HOMELAND STORES, INC.
EMPLOYEE STOCK BONUS PLAN
Effective August 2, 1996
TABLE OF CONTENTS
Page
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ELIGIBILITY AND PARTICIPATION. . . . . . . . . . . . . . . . . 16
Section 2.1. Eligibility. . . . . . . . . . . . . . . . . . . 16
Section 2.2. Periods of Eligibility . . . . . . . . . . . . . 16
ARTICLE III
CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.1. Initial Company Contributions. . . . . . . . . . 17
Section 3.2. Additional Company Contributions Based on
EBITDA. . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.3. Discretionary Company Contributions. . . . . . . 18
Section 3.4. Participant Pre-Tax Contributions. . . . . . . . 18
Section 3.5. Matching Company Contributions . . . . . . . . . 19
Section 3.6. Additional Contributions Upon Change of
Control of the Company . . . . . . . . . . . . . . . 20
Section 3.7. Limitations on Contributions . . . . . . . . . . 21
ARTICLE IV
ALLOCATION OF CONTRIBUTIONS. . . . . . . . . . . . . . . . . . 24
Section 4.1. Establishment of Accounts. . . . . . . . . . . . 24
Section 4.2. Allocations to Participants' Accounts. . . . . . 24
Section 4.3. Overall Annual and Cumulative
Limitations . . . . . . . . . . . . . . . . . . . . . 26
Section 4.4. Basis for Limitation Computations. . . . . . . . 27
Section 4.5. Definitions for Limitation
Computations. . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V
VALUATION OF FUND AND ADJUSTMENTS TO ACCOUNTS. . . . . . . . . 28
Section 5.1. Determination of Number of Shares of Stock
and Market Value . . . . . . . . . . . . . . . . . . 28
Section 5.2. Adjustments for Net Changes in Assets. . . . . . 28
Section 5.3. Treatment of Expenses. . . . . . . . . . . . . . 29
ARTICLE VI
ROLLOVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.1. Direct Rollovers and Rollover
Notices . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.2. Waiver of 30-Day Notice. . . . . . . . . . . . . 32
ARTICLE VII
VESTING AND FORFEITURES. . . . . . . . . . . . . . . . . . . . 32
Section 7.1. Vesting Schedule . . . . . . . . . . . . . . . . 32
Section 7.2. Vesting and Nonforfeitability. . . . . . . . . . 32
ARTICLE VIII
PAYMENT OF BENEFITS. . . . . . . . . . . . . . . . . . . . . . 33
Section 8.1. Distributions to Participants. . . . . . . . . . 33
Section 8.2. Distributions to Beneficiaries . . . . . . . . . 34
Section 8.3. Distributions in Shares of Stock . . . . . . . . 34
Section 8.4. Delay in Benefit Determination . . . . . . . . . 35
Section 8.5. Accounting for Benefit Payments. . . . . . . . . 35
Section 8.6. Designation of Beneficiaries . . . . . . . . . . 35
Section 8.7. Option to Have Company Purchase Stock. . . . . . 36
ARTICLE IX
ORGANIZATION OF PLAN COMMITEE;
ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . . . 38
Section 9.1. The Committee. . . . . . . . . . . . . . . . . . 38
Section 9.2. Committee Action, Rules and Expenses . . . . . . 38
Section 9.3. Plan Administered By Committee . . . . . . . . . 39
Section 9.4. Retention of Advisors and
Service-Providers . . . . . . . . . . . . . . . . . . 40
Section 9.5. Instructions to Trustee, Funding
Policy. . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.6. Valuation of Stock . . . . . . . . . . . . . . . 40
Section 9.7. Voting of Stock. . . . . . . . . . . . . . . . . 41
Section 9.8. Power of Delegation. . . . . . . . . . . . . . . 41
Section 9.9. Communication By Committee . . . . . . . . . . . 41
Section 9.10. Reports of the Committee . . . . . . . . . . . . 42
Section 9.11. Resignation or Removal of Committee
Member. . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE X
CLAIMS PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.1. Claim for Benefits. . . . . . . . . . . . . . . 42
Section 10.2. Request for Additional Information. . . . . . . 43
Section 10.3. Committee Claim Determination . . . . . . . . . 43
Section 10.4. Extension of Claim Processing Time. . . . . . . 44
Section 10.5. Claims Appeal Procedure . . . . . . . . . . . . 45
Section 10.6. Submission of Comments By Claimant. . . . . . . 45
Section 10.7. Extension of Claim Appeal Processing
Time. . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.8. Claimant's Right to a Conference. . . . . . . . 46
ARTICLE XI
TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.1. Creation of Trust Fund. . . . . . . . . . . . . 46
Section 11.2. No Right to Assets. . . . . . . . . . . . . . . 47
Section 11.3. Benefits Provided Solely By Trust . . . . . . . 47
ARTICLE XII
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XIII
TERMINATION; DISCONTINUANCE OFCONTRIBUTIONS; MERGER OF
PLANS; ADOPTION CONDITIONED UPON QUALIFICATION . . . . . . . 48
Section 13.1. Right to Terminate Plan . . . . . . . . . . . . 48
Section 13.2. Discontinuance of Contributions . . . . . . . . 49
Section 13.3. Evidence of Termination . . . . . . . . . . . . 49
Section 13.4. Merger of Plans . . . . . . . . . . . . . . . . 49
Section 13.5. Plan Adoption Conditioned Upon Qualification. . 50
ARTICLE XIV
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 14.1. Alternative Payees in the Event of
Incapacity . . . . . . . . . . . . . . . . . . . . . 51
Section 14.2. Nonassignment of Benefits, Qualified Domestic
Relations Orders. . . . . . . . . . . . . . . . . . 51
Section 14.3. Plan Creates No Employment Rights . . . . . . . 52
Section 14.4. Limit on Company Liability. . . . . . . . . . . 53
Section 14.5. Nondiversion of Assets. . . . . . . . . . . . . 53
Section 14.6. Missing Participants and
Beneficiaries . . . . . . . . . . . . . . . . . . . 54
Section 14.7. Indemnification of Committee Members. . . . . . 55
Section 14.8. Plan Headings . . . . . . . . . . . . . . . . . 55
Section 14.9. Number and Gender . . . . . . . . . . . . . . . 55
Section 14.10. Separability of Provisions. . . . . . . . . . . 56
Section 14.11. Interpretation of Provisions. . . . . . . . . . 56
PREAMBLE
This Plan shall be known as the "Homeland Stores, Inc.
Employee Stock Bonus Plan". The object of the Plan is to provide
certain Bargaining Unit Employees of Homeland Stores, Inc. with an
ownership interest in Homeland Stores, Inc. The Plan is intended to
be qualified as a stock bonus plan under Section 401(a) of the Code.
ARTICLE I
DEFINITIONS
Section 1.1 "Adjustment Factor" shall mean the cost of living
adjustment factor prescribed by the Secretary of the Treasury under
Section 415(d) of the Code, as applied to such items and in such
manner as the Secretary shall provide.
Section 1.2 "Affiliate" shall mean any entity affiliated with the
Company as described in Section 414(b) of the Code with respect to
controlled groups of corporations, Section 414(c) of the Code with
respect to trades or businesses under common control, Section 414(m)
of the Code with respect to affiliated service groups, or regulations
which may be prescribed under Section 414(o) of the Code with respect
to any entity required to be aggregated with the Company pursuant to
regulations under such Section of the Code; except that, for purposes
of applying the provisions of Sections 4.3, 4.4 and 4.5 with respect
to the limitations on contributions, Section 415(h) of the Code shall
apply.
Section 1.3 "Bargaining Unit Employee" shall mean an individual
who, following the completion of the Employee Buyout Plan (as defined
in the Collective Bargaining Agreements), performs services for the
Company in an employer-employee relationship on a regular and non-
temporary basis, and who is in a bargaining unit covered by a
Collective Bargaining Agreement. For purposes of computing the
number of Years of Vesting Service to be credited to a Bargaining
Unit Employee, any period during which the Bargaining Unit Employee
was a Leased Employee of the Company, and any period of employment
with (or as a leased employee of) any other corporation, partnership,
or proprietorship which is not the Company, shall be taken into
account to the same extent it would have been if it had been employ-
ment by the Company, but only to the extent that (i) the other corpo-
ration, partnership, or proprietorship is or was, at the time such
employment occurred, an Affiliate or (ii) such employment constitutes
service with a predecessor employer within the meaning of Sec-
tion 414(a) of the Code. The term Bargaining Unit Employee does not
include any such person employed on a temporary or casual basis. A
person otherwise regularly employed by the Company shall be deemed to
continue to be regularly employed by the Company if such person is on
Leave of Absence.
