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Exhibit 99.9
PAYLESS SHOESOURCE, INC.
PROFIT SHARING PLAN
INTRODUCTION
Prior to April 1, 1996, Associates of Payless ShoeSource, Inc.
("Payless") were covered by The May Department Stores Company Profit Sharing
Plan ("May Plan"). Effective April 1, 1996, Payless withdrew from and ceased
to be a participating Employer in the May Plan, and established the Payless
ShoeSource, Inc. Profit Sharing Plan. This Plan provides for (1) a Company
Contribution in an amount to be determined by the Company's Board of Directors
and allocated to eligible Plan Members and (2) if elected by the Member, a
salary reduction amount Member contribution determined on either a before-tax
or after-tax basis.
Generally effective August 1, 1997, Payless amended and restated the
Plan, primarily to establish a Company Matching Contribution based on Members'
contributions, to institute automatic enrollment in before-tax contributions by
Members, and to comply with certain changes in the law.
Now, the Company and Payless Merger Corp., a Missouri corporation and
wholly-owned subsidiary of Payless ShoeSource, Inc. (formerly Payless
ShoeSource Holdings, Inc.), a Delaware corporation, are merging, pursuant to an
Agreement and Plan of Merger among the Company, Payless Merger Corp. and
Payless ShoeSource, Inc. (formerly Payless ShoeSource Holdings, Inc.) (the
"Merger"), to be effective as of the date of the Merger (hereinafter the
"Effective Time").
SECTION 1
DEFINITIONS
1.01 ACCOUNTS means the Company Accounts and Member Accounts
established under Section 6.
1.02 AFTER-TAX CONTRIBUTIONS means Member Contributions which are not
Before-Tax Contributions and which are made by the Member in accordance with
Section 4.01(a).
1.03 ALLOCATION PAY AMOUNT means with respect to each eligible Member,
(a) one (1) times the amount of Pay as defined in Section 1.31 up to the Social
Security Wage Base ("SSWB") for the Plan Year, plus (b) two (2) times the
amount of such Pay in excess of the SSWB for the Plan Year. Notwithstanding
any provision of this Section 1.02 or of Section 3.03 to the contrary, in no
event shall the percentage of
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Members' Pay to be allocated for any year below the SSWB be less than fifty
percent (50%) of the percentage of Pay allocated with respect to Members' Pay
in excess of the SSWB, nor may the latter percentage of Pay (above the SSWB)
exceed the former percentage of Pay (below the SSWB) by more than 5.7% (or such
other percentage as may be the maximum permitted differential under Code
Section 401(1) from time to time).
In determining each eligible Member's Allocation Pay Amount, only Pay
received during the part of the Plan Year the Member is eligible for the
Company Contribution feature of the Plan, pursuant to Section 2, shall be
considered, and the SSWB to be applied for such Member shall be proportionally
prorated if such eligibility is for less than a full Plan Year.
Notwithstanding the foregoing, for the 1996 Plan Year, only Pay
received after the Plan's Effective Date shall be considered and the SSWB shall
be prorated accordingly.
Further, notwithstanding the foregoing, with respect to any Plan Year
for which applying the definition of Allocation Pay Amount set forth above
would cause the allocation made pursuant to Section 3.03 to violate the
permitted disparity limitations of Treas. Reg. Section 1.401(l)-2, Allocation
Pay Amount shall be adjusted to permit Section 3.03 to operate in compliance
with the limitations of Treas. Reg. Section 1.401(l)-2.
1.04 ASSOCIATE means any person employed by an Employer who receives
Pay from an Employer. The term Associate also may include, based upon the
express written determination of the Company or the Committee, a U.S. citizen
employed, at the request of the Company, by a member of the Group (defined in
Section 1.20) to the extent such employee otherwise qualifies for membership
under Section 2, in which case such Group member shall be deemed to be an
"Employer" hereunder, as to such person or persons only. Employees in
departments operated by others under lease or license shall be deemed
Associates for the purposes of this Plan but only in those cases approved by
the Committee in its discretion where the lessees or licensees shall have
requested participation hereunder and shall have agreed in writing to assume
their respective equitable proportions of the contributions payable to the
Trustee as provided under this Plan. The term "Associate" shall not include
(i) any person covered under a collective bargaining agreement unless and until
the Employer and the collective bargaining representatives so agree, (ii) any
non-resident alien, and (iii) any "leased employee" within the meaning of Code
Section 414(n)(2).
1.05 AUTHORIZED LEAVE OF ABSENCE means any leave of absence authorized
by the Employer under rules established by the Employer.
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1.06 BEFORE-TAX CONTRIBUTIONS means contributions which the Member
elects (in accordance with Section 4.01(b)) to have the Employer make directly
to the Plan on behalf of the Member, which election shall constitute an
election under Code Section 401(k)(2)(A). The "Member's Before-Tax
Contributions" shall refer to Before- Tax Contributions made to the Plan by the
Employer on behalf of the Member.
1.07 BENEFICIARY means the person or persons entitled under Section
9.02 to receive any payments payable under this Plan on account of a Member's
death.
1.08 BOARD means the Board of Directors of the Company.
1.09 CODE means the Internal Revenue Code of 1986, as amended from time
to time.
1.10 COMMITTEE means the Retirement Committee comprised of three or
more members as determined and appointed from time to time by the Board. On
and after the date the Company is no longer a subsidiary of The May Department
Stores Company, the Committee shall be comprised of the Compensation and
Nominating Committee of the Board or such individuals as the Board shall
otherwise designate.
1.11 COMPANY means Payless ShoeSource, Inc., a Missouri corporation,
provided that immediately after the Effective Time of the Merger, such term
shall mean Payless ShoeSource, Inc. (formerly Payless ShoeSource Holdings,
Inc.), a Delaware corporation, and any other organization which may be a
successor to it.
1.12 COMPANY ACCOUNTS means accounts reflecting the portion of each
Member's interest in the Investment Funds which are attributable to Company
Matching Contributions ("Company Matching Accounts") and to Company Profit
Sharing Contributions ("Company Profit Sharing Accounts") and to any
contributions made by an Employer under Prior Plans, as well as to any income
and/or earnings attributable to such Company Contributions and Prior Plan
contributions.
1.13 COMPANY MATCHING CONTRIBUTIONS means contributions made by the
Company or an Employer, based on a Member's Before-Tax and/or After Tax
Contributions, pursuant to Section 3.02.
1.14 COMPANY PROFIT SHARING CONTRIBUTIONS means discretionary
contributions made by the Company or an Employer, based on Net Profits,
pursuant to Section 3.01.
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1.15 EFFECTIVE DATE originally meant April 1, 1996. However, the
effective date of this amendment and restatement of the Plan shall be the
Effective Time of the Merger.
1.16 EMPLOYER means the Company and, if authorized by the Company to
participate herein, any subsidiary of the Company or any affiliated
corporation, partnership or sole proprietorship which elects to participate
herein including but not limited to Payless ShoeSource, Inc., a Missouri
corporation and sponsor of the Plan immediately prior to the Merger.
1.17 ERISA means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
1.18 FIDUCIARY means the Trustee, each of the members of the Committee
described in Section 13, and any investment manager designated pursuant to
Section 14.
1.19 FISCAL YEAR means the Company's Fiscal Year.
1.20 GROUP means the Company and any other company which is related to
the Company as a member of a controlled group of corporations in accordance
with Code Section 414(b), or as a trade or business under common control in
accordance with Code Section 414(c). For the purposes of the Plan, for
determining whether or not a person is an employee of the Group and the period
of employment of such person, each such other company shall be included in the
"Group" only for such period or periods during which such other company is a
member with the Company of a controlled group or under common control.
1.21 HOUR OF SERVICE means any hour for which an Associate (including a
leased employee) is directly or indirectly compensated, or entitled to
compensation, by the Employer or by any member of the Group, whether or not
such Group member has adopted the Plan, for any of the following:
(a) the performance of duties during the applicable computation
period;
(b) a period during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty, Military
Service, or Authorized Leave of Absence;
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(c) a period for which back pay is awarded or agreed to, provided
that no Hour of Service has been credited under subsection (a) or (b) with
respect to the same period.
Hours of Service and applicable computation periods shall be determined
in accordance with the requirements of 29 C.F.R. Section 2530.200b.
1.22 INVESTMENT FUND means any fund for investment of contributions as
described in Section 5.01.
1.23 MAY PLAN means The May Department Stores Company Profit Sharing
Plan.
1.24 MEMBER means any person included in the membership of this Plan as
provided in Section 2.
1.25 MEMBER ACCOUNTS means the Member Before-Tax Accounts and the
Member After-Tax Accounts.
1.26 MEMBER AFTER-TAX ACCOUNTS means the Member Accounts with respect
to a Member's After-Tax Contributions.
1.27 MEMBER BEFORE-TAX ACCOUNTS means the Member Accounts with respect
to a Member's Before-Tax Contributions.
1.28 MEMBER CONTRIBUTIONS means the Member's Before-Tax Contributions
and After-Tax Contributions.
1.29 MILITARY SERVICE means any period of obligatory military service
with the Armed Forces of the United States of America, or voluntary service in
lieu of such obligatory service, provided that the Associate returns to active
employment with the Employer within the period during which the Employer would
be required to re-employ the Associate under Federal law. Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to qualified Military Service will be provided in
accordance with Code Section 414(v).
1.30 NET PROFITS means the consolidated net profits of the Company for
any given Fiscal Year, determined by generally accepted accounting principles
except that (i) no deduction or provision shall be made for any federal, state
or other taxes measured by net income. nor for any contributions to the Trust
or to any other pension or profit sharing plan, and (ii) there shall be
excluded any proceeds from life insurance of which the Company is beneficiary
(whether paid in a single sum or otherwise) and any gains or losses on the sale
of capital assets. Such term shall also mean any
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accumulated and undistributed Net Profits (as defined in the preceding
sentence) earned in prior Fiscal Years to the extent that such accumulated and
undistributed Net Profits constitute surplus of the Company and its
subsidiaries available for contributions hereunder.
1.31 PAY means the aggregate of (i) all regular pay, commissions,
overtime pay, cash incentives, and prizes and cash awards, plus (ii) amounts
which the Associate elects to have the Employer contribute directly to the Plan
on the Associate's behalf in accordance with Section 4.01(b). Pay shall
include any amounts not otherwise includable in the Member's taxable income
pursuant to Code Section 125. Pay shall not include amounts for a pension, a
retirement allowance, a retainer or a fee under contract, deferred compensation
(including amounts deferred under the Deferred Compensation Plan of The May
Department Stores Company and the Deferred Compensation Plan of Payless
ShoeSource, Inc.), severance pay, distributions from this Plan or items of
extraordinary income including but not limited to amounts resulting from the
exercise of stock options, spinoff cash, spinoff stock and restricted stock
awards. Pay in excess of $150,000 shall be disregarded, although such amount
shall be adjusted at the same time and in such manner as permitted under Code
Section 415(d).
In determining the Pay of an Associate, the rules of Code Section
414(q)(6) shall apply, except that in applying such rules the term "family"
shall include only the spouse of the Associate and any lineal descendants of
the Associate who have not attained age 19 before the last day of the Plan
Year. Notwithstanding the foregoing, effective January 1, 1997, the "family
aggregation" rules of Code Section 414(a)(6) are repealed and of no further
effect.
1.32 PLAN means this Payless ShoeSource Inc. Profit Sharing Plan.
1.33 PLAN YEAR means a calendar year ending each December 31.
1.34 PRIOR PLAN means either The May Department Stores Company Profit
Sharing Plan, the Volume Shoe Corporation Profit Sharing Plan and such other
qualified plan as may be so designated by the Committee.
1.35 QUALIFIED DOMESTIC RELATIONS ORDER means a "qualified domestic
relations order" as that term is defined in Code Section 414(p), provided that
such order was entered on or after January 1, 1985.
1.36 RETIREMENT means a Member's termination of employment on or after
age 55 with at least five (5) Years of Service, as of which date the Member's
benefit shall be nonforfeitable.
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1.37 SOCIAL SECURITY WAGE BASE means, with respect to each Plan Year,
the maximum amount of wages which are subject to tax in such year under the
Federal Old Age, Survivors and Disability Insurance System.
1.38 TOTAL AND PERMANENT DISABILITY or DISABILITY means the total
incapacity of a Member for the continued performance of regular active
employment with an Employer, which disability is expected to be permanent, as
determined by the Committee, provided that a Member shall not be considered
totally and permanently disabled for purposes of this Plan unless he qualifies
for disability benefits under Title 11 of the Federal Social Security Act.
1.39 TRANSFERRED ACCOUNTS means Member and Company Accounts transferred
from the May Plan.
1.40 TRUST AGREEMENT means the agreement or agreements provided for in
Section 14, as amended from time to time.
1.41 TRUST FUND means all the assets of the Investment Funds, the
assets of The May Department Stores Company Profit Sharing Plan merged into
this Plan and any other assets which are held in one or more trusts by the
Trustee or Trustees for the purposes of this Plan.
1.42 TRUSTEE means the corporation(s), person or persons which may at
any time be acting as Trustee or Trustees under the Trust Agreement.
1.43 UNIT means one of the units representing an interest in an
Investment Fund as provided in Section 6.03.
1.44 UNIT VALUE means the value of each Unit in an Investment Fund as
of the Valuation Date as determined pursuant to Section 6.04.
1.45 VALUATION DATE means the last day of each calendar month or such
other date or dates as may be established by the Committee from time to time.
1.46 YEAR OF SERVICE for purposes of determining eligibility under
Section 2 means a year of employment during which the Associate has been paid
for not less than 1,000 Hours of Service for an Employer. An Associate shall
be credited with a year of employment on each anniversary date of his
commencement of employment with an Employer. Periods of temporary illness,
temporary layoff, Military Service, and Authorized Leaves of Absence shall not
be deemed as breaking continuity of employment and shall be counted in
determining Years of Service. The term "Year of Service" shall also include an
employment year during which, except to the extent otherwise provided in
Treasury Regulations, a "leased employee" within the meaning of
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Code Section 414(n) has been paid for not less than 1,000 Hours of Service for
the Employer even though during such period the leased employee was not an
Associate as defined in Section 1.04. The term "Year of Service" shall include
any period required to be included by the Family and Medical Leave Act of 1993.
The extent to which service with another organization, part or all of whose
business operations are acquired by the Company (or by an Employer), shall be
credited as "Years of Service" hereunder or as "Vesting Service" under Section
1.47 shall be determined by the Company or by the Committee on a case-by-case
basis.
1.47 VESTING SERVICE for purposes of determining a Member's vested
interest under Section 6.09 is based on "elapsed time" and is to be determined
in accordance with the following definitions:
(a) "EMPLOYMENT COMMENCEMENT DATE" means the date upon
which an Associate first performs an Hour of Service for the Employer.
(b) "HOUR OF SERVICE" means an hour for which an Associate is paid
or entitled to payment for the performance of duties for the Employer.
(c) "PERIOD OF SERVICE" means a period beginning on the
Associate's Employment Commencement Date (or Reemployment Commencement Date,
as the case may be) and ending on his Severance from Service Date.
(d) "SEVERANCE FROM SERVICE DATE" means the earlier to occur of:
(i) the date upon which an Associate terminates employment
with the Employer (either voluntarily or involuntarily), retires or
dies; or
(ii) the first anniversary of the date upon which the
Associate was first absent from service with the Employer (with
or without pay) for any other reason (i.e., vacation, sickness,
disability, leave of absence or layoff).
Notwithstanding the foregoing, the Severance from Service Date of an Associate
who is absent from service with the Employer beyond the first anniversary of
the first day of such absence on account of maternity or paternity (as
described in Code Sections 410(a)(5)(E) or 411(a)(6)(E)) shall be the
second anniversary of the first day of such absence; and the period of time
between such first and second anniversaries shall not be treated as a Period of
Service or as a Period of Severance.
(e) "PERIOD OF SEVERANCE" means a period beginning on an
Associate's Severance from Service Date and ending upon the Associate's
Reemployment Commencement Date.
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(f) "REEMPLOYMENT COMMENCEMENT DATE" means the first date,
following a Severance from Service Date, upon which the Associate performs an
Hour of Service for the Employer.
(g) "SERVICE SPANNING RULES." In determining whether or not an
Associate has completed a twelve month Period of Service for purposes of
vesting, the following Periods of Severance shall be treated as Periods of
Service:
(i) If an Associate terminates employment with the Employer
(either voluntarily or involuntarily) or retires, and then performs an
Hour of Service within the twelve month period beginning on the
Severance from Service Date, such Period of Severance shall be treated
as a Period of Service; and
(ii) If an Associate terminates employment with the Employer
(either voluntarily or involuntarily) or retires during an absence from
service of twelve months or less for any reason other than a
termination or retirement, and then performs an Hour of Service within
a period of twelve months from the date the Employee was first absent
from service, the Period of Severance shall be treated as a Period of
Service.
