EXHIBIT 10.6
(AMENDED)
TANDYCRAFTS, INC.
ESOP BENEFIT RESTORATION PLAN
EFFECTIVE JANUARY 1, 1993
ESOP BENEFIT RESTORATION PLAN
TABLE OF CONTENTS
Article I. Establishment and Purpose Page
1.1 Establishment 1
1.2 Purpose 1
Article II. Definitions and Construction
2.1 Definitions 1
2.2 Gender and Number 2
2.3 Severability 2
2.4 Applicable Law 2
2.5 Plan Not an Employment Contract 2
Article III. Participation
3.1 Participation 2
Article IV. Benefit and Payment
4.1 Account 3
4.2 Allocable Share 3
4.3 Account Adjustments 3
4.4 Vesting 3
4.5 Distribution 3
Article V. Miscellaneous Provisions
5.1 Funding 4
5.2 Tax Withholding 4
5.3 Compensation 4
5.4 Nontransferability 4
Article VI. Administration
6.1 Administration 5
6.2 Finality of Determination 5
6.3 Expenses 5
6.4 Indemnification and Exculpation 5
6.5 Payment of Attorney's Fees 6
Article VII. Merger, Amendment, and Termination
7.1 Merger, Consolidation, or Acquisition 6
7.2 Amendment and Termination 6
7.3 Adoption by Affiliates 6
TANDYCRAFTS, INC.
ESOP BENEFIT RESTORATION PLAN
(AMENDED) EFFECTIVE JANUARY 1, 1993
ARTICLE I. ESTABLISHMENT AND PURPOSE
1.1 Establishment. Effective as of January 1, 1993, Tandycrafts, Inc.
hereby amends the Tandycrafts, Inc. ESOP Benefit Restoration Plan.
1.2 Purpose The purpose of this Plan is to provide to Plan Participants,
a restoration of benefits lost under the Tandycrafts, Inc. Employee Stock
Ownership Plan because of certain limitations imposed by the Internal Revenue
Code.
ARTICLE II. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall
have the meanings set forth below unless the context otherwise requires, and
when the defined meaning is intended, the term is capitalized.
(a) "Account" means an account established for each participant in
this Plan.
(b) "Allocable Share" is defined in Section 4.2 below.
(c) "Beneficiary" means the person designated by the Participant, or
otherwise treated as, his beneficiary(ies) under the Qualified Plan.
(d) "Board" means the board of directors of the Company or the
Executive Committee of the Board.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the Plan administrative committee which is
appointed pursuant to Section 6.1 hereof..
(g) "Company" means Tandycrafts, Inc. or its successor.
(h) "Company Stock" means the common stock, $1 par value, of the
Company.
(i) "Compensation" means, for a given Plan Year, the amount of the
Participant's Compensation, as defined in the Qualified Plan, but without
regard to the limitations of Code Section 401(a)(17).
(j) "Matching Allocation" means, for a given Plan Year, the shares of
Company Stock or other assets allocable to a Participant under the
Qualified Plan resulting from Employer Contributions (including forfeitures
of Employer Contributions).
(k) "Participant" means an employee of the Company who is eligible to
participate in this Plan pursuant to Section 3.1 hereof.
(l) "Plan" means this document, the Tandycrafts, Inc. ESOP Benefit
Restoration Plan, as amended from time to time.
(m) "Plan Year" means the 12-month period beginning January 1 and
ending December 31.
(n) "Qualified Plan" means the Tandycrafts, Inc. Employee Stock
Ownership Plan, as amended from time to time.
2.2 Gender and Number Except when otherwise indicated by the context,
any masculine terminology when used in the Plan shall also include the feminine
gender and the neuter gender, and the definition of any term in the singular
shall also include the plural.
2.3 Severability. In the event any provision of the Plan shall be held
invalid or illegal for any reason, any illegality or invalidity shall not affect
the remaining parts of the Plan, but the Plan shall be construed and enforced as
if the illegal or invalid provision had never been inserted, and the Committee
shall have the privilege and opportunity to correct and remedy such questions of
illegality or invalidity by amendment as provided in the Plan.
2.4 Applicable Law. To the extent not preempted by Federal law, this
Plan shall be governed and construed in accordance with the laws of the State of
Texas.
2.5 Plan Not an Employment Contract. This Plan is not an employment
contract. It does not give to any Participant the right to continued employment
by the Company, and all Participants remain subject to change of salary,
transfer, change of job, discipline, layoff, discharge, or any other change of
employment status.
ARTICLE III. PARTICIPATION
3.1 Participation. In order to become a Participant in this Plan, an
employee must be selected by the Committee to participate and must meet each of
the following additional requirements: (i) be in the active employment of the
Company or any of its subsidiaries or affiliates on or after January 1, 1993,
(ii) have been eligible to participate in, and be an Active Participant, as
defined in the Qualified Plan, under the Qualified Plan, and (iii) the
employee's Matching Allocation under the Qualified Plan is subject to reduction
because of application of the limits of Sections 401(a)(17), 401(k)(3), 401(m),
402(g) or 415 of the Code. The Committee shall limit participation in the Plan
to a select group of the Company's management or highly compensated employees
meeting the above requirements. Participants shall be notified in writing by
the Committee of their participation in the Plan.
