EXHIBIT 10.(iv)(D)
MONTGOMERY WARD & CO., INCORPORATED
RETIREMENT SECURITY PLAN
(As amended and restated effective
as of January 1, 1994)
TABLE OF CONTENTS
PREAMBLES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I Background Information. . . . . . . . . . . . . . . . . . 3
1.1 Purpose of Plan . . . . . . . . . . . . . . . . . . . . . 3
1.2 Application of Restatement and Determination of
Retirement Benefits . . . . . . . . . . . . . . . . . . . 4
1.3 Other Effective Dates . . . . . . . . . . . . . . . . . . 6
ARTICLE II Definitions . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 "Accrued Benefit" . . . . . . . . . . . . . . . . . . . . 6
2.2 "Actuarial Equivalent" or "Equivalent Actuarial
Value". . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 "Actuary" . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4 "Administrative Director" . . . . . . . . . . . . . . . . 11
2.5 "Affiliate" . . . . . . . . . . . . . . . . . . . . . . . 11
2.6 "Beneficiary" . . . . . . . . . . . . . . . . . . . . . . 11
2.7 "Board" . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 "Break in Service". . . . . . . . . . . . . . . . . . . . 11
2.9 "Cash Balance Account". . . . . . . . . . . . . . . . . . 12
2.10 "Code". . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.11 "Committee" . . . . . . . . . . . . . . . . . . . . . . . 12
2.12 "Company" . . . . . . . . . . . . . . . . . . . . . . . . 12
2.13 "Credited Service". . . . . . . . . . . . . . . . . . . . 12
2.14 "Direct Rollover" . . . . . . . . . . . . . . . . . . . . 13
2.15 "Distributee" . . . . . . . . . . . . . . . . . . . . . . 14
2.16 "Effective Date". . . . . . . . . . . . . . . . . . . . . 14
2.17 "Eligible Retirement Plan". . . . . . . . . . . . . . . . 14
2.18 "Eligible Rollover Distribution". . . . . . . . . . . . . 14
2.19 "Employee" or "Associate" . . . . . . . . . . . . . . . . 15
2.20 "ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.21 "High Three-Year Pay" . . . . . . . . . . . . . . . . . . 15
2.22 "Hours of Service". . . . . . . . . . . . . . . . . . . . 15
2.23 "Immediate Cash Balance Account Annuity". . . . . . . . . 16
2.24 "Interest Credit(s)". . . . . . . . . . . . . . . . . . . 16
2.25 "Investment Manager". . . . . . . . . . . . . . . . . . . 16
2.26 "IRS" . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.27 "Jefferson Stores Plan" . . . . . . . . . . . . . . . . . 16
2.28 "Labor Department". . . . . . . . . . . . . . . . . . . . 16
2.29 "Lechmere Plan" . . . . . . . . . . . . . . . . . . . . . 16
2.30 "Long-Term Disability Plan" . . . . . . . . . . . . . . . 16
2.31 "Optional Retirement Benefit" . . . . . . . . . . . . . . 16
2.32 "Participant" . . . . . . . . . . . . . . . . . . . . . . 17
2.33 "Participating Company" . . . . . . . . . . . . . . . . . 17
2.34 "PBGC". . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.35 "Plan". . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.36 "Prior Plans" . . . . . . . . . . . . . . . . . . . . . . 17
2.37 "Regulations" . . . . . . . . . . . . . . . . . . . . . . 18
2.38 "Required Contributions". . . . . . . . . . . . . . . . . 18
2.39 "Retirement" or "Retire". . . . . . . . . . . . . . . . . 18
2.40 "Retirement Benefit". . . . . . . . . . . . . . . . . . . 18
2.41 "Retirement Security Plan". . . . . . . . . . . . . . . . 18
2.42 "Savings Plan". . . . . . . . . . . . . . . . . . . . . . 18
2.43 "Service" . . . . . . . . . . . . . . . . . . . . . . . . 18
2.44 "Surviving Spouse". . . . . . . . . . . . . . . . . . . . 19
2.45 "Total Earnings". . . . . . . . . . . . . . . . . . . . . 20
2.46 "Transferred Contribution Account". . . . . . . . . . . . 22
2.47 "Trust" . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.48 "Trust Agreement" . . . . . . . . . . . . . . . . . . . . 22
2.49 "Trust Fund". . . . . . . . . . . . . . . . . . . . . . . 22
2.50 "Trustees". . . . . . . . . . . . . . . . . . . . . . . . 22
2.51 "Vest", "Vested" or "Vesting" . . . . . . . . . . . . . . 22
2.52 "Ward". . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.53 "Year". . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.54 "Year of Credited Service". . . . . . . . . . . . . . . . 23
2.55 "Year of Service" . . . . . . . . . . . . . . . . . . . . 23
ARTICLE III Effective Date. . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV Eligibility . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V Participation . . . . . . . . . . . . . . . . . . . . . . 25
5.1 Enrollment. . . . . . . . . . . . . . . . . . . . . . . . 25
5.2 Suspension of Participation . . . . . . . . . . . . . . . 25
5.3 Break in Service. . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI Contributions . . . . . . . . . . . . . . . . . . . . . . 26
6.1 Cessation of a Participant's Contributions. . . . . . . . 26
6.2 Company Contributions . . . . . . . . . . . . . . . . . . 26
6.3 Actuarial Assumptions . . . . . . . . . . . . . . . . . . 26
ARTICLE VII Cash Balance Account. . . . . . . . . . . . . . . . . . . 27
7.1 In General. . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Interest Credits. . . . . . . . . . . . . . . . . . . . . 28
7.3 Immediate Cash Balance Account Annuity. . . . . . . . . . 28
ARTICLE VIII Retirement Dates. . . . . . . . . . . . . . . . . . . . . 29
8.1 Normal Retirement Date. . . . . . . . . . . . . . . . . . 29
8.2 Early Retirement Date . . . . . . . . . . . . . . . . . . 29
8.3 Postponed Retirement Date . . . . . . . . . . . . . . . . 30
ARTICLE IX Amount of Retirement Benefit. . . . . . . . . . . . . . . 30
9.1 Retirement Benefit Payable upon Retirement at
Normal Retirement Date. . . . . . . . . . . . . . . . . . 30
9.2 Retirement Benefit Payable upon Retirement at
Early Retirement Date . . . . . . . . . . . . . . . . . . 31
9.3 Retirement Benefit Payable upon Retirement at
Postponed Retirement Date . . . . . . . . . . . . . . . . 32
9.4 Offset of Retirement Benefit. . . . . . . . . . . . . . . 32
9.5 Cessation of Benefit Payments Following
Reemployment After Retirement . . . . . . . . . . . . . . 33
9.6 Retirement Benefit Payable upon Retirement
Following Reemployment after Termination of
Service . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.7 Maximum Amount of Retirement Benefit. . . . . . . . . . . 33
ARTICLE X Eligibility for Retirement Benefit. . . . . . . . . . . . 37
10.1 Eligibility for Retirement Benefit at Normal
Retirement Date . . . . . . . . . . . . . . . . . . . . . 37
10.2 Eligibility for Retirement Benefit at Early
Retirement Date . . . . . . . . . . . . . . . . . . . . . 37
10.3 Eligibility for Retirement Benefit at Postponed
Retirement Date . . . . . . . . . . . . . . . . . . . . . 38
10.4 Long-Term Disability Benefits . . . . . . . . . . . . . . 38
ARTICLE XI Methods of Payment. . . . . . . . . . . . . . . . . . . . 38
11.1 Qualified Joint and Survivor Benefit. . . . . . . . . . . 38
11.2 Optional Methods of Payment . . . . . . . . . . . . . . . 39
11.3 Election of Optional Method of Payment. . . . . . . . . . 42
11.4 Rules Regarding Distribution of Benefits. . . . . . . . . 43
11.5 Written Explanations of Survivor Benefit. . . . . . . . . 45
11.6 Cash Out. . . . . . . . . . . . . . . . . . . . . . . . . 45
11.7 Direct Rollover . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XII Death Benefits. . . . . . . . . . . . . . . . . . . . . . 46
12.1 Pre-Retirement Death Benefit. . . . . . . . . . . . . . . 46
12.2 Designation of Beneficiary. . . . . . . . . . . . . . . . 47
ARTICLE XIII Termination of Service. . . . . . . . . . . . . . . . . . 48
13.1 Termination of Service by Non-Vested Participant. . . . . 48
13.2 Termination of Service by Vested Participant. . . . . . . 48
13.3 Termination of Service without a Break in Service . . . . 49
13.4 Termination of Service Following Reemployment . . . . . . 49
ARTICLE XIV Non-Assignability . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XV Administration. . . . . . . . . . . . . . . . . . . . . . 51
15.1 In General. . . . . . . . . . . . . . . . . . . . . . . . 51
15.2 Appointment of Trustees . . . . . . . . . . . . . . . . . 51
15.3 Appointment of Administrative Director. . . . . . . . . . 52
15.4 Specific Responsibilities and Authority of the
Committee . . . . . . . . . . . . . . . . . . . . . . . . 52
15.5 Rules of Procedure. . . . . . . . . . . . . . . . . . . . 54
15.6 Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . 54
15.7 Claims Procedure. . . . . . . . . . . . . . . . . . . . . 56
15.8 Payment of Expenses . . . . . . . . . . . . . . . . . . . 58
15.9 Notices, etc. . . . . . . . . . . . . . . . . . . . . . . 58
15.10 Filing of Information . . . . . . . . . . . . . . . . . . 59
15.11 Claims Against Trust Fund . . . . . . . . . . . . . . . . 60
15.12 Agent for Service of Process. . . . . . . . . . . . . . . 60
ARTICLE XVI Termination of Participating Company's
Participation . . . . . . . . . . . . . . . . . . . . . . 60
16.1 Right to Terminate. . . . . . . . . . . . . . . . . . . . 60
16.2 Effect of Termination and Payment of Distributable
Reserve . . . . . . . . . . . . . . . . . . . . . . . . . 61
16.3 Transfer of Assets to Successor Plan. . . . . . . . . . . 62
ARTICLE XVII Amendment and Termination . . . . . . . . . . . . . . . . 62
17.1 Power to Amend. . . . . . . . . . . . . . . . . . . . . . 62
17.2 Retroactive Amendments. . . . . . . . . . . . . . . . . . 63
17.3 Notices of Amendments . . . . . . . . . . . . . . . . . . 64
17.4 Effect of Termination . . . . . . . . . . . . . . . . . . 64
17.5 Distribution of Assets If No ERISA Termination. . . . . . 64
17.6 Distribution of Assets Upon Termination . . . . . . . . . 65
17.7 Distribution of Assets Upon Termination Where
Assets Not Sufficient . . . . . . . . . . . . . . . . . . 68
17.8 Effect of Partial Termination . . . . . . . . . . . . . . 68
ARTICLE XVIII Limitations in the Event of Early Discontinuance. . . . . 69
18.1 Application . . . . . . . . . . . . . . . . . . . . . . . 69
18.2 Restriction of Benefits . . . . . . . . . . . . . . . . . 69
18.3 Payment of Benefits . . . . . . . . . . . . . . . . . . . 70
18.4 Additional Reserves . . . . . . . . . . . . . . . . . . . 71
ARTICLE XIX Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 71
19.1 In General. . . . . . . . . . . . . . . . . . . . . . . . 71
19.2 Coordination of Payment of Benefits with Other
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 72
19.3 Incapacity. . . . . . . . . . . . . . . . . . . . . . . . 72
19.4 Inability to Locate Benefit Recipient . . . . . . . . . . 72
19.5 Benefit Provided by Insurance . . . . . . . . . . . . . . 73
19.6 Credit for Prior Employment . . . . . . . . . . . . . . . 73
19.7 Construction. . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE XX Top Heavy Provisions. . . . . . . . . . . . . . . . . . . 74
20.1 In General. . . . . . . . . . . . . . . . . . . . . . . . 74
20.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . 74
20.3 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . 75
20.4 Distributions to Participants . . . . . . . . . . . . . . 76
20.5 Top Heavy Plan Years. . . . . . . . . . . . . . . . . . . 77
20.6 Duplication of Benefits . . . . . . . . . . . . . . . . . 77
ARTICLE XXI Transfer of Amounts Attributable to Contributions
Under The Jefferson Stores Plan . . . . . . . . . . . . . 79
21.1 Transfer of Accrued Benefit . . . . . . . . . . . . . . . 79
21.2 Transfer Held in Trust. . . . . . . . . . . . . . . . . . 79
21.3 Payment of Benefits . . . . . . . . . . . . . . . . . . . 79
ARTICLE XXII Transfer of Amounts Attributable to Contributions
Under the Lechmere Plan . . . . . . . . . . . . . . . . . 80
22.1 Transfer of Accrued Benefit . . . . . . . . . . . . . . . 80
22.2 Transfer Held in Trust. . . . . . . . . . . . . . . . . . 80
22.3 Payment of Benefits . . . . . . . . . . . . . . . . . . . 80
PREAMBLES
WHEREAS, the Retirement Security Plan first became effective
on February 1, 1957 and was thereafter from time to time amended;
and
WHEREAS, effective January 1, 1975, Ward amended and
restated the Retirement Security Plan to provide greater
retirement security for eligible associates of Ward and
Participating Companies; and
WHEREAS, the Profit-Sharing Plan was merged into the
Retirement Security Plan effective as of January 1, 1975; and
WHEREAS, effective as of January 1, 1976, Ward amended the
Retirement Security Plan to satisfy the requirements of ERISA;
and
WHEREAS, effective January 1, 1979, the Retirement Security
Plan was amended and restated to reflect certain corporate
reorganization changes, assure continued compliance with ERISA
and the final regulations issued thereunder, satisfy the
requirements of the 1978 amendments to the Age Discrimination in
Employment Act of 1967 and include administrative and clarifying
amendments; and
WHEREAS, Ward further amended and restated the Retirement
Security Plan for service on or after January 1, 1981 as a
separate and distinct retirement benefit plan for management,
administrative and supervisory associates, and to establish
distinct and separately funded retirement benefit plans for
timecard associates and for represented associates, with three
separate trust accounts commingled for investment purposes; and
WHEREAS, Ward amended and restated the Plan, effective April
1, 1983, so that amounts attributable to associate contributions
made to the Plan after December 31, 1980 and the Profit-Sharing
Plan Balances hereunder shall be transferred to the Montgomery
Ward & Co., Incorporated Savings and Profit Sharing Plan (the
"Savings Plan"), adopted by Ward effective April 1, 1983, for the
benefit of eligible associates, to eliminate associate
contributions under the Plan, to require eligible associates to
authorize salary reduction or payroll deduction contributions to
the Savings Plan in order to be eligible for continued benefit
accruals under the Plan, and to offset and reduce the benefits
provided under the Plan by the benefits, if any, that are or
could be provided by the Savings Plan funds attributable to the
transferred associate contributions and the required salary
reduction or payroll reduction contributions authorized by
associates under the Savings Plan; and
WHEREAS, Ward further amended the Plan, effective January 1,
1984, to provide a guaranteed minimum pension benefit for
associates, to satisfy the requirements of the Tax Equity and
Fiscal Responsibility Act of 1982, to comply with certain
requirements regarding actuarial computations, and to make other
technical changes; and
WHEREAS, Ward further amended the Plan effective January 1,
1985, to merge the Retirement Plan for Employees of Jefferson
Stores, Inc. into the Plan, to transfer amounts attributable to
contributions under the Jefferson Stores Plan to the Plan for the
benefit of eligible associates, to satisfy the requirements of
the Deficit Reduction Act of 1984 and the Retirement Equity Act
of 1984, and to make other technical changes;
WHEREAS, Ward amended and restated the Plan, effective
January 1, 1989, to merge the: (i) Montgomery Ward & Co.,
Incorporated Management Retirement Security Plan; (ii) Montgomery
Ward & Co., Incorporated Timecard Retirement Security Plan; and
(iii) Montgomery Ward & Co., Incorporated Represented Retirement
Security Plan, to satisfy the requirements of the Tax Reform Act
of 1986, and to make other technical changes;
WHEREAS, Ward desires to amend and restate the Plan,
effective January 1, 1994, to merge the Lechmere Plan into the
Plan, effective as of August 1, 1994, to transfer amounts
attributable to contributions under the Lechmere Plan to the Plan
for the benefit of eligible associates, to satisfy the
requirements of recent changes to the Code, and to make other
technical changes;
NOW, THEREFORE, the Plan is hereby amended and restated to
read as follows:
ARTICLE
I
Background Information
1.1 Purpose of Plan. The purpose of the Montgomery Ward &
Co., Incorporated Retirement Security Plan is to provide
retirement benefits for eligible associates of Ward and
Participating Companies and to thereby encourage such associates
to make and continue careers with Ward and Participating
Companies. The Plan, as amended and restated herein, and the
Trust is intended to qualify as a plan and trust which continue
to meet the requirements of Sections 401(a) and 501(a) of the
Code.
