Exhibit 10.9
PAYLESS SHOESOURCE, INC.
SUPPLEMENTARY RETIREMENT PLAN
AS AMENDED SEPTEMBER 18, 2003
TABLE OF CONTENTS
Section 1. Definitions......................................................................................1
1.1 Act............................................................................................1
1.2 Actuarial Equivalent...........................................................................1
1.3 Annual Compensation............................................................................1
1.4 Annual Estimated Social Security Benefits......................................................1
1.5 Annual Minimum Benefit Amount..................................................................2
1.6 Annual Retirement Income.......................................................................2
1.7 Annual Retirement Benefits Offset..............................................................2
1.8 Average Annual Compensation....................................................................3
1.9 Associate......................................................................................3
1.10 CEO............................................................................................3
1.11 Committee......................................................................................4
1.12 Company........................................................................................4
1.13 Compensation...................................................................................4
1.14 Competing Business.............................................................................4
1.15 Effective Date.................................................................................4
1.16 Employer.......................................................................................4
1.17 Gender.........................................................................................4
1.18 May............................................................................................4
1.19 May Profit Sharing Plan........................................................................4
1.20 May Retirement Plan............................................................................5
1.21 Member.........................................................................................5
1.22 Payless........................................................................................5
1.23 Payless Profit Sharing Plan....................................................................5
1.24 Retirement Date................................................................................5
1.25 Plan Service...................................................................................5
1.26 Termination Without Cause.....................................................................5
1.27 Total Disability..............................................................................5
Section 2. Membership.......................................................................................6
2.1 Eligibility for Membership.....................................................................6
2.2 Eligibility for Benefits.......................................................................6
Section 3. Benefits.........................................................................................6
3.1 Normal Retirement..............................................................................6
3.2 Early Retirement...............................................................................6
3.3 Cessation of Benefits.........................................................................11
3.4 Form of Benefit...............................................................................11
3.5 Standard Payment Period.......................................................................12
3.6 Limitation on Payments........................................................................12
3.7 Indirect Payment of Benefits..................................................................13
3.8 Termination and Rehire........................................................................13
3.9 Withholding...................................................................................14
Section 4. Administration of the Plan......................................................................14
4.1 The Committee.................................................................................14
4.2 Delegation of Duties..........................................................................14
4.3 Authority.....................................................................................14
Section 5. Certain Rights and Obligations..................................................................14
5.1 Rights of Members, Members' Spouses and Beneficiaries.........................................14
5.2 Employer-Associate Relationship...............................................................14
5.3 Unfunded Nature of Plan.......................................................................14
Section 6. Non-Alienation of Benefits......................................................................15
6.1 Provisions with Respect to Assignment and Levy................................................15
6.2 Alternate Application.........................................................................15
Section 7. Amendment and Termination.......................................................................15
7.1 Company's Rights..............................................................................15
7.2 Rights to Terminate...........................................................................15
Section 8. Construction....................................................................................16
Payless ShoeSource, Inc. Supplementary Retirement Plan
This document constitutes and sets forth the terms of the Payless ShoeSource,
Inc. Supplementary Retirement Plan (hereinafter referred to as the "Plan"),
effective as of the date Payless ShoeSource, Inc. was "spun-off" from and ceased
to be a subsidiary of The May Department Stores Company, May 4, 1996 (the
"Effective Date"). Capitalized terms, not otherwise defined herein, which are
defined in the Payless Profit Sharing Plan shall have the meanings set forth in
such plan.
SECTION 1. DEFINITIONS.
1.1 Act means the Social Security Act as in effect from time to time.
1.2 Actuarial Equivalent means a benefit of equivalent value when computed on
the basis of the actuarial principles and tables adopted or otherwise approved
by the Committee.
1.3 Annual Compensation means an Associate's Compensation during a fiscal year
of the Company, on an accrual basis, and shall include all of the Associate's
Compensation accrued for services during such fiscal year, regardless of when
such Compensation is paid or credited.