Section 1.4 "Beneficiary" shall mean the person or persons
(including a trust or estate) who are entitled to receive any benefit
payable hereunder by reason of the death of a Participant, as
designated pursuant to Section 8.6.
Section 1.5 "Board" shall mean the Board of Directors of the
Company.
Section 1.6 "Change of Control" shall mean a change of control as
defined in the Indenture Agreement, dated as of August 2, 1996, by
and among the Company, Homeland Holding Corporation and Fleet
National Bank.
Section 1.7 "Code" shall mean the Internal Revenue Code of 1986,
as amended.
Section 1.8 "Collective Bargaining Agreements" shall mean the
modified union agreement between United Food & Commercial Workers
Union, Locals No. 76, 322, 340, 540, 1000, chartered by the United
Food and Commercial Workers International Union, and the Company
effective as of August 4, 1996, the AFL-CIO agreement between the
Company and the Bakery Confectionery & Tobacco Workers Union, Local
No. 173 effective as of August 4, 1996.
Section 1.9 "Committee" shall mean the committee appointed in
accordance with Article IX.
Section 1.10 "Company" shall mean Homeland Stores, Inc., or any
successor corporation by merger, purchase, consolidation or
otherwise.
Section 1.11 "Compensation" shall mean a Bargaining Unit Employee's
total taxable compensation from the Company for the Plan Year;
provided, however, that Compensation shall not include any amounts in
excess of $150,000 (or such other amount as may be determined from
time to time under Section 401(a)(17) of the Code).
Section 1.12 "Computation Period" shall mean the Plan Year.
Section 1.13 "EBITDA" shall have the meaning ascribed thereto in
the New Bank Credit Agreement, dated as of August 2, 1996.
Section 1.14 "Effective Date" shall mean August 2, 1996, the
Effective Date as defined in the Company's First Amended Joint Plan
of Reorganization dated June 13, 1996.
Section 1.15 "Employment Commencement Date" shall mean the date on
which a Bargaining Unit Employee first performs an Hour of Service
for the Company.
Section 1.16 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
Section 1.17 "Highly Compensated Employee" shall mean, with respect
to a Plan Year, any employee (and any Leased Employee of the Company)
who during the Plan Year or the preceding Plan Year:
(a) was an owner of more than five percent of the value
of outstanding stock, or of stock possessing more than five
percent of the total combined voting power of all stock, of the
Company which is a corporation, or of more than five percent of
the capital or profits interest of the Company which is not a
corporation; or
(b) received compensation from the Company in excess of
$75,000 (or such other amount determined from time to time
under Section 414(q)(l) of the Code); or
(c) received compensation from the Company in excess of
$50,000 (or such other amount determined from time to time
under Section 414(q)(l) of the Code) and was in the Top-Paid
Group of Employees (as defined below) for the Plan Year; or
(d) was at any time during the Plan Year an officer of
the Company and received compensation exceeding 50 percent of
the limitation in effect under Section 415(b)(l)(A) of the
Code.
An employee who for the current Plan Year, but not for the preceding
Plan Year, is described in subsection (b), (c) or (d) above shall not
be considered to be described in such subsections unless he is also
one of the 100 highest paid employees of the Company for the Plan
Year. For purposes of subsection (d) above, the number of employees
counted as "officers" shall be limited to the lesser of (i) 50 or
(ii) the greater of three or ten percent of all active employees of
the Company, and, if for a Plan Year there is no officer of the
Company who receives compensation exceeding 50 percent of the
limitation in effect under Section 415(b)(l)(A) of the Code, the
highest paid officer of the Company shall be deemed to be a Highly
Compensated Employee. The "Top-Paid Group of Employees" for a Plan
Year is the group consisting of the top twenty percent of the
employees when ranked on the basis of compensation paid during the
Plan Year. In determining the number of employees in the "Top-Paid
Group of Employees" there shall be excluded any employee (i) who has
been employed for less than 6 months, (ii) who normally works less
than 17-1/2 hours each week or less than 6 months each year,
(iii) who has not reached age 21, (iv) except to the extent required
otherwise in regulations under Section 414(q) of the Code, whose
employment is covered by a collective bargaining agreement between
the Company and the employee's collective bargaining representative,
or (v) who is a nonresident alien who did not receive any earned
income from the Company which constitutes income from sources within
the United States. If an individual is a member of the family (that
is, the spouse, a lineal ascendant or descendant, or the spouse of a
lineal ascendant or descendant) of an employee described in sub-
section (a) above, or of an employee who is one of the ten Highly
Compensated Employees paid the greatest compensation for the Plan
Year, such individual shall not be considered to be a separate
employee and such individual's compensation shall be treated as if
paid to the employee described in subsection (a) above or who is one
of the ten Highly Compensated Employees paid the greatest
compensation for the Plan Year. For purposes of this Section 1.18,
"the Company" shall include all corporations, partnerships and pro-
prietorships which are Affiliates and an employee's annual
compensation from all such entities shall be aggregated and shall
include compensation for services which would be currently includible
but for a salary reduction election under Section 125 or Sec-
tion 401(k) of the Code. However, for purposes of the ownership test
in subsection (a) above, each such entity shall be considered
separately as the Company, and "ownership" shall be determined by
applying the constructive ownership rules contained in Section 318 of
the Code (but applied by substituting five percent for fifty percent
in Section 318(a)(2)(C) of the Code).
Section 1.18 "Hour of Service" shall mean:
(a) Each hour for which an employee is paid or is
entitled to be paid for the performance of duties for the
Company.
(b) Each hour for which an employee is directly or
indirectly paid or is entitled to be paid for a period of time
during which no duties are performed (irrespective of whether
the employment relationship has terminated) due to vacation,
holidays, illness, disability, layoff, jury duty, temporary
military duty, or Leave of Absence. However, no more than 501
Hours of Service shall be credited under this subsection (b)
for any single continuous period during which an employee
performs no duties (whether or not such period occurs in a
single Computation Period). Further, no Hours of Service shall
be credited on account of payments made solely under a plan
maintained to comply with worker's compensation, unemployment
compensation, or disability insurance laws, or to reimburse an
employee for medical expenses.
(c) Each hour for which back pay (ignoring any
mitigation of damages) is either awarded to the employee or
agreed to by the Company. However, no more than 501 Hours of
Service shall be credited under this subsection (c) for any
single continuous period during which an employee would not
have performed any duties.
(d) Solely for purposes of determining whether an
employee has incurred a Break in Service, an employee who is
not otherwise credited with an Hour of Service under sub-
section (a), (b) or (c) above shall be credited with an Hour of
Service for each additional hour that is part of an employee's
customary work week with the Company during which the employee
is on a Leave of Absence, provided the employee resumes
employment with the Company upon the expiration of such Leave
of Absence.
(e) Notwithstanding the foregoing, Hours of Service
shall be credited in any Computation Period only under one of
paragraphs (a), (b), (c) and (d) above; an employee may not
receive double credit for the same Computation Period.
(f) If the Company finds it impractical to count the
actual Hours of Service for any class or group of employees,
each employee in that class or group shall be credited with 10
Hours of Service for each day in which he has at least one Hour
of Service. However, an employee shall be credited only for
his normal working hours during a paid absence.
(g) Hours of Service to be credited on account of
payment to an employee (including back pay) shall be recorded
in the period of service for which the payment was made. If
the period overlaps two or more Computation Periods, the Hours
of Service credit shall be allocated in proportion to the
respective portions of the period included in the several Com-
putation Periods. However, in the case of periods of 31 days
or less, the Committee may apply a uniform policy of crediting
the Hours of Service to either the first Computation Period or
the second.
(h) In all respects an employee's Hours of Service shall
be counted as required by Section 2530.200b-2 of the Department
of Labor's regulations under Title I of ERISA which is
incorporated herein by this reference.
