-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, g/Q7Ei2MUKlOu0AD0D2peP3nwDhbMuB/kpjS328t24CfQR/hweVUF/icp1XzA3u1 wgscvkOIxHDR54RE9GriBQ== 0000950144-95-000710.txt : 19950616 0000950144-95-000710.hdr.sgml : 19950616 ACCESSION NUMBER: 0000950144-95-000710 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950322 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENUINE PARTS CO CENTRAL INDEX KEY: 0000040987 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLE SUPPLIES & NEW PARTS [5013] IRS NUMBER: 580254510 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05690 FILM NUMBER: 95522308 BUSINESS ADDRESS: STREET 1: 2999 CIRCLE 75 PARKWAY CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 4049531700 MAIL ADDRESS: STREET 1: 2999 CIRCLE 75 PARKWAY CITY: ATLANTA STATE: GA ZIP: 30339 10-K 1 GENUINE PARTS 10-K 1 SECURITIES AND EXCHANGE COMMISSION ---------------------------------- Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required) --------- For the Fiscal Year Ended: Commission File No. 1-5690 December 31, 1994 GENUINE PARTS COMPANY --------------------- (Exact name of Registrant as specified in its Charter) GEORGIA 58-0254510 ------- ---------- (State of Incorporation) (IRS Employer Identification No.) 2999 Circle 75 Parkway 30339 Atlanta, Georgia (Zip Code) (Address of Principal Executive Offices) Registrant's telephone number, including area code: (404) 953-1700. Securities registered pursuant to Section 12(b) of the Act and the Exchange on which such securities are registered: COMMON STOCK, PAR VALUE, $1 PER SHARE NEW YORK STOCK EXCHANGE - ------------------------------------- ----------------------- Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES X . NO . ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the Registrant's Common Stock (based upon the closing sales price reported by the New York Stock Exchange and published in The Wall Street Journal on February 10, 1995) held by non-affiliates as of February 10, 1995 was approximately $ 4,317,450,279.00. The number of shares outstanding of Registrant's Common Stock, as of February 10, 1995: 122,635,533. Documents Incorporated by Reference: -Portions of the Annual Report to Shareholders for the fiscal year ended December 31, 1994, are incorporated by reference into Parts I and II. -Portions of the definitive proxy statement for the Annual Meeting of Shareholders to be held on April 17, 1995 are incorporated by reference into Part III. 2 PART I. ITEM I. BUSINESS. Genuine Parts Company, a Georgia corporation incorporated on May 7, 1928, is a service organization engaged in the distribution of automotive replacement parts, industrial replacement parts and office products. In 1994, business was conducted throughout most of the United States and in western Canada from more than 1200 operations. As used in this report, the "Company" refers to Genuine Parts Company and its subsidiaries, except as otherwise indicated by the context; and the terms "automotive parts" and "industrial parts" refer to replacement parts in each respective category. Recent Developments. Effective January 1, 1995, the Company combined its Des Moines and DeWitt, Iowa, automotive operations, with the surviving operation being the NAPA Des Moines Distribution Center. Industry Segment Data. The following table sets forth the net sales, operating profit and identifiable assets for the fiscal years 1994, 1993 and 1992 attributable to each of the Company's groups of products which the Company believes indicate segments of its business. Sales to unaffiliated customers are the same as net sales. The figures have been restated to give effect to the acquisition of Berry Bearing Company and affiliates on January 29, 1993, which was accounted for as a pooling of interests.
1994 1993 1992 ---- ---- ---- NET SALES (in thousands) --------- Automotive Parts $ 2,693,961 $ 2,485,267 $ 2,318,761 Industrial Parts 1,317,495 1,153,371 1,082,428 Office Products 846,959 745,656 615,562 --------- --------- --------- TOTAL NET SALES $ 4,858,415 $ 4,384,294 $ 4,016,751 ========= ========= ========= OPERATING PROFIT ---------------- Automotive Parts $ 304,164 $ 282,791 $ 262,422 Industrial Parts 111,822 96,727 87,493 Office Products 78,206 65,938 50,967 --------- --------- --------- TOTAL OPERATING PROFIT 494,192 445,456 400,882 Interest Expense (1,321) (1,584) (1,871) Corporate Expense (22,854) (20,405) (17,577) Equity in Income 7,224 4,452 2,513 Minority Interests (2,373) (2,090) (1,537) --------- --------- --------- INCOME BEFORE INCOME TAXES $ 474,868 $ 425,829 $ 382,410 ========= ========= ========= IDENTIFIABLE ASSETS ------------------- Automotive Parts $ 1,223,416 $ 1,152,148 $ 1,040,191 Industrial Parts 404,647 370,633 354,547 Office Products 308,817 283,479 228,802 --------- --------- --------- TOTAL IDENTIFIABLE ASSETS 1,936,880 1,806,260 1,623,540 Corporate Assets 5,950 6,731 27,333 Equity Investments 86,641 57,765 56,430 --------- --------- --------- TOTAL ASSETS $ 2,029,471 $ 1,870,756 $ 1,707,303 ========= ========= =========
For additional information regarding industry data, see Page 27 of Annual Report to Shareholders for 1994. The majority of the Company's revenue, profitability and identifiable assets are attributable to the Company's operations in the United States. Revenue, profitability and identifiable assets in Canada and Mexico are not material. For additional information regarding foreign operations, see "Note 1 of Notes to Consolidated Financial Statements" on Page 23 of Annual Report to -2- 3 Shareholders for 1994. Competition - General. The distribution business, which includes all segments of the Company's business, is highly competitive with the principal methods of competition being product quality, sufficiency of inventory, price and the ability to give the customer prompt and dependable service. The Company anticipates no decline in competition in any of its business segments in the foreseeable future. Employees. As of December 31, 1994, the Company employed approximately 21,285 persons. AUTOMOTIVE PARTS GROUP. The Automotive Parts Group, the largest division of the Company, distributes automotive replacement parts and accessory items. The Company is the largest member of the National Automotive Parts Association ("NAPA"), a voluntary trade association formed in 1925 to provide nationwide distribution of automotive parts. In addition to the more than 150,000 part numbers that are available, the Company, in conjunction with NAPA, offers complete inventory, accounting, cataloging, marketing, training and other programs in the automotive aftermarket. During 1994, the Company's Automotive Parts Group included NAPA automotive parts distribution centers and automotive parts stores ("auto parts stores" or "NAPA Auto Parts stores") owned in the United States by Genuine Parts Company and Davis & Wilmar, Inc., a wholly owned subsidiary; automotive parts distribution centers and auto parts stores in western Canada owned and operated by UAP/NAPA Automotive Western Partnership ("UAP/NAPA"), a general partnership in which a wholly owned subsidiary of Genuine Parts Company owns a 49% interest; auto parts stores in Alaska owned and operated by Parts, Incorporated, a wholly owned subsidiary of Genuine Parts Company; auto parts stores in the United States operated by corporations in which Genuine Parts Company owned a 51% interest; distribution centers owned by Balkamp, Inc., a majority-owned subsidiary; rebuilding plants owned by the Company and operated by its Rayloc division; and since October 1, 1994, automotive parts distribution centers in Mexico, owned and operated by Grupo Auto Todo, S.A. de C.V. ("Auto Todo"), a joint venture company in which a wholly owned subsidiary of Genuine Parts Company owns a 49% interest. On December 31, 1994, Davis & Wilmar, Inc. and Parts, Incorporated were merged into Genuine Parts Company and their existence as separate wholly owned subsidiaries ceased. The Company's NAPA automotive parts distribution centers distribute replacement parts (other than body parts) for substantially all motor vehicle makes and models in service in the United States, including imported vehicles, trucks, buses, motorcycles, recreational vehicles and farm vehicles. In addition, the Company distributes small engines and replacement parts for farm equipment and heavy duty equipment. The Company's inventories also include accessory items for such vehicles and equipment, and supply items used by a wide variety of customers in the automotive aftermarket, such as repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, industrial concerns and individuals who perform their own maintenance and parts installation. Although the Company's domestic automotive operations purchase from more than 150 different suppliers, approximately 81% of 1994 automotive inventories were purchased from 25 major suppliers. Since 1931, the Company has had return privileges with most of its suppliers which has protected the Company from inventory obsolescence. Distribution System. In 1994, Genuine Parts Company and its Davis & Wilmar, Inc. subsidiary, operated 65 domestic NAPA automotive parts distribution centers located in 37 states and 722 domestic company-owned NAPA Auto Parts stores located in 41 states. In addition, at December 31, 1994, Genuine Parts Company owned a 51% interest in 49 corporations which operated 65 auto parts stores in 28 states. In Canada, Genuine Parts Company Ltd., a wholly-owned subsidiary, owns a 49% interest in UAP/NAPA which operated 9 automotive parts distribution centers -3- 4 and 125 auto parts stores located in the provinces of Alberta, British Columbia, Manitoba and Saskatchewan and in the Yukon Territories. In addition, the Company has an approximate 23% interest in UAP Inc., a publicly traded Canadian corporation, that owns the other 51% interest in UAP/NAPA and further engages in the distribution of automotive parts primarily in eastern Canada. In Mexico, Auto Todo owns and operates 8 distribution centers. Auto Todo is not licensed to and does not use the NAPA(R) name in Mexico. The Company's investments in UAP/NAPA, UAP Inc. and Auto Todo are accounted for by the equity method of accounting. The Company's distribution centers serve approximately 5,100 independently owned NAPA Auto Parts stores located throughout the market areas served. NAPA Auto Parts stores, in turn, sell to a wide variety of customers in the automotive aftermarket. Collectively, these auto parts stores account for approximately 37% of the Company's total sales with no auto parts store or group of auto parts stores with individual or common ownership accounting for more than .37% of the Company's total sales. Products. Distribution centers carry approximately 150,000 different parts and related supply items. Each item is cataloged and numbered for identification and accessibility. Significant inventories are carried to provide for fast and frequent deliveries to customers. Most orders are filled and shipped the same day as received. The majority of sales are on terms which require payment within 30 days of the statement date. The Company does not manufacture any of the products it distributes. The majority of products are distributed under the NAPA(R) name, a mark licensed to the Company by the National Automotive Parts Association. Related Operations. A majority-owned subsidiary of Genuine Parts Company, Balkamp, Inc.("Balkamp"), distributes a wide variety of replacement parts and accessory items for passenger cars, heavy duty vehicles, motorcycles and farm equipment. In addition, Balkamp distributes service items such as testing equipment, lubricating equipment, gauges, cleaning supplies, chemicals and supply items used by repair shops, fleets, farms and institutions. Balkamp packages many of the approximately 20,000 part numbers which constitute the "Balkamp" line of products which are distributed to the members of the National Automotive Parts Association ("NAPA"). These products are categorized in 150 different product groups purchased from more than 600 suppliers. All Balkamp items are cataloged separately to provide single source convenience for NAPA customers. BALKAMP(R), a federally registered trademark owned by the National Automotive Parts Association and licensed to Balkamp, is important to the sales and marketing promotions of the Balkamp organization. Balkamp has three distribution centers located in Indianapolis, Indiana, Greenwood, Mississippi, and West Jordan, Utah. The Company, through its Rayloc division, also operates six plants where certain small automotive parts are rebuilt. These products are distributed to the members of NAPA under the name Rayloc(R). Rayloc(R) is a mark licensed to the Company by the National Automotive Parts Association. Segment Data. In the year ended December 31, 1994, sales from the Automotive Parts Group approximated 56% of the Company's net sales as compared to 57% in 1993 and 58% in 1992. Service to NAPA Auto Parts Stores. The Company believes that the quality and the range of services provided to its auto parts customers constitute a significant part of its automotive parts distribution system. Such services include fast and frequent delivery, obsolescence protection, parts cataloging (including the use of computerized NAPA Auto Parts catalogues) and stock adjustment through a continuing parts classification system which allows auto parts customers to return certain merchandise on a scheduled basis. The Company offers its NAPA Auto Parts store customers various management aids, marketing aids and service on topics such as inventory control, cost analysis, accounting procedures, group insurance and retirement benefit plans, marketing conferences and seminars, sales and advertising manuals and training programs. Point of sale/inventory management is available through TAMS(R) (Total Automotive Management Systems), a computer system designed and developed by the Company for the NAPA Auto Parts -4- 5 store. In association with NAPA, the Company has developed and refined an inventory classification system to determine optimum distribution center and auto parts store inventory levels for automotive parts stocking based on automotive registrations, usage rates, production figures, technological advances and other similar factors. This system, which undergoes continuous analytical review, is an integral part of the Company's inventory control procedures and comprises an important feature of the inventory management services which the Company makes available to its NAPA Auto Parts store customers. Over the last 10 years, losses to the Company from obsolescence have been insignificant, and the Company attributes this to the successful operation of its classification system. Competition. In the distribution of automotive parts, the Company competes with automobile manufacturers (some of which sell replacement parts for vehicles built by other manufacturers as well as those which they build themselves), automobile dealers, warehouse clubs and large automotive parts retail chains. In addition, the Company competes with the distributing outlets of parts manufacturers, oil companies, mass merchandisers, including the national retail chains, and with other parts distributors and jobbers. NAPA. The Company is a member of the National Automotive Parts Association, a voluntary association formed in 1925 to provide nationwide distribution of automotive replacement parts. NAPA, which neither buys nor sells automotive parts, functions as a trade association whose members currently operate 73 distribution centers located throughout the United States, 64 of which are owned and operated by the Company. NAPA develops marketing concepts and programs which may be used by its members. It is not involved in the chain of distribution. Among the automotive lines which each NAPA member purchases and distributes are certain lines designated, cataloged, advertised and promoted as "NAPA" lines. The members are not required to purchase any specific quantity of parts so designated and may, and do, purchase competitive lines from other supply sources. The Company and the other NAPA members use the federally registered trademark NAPA(R) as part of the trade name of their distribution centers and jobbing stores. The Company contributes to the Association's national advertising which is designed to increase public recognition of the "NAPA" name and to promote "NAPA" product lines. The Company is a party, together with other members of NAPA and NAPA itself, to a consent decree entered by the Federal District Court in Detroit, Michigan, on May 4, 1954. The consent decree enjoins certain practices under the federal antitrust laws, including the use of exclusive agreements with manufacturers of automotive parts, allocation or division of territories among several NAPA members, fixing of prices or terms of sale for such parts among such members, and agreements to adhere to any uniform policy in selecting parts customers or determining the number and location of, or arrangements with, auto parts customers. INDUSTRIAL PARTS GROUP The Industrial Parts Group distributes industrial replacement parts and related supplies. This Group distributes industrial bearings and fluid transmission equipment, including hydraulic and pneumatic products, material handling components, agricultural and irrigation equipment and their related supplies. In 1994, the Company distributed industrial parts in the United States through Motion Industries, Inc. ("Motion"), headquartered in Birmingham, Alabama, and Berry Bearing Company ("Berry Bearing") and its affiliates (the "Berry Companies"), headquartered in Chicago, Illinois. At December 31, 1994, the Berry Companies were merged into Berry Bearing. Motion and Berry Bearing are wholly owned subsidiaries of the Genuine Parts Company. In Canada, industrial parts are distributed by Oliver Industrial Supply Ltd., a wholly owned subsidiary of Genuine Parts Holdings Ltd., headquartered in Lethbridge, Alberta. Genuine Parts Holdings Ltd. is a wholly-owned subsidiary of the Company. As of December 31, 1994, the Group served more than 150,000 customers in -5- 6 all types of industries located throughout the United States, and in Canada, principally in the Provinces of Alberta, Manitoba and Saskatchewan. Distribution System. In the United States, the Industrial Parts Group operates 5 distribution centers, two re-distribution centers, 10 service centers for fluid power and special hose applications and over 310 branches. Distribution centers stock and distribute more than 200,000 different items purchased from over 250 different suppliers. The Group's re-distribution centers serve as collection points for excess inventory collected from its branches for re-distribution to those branches which need the inventory. Approximately 50% of 1994 total industrial purchases were made from 15 major suppliers. Sales are generated from the Group's branches located in 38 states, each of which has warehouse facilities, which stock significant amounts of inventory representative of the lines of products used by customers in the respective market area served. In Canada, Oliver Industrial Supply Ltd. ("Oliver") operates an industrial parts and agricultural supply distribution center for its seven branches serving the industrial and agricultural markets of Alberta, British Columbia, Manitoba and Saskatchewan in western Canada. In addition to industrial parts and agricultural supplies, Oliver distributes irrigation systems and related supplies. Products. The Industrial Parts Group distributes a wide variety of products to its customers, primarily industrial concerns, to maintain and operate plants, machinery and equipment. Products include such items as hoses, belts, bearings, pulleys, pumps, valves, chains, gears, sprockets, speed reducers and electric motors. The nature of this Group's business demands the maintenance of large inventories and the ability to provide prompt and demanding delivery requirements. Virtually all of the products distributed are installed by the customer. Most orders are filled immediately from existing stock and deliveries are normally made within 24 hours of receipt of order. The majority of all sales are on open account. Related Information. Non-exclusive distributor agreements are in effect with most of the Group's suppliers. The terms of these agreements vary; however, it has been the experience of the Group that the custom of the trade is to treat such agreements as continuing until breached by one party, or until terminated by mutual consent. Segment Data. In the year ended December 31, 1994, sales from the Company's Industrial Parts Group approximated 27% of the Company's net sales as compared to 26% in 1993 and 27% in 1992. Competition. The Industrial Parts Group competes with other distributors specializing in the distribution of such items, as well as with general line distributors. To a lesser extent, the Group competes with manufacturers that sell directly to the customer. OFFICE PRODUCTS GROUP The Office Products Group, through S. P. Richards Company ("S.P. Richards"), a wholly owned subsidiary of Genuine Parts Company headquartered in Atlanta, Georgia, is engaged in the wholesale distribution of a broad line of office products which are used in the daily operation of businesses, schools, offices and institutions. Office products fall into the general categories of computer supplies, office machines, general office supplies, and office furniture sold primarily under the Lesker Furniture name. Computer supplies include diskettes, printer supplies, printout paper and printout binders. Office furniture includes desks, credenzas, chairs, chair mats, partitions, files and computer furniture. Office machines include telephones, answering machines, calculators, typewriters, shredders and copiers. General office supplies include copier supplies, desk accessories, business forms, accounting supplies, binders, report covers, writing instruments, note -6- 7 pads, envelopes, secretarial supplies, mailroom supplies, filing supplies, art/drafting supplies and audio visual supplies. S. P. Richards distributes more than 18,000 items to over 7,000 office supply dealers from 41 distribution centers located in 28 states. The newest distribution center opened in Middletown, New York in March, 1994. Approximately 62% of 1994 total office products purchases were made from 14 major suppliers. S. P. Richards sells to qualified resellers of office products. Customers are offered comprehensive marketing programs which include flyers, other promotional material and personalized product catalogs. The marketing programs are supported by all S. P. Richards' distribution centers which stock all cataloged products and have the capability to provide overnight delivery. While many recognized brand-name items are carried in inventory, S.P. Richards also markets items produced for it under its own SPARCO(R) brand name, as well as its NATURE SAVER(R) brand of recycled products. Segment Data. In the year ended December 31, 1994, sales from the Company's Office Products Group approximated 17% of the Company's net sales as compared to 17% in 1993 and 15% in 1992. Competition. In the distribution of office supplies to retail dealers, S. P. Richards competes with many other wholesale distributors as well as with manufacturers of office products and large national retail chains. * * * * * * * * Executive Officers of the Company. The table below sets forth the name and age of each person deemed to be an executive officer of the Company as of February 20, 1995, the position or office held by each and the period during which each has served as such. Each executive officer is elected by the Board of Directors and serves at the pleasure of the Board of Directors until his successor has been elected and has qualified, or until his earlier death, resignation, removal, retirement or disqualification.
Year First Assumed Name Age Position of Office Position - ---- --- ------------------ ---------- Larry L. Prince 56 Chairman of the Board of Directors and Chief Executive Officer 1990/1989 Thomas C. Gallagher 47 President and Chief Operating Officer 1990 George W. Kalafut 61 Executive Vice President-Finance and Administration * 1991 John J. Scalley 64 Executive Vice President 1986 Keith M. Bealmear 48 Group Vice President 1994 Robert J. Breci 59 Group Vice President 1987 Albert T. Donnon, Jr 47 Group Vice President 1993 Louis W. Rice, Jr 68 Senior Vice President-Personnel 1981
* Also serves as the Company's Principal Financial Officer. All executive officers have been employed by and have served as officers of the Company for at least the last five years. ITEM 2. PROPERTIES. The Company's headquarters are located in one of two adjacent office buildings owned by Genuine Parts Company in Atlanta, Georgia. The Company's Automotive Parts Group currently operates 64 NAPA Distribution Centers in the United States distributed among nine geographic divisions. More than 90% of the distribution center properties are owned by the Company. At December 31, 1994, the Company owned 722 NAPA Auto Parts stores located in 41 -7- 8 states, and Genuine Parts Company owned a 51% interest in 65 auto parts store stores located in 28 states. Other than NAPA Auto Parts stores located within Company owned distribution centers, most of the auto parts stores were operated in leased facilities. In addition, UAP/NAPA, in which Genuine Parts Company owns a minority interest, operated 125 auto parts stores in Western Canada. The Company's Automotive Parts Group also operates three Balkamp distribution centers, six Rayloc rebuilding plants, two transfer and shipping facilities and a Rayloc warehouse. The Company's Industrial Parts Group, operating through Motion and Berry Bearing, operates 5 distribution centers, 2 re-distribution centers, 10 service centers and over 310 branches. Approximately 80% of these branches are operated in leased facilities. In addition, the Industrial Parts Group operates an industrial parts and agricultural supply distribution center in Western Canada for its 7 branches of which approximately 85% are operated in leased facilities. The Company's Office Products Group operates 41 distribution centers in the United States distributed among the Group's six geographic divisions. Approximately 75% of these distribution centers are operated in leased facilities. For additional information regarding rental expense on leased properties, see "Note 5 of Notes to Consolidated Financial Statements" on Page 24 of Annual Report to Shareholders for 1994. ITEM 3. LEGAL PROCEEDINGS. Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not Applicable. PART II. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK- HOLDER MATTERS. Information required by this item is set forth under the heading "Market and Dividend Information" on Page 18 of Annual Report to Shareholders for the year ended December 31, 1994, and is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA. Information required by this item is set forth under the heading "Selected Financial Data" on Page 18 of Annual Report to Shareholders for the year ended December 31, 1994, and is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS. Information required by this item is set forth under the heading "Management's Discussion and Analysis" on Page 26 of Annual Report to Shareholders for the year ended December 31, 1994, and is incorporated herein by reference. -8- 9 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Information required by this item is set forth in the consolidated financial statements on Pages 20 through 25 and Page 27, in "Report of Independent Auditors" on Page 19, and under the heading "Quarterly Results of Operations" on Page 27, of the Annual Report to Shareholders for the year ended December 31, 1994, and is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not Applicable. PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information required by this item is set forth on Pages 1 through 4, and Page 17 of the definitive proxy statement for the Company's Annual Meeting to be held on April 17, 1995, and is incorporated herein by reference. Certain information about Executive Officers of the Company is included in Item 1 of Part I of this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION. Information required by this item is set forth on Pages 4 and 5, and on Pages 7 through 17 of the definitive proxy statement for the Company's Annual Meeting to be held on April 17, 1995, and is incorporated herein by reference. In no event shall the information contained in the definitive proxy statement for the Company's 1995 Annual Meeting on Pages 9 through 11 under the heading "Compensation and Stock Option Committee Report on Executive Compensation" or on Pages 16 and 17 under the heading "Performance Graph" be incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required by this item is set forth on Pages 5 and 6 of the definitive proxy statement for the Company's Annual Meeting to be held on April 17, 1995, and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information required by this item is set forth on Page 17 of the definitive proxy statement for the Company's Annual Meeting to be held on April 17, 1995, and is incorporated herein by reference. PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K. (a) (1) and (2) The response to this portion of Item 14 is submitted as a separate section of this report. (3) The following Exhibits are filed as part of this report in Item 14(c): Exhibit 3.1 Restated Articles of Incorporation of the -9- 10 Company, dated as of April 18, 1988, and as amended April 17, 1989 and amendments to the Restated Articles of Incorporation of the Company, dated as of November 20, 1989 and April 18, 1994. Exhibit 3.2 By-laws of the Company, as amended. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 5, 1993). Exhibit 4.1 Shareholder Protection Rights Agreement, dated as of November 20, 1989, between the Company and Trust Company Bank, as Rights Agent. (Incorporated herein by reference from the Company's Report on Form 8-K, dated November 20, 1989). Exhibit 10.1 * Incentive Stock Option Plan. (Incorporated herein by reference from the Company's Annual Meeting Proxy Statement, dated March 12, 1982). Exhibit 10.2 * 1988 Stock Option Plan. (Incorporated herein by reference from the Company's Annual Meeting Proxy Statement, dated March 9, 1988). Exhibit 10.3 * Form of Amendment to Deferred Compensation Agreement, adopted February 13, 1989, between the Company and certain executive officers of the Company. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 15, 1989). Exhibit 10.4 * Form of Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company providing for a supplemental employee benefit upon a change in control of the Company. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 15, 1989). Exhibit 10.5 * Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1991. (Incorporated herein by reference from the Company's Annual Report on Form 10-K, dated March 8, 1991). Exhibit 10.6 * 1992 Stock Option and Incentive Plan, effective April 20, 1992. (Incorporated herein by reference from the Company's Annual Meeting Proxy Statement, dated March 6, 1992). -10- 11 Exhibit 10.7 * The Genuine Parts Company Restated Tax-Deferred Savings Plan, effective January 1, 1993. Exhibit 10.8 * Restricted Stock Agreement dated March 31, 1994, between the Company and Larry L. Prince. (Incorporated herein by reference from the Company's Form 10-Q, dated May 6, 1994). Exhibit 10.9 * Restricted Stock Agreement dated March 31, 1994, between the Company and Thomas C. Gallagher. (Incorporated herein by reference from the Company's Form 10-Q, dated May 6, 1994). Exhibit 10.10 * Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1995. Exhibit 10.11 * Genuine Partnership Plan, as amended and restated January 1, 1994. Exhibit 10.12 * Genuine Parts Company Pension Plan, as amended and restated effective January 1, 1989. * Indicates executive compensation plans and arrangements Exhibit 13 The following sections and pages of the 1994 Annual Report to Shareholders: - Selected Financial Data on Page 18 - Market and Dividend Information on Page 18 - Report of Independent Auditors on Page 19 - Consolidated Financial Statements and Notes to Consolidated Financial Statements on Pages 20 - 25 - Management's Discussion and Analysis on Page 26 - Industry Data Information on Page 27 - Quarterly Results of Operations on Page 27 Exhibit 21 Subsidiaries of the Company Exhibit 23 Consent of Independent Auditors Exhibit 27 Financial Data Schedule (for SEC purposes only) (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Registrant during the last quarter of the fiscal year. (c) Exhibits. The response to this portion of Item 14 is submitted as a separate section of this report. (d) Financial Statement Schedules. The response to this portion of Item -11- 12 14 is submitted as a separate section of this report. SIGNATURES. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. GENUINE PARTS COMPANY /s/ Larry L. Prince 3/3/95 /s/ George W. Kalafut 3/3/95 - ------------------------------------- ------------------------------------ Larry L. Prince (Date) George W. Kalafut (Date) Chairman of the Board Executive Vice President - and Chief Executive Officer Finance and Administration and Principal Financial and Accounting Officer -12- 13 Pursuant to the requirements of the Securities and Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. - ------------------------------------- ------------------------------------ James R. Courim (Date) William A. Parker (Date) Director Director /s/Bradley Currey, Jr. 2/20/95 /s/Larry L. Prince 2/20/95 - ------------------------------------- ------------------------------------ Bradley Currey, Jr (Date) Larry L. Prince (Date) Director Director Chairman of the Board and Chief Executive Officer /s/Jean Douville 2/20/95 /s/John J. Scalley 2/20/95 - ------------------------------------- ----------------------------------- Jean Douville (Date) John J. Scalley (Date) Director Director Chairman of the Board and Executive Vice President Chief Executive Officer UAP INC. /s/John B. Ellis 2/20/95 /s/Alana S. Shepherd 2/20/95 - ------------------------------------- ----------------------------------- John B. Ellis (Date) Alana S. Shepherd (Date) Director Director /s/Thomas C. Gallagher 2/20/95 /s/Lawrence G. Steiner 2/20/95 - ------------------------------------- ----------------------------------- Thomas C. Gallagher (Date) Lawrence G. Steiner (Date) Director Director President and Chief Operating Officer /s/E. Reginald Hancock 2/20/95 /s/James B. Williams 2/20/95 - ------------------------------------- ----------------------------------- E. Reginald Hancock (Date) James B. Williams (Date) Director Director /s/Gardner E. Larned 2/20/95 - ------------------------------------- Gardner E. Larned (Date) Director
-13- 14 Annual Report on Form 10-K Item 14(a)(1) and (2), (c) and (d) List of Financial Statements Certain Exhibits Year ended December 31, 1994 Genuine Parts Company Atlanta, Georgia 15 Form 10-K - Item 14(a)(1) and (2) Genuine Parts Company and Subsidiaries Index of Financial Statements The following consolidated financial statements of Genuine Parts Company and subsidiaries, included in the annual report of the registrant to its shareholders for the year ended December 31, 1994, are incorporated by reference in Item 8: Consolidated balance sheets - December 31, 1994 and 1993 Consolidated statements of income - Years ended December 31, 1994, 1993 and 1992 Consolidated statements of shareholders' equity - Years ended December 31, 1994, 1993 and 1992 Consolidated statements of cash flows - Years ended December 31, 1994, 1993 and 1992 Notes to consolidated financial statements - December 31, 1994 All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. 16 ANNUAL REPORT ON FORM 10-K ITEM 14(a)(3) LIST OF EXHIBITS The following Exhibits are filed as a part of this Report: 3.1 Restated Articles of Incorporation of the Company, dated as of April 18, 1988, and as amended April 17, 1989 and amendments to the Restated Articles of Incorporation of the Company, dated as of November 20, 1989 and April 18, 1994. 10.9* The Genuine Parts Company Restated Tax-Deferred Savings Plan, effective January 1, 1993 10.10* Amendment No. 2 to the Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1995. 10.11* Genuine Partnership Plan, as amended and restated January 1, 1994. 10.12* Genuine Parts Company Pension Plan, as amended and restated effective January 1, 1989. 13 The following Sections and Pages of Annual Report to Shareholders for 1994: - Selected Financial Data on Page 18 - Common Stock Market and Dividend Information on Page 18 - Report of Independent Auditors on Page 19 - Consolidated Financial Statements and Notes to Consolidated Financial Statements on Pages 20-25 - Management's Discussion and Analysis of Financial Condition and Results of Operations on Page 26 - Industry Data Information on Page 27 - Quarterly Results of Operations on Page 27 21 Subsidiaries of the Company 23 Consent of Independent Auditors 27 Financial Data Schedule (for SEC use only) The following Exhibits are incorporated by reference as set forth in Item 14 on pages 9 through 11 of this Form 10-K: - 3.2 By-laws of the Company, as amended. - 4.1 Shareholder Protection Rights Agreement, dated as of November 20, 1989, between the Company and Trust Company Bank, as Rights Agent. - 10.1* Incentive Stock Option Plan. - 10.2* 1988 Stock Option Plan. - 10.3* Form of Amendment to Deferred Compensation Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company. - 10.4* Form of Agreement adopted February 13, 1989, between the Company and certain executive officers of the Company providing for a supplemental employee benefit upon a change in control of the Company. - 10.5* Genuine Parts Company Supplemental Retirement Plan, effective January 1, 1991. - 10.6* 1992 Stock Option and Incentive Plan, effective April 20, 1992. - 10.7* Restricted Stock Agreement dated March 31, 1994, between the Company and Larry L. Prince. - 10.8* Restricted Stock Agreement dated March 31, 1994, between the Company and Thomas C. Gallagher. * Indicates executive compensation plans and arrangements EX-3.1 2 ARTICLES OF AMENDMENT 1 EXHIBIT 3.1 ARTICLES OF AMENDMENT OF GENUINE PARTS COMPANY 1. The name of the corporation is Genuine Parts Company (the "Corporation"). 2. The Restated Articles of Incorporation of the Corporation, as previously amended, are hereby further amended by deleting Paragraph A of Article Four in its entirety and replacing it with the following: "A. The total number of shares of capital stock which the corporation shall have authority to issue is Four Hundred Sixty Million (460,000,000), of which Four Hundred Fifty Million (450,000,000) shares shall be common stock of the par value of $1 per share (hereinafter called the "common stock") and Ten Million (10,000,000) shares shall be preferred stock of the par value of $1 per share (hereinafter called the "preferred stock")." 3. The foregoing Amendment was adopted by the shareholders of the Corporation on April 18, 1994 in accordance with the provisions of Code Section 14-2-1003. IN WITNESS WHEREOF, the undersigned has caused these Articles of Amendment to be executed this 18th day of April, 1994. GENUINE PARTS COMPANY By: /s/ Larry L. Prince ------------------------------------- Larry L. Prince, Chairman of the Board and Chief Executive Officer ATTEST: /s/ Brainard T. Webb, Jr. - --------------------------------- Brainard T. Webb, Jr., Secretary [Corporate Seal] 2 ARTICLES OF AMENDMENT OF GENUINE PARTS COMPANY IN ACCORDANCE WITH SECTION 14-2-602(d) OF THE GEORGIA BUSINESS CORPORATION CODE Pursuant to Section 14-2-602(d) of the Georgia Business Corporation Code, Genuine Parts Company, a Georgia corporation (the "Corporation") delivers these Articles of Amendment relating to the establishment, as authorized by its Amended and Restated Articles of Incorporation, of the Series A Junior Participating Preferred Stock of the Corporation to the Secretary of State of Georgia for filing. I. The name of the Corporation is Genuine Parts Company. II. A copy of the resolution of the Board of Directors of the Corporation establishing and designating the Series A Junior Participating Preferred Stock of the Corporation, and fixing and determining the relative rights and preferences thereof, is attached hereto as Exhibit A. III. The resolution attached hereto as Exhibit A was adopted on November 20, 1989. IV. The resolution attached hereto as Exhibit A was duly adopted by the Board of Directors of the Corporation. IN WITNESS WHEREOF, Genuine Parts Company has caused these Articles of Amendment to be executed and its corporate seal to be affixed and has caused its seal and the execution hereof to be attested, all by its duly authorized officers, this 20th day of November, 1989. GENUINE PARTS COMPANY (CORPORATE SEAL) Attest: By: /s/ Edward M. Jones ------------------------ Edward M. Jones Vice Chairman of the Board By: /s/ Brainard T. Webb, Jr. ----------------------------- Brainard T. Webb, Jr. (SEAL) Secretary CERTIFICATE THIS DOCUMENT RECEIVED AND FILED IN THE OFFICE OF THE SECRETARY OF STATE BY: /s/ T. McAlister ----------------------- DATE: 11-20-89 --------------------- TRANSACTION# 89324633,637 -------------- CHARTER# 8505042 ------------------ 3 EXHIBIT A RESOLUTION ADOPTED AT A MEETING OF BOARD OF DIRECTORS OF GENUINE PARTS COMPANY HELD ON NOVEMBER 20, 1989 RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation by Article Four of its Amended and Restated Articles of Incorporation, and in accordance with the provisions of Section 14-2-602 of the Georgia Business Corporation Code, the Board of Directors does hereby create, authorize and provide for the issuance of a series of preferred stock, par value $1.00 per share, of the Corporation, having the following voting powers, designation, preferences and relative, participating, optional and other special rights, and qualifications, limitations and restrictions in addition to those set forth in such Article Four: Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Junior Participating Preferred Stock" and the number of shares constituting such series shall be 2,000,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Junior Participating Preferred Stock to a number less than the sum of (i) the quotient obtained by dividing (1) the number of shares of common stock, par value $1.00 per share, of the Corporation (the "Common Stock") then outstanding plus the number of shares of Common Stock reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into shares of Common Stock, by (2) 100, and (ii) the number of shares of Series A Junior Participating Preferred Stock then outstanding plus the number of shares of Series A Junior Participating Preferred Stock reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into shares of Series A Junior Participating Preferred Stock. Section 2. Dividend and Distributions. (A) Subject to the prior and superior rights of the holders of any shares of any other series of Preferred Stock (or any similar stock) ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, each holder of one one-hundredth (1/100) of a share (a "Unit") of Series A Junior Participating Preferred Stock, in preference to the holders of Common Stock of the Corporation, and of any other junior stock, shall be entitled to receive, when as and if declared by the Board of Directors out of funds legally available for that purpose (i) quarterly dividends payable in cash on the first day of January, April, July and October in each year (each such date being a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of such Unit of A-1 4 Series A Junior Participating Preferred Stock, in an amount per Unit (rounded to the nearest cent) equal to the greater of (a) $0.01 or (b) subject to the provision for adjustment hereinafter set forth, the aggregate per share amount of all cash dividends declared on shares of Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of a Unit of Series A Junior Participating Preferred Stock, and (ii) subject to the provision for adjustment hereinafter set forth, quarterly distributions (payable in kind) on each Quarterly Dividend Payment Date in an amount per Unit equal to the aggregate per share amount of all non-cash dividends or other distributions (other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock, by reclassification or otherwise) declared on shares of Common Stock since the immediately preceding Quarterly Dividend Payment Date, or with respect to the first Quarterly Dividend Payment Date, since the first issuance of a Unit of Series A Junior Participating Preferred Stock. In the event that the Corporation shall at any time after November 30, 1989 (the "Rights Declaration Date") (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock (ii) subdivide outstanding shares of Common Stock or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case the amount to which the holder of a Unit of Series A Junior Participating Preferred Stock was entitled immediately prior to such event pursuant to the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution of Units of Series A Junior Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the shares of Common Stock (other than a dividend payable in shares of Common Stock); provided, however, that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $0.01 per Unit on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and shall be cumulative on each outstanding Unit of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issuance of such Unit of Series A Junior Participating Preferred Stock, unless the date of issuance of such Unit is prior to the record date for the first Quarterly Dividend Payment Date, in which case, dividends on such unit shall begin to accrue from the date of issuance of such Unit, or unless the date of issuance is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of Units of Series A Junior Participating A-2 5 Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on Units of Series A Junior Participating Preferred Stock in an amount less than the aggregate amount of all such dividends at the time accrued and payable on such Units shall be allocated pro rata on a unit-by-unit basis among all Units of Series A Junior Participating Preferred Stock at the time outstanding. The Board of Directors may fix a record date for the determination of holders of Units of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of Units of Series A Junior Participating Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each Unit of Series A Junior Participating Preferred Stock shall entitle the holder thereof to one vote on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock or (iii) combine the outstanding shares of Common Stock into a smaller number of shares, then in each such case the number of votes per Unit to which holders of Units of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which shall be the number of shares of Common Stock outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein or by law, the holders of Units of Series A Junior Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. (C) (i) If at any time dividends on any Units of Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, then during the period (a "default period") from the occurrence of such event until such time as all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all Units of Series A Junior Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment, all holders of Units of Series A Junior Participating Preferred Stock, voting separately as a class, shall have the right to elect two Directors. A-3 6 (ii) During any default period, such voting rights of the holders of Units of Series A Junior Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of shareholders, and thereafter at annual meetings of shareholders, provided that neither such voting rights nor any right of the holders of Units of Series A Junior Participating Preferred Stock to increase, in certain cases, the authorized number of Directors may be exercised at any meeting unless one-third of the outstanding Units of Series A Junior Participating Preferred Stock shall be present at such meeting in person or by proxy. The absence of a quorum of the holders of the Common Stock shall not affect the exercise by the holders of Units of Series A Junior Participating Preferred Stock of such rights. At any meeting at which the holders of Units of Series A Junior Participating Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting separately as a class, to elect Directors to fill up to two vacancies in the Board of Directors, if any such vacancies may then exist, or, if such right is exercised at an annual meeting, to elect two directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Series A Junior Participating Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of Units of Series A Junior Participating Preferred Stock shall have exercised their right to elect Directors during any default period, the number of Directors shall not be increased or decreased except as approved by a vote of the holders of Units of Series A Junior Participating Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to the Series A Junior Participating Preferred Stock. (iii) Unless the holders of Series A Junior Participating Preferred Stock shall, during any existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any shareholder or shareholders owning in the aggregate not less than 25% of the total number of Units of Series A Junior Participating Preferred Stock outstanding may request in writing, the calling of a special meeting of the holders of Units of Series A Junior Participating Preferred Stock, which meeting shall thereupon be called by the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Units of Series A Junior Participating Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of this notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than ten days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any shareholder or shareholders owning in the aggregate not less than 25% of the total number of outstanding Units of Series A Junior Participating Preferred Stock. A-4 7 (iv) During any default period, the holders of shares of Common Stock and Units of Series A Junior Participating Preferred Stock, and other classes or series of stock of the Corporation, if applicable, shall continue to be entitled to elect all the Directors until the holders of Units of Series A Junior Participating Preferred Stock shall have exercised their right to elect two Directors voting as a separate class, after the exercise of which right (x) the Directors so elected by the holders of Units of Series A Junior Participating Preferred Stock continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of capital stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of capital stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of Units of Series A Junior Participating Preferred Stock as a separate class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Units of Series A Junior Participating Preferred Stock as a separate class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the Articles of Incorporation or bylaws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the Articles of Incorporation or bylaws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors. (vi) The provisions of this paragraph (C) shall govern the election of Directors by holders of Units of Series A Junior Participating Preferred Stock during any default period notwithstanding any provisions of the Articles of Incorporation to the contrary. (D) Except as set forth herein, holders of Units of Series A Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Shares of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on Units of Series A Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on outstanding Units of Series A Junior Participating Preferred Stock shall have been paid in full, the Corporation shall not: A-5 8 (i) declare or pay dividends on, or make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of junior stock; (ii) declare or pay dividends on or make any other distributions on any shares of parity stock, except dividends paid ratably on Units of Series A Junior Participating Preferred Stock and shares of all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of such Units and all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any parity stock, provided, however, that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any junior stock; or (iv) purchase or otherwise acquire for consideration any Units of Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such Units. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any Units of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled automatically upon the acquisition thereof. All such Units shall, upon their cancellation, become authorized but unissued shares (with each Unit being equal to one-hundredth of a share) of preferred stock and may be reissued as part of a new series of preferred stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, no distribution shall be made (i) to the holders of shares of junior stock unless the holders of Units of Series A Junior Participating Preferred Stock shall have received, subject to adjustment as hereinafter provided in paragraph (B), the greater of either (a) $.01 per Unit plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not earned or declared, to the date of such payment, or (b) the amount per Unit equal to the aggregate per share amount to be distributed to holders of shares of parity stock, unless simultaneously therewith A-6 9 distributions are made ratably on Units of Series A Junior Participating Preferred Stock and all other shares of such parity stock in proportion to the total amounts to which the holders of Units of Series A Junior Participating Preferred Stock are entitled under clause (i)(a) of this sentence and to which the holders of shares of such parity stock are entitled, in each case upon such liquidation, dissolution or winding up. (B) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on the outstanding shares of Common Stock payable in shares of Common Stock, or (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case the aggregate amount to which holders of Units of Series A Junior Participating Preferred Stock were entitled immediately prior to such event pursuant to clause (i)(b) of paragraph (A) of this Section 6 shall be adjusted by multiplying such amount by a fraction the number of which shall be the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination, statutory share exchange or other transaction in which the shares of Common Stock are exchanged for or converted into other stock or securities, cash and/or any other property, then in any such case Units of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged for or converted into an amount per Unit (subject to the provision for adjustment hereinafter set forth) equal to the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is converted or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the immediately preceding sentence with respect to the exchange or conversion of Units of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. Redemption. The Units of Series A Junior Participating Preferred Stock shall not be redeemable. Section 9. Ranking. The Units of Series A Junior Participating Preferred Stock shall rank junior, as to the payment of dividends and the distribution of assets, to all series of the Corporation's preferred stock that hereafter may be issued, unless the terms of any such series shall provide otherwise. A-7 10 Section 10. Amendment. The Articles of Incorporation, including, without limitation, this resolution, shall not hereafter be amended, either directly or indirectly, or through merger, statutory share exchange or consolidation with another corporation, in any manner that would alter or change the powers, preferences or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more the outstanding Units of Series A Junior Participating Preferred Stock, voting separately as a class. Section 11. Fractional Shares. The Series A Junior Participating Preferred Stock may be issued in Units or other fractions of a share, which Units or fractions shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock. A-8 11 (SEAL) CERTIFICATE THIS DOCUMENT RECEIVED AND FILED IN THE OFFICE OF THE SECRETARY OF STATE BY: /s/ Sandra Show ---------------------- DATE: 4/18/89 -------------------- TRANSACTION# 89110087 ------------ CHARTER# 8505042 ---------------- ARTICLES OF AMENDMENT OF GENUINE PARTS COMPANY ONE The name of the Corporation is Genuine Parts Company. TWO A new Article Nine to the Articles of Incorporation is hereby added as follows: ARTICLE NINE Classification of the Board of Directors 9.1 Number of Directors. The number of directors of the corporation shall be not less than nine or more than fifteen. The exact number of directors shall be determined within such minimum and maximum by resolution of the shareholders from time to time adopted by the affirmative vote of the majority of the shares represented at a meeting of shareholders and entitled to vote on the subject matter; provided, however, if the Georgia Business Corporation Code hereafter is amended to provide that the exact number within such minimum and maximum may be fixed or changed from time to time by the Board of Directors of the corporation, then thereafter the exact number within such minimum and maximum shall be fixed or changed from time to time solely by a resolution adopted by an affirmative vote of at least two-thirds (2/3) of the total number of directors then in office. It is anticipated that the Georgia Business Corporation Code will be amended effective July 1, 1989 to so provide that the exact number of such directors within such minimum and maximum may be fixed from time to time by the Board of Directors; therefore, effective immediately upon the effective date of such anticipated amendment, this Article 9.1 shall be deemed amended to provide that the exact number of directors within the minimum and maximum shall be fixed or changed from time to time solely by a resolution adopted by an affirmative vote of at least two-thirds (2/3) of the total number of directors then in office. 12 9.2 Classification, Terms and Election of Directors. The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. At the 1989 Annual Meeting of Shareholders, Class I directors shall be elected for a one-year term, Class II directors for a two-year term and Class III directors for a three-year term. At each succeeding annual meeting of shareholders, commencing in 1990, successors to the class of directors whose term expires at the annual meeting shall be elected or reelected for a three-year term. Except as provided in Article 9.4, a director shall be elected by the affirmative vote of a majority of the shares of the class of stock represented at the annual meeting of shareholders for which the director stands for election and entitled to elect such director. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible. In no case shall a decrease in the number of directors have the effect of shortening the term of an incumbent director. If the number of directors is increased, and any newly created directorships are filled by the Board, there shall be no classification of additional directors elected by the Board until the next meeting of the shareholders called for the purpose of electing directors. Each director shall serve until his successor is elected and qualified or until his earlier resignation, retirement, disqualification, removal from office or death. 9.3 Removal. The entire Board of Directors or any individual director may be removed from office with or without cause by the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares of Voting Stock (as defined in Article Six), excluding from the number of shares deemed to be outstanding at the time of such vote and from such vote on the removal action, all outstanding shares of Voting Stock held by a Related Person (as defined in Article Six) on the record date for the meeting at which such action is submitted to the shareholders for their approval. If the Georgia Business Corporation Code hereafter is amended to provide that these amended and Restated Articles - 2 - 13 of Incorporation may be further amended to provide that a director may be removed only for cause, then thereafter the reference above to removal from office "with or without cause" shall be amended to refer to removal from office "only for cause". It is anticipated that the Georgia Business Corporation Code will be amended effective July 1, 1989 to provide that, unless the shareholders have so specified in a corporation's articles of incorporation or bylaws, if the directors have staggered terms, they may be removed only for cause; therefore, effective immediately upon the effective date of such anticipated amendment, this Article 9.3 shall be deemed amended to provide that a director may be removed from office only for cause and only by the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares of Voting Stock, excluding shares of Voting Stock held by a Related Person. Removal action may be taken at any shareholders' meeting with respect to which notice of such purpose has been given, and a removed director's successor may be elected at the same meeting to serve the unexpired term. 9.4 Vacancies. A vacancy occurring on the Board of Directors, however occurring, whether by increase in the number of directors, death, resignation, retirement, disqualification, removal from office or otherwise, may be filled, until the next election of directors by the shareholders, by the affirmative vote of at least two-thirds (2/3) of the total number of directors then remaining in office, though they constitute less than a quorum of the Board of Directors. 9.5 Election of Directors by Holders of Preferred Stock. Notwithstanding any of the foregoing provisions in this Article Nine, whenever the holders of any one or more classes of preferred stock or series thereof issued by the corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of shareholders, the number of such directors, and the election, term of office, filling of vacancies and other features of each such directorship, shall be governed by the terms of these Amended and Restated Articles of Incorporation and any Preferred Stock Designation (as defined in Article Six) applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article Nine. - 3 - 14 9.6 Amendment or Repeal. Notwithstanding any other provisions of these Amended and Restated Articles of Incorporation or the Bylaws of the corporation or any provision of any law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series or Voting Stock required by law, these Amended and Restated Articles of Incorporation or any Preferred Stock Designation, the provisions set forth in this Article Nine may not be repealed or amended in any respect unless such action is approved by the affirmative vote of the holders of not less than two-thirds (2/3) of the outstanding shares of the Voting Stock of the corporation, excluding shares held by a Related Person on the record date for the meeting at which such action is submitted to the shareholders for their consideration. THREE The foregoing Amendment was adopted by the shareholders of the Corporation on April 17, 1989. FOUR The affirmative vote of the holders of 38,697,249 shares of the outstanding common stock was required to adopt the foregoing Amendment. On April 17, 1989, the date of submission of the foregoing Amendment to the shareholders, 77,394,497 shares of common stock were outstanding and entitled to vote thereon. The foregoing Amendment was adopted by the affirmative vote of the holders of 40,324,501 shares of the common stock of Genuine Parts Company. IN WITNESS WHEREOF, the undersigned has caused these - 4 - 15 Articles of Amendment to be duly executed this 17th day of April, 1989. By: /s/ Wilton D. Looney ------------------------- Wilton D. Looney Chairman of the Board Attest: /s/ Brainard T. Webb, Jr. - ------------------------------ Brainard T. Webb, Jr. Secretary (CORPORATE SEAL) - 5 - 16 AMENDED AND RESTATED -------------------- ARTICLES OF INCORPORATION ------------------------- OF -- GENUINE PARTS COMPANY --------------------- ARTICLE ONE ----------- Name ---- The name of the corporation is "Genuine Parts Company." ARTICLE TWO ----------- Governing Law ------------- The corporation is organized pursuant to the provisions of the Georgia Business Corporation Code. ARTICLE THREE ------------- Purpose ------- The corporation is organized as a corporation for profit for any lawful purpose not specifically prohibited to corporations under the applicable laws of the State of Georgia, including but not limited to the buying, selling, importing or exporting, manufacturing, machining, assembling, rebuilding and repairing gears, transmissions, pistons, rings, axles, brakes, and other parts and accessories, contrivances, devices, machinery and equipment for automobiles, trucks, motorcycles, motor boats, aircraft, ships, engines, and other vehicles, and machinery, devices and equipment for the repair of same, and all goods, materials, wares and merchandise which may in anyways appertain thereto or which may be used in connection with the foregoing articles, and generally to conduct a parts, accessory, machine shop and automotive business in all its branches as manufacturer, wholesaler, warehouseman, distributor, jobber, broker, importer, agent, retailer, or otherwise and shall be authorized in connection therewith to engage in any lawful business, act or activity. 