1.4 Annual Estimated Social Security Benefits means:
(a) the estimated initial annual amount of the Primary Insurance Amount or
the Disability Insurance Benefit (as such terms are defined in the Act),
whichever is applicable, determined by the Committee from available records and
such other information as the Committee may request the Member to furnish, to
which the Member would be entitled under the Act as in effect at the beginning
of the calendar year in which cessation of employment occurs assuming the Member
is not thereafter in employment covered under the Act. The estimated Primary
Insurance Amount shall be applicable under this Plan in all cases except as
hereinafter provided in certain cases of Total Disability and shall be adjusted
in the manner provided in the Act as of the date of retirement if such
retirement occurs on or after the Member's 62nd birthday or as if the Member's
age at retirement were 62 if such retirement occurs before the Member's 62nd
birthday. The estimated Disability Insurance Benefit shall be applicable to a
Member who sustains Total Disability and qualifies for LTD Plan benefits which
are reduced on account of Disability Insurance Benefits under the Act; and
(b) the estimated initial annual amount of benefit to which the Member
would be entitled under any public pension or welfare system of any country
other than the United States of America which is similar to the Primary
Insurance Amount or the
Disability Insurance benefit under the Act, as determined by the Committee in
its sole and absolute discretion.
1.5 Annual Minimum Benefit Amount means:
(a) for all years in which the Member participated in the Payless Profit
Sharing Plan or the May Profit Sharing Plan, the amount of the Company
contribution and forfeitures which would have been allocated to the Member's
Company Accounts in the May and Payless Profit Sharing Plans but for the
limitation on annual additions imposed by Section 415(c)(1) and Section
415(c)(2) of the Internal Revenue Code (the "Code"), and the limitation under
Code Section 401(a)(17) on the amount of such Member's Compensation which may be
taken into account in determining (i) the Member's basic contributions under the
May Profit Sharing Plan and (ii) the Member's Allocation Pay Amount under the
Payless Profit Sharing Plan. The Minimum Benefit Amount with respect to the
Payless Profit Sharing Plan shall be determined as if the Company Contribution
for the applicable year or years was invested in the investment fund(s) in which
the Company Contribution actually allocated for the Member was invested. (The
amount determined under this paragraph shall be converted to an annual benefit
which would be produced if the amount determined were paid in the form of an
Actuarially Equivalent immediate life annuity with appropriate adjustments to
the amount on account of investment experience actually experienced by the
Profit Sharing Plan); and
(b) the difference between the annual amount of Retirement Pension, if
any, to which the Member is entitled under the May Retirement Plan paid in the
form of an immediate life annuity and the annual amount of such Retirement
Pension which would be payable to the Member but for (i) the limitation on
benefits under Section 415(b) of the Code, (ii) the limitation under Code
Section 401(a) (17) on the amount of such Member's Compensation which may be
taken into account in determining such Member's annual amount of Retirement
Pension, and (iii) the limitation under Code Section 415(e) on the benefit
payable to a Member who participates in both a defined benefit plan and a
defined contribution plan, to the extent applicable.
1.6 Annual Retirement Income means the amount determined by multiplying two
percent (2%) of the Member's Average Annual Compensation by the number of years
and fractions thereof (to the closest one-twelfth) of Plan Service, up to a
maximum of twenty-five (25) years of Plan Service, completed by the Member on
his actual Retirement Date.
1.7 Annual Retirement Benefits Offset means, unless otherwise provided in the
employment agreement between the Member and the Company, the total of the
following annual amounts:
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(a) the annual amount of Retirement Pension that would be produced if the
benefits payable under the May Retirement Plan were paid to the Member in the
form of an immediate life annuity,
(b) the annual amount of Retirement Pension that would be produced under
any other retirement plan to which the Company or a related entity contributes
and which credits employment included in Plan Service if the benefits thereunder
were payable in the form of an Actuarially Equivalent immediate life annuity,
(c) the annual amount of benefits that would be produced if the amount
payable from the Member's Company Accounts under the Payless Profit Sharing Plan
(including Company Accounts which were Employer or Company Accounts under the
May Profit Sharing Plan or Plans merged into the May Profit Sharing Plan) were
paid in the form of an Actuarially Equivalent immediate life annuity, assuming
that:
(i) for each calendar year that the Member was eligible to
participate as a Member of the May Profit Sharing Plan and for
such period of time that the Member is eligible to share in
Company matching contributions under the Payless Profit
Sharing Plan, the Company Contribution and forfeitures
allocated to the Member's Company Accounts were and are deemed
to be in an amount equal to the product of the May or Company
matching rate (as applicable) actually applicable to such year
or period of time multiplied by the maximum basic
contributions under the May or Payless Profit Sharing Plan(s)
which could have been contributed by the Member for such
calendar year or other period of time,
(ii) appropriate adjustments on account of investment experience
were made to such amount based on the actual investment
experience of the May Profit Sharing Plan, as the Committee
shall determine;
(d) the May Retirement Plan and May Profit Sharing Plan offsets set forth
in this Section 1.7 shall apply only if the period of membership in those Plans
is included in Plan Service under this Plan.