Section 1.19 "Initial Outstanding Shares" shall mean 522,222 shares
of Stock.
Section 1.20 "Leave of Absence" shall mean the interruption of the
actual performance of services for and with the approval of the
Company on account of (i) governmental service, sickness, disability,
education or other cause interfering with the ability of such
individual to perform services for the Company, (ii) the first 12
weeks of any leave approved in writing, under uniform and non-
discriminatory rules in accordance with the Family Medical Leave Act
of 1993, or (iii) any other approved Leave of Absence which is in
accordance with the Collective Bargaining Agreements.
Section 1.21 "Leased Employee" shall mean a person who is
performing services for the Company (and is not a common-law employee
of the Company) if:
(a) such services are provided pursuant to an agreement
between the Company and any other entity (hereinafter referred
to as the "leasing organization"),
(b) such person has performed the services for the
Company (or a related company within the meaning of Section
144(a)(3) of the Code) on a substantially full-time basis for a
period of at least one year, and
(c) such services are of a type historically performed,
in the business field of the Company, by its employees.
Notwithstanding the foregoing, a person shall not be
considered a Leased Employee if (i) he is covered by a plan
maintained by the leasing organization that constitutes a safe harbor
plan under Section 414(n)(5) of the Code and (ii) Leased Employees do
not constitute more than 20% of the Company's non-highly compensated
work force. In applying the provisions of this paragraph, the
Company may rely upon a written certification by the leasing organi-
zation as to whether a person is covered by a plan of the type
described.
Section 1.22 "Matching Company Contributions" shall mean Company
Contributions made pursuant to Section 3.5.
Section 1.23 "Maternity or Paternity Absence" shall mean a period
during which an employee is absent from work (i) by reason of the
employee's pregnancy, (ii) by reason of the birth of a child of the
employee, (iii) by reason of the placement of a child with the
employee in connection with the employee's adoption of the child, or
(iv) for purposes of caring for a child described in clause (ii) or
(iii) above for a period beginning immediately following the birth or
placement. In no event shall an employee be considered to have been
on a Maternity or Paternity Absence unless the employee timely pro-
vides the Committee with sufficient information to establish that the
employee's absence from work was on account of a Maternity or
Paternity Absence and the number of days of such Maternity or
Paternity Absence.
Section 1.24 "Normal Retirement Age" shall mean the age of the
Participant on the date on which occurs his Normal Retirement Date.
Section 1.25 "Normal Retirement Date" shall mean the first to occur
of (i) the last to occur of (A) a Participant's 65th birthday or (B)
the fifth anniversary of the Participant's initial participation in
the Plan or (ii) the Participant's mandatory retirement date under
any retirement plan maintained by the Company or an Affiliate.
Section 1.26 "Participant" shall mean any Bargaining Unit Employee
who meets the requirements for eligibility under Article II or who
has a Stock Account balance under the Trust.
Section 1.27 "Plan" shall mean the Homeland Stores, Inc. Employee
Stock Bonus Plan, as described herein or hereinafter amended.
Section 1.28 "Plan Administrator" shall mean the Committee
described in Article IX of the Plan.
Section 1.29 "Plan Year" shall mean for the first Plan Year the
short period beginning on the Effective Date and ending on December
31, 1996 and for any Plan Year after the first Plan Year, the 12-
month period beginning on January 1 and ending on December 31.
Section 1.29 "Re-Employment Commencement Date" shall mean the first
date following a Termination of Employment on which a Bargaining Unit
Employee performs an Hour of Service for the Company.
Section 1.30 "Stock" shall mean shares of common stock of the
Homeland Holding Corporation, the parent company of Homeland Stores,
Inc.
Section 1.31 "Stock Account" shall mean a separate account
reflecting a Participant's interest in the Stock held in the Trust.
Each Participant's Stock Account shall be consist of the following
Sub-Accounts:
(a) A "Company Contribution Account" shall be maintained
for each Participant which reflects the Company Contributions
allocated to the Participant pursuant to Sections 3.1 and 3.2,
adjusted for earnings and losses attributable to the investment
thereof.
(b) A "Profit Sharing Company Contribution Account"
shall be maintained for each Participant which reflects Company
Contributions pursuant to Section 3.3, adjusted for earnings and
losses attributable to the investment thereof.
(c) A "Pre-Tax Employee Contribution Account" shall be
maintained for each Participant which includes the Pre-Tax
Contributions made by the Company on behalf of the Participant
pursuant to Section 3.4, adjusted for earnings and losses
attributable to the investment thereof.
(d) A "Matching Company Contribution Account" shall be
maintained for each Participant which reflects the Matching Company
Contributions allocated to the Participant pursuant to Section 3.5,
adjusted for earnings and losses attributable to the investment
thereof.
(e) An "After-Tax Contribution Account" shall be
maintained for each Participant which includes the Participant's
After-Tax Contributions, adjusted for earnings and losses
attributable to the investment thereof.
Section 1.33 "Termination of Employment" shall mean (a) the
resignation of a Bargaining Unit Employee for any reason, (b) the
dismissal of a Bargaining Unit Employee for any reason, or (c) the
death or retirement of a Bargaining Unit Employee, including a
cessation of employment on account of Total Disability. Transfers by
a Bargaining Unit Employee from employment by any The Company to
employment by another employer shall not be regarded as a Termination
of Employment as long as such Bargaining Unit Employee is still
performing substantially the same services for the successor
employer.
Section 1.34 "Totally Disabled" or "Total Disability" shall mean a
disability which entitles a Participant to benefits under the
Company's Long-Term Disability Income Plan. Any determination of
whether a Participant is Totally Disabled shall be made under rules
uniformly applied to all Participants.
Section 1.35 "Trust" shall mean the legal entity created by the
Trust Agreement (and any amendments thereto) between the Company and
the Trustee.
Section 1.36 "Trust Agreement" shall mean the agreement between the
Company and the Trustee establishing the Trust, as may be amended
from time to time.
Section 1.37 "Trust Fund" shall mean all property, real or
personal, received or held by the Trustee as part of the Trust, plus
all income and gains and minus all losses, expenses, and
distributions chargeable thereto.
Section 1.38 "Trustee" shall mean any corporation, individual or
individuals who shall accept the appointment as Trustee to execute
the duties of the Trustee as specifically set forth in the Trust
Agreement.
Section 1.39 "Valuation Date" shall mean the last day of each Plan
Year and such other date or dates during the Plan Year as may be
designated as such by the Committee.
Section 1.40 "Year of Vesting Service" shall mean any Plan Year
beginning on or after the Effective Date during which a Bargaining
Unit Employee is credited with at least an Hour of Service.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
Section 2.1 Eligibility. Each person who is a Bargaining Unit
Employee on the Effective Date shall become a Participant in the Plan
on the Effective Date. Any person who becomes a Bargaining Unit
Employee of the Company after the Effective Date shall become a
Participant in the Plan on the January 1 or July 1 following the date
on which he first becomes a Bargaining Unit Employee.
Section 2.2 Periods of Eligibility. A Bargaining Unit Employee
who becomes a Participant in accordance with Section 2.1 shall
continue to be eligible to receive contributions under the Plan until
the earlier to occur of (i) his Termination of Employment or (ii) the
date he is no longer a Bargaining Unit Employee. For this purpose, a
Bargaining Unit Employee who previously satisfied the initial
eligibility requirements of Section 2.1, but who either ceased to be
a Bargaining Unit Employee or terminated employment, shall enter or
re-enter the Plan, as the case may be, as of either (i) the next
January 1 or July 1, after he again becomes a Bargaining Unit
Employee, if the Bargaining Unit Employee was not previously a
Participant, or (ii) the Bargaining Unit Employee's Re-employment
Commencement Date or the date the Bargaining Unit Employee again
satisfies the eligibility requirements of Section 2.1, as the case
may be, if he was previously a Participant.
ARTICLE III
CONTRIBUTIONS
Section 3.1 Initial Company Contributions. As soon as
practicable following the completion of the Employee Buyout Plan and
as of each of the first two anniversaries thereof, the Company shall
contribute to the Trust 58,025 shares of Stock.
Section 3.2 Additional Company Contributions Based on
EBITDA.
