Sears Pension Plan
(As Amended and Restated
Effective as of January 1, 2000)
Mayer, Brown & Platt
Chicago
I, __________________________________, Secretary of the
Employee Benefits Administration Committee of Sears, Roebuck and
Co. hereby certify that the attached document is a full, true and
complete copy of the SEARS PENSION PLAN as in effect as of
January 1, 2000.
Dated this _____ day of ___________________, ____.
Secretary as
Aforesaid
(Seal)
INDEX OF DEFINED TERMS
5.1 - Accrued Benefit
8.5 - Actuarial Equivalent
8.5(a)(i)(A) - Annual PBGC Rate
2.2(c) - Allstate Group Employee
2.2(c) - Allstate Group
2.2 (c) - Allstate Distribution Rate
5.1(b) - Career Pay Benefit
5.1(b)(i) - Career Pay Base Benefit
5.1(b)(ii) - Career Pay Additional Benefit
4.3 - Annuity Starting Date
5.1(a)(iii) - Base Benefit
5.1(a)(iii) - Additional Benefit
8.8 - Beneficiary
2.8 - Benefits Executive
5.1(b) - Career Pay Benefit
5.1(b)(i) - Career Pay Base Benefit
5.1(b)(ii) - Career Pay Additional Benefit
8.8 - Coannuitant
1.1 - Code
1.1 - Company
5.2(c) & 5.2(d)- Compensation
2.1 - Computation Period
2.2 - Continuous Service
Supp. E - Contributory Group
5.2(a) - Covered Compensation
2.3 - Credited Service
10.3(A) - Death Beneficiary
6.1 - Deferred Vested Benefit
4.2 - Early Retirement Date
1.1 - Effective Date
3.1 - Eligible Employee
8.15 - Eligible Distribution
8.15 - Eligible Retirement Plan
1.3 - Employer
1.3 - Employers
1.4 - ERISA
5.2(b) - Final Average Monthly Compensation
5.1(A) - Final Average Pay Benefit
2.1 - Full-Time Employee
2.5 - Hour of Service
5.1(a)(i) - Immediate Credit Benefit
1.4 - Investment Committee
12.7(e) - Investment Manager
3.3 - Leased Employee
8.3(e) - Lump Sum
2.6 - Maternity or Paternity Absence
13.3 - Merged Plan
1.4 - Named Fiduciaries
5.1(b) - Minimum Benefit
4.1 - Normal Retirement Age
4.1 - Normal Retirement Date
2.6 - One Year Break in Service
2.1 - Part-Time, Seasonal or Temporary Employee
3.1 - Participant
1.1 - Plan
1.5 - Plan Year
1.1 - Predecessor Plan
10.2 - Qualified Preretirement Survivor Annuity
8.1, 10.2 - Qualified Spouse
1.3 - Related Company
4.4 - Retirement Income
4.4 - Retirement Date
Section 7 - Section 415 Affiliate
8.1(a) - Single Life Annuity
8.8 - Spousal Consent
1.12 - Supplements
8.1(b) - Surviving Spouse Annuity
1.4 - Trust
1.4 - Trust Agreement
1.4 - Trust Fund
1.4 - Trustee
2.1 - Year of Eligibility Service
2.3 - Year of Vesting Service
Sears Pension Plan
(As Amended and Restated
Effective as of January 1, 2000)
SECTION 1.
General
1.1. History, Purpose and Effective Date. The Sears
Pension Plan (the "Plan") is maintained by Sears, Roebuck and
Co., a New York corporation (the "Company"), to enable it to
provide retirement and other benefits for its eligible employees
and the eligible employees of Related Companies adopting the
Plan. The Plan has been amended from time to time since its
adoption and the following provisions constitute an amendment,
restatement and continuation of the Plan (whether this version or
an earlier restatement) as in effect immediately prior to January
1, 2000, the "Effective Date" of the Plan as set forth herein.
To the extent that any provision of the Plan as set forth herein
specifically provides for an effective date other than January 1,
2000, such provision will constitute an amendment of the Plan as
in effect on such date. The Plan is intended to be qualified
under section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
1.2. Benefits Under the Plan as in Effect Prior to
Effective Date. Except as otherwise specifically provided
herein, the provisions of the Plan as set forth in this
restatement will apply only to individuals who are employed by
the Employers and Related Companies on or after the Effective
Date. If an employee's employment with the Employers and all
Related Companies last terminated prior to the Effective Date,
his right to benefits, if any, and the amount thereof, will be
determined in accordance with the provisions of the Plan as in
effect on the date of such termination of employment. If a
Participant's spouse or other beneficiary was eligible for a
benefit under the Plan as in effect prior to the Effective Date,
he or she will continue to be eligible for a benefit determined
under the Plan as then in effect. If an individual is not, at
any time on or after the Effective Date, an Eligible Employee,
the amount of his benefits under the Plan will be determined in
accordance with the provisions of the Plan as in effect on the
date he last was an Eligible Employee.
1.3. Related Companies and Employers. The term "Related
Company" means any corporation or trade or business during any
period during which it is, along with the Company, a member of a
controlled group of corporations or a controlled group of trades
or businesses, as described in sections 414(b) and 414(c),
respectively, of the Code. The Company and each Related Company
which, with the consent of the Company, adopts the Plan, are
referred to below collectively as the "Employers" and
individually as an "Employer".
1.4. Plan Administration, Trust and Fiduciary
Responsibility. The authority to control and manage the
operations and administration of the Plan is vested in the
Company. The Company will be the administrator of the Plan (the
"Plan Administrator") and will have the
rights, duties and obligations of an "administrator" as that term
is defined in section 3(16)(A) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and of a "plan
administrator" as that term is defined in section 414(g) of the
Code. The Company also has the authority to consent to the
adoption of the Plan by other employers and to amend and
terminate the Plan. The authority and responsibility to
establish a funding policy, to appoint or select trustees,
custodians, investment managers and insurance companies to manage
the Plan's assets and the allocation of assets to each of them,
to determine the plan asset mixes, to establish investment
guidelines, proxy voting policies and securities trading
procedures, and to monitor the performance of the fiduciaries
responsible for investment of the Plan's assets is vested in a
committee appointed by the Company (the "Investment Committee").
The Company and the Investment Committee will be "named
fiduciaries", as described in section 402 of ERISA, with respect
to their respective authority under the Plan. The benefits to be
provided under the Plan will be funded pursuant to a trust (the
"Trust") which forms part of the Plan. The term "Trustee", as
used herein, means the individual or corporate trustee which, at
the time of reference, is acting under the terms of a trust
agreement (the "Trust Agreement") entered into for purposes of
holding the assets of the Plan, the terms of which Trust
Agreement will be incorporated herein by reference. The fund for
payment under the Plan is herein called the "Trust Fund". The
assets in the Trust Fund held by the Trustee may be commingled
for investment purposes with the funds of other employee pension
benefit plans qualified under section 401(a) of the Code.
1.5. Plan Year. The term "Plan Year" means the twelve-
consecutive-month period beginning on each January 1 and ending
on the following December 31.
1.6. Applicable Laws. The Plan will be construed and
administered in accordance with the internal laws of the State of
Illinois to the extent that such laws are not preempted by the
laws of the United States of America.
1.7. Gender and Number. Where the context permits, words
in any gender will include any other gender, words in the
singular will include the plural and the plural will include the
singular.
1.8. Notices. Any notice or document required to be filed
with the Plan Administrator under the Plan will be properly filed
if delivered or mailed postage prepaid, to the Plan Administrator
in care of the Company at its principal executive offices. Any
notice required under the Plan may be waived by the person
entitled to notice.
1.9. Form and Time of Elections. Unless otherwise
specified herein, each election permitted to be made by any
Participant or other person entitled to benefits under the Plan,
and any permitted modification or revocation thereof, will be in
writing filed with the Plan Administrator at such times and in
such form as the Plan Administrator will require.
1.10. Evidence. Evidence required of anyone under the Plan
may be by certificate, affidavit, document or other information
which the person acting on it considers pertinent and reliable,
and signed, made or presented by the proper party or parties.
1.11. Action by Employers. Except as otherwise
specifically provided herein, any action required or permitted to
be taken by any Employer (including the Company) which is a
corporation, will be by resolution of its Board of Directors, by
a duly authorized committee appointed by the Board of Directors,
or by a duly authorized officer of the Employer. Any action
required or permitted to be taken by any Employer which is a
partnership, will be by a general partner of such partnership or
by a duly authorized officer thereof.
1.12. Plan Supplements. The provisions of the Plan as
applied to any Employer or any group of employees of any Employer
may be modified or supplemented from time to time by the Company
by the adoption of one or more "Supplements". Each Supplement
will form a part of the Plan as of its effective date. In the
event of any inconsistency between a Supplement and the Plan
document, the terms of the Supplement will govern.
1.13. Defined Terms. Terms used frequently with the same
meaning are indicated by initial capital letters, and are defined
throughout the Plan. Appendix A contains an alphabetical listing
of such terms and the subsections in which they are defined.
SECTION 2.
Eligibility, Vesting and Benefit Service
2.1. Year of Eligibility Service.
(a) Effective on and after January 1, 2000, except as
provided in paragraph (c) below, each employee,
regardless of whether he is a full-time, part-time,
seasonal or temporary employee, who has not already
been credited with a Year of Eligibility Service
under paragraph (b) below (or who has been so
credited but who is treated as a new hire pursuant to
subsection 2.5) will have a Year of Eligibility
Service at the end of the first Computation Period
during which he completes 1,000 Hours of Service
(without having to be employed on the last day of
such Computation Period), with "Computation Period"
for purposes of this paragraph (a) meaning the
initial 12-month period beginning on the date the
employee is first credited with an Hour of Service
and each Plan Year beginning after such date. For
purposes of this paragraph (a), if an employee who
terminates employment with the Employers and Related
Companies is reemployed, the Plan Year containing his
reemployment date will constitute a Computation
Period, and if such employee is reemployed in a
Computation Period that is different than the
Computation Period in which he terminated employment,
the twelve-month period beginning with his
reemployment date will also be a Computation Period
(in addition to the Plan Years beginning after his
reemployment date).
(b) Prior to January 1, 2000, an employee was credited
with a "Year of Eligibility Service" in accordance
with the following, subject to the provisions of
subsection 2.5:
(i) A full-time employee had a Year of Eligibility
Service on the anniversary of his date of hire by
the Employers and Related Companies unless he was
absent from their service for more than 12 months;
in the case of a full-time employee who was absent
from service with the Employers and Related
Companies for more than 12 months, a Year of
Eligibility Service equaled an aggregate of 365
days of employment with the Employers and Related
Companies.
(ii) A part-time, seasonal or temporary employee
had a Year of Eligibility Service at the
conclusion of a Computation Period during which he
completed at least 1,000 Hours of Service (without
the necessity of being still employed on the last
day of such period). A "Computation Period" for
this purpose was the initial 12-consecutive-month
period commencing on the date an employee was
first credited with an Hour of Service and each
subsequent 12 month period commencing on the
anniversary of the date he was first credited with
an Hour of Service. An individual's Computation
Period remained the same, notwithstanding an
absence from employment, unless such individual
was treated as a new employee pursuant to
subsection 2.5 (describing the rule of parity).
(c) Notwithstanding the provisions of paragraph (a)
above, the following transition rules will apply to
an employee hired before January 1, 2000 who has not
completed a Year of Eligibility Service before
January 1, 2000 (and who is not treated as a new hire
under subsection 2.5):
(i) Such a full-time employee will have a Year of
Eligibility Service on the anniversary of his date
of hire by the Employers and Related Companies if
his employment is uninterrupted (or is interrupted
by an absence of less than 12 months); or, if his
employment is interrupted by an absence greater
than 12 months but not long enough to cause him to
be treated as a new hire under subsection 2.5, he
will be treated under paragraph 2.2(b) as an
individual who has changed employment status; and
(ii) Such a part-time, seasonal or temporary
employee hired before January 1, 2000 will have a
Year of Eligibility Service at the end of the
Computation Period described in subparagraph
2.1(b)(ii) which includes the Effective Date if he
is credited with at least 1,000 Hours of Service
in such
Computation Period, or, if he is not credited with
at least 1,000 Hours of Service in such
Computation Period, at the end of the first Plan
Year beginning on or after the Effective Date in
which he is credited with at least 1,000 Hours of
Service.
For purposes of this Section 2, a "full-time employee" is an
employee who is regularly scheduled to work a full work week as
determined by the rules established for his work location, and a
"part-time, seasonal or temporary employee" is an employee who is
not regularly scheduled to work a full week.
2.2. Changes in Employment Status and Application of
Different Service Crediting Rules. In the event that an
individual changes status from a full-time to a part-time,
seasonal or temporary employee or vice versa (whether in
connection with a termination of employment or otherwise), as
recognized by the Company's payroll system, the following rules
shall apply, subject to the provisions of subsection 2.5:
(a) An employee who moves from part-time, seasonal or
temporary to full-time status shall be credited with
the greater of (A) the period of elapsed-time service
that would be credited under subparagraph 2.1(b)(i)
during the Computation Period in which the transfer
occurs or (B) the service creditable under
subparagraph 2.1(b)(ii) as of the date of transfer,
in addition to any Years of Eligibility Service
already earned before the Computation Period in which
the transfer occurs; and
(b) An employee who moves from full-time to part-time,
seasonal or temporary status shall receive credit, in
the Computation Period in which the transfer occurs,
for 45 Hours of Service for each week (or part
thereof) worked in any fractional part of a year
credited under subparagraph 2.1(b)(i) immediately
prior to the transfer, and with actual Hours of
Service counted after the transfer, in addition to
any full Years of Eligibility Service earned prior to
the transfer.
For purposes of the foregoing, in connection with an interruption
of active employment, the transfer will be deemed to have
occurred on the date the employee returns to work when the change
in status occurs.
2.3. Continuous Service and Vesting Service.
(a) For an employee hired prior to the Effective Date, a
"Year of Vesting Service" is equal to a year of
Continuous Service. Except as provided in subsection
2.5, "Continuous Service" means all service for an
Employer or Related Company commencing on date of
hire (or rehire) and ending on the day a One Year
Break in Service begins, subject to the following:
(i) In the case of an employee who terminated
employment prior to January 1, 1978 and who, on
that date, was not employed by an Employer or a
Related Company, but who thereafter is employed
by an Employer or a Related Company, such
employee's Continuous Service for any period
prior to January 1, 1978 shall be determined in
accordance with the Employer's or Related
Company's personnel policy, or the predecessor
plan which applied to him, as the case may be,
in effect at the time of termination.
(ii) Continuous Service shall not include any period
or periods of part-time employment with the
Employers and Related Companies prior to January
2, 1971.
(iii) Service by a DWDC Group Employee with the
DWDC Group after the DWDC Distribution Date, and
service by an Allstate Group Employee with the
Allstate Group after the Allstate Distribution
Date, shall be credited as continuous service
under the Plan solely for purposes of
determining whether any such DWDC or Allstate
Group Employee is vested in his Accrued Benefit
under the Plan pursuant to subsection 2.8. For
purposes of the foregoing, the terms "DWDC Group
Employee", "DWDC Group" and "DWDC Distribution
Date" shall have the meanings given the same (or
comparable) terms in the Employee Benefits
Allocation Agreement of February 8, 1993 between
the Company and Dean Witter, Discover & Co., and
the terms "Allstate Group Employee", "Allstate
Group" and "Allstate Distribution Date" shall
have the meanings given the same (or comparable)
terms in the Employment and Agency-Related
Matters Allocation Agreement of May, 1993 among
the Company, Allstate Corporation and Allstate
Insurance Company.
(iv) In the case of an individual for whom periods of
service must be aggregated (because of an
absence of more than 12 months), a year of
Continuous Service will be determined on the
basis of 365 days of employment.
(b) For an employee hired after the Effective Date (or
rehired after the Effective Date and treated as a new
employee under subsection 2.5), a Year of Vesting
Service is a Plan Year in which the employee is
credited with at least 1,000 Hours of Service.
2.4. Credited Service. Subject to subsection 2.5 and
subsection 9.5, for purposes of paragraph 5.1(a)(i)(C) a
Participant shall have a number of complete and partial years of
"Credited Service" equal to the portion of his years of
Continuous Service earned after December 31, 1988 and before
January 1, 2000 as an Eligible Employee after completion of his
Year of Eligibility Service. (Credited Service for periods prior
to January 1, 1989 is determined under Supplement B to the Plan.)
Generally, periods of Credited Service shall be aggregated in
the case of a Participant whose service as an Eligible Employee
is interrupted, except that Credited Service will not be
aggregated in the case of a Participant who terminates employment
with the Employers and Related Companies, receives a Lump Sum
distribution and subsequently is reemployed as an Eligible
Employee, unless such Participant is entitled to, and actually
does, repay such Lump Sum in accordance with subsection 9.5. For
purposes of the foregoing, a Participant who receives a Lump Sum
payment on account of termination of employment who is reemployed
within 12 months and who would otherwise be credited with
Continuous Service for the period of his absence shall not
receive Credited Service for the same period unless the Credited
Service earned prior to his termination of employment is restored
on account of his repayment of such Lump Sum in accordance with
subsection 9.5. Any Participant who had a Year of Eligibility
Service prior to January 1, 1989 but who was not credited with an
Accrued Benefit under the Plan as of December 31, 1988 under the
terms of the Plan as in effect on such date, will have Credited
Service from the day following completion of his Year of
Eligibility Service.
2.5. Treatment as New Employee After Consecutive One Year
Breaks in Service. If an employee or Participant terminates
employment with the Employers and Related Companies before
earning five full years of Continuous Service (if he was hired
before January 1, 2000) or five Years of Vesting Service (if he
was hired or rehired on or after January 1, 2000), or otherwise
becoming vested in an Accrued Benefit and the number of his
consecutive One Year Breaks in Service equals or exceeds seven
(six in the case of an individual whose first 12 months of a
Maternity or Paternity Absence are disregarded under subsection
2.7), then his Year of Eligibility Service and any Continuous and
Credited Service earned prior to such consecutive One Year Breaks
in Service of seven or more years shall be erased and, if he is
later employed or reemployed by an Employer or a Related Company,
he shall be considered a new employee for all purposes under the
Plan.
2.6. Hour of Service. The term "Hour of Service" means,
with respect to any employee, each hour for which he is paid or
entitled to payment for the performance of duties for an Employer
or a Related Company or for which back pay, irrespective of
mitigation of damages, has been awarded to the employee or agreed
to by an Employer or a Related Company, subject to the following:
(a) An employee or Participant shall be credited with the
number of regularly scheduled working hours included
in the time period on the basis of which payment to
the Employee is calculated (or, if the number of such
hours is not determinable, 8 Hours of Service per day
(to a maximum of 40 Hours of Service per week)) for
any period during which he performs no duties for an
Employer or a Related Company (irrespective of
whether the employment relationship has terminated)
by reason of a vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military
duty or leave of absence but for which he is directly
or indirectly paid or entitled to payment by an
Employer or a Related
Company; provided, however, that an employee or
Participant shall not be credited with more than 501
Hours of Service under this paragraph (a) for any
single continuous period during which he performs no
duties for an Employer or a Related Company. Payments
considered for purposes of the foregoing sentence
shall include payments unrelated to the length of the
period during which no duties are performed but shall
not include payments made solely as reimbursement for
medically related expenses or solely for the purpose
of complying with applicable workmen's compensation,
unemployment compensation or disability insurance
laws.
(b) For any employee for whom hourly records are not
maintained for any period, Hours of Service shall be
determined in accordance with equivalencies
prescribed under applicable regulations published by
the Department of Labor in accordance with rules
established by the Plan Administrator.
(c) Hours of Service shall be calculated and credited
pursuant to Department of Labor Regulation section
2530.200b-2, which is incorporated herein by
reference.
2.7. One Year Break in Service. The term "One Year Break
in Service" means the 12-consecutive-month period commencing on
the day after the day an employee's employment with the Employers
and Related Companies is terminated for any reason, unless such
absence constitutes a Maternity or Paternity Absence. An absence
of less than 12 months following such termination of employment
shall be disregarded in determining whether a One Year Break in
Service has occurred. An individual who is absent because of
service in the U.S. Armed Forces will begin a One Year Break in
Service on the 91st day following his discharge from military
service, if he does not return to work within 90 days of such
discharge. With respect to an individual whose absence from
employment constitutes a Maternity or Paternity Absence, the term
"One Year Break in Service" means the 12-consecutive-month period
commencing on the day after the second anniversary of the first
day of such absence if he is not paid or entitled to payment for
the performance of duties for an Employer or a Related Company
during that 12-consecutive-month period. The period between the
first and second anniversaries of the first day of a Maternity or
Paternity Absence shall not constitute a period of Continuous
Service. The term "Maternity or Paternity Absence" means an
employee's or Participant's absence from work because of the
pregnancy of such individual, the birth of a child of such
individual, the placement of a child with such individual in
connection with the adoption of a child by such individual, or
for purposes of caring for the child by such individual
immediately following such birth or placement. The Plan
Administrator may require the employee or Participant to furnish
such information as it considers necessary to establish that such
individual's absence was a Maternity or Paternity Absence.
2.8. Vested Interest in Accrued Benefit. The interest of
a Participant in his Accrued Benefit under the Plan will become
fully vested and nonforfeitable in accordance with the following
schedule:
Years of Vesting Service Vested
Percentage
Less than 5 0%
5 or more 100%
Notwithstanding the foregoing provisions of this subsection 2.8,
a Participant will have a fully vested, nonforfeitable interest
in his Accrued Benefit under the Plan upon his attaining Normal
Retirement Age or, if such individual was a Participant before
January 1, 1989, age 63, while employed by an Employer or Related
Company. In addition, in the event of the Plan's termination (in
accordance with subsection 13.2) or partial termination (as
determined under applicable law and regulations), each affected
Participant will be fully vested in his Accrued Benefit under the
Plan, but only to the extent such benefit is then funded (as
determined under applicable regulations).
2.9. Pre-Acquisition Service. By written resolution of
the most senior executive of the Company with primary
responsibility for employee benefit matters, regardless of title
(the "Benefits Executive"), or by the terms of a stock or asset
purchase agreement, merger agreement or other transaction
document executed by the Company, the Company may recognize pre-
acquisition service with, or pre-acquisition eligibility under a
plan similar to the Plan of, a company which becomes a Related
Company or the assets of which are acquired by a Related Company,
for purposes of determining eligibility under the Plan. Such
pre-acquisition service and/or eligibility shall be calculated in
such manner as the Benefits Executive in his sole discretion
shall determine.
SECTION 3.
Participation in Plan
3.1. Eligibility for Participation. Subject to the terms
and conditions of the Plan, each Eligible Employee who was a
Participant in the Plan immediately prior to the Effective Date
will continue as such. Each other Eligible Employee will become
a "Participant" in the Plan on the later of (i) the date he
attains age 21 or (ii) the first day following the date on which
he has completed one Year of Eligibility Service, provided he is
still an Eligible Employee on such date. Each employee of an
Employer is an "Eligible Employee" for any period in which he
satisfies all of the following requirements:
(a) he belongs to an identifiable group of employees of
an Employer or business unit of an Employer to which
participation in the Plan has been extended by the
Company,
(b) he is not a member of a collective bargaining unit,
unless the Plan has been extended to the collective
bargaining unit under a currently effective
collective bargaining agreement,
(c) he is not a person employed outside the United States
who is neither a citizen nor a resident of the United
States, and
(d) he does not perform services for an Employer under a
contract, agreement or arrangement that purports to
treat him as either an independent contractor or the
employee of a leasing organization agency or other
similar entity, even if he is subsequently determined
(by judicial action or otherwise) to have instead
been a common law employee of such Employer.
Except as provided in subsection 2.4, if a Participant ceases to
be an Eligible Employee for any reason, including termination of
employment, and he again becomes an Eligible Employee, he will
recommence his participation in the Plan immediately upon again
becoming an Eligible Employee. In the event an employee of an
Employer or a Related Company who was not an Eligible Employee
becomes an Eligible Employee, such employee will immediately
commence participation in the Plan if he has completed a Year of
Eligibility Service and is at least age 21. If an employee whose
eligibility is determined under paragraph 2.1(a) terminates
employment before the anniversary of his date of hire but returns
to employment with the Employers and Related Companies after such
anniversary date and within 12 months, such individual shall
become a Participant on the first day coincident with or
following such reemployment on which he is again an Eligible
Employee.
3.2. Plan Not Contract of Employment. The Plan does not
constitute a contract of employment, and participation in the
Plan will not give any employee or Participant the right to be
retained in the employ of any Employer nor any right or claim to
any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan.