1.8 Average Annual Compensation means the average of the three highest amounts
of Annual Compensation of the Member accrued with respect to three (not
necessarily consecutive) of the most recent five fiscal years of the Company
ending before the Member's actual Retirement Date.
1.9 Associate means any associate of an Employer under the Payless Profit
Sharing Plan.
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1.10 CEO means the Company's Chief Executive Officer as of February 15, 2001,
and any successive Chief Executive Officer of the Company to whom the Board
grants the benefits specifically set forth in this Plan for the CEO.
1.11 Committee means the committee established by Section 4 of this Plan.
1.12 Company means Payless ShoeSource, Inc., a Delaware corporation, and any
other organization which may be a successor to it.
1.13 Compensation means, unless otherwise provided in the employment agreement
between the Associate and the Company, the total compensation from an Employer
(or, for the period prior to the date Payless ceases to be a subsidiary of May,
from an Employer or from any member of the controlled group of corporations
determined in accordance with Section 414(b) of the Code or is a trade or
business under common control in accordance with Section 414(c) of the Code,
which includes an Employer) with respect to an Associate for services rendered
prior to the Associate's actual Retirement Date, including all regular pay
commissions, overtime pay, cash incentives, prize awards, amounts which an
Associate elected to have the Employer contribute directly to the May or Payless
Profit Sharing Plans on the Associate's behalf in accordance with Section
4.01(b) of each such Plan, amounts not otherwise includable in the Associate's
taxable income pursuant to Section 125 of the Code, and amounts subject to the
Payless ShoeSource, Inc. Deferred Compensation Plan or the Payless ShoeSource,
Inc. Deferred Compensation 401(k) Mirror Plan. Compensation shall not include a
pension, retirement allowance, severance pay, retainer or fee under contract,
any special payments, cash or otherwise, relating to the spinoff of Payless or
distributions from the Profit Sharing Plan.
1.14 Competing Business means any single (i) retail department store; (ii)
discount department store; (iii) catalog showroom store; (iv) specialty store;
(v) furniture store; (vi) shoe store; (vii) clothing store; or a group of any of
the type of stores referred to in (i) through (vii) hereof, which such store or
group of stores had, in its fiscal year ending within the twelve month period
immediately preceding the date of such Member's Retirement Date, a gross sales
volume, including sales in leased or licensed departments, in excess of
$25,000,000.
1.15 Effective Date means May 4, 1996. The effective date of this amendment and
restatement is the effective date of the Merger.
1.16 Employer means an employer designated as an Employer under the Payless
Profit Sharing Plan.
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1.17 Gender. Wherever applicable, the masculine pronoun as used herein shall
include the feminine pronoun.
1.18 May means The May Department Stores Company.
1.19 May Profit Sharing Plan means The May Department Stores Company Profit
Sharing Plan.
1.20 May Retirement Plan means The May Department Stores Company Retirement
Plan.
1.21 (a) Member means any person included in the membership of the Plan as
provided in Section 2.
(b) Retired Member means a Member who retires after the Effective Date and
becomes entitled to a supplementary retirement benefit under this Plan in
accordance with its provisions.
1.22 Payless means Payless ShoeSource, Inc., a Delaware corporation.
1.23 Payless Profit Sharing Plan means the Payless ShoeSource, Inc. 401(k)
Profit Sharing Plan, as amended from time to time, and any other successor
retirement plan which may be designated by the Committee, including the Payless
ShoeSource, Inc. Profit Sharing Plan for Puerto Rico Associates.
1.24 Plan Service means Years of Service determined using the elapsed time
method. Plan Members shall receive a Year of Plan Service on each anniversary
date of their commencement of employment with an Employer, subject to any
limitations or restrictions as may be imposed in connection with such Employer's
adoption of the Plan.
1.25 Retirement Date means the last day of the month in which a Member retires
under the Payless Profit Sharing Plan or an earlier date set forth in Section
3.2 of this Plan under which a Member is eligible for benefits hereunder.
