BARNES & NOBLE, INC.
EMPLOYEES' RETIREMENT PLAN
Effective as of January 1, 1987
Amended and Restated as of January 1, 1998
Exhibit 10.8
BARNES & NOBLE, INC.
EMPLOYEES' RETIREMENT PLAN
INTRODUCTION
B. Dalton Bookseller, Inc., prior to 1987 a wholly-owned subsidiary of
Dayton-Hudson Corporation, established the B. Dalton Company Employees'
Retirement Plan as of January 1, 1987 ("B. Dalton Plan"). Effective
January 1, 1992, the Pension Plan for Employees of Doubleday Book Shops,
Inc. was merged into the B. Dalton Plan.
As of January 1, 1994, sponsorship of the B. Dalton Plan was transferred
from B. Dalton Bookseller, Inc. to Barnes & Noble, Inc.. The B. Dalton
Plan was amended and restated in its entirety and renamed the Barnes & Noble, Inc. Employees' Retirement Plan effective as of January 1, 1994
("Plan").
This amendment and restatement of the Plan is effective as of January 1,
1998 and incorporates the provisions of the Retirement Protection Act of
1994 as part of the General Agreement on Tariffs and Trade.
Except as otherwise herein specified, the rights and benefits of any
Participant who retires or whose employment is terminated are determined
in accordance with the provisions of the Plan in effect and operative at
the time of such retirement or termination.
Exhibit 10.8
BARNES & NOBLE, INC.
EMPLOYEES' RETIREMENT PLAN
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS .......................................................1
ARTICLE 2. PARTICIPATION ....................................................13
2.01 Participation Requirements .....................................13
2.02 Determination of Eligibility Service ...........................13
2.03 Events Affecting Participation .................................13
2.04 Participation upon Reemployment ................................14
ARTICLE 3. SERVICE ..........................................................15
3.01 Years of Vesting Service .......................................15
3.02 Credited Service ...............................................18
3.03 Restoration of Retired Participant or Other Former Eligible
Employee to Service ............................................19
ARTICLE 4. ELIGIBILITY FOR AND AMOUNT OF BENEFITS ...........................24
4.01 Normal Retirement ..............................................24
4.02 Late Retirement ................................................25
4.03 Early Retirement ...............................................27
4.04 Vesting ........................................................27
4.05 Spouse's Pension ...............................................28
4.06 Maximum Benefit Limitation .....................................32
4.07 Transfers and Employment with an Affiliate .....................33
ARTICLE 5. PAYMENT OF PENSIONS ..............................................35
5.01 Automatic Form of Payment ......................................35
5.02 Optional Forms of Payment ......................................36
5.03 Election of Options ............................................39
5.04 Commencement of Payments .......................................41
5.05 Distribution Limitation ........................................42
5.06 Direct Rollover of Certain Distributions .......................42
ARTICLE 6. CONTRIBUTIONS ....................................................44
6.01 Employer's Contributions .......................................44
6.02 Return of Contributions ........................................44
ARTICLE 7. ADMINISTRATION OF PLAN ...........................................45
7.01 Plan Sponsor and Plan Administrator ............................45
7.02 Administrative Responsibilities ................................45
BARNES & NOBLE, INC.
EMPLOYEES' RETIREMENT PLAN
TABLE OF CONTENTS
(cont'd)
Page
7.03 Delegation of Responsibilities .................................46
7.04 Certified Earnings and Bonding .................................46
7.05 Service in More Than One Fiduciary Capacity ....................46
7.06 Indemnification ................................................47
7.07 Establishment of Rules .........................................47
7.08 Correction of Errors ...........................................47
7.09 Prudent Conduct ................................................48
7.10 Actuary ........................................................48
7.11 Maintenance of Accounts ........................................48
7.12 Records ........................................................48
7.13 Appointment of Investment Manager ..............................48
7.14 Expenses of Administration .....................................49
7.15 Claims and Review Procedures ...................................49
ARTICLE 8. MANAGEMENT OF FUNDS ..............................................53
8.01 Funding Agent ..................................................53
8.02 Exclusive Benefit Rule .........................................54
8.03 Funding Policy .................................................54
ARTICLE 9. GENERAL PROVISIONS ...............................................55
9.01 Nonalienation ..................................................55
9.02 Conditions of Employment Not Affected by Plan ..................55
9.03 Facility of Payment ............................................56
9.04 Information ....................................................56
9.05 Top-Heavy Provisions ...........................................56
9.06 Offsets ........................................................60
9.07 Construction ...................................................60
9.08 Prevention of Escheat ..........................................61
ARTICLE 10. AMENDMENT, MERGER, AND TERMINATION ..............................62
10.01 Amendment of Plan .............................................62
10.02 Merger, Consolidation, or Transfer ............................62
10.03 Additional Participating Employers ............................63
10.04 Termination of Plan ...........................................63
10.05 Limitation Concerning Highly Compensated Employees or Highly
Compensated Former Employees ..................................64
10.06 Doubleday Book Shops, Inc .....................................65
BARNES & NOBLE, INC.
EMPLOYEES' RETIREMENT PLAN
TABLE OF CONTENTS
(cont'd)
Page
APPENDIX A. ACTUARIAL FACTORS ...............................................66
APPENDIX B. PROVISIONS APPLICABLE TO EMPLOYEES OF DOUBLEDAY BOOK SHOPS, INC .68
Exhibit 10.8
BARNES & NOBLE, INC.
EMPLOYEES' RETIREMENT PLAN
ARTICLE 1. DEFINITIONS
1.01 "Accrued Benefit" means, as of any date of determination, the
normal retirement Pension of a Participant computed under
Section 4.01 on the basis of the Participant's Final Average
Compensation, the number of years of Credited Service and other
applicable components of the Plan formula, as of that date.
1.02 "Actuarial Equivalent" means the equivalent value when computed
on the basis of the IRS Mortality Table and IRS Interest Rate,
except as otherwise specified in the Plan or Appendix A.
1.03 "Administrator" means the Company in its role described in Article 7.
1.04 "Affiliate" means any company not participating in the Plan
which is (i) a member of a controlled group of corporations (as
defined in Section 414(b) of the Code) which also includes as a
member the Employer; (ii) any trade or business under common
control (as defined in Section 414(c) of the Code) with the
Employer; (iii) any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes the Employer; or (iv)
any other entity required to be aggregated with the Employer
pursuant to regulations under Section 414(o) of the Code.
Notwithstanding the foregoing sentence, for purposes of Section
4.06, Section 3.01(e)(iii), and Section 3.02(c)(iii), the
definitions in Sections 414(b) and (c) of the Code shall be
modified as provided in Section 415(h) of the Code.
Page 2
1.05 "Annuity Starting Date" means, unless the Plan expressly
provides otherwise, the first day of the first period for which
an amount is due as an annuity or any other form.
1.06 "Beneficiary" means the person or persons named by a Participant
by written designation filed with the Administrator to receive
payments after the Participant's death.
1.07 "Board of Directors" means the Board of Directors of the
Company, as from time to time constituted, or any executive
committee thereof authorized to act for said Board of Directors.
1.08 "Break in Service" means a period which constitutes a break in
an Eligible Employee's Years of Vesting Service, as provided in
Section 3.01(c).
1.09 "Certified Earnings" means the basic cash remuneration paid to
an Eligible Employee for services rendered to the Employer,
determined prior to any pre-tax contributions under a "qualified
cash or deferred arrangement" (as defined under Section 401(k)
of the Code and its applicable regulations) or under a
"cafeteria plan" (as defined under Section 125 of the Code and
its applicable regulations), including salary, hourly wages,
commissions, overtime pay, and bonus pay, but excluding (a)
expense allowances or reimbursements, payments or contributions
to or for the benefit of the Participant under this Plan or any
other employee benefit plan, deferred compensation payments
under any deferred compensation plan, merchandise discounts or
benefits in the form or use of property, except to the extent
such amounts are required to be included in determining the
Eligible Employee's regular rate of pay under the Federal Fair
Labor Standards Act for purposes of computing his overtime pay,
(b) any bonus paid to the Eligible Employee under a plan or
policy of the Employer that is paid in a calendar year other
than the
Page 3
calendar year in which such bonus would normally be
paid under such plan or policy, or (c) amounts paid by any
entity other than the Employer.
However, effective on and after January 1, 1989 and before
January 1, 1994, Certified Earnings taken into account for any
purpose under the Plan, including the determination of Final
Average Compensation, shall not exceed $200,000 per year. Except
as provided below, as of January 1 of each calendar year on and
after January 1, 1990 and before January 1, 1994, the applicable
limitation as determined by the Commissioner of Internal Revenue
for that calendar year shall become effective as the maximum
Certified Earnings to be taken into account for Plan purposes
for that calendar year only in lieu of the $200,000 limitation
set forth above. Commencing with the Plan Year beginning in
1994, Certified Earnings taken into account for any purpose
under the Plan, including the determination of Final Average
Compensation, shall not exceed $150,000, as adjusted in
accordance with Sections 401(a)(17)(B) and 415(d)(1)A) of the
Code.
1.10 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
1.11 "Company" means prior to January 1, 1994, B. Dalton Bookseller,
Inc., and thereafter, Barnes & Noble, Inc. and any successor
thereof by merger, purchase, or otherwise.
1.12 "Covered Compensation" means, for any Participant, the average,
rounded to the nearest $3,000, of the taxable wage bases in
effect under Section 230 of the Social Security Act for each
year in the 35-year period ending with the calendar year in
which the Participant attains (or will attain) his Social
Security Retirement Age. In determining a Participant's Covered
Compensation for any Plan Year, the taxable wage base for the
current Plan Year and any subsequent Plan Year
Page 4
shall be assumed to be the same as the taxable wage base in effect as
of the beginning of the Plan Year for which the determination is made.
1.13 "Credited Service" means service recognized for purposes of
computing the amount of any benefit, determined as provided in
Section 3.02.
1.14 "Effective Date" means January 1, 1987.
1.15 "Eligible Employee" means any Employee who receives from an
Employer compensation other than a pension, severance pay,
retainer or fee under contract, but excluding any individual
classified by the Employer as a Leased Employee or independent
contractor, regardless of their classification by the Internal
Revenue Service for tax withholding purposes, any person who is
included in a unit of Employees covered by a collective
bargaining agreement which does not provide for his membership
in the Plan, any non-resident alien with no U.S.-source income
(as described in Code Section 861(a)(3)), and any Employee whose
services are performed outside the continental United States
(including Alaska and Puerto Rico) or Hawaii, or whose base of
operations is outside the continental U.S. (including Alaska and
Puerto Rico) or Hawaii.
1.16 "Employee" means any person who is employed by an Employer.
1.17 "Employer" means the Company with respect to its employees; or
any other company participating in the Plan as provided in
Section 10.03 with respect to its employees.
1.18 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
Page 5
1.19 "Final Average Compensation" means the average annual Certified
Earnings of a Participant during the five consecutive Plan Years
in the last ten or fewer Plan Years during which he completes at
least 1,000 Hours of Service in each such Plan Year affording
the highest such average, or during all of the Plan Years in
which he completes 1,000 Hours of Service, if less than five
years. The Plan Year in which the Participant first completes an
Hour of Service and/or the Plan Year in which he incurs a
Termination of Employment shall be included in the determination
of Final Average Compensation, even if he completed less than
1,000 Hours of Service in each of such Plan Years, if the
inclusion of Certified Earnings in either or both of such Plan
Years results in a higher Final Average Compensation, provided
that such Plan Years are within the last ten consecutive Plan
Years.
1.20 "Five Percent Owner" means with respect to a corporation, any
person who owns (or is considered as owning within the meaning
of Code Section 318) more than 5 percent of the outstanding
stock of the corporation or stock possessing more than 5 percent
of the total voting power of the corporation.
1.21 "Funding Agent" means the trustee or trustees or the legal
reserve life insurance company by whom the funds of the Plan are
held, as provided in Article 8.
1.22 "Highly Compensated Employee" means with respect to a Plan Year
commencing on or after January 1, 1997, any employee of the
Employer or an Affiliate (whether or not eligible for the Plan)
who:
(a) was a Five Percent Owner for such Plan Year or the
prior Plan Year, or
Page 6
(b) for the preceding Plan Year received Statutory
Compensation in excess of $80,000 (as adjusted by the
Secretary of the Treasury from time to time), and, if
the Employer so elects, was among the highest 20
percent of employees for the preceding Plan Year when
ranked by Statutory Compensation paid for that year
excluding, for purposes of determining the number of
such employees, such employees as the Administrator
may determine on a consistent basis pursuant to
Section 414(q) of the Code. For this purpose,
"Statutory Compensation" shall mean the wages,
salaries, and other amounts paid in respect of an
employee for services actually rendered to an Employer
or an Affiliate and including amounts excluded from
the income of an employee pursuant to Sections 125,
402(e)(3), 402(h)(1)(B), and 403(b) of the Code, but
excluding deferred compensation, stock options, and
other distributions which receive special tax benefits
under the Code.
Notwithstanding the foregoing, employees who are nonresident
aliens and who receive no earned income from the Employer or an
Affiliate which constitutes income from sources within the
United States shall be disregarded for all purposes of this
Section.
The provisions of this Section shall be further subject to such
additional requirements as shall be described in Section 414(q)
of the Code and its applicable regulations, which shall override
any aspects of this Section inconsistent therewith.
1.23 "Hour of Service" means, with respect to any applicable computation
period,
(a) each hour for which the Employee is paid or entitled
to payment for the performance of duties for the
Employer or an Affiliate,
(b) each hour for which an Employee is paid or entitled to
payment by the Employer or an Affiliate on account of
a period during which no duties are performed, whether
or not the
Page 7
employment relationship has terminated, due to
vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave
of absence, but not more than 501 hours for any single
continuous period,
(c) each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to
by the Employer or an Affiliate, excluding any hour
credited under (a) or (b), which shall be credited to
the computation period or periods to which the award,
agreement or payment pertains, rather than to the
computation period in which the award, agreement or
payment is made,
(d) solely for purposes of determining whether an Employee
has incurred a Break in Service under the Plan, each
hour for which an Employee would normally be credited
under paragraph (a) or (b) above during a period of
Parental Leave but not more than 501 hours for any
single continuous period. In the case in which hours
cannot be determined, eight hours of service per day
of such absence shall be credited. However, the number
of hours credited to an Employee under this paragraph
(d) during the computation period in which the
Parental Leave began, when added to the hours credited
to an Employee under paragraphs (a) through (c) above
during that computation period, shall not exceed 501.
If the number of hours credited under this paragraph
(d) for the computation period in which the Parental
Leave began is zero, the provisions of this paragraph
(d) shall apply as though the Parental Leave began in
the immediately following computation period, and
(e) solely for purposes of determining whether an Employee
has incurred a Break in Service under the Plan, each
hour for which an Employee would normally be credited
under paragraph (a) or (b) above during a period of
leave for the birth, adoption or placement of a child,
to care for a spouse or an immediate family member
with a serious illness or
Page 8
for the Employee's own illness pursuant to the Family
and Medical Leave Act of 1993 and its regulations.
For purposes of paragraph (b), a payment shall be deemed to be
made by or due from an Employer or Affiliate regardless of
whether such payment is made by or due from an Employer or
Affiliate directly, or indirectly through, among others, a trust
fund or insurer to which the Employer or Affiliate contributes
or pays premiums, and regardless of whether contributions made
or due to the trust fund, insurer or other entity are for the
benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
No more than 501 hours shall be credited under paragraph (b)
above for the non-performance of duties for any single
continuous period (whether or not such period occurs in a single
computation period).
No hours shall be credited on account of any period during which
the Employee performs no duties and receives payment solely for
the purpose of complying with unemployment compensation,
workers' compensation or disability insurance laws.
The Hours of Service credited shall be determined as required by
Title 29 of the Code of Federal Regulations, Section
2530.200b-2(b) and (c). In crediting Hours of Service hereunder,
each Employee for whom the Employer or Affiliate does not
maintain hourly work records and who completes at least one Hour
of Service (pursuant to paragraphs (a), (b), or (c) above)
during any week shall be credited with 45 Hours of Service for
such week. For each other Employee, Hours of Service shall be
credited based on the number of hours actually worked.
Page 9
1.24 "IRS Interest Rate" means the annual rate of interest on 30-year
Treasury Securities as published by the Commissioner in the
calendar month preceding the applicable Stability Period.
1.25 "IRS Mortality Table" means the mortality table prescribed by
the Secretary of the Treasury under Section 417(e)(3)(A)(ii)(I)
of the Code as in effect on the first day of the applicable
Stability Period.
1.26 "Leased Employee" means any person as so defined in Section 414(n) of
the Code.
1.27 "Limitation Year" means the calendar year.
1.28 "Normal Retirement Age" means an Eligible Employee's 65th
birthday or the fifth anniversary of the date he becomes a
Participant, if later.
1.29 "Normal Retirement Date" means the last day of the calendar month in
which an Eligible Employee reaches his Normal Retirement Age.
1.30 "Parental Leave" means a period in which the Eligible Employee
is absent from work immediately following his or her active
employment because of the Eligible Employee's pregnancy, the
birth of the Eligible Employee's child, the placement of a child
with the Eligible Employee in connection with the adoption of
that child by the Eligible Employee, or for purposes of caring
for that child for a period beginning immediately following
birth or placement.
1.31 "Participant" means any person included in the membership of the Plan,
as provided in Article 2.
Page 10
1.32 "Pension" means annual payments under the Plan as provided in
Article 5.
1.33 "Plan" means the Barnes & Noble, Inc. Employees' Retirement
Plan, as set forth in this document or as amended from time to
time.
1.34 "Plan Year" means the calendar year.
1.35 "Protected Benefit" means, as of any date of determination,
the Accrued Benefit of a Participant and
(a) any right of the Participant under the terms of the
Plan as of such date to have such Accrued Benefit
commence on a date other than the Normal Retirement
Date,
(b) any right of the Participant under the terms of the
Plan as of such date to have such Accrued Benefit
payable in an optional form of payment, and
(c) the methodology under the terms of the Plan as of such
date for determining the amount of benefit payable as
a result of the exercise of any right of the
Participant expressed in paragraph (a) or (b) above.
For the sole purposes of paragraph (c) above, any provision of
the Plan that requires payment of a Participant's Pension in a
form other than that described in Section 5.01(a) shall be
considered to be the exercise of a right by the Participant
therefor.
1.36 "Qualified Joint and Survivor Annuity" means an annuity
described in Section 5.01(b).
1.37 "Social Security Retirement Age" means age 65 with respect to a
Participant who was born before January 1, 1938; age 66 with
respect to a Participant who was born after December 31,
Page 11
1937 and before January 1, 1955; and age 67 with respect to a
Participant who was born after December 31, 1954.
1.38 "Spousal Consent" means the irrevocable, written consent given
by a Participant's spouse to an election made by the Participant
of a specified form of Pension, a designation of a specified
Beneficiary as provided in Article 5, or the waiver of the
spouse's benefit payable under Section 4.05. The specified form
or specified Beneficiary shall not be changed unless further
Spousal Consent is given, unless the spouse expressly waives the
right to consent to any future changes. Spousal Consent shall be
duly witnessed by a notary public and shall acknowledge the
effect on the spouse of the Participant's election. The
requirement for Spousal Consent may be waived by the
Administrator in the event that the Participant establishes to
its satisfaction that he has no spouse, that such spouse cannot
be located, that a legal separation has occurred or under such
other circumstances as may be permitted under applicable
Treasury Department regulations. Spousal Consent shall be
applicable only to the particular spouse who provides such
consent.
1.39 "Stability Period" means the Plan Year in which occurs the
Annuity Starting Date for the distribution.
1.40 "Suspendible Month" means a month in which the Participant
completes at least 40 Hours of Service with the Employer or an
Affiliate.
1.41 "Termination of Employment" means the date the Employee's
employment with the Employer and all Affiliates ceases, as
determined by the Employer, due to his resignation, discharge,
retirement, death, failure to return to active service at the
end of an authorized leave of absence or the authorized
extension(s) thereof, failure to return to service when duly
called following a
Page 12
temporary layoff, or the occurrence of any event or circumstance under
the policy of the Employer or Affiliate, or predecessor employer, in
effect from time to time that results in the termination of the
Employer/Employee relationship; provided, however, that a Termination
of Employment shall not be deemed to have occurred while an
Employee, prior to his Normal Retirement Date, is receiving, or
fulfilling a six-month waiting period to be eligible to receive,
payments under a long-term disability plan of the Employer
(assuming the Employee makes timely application therefor).
1.42 "Trustee" means the trustee or trustees in the separate trust
forming part of this Plan and any additional or successor
Trustees as may be appointed by the Company pursuant to
Article 8.
1.43 "Trust Fund" means the aggregate of assets described in Article 8.
1.44 "Year of Eligibility Service" means the period of service
recognized for purposes of determining eligibility for
membership in the Plan, determined as provided in Section 2.02.
1.45 "Years of Vesting Service" means the period of service
recognized for purposes of determining eligibility for a vested
Pension under the Plan, determined as provided in Section 3.01.
Page 13
ARTICLE 2. PARTICIPATION
2.01 Participation Requirements
Every person who was a Participant in the Plan on December 31,
1997 shall continue to be a Participant on January 1, 1998.
Every other Employee shall become a Participant in the Plan as
of the first day of the calendar month coinciding with or
immediately following (a) the date he completes one Year of
Eligibility Service or (b) his 21st birthday, whichever is
later, provided he is then an Eligible Employee.
2.02 Determination of Eligibility Service
Solely for purposes of this Article, a Year of Eligibility
Service shall be the 12-month period beginning on the date an
Eligible Employee first completes an Hour of Service upon hire
or rehire, or any Plan Year beginning after that date, in which
he completes at least 1,000 Hours of Service. In the event an
Eligible Employee incurs a Break in Service prior to his
completing one Year of Eligibility Service, upon his
reemployment, he shall be credited with one Year of Eligibility
Service for the 12-month period beginning on the date he first
completes an Hour of Service after he incurs a Break in Service
or any Plan Year beginning after that date, in which he
completes at least 1,000 Hours of Service.
2.03 Events Affecting Participation
A person's participation in the Plan shall end when he is no
longer employed by the Employer or an Affiliate if he is not
entitled to either an immediate or a deferred Pension under the
Plan. Participation shall continue while on approved leave of
absence from service or during a period while he is not an
Eligible Employee but is in the employ of the Employer or an
Affiliate, but no Years of Vesting Service or Credited Service
shall be counted for that period, except as
Page 14
specifically provided in Article 3 and Section 4.07, and such person's
benefit shall be determined in accordance with the provisions of the
Plan in effect on the date he ceased to be an Eligible Employee.
2.04 Participation upon Reemployment
If an Eligible Employee's participation in the Plan ends and he
again becomes an Eligible Employee, he shall be considered a new
Eligible Employee for all purposes of the Plan, except as
provided in Section 3.03.
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ARTICLE 3. SERVICE
3.01 Years of Vesting Service
(a) A Plan Year in which an Eligible Employee completes at least
1,000 Hours of Service counts as a full Year of Vesting Service.
Except as provided below, no Years of Vesting Service is counted
for any Plan Year in which an Eligible Employee completes less
than 1,000 Hours of Service, except that the Plan Year during
which he first completed an Hour of Service and the Plan Year
containing his Termination of Employment shall be aggregated for
the purpose of determining if the Eligible Employee shall be
credited with an additional Year of Vesting Service, provided
the Eligible Employee works at an annualized rate of 1,000 Hours
of Service in the Plan Year in which his Termination of
Employment occurs.
(b) Service rendered prior to January 1, 1989 shall be recognized
for vesting purposes to the extent that such service was
recognized for such purpose under the terms of the Plan as in
effect prior to such date.
(c) An Eligible Employee shall incur a one-year Break in
Service for any Plan Year after the year in which an Eligible
Employee first becomes employed during which he does not
complete more than 500 Hours of Service. If an Eligible
Employee who has not completed the vesting requirements for
a vested Pension has a Break in Service in which the number of
consecutive one-year Breaks in Service equals or exceeds
five, the service rendered before his most recent Break in
Service shall be excluded from his Years of Vesting Service.
If an Eligible Employee terminates his employment with the
Employer and all Affiliates and is reemployed after having a
Break in Service, his service before the Break in Service
shall be excluded from his Years of Vesting Service, except
as provided in Section 3.03. A period during which an
Eligible
Page 16
Employee is on a leave of absence approved by the Employer or on
temporary layoff shall not be considered as a Break in Service,
provided he returns to work at the end of an approved leave of absence
or upon recall when notified after a temporary layoff.
(d) If an Eligible Employee shall have been absent from the service
of the Employer because of service in the Armed Forces of the
United States and if he shall have returned to the service of
the Employer having applied to return while his reemployment
rights were protected by law, that absence shall not count as a
Break in Service, but instead shall be counted as Years of
Vesting Service.
(e) Each of the following periods of service shall be counted in a
person's Years of Vesting Service to the extent that it would be
recognized under paragraphs (a) through (c) above with respect
to Eligible Employees:
(i) a period of service as an Employee, but not an
Eligible Employee, of the Employer,
(ii) a period of service as an employee of an
Affiliate (excluding any period of service prior to
the date the entity became an Affiliate, unless
otherwise provided by the Board of Directors), and
(iii) in the case of a person who is a Leased Employee
before or after a period of service as an Eligible
Employee or a period of service described in (i) or
(ii) above, a period during which he has performed
services for the Employer or an Affiliate as a Leased
Employee.
The Break in Service rules of Sections 3.01 and 3.03 shall be
applied as though all such periods of service were service as an
Eligible Employee.
Page 17
(f) Notwithstanding any provision of this Section 3.01 to the
contrary, all Years of Vesting Service calculations for an
Eligible Employee hired prior to January 1, 1976 shall be
made using the elapsed time method described in IRS Regulation
Section 1.410(a)-7T. Service with regard to an individual
hired prior to January 1, 1976 shall begin on the date the
Eligible Employee first completes an Hour of Service and
ends on the Eligible Employee's severance date. For
purposes of this Section 3.01(f), "severance date" means the
earlier of (i) the date an Eligible Employee quits, retires,
is discharged or dies or (ii) the first anniversary of the
date on which an Eligible Employee is first absent from
service, with or without pay, for any other reason such as
vacation, sickness, disability, layoff or leave of
absence. If the employment of an Eligible Employee hired
prior to January 1, 1976 is terminated and he is later
reemployed within one year, the period between his severance
date and the date of his reemployment shall be included in
his Years of Vesting Service. However, if his employment is
terminated during a period of absence from service for
reasons such as vacation, sickness, disability, layoff or
leave of absence approved by the Employer, service shall be
counted for the period from his severance date to the date of
his reemployment only if he is reemployed within one year of
the first day of that absence. For purposes of this Section
3.01(f), a Break in Service shall occur if an Eligible
Employee is not reemployed within one year after a severance
date; provided, however, that is an Eligible Employee's
employment is terminated or if the Eligible Employee is
otherwise absent from work because of Parental Leave (as
defined in Section 1.30), a Break in Service shall occur only
if the Eligible Employee is not reemployed or does not
return to active service within two years of his severance
date; and provided further that the first year of such
absence for Parental Leave, measured from his severance date,
shall not be considered in determining the Eligible Employee's
"period of Break in Service" for purposes of Section 3.01(c).
