Compensated Associate by pay.
(vi) "Nonhighly Compensated Associate" shall mean
an Associate of the Company who is neither a Highly
Compensated Associate, nor a Family Member.
(vii) "Total Compensation" shall mean compensation
as defined by (Section Mark) 415(c)(3) of the Code, without regard
to the reductions in compensation provided by
(Section Mark)(Section Mark) 125,
402(a)(8), 402(h)(1)(B) and 403(b) of the Code, which
for Plan Years beginning on or after December 31, 1988,
shall not exceed $200,000.00, adjusted pursuant to
(Section Mark) 415(d) of the Code.
5.11. Special Rules for Tax Deferred Contributions.
(a) For purposes of Paragraph 5.10 and 5.12 , the
Actual Deferral Percentage for any Eligible Participant who
is a Highly Compensated Associate for the Plan Year, and who
is eligible to make Tax Deferred Contributions, under two
(2) or more plans described in (Section Mark) 401(k) of the Code, that
are maintained by Affiliated Companies, shall be determined
as if any such Tax Deferred Contributions were made under a
single plan. If a Highly Compensated Associate participates
in two or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements
ending with or within the same calendar year shall be
treated as a single arrangement.
(b) If this Plan satisfies the requirements of
(Section Mark)(Section Mark) 401(k), 401(a)(4) or 410(b)
of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the
requirements of such sections of the
Code only if aggregated with this Plan, then this Paragraph
shall be applied by determining the Actual Deferral
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Percentage of Associates as if all such plans were a single
plan.
(c) The requirements of Paragraphs 5.10 and 5.12
must be satisfied by aggregating Companies which are
Affiliated Companies as defined in Paragraph 1.6, and
Companies which are not Affiliated Companies may not be so
aggregated.
(d) For purposes of determining the Actual Deferral
Percentage of an Eligible Participant who is a five percent
(5%) owner or one of the ten (10) most Highly Compensated
Associates, the Tax Deferred Contributions and Total
Compensation of such Participant shall include the Tax
Deferred Contributions and Total Compensation for the Plan
Year of Family Members, and such Family Members shall be
disregarded in determining the Actual Deferral Percentage
for Eligible Participants who are Nonhighly Compensated
Associates and for Eligible Participants who are Highly
Compensated Associates.
(e) Pursuant to (Section Mark) 414(q)(9) of the Code, a former
Associate or an Associate who performs only a de minimis
amount of service will be considered a Highly Compensated
Associate if such Associate or former Associate was a Highly
Compensated Associate when such individual separated from
service, or anytime after the individual attained age 55.
5.12. Excess Tax Deferred Contributions.
(a) If the Average Actual Deferral Percentage for
Eligible Participants who are Highly Compensated Associates
does not meet any of the tests set forth in Paragraph
5.11, the Advisory Committee, as soon as administratively
possible after the end of the Plan Year, shall determine the
amount of Tax Deferred Contributions which would have to be
returned to the Highly Compensated Associates in order to
meet the appropriate test set forth in Paragraph 5.10.
Such amount as defined in (Section Mark) 401(k)(8)(B) of the Code shall
be known as "Excess Contributions." The Excess
Contributions shall be returned to Highly Compensated
Associates beginning with the Highly Compensated Associates
who have the largest Actual Deferral Percentages. If two
(2) or more Highly Compensated Associates have identical
Actual Deferral Percentages, their Actual Deferral
Percentages shall be reduced until they equal those of the
next lowest Highly Compensated Associates, and then shall be
reduced pro rata until the test set forth in Paragraph 5.10
is satisfied. If the Highly Compensated Associate is part
of an aggregated family group, the Excess Contributions
assigned to the family unit shall be allocated among the
Family Members in proportion to the Elective Contribution of
each Family Member that is combined to determine the Actual Deferral
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Percentage. The Advisory Committee shall direct
the Trustee to return such Excess Contributions to the
Highly Compensated Associates as soon as possible after such
determination is made and if at all possible within two and
one-half (2 1/2) months after the end of the Plan Year (so as
to avoid a 10% excise tax on the Company), and in any event
before the end of the Plan Year following the year of the
Excess Contributions. Effective January 1, 1992, the Excess
Contributions to be distributed to the Participants shall
be adjusted for income or loss for the Plan Year pursuant
to a reasonable method provided by the Advisory Committee,
but no income or loss shall be allocated for the 'gap
period' between the end of the Plan Year and the date of
distribution.
(b) The determination and treatment of any Excess
Contributions shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
5.13. Limitations on Aggregate Contributions.
(a) Matching Contributions made to the Plan must
satisfy one of the two following tests:
(i) The Average Aggregate Contribution Percentage
for Eligible Participants who are Highly Compensated
Associates for the Plan Year shall not exceed the
Average Aggregate Contribution Percentage for Eligible
Participants who are Nonhighly Compensated Associates
for the Plan Year multiplied by 1.25; or
(ii) The Average Aggregate Contribution Percentage
for Eligible Participants who are Highly Compensated
Associates for the Plan Year shall not exceed the
Average Aggregate Contribution Percentage for Eligible
Participants who are Nonhighly Compensated Associates
for the Plan Year multiplied by two (2), provided that
the Average Aggregate Contribution Percentage for
Eligible Participants who are Highly Compensated
Associates does not exceed the Average Aggregate
Contribution Percentage for Eligible Participants who
are Nonhighly Compensated Associates by more than two
(2) percentage points, or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent
the multiple use of this alternative limitation with
respect to any Highly Compensated Associates.
(b) For purposes of this Paragraph 5.13, the
following definitions shall apply:
(i) "Aggregate Limit" shall mean the sum of
(A) 125% of the greater of the Actual Deferral
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Percentage of the Nonhighly Compensated Associates
under the Plan subject to (Section Mark) 401(m) of the Code for the
Plan Year beginning with or within the Plan Year of the
cash or deferred arrangement; and (B) the lesser of
200% or two plus the lesser of such Actual Deferral
Percentage or Actual Contribution Percentage. "Lesser"
is substituted for "greater" in (A) above, and
"greater" is substituted for "lesser" after "two plus
the" in (B) above if it would result in a larger
Aggregate Limit.
(ii) "Average Aggregate Contribution Percentage"
shall mean the average (expressed as a percentage
calculated to the nearest one-hundredth of one percent)
of the Aggregate Contribution Percentages of the
Eligible Participants in a group.
(iii) "Aggregate Contribution Percentage" shall
mean the ratio (expressed as a percentage calculated
to the nearest one-hundredth of one percent), of the
Matching Contributions under the Plan on behalf of the
Eligible Participant for the Plan Year, to the Eligible
Participant's Total Compensation for the Plan Year; and
the determination and treatment of the Aggregate
Contribution Percentage shall satisfy such other
requirements as may be prescribed by the Secretary of
the Treasury.
(iv) "Eligible Participant" shall mean any
Associate of the Company who is otherwise authorized
under the terms of the Plan to have Matching
Contributions allocated to his or her Account for the
Plan Year.
(v) "Highly Compensated Associate" includes
highly compensated active Associates and highly
compensated former Associates.
A highly compensated active Associate includes any
Associate who performs service for the Company during
the determination year and who, during the look-back
year: (a) received compensation from the Company in
excess of $75,000 (as adjusted pursuant to (Section Mark) 415(d) of
the Code); (b) received compensation from the Company
in excess of $50,000 (as adjusted pursuant to (Section Mark) 415(d)
of the Code) and was a member of the top-aid group for
such year; or (c) was an officer of the Company and
received compensation during such year that is greater
than fifty percent (50%) of the dollar limitation in
effect under (Section Mark) 415(b)(1)(A) of the Code. The term
"Highly Compensated Associate" also includes:
(a) Associates who are both described in the preceding
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sentence if the term "determination year" is
substituted for the term "look-back year" and the
Associate is one of the one hundred (100) Associates
who received the most compensation from the Company
during the determination year; and (b) Associates who
are five percent (5%) owners at any time during the
look-back year or determination year.
If no officer has satisfied the compensation
requirement of (c) 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 twelve (12) month period immediately preceding the
determination year.
A highly compensated former Associate includes
any Associate who separated from service (or was deemed
to have separated) prior to the determination year,
performs no service for the Company during the
determination year, and was a highly compensated active
Associate for either the separation year or any
determination year ending on or after the Associate's
fifty-fifth (55th) birthday.
If an Associate is, during a determination year or
look-back year, a Family Member as defined in Paragraph
1.29, of either a five percent (5%) owner who is an
active or former Associate or a Highly Compensated
Associate who is one of the ten (10) most Highly
Compensated Associates ranked on the basis of
compensation paid by the Company during such year, then
the Family Member and the five percent (5%) owner or
top-ten Highly Compensated Associate shall be
aggregated. In such case, the Family Member and five
percent (5%) owner or top-ten 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 five
percent (5%) owner or top-ten 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 one hundred (100) Associates, the number of
Associates treated as officers and the compensation
that is considered, will be made in accordance with
(Section Mark) 414(q) of the Code and the regulations thereunder.
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(vi) "Family Member" shall mean an Associate of
the Company who is a spouse, lineal ascendant or
descendant, or a spouse of a lineal ascendant or
descendant of a Highly Compensated Associate who is a
five percent (5%) owner of the Company, or one of the
ten (10) most Highly Compensated Associates.
(vii) "Nonhighly Compensated Associate" shall mean
an Associate of the Company who is neither a Highly
Compensated Associate, nor a Family Member.
(viii) "Total Compensation" shall mean compensation
as defined by (Section Mark) 415(c)(3) of the Code, without regard
to the reductions in compensation provided by
(Section Mark)(Section Mark) 125,
402(a)(8), 402(h)(1)(B) and 403(b) of the Code, which
for Plan Years beginning on or after December 31, 1988,
shall not exceed $200,000.00, adjusted pursuant to
(Section Mark) 415(d) of the Code.
5.14. Special Rules for Aggregate Contributions.
(a) If one or more Highly Compensated Associates
participate in both a cash or deferred arrangement and a
plan subject to the Actual Contribution Percentage test
maintained by the Company and the sum of the Actual Deferral
Percentage and Actual Contribution Percentage of those
Highly Compensated Associates subject to either or both
tests exceeds the Aggregate Limit, then the Actual
Contribution Percentage of those Highly Compensated
Associates who also participate in a cash or deferred
arrangement will be reduced (beginning with such Highly
Compensated Associate whose Actual Contribution Percentage
is the highest) so that the limit is not exceeded. The
amount by which each Highly Compensated Associate's
Contribution Percentage Amounts is reduced shall be treated
as an Excess Aggregate Contribution. The Actual Deferral
Percentage and the 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. Multiple use does
not occur if either the Actual Deferral Percentage or Actual
Contribution Percentage of the Highly Compensated Associates
does not exceed 1.25 times the Actual Deferral Percentage
and Actual Contribution Percentage of the Nonhighly
Compensated Associates.
(b)For purposes of Paragraphs 5.13 and 5.15, the
Aggregate Contribution Percentage for any Eligible
Participant who is a Highly Compensated Associate for the
Plan Year, and who is eligible for Matching Contributions
under this Plan, and Matching Contributions or Voluntary
Contributions under another plan described in (Section Mark) 401(k) of
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the Code, that are maintained by Affiliated Companies, shall
be determined as if any such Matching Contributions and
Voluntary Contributions were made under a single plan. If a
Highly Compensated Associate participates in two or more
cash or deferred arrangements that have different plan
years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single
arrangement.
(c) The requirements of Paragraphs 5.13 and 5.15
must be satisfied by aggregating Companies which are
Affiliated Companies as defined in Paragraph 1.6, and
Companies which are not Affiliated Companies may not be so
aggregated.
(d) For purposes of determining the Aggregate
Contribution Percentage of an Eligible Participant who is a
five percent (5%) owner or one of the ten (10) most Highly
Compensated Associates, the Matching Contributions and
Total Compensation of such Participant shall include the
Matching Contributions and Total Compensation for the Plan
Year of Family Members, and such Family Members shall be
disregarded in determining the Aggregate Contribution
Percentage for Eligible Participants who are Nonhighly
Compensated Associates and for Eligible Participants who are
Highly Compensated Associates.
(e) Pursuant to (Section Mark) 414(q)(9) of the Code, a former
Associate, or an Associate who performs only a de minimis
amount of service will be considered a Highly Compensated
Associate if such Associate or former Associate was a Highly
Compensated Associate when such individual separated from
service, or anytime after the individual attained age 55.
5.15. Excess Aggregate Contributions.
(a) If the Average Aggregate Contribution Percentage
for Eligible Participants who are Highly Compensated
Associates does not meet any of the tests set forth in
Paragraph 5.13, the Advisory Committee, as soon as
administratively possible after the end of the Plan Year,
shall determine the amount of Matching Contributions which
would have to be returned to the Highly Compensated
Associates in order to meet the appropriate test set forth
in Paragraph 5.13. Such amount defined in (Section Mark) 401(m)(6)(B)
of the Code shall be known as "Excess Aggregate
Contributions." If the limit is exceeded, the Matching
Contributions, and after-tax employee contributions, if any,
including recharacterized contributions, shall be reduced,
beginning with the Highly Compensated Associates who have
the largest Aggregate Contribution Percentage. If two or
more Highly Compensated Associates have identical Actual
Contribution Percentages, their Actual Contribution
Percentages shall be
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reduced until they equal those of the
next lowest Highly Compensated Associate, and then shall be
pro rata reduced until the test set forth in Paragraph 5.12
is satisfied. If the Highly Compensated Associate is part
of an aggregated family group, the excess aggregate
contributions assigned to the family unit shall be allocated
among the Family Members in proportion to the contribution
of each Family Member that is combined to determine the
Actual Contribution Percentage. Excess Contributions and
income allocable thereto shall be forfeited, if otherwise
forfeitable under the terms of the Plan, or if not forfeited,
distributed no later than the last day of the Plan
Year following the Plan Year in which Excess Aggregate
Contributions were made.
(b) The determination and treatment of any Excess
Aggregate Contributions shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
5.16. Excess Tax Deferred Contributions.
(a) Notwithstanding any other provision of the Plan,
Excess Tax Deferred Contributions, and income allocable
thereto shall be distributed no later than the April 15
following the calendar year for which Excess Tax Deferred
Contributions are claimed by a Participant.
(b) For purposes of this Paragraph 5.16, "Excess Tax
Deferred Contributions" shall mean the amount of Tax
Deferred Contributions for a calendar year which the
Participant allocates to this Plan pursuant to the claims
procedure of subparagraph 5.16(c).
(c) The Participant's claim shall be in writing; shall
be submitted to the Advisory Committee no later than March 1
following the calendar year of the Excess Tax Deferred
Contributions; shall specify the Participant's Excess Tax
Deferred Contributions for the preceding calendar year; and
shall be accompanied by the Participant's written statement
that if such amounts are not distributed, such Excess Tax
Deferred Contributions when added to amounts deferred under
other plans or arrangements described in
(Section Mark)(Section Mark) 401(k), 408(k)
or 403(b) of the Code, shall exceed the limit imposed on the
Participant by (Section Mark) 402(g) of the Code for the year in which
the deferral occurred.
(d) No income shall be allocable to Excess Tax
Deferred Contributions provided that the Excess Tax
Deferred Contributions are distributed prior to the
Valuation Date of the Plan Year following the Plan Year of
the Excess Tax Deferred Contributions.
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(e) Amounts distributed under this Paragraph 5.16
shall be treated as distributions from the Participant's
Deferred Income Account.
5.17. Deduction of Legal Expenses. On the Adjustment
Date or Valuation Date of the Plan Year in which a legal claim
against the Plan, Trustee, Advisory Committee or Company,
pertaining to any claim of interest in the assets of the Plan or
the Trust Fund, is disposed by final order of a court adversely
to the claimant, the Trustee shall debit the vested portion of
the Account of the claimant or the Account with respect to which
the claim was made, with all expenses including counsel fees
actually paid by the Plan or incurred by the Plan but not yet
paid which were incurred in the defense against the claim. The
finality of any order and the adversity of the order to the
claimant shall be determined by the Advisory Committee in
accordance with the laws of the jurisdiction in which said claim
was litigated.
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ARTICLE VI
Trust Fund Valuation
6.1. Valuation of Trust Fund.
(a) As of each Valuation Date (and before making any
distributions as of such date), the Trustee shall value the
entire Trust Fund. Earmarked investments described in
Paragraph 6.4 shall not be taken into account.
(b) The Trustee shall determine the fair market value
of Trust Fund assets in compliance with this Paragraph and
the principles of Section 3(26) of ERISA and regulations
issued pursuant thereto. Valuation shall be based upon
information reasonably available to the Trustee, including
data from, but not limited to, newspapers and financial
publications of general circulation, statistical and
valuation services, records of securities exchanges,
appraisals by qualified persons, transactions and bona-fide
offers in assets of the type in question and other
information customarily used in the valuation of property
for purposes of the Internal Revenue Code. The Trustee may
elect to value any bank deposit, certificate of deposit,
bond, interest-bearing insurance contract, promissory note
or other evidence of indebtedness at its unpaid face value,
with interest accrued to the Valuation Date, if the
obligation is not in default. The value of any real
property held in the Trust Fund, determined as of the end of
the fourth quarter of any Plan Year, shall be considered to
remain unchanged until the end of the fourth quarter of the
following Plan Year. In determining the value of the Plan's
investment in any collective investment fund, separate
account, partnership or similar entity, the Trustee may (but
need not) rely on the most recent prior valuation of units
or interests in the fund, separate account, partnership or
entity made by or on behalf of the fund, separate account,
partnership or entity. With respect to securities for which
there is a generally recognized market, the published
selling prices on or nearest to such Valuation Date shall
establish the fair market value of such security. Fair
market value so determined shall be conclusive for all
purposes of the Plan and Trust.
(c) Administrative expenses which are paid or payable
by the Plan shall be accounted for in the manner specified
by the Trustee. In valuing the Trust Fund, the Trustee may
elect to treat as a Plan asset the unamortized amount of
capitalized administrative expenditures paid by the Plan.
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6.2. Unallocated Contributions. Company
Contributions being held pending allocation shall share in any
Increment and Decrement to the extent specified by the Trustee.
6.3. Special Rule for Variable Account Balances .
The Trustee may elect to allocate a fund Increment or Decrement
on the basis of the average Account Balances since the last
Valuation Date, as determined under a reasonable method
consistently applied.
6.4. Special Rule for Earmarked Investments. The
Increment or Decrement on an investment earmarked to a
Participant's Account shall be credited to that Account.
Earmarked investments shall be ignored in establishing the value
of Accounts for purposes of allocating the Increment or Decrement
under Paragraph 5.2 and their value shall not be included in the
Trust Fund value determined under Paragraph 6.1 or 6.3.
Investments earmarked to Accounts are:
(a) Loans to Participants;
(b) Company securities allocated to a Participant's
Account under Paragraph 2.16; and
(c) Insurance.
6.5. Interim Crediting of Increment or Decrement. If
an Account becomes wholly or partially distributable other than
on a Valuation Date and the Trustee determines that the Trust
Fund has had a substantial Increment or Decrement since the last
Valuation Date, the Trustee shall establish a special Valuation
Date and Accounts shall be revalued in accordance with this
Article.
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ARTICLE VII
Benefits
7.1. Retirement. As of the Adjustment Date
coinciding with or following the Participant's Early Retirement,
Normal Retirement or Disability, his or her Account shall be
fully vested and nonforfeitable. Benefits shall be paid pursuant
to Paragraph 7.5 within sixty (60) days of such Adjustment Date,
or as soon as administratively possible thereafter.
Pending complete distribution the Account of a Retired
Participant, the Participant (or Beneficiary) shall have the same
investment direction rights as any other Participant, except to
the extent the Advisory Committee elects to restrict or expand
such rights for persons awaiting distribution.