17 ARTICLE FOUR ------------ Authorized Shares ----------------- A. The total number of shares of capital stock which the corporation shall have authority to issue is One Hundred Sixty Million (160,000,000), of which One Hundred Fifty Million (150,000,000) shall be common stock of the par value of $1 per share (hereinafter called the "common stock") and Ten Million (10,000,000) shall be preferred stock of the par value of $1 per share (hereinafter called the "preferred stock"). B. The preferred stock may be issued from time to time by the corporation in one or more series, with such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issue of such stock adopted by the board of directors of the corporation pursuant to authority to do so which is hereby vested in the board of directors. Each such series of preferred stock shall be distinctly designated. Except in respect of the particulars fixed by the board of directors for each series as permitted hereby, all shares of preferred stock so designated by the board of directors shall be alike in every particular, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall be cumulative. The voting rights, if any, of each such series and the preferences and relative, participating, optional and other special rights of each such series and the qualifications, limitations and restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and the board of directors of the corporation is hereby expressly granted authority to fix, by resolutions duly adopted prior to the issuance of any shares of a particular series of preferred stock so designated by the board of directors, the voting powers of stock of such series, if any, and the designations, preferences and relative, participating, optional and other special rights and the qualifications, limitations and restrictions thereof, if any, for such series, including without limitation the following: (1) The distinctive designation of and the number of shares of preferred stock which shall constitute such series; provided that such number may be increased (except where otherwise provided by the board of directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the board of directors; (2) The rate and time at which, and the terms and conditions upon which, dividends, if any, on preferred stock of such series shall be paid, the extent of the preference or relation, if any, of such dividends to the dividends payable on any other series of preferred stock or any other class of stock of the corporation and whether such dividends shall be cumulative or non-cumulative. - 2 - 18 (3) The right, if any, of the holders of preferred stock of such series to convert the same into, or exchange the same for, shares of any other class of stock or any series of any class of stock of the corporation and the terms and conditions of such conversion or exchange; (4) Whether or not preferred stock of such series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and conditions upon which, preferred stock of such series may be redeemed; (5) The rights, if any, of the holders of preferred stock of such series upon the voluntary or involuntary liquidation of the corporation; (6) The terms of the sinking fund or redemption or purchase account, if any, to be provided for the preferred stock of such series; and (7) The voting powers, if any, of the holders of such series of preferred stock which may, without limiting the generality of the foregoing, include the right, voting as a series by itself or together with any other series of the preferred stock as a class, (i) to vote more or less than one vote per share on any or all matters voted upon by the shareholders and (ii) to elect one or more directors of the corporation if there has been a default in the payment of dividends on any one or more series of the preferred stock or under other circumstances and upon such other conditions as the board of directors may fix. C. Except as otherwise provided in these Amended and Restated Articles of Incorporation, the board of directors shall have authority to authorize the issuance, from time to time, without any vote or other action by the shareholders, of any or all shares of stock of the corporation of any class or series at any time authorized, and any securities convertible into or exchangeable for any such shares, and any options, rights or warrants to purchase or acquire any such shares, in each case to such persons and on such terms (including as a dividend or distribution on or with respect to, or in connection with a split or combination of, the outstanding shares of stock of the same or any other class or series) as the board of directors from time to time in its discretion lawfully may determine; provided, that the consideration for the issuance of shares of stock of the corporation (unless issued as such a dividend or distribution or in connection with such a split or combination) shall not be less than the par value of such shares. Shares so issued shall be fully paid stock, and the holders of such stock shall not be liable to any further call or assessments thereon. - 3 - 19 ARTICLE FIVE ------------ Preemptive Rights ----------------- None of the holders of shares of any class of stock of the corporation shall be entitled as a matter of right to purchase, subscribe for or otherwise acquire any new or additional shares of stock of the corporation of any class now or hereafter authorized, or any options or warrants to purchase, subscribe for or otherwise acquire any new or additional shares of stock of the corporation of any class now or hereafter authorized, or any shares, evidences of indebtedness, or any other securities convertible into or carrying options or warrants to purchase, subscribe for or otherwise acquire any new or additional shares. ARTICLE SIX ----------- Business Combinations --------------------- The shareholders vote required to approve Business Combinations (as hereinafter defined) shall be as set forth in this Article Six. (A) Notwithstanding any other provisions of these Amended and Restated Articles of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote and in addition to any affirmative vote required of the holders of any particular class or series of "Voting Stock" (as hereinafter defined) by law, these Amended and Restated Articles of Incorporation or any Preferred Stock Designation (as hereinafter defined), the affirmative vote of the holders of not less than two-thirds (2/3) of the outstanding shares of Voting Stock of the corporation, which shall include the affirmative vote of at least fifty percent (50%) of the outstanding shares of Voting Stock held by shareholders other than the "Related Person" (as hereinafter defined), shall be required for the approval or authorization of any Business Combination; provided, however, that the two-thirds (2/3) and fifty percent (50%) voting requirements shall not be required, and such Business Combination shall require only such affirmative vote as is required by law and any other provision of these Amended and Restated Articles of Incorporation if: (1) The Business Combination was approved by the Board of Directors of the corporation either (a) prior to the date that such Related Person became the Beneficial Owner (as hereinafter defined) of ten percent (10%) or more of the outstanding shares of the Voting Stock of the corporation; or - 4 - 20 (b) after such date, but only so long as such Related Person has sought and obtained the approval of the Board of Directors; provided, however, that such approval shall only be effective if at least two thirds (2/3) of the directors are Continuing Directors (as hereinafter defined); or (2) All of the following conditions are satisfied: (a) the Business Combination involves a merger or consolidation of the corporation and the consideration to be received per share by holders of Voting Stock in such Business Combination shall be either cash, or if the Related Person shall have acquired the majority of its holdings of the corporation's Voting Stock for a form of consideration other than cash, in the same form of consideration as the Related Person acquired such majority; and (b) the cash or Fair Market Value (as hereinafter defined) of the property, securities or Other Consideration to be Received (as hereinafter defined) per share by holders of common stock of the corporation shall have a Fair Market Value (as adjusted for stock splits, stock dividends, reclassifications of shares into a lesser number of shares and similar events) which is not less than the greater of (i) the highest per share price (including brokerage commissions, soliciting dealers' fees and transfer taxes) paid by such Related Person in acquiring any of its holdings of the corporation's common stock or (ii) an amount which bears the same or greater percentage relationship to the Fair Market Value of the corporation's common stock on the date of the first public announcement of such Business Combination as the highest per share price determined in (b)(i) above bears to the Fair Market Value of the corporation's common stock on the date on which the Related Person first became a Related Person; or (iii) the earnings per share of common stock of the corporation for the four consecutive quarters immediately preceding the Announcement Date, multiplied by the higher of the then price earnings multiple (if any) of such Related Shareholder or the highest price earnings multiple of the corporation during the two years immediately preceding the Announcement Date; and - 5 - 21 (c) if applicable, the cash or Fair Market Value of the property, securities or Other Consideration to be Received per share by holders of shares of any class of outstanding Voting Stock, other than common stock, shall have a Fair Market Value (as adjusted for stock splits,stock dividends, reclassifications of shares into a lesser number of shares and similar events) which is not less than the greatest of (i) the highest per share price (including brokerage commissions, soliciting dealers' fees and transfer taxes) paid by such Related Person in acquiring any of its holdings of such class of Voting Stock during the two year period immediately prior to the date of the first public announcement of such Business Combination; or (ii) if applicable, an amount which bears the same or greater percentage relationship to the Fair Market Value of such class of Voting Stock on the date of the first public announcement of such Business Combination as the highest per share price determined in (c)(i) above bears to the Fair Market Value of such Voting Stock on the date on which the Related Person first became a Related Person; or (iii) if applicable, the highest preferential amount per share to which holders of such class of Voting Stock would be entitled in the event of voluntary or involuntary liquidation of the corporation; and (d) after such Related Person has become a Related Person and prior to the consummation of such Business Combination, (i) there shall have been (aa) no failure to declare and pay at the regular date therefor any quarterly dividends (whether or not cumulative) on any outstanding preferred stock, and (bb) no reduction in the annual rate of dividends paid on common stock (after giving effect to any reclassification, including any reverse stock split, recapitalization, reorganization or similar transaction which has the effect of enlarging or reducing the number of outstanding shares of common stock) unless such reduction has been approved by the Board of Directors, at least two-thirds (2/3) of the members of which are Continuing Directors, (ii) such Related Person shall not have become the "Beneficial Owner" of any additional shares of Voting Stock of the corporation, except as part of the transaction which resulted in such Related Person becoming a Related Person or upon conversion of convertible securities acquired by it prior to becoming a Related Person or as a result of a pro rata stock dividend or stock split, and (iii) such Related Person shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges - 6 - 22 or other financial assistance or tax credits or other tax advantages provided by the corporation or any Subsidiary (as hereinafter defined); and (e) a proxy statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules and regulations), whether or not the corporation is then subject to such requirements, shall be mailed at least thirty (30) days prior to the consummation of such Business Combination to the public shareholders of the corporation for the purpose of soliciting shareholders approval of such Business Combination and shall contain at the front thereof in a prominent place (i) any recommendations as to the advisability (or inadvisability) of the Business Combination which the Continuing Directors, if any, may choose to state, and (ii) the opinion of a reputable national investment banking firm as to the fairness (or not) of such Business Combination from the financial point of view of the remaining public shareholders of the corporation (such investment banking firm to be engaged solely on behalf of the remaining public shareholders, to be paid a reasonable fee for their services by the corporation upon receipt of such opinion, to be one of the so-called major bracket investment banking firms which has not previously been associated with such Related Person, and, if there are at the time any such directors, to be selected by a majority of the Continuing Directors). (B) For Purposes of this Article Six: (1) the term "Business Combination" shall mean (a) any merger or consolidation of the corporation or any Subsidiary with or into a Related Person or any merger or consolidation of a Related Person with or into the corporation or any Subsidiary, (b) any sale, lease, exchange, transfer or other disposition (in either one transaction or in a series of related transactions) including, without limitation, the mortgage of or the use of any other security device relating to all or any Substantial Part (as hereinafter defined) of the assets of the corporation (including, without limitation, any voting securities of any Subsidiary) or of any Subsidiary to a Related Person, - 7 - 23 (c) any sale, lease, exchange, mortgage, pledge,transfer or other disposition (in either one transaction or a series of related transactions) of all or any Substantial Part of the assets of a Related Person to the corporation or any Subsidiary, (d) the adoption of any plan or proposal for the liquidation or dissolution of the corporation if, as of the record date for the determination of shareholders entitled to vote with respect thereto, any person is a Related Person, (e) the issuance of or transfer by the corporation or any Subsidiary (in one transaction or in a series of related transactions) of any securities of the corporation or any Subsidiary to a Related Person, (f) the acquisition by the corporation or any Subsidiary of any securities of a Related Person, (g) any reclassification of securities (including any reverse stock split), recapitalization or reorganization of the corporation or any merger or consolidation of the corporation with any of its Subsidiaries or any similar transaction (whether or not into or otherwise involving a Related Person) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity securities of the corporation or any Subsidiary which is, directly or indirectly, owned by any Related Person, (h) any loan or other extension of credit by the corporation or any Subsidiary to a Related Person or any guarantees by the corporation or any Subsidiary of any loan or other extension of credit by any person to a Related Person; or (i) any transaction or related series of transactions having, directly or indirectly, the same effect as any of the foregoing. (2) The term "person" shall mean any individual, firm, group, corporation or other entity (as such terms are used on March 21, 1986 in Rule 13d of the Securities Exchange Act of 1934, as amended). - 8 - 24 (3) The term "Related Person" shall mean (a) any person (other than the corporation, any Subsidiary or any employee benefit plan of the corporation or any Subsidiary) who or which, as of the record date for the determination of shareholders entitled to notice and to vote on such Business Combination or, if there is no record date,immediately prior to the consummation of any such transaction, together with its "Affiliates" and "Associates" (as such terms are defined on March 21, 1986 in Rule 12b-2 of the Securities Exchange Act of 1934, as amended) is the "Beneficial Owner" (as defined on March 21, 1986, as amended) of ten percent (10%) or more of the outstanding shares of Voting Stock of the corporation. (b) any Affiliate or Associate of such person described in the foregoing subparagraph 3(a) of this Section (B), (c) any Affiliate of the corporation which at any time within the two year period immediately prior to the date in question was the Beneficial Owner, directly or indirectly, of ten percent (10%) or more of the outstanding Voting Stock of the corporation or (d) any person who is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question, beneficially owned by any Related Person, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. Without limitation, any person that has the right to acquire any shares of Voting Stock of the corporation pursuant to any agreement, or upon exercise of conversion rights, warrants, or options, or otherwise, shall be deemed a Beneficial Owner of such shares for purposes of determining whether such person or group, individually or together with its Affiliates and Associates, is a Related Person, but the number of shares deemed to be outstanding pursuant to this paragraph (3) of Section (B) shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise - 9 - 25 (4) The term "Substantial Part" shall mean more than ten percent (10%) of the total consolidated assets of the corporation in question as of the end of the most recent fiscal year ending prior to the time the determination is being made. (5) The term "Subsidiary" shall mean any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the corporation; provided, however, that for the purposes of the definition of a Related Person set forth in Paragraph (3) of this Section (B), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the corporation. (6) For the purposes of subparagraphs 2(b) and 2(c) of Section (A), the term "Other Consideration to be Received" shall include, without limitation, common stock and, if applicable, shares of any other class of outstanding Voting Stock, retained by its existing public shareholders in the event of a Business Combination with such Related Person in which the corporation is the surviving corporation. (7) The term "Continuing Director" shall mean any person who (a) is not affiliated with a Related Person and who was a member of the corporation's Board of Directors prior to the time the Related Person became a Related Person, or (b) any successor to a Continuing Director who is not affiliated with a Related Person and who was recommended for election (before such person's initial election as a Director) as a Continuing Director by a majority of the Board of Directors if at least two-thirds (2/3) of the directors were Continuing Directors. (8) The term "Fair Market Value" shall mean: (a) in the case of stock, the highest closing sale price during the thirty (30) day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange Listed Stocks, or, if such stock is not - 10 - 26 listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed or, if such stock is not listed on any such exchange the highest closing bid quotation with respect to a share of such stock during the thirty (30) day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use or, if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Board of Directors if at least two-thirds (2/3) of the directors are Continuing Directors; and (b) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the Board of Directors if at least two-thirds (2/3) of the directors are Continuing Directors. (9) The term "Voting Stock" shall mean all outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors of the corporation considered for the purposes of this Article Six as one class (it being understood that, for purposes of this Article Six, each share of the Voting Stock shall have the number of votes granted to it pursuant to Article Four of these Amended and Restated Articles of Incorporation or any designation of the rights, powers and preferences of any class or series of preferred stock made pursuant to said Article Four [a "Preferred Stock Designation"]). Each reference in this Article Six to a percentage of shares of Voting Stock shall refer to the percentage of the votes entitled to be cast by such shares. (10) In the event any paragraph (or portions thereof) this Article Six shall be found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this Article Six shall be deemed to remain in full force and effect and shall be construed as if such invalid, prohibited or unenforceable provisions had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the corporation and its shareholders that each remaining provision (or portion thereof) of this Article Six remain to the fullest extent permitted by law, applicable and enforceable as to all shareholders, including Related Persons, notwithstanding any such finding. - 11 - 27 (C) Notwithstanding any other provisions of these Amended and Restated Articles of Incorporation or the Bylaws of the corporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series or Voting Stock required by law, these Amended and Restated Articles of Incorporation or any Preferred Stock Designation, the provisions set forth in this Article Six may not be repealed or amended in any respect unless such action is approved by the affirmative vote of the holders of not less than two-thirds (2/3) of the outstanding shares of the Voting Stock of the corporation; provided, however, that if there is a Related Person on the record date for the meeting at which such action is submitted to the shareholders for their consideration, such two-thirds (2/3) vote must include the affirmative vote of at least fifty percent (50%) of the outstanding shares of Voting Stock held by shareholders other than the Related Person. (D) A majority of the Board of Directors, if at least two-thirds (2/3) are Continuing Directors, shall have the power and duty to determine, on the basis of information known to them after reasonable inquiry, all facts necessary to determine compliance with this Article Six, including, without limitation. (1) whether a person is a Related Person, (2) the number of shares of Voting Stock beneficially owned by any person, (3) whether a person is an Affiliate or Associate of another, and (4) whether the applicable conditions set forth in Paragraph (2) of Section (B) have been met with respect to any Business Combination. (E) Nothing contained in this Article Six shall be construed to relieve any Related Person from any fiduciary obligation imposed by law. ARTICLE SEVEN ------------- Period of Duration ------------------ The corporation shall have perpetual duration. - 12 - 28 ARTICLE EIGHT ------------- Limitation of Personal Liability of Directors --------------------------------------------- 8.1 A director of the corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for breach of duty of care or other duty as a director, except for liability (i) for any appropriation, in violation of his duties, of any business opportunity of the Corporation; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) of the types set forth in Section 14-2-154 of the Georgia Business Corporation Code; or (iv) for any transaction from which the director derived an improper personal benefit. The provisions of this article shall not apply with respect to acts or omissions occurring prior to the effective date of this article. 8.2 Any repeal or modification of the provisions of this article by the shareholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation with respect to any act or omission occurring prior to the effective date of such repeal or modification. 8.3 If the Georgia Business Corporation Code hereafter is amended to authorize the further elimination or limitation of the liability of directors,then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended Georgia Business Corporation Code. Specifically, and not in limitation of the foregoing sentence, it is anticipated that the Georgia Business Corporation Code will be amended in 1989 so as, among other things, to permit elimination of the reference to a lack of 'good faith' in clause (ii) of Article 8.1 above; therefore, effective immediately upon the effective date, if any, of such anticipated amendment, clause (ii) of Article 8.1 above shall be deemed amended to read exactly as the corresponding provision of the Georgia Business Corporation Code, as so amended. 8.4 In the event that any of the provisions of this article (including any provision within a single sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions are severable and shall remain enforceable to the fullest extent permitted by law. These Amended and Restated Articles of Incorporation purport merely to restate those provisions in the Restated Articles of Incorporation now in effect and not being amended hereby. - 13 - 29 This amendment and restatement was authorized by the holders of the common stock of the corporation, the only class of stock then outstanding, at its Annual Meeting held on April 19, 1988. Of the _________ shares of common stock outstanding and entitled to vote, _________ shares were voted in favor of the restatement. The vote of a majority of the shares of common stock was required to adopt the restatement. These Amended and Restated Articles of Incorporation supersede the Articles of Incorporation as adopted on May 7, 1928 and as amended and restated on April 21, 1987 and as theretofore amended. IN WITNESS WHEREOF, Genuine Parts Company has caused these Amended and Restated Articles of Incorporation to be executed and its corporate seal affixed and has caused the foregoing to be attested, all by its duly authorized officers on this 18st day of April, 1988. GENUINE PARTS COMPANY By: /s/ Wilton Looney ------------------------------ Wilton Looney Chief Executive Officer Attest: /s/ Brainard T. Webb, Jr. - --------------------------------- Brainard T. Webb, Jr. Secretary [CORPORATE SEAL] - 14 - EX-10.9 3 TAX DEFERRED SAVINGS PLAN 1 EXHIBIT 10.9 THE GENUINE PARTS COMPANY TAX-DEFERRED SAVINGS PLAN ARTICLE 1 ESTABLISHMENT OF PLAN 1.01 Background of Plan. Genuine Parts Company hereby establishes, effective as of January 1, 1993, a deferred compensation plan known as The Genuine Parts Company Tax-Deferred Savings Plan. The purpose of the Plan is to help the Company retain employees of outstanding ability. 1.02 Status of Plan. The Plan is intended to be a nonqualified, unfunded plan of deferred compensation under the Internal Revenue Code of 1986, as amended. Also, because the only persons who may participate in this Plan are members of a select group of management or highly compensated employees, this Plan of deferred compensation is not subject to Parts 2, 3 and 4 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974. 1.03 Establishment of Trust. The Company has established a trust to fund benefits provided under the terms of the Plan ("Trust"). It is intended that the transfer of assets into the Trust will not generate taxable income (for federal income tax purposes) to the Participants until such assets are actually distributed or otherwise made available to the Participants. ARTICLE 2 DEFINITIONS Certain terms of this Plan have defined meanings which are set forth in this Article and which shall govern unless the context in which they are used clearly indicates that some other meaning is intended. Account. The bookkeeping account to which Bonuses which are deferred by a Participant shall be recorded and in which income or loss shall be credited in accordance with the Plan. Beneficiary. Any person or persons designated by a Participant, in accordance with procedures established by the Committee, to receive benefits hereunder in the event of the Participant's death. If any Participant shall fail to designate a Beneficiary or shall designate a Beneficiary who shall fail to survive the Participant, the Beneficiary shall be the Participant's Beneficiary under the Genuine Partnership Plan or any successor plan to the Genuine Partnership Plan. 2 Bonus. A Participant's bonus determined in the Company's discretion and paid as part of a Company bonus program for executives and other key employees. The term bonus does not include extraordinary payments to a Participant and does not include a Participant's wages or salary unless the Executive Committee designates such payments as a Bonus for purposes of this Plan. Any such designation must be made in advance of the Participant earning such payment. Committee. The Executive Committee or its designee that will administer and interpret the terms of the Plan. Company. Genuine Parts Company and its corporate successors. Effective Date. January 1, 1993. Election Form. A form substantially the same as the form attached to this Plan as Exhibit A. Executive Committee. The Executive Committee of the Board of Directors of the Company. Key Employee. Any full-time employee of the Company designated as a Key Employee by the Executive Committee. Participant. Any Key Employee who is participating in this Plan. Plan. The Genuine Parts Company Tax-Deferred Savings Plan as set forth in this document together with any subsequent amendments hereto. Termination of Service. A Key Employee who has ceased to serve as an employee of the Company for any reason. ARTICLE 3 PARTICIPATION 3.01 Participation. (a) In General. The only persons who may participate in this Plan are Key Employees of the Company who are designated as such by the Executive Committee. Upon becoming eligible to participate, a Key Employee must complete an Election Form. The Key Employee's participation shall commence on the date specified in this Article 3. Even though a Key Employee may be a Participant in this Plan, the Participant shall not be entitled to any benefit hereunder unless such Participant has properly - 2 - 3 completed an Election Form and deferred the receipt of his or her Bonus pursuant to the Plan. (b) Completion of Election Form. A Key Employee may participate in the Plan after delivering a properly completed and signed Election Form to the Committee. The Election Form shall be signed and delivered to the Committee prior to the first day of the calendar year with respect to which the Bonus will be earned. The Key Employee's participation in the Plan will be effective as of the first day of the calendar year which commences after the Committee's receipt of the Key Employee's Election Form. (c) Election After Plan is Approved. Notwithstanding paragraph (b), any Election Form which is delivered to the Committee within thirty days of the Company's approval of the Plan and prior to the end of the calendar year in which such approval is given shall be valid and shall apply to the Bonus which would ordinarily be paid to the Participant in the following calendar year. However, such bonus deferral shall be limited to the amount or percentage set forth in Section 4.01. (d) Voluntary Termination of Election Form. A Participant may terminate his or her Election Form at any time. If a Participant terminates his or her Election Form, however, the Participant may not execute a new Election Form to defer his or her Bonus for the remainder of the calendar year in which the Participant's Election Form is terminated. However, effective as of the first day of the following calendar year or the first day of any subsequent calendar year, the Participant may execute a new Election Form and thereby defer the receipt of any future Bonus attributable to the Participant's employment. Such Election Form shall be effective only for Bonus applicable to the Participant's employment after the first day of the calendar year following the Committee's receipt of the Participant's Election Form. (e) Continuation of Election Form. A Participant shall have the right to modify the dollar amount or percentage of his or her Bonus which is deferred under the Plan prior to the commencement of each calendar year. If the Participant fails to execute a new Election Form prior to the commencement of the new calendar year, the Participant's Election Form in effect during the previous calendar year shall continue in effect during the new calendar year. (f) Automatic Termination of Election Form. The Participant's Election Form will automatically terminate at the earliest of (i) the Participant's Termination of Service, (ii) the date the Executive Committee determines that the Participant is no longer a Key Employee under the Plan, or (iii) the termination of the Plan. - 3 - 4 (g) Nothing contained in the Plan shall be deemed to give any Key Employee the right to be retained as an employee of the Company. ARTICLE 4 PLAN BENEFITS 4.01 Deferred Bonus. A Key Employee may elect to defer any dollar amount or percentage of his or her Bonus in accordance with the terms of the Plan and the Election Form. However, for the Bonuses paid in 1994, a Key Employee may elect to defer a maximum of $10,000 or 25% of the Key Employee's Bonus, whichever is greater. For bookkeeping purposes, the amount of the Bonus which the Key Employee elects to defer pursuant to this Plan shall be transferred to and held in individual Accounts. 4.02 Investment. The Committee shall direct the instrument of all Accounts. As of the last day of each calendar year and on such other dates selected by the Committee, the Committee shall credit each Participant's Account with earnings, losses and changes in fair market value experienced by the investment alternative selected by the Committee. 4.03 Form of Payment. (a) Payment Election. Payment of Plan benefits shall commence on the date the Participant selects on the Election Form. Any date selected by the Participant must be at least two calendar years following the date the Bonus would ordinarily be paid. In no event, however, shall a Participant's Account commence to be distributed later than the first regular business day of the fourth month following the Participant's Termination of Service. For example, if a Participant has a Termination of Service on January 12, payment of plan benefits would commence on May 1 (the fourth month following January 12). (b) Optional Forms of Payment. The amount of the Participant's Account shall be paid to the Participant either in a lump sum or in a number of approximately equal annual installments designated by the Participant on the Election Form. Such annual installments may be for 5 years, 10 years or 15 years. If a Participant elects to receive a distribution of his or her Account in installments, the Committee may purchase an annuity from an insurance company which annuity will pay the Participant the desired annual installments. If the Committee purchases an annuity contract, the Key Employee will have no further rights to receive payments from the Company or the Plan with respect to the amounts subject to the annuity. If the Committee does not purchase an annuity contract, the amount of the Account remaining unpaid shall continue to receive allocations of income as - 4 - 5 provided in Section 4.02. If the Participant fails to designate a payment method in the Election Form, the Participant's Account shall be distributed in a lump sum. (c) Multiple Elections. A Participant may elect a different payment commencement date for each Bonus deferred under this Plan. In addition, a Participant may elect a different payment form for each Bonus deferred under this Plan. The Committee shall establish sub-accounts within a Participant's Account (to the extent necessary) to identify the portion of a Participant's Account that will be distributed as of the dates and in the form the Participant designates in the Election Form. A Participant may not modify or otherwise revoke the benefit commencement date and payment form designated on an Election Form after the Participant delivers such Election Form to the Committee. (d) Acceleration of Payment. If a Participant elects an installment distribution and the annual installment payment elected by the Participant would result in an annual payment of less than $3,000, the Committee shall accelerate payment of the Participant's benefits over a lesser number of whole years (but in increments of 5 or 10 years) so that the annual amount paid is at least $3,000. If payment of the Participant's benefits over a 5 year period will not provide annual payments of at least $3,000, the Participant's Account shall be paid in a lump sum. (e) Payment to Beneficiary. Upon the Participant's death, all unpaid amounts held in the Participant's Account shall be paid to the Participant's beneficiary in the same benefit payment form the Participant elected on the Election Form and in accordance with the payment distribution rules set forth in this Plan. Such payment will be commence to be paid on the first business day of the fourth month following the Participant's death. 4.04 Financial Hardship. The Committee may, in its sole discretion, accelerate the making of payment to a Participant of an amount reasonably necessary to handle a severe financial hardship of a sudden and unexpected nature due to causes not within the control of the Participant. Such payment may be made even if the Participant has not incurred a Termination of Service. All financial hardship distributions shall be made in a lump sum. Such payments will be made on a first-in, first-out basis so that the oldest Bonus deferred under the Plan shall be deemed distributed first in a financial hardship. 4.05 Payment to Minors and Incapacitated Persons. In the event that any amount is payable to a minor or to any person who, in the judgment of the Committee, is incapable of making proper disposition thereof, such payment shall be made for the benefit of such minor or such person in any of the following ways as the Committee, in its sole discretion, shall determine: - 5 - 6 (a) By payment to the legal representative of such minor or such person; (b) By payment directly to such minor or such person; (c) By payment in discharge of bills incurred by or for the benefit of such minor or such person. The Committee shall make such payments without the necessary intervention of any guardian or like fiduciary, and without any obligation to require bond or to see to the further application of such payment. Any payment so made shall be in complete discharge of the Plan's obligation to the Participant and his or her Beneficiaries. 4.06 Application for Benefits. The Committee may require a Participant or Beneficiary to complete and file certain forms as a condition precedent to receiving the payment of benefits. The Committee may rely upon all such information given to it, including the Participant's current mailing address. It is the responsibility of all persons interested in receiving a distribution pursuant to the Plan to keep the Committee informed of their current mailing addresses. 4.07 Designation of Beneficiary. Each Participant from time to time may designate any person or persons (who may be designated contingently or successively and who may be an entity other than a natural person) as his or her Beneficiary or Beneficiaries to whom the Participant's Account is to be paid if the Participant dies before receipt of all such benefits. Each Beneficiary designation shall be on the form prescribed by the Committee and will be effective only when filed with the Committee during the Participant's lifetime. Each Beneficiary designation filed with the Committee will cancel all Beneficiary designations previously filed with the Committee. The revocation of a Beneficiary designation, no matter how effected, shall not require the consent of any designated Beneficiary. ARTICLE 5 FUNDING OF PLAN 5.01 The benefits provided by this Plan shall be paid from the general assets of the Company or as otherwise directed by the Company. To the extent that any Participant acquires the right to receive payments under the Plan (from whatever source), such right shall be no greater than that of an unsecured general creditor of the Company. Participants and their Beneficiaries shall not have any preference or security interest in the assets of the Company other than as a general unsecured creditor. - 6 - 7 ARTICLE 6 ADMINISTRATION OF THE PLAN 6.01 The Committee shall have complete control of the administration of the Plan with all powers necessary to enable it to properly carry out the provisions of the Plan. In addition to all implied powers and responsibilities necessary to carry out the objectives of the Plan, the Committee shall have the following specific powers and responsibilities: (1) To construe the Plan and to determine all questions arising in the administration, interpretation and operation of the Plan; (2) To determine the benefits of the Plan to which any Participant, Beneficiary or other person may be entitled; (3) To keep records of all acts and determinations of the Committee, and to keep all such records, books of accounts, data and other documents as may be necessary for the proper administration of the Plan; (4) To prepare and distribute to all Participants and Beneficiaries information concerning the Plan and their rights under the Plan; (5) To do all things necessary to operate and administer the Plan in accordance with its provisions. ARTICLE 7 AMENDMENT AND TERMINATION 7.01 The Executive Committee reserves the right to modify, alter, amend, or terminate the Plan, at any time and from time to time, without notice, to any extent deemed advisable; provided, however, that no such amendment or termination shall (without the written consent of the Participant, if living, and if not, the Participant's Beneficiary) adversely affect any benefit under the Plan which has accrued with respect to the Participant or Beneficiary as of the date of such amendment or termination regardless of whether such benefit is in pay status. Notwithstanding the foregoing, no amendment, modification, alteration, or termination of this Plan may be given effect with respect to any Participant without the consent of such Participant if such amendment, modification, alteration, or termination is adopted during the six-month period prior to a Change of Control or during the two-year period following a Change of Control. - 7 - 8 ARTICLE 8 CHANGE IN CONTROL 8.01 Change of Control. (a) Notwithstanding any other provisions in this Plan, in the event there is a Change of Control of the Company as defined in subsection (c) of this Section 8.01, any Participant whose employment is terminated on account of such Change of Control, shall receive an immediate lump sum payment of the Participant's Account balance. For purposes of this Section 8.01(a), a Participant's employment shall be considered to have "terminated on account of such Change of Control" only if the Participant's employment with the Employer is terminated without cause during the 24 month period following the Change of Control. (b) Notwithstanding any other provisions in this Plan, in the event there is a change of control of the Company as defined in subsection (c) of this Section 8.01, any Participant who has commenced receiving installment distributions from the Company (other than from an annuity contract purchased from an insurance company) shall immediately receive a lump sum payment in an amount equal to the unpaid balance of the Participant's Account. (c) A Change of Control of the Company shall mean a change of control of a nature that would require to be reported in response to item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"). In addition, whether or not required to be reported thereunder, a Change of Control shall be deemed to have occurred at such time as (i) any "person" (as that term is used in Section 13(d)(2) of the Exchange Act) is or becomes the beneficial owner (as defined in rule 13(d)-3 of the Exchange Act) directly or indirectly of securities representing 20% or more of the combined voting power for election of directors of the then outstanding securities of the Company or any successor of the Company (ii) during any period of two consecutive years or less individuals who at the beginning of such period constituted the board of directors of the Company cease, for any reason, to constitute at least a majority of the board of directors, unless the election or nomination for election of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; (iii) the shareholders of the Company approve any merger or consolidation as a result of which the capital stock of the Company shall be changed, converted or exchanged (other than a merger with a wholly-owned subsidiary of the Company) or any liquidation of the Company or any sales or other disposition of 50% or more of the assets or earning power of the Company; or (iv) the shareholders of the Company - 8 - 9 approve any merger or consolidation to which the Company is a party as a result of which the persons who were shareholders of the Company immediately prior to the effective date of the merger or consolidation shall have beneficial ownership of less than 50% of the combined voting power for election of directors of the surviving corporation following the effective date of such merger or consolidation. Notwithstanding any provisions in this subparagraph (c), in the event the Company and a Participant agree prior to any event which would otherwise constitute a Change of control, that such event shall not constitute a Change of Control, then for purposes of this Plan there shall be no such Change of Control upon that event. ARTICLE 9 MISCELLANEOUS 9.01 Headings. The headings and sub-headings in this Plan have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. 9.02 Spendthrift Clause. None of the benefits, payments, proceeds or distribution under this Plan shall be subject to the claim of any creditor of any Participant or Beneficiary, or to any legal process by any creditor of such Participant or Beneficiary, and none of them shall have any right to alienate, commute, anticipate or assign any of the benefits, payments, proceeds or distributions under this Plan except to the extent expressly provided herein to the contrary. 9.03 Merger. The Plan shall not be automatically terminated by the Company's acquisition by, merger into, or sale of substantially all of its assets to any other organization, but the Plan shall be continued thereafter by such successor organization. All rights to amend, modify, suspend or terminate the Plan shall be transferred to the successor organization, effective as of the date of the combination or sale. 9.04 Release. Any payment to Participant or Beneficiary, or to their legal representatives, in accordance with the provisions of this Plan, shall to the extent thereof be in full satisfaction of all claims hereunder against the Committee and the Company, any of whom may require such Participant, Beneficiary, or legal representative, as a condition precedent to such payment, to execute a receipt and release therefor in such form as shall be determined by the Committee, or the Company, as the case may be. 9.05 Governing Law. The Plan shall be governed by the laws of the State of Georgia. 9.06 Costs of Collection; Interest. In the event the Participant collects any part or all of the payments due under this Plan by or through a lawyer or lawyers, the Company - 9 - 10 will pay all costs of collection, including reasonable legal fees incurred by the Participant. In addition, the Company shall pay to the Participant interest on all or any part of the payments that are not paid when due at a rate equal to the Prime Rate as announced by Trust Company Bank or its successors from time to time. 9.07 Successors and Assigns. This Plan shall be binding upon the successors and assigns of the parties hereto. IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed and its seal to be hereunto affixed on the date indicated below, but effective as of January 1, 1993. GENUINE PARTS COMPANY By: /s/ Frank M. Howard ------------------- Title: Treasurer ---------------- Date: December 1, 1994 ----------------- [CORPORATE SEAL] Attest: /s/ Brainard T. Webb, Jr. - ----------------------------- - 10 - EX-10.10 4 SUPPLEMENTAL RETIREMENT PLAN, AMENDMENT #2 1 EXHIBIT 10.10 AMENDMENT NO. 2 TO THE GENUINE PARTS COMPANY SUPPLEMENTAL RETIREMENT PLAN WHEREAS, the Executive Committee of the Board of Directors of Genuine Parts Company desires to amend the Genuine Parts Company Supplemental Retirement Plan (the "Plan") as follows: NOW, THEREFORE, BE IT RESOLVED, that the following Amendments be adopted: 1. Article Two is hereby deleted and a new Article Two is substituted therefor as follows: "ARTICLE TWO - PARTICIPATION 2.01 Eligibility. Except as provided in Section 2.02, any employee of the Employer ("Key Employee") whose annual, regular Earnings are expected to be equal to or greater than the compensation limits of Code Section 401(a)(17) ($150,000 in 1994) shall participate in this Plan.. Upon becoming eligible to participate, a Key Employee must complete and execute a Joinder Agreement in a form satisfactory to the Compensation and Stock Option Committee of the Board of Directors of Genuine Parts Company (the "Committee"). Even though a Key Employee may be a Participant in this Plan, he shall not be entitled to any benefit hereunder unless and until his benefits under the Pension Plan are reduced due to the application of either Section 401(a)(17) or Section 415 of the Code. 2.02 Additional Rules on Eligibility. (a) The Committee may increase the Earnings limitation (see Section 2.01) that a Key Employee must receive to become eligible to continue or commence his or her participation in the Plan. (b) A Key Employee shall not accrue a benefit for any year in which the Key Employee's annual, regular Earnings is expected to be less than the compensation limits of Code Section 401(a)(17) or, if greater, the Earnings limit established by the Committee pursuant to paragraph (a) above. Nevertheless, the Key Employee shall continue to participate in the Plan and shall again accrue a benefit under this Plan during the 2 calendar year in which the Key Employee's Earnings exceed the Earnings limit established in Section 2.01 or 2.02(a), whichever is greater. (c) The Committee may prohibit any Key Employee from participating in the Plan during a calendar year and subsequent calendar years by notifying such Key Employee during the first calendar year that his or her participation shall cease under the Plan. 2.03 Definition of Earnings. For purposes of this Plan, the term "Earnings" shall (except as modified below) have the same meaning given such term in the Pension Plan. Unlike the Pension Plan, however, Earnings shall include salary, bonus or other compensation that the Company would otherwise have been paid to a Key Employee but for the Key Employee's election to defer the receipt of such salary, bonus or other compensation pursuant to a Company sponsored deferred compensation program ("Deferred Compensation"). A Key Employee's Deferred Compensation shall not be included in Earnings in the year such Deferred Compensation is paid to the Key Employee." 2. Section 3.01 is hereby deleted and a new Section 3.01 is substituted therefor as follows: "3.01 Calculation of Supplement. (a) Each Participant who terminates active employment with the Employer on or after his Normal or Delayed Retirement Date by reason of retirement or voluntary or involuntary termination shall, except as provided in Section 6.05, be entitled to a monthly supplemental retirement income ("Supplemental Retirement Income") equal to (1) minus (2), where (1) equals the monthly Normal or Delayed Retirement Income which Participant would be entitled to receive under the Pension Plan beginning on the Benefit Commencement Date (as defined in Section 3.02) if the benefit limitations of Code Sections 401(a)(17) and 415 as reflected in the Pension Plan were not in effect (measured in the form of a single life annuity payable in monthly installments for the Participant's life) and if the definition of Earnings under this Plan were used to compute the Participant's Normal or Delayed Retirement Income under the Pension Plan; (2) equals the monthly Normal or Delayed Retirement Income which Participant is actually entitled to receive under the Pension Plan -2- 3 Beginning on the Benefit Commencement Date measured in the form of a single life annuity payable in monthly installments for the Participant's life. (b) Except as provided in Sections 3.01(c), 4.01 and 5.01, no payment of any kind shall be made under this Plan to any Participant who terminates active employment with the Employer prior to his Normal Retirement Date. For example, in the absence of a change in control and assuming Section 3.01(c) is not applicable, no payment shall be made to a Participant who resigns his employment prior to his Normal Retirement Date even though such Participant is eligible for Early Retirement under the Pension Plan. (c) The Committee may, in its sole discretion, determine that a Participant who terminates his or her employment on or after attaining age 55 and completing fifteen years of Credited Service ("Early Retirement Date") but prior to his or her Normal Retirement Date shall be eligible for benefits under this Plan. Such benefit shall be determined using the formula set forth in Section 3.01(a) above but by calculating the Participant's Supplemental Retirement Income as of his or her termination of employment and by applying the reduction set forth in the Pension Plan to reflect the early payment of benefits prior to the Participant's Normal Retirement Date. (d) In computing a Key Employee's benefit under this Plan, the Committee shall assume the Participant did not accrue a benefit under the Pension Plan (and did not receive any Earnings) during any calendar year in which the Key Employee did not accrue a benefit under this Plan (see Section 2.02)." 3. Section 3.02 is hereby amended by deleting the phrase "Section 3.01" where it appears in such Section and replacing it with the phrase "Section 3.01(a)." 4. Section 4.01 is hereby deleted and a new Section 4.01 is substituted therefor as follows: "4.01 Death of Participant Before Supplemental Income Payments Commence. (a) Participants Prior to January 1 1995. (1) This Section 4.01(a) shall apply only to Key Employees who became Participants in this Plan prior to January 1, 1995. -3- 4 (2) If a Participant (married or unmarried at the time of his death) dies before Supplemental Retirement Income commences hereunder and while he remains employed by the Employer, then the Participant's Beneficiary shall be entitled to receive a survivor benefit which is the Actuarial Equivalent of the Participant's Supplemental Retirement Income accrued to the date of his death under Section 3.01. For such purpose, the Participant's Beneficiary shall be the same as his or her Beneficiary designated under the Pension Plan. (b) Participants On or After January 1, 1995. (1) This Section 4.01(b) shall apply only to Key Employees who became Participants in this Plan on or after January 1, 1995. (2) If a Participant (married or unmarried at the time of his death) dies before Supplemental Retirement Income commences hereunder and while he remains employed by the Employer, then the Committee may, in its sole discretion, determine that a Participant's Beneficiary shall be entitled to receive a survivor benefit which is the Actuarial Equivalent of the Participant's Supplemental Retirement Income accrued to the date of his death under Section 3.01. For such purpose, the Participant's Beneficiary shall be the same as his or her Beneficiary designated under the Pension Plan. (c) Form of Survivor Benefit. For purposes of paragraphs (a) and (b) above, the survivor benefit shall be a benefit payable for the life of the Beneficiary which commences on the first day of the month following the Participant's death, and ending on the first day of the month coinciding with or immediately following the Beneficiary's death." 5. Section 4.02 is hereby amended by adding the following sentence to the end thereof as follows: "No death benefits shall be paid to the Participant's Beneficiary." 6. Section 5.01(a) is hereby deleted and a new Section 5.01(a) is substituted therefor as follows: "(a) Notwithstanding any other provisions in this Agreement, in the event there is a Change of Control of Genuine Parts as defined in subsection (c) of this Section 5.01, any Participant whose employment is terminated on account -4- 5 of such Change of Control, and who has seven (7) or more years of Credited Service for vesting purposes (and without regard to such Participant's service for benefit accrual purposes) under the Pension Plan, shall be entitled to receive an immediate lump sum payment in an amount which is the Actuarial Equivalent single sum value of the monthly Supplemental Retirement Income accrued by the Participant as of the date of his termination calculated pursuant to the formula set forth in Section 3.01(a) and assuming payments began on the Participant's Normal Retirement Date; provided, however, that for this purpose, Actuarial Equivalence shall be determined using an interest assumption of 6%. For purposes of this Section 5.01(a), a Participant's employment shall be considered to have "terminated on account of such Change of Control" only if the Participant's employment with the Employer is terminated without cause during the 24 month period following the Change of Control." 6. Section 6.05 is amended by deleting the phrase "Spouse or Beneficiary" wherever it appears in such Section and replacing it with the phrase "Beneficiary or Contingent Annuitant." 7. Section 6.08 is hereby deleted and a new Section 6.08 is substituted therefor as follows: "6.08 Right to Amend and Terminate. The Committee reserves the right to modify, alter, amend, or terminate the Plan, at any time and from time to time, without notice, to any extent deemed advisable; provided, however, that no such amendment or termination shall (without the written consent of the Participant, if living, and if not, the individual to whom survivor benefits are paid (i.e., either the Beneficiary or the Contingent Annuitant as the case may be)) adversely affect any benefit under the Plan which has accrued with respect to the Participant as of the date of such amendment or termination regardless of whether such benefit is vested or in pay status. Notwithstanding the foregoing, no amendment, modification, alteration, or termination of this Plan may be given effect with respect to any Participant, Beneficiary or Contingent Annuitant without the consent of such Participant (if living, and if not, the individual to whom survivor benefits are paid) if such amendment, modification, alteration, or termination is adopted during the six-month period prior to a Change of Control or during the two-year period following a Change of Control." -5- 6 8. This Amendment shall be effective as of January 1, 1995. 9. Except as amended herein, the Plan shall continue in full force and effect. IN WITNESS WHEREOF, Genuine Parts Company has caused this Amendment to be executed by its duly authorized officer. GENUINE PARTS COMPANY By: /s/ Frank M. Howard ----------------------------- Title: Treasurer ----------------------------- Date: December 1, 1994 ----------------------------- -6- EX-10.11 5 GENUINE PARTNERSHIP PLAN 1 EXHBIT 10.11 GENUINE PARTNERSHIP PLAN (Amended and Restated Effective January 1, 1994) 2 GENUINE PARTNERSHIP PLAN (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994) TABLE OF CONTENTS ARTICLE 1 -- INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.01 Establishment of Plan; Background . . . . . . . . . . . . . . . . . . . . . . 1 1.02 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.03 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.04 Plan Governs Distribution of Benefits . . . . . . . . . . . . . . . . . . . . 1 ARTICLE 2 -- DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Act or ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Affiliated Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Authorized Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Company Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Credited Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Employer Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Employer Matching Contribution Account . . . . . . . . . . . . . . . . . . . . . . 6 Employer Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Family Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Fund 6
- i - 3 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Investment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Non-highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . 8 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Permanent Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Plan Administrator or Administrator . . . . . . . . . . . . . . . . . . . . . . . 8 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Pre-Tax Contribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Prior Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Prior Employer Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Qualified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Qualified Nonelective Contribution . . . . . . . . . . . . . . . . . . . . . . . . 9 Qualified Nonelective Contribution Account . . . . . . . . . . . . . . . . . . . . 9 Qualifying Employer Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Rollover Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Rollover Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Treasury Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Trust or Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Other Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ARTICLE 3 -- PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.01 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.02 Year of Eligibility Service . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.03 Participation and Rehire . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.04 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.05 Not Contract for Employment . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE 4 -- PRE-TAX CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4.01 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4.02 Elections Regarding Pre-Tax Contributions . . . . . . . . . . . . . . . . . . 15 4.03 Change in Employee Contribution Percentage or Suspension of Contributions . . 15 4.04 Deadline for Contributions and Allocation of Pre-Tax Contributions . . . . . 16 4.05 Rollover Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