3.3. Leased Employees. If a person satisfies the
requirements of section 414(n) of the Code and applicable
Treasury regulations for treatment as a "Leased Employee", such
Leased Employee will not be eligible to participate in this Plan,
or in any other plan maintained by an Employer which is qualified
under section 401(a) of the Code, but, to the extent required by
section 414(n) of the Code and applicable Treasury regulations,
such person will be treated as if the services performed by him
in such capacity were performed by him as an employee of a
Related Company which has not adopted the Plan; provided,
however, that no such service will be credited for any period
during which not more than 20% of the non-highly compensated
workforce of the Employers and the Related Companies consists of
Leased Employees and the Leased Employee is a Participant in a
money purchase pension plan maintained by the leasing
organization which (i) provides for a nonintegrated employer
contribution of at least 10 percent of compensation, (ii)
provides for full and immediate vesting, and (iii) covers all
employees of the leasing organization (beginning with the date
they become employees), other than those employees excluded under
section 414(n)(5) of the Code. For purposes of this subsection
3.3, a highly compensated employee will mean an individual
described in section 414(q) of the Code and the regulations
thereunder.
SECTION 4.
Retirement Dates
4.1. Normal Retirement Date. The "Normal Retirement Date"
for a Participant is the date on which he terminates employment
with the Employers and Related Companies on or after his
attainment of Normal Retirement Age. A Participant's "Normal
Retirement Age" is age 65. The Retirement Income of a
Participant who retires on a Normal Retirement Date will be his
Accrued Benefit.
4.2. Early Retirement Date. The "Early Retirement Date"
for a Participant is the date on which he terminates employment
with the Employers and Related Companies before attaining Normal
Retirement Age and after his attainment of age 55 with at least
ten (10) years of Continuous Service or, in the case of an
individual who was a Participant prior to January 1, 1989, after
attainment of age 63. The Retirement Income of a Participant who
retires on an Early Retirement Date will be his Accrued Benefit
and will commence as of the first day of the month following his
65th birthday, unless the Participant elects to have his
Retirement Income (reduced in accordance with subsection 5.4)
commence as of the first day of any calendar month following his
Early Retirement Date; provided, however, that payment of such
Retirement Income must commence no later than the first day of
the month following his 65th birthday.
4.3. Retirement Date, Retirement Income and Annuity
Starting Date. The "Retirement Date" for a Participant is one of
the Retirement Dates described in the foregoing subsections of
this Section 4 on which he actually terminates his employment
with the Employers and Related Companies, regardless of when
benefit payments to such Participant commence. The "Retirement
Income" of a Participant is the benefit payable to a Participant
on or after his Normal or Early Retirement Date determined in
accordance with Section 5 and adjusted, as appropriate, for an
optional form of payment elected under Section 8. Retirement
Income shall be paid to a Participant as of the first day of the
month next following his Retirement Date, or, if a delay in
payment is permitted by the terms of the Plan, the first day of
the month selected for the commencement of benefits by the
Participant. The Participant's "Annuity Starting Date" shall be
the first day of the first period for which payment of a
Retirement Income or Deferred Vested Benefit (described in
Section 6) is made in any form.
SECTION 5.
Amount of Participant's Accrued Benefit and Retirement Income
5.1. Accrued Benefit. Subject to the other terms and
conditions of the Plan, a Participant's "Accrued Benefit" as of
any date is a monthly amount payable to the Participant for his
life commencing on the first day of the month following his
attainment of age 65 or, if later, his termination of employment,
in an amount equal to the sum of his monthly Final Average Pay
Benefit and his monthly Career Pay Benefit, each as defined
below:
(a) A Participant's monthly "Final Average Pay Benefit"
is the benefit accrued by the Participant as of
December 31, 1999, as though he terminated employment
on the earlier of December 31, 1999 or his actual
termination date, calculated as a monthly amount
equal to the greater of (i) or (ii) below:
(i) the sum of
(A) The Participant's monthly "Immediate Credit
Benefit", equal to the portion of the monthly
benefit accrued by the Participant under the
Plan as of December 31, 1988 determined under
paragraph (a) of subsection B-14 of
Supplement B.
(B) The Participant's monthly "Pre-1989 Adjusted
Benefit", equal to the portion of the monthly
benefit accrued by the Participant under the
Plan as of December 31, 1988 determined under
paragraph (b) of subsection B-14 of
Supplement B, subject to the following:
(I) the amount determined under paragraph
(b) of subsection B-14 of Supplement B
will be adjusted, if necessary, in order
to be no less than fifty percent (50%)
of the benefit that would have been
accrued by the Participant as of
December 31, 1988 if there had been no
offset for the Estimated Projected
Primary Social Security Benefit (as
defined in subsection B-12 of Supplement
B); and
(II) the amount initially determined under
the preceding provisions of this
paragraph (ii) will be adjusted as of
the Participant's Annuity Starting Date
(or, if earlier, December 31, 1999) by
multiplying such amount by a fraction,
which shall not be less than one (1),
the numerator of which is the
Participant's Final Average Monthly
Compensation as determined under
paragraph 5.2(b) subject to applicable
limitations under section 401(a)(17) of
the Code, and the denominator of which
is the Participant's final average
monthly compensation as actually
determined under subsection B-11 of
Supplement B as of December 31, 1988.
(C) The Participant's monthly "Post-1988
Benefit", equal to the sum of
(I) a "base benefit" determined by
multiplying .85 percent (.85%) of the
Participant's Final Average Monthly
Compensation by his period of Credited
Service, and
(II) an "additional benefit" determined by
multiplying .65 percent (.65%) of his
Final Average Monthly Compensation in
excess of his monthly Covered
Compensation by the lesser of
(a) the excess, if any, of 35 years
over the sum of his period of
credited past service (as defined
in subsection B-7 of Supplement B)
and his period of credited future
service (as defined in subsection
B-8 of Supplement B but excluding
any Credited Service taken into
account under subsection 2.4 for
any period prior to January 1,
1989), or
(b) his period of Credited Service;
provided that with respect to any individual who on
December 31, 1988 was both employed by an Employer
and a Participant, 1 percent (1%) will be substituted
for .85 percent (.85%) as the base benefit factor in
subparagraph (I) of this paragraph (C) for each year
of his Credited Service not exceeding the lesser of
11 years or the number of his years of credited
future service (as defined in subsection B-8 of
Supplement B), with all such years calculated to the
third decimal point.
(ii) a "Minimum Benefit" equal to the product of 7
times his period of Credited Service under
subsection 2.4 earned beginning on or after
January 1, 1994 and on or before December 31,
1999.
(b) A Participant's monthly "Career Pay Benefit" is the
aggregate of the following yearly accruals for each
Plan Year during which the Participant is credited
with at least 1,000 Hours of Service commencing on
and after January 1, 2000, divided by 12:
(i) a "Career Pay Base Benefit", equal to the
Participant's Compensation received as a
Participant for the Plan Year (or any portion
thereof) multiplied by .85 percent (.85%), plus
(ii) a "Career Pay Additional Benefit", equal to the
Participant's Compensation received as a
Participant for the Plan Year (or any portion
thereof) in excess of his Covered Compensation
for that year multiplied by .65 percent (.65%);
provided that no accruals shall be earned under
this subparagraph (ii) for more than 35 years,
reduced by the number of complete and partial
years of Credited Service taken into account
under this subsection 5.1 for periods prior to
January 1, 2000; and provided further that the
accrual under this subparagraph for the 35th
year shall be prorated, if necessary, to reflect
a partial year of Credited Service taken into
account under subparagraph (a)(i)(C)(II) of this
subsection 5.1.
For purposes of the foregoing, the 1,000 Hours of Service
requirement for a Career Pay Benefit accrual will not apply for
the Plan Year in which the Participant terminates his employment
with the Employers and Related Companies (although such
Participant must still be credited with at least 1,000 Hours of
Service in the Plan Year in which he terminates employment if
that year is to constitute a year of Vesting Service), provided,
however, that if the Participant is reemployed in the same Plan
Year, he will not accrue an additional benefit for that Plan Year
(based upon Compensation earned after his reemployment date)
unless he satisfies the 1,000 hour requirement for such Plan
Year.
5.2. Covered Compensation, Final Average Monthly
Compensation, and Compensation. Subject to the provisions of
subsection 5.3, the following definitions shall be used for
purposes of subsection 5.1:
(a) The term "Covered Compensation" means the average of
the Social Security taxable wage bases for the 35
year period ending with and including the calendar
year in which the Participant attains (or will
attain) Social Security retirement age. In
determining a Participant's Covered Compensation for
a calendar year, the Social Security taxable wage
base for the current calendar year and any subsequent
calendar year shall be assumed to be the same as the
Social Security taxable wage base as in effect as of
the beginning of the calendar year for which the
determination is being made. A Participant's Covered
Compensation for a calendar year ending after the 35
year period described above shall be the
Participant's Covered Compensation for the calendar
year during which the Participant attained his Social
Security retirement age. A Participant's Covered
Compensation for a calendar year prior to the 35 year
period described above shall be the Social Security
taxable wage base in effect as of the beginning of
the calendar year. Covered Compensation shall be
determined using rounding procedures similar to those
set forth in Table II of the 1989 Covered
Compensation Table attached to Internal Revenue
Service Notice 89-70. A Participant's monthly
Covered Compensation means his Covered Compensation,
as determined under the foregoing provisions of this
paragraph, divided by twelve (12).
(b) A Participant's "Final Average Monthly Compensation"
means the highest result obtained by dividing his
Compensation during a Considered Period by the number
of months in such considered period. A "Considered
Period" means any period of five successive complete
calendar years of a Participant's period of
Continuous Service as an Eligible Employee which
falls within the last ten successive complete
calendar years of his period of Continuous Service as
an Eligible Employee ending with his most recent
termination date; provided, however, that a
Considered Period shall not include any such complete
calendar year of Continuous Service during which he
was absent for more than 120 days because of an
approved leave of absence due to illness, layoff or
military service, nor any such complete calendar year
that occurred after the calendar year in which he
attains age 65 but before January 1, 1988, unless the
Participant completes an Hour of Service on or after
January 1, 1988. If a Participant's number of total
complete calendar years of Continuous Service prior
to his last termination of employment with the
Employers and Related Companies does not equal or
exceed five years, then, subject to the foregoing
provisions, such Participant's Considered Period
shall consist of all such complete calendar years.
(c) For calendar years prior to 1998, "Compensation"
means total cash compensation paid to an employee for
personal services rendered to an Employer, including
salary, wages, pre-tax employee deposits under any
qualified profit sharing or stock bonus plan
maintained by an Employer, Employer contributions on
behalf of the employee to a cafeteria plan of an
Employer pursuant to section 125 of the Code,
bonuses, incentive payments, commissions, overwrites,
vacation pay, severance or salary continuation
allowances (except to the extent such amounts are
paid in a lump sum), Employer payments for temporary
military service and short-term illness allowances,
all determined prior to any deferrals under the
Deferred Compensation Plan, but excluding any awards
under any long-term executive compensation plan,
service allowances, retirement or profit sharing
benefits, long-term disability benefit payments,
prizes or awards, retainers, living expense
allowances, moving allowances, payments or
reimbursements in connection with moving expenses,
special geographic differentials, medical expense
reimbursements, lump sum payments for vacations
earned but not taken, overseas compensation
adjustments (as determined under the Employer's
personnel policy), dividends paid with respect to
shares of restricted stock, cash payments received
pursuant to stock options and all other special
compensation of any kind. The compensation otherwise
determined with respect to a Participant whose
employment with the Employers last terminated under
conditions entitling him to a benefit under the Plan
will be adjusted by the Plan Administrator to
mitigate the effect of receipt of reduced
compensation (or no compensation) due to a period of
employment with a Related Company prior to his last
termination of employment with the Employers if the
Plan Administrator determines that such Participant's
compensation, as otherwise determined in accordance
with this paragraph (c), does not fairly reflect such
Participant's earnings history. If a Participant's
compensation is adjusted by operation of the
preceding sentence, then with respect to such
Participant, the term "Compensation" shall mean his
compensation as so adjusted. Notwithstanding the
foregoing, the term Compensation shall not include
amounts paid after the date shown as the
Participant's termination date on his Employer's
payroll records.
(d) For calendar years after 1997, "Compensation" means
all regular remuneration paid to an Eligible Employee
by the Employers before any pre-tax contributions are
made to any cash or deferred arrangement (under
section 401(k) of the Code) or any cafeteria plan
(under section 125 of the Code) sponsored by the
Employers or any deferrals are made under the
Deferred Compensation Plan, and shall not include
irregular forms of remuneration such as payments from
any nonqualified deferred compensation plan, income
from the exercise of stock options or the lapsing of
a restriction on Company stock, "WOW" bonuses,
finder's fees, vacation pay, severance or salary
continuation allowances paid as a lump sum, state
disability income, awards in the form of cash,
merchandise or trips and the related gross-up,
tuition reimbursements, moving allowances and the
related gross-up, signing bonuses or imputed income.
Notwithstanding the foregoing, the term Compensation
shall not include amounts paid after the date shown
as the Participant's termination date on his
Employer's payroll records.
5.3. Special Limitation on Compensation Taken Into Account
For Any Plan Year. Notwithstanding any other provision of the
Plan to the contrary, the Accrued Benefit of each Participant
will be determined without regard to any Compensation for any
Plan Year that exceeds the maximum amount permitted for such year
in accordance with section 401(a)(17) of the Code and applicable
regulations thereunder. In applying the foregoing limit, the
"fresh start with extended wearaway" method of benefit
calculation permitted under applicable Treasury Regulations shall
be utilized as of January 1, 1994, but only with respect to
Participants affected by section 401(a)(17). Accordingly, any
such affected Participant shall be entitled to an Accrued Benefit
that is the greater of the benefit determined under subsection
5.1 with the applicable section 401(a)(17) cap applied to all
relevant years, or the sum of the Participant's accrued benefit
as of December 31, 1993 using the 401(a)(17) cap for each of the
high five successive years prior to 1993 used in determining
Final Average Monthly Compensation, plus any additional benefits
accrued under subsection 5.1, applying the new section 401(a)(17)
cap (as adjusted for cost-of-living increases) for the period
commencing on January 1, 1994.
5.4. Early Retirement Reductions for Commencement Prior to
Normal Retirement Age. For any Participant who retires on an
Early Retirement Date and whose Annuity Starting Date precedes
his Normal Retirement Date, his Retirement Income shall be equal
to his Accrued Benefit reduced in accordance with the following
provisions:
(a) Age 63 With Less Than Ten Years of Continuous
Service. If an employee who was a Participant prior
to January 1, 1989 terminates employment with the
Employers and Related Companies with less than 10
years of Continuous Service and after attainment of
age 63 but before attainment of age 65, he will be
eligible for a Retirement Income equal to the sum of:
(i) his Immediate Credit Benefit under subparagraph
5.1(a)(i);
(ii) his Pre-1989 Adjusted Benefit under
subparagraph 5.1(a)(ii);
(iii) his Base Benefit under subparagraph 5.1(a)(iii)
(A) and his Career Pay Base Benefit under
subparagraph (b)(i), each reduced to its
Actuarial Equivalent; and
(iv) his Additional Benefit under subparagraph 5.1
(a)(iii)(B) and his Career Pay Additional
Benefit under subparagraph 5.1(b)(ii), each
reduced to its Actuarial Equivalent.
(b) Age 55 With Ten Years of Continuous Service. If a
Participant who is not covered by paragraph (a) above
terminates his employment with all of the Employers
and Related Companies for a reason other than his
death, and after he has both attained age 55 and
completed 10 or more years of Continuous Service, but
before attainment of age 65, he will be eligible for
a Retirement Income equal to the sum of:
(i) his Immediate Credit Benefit under subparagraph
5.1(a)(i), reduced by .4167% per month for each
full month that his Annuity Starting Date
precedes the first day of the month next
following the date he will attain age 63;
(ii) his Pre-1989 Adjusted Benefit under
subparagraph 5.1(a)(ii), reduced by .4167% per
month for each full month that his Annuity
Starting Date precedes the first day of the
month next following the date he will attain
age 63;
(iii) his Base Benefit under subparagraph 5.1(a)(iii)
(A) and his Career Pay Base Benefit under
subparagraph 5.2(b)(i), each reduced by .4167%
per month for each full month that his Annuity
Starting Date precedes the first day of the
month next following the date he will attain
age 65 (age 63 in the case of a Participant
who, while employed by the Employers, both
attains at least age 55 and has at least 20
years of Continuous Service on or before
December 31, 1999); and
(iv) his Additional Benefit under subparagraph
5.1(a) (iii)(B) and his Career Pay Additional
Benefit under subparagraph 5.1(b)(ii), each
reduced by .6667% for each full month that his
Annuity Starting Date precedes the first day of
the month next following the date he will
attain age 65, including the month next
following the date he will attain age 62, and
by .3333% per month for each full month that
his Annuity Starting Date precedes the first
day of the month next following the date he
will attain age 62.
A Participant to whom the Minimum Benefit under
subsection 5.1 is applicable shall be eligible for a
Retirement Income equal to such Minimum Benefit
reduced in the same manner as the base benefits under
subparagraph (b)(iii) above.
(c) Participants Hired On or After January 1, 2000. In
the case of a Participant who is hired (or rehired as
a new employee pursuant to subsection 2.5) on or
after January 1, 2000, 10 or more Years of Vesting
Service shall be substituted for 10 years of
Continuous Service for purposes of this subsection
5.4.
5.5. Non-Duplication of Benefits. Except as provided in
an applicable Supplement, the benefits payable to or on behalf of
any Participant under this Plan shall be reduced by the amount of
any benefits payable to or on behalf of such Participant under
any other defined benefit plan maintained by an Employer or a
Related Company to the extent that such benefits under such other
plan are based upon periods of service with the Employers which
constitute Credited Service under this Plan.
5.6. Protection of Accrued Benefit. Notwithstanding the
preceding provisions of this Section 5 or of Section 6, no
Participant shall have a Retirement Income or Deferred Vested
Income that is less than his accrued benefit under the Plan as of
December 31, 1988, adjusted by any applicable reduction factors
for commencement prior to age 65, determined in accordance with
the provisions of Supplement B.
SECTION 6.
Deferred Vested Benefit
6.1. Eligibility. If a Participant's employment with the
Employers and Related Companies is terminated for any reason
(other than his death) prior to the date on which he would first
be eligible to retire on a Normal or Early Retirement Date and
after he has become vested in his benefits under the Plan, he
will be entitled to receive a monthly "Deferred Vested Benefit"
in an amount determined under subsection 6.2. Subject to
subsection 8.11, a Participant who is entitled to a Deferred
Vested Benefit and who terminates employment with the Employers
and Related Companies may elect, by written application to the
Plan Administrator, to have his Deferred Vested Benefit commence
as of the first day of any month after the date he attains age
55; provided, however, that payment of such Participant's
Deferred Vested Benefit must commence in accordance with Section
8 as of the date no later than the first day of the month
following his 65th birthday. Any such election must be made in
writing in advance of the date the Participant intends to be his
Annuity Starting Date.
6.2. Amount of Deferred Vested Benefit. A Participant who
waits to receive his Deferred Vested Benefit until the first day
of the month following his 65th birthday will receive his Accrued
Benefit determined as of his termination of employment. A
Participant who elects to commence payment of his Deferred Vested
Benefit as of the first day of any month commencing on or before
the day on which he attains age 65 will receive a benefit that is
equal to his Accrued Benefit reduced using an interest rate of 8%
per annum, compounded annually, and the 1984 unisex pension table
to reflect commencement prior to the first day of the month
following age 65.
SECTION 7.
General Limitations on Benefits
7.1. Section 415. Notwithstanding any other provision of
this Plan, a Participant's benefit under the Plan will not exceed
the limitations specified in section 415 of the Code, determined
once as of his Annuity Starting Date. If the Participant
participates in any other defined benefit plan maintained by the
Employers or any Section 415 Affiliate (as defined below) and if
the Participant's total benefits under this Plan and such other
defined benefit plan would exceed the limits of section 415, the
Participant's benefit under this Plan will be reduced to the
extent necessary to satisfy section 415. For Annuity Starting
Dates commencing before January 1, 2000, if a Participant also
participates in any defined contribution plan maintained by the
Employers or any Section 415 Affiliate, and if the Participant's
combined interest in this Plan
and such defined contribution plan would exceed the limits of
section 415(e) of the Code, the benefits under this plan will be
reduced as necessary to satisfy section 415(e). For purposes of
this section, the term "Section 415 Affiliate" means any entity
that would be a Related Company if the ownership test of sections
414(b) and (c) of the Code was "more than 50%" rather than "at
least 80%".
SECTION 8.
Payment of Retirement Income
and Deferred Vested Benefit
8.1. Normal Form of Payment. Except as otherwise
specifically provided in this Section 8, the Retirement Income or
the Deferred Vested Benefit to which a Participant is entitled
under Section 5 or 6, respectively, will be paid to him in the
following manner:
(a) Unmarried Participants. The Retirement Income or
Deferred Vested Benefit payable to a Participant who
does not have a Qualified Spouse on his Annuity
Starting Date will be paid to him in the form of
equal monthly payments terminating with the payment
for the month in which he dies (a "Single Life
Annuity") that is his Accrued Benefit under
subsection 5.l, reduced (as appropriate) in
accordance with subsection 5.4 or subsection 6.2 for
early commencement.
(b) Married Participants. The Retirement Income or
Deferred Vested Benefit payable to a Participant who
has a Qualified Spouse on his Annuity Starting Date
will be paid in the form of a "Surviving Spouse
Annuity" which is the Actuarial Equivalent of the
normal form of Retirement Income which would be
payable under Section 8.1(a) in the absence of a
Qualified Spouse. Under this form reduced equal
monthly payments will be made to the retired
Participant during his lifetime and 50% of such
reduced payments will be made upon his death to his
Qualified Spouse for her life.
For purposes of this Section 8, the term "Qualified Spouse" means
the person to whom the Participant is legally married on his
Annuity Starting Date, except as otherwise provided in a
qualified domestic relations order within the meaning of section
414(p) of the Code.
8.2. Waiver of Normal Form of Payment. Notwithstanding
the provisions of subsection 8.1, a Participant entitled to a
Retirement Income or Deferred Vested Benefit may elect to waive
payment in accordance with the normal form set forth in
subsection 8.1 and to have his Retirement Income or Deferred
Vested Benefit, as applicable, paid to him in one of the optional
forms available to him pursuant to subsection 8.3; provided,
however, that a married Participant's waiver will be effective
with respect to a form of payment that would provide less to the
Qualified Spouse upon the death of the Participant than the
Surviving Spouse Annuity only if Spousal Consent is obtained with
respect thereto. No such election to waive the normal form of
payment shall be valid if it is made more than 90 days prior to
the Participant's Annuity Starting Date, or if it is made before
Retirement Election Information is given to the Participant, and
benefits shall not commence to be paid to the Participant until
at least 30 days have elapsed since he was given his Retirement
Election Information (unless such 30-day period is waived by the
Participant). A Participant may elect to rescind any prior
election made by him in accordance with this subsection 8.2 at
any time before his benefit payments commence, in which case his
Retirement Income or Deferred Vested Benefit, as applicable, will
be paid in the normal form required by subsection 8.1 unless
another election is timely filed. Any election permitted under
this subsection shall be made and filed with the Plan
Administrator in such form as it may require.
8.3. Optional Forms of Payments. In place of his normal
form of Retirement Income or Deferred Vested Benefit, a
Participant may elect to receive his Retirement Income or
Deferred Vested Benefit under any one of the optional forms of
payment set forth below. The amount payable in accordance with
any such election will be the Actuarial Equivalent of the amount
payable to the Participant under the normal form (provided that a
Lump Sum Payment under paragraph (e) shall not be less than the
Actuarial Equivalent of the Participant's Accrued Benefit). The
optional forms will include the following:
(a) Option A. A reduced monthly Retirement Income or
Deferred Vested Benefit payable during the retired
Participant's life, with the further provision that
after his death a monthly Retirement Income or
Deferred Vested Benefit of 50% or 100%, whichever he
shall elect, of such reduced monthly amount shall be
continued during the life of, and paid to, the
Coannuitant designated by him if such person survives
him.
(b) Option B. A reduced monthly Retirement Income or
Deferred Vested Benefit payable during the retired
Participant's life, with the further provision that
after his death a monthly Retirement Income or
Deferred Vested Benefit of 50% or 100%, whichever he
shall elect, of such reduced monthly amount shall be
continued during the life of, and paid to, the
Coannuitant designated by him if such person survives
him, and with the further provision that if such
Coannuitant predeceases the Participant, the monthly
Retirement Income or Deferred Vested Benefit payable
thereafter to the Participant during his life shall
be equal to the Retirement Income to which he would
have been entitled under Section 5 if he had not
elected this Option B and if subparagraph 8.1(a) had
applied to him.