1.2 Application of Restatement and Determination of
Retirement Benefits. This Restatement applies to Associates who
are in the Service of the Company on any date after the Effective
Date. Any benefits payable to a participant who retired or
terminated service prior to January 1, 1981 without resuming
service thereafter, or whose normal retirement date occurred on
or before January 1, 1981, and the benefits payable to any
Associate who was in the Service of the Company on December 31,
1980 but who has not enrolled in the Plan thereafter, will be
paid from the Trust, but will be governed solely by the terms of
the Retirement Security Plan. The total benefits payable from
the Trust for any Participant enrolled in the Plan on any date
after December 31, 1980 will be calculated in three parts or such
lesser number of parts as may be applicable to the Participant:
(i) the Participant's benefits determined as of December 31, 1980
under the Retirement Security Plan; provided that, in making such
determination, Service after December 31, 1980 shall apply only
for purposes of Vesting under the Retirement Security Plan, (ii)
the Participant's Supplemental Retirement Benefit determined as
of the date of the Participant's Retirement or termination of
Service under the Retirement Security Plan, and (iii) the
Participant's benefits determined under the Plan with respect to
participation after December 31, 1980. Notwithstanding the
foregoing, in the event of the death of any Participant who was
enrolled in the Retirement Security Plan on December 31, 1980 and
who became a Participant in the Plan on January 1, 1981, (i) if
such Participant's Surviving Spouse is eligible to receive a
Pre-Retirement Death Benefit, such Surviving Spouse shall be
entitled to elect, in accordance with procedures established by
the Committee, to receive in one lump sum the amounts
attributable to associate contributions made prior to January 1,
1981 to the Retirement Security Plan, plus interest (determined
in accordance with the Code and Regulations), and the amount of
the Pre-Retirement Death Benefit payable to such Surviving Spouse
shall be reduced by the Equivalent Actuarial Value of the lump
sum payment if such election is made, and (ii) the Retirement
Benefit, and form in which benefits, if any, will be paid, shall
be determined solely under the terms of the Plan as in effect on
the date of the Participant's termination of employment or
retirement, unless such person is thereafter reemployed and again
becomes a Participant. Benefits for all other Participants shall
be determined under the terms of the Plan as in effect on the
date of the Participant's termination of employment or
retirement, unless such person is thereafter reemployed and again
becomes a Participant.
1.3 Other Effective Dates. The Plan, as set forth herein,
constitutes a restatement of the Plan through January 1, 1994.
Although this restatement is generally effective January 1, 1994,
the inclusion of amendments to conform with the Tax Reform Act of
1986 and other applicable laws necessitates different effective
dates for certain Plan provisions. Accordingly, notwithstanding
the general effective date of this restatement, the following
Plan sections as amended, shall be effective as indicated below.
Sections Effective Date
8.1 and 9.7 January 1, 1987
2.14, 2.15, 2.17, January 1, 1993
2.18 and 11.7
Article VII July 1, 1994
2.2 August 1, 1994
ARTICLE II
Definitions
The following terms shall have the following meanings:
2.1 "Accrued Benefit" means the amount of annual
Retirement Benefit determined under Articles IX and X payable as
a straight life annuity beginning at a Participant's Normal
Retirement Date or, if applicable, the Participant's Postponed
Retirement Date as determined in accordance with Article IX. The
Accrued Benefit payable at Normal Retirement Date shall not be
less than the Accrued Benefit of such Participant determined on
the date preceding the Effective Date under the terms of the Plan
or the terms of the Lechmere Plan determined on June 30, 1994.
2.2 "Actuarial Equivalent" or "Equivalent Actuarial
Value" means, unless otherwise specified in the Plan, a benefit
of equivalent value when computed on the basis of the actuarial
tables and interest rates as set forth below; provided, however,
that the interest rate used to determine whether the Equivalent
Actuarial Value of a Retirement Benefit exceeds $3,500 for
purposes of the Plan or to determine the Equivalent Actuarial
Value of a lump sum option provided under Section 11.6 shall not
be greater than:
(a) For distributions prior to January 1, 1995:
(i) the applicable interest rate if the accrued
benefit (using such rate) is not in excess
of $25,000; or
(ii) 120% of the applicable interest rate if the
accrued benefit exceeds $25,000 (as
determined under subparagraph (i) above).
In no event shall the present value
determined under subparagraph (ii) be less
than $25,000.
The rate set forth in subparagraphs (i) and (ii) above
may be referred to as the PBGC Rate. For purposes of
subparagraphs (i) and (ii) above and Subsection (c) below, the
applicable interest rate shall mean the interest rate or rates
which would be used as of the first day of the calendar year in
which the distribution commences by the PBGC for purposes of
determining the present value of the Participant's benefits under
the Plan if the Plan had terminated on the date distribution
commences with insufficient assets to provide benefits guaranteed
by the PBGC on that date ("PBGC Rate").
(b) For distributions after December 31, 1994, the
annual rate of interest on 30-year Treasury securities ("30-Year
Treasury Rate") for the month before the date of distribution or
such other time as the Secretary of Treasury may by regulations
prescribe.
For purposes of determining whether the Equivalent
Actuarial Value of a Retirement Benefit exceeds $3,500 for the
purposes of the Plan or to determine the Equivalent Actuarial
Value of a lump sum option provided under Section 11.6, to the
extent the Administrative Director or Committee determines it is
legally permissible, the 30-Year Treasury Rate shall be
determined for the month before the first day of the calendar
year in which the distribution commences. Until the
Administrative Director or Committee makes the determination set
forth in the preceding sentence, the Administrative Director or
Committee will set the 30-Year Treasury Rate for distributions
during the calendar year at a rate which it believes will be
lower than the 30-Year Treasury Rate for the December of the
preceding calendar year and each of the first eleven months of
the calendar year through November of such calendar year or for
such other period it determines appropriate. Pursuant to the
preceding sentence, the 30-Year Treasury Rate set for the 1995
calendar year until a determination is made effective pursuant to
the first sentence of this paragraph shall be 7%.
(c) Subject to the other provisions of this Section
2.2, for purposes of distributions prior to January 1, 1995 of
the Retirement Benefit other than that portion attributable to
the Lechmere Frozen Benefit, as defined in Section 9.1(c), and
the Immediate Cash Balance Annuity, "Actuarial Equivalent" or
"Equivalent Actuarial Value" means the sex-neutral option factors
listed below:
Annuity Form Mortality Interest Rate
Qualified Joint 1971 GAT 7.5%
and Survivor (60% male/40% female)
Annuity
100%, 75% or 50% 1971 GAT 7.5%
Contingent Annuity (60% male/40% female)
10 Year Certain 1971 GAT 7.5%
and Life Annuity (60% male/40% female)
Level Income 1971 GAT 7.5%
Annuity (60% male/40% female)
Lump Sum Option 1983 GAM Applicable
(males) Interest Rate
(d) Subject to the other provisions of this Section 2.2,
for purposes of distributions prior to January 1, 1995 of the Lechmere
Frozen Benefit, as defined in Section 9.1(c), and the Immediate Cash
Balance Annuity, "Actuarial Equivalent" or "Equivalent Actuarial Value"
means the sex-neutral option factors listed below:
Annuity Form Mortality Interest Rate
100%, 75% or 50% 1983 GAM 7.5%
Contingent Annuity (males)
10 Year Certain 1983 GAM 7.5%
and Life Annuity (males)
Level Income 1983 GAM 7.5%
Annuity (males)
Lump Sum Option 1983 GAM PBGC Rate
(males)
(e) Subject to the other provisions of this Section 2.2,
for distributions after December 31, 1994, "Actuarial Equivalent" of
"Equivalent Actuarial Value" means the sex-neutral option factors
listed below:
Annuity Form Mortality Interest Rate
100%, 75% or 50% 1983 GAM 7.5%
Contingent Annuity (50% male/50% female)
10 Year Certain 1983 GAM 7.5%
and Life Annuity (50% male/50% female)
Level Income 1983 GAM 7.5%
Annuity (50% male/50% female)
Lump Sum Option 1983 GAM 30-Year Treasury
(50% male/50% female) Rate
(f) The lump sum value of a Participant's Cash Balance
Account as of a determination date shall be an amount equal to the
accumulated balance in such Cash Balance Account as of such
determination date. For purposes of converting the Cash Balance
Account to an annuity form of payment, the 1983 GAM (males) mortality
table and the PBGC immediate interest rate as in effect on the first
day of the Plan Year in which the annualization occurs shall be used
for distributions prior to January 1, 1995 and the 1983 GAM (50%
male/50% female) mortality table and the 30-Year Treasury Rate as set
forth in subparagraph (b) shall be used for distributions after
December 31, 1994.
(g) In no event shall the amount of any benefit or annuity
determined hereunder exceed the maximum benefit under Section 415 of
the Code.
2.3 "Actuary" means the enrolled actuary, within the
meaning of ERISA, engaged by the Committee.
2.4 "Administrative Director" means the Administrative
Director of the Plan appointed by the Committee in accordance with
Section 15.3 hereof.
2.5 "Affiliate" means any corporation controlling,
controlled by, or under common control with (within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the applicable
Regulations), the Company or such successor, directly or indirectly
through one or more intermediaries.
2.6 "Beneficiary" means the person or persons designated
by a Participant or the Beneficiary of a Participant to receive the
amount, if any, payable under the Plan in the event of the death of
such Participant or Beneficiary, as the case may be.
2.7 "Board" means the Board of Directors of Ward.
2.8 "Break in Service" means (a) after January 1, 1976,
the Year during which or immediately after which an associate
terminates Service and does not perform Service during at least 12
weeks or (b) prior to January 1, 1976, a break in service under the
rules then in effect under the Retirement Security Plan.
Notwithstanding the preceding sentence, after January 1, 1976, any
Associate who actually performs at least 500 Hours of Service during
any Year shall not be considered as having incurred a Break in Service.
Effective with respect to absences commencing on or after January 1,
1985, solely for purposes of determining whether a Break in Service has
occurred, an individual shall be credited with the Hours of Service
which such individual would have completed but for a maternity or
paternity absence, as determined by the Committee in accordance with
the Code and Regulations; provided, however, that the total Hours of
Service so credited shall not exceed 501 hours and that the individual
timely provide the Committee with such information as it shall require.
Hours of Service credited for a maternity or paternity absence shall be
credited entirely (i) in the Plan Year in which the absence began if
such Hours of Service are necessary to prevent a Break in Service in
such year, or (ii) in the following Plan Year. For purposes of this
Section 2.8, maternity or paternity absence shall mean an absence from
work by reason of the individual's pregnancy, the birth of the
individual's child or the placement of a child with the individual in
connection with adoption of the child by such individual, or for
purposes of caring for a child for the period immediately following
such birth or placement.
2.9 "Cash Balance Account" means the notional amount
described in Section 7.1 and maintained for Participants who previously
participated in the Lechmere Plan.
2.10 "Code" means the Internal Revenue Code of 1986, as
amended, and any successor provisions thereto.
2.11 "Committee" means the Benefit Plans Committee of Ward.
2.12 "Company" means Ward and any Participating Company or
any of them.
2.13 "Credited Service" means an Associate's Service as a
Participant, excluding any authorized leave of absence, military leave,
layoff or suspension in accordance with Subsections 2.43(a)-2.43(d)
hereof. Credited Service shall not include any period of Service
during which a Participant fails to make any contributions required
prior to the Effective Date for participation in the Plan or fails to
authorize Required Contributions to be made under the Savings Plan on
or after the Effective Date. Beginning January 1, 1989, Credited
Service shall include any period of disability leave of absence
provided that the Associate was a Participant immediately prior to such
leave or became eligible while on such leave and further provided that
the Participant is receiving Long-Term Disability benefits from a plan
sponsored by the Company. Credit under the Plan for the period of
disability leave of absence during which the Participant is receiving
long-term disability benefits from a plan sponsored by the Company
shall be limited to (i) the duration of the disability leave of
absence; (ii) the period prior to the Participant's Normal Retirement
Date; (iii) one year if the Participant has less than ten years of
continuous service, or (iv) two years if the Participant has ten or
more years of continuous service prior to such disability leave of
absence, whichever is less. Associates who were in Service of the
Company as of January 1, 1988, and had completed at least one Hour of
Service in 1988, and made investable basic contributions as defined in
the Montgomery Ward & Co., Incorporated Savings and Profit Sharing Plan
other than Associates employed by Signature Financial/Marketing Inc.,
accrued benefits for those contributions retroactive to their
enrollment date in the Savings and Profit Sharing Plan.