- ii - 4 ARTICLE 5 -- EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 5.01 Employer Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . 18 5.02 Qualified Nonelective Contributions . . . . . . . . . . . . . . . . . . . . . 18 5.03 Form and Timing of Contributions . . . . . . . . . . . . . . . . . . . . . . 19 5.04 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE 6 -- ACCOUNTS AND ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 6.01 Participant Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 6.02 Allocation of Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . 21 6.03 Allocation of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 6.04 Adjustment Attributable to Plan Loans . . . . . . . . . . . . . . . . . . . . 22 6.05 Plan Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 6.06 Investment Funds and Elections . . . . . . . . . . . . . . . . . . . . . . . 22 6.07 Errors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 ARTICLE 7 -- VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 7.01 Termination Date On or After Age 65 . . . . . . . . . . . . . . . . . . . . 24 7.02 Permanent Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 7.03 Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 7.04 Other Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 7.05 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 ARTICLE 8 -- DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 8.01 Commencement of Distribution . . . . . . . . . . . . . . . . . . . . . . . . 27 8.02 Method of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 8.03 Payment to Minors and Incapacitated Persons . . . . . . . . . . . . . . . . . 28 8.04 Application for Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 29 8.05 Special Distribution Rules . . . . . . . . . . . . . . . . . . . . . . . . . 29 8.06 Distributions Pursuant to Qualified Domestic Relations Orders . . . . . . . . 30 8.07 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 8.08 Participant Withdrawals After Age 59-1/2 . . . . . . . . . . . . . . . . . . 31 ARTICLE 9 -- HARDSHIP WITHDRAWALS; LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 33 9.01 Hardship Withdrawal of Account . . . . . . . . . . . . . . . . . . . . . . . 33 9.02 Definition of Hardship . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 9.03 Maximum Hardship Distribution . . . . . . . . . . . . . . . . . . . . . . . . 33 9.04 Procedure to Request Hardship . . . . . . . . . . . . . . . . . . . . . . . . 35 9.05 Authority to Establish Loan Program . . . . . . . . . . . . . . . . . . . . . 35 9.06 Eligibility for Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 9.07 Loan Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 9.08 Maximum Number of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 9.09 Assignment of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 9.10 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 9.11 Term of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
- iii - 5 9.12 Level Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 9.13 Directed Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 9.14 Other Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 9.15 Distribution of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE 10 -- ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . 38 10.01 Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 10.02 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 10.03 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 10.04 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 10.05 Standard of Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . 41 10.06 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 10.07 Indemnification of Committee . . . . . . . . . . . . . . . . . . . . . . . . 43 ARTICLE 11 -- AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 44 11.01 Right to Amend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 11.02 Termination or Discontinuance of Contributions . . . . . . . . . . . . . . . 44 11.03 IRS Approval of Termination . . . . . . . . . . . . . . . . . . . . . . . . 45 ARTICLE 12 -- SPECIAL DISCRIMINATION RULES . . . . . . . . . . . . . . . . . . . . . . . . 46 12.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 12.02 $7,000 Limit on Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . 49 12.03 Average Actual Deferral Percentage . . . . . . . . . . . . . . . . . . . . . 51 12.04 Special Rules For Determining Average Actual Deferral Percentage . . . . . . 52 12.05 Distribution of Excess ADP Deferrals . . . . . . . . . . . . . . . . . . . . 52 12.06 Average Actual Contribution Percentage . . . . . . . . . . . . . . . . . . . 54 12.07 Special Rules For Determining Average Actual Contribution Percentages . . . 55 12.08 Distribution of Employer Matching Contributions . . . . . . . . . . . . . . 55 12.09 Combined ACP and ADP Test . . . . . . . . . . . . . . . . . . . . . . . . . 56 12.10 Order of Applying Certain Sections of Article . . . . . . . . . . . . . . . 58 12.11 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 ARTICLE 13 -- HIGHLY COMPENSATED EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . 59 13.01 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 13.02 Highly Compensated Employees . . . . . . . . . . . . . . . . . . . . . . . . 59 13.03 Former Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . 59 13.04 Family Aggregation Rules . . . . . . . . . . . . . . . . . . . . . . . . . . 60 13.05 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 13.06 Other Methods Permissible . . . . . . . . . . . . . . . . . . . . . . . . . 62 ARTICLE 14 -- MAXIMUM BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 14.01 General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
- iv - 6 14.02 Combined Plan Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . 64 14.03 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 14.04 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 ARTICLE 15 -- TOP HEAVY RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 15.01 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 15.02 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 15.03 Minimum Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 15.04 Combined Plan Limitation For Top Heavy Years . . . . . . . . . . . . . . . . 69 ARTICLE 16 -- MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 16.01 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 16.02 Action by Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 16.03 Spendthrift Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 16.04 Distributions Upon Special Occurrences . . . . . . . . . . . . . . . . . . . 70 16.05 Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 16.06 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 16.07 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . 71 16.08 Agent for Service of Process . . . . . . . . . . . . . . . . . . . . . . . . 71 16.09 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 16.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 16.11 Adoption of the Plan by an Affiliated Sponsor . . . . . . . . . . . . . . . 72 16.12 Protected Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 16.13 Location of Participant or Beneficiary Unknown . . . . . . . . . . . . . . . 74
- v - 7 GENUINE PARTNERSHIP PLAN (Amended and Restated Effective January 1, 1994) ARTICLE 1 INTRODUCTION 1.01 Establishment of Plan; Background. (a) Effective July 1, 1988, Genuine Parts Company adopted and established the Genuine Partnership Plan ("Prior Plan"). The Prior Plan was at all times maintained as a plan meeting the requirements of Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended, and of the Employee Retirement Income Security Act of 1974. (b) Effective January 1, 1994, the Prior Plan is continued in an amended and restated form as set forth in its entirety in this document (the "Plan"). 1.02 Effective Date This Plan shall be effective as of January 1, 1994. Notwithstanding this general effective date, certain provisions of this Plan (as set forth in this document) shall have effective dates earlier than January 1, 1994. 1.03 Purpose. This Plan is intended to provide a cash or deferred arrangement under Code Sections 401(a) and 401(k). Under the Plan, Participants can direct that a specified percentage of the amount that otherwise would have been paid to them as Compensation be contributed by the Employer to the Plan. The benefits described in the Plan are provided for the exclusive benefit of the Participants and their Beneficiaries. 1.04 Plan Governs Distribution of Benefits The distribution of benefits for all Participants (whether employed by the Employer before or after the Effective Date) shall be governed by the provisions of this Plan. Nevertheless, early retirement benefits, retirement-type subsidies, or optional forms of benefit protected under Code Section 411(d)(6) ("Protected Benefits") shall not be reduced or eliminated with respect to benefits accrued under such Protected Benefits unless such reduction or elimination is permitted under the Code, Treasury Regulations, authority issued by the Internal Revenue Service or judicial authority. 8 ARTICLE 2 DEFINITIONS Certain terms of this Plan have defined meanings which are set forth in this Article and which shall govern unless the context in which they are used clearly indicates that some other meaning is intended. Account shall mean the Account established and maintained by the Committee or Trustee for each Participant or their Beneficiaries to which shall be allocated each Participant's interest in the Fund. Each Account shall be comprised of the sub-accounts described in Section 6.01. Act or ERISA shall mean Public Law No. 93-406, the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time. Adjustment shall mean, for any Valuation Date, the aggregate earnings, realized or unrealized appreciation, losses, expenses, and realized or unrealized depreciation of the Fund since the immediately preceding Valuation Date. The determination of the adjustment shall be made by the Trustee and shall be final and binding. Affiliate shall mean the Company and any corporation which is a member of a controlled group of corporations (as defined in Code Section 414(b)) which includes the Company; any trade or business which is under common control (as defined in Code Section 414(c)) with the Company; any organization which is a member of an affiliated service group (as defined in Code Section 414(m)) which includes the Company; and any other entity required to be aggregated with the Company pursuant to regulations under Code Section 414(o). Affiliated Sponsor shall mean any corporation and any other entity that is designated by the Committee as an Affiliated Sponsor under the Plan. See Section 16.11 for provisions relating to an Affiliated Sponsor's adoption of the Plan. All Affiliated Sponsors, groups of employees designated as participating in the Plan by such Affiliated Sponsors (if not all employees), and the effective date of each company's designation as an Affiliated Sponsor shall be specified in Schedule A. Authorized Absence shall mean any temporary layoff or any absence authorized by the Employer under the Employer's standard personnel practices provided that all persons under similar circumstances must be treated alike in the granting of such Authorized Leaves of Absence and provided further that the Participant returns within the period of authorized absence. An absence due to service in the Armed Forces of the United States shall be considered an Authorized Absence to the extent required by federal law. Beneficiary. For unmarried Participants, any individual(s), trust(s), estate(s), partnership(s), corporation(s) or other entity or entities designated by the Participant in -2- 9 accordance with procedures established by the Committee to receive any distribution to which the Participant is entitled under the Plan in the event of the Participant's death. The Committee may require certification by a Participant in any form it deems appropriate of the Participant's marital status prior to accepting or honoring any Beneficiary designation. Any Beneficiary designation shall be void if the Participant revokes the designation or marries. Any Beneficiary designation shall be void to the extent it conflicts with the terms of a qualified domestic relations order. If an unmarried Participant fails to designate a Beneficiary or if the designated Beneficiary fails to survive the Participant and the Participant has not designated a contingent Beneficiary, the Beneficiary shall be the surviving descendants of the Participant (who shall take per stirpes) and if there are no surviving descendants, the Beneficiary shall be the Participant's estate. For the purposes of the foregoing sentence, the term "descendants" shall include any persons adopted by a Participant or by any of his descendants. A married Participant's Beneficiary shall be his Spouse unless the Participant has designated a non-Spouse Beneficiary (or Beneficiaries) with the written consent of his Spouse given in the presence of a notary public on a form provided by the Committee, or unless the terms of a qualified domestic relations order require payment to a non-Spouse Beneficiary. A married Participant's designation of a non-Spouse Beneficiary in accordance with the preceding sentence shall remain valid until revoked by the Participant or until the Participant marries a Spouse who has not consented to a designation in accordance with the preceding sentence. For the purposes of this Section, revocation of prior Beneficiary designations will occur when a Participant (i) files a valid designation with the Committee; or (ii) files a signed statement with the Committee evidencing his intent to revoke any prior designations. Board shall mean the Board of Directors of the Company. Break in Service shall occur if the Employee ceases to be employed by the Employer and does not resume Employment for seven or more consecutive years. Code shall mean the Internal Revenue Code of l986, as amended. A reference to a specific provision of the Code shall include such provision and any applicable Treasury Regulation pertaining thereto. Committee shall mean the Committee appointed by the Board under Article 10 to administer the Plan. This term is interchangeable with "Plan Administrator." Company shall mean Genuine Parts Company and its successors and assigns which adopt this Plan. Company Stock shall mean the common stock of the Company. - 3 - 10 Company Stock Fund shall mean the portion of a Participant's Account and each subaccount which is invested in Company Stock. Compensation shall mean, effective January 1, 1989, the gross annual earnings reported on a Participant's Form W-2 (box 10 or its comparable location as provided on Form W-2 in future years) as required by Code Section Section 6041(d) and 6051(a)(3). In addition, Compensation shall include Pre-Tax Contributions under this Plan and salary reduction pre-tax contributions to a Section 125 Plan maintained by the Employer. Compensation shall be determined by ignoring any income exclusions under Code Section 3401(a) based on the nature or location of employment. In addition, Compensation shall be determined by ignoring reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, deferred compensation (and for this purpose benefits under a stock option plan is "deferred compensation") and welfare benefits (and for this purpose, worker's compensation payments of any type and severance pay of any type shall be considered "welfare benefits," but sick pay, short term disability and vacation pay are not considered "welfare benefits"). Compensation shall not include amounts in excess of the limitations set forth in Code Section 401(a)(17) ($150,000 in 1994). See also Section 13.04 for additional rules regarding aggregation of Compensation for certain Family Members. Credited Service shall mean the number of years of service as an Employee of the Employer (with proportionate allowance for fractional years) both before and after the Effective Date, measured in accordance with the following rules: (a) Credited Service for Employment Prior to January 1, 1988. An Employee who was employed on the day preceding the effective date of the Prior Plan (July 1, 1988) shall receive Credited Service under this Plan for all years of Credited Service earned under and pursuant to the Genuine Parts Company Pension Plan prior to January 1, 1988. Credited Service so determined shall be the Participant's Credited Service under this Plan for all service prior to January 1, 1988. If an Employee was not employed by the Employer on June 30, 1988, such Employee shall not receive Credited Service under this Plan for his Employment prior to January 1, 1988. (b) Credited Service for Employment On or After January 1, 1988. On or after January 1, 1988, an Employee shall receive Credited Service for the elapsed time of his Employment beginning on the date of the Employee's first Hour of Service on or after January 1, 1988 and ending on his Termination Date. If an Employee has a Termination Date and is subsequently rehired, such Employee shall again receive Credited Service (subject to the Break in Service rules set forth below) beginning on the date of the Employee's first Hour of Service on or after his reemployment and ending on his subsequent Termination Date. - 4 - 11 (c) Break in Service. Credited Service shall not include any period of Employment which precedes a Break in Service if as of the first day of the Break in Service, the Employee is not vested in any portion of his Account. (d) Employment with Affiliated Sponsors; Predecessor Businesses. Credited Service shall not include any period of employment with any Affiliated Sponsor prior to its designation as an Affiliated Sponsor or any period of employment with a predecessor business prior to its acquisition by Employer except to the extent provided in Schedules A or B. (f) Military Service. Credited Service shall not include any period of service in the military; except to the extent such service is required to be credited under applicable federal law. (g) Employment with Affiliates. An Employee's service with an Affiliate shall be considered Employment with the Employer. Distribution shall mean payment by the Trustee to or for the benefit of a Participant, Spouse, Beneficiary or other person entitled to benefits as provided in this Plan. Effective Date shall mean January 1, 1994. Eligible Employee shall mean, except for those Employees identified in the following sentence, all Employees employed by the Employer. The following Employees shall not be considered Eligible Employees: (i) any employee included in a collective bargaining unit for which a labor organization is recognized as collective bargaining agent unless such employee has been designated by the Committee as an "Eligible Employee" for the purposes of this Plan, (ii) any Employee who is a nonresident alien and who does not receive earned income from the Employer which constitutes income from sources within the United States, or (iii) any "leased employee," within the meaning of Code Section 414(n)(2), with respect to the Employer. Employee shall mean any person employed by or on Authorized Absence from the Employer, and any person who is a "leased employee" within the meaning of Code Section 414(n)(2) with respect to the Employer. However, if such "leased employees" constitute less than 20 percent of the Employer's combined non-highly compensated work force, within the meaning of Code Section 414(n)(1)(C)(ii), the term "Employee" shall not include "leased employees" covered by a plan described in Code Section 414(n)(5). Employer shall mean the Company and any Affiliated Sponsor. All Affiliated Sponsors are listed on Schedule A. Employer Contribution shall mean Employer Matching Contributions and Qualified Nonelective Contributions. Employer Contributions may be made without regard to - 5 - 12 current or accumulated earnings and profits for the taxable year or years ending with or within the Plan Year. Employer Matching Contribution Account shall mean the portion of a Participant's total Account attributable to Employer Matching Contributions, and the total of the Adjustments which have been credited to or deducted from a Participant's Account with respect to Employer Matching Contributions. Employer Matching Contribution shall have that meaning as defined in Section 5.01. Employment shall mean the active service of an Employee with the Employer. Employment with an Affiliated Sponsor prior to its designation as an Affiliated Sponsor and employment with a predecessor business prior to its acquisition by Employer shall be counted as employment with the Employer only to the extent provided in Schedules A or B. Entry Date shall mean the first business day of any calendar month. Family Member shall have that meaning as defined in Section 13.04(b). Fiduciary shall mean any party named as a Fiduciary in Section 10.01. Any party shall be considered a Fiduciary of the Plan only to the extent of the powers and duties specifically allocated to such party under the Plan. Fund shall mean the money and other properties held and administered by the Trustee in accordance with the Plan and Trust Agreement. If the Committee so directs, multiple trust funds may be established under this Plan, which together shall comprise the Fund hereunder. Highly Compensated Employee shall have that meaning as defined in Article 13. Hour of Service shall mean: (a) Each hour for which an Employee is paid, or entitled to payment, for performance of duties for an Employer or Employers. (b) Each hour for which an Employee is paid, or entitled to payment, by an Employer or Employers, on account of a period of time during which no duties are performed (irrespective of whether the employment relationship is terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or Authorized Absence; provided that in no event, shall an Employee receive credit for more than 501 Hours of Service for any single continuous period of non-working time. However, no Hours of Service shall be granted for any direct or indirect payment or for any entitlement to payment if (i) such payment is - 6 - 13 made or due under a plan maintained solely for the purpose of complying with applicable worker's compensation laws, unemployment laws or disability insurance laws or (ii) such payment is intended to reimburse an employee for his or her medical or medically related expenses. (c) Each hour for which an Employee is on an Authorized Leave of Absence by reason of: (i) the pregnancy of the Employee, (ii) birth of a child of the Employee, (iii) placement of a child with the Employee in connection with the adoption of the child by the Employee, or (iv) caring for a child referred to in paragraphs (i) through (iii) immediately following birth or placement. Hours credited under this paragraph shall be credited at the rate of 10 hours per day, 45 hours per week but shall not, in the aggregate, exceed the number of hours required to prevent the Employee from incurring a Break in Service under Code Section 410(a)(5) (a maximum of 501 hours) during the first computation period in which a Break in Service would otherwise occur. (d) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Employer or Employers. These hours shall be credited to the Employee for the computation period or period to which the award or agreement pertains, rather than the computation period in which the award, agreement, or payment is made. (e) In lieu of the foregoing, an Employee who is not compensated on an hourly basis (such as salary, commission or piecework employees) shall be credited with 45 Hours of Service for each week (or 10 Hours of Service for each day) in which such Employee would be credited with Hours of Service in hourly pay. However, this method of computing Hours of Service may not be used for any Employee whose Hours of Service is required to be counted and recorded by any Federal law, such as the Fair Labor Standards Act. Any such method must yield an equivalency of at least 1,000 hours per computation period. The following rules shall apply in determining whether an Employee completes an "Hour of Service": 1. The same hours shall not be credited under subparagraphs (a), (b) or (c) above, as the case may be, and subparagraph (d) above; nor shall the same hours credited under subparagraphs (a) through (d) above be credited under subparagraph (e) above;. 2. The rules relating to determining hours of service for reasons other than the performance of duties and for crediting Hours of Service to particular periods of employment shall be those rules stated in Department of Labor - 7 - 14 regulations Title 29, Chapter XXV, subchapter C, part 2530, Sections 200b2(b) and 200b2(c), respectively. Investment Fund shall mean the separate funds under the Trust Fund which are distinguished by their investment objectives. The term "Investment Fund" does not include a Participant's Common Stock Fund. Non-highly Compensated Employee shall mean an Employee of the Employer who is neither a Highly Compensated Employee nor a Family Member of a Highly Compensated Employee. Participant shall mean an Employee who becomes eligible to participate in the Plan as provided in Article 3. Permanent Disability shall mean a physical or mental condition of a Participant resulting from bodily injury, disease, or mental disorder which (i) for a Participant who is not in active Employment on or after January 1, 1993, entitles the Participant to Social Security disability benefits or (ii) for a Participant who is in active Employment on or after January 1, 1993, results in the Participant receiving long term disability benefits under The Genuine Parts Company Long Term Disability Plan. A Participant's Permanent Disability will end on the date the Participant is no longer receiving disability benefits (i) under Social Security for a Participant who is not in active Employment on or after January 1, 1993, or (ii) under The Genuine parts Company Long Term Disability Plan for a Participant who is in active Employment on or after January 1, 1993. Plan shall mean the Genuine Partnership Plan as set forth in this document together with any subsequent amendments hereto. Plan Administrator or Administrator shall mean the Committee appointed by the Board pursuant to Article 10 to administer the Plan. All references in the Plan to the Administrator shall be deemed to apply to the Committee and vice versa. The Committee so appointed is hereby designated as the "Administrator" of the Plan within the meaning of Section 3(16) of the Act and as the agent for service of legal process for purposes of Section 102(b) of the Act. Plan Year shall be the calendar year. Pre-Tax Contributions shall mean contributions made to the Plan during the Plan Year by the Employer, at the election of the Participant, in lieu of cash compensation and that are made pursuant to a salary reduction agreement. Such contributions are nonforfeitable when made and distributable only as specified in Article 8 below. Pre-Tax Contribution Account shall mean the portion of a Participant's Account attributable to Pre-Tax Contributions, and the total of the Adjustments which have been - 8 - 15 credited to or deducted from a Participant's Account with respect to Pre-Tax Contributions. Prior Plan. See Section 1.01. Prior Employer Account shall mean the portion of a Participant's Account attributable to assets transferred directly from the trustee of another Qualified Plan to the Trustee of this Plan and which are not separately allocated to an existing Account under this Plan. Sub-accounts may be established as necessary to separately account for pre-tax contributions, after-tax contributions, etc. Any restrictions or special rules applicable to the Prior Employer Account (including optional forms of benefit that are protected under Code Section 411(d)(6)) shall be set forth in Schedule C. Qualified as used in "qualified plan" or "qualified trust" shall mean a plan and trust which are entitled to the tax benefits provided respectively by Sections 401 and 501 of the Code, and related provisions of the Code. Qualified Nonelective Contribution shall have that meaning as defined in Section 5.02. Qualified Nonelective Contribution Account shall mean the portion of a Participant's Account attributable to Qualified Nonelective Contributions, and the total of the Adjustments which have been credited to or deducted from a Participant's Account with respect to Qualified Nonelective Contributions. Qualifying Employer Securities shall have that meaning as defined in Section 407(d)(5) of the Act. Rollover Account. The portion of a Participant's Account attributable to Rollover Contributions or the total of the Adjustments attributable to such Rollover Contributions. Rollover Contribution See Section 4.05. Spouse shall mean the person who was married to the Participant (in a civil or religious ceremony recognized under the laws of the state where the marriage was contracted) immediately prior to the date on which payments to the Participant from the Plan begin. If the Participant dies prior to the commencement of benefits, Spouse shall mean a person who is married to a Participant (as defined in the immediately preceding sentence) on the date of the Participant's death. A Participant shall not be considered married to another person as a result of any common law marriage whether or not such common law marriage is recognized by applicable state law. Termination Date shall mean the first to occur of the following events: (a) Voluntary resignation from service of the Employer; or - 9 - 16 (b) Discharge from the service of the Employer by the Employer; or (c) Termination on or after attaining age 65 (normal retirement date); or (d) Death; or (e) Permanent Disability; or (f) The first anniversary of the date the Employee ceases Employment for any reason not described above, e.g., vacation, holiday, sickness, disability (but not a Permanent Disability resulting in a Distribution from the Plan), leave of absence, or layoff. If, however, an Employee terminates his Employment on account of an event described in paragraphs (a) - (c) above and the Employee performs an Hour of Service within twelve months following such Termination Date (or such lesser period as provided in Treasury Regulation Section 1.410(a)-7(d)(iii)(B)), the Employee shall be considered as having been in active Employment during such period of absence. An Employee on Authorized Absence will not have a Termination Date earlier than the end of such Authorized Absence. Treasury Regulation means regulations pertaining to certain Sections of the Code as issued by the Secretary of the Treasury. Trust or Trust Agreement shall refer to the Fund established pursuant to one or more agreements of trust entered into between the Employer and one or more trustees (sometimes referred to as sub-trusts), which governs the creation and maintenance of the Fund, and all amendments thereto which may hereafter be made. It is expressly intended that (if the Committee so directs) multiple sub-trusts may be established under this Plan, which together shall comprise the Trust Fund hereunder and that all of the sub-trusts shall be considered to be a single trust fund for purposes of Section 1.414(1)- 1(b)(1) of the Treasury Regulations. The term Trust Fund shall also be deemed to include any fund existing pursuant to any deposit administration or group annuity contract between the Company and/or the Trustee and an Insurer. Each trust agreement or contract with an Insurer established pursuant to this Plan shall be listed on Schedule D. Trustee shall mean any institution or individual(s) who shall accept the appointment of the Committee to serve as Trustee pursuant to the Plan. Valuation Date. It is intended that the assets of the Plan will be invested in daily valued investment funds. Accordingly, the term "Valuation Date" shall mean each day of the calendar year during which the Trustee determines the fair market value of the assets held in the Investment Funds. - 10 - 17 Other Rules. A defined term, such as "Termination," will normally govern the definitions of derivatives therefrom, such as "Terminate," even though such derivatives are not specifically defined and even if they are or are not initially capitalized. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, unless the context clearly indicates to the contrary. Singular and plural nouns and pronouns shall be interchangeable as the factual context may allow or require. The words "hereof," "herein," "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan and not to any particular provision or Section. - 11 - 18 ARTICLE 3 PARTICIPATION 3.01 Participation (a) Each Eligible Employee who is a Participant in the Prior Plan on the day preceding the Effective Date of this Plan shall be a Participant in this Plan on the Effective Date (provided he is employed on the Effective Date). (b) An Eligible Employee who is not described in subsection (a) above shall become a Participant in the Plan on the Entry Date next following the later of (i) the date on which the Employee has both completed one Year of Eligibility Service and attained age 21 or (ii) the date the Employee becomes a member of the class of Eligible Employees. See Section 3.04 below for special rules that apply to new Employees following an acquisition. (c) If an Eligible Employee either (i) is not employed or (ii) is no longer an Eligible Employee on the earliest Entry Date on or after which such Employee satisfied the requirements described above, but returns to work or again becomes an Eligible Employee before incurring a Break in Service, such Eligible Employee shall commence participation on the date such Employee returns to work or again becomes an Eligible Employee. If the Employee returns to work or again becomes an Eligible Employee after a Break in Service, such Employee must again satisfy the requirements of Section 3.01(b). (d) An Eligible Employee who becomes eligible to participate in this Plan will be asked to follow certain procedures to enroll in the Plan, and pursuant to which he will designate Beneficiaries and may elect to make Pre-Tax Contributions. 3.02 Year of Eligibility Service (a) 1,000 Hour Rule. A Year of Eligibility Service is determined under the 1,000 Hours of Service method. Accordingly, an Employee shall receive one Year of Eligibility Service upon completing a twelve consecutive month period of Employment during which the Employee earns at least 1,000 Hours of Service. The initial twelve month period shall be the twelve consecutive month period commencing on the Employee's date of hire or rehire. If the Employee fails to complete 1,000 Hours of Service during - 12 - 19 this 12 month period, the Employee shall receive a Year of Eligibility Service upon completing at least 1,000 Hours of Service during a Plan Year (commencing with the Plan Year during which the Employee's first anniversary of his date of hire occurs). (b) Break in Service. For purposes of this Article 3, an Employee shall not receive credit for any Hours of Service during any period of Employment which precedes a Break in Service if, at the time of the Break in Service, the Employee had never been a Participant in the Plan. (c) Authorized Absence. A period during which an Employee is on Authorized Absence shall not count towards the Employee's Break in Service if such Employee resumes Employment immediately after the end of such Authorized Absence. 3.03 Participation and Rehire. (a) Status as a Participant. A Participant's participation in the Plan shall continue until the Participant's Termination Date. On or after his Termination Date, the Employee shall be known as a Former Participant and his benefits shall thereafter be governed by the provisions of Article 8. The individual's status as a Former Participant shall cease as of the date the individual ceases to have any balance in his Account. If a Participant ceases to be an Eligible Employee but does not have a Termination Date, then such person shall continue to be known as a "Participant," but shall not be eligible to make Pre-Tax Contributions and shall not be eligible to receive Employer Contributions. (b) Rehire of Person who was a Participant in this Plan. An Eligible Employee who was a Participant in this Plan at the time of his Termination Date and who is subsequently rehired by an Employer, shall be eligible to immediately participate in this Plan on the date of his rehire or, if later, on the date he becomes an Eligible Employee. 3.04 Acquisitions. If a group of persons becomes employed by an Employer (or any of its subsidiaries or divisions) as a result of an acquisition of another employer, the Committee shall determine whether and to what extent employment with such prior employer shall be treated as Years of Eligibility Service, the applicable Entry Date (or special entry date) for such acquired employees, and any other terms and conditions which apply to eligibility to participate in this Plan. Such terms and conditions shall be set forth in Schedule A or Schedule B to this Plan by action of the Committee. Except to the extent required by law, employees of an acquired business which is not identified in Schedule A or Schedule B shall not receive credit under this Plan for their prior employment with the acquired business. - 13 - 20 3.05 Not Contract for Employment. Participation in the Plan shall not give any Employee the right to be retained in the Employer's employ, nor shall any Employee, upon dismissal from or voluntary termination of his employment, have any right or interest in the Fund, except as herein provided. - 14 - 21 ARTICLE 4 PRE-TAX CONTRIBUTIONS 4.01 Pre-Tax Contributions. Effective on the Participant's initial Entry Date, a Participant may elect to make Pre-Tax Contributions to the Plan. If a Participant fails to elect to make Pre-Tax Contributions at that time, a Participant may elect to make Pre-Tax Contributions to the Plan effective as of the first day of any subsequent month (except during periods of suspension -- see Section 4.03). A Participant's Pre-Tax Contributions to the Plan shall be made by means of payroll deduction. A Participant may contribute as a Pre-Tax Contribution any whole percentage from 1% to 16% of his Compensation during any Plan Year. 4.02 Elections Regarding Pre-Tax Contributions. (a) Procedure for Making Elections. Elections by a Participant to make Pre-Tax Contributions to the Plan shall be made in writing on a form prescribed by the Committee and by designating on such form the percentage of Compensation that will be contributed as a Pre-Tax Contribution during each pay period. The election to make Pre-Tax Contributions shall be effective no earlier than the first day of the Participant's normal pay period beginning at least 30 days after the Employer receives such election form (or such smaller number of days as determined by the Committee on a nondiscriminatory basis). (b) Treatment as 401(k) Contributions. It is expressly intended that, to the extent allowable by law, Pre-Tax Contributions shall not be included in the gross income of the Participant for income tax purposes and shall be deemed contributions under a cash or deferred arrangement pursuant to Code Section 401(k). (c) Additional Limitations of Pre-Tax Contributions. Pre-Tax Contributions shall be subject to the limitations described in Section 12.02 (maximum dollar contribution limit), Section 12.03 (ADP non-discrimination test) and Article 14 (Code Section 415 limit). 4.03 Change in Employee Contribution Percentage or Suspension of Contributions. (a) Change of Contribution Percentage. A Participant may increase or decrease the percentage of his Compensation contributed as a Pre-Tax Contribution only on January 1 or July 1 of each Plan Year by delivery of written notice to the Committee. In order to be effective, the Participant - 15 - 22 must notify the Committee at least 30 days prior to the date that the increase or decrease will become effective (or such lesser number of days as determined by the Committee on a nondiscriminatory basis). (b) Suspension of Contributions. A Participant may suspend his Pre-Tax Contributions at any time by properly completing a form prescribed by the Committee. The suspension of Pre-Tax Contributions will be effective on the first day of the Participant's normal payroll period that begins 30 days after the Participant delivers the completed form to the Committee. A Participant may resume making Pre-Tax Contributions on the first day of any month which is at least six months after the effective date of such suspension of contributions and only after informing the Committee in writing at least 30 days prior to the date on which the Pre-Tax Contributions are to resume. The Committee, on a nondiscriminatory basis, may prescribe a lesser number of days on which the suspension or resumption of Pre-Tax Contributions is to be effective. A Participant's Pre-Tax Contributions shall automatically be suspended beginning on the first payroll period that commences after the Participant is not in receipt of Compensation, the Participant's layoff or the Participant's Authorized Absence without pay. (c) Other Rules. (1) See Section 9.03 for circumstances under which a Participant's Pre-Tax Contributions could be suspended for a period of at least 12 months after such Participant receives a hardship distribution. (2) In order to satisfy the provisions of Article 12 and Article 14, the Committee may from time to time either temporarily suspend the Pre-Tax Contributions of Highly Compensated Employees or reduce the maximum permissible Pre-Tax Contribution that may be made to the Plan by Highly Compensated Employees. (3) Any reduction, increase, or suspension of Pre-Tax Contributions described in this Article 4.03 shall be made in such manner as the Committee may prescribe from time to time consistent with the provisions of this Article. 4.04 Deadline for Contributions and Allocation of Pre-Tax Contributions. Pre-Tax Contributions shall be deducted by the Employer from the Participant's Compensation and paid to the Trustee as promptly as possible after the end of each regular pay period but in no event later than 90 days after such Pre-Tax Contributions have been retained by the Employer. - 16 - 23 4.05 Rollover Contribution (a) Without regard to any limitation on contributions set forth in this Article, a Participant shall be permitted, if the Committee consents (based on non-discriminatory criteria), to transfer to the Trustee during any Plan Year additional property acceptable to the Trustee, provided such property: (1) was received by the Participant from a Qualified Plan maintained by a previous employer of the Participant and qualifies as a rollover contribution within the meaning of Code Section 402(a)(5) or (2) was received by the Participant from an individual retirement account or individual retirement annuity and qualifies as a rollover contribution within the meaning of Code Section 408(d)(3)(A)(ii). Under either (1) or (2) above, a Participant may make a Rollover Contribution only if the Employer acquired the assets or stock of the Participant's previous employer and the Rollover Contribution originated from the Qualified retirement plan of such previous employer. (b) Such property shall be held by the Trustee in the Employee's Rollover Account. All such amounts so held shall at all times be fully vested and nonforfeitable. Such amounts shall be distributed to the Employee upon Termination Date in the manner provided in Article 8. (c) See Section 8.07 regarding the right of a Participant to request a trustee to trustee transfer of the Participant's Account in lieu of a distribution of such Account. - 17 - 24 ARTICLE 5 EMPLOYER CONTRIBUTIONS 5.01 Employer Matching Contribution. (a) Eligibility to Receive Matching Contribution. The Employer shall contribute to the Employer Matching Contribution Account of each Participant who is employed on the last day of a calendar month and who made a Pre- Tax Contribution during such calendar month. (b) Amount of Employer Matching Contribution. The Employer Matching Contribution shall equal the lesser of 20% of the Participant's Pre-Tax Contributions made during the calendar month or 20% of the Participant's first 6% of Compensation for such month (1.2% of Compensation). (c) Employment on Last Day of Month. For purposes of allocating an Employer Matching Contribution, any Participant who either has a Termination Date on or after attaining age 65 or has a Termination Date on account of death or Permanent Disability shall be deemed to be employed on the last day of the month in which such Termination of Employment occurred. In addition, certain Participants who have a Termination Date during the Plan Year may be treated as being employed for purposes of receiving an Employer Matching Contribution if such treatment is necessary to enable the Plan to satisfy the requirements of Code Sections 410(b), 401(a)(26) or 401(a)(4). (d) Qualifying Employer Securities. The Employer Matching Contributions are intended to be comprised primarily of Qualifying Employer Securities (i.e., Common Stock). It is hereby expressly provided that the Plan may acquire and hold Qualifying Employer Securities. 5.02 Qualified Nonelective Contributions. In the sole discretion of the Employer, an additional Employer Contribution may be made to the Plan which shall be known as a "Qualified Nonelective Contribution." Such contribution shall be made in order to satisfy the requirements of Article 12, and shall be allocated to the Qualified Nonelective Contribution Accounts of those Non-highly Compensated Employees selected by the Committee at the time such Qualified Nonelective Contribution is made, or as soon thereafter as possible. - 18 - 25 5.03 Form and Timing of Contributions. (a) Employer Contributions shall be made in cash or in Qualifying Employer Securities. Employer Matching Contributions shall be delivered to the Trustee on or before the date prescribed by the Code for filing the Employer's federal income tax return, including authorized extensions. Qualified Nonelective Contributions shall be delivered to the Trustee on or before the last day of the twelfth month following the close of the Plan Year to which the contribution relates. (b) Except as provided in this Section 5.03, all Employer Contributions shall be irrevocable, shall never inure to the benefit of any Employer, shall be held for the exclusive purpose of providing benefits to Participants and their Beneficiaries (and contingently for defraying reasonable expenses of administering the Plan), and shall be held and distributed by the Trustees only in accordance with this Plan. (c) Upon an Employer's request and to the extent permitted by the Code and other applicable laws and regulations thereunder, a contribution which was made by a mistake in fact, or conditioned upon the initial qualification of the Plan under Code Section 401(a) or upon the deductibility of the contribution under Section 404 of the Code shall be returned to the Employer within one year after the payment of the contribution, the denial of the Plan's initial qualification, or the disallowance of the deduction (to the extent disallowed) whichever is applicable. All contributions to this Plan are expressly conditioned on the deductibility of such contributions under Code Section 404. 5.04 Forfeitures. Forfeitures shall first be applied to restore amounts previously forfeited pursuant to Section 7.05(c). Next, forfeitures shall be used to pay expenses of the Plan which may be paid by the Plan in accordance with the provisions of ERISA. Thereafter any remaining forfeitures shall be allocated equally on a per capita basis among the Employer Matching Contribution Accounts of all Participants who are (i) actively employed on the last day of the calendar month in which the forfeiture occurred and (ii) who made an Elective Deferral during such calendar month or during any prior month of the Plan Year. See Section 7.05 to determine when a forfeiture of a Participant's Account occurs. - 19 - 26 ARTICLE 6 ACCOUNTS AND ALLOCATIONS 6.01 Participant Accounts. (a) Individual Account Plan. This Plan is an "individual account plan," as that term is used in ERISA. A separate Account shall be maintained for each Participant, former Participant or Beneficiary, so long as he has an interest in the Trust Fund. (b) Sub-Accounts. Each Account shall be divided (as appropriate) into the following parts and sub-parts: (1) The Pre-Tax Contribution Account, which shall reflect Pre-Tax Contributions contributed to this Plan and any Adjustments thereto. (2) The Employer Matching Contribution Account, which shall reflect Employer Matching Contributions contributed to this Plan and any Adjustments thereto. (3) The Prior Employer Account, which shall reflect assets transferred to this Plan directly from a trustee of another Qualified Plan to the Trustee of this Plan (and Adjustments thereto). The Prior Employer Account shall be further divided into such additional sub-portions as the Committee deems necessary or appropriate to maintain, including assets contributed to the Qualified Plan as pre-tax contributions, after-tax contributions, employer matching contributions, rollover contributions, etc. To the extent deemed appropriate, portions or sub-portions of this Account may be allocated to and held in other Accounts. For example, pre-tax contributions transferred to this Plan from another Qualified Plan, may be allocated to and held as part of the Pre-Tax Contribution Account. (4) The Rollover Account, which shall reflect the value of all investments derived from the Participant's Rollover Contributions under this Plan and any Adjustments thereto. (5) The Qualified Nonelective Contribution Account, which shall reflect Qualified Nonelective Contributions contributed to this Plan and any Adjustments thereto. - 20 - 27 In addition, the Committee may divide such sub-accounts into such additional sub-portions as the Committee deems to be necessary or advisable under the circumstances or to establish other accounts or sub-accounts as needed. (c) Value of Account as of Valuation Date. As of each Valuation Date, each Participant's Account shall equal: (1) his total Account as determined on the immediately preceding Valuation Date, plus (2) his Pre-Tax Contributions added to his Account since the immediately preceding Valuation Date, plus (3) his Employer Contributions added to his Account since the immediately preceding Valuation Date, plus (4) his Rollover Contributions or amounts transferred to this Plan from the trustee of another Qualified plan and which were added to his Account since the immediately preceding Valuation Date, minus (5) his Distributions, if any, since the immediately preceding Valuation Date, plus or minus (6) his allocable share of Adjustments. 6.02 Allocation of Adjustments. The Adjustment for each Investment Fund shall be calculated as of each Valuation Date. The Adjustment for a given Investment Fund shall be allocated to each Account invested in such Investment Fund in the proportion that each such Account bears to the total of all such Accounts. Such Valuation shall occur prior to the allocation of Employer Contributions, Pre-Tax Contributions, Rollover Contributions and transfers to this Plan from the trustee of another Qualified plan but after taking into account all Distributions since the prior Valuation Date. 6.03 Allocation of Dividends Any cash or stock dividend received on shares of Company Stock allocated to a Participant's Common Stock Fund shall be allocated to such Participant's Common Stock Fund. - 21 - 28 6.04 Adjustment Attributable to Plan Loans. The Adjustment that is allocable to the Participant's directed investment of his loan shall be the interest payments made by the Participant with respect to such loan since the immediately preceding Valuation Date. 6.05 Plan Expenses. The Committee may direct that expenses attributable to general Plan administration be allocated among the Accounts of all Participants (other than the Company Stock Fund) in proportion to their Account balances. 6.06 Investment Funds and Elections (a) Election of Investment Funds. Each Participant shall direct, following such procedures as may be specified by the Committee, to have his Pre-Tax Contribution Account, Prior Employer Contribution Account, Rollover Account and Qualified Nonelective Contribution Account allocated or reallocated among the Investment Funds. (b) Account Balance as of December 31, 1993. Prior to the Effective Date, a Participant's Account (other than his Matching Employer Contribution Account) was invested in a fixed income fund. Each Plan Year, beginning on or after the Effective Date, a Participant may direct the Committee to transfer up to 25% of his pre-1994 Account that was invested in the fixed income fund to any of the other available Investment Funds. (b) Initial Investment Direction. A Participant's initial investment election must allocate his entire Account in 50% increments among the Investment Funds, as of the date of the directive, and all subsequent contributions to each sub-account for so long as the election remains in effect. An Employee who fails to make a proper investment election by the deadline established by the Committee for such purpose, shall be deemed to have elected to allocate 100% of his Account in the Investment Fund which, in the opinion of the Committee, best preserves the principal amount of the Participant's Account. (c) Subsequent Elections. Investment elections will remain in effect until changed by a new election. New elections may be made in 50% increments by a Participant once each calendar quarter. New elections may change future allocations to the Participant's Account, may reallocate between the Investment Funds any amounts previously credited to the Participant's Account, or may leave the allocation of such prior amounts unchanged. - 22 - 29 (d) Investment Options. The Committee shall select such Investment Funds as are deemed appropriate and shall notify affected Participants of such Investment Funds. The Committee may modify, eliminate or select new Investment Funds from time to time and shall notify affected Participants of such changes and solicit new investment elections, if appropriate. (e) Company Stock Fund. A Participant's Employer Matching Contribution Account shall consist primarily of Company Stock. Company Stock shall be held in the Participant's Common Stock Fund. Participants may not direct the investment of their Company Stock Fund and may not direct the Trustee to transfer other contributions (e.g., Pre- Tax Contributions, etc.) to the Common Stock Fund. 6.07 Errors. Where an error or omission is discovered in any Participant's Account, the Committee shall make appropriate corrective adjustments as of the end of the Plan Year in which the error or omission is discovered. If it is not practical to correct the error retroactively, then the Committee shall take such action in its sole discretion as may be necessary to make such corrective adjustments, provided that any such actions shall treat similarly situated Participants alike and shall not discriminate in favor of Highly Compensated Employees. - 23 - 30 ARTICLE 7. VESTING 7.01 Termination Date On or After Age 65. A Participant who has a Termination Date on or after attaining age 65 shall be 100% vested in his Account. Such Account will be distributed on the date and in the form specified in Article 8. 7.02 Permanent Disability. A Participant who has a Termination Date on account of Permanent Disability shall become 100% vested in his Account as of the date of such Permanent Disability and shall be entitled to a Distribution of his Account on the date and in the form specified in Article 8. 7.03 Death. A Participant who has a Termination Date on account of death shall become 100% vested in his Account. The Participant's Beneficiary shall receive a Distribution of such Account on the date and in the form specified in Article 8. 7.04 Other Termination Date. (a) In General. For any reason other than a Termination Date on or after age 65, Permanent Disability or death, the Participant shall be entitled to the vested portion of his Account, which shall be distributed on the date and in the form specified in Article 8. (b) 100% Vesting in Certain Sub-Accounts. A Participant shall always be one hundred percent (100%) vested in his Pre- Tax Contribution Account, Qualified Nonelective Contribution Account, and Rollover Account. (c) Three Year Vesting For Certain Sub-Accounts. Any Participant who has three or more Years of Credited Service shall be 100% vested in his Employer Matching Contribution Account. If a Participant has less than three Years of Credited Service at the time he has a Termination Date, the Participant shall forfeit all amounts held in his Employer Matching Contribution Account. (d) Prior Employer Account. See Schedule C for the vesting provisions applicable to a Participant's Prior Employer Account. - 24 - 31 (e) Forfeiture. That portion of the Participant's Account which is not vested upon the Participant's Termination Date shall be forfeited in accordance with Section 7.05. 7.05 Forfeitures. (a) No Distribution of Account Prior to Break in Service. A Participant who has a Termination Date but who does not receive a Distribution of his vested Account prior to incurring a Break in Service shall, upon incurring the Break in Service, forfeit the non-vested portion of his Account. If the terminated Participant resumes Employment with the Employer prior to incurring a Break in Service, then the Participant's entire Account, unreduced by any forfeiture, shall become his beginning Account on the date he resumes participation in the Plan. (b) Distribution of Vested Account Prior to Break in Service. A Participant who has a Termination Date and receives a Distribution of his entire vested Account prior to incurring a Break in Service, shall, upon such Distribution, forfeit the non-vested portion of his Account. A Participant who is not vested in his Account shall be deemed to have received a Distribution of his entire vested account upon his Termination Date and the Participant's non- vested Account shall be immediately forfeited. (c) Repayment of Account; Restoration of Non-Vested Account. Except as provided below, a Participant who is re-hired by the Employer shall have the right to repay to the Plan the portion of the Participant's Account which was previously distributed to him. In the event the Participant repays the entire Distribution he received from the Plan, the Employer shall restore the non-vested portion of the Participant's Account. A Participant's Account shall first be restored, to the extent possible, out of forfeitures under the Plan in the Plan Year in which he was reemployed. To the extent such forfeitures are insufficient to restore the Participant's Account, restoration shall be made from Employer Contributions. A Participant who was deemed to have received a Distribution of his vested Account (see subsection (b) above) shall be deemed to have repaid such vested Account if such Participant is rehired before incurring a Break in Service. (d) Restrictions of Repayment Account. Notwithstanding anything to the contrary in this Plan, a Participant shall not have the right to repay to the Plan the portion of his Account which was previously distributed to him after any of the following events: (i) the Participant incurs a Break in Service before returning to Employment, (ii) the Participant fails to repay the prior Distribution within five years after the Participant is re-employed by the Employer, or (iii) the Participant received a Distribution of his entire Account balance at the time of such earlier Distribution. - 25 - 32 (e) Allocation of Forfeitures. See Section 5.04 for the allocation of forfeitures. - 26 - 33 ARTICLE 8 DISTRIBUTIONS 8.01 Commencement of Distribution. (a) Termination of Employment. If a Participant has a Termination Date other than on account of death, the Participant's Account will commence to be distributed no later than 60 days following the end of the Plan Year in which such Participant requests a Distribution of his Account. Such request shall be made on a form provided by the Committee. See Section 8.01(c) for circumstances where the Participant's consent to a Distribution is not required. (b) Death. If a Participant has a Termination Date on account of death, the Participant's Account shall be distributed within 90 days after the Participant's death unless the particular facts and circumstances require a longer waiting period. However, if the Spouse is the Participant's Beneficiary, the Spouse may delay the distribution of the Participant's Account until the latest date possible under Section 8.05 (relating to mandatory distributions upon attaining age 70-1/2). (c) Consent of Participant. A Participant's consent to a Distribution of his Account shall not be required in the circumstances described below, and the Committee shall direct the Trustee to distribute the Participant's Account as provided below: (i) Account Less Than $3,500. If the Participant's vested Account balance is less than or equal to $3,500 at the time of the Distribution, such Account will be distributed in a lump sum no later than 60 days after the end of the Plan Year in which such Termination Date occurred. (ii) Age 70-1/2. If a distribution is required under Section 8.05 (relating to mandatory distributions for Participants age 70-1/2), the Participant's Account will be distributed as provided in such Section. (iii) Termination Date On or After Age 65. If a Participant has incurred a Termination Date and is age 65 or older, the Plan shall begin distribution of the Participant's Account no later than 60 days following the end of the Plan Year in which the Participant attains age 65 or, if later, within 60 days following the end of the Plan Year in which the Participant has a Termination Date. - 27 - 34 (d) Hardship Withdrawals. Hardship withdrawals (see Article 9) shall commence no later than ninety (90) days after such request is approved by the Committee. (e) Committee Direction to Trustee. The Committee shall issue directions to the Trustee concerning the recipient and the distribution date of benefits which are to be paid from the Trust pursuant to the Plan. (f) Committee Guidelines. The Committee may establish for administrative purposes, uniform and nondiscriminatory guidelines concerning the commencement of benefits. 8.02 Method of Distribution. (a) Lump Sum Payment. Distribution of the Participant's Account will be made in a lump sum cash amount. However, see Schedule C for other optional distribution forms that may be applicable to the Participant's Prior Employer Account. (b) Form of Payment. Distributions shall be in cash. However, if the value of the vested Qualifying Employer Securities that are allocated to the Participant's Account equals or exceeds $1,000, the Participant shall have the option of receiving whole shares of such Qualifying Employer Securities in lieu of cash. Fractional shares, if any, shall be paid in cash. Notwithstanding the foregoing, any in-service withdrawals shall be paid in cash. 8.03 Payment to Minors and Incapacitated Persons. In the event that any amount is payable to a minor or to any person who, in the judgment of the Committee, is incapable of making proper disposition thereof, such payment shall be made for the benefit of such minor or such person in any of the following ways as the Committee, in its sole discretion, shall determine: (a) By payment to the legal representative of such minor or such person; (b) By payment directly to such minor or such person; (c) By payment in discharge of bills incurred by or for the benefit of such minor or such person. The Trustee shall make such payments as directed by the Committee without the necessary intervention of any guardian or like fiduciary, and without any obligation to require bond or to see to the further application of such payment. Any payment so made shall be in - 28 - 35 complete discharge of the Plan's obligation to the Participant and his Beneficiaries. 8.04 Application for Benefits. The Committee may require a Participant or Beneficiary to complete and file with the Committee certain forms as a condition precedent to the payment of benefits. The Committee may rely upon all such information given to it, including the Participant's current mailing address. It is the responsibility of all persons interested in distributions from the Trust Fund to keep the Committee informed of their current mailing addresses. 8.05 Special Distribution Rules. (a) To the extent that the distribution rules described in this Section provide a limitation upon distribution rules stated elsewhere in this Plan, the distribution rules stated in this Section shall take precedence over such conflicting rules. However, under no circumstances shall the rules stated in this Section be deemed to provide distribution rights to Participants or their Beneficiaries which are more expansive or greater than the distribution rights stated elsewhere in this Plan. For example, if the only distribution method permitted under the Plan is a lump sum, then distributions under this Section 8.05 may only be made in a lump sum. In addition, if the Plan requires distributions to commence at age 65 for Participants who have terminated Employment, distributions must commence at age 65 and may not be delayed to age 70-1/2. (b) In no event may the distribution of a Participant's Account commence later than April 1 following the calendar year in which the Participant attains age 70-1/2 (the "required beginning date"). However, if a Participant attained age 70-1/2 prior to January 1, 1988 and is not a 5% owner of an Employer (as defined in Code Section 401(a)(9) and the Treasury Regulations thereunder), such Participant's Account shall commence to be distributed no later than April 1 following the calendar year in which incurs his Termination Date. Notwithstanding the preceding distribution requirements, a distribution on behalf of any Participant may be made in accordance with a benefit payment election executed before January 1, 1984 in a manner that satisfies the requirements of the transitional rule of Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act of 1982. (c) The entire account balance of each Participant shall be distributed, beginning not later than the required beginning date, in a single lump sum. The initial distribution shall be based on the Participant's account balance as of the December 31 preceding the required beginning date. During the calendar year which begins after the required beginning date (and in each - 29 - 36 calendar year thereafter), the Participant's entire account balance shall be distributed in a single lump sum based on the value of such account balance as of the first day of such calendar year. (d) If a Participant dies before distribution of the Participant's Account has begun in accordance with paragraph (c) above, the Participant's entire vested Account must be distributed in a lump sum within 90 days of the Participant's death unless the Participant's Account is payable to or for the benefit of his Spouse. If the Beneficiary is the Participant's Spouse, the Spouse may delay a lump sum distribution of the Participant's Account until the date on which the Participant would have attained age 70-1/2. (e) Notwithstanding anything to the contrary herein, distributions under the Plan will comply with Treasury Regulations issued under Code Section 401(a)(9) and any other provisions reflecting Code Section 401(a)(9) as prescribed by the Commissioner of the Internal Revenue Service. 