SECTION 2
MEMBERSHIP
2.01 CONDITIONS OF ELIGIBILITY.
(a) Each Associate who on the day before the original Effective
Date of this Plan is a Member of or is eligible to be a Member of the May
Plan or who would be eligible to become a Member of the May Plan on April 1,
1996 if the Company had continued to be a participating Employer under the May
Plan shall be a Member of this Plan entitled to make Member Contributions
pursuant to Section 4 and eligible to share in Company Contributions pursuant
to Section 3.
(b) From the original Effective Date to July 31, 1997, each other
Associate shall be eligible to become a Member of this Plan as follows:
(i) When an Associate has completed one Year of Service and
attained age 21, he shall be eligible to make Member Contributions
pursuant to Section 4 hereof, commencing on the later of (a) July 1,
1996, or (b) the first day of the month coincident with or following
the date he has met these eligibility requirements.
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(ii) When an Associate has completed two Years of Service
and attained age 21, he shall be eligible to share in Company Profit
Sharing Contributions pursuant to Section 3 of this Plan, effective as
of the first day of the month coincident with or following the date he
satisfies the requirements of this subparagraph (ii).
(c) Commencing August 1, 1997, each Associate shall be eligible to
become a Member of the Plan when the Associate has completed one Year of
Service and attained age 21, with membership to commence as of the first day of
the month coincident with or following the date he has met these eligibility
requirements. Such Associate shall be eligible:
(i) to make Member Contributions pursuant to Section 4;
(ii) to share in Company Matching Contributions pursuant to
Section 3.02;
(iii) to share in Company Profit Sharing Contributions,
if any, pursuant to Section 3.01.
(d) Effective January 1, 1998, each Associate who was eligible as
of December 31, 1997, or who becomes eligible to become a Member thereafter,
shall be deemed to have elected to make a three percent (3%) Before-Tax
Contribution pursuant to Section 4.01(b), commencing with the first paycheck
received on or after the later of January 1, 1998, or the first day of the
month coincident with or following the date he met the foregoing eligibility
requirements. Notwithstanding this "deemed" election, an Associate or Member
may elect pursuant to procedures established by the Committee to not make, or
to suspend making, said three percent (3%) automatic Before-Tax Contribution,
or pursuant to Section 4.01(a) or (b) to make an After-Tax or a Before-Tax
Contribution of an amount other than three percent (3%).
(e) All Years of Service with an Employer and Years of Service
with The May Department Stores Company ("May") while the Employer was part
of the Group which included May are counted toward eligibility, provided that,
if an Associate has a 1-year break in service before satisfying the Plan's
condition of eligibility under Section 2.01(b)(i), service with an Employer or
May before such break will not be taken into account. For the purposes of this
Section 2.01, "break in service" means a 12 consecutive month period during
which the Associate does not complete more than 500 Hours of Service with the
Employer, and/or May while part of the Group.
(f) Effective January 1, 1997, Associates employed by the
Company's Puerto Rican Subsidiaries and subject to the related "Appendix"
hereto shall
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cease to be eligible for membership hereunder, but may participate, to the
extent they are eligible, in any plan or plans maintained from time to time by
the Company or by such Subsidiaries for the benefit of such Associates in
Puerto Rico.
2.02 NO DUAL MEMBERSHIPS. Notwithstanding anything in this Plan to the
contrary, when and as an Employer is obligated, pursuant to an agreement with
any group or association which represents an Associate, to contribute to any
plan involving pensions or other qualified deferred compensation, such
Associate shall not be eligible for membership in this Plan. If such Associate
has Accounts in this Plan, such Accounts shall continue to be revalued as of
each succeeding Valuation Date pursuant to Section 6.04.
2.03 RE-EMPLOYMENT. A former Member who has retired or has otherwise
terminated employment and is rehired shall become a Member on the first day of
the calendar month coinciding with or next following the date of his rehire.
SECTION 3
COMPANY CONTRIBUTIONS
3.01 AMOUNT OF COMPANY PROFIT SHARING CONTRIBUTION. The Company or an
Employer may contribute to the Trust, as of the end of each Plan Year, a
percentage of the Company's Net Profits as a Company Profit Sharing
Contribution. The amount of such contribution, if any, shall be determined by
the Board of Directors in its discretion. Any such contribution shall be made
as soon as practicable after the close of the Company's Fiscal Year.
For the Plan Year ended December 31, 1996, the Company Profit Sharing
Contribution shall be in an amount which is the sum of (a) 2 1/2% of Net Profits
for the period May 5, 1996 through February 1, 1997 plus (b) an amount, in
cash, necessary to provide each eligible Member who was a member of the May
Plan on March 31, 1996 and who was employed by the Employer on December 31,
1996, with a contribution allocation equal in value to the Company Matching
Allocation he would have received under the May Plan applying the "effective
matching rate" determined under the terms of the May Plan for the 1996 Plan
Year to the Member's Contributions made for January, February and March of
1996.
For the Plan Year ended December 31, 1997, the Company Profit Sharing
Contribution was made for the seven month period ended July 31, 1997, such that
the total combined amount contributed to the Plan and to the Payless
ShoeSource, Inc. Profit Sharing Plan for Puerto Rico Associates (the "Puerto
Rico Plan") for such period was equal to 2 1/2% of Net Profits for the period
February 2, 1997 through August 30, 1997. For the period August 1, 1997
through December 31, 1997, the Employer
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replaced the Company Profit Sharing Contribution with a Company Matching
Contribution such that the total combined amount contributed to the Plan and to
the Puerto Rico Plan for such period was equal to 2 1/2% of Net Profits for the
period August 31, 1997 through January 31, 1998.
3.02 AMOUNT OF COMPANY MATCHING CONTRIBUTION. Effective August 1,
1997, and for Plan Years commencing thereafter, the Company shall, in its
discretion, contribute to the Trust, as of the end of each Plan Year, a total
combined amount as to this Plan and the Puerto Rico Plan equal to 2 1/2% of its
Net Profits, until determined otherwise by the Board of Directors, in the form
of a Company Matching Contribution. Such contribution may be made by an
Employer, rather than by the Company, as to that Employer's participating
Associates. The total amount of such contribution shall be allocated in
proportion to the amount that each Member's Contributions under Sections
4.01(a) and (b), up to a total of 5% of such Member's Pay, bears to the total
amount of all Member Contributions up to 5% of such Members' Pay. Such Company
Matching Contribution shall be determined and paid to the Trustee as soon as
practicable after the close of each Fiscal Year.
For the Plan Year ended December 31, 1997, the total Company Matching
Contribution to this Plan and to the Puerto Rico Plan was a combined amount
equal to 2 1/2% of Net Profits for the period August 31, 1997 through January
31, 1998.
3.03 ALLOCATION OF COMPANY CONTRIBUTIONS. The Company Contributions
shall be allocated only to the Company Accounts of Members who are employed by
the Employer on the last day of the Plan Year and on behalf of Members whose
employment has terminated during the Plan Year by reason of Retirement, death
or Disability. Company Profit Sharing Contributions shall be credited to
eligible Members' Company Profit Sharing Contribution Accounts. Company Profit
Sharing Contributions allocated prior to or as of July 31, 1997 shall be fully
vested; Company Profit Sharing Contributions allocated thereafter shall be
subject to the vesting provisions of Section 6.09. Company Matching
Contributions shall be allocated, based on a Member's Contributions up to 5% of
Pay, to the Member's Company Matching Contribution Account, subject to the
vesting provisions of Section 6.09 and to the withdrawal penalty provisions of
Section 8.02(a). No Company Matching Contribution shall be made with respect
to a Member Before-Tax Contribution in excess of the Code Section 402(g) limit,
as revised from time to time.
3.04 PROFIT SHARING ALLOCATION FORMULA. The Company Profit Sharing
Contribution, if any, shall be allocated to all Members eligible to share in
the contribution according to the ratio that each Member's Allocation Pay
Amount for the Plan Year bears to the total Allocation Pay Amount for all
eligible Members for the Plan Year.
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Notwithstanding the foregoing paragraph, for the Plan Year ended
December 31, 1996, the allocation made to the Company Profit Sharing
Contribution Account of each eligible Member who was a Member of the May Plan
on March 31, 1996 and who was employed by the Employer on December 31, 1996,
shall be the sum of (a) the amount determined applying the allocation formula
set forth in the preceding paragraph for Members who made Member Contributions
under the May Plan during January, February and March of 1996, and, (b) an
amount equal in value to the Company Matching Allocation such Member would have
received under the May Plan applying the "effective matching rate" determined
under the terms of the May Plan for the 1996 Plan Year to the Member's
Contributions made for January, February and March of 1996. For the Plan Year
ended December 31, 1997, the allocation made to the Company Profit Sharing
Contribution Account of each eligible Member who was employed by the Employer
on December 31, 1997 shall be the amount determined applying the allocation
formula set forth in the preceding paragraph for Members eligible during
January, February, March, April, May, June and July of 1997, based on the
Allocation Pay of all such Members during said period. The amounts of such
contributions shall be subject to applicable limitations, if any, imposed by
the Code.
In no event shall an allocation be made under Sections 3.03 or 3.04 in
excess of an amount permitted by Code Section 401(a)(4) and the Regulations
pursuant thereto.
3.05 INVESTMENT OF THE COMPANY CONTRIBUTION. The amounts allocated to
each Member pursuant to Section 3.03 shall be credited to his Company Accounts
and invested in one or more of the Investment Funds described in Section 5.01
and in the percentages designated by the Member in the investment election
filed pursuant to Section 5.02 effective for the most recent December 31.
3.06 RETURN OF COMPANY CONTRIBUTIONS.
(a) If a Company Contribution is made to the Trust because of a
good faith mistake of fact, then, within one year of the date of payment of
such Company or Employer contribution to the Trust, the Company or Employer
shall have the right (i) to recover an amount equal to the excess of (A) the
amount of such Company or Employer contribution over (B) the amount that would
have been contributed had a mistake of fact not occurred, or (ii) to allow all
or a portion of such amount to remain in the Plan, to be forfeited and applied
to or allocated with other forfeitures at the end of such Plan Year.
(b) Each contribution made to the Trust shall be made on the
condition that it is currently deductible by the Company or Employer under Code
Section 404 for the taxable year with respect to which the contribution is
made. If a contribution subsequently is determined, whether in whole or in
part, not to be currently deductible as provided in the preceding sentence,
then, within one year of the
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date of disallowance of the deduction of such Company Contribution, an amount
equal to the disallowed deduction shall be returned to the Company or Employer.
(c) Earnings attributable to a contribution that is returned
pursuant to Subsection (a) or (b) above shall not be withdrawn, but losses
attributable thereto shall reduce the amount returned to the Company or
Employer.
SECTION 4
MEMBER CONTRIBUTIONS
4.01 PROCEDURE FOR MAKING CONTRIBUTIONS.
(a) AFTER-TAX CONTRIBUTIONS. Subject to the limitations set
forth in Sections 4.02, 4.03, 4.04 and 4.05, each Member may contribute
to the Plan an amount equal to not less than 1% nor more than 15% (in whole
percentage points) of his Pay, or beginning July 1, 1996, a flat dollar amount
of not less than $2.00 and not more than $10.00 per Pay period, as he shall
have designated pursuant to procedures established by the Company (which may
establish lower permissible After-Tax Contributions for Highly Compensated
Employees); provided, however, that a Member shall not contribute, or elect to
have contributed on his behalf, amounts with respect to Pay received by him
after the close of the calendar year during which his employment terminates and
further provided that any Before-Tax Contributions made on behalf of the Member
shall reduce, by the percentage or dollar amount which he elects to have
contributed pursuant to Section 4.01(b)(i), the percentage or dollar amount of
Pay that the Member may contribute pursuant to this Section 4.01(a).
(b) BEFORE-TAX CONTRIBUTIONS. (i) Subject to the limitations
set forth below, each Member may elect that his Employer shall
contribute directly to the Trust Fund an amount equal to a whole
percentage of his Pay, not less than 1% nor greater than such
percentage as may be determined from time to time by the Company, or
beginning July 1, 1996, a flat dollar amount of not less than $2.00 and
not more than $10.00 per Pay period, which amount shall be his
Before-Tax Contribution. The maximum Before-Tax Contribution by a
Member determined to be a Highly Compensated Employee under Section
4.02, for the Plan Year in question, may be further restricted or
limited by the Company or Committee from time to time.
(ii) Commencing January 1, 1998, pursuant to Section 2.01(d),
each eligible Member shall be deemed to have elected to make a three
percent (3%) Before-Tax Contribution, unless the Member elects otherwise
in accordance with procedures established by the Committee.
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(c) Notwithstanding any election in accordance with Section
4.01(b), if the Committee at any time determines that all or any portion of the
Member's Before-Tax Contributions should be treated as After-Tax Contributions
in order for the Before-Tax Contribution provisions of the Plan to quality as
a "qualified cash or deferred arrangement" for purposes of Code Section 401(k),
or if the Actual Deferral Percentage standards set forth in Code Section
401(k)(3) are not met at the end of the Plan Year; then the Committee, in its
sole and absolute discretion, (i) may, in accordance with Section 4.02(b)
below, limit the amount which shall be contributed by the Employer as
Before-Tax Contributions after the date of such determination on behalf of all
or any portion of the Members and (ii) may, except with respect to situations
in which Section 4.01(h) applies, (and prior to March 15 of the calendar year
following the Plan Year in which such contributions are made) declare all or
such portion of the Before-Tax Contributions theretofore or thereafter made on
behalf of all or a portion of the Members to be After-Tax Contributions.
(d) The Employer shall (i) deduct a Member's After-Tax
Contributions from the Pay of the Member in such installments as the Employer
my deem appropriate, (ii) contribute a Member's Before-Tax Contributions
on behalf of the Member, and (iii) reduce the Pay that is paid to the Member
directly in cash by an amount equal to the Member's Before-Tax Contributions in
such installments as the Employer shall deem appropriate. The amounts so
deducted and so contributed shall be paid by the Employer to the Trustee not
later than 15 days following the end of the month with respect to which such
amounts are to be so deducted and contributed or within such shorter period of
time as may be designated under the Code, ERISA or related regulations. The
Employer may, from time to time, make estimated contribution payments to the
Trustee during each month.
(e) Effective with the first payroll period paid in any calendar
month, or as of such other effective time as may be determined by the
Committee, a Member may elect to change the rate of his After-Tax Contributions
to any other rate permitted by Subsection (a) of this Section 4.01 and may
elect to change the amount to be contributed by the Employer directly to the
Trust Fund as Before-Tax Contributions to an amount equal to an amount
permitted by Subsection (b) of this Section 4.01 with respect to such
contributions to be made after the effective date of the election, pursuant to
procedures established by the Committee.
(f) Not later than 15 days prior to the beginning of a payroll
period of a Member, or not later than such other date as may be determined by
the Committee, such Member may elect, pursuant to procedures established by the
Committee, (i) to suspend making After-Tax Contributions and (ii) that the
Employer should suspend making Before-Tax Contributions on his behalf, all as
of the beginning of such payroll period. As of the first day of any calendar
month after the date of such suspension(s) and with at least 15 days' prior
notice, or as of such other date and with
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such notice as may be determined by the Committee, such Member may elect
(i) to resume making After-Tax Contributions and (ii) that the Employer shall
resume making Before-Tax Contributions on his behalf, by indicating any amount
of contributions permitted under Subsection (a) and designating an amount equal
to any amount of Pay as Before-Tax Contributions that is permitted under
Subsection (b) hereof.
(g) Contributions pursuant to this Section 4.01 shall be credited
to Member Accounts.
(h) Notwithstanding any election in accordance with paragraph (b)
of this Section 4.01, the total amount of a Member's Before-Tax Contributions
and other contributions made by the Member under Code Section 401(k) to
another plan qualified under Code Section 401(a) for any calendar year shall
not exceed $9,500 (as adjusted from time to time by the Secretary of the
Treasury or his delegate, pursuant to Code Section 415(d)). If any Member
may reach the $9,500 limit (as adjusted) the Committee can direct that all or
any portion of such Member's Contributions during such year shall be After-Tax
Contributions regardless of such Member's elections pursuant to Sections
4.01(a) and 4.01(b).