7.2. Severance Benefits. If a Participant ceases to
be an Associate of the Company for reasons other than Retirement
or death, (hereinafter referred to as a "Terminated
Participant"), the vested Account Balance of the Terminated
Participant, as of the Adjustment Date coinciding with or
following termination of employment shall be paid pursuant to
Paragraph 7.5. The vested Account Balance shall be paid within
sixty (60) days at which time the nonvested Account Balance of a
Participant shall be provisionally forfeited. For purposes of
this Paragraph, if the value of a Participant's vested Account
Balance is zero, the Participant shall be deemed to have received
a distribution of such vested Account Balance as of the date he
terminated employment. If the Terminating Participant's vested
Account Balance in the Plan exceeds $3,500, then the Participant
must consent in writing to a distribution of the Account Balance
for it to be paid by the Company prior to the Participant
attaining Retirement Age. A Terminating Participant shall
receive the following benefit:
(i) One hundred percent (100%) of the total
amount credited to the Terminated Participant's Tax
Deferred Contribution Account, Rollover Account and
Transfer Account;
(ii) That percentage of the Terminated
Participant's Matching Contribution Account and Profit
Sharing Contribution Account made on the Participant's
behalf, based on the number of Years of Service with
the Company then completed, and the following vesting
schedule:
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Years of Service Percent Vested
Less than 3 years 0%
At least 3 years, but less than 4 years 20%
At least 4 years, but less than 5 years 40%
At least 5 years, but less than 6 years 60%
At least 6 years, but less than 7 years 80%
At least 7 years or more 100%
7.3. Rehired Participants. The following rules apply
to Terminated Participants who are rehired:
(a) If a Terminated Participant who has received a
lump sum distribution of his or her vested Account Balance
is subsequently reemployed by the Company after having
incurred a Break in Service, occurring prior to January 1,
1985, or five (5) consecutive Breaks in Service, occurring
on or after January 1, 1985, then the Company shall
disregard all service performed by such Associate for which
he or she received such lump sum distribution. In the case
of a Participant who has five (5) or more consecutive Breaks
in Service, the Participant's pre-break service will count
in vesting of the Company-derived accrued benefit only if
either:
(i) such Participant has any nonforfeitable
interest in the accrued benefit attributable to Company
contributions at the time of separation from service;
or
(ii) upon returning to service, the number
of consecutive Breaks in Service is less than the
number of pre-break Years of Service.
If the Terminated Participant returns to the employment of
the Company and repays the amount of the lump sum
distribution prior to incurring five (5) consecutive Breaks
in Service, or within five (5) years of his or her return to
employment, whichever shall occur first, his or her
nonvested Account Balance shall be reestablished by the
Company and the Participant's pre-break service with respect
to which he or she received the distribution shall be added
to his or her post-break service for purposes of determining
his or her vested Account Balance. In no circumstances will
vesting or eligibility years be eliminated solely on account
of a lump sum distribution of the vested Account Balance of
a Participant. If a Terminating Participant is deemed to
receive a distribution pursuant to subparagraph 7.2(b)
above, and the Terminating Participant resumes employment
covered under this Plan before incurring five (5)
consecutive Breaks in Service, upon the reemployment of such
Terminating Participant, his or her nonvested Account
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Balance will be restored to the amount on the date of such
deemed distribution.
(b) If a Terminated Participant, who did not receive a
lump sum distribution returns to the employment of the
Company before incurring five (5) consecutive Breaks in
Service after incurring a provisional forfeiture of his or
her nonvested Account Balance, then the nonvested portion of
his or her Account Balance shall be reinstated pursuant to
Paragraph 5.4.
(c) If a Terminated Participant whose vested Account
Balance was not distributed in a lump sum shall return to
the employ of the Company prior to incurring a Break in
Service occurring prior to January 1, 1985, or five (5)
consecutive Breaks in Service, occurring on or after
January 1, 1985, then the Participant's vested percentage in
his or her pre-break Account Balance shall be increased as a
result of his or her post-break service, and only a single
Account need be maintained. If such Terminated Participant
shall return to the employ of the Company after incurring a
Break in Service or five (5) consecutive Breaks in Service,
as the case may be, then the Participant's vested percentage
in his or her pre-break Account Balance shall not be
increased as a result of his or her post-break service, and
separate Accounts shall be maintained for the Participant's
pre-break and post-break Account Balance. Both Accounts
will share in the earnings and losses of the fund.
(d) If a Terminated Participant is rehired by the
Company, he or she must notify the Department of Human
Resources that he or she was previously a Participant of the
Plan within 30 days of his or her reemployment. Provided
the Department of Human Resources is timely notified, a
Terminated Participant who has a vested right in his or her
Account Balance who is rehired by the Company or a
Terminated Participant who does not have a vested right in
his or her Account Balance but whose prior service cannot be
disregarded under (Section Mark) 410(a)(5) of the Code and who is rehired
by the Company after the Participant incurs a Break in
Service, will become a Participant of the Plan retroactively
as of his or her date of reemployment by the Company upon
the completion of a Year of Service measured as of his or
her reemployment commencement date.
(e) For purposes of participation and vesting, if an
Associate or Participant does not have any vested right in
his or her Account Balance derived from Company
Contributions, Years of Service completed by the Participant
or Associate prior to incurring a Break in Service shall be
disregarded if the number of consecutive Breaks in Service
equals or exceeds the greater of five (5) years or the
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aggregate number of Years of Service the Participant or
Associate completed prior to incurring a Break in Service;
however, the aggregate number of Years of Service completed
before such Break in Service shall not be deemed to include
any Years of Service not required to be taken into account
by reason of any prior Breaks in Service.
7.4. Death.
(a) If the Participant shall die prior to the payment
of his or her benefits has begun, or prior to the complete
payment of his or her Account, his or her vested Account
Balance as of the Adjustment Date coinciding with or
following the date of death shall be paid to the
Participant's Beneficiary within sixty (60) days following
the Adjustment Date, or as soon as administratively possible
thereafter. Death benefits shall be paid in a lump sum.
The nonvested Account Balance of a deceased Participant
shall be provisionally forfeited as of the Adjustment Date
coinciding with or following the date of death.
(b) At any time and from time to time within the
limits set forth in Paragraph 1.12, each Participant shall
have the right to designate the Beneficiary to receive his
or her death benefit and to revoke any such designation,
provided, that if the Participant shall be married, the
Participant may name someone other than his or her spouse as
the recipient of his or her death benefit only with the
consent of his or her spouse. The spousal consent must be
in writing, must be in the form of a waiver which must
acknowledge the effect of the waiver , must be either
witnessed by a Plan Representative or acknowledged before a
Notary Public, and must state the specific non-spouse
Beneficiary who will receive the Participant's death
benefit. If a Participant shall die without designating a
Beneficiary or if such designation is not effective for any
reason, as determined by the Advisory Committee, then the
benefit shall be paid in the following priority: (i) first,
to the Participant's surviving spouse; (ii) second, to the
Participant's estate (provided that the benefits shall be
paid to the third priority class if the death benefits would
otherwise escheat to any state); (iii) to the Contribution
Participants in the Plan Year in which the death benefits
would otherwise be distributed. Participants of a
priority class shall cease to be entitled to benefits on the
Advisory Committee's determination that no members of the
class exist, or the failure of the Advisory Committee to
locate any members of the class after making a reasonable
effort.
(c) The Advisory Committee shall notify the Trustee of
the death of a Participant or former Participant and shall
furnish the Trustee with an authenticated copy of the
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Beneficiary designation for such deceased Participant. The
Trustee shall rely upon such designation for the purpose of
distributing death benefits hereunder.
(d) The Advisory Committee may require such proof of
death and such evidence of the right of any person to
receive distributions of the benefits of the deceased
Participant as it may deem advisable.
(e) Benefit payments shall be made to the deceased
Participant's Beneficiary, provided that if a Beneficiary
shall die before receiving payment of the entire balance of
the deceased Participant's Account, the then remaining
balance shall be paid to the estate of the deceased
Beneficiary as of the Adjustment Date coinciding with or
following the death of the Beneficiary provided the Advisory
Committee received notification thereof prior to such date,
but no earlier than the Adjustment Date of the Plan Year in
which the Participant's termination of employment occurred.
If the Advisory Committee is unable to locate a duly
qualified personal representative of the estate of a
deceased Beneficiary after making reasonable efforts to do
so for one year, the undistributed remainder of the account
shall be distributed to Contribution Participants in
accordance with the priority classes of subparagraph 7.4(b)
above.
7.5. Payment of Benefits.
(a) Payment of any benefits shall be made in cash in
one lump sum, unless the Participant elects to receive in
kind the whole shares of Company Securities credited to his
or her Account or any individual insurance policies
earmarked to his or her Account. Any payment made in kind
shall have the same value on the date payment is made by the
Trustee as the amount of cash that otherwise would have been
payable on such date.
(b) The Advisory Committee shall notify the Trustee in
writing of the termination of employment of any Participant,
and the reason employment terminated. The Trustee shall
rely upon such notice for the purpose of paying retirement
benefits hereunder.
(c) Notwithstanding anything herein to the contrary,
any distribution to a Participant who has a benefit, which
exceeds $3,500, or has ever exceeded $3,500 at the time of
any prior distribution, shall require such Participant's
consent if such distribution commences prior to the
Participant's attainment of Normal Retirement Age. The
Participant must be informed of his right to defer receipt
of the distribution, subject to the requirements of
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Paragraph 7.6. Notice of the rights specified under this
Paragraph 7.5(c) shall be provided no less than thirty (30)
days and no more than ninety (90) days prior to the first
day on which all events have occurred which entitle the
Participant to a distribution. Written consent of the
Participant to the distribution must be obtained within the
ninety (90) day period ending on the first day on which all
events have occurred which entitle the Participant to the
benefit.
7.6. Limitation on the Distribution of Benefits .
The lump sum payment of benefits from the Plan must be made no
later than the first day of April of the calendar year
immediately following the later of the year in which the
Participant attains the age of seventy and one-half (70 1/2), or
retires, or, in the case of a Participant who is a 5% Owner as
defined in subparagraph 12.2(i)(i), payment shall be made no
later than the first day of April of the calendar year
immediately following the calendar year in which the Participant
attains the age of seventy and one-half (70 1/2). For Plan Years
beginning on or after January 1, 1989, lump sum payments for all
Participants must be made no later than the first day of April of
the calendar year immediately following the calendar year in
which each Participant attains the age of seventy and one-half
(70 1/2).
7.7. Commencement of Distribution of Benefits.
Subject to the provisions of Paragraph 7.6, distribution to any
Participant of the benefits provided pursuant to the provisions
of this Plan must commence within sixty (60) days after the close
of the Taxable Year in which the latest of the following events
shall occur:
(a) The Participant attains age sixty-five (65);
(b) The tenth (10th) anniversary of such Participant's
commencement of participation in the Plan occurs; or
(c) The actual termination of the Participant's
employment with the Company.
The purpose of this Paragraph is to provide a
limitation, subject to the incidental death benefit rules, on the
latest date upon which payment of benefits under the Plan can
commence. This Paragraph shall not preempt other provisions of
the Plan which require or permit payment of benefits at an
earlier date.
7.8. Restriction on Methods of Distribution.
Notwithstanding any other provision of the Plan, distribution of
benefits payable to Participants pursuant to the Plan shall be
subject to the following restrictions:
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(a) If distributions to a Participant have commenced
in installment payments and such Participant dies before his
or her entire Account Balance has been distributed, then the
remaining portion of his or her Account Balance must be
distributed to the Participant's Beneficiary or Designated
Beneficiary using a method of distribution at least as rapid
as the method being used at the date of the Participant's
death.
(b) If a Participant dies before the distribution of
his or her Account Balance begins, distribution of the
Participant's entire Account Balance shall be completed by
December 31 of the calendar year containing the fifth (5th)
anniversary of the Participant's death.
(c) For purposes of this Paragraph 7.8, if the
surviving spouse dies after the Participant, but before pay-
ments to such spouse begin, the provisions of this Paragraph
7.8, shall be applied as if the surviving spouse were the
Participant.
(d) For purposes of this Paragraph 7.8, any amount
paid to a child of the Participant will be treated as if it
had been paid to the surviving spouse if the amount becomes
payable to the surviving spouse when the child reaches the
age of majority.
(e) For the purposes of this Paragraph 7.8,
distribution of a Participant's Account Balance is
considered to begin on the Participant's Required Beginning
Date (or, if subparagraph (c) above is applicable, the date
distribution is required to begin to the surviving spouse
pursuant to subparagraph (b) above).
7.9. Procedure for the Payment of Benefits. Payment
of all benefits under the Plan shall be subject to written
application by the Participant or Beneficiary, as the case may
be, submitted in such form as the Advisory Committee may direct
from time to time.
When a Participant who has terminated employment is
entitled to distribution of his or her benefits, the Advisory
Committee shall deliver or cause to be delivered to the
Participant, directed to his last known address, a notice
informing the Participant as to his or her rights with respect to
his or her benefits. If the Participant is not located at his or
her last known address and his or her whereabouts are unknown to
the Advisory Committee at the expiration of six (6) months, the
Advisory Committee may treat the Participant's termination
benefit or the portion thereof remaining undistributed as a
provisional forfeiture and allocate it in accordance with
Paragraph 5.4; provided, however, that such provisionally
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forfeited amount shall be reinstated if the Participant or his
Beneficiary subsequently makes a claim for such benefit.
If any amount becomes payable under the Plan to a minor
or a person who, in the sole judgment of the Advisory Committee,
is considered to be unable to give a valid receipt for the
payment by reason of physical or mental condition, the Advisory
Committee may direct that such payment be made to any person
found by the Advisory Committee, in its sole judgment, to have
assumed the care of the person in question. Any payment made
pursuant to such determination shall constitute a full release
and discharge of the Trustee, the Advisory Committee and the
Company and their officers, directors, Associates, agents and
representatives.
If the payment of benefits from the Plan shall be
contested by any person, the costs incurred by the Plan in
settling any dispute concerning the proper party to receive
payment shall be paid from the Account in question, unless
otherwise paid by the Trustee or Company.
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ARTICLE VIII
Powers, Duties and Responsibilities of Trustee
8.1. Trust. All assets of the Plan shall be held in
a Trust forming part of this Plan, which shall be administered as
a fund to provide for the payment of benefits as provided in the
Plan to the Participants or their successors in interest, out of
the income and principal of the Trust. The assets of the Plan
shall never inure to the benefit of the Company, except that
payment of taxes and reasonable administrative expenses may be
paid from the Trust as provided by the terms of the Plan. To the
maximum extent allowed by ERISA, such reasonable administrative
expenses shall specifically include all expenses that not do
otherwise constitute settlor functions as determined by the
Advisory Committee as well as any taxes levied or assessed upon
the Trust, as provided in Paragraph 8.7.
8.2. Trust Fund. The Trustee, who shall be appointed
by the Company, shall hold the funds received by it from the
Company subject to the terms of this Plan, and upon the uses and
trusts, and for the purposes herein set forth. The funds subject
to the provisions of this Plan shall include, but shall not be
limited to, all monies, properties, securities, investments,
notes, bonds, mortgages, debentures, shares of stock, accounts,
and evidences of indebtedness of whatsoever kind or nature at any
time or from time to time acquired or held by the Trustee
pursuant to the terms of this Plan; however, the Trustee shall
be responsible only for such funds as shall actually be received
by it as Trustee hereunder.
8.3. Powers of Trustee. The Trustee shall have, and
is hereby vested with, the following specific powers and
authority in addition to, but not in any limitation of, the
general powers and authority vested in Trustees by law, all of
which shall be exercised by the Trustee without prior application
to or confirmation by any court:
(a) To receive and accept in kind and to hold as an
investment, as long as shall seem expedient and
advantageous, any and all property which may come to it as
Trustee hereunder.
(b) To hold legal title to and have exclusive and sole
control and responsibility for the safekeeping of Trust
assets.
(c) To receive any contributions paid to it in cash or
other property and shall retain, manage, administer, hold,
and distribute the same, together with the income therefrom,
in accordance with the terms and provisions of the Plan. No
part of the corpus or income of the Trust Fund shall be used
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for any purpose except for the exclusive benefit of
Associates of the Company or their surviving spouses or
other Beneficiaries, and payment of the expenses of
administration of the Plan and Trust.
(d) To hold investments in the name of a nominee, or
the Trustee, without disclosing the fiduciary office, to
vote stock either in person or by proxy, to participate in
corporate reorganizations, and to exercise any and all other
rights arising out of any Trust investment.
(e) To do any and all acts and to make, execute, and
deliver, as Trustee, any and all instruments in writing
necessary or proper for the effective exercise of any of the
Trustee's powers as stated herein, or otherwise necessary to
accomplish the purposes of this Trust, as it shall determine
in its discretion.
(f) To make payments out of the Trust Fund to such
persons, in such manner, in such amounts, and for such
purposes as the Plan specifies and pursuant to the written
directions of the Advisory Committee. The Trustee shall
furnish to recipients of Plan benefits factual information
(but not advice) pertinent to the determination of the
taxability of such benefits, and shall provide such factual
information to governmental authorities as required by law.
The Trustee shall serve as "payor," and be solely
responsible for the withholding of income taxes on
distributions from the Trust Fund, to the extent withholding
is required by law. The Company in its sole discretion,
without terminating the Trust, may direct the Trustee at any
time to transfer to the trustee of another trust qualified
under (Section Mark) 401(a) of the Code, and exempt from tax under
(Section Mark) 501(a) of the Code, such cash and securities as the
Company may direct, or the Accounts of such Participants as
the Company may specify.
(g) To employ such brokers, banks, custodians,
attorneys, accountants, other agents or appraisers; and to
delegate to them such of its duties, rights, and powers
(including, among others, the right to vote shares of stock
held by it), as it shall determine to be prudent and
advisable and for such periods as it shall deem proper.
(h) To keep accurate and detailed accounts of all
investments, receipts, disbursements, and other transactions
hereunder, including the basis of Company Securities. The
Trustee shall render to the Advisory Committee a complete
accounting of the Trust Fund each fiscal year of the Trust,
within ninety (90) days following the close of the fiscal
year of the Trust, and provide the Advisory Committee with
an annual statement for each Participant of his or her
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Account. The Trustee shall submit such interim valuations,
reports and other information to the Advisory Committee as
it may reasonably require. Except as otherwise provided by
the Advisory Committee all valuations of the Trust by the
Trustee shall show the carrying and market values of all
Trust assets. All accounts, books, and records relating to
such transactions shall be open to inspection and audit at
all reasonable times by the Company, Advisory Committee or
any other person designated by the Company.
(i) To receive and record Beneficiary designations
made by Participants.
(j) To enter into, modify, renew and terminate annuity
contracts of deposit administration or immediate
participation or other group or individual type, or (to the
extent provided for in the Plan) life insurance contracts,
with one or more insurance companies; to pay or deposit all
or any part of the Trust Fund under such contracts; to
provide in any such contract for the investment in separate
accounts of all or any part of funds so deposited with the
insurance company; to purchase annuities for retired
Participants, including variable annuities (to the extent
provided for in the Plan); to exercise and claim all rights
and benefits granted to the contract holder by any such
contracts; to transfer assets to, or receive assets from
other trusts or insurance arrangements maintained to fund
the Plan, as directed by the Advisory Committee.
(k) To invest, reinvest or hold "qualifying employer
securities" and "qualifying employer real property," as such
terms are defined in Section 407(d) of ERISA to the fullest
extent permissible under ERISA with respect to the Plan.
(l) Except as otherwise instructed by the Advisory
Committee, to invest funds pending other investment
directions in (i) any short term investment fund; or (ii)
any type of interest-bearing "deposit," within the meaning
of (Section Mark) 408(b)(4) of ERISA, with any bank or savings and loan
association (including any such facility of the Trustee or
its affiliates provided that at least a reasonable rate of
interest is paid on the deposit.
8.4. Exercise of Powers. The powers granted to the
Trustee pursuant to Paragraph 8.3 shall be exercised by the
Trustee in its discretion insofar as such exercise does not
contravene any written direction from the Company, or the policy
for the funding of this Plan to be developed under Paragraph 2.5.
The decision of the Trustee in matters within its jurisdiction
shall be final, binding, and conclusive upon the Company, and
upon each Associate, Participant, Beneficiary, and every other
person interested or concerned. Provided, however, in exercising
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such powers and authority, the Trustee shall not lend any funds
of the Trust to the Company under any circumstances, and shall
not pay any compensation to the Company in excess of reasonable
compensation for services actually rendered by the Company to the
Trust.
8.5. Accounting. Within ninety (90) days following
the close of each fiscal year of the Trust, and within sixty (60)
days after the removal or resignation of the Trustee as provided
in Paragraph 8.6, the Trustee shall file with the Company a
written account setting forth all investments, receipts,
disbursements, and other transactions effected by it during such
fiscal year or during the period from the close of the last
fiscal year to the date of such removal or resignation, and
setting forth the value of the Trust Fund and the amount in each
Participant's Account as of the close of business on each
Adjustment Date or date of removal or resignation.