8.06 Distributions Pursuant to Qualified Domestic Relations Orders. Notwithstanding anything to the contrary in this Plan, a "qualified domestic relations order", as defined in Code Section 414(p), may provide that any amount to be distributed to an alternate payee may be distributed immediately even though the Participant is not yet entitled to a distribution under the Plan. The intent of this Section is to provide for the distribution of benefits to an alternate payee as permitted by Treasury Regulation 1.401(a)-13(g)(3). 8.07 Direct Rollovers. (a) In General. This Section 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 Section, 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. (b) Definitions. Eligible Rollover Distribution. An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee's designated Beneficiary, or for a - 30 - 37 specified period of ten 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). Eligible Retirement Plan. An Eligible Retirement Plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. Distributee. A Distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are Distributees with regard to the interest of the spouse or former spouse. Direct Rollover. A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee. (c) Waiver of 30-day Notice. If a distribution is one to which Sections 401(a)(11) and 417 of the Internal Revenue 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: (1) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and (2) the Participant, after receiving the notice, affirmatively elects a distribution. 8.08 Participant Withdrawals After Age 59-1/2. At any time after a Participant attains age 59-1/2, the Participant may elect to withdraw a part or all of his vested - 31 - 38 Account (including any earnings thereon). In no event shall a Participant be permitted to repay the amount of his or her in-service withdrawal. If the Participant withdraws only a portion of his vested Account, the Committee shall determine (in a nondiscriminatory manner) the source of the Accounts and Investment Funds from which the withdrawal shall be made. - 32 - 39 ARTICLE 9 HARDSHIP WITHDRAWALS; LOANS 9.01 Hardship Withdrawal of Account. (a) In General. Any Participant may request the Committee to distribute to him part or all of his vested Account (other than amounts held in the Participant's Qualified Nonelective Contribution Account, amounts used as collateral for a Participant loan and certain earnings on the Participant's Account as provided below). The Committee shall determine (in a nondiscriminatory manner) the source of the Accounts (other than the Accounts and amounts identified above) and Investment Funds from which the withdrawal shall be made. (b) No Distribution of Earnings. Income or gain that is allocated to the Participant's Pre-Tax Contribution Account may not be distributed in a hardship withdrawal. 9.02 Definition of Hardship. Hardship shall mean an immediate and heavy financial need experienced by reason of: (a) Expenses of any accident to or sickness of such Participant, his Spouse or his dependents or expenses necessary to provide medical care for such Participant, his Spouse or his dependents; (b) Purchase of a primary residence for such Participant; (c) Payment of tuition and related educational fees for the next twelve months of post-secondary education for the Participant, his Spouse, children or dependents; (d) The need to prevent the eviction of the Participant from his principal residence or foreclosure on the Participant's principal residence; or (e) Other financial hardships as permitted by Treasury Regulations or other regulatory or judicial authority and approved by the Committee. 9.03 Maximum Hardship Distribution. A hardship distribution cannot exceed the amount required to meet the immediate financial need created by the hardship (after taking into account applicable federal, - 33 - 40 state, or local income taxes and penalties) and not reasonably available from other resources of the Participant. In order to ensure compliance with this requirement, the Committee may require the Participant to satisfy any or all of the provisions described below in (a), (b), or (c) below as a condition precedent to the Participant receiving a hardship distribution: (a) No Other Sources Available. Certification by the Participant on a form provided by the Committee for such purpose that the financial need cannot be relieved (1) through reimbursement or payment by insurance; (2) by reasonable liquidation of the Participant's assets; (3) by ceasing Pre-Tax Contributions under the Plan; (4) by other in- service distributions (including loans) under the Plan and under any other plan maintained by the Employer; or (5) by borrowing from commercial lenders on reasonable commercial terms. (b) Receipt of all Distributions Available; Suspension of Future Contributions. Receipt by the Participant of all distributions that he is eligible to receive (including loans) under this Plan and under any other plan maintained by the Employer. In addition, the Participant must agree to the following limitations and restrictions: (1) The Participant's Pre-Tax Contributions shall automatically be suspended beginning on the first payroll period that commences after such Participant requests and receives a hardship distribution. Such Participant may resume making Pre-Tax Contributions only on the first day of a calendar month which is at least 12 months after the effective date of such suspension and only after informing the Committee in writing at least 30 days (or such lesser time as specified by the Committee) prior to the date on which the Pre-Tax Contributions are to resume. (2) The maximum Pre-Tax Contribution the Participant may make for the calendar year following his hardship distribution shall be reduced by the amount of Pre-Tax Contributions made by the Participant during the calendar year in which he received his hardship distribution. (3) The Participant shall be prohibited under a legally enforceable agreement from making an employee contribution to any other plan maintained by the Employer for at least 12 months after the receipt of the hardship distribution. For this purpose, the phrase "any other plan" includes all qualified and nonqualified plans of deferred compensation, stock option plans and stock purchase plans. It does - 34 - 41 not include a health or welfare plan including one that is part of a section 125 cafeteria plan. (c) Other. Any other condition or method approved by the Internal Revenue Service. 9.04 Procedure to Request Hardship. The request to receive a hardship distribution shall be made on such forms and following such procedures as the Committee may prescribe from time to time. Under no circumstances shall the Committee permit a Participant to repay to the Plan the amount of any withdrawal by a Participant under this Section. 9.05 Authority to Establish Loan Program. The Committee is authorized and directed to administer the loan program. 9.06 Eligibility for Loans. Loans shall be available to all Participants on a reasonably equivalent basis. For the purposes of receiving a loan, the term "Participant" shall include any Former Participant who is a "party in interest" as defined in Section 3(14) of ERISA. 9.07 Loan Amount. (a) Minimum Loan. No loan of less than $1,000 will be made. (b) Maximum Loan. A loan to any Participant (determined immediately after the origination of the loan) shall not exceed the lesser of: (1) Fifty percent (50%) of the Participant's vested balance in his Account as of the Valuation Date with respect to which the loan is processed; or (2) $50,000, reduced by the excess (if any) of (A) the highest outstanding balance of loans from the Plan during the one-year period ending on the day before the date on which such loan was made, over (B) the outstanding loan balance of loans from the Plan on the date on which the loan was made. 9.08 Maximum Number of Loans. No more than one loan may be made outstanding to any Participant at any time. - 35 - 42 9.09 Assignment of Account. Each loan shall be supported by the Participant's promissory note for the amount of the loan, including interest, payable to the order of the Trustee. In addition, each loan shall be supported by an assignment of the Participant's right, title and interest in and to his Account equal to the amount of the loan and shall be supported by any other reasonable security required by the Trustee. 9.10 Interest. Interest shall be charged on any such loan at a rate established from time to time by the Trustee provided such rate is equivalent to a rate that would be charged by a commercial lender for a similar loan. 9.11 Term of Loan. The maximum repayment term of any loan is five years unless the loan is used to acquire any dwelling unit which within a reasonable time after the loan is made is to be used as the principal residence of the Participant. The maximum repayment term for a loan used to acquire a dwelling unit shall be a reasonable time, as determined by the Committee, that may exceed five years but shall not exceed fifteen years. Except for Former Participants described in Section 9.06, the term of the loan may not extend beyond the Participant's Termination Date. The Committee may, in its discretion, establish a shorter repayment term than the maximum repayment term otherwise permitted under the Plan. 9.12 Level Amortization. Each loan shall provide for level amortization with payments to be made at such regular intervals as the Committee determines in its discretion, but not less frequently than once every three months over the term of the loan. Loans to Participants in active Employment shall be repaid through payroll deductions and the Participant shall be required to authorize such payroll deduction as a condition to receiving the loan. 9.13 Directed Investment. A Participant who requests a loan shall be deemed to have directed the Committee to invest assets held in his Account by the amount of the loan, and until such loan is repaid, such loan shall be considered a directed investment of the Participant's Account hereunder. The Plan monies which are used to fund the Participant loan shall be withdrawn from the Participant's Account in the following order (and principal and interest loan repayments shall be added back to such Accounts in the same order): - 36 - 43 (a) the Pre-Tax Contribution Account; (b) the Rollover Account; (c) the Qualified Nonelective Contribution Account; (d) the Prior Employer Account; and (e) the Employer Matching Contribution Account. Within each such Account the monies which are used to fund the Participant loan shall be withdrawn on a pro rata basis according to the value of the Investment Funds in which such Account was invested. Principal and interest payments on the loan will be allocated to the Participant's Investment Funds according to the Participant's investment election at the time of the payment. However, if the Participant does not have an investment election in place at the time of repayment, the principal and interest payments will be allocated to the Participant's Investment Funds on a pro rata basis based on the Participant's investment election in place at the time the loan was made. If a loan is made out of the Participant's Employer Matching Contribution Account, repayment of principal and interest attributable to such Account shall be allocated to the Participant's Common Stock Fund. 9.14 Other Requirements. The Committee may establish such additional guidelines and rules as it deems necessary. Such guidelines and rules shall be set forth in the loan application and the terms specified in such loan application are hereby incorporated by reference in the Plan. The Committee may amend or modify the loan application as it deems necessary to carry out the provisions of this Article Nine. 9.15 Distribution of Loan. Loan proceeds will be distributed as soon as practicable after the loan is approved and after the Participant completes all documentation necessary to make such loan. - 37 - 44 ARTICLE 10 ADMINISTRATION OF THE PLAN 10.01 Named Fiduciaries. The following parties are named as Fiduciaries of the Plan and shall have the authority to control and manage the operation and administration of the Plan: (i) The Company; (ii) The Board; (iii) The Trustee; (iv) The Committee. The Fiduciaries named above shall have only the powers and duties expressly allocated to them in the Plan and in the Trust Agreement and shall have no other powers and duties in respect of the Plan; provided, however, that if a power or responsibility is not expressly allocated to a specific named fiduciary, the power or responsibility shall be that of the Company. No Fiduciary shall have any liability for, or responsibility to inquire into, the acts and omissions of any other Fiduciary in the exercise of powers or the discharge of responsibilities assigned to such other Fiduciary under this Plan or the Trust Agreement. 10.02 Board of Directors. (a) The Board shall have the following powers and duties with respect to the Plan: (1) to appoint and remove the members of the Committee as provided herein; and (2) to terminate the Plan in whole or in part pursuant to the procedures provided hereunder. (b) The Compensation and Stock Option Committee of the Board shall have the power to amend any or all of the provisions of the Plan. (However, see 10.04(c) for certain amendment powers granted to the Committee). (c) The Board shall have no other responsibilities with respect to the Plan. - 38 - 45 10.03 Trustee. The Trustee shall exercise all of the powers and duties assigned to the Trustee as set forth in the Trust Agreement. The Trustee shall have no other responsibilities with respect to the Plan. 10.04 Committee. (a) A Committee of one or more individuals shall be appointed by and serve at the pleasure of the Board to administer the Plan. Any Participant, officer, or director of the Employer shall be eligible to be appointed a member of the Committee and all members shall serve as such without compensation. Upon termination of his employment with the Employer, or upon ceasing to be an officer or director, if not an employee, he shall cease to be a member of the Committee. The Board shall have the right to remove any member of the Committee at any time, with or without cause. A member may resign at any time by written notice to the Committee and the Board. If a vacancy in the Committee should occur, a successor shall be appointed by the Board. The Committee shall by written notice keep the Trustee notified of current membership of the Committee, its officers and agents. The Committee shall furnish the Trustee a certified signature card for each member of the Committee and for all purposes hereunder the Trustee shall be conclusively entitled to rely upon such certified signatures. (b) The Board shall appoint a Chairman and a Secretary from among the members of the Committee. All resolutions, determinations and other actions shall be by a majority vote of all members of the Committee. The Committee may appoint such agents, who need not be members of the Committee, as it deems necessary for the effective performance of its duties, and may delegate to such agents such powers and duties, whether ministerial or discretionary, as the Committee deems expedient or appropriate. The compensation of such agents shall be fixed by the Committee; provided, however, that in no event shall compensation be paid if such payment violates the provisions of Section 408 of the Act and is not exempted from such prohibitions by Section 408 of the Act. (c) The Committee shall have complete control of the administration of the Plan with all powers necessary to enable it to properly carry out the provisions of the Plan. In addition to all implied powers and responsibilities necessary to carry out the objectives of the Plan and to comply with the requirements of the Act, the Committee shall have the following specific powers and responsibilities: - 39 - 46 (1) To construe the Plan and Trust Agreement and to determine all questions arising in the administration, interpretation and operation of the Plan; (2) To decide all questions relating to the eligibility of Employees to participate in the benefits of the Plan and Trust Agreement; (3) To determine the benefits of the Plan to which any Participant, Beneficiary or other person may be entitled; (4) To keep records of all acts and determinations of the Committee, and to keep all such records, books of accounts, data and other documents as may be necessary for the proper administration of the Plan; (5) To prepare and distribute to all Plan Participants and Beneficiaries information concerning the Plan and their rights under the Plan, including, but not limited to, all information which is required to be distributed by the Act, the regulations thereunder, or by any other applicable law; (6) To file with the Secretary of Labor such reports and additional documents as may be required by the Act and regulations issued thereunder, including, but not limited to, summary plan description, modifications and changes, annual reports, terminal reports and supplementary reports; (7) To file with the Secretary of the Treasury all reports and information required to be filed by the Internal Revenue Code, the Act and regulations issued under each; (8) To do all things necessary to operate and administer the Plan in accordance with its provisions and in compliance with applicable provisions of federal law; (9) To amend certain portions of this Plan as specifically delegated to the Committee in this Plan (e.g., any Schedule authorizing Affiliated Sponsors to participate in the Plan, etc.), to amend the Plan to comply with changes in law recommended by legal counsel that are necessary to maintain the tax qualified status of the Plan and to make other amendments to the Plan that do not materially increase the costs associated with the plan. (10) to appoint and remove the Trustee(s); and - 40 - 47 (11) to adopt procedures for providing adequate notice in writing to any Participant or Beneficiary whose claim for benefits under the Plan is denied, which notice shall set forth the specific reasons for such denial (written in a manner calculated to be understood by the Participant or Beneficiary); and to provide a procedure for affording a reasonable opportunity to any Participant or Beneficiary whose claim for benefits has been denied, a full and fair review by the Committee of the decision denying the claim; (d) To enable the Committee to perform its functions, the Employer shall supply full and timely information of all matters relating to the compensation and length of service of all Participants, their retirement, death or other cause of termination of employment, and such other pertinent facts as the Committee may require. The Committee shall advise the Trustee of such facts and issue to the Trustee such instructions as may be required by the Trustee in the administration of the Plan. The Committee and the Employer shall be entitled to rely upon all certificates and reports made by a Certified Public Accountant selected or approved by the Employer. The Committee, the Employer and its officers and the Trustee, shall be fully protected in respect of any action suffered by them in good faith in reliance upon the advice or opinion of any accountant or attorney, and all action so taken or suffered shall be conclusive upon each of them and upon all other persons interested in the Plan. 10.05 Standard of Fiduciary Duty. Any Fiduciary, or any person designated by a Fiduciary to carry out fiduciary responsibilities with respect to the Plan, shall discharge his duties solely in the interests of the Participants and Beneficiaries for the exclusive purpose of providing them with benefits and defraying the reasonable expenses of administering the Plan. Any Fiduciary shall discharge his duties 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 matter would use in the conduct of an enterprise of a like character and with like aims. Any Fiduciary shall discharge his duties in accordance with the documents and instruments governing the Plan insofar as such documents and instruments are consistent with the provisions of the Act. Notwithstanding any other provisions of the Plan, no Fiduciary shall be authorized to engage in any transaction which is prohibited by Sections 408 and 2003(a) of the Act or Section 4975 of the Code in the performance of its duties hereunder. 10.06 Claims Procedure. Any Participant, Former Participant, Beneficiary, or Spouse or authorized representative thereof (hereinafter referred to as "Claimant"), may file a claim for - 41 - 48 benefits under the Plan by submitting to the Committee a written statement describing the nature of the claim and requesting a determination of its validity under the terms of the Plan. Within sixty (60) days after the date such claim is received by the Committee, it shall issue a ruling with respect to the claim. If special circumstances require an extension of time for processing, the Committee shall send the Claimant written notice of the extension prior to the termination of the 60-day period. In no case, however, shall the extension of time delay the Committee's decision on such appeal request beyond one hundred twenty (120) days following receipt of the actual request. If the claim is wholly or partially denied, written notice shall be furnished to the Claimant, which notice shall set forth in a manner calculated to be understood by the Claimant: (1) The specific reason or reasons for denial; (2) Specific reference to pertinent Plan provisions on which the denial is based; (3) A description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and (4) An explanation of the claims review procedures. Any Claimant whose claim for benefits has been denied, may appeal such denial by resubmitting to the Committee a written statement requesting a further review of the decision within sixty (60) days of the date the Claimant receives notice of such denial. Such statement shall set forth the reasons supporting the claim, the reasons such claim should not have been denied, and any other issues or comments which the Claimant deems appropriate with respect to the claim. If the Claimant shall request in writing, the Committee shall make copies of the Plan documents pertinent to his claim available for examination of the Claimant. Within sixty (60) days after the request for further review is received, the Committee shall review its determination of benefits and the reasons therefor and notify the Claimant in writing of its final decision. If special circumstances require an extension of time for processing, the Committee shall send the Claimant written notice of the extension prior to the termination of the 60-day period. In no case, however, shall the extension of time delay the Committee's decision on such appeal request beyond one hundred twenty (120) days following receipt of the actual request. - 42 - 49 Such written notice shall include specific reasons for the decision, written in a manner calculated to be understood by the Claimant, with specific references to the pertinent Plan provisions on which the decision is based. 10.07 Indemnification of Committee. To the extent permitted under the Act, the Plan shall indemnify the Board and the Committee against any cost or liability which they may incur in the course of administering the Plan and executing the duties assigned pursuant to the Plan. The Employer shall indemnify the Committee and the members of the Board against any personal liability or cost not provided for in the preceding sentence which they may incur as a result of any act or omission in relation to the Plan or its Participants. The Employer may purchase fiduciary liability insurance to insure its obligation under this Section. - 43 - 50 ARTICLE 11 AMENDMENT AND TERMINATION 11.01 Right to Amend The Company intends for the Plan to be permanent so long as the corporation exists; however, (through action of the Committee) it reserves the right to modify, alter, or amend this Plan or the Trust Agreement, from time to time, to any extent that it may deem advisable, including, but not limited to any amendment deemed necessary to insure the continued qualification of the Plan under Sections 40l(a) and 401(k) of the Code or to insure compliance with the Act; provided, however, that the Committee shall not have the authority to amend this Plan in any manner which will: (a) Permit any part of the Fund (other than such part as is required to pay taxes and administrative expenses) to be used for or diverted to purposes other than for the exclusive benefit of the Participants or their Beneficiaries; (b) Cause or permit any portion of the funds to revert to or become the property of the Employer; (c) Change the duties, liabilities, or responsibilities of the Trustee without its prior written consent. See Section 16.11 regarding the power of an Affiliated Sponsor to amend or terminate the Plan. 11.02 Termination or Discontinuance of Contributions The Company shall have the right at any time to terminate this Plan (hereinafter referred to as "Plan Termination"). Upon Plan Termination, the Committee shall direct the Trustee with reference to the disposition of the Fund, after payment of any expenses properly chargeable against the Fund. The Trustee shall distribute all amounts held in Trust to the Participants and others entitled to Distributions in proportion to the Accounts of such Participants and other Distributees as of the date of such Termination. In the event that this Plan is partially terminated, then the provisions of this Section 11.02 shall apply, but solely with respect to the Employees affected by the partial termination. The termination of sponsorship of the Plan by any Affiliated Sponsor shall not affect the sponsorship of the Plan by the Company or any other Affiliated Sponsor. - 44 - 51 11.03 IRS Approval of Termination. Notwithstanding Section 11.02, the Trustee shall not be required to make any Distribution from this Plan in the event of complete or partial termination until the authorized officials of the Internal Revenue Service shall have determined that there will be no liability against the Trustee by reason of such Distribution. - 45 - 52 ARTICLE 12 SPECIAL DISCRIMINATION RULES 12.01 Definitions. Actual Contribution Percentage or ACP shall mean the ratio (expressed as a percentage) of (i) the sum of the Employer Matching Contributions on behalf of the Participant for the Plan Year and, to the extent permitted in Treasury Regulations and elected by the Employer, the Participant's Qualified Elective Deferrals and Qualified Nonelective Contributions to (ii) the Participant's Compensation for the Plan Year. The Employer, on an annual basis, may elect to include or not to include Qualified Elective Deferrals and Qualified Nonelective Contributions in computing the ACP for a Plan Year. An Employer may elect on an annual basis to count a Participant's Employer Matching Contribution toward satisfying the required minimum contribution under Section 15.03 (minimum contribution for Non-Key Employees in a top-heavy plan) in lieu of including such contributions in the ACP. If a Participant (as defined below) does not receive an allocation of Employer Contributions for a Plan Year, such Participant's ACP for the Plan Year shall be zero. Actual Deferral Percentage or ADP shall mean the ratio (expressed as a percentage) of (i) the sum of Pre-Tax Contributions on behalf of a Participant for the Plan Year (excluding any Excess Deferrals by a Non-highly Compensated Employee) and, to the extent permitted in Treasury Regulations and elected by the Employer, the Participant's Qualified Nonelective Contributions to (ii) the Participant's Compensation for the Plan Year. The Employer, on an annual basis, may elect to include or not to include Qualified Nonelective Contributions in computing the ADP for a Plan Year. In the case of a Participant (as defined below) who does not make a Pre-Tax Contribution for a Plan Year and is not allocated a Qualified Nonelective Contribution for such Plan Year, such Participant's ADP for the Plan Year shall be zero. Average Actual Contribution Percentage shall mean the average (expressed as a percentage) of the Actual Contribution Percentages of the Participants in a group. The percentage shall be rounded to the nearest one-hundredth of one percent (four decimal places). Average Actual Deferral Percentage shall mean the average (expressed as a percentage) of the Actual Deferral Percentages of the Participants in a group. The percentage shall be rounded to the nearest one-hundredth of one percent (four decimal places). Combined ADP and ACP Test shall have the meaning as defined in Section 12.09. - 46 - 53 Compensation for purposes of this Article 12 shall be that definition selected by the Committee that satisfies the requirements of Code Section Section 414(s) and 401(a)(17). Such definition may change from year to year but must apply uniformly among all Eligible Employees being tested under the Plan for a given Plan Year and among all Employees being tested under any other plan that is aggregated with this Plan during the Plan Year. If the Committee fails to select a definition of Compensation for purposes of this Article 12, Compensation (for purposes of Article 12) shall have the same meaning as defined in Article 2. Employer Matching Contributions. For purposes of this Article 12, an Employer Matching Contribution for a particular Plan Year includes only those contributions that are (i) allocated to the Participant's Account under the Plan as of any date within such Plan Year, (ii) contributed to the Trust no later than the end of the 12-month period following the close of such Plan Year, and (iii) made on account of such Participant's Pre-Tax Contributions for the Plan Year. Excess Deferrals shall have that meaning as defined in Section 12.02. Excess ACP Contributions shall have that meaning as defined in Section 12.08. Excess ADP Deferrals shall have that meaning as defined in Section 12.05. Family Member. See Article 13. Highly Compensated Employee. See Article 13. Maximum Combined Percentage shall have the meaning as defined in Section 12.09(c). Non-highly Compensated Employee. See Article 13. Participant. For purposes of this Article 12, a Participant shall mean any Eligible Employee who (i) is eligible to receive an allocation of an Employer Matching Contribution, even if no Employer Matching Contribution is allocated due to the Eligible Employee's failure to make a required Pre-Tax Contribution, (ii) is eligible to make a Pre-Tax Contribution, including an Eligible Employee whose right to make Pre-Tax Contribution has been suspended because of an election not to participate or a hardship distribution, and (iii) is unable to receive an Employer Matching Contribution or make a Pre-Tax Contribution because his Compensation is less than a stated amount. Pre-Tax Contributions. For purposes of this Article 12, a Pre-Tax Contribution is taken into account only if the contribution (i) is allocated to the Participant's Account under the terms of the Plan as of any date within the Plan Year, and (ii) - 47 - 54 relates to Compensation that would have been received by the Participant during the Plan Year or within 2-1/2 months after the Plan Year but for the deferral election. A Pre-Tax Contribution is considered to be allocated as of a date within a Plan Year only if the allocation is not contingent on participation in the Plan or performance of service after the Plan Year to which the Pre-Tax Contribution relates. Qualified Elective Deferral shall mean Pre-Tax Contributions designated by the Committee as Qualified Elective Deferrals in order to meet the ACP testing requirements of Section 12.06. In addition, the following requirements must be satisfied: (1) The aggregate of all Pre-Tax Contributions for the Plan Year (including the Qualified Elective Deferrals) must satisfy the ADP testing requirements set forth in Section 12.03(a). (2) The aggregate of all Pre-Tax Contributions for the Plan Year (excluding the Qualified Elective Deferrals) must satisfy the ADP testing requirements set forth in Section 12.03(a). (3) Qualified Elective Deferrals must satisfy all other provisions of this Plan applicable to Pre-Tax Contributions and shall remain part of the Participant's Pre-Tax Contribution Account. (4) Except as provided by this definition, Qualified Elective Deferrals shall be excluded in determining whether any other contribution or benefit satisfies the nondiscrimination requirements of Code Section Section 401(a)(4) and 401(k)(3). Qualified Nonelective Contribution shall mean an Employer contribution designated by the Committee as a Qualified Nonelective Contribution in order to meet the ADP testing requirements of Section 12.03 or the ACP testing requirements of Section 12.06. In addition, the following requirements must be satisfied: (1) The Qualified Nonelective Contribution, whether or not used to satisfy the requirements of Sections 12.03 or 12.06, must meet the requirements of Code Section 401(a)(4). (2) Qualified Nonelective Contributions which are taken into account in order to meet the requirements of Section 12.03 or 12.06 (as applicable) shall not be counted in determining whether the testing requirements of any of such other Sections are met. - 48 - 55 (3) The Qualified Nonelective Contributions shall be subject to all provisions of this Plan applicable to Pre-Tax Contributions (except that Qualified Nonelective Contributions cannot be distributed in a hardship distribution). (4) Except as provided in this paragraph, the Qualified Nonelective Contributions shall be excluded in determining whether any other contribution or benefit satisfies the nondiscrimination requirements of Code Section Section 401(a)(4) and 401(k)(3). 12.02 $7,000 Limit on Pre-Tax Contributions. (a) Notwithstanding any other provision of the Plan to the contrary, the aggregate of a Participant's Pre-Tax Contributions during a calendar year may not exceed $7,000 (or such greater amount as established by the Secretary of the Treasury pursuant to Code Section 402(g)(5)). Any Pre-Tax Contributions in excess of the foregoing limit ("Excess Deferral"), plus any income and minus any loss allocable thereto, may be distributed to the applicable Participant no later than April 15 following the calendar year in which the Pre-Tax Contributions were made. (b) Any Participant who has an Excess Deferral during a calendar year may receive a distribution of the Excess Deferral during such calendar year plus any income or minus any loss allocable thereto, provided (1) the Participant requests (or is deemed to request) the distribution of the Excess Deferral, (2) the distribution occurs after the date the Excess Deferral arose, and (3) the Committee designates the distribution as a distribution of an Excess Deferral. (c) If a Participant makes a Pre-Tax Contribution under this Plan and in the same calendar year makes a contribution to a Code Section 401(k) plan containing a cash or deferred arrangement (other than this Plan), a Code Section 408(k) plan (simplified employee pension plan) or a Code Section 403(b) plan (tax sheltered annuity) and, after the return of any Excess Deferral pursuant to Section 12.02(a) and (b) the aggregate of all such Pre-Tax Contributions and contributions exceed the limitations contained in Code Section 402(g), then such Participant may request that the Committee return all or a portion of the Participant's Pre-Tax Contributions for the calendar year plus any income and minus any loss allocable thereto. The amount by which such Pre-Tax Contributions and contributions exceed the Code Section 402(g) limitations will also be known as an Excess Deferral. (d) Any request for a return of Excess Deferrals arising out of contributions to a plan described in Section 12.02(c) above which is maintained by an entity other than the Employer must: - 49 - 56 (1) be made in writing; (2) be submitted to the Committee not later than the March 1 following the Plan Year in which the Excess Deferral arose; (3) specify the amount of the Excess Deferral; and, (4) contain a statement that if the Excess Deferral is not distributed, it will, when added to amounts deferred under other plans or arrangements described in Section Section 401(k), 408(k),or 403(b) of the Code, exceed the limit imposed on the Participant by Section 402(g) of the Code for the year in which the Excess Deferral occurred. In the event an Excess Deferral arises out of contributions to a plan (including this Plan) described in Section 12.02(c) above which is maintained by the Employer, the Participant making the Excess Deferral shall be deemed to have requested a return of the Excess Deferral. (e) Pre-Tax Contributions may only be returned to the extent necessary to eliminate a Participant's Excess Deferral. Excess Deferrals shall be treated as annual additions under the Plan. In no event shall the returned Excess Deferrals for a particular calendar year exceed the Participant's aggregate Pre-Tax Contributions for such calendar year. (f) The income or loss allocable to a Pre-Tax Contribution that is returned to a Participant pursuant to Section 12.02(a) or (c) shall be determined by multiplying the income or loss allocable to the Participant's Account for the calendar year in which the Excess Deferral arose by a fraction. The numerator of the fraction is the Excess Deferral. The denominator of the fraction is the value of the Participant's Account balance on the last day of the calendar year in which the Excess Deferral arose reduced by any income allocated to the Participant's Account for such calendar year and increased by any loss allocated to the Participant's Account for such calendar year. (g) The income or loss allocable to an Excess Deferral that is returned to a Participant pursuant to Section 12.02(b) shall be determined using any reasonable method adopted by the Plan to measure income earned or loss incurred during the Plan Year or any other method authorized by the Internal Revenue Service to compute the income earned or loss incurred for the period commencing on January 1 of the calendar year in which the Pre-Tax Contribution was made and ending on the date the Excess Deferral was distributed. (h) Any Employer Matching Contribution allocable to an Excess Deferral that is returned to a Participant pursuant to this Section 12.02 shall be forfeited - 50 - 57 notwithstanding the provisions of Article 7 (vesting). For this purpose, however, the Pre-Tax Contributions that are returned to the Participant as an Excess Deferral shall be deemed to be first those Pre-Tax Contributions for which no Employer Matching Contribution was made and second those Pre-Tax Contributions for which an Employer Matching Contribution was made. Accordingly, if the Pre-Tax Contributions that are returned to the Participant as Excess Deferrals were not matched, no Employer Matching Contribution will be forfeited. 12.03 Average Actual Deferral Percentage. (a) The Average Actual Deferral Percentage for Highly Compensated Employees for each Plan Year and the Average Actual Deferral Percentage for Non-highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (1) The Average Actual Deferral Percentage for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the Average Actual Deferral Percentage for Participants who are Non-highly Compensated Employees for the Plan Year multiplied by 1.25; or (2) The excess of the Average Actual Deferral Percentage for Participants who are Highly Compensated Employees for the Plan Year over the Average Actual Deferral Percentage for Participants who are Non-highly Compensated Employees for the Plan Year is not more than two percentage points, and the Average Actual Deferral Percentage for Participants who are Highly Compensated Employees is not more than the Average Actual Deferral Percentage for Participants who are Non-highly Compensated Employees multiplied by two. (b) The permitted disparity between the Average Actual Deferral Percentage for Highly Compensated Employees and the Average Actual Deferral Percentage for Non-Highly Compensated Employees may be further reduced as required by Section 12.09. (c) If at the end of the Plan Year, the Plan does not comply with the provisions of Section 12.03(a), the Employer may do any or all of the following, except as otherwise provided in the Code or Treasury Regulations: (1) Distribute Pre-Tax Contributions to certain Highly Compensated Employees as provided in Section 12.05; or - 51 - 58 (2) Make a Qualified Nonelective Contribution on behalf of any or all of the Non-highly Compensated Employees and aggregate such contributions with the Non-highly Compensated Employees' Pre-Tax Contributions Deferrals as provided in Section 12.01 (definition of ADP). 12.04 Special Rules For Determining Average Actual Deferral Percentage. (a) The Actual Deferral Percentage for any Highly Compensated Employee for the Plan Year who is eligible to have Pre- Tax Contributions allocated to his Account under two or more arrangements described in Section 401(k) of the Code that are maintained by an Employer or its Affiliates shall be determined as if such Pre-Tax Contributions were made under a single arrangement. (b) If two or more plans maintained by the Employer or its Affiliates are treated as one plan for purposes of the nondiscrimination requirements of Code Section 401(a)(4) or the coverage requirements of Code Section 410(b) (other than for purposes of the average benefits test), all Pre-Tax Contributions that are made pursuant to those plans shall be treated as having been made pursuant to one plan. (c) For purposes of determining the ADP of a Highly Compensated Employee who is either a 5% or more owner of an Employer or one of the ten highest paid Highly Compensated Employees during the Plan Year, the Pre-Tax Contributions and Compensation of such Participant shall include the Pre-Tax Contributions and Compensation of his Family Members. Any person who is a Family Member shall not be treated as a separate Employee in determining the Average Actual Deferral Percentage for either Non-highly Compensated Employees or for Highly Compensated Employees. (d) The determination and treatment of the Pre-Tax Contributions and Actual Deferral Percentage of any Participant shall be in accordance with such other requirements as may be prescribed from time to time in Treasury Regulations. 12.05 Distribution of Excess ADP Deferrals. (a) Pre-Tax Contributions exceeding the limitations of Section 12.03(a) ("Excess ADP Deferrals") and any income or loss allocable to such Excess ADP Deferral shall be designated by the Committee as Excess ADP Deferrals and shall be distributed to Highly Compensated Employees whose Accounts were credited with Excess ADP Deferrals in the preceding Plan Year. In determining the amount of Excess ADP Deferrals for each - 52 - 59 Highly Compensated Employee, the Committee shall reduce the ADP for each Highly Compensated Employee as follows: (1) The ADP for the Highly Compensated Employee(s) with the highest ADP will be reduced until equal to the second highest ADPs under the Plan; then (2) The ADP for the two (or more) Highly Compensated Employees with the highest ADPs under the Plan will be reduced until equal to the third highest ADP level under the Plan; then (3) The steps described in (1) and (2) shall be repeated with respect to the third and successive highest ADP levels under the Plan until the Plan complies with one or both of the ADP tests described in Section 12.03(a). (b) To the extent administratively possible, the Committee shall distribute all Excess ADP Deferrals and any income or loss allocable thereto prior to 2-1/2 months following the end of the Plan Year in which the Excess ADP Deferrals arose. In any event, however, the Excess ADP Deferrals and any income or loss allocable thereto shall be distributed prior to the end of the Plan Year following the Plan Year in which the Excess ADP Deferrals arose. Excess ADP Deferrals shall be treated as annual additions under the Plan. (c) The income or loss allocable to Excess ADP Deferrals shall be determined by multiplying the income or loss allocable to the Participant's Account for the Plan Year in which the Excess ADP Deferrals arose by a fraction. The numerator of the fraction is the Excess ADP Deferral. The denominator of the fraction is the value of the Participant's Account balance on the last day of the Plan Year in which the Excess ADP Deferrals arose reduced by any income allocated to the Participant's Account for such Plan Year and increased by any loss allocated to the Participant's Account for the Plan Year. (d) If an Excess Deferral has been distributed to the Participant pursuant to Section 12.02(a) or (b) for any taxable year of a Participant, then any Excess ADP Deferral allocable to such Participant for the same Plan Year in which such taxable year ends shall be reduced by the amount of such Excess Deferral. (e) Distribution of Excess ADP Deferrals to Participants described in Section 12.04(c) shall be made in accordance with the provisions of Treasury Regulation Section 1.401(k)-1(f)(5)(ii) or any successor Treasury Regulation thereto. - 53 - 60 (f) Any Employer Matching Contribution allocable to an Excess ADP Deferral that is returned to the Participant pursuant to this Section 12.05 shall be forfeited notwithstanding the provisions of Article 7 (vesting). For this purpose, however, the Pre-Tax Contributions that are returned to the Participant shall be deemed to be first those Pre-Tax Contributions for which no Employer Matching Contribution was made and second those Pre-Tax Contributions for which an Employer Matching Contribution was made. Accordingly, unmatched Pre-Tax Contributions shall be returned as an Excess ADP Deferral before matched Pre-Tax Contributions. 12.06 Average Actual Contribution Percentage. (a) The Average Actual Contribution Percentage for Highly Compensated Employees for each Plan Year and the Average Actual Contribution Percentage for Non-highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (1) The Average Actual Contribution Percentage for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the Average Actual Contribution Percentage for Participants who are Non-highly Compensated Employees for the Plan Year multiplied by 1.25; or (2) The excess of the Average Actual Contribution Percentage for Participants who are Highly Compensated Employees for the Plan Year over the Average Actual Contribution Percentage for Participants who are Non- highly Compensated Employees for the Plan Year is not more than two percentage points, and the Average Actual Contribution Percentage for Participants who are Highly Compensated Employees is not more than the Average Actual Contribution Percentage for Participants who are Non-highly Compensated Employees multiplied by two. (b) If at the end of the Plan Year, the Plan does not comply with the provisions of Section 12.06(a), the Employer may do any or all of the following in order to comply with such provision as applicable (except as otherwise provided in the Code or in Treasury Regulations): (1) Aggregate Qualified Elective Deferrals with the Employer Matching Contributions of Non-highly Compensated Employees as provided in Section 12.01 (definition of ACP). (2) Distribute Employer Matching Contributions to certain Highly Compensated Employees as provided in Section 12.08. - 54 - 61 (3) Make a Qualified Nonelective Contribution on behalf of any or all of the Non-highly Compensated Employees and aggregate such contributions with the Non-highly Compensated Employees' Employer Matching Contributions as provided in Section 12.01 (definition of ACP). 12.07 Special Rules For Determining Average Actual Contribution Percentages. (a) The Actual Contribution Percentage for any Highly Compensated Employee for the Plan Year who is eligible to have Employer Matching Contributions allocated to his Account under two or more arrangements described in Section Section 401(a) or 401(m) of the Code that are maintained by an Employer or its Affiliates shall be determined as if such contributions were made under a single arrangement. (b) If two or more plans maintained by the Employer or its Affiliates are treated as one plan for purposes of the nondiscrimination requirements of Code Section 401(a)(4) or the coverage requirements of Code Section 410(b) (other than for purposes of the average benefits test), all Employer Matching Contributions that are made pursuant to those plans shall be treated as having been made pursuant to one plan. (c) For purposes of determining the Actual Contribution Percentage of a Highly Compensated Employee who is a 5% or more owner of an Employer or one of the ten highest paid Highly Compensated Employees during the Plan Year, the Employer Matching Contributions and Compensation of such Participant shall include all Employer Matching Contributions and Compensation of Family Members. Family Members shall not be treated as separate Employees for purposes of determining the Average Actual Contribution Percentage for either Non-highly Compensated Employees or for Highly Compensated Employees. (d) The determination and treatment of the Actual Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 12.08 Distribution of Employer Matching Contributions. (a) Employer Matching Contributions exceeding the limitations of Section 12.06(a) ("Excess ACP Contributions") and any income or loss allocable to such Excess ACP Contribution may be designated by the Committee as Excess ACP Contributions and may be distributed in the Plan Year following the Plan Year in which the Excess ACP Contributions arose to those Highly Compensated Employees whose Accounts were credited with - 55 - 62 Excess ACP Contributions in the preceding Plan Year. The amount of Excess ACP Contributions to be distributed to a Highly Compensated Employee shall be determined using the procedure described in Section 12.05(a). (b) To the extent administratively possible, the Committee shall distribute all Excess ACP Contributions and any income or loss allocable thereto prior to 2-1/2 months following the end of the Plan Year in which the Excess ACP Contributions arose. In any event, however, the Excess ACP Contributions and any income or loss allocable thereto shall be distributed prior to the end of the Plan Year following the Plan Year in which the Excess ACP Contributions arose. (c) The income or loss allocable to Excess ACP Contributions shall be determined by multiplying the income or loss allocable to the Participant's Account for the Plan Year in which the Excess ACP Contribution arose by a fraction. The numerator of the fraction is the Excess ACP Contributions. The denominator of the fraction is the value of the Participant's Account on the last day of the Plan Year reduced by any income allocated to the Participant's Account by such Plan Year and increased by any loss allocated to the Participant's Account for the Plan Year. (d) Amounts distributed to Highly Compensated Employees under this Section 12.08 shall be treated as annual additions with respect to the Employee who received such amount. (e) Distribution of Excess ACP Contributions to Participants described in Section 12.08(c) shall be made in accordance with the provisions of Treasury Regulation Section 1.401(m)-1(e)(2)(iii) or any successor Treasury Regulations thereto. 12.09 Combined ACP and ADP Test. (a) The Plan must satisfy the Combined ACP and ADP Test described in this Section 12.09 only if (1) the Average Actual Deferral Percentage of the Highly Compensated Employees exceeds 125% of the Average Actual Deferral Percentage of the Non-highly Compensated Employees and (2) the Average Actual Contribution Percentage of the Highly Compensated Employees exceeds 125% of the Average Actual Contribution Percentage of the Non-highly Compensated Employees. (b) The Combined ACP and ADP Test is satisfied if the sum of the Highly Compensated Employees' Average Actual Deferral Percentage and Average Actual Contribution Percentage is equal to or less than the Maximum Combined Percentage defined in paragraph (c) below. - 56 - 63 (c) The Maximum Combined Percentage shall be determined by adjusting the Non-highly Compensated Employees' Average Actual Deferral Percentage and Average Actual Contribution Percentage in the following manner: (1) The greater of the two percentages shall be multiplied by 1.25; and (2) The lesser of the two percentages shall be increased by two percentage points; however, in no event shall such adjusted percentage exceed twice the original percentage. The sum of (1) and (2) shall be the Maximum Combined Percentage. Notwithstanding the foregoing, the Maximum Combined Percentage shall be determined in the following manner if such calculation results in a higher Maximum Combined Percentage than the formula specified above: (1) The lesser of the Average Actual Deferral Percentage and Average Actual Contribution Percentage of the Non-Highly Compensated Employees shall be multiplied by 1.25; and (2) The greater of such two percentages shall be increased by two percentage points; however, in no event shall such percentage exceed twice the original percentage. (d) In the event the Plan does not satisfy the Combined ADP and ACP Test, the Highly Compensated Employees' Average Actual Contribution Percentage shall be decreased by either distributing Employer Matching Contributions to certain Highly Compensated Employees by using the procedures described in Section 12.08 or by making a Qualified Nonelective Contribution as provided in Section 12.06(b)(3) until the sum of such percentage and the Highly Compensated Employees' Average Actual Deferral Percentage equals the Maximum Combined Percentage. (e) If Employer Matching Contributions are distributed to certain Highly Compensated Employees in order to satisfy the Combined ADP and ACP Test, income or loss allocable to such Employer Matching Contributions shall also be distributed. (f) To the extent administratively possible, the Committee shall distribute the Employer Matching Contributions (if applicable) and allocable income or loss prior to 2-1/2 months following the end of the Plan Year for which the Combined ADP and ACP Test is computed. In any event, however, such Employer Matching Contributions (if applicable) and allocable income or loss shall be distributed by the end of the Plan Year following the Plan Year - 57 - 64 for which the Combined ADP and ACP Test is computed. Employer Matching Contributions that are distributed pursuant to this Section 12.09 shall be treated as annual additions under the Plan. (g) The income or loss allocable to returned Employer Matching Contributions shall be determined using the same procedures as Section 12.05(c). 12.10 Order of Applying Certain Sections of Article. In applying the provisions of this Article 12, the determination and distribution of Excess Deferrals shall be made first, the determination and elimination of Excess ACP Deferrals shall be made second, the determination and elimination of Excess ADP Contributions shall be made third and finally the determination and any necessary adjustment related to the Combined ADP and ACP Test shall be made. 12.11 Effective Date. The provisions of this Article 12 shall be effective July 1, 1988. - 58 - 65 ARTICLE 13 HIGHLY COMPENSATED EMPLOYEES 13.01 In General. For the purposes of this Plan, the term "Highly Compensated Employee" is any active Employee described in Section 13.02 below and any Former Employee described in Section 13.03 below. Various definitions used in this Article are contained in Section 13.05. A Non-Highly Compensated Employee is an Employee who is neither a Highly Compensated Employee nor a Family Member of a Highly Compensated Employee. This Article 13 shall be effective July 1, 1988. 13.02 Highly Compensated Employees. (a) An Employee is a Highly Compensated Employee if during the Determination Year the Employee: (1) is a 5 Percent Owner; (2) receives Compensation in excess of $75,000; (3) receives Compensation in excess of $50,000 and is a member of the Top Paid Group; or (4) is an Includable Officer. The dollar amounts described above shall be increased annually as provided in Code Section 414(q)(1). (b) Calendar Year Election. The Employer hereby elects the calendar year calculation election described in Temporary Regulation Section 1.414(q)-1T, Q&A-14(b) or any successor regulation thereto. Because the Plan uses the calendar year as its Plan Year, there is no separate Look Back Year calculation. This election is binding on all other qualified retirement Plans maintained by the Employer until the election is withdrawn. 13.03 Former Highly Compensated Employee. A Former Employee is a Highly Compensated Employee if (applying the rules of Section 13.02(a) or (b)) the Former Employee was a Highly Compensated Employee during a Separation Year or during any Determination Year ending on or after the Former Employee's 55th birthday. With respect to a Former Employee - 59 - 66 whose Separation Year was prior to January 1, 1987, such Former Employee will be treated as a Highly Compensated Employee only if the Former Employee was a 5% Owner or received Compensation in excess of $50,000 during (i) the Former Employee's Separation Year (or the year preceding such Separation Year); or (ii) any year ending on or after such Former Employee's 55th birthday (or the last year ending before such Former Employee's 55th birthday). 13.04 Family Aggregation Rules. (a) For purposes of this Article 13, an Employee who is, for a given Determination Year or Look Back Year, either (i) a 5 Percent Owner, or (ii) a Highly Compensated Employee who is one of the ten most highly compensated Employees ranked on the basis of Compensation paid during such year, shall be aggregated with such Employee's Family Members. (b) For purposes of this Section 13.04, the term "Family Member" means, with respect to an Employee described in Section 13.04(a), a person who is, on any day during the given Determination Year or Look Back Year: (1) his spouse; or (2) his lineal ascendant or descendant; or (3) the spouse of his lineal ascendant or descendant. (c) The determination of Employees and Family Members who must be aggregated for purposes of this Article 13 shall be made in accordance with Temporary Regulation Section 1.414(q)-1T, Q&A-11 and Q&A-12. (d) For purposes of applying the limits of Code Section 401(a)(17) (i.e., the $150,000 limit on compensation, as adjusted) with respect to Compensation under Articles 12 (401(k)/401(m) tests) and 14 (Section 415 limits), the Compensation for any Employee described in Section 13.04(a) and for any Family Member who is such Employee's spouse or lineal descendant under age 19, shall be aggregated. In such event, the deemed Compensation for each such Employee shall be an amount equal to the Section 401(a)(17) limit for the Plan Year (as adjusted) multiplied by a fraction, the numerator of which is the Employee's actual Compensation for the Plan Year, and the denominator of which is the aggregate Compensation of the Employee and the aggregated Family Member for the Plan Year. The same procedure shall then be used to determine the deemed Compensation of the aggregated Family Member. - 60 - 67 13.05 Definitions. The following special definitions shall apply to this Article 13: Compensation for purposes of this Article 13 shall mean the gross annual earnings reported on the Participant's IRS Form W-2 (box 10 or its comparable location as provided on Form W-2 in future years) as required by Code Section Section 6041(d) and 6051(a)(3). In addition, Compensation shall include compensation which is not includable in the Participant's IRS Form W-2 (Box 10) by reason of Code Section 402(a)(8) (employee pre-tax contributions under a Code Section 401(k) plan) or Code Section 125 (salary deferrals under a cafeteria plan). Compensation shall not include amounts paid or reimbursed by the Employer for moving expenses if, at the time of the payment of such moving expenses, it is reasonable to believe that the moving expenses will be deductible by the Participant under Code Section 217. Compensation shall be determined by ignoring any income exclusions under Code Section 3401(a) based on the nature or location of employment. In no event shall Compensation in excess of the limitations under Code Section 401(a)(17) (e.g., $150,000 in 1994) be taken into account for any Employee. Determination Year shall mean the Plan Year for which the ACP and the ADP are computed. Employer for purposes of this Article 13 shall mean the Company and its Affiliates. 5 Percent Owner shall mean any Employee who owns or is deemed to own (within the meaning of Code Section 318), more than five percent of the value of the outstanding stock of the Employer or stock possessing more than five percent of the total combined voting power of the Employer. Former Employee shall mean an Employee (i) who has incurred a Severance from Service or (ii) who remains employed by the Employer but who has not performed services for the Employer during the Determination Year (e.g., an Employee on Authorized Absence). Includable Officer shall mean any officer of the Employer who, during the applicable year, receives Compensation in excess of 50% of the dollar limitations under Code Section 415(b)(1)(A)(as adjusted by the Secretary of the Treasury for cost of living increases). The Employer shall be deemed to have a minimum of 3 officers or, if greater, a number equal to 10 percent of all Employees. However, no more than 50 officers shall be considered Includable Officers under this Article 13. If the Employer does not have any Includable Officers because no officer receives Compensation in excess of the dollar limitations of Code Section 415(b)(1)(A), the Employer's highest paid officer shall be considered an Includable Officer. - 61 - 68 Look Back Year shall mean the Plan Year preceding the Determination Year, or if the Employer elects, the calendar year ending with or within the determination year. Separation Year shall mean any of the following years: (1) An Employee who incurs a Termination of Employment shall have a Separation Year in the Determination Year in which such Termination of Employment occurs; (2) An Employee who remains employed by the Employer but who temporarily ceases to perform services for the Employer (e.g., an Employee on Authorized Absence) shall have a Separation Year in the calendar year in which he last performs services for the Employer; (3) An Employee who remains employed by the Employer but whose Compensation for a calendar year is less than 50% of the Employee's average annual Compensation for the immediately preceding three calendar years (or the Employee's total years of employment, if less) shall have a Separation Year in such calendar year. However, such Separation Year shall be ignored if the Employee remains employed by the Employer and the Employee's Compensation returns to a level comparable to the Employee's Compensation immediately prior to such Separation Year. Top Paid Group shall mean the top 20% of all Employees ranked on the basis of Compensation received from the Employer during the applicable year. The number of Employees in the Top Paid Group shall be determined by ignoring Employees who are non-resident aliens and Employees who do not perform services for the Employer during the applicable year. The Employer elects to compute the Top Paid Group without the age and service exclusion provided in applicable Treasury Regulations. 