4.02 LIMITATIONS ON BEFORE-TAX CONTRIBUTIONS.
(a) Notwithstanding the foregoing provisions of this Section 4,
the Committee shall limit the amount of Before-Tax Contributions made on
behalf of each "Highly Compensated Employee" (as hereinafter defined) to the
extent necessary to ensure that either of the following tests is satisfied:
(i) The "Actual Deferral Percentage" (as hereinafter
defined) of the group of eligible Highly Compensated Employees
is not more than the Actual Deferral Percentage of all other eligible
Associates ("non-Highly Compensated Employees") multiplied by 1.25; or
(ii) The excess of the Actual Deferral Percentage for the
group of eligible Highly Compensated Employees over that of all other
eligible Associates is not more than two percentage points, and
the Actual Deferral Percentage for the group of eligible Highly
Compensated Employees is not more than the Actual Deferral Percentage
of all other eligible Associates multiplied by 2.0.
(iii) Effective January 1, 1997, the Actual Deferral
Percentage for non-Highly Compensated Employees used in satisfying
the tests set forth in (i) and/or (ii) above may be, for any Plan Year,
the Actual Deferral Percentage for non-Highly Compensated Employees for
the immediately preceding Plan Year, as determined by the Company in
the manner permitted by law.
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For the purposes of this Section 4.02, Section 4.04 and Section 4.05,
"eligible" means eligible to be a Member of this Plan pursuant to Section
2.01(b)(1).
For purposes of Sections 4.02, 4.04 and 4.05, the term "Highly
Compensated Employee" shall be determined in accordance with Code Section
414(q) and with such rules and regulations as shall be promulgated by the
Internal Revenue Service thereunder and shall mean an Associate who, at any
time during such Plan Year or the preceding Plan Year (i) was a 5% owner (as
defined in Code Section 416(i)(1)) with respect to an Employer, (ii) earned
more than $66,000 of "compensation," (as defined in Code Section 414(q)(7)) and
was among the "top-paid group" (as defined in Code Section 414(q)(4)), (iii)
earned more than $100,000 of "compensation," or (iv) was one of the fifty
highest-paid officers who earned more than $60,000 of "compensation" (or, if
greater, 50% of the defined benefit plan dollar limit in effect under Code
Section 415(b)(1)(A) with respect to such year). For purposes of Sections
4.02, 4.04 and 4.05, the $66,000 and $100,000 amounts are to be indexed at the
same time and in the same manner as is the dollar limit applicable to defined
benefit plans under Code Section 415. Notwithstanding any other provision of
this Plan, the Committee may prescribe that a "Highly Compensated Employee"
shall be determined under the calendar year election method described in
Treasury Regulation 1.414(q) 1T, Q&A 14(b). Such election, if made, shall
apply to all other plans maintained by an Employer that are qualified under
Code Section 401(a).
Notwithstanding any provision of this Section 4 to the contrary,
effective January 1, 1997, the term "Highly Compensated Employee" shall be
limited to an Associate who (i) is a 5% owner of an Employer (as determined
above) in the current or preceding Plan Year or (ii) had "compensation" in the
preceding Plan Year greater than $80,000 (as indexed in the manner described
above) and was among the "top paid group."
(b) Notwithstanding the provisions of the foregoing paragraph,
(i) In the case of the Plan Year for which the relevant
determination is being made, an Associate not described in subparagraph
(ii), (iii) or (iv) of the foregoing paragraph for the preceding
calendar year (without regard to this subparagraph (b)) shall not be
treated as being described in subparagraph (ii), (iii) or (iv) above
unless such Associate is a member of the group consisting of the 100
Associates paid the greatest "compensation" during the Plan Year for
which such determination is being made; and
(ii) A former Associate shall be treated as a Highly
Compensated Employee if (A) such Associate was a Highly Compensated
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Employee when such Associate separated from service, or (B) such
Associate was a Highly Compensated Employee at any time after attaining
age 55.
(iii) For purposes of this Section 4.02, the term "Actual
Deferral Percentage" shall mean, for a specified group of Associates
for a Plan Year, the average of the ratios (calculated separately for
each person in such group) of
(A) The aggregate of the Before-Tax Contributions
(and such other contributions which, in accordance with applicable
rules and regulations promulgated by the Internal Revenue Service,
may be aggregated with such Before-Tax Contributions for purposes of
demonstrating compliance with the requirements of Code Section
401(k)(3)) which are actually payable to the Trust on behalf of
each such Associate, to
(B) Such Associate's compensation (as determined
under Code Section 414(s)) for such Plan Year.
In the event it is determined prior to any payroll period that the
amount of Before-Tax Contributions elected to be made thereafter would cause
the limitation prescribed in this Section 4.02 to be exceeded, the amount of
Before-Tax Contributions allowed to be made on behalf of Highly Compensated
Employees (and/or such other Members as the Committee may prescribe) shall be
reduced to a rate determined by the Committee, and any elections of future
Before-Tax Contributions which exceed the rate determined by the Committee
shall be deemed to be After-Tax Contributions for the remainder of the Plan
Year, notwithstanding the limitations on contribution rate changes in Section
4.01(e). Except as is hereinafter provided, the Members to whom such reduction
is applicable and the amount of such reduction shall be determined pursuant to
such uniform and nondiscriminatory rules as the Committee shall prescribe.
(c) Notwithstanding the provisions of the foregoing paragraph,
with respect to any Plan Year in which Before-Tax Contributions on behalf of
Highly Compensated Employees exceed the applicable limit set forth in this
Section 4.02, the Committee shall reduce the amount of the excess Before-Tax
Contributions made on behalf of the Highly Compensated Employees (by reducing
such contributions in order of Actual Deferral Percentages beginning with the
highest), and shall distribute such excess Before-Tax Contributions (along with
earnings attributable to such excess Before-Tax Contributions, as determined
pursuant to such rules and regulations as shall be prescribed by the Internal
Revenue Service) to the affected Highly Compensated Employees as soon as
practicable after the end of such Plan Year, and in all events prior to the end
of the next following Plan Year. Effective January 1, 1997, any excess
Before-Tax Contributions to be returned to Highly Compensated Employees
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shall be calculated (i.e., reduced) and distributed by first reducing the
Before-Tax Contributions of the Highly Compensated Employees with the largest
dollar amount(s) of Before-Tax Contributions (rather than with the highest
Percentage(s)). In lieu of such distribution of excess Before-Tax
Contributions, the Committee may, to the extent permitted by applicable rules
and regulations (and (a) except with respect to situations in which Section
4.01 (h) applies, and (b) prior to March 15 of the calendar year following the
Plan Year in which such contributions are made), recharacterize as After-Tax
Contributions for such Plan Year all or a portion of the Before-Tax
Contributions for Members who are Highly Compensated Employees to the extent
necessary to comply with the applicable limit set forth in this Section 4.02.
(d) Notwithstanding any provision of Sections 4.02(c) to the
contrary, if Before-Tax Contributions on behalf of Highly Compensated Employees
in excess of the applicable limit set forth in Section 4.02 either are
distributed or are recharacterized, any Company Matching Allocation which would
have been attributable to the amounts distributed or recharacterized shall be
held unallocated in a suspense account and, as of the end of the Plan Year,
forfeited and added to and allocated with Company Contributions in the next
following Plan Year.
4.03 DISTRIBUTIONS OF EXCESS DEFERRALS.
(a) Notwithstanding any other provision of the Plan, Excess
Before-Tax Deferrals (as hereinafter defined) and earnings allocable thereto
as determined pursuant to such rules and regulations as are prescribed by the
Internal Revenue Service, may be distributed no later than April 15 to Members
who claim such allocable Excess Before-Tax Amounts (which shall be the "Excess
Before-Tax Deferrals" plus earnings, if any) for the preceding calendar year.
(b) For purposes of this Section 4.03, "Excess Before-Tax
Deferral" means the amount of elective deferrals (within the meaning of
Code Section 402(g)(3)) which is a Member Contribution under Section 4.01 for a
calendar year that the Member allocates to this Plan pursuant to the claim
procedure set forth in subsection 4.03(c) hereof.
(c) The Member's claim shall be in writing; shall be submitted
to the Committee no later than April 1; shall specify the amount of the
Member's Excess Before-Tax Deferral for the preceding calendar year; and shall
be accompanied by the Member's written statement that if such amounts are not
distributed, the Excess Before-Tax Deferrals, when added to amounts deferred
under other plans or arrangements described in Code Sections 401(k), 408(k) or
403(b), exceeds the limit imposed on the Member in accordance with the
applicable provisions of the Code for the year in which the deferral occurred.
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(d) Notwithstanding any provision of Sections 3 or 4 to the
contrary, any Company Matching Allocation which would have been attributable
to an Excess Before-Tax Deferral distributed to a Member under Section 4.02(a)
shall not be retained or distributed, but shall be held unallocated in a
suspense account and, as of the end of the Plan Year, forfeited and added to
and allocated with Company Contributions in the next following Plan Year.
4.04 LIMITATIONS ON AFTER-TAX CONTRIBUTIONS.
(a) Notwithstanding the foregoing provisions of this Section 4,
the Committee shall limit the amount of After-Tax Contributions made by or
on behalf of each eligible "Highly Compensated Employee" (as hereinafter
defined) to the extent necessary to ensure that either of the following tests
is satisfied:
(i) The "Actual After-Tax Contribution Percentage" (as
hereinafter defined) for the group of Highly Compensated Employees is
not more than the Actual After-Tax Percentage of all other eligible
Associates multiplied by 1.25; or
(ii) The excess of the Actual After-Tax Contribution
Percentage for the group of eligible Highly Compensated Employees over
that of all other eligible Associates is not more than two percentage
points, and the Actual After-Tax Contribution Percentage for the group
of eligible Highly Compensated Employees is not more than the Actual
After-Tax Contribution Percentage of all other Associates multiplied by
2.0.
(iii) Effective January 1, 1997, the Actual After-Tax
Contribution Percentage for non-Highly Compensated Employees used in
satisfying the tests set forth in (i) and/or (ii) above may be, for any
Plan Year, the Actual After-Tax Contribution Percentage for non-Highly
Compensated Employees for the immediately preceding Plan Year, as
determined by the Company in the manner permitted by law.
(b) For purposes of this Section 4.05(a), the term "Actual
After-Tax Contribution Percentage" shall mean, for a specified group of
Associates, the average of the ratios (calculated separately for each person
in such group) of
(i) The aggregate of the After-Tax Contributions (and such
other contributions which, in accordance with applicable rules and
regulations promulgated by the Internal Revenue Service, may be
aggregated with such After-Tax Contributions for purposes of
demonstrating compliance with the requirements of Code Section
401(m)(2)) which are actually payable to the Trust by or on behalf of
each such Associate, to
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(ii) Such Associate's compensation (as determined under Code
Section 414(s)) for such Plan Year.
(c) In the event it is determined prior to any payroll period
that the amount of After-Tax Contributions to be made thereafter would
cause the limitation prescribed in this Section 4.04 to be exceeded, the amount
of such contributions allowed to be made by or on behalf of Highly Compensated
Employees (and/or such other Members as the Committee may prescribe) shall be
reduced, notwithstanding the limitations on contribution rate changes in
Section 4.01(e). Except as is hereinafter provided, the Members to whom such
reduction is applicable and the amount of such reduction shall be determined
pursuant to such uniform and nondiscriminatory rules as the Committee shall
prescribe.
(d) Notwithstanding the foregoing paragraph, with respect to any
Plan Year in which After-Tax Contributions made by or on behalf of Highly
Compensated Employees exceed the applicable limit set forth in this Section
4.04(a), the Committee shall reduce the amount of the excess After-Tax
Contributions made by or on behalf of the Highly Compensated Employees (by
reducing such contributions in accordance with such rules and regulations as
the Internal Revenue Service shall prescribe) in the order of the Actual
After-Tax Contribution Percentages of such Highly Compensated Employees and
beginning with the highest, but only to the extent necessary to comply with the
limitations, and shall distribute such excess After-Tax Contributions (along
with earnings attributable to such excess contributions, as determined pursuant
to such rules and regulations as shall be prescribed by the Internal Revenue
Service) to the affected Highly Compensated Employees as soon as practicable
after the end of such Plan Year, and in all events prior to the end of the next
following Plan Year. Effective January 1, 1997, any excess After-Tax
Contributions to be returned to Highly Compensated Employees shall be
calculated (i.e., reduced) and distributed by first reducing the After-Tax
Contributions of the Highly Compensated Employees with the largest dollar
amount(s) of After-Tax Contributions (rather than the highest percentages).
4.05 LIMITATIONS ON COMPANY MATCHING CONTRIBUTIONS.
(a) Notwithstanding the foregoing provisions of Sections 3.02 or
this Section 4, the Committee shall limit the amount of Company Matching
Contributions allocated on behalf of each eligible Highly Compensated Employee
to the extent necessary to ensure that either of the following tests is
satisfied:
(i) The "Actual Matching Contribution Percentage" (as
hereinafter defined) for the group of Highly Compensated Employees is
not
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more than the Actual Matching Contribution Percentage of all other
eligible Associates multiplied by 1.25; or
(ii) The excess of the Actual Matching Contribution
Percentage for the group of eligible Highly Compensated Employees over
that of all other eligible Associates is not more than two percentage
points, and the Actual Matching Contribution Percentage for the group
of eligible Highly Compensated Associates is not more than the Actual
Matching Contribution Percentage of all other Associates multiplied by
2.0.
(iii) Effective January 1, 1997, the Actual Matching
Contribution Percentage for non-Highly Compensated Employees used in
satisfying the tests set forth in (i) and/or (ii) above shall be, for
any Plan Year, the Actual Matching Contribution Percentage for
non-Highly Compensated Employees for the immediately preceding Plan
Year, unless elected otherwise by the Company in the manner permitted
by law.
(b) For purposes of this Section 4.05, the term "Matching
Contribution" shall mean any portion of the Company Contribution deemed to be a
matching contribution under Section 3.02, allocated to the Accounts of Members
for a Plan Year.
(c) For purposes of this Section 4.05, the term "Actual Matching
Contribution Percentage" shall mean, for a specified group of Associates, the
average of the ratios (calculated separately for each person in such group) of
(i) The aggregate of the Matching Contribution on behalf of
each such Associate, to
(ii) Such Associate's compensation (as determined under Code
Section 414(s)) for such Plan Year.
(d) With respect to any Plan Year in which Matching Contributions
on behalf of Highly Compensated Employees exceed the applicable limit set forth
in this Section 4.05(a), the Committee shall reduce the amount of the
excess Matching Contribution on behalf of the Highly Compensated Employees (by
reducing such amounts in accordance with such rules and regulations as the
Internal Revenue Service shall prescribe) in the order of the Actual Matching
Contribution Percentages of such Highly Compensated Employees and beginning
with the highest, but only to the extent necessary to comply with the
limitations, and shall distribute such excess Matching Contribution (along with
earnings attributable to such excess allocations, as determined pursuant to
such rules and regulations as shall be prescribed by the Internal Revenue
Service) to the affected Highly Compensated Employees as soon as practicable
after the
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end of such Plan Year, and in all events prior to the end of the next
following Plan Year, so long as such distribution is in accordance with the
rules and regulations governing Code Section 401(m). Notwithstanding the
foregoing, effective January 1, 1997, any excess Matching Contributions to be
returned to Highly Compensated Employees shall be calculated (i.e., reduced)
and distributed by first reducing the Company Matching Contributions of the
Highly Compensated Employees with the largest dollar amount(s) of Matching
Contributions (rather than the highest Matching Contribution Percentages).
4.06 AGGREGATE LIMITATIONS.
(a) To the extent required under Code Section 401(m) or
Regulations thereunder, Company Matching Contributions and Member After-Tax
Contributions shall be aggregated on a Member by Member basis and the "Actual
After-Tax Contribution Percentage" test under Section 4.04 and the "Actual
Matching Contribution Percentage" test under Section 4.05 in effect shall be
performed on a combined basis.
(b) The Secretary of the Treasury may impose, and the Plan shall
comply with, Regulations to prevent the multiple use of the limitations in
Section 4.02(b)(i) and (ii) above and in Sections 4.04 and 4.05 also above with
respect to contributions by or on behalf of Highly Compensated Employees
provided, however, that in lieu of such limitations (which are also contained
in Code Sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii)), the Plan may elect
to satisfy any alternate, combined or multiple use limitations permitted under
such Regulations.