Page 18
3.02 Credited Service
(a) A full year of Credited Service shall be counted for each Plan
Year during which an Eligible Employee completes 1,000 Hours of
Service as an Eligible Employee. If an Eligible Employee does
not complete 1,000 Hours of Service during the Plan Years in
which he first completes an Hour of Service or incurs his
Termination of Employment, he shall receive credit for a
fractional year equal to the actual number of months worked
during such Plan Years, provided that he was working at the rate
of 1,000 Hours of Service per Plan Year. For purposes of the
preceding sentence, an Eligible Employee shall receive credit
for a month of service, provided he has worked 15 or more days
during such month.
(b) Credited Service shall include, to the extent required by law,
any period of absence from service with the Employer due to
service in the Armed Forces of the United States which is
counted in an Eligible Employee's Years of Vesting Service as
provided in Section 3.01(d) and which occurs after the date the
Employee meets the requirements to be an Eligible Employee.
(c) Credited Service shall not be credited for any period in which a
Participant is (i) not an Eligible Employee but is in the employ
of the Employer, or (ii) in the employ of an Affiliate, or (iii)
performing services for the Employer or an Affiliate as a Leased
Employee.
(d) Notwithstanding any provision of this Section 3.02 to the
contrary, all Credited Service calculations for a
Participant employed by the Company prior to January 1, 1976
shall be made using the elapsed time method as described in IRS
Regulation Section 1.410(a)-7T. Service with regard to an
individual hired prior to January 1, 1976 shall begin on
the date the Eligible Employee first completes an Hour of
Service and ends on the Eligible Employee's severance
date. For purposes of this Section 3.02(d), "severance
date" means the earlier of (i) the date an
Page 19
Eligible Employee quits, retires, is discharged or dies or (ii) the
first anniversary of the date on which an Eligible Employee is
first absent from service, with or without pay, for any other
reason such as vacation, sickness, disability, layoff or leave of
absence.
3.03 Restoration of Retired Participant or Other Former Eligible
Employee to Service
(a) If a Participant in receipt of a Pension is restored to service
with the Employer as an Eligible Employee, the following shall
apply:
(i) His Pension shall continue through the month in which he
completes at least 960 Hours of Service, after which (A) if
his restoration to service occurs after his Normal Retirement
Date, his Pension shall be suspended during each Suspendible
Month (unless the provisions of Sections 4.02(c) and 5.04(b)
are applicable), and any optional benefit shall remain in
effect, unless the Participant shall elect otherwise; if the
Participant had commenced payment prior to his Normal
Retirement Date, however, any additional Pension he accrues
after his restoration to service shall be paid to his
surviving spouse in accordance with the provisions of Section
4.05 if he should die in active service, and (B) if his
restoration to service occurs before his Normal Retirement
Date, his Pension shall be suspended during each Suspendible
Month (unless the provisions of Sections 4.02(c) and 5.04(b)
are applicable), and any election of an optional benefit in
effect shall be void.
(ii) Any Years of Vesting Service and Credited Service to which he
was entitled when he retired or terminated service shall be
restored to him.
(iii) Upon later retirement or termination his Pension shall be
based on the benefit formula then in effect and his Certified
Earnings and Credited Service before and after the period when
he was not in the service of the Employer reduced by an amount
that is the
Page 20
Actuarial Equivalent of the benefits, if any, he received
before the earlier of the date of his restoration to service
or his Normal Retirement Date.
(iv) The part of the Participant's Pension upon later retirement
payable with respect to Credited Service rendered before his
previous Termination of Employment shall never be less than
the amount of his previous Pension modified to reflect any
option in effect on his later retirement.
(v) Upon later retirement of a Participant in service after his
Normal Retirement Date, payment of the Participant's Pension
shall resume no later than the third month after the latest
Suspendible Month during the period of restoration, and shall
be adjusted, if necessary, in compliance with Title 29 of the
Code of Federal Regulations, Section 2530.203-3 in a
consistent and nondiscriminatory manner.
(vi) If a monthly Pension payment is made for a calendar month and
it is determined after the Participant's later retirement and
subsequent recommencement of benefits that such payment was
subject to permanent withholding pursuant to the provisions of
this paragraph (a), the amount of such payment shall be
applied as an offset against subsequent monthly payments
unless the Participant has previously repaid the overpayment.
However, the amount of any such offset shall not exceed, in
any month after the Participant attains Normal Retirement Age,
25 percent of the monthly total benefit payment that would
have been paid but for the offset.
(vii) The Employer shall notify a Participant of any suspension
under subparagraph (i) above. The notice shall conform to the
requirements of Section 2530.203-3(b)(4) of the Department of
Labor Regulations. The provisions of this Section shall be
administered in accordance with Section 2530.203-3 of the
Department of Labor Regulations.
Page 21
(b) If a Participant entitled to but not in receipt of a Pension,
or a former Participant, or an Eligible Employee who was
never a Participant is reemployed without having had a Break
in Service, his Years of Vesting Service and Credited
Service shall be determined as provided in Sections 3.01 and
3.02, and if reemployed as an Eligible Employee, he shall,
in the case of a former Participant, immediately be restored
as a Participant as of his date of reemployment, and in the
case of an Eligible Employee who was never a Participant,
become a Participant in accordance with Section 2.01.
However, if a former Participant received a lump sum
settlement in lieu of a Pension, the Credited Service to
which he was entitled at the time of his termination of
service shall be restored to him in accordance with the
provisions of Section 3.03(c)(ii).
(c) If a Participant entitled to but not in receipt of a Pension or
a former Participant who received a lump sum settlement in lieu
of a Pension is reemployed after having had a Break in Service,
the following shall apply:
(i) The Years of Vesting Service to which he was previously
entitled shall be restored to him, and if reemployed as an
Eligible Employee, he shall immediately be restored as a
Participant as of his date of reemployment.
(ii) Any Credited Service to which the Participant was entitled at
the time of his termination of service shall be restored to
him, except that if he received a lump sum settlement by the
end of the second Plan Year following the Plan Year in which
he incurred a Termination of Employment, that Credited Service
shall not be restored to him.
(iii) Upon later termination or retirement of a Participant whose
previous Credited Service has been restored under this
paragraph (c), his Pension shall be based on the benefit
formula then in effect and his Certified Earnings and Credited
Service before and after the period when he was not in the
service of the Employer, and shall be reduced, if
applicable, but not below zero, by an amount of Actuarial
Equivalent value to any lump
Page 22
sum settlement received upon his prior termination. However,
in no event shall the reduction provided for in the preceding
sentence exceed the portion of the Participant's Pension based
on the period of Credited Service included in the calculation
of the lump sum payment.
(d) If a former Participant who is not entitled to a Pension is
restored to service, either as an Eligible Employee or as an
Employee, after having had a Break in Service, the following
shall apply:
(i) He shall again become a Participant as of his date of
restoration to service as an Eligible Employee.
(ii) Upon his restoration to membership, the Years of Vesting
Service to which he was previously entitled shall be restored
to him if the total number of consecutive one-year Breaks in
Service does not equal or exceed five.
(iii) Any Credited Service to which the Participant was entitled at
the time of his Termination of Employment of service which is
included in the Years of Vesting Service so restored shall be
restored to him.
(iv) Upon later termination or retirement of a Participant whose
previous Credited Service has been restored under this
paragraph (d), his Pension, if any, shall be based on the
benefit formula then in effect and his Certified Earnings and
Credited Service before and after the period when he was not
an Eligible Employee.
(e) If an Eligible Employee who was never a Participant is restored
to service with the Employer, after having had a Break in
Service, the Years of Vesting Service to which he was previously
entitled under Section 3.01(e) shall be restored to him if he
would be entitled to nonforfeitable benefits under the Plan if
he were a Participant, or otherwise, if the total number of
consecutive one-year Breaks in Service does not equal or exceed
five.
Page 23
ARTICLE 4. ELIGIBILITY FOR AND AMOUNT OF BENEFITS
4.01 Normal Retirement
(a) The right of a Participant to his normal retirement Pension
shall be nonforfeitable as of his Normal Retirement Age. A
Participant who has attained his Normal Retirement Age may
retire from service with the Employer and all Affiliates and
receive a normal retirement Pension beginning on his Normal
Retirement Date, or he may postpone his retirement and remain in
service after his Normal Retirement Date, in which event the
provisions of Section 4.02 shall be applicable.
(b) Subject to the provisions of Section 5.01, the annual normal
retirement Pension payable upon retirement on a Participant's
Normal Retirement Date (provided he is alive on such
date) shall be equal to .7 percent of the Participant's
Final Average Compensation not in excess of Covered
Compensation, plus 1.3 percent of such Final Average
Compensation in excess of Covered Compensation, multiplied
by the number of years of his Credited Service up to 35 such
years; provided, however, that the annual normal retirement
Pension of a Participant who is affected by the imposition
of the $150,000 limitation on Certified Earnings provided
in Section 1.09 shall be equal to the greater of (i) the
Participant's Pension calculated under the provisions of the
Plan as determined with regard to such imposition or (ii) a
Pension equal to the Participant's Accrued Benefit
determined as of December 31, 1993 plus the Participant's
Accrued Benefit based solely on service after such date under
the provisions of the Plan as determined with regard to
such imposition. For purposes of the Plan, the Accrued
Benefit as of December 31, 1993 shall be determined with
regard to the $200,000 limitation on Certified Earnings
provided in Section 1.09, but not less than the
Participant's Accrued Benefit determined as of December 31,
1988. However, the annual normal retirement Pension shall
never be less than the greatest
Page 24
annual amount of reduced early retirement Pension which the
Participant could have received under Section 4.03 before his
Normal Retirement Date and no increase in Covered Compensation shall
decrease a Participant's Accrued Benefit under the Plan.
(c) Except as otherwise provided in Section 401(l) of the Code and
applicable regulations thereunder, the cumulative permitted
disparity fraction for purposes of computing a Participant's
normal retirement Pension shall not exceed 35.
(d) Notwithstanding the foregoing, the minimum monthly Pension
payable to a Participant shall be equal to $2.00 multiplied by
his years of Credited Service.
4.02 Late Retirement
(a) If a Participant postpones his retirement as provided in Section
4.01(a), upon his Termination of Employment from the Employer
and all Affiliates, he shall be entitled to a late retirement
Pension beginning on the first day of the calendar month after
the Administrator receives his written application to retire,
which shall be his late retirement date.
(b) A Participant who remains in service after his Normal
Retirement Date shall be entitled to a monthly retirement
Pension for each month during the postponement period which
does not constitute a Suspendible Month. Upon later
retirement, the Participant shall be entitled to an immediate
late retirement Pension beginning on the Participant's late
retirement date (provided he is alive on such date), and
subject to the provisions of Section 5.01, shall be equal to
the amount determined in accordance with Section 4.01 based
on the Participant's Credited Service and Final Average
Compensation as of his late retirement date reduced by an
amount that is the Actuarial Equivalent of any benefits
he previously received pursuant to the preceding sentence;
Page 25
provided that if the Participant's actual late retirement
date is later than the first day of the first Plan Year
following his Normal Retirement Date, his late retirement
Pension shall be recomputed as of the first day of each
subsequent Plan Year before the Participant's actual late
retirement date (and as of his actual late retirement date)
as if each such date were Participant's late retirement date;
and provided further that no reduction hereunder as of the
date of any such recomputation shall reduce the Participant's
late retirement Pension below the amount of late retirement
Pension payable to the Participant prior to such recomputation.
(c) (i) In the event a Participant's Pension is required to
begin under Section 5.04(b) prior to January 1,
1998 and while the Participant is in active service,
such required beginning date shall not be the
Participant's Annuity Starting Date for purposes
of Article 5 and the Participant shall receive a
late retirement Pension commencing on or before
such required beginning date in an amount
determined as if he had retired on such date. The
Pension payable to the Participant during his
period of active service shall be in the form of a
single life annuity. Upon subsequent retirement,
the Participant's Pension shall be paid in
accordance with the Participant's form of payment
election made pursuant to Article 5.
(ii) In the event a Participant's Pension is required to
begin under Section 5.04(b) on or after January 1,
1998 and while the Participant in active service,
such beginning date shall be the Participant's
Annuity Starting Date for purposes of Article 5,
and his Pension shall be paid in accordance with the
Participant's form of payment election made pursuant
to Article 5.
(iii) As of each succeeding December 31 prior to the
Participant's actual late retirement date (and as of
his actual late retirement date), the Participant's
Pension shall be recomputed to reflect additional
accruals. The Participant's recomputed Pension shall
then be reduced by the Actuarial Equivalent of the
Page 26
total payments of his late retirement Pension which
were paid prior to each such recomputation to
arrive at the Participant's late retirement
Pension; provided that no such reduction shall reduce
the Participant's late retirement Pension below
the amount of late retirement Pension payable to the
Participant prior to the recomputation of such
Pension.
4.03 Early Retirement
(a) A Participant who has not reached his Normal Retirement Date but
who, prior to his Termination of Employment from the Employer
and all Affiliates, has reached his 55th birthday and completed
five Years of Vesting Service may retire from service with the
Employer and all Affiliates and receive an early retirement
Pension beginning on the first day of the calendar month after
the Administrator receives his written application to retire,
which shall be his early retirement date (provided he is living
on such date).
(b) The early retirement Pension shall be a deferred Pension
beginning on the Participant's Normal Retirement Date, and
subject to the provisions of Section 5.01, shall be equal to his
Accrued Benefit. However, the Participant may elect to receive
an early retirement Pension beginning on the first day of any
calendar month before his Normal Retirement Date, provided that
an early payment date shall be subject to the notice and timing
requirements described in Section 5.03(b). In that case, the
Participant's Pension shall be reduced pursuant to Table 2 of
Appendix A.
4.04 Vesting
(a) A Participant shall be 100 percent vested in, and have a
nonforfeitable right to, his Accrued Benefit upon completion of
five Years of Vesting Service, counted since the first day of
the Plan Year in which his 18th birthday occurs if the
Participant was hired on or after January 1, 1990. If
Page 27
the Participant's employment is subsequently terminated for reasons
other than retirement or death, he shall be eligible to receive his
vested Pension after the Administrator receives his written application
for the Pension.
(b) Notwithstanding the foregoing, a Participant who was an Eligible
Employee of the Employer on the Effective Date and whose accrued
benefit under the Dayton Hudson Corporation Retirement Plan was
transferred to the Plan shall be 100 percent vested in, and have
a nonforfeitable right to, his Accrued Benefit under the Plan.
(c) The vested Pension shall begin on the Participant's Normal
Retirement Date, and subject to the provisions of Section 5.01,
shall be equal to his Accrued Benefit. However, the Participant
may elect to have his vested Pension begin on the first day of
any calendar month before his Normal Retirement Date (provided
he is living on such date). In that case, the Participant's
Pension shall be reduced pursuant to Table 2 of Appendix A.
4.05 Spouse's Pension
(a) If a married Participant:
(i) dies in active service after reaching age 55 and completing 15
years of Credited Service, or
(ii) dies in active service prior to reaching age 55 and completing
15 years of Credited Service but after having met the
requirements for a Pension pursuant to Section 4.01, 4.02,
4.03 or 4.04, or
(iii) dies after retiring on any Pension, or after terminating
service with entitlement to a vested Pension, but in either
case before his Annuity Starting Date,
Page 28
a spouse's Pension shall be payable to his surviving spouse
for life provided that he and his spouse have been married
throughout the one-year period ending on the date of his
death.
(b) The spouse's Pension shall commence on what would have been the
Participant's Normal Retirement Date (or the first day of the
month following his date of death, if later). However, the
Participant's spouse may elect to begin receiving payments as of
the first day of any month following the Participant's date of
death and prior to what would have been his Normal Retirement
Date, provided such election is made on a form provided by the
Administrator during the 90-day period ending on the date the
payments to the spouse commence.
(c) (i) The spouse's Pension payable to the eligible spouse,
if any, of a married Participant described in
paragraph (a)(i) above shall be equal to 50 percent
of the monthly Pension the Participant would have
received if he had a Termination of Employment on
the day before his death and elected to have his
Pension commence on his Normal Retirement Date in
the form of a single life annuity. This spouse's
Pension shall be payable for the life of the
eligible spouse and shall not be reduced for
commencement prior to what would have been the
Participant's Normal Retirement Date.
(ii) Before reduction in accordance with paragraph (d)
below (with regard to a Participant who has had a
Termination of Employment), the spouse's Pension
payable to the eligible spouse, if any, of a
Participant described in paragraph (a)(ii) or
(a)(iii) above, shall be equal to the amount of
benefit the spouse would have received if the
Pension to which the Participant was entitled at his
date of death had commenced on his Normal Retirement
Date (or the first day of the month following his
date of death, if later) in the form of a
Qualified Joint and Survivor Annuity and the
Participant had died immediately thereafter.
However, if within the 90 day period prior to his
Annuity Starting Date a
Page 29
Participant has elected an optional form of Pension which
provides for monthly payments to his spouse for life in an
amount equal to at least 50 percent but not more than 100
percent of the monthly amount payable under the option for
the life of the Participant and such option is the
Actuarial Equivalent of the Qualified Joint and Survivor
Annuity, such optional form of Pension shall be used for
computing the spouse's Pension instead of the Qualified
Joint and Survivor Annuity. The spouse's Pension shall be
further adjusted to reflect its commencement prior to
the Participant's Normal Retirement Date as follows:
(A) if the spouse of a Participant who dies
after having met the requirements for early
retirement elects early commencement in
accordance with paragraph (b) above, the
amount of the Pension payable to the spouse
will be based on the amount of early
retirement Pension to which the Participant
would have been entitled if he had
requested benefit commencement at that
earlier date, reduced in accordance with
Section 4.03(b); and
(B) if the spouse of any other Participant who
dies prior to his Annuity Starting Date
elects early commencement in accordance
with paragraph (b) above, the amount of the
Pension payable to the spouse shall be based
on the amount of vested Pension to which the
Participant would have been entitled if he had
requested benefit commencement at that
earlier date, reduced in accordance with
Section 4.04(c).
(d) With respect to a Participant who has incurred a Termination
of Employment and whose spouse would have been entitled to a
spouse's Pension under this Section had the Participant's
death occurred prior to his Annuity Starting Date, the
Pension subsequently payable to such Participant or the
spouse's Pension payable to his spouse after his death,
whichever is applicable, shall be reduced by the applicable
percentage shown in the following table for each full month
that the
Page 30
provisions of this Section 4.05 are in effect with respect to the
Participant after his Termination of Employment and prior to the
Participant's Annuity Starting Date or his date of death, if earlier.
Notwithstanding the foregoing, no such reduction shall be made
with respect to any period before the later of (i) the date
the Administrator furnishes the Participant the notice of his
right to waive the spouse's Pension in accordance with paragraph
(e) below or (ii) the commencement of the election period
specified in paragraph (f) below.
Monthly Reduction for Spouse's Coverage After
Retirement or
Other Termination of Service
----------------------------------------------------
Age Reduction
------------------------ ---------------------
55 but less than 65 .05%
45 but less than 55 .03%
less than 45 .01%
(e) The Employer shall furnish to each Participant a written
explanation in nontechnical language which describes (i)
the terms and conditions of the spouse's Pension, including
an explanation of the relative financial effect on the
Participant's Pension of an election to waive the spouse's
Pension, (ii) the Participant's right to make, and the
effect of, an election to waive the spouse's Pension, (iii)
the rights of the Participant's spouse, and (vi) the right
to make, and the effect of, a revocation of such an election.
The Employer shall furnish the written explanation of
the spouse's Pension to each Participant as soon as
practicable following the date the Participant incurs a
Termination of Employment, but in no case later than one year
after such date. The written explanation described above
shall be furnished to a Participant even though he is not
married.
(f) An election to waive the spouse's Pension provided under this
Section, or any revocation of that election, may be made at any
time during the period beginning on the date of the
Participant's Termination of Employment and ending on the
Participant's Annuity Starting Date or his date of death, if
earlier. Any election to waive the spouse's Pension or any
revocation of that election
Page 31
shall be made on a form provided by the Administrator, and shall be
effective when received by the Administrator. Any election to waive the
spouse's Pension shall be effective only if it includes Spousal Consent
to such election.
4.06 Maximum Benefit Limitation
Notwithstanding any provision of the Plan to the contrary, the
maximum annual Pension payable to a Participant under the Plan
shall be subject to the limitations set forth in Section 415 of
the Code and any regulations issued thereunder. If the Pension
begins before the Participant's 62nd birthday, the dollar
limitation described in Section 415(b)(1)(A) of the Code shall
be the Actuarial Equivalent of the maximum benefit payable at
age 62. If the Pension begins after the Participant's Social
Security Retirement Age, such dollar limitation shall be the
Actuarial Equivalent of the maximum benefit payable at the
Social Security Retirement Age. If the Pension is payable
neither as a life annuity nor as a qualified joint and survivor
annuity with the Participant's spouse as beneficiary, the
maximum limitation shall be the Actuarial Equivalent of the
maximum limitation otherwise applicable. Actuarial Equivalent
for the purposes of this Section 4.06 shall be determined in
accordance with Section 415(b) of the Code and the regulations
or rulings issued thereunder and using the Plan's early
retirement, late retirement or optional benefit factors as
appropriate, or if less, using factors calculated from the IRS
Mortality Table, if applicable, and (i) with respect to an
adjustment required under Section 415(b)(2)(B) or (C) of the
Code, the IRS Interest Rate if the Pension is subject to the
provisions of Section 417(e)(3) of the Code or 5 percent
otherwise; and (ii) with respect to an adjustment required under
Section 415(b)(2)(D) of the Code, an interest rate of 5 percent.
If a Participant is a participant in any qualified defined
contribution plan required to be taken into account for purposes
of applying the combined plan limitations contained in Section
415(e) of
Page 32
the Code, then for any year the sum of the defined
benefit plan fraction and the defined contribution plan
fraction, as such terms are defined in said Section 415(e),
shall not exceed 1.0. If for any year the foregoing combined
plan limitation would be exceeded, the benefit provided under
this Plan shall be reduced to the extent necessary to meet that
limitation.
As of January 1 of each calendar year commencing on or after
January 1, 1988, the dollar limitation as determined by the
Commissioner of Internal Revenue for that calendar year shall
become effective as the maximum permissible dollar amount of
Pensions payable under the Plan during the Limitation Year
ending within that calendar year, including Pensions payable to
Participants who retired prior to that Limitation Year.
4.07 Transfers and Employment with an Affiliate
(a) If an Eligible Employee (i) becomes employed by the Employer
in any capacity other than as an Eligible Employee as defined
in Article 1, (ii) becomes employed by an Affiliate, or
(iii) becomes a Leased Employee, he shall retain any
Credited Service he has under this Plan. Upon his later
retirement or termination of employment with the Employer or
Affiliate (or upon benefit commencement in the case of a
Leased Employee), any benefits to which the Eligible
Employee is entitled under the Plan shall be determined
under the Plan provisions in effect on the date he ceases
to be an Eligible Employee as defined in Article 1, and
only on the basis of his Credited Service accrued and
Certified Earnings paid while he was an Eligible Employee as
defined in Article 1.
(b) Subject to the Break in Service provisions of Article 3, in the
case of a person who (i) was originally employed by the Employer in any
capacity other than as an Eligible Employee as defined in Article 1,
(ii) was originally employed by an Affiliate, or (iii) was originally
providing services to the Employer as a Leased Employee, and
thereafter becomes
Page 33
an Eligible Employee, upon his later retirement or termination of
employment, the benefits payable under the Plan shall be computed under
the Plan provisions in effect at that time, and only on the basis of
the Credited Service accrued and Certified Earnings paid while he is an
Eligible Employee as defined in Article 1.
Page 34
ARTICLE 5. PAYMENT OF PENSIONS
5.01 Automatic Form of Payment
(a) If the Participant is not married on his Annuity Starting Date,
his Pension shall be payable in monthly installments ending with
the last monthly payment before death, unless the Participant
has elected an optional benefit as provided in Section 5.02.
(b) If the Participant is married on his Annuity Starting Date,
and if he has not elected an optional form of benefit as
provided in Section 5.02, the Pension payable shall be in
the form of a Qualified Joint and Survivor Annuity that is the
Actuarial Equivalent of the Pension otherwise payable,
providing for a reduced Pension payable to the Participant
during his life, and after his death providing that one-half of
that reduced Pension will continue to be paid during the
life of, and to, the spouse to whom he was married on his
Annuity Starting Date. Notwithstanding the preceding, if
an option described in Section 5.02 provides for payments
continuing after the Participant's death for the life of a
Beneficiary at a rate of at least 50 percent but not more
than 100 percent of the Pension payable for the life of the
Participant and if such option, with the spouse to whom the
Participant is married on his Annuity Starting Date named as
Beneficiary, would be of greater actuarial value than the
joint and survivor annuity described above, such option
with such spouse as Beneficiary shall be the Qualified Joint
and Survivor Annuity.
(c) In any case, a lump sum payment that is the Actuarial Equivalent
shall be made in lieu of all benefits if the present value of the
Pension payable to or on the behalf of the Participant determined as
of the Participant's Normal Retirement Date or actual Termination of
Employment, if later, amounts to $3,500 (effective January 1, 1998,
$5,000 or less). In determining the amount of a lump sum payment
payable under this
Page 35
paragraph to a Participant whose Annuity Starting Date is on or
after January 1, 1998, (i) Actuarial Equivalent shall mean a
benefit, in the case of a lump sum benefit payable prior to a
Participant's Normal Retirement Date, of equivalent value to the
benefit which would otherwise have been provided commencing at the
Participant's Normal Retirement Date, and (ii) the Actuarial
Equivalent shall be determined by using the IRS Mortality Table and the
IRS Interest Rate. Unless otherwise permitted by applicable law,
the determination as to whether a lump sum payment is due shall
be made as soon as practicable following the Participant's
termination of service or death. Any lump sum benefit payable shall
be made as soon as practicable following such determination and in
any event prior to the date Pension payments would have otherwise
commenced as an annuity.
In the event a Participant is not entitled to any Pension upon his
Termination of Employment, he shall be deemed cashed-out under the
provisions of this paragraph (c) as of the date he terminated service.
However, if a Participant described in the preceding sentence is
subsequently restored to service, the provisions of Section 3.03 shall
apply to him without regard to such sentence.
5.02 Optional Forms of Payment
Any Participant may, subject to the provisions of Section 5.03,
elect to convert the Pension otherwise payable to him into an
optional benefit that is the Actuarial Equivalent, as provided
in one of the options named below.
Ten-Year Certain and Life A modified Pension payable
Option during the Participant's
life; if the Participant
dies within 120 months of his
Annuity
Page 36
Starting Date, the balance of those
monthly payments shall be paid to the
Beneficiary named by him when
he elected the option; provided that
if the Beneficiary does not survive
the 120-month period, a lump sum
payment that is the Actuarial
Equivalent as determined in Table 1
of Appendix A of the remaining
payments shall be paid to the estate
of the last to survive of the
Participant and the Beneficiary.
50% Joint & Survivor A modified Pension payable
Option during the Participant's life
and after his death payable
at 50 percent of the rate of
his modified Pension during
the life of, and to, the
Beneficiary named by him when
he elected the option. The
Pension payable to the
Participant shall be
determined by multiplying the
amount that would be paid to
the Participant as a single
life annuity by a reduction
factor of 90 percent,
increased by 1/2 of 1 percent
(but not to more than 100
percent) for each year by
which the Beneficiary is
older than the Participant
and decreased by 1/2 of 1
percent for each year the
Beneficiary is younger than
the Participant.
75% Joint & Survivor A modified Pension payable
Option during the Participant's life
and after his death payable
at 75 percent of the rate of
his modified Pension during
the life of, and to, the
Beneficiary named by him when
he elected the option. The
Pension payable to the
Participant shall be
determined by multiplying the
amount that would be paid to
the Participant
Page 37
as a single life annuity by a
reduction factor of 85 percent,
increased by 1/2 of 1 percent
(but not to more than 100 percent)
for each year by which the
Beneficiary is older than the
Participant and decreased by 1/2 of 1
percent for each year the Beneficiary
is younger than the Participant.
100% Joint & Survivor A modified Pension payable
Option during the Participant's life
and Option after his death
payable at 100 percent of the
rate of his modified Pension
during the life of, and to,
the Beneficiary named by him
when he elected the option.
The Pension payable to the
Participant shall be
determined by multiplying the
amount that would be paid to
the Participant as a single
life annuity by a reduction
factor of 80 percent,
increased by 1/2 of 1 percent
(but not to more than 100
percent) for each year by
which the Beneficiary is
older than the Participant
and decreased by 1/2 of 1
percent for each year the
Beneficiary is younger than
the Participant.
Lump Sum or Installment If the total present value of
Option the Pension payable is more
than $3,500 ($5,000
effective January 1, 1998)
but less than $7,000, the
Participant may elect either
a single cash lump sum or
monthly installments over a
period to be selected by the
Participant. In determining
the amount of a lump sum
optional benefit available
under this Section to a
Participant whose Annuity
Starting Date is on or after
January 1, 1998, (a)
Actuarial Equivalent shall
mean a benefit, in the case
of a lump sum benefit payable
Page 38
prior to a Participant's
Normal Retirement Date, of
equivalent value to the
benefit which would otherwise
have been provided commencing
at the Participant's Normal
Retirement Date, and (b)
Actuarial Equivalent shall be
determined on the basis of
the IRS Mortality Table and
the IRS Interest Rate.
If a Participant dies after Pension payments have commenced, any
payments continuing on to his spouse or Beneficiary shall be
distributed at least as rapidly as under the method of
distribution being used as of the Participant's date of death.
5.03 Election of Options
(a) A married Participant's election of any option shall only be
effective if Spousal Consent to the election is received by the
Administrator, unless:
(i) the option provides for monthly payments to his spouse for
life after the Participant's death, in an amount equal to at
least 50 percent but not more than 100 percent of the monthly
amount payable under the option to the Participant, and
(ii) the option is of actuarial equivalent value to the Qualified
Joint and Survivor Annuity.
(b) The Employer shall furnish to each Participant, no less
than 30 days and no more than 90 days, before his Annuity
Starting Date a written explanation in nontechnical language
of the terms and conditions of the Pension payable to the
Participant in the normal and optional forms described in
Sections 5.01 and 5.02. Such explanation shall include a
general description of the eligibility conditions for, and
the material features and relative values of, the optional
forms of Pensions under the Plan, any rights the Participant
may have to defer commencement of his Pension, the
Page 39
requirement for Spousal Consent as provided in paragraph
(a) above, and the right of the Participant to make, and to
revoke, elections under Section 5.02.
(c) A Participant's Annuity Starting Date may not occur less than 30
days after receipt of the notice described in paragraph (b). An
election under Section 5.02 shall be made on a form provided by
the Administrator and may be made during the 90-day period
ending on the Participant's Annuity Starting Date, but not prior
to the date the Participant receives the written explanation
described in paragraph (b).
(d) Notwithstanding the provisions of paragraph (c) above, a
Participant may, after having received the notice, affirmatively
elect to have his benefit commence sooner than 30 days following
his receipt of the notice, provided all of the following
requirements are met:
(i) the Administrator clearly informs the Participant
that he has a period of at least 30 days after
receiving the notice to decide when to have his
benefits begin, and if applicable, to choose a
particular optional form of payment;
(ii) the Participant affirmatively elects a date for his
benefits to begin, and if applicable, an optional form
of payment, after receiving the notice;
(iii) the Participant is permitted to revoke his election
until the later of his Annuity Starting Date or seven
days following the day he received the notice;
(iv) payment does not commence less than seven days
following the day after the notice is received by the
Participant; and
(v) the Participant's Annuity Starting Date is after the
date the notice is provided.
(e) An election of an option under Section 5.02 may be revoked on
a form provided by the Administrator, and subsequent
elections and revocations may be made at any time and from
time
Page 40
to time during the election period specified in
paragraph (c) or (d) above, whichever is applicable. An
election of an optional benefit shall be effective on the
Participant's Annuity Starting Date and may not be modified or
revoked after his Annuity Starting Date unless otherwise
provided under paragraph (d) above. A revocation of any
election shall be effective when the completed form is
filed with the Administrator. If a Participant who has
elected an optional benefit dies before the date the election
of the option becomes effective, the election shall be
revoked except as provided in Section 4.05(c). If the
Beneficiary designated under an option dies before the date
the election of the option becomes effective, the
election shall be revoked.
5.04 Commencement of Payments
(a) Except as otherwise provided in Article 4 or this Article 5,
payment of a Participant's Pension shall begin as soon as
administratively practicable following the latest of (i) the
Participant's 65th birthday, (ii) the fifth anniversary of the
date on which he became a Participant, or (iii) the
Participant's Termination of Employment, (but not more than 60
days after the close of the Plan Year in which the latest of
(i), (ii) or (iii) occurs); provided, however, that if the
amount of the payment to be made cannot be determined by 60 days
following the Plan Year in which the latest of (i), (ii), or
(iii) occur, a payment retroactive to that date shall be made.
(b) Notwithstanding the preceding paragraph and except as
provided below, in the case of a Participant in active
service who owns either (i) more than 5 percent of the
outstanding stock of the Employer or (ii) stock possessing
more than 5 percent of the total combined voting power of
all stock of the Employer, the Participant's Pension shall
begin not later than the April 1 following the calendar year in
which he attains age 70 1/2. On and after the first day of
the Plan Year beginning in 1989, payment in active service
of any Participant's Pension shall begin not
Page 41
later than April 1 of the calendar year following the calendar year
in which he attains age 70 1/2, provided that such commencement in
active service shall not be required with respect to a Participant
who attains age 70 1/2prior to January 1, 1988 and who is not a
5-percent owner as described above.
5.05 Distribution Limitation
Notwithstanding any other provision of this Article 5, all
distributions from this Plan shall conform to the regulations
issued under Section 401(a)(9) of the Code, including the
incidental death benefit provisions of Section 401(a)(9)(G) of
the Code. Further, such regulations shall override any Plan
provision that is inconsistent with Section 401(a)(9) of the
Code. For purposes of Section 401(a)(9) of the Code, the life
expectancies of Participants and their spouses shall not be
recalculated.
5.06 Direct Rollover of Certain Distributions
(a) This Section applies to certain distributions made on or after
January 1, 1993. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a distributee's election
under this Article, a distributee may elect, at the time and in
the manner prescribed by the Administrator, to have any portion
of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a
direct rollover.
(b) The following definitions apply to the terms used in this
Section:
(i) 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
Page 42
or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or
for a specified period of ten years or more; any distribution
to the extent such distribution is required under Section
401(a)(9) of the Code; and the portion of any distribution
that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with
respect to employer securities);
(ii) An "eligible retirement plan" is an individual retirement
account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the Code, that
accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to
the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity;
(iii) A "distributee" includes an Eligible Employee or former
Eligible Employee. In addition, the Eligible Employee's or
former Eligible Employee's surviving spouse and the Eligible
Employee's or former Eligible Employee's spouse or former
spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse or
former spouse; and
(iv) A "direct rollover" is a payment by the Plan to the eligible
retirement plan specified by the distributee.
In the event that the provisions of this Section 5.06 or any
part thereof cease to be required by law as a result of
subsequent legislation or otherwise, this Section or any
applicable part thereof shall be ineffective without the
necessity of further amendments to the Plan.
Page 43
ARTICLE 6. CONTRIBUTIONS
6.01 Employer's Contributions
It is the intention of the Employer to continue the Plan and
make the contributions that are necessary to maintain the Plan
on a sound actuarial basis and to meet the minimum funding
standards prescribed by law. However, subject to the provisions
of Article 10, the Employer may discontinue its contributions
for any reason at any time.
6.02 Return of Contributions
(a) The Employer's contributions to the Plan are conditioned upon
their deductibility under Section 404 of the Code. If all or
part of the Employer's deductions for contributions to the Plan
are disallowed by the Internal Revenue Service, the portion of
the contributions to which that disallowance applies shall be
returned to the Employer without interest, but reduced by any
investment loss attributable to those contributions. The return
shall be made within one year after the date of the disallowance
of deduction.
(b) The Employer may recover without interest the amount of its
contributions to the Plan made on account of a mistake in fact,
reduced by any investment loss attributable to those
contributions, if recovery is made within one year after the
date of those contributions.
Page 44
ARTICLE 7. ADMINISTRATION OF PLAN
7.01 Plan Sponsor and Plan Administrator
The Company shall be the "plan administrator" and the "plan
sponsor" of the Plan, as such terms are used in ERISA and the
Code.
7.02 Administrative Responsibilities
(a) Except as expressly otherwise provided herein, the Company
shall be the named fiduciary that has the authority to
control and manage the administration and operation of the
Plan, and shall have the sole and complete discretion to
interpret and administer the terms of the Plan and to
determine eligibility for benefits and the amount of any such
benefits pursuant to the terms of the Plan, and in so doing
the Company may correct defects, supply omissions and
reconcile inconsistencies to the extent necessary to
effectuate the Plan, and such actions shall be binding and
conclusive on all persons. The Company shall prescribe such
forms, make such rules, regulations, interpretations and
computations and shall take such other action to administer the
Plan as it may deem appropriate. In administering the Plan,
the Company shall act in a nondiscriminatory manner to the
extent required by Section 401(a) and related provisions of
the Code and shall at all times discharge its duties with
respect to the Plan in accordance with the standards set
forth in Section 404(a)(1) of ERISA.
(b) Except in cases where the Plan expressly requires action on
behalf of the Company to be taken by the Board of Directors,
action on behalf of the Company may be taken by any of the
following:
(i) the Board of Directors;
(ii) the chief executive officer of the Company; or
Page 45
(iii) any person or persons or committee to whom
responsibilities for the operation and administration
of the Plan are allocated, by resolution of the Board
of Directors or by written instrument executed by the
chief executive officer of the Company and filed with
its permanent records, but action of such person or
persons or committee shall be within the scope of said
allocation.
7.03 Delegation of Responsibilities
The Company may engage such attorneys, actuaries, accountants,
consultants or other persons to render advice or to perform
services with regard to any of its responsibilities under the
Plan as it shall determine to be necessary or appropriate. The
duties and responsibilities of the Company under the Plan shall
be carried out by the directors, officers and employees of the
Company, acting on behalf of the Company in their capacities as
directors, officers and employees and not as individual
fiduciaries.
7.04 Certified Earnings and Bonding
Except to the extent permitted by applicable regulations, no
Eligible Employee shall receive any compensation from the Plan
for his services rendered to the Plan. The Company shall
purchase such bonds as may be required under ERISA.
7.05 Service in More Than One Fiduciary Capacity
Any individual, entity or group of persons may serve in more
than one fiduciary capacity with respect to the Plan and/or the
funds of the Plan.
Page 46
7.06 Indemnification
In addition to any other applicable arrangements for
indemnification, the Employers jointly and severally agree to
indemnify and hold harmless, to the extent permitted by law,
each director, officer, and employee of the Employers against
any and all liabilities, losses, costs, or expenses (including
legal fees) of whatsoever kind and nature which may be imposed
on, incurred by, or asserted against such person at any time by
reason of such person's services as a fiduciary in connection
with the Plan, but only if such person did not act dishonestly,
or in bad faith, or in willful violation of the law or
regulations under which such liability, loss, cost, or expense
arises.
7.07 Establishment of Rules
Subject to the limitations of the Plan, the Administrator from
time to time shall establish rules for the administration of the
Plan and the transaction of Plan business. The Administrator
shall have discretionary authority to interpret the Plan and to
make factual determinations (including but not limited to,
determination of an individual's eligibility for Plan
participation, the right and amount of any benefit payable under
the Plan and the date on which any individual ceases to be a
Participant). The determination of the Administrator as to the
interpretation of the Plan or any disputed question shall be
conclusive and final to the extent permitted by applicable law.
7.08 Correction of Errors
It is recognized that in the operation and administration of the
Plan certain mathematical and accounting errors may be made or
mistakes may arise by reason of factual errors in information
supplied to the Company or Funding Agent. The Company shall have
power to cause such equitable adjustments to be made to correct
for such errors as the Company in its discretion considers
appropriate. Such adjustments shall be final and binding on all
persons.
Page 47
7.09 Prudent Conduct
The Administrator shall use that degree of care, skill, prudence
and diligence that a prudent man acting in a like capacity and
familiar with such matters would use in a similar situation.
7.10 Actuary
As an aid to the Administrator in fixing the rate of
contributions payable to the Plan, the actuary designated by the
Company shall make annual actuarial valuations of the contingent
assets and liabilities of the Plan, and shall submit to the
Company the rates of contribution recommended for use.
7.11 Maintenance of Accounts
The Administrator shall maintain accounts showing the fiscal
transactions of the Plan and shall keep in convenient form such
data as may be necessary for actuarial valuations of the Plan.
7.12 Records
Each Employer, each fiduciary with respect to the Plan, and each
other person performing any functions in the operation or
administration of the Plan or the management or control of the
assets of the Plan shall keep such records as may be necessary
or appropriate in the discharge of their respective functions
hereunder, including records required by ERISA or any other
applicable law. Records shall be retained as long as necessary
for the proper administration of the Plan and at least for any
period required by ERISA or other applicable law.
7.13 Appointment of Investment Manager
The Company, in its sole discretion, shall determine the
investment policy for the Plan. However, the Company may, in its
sole discretion, appoint one or more investment managers to
Page 48
manage the assets of the Plan (including the power to acquire
and dispose of all or part of such assets) as the Company shall
designate. In that event, the authority over and responsibility
for the management of the assets so designated shall be the sole
responsibility of that investment manager.
For purposes of this Article, the term "investment manager"
means an individual who:
(a) Has the power to manage, acquire or dispose of any
asset of the Plan;
(b) Is (i) registered as an investment advisor under the
Investment Advisors Act of 1940, (ii) is a bank, as
defined in that Act, or (iii) is an insurance company
qualified to perform services described in paragraph
(a) above; and
(c) Has acknowledged in writing that he is a fiduciary
with respect to the Plan.
7.14 Expenses of Administration
All expenses that arise in connection with the administration of
the Plan, including but not limited to the compensation of the
Trustee, administrative expenses and proper charges and
disbursements of the Trustee and compensation and other expenses
and charges of any enrolled actuary, counsel, accountant,
specialist, or other person who has been retained by the Company
in connection with the administration thereof, shall be paid
from the funds of the Plan held by the Trustee under the trust
agreement adopted for use in implementing the Plan, to the
extent not paid by the Employer.
7.15 Claims and Review Procedures
(a) Applications for benefits and inquiries concerning the Plan (or
concerning present or future rights to benefits under the Plan)
shall be submitted to the Company in writing. An application
Page 49
for benefits shall be submitted on the prescribed form and shall be
signed by the Participant, or in the case of a benefit payable
after his death, by his Beneficiary.
(b) In the event that an application for benefits is denied in
whole or in part, the Company shall notify the applicant in
writing of the denial and of the right to review of the
denial. The written notice shall set forth, in a manner
calculated to be understood by the applicant, specific
reasons for the denial, specific references to the provisions
of the Plan on which the denial is based, a description of any
information or material necessary for the applicant to
perfect the application, an explanation of why the material
is necessary, and an explanation of the review procedure
under the Plan. The written notice shall be given to the
applicant within a reasonable period of time (not more than
90 days) after the Company received the application, unless
special circumstances require further time for processing and
the applicant is advised of the extension. In no event shall
the notice be given more than 180 days after the Company
received the application.
(c) The Company shall from time to time appoint a committee (the
"Review Panel") that shall consist of three individuals who may,
but need not, be Eligible Employees. The Review Panel shall be
the named fiduciary that has the authority to act with respect
to any appeal from a denial of benefits or a determination of
benefit rights.
(d) An applicant whose application for benefits was denied
in whole or part, or the applicant's duly authorized
representative, may appeal the denial by submitting to the
Review Panel a request for a review of the application
within 60 days after receiving written notice of the denial
from the Company. The Company shall give the applicant or his
representative an opportunity to review pertinent materials,
other than legally privileged documents, in preparing the
request for a review. The request for a review shall be in
writing and addressed
Page 50
to the Review Panel. The request for a review shall set forth all of
the grounds on which it is based, all facts in support of the request
and any other matters that the applicant deems pertinent. The
Review Panel may require the applicant to submit such additional
facts, documents or other materials as it may deem necessary or
appropriate in making its review.
(e) The Review Panel shall act on each request for a review
within 60 days after receipt, unless special circumstances
require further time for processing and the applicant is
advised of the extension. In no event shall the decision on
review be rendered more than 120 days after the Review Panel
received the request for a review. The Review Panel
shall give prompt written notice of its decision to the
applicant and or the Company. In the event that the Review
Panel confirms the denial of the application for benefits in
whole or in part, the notice shall set forth, in a manner
calculated to be understood by the applicant, the specific
reasons for the decision and specific references to the
provisions of the Plan on which the decision is based.
(f) The Review Panel shall adopt such rules, procedures and
interpretations of the Plan as it deems necessary or appropriate
in carrying out its responsibilities under this Section 7.15. In
carrying out such responsibilities, the Review Panel shall have
the sole and complete discretion to interpret and administer the
terms of the Plan and to determine eligibility for benefits and
the amount of any such benefits pursuant to the terms of the
Plan, and in so doing the Review Panel may correct defects,
supply omissions and reconcile inconsistencies to the extent
necessary to effectuate the Plan, and such actions shall be
binding and conclusive on all persons.
(g) No legal action for benefits under the Plan shall be brought
unless and until the claimant (i) has submitted a written
application for benefits in accordance with paragraph (a), (ii)
has been
Page 51
notified by the Company that the application is denied,
(iii) has filed a written request for a review of the
application in accordance with paragraph (d) and (iv) has been
notified in writing that the Review Panel has affirmed the
denial of the application; provided, however, that legal action
may be brought after the Company or the Review Panel has failed
to take any action on the claim within the time prescribed by
paragraphs (b) and (e) above.
Page 52
ARTICLE 8. MANAGEMENT OF FUNDS
8.01 Funding Agent
(a) All the funds of the Plan shall be held by a Funding Agent
appointed from time to time by the Company under a trust
instrument or an insurance or annuity contract adopted, or as
amended, by the Company for use in providing the benefits of
the Plan and paying its expenses not paid directly by the
Company. The Company shall have the right to determine the
form and substance of each trust agreement and group
annuity contract under which any part of the funds of the Plan
is held, subject only to the requirement that they are not
inconsistent with the provisions of the Plan. Any such
trust agreement may contain provisions pursuant to which the
trustee will make investments on direction of a third
party. The Company shall have no liability for the payment of
benefits under the Plan nor for the administration of the
funds paid over to the Funding Agent.
(b) The Company shall issue such written directions to the Funding
Agent as are necessary to accomplish distributions to the
Participants and Beneficiaries in accordance with the provisions
of the Plan.
(c) The Funding Agent shall be entitled to receive such reasonable
compensation for its services as may be agreed upon with the
Company. The Funding Agent shall also be entitled to
reimbursement for all reasonable and necessary costs, expenses,
and disbursements incurred by it in the performance of its
services. Such compensation and reimbursements shall be paid
from the Trust Fund if not paid directly by the Company.
Page 53
8.02 Exclusive Benefit Rule
Except as otherwise provided in the Plan, no part of the corpus
or income of the funds of the Plan shall be used for, or
diverted to, purposes other than for the exclusive benefit of
Participants and other persons entitled to benefits under the
Plan and paying Plan expenses not otherwise paid by the
Employer, before the satisfaction of all liabilities with
respect to them. No person shall have any interest in or right
to any part of the earnings of the funds of the Plan, or any
right in, or to, any part of the assets held under the Plan,
except as and to the extent expressly provided in the Plan.
8.03 Funding Policy
The Company shall adopt a procedure, and revise it from time to
time as it shall consider advisable, for establishing and
carrying out a funding policy and method consistent with the
objectives of the Plan and the requirements of ERISA. It shall
advise each Funding Agent of the funding policy in effect from
time to time.
Page 54
ARTICLE 9. GENERAL PROVISIONS
9.01 Nonalienation
Except as required by any applicable law, no benefit under the
Plan shall in any manner be anticipated, assigned or alienated,
and any attempt to do so shall be void. However, payment shall
be made in accordance with the provisions of any judgment,
decree, or order which:
(a) creates for, or assigns to, a spouse, former
spouse, child or other dependent of a Participant the right to
receive all or a portion of the Participant's benefits under
the Plan for the purpose of providing child support, alimony
payments or marital property rights to that spouse, child or
dependent,
(b) is made pursuant to a State domestic relations law,
(c) does not require the Plan to provide any type of benefit, or
any option, not otherwise provided under the Plan, and
(d) otherwise meets the requirements of Section 206(d) of ERISA,
as amended, as a "qualified domestic relations order", as
determined by the Administrator.
If the present value of any series of payments meeting the
criteria set forth in clauses (a) through (d) above amounts to
$3,500 or less, a lump sum payment that is the Actuarial
Equivalent, determined in the manner described in Section
5.01(c), shall be made in lieu of the series of payments.
9.02 Conditions of Employment Not Affected by Plan
Participation in the Plan shall not confer any legal rights upon
any Eligible Employee or other person for a continuation of
employment, nor shall it interfere with the right of the
Employer (which right is hereby reserved) to discharge any
Eligible Employee and to treat him without regard to the effect which
that treatment might have upon him as a
Page 55
Participant or potential Participant of the Plan.
9.03 Facility of Payment
If in the opinion of the Administrator a Participant or other
person entitled to a benefit hereunder is unable to care for his
affairs because of illness or accident or because he is a minor,
the Administrator may direct that any benefit due him, unless
claim shall have been made for the benefit by a duly appointed
guardian or other legal representative, be paid to his spouse, a
child, a parent or other blood relative, or any other person or
institution then in the opinion of the Administrator caring for
or maintaining the Participant or other person during this
period, or to a person with whom he resides. Any payment so made
shall be a complete discharge of the liabilities of the Plan for
that benefit.
9.04 Information
Each Participant or other person entitled to a benefit, before
any benefit shall be payable to him or on his account under the
Plan, shall file with the Company the information that it shall
require to establish his rights and benefits under the Plan.
9.05 Top-Heavy Provisions
(a) The following definitions apply to the terms used in this Section:
(i) "applicable determination date" means the last day of the
preceding Plan Year;
(ii) "top-heavy ratio" means the ratio of (A) the present value of
the cumulative Accrued Benefits under the Plan for key
employees to (B) the present value of the cumulative Accrued
Benefits under the Plan for all key employees and non-key
employees; provided, however, that if an individual has not
performed services for the Employer at
Page 56
any time during the five-year period ending on the applicable
determination date, any accrued benefit for such individual
(and the account of such individual) shall not be taken into
account;
(iii) "applicable valuation date" means the date within the preceding
Plan Year as of which annual Plan costs are or would be
computed for minimum funding purposes;
(iv) "key employee" means an employee who is in a category of
employees determined in accordance with the provisions of
Section 416(i)(1) and (5) of the Code and any regulations
thereunder, and where applicable, on the basis of the Eligible
Employee's remuneration (which, with respect to any Eligible
Employee, shall mean the wages, salaries, and other amounts
paid in respect of such Eligible Employee by the Employer or
an Affiliate for personal services actually rendered,
determined before any pre-tax contributions under a "qualified
cash or deferred arrangement", as defined in Section 401(k) of
the Code and its applicable regulations, or under a "cafeteria
plan", as defined in Section 125 of the Code and its
applicable regulations, and shall include, but not by way of
limitation, bonuses, overtime payments, and commissions, and
shall exclude deferred compensation, stock options, and other
distributions which receive special tax benefits under the
Code);
(v) "non-key employee" means any employee who is not a key
employee;
(vi) "average remuneration" means the average annual remuneration
of a Participant for the five consecutive years of his Years
of Vesting Service during which he received the greatest
aggregate remuneration, as limited by Section 401(a)(17) of
the Code, from the Employer or an Affiliate, excluding any
remuneration for service after the last Plan Year with respect
to which the Plan is top-heavy;
(vii) "required aggregation group" means each other qualified plan
of the Employer or an Affiliate (including plans that
terminated within the five-year period ending on the
Page 57
determination date) in which there are members who are key
employees or which enables the Plan to meet the requirements
of Section 401(a)(4) or 410 of the Code; and
(viii) "permissive aggregation group" means each plan in the required
aggregation group and any other qualified plan(s) of the
Employer or an Affiliate in which all members are non-key
employees, if the resulting aggregation group continues to
meet the requirements of Sections 401(a)(4) and 410 of the
Code.
(b) For purposes of this Section, the Plan shall be "top-heavy"
with respect to any Plan Year if as of the applicable
determination date the top-heavy ratio exceeds 60 percent.
The top-heavy ratio shall be determined as of the applicable
valuation date in accordance with Section 416(g)(3) and
(4)(B) of the Code on the basis of the UP-1984 Mortality
Table and an interest rate of 5 percent per year compounded
annually. For purposes of determining whether the Plan is
top-heavy, the present value of Accrued Benefits under the
Plan will be combined with the present value of accrued
benefits or account balances under each other plan in the
required aggregation group, and in the Employer's
discretion, may be combined with the present value of
accrued benefits or account balances under any other
qualified plan(s) in the permissive aggregation group. The
accrued benefit of a non-key employee under the Plan or any
other defined benefit plan in the aggregation group shall be
(i) determined under the method, if any, that uniformly
applies for accrual purposes under all plans maintained by
the Employer or an Affiliate, or (ii) if there is no such
method, as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under the fractional rule
described in Section 411(b)(1)(C) of the Code.
(c) The following provisions shall be applicable to Participants for
any Plan Year with respect to which the Plan is top-heavy:
Page 58
(i) In lieu of the vesting requirements specified in Section 4.04,
a Participant shall be vested in, and have a nonforfeitable
right to, a percentage of his Accrued Benefit determined in
accordance with the provisions of Section 1.01 and
subparagraph (ii) below, as set forth in the following vesting
schedule:
Years of Vesting Percentage
Service Vested
---------------- -----------
Less than 2 years 0%
2 years 20
3 years 40
4 years 60
5 or more years 100
(ii) The Accrued Benefit of a Participant who is a non-key employee
shall not be less than 2 percent of his average remuneration
multiplied by the number of years of his Years of Vesting
Service, not in excess of 10, during the Plan Years for which
the Plan is top-heavy. That minimum benefit shall be payable
at a Participant's Normal Retirement Date. If payments
commence at a time other than the Participant's Normal
Retirement Date, the minimum Accrued Benefit shall be the
Actuarial Equivalent of that minimum benefit.
(iii) The multiplier "1.25" in Sections 415(e)(2)(B)(i) and
(3)(B)(i) of the Code shall be reduced to "1.0", and the
dollar amount "$51,875" in Section 415(e)(6)(B)(i)(I) of the
Code shall be reduced to "$41,500".
(d) If the Plan is top-heavy with respect to a Plan Year and ceases
to be top-heavy for a subsequent Plan Year, the following
provisions shall be applicable:
(i) The Accrued Benefit in any such subsequent Plan Year shall
not be less than the minimum Accrued Benefit provided in
paragraph (c)(ii) above, computed as of the end of the most
recent Plan Year for which the Plan was top-heavy.
Page 59
(ii) If a Participant has completed three years of Years of
Vesting Service on or before the last day of the most recent
Plan Year for which the Plan was top-heavy, the vesting
schedule set forth in paragraph (c)(i) above shall continue
to be applicable.
(iii) If a Participant has completed at least two, but less than
three, years of Years of Vesting Service on or before the
last day of the most recent Plan Year for which the Plan was
top-heavy, the vesting provisions of Section 4.04 shall
again be applicable; provided, however, that in no event
shall the vested percentage of a Participant's Accrued Benefit
be less than the percentage determined under paragraph (c)(i)
above as of the last day of the most recent Plan Year for
which the Plan was top-heavy.
9.06 Offsets
Notwithstanding the foregoing provisions, the monthly amounts
otherwise payable hereunder shall be reduced by the amount
(expressed on a comparable basis that is an Actuarial
Equivalent) of the monthly pension, if any, to which the
Participant is entitled under any other pension plan that meets
the requirements of Section 401(a) of the Code, or any
comparable section or sections of any future legislation that
amends, supplements, or supersedes said section, and that is
financed in whole or in part by an Employer but only to the
extent such other pension is attributable to employer
contributions and to the same period of service for which the
pension is being paid under this Plan.
9.07 Construction
(a) The Plan shall be construed, regulated and administered under
ERISA as in effect from time to time, and the laws of the State
of New York, except where ERISA controls.
(b) The masculine pronoun shall mean the feminine where
appropriate, and vice versa.
Page 60
(c) The titles and headings of the Articles and Sections in this
Plan are for convenience only. In case of ambiguity or
inconsistency, the text rather than the titles or headings shall
control.
9.08 Prevention of Escheat
If the Administrator cannot ascertain the whereabouts of any
person to whom a payment is due under the Plan, the
Administrator may, no earlier than three years from the date
such payment is due, mail a notice of such due and owing payment
to the last known address of such person as shown on the records
of the Administrator or the Employer. If such person has not
made written claim therefor within three months of the date of
the mailing, the Administrator may, if it so elects and upon
receiving advice from counsel to the Plan, direct that such
payment and all remaining payments otherwise due such person be
canceled on the records of the Plan and the amount thereof
applied to reduce the contributions of the Employer. Upon such
cancellation, the Plan shall have no further liability therefor
except that, in the event such person or his Beneficiary later
notifies the Administrator of his whereabouts and requests the
payment or payments due to him under the Plan, the amount so
applied shall be paid to him in accordance with the provisions
of the Plan.
Page 61
ARTICLE 10. AMENDMENT, MERGER, AND TERMINATION
10.01 Amendment of Plan
The Company, by action of its Board of Directors or by action of
a person so authorized by resolution of the Board of Directors,
reserves the right at any time and from time to time, and
retroactively if deemed necessary or appropriate, to amend in
whole or in part any or all of the provisions of the Plan.
However, no amendment shall make it possible for any part of the
funds of the Plan to be used for, or diverted to, purposes other
than for the exclusive benefit of persons entitled to benefits
under the Plan, before the satisfaction of all liabilities with
respect to them. No amendment shall be made which has the effect
of decreasing the Protected Benefit of any Participant or of
reducing the nonforfeitable percentage of the Accrued Benefit of
a Participant below the nonforfeitable percentage computed under
the Plan as in effect on the date on which the amendment is
adopted, or if later, the date on which the amendment becomes
effective.
10.02 Merger, Consolidation, or Transfer
The Board of Directors may, in its sole discretion, merge this
Plan with another qualified plan, subject to any applicable
legal requirements. However, the Plan may not be merged or
consolidated with, and its assets or liabilities may not be
transferred to, any other plan unless each person entitled to
benefits under the Plan would, if the resulting plan were then
terminated, receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than the
benefit he would have been entitled to receive immediately
before the merger, consolidation, or transfer if the Plan had
then terminated.
Page 62
10.03 Additional Participating Employers
(a) If any company is now or becomes a subsidiary or
associated company of an Employer, the Board of Directors
may include the employees of that company in the
membership of the Plan upon appropriate action by that
company necessary to adopt the Plan. In that event, or if
any persons become Eligible Employees of an Employer as the
result of merger or consolidation or as the result of
acquisition of all or part of the assets or business of another
company, the Board of Directors shall determine to what
extent, if any, credit and benefits shall be granted for
previous service with the subsidiary, associated or other
company, but subject to the continued qualification of the
trust for the Plan as tax-exempt under the Code.
(b) Any subsidiary or associated company may terminate its
participation in the Plan upon appropriate action by it, in
which event the funds of the Plan held on account of
Participants in the employ of that company shall be determined
by the Administrator and shall be applied as provided in Section
10.04 if the Plan should be terminated, or shall be segregated
by the Trustee as a separate trust, pursuant to certification to
the Trustee by the Administrator, continuing the Plan as a
separate plan for the employees of that company under which the
board of directors of that company shall succeed to all the
powers and duties of the Board of Directors, including the
appointment of the administrator.
10.04 Termination of Plan
The Company, by action of its Board of Directors, may terminate
the Plan for any reason at any time. In case of termination of
the Plan, the rights of Participants to their Protected Benefits
as of the date of the termination, to the extent then funded or
protected by law, if greater, shall be nonforfeitable. The funds
of the Plan shall be used for the exclusive benefit of persons
entitled to benefits under the Plan as of the date of
termination, except as provided in Section 6.02.
Page 63
However, any funds not required to satisfy all liabilities of the Plan
for benefits because of erroneous actuarial computation shall be
returned to the Employer. The Administrator shall determine on
the basis of actuarial valuation the share of the funds of the
Plan allocable to each person entitled to benefits under the
Plan in accordance with Section 4044 of ERISA, or corresponding
provision of any applicable law in effect at the time. In the
event of a partial termination of the Plan, the provisions of
this Section shall be applicable to the Participants affected by
that partial termination.
10.05 Limitation Concerning Highly Compensated Employees or Highly
Compensated Former Employees
(a) The provisions of this Section shall apply (i) in the event
the Plan is terminated, to any Participant who is a Highly
Compensated Employee or highly compensated former employee
(as those terms are defined in Section 414(q) of the Code) of
the Employer or an Affiliate and (ii) in any other event,
to any Participant who is one of the 25 Highly Compensated
Employees or highly compensated former employees of the
Employer or Affiliate with the greatest compensation in
any Plan Year. The amount of the annual payments to any one of
the Participants to whom this Section applies shall not be
greater than an amount equal to the annual payments that
would be made on behalf of the Participant during the year
under a single life annuity that is the Actuarial Equivalent
of the sum of the Participant's Accrued Benefit and the
Participant's other benefits under the Plan.
(b) If, (i) after payment of Pension or other benefits to any one
of the Participants to whom this Section applies, the value
of Plan assets equals or exceeds 110 percent of the value of
current liabilities (as that term is defined in Section
412(l)(7) of the Code) of the Plan, (ii) the value of the
Accrued Benefit and other benefits of any one of the
Participants to whom this Section applies is less than 1 percent of
the value of current liabilities of
Page 64
the Plan, or (iii) the value of the benefits payable to a Participant
to whom this Section applies does not exceed the amount described in
Section 411(a)(11)(A) of the Code, the provisions of paragraph (a)
above will not be applicable to the payment of benefits to such
Participant.
(c) Notwithstanding paragraph (a) of this Section, in the event the
Plan is terminated, the restriction of this Section shall not be
applicable if the benefit payable to any Highly Compensated
Employee and any highly compensated former employee is limited
to a benefit that is nondiscriminatory under Section 401(a)(4)
of the Code.
(d) If it should subsequently be determined by statute, court
decision acquiesced in by the Commissioner of Internal Revenue,
or ruling by the Commissioner of Internal Revenue, that the
provisions of this Section are no longer necessary to qualify
the Plan under the Code, this Section shall be ineffective
without the necessity of further amendment to the Plan.
10.06 Doubleday Book Shops, Inc.
Appendix B constitutes an integral part of the Plan and is
applicable with respect to (i) those Participants included in
the Plan who are employees of Doubleday Book Shops, Inc., and
(ii) those former employees of Doubleday Book Shops, Inc. with
continuing rights under the Pension Plan for Eligible Employees
of Doubleday Book Shops, Inc. as of December 31, 1991. Such
employees and former employees are subject to all the terms and
conditions of the Plan, except as otherwise provided by
Appendix B.
Page 65
APPENDIX A. ACTUARIAL FACTORS
TABLE 1
TEN-YEAR CERTAIN & LIFE FACTOR REDUCTION CHART
Nearest Age Factor
-------------------- --------------------
65 .930
64 .935
63 .940
62 .945
61 .950
60 .955
59 .960
58 .965
57 .970
56 .975
55 .980
54 .985
53 .990
52 .995
51 or less 1.000
Page 66
APPENDIX A
(cont'd)
TABLE 2
REDUCTION FACTORS IF BENEFITS BEGIN BEFORE NORMAL RETIREMENT DATE
LIFE ONLY BENEFITS
(Interpolate for ages less than a whole year.)
Age Reduction Factor Age Reduction Factor
------ ------------------ ------ ------------------
64 .933 44 .194
63 .867 43 .179
62 .800 42 .165
61 .733 41 .153
60 .667 40 .141
59 .633 39 .131
58 .600 38 .121
57 .567 37 .112
56 .533 36 .104
55 .500 35 .097
54 .456 34 .090
53 .417 33 .083
52 .381 32 .077
51 .349 31 .072
50 .320 30 .067
49 .293 29 .062
48 .270 28 .058
47 .248 27 .054
46 .228 26 .050
45 .210 25 .047
Page 67
APPENDIX B. PROVISIONS APPLICABLE TO EMPLOYEES OF DOUBLEDAY BOOK SHOPS, INC.
This Appendix B constitutes an integral part of the Plan and is
applicable with respect to (i) those Participants included in the Plan
who are employees of Doubleday Book Shops, Inc., and (ii) those former
employees of Doubleday Book Shops, Inc. with continuing rights under the
Pension Plan for Eligible Employees of Doubleday Book Shops, Inc. as of
December 31, 1991. Such employees and former employees are subject to
all the terms and conditions of the Plan, except as otherwise provided
by this Appendix B. Section references in this Appendix B correspond to
appropriate Sections of the Plan.
ARTICLE 1. DEFINITIONS
1.02 "Actuarial Equivalent" means a benefit of equivalent value,
determined using a 7 percent interest rate and the UP-1984
Mortality Table. For purposes of determinations under Section
4.04, the applicable factors set forth in Table 2 of this
Appendix B shall be used. For purposes of determinations under
Section 5.02, the Actuary shall use the applicable factors set
forth in Table 1 of this Appendix B
1.09 "Compensation" shall include amounts received by an Eligible
Employee from an Affiliate, provided such compensation would
otherwise meet the definition of Certified Earnings in Section
1.09 of the Plan.
1.15 "Eligible Employee" means an Employee:
(a) who is not included in a unit of Employees covered by a
collective bargaining agreement between employee
representatives and an Employer if such retirement benefits
were the
Page 68
subject of good faith bargaining, unless such agreement
expressly provides for the inclusion of such persons as
Participants in the Plan;
(b) who is not covered under another defined benefit retirement
program as an employee employed by an Affiliate; or
(c) who is not classified by Doubleday Book Shops, Inc. as a
leased employee (as defined in Section 414(n)(2) of the Code)
or as an independent contractor, regardless of his or her
classification by the Internal Revenue Service for tax
withholding purposes.
1.16 "Employee" means any person employed by Doubleday Book Shops,
Inc., excluding demonstrators. A "full-time Employee" means an
Employee who, on the basis of his regular stated work schedule,
is classified as a full-time Employee. A "part-time Employee"
means an Employee who, on the basis of his regular stated work
schedule, is classified as a part-time Employee.
1.19 "Final Average Compensation" The "Final Average Compensation"
for purposes of determining the normal monthly retirement
pension (as defined in Section 4.01 of this Appendix B) is the
average of such Participant's Compensation for those five
consecutive Plan Years within the last ten Plan Years preceding
the calendar year in which the Participant's Termination of
Employment occurs (as defined in Section 1.36 of this Appendix
B) with the Employer and all Affiliates that produces the
highest average. If such Participant has less than five
consecutive full calendar years of employment with the Employer
and all Affiliates, Final Average Compensation shall be computed
with respect to his actual full calendar years of employment
with the Employer and all Affiliates.
Page 69
1.41 "Termination of Employment" of a full-time Employee shall be
deemed to occur on the earlier of:
(a) his resignation, discharge, retirement, or death; or
(b) the first anniversary of the first date of a period in which
the full-time Employee is absent from work (with or without
pay) with the Employer for any other reason (e.g., vacation,
holiday, disability, leave of absence, or layoff).
The "Termination of Employment" of a part-time Employee shall be
deemed to occur on the earliest of his resignation, discharge,
retirement, or death.
ARTICLE 2. PARTICIPATION
2.01 Participation Requirements
(a) Each Employee of Doubleday Book Shops, Inc. who was a
participant in the Pension Plan for Employees of Doubleday Book
Shops, Inc. on December 31, 1991 will become a Participant of
the Plan on January 1, 1992, provided he is an Eligible Employee
on such date. As of January 1, 1992, Participants in the Plan
shall include all retired or terminated participants with
entitlement to benefits under the Pension Plan for Employees of
Doubleday Book Shops, Inc. on December 31, 1991. Any retirement
benefit which would have been payable to or on behalf of any
such retired or terminated participants under the Pension Plan
for Employees of Doubleday Book Shops, Inc. shall be payable
from the Plan.
(b) On and after January 1, 1992, any Employee of Doubleday Book
Shops, Inc. shall become a Participant in the Plan on the date
he first completes an Hour of Service or the date he becomes an
Eligible Employee, if later.
Page 70
ARTICLE 3. SERVICE
3.01 Years of Vesting Service
(a) "Year of Vesting Service" means with respect to an employee of
Doubleday Book Shops, Inc.:
(i) with respect to a part-time Employee, a Plan Year in which
such Employee has completed 1,000 or more Hours of Service;
and
(ii) with respect to a full-time Employee, a 12-month period of
uninterrupted employment rendered by such Employee with the
Employer during the period beginning on the date the Employee
first completes an Hour of Service and ending on the
Employee's Termination of Employment;
subject, however, to the service rules of Section 3.01 of the
Plan and the following provisions of this Section 3.01.
If a full-time Employee's employment is terminated and he is
later reemployed within one year, the period between his
Termination of Employment and the date of his reemployment shall
be included in Years of Vesting Service. However, if his
employment is terminated during a period of absence from service
for reasons such as vacation, sickness, disability, layoff, or
leave of absence approved by the Employer, the period from his
Termination of Employment to the date of his reemployment shall
be counted in his Years of Vesting Service only if he is
reemployed within one year of the first day of such absence.
(b) Notwithstanding the foregoing provisions of this Section 3.01,
an Employee of Doubleday Book Shops, Inc. shall not be deemed to
have incurred a One Year Break in Service if the Employee is
absent from work because of:
(i) Service in the Armed Forces of the United States;
Page 71
(ii) An authorized leave of absence for sickness, vacation or
sabbatical granted in writing and for a period not in excess
of two years, or a temporary layoff for less than 12 months.
Leaves of absence shall be authorized in a nondiscriminatory
manner; or
(iii) Disability, other than permanent and total disability, as
defined in Section 4.09 of this Appendix B, causing an
absence.
(c) Service rendered prior to April 1, 1990 to Doubleday & Company,
Inc. or any affiliated entity thereof within the meaning of
Sections 414(b), (c), (m), and (o) of the Code shall be
recognized for vesting purposes under the terms of the Pension
Plan for Employees of Doubleday & Company, Inc. and its
Associated Employers as in effect on March 31, 1990.
3.02 Credited Service
Credited Service for purposes of this Appendix B means all Years
of Vesting Service rendered as an Employee of Doubleday Book
Shops, Inc., except as provided below. Any period between a
Termination of Employment (as defined in Section 1.41 of this
Appendix B) and a reemployment date which is counted as Years of
Vesting Service as provided in Section 3.01 of this Appendix B
shall not be counted as Credited Service, except that Credited
Service shall include any period of absence from service with
the Employer due to service in the Armed Forces of the United
States which is counted in a Participant's Years of Vesting
Service as provided in the Plan. An Employee's Credited Service
rendered prior to a Termination of Employment will not be
restored to him upon subsequent reemployment if the Employee
received a lump sum amount as provided in Section 5.01(c).
Page 72
3.03 Reemployment
(a) If a Participant is reemployed by Doubleday Book Shops, Inc. and
works at least eight days during a calendar month, any pension
payments he is currently receiving shall be discontinued. After
said month and prior to the month following his subsequent
Termination of Employment, pension payments that the Participant
would otherwise be entitled to receive shall be permanently
withheld for each calendar month in which he works at least
eight days.
(b) If a Participant's employment with Doubleday Book Shops, Inc.
continues after he attains Normal Retirement Age, his pension
payments will be permanently withheld for each calendar month in
which he works at least eight days.
(c) If a Participant who was an employee of Doubleday Book Shops,
Inc. is rehired by any other Employer, the provisions set
forth in Section 3.03 of the Plan shall control.
3.04 Change in Employment Status
(a) If an Employee employed by Doubleday Book Shops, Inc. on
a full-time basis becomes employed on a part-time basis,
his Years of Vesting Service prior to the date of such
change in status shall be determined under the provisions
of Section 3.01 of this Appendix B as applicable to a full-time
Employee and his subsequent Years of Vesting Service shall be
determined under the provisions of Section 3.01 of this
Appendix B as applicable to a part-time Employee; provided,
however, that in determining his Years of Vesting Service
with respect to the Plan Year in which such change in status
occurs, 190 Hours of Service will be counted for each month
(or part thereof) of employment prior to the date such
change took place.
Page 73
(b) If an Employee of Doubleday Book Shops, Inc. who is employed
on a part-time basis becomes employed on a full-time basis,
his Years of Vesting Service prior to the first day of the Plan
Year coincident with or next following such change in status
shall be determined under the provisions of Section 3.01 of
this Appendix B as applicable to a part-time Employee and his
subsequent Years of Vesting Service shall be determined
under the provisions of Section 3.01 of this Appendix B
as applicable to a full-time Employee; provided, however,
that in the Plan Year in which such change in status occurs,
such Employee will be credited with one full Year of Vesting
Service if he completes 1,000 Hours of Service in such Plan
Year. If the Employee is not credited with one full Year of
Vesting Service in such Plan Year in accordance with the
prior sentence, his Years of Vesting Service for the Plan
Year in which the change in status occurred shall equal the
Years of Vesting Service that would have been counted if the
Employee had remained a full-time Employee up to the earlier
of the end of such Plan Year or his Termination of
Employment.
ARTICLE 4. ELIGIBILITY FOR AND AMOUNT OF BENEFITS
4.01 Normal Retirement
(a) The normal retirement Pension of a Participant attributable
to his period of employment as an Employee of Doubleday Book
Shops, Inc. shall be a monthly amount, payable at his Normal
Retirement Date, equal to:
1/12 of 1.1 percent of Final Average Compensation up
to Covered Compensation for each year of Credited
Service (maximum 30 years) plus 1.67% of Final Average
Compensation greater than Covered Compensation for
each year of Credited Service (maximum 30 years).
Page 74
4.03 Early Retirement
If a Participant elects to begin payment of his early retirement
Pension prior to his Normal Retirement Date, the Pension payable
with respect to his period of employment as an Employee of
Doubleday Book Shops, Inc. shall be equal to his accrued monthly
Pension, as determined under this Appendix B, reduced by 5
percent for each full year that the date the Participant's early
retirement benefit commences precedes his Normal Retirement
Date, with pro rata reductions hereunder based on fractions of a
year.
4.05 Spouse's Pension
(a) If a Participant who:
(i) is an Employee of Doubleday Book Shops, Inc.
dies in active service prior to his Annuity Starting Date
having met the requirement for any pension benefit under
Article 4;
(ii) was an Employee of Doubleday Book Shops, Inc. dies after
Termination of Employment but prior to his Annuity Starting
Date with entitlement to a pension benefit under Article 4; or
(iii) was an Employee of Doubleday Book Shops, Inc. dies while
accruing service under Section 4.09 of this Appendix B and
prior to his Annuity Starting Date having met the requirement
for any pension benefit under Article 4;
his eligible surviving spouse (if any) shall be entitled to a
monthly Pension payable for life. The first payment of such
survivor Pension benefit shall be made on the first day of the
month following what would have been the Participant's Normal
Retirement Date or his date of death, if later. However, the
eligible surviving spouse may elect to begin receiving payments
on the first day of the month coinciding with or following the
month in which the Participant would have attained age 55 and
prior to his Normal Retirement Date or the date of the
Participant's death, if
Page 75
later. The last monthly payment shall be made as of the first day of
the month in which the eligible surviving spouse's death occurs.
The amount of each monthly payment shall be equal to the amount
of benefit the eligible surviving spouse would have received if
the Pension benefit to which the Participant was entitled to as
of his date of death had commenced on his Normal Retirement Date
(or his date of death, if later) in the form of a Qualified
Joint and Survivor Annuity and the Participant had died
immediately thereafter. If the eligible surviving spouse elects
an earlier commencement date, the amount of each payment shall
be further adjusted to reflected commencement prior the
Participant's Normal Retirement Date as follows:
(i) If the Participant's death occurred after he attained age 55
and the eligible surviving spouse elects early commencement,
the monthly Pension payable to the eligible surviving spouse
shall be based on the amount of the benefit determined under
Section 4.01 of this Appendix B to which the Participant would
have been entitled if he had requested benefit commencement in
the form of a Qualified Joint and Survivor Annuity at that
earlier date, reduced as provided in Section 4.03 of this
Appendix.
(ii) If the Participant's death occurred before he attained age 55
and the eligible surviving spouse elects a commencement date
on or after the date the Participant would have attained age
55, the monthly pension payable to the eligible surviving
spouse shall be based on the amount of benefit determined
under Section 4.01 of this Appendix B to which the Participant
would have been entitled if he had commenced payment in the
form of a Qualified Joint and Survivor Annuity at that earlier
date, reduced in accordance with the provisions of Section
4.04 of this Appendix.
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(b) A Participant described in paragraph (a) may not elect to
waive the survivor annuity coverage under paragraph (a).
4.08 Protection of Benefits Accrued Prior to January 1, 1992
Notwithstanding any provisions to the contrary, each Participant
who was a participant in the Pension Plan for Employees of
Doubleday Book Shops, Inc. on December 31, 1991 and who became a
Participant in the Plan on January 1, 1992 shall not have his
benefit (including optional forms of benefit and other benefits
protected under Internal Revenue Code Section 411(d)(6) and
regulations thereunder) accrued as of December 31, 1991 under
the terms of the Pension Plan for Employees of Doubleday Book
Shops, Inc. as in effect on such date reduced or eliminated.
4.09 Disability Retirement
In the event a Participant, while he is an Employee of Doubleday
Book Shops, Inc., becomes permanently and totally disabled
before his Normal Retirement Date so that he is no longer able
to continue in employment in the same or similar capacity, such
Participant shall continue to be credited with Years of Vesting
Service and years of Credited Service for all Plan purposes
while he is permanently and totally disabled, but his Final
Average Compensation shall be calculated as of the date he
becomes permanently and totally disabled. Such Participant shall
receive his retirement benefit as of his Normal Retirement Date
unless he elects in writing to the Administrator that such
benefit commence at an early retirement date. A Participant
shall be deemed "permanently and totally disabled" if the
Participant is entitled to and is receiving disability benefits
under the Social Security Act.
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ARTICLE 5. PAYMENT OF PENSIONS
5.02 Optional Forms of Payment
In lieu of the amount and form of Pension payable to him under
the Plan, and subject to any Spousal Consent required, a
Participant may, under such rules as the Employer may prescribe,
elect to have his Pension attributable to his employment as an
Employee of the Doubleday Book Shops, Inc. (as determined under
this Appendix B) paid under any of the following options:
(a) The Ten-Year Certain and Life Option available under the Plan,
determined by multiplying the amount that would be paid to him
on a life only basis by the applicable reduction factor from
Table 1 of this Appendix B.
(b) A Five-Year Certain and Life Option that is a modified Pension
payable during the Participant's life; if the Participant dies
within 60 months of his Annuity Starting Date, the balance of
those monthly payments shall be paid to the Beneficiary named
by him when he elected the option. The monthly amount payable
under this option will be determined by multiplying the amount
that would be paid to the Participant on a life-only basis by
the applicable reduction factor from Table 1 of this Appendix
B.
(c) The 50% Joint and Survivor Option available under the Plan,
determined by multiplying the amount that would be paid to him
on a life only basis by a reduction factor which is 90
percent, increased by 3/10 of 1 percent (but not more than 100
percent) for each year the contingent annuitant is older than
the Participant, and decreased by 3/10 of 1 percent for each
year the contingent annuitant is younger than the Participant.
(d) The 100% Joint and Survivor Option available under the Plan,
determined by multiplying the amount that would be paid to him
on a life-only basis by a reduction factor which is 82
percent, increased by 6/10 of 1 percent (but not more than 100
percent) for each year the contingent annuitant is older than
the Participant, and decreased by 6/10 of 1 percent for each
year the contingent
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annuitant is younger than the Participant.
In the event the Beneficiary named under the provisions of
paragraph (a) or (c) above fails to survive the Participant and
the Participant has not designated a contingent beneficiary, the
Beneficiary shall be deemed to be in the order of sequence
below: (1) the Participant's eligible surviving spouse, if any,
(2) his children then living, (3) his brothers or sisters then
living, or (4) his estate. If the designated Beneficiary
survives the Participant but dies prior to receiving the full
number of payments under the five- or ten-year certain and life
option and the Participant has not designated a contingent
Beneficiary, distribution of the remaining payments will be made
to the Beneficiary's estate.
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APPENDIX A
TABLE 1
FIVE- OR TEN-YEAR CERTAIN AND LIFE FACTOR REDUCTION CHART
Employees' Retirement Plan - Barnes & Noble Inc.
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