1.26 Termination Without Cause means the involuntary termination of Member's
employment for any other reason than specified in Section 3.2(d) and (e).
1.27 Total Disability means a disability qualifying a Member for benefits under
the Payless ShoeSource, Inc. Long-Term Disability Plan.
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SECTION 2. MEMBERSHIP.
2.1 Eligibility for Membership. Each Associate who is a member of The May
Department Stores Company Supplementary Retirement Plan on the day Payless
ceased to be a subsidiary of May shall become a Member of the Plan as of that
date. Each other Associate of an Employer who has Compensation from an Employer
in any later calendar year completed prior to his Retirement Date equal to at
least twice the amount of "wages" which are subject to the payment of F.I.C.A.
tax by the Associate in such year shall become a Member as of the January 1
thereafter. The Committee, in its discretion, may permit any other Associate to
become a Member if the Committee determines that the Associate's Compensation
from an Employer in any calendar year does not adequately reflect the
Associate's full Compensation for such year.
2.2 Eligibility for Benefits. A Member shall become entitled to benefits under
the Plan only if, and to the extent that, the Plan so provides. The fact that an
Associate becomes a Member shall not, by itself, entitle the Associate to any
benefit under the Plan.
SECTION 3. BENEFITS.
3.1 Normal Retirement.
(a) Subject to the remaining provisions of this Section 3, the annual
supplementary retirement benefit payable to a Member who retires on or after
attaining age 65 shall be equal to the excess, if any, of:
(i) such Members Annual Retirement Income, over
(ii) the sum of:
X his Annual Estimated Social Security Benefits, and
X his Annual Retirement Benefits Offset.
(b) If the benefit payable under subsection (a) above is less than the
Annual Minimum Benefit Amount computed pursuant to Section 1.5, the Member shall
receive the Annual Minimum Benefit Amount.
3.2 Early Retirement.
(a)(i) A Member may retire early under this Plan at any time after
attaining age 55 and completing 5 years of Plan Service. Subject to the
remaining provisions of this Section 3, the annual supplementary retirement
benefit determined under Sections 3.1(a)
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and 3.1(b) above, payable to a Member who retires prior to attaining age 65
shall be first computed on the basis provided by Section 3.1(a), taking into
account only years of Plan Service and Average Annual Compensation to the
Member's Retirement Date or, if applicable, on the basis provided by Section
3.1(b), which amount shall be reduced as follows:
Age at Retirement Reduction in Payment
- ----------------- --------------------
65 or older No reduction
64 2.0% of Average Annual Compensation
63 4.0% of Average Annual Compensation
62 6.0% of Average Annual Compensation
61 6.5% of Average Annual Compensation
60 7.0% of Average Annual Compensation
59 7.5% of Average Annual Compensation
58 8.0% of Average Annual Compensation
57 8.5% of Average Annual Compensation
56 9.0% of Average Annual Compensation
55 9.5% of Average Annual Compensation
54 10% of Average Annual Compensation
53 10.5% of Average Annual Compensation
52 11% of Average Annual Compensation
51 11.5% of Average Annual Compensation
(a)(ii) The CEO shall be eligible for benefits under the Plan upon an
involuntary Termination without Cause (as defined in the CEO's employment
agreement with the Company). If Terminated Without Cause prior to attaining age
65, the benefits payable to the CEO shall first be computed on the basis
provided by Section 3.1(a), taking into account only years of Plan Service and
Average Annual Compensation to the Member's Retirement Date or, if applicable,
on the basis provided by Section 3.1(b), which amount shall be reduced as
specified in the chart provided under Section 3.2(a)(i).
(a)(iii) The CEO shall be eligible for benefits under the Plan upon Total
Disability. If the CEO experiences Total Disability prior to attaining age 65,
the benefits payable to the CEO shall first be computed on the basis provided by
Section 3.1(a) taking into account only years of Plan Service and Average Annual
Compensation to the Member's Retirement Date or, if applicable, on the basis
provided by Section 3.1(b), which amount shall be reduced as specified in the
chart provided under Section 3.2(a)(i).
(b) Notwithstanding the other provisions of this Section 3.2, if a
Member's retirement occurs prior to his 62nd birthday, then during the period
between his Retirement Date and the Member's 62nd birthday only, in the
calculation of the
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Member's supplementary retirement benefit, such Member's supplementary
retirement benefit shall not be reduced by his Annual Estimated Social Security
Benefits.