(c) Option C. A reduced monthly Retirement Income or
Deferred Vested Benefit payable during the
Participant's life, with the further provision that
upon the death of the retired Participant prior to
his receipt of 120 monthly payments, such reduced
Retirement Income or Deferred Vested Benefit will
continue to be payable to his designated Beneficiary
or Beneficiaries (in such proportions and with such
rights of succession) or the survivor or survivors
among such persons or the estate of the last survivor
among such persons, or if no such person survives the
Participant, to the estate of the Participant, until
a total of 120 monthly payments shall have been made,
in the aggregate, to the Participant, the surviving
Beneficiar(ies), or the estate of the last survivor
among such persons, or the estate of the Participant,
as the case may be.
(d) Option D. A reduced monthly Retirement Income or
Deferred Vested Benefit payable during the
Participant's life, with the further provision that
after his death a monthly Retirement Income of 100%
of such reduced monthly Retirement Income or Deferred
Vested Benefit shall be continued during the life of,
and paid to, his Coannuitant if such person survives
him, and with the further provision that upon the
deaths of both the retired Participant and the
Coannuitant prior to the receipt of 120 monthly
payments, such reduced Retirement Income or Deferred
Vested Benefit will continue to be payable to the
designated Beneficiary or Beneficiaries (in such
proportions and with such rights of succession) or
the survivor or survivors among such persons or the
estate of the last survivor among such persons, or if
no such person survives the Participant, to the
estate of the Participant, until a total of 120
monthly payments shall have been made, in the
aggregate, to the Participant, his Coannuitant, the
surviving Beneficiar(ies) or the estate of the last
survivor among such persons, or the estate of the
Participant, as the case may be.
(e) Lump Sum. Subject to the provisions set forth below,
in lieu of a Retirement Income or Deferred Vested
Benefit otherwise payable to, or on account of, a
Participant, a "Lump Sum" payment which is the
Actuarial Equivalent of such Retirement Income or
Deferred Vested Benefit will be paid to the person or
persons entitled thereto, if the Participant
terminates employment with all the Employers and
Related Companies (i) at or after his attainment of
age 55 and completion of 20 or more years of
Continuous Service, (ii) at or after his attainment
of age 60, if he attains age 60 prior to January 1,
1990, or (iii) at or after his attainment of age 60
and completion of 10 or more years of Continuous
Service, if he attains age 60 on or after January 1,
1990, or (iv) if the Participant's Accrued Benefit
when he terminates employment is less than $150,
provided that such Participant may elect instead to
receive an annuity for his life (if he is unmarried)
or a joint and 50% survivor annuity for the lives of
himself and his Qualified Spouse (if he is married)
which is the Actuarial Equivalent of the Lump Sum
payable under this clause (iv) commencing as early as
the first day of the month following his termination
from employment. For purposes of this paragraph (e),
Years of Vesting Service shall be substituted for
years of Continuous Service in the case of a
Participant hired (or rehired as a new employee
pursuant to subsection 2.5) on or after January 1,
2000.
(f) Single Life Annuity. (Optional for a married
Participant.)
If the Coannuitant designated under paragraph (a), (b) or (d)
above dies before the Annuity Starting Date, payment will be made
in the normal form specified in subsection 8.1. A Participant's
designation of a Coannuitant or Beneficiary is irrevocable unless
he makes a new election in accordance with subsection 8.4.
8.4. Election and Discontinuance of Options. A
Participant may cancel any option elected under subsection 8.3 at
any time prior to the day his first payment is processed, and may
make a new election, subject to the provisions of this Section 8
(including the requirement of Spousal Consent) and uniform rules
established by the Plan Administrator (or its delegate) from time
to time. If a Participant dies before his Annuity Starting Date,
no benefits will be payable to any person under the Plan, except
as provided in Section 10. For purposes of determining whether
this Section 8 or Section 10 is applicable to a deceased
Participant, a Participant's Annuity Starting Date will have been
established if all of the events necessary for the Plan to
properly make or commence payment as of that date have occurred.
8.5. Actuarial Equivalents. Except where covered by a
table attached to the Plan, in determining whether one form of
benefit is the "Actuarial Equivalent" of another form of benefit
under the Plan, the following actuarial assumptions shall be
employed:
Interest Rate: 8% per annum, compounded annually
Mortality Table: the 1984 unisex pension table, but
with a one-year setback solely for purposes
of Lump Sum calculations ("UP 84 mortality
table")
Notwithstanding the foregoing, in calculating the present value
of any benefit payable in the form of a Lump Sum pursuant to
subsection 8.3, the Plan shall use the following actuarial
assumptions:
(a) For Participants who terminate employment before
January 1, 1995,
(i) if the Participant's Annuity Starting Date
occurs before January 1, 1996, the present
value of his Accrued Benefit shall be
determined using the UP 84 mortality table and
the following interest rates:
(A) the lesser of 8% or the applicable interest
rate used by the Pension Benefit Guaranty
Corporation ("PBGC") to value lump sum
benefits upon plan termination as of the
first day of the plan year in which such
benefit commencement date occurs (the
"annual PBGC rate"), with respect to that
portion of such Participant's Accrued
Benefit which was earned through
December 31, 1990; and
(B) with respect to that portion of such
Participant's Accrued Benefit which was
earned after December 31, 1990,
(I) if the sum of the lump sum value
determined under clause (i)(A)
above plus the lump sum value of
the Participant's post-1990 Accrued
Benefit calculated by using the
annual PBGC rate is less than
$25,000, the annual PBGC rate, and
(II) if the lump sum value in clause
(i)(B)(I) above is at least
$25,000, 110% of the annual PBGC
rate,
provided that use of the 110% factor may
not result in a lump sum of less than
$25,000;
(ii) if the Participant's Annuity Starting Date
occurs on or after January 1, 1996, the
present value of his Accrued Benefit shall
be determined using the following
assumptions:
(A) with respect to his Accrued Benefit
as of December 31, 1990, whichever of
the following produces the larger
lump sum value: (I) the Applicable
Interest Rate for the November
preceding the Plan Year in which his
Annuity Starting Date occurs and the
Applicable Mortality Table or (II) 8%
and the UP 84 mortality table; and
(B) with respect to the Accrued Benefit
earned after December 31, 1990, the
Applicable Interest Rate for the
November preceding the plan year in
which his Annuity Starting Date
occurs and the Applicable Mortality
Table.
(b) For a Participant who terminates employment on or
after January 1, 1995, the following assumptions
shall be used:
(i) if the Participant's Annuity Starting Date
occurs before January 1, 1996, the UP 84
mortality table and the applicable interest
rate employed by the PBGC as of the first day
of the month in which the Participant's Annuity
Starting Date occurs for purposes of
determining the present value of a lump sum
distribution upon plan termination (the
"monthly PBGC rate") or, in the case of a
present value in excess of $25,000, 120% of
such monthly PBGC rate, provided that no such
Participant shall receive a lump sum that is
less than the present value of the portion of
his Accrued Benefit which he had earned by
December 31, 1994, calculated in accordance
with subparagraph (a)(i) above;
(ii) if the Participant's Annuity Starting Date
occurs on or after January 1, 1996, the
Applicable Interest Rate for the second month
preceding the month in which the Participant's
Annuity Starting Date occurs and the Applicable
Mortality Table; provided, however, that the
present value determined under this
subparagraph (b)(ii) shall not be less than the
present value of the Accrued Benefit earned by
the Participant as of December 31, 1994
determined in accordance with subparagraph
(a)(ii) above.
For purposes of this subsection 8.5 "Applicable Interest Rate"
for a month means the annual interest rate on 30-year Treasury
securities as specified by the Commissioner of Internal Revenue
for that month (rounded down to the nearest tenth of a percentage
point), and "Applicable Mortality Table" means the mortality
table based on the prevailing commissioner's standard table used
to determine reserves for group annuity contracts issued on the
date as of which present value is being determined.
8.6. Retirement Election Information. The Plan
Administrator will make "Retirement Election Information"
available to a Participant no earlier than 90 days prior to his
Annuity Starting Date that includes the following:
(a) a written description of the terms and conditions of
the normal form of payment (the Single Life Annuity
or Surviving Spouse Annuity, as applicable);
(b) a notification of the Participant's right to revoke
payment in accordance with subsection 8.2 and the
Qualified Spouse's rights, if any, with respect to
that revocation; and
(c) a general description of the eligibility conditions
and other material features of the optional forms of
benefit, if any, available to him under the Plan and
information explaining the relative values of such
optional forms of benefit.
The Plan Administrator may make Retirement Election Information
available to a Participant by:
(i) personal delivery to him;
(ii) first class mail, postage prepaid, addressed to
the Participant at his last known address as
shown on his Employer's records; or
(iii) permanent posting on a bulletin board located
at the Participant's work site, if he is not a
retired or terminated Participant.
After receiving his Retirement Election Information, a
Participant may make a written request for an explanation,
written in nontechnical language, of the terms, conditions and
financial effect (in terms of dollars per monthly benefit
payment) of payment in accordance with the optional forms.
8.7. Spousal Consent. Any waiver, revocation, election or
other action by a Participant under the Plan which, by its terms,
requires "Spousal Consent", will be effective only if:
(a) the Participant's Qualified Spouse consents in
writing to such election or other action;
(b) the consent acknowledges the effect of the election
or other action and is witnessed either by a notary
public or by a Plan representative appointed or
approved by the Plan Administrator;
(c) in the case of Spousal Consent to a Coannuitant
Beneficiary, or Death Beneficiary designation, such
designation names the specific person (including any
class of persons), which person(s) may not be changed
without Spousal Consent, or the consent expressly
permits designations by the Participant without any
requirement of further consent by the Qualified
Spouse in a manner that satisfies applicable Treasury
regulation; and
(d) in the case of a waiver of the Surviving Spouse
Annuity, the waiver specifies the optional form of
benefit elected, which form of benefit may not be
changed without Spousal Consent (except back to a
Surviving Spouse Annuity), or the consent expressly
permits the Participant to change the form of benefit
without any requirement of further consent by the
Qualified Spouse in accordance with applicable
Treasury regulations;
provided, however, that, unless otherwise provided by a
qualified domestic relations order within the meaning of
section 414(p) of the Code, no Spousal Consent will be
required if it is established to the satisfaction of a Plan
representative appointed or approved by the Plan
Administrator that Spousal Consent cannot be obtained
because there is no Qualified Spouse, because the Qualified
Spouse cannot be located or because of such other
circumstances as the Secretary of the Treasury may prescribe
in regulations.
Once Spousal Consent is given in accordance with this subsection
8.7 it shall be irrevocable.
8.8. Coannuitant and Beneficiary Designations. If the
Participant is not married on his Annuity Starting Date, or if
the Participant is married but obtains Spousal Consent to the
designation of a person other than the Qualified Spouse, the term
"Coannuitant" and "Beneficiary" will mean such person as the
Participant designates to receive, respectively (a) any lifetime
benefits payable as the survivor portion of a joint and survivor
annuity or (b) ten-year certain annuity form elected in
accordance with subsection 8.3. Such designation may be made,
revoked or changed only by an instrument signed by the
Participant and filed with the Plan Administrator prior to his
death.
8.9. Facility of Payment. Notwithstanding the foregoing
provisions of this Section 8, if, in the Plan Administrator's
opinion, a Participant or other person entitled to benefits under
the Plan is under a legal disability or is in any way
incapacitated so as to be unable to manage his financial affairs,
the Plan Administrator may direct the Trustee to make payment to
a relative or friend of such person for his benefit until claim
is made by a conservator or other person legally charged with the
care of his person or of his estate. Thereafter, any benefits
under the Plan to which such Participant or Beneficiary is
entitled will be paid to the conservator or other person legally
charged with the care of his person or his estate.
8.10. Restrictions on Alienation and Qualified Domestic
Relations Orders. The interests of Participants and other persons
entitled to benefits under the Plan are not subject to the claims
of their creditors and may not be voluntarily or involuntarily
assigned, alienated or encumbered, except in the case of
qualified domestic relations orders which relate to the provision
of child support, alimony payments or marital property rights of
a spouse, child or other dependent and which meet the
requirements of section 414(p) of the Code and the regulations
issued thereunder, or in the case of a levy by the Internal
Revenue Service. With respect to any such qualified domestic
relations order (a "QDRO") received on or after May 1, 1997, the
alternate payee may be given the choice (by express language or
by general reference in the QDRO to any form of payment
permissible under the Plan) to elect payment of the Actuarial
Equivalent of the portion of the Participant's Accrued Benefit
awarded to such alternate payee in the form of a Lump Sum,
determined as of the first day of the month next following the
later of the date the order is entered or the date the Plan
Administrator (or his designated agent) determines that the order
is qualified within the meaning of section 414(p) of the Code.
With respect to any domestic relations order determined by the
Plan Administrator to be qualified prior to July 15, 1991 which
contemplates payments to an alternate payee until the death of
the earlier to die of such alternate payee or the Participant
whose Accrued Benefit has been alienated pursuant to such order,
such alternate payee may elect to convert such payments (or the
remaining portion thereof if the alternate payee is already in
pay status) to an actuarially equivalent Lump Sum, but only if,
and when, such Participant retires and receives a Lump Sum
distribution pursuant to subsection 8.3.
8.11. Immediate Payment of Small Amounts. If the present
value of the vested Accrued Benefit payable to or on behalf of
any Participant is $3,500 or less, the Plan Administrator will
direct the Trustee to distribute to the Participant or his
Qualified Spouse or Death Beneficiary, as the case may be, the
Actuarial Equivalent Lump Sum value of the Accrued Benefit
without regard to whether the payee consents to such
distribution. Such present value shall be determined as of the
first day of the month following the Participant's termination of
employment and will be paid as soon as administratively feasible
thereafter, provided that if the Plan Administrator does not
receive notification (by the appropriate payroll department) that
the Participant has terminated employment with the Employers and
Related Companies, or that the Participant has died, within six
months of the event, the determination of the amount of the Lump
Sum (and whether this subsection applies) will be made as of the
first day of the month following such notification and the
resulting Lump Sum will be paid as promptly as possible
thereafter. A Participant who terminates employment with the
Employers and Related Companies before he becomes vested in any
portion of his Accrued Benefit shall nevertheless be deemed to
have received his vested interest (zero) in the Plan pursuant to
this subsection 8.11. If a Participant earns separate benefits
under the Plan because of reemployment, his entire Accrued
Benefit will be aggregated for purposes of determining whether
the involuntary cash-out provision of this subsection shall
apply; provided that, in accordance with applicable Treasury
regulations the foregoing shall not apply if the benefits earned
during his prior period of employment have already been paid out
in full, and provided further that if a Participant is cashed out
after he has attained age 65 in accordance with this subsection
8.11, any additional benefit earned under the Plan after the
Annuity Starting Date for such cash out will be paid in the form
of a Lump Sum.
8.12. Limitation on Payment Period. Notwithstanding any
other provision of the Plan to the contrary, benefits payable
under the Plan to or on account of any Participant will be
subject to the following:
(a) All distributions under the Plan will be made in
compliance with sections 401(a)(9) and 401(a)(14) of
the Code and applicable regulations thereunder
including the minimum incidental benefit requirement
of Treas. Reg. Sec. 1.401(a)(9)-2.
(b) Unless the Participant elects otherwise, in no event
will distribution of a Participant's benefit commence
later than 60 days after the close of the Plan Year
in which the later of the following events occurs:
(i) the Participant's Normal Retirement Age, or (ii)
the Participant's termination of employment.
(c) Distribution of a Participant's vested benefits will
commence, in such form as the Participant may elect
in accordance with the foregoing provisions of this
Section 8, no later than his "Required Commencement
Date", determined in accordance with the following:
(i) if the Participant is a full-time employee, the
April 1 following the calendar year in which
the Participant attains age 70-1/2;
(ii) if the Participant is a part-time employee, the
later of the first day of the month following
his 65th birthday or the first day of the month
following the date he transfers from full-time
to part-time status.
(d) Distribution will be made over a period no greater
than the life of the Participant or the lives of such
Participant and his Coannuitant and/or Beneficiary
(or a period not extending beyond the life expectancy
of such Participant or the life expectancies of such
Participant and his Coannuitant or Beneficiary). If
a Participant dies after his Annuity Starting Date,
the remaining portion of his benefits, if any, will
be distributed to his Coannuitant or Beneficiary at
least as rapidly as under the method of distribution
used prior to the Participant's death.
(e) If a Participant dies prior to his Annuity Starting
Date, the benefits payable under Section 10, if any,
will commence as of the date determined thereunder,
and will be paid over a period no greater than the
life of the Qualified Spouse or Death Beneficiary or
a period not exceeding the life expectancy of the
Qualified Spouse or Death Beneficiary.
(f) For purposes of this subsection 8.12, life
expectancies will be determined in accordance with
Tables V and VI of Treas. Reg. Sec. 1.72-9 and will not
be recalculated following the commencement of
benefits.
8.13. Missing Participants or Beneficiaries. Each
Participant and each designated Beneficiary must file with the
Plan Administrator from time to time in writing his post office
address and each change of post office address. Any
communication, statement or notice addressed to a Participant or
designated Beneficiary at his last post office address filed with
the Plan Administrator, or, in the case of a Participant, if no
address is filed with the Plan Administrator, then at his last
post office address as shown on the Employers' records, will be
binding on the Participant and his designated Beneficiary for all
purposes of the Plan. None of the Plan Administrator, the
Employers, nor the Trustee will be required to search for or
locate a
Participant or designated Beneficiary. If the Plan
Administrator, for any reason, is in doubt as to whether benefit
payments are being received by the person entitled thereto, it
will, by registered mail addressed to the person concerned at his
last known address, notify such person that all unmailed and
future benefit payments will henceforth cease (subject to
retroactive reinstatement without interest) until he provides the
Plan Administrator with evidence that he is still alive, and with
his proper mailing address.
8.14. Absence of Guaranty. None of the Plan Administrator,
the Trustee, or the Employers in any way guarantee the Trust Fund
from loss or depreciation. The Employers do not guarantee any
payment to any person. The liability of the Plan Administrator
and the Trustee to make any payment is limited to the available
assets of the Trust Fund.
8.15. Direct Rollover Option. To the extent required under
section 401(a)(31) of the Code and regulations issued thereunder,
any person receiving an "eligible rollover distribution" (as
defined therein) may direct the Plan Administrator to pay such
distributable amount, or a portion thereof, to an "eligible
retirement plan" (as defined therein), in accordance with uniform
rules established by the Plan Administrator.
8.16. Administrative Delay in Payment. A reasonable
administrative delay in processing a payment will not affect the
establishment of an Annuity Starting Date or the calculation of
the amount of benefit; a delay that is longer than
administratively reasonable will cause the Annuity Starting Date
to be postponed (and the Retirement Income or Deferred Vested
Benefit to be redetermined as of the new date). Generally, a
reasonable delay for this purpose means a period of six months
or, if less, the longest period permitted by applicable Treasury
regulations. In the case of a payment which is not suspendable
in accordance with subsection 9.1 (because the Participant is at
least age 65 and is not working for at least 40 hours a month),
the Accrued Benefit will be actuarially increased to reflect a
postponed Annuity Starting Date.
SECTION 9.
Employment Beyond Normal Retirement
Age and Reemployment
9.1. Continuous Full-time Employment Beyond Normal
Retirement Age. Except as provided in paragraph 8.12(c), if a
Participant is employed by an Employer or a Related Company on a
full-time basis beyond his Normal Retirement Age, no Retirement
Income will be paid to such Participant until his termination of
employment with the Employers and Related Companies or attainment
of age 701/2 and the Participant will be so informed in accordance
with applicable regulations; provided, however, that the
Actuarial Equivalent of such benefit will be provided upon
subsequent retirement for any month commencing after the
Participant's Normal Retirement Age in which the Participant is
credited with fewer than 40 Hours of Service.
9.2. Adjustment of Retirement Income During Employment
After Required Commencement Date. The Retirement Income of a
Participant who is a part-time employee, or a full-time employee
who attains age 70-1/2, and who receives or begins to receive
payment of his
Retirement Income under Section 5 calculated as of his Required
Commencement Date while still employed shall be subject to the
following:
(a) Any such Participant who begins to receive payment of
his Retirement Income in a form other than a Lump Sum
shall have his Retirement Income recalculated as of
the end of each Plan Year beginning with the Plan
Year in which his Annuity Starting Date occurs to
reflect his employment after such date, as follows:
(i) For the Plan Year in which his Annuity Starting
Date occurs, his additional Retirement Income
shall be equal to the Actuarial Equivalent of:
(A) His Accrued Benefit as of the last day of
such Plan Year less
(B) His Accrued Benefit as of his Annuity
Starting Date,
and shall be added to his previous Retirement
Income as of the first day of the next Plan
Year.
(ii) For each succeeding Plan Year, his additional
Retirement Income shall be equal to the
Actuarial Equivalent of:
(A) His Accrued Benefit as of the last day of
such Plan Year less
(B) His Accrued Benefit as of the last day of
the next preceding Plan Year,
and shall be added to his previous Retirement
Income as of the first day of the next Plan
Year.
In no event, however, will a Participant's
recalculated Retirement Income as of the beginning of
a Plan Year be less than the amount of monthly
Retirement Income payable to him during the prior
Plan Year.
(b) Any such Participant who receives payment of his
Accrued Benefit in the form of a Lump Sum shall be
entitled to the additional Accrued Benefit, if any,
payable on his behalf under the formulas set forth in
subsection 5.1 due to his employment after his
Annuity Starting Date. Such additional Accrued
Benefit shall be calculated on an annual basis as of
the last day of each Plan Year ending after his
Annuity Starting Date, as follows:
(i) For the Plan Year in which his Annuity Starting
Date occurs, his additional Accrued Benefit
shall be the Actuarial Equivalent of:
(A) His Accrued Benefit as of the last day of
such Plan Year less
(B) His Accrued Benefit as of his Annuity
Starting Date.
(ii) For each succeeding Plan Year, his annual
additional Accrued Benefit shall be the
Actuarial Equivalent of:
(A) His Accrued Benefit as of the last day of
such Plan Year less
(B) His Accrued Benefit as of the last day of
the next preceding Plan Year.
Payment of such annual additional Accrued Benefit
shall be made to or on behalf of the Participant in
the form of a Lump Sum as soon as practicable after
the end of the Plan Year for which such annual
additional Retirement Income was calculated.
Each recalculation under paragraphs (a) and (b) above shall
reflect the Participant's Compensation, Covered Compensation
and Credited Service as of the end of the Plan Year for
which such recalculation is made and shall be effective as
of the first day of the following Plan Year.
9.3. Reemployment of Annuitant As A Full-Time Employee
After Commencement of Benefits. If a Participant who has
commenced receipt of a Retirement Income or Deferred Vested
Benefit in the form of an annuity is reemployed by an Employer or
Related Company in a full-time capacity, then, subject to the
provisions of paragraph 8.12(c), no benefits will be payable to
him under the Plan during the period of reemployment (for as long
as he remains a full-time employee) and his annuity payments will
be suspended. Subject to subsection 9.5, any benefit payable to
or on his account after his employment with the Employers and
Related Companies is again terminated will be determined in
accordance with the provisions of the Plan (including the
provisions of subsection 9.1, if applicable) as in effect on the
date his employment with the Employers and Related Companies is
subsequently terminated, and for this purpose, his Credited
Service, Compensation and Final Average Monthly Compensation as
of his last preceding termination date will be adjusted to
reflect any additional Credited Service, Compensation or Final
Average Monthly Compensation earned during his period of
reemployment, except as provided in subsection 9.5. However,
such recalculated benefit will be reduced by an amount determined
by the Plan Administrator to be the Actuarial Equivalent of
benefits previously paid to him under the Plan. Notwithstanding
the foregoing provisions of this subsection 9.3, in no event will
the amount of a Participant's Retirement Income or Deferred
Vested Benefit, as the case may be (expressed in the form of a
single life annuity), determined as of a subsequent termination
of employment with the Employers and Related Companies, be less
than the amount of the Retirement Income or Deferred Vested
Benefit, as the case may be (expressed in the form of a single
life annuity), that he was receiving or entitled to receive
immediately prior to his reemployment date. The benefit payable
under this subsection 9.3 will
be adjusted by appropriate actuarial factors to take into account
any option elected by the Participant in accordance with
subsections 8.3 and 9.6. The Plan Administrator will notify the
Participant, in writing, of the suspension of his benefit
payments under this subsection 9.3 as and to the extent required
by applicable regulations.