(a) If the Company's EBITDA for the period beginning on
the Effective Date and ending on the day immediately prior to the
first anniversary of the Effective Date exceeds $25 million, then the
Company shall contribute to the Trust, as soon as practicable
following the first anniversary of Effective Date, 58,025 shares of
Stock.
(b) If the Company's EBITDA for the period beginning on
the first anniversary of the Effective Date and ending on the day
immediately prior to the second anniversary of the Effective Date
exceeds $27.5 million, then the Company shall contribute to the
Trust, as soon as practicable following the second anniversary of
Effective Date, 58,025 shares of Stock.
(c) If the Company's EBITDA for the period beginning on
the second anniversary of the Effective Date and ending on the day
immediately prior to the third anniversary of the Effective Date
exceeds $30.25 million, then the Company shall contribute to the
Trust, as soon as practicable following the third anniversary of
Effective Date, 58,025 shares of Stock.
Section 3.3 Discretionary Company Contributions. In
addition to contributions made pursuant to Sections 3.1 and 3.2
above, the Company, in its sole discretion, may make additional
contributions of cash or Stock to the Plan.
Section 3.4 Participant Pre-Tax Contributions. Within 30
days (or such greater or lesser period as the Committee shall
determine, subject to all applicable laws) after the completion of
the Employee Buyout Plan, and each of the first two anniversaries
thereof, each Participant who is employed by the Company or on a
Leave of Absence as of such date, shall be entitled to enter into a
salary reduction agreement with the Company pursuant to which the
Employee's salary shall be reduced by an amount and the Company shall
contribute Stock to the Plan on behalf of the Employee, with a value
(determined in accordance with Section 9.6) equal to the amount the
Participant so elects up to the Applicable Limit. For purposes of
the paragraph the Applicable Limit (determined on an aggregate basis
for all Participants) shall mean 58,025 shares of Stock. If, as of
the beginning of the Plan Year, the Participants (in the aggregate)
have elected to reduce their salary in an amount in excess of the
Applicable Limit, then the Participant's election with the highest
salary reduction request shall be reduced by the dollar amount
required to cause such Participant's salary reduction request to
equal the salary reduction request of the Participant with the next
highest salary reduction request. If a lesser reduction would enable
the aggregate amount of Stock requested to be purchased by the
Company and contributed on behalf of the Participants not to exceed
the Applicable Limit, then only this lesser reduction shall be made.
This process is repeated until the Applicable Limit is not exceeded.
Section 3.5 Matching Company Contributions. With respect to
any Bargaining Unit Employee who makes a timely contribution pursuant
Section 3.4, the Company shall make a Matching Company Contribution
in the form of Stock, as soon as practicable after the end of each
period during which Bargaining Unit Employees can make a contribution
under such Section, equal to 33 1/3% of the amount actually contributed
by the Participant pursuant to Section 3.4. Any such matching
contribution shall be allocated to each Participant's Matching
Company Contribution Account in accordance with Article IV of the
Plan.
Section 3.6 Additional Contributions Upon Change of Control
of the Company. In the event of a Change of Control of the Company:
(a) The Company shall contribute the number of shares of
Stock that have been contributed under Sections 3.1, 3.2 and 3.5, on
behalf of Participants on the date of the Change of Control (or as
soon as practicable thereafter) on behalf of such Participants
whether or not the criteria applicable to such contributions set
forth in Sections 3.1, 3.2 and 3.5, respectively, have been
satisfied. Contributions pursuant to this paragraph 3.6(a) shall be
allocated in accordance with Article 4 and the Participants receiving
such contributions shall be immediately vested in any Stock allocated
to their Stock Account.
(b) In addition to paragraph (a) above, the Company
shall contribute Stock or cash (at the option of the Company) on the
date of the Change of Control (or as soon as practicable thereafter),
on the Participant's behalf, in an amount equal to 174,074 shares of
Stock (3 1/3% of Initial Outstanding Shares) less the value of any
amount that the Company has previously contributed pursuant to
Section 3.5 hereof. The additional contribution made pursuant to
this Section 3.6(b) shall be allocated to all Participants who are
Bargaining Unit Employees on the date of the Change in Control on a
per capita basis.
(c) If any contributions provided for in this Section
3.6 cannot be allocated to a Participant because of the limitations
set forth in Sections 3.7 and 4.3, then such Participant's allocation
shall be reduced by the amount required to cause the Participant not
to exceed such limits. Any amount that is reduced under this
paragraph (c) shall be reallocated to the remaining Participants who
are Bargaining Unit Employees on the date of the Change in Control on
a per capita basis.
Section 3.7 Limitations on Contributions.
(a) No Participant shall be permitted elect to receive
Company contributions under Section 3.4 of the Plan during any
calendar year in excess of $9,500 (adjusted by the Adjustment
Factor). If a Participant's contributions to the Plan and to any
other plan, contract or arrangement maintained by the Company during
any calendar year would exceed $9,500 (as adjusted by the Adjustment
Factor), the contributions will be deemed to be after-tax
contributions in accordance with Regulation Section 1.402(a)-1(d)(1)
and will be credited to the Participant's After-Tax Contribution
Account.
(b) The Company shall have the right, as and to the
extent that it, in its discretion, deems necessary or appropriate, to
limit contributions by any Highly Compensated Employee to the extent
necessary to assure that the Average Actual Deferral Percentage for
all Eligible Participants who are Highly Compensated Employees meets
either of the following tests:
(i) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage
for Eligible Participants who are not Highly Compensated
Employees for the Plan Year multiplied by 1.25; or
(ii) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage
for Eligible Participants who are not Highly Compensated
Employees for the Plan Year multiplied by two (2), provided,
that the Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees does not
exceed the Average Actual Deferral Percentage for Eligible
Participants who are not Highly Compensated Employees 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 Employee.
(c) For purposes of this Section 3.7, the following
terms shall have the following meanings:
(i) "Actual Deferral Percentage" shall mean the ratio
(expressed as a percentage) of Contributions on behalf of the
Eligible Participant for the Plan Year to the Eligible
Participant's Compensation for the Plan Year. For purposes of
determining the Actual Deferral Percentage of a Participant who
is a Highly Compensated Employee, the Employee Contributions -
and Compensation for such Participant shall include the
contributions and Compensation of Family Members, but such
Family Members shall be disregarded in determining the Actual
Deferral Percentage for Eligible Participants who are not
Highly Compensated Employees. For purposes of this Section 3.8
"Family Members" shall mean a Participant's spouse and lineal
ascendants or descendants and the spouses of such lineal
ascendants or descendants.
(ii) "Average Actual Deferral Percentage" shall mean the
average (expressed as a percentage) of the Actual Deferral
Percentages of the Eligible Participants in a specified group.
(iii)"Eligible Participant" shall mean a Covered Employee
who is otherwise authorized under the terms of the Plan to have
contribution and employer nonelective contributions allocated
to the Participant's Pre-Tax Employee Contribution Account for
the Plan Year.
ARTICLE IV
ALLOCATION OF CONTRIBUTIONS
Section 4.1 Establishment of Accounts. There shall be established
a Stock Account in the name of each Participant. All shares of Stock
allocated to a Participant shall be credited to his appropriate sub-
account in his Stock Account.
Section 4.2 Allocations to Participants' Accounts.
(a) As of the last day of each Plan Year, but subject to
the limitations in Section 4.3, the Stock contributed, or acquired by
the Plan with cash contributions from the Company during the Plan
Year, in accordance with Section 3.1 shall be allocated among the
Stock Accounts of Participants who were employed both on the date of
completion of the Employee Buyout Plan and on the last day of the
applicable Plan Year, on a per capita basis, except that Bargaining
Unit Employees who are scheduled to work part-time (as defined in the
Collective Bargaining Agreements) and any Bargaining Unit Employee
who first becomes a Participant during such Plan Year shall receive
one-half the number of shares granted to full-time Bargaining Unit
Employees.
(b) The Stock contributed by the Company during the Plan
Year, in accordance with Section 3.2 shall be allocated to
Participants who were employed for at least six months of the
applicable Plan Year and are employed on the last day of the Plan
Year, on a per capita basis, except that Bargaining Unit Employees
who are scheduled to work part-time (as defined in the Collective
Bargaining Agreements) and any Bargaining Unit Employee who first
becomes a Participant during such Plan Year shall receive one-half
the number of shares granted to full-time Bargaining Unit Employees.