8.6. Removal, Resignation, and Appointment of
Successor Trustee. The Trustee shall have the right to resign at
any time by giving at least ninety (90) days written notice
thereof to the Company; and the Trustee may be removed, with or
without cause, at any time by the Company by giving sixty (60)
days written notice of such removal to the Trustee; provided,
however, the Company and the Trustee shall each have the right to
waive the ninety (90) day period in writing within sixty (60)
days following the effective date of the removal or resignation
of the Trustee, the Trustee shall file with the Advisory
Committee a written account setting forth all transactions
effected by it subsequent to the end of the period covered by its
last previous account and listing the assets of the Trust. Upon
a vacancy resulting from the resignation or removal of a Trustee
or from any other cause, the Company shall designate a successor
Trustee. The designation of any successor Trustee shall be made
by an instrument in writing executed by the Company, and a copy
thereof shall be delivered to the former Trustee. A successor
Trustee so designated shall have all the rights, powers,
privileges, liabilities, and duties of the former Trustee and may
be an individual or individuals, a corporate fiduciary or
fiduciaries, or a combination of an individual and corporate
fiduciary. The appointment and qualification of a successor
Trustee to whom the Trust Funds may be transferred are conditions
which must be fulfilled before the resignation or removal of a
Trustee shall be effective. Upon acceptance of such appointment
by the successor Trustee, the former Trustee shall assign,
transfer, and pay over to such successor Trustee the funds and
properties then constituting the Trust; however, the former
Trustee is authorized to reserve such sum of money as to whatever
it may seem advisable for payment of its fees and expenses in
connection with the settlement of its account or otherwise.
Within six (6) months after the successor Trustee takes office,
the former Trustee shall account for the reserve, including all
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disbursements therefrom, and any balance of such reserve
remaining after the payment of such fees and expenses shall be
paid over to the successor Trustee.
8.7. Payment of Compensation, Expenses and Taxes. The
Trustee shall be paid such reasonable compensation as shall from
time to time be agreed upon in writing by the Company and the
Trustee. In addition, the Trustee shall be reimbursed for any
reasonable expenses, including reasonable counsel fees, incurred
by it in the administration of the Trust; provided, however, no
Trustee who already receives full-time pay from the Company shall
receive compensation from the Trust. All taxes of any and all
kinds whatsoever that may be levied or assessed under existing or
future laws upon, or in respect of, the Trust or the income
thereof shall be paid from the Trust.
8.8. Limitations on Responsibility.
(a) The Trustee shall have no powers, duties or
responsibilities with regard to the administration of the
Plan nor shall it have any power, duty or responsibility to
determine the rights or benefits of any person having or
claiming an interest under the Plan or Trust.
(b) The Trustee shall have no liability for the
adequacy of contributions to the Plan and no responsibility
to enforce the payment of such contributions.
8.9. Non-Corporate Trustee. The Company may appoint
one or more non-corporate entities or individuals to serve singly
or jointly as Trustee. The term "Trustee," as used in the Plan
shall refer collectively to all such persons serving as Trustee.
If there are three or more persons then serving as Trustee, such
persons shall act by majority vote; if there are two persons
serving as Trustee, such persons shall act by unanimous vote. A
single person acting as Trustee shall act singly as Trustee.
Each person acting as Trustee shall be separately subject to the
removal, resignation and replacement provisions of this Article.
If fewer than all persons serving as Trustee resign or are
removed, the "successor Trustee" referred to in Paragraph 8.6
shall be the remaining persons serving as Trustee. Persons
acting as the Trustee may delegate ministerial responsibilities
(such as the responsibility for effecting investment transactions
or making disbursements) to other persons.
8.10. Merger of Trustee. If any corporate Trustee
hereunder shall at any time merge or consolidate with, or shall
sell or transfer substantially all of its assets and business to
another corporation, the corporation resulting from such merger
or consolidation or the corporation into which it is converted or
to which such sale or transfer shall be made, shall thereupon
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become the Trustee under this Trust with the same effect as
though originally so named.
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ARTICLE IX
Fiduciary Responsibilities
9.1. Allocation of Responsibility Among Fiduciaries
for Plan and Trust Administration. The Fiduciaries shall have
only those specific powers, duties, responsibilities and
obligations that are specifically given them under this Plan. In
general:
(a) The Company shall have the responsibility for:
(i) Making the contributions provided for under
Article IV.
(ii) Appointing and removing the Trustee or its
successor.
(iii) Appointing the members of the Advisory
Committee.
(iv) Amending or terminating the Plan .
(b) The C.E.O. shall have the responsibility for:
(i) Furnishing the Advisory Committee complete
and correct information concerning its Associates as is
necessary to the proper administration of this Plan.
(ii) Determining the amount, if any, of Fail-Safe
Contributions or Discretionary Contributions.
(c) The Advisory Committee shall have the
responsibility for:
(i) The Administration of the Plan under this
instrument.
(ii) Those duties set forth in Article II.
(d) The Trustee shall have the responsibility for:
(iii) The administration of the Trust Fund,
including valuation of Trust assets, and allocations of
contributions, forfeitures and Trust assets and
maintenance of Participants' Accounts.
(ii) Custody and safekeeping of all Trust assets.
(iii) Paying and disbursing benefits upon direction
of the Advisory Committee.
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(iv) Those duties set forth in Article VI and
VIII.
9.2. Fiduciary Warranty. Each Fiduciary warrants
that any directions given, information furnished, or action taken
by it shall be in accordance with the provisions of the Plan,
authorizing or providing for such direction, information or
action.
9.3. Reliance on Other Fiduciaries. Each Fiduciary
may rely upon any such direction, information or action of
another Fiduciary as being proper under the Plan, and is not
required under the Plan to inquire into the propriety of any such
direction, information or action.
9.4. No Responsibility for Others. It is intended
under this Plan that each Fiduciary shall be responsible for the
proper exercise of its own powers, duties, responsibilities and
obligations under the Plan and shall not be responsible for any
act or failure to act of another Fiduciary. No Fiduciary
guarantees the Trust Fund in any manner against investment loss
or depreciation in asset value.
9.5. Bond. A fidelity bond or other surety shall be
required of the Company, as well as all individuals to whom
fiduciary duties have been delegated or will be delegated, and
such bond will be of the type required by the terms and
provisions of ERISA and the regulations issued pursuant thereto,
and shall be in a minimum amount of the lesser of $1,000 or ten
percent (10%) of the assets in the Plan, and the payment of
premiums for such bond or other surety shall be paid by the
Trustee from the Trust Fund to the extent not paid by the
Company.
9.6. Fiduciary Responsibility. All fiduciaries (as
defined in ERISA) with respect to the Plan shall discharge their
duties as such solely in the interest of the Participants and
their successors in interest. In this connection, all
fiduciaries shall act:
(a) for the exclusive purposes of providing benefits
to Participants and their successors in interest and
defraying reasonable expenses of administering the Plan,
including the Trust, which is a part of the Plan;
(b) with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent man
acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of like character
and with like aims; and
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(c) in accordance with the Plan and Trust agreement,
except to the extent such document may be inconsistent with
ERISA.
9.7 Indemnification. To the extent permitted by
applicable law, the Company shall indemnify and save harmless the
Board of Directors, the C.E.O., the Advisory Committee, any
individual serving as Trustee and any other fiduciary who is an
Associate against any and all expenses, liabilities and claims
(including legal fees incurred to defend against such liabilities
and claims) arising out of their discharge in good faith of
responsibilities under or incident to the Plan. Expenses and
liabilities arising out of willful misconduct shall not be
covered under this indemnity. This indemnity shall not preclude
such further indemnities as may be available under insurance
purchased by the Company or provided by the Company under any
bylaw, agreement, vote of stockholders or disinterested directors
or otherwise, as such indemnities are permitted under applicable
law. Payments with respect to any indemnity and payment of
expenses or fees shall be made only from assets of the Company
and shall not be made directly or indirectly from Trust assets.
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ARTICLE X
Amendment, Termination, Merger, Consolidation
or Transfer of Assets
10.1. Amendment of Plan and Trust. The Company shall
have the right to amend the Plan and the Trust, in whole or in
part, at any time and from time to time. All amendments shall be
adopted in writing by resolution of the Board of Directors.
However, no change may be made in the Plan and Trust which shall
vest in the Company, directly or indirectly, any interest,
ownership, or control of any of the present or subsequent funds
of the Trust, or in any of the present or subsequent funds set
aside for Participants pursuant to the Plan; and no amendment
shall increase or change the duties or the liabilities of the
Trustee without the Trustee's specific consent thereto in
writing. No portion of the funds of the Trust shall, by reason
of any amendment, be used for, or diverted to, purposes other
than for the exclusive benefit of Participants and their
Beneficiaries. Nor shall any amendment reduce or restrict,
either directly or indirectly, the vested benefit provided any
Participant prior to such amendment, except as otherwise
permitted by the Code or the regulations thereunder. Subject to
the foregoing limitations, the Company shall have the power to
amend the Plan and Trust in any manner which is deemed to be
desirable, including, but not by way of limitation, the right to
increase or diminish contributions hereunder to change or modify
the method of allocation of such contributions, to change any
provisions relating to the administration of the Plan, and to
change any provisions relating to the distribution or payment, or
both, of any of the assets of the Trust.
Any material modification of the Plan by amendment or
termination shall be communicated to all interested parties and
the Secretaries of Labor and the Treasury in the time and manner
required by law.
10.2. Limitation on Amendment.
(a) Notwithstanding the above, a Plan amendment which
has the effect of either eliminating or reducing an early
retirement benefit or a retirement-type subsidy, or
eliminating an optional form of benefit, shall be treated as
reducing an accrued benefit, and shall be disallowed
(subject to exceptions to be promulgated in Treasury
Regulations). With respect to an early retirement benefit
or a retirement-type subsidy, the above protection of
accrued benefits will apply only with respect to a
Participant who satisfies the preamendment conditions for
the benefit either before or after the amendment.
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(b) No Plan amendment, unless it expressly provides
otherwise, shall be applied retroactively to increase the
vested percentage of a former Participant whose employment
terminated before the date such amendment became effective
unless and until he or she again becomes a Participant and
additional Company Contributions are allocated to the
Participant.
(c) No Plan amendment, unless it expressly provides
otherwise, shall be applied retroactively to increase the
amount of service credited to any person for employment
before the date such amendment became effective.
(d) Except as provided in subsections (b) and (c), all
rights under the Plan shall be determined under the terms of
the Plan as in effect at the time the determination is made.
10.3. Election of Prior Vesting. No amendment to the
vesting schedule shall be permitted to decrease the vested
Account Balance of any Participant, and a Participant who has at
least three (3) Years of Service may elect to have his or her
vested Account Balance computed without regard to the amended
vesting schedule. Such election must be made without regard to
the amended vesting schedule. Such election must be made within
sixty (60) days after the latest of the following dates: (a) the
date the amendment is adopted, (b) the date the amendment becomes
effective, or (c) the date the Participant is notified in writing
of the amendment.
10.4. Discontinuance of Contributions and Termination
of Plan and Trust.
(a) If the Company decides it is impossible or
inadvisable to make its contributions as herein provided,
the Company shall have the power to terminate the Plan with
respect to its Associates by appropriate resolution. A
certified copy of such resolution or resolutions shall be
delivered to the Trustee and as soon as possible thereafter,
the Advisory Committee shall notify each Participant or
Beneficiary entitled to receive benefits under the Plan.
After the date specified in such resolutions the Company
shall make no further contributions under the Plan. The
Trust, however, shall remain in existence as well as all
other provisions of the Plan, except for provisions for
contributions by the Company shall continue to be held,
administered and distributed by the Trustee in accordance
with the provisions of the Plan.
(b) In the event of the termination or partial
termination of the Plan, or a complete discontinuance of
contributions under the Plan, the Account of each affected
Participant shall become fully vested and nonforfeitable.
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(c) If the Company shall decide to terminate
completely the Plan and the Trust, such termination shall be
effective as of a date to be specified in certified copies
of its resolutions to be delivered to the Trustee, and as
soon as possible thereafter the Advisory Committee shall
notify each Participant or Beneficiary entitled to receive
benefits under the Plan. Upon termination of the Plan and
Trust and after payment of all expenses and proportional
adjustment of the Accounts of Participants to reflect such
expenses, Trust Fund profit or losses, and reallocations to
the date of termination, each employed or retired
Participant (or Beneficiary of such Participant) entitled to
receive benefits shall be entitled to receive his or her
vested Account Balance, conditioned on the satisfaction of
all applicable regulatory requirements. The Trustee shall
make distribution of such amounts to the Participants in
the form and manner provided in Article VII above, unless
the Company shall direct that payment be made in a
Trustee-to-Trustee transfer to another qualified plan. Such
distribution or transfer shall be made as soon as
administratively feasible following the date of termination.
(d) Distributions of the PAYSOP accounts upon
termination of the PAYSOP shall be made pursuant to and in
accordance with the applicable laws governing distributions
from terminated plans and such distributions shall be made
in a lump sum and will consist of Company Securities (except
cash will be distributed in lieu of fractional shares of
Company Securities). A prior written consent to the
distribution must be received before any distribution to a
Participant with a PAYSOP Account balance in excess of
$3,500 and no consent to a distribution shall be required of
Participants with a PAYSOP Account balance of $3,500 or
less. In the event a Participant with a PAYSOP Account
balance of more than $3,500 does not consent to the
termination distribution of his PAYSOP Account, the assets
in such Participant's PAYSOP Account shall be allocated to
an account for the benefit of such Participant under the
Plan and shall be held, administered and invested in
accordance with the provisions of the Plan, as amended,
without regard to the requirements of (Section Mark) 409 of the Code.
The Participant's former PAYSOP Account allocated to an
account and held under the Plan shall at all times remain
100% vested and shall not be subject to forfeiture.
(e) Nothing hereinabove in this Amendment shall be
construed as terminating or having the effect of terminating
any Plan other than the deemed separate PAYSOP and the Plan
shall continue to operate for the exclusive benefit of
Participants and their beneficiaries pursuant to the terms
and provisions set forth in the Plan, as amended, and as may
be subsequently amended from time to time.
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10.5. Merger, Consolidation, or Transfer.
Notwithstanding, anything herein to the contrary, in the event of
a merger or consolidation with, or transfer of assets to any
other plan, each affected Participant will receive a benefit
immediately after such merger, etc. (as if the Plan then
terminated) which is at least equal to the benefit the
Participant was entitled to immediately before such merger, etc.
(as if the Plan had terminated).
10.6. De Facto Termination. If the Advisory Committee
determines in its sole discretion that the Plan has been
terminated partially or completely, within the meaning of
regulations under (Section Mark) 411 of the Code, the Advisory Committee shall
determine the date of such termination and who has been affected
by the termination. In addition, even though a partial
termination has not occurred, the Advisory Committee may vest the
Accounts of a group of Participants in full because they are
affected by a business divestiture, layoff or other similar
transaction (for purposes of this Section, the partial
termination rules set forth herein shall apply in such event even
though a partial termination has not occurred). The Accounts of
all persons affected shall remain payable under the terms set
forth in the Plan, except as provided below:
(a) In connection with a termination or partial
termination of the Plan or thereafter, the Advisory
Committee may elect to discharge all of the Plan's
obligations to affected Participants. In such event, the
Advisory Committee shall direct the Trustee to liquidate the
necessary portion of the Trust Fund and distribute affected
Accounts, less proportionate shares of the expenses of
termination, to the persons entitled thereto.
(b) A Company shall have the right at any time to
discontinue contributions to the Plan completely or as to
any of the Company's divisions, facilities or operational
units. A complete discontinuance of contributions, however,
shall constitute a Plan termination.
(c) This Paragraph has been included in the Plan to
meet requirements of federal law. It is not intended to
create, nor shall it be construed as creating, any
contractual rights whatsoever.
10.7. Succession of Power. On the effective date of
the termination of the Plan, the Trustee shall immediately
succeed to all of the duties, responsibilities and powers
theretofore held by the Advisory Committee, except as those
powers are otherwise modified by the terms of this Article.
10.8. Continuation of Payment. Benefit payments to
Participants whose termination of employment occurred before the
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effective date of the Plan termination shall continue to be made
at the times and in the amounts provided in Article VII hereof.
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ARTICLE XI
Withdrawals and Loans
11.1. In-Service Withdrawals. The purpose of the Plan
is to provide for each Participant's retirement; however, a
Participant, subject to the below described limitations, may make
an in-service withdrawal while an Associate. Any withdrawal may
be made from the Participant's Deferred Income Account, without
any earnings thereon. An in-service withdrawal may be made for
the following reasons:
(a) A Participant who has attained 59 1/2 years of age
may make a written request to the Advisory Committee for a
withdrawal in accordance with the Plan Rules as prescribed
by the Advisory Committee.
(b) Upon the written request of a Participant to the
Advisory Committee and upon compliance with such Plan Rules
as may be prescribed by the Advisory Committee a hardship
withdrawal may be made, which distribution shall comply with
the safe-harbor approach of the final regulations to
(Section Mark) 401(k) of the Code. The minimum amount of a hardship
withdrawal must be at least $500. A hardship withdrawal
shall be authorized by the Advisory Committee only upon an
immediate and heavy financial hardship of the Participant
determined in accordance with Treasury Regulation 1.401(k)-
1(d)(2)(ii)(B), which currently includes but is not limited
to:
(i) Medical expenses (as defined in (Section Mark) 213(d) of
the Code) for a Participant or his or her dependents.
(ii) Effective July 1, 1991, the purchase or
hardship maintenance of a Participant's primary home.
Hardship maintenance is limited to that maintenance
necessary to avoid legal condemnation.
(iii) Post-Secondary educational tuition for the
current semester or quarter for the dependents of a
Participant.
The determination by the Advisory Committee of whether
a hardship withdrawal is necessary to satisfy the financial
hardship of the Participant after the Participant has
exhausted other resources reasonably available shall be
determined in accordance with Treasury Regulation Section
1.401(k)-1(d)(2)(iii)(B), which provides that a hardship
withdrawal may be made on a representation of the
Participant to the Advisory Committee that:
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(i) The hardship distribution is not in excess of
the amount of the immediate and heavy financial need.
(ii) The Participant has obtained all
distributions other than hardship distributions and all
non-taxable loans currently available under all plans
maintained by the Company. A hardship distribution
shall not be denied solely because the Participant does
not receive a nontaxable loan pursuant to Paragraph
11.3 of the Plan if the loan is not made on account of
a determination by the Advisory Committee that the loan
cannot be adequately secured.
Notwithstanding any provision of the Plan to the
contrary, the Plan shall be construed so as to comply with
the requirements of Treasury Regulation Section 1.401(k)-
1(d)(2)(ii) for a safe-harbor hardship withdrawal, which
requirements provide that the Participant's Tax Deferred
Contributions and any other voluntary employee contributions
will be suspended for a twelve (12) month period following
the receipt of the hardship withdrawal and that the maximum
allowable Tax Deferred Contribution for the taxable year
following the taxable year of the hardship withdrawal shall
be reduced by the amount of Tax Deferred Contributions made
by the Participant in the taxable year in which the hardship
withdrawal was received.
Hardship withdrawals shall be made as soon as
administratively possible following the date of the Advisory
Committee's approval of the Participant's request. The
Advisory Committee shall not authorize a hardship withdrawal
in an amount greater than the amount necessary to meet the
financial need created by the hardship, nor shall the
hardship request be authorized if the amount of the request
is reasonably available from other resources of the
Participant.
11.2. Withdrawals on Account of Plan Termination or
Sale of Assets. Except when specifically stated otherwise in the
Plan, and subject to any required or requested governmental
approval, a Participant may withdraw his or her Account Balance
including income thereon, in a lump sum upon the happening of any
of the following:
(a) Plan termination without the establishment of a
successor plan;
(b) the date of the sale by the Company of
substantially all of its assets used in a trade or business
if the Participant continues employment with the corporation
acquiring the assets; or
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(c) the date of the sale by the Company of its
interest in a subsidiary, if the Participant continues
employment with the subsidiary.