9.4. Reemployment of Annuitant As A Part-Time Employee
After Commencement of Benefits. If a Participant who has
commenced receipt of a Retirement Income or Deferred Vested
Benefit in the form of an annuity is reemployed by an Employer or
Related Company in a part-time capacity, his annuity payments
will not be suspended (for as long as he remains a part-time
employee) even if his reemployment occurs prior to his attainment
of age 65. If such individual again becomes an Eligible
Employee, his Credited Service, Compensation and Final Average
Monthly Compensation as of his last preceding termination date
will be adjusted to reflect any additional Credited Service,
Compensation and Final Average Monthly Compensation earned during
his period of reemployment upon his subsequent termination of
employment with all Employers and Related Companies, and the
separate amount of additional Retirement Income earned during
such reemployment will be determined in accordance with the
following:
(a) First, the value of his new accrual will be
calculated as the excess of (i) his Accrued Benefit
determined on the basis of his Credited Service, his
Final Average Monthly Compensation and his Covered
Compensation as of such subsequent termination over
(ii) the Accrued Benefit earned by him on the basis
of his Credited Service, his Final Average Monthly
Compensation and his Covered Compensation as of his
last preceding termination from employment, provided
that if such last preceding termination occurred
prior to January 1, 1989, the amount under this
clause (ii) shall be the amount that would have been
payable to him at Normal Retirement Age determined
under the provisions of Supplement B.
(b) Next, the amount determined under (a) above will be
reduced for each full calendar month, if any,
remaining in the period between the date of such
subsequent commencement date and the first day of the
month next following the date on which he will attain
age 65 in accordance with subsection 5.4.
(c) Next, the amount determined after application of (a)
and (b) above is payable as of the first day of the
month following such subsequent termination and will
be adjusted by appropriate actuarial factors to take
into account any option elected by him in accordance
with subsections 8.3 and 9.6.
Notwithstanding the foregoing provisions of this subsection 9.4,
the additional Retirement Income of a Participant who continues
to be reemployed in a part-time capacity beyond age 65 will
commence to be paid to him upon his attainment of age 65 (or as
of the end of the month in which he is reemployed, if
reemployment occurs after he has already attained age 65) in
accordance with the election provisions of paragraph (c) above,
and thereafter such additional
Retirement Income will be separately adjusted each year to
reflect the additional benefit accruals of such Participant, if
any, under subsection 9.2. In the case of any Participant
covered by this subsection who is receiving monthly Retirement
Income under Supplement A to the Plan, the Plan Administrator may
make appropriate adjustments, following the principles set forth
above, in determining the amount of additional Retirement Income
accrued during any period of reemployment.
9.5. Additional Accruals After Receipt of Lump Sum.
Notwithstanding any other provisions of this Section 9, if a Lump
Sum payment was made to a Participant on account of a termination
of employment with the Employers and Related Companies or on
account of a Required Commencement Date and thereafter the
Participant to whom such payment was made is or becomes entitled
to earn additional benefits under the Plan, only such
Participant's Compensation, and not his Credited Service earned
prior to such Lump Sum payment, shall be used in calculating the
amount of the additional Retirement Income payable to him under
the Plan on account of his reemployment. If, however, a former
Participant who terminated employment prior to January 1, 1989 is
reemployed, resumes participation in the Plan and restores in a
single payment (within a period of five years from such reemploy-
ment) to the Plan the lump sum amount previously paid to him with
interest on such amount at the maximum rate permitted from time
to time under ERISA from the date of payment to the date of such
restoration, such Participant's Credited Service shall be
restored to him for purposes of calculating any Retirement Income
thereafter payable to him under the Plan, provided that repayment
shall not be required if such Participant is reemployed after age
65, and restoration of his Credited Service instead shall be
automatic (subject to the offset described in subsection 9.4.)
9.6. Elections For Participants Who Accrue Additional
Benefits After An Annuity Starting Date.
(a) Generally, if a Participant's Annuity Starting Date
occurs on or after such Participant's Normal
Retirement Date, all subsequent accruals (whether
because of continued employment or reemployment) will
be subject to the election made by the Participant in
connection with his original Annuity Starting Date,
and will be paid in the same form; provided that for
purposes of determining the Actuarial Equivalent
value (including the Lump Sum value) of the
additional accruals, the interest rate and mortality
assumptions will be adjusted to reflect the date as
of which the additional accruals are payable.
(b) A Participant who has an Annuity Starting Date before
he attains age 65 and who is reemployed and earns
additional benefits under the Plan must separately
elect a form of payment, with a new Annuity Starting
Date, for the benefits accrued after his reemployment
and, in the case of a Participant whose original
payments were suspended in accordance with subsection
9.3, for the recommenced payment of his suspended
benefit in a single election.
(c) A Participant may have multiple Annuity Starting
Dates reflecting different periods of accrual,
provided that the first election made for an Annuity
Starting Date occurring after the Participant attains
age 65 will determine the form of payment of all
future accruals.
(d) If a Participant who first commenced receiving
benefits under the Plan prior to age 65 and who is
reemployed and earns additional benefits under the
Plan dies before commencement of his additional
benefits, Section 10 will apply to any benefits
subject to a new payment election under the preceding
provisions of this subsection. Accordingly:
(i) in the case of a Participant who is reemployed
as a part-time employee after commencing
payment in the form of an annuity who dies
before age 65 while still working, the survivor
portion of the original benefit will be paid to
a Beneficiary or Coannuitant in accordance with
his original benefit election and only the new
accrued benefit will be paid under 10.2 or
10.3;
(ii) if a Participant who is reemployed as a full-
time employee whose original benefit commenced
before age 65 dies before his new accruals and
suspended benefit commence under a new
election, his entire benefit (less the amount
offset to reflect his prior payments) will be
subject to Section 10 and the original form of
payment disregarded;
(iii) if a pre-65 annuity recipient who was
reemployed as a part-time employee died after
his Annuity Starting Date for payment of his
new accruals at age 65, no death benefit under
Section 10 will be payable but two different
Coannuitants or Beneficiaries (or his estate if
the post-65 election was for a Lump Sum) could
be due the residual portions of his two benefit
pieces, depending on the forms elected; or
(iv) if a post-65 annuity recipient dies after he is
reemployed, his entire benefit will be paid to
the Coannuitant or Beneficiary, if any, due the
survivor portion under his original election.
SECTION 10.
Death Benefits
10.1. Death Benefits in General. Except for benefits under
this Section 10, there are no death benefits payable under the
Plan either before or after a Participant's retirement or
termination of employment; provided, however, that benefits may
continue to be paid to a Participant's Qualified Spouse,
Coannuitant or Beneficiary after his death under the form of
benefit chosen by the Participant in accordance with Section 8.
For purposes of this Section 10, if the Participant and his
Qualified Spouse or other Death Beneficiary die at the same time,
the Participant shall be deemed to have died after the Qualified
Spouse or other Death Beneficiary. In addition, no benefit shall
be paid with respect to any Qualified Spouse or other Death
Beneficiary if such Qualified Spouse or Death Beneficiary dies
before his or her Annuity Starting Date.
10.2. Qualified Preretirement Survivor Annuity. If a
married Participant who has a nonforfeitable right to his Accrued
Benefit dies prior to his Annuity Starting Date (whether or not
such Participant is then employed by an Employer or Related
Company), a Qualified Preretirement Survivor Annuity will be
payable to his Qualified Spouse. For purposes of this subsection
10.2, a "Qualified Preretirement Survivor Annuity" or "QPSA" is
an annuity payable over the life of the Qualified Spouse of a
Participant, the payments of which are not less than the amounts
that would have been payable under the Surviving Spouse Annuity
under subsection 8.1(b). Such annuity shall be calculated as if:
(a) in the case of a Participant who dies on or after
attaining age 55, such Participant:
(i) terminated employment on the date of his death
(if his employment had not yet terminated),
(ii) survived to the first of the next month
following his death,
(iii) commenced receiving a Surviving Spouse Annuity
in accordance with paragraph 8.1(b) on the
first day of the month immediately following
his death, and
(iv) died the day after such commencement, or
(b) in the case of a Participant who dies before
attaining age 55, such Participant:
(i) terminated employment on the date of his death
(if his employment had not yet terminated),
(ii) survived to the date that would have been his
55th birthday,
(iii) commenced receiving the Surviving Spouse
Annuity in accordance with paragraph 8.1(b) on
the first day of the month immediately
following the day that would have been his 55th
birthday, and
(iv) died the day after such commencement;
provided, however, that if the Participant prior to his death had
made a valid election of the 100% (with or without "pop-up"
feature) joint and survivor annuity form with his Qualified
Spouse as the Coannuitant, the Qualified Preretirement Survivor
Annuity will be based on the form elected by the Participant
prior to his death.
The Qualified Preretirement Survivor Annuity will be payable in
equal monthly installments, unless the Qualified Spouse elects a
Lump Sum payment under subsection 10.4. The first of such monthly
installments will be payable to the Qualified Spouse on the first
day of the calendar month following the Participant's death
(reduced to its Actuarial Equivalent in the event of commencement
prior to the first day of the month following the date that would
have been the Participant's 55th birthday). Notwithstanding the
preceding sentence, the Qualified Spouse may elect to defer the
commencement of the Qualified Preretirement Survivor Annuity
until the first day of any month after the Participant's death,
but no later than the first day of the month following the date
that would have been the Participant's 65th birthday, with an
appropriate adjustment to the actuarial reduction required under
subsection 5.4 or 6.2 (whichever is applicable) to reflect such
delayed commencement.
For purposes of this Section 10 the term "Qualified Spouse" means
the person to whom a deceased Participant was legally married on
the date of his death.
Notwithstanding any other provision of this subsection, no
Qualified Spouse may elect payment of the Qualified Preretirement
Survivor Annuity until the Plan has been properly notified of the
Participant's death, and payment of the QPSA shall in no event be
retroactive to the first day of the month following the date of
death of the Participant (even if otherwise permitted under this
subsection) unless notice of the death is given within 180 days
of the date of death.
10.3. Special Death Benefits. Under the circumstances
described below the Plan may pay a death benefit other than the
Qualified Pre-retirement Survivor Annuity, and, with Spousal
Consent, to someone other than the Qualified Spouse. In no
event, however, will a benefit be payable with respect to the
same Participant under both subsection 10.1 and subsection 10.2.
(a) Death of Active Employees After Attainment of Age 55.
If a Participant dies while employed by the
Employers and Related Companies, after he has both
attained age 55 and has completed ten or more years
of Continuous Service, or after attainment of age 65
(age 63 in the case of an individual who was a
Participant on or before December 31, 1988)
regardless of length of Continuous Service, a
Retirement Income shall be payable to his Qualified
Spouse, as the Qualified Spouse elects, commencing
with the first day of any month following the month
in which the deceased Participant's death occurs, in
the same amount as would have been payable to such
Qualified Spouse if the deceased Participant had
terminated his employment with all Employers and
Related Companies (for a reason other than his death)
on the date his death occurred, had elected to have
his Retirement Income commence on the first day of
any month, as elected by
the Qualified Spouse following the date of his
death, had survived to his Annuity Starting Date and
had elected Option A under subsection 8.3 with a
100% survivor annuity. If a deceased Participant to
whom this paragraph (a) applies is not survived by a
Qualified Spouse, then a Retirement Income shall be
payable to his estate, determined on the same
assumptions as set forth above, the same as if the
deceased Participant had effectively elected Option
C under subsection 8.3 commencing on the first day
of the month following the date of his death, with
his estate as his designated Beneficiary.
Notwithstanding the foregoing provisions of this
paragraph (a), a Participant may waive the death
benefit that would otherwise be payable on his
behalf under both subsection 10.2 and the preceding
provisions of this paragraph (a) and instead elect
to have a death benefit paid in the form of any
option of comparable value to the benefit previously
described in this paragraph (a) under Options A, C
or D under subsection 8.3, payable to such person or
persons as he may select (his "Death Beneficiary"),
in the same amount as would have been payable to
such person or persons under such option if he had
severed his employment with all Employers and
Related Companies on the date of his death, had
elected to have his Retirement Income commence on
the first day of the month following the date of his
death, and had survived to his Annuity Starting
Date. However, no such waiver and election will be
effective with respect to a Participant who is
married on the date of his death without Spousal
Consent. Such waiver and election of an alternative
option or an alternative Death Beneficiary may be
made at any time after the Participant meets the age
and service requirements of this paragraph (a).
(b) Death of Active Employees Before Both Attainment of
Age 55 and Completion of Ten Years of Continuous
Service. If a vested Participant dies while employed
by the Employers and Related Companies, and before
attainment of age 55 and completion of 10 years of
Continuous Service, without qualifying for the
special death benefit provided under paragraph (a)
above, and such deceased Participant is survived by a
Qualified Spouse, a monthly Retirement Income shall
be payable to such Qualified Spouse as the Qualified
Spouse elects commencing on the first day of any
month following the month in which the Participant's
death occurs (but no later than the first day of the
month following the later of the deceased
Participant's date of death or his 65th birthday) and
terminating with the payment due on the first day of
the month in which such surviving Qualified Spouse
dies. The amount of such Retirement Income shall be
calculated initially as the deceased Participant's
Accrued Benefit, which initially calculated amount
then shall be reduced, in the event of commencement
to the Qualified Spouse on or before the date that
would have been the deceased Participant's 65th
birthday, to a percentage thereof derived from Tables
A, B and C which are attached to and form a part of
the Plan, and on the assumption that the deceased
Participant had effectively elected Option A (50%)
under subsection 8.3 with his Qualified Spouse as his
Coannuitant. At the death of a Participant described
in this paragraph (b) who is not survived by a
Qualifie
Spouse, monthly payments shall be paid to such
Participant's estate for a period of 60 months
commencing on the first day of the month following
the month in which such Participant's death occurs.
The amount of each such monthly payment shall be
initially calculated as the deceased Participant's
Accrued Benefit based on his Credited and Continuous
Service, age and Compensation as of the date of his
death, which initially calculated amount then shall
be reduced to a percentage thereof, derived from
Tables D, E and F, which are attached to and form a
part of the Plan. Notwithstanding the foregoing,
unless subsection 8.11 applies no Retirement Income
shall be paid to a Qualified Spouse under this
paragraph (b) prior to the first day of the month
following the Participant's 65th birthday without
such Qualified Spouse's consent.
(c) Death of Certain Former Employees. If a Participant
who terminated his employment with all Employers and
Related Companies after attainment of age 55 and
completion of at least 20 years of Continuous Service
dies following such termination but before his
Annuity Starting Date, then a Retirement Income shall
be payable, commencing with the first day of the
month following the month in which the deceased
Participant's death occurs, in an amount determined
in the same manner and to the same persons as would
have been payable under paragraph (a) of this
subsection 10.3 if such Participant had died while
actively employed by the Employers and Related
Companies.
Payment under this subsection 10.3 is conditioned upon the Plan's
receipt of proper notice of the Participant's death, and payments
will not be made retroactively (except in the case of immediate
commencement following the Participant's death if notice is given
within 180 days following the date of death).
10.4. Lump Sum Election. Any Qualified Spouse, other Death
Beneficiary or the administrator of an estate entitled to a
Qualified Preretirement Survivor Annuity under subsection 10.2 or
a special death benefit under subsection 10.3 may elect payment
in the form of a Lump Sum that is the Actuarial Equivalent of the
benefit otherwise payable to such person or estate at any time
after the Participant's death (but no later than the date that
would have been his Normal Retirement Date), subject to the
provisions of subsection 8.11.
SECTION 11.
Funding Plan Benefits
11.1. Contributions. Subject to the provisions of
Section 13, the Employers will make contributions from time to
time to the Trustee in amounts that are sufficient (as determined
in accordance with the funding method and policy adopted by the
Company) to maintain the Plan in sound actuarial condition and as
are consistent with the provisions of section 412 of the Code.
Participants are not required or permitted to make contributions
under the Plan.
11.2. Forfeitures. Forfeitures arising under the Plan for
any reason will not be used to increase the benefits any person
would otherwise receive under the Plan and will instead be
applied to reduce the Plan contributions of the Employers.
11.3. No Reversion to Employers. No part of the corpus or
income of the Trust Fund will revert to any Employer or be used
for, or diverted to, purposes other than for the exclusive
benefit of Participants and other persons entitled to benefits
under the Plan, except as specifically provided in the Trust
Agreement and in the provisions set forth below:
(a) The contributions of each Employer under the Plan are
conditioned upon the deductibility thereof under
section 404 of the Code, and, to the extent any such
deduction is disallowed, the Trustee will, upon
written request of that Employer, return the amount
of the contribution (to the extent disallowed),
reduced by the amount of any losses thereon, to that
Employer within one year after the date the deduction
is disallowed.
(b) If a contribution or any portion thereof is made by
an Employer by a mistake of fact, the Trustee will,
upon written request of that Employer, return the
amount of the contribution or such portion, reduced
by the amount of any losses thereon, to that Employer
within one year after the date of payment to the
Trustee.
(c) Upon termination of the Plan, after all liabilities
to Participants and other persons entitled to
benefits under the Plan have been satisfied pursuant
to and in accordance with the provisions of Section
13, any residual assets will be returned to the
Employers.
SECTION 12.
Administration of the Plan and Management of Its Assets
12.1. Plan Administrator. The Plan Administrator is the
Company.
12.2. General Powers, Rights and Duties of Plan
Administrator. In addition to the powers, rights and duties
conferred or imposed upon the Plan Administrator elsewhere in the
Plan or by law, the Plan Administrator shall have the following
powers, rights and duties:
(a) To conclusively determine, in its sole discretion,
all questions arising under the Plan, including the
power to determine the rights and eligibility of
employees, Participants, Coannuitants, Beneficiaries
and other persons, and the amount of their Retirement
Incomes or other benefits under the Plan, and to
remedy ambiguities, inconsistencies or omissions,
and, without limiting the generality of the
foregoing, where records relating to any
Participant's Continuous Service,
Credited Service, and Compensation or other component
of any formula are not readily available, to estimate
any or all of such factors, which estimates will be
conclusive on all persons unless demonstrated to be
incorrect to the satisfaction of the Plan
Administrator;
(b) To adopt such rules of procedure and regulations as,
in its opinion, may be necessary for the proper and
efficient administration of the Plan and as are
consistent with the provisions of the Plan and
applicable law;
(c) To enforce the Plan in accordance with its terms and
the rules and regulations adopted by the Plan
Administrator;
(d) To furnish the Employers with such information as may
be required by them for tax or other purposes in
connection with the Plan;
(e) To utilize agents, attorneys, accountants, actuaries,
or other persons (who may be employees of the Company
or who also may be utilized by the Company) and to
allocate or delegate to them such powers, rights and
duties as the Plan Administrator considers necessary
or advisable to properly carry out the administration
of the Plan, provided that any allocation and
delegation of any fiduciary duty imposed upon the
Plan Administrator, and the acceptance thereof, shall
be in writing; and
(f) To direct any Trustee of assets of the Plan with
respect to payment of Retirement Income or other
benefits under the Plan.
12.3. Claims Review. The Plan Administrator shall
establish a claims review procedure which:
(a) Gives notice in writing to any Participant or other
person whose application for a Retirement Income or
other benefits has been denied;
(b) States the specific reason for such denial; and
(c) Affords a reasonable opportunity to such Participant
or other person for a full and fair review of any
decision.
The Plan Administrator or any person or persons designated by the
Plan Administrator shall review and make decisions on claim
denials. The records of the Employers as to a Participant's
period of employment, termination of employment and the reason
therefor, leave of absence, reemployment and Compensation will be
conclusive on all persons unless determined to the Plan
Administrator's satisfaction to be incorrect.
12.4. Expense of Plan Administration. All fees, costs,
expenses, taxes and charges incurred with respect to the
administration of the Plan (including, to the extent permitted by
law, any direct expenses incurred by the Company or any of its
affiliates in providing administrative services and office space
to the Plan or otherwise incurred by them in connection with the
Plan) shall be expenses of the Plan and shall be paid or
reimbursed from Plan assets.
12.5. Administrative Services and Office Space Provided by
the Company and its Affiliates. Any administrative services
rendered to the Plan by the Company or its affiliates, and the
provision of office space in connection therewith, shall be
subject to the approval of the Benefits Executive, acting in the
capacity of a named fiduciary of the Pension Plan.
12.6. Responsibilities of Investment Committee. All of the
assets of the Plan shall be managed and controlled by a
Investment Committee consisting of not less than three
individuals who shall be the "named fiduciaries" for all purposes
of ERISA relating to the acquisition, retention and disposition
of Plan assets for purposes other than payment of Retirement
Income and other benefits under the Plan. The members of the
Investment Committee shall be appointed by the Company and shall
serve at the pleasure of the Company.
12.7. General Powers, Rights and Duties of Investment
Committee. Except as otherwise specifically provided in
subparagraph 12.2(f), and in addition to the powers, rights and
duties specifically given to the Investment Committee elsewhere
in the Plan, by law, and in any Trust agreement, the Investment
Committee shall have the following powers, rights and duties:
(a) To direct any Trustee with respect to the
acquisition, retention and disposition of the Plan
assets, and with respect to the exercise of
investment powers, authorities and discretions
relating to such assets, and without limiting the
generality of the foregoing, the Investment Committee
is specifically authorized to direct any Trustee to
invest assets of the Plan in common shares of the
Company, provided that the aggregate amount of the
assets of the Plan invested in any such common
shares, immediately following any acquisition
thereof, shall not exceed 10% of the fair market
value of the assets of the Plan;
(b) To furnish any Trustee, the Plan Administrator and
the Company with such information as may be required
for any purpose related to the Plan;
(c) To adopt such rules of procedure and regulations as
in the Investment Committee's opinion may be
necessary for the proper and efficient performance of
the Committee's duties and responsibilities;
(d) To appoint an Executive Director and a Secretary, who
may, but need not, be members of the Investment
Committee and to employ such other agents, attorneys,
accountants, investment advisors, actuaries, and
other persons and to delegate to them and to allocate
among them, in writing, such powers, rights and
duties as the Investment Committee may consider
necessary or advisable
properly to carry out the Investment Committee's
responsibilities; and in the same manner to revoke
such delegation and allocation; the acceptance of
such written allocation or delegation shall also be
in writing; any action of the delegate or person to
whom responsibilities have been allocated shall have
the same force and effect for all purposes hereunder
as if such action had been taken by the Investment
Committee; neither the Investment Committee nor any
of its members shall be liable for the acts or
omissions of such delegates or persons to whom
responsibilities have been allocated except as
required by law;
(e) Without limiting the generality of (d) above, to
appoint an investment manager as defined in section
3(38) of ERISA ("Investment Manager") to manage (with
power to acquire and dispose of) Plan assets, which
Investment Manager may or may not be a subsidiary of
the Company, and to delegate to any such Investment
Manager all of the powers, authorities and
discretions granted to the Investment Committee
hereunder or under the Trust Agreement (including the
power to delegate and, in the case of Sears
Investment Management Co., the power, with prior
notice to the Investment Committee, to appoint an
Investment Manager), in which event any direction to
any Trustee from such Investment Manager with respect
to the acquisition, retention or disposition of Plan
assets shall have the same force and effect as if
such direction had been given by the Investment
Committee and to remove such Investment Manager;
provided, however, that the power and authority to
manage, acquire or dispose of any asset of the Plan
shall not be delegated except to an Investment
Manager, and provided further that the acceptance by
any Investment Manager of such appointment and
delegation shall be in writing, and the Investment
Committee shall give notice to the Trustee, in
writing, of any appointment of, delegation to, or
removal of, any Investment Manager; and
(f) To adopt from time to time the methods of funding.
12.8. Manner of Action by Investment Committee. In the
performance of the Investment Committee's duties, the following
provisions shall apply where the context admits:
(a) Any Investment Committee member, by written
instrument, may delegate any or all of his rights,
powers, duties or discretions to any other Committee
member, with the consent of the latter.
(b) The Investment Committee may act by meeting or by a
written instrument signed without meeting and may
execute any document by signing one document or
concurrent documents.
(c) An action or decision of a majority of the members of
the Investment Committee as to a matter shall be as
effective as if taken or made by all members of the
Investment Committee, but, except to the extent
otherwise
expressly provided by law, no member of the
Investment Committee who dissents from any action or
decision of a majority of the Investment Committee
shall be liable or responsible for such action.
(d) If, because of the number qualified to act, there is
an even division of opinion among the members of the
Investment Committee as to any matter, a
disinterested party selected by the Investment
Committee shall decide the matter and his decision
shall control.
(e) The certificate of the Secretary of the Investment
Committee or of a majority of the members of the
Investment Committee that the Investment Committee
has taken or authorized any action shall be
conclusive in favor of any person relying on the
certificate.