13.06 Other Methods Permissible. To the extent permitted by the Code, judicial decisions, Treasury Regulations and IRS pronouncements, the Committee may (without further amendment to this Plan) take such other steps and actions or adopt such other methods or procedures (in addition to those methods and procedures described in this Article 13) to determine and identify Highly Compensated Employees (including adopting alternative definitions of Compensation which satisfy Code Section 414(q)(7) and are uniformly applied). - 62 - 69 ARTICLE 14. MAXIMUM BENEFITS 14.01 General Rule. (a) Notwithstanding any other provision of this Plan, for any Plan Year, the Annual Additions to a Participant's Account, when combined with the Annual Additions to the Participant's Account under all other Qualified individual account plans maintained by the Employer or its Affiliates shall not exceed the lesser of (i) $30,000 or (ii) twenty-five percent (25%) of the Participant's Compensation for such Plan Year (the "maximum permissible amount"). (b) The Employer hereby elects that the Limitation Year for purposes of Code Section 415 shall be the Plan Year. (c) For purposes of determining the limit on Annual Additions under paragraph (a) of this Section, the dollar limit described therein, to wit, $30,000, shall be increased for each Plan Year to the extent permitted by law. (d) If the amount to be allocated to a Participant's Account exceeds the maximum permissible amount (and for this purpose Employer Contributions shall be deemed to be allocated after Pre-Tax Contributions), the excess will be disposed of as follows. First, if the Participant's Annual Additions exceed the maximum permissible amount as a result of (i) a reasonable error in estimating the Participant's Compensation, (ii) a reasonable error in estimating the amount of Pre-Tax Contributions that the Participant could make under Code Section 415 or (iii) other facts and circumstances that the Internal Revenue Service finds justifiable, the Committee may direct the Trustee to return to the Participant his Pre-Tax Contributions for such Plan Year to the extent necessary to reduce the excess amount. Such returned Pre-Tax Contributions shall be ignored in performing the discrimination tests of Article 12. Second, any excess annual additions still remaining after the return of Pre-Tax Contributions shall be reallocated as determined by the Committee among the Participants whose accounts have not exceeded the limit in the same proportion that the Compensation of each such Participant bears to the Compensation of all such Participants. If such reallocation would result in an addition to another Participant's Account which exceeds the permitted limit, that excess shall likewise be reallocated among the Participants whose Accounts do not exceed the limit. However, if the allocation or reallocation of the excess amounts pursuant to these provisions causes the limitations of Section 415 of the Code to be exceeded with respect to each Participant for the - 63 - 70 limitation year, then any such excess shall be held unallocated in a 415 Suspense Account. If the 415 Suspense Account is in existence at any time during a limitation year, other than the limitation year described in the preceding sentence, all amounts in the 415 Suspense Account shall be allocated and reallocated to Participants' Accounts (subject to the limitations of Code Section 415) before any Contributions which would constitute annual additions may be made to the Plan for that limitation year. (e) If the Participant is covered under another qualified defined contribution plan maintained by an Employer during any limitation year, the annual additions which may be credited to a Participant's account under this Plan for any such limitation year shall not exceed the maximum permissible amount reduced by the annual additions credited to a Participant's account under all such plans for the same limitation year. If 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 (and for this purpose, Employer Contributions shall be deemed to be allocated after Pre-Tax Contributions). If an excess amount is 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 as of such date, times (ii) the ratio of (A) the annual additions allocated to the Participant for the limitation year as of such date under this Plan to (B) 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 maintained by the Employer. Any excess amount attributed to this Plan will be disposed in the manner described in this Section 14.01 above. 14.02 Combined Plan Limitation. If the Employer or its Affiliates maintains, or at any time maintained, a Qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant's defined benefit plan fraction and defined contribution plan fraction shall not exceed 1.0 in any limitation year and the annual benefit otherwise payable to the Participant under such defined benefit plan shall be frozen or reduced to the extent necessary so that the sum of such fractions shall not exceed 1.0. 14.03 Definitions. For the purposes of this Article 14, the following definitions shall apply: - 64 - 71 (a) "Annual Addition" shall mean the sum of: (1) Employee Contributions; (2) Employer Contributions; (3) Forfeitures; and (4) Amounts described in Code Section Section 415(l)(1) and 419A(d)(2). Annual Additions shall not include any amounts credited to the Participant's Account resulting from Rollover Contributions. (b) "Affiliates" shall have that meaning contained in Article 2 except that for purposes of determining who is an Affiliate the phrase "more than 50 percent" shall be substituted for the phrase "at least 80 percent" each place it appears in Code Section 1563(a)(1). (c) "Compensation" shall have the same meaning as defined in Article 12 except that Compensation for purposes of Article 14 shall not include Pre-Tax Contributions under this Plan and shall not include salary deferrals under a Code Section 125 Cafeteria Plan. (d) "Defined Benefit Fraction" means a fraction, the numerator of which is the sum of the Participant's projected annual benefits under all the defined benefit plans (whether or not terminated) maintained by the Employer or its Affiliates, and the denominator of which is the lesser of (i) 125 percent of the dollar limitation in effect for the limitation year under Section 415(b)(1)(A) of the Code or (ii) 140 percent of the Highest Average Compensation. Notwithstanding the foregoing, 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 Employer or its Affiliates which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125 percent of the sum of the annual benefits under such plans which the Participant had accrued as of the end of the last limitation year beginning before January 1, 1987, but determined without regard to any changes in the terms and conditions of the Plan occurring after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 for all limitation years beginning before January 1, 1987. (e) "Defined Contribution Fraction" means 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 Employer or its Affiliates for the current and all prior limitation years, and - 65 - 72 the denominator of which is the sum of the Maximum Aggregate Amounts for the current and all prior limitation years of service with the Employer or its Affiliates (regardless of whether a defined contribution plan was maintained by the Employer or its Affiliates). The Maximum Aggregate Amount in any limitation year is the lesser of (i) 125 percent of the dollar limitation in effect under Section 415(c)(1)(A) of the Code; or (ii) 35 percent of the Participant's compensation for such year. If the Employee was a Participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined contribution plans maintained by the Employer or its Affiliates 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 (i) the excess of the sum of the fractions over 1.0 times and (ii) 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 limitation year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the plans made after May 5, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. The annual addition for any Limitation Year beginning before January 1, 1987 shall not be recomputed to treat employee contributions as annual additions. (f) "Highest Average Compensation" means the average compensation for the three consecutive years of service with the employer that produces the highest average. (g) "Projected Annual Benefit" means the annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or qualified joint and survivor annuity) to which the Participant would be entitled under the terms of the plan assuming (i) the Participant will continue employment until normal retirement age under the plan (or current age, if later), and (ii) the Participant's compensation for the current limitation year and all other relevant factors used to determine benefits under the plan will remain constant for all future limitation years. 14.04 Effective Date. The provisions of this Article 14 shall be effective January 1, 1987. - 66 - 73 ARTICLE 15. TOP HEAVY RULES 15.01 General. The provisions of this Article of the Plan shall become effective in any Plan Year in which the Plan is determined to be Top Heavy and shall supersede any conflicting provision of this Plan. 15.02 Definitions. (a) Top Heavy. The Plan shall be Top Heavy for the Plan Year if, as of the Valuation Date which coincides with or immediately precedes the Determination Date, the value of the Participant Accounts of Key Employees exceeds 60% of the value of all Participant Accounts. If the Employer maintains more than one plan, all plans in which any Key Employee participates and all plans which enable this Plan to satisfy the anti-discrimination requirements of Code Section Section 401(a)(4) and 410 must be combined with this Plan ("Required Aggregation Group") for the purposes of applying the 60% test described in the preceding sentence. Plans maintained by the Employer which are not in the required aggregation group may be combined at the Employer's election with this Plan for the purposes of determining Top Heavy status if the combined plan satisfies the requirements of Code Section 401(a)(4) and 410 ("Permissive Aggregation Group"). In determining the value of Participant Accounts, all distributions made during the five-year period ending on the Determination Date shall be included and any unallocated Employer Contributions or forfeitures attributable to the Plan Year in which the Determination Date falls shall also be included. The Account of (i) any Employee who at one time was a Key Employee but who is not a Key Employee for any of the five Plan Years ending on the Determination Date; and (ii) any Employee who has not performed services for the Employer or a related employer maintaining a plan in the aggregation group for the five Plan Years ending on the Determination Date, shall be disregarded in determining Top Heavy status. If the Employer maintains a defined benefit plan during the Plan Year which is subject to aggregation with this Plan, the 60% test shall be applied after calculating the present value of the Participants' accrued benefits under the defined benefit plan in accordance with the rules set forth in that plan and combining the present value of such accrued benefits with the Participant's account balances under this Plan. - 67 - 74 Effective January 1, 1987, solely for the purpose of determining if the Plan, or any other plan included in the Required Aggregation Group, is Top-Heavy, a Non-Key Employee's accrued benefit in a defined benefit plan shall be determined under (i) the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Affiliates, or (ii) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate of Code Section 411(b)(1)(C). (b) Key Employee. Any employee of the Employer who, during the Plan Year or the four preceding Plan Years was an officer receiving Compensation in excess of 50% of the limit described in Code Section 415(b)(1)(A), one of the ten employees of the Employer owning the largest interests in the Employer and receiving Compensation equal to or greater than the dollar limit described in Code Section 415(c)(1)(A), a greater than 5% owner of the Employer, a greater than 1% owner of the Employer receiving Compensation in excess of $150,000, or the Beneficiary of a Key Employee. The Code Section 415(b)(1)(A) and 415(c)(1)(A) limits referred to in the preceding sentence shall be the specified dollar limit plus any increases reflecting cost of living adjustments specified by the Secretary of the Treasury. (c) Determination Date. The last day of the Plan Year immediately preceding the Plan Year for which Top Heavy status is determined. For the first Plan Year, the Determination Date shall be the last day of the first Plan Year. (d) Non-Key Employee. Any Participant who is not a Key Employee. (e) Employer. The term "Employer" shall include any Affiliate of such Employer. (f) Compensation. The term "Compensation" shall have that meaning as defined in Article 14. 15.03 Minimum Benefit. (a) Except as provided below, the Employer Contributions allocated on behalf of any Non-Key Employee who is employed by the Employer on the Determination Date shall not be less than the lesser of (i) 3% of such Non-Key Employee's Compensation or (ii) the largest percentage of Employer Contributions and Pre-Tax Contributions, as a percentage of the Key Employee's Compensation, allocated on behalf of any Key Employee for such Plan Year. Pre-Tax Contributions allocated to the Accounts of Non-Key Employees and Employer Matching Contributions allocated to the Accounts of Non-Key Employees that are used to satisfy the provisions of - 68 - 75 Article 12 shall not be considered in determining whether a Non-Key Employee has received the minimum contribution required by this Section 15.03. (b) The minimum allocation is determined without regard to any Social Security contribution and shall be made even though, under other Plan provisions, the Non-Key Employee would have received a lesser allocation or no allocation for the Plan Year because of the Non-Key Employee's failure to complete 1,000 Hours of Service, his failure to make mandatory employee contributions, or his earning compensation less than a stated amount. (c) If the Employer maintains a defined benefit plan in addition to this Plan, the minimum contribution and benefit requirements for both plans in a Top Heavy Plan Year may be satisfied by an allocation of Employer Contributions to the Account of each Non-Key Employee in the amount of 5% of the Non-Key Employee's compensation. 15.04 Combined Plan Limitation For Top Heavy Years. In any Plan Year during which more than 90% of the Participant Account balances are attributable to Key Employees, 100% or an equivalent factor shall be substituted for 125% or an equivalent factor in the combined plan fraction denominators set forth in the Section of this Plan which limits maximum benefits pursuant to Section 415 of the Code. In any Plan Year during which more than 60% but not more than 90% of the Participant Account balances are attributable to Key Employees, 100% or an equivalent factor shall be substituted for 125% or an equivalent factor in the combined plan fraction denominators unless the Account of each Non-Key Employee participating in the Plan receives an allocation which satisfies Section 15.03 above, except that for this purpose the figure "4%" shall be substituted for "3%" where it appears in Section 15.03(a) and the figure "7.5%" shall be substituted for "5%" where it appears in Section 15.03(c). - 69 - 76 ARTICLE 16 MISCELLANEOUS 16.01 Headings. The headings and sub-headings in this Plan have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. 16.02 Action by Employer. Any action by an Employer under this Plan shall be by resolution of its Board of Directors, or by any person or persons duly authorized by resolution of said Board to take such action. 16.03 Spendthrift Clause. Except as otherwise required by a "qualified domestic relations order" as defined in Code Section 414(p), none of the benefits, payments, proceeds or distributions under this Plan shall be subject to the claim of any creditor of any Participant or Beneficiary, or to any legal process by any creditor of such Participant or Beneficiary, and none of them shall have any right to alienate, commute, anticipate or assign any of the benefits, payments, proceeds or distributions under this Plan except for the extent expressly provided herein to the contrary. If any Participant shall attempt to dispose of the benefits provided for him hereunder, or to dispose of the right to receive such benefits, or in the event there should be an effort to see such benefits or the right to receive such benefits by attachment, execution or other legal or equitable process, such right to benefits shall pass and be transferred, at the discretion of the Plan Administrator, to such one or more as may be appointed by the Plan Administrator from among the Beneficiaries, if any theretofore designated by the Participant, or from the spouse, children or other dependents of the Participant, in such shares as the Committee may appoint. Any appointment so made by the Committee may be revoked by it at any time and further appointment made by it which may include the Participant. 16.04 Distributions Upon Special Occurrences. (a) Subject to Section 11.03, Pre-Tax Contributions and any income attributable thereto, shall be distributed to Participants or their Beneficiaries as soon as administratively feasible after the termination of the Plan, provided that neither the Employer nor its Affiliates maintain a successor plan. (b) Pre-Tax Contributions and any income attributable thereto shall be distributed to Participants as soon as administratively feasible after the - 70 - 77 sale, to an entity that is not an Affiliate, of substantially all of the assets used by the Employer in the trade or business in which the Participant is employed. (c) After the sale of an incorporated Affiliate's interest in a subsidiary to an entity that is not an Affiliate, Pre-Tax Contributions and any income attributable thereto of a Participant who continues to work for such subsidiary shall be distributed as soon as administratively feasible. (d) The provisions of this Section 16.04 including the definitions of terms such as "successor plan" and "substantially all of the assets" shall be governed by Treasury Regulation Section 1.401(k)-1(d)(1)(iii) or any successor Treasury Regulation thereto. 16.05 Discrimination. The Employer, the Committee, the Trustee and all other persons involved in the administration and operation of the Plan shall administer and operate the Plan and Trust in a uniform and consistent manner with respect to all Participants similarly situated and shall not permit discrimination in favor of Highly Compensated Employees. 16.06 Release. Any payment to a Participant or Beneficiary, or to their legal representatives, in accordance with the provisions of this Plan, shall to the extent thereof be in full satisfaction of all claims hereunder against the Trustee, Plan Administrator, Committee and the Employer, any of whom may require such Participant, Beneficiary, or legal representative, as a condition precedent to such payment, to execute a receipt and release therefor in such form as shall be determined by the Trustee, the Committee, or the Employer, as the case may be. 16.07 Compliance with Applicable Laws. The Company, through the Plan Administrator, shall interpret and administer the Plan in such manner that the Plan and Trust shall remain in compliance with the Code, with the Act, and all other applicable laws, regulations, and rulings. 16.08 Agent for Service of Process. The agent for service of process of this Plan shall be the person listed from time to time in the current records of the Secretary of State of Georgia as the agent for the service of process for the Company. - 71 - 78 16.09 Merger. In the event of any merger or consolidation of the Plan with any other Plan, or the transfer of assets or liabilities by the Plan to another Plan, each Participant must receive (assuming that the Plan would terminate) the benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit such Participant would have been entitled to receive immediately before the merger, consolidation, or transfer (assuming that the Plan had then terminated), provided such merger, consolidation, or transfer took place after the date of enactment of the Act. 16.10 Governing Law. The Plan shall be governed by the laws of the State of Georgia to the extent that such laws are not preempted by Federal law. 16.11 Adoption of the Plan by an Affiliated Sponsor.. (a) The Committee shall determine which employers shall become Affiliated Sponsors within the terms of the Plan. In order for the Committee to designate an Employer as an Affiliated Sponsor, the Committee must approve the addition of the Affiliated Sponsor's identity to Schedule A (which approval may be retroactive to an earlier effective date). The Committee may also specify such terms and conditions pertaining to the adoption of the Plan by the Affiliated Sponsor as the Committee deems appropriate. With the Committee's consent, an Affiliated Sponsor may limit participation in the Plan to certain of its Employees. (b) The Plan of the Affiliated Sponsor and of the Company shall be considered a single plan for purposes of Treasury Regulations Section 1.414(1)-1(b)(1). All assets contributed to the Plan by the Affiliated Sponsor shall be held in a single fund together with the assets contributed by the Company (and with the assets of any other Affiliated Sponsors); and so long as the Affiliated Sponsor continues to be designated as such, all assets held in such fund shall be available to pay benefits to all Participants and Beneficiaries covered by the Plan irrespective of whether such Employees are employed by the Company or by the Affiliated Sponsor. Nothing contained herein shall be construed to prohibit the separate accounting of assets contributed by the Company and the Affiliated Sponsors for purposes of cost allocation if directed by the Committee or the holding of Plan assets in more than one Trust Fund with more than one Trustee. (c) So long as the Affiliated Sponsor's designation as such remains in effect, the Affiliated Sponsor shall be bound by, and subject to all provisions of the Plan and the Trust Agreement. The exclusive authority to amend the - 72 - 79 Plan and the Trust Agreement shall be vested in the Committee and no Affiliated Sponsor shall have any right to amend the Plan or the Trust Agreement. Any amendment to the Plan or the Trust Agreement adopted by the Committee shall be binding upon every Affiliated Sponsor without further action by such Affiliated Sponsor. (d) Each Affiliated Sponsor shall be solely responsible for making an Employer Contribution with respect to its Employees and solely responsible for making any contribution required by Article 15. Furthermore, if an Affiliated Sponsor determines to make a Qualified Nonelective Contribution on behalf of its Employees, such Affiliated Sponsor shall be solely responsible for making such contribution. Neither the Company nor any other Affiliated Sponsor is obligated to make an Employer Matching Contribution or Qualified Nonelective Contribution on behalf of the Employees of a different Affiliated Sponsor. (e) The Company and each Affiliated Sponsor which is an Affiliate will be tested on a combined basis to determine whether the Company and such Affiliated Sponsors satisfy the Average Actual Deferral Percentage Test described in Section 12.03 and the Average Actual Contribution Percentage test described in Section 12.06. An Affiliated Sponsor which is not an Affiliate shall be tested separately from the Company and those Affiliated Sponsors that are Affiliates for purposes of the ADP test and ACP test described in Article 12. (f) No Affiliated Sponsor other than the Company shall have the right to terminate the Plan. However, any Affiliated Sponsor may withdraw from the Plan by action of its board of directors provided such action is communicated in writing to the Committee. The withdrawal of an Affiliated Sponsor shall be effective as of the last day of the Plan Year following receipt of the notice of withdrawal (unless the Committee consents to a different effective date). In addition, the Committee may terminate the designation of an Affiliated Sponsor to be effective on such date as the Committee specifies. Any such Affiliated Sponsor which ceases to be an Affiliated Sponsor shall be liable for all cost accrued through the effective date of its withdrawal or termination and any contributions owing as a result of Pre-Tax Contributions by its Employees or any other contribution as provided in paragraphs (d) and (e). In the event of the withdrawal or termination of an Affiliated Sponsor as provided in this paragraph, such Affiliated Sponsor shall have no right to direct that assets of the Plan be transferred to a successor plan for its Employees unless such a transfer is approved by the Committee in its sole discretion. - 73 - 80 16.12 Protected Benefits. Early retirement benefits, retirement-type subsidies, or optional forms of benefits protected under Code Section 411(d)(6) ("Protected Benefits") shall not be reduced or eliminated with respect to benefits accrued under such Protected Benefits unless such reduction or elimination is permitted under the Code authority issued by the Internal Revenue Service, or judicial authority. 16.13 Location of Participant or Beneficiary Unknown. In the event that all or any portion of the distribution payable to a Participant or his Beneficiary shall remain unpaid solely by reason of the Committee's inability to ascertain the whereabouts of such Participant or Beneficiary, the amount unpaid shall be forfeited. However, such forfeiture shall not occur until five (5) years after the amount first became payable. The Committee shall make a diligent effort to locate the Participant or Beneficiary including the mailing of a registered letter, return receipt requested, to the last known address of such Participant or Beneficiary. In the event a Participant or Beneficiary is located subsequent to his benefit being forfeited, such benefit shall be restored and distributed. IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed and its seal to be hereunto affixed on the date indicated below, but effective as of January 1, 1994. GENUINE PARTS COMPANY By: /s/ Frank M. Howard --------------------------------------- Title: Treasurer ------------------------------------ Date: December 1, 1994 ------------------------------------- - 74 - 81 SCHEDULE A Affiliated Sponsors Designated Under Section 16.11 I. General Rule - No Past Service Credit. Unless otherwise identified below, an employee will not receive Credited Service and Years of Eligibility Service under this Plan for his or her prior employment with the Affiliated Sponsor. Instead (unless otherwise required by law), Hours of Service worked for an Affiliated Sponsor prior to the Designation Date shall be ignored. II. Definition of Past Service Credit. If Employees of an Affiliated Sponsor are granted past service credit (as noted below), such Employees who are employed by the Affiliated Sponsor on the Designation Date shall receive Credited Service and Years of Eligibility Service under this Plan beginning with their employment commencement date with the Affiliated Sponsor, but subject to all of the rules concerning crediting of service and Breaks in Service set forth in this Plan.
Designation Name Date Special Notes ---- ----------- ------------- 1. S.P. Richards July 1, 1988 Past Service Credit Granted Company 2. Balkamp, Inc. July 1, 1988 Past Service Credit Granted. 3. NAPA, Inc. July 1, 1988 Past Service Credit Granted. 4. Motion (See Note Below) Past Service Credit Granted Industries, Inc.
Special Note on Motion Industries, Inc. On or about January 1, 1984, Genuine Parts Company acquired Motion Industries, Inc. ("Motion"). Employees of Motion whose initial date of hire was on or after January 1, 1984, became participants in the Genuine Parts Company Pension Plan after satisfying the age and service requirements under such Plan. Employees of Motion whose initial date of hire was prior to January 1, 1984, elected either to (1) continue their participation in the Motion Industries, Inc. Profit Sharing Plan or (2) to participate in the Genuine Parts Company Pension Plan. Effective January 1, 1990, the Motion Profit Sharing Plan was terminated. Employees of Motion who participated in the Motion Profit Sharing Plan on 82 December 31, 1989, and who were employed by Motion on January 1, 1990, became eligible to participate in the Genuine Parts Company Pension Plan effective as of January 1, 1990. Employees of Motion who participated in the Genuine Parts Company Pension Plan on July 1, 1988, began their participation under the Genuine Partnership Plan on July 1, 1988. Employees who first became eligible to participate in the Genuine Parts Company Pension Plan on January 1, 1990, commenced participation in the Genuine Partnership Plan on January 1, 1990. In either case, employees of Motion who began participation in the Genuine Partnership Plan on July 1, 1988, or January 1, 1990, received credit for vesting purposes under the Genuine Partnership Plan for their years of employment with Motion. Please note that employees hired by Motion on or after January 1, 1984, became eligible to participate in the Genuine Parts Company Pension Plan and Genuine Partnership Plan in accordance with the same rules applicable to all employees of Genuine Parts Company. The staggered entry dates of July 1, 1988, and January 1, 1990, apply to those employees who worked for Motion prior to January 1, 1984. 83 SCHEDULE B Credit for Service with Predecessor Employers I. General Rule - No Past Service. Unless otherwise identified in Part II below, an Employee will not receive Credited Service or Years of Eligibility Service under this Plan for any purpose. Instead (unless otherwise required by law) Hours of Service worked for a predecessor employer prior to the Designation Date shall be ignored. II. Definition of Past Service Credit. If Employees who were previously employed by a predecessor employer are granted past service credit (as noted below), such Employees who are employed by an Employer on the Designation Date shall receive Credited Service and Years of Eligibility Service under this Plan beginning with the employment commencement date with the predecessor employer, but subject to all of the rules concerning crediting of service and Breaks in Service set forth in this Plan.
Extent of Credit for Service Name Designation Date with Predecessor Company ---- ---------------- ---------------------------- 1. Odell Hardware Company 7/1/88 Past Service Credit Granted ("Odell") 2. Clark Siviter 7/1/88 Past Service Credit Granted 3. Brooks-Noble Parts 7/1/88 Past Service Credit Granted & Machine Co., Inc. 4. General Automotive Parts 7/1/88 Past Service Credit Granted Company and its subsidiaries ("General Automotive") 5. Standard Units Parts 7/1/88 Past Service Credit Granted Corporation including its subsidiary Manco, Inc. ("Standard Units Parts") 6. NAPA Des Moines 7/1/88 Past Service Credit Granted Warehouse ("Des Moines")
III. Participants employed by the following predecessor employers shall not receive Past Service Credit as of the date the predecessor employer was acquired by or merged into Genuine Parts Company. However, after an employee of such predecessor employer 84 becomes a Participant in the Plan by satisfying the requirements of Section 3.01, such Participant shall receive Credited Service for all employment with such predecessor employer. Such Credited Service may be forfeited or disregarded in accordance with the definition of Credited Service set forth in Article II. Furthermore, no Credited Service shall be granted for employment with a predecessor employer if the granting of such Credited Service will adversely impact the tax qualified status of the Plan. [None as of the Effective Date] Name Employment Date ---- --------------- 85 SCHEDULE C Prior Employer Accounts EX-10.12 6 PENSION PLAN 1 EXHIBIT 10.12 GENUINE PARTS COMPANY PENSION PLAN (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1989 UNLESS OTHERWISE SPECIFIED HEREIN) 2 GENUINE PARTS COMPANY PENSION PLAN TABLE OF CONTENTS ARTICLE I - INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.01 History of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.02 New Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.03 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.04 Accrued Benefits Under This Plan and Under Prior Plan . . . . . . . . . . . . . . 2 1.05 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.01 Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.02 Act or ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.03 Actuarial Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.04 Actuary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.05 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.06 Alternate Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.07 Annuity Starting Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.08 Anticipated Social Security Benefit . . . . . . . . . . . . . . . . . . . . . . . 5 2.09 Authorized Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.10 Average Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.11 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.12 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.13 Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.14 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.15 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.16 Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.17 Cost of Living Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.18 Credited Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.19 Delayed Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.20 Disability Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.21 Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.22 Earliest Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.23 Early Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.24 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.25(a) Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.25(b) Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.26 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.27 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.28 Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
- i - 3 2.29 Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.30 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.31 Hours of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.32 Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.33 Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.34 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.35 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.36 Participating Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.37 Pension Committee or Committee . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.38 Permanent Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.39 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.40 Plan Administrator or Administrator . . . . . . . . . . . . . . . . . . . . . . . 14 2.41 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.42 Predecessor Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.43 Pre-Retirement Survivor Annuity . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.44 Prior Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.45 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.46 Retirement Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.47 Safekeeping Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.48 Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.49 Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 2.50 Treasury Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 2.51 Trust or Trust Agreement or Trust Fund or Fund . . . . . . . . . . . . . . . . . 16 2.52 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2.53 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE III - PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 ARTICLE IV - RETIREMENT DATES AND BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 19 4.01 Normal Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 4.02 Early Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.03 Permanent Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 4.04 Delayed Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 4.05 Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 4.06 Suspension of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 4.07 Reduction of Benefit in Certain Cases . . . . . . . . . . . . . . . . . . . . . . 26 4.08 Increase in Benefits for Retired Participants . . . . . . . . . . . . . . . . . . 28 4.09 Minimum Benefit of Prior Plans . . . . . . . . . . . . . . . . . . . . . . . . . 28 4.10 Grandfathered Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE V - DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 5.01 Pre-Retirement Survivor Annuity . . . . . . . . . . . . . . . . . . . . . . . . . 30 5.02 Alternate Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
- ii - 4 5.03 Death After Normal Retirement Date but Prior to Delayed Retirement Date . . . . . 34 5.04 Death On or After the Annuity Starting Date . . . . . . . . . . . . . . . . . . . 35 5.05 Purchase of Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . 35 ARTICLE VI - OPTIONAL FORMS OF RETIREMENT INCOME . . . . . . . . . . . . . . . . . . . . . . . 37 6.01 Automatic Forms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 6.02 Optional Forms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 6.03 Special Distribution Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 6.04 Small Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 6.05 Application For Commencement of Benefits . . . . . . . . . . . . . . . . . . . . 41 6.06 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 6.07 Direct Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 ARTICLE VII - METHOD OF FINANCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.01 Establishment of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.02 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.03 Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.04 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 ARTICLE VIII - ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 8.01 Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 8.02 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 8.03 Trustee(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 8.04 Safekeeping Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 8.05 Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 8.06 Pension Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 8.07 Standard of Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 8.08 Indemnification of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 50 8.09 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 8.10 Appointment of Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . 51 ARTICLE IX - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 9.01 Amendment of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 9.02 Termination of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 9.03 Restriction on Certain Benefits and Distributions . . . . . . . . . . . . . . . . 55 9.04 Adoption of the Plan by a Participating Employer . . . . . . . . . . . . . . . . 56 ARTICLE X - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 10.01 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 10.02 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 10.03 Spendthrift Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 10.04 Legally Incompetent, Minors . . . . . . . . . . . . . . . . . . . . . . . . . . 59 10.05 Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
- iii - 5 10.06 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 10.07 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . 60 10.08 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 ARTICLE XI - SPECIAL PROVISIONS REGARDING SAFEKEEPING TRUST . . . . . . . . . . . . . . . . . . 61 ARTICLE XII - TOP HEAVY RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 12.01 General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 12.02 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 12.03 Minimum Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 12.04 Form of Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 12.05 Nonforfeitability of Employer Top-Heavy Contribution . . . . . . . . . . . . . . 64 12.06 Minimum Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 12.07 Combined Plan Limitation For Top Heavy Years . . . . . . . . . . . . . . . . . . 65 ARTICLE XIII - MAXIMUM BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 13.01 General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 13.02 Combined Plan Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 13.03 Grandfather Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 13.04 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 ARTICLE XIV - HIGHLY COMPENSATED EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . 70 14.01 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 14.02 Highly Compensated Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 70 14.03 Former Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . 70 14.04 Family Aggregation Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 14.05 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 14.06 Other Methods Permissible . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
- iv - 6 GENUINE PARTS COMPANY PENSION PLAN (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1989) ARTICLE I INTRODUCTION 1.01 History of the Plan. Prior to January 1, 1984, the Company maintained the Predecessor Plans covering different groups of its employees. Effective January 1, 1984, the Predecessor Plans were merged together in accordance with Code Section 414(l) to form the Genuine Parts Company Pension Plan (the "Prior Plan"). The Prior Plan assumed all liabilities for retirement benefits accrued prior to January 1, 1984 under the merged plans. The Prior Plan was maintained as a plan meeting the requirements of qualification under Code Section 401(a). 1.02 New Plan. Effective January 1, 1989, the Prior Plan is continued in an amended and restated form as set forth in its entirety in this document for the purpose of complying with the provisions of the Employee Retirement Income Security Act of 1974 as amended and maintaining qualification under Section 401(a) of the Internal Revenue Code of 1986, as amended. S.P. Richards Company, Balkamp, Inc., NAPA, Inc. and Motion Industries, Inc. will also adopt this document as Participating Employers 1.03 Effective Date. The Plan shall be effective January 1, 1989 except as described below or as otherwise provided herein: (a) Section 2.03 relating to the actuarial assumptions used in the Plan shall be effective January 1, 1987; (b) Section 2.08 relating to a Participant's Anticipated Social Security Benefits shall be effective January 1, 1987, but only for those Employees who accrue an Hour of Service on or after that date; (c) Sections 2.18(g), 4.04, and 4.06 relating to the accrual of benefits beyond age 65 shall be effective January 1, 1988, but only for those Employees who accrue an Hour of Service on or after that date; (d) Section 2.21, the definition of Earnings, shall be effective July 1, 1988; (e) Section 2.34, the definition of Normal Retirement Age, shall be effective January 1, 1988; 7 (f) Article III which permits Employees who are hired on or after their 60th birthday to participate in the Plan shall be effective January 1, 1988, but only for those Employees who accrue an Hour of Service on or after that date; (g) Section 6.07 relating to Direct Rollovers shall be effective January 1, 1993; (h) Article XIII relating to maximum benefit levels shall be effective January 1, 1987; and, (i) Article XIV, defining a Highly Compensated Employee, is effective January 1, 1987. 1.04 Accrued Benefits Under This Plan and Under Prior Plan. Only Participants who earn an Hour of Service after the Effective Date shall have their Accrued Benefit determined under the provisions of this Plan. All other Participants shall have their Accrued Benefit determined in accordance with the terms and provisions of the Prior Plan. However, all Participants who have an Accrued Benefit under the Plan or Prior Plan shall receive a distribution of their Accrued Benefit in accordance with this Plan. 1.05 Purpose. The purpose of this Plan (and the Trust Agreement) is to reward the loyal and efficient services of the Employees and to stimulate in them an interest in the successful operation of the Company's business by providing the benefits of a qualified retirement plan. This Plan shall be maintained for the exclusive benefit of the Participants and their Beneficiaries and shall be administered and interpreted in accordance with such purpose. - 2 - 8 ARTICLE II DEFINITIONS 2.01 Accrued Benefit. (a) In General. For purposes of this Plan, the term "Accrued Benefit" shall mean the Participant's Projected Retirement Income multiplied by a fraction. The numerator of the fraction is the Participant's actual years of Credited Service. The denominator of the fraction is the Participant's projected years of Credited Service assuming the Participant had terminated his Employment on his Normal Retirement Date. The Projected Retirement Income of a Participant with fifteen or more years of Credited Service is the Participant's Retirement Income as determined in Section 4.01(b) assuming the Participant terminated his Employment on his Normal Retirement Date and based on his Average Earnings as of his termination of Employment. The Projected Retirement Income of a Participant with less than fifteen years of Credited Service is the Participant's Retirement Income as determined in Section 4.01(c) assuming the Participant terminated his Employment on his Normal Retirement Date and based on his Average Earnings as of his termination of Employment. (b) $200,000 Earnings Limit. Effective January 1, 1989, the Plan must limit Earnings during a Plan Year (including Plan Years before and after January 1, 1989) to $200,000, adjusted annually by the Cost of Living Factor (see Plan Section 2.21). Notwithstanding the $200,000 limit, a Participant's Accrued Benefit shall not be less than the Participant's Accrued Benefit as of December 31, 1988 (determined without regard to the new $200,000 limit). (c) $150,000 Earnings Limit. Effective January 1, 1994, the Plan must limit Earnings during a Plan Year (including Plan Years before and after January 1, 1994) to $150,000, adjusted annually by the Cost of Living Factor (see Plan Section 2.21). Notwithstanding the $150,000 limit, a Participant's Accrued Benefit shall not be less than the greater of: (1) the Participant's Accrued Benefit as of December 31, 1993, (determined without regard to the new $150,000 limit but after application of the $200,000 limit of paragraph (b)) plus the - 3 - 9 Participant's Accrued Benefit earned after December 31, 1993 (determined with the $150,000 limit); or, (2) the Participant's Accrued Benefit for all years of Credited Service both before and after December 31, 1993 (determined with the $150,000 limit). 2.02 Act or ERISA shall mean Public Law No. 93-406, the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time. 2.03 Actuarial Equivalent shall mean a benefit of equivalent value computed in accordance with the actuarial assumptions described below. These actuarial assumptions shall be effective as of January 1, 1987. (a) The UP 1984 Mortality Table without any adjustments. (b) An effective annual interest rate of 8%, except that for purposes of calculating single sum values, the rate shall be determined under 2.03(c) below. (c) For purposes of computing single sum values, the interest rate shall be the interest rate which would be applied by the Pension Benefit Guaranty Corporation for purposes of determining the present value of the Participant's benefits under the Plan if the Plan had terminated on January 1 of the applicable Plan Year with insufficient assets to provide benefits guaranteed by the Pension Benefit Guaranty Corporation on that date. 2.04 Actuary shall mean an Actuary selected by the Company (or a firm of Actuaries) who is enrolled under Subtitle C of Title III of the Act. 2.05 Affiliate shall mean the Company and any corporation which is a member of a controlled group of corporations (as defined in Code Section 414(b)) which includes the Company; any trade or business which is under common control (as defined in Code Section 414(c)) with the Company; any organization which is a member of an affiliated service group (as defined in Code Section 414(m)) which includes the Company; and any other entity required to be aggregated with the Company pursuant to regulations under Code Section 414(o). 2.06 Alternate Death Benefit shall have that meaning as defined in Section 5.02. - 4 - 10 2.07 Annuity Starting Date shall mean the earliest of the following dates: (i) For Participants who terminate their Employment and commence to receive Retirement Income under Section 4.01, the Participants' Normal Retirement Date; (ii) For Participants who terminate their Employment and commence to receive Retirement Income under Section 4.02, the Participants' Early Retirement Date; (iii) For Participants who are Permanently Disabled and commence to receive Retirement Income under Schedule D, the Participant's Disability Retirement Date as defined in Schedule D; (iv) For Participants who terminate their Employment and commence to receive Retirement Income under Section 4.04, the Participants' Delayed Retirement Date; and (v) For Participants who terminate their Employment with less than 15 years of Credited Service and are therefore entitled to a Retirement Income under Section 4.05, the Participants' Normal Retirement Date. 2.08 Anticipated Social Security Benefit shall mean the estimated monthly primary insurance amount which is or will become payable to a Participant at the Participant's Social Security Retirement Age (as defined in Code Section 415(b)(8)), based on the Social Security Act in effect on the date of determination of the benefit, without taking into account any undetermined future automatic adjustments in (i) benefits and (ii) the contribution and benefit base, and on uniform rules adopted by the Committee, assuming: (a) that his Earnings at date of determination of his benefit under the Plan remains in effect thereafter to his Social Security Retirement Age; and (b) the earnings test for purposes of determining eligibility for the Social Security benefit shall not apply. The Anticipated Social Security Benefit shall become fixed as of the Participant's Retirement, or, if earlier, the date on which his Employment terminates (most recent date of termination for a reemployed employee). In determining a Participant's Anticipated Social Security Benefit, the Committee shall estimate the Participant's compensation for all years prior to the - 5 - 11 Participant's Termination Date. The Participant's estimated compensation shall be determined by applying a salary scale (six percent (6%) per annum), projected backwards, to the Participant's Earnings at the time of the Participant's Termination Date. Each Participant shall have the right to have his Anticipated Social Security Benefit computed on the basis of the Participant's actual salary history instead of using the Participant's estimated compensation. If the Participant supplies his actual salary history within a reasonable period of time following the Participant's Termination Date or, if later, following the date the Participant receives notice of his right to supply actual salary history, the Participant's Retirement Income will be adjusted based on the Participant's actual salary history. After the Participant's Termination Date, the Plan Administrator shall notify the Participant of his right to supply actual salary history and the financial consequences of failing to provide such salary history. Such notice shall state that actual salary history can be obtained from the Social Security Administration. In addition, the Plan Administrator shall provide written notice to each Participant of the right to supply actual salary history at the time a summary plan description is provided to the Participant. This Section 2.08 shall be effective January 1, 1987 but only for those Participants with an Hour of Service on or after that date. 2.09 Authorized Absence shall mean any temporary layoff or any absence authorized by the Employer under the Employer's standard personnel practices provided that all persons under similar circumstances must be treated alike in the granting of such Authorized Leaves of Absence and provided further that the Participant returns within the period of authorized absence. An absence due to service in the Armed Forces of the United States shall be considered an Authorized Absence to the extent required by federal law. Employees on Authorized Absence will be deemed to be in active Employment for purposes of Credited Service (but not for other purposes such as eligibility for the Alternate Death Benefit). 2.10 Average Earnings shall mean the average of the Participant's monthly Earnings for the highest five (5) calendar years of Employment out of the last complete ten (10) calendar years of Employment (or during total Employment if less) immediately preceding the Participant's Termination of Employment. Average Earnings shall be determined by dividing the total Earnings received by the Participant during the appropriate five (5) calendar year period by the number of months for which he received Earnings in such period. If the Participant's - 6 - 12 Earnings in the calendar year in which the Participant terminates Employment will increase the Participant's Average Earnings, such Earnings shall be counted as part of the Participant's 10 complete calendar years of Employment. 2.11 Beneficiary shall have the following meaning: (a) Unmarried Participants, may designate any individual(s), trust(s), estate(s), partnership(s), corporation(s) or other entity or entities as Beneficiaries in accordance with procedures established by the Committee to receive any distribution to which the Participant is entitled under the Plan in the event of the Participant's death. The Committee may require certification by a Participant in any form it deems appropriate of the Participant's marital status prior to accepting or honoring any Beneficiary designation. Any Beneficiary designation by an unmarried Participant shall be void if the Participant revokes the designation or marries. Any Beneficiary designation by an unmarried Participant shall also be void to the extent that it conflicts with the terms of a qualified domestic relations order. If an unmarried Participant fails to designate a Beneficiary or if the designated Beneficiary fails to survive the Participant and the Participant has not designated a contingent Beneficiary, the Beneficiary shall be the surviving descendants of the Participant (who shall take per stirpes) and if there are no surviving descendants, the Beneficiary shall be the Participant's estate. For the purposes of the foregoing sentence, the term "descendants" shall include any persons adopted by a Participant or by any of his descendants. (b) A married Participant's Beneficiary shall be his Spouse unless the Participant has designated a non-Spouse Beneficiary (or Beneficiaries) with the written consent of his Spouse given in the presence of a notary public on a form provided by the Committee, or unless the terms of a qualified domestic relations order require payment to a non-Spouse Beneficiary. A married Participant's designation of a non-Spouse Beneficiary in accordance with the preceding sentence shall remain valid until revoked by the Participant or until the Participant marries a Spouse who has not consented to a designation in accordance with the preceding sentence. For the purposes of this Section, revocation of prior Beneficiary designations will occur when a Participant; (i) files a valid designation with the Committee, or (ii) files a signed statement with the Committee evidencing his intent to revoke any prior designations. - 7 - 13 2.12 Board shall mean the Board of Directors of the Company. 2.13 Break in Service shall occur if the Employee ceases to be employed by the Employer and does not resume employment for seven or more consecutive years. 2.14 Code shall mean the Internal Revenue Code of 1986, as amended. A reference to a specific provision of the Code shall include such provision and any applicable Treasury Regulation pertaining thereto. 2.15 Company shall mean Genuine Parts Company and its successors or assigns who adopt this Plan. 2.16 Contributions shall mean the Employer contributions to the Fund made in accordance with Article VII. 2.17 Cost of Living Factor shall mean the cost of living factor prescribed by the Secretary of the Treasury under section 415(d) of the Code for years beginning after December 31, 1987, as applied to such items and in such manner as the Secretary may provide. 2.18 Credited Service shall mean the number of years of service as an Employee of Employer (with proportionate allowance for fractional years) both before and after the Effective Date which shall be measured in accordance with the following rules: (a) Except as provided below, an Employee shall receive Credited Service for the elapsed time of his Employment from the date on which the Employee first performs an Hour of Service for the Employer to his Termination Date. If an Employee has a Termination Date and is subsequently rehired, such Employee shall again receive Credited Service (subject to the Break in Service rules set forth below) beginning on the date of the Employee's first Hour of Service on or after his reemployment and ending on his subsequent Termination Date. (b) Credited Service shall not include any period of Employment which precedes a Break in Service if as of the first day of the Break in Service, - 8 - 14 the Employee is not entitled to a nonforfeitable Retirement Income under Section 4.05. (c) Credited Service shall not include any period of service as an Employee of Employer during which an Employee is a member of a collective bargaining unit whose Employees are covered by a retirement or pension plan to which Employer contributes (other than this Plan) except to the extent provided in 4.07. (d) Credited Service shall not include any period of Employment with a Participating Employer prior to its designation as a Participating Employer or any period of employment with a predecessor business prior to its acquisition by Employer except to the extent provided in Schedules A and B. (e) An Employee's service with an Affiliate shall be considered Employment with the Employer; provided, however, that any benefit payable under this Plan shall be reduced on an Actuarial Equivalent basis by 100% of the value of any benefits received or payable from any qualified employee benefit plan maintained by such Affiliate. (f) Credited Service shall not include any period of service in the military; except to the extent such service is required to be credited under applicable federal law. (g) Credited Service shall not be reduced or discontinued merely because the Participant attains his Normal Retirement Age. This provision is effective January 1, 1988 for each Employee who earns an Hour of Service on or after that date. (h) Prior to January 1, 1988, Employees who were hired on or after their 60th birthday were not eligible to participate in the Plan. Any such Employee who accrues an Hour of Service on or after January 1, 1988 shall, subject to the rules set forth in this Section 2.18, receive Credited Service for their entire period of Employment. 2.19 Delayed Retirement Date shall mean for a Participant who continues his Employment beyond his Normal Retirement Date, the first day of the month coincident with or immediately following such Participant's termination of Employment. 2.20 Disability Retirement Date. See Schedule D. - 9 - 15 2.21 Earnings shall be determined in accordance with the following rules: (a) Except as provided below, Earnings means the Participant's total compensation including wages, salaries, and other amounts received for personal services actually rendered in the course of Employment (including commissions, overtime and bonuses). However, Earnings shall NOT include reimbursements or other expense allowances, fringe benefits (cash and non cash), moving expenses, deferred compensation and welfare benefits. Earnings SHALL include any compensation which is not includible in the Participant's gross income by reason of Code Section 402(a)(8) (Employee pre-tax contributions to the Genuine Partnership Plan), Code Section 125 (Employee salary deferrals under the Genuine Parts Company Section 125 Plan), and Code Sections 402(h), 457(b) and 414(h)(2) (none of which currently apply to the Company). (b) Effective for January 1, 1989, the Plan shall not take into account more than $200,000 in Earnings for any Plan Year (including Plan Years prior to January 1, 1989). The $200,000 limit will be adjusted annually by the Cost of Living Factor. However, any increase in the $200,000 limit shall apply only to Earnings taken into account for the Plan Year in which the increase is effective and shall not apply retroactively. In no event will the $200,000 limit described above reduce a Participant's Accrued Benefit as of December 31, 1988. (c) Effective for January 1, 1994, the Plan shall not take into account more than $150,000 in Earnings for any Plan Year (including Plan Years prior to January 1, 1994). The $150,000 limit will be adjusted annually by the Cost of Living Factor. However, any increase in the $150,000 limit shall apply only to Earnings taken into account for the Plan Year in which the increase is effective and shall not apply retroactively. In no event will the $150,000 limit described above reduce a Participant's Accrued Benefit as of December 31, 1993. 2.22 Earliest Retirement Age shall mean the Participant's Normal Retirement Date. However, if the Participant has 15 or more years of Credited Service, the Participant's Earliest Retirement Age shall be the first day of the month coincident with or immediately following the date the Participant attains (or would have attained) his Early Retirement Date. 2.23 Early Retirement Date shall mean the first day of the month coincident with or immediately following the day on which the Participant (i) completes fifteen (15) - 10 - 16 years of Credited Service and has attained age fifty-five (55) and (ii) actually terminates his Employment. 2.24 Effective Date shall mean January 1, 1989. 2.25 (a) Eligible Employee shall mean, except for those Employees identified in the following sentence, all Employees employed by the Employer. The following Employees shall not be considered Eligible Employees: (i) any employee included in a collective bargaining unit for which a labor organization is recognized as collective bargaining agent unless such employee has been designated by the Committee as an "Eligible Employee" for the purposes of this Plan, (ii) any Employee who is a nonresident alien and who does not receive earned income from the Employer which constitutes income from sources within the United States, or (iii) any "leased employee," within the meaning of Code Section 414(n)(2), with respect to the Employer. (b) Employee shall mean any person employed by or on Authorized Absence from the Employer, and any person who is a "leased employee" within the meaning of Code Section 414(n)(2) with respect to the Employer. However, if such "leased employees" constitute less than 20 percent of the Employer's combined non-highly compensated work force, within the meaning of Code Section 414(n)(1)(C)(ii), the term "Employee" shall not include "leased employees" covered by a plan described in Code Section 414(n)(5). 2.26 Employer shall mean the Company and any Participating Employer. All Participating Employers are listed on Schedule A. 2.27 Employment shall mean the active service of an Employee with the Employer. Employment with a Participating Employer prior to its designation as a Participating Employer and employment with a predecessor business prior to its acquisition by Employer shall be counted as employment with the Employer only to the extent provided Schedules A or B. 2.28 Fiduciary shall mean a party named as a Fiduciary in Section 8.01. Any party shall be considered a fiduciary of the Plan only to the extent of the powers and duties specifically allocated to such party under the Plan. 2.29 Fund shall mean the money and other properties held and administered by the Trustee in accordance with the Plan and Trust Agreement. It is expressly - 11 - 17 intended that multiple trust funds may be established under this Plan, which together shall comprise the Fund hereunder. See Section 2.51 and Schedule C. 2.30 Highly Compensated Employee. See Article XIV. 2.31 Hours of Service shall mean: (a) Each hour for which an Employee is paid, or entitled to payment, for performance of duties for an Employer or Employers. (b) Each hour for which an Employee is paid, or entitled to payment, by an Employer or Employers, on account of a period of time during which no duties are performed (irrespective of whether the employment relationship is terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or an Authorized Absence; provided that in no event, shall an Employee receive credit for more than 501 Hours of Service for any single continuous period of non-working time. However, no Hours of Service shall be granted for any direct or indirect payment or for any entitlement to payment if (i) such payment is made or due under a plan maintained solely for the purpose of complying with applicable worker's compensation laws, unemployment laws or disability insurance laws or (ii) such payment is intended to reimburse an employee for his or her medical or medically related expenses. (c) Each hour for which an Employee is on an Authorized Absence by reason of: (i) the pregnancy of the Employee, (ii) birth of a child of the Employee, (iii) placement of a child with the Employee in connection with the adoption of the child by the Employee, or (iv) caring for a child referred to in paragraphs (i) through (iii) immediately following birth or placement. Hours credited under this paragraph shall be credited at the rate of 10 hours per day, 45 hours per week but shall not, in the aggregate, exceed the number of hours required to prevent the Employee from incurring a Break in Service under Code Section 410(a)(5) (a maximum of 501 hours) during the first computation period in which a Break in Service would otherwise occur. (d) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Employer or Employers. (e) In lieu of the foregoing, an Employee who is not compensated on an hourly basis (such as salary, commission or piecework Employees) shall be credited with 45 Hours of Service for each week (or ten Hours of - 12 - 18 Service for each day) in which such Employee would be credited with Hours of Service if hourly paid. However, this method of computing Hours of Service may not be used for any Employee whose Hours of Service is required to be counted and recorded by any Federal Law, such as the Fair Labor Standards Act. Any such method must yield an equivalency of at least 1,000 hours per computation period. The following rules shall apply in determination of whether an Employee completes an "Hour of Service": 1. The same hours shall not be credited under subparagraphs (a), (b) or (c) above, as the case may be, and subparagraph (d) above; nor shall the same hours credited under subparagraphs (a) through (d) above be credited under subparagraph (e) above; 2. The rules relating to determining Hours of Service for reasons other than the performance of duties and for crediting Hours of Service to particular periods of employment shall be those rules stated in Department of Labor Regulations Title 29, Chapter XXV, Subchapter C, part 2530, Sections 200b2(b) and 200b2(c), respectively. 2.32 Insurer shall mean a legal reserve life insurance company which issues a policy of life insurance or a group annuity contract under the Plan. 2.33 Normal Retirement Age shall mean the Participant's 65th birthday or, if later, the fifth anniversary of the date the Participant commenced participation in the Plan. 2.34 Normal Retirement Date shall mean the first day of the month coincident with or next following the Participant's Normal Retirement Age. 2.35 Participant shall mean an Employee who becomes eligible to participate in the Plan as provided in Article III. 2.36 Participating Employer shall mean any corporation and any other entity that is designated by the Committee as a Participating Employer under the Plan. See Section 9.04 for provisions relating to a Participating Employer's adoption of this Plan. All Participating Employers, groups of employees designated as participating in the Plan by such Participating Employers (if not all employees), and the effective date of each Company's designation as a Participating Employer shall be specified in Schedule A. - 13 - 19 2.37 Pension Committee or Committee shall mean the committee of persons appointed by the Board to administer the Plan in accordance with the terms of Article VIII. 2.38 Permanent Disability shall mean a physical or mental condition of a Participant resulting from bodily injury, disease, or mental disorder which (i) for a Participant who is not in active Employment on or after January 1, 1993, entitles the Participant to Social Security disability benefits or (ii) for a Participant who is in active Employment on or after January 1, 1993, results in the Participant receiving long term disability benefits under The Genuine Parts Company Long Term Disability Plan. A Participant's Permanent Disability will end on the date the Participant is no longer receiving disability benefits (i) under Social Security for a Participant who is not in active Employment on or after January 1, 1993, or (ii) under The Genuine Parts Company Long Term Disability Plan for a Participant who is in active Employment on or after January 1, 1993. 2.39 Plan shall mean the Genuine Parts Company Pension Plan as set forth in this document together with any subsequent amendments hereto. 2.40 Plan Administrator or Administrator shall mean the committee of persons appointed by the Board pursuant to Article VIII to administer the Plan. The committee of such persons shall also be known as the Pension Committee and all references in the Plan to the Plan Administrator shall be deemed to apply to the Pension Committee and vice versa. The committee of such persons is hereby designated as the "Administrator" of the Plan within the meaning of Section 3(16) of the Act and as the agent for the service of legal process for the purposes of Section 102(b) of the Act. 2.41 Plan Year shall be the calendar year. 2.42 Predecessor Plans shall mean the following qualified defined benefit plans established prior to January 1, 1984 for employees of the Company:
Name of Plan Effective Date ------------ -------------- Genuine Parts Company Pension Plan 01/01/74 S. P. Richards Company Pension Plan 01/01/56 General Automotive Parts Pension Plan 01/01/64 (which does not include union employees covered under the plan of Union Automotive Association of St. Louis, Inc. or any successor thereto)
- 14 - 20 Pension Plan for the Employees of 01/01/65 Standard Unit Parts Corporation (including Manco, Inc., an associate employer) Retirement Plan for Employees of 01/01/63 Balkamp, Inc. (which includes NAPA Headquarters employees) Restated NAPA Des Moines Warehouse 08/13/74
2.43 Pre-Retirement Survivor Annuity shall have that meaning as defined in Section 5.01. 2.44 Prior Plan shall mean the Genuine Parts Company Plan as in effect on the day preceding the Effective Date. 2.45 Retirement shall mean the date the Participant actually ceases Employment for Early Retirement, Normal Retirement, Delayed Retirement or (prior to January 1, 1993) Disability Retirement, whichever is applicable. 2.46 Retirement Income shall mean any amount payable to or on behalf of a Participant, Beneficiary or Spouse in accordance with the provisions of the Plan. 2.47 Safekeeping Trust shall have the meaning described in Section 11.01. 2.48 Spouse shall mean, as of any applicable date, a person who: (a) was married to a Participant in a religious or civil ceremony recognized under the laws of the state where the marriage was contracted; (b) was married to the Participant on the Participant's Annuity Starting Date; and (c) for purposes of Article V (Death Benefits) was married to the Participant throughout the one-year period ending on the Participant's death. A Participant shall not be considered married to another person as a result of any common law marriage whether or not such common law marriage is recognized by applicable state law. The Participant's Spouse as of the Participant's Annuity Starting Date shall continue to be the Participant's Spouse for purposes of this Plan (unless otherwise provided in a qualified domestic relations order) notwithstanding the subsequent death or divorce of such Spouse and the remarriage of the Participant. - 15 - 21 2.49 Termination Date shall mean the first to occur of the following events: (a) Voluntary resignation from service of the Employer; or (b) Discharge from the service of the Employer by the Employer; or (c) Retirement; or (d) Death; or (e) Permanent Disability; or (f) The first anniversary of the date the Employee ceases Employment for any reason not described above (e.g., vacation, holiday, sickness, disability (but not disability retirement described in Schedule D), leave of absence, or layoff). If, however, an Employee terminates his Employment on account of an event described in paragraphs (a) - (c) above and the Employee performs an Hour of Service within twelve months following such termination of Employment (or such lesser period as provided in Treasury Regulation Section 1.410(a)-7(d)(iii)(B)), the Employee shall be considered as having been in active Employment during such period of absence. An Employee on Authorized Absence will not have a Termination Date earlier than the end of such Authorized Absence. 2.50 Treasury Regulations shall mean regulations pertaining to certain Sections of the Code as issued by the Secretary of the Treasury. 2.51 Trust or Trust Agreement or Trust Fund or Fund shall refer to the Fund established pursuant to one or more agreements of trust entered into between the Employer and one or more trustees (sometimes referred to as sub-trusts), which governs the creation and maintenance of the Fund, and all amendments thereto which may hereafter be made. References to Trust and Trust Agreement shall include the Safekeeping Trust described in Section 11.01. It is expressly intended that multiple sub-trusts may be established under this Plan, which together shall comprise the Trust Fund hereunder and that all of the sub-trusts shall be considered to be a single trust fund for purposes of Section 1.414(1)-1(b)(1) of the Treasury Regulations. The term Trust Fund shall also be deemed to include any fund existing pursuant to any deposit administration or group annuity contract between the Company and/or the Trustee and an Insurer. Each trust agreement or contract with an Insurer established pursuant to this Plan shall be listed on Schedule C. - 16 - 22 2.52 Trustee shall mean any institution or individual(s) who shall accept the appointment of the Committee to serve as Trustee pursuant to the Plan. 2.53 Defined Terms. A defined term, such as "Retirement," will normally govern the definitions of derivatives therefrom, such as "Retire," even though such derivatives are not specifically defined and even if they are or are not initially capitalized. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, unless the context clearly indicates to the contrary. Singular and plural nouns and pronouns shall be interchangeable as the factual context may allow or require. The words "hereof," "herein," "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan and not to any particular provision or Section. - 17 - 23 ARTICLE III PARTICIPATION 3.01 Each Employee who was a Participant under the Prior Plan on the day prior to the Effective Date and who is employed by an Employer on the Effective Date shall participate in this Plan on the Effective Date. 3.02 After the Effective Date each Employee shall participate in the Plan on the first day (assuming the Participant is still an Employee on such date) to occur after such Employee attains age 21 and completes an eligibility computation period in which such Employee has 1,000 Hours of Service. An Employee's first eligibility computation period shall be the 12 consecutive months following the commencement of his Employment. If the Employee fails to complete 1,000 Hours of Service during his first eligibility computation period, then his second eligibility computation period shall be the Plan Year which commences on the January 1 following his initial date of hire. If an Employee shall fail to complete 1,000 Hours of Service during his second eligibility computation period, then each successive Plan Year shall be the eligibility computation period. 3.03 A Participant shall participate in the Plan for so long as the Participant remains an Employee. If a Participant ceases to be an Employee and is later rehired, he shall resume participation in the Plan as of the date of rehire. 3.04 Notwithstanding any other provision of the Plan, no Employee shall participate in the Plan during any period in which such Employee is a member of a collective bargaining unit whose Employees are covered by a retirement or pension plan to which Employer contributes (other than this Plan). If any Employee shall cease to be a member of such a collective bargaining unit and shall remain in the employ of Employer, then such Employee shall become a Participant in this Plan as of the first day of the month coinciding with or next following the earliest date on which such Employee has attained the age of 21 and completed a twelve month period of Employment during which such Employee has not less than 1,000 Hours of Service, and for such purpose all actual Employment of Employee shall be counted including employment during the period in which such Employee was a member of such bargaining unit. See Section 4.07 concerning reduction in benefits in certain cases in which Employment is counted as provided in the preceding sentence. 3.05 Participation in the Plan shall not give any Employee the right to be retained in the Employer's employ, nor shall any Employee, upon dismissal from or voluntary termination of his Employment, have any right or interest in the Fund, except as herein provided. - 18 - 24 ARTICLE IV RETIREMENT DATES AND BENEFITS 4.01 Normal Retirement. (a) A Participant who retires on his Normal Retirement Date is entitled to receive an annual Retirement Income beginning on his Normal Retirement Date payable in monthly installments in the form described in Article VI. A Participant who has attained Normal Retirement Age shall become 100% vested in his Accrued Benefit. (b) The monthly Retirement Income payable to a Participant who retires on his Normal Retirement Date with 15 or more years of Credited Service and who elects to receive his benefit in the form of a Life Annuity Option shall be the greater of (A) and (B) where: (A) is 30% of the Participant's Average Earnings; and (B) is the applicable percentage of the Participant's Average Earnings on his Normal Retirement Date less 50% of the Participant's monthly Anticipated Social Security Benefit. The applicable percentage of the Participant's Average Earnings shall be determined by the following table: - 19 - 25
Participant's Years Participant's Years of Credited Service of Credited Service as of Normal Percentage of as of Normal Percentage of Retirement Date Average Earnings Retirement Date Average Earnings ------------------- ---------------- ------------------- ---------------- 15....................40.0% 31.....................48.0% 16....................40.5% 32.....................48.5% 17....................41.0% 33.....................49.0% 18....................41.5% 34.....................49.5% 19....................42.0% 35.....................50.0% 20....................42.5% 36.....................50.5% 21....................43.0% 37.....................51.0% 22....................43.5% 38.....................51.5% 23....................44.0% 39.....................52.0% 24....................44.5% 40.....................52.5% 25....................45.0% 41.....................53.0% 26....................45.5% 42.....................53.5% 27....................46.0% 43.....................54.0% 28....................46.5% 44.....................54.5% 29....................47.0% 45 or more.............55.0% 30....................47.5%
(c) Any Participant who retires on his Normal Retirement Date with less than 15 years of Credited Service and who elects the Life Annuity Option shall be entitled to a monthly Retirement Income equal to 30% of the Participant's Average Earnings multiplied by a fraction. The numerator of the fraction is the Participant's months of Credited Service as of his Normal Retirement Date, but not in excess of 180. The denominator of the fraction is 180. 4.02 Early Retirement. (a) Each Participant who has attained age 55 and who has completed at least 15 years of Credited Service may elect early retirement. A Participant who takes early retirement shall receive a monthly Retirement Income in the form described in Article VI beginning on his Early Retirement Date. (b) The monthly Retirement Income payable to a Participant who elects to begin receiving his Retirement Income prior to his Normal Retirement Date shall be determined in the same manner as his monthly Retirement Income would be determined under Section 4.01, except that his Average Earnings and Credited Service shall be calculated as of his Early Retirement Date. Furthermore the Retirement Income computed above shall be reduced by one-half of one percent (.005) for each complete - 20 - 26 month that the Participant's Early Retirement Date precedes his Normal Retirement Date. (c) The Committee may from time to time provide in its sole discretion that Participants who meet specified age and service requirements (or other applicable requirements established by the Committee) will be permitted to retire during specified periods and will receive a retirement benefit based on additional years of Credited Service, without the reduction described in paragraph (b) above or based on other factors and adjustments as determined by the Committee. The Committee's decision will be described in Schedule E to this Plan. All such special retirements will be communicated to the affected Participants but shall have no effect to the extent such adjustments or other factors result in a retirement benefit that adversely affects the qualified status of the Plan under Code Section 401(a)(4). 4.03 Permanent Disability. (a) This Section 4.03 shall apply to any Participant who is in active Employment on or after January 1, 1993. Any Participant who is not in active Employment with an Employer on or after January 1, 1993, (including any Participant who is not in active Employment on such date but who has a Termination Date before, on, or after January 1, 1993) and who becomes Permanently Disabled is governed by Schedule D and not this Section 4.03. (b) A Participant who prior to his cessation of active Employment: (i) completes one year of Credited Service and (ii) becomes Permanently Disabled shall be entitled to the provisions of this Section 4.03. If a Participant has not completed one year of Credited Service prior to his cessation of active Employment, the Participant shall not be entitled to a Retirement Income under this Plan. If the Participant becomes Permanently Disabled after his cessation of active Employment, the Participant's Retirement Income, if any, shall be determined in accordance with Sections 4.01, 4.02 or 4.05. (c) The monthly Retirement Income payable to a Participant who is Permanently Disabled shall be determined in the same manner as his monthly Retirement Income would be determined under Section 4.01 assuming the Participant continued to earn Credited Service during his Period of Disability and assuming the Participant's Average Earnings as of the date of his Permanent Disability remained unchanged. A Participant's "Period of Disability" shall commence on the date he became Permanently Disabled and shall end on his Normal Retirement Date or, if earlier, the date benefits commence under Section 4.02. - 21 - 27 (d) If a Participant has earned at least 15 years of Credited Service (including the Participant's years of Credited Service earned during his Period of Disability) and the Participant has attained age 55, the Participant may elect to receive Disability Retirement benefits prior to his Normal Retirement Date. If the Participant receives benefits prior to his Normal Retirement Date, his Retirement Income shall be computed as provided in Section 4.02 including a reduction of the Participant's Retirement Income for each complete month that the Participant's Early Retirement Date precedes his Normal Retirement Date. (e) If the Participant ceases to be Permanently Disabled prior to the commencement of benefits under this Plan, the Participant shall nevertheless receive Credited Service for his Period of Disability (which ends on the date the Participant's Permanent Disability ceases). (f) If a Participant described in paragraph (b) dies prior to the commencement of benefits under this Plan and while he is Permanently Disabled, the Participant's Spouse shall be entitled to a Spouse's Benefit pursuant to Article V based upon the Participant's Credited Service that the Participant would have had if the Participant had remained in active Employment until his death and based on the Participant's Average Earnings in effect prior to his Permanently Disability. 4.04 Delayed Retirement. (a) After the Effective Date, any Participant who attains his Normal Retirement Age may remain in the active employ of the Employer beyond his Normal Retirement Age, provided, however, that an Employee may not remain in the active employ of the Employer if the Employer can, under the terms of the Age Discrimination in Employment Act, require the Employee to retire at his Normal Retirement Age and the Employer wishes the Employee to do so. (b) A Participant who retires on his Delayed Retirement Date is entitled to receive a Retirement Income beginning on his Delayed Retirement Date payable in monthly installments. (c) The monthly Retirement Income payable at a Participant's Delayed Retirement Date will be paid in the form described in Article VI. Such Retirement Income shall be the greater of the following amounts: (i) The Retirement Income payable to the Participant determined in the same manner as his Normal Retirement Income would be determined - 22 - 28 under Section 4.01, but using the Participant's Average Earnings and Credited Service as of his Delayed Retirement Date, or (ii) The Retirement Income the Participant would have received assuming the Participant had retired on his Normal Retirement Date actuarially increased from the Participant's Normal Retirement Date to the Participant's Delayed Retirement Date. For this purpose, the Participant's Delayed Retirement Date shall be deemed to be such Participant's birthday which is coincident with or immediately preceding the Participant's actual Delayed Retirement Date. (d) The Retirement Income computed under Section 4.04(c) shall be reduced by the Actuarial Equivalent of any Retirement Income previously paid to the Participant under Section 6.03 (mandatory distributions after age 70-1/2) to the extent permitted by Code Section 411(b)(1)(H)(iii). (e) This Section 4.04, which permits the accrual of Credited Service for employment after Normal Retirement Age shall be effective as of January 1, 1988 for any Employee who accrues one or more Hours of Service on or after January 1, 1988. 4.05 Termination of Employment. (a) A Participant who terminates Employment with the Employer prior to his Retirement and prior to the completion of three years of Credited Service shall not be entitled to receive any Retirement Income under the Plan. (b) A Participant with at least three years of Credited Service who terminates his Employment for any reason other than his Retirement or death shall be entitled to the monthly Retirement Income described below payable in accordance with Article VI commencing on his Normal Retirement Date (provided he is then alive). (c) The monthly Retirement Income payable to a Participant described in Section 4.05(b) or to any Participant who makes the election described in Section 4.02(c) shall equal the product of (1) and (2), where: (1) is such Participant's Accrued Benefit as of his Termination Date; and (2) is the applicable percentage based on completed years of Credited Service in accordance with the following table: - 23 - 29
Complete Years of Credited Service Percent of Monthly at Termination Date Benefit Payable ------------------- ------------------ Less than 3 0% 3 20% 4 40% 5 60% 6 80% 7 or more 100%
(d) Upon attaining age 55, a Participant who has completed at least 15 years of Credited Service as of his Termination Date may elect to receive a monthly Retirement Income commencing on his Early Retirement Date or on the first day of any month after his Early Retirement Date but in no event later than his Normal Retirement Date, whichever the Participant elects. Such Retirement Income shall be computed in the same manner his Retirement Income would be determined under Section 4.02 (including the reduction for each complete month that the commencement of such benefits precedes the Participant's Normal Retirement Date). An election to receive benefits under this paragraph shall be in writing on such form as the Committee may prescribe and shall be delivered to the Committee not later than 60 days prior to the date such Participant desires payments to commence in accordance with this paragraph. (e) If a Participant terminates his Employment on account of death, any benefit payable to the Participant's Beneficiary shall be determined in accordance with Article V. 4.06 Suspension of Benefits. (a) This Section 4.06 shall apply to any Participant who has a Termination Date under the provisions of this Plan, (ii) was receiving or was entitled to receive Retirement Income hereunder and returns to Employment with Employer, and (iii) is anticipated to receive Credited Service hereunder after his reemployment. Such Participant shall be subject to the following provisions: (1) The Participant shall not be entitled to receive (if payments were being made) during such period of reemployment any Retirement Income to which the Participant might otherwise be entitled to receive under this Plan; provided, however, that Retirement Income will not be suspended if it is anticipated that the - 24 - 30 Participant will not normally accrue 1000 Hours of Service during a Plan Year after reemployment; (2) The Participant shall be treated like any other Participant who terminated Employment and was rehired (ignoring the fact that he may have retired and was receiving Retirement Income) and for all purposes under the Plan shall be given credit for Credited Service earned after reemployment and prior to his subsequent Termination Date. The period during which he was retired or was not employed by the Employer shall not be included as Credited Service. (3) If the Participant dies during the time of his reemployment and such Employee had previously received Retirement Income, then any death benefit payable to the Participant's Beneficiary shall be determined under the form of payment previously elected by the Participant pursuant to Article VI, after recomputing the Participant's Retirement Income as described in subparagraph (4) below. If the Participant had not previously received Retirement Income, then any death benefit shall be determined under Article V of the Plan (after recomputing the Participant's Credited Service and Earnings before and after his reemployment). The death benefits so determined shall be reduced by the Actuarial Equivalent value of any Retirement Income previously received by the Participant. (4) The Retirement Income payable on the Participant's subsequent termination of Employment shall be made under the form of payment in effect (if any) prior to his reemployment and shall equal the greater of (i) or (ii) below. However, a Participant's Accrued Benefit earned after his Normal Retirement Age shall not be offset by more than the amounts permissible under Proposed Treasury Regulation Section 1.411(b)-2(b)(4) or any successor regulation thereto. (i) The Retirement Income payable to the Participant determined in accordance with Article IV based upon his Average Earnings before his prior termination of Employment and after his rehire (to the extent permitted under the definition of Average Earnings) and by aggregating his Credited Service before his prior termination of Employment with his Credited Service after his rehire. The Retirement Income so determined shall be reduced by the Actuarial Equivalent of any Retirement Income previously paid to the Participant. - 25 - 31 (ii) The monthly Retirement Income the Participant was receiving or was entitled to receive prior to his termination of Employment. However, if the Participant's Retirement Income was suspended during his period of reemployment and such reemployment included Hours of Service after the Participant's Normal Retirement Date, the Participant's Retirement Income shall be actuarially increased for the period of time beginning on the later of the Participant's Normal Retirement Date or the date the Participant's Retirement Income was suspended and ending on the date his Retirement Income resumes. (b) Conflict with Suspension of Benefit Regulations. In no event shall the determination under this Section 4.06 as to when a reemployed Participant's Retirement Income may be suspended be less favorable to the Participant than the rules set forth in Department of Labor Regulation Section 2530.203-3. In the event of any conflict between the provisions of this Section 4.06 and said Regulation, the provisions of said Regulation shall prevail. 4.07 Reduction of Benefit in Certain Cases. (a) Notwithstanding any other provision of the Plan, any Participant who reaches his Termination Date and who was during any period of his Employment a member of a collective bargaining unit whose employees were, during such period, covered by a retirement, pension plan or group contract to which Employer contributed or is responsible (other than this Plan) which is qualified or intended to qualify under Section 401(a) of the Code shall be entitled to a Retirement Income computed in accordance with the following rules: (1) Such Participant shall receive Credited Service for all actual service in the employ of the Employer in accordance with the rules of paragraph 2.18 and for purposes of 2.18(c) there shall be included as Credited Service any service during any period in which such Participant was a member of a collective bargaining unit whose employees were, during such period, covered by a retirement or pension plan to which Employer contributed (other than this Plan). (2) The amount of the benefit to which such Participant is entitled shall be computed in accordance with 4.01, 4.02, 4.03 (or Schedule D as applicable), 4.04, 4.05 or Article V (whichever is applicable), but shall be reduced on an Actuarial Equivalent basis - 26 - 32 by 100% of the value of any retirement, termination, disability, or death benefits payable to such Participant from such other retirement or pension plan which are attributable to the contributions of Employer. The Pension Committee shall be empowered to adopt rules which shall be applied on a uniform basis to all Employees similarly situated for the determination of benefits under this Section 4.07. (b) Any Participant who is granted Credited Service for benefit accrual purposes for any period of employment with any predecessor business prior to its acquisition by Employer or during any period of employment with a Participating Employer prior to its designation as a Participating Employer shall be entitled to a benefit the amount of which shall be computed in accordance with 4.0l, 4.02, 4.03 (or Schedule D), 4.04, 4,05 or Article V (whichever is applicable) but shall be reduced on an Actuarial Equivalent basis by l00% of the value of any retirement, termination, disability, or death benefits received or payable from the pension or retirement plan of such predecessor business or of such Participating Employer. (c) Notwithstanding anything in this Plan to the contrary, any monthly Retirement Income payable under this Plan to the Participant or his Beneficiary shall be reduced by the amount of any benefits received by a Participant under the Workers' Compensation laws of any State to the extent such benefits are attributable to Employment with the Employer. No offset, however, shall be made for the following: (i) Worker's Compensation payments specifically allocated for hospitalization or medical expenses (i.e., if not specifically allocated, the payment will be treated as not attributable to hospitalization or medical expense); or (ii) Worker's Compensation payments applicable to periods prior to the date the Participant ceased active employment with the Employer. For the purpose of this Section 4.07, Worker's Compensation benefits include periodic payments, lump sum payments and payments made in settlement of actual or disputed Worker's Compensation claims. Where an amount is paid to a Participant in a single sum, no further payments shall be paid hereunder until the total amount of the monthly payments otherwise payable hereunder equals the amount of such single sum payment. Thereafter, payments hereunder shall resume. - 27 - 33 4.08 Increase in Benefits for Retired Participants. The Committee may from time to time declare an increase in the monthly Retirement Income payable to retired Participants, Spouses, or Beneficiaries by reason of a former Participant's taking Early, Normal, Delayed, or (prior to January 1, 1993) Disability Retirement during any given calendar year designated by the Company. The class of former Participants to whom such increase applies; the amount of such increase; the time when such increase becomes effective; and any other relevant information shall from time to time be set forth on the records of the Committee. 4.09 Minimum Benefit of Prior Plans. Notwithstanding any contrary provision of this Plan, in no event shall any Participant's Retirement Income Under this Plan be less than the Participant's benefit that he had accrued under the terms of any Predecessor Plan, or under the terms of the Prior Plan. 4.10 Grandfathered Retirement Benefits. Any Participant who (a) was a Participant in any of the Predecessor Plans on December 31, 1983, (b) attained the age of 55 on or prior to January 1, 1984, and (c) retires on or after January 1, 1984 under Section 4.01, 4.02 or 4.04 shall automatically receive a Retirement Income hereunder which is the greater of (i) and (ii) where: (i) is the Retirement Income otherwise provided under Section 4.01, 4.02 or 4.04, whichever is applicable, and (ii) is the benefit such Participant would have received under his respective Predecessor Plan assuming that the benefit formula in such Predecessor Plan as in effect on December 31, 1983 had remained in effect until such Participant's Retirement. For this purpose, the benefit formula of the Predecessor Plan shall reflect current requirements of law and limitations of law (e.g., current covered compensation tables, limitations of Code Section 401(a)(4), Code Section 415, Code Section 401(a)(17), etc.). For purposes of determining whether any such Participant may retire under Section 4.02 and this Section 4.10, any such Participant who does not meet the age or service condition to elect Early Retirement may nonetheless retire under Section 4.02 and this Section 4.10 if he would have met the age and service early retirement conditions of his respective Predecessor Plan assuming such Predecessor Plan as in effect on December 31, 1983 had remained in effect until such Participant's Retirement. For purposes of determining such grandfathered retirement benefits, the Predecessor Plans as in effect on December 31, 1983, are attached hereto as Schedule F: S.P. Richards Company Pension Plan - 28 - 34 General Automotive Parts Pension Plan Pension Plan for Employees of Standard Unit Parts Corporation Retirement Plan for Employees of Balkamp, Inc. Restated NAPA Des Moines Warehouse Pension Plan. The following modifications in the Plan shall apply to those Participants who are eligible for grandfathered retirement benefits under this Section 4.10: (i) The Normal Retirement Age under the Plan for a Participant eligible for grandfathered retirement benefits under the General Automotive Parts Pension Plan shall mean such Participant's 62nd birthday. (ii) Participants eligible for grandfathered retirement benefits under the S.P. Richards Company Pension Plan may elect to receive their Retirement Income in the form of a five years certain and life option in addition to the other optional forms provided in Article VI. However, the election of the five years and certain benefit option shall be subject to the provisions of Section 6.02. - 29 - 35 ARTICLE V DEATH BENEFITS 5.01 Pre-Retirement Survivor Annuity. (a) Except as provided in Section 5.02, if a married Participant with three (3) or more years of Credited Service dies prior to his Annuity Starting Date, the Participant's Spouse shall be entitled to a monthly Retirement Income known as a "Pre-Retirement Survivor Annuity." The amount of the Pre-Retirement Survivor Annuity shall be determined under Section 5.01(b) or (c), whichever is applicable. The Pre-Retirement Survivor Annuity shall commence as of the date determined under Section 5.01(e). (b) If the Participant dies after his Earliest Retirement Age, the Spouse's Pre-Retirement Survivor Annuity shall equal 50% of the monthly Retirement Income that the Participant would have received assuming the Participant had retired on the day before his death and elected to receive his Retirement Income under the Joint and 50% Survivor Annuity. (c) If the Participant dies on or before his Earliest Retirement Age, the Spouse's Pre-Retirement Survivor Annuity shall equal 50% of the monthly Retirement Income that the Participant would have received assuming the Participant (i) had separated from service on his Termination Date; (ii) had survived until his Earliest Retirement Age; (iii) had retired on his Earliest Retirement Age and elected to receive his Retirement Income under the Joint and 50% Survivor Annuity; and (iv) had died on the next day. (d) Notwithstanding (b) and (c) above, if during the 90 day period preceding the Participant's Annuity Starting Date the Participant had elected (with spousal consent) to receive a Joint and Last Survivor Option (as described in Section 6.02) with his Spouse as his Beneficiary, the Spouse's Pre-Retirement Survivor Annuity shall be determined assuming the Participant had retired under the Joint and Last Survivor Option instead of the Joint and 50% Survivor Annuity. (e) The Spouse may elect to receive the Pre-Retirement Survivor Annuity commencing as of the date of the Participant's deemed Retirement or as of the first day of any succeeding month. In no event will the Pre-Retirement Survivor Annuity commence later than the date the Participant would have attained his Normal Retirement Date or the first day of the month following the Participant's death, if later. The monthly Retirement Income of a delayed Pre-Retirement Survivor Annuity shall equal the Actuarial Equivalent of a Pre-Retirement Survivor Annuity - 30 - 36 commencing as of the date of the Participant's deemed Retirement. If the Spouse dies prior to the commencement of the Pre-Retirement Survivor Annuity, no monthly Retirement Income payments shall be made under this Section 5.01. (f) If the Participant dies prior to terminating employment and the Participant's Spouse is entitled to a Pre-Retirement Survivor Annuity, such Spouse, after the Participant's death, may elect to receive the Alternate Death Benefit described in Section 5.02 in lieu of the Pre-Retirement Survivor Annuity, provided the Participant had completed five or more years of Credit Service prior to his death. (g) If the Participant does not have three years of Credited Service at the time of his death, if the Participant dies without a Spouse, or if the Participant dies after his Annuity Starting Date, neither the Participant's Spouse nor the Participant's Beneficiary shall be entitled to Retirement Income under this Section 5.01. 5.02 Alternate Death Benefit. (a) The Alternate Death Benefit shall be paid to a Participant's Beneficiary if the following conditions are satisfied: (i) The Participant has earned 5 or more years of Credited Service; (ii) The Participant dies prior to terminating his Employment and prior to his Annuity Starting Date; and (iii) In the case of a married Participant, either (1) the Participant receives the notice described in Section 5.02(c), the Spouse consents to the Participant's election of the Alternate Death Benefit, and the Spouse agrees to waive the Pre- Retirement Survivor Annuity of Section 5.01, or (2) following the Participant's death, the Spouse elects the Alternate Death Benefit in lieu of the Pre-Retirement Survivor Annuity. (b) The Alternate Death Benefit shall provide a monthly Retirement Income payable to the Participant's Beneficiary commencing on the first day of the month following the Participant's death and continuing only for a specified number of months as determined under the following table: - 31 - 37
Complete Years of Credited Service at Number of Date of Death Months Payable ------------------- -------------- 5 but less than 10 12.5 10 but less than 15 25 15 or more 50
The monthly Retirement Income payable under the Alternate Death Benefit shall be determined as follows: (i) If the Participant dies prior to his Normal Retirement Date, the Beneficiary's Retirement Income shall equal the greater of (A) 30% of the Participant's current monthly Earnings or (B) 30% of the Participant's Average Earnings. (ii) If the Participant dies after his Normal Retirement Date, the Beneficiary's Retirement Income shall equal the Retirement Income the Participant would have received if the Participant had retired on the day before his death and elected the Life Annuity Option. However, in such case the maximum number of payments as determined pursuant to the table above shall be reduced by the number of months that have elapsed since the Participant's Normal Retirement Date. (c) Prior to electing the Alternate Death Benefit and prior to designating a non-Spouse Beneficiary, a married Participant must receive a written explanation of the Pre-Retirement Survivor Annuity. Such explanation shall contain comparable information as provided in the notice described in Section 6.02(d). The notice must be provided to the Participant during the "Applicable Period". The "Applicable Period" shall mean whichever of the following periods ends last: (i) The period beginning with the first Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year in which the Participant attains age 34; or (ii) A reasonable period of time ending after the Employee becomes a Participant. However, the Committee may provide such notice to the Participant prior to the Applicable Period. If the Participant receives the notice prior to the commencement of the Applicable Period, a second notice must be given to the Participant during the Applicable Period. - 32 - 38 (d) The Participant's Spouse must consent in writing on a form provided by the Plan Administrator in the presence of a Notary Public or Plan representative to the Participant's election of the Alternate Death Benefit and designation of a non-Spouse Beneficiary, if any. The Spouse's consent must acknowledge the effect of such consent and must specifically state the non-Spouse Beneficiary, if any, selected by the Participant. However, if the Participant establishes to the satisfaction of the Plan Administrator that his Spouse's consent cannot be obtained because he has no Spouse, because his Spouse cannot be located, or because of other circumstances as determined by applicable Treasury Regulations, the Committee may treat the Participant's election as an election for which spousal consent was obtained. A Spouse's consent, if given on or after the Plan Year in which the Participant attains age 35, shall be irrevocable. If, however, the Spouse's consent was given prior to such Plan Year, the Spouse's consent shall be void as of the first day of the Plan Year in which the Participant attains age 35. In such case, the Participant may again elect the Alternate Death Benefit and select a non-Spouse Beneficiary, provided the Participant's Spouse consents to such election in the manner provided in this Section 5.02(d). The Spouse's consent shall then be irrevocable. The Participant's election of the Alternate Death Benefit and the Spouse's consent to such election shall constitute a waiver of the Pre-Retirement Survivor Annuity. (e) A married Participant may revoke his designation of the Alternate Death Benefit and his designation of a non-Spouse Beneficiary at any time prior to his death. Furthermore, the Participant's election shall cease to be valid upon the remarriage of the Participant following the death or divorce of the Spouse giving the consent to the non-Spouse Beneficiary. If the Participant revokes his election of a non-Spouse Beneficiary or of the Alternate Death Benefit or if such election otherwise ceases to be valid, any death benefit payable shall be determined pursuant to Section 5.01. (f) A married Participant may elect the Alternate Death Benefit in lieu of the Pre-Retirement Survivor Annuity at any time before his Termination Date. However, if the Participant's Beneficiary is not entitled to receive the Alternate Death Benefit by virtue of the Participant's failure to complete five years of Credited Service or the Participant's death following his Termination Date, the Participant's Beneficiary for purposes of Article V shall be his Spouse and any death benefit available to such Spouse shall be determined pursuant to Section 5.01. (g) In the event of the death of a Beneficiary who survives the Participant and who, at his or her death, is receiving the Alternate Death Benefit, the - 33 - 39 remaining benefits, if any, shall be payable to a person designated by the Participant to receive the remaining benefits or, if no person was so designated, then to a person designated by the Beneficiary of the deceased Participant; provided, however, that if no person so designated be living upon the occurrence of such contingency, the remaining benefits, if any, shall be payable to the Spouse of the deceased Participant, if living; otherwise, to the descendants of the deceased Beneficiary per stirpes; or if none, to the legal representative of the estate of the deceased Beneficiary. (h) The Beneficiary may, prior to the commencement of benefits under this Section 5.02, request that the Alternate Death Benefit be paid in the form of a lump sum. Such lump sum payment shall be the Actuarial Equivalent of the Beneficiary's Alternate Death Benefit. The Plan Administrator shall direct the Trustee to distribute the Alternate Death Benefit in the form selected by the Beneficiary. 5.03 Death After Normal Retirement Date but Prior to Delayed Retirement Date. (a) Notwithstanding any other provision of the Plan to the contrary, any Participant who remains in Employment after his Normal Retirement Date shall be entitled to elect an optional death benefit in lieu of the death benefits provided under Sections 5.01 or 5.02. The Participant shall elect such optional death benefit by selecting one of the following options on a form provided by the Plan Administrator for such purpose. (i) A death benefit equal to the monthly amount that would have been paid to the Participant's Beneficiary assuming the Participant had retired on the first day of the month preceding his death and had elected to receive Retirement Income under the Ten Years Certain and Life Option (See Section 6.02(a)(i)). Such death benefit shall be paid to the Participant's Beneficiary for a period of ten years commencing on the first day of the month following the Participant's death. (ii) A death benefit equal to the monthly amount that would have been paid to the Participant's Beneficiary assuming the Participant had retired on the first day of the month preceding his death and had elected to receive Retirement Income under the Joint and Last Survivor Option (See Section 6.02(a)(ii)) with the Participant's Beneficiary receiving 50%, 75%, or 100% (as designated by the Participant) of the monthly Retirement Income payable to the Participant during the Participant's lifetime. Such death benefit will be paid to the Participant's Beneficiary for the - 34 - 40 Beneficiary's lifetime beginning on the first day of the month following the Participant's death. (b) A married Participant's election of the optional death benefit provided by this Section 5.03 shall be void unless the Participant's Spouse (after receipt of the explanation of the Pre-Retirement Survivor Annuity described in Section 5.02(c)) consents in writing on a form provided by the Plan Administrator in the presence of a Notary Public or Plan representative to the Participant's election of such optional death benefit. The Spouse's consent must acknowledge the effect of such consent and must specifically state the non-Spouse beneficiary, if any, selected by the Participant. However, if the Participant establishes to the satisfaction of the Plan Administrator that his Spouse's consent cannot be obtained because he has no Spouse, because his Spouse cannot be located, or because of other circumstances as determined by applicable Treasury Regulations, the Committee may treat the Participant's election as an election for which spousal consent was obtained. A Spouse's consent pursuant to this paragraph shall be irrevocable. (c) A married Participant may revoke his election of the optional death benefit provided by this Section 5.03 at any time prior to his Delayed Retirement Date. Furthermore, the Participant's election to receive such optional death benefit shall cease to be valid upon the remarriage of the Participant following the death or divorce of the Spouse giving the consent to such optional death benefit. If the Participant revokes his election or if such election otherwise ceases to be valid, any death benefit payable to the Participant's Spouse shall be determined pursuant to Section 5.01 unless the married Participant, with his Spouse's consent, elects the Alternate Death Benefit under Section 5.02. 5.04 Death On or After the Annuity Starting Date. Neither the Participant's Spouse nor the Participant's Beneficiary shall be entitled to a Retirement Income under this Article V if the Participant dies on or after his Annuity Starting Date. Instead, any benefit payable to the Participant's Spouse or Beneficiary will be determined pursuant to Article VI. 5.05 Purchase of Insurance Policies. The Committee may in its discretion direct the Trustee to purchase life insurance policies on the lives of Participants in amounts not exceeding the death benefits herein provided. Any policy so purchased shall name the Trustee as the beneficiary and owner thereof. The Committee shall select the Insurer or Insurers providing any such policies, establish the terms and conditions thereof, and the premiums payable therefor. The Committee shall furnish the Trustee with properly completed application forms for its signature. The Committee shall instruct the Trustee in all matters pertaining to any policy - 35 - 41 issued hereunder, including inter alia, the application of any dividends payable on any policy. If the Committee shall so direct, the Trustee shall enter into agreements in such form as the Committee shall direct with an Insurer whereby the Insurer retains custody of any insurance policies issued hereunder. - 36 - 42 ARTICLE VI OPTIONAL FORMS OF RETIREMENT INCOME 6.01 Automatic Forms of Payment. If a Participant does not have a Spouse on his Annuity Starting Date, the Participant's Retirement Income shall be payable under the Life Annuity Option described below unless the Participant otherwise elects under Section 6.02. If a Participant has a Spouse on his Annuity Starting Date, the Participant's Retirement Income shall be payable under the Joint and 50% Survivor Annuity described below unless the Participant (with spousal consent) otherwise elects under Section 6.02. (a) Life Annuity Option is a monthly Retirement Income payable during the Participant's lifetime, with payments ceasing upon the Participant's death. (b) Joint and 50% Survivor Annuity is a monthly Retirement Income equal to the reduced Actuarial Equivalent of the Life Annuity Option. The Retirement Income shall be payable to the Participant for his life, and upon the Participant's death, 50% of such Retirement Income shall be payable to the Participant's Spouse for the Spouse's life. Such Retirement Income shall cease on the later of the death of the Participant or the death of the Participant's Spouse. 6.02 Optional Forms of Payment. (a) Within 90 days prior to the Participant's Annuity Starting Date, the Participant may elect to receive any of the following optional forms of payment in lieu of the automatic form of payment described in Section 6.01. In addition, a married Participant may designate a non-Spouse Beneficiary to receive the Retirement Income, if any, that is payable upon such Participant's death. (i) Ten Years Certain and Life Option is a monthly Retirement Income equal to the reduced Actuarial Equivalent of the Life Annuity Option. The Retirement Income shall be payable to the Participant during his lifetime and, in the event of the Participant's death within a period of ten years after the commencement of benefits, the same monthly amount shall be payable to the Participant's Beneficiary for the remainder of such ten-year period. - 37 - 43 (ii) Joint and Last Survivor Option is a monthly Retirement Income equal to the reduced Actuarial Equivalent of the Life Annuity Option. The Retirement Income shall be payable to the Participant for his life, and upon the Participant's death, a designated percentage (100%, 75%, or 50%) of the Participant's Retirement Income shall be payable to the Participant's Beneficiary for the Beneficiary's life. Such Retirement Income shall cease on the later of the death of the Participant or the death of the Participant's Beneficiary. (b) A married Participant's election to receive an optional form of payment or to designate a non-Spouse Beneficiary shall be valid only if the Participant's Spouse (after receipt of the written explanation described in Section 6.02(d)) consents in writing on a form provided by the Committee in the presence of a Notary Public or Plan representative to the Participant's election. The Spouse's consent must acknowledge the effect of such consent and must specifically state the non-Spouse beneficiary, if any, selected by the Participant. However, if the Participant establishes to the satisfaction of the Committee that his Spouse's consent cannot be obtained because he has no Spouse, because his Spouse cannot be located, or because of other circumstances as determined by applicable Treasury Regulations, the Committee may treat the Participant's election as an election for which spousal consent was obtained. A Spouse's consent pursuant to this paragraph shall be irrevocable. (c) A Participant may revoke his election of an optional form of payment or make a new election (provided any required spousal consent is obtained) at any time prior to his Annuity Starting Date. Furthermore, the Participant's election shall cease to be valid upon the marriage of the Participant or upon the remarriage of the Participant following the death or divorce of the Spouse giving the consent to the Participant's election. If the Participant revokes his election or if such election otherwise ceases to be valid, the Participant's Retirement Income shall be payable under the applicable automatic form of payment described in Section 6.01. (d) Prior to the Participant's Annuity Starting Date, the Plan Administrator shall provide an election form on which the Participant may elect an optional form of benefit. In addition to the election form, the Plan Administrator shall provide each Participant a written explanation of the applicable automatic form of payment described in Section 6.01 and the optional forms of payment described in Section 6.02(a). Such explanation should describe the circumstances under which Joint and 50% Survivor Annuity will be provided, and an explanation of the - 38 - 44 financial effect of electing not to have such form. Furthermore, the written explanation shall provide a general description of the eligibility conditions (if any) and other material features of the optional forms of payment including sufficient information regarding the relative values of the optional forms of payment and the automatic form of payment. If payment is scheduled to commence prior to the Participant's Normal Retirement Date, the written explanation must also inform the Participant of his right to defer receipt of the distribution until his Normal Retirement Date. If a Participant makes a request for additional information that is received 90 days prior to the Annuity Starting Date, such information must be furnished within 30 days. The Participant will then be entitled to a 90-day period in which to make or change an election, even if such 90-day period extends beyond the Participant's Annuity Starting Date and, in such case, the Participant's first payment shall be made after such election form has been received, on a retroactive basis, if necessary. (e) If the Participant elects the Joint and Last Survivor Option and the Participant's Beneficiary dies prior to the Participant's Annuity Starting Date, the Participant's election shall be null and void and, unless the Participant makes another election or selects another Beneficiary (with spousal consent if required), the Participant's Retirement Income shall be payable in accordance with the applicable automatic form of payment described in Section 6.01. (f) If the Participant elects the Ten Year Certain and Life Option and the Participant's Beneficiary fails to survive the Participant, the Beneficiary shall be the Participant's Spouse, if living, otherwise to the Participant's descendants who shall take per stirpes. If there are no surviving descendants, the Beneficiary shall be the Participant's estate. 6.03 Special Distribution Rules. (a) In no event may the payment of Retirement Income commence later than the 60th day after the latest of the close of the Plan Year in which: (i) the Participant attains age 65; (ii) the fifth (5th) anniversary of the date the Participant commenced participation in this Plan; or (iii) the Participant's termination of Employment. Notwithstanding the foregoing, distribution to the Participant shall commence not later than April 1 following the calendar year in which the - 39 - 45 Participant attains age 70-1/2 (the "required beginning date"). However, if a Participant attained age 70-1/2 prior to January 1, 1988 and is not a 5% owner of an Employer (as defined in Code Section 401(a)(9) and the Treasury Regulations thereunder), such Participant's Retirement Income shall commence no later than April 1 following the calendar year in which he terminates his Employment. (b) The entire interest of each Participant in this Plan will be distributed, beginning not later than the required beginning date described in paragraph (a) above, over the life of such Participant or over the lives of such Participant and his beneficiary (or over a period not extending beyond the life expectancy of such Participant or the life expectancy of such Participant and his beneficiary). (c) If distribution of a Participant's interest has begun in accordance with paragraph (b) above, and if the Participant dies before his entire interest has been distributed to him, then the remaining portion of such interest will be distributed at least as rapidly as under the method of distribution being used under paragraph (b) as of the date of the Participant's death. (d) If a Participant dies before distribution of the Participant's interest has begun in accordance with paragraph (b) above, the entire interest of the Participant must be distributed within five years after the death of the Participant unless (i) any portion of the Participant's interest is payable to or for the benefit of his beneficiary; (ii) such portion will be distributed over the life of the beneficiary (or over a period not extending beyond the life expectancy of the beneficiary); and (iii) such distributions begin not later than one year after the date of the Participant's death or such later date as may be prescribed in Treasury regulations. If the conditions stated in clauses (i), (ii) and (iii) are met, then the portion referred to in clause (i) shall be treated as distributed on the date on which distributions begin. If the Beneficiary referred to in clause (i) above is the surviving spouse of the Participant, then the date on which the distributions are required to begin under clause (iii) above shall not be earlier than the date on which the Participant would have attained age 70-1/2, and if the surviving spouse dies before distributions to such spouse begin, this paragraph shall be applied as if the surviving spouse were the Participant. - 40 - 46 The Participant's Beneficiary may elect whether the Participant's entire interest will be distributed within five years of the Participant's death or pursuant to the provisions of paragraphs (i) - (iii) above. Such election must be made within the time limits described in Treasury Regulation Section 1.401(a)(9)-1, C-4. If no election is made, the Plan Administrator shall distribute the Participant's entire interest pursuant to the provisions of paragraphs (i) - (iii) above. 6.04 Small Payments. Notwithstanding anything in this Plan to the contrary, the Plan Administrator shall pay a Participant's, Spouse's or Beneficiary's Retirement Income in a single lump sum if, as of the payment date, the Actuarial Equivalent present value of the Participants' vested Retirement Income is $3,500 or less and monthly Retirement Income payments to the Participant have not commenced. Notwithstanding anything to the contrary in this Plan, the payment of any such lump sum shall act as a complete discharge of the Plan's obligation to provide any benefit to the Participant, his Spouse, or any Beneficiary of such Participant or Spouse. In the event of the subsequent employment of a Participant who has received a single sum cash payment pursuant to this paragraph, such Participant shall continue to accrue a benefit under this Plan based on service before and after his date of reemployment subject to all the provisions of this Plan; provided, however, that any Retirement Income subsequently payable to the Participant and his Beneficiaries shall be reduced on an actuarial equivalent basis by the value of the single sum payment received under this paragraph. 6.05 Application For Commencement of Benefits. A Participant must apply to have Retirement Income commence. The application must be on the form prescribed by the Committee, and must be filed with the Committee not more than 90 days prior to the Participant's Annuity Starting Date. 6.06 Miscellaneous. Notwithstanding any other provision of the Plan, if the amount of any Retirement Income computed under the Plan is other than an even dollar amount, then the amount of the Retirement Income payable shall be increased to the next larger even dollar amount. 