(c) In furtherance of the foregoing and any other provision of the
Plan to the contrary notwithstanding, the provisions of this Section 4.06 shall
apply with respect to a Plan Year if the conditions of both (i) and (ii) below
are met:
(i) the sum of (1) the "Actual Deferral Percentage" (as
defined in Section 4.02(b)), (2) the "Actual After-Tax Contribution
Percentage" (as defined in Section 4.04) and (3) the "Actual
Matching Contribution Percentage" (as defined in Section 4.05(b)) for
the group of eligible Associates who are Highly Compensated Employees
exceeds the "Aggregate Limit" (as hereinafter defined), and
(ii) both (1) the Actual Deferral Percentage for the group of
eligible Associates who are Highly Compensated Employees exceeds 125% of
the Actual Deferral Percentage of all other eligible Associate and (2)
the combined Actual After-Tax Contribution Percentage and Actual
Matching Contribution Percentage of such group of Highly Compensated
Employees
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exceeds 125% of the combined Actual After-Tax Contribution
Percentage and Actual Matching Contribution Percentage of all such
other Associates.
The term "Aggregate Limit" means the greater of the sum of (i) and (ii)
below or the sum of (iii) and (iv) below:
(i) 125% of the greater of (1) the Actual Deferral
Percentage of the group of eligible Associates who are not Highly
Compensated Employees, or (2) the combined Actual After-Tax and
Matching Contribution Percentage of the group of eligible Associates
who are not Highly Compensated Employees, and
(ii) two plus the lesser of (i)(1) or (i)(2) above (but in
no event more than 200% of the lesser of (i)(1) or (i)(2) above).
(iii) 125% of the lesser of (1) the Actual Deferral
Percentage of the group of eligible Associates who are not Highly
Compensated Employees, and
(iv) two plus the greater of (iii)(1) or (iii)(2) above
(but in no event more than 200% of the greater of (iii)(1) or (iii)(2)
above).
If the Actual Deferral Percentage and/or combined Actual After-Tax
Contribution and Actual Matching Contribution Percentage for the group of
eligible Associates who are Highly Compensated Employees, determined after any
corrective distribution or recharacterization of excess amounts in accordance
with the provisions of Section 4.02(b) and 4.04 have been effectuated, exceed
an amount which would cause the limits set forth in the foregoing provisions of
this Section 4.06 to be exceeded, first the amount of After-Tax Contributions
then the amount of Company Matching Contributions and then the amount of
Before-Tax Contributions shall be reduced, in the same manner and at the same
time as such contributions are reduced in accordance with Sections 4.02(b) and
4.04, but only to the extent necessary to bring the Plan into compliance with
the applicable limits set forth in this Section 4.06.
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SECTION 5
INVESTMENT PROVISIONS
5.01 INVESTMENT FUNDS.
(a) There shall be established as part of the Trust Fund a
reasonable range of investment options which may include a money market or
stable value fund, a fixed income fund, a common stock fund, a Payless Common
Stock Fund and a May Common Stock Fund. The May Common Stock Fund shall not be
available for investment of new contributions after May 4, 1996, and shall be
eliminated entirely as an investment option not later than December 31, 1997.
If, on or before December 31, 1997, a Member has failed to direct the
reinvestment of amounts in his May Common Stock Fund, he shall be deemed to
have elected to have such amounts invested in the money market or stable value
fund. The Committee may from time to time, in its discretion, change, delete
or add Investment Funds available within the Trust Fund; provided that unless
and until the Plan is amended accordingly, the Plan shall continue to provide a
Payless Common Stock Fund as an investment option. Effective immediately
following the Merger, a reference to the "Payless Common Stock Fund" and to
"Payless Stock" shall be deemed to be a reference to a fund invested in, and
shares of common stock of, the Company rather than a reference to Payless
ShoeSource, Inc., a Missouri corporation and the sponsor of the Plan
immediately prior to the Merger.
(b) Income from and proceeds of sales of investments in each
Investment Fund shall be reinvested in the same Investment Fund. Any income or
other taxes payable with respect to a Fund shall be charged to such Fund.
(c) A Trustee may, from time to time, make temporary investments
in short term obligations of the United States Government, commercial paper, or
other investments of a short term nature, pending investment in an Investment
Fund.
5.02 INVESTMENT DIRECTION.
(a) A Member may elect that his Member Contributions for each
calendar month be invested in 1% increments totaling 100% in one or more of the
Investment Funds. Such election must be made with at least one day notice
prior to each calendar month or prior to membership in the Plan, pursuant to
procedures prescribed by the Committee, or on such other date and subject to
other conditions as may be determined by the Committee. Such election shall be
effective until and unless a Member makes a different election for any period,
but only as provided for under Subsection 5.02(b) and Subsection 5.02(c). If
the Member fails to file a timely initial investment election, he shall be
deemed to have elected to have 100% of his Member Contributions and his Company
Profit Sharing Contributions invested in the Money Market Fund (or such other
stable, fixed income investment as may be determined by the Committee) and 100%
of his Company Matching Contributions in the Payless Common Stock Fund.
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For the Plan Year ended December 31, 1996 and until such time as the
Committee determines otherwise and so notifies Members, a Member's share of any
Company Contributions, when allocated as of Plan Year-end, shall be invested in
the same Investment Funds in the same proportions as the Member has elected in
connection with investment of his Member Contributions at such Plan Year-end.
(b) A Member may change his election with respect to future
Member and Company Contributions effective with the first payroll period paid
in each calendar month with at least one day prior written notice to the
Committee pursuant to procedures prescribed by the Committee, or on such other
date and subject to other conditions as may be determined by the Committee and
may not change his election in any other manner except as provided in
Subsection 5.02(c).
(c) Effective as of the last day of each calendar month with at
least one day prior notice to the Committee, or as of such other date
determined by the Committee, and pursuant to procedures prescribed by the
Committee, a Member may elect to have any or all of the value in any of the
Investment Funds which are credited to his Member and/or Company Accounts
transferred and invested in any one or more of the Investment Funds under
Section 5.01.
SECTION 6
ACCOUNTS
6.01 MEMBER ACCOUNTS. The Committee shall maintain or cause to be
maintained for each Member under each Investment Fund in which his Member
Contributions are invested separate Member Accounts which shall reflect the
portion of his interest in such Investment Fund which is attributable to his
contributions. The Member's After-Tax Contributions shall be credited to a
separate Member After-Tax Account. The Member's Before-Tax Contributions shall
be credited to a separate Member Before-Tax Account.
6.02 COMPANY ACCOUNTS. The Committee shall maintain or cause to be
maintained for each Member under each Investment Fund in which his Company
Contributions are invested separate Company Accounts which shall reflect the
portion of his interest in such Investment Fund which is attributable to
Company Contributions, as well as to contributions made by an Employer under
Prior Plans and to any income or earnings attributable to such Company
Contributions and Prior Plan contributions.
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The Member's Company Matching Contributions shall be credited to a separate
Company Matching Contribution Account. The Member's Company Profit Sharing
Contribution, if any, shall be credited to a separate Company Profit Sharing
Contribution Account.
6.03 MAINTENANCE OF ACCOUNTS. For the purposes of maintaining Accounts
pursuant to this Section 6, each Investment Fund, shall be divided into Units,
and the Interest of each Member in such Investment Fund shall be evidenced by
the number of Units in such Investment Fund credited to his Accounts.
6.04 VALUATION OF ACCOUNTS. As of each Valuation Date the Committee
shall determine the value of a Unit in each Account by dividing the current
market value of all property in each such Account as of such Valuation Date
(after deducting any expenses or other amounts including withdrawals property
chargeable against such Account) by the number of Units then outstanding to the
credit of all Members in each such Account.
6.05 MEMBER STATEMENTS. The Committee shall furnish or cause to be
furnished to each Member a statement of his Company and Member Accounts, at
least once each year, or more frequently if required by applicable law.
6.06 SHARES OF THE MAY DEPARTMENT STORES COMPANY ("MAY STOCK") IN THE
MAY COMMON STOCK FUND. The provisions of this Section 6.06 shall govern the
shares of common stock in the May Common Stock Fund, including the shares of
stock transferred to the Plan from the May Plan.
(a) The May Stock shall be held by the Trustee in a separate fund
of the Trust designated as the May Common Stock Fund. Subject to the
further provisions of Section 6.07, the May Common Stock Fund shall be invested
only in shares of May Stock. Dividends received by the Trustee in respect of
the May Stock shall be first used to pay expenses of the May Common Stock Fund
and then invested in the Money Market Fund.
(b) A Member may elect to sell some or all of the Units in the May
Common Stock Fund attributable to either his Member or Company Accounts. Such
election shall be made in such manner as provided by the Committee and will be
effective as of the last day of the calendar month in which the election is
recorded.
Notwithstanding the foregoing, the Committee may permit Members to
elect to sell Units as of any monthly valuation date and under such further
conditions as may be determined from time to time which shall be applicable to
all Members with Units in the May Common Stock Fund.
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(c) The net proceeds from the sale of a Member's interest in the
May Common Stock Fund shall be invested pursuant to the Member's election in
one or more of the other Investment Funds described in Section 5.02.
(d) At such time as all shares of May Common Stock attributable to
Units held in the May Common Stock Fund have been distributed or sold pursuant
to Member election, the May Common Stock Fund shall terminate. Until such
time as such Fund has been terminated, it shall be valued at the same time and
in the same manner as the Investment Funds described in Section 5.02, and
maintained to and valued in Member Accounts in accordance with Sections 6.03.
(e) Each Member (or beneficiary of a deceased Member) who has
Accounts in the May Common Stock Fund shall, as a named fiduciary within the
meaning of Section 403(a)(1) of ERISA, have the right to direct the Trustee with
respect to the vote of the number of shares of May Stock attributable to Units
credited to him in the May Common Stock Fund as of the latest practicable
Valuation Date prior to each meeting of shareowners of May. For such purpose
the Trustee shall furnish to each such Member prior to each such meeting
the proxy statement for such meeting, together with a form to be returned
to the Trustee on which may be set forth the Member's instructions as to
the manner of voting such shares of stock. Each Member or Beneficiary who
has the right under this section to direct the Trustee with respect to voting
shares and who provides timely instructions to the Trustee shall, as a named
fiduciary, be considered to have directed the Trustee to vote a pro rata
portion of the shares attributable to Units for which the Trustee receives no
timely instructions and shares which have not been credited as of the latest
practicable Valuation Date. Upon receipt of such instructions, the Trustee
shall vote such shares in accordance therewith. If, within such reasonable
period of time prior to any such meeting of the shareowners as may be specified
by the Trustee, no instructions shall have been received by the Trustee from
such Member, the Trustee shall vote, in person or by proxy, such shares of
stock proportionally in the same manner as the May Stock for which the Trustee
received voting instructions from Members. The Trustee shall not divulge the
instruction of any Member. The Trustee shall also be entitled to vote in its
sole discretion, in person or by proxy, all shares of May Stock held by it upon
any matters to which as a practical matter no instructions can be given by
Members prior to the meeting.
(f) Each Member who has Accounts in the May Common Stock Fund
shall, as a named fiduciary within the meaning of Section 403(a)(1) of ERISA,
have the right with respect to the number of shares of May Stock attributable
to Units credited to him in the May Common Stock Fund as of the latest
practicable Valuation Date, to direct the Trustee in writing as to the manner
in which to respond to a tender or exchange offer with respect to May Stock,
and the Trustee shall respond in accordance with the instructions so received.
The Trustee shall utilize its best efforts to
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timely distribute or cause to be distributed to each Member such information
as will be distributed to shareowners of May in connection with any such
tender or exchange offer, together with a form requesting instructions on
whether or not such shares will be tendered or exchanged. If the Trustee shall
not receive timely direction from a Member as to the manner in which to respond
to such a tender or exchange offer, the Trustee shall not tender or exchange
any shares of May Stock with respect to which such Member has the right of
direction. The Trustee shall not divulge the instructions of any Member.
Shares in May Stock Fund Accounts of Members who direct that such shares be
tendered or exchanged shall be transferred to a new fund.
6.07 SHARES OF THE COMPANY RECEIVED IN RESPECT OF MAY STOCK. In the
event that shares of the Company were distributed to Members' Accounts in the
May Common Stock Fund, such shares were segregated and transferred to the
Payless Common Stock Investment Fund.
6.08 SHARES OF PAYLESS SHOESOURCE, INC. ("PAYLESS STOCK") IN THE
PAYLESS COMMON STOCK FUND.
(a) Each Member (or beneficiary of a deceased Member) who has
Accounts invested in the Payless Common Stock Fund shall, as a named fiduciary
within the meaning of Section 403(a)(1) of ERISA, have the right to direct the
Trustee with respect to the vote of the number of shares of Payless Stock
attributable to Units credited to him in the Payless Common Stock Fund as of
the latest practicable Valuation Date prior to each meeting of shareowners of
the Company. For such purpose the Trustee shall furnish to each such Member
prior to each such meeting the proxy statement for such meeting, together with
a form to be returned to the Trustee on which may be set forth the Member's
instructions as to the manner of voting such shares of stock. Each member or
Beneficiary who has the right under this Section 6.08 to direct the Trustee
with respect to voting shares and who provides timely instructions to the
Trustee shall, as a named fiduciary, be considered to have directed the Trustee
to vote a pro rata portion of the shares attributable to Units for which the
Trustee receives no timely instructions and shares which have not been credited
as of the latest practicable Valuation Date. Upon receipt of such
instructions, the Trustee shall vote such shares in accordance therewith. If,
within such reasonable period of time prior to any such meeting of the
shareowners as may be specified by the Trustee, no instruction shall have been
received by the Trustee from such Member, the Trustee shall vote, in person or
by proxy, such shares of stock proportionally in the same manner as the Payless
Stock for which the Trustee received voting instructions from Members. The
Trustee shall not divulge the instructions of any Member. The Trustee shall
also be entitled to vote in its sole discretion, in person or by proxy, all
shares of Payless Stock held by it upon any matters to which as a practical
matter no instructions can be given by Members prior to the meeting.
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(b) Each Member (or beneficiary of a deceased Member) who has
Accounts invested in the Payless Common Stock Fund shall, as a named fiduciary
within the meaning of Section 403(a)(1) of ERISA, have the right with respect
to the number of shares of Payless Stock attributable to Units credited to him
in the Payless Common Stock Fund as of the latest practicable Valuation Date,
to direct the Trustee in writing as to the manner in which to respond to a
tender or exchange offer with respect to Payless Stock, and the Trustee shall
respond in accordance with the instructions so received. The Trustee shall
utilize its best efforts to timely distribute or cause to be distributed to
each Member such information as will be distributed to shareowners of the
Company in connection with any such tender or exchange offer, together with a
form requesting instructions on whether or not such shares will be tendered or
exchanged. If the Trustee shall not receive timely direction from a Member as
to the manner in which to respond to such a tender or exchange offer, the
Trustee shall not tender or exchange any shares of Payless Stock with respect
to which such Member has the right of direction. The Trustee shall not divulge
the instructions of any member. The proceeds from the tender or exchange of
shares attributable to Units in Payless Common Stock Investment Fund accounts
of members shall be transferred to one of the Investment Funds described in
Section 5.01 and pursuant to a procedure established by the Committee.
6.09 VESTING IN MEMBER AND COMPANY ACCOUNTS.
(a) VESTING SCHEDULE. A Member shall have a fully vested
interest at all times (i) in his Member Accounts and (ii) in his Company
Profit Sharing Contribution Account balance determined as of July 31, 1997. A
Member who has completed at least two full Years of Service as of August 1,
1997 also shall be fully vested at all times (i) in his Company Matching
Contributions Account and (ii) in his Company Profit Sharing Contribution
Account determined at any time after July 31, 1997. The Company Matching
Contribution Account of a Member who is not or was not credited with at least
two Years of Service as of August 1, 1997 and his Company Profit Sharing
Contribution Account attributable to Company Profit Sharing Contributions, if
any, based on such Member's eligibility for such contributions after August 1,
1997, shall vest according to the following schedule:
Period of Service Vested Interest
----------------- ---------------
Fewer than 2 years 0%
2 years 25%
3 years 50%
4 years 75%
5 years or more 100%
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Notwithstanding the foregoing, a Member's interest in his Company Matching
Contribution Account and his Company Profit Sharing Contribution Account shall
become fully vested upon the Member's Retirement, death or Disability.
(b) CASH-OUT DISTRIBUTIONS TO PARTIALLY VESTED MEMBERS AND
RESTORATION OF FORFEITURES. If, pursuant to Section 9.01, a partially-vested
Member receives a cash-out distribution before he incurs a Forfeiture Break in
Service (as defined in clause (e) below), the cash-out distribution will result
in an immediate forfeiture of the nonvested portion(s) of the Member's Company
Matching and Company Profit Sharing Contribution Account(s). See clause (f)
below. A partially- vested Member is a Member whose Vested Interest,
determined under Section 6.09(a), in either his Company Matching Contribution
Account or his Company Profit Sharing Contribution Account, or both, is less
than 100%. A cash-out distribution is a distribution of the entire vested
portion of the Member's Account(s).