12.9. Expenses of Asset Management. All fees, costs,
expenses, taxes and charges incurred in connection with the
operation, preservation and management of Plan assets (including,
to the extent permitted by law, any direct expenses incurred by
the Company or any of its affiliates in providing asset
management services and office space to the Plan) shall be
expenses of the Plan and shall be paid or reimbursed from Plan
assets.
12.10. Asset Management Services Provided by the Company
and its Affiliates. Any services rendered to the Plan or the
Trust by the Company or its affiliates, and the provision of
office space in connection therewith, shall be subject to the
approval of the Investment Committee, acting as a named fiduciary
of the Plan.
12.11. Indemnification of Individuals Acting on Behalf of
the Company. To the full extent permitted by law and to the
extent not covered by any applicable insurance policy, any person
acting on behalf of the Company with respect to the Plan will be
indemnified by the Employers against any and all liabilities,
losses, costs and expenses (including legal fees and expenses) of
whatsoever kind and nature which may be imposed on, incurred by,
or asserted against such person by reason of the performance of
the functions delegated to such person by the Plan Administrator
if such person did not act dishonestly or in willful violation of
the law or regulation under which such liability, loss, cost or
expense arises.
12.12. Separation and Limitation of Duties and
Responsibilities of Plan Administrator, Investment Committee and
Employers. To the extent permitted by law, none of the Plan
Administrator, the Investment Committee and the Employers shall
be obliged to inquire into, or otherwise be responsible for, the
acts or omissions of any of the others, and neither the Plan
Administrator nor any member of the Investment Committee shall be
personally liable for the payment of any benefit under the Plan.
12.13. Information to be Furnished by Participants and
Employers. Each Participant and each Qualified Spouse,
Beneficiary, Coannuitant or alternate payee or other entitled to
benefits under the Plan shall furnish the Plan Administrator with
such documents, evidence, data
or information as the Plan Administrator considers necessary or
desirable for purposes of administering the Plan. Without
limiting the generality of the foregoing, each person entitled to
receive Retirement Income or Deferred Vested Benefits under the
Plan must file with the Plan Administrator, in writing, his post
office address and each change of post office address. Any
communication, statement or notice addressed to any such person
at his last post office address so filed will be binding upon
such person, and neither the Plan Administrator nor any employer
is required to search for or locate any such person. The
Employers shall furnish the Plan Administrator with such data or
information within their possession as the Plan Administrator may
deem necessary or desirable in order to administer the Plan.
SECTION 13.
Amendment, Termination and Merger
13.1. Amendment. While it is expected that the Plan will
be continued, the Company may amend the Plan from time to time by
action of its Board of Directors or by a duly-authorized
administrative committee or by a duly authorized officer of the
Company; provided, however, that no amendment will reduce a
Participant's Accrued Benefit to less than the accrued benefit
that he would have been entitled to receive if he had resigned
from the employ of the Employers and Related Companies on the day
of the amendment (except to the extent permitted by section
412(c)(8) of the Code) and no amendment will eliminate an
optional form of benefit with respect to a Participant or
Beneficiary except as otherwise permitted by law and applicable
regulation. Any such amendment may be made retroactively
effective if, in the opinion of the Plan Administrator, such
amendment is necessary or appropriate to conform the Plan
document to a consistent interpretation or administrative rule,
or to secure or retain a determination by any Federal government
agency having the required jurisdiction that the Plan qualifies
under the provisions of applicable Federal law, or any applicable
rule or regulation made pursuant to any such applicable Federal
law.
13.2. Termination. The Plan will terminate as to all of
the Employers on any day specified by the Company. Affected
employees of any Employer will cease active participation in the
Plan on the first to occur of the following:
(a) the date on which that Employer ceases to be a
contributing sponsor of the Plan by appropriate
action taken by the Company or such Employer;
(b) the date that Employer is judicially declared
bankrupt or insolvent; or
(c) the dissolution, merger, consolidation,
reorganization or sale of that Employer, or the sale
by that Employer of all or substantially all of its
assets, except that, subject to the provisions of
subsection 13.3, with the consent of the Company, in
any such event arrangements may be made whereby the
Plan will be continued by any successor to that
Employer or any purchaser of all or
substantially all of that Employer's assets, in
which case the successor or purchaser will be
substituted for the Employer under the Plan.
13.3. Merger and Consolidation of Plan, Transfer of Plan
Assets. In the case of any merger or consolidation with, or
transfer of assets and liabilities to, any other plan, provisions
will be made so that each affected Participant in the Plan on the
date thereof, if the Plan then terminated, would receive a
benefit immediately after the merger, consolidation or transfer
which is equal to or greater than the benefit he would have been
entitled to receive immediately prior to the merger,
consolidation or transfer if the Plan had then terminated. If
another plan (the "Merged Plan") is merged into this Plan, the
total liabilities of the Merged Plan are less than 3 percent of
the assets of the Plan, and if there is a spinoff from the Plan
or the Plan terminates within five years after such merger, then
Plan assets will be allocated first for the benefit of the
participants in the Merged Plan to the extent of the present
value of their benefits as of the date of the merger.
13.4. Distribution on Termination. On termination of the
entire Plan with respect to all Employers, the Trust Fund will be
liquidated by the Trustee. After payment of all expenses of
liquidation, the Plan Administrator will allocate the remainder
of the Trust Fund assets and cause them to be distributed by the
Trustee in the manner and order set forth in section 4044 of
ERISA to the extent of the sufficiency of such assets. If any
assets remain after satisfaction of all liabilities of the Plan
to Participants and Beneficiaries, such surplus assets will be
distributed to the Company, or, if applicable, to its assigns.
13.5. Notice of Amendment, Termination or Partial
Termination. Affected Participants will be notified of an
amendment, termination or partial termination of the Plan as
required by law.
DEATH BENEFIT REDUCTION TABLE - MARRIED
POST-1988 BASE BENEFIT WITH REDUCTION FROM AGE 65
(TABLE A)
_____________________________________________________________________
EXACT EARLY APPLICABLE EXACT EARLY APPLICABLE
PAYMENT PERIOD* PERCENTAGE** PAYMENT PERIOD* PERCENTAGE**
1 Years 95.00% 26 Years 11.68*
2 90.00 27 10.74
3 85.00 28 9.87
4 80.00 29 9.08
5 75.00 30 8.35
6 70.00 31 7.69
7 65.00 32 7.08
8 60.00 33 6.52
9 55.00 34 6.01
10 50.00 35 5.54
11 45.30 36 5.11
12 41.10 37 4.71
13 37.34 38 4.35
14 33.96 39 4.01
15 30.92 40 3.70
16 28.19 41 3.42
17 25.72 42 3.15
18 23.49 43 2.91
19 21.47 44 2.69
20 19.64
21 17.98
22 16.47
23 15.10
24 13.86
25 12.72
* "Early Payment Period" is number of years
between first day of month next following
participant's date of death and first day of
month next following participant's 65th
birthday.
** For a period other than exact whole number
of years, applicable percentage will be
determined by interpolation between appropriate
whole-year factors.
DEATH BENEFIT REDUCTION TABLE - MARRIED
POST-1988 ADDITIONAL BENEFIT
(TABLE B)
_________________________________________________________
EXACT EARLY APPLICABLE EXACT EARLY APPLICABLE
PAYMENT PERIOD* PERCENTAGE** PAYMENT PERIOD* PERCENTAGE**
1 Years 92.00% 26 Years 11.22%
2 84.00 27 10.31
3 76.00 28 9.48
4 72.00 29 8.72
5 68.00 30 8.02
6 64.00 31 7.38
7 60.00 32 6.80
8 56.00 33 6.26
9 52.00 34 5.77
10 48.00 35 5.32
11 45.49 36 4.90
12 39.46 37 4.52
13 35.84 38 4.17
14 32.60 39 3.85
15 29.69 40 3.55
16 27.06 41 3.28
17 24.69 42 3.03
18 22.55 43 2.79
19 20.61 44 2.58
20 18.85
21 17.26
22 15.82
23 14.50
24 13.30
25 12.72
* "Early Payment Period" is number of years
between the first day of month next following
participant's date of death and first day of
month next following participant's 65th
birthday.
** For a period other than exact whole number
of years, applicable percentage will be
determined by interpolation between appropriate
whole-year factors.
DEATH BENEFIT REDUCTION TABLE - MARRIED
PRE-1989 ADJUSTED BENEFIT
IMMEDIATE CREDIT BENEFIT
(TABLE C - Formerly Table 3)
_________________________________________________
EXACT EARLY APPLICABLE EXACT EARLY APPLICABLE
PAYMENT PERIOD* PERCENTAGE** PAYMENT PERIOD* PERCENTAGE**
1 Years 95.00% 21 Years 18.12%
2 90.00 22 16.62
3 85.00 23 15.26
4 80.00 24 14.01
5 75.00 25 12.88
6 70.00 26 11.84
7 65.00 27 10.89
8 60.00 28 10.02
9 54.36 29 9.22
10 49.32 30 8.49
11 44.80 31 7.82
12 40.74 32 7.21
13 37.10 33 6.65
14 33.81 34 6.13
15 30.85 35 5.65
16 28.17 36 5.21
17 25.75 37 4.81
18 23.56 38 4.44
19 21.57 39 4.10
20 19.76 40 3.78
41 3.49
42 3.22
* "Early Payment Period" is number of years
between first day of month next following
participant's date of death and first day of
month next following participant's 63rd
birthday.
** For a period other than exact whole number
of years, applicable percentage will be
determined by interpolation between appropriate
whole-year factors.
DEATH BENEFIT REDUCTION TABLE - SINGLE
POST-1988 BASE BENEFIT WITH REDUCTION FROM AGE 65
(TABLE D)
__________________________________________________
EXACT EARLY APPLICABLE EXACT EARLY APPLICABLE
PAYMENT PERIOD* PERCENTAGE** PAYMENT PERIOD* PERCENTAGE**
1 Years 92.95% 26 Years 11.66%
2 88.25 27 10.72
3 83.51 28 9.86
4 78.75 29 9.07
5 73.94 30 8.34
6 69.12 31 7.68
7 64.26 32 7.07
8 59.38 33 6.51
9 54.66 34 6.00
10 49.58 35 5.54
11 44.96 36 5.11
12 40.83 37 4.71
13 37.11 38 4.35
14 33.78 39 4.01
15 30.77 40 3.70
16 28.06 41 3.42
17 25.62 42 3.15
18 23.41 43 2.91
19 21.40 44 2.69
20 19.59
21 17.94
22 16.44
23 15.07
24 13.83
25 12.70
* "Early Payment Period" is number of years
between first day of month next following
participant's date of death and first day of
month next following participant's 65th
birthday.
** For a period other than exact whole number
of years, applicable percentage will be
determined by interpolation between appropriate
whole-year factors.
DEATH BENEFIT REDUCTION TABLE - SINGLE
POST-1988 ADDITIONAL BENEFIT
(TABLE E)
_________________________________________________________
EXACT EARLY APPLICABLE EXACT EARLY APPLICABLE
PAYMENT PERIOD* PERCENTAGE** PAYMENT PERIOD* PERCENTAGE**
1 Years 90.01% 26 Years 11.20%
2 82.37 27 10.29
3 74.67 28 9.47
4 70.87 29 8.71
5 67.04 30 8.01
6 63.19 31 7.37
7 59.32 32 6.79
8 55.42 33 6.25
9 51.68 34 5.76
10 47.60 35 5.32
11 43.16 36 4.90
12 39.20 37 4.52
13 35.62 38 4.17
14 32.42 39 3.85
15 29.55 40 3.55
16 26.94 41 3.28
17 24.59 42 3.03
18 22.47 43 2.79
19 20.55 44 2.58
20 18.80
21 17.22
22 15.79
23 14.47
24 13.28
25 12.19
* "Early Payment Period" is number of years
between first day of month next following
participant's date of death and first day of
month next following participant's 65th
birthday.
** For a period other than exact whole number
of years, applicable percentage will be
determined by interpolation between appropriate
whole-year factors.
DEATH BENEFIT REDUCTION TABLE - SINGLE
PRE-1989 ADJUSTED BENEFIT
IMMEDIATE CREDIT BENEFIT
(TABLE F - Formerly Table 4)
________________________________________________
EXACT EARLY APPLICABLE EXACT EARLY APPLICABLE
PAYMENT PERIOD* PERCENTAGE** PAYMENT PERIOD* PERCENTAGE**
1 Years 93.34% 21 Years 18.08%
2 88.59 22 16.59
3 83.80 23 15.24
4 78.99 24 13.99
5 74.15 25 12.86
6 69.28 26 11.83
7 64.60 27 10.88
8 59.50 28 10.01
9 53.95 29 9.21
10 48.99 30 8.48
11 44.53 31 7.81
12 40.52 32 7.20
13 36.92 33 6.65
14 33.66 34 6.13
15 30.73 35 5.65
16 28.07 36 5.21
17 25.67 37 4.81
18 23.50 38 4.44
19 21.52 39 4.10
20 19.72 40 3.78
41 3.49
42 3.22
* "Early Payment Period" is number of years
between first day of month next following
participant's date of death and first day of
month next following participant's 63rd
birthday.
** For a period other than exact whole number
of years, applicable percentage will be
determined by interpolation between appropriate
whole-year factors.
SUPPLEMENT A
TO
SEARS PENSION PLAN
THE SUPPLEMENTAL PLAN
A-1. Purpose. The Sears Pension Plan is an amendment and
restatement of the Sears Supplemental Pension Plan (the
"Supplemental Plan") with respect to those employees on
January 1, 1978 who were participants in the Supplemental Plan on
December 31, 1977 and those retired participants and former
participants in the Supplemental Plan who, on
December 31, 1977, were entitled to receive benefits under the
Supplemental Plan. The purpose of this Supplement A is:
(a) To set forth those particulars wherein the Plan, as
applied to Participants in this Supplement A, and the
Retirement Income and other benefits to be provided
under the Plan, differ from, and may be in addition to,
the Retirement Income and other benefits provided under
the Supplemental Plan; and
(b) To provide for the protection and preservation of the
benefits accrued through December 31, 1977 under the
Supplemental Plan for Participants in this Supplement
A.
Any benefits provided for any person under this Supplement A will
be in addition to the benefits, if any, payable to such person
under the Plan.
A-2. Use of Terms. Except where the context of this
Supplement A expressly indicates to the contrary, terms used and
defined in the Plan or in Supplement B shall have the same
meanings for purposes of this Supplement A. As used in this
Supplement A, the term "this Supplement A" shall include only
this Supplement A and any tables or exhibits attached to and
forming a part of this Supplement A, and references to the "Plan"
shall include all provisions of the Plan and all other
supplements, tables and exhibits attached to and forming a part
of the Plan, but shall not include this Supplement A.
A-3. Conflicts Between Plan and This Supplement A. This
Supplement A, together with the Plan, comprises the Plan with
respect to participants in this Supplement A. In case of any
conflict between the provisions of the Plan and this Supplement
A, the terms and provisions of this Supplement A shall govern to
the extent necessary to eliminate such conflict.
A-4. Participants. Only those employees of the Employers on
January 1, 1978 and other persons who were participants in the
Supplemental Plan on December 31, 1977 and those retired
participants, former participants and contingent annuitants in
the Supplemental Plan who, on December 31, 1977, were receiving
or were entitled to receive, benefits under the Supplemental Plan
will be participants in this Supplement A. No other employees of
the Employers will be eligible to become participants in this
Supplement A. Notwithstanding the foregoing provisions of this
subsection A-4, a participant who is a highly compensated
employee,
as such term is defined in section 414(q) of the Internal Revenue
Code, at any time on or after December 31, 1988 and who either
terminates employment prior to November 8, 1994 (and is not
rehired prior to his Annuity Starting Date) or terminates
employment under the Sears 1993 Early Retirement Incentive
Program for Checklist Associates (as described in Supplement I)
shall cease to accrue benefits under this Supplement A as of the
later of December 31, 1988 or the first day of the first plan
year during which such participant first becomes a highly
compensated employee.
A-5. Amount of Supplement A Retirement Income. The
Retirement Income of a vested participant covered by this
Supplement A shall be an annuity payable each month for life
commencing on his Normal Retirement Date in an amount equal to:
(a) one and one-half percent (1-1/2%) of that part of the
annual amount of his Final Average Monthly Compensation
(as defined below) which is in excess of $1,250,
multiplied by
(b) the period of his credited service as of December 31,
1977 as determined under the provisions of the Plan in
effect on that date,
provided, however, that in no event will the monthly retirement
income for any such participant in this Supplement A be less than
1/12th of the annual amount of retirement allowance accrued for
him under the Supplemental Plan through December 31, 1977. For
purposes of (a) above,
(c) There shall be excluded from amounts otherwise included
in the term "Compensation" any compensation paid to an
employee who either was not exempt from Sections 6 and
7 of the Fair Labor Standards Act of 1938, as amended,
or would not have been so exempt under that Act as
amended to December 31, 1966, except that any such
compensation which otherwise would qualify as compen-
sation shall be taken into account if it is paid to any
employee during a calendar year in which the employee
ceased to be so exempt under such Act as in effect on
December 31, 1966; and
(d) For purposes of computing Final Average Monthly
Compensation in the case of any Participant who, prior
to severance from employment, ceases to receive any
compensation, as so defined, the ten-year period ending
with the last calendar year during which he received
any such compensation will be used.
Notwithstanding the foregoing, no additional benefits shall be
accrued by any Participant under this Supplement A after December
31, 1999, on which date each Participant's Retirement Income
under this Supplement A shall be fixed.
A-6. Vesting. A Participant in this Supplement A will be
fully vested in his Supplement A benefit if he severs his
employment with all Employers and Related Companies after he has
completed at least 5 years of Continuous Service or after
attainment of age 60. Notwithstanding
the preceding sentence, the nonforfeitable percentage of the
basic monthly Retirement Income of a Participant in this
Supplement A who does not have an Hour of Service on or after
January 1, 1989 will be determined under the provisions of this
Supplement A as in effect on December 31, 1988.
A-7. Early Commencement of Supplement A Benefit. In
general, a Participant in this Supplement A who is also entitled
to a Retirement Income or Deferred Vested Benefit under the main
provisions of the Plan will be paid his entire benefit under the
Plan, including the benefit payable under this Supplement A, at
the same time, pursuant to a single election with one Annuity
Starting Date, except as otherwise provided under Section 9 with
respect to part-time employment after age 65 and reemployment.
If, however, a Participant in this Supplement A wants to commence
his Supplement A benefit between the first day of the month after
he attains age 60 (when he can begin receiving his Supplement A
benefit without reduction for early commencement) and the first
day of the month after he attains age 65, he can do so without
commencing his Retirement Income or Deferred Vested Benefit under
the main provisions of the Plan at the same time. In that case,
such Participant will have two Annuity Starting Dates and two
separate elections and, if such individual happens to die after
the Annuity Starting Date for his Supplement A benefit but before
the Annuity Starting Date for his Retirement Income or Deferred
Vested Benefit under the main provisions of the Plan, the
residual portion, if any, of his Supplement A benefit will be
paid to his Coannuitant or Beneficiary in accordance with the
form of payment he selected for his Supplement A benefit, and the
Accrued Benefit remaining under the main provisions of the Plan
will be paid in accordance with Section 10 of the Plan.
A-8. Amount of Supplement A Benefit Paid Prior to Age 60. A
Participant in this Supplement A who commences payment of his
Supplement A benefit on or after the first day of the month
following attainment of age 60 will receive the amount determined
under subsection A-5 without reduction for early commencement
(but actuarially adjusted, if necessary, to reflect the elected
form of payment). A Participant in this Supplement A may
commence payment earlier than the first day of the month
following his attainment of age 60 if he commences receipt of his
Retirement Income or Deferred Vested Benefit under the main
provisions of Plan earlier than that date, subject to the
following adjustments for early commencement:
(a) In the case of a Participant in this Supplement A who
retires on an Early Retirement Date and commences
receiving a Retirement Income under Section 5, the
amount determined initially in accordance with
paragraph A-5 will be reduced by one-half of one
percent (1/2%) thereof for each full month that the date
of commencement precedes the first day of the month
following the date on which he would attain age 60.
(b) In the case of a Participant in this Supplement A who
commences receipt of a Deferred Vested Benefit under
Section 6, the amount determined initially in
accordance with paragraph A-5 will be reduced to its
actuarial equivalent as determined according to the
following:
Age at Commencement Percentage Payable
60 or older 100%
59 89.85%
58 80.89%
57 72.94%
56 65.89%
55 59.61%
A-9. Retirement Allowances and Other Benefits for
Participants Not Entitled to Benefits Under the Plan. Except as
otherwise expressly provided in Exhibit II of this Supplement A,
persons who are participants in this Supplement A and who, on or
after January 1, 1978 are not receiving, and do not become
entitled to receive, any Retirement Income or other benefits
under the Plan, will not receive any additional benefits under
this Supplement A or the Plan because of their participation in
this Supplement A. However, subject to the provisions of any
Exhibit to this Supplement A, such participants (and their
surviving spouses, designated annuitants and contingent
annuitants) will be entitled to receive, pursuant to this
Supplement A, the same retirement allowances, or other benefits
based upon such retirement allowances, as they were receiving, or
such Participants were entitled to receive, under the provisions
of the Supplemental Plan, as in effect on December 31, 1977,
based upon continuous service accrued, and compensation received,
up to, but not beyond, that date. Any such Participant whose
retirement allowance is based upon such Participant's employment
with the Employers may elect to receive such retirement allowance
in one of the optional forms provided under subsection 8.3 of the
Plan.
A-10. Effect of Other Plan Provisions. Except to the
extent expressly overridden by any of the provisions of this
Supplement A, all of the other provisions of the Plan will apply
with respect to eligibility for, and payment of, monthly
Retirement Income or other benefits under this Supplement A.
Notwithstanding the foregoing, if a Participant in this
Supplement A dies and Retirement Income payments become payable
under Section 10 of the Plan to his Qualified Spouse or his
estate (or would have become payable except for such
Participant's severance of employment after December 31, 1975 and
before January 1, 1978), the monthly Retirement Income payable to
his Qualified Spouse or estate under this Supplement A shall be
calculated in the same manner and under the same assumptions as
apply in calculating the amount payable to his Qualified Spouse
or estate under Section 10 except that the initially calculated
amount under this Supplement A shall be reduced to a percentage
thereof derived from Table A-1 in the case of payments to a
Qualified Spouse or from Table A-2 in the case of payments to an
estate, which tables are attached to and form a part of this
Supplement A, and in the case of payments to a Qualified Spouse,
such initially calculated amount shall be reduced to its
Actuarial Equivalent.
SUPPLEMENT A
TO
SEARS PENSION PLAN
Table A-1
Exact Early Applicable Exact Early Applicable
Payment Period* Percentage** Payment Period* Percentage**
1 years 94.00% 16 years 25.16%
2 88.00 17 23.05
3 82.00 18 21.14
4 76.00 19 19.39
5 70.00 20 17.80
6 63.42 21 16.35
7 57.54 22 15.02
8 52.26 23 13.81
9 47.53 24 12.70
10 43.28 25 11.69
11 39.45 26 10.76
12 35.99 27 9.91
13 32.87 28 9.13
14 30.04 29 8.41
15 27.48 30 7.75
* "Early Payment Period" is number of years
between first day of month next following
participant's date of death and first day of
month next following participant's 60th
birthday.
** For a period other than exact whole number
of years, applicable percentage will be
determined by interpolation between
appropriate whole-year factors.
SUPPLEMENT A
TO
SEARS PENSION PLAN
Table A-2
Percentages to be Applied Pursuant to Subparagraph (f) of
Paragraph A-11 of Supplement A in Determining Monthly Amount of
60 Installments Payable to Estate of Unmarried Participant Under
Paragraph A-10 of Supplement A
Exact Early Applicable Exact Early Applicable
Payment Period* Percentage** Payment Period* Percentage**
1 years 92.81% 16 years 25.10%
2 87.00 17 23.00
3 81.16 18 21.10
4 75.30 19 19.36
5 69.42 20 17.77
6 62.94 21 16.33
7 57.15 22 15.00
8 51.95 23 13.79
9 47.27 24 12.69
10 43.07 25 11.68
11 39.28 26 10.75
12 35.85 27 9.90
13 32.76 28 9.12
14 29.95 29 8.40
15 27.41 30 7.74
* "Early Payment Period" is number of years
between first day of month next following
participant's date of death and first day of
month next following participant's 60th
birthday.
** For a period other than exact whole number of
years, applicable percentage will be
determined by interpolation between
appropriate whole-year factors.
EXHIBIT I DELETED NOVEMBER 8, 1995
EXHIBIT II
1. Purpose. The purpose of this Exhibit II is to set
forth the terms and conditions of increased pension benefits
which are to become effective October 1, 1979 (the "Effective
Date" of this Exhibit II) for certain Participants in Supplement
A.