(c) The Stock contributed by the Company during the Plan
Year in accordance with Section 3.3 shall be allocated among the
Stock Accounts of Participants who are employed on the last day of
the Plan Year, on a per capita basis, except that Bargaining Unit
Employees who are scheduled to work part-time (as defined in the
Collective Bargaining Agreements) and any Bargaining Unit Employee
who first becomes a Participant during such Plan Year shall receive
one-half the number of shares granted to full-time Bargaining Unit
Employees.
(d) The Stock contributed by the Company on the behalf
of Participants during the Plan Year and pursuant to Section 3.4,
shall be allocated in accordance with Participants' salary reduction
agreements.
(e) The Stock contributed by the Company during the Plan
Year, in accordance with Section 3.5, shall be allocated based on the
ratio of each Participant's Pre-Tax Contributions pursuant to Section
3.4 for such Plan Year to the total Pre-Tax Contributions of all
Participants who made Contributions pursuant to Section 3.4 for such
Plan Year.
Section 4.3 Overall Annual and Cumulative Limitations.
(a) Basic Limitations. The "annual addition" (as
defined in Section 4.5) for any Plan Year with respect to a Partici-
pant shall not exceed the least of (i) $30,000, or 25 percent of the
dollar limitation in effect for such Plan Year under Section
415(b)(l)(A) of the Code, if that is greater, (ii) 25 percent of the
Participant's total compensation for the Plan Year (including
bonuses, commissions and overtime pay, but excluding any amounts
which would not be included in his compensation for purposes of
Section 415 of the Code), or (iii) the maximum amount that can be
allocated to the Participant without resulting in the sum of the
Participant's defined benefit fraction (within the meaning of Section
415(e)(2) of the Code) and the Participant's defined contribution
fraction (within the meaning of Section 415(e)(3) of the Code)
exceeding 1.0 for such Plan Year. For the purpose of this Section,
all defined benefit plans (whether or not terminated) of the
Company and Affiliates shall be treated as a single defined benefit
plan and all defined contribution plans (whether or not terminated)
of the Company and Affiliates shall be treated as one defined
contribution plan.
(b) Adjustments. To the extent that the annual addition
otherwise allocable to a Participant exceeds the limitation pre-
scribed in this Section 4.3, the annual addition to the Stock Account
of a Participant shall be reduced by such portion of such excess as
the Committee determines is necessary to reduce the annual addition
to an amount that complies with such limitation; provided, however,
any such reduction in the annual addition under this Plan shall be
made only after (x) the projected annual benefit of the Participant
has been reduced to the maximum extent possible pursuant to the terms
of any defined benefit plans of the Company and Affiliates (if the
limit described in clause (iii) of Section 4.3(a) may be exceeded)
and then (y) the maximum possible reduction is made in the annual
addition to the accounts of the Participant under all other defined
contribution plans of the Company and Affiliates (if any limit may
be exceeded). To the extent the contributions are reduced as
provided for herein, contributions made pursuant to Sections 3.4 and
3.5 shall be reduced before any other amounts.
Section 4.4 Basis for Limitation Computations. All computations
with respect to the limitations under this Article on annual
additions shall be made on the basis of each Plan Year, pursuant to
the rules set forth in Section 415 of the Code and the regulations
promulgated thereunder which are herein incorporated by this
reference.
Section 4.5 Definitions for Limitation Computations. As used
herein, the term "annual addition" means, with respect to any Active
Participant, the sum of (i) with respect to this Plan, that
percentage of the Company' contributions allocated to the Partici-
pant's Stock Account as of the end of the Plan Year pursuant to Sec-
tion 4.3 and (ii) with respect to other defined contribution plans
(as defined in Section 414(i) of the Code) maintained by the
Company and Affiliates, (1) all contributions made by the Company
and Affiliates allocable to the Participants' account and (2) all
contributions made by a Participant thereunder.
ARTICLE V
VALUATION OF FUND AND ADJUSTMENTS TO ACCOUNTS
Section 5.1 Determination of Number of Shares of Stock and Market
Value. Subject to Section 9.6, the Trustee, or investment manager if
so designated, shall determine the current fair market value of all
assets held in the Trust Fund as of each Valuation Date.
Section 5.2 Adjustments for Net Changes in Assets. As of each
Valuation Date, the Trustee shall determine the net increase or
decrease in the number of shares of Stock, and the net increase or
decrease in the current fair market value of all other assets held in
the Trust Fund since the prior Valuation Date as follows: the number
of shares of Stock credited to a Participant's Stock Account
immediately after the preceding Valuation Date shall be the number or
balance as adjusted for (i) payment of benefits under Article VIII
during the valuation period, (ii) contributions by the Company or the
Participant under Article III of the Plan, and (iii) any dividends or
other distributions issued on the Stock in the Participant's Account.
The adjustments described in this Section 5.2 shall be made each Plan
Year or other valuation period designated by the Committee before any
Stock or other amounts are allocated to Participants' Stock Accounts
with respect to such Plan Year or valuation period pursuant to
Section 4.3.
Section 5.3 Treatment of Expenses. All expenses incurred by the
Committee and the Trustee in connection with administering the Plan
and the Trust Fund shall be paid by the Trustee from the Trust Fund
to the extent the expenses have not been paid or assumed by the
Company within 30 days of a request for such payment by the Trustee.
ARTICLE VI
ROLLOVERS
Section 6.1 Direct Rollovers and Rollover Notices.
Notwithstanding any provision in the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a
Participant or other distributee under the Plan may elect to have any
portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
Any such election shall be made at the time and in the
manner prescribed by the plan administrator and shall be subject to
any uniform restrictions or limitations (permissible under Section
401(a)(31) and other applicable Code provisions) that the plan
administrator may impose under rules adopted by it.
To the extent and in the manner required by Section
402(f) of the Code, each distributee who is to receive an eligible
rollover distribution from the Plan shall be notified of the special
Federal income tax provisions applicable to such distribution.
For purposes of this Section, the following definitions
shall apply:
(a) An "eligible rollover distribution" is any lump sum
payment or other distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: (i) any life
annuity or other 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 10 years or more; (ii) any
distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and (iii) the portion of any
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation
with respect to employer securities).
(b) An "eligible retirement plan" is an individual
retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of
the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified trust described in Section 401(a) of the
Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual
retirement annuity.
(c) A "distributee" includes a Participant (whether or
not he has terminated employment). In addition, the
Participant's surviving spouse and the Participant's spouse or
former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of the
spouse or former spouse.
(d) A "direct rollover" is a payment by the Plan to the
eligible retirement plan specified by the distributee.
Section 6.2 Waiver of 30-Day Notice. If a Participant receives a
distribution to which Sections 401(a)(11) and 417 of the Code do not
apply, such distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(a) the Plan Administrator clearly informs the
Participant that such Participant has a right to a period of at least
30 days after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(b) the Participant, after receiving the notice,
affirmatively elects a distribution.
ARTICLE VII
VESTING AND FORFEITURES
Section 7.1 Vesting Schedule. A Participant shall be fully
vested at all times in his Stock Account.
Section 7.2 Vesting and Nonforfeitability. A Participant's
interest in his Stock Account which has become vested shall not be
forfeited for any reason.
ARTICLE VIII
PAYMENT OF BENEFITS
Section 8.1 Distributions to Participants. Except as
otherwise provided below, any Participant who incurs a Termination of
Employment may elect to receive the vested balance in his Stock
Account (i) in a single lump sum as soon as practicable after the
Valuation Date coincident with or next following the Participant's
Termination of Employment or (ii) in up to two approximately equal
annual installments (but in no event shall installment payments be
permitted over a period exceeding the Participant's life expectancy)
commencing as soon as practicable after the Valuation Date coincident
with or next following the Participant's Termination of Employment.