(c) Notwithstanding anything else to the contrary provided in this Section
3.2 or otherwise in the Plan, if, during the five-year period following the
occurrence of a Change in Control of the Company, the Company or an Employer
terminates a Member's employment, who is not the CEO, other than as a
Termination For Cause and such Member had attained age 50 on the date on which
the Change in Control occurred, then such Member's annual supplementary
retirement benefit shall be computed and paid to such Member as if such Member
had retired at age 55 with at least five years of service on the date of
termination with benefits to be determined as if such Member had been employed
through age 55 at a level of Compensation equal to the Member's Average Annual
Compensation. Notwithstanding anything to the contrary provided in this Section
3.2, or otherwise in the Plan, the CEO shall be eligible (prior to age 55) for
benefits under the Plan immediately upon a Change of Control of the Company and
benefits shall be determined in accordance with this Section 3.2(c). For the
purposes stated in this Section 3.2(c), the Average Annual Compensation of the
specified Member shall be deemed to be the greater of his Average Annual
Compensation determined (i) as of the date of the Change in Control or (ii) as
of the date of termination of employment.
(d) A "Change in Control of the Company" shall be deemed to have occurred
if:
(i) Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") acquires
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either
(A) the then-outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (B) the combined
voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that, for purposes of this Section 3.2(d),
none of the following shall constitute a Change of Control:
(i) any acquisition directly from the Company of 30% or less
of Outstanding Company Common Stock or Outstanding Company
Voting Securities provided that at least a majority of the
members of the board of directors of the Company following
such acquisition were members of the Incumbent Board at the
time of the Board's approval of such acquisition, (ii) any
acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any affiliated
8
company, or (iv) any acquisition by the Company which, by
reducing the number of shares of Outstanding Company Common
Stock or Outstanding Company Voting Securities, increases the
proportionate number of shares of Outstanding Company Common
Stock or Outstanding Company Voting Securities beneficially
owned by any Person to 20% or more of the Outstanding Company
Common Stock or Outstanding Company Voting Securities;
provided, however, that, if such Person shall thereafter
become the beneficial owner of any additional shares of
Outstanding Company Common Stock or Outstanding Company Voting
Securities and beneficially owns 20% or more of either the
Outstanding Company Common Stock or the Outstanding Company
Voting Securities, then such additional acquisition shall
constitute a Change of Control; or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board;
(iii) A reorganization, merger, consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Business Combination") is consummated, in each
case, unless, immediately following such Business Combination,
(A), more than 50%, respectively, of the then-outstanding
shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of (x) the
corporation resulting from such Business Combination or (y) a
corporation that, as a result of such transaction, owns the
Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries, is
represented by the Outstanding Company Common Stock and the
Outstanding Company Voting Securities (or, if applicable, is
represented by shares into which Outstanding Company Common
Stock or Outstanding Company Voting
9
Securities were converted pursuant to such Business
Combination) in substantially the same proportions as their
ownership immediately prior to such Business Combination of
the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (B) no Person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business
Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except
to the extent that such ownership existed prior to the
Business Combination, and (C) at least a majority of the
members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement or
of the action of the Board providing for such Business
Combination; or
(iv) The stockholders of the Company approve of a complete
liquidation or dissolution of the Company
(e) "Termination for Cause" by the Company or by an Employer of the
Company means termination upon:
(i) the willful and continued failure by the Member to
substantially perform his duties with the Company or an
Employer (other than any such failure resulting from
disability or any such actual or anticipated failure after the
Member notifies the Company or an Employer of termination for
good reason) after a written demand for substantial
performance is delivered to the Member by the Company or
Employer, which demand specifically identifies the manner in
which the Company or Employer believes the Member has not
substantially performed his duties, or
(ii) the willful engaging by the Member in conduct that is
demonstrably and materially injurious to the Company or
Employer, monetarily or otherwise.
provided, however, that a termination shall not be deemed a Termination for
Cause if the Member's employment agreement with the Company provides a
definition of "cause" under which "cause" has not occurred.