2. Applicability. The provisions of this Exhibit II apply
only to those Participants in Supplement A who:
(a) are described in paragraph A-9 of Supplement A; and
(b) on December 31, 1977 were receiving a monthly
Retirement Income under the Supplemental Plan or, on or
after that date and before the Effective Date, became
entitled to receive a monthly Retirement Income
following the death of a person who, on December 31,
1977, was receiving a monthly Retirement Income under
the Supplemental Plan; and
(c) are alive on the effective date.
Persons to whom the provisions of this Exhibit II apply are
referred to below as "Covered Persons".
3. Determination of Amount of Pension Benefit Increase.
The amount of a Covered Person's pension benefit increase under
this Exhibit II depends upon the earliest date as of which
monthly Retirement Income under the Supplemental Plan commenced
to be paid either to the Covered Person or to the retired or
deceased employee upon whose retirement allowance such Covered
Person's pension benefit is based (the "Commencement Date").
Subject to the limitations set forth in paragraph (4) below, the
amount of pension benefit increase for any Covered Person will be
determined as follows:
(a) If the monthly pension payment was computed based upon
"Final Average Monthly Participating Compensation" in
accordance with the provisions of the Supplemental Plan
as in effect on or after February 1, 1971, the monthly
Retirement Income otherwise payable to such Covered
Person on the Effective Date shall be increased by an
amount equal to 1% thereof, multiplied by the number of
calendar years (including the calendar years in which
the Commencement and Effective Dates occurred) elapsed
between the Commencement Date and the Effective Date.
(b) If the monthly Retirement Income was computed based
upon "total participating annual compensation" in
accordance with the provisions of the Supplemental Plan
as in effect before February 1, 1971, the monthly
Retirement Income otherwise payable to such Covered
Person on the Effective Date shall be increased
by an amount equal to 2% thereof, multiplied by the
number of calendar years (including the calendar years
in which the Commencement and Effective Dates occurred)
elapsed between the Commencement Date and the Effective
Date.
(c) Notwithstanding the foregoing, the minimum amount of
any increase in any monthly pension benefit, calculated
pursuant to (a) or (b) above, shall be ten dollars
($10) and the maximum amount of any increase in any
monthly pension benefit, calculated pursuant to (a) or
(b) above, shall be two hundred dollars ($200).
(d) Beginning with the Effective Date, any increase in any
pension benefit, as determined in accordance with the
foregoing provisions, shall be payable subject to the
same terms and conditions as the pension benefit to
which such increase is added.
4. Limitations on Pension Benefit Increases. The amount
of any increase, as determined in accordance with paragraph (3)
above, is subject to such of the following limitations as may
apply:
(a) Such increase, when added to the monthly pension
benefit otherwise payable to such Covered Person on the
Effective Date, shall not exceed the Actuarial
Equivalent of the maximum retirement allowance that
could be paid under the limitations of subsection
415(b) of the Internal Revenue Code of 1986, as
adjusted from time to time pursuant to such Code.
(b) Such increase shall not exceed the sum of:
(i) the excess of:
(A) the monthly amount of single life annuity
normal retirement allowance which could have
been provided under the Supplemental Plan at
the Commencement Date, exclusive of any
portion of such retirement allowance which
was permitted to be provided on account of
the employee's accumulation in the Profit
Sharing Fund arising out of the Employers'
Contributions under the Profit Sharing Fund,
increased by the compound rate of the
increase in the Consumer Price Index - Urban
Wage Earners and Clerical Employees, U. S.
City Average, All Items - Series A (1967-1OO)
U. S. Department of Labor, Bureau of Labor
Statistics, in the period from the first day
of the year in which the commencement date
occurred to the effective date,
over
(B) the monthly amount of single life annuity
normal retirement allowance which could have
been provided under the Supplemental Plan at
the Commencement Date, exclusive of any
portion of such retirement allowance which
was permitted to be provided on account of
the employee's accumulation in the Profit
Sharing Fund arising out of the Employer's
Contributions under the Profit Sharing Fund;
plus
(ii) the excess, if any, of:
(A) the monthly amount of single life annuity
normal retirement allowance which could have
been provided at the commencement date with
the employee's accumulation in the Profit
Sharing Fund arising out of the Employers'
Contributions to the Profit Sharing Fund up
to the Commencement Date, plus the amount of
retirement allowance described in (i)(B)
above,
over
(B) the monthly amount of single life annuity
normal retirement allowance which could have
been provided at the Commencement Date.
(c) the amount of any increased pension benefit for any
covered person whose retirement allowance under the
Supplemental Plan is subject to the restrictions of
Supplement B to the Plan also shall be subject to the
restrictions of such Supplement B, except that the
period of such restrictions with respect to such
increased amount shall begin on the Effective Date and
end on September 30, 1989.
SUPPLEMENT B
TO
SEARS PENSION PLAN
CALCULATION OF ACCRUED BENEFITS FOR
PARTICIPANTS IN THE PLAN ON DECEMBER 31, 1988
B-1. Purpose. The Sears Pension Plan has been amended and
restated effective January 1, 1989 to comply with applicable
provisions of the Tax Reform Act of 1986, including new
restrictions on integration with Social Security benefits under
section 401(l) of the Internal Revenue Code. This Supplement B
contains the provisions of the Plan as in effect on December 31,
1988 that are relevant to determining the benefits accrued by
Participants as of that date which form part of the new formula
under paragraphs (a)(i) and (a)(ii) of subsection 5.1 or are
protected from reduction under subsection 5.6.
B-2. Use of Terms. Except where the context of this
Supplement B expressly indicates to the contrary, terms used and
defined in the Plan shall have the same meanings for purposes of
this Supplement B. As used in this Supplement B, the term "this
Supplement B" shall include only this Supplement B and any tables
or exhibits attached to and forming a part of this Supplement B,
and references to the "Plan" shall include all provisions of the
Plan and all other supplements, tables and exhibits attached to
and forming a part of the Plan, but shall not include this
Supplement B.
B-3. Conflicts Between Plan and This Supplement B. This
Supplement B, together with the Plan, comprises the Plan with
respect to Participants in this Supplement B. In case of any
conflict between the provisions of the Plan and this Supplement
B, the terms and provisions of this Supplement B shall govern to
the extent necessary to eliminate such conflict.
B-4. Supplement B Participants. Only those employees and
former employees of the Employers who had accrued a benefit under
the Plan as of December 31, 1988 and who have Credited Service
under the Plan on or after January 1, 1989 will be Participants
in this Supplement B.
B-5. Basis of Supplement B Benefit. A Participant's
"Supplement B benefit" under this Supplement B will be based upon
his "Credited Past Service", his "Credited Future Service", his
"Past Service Compensation", his "Final Average Monthly
Compensation", and his "Estimated Projected Primary Social
Security Benefit", each as defined below.
B-6. Continuous Service. "Continuous Service" for purposes
of this Supplement B will have the same meaning as Continuous
Service under subsection 2.2 of the Plan.
B-7. Credited Past Service. Only those employees in the
employ of the Employers on January 1, 1978 who became
Participants in the Plan on that date will be eligible for
Credited Past Service. An eligible Participant's "Credited Past
Service" means that portion of his Continuous
Service which occurred before January 1, 1978 and after the date
on which he was first credited with a Year of Eligibility
Service, but before his Normal Retirement Date. A Participant's
"Period of Credited Past Service" means the number of years, and
any fractional year, of Credited Past Service.
B-8. Credited Future Service. A participant's "Credited
Future Service" means that portion of his period of Continuous
Service which occurred after December 31, 1977 and before
January 1, 1989 during which he was an employee of one or more
Employers and after the date on which he was first credited with
a Year of Eligibility Service, whichever is applicable to him;
provided, however, that Credited Future Service shall not include
any such period of Continuous Service that occurred after the end
of the calendar month in which he attained age 65 but before
January 1, 1988, unless the Participant completes an Hour of
Service (as defined in subsection 2.5 of the Plan) on or after
January 1, 1988. A Participant's "Period of Credited Future
Service" means the number of years, and any fractional year, of
Credited Future Service.
B-9. Compensation. The term "Compensation" for purposes of
this Supplement B means total cash compensation paid to an
employee for personal services rendered to an Employer, including
salary, wages, pre-tax employee deposits under any qualified
profit sharing or stock bonus plan maintained by an Employer,
employer contributions on behalf of the employee to a cafeteria
plan of an Employer pursuant to section 125 of the Internal
Revenue Code of 1986, bonuses, incentive payments, commissions,
overwrites, vacation pay, unit closing allowances (except to the
extent such allowances are paid in a lump sum), employer payments
for temporary military service and short-term illness allowances,
but excluding any awards under any long-term executive
compensation plan, service allowances, retirement or profit
sharing benefits, long-term disability benefit payments, prizes
or awards, retainers, living expense allowances, moving
allowances, payments or reimbursements in connection with moving
expenses, special geographic differentials, medical expense
reimbursements, lump sum payments for vacations earned but not
taken, overseas compensation adjustments (as determined under the
employer's personnel policy), dividends paid with respect to
shares of restricted stock, cash payments received pursuant to
stock options and all other special compensation of any kind.
The Compensation otherwise determined with respect to a
Participant whose employment with the Employers last terminated
under conditions entitling him to a benefit under the Plan will
be adjusted by the Plan Administrator to mitigate the effect of
receipt of reduced compensation (or no compensation) due to a
period of employment with a Related Company prior to his last
date of severance with the Employers if the Pension Plan
Administrator determines that such Participant's Compensation, as
otherwise determined in accordance with this subsection B-9, does
not fairly reflect such Participant's earnings history. If a
Participant's Compensation is adjusted by operation of the
preceding sentence then, with respect to such Participant, the
term "Compensation" shall mean his Compensation as so adjusted.
Notwithstanding the foregoing provisions of this subsection B-9,
no Compensation earned after December 31, 1988 shall be taken
into account in determining a Participant's Supplement B benefit.
B-10. Past Service Compensation. A participant's "Past
Service Compensation" means that part of his Compensation for the
calendar year 1976 or 1977, whichever is higher, which does not
exceed $15,000, and for this purpose, the actual Compensation
received by a Participant who
also was receiving long-term disability payments for part of
either of those years will be converted to its annual equivalent.
B-11. Final Average Monthly Compensation. A
participant's "Final Average Monthly Compensation" shall mean the
highest result obtained by dividing his Compensation (as
determined in accordance with subsection B-9 above) during a
Considered Period by the number of months in such Considered
Period. A "Considered Period" shall mean any period of five
successive complete calendar years of a Participant's period of
Continuous Service which falls within the last ten successive
complete calendar years of his period of Continuous Service
ending on the earlier of December 31, 1988 or his last date of
severance prior to January 1, 1989; provided, however, that a
Considered Period shall not include any such complete calendar
year of Continuous Service during which he was absent for more
than 120 days because of an approved leave of absence due to
illness, layoff or military service, nor any such complete
calendar year that occurred after the calendar year in which he
attains age 65 but before January 1, 1988, unless the Participant
completes an Hour of Service (as defined in subsection 2.5) on or
after January 1, 1988. If a Participant's number of total
complete calendar years of Continuous Service on the earlier of
December 31, 1988 or his last date of severance prior to January
1, 1989 does not equal or exceed five years, then, subject to the
foregoing provisions, such Participant's considered period shall
consist of all such complete calendar years.
B-12. Estimated Projected Primary Social Security
Benefit. The Estimated Projected Primary Social Security Benefit
for purposes of calculating the amount of a Participant's
Supplement B benefit shall be the monthly amount which it is
estimated will be payable to him at his Normal Retirement Date
(or, if applicable, the amount that will be payable to him at his
later severance date) under the provisions of the Social Security
Act, as amended and as in effect on the earlier of December 31,
1988 or his last date of severance prior to January 1, 1989,
subject to the following:
(a) It will be assumed that in the case of a Participant
who would attain his Normal Retirement Age after the
earlier of December 31, 1988 or his last date of
severance prior to January 1, 1989, that he would have
received Compensation for each year in the period
beginning with the earlier of the 1988 calendar year or
the year in which his last date of severance prior to
January 1, 1989 occurs and until the calendar year in
which he would attain his Normal Retirement Age in an
amount equal to the annual amount of his Final Average
Monthly Compensation.
(b) It will further be assumed that a Participant received
compensation in each calendar year in the period ending
after the later of the calendar year 1950 and the
calendar year in which he attained age 21 and up to the
end of the earlier of the 1988 calendar year or the
calendar year coincident with or next preceding his
last date of severance prior to January 1, 1989 (or, in
the case of a part-time or part-time regular employee
whose Retirement Income is recalculated for each Plan
Year or who receives a lump sum payment for each Plan
Year to reflect Compensation and service earned after
his Normal Retirement Date, up to the end of each such
Plan Year occurring prior to January 1, 1989) in an
amount equal to
the product of (i) the annual amount of his Final
Average Monthly Compensation multiplied by (ii) a
factor derived from Table 2 which is attached to and
forms a part of this Supplement B.
(c) In the case of a Participant whose severance date
occurs after the date on which he attains his Normal
Retirement Age, his Estimated Projected Primary Social
Security Benefit (A) will be adjusted to reflect cost
of living increases, if any, that would have been
applied to his benefit payable under the Social
Security Act had he retired on his Normal Retirement
Date from such Normal Retirement Date through the
earlier of December 31, 1988 or his last date of
severance prior to January 1, 1989, but (B) will not be
adjusted to reflect any delayed retirement credits that
will be applied in the calculation of his benefit under
the Social Security Act.
(d) For purposes of this subsection B-12, a Participant's
Final Average Monthly Compensation shall be determined
on the basis of the same five-year (or shorter) period
used in determining his Final Average Monthly
Compensation for purposes of subsection B-11, above
including any increases or decreases in Final Average
Compensation that occur as a result of his period of
employment after he attains his Normal Retirement Age
and prior to January 1, 1989.
The amount of a Participant's Supplement B benefit shall be
calculated based on his Estimated Projected Primary Social
Security Benefit as of December 31, 1988 as determined above
unless he elects that, for purposes of calculating such
Supplement B benefit as of December 31, 1988, his Estimated
Projected Primary Social Security Benefit be determined
based on his actual earnings history. Such election by a
Participant to have his Estimated Projected Primary Social
Security Benefit determined based upon his actual earnings
history must be made by written notice filed with the Plan
Administrator. Such election shall become effective only
if, within such reasonable period of time as shall be
established by the Plan Administrator, such Participant
supplies the Plan Administrator with a record of the actual
earnings upon which his Primary Insurance Amount under the
Federal Social Security Act will be based. As soon as
practicable, after receiving such request and earnings
record, the Plan Administrator shall recalculate the
Participant's Supplement B benefit as of the Participant's
Annuity Starting Date. If the Participant's Supplement B
benefit increases as a result of such recalculation, the
Participant shall be entitled to the larger amount, but in
no event shall the substitution of actual earnings history
cause a decrease in a Participant's Supplement B benefit.
If the Participant has already commenced receiving his
Supplement B benefit, the Plan Administrator shall (i)
convert that larger Supplement B benefit into the form of
payment originally elected by the Participant, (ii) pay the
Participant, in a lump sum and without interest, the
difference between the Supplement B benefit payment(s) he
has already received and the payment(s) he would have
received had the Participant provided his actual earnings
history when his Supplement B benefit was first calculated,
and (iii) if the Participant is receiving his Supplement B
benefit in the form of an annuity, increase his future
monthly payments to equal the amount produced by the
recalculation. In no event shall any such recalculation
affect the form of payment chosen by the Participant when he
first commenced receiving his Supplement B benefit.
B-13. Amount of Supplement B Benefit at Normal
Retirement Date. Subject to the limitations of section 415 of
the Code, a Participant's Supplement B benefit, payable to him in
the form of a single life annuity commencing on the first day of
the month following his attainment of age 65, will be an amount
equal to the sum of the following:
(a) An amount equal to one-twelfth (1/12th) of two-tenths
of one percent (.2%) of his Past Service Compensation
multiplied by his Period of Credited Past Service; and
(b) An amount equal to a percentage of his Final Average
Monthly Compensation reduced by the same percentage of
his monthly Estimated Projected Primary Social Security
Benefit (but not exceeding fifty percent of such
monthly Estimated Projected Primary Social Security
Benefit in any event), such percentage to be the sum
of:
(i) One and one-half percent (1-1/2%) multiplied by
that portion of his period of Credited Future
Service which occurred before the first day of the
calendar month in which he had both attained age
50 and completed fifteen years of Continuous
Service; and
(ii) Two percent (2%) multiplied by that portion of his
period of Credited Future Service which occurred
after the end of the calendar month next preceding
the month in which he had both attained age 50
years and completed fifteen years of Continuous
Service.
B-14. Effect of Severance After Attainment of Age 63.
Subject to the limitations of section 415 of the Internal Revenue
Code, if a Participant severs his employment with all Employers
and Related Companies for a reason other than his death, and on
or after attainment of age 63, but before his Normal Retirement
Date, he will be credited with a Supplement B benefit, commencing
with the first day of the month following the date of severance,
in an amount equal to the sum of the following:
(a) An amount equal to one-twelfth (1/12th) of two-tenths
of one percent (.2%) of his past service compensation
multiplied by his period of credited past service; and
(b) An amount equal to a percentage of his final average
monthly compensation, such percentage to be an amount
calculated in the same manner as provided in clauses
(i) and (ii) of paragraph B-13(b), but such amount then
to be reduced by a percentage of the Participant's
Estimated Projected Primary Social Security Benefit,
such percentage to be:
(i) In the case of a Participant whose Period of
Credited Future Service began when he had attained
age 36 and 8 months or more, a percentage
calculated in the same manner as provided in
clauses (i) and (ii) of paragraph B-13(b); and
(ii) In the case of a Participant whose Period of
Credited Future Service began before he had
attained age 36 years and 8 months, a percentage
initially calculated in the same manner as
provided in clauses (i) and (ii) of paragraph
B-13(b), but such percentage then to be reduced by
multiplying it by the appropriate factor derived
from Table 1 which is attached to and forms a part
of this Supplement B.
B-15. Effect of Severance After Attainment of Age 55 and
Completion of 10 or More Years of Continuous Service. If a
Participant severs his employment with all of the Employers and
Related Companies for a reason other than his death, and after he
has both attained age 55 and completed 10 or more years of
Continuous Service, but before attainment of age 63, he will be
entitled to a Supplement B benefit equal to the one of the
following which he shall elect:
(a) A Supplement B benefit, commencing with the first day
of the month next following the date he will attain age
63, in an amount determined in accordance with
subsection B-14; or
(b) A Supplement B benefit, commencing as of the first day
of the month next following the date of severance or as
of the first day of any month thereafter, in an amount
equal to the amount described in paragraph (a) above,
but then reduced by .4167% thereof for each full month
that the date of commencement precedes the first day of
the month next following the date he will attain age
63.
B-16. Deferred Vested Benefit. If a Participant severs
his employment with all Employers and Related Companies for a
reason other than his death, and before he has both attained age
55 and completed 10 years of Continuous Service, but after he has
completed five or more years of Continuous Service (including at
least one Hour of Service in a Plan Year beginning after
December 31, 1988), he will be entitled to a Supplement B benefit
commencing with the first day of the month next following the
date he attains age 65, in an amount determined in accordance
with paragraph B-14. In lieu of the benefit described in the
preceding sentence, he may elect a Supplement B benefit,
commencing as of the first day of any month following the month
in which he attains age 55, in an amount equal to the amount
described in the preceding sentence, but then reduced to its
Actuarial Equivalent. If a Participant who severed from
employment prior to January 1, 1989 when ineligible for a
deferred Retirement Income is reemployed, the Participant shall
be fully vested in his Supplement B benefit upon completion of
five or more years of Continuous Service, provided he completes
at least one Hour of Service in a Plan Year beginning after
December 31, 1988.
B-17. Actuarial Equivalents. Except where covered by a
table attached to this Supplement B, in determining whether one
form of Supplement B benefit is the "Actuarial Equivalent" of
another form of Supplement B benefit for purposes of determining
the protected Accrued Benefit under subsection 5.6 of the Plan,
the applicable provisions of subsection 8.5 shall govern.
SEARS PENSION PLAN
SUPPLEMENT B
Table 1
Factors to be Applied, Depending upon Age of Participant at Time
Credited Future Service Commenced, in Determining Percentage of
Estimated Projected Primary Social Security
Factor to be Applied
Age of Participant To Percentage of Esti-
When Credited Future mated Projected Primary
Service Began Social Security Benefit
36 years and 8 months or more 1.0000
36 years or more but less than 36 years
and 8 months .9804
35 years or more but less than 36 years .9524
34 years or more but less than 35 years .9259
33 years or more but less than 34 years .9009
32 years or more but less than 33 years .8772
31 years or more but less than 32 years .8547
30 years or more but less than 31 years .8333
29 years or more but less than 30 years .8130
28 years or more but less than 29 years .7937
27 years or more but less than 28 years .7752
26 years or more but less than 27 years .7576
25 years or more but less than 26 years .7407
24 years or more but less than 25 years .7246
23 years or more but less than 24 years .7092
22 years or more but less than 23 years .6944
21 years or more but less than 22 years .6803
20 years or more but less than 21 years .6667
19 years or more but less than 20 years .6536
18 years or more but less than 19 years .6410
17 years or more but less than 18 years .6289
16 years or more but less than 17 years .6173
15 years or more but less than 16 years .6061
SEARS PENSION PLAN
SUPPLEMENT B
Table 2
Table of Factors to be applied under Clause (b)(ii) of Subsection
B-12 of Supplement B
Complete Calendar Years
Preceding the Earliest of
the 1989 Calendar Year and Factor to be Applied to
the Calendar Year in Which Annualized Final Average
Day Following Severance Monthly Compensation to
Date Prior to January 1, Determine Compensation
1989 Occurs in That Calendar Year
First (most recent) Year 1.0000
Second Year 1.0000
Third Year 1.0000
Fourth Year 1.0000
Fifth Year 1.0000
Sixth Year .8396
Seventh Year .7921
Eighth Year .7473
Ninth Year .7050
Tenth Year .6651
Eleventh Year .6274
Twelfth Year .5919
Thirteenth Year .5584
Fourteenth Year .5268
Fifteenth Year .4970
Sixteenth Year .4688
Seventeenth Year .4423
Eighteenth Year .4173
Nineteenth Year .3936
Twentieth Year .3714
Twenty-First Year .3503
Twenty-Second Year .3305
Twenty-Third Year .3118
Twenty-Fourth Year .2942
Twenty-Fifth Year .2775
To calculate the factor for the Twenty-Sixth year, the factor for
the Twenty-Fifth year is divided by 1.06. The factors for the
Twenty-Seventh and subsequent years shall be determined in a
similar manner.
SUPPLEMENT C
TO
SEARS PENSION PLAN
RELATING TO TRANSFERRED EMPLOYEES
PRORATION
(Effective January 1, 1984)
C-1. Coverage. Only Transferred Employees whose transfers
occurred on or before June 30, 1995 will be Participants in this
Supplement C. A "Transferred Employee" is a Participant in the
Sears Pension Plan (the "Plan"):
(a) who, on or after January 1, 1984 and within a period of
twelve months following a prior severance from
employment with all Employers and Related Companies,
was employed by one of more Employers maintaining the
Plan; or
(b) who, on or after January 1, 1984 and without any
severance from employment with all Employers and
Related Companies, at the request of a Related Company
or by mutual agreement, transferred directly to
employment with an Employer under the Plan; and
(c) who, prior to such transfer or commencement of such
employment, was employed by a Related Company which is
not an Employer under the Plan and, while so employed,
was a Participant in a defined benefit pension plan
maintained by such Related Company under which
Retirement Incomes were based upon final average
(rather than career average) earnings (such plan being
referred to below as a "Related Plan"); and
(d) who, with respect to any such transfer or commencement
of such employment that occurred after December 31,
1987, completed at least twelve months of Continuous
Service with an Employer under the Plan after such
transfer or commencement of such employment; and
(e) who again severs employment with all Employers and
Related Companies for any reason (including death) and
under conditions entitling him (or his Qualified Spouse
or any other person) to a Retirement Income or Deferred
Vested Benefit income under the Plan; and
(f) whose last period of Continuous Service was with one or
more Employers.