If the Participant's vested balance in his Stock Account
is more than $3,500 (as valued in accordance with Section 9.6),
unless the Participant elects an earlier payment, no distribution
shall commence prior to the later of the date the Participant reaches
Normal Retirement Age or has a Termination of Employment. Such
Participant's vested balance in his Stock Account shall be
distributed as soon as practicable following the Valuation Date
coincident with or next following the later of the date the
Participant reaches Normal Retirement Age or has a Termination of
Employment. If a Participant's vested balance in his Stock Account
is $3,500 or less (as valued in accordance with Section 9.6) at his
Termination of Employment, the Participant shall receive an immediate
lump sum distribution of such interest as soon as practicable after
the Valuation Date coincident with or next following his Termination
of Employment. In any event, distribution of the vested balance of a
Participant's Stock Account shall commence no later than the April
1st next following the end of the calendar year in which he reaches
age 70-1/2, regardless of whether he is employed on such date.
Section 8.2 Distributions to Beneficiaries. If a
Participant's employment is ended by his death, or if a Participant
has any vested interest in his Stock Account at his Termination of
Employment and he dies before all of his benefits are paid, his
vested interest in his Stock Account shall be paid to his
Beneficiary. The Beneficiary's benefits will be paid as soon as
practicable in a single lump sum (as valued in accordance with
Section 9.6) not later than the end of the 60-day period commencing
on the first day of the Plan Year commencing on or after the date of
the Participant's death.
Section 8.3 Distributions in Shares of Stock. Except as
provided in Section 8.1 or 8.2, a Participant's benefits shall be
paid in shares of Stock, provided, however, that the value of any
fractional share of Stock shall be paid in cash.
Section 8.4 Delay in Benefit Determination. If the
Committee is unable to determine the benefits payable to a
Participant or Beneficiary on or before the latest date prescribed
for payment pursuant to Section 8.1 or 8.2, the benefits shall in any
event be paid within 60 days after they can first be determined, with
whatever make-up payments may be appropriate in view of the delay.
Section 8.5 Accounting for Benefit Payments. Any benefit
payment shall be charged to the Participant's Stock Account as of the
first day after the Valuation Date coincident with or next preceding
the date of such benefit payment.
Section 8.6 Designation of Beneficiaries. A Participant may
designate a Beneficiary or Beneficiaries (in any order of priority)
by written notice filed with the Committee, and may change his
designated Beneficiary at any time by designating a new Beneficiary
or Beneficiaries in the same manner, and no notice need be given to
any prior designated Beneficiary; provided, however, that a Partici-
pant's Beneficiary shall be the Participant's surviving spouse, if
any, unless (i) such spouse consents in writing to the designation of
another beneficiary acknowledging the effect of such designation and
the nonspouse Beneficiary (including class of Beneficiaries or any
contingent Beneficiaries) designated by the Participant, and such
consent is witnessed by a notary public or the Plan Administrator, or
(ii) it is established to the satisfaction of the Committee that such
consent may not be obtained because there is no spouse, because the
spouse cannot be located, or because of such other circumstances as
prescribed by regulations issued under Section 417 of the Code. Any
consent by a spouse under the preceding sentence shall be irrevocable
but shall be effective only with respect to such spouse. Consent by
a Participant's spouse shall not be necessary if a prior consent by
the Participant's spouse expressly permits the Participant to make
designations and changes without the spouse's subsequent consent. If
no beneficiary as designated or provided for above shall survive a
deceased Participant, the payment of any death benefit shall be made
to the Participant's surviving spouse, if any, or, if none, to such
of his descendants as shall survive him, if any, in equal shares, per
stirpes, or, if none, to his surviving parents, or, if none, to his
surviving brothers and sisters, or, if none, to his estate; and for
all purposes hereof, any such Beneficiary shall be treated as if he
had been designated by the Participant.
Section 8.7 Option to Have Company Purchase Stock. Any
Participant or Beneficiary who receives any Stock and any person who
receives Stock from a Participant or Beneficiary by reason of the
Participant's or Beneficiary's death or incompetency may require the
Company to purchase such Stock for its fair market value (the "put
right") as described in this Section 8.7. This put right shall apply
only to the extent that Stock is not readily tradable on an
established securities market in accordance with federal and state
securities laws and regulations. The put right shall be exercisable
by written notice to the Committee during the first 60 days after the
Stock is distributed by the Plan, and, if not exercised in that
period, during the first 60 days of the next Plan Year following the
year of distribution. If the put right is exercised, the Trustee
may, if so directed by the Committee, assume the Company's rights and
obligations with respect to purchasing the Stock, provided that the
Company provides the Trustee with such funds as and when needed to
effect such purchases. (Any Stock repurchased by the Trustee
hereunder shall be used to satisfy the Company's obligations under
Article III and shall be allocated to Participants in accordance with
the provisions of Article 4. The Company or the Trustee (if so
directed by the Committee) may elect to pay for the Stock in equal
periodic installments (not less frequent than annually) over a period
not longer than two years from the date the put right is exercised,
with interest accruing on the unpaid balance at a reasonable rate to
be determined by the Committee, in its sole discretion, and the first
installment to be paid not later than 30 days after the Participant
exercises the put option. Nothing contained herein shall be deemed
to obligate the Company to register any Stock under any federal or
state securities law or to create a public market to facilitate
transferability of Stock.
ARTICLE IX
ORGANIZATION OF PLAN COMMITTEE;
ADMINISTRATION OF PLAN
Section 9.1 The Committee. The Plan shall be administered by a
Committee composed of not less than two members, to be appointed by
the Board, each of whom is a director, officer or employee of the
Company. Each member of the Committee shall serve at the will of the
Board and without compensation. Any person may serve in more than
one fiduciary capacity with respect to the Plan. The Committee is
the "named fiduciary" of the Plan within the meaning of ERISA and the
"plan administrator" of the Plan within the meaning of and for the
purposes of ERISA.
Section 9.2 Committee Action, Rules and Expenses. The Committee
shall appoint a chairperson and a secretary from among its members
approved by a majority of its members. Any action by the Committee
shall be taken by a vote of the majority of its members present at a
meeting, at which at least two members are present, or signed by a
majority of its members in writing without a meeting. A quorum shall
consist of two members. Minutes of each meeting shall be kept and
other appropriate books and records shall be maintained by the
Committee. The Committee may establish such rules as may be
necessary or desirable for its own operations. The proper expenses
of the Committee in the performance of its duties, including fees for
legal, clerical, accounting, appraisal and other services rendered to
the Committee shall be paid by the Trustee out of the Trust Fund
unless paid by the Company.
Section 9.3 Plan Administered By Committee. The Committee shall
administer the Plan and shall have complete control in the
administration thereof. In exercising any of its discretionary
powers with respect to the administration of the Plan, the Committee
shall act in a uniform and nondiscriminatory manner and for the ex-
clusive benefit of Participants and their Beneficiaries. The Board
shall have no responsibility for the operation of the Plan, except as
otherwise provided herein. The Committee shall have all powers which
are reasonably necessary to carry out its responsibilities under the
Plan including, but not by way of limitation, the power to construe
the Plan and to determine all questions that shall arise thereunder,
and shall also have all the powers elsewhere in the Plan conferred
upon it. Except as otherwise provided herein, the decision of the
Committee as to any disputed question arising hereunder, including
questions of construction, interpretation and administration shall be
final, binding and conclusive.
Section 9.4 Retention of Advisors and Service-Providers. The
Committee may employ one or more persons to render advice with regard
to any responsibility it has under the Plan or Trust. The
compensation of such person or persons shall be fixed by the
Committee and shall be paid by the trustee out of the Trust Fund
unless paid by the Company.
Section 9.5 Instructions to Trustee, Funding Policy. The
Committee shall give instructions or directions to the Trustee on all
matters within the Committee's discretion under the terms of the
Trust. All disbursements by the Trustee, except for the reasonable
expenses of administration of the Trust, shall be made upon, and in
accordance with, the written instructions of the Committee. The
Committee shall have the power and the responsibility to establish
and carry out a funding policy and method consistent with the objec-
tives of the Plan and the requirements of ERISA.
Section 9.6 Valuation of Stock. As long as shares of Stock are
not readily tradable on an established securities market, the fair
market value of a share of Stock as of the end of each Plan Year and
as of any other time shall, to the extent required pursuant to ERISA
and the Code, be determined by an independent appraiser retained for
such purpose by the Committee. To the extent permitted under ERISA,
the Committee shall be protected in relying upon the independent
appraiser's determination of the fair market value of a share of
Stock.