ARTICLE IV. BENEFIT AND PAYMENT
4.1 Account. An account shall be maintained by the Company for each
Participant (the Participant's Account") whose Matching Allocation under the
Qualified Plan for the Plan year in question is limited by reason of Code
Sections 401(a)(17), 401(k)(3), 401(m), 402(g) or 415.
4.2 Allocable Share. For each Plan Year beginning on or after January 1,
1993, a Participant's Allocable Share under this Plan shall be the excess of
(i) the aggregate Matching Allocations, expressed in shares of Company Stock,
which would have been received by the Participant under the Qualified Plan as of
all Qualified Plan allocation dates falling within the Plan Year in question if
Qualified Plan allocations were calculated without applying the limitations of
Code Sections 401(a) (17), 401(k)(3), 401(m), 402(g) or 415 to such Participant
over (ii) the actual aggregate Matching Allocation, expressed in shares of
Company Stock, credited to the Participant's accounts in the Qualified Plan as
of all Qualified Plan allocation dates within such Plan Year. In calculating the
hypothetical unlimited Matching Allocation under clause (i) of the preceding
sentence, the statutory limitations in effect for any portion of the Plan Year
shall be pro-rated in proportion to the number of months during the Plan Year
such limitation is in effect, and added to the similarly pro-rated limitation
(s) for each other portion of the Plan Year; and the average cost of all shares
actually allocated under the Qualified Plan as of any date within this Plan's
Plan Year shall be used to determine the number of shares that would have been
allocated under the Qualified Plan had the limitations not applied.
4.3 Account Adjustments. Each Participant shall have his Account
credited with the number of shares of "Phantom" stock equal to the number of
shares of Company Stock in Participant's Allocable Share. A Participant's
Account shall be credited, effective as of the payment date of any cash
dividend, with the amount of any "Phantom Stock" cash dividends which would have
been received, and the amount of any cash dividends shall be converted
immediately into shares of Company stock based upon the average of the high and
low trades of the Company Stock as published in a national newspaper ("market
price") for the date the cash dividend is paid. Participant's Account shall be
adjusted for any stock splits, stock dividends or similar transactions so as to
produce the same number of shares of stock as the holder of an equal number of
shares of Company Stock at the date of record would have following such
transactions. The crediting of shares of Company Stock to a Participants Account
is merely a bookkeeping entry for purposes of determining the Participant's
benefits under the Plan, and does not convey any rights or interest in Company
Stock to a Participant.
4.4 Vesting. A Participant's Account hereunder shall vest immediately.
4.5 Distribution. A Participant will be entitled to a distribution of
Company Stock equal to the number of shares of "Phantom Stock" allocated to
Participant's Account in the Plan upon termination of employment with the
Company for any reason; however, no distribution shall occur prior to
termination of employment with the Company and all of its subsidiaries and
affiliates. Distribution shall commence as soon as administratively practical
following the date the Participant is first eligible to receive a distribution
from the Qualified Plan.
In the event the Participant dies before the distribution is made,
distribution shall be made as soon as administratively practical to his
Beneficiary, or if there is no Beneficiary, to his estate.
ARTICLE V. MISCELLANEOUS PROVISIONS
5.1 Funding. This Plan is intended to be an unfunded plan within the
meaning of ERISA and the Code. All benefits under this Plan shall be paid in
company stock from the general assets of the Company or such other funding
vehicle as the Board shall provide; provided, however, that all assets paid into
any funding vehicle hereunder shall at all times prior to payment to a
Participant or Beneficiary remain subject to the claims of general unsecured
creditors of the Company. The benefits allocated to the Company Accounts of
Participants under the Plan shall be reflected on the accounting records of the
Company, but absent action by either the Board or Committee shall not be
construed to create, or require the creation of, a trust, custodial or escrow
account, or other fund of any kind.
No Participant or any other person shall have any right, title, or interest
whatever in or to, or any preferred claim in or to, any investment reserves,
accounts, or funds that the Company may purchase, establish, or accumulate to
aid in providing the payments described in this Plan. No Participant shall have
any voting rights or any other rights of a stockholder with respect to shares of
stock credited to his Account. Nothing contained in this Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a trust
or a fiduciary relationship of any kind between the Company and a Participant or
any other person. Neither a Participant nor a Beneficiary shall acquire any
interest in any assets of the Company or in any investment reserves, accounts,
or funds that the Company may purchase, establish or accumulate for the purposes
of paying benefits hereunder.
5.2 Tax Withholding. The Company may withhold or cause to be withheld
from or with respect to any benefit hereunder any federal, state, or local taxes
required by law to be withheld with respect to such benefit and such sum as the
Company may reasonably estimate as necessary to cover any taxes for which the
Company may be liable and which may be assessed with regard to such benefit.
In the event any tax is required to be withheld prior to actual payment of
benefits hereunder, the Company may withhold such tax from the Participant's
other cash remuneration.