C-2. Calculation of Basic Monthly Retirement Income for
Participants in this Supplement C. Notwithstanding the
provisions of subsection 5.1, the Accrued Benefit of a
Participant in this Supplement C will be calculated as follows:
(a) First, the Accrued Benefit that would be payable to (or
on account of) such Participant under the Plan and each
Related Plan will be calculated using the Participant's
period of Credited Service (or such other denominated
service which is used in calculating benefits under any
Related Plan) and using his Compensation from all
Employers and all Related Companies in determining his
Final Average Monthly Compensation;
(b) Next, the respective amounts calculated for the Plan
and each Related Plan under subparagraph (a) above will
be multiplied by a fraction, the numerator of which
shall consist of (i) that portion of his period of
Continuous Service during which he was an employee of
one or more Employers (with respect to amounts
calculated for the Plan) or (ii) that portion of his
period of Continuous Service during which he was an
employee of one or more Related Companies maintaining a
Related Plan (with respect to amounts calculated for
such Related Plan), as the case may be, and the
denominator of which shall consist of the period of his
Continuous Service;
(c) The Accrued Benefit under the Plan to or on account of
a Participant in this Supplement C shall be the excess
of
(i) the sum of the amounts calculated after
application of (a) and (b) next above,
over
(ii) the sum of the amounts that would be payable in
the form of a monthly Retirement Income payable as
a single life annuity commencing on his Normal
Retirement Date to such Participant under all
Related Plans.
C-3. Death of Certain Participants in this Supplement C. If
a Participant in this Supplement C dies while employed by one or
more Employers, Retirement Income will be payable to such
Participant's Qualified Spouse (or other person) in accordance
with the provisions of Section 10 of the Plan. The amount of
such Retirement Income will be based, initially, upon the Accrued
Benefit that would have been payable to the deceased Participant
as calculated in accordance with subsection C-2 of this
Supplement C, and finally, upon the effect of any option election
by such Participant which may have become effective before his
death.
C-4. Use of Terms. Except where the context of this
Supplement C expressly indicates to the contrary, terms used and
defined in the Plan shall have the same meanings for purposes of
this Supplement C. As used in this Supplement C, the term "this
Supplement C" shall include only this Supplement C, and
references to the "Plan" shall include all provisions of the Plan
and all other supplements, tables and exhibits attached to and
forming a part of the Plan, but shall not include this Supplement
C.
C-5. Effect of Different Commencement Dates. For purposes
of this Supplement C, if the Participant is eligible to
immediately commence receiving his Accrued Benefit under this
Plan and under each Related Plan, his prorated benefit under
subsection C-2 shall be calculated on the basis of a single life
annuity payable immediately from this Plan and from all such
Related Plans. If, instead, the Participant is eligible to
immediately commence his Accrued Benefit under this Plan but not
under one or more Related Plans, paragraph C-2(c) shall be
applied using the single life annuity value of any immediately-
payable amount calculated for the Plan and any Related Plan, and
the Actuarial Equivalent of any amount for a Related Plan the
Accrued Benefit from which is not immediately payable to the
Participant.
C-6. Calculation Upon Employer's Departure From Controlled
Group. If an entity referred to in paragraph C-1(c) ceases to be
a Related Company, the proration benefit provided under this
Supplement C shall be frozen, with respect to such former Related
Company, as of the day of its departure from the Company's
Controlled Group. In such event the "Frozen Proration Benefit"
of each affected Participant with respect to that departed
Related Company shall be equal to the excess of (a) his Accrued
Benefit under the Plan determined under the provisions of
subsection C-2 as of the date of the former Related Company's
departure from the Controlled Group, over (b) such Participant's
Accrued Benefit under the Plan determined as of the same date but
treating the plan of the former Related Company as though it were
not a Related Plan within the meaning of paragraph C-1(c). When
any such Participant terminates employment with the Employers and
remaining Related Companies, his Accrued Benefit income shall
equal the sum of (i) his Accrued Benefit income determined under
the applicable provisions of Section 5 without regard to this
Supplement C and (ii) his frozen proration benefit (or benefits,
if the Participant is affected by the departure of more than one
Related Company), which sum shall be reduced for commencement
prior to his Normal Retirement Date in accordance with the Plan's
applicable reduction factors, treating the Participant's frozen
proration benefit(s) as part of his base benefit for purposes of
any such reduction.
SUPPLEMENT D
TO
SEARS PENSION PLAN
[Intentionally Left Blank]
SUPPLEMENT E
TO
SEARS PENSION PLAN
SPECIAL RULES FOR TOP-HEAVY PLANS
E-1. Purpose and Effect. The purpose of this Supplement E
is to comply with the requirements of section 416 of the Internal
Revenue Code of 1954. The provisions of this Supplement E shall
be effective for each Plan Year beginning after December 31, 1983
in which the Plan is a "Top-Heavy Plan" within the meaning of
section 416(g) of the Internal Revenue Code.
E-2. Top-Heavy Plan. In general, the Plan will be a Top-
Heavy Plan for any Plan Year if, as of the last day of the
preceding Plan Year (the "Determination Date"), the present value
of the cumulative accrued benefits of Participants who are Key
Employees (as defined in section 416(i)(1) of the Internal
Revenue Code) exceeds 60 percent of the present value of the
cumulative accrued benefits of all Participants. In making the
foregoing determination, the following special rules shall apply:
(a) The present value of a Participant's Accrued Benefit
shall be increased by the aggregate distributions, if
any, made with respect to the Participant during the
five-year period ending on the Determination Date.
(b) The accrued benefit of a Participant who was previously
a Key Employee, but who is no longer a Key Employee,
shall be disregarded.
(c) The accrued benefit of a beneficiary of a Participant
shall be considered an accrued benefit of the
Participant.
E-3. Key Employee. In general, a "Key Employee" is a
Participant who, at any time during the five-year period ending
on the Determination Date, is:
(a) an officer of the Employer;
(b) one of the ten Participants owning the largest
interests in the Employer;
(c) a 5 percent owner of the Employer; or
(d) a 1 percent owner of the Employer receiving annual
compensation from the Employer of more than $150,000.
In no event shall more than 50 employees (or, if lesser, the
greater of three persons or 10% of the employees) be treated as
officers.
E-4. Minimum Vesting. For any Plan Year in which the Plan
is a Top-Heavy Plan, a Participant's vested percentage in his
Accrued Benefit shall not be less than the percentage determined
under the following table:
Years of Vested
Credited Service Percentage
Less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
If the foregoing provisions of this paragraph E-4 become
effective, and the Plan subsequently ceases to be a Top-Heavy
Plan, each Participant who has then completed five or more years
of credited service may elect to continue to have the vested
percentage of his Accrued Benefit determined under the provisions
of this paragraph E-4.
E-5. Minimum Benefit. A Participant's monthly Retirement
Income or Deferred Vested Benefit, commencing at his Normal
Retirement Date and payable as a life annuity, shall not be less
than an amount equal to 2 percent of his Average Compensation (as
defined below), multiplied by the number of years (not to exceed
ten) of his Top-Heavy Service (as defined below). A
participant's "Average Compensation" means the monthly average of
his Compensation for the five consecutive years for which his
Compensation was highest, disregarding any Compensation paid
after the last year in which the Plan is a Top-Heavy Plan. A
Participant shall be entitled to a year of "Top-Heavy Service"
for each year of his Credited Service after December 31, 1983
during which the Plan is a Top-Heavy Plan and he is a Participant
thereunder.
E-6. Maximum Earnings. For any Plan Year in which the Plan
is a Top-Heavy Plan, a Participant's earnings in excess of
$200,000 (or such greater amount as may be determined by the
Commissioner of Internal Revenue for that Plan Year) shall be
disregarded for purposes of subsection 5.2 of the Plan.
E-7. Commencement of Distributions. Distribution of a Key
Employee's benefits must commence no later than the first
December 31 on which both of the following have occurred:
(a) the Plan is then a Top-Heavy Plan; and
(b) the Key Employee has attained age 70-1/2.
Notwithstanding the foregoing provisions of this paragraph E-7, a
Key Employee may elect, by filing a written designation with the
Pension Plan Administrator prior to January 1, 1984, to have
distribution of his benefits commence at any date permitted under
the terms of the Plan as in effect immediately preceding
January 1, 1984.
E-8. Aggregation of Plans. In accordance with section
416(g) (2) of the Internal Revenue Code, other plans maintained
by the Employers and Related Companies may be required or
permitted to be aggregated with this Plan for purposes of
determining whether the Plan is a Top-Heavy Plan.
E-9. No Duplication of Benefits. If the Employers and
Related Companies maintain more than one Plan, the minimum
benefit otherwise required under paragraph E-5 above may be
reduced in accordance with regulations of the Secretary of
Treasury to prevent inappropriate duplication of minimum benefits
or contributions.
E-10. Adjustment of Combined Benefit Limitations. For
any Plan Year in which the Plan is a Top-Heavy Plan, paragraphs
(2)(B) and (3)(B) of section 415(e) of the Internal Revenue Code,
to the extent applicable, shall be applied by substituting "1.0"
for "1.25".
E-11. Use of Terms. All terms and provisions of the
Plan, including all other Supplements, shall apply to this
Supplement E, except that where the terms and provisions of the
Plan (and all other Supplements) and this Supplement E conflict,
the terms and provisions of this Supplement E shall govern.
SUPPLEMENT F
TO
SEARS PENSION PLAN
RELATING TO STS EMPLOYEES
(EFFECTIVE AS OF JANUARY 1, 1991)
F-1. Coverage. Only employees of Sears Technology Services,
Inc. ("STS") will be Participants in this Supplement F.
F-2. Definitions. Except as otherwise provided in this
Supplement F, words that have been defined in the Plan or any
other Supplement to the Plan shall have the same meaning in this
Supplement F.
F-3. Participation. Each employee of STS who meets the
eligibility requirements of either paragraph 2.1(a) or 2.1(b)
shall become a Participant in the Plan on the later of (a) the
date specified in such paragraph 2.1(a) or 2.1(b) (whichever is
applicable) or January 1, 1991.
F-4. Credited Service. Notwithstanding the provisions of
subsection 2.3, no STS employee shall have Credited Service prior
to January 1, 1991 unless such employee had Credited Service
prior to such date pursuant to subsection 2.3 as an employee of
an Employer other than STS, except as otherwise provided in
subsection F-6 below.
F-5. Retirement Income Formula. In calculating the Accrued
Benefit of an STS employee under the Plan, 1.1 shall be
substituted for .85 in subparagraph 5.1(a)(iii)(A) for any period
of Credited Service as an STS employee after December 31, 1990,
and the last clause of paragraph 5.1(a)(iii) shall be
inapplicable to any such period of Credited Service; provided,
however, that if any STS employee is entitled to a prorated
benefit under Supplement C, December 31, 1988 shall be
substituted for December 31, 1990 in the foregoing clause, solely
for purposes of calculating such prorated benefit under
Supplement C.
F-6. Special Rules for January 1, 1991 STS Employees.
Notwithstanding the preceding subsections of this Supplement F,
for purposes of calculating the Accrued Benefit of any
Participant who was an employee of STS on January 1, 1991 and who
on that date also was a Participant in this Plan or any other
defined benefit pension plan with a final average pay formula
sponsored by an Employer or a Related Company, the following
special rules shall apply:
(a) Supplement C of the Plan shall be applied as if during
the period from such Participant's date of hire by STS
to December 31, 1999 (or if earlier, the date he
terminates employment with the Employers and Related
Companies) he had been employed by Allstate Insurance
Company and covered under the Allstate Retirement Plan
as in effect on January 1, 1991 or, if earlier, the
date of his termination of employment (and had not been
employed by STS during that same period).
(b) If such an STS employee has Credited Service recognized
under the provisions of subsection 5.1 for any period
to which subsection F-5 above is inapplicable because
such service is for an Employer other than STS,
Supplement C shall apply to such Participant as though
his shift between the normal formula described in
subsection 5.1 and the special formula for STS
employees described in subsection F-5 were a transfer
of employment between an Employer and a Related Company
sponsoring a different defined benefit pension plan.
SUPPLEMENT G
TO
SEARS PENSION PLAN
RELATING TO RETIREE MEDICAL BENEFITS
(EFFECTIVE AS OF JANUARY 1, 1993)
G-1. Purpose. The purpose of this Supplement G to the Sears
Pension Plan (the "Plan") is to provide for the payment of
medical benefits for eligible Participants (as described in
subsection G-4) under the Plan.
G-2. Effective Date. This Supplement G is effective on
January 1, 1993.
G-3. Definitions. Unless the context clearly implies or
indicates the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined in this Supplement G.
G-4. Eligible Member. For purposes of this Supplement G,
the term "Eligible Participant" means each Participant who
retires on or after January 1, 1993 under the Plan and who is
eligible for post-retirement medical benefits under the Sears
Group Health Plans for Retirees and Their Families ("Health
Plans"). An Eligible Participant who is re-employed by an
Employer or Related Company shall cease to be an Eligible
Participant during the period of his re-employment.
G-5. Payment of Medical Benefits. Subject to the provisions
of subsection G-13, no benefits under this Supplement G shall be
paid directly to any Participant or beneficiary. However,
subject to the provisions of this Supplement G, all payments for
sickness, accident, hospitalization and medical expenses for
Eligible Participants and their Qualified Spouses and dependents
under the Health Plans, including any required insurance
premiums, shall be paid or reimbursed by the Trustee at the
direction of the Company solely from amounts credited to the
separate account (as described in subsection G-7).
G-6. Employer Contributions. Subject to the provisions of
subsection G-13 and the following provisions of this subsection
G-6, the Employers and Related Companies shall make contributions
from time to time to the Trustee in such amounts, as determined
by the Company in accordance with generally accepted actuarial
methods, necessary to fund medical benefits required to be paid
in accordance with subsection G-5; provided, however, that for
any Plan Year, no Employer shall be required to contribute an
amount in excess of the maximum amount deductible on account
thereof by the Employer for that Plan Year as an expense for
federal income tax purposes. In no event shall the amount of the
Employer's contribution under this subsection G-6 for any Plan
Year exceed the lesser of the following amounts:
(a) the amount which, when aggregated with all prior
contributions under this Supplement G, equals 25
percent of the total contributions made to the Plan
(other than contributions to fund past service credits)
after January 1, 1993; or
(b) the amount necessary to fund amounts required to be
paid in accordance with subsection G-5, as determined
by the Investment Committee for the Plan Year in
accordance with generally accepted actuarial methods.
Each Employer and Related Company, at the time it makes a
contribution to the Plan, shall designate in writing to the
Trustee that portion, if any, of its contribution which is
allocable to the funding of medical benefits under this
Supplement G.
G-7. Separate Account. The Trustee (or the Investment
Committee on behalf of the Trustee) shall maintain a separate
account which shall reflect the portion of the assets of the Plan
allocable to the provision of medical benefits pursuant to this
Supplement G. The Trustee shall not be required to separately
invest the funds credited to such separate account; provided,
however, that if the funds credited to the separate account are
invested with the other assets of the Plan, the Trustee (or the
Investment Committee on behalf of the Trustee) shall allocate a
reasonable portion of the earnings on the assets of the Plan to
the separate account.
G-8. Individual Medical Benefit Account for Key Employee.
The portion of an Employer's contribution which is allocable to
the provision of medical benefits to or on behalf of a
Participant who is a Key Employee (as defined below) shall be
credited to an individual medical benefit account which shall be
established and maintained for each such Participant under the
separate account. Employer costs for medical benefits provided
under this Supplement G with respect to an Eligible Participant
(or his Qualified Spouse or dependents) for whom an individual
medical benefit account is maintained shall be payable only from
such individual medical benefit account. For purposes of the
preceding sentence, the term "Key Employee" means any employee
who, at any time during the Plan Year or any preceding Plan Year
during which contributions were made on his behalf, is or was a
Key Employee as defined in section 416(i) of the Code.
G-9. Payment From General Corporate Assets. Insurance
premiums and other costs and expenses under the Health Plans
otherwise required to be paid or reimbursed under subsection G-5
shall not be payable from the Plan (but may be paid by an
Employer and Related Company from its general corporate assets):
(a) to the extent that the assets in the separate account
at the time such premiums or other costs and expenses
are due and payable are insufficient to meet the total
of the premiums, costs and expenses then due for
eligible participants under the Health Plans; and
(b) to the extent that amounts credited to an Eligible
Participant's individual medical benefit account are
insufficient to meet the total cost of benefits for
that Eligible Participant (and his Qualified Spouse and
dependents) under the Health Plans for that year.
G-10. Forfeiture. If a Key Employee ceases to be, or is
precluded from becoming, an Eligible Participant under this
Supplement G for any reason, his individual medical benefit
account shall be eliminated and any amount credited thereto shall
be reallocated to the separate account for the payment of medical
benefits to other Eligible Participants.
G-11. Diversion Prohibited. Prior to the satisfaction
of all liabilities under this Supplement G, no part of the assets
of the Plan allocable to the separate account may be used for, or
diverted to, any purpose other than paying health insurance
premiums and providing medical benefits directly to Eligible
Participants and their Qualified Spouses and dependents and the
payment of appropriate expenses of the Plan attributable to the
administration of the separate account under this Supplement G.
G-12. Reversion to Employer. Any amounts which remain
credited to the separate account after satisfaction of all
liabilities for the provision of medical benefits under this
Supplement G shall be returned to the Employers and Related
Companies. The portion of the separate account which shall be
returned to an Employer shall be determined by the Company in
such manner as the Company determines to be equitable.
G-13. Amendment and Termination. The Company's right to
amend or terminate the Health Plans including, without
limitation, the right to decrease benefit levels or increase
required employee contributions, shall be governed exclusively by
the terms and conditions of the Health Plans and shall not be
limited or abridged by the provisions of this Supplement G. The
Company reserves the right to amend and to terminate the
provisions of this Supplement G at any time, including, without
limitation, the right to include additional persons as Eligible
Participants, and the right to eliminate the obligation under the
Plan of any Employer and Related Companies to make contributions
required under subsection G-6 for any Plan Year; provided,
however, that an amendment or termination which would eliminate
the obligation of an Employer and Related Companies to make
contributions required under subsection G-6 for any Plan Year
shall be effective only if the amendment or termination is
adopted before the last day of that year or, if earlier, the date
such contribution is paid.
G-14. No Guaranty of Benefits. Neither the Trustee nor
the Employers and Related Companies in any way guarantee the
assets credited to the separate account from loss or
depreciation. The Employers and Related Companies do not
guarantee any payment for benefits under this Supplement G to any
person. The liability of the Trustee to make any payment for
medical benefits under this Supplement G is limited to the assets
credited to the separate account.
SUPPLEMENT H
TO
SEARS PENSION PLAN
RELATING TO ADVANTIS EMPLOYEES
(EFFECTIVE AS OF JANUARY 1, 1993)
H-1. Purpose. The purpose of this Supplement H to the Sears
Pension Plan (the "Plan") is to provide for the recognition of
service with, and compensation from, Advantis, a New York general
partnership in which the Company has an interest ("Advantis"),
for certain purposes under the Plan.
H-2. Effective Date. This Supplement H is effective as of
January 1, 1993.
H-3. Definitions. Unless the context clearly implies or
indicates the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined in this Supplement H.
H-4. Eligible Participant. For purposes of this Supplement
H, the term "Eligible Participant" means each person listed on
Schedule H attached hereto who became an employee of Advantis or
of a subsidiary of Advantis on the later of January 1, 1993 or
the date such person returned to work from an authorized leave
(commencing prior to January 1, 1993) under a leave of absence
policy of an Employer or Related Company, or who was transferred
by an Employer to Advantis after January 1, 1993. For purposes
of this Supplement H, a "Subsidiary" of Advantis is any
partnership, corporation or unincorporated association of which
Advantis owns or controls, either directly or indirectly, more
than 50% of the outstanding shares or securities entitled to
vote, or, in the absence of shares or securities with voting
rights, more than 50% of the ownership interest representing the
right to make decisions for such entity. No additional benefits
of any kind shall accrue to an otherwise Eligible Participant
under this Supplement H after the earliest of (a) the date such
Eligible Participant receives or commences distribution of his
benefit under Section 5 of the Plan, (b) the date the Company
disposes of its interest in Advantis or (c) December 31, 1999.
H-5. Recognition of Partnership Service. Solely for
purposes of determining an Eligible Participant's eligibility to
receive his Accrued Benefit prior to his Normal Retirement Date
under subsection 5.4 or 6.1 and his eligibility for a Lump Sum
payment under paragraph 8.3(e) of the Plan (but not for purposes
of calculating the amount of his Accrued Benefit under subsection
5.1 or, if applicable, Supplements A, C and/or F except for
determining eligibility for the special enhancement under the
Allstate formula (as in effect on December 31, 1992) incorporated
into Supplement F), the term "Continuous Service" (as defined in
subsection 2.2 of the Plan) shall include service with Advantis
and any of its subsidiaries as though Advantis and any such
subsidiary were a Related Company.
H-6. Compensation. The Compensation of an Eligible
Participant under subsection 5.2 of the Plan shall include
Compensation paid to him by Advantis or any of its subsidiaries
as though Advantis or any such subsidiary were an Employer under
the Plan. Advantis compensation shall be included in the same
manner as additional compensation is taken into account under
subparagraph 5.1(a)(ii)(B), using Final Average Monthly
Compensation as of the date of the Eligible Participant's
transfer to Advantis as the denominator.
H-7. Early Retirement After 30 Years of Continuous Service.
An Eligible Participant who terminates employment with Advantis
or one of its subsidiaries after having completed at least 30
years of Continuous Service shall be eligible to receive his
Accrued Benefit under subsection 5.1 (or Supplements A, C or F,
if applicable) without any reduction for commencement prior to
his Normal Retirement Date. An Eligible Participant who has not
already been credited with 30 years of Continuous Service at the
time of his termination of employment with Advantis or one of its
subsidiaries may not satisfy such 30-year requirement through
subsequent employment with an Employer or Related Company.
H-8. Early Retirement After Age 55 With 15 Years of
Continuous Service. An Eligible Participant who terminates
employment with Advantis or one of its subsidiaries after
attainment of age 55 with at least 15 (but fewer than 30) years
of Continuous Service shall be eligible to receive his Accrued
Benefit under subsection 5.1 (or Supplements A, C and/or F, if
applicable) reduced by the lesser of (i) 5% for each year (or
fraction thereof) by which his years of Continuous Service are
fewer than 30 or (ii) 5% for each year (or fraction thereof) by
which the age of such Eligible Participant at his Annuity
Starting Date is less than 60; provided that in no event shall
the foregoing reductions be greater than the reductions that
otherwise would be applied to the Retirement Income of such
Eligible Participant under Section 5 (and, if applicable,
Supplement A) of the Plan in the event of commencement of such
Retirement Income prior to the Eligible Participant's Normal
Retirement Date. An Eligible Participant who has not already
satisfied the above requirements at the time of his termination
of employment with Advantis or one of its Subsidiaries may not
satisfy such requirements through subsequent employment with an
Employer or Related Company.
H-9. Certain Highly Compensated Participants.
Notwithstanding the foregoing provisions of this Supplement H, no
Participant who on January 1, 1993 is a Highly Compensated
Employee, as such term is defined in section 414(q) of the
Internal Revenue Code, will accrue any additional benefits under
Subsections H-7 and H-8 after that date, and any other Eligible
Participant who thereafter becomes a Highly Compensated Employee
will cease to accrue benefits under Subsections H-7 and H-8 as of
the first day of the Plan Year during which such Eligible
Participant first becomes a Highly Compensated Employee.
H-10. Reemployment By An Employer. Notwithstanding any
other provision of the Plan, if an Eligible Participant under
this Supplement H terminates his employment with Advantis and is
reemployed by an Employer under circumstances that require the
Plan to recognize the Credited Service he earned prior to such
reemployment, his Accrued Benefit when he again terminates his
employment with the Employers and Related Companies shall be the
greater of (a) his Accrued Benefit under the Plan, determined in
accordance with the provisions of subsection H-6 as of the date
of his termination of employment with Advantis, reduced for early
commencement in accordance with applicable Plan provisions
(including the provisions of subsections H-7 and H-8 to the
extent applicable), or (b) the sum of (i) his Accrued Benefit
under the Plan as of December 31, 1992 (prior to his transfer to
Advantis) multiplied by a fraction the numerator of which is his
Final Average Monthly Compensation as of his most recent
termination of employment with the Employers and Related
Companies (determined without regard to the provisions of
subsection H-6) and the denominator of which is his Final Average
Monthly Compensation as of December 31, 1992, and (ii) his
Accrued Benefit under subsection 5.1 determined without regard to
the provisions of this Supplement H and calculated using only the
Credited Service he has earned after his reemployment by an
Employer and Related Companies following his departure from
Advantis, which sum shall be reduced for early commencement in
accordance with the applicable provisions of Section 5 and
Supplements C and F (but not subsections H-7 and H-8). In
determining whether (a) or (b) is greater, the principles set
forth in subsection C-5 shall apply.