With respect to each Participant who was an associate of
Jefferson Stores, Inc., Credited Service shall not include any period
of Service prior to July 1, 1983.
2.14 "Direct Rollover" shall mean a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
2.15 "Distributee" shall mean an Associate or former
Associate. In addition, the Associate's or former Associate's
surviving Spouse and the Associate's or former Associate's Spouse or
former Spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are
Distributees with regard to the interest of the Spouse or former
Spouse.
2.16 "Effective Date" means the date of effectiveness of
this amendment and restatement, as provided in Article III hereof.
2.17 "Eligible Retirement Plan" means an individual
retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code,
an annuity plan described in Section 403(a) of the Code, or a qualified
trust described in Section 401(a) of the Code, that accepts the
Distributee's Eligible Rollover Distribution. However, in the case of
an Eligible Rollover Distribution to the surviving Spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
2.18 "Eligible Rollover Distribution" shall mean any
distribution of all or any portion of the balance to the credit of
the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee
or the joint lives (or joint life expectancies) of the Distributee
and the Distributee's designated Beneficiary, or for a specified
period of ten years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
2.19 "Employee" or "Associate" means any individual
who is employed by the Company, as determined by the Committee,
excluding (a) any associate who is included in a unit of associates
covered by a negotiated collective bargaining agreement which does
not provide for the associate's membership in the Plan, (b) any
associate of a division of the Company which the Committee has
determined to treat as though it is an Affiliate which is not a
Participating Company, and (c) any non-resident alien.
2.20 "ERISA" means the Employee Retirement Income
Security Act of 1974, as from time to time amended.
2.21 "High Three-Year Pay" means a Participant's
average annual amount of total taxable remuneration paid or payable
by the Company or any Affiliate for the three consecutive calendar
years for which he receives or received Credited Service and during
which years such remuneration was the highest; provided that such
remuneration for the last calendar year shall be annualized.
2.22 "Hours of Service" means each hour during which
an Associate performs Service (or is treated as performing Service
under Section 2.43) and for which he is paid, or entitled to
payment for the performance of duties for the Company (including
back pay irrespective of mitigation of damages). In addition,
Hours of Service shall also include up to 501 hours of non-working
time during any single continuous period of absence which does not
otherwise constitute Service, but for which an associate is
directly or indirectly paid or entitled to payment. The
determination of Hours of Service to be credited hereunder shall be
made by the Committee in accordance with the Regulations, including
Section 2530.200b-2(b) and (c) of the Labor Department Regulations.
2.23 "Immediate Cash Balance Account Annuity" means an
annuity as described in Section 7.3 with respect to a Participant
who was a participant in the Lechmere Plan.
2.24 "Interest Credit(s)" means the interest amount
credited to the Cash Balance Account of a Participant who was a
participant in the Lechmere Plan.
2.25 "Investment Manager" means an Investment Manager,
as that term is defined in ERISA, appointed by the Trustees.
2.26 "IRS" means the United States Internal Revenue
Service.
2.27 "Jefferson Stores Plan" means the Retirement Plan
for Employees of Jefferson Stores, Inc. amended effective as of
January 1, 1984.
2.28 "Labor Department" means the United States
Department of Labor.
2.29 "Lechmere Plan" means the Lechmere, Inc. Personal
Retirement Account Plan, amended and restated effective January 1,
1992.
2.30 "Long-Term Disability Plan" means the Montgomery
Ward & Co., Incorporated Long-Term Disability Plan, as from time to
time in effect.
2.31 "Optional Retirement Benefit" means an
alternative form of Retirement Benefit provided for in Section 11.2
hereof, which a Participant may elect to receive upon Retirement
and which is the Actuarial Equivalent of a Retirement Benefit.
2.32 "Participant" means each Associate or former
Associate who is enrolled for participation in the Plan or is
entitled to receive or receiving benefit payments hereunder.
2.33 "Participating Company" means any company which
is an Affiliate, designated by the Board as such, the board of
directors or equivalent governing body of which shall adopt the
Plan by appropriate action and the Associates of which shall be
eligible to participate in the Plan in the manner and to the extent
determined by the Board so long as that company remains so
designated. Any such company so designated and which adopts the
Plan shall be deemed thereby to appoint Ward, the Committee, the
Administrative Director and the Trustees its exclusive agents to
exercise on its behalf all of the powers conferred hereby or by the
Trust Agreement upon the Company, the Committee, the Administrative
Director and the Trustees, respectively, and shall make its
allocable contributions to the Plan. The authority of the Company,
the Committee, the Administrative Director and the Trustees,
respectively, to act as such agent shall continue until the Plan
has terminated as to such company and the relevant Trust Fund
assets have been distributed by the Trustees as provided in Article
XVI hereof.
2.34 "PBGC" means the Pension Benefit Guaranty
Corporation.
2.35 "Plan" means this Retirement Security Plan, as
herein set forth, and as from time to time in effect.
2.36 "Prior Plans" means the Management Retirement
Security Plan, the Timecard Retirement Security Plan and the
Represented Retirement Security Plan, each as in effect on December
31, 1988.
2.37 "Regulations" means the applicable proposed,
temporary or final regulations issued under the Code or ERISA by
the IRS, the PBGC, the Labor Department or any other governmental
authority and any temporary rulings and questions and answers
promulgated by such authorities pending the issuance of such
regulations.
2.38 "Required Contributions" means contributions
authorized by Participants to be made to the Savings Plan pursuant
to Section 4.1 thereof.
2.39 "Retirement" or "Retire" means or refers to such
time as a Participant is eligible to receive currently and elects
to receive currently a Retirement Benefit or an Optional Retirement
Benefit upon or after the Participant's termination of Service.
2.40 "Retirement Benefit" means a single life annuity
determined upon a Participant's Retirement in accordance with the
relevant Section of Article IX hereof, payable in accordance with
the relevant Section of Article XI hereof.
2.41 "Retirement Security Plan" means the Montgomery
Ward & Co., Incorporated Retirement Security Plan as amended
through December 31, 1980.
2.42 "Savings Plan" means the Montgomery Ward & Co.,
Incorporated Savings and Profit Sharing Plan, effective as of April
1, 1983, and as amended from time to time.
2.43 "Service" means employment with the Company or
with any Affiliate, excluding service performed by an individual
prior to January 1, 1976, if such periods would have been
disregarded under the break in service rules then in effect under
the Retirement Security Plan or prior to January 1, 1985, if such
periods would have been disregarded under the break in service
rules then in effect under the Plan, and excluding Service which is
disregarded under the Break in Service rules of the Plan, the Prior
Plans, the Jefferson Stores Plan or the Lechmere Plan. Service
shall include the following:
(a) Any authorized leave of absence under rules
determined by the Committee, which are uniformly applicable to all
associates similarly situated and in accordance with the
Regulations (including Sections 2530.200b-2(b) and (c) of the Labor
Department Regulations and Sections 825.214 through 825.216 of the
Family and Medical Leave Act ("FMLA") Regulations); provided the
associate returns to active Service within the period authorized
for such leave;
(b) Service in any of the United States Armed
Forces, if and to the extent required by the Military Selective
Service Act, as amended, the FMLA, the Uniformed Services
Employment and Reemployment Rights Act of 1994 or any other federal
law, or as otherwise recognized by the Committee;
(c) Any period of layoff not in excess of
12 months during which the associate retains reemployment rights
and provided that the associate reports to work within three
working days after recall; and
(d) Any period of suspension of participation,
as provided for in Section 5.2 hereof.
2.44 "Surviving Spouse" means the survivor of a
deceased Participant to whom such deceased Participant was legally
married, as determined by the Committee on the earlier of, (a) the
date of the Participant's Retirement, or (b) for at least one year
on the date of such Participant's death.
2.45 "Total Earnings" means the total of an
Associate's compensation, including salary, wages, overtime
premium, commissions, holiday pay, vacation pay, bonuses, cash
incentives other than from contests, and salary continuance paid or
payable by the Company and any Affiliates for Service during a
calendar year prior to the earlier of the Associate's date of
termination of Service or the Associate's Normal Retirement Date
or, if applicable, Early Retirement Date, but excluding (a) amounts
paid under the 1970 Marcor Stock Price Plan, under any stock option
plan or stock award plan and under any other plans maintained
exclusively for management Associates of Ward or of Ward and
Affiliates which the Committee determines to exclude from Total
Earnings, (b) amounts contributed by the Associate's employer to
the Trust pursuant to the provisions of the Plan or paid or
contributed to any group insurance plan or other employee benefit
plan established or maintained by the Associate's employer or in
which the Associate's employer participates, other than amounts
contributed on behalf of a Participant under Section 4.1 of the
Savings Plan, (c) amounts paid to the Associate from Jefferson
Stores, Inc. while he was a participant under the Jefferson Stores
Plan, (d) amounts paid during any period during which a Participant
fails to make any contributions required prior to the Effective
Date for participation in the Plan or fails to authorize Required
Contributions to be made under the Savings Plan, and (e) amounts
paid in a calendar year in excess of $200,000 (adjusted for cost of
living to the extent permitted by the Code and Regulations).
Effective for calendar years beginning after December 31, 1993,
Total Earnings shall exclude amounts paid in a calendar year in
excess of $150,000 (adjusted for cost of living in accordance with
Section 401(a)(17) of the Code). In determining Total Earnings and
applying the $150,000 limitation for a highly compensated employee
(as defined in Section 414(q) of the Code) ("Highly Compensated
Associate") who is either a 5% owner of the Company or one of the
10 most highly paid Highly Compensated Associates and is therefore
subject to the family aggregation rules of Section 414(q)(6) of the
Code, the Highly Compensated Associate's family unit shall be
treated as a single employee with one Total Earnings. The term
"family" shall include the Highly Compensated Associate and any
Associate who is the Highly Compensated Associate's spouse or any
lineal descendants of the Highly Compensated Associate who have not
attained age 19 before the close of the Plan Year. If, as a result
of applying the family aggregation rules, the adjusted $150,000
limitation is exceeded, then the adjusted $150,000 limitation will
be allocated among the members of the family unit in proportion to
each such member's Total Earnings as determined prior to the
application of the $150,000 limitation. In the case of a
Participant for whom long-term disability benefits are being paid
under the Long-Term Disability Plan pursuant to the provisions of
said plan, the Participant's Total Earnings for the period during
which such benefits are being accrued by this Plan shall be deemed
to continue at the same rate as the Participant's Total Earnings
immediately prior to such disability.
2.46 "Transferred Contribution Account" means the
account, established and maintained as part of a Participant's
account under the Savings Plan to reflect amounts transferred with
respect to a Member's Benefit derived from Associate Contributions,
pursuant to Section 6.2 of the Savings Plan.
2.47 "Trust" means the Trust established by Ward as a
part of the Plan.
2.48 "Trust Agreement" means the agreement with the
Trustees establishing the Trust.
2.49 "Trust Fund" means all the assets held by the
Trustees pursuant to the Trust Agreement.
2.50 "Trustees" means the trustees under the Trust
Agreement appointed by the Committee in accordance with Section
15.2 hereof.
2.51 "Vest", "Vested" or "Vesting" means the
acquisition by a Participant or the Participant's Beneficiary of a
nonforfeitable right to a Retirement Benefit, except in the event
of the Participant's death prior to the time prescribed for payment
of such Retirement Benefit. For purposes of the Plan, Vesting
occurs after five Years of Service with the fifth year being the
completion of five months of service or upon Normal Retirement Date
pursuant to the provisions hereof, whichever occurs first. In
determining whether a Participant is Vested, the Years of Service
prior to any Break in Service shall be disregarded if he was not
then Vested and the number of consecutive Years in which he
incurred a Break in Service equals or exceeds the greater of 5 or
the aggregate number of the Participant's Years of Service prior to
such Break in Service (excluding any Years of Service prior to
January 1, 1976 which were disregarded under the break in service
rules then in effect under the Retirement Security Plan, and
excluding any Years of Service which are disregarded under the
Break in Service rules of the Plan, the Prior Plans, the Jefferson
Stores Plan or the Lechmere Plan).
2.52 "Ward" means the present Illinois corporation by
the name of Montgomery Ward & Co., Incorporated and any successor
to all or substantially all of its business and assets.
2.53 "Year" means the 12 consecutive month period
beginning on the date an Associate's Service commenced or
recommenced after a Break in Service (determined under the rules of
the Plan, the Prior Plans, the Jefferson Stores Plan or the
Lechmere Plan), as determined by the Committee, or an anniversary
date thereof. Effective January 1, 1994, if the Associate does not
complete 1,000 Hours of Service during the first 12 consecutive
month period, the determining period shall be any 12 consecutive
month period beginning with the first day of the calendar year
beginning on or after the date of employment.
2.54 "Year of Credited Service" means a Year of
Service for which an Associate receives Credited Service. Partial
Years of Credited Service shall be taken into account on the basis
of 1/12 Year's credit for each month of Service.
2.55 "Year of Service" means a Year in which an
Associate performs Service and completes 1,000 Hours of Service.
Any Associate who actually performs 1,000 Hours of Service during
any Year shall be considered as having performed a Year of Service.
ARTICLE III
Effective Date
The Effective Date of this amendment and restatement
shall be January 1, 1994.
ARTICLE IV
Eligibility
Each Associate who, immediately prior to the Effective
Date, was a Participant shall continue to be a Participant on and
after the Effective Date. Each other Associate who was in Service
immediately prior to the Effective Date, but who was not then a
Participant of the Plan shall be eligible for participation in the
Plan on the later of the Effective Date or the first day of the
month following the date on which he satisfies the requirements for
participation in the Plan as in effect on December 31, 1993;
provided, however, that any such Associate who does not submit an
enrollment form on the earliest date prescribed by the Committee
must satisfy the requirements for participation under this
amendment and restatement before again being eligible for
participation in the Plan. Each other Associate who was or is
employed by the Company shall become eligible to participate in the
Plan on the first day of the month following the later of (a) the
date on which he attains age 21; or (b) the date on which he
completes one Year of Service. Notwithstanding the foregoing, each
participant of the Lechmere Plan on June 30, 1994 shall become a
Participant on July 1, 1994.