5.3 Compensation. No benefit accrued or payable hereunder shall be
deemed compensation to the Participant for the purposes of computing benefits to
which such Participant may be entitled under the Qualified Plan or any other
benefit plan or arrangement of the Company for the benefit of its employees;
provided, however, that in the event of a conflict with this Plan, the terms of
the Qualified Plan or such other retirement plan or arrangement shall control.
5.4 Nontransferability. A Participant or his Beneficiary shall have no
rights by way of anticipation or otherwise to assign or otherwise dispose of any
interest under this Plan, nor shall rights be assigned or transferred by
operation of law.
ARTICLE VI. ADMINISTRATION
6.1 Administration. The Company shall be the "Plan Administrator." The
Plan Administrator may resign or may be removed and a successor appointed by the
Board at any time. The Board may appoint an administrative committee (the
"Committee") to handle the day-to-day administration of the Plan, and the
Committee shall have the authority of the Plan Administrator to the extent the
Plan Administrator has delegated its authority to the Committee. Members of the
Committee may resign with 30 days' written notice to the Board or may be removed
by the Board at any time, whereupon a successor Committee member may be
appointed by the Board.
A majority of the members of the Committee shall constitute a quorum and
the acts of a majority of the members present, or acts approved in writing by a
majority of the members without a meeting, shall be the acts of the Committee.
The Committee shall have that authority which is expressly stated in this Plan
as being vested in the Committee and shall have the discretionary authority to
make administrative rules, to construe and interpret the Plan, to reconcile any
inconsistencies, correct any errors and supply any omissions in the Plan, to
decide all questions arising under the Plan, to establish a claims procedure and
to take such other action as may be appropriate to carry out the purposes of the
Plan. No Participant in this Plan may be a member of the Committee.
6.2 Finality of Determination. Determinations of the Plan Administrator
or Committee as to any disputed questions arising under this Plan, including
questions of construction and interpretation, shall be final, binding, and
conclusive upon all persons. Determinations of the Board as to eligibility and
the vehicle, if any, to be used to fund benefits shall be final, binding and
conclusive upon all persons.
6.3 Expenses. The expenses of administering the Plan shall be borne by
the Company.
6.4 Indemnification and Exculpation. In the event and to the extent not
insured against under any contract of insurance with an insurance company, the
Company shall indemnify and hold harmless each "Indemnified Person," as defined
below, against any and all claims, demands, suits, proceedings, losses, damages,
interest, penalties, expenses (specifically including, but not limited to
counsel fees to the extent approved by the Board of Directors of the Company or
otherwise provided by law, court costs and other reasonable expenses of
litigation), and liability of every kind, including amounts paid in settlement
with the approval of the Board of Directors, arising from any action or cause of
action related to the Indemnified Person's act or acts or failure to act in
connection with this Plan. Such indemnity shall apply regardless of whether
such claims, demands, suits, proceedings, losses, damages, interest, penalties,
expenses, and liability arise in whole or in part from the negligence or other
fault of the Indemnified Person, except when the same is judicially determined
to be due to gross negligence, fraud, recklessness, willful or intentional
misconduct of such Indemnified Person. "Indemnified Person" shall mean each
member of the Board, each member of the Committee and each other employee of the
Company who is allocated administrative or other responsibility hereunder.
6.5 Payment of Attorney's Fees. In the event a Participant or
Beneficiary is denied benefits under this Plan and brings a successful legal
action resulting in the award of such benefits to such Participant or
Beneficiary, the Company shall reimburse the Participant or Beneficiary for the
costs and expenses he or she has incurred in connection with such legal action,
including reasonable attorney's fees.
ARTICLE VII. MERGER, AMENDMENT, AND TERMINATION
7.1 Merger, Consolidation, or Acquisition. In the event of a merger,
consolidation, or acquisition where the Company is not the surviving
corporation, this Plan shall terminate but all amounts credited to participant
Accounts prior to Plan termination shall continue to be an obligation of the
successor acquiring corporation and the provisions of the Plan shall be binding
on such successor for all amounts credited to Participant Accounts prior to Plan
termination.
7.2 Amendment and Termination. The Company may amend, modify, or
terminate the Plan at any time, expressly including the making of retroactive
amendments; provided, that no such amendment or termination shall deprive a
Participant or Beneficiary of any benefits which have previously accrued
hereunder.
7.3 Adoption by Affiliates. Any subsidiary or affiliate of the Company
that has adopted the Qualified Plan for the benefit of its employees may adopt
this Plan for the benefit of its eligible employees, subject to the approval of
the Company's Board. The Company, however, reserves the exclusive right to
select the employees eligible to participate in the Plan, to administer the
Plan, to make all decisions regarding funding the Plan, and to amend or
terminate the Plan. In the event a subsidiary of affiliate adopts the Plan, it
shall be solely responsible for payment of any benefits due to its employees
hereunder and any related taxes, and for its pro rata portion of any
administrative expenses or other payments hereunder.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
as of this ---- day of June, 1995.
TANDYCRAFTS, INC.
By:
--------------------
Michael J. Walsh