(i) A partially-vested Member who is reemployed by an
Employer after receiving a cash-out distribution of the vested portion
of his Account(s) shall have such forfeited amount restored, unless
the Member no longer has a right to restoration under this subparagraph
(i). The amount restored by the Plan Administrator shall be the same
dollar amount as the dollar amount of his Account(s) on the Valuation
Date immediately preceding the date of the cash-out distribution,
unadjusted for any gains or losses occurring subsequent to that
Valuation Date but reduced by the amount of the prior cash- out
distribution. Restoration of the Member's Account balance(s) includes
restoration of all Code Section 411(d)(6) protected benefits with
respect to the restored Account(s) in accordance with applicable
Treasury regulations. The Plan Administrator will not restore a
reemployed Member's Account balance(s) under this subparagraph (i) if
the Member has incurred a Forfeiture Break in Service (as defined in
clause (e) below.
(ii) If restoration of the Member's Account(s) is permitted
under subparagraph (i) above, the Plan Administrator will restore the
Member's Account(s) as of the last day of the Plan Year during
which such Member was reemployed by an Employer. To restore the
Member's Account(s), the Plan Administrator, to the extent necessary,
will allocate to the Member's Account(s):
(A) first, the amount, if any, of Member forfeitures
otherwise available for allocation under clause (f) below;
(B) second, deductible Employer contributions for the
Plan Year to the extent made under a discretionary formula; and
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(C) third, as otherwise permitted by law.
The Plan Administrator will not take into account any allocation under
this clause (b) in applying the limitation on allocations under Section
12.
(iii) The deemed cash-out rule applies to a 0% vested Member.
A 0% vested Member is a Member whose Account(s) derived from Employer
contributions is (are) entirely forfeitable at the time of his
termination of employment. Under the deemed cash-out rule, the Plan
Administrator will treat the 0% vested Member as having received a
cash-out distribution on the date of the Member's termination of
employment or, if the Member's Account(s) is (are) entitled to an
allocation of Employer contributions for the Plan Year in which he
terminates employment, on the last day of that Plan Year.
(c) PERIOD OF SERVICE--VESTING. For purposes of determining a
Member's Vested Interest in his Company Contributions Account(s) under clause
(a) above, a Member shall be credited with that number of "years of service"
determined by adding together all of the Employee's Periods of Service,
whether or not consecutive. Only whole years of service shall be taken
into account for purposes of applying the schedule set forth in clause (a)
above, and, for purposes of determining a Member's number of whole years of
service, non-successive Periods of Service must be aggregated, with thirty (30)
days of service being deemed to constitute one month and with either twelve
(12) months or 365 days of service being deemed to constitute one year. For
purposes of determining a Member's Period of Service, the Service Spanning
rules described in Section 1.47(g) shall apply.
(d) BREAK IN SERVICE--VESTING. For purposes of this Section
6.09, a "Break in Service" is a Period of Severance of at least twelve (12)
consecutive months.
(e) INCLUDED PERIODS OF SERVICE.
(i) For purposes of determining "Periods of Service" under
this clause (e), the Plan takes into account all Periods of Service an
Associate completes with an Employer or member of the Group (as defined
in Section 1.20), except:
(A) any Period of Service before the Plan Year in
which the Member attained the age of eighteen (18); and
(B) for the sole purpose of determining a Member's
Vested Interest of his Account(s) derived from Company
contributions which accrued for his benefit prior to a Forfeiture
Break in Service, the
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Plan shall disregard any Period of Service after the Member first
incurs a Forfeiture Break in Service. The Member incurs a
Forfeiture Break in Service when he incurs five (5) consecutive
Breaks in Service.
(f) FORFEITURE OCCURS. A Member's forfeiture, if any, of his
Account balance(s) derived from Company contributions occurs under the Plan on
the earlier of:
(i) the last day of the last pay period ending within the
Plan Year in which the Member first incurs a Forfeiture Break in
Service; or
(ii) the date the Member receives a cash-out distribution.
The Plan Administrator shall determine the percentage of a Member's
Account(s) forfeiture, if any, under this clause (f) solely by reference to the
vesting schedule of Section 6.09(a). As of the last day of each Plan Year, the
total amount of forfeitures which occurred during such Plan Year shall be
calculated and such amount shall be applied (i) to restore under (b) above any
amounts previously forfeited from rehired Members' Accounts, (ii) to pay
Administrative Expenses under Section 7.01 and (iii) the balance, if any, shall
be added to and allocated with the Company Matching Contribution for that Plan
Year.
(g) FORMER MAY PLAN MEMBERS. The provisions of this clause (g)
apply to a Member who previously was employed by the Employer, when it was part
of the Group which included The May Department Stores Company, and who at
the termination of his employment had Company Accounts in the May Plan which
were forfeited as a result of termination of employment. If such Member has
not incurred five consecutive one-year breaks in service, the value of the
Member's Company Account forfeited under the May Plan will be restored under
this Plan (in the manner described in clause (b) above) and will be 100%
vested.
SECTION 7
EXPENSES
7.01 ADMINISTRATIVE EXPENSES. To the extent permitted by applicable
law, the costs and expenses for administering this Plan, consisting of Trustee
fees and expenses, Investment Manager fees and expenses, fees and expenses of
outside experts, expenses of maintaining records under Section 6 of the Plan,
and all other administrative expenses of the Plan, shall be paid out of the
Trust Fund unless the Company elects to pay them with its own funds. Costs
incident to the purchase and sale of securities, such as brokerage fees,
commissions and stock transfer fees, are not
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regarded as administrative expenses and shall be borne by the appropriate
Investment Fund as determined by the Trustee or Committee.
SECTION 8
WITHDRAWALS DURING EMPLOYMENT
8.01 WITHDRAWALS PROHIBITED UNLESS SPECIFICALLY AUTHORIZED. No
withdrawal from the Plan shall be permitted prior to a Member's termination of
employment, except as provided in Section 8.02.
8.02 AUTHORIZED WITHDRAWALS.
(a) Prior to his termination of employment, a Member may elect to
withdraw, in cash, any or all of the value in his Member After-Tax Accounts.
However, in the event a Member elects to withdraw all or a portion of his
After-Tax Contributions made after August 1, 1997, such Member shall forfeit
his right to fifty percent (50%) of the Company Matching Contribution, if any,
otherwise allocable in connection with his Member Contributions for the Plan
Year in which the withdrawal occurs.
(b) Prior to his termination of employment, a Member may elect to
withdraw, in the event of a "hardship", an amount in cash equal to (i) the
total amount of the Before-Tax Contributions made to the Trust on his
behalf, or (ii) the value in his Member Before-Tax Account whichever is less.
In any event the amount withdrawn may not be greater than the amount determined
by the Committee as being required to meet the immediate financial need created
by the "hardship" and not reasonably available from other resources of the
Member, whichever amount is less. The term "hardship" means a heavy financial
hardship in light of immediate and heavy financial needs as determined by the
Committee in accordance with Internal Revenue Service regulations. The amount
of an immediate and heavy financial need may include any amounts necessary to
pay any federal, state or local taxes or penalties reasonably anticipated to
result from the distribution. The determination shall be made in a
nondiscriminatory manner. Hardship shall include but not be limited to the
following:
(i) Medical expenses described in Code Section 213(d),
previously incurred by the Member, the Member's spouse, or any of the
Member's dependents (as defined in Code Section 125) or necessary for
these persons to obtain medical care described in Section 213(d);
(ii) Purchase (excluding mortgage payments) of a principal
residence for the Member;
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(iii) Payment of tuition, related educational fees, and room
and board expenses for the next 12 months of post-secondary education
for the Member, his or her spouse, children, or dependents (as defined
in Code Section 152);
(iv) The need to prevent the eviction of the Member from his
or her principal residence or foreclosure on the mortgage of the
Member's principal residence.
The Committee may adopt written guidelines which identify additional
circumstances constituting hardship and which provide procedures to be
followed in the administration of hardship withdrawal requests, which
guidelines are hereby incorporated herein.
In addition, such hardship must be one which in the judgment of the
Committee, based on the Member's representations, cannot be relieved (1)
through reimbursement or compensation by insurance or otherwise, (2) by
reasonable liquidation of the Member's assets to the extent such liquidation
would not itself cause an immediate and heavy financial need, (3) by cessation
of Member Contributions under the Plan or (4) by other distributions from
employee benefit plans maintained by the Company or any other employer or by
borrowing from commercial sources on reasonable commercial terms. The Member
shall be required to submit documentation, to be determined by the Committee,
with his hardship withdrawal request to enable the Committee to make a judgment
regarding the validity of such hardship withdrawal request.
For any Member who has attained age 59 1/2, the "hardship" requirement
shall be deemed waived.
(c) A withdrawal election shall be made pursuant to application
procedures established by the Committee. For any withdrawal under paragraph
(a) or (b), if the amount which may be withdrawn exceeds $100, the Member may
not withdraw less than $100, and if the amount which may be withdrawn is less
than $100, the Member shall be required to withdraw all of such amount.
Contribution totals and Account values shall be determined as of the Valuation
Date coinciding with or next following the filing of the withdrawal election.
If the Member Accounts from which withdrawal is made are in more than one
Investment Fund, the withdrawal shall be pro rata from each such Investment
Fund.
(d) A Member who was a Participant in or eligible to be a
Participant in the Volume Shoe Corporation Profit Sharing Plan (the "Volume
Plan") as of December 31, 1988 and who had an account balance in the Volume
Plan attributable to Employer Contributions made to the Volume Plan before July
31, 1976 and which account became a Company Account under The May Department
Stores Company
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Profit Sharing Plan and which has been transferred to this Plan, shall be
entitled to withdraw the market value of such account balance determined (and
frozen) as of December 31, 1988.
SECTION 9
BENEFITS UPON RETIREMENT, DEATH, DISABILITY, OR TERMINATION OF EMPLOYMENT
9.01 BENEFITS. Upon a Member's Retirement, death, Disability, or other
termination of employment, the value of his Member Accounts and of his vested
Company Accounts shall be determined as of the Valuation Date at the end of the
month next following the later of (i) the date of such termination of
employment or (ii) the date the Plan Administrator receives notice of such
termination of employment, whether such notice be written notice or actual
notice, and shall be distributed as provided in Section 10. A temporary
Authorized Leave of Absence for Military Service or for other purposes approved
by the Employer shall not, while any such Authorized Leave of Absence is
validly in effect, be regarded as a termination of employment for the purposes
of this Plan.
9.02 BENEFICIARY. Any benefits payable on account of a Member's death
shall be paid to such Member's spouse. If such Member has no spouse or if such
Member's spouse shall have consented to the naming of another beneficiary, such
benefits shall be paid to the person or persons (including, without limitation,
estates, trust, or other entities) last named as beneficiary by such Member on
an appropriate form filed with the Committee. A spouse's consent shall
designate a beneficiary, acknowledge the effect of the consent and be in
writing, witnessed by a Plan representative or notary public. A spouse's
consent shall be irrevocable. If no beneficiary has been so named or the named
beneficiary does not survive the Member, any payment to be made under this Plan
on account of a Member's death shall be paid to such Member's spouse, or, if he
has no spouse, to such Member's estate. Whenever permitted by the Code or
regulations thereunder, the Committee may waive the requirements that a
spouse's consent be obtained. Such waiver may be on a case by case basis or by
categories.
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SECTION 10
PAYMENT OF BENEFITS
10.01 TIME OF PAYMENT.
(a) All amounts distributable to a Member or Beneficiary pursuant
to Section 9 shall, unless the Member makes an approved election pursuant
to Section 10.01 (b) or 10.01 (c), be paid in a lump sum payment to be made as
soon as practicable after the Valuation Date as of which the Account values are
determined pursuant to Section 9.01 provided, however, that any additional
amounts which may be allocated to a Member's Company Accounts resulting from a
Company Contribution in respect of the calendar year in which employment
terminates shall be paid as soon as practicable after such contribution.
Notwithstanding any provision of this Section 10 to the contrary, if
the present value of the nonforfeitable accrued benefit of a Member, including
Company and Member Contributions (but excluding accumulated deductible employee
contribution, if any) exceeds (or ever has exceeded) $3,500 (or, effective
January 1, 1998, $5,000), no partial or total distribution shall be made unless
the Member has consented thereto in writing in the manner required by law.
(b) A Member who was a Member of the May Plan as of June 30,
1990 may elect that all Transferred Accounts distributable to him pursuant to
Section 9 shall be paid in annual installments over a period not to
exceed ten years beginning with the Valuation Date as of which the lump sum
payment would otherwise be made. In the event of the death of a Member prior
to the expiration of such period, all amounts which have not been distributed
to him shall be paid in a lump sum to his designated Beneficiary or his estate
if there is no designated Beneficiary. Subject to the foregoing, each such
installment shall be paid as of a Valuation Date and, until all the Accounts of
the Member have been fully distributed, they shall continue to be revalued as
of each succeeding Valuation Date pursuant to Section 6.04.
Notwithstanding the paragraph above, a Member who as of December 31,
1988 was or was entitled to be a Participant in the Volume Shoe Corporation
Profit Sharing Plan may elect that all Transferred Accounts distributable to
him pursuant to Section 9 be paid in the form of equal monthly installments
over a period not to exceed 120 months. Such payments shall otherwise be made
in accordance with the foregoing portion of this Subsection 10.01 (b).
(c) A Member who is entitled to receive a distribution in excess
of $3,500 (or $5,000) may elect to defer such distribution to age 65. An
election to defer distribution shall conform to such requirements as to form,
content, manner, and
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timing as shall be determined by the Committee and which requirements
shall be applied in a manner which does not discriminate in favor of Members
who are highly compensated employees (within the meaning of Code Section
414(q)). All Accounts of a Member who elects to defer his distribution shall
continue to be revalued as of each succeeding Valuation Date pursuant to
Section 6.04. A deferred distribution shall be paid when such Member attains
the age of 65 years or at such earlier or later time as shall be determined by
the Committee as permitted by law. In the event of the death of a Member prior
to distribution of the deferred amounts, all amounts shall be distributed in a
lump sum to his designated Beneficiary or to his estate if there is no
designated Beneficiary. The value for payment shall be determined as of the
Valuation Date coincident with or next following such Member's 65th birthday or
such other payment date determined by the Committee.
10.02 FORM OF PAYMENT. All distributions shall be made in the form
of cash, except that distributions from the May Common Stock Fund or the
Payless Common Stock Fund shall be made in the form of full shares of May
Common Stock or Payless Common Stock, as applicable (with payment in cash for a
fraction of a share) or in cash if elected by the Member or Beneficiary. The
rights extended to a Member hereunder shall also apply to any Beneficiary or
alternate payee of such Member.
10.03 INDIRECT PAYMENT OF BENEFITS. If any Member or Beneficiary
has been adjudged to be legally, physically or mentally incapable or
incompetent, payment may be made to the legal guardian or other legal
representative of such Member or Beneficiary as determined by the Committee.
Such payments shall constitute a full discharge with respect thereto.
10.04 INABILITY TO FIND MEMBER. If a Member or Beneficiary or
other person to whom a benefit payment is due cannot be found during the three
years subsequent to the date a distribution was required to be made under this
Plan, the Accounts shall be forfeited at the end of such three-year period.
The value of such Accounts as of the date the distribution was required to be
made shall be restored if such Member or Beneficiary or other person makes a
claim.
10.05 COMMENCEMENT OF BENEFIT DISTRIBUTION TO MEMBER. In
accordance with Code Section 401 (a) (9) and Treasury Regulations promulgated
thereunder, distributions to a Member must commence not later than the first
day of April following the calendar year in which the Member attains age 70
1/2. Notwithstanding the foregoing, effective January 1, 1997, distribution to
a Member who is not a "five percent owner" as defined in Section 20.10(f)(3)
shall commence not later than April 1 following the calendar year in which the
Member attains age 70 1/2 or, if later, the calendar year in which the Member
retires. If a Member is currently receiving required distributions from the
Plan under Code Section 401(a)(9) and this Section 10.05 but would not be
required to receive such payments after January 1, 1997 under
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this Section 10.05 as amended, such Member may elect, in the manner determined
by the Committee, to postpone further distributions until the date otherwise
required hereunder.
Such distribution may be made by distributing the entire value of the
Member's Accounts as of the last day of such calendar year. If otherwise
permitted pursuant to Code Section 401 (a) (9) and Regulations thereto, the
Member may elect to take such distribution in lump sum or in installments, if
he is otherwise entitled to installment payments pursuant to Section 10.01 (b).
10.06 COMMENCEMENT OF BENEFIT DISTRIBUTION TO BENEFICIARY.
Distributions to the Beneficiary entitled under Section 10.02 to receive any
payments payable under this Plan on account of a Member's death shall be made
in a lump sum payment not later than the first day of April following the
calendar year in which the Member would have attained age 70 1/2.
Notwithstanding the above, any portion of a Member's accounts which are
distributable to a Beneficiary shall be distributed within five (5) years of
the Member's death.
10.07 COMMENCEMENT OF BENEFIT DISTRIBUTION TO ALTERNATE PAYEE.
Distributions to an alternate payee entitled under Section 16.01 to receive any
payments payable under this Plan pursuant to the terms of a Qualified Domestic
Relations Order shall be made in accordance with the terms of such Qualified
Domestic Relations Order and this Plan on or after the date on which the Member
has attained his "earliest retirement age" (as defined under Code Section
414(p)) under the Plan. Notwithstanding the foregoing, distribution to an
alternate payee may be made prior to the Member's attainment of his earliest
retirement age if, but only if: (1) the Qualified Domestic Relations Order
specifies distribution at that time or permits an agreement between the Plan
and the alternate payee to authorize an earlier distribution; (2) the
distribution is a single sum distribution of the alternate payee's entire
benefit entitlement under the Plan; and (3) in the event the present value of
the alternate payee's benefits under the Plan exceeds $3,500, the alternate
payee consents to any distribution occurring prior to the Member's attainment
of earliest retirement age.
Nothing in this Section 10.07 shall be construed to permit a Member to
(1) receive a distribution at a time not otherwise permitted under the Plan,
(2) permit the alternate payee to receive a form of payment not otherwise
permitted under the Plan, or (3) cause his Plan accounts to be valued or
otherwise determined in a manner not otherwise permitted under the Plan.
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SECTION 11
PERMITTED ROLLOVER OF PLAN DISTRIBUTIONS
11.01 ROLLOVER PERMITTED. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a distributee's election under
this Section, a distributee may elect, at the time and pursuant to procedures
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. Such distribution may commence less than
thirty (30) days after the notice required under Treas. Reg. Section
1.411(a)-11(c) (or its successor) is given to a Member or other distributee,
provided that the Member has been clearly informed that he has a right to a
period of at least thirty (30) days after receiving said notice to consider the
decision as to whether to elect a distribution or, if applicable, a
distribution option, and the Member nevertheless affirmatively elects an
earlier distribution.
11.02 DEFINITIONS. The following definitions shall apply for the
purposes of this Section 11:
(a) ELIGIBLE ROLLOVER DISTRIBUTION. An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: 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 beneficiary or for a
specified period of ten years or more; any distribution to the extent such
distribution is required under Code Section 401 (a) (9); and the portion of any
distribution that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities).
(b) ELIGIBLE RETIREMENT PLAN. An eligible retirement plan
is an individual retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 401(b), an annuity plan
described in Code Section 403(a), or a qualified trust described in Code
Section 401(a), and which accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to a
Member's surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(c) DISTRIBUTEE. A distributee includes a Member or former
Member. In addition, the Member or former Member's surviving spouse and the
Member's or former Member's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Code Section 414(p),
are distributees with regard to the interest of the spouse or former spouse.
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(d) DIRECT ROLLOVER. A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the distributee.
SECTION 12
LIMIT ON CONTRIBUTIONS TO THE PLAN
This Section 12 is intended to conform the Plan to the requirements of
Code Section 415 and limits the contributions that can be made by and for an
individual under the Plan.
12.01 LIMIT ON CONTRIBUTIONS. Notwithstanding any provision of the
Plan to the contrary:
(a) The "Annual Addition" that may be made to a Member's
Accounts in any calendar year shall not exceed (i) 25% of his Earnings for the
calendar year or (ii) $30,000 (as adjusted from time to time by the Secretary
of the Treasury or his delegate, pursuant to Code Section 415(d), provided
that no such adjustment shall be taken into account before the calendar year
for which the adjustment first takes effect).
(b) If a Member participates in a Defined Benefit Plan
maintained by the Extended Group, the sum of the Member's Defined Contribution
Plan Fraction and Defined Benefit Plan Fraction may not exceed 1.0 for any
calendar year.
(c) If the limitation imposed by Subsection (a) above
applies to a Member in a calendar year, his Member Contributions and, if
necessary, Company Contributions shall be reduced to the extent necessary to
prevent the limitation with respect to such calendar year from being exceeded.
If the limitation imposed by Subsection (b) above, applies, the benefits under
any Defined Benefit Plan maintained by the Extended Group shall be reduced
before the Annual Additions under this Plan are reduced.
12.02 SPECIAL DEFINITIONS. For the purposes of this Section 12,
the following terms shall have the following meanings:
(a) ANNUAL ADDITION for any calendar year is the sum of:
(i) the amount of the Company Profit Sharing and
Matching Contributions for the calendar year, plus
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(ii) the Member's Before-Tax Contributions for the
calendar year, plus
(iii) the Member's After-Tax Contributions, plus
(iv) the amount of an Employer's contribution on behalf
of the Member or of a Member's contribution, if any, in the same Plan
Year, to another individual account pension benefit plan maintained by
an Employer, plus
(v) the amount, if any, allocated to an individual
medical account pursuant to Code Section 415(l)(1), plus
(vi) the amount, if any, attributable to
post-retirement medical or life insurance benefits for key employees
pursuant to Code Section 419A(d)(2).
(b) DEFINED BENEFIT PLAN means any plan which is qualified
under Code Sections 401(a) or 403(a) and which is not a Defined Contribution
Plan.
(c) DEFINED BENEFIT PLAN FRACTION means a fraction, where the
numerator is the Member's projected annual benefit under the Defined Benefit
Plan (determined as of the close of the calendar year), and the denominator is
the lesser of:
(i) 1.25 multiplied by the dollar limitation in effect
under Code Section 415(b)(1)(A) for that calendar year, or
(ii) 1.4 multiplied by the amount that may be taken into
account under Code Section 415(b)(1)(B) with respect to the Member for
the calendar year.
(d) DEFINED CONTRIBUTION PLAN means any plan which is
qualified under Code Sections 401(a), 403(a), or 405(a) and which
provides for an individual account for each Member and for benefits based
solely on the amount contributed to the account, and any income, expenses,
gains, losses, and forfeitures that may be allocated to the account.
(e) DEFINED CONTRIBUTION PLAN FRACTION means a fraction,
where the numerator is the sum of the Annual Additions to the Member's
Accounts as of the close of the calendar year, and the denominator is the sum
of the lesser of the following amounts for such calendar year and for each
prior calendar year of service with the Extended Group:
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(i) 1.25 multiplied by the dollar limitation in effect
under Code Section 415(c)(1)(A) for that calendar year (determined
without regard to Code Section 415(c)(6)), or
(ii) 1.4 multiplied by the amount that may be taken into
account under Code Section 415(c)(1)(B) with respect to the Member for
the calendar year; provided, that the Company may, in accordance
with applicable Treasury Department regulations, elect to calculate the
denominator of the Defined Contribution Plan Fraction in accordance
with Code Section 415(e)(6).
(f) EARNINGS means the Member's "415(c) compensation" (as
determined under Section 415(c)(3) of the Code and under Treasury Regulation
Section 1.415-2(d)(11), and including any such compensation received from the
Extended Group.
(g) EXTENDED GROUP means the Company and any other employer
which is related to the Corporation as a member of a controlled group of
corporations in accordance with Code Section 414(b), or as a trade or business
under common control in accordance with Code Section 414(c), plus any other
company, trade or business which would be included by such definition after the
modification thereof required by Code Section 415(h).
12.03 GENERAL.
(a) For purposes of applying the limitations set forth in
this Section 12, all Defined Benefit Plans (whether or not terminated) of the
Extended Group shall be treated as one Defined Benefit Plan, and all Defined
Contribution Plans (whether or not terminated) of the Extended Group shall be
treated as one Defined Contribution Plan.
(b) This Section 12 is intended to satisfy the requirements
imposed by Code Section 415 and shall be construed in a manner that shall
effectuate this intent. This Section 12 shall not be construed in a manner
that would impose limitations that are more stringent than those required by
Code Section 415.
12.04 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS.
(a) If, as a result of the allocation of forfeitures, a
reasonable error in estimating a Member's Pay or other facts and
circumstances to which Treasury Regulation Section 1.415-6(b)(6) shall be
applicable, the "annual additions" under this Plan would cause the maximum
"annual additions" to be exceeded for any Member, the Committee shall (1)
return any Member Contributions credited for the "limitation year"to the extent
that the return would reduce the "excess amount" in the Member's
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Accounts, (2) hold any "excess amount" remaining after the return of any
Member Contributions in a "Section 415 suspense account", (3) use the "Section
415 suspense account" in the next "limitation year" (and succeeding "limitation
years" if necessary) to reduce either Company Contributions for that Member if
that Member is covered by the Plan as of the end of the "limitation year" or if
such Member is not covered by the Plan at the end of the "limitation year" to
reduce Company Contributions for all Members in the Plan, before any Company
Contributions or Member Contributions which would constitute "annual additions"
are made to the Plan for such "limitation year," (4) reduce Company
Contributions for such "limitation year" by the amount of the "Section 415
suspense account" allocated and reallocated during such "limitation year." For
purposes of (3) above, the Plan may not distribute "excess amounts" to Members
or former Members.
(b) For purposes of this Section, "EXCESS AMOUNT" for any
Member for a "limitation year" shall mean the excess, if any, of (1) the
"annual additions" which would be credited to his account under the terms of
the Plan without regard to the limitations of Code Section 415 over (2) the
maximum "annual additions" determined pursuant to Section 12.01(a).
(c) For purposes of this Section, "SECTION 415 SUSPENSE
ACCOUNT" shall mean an unallocated account equal to the sum of "excess amount"
for all Members in the Plan during the "limitation year." The "Section 415
suspense account" shall not share in any earnings or losses of the Trust Fund.
12.05 LIMITATION IMPOSED BY CODE SECTION (401)(A)(17). In addition
to other applicable limitations set forth in the Plan, and notwithstanding any
other provision of the Plan to the contrary, the annual Pay of each Associate
taken in to account under the Plan shall not exceed the annual compensation
limit of the Omnibus Budget Reconciliation Act of 1993 (OBRA '93). The OBRA
'93 annual Pay limit is $150,000, as adjusted by the Commissioner of Internal
Revenue Service for increases in the cost of living in accordance with Code
Section 40l(a)(17)(B). The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which Pay is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93 annual Pay
limit will be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is 12.
Any reference in this Plan to the limitation under Code Section
401(a)(17) shall mean the OBRA '93 annual Pay limit set forth is this
provision.
If Pay for any prior determination period is taken into account in
determining an Associate's benefits accruing in the current year, the Pay for
that prior determination period is subject to the OBRA '93 annual Pay limit in
effect for that prior
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determination period. For this purpose, for a determination period beginning
before the first day of the first Plan Year beginning on or after January 1,
1994, the OBRA '93 annual Pay limit is $150,000.
SECTION 13
ADMINISTRATION OF THE PLAN
13.01 PLAN ADMINISTRATOR. The Company shall be the Plan
Administrator of the Plan for purposes of ERISA and shall be a "named
fiduciary" as determined in ERISA Section 402(a)(2).
13.02 DELEGATION OF AUTHORITY.
(a) Authority to administer the Plan has been delegated to
the Committee and the Administrative Subcommittee, if any, in accordance
with Sections 1.38 (Total and Permanent Disability), 4.01 (b) and (c) (Member
Contributions), 6.01 (Member Accounts), 6.02 (Company Accounts), 6.05 (Annual
Statements), 8.02 (Authorized Withdrawals), 12.04 (Adjustment of Excessive
Annual Additions), 18.02 (Withdrawal of an Employer) and this Section 13.
(b) Authority with respect to the Investment Funds of the
Plan has been delegated to the Trustee in accordance with Sections 7.01
(Administrative Expenses), 5.01 (c) (Investment Funds), 14 (Management of the
Trust Fund), 6.06 (shares of The May Department Stores Company in the May
Common Stock Fund), and 6.08 (shares of Payless ShoeSource, Inc. in the Payless
Common Stock Fund).
(c) Authority to direct the investment of the Plan's funds
has been delegated to the Investment Subcommittee, if any, in accordance with
Section 14.03(b), (c) and (d) (Investments and Reinvestments).
(d) Authority to exercise any and all of the powers of the
Company hereunder following the Effective Time of the Merger may be delegated
by the Company to Payless ShoeSource, Inc., a Missouri corporation and sponsor
of the Plan immediately prior to the Merger, or to any officer, employee or
agent thereof.
13.03 COMMITTEE AND SUBCOMMITTEES.
(a) The Committee may appoint two subcommittees (an
"Administrative Subcommittee" and an "Investment Subcommittee"), each
Subcommittee to consist of at least three persons, who need not be members of
the Board. The Committee and each Subcommittee, if appointed, shall elect from
its members a Chairman and a Secretary, and may appoint one or more Assistant
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Secretaries who may, but need not be, members of the Committee or such
Subcommittee, and may employ such agents, such legal counsel and such clerical,
medical, accounting, actuarial and other services as it may from time to time
deem advisable to assist in the administration of the Plan. The Committee and
each Subcommittee may, from time to time, appoint agents and delegate to such
agents such duties as it considers appropriate and to the extent that such
duties have been so delegated, the agent shall be exclusively responsible for
the proper discharge of such duties.
(b) The Administrative Subcommittee shall have the general
responsibility for the administration of the Plan and the carrying out of its
provisions, and shall have general powers with respect to Plan administration,
including, but not limited to, the powers listed in this Section 13.03. The
Administrative Subcommittee shall have the power to interpret and construe
the Plan, the power to establish rules for the administration of the Plan
and the transaction of its business, the power to remedy and resolve
inconsistencies and omissions, and the power to determine all questions which
arise in the administration, interpretation, or application of the Plan,
including but not limited to questions regarding the eligibility, status,
Account value and any rights of any Member, Beneficiary, and any other person
hereunder.
(c) The Investment Subcommittee shall have the powers
provided for in Section 14.03(b).
(d) The Committee and each Subcommittee shall act by a
majority of its members and the action of such majority expressed by a vote
at a meeting, or in writing without a meeting, shall constitute the action of
the Committee or such Subcommittee. All decisions, determinations, actions or
interpretations with respect to the Plan by the Committee or either
Subcommittee and the individual committee or subcommittee members shall be in
the Committee's, Subcommittee's or individual member's sole discretion. The
decision, determination, action or interpretation of the Committee or either
Subcommittee and the respective individual members of the Committee or
Subcommittee in respect to all matters within the scope of its authority shall
be conclusive and binding on all persons. No member of the Committee or either
Subcommittee shall have any liability to any person for any action or omission
except each for his own individual willful misconduct. If a Subcommittee is
not appointed, the Committee shall exercise such Subcommittee's authority and
perform its duties as described herein.
(e) Nothing in this Section 13 or in any other provision of
the Plan shall be deemed to relieve any person who is a fiduciary under
the Plan for purposes of ERISA from any responsibility or liability for any
responsibility, obligation or duty which Part 4 of Title I of ERISA shall
impose upon such person with respect to this Plan.
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13.04 ACCOUNTS AND REPORTS. The Committee shall maintain or cause
to be maintained accounts reflecting the fiscal transactions of the Plan and
shall keep in convenient form such data as may be necessary for the
administration of the Plan. The Committee shall prepare annually a report
showing in reasonable detail the assets and liabilities of the Plan and setting
forth a brief account of the operation of the Plan for the preceding year.
13.05 NON-DISCRIMINATION. Neither the Committee nor either
Subcommittee shall exercise its discretion in such a way as to result in
discrimination in favor of officers, shareholders or highly compensated
employees (within the meaning of Code Section 414(q)).
SECTION 14
MANAGEMENT OF THE TRUST FUND
14.01 USE OF THE TRUST FUND. All assets of the Plan shall be held
as a Trust Fund in one or more trusts and shall be used to provide the benefits
of this Plan. No part of the corpus or income shall be used for, or diverted
to, purposes other than for the exclusive benefit of Members and their
Beneficiaries under this Plan and administrative expenses of this Plan.
14.02 TRUSTEES. The Trust Fund may, at the direction of the
Company, be divided into one or more separate trusts, each of which may have a
separate Trustee appointed from time to time by the Company and subject to
removal by the Company. The Trustee or Trustees of each trust shall have
complete authority and discretion with respect to the investment and
reinvestment of the assets of each trust, subject, however, to (i) the
provisions in the Trust Agreements between the Trustee or Trustees and the
Company, and (ii) the provisions of this Plan. Any or all of such separate
trusts shall be referred to collectively from time to time as the Trust Fund.
Any division of the Trust Fund into one or more separate trusts shall be at the
direction of the Company.