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For the purposes of this subparagraph, "good reason" means, without the Member's
express written consent, the occurrence of any of the following circumstances
during the one-year period following a Change in Control of the Company, unless
such circumstances are fully corrected (effective retroactive to and including
the date the circumstances first occurred) within 30 days of the Company or
Employer receiving notice of the Member's termination:
(A) a reduction by the Company or Employer or a subsidiary, as
appropriate, in the Member's annual base salary, bonus
opportunity or benefits as the same may be increased from time
to time except for across-the-board salary, bonus opportunity
or benefit reductions similarly affecting all management
personnel of the Company, Employer and/or subsidiaries (and
all management personnel of any person in control of the
Company or Employer and of all persons, firms, corporations
and partnerships and other entities controlled by such
person); or
(B) the relocation of the Company's or Employer's (or
subsidiary's) offices at which the Member is principally
employed to a location more than 35 miles from such location.
or the Company's or Employer's (or subsidiary's) requiring the
Member to be based anywhere other than the Company's or
Employer's (or subsidiary's) offices at such location.
provided, however, that "good reason" shall also have the meaning specified in
the employment agreement between the Member and the Company.
3.3 Cessation of Benefits. Subject to the provisions of Sections 3.4, 3.5 and
3.6, all payments of supplementary retirement benefits hereunder shall cease
upon the death of the Member.
3.4 Form of Benefit. Subject to subsection (b) below, the standard form of the
supplementary retirement benefit payable hereunder shall be an immediate life
annuity; provided, however, that one of the following optional forms of payment
may also be elected:
(a) 100% Joint Annuity. This option is an actuarially reduced benefit
payable to a Member during his life and, after his death, payable
for life to such person he shall have designated as his contingent
annuitant.
(b) 50% Joint and Survivor Annuity. This option is an actuarially
reduced benefit payable to a Member during his life and, after his
death, a benefit at one-half the rate of such actuarially reduced
benefit payable for life to such person as he shall have designated
as his contingent annuitant. Unless the Member's spouse consents to
another optional form of
11
payment, this will be the standard form of payment for a Member who
is married at Retirement Date. The Member's spouse will be the
contingent annuitant.
(c) Period Certain Annuity (10 years). This option is an actuarially
reduced benefit payable to a Member during his life with periodic
payments certain terminating at the end of ten years, with provision
that if the Member dies before receiving all the periodic payments
for such ten year period, (i) periodic payments for the remainder of
such period shall be paid to a designated beneficiary, and (ii) if
there is no such designated beneficiary, to his estate.
(d) Period Certain Annuity. (15 years). This option is an actuarially
reduced benefit payable to a Member during his life with periodic
payments certain terminating at the end of fifteen years, with
provision that if the Member dies before receiving all the periodic
payments for such fifteen year period, (i) periodic payments for the
remainder of such period shall be paid to a designated beneficiary,
and (ii) if there is no such designated beneficiary, to his estate.
The supplementary retirement benefit payable under an optional form shall be the
Actuarial Equivalent of the supplementary retirement benefit otherwise payable
in the form of an immediate life annuity.
3.5 Standard Payment Period. Supplementary retirement benefit payments shall be
made in monthly installments, except that the Committee may, in its discretion
at any time and from time to time prior or subsequent to retirement, direct that
such payments be made other than at monthly intervals, or direct that either a
lump sum settlement or a different form of payment be made equal to the
Actuarial Equivalent of the benefit or remainder thereof otherwise payable.
3.6 Limitation on Payments.
(a) It is recognized that a Member's duties during the period of
employment with the Company or an Employer entail the receipt of confidential
information concerning not only the current operations and procedures of the
Company or an Employer but also its short-range and long-range plans. If (A) the
Member during any portion of the period of two (2) years following his
retirement (1) has an aggregate investment (as determined from time to time) in
a Competing Business equal to at least the greater of (i) $100,000, (ii) 1% in
value of such Competing Business or (iii) such greater amount as the Committee
may establish on a case by case basis or (2) personally renders services to a
Competing Business in any manner, including without limitation, as owner,
partner, director, trustee, officer, employee, consultant or advisor thereof,
and (B) the Committee determines, in its discretion, that such investment or
rendering of personal services is contrary to the best interests of the Company,
then all rights to receive any benefits under the Plan shall immediately cease
if the Member does not
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reduce such aggregate investment to an amount permitted hereunder or cease
rendering such personal services, within 60 days of receipt of written notice of
such determination from the Committee. The term "value" as used herein shall
mean the net worth of such Competing Business, as disclosed by the balance sheet
of such Competing Business, as of the close of the last preceding fiscal year;
provided, however, that with respect to an investment in stock or other
securities of a Competing Business, if such stock or other securities are part
of a class of stock or other securities listed on any stock exchange, the term
"value" shall mean the market value of such class of stock or other securities
of such Competing Business, as of the date of any such determination by the
Committee.