11.3. Loans to Participants.
(a) A loan may be made from the Trust to a Participant
who is also an Associate in cases of necessity or when
otherwise deemed warranted by the Advisory Committee on a
nondiscriminatory basis provided, however, no loan shall be
made to a Associate who is an owner-employee as defined in
(Section Mark) 401(c) of the Code if such loan would constitute a
prohibited transaction. A Participant who wishes to receive
a loan from the Plan shall file a written loan application
with the Advisory Committee. A Participant may have no more
than one loan outstanding at any one time. For Accounts of
less than $20,000, a Participant may borrow the lesser of
$10,000 or 90% of his or her Account Balance. For Accounts
of $20,000 or more the Participant may borrow the lesser of
fifty thousand dollars ($50,000) or one-half (1/2) of his or
her Account Balance. For loans made on or after January 1,
1987, the fifty thousand dollar ($50,000) limit is reduced
by a Participant's largest outstanding loan balance during
the twelve (12) month period ending on the day before the
date of the new loan. Loans shall not be made to
Participants if the principal amount of the loan would be
less than five hundred dollars ($500). All loans shall be
evidenced by a negotiable promissory note and shall meet the
following requirements:
(i) The loan shall be payable in installments by
payroll deduction on a level amortization basis.
(ii) The loan shall bear a reasonable rate of
interest not in excess of that permitted by law, and at
least equal to the rate of return then being earned by
the Guaranteed Investment Fund; provided that loans
granted at different times may bear different interest
rates if, in the opinion of the Advisory Committee, the
difference in the rates is justified by a change in
general economic conditions.
(iii) The loan shall be adequately secured and
security may be required in addition to that
automatically provided under subparagraph (b), below.
(iv) Except as otherwise authorized by the
Advisory Committee, interest and principal on a loan
must be repaid in installments through payroll
deductions over a specified period not to exceed four
and one-half (4 1/2) years; unless said loan shall have
been obtained for the purpose of purchasing the
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Participant's primary residence (hereinafter referred
to as a "residential loan") and the Advisory Committee
shall authorize a longer repayment period for
residential loans. A residential loan, shall be repaid
over such reasonable repayment period as the Advisory
Committee determines, not to exceed the average
repayment period for residential loans being made by
commercial lending institutions in the area in which
the Participant is residing at the time of such loan or
the maximum repayment period permitted by Regulations
issued by the Commissioner of Internal Revenue and in
effect at the time of such loan, whichever period shall
be shorter.
(v) The loan shall be documented by such notes,
evidences of indebtedness and other instruments
executed by the Participant which the Advisory
Committee in its discretion requires.
(vi) A loan to a Participant shall not be
permitted until at least thirty (30) days after all
other loans to the Participant from the Plan have been
repaid.
(b) In addition to the above limitations, the Advisory
Committee may further limit the amount loaned to any
Participant in order to maintain a reserve chargeable
against the Participant's benefit for income taxes which
would have to be withheld by the Trustee if the loan becomes
a deemed distribution to the Participant. Any such taxes
required to be withheld by the Trustee (whether or not such
a reserve has been created) shall be charged to and reduce
the Participant's benefit to the extent possible and any
excess shall be treated as an administrative expense of the
Plan which shall be reimbursed by the Participant in
question.
(c) Each loan from the Plan shall be secured by the
borrowing Participant's interest in the Plan. If a
Participant is no longer an Associate, or the Plan
terminates or the Participant files for relief under the
United States Bankruptcy Code before he or she repays the
loan, or if the loan becomes a deemed distribution to the
Participant under (Section Mark) 72(p) of the Code, the loan shall become
immediately due and shall be repaid out of the Participant's
vested Account Balance, which shall be reduced accordingly.
This right of set-off does not authorize the Advisory
Committee to defer collection of a loan until the
Participant ceases to be an Associate, but merely provides a
method of assuring payment by such time. In addition, if a
Participant's loan is in default and the Participant is
still an Associate, the loan shall become immediately due
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and payable and shall be satisfied to the extent possible
from the Participant's vested Account Balance and such
Account shall be reduced accordingly, provided that the
Advisory Committee determines that such a set-off does not
jeopardize the qualified status of the Plan.
(d) The Advisory Committee shall at the time of any
loan notify the borrower of the amount of the loan, the
interest rate to be charged, and the repayment schedule. If
any loan to a Participant is unpaid on the date that such
Participant or his or her Beneficiary becomes entitled to a
distribution from the Trust, such loan shall become due and
payable on such date; and the amount thereof, together with
any interest thereon, shall be deducted from the amount of
the distribution to which such Participant or his or her
Beneficiary is entitled. Any additional administrative
expenses incurred by the Trustee in connection with any such
loan may be charged to the Participant obtaining said loan.
11.4. Loans on or after October 18, 1989. The
following provisions with respect to Plan loans shall apply to
Plan loans made or renewed on or after October 18, 1989. The
provisions of the Plan and the law in effect prior to this
amendment, as set forth in Paragraph 11.3, shall continue to
apply to all loans in existence on October 18, 1989, provided
such loans are not renewed. The loan provisions set forth herein
are designed to comply with the requirements set forth in the
final Department of Labor regulations under Section 408(b)(1) of
ERISA, and the Advisory Committee shall interpret the provisions
to the extent necessary to comply with the final regulations,
including any amendments and interpretations thereto.
(a) The Advisory Committee shall have the authority
to establish a loan administration policy, which policy may
include revisions or modifications to the provisions of
this Paragraph 11.4 to the extent necessary to bring the
provisions herein into conformance with the requirements of
Section 408(b)(1) of ERISA, including any regulations,
amendments or interpretations thereto without the necessity
of amending the Plan. Such policy, which, when properly
executed, is hereby incorporated by reference and made a
part of the Plan, must include but need not be limited to
the following:
(i) The identity of the person or positions
authorized to administer the Participant loan program;
(ii) A procedure for applying for loans;
(iii) The basis on which loans will be approved or
denied;
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(iv) Limitations, if any, on the types and amounts
of loans offered;
(v) The procedure under the program for
determining a reasonable rate of interest;
(vi) The types of collateral which may secure a
Participant loan; and
(vii) The events constituting default and the steps
that will be taken to preserve Plan assets.
(b) A loan or loans may be made from the Trust to a
Participant who is also an Associate. The Participant must
submit a written application to the Advisory Committee
requesting a loan, in such form as determined by the
Advisory Committee. All loans shall be made on a reasonably
equivalent basis, as determined by the Advisory Committee in
accordance with Department of Labor Regulation Section
2550.408b-1(b).
(c) Loans shall not be made available to any
Participant who is a Highly Compensated Associate in an
amount greater than the amount made available to other
Participants and no loans shall be made to a Participant who
is an owner-employee as defined in (Section Mark) 401(c) of the Code if
such loan would constitute a prohibited transaction.
(d) All loans shall be evidenced by a negotiable
promissory note and shall be adequately secured as
determined by the Advisory Committee in accordance with
Department of Labor Regulation Section 2550.408b-1(f), which
security must consist of that security required in a normal
commercial setting between unrelated parties in an
arms-length transaction. No more than fifty percent (50%)
of the Participant's vested Account Balance may be used as
security. If the Participant is married, the written
consent of his or her spouse will be required to obtain a
Plan loan. No loan shall be authorized unless it is
determined that it will be adequately secured.
(e) Except as otherwise authorized by the Advisory
Committee, loans shall be repayable in installments by
payroll deductions on a level amortization basis. A
Participant may prepay his or her loan without penalty at
any time. Prepayment procedures shall be governed by a
written policy adopted by the Advisory Committee.
(f) All loans shall provide for a reasonable rate of
interest in accordance with the requirements of Department
of Labor Regulation Section 2550.408b-1(e). The rate of
interest charged on the loan shall be determined pursuant to
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a written policy adopted by the Advisory Committee, and
shall provide a return commensurate with interest rates
charged by commercial lenders in the local area under
similar circumstances.
(g) The maximum term of a loan shall not exceed four
and one-half (4 1/2) years from the date of the loan unless
said loan shall have been obtained for the purpose of
purchasing or building a Participant's primary residence
(hereinafter referred to as a "Residential Loan") and the
Advisory Committee shall authorize a longer repayment period
for Residential Loans. A Residential Loan may be repaid
over such reasonable repayment period as the Advisory
Committee determines on a nondiscriminatory basis, not to
exceed the shorter of the average repayment period for
Residential Loans being made by commercial lending
institutions in the area in which the Participant is
residing at the time of such loan, or the maximum repayment
period permitted by regulations in effect at the time of
such loan, but which period of repayment shall not exceed
fifteen (15) years.
(h) Loans shall not be granted to any Participant
which provide for a repayment period extending beyond such
Participant's Normal Retirement Date.
(i) A loan to a Participant shall not be permitted
until at least thirty (30) days after all other loans to the
Participant from the Plan have been repaid.
(j) In addition to the above limitations, the Advisory
Committee may further limit the amount loaned to any
Participant in order to maintain a reserve chargeable
against the Participant's benefit for income taxes which
would have to be withheld by the Trustee if the loan becomes
a deemed distribution to the Participant. Any such taxes
required to be withheld by the Trustee (whether or not such
a reserve has been created) shall be charged to and reduce
the Participant's benefit to the extent possible and any
excess shall be treated as an administrative expense of the
Plan which shall be reimbursed by the Participant in
question.
(k) Any loan from the Plan shall be considered an
earmarked investment of the Participant who received the
loan, in accordance with Paragraph 6.4 of the Plan.
(l) The Advisory Committee shall adopt a uniform
written policy for dealing with delinquent loans, which
policy must be consistent with the requirements of the Code
and ERISA. Furthermore, if any loan to a Participant is
unpaid on the date that such Participant, or his or her
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beneficiary, becomes entitled to a distribution from the
Plan, such loan shall become due and payable on such date
and the balance of the loan, together with any unpaid
interest thereon, shall be deducted from the amount of the
distribution to which such Participant, or his or her
beneficiary, is otherwise entitled.
(m) Any additional expenses incurred by the Advisory
Committee or Trustee in connection with the making of a loan
or the administration or enforcement thereof, may be charged
to the account of the Participant who requested or received
said loan.
(n) The loan shall be documented by such notes,
evidences of indebtedness and other instruments executed by
the Participant which the Advisory Committee in its discre-
tion requires. To the extent required by the Federal Truth
in Lending Act, the Advisory Committee shall prepare the
required statement of disclosures with respect to a loan
from the Plan.
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ARTICLE XII
Miscellaneous Provisions
12.1. No Guaranty of Employment. The adoption and
maintenance of the Plan shall not be deeded to constitute a
contract between the Company and any Associate or to be a
consideration for, or an inducement or condition of, the
employment of any person. Nothing herein contained shall be
deemed to give any Associate the right to be retained in the
employ of the Company or to interfere with the right of the
Company to discharge any Associate at any time, nor shall it be
deemed to give the Company the right to require the Associate to
remain in its employ, nor shall it interfere with the Associate's
right to terminate his employment at any time.
12.2. Limitation of Rights. Except as otherwise
required by law, inclusion under the Plan will not give any
Associate any right or claim to any benefit hereunder except to
the extent such right has specifically become fixed under the
terms of the Plan and there are Trust Funds available. The
doctrine of substantial performance shall have no application to
Associates, Participants or Beneficiaries. Each condition and
provision of the Plan, including numerical items, has been
carefully considered and constitutes the minimum limit on
performance which will give rise to the applicable right.
12.3. Provision of Benefits. All benefits payable
under the Plan shall be paid or provided for solely from the
Trust Fund, and the Company assumes no liability or
responsibility therefor.
12.4. Headings. The headings of Articles are included
solely for convenience of reference, and if there is any conflict
between such headings and the text of this Plan and Trust, the
text shall control.
12.5. Governing Law. All legal questions pertaining
to this Agreement shall be determined in accordance with the laws
of the State of North Carolina insofar as the same shall be
applicable and not superseded by ERISA.
12.6. Alienation of Benefits. The right of any
Participant or his Beneficiary to any benefit or to any payment
hereunder shall not be subject to alienation or assignment,
except as may be expressly permitted herein pursuant to a
Qualified Domestic Relations Order, as defined in (Section Mark) 414(p) of the
Code, and described in Article XIV; or pursuant to the engagement
by the Participant in any dishonest or illegal act against the
Company, including, but not limited to, embezzlement of Company
funds. If a Participant should engage in embezzlement of Company
funds, or other illegal act against the Company, his Account
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Balance under the Plan shall be offset by the amount of damages
incurred by the Company, as determined by the Advisory Committee,
and the amount of the offset shall be paid to the Company.
If such Participant or Beneficiary shall attempt to
assign, transfer, or dispose of his right to any benefit or to
any payment hereunder or should such right be subject to
attachment, execution, garnishment, sequestration, or other legal
or equitable process other than as described above and in Article
XIV, it shall ipso facto pass to the Participant's spouse or, if
none, or if such right would also be subject to attachment,
execution, garnishment, sequestration or other legal or equitable
process other than as described above, the right shall pass to
such person or persons as may be appointed by the Advisory
Committee from among the Beneficiaries, if any, theretofore
designated by such Participant or the spouse or lineal ascendants
and descendants of the Participant; provided however, the
Advisory Committee, in its sole discretion, may reappoint the
Participant to receive any distribution thereafter becoming due
either in whole or in part. Any appointment made by the Advisory
Committee hereunder may be revoked by the Advisory Committee at
any time, and further appointment made by it if necessary to
comply with the provisions of the Code, ERISA and the Plan.
12.7. Severability. If any provisions of this Plan
shall be held illegal or invalid for any reason, said illegality
or invalidity shall not affect the remaining provisions of this
Plan but shall be fully severable; and the Plan shall be
construed and enforced as if said illegal and invalid provisions
had never been inserted herein.
12.8. Claims. A Participant or Beneficiary shall have
the right to file a claim, inquire if he or she has any right to
benefits, or appeal the denial of a claim. A claim will be
considered as having been filed when a written or oral
communication is made by the person (or his authorized
representative) who brings the claim request to the attention of
the Advisory Committee. The Advisory Committee or claims
official will notify the claimant in writing within a reasonable
period of time after the claim is filed if the claim is granted
or wholly or partially denied. If the claim is granted,
appropriate action shall be taken and, if appropriate,
distribution or payment shall be made from the Trust Fund. If
the claim is wholly or partially denied, the claims official
shall, within ninety (90) days (or such longer period as may be
reasonably necessary) provide the claimant with written notice of
such denial, setting forth, in a manner calculated to be
understood by the claimant:
(a) The reason or reasons for denial;
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(b) Specific reference to the Plan provisions that
apply in the case;
(c) A description of any additional material or
information that would be helpful to the Advisory Committee
in further review of the claim, and reason or reasons why it
is necessary; and
(d) An explanation of the Plan's claim appeal
procedure.
If a claim is denied, the claimant may file an appeal asking the
Review Official to conduct a full and fair review of his or her
claim. An appeal must be made in writing no more than sixty (60)
days after the claimant receives written notice of the denial.
The claimant may review any documents that apply to the case and
may also submit points of disagreement and other comments in
writing along with the appeal. The decision of the Review
Official regarding the appeal will be given to the claimant in
writing no later than sixty (60) days following receipt of the
appeal. However, if a hearing is held or there are special
circumstances involved, the decision will be given no later than
one hundred twenty (120) days after receiving the appeal.
12.9. Number and Gender. Masculine pronouns shall
include the feminine gender (and vice versa), and the singular
shall include the plural (and vice versa) unless the context
indicates otherwise. The pronouns "it" and "its" shall refer to
a natural person (and vice versa) if the context so requires.
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ARTICLE XIII
Top-Heavy Rules
13.1. Effect of Article XIII on Plan. Notwithstanding
any contrary provisions contained in any other Article of the
Plan, if at any time the Plan shall be a Top-Heavy Plan (as
hereinafter defined), this Article shall control; and any
contrary terms of the Plan shall be deemed replaced by the
provisions of this Article. However, this Article shall not be
effective for any subsequent Plan Year in which the Plan is
determined not to be a Top-Heavy Plan. In addition, the
requirements of Paragraphs 13.2(j), 13.3, and 13.4 shall not
apply with respect to any Associate included in a unit of
associates covered by an agreement which the Secretary of Labor
finds to be a collective bargaining agreement between Associate
representatives and one or more Companies if there is evidence
that retirement benefits were the subject of good faith
bargaining between the parties. Furthermore, the Account Balance
of any Associate who has not performed any service for the
Company at any time during the five (5) year period ending on the
Determination Date, shall not be considered in determining
whether the Plan is a Top-Heavy Plan.
13.2. Definitions. For purposes of this Article VII
the following words and terms shall have the following meanings:
(a) "Key Associates" shall mean:
(i) Any Associate or former Associate (and the
surviving spouse or other Beneficiary of such
Associate) who at any time during the Determination
Period was an officer of the Company having an annual
compensation greater than fifty percent (50%) of the
amount in effect under (Section Mark) 415(b)(1)(A) of the Code for
any Plan Year [no more than fifty (50) employees (or,
if the Company shall have fewer than fifty (50)
Associates, the greater of three (3) or ten percent
(10%) of the employees) shall be considered officers];
(ii) An Associate who owns (or is considered to
own under (Section Mark) 318 of the Code) one of the ten (10)
largest interests in the Company providing such
interest is greater than one-half percent (1/2%) and
further providing such individual's compensation
exceeds one hundred percent (100%) of the dollar
limitation under (Section Mark) 415(c)(1)(A) of the Code [if 2
Associates have the same interest in the Company, the
Associate having greater annual compensation shall be
treated as having a larger interest]; or
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(iii) A five percent (5%) owner of the Company,
or a one percent (1%) owner of the Company who has an
annual compensation of more than one hundred fifty
thousand dollars ($150,000).
Annual compensation means compensation as defined in
(Section Mark) 415(c)(3) of the Code, but including amounts contributed by
the Company pursuant to a salary reduction agreement which
are excludible from the Associate's gross income under
(Section Mark) 125, (Section Mark) 402(a)(8),
(Section Mark) 402(h) or (Section Mark) 403(b) of the Code.
The Determination Period is the Plan Year containing
the Determination Date and the four preceding Plan Years.
The determination of who is a Key Associate will be made in
accordance with (Section Mark) 416(i)(1) of the Code and the regulations
thereunder.
(b) "Top-Heavy Plan" shall mean a Plan subject to any
one of the following conditions:
(i) If the Top-Heavy Ratio for this Plan exceeds
sixty percent (60%) and this Plan is not part of any
Required Aggregation Group or Permissive Aggregation
Group of plans.
(ii) If this Plan is a part of a Required
Aggregation Group of plans but not part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the group
of plans exceeds sixty percent (60%).
(iii) If this Plan is a part of a Required
Aggregation Group and part of a Permissive Aggregation
Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds sixty percent
(60%).
(c) "Top-Heavy Ratio" shall mean:
(i) If the Company maintains one or more defined
contribution plans (including any Simplified Employee
Pension Plan) and the Company has never maintained any
defined benefit plan which has covered or could cover a
Participant in this Plan, the Top-Heavy Ratio is a
fraction, the numerator of which is the sum of the
Account Balances of all Key Associates as of the
Determination Date, and the denominator of which is the
sum of all Account Balances of all Participants as of
the Determination Date, both computed in accordance
with (Section Mark) 416 of the Code and the regulations thereunder.
Both the numerator and the denominator of the Top-Heavy
Ratio are increased to reflect any contribution which
is due but unpaid as of the Determination Date, but
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which is required to be taken into account on that date
under (Section Mark) 416 of the Code and the regulations thereunder.
In determining the above Account Balances, such amount
must be increased by the aggregate distributions made
within the five (5) year period ending on the
Determination Date as well as distributions under a
terminated plan for the same five (5) year period
which, if it had not been terminated, would have been
required to be included in an aggregation group.
(ii) If the Company maintains one or more defined
contribution plans (including any Simplified Employee
Pension Plan) and the Company maintains or has
maintained one or more defined benefit plans which have
covered or could cover a Participant in this Plan, the
Top-Heavy Ratio is a fraction, the numerator of which
is the sum of account balances under the defined
contribution plans for all Key Associates, and the
Present Value of accrued benefits under the defined
benefit plans for all Key Associates, and the
denominator of which is the sum of the account balances
under the defined contribution plans for all
Participants and the Present Value of accrued benefits
under the defined benefit plans for all Participants.
Both the numerator and denominator of the Top-Heavy
Ratio are increased for any distribution of an account
balance or an accrued benefit made in the five (5) year
period ending on the Determination Date, as well as any
distributions during the same five (5) year period
under a terminated plan which if it had not been
terminated would have been required to be included in
an aggregation group, and any Contribution due but
unpaid as of the Determination Date.
(iii) For purposes of (i) and (ii) above, the value
of account balances and the present value of accrued
benefits will be determined as of the most recent
Valuation Date that falls within or ends with the
twelve (12) month period ending on the Determination
Date. The account balances and accrued benefits of the
Participant who is not a Key Associate but who was a
Key Associate in a prior year will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken
into account will be made in accordance with (Section Mark) 416 of
the Code and the regulations thereunder. Deductible
employee contributions will not be taken into account
for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of account balances and the
Present Value of accrued benefits will be calculated
with reference to the Determination Dates that fall
within the same calendar year.
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(d) "Permissive Aggregation Group" shall mean the
Required Aggregation Group of plans plus any other plan or
plans of the Company which, when considered as a group with
the Required Aggregation Group, would continue to satisfy
the requirements of (Section Mark)(Section Mark) 401(a)(4)
and 410 of the Code.
(e) "Required Aggregation Group" shall mean:
(i) each qualified plan of the Company in which
at least one Key Associate participates or participated
at any time during the determination period (regardless
of whether the Plan has terminated) , and
(ii) any other qualified plan of the Company which
enables a plan described in (i) to meet the
requirements of (Section Mark)(Section Mark) 401(a)(4)
and 410 of the Code.
(f) "Determination Date" shall mean for any Plan Year
subsequent to the first Plan Year, the last day of the
preceding Plan Year; and for the first Plan Year of the
Plan, the last day of that year.
(g) "Valuation Date" shall mean the date set forth in
Paragraph 1.3 as the Adjustment Date, which is the date upon
which account balances or accrued benefits are valued for
purposes of calculating the Top-Heavy Ratio.
(h) "Non-Key Associate" shall mean any Associate who
is not a Key Associate.
(i) "Five Percent (5%) Owner and One Percent (1%)
Owner" shall be defined as follows:
(i) "Five Percent (5%) Owner" shall mean any
person who owns (or is considered as owning pursuant to
(Section Mark) 318 of the Code) more than five percent (5%) of the
outstanding stock of the corporation, or stock
possessing more than five percent (5%) of the total
combined voting power of all stock of the corporation.
(ii) "One Percent (1%) Owner" shall mean any
person who would be described in subparagraph (i) above
if one percent (1%) were substituted for five percent
(5%).
(iii) For purposes of this Paragraph 14.2(i) the
provisions of (Section Mark) 318(a)(2)(C) of the Code shall be
applied by substituting "five percent (5%)" for "fifty
percent (50%)."
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(iv) The aggregation rules of subsections (b),
(c), and (m) of (Section Mark) 414 of the Code shall not apply for
purposes of determining ownership in the Company.
(j) The Maximum Annual Compensation taken into account
under a Top-Heavy Plan may not exceed the first two hundred
thousand dollars ($200,000) of any Associate's annual
Compensation (or such greater amount as may be subsequently
allowed as a cost of living adjustment by law or regulations
prescribed thereunder).
13.3. Minimum Contribution.
(a)If the Plan shall be a Top-Heavy Plan for any Plan
Year, except as otherwise provided in (c) and (d) below, the
Company Contributions and Forfeitures allocated on behalf of
any Participant who is not a Key Associate shall not be less
than the lesser of three percent (3%) of such Participant's
compensation, or, if the Company has no defined benefit plan
which designates this Plan to satisfy (Section Mark) 401 of the Code, the
largest percentage of Company contributions and forfeitures,
as a percentage of the first two hundred thousand dollars
($200,000) of the Key Associate's compensation, allocated on
behalf of any Key Associate for that year. The minimum
contribution is determined without regard to any Social
Security contribution. Such minimum contribution shall be
made and allocated to the account of the Participant even
though, under other Plan provisions, the Participant would
not otherwise be entitled to receive an allocation, or would
have received a smaller allocation for the year because of
(i) the Participant's failure to complete one thousand
(1,000) Hours of Service (or any equivalent provided in the
Plan), or (ii) the Participant's failure to make mandatory
employee contributions to the Plan, or (iii) the
Participant's compensation was less than a stated amount.
(b) For purposes of computing the minimum
contribution, compensation shall mean compensation of an
Associate of the Company for the entire Plan Year.
(c) Subparagraph (a) above shall not apply to any
Participant who terminated employment during the year for a
reason other than death or Retirement, and who was not
employed by the Company on the last day of the Plan Year.
(d) Subparagraph (a) above shall not apply to any
Participant to the extent he or she is covered under any
other plan or plans of the Company and the Company has
provided in such plan or plans that the minimum contribution
or benefit requirement applicable to Top-Heavy Plans will be
met in the other plan or plans. If a minimum contribution
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is required, it shall be made from the Rose's Stores, Inc.
Profit Sharing Plan.
(e) The minimum contribution required (to the extent
required to be nonforfeitable under (Section Mark) 416(b)) may not be
forfeited under (Section Mark)(Section Mark) 411(a)(3)(B) or 411(a)(3)(D).
13.4. Adjustments to Aggregate Limit.
(a) For any Plan Year in which the Plan is a Top-Heavy
Plan, "1.0" shall be substituted for "1.25" in Paragraph
5.8(d)(i)(A) and 5.8(d)(ii)(A).
(b) Even though the Plan shall be a Top-Heavy Plan,
subparagraph (a) above shall not apply for any Plan Year in
which the following requirements are met:
(i) The Plan meets the requirements set forth in
Paragraph 13.3 above as modified by substituting "four
percent" (4%) for "three percent" (3%) wherever the
same shall appear therein; and
(ii) If the Plan would not be a Top-Heavy Plan if
"ninety percent" (90%) is substituted for "sixty
percent" (60%) wherever the same shall appear in
Paragraph 13.2(b).
(c) Even though subparagraph (a) above shall be
applicable to the Plan for any Plan Year, its application
shall be suspended with respect to any individual so long as
there are no:
(i) Company Contributions, Forfeitures or
Voluntary Contributions allocated to such individual,
or
(ii) Accruals under the defined benefit plan for
such individual.
13.5. Vesting Requirements. For any Plan Year in
which the Plan is a Top-Heavy Plan, each Participant's Company
Contribution Account shall vest and become nonforfeitable based
on the more rapid of the normal vesting schedule in the Plan or
at each level in accordance with the following graded vesting
schedule:
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Years of Service Vested Percentage
Less than 2 years 0%
At least 2 but less than 3 years 20%
At least 3 but less than 4 years 40%
At least 4 but less than 5 years 60%
At least 5 but less than 6 years 80%
At least 6 years or more 100%
When the Plan ceases to be a Top-Heavy Plan, the
vesting schedule shall revert to the schedule defined in
Paragraph 7.2. However, each Participant with at least three (3)
Years of Service may elect to have his or her nonforfeitable
percentage computed under the Plan according to the Top-Heavy
vesting schedule. For purposes of this Paragraph, a Participant
shall be considered to have completed three (3) Years of Service
if he or she has completed 1,000 Hours of Service in each of
three (3) Plan Years, whether or not consecutive, ending with or
prior to the last day of the election period described below.
The election period shall begin no later than the date following
the Determination Date on which the Plan is found not to be
Top-Heavy and shall end no earlier than the latest of the
following dates:
(a) The date which is sixty (60) days after such
Determination Date; or
(b) The date which is sixty (60) days after the day
the Participant is issued written notice of the change by
the Company or the Advisory Committee.
If the vesting schedule of this Plan is changed, the
Account Balance of any Participant determined as of the later of
the date the change is effective or the date the change is
adopted shall not be less than the Account Balance computed under
the Plan without regard to such change.
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ARTICLE XIV
Qualified Domestic Relations Orders
14.1. Notice. Should the Plan receive a judgment,
decree or order entered or enforceable pursuant to the domestic
relations law of the state from which the decree or order
originated, and relating to the provision of child support,
alimony payments or marital property rights of a spouse, child or
other dependent of the Participant, then:
(a) The Advisory Committee shall promptly notify the
Participant and any Alternate Payee of the receipt of such
order and the Plan's procedures for determining its
qualified status, and
(b) The Advisory Committee within a reasonable time
shall determine the qualified status of such order as set
forth in Paragraph 14.2, and notify the Participant and each
Alternate Payee upon such determination.
14.2. Requirements of Qualified Domestic Relations
Order. Subject to any regulations promulgated by the Treasury
Department, the Advisory Committee shall determine whether a
domestic relations order constitutes a Qualified Domestic
Relations Order by determining whether the following requirements
prescribed in (Section Mark) 414(p) of the Code have been met. The order
must:
(a) Create or recognize the existence of, or assign to
any spouse, former spouse, child or other dependent of a
Participant (hereinafter referred to as an "Alternate
Payee") the right to receive all or any portion of the
benefits payable with respect to a Participant under the
Plan;
(b) Clearly specify the following facts:
(i) The name and last known mailing address of
each Participant and Alternate Payee covered by the
order,
(ii) The amount or percentage, or the manner of
determining same, of the Participant's benefits to be
paid by the Plan to the Alternate Payee,
(iii) The number of payments or period to which the
order applies, and
(iv) Each plan to which the order applies; and
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(c) Not require the Plan to provide any type or form
of benefit not otherwise provided by its terms, or provide
an increased benefit, or be in conflict with the payment
provisions of any order previously determined to be a
Qualified Domestic Relations Order. An order, however,
shall not be considered to provide any type or form of
benefit not otherwise provided, merely because the order
requires payment be made to an Alternate Payee on or after
the date on which the Participant attains the earliest
retirement age without regard to whether the Participant has
separated from service.
14.3. Segregated Account. During any period in which
the issue of whether a domestic relations order is a Qualified
Domestic Relations Order is being determined pursuant to this
Article XIII, a separate account in the Plan shall be maintained
consisting of the amount which would have been payable to the
Alternate Payee during such period if the order had been
determined to be qualified. If within eighteen (18) months the
order is determined to be a Qualified Domestic Relations Order,
the segregated amount (plus any interest thereon) shall be paid
to the Alternate Payee. If within eighteen (18) months the issue
is not resolved, or the order is determined not be a Qualified
Domestic Relations Order, then the segregated amount (plus any
interest thereon) shall be paid to the person or persons who
would have been entitled to such amounts if there had been no
order. Any determination that an order is a Qualified Domestic
Relations Order which is made subsequent to the eighteen (18)
month period shall be applied prospectively only.
14.4 Limitations on Benefits and Distributions. All
rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded
to any "alternate payee" under a "qualified domestic relations
order." Furthermore, a distribution to an "alternate payee"
shall be permitted if such distribution is authorized by a
"qualified domestic relations order," even if the affected
Participant has not reached the "earliest retirement age" under
the Plan. For example, a "qualified domestic relations order"
may require a distribution to an "alternate payee" prior to the
time the Participant who is the spouse or ex-spouse of the
"alternate payee" either separates from service or attains age
50. For the purposes of this Section, "alternate payee,"
"qualified domestic relations order" and "earliest retirement
age" shall have the meanings set forth under (Section Mark) 414(p) of the
Code.
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IN WITNESS WHEREOF, the Company has caused these
presents to be executed by its duly authorized officers and its
corporate seal to be hereunto affixed, and the Trustee has
hereunto affixed its respective hand and seal, all as of the day
and year first above written.
COMPANY:
ROSE'S STORES, INC.
ATTEST:
George M. Harvin, Secretary By: L. H. Harvin, III, Chairman
George M. Harvin, Secretary L. H. Harvin, III, Chairman
[Corporate Seal]
TRUSTEE:
CENTRAL CAROLINA BANK AND
ATTEST: TRUST COMPANY
Alberta M. Buxton By: K. Coffield Knight
Asst. Secretary First Vice President
[Corporate Seal]
EXHIBIT 10.5
NORTH CAROLINA
AMENDMENT TO THE
ROSE'S STORES, INC.
COUNTY OF VANCE VARIABLE INVESTMENT PLAN
THIS AMENDMENT, made and entered into this 30 day of
December, 1993, by and between ROSE'S STORES, INC., a Delaware
corporation (the "Employer"), and Central Carolina Bank and Trust
Company, a institution having banking powers in North Carolina
(the "Trustee"):
W I T N E S S E T H:
WHEREAS, the Employer has previously established the Rose's
Stores, Inc. Variable Investment Plan (the "Plan") for the
benefit of its eligible Associates, as last amended and restated
generally effective January 1, 1989;
WHEREAS, the Employer has reserved the right to amend or
modify the Plan at any time;
WHEREAS, the Employer has authorized and directed the
officers of the Employer to amend the Plan to give effect to the
elimination of the Company Stock Fund as an available investment
option for contributions made to the Plan on and after September
5, 1993.
NOW, THEREFORE, in consideration of the mutual covenants and
premises herein contained, the Employer does hereby amend the
Plan as follows effective September 1, 1993, except where
provided otherwise:
1. Subparagraphs (a), (b), (c) and (d) of Paragraph 2.14
shall be deleted in their entirety and the following shall be
inserted in lieu thereof:
(a) the Guaranteed Income Fund;
(b) the Fidelity Magellan Fund;
(c) the Biltmore Fixed Income Fund;
(d) the Company Stock Fund, which shall accept no
additional contributions on or after September 1, 1993; and
(e) such other Investment Funds as the Advisory
Committee may designate from time to time, in its
discretion.
2. The text of Paragraph 2.17 shall be modified by deleting
subparagraph (d) and redesignating subparagraphs (e), (f), (g)
and (h) as subparagraphs (d), (e), (f) and (g).
<PAGE>
3. The second sentence of Paragraph 4.4 shall be modified
to read as follows:
The Matching Contribution shall be limited to a specified
percentage of the Tax Deferred Contributions made by a
Participant.
4. Paragraph 4.9 shall be modified to read as follows:
All contributions made to the Plan shall be made in cash.
5. In Paragraph 6.4(b), the reference to Paragraph 2.16
shall be deleted and a reference to Paragraph 2.17 shall be
inserted in lieu thereof.
6. A new Paragraph 7.10, which shall read as follows, shall
be inserted immediately following Paragraph 7.9:
7.10 Direct Rollover.
(a)This Paragraph 7.10 applies to distributions made
on or after January 1, 1993. Notwithstanding any provision
of the Plan to the contrary that would otherwise limit a
distributee's election under this Paragraph, a distributee
may elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct
rollover.
(i) An eligible rollover distribution is any
distribution of all or any portion of the balance to
the credit of the distributee, except that an eligible
rollover distribution does not include: any
distribution that is one of a series of substantially
equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of
ten years or more; any distribution to the extent such
distribution is required under (Section Mark) 401(a)(9) of the Code;
and the portion of any distribution that is not
includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with
respect to employer securities).
(ii) An eligible retirement plan is an
individual retirement account described in (Section Mark) 408(a) of
the Code, an individual retirement annuity described in
(Section Mark) 408(b) of the Code, an annuity plan described in
(Section Mark) 403(a) of the Code, or a qualified trust described in
(Section Mark) 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case
<PAGE>
of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(iii) A distributee includes an Associate or
former Associate. In addition, the Associate's or
former Associate's surviving spouse and the Associate's
or former Associate's spouse or former spouse who is
the alternate payee under a qualified domestic
relations order, as defined in (Section Mark) 414(p) of the Code,
are distributees with regard to the interest of the
spouse or former spouse.
(iv) A direct rollover is a payment by the
plan to the eligible retirement plan specified by the
distributee.
7. Paragraph 7.5(c) shall be modified by adding the
following at the end thereof:
Notwithstanding the foregoing, a distribution may commence
before the end of the thirty (30) day period described
above, provided that:
(i) the Advisory Committee clearly informs
the Participant that the Participant has a right to a
period of at least thirty (30) days after receiving the
notice to consider the decision of whether or not to
elect a distribution (or, if applicable, the form of
distribution), and
(ii) the Participant, after receiving the
notice, affirmatively elects a distribution.
<PAGE>
IN WITNESS WHEREOF, the Employer has caused these presents
to be executed by a duly authorized officer and its corporate
seal to be affixed hereto, and the Trustee has affixed hereto its
hand and seal, all as of the day first written above.
EMPLOYER:
ROSE'S STORES, INC.
ATTEST:
By: George L. Jones
George T. Blackburn, II
[Corporate Seal]
TRUSTEE:
CENTRAL CAROLINA BANK AND
TRUST COMPANY
ATTEST:
By:
[Corporate Seal]
<PAGE>
IN WITNESS WHEREOF, the Employer has caused these presents
to be executed by a duly authorized officer and its corporate
seal to be affixed hereto, and the Trustee has affixed hereto its
hand and seal, all as of the day first written above.
EMPLOYER:
ROSE'S STORES, INC.
ATTEST:
By:
[Corporate Seal]
TRUSTEE:
CENTRAL CAROLINA BANK AND
TRUST COMPANY
ATTEST:
Alberta M. Buxton By: K. Coffield Knight
Assistant Secretary 1st Vice President
[Corporate Seal]
EXHIBIT 10.8
ROSE'S STORES, INC.
SEVERANCE PROGRAM
Section 1
Purpose of the Program
Rose's Stores, Inc. (the "Company") intends by this Severance
Program (the "Program") to provide a method which, in the
discretion of the Program Administrator, can be utilized to
provide Officers and Salaried Associates of the Company with
temporary protection against economic hardship if they are
separated from employment by the Company on account of severance
as defined in Section 3 herein.
This Program shall supersede, replace and control any and all
prepetition termination agreements and the corporate severance
pay policy, except for the employment agreement between the
Company and the President and Chief Executive Officer effective
July 25, 1991.
This Program shall be effective as of the date of approval of
this Program by the court with jurisdiction over the bankruptcy
filing and shall cease to be effective one (1) year from: (a)
the date of confirmation of the Company's plan of reorganization
under chapter 11 of the Bankruptcy Code of 1978, as amended (the
"Bankruptcy Code"); (b) a creditor's plan of reorganization; (c)
a plan of liquidation under the provisions of Chapter 11 of the
Bankruptcy Code; or (d) a conversion to Chapter 7 of the
Bankruptcy Code.
Section 2
Definitions
As used in this Program, the following words and phrases shall
have the following meanings, unless the context clearly indicates
otherwise:
(a) "Associate" shall mean any person in the employment of the
Company.
(b) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
(c) "Length of Service" or "Active Service" shall mean the total
combined months of an Associate's active employment with the
Company and is limited only to that time for which the Associate
received pay from the Company for the actual performance of
services. If an Associate works over one-half of the working
days in a calendar month, he shall be credited with a full month
of Active Service for such month.
<PAGE>
Calculations shall be based on a forty (40) hour work week for a
regular full-time Associate and on the average weekly hours
worked during the three (3) months immediately preceding the
Associate's Termination Date for a regular part-time Associate.
The period for which Severance Allowance benefits are paid shall
not be counted in determining Length of Service.
(d) "Misconduct" shall mean the conviction of, or the entering
of a plea of, nolo contendere by the Associate for any felony
arising out of acts of fraud or dishonesty committed against the
Company; or willful gross misconduct deemed to be materially and
demonstrably injurious to the Company as determined by the
Program Administrator. The Program Administrator's determination
that a separation from employment is due to Misconduct shall be
final and binding.
(e) "Officer" shall mean any of the following Associates of the
Company:
(i) Executive Vice Presidents,
(ii) Senior Vice Presidents,
(iii) Vice Presidents, and
(iv) Treasurer.
(f) An Associate shall be deemed to be "Permanently Disabled"
six (6) months after the first date on which he is disabled by
bodily or mental illness, disease, or injury, to the extent that
he is prevented from performing his material and substantial
duties of employment provided that such disability has continued
uninterrupted for such six (6) month period. The Program
Administrator shall determine that an Associate is "Permanently
Disabled". The Program Administrator's determination that an
Associate is "Permanently Disabled" shall be final and binding.
(g) "Program Administrator" shall mean the Human Resources
Department of the Company.
(h) "Salaried Associate" shall mean any of the following
Associates of the Company:
(i) Directors (not the Company Board of Directors),
(ii) Senior Managers,
(iii) Senior Buyers,
(iv) Buyers,
(v) Store Managers,
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(vi) Exempt Managers, and
(vii) Other Exempt Associates.
(i) "Salary" shall mean an Associate's regular annual salary
from the Company on his Termination Date exclusive of overtime,
bonuses, awards, imputed income or extraordinary payments. When
used in connection with the computation of the amount of an
Associate's Severance Allowance, the Program Administrator shall
employ the following guidelines: the monthly Salary rate shall
be computed by dividing the Associate's Salary by 12, the weekly
Salary rate shall be computed by dividing the Associate's Salary
by 52, and the daily Salary rate shall be computed by dividing
the weekly Salary rate by five. An Associate's Salary shall be
determined by the Program Administrator and its determination
shall be final and binding on all parties.
(j) "Severance Allowance" shall mean a payment or payments as
may be provided herein to an Associate upon termination of active
employment in consideration of the Associate's tenure and
performance with the Company and the probability that the
Associate will suffer economic hardship until the Associate
obtains a new income-earning position and in further
consideration of the execution of such release as shall be
determined to be necessary by the Program Administrator. The
amount of any Severance Allowance may be reduced by any monies
arising out of the employment relationship which the Associate
may owe to the Company. Payments shall be reduced by any
required deduction for taxes, withholding or benefits provided or
elected hereunder. Such pay shall not be extended by holidays
occurring during the covered period. Any portion of the
severance allowance to be paid in installments shall not be paid
if the Associate shall become actively employed as determined by
the Program Administrator.
(k) "Severance Allowance Period" shall mean the period beginning
on the Associate's Termination Date through and including the
ending date used as the basis for the calculation of the
Severance Allowance benefit, or, if earlier, the date the
Associate becomes actively employed as determined by the Program
Administrator.
(l) "Termination Date" shall mean the last official work day for
which an Associate receives pay for Active Service, excluding any
period for which Severance Allowance or other benefit payments
hereunder are made.
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<PAGE>
Section 3
Eligibility for Severance Allowance
Any Officer or Salaried Associate who is separated from
employment shall be eligible for Severance Allowance in
accordance with the following rules and restrictions:
(a) If an Associate ceases employment for any of the following
reasons, he will be entitled to receive a Severance Allowance as
described below:
(i) elimination of his or her position, unless the
Associate is offered a comparable or better
position with the Company as determined by the
Program Administrator,
(ii) termination of his or her employment other than
for Misconduct,
(iii) constructive or voluntary termination, within
sixty (60) days of such termination, due to a
material reduction in salary,
(iv) constructive or voluntary termination, within
sixty (60) days of such termination, due to a
material change in job responsibilities,
(v) termination of his or her employment with the
Company on account of the Associate's Permanent
Disability, or
(vi) termination due to liquidation of the Company
under the provisions of chapter 11 of the
Bankruptcy Code or a conversion to a proceeding
under chapter 7 of the Bankruptcy Code.
Section 4
Calculation of Severance Allowance
The amount of any Severance Allowance, shall be calculated as
follows:
Tier 1: Executive Vice Presidents and Senior Vice Presidents
The Severance Allowance shall consist of:
(a) Eighteen (18) months' Salary, one-half (1/2) payable in a
lump sum payment made as soon as administratively
possible after the Associate's Termination Date and
one-half (1/2) payable in substantially equal monthly
installments over a nine (9) month period with
installment payments commencing on the first day of the
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<PAGE>
tenth month following the Termination Date; or, if the
Associate shall not execute a general release
acceptable to the Program Administrator, one week's
salary;
(b) Reimbursement for reasonable expenses, as determined by
the Program Administrator, incurred by the Associate in
the pursuit of subsequent employment, including any
reputable outplacement assistance, up to a maximum of
$10,000. The Associate shall be entitled to such
payments until the first day of the month following the
month in which the Associate is reemployed or the end
of the six-month period beginning on the Termination
Date, whichever shall occur first; and
(c) Continued medical, dental and disability coverage under
the current Company plans for a period of three (3)
months following the Associate's Termination Date. In
lieu of continued coverage pursuant to this provision
of the Program, an Associate may elect to receive the
present value of the continued coverage in a lump sum
payment made as soon as administratively possible after
the Associate's Termination Date by filing his choice
with the Company in writing within fourteen (14) days
following the Termination Date. Any benefits or
payments under this section shall be in addition to any
extended group health plan coverage to which the
Associate is entitled under the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
Tier 2: Vice Presidents and Treasurer
The Severance Allowance shall consist of:
(a) Twelve (12) months' Salary, one-half (1/2) payable in a
lump sum payment made as soon as administratively
possible after the Associate's Termination Date and
one-half (1/2) payable in substantially equal monthly
installments over a six (6) month period with
installment payments commencing on the first day of the
seventh month following the Termination Date; or, if
the Associate shall not execute a general release
acceptable to the Program Administrator, one week's
salary;
(b) Reimbursement for reasonable expenses, as determined by
the Program Administrator, incurred by the Associate in
the pursuit of subsequent employment, including any
reputable outplacement assistance, up to a maximum of
$7,500. The Associate shall be entitled to such
payments until the first day of the month following the
month in which the Associate is reemployed or the end
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<PAGE>
of the six-month period beginning on the Termination
Date, whichever shall occur first; and
(c) Continued medical, dental and disability coverage under
the current Company plans for a period of three (3)
months following the Associate's Termination Date. In
lieu of continued coverage pursuant to this provision
of the Program, an Associate may elect to receive the
present value of the continued coverage in a lump sum
payment made as soon as administratively possible after
the Associate's Termination Date by filing his choice
with the Company in writing within fourteen (14) days
following the Termination Date. Any benefits or
payments under this section shall be in addition to any
extended group health plan coverage to which the
Associate is entitled under the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
Tier 3: All Salaried Associates
The Severance Allowance payable to a Salaried Associate
shall be based upon the Associate's Length of Service and shall
be determined according the following schedule:
ASSOCIATE CLASSIFICATION SEVERANCE ALLOWANCE
Class A:
Directors, Senior Three (3) weeks' Salary
Managers, Senior Buyers for each year of Active
(Pay Grades 10 and above) Service, but in no event
less than 12 weeks'
Salary or in excess of 26
weeks' Salary (minimum 12
weeks, maximum 26 weeks)
Class B:
Buyers, Store Managers Two (2) weeks' salary for
each year of Active
Service, but in no event
less than 12 weeks'
Salary or in excess of 26
weeks' Salary (minimum 12
weeks, maximum 26 weeks)
Class C:
Exempt Managers, Other Two (2) weeks' Salary for
Exempt Associates each year of Active
(Pay Grades 7 through 9) Service, but in no event
less than 6 weeks' Salary
or in excess of 26 weeks'
Salary (minimum 6 weeks,
maximum 26 weeks)
6
<PAGE>
Class D:
Exempt Associates One (1) week's Salary for
(Pay Grades 1 through 6) each year of Active
Service, but in no event
less than 4 weeks' Salary
or in excess of 12 weeks'
Salary (minimum 4 weeks,
maximum 12 weeks)
The above severance amounts shall be payable in weekly
installments with the initial installment beginning as soon as
possible after the Termination Date.
Installment payments made under Tiers 1, 2 and 3 shall cease
upon such date that the Associate shall become actively employed
as determined by the Program Administrator. Furthermore, if the
Associate shall not execute a general release acceptable to the
Program Administrator the maximum severance amounts shall be one
week's salary.
Section 5
General Provisions Governing Severance Allowances
(a) The terms of this Program shall not affect the provision of
benefits under other plans or programs of the Company which other
plans or programs shall be governed solely by their terms and
applicable law. The benefits under any other plan or program of
the Company are not continued as a result of a Severance
Allowance other than those mandated by Federal or state
regulations.
(b) Any portion of a Severance Allowance payable in installments
shall cease at such time as the Associate obtains employment with
another employer.
(c) An Associate who is dismissed due to Misconduct shall not be
eligible for a Severance Allowance or any other benefits
hereunder.
(d) In no event shall any Severance Allowance (1) be paid over a
period longer than twenty-four (24) months; (2) exceed 200% of
the Associate's annual compensation as of the Termination Date;
or (3) be structured so that the payments constitute an employee
pension benefit plan as defined by Title I, Section 3 of ERISA.
(e) As a condition to receiving a Severance Allowance from the
Corporation, an Associate must immediately notify in writing the
Personnel Department of the Company if the Associate shall obtain
new employment. If the Associate fails to timely or accurately
provide written notification, as determined by the Program
Administrator, the Company shall be entitled to terminate
Severance Allowance payments to the Associate and to recover from
the Associate the amount of any Severance Allowance payments
previously made to the Associate equal to the amount which was
7
<PAGE>
erroneously paid on account of the failure to provide timely
notice.
(f) The fact that an Associate is employed in a secondary part-
time position with another employer at the time of his
termination of employment with the Company shall have no adverse
effect on his eligibility for Severance Allowance under this
Program, as determined by the Program Administrator in its
discretion.
Section 6
Administrative Information
The Program Administrator shall have the responsibility for the
administration of the Program, and shall have the discretionary
authority to determine eligibility for benefits under the
Program, to otherwise administer the Program and to construe the
terms of the Program, and its decisions shall be final and
binding on all affected parties.
Section 7
Powers and Duties of Program Administrator
In addition to any implied powers and duties that may be needed
to carry out the provisions of the Program, the Program
Administrator shall have the following specific powers and
duties, which powers and duties it may exercise in its
discretion:
(a) To make and enforce such rules and regulations as it shall
deem necessary and proper for the efficient administration of the
Program;
(b) To interpret the Program and to decide any and all matters
arising hereunder, including the right to interpret and remedy
possible ambiguities, inconsistencies or omissions
(c) To determine and compute the amount of benefits that shall
be payable to any Associate, in accordance with the provisions of
the Program;
(d) To appoint other persons to perform such responsibilities
under the Program as it may determine; and
(e) To employ one or more persons to render advice with respect
to any of its responsibilities under the Program.
Section 8
Appeals Procedure
If an Associate eligible for a Severance Allowance or his legal
representative or other person designated by the Program
8
<PAGE>
Administrator to receive payment on the Associate's behalf (the
"claimant") is denied benefits under this Program or disagrees
with the amount of or the determination of his entitlement to a
Severance Allowance, if any, he may request a review of his claim
by notifying the Program Administrator in writing. The request
shall be reviewed and the claimant shall be notified of the
Program Administrator's decision within ninety (90) days. If the
appeal is denied, the notice shall explain the reason of the
denial, quoting the sections of the Program or other pertinent
documents, if any, used to arrive at this decision; shall provide
a description of any additional material or information that
would be helpful to the Program Administrator in further review
of the claim and reasons why such material or information is
necessary; and shall provide an explanation of the claims review
procedure. If the notice does not resolve the claim to the
claimant's satisfaction, he may appeal the decision by filing a
written request for a hearing before the Program Administrator.
This written request must be filed with the Program Administrator
within 60 days after the claimant has received the written
decision of the Program Administrator. The claimant may review
any applicable documents and may also submit points of
disagreement or other comments in writing.
The Program Administrator, in its discretion, may schedule a
meeting with the claimant and/or his representative within sixty
(60) days after the claimant has filed the request for review.
Within sixty (60) days of the date of the receipt of the appeal
by the Program Administrator, the claimant shall receive written
notice of the Program Administrator's final decision. However,
if a hearing is held or there are other special circumstances
involved, the decision shall be given no later than within one
hundred and twenty (120) days of the date of the receipt of the
appeal.
The Program Administrator shall interpret the appeals procedure
set forth in this Section 8 so as to conform to the requirements
of the claims review provisions of Part 5, Title I of ERISA.
Section 9
Miscellaneous Provisions
(a) Payments hereunder shall be made from the general assets of
the Company pursuant to Program provisions.
(b) Service of legal process may be made upon the secretary of
the Company at the office of the Company, or upon such other
person as shall be designated by the Company.
(c) Except to the extent preempted by ERISA, the Program shall
be construed in accordance with the laws of the State of North
Carolina.
9
<PAGE>
(d) Every fiduciary shall, unless exempt by ERISA, be bonded in
accordance with the requirements of ERISA. The bond shall
provide protection to the Program against any loss by reason of
acts of fraud or dishonesty by the fiduciary or in connivance
with others. The cost of the bond shall be an expense of the
Company.
(e) When any person entitled to benefits under the Program is
under legal disability or, in the Program Administrator's
opinion, is in any way incapacitated so as to be unable to manage
his or her affairs, the Program Administrator may cause such
person's benefits to be paid to such person's legal
representative for his or her benefit or to be applied for the
benefit of such person in any other manner that the Program
Administrator may determine. Such payments of benefits shall
completely discharge the liability of the Program Administrator
or the Company for such benefits.
(f) The records of the Program shall be maintained on the basis
of the taxable year of the Company.
(g) The Program Administrator shall cause the timely filing with
proper governmental authorities and timely furnishing to all
participants of all documents required by ERISA to be so filed
and furnished.
(h) Except for the right to receive any benefit payable under
the Program, no person shall have any right, title or interest in
or to the assets of the Company because of the Program.
(i) Rights of any Associate to be employed shall not be deemed
to be enlarged or diminished by reason of the establishment of
the Program, and no Associate shall have any right to be retained
in the service of the Company by way of this Program that he
would not otherwise have.
(j) Nothing contained in the Program shall impose on the Program
Administrator, the Company, or any directors, officers or
employees of the Company any liability for the payment of
benefits under the Program other than liabilities resulting from
willful neglect or fraud. The liability of the Company for
benefits shall be limited to the benefits provided under the
Program. Persons entitled to benefits under the plan shall look
only to the Company for payment.
(k) Where the context permits, words in the masculine gender
shall include the feminine gender and the singular shall include
the plural.
(l) The headings and subheadings of the Program have been
inserted for convenience of reference and shall be disregarded in
any construction of the provisions hereof.
10
<PAGE>
(m) The Company agrees to indemnify and to defend to the fullest
extent permitted by law any employee serving as the Program
Administrator or as a member of a committee designated as Program
Administrator (including any employee or former employee who
formerly served as Program Administrator or as a member of such
Committee) against all liabilities, damages, costs and expenses
(including attorney's fees and amounts paid in settlement of any
claims approved by the Employer) occasioned by any act or
omission to act in connection with the Program, if such act or
omission is in good faith.
(n) If any provision of the Program shall be invalid or
unenforceable for any reason, the remaining provisions shall
nevertheless be carried into effect.
This ____ day of ____________, 1994.
ROSE'S STORES, INC.
ATTEST: By:__________________________
President
___________________________
Secretary
(Corporate Seal)
11
EXHIBIT 10.9(a)
UNITED STATES BANKRUPTCY CODE
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
ROSE'S STORES, INC. CASE NO.: 93-01365-5-ATS
Debtor (CHAPTER 11)
(TAX I.D. #56-0382475)
ORDER AUTHORIZING COMPENSATION OF SENIOR VICE PRESIDENTS
THIS MATTER having been brought before the undersigned
United States Bankruptcy Judge upon the "Motion For Order
Authorizing Compensation Of And Assumption Of Termination
Agreements With Senior Vice Presidents" ("Motion"), filed by
Counsel for Rose's Stores, Inc. (the "Debtor"), and following
notice to creditors and a hearing, the Court finds as follows:
1. The Debtor filed for relief under chapter 11 of the
Bankruptcy Code on September 5, 1993. Since that time, the
Debtor has been operating as a debtor in possession under
sections 1107 and 1108 of the Bankruptcy Code.
2. The Debtor operates a chain of 215 discount retail
stores known as "Roses" located in 11 southeastern states. The
Debtor generates approximately 1.4 billion in revenue per year.
3. The Debtor is the fifth largest non-public employer in
North Carolina. Of the approximately 18,000 individuals employed
by the Debtor, 10,000 are located in North Carolina. At its
headquarters in Henderson, North Carolina, the Debtor employs
over 1,400 associates, making it one of the largest employers in
Vance County. The Debtor's operations are directed by an officer
group comprised of only 22 individuals.
<PAGE>
4. Mr. F. Terry Bean is the Senior Vice-President of Human
Resources. Mr. Bean joined Rose's as vice president of human
resources in 1989 and was promoted to senior vice president for
that division in the following years. Prior to Rose's, Mr. Bean
served as vice president of personnel services with Federal Express
Corporation, based in Memphis, Tennessee. His background in the
human resources field also includes serving as a personnel
supervisor with Johnson & Johnson Corporation and as employee
relations manager with Eaton Corporation. Mr. Bean holds a
bachelor's degree in business administration with concentration in
personnel management and labor relations from Memphis State
University. In his current position at Rose's, Mr. Bean is
responsible for employee relations, compensation, and group
benefits; organizational development and training; corporate
communication and customer service; and quality assurance.
5. Mr. Rob Gruen is the Senior Vice-President of
Merchandising. Mr. Gruen joined Roses in 1991 as the vice
president and general merchandise manager for hardlines. Prior to
joining Rose's, Mr. Gruen spent nine years with Dayton Hudson
Corporation, where he held merchandising positions at both Target
Stores and Dayton Hudson Department Stores and gained broad
experience in both hardlines and softlines areas. Mr. Gruen holds
a bachelor's degree in business administration from the University
of Iowa and a master's degree in business administration from Drake
University. His current responsibilities include overseeing all
merchandising as well as merchandise planning and control
2
<PAGE>
functions.
6. In response to the changing retail environment, the
Debtor set forth approximately two years ago to return the Debtor
to its historical position as a thriving enterprise. The majority
of the current officers assumed their current positions during this
two year period. The Debtor maintains that retention of this
restructured officer group is critical to efforts to reorganize.
7. The Debtor's primary strategy was to attract talented
individuals with the ability to reposition and transform the
Debtor. The Board of Directors for the Debtor deliberately
initiated this strategy and began implementing this plan in 1991 by
hiring George L. Jones, a highly regarded executive in the discount
retail industry. During this period of transformation, the
Debtor's profitability and capitalization was rapidly declining,
making it particularly difficult to attract and retain the very
executives needed to effect a turnaround of the company.
8. Under its prepetition officer compensation plan, the
Debtor offered its senior officers a compensation package comprised
of base salary, an automobile allowance, a bonus, and a medical
reimbursement plan. Competitive base salaries, however, are the
Debtor's primary mechanism for recruiting and retaining talented
executives. While the Debtor has a bonus program, the award has
been minimal due to the declining profitability of the Debtor. The
Debtor offers stock-based plans to its officers, but the price of
stock under the plans has been much higher than the fair market
value of the stock, and the prospects for long term appreciation
3
<PAGE>
are uncertain. Further, in an effort to control costs, the primary
perquisites available exclusively to the senior officers are a car
allowance and a medical reimbursement plan.
9. The Debtor has sought to retain the officer compensation
package which was adopted by the Debtor prior to the filing of the
chapter 11 petition.
10. The Debtor has sought authorization to compensate Mr.
Bean and Mr. Gruen for their services as Senior Vice Presidents at
their prepetition base salaries of $185,000 and $228,000
respectively.
11. Mr. Bean and Mr. Gruen have a number of years of
experience in the retail industry, occupy senior positions at
Roses, and are primary targets for recruitment by competitors.
Because of the importance of their role during reorganization, it
is critical that the Debtor retain both individuals in their
current positions.
12. Mr. Bean and Mr. Gruen currently receive an annual
automobile allowance of $5,528. The Debtor has requested
authorization to retain this automobile allowance for
Mr. Bean and Mr. Gruen.
13. In its Motion, the Debtor sought to assume the
Termination Agreements currently in place between the Debtor and
Mr. Anderson and Mr. Freeman, a sample copy of which is attached to
the Debtor's Motion as Exhibit A.
14. In its Motion, the Debtor sought authority to retain its
Annual Bonus Plan for 1993, a copy of which is attached to the
4
<PAGE>
Debtor's Motion as Exhibit B. The Debtor has withdrawn its request
for court authorization to retain the Annual Bonus Plan for 1993.
15. The only perquisite available to all officers is the
Debtor's Officer Medical Reimbursement Plan, a copy of which is
attached to the Debtor's Motion as Exhibit C. The Debtor has
sought to retain this plan. The following officers and their
eligible dependents are eligible for the Medical Reimbursement
plan: Chairman of the Board, President and Chief Executive
Officer, Executive Vice Presidents, Senior Vice
Presidents, Vice Presidents and Treasurer.
16. Under the Officer Medical Reimbursement Plan, the Debtor
will reimburse the covered individual for eligible medical
expenses, as allowed under section 213(d) of the Internal Revenue
Code, to a maximum of $10,000 or 10% of the officer's base pay as
of the first day of the calendar year. In 1992, the average amount
reimbursed to officers was less than $3,000 per each officer.
Eligible medical expenses include expenses for medically necessary
care which are not covered by Rose's Basic Medical Plan (i.e. the
deductible, the 20% coinsurance, expenses for preventive care);
dental and vision expenses for medical care; and prescribed drugs.
17. The compensation awarded pursuant to this order is in
addition to the standard employee benefits awarded to all Rose's
associates.