I N S E R T A T T A C H M E N T O F S U P P L E M E N T H P A G E S
[List of Eligible Participants]
SUPPLEMENT I
TO
SEARS PENSION PLAN
RELATING TO ADDITIONAL AGE AND SERVICE CREDIT FOR ELIGIBLE
"ERIP" PARTICIPANTS (EFFECTIVE AS OF MAY 1, 1993)
I-1. Purpose. In order to assist in its business purpose of
achieving a reduction in force as part of its overall corporate
restructuring, the Company adopted the "Sears 1993 Early
Retirement Incentive Program for Checklist Associates," Plan No.
558 ("ERIP"), permitting eligible salaried employees who retire
during a limited window period to receive enhanced pension
benefits and certain other benefits.
The ERIP applies:
(a) in the case of voluntary termination of employment, to
Eligible Employees who voluntarily elect to retire
under the terms of the ERIP:
(1) in the case of employees not employed by Sears
Logistics Services, between March 1 and April 15,
1993; and
(2) in the case of employees of Sears Logistics
Services, between March 15 and April 30, 1993.
(b) in the case of involuntary termination of employment by
Sears, to eligible employees who:
(1) have an involuntary termination of employment as a
result of a unit closing or reorganization as
determined under the ERIP; or
(2) elect to retire under the terms of the ERIP.
The purposes of this Supplement I to the Sears Pension Plan
(the "Plan") are (i) to provide for additional age and service
credit under the Sears Pension Plan and Supplements for those
eligible employees who retire according to the terms of the ERIP
and (ii) to set forth those particulars wherein the Plan, as
applied to Eligible Participants in this Supplement I, and the
Retirement Income and other benefits to be provided under the
Plan, differ from, and may be in addition to, the Retirement
Income and other benefits provided under the Plan. Any benefits
provided for any person under this Supplement I will be in
addition to the benefits, if any, payable to such person under
the Plan.
I-2. Effective Date. This Supplement I is effective as of
May 1, 1993.
I-3. Definitions. Unless the context clearly implies or
indicates the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined in this Supplement I.
I-4. Eligible Employee and Eligible Participant. For
purposes of this Supplement I, the term "Eligible Employee" means
any checklist employee of Sears, Roebuck and Co., Sears Tower
Management Company, Sears Roebuck Acceptance Corp., Sears
Investment Management Company, Sears Logistical Services,
Discover Credit Corp., Sears Buying Services, Inc., Sears,
Roebuck de Puerto Rico, Inc., Sears Canada, Sears, Roebuck de
Mexico, and any other entities specified by the Company from time
to time as participating in the ERIP, who is a Participant in the
Sears Pension Plan, and who is eligible for the ERIP.
For purposes of this Supplement I, the term "Eligible
Participant" means any eligible employee who (1) accepted the
early retirement offer under the ERIP, (2) signed and returned to
the Company the ERIP Election Form and General Release and Waiver
Agreement, (3) worked until a date determined under the ERIP by
the management of the Company, (4) had an actual attained age of
at least 50 as of the earlier of December 31, 1993 or the date of
his or her last salary continuation payment pursuant to the ERIP.
Any otherwise Eligible Participant who had Compensation (as
determined in accordance with subsection 4.4 of the Plan as in
effect on May 1, 1993) for 1992 of more than $67,000 and was
eligible to retire according to the terms of the subsection
7.4(b)(ii)(A) of the Plan by May 1, 1993 will not receive any
benefits under this Supplement I.
I-5. Additional Service. Each Eligible Participant shall be
credited with an additional five years of Continuous and Credited
Service provided that
(a) such additional service credit shall not be taken into
account under a particular provision of the Plan if the
effect would be to reduce the amount of the benefit
under that provision, or to postpone the date as of
which an Eligible Participant becomes eligible to
receive the benefit under that provision;
(b) if such Eligible Participant is reemployed by an
Employer or Related Company, or becomes a part-time or
part-time regular employee, any additional service
credited hereunder shall be disregarded upon such
reemployment or becoming a part-time or part-time
regular employee, in determining the amount of his
Continuous Service and Credited Service earned prior to
his rehire or becoming a part-time or part-time regular
employee, for purposes of recalculating his basic
monthly Retirement Income after Normal Retirement Age
under subsection 9.2, eligibility for and the amount of
the lump sum payable under subsection 8.3, and
recalculation of the suspended monthly Retirement
Income under subsection 9.3 of the Plan; provided that
such disregarding of service shall not result in a
reduction to an Eligible Participant's monthly
Retirement Income to less than the amount of monthly
Retirement Income payable to him prior to such
reemployment or becoming a part-time or part-time
regular employee;
(c) such additional service shall not cause the 35-year and
11-year maximums in subparagraph 5.1(a)(iii) to be
exceeded;
(d) such additional service shall not be credited if it
would be contrary to applicable law.
I-6. Additional Age. The term "Actual Attained Age" when
used in this Supplement I shall mean a person's age as without
regard to this Supplement I, other than Section I-5. Any
Eligible Participant shall be deemed to have an attained age of
his Actual Attained Age plus five years for purposes of
determining eligibility for and the amount of benefits under the
Plan and Supplements thereto; provided, however, that:
(a) such additional age shall not be credited under a
particular provision of the Plan if the effect would be
to reduce the amount of the benefit under that
provision, or to postpone the date as of which an
Eligible Participant becomes eligible to receive a
benefit under that provision;
(b) an Eligible Participant's Actual Attained Age shall be
used for the following purposes:
(1) determining required minimum distributions under
subsection 8.12 of the Plan;
(2) determining the maximum limitations on the amount
of basic monthly Retirement Income under Section 7
of the Plan;
(3) applying the applicable reduction factors for
commencement prior to age 65 in determining the
amount of protected benefits under subsection 5.6
of the Plan;
(4) any other purpose for which Actual Attained Age is
required to be used under applicable law.
I-7. Lump Sum Calculation. If an Eligible Participant
elects payment in the form of a Lump Sum pursuant to subsection
8.3 and the terms of this Supplement I, such lump sum shall be
calculated in accordance with the provisions of subsection 7.8 of
the Plan as in effect on May 1, 1993.
I-8. Reemployment. If an Eligible Participant who receives
an enhanced benefit under this Supplement I is reemployed, and
again begins accruing benefits under the Plan, any limits on
benefit accruals based upon years of Continuous Service or
Credited Service set forth elsewhere in the Plan shall be applied
by taking into account the years of Continuous Service and years
of Credited Service included in the calculation of the
Participant's Retirement Income at his prior termination of
employment, including the additional years of service added for
purposes of that calculation under subsection I-5.
SUPPLEMENT J
TO
SEARS PENSION PLAN
LIMITATIONS ON PAYMENT UPON PLAN TERMINATION
J-1. Application. This Supplement J to the Sears Pension
Plan (the "Plan") applies the limits of Section 4022 of ERISA to
the Plan.
J-2. Effective Date. The Effective Date of this Supplement
J is January 1, 1985.
J-3. Definitions. Unless the context clearly implies or
indicates the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of this
Supplement J.
J-4. Temporary Limitations on Benefits for 25 Highest-Paid
Participants (Provisions Applicable Before 1993).
Notwithstanding any other provisions of the Plan and except as
otherwise permitted by law, for Plan Years commencing before
January 1, 1993:
(a) Until the date 10 years after any amendment which
substantially increases benefits under the Plan (an
"Unrestricted Date"), the benefits for any Participant
whose anticipated annual Retirement Income from the
Plan will exceed $1,500 and who was one of the 25
highest paid employees of an Employer on the date of
such amendment (a "Pre-1993 Restricted Participant"),
will be paid in full to the extent provided by employer
contributions, not exceeding the largest of:
(i) $20,000;
(ii) the employer contributions which would have been
applied to provide his benefits if the Plan, as
in effect on the date of the amendment, had been
continued without change;
(iii) the sum of:
(A) the employer contributions which would have
been applied to provide his benefits under
the Plan, as in effect on the date of the
amendment, if it had been terminated on that
date; plus
(B) an amount computed by multiplying the number
of years after that date for which the full
current costs (as described in paragraph (g)
below) of the Plan have been met by 20
percent of the first $50,000 of his average
regular annual compensation received from the
Employer and the Related Companies during his
latest five-year
period of active employment, or total period
of active employment if less than five years;
(C) in the case of a Pre-1993 Restricted
Participant who is a substantial owner (as
defined in section 4022(b)(5) of ERISA), the
present value of the benefit, which is
guaranteed for such Participant under section
4022 of ERISA or would be guaranteed if the
Plan then terminated; or
(D) in the case of a Pre-1993 Restricted
Participant who is not a substantial owner,
the present value of the maximum benefit
described in section 4022(b)(3)(B) of ERISA,
determined on the date the Plan terminates
or, if earlier, the date the benefit
commences, without regard to any other
limitation in section 4022 of ERISA.
(b) If the Plan is terminated before an Unrestricted Date,
the benefits that a Pre-1993 Restricted Participant may
receive will not exceed the benefits set forth in
paragraph (a) above except as indicated in the
following paragraphs. If the full current costs have
not been met at any time before an Unrestricted Date,
the restrictions set forth above will continue to apply
until the date that the full current costs have been
met for the first time.
(c) If a Pre-1993 Restricted Participant leaves the employ
of the Employers and Related Companies at a time when
the full current costs have been met, the aggregate
benefits he may receive before an applicable
unrestricted date will not exceed the benefits set
forth in paragraph (a) above, except as indicated
below.
(d) The above restrictions will not apply to Retirement
Income payments payable to a retired Participant during
any period in which the Plan is in full effect and its
full current costs have been met.
(e) The above restrictions will not apply to any death or
survivor's benefits payable under the Plan during any
period in which the Plan is in full effect and the full
current costs have been met.
(f) If the Plan is terminated before an Unrestricted Date,
all amounts which, because of this Supplement J, cannot
be distributed to a Pre-1993 Restricted Participant,
will be distributed or applied for the benefit of other
Participants whose benefits are not restricted in the
proportion that the actuarial liabilities attributable
to each such other Participant bears to the then
actuarial liabilities attributable to all such other
Participants.
(g) For purposes of the Plan, the "Full Current Costs" of
the Plan with respect to any Employer and Controlled
Group member, will be considered as having been met as
of any date after an amendment which substantially
increases benefits under the Plan, if the unfunded past
service liability as of such date on account of
benefits provided under the Plan does not exceed the
Employer's past service liability under the Plan as of
the date of the amendment, plus any supplemental or
additional past service liability incurred by the
Employer after that date on account of any increase in
benefits or compensation.
(h) The limits of this Supplement J will not apply to a
Pre-1993 Restricted Participant if:
(i) the Pre-1993 Restricted Participant enters into a
written agreement with the Plan providing that if:
(A) prior to the end of his restricted period,
the Plan terminates; or
(B) the full current costs of the Plan are not
met for any year ending on or before the last
day of his restricted period,
then the Pre-1993 Restricted Participant (or, in
the event of his death, his estate) will repay to
the Plan an amount equal to the then present value
of the amounts by which the Pre-1993 Restricted
Participant's benefits would be decreased during
his remaining lifetime pursuant to the foregoing
provisions of this subsection (the "Repayment
Amount"), which agreement will contain such other
provisions as the Administrator determines to be
appropriate to adequately protect the Plan; and
(ii) the agreement described in subparagraph (i) above
is secured by (A) a bond or letter of credit
providing for repayment of the Repayment Amount;
or (B) establishment of a depositary (including an
individual retirement account) providing for
repayment of the Repayment Amount.
J-5. Pre-Termination Restrictions (Provisions Applicable
After 1992). Notwithstanding any other provisions of the Plan
and except as otherwise permitted by law, for Plan Years
commencing on or after January 1, 1993:
(a) In the event of the Plan's termination, the benefit of
any Highly Compensated Employee (as described in Code
section 414(q)) and Highly Compensated Former Employee
will be limited to a benefit that is nondiscriminatory
under section 401(a)(4) of the Code.
(b) For any Plan Year, the single sum option described in
subsection 8.3 will not be available to any Post-1992
Restricted Participant (as defined in paragraph (c)
below), and will be restricted to an amount equal to
the payments that would be made to him in the form of a
straight life annuity that is the actuarial equivalent
of his Retirement Income or Deferred Vested Benefit,
unless:
(i) after payment to him of all his benefits under the
Plan (within the meaning of Treas. Reg.
Sec.1.401(a)(4)-5(b)(3)(iii)), the value of Plan
assets equals or exceeds 110 percent of the value
of the Plan's current liabilities, as defined in
section 412(l)(7) of the Code;
(ii) the value of his benefits under the Plan (within
the meaning of Treas. Reg. Sec. 1.401(a)(4)-
5(b)(3)(iii)) is less than 1 percent of the value
of the Plan's current liabilities; or
(iii) the value of his benefits under the Plan
(within the meaning of Treas. Reg. Sec. 1.401(a)(4)-
5(b)(3)(iii)) does not exceed the amount described
in section 411(a)(11)(A) of the Code.
(c) For any Plan Year, a "Post-1992 Restricted Participant"
will mean a Participant who is a member of the group of
the 25 Highly Compensated Employees (within the meaning
of section 414(q) of the Code) and Highly Compensated
Former Employees who have the greatest Compensation.
SUPPLEMENT K
TO
SEARS PENSION PLAN
RELATING TO SMC/SSB EMPLOYEES
K-1. Application. This Supplement K to the Sears Pension
Plan (the "Plan") applies to employees (hereinafter referred to
as "SMC/SSB Eligible Employees") of Sears Mortgage Corporation
and Sears Savings Bank (together, "SMC/SSB") who were active
employees on November 30, 1993 (the date SMC/SSB was sold to PNC
Mortgage Corp. of America) and who had been active Participants
in the Sears Consumer Financial Corporation Pension Plan (the
"SCFC Plan") on June 30, 1993 when Dean Witter, Discover & Co.
was spun off from the Company's Controlled Group.
K-2. Effective Date. This Supplement K shall be effective
as of November 30, 1993.
K-3. Definitions. Unless the context clearly implies or
indicates the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of this
Supplement K.
K-4. Accrued Benefits. An SMC/SSB Eligible Employee who was
vested in his Accrued Benefit under the SCFC Plan on November 30,
1993 will have an Accrued Benefit under this Supplement K equal
to the amount he would have earned under subparagraph 5.1(a)(iii)
of the Plan had he become a Participant in the Plan on July 1,
1993 and terminated employment with the Employers and Related
Companies on November 30, 1993; provided, however that if any
such SMC/SSB Eligible Employee would have been entitled to have
his benefit prorated with reference to the Allstate Pension Plan
in accordance with the terms of the SCFC Plan, the Allstate
Pension Plan formula (as in effect on January 1, 1991) will be
substituted for the formula set forth in subparagraph
5.1(a)(iii). An SMC/SSB Eligible Employee who was not vested in
his Accrued Benefit under the SCFC Plan on November 30, 1993 will
have an Accrued Benefit under this Supplement K (expressed as a
single life annuity payable as of age 65) equal to the amount he
would have earned under subparagraph 5.1(a)(iii) of the Plan
(including the proviso at the end of paragraph 5.1(a)) had he (a)
become a Participant in the Plan on the day he began accruing
benefit service under the SCFC Plan and (b) terminated employment
with the Employers and Related Companies on November 30, 1993.
An SMC/SSB Eligible Employee will be fully vested in his accrued
benefit under this Supplement K regardless of the number of years
of Continuous Service he had earned by November 30, 1993.
K-5. Early Retirement Factors. An SMC/SSB Eligible Employee
will be entitled to commence payment of his Accrued Benefit under
this Supplement K as of November 1, 1997 or such subsequent date
the Participant elects that is no later than the first day of the
month following the Participant's attainment of age 65, provided
the Eligible Employee is not then employed by an Employer or
Related Company. The Accrued Benefit of an SMC/SSB Eligible
Employee who commences payment prior to attaining age 65 will be
reduced in accordance with the provisions of Section 5 of the
Plan.
K-6. Forms of Payment. An Eligible Employee will be
entitled to receive his Accrued Benefit under this Supplement K
in any of the annuity forms available under Section 8, or in a
Lump Sum payment. For purposes of determining the actuarially-
equivalent amount of any form of payment, the assumptions set
forth in subsection 8.5 will apply, except that the amount of a
Lump Sum payment will be determined using the Applicable Interest
Rate for the second month preceding the month in which the
Eligible Employee's Annuity Starting Date occurs and the
Applicable Mortality Table.
K-7. Distribution Election. Benefits payable under this
Supplement K will be subject to the normal distribution election
provisions of the Plan, including the requirements for Spousal
Consent. For this purpose, the rules of clause 8.3(e)(iv)
(requiring a simultaneous offering of an annuity in the normal
form with the offer of an early Lump Sum for an accrued benefit
not in excess of $150 per month) shall apply to any Lump Sum
payment offered to an Eligible Employee under this Supplement K
who has not yet attained age 55 and whose benefit exceeds the
mandatory cash out limit of the Plan.
SUPPLEMENT L
TO
SEARS PENSION PLAN
RELATING TO CIRCLE OF BEAUTY
L-1. Application. This Supplement L to the Sears Pension
Plan (the "Plan") describes the special provisions relating to
employees of Circle of Beauty ("CoB") that have been adopted by
the Company as part of its extension of the Plan to employees of
CoB.
L-2. Effective Date. The Effective Date of this Supplement
L is September 1, 1997.
L-3. Definitions. Unless the context clearly implies or
indicates the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of this
Supplement L.
L-4. Credited Service for Circle of Beauty Employees.
Notwithstanding any other provision of the Plan to the contrary,
for purposes of determining the Credited Service of an employee
of CoB, the following rules shall govern:
(a) no period of service with CoB prior to April 14, 1995
shall be included in the Participant's period of
Credited Service;
(b) in the case of any individual employed by CoB on
September 1, 1997, any period of service for CoB during
the period beginning on April 14, 1995 and ending on
August 31, 1997 shall be included in the individual's
Credited Service to the same extent that it would have
been included had CoB been an Employer during that same
period; and
(c) in the case of any individual who was employed by CoB
prior to September 1, 1997, who is not described in
paragraph (b) above but who is subsequently reemployed
by CoB after September 1, 1997, no service before
September 1, 1997 shall be counted as Credited Service
(unless such individual had earned Credited Service for
a period prior to such date through employment with an
Employer other than CoB.)
L-5. Compensation. For purposes of determining a CoB
employee's Final Average Compensation, any amount that was paid
during a period treated as Credited Service under subsection L-4
shall be treated as Compensation if it would have satisfied the
definition in subsection 5.2 but for the fact that the
Participant was not then an Eligible Employee.
SUPPLEMENT M
TO
SEARS PENSION PLAN
RELATING TO SEARS TIRE GROUP
M-1. Application. This Supplement M to the Sears Pension
Plan (the "Plan") describes the special provisions relating to
employees of Sears Tire Group ("STG") that have been adopted by
the Company as part of its extension of the Plan to employees of
STG.
M-2. Effective Date. The Effective Date of this Supplement
M is December 15, 1997.
M-3. Definitions. Unless the context clearly implies or
indicates the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of this
Supplement M.
M-4. Eligibility Rules for Sears Tire Group Employees. The
following rules shall modify the normal provisions of Section 2
and Section 3 in determining whether and when an employee of the
Company or another Employer who performs services for Sears Auto
Centers ("SAC") or National Tire and Battery ("NTB") is eligible
to participate in the Plan:
(a) generally, of the employees who perform services for
SAC or NTB, only those who are salaried employees and
who are on an Employer's payroll as such on or after
December 15, 1997 are eligible to participate in the
Plan;
(b) notwithstanding the general limitation set forth in
paragraph (a) above, an hourly employee who performs
services for SAC or NTB shall be eligible to
participate in the Plan while performing such services
if he (i) performed services for SAC in any capacity
prior to April 1, 1997 or as a salaried employee on or
after April 1, 1997, or (ii) has been (and remains)
credited with Continuous Service for an Employer that
is not attributable to services performed for SAC or
NTB.
M-5. Credited Service for Sears Tire Group Employees.
Notwithstanding any other provision of the Plan to the contrary,
for purposes of determining the Credited Service of an individual
performing services for SAC or NTB, the following rules shall
govern:
(a) a salaried employee described in paragraph M-4(a) shall
receive Credited Service for any period of employment
between January 1, 1997 and December 15, 1997 to the
same extent that it would have been included had
eligibility in the Plan been extended to that group of
employees on January 1, 1997, and
(b) an hourly employee described in paragraph M-4(b) shall
receive Credited Service in accordance with the rules
of subsection 2.3 except that service prior to
January 1, 1997 for NTB shall not count as Credited
Service.
M-6. Compensation. For purposes of determining the Final
Average Compensation of a Participant covered by this Supplement
M, any amount that was paid during a period treated as Credited
Service hereunder shall be treated as Compensation if it would
have satisfied the definition in subsection 5.2 but for the fact
that the Participant was not then an Eligible Employee.
SUPPLEMENT N
TO
SEARS PENSION PLAN
RELATING TO THE GREAT INDOORS
N-1. Application. This Supplement N to the Sears Pension
Plan (the "Plan") applies to employees (hereinafter referred to
collectively as "Great Indoors Employees" and individually as a
"Great Indoors Employee") of the Company's business unit known as
the "Great Indoors" and describes the special eligibility
provisions that have been adopted by the Company with respect to
Great Indoors Employees.
N-2. Effective Date. The Effective Date of this Supplement
N is January 1, 1998.
N-3. Definitions. Unless the context clearly implies or
indicates the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of this
Supplement N.
N-4. Eligibility to Participate. Effective as of January 1,
1998 participation in the Plan by Great Indoors Employees (who
satisfy the Plan's minimum eligibility requirements related to
age and service) has been limited to the following groups:
(a) hourly-paid employees employed in "store support"
positions;
(b) hourly-paid employees employed at store locations
who were already Participants prior to January 1,
1998 (for so long as they remain continuously
employed by the Company); and
(c) all salaried employees.
SUPPLEMENT O
TO
SEARS PENSION PLAN
RELATING TO MAXSERV, INC.
O-1. Application. This Supplement O to the Sears Pension
Plan (the "Plan") applies to employees (hereinafter referred to
collectively as "MaxServ Employees" and individually as a MaxServ
Employee") of "MaxServ, Inc." and describes the special
provisions that have been adopted by the Company as part of the
adoption of the Plan by MaxServ.
O-2. Effective Date. The Effective Date of this Supplement
O is January 1, 1999.
O-3. Definitions. Unless the context clearly implies or
indicates the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of this
Supplement O.
O-4. Service for MaxServ Employees. Notwithstanding any
other provision of the Plan to the contrary, for purposes of
determining the Credited and Continuous Service of each MaxServ
Employee, the following rules shall govern:
(a) no period of service with the MaxServ prior to January
1, 1999 shall be included in the Participant's period
of Credited Service;
(b) in the case of any MaxServ Employees actively employed
by MaxServ on March 18, 1997, each such Participant's
period of Continuous Service shall be determined based
on the Participant's date of hire by MaxServ even if
earlier than March 18, 1997.
O-5 Eligibility to Participate. Participation in the Plan
is extended to MaxServ Employees effective January 1, 1999.
SUPPLEMENT P
TO
SEARS PENSION PLAN
RELATING TO CERTAIN SUBSIDIARIES OF SEARS LOGISTICS SERVICES,
INC.
P-1. Application. This Supplement P to the Sears Pension
Plan (the "Plan") applies to employees (hereinafter referred to
collectively as "SLS Eligible Employees" and individually as an
"SLS Eligible Employee") of the following subsidiaries of Sears
Logistics Services, Inc. (the "SLS Subsidiaries"):
Optimum Home Delivery Service, Inc.
STG Logistics, Inc.
Focus Distribution, Inc.
Delano Logistics Services, Inc.
Wilkes Barre Logistics Services, Inc.
and describes the special provisions that have been adopted by
the Company as part of its extension of the Plan to the SLS
Eligible Employees.
P-2. Effective Date. The Effective Date of this Supplement
P is September 1, 1999.
P-3. Definitions. Unless the context clearly implies or
indicates the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of this
Supplement P.
P-4. Credited and Continuous Service for SLS Eligible
Employees. Notwithstanding any other provision of the Plan to
the contrary, for purposes of determining the Credited and
Continuous Service of each SLS Eligible Employee, the following
rules shall govern:
(a) no period of service with the SLS Subsidiaries prior to
September 1, 1999 shall be included in the
participant's period of Credited Service;
(b) in the case of any SLS Eligible Employees employed by
the SLS Subsidiaries prior to September 1, 1999, each
participant's period of Continuous Service shall be
determined based on the date such SLS Subsidiary was
acquired by Sears Logistics Services, Inc., or the
participant's date of hire, if later.