Section 9.7 Voting of Stock. To the extent that Stock held by the
Trust Fund is entitled to be voted, and notwithstanding the Trustee's
general authority to vote any Stock held by the Trust Fund, each
Participant shall be entitled to direct the Trustee as to the manner
in which such voting rights with respect to the shares of Stock
allocated to his Stock Account will be exercised.
Section 9.8 Power of Delegation. The Committee may allocate among
its members or delegate to any person who is not a member of the
Committee any administrative responsibility which it has hereunder.
The responsibility of the Committee with respect to the management or
control of the assets of the Trust Fund may be delegated or allocated
to the Trustee or to an "investment manager" within the meaning of
ERISA. Any delegation or allocation of a responsibility pursuant to
this Section shall be evidenced by the minutes of the meeting of the
Committee at which such delegation or allocation was approved or, if
no such meeting was held, by the writing under which such action was
taken.
Section 9.9 Communication By Committee. Decisions and directions
of the Committee may be communicated to the Trustee, a Participant, a
Beneficiary, the Company or any other person who is to receive such
decision or direction by a document signed by any one or more members
of the Committee (or persons other than members) so authorized, and
such decision or direction of the Committee may be relied upon by the
recipient as being the decision or direction of the Committee. The
Committee may authorize one or more of its members, or a designee who
is not a member, to sign on behalf of the entire Committee.
Section 9.10 Reports of the Committee. The Committee shall
report to the Board, not less often than annually, on the performance
of its responsibilities and on the performance of any persons to whom
any of its powers and responsibilities may have been delegated pursu-
ant to Section 9.8.
Section 9.11 Resignation or Removal of Committee Member. Any
member of the Committee may resign by giving written notice to the
Board not less than 30 days before the effective date of his
resignation. Any member of the Committee may be removed, with or
without cause, at any time by the Board. The Board shall fill
vacancies in the Committee as soon as is reasonably possible after a
vacancy occurs and, until a new appointment is made, the remaining
members shall have full authority to act.
ARTICLE X
CLAIMS PROCEDURE
Section 10.1 Claim for Benefits. Any request for a benefit payable
under the Plan shall be made in writing by a Participant or
Beneficiary (or an authorized representative of either of them), as
the case may be, and shall be delivered to any member of the
Committee. Such written request shall be deemed filed upon receipt
thereof by the Committee. Such request shall be made within the time
prescribed in the Plan for claiming a particular benefit or, if no
time is so prescribed, within a reasonable time before payment of the
benefit is to commence.
Section 10.2 Request for Additional Information. In the event a
request for benefits contains insufficient information, the Committee
shall, within 15 days after receipt of such request, send a written
notification to the claimant setting forth a description of any addi-
tional material or information necessary for the claimant to perfect
the claim and an explanation of why such material is necessary. The
claimant's request shall be deemed filed with the Committee on the
date the Committee receives in writing such additional information.
Section 10.3 Committee Claim Determination. The Committee shall
make a determination with respect to a request for benefits within 90
days after such request is filed (or within such extended period
prescribed below). The Committee shall notify the claimant whether
his claim has been granted or whether it has been denied in whole or
in part. Such notification shall be in writing and shall be
delivered, by mail or otherwise, to the claimant within the time
period described above. If the claim is denied in whole or in part,
the written notification shall set forth, in a manner calculated to
be understood by the claimant:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent provisions of the
Plan on which the denial is based;
(c) any additional material or information necessary for
the claimant to perfect the claim as well as an explanation of
why such material or information is necessary; and
(d) an explanation of the Plan's claim review procedure.
Failure by the Committee to give notification pursuant to this
Section within the time prescribed shall be deemed a denial of the
request for the purpose of proceeding to the review stage.
Section 10.4 Extension of Claim Processing Time. If special
circumstances require an extension of time for processing the claim,
the Committee shall furnish the claimant with written notice of such
extension. Such notice shall be furnished prior to the termination
of the initial 90-day period and shall set forth the special cir-
cumstances requiring the extension and the date by which the
Committee expects to render its decision. In no event shall such
extension exceed a period of 90 days from the end of such initial 90-
day period.
Section 10.5 Claims Appeal Procedure. A claimant whose request for
benefits has been denied in whole or in part, or his duly authorized
representative, may, within 60 days after written notification of
such denial, file with the Committee a written request for a review
of his claim. Such written request shall be deemed filed upon
receipt of same by the Committee.
Section 10.6 Submission of Comments By Claimant. A claimant who
timely files a request for review of his claim for benefits, or his
duly authorized representative, may review pertinent documents (upon
reasonable notice to the Committee) and may submit the issues and his
comments to the Committee in writing. The Committee shall, within 60
days after receipt of the written request for review (or within such
extended period prescribed below), communicate its decision in
writing to the claimant and/or his duly authorized representative
setting forth, in a manner calculated to be understood by the
claimant, the specific reasons for its decision and the pertinent
provisions of the Plan on which the decision is based. If the
decision is not communicated within the time prescribed, the claim
shall be deemed denied on review.
Section 10.7 Extension of Claim Appeal Processing Time. If special
circumstances require an extension of time beyond the 60-day period
described above for the Committee to render its decision, such as the
need for holding a conference as provided below, the Committee shall
furnish the claimant with written notice of the extension required.
Such notice shall be furnished prior to the termination of the
initial 60-day period and shall set forth the special circumstances
requiring the extension period. In no event shall such extension
exceed a period of 60 days from the end of such initial 60-day
period.
Section 10.8 Claimant's Right to a Conference. If the claimant so
requests in his timely application for review, the Committee shall
schedule a conference with the claimant (and/or his duly authorized
representative). Such conference shall be held at the offices of the
Company at a date and time which is mutually agreed upon by the
parties concerned, provided that in no event shall the conference be
held more than 60 days after the Committee receives the claimant's
written request for review of his claim.
ARTICLE XI
TRUST FUND
Section 11.1 Creation of Trust Fund. The Trust Fund, created under
the Trust Agreement entered into by the Company, consists of all
payments to the Trustee as provided herein, together with the net
increase or decrease of the Common Stock which shall be produced by
the investments of the Trust Fund or the sale of any such
investments, which shall be added to or deducted from the Trust Fund
by the Trustee. The Trust Fund shall be held, administered and
invested in the manner provided in the Trust Agreement.
Section 11.2 No Right to Assets. All assets of the Trust Fund
shall be owned by the Trustee and no asset shall be considered as
belonging to any particular Account of a Participant or Beneficiary.
Section 11.3 Benefits Provided Solely By Trust. All benefits
payable under the Plan shall be paid or
provided for solely from the Trust Fund, and the Company assume no
liability or responsibility therefor.
ARTICLE XII
AMENDMENTS
The Board reserves the right at any time and from time to
time, and retroactively if appropriate (including to the extent
deemed necessary to meet the requirements of Section 401(a) of the
Code, ERISA and any other laws), to modify or amend in whole or in
part any or all of the provisions of the Plan; provided, however,
that no such modification or amendment may be made which would cause
or permit any part of the assets of the Trust Fund to be used for, or
diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries, or which would cause any part of
the assets of the Trust Fund to revert to or become the property of
the Company except as provided in Section 13.5 hereof; and provided,
further, that, no such modification or amendment shall be made which
would substantially and adversely affect the contributions or
benefits of the Participants without the written approval of the
unions subject to the Collective Bargaining Agreements which are
adversely affected.
ARTICLE XIII
TERMINATION; DISCONTINUANCE OF
CONTRIBUTIONS; MERGER OF PLANS;
ADOPTION CONDITIONED UPON QUALIFICATION
Section 13.1 Right to Terminate Plan. While the Company
intends to continue the Plan indefinitely, nevertheless it assumes no
contractual obligation as to its continuance and the Board may
terminate the Plan at any time in its discretion. Upon a termination
of the Plan, no portion of the Trust Fund shall revert to the Company
or an Affiliate or, after payment of all expenses of the Plan and
Trust, be used for any purpose other than for the exclusive benefit
of Participants and their Beneficiaries; except as provided in
Section 13.5 hereof.