ARTICLE V
Participation
5.1 Enrollment. Each Associate who becomes eligible
to become a Participant under the Savings Plan shall become a
Participant on the first day of the month following the Associate's
submission of an enrollment form prescribed by the Committee. The
Committee shall take any necessary or appropriate action to enroll
each Associate who becomes eligible to become a Participant
pursuant to this Section 5.1 and, if it is determined that an
eligible Associate has not been enrolled in the Plan due to error,
such Associate may be retroactively enrolled if the Committee
receives notice of the error within a reasonable period of time
following such error.
5.2 Suspension of Participation. No Participant may
continue participation in the Plan in the event the Participant
ceases to be an Associate or is transferred from the Company to an
Affiliate which is not designated a Participating Company or who is
on a leave of absence, except, to the extent provided in this Plan,
for those Associates receiving long-term disability benefits from a
plan sponsored by the Company. A Participant who becomes
ineligible to participate in the Plan because of the application of
the preceding sentence shall be suspended from further
participation during the period of such ineligibility without
forfeiting any benefits accrued prior to the date such Participant
became ineligible to participate, unless the Committee shall
determine, in accordance with rules established by the Committee
which are uniformly applicable to all Associates similarly
situated, that such Participant shall be deemed to have terminated
the Participant's employment for purposes of participation in the
Plan pursuant to Article XIII hereof. Such action shall not be
applicable to any Participant who is transferred to an Affiliate.
Credited Service shall exclude any such period of suspension, as
provided in Section 2.13 hereof, but Service for purposes of
Vesting and eligibility shall include such period. Notwithstanding
any of the provisions of the Plan to the contrary, each Participant
shall be entitled to the benefits provided under Sections 21.3 and
22.3, if applicable.
5.3 Break in Service. If a Participant's employment
terminates and he is later rehired, he shall again be eligible to
participate in the Plan as of the date of rehire.
ARTICLE VI
Contributions
6.1 Cessation of a Participant's Contributions. No
Participant shall be required or permitted to contribute to the
Plan on or after April 1, 1983.
6.2 Company Contributions. Subject to the provisions
of Articles XVI and XVII hereof, Ward and each Participating
Company shall contribute to the Trust, not less frequently than
quarterly during each Plan Year, the amounts recommended by the
Actuary to the Committee as necessary to maintain the Plan on a
sound actuarial basis, consistent with the requirements of ERISA
and the Code. The Committee shall arrange for such funding
standard accounts as are required by ERISA in accordance with the
recommendations of the Actuary.
6.3 Actuarial Assumptions. The Committee shall adopt
and may change from time to time, in accordance with the provisions
of ERISA and the Code, such actuarial assumptions and methods as
are recommended by the Actuary for the purpose of actuarial
valuations of the Plan. The Actuary shall make an annual actuarial
valuation of the Plan and shall estimate the contributions required
under Section 6.2 hereof on the basis thereof. At least once a
year, the Actuary shall make an actuarial study of the mortality
and other actuarial assumptions, service and compensation
experience of the Participants in the Plan, the investment
experience and any other relevant experience gains and losses under
the Plan, including such calculations as may be necessary to
determine whether the Plan is adequately funded, and shall report
the results of its study to the Committee. Prior to termination of
the Plan, forfeitures of benefits arising from termination of
Service, death or any other reason under the Plan shall not be
applied to increase the benefits that any Participants would
otherwise be entitled to receive under the Plan, but may be
anticipated in estimating costs under the Plan and shall be applied
to reduce the Company's contributions under the Plan.
ARTICLE VII
Cash Balance Account
7.1 In General. A notional account (hereinafter
referred to as the Cash Balance Account) shall be established and
maintained for each Participant who was a participant in the
Lechmere Plan. The initial Cash Balance Account for each
Participant shall equal such Participant's Cash Balance Account
under the Lechmere Plan as of June 30, 1994. Such Participant's
Cash Balance Account shall be credited with Interest Credits in
accordance with Section 7.2.
7.2 Interest Credits. Interest Credits equal to the
rate of interest specified in this Section 7.2 multiplied by the
amount of the Participant's Cash Balance Account as of the first
day of each calendar year shall be added to each Participant's Cash
Balance Account as of the last day of the calendar year. For any
calendar year in which a distribution is made from the Plan on
behalf of a Participant, interest shall be credited on the amount
of the Participant's Cash Balance Account as of the first day of
such year for the period from the first day of such year to the
date of benefit distribution. The rate of interest used to
determine the Interest Credit for a calendar year, shall be the 12-
month average rate for six month Treasury Bills as of December 31
of the prior calendar year. In no event will the annual Interest
Credit be less than 5.75% or more than 10.0%.
7.3 Immediate Cash Balance Account Annuity. The
amount of annual retirement income payable with respect to the Cash
Balance Account of a Participant is equal to the Immediate Cash
Balance Account Annuity. The Immediate Cash Balance Account
Annuity is the annual amount of retirement income payable as a
Single Life Benefit as defined in Section 11.2(a). The annual
amount of retirement income is determined as:
(a) The Participant's Cash Balance Account
divided by;
(b) The immediate annuity factor for one dollar
of annual benefit under the Single Life
Benefit form of payment defined in Section
11.2(a), based on the Participant's age as
of the Retirement Date.
The immediate annuity factor referenced in Section 7.3 above shall
be based on the actuarial assumptions described in Section 2.2.
ARTICLE VIII
Retirement Dates
8.1 Normal Retirement Date. A Participant's Normal
Retirement Date shall be the first day of any month following the
Participant's 65th birthday. Benefits accrued to a Participant
under the Plan shall be nonforfeitable upon the attainment of age
65.
Any Participant who, for at least two years before the
Participant's Normal Retirement Date, is employed in an executive
or other policy-making position and who, as of the Participant's
Normal Retirement Date, is entitled to an aggregate anticipated
annual retirement benefit, including benefits not provided under
the Plan, of $44,000 or more, when expressed as a Single Life
Benefit as defined in Subsection 11.2(a) hereof, all as determined
by the Committee under uniform rules and in accordance with
applicable law and Regulations, shall retire on the Participant's
Normal Retirement Date, unless the Participant's employment
thereafter has been approved by the Board or unless a state or
federal law requires that such Participant be permitted to continue
employment beyond his Normal Retirement Date.
8.2 Early Retirement Date. A Participant's Early
Retirement Date may be the first day of any month following the
Participant's termination of Service prior to the Participant's
Normal Retirement Date, provided such Participant (a) has attained
age 55, (b) has completed five Years of Service (except that this
requirement shall not apply to an Associate of the Company or an
Affiliate on December 31, 1968), and (c) has prior to such date
elected to Retire on such date pursuant to rules adopted by the
Committee in accordance with the Regulations.
8.3 Postponed Retirement Date. A Participant's
Postponed Retirement Date shall be the first day of any month
following termination of Service after Normal Retirement Date,
pursuant to Section 8.1 hereof.
ARTICLE IX
Amount of Retirement Benefit
9.1 Retirement Benefit Payable upon Retirement at
Normal Retirement Date. Subject to the provisions of this Article,
in the event of the Retirement of a Participant on his Normal
Retirement Date, the amount of the Retirement Benefit shall be the
sum of (a), (b), (c) and (d) below:
(a) the Participant's Retirement Benefit determined
as of December 31, 1993; and
(b) 1.5% of the Participant's Total Earnings while a
participant during each year of Credited Service after the
Effective Date; and
(c) the Participant's Lechmere Plan frozen benefit as
of June 30, 1994, excluding the benefit attributable to the
Participant's Immediate Cash Balance Annuity ("Lechmere Frozen
Benefit"); and
(d) the Participant's Immediate Cash Balance Annuity,
if any.
The Retirement Benefit will be accrued each calendar
year on the basis of the Participant's Credited Service and Total
Earnings during such calendar year and, with respect to a
Participant's Cash Balance Account, on the basis of Interest
Credits. In no event shall a Participant's Retirement Benefit
decrease after any date which could have been the Participant's
Early Retirement Date. The minimum Retirement Benefit payable upon
Retirement at Normal Retirement Date, including any benefit payable
with respect to a Participant's credited service under the
Retirement Security Plan prior to January 1, 1981, and any benefit
payable under the Plan on or after such date, shall be $1,200 after
an aggregate of 20 Years of Service during which the Participant
received either Credited Service or credited service under the
Retirement Security Plan, the Prior Plans or the Plan, with an
additional $60 for each of the first five such Years of Service in
excess of 20 and an additional $125 for each such Year of Service
in excess of 25, but in no event shall such minimum benefit exceed
$2,125, ending with Credited Service as of December 31, 1988.
9.2 Retirement Benefit Payable upon Retirement at
Early Retirement Date. In the event of a Participant's Retirement
on an Early Retirement Date, the amount of the Retirement Benefit
payable, including the annual minimum, shall be the amount provided
for in Section 9.1 hereof, provided that, in the event the
Participant's Early Retirement Date occurs prior to the first day
of the month following the Participant's 63rd birthday, the portion
of the Retirement Benefit derived from Sections 9.1(a) and 9.1(b)
shall be reduced by 5/12 of 1% for each month by which the
Participant's Early Retirement Date precedes such first day and
provided that in the event the Participant's Early Retirement Date
occurs prior to the first day of the month following the
Participant's 65th birthday, the portion of the Retirement Benefit
derived from Section 9.1(c) hereof shall be reduced by 5/9 of 1%
for each of the first 60 months by which the Participant's Early
Retirement precedes such first day and 5/18 of 1% for each of the
next 60 months.
9.3 Retirement Benefit Payable upon Retirement at
Postponed Retirement Date. In the event of a Participant's
Retirement on a Postponed Retirement Date, the amount of the
Retirement Benefit payable, including the annual minimum, shall be
the same amount which the Participant was entitled to receive on
the Participant's Normal Retirement Date, as provided in Section
9.1 hereof, with additional credit for Service after such date.
9.4 Offset of Retirement Benefit. Notwithstanding
any other provision of the Plan, the amount of the Retirement
Benefit payable, including the minimum Retirement Benefit, to any
Participant shall be reduced by the current annuity rates of a
legal reserve life insurance company chosen by the Committee of
that portion of the annuity which could be purchased for the
Participant under the Savings Plan with the amount, if any, in the
Participant's Transferred Contribution Account and the amount, if
any, in the Participant's Account attributable to Required
Contributions as determined by the Committee as of the date of the
Participant's Retirement. Notwithstanding anything provided
herein, effective January 1, 1984, the Retirement Benefit of
associates of Montgomery Ward Insurance Company and its
subsidiaries shall not be offset by benefits provided under the
Savings Plan and effective October 1, 1984, the Retirement Benefit
of associates of Signature Financial/Marketing, Inc. and its
subsidiaries shall not be offset by the benefits provided under the
Savings Plan except as set forth herein. In addition, effective as
of such dates, associates of the aforesaid companies will accrue
benefits under the Plan although they have not authorized payroll
deduction contributions under the Savings Plan. The Retirement
Benefit payable to associates of Montgomery Ward Insurance Company
shall be reduced by Equivalent Actuarial Value of that portion of
the annuity that could be purchased with the Transferred
Contributions and their contributions made prior to January 1, 1984
(or October 1, 1984 for certain associates) under the Savings and
Profit Sharing Plan.
9.5 Cessation of Benefit Payments Following
Reemployment After Retirement. Upon reemployment of a former
Associate who previously Retired hereunder, all benefit payments
being made to the Associate which are permitted to be suspended
under Regulations shall cease.
9.6 Retirement Benefit Payable upon Retirement
Following Reemployment after Termination of Service. If a
Participant who incurs a Break in Service is for any reason
reemployed by the Company, then, upon the Participant's subsequent
Retirement, the Participant's Retirement Benefit shall be based on
the Participant's Credited Service after the Participant's
reemployment plus the Retirement Benefit (after applying the
offset) previously accrued as of the Participant's separation from
Service.
9.7 Maximum Amount of Retirement Benefit.
(a) The provisions of this Section shall govern
the benefits to which it is applicable notwithstanding any other
provision of the Plan to the contrary. The benefits to which this
Section is applicable are: (i) any annuity payable to a
Participant for life as a part of a Qualified Joint and Survivor
Benefit or as a part of an Optional Retirement Benefit elected by
the Participant under Section 11.2 hereof and having the effect of
a qualified joint and survivor annuity within the meaning of
Section 417(b) of the Code (excluding in either case any
post-Retirement Surviving Spouse benefit); (ii) any Single Life
Benefit elected by a Participant under Subsection 11.2(a) hereof;
and (iii) any other Optional Retirement Benefit elected by a
Participant under Section 11.2 hereof (including both the annuity
payable to the Participant and any other annuity or benefit payable
thereunder). This Section shall not limit the amount of any
Supplemental Retirement Benefit, if any, which is payable by reason
of the prior maintenance of the Profit-Sharing Plan, which benefit
represents benefits under a "defined contribution plan", as that
term is defined in ERISA.
(b) The benefits to which this Section is
applicable may not exceed the limitations set forth in Section 415
of the Code, which are incorporated by reference herein. For these
purposes, the "limitation year" means the Plan Year. If a
Participant also participates in any defined contribution plan (as
defined in Sections 414(i) and 415(k) of the Code) maintained by
the Company or any Affiliate, in the event that in any Plan Year
the sum of the Participant's defined benefit fraction (as defined
in Section 415(e)(2) of the Code) and the Participant's defined
contribution fraction (as defined in Section 415(e)(3) of the Code)
would otherwise exceed 1.0, then the benefit payable under this
Plan shall be reduced so that the sum of such fractions in respect
of that Member will not exceed 1.0. If the above reduction does
not ensure that the limitation set forth in this Section is not
exceeded, then the annual additions (as defined in Section
415(c)(2) of the Code) to any defined contribution plan maintained
by the Company or any Affiliate in which the Participant
participates, shall be reduced in accordance with the provisions of
that plan, but only to the extent necessary to ensure that such
limitation is not exceeded. If a Participant also participates in
another defined benefit plan (as defined in Sections 414(j) and
415(k) of the Code) maintained by the Company or any Affiliate, in
the event that in any Plan Year such Participant's aggregated
accrued benefit under such plans exceeds the applicable limits
under Section 415 of the Code, the benefit payable under such other
plan shall be reduced to the extent necessary to comply with such
limits.
(c) For purposes of this Section, the benefits
to which this Section is applicable shall be determined without
regard to any amounts transferred from the Jefferson Stores Plan
and the Lechmere Plan pursuant to Section 21.2.
(d) In the case of any Associate who was a
Participant under the Retirement Security Plan prior to October 3,
1973, the benefits to which this Section is applicable may not
exceed the greater of (i) the limitations contained in Subsection
9.7(b) hereof, adjusted as described therein, or (ii) either (A)
the Actuarial Equivalent of a Single Life Benefit, as described in
Section 11.2 hereof, equal to 100% of the Participant's Total
Earnings on October 2, 1973, or, if earlier, the date of his
termination of Service, or (B) the Actuarial Equivalent of the
benefits which would have been provided under the Retirement
Security Plan as in effect on October 2, 1973, without taking into
account any increases in the Associate's Total Earnings after such
date.
(e) The Committee shall, to the extent required
by ERISA and in accordance with Regulations, apply the limitations
contained in this Section, after giving due consideration to the
wishes of the Participant, by taking into account the Supplemental
Retirement Benefit, if any, and the benefits payable and the
contributions made under any other plans maintained by Ward or any
Affiliate which are qualified under Section 401(a) of the Code. If
such other plan is a defined contribution plan, then the sum of the
defined benefit plan fraction and the defined contribution plan
fraction (each as described in Section 415(e) of the Code) shall
not exceed 1.0.
(f) Notwithstanding the foregoing provisions of
this Section, the maximum limitation on Retirement Benefits, with
respect to any person who was a Participant prior to December 31,
1982 and whose Retirement Benefit (determined without regard to any
changes in the Plan after July 1, 1982 and without regard to cost-
of-living adjustments, if any, occurring after July 1, 1982) as of
December 31, 1982, exceeds the limitations set forth in Section
9.7(b), shall be such Participant's Retirement Benefit as of
December 31, 1982; provided that, such Participant's Retirement
Benefit did not exceed the maximum limitation thereon as of
December 31, 1982.
(g) Notwithstanding the foregoing provisions of
this Section, the maximum limitation on Retirement Benefits, with
respect to any person who was a Participant on or prior to December
31, 1994 and whose Retirement Benefit as of December 31, 1994
exceeds the limitations set forth in Section 9.7(b), shall not be
less than such Participant's Retirement Benefit as of December 31,
1994; provided that, such Participant's Retirement Benefit did not
exceed the maximum limitation thereon as of December 31, 1994.
ARTICLE X
Eligibility for Retirement Benefit
10.1 Eligibility for Retirement Benefit at Normal
Retirement Date. Except as otherwise provided in Article IX hereof
and Section 11.4, a Participant who Retires on the Participant's
Normal Retirement Date shall be eligible for the Retirement Benefit
provided for in Section 9.1 hereof or a benefit of Equivalent
Actuarial Value thereto as provided for herein payable from and
after the Participant's Normal Retirement Date.
10.2 Eligibility for Retirement Benefit at Early
Retirement Date. Except as otherwise provided in Article IX
hereof, a Participant who Retires on an Early Retirement Date shall
be eligible for the Retirement Benefit provided for in Section 9.2
hereof or a benefit of Equivalent Actuarial Value thereto as
provided for herein payable from and after the Participant's Early
Retirement Date. A Participant who has attained age 55 and
terminates Service prior to the Participant's Normal Retirement
Date with five Years of Service shall be eligible for the
Retirement Benefit provided for in Section 9.1(c) or a benefit of
Equivalent Actuarial Value.
Notwithstanding any other provisions of the Plan, no
distribution of any amounts attributable to contributions paid on
behalf of a Participant while he was a 5% owner shall be made to a
Participant who is or has been a 5% owner prior to such
Participant's attaining age 59 1/2, for any reason other than such
Participant's death or disability. For purposes of this Section
10.2, a 5% owner shall mean a 5% owner of such Participant's
employer as defined in Section 416(i)(1)(B)(i) of the Code.
10.3 Eligibility for Retirement Benefit at Postponed
Retirement Date. Except as otherwise provided in Article IX hereof
and Section 11.4, a Participant who Retires on a Postponed
Retirement Date shall be eligible for the Retirement Benefit
provided for in Section 9.3 hereof or a benefit of Equivalent
Actuarial Value thereto as provided for herein payable from and
after the Participant's Postponed Retirement Date.
10.4 Long-Term Disability Benefits. During any period
when benefits would otherwise be payable under the Long-Term
Disability Plan, no benefits shall be paid under this plan unless a
Participant ceases to receive benefits under the Long-Term
Disability Plan.
ARTICLE XI
Methods of Payment
11.1 Qualified Joint and Survivor Benefit. If a
Participant is legally married, as determined by the Committee, on
the date of the Participant's Retirement, the Equivalent Actuarial
Value of any Retirement Benefit, to which such Participant is
entitled under the Plan shall, except as otherwise provided in this
Section or in Section 11.2 hereof, be payable in the form of a
Qualified Joint and Survivor Benefit. The term "Qualified Joint
and Survivor Benefit" means a benefit providing an annuity for the
life of the Participant, ending with the payment due on the first
day of the month in which the Participant's death occurs, and, if
the Participant dies leaving a Surviving Spouse, a survivor annuity
for the life of such Surviving Spouse, commencing on the first day
of the month following the date of the Participant's death and
ending with the payment due on the first day of the month in which
such Surviving Spouse's death occurs. The survivor annuity payable
to the Surviving Spouse shall be in an amount equal to one-half of
the annuity payable for the life of the Participant under the
Participant's Qualified Joint and Survivor Benefit. If a
Participant is not legally married, as determined by the Committee,
on the date of the Participant's Retirement, the Participant's
Retirement Benefit shall, except as otherwise provided in Section
11.2 hereof, be payable to the Participant in the form provided for
in Subsection 11.2(a) hereof.
11.2 Optional Methods of Payment. In lieu of the
Qualified Joint and Survivor Benefit, a Participant may elect,
subject to Sections 11.3 and 11.4 hereof, to receive the Actuarial
Equivalent of the Retirement Benefit to which the Participant is
entitled under the Plan in accordance with any one of the following
options:
(a) Single Life Benefit. An annuity for the
Participant's life, ending with the payment due on the first day of
the month in which the Participant's death occurs, with no monthly
annuity payable to a beneficiary.
(b) Contingent Annuitant Benefit. An annuity
for life and an annuity for 100%, 75% or 50% of such amount after
the Participant's death on or after the Participant's Normal
Retirement Date or Early Retirement Date, if applicable, to the
Participant's Beneficiary for the life of the Beneficiary (the
"Contingent Annuitant Benefit" or "Joint and Survivor Benefit").
In no event shall the effect of the selection of a Contingent
Annuitant Benefit in which the Beneficiary is not the Participant's
spouse cause the benefit payable to the Participant to be reduced
to a level less than 50% of the benefit to which the Participant
would have been entitled if the Participant had not elected the
Contingent Annuitant Benefit. The conditions governing the
Contingent Annuitant Benefit shall be:
(i) The effective date of the Contingent
Annuitant Benefit (the "Option Effective Date") shall be
the Participant's Retirement Date.
(ii) The election shall be made in writing,
dated the day the election is made, on the prescribed
form and shall specify the 100%, 75% or 50% Contingent
Annuitant Benefit and the name, social security number,
sex and date of birth of the Participant's Beneficiary.
(iii) Retirement income under the Contingent
Annuitant Benefit shall commence effective the first day
of the month following Retirement.
(iv) The Contingent Annuitant Benefit shall
become inoperative in the event the Participant cancels
the benefit prior to the Option Effective Date or if
either the Participant or the Beneficiary should die
prior to the Option Effective Date. On the Option
Effective Date, the Contingent Annuitant Benefit shall
become noncancellable and the Beneficiary selection
binding, and, if either the Participant or the
Beneficiary should die after the Option Effective Date,
the benefit shall nevertheless continue to be operative.
(c) Level Income Benefit. Benefit from the Plan
up to the earliest date age 62 that the Participant will be
entitled to receive a retirement benefit from social security and a
smaller benefit, or no benefit if so actuarially determined, from
the Plan commencing after such date (the "Level Income Benefit").
If the Participant dies prior to age 62 or if benefits continue
after age 62, the Annuity ceases with the payment due on the fist
date of the month in which the Participant's death occurs. The
Plan benefits payable both before and after the retirement benefit
from social security as estimated for age 62 commencement becomes
payable, in combination, are to have the Equivalent Actuarial Value
of the reduced amount of Retirement Benefit provided for in Section
9.2 hereof commencing on the Early Retirement Date.
(d) Ten Years Certain and Continuous Benefit.
An annuity for life with the provision that, if the Participant
should die before having received 120 monthly payments, the
Participant's Beneficiary shall receive the balance of such
payments (the "Ten Years Certain and Continuous Benefit"). The
conditions governing the Ten Years Certain and Continuous Benefit
shall be the same as those governing the Contingent Annuitant
Benefit, except that the election form need not specify the social
security number, sex and date of birth of the Participant's
Beneficiary and the Participant may change the Participant's
Beneficiary at any time before or after the Option Effective Date
upon written notice to the Committee.
(e) Lump Sum Benefit. For Participants who were
participating in the Lechmere Plan as of June 30, 1994, to the
extent that the Equivalent Actuarial Value of a Participant's
Accrued Benefit from the Lechmere Plan determined as of June 30,
1994 is less than or equal to $7,000, the Participant or the
Participant's Surviving Spouse may elect to receive such Accrued
Benefit in one lump sum payment; or to the extent that a
Participants' Accrued Benefit age 55 or older is $50.00 or less,
the Participant may elect to receive the Equivalent Actuarial Value
of such Accrued Benefit in one lump sum payment.
11.3 Election of Optional Method of Payment. Except
as otherwise provided in Sections 11.2 and 11.5 hereof, any
election or revocation of an election under this Article shall be
made by the Participant at any time prior to the date that benefit
payments to the Participant commence pursuant to the provisions of
the Plan. If a Participant has elected a Contingent Annuitant
Benefit or 10 Years Certain and Continuous Benefit in accordance
with Section 11.2 and dies prior to the date payment of the
Participant's Retirement Benefit commences without leaving a
surviving Spouse, then such form of benefit shall become payable to
the Participant's Beneficiary in the same amount, if any, that
would have been payable to such Beneficiary if the payments
thereunder had commenced to the Participant on the last day of the
month coincident with or preceding the date of the Participant's
death. If such a Participant dies prior to the date payment of the
Participant's Retirement Benefit commences, leaving a Surviving
Spouse and without having made a valid election under Section
12.1(b), then the election under Section 11.2, if any, shall be
null and void, and the Surviving Spouse shall receive the Pre-
Retirement Death Benefit in accordance with Section 12.1(a).
11.4 Rules Regarding Distribution of Benefits.
(a) Notwithstanding any other provision of the
Plan, unless otherwise provided by law, any benefit payable to a
Participant shall commence no later than the April 1st of the
calendar year following the calendar year in which such Participant
attains age 70 1/2; provided, however, if a Participant attained
age 70 1/2 prior to January 1, 1988, except as otherwise provided
in Subsection 11.4(e), any benefit payable to such Participant
shall commence no later than the April 1st of the calendar year
following the later of (i) the calendar year in which the
Participant attains age 70 1/2 or (ii) the calendar year in which
the Participant retires. Such benefit shall be paid, in accordance
with the Regulations, over a period not extending beyond the life
expectancy of such Participant and the Participant's Beneficiary.
Life expectancy for purposes of this Section shall not be
recalculated annually in accordance with the Regulations. Any
additional Retirement Benefit Accrued beyond the Retirement Benefit
Commencement date shall be paid in a lump sum.
(b) If distribution of a Participant's benefit
has commenced prior to a Participant's death, and such Participant
dies before the Participant's entire benefit is distributed to the
Participant, distribution of the remaining portion of the
Participant's benefit to the Participant's Beneficiary shall be
made at least as rapidly as under the method of distribution in
effect on the date of the Participant's death.
(c) If a Participant dies before distribution of
the Participant's benefit has commenced, distributions to any
Beneficiary shall be made on or before the December 31st of the
calendar year which contains the 5th anniversary of the date of
such Participant's death; provided, however, that any distribution
to a Beneficiary designated under Section 12.2 may be made over the
life of such Beneficiary or a period not extending beyond the life
expectancy of such Beneficiary. Such distribution shall commence
not later than the December 31st of the calendar year immediately
following the calendar year in which the Participant died, or, in
the event such Beneficiary is the Participant's Surviving Spouse,
not later than the date of which such Participant would have
attained age 70 1/2, if later (or, in either case, on any later
date prescribed by Regulations). If such Participant's Surviving
Spouse dies after such Participant's death but before distributions
to such Surviving Spouse commence, this Section 11.4(c) shall be
applied to require payment of any further benefits as if such
Surviving Spouse were the Participant.
(d) Pursuant to Regulations, any benefits paid
to a child shall be treated as if paid to a Participant's Surviving
Spouse if such amount will become payable to such Surviving Spouse
on the child's attaining majority, or other designated event
permitted by Regulations.
(e) If a Participant who is 5% owner attained
age 70 1/2 before January 1, 1988, any benefit payable to such
Participant shall commence no later than the April 1st of the
calendar year following the later of (i) the calendar year in which
the Participant attained age 70 1/2 or (ii) the earlier of (A) the
calendar year within which the Participant becomes a 5% owner or
(B) the calendar year in which the Participant retires. For
purposes of this Subsection (e), a 5% owner shall mean a 5% owner
of such Participant's employer as defined in Section 416(i) of the
Code at any time during the Plan Year in which such owner attains
age 66 1/2 or any subsequent Plan Year.
11.5 Written Explanations of Survivor Benefit. The
Committee shall furnish or cause to be furnished to each married
Participant explanations of the Qualified Joint and Survivor
Benefit and the Pre-Retirement Death Benefit in Section 12.1(a)
under procedures developed by the Committee in accordance with the
Code and Regulations. A Participant may with the written consent
of the Participant's spouse (unless the Committee makes a written
determination in accordance with the Code and Regulations that no
such consent is required), elect in writing to receive the
Participant's Retirement Benefit in one of the optional forms
described in Section 11.2 in lieu of a Qualified Joint and Survivor
Benefit within the 90-day period ending on the date payment of the
Participant's Retirement Benefit commences. Any such election may
be revoked by a Participant, without spousal consent, at any time
within which such election could have been made. Such an election
or revocation must be made in accordance with procedures developed
by the Committee in accordance with the Code and Regulations, or
both.
11.6 Cash Out. Payments of any Retirement Benefit
with an Equivalent Actuarial Value of $3,500 or less will be made
in a lump cash sum in full settlement of the Plan's liability
therefor, provided, however, that in the case of a married
Participant, no such lump-sum payment shall be made after benefits
have commenced without the consent of the Participant and the
Participant's spouse or, if the Participant has died, the
Participant's Surviving Spouse.
11.7 Direct Rollover. Notwithstanding any provision
of the Plan to the contrary, a Distributee may elect, at the time
and in the manner prescribed by the Committee, to have any portion
of an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct Rollover.
ARTICLE XII
Death Benefits
12.1 Pre-Retirement Death Benefit. A Vested
Participant who is in Service or who terminated Service but whose
effective date of payment of Retirement Benefits has not yet
occurred is entitled to a Pre-Retirement Death Benefit. The term
"Pre-Retirement Death Benefit" means a benefit providing that, in
the event of the Participant's death before the effective date of
payment of the Participant's Retirement Benefit, the Participant's
Surviving Spouse, if any, shall be entitled to receive a survivor
annuity equal to one-half of the annuity which would have been
payable for the life of the Participant under a Qualified Joint and
Survivor Benefit, if payments thereunder had commenced on the first
day of the month following the later of (i) the Participant's death
or (ii) the Participant's attainment of age 55. Such Pre-
Retirement Death Benefit shall become payable to the Surviving
Spouse on the first day of the month coincident with or following
the later of (i) the date of the Participant's death, or (ii) the
day on which the Participant would have attained age 55 had he
lived.
12.2 Designation of Beneficiary. Each Participant
shall file with the Committee a written designation of one or more
persons as the Beneficiary who, subject to Section 11.5, shall be
entitled to receive the amount, if any, payable to the
Participant's Beneficiary upon the death of the Participant. The
designation of a Beneficiary for purposes of the Contingent
Annuitant Benefit or Ten Years Certain and Continuous Benefit shall
be deemed to be a Beneficiary designation for all purposes under
the Plan unless otherwise specified by the Participant. Each
Beneficiary of a Participant may file with the Committee a written
designation of one or more persons as the Beneficiary who shall be
entitled to receive the amount, if any, payable to such Beneficiary
of the Beneficiary of the Participant upon the death of the
Participant's Beneficiary. A Participant or the Beneficiary of a
Participant may from time to time revoke or change his Beneficiary
designation without the consent of any prior Beneficiary by filing
a new designation with the Committee. The last Beneficiary
designation received by the Committee shall be controlling;
provided that, no designation, or change or revocation thereof,
shall be effective unless received by the Committee prior to the
death of the Participant or the Beneficiary of the Participant, as
the case may be, or be effective as of the date prior to the date
of such receipt. If no Beneficiary designation is in effect at the
time of a Participant's death or if no Beneficiary survives the
Participant, payment of the amount, if any, payable upon the death
of the Participant shall be made to the Participant's estate. If
no Beneficiary designation is in effect at the time of the death of
the Beneficiary of a Participant or if no Beneficiary survives the
Beneficiary of a Participant, payment of the amount, if any,
payable upon the death of the Beneficiary of the Participant shall
be made to the estate of the Beneficiary of the Participant. If
the Committee is in doubt as to the right of any person to receive
an amount payable pursuant to this Section, the Committee may
direct the Trustees to retain such amount, without liability for
any interest thereon, until the rights thereto are determined, or
the Committee may direct the Trustees to pay such amount to any
court of competent jurisdiction, which payment shall be a complete
discharge of the liability under the Plan and of the Trust
therefor.
ARTICLE XIII
Termination of Service
13.1 Termination of Service by Non-Vested Participant.
If the Service of a Participant who is not and does not at the time
thereof become Vested terminates, no Retirement Benefit shall be
payable to the Participant under the Plan.
13.2 Termination of Service by Vested Participant. If
the Service of a Participant who is Vested terminates prior to
Retirement, such Participant may elect, subject to Sections 10.2
and 11.4, any of the following:
(a) To receive a Retirement Benefit commencing
upon the Participant's Normal Retirement Date, including the annual
minimum if the Service requirement therefor is satisfied, based on
the Participant's Years of Credited Service prior to the
Participant's termination of Service and determined in accordance
with Section 9.1 hereof; or
(b) If such Participant is ineligible for
benefits under the Long-Term Disability Plan (or has voluntarily
elected to forego receipt of benefits otherwise payable
thereunder), such Participant may elect to receive the benefits
provided for in Section 9.2 hereof, including the annual minimum if
the Service requirement therefor is satisfied, based on the
Participant's Years of Service prior to the Participant's
termination of Service, commencing on the first day of the month
following attainment of age 55 or the first day of any subsequent
month prior to the Participant's Normal Retirement Date, where such
Participant has prior to such date elected to receive such benefits
on such date pursuant to rules adopted by the Committee in
accordance with the Regulations.
13.3 Termination of Service without a Break in
Service. In the event the Service of a Participant terminates and
he is reemployed without having incurred a Break in Service, such
Participant's enrollment in the Plan shall be reinstated as of the
effective date of the Participant's re-enrollment; the Retirement
Benefit payable shall be the prior accrued Retirement Benefit
reduced by the prior annuity offset plus any additional Retirement
Benefit accruals of the amount previously paid to the Participant
from the Trust Fund.
13.4 Termination of Service Following Reemployment.
Notwithstanding the foregoing provisions of this Article, if the
Service of a Participant who was reemployed following a termination
of Service shall subsequently be terminated for any reason, the
benefits payable to the Participant pursuant to the provisions of
the Plan shall be reduced by the Equivalent Actuarial Value of all
amounts theretofore paid to the Participant pursuant to the Plan.
ARTICLE XIV
Non-Assignability
Except insofar as applicable law may otherwise require
or pursuant to the terms of a Qualified Domestic Relations Order,
no amount payable at any time under the Plan and Trust shall be
subject in any manner to alienation by anticipation, sale,
transfer, assignment, bankruptcy, pledge, attachment, charge or
encumbrance of any kind, and any attempt to alienate, sell,
transfer, assign, pledge, attach, charge or otherwise encumber any
such amount, whether presently or hereafter payable, shall be void.
The Plan and Trust shall not be liable for or subject to the debts
or liabilities of any person entitled to any amounts payable under
the Plan. If any person shall attempt to, or shall, alienate,
sell, transfer, assign, pledge or otherwise encumber any amount
payable under the Plan and Trust, or any part thereof, or if by
reason of the Participant's bankruptcy or other event happening at
such time such amount would not be enjoyed by the Participant, then
the Committee, if it so elects, may direct that such amount be
withheld and shall hold or apply it to or for the benefit of such
person, the Participant's spouse, children or other dependents, or
any of them, in such manner and proportion as the Committee may
deem proper. For purposes of the Plan, a Qualified Domestic
Relations Order means any judgment, decree, or order (including
approval of a property settlement agreement) which has been
determined by the Committee in accordance with procedures
established under the Plan, to constitute a qualified domestic
relations order within the meaning of Section 414(p)(1) of the
Code.
ARTICLE XV
Administration
15.1 In General. The Committee shall have authority
and responsibility for the administration and interpretation of the
Plan, and, for purposes of ERISA, shall be the "administrator" of
the Plan and its "named fiduciary" with respect to matters for
which it is responsible; provided that the Board shall have the
sole authority to amend, suspend or terminate the Plan, except as
otherwise provided in Subsection 15.4(c) hereof. The Committee
shall consist of not less than three persons, who need not be
directors of Ward, as from time to time appointed by the Board.
Any Committee member may resign and the Board may remove any
Committee member, with or without cause, at any time. To the
maximum extent permitted by ERISA, every action and determination
of the Committee in accordance with this Section shall be final and
binding upon each Participant, Beneficiary, other Associate and
every other person entitled to or claiming participation in the
Plan or benefits from the Plan. No member of the Committee shall
be entitled to act on or decide any matter relating solely to the
Participant or to any of the Participant's rights or benefits under
the Plan.
15.2 Appointment of Trustees. The Committee shall
appoint the Trustees, and may remove any Trustees in accordance
with the Trust Agreement. Upon acceptance of their appointments,
the Trustees shall have exclusive authority to manage and control
the Trust Fund, subject to the provisions of the Plan and the Trust
Agreement and, for purposes of ERISA, shall be the "named
fiduciary" of the Plan with respect to matters for which they are
responsible; provided that, as provided in the Trust Agreement, the
Trustees may appoint one or more Investment Managers and may
delegate authority to the Investment Managers so appointed as
provided therein and permitted by ERISA.
15.3 Appointment of Administrative Director. The
Committee shall appoint an Administrative Director and may from
time to time allocate or delegate to any subcommittee or member of
the Committee, the Administrative Director and others, not
necessarily Associates, such duties relative to compliance with the
reporting and disclosure obligations of ERISA and the
administration and interpretation of the Plan as it deems necessary
or appropriate including matters involving the exercise of
discretion. The Administrative Director may from time to time
delegate to others, not necessarily Associates, such of the
Administrative Director's duties as the Administrative Director
deems necessary or appropriate. The Committee may remove, with or
without cause, at any time the Administrative Director and any
person to whom duties are delegated by the Committee or the
Administrative Director in accordance with this Section.
15.4 Specific Responsibilities and Authority of the
Committee. In furtherance of, and not by way of limitation on, the
responsibilities and authority conferred on the Committee in
Section 15.1 hereof, the Committee shall administer the Plan in
accordance with its terms and provisions and shall have the
following specific responsibilities and authorities:
(a) to construe and interpret the Plan and
determine all questions arising in its operation;
(b) to develop and from time to time review a
policy for funding the Plan recommended by the Actuary, which shall
be consistent with the objectives of the Plan and the actuarial
tables and interest rate assumptions from time to time recommended
by the Actuary for the Plan in accordance with the Regulations and
to advise the Trustees of such policy and of any changes therein
from time to time;
(c) to make such amendments in the Plan and the
Trust Agreement as it deems necessary or appropriate in order to
enable the Plan to comply with ERISA and any other applicable legal
requirements; provided that such amendments would not significantly
affect the cost of the Plan;
(d) to receive reports from the Trustees and
from the Administrative Director on the discharge of their duties
and authority with respect to the Plan, including in the case of
the Administrative Director the preparation, distribution and
maintenance of all documents necessary or appropriate for
compliance with the reporting, disclosure and recordkeeping
requirements contained in ERISA, as well as such other records or
data as may be necessary or appropriate for the proper
administration of the Plan;
(e) to employ the Actuary and such certified
public accountants, legal counsel and other persons as may be
required by ERISA or as it shall otherwise deem necessary or
appropriate in connection with the operation of the Plan;
(f) to adopt such rules and procedures as the
Committee deems necessary or appropriate in order to fulfill its
responsibilities with respect to the Plan; provided that such rules
and procedures are uniformly and consistently applied to persons in
similar circumstances;
(g) to hold regular meetings designed to insure
the discharge of its responsibilities hereunder, and to maintain an
accurate written record of all such meetings; and
(h) to furnish the Board with reports, including
subjects reported upon to it by the Trustees and the Administrative
Director.
15.5 Rules of Procedure. Subject to the by-laws of
the Company and the resolutions of the Board, the Committee shall
establish its own rules of procedure and the time and place of its
meetings. A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the act of
a majority of the Committee members at a meeting at which a quorum
is present shall be the act of the Committee. Any action which may
be taken at a meeting of the Committee may be taken without a
meeting if a consent, in writing, setting forth the action so
taken, shall be signed by all of the members of the Committee.
15.6 Trust Fund. The Company has entered into the
Trust Agreement with the Trustees providing for the administration
and management of the Trust Fund. All benefits and other amounts
payable hereunder shall be paid exclusively from the Trust Fund,
and neither the Company, the Committee, any Trustee, the
Administrative Director, nor any director, officer, Associate or
agent of the Company assumes any responsibility or liability
therefor. The Trust Fund may be commingled for investment purposes
with like separate trust funds of any other plans and trusts of
Ward or any Affiliate which meet the requirements of Sections
401(a) and 501(a) of the Code. Each Participant, each Beneficiary
or each other person who shall claim the right to any payment under
the Plan shall look exclusively to the Trust Fund therefor and
shall not have any right or claim therefor against the Company, the
Committee, any Trustee, the Administrative Director or any
director, officer, Associate or agent of the Company. Except as
otherwise required by ERISA, neither the Company, the Committee,
the Administrative Director, nor any director, officer, Associate
or agent of the Company shall be required to inquire into or be
responsible for any act or failure to act of any Trustee or any
Participant. To the maximum extent permitted by ERISA and
applicable state law, each member of the Committee, each Trustee,
the Administrative Director and each director and officer of the
Company, and each Associate who performs services on behalf of the
Plan or the Trust, shall be indemnified and saved harmless by the
Company out of its own assets (including the proceeds of any
insurance policy the premiums of which are paid by the Company)
from and against any and all losses, costs and expenses (including
any amounts paid in settlement of a claim with the Committee's
approval) to which any of them may be subjected by reason of any
act done or omitted to be done in good faith in their official
capacities with respect to the Plan or the Trust Agreement,
including all expenses reasonably incurred in their defense.
15.7 Claims Procedure.
(a) Any claim for benefits shall be submitted on
a prescribed claim form to the claimant's local personnel
department. If the claim is wholly or partially denied, written
notice of the denial shall be furnished within 90 days after
receipt of the claim; provided that, if special circumstances
require an extension of time for processing the claim, an
additional 90 days from the end of the initial period shall be
allowed for processing the claim, in which event the claimant shall
be furnished with a written notice of the extension prior to the
termination of the initial 90-day period indicating the special
circumstances requiring an extension. The written notice denying
the claim shall set forth the reasons for the denial, including
specific reference to pertinent provisions of the Plan on which the
denial is based, a description of any additional information
necessary to perfect the claim and information regarding review of
the claim and its denial.
(b) All disputed claims for benefits shall be
submitted within 60 days after receipt by the claimant of the
written notice of denial to, and decided within a reasonable period
of time by, the Administrative Director or one member of the
Committee designated by its Chairman. Written notice of the
decision on each such claim shall be furnished to the claimant
within 60 days after receipt by the Administrative Director of a
request for review, unless special circumstances require an
extension of time for processing, in which event an additional 60
days shall be allowed for review and the claimant shall be so
notified in writing. If the claim is wholly or partially denied,
such written notice shall set forth an explanation of the specific
findings and conclusions on which such denial is based. A claimant
may review all pertinent documents and may request a review by the
Committee of such a decision denying the claim. Such a request
shall be made in writing and filed with the Committee within 60
days after delivery to the claimant of written notice of the
decision. Such written request for review shall contain all
additional information which the claimant wishes the Committee to
consider. The Committee may hold a hearing or conduct an
independent investigation, and the decision on review shall be made
as soon as possible after the Committee's receipt of the request
for review, but in no event later than the third regularly
scheduled meeting of the Committee after the Committee's receipt of
the request for review. Written notice of the decision on review
shall be promptly furnished to the claimant and shall include
specific reasons for the decision. For all purposes under the
Plan, such decision on claims (where no review is requested) and
decision on review (where review is requested) shall be final,
binding and conclusive on all interested persons as to
participation and benefits eligibility, the amount of benefits and
as to any other matter of fact or interpretation relating to the
Plan. In the case of a Participant covered by a collective
bargaining agreement, a disputed claim for benefits shall be
governed by the grievance and arbitration procedures established
under such agreement; provided, however, that, if such agreement
permits, the Committee will review such a claim before it is
referred to formal grievance procedures.
15.8 Payment of Expenses. Except as otherwise
provided in the Plan or the Trust Agreement, all expenses and
charges incurred in the administration and operation of the Plan
and the Trust Agreement shall be paid out of the Trust Fund. No
compensation shall be paid by the Plan to any member of the
Committee, any Trustee or the Administrative Director if employed
by the Company or any Affiliate, but said persons may be reimbursed
for their reasonable expenses incurred in carrying out their
duties, responsibilities and authority hereunder, and the
compensation, or a properly allocable portion thereof, paid to
other Associates who are involved in the administration of the Plan
and all other properly allowable expenses shall, to the extent not
paid by the Company, be treated as administrative expenses. No
bond shall be required of the members of the Committee, the
Trustees or the Administrative Director, except as otherwise
required by law.
15.9 Notices, etc. Any notice, election, application,
instruction, designation or other form of communication required to
be given or submitted by any Participant, other Associate or
Beneficiary shall be in such form as is prescribed from time to
time by the Committee, sent by first class mail or delivered in
person to the Administrative Director of the Plan, 8-3, Montgomery
Ward & Co., Incorporated, Montgomery Ward Plaza, Chicago, Illinois
60671, and shall be deemed to be duly given only upon actual
receipt thereof by the Administrative Director. Any notice,
statement, report and other communication from the Company, the
Committee or the Administrative Director to any Participant, other
Associate or Beneficiary required or permitted by the Plan shall be
deemed to have been duly given when delivered to such person or
mailed by first class mail to such person at the person's address
last appearing on the records of the Company. Each person entitled
to receive a payment under the Plan shall file in accordance
herewith the person's complete mailing address and each change
therein. A check or communication mailed to any person at such
person's address on file with the Administrative Director shall be
deemed to have been received by such person for all purposes of the
Plan, and neither the Committee, the Administrative Director nor
any Associate or agent of the Company shall be obliged to search
for or ascertain the location of any such person except as required
by ERISA. If the Administrative Director shall be in doubt as to
whether payments are being received by the person entitled thereto,
it may, by registered mail addressed to such person at the person's
address last known to the Administrative Director, notify such
person that all future payments will be withheld until such person
submits to the Administrative Director the person's proper mailing
address and such other information as the Administrative Director
may reasonably request.
15.10 Filing of Information. Each Participant shall
file with the Committee such pertinent information concerning the
Participant and the Participant's Beneficiary, and each Beneficiary
shall file with the Committee such information concerning the
Beneficiary, as the Committee or the Administrative Director may
specify, and in such manner and form as the Committee or
Administrative Director may specify or provide, and no Participant
or Beneficiary shall have any right or be entitled to any benefits
or further benefits under the Plan unless such information is filed
by the Participant or Beneficiary or on behalf of the Participant
or Beneficiary.
15.11 Claims Against Trust Fund. If the Committee
receives notification from the Trustees of any trust fund
established by the Company as a part of an employee benefit plan
other than the Trust Fund that such Trustees have a claim against
the Trust Fund by reason of overpayment or otherwise, then the
Committee may direct the Trustees to withhold further payments
under the Plan, pay the amount of such claim to any court of
competent jurisdiction or take any other action which the Committee
shall deem appropriate.
15.12 Agent for Service of Process. The agent for the
service of legal process of the Plan shall be the Secretary of
Ward.
ARTICLE XVI
Termination of Participating Company's Participation
16.1 Right to Terminate. Any Participating Company
may terminate its participation in the Plan by giving the Committee
prior written notice specifying a termination date which shall be
the last day of the month at least 60 days subsequent to the date
such notice is received by the Committee. The Committee may
terminate any Participating Company's participation in the Plan, as
of any termination date specified by the Committee, for the failure
of the Participating Company to make proper contributions or to
comply with any other provision of the Plan.
16.2 Effect of Termination and Payment of
Distributable Reserve. To the maximum extent permitted by ERISA,
any rights of Participants no longer employed by the Participating
Company, former Participants and their Beneficiaries, Surviving
Spouses and other eligible survivors under the Plan shall be
unaffected by a termination of the Plan as to any Participating
Company. Subject to the provisions of Section 16.8, the benefits
provided under the Plan with respect to each Participant in Service
with such Participating Company as of the termination date will be
paid or forfeited in accordance with the Plan as if such
termination had not occurred except that the Committee may direct
the Trustees to segregate such portion of the assets of the Trust
(the "Distributable Reserve") as the Actuary shall determine to be
properly allocable in accordance with ERISA to the active
Associates of such Participating Company and direct the Trustees to
apply the Distributable Reserve for the benefit of the Participants
employed by the Participating Company as of the termination date in
such manner as the Committee shall determine including, without
limitation, payment to such Participants in lump cash sums, cash
installments, or the purchase of immediate or deferred annuities, a
transfer to a successor employee benefit plan which is qualified
under Section 401(a) of the Code, or any combination thereof;
provided, however, that in the event of any transfer of assets to a
successor employee benefit plan the provisions of Section 16.3 will
apply. Any such payments or transfers of the Distributable Reserve
shall constitute a complete discharge of all liabilities under the
Plan with respect to such Participating Company's participation in
the Plan and any Participant then employed by such Participating
Company. To the maximum extent permitted by ERISA, the termination
of the Plan as to any Participating Company shall not in any way
affect any other Participating Company's participation in the Plan.
16.3 Transfer of Assets to Successor Plan. No
transfer of the Plan's assets and liabilities to a successor
employee benefit plan (whether by merger or consolidation with such
successor plan or otherwise) shall be made unless each Participant
would, if either the Plan or such successor plan then terminated,
receive a benefit immediately after such transfer which (after
taking account of any distributions or payments to them as part of
the same transaction) is equal to or greater than the benefit he
would have been entitled to receive immediately before such
transfer if the Plan had then been terminated. The Committee may
also request appropriate indemnification from the employer or
employers maintaining such successor plan before making such a
transfer.
ARTICLE XVII
Amendment and Termination
17.1 Power to Amend.
(a) Subject to the provisions of Subsection
15.4(c) hereof, the Board reserves the right at any time to amend,
suspend, discontinue or terminate the Plan, any contributions
thereunder, the Trust or any contract issued by an insurance
carrier forming a part of the Plan, in whole or in part and for any
or no reason and without the consent of any Participating Company,
Participant or Beneficiary; and the Committee may adopt amendments
necessary or appropriate to qualify or maintain the Plan, the Trust
and any contract with an insurance carrier which may form a part of
the Plan as a plan and trust meeting the requirements of Sections
401(a) and 501(a) of the Code or any other applicable section of
law, including ERISA, as now in effect or hereafter amended or
adopted and the Regulations.
Each Participating Company by its adoption of the Plan
shall be deemed to have delegated this authority to the Board and
the Committee, respectively.
(b) No amendment or modification shall be made
which would (i) retroactively impair any right to any benefit under
the Plan which any Participant or Beneficiary would otherwise have
had at the date of such amendment by reason of the contributions
theretofore made, except to such extent as may be necessary or
appropriate to qualify or maintain the Plan, the Trust and any
contract with an insurance carrier which may form a part of the
Plan as a plan and trust meeting the requirements of Sections
401(a) and 501(a) of the Code or any other applicable section of
law, including ERISA, as now in effect or hereafter amended or
adopted and the Regulations or (ii) make it possible for any part
of the funds of the Plan (other than such part as is required to
pay taxes, if any, and administrative expenses as provided in
Section 15.8 hereof) to be used for or diverted to any purposes
other than for the exclusive benefit of Participants and their
Beneficiaries prior to the satisfaction of all liabilities with
respect thereto.
17.2 Retroactive Amendments. Subject to the
provisions of Section 17.1 hereof, any amendment, modification,
suspension or termination of any provisions of the Plan may be made
retroactively if necessary or appropriate to qualify or maintain
the Plan, the Trust and any contract with an insurance company
which may form a part of the Plan as a plan and trust meeting the
requirements of Sections 401(a) and 501(a) of the Code or any other
applicable section of law, including ERISA, as now in effect or
hereafter amended or adopted and the Regulations.
17.3 Notices of Amendments. Notice of any amendment,
modification, suspension or termination of the Plan shall be given
by the Board or the Committee, whichever adopts the amendment, to
the other and to the Trustees and all Participating Companies and,
where and to the extent required by law, to Participants and other
interested parties.
17.4 Effect of Termination. Upon termination of the
Plan, no amount shall thereafter be payable under the Plan to or in
respect of any Participant except as provided in this Article, and,
to the maximum extent permitted by ERISA, transfers or
distributions of the assets of the Plan as provided in this Article
shall constitute a complete discharge of all liabilities under the
Plan. The Committee shall remain in existence, and all of the
provisions of the Plan which in the opinion of the Committee are
necessary for the execution of the Plan and the distribution or
transfer of the assets of the Plan shall remain in force. All
distributions and notifications referred to in this Article shall
be in form and substance satisfactory to counsel for the Plan.
17.5 Distribution of Assets If No ERISA Termination.
If the Committee receives a determination from the PBGC that the
termination of the Plan does not constitute a plan termination for
purposes of Title IV of ERISA, then, upon receipt by the Committee
of IRS approval of such termination, the assets of the Plan shall
be applied for the benefit of Participants and Beneficiaries in
such manner as the Committee shall determine, provided that, in the
event of any transfer of assets to a successor employee benefit
plan, the provisions of Section 16.3 hereof will apply.
17.6 Distribution of Assets Upon Termination.
(a) If the termination of the Plan does not
constitute a plan termination for purposes of Title IV of ERISA,
then the rights of all Participants (including any person or
persons whose benefits are paid from the Trust regardless of the
plan under which the benefits are calculated) to their Retirement
Benefits accrued to the date of such termination shall thereupon be
nonforfeitable, but only to the extent that such Retirement
Benefits have then been funded by contributions made prior to such
termination and that funds are available to provide such Retirement
Benefits upon the allocations hereinafter provided in this Section.
(b) Upon receipt by the Committee of (i) all
necessary PBGC regulatory approvals that the assets of the Plan are
sufficient to discharge when due all obligations thereunder with
respect to benefits which are guaranteed by the PBGC under Title IV
of ERISA and (ii) IRS approval of such termination, the assets of
the Plan which remain after reservation of an amount sufficient to
apply all expenses of final administration shall be allocated, to
the extent sufficient, in the following order of priority:
(A) To provide for the benefits which are
payable to or in respect of Participants who
Retired or died, who could have Retired, or who,
having terminated Service, either began receiving
payments of such benefits or could have begun
receiving such payments at least three years
prior to the termination date, determined in each
case on the basis of the provisions of the Plan
at any time during the five-year period ending on
the termination date when such benefits were or
would have been the lowest and without regard to
any increases in such benefits which accrued less
than three years prior to the termination date;
then
(B) To provide all other benefits under the
Plan which are guaranteed by the PBGC under Title
IV of ERISA or which would be guaranteed if
Sections 4022(b)(5) and 4022(b)(6) were not
applicable, but which have not been allocated
under Clause (A) of this Section; then
(C) To provide all other benefits which had
become nonforfeitable under the Plan prior to the
termination date but which have not been
allocated under Clause (A) or (B) of this
Section; then
(D) To provide all other benefits which had
accrued under the Plan prior to the termination
date but which have not been allocated under
Clause (A), (B) or (C) of this Section; then
(E) Any surplus assets of the Plan
remaining after the payment of all expenses of
final administration and after the satisfaction
of all liabilities accrued to the termination
date with respect to Participants and their
Beneficiaries shall, upon receipt of the IRS
approval therefor, revert ratably to each
Participating Company in such manner and in such
proportion as the Committee, upon the advice of
the Actuary, shall determine. The foregoing
allocations shall be made by the Committee in
accordance with the determinations of the Actuary
pursuant to the Regulations. If the balance
remaining for allocation under any of the
foregoing Clauses is insufficient to provide in
full the allocations under such Clause,
individual allocations shall be reduced pro rata
(except that, under Clause (C) only, such balance
shall first be allocated to provide the benefits
described therein determined on the basis of the
provisions of the Plan which were in effect at
the beginning of the five-year period ending on
the termination date and then, if the balance
remaining for allocation is sufficient, to
provide the benefits described therein which
result from each successive amendment to the Plan
during such five-year period under the first such
amendment as to which such balance is
insufficient before reducing such allocation pro
rata), and no allocations shall be made under
subsequent clauses. The assets of the Plan
allocated in accordance with Clauses (A), (B),
(C) and (D) of this Section shall be distributed
in such manner as the Committee shall determine,
including without limitation, lump-sum payments,
cash installments, the purchase of immediate or
deferred annuities or any combination of the
foregoing.
17.7 Distribution of Assets Upon Termination Where
Assets Not Sufficient. Notwithstanding the provisions of Section
17.6 hereof, if the PBGC notifies the Committee that it is unable
to determine whether the assets of the Plan are sufficient or that
such assets are insufficient to discharge when due all obligations
thereunder with respect to benefits which are guaranteed by the
PBGC under Title IV of ERISA, then the assets of the Plan shall be
allocated and distributed only as a court having competent
jurisdiction of the Plan or Trust or a trustee appointed by such
court shall direct or permit or as otherwise provided in an
agreement satisfactory to the Committee.
17.8 Effect of Partial Termination. In the event that
any governmental authority, including without limitation the IRS
and PBGC, determines that a partial termination, within the meaning
of ERISA, of the Plan has occurred as to any Participating Company,
then (i) the rights of all Participants affected thereby to their
Retirement Benefits accrued to the date of such partial termination
shall thereupon be nonforfeitable, but only to the extent that such
Retirement Benefits have then been funded by such portion of the
assets of the Trust as are determined to be properly allocable to
such Participants and that such portion of assets is available to
provide such Retirement Benefits upon the allocations provided in
Section 17.6 hereof, and (ii) the provisions of Sections 17.2,
17.3, 17.4, 17.6, and 17.7 hereof and Section 16.3 hereof which in
the opinion of the Committee are necessary for the execution of the
Plan and the allocation and distribution of the assets of the Plan
shall apply. To the maximum extent permitted by ERISA, if any
liability arises as a result of such partial termination, only the
Participating Company as to which the partial termination of the
Plan has occurred shall be liable to the PBGC for any insufficiency
of assets.
ARTICLE XVIII
Limitations in the Event of Early Discontinuance
18.1 Application. In order to qualify the Plan and
the Trust as a qualified plan and trust under the Code, the
benefits to be provided to certain Participants will be subject to
the limitations set forth in this Article XVIII.
18.2 Restriction of Benefits.
(a) In the event the Plan is terminated, the benefit
of any active or former Participant who was a Highly Compensated
Associate (as defined in Section 414(q) of the Code) shall be
limited to that benefit that is nondiscriminatory under Section
401(a)(4) of the Code.
(b) The annual payments to a Participant described in
(c) below are restricted to an amount equal to the payments that
would be made on behalf of that Participant under a straight life
annuity that is the Actuarial Equivalent of the Participant's
Accrued Benefit under the Plan. The restrictions in this Section
18.2 do not apply, however, if:
(i) After payment to a Participant
described in (c) below of all benefits described in (d)
below, the value of Plan assets equals or exceeds 110%
of the value of current liabilities (as defined in
Section 412(1)(7) of the Code), or
(ii) The value of the benefits described in
(d) below for a Participant described in (c) below is
less than 1% of the value of current liabilities, or
(iii) The value of benefits described in (d)
below for a Participant described in (c) below does not
exceed the amount described in Section 411(a)(11)(A) of
the Code.
(c) The Participants whose benefits are restricted
pursuant to this Article XVIII on distribution are the 25 Highly
Compensated Associates and former Highly Compensated Associates (as
defined in Section 414(q) of the Code) with the greatest
compensation in the current or any prior year. Plan provisions
defining or altering the group of Participants whose benefits are
restricted under this Section 18.2 may be amended at any time
without violating the requirements of Section 411(d)(6) of the
Code.
(d) For purposes of this Section 18.2, the term
"benefit" includes loans in excess of the amounts set forth in
Section 72(p)(2)(A) of the Code, any periodic income, any
withdrawal values payable to a living Participant and any death
benefits not provided for by insurance on the Participant's life.
18.3 Payment of Benefits. The limitations established
under this Article XVIII shall not restrict either the payment of
any monthly benefit due prior to the termination of the Plan or the
payment of benefits to a Participant's Beneficiary or Surviving
Spouse under the Plan at any time, if such payment commenced prior
to the date of such termination. If the foregoing limitations
would otherwise become applicable the Committee may, if it so
elects, nevertheless pay full benefits to or in respect of any
Participant who executes an agreement with the Trustees, in form
and in substance satisfactory to the Committee, which is adequately
secured and which guarantees the repayment of any payment subject
to such limitations.
18.4 Additional Reserves. Any additional reserves
arising by the application of the foregoing limitations shall be
used and applied for the benefit of the other Participants and
their Beneficiaries and Surviving Spouses under the Plan; provided,
however, that if sufficient funds are available to provide in full
for the benefits accrued for all such other Participants and their
Beneficiaries and Surviving Spouses under the Plan, then such
additional reserves shall be used, to the extent available, to
provide the benefits under the Plan of the Participants whose
benefits would otherwise have been restricted by operation of this
Article XVIII.
ARTICLE XIX
Miscellaneous
19.1 In General. Any and all rights or benefits
accruing to any person under the Plan shall be subject to all terms
and conditions of the Plan and the Trust Agreement. The adoption
and maintenance of the Plan shall not constitute a contract between
the Company and any associate or be a consideration for, or an
inducement or condition of, employment of any associate. Neither
participation nor anything contained in the Plan shall give any
associate the right to be retained in the employ of the Company,
nor shall it interfere with the right of the Company to discharge
any associate at any time.
19.2 Coordination of Payment of Benefits with Other
Plans. Notwithstanding any other provision of this Plan, the
payment of benefits to Participants and their Beneficiaries,
Surviving Spouses and other eligible survivors under the Plan shall
be paid as a part of and concomitantly with any benefits to which
he is entitled in accordance with the terms of the Prior Plans.
19.3 Incapacity. If the Committee shall find that any
person to whom any amount is payable under the Plan is unable to
care for such person's affairs because of illness or accident, is a
minor or has died, then any payment due to the person or the
person's estate (unless a prior claim therefor has been made by a
duly appointed legal representative) may be paid to the spouse, a
child, a relative, an institution maintaining or having custody of
such person or any other person deemed by the Committee to be a
proper recipient on behalf of such person otherwise entitled to
payment. Any such payment shall be a complete discharge of the
liabilities of the Plan and Trust Fund.
19.4 Inability to Locate Benefit Recipient. If the
Committee cannot ascertain the whereabouts of any person to whom an
amount is payable under the Plan, and if, after five years from the
date such payment is due, a notice of such payment due is mailed to
the last known address of such person as shown on the records of
the Company and within three months after such mailing such person
has not made a written claim therefor, the Committee, if it so
elects and after receiving advice from counsel to the Plan, may
assume that such person is deceased and direct that such payment be
made in accordance with the applicable provisions of Article XI
hereof.
19.5 Benefit Provided by Insurance. If the payment of
any benefit under the Plan is provided as an annuity benefit under
a contract with an insurance company, the payment of such benefit
shall be subject to all the provisions of such contract.
19.6 Credit for Prior Employment. Upon such terms and
conditions as the Committee and the Internal Revenue Service may
approve, credit may be given for service and benefits provided
under the Plan to a Participant with respect to any period of the
Participant's prior employment by an organization, and such credit
and benefits may be provided for in whole or in part by funds
transferred, directly or indirectly (including a rollover from an
individual retirement account, or an individual retirement annuity
as described in Section 408 of the Code), to the Trust Fund from an
employee benefit plan of such organization which qualifies under
Section 401(a) of the Code.
19.7 Construction. To the maximum extent permitted by
ERISA, the Plan shall be construed in accordance with the laws of
the State of Illinois. As used herein, the masculine form shall,
where appropriate, include the feminine and neuter genders. All
Article and Section headings herein have been inserted for
convenience only and shall not affect the meaning of the language
contained herein.
ARTICLE XX
Top Heavy Provisions
20.1 In General. The Plan will be considered a Top
Heavy Plan for any Plan Year if its determined to be a Top Heavy
Plan as of the last day of the preceding Plan Year. For purposes
of determining whether the Plan is a Top Heavy Plan, uniform
actuarial assumptions which reflect interest rate, as prescribed in
Section 2.1, shall be used. The present value of a Participant's
Retirement Benefit shall be determined as of the last valuation
date used for computing Plan costs for minimum funding purposes
which occurs within the Plan Year in which the determination is
being made, and shall include amounts distributed to or on behalf
of the Participants within the four preceding Plan Years.
Notwithstanding any other provisions in the Plan, the provisions of
this Article XX shall apply and supersede all other provisions of
the Plan with respect to a Plan Year with respect to which the Plan
is determined to be a Top Heavy Plan.
20.2 Definitions. For purposes of this Article XX and
as otherwise used in this Plan, the following terms shall have the
meanings set forth below:
(a) "Affiliate" shall mean any entity affiliated
with the Company within the meaning of Section 414(b),
414(c) or 414(m) of the Code, except that for purposes
of applying the provisions hereof with respect to the
limitation on benefits, Section 415(h) of the Code shall
apply.
(b) "Aggregation Group" shall mean the group
composed of each qualified retirement plan of the
company or an Affiliate in which a Key Associate is a
participant and each other qualified retirement plan of
the Company or an Affiliate which enables a plan of the
Company or an Affiliate in which a Key Associate is a
participant to satisfy Sections 401(a)(4) and 410 of the
Code with such plan being taken into account.
(c) "Key Associate" shall mean a "Key Employee"
as defined in Section 416(i)(1) and (5) of the Code and
Regulations promulgated thereunder.
(d) "Top Heavy Plan" shall mean a "Top Heavy
Plan" as defined in Sections 416(g) of the Code and
Regulations promulgated thereunder.
20.3 Vesting. (a) If a Plan is a Top Heavy Plan with
respect to any Plan Year, a Participant's nonforfeitable right to
the Participant's Retirement Benefit derived from the Company's
contributions shall not be less than the amount determined in
accordance with the following vesting schedule:
Years of Service Percentage
Less than 3 0%
3 or more 100%
(b) In the event the vesting schedule provided
in Section 2.51 is amended, or changed on account of the Plan
becoming or ceasing to be a Top Heavy Plan, any Participant who has
completed at least 5 Years of Service for purposes of determining a
Participant's nonforfeitable right to the Participant's Retirement
Benefit derived from the Company's contributions under Sections
2.51 and 20.3 may elect to have the Participant's nonforfeitable
percentage determined under the Plan without regard to such
amendment or change by notifying the Committee in writing within
the election period hereinafter described. The election period
shall begin on the date such amendment is adopted or the date such
change is effective, as the case may be, and shall end no earlier
than the latest of the following dates.
(1) The date which is 60 days after the day
such amendment is adopted;
(2) The date which is 60 days after the day
such amendment or change becomes effective; or
(3) The date which is 60 days after the day
the Participant is given written notice of such
amendment or change by the Committee. Any election made
pursuant to this Section 20.3(b) shall be irrevocable.
20.4 Distributions to Participants.
(a) Subject to Section 20.5, for each Plan Year
that the Plan is a Top Heavy Plan, the Retirement
Benefit for each Participant who has completed a Year of
Service and who is not a Key Associate shall not be less
than such Participant's Average Compensation, multiplied
by the lesser of (i) 2% multiplied by the number of
Years of Service with the Company or (ii) 20%. For
purposes of the preceding sentence, Years of Service
shall not include any Year of Service completed prior to
the Plan Year beginning prior to January 1, 1984, or any
Year of Service if the Plan was not a Top Heavy Plan for
any Plan Year ending during such Year of Service.
(b) For purposes of this Section 20.4, "Average
Compensation" shall mean the average of a Participant's
compensation (as described in Section 415 of the Code)
for the period of 5 consecutive years (or, if the
Participant does not have 5 consecutive years, the
Participant's actual number of consecutive years) during
which the Participant had the greatest aggregate
compensation. Compensation earned during a Plan Year
beginning before January 1, 1984, or during a Plan Year
which begins after the last Plan Year in which the Plan
was not a Top Heavy Plan shall be disregarded for
purposes of determining Average Compensation.
20.5 Top Heavy Plan Years. (a) For each Plan Year
that the Plan is a Top Heavy Plan, 1.0 shall be substituted for
1.25 as the multiplicand of the dollar limitation in determining
the denominator of the defined benefit plan fraction and of the
defined contribution plan fraction for purposes of Section 415(e)
of the Code.
(b) If, after substituting 90% for 60% wherever
the latter appears in Section 416(g) of the Code, the Plan is not
determined to be a Top Heavy Plan, the provisions of paragraph (a)
shall not be applicable if the Retirement Benefit for each
Participant who is not a Key Associate is determined in accordance
with Section 20.4(a), substituting "3%" for "2%" in Section 20.4(a)
and increasing "20%" in Section 20.4(a) by 1 for each Plan Year
described in the last sentence of Section 20.4(a), but not beyond
"30%".
20.6 Duplication of Benefits. The Committee shall, to
the extent permitted by the Code and in accordance with
Regulations, apply the provisions of this Article XX by taking into
account the benefits payable and the contributions made under any
other plans maintained by the Company or any of its subsidiaries or
affiliated or associated entities which are qualified under Section
401(a) of the Code to prevent inappropriate omissions or
duplication of minimum benefits or contributions.
ARTICLE XXI
Transfer of Amounts Attributable
to Contributions Under
The Jefferson Stores Plan
21.1 Transfer of Accrued Benefit. Each Participant
who was a participant of the Jefferson Stores Plan on December 31,
1984 had an amount equal to the Participant's accrued retirement
benefit under the Jefferson Stores Plan, if any, transferred from
the trust established as part of the Jefferson Stores Plan to the
Trust.
21.2 Transfer Held in Trust. The Committee shall
establish and maintain or cause to be established and maintained,
as part of the Trust, such accrued benefits which are allocable to
the amounts transferred pursuant to Section 21.1, if any, and all
relevant data pertaining thereto. All such transferred amounts
shall be held by the Trustee for the exclusive benefit of such
Participants in accordance with the terms of the Plan, to be
commingled, managed, invested and reinvested with the other assets
of the Plan. Upon such transfer, and except as otherwise provided
in the Jefferson Stores Plan, the Trustees of the Jefferson Stores
Plan shall have no further liability whatsoever with respect to
such transferred amounts or the benefits which had been based
thereon, and the Participant shall look solely to the Plan for any
payment or other benefit in respect of the amount so transferred.
21.3 Payment of Benefits. The accrued benefit
attributable to any amounts transferred from the Jefferson Stores
Plan, if any, shall be nonforfeitable and shall be paid from the
Trust Fund to the Participant or the Participant's Beneficiary or
Surviving Spouse at the same time and in the same manner as any
payment made in accordance with Articles XI, XII or XIII.
ARTICLE XXII
Transfer of Amounts Attributable to
Contributions Under the Lechmere Plan
22.1 Transfer of Accrued Benefit. Each Participant
who was a participant of the Lechmere Plan on June 30, 1994 had an
amount equal to the Participant's accrued retirement benefit under
the Lechmere Plan, if any, transferred from the trust established
as part of the Lechmere Plan to the Trust.
22.2 Transfer Held in Trust. The Committee shall
establish and maintain or cause to be established and maintained,
as part of the Trust, such accrued benefits which are allocable to
the amounts transferred pursuant to Section 22.1, if any, and all
relevant data pertaining thereto. All such transferred amounts
shall be held by the Trustees for the exclusive benefit of such
Participants in accordance with the terms of the Plan, to be
commingled, managed, invested and reinvested with the other assets
of the Plan. Upon such transfer, and except as otherwise provided
in the Lechmere Plan, the Participant shall look solely to the Plan
for any payment or other benefit in respect of the amount so
transferred.
22.3 Payment of Benefits. The accrued benefit
attributable to any amounts transferred from the Lechmere Plan, if
any, shall be nonforfeitable and shall be paid from the Trust Fund
to the Participant or the Participant's Beneficiary or Surviving
Spouse at the same time and in the same manner as any payment made
in accordance with Articles XI, XII or XIII.