(b) Any and all rights to benefits payable to or for the account of a
Member shall at all times be subject to termination (i) if the Committee shall
find such Member guilty of dishonesty or any other unlawful act causing injury
or harm to the Company or an Employer or their employees or customers, or (ii)
if such Member voluntarily terminates his employment without the written consent
of the Company or his Employer or in violation of a written contract of
employment.
(c) Notwithstanding any other provisions of the Plan, in the event that
the aggregate amount of benefits paid under this Plan in any benefit year (the
period commencing on July 1 of any year and ending on the following June 30),
after taking into account the tax effect on the Company or an Employer, shall
exceed five percent (5%) of the average consolidated net earnings of the Company
as shown in the Company's annual report to shareowners for the three (3) most
recent consecutive fiscal years, ending prior to the conclusion of the benefit
year, then all benefits otherwise payable hereunder during the next following
benefit year shall be reduced or if necessary terminated. Such reduction shall
be made by reducing the benefits otherwise payable during such next following
benefit year in the same proportion that the benefits for the immediately
preceding benefit year (before the imposition of the limitations provided for by
this paragraph) would have had to have been reduced so that no excess would have
occurred during such immediately preceding benefit year.
(d) Notwithstanding anything provided in this Section 3.6 or otherwise in
the Plan, to the contrary, the terms of subsections (a), (b) and (c) of this
Section 3.6 shall cease to apply and shall be null and void immediately upon the
occurrence of a Change in Control of the Company, as defined in Section 3.2(d)
of the Plan, or as otherwise provided in the employment agreement between the
Member and the Company.
3.7 Indirect Payment of Benefits. If any retired Member or his beneficiary is,
in the judgment of the Committee, legally, physically or mentally incapable or
incompetent, payment may be made to the guardian or other legal representative
of such retired Member or beneficiary or, if there be none, to such other person
or institution who or which, in the opinion of the Committee, based on
information furnished to the Committee, is then maintaining or has custody of
such retired Member or beneficiary. Such payment shall constitute a full
discharge with respect thereto.
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3.8 Termination and Rehire. Except as provided in Section 3.2(a)(ii),
3.2(a)(iii) and 3.2(c), in the event a Member's employment is terminated prior
to eligibility for early retirement, as described in Section 3.2, or in the
event that a Member dies prior to the date as of which supplementary retirement
benefits hereunder would otherwise commence, then no benefits shall be payable
under this Plan. If a terminated Member is rehired under circumstances which
result in reinstatement of membership under the Payless Profit Sharing Plan,
reinstatement of membership under this Plan will occur at the same time. Such
reinstatement will result in cessation of payment of benefits under this Plan.
Upon the subsequent retirement of a Member whose benefits had ceased by reason
of this Section 3.8, supplementary retirement benefits shall again be payable
based upon such adjustments in amounts as the Committee may deem equitable.
3.9 Withholding. The Employer shall withhold from amounts otherwise payable
under this Plan any amounts required to be withheld under federal, state or
local law or regulations, such amounts to be remitted on a timely basis to the
appropriate governmental authorities.
SECTION 4. ADMINISTRATION OF THE PLAN.
4.1 The Committee. Except as otherwise provided herein, the Plan shall be
administered by the Committee constituted under the Payless Profit Sharing Plan.
4.2 Delegation of Duties. In the administration of the Plan, the Committee may,
from time to time, appoint agents and delegate to such agents and to the
Administrative Subcommittee such duties as it considers appropriate and to the
extent that such duties have been so delegated, the Administrative Subcommittee
or agent, as the case may be, shall be exclusively responsible for the proper
discharge of such duties. The Committee, the Administrative Subcommittee or any
agent may from time to time consult with counsel who may be counsel to the
Company.
4.3 Authority. Any decision or action of the Committee (or, with respect to any
duty delegated to it, any decision or action of the Administrative Subcommittee
or of a duly appointed agent) in respect of any question arising out of or in
connection with the administration, interpretation and application of the Plan
and the rules and regulations thereunder shall be in its absolute discretion and
shall be final, conclusive and binding upon all persons having any interest in
the Plan.
SECTION 5. CERTAIN RIGHTS AND OBLIGATIONS.
5.1 Rights of Members, Members' Spouses and Beneficiaries. The rights of the
Members, their spouses, their beneficiaries and other persons are hereby
expressly limited as set forth herein and shall be determined solely in
accordance with the provisions of the Plan.
5.2 Employer-Associate Relationship. The establishment of the Plan shall not be
construed as conferring any legal or other rights upon any Associate or any
other person for a continuation of employment or as interfering with or
affecting in any manner the right of the
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Company or any Employer to discharge any Associate or otherwise act with
relation to such Associate. The Company or an Employer may take action
(including discharge) with respect to any Associate or other person and may
treat him without regard to the effect which such action or treatment might have
upon him under the Plan.
5.3 Unfunded Nature of Plan. The Plan shall be unfunded. Neither an Employer nor
the Committee shall be required to segregate any assets in connection with
benefits provided by the Plan. Neither the Company, an Employer nor the
Committee shall be deemed to be atrustee of any amounts to be paid under the
Plan. Any liability of the Company or an Employer to any person with respect to
benefits payable under the Plan shall be based solely upon such contractual
obligations, if any, as shall be created by the Plan and shall be only a claim
against the general assets of the Company or the Employer, and no such liability
shall be deemed to be secured by any pledge or any other encumbrance on any
specific property of the Company or any Employer.
SECTION 6. NON-ALIENATION OF BENEFITS.
6.1 Provisions with Respect to Assignment and Levy. No benefit payable under the
Plan shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, levy or charge, and any attempt so to
anticipate, alienate, sell, transfer, assign, pledge, encumber, levy upon or
charge the same shall be void; nor shall any such benefit be in any manner
liable for or, subject to the debts, contracts, liabilities, engagements or
torts of the person entitled to such benefit, except as specifically provided
herein.
6.2 Alternate Application. If any Member, Member's spouse or beneficiary under
the Plan becomes bankrupt or attempts to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any benefit under the Plan, except as
specifically provided herein, or any benefit shall be levied upon, garnished or
attached, then such benefit shall, in the discretion of the Committee, cease,
and in that event the Committee may hold or apply the same or any part thereof
to or for the benefit of such Member, Member's spouse or beneficiary, children
or other dependents, or any of them, or in such other manner and in such
proportion as the Committee may deem proper.
SECTION 7. AMENDMENT AND TERMINATION.
7.1 Company's Rights. The Company reserves the right at any time and from time
to time in its sole discretion to modify or amend in whole or in part any or all
of the provisions of the Plan, provided that no amendment shall reduce any
supplementary retirement benefit with respect to a Member who had already
retired and no amendment shall reduce the amount of any supplementary retirement
benefit with respect to a Member who, at the time of amendment, was eligible for
retirement under the terms of the Plan, to a level below that determined as if
retirement were effective at the time of amendment.
Notwithstanding anything provided to the contrary in this Section 7.1 or the
next Section 7.2, following a Change in Control of the Company the Plan may not
be amended or terminated in
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a manner that would adversely affect the rights of any Member to his vested
annual supplementary retirement benefits. Without limiting the generality of the
foregoing, Section 3.2(c) through (e) may not be amended or deleted following a
Change of Control of the Company.
7.2 Rights to Terminate. Except as provided in the previous Section 7.1, the
Company reserves the right at any time and from time to time in its sole
discretion to terminate the Plan, in whole or in part. In the event the Plan is
terminated, the Employer shall be under no further obligation to provide
benefits under the Plan, except to the extent of any supplementary retirement
benefit with respect to a Member who had already retired and to the extent of
any supplementary retirement benefit with respect to a Member who, at the time
of termination, was eligible for retirement under the terms of the Plan,
including Sections 3.2(a)(i), 3.2(a)(ii), 3.2(a)(iii) and 3.2(c), determined as
if retirement were effective at the time of Plan termination. If the Plan is
partially terminated, the preceding sentence shall apply to Members in the class
with respect to which the Plan is terminated.
SECTION 8. CONSTRUCTION.
The provisions of the Plan shall be construed, regulated, administered and
enforced according to the laws of the State of Kansas.
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