Section 13.2 Discontinuance of Contributions. To the extent
permitted by law, after a complete discontinuance of contributions by
the Company, the Plan and the Trust shall continue until all Stock
Accounts have been distributed. The Stock Account of each person
affected by a complete discontinuance of contributions shall be
distributed in any of the ways provided herein for the distribution
of benefits upon a termination of employment. Such distribution may
be postponed until the time it would otherwise have commenced had
there been no such discontinuance; provided, however, that the
Trustee shall, at the direction of the Committee, distribute the
amount in the Stock Account of such persons so affected at any prior
time.
Section 13.3 Evidence of Termination. A certified copy of
any resolution terminating the Plan, in whole or in part, shall be
delivered to the Committee and the Trustee.
Section 13.4 Merger of Plans. In the case of any merger or
consolidation of the Plan with, or any transfer of assets or
liabilities of the Plan to, any other plan, each Participant shall be
entitled to receive a benefit if the Plan were to terminate
immediately after the merger, consolidation or transfer, which is not
less than the benefit he would have been entitled to receive if the
Plan had terminated immediately before the merger, consolidation or
transfer.
Section 13.5 Plan Adoption Conditioned Upon Qualification.
Notwithstanding any other provision of the Plan, the adoption of the
Plan and the execution of the Trust Agreement are conditioned upon an
initial determination by the Internal Revenue Service that the Plan
meets the qualification requirements of Section 401(a) of the Code so
that the Company may deduct currently for federal income tax
purposes its contributions to the Trust and so that the Participants
may exclude the contributions (other than Participant After-Tax
Contributions) from their gross income and recognize income only when
they receive benefits. In the event that this Plan is determined by
the Internal Revenue Service not to qualify initially under Section
401(a) of the Code, the Plan may be amended retroactively to the
earliest date permitted by U.S. Treasury Regulations in order to
secure qualification under Section 401(a) of the Code. If this Plan
is held by the Internal Revenue Service not to qualify initially
under Section 401(a) of the Code as originally adopted or as so
amended, Company's contributions to the Trust under this Plan
(including any earnings thereon) shall be returned to it and this
Plan shall be terminated.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Alternative Payees in the Event of Incapacity.
If any person to whom a benefit is payable hereunder is a minor or if
the Committee determines that any person to whom such benefit is
payable is incompetent by reason of physical or mental disability,
the Committee may cause the payments becoming due to such person to
be made to another for his benefit without responsibility of the
Committee or the Trustee to see to the application of such payments.
Any payments made pursuant to such power shall, as to such payment,
operate as a complete discharge of the Trust Fund, the Trustee and
the Committee.
Section 14.2 Nonassignment of Benefits, Qualified Domestic
Relations Orders. Except as otherwise provided by law, including
pursuant to a "qualified domestic relations order" (as defined in
Section 414(p) of the Code), the interest of any Participant or
Beneficiary in the Trust Fund shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encum-
brance or charge, whether voluntary or involuntary, and any attempt
to so anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge the same shall be void; nor shall any such distribution or
payment be in any way liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person entitled to such
distribution or payment. If any Participant or Beneficiary is
adjudicated bankrupt or purports to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge any such distribution or
payment, voluntarily or involuntarily, the Committee, in its
discretion, may hold or cause to be held or applied such distribution
or payment or any part thereof to or for the benefit of such
Participant or Beneficiary in such manner as the Committee shall
direct. A determination by the Committee that a domestic relations
order constitutes a qualified domestic relations order shall be
binding and conclusive as to all parties. The Committee shall
establish reasonable procedures to determine the qualified status of
domestic relations orders and to administer distributions under such
qualified orders.
Section 14.3 Plan Creates No Employment Rights. This Plan
shall not be deemed to constitute a contract of employment between
the Company and any employee or other person whether or not in the
employ of the Company, nor shall anything herein contained be deemed
to give an employee or any other person, whether or not in the employ
of the Company, any right to be retained in the employ of the
Company, or to interfere with the right of the Company to discharge
an employee at any time or to treat him without any regard to the
effect which such treatment might have upon him as a Participant in
the Plan, or any right to any payment whatsoever, except to the
extent expressly provided for hereunder.
Section 14.4 Limit on Company Liability. No person shall
have any right or interest in the Trust Fund other than as provided
herein. All benefits under the Plan shall be paid or provided solely
from the Trust Fund and the Company assume no responsibility
therefor. Any final payment or final distribution to any Participant
or Beneficiary in accordance with the provisions of the Plan shall be
in full satisfaction of all claims against the Trust Fund, the
Trustee, the Committee, the Company, the Board and any fiduciary
with respect to the Plan or Trust. The Trustee or the Committee may
require any Participant or Beneficiary to execute a receipt and a
general release of any and all such claims upon a final payment or
final distribution, or a receipt to the extent of any partial payment
or partial distribution.
Section 14.5 Nondiversion of Assets. Notwithstanding
anything to the contrary contained in this Plan, or in any amendment
hereto, it shall be impossible, at any time prior to the satisfaction
of all liabilities with respect to the Participants or their
Beneficiaries under the Plan, for any part of the Trust Fund, other
than such part as is required to pay taxes and expenses of adminis-
tration of the Plan, to be used for, or diverted to, purposes other
than for the exclusive benefit of the Participants or their Benefici-
aries under the Plan; provided, however, that in the event that the
Committee shall certify that (i) any contribution has been made by
the Company by a mistake of fact, (ii) a contribution to the Trust
has been conditioned on qualification of the Plan under Section
401(a) of the Code and that such qualification has been denied or
(iii) a contribution has been conditioned upon the deductibility
thereof under Section 404 of the Code and that such deduction has
been disallowed, and shall direct the return of such contribution,
the Trustee shall return such contribution (or the value thereof if
lower than the amount of such contribution) to the Company in
accordance with such direction, but in no event shall any such return
be made other than prior to the expiration of one year following the
payment thereof in the case of a direction under (i) above, the
denial of qualification in the case of a direction under (ii) above,
or the disallowance of the deduction in the case of a direction under
(iii) above.
Section 14.6 Missing Participants and Beneficiaries. If a
Participant or any Beneficiary cannot be located after a reasonable
period of time but in any event prior to the date which such
Participant's or Beneficiary's benefit would escheat under the
applicable state law, such Participant's Stock Account or such
Beneficiary's interest shall be forfeited. If such Participant or
Beneficiary shall contact the Committee, the amount forfeited shall
be restored, to the extent possible, from forfeitures arising during
the then current Plan Year or otherwise by Company contributions
which shall be in addition to those provided for under Article III
and allocated to the restored account.
Section 14.7 Indemnification of Committee Members. The
Company shall indemnify each member of the Committee, each member of
the Board, and any employee of the Company to whom a fiduciary
responsibility with respect to the Plan is allocated or delegated
from and against all liabilities, costs and expenses (including
reasonable attorneys' fees) incurred by such person as a result of an
act, omission or conduct in connection with the performance of his
fiduciary duties, responsibilities and obligations under the Plan and
under ERISA, except with respect to liabilities and claims arising
from such person's own wilful misconduct or gross negligence. the
Company may obtain, pay for and maintain a policy or policies of
insurance, the proceeds of which may be used in satisfying their
obligations under this Section.
Section 14.8 Plan Headings. The headings in this Plan have
been inserted for convenience of reference only, and are to be
ignored in any construction of the provisions hereof.
Section 14.9 Number and Gender. In the construction of this
Plan, the masculine shall include the feminine and the singular the
plural, and vice versa, in all cases where such meanings would be
appropriate.
Section 14.10 Separability of Provisions. If any provision of
this Plan or the application of such provision to any person or
circumstance shall be held invalid, the remainder of this Plan (and
the application of such provision to any person or circumstance other
than the person or circumstance to which it is held invalid) shall
not be affected thereby.
Section 14.11 Interpretation of Provisions. The Company
intend this Plan and the Trust to be a qualified stock bonus plan
under Section 401(a) of the Code and to satisfy any applicable
requirement under ERISA. Accordingly, the Plan and Trust Agreement
shall be interpreted and applied in a manner consistent with this
intent, and to the extent not inconsistent therewith, in accordance
with the laws of the State of Oklahoma.
IN WITNESS WHEREOF, and as evidence of the adoption of
this Plan effective as of August 2, 1996 by the Company, it has
caused the same to be signed by its duly authorized officers this 2nd
day of August, 1996.
HOMELAND STORES, INC.
By:
ATTEST: