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EXHIBIT 99.10
PAYLESS SHOESOURCE, INC.
PROFIT SHARING PLAN FOR PUERTO RICO ASSOCIATES
INTRODUCTION
Effective April 1, 1996, Payless ShoeSource, Inc. ("Payless") withdrew
from and ceased to be a participating Employer in the May Department Stores
Company Profit Sharing Plan (the "May Plan") and established the Payless
ShoeSource, Inc. Profit Sharing Plan (the "Payless Plan"). The Payless Plan,
as adopted, covered eligible Associates employed in Puerto Rico by Payless
ShoeSource of Puerto Rico, Inc. ("Payless PR"). The Payless Plan provided 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, Member contributions determined on either a before-tax or after-tax
basis.
Effective January 1, 1997, Payless spun off the portion of the Payless
Plan covering Associates employed by Payless PR and established a new Plan,
adopted by Payless PR as an adopting Employer under Section 1.16. The terms
and provisions of the new Plan established by Payless to accept the spin-off
were substantially identical to the terms and provisions of the Payless Plan,
as amended and restated. Such amendment and restatement, both as to the
Payless Plan and in connection with this Plan, applied only to Associates who
were employed by an Employer on or after the effective date(s) of the
respective amended provisions, and the rights and benefits of persons
thereunder were to be determined solely in accordance with the provisions of
the Plan in effect on the date an Associate's employment was or is terminated.
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.)
(hereinfater referred to as the "Merger"), to be effective as of the date of
the Merger (hereinafter the "Effective Time"). This amendment and restatement
of the Plan, as of the Effective Time, makes such changes as are necessary to
reflect the Merger.
The terms and provisions of this amended and restated Plan are as
follows:
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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 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 Payless PR who receives Pay
from Payless PR. 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 or the Employer, by a member of the Group
(defined in
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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). The term "Associate" may include, where appropriate,
Associates of Payless or other related Employers who are transferred to the
Employer or as otherwise may be necessary or appropriate in construing the Plan
under applicable law.
1.05 AUTHORIZED LEAVE OF ABSENCE means any leave of absence authorized
by the Employer under rules established by the Employer.
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 U.S. Internal Revenue Code of 1986, as amended from
time to time, but only to the extent incorporated into the applicable
provisions of the Puerto Rico Internal Revenue Code of 1994 (the "Act"). Any
references herein to Code Sections which have not been incorporated into the
Act and which conflict with the Act shall be void and of no effect hereunder.
Any references herein to specific Code Sections or regulations thereunder shall
be construed as and deemed to be references to the corresponding sections of
the Act or regulations thereunder, as applicable.
1.10 COMMITTEE means the Retirement Committee comprised of three or
more members as determined and appointed from time to time by the Board.
Unless determined otherwise by the Board, the Committee shall constitute the
Retirement Committee of the Payless ShoeSource, Inc. Profit Sharing Plan from
time to time.
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1.11 COMPANY OR PAYLESS 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 by 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 by an Employer, based on Net Profits,
pursuant to Section 3.01.
1.15 EFFECTIVE DATE originally meant January 1, 1997. However, the
effective date of this amendment and restatement of the Plan shall be the
Effective Time of the Merger.
1.16 EMPLOYER OR PAYLESS PR means Payless ShoeSource of Puerto Rico,
Inc. and any other entity affiliated with the Company which elects, with the
consent of the Company, to participate herein.
1.17 ERISA means the Employee Retirement Income Security Act of 1974,
as amended from time to time, to the extent applicable to the Plan.
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, the Employer, and any other company which
is related to the Company or Employer 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
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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 or Employer of a controlled group or under
common control. In determining Hours of Service, Years of Service and Vesting
Service for all purposes hereunder, employment with any member of the Group
shall be included.
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 Company or 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;
(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.
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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 or the Employer
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
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 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).
1.32 PLAN means this Payless ShoeSource, Inc. Profit Sharing Plan for
Puerto Rico Associates, as amended from time to time.
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1.33 PLAN YEAR means a calendar year ending each December 31.
1.34 PRIOR PLAN means The May Department Stores Company Profit Sharing
Plan, the Volume Shoe Corporation Profit Sharing Plan, the Payless ShoeSource,
Inc. 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.
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 a Prior 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, including
assets transferred from a Prior Plan, 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.
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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 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
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(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.
(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.
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SECTION 2
MEMBERSHIP
2.01 CONDITIONS OF ELIGIBILITY.
(a) Each Associate who on the day before the Effective Date of
this Plan is a Member of or is eligible to be a Member of the Payless Plan
or who would be eligible to become a Member of the Payless Plan on January 1,
1997 if the Employer had continued to be a participating Employer under the
Payless 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 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 first day of the
month coincident with or following the date he has met these eligibility
requirements.
(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
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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 including the Company
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.
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. All such
contributions advanced to the Plan by the
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Company shall be reimbursed to the Company by the Employer for which such
amounts were advanced.
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 this Plan and to the Payless 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 replaced the Company Profit Sharing Contribution with a
Company Matching Contribution such that the total combined amount contributed
to this Plan and to the Payless 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 Payless Plan equal to 2 1/2% of Net
Profits, until determined otherwise by the Board of Directors, in the form of a
Company Matching Contribution. Such contribution may be made directly 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 for a Plan Year,
bears to the total amount of all Member Contributions up to 5% of such Members'
Pay for a Plan Year. Such Company Matching Contribution shall be determined
and paid to the Trustee as soon as practicable after the close of each Fiscal
Year and shall be reimbursed to the Company by the Employer when paid.
For the Plan Year ended December 31, 1997, the total Company Matching
Contribution to this Plan and to the Payless 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 annual Member 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
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Contribution shall be made with respect to a Member Before-Tax Contribution in
excess of the Code Section 402(g) limit, as referred to in Section 4.01(h) and
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. For this purpose the term "eligible
Members" includes Members in both the Payless Plan and this Plan.
Notwithstanding the foregoing paragraph, 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 and the Act.
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 or Employer 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 contribution to the Trust, the Company and/or the
Employer shall have the right (i) to recover an amount equal to the excess of
(A) the amount of such Company 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 Employer under Code Section
404 for the taxable year with respect to which the contribution is made.
If a contribution
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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
date of disallowance of the deduction of such Company Contribution, an amount
equal to the disallowed deduction shall be returned to the Company and/or
Employer, as applicable.
(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
and/or Employer.
SECTION 4
MEMBER CONTRIBUTIONS
4.01 PROCEDURE FOR MAKING CONTRIBUTIONS.
(a) AFTER-TAX CONTRIBUTIONS. Subject to any limitations set
forth in the Act from time to time, each Member may designate, pursuant to
procedures established by the Company, and contribute to the Plan an
amount equal to not less than 1% nor more than 15% (in whole percentage points)
of his Pay, or a flat dollar amount of not less than $2.00 and not more than
$10.00 per Pay period, subject to any further limitations imposed by the
Company in its discretion; provided, however, 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 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 who is 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 the 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 Section 1165(e) of the Puerto Rico Internal Revenue Code of 1994 ("Act"), or
if the Actual Deferral Percentage standards set forth in the Act 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) shall distribute any excess Before-Tax Contributions made with respect
to the Plan Year to the affected Members as soon as practicable after the end
of the Plan Year.
(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 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
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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
for any calendar year shall not exceed $7,500 or 10% of the Member's annual Pay
or such other amount as may be adjusted from time to time under applicable
Puerto Rico law (the "Deferral Limit"). If a Member reaches the Deferral
Limit, 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 to the extent permitted
by the Act, 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 mean any employee whose Pay is greater than the Pay
of two-thirds of all eligible employees, taking into account only Pay which is
considered for the purpose of Section 4.01.
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
(i) The aggregate of the Before-Tax Contributions (and such
other contributions which, in accordance with applicable rules and
regulations promulgated under the Act, may be aggregated with such
Before-Tax Contributions for purposes of demonstrating compliance with
the requirements of the Act) which are actually payable to the Trust on
behalf of each such Associate, to
(ii) Such Associate's Pay 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.
(b) 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
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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 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)) to the extent required or permitted under the Act.
In lieu of such distribution of excess Before-Tax Contributions, the
Committee may, to the extent permitted by applicable rules and regulations (and
(i) except with respect to situations in which Section 4.01 (h) applies, and
(ii) prior to March 15 of the calendar year following the Plan Year in which
such contributions are made or such later date as may be permitted under the
Act), 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.
In lieu of either distributing or recharacterizing excess Before-Tax
Contributions, the Company may, to the extent permitted by applicable rules and
regulations, make a qualified nonelective contribution on behalf of non-Highly
Compensated Employees in an amount sufficient to satisfy one of the non-
discrimination tests set forth above, which Company contribution (if any) shall
be reimbursed by the Employer. Allocation of any such qualified non-elective
contribution would be to the Member Before-Tax Accounts of each non-Highly
Compensated Employee in the same proportion that such Member's Before-Tax
Contributions for the year bears to the total Member Before-Tax Contributions
for the year for all non-Highly Compensated Employees of the Employer.
However, the maximum annual addition credited to a Member's Account shall be
limited by Section 4.06.
(c) 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 (or such
later date as may be
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permitted under the Act) 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 Pay which a Member has elected to have the
Employer contribute to the Trust rather than receive it in cash, 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 March 1 (or such other date as the Committee may
specify); 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 Act Section 1165(e) exceeds the limit imposed on the
Member in accordance with the applicable provisions of the Act for the year in
which the deferral occurred.
(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 (unless and to the extent permitted under
the Act and so determined by the Company in a uniform, nondiscriminatory
manner), 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. Notwithstanding the
foregoing provisions of this Section 4, the Company or the Committee, in their
respective discretion, may limit the amount of After-Tax Contributions made by
or on behalf of each eligible Member to the extent determined appropriate.
4.05 LIMITATIONS ON COMPANY MATCHING CONTRIBUTIONS. Notwithstanding
the foregoing provisions of Sections 3.02 or this Section 4, the Company or the
Committee, in their respective discretion, may limit the amount of Company
Matching Contributions allocated on behalf of each eligible Member to the
extent determined appropriate.
4.06 AGGREGATE LIMITATIONS. To the extent required under the Act or as
so determined by the Company or the Committee, in their respective discretion,
Company Matching Contributions and Member After-Tax Contributions may be
aggregated on a Member by Member basis and limited, as determined appropriate.
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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 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, any reference to the "Payless Common Stock Fund" or to
"Payless Stock" shall be deemed to be a reference to a fund invested in, and to
shares of common stock of, the Company, rather than a reference to a fund
invested in, or shares of, 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
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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.
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 PAYLESS STOCK RECEIVED IN RESPECT OF MAY STOCK. In the
event that shares of Payless Stock 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 with a member of the
Group (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 or the Employer 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
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fees, are not 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) Any 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 from the
Payless 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) Any 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, any 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, the Employer 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 the 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 index 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 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/or the
Employer) 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 the Company or the 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 the Company or the Employer to
discharge any Associate or otherwise act with relation to him. The Company and
the 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 and/or the Employer 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, 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 Puerto Rico and, whenever possible, to be in
conformity with the applicable requirements of ERISA, of the Internal Revenue
Code to the extent applicable and of the Puerto Rico Internal Revenue Code of
1994.
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.
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PAYLESS SHOESOURCE, INC.
PROFIT SHARING PLAN
FOR PUERTO RICO ASSOCIATES
Effective June 1, 1998
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TABLE OF CONTENTS
Page
SECTION 1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.01 Accounts. . . . . . . . . . . . . . . . . . . . . 2
1.02 After-Tax Contributions . . . . . . . . . . . . . 2
1.03 Allocation Pay Amount . . . . . . . . . . . . . . 2
1.04 Associate . . . . . . . . . . . . . . . . . . . . 2
1.05 Authorized Leave of Absence. . . . . . . . . . . 3
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 or Payless. . . . . . . . . . . . . . . . 4
1.12 Company Accounts. . . . . . . . . . . . . . . . . 4
1.13 Company Matching Contributions. . . . . . . . . . 4
1.14 Company Profit Sharing Contributions. . . . . . . 4
1.15 Effective Date. . . . . . . . . . . . . . . . . . 4
1.16 Employer or Payless PR . . . . . . . . . . . . . 4
1.17 ERISA . . . . . . . . . . . . . . . . . . . . . . 4
1.18 Fiduciary . . . . . . . . . . . . . . . . . . . . 4
1.19 Fiscal Year . . . . . . . . . . . . . . . . . . . 4
1.20 Group . . . . . . . . . . . . . . . . . . . . . . 4
1.21 Hour of Service . . . . . . . . . . . . . . . . . 5
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. . . . . . . . . . . . 6
1.28 Member Contributions. . . . . . . . . . . . . . . 6
1.29 Military Service. . . . . . . . . . . . . . . . . 6
1.30 Net Profits . . . . . . . . . . . . . . . . . . . 6
1.31 Pay . . . . . . . . . . . . . . . . . . . . . . . 6
1.32 Plan. . . . . . . . . . . . . . . . . . . . . . . 6
1.33 Plan Year . . . . . . . . . . . . . . . . . . . . 7
1.34 Prior Plan. . . . . . . . . . . . . . . . . . . . 7
1.35 Qualified Domestic Relations Order. . . . . . . . 7
1.36 Retirement. . . . . . . . . . . . . . . . . . . . 7
1.37 Social Security Wage Base . . . . . . . . . . . . 7
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1.38 Total and Permanent Disability or Disability. . . 7
1.39 Transferred Accounts. . . . . . . . . . . . . . . 7
1.40 Trust Agreement . . . . . . . . . . . . . . . . . 7
1.41 Trust Fund. . . . . . . . . . . . . . . . . . . . 7
1.42 Trustee . . . . . . . . . . . . . . . . . . . . . 7
1.43 Unit. . . . . . . . . . . . . . . . . . . . . . . 7
1.44 Unit Value. . . . . . . . . . . . . . . . . . . . 8
1.45 Valuation Date. . . . . . . . . . . . . . . . . . 8
1.46 Year of Service . . . . . . . . . . . . . . . . . 8
1.47 Vesting Service . . . . . . . . . . . . . . . . . 8
SECTION 2 Membership . . . . . . . . . . . . . . . . . . . . . 10
2.01 Conditions of Eligibility.. . . . . . . . . . . . 10
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.. . . . . . . . 13
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.. . . . . . . . 18
4.04 Limitations on After-Tax Contributions. . . . . . 19
4.05 Limitations on Company Matching Contributions . . 19
4.06 Aggregate Limitations.. . . . . . . . . . . . . . 19
SECTION 5 Investment Provisions . . . . . . . . . . . . . . . 20
5.01 Investment Funds. . . . . . . . . . . . . . . . . 20
5.02 Investment Direction. . . . . . . . . . . . . . . 20
SECTION 6 Accounts . . . . . . . . . . . . . . . . . . . . . . 21
6.01 Member Accounts . . . . . . . . . . . . . . . . . 21
6.02 Company Accounts. . . . . . . . . . . . . . . . . 21
6.03 Maintenance of Accounts.. . . . . . . . . . . . . 22
6.04 Valuation of Accounts.. . . . . . . . . . . . . . 22
6.05 Member Statements.. . . . . . . . . . . . . . . . 22
6.06 Shares of The May Department Stores Company ("May
Stock") in the May Common Stock Fund. . . . . . . 22
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6.07 Shares of Payless Stock Received in Respect of May
Stock . . . . . . . . . . . . . . . . . . . . . . 24
6.08 Shares of Payless ShoeSource, Inc. ("Payless
Stock") in the Payless Common Stock Fund. . . . . 24
6.09 Vesting in Member and Company Accounts. . . . . . 25
SECTION 7 Expenses. . . . . . . . . . . . . . . . . . . . . . . 28
7.01 Administrative Expenses . . . . . . . . . . . . . 28
SECTION 8 Withdrawals During Employment . . . . . . . . . . . . 29
8.01 Withdrawals Prohibited Unless Specifically
Authorized . . . . . . . . . . . . . . . . . . . 29
8.02 Authorized Withdrawals. . . . . . . . . . . . . . 29
SECTION 9 Benefits Upon Retirement, Death, Disability, or
Termination of Employment . . . . . . . . . . . . . . 31
9.01 Benefits. . . . . . . . . . . . . . . . . . . . . 31
9.02 Beneficiary.. . . . . . . . . . . . . . . . . . . 31
SECTION 10 Payment of Benefits . . . . . . . . . . . . . . . . . 32
10.01 Time of Payment . . . . . . . . . . . . . . . . . 32
10.02 Form of Payment . . . . . . . . . . . . . . . . . 33
10.03 Indirect Payment of Benefits. . . . . . . . . . . 33
10.04 Inability to Find Member. . . . . . . . . . . . . 33
10.05 Commencement of Benefit Distribution to Member. . 33
10.06 Commencement of Benefit Distribution to
Beneficiary . . . . . . . . . . . . . . . . . . . 34
10.07 Commencement of Benefit Distribution to
Alternate Payee . . . . . . . . . . . . . . . . . 34
SECTION 11 Permitted Rollover of Plan Distributions. . . . . . . 35
11.01 Rollover Permitted. . . . . . . . . . . . . . . . 35
11.02 Definitions . . . . . . . . . . . . . . . . . . . 35
SECTION 12 Limit on Contributions to the Plan. . . . . . . . . . 36
12.01 Limit on Contributions. . . . . . . . . . . . . . 36
12.02 Special Definitions . . . . . . . . . . . . . . . 36
12.03 General . . . . . . . . . . . . . . . . . . . . . 38
12.04 Adjustment for Excessive Annual Additions . . . . 38
12.05 Limitation Imposed by Code
Section (401)(a)(17). . . . . . . . . . . . . . . 39
SECTION 13 Administration of the Plan. . . . . . . . . . . . . . 40
13.01 Plan Administrator. . . . . . . . . . . . . . . . 40
13.02 Delegation of Authority . . . . . . . . . . . . . 40
13.03 Committee and Subcommittees . . . . . . . . . . . 40
13.04 Accounts and Reports. . . . . . . . . . . . . . . 42
13.05 Non-Discrimination. . . . . . . . . . . . . . . . 42
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SECTION 14 Management of the Trust Fund. . . . . . . . . . . . . . 42
14.01 Use of the Trust Fund . . . . . . . . . . . . . . . 42
14.02 Trustees. . . . . . . . . . . . . . . . . . . . . . 42
14.03 Investments and Reinvestments . . . . . . . . . . . 42
SECTION 15 Certain Rights and Obligations of Employers and
Members . . . . . . . . . . . . . . . . . . . . . . . . 43
15.01 Disclaimer of Employer Liability. . . . . . . . . . 43
15.02 Employer-Associate Relationship . . . . . . . . . . 44
15.03 Binding Effect . . . . . . . . . . . . . . . . . . 44
15.04 Corporate Action. . . . . . . . . . . . . . . . . . 44
15.05 Claim and Appeal Procedure. . . . . . . . . . . . . 44
SECTION 16 Non-Alienation of Benefits. . . . . . . . . . . . . . . 45
16.01 Provisions With Respect to Assignment and Levy. . . 45
16.02 Alternate Application . . . . . . . . . . . . . . . 45
SECTION 17 Amendments. . . . . . . . . . . . . . . . . . . . . . . 45
17.01 Company's Rights. . . . . . . . . . . . . . . . . . 45
17.02 Procedure to Amend. . . . . . . . . . . . . . . . . 46
17.03 Provision Against Diversion . . . . . . . . . . . . 46
SECTION 18 Termination . . . . . . . . . . . . . . . . . . . . . . 46
18.01 Right to Terminate. . . . . . . . . . . . . . . . . 46
18.02 Withdrawal of an Employer . . . . . . . . . . . . . 46
18.03 Distribution in Event of Termination of Trust . . . 46
18.04 Administration in Event of Continuance of Trust . . 47
18.05 Merger, Consolidation or Transfer . . . . . . . . . 47
SECTION 19 Construction. . . . . . . . . . . . . . . . . . . . . . 47
19.01 Applicable Law. . . . . . . . . . . . . . . . . . . 47
19.02 Gender and Number . . . . . . . . . . . . . . . . . 47
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