6.07 Direct Rollover. (a) This section 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 section, a Distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a direct rollover. - 41 - 47 (b) Definitions. (i) Eligible Rollover Distribution. An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee's designated Beneficiary, or for a specified period of ten 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.) (ii) Eligible Retirement Plan. An Eligible Retirement Plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. (iii) Distributee. A Distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are Distributees with regard to the interest of the spouse or former spouse. (iv) Direct Rollover. A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee. (c) If a distribution is one to which Sections 401(a)(11) and 417 of the Internal Revenue 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: (i) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving - 42 - 48 the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and (ii) the Participant, after receiving the notice, affirmatively elects a distribution. (d) Application to Plan. Life Annuity payments, Joint and 50% Survivor Annuity payments, Ten Year Certain and Life Annuities and Joint and Last Survivor Annuities are not Eligible Rollovers and are not subject to the requirements of this Section 6.07. However, lump sum payments of small benefits and certain death benefits (if paid over a period of time less than 10 years) are subject to this Section 6.07 and may be directly rolled over to another Eligible Retirement Plan - 43 - 49 ARTICLE VII METHOD OF FINANCING 7.01 Establishment of Trust Fund. The Board shall designate a Trustee or Trustee(s) to serve as herein provided and Trust Agreement(s) shall be executed between the Employer and such Trustee(s). The Trust Agreement(s), the terms of which are incorporated by reference, shall govern the establishment of the Fund or Fund(s) from which the benefits provided by the Plan shall be paid. 7.02 Employer Contributions. The Employer shall contribute to the Fund from time to time such amounts as the Board shall determine, based upon the recommendations of an Actuary, in order to fund the benefits provided hereunder on an actuarially sound basis. All Employer contributions when made to the Fund and all property and funds of the Trust Fund, including income from investments and from all other sources, shall be retained for the exclusive benefits of Participants and Beneficiaries and shall be used to pay Retirement Income provided hereunder or to pay expenses of administration of the Plan and the Trust Fund provided, however, that the foregoing shall not prevent the Trustee from entering into agreement with an Insurer whereby the Insurer maintains custody of insurance policies in accordance with 5.04. Upon an Employer's request and to the extent permitted by the Code and other applicable laws and regulations thereunder, a contribution which was made by a mistake in fact, or conditioned upon the initial qualification of the Plan under Code Section 401(a) or upon the deductibility of the contribution under Section 404 of the Code shall be returned to the Employer within one year after the payment of the contribution, the denial of the Plan's initial qualification, or the disallowance of the deduction (to the extent disallowed) whichever is applicable. All contributions to the Plan are expressly made upon the assumption such contributions are fully deductible for federal income tax purposes. 7.03 Participant Contributions. No contributions shall be required of or permitted by any Participant under this Plan. 7.04 Miscellaneous. (a) Any actuarial gains arising from actuarial experience under the Plan shall be used to reduce the Employer contributions and will not be used to increase any benefits payable under this Plan. No forfeiture arising from severance of employment, death or for any other reason, shall be applied to increase the benefits any Participant would otherwise receive under the Plan at any time prior to the termination of the Plan or the complete discontinuance of Employer contributions hereunder, but all amounts so - 44 - 50 forfeited shall be used as soon as possible to reduce the Employer contributions under the Plan. (b) No person shall have any interest in or right to the Fund or any part thereof, except as expressly provided in the Plan. - 45 - 51 ARTICLE VIII ADMINISTRATION OF THE PLAN 8.01 Named Fiduciaries. (a) The following parties are named as Fiduciaries of the Plan and shall have the authority to control and manage the operation and administration of the Plan: (1) The Board; (2) The Trustee(s); (3) The Safekeeping Trustees; (4) The Pension Committee; and (5) The Insurer. (b) The Fiduciaries named above shall have only the powers and duties hereinafter expressly enumerated and shall have no other powers and duties under the Plan. In discharging their powers and duties hereunder, the Fiduciaries shall act in accordance with the Standard of Fiduciary Duty set forth in 8.07. 8.02 Board of Directors. (a) The Board shall have the following powers and duties with respect to the Plan: (1) to formulate and to implement a funding policy designed to produce sufficient funds to discharge when due all obligations of the Plan with respect to the benefits provided hereunder; (2) to cause the Employer to make contributions to the Plan pursuant to the funding policy and based on the recommendations of the Actuary in such amounts as are necessary to fund the Plan on a basis permitted under Section 302 of the Act; (3) to appoint and remove the members of the Pension Committee as provided herein; and (4) to terminate the Plan in whole or in part pursuant to the procedures provided hereunder. - 46 - 52 (b) The Compensation and Stock Option Committee of the Board shall have the power to amend any or all of the provisions of the Plan. (However, see 8.06(c) for certain amendment powers granted to the Committee). (c) The Board shall have no other responsibilities with respect to the Plan. 8.03 Trustee(s). The Trustee(s) shall exercise all of the powers and duties assigned to the Trustee(s) as set forth in the Trust Agreement(s). The Trustee(s) shall have no other responsibilities with respect to the Plan. (See Section 2.52 and Schedule C.) 8.04 Safekeeping Trustees. The Safekeeping Trustees shall have the powers and duties set forth in Section 11.01 and in the Safekeeping Trust. The Safekeeping Trustees shall have no other responsibilities with respect to the Plan. 8.05 Insurer. An Insurer which issues an insurance policy under 5.04 shall perform its obligations under any such policy in accordance with the terms thereof. An Insurer which agrees to maintain custody of such policies in accordance with 5.04 shall hold and safeguard such policies subject to the provisions of the written agreement with the Trustee. The Insurer shall have no other responsibilities with respect to the Plan. 8.06 Pension Committee. (a) The Committee shall consist of not less than three individuals who shall be appointed by and serve at the pleasure of the Board. Any Participant, officer, former officer or director of any Employer shall be eligible to be appointed a member of the Committee and all members shall serve as such without compensation. Upon termination of his employment with such Employer or upon termination of his position as a director, if not a Participant or former officer, he shall cease to be a member of the Committee. The Board shall have the right to remove any member of the Committee at any time. A member may resign at any time by written notice to the Committee and the Board. If a vacancy in the Committee should occur, a successor shall be appointed by the Board. The Committee shall by written notice keep the Trustee notified of current membership of the Committee, its officers and agents. The Committee shall furnish the Trustee a certified signature card for each member of the Committee and for all purposes hereunder the Trustee shall be conclusively entitled to rely upon such certified signatures. (b) The Board shall appoint a Chairman and a Secretary from among the members of the Committee. All resolutions, determinations and other actions shall be by a majority vote of all members of the Committee. The - 47 - 53 Committee may appoint such agents, who need not be members of the Committee, as it deems necessary for the effective performance of its duties, and may delegate to such agents such powers and duties, whether ministerial or discretionary, as the Committee deems expedient or appropriate. The compensation of such agents shall be fixed by the Committee; provided, however, that in no event shall compensation be paid if such payment violates the provisions of Section 406 of the Act and is not exempted from such prohibitions by Section 408 of the Act. (c) The Committee shall have complete control of the administration of the Plan with all powers necessary to enable it to properly carry out the provisions of the Plan. In addition to all implied powers and responsibilities necessary to carry out the objectives of the Plan and to comply with the requirements of the Act, the Committee shall have the following specific powers and responsibilities: (1) to construe the Plan and Trust Agreement and to determine all questions arising in the administration, interpretation and operation of the Plan; (2) to decide all questions relating to the eligibility of Employees to participate in and to receive benefits under the Plan and Trust Agreement; (3) to determine the benefits of the Plan to which any Participant or Beneficiary may be entitled; (4) to adopt procedures for providing adequate notice in writing to any Participant or Beneficiary whose claim for benefits under the Plan is denied, which notice shall set forth the specific reasons for such denial (written in a manner calculated to be understood by the Participant or Beneficiary); and to provide a procedure for affording a reasonable opportunity to any Participant or Beneficiary whose claim for benefits has been denied, a full and fair review by the Committee of the decision denying the claim; (5) to keep records of all acts and determinations of the Committee, and to keep all such records, books of accounts, data and other documents as may be necessary for the proper administration of the Plan; (6) to prepare and distribute to all Plan Participants and Beneficiaries information concerning the Plan and their rights under the Plan, including, but not limited to, all information which is required to - 48 - 54 be distributed by the Act, the regulations thereunder, or by any other applicable law; (7) to file with the Secretary of Labor such reports and additional documents as may be required by the Act and regulations issued thereunder, including, but not limited to, a plan description, summary plan description, modifications and changes, annual reports, terminal reports and supplementary reports; (8) to file with the Secretary of the Treasury and the Pension Benefit Guaranty Corporation all reports and information required to be filed by the Internal Revenue Code, the Act and regulations issued under each; (9) to do all things necessary to operate and administer the Plan in accordance with its provisions and in compliance with applicable provisions of federal law; (10) to amend certain portions of this Plan as specifically delegated to the Committee in this Plan (e.g., any Schedule authorizing Affiliated Sponsors to participate in the Plan, etc.), to amend the Plan to comply with changes in law recommended by legal counsel that are necessary to maintain the tax qualified status of the Plan and to make other amendments to the Plan that do not materially increase the costs associated with the plan.; and (11) to appoint and remove the Trustee(s). (d) Miscellaneous. To enable the Committee to perform its functions, the Employer shall supply full and timely information of all matters relating to the compensation and length of service of all Participants, their retirement, death or other cause of termination of employment, and such other pertinent facts as the Committee may require. The Committee shall advise the Trustee of such facts and issue to the Trustee such instructions as may be required by the Trustee in the administration of the Plan. The Committee and the Employer shall be entitled to rely upon all certificates and reports made by a Certified Public Accountant selected or approved by the Company. The Committee, the Employer and its officers and the Trustee, shall be fully protected in respect of any action taken or suffered by them in good faith in reliance upon the advice or opinion of any actuary, accountant or attorney, and all action so taken or suffered shall be conclusive upon each of them and upon all other persons interested in the Plan. - 49 - 55 8.07 Standard of Fiduciary Duty. Any Fiduciary, or any person designated by a Fiduciary to carry out fiduciary responsibilities with respect to the Plan, shall discharge his duties solely in the interests of the Participants end Beneficiaries for the exclusive purpose of providing them with benefits and defraying the reasonable expenses of administering the Plan. Any Fiduciary shall discharge his duties 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 a like character and with like aims. Any Fiduciary shall discharge his duties in accordance with the documents and instruments governing the Plan insofar as such documents and instruments are consistent with the provisions of the Act. Notwithstanding any other provisions of the Plan, no Fiduciary shall be authorized to engage in any transaction which is prohibited by Sections 406 and 2003(a) of the Act or Section 4975 of the Code in the performance of its duties hereunder. 8.08 Indemnification of Committee. To the extent permitted under the Act, the Plan shall indemnify the Board and the Committee against any cost or liability which they may incur in the course of administering the Plan and executing the duties assigned pursuant to the Plan. The Employer shall indemnify the Committee and the members of the Board against any personal liability or cost not provided for in the preceding sentence which they may incur as a result of any act or omission in relation to the Plan or its Participants. The Employer may purchase fiduciary liability insurance to insure its obligation under this Section. 8.09 Claims Procedure. Any Participant, Former Participant, Beneficiary, Spouse or legal representative thereof (hereinafter referred to as "Claimant"), may file a claim for benefits under the Plan by submitting to the Committee a written statement describing the nature of the claim and requesting a determination of its validity under the terms of the Plan. Within sixty (60) days after the date such claim is received by the Committee, it shall issue a ruling with respect to the claim. If special circumstances require an extension of time for processing, the Committee shall send the Claimant written notice of the extension prior to the termination of the 60-day period. In no case, however, shall the extension of time delay the Committee's decision on such appeal beyond one hundred twenty (120) days following receipt of the actual request. If the claim is wholly or partially denied, written notice shall be furnished to the claimant, which notice shall set forth in a manner calculated to be understood by the Claimant: (a) the specific reason or reasons for denial; (b) specific reference to pertinent Plan provisions on which the denial is based; - 50 - 56 (c) a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and (d) an explanation of the claims review procedures. Any Claimant whose claim for benefits has been denied, may appeal such denial by submitting to the Committee a written statement requesting a further review of the decision within sixty (60) days of the date the Claimant receives a notice of such denial. Such statement shall set forth the reasons supporting the claim, the reason such claim should not have been denied, and any other issues or comments which the Claimant deems appropriate with respect to the claim. If the Claimant shall request in writing, the Committee shall make copies of the Plan documents pertinent to his claim available for examination by the Claimant. Within sixty (60) days after the request for further review is received, the Committee shall review its determination of benefits and the reasons therefor and notify the claimant of its final decision. If special circumstances require an extension of time for processing, the Committee shall send the Claimant written notice of the extension prior to the termination of the 60-day period. In no case, however, shall the extension of time delay the Committee's decision on such appeal request beyond one hundred twenty (120) days following receipt of the actual request. Such written notice shall include specific reasons for the decision, written in a manner calculated to be understood by the Claimant, with specific references to the pertinent Plan provisions on which the decision is based. 8.10 Appointment of Investment Manager. The Company, acting through its Chief Executive Officer or the Pension Committee, may from time to time appoint (and remove) one or more investment fund managers (the "Investment Manager") who shall have the authority to direct investments to be made by the Trustee with respect to all or any part of the assets of the Trust Fund. Any such Investment Managers must either be registered as an investment advisor under the Investment Advisors Act of 1940 or be a bank, as defined in such Act. Any Investment Managers appointed under this Section shall acknowledge, in writing, its acceptance of such appointment and that it is a fiduciary with respect to the assets of the Trust Fund subject to its investment direction. Upon receipt of written notice of the appointment of an Investment Manager, the Trustee shall perform such custodial and disbursing functions and ministerial acts relating to investments directed by the Investment Manager as may be required to carry out the administration of the Trust Fund but shall be relieved of all responsibility for investment or failure to invest that portion of the Trust Fund subject to - 51 - 57 investment direction by the Investment Manager during the period of appointment of such Investment Manager. - 52 - 58 ARTICLE IX AMENDMENT AND TERMINATION 9.01 Amendment of the Plan. The Pension Committee shall have the right, at any time, to amend any or all of the provisions of the Plan; provided, however, that no such amendment shall authorize or permit any part of the Fund held by the Trustee to be diverted to purposes other than for the exclusive benefit of Participants and their Beneficiaries; and further provided that no amendment shall have the effect of revesting in the Employer any portion of the Fund except such amounts as may, due to erroneous actuarial computation, remain in the Fund after termination of the Plan and after all liabilities under the Plan have been satisfied. 9.02 Termination of the Plan. (a) The Employer expects this Plan to be continued indefinitely but, of necessity, the right to terminate the Plan and its Contributions hereunder at any time with respect to its Employees is reserved by the Company. In the event that it becomes necessary to terminate or partially terminate the Plan, or there is a complete discontinuance of Employer contribution, then the Accrued Benefit of each Participant, to the extent funded, shall become fully vested and non-forfeitable as of the date of such termination or partial termination in the manner hereinafter provided in this Section 9.02. (b) If the Company shall elect to terminate the Plan, the Board shall give written notice of such fact to the Pension Committee, thereafter the Pension Committee shall wind up the affairs of the Plan and file all requests for determinations, notices of intent to terminate and terminal reports as may be required by the Internal Revenue Code, the Act and regulations issued thereunder. (c) In the event that the Plan shall be terminated or partially terminated, the Committee shall then allocate the assets of the Plan among the Employers and, with respect to each terminating Employer separately, shall arrange for the assets of the Plan (available to provide benefits) to be allocated among the Participants and Beneficiaries in accordance with Section 4044 of the Act and regulations issued thereunder, in the following order: (1) FIRST, in the case of benefits payable as an annuity - - 53 - 59 (A) To benefits which were being paid as of three years prior to the date of termination of the Plan, with the amount to be allocated to each such benefit, based on the provisions of the Plan in effect during the 5-year period preceding the date of termination under which such benefit would be the least, (B) To benefits which would have been paid as of three years prior to the date of termination (i) if the Participant had retired prior to the three-year period and (ii) if his benefits had commenced (in the normal form of annuity under the Plan) as of the beginning of such three-year period, with the amount to be allocated to each such benefit determined under the provisions of the Plan in effect during the five-year period preceding the date of termination under which the benefit would be the least. (2) SECOND, to all other benefits guaranteed by the termination insurance provisions of Title IV of the Act (with the amount to be allocated to each such benefit determined without regard to the limitation contained in Section 4022(b)(5) of the Act on the amount of guaranteed non-forfeitable basic benefits), including those benefits which would have been guaranteed except for the limitation on coverage of a "substantial owner" under Section 4022(b)(6) of the Act. (3) THIRD, to all other uninsured, non-forfeitable benefits under the Plan. (4) FOURTH, to all other benefits under the Plan. (e) If the assets available for allocation of any class specified above are insufficient to satisfy in full the benefits of all individuals within that class, the assets shall be allocated pro rata among such individuals on the basis of present value (as of the termination date) of their respective benefits. (f) The Committee shall then arrange for the Trustee to liquidate the assets held in the Fund which are applicable to each terminating Employer and shall secure from the Trustee a statement of the liquidated value of such assets. The Committee, in its sole discretion, shall direct the Trustee to purchase from an insurance company an annuity contract or contracts which provides the benefits to which each Participant or Beneficiary is entitled. The Trustee shall distribute the assets in accordance with the directions of the Committee. - 54 - 60 (g) Any residual assets of the Plan remaining after distribution in accordance with the preceding paragraphs shall be distributed to the Employer, provided: (1) all liabilities of the Plan to Participants and Beneficiaries have been satisfied, and (2) the distribution does not contravene any provision of law. 9.03 Restriction on Certain Benefits and Distributions. (a) In the event the Plan is terminated, the benefits provided to any Top-25 Highly Compensated Employee shall be limited to a benefit that is nondiscriminatory within the meaning of Code Section 401(a)(4). (b) The annual distribution to a Top-25 Highly Compensated Employee cannot exceed the annual payment under a Life Annuity (as defined in Section 6.01(a)) based on the Actuarial Equivalence of the Participant's Accrued Benefit and other benefits under the Plan. (c) The restriction in Section 9.03(b) shall not apply under the following circumstances: (i) After payment of the Top-25 Highly Compensated Employee's Retirement Income, the value of the Plan's assets equals or exceeds 110 percent of the value of the Plan's Current Liabilities. (ii) The value of the Top-25 Highly Compensated Employee's Retirement Income is less than one percent of the value of the Plan's Current Liabilities. (d) The restrictions of this Section 9.03 (including paragraphs (a) and (b)) shall not apply if the Commissioner of Internal Revenue or his/her delegate determines that such restrictions are not necessary to prevent prohibited discrimination in favor of Highly Compensated Employees in the event of an early termination of the Plan. (e) For the purposes of this Section 9.03, the following definitions shall apply: (i) "Top-25 Highly Compensated Employee" shall mean any member of the top 25 Highly Compensated Employees and highly compensated former employees (as defined in Code Section - 55 - 61 414(q)(9)) with the greatest Compensation (as defined in Plan Section 13.04(b)). (ii) "Current Liabilities" shall have that meaning contained in Code Section 412(l)(7). (iii) "Retirement Income" shall have that meaning contained in Plan Section 2.46 and, in addition, loans in excess of the amount set forth in Code Section 72(p)(2)(A), any periodic income, any withdrawal values payable to a living employee, and any death benefits not provided for by insurance on the employee's life. (f) This Section 9.03 is intended to comply with the provisions of Proposed Regulation Section 1.401(a)(4)-5(c) or any successor regulation thereto, and the provisions of this Section 9.03 shall be so interpreted. This Section 9.03 shall be effective January 1, 1991. Prior to that date, the provisions of the Prior Plan dealing with the top 25 highest paid employees shall apply. 9.04 Adoption of the Plan by a Participating Employer. (a) The Committee shall determine which employers shall become participating employers within the terms of the Plan. In order for the Committee to designate an Employer as a Participating Employer, the Committee must approve the addition of the Participating Employer's identity to Schedule A (which approval may be retroactive to an earlier effective date). The Committee may also specify such terms and conditions pertaining to the adoption of the Plan by the Participating Employer as the Board deems appropriate. With the Committee's consent, a Participating Employer may limit participation in the Plan to certain of its Employees. The Committee shall maintain a schedule, Schedule A, attached to the plan document, listing Participating Employers, groups of Employees designated as participating in the Plan by those Participating Employers, and the effective date of designation (the "Designation Date") as a Participating Employer. Such Schedule shall specify the extent, if any, to which service with the Participating Employer prior to the Designation Date shall qualify as Credited Service hereunder. Notwithstanding any other provision of this Plan, no Employee whose termination of employment precedes the Designation Date shall be entitled to any benefits hereunder. (b) The plan of the Participating Employer and of the Company shall be considered a single plan for purposes of Section 1.414(1)-1(b)(1) of the - 56 - 62 Treasury Regulations. All assets contributed to the Plan by the Participating Employer shall be held in a single fund together with the assets contributed by the Company (and with the assets of any other Participating Employers); and so long as the Participating Employer continues to be designated as such, all assets held in such fund shall be available to pay benefits to all eligible employees and beneficiaries covered by the Plan irrespective of whether such Employees are employed by the Company or by the Participating Employer. Nothing contained herein shall be construed to prohibit the separate accounting for assets contributed by the Company and the Participating Employers for purposes of cost allocation if directed by the Committee or the holding of plan assets in more than one Trust Fund with more than one Trustee. (c) So long as the Participating Employer's designation as such remains in effect, the Participating Employer shall be bound by, and subject to all provisions of the Plan and the Trust Agreement. The exclusive authority to amend the Plan and the Trust Agreement shall be vested in the Committee and no Participating Employer shall have any right to amend the Plan or the Trust Agreement. Any amendment to the Plan or the Trust Agreement adopted by the Committee shall be binding upon every Participating Employer without further action by such Participating Employer. (d) So long as each Participating Employer shall be designated as such pursuant to Section 9.04(a), such Participating Employer shall be liable for its pro rata share of the contribution deemed necessary by the Actuary to fund the Plan on an acceptable basis in accordance with Title I, Section 302 and Title II, Section 1013 of the Act. The total contribution required each year to fund the Plan shall be apportioned among the Company and the Participating Employers based upon the advice of the Actuary and subject to such Treasury or Labor regulations as may be from time to time applicable. (e) No Participating Employer other than the Company shall have the right to terminate the Plan. However, any Participating Employer may withdraw from the Plan by action of its Board of Directors provided such action is communicated in writing to the Committee. The withdrawal of a Participating Employer shall be effective as of the December 31st following receipt of the notice of withdrawal (unless the Committee consents to a different effective date). In addition, the Committee may terminate the designation of a Participating Employer to be effective on such date as the Committee specifies. Any such Participating Employer which ceases to be a Participating Employer shall be liable for all cost accrued through the effective date of its withdrawal or termination. In - 57 - 63 the event of the withdrawal or termination of a Participating Employer as provided in this paragraph, such Employer shall have no right to direct that assets of the Plan be transferred to a successor plan for its Employees unless such a transfer is approved by the Committee in its sole discretion. - 58 - 64 ARTICLE X MISCELLANEOUS 10.01 Headings. The headings and subheadings in this Plan have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. 10.02 Governing Law. The Plan shall be construed and enforced and all provisions thereof administered in accordance with the Act and to the extent not governed by the Act in accordance with the laws of the State of Georgia. 10.03 Spendthrift Clause. Except as provided in the terms of a "qualified domestic relations order" as defined in Code Section 414(p) and to the extent otherwise required or permitted by law, none of the benefits, payments, proceeds or distributions under this Plan shall be subject to the claim of any creditor of the Former Employee, Participant or Beneficiary hereunder, or to any legal process by any creditor of such Former Employee, Participant or Beneficiary, and none of them shall have any right to alienate, commute, anticipate or assign any of the benefits, payments, proceeds or distributions under this Plan except to the extent expressly provided herein to the contrary. If any Participant shall attempt to dispose of the benefits provided for him hereunder, or to dispose of the right to receive such benefits, or in the event there should be an effort to seize such benefits or the right to receive such benefits by attachment, execution or other legal or equitable process, such right may pass and be transferred, at the discretion of the Committee, to such one or more as may be appointed by the Committee from among the Beneficiaries, if any, theretofore designated by the Participant, or from the spouse, children or other dependents of the Participant, in such shares as the Committee may appoint. Any appointment so made by the Committee may be revoked by it at any time and further appointment made by it which may include the Participant. 10.04 Legally Incompetent; Minors. If any Former Employee, Participant or Beneficiary is a minor, or, in the judgment of the Committee, is otherwise legally incapable of personally receiving and giving a valid receipt for any payment due him hereunder, the Committee may, unless and until claim shall have been made by a duly appointed guardian or committee of such person, direct that such payment or any part thereof be made to such person's spouse, child, parent, brother or sister, or other person deemed by the Committee to have incurred expense for or assumed responsibility for the expenses of such person. 10.05 Discrimination. The Employer, through the Committee, shall administer the Plan in a uniform and consistent manner with respect to all Participants and shall not permit discrimination in favor of Highly Compensated Employees. - 59 - 65 10.06 Claims. Any payment to a Participant or Beneficiary, or to their legal representatives, in accordance with the provisions of this Plan, shall to the extent thereof be in full satisfaction of all claims hereunder against the Trustee, Committee and the Employer, any of whom may require such Participant, Beneficiary or legal representative, as a condition precedent to such payment, to execute a receipt and release therefor in such form as shall be determined by the Trustee, the Committee or the Employer, as the case may be. 10.07 Compliance with Applicable Laws. The Employer, through the Committee, shall interpret and administer the Plan in such manner that the Plan and Trust shall remain in compliance with the Code, with the Act, and all other applicable laws, regulations and revenue rulings. 10.08 Merger. In the event of any merger or consolidation of the Plan with any other plan, or the transfer of assets or liabilities by the Plan to another plan, each Participant must receive (assuming that the Plan then terminated) a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit such Participant would have been entitled to receive immediately before the merger, consolidation, or transfer (assuming that the Plan had then terminated), provided such merger, consolidation, or transfer took place after the date of enactment of the Act. - 60 - 66 ARTICLE XI SPECIAL PROVISION REGARDING SAFEKEEPING TRUST 11.01 The assets of the Plan are held primarily by Trust Company Bank and its successors, if any, pursuant to an Agreement and Declaration of Trust effective as of January 1, 1975. As of November 1, 1982, the Employer established a second Trust Agreement ("Safekeeping Trust"). As of the Effective Date, Edward M. Jones, Jerry Nix, and Earl Dolive are the Trustees of the Safekeeping Trust ("Safekeeping Trustees"). Effective February 1, 1990, George Kalafut was added as a Safekeeping Trustee. The Employer may from time to time maintain certain other trust funds as part of the Fund as permitted under this Plan, as amended effective January 1, 1989. The Safekeeping Trust was established to hold certain assets of the Plan and exists concurrently with the other trusts described above, all of which comprise the Trust Fund of this Plan. The purpose of this Article XI is to make clear that Trust Company Bank and the other trustees shall have no duties or responsibilities whatsoever with respect to the Safekeeping Trust and the Safekeeping Trustees shall have no duties or responsibilities whatsoever with respect to any portion of the Fund other than the portion held in the Safekeeping Trust. The Company shall indemnify and hold harmless each Safekeeping Trustee against any personal liability or expense arising from his service as Safekeeping Trustee. - 61 - 67 ARTICLE XII TOP-HEAVY RULES 12.01 General Rule. If the Plan is or becomes Top-Heavy, the provisions of this Article will supersede any conflicting provision in the Plan. 12.02 Definitions. (a) Top-Heavy: The Plan shall be Top-Heavy for the Plan Year if, as of the Determination Date, the present value of the Accrued Benefits attributable to Key Employees exceeds 60% of the present value of all Accrued Benefits under the Plan. If the Employer maintains more than one plan, all plans in which any Key Employee participates and all plans which enable this Plan to satisfy the antidiscrimination requirements of Section 401(a)(4) and 410 must be combined with this Plan ("required aggregation group") for the purposes of applying the 60% test described in the preceding sentence. Plans maintained by the Employer which are not in the required aggregation group may be combined at the Employer's discretion with this Plan for the purposes of determining Top-Heavy status if the combined plan satisfies the requirements of Code Section 401(a)(4). If the Employer maintains a defined contribution plan which is aggregated with this Plan, the account balances of participants under the defined contribution plan shall be determined in accordance with the provisions of that plan and combined with Accrued Benefits under this Plan for the purpose of applying the 60% test described in the first sentence of this paragraph. In determining the present value of Participant Accrued Benefits, all distributions made during the five year period ending on the Determination Date shall be included. The Accrued Benefit of (i) any employee who at one time was a Key Employee but who is not a Key Employee for the Plan Year ending on the Determination Date; and (ii) any employee who has received no Compensation from the Employer or a related employer maintaining a plan in the aggregation group for the five years immediately preceding the Determination Date shall be disregarded in determining Top-Heavy status. For the purposes of this subsection, a Participant rollover shall be included in the present value of Participant Accrued Benefits except to the extent that the rollover was received in a transaction consummated after December 31, 1983 which was initiated by the Participant and the amount received is attributable to a distribution or transfer from the plan of an employer which is unrelated to the Employer. - 62 - 68 Solely for the purpose of determining if the Plan, or any other plan included in the required aggregation group, is Top-Heavy, the Accrued Benefit of an Employee other than a Key Employee shall be determined under (i) the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Affiliates, or (ii) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate of Code Section 411(b)(1)(C). This paragraph shall be effective January 1, 1987. (b) Key Employee. Shall mean any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the Plan Year which ends on the Determination Date or the preceding 4 Plan Years (1) was an officer of the Employer having annual Compensation from the Employer greater than 50% of the amount in effect under Code Section 415(b)(1)(A) for such Plan Year; (ii) an owner (or considered an owner under Section 318 of the Code) of one of the ten largest interests in the Employer if such individual's Compensation equals or exceeds the dollar limitation under Section 415(c)(1)(A) of the Code; (iii) a 5-percent owner of the Employer; or (iv) a 1-percent owner of the Employer who has an annual Compensation of more than $150,000. (c) Determination Date: For any Plan Year, the last day of the preceding Plan Year. (d) Non-key Employee. Any Participant who is not a Key-Employee. (e) Present Value: The present value of Accrued Benefits for the purpose of determining Top-Heavy status, shall be calculated in accordance with the actuarial assumptions specified in Section 2.03 of the Plan. 12.03 Minimum Accrued Benefit. (a) Notwithstanding any other provision in this Plan except (b) below, for any Plan Year in which this Plan is Top-Heavy, each Participant who is not a Key Employee and has completed 1,000 Hours of Service will accrue a benefit (to be provided solely by Employer contributions and expressed as a single life annuity commencing at Normal Retirement Age) of not less than two percent (2%) of his or her highest average Compensation for the five consecutive years for which the Participant had the highest Compensation. The minimum accrual applies even though under other Plan provisions the Participant would not otherwise be entitled to receive an accrual, or would have received a lesser accrual for the year because (i) the Participant fails to make mandatory contributions to the Plan, (ii) the Participant's Compensation is less than a stated amount, (iii) the Participant is not employed on the last day of - 63 - 69 the accrual computation period, or (iv) the Plan is integrated with Social Security. (b) No additional benefit accruals shall be provided pursuant to (a) above to the extent that the total accrual on behalf of the Participant attributable to Employer contributions will provide a benefit expressed as a single life annuity commencing at Normal Retirement Age that equals or exceeds 20 percent of the Participant's highest average compensation for the five consecutive years for which the Participant had the highest compensation. Also, the benefit accrual requirement of this section shall not apply if the Employer maintains a defined contribution plan and contributes thereto an amount sufficient to render the benefit accrual requirements of this section inapplicable under regulations prescribed by the Secretary of the Treasury. 12.04 Form of Benefit. If the form of benefit is other than a single life annuity, the Participant must receive an amount that is the actuarial equivalent of the minimum single life annuity benefit. If the benefit commences at a date other than at Normal Retirement Age, the Participant must receive at least an amount that is the actuarial equivalent of the minimum single life annuity benefit commencing at Normal Retirement Age. 12.05 Nonforfeitability of Employer Top-Heavy Contribution. The Employer Top-Heavy Accrued Benefit (to the extent required to be nonforfeitable under Code Section 416(b)) may not be forfeited under Code Sections 411(a)(3)(B) or 411(a)(3)(D). 12.06 Minimum Vesting. If the Plan becomes Top Heavy, the following vesting schedule shall be applied notwithstanding any provision in this Plan to the contrary:
Credited Service Percent of Accrued at Termination Date Benefit Vested ------------------------- ------------------ 2 years 20% 3 years 40% 4 years 60% 5 years 80% 6 years 100%
The vesting schedule described above shall not apply to any Participant unless the Participant has accumulated at least one Hour of Service after the Plan becomes Top Heavy. If the Plan becomes Top Heavy and subsequently ceases to be such, the vesting schedule described above shall continue to apply in - 64 - 70 determining the vested Accrued Benefit of any Participant who has at least three years of Credited Service on the last day of the Top Heavy Plan Year. Notwithstanding the foregoing, no change in the vesting schedule shall reduce the then vested percentage of any Participant's Accrued Benefit. 12.07 Combined Plan Limitation For Top Heavy Years. In any Plan Year during which more than 90% of the Accrued Benefits under the Plan (after aggregation) are attributable to Key Employees, 100% or an equivalent factor shall be substituted for 125% or an equivalent factor in the combined plan fraction denominators set forth in the Section of this Plan which limits maximum benefits pursuant to Section 415 of the Code. In any Plan Year during which more than 60% but not more than 90% of the Accrued Benefits under the Plan (after aggregation) are attributable to Key Employees, 100% or an equivalent factor shall be substituted for 125% or an equivalent factor in the combined plan fraction denominators unless the minimum Accrued Benefit of each non Key Employee meets the requirements of Section 12.03 after substituting 3% for 2% in Section 12.03(a) and 30% for 20% in Section 12.03(b). - 65 - 71 ARTICLE XIII MAXIMUM BENEFITS 13.01 General Rule. The provisions of this Article XIII shall be effective for Plan Years beginning after December 31, 1986. The annual benefit payable to a Participant at any time shall not exceed the maximum permissible amount. "Maximum permissible amount" shall mean the lesser of (i) $90,000 (such limitation to be adjusted automatically as determined by the Commissioner of Internal Revenue for each calendar year, and the new limitation to apply to limitation years ending within the calendar year of the date of the adjustment); or (ii) 100 percent of the Participant's highest average compensation. If the annual benefit commences before or after the Participant's Social Security Retirement Age, the maximum permissible amount shall be determined under Section 415 of the Code and Regulations and rulings thereunder. If the annual benefit commences when the Participant has less than ten years of Credited Service with the Company or less than ten years of participation in this Plan or any predecessor plan to this Plan, the maximum permissible amount otherwise defined above shall be reduced by one-tenth for each year less than ten in accordance with applicable regulations. 13.02 Combined Plan Limitations. If the Employer maintains, or any time maintained, one or more qualified defined contribution plans covering any Participant in this Plan, the sum of the Participant's defined contribution fraction and defined benefit fraction shall not exceed 1.0 in any limitation year, and the annual benefit otherwise payable to the Participant under this Plan shall be frozen or reduced to the extent necessary so that the sum of such fractions shall not exceed 1.0. 13.03 Grandfather Rule. In the case of an individual who was a participant in one or more defined benefit plans of the Employer which were in existence on July 1, 1982, the maximum permissible amount for such individual under all such defined benefit plans shall not be less than the individual's accrued benefit under all such defined benefit plans as of the end of the last limitation year beginning before January 1, 1983, but determined without regard to changes in the plan or cost-of-living increases occurring after July 1, 1982. The preceding sentence applies only if all such defined benefit plans met the requirements of Section 415 of the Code, as in effect on July 1, 1982, for all limitation years beginning before January 1, 1983. 13.04 Definitions. For purposes of Article XIII, the following definitions shall apply: - 66 - 72 (a) "Annual benefit" means Retirement Income under the Plan which is payable annually in the form of a straight life annuity. The interest rate assumption used to determine actuarial equivalence for this purpose shall be the greater of the interest rate specified in this plan or 5 percent. No actuarial adjustment to the benefit is required for (i) the value of a qualified Joint and Survivor Annuity; (ii) the value of benefits that are not directly related to retirement benefits (such as a qualified disability benefit, pre-retirement death benefits, and post-retirement medical benefits); or (iii) the value of post-retirement cost-of-living increases made in accordance with federal income tax regulations. (b) "Compensation" means a Participant's wages as defined in Code Section 3401(a) (wages subject to income tax withholding at the source) but without regard to exceptions contained in Code Section 3401(a) for wages based on the nature or location of the employment or the services performed. The intent of this definition is to comply with the alternative definition of compensation described in Treasury Regulation Section 1.415-2(d)(11)(ii). (c) "Defined benefit fraction" means a fraction, the numerator of which is the sum of the Participant's projected annual benefits under all the defined benefit plans (whether or not terminated) maintained by the Employer, and the denominator of which is the lesser of (i) 125 percent of the dollar limitation in effect for the limitation year under Section 415(b)(1)(A) of the Code; or (ii) 140 percent of the Participant's highest average compensation. Notwithstanding the foregoing, if the Participant was a Participant in a plan in existence on July 1, 1982, the denominator of this fraction shall not be less than 125 percent of the sum of the annual benefits under such plans which the Participant had accrued as of the end of the last limitation year beginning before January 1, 1983, but determined without regard to changes in the Plan or cost-of-living increases occurring after July 1, 1982. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 for all limitation years beginning before January 1, 1983. (d) "Defined contribution fraction" means 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 Employer for the current and all prior limitation years, and the denominator of which is the sum of the maximum aggregate amounts for the current and all prior limitation years of employment with the Employer (regardless of whether a defined contribution plan was maintained by the Employer). - 67 - 73 The maximum aggregate amount in any limitation year is the lesser of 125 percent of the dollar limitation in effect under Section 415(c)(1)(A) of the Code; or (ii) 35 percent of the Participant's compensation for such year. If the Employee was a participant in one or more defined contribution plans maintained by the Employer which were in existence on July 1, 1982, the numerator of this fraction shall 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 and (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, 1983. (e) "Employer" means an Affiliate. (f) "Highest average compensation" means the average compensation for the three consecutive years of Credited Service with the Employer that produces the highest average. (g) "Limitation year" means the Plan Year. (h) "Projected annual benefit" means the annual benefit to which the Participant would be entitled under the terms of the Plan assuming (i) the Participant will continue employment until normal retirement age under the Plan (or current age, if later); and (ii) the Participant's compensation for the current limitation year and all other relevant factors used to determine benefits under the Plan will remain constant for all future limitation years. (i) "Annual additions" means the sum of the following amounts credited to a Participant's account for the limitation year: (i) Employer contributions; (ii) Forfeitures; (iii) nondeductible employee contributions; provided, however, that the annual addition for any limitation year beginning before January 1, 1987 shall not be recomputed to treat nondeductible employee contributions as an annual addition; and (iv) Amounts described in Code Sections 415(l)(1) and 419A(d)(2). - 68 - 74 (j) "Social Security Retirement Age" shall mean the age used as the retirement age for the Participant under Section 216(l) of the Social Security Act, except that such section shall be applied without regard to the age increase factor, and as if the early retirement age under Section 216(l) of such Act were 62. - 69 - 75 ARTICLE XIV HIGHLY COMPENSATED EMPLOYEES 14.01 In General. For the purposes of this Plan, the term "Highly Compensated Employee" is any active Employee described in Section 14.02 below and any Former Employee described in Section 14.03 below. Various definitions used in this Article are contained in Section 14.05. A Non-Highly Compensated Employee is an Employee who is neither a Highly Compensated Employee nor a Family Member of a Highly Compensated Employee. This Article 14 shall be effective January 1, 1987. 14.02 Highly Compensated Employees. (a) An Employee is a Highly Compensated Employee if during the Determination Year the Employee: (1) is a 5 Percent Owner; (2) receives Compensation in excess of $75,000; (3) receives Compensation in excess of $50,000 and is a member of the Top Paid Group; or (4) is an Includable Officer. The dollar amounts described above shall be increased annually as provided in Code Section 414(q)(1). (b) Calendar Year Election. The Employer hereby elects the calendar year calculation election described in Temporary Regulation Section 1.414(q)-1T, Q&A-14(b) or any successor regulation thereto. Because the Plan uses the calendar year as its Plan Year, there is no separate Look Back Year calculation. This election is binding on all other qualified retirement Plans maintained by the Employer until the election is withdrawn. 14.03 Former Highly Compensated Employee. A Former Employee is a Highly Compensated Employee if (applying the rules of Section 14.02(a) or (b)) the Former Employee was a Highly Compensated Employee during a Separation Year or during any Determination Year ending on or after the Former Employee's 55th birthday. With respect to a Former Employee - 70 - 76 whose Separation Year was prior to January 1, 1987, such Former Employee will be treated as a Highly Compensated Employee only if the Former Employee was a 5% Owner or received Compensation in excess of $50,000 during (i) the Former Employee's Separation Year (or the year preceding such Separation Year); or (ii) any year ending on or after such Former Employee's 55th birthday (or the last year ending before such Former Employee's 55th birthday). 14.04 Family Aggregation Rules. (a) For purposes of this Article 14, an Employee who is, for a given Determination Year or Look Back Year, either (i) a 5 Percent Owner, or (ii) a Highly Compensated Employee who is one of the ten most highly compensated Employees ranked on the basis of Compensation paid during such year, shall be aggregated with such Employee's Family Members. (b) For purposes of this Section 14.04, the term "Family Member" means, with respect to an Employee described in Section 14.04(a), a person who is, on any day during the given Determination Year or Look Back Year: (1) his spouse; or (2) his lineal ascendant or descendant; or (3) the spouse of his lineal ascendant or descendant. (c) The determination of Employees and Family Members who must be aggregated for purposes of this Article 14 shall be made in accordance with Temporary Regulation Section 1.414(q)-1T, Q&A-11 and Q&A-12. (d) For purposes of applying the limits of Code Section 401(a)(17) (i.e., the $150,000 limit on compensation, as adjusted) with respect to Compensation under Article 14 (Section 415 limits), the Compensation for any Employee described in Section 14.04(a) and for any Family Member who is such Employee's spouse or lineal descendant under age 19, shall be aggregated. In such event, the deemed Compensation for each such Employee shall be an amount equal to the Section 401(a)(17) limit for the Plan Year (as adjusted) multiplied by a fraction, the numerator of which is the Employee's actual Compensation for the Plan Year, and the denominator of which is the aggregate Compensation of the Employee and the aggregated Family Member for the Plan Year. The same procedure shall then be used to determine the deemed Compensation of the aggregated Family Member. - 71 - 77 14.05 Definitions. Unless otherwise indicated, the definitions of Article II shall apply to Article XIV. In addition, the following special definitions shall apply to this Article XIV: Determination Year shall mean the Plan Year for which an individual's status as a Highly Compensated Employee is determined. Employee shall mean Employees as defined in Article II, leased employees described in Code Section 414(n), and employees who are members of any collective bargaining unit. 5 Percent Owner shall mean any Employee who owns or is deemed to own (within the meaning of Code Section 318), more than five percent of the value of the outstanding stock of the Employer or stock possessing more than five percent of the total combined voting power of the Employer. Former Employee shall mean an Employee (i) who has incurred a Severance from Service or (ii) who remains employed by the Employer but who has not performed services for the Employer during the Determination Year (e.g., an Employee on Authorized Absence). Includable Officer shall mean any officer of the Employer who, during the applicable year, receives Compensation in excess of 50% of the dollar limitations under Code Section 415(b)(1)(A)(as adjusted by the Secretary of the Treasury for cost of living increases). The Employer shall be deemed to have a minimum of 3 officers or, if greater, a number equal to 10 percent of all Employees. However, no more than 50 officers shall be considered Includable Officers under this Article 14. If the Employer does not have any Includable Officers because no officer receives Compensation in excess of the dollar limitations of Code Section 415(b)(1)(A), the Employer's highest paid officer shall be considered an Includable Officer. Look Back Year shall mean the Plan Year preceding the Determination Year, or if the Employer elects, the calendar year ending with or within the determination year. Separation Year shall mean any of the following years: (1) An Employee who incurs a Termination of Employment shall have a Separation Year in the Determination Year in which such Termination of Employment occurs; (2) An Employee who remains employed by the Employer but who temporarily ceases to perform services for the Employer (e.g., an Employee on - 72 - 78 Authorized Absence) shall have a Separation Year in the calendar year in which he last performs services for the Employer; (3) An Employee who remains employed by the Employer but whose Compensation for a calendar year is less than 50% of the Employee's average annual Compensation for the immediately preceding three calendar years (or the Employee's total years of employment, if less) shall have a Separation Year in such calendar year. However, such Separation Year shall be ignored if the Employee remains employed by the Employer and the Employee's Compensation returns to a level comparable to the Employee's Compensation immediately prior to such Separation Year. Top Paid Group shall mean the top 20% of all Employees ranked on the basis of Compensation received from the Employer during the applicable year. The number of Employees in the Top Paid Group shall be determined by ignoring Employees who are non-resident aliens and Employees who do not perform services for the Employer during the applicable year. The Employer elects to compute the Top Paid Group without the age and service exclusion provided in applicable Treasury Regulations. 14.06 Other Methods Permissible. To the extent permitted by the Code, judicial decisions, Treasury Regulations and IRS pronouncements, the Committee may (without further amendment to this Plan) take such other steps and actions or adopt such other methods or procedures (in addition to those methods and procedures described in this Article 14) to determine and identify Highly Compensated Employees (including adopting alternative definitions of Compensation which satisfy Code Section 414(q)(7) and are uniformly applied). IN WITNESS WHEREOF, the Employer has caused this Plan to be duly executed and its seal to be hereunto affixed on the date indicated below, but effective as of January 1, 1989. GENUINE PARTS COMPANY By: /s/ Frank W. Howard ------------------- Title: Treasurer ---------------- Date: December 1, 1995 ----------------- Attest: /s/ Brainard T. Webb, Jr. - ------------------------------ - 73 - 79 SCHEDULE A PARTICIPATING EMPLOYERS DESIGNATED UNDER SECTION 9.04
Extent of Credit for Name and Service with a Designation Participating Employer Date Prior to Designation Date ----------- ------------------------- 1. S.P. Richards Participants in the Plan who were employed Company by S. P. Richards Company shall receive Credited January 1, 1984 Service for all purposes of this Plan beginning with their employment commencement date with S. P. Richards Company but subject to all of the rules concerning crediting of service set forth in this Plan. 2. Balkamp, Inc. Participants in the Plan who were employed by and National Balkamp, Inc. or affiliates NAPA shall receive Automotive Parts Credited Service for all purposes of this Plan Association (NAPA) this Plan beginning with their employment January 1, 1984 commencement date with Balkamp, Inc. or NAPA, Inc. but subject to all of the rules concerning crediting of service set forth in this plan. 3. Motion Eligibility: Industries, ----------- Inc. ("Motion") Employees of Motion whose initial date of hire January 1, 1984 is on or after January 1, 1984, shall automatically become Participants of this Plan on the date such Employee satisfies the age and service requirements of Section 3.02 (and for such purpose all employment with Motion shall be counted as though it was employment with the Company). Employees of Motion whose initial date of hire is prior to January 1, 1984, and who have made an election in the manner authorized by the committee not to participate in the Motion Industries, Inc. Profit Sharing Plan (the "Profit Sharing Plan") shall commence participation in this Plan, effective as follows:
80 1) Employees hired prior to January 1, 1984, who were Participants in the Profit Sharing Plan as of December 31, 1983, shall participate in this Plan effective as of January 1, 1984, and 2) Employees hired prior to January 1, 1984, who were not Participants in the Profit Sharing Plan shall become Participants in this Plan on the date that they would have been eligible to participate in the Profit Sharing Plan if the Profit Sharing Plan as in effect on December 31, 1983 had continued unchanged. Participants in this Plan employed by Motion who were not participants in the Motion Profit Sharing Plan as of December 31, 1983, shall receive Credited Service for all purposes of this Plan beginning with their employment commencement date with Motion but subject to all of the rules concerning crediting of service set forth in this Plan. Participants employed by Motion who were participants in the Motion Profit Sharing Plan as of December 31, 1983 and who elected to commence participation in this Plan effective January 1, 1984, shall receive Credited Service for purposes of determining an Employee's vested percentage under Section 4.05; for purposes of determining an Employee's benefits under the Disability Retirement provisions of Schedule D; for purposes of determining an Employee's entitlement to Death Benefits under Article V; but service with Motion prior to January 1, 1984 shall not be credited for purposes of determining the amount of such Employee's Retirement Income. Effective January 1, 1990, the Profit Sharing Plan was terminated. Employees of Motion who participated in the Profit Sharing Plan on December 31, 1989, and who are employed by Motion on January 1, 1990, shall commence participation in this Plan effective as of January 1, 1990. Such Participants shall receive Credited Service under this Plan beginning with their employment commencement date with Motion but only for the
81 purpose described in the following sentence and subject to all of the rules concerning crediting of service set forth in this Plan. The Participants discussed in this paragraph shall receive Credited Service for purposes of determining an Employee's vested percentage under Section 4.05; for purposes of determining an Employee's benefits under the Disability Retirement provisions of Schedule D; and for purposes of determining an Employee's entitlement to Death Benefits under Article V. In no event, shall such Participants receive Credited Service prior to January 1, 1990 for purposes of determining the amount of such Employee's Retirement Income (other than for the Disability Retirement described in Schedule D).
82 SCHEDULE B CREDIT FOR SERVICE WITH PREDECESSOR EMPLOYERS I. Participants employed by a predecessor employer not listed in Sections II or III below shall be deemed to have as their date of Employment for all purposes of this Plan, the date the predecessor employer was acquired by or merged into Genuine Parts Company. II. Participants employed by the following predecessor employers shall receive Credited Service for all purposes of this Plan beginning with their employment commencement date with that predecessor employer but subject to all the rules concerning crediting of service set forth in this Plan. 1. Clark Siviter Co. St. Petersburg, FL 2. Standard Parts Company Columbia, SC 3. Standard Unit Parts Company Normal, IL Except that the benefits provided to Richard R. Mikulechy under this Plan shall be reduced by one hundred percent (100%) of the benefits provided under that certain Salary Continuation Agreement dated January 10, 1977 in the event of his retirement, death, disability or other termination of service; and Except that the benefits provided to Mark R. Larson under this Plan shall be reduced by one hundred percent (100%) of the benefits provided under that certain Salary Continuation Agreement dated January 10, 1977 in the event of his retirement, death, disability or other termination of service. 4. National Parts Service Inc. Hartford, CT Covering the following National Parts Service employees:
Name S.S. No. Employment Date ---------------- ------------ --------------- Raymond Jensen ###-##-#### May 1, 1946 Charles A. Veci ###-##-#### July 1, 1952 Paul F. Baldi ###-##-#### August 27, 1960
83 Bernhardt E. Johnson ###-##-#### October 1, 1966 Jean L. Veillette ###-##-#### July 1, 1972 Paul R. Denis ###-##-#### July 26, 1974 Mark P. Taylor ###-##-#### January 17, 1980 Roy M. Robbins ###-##-#### June 16, 1980
5. General Automotive Parts Company and its subsidiaries 6. NAPA Des Moines Warehouse 7. M&B, Inc. (Lesker Office Furniture), November 1, 1993 III. Participants employed by the following predecessor employers shall be deemed to have as their date of Employment for all purposes of this Plan, the date the predecessor employer was acquired by or merged into Genuine Parts Company. However, after an employee of such predecessor employer becomes a Participant in the Plan by satisfying the requirements of Section 3.02, such Participant shall receive Credited Service for all employment with such predecessor employer for purposes of (1) determining the Participant's vested percentage under Section 4.05(c); (2) determining whether a Participant has completed five years of Credited Service for the Disability Retirement provisions of Schedule D; and (3) determining the Participant's entitlement to Death Benefits under Article V and related sections of the Plan. Such Credited Service may be forfeited or disregarded in accordance with Section 2.18. Furthermore, no Credited Service shall be granted for employment with a predecessor employer if the granting of such Credited Service will adversely impact the tax qualified status of the Plan.