14.03 INVESTMENTS AND REINVESTMENTS. The investment and
reinvestment of the assets of the Trust Fund shall be in accordance with the
following:
(a) The Company shall have the authority to instruct the
Trustee or Trustees to accept and follow the instructions of any
designated investment manager (within the meaning of ERISA Section 3(38)) with
respect to the investment and reinvestment of the assets constituting a money
market or stable value fund, a fixed income fund, a common stock fund, or any
other Investment Funds the Company may designate.
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(b) The Investment Subcommittee shall have the powers, with
respect to investment and reinvestment of the assets constituting the
Investment Funds, to promulgate limitations, restrictions, rules or guidelines
with respect to the investment policies and classes of investments in which the
assets of the Investment Funds may be invested or reinvested by the Trustee or
Trustees, including any such investments made pursuant to the instructions of
any investment manager. In the event an investment manager designated pursuant
to Section 14.03(a) resigns or otherwise is unable to act, the Investment
Subcommittee shall have such power and authority as otherwise would be
exercisable by such Investment Manager.
(c) In the event that the assets of the Trust Fund shall be
divided into one or more separate trusts pursuant to the authority provided
for in Section 14.02, then the powers of the Investment Subcommittee as
provided for in Section 14.03(b) may be exercised with respect to one or more
of such trusts within the discretion of the Investment Subcommittee.
(d) The powers of the Investment Subcommittee as provided in
Section 14.03(b), may be exercised at any time or from time to time by the
Investment Subcommittee within the discretion of the Investment Subcommittee
and shall be pursuant to a written agreement between the Investment
Subcommittee and the Trustee or Trustees or, if an investment manager has been
appointed, between the Investment Subcommittee and the investment manager.
(e) The Trust Agreement between the Company and the Trustee
or Trustees implementing the Plan shall contain provisions effectuating the
provisions of this Section 14 of the Plan.
SECTION 15
CERTAIN RIGHTS AND OBLIGATIONS OF EMPLOYERS AND MEMBERS
15.01 DISCLAIMER OF EMPLOYER LIABILITY.
(a) No liability shall attach to any Employer with respect
to a benefit or claim hereunder and Members and their Beneficiaries, and all
persons claiming under or through them, shall have recourse only to the Trust
Fund for payment of any benefit hereunder.
(b) The rights of the Members, their Beneficiaries and other
persons are hereby expressly limited and shall be only in accordance with the
provisions of the Plan. Nothing contained herein shall be deemed to give a
Member any interest in any specific property of the Trust or any interest other
than a right to receive payments pursuant to the provisions of the Plan.
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15.02 EMPLOYER-ASSOCIATE RELATIONSHIP. Neither the establishment
of this Plan nor its communication through a Summary Plan Description (or
otherwise) shall be construed as conferring any legal or other rights upon any
Associate or any other person to continue in employment or as interfering with
or affecting in any manner the right of an Employer to discharge any Associate
or otherwise act with relation to him. Each Employer may take any 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 as a Member of this Plan.
15.03 BINDING EFFECT. Each Member, by executing an enrollment
form, beneficiary designation and otherwise agreeing to participate in the Plan
agrees for himself, his beneficiary(ies), heirs, successors and assigns to be
bound by all of the provisions of the Plan.
15.04 CORPORATE ACTION. With respect to any action permitted or
required by the Plan, the Company may act through its appropriate officers.
15.05 CLAIM AND APPEAL PROCEDURE. A Member or beneficiary may
file with the Committee or its designee at any time a written claim in
connection either with a benefit payable hereunder or otherwise. The Committee
or its designee, normally within 90 days after receipt of a written claim,
shall render a written decision on the claim, unless an additional 90 days is
required by special circumstances which shall be explained to the claimant. If
the claim is denied, either in whole or in part, the decision shall include the
reason or reasons for the denial; a specific reference to the Plan provision or
provisions which are the basis for the denial; a description of any additional
material or information necessary for the claimant to perfect the claim; an
explanation as to why the information or material is necessary; and an
explanation of the Plan's entire claim procedure. The claimant may file with
the Committee, within 60 days after receiving the written decision from the
Committee, a written notice of request for review of the Committee's decision.
The review shall be made by a committee of up to three individuals (which may
include members of the Committee) appointed by the Company or by the Committee.
Said committee shall render a written decision on the claim containing the
specific reasons for their decision, including a reference to the Plan's
provisions, normally within 60 days after receipt of the request for review,
unless an additional 60 days is required by special circumstances which shall
be explained to the claimant. If a Member or beneficiary does not file written
notice of a claim with the Committee or its designee at the times set forth
above, he shall have waived any right to a benefit other than as originally
proposed by the Company or the Committee.
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SECTION 16
NON-ALIENATION OF BENEFITS
16.01 PROVISIONS WITH RESPECT TO ASSIGNMENT AND LEVY. No benefit
payable under this 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, 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. Notwithstanding the foregoing, the creation,
assignment, or recognition of a right to any benefit payable to an alternate
payee with respect to a Qualified Domestic Relations Order shall not be treated
as an assignment or alienation prohibited by this Section. Any other provision
of the Plan to the contrary notwithstanding, if a Qualified Domestic Relations
order requires the distribution of all or part of a Member's benefits under the
Plan, the establishment or acknowledgment of the alternate payee's right to
benefits under the Plan in accordance with the terms of such Qualified Domestic
Relations Order shall in all events be deemed to be consistent with the terms
of the Plan.
16.02 ALTERNATE APPLICATION. If a Member or Beneficiary under this
Plan becomes bankrupt or attempts to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any benefit under this Plan, except as
specifically provided herein, or if any 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 or Beneficiary, his
spouse, children or other dependents, or any of them, or in such other manner
and in such proportion as the Committee may deem proper.
SECTION 17
AMENDMENTS
17.01 COMPANY'S RIGHTS. The Company reserves the right at any time
and from time to time in its sole discretion to alter, amend, or modify, in
whole or in part, any or all of the provisions of this Plan, provided, however,
no such alteration, amendment or modification shall be made which shall
decrease the accrued benefit of any Member. Anything in this Plan to the
contrary notwithstanding, the Company in its sole discretion may make any
modifications or amendments, additions or deletions in or to this Plan as to
benefits or otherwise and retroactively if necessary, and regardless of the
effect thereof on the rights of any particular Member or Beneficiary, which it
deems appropriate and/or necessary in order to comply with or satisfy any
conditions of any law or regulation relating to the qualification of this Plan
and the trust or trusts created pursuant hereto and to keep this Plan and said
trusts qualified under
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Code Section 401(a) and to have the trust or trusts declared exempt from
taxation under Code Section 501(a).
17.02 PROCEDURE TO AMEND. This Plan may be amended by action of
the Company's Board of Directors and evidenced by a written amendment signed by
the Company's Secretary or by any other person so authorized by or pursuant to
authority of the Board of Directors.
17.03 PROVISION AGAINST DIVERSION. No part of the assets of the
Trust Fund shall, by reason of any modification or amendment or otherwise, be
used for, or diverted to, purposes other than for the exclusive benefit of
Members and their Beneficiaries under this Plan and administrative expenses of
this Plan.
SECTION 18
TERMINATION
18.01 RIGHT TO TERMINATE. The Company reserves the right to
terminate this Plan, in whole or in part, at any time and, if this Plan shall
be terminated either in its entirety or with respect to any Employer included
hereunder, the provisions of Section 18.03 shall apply and the Accounts of
affected Members shall become (or remain) fully vested and nonforfeitable.
18.02 WITHDRAWAL OF AN EMPLOYER. If an Employer shall cease to be
a participating Employer in this Plan, the Trust Fund and the Accounts of the
Members of the withdrawing Employer and their Beneficiaries shall be revalued
as if such withdrawal date were a Valuation Date. The Committee shall then
direct the Trustee either to distribute the Accounts of the Members of the
withdrawing Employer as of the date of such withdrawal on the same basis as if
the Plan had been terminated pursuant to Section 18.03 or to deposit in a trust
established by the withdrawing Employer pursuant to a plan substantially
similar to this Plan assets equal in value to the assets of the Trust Fund
allocable to the Accounts of the Members of the withdrawing Employer.
18.03 DISTRIBUTION IN EVENT OF TERMINATION OF TRUST. If this Plan
is terminated at any time including a partial termination as defined in Code
Section 411(d)(3), or if contributions are completely discontinued and the
Company determines that the trust shall be terminated, in whole or in part, the
Trust Fund and all Accounts shall be revalued as if the termination date were a
Valuation Date and the affected Members' Accounts shall be distributed in
accordance with Section 10.
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18.04 ADMINISTRATION IN EVENT OF CONTINUANCE OF TRUST. If this
Plan shall be terminated in whole or in part or contributions completely
discontinued but the Company determines that the trust shall be continued
pursuant to the terms of the Trust Agreement, the trust shall continue to be
administered as though the Plan were otherwise in effect. Upon the subsequent
termination of the trust, in whole or in part, the provisions of Section 18.03
shall apply.
18.05 MERGER, CONSOLIDATION OR TRANSFER. In the case of any merger
or consolidation with, or transfer of Plan assets or liabilities to, any other
plan each Member shall be entitled to receive a benefit immediately after the
merger, consolidation or transfer (if the transferee plan then terminated)
which is equal to or greater than the benefit he would have been entitled to
receive immediately before the merger, consolidation or transfer (if the Plan
had then terminated).
SECTION 19
CONSTRUCTION
19.01 APPLICABLE LAW. The provisions of this Plan except as
otherwise governed by ERISA shall be construed, regulated, administered and
enforced according to the laws of the State of Kansas and, whenever possible,
to be in conformity with the applicable requirements of ERISA and the Internal
Revenue Code.
19.02 GENDER AND NUMBER. Wherever applicable, the masculine
pronoun as used herein shall include the feminine pronoun and the singular
pronoun shall include the plural.
SECTION 20
TOP-HEAVY REQUIREMENTS
20.01 GENERALLY. For any Plan Year in which the Plan is a
Top-Heavy Plan, the provisions of Sections 20.02, 20.03, 20.04 and 20.05 shall
automatically take effect in accordance with Code Section 416.
20.02 VESTING. A Member who is credited with an Hour of Service
while the Plan is Top-Heavy, or in any Plan Year after a Plan Year in which the
Plan is Top- Heavy, and who has completed at least three Years of Service shall
have a nonforfeitable right to 100 percent of his accrued benefit and no amount
may become forfeitable if the Plan later ceases to be Top-Heavy. Such accrued
benefit shall include benefits accrued before the Plan becomes Top-Heavy.
Notwithstanding any other provision of this Plan to the contrary, once the
vesting requirements of this Section
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20.02 become applicable, they shall remain applicable even if the Plan later
ceases to be Top-Heavy.
20.03 MINIMUM ALLOCATIONS.
(a) Minimum Employer Allocations and allocations of Plan
forfeitures for a Member who is not a Key Employee shall be required under the
Plan for the Plan Year as set forth in Section 20.03(b) and (c).
(b) The amount of the minimum allocation shall be the lesser
of the following, percentages of Pay: (i) four percent or, (ii) the highest
percentage at which such allocations are made under the Plan for the Plan Year
on behalf of a Key Employee. For purposes of this paragraph (b), all defined
contribution plans required to be included in an Aggregation Group shall be
treated as one plan. This paragraph (b) shall not apply if the Plan is
required to be included in an Aggregation Group and the Plan enables a defined
benefit plan required to be included in the Aggregation Group to meet the
requirement of Code Sections 401(a)(4) or 410. For purposes of this paragraph
(b), the calculation of the percentage at which allocations are made for a Key
Employee shall be based only on his Pay not in excess of $150,000, such amount
to be adjusted periodically for increases in the cost of living in accordance
with Code Section 401(a)(17). The minimum allocation described in this
paragraph (b) shall be in addition to (and shall not be reduced by) any Member
Contributions under Section 4 (whether Before-Tax or After-Tax) and any
allocation of forfeitures, if any, to which a Member may be entitled.
(c) For purposes of this Section 20.03, the term "Member"
shall be deemed to refer to all Members who have not separated from service at
the end of the Plan Year including, without limitation, individuals who
declined to make contributions to the Plan.
20.04 PARTICIPANTS UNDER DEFINED BENEFIT PLANS. If any Member
other than a Key Employee is also a participant under a defined benefit plan of
an Employer which is a Top-Heavy Plan, then Section 20.03(a) shall not apply
and the required minimum annual contribution for such Member under this Plan
shall be 7 1/2 percent of such Member's Pay. Such contribution shall be made
without regard to the amount of contribution, if any, made to the Plan on
behalf of Employees.
20.05 SUPER TOP-HEAVY PLANS. If for any Plan Year in which the
Plan is a Top-Heavy Plan it is also a Super Top-Heavy Plan, then for purposes
of the limitations on contributions and benefits under Code Section 415, the
dollar limitations in the defined benefit plan fraction and the defined
contribution plan fraction shall be multiplied by 1.0 rather than 1.25.
However, if the application of the provisions of this Section 20.05 would cause
any individual to exceed the combined Code Section 415
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limitations on contributions and benefits, then the application of the
provisions of this Section 20.05 shall be suspended as to such individual until
such time as he no longer exceeds the combined Code Section 415 limitations as
modified by this Section 20.05. During the period of such suspension, there
shall be no Employer Contributions, forfeitures or voluntary nondeductible
contributions allocated to such individual under this or any other defined
contribution plan of an Employer and there shall be no accruals for such
individual under any defined benefit plan of an Employer.
20.06 DETERMINATION OF TOP HEAVINESS.
(a) The determination of whether a plan is Top-Heavy shall
be made in accordance with paragraphs (b) through (d) of this Section 20.06.
(b) If the Plan is not required to be included in an
Aggregated Group with other plans, then it shall be Top-Heavy only if when
considered by itself, it is a Top-Heavy Plan and it is not included in a
permissive Aggregation Group that is not a Top-Heavy Group.
(c) If the Plan is required to be included in an Aggregation
Group with other plans, it shall be Top-Heavy only if the Aggregation Group,
including any permissively aggregated plans, is Top-Heavy.
(d) If a plan is not a Top-Heavy Plan and is not required to
be included in an Aggregation Group, then it shall not be Top-Heavy even if it
is permissively aggregated in an Aggregation Group which is a Top-Heavy Group.
20.07 DETERMINATION OF SUPER TOP HEAVINESS. A plan shall be a
Super Top-Heavy Plan if it would be a Top-Heavy Plan under the provisions of
Section 20.08, but substituting "90 percent" for "60 percent" in the ratio test
in Section 20.08.
20.08 CALCULATION OF TOP-HEAVY RATIOS. A plan shall be Top-Heavy
and an Aggregation Group shall be a Top-Heavy Group with respect to any Plan
Year as of the Determination Date if the sum as of the Determination Date of
the Cumulative Accrued Benefits and the Cumulative Accounts of Employees who
are Key Employees for the Plan Year exceeds 60 percent of a similar sum
determined for all Employees, excluding former Key Employees.
20.09 CUMULATIVE ACCOUNTS AND CUMULATIVE ACCRUED BENEFITS.
(a) The Cumulative Accounts and Cumulative Accrued Benefits
for any Employee shall be determined in accordance with paragraphs (b) through
(e) of this Section 20.09.
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(b) Cumulative Account shall mean the sum of the amount of an
Employee's accounts under a defined contribution plan (for an unaggregated
plan) or under all defined contribution plans included in an Aggregation Group
(for aggregated plans) determined as of the most recent plan Valuation Date
within a 12-month period ending on the Determination Date, increased by any
allocations due after such Valuation Date and before the Determination Date.
(c) Cumulative Accrued Benefit means the sum of the present
value of an Employee's accrued benefits under a defined benefit plan (for an
unaggregated plan) or under all defined benefit plans included in an
Aggregation Group (for aggregated plans), determined under the actuarial
assumptions set forth in such plan or plans, as of the most recent plan
Valuation Date within a 12-month period ending on the Determination Date as if
the Employee voluntarily terminated service as of such Valuation Date.
(d) Accounts and benefits shall be calculated to include all
amounts attributable to both Matching Allocations and Employee contributions
but excluding amounts attributable to voluntary deductible Employee
contributions.
(e) Accounts and benefits shall be increased by the aggregate
distributions during the five-year period ending on the Determination Date made
with respect to an Employee under the plan or plans as the case may be or
under a terminated plan which, if it had not been terminated, would have been
required to be included in the Aggregation Group.
(f) Rollovers and direct plan-to-plan transfers shall be
handled as follows:
(i) If the transfer is initiated by the Employee and
made from a plan maintained by one Employer to a plan maintained
by another Employer, the transferring plan continues to count the
amount transferred under the rules for counting distributions. The
receiving plan does not count the amount if accepted after December 31,
1983, but does count it if accepted prior to December 31, 1983.