18. Objections to the Motion were filed by the Unsecured
Creditors Committee, the Bank Group, the Senior Noteholders, the
Bank of Tokyo and the Bankruptcy Administrator, and a hearing was
5
<PAGE>
held in Raleigh, North Carolina on October 25, 1993. The Bank
Group, the Senior Noteholders, the Bank of Tokyo, and the
Bankruptcy Administrator argued that consideration of the
assumption of the Termination Agreements should be deferred for
approximately sixty days at which time the Debtor will have
revealed its comprehensive business plan. Pursuant to an order
dated October 29, the court ordered that hearings on the assumption
of the Termination Agreements be rescheduled in approximately sixty
(60) days; now therefore, based on the foregoing findings
IT IS HEREBY ORDERED as follows:
1. The Debtor is authorized to compensate its senior vice-
presidents at their prepetition base salaries as set forth herein
and to award its senior vice-presidents an annual automobile
allowance at the prepetition levels as set forth herein.
2. The Debtor is authorized to continue coverage of the
Officer Medical Reimbursement Plan for its senior vice-presidents.
3. The compensation awarded pursuant to this Order is in
addition to the standard employee benefits awarded to all Rose's
associates.
4. A hearing on the assumption of Termination Agreements
shall be held within approximately sixty (60) days from the date of
the hearing on the Motion.
Dated: NOV 18 1993
/s/ A THOMAS SMALL
Bankruptcy Judge
6
EXHIBIT 10.9(b)
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE: CASE NO.: 93-01365-5-ATS
ROSE'S STORES, INC., (CHAPTER 11)
Debtor
(TAX ID #56-0382475)
ORDER AUTHORIZING COMPENSATION OF EXECUTIVE VICE PRESIDENTS
THIS MATTER having been brought before the undersigned
United States Bankruptcy Judge upon the "Motion For Order
Authorizing Compensation Of And Assumption Of Termination
Agreements With Executive Vice Presidents" ("Motion"), filed by
Counsel for Rose's Stores, Inc. (the "Debtor"), and following
notice to creditors and a hearing, the Court hereby finds as
follows:
1. The Debtor filed for relief under chapter 11 of the
Bankruptcy Code on September 5, 1993. Since that time, the
Debtor has been operating as a debtor in possession under
sections 1107 and 1108 of the Bankruptcy Code.
2. The Debtor operates a chain of 215 discount retail
stores known as "Roses" located in 11 southeastern states. The
Debtor generates approximately 1.4 billion in revenue per year.
3. The Debtor is the fifth largest non-public employer in
North Carolina. Of the approximately 18,000 individuals employed
by the Debtor, 10,000 are located in North Carolina. At its
headquarters in Henderson, North Carolina, the Debtor employs
over 1,400 associates, making it one of the largest employers in
Vance County. The Debtor's operations are directed by an officer
group comprised of only 22 individuals.
<PAGE>
4. Mr. R. Edward Anderson is the Executive Vice President
and Chief Financial Officer of Rose's. Prior to joining Rose's
in 1978 as controller, Mr. Anderson was a C.P.A. with the
accounting firm of Peat, Marwick, Mitchell. Currently, his job
responsibilities at Rose's include supervising company finances,
accounting information systems, distribution, and risk
management. A native of Goldsboro, North Carolina, Mr. Anderson
earned a bachelor's degree in business and accounting from the
University of North Carolina at Chapel Hill.
5. Mr. Kevin R. Freeman, Executive Vice President, Store
Operations joined Rose's in 1991, bringing with him more than
twenty years of experience in the retail industry. Formerly, he
served as Senior Vice President of Regional Operations for Target
Stores out of Minneapolis, Minnesota. During his 13 years with
Target, Mr. Freeman worked his way up from assistant store
manager to the senior vice president position. In his current
position at Rose's, he is responsible for all store operations in
addition to special services, construction, maintenance, and
store planning.
6. In response to the changing retail environment, the
Debtor set forth approximately two years ago to return the Debtor
to its historical position as a thriving enterprise. The
majority of the current officers assumed their current positions
during this two year period. The Debtor maintains that retention
of this restructured officer group is critical to efforts to
reorganize.
2
<PAGE>
7. The Debtor's primary strategy was to attract talented
individuals with the ability to reposition and transform the
Debtor. The Board of Directors for the Debtor deliberately
initiated this strategy and began implementing this plan in 1991
by hiring George L. Jones, a highly regarded executive in the
discount retail industry. During this period of transformation,
the Debtor's profitability and capitalization was rapidly
declining, making it particularly difficult to attract and retain
the very executives needed to effect a turnaround of the company.
8. Under its prepetition officer compensation plan, the
Debtor offered its executive officers a compensation package
comprised of base salary, an automobile allowance, a termination
agreement, and a medical reimbursement plan. Competitive base
salaries, however, are the Debtor's primary mechanism for
recruiting and retaining talented executives. While the Debtor
has a bonus program, the award has been minimal due to the
declining profitability of the Debtor. The Debtor offers stock-
based plans to its officers, but the price of stock under the
plans has been much higher than the fair market value of the
stock, and the prospects for long term appreciation are
uncertain. Further, in an effort to control costs, the primary
perquisites available exclusively to the executive officers are a
car allowance and a medical reimbursement plan.
9. In its motion, the Debtor has sought to retain the
officers compensation package which was adopted by the Debtor
prior to the filing of the chapter 11 petition.
3
<PAGE>
10. The Debtor has sought authorization to compensate Mr.
Anderson and Mr. Freeman for their services as Executive Vice
Presidents at their prepetition annual base salary of $270,000.
11. Mr. Anderson and Mr. Freeman have a number of years of
experience in the retail industry, occupy senior positions at
Roses, and are primary targets for recruitment by competitors.
Because of the importance of their role during reorganization, it
is critical that the Debtor retain both individuals in their
current positions.
12. Mr. Anderson and Mr. Freeman currently receive an
annual automobile allowance of $5,528. The Debtor has requested
authorization to retain this automobile allowance for Mr.
Anderson and Mr. Freeman.
13. In its Motion, the Debtor sought to assume the
Termination Agreements currently in place between the Debtor and
Mr. Anderson and Mr. Freeman, a sample copy of which is attached
to the Debtor's Motion as Exhibit A.
14. In its Motion, the Debtor sought authority to retain
its Annual Bonus Plan for 1993, a copy of which is attached to
the Debtor's Motion as Exhibit B. The Debtor has withdrawn its
request for court authorization to retain the Annual Bonus Plan
for 1993.
15. The only perquisite available to all officers is the
Debtor's Officer Medical Reimbursement Plan, a copy of which is
attached to the Debtor's Motion as Exhibit C. The Debtor has
sought to retain this plan. The following officers and their
eligible dependents are eligible for the Medical Reimbursement
4
<PAGE>
plan: Chairman of the Board, President and Chief Executive
Officer, Executive Vice Presidents, Senior Vice Presidents, Vice
Presidents and Treasurer.
16. Under the Officer Medical Reimbursement Plan, the
Debtor will reimburse the covered individual for eligible medical
expenses, as allowed under section 213(d) of the Internal Revenue
Code, to a maximum of $10,000 or 10% of the officer's base pay as
of the first day of the calendar year. In 1992, the average
amount reimbursed to officers was less than $3,000 per each
officer. Eligible medical expenses include expenses for
medically necessary care which are not covered by Rose's Basic
Medical Plan (i.e. the deductible, the 20% coinsurance, expenses
for preventive care); dental and vision expenses for medical
care; and prescribed drugs.
17. The compensation awarded pursuant to this order is in
addition to the standard employee benefits awarded to all Rose's
associates.
18. Objections to the Motion were filed by the Unsecured
Creditors Committee, the Bank Group, the Senior Noteholders, the
Bank of Tokyo, and the Bankruptcy Administrator, and a hearing
was held in Raleigh, North Carolina on October 25, 1993. The
Bank Group, the Senior Noteholders, the Bank of Tokyo and the
Bankruptcy Administrator argued that consideration of the
assumption of the Termination Agreements should be deferred for
approximately sixty days at which time the Debtor will have
revealed its comprehensive business plan. Pursuant to an order
dated October 29, the court ordered that hearings on the
assumption of the Termination
5
<PAGE>
Agreements be rescheduled in approximately sixty days; now
therefore, based on the foregoing findings
IT IS HEREBY ORDERED as follows:
1. The Debtor is authorized to compensate its executive
vice-presidents at their prepetition base salaries as set forth
herein and to award its executive vice-presidents an annual
automobile allowance at the prepetition level as set forth herein.
2. The Debtor is authorized to continue coverage of the
Officer Medical Reimbursement Plan for its executive vice-
presidents.
3. The compensation awarded pursuant to this Order is in
addition to the standard employee benefits awarded to all Rose's
associates.
4. A hearing on the assumption of Termination Agreements
shall be held within approximately sixty (60) days from the date
of the hearing on the Motion.
Dated: NOV 18 1993
/s/ A THOMAS SMALL
Bankruptcy Judge
6
EXHIBIT 10.9(c)
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE: CASE NO.: 93-01365-5-ATS
ROSE'S STORES, INC. (CHAPTER 11)
Debtor
(TAX ID #56-0382475)
ORDER AUTHORIZING COMPENSATION OF VICE PRESIDENTS & TREASURER
THIS MATTER having been brought before the undersigned
United States Bankruptcy Judge upon the "Motion For Order
Authorizing Compensation Of And Assumption Of Termination
Agreements With Vice Presidents And Treasurer" ("Motion") filed
by Counsel for Rose's Stores, Inc. (the "Debtor"), and following
notice to creditors and a hearing, the Court hereby finds as
follows:
1. The Debtor filed for relief under chapter 11 of the
Bankruptcy Code on September 5, 1993. Since that time, the
Debtor has been operating as a debtor in possession under
sections 1107 and 1108 of the Bankruptcy Code.
2. The Debtor operates a chain of 215 discount retail
stores known as "Roses" located in 11 southeastern states. The
Debtor generates approximately $1.4 billion in revenue per year.
3. The Debtor is the fifth largest non-public employer in
North Carolina. Of the approximately 18,000 individuals employed
by the Debtor, 10,000 are located in North Carolina. At its
headquarters in Henderson, North Carolina, the Debtor employs
over 1,400 associates, making it one of the largest employers in
Vance County.
<PAGE>
4. The Debtor's operations are directed by an officer
group comprised of only 22 individuals. The Vice Presidents and
Treasurer ("Officers") which the Debtor has sought to compensate,
their annual base salary, and job descriptions are as follows:
a) Mr. George T. Blackburn, II, Vice-President and Legal
Counsel, is paid a base salary of $77,000. Mr. Blackburn
joined Rose's as vice president and general counsel in 1991,
and was elected secretary of the corporation in February
1993. Before joining Rose's, he was a partner in the law
firm of Perry, Kittrell, Blackburn and Blackburn of
Henderson, North Carolina, where he served for over 12 years
as legal counsel for Rose's. He completed undergraduate
studies and received his Juris Doctorate degree from the
University of North Carolina at Chapel Hill.
b) Mr. John M. Freise, Zone Vice-President, Store Operations,
is paid a base salary of $148,000. Mr. Freise came to
Rose's in 1991, bringing with him over 20 years experience
in the retail industry. Prior to Rose's, he served as a
district manager with Target Stores of Minneapolis,
Minnesota. His background also includes serving as vice
president and divisional merchandise manager for Macy's
Department Stores in their midwest division, and as a buyer
with Donaldson Department Stores of Minneapolis. Mr. Freise
holds a bachelor of science degree in business from Southern
Illinois University at Carbondale. His current
responsibilities include directing store operation functions
for Zone 1, which encompasses the northern tier of Rose's
stores.
c) Ms. M. Jane Hill, Vice-President, Merchandise Planning and
Control, is paid a base salary of $97,275. Ms. Hill has
been with Rose's since 1984. Joining the company as a buyer
in ladies sportswear and seasonal apparel, she later held
positions as project manager in merchandise administration
and replenishment systems; senior project manager in
merchandise, accounting and replenishment systems; and
senior manager in merchandise presentation. Prior to
Rose's, she was a buyer for Richway Stores of Atlanta,
Georgia and for Miller's, Inc. of Knoxville, Tennessee. Ms.
Hill earned a B.A. degree from the University of Tennessee,
at Knoxville. Her current responsibilities include
merchandise presentation as well as merchandise planning and
control functions which entail the allocation of monies to
purchase merchandise, the control of merchandise inventory
levels in stores, and the distribution of merchandise.
2
<PAGE>
d) Mr. Robert W. Morgan, Vice-President, Organization
Development and Associate Relations, is paid a base salary
of $85,000. Mr. Morgan worked for Rose's on a part-time
basis while attending college and joined the company full-
time in 1981. In following years, he held positions as
assistant store manager, assistant buyer, buyer for
automotives, labor relations manager, senior manager of
compensation, senior manager of training, and director of
human resources and organization development. Mr. Morgan is
a graduate of Wake Forest University, earning a bachelor of
arts degree in economics. Mr. Morgan's current
responsibilities include management development, associate
training, succession planning, and associate relations
functions for all store locations.
e) Mr. Howard R. Parge, Zone Vice-President, Operations, is
paid a base salary of $144,900. Mr. Parge joined Rose's in
1992, bringing with him over 20 years experience in the
retail industry. Prior to joining Rose's, he served as a
district manager with Target Stores of Minneapolis,
Minnesota. His background also includes serving as senior
merchandise manager with J.C. Penney Company. Mr. Parge
holds a bachelor's degree in business administration and
history from Minot State University. Mr. Parge's current
responsibilities include store operations functions for Zone
2, which encompasses the southern tier of stores.
f) Ms. Jeanette R. Peters, Vice-President, Controller, is paid
a base salary of $96,700. Ms. Peters joined Rose's in 1983
as manager of financial planning. In subsequent promotions
she served as senior manager of financial planning, and
senior financial analysis manager. Ms. Peters is a graduate
of Virginia Polytechnic Institute with a bachelor of science
in accounting. She became a certified public accountant
while working for the firm of Peat, Marwick & Mitchell Co.
Ms. Peters current responsibilities include accounting and
financial reporting and control functions which includes
sales and inventory audit, accounts payable, payroll
processing, tax, financial analysis, and financial
reporting.
g) Mr. A. Len Priode, Vice-President, Information Services, is
paid a base salary of $118,700. Mr. Priode rejoined Rose's
in 1988 as vice president of information services, having
previously worked for Rose's between 1984-85 as director of
information services. During his absence from Rose's, he
served as operating vice president with Caldor Stores of
Norwalk, Connecticut, a division of May Department Stores.
Mr. Priode holds a degree in business administration from
Franklin University in Columbus, Ohio. Mr. Priode's current
responsibilities include directing information service
operations which includes systems development, systems
operations through Rose's data center, and information support
3
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services which provide support to information system
technology both in the stores and in the corporate offices.
h) Mr. D. Carey Pylant, Vice-President, Loss Prevention, is
paid a base salary of $118,000. Mr. Pylant joined Rose's in
1993 with over twenty-three years of retail loss prevention
experience. He previously held the title of regional asset
protection director at Target Stores of Minneapolis,
Minnesota before recently joining the Rose's team. Mr.
Pylant has also been affiliated with Montgomery Ward
Company, Gimbels Midwest and Federated Department Stores.
He holds an Administration of Justice degree and has served
as a staff sergeant in the United States Marine Corp. Mr.
Pylant's is responsible for the loss prevention functions in
stores and corporate offices which includes merchandise
theft detection and apprehension, asset protection program
development and communication, and inventory shortage
controls.
i) Mr. J. Mike Shuster, Vice-President, Distribution, is paid a
base salary of $124,000. Mr. Shuster joined Rose's in 1978
as assistant controller from the certified public accounting
firm of Peat, Marwick, & Mitchell Co. Over the last five
years, Mr. Shuster has held numerous positions including
information systems development manager, controller, vice
president and controller. Mr. Shuster, who is also a
certified public accountant, is a graduate of the University
of North Carolina at Chapel Hill with a bachelor of science
degree in business administration. Mr. Shuster directs the
on-going merchandise processing and distribution functions
which utilize the company distribution center, import
warehouse, and fleet of tractors and trailers.
j) Mr. Roger C. Trivette, Vice-President, Construction and
Maintenance, is paid a base salary of $83,200. Mr. Trivette
came to Rose's in 1983 from Lowes Food Stores of North
Wilkesboro, North Carolina where he served as a director of
engineering. The former construction and design manager was
later named director of store design and construction before
being promoted to vice president. Mr. Trivette studied
mechanical and electrical engineering, architecture, and
machine design at North Carolina University and Forsyth
Technical Institute. Mr. Trivette directs the design and
construction activities for new and remodeled stores and for
the corporate offices. He also directs the maintenance
functions and monitors utility expenses in both stores and
corporate offices.
k) Mr. Barry L. Gouge, Vice President, General Merchandise
Manager, is paid a base salary of $163,000. Mr. Gouge
rejoined Rose's in 1992 after an absence of seven years.
Prior to rejoining Rose's, he served as senior vice president
of sales and marketing with McCroy Stores of York,
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Pennsylvania. He formerly worked for Rose's from 1976 to
1984, rising from a position as a store manager to become
general merchandise manager for hardlines and home
furnishings. Mr. Gouge has a degree in business
administration from Brevard Business College of Coco, Florida.
Mr. Gouge's current responsibilities include directing the
merchandising functions for the hardlines division which
includes toys, sporting goods, seasonal goods, electronics,
bicycles, and household goods.
l) Ms. Kathy M. Hurley, Vice-President, General Merchandise
Manager, is paid a base salary of $150,000. Ms. Hurley came
to Rose's in 1992 as vice president and general merchandise
manager for the softlines division. She has nearly 24 years
experience in the retail industry, and prior to joining
Rose's, served in a key management position with Weathervane
Stores. Her background also includes management positions at
Gold Circle, Montgomery Ward, Service Merchandise, Hecks, and
Lane Bryant. Ms. Hurley holds a bachelor's degree from Ohio
University. Ms. Hurley currently directs the merchandising
functions for the softlines division, including apparel for
women, men, boys, girls, and infants, as well as fashion
accessories, jewelry, and cosmetics.
m) Ms. Shelia Moffitt, Vice-President Marketing and Advertising,
is paid a base salary of $100,000. Ms. Moffitt has over
twenty years of experience in the retail industry. Prior to
joining Rose's, she served as Vice President, Advertising for
Fisher Big Wheel of New Castle, Pennsylvania; Vice President,
Sales Promotion, J. Byron's of Miami, Florida; and Vice
President of Creative Service for the Main Street Division of
Federated Department Stores. Ms. Moffitt attended the Cooper
School of Art in Cleveland, Ohio. Currently, she directs the
full-range of marketing, advertising, sales promotion, and
merchandise co-op activities for the company.
n) Mr. Dan L. Overby, Vice-President, Operations Administration,
is paid a base salary of $133,900. Mr. Overby joined Rose's
in 1966. He started out as a stockperson in one of the retail
stores and worked his way up through the management
development program to later manage five different stores. In
following years, he served as a district operations and
personnel manager, a district manager, zone vice president,
and senior vice president of store operations. Mr. Overby's
current responsibilities include video rental, food service
and in-store photography, as well as the administrative
functions for store operations such as budgeting, expense
analysis, implementation of information systems and training
programs.
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o) Mr. Bob Sasser, Vice-President, General Merchandise Manager,
is paid a base salary of $121,000. Mr. Sasser joined Rose's
in 1975 as an assistant manager in the company's management
training program. He later managed several of the company's
stores before transferring into the corporate offices. Over
the last five years, Mr. Sasser has held the positions of
divisional merchandise manager and general merchandise manager
of home furnishings and housewares. He holds a bachelor's
degree in marketing from Florida State University in
Tallahassee. Mr. Sasser's current duties include
merchandising functions for the hardlines division which
includes health and beauty aids, housewares, household
chemicals, food, domestics, crafts, stationary, and snack
merchandise categories.
p) Mr. William E. Triplett, III, Treasurer, is paid a base salary
of $82,000. Mr. Triplett first joined Rose's as an internal
auditor in 1978. After a brief stint on the internal audit
staff at NCNB Corp., Mr. Triplett returned to Rose's as
internal audit manager in 1980 and was later promoted to the
position of director of internal audit. He was named
assistant treasurer of the company in 1987. Mr. Triplett is
a graduate of the University of North Carolina at Chapel Hill
where he earned a bachelor of science in business
administration with a major in accounting. Mr. Triplett
directs the cash management, investing, and risk management
functions for the company.
5. In response to the changing retail environment, the
Debtor set forth approximately two years ago to return the Debtor
to its historical position as a thriving enterprise. The majority
of the current officers assumed their current positions during this
two year period. The Debtor maintains that retention of this
restructured officer group is critical to efforts to reorganize.