Name Employment Date ---------------- --------------- Odell Hardware Company January 1, 1980 Greensboro, NC Brooks-Noble Parts & Machine Co., Inc. August 1, 1981 Jackson, MS One Stop Auto Parts Inc. March 10, 1982 Lathan, NY One Stop Auto Parts Inc. March 16, 1983 Albany, NY E. E. Long Inc. September 1, 1984 Des Moines, IA Motor Parts & Supply April 1, 1986
84 Baton Rouge, LA Chattanooga Service Auto Center May 1, 1986 Chattanooga, TN Gerace Auto Parts December 1, 1986 Port Allen, LA Lawwill Auto Parts September 1, 1987 Chattanooga, TN Smith Automotive Corp. August 1, 1990 (2 stores) Martinez, GA & Belvedere, SC Kings Parts Company, Inc. August 10, 1990 Lake Oswego, OR W.K. NAPA on Kensington, Inc. August 10, 1990 Elk Grove Village, IL Auto Parts, Inc. of Wilmington October 1, 1990 Wilmington, NC Carolina Auto Parts of Thomasville, Inc. October 1, 1990 Thomasville, NC Stokes Auto Parts, Inc. October 1, 1990 Thomasville, NC MGM Auto Parts, Inc. November 1, 1990 Kenmore, NY Wholesale Sationers Corp. December 1, 1990 Salt Lake City, UT (S.P. Richards) Santa Monica Auto Parts November 1, 1990 Santa Monica, CA Precise Industries, Inc. December 1, 1990 (2 Stores) Kingsport & Blountville, TN Automotive Service & Supply, Inc. December 1, 1990 (3 Stores) Kingsport, TN, Bristol & Abingdon, VA NAPA Auto Parts of Lombard, Inc. December 1, 1990
85 Lombard, IL Middleburg Parts and Hardware, Inc. December 31, 1990 Middleburg, FL Strap Industries, Inc. March 1, 1991 Tempe, AZ Anderson's Parts March 1, 1991 Blue Springs, MO Evergreen Automotive Supply, Inc. May 1, 1991 Chicago, IL Heath Motor Supply Co. July 1, 1991 Panama City, FL Bryant Stooks - D.J.'s Auto Supply July 1, 1991 (2 Stores) Chandler and Mesa, AZ NAPA Auto Parts Store of John Nall August 1, 1991 South Milwaukee, WI Deer Park Automotive Parts, Inc. September 1, 1991 Mt. Carmel, OH T & L Auto Parts Company, Inc. October 1, 1991 (4 Stores) Fayetteville, NC B.W.P. Ltd. October 1, 1991 (2 Stores) Fayetteville, Roseboro, NC Auto Parts of Clinton October 1, 1991 Clinton, NC Byrd-Wood Parts Group, Inc. October 1, 1991 Fayetteville, NC Burien Auto Parts, Inc. October 1, 1991 (2 Stores) Seattle, WA B.N. Auto Parts Co. December 1, 1991 Marietta, GA Capital Automotive Parts, Inc. December 1, 1991
86 Milwaukee, WI Bill's Auto Supply, Inc. January 1, 1992 Milwaukee, WI Bill's Auto Supply, Inc. January 1, 1992 Kansas City, MO Bald Hill Auto Parts, Inc. February 1, 1992 Warwick, RI Manton Auto Prats, Inc. February 1, 1992 Providence, RI Hudson Auto Parts February 1, 1992 Hudson, WI B&B Genuine Auto Parts, Inc. February 16, 1992 Canton, OH Jimmy's Auto Parts, Inc. March 1, 1992 Alpharetta, GA West Town Auto Parts, Inc. June 1, 1992 Knoxville, TN Lakeland Motor Parts, Inc. June 1, 1992 (2 Stores) Lakeland, FL Haas Auto Parts & Machine Co., Inc. June 1, 1992 Jeffersonville, IN Parts Dept. of Shakopee, Inc. June 1, 1992 Shakopee, MN HMH Automotive Parts, Inc. June 1, 1992 (2 Stores) Galesburg, Monmouth, IL Southern Parts & Electric, Inc. July 1, 1992 (4 Stores) Durham, NC Service Supply Co. of Douglasville, Inc. July 1, 1992 Douglasville, GA Service Supply Company of Dallas, Inc. July 1, 1992
87 Dallas, GA NAPA of Lemon Grove, Inc. August 1, 1992 La Mesa, CA Whitewater Auto Supply, Inc. September 1, 1992 Janesville, WI Regalia Auto Parts, Inc. September 1, 1992 Seattle, WA Drexel Auto Parts, Inc. October 1, 1992 Huntsville, AL Warren Auto Supply, Inc. December 4, 1992 (2 Stores) Warren, OH Cal's Service Parts, Inc. January 1, 1993 (6 Stores) Boise, ID H & G Enterprises, Inc. January 1, 1993 Louisville, KY Kernersville Auto Parts, Inc. February 1, 1993 Kernersville, NC McCowen Enterprises, Inc. April 1, 1993 (2 Stores) Champaign & Urbana, IL Breese Company, Inc. May 1, 1993 (3 Stores, Iowa City, Muscatine & Coralville, IA) Young's Auto Supply Warehouse, Inc. July 1, 1993 Norfolk, VA Joliet Auto Supply, Inc. July 1, 1993 Joliet, IL Bryan - Rogers, Inc. August 1, 1993 (3 Stores) Tupelo, Baldwyn & Amory, MS Hyllberg Enterprises, Inc. August 1, 1993 Virginia Beach, VA Hager Auto & Industrial Parts, Inc. November 1, 1993
88 (2 Stores) Burlington & South Burlington, VT Ballard Auto Parts, Inc. January 1, 1994 Cornelius, NC Service Parts of Hendersonville, Inc. January 1, 1994 Hendersonville, NC Power's Auto Parts, Inc. March 1, 1994 Williamsburg, VA Big J Auto Parts, Inc. March 14, 1994 Johnson City, TN Economy Auto Supply Co., Inc. April 1, 1994 Norfolk, VA Paul's Automotive, Inc. April 1, 1994 Toledo, OH Sulphur Springs Parts Co., Inc. June 1, 1994 Sulphur Springs, TX The Parts Place August 1, 1994 Gulfport, MS A & J Automotive Co. August 1, 1994 Dalton, GA Clewiston Auto Parts, Inc. September 1, 1994 Clewiston, FL Oregon City Auto Parts, Inc. October 1, 1994 Oregon City and Clackamas, OR Kiema Car Part, Inc. November 1, 1994 El Monte, CA Shoreline Auto Parts November 1, 1994 Seattle, WA Lockport Automotive Supply, Inc. December 1, 1994 Lockport, NY Mircon, Inc. Scardsdale Auto Parts December 1, 1994
89 Scarsdale, NY Motor Parts Company December 1, 1994 Booneville, MS Davis & Wilmar, Inc. July 1, 1992 (Eligible to Begin Participation 5/1/93) The Parts, Inc. January 1, 1994 (Eligible to Begin Participation 1/1/95) Dade City Jobbing Group January 2, 1992 (Eligible to Begin Participation 1/1/94) Colorado Parts Company December 1, 1994 (4 stores) Ft. Collins, Loveland, Longmont, CO Serene Plaza Auto Parts December 1, 1994 Seattle, WA
90 SCHEDULE C TRUST FUND ESTABLISHED PURSUANT TO PLAN Under the Plan, the Employer may establish multiple trust funds ("sub-trusts") pursuant to one or more agreements of trust between the Employer and one or more trustees to provide the benefits of the Plan. The Plan also provides that the term Trust Fund includes any group annuity or deposit administration contract entered into between the Employer and an Insurer. All such sub-trusts in the aggregate shall comprise the Trust Fund as defined in Section 2.51 of the Plan. The Trust Fund (including all sub-trusts) shall be available to provide all benefits under the Plan to any Plan Participant irrespective of the division or unit which employs such Participant. As of January 1, 1989, the following sub-trusts comprise the Trust Fund under the Plan: 1. Agreement of Trust Entered Into Between Genuine Parts Company and Trust Company Bank Effective as of January 1, 1975. 2. Agreement of Trust Entered Into By and Between Genuine Parts Company and the Safekeeping Trustees adopted effective November 1, 1982. 3. Group Annuity Contract Number DA710 Issued by Massachusetts Mutual Life Insurance Company to Standard Unit Parts Corporation. 4. Group Annuity Contract Number GA1466 Issued by Aetna Life Insurance Company to Balkamp Inc. 91 SCHEDULE D DISABILITY RETIREMENT FOR PARTICIPANTS WHO TERMINATE ACTIVE EMPLOYMENT PRIOR TO JANUARY 1, 1993 (a) This Schedule D shall apply to any Participant who is not in active Employment on or after January 1, 1993. Any Participant who is in active Employment with an Employer on or after January 1, 1993 will not be eligible for a Disability Retirement under this Schedule D. Instead, such Participant's Disability Retirement benefit, if any, will be determined pursuant to the provisions of Section 4.03. (b) Each Participant who prior to his cessation of active Employment completes five years of Credited Service and becomes Permanently Disabled shall be entitled to elect disability retirement. A Participant who elects disability retirement shall receive a monthly Retirement Income in the form of a Life Annuity Option (see Section 6.01(a)) for the life of the Participant beginning on his Disability Retirement Date. (c) The monthly Retirement Income payable to a Participant who is Permanently Disabled shall be determined in the same manner as his monthly Retirement Income would be determined under Section 4.01 except as modified below: (i) The Participant's disability Retirement Income shall be determined using the Participant's Credited Service as of the Participant's Disability Retirement Date (ignoring Credited Service beyond such Disability Retirement Date). (ii) The Participant's Average Earnings shall be the greater of the following two amounts: (A) The Participant's current monthly Earnings, or (B) 1/l2th of the Participant's previous calendar year Earnings. (iii) If a Participant has less than 15 years of Credited Service on his Disability Retirement Date, the Participant's disability Retirement Income shall equal 30% of the Participant's Average Earnings (as modified in paragraph (ii) above) without the reduction provided in Section 4.01(c). (iv) In computing the Participant's disability Retirement Income under Section 4.01(b) (for Participants with 15 or more years of Credited Service), the offset of 50% of the Participant's monthly Anticipated Social Security 92 Benefit shall not exceed 64% of the Participant's actual Social Security disability retirement benefit. (c) A married Participant's election to receive a disability retirement shall be valid only if the Participant's Spouse consents in writing to the disability retirement on a form provided by the Committee for such purpose in the presence of a Notary Public or Plan representative. The Spouse's consent must acknowledge the effect of such consent. However, if the Participant establishes to the satisfaction of the Committee that his Spouse's consent cannot be obtained because he has no Spouse, because his Spouse cannot be located, or because of other circumstances as determined by applicable Treasury Regulations, the Committee may treat the Participant's election as an election for which spousal consent was obtained. A Spouse's consent pursuant to this paragraph shall be irrevocable. (d) Prior to electing or consenting to the disability retirement, the Participant and the Participant's Spouse (if married) shall receive a written explanation of the disability retirement and of the option of receiving normal or early retirement benefits in accordance with Sections 4.01 and 4.02. The explanation shall also describe the impact of electing disability retirement benefits including waiver of the Joint and 50% Survivor Annuity and Pre-Retirement Survivor Annuity. Such explanation shall also provide all other relevant information described in Section 6.02(d). (e) By electing and consenting to the disability retirement, Participant and Spouse waive all rights to benefits under all other sections of Article IV, including normal retirement (Section 4.01), early retirement (Section 4.02), delayed retirement (Section 4.04) and termination of employment benefits (Section 4.05). In addition, all death benefits under Article V shall be waived and the death benefit, if any, provided to the Participant's Beneficiary shall be limited to the death benefits described in paragraph (f) below. If the Participant fails to elect to receive disability retirement or the Participant's Spouse fails to consent to the Participant's election, the Participant shall not be entitled to elect a Retirement Income under this Schedule D but shall instead be entitled to a Retirement Income pursuant to and in accordance with Sections 4.01, 4.02, 4.04 or 4.05, as the case may be. (f) If a Participant is Permanently Disabled and dies while he is entitled to benefits under this Schedule D, the Participant's Beneficiary shall be entitled to receive a monthly Retirement Income to the extent the total months of Retirement Income paid to the Participant under Schedule D is less than the number of months determined pursuant to the following table: 93
Complete Years of Credited Number of -------------------------- --------- Service at Disability Retirement Months --------------------------------- ------ Date Payable ----- ------- 5 but less than 10 12.5 10 but less than 15 25 15 or more 50
In such event, the Participant's Beneficiary shall receive a Retirement Income in the same amount as the Participant was receiving under this Schedule D immediately prior to his death beginning on the first day of the month following the Participant's death and continuing only until the total months of Retirement Income paid to the Participant and the total months of Retirement Income paid to the Participant's Beneficiary equal the appropriate number of months as determined by the above table. The Beneficiary may, prior to the receipt of benefits, request that the death benefit be paid in a lump sum. Such lump sum payment shall be the Actuarial Equivalent of the benefits payable to the Beneficiary. (g) Notwithstanding anything in this Plan to the contrary, any Participant who remains in the employ of the Employer after his Normal Retirement Date and who thereafter becomes Permanently Disabled while employed by the Employer, shall have his Retirement Income determined under Section 4.04 instead of this Schedule D. (h) If the Participant's Permanent Disability ceases prior to his Normal Retirement Date, the following shall apply: (i) All payments under this Schedule D shall cease. In addition, the Participant's and Spouse's, if married, election to waive the Automatic Form of Payment (Section 6.01) shall be void. Thereafter, the Participant's Retirement Income shall be determined under the terms of Sections 4.01, 4.02, 4.04 or 4.05, whichever is applicable. (ii) If the Participant recommences Employment within 90 days after he recovers from his Permanent Disability, the Participant shall receive Credited Service for the period of his Permanent Disability (starting as of his Disability Retirement Date and ending on the date of his recovery from Permanent Disability). In addition, the Participant's Average Earnings will be determined assuming the Participant received monthly Earnings during his period of Permanent Disability equal to his Average Earnings received immediately prior to his Permanent Disability. Any Retirement Income subsequently paid to the Participant will be reduced by the Actuarial Equivalent of benefits previously paid to the Participant under this Schedule D. (iii) If the Participant does not recommence Employment within 90 days after he recovers from his Permanent Disability, the Participant's subsequent 94 Retirement Income shall be based on the Participant's Average Earnings and Credited Service as of his Disability Retirement Date. (i) If a Participant has not completed five years of Credited Service prior to his cessation of active Employment or if the Participant becomes Permanently Disabled after his cessation of active Employment, the Participant shall not be entitled to a monthly Retirement Income under this Schedule D. (j) Disability Retirement Date shall mean the first day of the month coincident with or immediately following the later of (i) the date the Permanent Disability as defined in Section 2.38 has existed for five consecutive months or (ii) the date the Committee determines that the Participant is Permanently Disabled. (k) In each case, the Disability Retirement Benefit described in this Schedule D remains subject to all limitations, reductions, adjustments of this Plan, including but not limited to adjustments under Code Section 401(a)(17) (limit on Earnings), Code Section 415 (see Article XIII) and Section 4.07 of the Plan (reduction of benefit in certain cases). 95 SCHEDULE E SPECIAL PROVISIONS RELATING TO RETIREMENT WINDOWS (SEE SECTION 4.02(C)) 1. Retirement Window for Certain Employees of the Mid-South Data Processing and D.C. Accounting to Normal, Illinois. Employees who have attained age 55 and earned 15 or more years of Credited Service as of December 31, 1989 and who are employed on October 31, 1989 by (1) Mid-South Data Processing, (2) Mid-South Distribution Center Accounting, or (3) Memphis-area Locals may elect early retirement without the early retirement reduction factor described in Section 4.02(b) of the Plan. Such eligible Employees must notify the Company of their desire to elect early retirement between September 19, 1989 and October 31, 1989 (inclusive) and must actually retire from the Company between December 31, 1989 and February 1, 1990 (inclusive). The term "Memphis-area Locals" refers to Company-owned (NAPA) stores located in the Memphis area served by the Memphis Distribution Center. All eligible Employees will be notified of this special early retirement on or about September 19, 1989. 2. Retirement Window for Certain Employees Employed by Rayloc Atlanta. Employees who (1) were actively employed on October 21, 1994, by Rayloc and continuously employed thereafter by Rayloc through December 31, 1994, at its Atlanta facility; and, (2) have attained age 59-1/2 but are younger than age 65 (i.e., born after January 1, 1930 and before July 1, 1935); and, (3) have earned 15 or more years of Credited Service may elect early retirement without the early retirement reduction factor described in Section 4.02(b) of the Plan. Such eligible Employees must notify the Company of their desire to elect early retirement between October 21, 1994, and December 9, 1994 (inclusive) and must actually terminate employment from Rayloc on December 31, 1994 (with early retirement effective January 1, 1995). 96 NAPA Auto Parts March 1, 1984 Pella, IA Motor Parts & Supply August 1, 1988 Hattiesburg, MS Motor Parts & Supply August 1, 1988 Petal, MS W. C. Hendrie & Co. August 1, 1988 Long Beach, CA (Motion Ind.) Auto Parts of Fairfield August 1, 1989 Fairfield, IA M & J Auto Parts November 1, 1989 Toledo, OH Strong Auto Parts January 1, 1990 Deer Park, WA Loeb Auto Parts February 1, 1990 Washington, IL Central City Auto Parts March 1, 1990 Central City, KY Beaver Dam Auto Parts March 1, 1990 Beaver Dam, KY Les Hite Inc. June 1, 1990 Leesburg, SC Sheppard Auto Supply Inc. July 1, 1990 Montgomery, WV Ansted, WV Belle, WV Clay, WV Gauley Bridge, WV Oak Hill, WV Neilson Auto Parts July 1, 1990 Idaho Falls, ID Rigby Auto Parts July 1, 1990 Idaho Falls, ID
- i - 97 BMP Inc. August 1, 1990 Schofield, WI Wausau, WI Milligan Parts Company October 1, 1990 Georgetown, OH Bethel, OH Pebbles, OH Ripley, OH W. Union, OH Lovell Bros, Inc. November 1, 1990 Ocala, FL Bolleview, FL Crystal River, FL Inverness, FL Lynn, FL Williston, FL A&J Automotive Parts, Inc. December 1, 1990 Commerce, GA
- ii - EX-13 7 SELECTED FINANCIAL DATA 1 EXHIBIT 13 SELECTED FINANCIAL DATA Genuine Parts Company and Subsidiaries [LOGO]
- ---------------------------------------------------------------------------------------------------------------- (restated to give effect to pooling of interests) Year Ended December 31 - ---------------------------------------------------------------------------------------------------------------- 1994 1993 1992 1991 1990 ================================================================================================================ (in thousands except per share data) Net sales .................................... $4,858,415 $4,384,294 $4,016,751 $3,763,736 $3,660,443 Cost of goods sold ........................... 3,343,699 3,023,038 2,781,731 2,612,059 2,543,951 Selling, administrative and other expenses ... 1,039,848 935,427 852,610 790,559 755,051 Income before income taxes ................... 474,868 425,829 382,410 361,118 361,441 Income taxes ................................. 186,320 166,961 145,440 137,154 137,718 Net income** ................................. $ 288,548 $ 257,813 $ 236,970 $ 223,964 $ 223,723 Average common shares outstanding during year* 124,041 124,217 124,085 123,980 125,262 Per common share*: Net income** ......................... $ 2.33 $ 2.08 $ 1.91 $ 1.81 $ 1.79 Dividends declared ................... 1.15 1.06 1.00 .97 .92 December 31 closing stock price ...... 36.00 37.63 34.00 32.50 25.33 Long-term debt, less current maturities ...... 11,431 12,265 13,043 12,658 16,369 Shareholders' equity ......................... 1,526,165 1,445,263 1,316,372 1,211,716 1,122,182 Total assets ................................. $2,029,471 $1,870,756 $1,707,303 $1,577,516 $1,488,412 - ----------------------------------------------------------------------------------------------------------------
*Adjusted to reflect the three-for-two split in 1992. **Net of cumulative effect of changes in accounting principles of $1,055 in 1993. SELECTED RATIO ANALYSIS
(restated to give effect to pooling of interests) Year Ended December 31 - ---------------------------------------------------------------------------------------------------------------- 1994 1993 1992 1991 1990 ================================================================================================================ (In % of net sales) Cost of goods sold .............................. 68.82% 68.95% 69.25% 69.40% 69.50% Selling, administrative and other expenses ...... 21.40 21.34 21.23 21.00 20.63 Income before income taxes ...................... 9.77 9.71 9.52 9.60 9.87 Net income ...................................... 5.94 5.88 5.90 5.95 6.11 Rate earned on shareholders' equity at the beginning of each year .................................... 19.97% 19.59% 19.56% 19.96% 21.14% - ----------------------------------------------------------------------------------------------------------------
MARKET AND DIVIDEND INFORMATION High and Low Sales Price and Dividends Declared per Share of Common Shares Traded on the New York Stock Exchange.
Sales Price of Common Shares - ---------------------------------------------------------------------------------------------------------------- Quarter 1994 1993 ================================================================================================================ High Low High Low - ---------------------------------------------------------------------------------------------------------------- First.............................................. $39.38 $33.75 $37.25 $32.88 Second............................................. 36.88 33.63 37.38 33.50 Third.............................................. 37.38 34.13 38.25 34.50 Fourth............................................. 37.00 33.88 39.00 34.88
Dividends Declared per Share - ---------------------------------------------------------------------------------------------------------------- 1994 1993 ================================================================================================================ First ............................................. $.2875 $.265 Second ............................................ .2875 .265 Third ............................................. .2875 .265 Fourth ............................................ .2875 .265 Number of Record Holders of Common Stock........... 7,917
eighteen 2 REPORT OF INDEPENDENT AUDITORS Genuine Parts Company and Subsidiaries [LOGO] ERNST & YOUNG LLP Board of Directors Genuine Parts Company We have audited the accompanying consolidated balance sheets of Genuine Parts Company and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Genuine Parts Company and subsidiaries at December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. As discussed in Note 1 to the financial statements, in 1993 the Company changed its method of accounting for postretirement benefits and income taxes. /s/ ERNST & YOUNG LLP Atlanta, Georgia February 6, 1995 nineteen 3 CONSOLIDATED BALANCE SHEETS Genuine Parts Company and Subsidiaries [LOGO]
- -------------------------------------------------------------------------------------------- December 31 - -------------------------------------------------------------------------------------------- 1994 1993 ============================================================================================ (dollars in thousands) ASSETS - -------------------------------------------------------------------------------------------- CURRENT ASSETS Cash and cash equivalents ....................................... $ 82,410 $ 123,231 Short-term investments, at cost, which approximates market value ..................................... --- 64,599 Trade accounts receivable ....................................... 487,395 428,911 Merchandise inventories ......................................... 1,004,580 879,154 Prepaid expenses and other current accounts ..................... 21,396 10,299 - -------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 1,595,781 1,506,194 INVESTMENTS AND OTHER ASSETS (Notes 1 and 8) .................... 175,658 133,364 PROPERTY, PLANT AND EQUIPMENT Land ............................................................ 32,152 28,109 Buildings, less allowance for depreciation (1994 - $60,176; 1993 - $56,839)............................... 106,608 103,146 Machinery and equipment, less allowance for depreciation (1994 - $131,905; 1993 - $128,262) ............... 119,272 99,943 - -------------------------------------------------------------------------------------------- NET PROPERTY, PLANT AND EQUIPMENT 258,032 231,198 - -------------------------------------------------------------------------------------------- $2,029,471 $1,870,756 ============================================================================================ LIABILITIES AND SHAREHOLDERS' EQUITY - -------------------------------------------------------------------------------------------- CURRENT LIABILITIES Trade accounts payable .......................................... $ 316,589 $ 258,949 Current maturities on long-term debt ............................ 933 797 Accrued compensation ............................................ 37,790 30,883 Accrued expenses ................................................ 20,368 18,222 Dividends payable ............................................... 35,246 32,933 Income taxes payable ............................................ 11,482 10,167 Deferred income taxes ........................................... --- 1,521 - -------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 422,408 353,472 LONG-TERM DEBT, less current maturities ......................... 11,431 12,265 DEFERRED INCOME TAXES ........................................... 44,540 37,980 MINORITY INTERESTS IN SUBSIDIARIES .............................. 24,927 21,776 SHAREHOLDERS EQUITY (Notes 2, 3, 4 and 6): Preferred Stock, par value $1 a share-authorized 10,000,000 shares; none issued Common Stock, par value $1 a share-authorized 450,000,000 shares; issued 122,627,303 shares in 1994; 124,282,289 shares in 1993 ........................... 122,627 124,282 Additional paid-in capital ...................................... --- 2,566 Retained earnings ............................................... 1,403,538 1,318,415 - -------------------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 1,526,165 1,445,263 - -------------------------------------------------------------------------------------------- $2,029,471 $1,870,756 ============================================================================================
See accompanying notes. twenty 4 CONSOLIDATED STATEMENTS OF INCOME Genuine Parts Company and Subsidiaries (LOGO)
- ------------------------------------------------------------------------------------------------- Year Ended December 31 - ------------------------------------------------------------------------------------------------- 1994 1993 1992 ================================================================================================= (dollars in thousands except per share data) - ------------------------------------------------------------------------------------------------- Net sales ............................................ $4,858,415 $4,384,294 $4,016,751 Cost of goods sold ................................... 3,343,699 3,023,038 2,781,731 - ------------------------------------------------------------------------------------------------- 1,514,716 1,361,256 1,235,020 Selling, administrative and other expenses ........... 1,039,848 935,427 852,610 - ------------------------------------------------------------------------------------------------- Income before income taxes and cumulative effect of changes in accounting principles ................... 474,868 425,829 382,410 Income taxes (Note 7) ................................ 186,320 166,961 145,440 - ------------------------------------------------------------------------------------------------- Income before cumulative effect of changes in accounting principles .............................. 288,548 258,868 236,970 Cumulative effect of changes in accounting principles, net of tax (Note 1) ................................ -- 1,055 -- - ------------------------------------------------------------------------------------------------- NET INCOME ........................................... $ 288,548 $ 257,813 $ 236,970 ================================================================================================= Net income per common share .......................... $ 2.33 $ 2.08 $ 1.91 ================================================================================================= Average common shares outstanding during the year .... 124,041 124,217 124,085 ================================================================================================= See accompanying notes.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY Genuine Parts Company and Subsidiaries (LOGO)
- --------------------------------------------------------------------------------------------------------- Common Stock Additional Total ------------ Paid-In Retained Shareholders Shares Amount Capital Earnings Equity ========================================================================================================= (dollars in thousands) - --------------------------------------------------------------------------------------------------------- Balance at January 1, 1992 ........ 82,670,204 $ 82,670 $ -- $1,129,046 $1,211,716 Net income ...................... -- -- -- 236,970 236,970 Cash dividends declared ......... -- -- -- (114,508) (114,508) Three-for-two stock split ....... 41,350,036 41,350 -- (41,395) (45) Stock options exercised ......... 142,849 143 -- 3,270 3,413 Repurchase of shares by pooled companies prior to merger ..... -- -- -- (4,895) (4,895) Cash dividends declared by pooled companies prior to merger ..... -- -- -- (16,279) (16,279) - ------------------------------------------------------------------------------------------------------ Balance at December 31, 1992 ...... 124,163,089 124,163 -- 1,192,209 1,316,372 Net income ...................... -- -- -- 257,813 257,813 Cash dividends declared ......... -- -- -- (131,681) (131,681) Stock options exercised ......... 119,200 119 2,566 74 2,759 - ------------------------------------------------------------------------------------------------------ Balance at December 31, 1993 ...... 124,282,289 124,282 2,566 1,318,415 1,445,263 Net income ...................... -- -- -- 288,548 288,548 Cash dividends declared ......... -- -- -- (142,602) (142,602) Stock options exercised ......... 192,613 193 4,175 -- 4,368 Purchase of stock ............... (2,011,000) (2,011) (6,741) (61,593) (70,345) Other ........................... 163,401 163 -- 770 933 - ------------------------------------------------------------------------------------------------------ BALANCE AT DECEMBER 31, 1994 ...... 122,627,303 $122,627 $ -- $1,403,538 $1,526,165 ========================================================================================================= See accompanying notes.
twenty-one 5 CONSOLIDATED STATEMENTS OF CASH FLOWS Genuine Parts Company and Subsidiaries [LOGO]
- ---------------------------------------------------------------------------------------------------------------- Year Ended December 31 - ---------------------------------------------------------------------------------------------------------------- 1994 1993 1992 ================================================================================================================ (dollars in thousands) Operating Activities Net income ............................................................ $ 288,548 $ 257,813 $ 236,970 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ..................................... 37,374 34,420 31,687 Gain on sale of property, plant and equipment ..................... (158) (1,342) (895) Provision for deferred taxes ...................................... 6,699 5,990 3,896 Equity in income from investees ................................... (7,224) (4,452) (2,513) Income applicable to minority interests ........................... 2,373 2,090 1,537 Changes in operating assets and liabilities: Trade accounts receivable ....................................... (58,484) (25,759) (33,455) Merchandise inventories ......................................... (125,426) (91,462) (60,614) Prepaid expenses and other current accounts ..................... (11,097) (1,413) 488 Trade accounts payable .......................................... 57,641 18,319 22,090 Income taxes payable and other current liabilities .............. 8,708 6,367 (12,987) - ---------------------------------------------------------------------------------------------------------------- (89,594) (57,242) (50,766) - ---------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 198,954 200,571 186,204 Investing Activities Acquisition of Davis & Wilmar, Inc., net of cash acquired of $3,556 ... -- -- (28,444) Investment in Grupo Auto Todo ......................................... (26,009) -- -- Purchase of property, plant and equipment ............................. (66,002) (57,513) (31,585) Proceeds from sale of property, plant and equipment ................... 2,885 4,831 3,862 Purchase of short-term investments .................................... -- (64,599) (12,010) Proceeds from sale and maturity of short-term investments ............. 64,599 12,010 17,698 Other investing activities ............................................ (9,062) (12,962) (9,696) - ---------------------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (33,589) (118,233) (60,175) Financing Activities Payments on long-term debt ............................................ (698) (804) (5,954) Stock options exercised ............................................... 4,368 2,759 3,368 Dividends paid ........................................................ (140,289) (129,846) (127,338) Purchase of stock ..................................................... (70,345) -- (4,896) Contributions from minority interests ................................. 778 765 822 - ---------------------------------------------------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES (206,186) (127,126) (133,998) - ---------------------------------------------------------------------------------------------------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (40,821) (44,788) (7,969) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 123,231 168,019 175,988 - ---------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 82,410 $ 123,231 $ 168,019 ================================================================================================================ Supplemental disclosure of cash flow information Cash paid during the year for: Income taxes ........................................................ $ 178,307 $ 160,944 $ 154,498 ================================================================================================================ Interest ............................................................ $ 1,333 $ 1,587 $ 1,890 ================================================================================================================
See accompanying notes. twenty-two 6 Notes to Consolidated Financial Statements Genuine Parts Company and Subsidiaries December 31, 1994 GPC(LOGO) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of Genuine Parts Company and all of its subsidiaries (the "Company"). Income applicable to minority interests is included in other expenses. Significant intercompany accounts and transactions have been eliminated in consolidation. CASH EQUIVALENTS: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. INVESTMENTS: On August 27, 1992, the Company paid approximately $5.5 million to increase its ownership in UAP Inc., a Canadian automotive parts distributor, from 20% to 24%. The Company also has a 49% interest in a partnership formed by the Company and UAP Inc. On October 1, 1994, the Company paid approximately $26 million to acquire a 49% interest in Grupo Auto Todo, a partnership formed by the Company and Auto Todo, a Mexican automotive parts distributor. These investments are accounted for by the equity method of accounting. INVENTORIES: Inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for substantially all automotive parts, and certain industrial parts, and by the first-in, first-out (FIFO) method for all other inventories. If the FIFO method had been used for all inventories, cost would have been $102,077,000 and $100,772,000 higher than reported at December 31, 1994 and December 31, 1993, respectively. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is stated on the basis of cost. Depreciation is determined principally on a straight-line basis over the estimated useful life of each asset. STOCK OPTIONS: Proceeds from the sale of stock under options are credited to common stock at par value and the excess of the option price over par value is credited to additional paid-in capital. INTEREST INCOME: Interest income (1994 - $6,765,000; 1993 - $6,273,000; 1992 - $7,538,000) has been deducted from selling, administrative and other expenses. FOREIGN OPERATIONS: Foreign operations represent less than five percent of consolidated amounts. Translation adjustments are not significant. ACCOUNTING CHANGES: Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" which requires the projected future costs of providing postretirement benefits, such as health care and life insurance, be recognized as an expense as employees render service instead of when benefits are paid. The Company applied the new rules using the cumulative effect method, resulting in a charge of $5,055,000 (net of income taxes of $3,095,000) in 1993. Also effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The cumulative effect as of January 1, 1993, of adopting Statement 109 increased 1993 net income by $4,000,000. The adoption of Statements 106 and 109 did not have a material impact on the Company's financial statements or results of operations. NET INCOME PER COMMON SHARE: Net income per common share is based on the weighted average number of shares of common stock outstanding during each year. Options outstanding under the Company's stock option plan would not materially dilute net income per share and, therefore, have not been included in the computation. 2. ACQUISITIONS On June 30, 1992, the Company acquired all of the outstanding common stock of Davis & Wilmar, Inc., an automotive parts distributor, for $32 million. The acquisition has been recorded using the purchase method of accounting. On January 29, 1993, the Company completed its merger of Berry Bearing Company and certain affiliated companies into the Company. The Berry Companies distribute industrial replacement parts and related supplies throughout the Midwestern United States. The Company issued 9,586,531 shares of common stock for all of the outstanding common stock of the Berry Companies. This transaction has been accounted for as a pooling of interests and, accordingly, the accompanying financial statements have been retroactively combined to include the accounts of the pooled companies. 3. STOCK SPLIT On February 17, 1992, the Board of Directors approved a three-for-two stock split, effected in the form of a 50% stock dividend, payable to shareholders of record on March 16, 1992. The par value of the shares issued was charged to retained earnings. twenty-three 7 4. SHAREHOLDERS' EQUITY The Company has a Shareholder Protection Rights Agreement which includes the distribution of Rights to common shareholders. The Rights entitle the holder, upon occurrence of certain events, to purchase additional stock of the Company. The Rights will be exercisable only if a person, group or company acquires 20% or more of the Company's common stock or commences a tender offer that would result in ownership of 30% or more of the common stock. The Company is entitled to redeem each Right for one cent. 5. LEASED PROPERTIES The Company leases land, buildings and equipment. Certain land and building leases have renewal options generally for periods ranging from two to ten years. Future minimum payments, by year and in the aggregate, under the noncancellable operating leases with initial or remaining terms of one year or more consisted of the following at December 31, 1994 (in thousands): 1995.......................... $ 48,238 1996.......................... 35,159 1997.......................... 24,534 1998.......................... 17,755 1999.......................... 12,031 Subsequent to 1999............ 24,725 - -------------------------------------------- $162,442 ============================================
Rental expense for operating leases was $53,913,000 in 1994; $48,935,000 in 1993; and $47,033,000 in 1992. 6. STOCK OPTIONS In accordance with stock option plans approved by the shareholders, options are granted to key personnel for the purchase of the Company's common stock at prices not less than the fair market value of the shares on the dates of grant. Most options may be exercised not earlier than twelve months nor later than ten years from the date of grant. On April 20, 1992, the shareholders approved the 1992 Stock Option and Incentive Plan which provides for 4,500,000 shares of common stock to be available for granting of incentive and nonqualified stock options to key employees. Further information relating to the options is as follows:
Shares Option Price -------------------------------------- Per Share 1994 1993 1992 - --------------------------------------------------------------------------------- Outstanding at January 1 ........ $22.58 to $37.06 1,496,301 1,432,850 798,556 Granted .......... 30.31 to 37.06 693,000 235,700 858,900 Exercised ........ 22.58 to 31.92 (272,887) (150,749) (206,481) Cancelled ........ 22.79 to 35.69 (16,337) (21,500) (18,125) - --------------------------------------------------------------------------------- Outstanding at December 31 ...... 23.21 to 37.06 1,900,077 1,496,301 1,432,850 ================================================================================= Exercisable at December 31 ...... 23.21 to 37.06 770,774 1,014,843 520,316 ================================================================================= Shares available for future grants .... 2,694,193 3,520,856 3,735,056 =================================================================================
On March 31, 1994, the Company entered into restricted stock agreements with two officers which provide for the award of up to 100,000 and 50,000 shares, respectively, during the period 1994 - 1998 based on the Company achieving certain increases in earnings per share and stock price levels, as defined in the agreements. For the year ended December 31, 1994, the officers earned 10,000 and 5,000 shares, respectively. The Company recognizes compensation expense equal to the fair market value of the stock on the award date over the remaining vesting period which expires on March 31, 2004. 7. INCOME TAXES Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities are as follows:
1994 1993 - ---------------------------------------------------- (in thousands) Employee and retiree benefits.. $17,301 $15,793 Property, plant and equipment.. 17,231 15,944 Merchandise inventories ....... 6,855 6,243 Other ......................... 3,153 1,521 - ---------------------------------------------------- $44,540 $39,501 ====================================================
The components of income tax expense are as follows:
1994 1993 1992 - -------------------------------------------------- (in thousands) Federal: Current..... $148,282 $132,298 $116,772 Deferred.... 6,699 5,990 3,896 State ......... 31,339 28,673 24,772 - -------------------------------------------------- $186,320 $166,961 $145,440 ==================================================
The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes were as follows:
1994 1993 1992 - --------------------------------------------------------------------- (in thousands) Statutory rate applied to pre-tax income ............. $ 166,204 $ 149,040 $ 130,019 Plus state income taxes, net of Federal tax benefit.. 20,370 18,637 16,350 Other ........................ (254) (716) (929) - --------------------------------------------------------------------- $ 186,320 $ 166,961 $ 145,440 =====================================================================
8. EMPLOYEE BENEFIT PLANS The Company's noncontributory defined benefit pension plan covers substantially all of its employees. The benefits are based on an average of the employees' compensation during five of their last ten years of credited service. The Company's funding policy is to contribute amounts twenty-four 8 deductible for income tax purposes. Contributions are intended to provide not only for benefits attributed for service to date but also for those expected to be earned in the future. The following table sets forth the plan's funded status and amounts recognized in the Company's financial statements at December 31:
1994 1993 - ------------------------------------------------------------------- (in thousands) Actuarial present value of benefit obligations: Accumulated benefit obligation, including vested benefits of $201,029 in 1994 and $202,994 in 1993 ........ $(205,808) $(207,707) =================================================================== Projected benefit obligation for service rendered to date ...................... $(315,368) $(339,271) Plan assets at fair value, primarily insurance contracts, U.S. Government securities and equity securities ...... 346,303 344,217 - ------------------------------------------------------------------- Plan assets in excess of projected benefit obligation .................... 30,935 4,946 Unrecognized prior service cost ......... (26,520) (24,365) Unrecognized net loss from past experience different from that assumed and effects of changes in assumptions ........................ 51,926 61,307 Unrecognized net transition obligation .. 1,822 2,083 - ------------------------------------------------------------------- Net prepaid pension cost ................ $ 58,163 $ 43,971 ===================================================================
Net pension cost (income) included the following components at December 31:
1994 1993 1992 - --------------------------------------------------------- (in thousands) Service cost ........ $ 12,247 $ 9,498 $ 10,775 Interest cost ....... 25,002 23,192 23,909 Actual return on plan assets ............ 3,578 (35,190) (21,080) Net amortization and deferral .......... (36,606) 2,353 (5,870) - --------------------------------------------------------- Net periodic pension cost (income) ..... $ 4,221 $ (147) $ 7,734 =========================================================
Effective January 1, 1993, the Company began insuring new long-term disability claims under a policy separate from the pension plan, resulting in a decrease in net pension cost of approximately $7,000,000 during 1993. Assumptions used in the accounting for the defined benefit plan as of December 31 were:
1994 1993 1992 - ----------------------------------------------------------- Weighted-average discount rate ............. 8.40% 7.50% 8.75% Rate of increase in future compensation levels .................... 5.00% 5.75% 5.75% Expected long-term rate of return on assets.. 9.50% 10.00% 10.00%
The changes in the above assumptions resulted in a net $37,400,000 decrease in the projected benefit obligation at December 31, 1994. At December 31, 1994, the plan held 534,997 shares of common stock of the Company with a market value of $19,259,892. The Company has a defined contribution plan which covers substantially all of its employees. The Company's contributions are determined based on 20% of the first 6% of the covered employee's salary. Total plan expense was approximately $3,364,000 in 1994, $2,712,000 in 1993, and $2,212,000 in 1992, respectively. 9. INDUSTRY DATA The industry data for the past five years presented in the Exhibit on page 27 is an integral part of these financial statements. The Company is primarily engaged in the distribution of merchandise, principally automotive and industrial replacement parts, and office supplies. In the automotive industry, the Company distributes replacement parts (other than body parts) for substantially all makes and models of domestically manufactured automobiles, most domestically manufactured trucks and buses, and most vehicles manufactured outside the United States. In addition, this segment of the business includes the rebuilding of some automotive parts and the distribution of replacement parts for certain types of farm equipment, motorcycles, motorboats and small engines. The Company's industrial segment distributes a wide variety of industrial bearings, mechanical and fluid power transmission equipment, including hydraulic and pneumatic products, material handling components, and related parts and supplies. The Company's office products segment distributes a wide variety of office products, computer supplies, office furniture and business electronics. Intersegment sales are not significant. Operating profit for each industry segment is calculated as net sales less operating expenses excluding general corporate expenses, interest expense, equity in income from investees and minority interests. Identifiable assets by industry are those assets that are used in the Company's operations in each industry. Corporate assets are principally cash, cash equivalents, short-term investments and headquarters' facilities and equipment. twenty-five 9 MANAGEMENT'S DISCUSSION AND ANALYIS Genuine Parts Company and Subsidiaries (LOGO) December, 31, 1994 RESULTS OF OPERATIONS: Net sales in 1994 increased for the 45th consecutive year to a record high of $4.9 billion. This was an increase of 11% over the prior year and compares with increases of 9% in 1993, and 7% in 1992. Sales for the Automotive Parts Group increased 8% in 1994 versus 7% in 1993, reflecting an improved economic climate and enhanced marketing programs for all segments of the automotive aftermarket. Sales for the Industrial Parts Group increased 14% in 1994 versus 7% in 1993 as industrial production continues to increase and factory utilization remains high. Sales for the Office Products Group increased 14% in 1994 compared with 21% in 1993 reflecting geographic expansion, increased market share and improved service level. Costs of goods sold remained approximately the same as a percentage of net sales in each of the past two years. Selling, administrative and other expenses increased each year, and the percentage to net sales remained approximately the same. The effective income tax rate was 39.2% in 1994 and in 1993 and 38.0% in 1992. The effective tax rate in 1993 reflects the increase in the federal tax rate from 34% to 35% effective January 1, 1993. Consolidated net income in 1994 increased 12% over 1993 net income. Net income in 1993 increased 9% over 1992. Effective December 31, 1994, the Company changed the assumptions in the Pension Plan as follows: weighted average discount rate from 7.50% to 8.40%, rate of increase in future compensation levels from 5.75% to 5.00%, and the expected long-term rate of return on assets from 10.00% to 9.50%. The changes in these assumptions resulted in a net $37,400,000 decrease in the projected benefit obligation at December 31, 1994. Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" which requires the projected future costs of providing postretirement benefits, such as health care and life insurance, be recognized as an expense as employees render service instead of when benefits are paid. The Company has applied the new rules using the cumulative effect method, resulting in a charge of $5,055,000 (net of income taxes of $3,095,000). Also effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The cumulative effect as of January 1, 1993, of adopting Statement 109 increased net income by $4,000,000. As permitted by the Statement, prior year financial statements have not been restated to reflect the change in accounting method. The adoption of Statements 106 and 109 did not have a material impact on the Company's financial statements or results of operations. LIQUIDITY AND SOURCES OF CAPITAL: The ratio of current assets to current liabilities was 3.8 at the close of 1994 with current assets amounting to 79% of total assets. Trade accounts receivable and inventories increased 13.6% and 14.3% respectively, while working capital increased 2%. The increase in working capital has been financed principally from the Company's cash flow generated by operations. Working capital only increased a small percentage due to the Company's stock repurchase program for 1994. At its August 16, 1994 meeting, the Genuine Parts Company Board of Directors approved a stock repurchase program which authorizes the Company to reacquire up to 10 million shares of its Common Stock. To date, approximately 2 million shares have been repurchased. Current financial resources and anticipated funds from operations are expected to meet requirements for working capital in 1995. Capital expenditures during 1994 amounted to $66 million compared with $58 million in 1993 and $32 million in 1992. The increase in 1994 and 1993 reflects the Company's continuing geographic expansion as well as the upgrading of its existing facilities. Additionally, capital expenditures in 1992 reflected the Company's response to the difficult business environment and the overall economy. It is anticipated that capital expenditures in 1995 will be approximately the same as 1994. On January 29, 1993, 9,586,531 shares of common stock were issued for all of the outstanding common stock of Berry Bearing Company and certain affiliated companies. This transaction has been accounted for as a pooling of interests; and accordingly, the financial statements prior to that date have been retroactively combined to include the accounts of the pooled companies. INFLATION: There were no price increases in the Automotive Parts Group in 1994 as sales increased 8%. The Industrial Parts Group had a sales increase of 14% and price increases of approximately 2.9%. The Office Products Group had a sales increase of 14% and price increases of less than 1%. Price increases in the Automotive Group were approximately 1% in 1993 as sales increased 7%. The Industrial Parts Group had a sales increase of 7% and price increases of approximately 3%. The Office Products Group had a sales increase of 21% and price increases of less than 1%. The charges to operations for depreciation represent the allocation of historical costs incurred over past years and are significantly less than if they were based on the current cost of productive capacity being consumed. twenty-six 10 Industry Data Genuine Parts Company and Subsidiaries GPC(LOGO)
- -------------------------------------------------------------------------------------------------------------- 1994 1993 1992 1991 1990 ============================================================================================================== (dollars in thousands) Net sales Automotive ........................... $2,693,961 $2,485,267 $2,318,761 $2,188,698 $2,117,464 Industrial ........................... 1,317,495 1,153,371 1,082,428 1,021,019 1,019,227 Office products ...................... 846,959 745,656 615,562 554,019 523,752 - -------------------------------------------------------------------------------------------------------------- Total net sales ................... $4,858,415 $4,384,294 $4,016,751 $3,763,736 $3,660,443 - -------------------------------------------------------------------------------------------------------------- Operating profit Automotive ........................... $ 304,164 $ 282,791 $ 262,422 $ 260,818 $ 252,862 Industrial ........................... 111,822 96,727 87,493 76,922 80,578 Office products ...................... 78,206 65,938 50,967 45,112 45,606 - -------------------------------------------------------------------------------------------------------------- Total operating profit ............ 494,192 445,456 400,882 382,852 379,046 Interest expense ....................... (1,321) (1,584) (1,871) (5,434) (5,411) Corporate expense ...................... (22,854) (20,405) (17,577) (18,662) (14,448) Equity in income ....................... 7,224 4,452 2,513 4,000 3,814 Minority interests ..................... (2,373) (2,090) (1,537) (1,638) (1,560) - -------------------------------------------------------------------------------------------------------------- Income before income taxes ........ $ 474,868 $ 425,829 $ 382,410 $ 361,118 $ 361,441 - -------------------------------------------------------------------------------------------------------------- Identifiable assets Automotive ........................... $1,223,416 $1,152,148 $1,040,191 $ 926,617 $ 875,324 Industrial ........................... 404,647 370,633 354,547 338,054 337,418 Office products ...................... 308,817 283,479 228,802 201,036 186,815 Corporate ............................ 5,950 6,731 27,333 57,197 43,881 Equity investments ................... 86,641 57,765 56,430 54,612 44,974 - -------------------------------------------------------------------------------------------------------------- Total assets ...................... $2,029,471 $1,870,756 $1,707,303 $1,577,516 $1,488,412 - -------------------------------------------------------------------------------------------------------------- Depreciation and amortization Automotive ........................... $ 26,588 $ 24,056 $ 21,905 $ 20,301 $ 19,436 Industrial ........................... 4,640 5,410 5,286 5,732 5,450 Office products ...................... 5,257 4,246 3,752 3,794 3,727 Corporate ............................ 889 708 744 768 964 - -------------------------------------------------------------------------------------------------------------- Total depreciation and amortization $ 37,374 $ 34,420 $ 31,687 $ 30,595 $ 29,577 - -------------------------------------------------------------------------------------------------------------- Capital expenditures Automotive ........................... $ 45,921 $ 39,502 $ 24,272 $ 22,381 $ 33,190 Industrial ........................... 4,164 2,779 2,553 2,479 8,586 Office products ...................... 13,547 12,378 3,395 3,055 3,488 Corporate ............................ 2,370 2,854 1,365 358 845 - -------------------------------------------------------------------------------------------------------------- Total capital expenditures ........ $ 66,002 $ 57,513 $ 31,585 $ 28,273 $ 46,109 - --------------------------------------------------------------------------------------------------------------
Assets acquired in prior years will, of course, be replaced at higher costs, but this will take place over many years. Present tax laws do not allow deductions for adjustments for the impact of inflation. Thus, taxes are levied on the Company at rates which, in real terms, exceed established statutory rates. In general, during periods of inflation, this tax policy results in a tax on shareholders' investment in the Company. QUARTERLY RESULTS OF OPERATIONS: Miscellaneous year-end adjustments resulted in increasing net income during the fourth quarter of 1994 and 1993 by approximately $18,353,000 ($.15 per share) and $16,206,000 ($.13 per share), respectively. The following is a summary of the quarterly results of operations for the years ended December 31, 1994 and 1993.
Three Months Ended - ------------------------------------------------------------------------------------ March 31, June 30, Sept. 30, Dec.31, - ------------------------------------------------------------------------------------ 1994 - ---- Net Sales............... $1,162,075 $1,219,801 $1,268,417 $1,208,122 Gross Profit............ 346,457 362,817 382,280 423,162 Net Income.............. 62,891 71,011 72,924 81,722 Net Income per Common Share.......... .51 .57 .59 .66 1993 - ---- Net Sales............... $1,037,914 $1,106,176 $1,144,839 $1,095,365 Gross Profit............ 310,421 326,282 347,399 377,154 Net Income.............. 55,336 65,905 63,019 73,553 Net Income per Common Share.......... .45 .53 .51 .59
twenty-seven EX-21 8 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 21 SUBSIDIARIES OF THE COMPANY
Jurisdiction of Name % Owned Incorporation ---- ------- ------------- Balkamp, Inc. 89.61 Indiana Berry Bearing Company 100.0 Illinois Genuine Parts Holdings, Ltd. 100.0 Province of Alberta, Canada Motion Industries, Inc. 100.0 Delaware S. P. Richards Company 100.0 Georgia Alamogordo Parts & Supply, Inc. 51.0 Georgia Auto Paint and Supply Company of Lexington, Inc. 51.0 Georgia Best Auto Parts, Inc. 51.0 Georgia Brigham Automotive Supply, Inc. 51.0 Georgia Bulldog Auto Parts, Inc. 51.0 Georgia Calcutta Auto Supply, Inc. 51.0 Georgia Central Motor Parts, Inc. 51.0 Georgia CKT Motive Parts, Inc. 51.0 Georgia Clermont-Brown Automotive Supply, Inc. 51.0 Georgia C & O Auto Parts, Inc. 51.0 Georgia First Choice Automotive, Inc. 51.0 Georgia First Settlement Automotive, Inc. 51.0 Georgia 1st Choice Auto Parts, Inc. 51.0 Georgia Franklin County Supply, Inc. 51.0 Georgia Gila Automotive Supply, Inc. 51.0 Georgia Hansens Automotive Supply, Inc. 51.0 Georgia Hastings Auto Supply, Inc. 51.0 Georgia J.B.H. Auto Supply Incorporated 51.0 Georgia
2 Exhibit 21 (cont.) L & P Automotive Supply, Inc. 51.0 Georgia Lana Lou Auto Parts, Inc. 51.0 Georgia Landry Supply, Inc. 51.0 Georgia Luke's Auto Supply, Inc. 51.0 Georgia Mid-town Auto & Machine Shop, Inc. 51.0 Georgia McMinn County Automotive, Inc. 51.0 Georgia Middletown Parts Unlimited, Inc. 51.0 Georgia Nelson Enterprises, Inc. 51.0 Georgia North Shore Automotive, Inc. 51.0 Georgia Oberlin Auto Parts, Inc. 51.0 Georgia Parts & Company of Selma, Inc. 51.0 Georgia Petoskey Automotive Center, Incorporated 51.0 Georgia P.M.A. Associates, Inc. 51.0 Georgia Port Charlotte Auto Supply, Inc. 51.0 Georgia Price Automotive Enterprises, Inc. 75.5 Georgia Pride City Auto Parts, Inc. 51.0 Georgia Quality Auto Parts & Paint Supply, Inc. 51.0 Georgia R.K.R., Inc. 51.0 Georgia Rasmussen Auto Supply, Inc. 51.0 Georgia River Valley Auto Parts, Inc. 51.0 Georgia Rome Auto Parts, Inc. 51.0 Georgia Rutherford Automotive, Inc. 51.0 Georgia Sanchez Truck & Auto Parts, Inc. 51.0 Georgia Sevier County Auto Parts, Inc. 51.0 Georgia Slidell Parts Warehouse, Inc. 51.0 Georgia Sumner Auto & Truck, Inc. 51.0 Georgia TAG Automotive, Inc. 51.0 Georgia TNT Supply, Inc. 51.0 Georgia Uptergrove Auto Supply, Inc. 51.0 Georgia Warren County Automotive, Inc. 51.0 Georgia Wisota Auto Parts, Inc. 51.0 Georgia
EX-23 9 CONSENT OF ERNST & YOUNG LLP 1 Exhibit 23 - Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of Genuine Parts Company of our report dated February 6, 1995, included in the 1994 Annual Report to Shareholders of Genuine Parts Company. We also consent to the incorporation by reference in the Registration Statement (Form S-8 Number 33-30982) pertaining to the Genuine Parts Company 1988 Stock Option Plan and in the Registration Statement (Form S-8 Number 33-62512) pertaining to the Genuine Parts Company 1992 Stock Option and Incentive Plan of our report dated February 6, 1995, with respect to the consolidated financial statements of Genuine Parts Company incorporated by reference in the Annual Report (Form 10-K) for the year ended December 31, 1994. ERNST & YOUNG LLP Atlanta, Georgia March 22, 1995 EX-27 10 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF GENUINE PARTS COMPANY FOR THE YEAR ENDED DECEMBER 31, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1994 JAN-01-1994 DEC-31-1994 82,410 0 487,395 0 1,004,580 1,595,781 258,032 192,081 2,029,471 422,408 11,431 122,627 0 0 1,403,538 2,029,471 4,858,415 4,858,415 3,343,699 3,343,699 0 0 0 474,868 186,320 288,548 0 0 0 288,548 2.33 2.33
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