(ii) If the transfer is not initiated by the Employee
or is made between plans maintained by the Employers, the transferring
plan shall no longer count the amount transferred and the receiving
plan shall count the amount transferred.
(iii) For purposes of this subsection (f), all Employers
aggregated under the rules of Code Sections 414(b), (c) and (m) shall be
considered a single employer.
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20.10 OTHER DEFINITIONS.
(a) Solely for purposes of this Section 20, the definitions
in paragraphs (b) through (i) of this Section 20.10 shall apply, to be
interpreted in accordance with the provisions of Code Section 416 and the
regulations thereunder.
(b) AGGREGATION GROUP means a plan or group of plans which
included all plans maintained by the Employer in which a Key Employee is a
participant or which enables any plan in which a Key Employee is a participant
to meet the requirements of Code Section 401(a)(4) or Code Section 410, as well
as all other plans selected by the Company for permissive aggregation, the
inclusion of which would not prevent the group of plans from continuing to
meet the requirements of such Code sections.
(c) DETERMINATION DATE means, with respect to any Plan Year,
the last day of the preceding Plan Year.
(d) EMPLOYEE means any person employed by an Employer and
shall also include any Beneficiary of such persons, provided that the
requirements of Sections 20.02, 20.03 and 20.05 shall not apply to any person
included in a unit of Employees covered by an agreement which the Secretary of
Labor finds to be a collective bargaining agreement between Employee
representatives and one or more Employers if there is evidence that retirement
benefits were the subject of good faith bargaining between such Employee
representatives and such Employer or Employers.
(e) EMPLOYER means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Company or any trades or businesses (whether or not incorporated)
which are under common control (as defined in Code Section 414(c)) with the
Company, or a member of an affiliated service group (as defined in Code Section
414(m)) which includes the Company,
(f) KEY EMPLOYEE means any Employee or former Employee who
is, at any time during the Plan Year, or was, during any one of the four
preceding Plan Years any one or more of the following: (1) an officer of an
Employer who has annual Pay of more than 50% of the amount in effect under Code
Section 415(b)(1)(A) for such Plan Year, unless fifty (50) other such officers
have higher annual Pay; (2) one of the 10 persons employed by an Employer
having annual Pay greater than the limitation in effect under Code Section
415(c)(1)(A), and owning (or considered as owning within the meaning of Code
Section 318) the largest interests in the Employers (if two Employees have the
same interest, the one with the greater Compensation shall be treated as owning
the larger interest); (3) any person owning (or considered as owning
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within the meaning of the Code Section 318) more than five percent of the
outstanding stock of an Employer or stock possessing more than five percent of
the total combined voting power of such stock; (4) a person who would be
described in subsection (3) above if "one percent" were substituted for "five
percent" each place it appears in subsection (3) above, and who has annual Pay
of more than $150,000 (for purposes of determining ownership under this
subsection, Code Section 318(a)(2)(C) shall be applied by substituting "five
percent" for "50 percent" and the rules of subsections (b), (c) and (m) of Code
Section 414 shall not apply).
(g) LIMITATION YEAR means the calendar year.
(h) PLAN YEAR means the calendar year.
(i) YEAR OF SERVICE means a year which constitutes a "year of
service" under the rules of paragraphs (4), (5) and (6) of Code Section 411(a)
to the extent not inconsistent with the provisions of this Section 20.
58
PAYLESS SHOESOURCE, INC.
PROFIT SHARING PLAN
As Amended and Restated Generally Effective June 1, 1998
59
TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . .1
1.01 ACCOUNTS. . . . . . . . . . . . . . . . . . .1
1.02 AFTER-TAX CONTRIBUTIONS . . . . . . . . . . .1
1.03 ALLOCATION PAY AMOUNT . . . . . . . . . . . .1
1.04 ASSOCIATE . . . . . . . . . . . . . . . . . .2
1.05 AUTHORIZED LEAVE OF ABSENCE . . . . . . . . .2
1.06 BEFORE-TAX CONTRIBUTIONS. . . . . . . . . . .3
1.07 BENEFICIARY . . . . . . . . . . . . . . . . .3
1.08 BOARD . . . . . . . . . . . . . . . . . . . .3
1.09 CODE. . . . . . . . . . . . . . . . . . . . .3
1.10 COMMITTEE . . . . . . . . . . . . . . . . . .3
1.11 COMPANY . . . . . . . . . . . . . . . . . . .3
1.12 COMPANY ACCOUNTS. . . . . . . . . . . . . . .3
1.13 COMPANY MATCHING CONTRIBUTIONS. . . . . . . .3
1.14 COMPANY PROFIT SHARING CONTRIBUTIONS. . . . .3
1.15 EFFECTIVE DATE. . . . . . . . . . . . . . . .4
1.16 EMPLOYER. . . . . . . . . . . . . . . . . . .4
1.17 ERISA . . . . . . . . . . . . . . . . . . . .4
1.18 FIDUCIARY . . . . . . . . . . . . . . . . . .4
1.19 FISCAL YEAR . . . . . . . . . . . . . . . . .4
1.20 GROUP . . . . . . . . . . . . . . . . . . . .4
1.21 HOUR OF SERVICE . . . . . . . . . . . . . . .4
1.22 INVESTMENT FUND . . . . . . . . . . . . . . .5
1.23 MAY PLAN. . . . . . . . . . . . . . . . . . .5
1.24 MEMBER. . . . . . . . . . . . . . . . . . . .5
1.25 MEMBER ACCOUNTS . . . . . . . . . . . . . . .5
1.26 MEMBER AFTER-TAX ACCOUNTS . . . . . . . . . .5
1.27 MEMBER BEFORE-TAX ACCOUNTS. . . . . . . . . .5
1.28 MEMBER CONTRIBUTIONS. . . . . . . . . . . . .5
1.29 MILITARY SERVICE. . . . . . . . . . . . . . .5
1.30 NET PROFITS . . . . . . . . . . . . . . . . .5
1.31 PAY . . . . . . . . . . . . . . . . . . . . .6
1.32 PLAN. . . . . . . . . . . . . . . . . . . . .6
1.33 PLAN YEAR . . . . . . . . . . . . . . . . . .6
1.34 PRIOR PLAN. . . . . . . . . . . . . . . . . .6
1.35 QUALIFIED DOMESTIC RELATIONS ORDER. . . . . .6
1.36 RETIREMENT. . . . . . . . . . . . . . . . . .6
1.37 SOCIAL SECURITY WAGE BASE . . . . . . . . . .7
1.38 TOTAL AND PERMANENT DISABILITY OR DISABILITY.7
1.39 TRANSFERRED ACCOUNTS. . . . . . . . . . . . .7
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1.40 TRUST AGREEMENT . . . . . . . . . . . . . . .7
1.41 TRUST FUND. . . . . . . . . . . . . . . . . .7
1.42 TRUSTEE . . . . . . . . . . . . . . . . . . .7
1.43 UNIT. . . . . . . . . . . . . . . . . . . . .7
1.44 UNIT VALUE. . . . . . . . . . . . . . . . . .7
1.45 VALUATION DATE. . . . . . . . . . . . . . . .7
1.46 YEAR OF SERVICE . . . . . . . . . . . . . . .7
1.47 VESTING SERVICE . . . . . . . . . . . . . . .8
SECTION 2 MEMBERSHIP . . . . . . . . . . . . . . . . . . . .9
2.01 CONDITIONS OF ELIGIBILITY.. . . . . . . . . .9
2.02 NO DUAL MEMBERSHIPS.. . . . . . . . . . . . 11
2.03 RE-EMPLOYMENT.. . . . . . . . . . . . . . . 11
SECTION 3 COMPANY CONTRIBUTIONS . . . . . . . . . . . . . 11
3.01 AMOUNT OF COMPANY PROFIT SHARING
CONTRIBUTION. . . . . . . . . . . . . . . . 11
3.02 AMOUNT OF COMPANY MATCHING CONTRIBUTION.. . 12
3.03 ALLOCATION OF COMPANY CONTRIBUTIONS.. . . . 12
3.04 PROFIT SHARING ALLOCATION FORMULA.. . . . . 12
3.05 INVESTMENT OF THE COMPANY CONTRIBUTION. . . 13
3.06 RETURN OF COMPANY CONTRIBUTIONS.. . . . . . 13
SECTION 4 MEMBER CONTRIBUTIONS . . . . . . . . . . . . . . 14
4.01 PROCEDURE FOR MAKING CONTRIBUTIONS. . . . . 14
4.02 LIMITATIONS ON BEFORE-TAX CONTRIBUTIONS.. . 16
4.03 DISTRIBUTIONS OF EXCESS DEFERRALS.. . . . . 19
4.04 LIMITATIONS ON AFTER-TAX CONTRIBUTIONS. . . 20
4.05 LIMITATIONS ON COMPANY MATCHING
CONTRIBUTIONS.. . . . . . . . . . . . . . . 21
4.06 AGGREGATE LIMITATIONS.. . . . . . . . . . . 23
SECTION 5 INVESTMENT PROVISIONS . . . . . . . . . . . . . 25
5.01 INVESTMENT FUNDS. . . . . . . . . . . . . . 25
5.02 INVESTMENT DIRECTION. . . . . . . . . . . . 25
SECTION 6 ACCOUNTS . . . . . . . . . . . . . . . . . . . . 26
6.01 MEMBER ACCOUNTS.. . . . . . . . . . . . . . 26
6.02 COMPANY ACCOUNTS. . . . . . . . . . . . . . 26
6.03 MAINTENANCE OF ACCOUNTS.. . . . . . . . . . 27
6.04 VALUATION OF ACCOUNTS.. . . . . . . . . . . 27
6.05 MEMBER STATEMENTS.. . . . . . . . . . . . . 27
6.06 SHARES OF THE MAY DEPARTMENT STORES COMPANY
("MAY STOCK") IN THE MAY COMMON STOCK
FUND. . . . . . . . . . . . . . . . . . . . 27
6.07 SHARES OF THE COMPANY RECEIVED IN RESPECT
OF MAY STOCK . . . . . . . . . . . . . . . 29
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6.08 SHARES OF PAYLESS SHOESOURCE, INC.
("PAYLESS STOCK") IN THE PAYLESS COMMON
STOCK FUND. . . . . . . . . . . . . . . . . 29
6.09 VESTING IN MEMBER AND COMPANY ACCOUNTS. . . 30
SECTION 7 EXPENSES . . . . . . . . . . . . . . . . . . . . 33
7.01 ADMINISTRATIVE EXPENSES.. . . . . . . . . . 33
SECTION 8 WITHDRAWALS DURING EMPLOYMENT . . . . . . . . . 34
8.01 WITHDRAWALS PROHIBITED UNLESS SPECIFICALLY
AUTHORIZED. . . . . . . . . . . . . . . . . 34
8.02 AUTHORIZED WITHDRAWALS. . . . . . . . . . . 34
SECTION 9 BENEFITS UPON RETIREMENT, DEATH, DISABILITY,
OR TERMINATION OF EMPLOYMENT . . . . . . . . . . 36
9.01 BENEFITS. . . . . . . . . . . . . . . . . . 36
9.02 BENEFICIARY.. . . . . . . . . . . . . . . . 36
SECTION 10 PAYMENT OF BENEFITS . . . . . . . . . . . . . . 37
10.01 TIME OF PAYMENT. . . . . . . . . . . . . . 37
10.02 FORM OF PAYMENT . . . . . . . . . . . . . 38
10.03 INDIRECT PAYMENT OF BENEFITS . . . . . . . 38
10.04 INABILITY TO FIND MEMBER . . . . . . . . . 38
10.05 COMMENCEMENT OF BENEFIT DISTRIBUTION
TO MEMBER . . . . . . . . . . . . . . . . 38
10.06 COMMENCEMENT OF BENEFIT DISTRIBUTION
TO BENEFICIARY . . . . . . . . . . . . . . 39
10.07 COMMENCEMENT OF BENEFIT DISTRIBUTION
TO ALTERNATE PAYEE . . . . . . . . . . . . 39
SECTION 11 PERMITTED ROLLOVER OF PLAN DISTRIBUTIONS . . . . 40
11.01 ROLLOVER PERMITTED . . . . . . . . . . . . 40
11.02 DEFINITIONS . . . . . . . . . . . . . . . 40
SECTION 12 LIMIT ON CONTRIBUTIONS TO THE PLAN . . . . . . . 41
12.01 LIMIT ON CONTRIBUTIONS . . . . . . . . . . 41
12.02 SPECIAL DEFINITIONS . . . . . . . . . . . 41
12.03 GENERAL . . . . . . . . . . . . . . . . . 43
12.04 ADJUSTMENT FOR EXCESSIVE ANNUAL
ADDITIONS . . . . . . . . . . . . . . . . 43
12.05 LIMITATION IMPOSED BY CODE SECTION
(401)(A)(17) . . . . . . . . . . . . . . . 44
SECTION 13 ADMINISTRATION OF THE PLAN. . . . . . . . . . . 45
13.01 PLAN ADMINISTRATOR . . . . . . . . . . . . 45
13.02 DELEGATION OF AUTHORITY. . . . . . . . . . 45
13.03 COMMITTEE AND SUBCOMMITTEES. . . . . . . . 45
13.04 ACCOUNTS AND REPORTS . . . . . . . . . . . 47
13.05 NON-DISCRIMINATION . . . . . . . . . . . . 47
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SECTION 14 MANAGEMENT OF THE TRUST FUND . . . . . . . . . . 47
14.01 USE OF THE TRUST FUND. . . . . . . . . 47
14.02 TRUSTEES.. . . . . . . . . . . . . . . 47
14.03 INVESTMENTS AND REINVESTMENTS. . . . . 47
SECTION 15 CERTAIN RIGHTS AND OBLIGATIONS OF EMPLOYERS
AND MEMBERS . . . . . . . . . . . . . . . . . . 48
15.01 DISCLAIMER OF EMPLOYER LIABILITY.. . . 48
15.02 EMPLOYER-ASSOCIATE RELATIONSHIP. . . . 49
15.03 BINDING EFFECT . . . . . . . . . . . . 49
15.04 CORPORATE ACTION.. . . . . . . . . . . 49
15.05 CLAIM AND APPEAL PROCEDURE.. . . . . . 49
SECTION 16 NON-ALIENATION OF BENEFITS . . . . . . . . . . . 50
16.01 PROVISIONS WITH RESPECT TO ASSIGNMENT
AND LEVY . . . . . . . . . . . . . . . 50
16.02 ALTERNATE APPLICATION. . . . . . . . . 50
SECTION 17 AMENDMENTS . . . . . . . . . . . . . . . . . . . 50
17.01 COMPANY'S RIGHTS.. . . . . . . . . . . 50
17.02 PROCEDURE TO AMEND.. . . . . . . . . . 51
17.03 PROVISION AGAINST DIVERSION. . . . . . 51
SECTION 18 TERMINATION . . . . . . . . . . . . . . . . . . 51
18.01 RIGHT TO TERMINATE.. . . . . . . . . . 51
18.02 WITHDRAWAL OF AN EMPLOYER. . . . . . . 51
18.03 DISTRIBUTION IN EVENT OF TERMINATION
OF TRUST . . . . . . . . . . . . . . . 51
18.04 ADMINISTRATION IN EVENT OF CONTINUANCE
OF TRUST . . . . . . . . . . . . . . . 52
18.05 MERGER, CONSOLIDATION OR TRANSFER. . . 52
SECTION 19 CONSTRUCTION . . . . . . . . . . . . . . . . . . 52
19.01 APPLICABLE LAW.. . . . . . . . . . . . 52
19.02 GENDER AND NUMBER. . . . . . . . . . . 52
SECTION 20 TOP-HEAVY REQUIREMENTS . . . . . . . . . . . . . 52
20.01 GENERALLY. . . . . . . . . . . . . . . 52
20.02 VESTING. . . . . . . . . . . . . . . . 52
20.03 MINIMUM ALLOCATIONS. . . . . . . . . . 53
20.04 PARTICIPANTS UNDER DEFINED BENEFIT
PLANS. . . . . . . . . . . . . . . . . 53
20.05 SUPER TOP-HEAVY PLANS. . . . . . . . . 53
20.06 DETERMINATION OF TOP HEAVINESS.. . . . 54
20.07 DETERMINATION OF SUPER TOP HEAVINESS.. 54
20.08 CALCULATION OF TOP-HEAVY RATIOS. . . . 54
20.09 CUMULATIVE ACCOUNTS AND CUMULATIVE
ACCRUED BENEFITS . . . . . . . . . . . 54
20.10 OTHER DEFINITIONS. . . . . . . . . . . 56
iv