6. The Debtor's primary strategy was to attract talented
individuals with the ability to reposition and transform the
Debtor. The Board of Directors for the Debtor deliberately
initiated this strategy and began implementing this plan in 1991 by
hiring George L. Jones, a highly regarded executive in the discount
retail industry. During this period of transformation, the
6
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Debtor's profitability and capitalization was rapidly declining,
making it particularly difficult to attract and retain the very
executives needed to effect a turnaround of the company.
7. Under its prepetition officer compensation plan, the
Debtor offered its Officers a compensation package comprised of
base salary, an annual bonus, a termination agreement and a medical
reimbursement plan. Competitive base salaries, however, are the
Debtor's primary mechanism for recruiting and retaining talented
executives. While the Debtor has a bonus program, the award has
been minimal due to the declining profitability of the Debtor. The
Debtor offers stock-based plans to its officers, but the price of
stock under the plans has been much higher than the fair market
value of the stock, and the prospects for long term appreciation
are uncertain. Further, in an effort to control costs, the only
perquisite available to all officers is an Officer Medical
Reimbursement plan.
8. The Debtor has sought to retain the officer compensation
package which was adopted by the Debtor prior to the filing of the
chapter 11 petition.
9. The Debtor has sought authorization to continue compensation of the
Officers at their prepetition annual base salary as set forth in
paragraph 4 of the Debtor's motion.
10. The Officers have a number of years of experience in
the retail industry, are knowledgeable about the operations of the
Debtor, and are primary targets for recruitment by competitors.
Because of the importance of their role during reorganization, it
7
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is critical that the Debtor retain these individuals in their current
positions.
11. In its Motion, the Debtor sought to assume the
Termination Agreements currently in place between the Debtor and
each of the Officers, a sample copy of which is attached to the
Debtor's Motion as Exhibit A.
12. In its Motion, the Debtor sought authority to retain its
Annual Bonus Plan for 1993, a copy of which is attached to the
Debtor's Motion as Exhibit B. The Debtor has withdrawn its request
for court authorization to retain the Annual Bonus Plan for 1993.
13. The only perquisite available to all officers is the
Debtor's Officer Medical Reimbursement Plan, a copy of which is
attached to the Debtor's Motion as Exhibit C. The Debtor has
sought to retain this plan. The following officers and their eligible
dependents are eligible for the Medical Reimbursement plan:
Chairman of the Board, President and Chief Executive Officer,
Executive Vice Presidents, Senior Vice Presidents, Vice Presidents,
and Treasurer.
14. Under the Officer Medical Reimbursement Plan, the Debtor
will reimburse the covered individual for eligible medical
expenses, as allowed under section 213(d) of the Internal Revenue
Code, to a maximum of $10,000 or 10% of the officer's base pay as
of the first day of the calendar year. In 1992, the average amount
reimbursed to officers was less than $3,000 per each officer.
Eligible medical expenses include expenses for medically necessary
care which are not covered by Rose's Basic Medical Plan (i.e. the
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<PAGE>
deductible, the 20% coinsurance, expenses for preventive care);
dental and vision expenses for medical care; and prescribed drugs.
15. Negotiated Relocation Costs. In addition to the
relocation benefits offered to all associates, candidates for an
officer position can negotiate with the Debtor for additional
relocation benefits. Pursuant to an offer letter dated May 12,
1993, as amended by memorandum dated July 21, 1993, copies of which
are attached to the Debtor's Motion as Exhibit D, the Debtor agreed
to pay Mr. Pylant additional relocation benefits. The only benefit
remaining to be paid is as follows:
(i) one payment to the mortgage company for house in Plano, Texas not to
exceed $2,400 to be paid in October.
The Debtor has requested authorization to assume the above
referenced obligation to Mr. Pylant.
16. The compensation awarded pursuant to this order is in
addition to the standard employee benefits awarded to all Rose's
associates.
17. Objections to the Motion were filed by the Unsecured
Creditors Committee, the Bank Group, the Senior Noteholders, the
Bank of Tokyo and the Bankruptcy Administrator, and a hearing was
held in Raleigh, North Carolina on October 25, 1993. The Bank
Group, the Senior Noteholders, the Bank of Tokyo, and the
Bankruptcy Administrator argued that consideration of the
assumption of the Termination Agreements should be deferred for
approximately sixty days at which time the Debtor will have
revealed its comprehensive business plan. Pursuant to an order
dated October 29, the court ordered that hearings on the assumption
9
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of the Termination Agreements be rescheduled in approximately sixty
days from the date of the order; now therefore, based on the
foregoing findings
IT IS HEREBY ORDERED as follows:
1. The Debtor is authorized to compensate its vice-
presidents and treasurer at their prepetition base salaries as set
forth herein.
2. The Debtor is authorized to continue coverage of the
Officer Medical Reimbursement Plan for its vice-presidents and
treasurer.
3. The Debtor is authorized to pay Mr. Pylant's $2,400
mortgage payment pursuant to the above referenced offer letter
dated May 12, 1993, as amended by memorandum dated July 21, 1993.
4. The compensation awarded pursuant to this Order is in
addition to the standard employee benefits awarded to all Rose's
associates.
5. A hearing on the assumption of Termination Agreements
shall be held within approximately sixty (60) days from the date of
the hearing on the Motion.
Dated: NOV 18 1993
/s/ A THOMAS SMALL
Bankruptcy Judge
10
EXHIBIT 10.9(d)
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE: CASE NO.: 93-01365-5-ATS
ROSE'S STORES, INC. (CHAPTER 11)
Debtor
(TAX ID #56-0382475)
ORDER AUTHORIZING COMPENSATION OF GEORGE L. JONES
THIS MATTER having been brought before the undersigned
United States Bankruptcy Judge upon the "Motion For Order
Authorizing Assumption Of Executive Employment Agreement With
George L. Jones" ("Motion") filed by Counsel for Rose's Stores,
Inc. (the "Debtor"), and following notice to creditors and a
hearing, the Court hereby finds as follows:
1. The Debtor filed for relief under chapter 11 of the
Bankruptcy Code on September 5, 1993. Since that time, Debtor
has been operating as a debtor in possession under sections 1107
and 1108 of the Bankruptcy Code.
2. The Debtor operates a chain of 215 discount retail
stores known as "Roses" located in 11 southeastern states. Most
of the stores are located in strip shopping centers in non-urban
areas. The Debtor generates approximately $1.4 billion in
revenue per year.
3. The Debtor is the fifth largest non-public employer in
North Carolina. Of the approximately 18,000 individuals employed
by the Debtor, 10,000 are located in North Carolina. At its
headquarters in Henderson, North Carolina, the Debtor employs
over 1,400 associates, making it one of the largest employers in Vance
<PAGE>
County. The Debtor's operations are directed by an officer
group comprised of only 22 individuals.
4. In response to the changing retail environment, the
Debtor set forth on a mission approximately two years ago to
return the Debtor to its historical position as a thriving
enterprise. The Debtor's primary strategy was to attract
talented individuals with the ability to reposition and transform
the Debtor. During this period of transformation, the Debtor's
profitability and capitalization was rapidly declining, making it
particularly difficult to attract and retain the very executives
needed to effect a turnaround of the company. The Board of
Directors began implementing its plan for change in 1991 by hiring
George L. Jones, a highly regarded executive in the discount
retail industry.
5. The Debtor entered into an Executive Employment Agreement
("Employment Agreement") with George L. Jones effective July 25,
1991 in which the Debtor agreed to employ Mr. Jones as President
and Chief Executive Officer for a term of three years. A copy of
the Employment Agreement is attached to the Debtor's Motion as
Exhibit A.
6. Prior to joining Roses in 1991, Mr. Jones served as
Executive Vice President, Store Operations of Target Stores in
Minneapolis, Minnesota, which generates 10 billion in revenue per
year. With twenty years of experience in the retail industry, Mr.
Jones' background includes holding executive positions with
Dillard's Department Stores and Diamond's Department Stores, as
well as serving as chairman and Chief Executive Officer of Monica
2
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Scott, Inc.
7. Mr. Jones was reluctant to leave his position as
executive vice president of Target Stores because of his concern
about the immediate stability of the Debtor and the security of his
position with the Debtor. Mr. Jones was also concerned about
leaving the opportunity to advance to the position of Chief
Executive Officer at Target Stores which would have been a natural
career progression had he remained with Target Stores and was
likely to occur. To induce Mr. Jones to leave Target Stores, the
Debtor entered into the above referenced Employment Agreement with
Mr. Jones.
8. The Employment Agreement grants Mr. Jones the primary
executive and general management responsibility for operating
Rose's. Mr. Jones has expansive authority to make decisions and
implement changes which he believes are necessary to run the daily
operations of the Debtor.
9. The Employment Agreement provides Mr. Jones with the
following types of compensation: a base salary, severance pay, an
annual bonus, and a signing bonus or alternatively a stock option.
The terms of the Employment Agreement were based upon the basic
restructuring task which Mr. Jones was asked to undertake, as well
as the risks assumed by Mr. Jones in agreeing to accept
responsibility for the restructuring in the intensely competitive
market situation in which the Debtor operates.
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<PAGE>
10. Pursuant to the Employment Agreement, Mr. Jones receives
an annual base salary of $700,000.00. Mr. Jones' base salary is
comparable to the base salaries paid to incumbents who have both
President and Chief Executive Officer responsibilities at other
similar retail companies and is reasonable in light of the job
responsibilities which accompany his position.
11. The Employment Agreement provides Mr. Jones with
severance pay in the event that he is terminated during the life of
the agreement as the result of a "qualifying termination event" as
defined herein (other than death or disability). The Employment
Agreement states that the severance pay awarded will be an amount
equal to the base salary owed to Mr. Jones for the life of the
Employment Agreement at the time that he is terminated reduced to
present value.
12. The Employment Agreement provides Mr. Jones with an
annual incentive bonus. The Compensation Committee of the Board of
Directors of the Company determines the amount of the bonus based
on the performance of both the Company and Mr. Jones, and such
other factors the Compensation Committee deems relevant. Because
of the low profitability of the company, Mr. Jones did not receive
a bonus in 1991 or 1992 and thus, the bonus provided no additional
compensation to Mr. Jones.
13. Upon signing the Employment Agreement, Mr. Jones received
a "signing bonus" of $2,500,000.00. To fulfill its obligation
under the Employment Agreement, the Debtor paid and delivered the
Signing Bonus in August 1991 to Norwest Bank, National Association
4
<PAGE>
as Trustee under a written Trust Agreement between the Company and the
Bank as trustee.
14. The Employment Agreement charges the Trustee with the
responsibility for investing and reinvesting the Signing Bonus for
the benefit of Mr. Jones. All income from the trust estate less
trustee expenses and compensation is paid and delivered to Mr.
Jones on a quarterly basis, with payments commencing on November
15, 1991.
15. Pursuant to the Trust Agreement, the Trustee is charged
with holding the Signing Bonus until the date such bonus is
distributed. All of the principal and undistributed income less
Trustee expenses and compensation will be distributed to Mr. Jones
upon the earlier of: (i) the third anniversary of the effective date of the
Employment Agreement; (ii) the occurrence of a Qualifying
Termination Event as defined above; (iii) the date on which the stock
price of the company's Non-voting Class B stock ("Stock") is quoted
at or greater than $15.50 per share on the NASDAQ National Market System
("NASDAQ") or any other national or regional stock exchange.
16. The Trust Agreement is irrevocable. The Debtor believes
that because it has already paid the signing bonus into an
irrevocable trust for the benefit of Mr. Jones, such funds
are not part of the Debtor's estate.
17. Pursuant to the Tandem Stock Option Agreement executed in
conjunction with the Employment Agreement, Mr. Jones has the right
to purchase up to 200,000 shares of the common stock of the Debtor
5
<PAGE>
at $3.00 per share. This option is exercisable upon the date of
distribution of the Signing Bonus and 30 days thereafter.
18. If Mr. Jones exercises his rights under the Option
Agreement, the Signing Bonus will be reduced by an amount equal
to the number of shares purchased by Mr. Jones times the lesser
of $12.50 or the spread between the exercise price and the closing
price of such stock on the NASDAQ or such exchange on the date
such option is exercised.
19. The compensation provided under the Employment Agreement does not
affect Mr. Jones' right to receive other compensation provided by the
company, including (i) hospitalization, long term disability, and
life insurance; (ii) an automobile allowance and (iii) employee
benefit plans.
20. Objections to the Motion were filed by the Unsecured
Creditors Committee, the Bank Group, the Senior Noteholders, the
Bank of Tokyo and the Bankruptcy Administrator, and a hearing was
held in Raleigh, North Carolina on October 25, 1993. The Bank
Group, the Senior Noteholders, the Bank of Tokyo, and the
Bankruptcy Administrator argued that consideration of the
assumption of the Employment Agreement should be deferred for
approximately sixty days at which time the Debtor will have
revealed its comprehensive business plan. Pursuant to an order
dated October 29, the court ordered that hearings on the assumption
of the Executive Employment Agreement be rescheduled in
approximately sixty days; now therefore, based on the foregoing
findings
6
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IT IS HEREBY ORDERED as follows:
1. The Debtor is authorized to compensate George L. Jones at
his annual base salary as set forth herein and to award him an
annual automobile allowance at the prepetition level as set forth
herein.
2. The compensation awarded pursuant to this Order is in
addition to the standard employee benefits awarded to all Rose's
associates.
3. A hearing on the assumption of the Executive Employment Agreement
shall be held within approximately sixty (60) days from the date of the
hearing on the Motion.
Dated: NOV 18 1993
/s/ A THOMAS SMALL
Bankruptcy Judge
7
EXHIBIT 10.9(e)
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE: CASE NO.: 93-01365-5-ATS
ROSE'S STORES, INC. (CHAPTER 11)
Debtor
(TAX ID #56-0382475)
ORDER CONTINUING COMPENSATION OF
CHAIRMAN OF THE BOARD OF DIRECTORS PENDING HEARING
THIS MATTER having been brought before the undersigned United
States Bankruptcy Judge upon the "Motion For Order Authorizing
Compensation Of Chairman Of The Board Of Directors For The Debtor"
("Motion"), filed by Counsel for Rose's Stores, Inc. (the
"Debtor"), and following notice to creditors, the Court hereby
finds as follows:
1. The Debtor filed for relief under chapter 11 of the
Bankruptcy Code on September 5, 1993. Since that time, the Debtor
has been operating as a debtor in possession under sections 1107
and 1108 of the Bankruptcy Code.
2. The Debtor operates a chain of 215 discount retail stores
known as "Roses" located in 11 southeastern states. The Debtor
generates approximately $1.4 billion in revenue per year.
3. Mr. Lucius Harvin, III has been the Chairman of the Board
of the Directors for the Debtor since 1984. Since joining the
Debtor in 1964, Mr. Harvin has held numerous positions within the
company. Starting out as an assistant in the real estate
department, he later served as the company's treasurer, vice
president and director of expansion, senior vice president and
chief operating officer of the Debtor, and as president and chief
<PAGE>
executive officer. He served on the Debtor's board of directors
since 1969, and as chairman since 1984. Mr. Harvin performed
undergraduate work at Davidson College, and graduated from the
University of North Carolina at Chapel Hill in 1960 with a
bachelor's degree in English. He also holds a Juris Doctorate
degree from Duke University School of Law.
4. Pursuant to an ex parte order entered on September 9,
1993, this Court authorized the Debtor to continue paying Mr.
Lucius H. Harvin, III his prepetition base salary of $350,000.00
and his prepetition automobile allowance of $6,198.00.
5. Objections to the motion were filed by the Unsecured
Creditors Committee, the Bank Group, the Senior Noteholders, the
Bank of Tokyo, and the Bankruptcy Administrator, and a hearing was
held in Raleigh, North Carolina on October 25, 1993. The Unsecured
Creditor's Committee and the Debtor agreed that consideration of
the Motion should be continued until a future date, and the
objecting parties concurred with the continuance; now therefore,
based on the foregoing findings
IT IS HEREBY ORDERED that the Debtor is authorized to continue
paying the Chairman of the Board at the level approved by the ex
parte order entered by the Bankruptcy Court on September 9, 1993
pending a hearing and final court approval of the Motion.
Dated: NOV 18 1993
/s/ A THOMAS SMALL
Bankruptcy Judge
EXHIBIT 10.9(f)
UNITED STATES BANKRUPTCY CODE
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE: CASE NO.: 93-01365-5-ATS
ROSE'S STORES, INC. (CHAPTER 11)
Debtor
(TAX I.D. #56-0382475)
ORDER AUTHORIZING PAYMENT OF COMPENSATION TO DIRECTORS
THIS MATTER coming on before the undersigned Bankruptcy
Judge upon the "First Amended Application For Authority To
Compensate Directors Pursuant To Local Bankruptcy Rule
4002.3(B)(i)" (the "Application"), and upon adequate notice given
to all interested parties and no objections or responses having
been filed, the Court, having reviewed the Application, finds as follows:
1. The Debtor filed for relief under chapter 11 of the
Bankruptcy Code on September 5, 1993 and is operating as a debtor
in possession under section 1107 and 1108 of the Bankruptcy Code.
2. The Debtor employs twelve directors which serve on
the board. The Debtor believes that each individual serving on its
board of directors contributes valuable services to the Debtor and
that such services are critical to the Debtor's reorganization.
During the course of the Debtor's reorganization, the Debtor will
rely upon its directors for guidance as it makes major decisions
which will greatly impact the Debtor's future as a going concern.
3. The directors serving on the board who are to be
compensated pursuant to the Application and this Order are Bruce G.
Allbright, Sam Ayoub, Elizabeth C. Bacon, Hon. George D. Busbee,
<PAGE>
John T. Church, Frank A. Daniels, Jr., George M. Harvin, James
Maynard, Robert K. Montgomery and Albert N. Whiting (the
"Directors"); now therefore,
IT IS ORDERED that the Debtor is authorized to compensate
the Directors as follows:
A. The Directors will be compensated at the following rates:
(a) each director will receive an annual retainer
of $8,000, in addition to a $1,000 fee for each
board meeting attended;
(b) each director will receive $500 for attending
each committee meeting held on the same day as a
regular board meeting, and $1,000 for attending
committee meetings on days other than a regular
board meeting;
(c) each director will receive a $250 fee for
participating in each board meeting held by
telephone conference; and
(d) each director will be reimbursed for actual
travel expenses incurred in connection with any
board or committee meeting
B. The Directors may participate in the Rose's Stores,
Inc. Health Plan, which is the same health plan available to
the associates/employees of the Debtor. The Debtor's health plan
was amended to provide for continuing health care coverage for
directors (who had served in such capacity for no less than five
(5) years) following the termination or expiration of their
position as a director of the company. For each year of service as
a director, the director will receive one (1) year coverage on the
same basis and at the same cost as a participating associate.
C. The Directors are entitled to receive
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nondiscretionary nonqualified stock option awards which are made
pursuant to the Equity Compensation Plan. Each award would entitle
the recipient to purchase 5,000 shares of the Debtor's stock at
an option price equal to the greater of five dollars ($5.00) or the
fair market value on the date of the grant, and each director is
entitled to a maximum of three such awards.
DATED: NOV 18 1993
(Signature of A. Thomas Small)
United States Bankruptcy Judge
3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Rose's Stores, Inc.:
We consent to incorporation by reference in the registration statement
(No. 33-64758) on Form S-8, registration statement (No. 33-49636) on
Form S-3, and registration statement (No. 33-45094) on Form S-8
of Rose's Stores, Inc. of our report dated April 4, 1994, relating
to the consolidated balance sheets of Rose's Stores, Inc., Debtor-in-
Possession, as of January 29, 1994 and January 30, 1993, and the related
consolidated statements of operations, stockholders' equity,
and cash flows, and related schedule for each of the years in the
three-year period ended January 29, 1994, which report appears in the
January 29, 1994 annual report on Form 10-K of Rose's Stores, Inc.
Our report included an explanatory paragraph discussing the Company's
voluntary filing for reorganization under Chapter 11 of the United
States Bankruptcy Code. Our report also included an additional explanatory
paragraph indicating that the Company adopted Statement of Financial
Accounting Standards No. 106 in 1992 and changed its method of determining
retail price indices used in the valuation of LIFO inventories in 1991.
(Signature of KPMG Peat Marwick)
KPMG PEAT MARWICK
Raleigh, North Carolina
April 28, 1994
